leadf
logo-loader
RNS
viewHaike Chemical

HaiKe Chemical Group - Half-year Report

RNS Number : 4891P
HaiKe Chemical Group Ltd.
01 September 2017
 

 

HAIKE CHEMICAL GROUP LIMITED

INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2017

(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, announces its unaudited consolidated results for the six months ended 30 June 2017.

 

The Group has delivered a profitable performance despite facing challenging market conditions and a reduction in output as a result of the planned annual plant shutdown and upgrades.  The Board continues to be mindful of the difficult trading environment and expects to make further technical upgrades and develop new products in H2 2017 to ensure continued profitability.

Financial highlights*

·       Total revenues increased by 14.9% to CNY402.8 million / GBP46.6 million (H1 2016: CNY350.7 million / GBP37.5 million)

·       Gross profit increased slightly to CNY61.6 million / GBP7.1 million (H1 2016: CNY61.2 million / GBP6.5 million)

·       Profit for the period decreased by 10.7% to CNY10.2 million / GBP1.2 million (H1 2016: CNY11.4 million / GBP1.3 million)

·       Cash and cash equivalents balance as at 30 June 2017 was CNY44.7 million / GBP5.1 million (31 December 2016: CNY CNY55.0 million / GBP6.5 million)

·       Total borrowings at 30 June 2017 were CNY80.0 million / GBP9.1 million (31 December 2016: CNY80.0 million / GBP9.4 million)

* As at 30 June 2017 the GBP/CNY exchange rate was 1:8.8144. The arithmetic average of the exchange rate for the first half of 2017 was 1:8.6483

Operational highlights

·       Selling price of products increased significantly, driven by the increase in price of raw materials, while sales volumes decreased due to the planned annual plant shutdown for maintenance and upgrade of the Company's principal production facility

·       Profit for the period decreased due to costs associated with the annual shutdown of the aforementioned production facility

·       Investment in a new electrolyte solvent plant which produces higher-end battery grade products

·       One high-end product of the new electrolyte solvent plant has passed acceptance testing and been successfully sold to customers since May

 

Outlook

·       Continue to focus on product innovation and enhancing customer service to mitigate difficult trading conditions, which are expected for the remainder of the year

·       Investment in a new pulverized coal stove to meet increased heating demand for higher-end products; this will also reduce shutdown frequency and meet enhanced environmental regulations

·       July 2017 recorded a loss of CNY0.98m due to lower than expected sales. Upgrades required by enhanced environmental regulations meant downstream companies have had to shut down operations in recent weeks, impacting sales. The Group therefore expects August 2017 to be a loss-making month.

Mr. Xiaohong Yang, Executive Chairman, said:

 "The Board is pleased with the performance of the Group and, despite facing challenging market conditions and a reduction in output as a result of the planned annual plant shutdown, HaiKe has made good progress in its long-term strategy of focusing on the higher margin specialty chemicals business. The Company is planning further technical upgrades and expects to develop new products in H2 to ensure continued profitability."

For further information please contact:

 

 

HaiKe Chemical Group

Jes Cui, Chief Financial Officer

 

 

+86 546 7787789

[email protected]

[email protected]

Stockdale Securities

Richard Johnson / Antonio Bossi 

+44 (0) 20 7601 6100

Cardew Group

Shan Shan Willenbrock /

Joe McGregor

[email protected] 

+44 (0) 20 7930 0777

A copy of this half yearly financial report is available on the Company's website www.haikechemical.com.



CHAIRMAN'S STATEMENT

1.   Review of operating results

In H1 2017, the Group sold 58,000 tons of specialty chemicals, representing a volume decrease of 14.2% when compared to the same period in the previous year. The sales of high-end specialty chemicals accounted for 14.5% of total sales in H1 2017, compared to 3.4% in H1 2016.

 

The IPA plant was shut down for annual maintenance from 11 May to 13 June 2017. During this period, the Company carried out additional upgrades to support the planned focus on higher-end products and in compliance with enhanced environment regulations. As a result of increased heating demand for higher-end products, the Company is building a new pulverized coal stove. In order to manage the heating capacity prior to the completion of the stove, the Board, as previously announced on 26 June 2017, has decided to reduce the operating capacity of the DMC plant which produces lower margin products. The DMC plant is expected to be fully operational by the year end, in line with the completion of the coal stove. 

