Source - RNS
RNS Number : 8715K
HaiKe Chemical Group Ltd.
27 September 2016
 

 

HAIKE CHEMICAL GROUP LIMITED

INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016

(UNAUDITED)

 

HaiKe Chemical Group Ltd. ("HaiKe" or "the Company" or "the Group"), the AIM quoted (AIM: HAIK) specialty chemical company based in Shandong Province, China, today announces its unaudited consolidated results for the six months ended 30 June 2016.

 

In order to better position the business in a fiercely competitive market, the Board in Q3 of 2015 took the decision to focus on higher margin speciality chemical products, product innovation and cost controls. These actions began to have a positive impact in Q4 2015 and have enabled the Group to deliver a satisfactory, profitable performance for the first half of 2016.

 

Financial highlights

·       Total revenues decreased by 9.0% to CNY350.7million (H1 2015: CNY385.4 million)

·       Gross profit increased by 47.6% to CNY61.2million (H1 2015: profit of CNY41.5 million)

·       Profit for the period from continuing operations was CNY11.4 million (H1 2015: profit of CNY95,000)

·       Cash and cash equivalents balance as at 30 June 2016 was CNY73.5 million (31 December 2015: CNY CNY35.4 million)

·       Total borrowings as at 30 June 2016 were CNY80.0 million (31 December 2015: CNY80.0 million)

Operational highlights

·       Move to focus on higher-end specialty chemical products has enhanced business performance

·       Significant rise in gross margins enhanced by increased sales of higher margin product mix and decline in prices of raw materials

·       Stringent cost controls and a reduction in the average balance of loans outstanding reduced interest expenses by 68.0% year-on-year to CNY1.9 million for H1 2016 (H1 2015: CNY5.9 million)

Outlook

·       Trading conditions expected to remain challenging

·       Optimization of product mix and new product development continues to be a core focus to drive business performance

·       Focus on domestic and international marketing campaigns to grow revenue

·       Trading in July has continued to be profitable, however an expected loss was recorded in August due to a planned shutdown of its DiMethyl Carbonate ("DMC") facility for routine annual maintenance

 

Mr. Xiaohong Yang, Executive Chairman, said:

 "I am pleased to report the satisfactory performance for the Group over the first half of 2016, especially given the challenging trading environment. The improvement in profitability was driven by the decisive actions taken by the Board last year to better position the business in the current environment and improve performance. We are pleased these are starting to bear fruit and we will continue our efforts in this area. The Group has entered the second half of the year in a strong position and while we believe market conditions will remain difficult, we are well-positioned and look to the future with confidence."

For further information, please contact:

 

 

HaiKe Chemical Group

Yolanda Zhang

[email protected]

 

+86 158 0546 2695

Stockdale Securities

 

 Richard Johnson / Antonio Bossi

+44 (0) 20 7601 6100

Cardew Group

Shan Shan Willenbrock /

Emma Crawshaw

[email protected]

+44 (0) 20 7930 0777

 

 

CHAIRMAN'S STATEMENT

1.   Review of operating results

In H1 2016, the Group sold 68,000 tons of specialty chemicals, representing a volume gain of 10.2% when compared to the same period in the previous year. Sales of high-end specialty chemicals accounted for 3.4% of total sales in H1 2016, compared to 2.7% in H1 2015. While both overall sales volumes and the proportion of high-end speciality chemicals sold in H1 2016 increased, when compared to the prior year period, the fall in crude oil prices over the same period had a negative effect on selling prices, as detailed below. This contributed to lower average realized prices for the period.

 

The price of crude oil fell significantly in H1 2016, achieving an average barrel price of $41.2 over the period, 30.6% lower than in H1 2015. This decline affected Group selling prices in two ways: depressing selling prices of downstream derivative products, which affected our specialty chemical products; and, by benefitting rival manufacturers of Isopropyl alcohol, who adopt a different production process which is more sensitive to oil price fluctuations. These rival manufacturers initiated a price war during 2015, as the oil price began to fall, and this continued into the first half of 2016 in an attempt to gain market share in what had become an oversupplied market of mid to lower-end specialty chemicals, chiefly due to the slowing Chinese economy.

 

In order to maintain market share we continued to suppress our selling prices over the period, with the shift towards more high-end speciality chemicals to address the oversupply of the mid to lower-end speciality chemicals market.

