20th Sep 2010 07:00
HAIKE CHEMICAL GROUP LTD.
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010
(UNAUDITED)
HaiKe Chemical Group Ltd. ("HaiKe" or the "Company"), the AIM quoted (AIM: HAIK) petrochemical, speciality chemical and biochemical business based in China, is pleased to announce its unaudited results for the six months ended 30 June 2010.
Highlights
l Total revenue increased by 78.7% to US$ ("$") 467.2m over the same period last year (H1 2009: $261.5m)
l Petrochemical revenues increased by 86.9% to $407.8m (H1 2009: $218.2m)
l Chemical products revenues increased by 37.0% to $59.4m (H1 2009: $43.4m)
l Gross profit decreased by 93.9% to $1.4m (H1 2009: $23.1m)
l Loss for the period was $21.2m (H1 2009: profit of $10.8m)
l Loss after non-controlling interest was $14.8m (H1 2009: profit of $9.9m)
Mr. Xiaohong Yang, Executive Chairman, said:
"The first six months of 2010 have been challenging, during which the Company successfully achieved a significant increase in revenues of 86.9% and 37.0% in petrochemical and chemical products businesses respectively. Consequently, total revenue increased substantially by 78.7% as a result of improved demand and our effective strategy in adjusting our product mix.
During the first half of 2010, the high feedstock price has made the overall environment very challenging and has affected the Company's profitability. Ruilin was in the initial trial phase of operation which meant its profit contribution was variable; however, we anticipate this will stabilise over time.
For the remainder of 2010, the Company will focus strongly on controlling feedstock purchase costs so as to improve overall group performance."
For further information please contact:
|
HaiKe
|
Nick Su, Chief Finance Officer
|
+86 (0) 546 8289175
|
|
Westhouse Securities
|
Tim Metcalfe / Martin Davison
|
+44 (0) 20 7601 6100
|
|
Cardew Group
|
Rupert Pittman / Shan Shan Willenbrock /
Catherine Maitland
|
+44 (0) 20 7930 0777
|
First Half 2010 Results
In the period under review, total revenue increased 78.7% to $467.2m (H1 2009: $261.5m). The Company experienced a significant improvement in revenues across all business streams as a result of an increase in demand and adjustments in product mix. Petrochemical revenues increased by 86.9% to $407.8m (2009: $218.2m) and sales for chemical products increased by 37.0% to $59.4m (H1 2009: $43.4m).
Despite the rise in revenues, it was not enough to off-set the decrease in selling price and our total cost of sales arising from the high crude oil price and the significant expansion of our petrochemicals business. Cost of sales increased to $465.8m (H1 2009: $238.4m) in the first half which consequently decreased our gross profit to $1.4m (H1 2009: $23.1m).
During the period under review, other operating income rose to $0.2m (H1 2009: $0.1m). In the first six months of 2010, administrative expenses increased to $9.3m (H1 2009: $5.3m) 2010 which were mainly due to start up costs incurred by Ruilin during the initial trial phase of operation. Selling and distribution expenses increased 14.9% from $2.1m to $2.5m as a result of transportation costs and business development costs due to a rise in sales volume across the group. The Company has incurred an operating loss of $10.1m (H1 2009: operating income of $15.7m).
Finance expenses increased to $11.5m (H1 2009: $5.4m) in the period under review but remained unchanged since the year end at 31 December 2009, when it benefited from a cost reduction due to lower tax rates. Finance income reduced 30.9%
The Company has incurred a loss of $21.2m during the first half of this year (H1 2009 profit: $10.8m). Loss attributable to the Company's shareholders was $14.8m resulting in a net loss per share of $0.386 (basic and diluted). In the first half of 2009, profit attributable to the Company's shareholders was $9.9m with earnings per share of $0.258 (basic and diluted).
Capital Expenditure
Investment in property, plant and equipment decreased from $51.5m in the first half of 2009 to $48.3m in the same period in 2010, representing a 6.2% reduction. During the first half of 2009, the Company invested heavily in various projects including construction of Ruilin refinery facilities, and a new production and a research and development facility for Tiandong Biochemical. The Company has since successfully completed the construction of Ruilin and as a result investment in property, plant and equipment reduced in the period under review.
Cash Flows
In the first half of 2010, cash used for operating activities amounted to $49.2m compared to $26.4m in 2009 due to increased refinery feedstock inventory, trade and other receivables.