 

As previously stated in the final results, the Company is focused on upgrading various products and supplying multiple types of supporting products.  To facilitate the upgrade, the Company has invested CNY 62 million, funded from existing cashflow, in a new electrolyte solvent plant which is expected to produce a range of higher-end battery grade products including DiMethyl Carbonate (DMC), battery grade Propylene Carbonate (PC), battery grade Ethyl Methyl Carbonate (EMC), battery grade Diethyl Carbonate (DEC), and battery grade Ethylene Carbonate (EC). DEC, one of new high-end products produced from the new electrolyte solvent plant has passed the acceptance testing and has been sold to customers since May.   

 

The selling price of products increased significantly, driven by the increase in the price of raw materials and the rise in oil prices. 

 


Sales Volume

Average Realized Price


('000 ton)


(CNY/ton)


 

6 months ended

30-Jun-17

6 months ended

30-Jun-16

Change y-o-y (%)

6 months ended

30-Jun-17

6 months ended

30-Jun-16

Change y-o-y (%)

DiMethyl Carbonate

19

24

-20.3%

5,176

3,782

36.9%

Propylene glycol

16

19

-12.3%

7,961

6,618

20.3%

Isopropyl alcohol

21

24

-12.1%

6,446

4,705

37%

Diisopropyl ether

2

1

14.3%

10,705

9,688

10.5%

Diethyl carbonate

0.2

0


10,958



Total

58

68

-14.2%

6,593

5,013

31.5%

 

2.   Financial Analysis

Turnover

The Group's turnover increased by 14.9% to CNY402.8 million in the first half of 2017 (H1 2016: CNY350.7 million). Selling prices of DMC and IPA rose 36.9% and 37% respectively. This was attributable to the rise in raw materials.

 

The price of propylene is closely related to that of crude oil which increased 26% compared with H1 2016. In addition, some companies producing propylene as a main product shut down for maintenance which reduced the supply of propylene sharply, resulting in the Company not producing any new propylene products in the period.  For propylene oxide, the average operating rate was 79% for H1 2017, down by 4% compared to the same period last year. The government has implemented more stringent environment inspections and regulation, causing some factories to cease operation.

 

While the overall average realized price increased by 31.5% in the period, total sales volumes decreased by 14.2% due to the shutdown of some of the Company's plants. The IPA plant was closed for annual maintenance for one month. The smaller 15,000 tons per annum DMC plant which produces lower margin products was shut down from 24 April until the end of this year to manage the heating capacity prior to the completion of the coal stove. The larger 30,000 tons per annum DMC plant continues to operate normally.

 

Gross Profit

Gross profit increased slightly to CNY61.6 million compared with the same period in 2017 (H1 2016: CNY61.2 million). The price of propylene and propylene oxide increased by 29% and 28% respectively. This led to a rise in the cost of sales of 17.8%. The Company maintains a reasonable stock of raw materials.

 

Selling, General and Administrative Expenses

Selling and distribution expenses decreased to CNY20.4 million in H1 2017 (H1 2016: CNY20.8 million). Freight costs decreased by 14.5% and commission fell by 68.3% due to a reduction in sales volume.

 

General and administrative expenses increased to CNY28.4 million in H1 2017 (H1 2016: CNY25.2 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 5% year-on-year to CNY0.87 million for H1 2017 (H1 2016: CNY0.91 million).

 

Interest expenses were CNY1.9 million for H1 2017 (H1 2016: CNY1.9 million). Bank loans remained unchanged.

 

Profit Before Tax

Profit before taxation was CNY12.1 million for H1 2017 (H1 2016: CNY13.8 million).  A lower profit was achieved in the period compared to H1 2016 as a result of a 4.6% increase in total expenses. This is attributable to shutdown costs of the IPA plant and start-up expenses of the new electrolyte solvent plant which accounted for CNY4.5 million.  

 

Income Tax

Income tax charge was CNY1.9 million for H1 2017, as compared to CNY2.4 million for the same period in the previous year.

 

Profit for the Period

Profit for the half year was CNY10.2 million (H1 2016: CNY11.4 million).