 

 

Sales Volume

Average Realized Price

 

('000 ton)

 

(CNY/ton)

 

 

6 months ended

30-Jun-16

6 months ended

30-Jun-15

Change y-o-y (%)

6 months ended

30-Jun-16

6 months ended

30-Jun-15

Change y-o-y (%)

DiMethyl Carbonate

24

23

+4.4%

3,782

3,872

-2.3%

Propylene glycol

19

17

+7.5%

6,618

8,496

-22.1%

Isopropyl alcohol

24

19

+23.7%

4,705

5,726

-17.8%

Diisopropyl ether

1

2

-30.0%

9,688

11,319

-14.4%

Total

68

62

+10.2%

5,013

6,008

-16.6%

 

2.   Financial Analysis

Turnover

The Group's turnover decreased by 9.0% to CNY350.7 million for the first half of 2016 (H1 2015: CNY385.4 million) as a result of a reduction in selling prices. Trading revenues from HaiKe Trading, the trading arm of the Company, decreased to CNY1.8 million in the period (H1 2015: CNY21.7 million).  

 

Gross Profit

Gross profit was CNY61.2 million for H1 2016, up 47.6% compared with the same period in 2015 (H1 2015: CNY41.5 million). The growth in gross profit was mainly attributable to increased sales of higher margin product mix and a decline in sales cost. Sales of high-end specialty chemicals accounted for 3.4% of total sales in H1 2016, compared to 2.7% in H1 2015. The cost of sales decreased 15.8% compared to the same period in the previous year. Cost of materials accounted for 81% of total cost. The Company correctly judged price trends through analysis of the raw material market, reducing inventory when the price of raw materials was high and taking advantage of lower prices to increase stock. The price of Propylene Oxide and Propylene, the two main raw materials, deceased 24.7% and 31.6% respectively in the period under review.

 

Selling, General and Administrative Expenses

Selling and distribution expenses increased by 19.0% to CNY20.8 million in H1 2016 (H1 2015: CNY17.5 million) as we continued with aggressive sales and marketing efforts to counteract sluggish market conditions. General and administrative expenses increased to CNY25.2 million (H1 2015: CNY20.4 million) which was mainly attributable to an increase in labour cost as a result of an increase in domestic inflation.

 

Net Interest Expenses

Interest income decreased by 68.4% year-on-year to CNY0.9 million for H1 2016 (H1 2015: CNY2.9 million) due to exchange rate gains.

 

Interest expenses decreased by 68.0% year-on-year to CNY1.9 million for H1 2016 (H1 2015: CNY5.9million). This was mainly due to a decrease in the average balance of loans outstanding.

 

Profit Before Taxation

Profit before taxation was CNY13.8 million for H1 2016 (H1 2015: CNY666,000). In order to maintain market share the Company increased its sales volume. The Company improved earnings although the average realized price decreased. Interest expenses decreased as a result of a decrease in the average balance of loans outstanding compared with the same period in 2015.

 

Income Tax

Income tax charge was CNY2.4 million for H1 2016, as compared to CNY571,000 for the same period in the previous year.

 

Profit from Continuing Operations

Profit for the half year was CNY11.4 million (H1 2015: profit of CNY95,000).

 

Cash and Cash Equivalents

Cash and cash equivalents increased to CNY73.5 million as at 30 June 2016 compared to CNY35.4 million as at 31 December 2015. The increase in cash and cash equivalents was due to the decline of working capital and profit improvement.

 

Bank Loans

Bank loans were CNY80.0 million as at 30 June 2016, unchanged from31 December 2015 (CNY 80.0 million).

 

Cash Flow from Continuing Operations

Cash flow from operating activities was CNY68.0 million for the six months ended 30 June 2016, compared to CNY531.9 million for the same period in 2015. In H1 2015 working capital was used to repay a net loan of CNY 520.5 million.

