UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F/A
Amendment No. 1
(Mark One)
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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OR | |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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OR | |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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OR | |
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .
Commission file number: 001-34609
CHINA HYDROELECTRIC CORPORATION |
(Exact name of Registrant as specified in its charter) |
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Not applicable |
(Translation of Registrants name into English) |
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Cayman Islands |
(Jurisdiction of incorporation or organization) |
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2105A, Pingan International Financial Center, No. 3 South Xinyuan Street Chaoyang District, Beijing Peoples Republic of China 100027 |
(Address of principal executive offices) |
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class |
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Name of each exchange on which registered |
American Depositary Shares, each representing three Ordinary Shares, par value $0.001 per share |
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New York Stock Exchange |
Ordinary Shares, par value $0.001 per share |
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New York Stock Exchange* |
Warrants each to purchase three Ordinary Shares |
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New York Stock Exchange |
*Not for trading, but only in connection with the registration of American Depositary Shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act. None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None
Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report: 162,057,167 ordinary shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
o Yes x No
If this report is an annual or transaction report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
o Yes x No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
Large accelerated filer o |
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Accelerated filer o |
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Non-accelerated filer x |
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP x |
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International Financial Reporting Standards as issued |
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Other o |
If Other has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow.
o Item 17 o Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes x No
EXPLANATORY NOTE
We are filing this Amendment No. 1 to our Annual Report on Form 20-F for the fiscal year ended December 31, 2012, which we filed with the Securities and Exchange Commission on April 18, 2013, for the sole purpose of furnishing the Interactive Data File as Exhibit 101.
No other changes have been made to our Annual Report on Form 20-F. This Amendment No. 1 does not reflect events that have occurred after the April 18, 2013 filing date of our Annual Report on Form 20-F, or modify or update the disclosures therein, except to reflect the amendment described above.
PART III
ITEM 19. EXHIBITS
The following is a list of exhibits filed as part of this Amendment No. 1 to such Annual Report.
Exhibit Number |
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Description of Exhibit |
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101.INS |
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XBRL Instance Document* |
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101.SCH |
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XBRL Taxonomy Extension Schema Document* |
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101.CAL |
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XBRL Taxonomy Extension Calculation Linkbase Document* |
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101.DEF |
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XBRL Taxonomy Extension Definitions Linkbase Document* |
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101.LAB |
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XBRL Taxonomy Extension Labels Linkbase Document* |
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101.PRE |
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XBRL Taxonomy Extension Presentation Linkbase Document* |
* XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment No. 1 to its annual report on its behalf.
Date: May 15, 2013
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CHINA HYDROELECTRIC CORPORATION |
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By: |
/s/ You-Su Lin |
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Name: Dr. You-Su Lin |
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Title: Interim Chief Executive Officer |
CONDENSED FINANCIAL INFORMATION OF THE COMPANY
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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CONDENSED FINANCIAL INFORMATION OF THE COMPANY | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED FINANCIAL INFORMATION OF THE COMPANY | 32. CONDENSED FINANCIAL INFORMATION OF THE COMPANY
The following is the condensed financial information of the Company on a non-consolidated basis:
Balance sheets
Statements of comprehensive income
Statements of cash flows
(a) Basis of presentation
In the Company-only financial statements, the Company’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date of acquisition. Company-only financial statements should be read in conjunction with the Company’s consolidated financial statements.
The Company records its investment in its subsidiaries under the equity method of accounting as prescribed in ASC 323-10. Such investment is presented as “Investment in subsidiaries” in the balance sheet and share of the subsidiaries’ losses or profits is presented as “Equity in profits (losses) of subsidiaries” in the statements of comprehensive income.
The subsidiaries paid US$nil, US$nil and US$1,039 dividend to the Company for the years ended December 31, 2010, 2011 and 2012, respectively.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted by reference to the disclosures in the consolidated financial statements.
(b) Commitments
The Company does not have any significant commitments or long-term obligations as of any of the years presented, except for those disclosed in the consolidated financial statements (Note 24).
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CONCENTRATION OF RISKS (Details) (PRC)
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12 Months Ended | ||
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Dec. 31, 2012
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Dec. 31, 2011
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Dec. 31, 2010
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Foreign currency exchange rate risk | |||
Appreciation of the RMB against US$ (as a percent) | 0.20% | 4.90% | 3.00% |
Top five customers
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Concentration of risks | |||
Number of customers | 5 | ||
Accounts receivable | Credit concentration risk | Top five customers
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Concentration of risks | |||
Concentration risk (as a percent) | 86.00% | 85.00% | |
Revenue | Customer concentration risk | Yunnan Province | Yunnan Nujiang Electric Power Co., Ltd.
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Concentration of risks | |||
Concentration risk (as a percent) | 5.00% | 7.00% | 1.00% |
Revenue | Customer concentration risk | Yunnan Province | Yunnan Dehong Electric Power Co., Ltd.
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Concentration of risks | |||
Concentration risk (as a percent) | 6.00% | 11.00% | 9.00% |
Revenue | Customer concentration risk | Yunnan Province | Yunnan Honghe Electric Power Co., Ltd.
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Concentration of risks | |||
Concentration risk (as a percent) | 1.00% | 1.00% | |
Revenue | Customer concentration risk | Yunnan Province | Yunnan Grid Company, Ltd.
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Concentration of risks | |||
Concentration risk (as a percent) | 3.00% | 4.00% | 3.00% |
Revenue | Customer concentration risk | Sichuan Province | Sichuan Cangxi Electric Power Co., Ltd.
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Concentration of risks | |||
Concentration risk (as a percent) | 1.00% | 1.00% | 1.00% |
Revenue | Customer concentration risk | Zhejiang Province | Lishui Electric Power Bureau
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Concentration of risks | |||
Concentration risk (as a percent) | 46.00% | 43.00% | 49.00% |
Revenue | Customer concentration risk | Fujian Province | Fujian Electric Power Co., Ltd.
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Concentration of risks | |||
Concentration risk (as a percent) | 20.00% | 16.00% | 24.00% |
Revenue | Customer concentration risk | Fujian Province | Pingnan Power Supply Company
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Concentration of risks | |||
Concentration risk (as a percent) | 5.00% | 8.00% | 13.00% |
Revenue | Customer concentration risk | Fujian Province | Shaowu Electric Power Bureau
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Concentration of risks | |||
Concentration risk (as a percent) | 9.00% | 7.00% | |
Revenue | Customer concentration risk | Fujian Province | Nanping Electric Power Bureau
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Concentration of risks | |||
Concentration risk (as a percent) | 4.00% | 2.00% |
BORROWINGS (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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BORROWINGS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of total borrowings |
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Schedule of corporate guarantee by third party |
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Schedule of maturities of long-term loans |
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GOODWILL (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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GOODWILL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in the carrying amount of goodwill by operating and reportable segments | The changes in the carrying amount of goodwill by operating and reportable segments for the years ended December 31, 2011 and 2012 are as follows:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $)
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12 Months Ended |
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Dec. 31, 2012
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Cash and cash equivalents | |
Restricted cash and cash equivalents | $ 0 |
Restricted cash | |
Restriction on cash collateral amount | 5,171,000 |
Maximum maturity term of Notes receivable | 6 months |
Warrant liabilities
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Reconciliation of warrant liabilities measured at fair value on a recurring basis using significant unobservable inputs | |
Balance at the beginning of the period | 440,000 |
Unrealized losses | 399,000 |
Balance at the end of the period | $ 839,000 |
OTHER NON-CURRENT LIABILITIES (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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OTHER NON-CURRENT LIABILITIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other non-current liabilities |
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PREPAYMENTS AND OTHER CURRENT ASSETS (Details)
In Thousands, unless otherwise specified |
Dec. 31, 2012
USD ($)
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Dec. 31, 2011
USD ($)
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Oct. 18, 2012
Yuheng
USD ($)
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Oct. 18, 2012
Yuheng
CNY
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Dec. 31, 2012
Jinling and its subsidiaries
USD ($)
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Dec. 31, 2011
Jinling and its subsidiaries
USD ($)
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Dec. 31, 2012
Wangkeng and Hengda
USD ($)
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Dec. 31, 2011
Wangkeng and Hengda
USD ($)
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Dec. 31, 2012
Wangkeng
USD ($)
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Dec. 31, 2011
Wangkeng
USD ($)
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Dec. 31, 2012
Hengda
USD ($)
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Dec. 31, 2011
Hengda
USD ($)
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Dec. 31, 2012
Banzhu
USD ($)
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Dec. 31, 2011
Banzhu
USD ($)
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PREPAYMENTS AND OTHER CURRENT ASSETS | ||||||||||||||
Advances for construction projects | $ 78 | $ 88 | ||||||||||||
Acquisition deposits | 716 | 714 | 477 | 476 | 239 | 238 | ||||||||
Amounts due from original shareholders of acquired subsidiaries | 1,297 | 1,244 | 794 | 487 | 503 | 502 | ||||||||
Consideration receivable from disposal of a subsidiary | 11,534 | |||||||||||||
Others | 2,085 | 1,667 | ||||||||||||
Prepayments and other current assets, gross | 15,710 | 3,713 | ||||||||||||
Less: Provision for impairment allowance | (1,560) | (714) | (794) | (716) | (714) | |||||||||
Total | 14,150 | 2,999 | ||||||||||||
PREPAYMENTS AND OTHER CURRENT ASSETS | ||||||||||||||
Acquisition deposits | 716 | 714 | 477 | 476 | 239 | 238 | ||||||||
Amounts due from original shareholders of acquired subsidiaries | 1,297 | 1,244 | 794 | 487 | 503 | 502 | ||||||||
Provision for impairment allowance (in dollars) | 1,560 | 714 | 794 | 716 | 714 | |||||||||
Ownership interest percentage held in discontinued operations | 100.00% | 100.00% | ||||||||||||
Total consideration in cash | $ 21,269 | 134,000 |
COMMITMENTS AND CONTINGENCIES (Details 2) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | |
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Dec. 31, 2012
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Dec. 31, 2011
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Other commitments | ||
Compensation costs paid | $ 739 | $ 166 |
Future minimum compensation costs | ||
2013 | 105 | |
2014 | 86 | |
2015 | 203 | |
2016 | 194 | |
2017 | 193 | |
Thereafter | 5,535 | |
Total | $ 6,316 | |
Minimum
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Other commitments | ||
Term of compensation agreements | 5 years | |
Maximum
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Other commitments | ||
Term of compensation agreements | 43 years |
PROPERTY, PLANT AND EQUIPMENT, NET (Tables)
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Dec. 31, 2012
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PROPERTY, PLANT AND EQUIPMENT, NET | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property, plant and equipment and its related accumulated depreciation |
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Schedule of construction in progress, net of impairment charge |
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Schedule of depreciation expenses |
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SEGMENT AND GEOGRAPHIC INFORMATION
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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SEGMENT AND GEOGRAPHIC INFORMATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT AND GEOGRAPHIC INFORMATION | 26. SEGMENT AND GEOGRAPHIC INFORMATION
The Group follows ASC 280-10 for disclosure of segment information. The Group’s chief operating decision maker, who has been identified as the CEO, relies upon financial information by provinces with operations in the PRC when making decisions about allocating resources and assessing the performance of the Group. For the years ended December 31, 2010, 2011 and 2012, the Group operated and managed its business as four operating and reportable segments, namely the Yunnan Province segment, the Sichuan Province segment, the Zhejiang Province segment and the Fujian Province segment. As the Group’s long-lived assets and revenues are substantially all located in and derived from the PRC, no geographical segments are presented.
