MayAir Group Regulatory News (MAYA)

MayAir Group plc

("MayAir" or the "Group")

Final Results

MayAir Group plc (AIM: MAYA.L), a leading provider of air filtration and clean air technology in the industrial, commercial and residential markets, announces its maiden set of final results for the year ended 31 December 2015 (the "period").

FINANCIAL HIGHLIGHTS

* Calculation of EPS for pro-forma 2014 does not include the issuance of new shares issued during the year pursuant to the admission to trading on the AIM market of the London Stock Exchange.

OPERATIONAL HIGHLIGHTS

· Successfully raised £16.2 million (before expenses) and admitted to trading on AIM on 7 May 2015

· Funds raised to assist with Group's growth, to increase R&D spending, and to provide funds for the construction of a new primary manufacturing facility

· Gained market share in the industrial market as sales grew by 76% year-on-year, providing air purification solutions to large multinational manufacturers

· Capitalising on the Group's leading position in the industrial market to support growth in the commercial air purification systems market place with significant growth expected in 2016

· Invested in sales and marketing in Asia ex-China, including recruitment of new personnel - the Group saw a 17% increase in sales outside of China

· Signed an exclusive distributorship agreement for the sale and promotion of a selection of the Group's industrial cleanroom products into Thailand

· Tenders received from contractors for building new manufacturing facility to increase production capacity; on track to complete by end of 2017

· Good interest received for new high-efficiency product line, the PTFE Filter range, launched in the second half of 2015

Yap Wee Keong, Chief Executive Officer of MayAir Group, said: "We are pleased to be announcing significant growth in Group sales as we benefited from strong pick-up in demand for our products as large multinationals continue to build cleanrooms. There was also strong demand in major cities in China for our products in the commercial segment. We believe that this is testament to the strength of MayAir's technology and solutions as well as our established reputation within China and elsewhere.

"Looking ahead, with the proceeds from our IPO, we have begun increasing our investment in R&D and building our sales team. The Board anticipates continued momentum in both the industrial and commercial sectors as the demand for clean air at work and at home shows no signs of abating. The strategy of diversifying and expanding into other countries in Asia is on track. The Board believes that MayAir is well positioned to take advantage of the opportunities available to the Group and we look forward to the coming year with optimism."

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About MayAir

MayAir Group plc (AIM: MAYA.L), is one of the market leaders in providing air purification solutions for use in industrial cleanrooms, and has supplied large multinational manufacturers. Founded in 2001, the Group's core business historically has been in providing fan filter units (FFUs) air filtering equipment for use in industrial cleanrooms, an area in which it has established itself as one of the leading providers in China. Since 2011, the Group has begun to diversify its product offering, increasingly implementing its strategy of expanding its business to include indoor clean air solutions for the commercial and residential markets. Key large flagship commercial customers so far include SOHO Galaxy Beijing and Huawei. The Group has an extensive IP portfolio, is ISO certified for quality management systems (9001:2008) and environment (14001:2004) and its products are certified by CE (European Union) and UL (Underwriters Laboratories, an American worldwide safety consulting and certification company). For additional information please visit: www.mayairgroup.com

Chairman's Statement

On behalf of the Board, I am pleased to introduce MayAir's maiden set of full year results since the Group's successful admission to trading on AIM in May 2015. The Group has performed strongly in the financial year ended 31 December 2015, with significant growth compared to 2014 and has an excellent pipeline of prospects for 2016.

Admission to AIM

The placing that accompanied MayAir's admission to AIM raised £16.2 million before expenses. This was the largest fundraise by a Malaysian business on AIM in recent years. The response from investors to the admission was positive, demonstrating confidence in both the Group's strategy and the management team's ability to deliver and generate returns. The Board joins me in welcoming all our new shareholders and thanking them for their continuing support of the Group.

Strategy

MayAir's overall strategy is to become a leading global provider of clean air solutions with a long-term strategy to develop new segments and revenue streams.

