Stock Codes: 600801, 900933 Stock abbreviations: Huaxin Cement, Huaxin B Share Ref: Lin 2012-012
Huaxin Cement Co., Ltd.
To the best of our knowledge, the Board of Directors of the Company and its members confirm that there is no material false or misleading statement or material omission in this announcement and shall be severally and jointly liable for the truthfulness, accuracy and completeness of its content.
I. Overview on Changing the Projects of the Private Placement
1. Basic information of the raised funds
Approved by Document Zheng Jian Xu Ke [2011] No.1299 issued by the CSRC, Huaxin Cement Co., Ltd. (hereinafter referred to as ¡°the Company¡±) made the private placement of RMB ordinary shares (A share) in amount of 128,099,928 shares with the face value of 1Yuan per share on October 31, 2011. The issuing price was 14.01 Yuan per share. According to the Report on Capital Verification (PricewaterhouseCoopers Zhong Tian Yan Zi (2011) No. 323) issued by PricewaterhouseCoopers Zhong Tian CPAs Limited Company, the total raised funds from the private placement was1,794,679,991 Yuan. The net amount of the raised funds was 1,742,887,551 Yuan minus underwriting fee and other transaction fees of 51,792,440 Yuan.
The investment projects which use the funds raised by this private placement include: 719,870 k Yuan investment in 15 cement kiln pure low temperature waste heat power generation projects, 455,810 k Yuan investment in 25 RMX station projects, 159,000 k Yuan investment in 1 aggregate production line project and 460,000 k Yuan for repaying loans of the Company.
2. Actual use of the raised funds for the projects which are planned to be changed
Considering the government planning and changes in market conditions, in order to ensure the timely, effective and reasonable use of the raised funds from the private placement and according to the ¡°Administrative Rules on Raised Funds of Listed Companies¡± of Shanghai Stock Exchange and ¡°Administrative Rules on Storage and Use of Raised Funds" of the Company, after deliberation, the Company plans no longer use the raised funds to construct 10 RMX projects including Dongchuan, Fuling, Jiangling, Xuanen, Dawu, Luoshan, Daoxian, Chenzhou, Hefeng, and Zhuzhou.
As at March 31, 2012, use of the raised funds for the aforesaid 10 RMX projects is as follows:
|
No |
Project |
Abbreviation |
|
Actual use of the raised funds (0000 Yuan) |
Unused raised funds (0000 Yuan) |
|
1 |
Yunnan Dongchuan 200 km3/y RMX Station Project |
Dongchuan RMX |
1,669.00 |
281.23 |
1,387.77 |
|
2 |
Chongqing Fuling 300 km3/y RMX Station Project |
Fuling RMX |
1,815.00 |
0.00 |
1,815.00 |
|
3 |
Hubei Jiangling 200 km3/y RMX Station Project |
Jiangling RMX |
1,831.00 |
0.00 |
1,831.00 |
|
4 |
Hubei Xuanen 200 km3/y RMX Station Project |
Yuanen RMX |
2,026.00 |
387.20 |
1,638.80 |
|
5 |
Hubei Dawu 200 km3/y RMX Station Project |
Dawu RMX |
1,993.00 |
0.00 |
1,993.00 |
|
6 |
Henan Luoshan 200 km3/y RMX Station Project |
Luoshan RMX |
1,831.00 |
0.00 |
1,831.00 |
|
7 |
Hunan Daoxian 200 km3/y RMX Station Project |
Daoxian RMX |
1,564.00 |
272.86 |
1,291.14 |
|
8 |
Hunan Chenzhou 200 km3/y RMX Station Project |
Chenzhou RMX |
1,699.00 |
49.65 |
1,649.35 |
|
9 |
Hubei Hefeng 200 km3/y RMX Station Project |
Hefeng RMX |
1,752.00 |
0.00 |
1,752.00 |
|
10 |
Hunan Zhuzhou 200 km3/y RMX Station Project |
Zhuzhou RMX |
2,067.00 |
0.00 |
2,067.00 |
|
Total |
18,247.00 |
990.94 |
17,256.06 |
The raised funds used in the above projects are mainly for obtaining the state-owned construction land use rights of Xuanen and Daoxian and for purchasing production equipments of Dongchuan. As for the obtained land use rights, the Company will transfer in a timely manner. Regarding the purchased production equipments, the Company will use them in the RMX projects in other areas.