The Group’s segment information as of and for the year ended December 31, 2010 is as follows:
The Group’s segment information as of and for the year ended December 31, 2011 is as follows:
The Group’s segment information as of and for the year ended December 31, 2012 is as follows:
|
DISCONTINUED OPERATIONS (Details)
In Thousands, unless otherwise specified |
12 Months Ended | 12 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
USD ($)
|
Dec. 31, 2011
USD ($)
|
Dec. 31, 2010
USD ($)
|
Dec. 31, 2012
Yuanping
USD ($)
|
Mar. 02, 2012
Yuanping
USD ($)
|
Dec. 31, 2011
Yuanping
USD ($)
|
Dec. 03, 2011
Yuanping
USD ($)
|
Dec. 03, 2011
Yuanping
CNY
|
Dec. 31, 2011
Yuanping
Assets classified as held-for-sale, current
USD ($)
|
Dec. 31, 2011
Yuanping
Liabilities directly associated with the assets classified as held-for-sale, current
USD ($)
|
Dec. 03, 2011
Yuanping
PRC
item
|
Dec. 31, 2012
Yuheng
USD ($)
|
Oct. 31, 2012
Yuheng
USD ($)
|
Oct. 18, 2012
Yuheng
USD ($)
|
Oct. 18, 2012
Yuheng
CNY
|
Dec. 31, 2011
Yuheng
USD ($)
|
Oct. 18, 2012
Yuheng
PRC
item
|
|
Discontinued operations | |||||||||||||||||
Ownership interest percentage held in discontinued operations | 100.00% | 100.00% | 100.00% | 100.00% | |||||||||||||
Total consideration in cash | $ 11,276 | 71,050 | $ 21,269 | 134,000 | |||||||||||||
Number of businesses operated | 1 | 1 | |||||||||||||||
Right to use water generated by dam assigned (as a percent) | 36.48% | 36.48% | |||||||||||||||
Assets of disposal group classified as held-for-sale | |||||||||||||||||
Cash and cash equivalents | 56 | 11 | 11 | 472 | 33 | ||||||||||||
Property, plant and equipment, net | 17,304 | 17,376 | 17,376 | 18,509 | 19,004 | ||||||||||||
Goodwill | 3,219 | 3,214 | 3,214 | 23,448 | 23,445 | ||||||||||||
Other intangible assets | 617 | 587 | 587 | 1,916 | 1,966 | ||||||||||||
Deferred tax assets | 259 | 259 | 259 | 174 | 333 | ||||||||||||
Other current assets | 328 | 246 | 246 | 241 | 651 | ||||||||||||
Total | 21,783 | 21,693 | 21,693 | 44,760 | 45,432 | ||||||||||||
Liabilities directly associated with the assets classified as held-for-sale | |||||||||||||||||
Long-term loans | 10,489 | 10,475 | 10,475 | 7,301 | 8,729 | ||||||||||||
Deferred tax liabilities, non-current | 136 | 827 | 815 | 815 | 2,046 | 1,818 | |||||||||||
Current portion of long-term loans | 477 | 476 | 476 | 14,920 | 15,553 | ||||||||||||
Accrued expenses and other current liabilities | 163 | 154 | 154 | 2,256 | 1,402 | ||||||||||||
Other non-current liabilities | 33 | ||||||||||||||||
Total | 11,956 | 11,920 | 11,920 | 26,556 | 27,502 | ||||||||||||
Results of discontinued operations | |||||||||||||||||
Revenues | 4,661 | 4,737 | 8,495 | ||||||||||||||
Cost of revenues | (1,131) | (2,098) | (2,192) | ||||||||||||||
General and administrative expenses | (176) | (226) | (274) | ||||||||||||||
Interest income | 2 | 2 | 393 | ||||||||||||||
Interest expense | (1,634) | (2,580) | (1,997) | ||||||||||||||
Other (loss) income, net | 3,543 | (16) | (38) | ||||||||||||||
Income tax expense | (1,358) | (101) | (152) | ||||||||||||||
Net income (loss) from discontinued operations | 3,907 | (282) | 4,235 | ||||||||||||||
Gain on disposal from disposition | $ 2,767 | $ 1,819 | $ 1,907 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 6) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Goodwill and intangible assets | |||
Goodwill impairment loss | $ 0 | $ 11,388 | $ 0 |
Development right | Binglangjiang
|
|||
Goodwill and intangible assets | |||
Estimated useful life for the intangible assets | 30 years | ||
Dam use right | Jinling
|
|||
Goodwill and intangible assets | |||
Estimated useful life for the intangible assets | 40 years | ||
Land use rights | PRC
|
|||
Goodwill and intangible assets | |||
Agreement term of land use rights | 50 years | ||
Land use rights | PRC | Minimum
|
|||
Goodwill and intangible assets | |||
Estimated useful life for the intangible assets | 41 years | ||
Land use rights | PRC | Maximum
|
|||
Goodwill and intangible assets | |||
Estimated useful life for the intangible assets | 50 years |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details 2) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2012
John Kuhns
|
Dec. 31, 2012
Mary Fellows
|
Dec. 31, 2011
Xiaopengzu
|
Dec. 31, 2011
Ruiyang
|
Dec. 31, 2011
Wuliting
|
Dec. 31, 2011
Wuliting
Maximum
|
Dec. 31, 2011
Dazhaihe, Wangkeng, and Wuliting
|
Dec. 31, 2011
Wangkeng
Maximum
|
Dec. 31, 2012
Yingchuan
|
Dec. 31, 2011
Yingchuan
Maximum
|
Dec. 31, 2012
Jinling
|
Dec. 31, 2011
Jinling
|
Dec. 31, 2012
Jinling
24% loan from non-financial institutions
|
Dec. 31, 2012
Jinling
18% loan from non-financial institutions
|
Dec. 31, 2012
Jinling
32% loan from non-financial institutions
|
Dec. 31, 2011
Jinling
Maximum
|
Dec. 31, 2012
Jinlong
|
Dec. 31, 2011
Jinlong
|
Dec. 31, 2011
Jinlong
Maximum
|
Dec. 31, 2011
Jiulongshan
|
Dec. 31, 2012
Hengda
|
Dec. 31, 2012
Binglangjiang
|
Dec. 31, 2012
Dazhaihe, Hengda, Xineng and Banzhu
|
|
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||||||||||||||||||||||||
Purchase consideration payable | $ 4,752 | $ 1,825 | $ 18 | $ 2,909 | |||||||||||||||||||||
Aggregate termination benefits payable | 3,445 | 2,583 | 1,250 | 500 | |||||||||||||||||||||
Period over which the company shall pay aggregate termination benefits | 24 months | 24 months | |||||||||||||||||||||||
Period from furnishing of final documentation for refund of deposits | 10 days | 10 days | 10 days | ||||||||||||||||||||||
Period from acquisition for providing documentation by the original shareholders | 1 year | 1 year | 1 year | ||||||||||||||||||||||
Guarantee deposits from original shareholders of acquired subsidiaries | 1,358 | 4,265 | 87 | 1,271 | |||||||||||||||||||||
Amounts due to original shareholders of Dazhaihe, Wangkeng, and Wuliting for their entitlement to net working capital surplus | 2,785 | ||||||||||||||||||||||||
Amounts due to original shareholders of acquired subsidiaries for borrowings before acquisition date | 18,735 | 1,271 | |||||||||||||||||||||||
Weighted average interest rate (as a percent) | 7.33% | ||||||||||||||||||||||||
Loans from third parties | $ 13,627 | $ 14,483 | $ 3,174 | $ 3,174 | $ 9,139 | $ 3,483 | $ 32 | $ 2,743 | $ 6,364 | $ 4,121 | $ 1,478 | $ 3,174 | $ 240 | $ 127 | |||||||||||
Annual interest rate on short-term loans (as a percent) | 21.60% | 21.60% | 18.00% | 18.55% | 24.00% | 18.00% | 32.00% | 18.00% | 21.60% | ||||||||||||||||
Repayment term of loans | 1 year | 1 year |
BASIC AND DILUTED (LOSS) INCOME PER SHARE (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
|
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BASIC AND DILUTED (LOSS) INCOME PER SHARE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of basic and diluted (loss) income per share |
|
SHARE-BASED PAYMENT (Details 2) (USD $)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
SHARE-BASED PAYMENT | |||
Total compensation cost recognized | $ 166,000 | $ 10,479,000 | $ 3,615,000 |
General and administrative expenses
|
|||
SHARE-BASED PAYMENT | |||
Total compensation cost recognized | $ 166,000 | $ 10,479,000 | $ 3,615,000 |
ACQUISITIONS (Details 2)
In Thousands, unless otherwise specified |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
USD ($)
|
Dec. 31, 2011
USD ($)
|
Dec. 31, 2010
USD ($)
|
Dec. 31, 2011
Wangkeng
USD ($)
|
Dec. 31, 2010
Wangkeng
USD ($)
|
Jan. 14, 2011
Wangkeng
Fujian Huabang
USD ($)
|
Jan. 14, 2011
Wangkeng
Fujian Huabang
CNY
|
Dec. 31, 2010
Wangkeng
Fujian Huabang
|
|
ACQUISITIONS | ||||||||
Ownership interest (as a percent) | 10.00% | |||||||
Purchase consideration | $ 5,939 | 38,967 | ||||||
Carrying amount of noncontrolling interest before changes in the entity's ownership interest | 1,032 | 6,777 | ||||||
Effects of changes in the entity's ownership interest | ||||||||
Net income (loss) attributable to the entity | (1,243) | (45,389) | 3,742 | (45,389) | 3,742 | |||
Decrease in the company's paid-in capital for purchase of 10% of equity interest in Wangkeng | (4,907) | |||||||
Net transfers to noncontrolling interest | (4,907) | |||||||
Change from net income (loss) attributable to the entity and transfers to noncontrolling interest | $ (50,296) | $ 3,742 |
LAND USE RIGHTS (Details) (Land use rights, USD $)
In Thousands, unless otherwise specified |
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Land use rights
|
||
Land use rights | ||
Land use right | $ 47,521 | $ 48,500 |
Less: Accumulated amortization | (4,614) | (3,528) |
Foreign currency translation adjustment | 5,733 | 5,694 |
Total | 48,640 | 50,666 |
Estimated annual amortization expenses | ||
2013 | 1,156 | |
2014 | 1,156 | |
2015 | 1,156 | |
2016 | 1,156 | |
2017 | $ 1,156 |
OTHER NON-CURRENT ASSETS (Details) (USD $)
In Thousands, unless otherwise specified |
0 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Aug. 09, 2012
Liyuan
|
Aug. 09, 2012
Liyuan
Minimum
|
Aug. 09, 2012
Liyuan
Maximum
|
|
OTHER NON-CURRENT ASSETS | |||||
Long-term prepaid debt insurance cost | $ 315 | $ 591 | |||
Long-term prepaid rental expenses | 118 | 270 | |||
Long-term prepaid compensation cost | 337 | 90 | |||