 

Cash and Cash Equivalents

Cash and cash equivalents decreased to CNY44.7 million as at 30 June 2017 compared to CNY55.0 million as at 31 December 2016. The reduction in cash and cash equivalents was due to the investment in the new electrolyte solvent plant, associated start-up expenses and shutdown costs of the IPA plant.

 

Bank Loans

Bank loans were CNY80.0 million as at 30 June 2017, unchanged from 31 December 2016 (CNY 80.0 million).

 

Cash Flow from Operations

Cash flow from operating activities was CNY86.7 million for the six months ended 30 June 2017, compared to CNY68.0 million for the same period in 2016. This was mainly attributable to positive movements of working capital.

3.   Outlook

The Group recorded an unaudited loss of CNY0.98 million for July due to demand being lower than expected. The output product of the operating DMC plant, propylene glycol, was used as raw material for the new electrolyte solvent plant, which reduced sales volume of propylene glycol. Sales of Diisopropyl ether were lower than expected due to weak market conditions.

 

In order to facilitate upgrades required by enhanced environmental regulations, some downstream companies have had to shut down operations in recent weeks, impacting sales. The Group therefore expects August 2017 to be a loss-making month.

 

As previously announced, the Company expects a further shutdown of the IPA plant in the second half of 2017 to fit a new catalyst which is anticipated to take no longer than one month. As a result of increased heating demand for our higher-end products, the Company is building a new pulverized coal stove. This action is intended to reduce shutdown frequency and allow the Company to meet enhanced environment regulations. Construction of the stove has begun, with completion expected toward the year end.

 

In order to continue to deliver a profitable performance for H2 in a challenging operating environment, our efforts will remain focused on:

·       Establishing strategic partnerships with customers for higher-end products

·       Providing specialist technical services to enhance product value and improve overall customer service

·       Continuing to increase marketing investment

·       Product innovation to introduce new higher-end products to diversify our product portfolio

 

 

 

Xiaohong Yang

Executive Chairman



Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2017

 

 

 

6 months ended

6 months ended

Year ended

 

 

30-Jun-17

30-Jun-16

31-Dec-16

 

Note

(Unaudited)

(Unaudited)

(Audited)

 

 

CNY'000

CNY'000

CNY'000

 

 

 


 

Revenue

 

          402,818

         350,706

728,274

Cost of sales

 

         (341,178)

         (289,521)

(613,367)

Gross profit

 

          61,640

          61,185

114,908

Other operating income

 

              300

                 (387)

(1,070)

Administrative expenses

 

           (28,410)

           (25,160)

(51,060)

Selling and distribution expenses

 

           (20,398)

           (20,843)

(40,542)

Profit from operations

 

            13,132

            14,795

22,237

 

 

 

 

 

Finance expenses

 

           (1,892)

           (1,877)

(15,043)

Finance income

 

             866

           906

13,509

 

 

 

 

 

Profit / (loss) before tax

 

              12,106

             13,824

20,703

 

 

 

 

 

Tax expense

7

             (1,940)

             (2,435)

(3,757)

Profit/(Loss) for the period

 

             10,166

              11,389

16,946

 

 

 

 

 

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

 

        10,166

         11,389

16,946

 

 

 

 

 

Profit / (loss) for the period attributable to:

 

 

 

 

 Owners of parent

 

        10,152

         11,372

16,921

 Non-controlling interest

 

               14

           17

25

 

 

       10,166

        11,389

16,946

 

 

 

 

 

Total comprehensive profit for the period attributable to:

 

        10,152

        11,372

16,921

 Owners of parent

 

               14

           17

25

 Non-controlling interests

 

      10,166

        11,389

16,946

 

 

 

 

 

Earnings per share for profit attributable to the

 

 

 

 

ordinary equity holders of the parent during the period

 

 

 

 

 

 

 

 

 


 

 

 

 

Basic

 

CNY0.265

CNY0.297

CNY0.442

Diluted

 

CNY0.265

CNY0.297

CNY0.442

 

 

Condensed consolidated Statement of Financial Position

As at 30 June 2017

 

 

 

6 months ended

 

6 months ended

 

Year ended

 

 

30-Jun-17

 

30-Jun-16

 

31-Dec-16

 

Notes

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

CNY'000

 

CNY'000

 

CNY'000

ASSETS

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

               209,691

 

               148,632

 