During the period under review, cash outflow for investment in property, plant and equipment was $38.0m (H1 2009: $41.5m), representing an 8.6% reduction. During the first half of 2010, the Company also invested $2.3m in purchasing intangible assets in comparison with $5.5m cash outflow for the first six months of 2009. The cash outflow was mainly funded from an increase in bank facilities of $192.5m (H1 2009: $108.1m). As at 30 June 2010, short-term borrowings amounted to $366.4m and the Company has long-term borrowings of $92.9m. It is standard practice for the Chinese banking system to provide bank borrowings on a short-term renewal basis to most non-government controlled businesses. In order to secure the borrowings the Company has placed on deposit $149.4m (31 December 2009: $120.6m) of cash ("Restricted Cash").
Cash and cash equivalents decreased from $51.8m as at 31 December 2009 to $43.8m as at 30 June 2010.
Liquidity and Financial Risk
We believe that the Company has sufficient funds to meet foreseeable business requirements as long as the Chinese Banks continue to support HaiKe. HaiKe has enjoyed, and continues to enjoy, good relationships with local banks which are supportive of the Company's business. However, if the Group continues to incur further losses or loses banking support, the Group may have liquidity risks.
Operational Review
Our efforts in increasing our group sales by adjusting products mix has resulted in a 78.7% increase in revenue. Our primary business segment, the petrochemical revenues contributed $407.8m, representing a growth of 86.9% (H1 2009: $218.2m). Revenues for our chemicals division also rose by 37.0% to $59.4m (H1 2009: $43.4m).
Despite our effective strategy in growing revenues, the high crude oil price combined with tight control over selling price of refinery products in China had made the business environment ever more challenging and significantly undermined HaiKe's profitability. Our investment in Ruilin has expanded HaiKe's production capacity considerably and we continue to improve its efficiencies and utilisation. Loss attributable to shareholders of the parent was $14.8m (H1 2009 profit attributable to shareholders: $9.9m) and loss per share was $0.386 per share (basic and diluted) (H1 2009 earnings per share: $0.258 per share (basic and diluted)).
During the first half of 2010, in order to gain more effective control over fuel oil feedstock inventory, HaiKe has spent $54.4m (H1 2009: $40.0m). During the period under review, the Company incurred cash outflow of $13.2m (H1 2009 cash inflow: $9.0m) resulting from increased trade and other receivables. The Company has relied on raising funds from both short-term and long-term borrowings from local banks to improve its cash flow status.
Outlook
HaiKe has completed the expansion of its production facilities in the past few years and revenue has grown significantly. This reflects the high level of demand that exists in our domestic market. However, in light of the high raw material price and strict controls over selling prices of refined products imposed by the Chinese government, the outlook for the remainder of the 2010 is uncertain. We believe that the Company will incur losses for the whole year.
|
Consolidated Statement of Comprehensive Income |
|||||||||
|
For the 6 Months Ended 30 June 2010 |
|||||||||
|
|
|
|
|
|
|
|
|||
|
|
|
6 months ended 30 June 2010 |
6 months ended 30 June 2009 |
Year ended 31 December 2009 |
|||||
|
|
Notes |
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|||
|
|
|
$'000 |
|
$'000 |
|
$'000 |
|||
|
|
|
|
|
|
|
|
|||
|
Revenue |
|
467,223 |
|
261,527 |
|
591,329 |
|||
|
Cost of sales |
|
(465,816) |
|
(238,444) |
|
(567,653) |
|||
|
|
|
|
|
|
|
|
|||
|
Gross profit |
|
1,407 |
|
23,083 |
|
23,676 |
|||
|
|
|
|
|
|
|
|
|||
|
Other operating income |
|
235 |
|
111 |
|
3,531 |
|||
|
Administrative expenses |
|
(9,308) |
|
(5,305) |
|
(15,618) |
|||
|
Selling and distribution expenses |