3. Information of the new projects
The Company intends to change the injection of the unused 172,560.6 k Yuan (as at Mar 31, 2012) for the aforesaid 10 RMX projects. It plans to inject the unused funds in the following seven new projects.
|
No. |
Project |
Abbreviation |
Total investment
(0000 Yuan) |
Planned use of the raised funds (0000 Yuan) |
|
1 |
Acquiring 100% assets of Jiangxi Jiangcheng New Material Co., Ltd. |
Jiangxi acquisition project |
7,450.00 |
3,850,00 |
|
2 |
Acquiring 100% assets of Xiaogan Yongtai Concrete Co., Ltd. |
Xiaogan acquisition project |
2,657.00 |
1,397.00 |
|
3 |
Acquiring 100% assets of Xiangyang Longtai Mortar Concrete Engineering Co., Ltd. |
Xiangyang Longtai project |
2,660.00 |
1,430.00 |
|
4 |
Acquiring 100% assets of Xiangyang Xinglongtai New Building Material Science & Technology Co., Ltd. |
Xiangyang Xinglongtai project |
1,890.00 |
1,044.00 |
|
5 |
Acquiring 100% assets of Nanzhang Longtai Concrete Engineering Co., Ltd. |
Nanzhang Longtai project |
2,300.00 |
1,250.00 |
|
6 |
Huaxin Jianshan cooperation project |
Huaxin Jianshan project |
7,285.00 |
2,285.00 |
|
7 |
Huaxin Aggregate (Yangxin) Co., Ltd. Phase II project 1000 tph production line |
Yangxin Aggregate II |
12,851.89 |
6,000.06 |
|
Total |
37,093.89 |
17,256.06 |
(II) Specific reasons for not implementing the original projects
1. Fuling and Jiangling: The local government adjusted its planning to the project sites, resulting in the change of land nature of the project sites of the aforesaid two projects. They had to reselect the project sites in the fringing area which is far away from the downtown. In general, transportation radius of RMX stations is about 20 km. Thus, these two projects fail to supply effectively to the urban markets, which directly give negative impact on obtaining orders, and the expected profit can not be achieved. Therefore, the Company decided not to implement the above two projects according to the actual situation.
2. Chenzhou and Zhuzhou: During the progress of the project, there are new competitors entered. Some RMX plants gave negative impacts on the local concrete market by means of lowering prices, resulting in intensified disorderly market competition. The industrial profit is low. Therefore, the Company decided not to implement the above two projects.
3. Dongchuan, Luoshan, Dawu, Hefeng, Daoxian, Xuanen: As the ¡°prohibition of site mix¡± was not yet strictly implemented in the area of project sites. In recent years, the State strictly controls over real estate market, so there were less commodity building projects start construction. RMX market demand did not reach the early expectation of the Company and the expected profits will be difficult to achieve. So, the Company decided not to implement the above 6 projects.
III. Information of the new projects
1. Acquiring 100% assets of Jiangxi Jiangcheng New Material Co., Ltd.
Jiangxi Jiangcheng New Material Co., Ltd. (hereinafter referred to as ¡°Jiangcheng Company) is located in No. 116 Binjiang East Road, Xunyang District, Jiujiang City, Jiangxi Province. It is a limited liability company (invested or controlled by natural person) with registered capital of 10 million Yuan. Its main business is manufacture of commercial ready-mixed concrete.
Assets of Jiangcheng Company include: Land use right with the area of 31,600 square meters in Jiangxi Jiangcheng New Material Co., Ltd. which is located in No. 116 Binjiang East Road, Xunyang District, Jiujiang City; production line(s) of the RMX station, buildings, structures, ancillary facilities and equipments above the aforesaid land and Production line(s) of the RMX station in Yongan Ginnery which is located in Jiujiang County, Jiujiang City; buildings, structures, ancillary facilities and equipments outside the lease scope. After assessed by Hubei Wanxin Assets Appraisal Co., Ltd. which has securities & futures assessment qualifications, the ¡°assets assessment report¡± with the assessment base date on November 30, 2011 (E Wanxin Ping Bao Zi [2011] No.42) was issued. The total book value of the aforesaid assets is 69,086.9 k Yuan, the assessed value is 60,456 k Yuan.