Deposit for financing arrangement | 859 | ||||
Unamortized service fee | 187 | ||||
Long-term prepaid guarantee fee | 197 | ||||
Total | 2,013 | 951 | |||
Other Non-Current Assets | |||||
Cash consideration for sale of certain power generating assets | 7,151 | ||||
Term of sale and leaseback | 3 years | ||||
Monthly lease payment | 219 | ||||
Implicit interest rate on the lease payments (as a percent) | 6.50% | ||||
Basis spread on variable rate (as a percent) | 0.35% | ||||
Variable rate basis | Benchmark interest rate announced by the People's Bank of China | ||||
Term of loan for basis spread on variable rate | 1 year | 3 years | |||
Nonrefundable service fee paid | 354 | ||||
Refundable deposit amount paid to IEL | $ 858 |
ACCOUNTS RECEIVABLE (Details)
|
12 Months Ended |
---|---|
Dec. 31, 2012
|
|
ACCOUNTS RECEIVABLE | |
Maximum credit term of accounts receivable | 60 days |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (Nonrecurring basis, USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2011
|
---|---|
Total loss
|
|
Fair value measurement | |
Assets | $ (22,978) |
Construction in progress | Total loss
|
|
Fair value measurement | |
Assets | (11,590) |
Construction in progress | Wuyue | Fair value
|
|
Fair value measurement | |
Assets | 0 |
Construction in progress | Wuyue | Before fair value adjustment | Carrying amount
|
|
Fair value measurement | |
Assets | 11,590 |
Goodwill | Fair value
|
|
Fair value measurement | |
Assets | 135,651 |
Goodwill | Total loss
|
|
Fair value measurement | |
Assets | (11,388) |
Goodwill | Before fair value adjustment | Carrying amount
|
|
Fair value measurement | |
Assets | 147,039 |
Goodwill | Significant unobservable inputs (Level 3)
|
|
Fair value measurement | |
Assets | $ 135,651 |
WARRANTS
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
|
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WARRANTS. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTS | 18. WARRANTS
On November 10, 2006, the founding shareholders of the Company purchased 375,000 units of securities issued by the Company through China Hydro LLC (“CHL”), a limited liability company formed under the laws of the State of Delaware which holds the equity interest in the Company for the founding shareholders. Each unit consists of one ordinary share and two warrants each to purchase one ordinary share of the Company at US$5.00 per share (“Founders’ Warrants”). The exercise period of the Founders’ Warrants commences on the date of issuance and expires on the earlier of November 10, 2011 or the redemption of the warrants by the Company. The Founders’ Warrants can be redeemed at the option of the Company at any time during the exercise period at US$0.001 per warrant, provided that the last independent bid price of the ordinary share exceeds US$8.50 per share.
On November 10, 2006, the Company also issued two warrants to Morgan Joseph & Co., Inc (“Morgan Joseph”), as part of the payment for services rendered by Morgan Joseph on the issuance of convertible notes (the “Notes”). One warrant allows Morgan Joseph to purchase 550,000 units of securities (each unit consists of one ordinary share and two warrants each to purchase one ordinary share of the Company at US$5.00 per share) and the other warrant allows Morgan Joseph to purchase 283,333 units of securities (each unit consists of one ordinary share and four warrants each to purchase one ordinary share of the Company at US$5.00 per share) issued by the Company at US$6.60 per unit (“Morgan Joseph Warrants”). The exercise period of the Morgan Joseph Warrants commences on the date of issuance and expires on November 10, 2011. The Morgan Joseph Warrants provide for a cashless exercise option. The Morgan Joseph Warrants expired unexercised.
On April 11, 2007, Vicis Capital Master Fund (“Vicis”), JMG Capital Partners, LLP and JMG Triton Offshore Fund Limited (collectively, “JMG”), which are holders of the US$50,000 convertible notes (the “Notes”) issued by the Company in November 2006, approved the consummation of a business combination by the Company. Pursuant to the Notes agreements, Vicis converted its US$41,000 Notes into 6,833,333 ordinary shares and 18,666,666 warrants each to purchase one ordinary share at US$5.00 per share while JMG elected not to convert its US$9,000 Notes and received 666,666 warrants each to purchase one ordinary share at US$5.00 per share. The warrants issued to Vicis and JMG (collectively, the “Holders’ Warrants”) have terms identical to the Founders Warrants in that the Company has an option to redeem at any time at US$0.001 per warrant, provided that the last independent bid price of the ordinary share exceeds US$8.50 per share, and that the exercise period commences on the date of issuance and expires on the earlier of November 10, 2011 or the redemption of the warrants by the Company. The Holders’ Warrants issued to JMG expired unexercised.
Under ASC sub-topic 815-40 (“ASC 815-40”), Derivatives and Hedging: Contracts in Entity’s Own Equity, if a contract could potentially be cash settled, and such settlement is not within the control of the issuer, the derivative is accounted for as an asset or liability, and changes in fair value are recognized in the consolidated statements of comprehensive income. From their respective issuance date to the expiration date on November 10, 2011, the Company evaluated ASC 815-40-25-7 to ASC 815-40-25-35 and concluded that the Founder’s Warrants, Morgan Joseph Warrants and Holders’ Warrants could only be physical settled or net-share settled but not net-cash settled. Therefore, these warrants have been classified as equity since their respective issuance date and the fair value at their respective commitment date was determined to be minimal.
On January 28, 2008, the Company issued another warrant to Morgan Joseph, as part of the payment for services rendered by Morgan Joseph on the issuance of the Series A Preferred Shares. The warrant allows Morgan Joseph to purchase (i) up to 15,000 Series A Preferred Shares at US$1,100 per share prior to the closing of a qualified public offering or (ii) up to such number of ordinary shares automatically converted into from 15,000 Series A Preferred Shares upon the closing of a qualified public offering at 110% of the then-effective conversion price per Series A Preferred Share (“Morgan Joseph Preferred Shares Warrant”). The exercise period of the Morgan Joseph Preferred Shares Warrant commences on the date of issuance and expires on January 28, 2013. The Morgan Joseph Preferred Shares Warrant provides for a cashless exercise option.
The Morgan Joseph Preferred Shares Warrant was classified as a liability from its issuance date to the closing of the Company’s IPO on January 25, 2010, in accordance with ASC sub-topic 480-10 (“ASC 480-10”), Distinguishing Liabilities from Equity: Overall, as Morgan Joseph is entitled to a cashless exercise into Series A Preferred Shares which are contingently redeemable for cash. The fair value of the Morgan Joseph Preferred Shares Warrant was US$899 and US$13,968 at the time of issuance and as of January 25, 2010, respectively. An income of US$365 from the change in fair market value of the Morgan Joseph Preferred Shares Warrant was recognized in the statements of comprehensive income during the year ended December 31, 2010.
Upon the closing of the IPO on January 25, 2010, all of the outstanding Series A Preferred Shares were automatically converted into ordinary shares. As a result, pursuant to the preferred shares subscription agreement, the Morgan Joseph Preferred Shares Warrant automatically became a warrant that allows Morgan Joseph to purchase up to 4,606,880 ordinary shares at US$3.26 per share and was reclassified from liability to equity (“Morgan Joseph Converted Warrant”). The Morgan Joseph Converted Warrant commences on the date of the IPO and expires on January 28, 2013. The Morgan Joseph Converted Warrant provides for a cashless exercise option. The Morgan Joseph Converted Warrant expired unexercised.
On January 25, 2010, the Company completed an IPO, whereby the Company issued 6,000,000 units of securities at US$16.00 per unit. Each unit consists of one American Depositary Share (“ADS”) and one warrant (“IPO Warrant”). Each ADS represents three ordinary shares and each IPO Warrant entitles the holder to purchase three ordinary shares for an exercise price of US$15.00. The Company determined that the relative fair value of the ADSs and the IPO Warrants was US$14.80 and US$1.20, respectively, and allocated the sales proceeds of US$16.00 per unit of securities to the ADS and the IPO Warrant based on their relative fair values. The exercise period of the IPO Warrants commences on the date of issuance and expires on the earlier of January 27, 2014 or the redemption of the warrants by the Company. The IPO Warrants can be redeemed at the option of the Company at any time during the exercise period at US$0.01 per warrant, provided that the sales price per ADS equals or exceeds US$23.00 for any 20 trading days within a 30-trading day period before the redemption.