I am pleased to report that the Group is making excellent progress on delivering on its stated strategy, which continues to be achieved via strong organic growth. Our end markets continue to offer considerable opportunity for future growth. Over the financial year, the Group's three business divisions have all made solid progress. This is covered in more detail in the CEO's Review.

A key reason for MayAir's application for admission to AIM was to provide the Group with a solid platform for future growth, enhancing our reputation with existing and potential customers and supporting the development of the MayAir brand in Asia and globally, as well as expanding our production capabilities with a larger and more modern manufacturing facility.

Corporate Governance

MayAir values corporate governance highly and the Board believes that effective corporate governance is integral to the delivery of the Group's corporate strategy, the generation of shareholder value and the safeguard of our shareholders' long-term interests.

As Chairman, I am responsible for the leadership of the Board and for ensuring its effectiveness in all aspects of its role. The Board is responsible for the Group's strategic development, monitoring and achievement of its business objectives, oversight of risk and maintaining a system of effective corporate governance. I will continue to draw upon my experience to help ensure that the Board delivers maximum shareholder value.

Dividend

As outlined in the Group's AIM admission document, MayAir is not paying a dividend for the 2015 financial year.

Our employees and stakeholders

The strong performance of the Group reflects the dedication and quality of the Group's employees. We rely on the skills, experience and commitment of our team to drive the business forward. Their enthusiasm, innovation and performance remain key assets of the Group and are vital to its future success. On behalf of the Board, I would like to thank all of our employees, customers, suppliers, business partners and shareholders for their continued support over the last year.

MayAir is well positioned to take advantage of the opportunities available to it and the Board looks forward to the coming year with optimism.

Martin Bloom

Non-Executive Chairman

15 April 2016

CEO's Review

I am delighted by MayAir's progress over the last 12 months and excited about our future potential. MayAir has had a transformational year in which the Group successfully joined AIM, took significant strategic steps in expanding operations outside of China, generated growth across its divisions, and delivered on commitments made at the time of admission to AIM.

These are the first full year results following the Group's admission to AIM in May 2015. MayAir is one of the market leaders in providing air purification solutions for use in industrial cleanrooms, and has supplied large multinational manufacturers such as OSRAM, Sony, York and SanDisk. The Group is successfully leveraging its position in the industrial cleanrooms market to increase penetration into the commercial air purification systems market place. Flagship commercial customers so far include Galaxy SOHO Beijing and Huawei, among others. MayAir's objective is to become a leading global provider of clean air solutions.

Results

Although considerable time was spent preparing for the AIM admission during the financial year, the management team remained focused on the Group's operational businesses and we are pleased that these maiden results for the year ended 31 December 2015 are ahead of the management's expectations at the time of admission.

Group revenue increased by 45.2% to US$63.6 million (2014: US$43.8 million). This revenue growth was delivered as a result of higher demand and the completion of some significant industrial cleanroom projects during the period. Gross margin was 31.5% compared with 36.1% for 2014. This decrease in gross margin was mainly due to competitive pricing for industrial cleanroom projects as well as an increase in the costs of raw materials.

Gross profit increased by 26.6% to US$20.0 million (2014: US$15.8 million) and EBITDA increased 15.4% to US$9.0 million (2014: US$7.8 million).

Profit after tax increased by 12.5% to US$6.3 million (2014: US$5.6 million). The Group saw an increase in operational expenses compared with the prior year, including Research & Development, Sales & Marketing and also employee recruitment, as well as administrative expenses necessary to an AIM-quoted plc.

Market Growth

The Group's products and services are sold to customers in the industrial and commercial markets. The industrial market continues to dominate the sales mix, accounting for almost 76% of total Group revenue for the full year ended 31 December 2015 compared with 63% for the equivalent period in 2014. In addition, the replacement parts segment, which is aimed at generating recurring revenues primarily from customers from previously-completed industrial market projects, accounted for 13% of total Group revenue compared with 21% for the equivalent period in 2014. The commercial market contributed 10% of total Group revenue during the year ended 31 December 2015 compared with 16% for the prior year period.