|
(2,465) |
|
(2,146) |
|
(4,463) |
|||
|
|
|
|
|
|
|
|
|||
|
(Loss)/profit from operations |
|
(10,131) |
|
15,743 |
|
7,126 |
|||
|
|
|
|
|
|
|
|
|||
|
Finance expenses |
|
(11,453) |
|
(5,371) |
|
(11,461) |
|||
|
Finance income |
|
520 |
|
753 |
|
2,442 |
|||
|
Share of results of associates |
|
- |
|
(154) |
|
(60) |
|||
|
|
|
|
|
|
|
|
|||
|
(Loss)/profit before tax |
|
(21,064) |
|
10,971 |
|
(1,953) |
|||
|
|
|
|
|
|
|
|
|||
|
Tax (expense)/credit |
4 |
(149) |
|
(142) |
|
123 |
|||
|
|
|
|
|
|
|
|
|||
|
(Loss)/profit for the periods/year |
|
(21,213) |
|
10,829 |
|
(1,830) |
|||
|
|
|
|
|
|
|
|
|||
|
Other comprehensive income |
|
|
|
|
|
|
|||
|
Exchange difference arising from consolidation |
|
117 |
|
19 |
|
43 |
|||
|
|
|
|
|
|
|
|
|||
|
Total comprehensive (loss)/income |
|
(21,096) |
|
10,848 |
|
(1,787) |
|||
|
|
|
|
|
|
|
|
|||
|
(Loss)/profit for the periods/year attributable to: |
|
|
|
|
|
|
|||
|
Owners of parent |
|
(14,822) |
|
9,903 |
|
187 |
|||
|
Non-controlling interest |
|
(6,391) |
|
926 |
|
(2,017) |
|||
|
|
|
(21,213) |
|
10,829 |
|
(1,830) |
|||
|
|
|
|
|
|
|
|
|||
|
Total comprehensive (loss)/income attributable to: |
|
|
|
|
|
||||
|
Owners of parent |
|
(14,705) |
|
9,922 |
|
230 |
|||
|
Non-controlling interest |
|
(6,391) |
|
926 |
|
(2,017) |
|||
|
|
|
(21,096) |
|
10,848 |
|
(1,787) |
|||
|
|
|
|
|
|
|
|
|||
|
(Loss)/earnings per share for (loss)/profit attributable to the ordinary equity holders of the parent during the periods/year |
|||||||||
|
Basic |
|
($0.386) |
|
$0.258 |
|
$0.005 |
|||
|
Diluted |
|
($0.386) |
|
$0.258 |
|
$0.005 |
|||
|
|
|
|
|
|
|
|
|||
|
Consolidated Statement of Financial Position |
||||||
|
As at 30 June 2010 |
||||||
|
|
|
|
|
|
|
|
|
|
|
30 June 2010 |
|
30 June 2009 |
|
31 December 2009 |
|
|
Notes |
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
Property, plant and equipment |
|
257,634 |
|
187,410 |
|
233,718 |
|
Intangible assets |
|
21,174 |
|
8,645 |
|
18,835 |
|
Investments in equity-accounted associates |
|
88 |
|
- |
|
66 |
|
Available-for-sale investments |
|
- |
|
143 |
|
- |
|
Deferred tax assets |
4 |
911 |
|
756 |
|
908 |
|
|
|
279,807 |
|
196,954 |
|
253,527 |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Inventories |
|
141,404 |
|
71,648 |
|
86,957 |
|
Trade and other receivables |
|
77,534 |
|
16,254 |
|
61,991 |
|
Income tax receivable |
|
6,938 |
|
3,732 |
|
6,508 |
|
Restricted cash |
|
149,446 |
|
67,737 |
|
120,637 |
|
Cash and cash equivalents |
|
43,760 |
|
37,052 |
|
51,844 |
|
|
|
419,082 |
|
196,423 |
|
327,937 |
|
Total assets |
|
698,889 |
|
393,377 |
|
581,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Short-term loan |
|
366,373 |
|
191,258 |
|
320,632 |
|
Trade and other payables |
|
164,410 |
|
79,815 |
|
118,763 |
|
Deferred income |
|
- |
|
202 |
|
- |
|
Income tax payable |
|
- |
|
- |
|
- |
|
Amounts due to related parties |
|
36,374 |
|
34,532 |
|
27,647 |
|
|
|
567,157 |
|
305,807 |
|
467,042 |
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
Long-term loan |
|
92,908 |
|
16,834 |
|
56,021 |
|
Deferred income |
|
3,248 |
|
1,446 |
|
1,729 |
|
|
|
96,156 |
|
18,280 |
|
57,750 |
|
Total liabilities |
|
663,313 |
|
324,087 |
|
524,792 |
|
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
|
Share capital |
|
77 |
|
77 |
|
77 |
|
Share premium |
|
18,338 |
|
18,338 |
|
18,338 |
|
Other reserves |
|
6,145 |
|
6,145 |
|
6,145 |
|
Statutory reserves |
|
2,800 |
|
2,722 |
|
2,800 |
|
Foreign currency translation reserve |
|
6,432 |
|
6,291 |
|
6,315 |
|
Accumulated losses |
|
(28,581) |
|
(3,931) |
|
(13,759) |
|
Equity attributable to equity holders of the parent |
5,211 |
|
29,642 |
|
19,916 |
|
|
Non-controlling interest |
|
30,365 |
|
39,648 |
|
36,756 |
|
Total equity |
|
35,576 |
|
69,290 |
|
56,672 |
|
Total liabilities and equity |
|
698,889 |
|
393,377 |
|
581,464 |
|
|
|
|
|
|
|
|
|
Consolidated Statement of Changes in Equity |
||||||||||||||||||||||||||||||||||||||
