30th Sep 2014 08:02
HAIKE CHEMICAL GROUP LIMITED
INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014
(UNAUDITED)
HaiKe Chemical Group Ltd. ("HaiKe" or "the Company" or "the Group"), the AIM quoted (AIM: HAIK) specialty chemical business based in Shandong Province, China, today announces its unaudited consolidated results for the six months ended 30 June 2014.
Financial highlights
· Total revenues were stable at RMB460.0 million (H1 2013: RMB469.0 million)
· Gross profit fell 18.4% to RMB47.0 million (H1 2013: profit of RMB57.6 million)
· Profit from operations decreased by 49.0% to RMB16.5 million (H1 2013: profit of RMB32.4 million), adversely affected by one-off restructuring expenses
· Loss for the period was RMB380.5 million (H1 2013: loss of RMB326.6 million)
· Bank loans increased to RMB860.1 million as at 30 June 2014 compared to RMB393.3 million as at 31 December 2013
Operational highlights
· Major restructuring successfully completed in H1 2014 resulting in the divestment of the Group's refinery and biochemical assets to leave a smaller, more focused specialty chemicals business
· Specialty chemical products, particularly those in the mid to lower end, remain in oversupply in domestic market
· Continued focus on high-end products to enhance profitability, increase product mix and grow margins
· Modest sales volume growth in high-end specialty chemicals coupled with a 1.5% increase in average selling prices for specialty products
Outlook
· The global economy remains challenging; whilst growth in local market remains subdued
· Continued efforts to expand source of income and tighten cost control
· Development of new business opportunities underway
Mr. Xiaohong Yang, Executive Chairman, said:
"This has been a tough transitional period for the Company, however with support from our shareholders, we successfully completed a major restructuring of the Group in the first half of the financial year. This culminated in the divestment of the Group's historically unprofitable assets and a significant portion of the Group's financial liabilities.
Despite making good progress in our long-term strategy of focusing on the higher margin, profitable specialty chemicals business, challenging market conditions, including oversupply of specialty chemicals in the domestic market, resulted in a difficult first half for the Group. Encouragingly, the Group's performance improved in July and August, recording a positive operating profit for both months and we continue to work hard to improve the overall performance of the business."
The Interim Results are being sent to shareholders and will be available from the Company's website www.haikechemical.com.
For further information please contact:
HaiKe Chemical Group | George Zeng, Chief Financial Officer
| +86 138 2520 2570 |
Westhouse Securities
| Martin Davison / Richard Johnson | +44 (0) 20 7601 6100 |
Cardew Group | Shan Shan Willenbrock / Tom Horsman | +44 (0) 20 7930 0777 |
CHAIRMAN'S STATEMENT
As planned, we completed a restructuring of the Group during the first half of the financial year. HaiKe now comprises 2 major subsidiaries: (1) Spring Chemical, a PRC manufacturing company which produces and sells specialty chemical products; and (2) Haike Trading, a Hong Kong based company which trades feedstock on behalf of the Group.
In order to comply with the International Financial Reporting Standards, both H1 2014 and its comparable H1 2013 accounts were restated to reflect the restructuring during the reporting period. Profit and loss, as well as cash flow items in connection with discontinuing operations during the period, were carved out and showed in net amount in a separate line, while Balance Sheet items showed post-restructuring status.
1. Review of operating results
During the first half of 2014, the domestic market for specialty chemical products remained flat. Feedstock prices decreased as a result of the depressed crude oil price whilst domestic oversupply, particularly for mid to lower end products, constrained earnings across the industry.
In H1 2014, the Group sold 60,000 tons of speciality chemicals, representing a volume gain of 4.5% when compared to the same period in the previous year. The average price for speciality products increased by 1.3% year-on-year.
Trading revenues from HaiKe Trading decreased to RMB29.1 million during the period (H1 2013: RMB46.1 million) as a result of carving out of the biochemicals trading which formed part of the restructuring.