Industrial

MayAir's customers for its industrial clean air solutions consist primarily of businesses that require cleanrooms as part of their own manufacturing processes, including technology companies, semiconductor manufacturers, pharmaceutical companies, hospitals and food & beverage businesses.

During the period ending 31 December 2015, industrial market sales increased by 77% compared with the equivalent period in 2014, largely as a result of the industrialisation of the technology sector in the Peoples Republic of China ("PRC"). This included key projects for cleanroom solutions delivered for customers such as Chongqing BOE Optoelectronics Technology Co Ltd, Nanjing Panda Flat Display Technology Co Ltd and Shenzhen Huaxin China Optoelectronics Co Ltd in the second half of 2015.

Commercial

In the commercial market, MayAir provides clean air solutions for venues such as commercial office buildings, airports, subways, hotels, exhibition centres and schools. Demand for the Group's solutions in the commercial market is driven by the desire for improved air quality to protect against health issues such as asthma and other respiratory conditions, skin conditions, allergies, increased cardiovascular risks, nausea and fatigue; and thereby improving quality of life.

During the period, sales in the commercial market contracted by 13% compared with the equivalent period in 2014 due to unanticipated delays in certain projects. Some notable completed projects during the period include projects for Huawei, China Telecom and at China Central Place, an office, hotel, retail and apartment development in Beijing.

Residential

The Group established this business unit to address the demand in the residential market for clean air solutions to improve (as with the commercial market) health and quality of life. In this market, MayAir focused on developing unique solutions targeted at property developers rather than the existing "off the shelf" products for consumers. The Group is on track with its plan to see sales from 2017 onwards.

International Expansion

Currently, approximately 96% of MayAir's revenue is generated from customers in the PRC, with the remainder coming from customers in South East Asia, Europe, the Middle East, Pakistan and Bangladesh. As noted at the time of the Group's AIM admission, a key objective is to expand MayAir's business internationally beyond the PRC. During the period, the Group advanced this strategy by intensifying its sales and marketing efforts targeting Asia beyond China, which included recruitment of new personnel. In August 2015, MayAir signed an exclusive distributorship arrangement for the sale and promotion of a selection of its industrial cleanroom products into Thailand. As a result, revenue generated outside of the PRC in the period increased by 17% compared to 2014.

Product Development

MayAir believes that continuous technological innovation and advancement through R&D activities in the clean air sector are critical for the Group's ongoing competitiveness. MayAir also continues to seek collaborations with, and acquisitions of, businesses with products and processes that would enhance the Group's product range and capabilities. In the second half of the year, MayAir launched a new Polytetrafluoroethylene ("PTFE") High Efficiency product line, which is targeted primarily at industrial cleanrooms. The PTFE Filter is a highly efficient energy-saving filter, and is considered to be the next generation of filter technology. The Group is already seeing some early demand. The Board believes that MayAir is one of few companies in the world to have such a product offering for use in industrial applications.

In recognition of the strength of the Group's product offering, during the period ending 31 December 2015 MayAir received three industry awards: the 2015 Frost & Sullivan Global Clean Air Solutions Company of the Year award and Best Quality Award by China Star Optoelectronics Co., Ltd (Shenzhen). In December 2015, the Group received the inaugural Bluetech Award for its patented double-stage filtration system to improve indoor air quality in industrial and commercial buildings from the Clean Air Alliance of China (CAAC), a collaboration of academic institutions and public, private and non-profit organisations dedicated to improving air quality in China.

In addition, MayAir's range of new products developed specifically for the commercial segment has gained buy-in and traction from major corporates within the PRC.