On December 12, 2011, the Company reached an agreement with Jiangcheng Company through Jiujiang Huaxin Concrete Co., Ltd. (hereinafter referred to as Jiujiang Concrete), which was solely established by the Company¡¯s wholly-owned subsidiary ¨C Huaxin Concrete (Huangshi) Ltd.. The Company acquired 100% assets of Jiangcheng Company with the price of 60 million Yuan. The acquisition of 100% assets of Jiangcheng Company is not defined as a related transaction, it neither belongs to the definition of the provisions on major assets restructuring in ¡°Administrative Measures on Major Asset Restructuring of Listed Companies¡±. Thus it is not necessary to obtain approval from relevant authorities.
Jiujiang is an economic important city along the Yangtze River. Its built up area, urban population and economic strength rank only second to the provincial capital Nanchang. It is the second largest city of Jiangxi Province. In the "12th Five-Year" period, Jiujiang City will further accelerate the pace of ¡°strengthen industry for a prosperous city¡± and accelerate new industrialization, new urbanization and new agricultural and rural modernization. It has a higher market demand for cement and commercial ready-mixed concrete.
Through acquisition of Jiangcheng RMX Station, the Company can save the preparation and approval time for establishing a new RMX station. It can shorten the incubation period of the market and help to build a supporting point for the RMX business of Huaxin Cement in Jiujiang, Jiangxi.
According to the estimation of the Company, annual average sales revenue of the project for the first five years is 99,610 k Yuan, annual average total profit is 14,190 k Yuan. Annual average sales revenue of the project for the next five years is 129,760 k Yuan, annual average total profit is 22,210 k Yuan. Internal rate of return is 18.04% and payback period for the investment is 7.5 years.
RMX project of Jiangxi Jiangcheng New Material Co., Ltd. obtained ¡±Approval on Filing of Jiangxi Jiangcheng New Material RMX Station"(Xun Fa Gai Fa [2010] No.04)" and ¡°Approval on the ¡®Application Report on the Location of Constructing RMX Station¡¯ of Jiangxi Jiangcheng New Material Co., Ltd¡± (Jiu Gong Xin Zi [2011] No.53). On December 30, 2011, Jiujiang Xunyang Environmental Protection Bureau agreed that the EIA approval of Jiangxi Jiangcheng New Material Co., Ltd. is applicable to Jiujiang Huaxin Concrete Co., Ltd. Land use right certificate, concrete business qualification and laboratory qualification are being transferred.
2. Acquiring 100% assets of Xiaogan Yongtai Concrete Co., Ltd.
Xiaogan Yongtai Concrete Co., Ltd. (hereinafter referred to as ¡°Xiaogan Yongtai¡±) is located in the industrial zone of Shahe Village, Yunmeng County, Hubei Province. It is a limited liability company (invested or controlled by natural person) with registered capital of 10 million Yuan. Its main business is manufacture of commercial ready-mixed concrete.
Assets of Xiaogan Yongtai include: assets relating to RMX production and residence in the industrial zone of Shahe Village, Yunmeng County, including but not limited to land use right with the area of 22,666.78 square meters; production line(s) of the RMX station, buildings, structures, ancillary facilities and equipments (excluding RMX trucks and pump trucks) above the aforesaid land. After assessed by Kaiyuan Assets Appraisal Co., Ltd. which has securities & futures assessment qualifications, the ¡°assets assessment report¡± with the assessment base date on December 31, 2011 (Kaiyuan (Jing) Ping Bao Zi [2012] No.022) was issued. The assessed value of the aforesaid assets is 19,092.2 k Yuan.
On February 27, 2012, the Company reached an agreement with Xiaogan Yongtai through its wholly-owned subsidiary Huaxin Concrete (Wuhan) Co., Ltd. The Company acquired 100% assets of Xiaogan Yongtai with the price of 21 million Yuan. The acquisition of 100% assets of Jiangcheng Company is not defined as a related transaction, it neither belongs to the definition of the provisions on major assets restructuring in ¡°Administrative Measures on Major Asset Restructuring of Listed Companies¡±. Thus it is not necessary to obtain approval from relevant authorities.
After the acquisition, the Company needs to invest 1.37 million Yuan in purchasing equipments and upgrading and to invest 4.2 million Yuan working capital for the early operation of this company. The estimated total investment for this project is 26.57 million Yuan. From the signing day of the "Asset Transfer Agreement¡± to March 31, 2012, 12.6 million Yuan has been paid for the project. Thus the planned use of the raised funds for this project is 13.97 million Yuan.