Sales Volume | Average Realised Price | |||||
('000 ton) | (CNY/ton) | |||||
| 6 months ended 30-Jun-14 | 6 months ended 30-Jun-13 | Change y-o-y (%) | 6 months ended 30-Jun-14 | 6 months ended 30-Jun-13 | Change y-o-y (%) |
DiMethyl Carbonate | 21 | 19 | 10.4% | 5,155 | 5,123 | 0.6% |
Propylene glycol | 17 | 15 | 16.2% | 9,207 | 8,752 | 5.2% |
Isopropyl alcohol | 20 | 22 | -9.3% | 8,251 | 8,142 | 1.3% |
Diisopropyl ether | 1 | 1 | 18.3% | 12,372 | 15,174 | -18.5% |
Total | 60 | 57 | 4.5% | 7,544 | 7,449 | 1.3% |
Sales turnover, excluding that from discontinuing operations, was comparable at RMB460.0 million for the six months ended 30 June 2014 (H1 2013: RMB469.0million). Gross margins fell to 10.2% (H1 2013: 12.3%). Profit from operations was RMB6.3 million (H1 2013: RMB32.4 million).
The discontinued operations, including refinery products, biochemicals and salt chemicals, recorded a total turnover of RMB16.6billion (H1 2013: RMB7.8 billion) and a net loss of RMB381.9million (H1 2013: net loss of RMB331.2 million) during the period under review.
2. Financial Analysis
Turnover
The Group's sales turnover was RMB460.0 million in the first half of 2014 (H1 2013: RMB469.0 million) which was a compound result of sales volume increase, sales price gain and a trading volume decrease.
Gross Profit
Gross profit was RMB47.0 million for the six months ended 30 June 2014, an 18.4% decrease compared with the same period in 2013 (H1 2013: RMB57.6 million). The decrease was mainly attributable to an increase in direct labour cost as a result of an increase in domestic inflation.
Selling, General and Administrative Expenses
Selling and distribution expenses increased by 4.6% to RMB16.6 million for the six months ended 30 June 2014 (H1 2013: RMB15.9 million) due to more aggressive sales and marketing efforts in sluggish market conditions, including incremental costs incurred in setting up new sales offices in Shanghai and Hong Kong. General and administrative expenses increased to RMB13.9 million (H1 2013: RMB9.6 million) which was mainly attributable to a one-off expense incurred during the restructuring process.
Net Interest Expenses
Interest income decreased by 65.5% year-on-year to RMB1.3 million for the six months ended 30 June 2014 (H1 2013: RMB3.8 million) due to lower investment return on cash management as a result of smaller average cash balance.
Interest expenses decreased by 47.9% year-on-year to RMB16.4 million for the six months ended 30 June 2014 (H1 2013: RMB31.6 million). This was mainly due to a decrease in effective interest rates resulting from the deployment of low-cost financing tools.
Profit Before Taxation
Profit before taxation was RMB1.4million for the six months ended 30 June 2014, compared to a profit of RMB4.7 million for the same period in the previous year.
Income Tax
Income tax charge was RMB1.8 million for the six months ended 30 June 2014, as compared to RMB2.8 million for the same period in the previous year.
Loss for the year
Loss for the year was RMB380.5million for the six months ended 30 June 2014 (H1 2013: loss of RMB326.6 million).
Loss attributable to non-controlling interest of the Company
The loss attributable to minority interests was RMB37.1 million for the six months ended 30 June 2014 (H1 2013: loss of RMB40.1 million). This loss mainly arose from a minority interest in Hi-Tech Chemical.
Loss attributable to owners of the Company
Due to the composite effects described above, the loss attributable to the owners of the Company was RMB343.4 million for the six months ended 30 June 2014 (H1 2013: loss of RMB286.5 million).
Cash and cash equivalents
Cash and cash equivalents decreased to RMB7.2 million as at 30 June 2014 compared to RMB125.2 million as at 31 December 2013. The decrease in cash and cash equivalents was mainly due to the disposal of the Group's refinery assets.
Bank loans
Bank loans increased to RMB860.1 million as at 30 June 2014 compared to RMB393.3 million as at 31 December 2013. The short-term portion of bank loans increased by RMB466.8 million. The increase in bank loans was mainly due to increased financing demand for operations as a result of negative operating cash flow in H1 2014.
