TIDMCHRR
RNS Number : 5768O
China Rerun Chemical Group Ltd
29 May 2015
China Rerun Chemical Group Limited
("China Rerun" or the "Group")
Half-yearly results for the six months ended 28 February
2015
China Rerun Chemical Group Ltd (CHRR.L), the producer of
lubricant products for the domestic automotive, industrial and
agricultural markets in the People's Republic of China ("PRC"),
today announces its unaudited half year results from 1 September
2014 to 28 February 2015 ("the period").
Financial Highlights
Unaudited Audited Growth
HY2015 ended HY2014 ended (HY2015 and
28 Feb 2015 28 Feb 2014 HY2014)
Revenue RMB139.7m RMB164.7m -15.2%
-------------- -------------- -------------
Gross profit RMB34.8m RMB50.7m -31.4%
-------------- -------------- -------------
Gross margin 24.9% 30.8% 59Bps
-------------- -------------- -------------
Pre-tax profit RMB16.3m RMB32.7m -50.2%
-------------- -------------- -------------
Indicative exchange rates as at 26 February 2015: GBP1: RMB
9.52
Source:www.oanda.com
Financial Review
I am pleased to announce the half-yearly results to 28 February
2015. The figures are not particularly positive, as sales of
lubricating oils were heavily down, but mask some improvement in
the company's trading.
In the period under review, the Group generated revenue of
RMB139.7m (HY 2014:RMB164.7m) representing decline of 15.2%. The
Group achieved gross profit of RMB34.8m a decrease of 31.4%
compared to the prior year period (HY 2014: RMB50.7m). Gross margin
decreased by 5.9 percentage points to 24.9 per cent. year-on-year
(HY 2014: 30.8%). The deterioration on gross profit was mainly
driven by sales volume decreased by 13.6% to 7.0 million litres
compared with HY2014.
Sales and distribution expenses increased to RMB14.1m (HY 2014:
RMB11.2m). This increase was mainly driven by increased sales
commission rates, distributors' rebates and distribution costs.
During the period under review, administrative expenses were
RMB4.1m. The Group achieved a pre-tax profit of RMB16.3m in HY
2015, down 50.2% (HY 2014: RMB 32.7m). Operating margin decreased
by 8.2 percentage points to 11.6% (HY 2014: 19.8%). The Group's PRC
operating subsidiary is subject to an income tax rate of 25 per
cent., which is in accordance with the PRC Enterprise Income Tax
Law.
At 28 February 2015, cash increased by RMB116.1m to RMB207.5m
(HY 2014: RMB91.4m) and it was mainly attribute to settle the
group's various tax liabilities which increased by RMB64.5m to
RMB135.6m (HY 2014: RMB71.1m).
The Board remain conscious that we need to improve the company's
trading position. Ever endeavour will be made to continue the
growth that the company has enjoyed over the past 10 years
Commenting on the results, Mr Xinghe Wu, Executive Chairman of
China Rerun said:
"After a long period of sustained top and bottom line growth it
is disappointing to see a period when key financial metrics have
worsened.