181,287

Intangible assets

 

10,174 

 

11,465 

 

10,819 

 

 

              219,865

 

              160,097

 

192,106

Current assets

 

 

 

 

 

 

Inventories

 

                 46,299

 

                 33,296

 

39,798

Trade and other receivables

 

               151,911

 

              105,941

 

142,196

Amounts due from related parties

 

                          204,789

 

                          580,931

 

149,221

Income tax receivable

 

 

                          

 

 

                          

 

                       -

Restricted cash

 

              2,200

 

              7,612

 

4,156

Cash and cash equivalents

 

                   44,700

 

                   73,541

 

54,978

 

 

           449,899

 

           801,321

 

390,349

Total assets

 

           669,764

 

          961,418

 

582,455

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Short-term loan

 

 

               80,000

 

80,000

Trade and other payables

 

              184,473

 

              180,202

 

121,570

Income tax payable


4,076


6,749


7,921

Amounts due to related parties

 

                          257,327

 

                          568,654

 

241,657

 

 

          525,876

 

          835,605

 

451,148

Non-current liabilities

 

 

 

 

 

 

Long-term loan

 

 

 

 

 

 

Deferred income

 

2,300 

 

2,192 

 

2,129

 

 

                          2,300

 

                          2,192

 

2,129

Total liabilities

 

528,176

 

837,797

 

453,277

 

 

 

 

 

 

 

CAPITAL AND RESERVES

 

 

 

 

 

 

Share capital

 

                      598

 

 598

 

598

Share premium

 

               1,564,667

 

               1,564,667

 

1,564,667

Other reserves

 

                   1,818

 

1,818

 

                1,818

Foreign currency translation reserve

 

(587)

 

(587)

 

                 (587)

Statutory reserves

 

34,205

 

32,268

 

34,205

Accumulated losses

 

           (1,459,224)

 

           (1,475,228)

 

        (1,471,616)

Equity attributable to equity holders of the parent

 

           141,477

 

          123,536

 

129,085

Non-controlling interest

 

             111

 

            85

 

93

Total equity

 

           141,588

 

          123,621

 

129,178

Total liabilities and equity

 

           669,764

 

           961,418

 

582,455

 

 


 

 

 

Condensed consolidated Statement of Changes in Equity

For the 6 months ended 30 June 2017

 

 

 

Attributable to equity holders of the parent

 For the 6 months ended 30 June 2017
(Unaudited)

 Share capital
CNY'000

 

 Share premium
CNY'000

 

 Other reserves
CNY'000

 

 Foreign currency translation reserve

CNY'000

 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 2017

598

 

1,564,667

 

1,818

 

(587)

34,205

 

(1,471,616)

 

129,085

93

 

129,178

Transfer to statutory reserves

        

 

 

 

 

 

 

 

 

 

 

         

 

 

        

Previous year adjustment










2,239


2,239



2,239

Transactions with owners

        

 

           -   

 

            -  

 

             -

                -

 

2,239

 

2,239         

                    -

 

2,239-

Profit for the year

 

 

 

 

 

 

 

 

 

     10,152

 

10,152

         14

 

10,166

Other comprehensive profit

           -  

 

           -  

 

          -  

 

 

              -  

 

           

 

         

            -

 


 - Foreign currency translation

           -  

 

           -  

 

 

 


              -  

 

 

 


 

 


Total comprehensive profit for the year

           -  

 

           -  

 

          -  

 

-

              -  

 

10,152

 

10,152

14

 

10,166

Balance as at 30 June 2017

598

 

1,564,667

 

1,818

 

(587)

34,205

 

(1,459,225)

 

141,477

107

 

141,584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

CNY'000

 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

 

 

 

 

 

 

 

        

 

(15)

 

               (15)

 

 

(15) 

Previous year adjustment















(15)

Transactions with owners

             -

 

             -

 

            -

 

             -

        

 

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 For the year ended 31 December 2016
(Audited)

 

Attributable to equity holders of the parent

 

 Share capital
CNY'000

 

 Share premium
CNY'000

 

 Other reserves
CNY'000

 

 Foreign currency translation reserve

CNY'000

 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

           -  

 

           

 

          -  

 

 

1,937

 

(1,937)

 

-




Previous year adjustment










(15)


(15)