Cash flow from operating activities
Cash flow from operating activities was RMB409.9 million for the six months ended 30 June 2014, compared to a negative cash flow of RMB256.9 million for the same period in the previous year. This was mainly attributable to earnings deterioration and negative movements of working capital.
3. Outlook
The outlook remains challenging on the back of the volatile global economy and slowing domestic economic growth. In addition, most specialty chemical products remain in oversupply whilst sales' volumes remain flat and prices are under pressure.
In response to these difficult market conditions, the Company will continue to improve product mix by focusing on the more profitable higher-end products, drive technological innovation, tighten cost control, and strengthen sales and marketing efforts by developing overseas markets. The Company will also assess the viability of introducing new products to the domestic market to diversify our specialty chemicals offering.
Encouragingly, the Group's performance improved in July and August 2014, recording a positive operating profit for both months. This was mainly attributable to a turnaround at Spring Chemical as a result of a higher utilisation rate compared to the first half.
Xiaohong Yang
Executive Chairman
Consolidated statement of comprehensive income
For the six months ended 30 June 2014
|
| 6 months ended | 6 months ended | Year ended |
|
| 30-Jun-14 | 30-Jun-13 | 31-Dec-13 |
| Note | (Unaudited) | (Unaudited) | (Audited) |
|
| CNY'000 | CNY'000 | CNY'000 |
|
|
|
| |
Revenue |
| 460,042 | 468,971 | 981,500 |
Cost of sales |
| (413,032) | (411,367) | (870,733) |
Gross profit |
| 47,010 | 57,604 | 110,767 |
Other operating income |
| 21 | 275 | 650 |
Administrative expenses |
| (13,895) | (9,568) | (48,455) |
Selling and distribution expenses |
| (16,610) | (15,882) | (35,694) |
Profit from operations |
| 16,526 | 32,429 | 27,268 |
|
|
|
| |
Finance expenses |
| (16,447) | (31,578) | (51,484) |
Finance income |
| 1,312 | 3,799 | 14,066 |
|
|
|
| |
Profit / (loss) before tax |
| 1,391 | 4,650 | (10,150) |
|
|
|
| |
Tax expense | 4 | (1,752) | (2,823) | (835) |
(Loss) / Profit for the year from continuing operations |
| (361) | 1,827 | (10,985) |
Loss for the year from discontinuing operations |
| (380,181) | (328,405) | (784,192) |
Loss for the year |
| (380,542) | (326,578) | (795,177) |
|
|
|
| |
Other comprehensive loss, net of tax |
|
|
| |
Items that will be reclassified subsequently to profit or loss |
|
|
| |
Exchange difference arising from consolidation |
| 523 | - | (448) |
Total comprehensive loss for the year, net of tax |
| (380,019) | (326,578) | (795,625) |
|
|
|
| |
Profit / (loss) for the period attributable to: |
|
|
| |
Owners of parent |
| (343,404) | (286,496) | (709,546) |
Non-controlling interest |
| (37,138) | (40,082) | (85,631) |
|
| (380,542) | (326,578) | (795,177) |
|
|
|
| |
Total comprehensive loss for the period attributable to: |
| (342,881) | (286,496) | (709,994) |
Owners of parent |
| (37,138) | (40,082) | (85,631) |
Non-controlling interests |
| (380,019) | (326,578) | (795,625) |
|
|
|
| |
Earnings per share for profit attributable to the |
|
|
| |
ordinary equity holders of the parent during the period |
|
|
| |
|
|
|
| |
Basic |
|
|
| |
- continuing operations |
| CNY0.009 | CNY0.048 | (CNY0.286) |