|
For the 6 months ended 30 June 2010 |
||||||||||||||||||||||||||||||||||||||
|
|
Attributable to equity holders of the parent |
|
|
|
|
|||||||||||||||||||||||||||||||||
|
For the 6 months ended 30 June 2010 (Unaudited) |
Share capital |
Share premium |
Other reserves |
Statutory reserves |
Accumulated losses |
Foreign currency translation reserve |
Total |
|
Non-controlling interest |
Total equity |
||||||||||||||||||||||||||||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|||||||||||||||||||||
|
Balance as at 1 January 2010 |
77 |
|
18,338 |
|
6,145 |
|
2,800 |
|
(13,759) |
|
6,315 |
|
19,916 |
|
36,756 |
|
56,672 |
|||||||||||||||||||||
|
Total comprehensive loss for the period |
- |
|
- |
|
- |
|
- |
|
(14,822) |
|
117 |
|
(14,705) |
|
(6,391) |
|
(21,096) |
|||||||||||||||||||||
|
Balance as at 30 June 2010 |
77 |
|
18,338 |
|
6,145 |
|
2,800 |
|
(28,581) |
|
6,432 |
|
5,211 |
|
30,365 |
|
35,576 |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
Attributable to equity holders of the parent |
|
|
|
|
|||||||||||||||||||||||||||||||||
|
For the 6 months ended 30 June 2009 (Unaudited) |
Share capital |
Share premium |
Other reserves |
Statutory reserves |
Accumulated losses |
Foreign currency translation reserve |
Total |
|
Non-controlling interest |
Total equity |
||||||||||||||||||||||||||||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|||||||||||||||||||||
|
Balance as at 1 January 2009 |
77 |
|
18,338 |
|
6,145 |
|
2,722 |
|
(13,834) |
|
6,272 |
|
19,720 |
|
9,558 |
|
29,278 |
|||||||||||||||||||||
|
Capital injection to subsidiary from non-controlling interest |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
29,851 |
|
29,851 |
|||||||||||||||||||||
|
Total comprehensive income for the period |
- |
|
- |
|
- |
|
- |
|
9,903 |
|
19 |
|
9,922 |
|
926 |
|
10,848 |
|||||||||||||||||||||
|
Dividend paid to non-controlling interest |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(687) |
|
(687) |
|||||||||||||||||||||
|
Balance as at 30 June 2009 |
77 |
|
18,338 |
|
6,145 |
|
2,722 |
|
(3,931) |
|
6,291 |
|
29,642 |
|
39,648 |
|
69,290 |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
Attributable to equity holders of the parent |
|
|
|
|
|||||||||||||||||||||||||||||||||
|
For the year ended 31 December 2009 (Audited) |
Share capital |
Share premium |
Other reserves |
Statutory reserves |
Retained earnings/(accumulated losses) |
Foreign currency translation reserve |
Total |
|
Non-controlling interest |
Total equity |
||||||||||||||||||||||||||||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|||||||||||||||||||||
|
Balance as at 1 January 2009 |
77 |
|
18,338 |
|
6,145 |
|
2,722 |
|
(13,834) |
|
6,272 |
|
19,720 |
|
9,558 |
|
29,278 |
|||||||||||||||||||||
|
Capital injection to subsidiary from non-controlling interest |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
29,861 |
|
29,861 |
|||||||||||||||||||||
|
Total comprehensive loss for the year |
- |
|
- |
|
- |
|
- |
|
187 |
|
43 |
|
230 |
|
(2,017) |
|
(1,787) |
|||||||||||||||||||||
|
Dividend paid to non-controlling interest |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(680) |
|
(680) |
|||||||||||||||||||||
|
Transfer to statutory reserves |
- |
|
- |
|
- |
|
112 |
|
(112) |
|
- |
|
- |
|
- |
|
- |
|||||||||||||||||||||
|
Transfer to non-controlling interest |
- |
|
- |
|
- |
|
(34) |
|
- |
|
- |
|
(34) |
|
34 |
|
- |
|||||||||||||||||||||
|
Balance as at 31 December 2009 |
77 |
|
18,338 |
|
6,145 |
|
2,800 |
|
(13,759) |
|
6,315 |
|
19,916 |
|
36,756 |
|
56,672 |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Consolidated Statement of Cash Flow |
||||||
|
For the 6 months ended 30 June 2010 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended 30 June 2010 |
6 months ended 30 June 2009 |
Year ended 31 December 2009 |
||
|
|
Notes |
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
|
Cash flow from operating activities |
a |
(49,194) |
|
(26,427) |
|
(105,071) |
|