Production Capacity Expansion

In 2014, MayAir completed the purchase of some land in Nanjing in the PRC for the construction of a new 38,500m2 manufacturing facility in order to ensure sufficient manufacturing capacity for anticipated future growth. The purchase price was US$3.4 million, fully satisfied via internally generated funds. The Group has asked for expressions of interest and bids from contractors to build the facility. The construction cost for the new facility is expected to be lower than first anticipated as a result of decreasing raw material costs, as well as the more general slowdown in volume of infrastructure projects in China, meaning that contractors are submitting increasingly competitive prices. This new manufacturing facility is on track to commence production in 2017 when it will replace the existing leased manufacturing facility located in Nanjing. It is expected to double the Group's manufacturing capacity, as well as providing additional space for R&D and new product development.

Admission to AIM

MayAir was admitted to AIM and dealings in its ordinary shares commenced on 7 May 2015. It successfully raised £16.2 million before costs via a placing of 12,475,000 new ordinary shares at a price of 130 pence per share.

The Board expects that the Group's admission to AIM will enhance MayAir's profile with existing and potential customers and support the development of the MayAir brand in Asia, as well as globally. The Group targeted to use the funds raised during the placing, along with its pre-IPO cash resources, to assist with MayAir's growth, to increase its R&D spending, and to finance the construction of a new primary manufacturing facility.

Trading Outlook

Trading in the year to date has been in line with the Board's expectations. 2015 was characterised by a number of mega projects which were awarded early in the year. 2016 has started well with a strong pipeline of opportunities in the markets in which we operate.

Industry trends have been supporting MayAir's growth and show no signs of abating. This is being driven by continued demand in Chinese high-technology markets, where there are increasing requirements for cleanrooms. In the commercial segment, whilst the indoor air quality market in China is relatively young, it is growing strongly due to the demands for solutions to improve health and quality of life. The Board believes that MayAir has the technologies and solutions, as well as brand recognition, to grow sales in these markets. In addition, MayAir's investment in international expansion remains on track and the Board anticipates sales outside of China to increase significantly during 2016.

The Group looks forward to another year of revenue growth.

Yap Wee Keong

Chief Executive Officer

15 April 2016

Financial Review

The financial year to 31 December 2015 has seen a transformational change in business performance with strong growth in revenue, gross profit and EBITDA. MayAir's admission to AIM in May 2015 also enabled the Group to significantly strengthen its balance sheet and the Group has no long-term debt.

Revenue

Revenue increased by 45% to US$63.6 million (FY14: US$43.8 million). The revenue mix continues to be dominated by the Industrial division at 76% (FY14: 63%). This increase in revenues is a reflection of the industrialisation of the technology sector in the PRC. During the period, MayAir completed several big industrial cleanroom projects which contributed to the significant growth in revenue.

The Replacement parts segment contributed 13% of the Group's total revenue and recorded total sales of US$8.7 million (FY14: US$9.0 million). In December 2015, the Group's management put in place a new sales and support strategy aimed at boosting future growth in this sector.

Due to a delay in the timing of the completion of some projects, the Commercial division recorded lower sales of US$6.1 million (FY14: US$7.0 million). We believe that the attractive medium-term characteristics of this division will be driven by an increased awareness of the negative impact that polluted air in the PRC has on people's health. Demand by corporate customers for clean air solutions has been very encouraging and MayAir expects strong growth in FY16 and beyond. During 2015, MayAir completed a number of notable projects, including projects for customers such as Huawei and China Telecom.

Efforts to expand sales globally beyond the PRC have shown positive results with an encouraging 17% growth to US$2.4 million. Revenue generated in the PRC was US$61.2 million, representing 96% of total Group revenue in FY2015.

Gross Profit

Gross profit increased by 27% to US$20.0 million (2014: US$15.8 million). Gross margin reduced from 36% to approximately 31.5% due to a combination of the competitive pricing of new larger contracts and increased raw material prices. We expect the sales contribution from the Commercial and Residential divisions to help improve margins in 2016.