- discontinuing operations |
| (CNY8.954) | (CNY7.470) | (CNY18.214) |
Total |
| (CNY8.963) | (CNY7.422) | (CNY18.500) |
Diluted |
|
|
| |
- continuing operations |
| CNY0.009 | CNY0.048 | (CNY0.286) |
- discontinuing operations |
| (CNY8.954) | (CNY7.470) | (CNY18.214) |
Total |
| (CNY8.963) | (CNY7.422) | (CNY18.500) |
Consolidated Statement of Financial Position
As at 30 June 2014
|
| 6 months ended |
| 6 months ended |
| Year ended | |
|
| 30-Jun-14 |
| 30-Jun-13 |
| 31-Dec-13 |
|
| Notes | (Unaudited) |
| (Unaudited) |
| (Audited) |
|
|
| CNY'000 |
| CNY'000 |
| CNY'000 |
|
ASSETS |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
Property, plant and equipment |
| 144,028 |
| 158,436 |
| 149,525 |
|
Intangible assets |
|
|
| 34 |
|
|
|
Investments in equity-accounted associates |
|
|
|
| 0 |
| |
Deferred tax assets | 4 |
|
| 729 |
|
|
|
|
| 144,028 |
| 159,199 |
| 149,525 |
|
Current assets |
|
|
|
|
|
|
|
Inventories |
| 35,650 |
| 57,700 |
| 58,658 |
|
Trade and other receivables |
| 330,430 |
| 215,610 |
| 318,408 |
|
Amounts due from related parties |
| 585,479 |
| - |
| 0 |
|
Income tax receivable |
|
|
| - |
| - |
|
Restricted cash |
| 106,260 |
| - |
| 98,649 |
|
Cash and cash equivalents |
| 7,248 |
| 131,296 |
| 125,167 |
|
Assets of disposal group as held for sale |
| 0 |
| 8,528,840 |
| 11,046,967 |
|
|
| 1,065,067 |
| 8,933,446 |
| 11,647,849 |
|
Total assets |
| 1,209,095 |
| 9,092,645 |
| 11,797,374 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Short-term loan |
| 860,108 |
| 349,988 |
| 393,280 |
|
Trade and other payables |
| 256,229 |
| 106,467 |
| 84,783 |
|
Amounts due to related parties |
| 859 |
|
|
| 0 |
|
Liabilities of disposal group as held for sale | 0
|
| 9,144,508 |
| 12,295,982 |
| |
|
| 1,117,196 |
| 9,600,963 |
| 12,774,045 |
|
Non-current liabilities |
|
|
|
|
|
|
|
Long-term loan |
|
|
|
|
|
|
|
Deferred income |
|
|
|
|
|
|
|
|
| - |
| - |
| 0 |
|
Total liabilities |
| 1,117,196 |
| 9,600,963 |
| 12,774,045 |
|
|
|
|
|
|
|
|
|
CAPITAL AND RESERVES |
|
|
|
|
|
|
|
Share capital |
| 598 |
| 598 |
| 598 |
|
Share premium |
| 142,312 |
| 142,312 |
| 142,312 |
|
Other reserves |
| 1,818 |
| 1,818 |
| 1,818 |
|
Foreign currency translation reserve |
|
|
| (769) |
| (523) |
|
Statutory reserves |
| 30,928 |
| 30,928 |
| 30,928 |
|
Accumulated losses |
| (83,796) |
| (637,188) |
| (1,060,238) |
|
Equity attributable to equity holders of the parent |
| 91,860 |
| (462,301) |
| (885,105) |
|
Non-controlling interest |
| 39 |
| (46,017) |
| (91,566) |
|
Total equity |
| 91,899 |
| (508,318) |
| (976,671) |
|
Total liabilities and equity |
| 1,209,095 |
| 9,092,645 |
| 11,797,374 |
|
Consolidated Statement of Changes in Equity
For the 6 months ended 30 June 2014
|
| |||||||||||||||
For the 6 months ended 30 June 2014（Unaudited） | Share capitalCNY'000 |
| Share premiumCNY'000 |
| Other reservesCNY'000 |
| Foreign currency translation reserve | Statutory reservesCNY'000 |
| Accumulated lossesCNY'000 |
| TotalCNY'000 | Non-controlling interestCNY'000 |
| Total equityCNY'000 | |
Balance as at 1 January 2014 | 598 |
| 142,312 |
| 1,818 |
| (523) | 30,928 |
| (1,060,238) |
| (885,105) | (91,566) |
| (976,671) | |
Transfer to statutory reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 307 | |
Transactions with owners |
|
| - |
| - |
| - | - |
| - |
|
| - |
| 307 | |
Loss for the year |
|
|
|
|
|
|
|
|