We have experienced a more competitive environment that has been
the case in the past and some market share has been lost. We
continue to invest in product development, human resources and
equipment. We believe that this is the correct response to more
challenging market conditions. This strategy has been successful
for many years and we believe it will be successful again. We are
hopeful that the lost market share can be recovered through this
investment
The fundamental drivers of the Chinese lubricating oil market
remain strongly positive. GDP growth, whilst lower than in recent
years, remains high. Car ownership is increasing quickly"
For further enquiries, please visit www.chinarerun.com or
contact:
China Rerun Xinghe Wu +86 459 666 9777
Nick Lyth www.chinarerun.com/
+44 776 990 6686
Cairn Financial Advisers
LLP Jo Turner
(Nominated Adviser) Liam Murray +44 20 7148 7900
-------------- ---------------------
Beaufort Securities
Limited
(Broker) Chris Rourke +44 20 7382 8300
-------------- ---------------------
Condensed consolidated statement of comprehensive income
for the six months ended 28 February 2015
6 months 6 months 12 months
ended ended ended
28 Feb 28 Feb 31 Aug
2015 2014 2014
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
Revenue 139,724 164,703 319,332
Cost of sales (104,878) (114,014) (232,353)
---------- ---------- ----------
Gross profit 34,846 50,689 86,979
Selling and distribution expenses (14,112) (11,267) (25,231)
Administrative expenses (4,053) (6,848) (8,296)
Listing costs (574) - (4,735)
Finance income 157 86 266
---------- ---------- ----------
Profit before tax 16,264 32,660 48,983
Income tax expense (4,533) (9,163) (13,855)
---------- ---------- ----------
Profit for the period 11,731 23,497 35,128
Other comprehensive income
Items that may be reclassified subsequently
to profit and loss
Exchange differences on translation
of foreign operations (6) 29 4
---------- ---------- ----------
Total comprehensive income for the
period 11,725 23,526 35,132
========== ========== ==========
Profit for the period attributable
to:
Equity Shareholders of the Company 11,731 23,497 35,128
Total comprehensive income for the
period
Attributable to:
Equity Shareholders of the Company 11,725 23,526 35,132
Earnings per ordinary share
Basic (in RMB 1.00) 0.046 0.092 0.137
Diluted (in RMB 1.00) 0.046 0.092 0.136
Condensed consolidated statement of financial position
as at 28 February 2015
28 Feb 28 Feb 31 Aug
2015 2014 2014
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
ASSETS
Non-current asset
Property, plant and equipment 2,767 3,393 3,087
Intangible assets -* -* -*
2,767 3,393 3,087
Current assets
Inventories 8,767 8,799 2,596
Trade and other receivables 34,730 37,590 34,487
Director loan account 5,358 - 110,984
Cash and cash equivalents 207,493 91,391 51,960
---------- ---------- --------
256,348 137,780 200,027
---------- ---------- --------
Total assets 259,115 141,173 203,114
========== ========== ========
EQUITY AND LIABILITIES
Capital and Reserves
Share capital 12 12 12
Share premium 2,414 2,414 2,414
Statutory reserves 2,287 4,013 2,287
Warrant reserve 496 497 496
Translation reserves 106 137 112
Retained earnings 62,925 37,837 51,194
---------- ---------- --------
Equity attributable to owners 68,240 44,910 56,515
Minority Interest - - -
---------- ---------- --------
Total equity 68,240 44,910 56,515
---------- ---------- --------
Non-current liabilities
Borrowings 3,897 - 3,891
---------- ---------- --------
3,897 - 3,891
---------- ---------- --------
Current
Trade and other payables 51,326 25,193 37,418
VAT payable 109,942 54,599 84,127
Corporate income tax payable 25,710 16,471 21,163
186,978 96,263 142,708
---------- ---------- --------
Total liabilities 190,875 96,263 146,599
========== ========== ========
Total equity and liabilities 259,115 141,173 203,114
========== ========== ========
*Amount is less than RMB 1,000
Condensed consolidated statement of cash flows
for the six months ended 28 February 2015
6 months 6 months Year
Ended Ended ended
28 Feb 28 Feb 31 Aug
2015 2014 2014
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
Profit before income tax 16,264 32,660 48,983
Adjustments for:
Interest expense - - 8
Interest income (145) (84) (274)
Warrant charge - 497 496
Depreciation of property, plant and
equipment 320 317 639
Operating profit before working capital
changes 16,439 33,390 49,852
Decrease/(increase) in inventories (6,171) (6,144) 59
Increase in trade and other receivables (243) (20,988) (17,885)
Increase in trade and other payables 39,737 35,661 82,047
---------- ---------- ----------
Cash generated from operations 49,762 41,919 114,073
Tax paid - - -
---------- ---------- ----------
Net cash generated from operating activities 49,762 41,919 114,073
Investing activities
Interest received 145 84 274
Purchase of property, plant and equipment - (11) (25)
Net cash from/(used in) investing activities 145 73 249
Financing activities
Interest paid - - (8)
Loan from/(to) director 105,626 769 (110,984)
Proceed from issue of shares - 1,794 1,794
Net cash inflow from/(used in) financing
activities 105,626 2,563 (109,198)
Net increase in cash and cash equivalents 155,533 44,555 5,124
Cash and cash equivalents at beginning
of period 51,960 46,836 46,836
Effect of foreign exchange rate changes -* -* -
---------- ---------- ----------
Cash and cash equivalents at end of
period 207,493 91,391 51,960
========== ========== ==========
Condensed consolidated statement of changes in equity
for the period ended 28 February 2015
Share Share Statutory Warrant Translation Retained Non-controlling
Capital Premium reserve reserve reserve earnings Total interest Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At 31 August
2013 12 620 2,287 - 108 16,066 19,093 - 19,093
======== ============ ========= ======== =========== ========= ======= =============== =======
Profit for the
period - - - - - 23,497 23,497 - 23,497
Transfer to
statutory
reserve - - 1,726 - - (1,726) - - -
Exchange
difference - - - - 29 - 29 - 29
-------- ------------ --------- -------- ----------- --------- ------- --------------- -------
Total
comprehensive
income
for the year - - 1,726 - 29 21,771 23,526 - 23,526
-------- ------------ --------- -------- ----------- --------- ------- --------------- -------
Issue of
shares -* 1,794 - - - - 1,794 - 1,794
Warrant
granted - - - 497 - - 497 - 497
At 28 February
2014 12 2,414 4,013 497 137 37,837 44,910 - 44,910
======== ============ ========= ======== =========== ========= ======= =============== =======
At 31 August
2013 12 620 2,287 - 108 16,066 19,093 - 19,093
======== ============ ========= ======== =========== ========= ======= =============== =======
Profit for the
period - - - - - 35,128 35,128 - 35,128
Transfer to
statutory
reserve - - - - - - - - -
Exchange
difference - - - - 108 - 4 - 4
-------- ------------ --------- -------- ----------- --------- ------- --------------- -------
Total
comprehensive
income
for the year - - 2,287 - 108 35,128 35,132 - 35,132
-------- ------------ --------- -------- ----------- --------- ------- --------------- -------
Issue of
shares -* 1,794 - - 4 - 1,794 - 1,794
Warrant
granted - - - 496 - - 496 - 496
-------- ------------ --------- -------- ----------- --------- ------- --------------- -------
At 31 August
2014 12 2,414 2,287 496 112 51,194 56,515 - 56,515
======== ============ ========= ======== =========== ========= ======= =============== =======
Profit for the
period - - - - - 11,731 11,731 - 11,731
Transfer to
statutory
reserve - - - - - - - - -
Exchange
difference - - - - (6) - (6) - (6)
-------- ------------ --------- -------- ----------- --------- ------- --------------- -------
Total
comprehensive
income
for the year - - - - (6) 11,731 11,725 - 11,725
-------- ------------ --------- -------- ----------- --------- ------- --------------- -------
Issue of
shares - - - - - - - - -
Warrant
granted - - - - - - - - -
At 28 February
2015 12 2,414 2,287 496 106 62,925 68,240 - 68,240
======== ============ ========= ======== =========== ========= ======= =============== =======
Notes to the condensed consolidated financial statement
1. General information
China Rerun Chemical Group Limited ("China Rerun" or the
"Company") was incorporated on 30 May 2012 in Cayman Islands. The
registered office of the Company is located at 89 Nexus Way, Camana
Bay, Grand Cayman Y1-9007, Cayman Islands.