3.   Outlook

The Group recorded an unaudited profit of CNY1.4 million and loss of CNY3.0 million for July and August 2016 respectively. The expected loss incurred in August was due to a planned one-month shutdown of a production facility which manufactures DMC for routine annual maintenance, however we expect the improvement in product mix and cost saving initiatives will continue to drive profitability from September. We expect market conditions to remain challenging. The collapse in the crude oil price has made conditions difficult for the specialty chemicals industry in China and the domestic economy has had a negative impact on demand. At the industry level we are facing increasing competition, particularly at the mid to lower end of the market, and we believe companies will increasingly have to develop their own niche through technological innovation to deliver growth. To ensure the Group is well positioned to continue to deliver a profitable performance in a tough operating environment, management efforts will remain focused on:

 

·      improving the product mix towards higher margin speciality chemical products

·      continued stringent cost controls 

·      strengthen sales efforts to speed up product inventory turnover

·      developing and introducing new products to the domestic market to diversify our product offering

 

4.   People

On behalf of the Board, I would like to sincerely thank Mr. George Zeng for his commitment and outstanding contribution to the business over the last five years. The Board has initiated a comprehensive search for a new Chief Financial Officer, who would be expected to join the Board, and a further announcement will be made in due course.

 

Xiaohong Yang

Executive Chairman

 

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2016

 

 

 

6 months ended

6 months ended

Year ended

 

 

30-Jun-16

30-Jun-15

31-Dec-15

 

Note

(Unaudited)

(Unaudited)

(Audited)

 

 

CNY'000

CNY'000

CNY'000

 

 

 

 

 

Revenue

 

350,706

385,427

727,521

Cost of sales

 

(289,521)

(343,960)

(643,092)

Gross profit

 

61,185

41,467

84,429

Other operating income

 

(387)

112

485

Administrative expenses

 

(25,160)

(20,392)

(41,175)

Selling and distribution expenses

 

(20,843)

(17,514)

(34,749)

Profit from operations

 

14,795

3,673

8,990

 

 

 

 

 

Finance expenses

 

(1,877)

(5,872)

(20,742)

Finance income

 

906

2,865

17,529

 

 

 

 

 

Profit / (loss) before tax

 

13,824

666

5,777

 

 

 

 

 

Tax expense

7

(2,435)

(571)

(1,709)

Profit/(Loss) for the period

 

11,389

95

4,068

 

 

 

 

 

Other comprehensive profit, net of tax

 

 

 

 

Items that will be reclassified subsequently to profit or loss

 

 

 

 

  Exchange difference arising from consolidation

 

-          

-       

-

Total comprehensive profit for the period, net of tax

 

11,389

95

4,068

 

 

 

 

 

Profit / (loss) for the period attributable to:

 

 

 

 

 Owners of parent

 

11,372

94

4,059

 Non-controlling interest

 

17

1

9

 

 

11,389

95

4,068

 

 

 

 

 

Total comprehensive profit for the period attributable to:

 

11,372

94

4,059

 Owners of parent

 

17

1

9

 Non-controlling interests

 

11,389

95

4,068

 

 

 

 

 

Earnings per share for profit attributable to the

 

 

 

 

ordinary equity holders of the parent during the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

CNY0.297

CNY0.002

CNY0.106

Diluted

 

CNY0.297

CNY0.002

CNY0.106

 

 

 

 

Condensed consolidated Statement of Financial Position

As at 30 June 2016

 

 

 

6 months ended

 

6 months ended

 

Year ended

 

 

30-Jun-16

 

30-Jun-15

 

31-Dec-15

 

Notes

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

CNY'000

 

CNY'000

 

CNY'000

ASSETS

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

148,632

 

136,533

 

135,164

Intangible assets

 

11,465

 

 

 

12,111

Investments in equity-accounted associates

 

 

 

 

 

Deferred tax assets

7

 

 

 

 

 

 

 

160,097

 

136,533

 

147,275

Current assets

 

 

 

 

 

 

Inventories

 

33,296

 

41,296

 

28,595

Trade and other receivables

 

105,941

 

174,598

 

101,307

Amounts due from related parties

 

                          580,931

 

                          364,803

 

402,535

Income tax receivable

 

 

                          

 

 

                          

 

-

Restricted cash

 

7,612

 

24,471

 

13,259

Cash and cash equivalents

 

                   73,541

 

                   43,628

 

35,405

 

 

801,321

 

648,796

 

581,101

Total assets

 

961,418

 

785,329

 

728.376

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Short-term loan

 

80,000

 

182,362

 