| (343,404) |
| (343,404) | (37,138) |
| (380,542 | |
Other comprehensive loss | - |
| - |
| - |
|
| - |
| 1,319,846 |
| 1,319,846 | 128,743 |
| 1,448,589 | |
- Foreign currency translation | - |
| - |
|
|
| 523 | - |
|
|
| 523 |
|
| 523 | |
Total comprehensive loss for the year | - |
| - |
| - |
| 523 | - |
| 976,442 |
| 976,965 | 91,605 |
| 1,068,570 | |
Balance as at 30 June 2014 | 598 |
| 142,312 |
| 1,818 |
| 0 | 30,928 |
| (83,796) |
| 91,860 | 39 |
| 91,899 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |||||||||||||||
For the 6 months ended 30 June 2013（Unaudited） | Share capitalCNY'000 |
| Share premiumCNY'000 |
| Other reservesCNY'000 |
| Foreign currency translation reserve | Statutory reservesCNY'000 |
| Accumulated lossesCNY'000 |
| TotalCNY'000 | Non-controlling interestCNY'000 |
| Total equityCNY'000 | |
Balance as at 1 January 2013 | 598 |
| 142,312 |
| 1,818 |
| (75) | 29,323 |
| (349,087) |
| (175,111) | (5,935) |
| (181,046) | |
Transfer to statutory reserves |
|
|
|
|
|
|
| 1,605 |
| (1,605) |
| - |
|
|
| |
Transactions with owners | - |
| - |
| - |
| - | 1,605 |
| (1,605) |
| - | - |
| - | |
Loss for the year |
|
|
|
|
|
|
|
|
| (286,496) |
| (286,496) | (40,082) |
| (326,578) | |
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
- Foreign currency translation | - |
| - |
| - |
| (694) | - |
|
|
| (694) |
|
| (694) | |
Total comprehensive loss for the year | - |
| - |
| - |
| (694) | - |
| (286,496) |
| (287,190) | (40,082) |
| (327,272) | |
Balance as at 31 June 2013 | 598 |
| 142,312 |
| 1,818 |
| (769) | 30,928 |
| (637,188) |
| (462,301) | (46,017) |
| (508,318) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For the year ended 31 December 2013（Audited） |
| |||||||||||||||
| Share capitalCNY'000 |
| Share premiumCNY'000 |
| Other reservesCNY'000 |
| Foreign currency translation reserve | Statutory reservesCNY'000 |
| Accumulated lossesCNY'000 |
| TotalCNY'000 | Non-controlling interestCNY'000 |
| Total equityCNY'000 | |
Balance as at 1 January 2013 | 598 |
| 142,312 |
| 1,818 |
| (75) | 29,323 |
| (349,087) |
| (175,111) | (5,935) |
| (181,046) | |
Transfer to statutory reserves | - |
| - |
| - |
|
| 1,605 |
| (1,605) |
| 0 | - |
| 0 | |
Transactions with owners | - |
| - |
| - |
| - | 1,605 |
| (1,605) |
| 0 | 0 |
| 0 | |
Loss for the year |
|
|
|
|
|
|
|
|
| (709,546) |
| (709,546) | (85,631) |
| (795,177) | |
Other comprehensive loss | - |
| - |
| - |
|
| - |
|
|
| 0 |
|
| 0 | |
- Foreign currency translation | - |
| - |
|
|
| (448) | - |
|
|
| (448) |
|
| (448) | |
Total comprehensive loss for the year | - |
| - |
| - |
| (448) | - |
| (709,546) |
| (709,994) | (85,631) |
| (795,625) | |
Balance as at 31 December 2013 | 598 |
| 142,312 |
| 1,818 |
| (523) | 30,928 |
| (1,060,238) |
| (885,105) | (91,566) |
| (976,671) | |
Consolidated Statement of Cash Flow
For the 6 months ended 30 June 2014
|
| 6 months ended |
| 6 months ended |
| Year ended |
|
| 30-Jun-14 |
| 30-Jun-13 |
| 31-Dec-13 |
|
| (Unaudited) |
| (Unaudited) |
| (Audited) |
|
| CNY'000 |
| CNY'000 |
| CNY'000 |
|
|
|
|
|
|
|
Profit /(loss) before tax |
| 1,391 |
| 4,650 |
| (10,150) |
Adjustments for: |
| - |
|
|
|
|
Amortisation of intangible assets |
| 108 |
| 108 |
| 158 |
Provisions for doubtful debts |
|
|
| - |
| 0 |
Depreciation of property, plant and equipment |
| 13,173 |
| 15,426 |
| 30,637 |