Xiaogan Yongtai is located in Yunmeng County, which is about three kilometers from the downtown of Xiaogan City. Through the acquisition of Xiaogan Yongtai RMX station, the Company can enter Xiaogan downtown market. According to the estimation of the Company, annual average sales revenue of the project for the first five years is 44,340 k Yuan, annual average total profit is 2650 k Yuan. Annual average sales revenue of the project for the next five years is 74,600 k Yuan, annual average total profit is 7480 k Yuan. Internal rate of return is 13.35% and payback period for the investment is 9.4 years.
Xiaogan Yongtai RMX project obtained ¡°Hubei Enterprises Investment Project Filing Certificate" (project codes: 2011092331110042). It also obtained the ¡°Environmental Protection Acceptance Approval on Xiaogan Yongtai RMX station construction project completion¡± issued by Yunmeng County Environmental Protection Bureau (Yun Huan Letter [2011] No. 04), which agree that the project passes the Environmental Protection acceptance. Land use right certificate, concrete business qualification and laboratory qualification are being transferred.
3. Acquiring 100% assets of Xiangyang Longtai Mortar Concrete Engineering Co., Ltd.
Xiangyang Longtai Mortar Concrete Engineering Co., Ltd. (hereinafter referred to as ¡°Xiangyang Longtai¡±) is located in Yanghu Village, Shipu Town, Xiangcheng District, Xiangyang City, Hubei Province. It is a limited liability company (invested or controlled by natural person) with registered capital of 10 million Yuan. Its main business is manufacture of commercial ready-mixed concrete.
Assets of Xiangyang Longtai include: assets relating to RMX production and residence
in Yanghu Village, Shipu Town, Xiangyang City, including but not limited to land use right with the area of 19,766.7655 square meters; production line(s) of the RMX station, buildings, structures, ancillary facilities and equipments (excluding administrative building, RMX trucks and pump trucks) above the aforesaid land. After assessed by Kaiyuan Assets Appraisal Co., Ltd. which has securities & futures assessment qualifications, the ¡°assets assessment report¡± with the assessment base date on December 31, 2011 (Kaiyuan (Jing) Ping Bao Zi [2012] No. 019) was issued. The assessed value of the aforesaid assets is 18,630 k Yuan.
On February 27, 2012, the Company reached an agreement with Xiangyang Longtai through its wholly-owned subsidiary Huaxin Concrete (Wuhan) Co., Ltd. The Company acquired 100% assets of Xiaogan Yongtai with the price of 20.5 million Yuan. The acquisition of 100% assets of Jiangcheng Company is not defined as a related transaction, it neither belongs to the definition of the provisions on major assets restructuring in ¡°Administrative Measures on Major Asset Restructuring of Listed Companies¡±. Thus it is not necessary to obtain approval from relevant authorities.
After the acquisition, the Company needs to invest 2 million Yuan in purchasing equipments and upgrading and to invest 4.1 million Yuan working capital for the early operation of this company. The estimated total investment for this project is 26.6 million Yuan. From the signing day of the "Asset Transfer Agreement¡± to March 31, 2012, 12.3 million Yuan has been paid for the project. Thus the planned use of the raised funds for this project is 14.3 million Yuan.
Through the assets acquisition of Xiangyang Longtai RMX station, the Company can improve its layout in Xiangyang and enhance its influence in Xiangyang. According to the estimation of the Company, annual average sales revenue of the project for the first five years is 47,730 k Yuan, annual average total profit is 4350 k Yuan. Annual average sales revenue of the project for the next five years is 59,740 k Yuan, annual average total profit is 6160 k Yuan. Internal rate of return is 12.9% and payback period for the investment is 10.4 years.
Xiagyang Longtai project obtained ¡°Hubei Enterprises Investment Project Filing Certificate" (project codes: 2010060683900011). It also obtained the EIA Approval (Xiang Huan Ping Biao Shen [2010] No. 70). Land use right certificate, concrete business qualification and laboratory qualification are being transferred.
4. Acquiring 100% assets of Xiangyang Xinglongtai New Building Material Science and Technology Co., Ltd.
Xiangyang Xinglongtai New Building Material Science and Technology Co., Ltd. (hereinafter referred to as ¡°Xiangyang Xinglongtai¡±) is located in Hedian Village, Yujiahu, Xiangcheng District, Xiangyang City, Hubei Province. It is a limited liability company (invested or controlled by natural person) with registered capital of 10 million Yuan. Its main business is manufacture of commercial ready-mixed concrete.