Operating Profit and EBITDA

Operating profit improved by 16% to US$8.1 million (2014: US$7.0 million) and EBITDA increased 15% to US$9.0 million (2014: US$7.8 million). Operating profit and EBITDA levels reflect the higher spending on Research & Development, Sales & Marketing, new recruitments and administration expenses such as the costs associated with a publicly listed company on AIM.

Earnings Per Share

EPS for FY2015 is at US$0.1462 per ordinary share.

Taxation

The Group's effective tax rate was 16%. MayAir's operation in the PRC has benefited from a concessionary corporate tax rate of 15% under the "Hi-Technology Industry Incentive", profits which otherwise would be taxed at the standard corporate tax rate of 25%. The overall charge has increased in the period due to an increase in profits.

Cash Flow

The Group's cash position has increased significantly following the fund raising and AIM listing in May 2015, with the placing of shares providing proceeds of approximately US$22.8 million after expenses. This has been offset by cash used in operations of US$4.2 million and capital expenditure of US$1.5 million.

The Group ended 2015 with net cash of US$15.1 million. The Group does not have any long-term debt. The Board anticipates that the Group is sufficiently funded for its current expansion plan.

Koh Tat Seng

Chief Financial Officer

15 April 2016

Consolidated Statements of Financial Position

As at 31 December 2015

Consolidated Statements of Comprehensive Income

For the financial year ended 31 December 2015

Consolidated Statements of Changes in Equity

For the financial year ended 31 December 2015

For the financial year ended 31 December 2015

Consolidated Statements of Changes in Equity

For the financial year ended 31 December 2014

Consolidated Statements of Cash Flows

For the financial year ended 31 December 2015

Consolidated Statements of Cash Flows (Cont'd)

For the financial year ended 31 December 2015

NOTES TO THE FINANCIAL INFORMATION

1. BASIS OF PREPARATION

The consolidated financial information has been prepared using accounting policies which are consistent with those adopted in the Company's AIM admission document, as well as applying the following accounting policy in respect of the basis of consolidation.

The Company was incorporated on 6 February 2015 with an unlimited authorised share capital of no par value, of which two (2) ordinary shares ("Ordinary Shares") were issued fully paid to the subscribers, with one (1) Ordinary Share each being issued to Capita Nominees Limited and Capita Secretaries Limited. On 10 February 2015, by resolution of the Board, the Board approved the transfer of the two (2) subscriber shares to Yap Wee Keong and Koh Tat Seng respectively.

Pursuant to a resolution of the Board on 8 April 2015 and in accordance with the terms as specified in the Share Exchange Agreement dated 17 April 2015, which form part of the Group's restructuring exercise in preparation for the Company's listing on the AIM market London Stock Exchange, the Company completed the share exchange exercise by issuing and allotting 29,999,998 Ordinary Shares resulting in the total issued number of Ordinary Shares being increased to 30,000,000.

On 7 May 2015, the Company issued a further 12,475,000 Ordinary Shares (representing 29.4% of the Company's enlarged share capital) at 130 pence per Ordinary Share to raise GBP16,217,500, in conjunction with the Admission to AIM of the Company's enlarged share capital. The costs associated with the share issue, amounting to USD1,942,000, have been deducted from the Company's stated capital. As at 31 December 2015, the Company's issued share capital is 42,475,000 Ordinary Shares.

The Directors considered IFRS 3 "Business Combinations" (Revised 2008) as the appropriate accounting treatment. However, they concluded that the Group fell outside of the scope of IFRS 3 (revised 2008) since the Group represents a combination of entities under common control.

In accordance with IAS 8 "Accounting policies, changes in accounting estimates and errors", in developing an appropriate accounting policy, the Directors have considered the pronouncements of other standard setting bodies and specifically looked to accounting principles generally accepted in the United Kingdom ("UK GAAP") for guidance (FRS 102 Section 19 - Acquisitions and Mergers) which does not conflict with IFRS and reflects the economic substance of the transaction.