Cash flow from investing activities |
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
(37,952) |
|
(41,541) |
|
(87,079) |
|
Purchase of intangible assets |
|
(2,319) |
|
(5,502) |
|
(13,923) |
|
Interest received |
|
520 |
|
753 |
|
1,649 |
|
Government grant received |
|
- |
|
- |
|
438 |
|
Proceeds on sales of available-for-sale financial assets |
|
- |
|
544 |
|
961 |
|
Gain on sales of available-for-sale financial assets |
|
- |
|
570 |
|
- |
|
Proceeds from disposal of property, plant and equipment |
|
- |
|
- |
|
661 |
|
Cash flow used in investing activities |
|
(39,751) |
|
(45,176) |
|
(97,293) |
|
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
|
|
Capital injection to subsidiary from non-controlling shareholders |
- |
|
29,850 |
|
29,861 |
|
|
Proceeds from bank borrowings |
|
192,544 |
|
108,110 |
|
547,690 |
|
Repayment of bank borrowings |
|
(109,916) |
|
(48,867) |
|
(328,814) |
|
Loans from/(to) related parties |
|
8,727 |
|
(9,123) |
|
(17,900) |
|
Interest paid |
|
(11,453) |
|
(5,371) |
|
(11,461) |
|
Dividend paid to non-controlling interest |
|
- |
|
(687) |
|
(680) |
|
Cash flow from financing activities |
|
79,902 |
|
73,912 |
|
218,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(9,043) |
|
2,309 |
|
16,332 |
|
Cash at the beginning of periods/year |
|
51,844 |
|
34,728 |
|
34,728 |
|
Foreign currency translation differences |
|
959 |
|
15 |
|
784 |
|
Cash at the end of periods/year |
|
43,760 |
|
37,052 |
|
51,844 |
|
|
|
|
|
|
|
|
|
Notes to Consolidated Statement of Cash Flow |
||||||
|
For the 6 months ended 30 June 2010 |
||||||
|
|
|
|
|
|
|
|
|
(a) Cash flow from operating activities |
|
|
|
|
|
|
|
|
|
6 months ended 30 June 2010 |
6 months ended 30 June 2009 |
Year ended 31 December 2009 |
||
|
|
|
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
|
$'000 |
|
$'000 |
|
$'000 |
|
(Loss)/profit before tax |
|
(21,064) |
|
10,971 |
|
(1,953) |
|
Adjustments for: |
|
|
|
|
|
|
|
Amortisation of intangible assets |
|
37 |
|
34 |
|
181 |
|
Provisions for doubtful debts |
|
- |
|
0 |
|
195 |
|
Depreciation of property, plant and equipment |
9,992 |
|
6,531 |
|
13,812 |
|
|
Loss on disposal of property, plant and equipment |
- |
|
117 |
|
299 |
|
|
Amortisation of deferred capital grants |
|
- |
|
(95) |
|
(650) |
|
Gain on disposal of available-for-sale financial assets |
- |
|
(570) |
|
(417) |
|
|
Foreign exchange gain |
|
(117) |
|
- |
|
(793) |
|
Interest income |
|
(520) |
|
(753) |
|
(1,649) |
|
Finance expenses |
|
11,453 |
|
5,371 |
|
11,461 |
|
Operating cash flows before working capital changes |
(219) |
|
21,606 |
|
20,486 |
|
|
|
|
|
|
|
|
|
|
Working capital changes: |
|
|
|
|
|
|
|
(Increase)/decrease in: |
|
|
|
|
|
|
|
Inventories |
|
(54,448) |
|
(40,012) |
|
(48,070) |
|
Trade and other receivables |
|
(13,224) |
|
8,995 |
|
(28,061) |
|
Amounts due from related parties |
|
- |
|
299 |
|
299 |
|
Restricted cash |
|
(28,809) |
|
(11,392) |
|
(64,324) |
|
Increase/(decrease) in: |
|
|
|
|
|
|
|
Trade and other payables |
|
38,847 |
|
(2,648) |
|
20,575 |
|
Amounts due to related parties |
|
8,727 |
|
- |
|
1,910 |
|
Cash used in operations |
|
(49,126) |
|
(23,152) |
|
(97,185) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax paid |
|
(68) |
|
(3,275) |
|
(7,886) |
|
Net cash utilised in operating activities |
|
(49,194) |
|
(26,427) |
|
(105,071) |
|
|
|
|
|
|
|
|
Notes to the Interim Consolidated Financial Information
For Six Months Ended 30 June 2010
(Unaudited)
1. General information
HaiKe Chemical Group Ltd. (the "Company") is a public limited company in Cayman Islands incorporated on 20 June 2006, and is quoted on AIM. The address of the registered office is at Scotia Center 4th Floor, P.O. Box 2804, George Town, Grand Cayman, Cayman Islands. The principal activity of the Company is that of investment holding. The Company's ultimate parent company is Hi-Tech Chemical Investment Limited, a company incorporated in the British Virgin Islands.