On January 25, 2010, the Company issued a warrant to Broadband Capital Management LLC (“Broadband Capital”), as part of the payment for services rendered by Broadband Capital in connection with the Company’s IPO, for US$100.00. The warrant allows Broadband Capital to purchase a number of units of securities equal to an aggregate of 4% of the units of securities sold in the IPO at an exercise price of 120% of the IPO price, or US$19.20 per unit (the “Underwriter’s Warrants”). The warrants underlying the units of securities issuable upon exercise of the Underwriter’s Warrant are equivalent to the IPO Warrants, except that the Underwriter’s Warrants are exercisable at 120% of the IPO warrant exercise price, or $18.00 for three ordinary shares. The Underwriter’s Warrants are exercisable on a cashless basis, are non-redeemable and have a five-year term.
Upon the closing of the Company’s IPO on January 25, 2010 and as of December 31, 2011 and 2012, in accordance with ASC 815-40, the Morgan Joseph Converted Warrant, IPO Warrants and Underwriter’s Warrants were concluded to be indexed solely to the Company’s own stock since the warrants do not contain an exercise contingency based on an observable market or an observable index, and the settlement amount would equal to the difference between the fair value of a fixed number of the Company’s ordinary shares and a fixed exercise price. In addition, the Company evaluated ASC 81-40-25-7 to ASC 815-40-25-35 and concluded that the Morgan Joseph Converted Warrant, IPO Warrants and Underwriter’s Warrants could only be physical settled or net-share settled but not net-cash settled. Therefore, the Morgan Joseph Converted Warrant, IPO Warrants and Underwriter’s Warrants have been classified as equity since the Company’s IPO on January 25, 2010.
The Morgan Joseph Converted Warrant, IPO Warrants and Underwriter’ s Warrants will continue to be reported as equity until such time as the warrants are exercised, expire, or become cash-settleable. In the event of a reclassification from equity to liability, the warrants will be measured at a new fair value as of the reclassification date with the change from the existing carrying value to the new fair value as an adjustment to shareholders’ equity.
On July 26, 2010, the directors of CHL resolved to distribute its ordinary shares in the Company and the Founders’ Warrants to founding shareholders in proportion of their shareholding percentage at nil consideration. In connection with the distribution, CHL distributed to Sam Shoen and Shoen’s Trusts (collectively, “Shoen”) 66,964 Founders’ Warrants (the “Shoen’s Warrants”). Except for the Shoen’s Warrants, all of the other Founders’ Warrants expired unexercised.
On August 18, 2011, the Company amended the exercise price of the Holder’s Warrants held by Vicis to US$1.1544 per share. Immediately after the amendment, Vicis exercised 8,662,509 of the warrants to purchase 8,662,509 ordinary shares of the Company at the reduced exercise price of US$1.1544 per share. Vicis holds 10,004,157 warrants after the exercise. On August 19, 2011, the Company further amended three other terms of the remaining 10,004,157 warrants held by Vicis (the “Vicis’ Amended Warrants”) by (i) introducing full-ratchet anti-dilution protection where the exercise price is further adjusted to equal the dilutive price if the Company issues or sells any shares or equity-linked instrument at a price per share or new exercise price per share less than the reduced exercise price of US$1.1544; (ii) providing a cashless exercise option; and (iii) increasing the hurdle for the Company’s exercise of its call option over the Holders’ Warrants, from a bid price equals or exceeds US$8.50 per share to US$17.66 per share.
On October 27, 2011, the Company amended the exercise price of the Shoen’s Warrants to US$1.15 per share. Immediately after the amendment, Shoen exercised 31,072 of the warrants to purchase 31,072 ordinary shares of the Company at the reduced exercise price of US$1.15 per share. After the exercise, the Company further amended three other terms of the remaining 35,892 warrants held by Shoen (the “Shoen’s Amended Warrants”) by (i) introducing full-ratchet anti-dilution protection where the exercise price is further adjusted to equal the dilutive price if the Company issues or sells any shares or equity-linked instrument at a price per share or new exercise price per share less than the reduced exercise price of US$1.15; (ii) providing a cashless exercise option; and (iii) increasing the hurdle for the Company’s exercise of its call option over the Founders’ Warrants, from a bid price equals or exceeds US$8.50 per share to US$17.66 per share.
The Company evaluated ASC 815-40-15 and concluded that the 10,004,157 Vicis’ Amended Warrants and the 35,892 Shoen’s Amended Warrants are not indexed to its own stock due to the full-ratchet anti-dilution protection because the issuance of shares or an-equity-linked instrument in the future is not an input to the determination of the fair value of the settlement amount of a fixed-for-fixed or equity instrument. Therefore, the Vicis’ Amended Warrants and the Shoen’s Amended Warrants were reclassified from equity to liability. In accordance with ASC 815-40-35, the change in fair value of the Vicis’s Amended Warrants and the Shoen’s Warrants during the period these warrants were classified as equity was accounted for as an adjustment to stockholders’ equity with any subsequent change in fair value being adjusted through earnings. The aggregate fair value of the Vicis’ Amended Warrants and the Shoen’s Amended Warrants were US$1,391, US$440 and US$839 at the time of amendment and as of December 31, 2011 and 2012, respectively. Thus, a debit to additional paid-in capital of US$1,391 and a gain of US$951 from the change in fair value of the Vicis’ Amended Warrants and Shoen’s Amended Warrants were recognized in the statements of shareholders’ equity and the statements of comprehensive income, respectively, during the year ended December 31, 2011. A loss of US$399 from the change in fair value of the Vicis’ Amended Warrants and Shoen’s Amended Warrants was recognized in the statements of comprehensive income during the year ended December 31, 2012.
The fair values of the outstanding Vicis’s Amended Warrants and Shoen’s Amended Warrants, which are classified as liabilities, were estimated at their commitment date and December 31, 2011 and 2012 using the following assumptions:
The fair values of the Morgan Joseph Converted Warrants, IPO Warrants and Underwriter’s Warrants, which are classified as equity, were estimated at their commitment date using the following assumptions:
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the fair value of the Company’s ordinary shares as of December 31, 2012, for those warrants that have an exercise price currently below the fair value of the Company’s ordinary shares. As of December 31, 2012, the Company has warrants outstanding to purchase an aggregate 34,086,929 ordinary shares. None of these warrants has an exercise price below the fair value of the Company’s ordinary shares, resulting in an aggregate intrinsic value of US$nil.
All warrants were vested as of the date they were issued, except for the Underwriter’s Warrants which vested 540 days after the IPO on July 19, 2011. Except for the exercise and expiration of warrants described above, no other warrants were redeemed, forfeited, cancelled or exercised for the years ended December 31, 2010, 2011 and 2012.
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OTHER NON-CURRENT ASSETS (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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OTHER NON-CURRENT ASSETS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other non-current assets |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of assets and liabilities measured at fair value on a recurring basis | All assets and liabilities measured at fair value on a recurring basis as of December 31, 2011 are summarized below:
All assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 are summarized below:
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Schedule of reconciliation of warrant liabilities measured at fair value on a recurring basis using significant unobservable inputs | All assets and liabilities measured at fair value on a recurring basis as of December 31, 2011 are summarized below:
All assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 are summarized below:
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Summary of assets and liabilities measured at fair value on a nonrecurring basis | All assets and liabilities measured at fair value on a nonrecurring basis as of December 31, 2011 are summarized below:
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Schedule of estimated useful lives of property, plant and equipment |
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Schedule of estimated useful life for the intangible assets | The estimated useful life for the intangible assets as of December 31, 2012 is as follows:
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ACQUISITIONS (Details)
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12 Months Ended | 9 Months Ended | 12 Months Ended | 214 Months Ended | 2 Months Ended | 0 Months Ended | 2 Months Ended | 6 Months Ended | 63 Months Ended | 12 Months Ended | 2 Months Ended | 2 Months Ended | 4 Months Ended | 12 Months Ended | 4 Months Ended | 4 Months Ended | 3 Months Ended | 12 Months Ended | 4 Months Ended | 4 Months Ended | 12 Months Ended | 0 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2011
USD ($)
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Dec. 31, 2010
USD ($)
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Dec. 31, 2010
Hengda
|
Dec. 31, 2010
2010 Acquisitions
USD ($)
|
Dec. 31, 2010
Husahe
USD ($)
|
Dec. 31, 2010
Husahe
USD ($)
|
Dec. 31, 2012
Husahe
item
|
Apr. 19, 2010
Husahe
Yunnan Province
USD ($)
|
Apr. 18, 2010
Husahe
Fujian Huabang
USD ($)
|
Apr. 18, 2010
Husahe
Fujian Huabang
CNY
|
Apr. 19, 2010
Husahe
Binglangjiang
USD ($)
|
Apr. 19, 2010
Husahe
Binglangjiang
CNY
|
Apr. 18, 2010
Husahe
Binglangjiang
USD ($)
|
Apr. 18, 2010
Husahe
Binglangjiang
CNY
|
Dec. 31, 2010
Hengda
USD ($)
|
Dec. 31, 2012
Hengda
item
|
Dec. 31, 2010
Hengda
Yunnan Province
USD ($)
|
Jun. 22, 2010
Hengda
Yunnan Province
USD ($)
|
Jun. 21, 2010
Hengda
Fujian Huabang
USD ($)
|
Jun. 21, 2010
Hengda
Fujian Huabang
CNY
|
Jun. 22, 2010
Hengda
Fujian Huabang
USD ($)
|
Jun. 22, 2010
Hengda
Fujian Huabang
CNY
|
Jun. 21, 2010
Hengda
Banzhu
USD ($)
|
Jun. 21, 2010
Hengda
Banzhu
CNY
|
Dec. 31, 2010
Xineng
USD ($)
|
Dec. 31, 2010
Xineng
USD ($)
|
Aug. 16, 2010
Xineng
Yunnan Province
USD ($)
|
Aug. 15, 2010
Xineng
Fujian Huabang
USD ($)
|
Aug. 15, 2010
Xineng
Fujian Huabang
CNY
|
Aug. 16, 2010
Xineng
Fujian Huabang
USD ($)
|
Aug. 16, 2010
Xineng
Fujian Huabang
CNY
|
Aug. 15, 2010
Xineng
Hengda
USD ($)
|
Aug. 15, 2010
Xineng
Hengda
CNY
|
Dec. 31, 2010
Xiaopengzu
USD ($)
|
Dec. 31, 2010
Xiaopengzu
USD ($)
|
Sep. 08, 2010
Xiaopengzu
Yunnan Province
USD ($)
|
Sep. 07, 2010