Loss on disposal of property, plant and equipment |
|
|
| 242 |
| 140 |
Amortisation of deferred capital grants |
|
|
| 500 |
| 500 |
Interest income |
| (1,312) |
| (3,799) |
| (2,124) |
Finance expense |
| 16,447 |
| 31,578 |
| 45,605 |
Operating cash flows before working capital changes |
| 29,807 |
| 48,705 |
| 64,766 |
|
|
|
|
|
|
|
Working capital changes: |
|
|
|
|
|
|
(Increase)/decrease in: |
|
|
|
|
|
|
Inventories |
| 23,008 |
| (16,774) |
| (17,732) |
Trade and other receivables |
| (193,875) |
| (99,627) |
| (80,937) |
Amounts due from related parties |
| (585,479) |
| - |
| 0 |
Restricted cash |
| (7,611) |
| - |
| (98,649) |
Increase/(decrease) in: |
|
|
|
|
|
|
Trade and other payables |
| 171,355 |
| 57,356 |
| 93,743 |
Cash generated from /(used in) operations |
| (562,794) |
| (10,340) |
| (38,808) |
Income tax paid |
| - |
| (6,490) |
| (6,490) |
Net cash used in continuing operations |
| (562,794) |
| (16,830) |
| (45,299) |
Net cash used in discontinuing operations |
| 972,767 |
| (240,024) |
| (2,851,357) |
Net cash used in operating activities |
| 409,973 |
| (256,854) |
| (2,896,655) |
|
|
|
|
|
|
|
|
| 6 months ended |
| 6 months ended |
| Year ended |
|
| 30-Jun-14 |
| 30-Jun-13 |
| 31-Dec-13 |
|
| (Unaudited) |
| (Unaudited) |
| (Audited) |
| Notes | CNY'000 |
| CNY'000 |
| CNY'000 |
|
|
|
|
|
|
|
Cash flow generated from /(used in) operating activities | a | 409,973 |
| (256,854) |
| (2,896,655) |
Cash flow from investing activities |
|
|
|
|
|
|
Purchase of property, plant and equipment |
| (7,676) |
| (3,018) |
| (9,326) |
Purchase of intangible assets |
|
|
| 0 |
| 0 |
Interest received |
| 1,312 |
| 3,799 |
| 2,124 |
Government grant received |
|
|
| 33 |
| 170 |
Purchase of shares in subsidiary from minorities |
|
|
| - |
| 0 |
Net cash used in continuing operations |
| (6,364) |
| 814 |
| (7,032) |
Net cash used in discontinuing operations |
| (178,369) |
| (115,508) |
| (410,103) |
Cash flow used in investing activities |
| (184,733) |
| (114,694) |
| (417,135) |
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
|
Capital injection from minority shareholders in subsidiaires |
|
|
|
|
|
|
Proceeds from bank borrowings |
| 858,027 |
| 269,988 |
| 553,269 |
Repayment of bank borrowings |
| (391,199) |
| (130,000) |
| (369,988) |
Loans(from)/to related parties |
|
|
|
|
|
|
Interest paid |
| (16,447) |
| (31,578) |
| (45,605) |
Dividends paid to non-controlling interest |
| - |
| - |
|
|
Net cash generated in continuing operations |
| 450,381 |
| 108,410 |
| 137,675 |
Net cash used in discontinuing operations |
| (35,772) |
| 303,196 |
| 3,536,236 |
Cash flow (used in) /generated from financing activities |
| 414,609 |
| 411,606 |
| 3,673,911 |
|
|
|
|
|
|
|
Net (decrease) /increase in cash and cash equivalents |
| 639,849 |
| 40,058 |
| 360,121 |
Cash at beginning of period |
| 646,519 |
| 286,398 |
| 286,398 |
Foreign currency translation differences |
|
|
| - |
|
|
|
| 1,286,368 |
| 326,455 |
| 646,519 |
- included in disposal group |
| (1,279,120) |
| -195,159 |
| (521,352) |
Cash at end of year |
| 7,248 |
| 131,296 |
| 125,167 |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL INFORMATION
FOR SIX MONTHS ENDED 30 JUNE 2014
(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 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 Company are manufacturing of petrochemical and chemical products.