80,000

Trade and other payables

 

180,202

 

343,058

 

89,182

Income tax payable

 

6,749

 

 

 

4,668

Amounts due to related parties

 

                          568,654

 

                          158,778

 

440,029

 

 

835,605

 

684,198

 

613,879

Non-current liabilities

 

 

 

 

 

 

Long-term loan

 

 

 

 

 

 

Deferred income

 

2,192

 

1,200

 

2,250

 

 

                          2,192

 

                          1,200

 

2,250

Total liabilities

 

837,797

 

685,398

 

616,129

 

 

 

 

 

 

 

CAPITAL AND RESERVES

 

 

 

 

 

 

Share capital

 

                      598

 

598

 

598

Share premium

 

               1,564,667

 

               1,564,686

 

1,564,667

Other reserves

 

                   1,818

 

1,818

 

1,818

Foreign currency translation reserve

 

(587)

 

(587)

 

(587)

Statutory reserves

 

32,268

 

31,575

 

32,268

Accumulated losses

 

           (1,475,228)

 

           (1,498,208)

 

(1,486,585)

Equity attributable to equity holders of the parent

 

123,536

 

99,882

112,179

Non-controlling interest

 

85

 

49

 

68

Total equity

 

123,621

 

99,931

 

112,247

Total liabilities and equity

 

961,418

 

785,329

 

728,376

 

 

 

 

 

 

Condensed consolidated Statement of Changes in Equity

For the 6 months ended 30 June 2016

 

 

Attributable to equity holders of the parent

 

 

 For the 6 months ended 30 June 2016
Unaudited

 Share capital
CNY'000

 

 Share premium
CNY'000

 

 Other reserves
CNY'000

 

 Foreign currency translation reserve

 Statutory reserves
CNY'000

 

 Accumulated losses
CNY'000

 

 Total
CNY'000

 Non-controlling interest
CNY'000

 

 Total equity
CNY'000

Balance as at 1 January 2016

598

 

1,564,667

 

1,818

 

(587)

32,268

 

(1,486,585)

 

112,179

68

 

112,247

Transfer to statutory reserves

        

 

 

 

 

 

 

 

 

 

 

         

 

 

   

Previous year adjustment

 

 

 

 

 

 

 

 

 

(15)

 

(15)

 

 

(15)

Transactions with owners

        

 

-

 

-

 

-

-

 

                 (15)

 

(15)

                    -

 

(15)

Profit for the year

 

 

 

 

 

 

 

 

 

11,372

 

11,372

17

 

11,389

Other comprehensive profit

-  

 

-  

 

-  

 

 

-  

 

           

 

         

-

 

 

 - Foreign currency translation

-  

 

-  

 

 

 

 

-  

 

 

 

 

 

 

 

Total comprehensive profit for the year

-  

 

-  

 

-  

 

-

-  

 

11,372

 

11,372

17

 

11,389

Balance as at 30 June 2016

598

 

1,564,667

 

1,818

 

(587)

32,268

 

(1,475,228)

 

123,536

85

 

123,621

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to equity holders of the parent

 

 For the 6 months ended 30 June 2015
Unaudited

 Share capital
CNY'000

 

 Share premium
CNY'000

 

 Other reserves
CNY'000

 

 Foreign currency translation reserve

 Statutory reserves
CNY'000

 

 Accumulated losses
CNY'000

 

 Total
CNY'000

 Non-controlling interest
CNY'000

 

 Total equity
CNY'000

Balance as at 1 January 2015

598

 

  1,564,686

 

1,818

 

          (587)

31,575

 

     (1,498,313)

 

   99,777

48

 

99,825

Transfer to statutory reserves

 

 

 

 

 

 

 

        

 

        

 

               -

 

 

 

Transactions with owners

-

 

-

 

-

 

-

        

 

        

 

               -

                    -

 

-

Profit for the year

 

 

 

 

 

 

 

 

 

94

 

94

1

 

95

Other comprehensive profit

 

 

 

 

 

 

 

 

 

11

 

11

- 

 

11

 - Foreign currency translation

-

 

-

 

-

 

-

-

 

 

 

-

 

 

-

Total comprehensive profit for the year

-

 

-

 

-

 

-

-

 

105

 

105

1

 

106

Balance as at 30 June 2015

598

 