(15)

Transactions with owners

           -  

 

           

 

          -  

 

           -  

1937

 

(1952)

 

(15)


 

(15)

Profit for the year

 

 

 

 

 

 

 

 

 

16,921

 

16,921

25

 

16,946

Other comprehensive profit

           -  

 

           -  

 

          -  

 

 

              -  

 

 

 

-

 

 

0

 - Foreign currency translation

           -  

 

           -  

 

 

 

-

              -  

 

 

 

-

 

 


Total comprehensive profit for the year

           -  

 

           -  

 

          -  

 

-

              -  

 

16,921

 

16,921

25

 

16,946

                                                             

Balance as at 31 December 2016

598

 

1,564,667

 

1,818

 

(587)

34,205

 

(1,471,616)

 

129,085

93

 

129,178

 


Condensed consolidated Statement of Cash Flow

For the 6 months ended 30 June 2017

 

 

 

6 months ended

 

6 months ended

 

Year ended

 

 

30-Jun-17

 

30-Jun-16

 

31-Dec-16

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

CNY'000

 

CNY'000

 

CNY'000

 

 

 

 

 

 

 

Profit /(loss) before tax

 

                 12,106

 

                 13,824

 

20,703

Adjustments for:

 

                        -

 

                        -

 

 

  Amortisation of intangible assets

 

                    646

 

                    646

 

1,291

  Provisions for doubtful debts

 

885 

 

136 

 

885

  Depreciation of property, plant and equipment

 

               13,491

 

               12,860

 

26,203

  Loss on disposal of property, plant and equipment

 

 

 

(472) 

 

1,448

  Amortisation of deferred capital grants

 

102 

 

250 

 

1,050

  Interest income

 

               (110)

 

              (114)

 

(11,062)

  Finance expense

 

1,892

 

953

 

15,043

Operating cash flows before working capital changes

 

              29,012

 

            28,083

 

55,561

 

 

 

 

 

 

 

Working capital changes:

 

 

 

 

 

 

  (Increase)/decrease in:

 

 

 

 

 

 

     Inventories

 

               (6,500)

 

              (4,701)

 

(11,204)

    Trade and other receivables

 

            (9,717)

 

           (4,634)

 

(40,888)

    Movement in related parties' balances

 

9,988 

 

(49,803) 

 

62,256

    Restricted cash

 

               1,956

 

             5,647

 

9,104

  Increase/(decrease) in:

 

 

 

 

 

 

    Trade and other payables

 

             59,059

 

            91,020

 

32,388

Cash generated from operations

 

            83,798

 

         65,612

 

107,220

  Income tax paid

 

                        2,881

 

                        2,388

 

3,496

Net cash generated from operating activities

 

86,679

 

68,000

 

110,716

 

 

 

 

 

 

 

 

 

 

 

 

6 months ended

 

6 months ended

 

Year ended

 

 

30-Jun-17

 

30-Jun-16

 

31-Dec-16

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 


CNY'000

 

CNY'000

 

CNY'000

 

 

 

 

 

 

 

Cash flow generated from operating activities


86,679

 

68,000

 

110,716

Cash flow from investing activities

 

 

 

 

 

 

  Purchase of property, plant and equipment

 

               (95,443)

 

               (29,085)

 

(76,421)

  Purchase of intangible assets

 

 

 

 

 

-

  Interest received

 

              

 

                 114

 


  Government grant received

 

377 

 

60 

 

321

  Purchase of shares in subsidiary from minorities

 

 

 

 

 

-

Cash flow (used in)/ generated from investing activities

 

(95,066)

 

(28,911)

 

(76,100)

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

 

  Capital injection from minority shareholders in subsidiaires

 

 

 

 

 

 

  Proceeds from bank borrowings

 

             80,000

 

            80,000

 

120,000

  Repayment of bank borrowings

 

            (80,000)

 

            (80,000)

 

(120,000)

  Loans(from)/to related parties

 

 

 

 

 

 

  Interest paid

 

             (1,892)

 

           (953)

 

(15,043)

  Dividends paid to non-controlling interest

 

                      -  

 

                      -  

 

 

Cash flow (used in) /generated from financing activities

 

(1,892) 

 

(953)

 

(15,043)

 

 

 

 

 

 

 

Net (decrease) /increase in cash and cash equivalents

 

          (10,279)

 

          38,136

 

19,573

Cash at beginning of period

 

            54,978

 

         35,405

 

35,405

Foreign currency translation differences

 

 

 

 

 

 

Cash at end of year

 

44,700

 

73,541

 

54,978

 

 



 

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL INFORMATION

FOR SIX MONTHS ENDED 30 JUNE 2017

(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 2017 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 2017.