The principal activities of the Group are manufacturing of petrochemical and chemical products. The principal place of business of the Company is West of Boxin Road, Shikou Country, Dongying City, Shandong Province, China.
The interim consolidated financial information of the Company for the six months ended 30 June 2010 comprises HaiKe Chemical Group Ltd. and its subsidiary undertakings (the "Group").
2. Accounting policies
The consolidated financial statements of HaiKe Chemical Group Ltd. and its subsidiary undertakings (the "Group") and the individual financial statements of HaiKe Chemical Group Ltd. (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 Group's latest annual audited financial statements and are expected to be used for Group's annual financial statements for the year ending 31 December 2010.
Financial information for the six months ended 30 June 2010 and 30 June 2009 is unaudited and does not constitute the Group's financial statements for these periods. Comparative financial information for the full year ended 31 December 2009 has been derived from the audited financial statements for that period. The Board of Directors approved the interim statements on 7 September 2010.
3. Segmental information
a) Operating segment
The following table presents revenue and profit from the Group's operating segments for the financial periods ended 30 June 2010 and 30 June 2009, and for the financial year ended 31 December 2009.
|
|
6 months ended 30 June 2010 (Unaudited) |
6 months ended 30 June 2009 (Unaudited) |
Year ended 31 December 2009 (Audited) |
||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
Sales to external customers |
|
|
|
|
|
|
Petrochemical |
407,826 |
|
218,177 |
|
486,288 |
|
Chemical products |
59,397 |
|
43,350 |
|
105,041 |
|
|
467,223 |
|
261,527 |
|
591,329 |
|
(Loss)/profit for the periods/year |
|
|
|
|
|
|
Petrochemical |
(22,541) |
|
12,602 |
|
1,130 |
|
Share of associate |
- |
|
(154) |
|
(60) |
|
|
(22,541) |
|
12,448 |
|
1,070 |
|
Chemical products |
2,051 |
|
(706) |
|
615 |
|
Unallocated expense - Head office cost |
(445) |
|
(649) |
|
(2,405) |
|
- Consolidation adjustments |
(129) |
|
(122) |
|
(1,233) |
|
|
|
|
|
|
|
|
(Loss)/profit from operations before tax |
(21,064) |
|
10,971 |
|
(1,953) |
|
Income tax (expense)/credit |
(149) |
|
(142) |
|
123 |
|
(Loss)/profit for the periods/year |
(21,213) |
|
10,829 |
|
(1,830) |
|
|
|
|
|
|
|
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities to the Group's corresponding amounts:
|
|
6 months ended 30 June 2010 (Unaudited) |
6 months ended 30 June 2009 (Unaudited) |
Year ended 31 December 2009 (Audited) |
||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
Total revenue for reportable segments |
467,223 |
|
261,527 |
|
591,329 |
|
|
|
|
|
|
|
|
(Loss)/profit after income tax expense |
|
|
|
|
|
|
Total (loss)/profit for reportable segments |
(20,490) |
|
11,896 |
|
1,745 |
|
Share of associate |
- |
|
(154) |
|
(60) |
|
Corporation taxes |
(149) |
|
(142) |
|
123 |
|
Unallocated amounts: |
|
|
|
|
|
|
Other corporate expenses |
(574) |
|
(771) |
|
(3,638) |
|
(Loss)/profit after income tax expense (continuing activities) |
(21,213) |
|
10,829 |
|
(1,830) |
|
|
|
|
|
|
|
3. Segmental information (Cont'd)
|
|
6 months ended 30 June 2010 (Unaudited) |
6 months ended 30 June 2009 (Unaudited) |