1,564,686

 

1,818

 

(587)

31,575

 

(1,498,208)

 

99,882

49

 

99,931

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 For the year ended 31 December 2015
Audited

 

Attributable to equity holders of

the parent

 

 

 Share capital
CNY'000

 

 Share premium
CNY'000

 

 Other reserves
CNY'000

 

 Foreign currency translation reserve

 Statutory reserves
CNY'000

 

 Accumulated losses
CNY'000

 

 Total
CNY'000

 Non-controlling interest
CNY'000

 

 Total equity
CNY'000

Balance as at 1 January 2015

598

 

  1,564,686

 

1,818

 

(587)

31,575

 

(1,498,313)

 

99,777

48

 

99,825

Transfer to statutory reserves

-  

 

          (19)

 

-  

 

 

693

 

(674)

 

-

              11

 

11

Previous year adjustment

 

 

 

 

 

 

 

 

 

8,343

 

8,343

 

 

8,354

Transactions with owners

-  

 

(19)

 

-  

 

-  

693

 

7,669

 

8,343

11

 

8,354

Profit for the year

 

 

 

 

 

 

 

 

 

4,059

 

4,059

9

 

4,068

Other comprehensive profit

-  

 

-  

 

-  

 

 

-  

 

 

 

-

 

 

0

 - Foreign currency translation

-  

 

-  

 

 

 

-

-  

 

 

 

-

 

 

(64)

Total comprehensive profit for the year

-  

 

-  

 

-  

 

-

-  

 

4,059

 

4,059

9

 

4,068

                                                             

Balance as at 31 December 2015

598

 

1,564,667

 

1,818

 

(587)

32,268

 

(1,486,585)

 

112,179

68

 

112,247

                                   

 

 

Condensed consolidated Statement of Cash Flow

For the 6 months ended 30 June 2016

 

 

 

6 months ended

 

6 months ended

 

Year ended

 

 

30-Jun-16

 

30-Jun-15

 

31-Dec-15

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

CNY'000

 

CNY'000

 

CNY'000

 

 

 

 

 

 

 

Profit /(loss) before tax

 

13,824

 

666

 

5,777

Adjustments for:

 

-

 

-

 

 

  Amortisation of intangible assets

 

646

 

201

 

802

  Provisions for doubtful debts

 

136

 

 

 

136

  Depreciation of property, plant and equipment

 

12,860

 

12,104

 

24,413

  Loss on disposal of property, plant and equipment

 

(472)

 

(28)

 

(51)

  Amortisation of deferred capital grants

 

250

 

 

 

1,000

  Interest income

 

(114)

 

(284)

 

(12,790)

  Finance expense

 

953

 

5,906

 

20,742

Operating cash flows before working capital changes

 

28,083

 

18,565

 

40,029

 

 

 

 

 

 

 

Working capital changes:

 

 

 

 

 

 

  (Increase)/decrease in:

 

 

 

 

 

 

     Inventories

 

(4,701)

 

(10,098)

 

2,603

    Trade and other receivables

 

(4,634)

 

(50,945)

 

22,346

    Movement in related parties' balances

 

(49,803)

 

577,234

 

809,285

    Restricted cash

 

5,647

 

(7,851)

 

3,361

  Increase/(decrease) in:

 

 

 

 

 

 

    Trade and other payables

 

91,020

 

5,025

 

(238,707)

Cash generated from operations

 

65,612

 

531,930

 

638,917

  Income tax paid

 

2,388

 

-

 

283

Net cash generated from operating activities

 

68,000

 

531,930

 

639,200

 

 

 

 

 

 

 

 

 

6 months ended

 

6 months

ended

 

Year ended

 

 

30-Jun-16

 

30-Jun-15

 

31-Dec-15

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

Notes

CNY'000

 

CNY'000

 

CNY'000

 

 

 

 

 

 

 

Cash flow generated from operating activities

 

68,000

 

531,930

 

639,200

Cash flow from investing activities

 

 

 

 

 

 

  Purchase of property, plant and equipment

 

(29,085)

 

(1,971)

 

(12,818)

  Purchase of intangible assets

 

 

 

 

 

-

  Interest received

 

114

 

284

 

12,790

  Government grant received

 

60

 

414

 

