19th Dec 2016 09:20
19 December 2016
Zibao Metals Recycling Holdings Plc("Zibao" or the "Company")
Half Year Results
Zibao Metals Recycling Holdings Plc (AIM: ZBO), a Hong Kong based, recyclable metal trader is pleased to announce its half year results for the six months ended 30 September 2016 .
The Group figures are presented in Hong Kong Dollars.
Highlights
· Revenue increased by 145% to HKD 394 million from HKD161 million
· Gross profit increased by 0.02% to HKD4.26 million from HKD4.18 million while selling and distribution expenses have decreased to HKD53,000 from HKD265,000
· Profit before tax increased 169% to HKD 0.5 million (2015: HKD 0.2 million) mainly due to increased sales volumes.
· The closing cash position at period end was HKD 0.87 million (2015: HKD 3.1 million)
Joe Zhou, Zibao Chairman commented: "The market conditions in the PRC and Europe continue to be challenging. However we continue to control costs and manage the credit risks prudently. We believe that the Group is well positioned to benefit from a future recovery."
For further information please contact:
Zibao Metals Recycling Holdings PLC Wenjie "Joe" Zhou, Chairman Jianfeng "Eddy" Li, Chief Executive Officer Chor Wei "Alan" Ong, Finance Director
| Tel: +852 2769 7662 www.zibaometals.com |
ZAI Corporate Finance Limited (Nominated Adviser and Broker) Ray Zimmerman/Tim Cofman/ Songdi Lin
| Tel: +44 (0)20 7060 2220 www.zaicf.com |
Zibao Metals Recycling Holdings PLC
Established in its current form in 2009, and incorporated as a UK registered company in 2014, Zibao is a trader in non-ferrous metals - principally aluminium and copper. It imports these from a variety of international sources or indirectly from importers based in the People's Republic of China ("PRC") and resells them into the PRC to (a) operators who process them into a 'clean' form for sale to foundries (b) customers who buys them in clean form.
The Company was formed by Wenjie 'Joe' Zhou, whose family has had interests in recyclable metals for nearly twenty years. During this period he has established good relationships with a range of overseas supplier, importers based in the PRC and developed an in-depth knowledge of the PRC rules and regulations for the metals recycling industry.
Metals recycling is a multi-million pounds global industry and China is the world's leading importer of copper and aluminium and needs recycling to supplement its growing demand.
Chairman's Statement
We are pleased to report the Company's interim results for the six months ended 30 September 2016,
Results
The Group's turnover was HKD 394 million, an increase of approximately 145% mainly due to an increasing demand from both new and existing customers. Profit before tax increased during the period by 169% to HKD 0.5 million reflecting the growth in sales and the tight control over overhead costs.
Suppliers
Some five new suppliers have been secured in the first half of the year, further strengthening the overall supplier base . Each supplier is vetted by the Group before becoming an approved trading partner. The Group seeks to cultivate strong and long-term relationships with its suppliers, helping maintain product quality and promoting integrity and reliability throughout its supply chain.
Customers
Over five new customers were added in the first half of the year and at the same time the Group also saw existing customers increase their order volumes. A factor in the increase in orders was the slight loosening of credit in the PRC. Despite this, the overall PRC economy remains weak and margins continue to be tight. As a result, the Group's gross profit margins on sales have fallen due to competition from other suppliers.
Outlook
Market conditions in the PRC and Europe continue to be challenging. The Group will continue its policy of controlling costs and managing the credit risk prudently.
The Board believes that the Group is well positioned to benefit from any future recovery.
I would like to take this opportunity to thank our long standing customers and suppliers as well as our employees for their loyalty and hard work.