Year ended 31 December 2009 (Audited) |
||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
Segment assets |
|
|
|
|
|
|
Petrochemical |
575,528 |
|
248,386 |
|
578,487 |
|
Investment in associate |
88 |
|
- |
|
66 |
|
|
575,616 |
|
248,386 |
|
578,553 |
|
Chemical products |
255,318 |
|
243,625 |
|
106,115 |
|
Unallocated assets |
494 |
|
436 |
|
2,567 |
|
Less: Intersegment balance |
(132,539) |
|
(99,070) |
|
(105,771) |
|
|
698,889 |
|
393,377 |
|
581,464 |
|
Segment liabilities |
|
|
|
|
|
|
Petrochemical |
531,195 |
|
267,807 |
|
509,422 |
|
Chemical products |
259,055 |
|
157,991 |
|
117,335 |
|
Unallocated liabilities |
5,602 |
|
3,842 |
|
3,806 |
|
Less: Intersegment balance |
(132,539) |
|
(105,553) |
|
(105,771) |
|
|
663,313 |
|
324,087 |
|
524,792 |
|
Other segment information |
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
Petrochemical |
30,727 |
|
41,069 |
|
96,840 |
|
Chemical products |
17,573 |
|
10,428 |
|
19,839 |
|
|
48,300 |
|
51,497 |
|
116,679 |
|
Depreciation and amortization |
|
|
|
|
|
|
Petrochemical |
21,753 |
|
3,187 |
|
6,925 |
|
Chemical products |
3,589 |
|
3,378 |
|
7,068 |
|
|
25,342 |
|
6,565 |
|
13,993 |
|
|
|
|
|
|
|
|
Finance income |
|
|
|
|
|
|
Petrochemical |
272 |
|
690 |
|
958 |
|
Chemical products |
248 |
|
63 |
|
1,484 |
|
|
520 |
|
753 |
|
2,442 |
|
|
|
|
|
|
|
|
Finance expense |
|
|
|
|
|
|
Petrochemical |
9,653 |
|
4,564 |
|
8,153 |
|
Chemical products |
1,800 |
|
807 |
|
3,308 |
|
|
11,453 |
|
5,371 |
|
11,461 |
|
|
|
|
|
|
|
Capital expenditures include additions to property, plant and equipment and intangible assets.
3. Segmental information (Cont'd)
b) Geographical information
The following table provides an analysis of the Group's sales by geographical market, irrespective of the origin of the goods or services.
|
External revenue |
6 months ended 30 June 2010 (Unaudited) |
6 months ended 30 June 2009 (Unaudited) |
Year ended 31 December 2009 (Audited) |
||||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
|
Sales to external customers |
|
|
|
|
|
|
|
|
People's Republic of China |
452,716 |
|
251,450 |
|
563,769 |
|
|
|
Exports |
14,507 |
|
10,077 |
|
27,560 |
|
|
|
|
467,223 |
|
261,527 |
|
591,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended 30 June 2010 (Unaudited) |
Venezuela |
|
Russia |
|
Other |
|
Total |
|
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
Export sales to |
624 |
|
547 |
|
13,336 |
|
14,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended 30 June 2009 (Unaudited) |
Chile |
|
Belarus |
|
Other |
|
Total |
|
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
Export sales to |
3,157 |
|
1,410 |
|
5,510 |
|
10,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2009 (Audited) |
India |
|
Italy |
|
Other |
|
Total |
|
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
Export sales to |
6,502 |
|
5,166 |
|
15,892 |
|
27,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets |
30 June 2010 (Unaudited) |
30 June 2009 (Unaudited) |
31 December 2009 (Audited) |
||||
|
|
$'000 279,807 - 279,807 |
$'000 196,954 - 196,954 |
$'000 253,527 - 253,527 |
||||
|
Peoples' Republic of China |
|||||||
|
Other areas of the world |
|||||||
|
|
|||||||
|
|
|||||||
Revenues from one customer in the petrochemical segment represent approximately 5% (31 December 2009: 8%) of the total Group's revenue.