Xiaopengzu
Fujian Huabang
USD ($)
|
Sep. 07, 2010
Xiaopengzu
Fujian Huabang
CNY
|
Sep. 08, 2010
Xiaopengzu
Fujian Huabang
USD ($)
|
Sep. 08, 2010
Xiaopengzu
Fujian Huabang
CNY
|
Apr. 23, 2010
Xiaopengzu
Fujian Huabang
item
|
Sep. 07, 2010
Xiaopengzu
Binglangjiang
USD ($)
|
Sep. 07, 2010
Xiaopengzu
Binglangjiang
CNY
|
Sep. 07, 2010
Xiaopengzu
Banzhu
USD ($)
|
Sep. 07, 2010
Xiaopengzu
Banzhu
CNY
|
Sep. 07, 2010
Xiaopengzu
Yingchuan
USD ($)
|
Sep. 07, 2010
Xiaopengzu
Yingchuan
CNY
|
Sep. 07, 2010
Xiaopengzu
Wangkeng
USD ($)
|
Sep. 07, 2010
Xiaopengzu
Wangkeng
CNY
|
Sep. 07, 2010
Xiaopengzu
Yuanping
USD ($)
|
Sep. 07, 2010
Xiaopengzu
Yuanping
CNY
|
Dec. 31, 2010
Jinling
USD ($)
|
Dec. 30, 2010
Jinling
Fujian Province
USD ($)
|
Dec. 30, 2010
Jinling
Fujian Huabang
USD ($)
|
Dec. 30, 2010
Jinling
Fujian Huabang
CNY
|
Dec. 30, 2010
Jinling
Jinlong
|
Dec. 30, 2010
Jinling
Jintang
|
Dec. 30, 2010
Jinling
Jinwei
|
Mar. 23, 2013
Wuyue
USD ($)
|
Mar. 23, 2013
Wuyue
CNY
|
Oct. 22, 2009
Wuyue
USD ($)
MW
|
Oct. 22, 2009
Wuyue
CNY
MW
|
Dec. 31, 2010
Wuyue
USD ($)
|
Dec. 31, 2011
Dazhaihe
USD ($)
|
Dec. 31, 2011
Dazhaihe
USD ($)
|
Dec. 31, 2010
Dazhaihe
USD ($)
|
Apr. 10, 2011
Dazhaihe
Yunnan Province
USD ($)
|
Apr. 10, 2011
Dazhaihe
Xiaopengzu
USD ($)
|
Apr. 10, 2011
Dazhaihe
Xiaopengzu
CNY
|
Nov. 06, 2010
Dazhaihe
Xiaopengzu
item
|
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ACQUISITIONS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ownership interest (as a percent) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 55.00% | 74.00% | 74.00% | 79.00% | 79.00% | 79.00% | 100.00% | 100.00% | 100.00% | 100.00% | ||||||||||||||||||||||||||||||||||||||||||
Number of shareholders entered into an equity transfer purchase agreement | 8 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash purchase price, excluding additional payment for acquiring certain receivables | $ 15,528,000 | 106,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional cash payment to acquire certain receivables | 1,316,000 | 8,980,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount of advance payment in cash as capital injection | 8,350,000 | 57,000,000 | 7,471,000 | 51,000,000 | 10,962,000 | 74,521,000 | 166,000 | 1,130,000 | 2,003,000 | 13,630,000 | 901,000 | 6,134,000 | 6,259,000 | 42,500,000 | 1,914,000 | 13,000,000 | 957,000 | 6,500,000 | 1,473,000 | 10,000,000 | 2,945,000 | 20,000,000 | 147,000 | 1,000,000 | 4,771,000 | 32,500,000 | ||||||||||||||||||||||||||||||||||||||||||||
Number of hydroelectric stations operated | 3 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of megawatts of hydropower project that subsidiary holds a right to develop | 1,000 | 1,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
First installment of capital injection | 4,771,000 | 32,500,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional cash as capital injection | 19,629,000 | 130,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period within which the entity is obligated to pay additional cash of capital injection after obtaining the certificate of approval | 2 years | 2 years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated fair value of the assets acquired and liabilities assumed at the date of acquisition | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash purchase price | 16,844,000 | 9,562,000 | 4,591,000 | 22,089,000 | 11,333,000 | 75,060,000 | 9,019,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total purchase consideration | 16,844,000 | 114,980,000 | 9,562,000 | 65,000,000 | 4,591,000 | 31,250,000 | 22,089,000 | 150,000,000 | 11,333,000 | 9,019,000 | 59,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Bank | 7,478,000 | 1,000 | 2,350,000 | 26,000 | 59,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment, net | 14,089,000 | 38,653,000 | 19,847,000 | 45,592,000 | 78,953,000 | 11,540,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets | 342,000 | 124,000 | 1,759,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other assets | 9,958,000 | 407,000 | 255,000 | 569,000 | 1,665,000 | 555,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | 1,826,000 | 1,826,000 | 428,000 | 428,000 | 1,004,000 | 1,004,000 | 12,398,000 | 12,398,000 | 9,341,000 | 9,341,000 | 6,646,000 | 6,646,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax assets- non-current | 474,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets acquired | 33,351,000 | 39,831,000 | 21,230,000 | 60,909,000 | 92,218,000 | 18,800,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term loans | (9,286,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current portion of long-term loans | (3,015,000) | (73,000) | (1,878,000) | (5,964,000) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | (15,998,000) | (12,598,000) | (3,231,000) | (16,420,000) | (41,549,000) | (9,303,000) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term loans | (14,269,000) | (13,149,000) | (20,210,000) | (16,081,000) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax liabilities-non-current | (509,000) | (387,000) | (186,000) | (312,000) | (4,274,000) | (478,000) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities assumed | (16,507,000) | (30,269,000) | (16,639,000) | (38,820,000) | (77,154,000) | (9,781,000) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interest | (3,731,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets acquired | 1,825,000 | 11,333,000 | 16,844,000 | 9,562,000 | 4,591,000 | 22,089,000 | 11,333,000 | 9,019,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill expected to be deductible for tax purposes | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition-related costs | 54,000 | 169,000 | 104,000 | 27,000 | 51,000 | 28,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | 1,698,000 | 1,497,000 | 556,000 | 876,000 | 0 | 831,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net profit/(loss) | 706,000 | (58,000) | (80,000) | (202,000) | 0 | (717,000) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited pro forma consolidated financial information | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | 69,580,000 | 54,960,000 | 59,125,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit (loss) before income taxes | (9,575,000) | (53,730,000) | 2,824,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss attributable to ordinary shareholders | $ (7,653,000) | $ (45,638,000) | $ (12,322,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted loss per share (in dollars per share) | $ (0.05) | $ (0.29) | $ (0.09) |
WARRANTS (Details 2) (USD $)
|
0 Months Ended | ||||||||
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Dec. 31, 2012
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Aug. 18, 2011
Vicis' Amended Warrants
Warrants classified as liabilities
|
Oct. 27, 2011
Shoen's Amended Warrants
Warrants classified as liabilities
|
Dec. 31, 2012
Vicis'/Shoen's Amended Warrants
Warrants classified as liabilities
|
Dec. 31, 2011
Vicis'/Shoen's Amended Warrants
Warrants classified as liabilities
|
Jan. 25, 2010
Morgan Joseph Converted Warrant
Warrants classified as equity
|
Jan. 25, 2010
IPO Warrants
Warrants classified as equity
|
Jul. 19, 2011
Underwriter's Warrants
|
Jan. 25, 2010
Underwriter's Warrants
Warrants classified as equity
|
|
Assumptions used in estimating the fair values of the outstanding warrants at commitment date | |||||||||
Average risk-free rate of return (as a percent) | 0.24% | 0.24% | 0.14% | 0.24% | 2.40% | 2.40% | 2.40% | ||
Expected term/life | 2 years 4 months 17 days | 2 years 2 months 5 days | 1 year | 2 years | 3 years | 4 years 11 months 26 days | 4 years 11 months 26 days | ||
Volatility rate (as a percent) | 52.52% | 51.20% | 88.40% | 72.00% | 66.00% | 66.00% | 66.00% | ||
Fair value of ordinary share (in dollars per share) | $ 0.14 | $ 0.04 | $ 0.57 | $ 0.04 | $ 4.93 | $ 4.93 | $ 4.93 | ||
Estimated forfeiture rate (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | ||
Additional disclosure | |||||||||
Shares that can be purchased by warrants outstanding (in shares) | 34,086,929 | ||||||||
Number of warrants with exercise price below the fair value of the ordinary shares | 0 | ||||||||
Aggregate intrinsic value of warrants | $ 0 | ||||||||
Vesting period of warrants after the IPO | 540 days |
CONCENTRATION OF RISKS
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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CONCENTRATION OF RISKS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONCENTRATION OF RISKS | 30. CONCENTRATION OF RISKS
Financial instruments that potentially subject the Group to significant concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. As of December 31, 2011 and 2012, substantially all of the Group’s cash and cash equivalents were managed by financial institutions located in the United States and the PRC which management believes are of high credit quality.
Accounts receivable are typically unsecured and derived from revenue earned from customers in the PRC. As a percentage of total accounts receivable, the top five customers accounted for 85% and 86% as of December 31, 2011 and 2012, respectively.
Due to the Group’s dependence on a limited number of customers, any negative events or deterioration in financial strength with the Group’s customers or deterioration of relationship with the Group’s customers, may cause material loss to the Group and have a material adverse effect on the Group’s financial condition and results of operations. The major customers and the portion of revenue from these customers for the years ended December 31, 2010, 2011 and 2012 are listed below:
Currency convertibility risk
Substantially all of the Group’s businesses are transacted in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China. However, the unification of the exchange rates does not imply the convertibility of RMB into US$ or other foreign currencies. Under Mainland China’s Foreign Exchange Currency Regulation and Administration, the Group is permitted to exchange RMB for foreign currencies through banks authorized to conduct foreign exchange business. All foreign exchange transactions continue to take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other institutions requires submitting a payment application form together with invoices and signed contracts.
Foreign currency exchange rate risk
On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to US$. Under the new policy, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in an approximately 3.0%, 4.9% and 0.2% appreciation of the RMB against the US$ in 2010, 2011 and 2012, respectively. On June 19, 2010, the People’s Bank of China announced the end of the RMB’s de facto peg to US$, a policy which was instituted in late 2008 in the face of the global financial crisis, to further reform the RMB exchange rate regime and to enhance the RMB exchange rate flexibility. The exchange rate floating bands will remain the same as previously announced in the inter-bank foreign exchange market. While the international reaction to the RMB revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant volatility of the RMB against the US$.