Assets of Xiangyang Xinglongtai include: assets relating to RMX production and residence in Hedian Village, Yujiahu, Xiangcheng District, Xiangyang City, including but not limited to the production line(s) of the RMX station, buildings, structures, ancillary facilities above the leased land of Party B with the area of 10,666.72 square meters; production line(s) of the RMX station, buildings, structures, ancillary facilities and equipments (excluding office building, mess hall, RMX trucks and pump trucks) above the leased land of Party B with the area of 12,666.73 square meters. After assessed by Kaiyuan Assets Appraisal Co., Ltd. which has securities & futures assessment qualifications, the ¡°assets assessment report¡± with the assessment base date on December 31, 2011 (Kaiyuan (Jing) Ping Bao Zi [2012] No. 021) was issued. The assessed value of the aforesaid assets is 12,484.9 k Yuan.
After the acquisition, the Company needs to invest 2 million Yuan in purchasing equipments and upgrading and to invest 2.8 million Yuan working capital for the early operation of this company. The estimated total investment for this project is 18.9 million Yuan. From the signing day of the "Asset Transfer Agreement¡± to March 31, 2012, 8.46 million Yuan has been paid for the project. Thus the planned use of the raised funds for this project is 10.44 million Yuan.
Xiagyang Xinglongtai RMX station project obtained ¡°Hubei Enterprises Investment Project Filing Certificate" (project codes: 2011060231390025). Concrete business qualification and laboratory qualification are being transferred.
5. Acquiring 100% assets of Nanzhang Longtai Concrete Engineering Co., Ltd.
Nanzhang Longtai Concrete Engineering Co., Ltd. (hereinafter referred to as ¡°Nanzhang Longtai¡±) is located in Yongquan Industrial Zone of Economic Development District, Nanzhang County, Hubei Province. It is a limited liability company (invested or controlled by natural person) with registered capital of 10 million Yuan. Its main business is manufacture of commercial ready-mixed concrete.
Assets of Nanzhang Longtai include: assets relating to RMX production and residence in Yongquan Industrial Zone of Economic Development District, Nanzhang County, including but not limited to land use right with the area of 13,424.4 square meters; production line(s) of the RMX station, buildings, structures, ancillary facilities and equipments (excluding RMX trucks and pump trucks) above the aforesaid land. After assessed by Kaiyuan Assets Appraisal Co., Ltd. which has securities & futures assessment qualifications, the ¡°assets assessment report¡± with the assessment base date on December 31, 2011 (Kaiyuan (Jing) Ping Bao Zi [2012] No. 020) was issued. The assessed value of the aforesaid assets is 15,571.4 k Yuan.
On February 27, 2012, the Company reached an agreement with Nanzhang Longtai through its wholly-owned subsidiary Huaxin Concrete (Wuhan) Co., Ltd. The Company acquired 100% assets of Xiaogan Yongtai with the price of 17.5 million Yuan. The acquisition of 100% assets of Jiangcheng Company is not defined as a related transaction, it neither belongs to the definition of the provisions on major assets restructuring in ¡°Administrative Measures on Major Asset Restructuring of Listed Companies¡±. Thus it is not necessary to obtain approval from relevant authorities.
After the acquisition, the Company needs to invest 2 million Yuan in purchasing equipments and upgrading and to invest 3.5 million Yuan working capital for the early operation of this company. The estimated total investment for this project is 23 million Yuan. From the signing day of the "Asset Transfer Agreement¡± to March 31, 2012, 10.5 million Yuan has been paid for the project. Thus the planned use of the raised funds for this project is 12.5 million Yuan.
Through the assets acquisition of Nanzhang Longtai RMX station, the Company can improve its layout in Xiangyang and enhance its influence in Xiangyang.
According to the estimation of the Company, annual average sales revenue of the project for the first five years is 37,180 k Yuan, annual average total profit is 2210 k Yuan. Annual average sales revenue of the project for the next five years is 62,830 k Yuan, annual average total profit is 6600 k Yuan. Internal rate of return is 13.26% and payback period for the investment is 9.6 years.
Nanzhang Longtai RMX project obtained ¡°Hubei Enterprises Investment Project Filing Certificate" (project codes: 2009062450900010). On August 17, 2009, Nanzhang County Environmental Protection Bureau issued its approval (Nan Huan Ping Biao Shen [2009] No.09). It believed that the project site selection has feasibility. Land use r