4. Taxation
Major components of income tax expense/(credit)
The major components of income tax expense/(credit) are as follows:
|
|
6 months ended 30 June 2010 (Unaudited) |
6 months ended 30 June 2009 (Unaudited) |
Year ended 31 December 2009 (Audited) |
|||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
|
|
Current income tax |
149 |
|
108 |
|
(7) |
|
|
Deferred tax: |
|
|
|
|
|
|
|
Originating and reversal of temporary differences |
- |
|
34 |
|
(116) |
|
|
Income tax recognised in income statement |
149 |
|
142 |
|
(123) |
|
|
|
|
|
|
|
|
|
Relationship between tax expense/(credit) and accounting (loss)/profit
A reconciliation between tax expense and the accounting profit multiplied by the applicable corporate tax rate is as follows:
|
|
6 months ended 30 June 2010 (Unaudited) |
6 months ended 30 June 2009 (Unaudited) |
Year ended 31 December 2009 (Audited) |
||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
Accounting (loss)/profit before income tax |
(21,064) |
|
10,971 |
|
(1,953) |
|
|
|
|
|
|
|
|
Tax at respective companies' domestic income tax rate |
(5,123) |
|
3,137 |
|
421 |
|
Effect of partial tax exemption |
(287) |
|
333 |
|
(181) |
|
Utlisation of previous unrecongized tax loss |
(80) |
|
(214) |
|
(1,782) |
|
Non-deductible expenses |
- |
|
- |
|
345 |
|
Unrecognized tax losses |
5,639 |
|
(2,922) |
|
1,074 |
|
Share of results of associate |
- |
|
(192) |
|
- |
|
Income tax expense recognized in income statement |
149 |
|
142 |
|
(123) |
|
|
|
|
|
|
|
Deferred tax assets
|
|
6 months ended 30 June 2010 (Unaudited) |
|
6 months ended 30 June 2009 (Unaudited) |
|
Year ended 31 December 2009 (Audited) |
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
At beginning of the financial periods / year |
908 |
|
791 |
|
791 |
|
Transfer to/(from) income statement |
- |
|
(36) |
|
116 |
|
Exchange differences |
3 |
|
1 |
|
1 |
|
At end of the financial periods / year |
911 |
|
756 |
|
908 |
|
|
|
|
|
|
|
Deferred income tax relates to the following:
|
|
6 months ended 30 June 2010 (Unaudited) |
6 months ended 30 June 2009 (Unaudited) |
Year ended 31 December 2009 (Audited) |
||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
Provision for doubtful debts |
666 |
|
617 |
|
666 |
|
Allowance for long-term investment |
26 |
|
26 |
|
26 |
|
Depreciation |
219 |
|
113 |
|
216 |
|
|
911 |
|
756 |
|
908 |
|
|
|
|
|
|
|
Unrecognised tax losses
As at 30 June 2010, the Group has tax losses of approximately $13,964,000 (30 June 2009: $5,100,000; 31 December 2009: $7,265,000) that are available to offset against future taxable profits of the companies in which the losses arose for which no deferred tax asset is recognised due to uncertainty of its recoverability. The use of these tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the country in which the companies operate.
5. (Loss)/earnings per share from continuing operations
(Loss)/earnings for the purpose of basic and diluted (loss)/earnings per share are the net (loss)/profit for six months ended 30 June 2010 attributable to equity holders of the parent of $14,822,000 of loss (for the six months ended 30 June 2009: $9,903,494 of profit, for the year ended 31 December 2009: $187,000 of profit).
The (loss)/profit from continuing operations for the financial periods / year attributable to equity holders of the parent is as follows:
|
|
6 months ended 30 June 2010 (Unaudited) |
6 months ended 30 June 2009 (Unaudited) |
Year ended 31 December 2009 (Audited) |
|||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
(Loss)/profit from continuing operations attributable to equity holders of the parent |
(14,822) |
|
9,903 |
|
187 |
|
|
|
|
|
|
|
|
|
|
Number of ordinary shares |
6 months ended 30 June 2010 (Unaudited) |
6 months ended 30 June 2009 (Unaudited) |
Year ended 31 December 2009 (Audited) |
||
|
|
$'000 |
|
$'000 |
|
$'000 |
|
Weighted average number of ordinary shares - basic & diluted |
38,353,571 |
38,353,571 |
|
38,353,571 |
|
6. Contingencies
Up to 30 June 2010, as a warrantor, the Group has guaranteed the bank loans of third parties to aggregate amount of $277,996,020 (31 December 2009: $218,955,682; 30 June 2009: $125,800,000). It is unlikely that any significant liability to the Group will arise because the financial statements of the warrantees indicate that they are able to pay their debts as they mature. The directors are of the view that they do not expect any liability to arise in respect of the guarantee at the date of these financial statements.
Related Shares:
Haike Chemical Group