459

  Purchase of shares in subsidiary from minorities

 

 

 

 

 

-

Cash flow (used in) / generated from investing activities

 

(28,911)

 

(1,273)

 

431

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

 

  Capital injection from minority shareholders in subsidiaires

 

 

 

 

 

 

  Proceeds from bank borrowings

 

80,000

 

40,000

 

80,000

  Repayment of bank borrowings

 

(80,000)

 

(560,526)

 

(702,888)

  Loans(from)/to related parties

 

 

 

 

 

 

  Interest paid

 

(953)

 

(5,906)

 

(20,742)

  Dividends paid to non-controlling interest

 

-  

 

-  

 

 

Cash flow (used in) /generated from financing activities

 

(953)

 

(526,432)

 

(643,630)

 

 

 

 

 

 

 

Net (decrease) /increase in cash and cash equivalents

 

38,136

 

4,225

 

(3,999)

Cash at beginning of period

 

35,405

 

39,404

 

39,404

Foreign currency translation differences

 

 

 

 

 

 

Cash at end of year

 

73,541

 

43,628

 

35,405

 

 

 

 

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL INFORMATION

FOR SIX MONTHS ENDED 30 JUNE 2016

(UNAUDITED)

 

1.   General information

HaiKe Chemical Group Ltd. ("the Company") is a public limited company, incorporated in the Cayman Islands on 20 June 2006, and is quoted on AIM. The address of the registered office is Scotia Center 4th Floor, P.O. Box 2804, George Town, Grand Cayman, Cayman Islands.

The Company's ultimate parent company is HiTech Chemical Investment Ltd, a company incorporated in the British Virgin Islands.

The principal activities of the Company are manufacturing of specialty chemical products.

The principal place of business of the Company is Shengli Industrial Park, Dongying City, Shandong Province, China.

The interim consolidated financial information of the Company for the six months ended 30 June 2016 comprises the Company and its subsidiary undertakings ("the Group").

2.   Accounting policies

The consolidated financial statements of the Company have been prepared in accordance with those International Financial Reporting Standards and Interpretations in force ("IFRS"), as adopted by the European Union.

The principal accounting policies adopted in the preparation of the interim financial statements have been consistently applied in the Company's latest annual audited consolidated financial statements and are expected to be used for Company's annual consolidated financial statements for the year ending 31 December 2016.

Financial information for the six months ended 30 June 2016 and 30 June 2015 is unaudited and does not constitute the Company's financial statements for these periods.

Comparative financial information for the full year ended 31 December 2015 has been derived from the audited financial statements for that period. The Board of Directors approved the interim statements on 19 September 2015.

3.   Related Party Transactions

The Company undertook a restructuring in 2014 which resulted in the divestment of the Group's refinery and biochemical assets to leave a smaller, more focused specialty chemicals business. The disposed companies and HaiKe are members of the group controlled by HiTech Chemical Investment Ltd. Therefore, in accordance with IAS24, the disposed companies and Haike are related parties.

On 20 July 2016 the Company announced an unaudited revenue figure of CNY 526.9 million for H1 2016, which did not incorporate a net-off of transactions between Haike and two companies, Shandong Hi-Tech Chemical Group Ltd. and Haiyuan Trading Pte. Ltd., which were disposed companies in the restructuring. Revenue recognition is applied in line with IAS 18 - transactions between Haike and related parties, where Haike acts in a capacity as an agent and gross inflows do not result in increases in equity are not recognised as revenue.  The Company made a corrective announcement on 6 September 2016.

The immediate and ultimate parent company is HiTech Chemical Investment Ltd., a company incorporated in British Virgin Islands. Related parties include companies that fall under the common control provisions of IAS24. Details of transactions with related parties are as follows:

Sales, purchase of goods and loans

In H1 2016, the Group made the following sales, purchase and funds transfer with related parties:

 

Sales

Purchase

Loan from

Loan to

Loan repayment

Total

30-06-2016

CNY'000

CNY'000

CNY'000

CNY'000

CNY'000

CNY'000

Shareholder

-

-

-

8

-

8

Bright Century Global Holdings Limited

-

-

189,704

-

-

189,704

Haike Holding Hongkong Limited

-

-

10

87,250

-

87,260

Haike International Holding Limited

-

-

-

10

-

10

Haiyuan Trading Pte.Ltd

-

-

-

173,513

-

173,513

HiTech Chemical Investment Ltd.

