ACE.L Regulatory News (ACE)

AUHUA CLEAN ENERGY PLC

Trading Update and Completion of Placing and Subscription

19 June 2015: Auhua Clean Energy Plc (AIM: ACE) (the "Company"), the environmental technology group, is pleased to announce that it closed the year ended 31 December 2014 with unaudited revenues of RMB248.9 million (GBP24.6 million) and an unaudited profit before tax of RMB48.7 million (GBP4.8 million).

This compares to the FY13 revenues of RMB250.9 million (GBP26.1 million), representing a fall of 0.8 per cent., which was largely due to certain clients delaying shipment until the start of the new year. In terms of profitability, gross margins dipped to 38.6 per cent. (FY2013: 43.6 per cent.) due to price pressure from larger customers. Fixed costs increased as a result of the additional overheads at Taiwan Ziolar (our research and development subsidiary) and amortization of intangibles from our Taiwan Ziolar acquisition.

Accounts receivables increased to RMB90.7 million (GBP9.0 million), up 20 per cent. from last year of RMB76.0 million (GBP7.9 million). The Group nevertheless, maintained cash balances of RMB47.0 million (GBP4.6 million) as at 31 December 2014 compared to RMB48.7 million (GBP4.8 million).

The Company has performed strongly amidst the slower growth in the Chinese economy and the sluggish property sector. This is largely because the Chinese government remains committed in the renewable energy sector and in particular, the promotion of solar technologies in building developments. The Company was recently awarded a technology accolade by the Weihai Science and Technology Department for its technology advancements in solar thermal panel efficiency. Demand for solar thermal projects remains strong among the property developers in China.

David Sumner, Chairman and Non-Executive Director of Auhua, said: "We are delighted with this sound set of financial results which reflect steady revenues, solid profit before tax, a healthy cash balance and strong gross margins. We're a company which has succeeded in one of the largest provinces in China and have an international market for our solar panel production. Due to our global business model, we are largely sheltered from the imbalance of supply and demand currently affecting other Chinese solar specialists. Our acquisition of Taiwan Ziolar has significantly enhanced our overall product offering, underpinning the acute need for continuous investment into research and development. Remaining at the cutting-edge of technology in the solar market is core to the success of our business."

Placing and Subscription

Further to the announcement on 16 June 2015, the Company today announces that it has raised approximately £1,724,500 (before expenses) through a placing of new Ordinary Shares of no par value ("Ordinary Shares") by WH Ireland Limited ("WHI"), as agent of the Company (the "Placing") and subscriptions for new Ordinary Shares direct to the Company (the "Subscription"). The issue price of both the Placing and the Subscription is 4.5 pence per new Ordinary Share.

While the Group's operations in China are profitable and cash positive, liquidity in China continues to be tight and the working capital requirements to operate the business has increased year on year. As such, the Company has sought to raise monies from the market to fund its capital expansion and provide working capital for its overseas expansion. However, this has proved difficult and the discount of the Placing and Subscription to the recent trading price has been necessary to raise the required funds.

Chen Anxiang, Chief Executive Officer of Auhua, commented: "China remains one of the world's biggest solar technology markets and, in spite of a challenging economic backdrop in the country, Auhua has had a really strong year. We have domestic and international expansion plans as global demand for solar products continues to thrive. The Placing and Subscription allows us to fund our expansion into Taiwan and the United Arab Emirates while also increasing production capacity in China. We look forward to a promising future ahead."

The Placing comprises the issue of 9,033,332 new Ordinary Shares (the "Placing Shares") and the Subscription comprises the issue of 29,288,889 new Ordinary Shares (the "Subscription Shares").

Application will be made for the Placing Shares and the Subscription Shares to be admitted to trading on AIM ("Admission"). It is expected that Admission in respect of the Placing Shares and the Subscription Shares will occur on or around 25 June 2015.

Following Admission, the total number of Ordinary Shares in the capital of the Company in issue will be 127,794,466 with each share carrying the right to vote. This number of shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company, under the FCA's Disclosure and Transparency Rules.

The Company will notify and post its annual report and accounts to shareholders by 30 June 2015.

All RMB amounts have been translated using the below exchange rates:

RMB 1: GBP 0.09870 (average exchange rate for 2014)

RMB 1: GBP 0.10396 (average exchange rate for 2013)

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About Auhua:

Auhua Clean Energy (www.auhuacleanenergy.com) is an environmental technology group based in the Shandong Province of Eastern China specialising in the development and application of green energy and energy efficient solar thermal solutions. In particular, the Group is focused on the manufacture and sale of split-unit solar water heating systems.

Auhua Clean Energy operates through its wholly owned subsidiaries Shandong Auhua New Energy Co., Ltd, Weihua Auhua New Energy Co., Ltd., and Taiwan Ziolar Technology Co. Ltd, of which Auhua Holdings Pte Ltd is the intermediate holding company.