Joe Zhou
Chairman
19 December 2016
Consolidated Statement of Comprehensive Income
Notes | 6 months to 30 September 2016 | 6 months to 30 September 2015 |
Year to 31 March 2016 |
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HKD'000 | HKD'000 | HKD'000 |
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Unaudited | Unaudited | Audited |
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Continuing operations |
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Revenue | 3 | 394,128 | 160,989 | 496,978 |
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Cost of sales | (389,873) | (156,806) | (488,550) |
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─────── | ─────── | ─────── |
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Gross profit | 4,255 | 4,183 | 8,428 |
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Other revenues | 1 | 2 | 751 |
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Selling and distribution expenses
| (53)
| (265)
| (346 |
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Administrative expenses | (3,695) | (3,731) | (8,247 |
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─────── | ─────── | ─────── |
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Operating profit | 508 | 189 | 586 |
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Finance cost | - | - | - |
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─────── | ─────── | ─────── |
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Profit before tax | 508 | 189 | 586 |
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Income tax (expense)/credit | 10 | - | 23 |
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─────── | ─────── | ─────── |
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Profit and total comprehensive income for the period | 518 | 189 | 609 |
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═══════ | ═══════ | ═══════ |
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Profit and total comprehensive income for the year attributable to the owners of the Company |
518 |
189 |
609 |
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═══════ | ═══════ | ═══════ |
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Earnings per share
| 5 | HKD | HKD | HKD |
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Basic | 0.004 | 0.002 | 0.005 |
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Diluted | 0.004 | 0.002 | 0.005 |
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═════ | ═════ | ═════ |
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Consolidated Statement of Financial Position
Notes | As at 30 September 2016 | As at 30 September 2015 | As at 31 March 2016 | |
HKD'000 Unaudited | HKD'000 Unaudited | HKD'000 Audited | ||
Assets | ||||
Non-Current Assets | ||||
Property, plant and equipment | 41,222 | 44,563 | 43,730 | |
Intangible assets | 1,608 | 1,772 | 1,658 | |
─────── | ─────── | ─────── | ||
42,830 | 46,335 | 45,388 | ||
─────── | ─────── | ─────── | ||
Current Assets | ||||
Inventories | 32,333 | 18,355 | 26,052 | |
Trade receivables | 5,908 | 9,099 | 2,663 | |
Taxes recoverable | - | 9,107 | 92 | |
Prepayments, deposits and other receivables | 5,675 | 4,864 | 8,584 | |
Cash and cash equivalents | 6 | 870 | 3,077 | 5,289 |
─────── | ─────── | ─────── | ||
44,786 | 44,502 | 42,680 | ||
─────── | ─────── | ─────── | ||
Total Assets | 87,616 | 90,837 | 88,068 | |
═══════ | ═══════ | ═══════ | ||
Equity and liabilities | ||||
Equity attributable to owners of the company | ||||
Share capital | 7 | 15,549 | 15,549 | 15,549 |
Share premium | 42,167 | 42,167 | 42,167 | |
Group reorganisation reserve | (527) | (527) | (527) | |
Share based payments reserve Foreign exchange reserve | 662 (1,265) | 589 | 662 135 | |
Retained earnings | 7,717 | 6,779 | 7,199 | |
─────── | ─────── | ─────── | ||
Total Equity | 64,303 | 64,557 | 65,185 | |
─────── | ─────── | ─────── | ||
Non-current liabilities | ||||
Deferred tax | 168 | 200 | 177 | |
─────── | ─────── | ─────── | ||
168 | 200 | 177 | ||
─────── | ─────── | ─────── | ||
Current liabilities | ||||
Trade payables | 9,649 | 8,981 | 9,966 | |
Accrued liabilities and other payables | 4,102 | 4,979 | 3,624 | |
Amount due to a director | - | 3,004 | - | |
Corporate Tax payable | 9,394 | 9,116 | 9,116 | |
─────── | ─────── | ─────── | ||
23,145 | 26,080 | 22,706 | ||
─────── | ─────── | ─────── | ||
Total Liabilities | 23,313 | 26,280 | 22,883 | |
─────── | ─────── | ─────── | ||
Total Equity and Liabilities | 87,616 | 90,837 | 88,068 | |
═══════ | ═══════ | ═══════ | ||
Consolidated Statement of Cash Flows |
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| 6 months to Sep 2016 | 6 months to Sep 2015 | Year to 31 March 2016 | ||||||||||
| HKD'000 | HKD'000 | HKD'000 | ||||||||||
| Unaudited | Unaudited | Audited | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net cash from operating activities | (6,529) | 1,814 | 4,480 | |||||||||
| Taxation | 370 | (238) | (237) | |||||||||
| Net cash (used in)/ generated from operating activities |
(6,159) |
1,576 |
4,243 | |||||||||
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| Investing activities | ||||||||||||
| Addition of property, plant and equipment | (10) | - | (92) | |||||||||
| Sales of property, plant and equipment | - | 397 | 34 | |||||||||
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| Net cash (used in)/generated from investing activities |
(10) |
397 |
(58) | |||||||||
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| Net (decrease)/increase in cash and cash equivalents | (6,169) | 1,973 | 4,185 | |||||||||
| Cash and cash equivalents at beginning of the period | 5,289 | 1,104 | 1,104 | |||||||||
| Effect of foreign exchange rate changes | 1,750 | - | - | |||||||||
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| Cash and cash equivalents at end of the period | 870 | ` | 3,077 | 5,289 | ||||||||
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| Represented by: | ||||||||||||