-

-

-

396

-

396

Jumbo Light Hong Kong Limited

-

-

-

211,660

-

211,660

Dongying Hi-tech Qifen Co., Ltd

-

71,576

-

101,068

-

172,644

Shandong Hi-tech Ruilin Chemical Co., Ltd

284

8,821

59,069

-

-

68,174

Dongying He-bang Chemical Co., Ltd

-

587

40,392

-

-

40,979

Dongying Tiandong Biochemical Co., Ltd

-

-

7,344

3,209

-

10,553

Shandong Hi-tech Chemical Group Ltd

-

3,810

266,500

3,477

-

273,787

Shanghai Yuanchuan Chemical Ltd

-

-

5,552

-

-

5,552

Dongying Hi-tech Transport Co.,Ltd.

-

554

83

-

-

637

Shandong Hi-Tech Shengli Electrochemical Co., Ltd

-

-

-

340

-

340

 

284

85,348

568,654

580,931

-

1,235,217

The sales of goods to the related parties are based on the market price.

4.   Subsequent Event

No subsequent event occurred after the reporting period.

5.     Capital commitments

Capital expenditure contracted for property, plant and equipment in continuing operations as at 30 June 2016, but not recognized in the financial statements, was CNY10.2 million (31 December 2015: CNY3.5 million).

6.   Acquisitions and disposals of items of property, plant and equipment 

Acquisitions of items of property, plant and equipment were CNY29.1 million (H1 2015: CNY2.0 million). Loss on disposals of items of property, plant and equipment was CNY472,000 (H1 2015: CNY28,000).

7.   Taxation

 

Major components of income tax expense/(credit)

 

The major components of income tax expense are as follows:

 

 

6 months ended

 

6 months ended

 

Year ended

 

30-Jun-16

 

30-Jun-15

 

31-Dec-15

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

CNY'000

 

CNY'000

 

CNY'000

 

 

 

 

 

 

Current income tax

2,435        

 

571

 

1,709

Deferred tax:

 

 

 

 

 

Originating and reversal of temporary differences

- 

 

- 

 

-

Income tax recognised in income statement

2,435

 

571

 

1,709

 

Relationship between tax expense and accounting (loss)/profit

Reconciliation between tax expense and the accounting profit multiplied by the applicable corporate tax rate is as follows:

 

6 months ended

 

6 months ended

 

Year ended

 

30-Jun-16

 

30-Jun-15

 

31-Dec-15

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

CNY'000

 

CNY'000

 

CNY'000

 

 

 

 

 

 

Accounting profit before income tax

                     13,824

 

666

 

5,777

Tax at respective companies' domestic income tax rate

3,456

 

167

 

1,444

Nondeductible expenses

                 (1,021)

 

405

 

265

Income tax expense recognized in income statement

2,435

 

572

 

1,709

 

 

8.    Profit per share from continuing operations

Earnings for the purpose of basic and diluted earnings per share are the net profit for six months ended 30 June 2016 attributable to equity holders of the parent of CNY11,372,000 (for the six months ended 30 June 2015: profit of CNY94,000; for the year ended 31 December 2015: profit of CNY4,059,000).

The profit from continuing operations for the financial periods attributable to equity holders of the parent was as follows:

 

 

profit per share from continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

6 months ended

 

6 months ended

 

Year ended

 

30-Jun-16

 

30-Jun-15

 

31-Dec-15

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

CNY'000

 

CNY'000

 

CNY'000

profit per share from continuing operations

 

 

 

 

 

attributable to equity holders of the parent

11,372

 

94

 

4,059

 

 

 

 

 

 

 

 

 

 

 

 

Number of ordinary shares

6 months ended

 

6 months ended

 

Year ended

 

30-Jun-16

 

30-Jun-15

 

31-Dec-15

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

'000

 

'000

 

'000

Weighted average number of ordinary shares - basic & diluted

 

 

 

 

 

 

38,354

 

38,354

 

38,354

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR BRGDCRGDBGLL

Related Charts

HaiKe Chemical Group (HAIK)

0.00p (0.00%)
delayed 18:15PM