Any significant revaluation of RMB may materially and adversely affect the cash flows, revenues, earnings and financial position in US$.
Current vulnerability due to certain other concentrations
The Group’s operations may be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for almost 30 years, no assurance can be given that the PRC Government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC’s political, economic and social conditions. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective.
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INCOME TAX EXPENSES (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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INCOME TAX EXPENSE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of (loss) income before income taxes |
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Schedule of income tax expenses |
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Schedule of reconciliation of the effective income tax provisions |
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Schedule of aggregate amount and effects of tax holidays on basic and diluted loss per share |
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Schedule of reconciliation of accrued unrecognized tax benefits |
|
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
12 Months Ended | 0 Months Ended | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
item
|
Dec. 31, 2011
item
|
Dec. 31, 2010
item
|
Dec. 31, 2012
ABC
|
Dec. 31, 2012
Binglangjiang
|
Dec. 31, 2012
Liyuan
|
Dec. 31, 2012
Yingchuan
|
Dec. 31, 2012
Wuliting
|
Dec. 31, 2012
Jiulongshan
|
Dec. 31, 2012
CHC HK
|
Dec. 31, 2012
Wangkeng
|
Dec. 31, 2012
Banzhu
|
Dec. 31, 2012
Sunpower
|
Dec. 31, 2012
Shapulong
|
Dec. 31, 2012
Ruiyang
|
Dec. 31, 2012
Zhougongyuan
|
Dec. 31, 2012
Fujian Huabang
|
Dec. 31, 2012
Wuyue
|
Dec. 31, 2012
Husahe
|
Dec. 31, 2012
Hengda
|
Dec. 31, 2012
Xineng
|
Dec. 31, 2012
Xiaopengzu
|
Dec. 31, 2012
Jinling
|
Dec. 31, 2012
Jinlong
|
Dec. 31, 2012
Jintang
|
Dec. 31, 2012
Jinwei
|
Dec. 31, 2012
Dazhaihe
|
Jan. 25, 2010
Units
|
Jan. 25, 2010
Units
ADS
|
Jan. 25, 2010
Units
Warrant
|
|
Organization and principal activities | ||||||||||||||||||||||||||||||
Issuance of units | 6,000,000 | |||||||||||||||||||||||||||||
Number of ADS consisted in each unit | 1 | |||||||||||||||||||||||||||||
Number of warrants consisted in each unit | 1 | |||||||||||||||||||||||||||||
Unit price (in dollars per share) | $ 16.00 | $ 14.80 | $ 1.20 | |||||||||||||||||||||||||||
Number of ordinary shares represented by each ADS | 3 | 3 | 3 | 3 | ||||||||||||||||||||||||||
Number of ordinary shares that can be purchased by warrant holder | 3 | |||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 15.00 | |||||||||||||||||||||||||||||
Aggregate gross proceeds yielded from IPO (in dollars) | $ 96,000 | $ 96,000 | ||||||||||||||||||||||||||||
Number of hydroelectric entities acquired | 0 | 1 | 6 | |||||||||||||||||||||||||||
Percentage of ownership | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 79.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 55.00% | 74.00% | 74.00% | 100.00% |
OTHER INCOME (LOSS), NET (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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OTHER INCOME (LOSS), NET | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other income (loss), net |
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INTANGIBLE ASSETS (Tables) (Intangible assets, excluding land use rights)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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Intangible assets, excluding land use rights
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Intangible assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets and their related accumulated amortization |
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Schedule of amortization expenses for the intangible assets with finite lives |
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Schedule of estimated annual amortization expenses |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation
The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”). Certain comparative amounts have been reclassified to conform with the current year’s presentation.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.
As of December 31, 2012, the Group had working capital deficiency of US$81,024. This factor raises substantial doubt about the Company’s ability to continue as a going concern. The continued operation of the Group is dependent upon the Group’s ability in raising additional capital, obtaining additional financing and improving future operating and financial results. Therefore, the Company may not be able to realize its assets and discharge its liabilities in the normal course of business. In view of this, management has taken steps to actively pursue additional capital and financing.
While the Company strongly believes that its capital resources will be sufficient in the near term, there is no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there is no assurance that any additional financing, if available, will be obtainable on terms satisfactory or attractive to the Company.
The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded assets or the amounts and classification of liabilities that might have been necessary should the Company not be able to continue in existence as a going concern.
(b) Principles of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtained control and continued to be consolidated until the date that such control ceases.
Investments in entities that the Company does not control, but has the ability to exercise significant influence over operating and financial policies, are accounted for under the equity method. Investments in entities in which the Company does not have the ability to exercise significant influence are accounted for under the cost method. All significant intercompany transactions and balances have been eliminated upon consolidation.
The Group accounted for business combinations in accordance with ASC sub-topic 805-10 (“ASC 805-10”), Business Combinations: Overall. ASC 805-10 requires the acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction, establishes the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. During the measurement period, which shall not exceed one year from the acquisition date, the Company recognizes adjustments to the provisional amounts of acquisition-date fair value and the resulting goodwill for new information obtained as if the accounting for the business combination had been completed at the acquisition date. The comparative information for prior periods presented in the consolidated financial statements is revised as needed, including making any change in depreciation, amortization or other income effects recognized in completing the initial accounting.
For a component of the Group that either has been disposed of or is classified as held-for-sale, the Group accounted for the result of operations of the component as a discontinued operation in accordance with ASC sub-topic 205-20 (“ASC 205-20”), Presentation of Financial Statements when (1) the operations and cash flows of the component have been or will be eliminated from the ongoing operations of the Group as a result of the disposal transaction; and (2) the Group will not have any significant continuing involvement in the operations of the component after the disposal transaction.
The Company accounted for the purchase of additional ownership in its subsidiary from noncontrolling interests as an equity transaction in accordance with ASC sub-topic 810-10 (“ASC 810-10”), Consolidation: Overall. The carrying amount of the noncontrolling interest is adjusted to reflect the change in the Group’s ownership interest in the subsidiary. Any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted is recognized in additional paid-in capital.
(c) Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
(d) Fair value measurement
Financial instruments include cash and cash equivalents, accounts receivable, notes receivable, certain other current assets, accounts payable, certain other liabilities, short-term loans, long-term loans, convertible redeemable preferred shares and warrants. The carrying values of these financial instruments, other than long-term loans, convertible redeemable preferred shares and warrants, approximate their fair values due to their short-term maturities. The warrants issued in connection with the convertible notes and the IPO were recorded in equity at the fair value as determined on the day of issuance (Note 18). The convertible redeemable preferred shares were initially recorded at issue price net of issuance costs. The Company recognized changes in the redemption value immediately as they occur and adjusted the carrying value of the convertible redeemable preferred shares to equal the redemption value at the end of each reporting period. All of the convertible redeemable preferred shares were automatically converted into ordinary shares on January 25, 2010, the date of the Company’s IPO (Note 17). The warrants issued in connection with the convertible redeemable preferred shares were recorded as a liability at fair value as determined on the day of issuance and subsequently adjusted to the fair value at each reporting date (Note 18). Upon the closing of the Company’s IPO, these warrants issued in connection with the convertible redeemable preferred shares were reclassified from liability to equity at the fair value immediately prior to such reclassification (Note 18). During the year ended December 31, 2011, certain warrants were reclassified from equity to liability upon modification of terms (Note 18). These amended warrants were recorded as liabilities at fair value on the day of modification and subsequently adjusted to the fair value at each reporting date.
The carrying values of long-term loans approximate their fair values due to the fact that the interest rates on these loans are reset each year based on prevailing market interest rates.
The Group applied the provisions of ASC sub-topic 820-10 (“ASC 820-10”), Fair Value Measurements and Disclosures: Overall, in measuring fair value. ASC 820-10 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.
ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Include other inputs that are directly or indirectly observable in the marketplace.
Level 3—Unobservable inputs which are supported by little or no market activity.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
ASC 820-10 describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.
In accordance with ASC 820-10, the Group measures the fair value of money market funds included in cash equivalents using the market approach based on quoted market prices. The warrant liabilities were valued using the income approach based on inputs that are unobservable in the market (Level 3).
All assets and liabilities measured at fair value on a recurring basis as of December 31, 2011 are summarized below:
All assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 are summarized below:
The following table presents a reconciliation of warrant liabilities measured at fair value on a recurring basis using significant unobservable inputs for the year ended December 31, 2012:
Unrealized losses of US$399 for the year ended December 31, 2012 were recorded in “changes in fair value of warrant liabilities” in the consolidated statements of comprehensive income.
All assets and liabilities measured at fair value on a nonrecurring basis as of December 31, 2011 are summarized below:
In accordance with ASC 360-10, construction in progress of Wuyue with a carrying amount of US$11,590 was written down to its fair value of zero, resulting in an impairment charge of US$11,590, which was included in the statements of comprehensive income for the year ended December 31, 2011 (Note 7).
In accordance with ASC 350-20, goodwill with a carrying amount of US$147,039 was written down to its implied fair value of US$135,651, resulting in an impairment charge of US$11,388, which was included in the statements of comprehensive income for the year ended December 31, 2011 (Note 9).
No assets and liabilities were measured at fair value on a non-recurring basis as of December 31, 2012.
(e) Foreign currency
The Company determined its functional currency to be the US$ while its subsidiaries determine their functional currency based on the criteria of ASC sub-topic 830-10 (“ASC 830-10”), Foreign Currency Matters: Overall. All of the Company’s subsidiaries determined their functional currency to be their respective local currency, except for CHC HK and Sunpower which determined their functional currency to be the US$. The Company uses the US$ as its reporting currency.
Each entity in the Group maintains its financial records in its own functional currency. Transactions denominated in foreign currencies are measured at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in foreign currencies are remeasured at the exchange rates prevailing at the balance sheet date. Exchange gains and losses are included in the consolidated statements of comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are remeasured using the exchange rates at the dates of the initial transactions.
The assets and liabilities of the Company’s subsidiaries are translated into the reporting currency of the Company at the exchange rates prevailing at the balance sheet date. The statements of comprehensive income of the Company’s subsidiaries are translated into the reporting currency of the Company at the weighted average exchange rates for the year. The resulting translation gains (losses) are recorded in accumulated other comprehensive income as a component of shareholders’ equity.
