SOURCE: Regal Group, Inc.

October 12, 2010 09:00 ET

Regal Group Subsidiary UHF Logistics Gains Threshold in Chinese Power Industry

PHOENIX, AZ--(Marketwire - October 12, 2010) -  Regal Group, Inc. ("Regal" or the "Company") (OTCBB: RGLG) and its wholly-owned subsidiary, UHF Logistics Ltd ("UHF"), announced that pursuant to the Request for Proposal ("RFP") put out to tender by Henan Electric Power Company ("HEPC") for its subsidiary, Henan Electric Power Measurement Center ("HEPMC") on a smart 3D logistics warehouse project in May 2010, the tender has been awarded to Kunming Shipbuilding Equipment Company ("KSEC"), a subsidiary of China Shipbuilding Corp and whose automated logistics system is widely used in the tobacco, food, national defence, automotive and pharmaceutical industries. A related purchase order for RMB1.03 million (approximately US$155,600) for primarily UHF RFID tags, has subsequently been granted to UHF's operating subsidiary, Shenzhen Rui Pu Da Electronic Technology Company Ltd. ("RPD"), by Beijing Guo Du Times Science & Technology Co. Ltd., a sub-contractor of KSEC for the related 3D logistics warehouse management system project component and a leading IT systems integrator and application developer in the country. The smart RFID-enabled meter application, underlying the imbedded RFID tag in each individual power meter, is one of the first automation process undertaken in the power industry in China to optimize the bulk procurement and inspection process, achieve better inventory control, enhance the meter reading process and perfect the authentication of individual meters installed at each household. This is also the first time in China that RFID tags are being embedded directly into the inner casing of each household meter during the meter production process for unique identification and life cycle management/maintenance purposes. Delivery on this initial purchase order is anticipated to be completed by December 15, 2010.

HEPMC is China's first provincial measurement center adopting a "province-centered" model for consolidated smart power measurement. HEPMC was officially inaugurated in Zhengzhou, central Henan Province, on February 5, 2010, Henan Province is the first province in China to consolidate all meter measurement works previously undertaken by prefecture cities located in the province. The Center intends to employ state-of-the-art intelligent automated energy meter testing systems and automated three-dimensional logistics warehousing systems to integrate company resources, standardize energy measurement and data transfer, centralize electrical meter inspection and calibration to allow for annual inspection capacity of over 1.5 million units of single phase meters and 100,000 units of three-phase energy meters in the Henan Province, and unify storage and distribution of power meter inventory. HEPC is one of 24 provincial electrical power companies under the umbrella of State Grid Corporation of China ("SGCC"), the largest electric power transmission and distribution company in China.

This 3D logistics warehouse management system RFP is the first phase plan execution of an advanced metering infrastructure initiative for the Henan Province and the underlying intent behind this RFP covers 2 primary areas:

  1. Development of an Intelligent Automated Single-phase Energy Meter Testing System. The final testing system is intended to have a projected capacity to inspect and calibrate 1.5 million units of single-phase energy meters annually and its construction is scheduled to be completed in 2 phases. The first trial phase is expected to service annual inspection capacity of 750,000 units and this RFP cover goods and services required to complete first trial phase construction.
  2. Development of an Intelligent Warehousing and Logistics Management Information System for the storage, testing of and distribution logistics for power meters.

"This initial purchase order of RFID tags for the Henan Electric Power Measurement Center project is the result of two years of hard work and perseverance to perfect an integrated solution for the power industry and improve their ability to share up-to-date information about stock and goods in transit, and comply with functional requirements for single phase meters under new standards promulgated by State Grid Corporation. We strive to incorporate today's emerging technologies into the fabric of our lives and are pleased to witness that our vision to make RFID mainstream in the electric power industry is a step closer to fuller adoption across different principles and business processes in the industry," Mr. Sammul Su, Chairman of Regal commented.

"Henan Electric Power Measurement Center is a subsidiary of Henan Electric Power Company which maintains and operates the provincial power transmission network, an integral part of the Central China Power Network covering Henan, Hubei, Hunan and Jiangxi Provinces. With a population base of over 100 million, Henan is the most populous province in China and Henan Power, one of the largest power utilities in the State Grid Corporation of China, has potentially the largest provincial power transmission network in China that will continue to grow over the next few years. In anticipation of growing energy consumption resulting from socio-economic development in Henan, Henan Power has commenced upon its five-year plan to develop its advanced next-generation power grid and UHF is committed to advancing its RFID technology platform to support this growth," added Mr. Su. "The key to our differentiation from our competitors and success path lies in our unique combination of customizing technology with our deep market knowledge and key industry relationships. Our objective moving forward is to continue staying on top of industry demand, and strengthen our foothold in emerging market sectors in the country."