| Bank balances and cash | 870 | 3,077 | 5,289 | |||||||||
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| 870 | 3,077 | 5,289 | ||||||||||
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Notes for Consolidated Statement of Cash Flows |
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6 months to Sep 2016 | 6 months to Sep 2015 | Year to 31 March 2016 | ||||||||||
HKD'000 | HKD'000 | HKD'000 | ||||||||||
Unaudited | Unaudited | Audited | ||||||||||
Cash flows from operating activities before changes in working capital and provisions | ||||||||||||
Profit before income tax | 508 | 189 | 586 | |||||||||
Adjustments for: | ||||||||||||
Depreciation on property, plant and equipment | 768 | 488 | 966 | |||||||||
Interest income | - | (2) | - | |||||||||
Amortisation | 50 | - | 113 | |||||||||
Share option payment | - | - | 73 | |||||||||
Foreign exchange difference | (1,400) | - | 135 | |||||||||
(Increase) in inventories | (6,281) | (1,122) | (8,819) | |||||||||
(Increase) / decrease in trade receivables | (3,245) | 5,675 | 12,111 | |||||||||
Decrease in prepayments, deposits and other receivables | 2,909 | 8,934 | 15,038 | |||||||||
(Decrease) in trade payables | (317) | (13,809) | (12,825) | |||||||||
Increase in accrued liabilities and other payables | 479 | 1,461 | 106 | |||||||||
(Decrease) in amounts due to a director | - | - | (3,004) | |||||||||
Cash used in operations | (6,529) | 1,814 | 4,480 | |||||||||
Consolidated Statement of Changes in Equity |
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| Share Capital | Share premium | Share based payment reserves | Group Reorgan-isation reserve | Foreign exchange reserve | Retained Earnings | Total |
| HKD'000 | HKD'000 | HKD'000 | HKD'000 | HKD'000 | HKD'000 | HKD'000 | |
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As at 31 March 2015 | 15,549 | 42,167 | 589 | (527) | - | 6,590 | 64,368 | |
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Total comprehensive income for the period | - | - | - | - | - | 189 | 189 | |
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As at 31 September 2015 | 15,549 | 42,167 | 589 | (527) | - | 6,779 | 64,557 | |
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Total comprehensive income for the period |
|
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| 420 | 420 | |
Share options expense for the period |
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| 73 |
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| 73 | ||
Foreign exchange differences | 135 | 135 | ||||||
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As at 31 March 2016 | 15,549 | 42,167 | 662 | (527) | 135 | 7,199 | 65,185 | |
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Total comprehensive income for the period |
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| 518 | 518 | |
Foreign exchange difference | (1,400) | (1,400) | ||||||
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As at 31 September 2016 | 15,549 | 42,167 | 662 | (527) | (1,265) | 7,717 | 64,303 | |
Notes to the interim financial information
1. General information
Zibao Metals Recycling Holdings Plc is a company incorporated in England on 9 October 2013 under the Companies Act 2006 but domiciled in Hong Kong. It was listed on the AIM market on 20 June 2014. The Group's principal activity is that of trading scrap metals.
2. Basis of preparation and significant accounting policies
This interim report, which incorporates the financial information of the Company, has been prepared using the historical cost convention, on a going concern basis and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, using accounting policies which are consistent with those set out in the financial statements for the year ended 31 March 2016.
Taxes
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
Standards and Interpretations adopted with no material effect on financial statements
There are no IFRS or IFRIC interpretations that are effective for the first time in this financial period that would be expected to have a material impact on the Group.
Standards, interpretations and amendments to published standards that are not yet effective.
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial period beginning 1 April 2016 and have not been early adopted:
Reference | Title | Summary | Application date of standard | Application date of Group |
IFRS 9 | Financial Instruments | Revised standard for accounting for financial instruments | Periods commencing on or after 1 January 2018 | 1 April 2018 |
IFRS 15 | Revenue from contracts with customers | Specifies how and when to recognise revenue from contracts as well as requiring more informative and relevant disclosures | Periods commencing on or after 1 January 2018 | 1 April 2018 |
IFRS 16 | Lease | IFRS 16 Leases published | Periods commencing on or after 1 January 2019 | 1 April 2019 |
Reference | Title | Summary | Application date of standard | Application date of Group |
IFRS 9 | Financial Instruments | Revised standard for accounting for financial instruments | Periods commencing on or after 1 January 2018 | 1 April 2018 |
IFRS 15 | Revenue from contracts with customers | Specifies how and when to recognise revenue from contracts as well as requiring more informative and relevant disclosures | Periods commencing on or after 1 January 2018 | 1 April 2018 |
IFRS 16 | Lease | IFRS 16 Leases published | Periods commencing on or after 1 January 2019 | 1 April 2019 |
The directors anticipate that the adoption of these standards and the interpretations in future periods will have no material impact on the financial statements of the Group.
3. Segmental reporting
In the opinion of the directors, the Group has one class of business, being the trading of scrap materials. The Group's primary reporting format is determined by the geographical segment according to the location of its establishments. There is currently only one geographic reporting segment, which is China. All revenues and costs are derived from the single segment.