The principal activity of the Company is that of an investment
holding company and the principal activities of the Group are
production and distribution of lubricating oil for the automotive,
agricultural and certain industrial markets in PRC. The principal
place of business is at No 99, Zhongsan Road, Sa'ertu district,
Daqing, Heilongjiang Province, PRC.
These condensed financial statements present information about
the group and are set out in Renminbi ("RMB") of the PRC, which is
the functional currency of the group.
2. Basis of preparationand accounting policies
These condensed financial statements have been prepared on the
basis of the accounting policies set out in the last audited
consolidated financial statements, which are in accordance with
International Accounting Standard 34 Interim Financial
Reporting.
The interim report is unaudited and does not constitute the
company's statutory accounts for the six months ended 28 February
2015.
The preparation of the interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expense. Actual results
may subsequently differ from those estimates.
3. Taxation
A company is deemed to be resident in PRC if it is established
in PRC or its effective management is in PRC. Residents are taxed
on their worldwide income. Non-residents are taxed on PRC source
income and income effectively connected with their establishments
in PRC.
China Rerun is regarded as resident for the tax purposes in
Cayman Islands. There are no applicable taxes in the Cayman Islands
for the company.
The Group is regarded as resident for the tax purposes in PRC
and subject to national income tax at 25%.
The taxation charge is based upon the expected effective rate
for theperiod ended 28 February 2015.
4. Warrant charge
Details of the warrants outstanding at 28 February 2015 are as
follows:
Date of grant: 15 Oct 2013
Number of warrants: 2,576,200
Option price: 10 pence
Exercise period: 15.10.2013 - 14.10.2018
5. Earnings per share
Basic profit per share
Basic profit per share is calculated by dividing the profit for
the period attributable to equity shareholders of the company by
the weighted average number of ordinary shares in issue during the
period.
28 Feb 2015 28 Feb 2014 31 Aug 2014
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
Profit attributable to equity
holders of the company 11,731 23,497 35,128
============ ============ ============
Weighted average number of shares '000 '000 '000
in
issue (thousands) 255,810 254,963 255,390
============ ============ ============
Diluted earnings per share
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The dilutive
potential ordinary shares in the company are share options. A
calculation is done to determine the number of shares that could
have been acquired at fair value (determined as the average annual
market share price of the company's shares) based on the monetary
rights attached to outstanding share options. The number of shares
calculated above is compared with the number of shares that would
have issued assuming the exercise of the share options.
Weighted average number of ordinary shares (diluted):
28 Feb 2015 28 Feb 2014 31 Aug 2014
Unaudited Unaudited Audited
'000 '000 '000
Weighted average number of shares
in issue (thousands) 255,810 254,963 255,390
Effect of conversion of warrants 229 1,921 2,251
At the end of period 256,039 256,884 257,641
============ ============ ============
6. Share capital
The issued share capital of the company as at 28 February 2015
is RMB 12,410 fully paid. There were no movements in the issued
share capital of the company in the current interim reporting
period.
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the company. All shares rank equally with
regard to the company's residual assets.
7. Related party transactions
The company made several large payments, totaling RMB 120m in
2014, intended to settle the group's various tax liabilities. Due
to the method of settlement, which was subsequently reversed, the
transaction was recorded as a director's loan. All balances have
been settled after the Period end.
At 28 February 2015, the amount recorded as due from Mr Wu was
RMB5.36m
8. Contingencies
Since 1 March 2013, the Group commenced to trade (taking over
lubrication oil business from Daqing Runyuan for nil consideration)
and it has not operated its taxation affairs in accordance with the
legislation within the PRC. All relevant tax returns were filed
incorrectly. These taxation procedures mean that substantial
liabilities, corporation tax and Value-added taxes (VAT), are
accruing (and being reflected in the Statements of Financial
Position) but are not being settled by the Group. It is unclear
whether any penalties or interest will be charged by the PRC tax
authorities when the liabilities are eventually settled.
Except for the above issues, the Group had no significant
contingent assets or liabilities at any of the financial position
dates.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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