Financial information for the six months ended 30 June 2017 and 30 June 2016 is unaudited and does not constitute the Company's financial statements for these periods.

Comparative financial information for the full year ended 31 December 2016 has been derived from the audited financial statements for that period. The Board of Directors approved the interim statements on 31 August 2017.

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 controlled by HiTech Chemical Investment Ltd and therefore, in accordance with IAS24, the disposed companies are deemed to be related parties of the Group.

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 2017, the Group made the following sales, purchase and funds transfer with related parties:


Sales

Purchase

Loan from

Loan to

Loan repayment


30-06-2017

CNY'000

CNY'000

CNY'000

CNY'000

CNY'000


Shareholder

-

-

-

8

-


Haike Holding Hongkong Limited

-

-

14,380

83,709

-


Haike International Holding Limited

-

-

-

10

-


HiTech Chemical Investment Ltd.

-

-

-

397

-


Dongying Hi-tech Qifen Co., Ltd

1,921

112,990

-

75699

-


Shandong Hi-tech Ruilin Chemical Co., Ltd



119,423

-

-


Dongying He-bang Chemical Co., Ltd

-

842

75,976

-

-


Dongying Tiandong Biochemical Co., Ltd

-

-

4,864

3,209

-


Shandong Hi-tech Chemical Group Ltd

-

52

35,811

37,892

-


Shanghai Yuanchuan Chemical Ltd

-

-

6,535

-

-


Dongying Hi-tech Transport Co.,Ltd.

-

370

337

-

-


Shandong Hi-Tech Shengli Electrochemical Co., Ltd

-

-

-

390

-



1,921

114,254

257,327

201,313

-


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 2017 but not recognized in the financial statements, was CNY29.7 million (31 December 2016: CNY29.4 million).

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

Acquisitions of items of property, plant and equipment were CNY95.4 million (H1 2016: CNY29.1million). Loss on disposals of items of property, plant and equipment was CNY0 (H1 2016: CNY472,000).

7.   Tax

 

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-17

 

30-Jun-16

 

31-Dec-16

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

CNY'000

 

CNY'000

 

CNY'000

 

 

 

 

 

 

Current income tax

1,940

 

2,435

 

                 3,757

Deferred tax:

 

 

 

 

 

Originating and reversal of temporary differences

- 

 

- 

 

                    -

Income tax recognised in income statement

1,940

 

2,435

 

3,757

 

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-17

 

30-Jun-16

 

31-Dec-16

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

CNY'000

 

CNY'000

 

CNY'000

 

 

 

 

 

 

Accounting profit before income tax

                     12,106

 

                     13,824

 

20,703

Tax at respective companies' domestic income tax rate

                3,027

 

                 3,456

 

5,176

Nondeductible expenses

                 (1,087)

 

                 (1,021)

 

(1,419)

Income tax expense recognized in income statement

1,940

 

2,435

 

3,757

 

 

 

8.   Profit per share from operations

Earnings for the purpose of basic and diluted earnings per share are the net profit for six months ended 30 June 2017 attributable to equity holders of the parent of CNY10,152,000 (for the six months ended 30 June 2016: profit of CNY11,372,000; for the year ended 31 December 2016: profit of CNY16,921,000).

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

 

 

Profit per share from operations













6 months ended


6 months ended


Year ended


30-Jun-17


30-Jun-16


31-Dec-16


(Unaudited)


(Unaudited)


(Audited)


CNY'000


CNY'000


CNY'000

Profit per share from operations






attributable to equity holders of the parent

10,152


11,372


16,921













Number of ordinary shares

6 months ended


6 months ended


Year ended


30-Jun-17


30-Jun-16


31-Dec-16


(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 BSGDIIXXBGRB

Quick facts: Haike Chemical

Price: -

Market: AIM
Market Cap: -
Follow

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

49 min read