Under UK GAAP, the assets and liabilities of the transferee and transferor are recorded at book value, not fair value (although adjustments are made to achieve uniform accounting policies), intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the legal acquirer in accordance within applicable IFRS, no goodwill is recognised, any expenses of the combination are written off immediately to the Consolidated Statement of Comprehensive Income and comparative amounts, if applicable, are restated as if the combination had taken place at the beginning of the earliest accounting period presented.

Therefore, although the Group reconstruction did not become unconditional until 17 April 2015, the consolidated financial statements are presented as if the Group structure had been in place throughout the period under audit, including the activity from incorporation of the Group's subsidiary. All entities had common management as well as majority shareholders.

On this basis, the Directors have decided that it is appropriate to reflect the combination using merger accounting principles as a group reconstruction under FRS 102 Section 19 - Acquisitions and Mergers, in order to give a true and fair view. No fair value adjustments have been made as a result of the combination. On this basis, the comparative information is pro-forma.

The financial information is presented in United States Dollars ("USD"), which is the presentation currency for the consolidated financial statements. All financial information presented in USD has been recorded to the nearest thousand.

The consolidated financial statements have been prepared on the historical cost basis.

The financial statements have been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") issued by the International Accounting Standards Board ("IASB"), including related interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2015, but is derived from those accounts. The statutory accounts will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their report was unqualified.

The directors do not recommended the payment of a final dividend.

The financial information set out in this announcement was approved and authorised for issue by the board of directors on 15 April 2016.

2. PLANT AND EQUIPMENT

Included in the assets of the Group at the end of the reporting period were motor vehicles with a total net book value of USD127,000 (2014 - USD78,000), which were acquired under hire purchase terms.

3. LAND USE RIGHTS

The Group has land use rights over a piece of vacant state-owned land in the PRC and is planning for its factory construction on the said land subsequent to year end (refer Note 33). The land use rights have remaining tenure of 49 years as at 31 December 2015 (2014: 50 years).

4. INVENTORIES

5. AMOUNTS DUE FROM CONTRACT CUSTOMERS

6. TRADE RECEIVABLES

The Group's normal trade credit terms range from 30 to 90 days. Other credit terms are assessed and approved on a case-by-case basis.

Included in trade receivables are the followings:-

7. CASH AND BANK BALANCES

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:-

The Chinese Renminbi is not freely convertible into foreign currencies. Under The People's Republic of China ("PRC") Foreign Exchange Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Group is permitted to exchange Chinese Renminbi for foreign currencies through banks that are authorised to conduct foreign exchange business.

The cash and bank balances of the Group in The People's Republic of China amounting to USD4,132,000 (2014 - USD4,069,000) are subject to exchange control restrictions.

8. STATED CAPITAL ACCOUNT

The movements in the registered capital of the Company are as follows:-

The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the Company.

The consolidated financial information includes the assets and liabilities of the MayAir Group Plc's Employee Benefit Trust ("EBT'') within its Statement of Financial Position. In the event of the winding up of the Company, neither the shareholders nor creditors would be entitled to the assets of the EBT. The cost of ordinary shares held by the EBT is deducted from shareholders' funds and classified as 'Own Shares' until such time as they vest unconditionally to participating employees. At 31 December 2015 the EBT held 2,554,650 ordinary shares in the Company at a cost of $nil and no shares has been awarded to any employees.

On admission to AIM in May 2015, the Company granted warrants to its professional advisers to subscribe for 212,375 new Ordinary Shares at £1.30 at any time up to the tenth anniversary of admission. The fair value of the services received in consideration for the issue of the warrants was measured at the date of grant was approximately US$192,000. A charge of US$192,000 has been recognised in equity for the year within stated capital with an equivalent increase in stated capital.

9. REVENUE