The China Electric Power Industry and RFID Applications for Power Distribution and Retail Systems Sector

China is the world's second-largest electricity consumer, after the United States. By the end of 2007, China's total installed capacity amounted to 713 million kilowatts. Total energy consumption increased by 7.8% equivalent to 2.65 billion tons of standard coal while the amount of electric power generated grew by 14.1% in 2007, to 3263.2 TWh. China's power demand continued a steady growth momentum in 2008, up 13% year on year. By the end of 2010, it is expected that the total installed capacity will reach 900 GW and annual generation of electricity will exceed 3700 TWh. China's power industry, boosted by an accelerated process of industrialization and urbanization, is projected to have an average annual growth rate of 6.6% to 7.0% for the next ten years.

Prior to 1994 electricity supply was managed by electric power bureaus of the provincial governments in the country. To end the State Power Corporation's (SPC) monopoly over the power industry (who previously owned 46% of the country's electrical generation assets and 90% of the electrical supply assets), China's State Council dismantled the corporation in December 2002 and set up 11 smaller companies. These smaller companies included two electric power grid operators, five electric power generation companies and four relevant business companies.

One of the two electric power grid operators, State Grid Corporation of China (SGCC) is the largest electric power transmission and distribution company in China. Headquartered in Beijing, with registered capital of RMB 200 billion and a service area covering 26 provinces, autonomous regions and municipalities equal to 88% of the national territory, SGCC owns and manages 5 regional power grid companies and 24 provincial electric power companies, of which Henan Electric Power Company is one of its subsidiaries. 

The electrical power industry is commonly split up into four processes: electricity generation, (including power plant generation) electric power transmission, electricity distribution and electricity retailing. RFID technology is gaining momentum in the energy industry and starting to establish a footprint across these four basic functions. Perfected in the defence and logistics sectors, RFID can now be employed by power plants for everyday tasks ranging from workforce security, tracking fuel consumption, to monitoring plant exhaust. Power utilities can use RFID for metering, monitoring losses along pipelines, tracking the location of hidden assets and for monitoring the performance of treatment processes. Fleet monitoring, mobile and fixed asset location, and hazardous waste handling can be enhanced through RFID deployment.

There also exists considerable opportunity for radio frequency and RFID devices to improve the tracking, monitoring, and management of power transmission systems. These can include simple tasks such as labelling transformers and towers with RFID chips to monitoring devices equipped with radio transmission technology. The memory in the RFID chips can store the unique serial number and can be a backup to a painted serial number. The ID of the chip can be read by a handheld device and correlated to information regarding its maintenance. The memory in the chip can also be used to store critical information that can be downloaded locally (including temperature and last maintenance date).

The power distribution and retail systems include the infrastructure to carry electricity from high-voltage transmission systems to the end customer. The assets for power distribution include a series of step down sub-transmission and primary distribution systems. This is followed by a secondary distribution system that includes the poles, transformers, reclosers, capacitors, voltage regulators, and electric meters. The geographic distribution and the high numbers of each asset class necessitate the use of low-cost standardized items. These items should be reliable (having a life span of 20 or more years) and easy to replace. RFID devices can be used to form mesh networks for "smart" electricity meters, preventing the need for manual reading of the meters and allowing for rapid response to high use. This is increasingly becoming mandated as new houses move towards having "greener" credentials.

For a 3D modeling view of the proposed smart logistics warehouse to be constructed for HEPMC, please see attached URL link:

About Regal Group, Inc.

Regal Group, Inc. is a publicly traded company with headquarters in Phoenix, Arizona. Regal is strategically positioning itself in key industry sectors in China and recently completed the acquisition of UHF Logistics Ltd., a HK-incorporated holding company, which, through its wholly owned Chinese operating subsidiaries, is focused on the development, marketing and implementation of UHF RFID products and solutions in China since 2006. Regal trades on the NASDAQ OTC BB under the ticker symbol: RGLG.

Forward-Looking Statements & Risks
Statements in this news release that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Words such as "expects," "intends," "plans," "may," "could," "should," "anticipates," "likely," "believes" and words of similar import also identify forward-looking statements. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management, including, but not limited to, the Company's belief that Regal and/or its subsidiaries can identify and successfully negotiate business prospects in Asia, and that the Company can successfully operate such prospects. Actual results may differ materially from those currently anticipated due to a number of factors and risks beyond the reasonable control of the Company.

In addition to the risks associated with forward-looking statements, statements in this news release are subject to additional risks, which include, among others, the corporate disclosure, governance and regulatory requirements of the People's Republic of China (the "PRC"), and PRC regulations relating to, among others, cross-border mergers and acquisitions, product liability and currency exchange rates. Even though the transaction is completed, anticipated synergies or other intended benefits of the transaction may not be realized, and the prospects of the combined entity will remain subject to all the general risks associated with the RFID industry, the public securities markets and risks related to doing business in China, such as the PRC's economic, political and social environment, and matters relating to PRC taxes, repatriation of profit and currency conversion, acquisition and appropriation of land use rights, foreign investments, permits and business licenses, employment contracts, government intervention, shareholders' rights and enforcement of judgments, as well as the developing PRC legal system. The Company cautions that the foregoing list of material risks is not exhaustive.

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