For the purpose of the consolidated statements of cash flows, cash flows of the Company’s subsidiaries are translated into the reporting currency of the Company at the exchange rates prevailing on the dates of the cash flows. Frequently recurring cash flows of the Company’s subsidiaries, which arise throughout the year, are translated into the reporting currency of the Company at the weighted average exchange rates for the year.
(f) Cash and cash equivalents
Cash and cash equivalents include cash on hand and short-term deposits with original maturity of three months or less at the date of purchase. Except for the restricted cash, none of the Group’s cash and cash equivalents is restricted as to withdrawal and use.
(g) Restricted cash
Restricted cash represents cash pledged to financial institutions as collateral for the Company’s bank loans (Note 15). The restriction on the cash collateral amount of US$5,171 as of December 31, 2012 will be released in May 2013 upon repayment of the bank loans.
(h) Accounts receivable
Accounts receivable are carried at net realizable value. In evaluating the collectability of receivable balances, the Group considers many factors, including the aging of the balance, the customer’s payment history, its current credit-worthiness and current economic trends. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Accounts receivable are written off after all collective efforts have ceased.
(i) Notes receivable
Notes receivable represent short-term bank acceptance notes issued by financial institutions that entitle the holder to receive the stated amount from the financial institutions at the maturity date of the bill, which is generally within six months from the date of issuance. The holder of the bills can obtain payment from the financial institutions prior to the stated maturity date. In such a case, the holder will receive a discounted amount off the face value of the bill. There is recourse to the customers in the event the financial institutions default upon demand for payment by the holders of the notes. To reduce the Group’s credit risk, the Group has required certain customers to pay for electricity using notes receivable during the year ended December 31, 2012.
(j) Property, plant and equipment
Property, plant and equipment are recorded at cost less accumulated depreciation. The depreciable amount of an item of property, plant and equipment is its cost less its estimated residual value, if any. The residual value is calculated by taking the price such an asset would fetch at the reporting date, with the assumption that it was already in the condition it will be in at the end of its useful life. Depreciation is recorded on a straight-line basis over the following estimated useful lives:
For property, plant and equipment acquired through a business combination, depreciation is recorded on a straight-line basis over their respective remaining estimated useful lives. The useful lives, residual values and methods of depreciation are reviewed at each reporting date and adjusted prospectively, if appropriate.
All direct and indirect costs that are related to the construction of property, plant and equipment and incurred before the assets are ready for their intended use are capitalized as construction in progress. Construction in progress is transferred to specific property, plant and equipment accounts and commences depreciation when these assets are ready for their intended use.
Interest costs are capitalized if they are incurred during the acquisition, construction or production of a qualifying asset and such costs could have been avoided if expenditures for the assets have not been made. Capitalization of interest costs commences when the activities to prepare the asset are in progress and expenditures and borrowing costs are being incurred. Interest costs are capitalized until the assets are ready for their intended use.
Repair and maintenance costs are charged to expense when incurred, whereas the cost of renewals and betterment that extend the useful life of fixed assets are capitalized as additions to the related assets. Retirement, sale and disposal of assets are recorded by removing the cost and accumulated depreciation, with any resulting gain or loss reflected in the consolidated statements of comprehensive income.
(k) Goodwill and intangible assets
Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of acquired businesses. ASC sub-topic 350-10 (“ASC 350-10”), Intangibles—Goodwill and Other: Overall, requires that goodwill be tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. The Group assigns and assesses goodwill for impairment at the reporting unit level at each reporting date. The Group determines that each reporting unit is identified at the component level, which is one level below the operating segment.
The performance of the impairment test involves a two-step process. The first step of the impairment test involves comparing the fair value of the reporting unit with its carrying amount, including goodwill. Fair value is primarily determined through the income approach by computing the future discounted cash flows expected to be generated by the reporting unit and is dependent on a number of significant entity specific assumptions, including plant utilization rate, electricity sales volumes and tariffs, costs of production, capital expenditures, working capital changes and the discount rate. The discount rate is commensurate with the risk inherent in the projected cash flows and reflects the rate of return required by an investor in the current economic conditions. For reporting units to be disposed of subsequent to the reporting date, the market approach is used where estimates of prices reasonably expected to be realized from the sale of the reporting units are used to determine the fair value of each reporting unit.
If the carrying value exceeds the fair value, goodwill may be impaired. If this occurs, the Group performs the second step of the quantitative goodwill impairment test to determine the amount of impairment loss. The fair value of the reporting unit is allocated to its assets and liabilities in a manner similar to a purchase price allocation in order to determine the implied fair value of the reporting unit goodwill. This implied fair value is then compared with the carrying amount of the reporting unit goodwill, and if it is less, the Group would then recognize an impairment loss. For the year ended December 31, 2012, the Company adopted ASU No. 2011-08 (“ASU 2011-08”), Intangibles—Goodwill and Other (ASC 350), pursuant to which the Company has the option to first assess qualitative factors to determine whether it is necessary to perform the two-step test. If the Company believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required.
The Group recognized goodwill impairment loss of US$nil, US$11,388 and US$nil for the years ended December 31, 2010, 2011 and 2012, respectively (Note 9).
Intangible assets are carried at cost less accumulated amortization. Intangible assets acquired in a business combination are recognized initially at fair value at the date of acquisition. Intangible assets with a finite useful life are amortized using the straight-line method over the estimated economic life of the intangible assets. The estimated useful life for the intangible assets as of December 31, 2012 is as follows:
The Group reviews and adjusts the carrying value of the intangible assets if facts and circumstances suggest the intangible assets may be impaired (Note 2(n)). The Group assessed and concluded that there was no impairment for intangible assets in any of the years presented.
(l) Land use rights
The land use rights represent the amounts paid and relevant costs incurred for the right to use land in the PRC and are recorded at purchase cost less accumulated amortization. Amortization is provided on a straight-line basis over the terms of the respective land use rights agreements, which are 50 years. For land use rights acquired through a business combination, amortization is recorded on a straight-line basis over their respective remaining estimated useful lives, which range from 41 to 50 years.
(m) Asset retirement obligations
ASC sub-topic 410-20 (“ASC 410-20”), Asset Retirement Obligations, requires companies to record the present value of obligations associated with the retirement of tangible long-lived assets in the period in which it is incurred. The value of the liability is capitalized as part of the carrying amount of the related long-lived asset. Over time, accretion of the liability is recognized as an operating expense and the capitalized cost is depreciated over the expected useful life of the related asset. The Group’s asset retirement obligations relate primarily to the restoration of leased lands under land use rights granted by the local government to their original condition. Asset retirement obligations as of December 31, 2011 and 2012 were insignificant.
(n) Impairment of long-lived assets
The Group evaluates its long-lived assets, including property, plant and equipment, land use rights and intangible assets with finite lives, for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not be recoverable in accordance with ASC sub-topic 360-10 (“ASC 360-10”), Property, Plant, and Equipment: Overall. When these events occur, the Group assesses the recoverability of long-lived assets by comparing the carrying amount of the assets to the expected future undiscounted cash flows resulting from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group recognizes an impairment loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available. The Group recognized impairment loss on long-lived assets of US$nil, US$11,590 and US$nil for the years ended December 31, 2010, 2011 and 2012, respectively.
(o) Derivative instruments
ASC sub-topic 815-10 (“ASC 815-10”), Derivatives and Hedging: Overall, requires all contracts which meet the definition of a derivative to be recognized in the consolidated financial statements as either assets or liabilities and recorded at fair value. Changes in the fair value of derivative financial instruments are either recognized periodically in earnings or in shareholders’ equity as a component of other comprehensive income depending on the use of the derivative and whether it qualifies for hedge accounting. Changes in fair values of derivatives not qualified as hedges are reported in the consolidated statements of comprehensive income. The estimated fair values of derivative instruments are determined at discrete points in time based on the relevant market information. These estimates are calculated with reference to the market rates using industry standard valuation techniques.
(p) Comprehensive income (loss)
Comprehensive income (loss) is defined as the change in shareholders’ equity of the Group during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. The Group presents items of net income (loss) and other comprehensive income (loss) in one continuous statement. Accumulated other comprehensive income (loss) of the Group includes the cumulative foreign currency translation adjustments and net losses not recognized immediately as a component of net periodic pension cost of a defined benefit plan.
(q) Revenue recognition
The Group’s revenue is derived from the sale of electricity. Revenues are recognized when the following four criteria are met as prescribed by ASC sub-topic 605-10 (“ASC 605-10”), Revenue Recognition: Overall: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured. The Group considers the terms of each arrangement to determine the appropriate accounting treatment. Revenue is generally earned and recognized upon transmission of electricity to the power grid controlled and owned by the respective regional or provincial grid companies. For transactions in which electricity has been transmitted to the power grid without a fixed or determinable unit price per kWh while the tariff is pending approval of the regional or provincial pricing bureau, cash received in exchange for the transmission of electricity to the power grid controlled by the respective regional or provincial grid companies has been recorded as customer deposits until such time the price becomes fixed and determinable. When the price becomes fixed and determinable, all or a portion of the customer deposits will be recognized as revenue. The Group does not defer the related cost of revenues, which is charged to expense as incurred. No customer deposits were recognized as of December 31, 2011 and 2012. The Group has not offered any discounts or rebates to its customers nor does it provide for refunds in its sales contracts with customers.
The Company’s subsidiaries are subject to withholding value-added tax (“VAT”) on the revenues earned in the PRC. The applicable rate of VAT is 6% for small hydroelectric power projects with a total installed capacity of 50 megawatts or less and 17% for large hydroelectric power projects with a total installed capacity of over 50 megawatts. For the year ended December 31, 2010, the lower VAT rate of 6% was applied to the hydroelectric power projects of Binglangjiang, Liyuan, Yingchuan, Wuliting, Pingnan County Yuheng Hydropower Co., Ltd. (“Yuheng”), Pingnan County Yuanping Hydroelectric Co., Ltd. (“Yuanping”), Jiulongshan, Zhougongyuan, Shapulong, Ruiyang, Husahe, Hengda, Xineng, Xiaopengzu, Jinling, Jinlong, Jintang and Jinwei, and the VAT rate of 17% was applied to the hydroelectric power projects of Banzhu and Wangkeng. For the years ended December 31, 2011 and 2012, the lower VAT rate of 6% was applied to the hydroelectric power projects of Binglangjiang, Liyuan, Yingchuan, Wuliting, Yuheng, Yuanping, Jiulongshan, Zhougongyuan, Shapulong, Ruiyang, Husahe, Hengda, Xineng, Xiaopengzu, Jinling, Jinlong, Jintang Jinwei and Dazhaihe, and the VAT rate of 17% was applied to the hydroelectric power projects of Banzhu and Wangkeng. VAT on revenues earned from the sale of electricity by the Group to its customers for the years ended December 31, 2010, 2011 and 2012 were US$5,728, US$4,583 and US$7,387, respectively. The Group has recognized revenues net of VAT in the consolidated statements of comprehensive income.