4. Directors' remuneration
6 months to 30 September 2016 | 6 months to 30 September 2015 |
Year to 31 March 2016 | |
Salaries, fees and options | Salaries, fees and options | Salaries, fees and options | |
HKD'000 | HKD'000 | HKD'000 | |
Unaudited | Unaudited | Audited | |
Wenjie Zhou | 240 | 240 | 480 |
Jianfeng Li | 120 | 120 | 240 |
Alan Ong | 67 | 58 | 159 |
Chin Phang Kwok | 67 | 57 | 159 |
Peter Greenhalgh | 67 | 58 | 150 |
Ajay Rajpal | 66 | 57 | 157 |
─────── | ─────── | ─────── | |
627 | 590 | 1,345 | |
_________ | _________ | _________ |
5. Earnings per share
Profit per share data is based on the Group profit for the period and the weighted average number of shares in issue.
6 months to 30 September 2016 | 6 months to 30 September 2015 |
Year to 31 March 2016 |
| |
HKD'000 | HKD'000 | HKD'000 |
| |
Unaudited | Unaudited | Audited |
| |
Profit for the period attributable to owners of Company |
518 |
189 |
609 | |
═════ | ═════ | ═════ | ||
Weighted average number of ordinary shares for the purposes of basic earnings per share (000's) | 122,010 | 122,010 | 122,010 | |
Weighted average number of ordinary shares for the purposes of diluted earnings per share (000's) | 125,453 | 123,452 | 125,453 | |
═════ | ═════ | ═════ |
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6 months to 30 September 2016 | 6 months to 30 September 2015 |
Year to 31 March 2016 |
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HKD'000 Unaudited | HKD'000 Unaudited | HKD'000 Audited |
| |
Basic earnings per share |
| |||
Total basic earnings per share | 0.004 | 0.002 | 0.005 |
|
Diluted earnings per share | |||
Total basic and diluted earnings per share | 0.004 | 0.002 | 0.005 |
───── | ───── | ───── |
6. Cash and cash equivalents Group
As at 30 September 2016 | As at 30 September 2015 | As at 31 March 2016 | ||
HKD'000 | HKD'000 | HKD'000 | ||
Unaudited | Unaudited | Audited
| ||
Cash and bank balances | 870 | 3,077 | 5,289 | |
─────── | ─────── | ─────── | ||
Cash and bank balances as presented in balance sheets | 870 | 3,077 | 52,89 | |
─────── | ─────── | ─────── | ||
Cash and cash equivalents as presented in consolidated statement of cash flows | 870 | 3,077 | 5,289 | |
_________ | _________ | _________ |
7. Share capital
The issued share capital as at 30 September 2016 was 122,010,000 ordinary shares of £0.01 each (30 September 2015: 122,010,000 ordinary share of £0.01, 31 March 2016: 122,010,000 ordinary shares of £0.01)
8. Related-party transactions
During the period, the Group entered into the following trading transactions with related parties that are not members of the Group:
Sales of goods | |||
6 months to 30 September 2016 HKD'000 | 6 months to 30 September 2015 HKD'000 | Year to 31 March 2016 HKD'000 | |
Wang Kei Yip Development Limited |
15,777 |
11,739 |
32,658 |
The following balances were outstanding at end of the period:
Amounts owed by related parties | Amounts owed to related parties | ||||
As at 30 Sept 2016 HKD'000 | As at 30 March 2016 HKD'000 | As at 30 Sept 2015 HKD'000 | As at 30 Sept 2016 HKD'000 | As at 30 March 2016 HKD'000 | |
Wang Kei Yip Development Limited | - | 263 | - | 241 | 1,866 |
Wenjie Zhou | - | - | 3,004 | - | - |
Ben Lee is the brother in law of the director, and is a director of Wang Kei Yip Development Limited. Wang Kei Yip Development Limited is therefore a related party.
The amount due to Wenjie Zhou was unsecured, interest-free and had no fixed term of repayment. All the above transactions were done at arm's length.
9. The unaudited results for the period ended 30 September 2016 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The comparative figures for the period ended 31 March 2016 were extracted from the audited financial statements which contained an unqualified audit report and did not contain statements under Sections 498 to 502 of the Companies Act 2006.
10. This interim financial statement will be, in accordance with Rule 26 of the AIM Rules for Companies, available shortly on the Company's website at www.zibaometals.com.
11. The Company is incorporated in the UK but is treated as a Hong Kong resident for tax purposes.
Macau and Hong Kong tax has been provided at a rate of 12% and 16.5% respectively.
There was deferred taxation in respect of the period.
Related Shares:
ZBO.L