(r) Cost of revenues
Cost of revenues consists primarily of depreciation expense of hydroelectric power projects and related operating costs and overhead expenses directly attributable to the production of electricity.
(s) Leases
In accordance with ASC sub-topic 840-10 (“ASC 840-10”), Lease: Overall, leases are classified at the inception date as either a capital lease or an operating lease. For the lessee, a lease is a capital lease if any of the following conditions exist: (i) ownership is transferred to the lessee by the end of the lease term, (ii) there is a bargain purchase option, (iii) the lease term is at least 75% of the property’s estimated remaining economic life or (iv) the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases wherein rental payments are expensed on a straight-line basis over the lease periods.
The Group has no capital leases for any of the years presented.
(t) Income taxes
The Group follows the liability method of accounting for income taxes in accordance with ASC sub-topic 740-10 (“ASC 740-10”), Income Taxes: Overall. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities, net operating loss and credits carryforwards, using enacted tax rates that will be in effect for the period in which the differences are expected to reverse. The Group records a valuation allowance against the amount of deferred tax assets if based on the weight of available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in the consolidated statements of comprehensive income in the period that includes the enactment date.
The Company accounts for uncertainty in income taxes in accordance with ASC 740-10. Interests and penalties arising from underpayment of income taxes are computed in accordance with the related PRC tax law. The amount of interest expenses is computed by applying the applicable statutory rate of interest to the difference between the tax position recognized and the amount previously taken or expected to be taken in a tax return. Interest recognized from the accounting for uncertainty in income taxes is classified in the financial statements as interest expenses, while penalties recognized from the accounting for uncertainty in income taxes are classified in the financial statements as other expenses.
The Group recognizes in its financial statements the impact of a tax position if a tax return position or future tax position is “more likely than not” to prevail, which is defined as a likelihood of more than fifty percent of being sustained upon audit, based on the technical merits of the tax position. Tax positions that meet the “more likely than not” threshold are measured, using a probability weighted approach, at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement.
The Group’s estimated liability for unrecognized tax benefits is periodically assessed for adequacy and may be affected by changing interpretation of laws, rulings by tax authorities, certain changes and/or developments with respect to audits, and expiration of the statute of limitations. The outcome for a particular audit cannot be determined with certainty prior to the conclusion of the audit and, in some cases, appeal or litigation process. The actual benefits ultimately realized may differ from the Group’s estimates. As each audit is concluded, adjustments, if any, are appropriately recorded in the Group’s financial statements. Additionally, in future periods, change in facts, circumstances, and new information may require the Group to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized in the period in which the change occurs. The Group classified unrecognized tax benefits as current liabilities to the extent the Group anticipates payment of cash within one year or the operating cycle, if longer.
The Company recognizes the tax benefit for the excess of the tax basis over the financial reporting basis or the tax liability when the financial reporting basis exceeds the tax basis (“outside basis difference”) of an investment in subsidiary in accordance with ASC sub-topic 740-30 (“ASC 740-30”), Income Taxes: Recognition, when it is apparent that the temporary differences will reverse in the foreseeable future. If it is more likely than not that a deferred tax liability will be realized as a result of the decision to dispose of a subsidiary, the tax liability would be recorded when the disposal group is classified as held for sale even though any gain expected upon disposal cannot be recognized until the sale is consummated.
(u) Net (loss) income per share
In accordance with ASC sub-topic 260-10 (“ASC 260-10”), Earnings Per Share: Overall, basic (loss) income per share is computed by dividing net (loss) income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted (loss) income per share is calculated by dividing net (loss) income attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary share equivalents outstanding during the period. Ordinary share equivalents consist of the ordinary shares issuable upon the Group’s convertible redeemable preferred shares (Note 17), using the if-converted method, and ordinary shares issuable upon the conversion of the warrants (Note 18) and share options (Note 27), using the treasury stock method.
(v) Segment reporting
The Group follows ASC sub-topic 280-10 (“ASC 280-10”), Segment Reporting: Overall, for the presentation of segment information. The Group’s chief operating decision maker, who has been identified as the chief executive officer (“CEO”), relies upon financial information by provinces with operations in the PRC when making decisions about allocating resources and assessing the performance of the Group. As a result, the Group operates and manages its business as four operating and reportable segments, namely the Yunnan Province segment, the Sichuan Province segment, the Zhejiang Province segment and the Fujian Province segment. As the Group’s long-term assets are substantially all located in and derived from the PRC, no geographical segments are presented.
(w) Government grant
Government grants are recognized when there is reasonable assurance that the attaching conditions will be complied with. A grant relates to an expense item is recognized as income over the period necessary to match the grant on a systematic basis to the related costs, whereas a grant relates to an asset acquisition is recognized as deferred government grant and recognized as income in proportion to depreciation of the related assets. Grant income is recognized on a net basis as a reduction to cost of revenues in the consolidated statements of comprehensive income.
(x) Share-based payment
The Company accounts for share awards issued to employees in accordance with ASC sub-topic 718-10 (“ASC 718-10”), Compensation-Stock Compensation: Overall. In accordance with the fair value recognition provision of ASC 718-10, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense, net of estimated forfeitures, over the requisite service period, which is generally the vesting period. The Company has elected to recognize share-based compensation expense for share awards granted to employees using the straight-line method. The Company uses a binomial option pricing valuations model in determining the fair value of the options granted.
The Company accounts for share awards issued to non-employees in accordance with the provisions of ASC 718-10 and ASC sub-topic 505-50 (“ASC 505-50”), Equity: Equity-Based Payment to Non-employees. The Company’s share awards issued to non-employees are subject to graded vesting provisions. The Group recognizes share-based compensation expense for share awards granted to non-employees using the accelerated recognition method over the requisite service period of the award. In accordance with ASC 718-10 and ASC 505-50, the Company uses the binomial option pricing valuations model to measure the value of options granted to non-employees at each vesting date to determine the appropriate charge to share-based compensation.
ASC 718-10 requires forfeitures to be estimated at the time of grant and revised, if necessary, in the subsequent period if actual forfeitures differ from initial estimates. Share-based compensation expense was recorded net of estimated forfeitures such that expense was recorded only for those share-based awards that are expected to vest. Forfeiture rate is estimated based on historical and future expectation of employee turnover rate and is adjusted to reflect future change in circumstances and facts, if any.
(y) Long-lived assets to be disposed of and discontinued operations
The Company accounts for a long-lived asset to be disposed of other than by sale in accordance with the provisions of ASC sub-topic 360-10 (“ASC 360-10”), Impairment and Disposal of Long-Lived Assets, where such long-lived asset continues to be classified as held and used until it is disposed of. When a long-lived asset ceases to be used, the carrying amount of the asset is written down to its salvage value, if any.
The Company accounts for a long-lived asset or disposal group to be sold in accordance with ASC 360-10, where such long-lived asset or disposal group is classified as held for sale in the period in which all six criteria are met: (1) a plan to sell the asset has been committed to by management; (2) the asset can be sold in its current condition; (3) an active plan has been initiated to find a buyer; (4) it is probable that the asset will be sold and the sale will be completed within one year and will qualify as a completed sale; (5) the sales price is reasonable relative to the asset’s current fair value and the entity is actively marketing the asset; and (6) it is unlikely that the plan to sell the asset will be withdrawn or changed significantly.
A long-lived asset or disposal group classified as held for sale is measured at the lower of its carrying amount or fair value less cost to sell, and it is presented separately on the balance sheets. Long-lived assets reclassified as held for sale are not depreciated or amortized.
The Company follows ASC 205-20 in its accounting for a component of the Company that has been disposed of or is classified as held for sale and has operations and cash flows that can be clearly distinguished from the rest of the Company. Such component is reported as discontinued operations. In the period in which a component has been disposed of or classified as held for sale, the results of operations, including any gain or loss after tax recognized in accordance with ASC 360-10, less applicable income taxes, for the periods presented are reclassified into line items of income separately from net income (loss) from continuing operations before extraordinary items (if applicable), in the consolidated statements of comprehensive income.
(z) Recently issued accounting standards
In July 2012, the FASB issued ASU No. 2012-02 (“ASU 2012-02”), Intangibles—Goodwill and Other (“Topic 350”), which is intended to reduce the cost and complexity of performing the impairment test for indefinite-lived intangible assets other than goodwill by providing entities an option to perform a qualitative assessment to determine whether further quantitative impairment testing is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that an indefinite lived intangible asset is impaired, the quantitative impairment test is required. Otherwise, no further testing is required. This standard is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The Company is currently evaluating the impact on its consolidated financial statements of adopting this guidance.
In February 2013, the FASB issued ASU No. 2013-02 (“ASU 2013-02”), Comprehensive Income (“Topic 220”), which is intended to improve the reporting of reclassifications out of accumulated other comprehensive income by requiring an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under US GAAP to be reclassified in its entirety to net income. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account (for example, inventory) instead of directly to income or expense in the same reporting period. This standard is effective for fiscal years beginning after December 15, 2012, with early adoption permitted. The Company is currently evaluating the impact on its consolidated financial statements of adopting this guidance.
In March 2013, the FASB issued ASU No. 2013-05 (“ASU 2013-05”), Foreign Currency Matters (“Topic 830”), which is intended to resolve the diversity in practice about whether ASC 810-10 or ASC 830-30 applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity by requiring a parent deconsolidate a subsidiary or derecognize a group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) if the parent ceases to have a controlling financial interest in that group of assets. This standard is effective for the first interim or annual period beginning after December 15, 2014, with early adoption permitted. The Company is currently evaluating the impact on its consolidated financial statements of adopting this guidance.
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Dec. 31, 2012
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SEGMENT AND GEOGRAPHIC INFORMATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the Group's segment information | The Group’s segment information as of and for the year ended December 31, 2010 is as follows:
The Group’s segment information as of and for the year ended December 31, 2011 is as follows:
The Group’s segment information as of and for the year ended December 31, 2012 is as follows:
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