The principal place of business of the Company is West of Boxin Road, Shikou County, Dongying City, Shandong Province, China.
The interim consolidated financial information of the Company for the six months ended 30 June 2014 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 2014.
Financial information for the six months ended 30 June 2014 and 30 June 2013 is unaudited and does not constitute the Company's financial statements for these periods.
Comparative financial information for the full year ended 31 December 2013 has been derived from the audited financial statements for that period. The Board of Directors approved the interim statements on [23] September 2013.
3. Segmental information
a) Operating segment
The following table presents revenue and profit or loss from the Group's operating segments for the financial periods ended 30 June 2014 and 30 June 2013, and for the financial year ended 31 December 2013.
|
| 6 months ended |
| 6 months ended |
| Year ended |
|
| 30-Jun-14 |
| 30-Jun-13 |
| 31-Dec-13 |
|
| (Unaudited) |
| (Unaudited) |
| (Audited) |
|
| CNY'000 |
| CNY'000 |
| CNY'000 |
|
|
|
|
|
|
|
Sales to external customers |
|
|
|
|
| |
Petrochemical | - Continuing operations |
|
|
|
|
|
| - Discontinuing operations | 16,271,351 |
| 7,506,765 |
| 22,916,896 |
Chemical products | - Continuing operations | 460,042 |
| 468,971 |
| 981,500 |
| - Discontinuing operations | 224,181 |
| 174,305 |
| 460,324 |
Tiandong | - Continuing operations | - |
|
|
| 0 |
| - Discontinuing operations | 84,624 |
| 113,091 |
| 215,996 |
|
| 17,040,198 |
| 8,263,132 |
| 24,574,716 |
(Loss)/profit before tax |
|
|
|
|
| |
Petrochemical | - Continuing operations |
|
|
|
|
|
| - Discontinuing operations | (364,106) |
| (294,216) |
| (642,616) |
Chemical products | - Continuing operations | 1,391 |
| 4,650 |
| (10,150) |
| - Discontinuing operations | (39,999) |
| (39,452) |
| (134,661) |
Tiandong | - Continuing operations | - |
|
|
| 0 |
| - Discontinuing operations | 10,471 |
| 12,395 |
| 15,802 |
Unallocated expense - Head office cost | 16,116 |
| (4,549) |
| (11,126) | |
|
| (376,127) |
| (321,172) |
| (782,751) |
|
|
|
|
|
|
|
Profit/(loss) from operations before tax | 1,391 |
| 4,650 |
| (10,150) | |
Loss from discontinuing operations before tax | (377,518) |
| (325,822) |
| (772,601) | |
Income tax credit/(expense) | (4,415) |
| (5,407) |
| (12,426) | |
Profit/(loss) for the year | (380,542) |
| (326,579) |
| (795,177) | |
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities to the Group's corresponding amounts:
|
| 6 months ended |
| 6 months ended |
| Year ended |
|
| 30-Jun-14 |
| 30-Jun-13 |
| 31-Dec-13 |
|
| (Unaudited) |
| (Unaudited) |
| (Audited) |
|
| CNY'000 |
| CNY'000 |
| CNY'000 |
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
Total revenue for reportable continuing segments | 460,042 |
| 468,971 |
| 981,500 | |
Total revenue for reportable discontinuing segments | 16,580,156 |
| 7,794,161 |
| 23,593,216 | |
| 17,040,198 |
| 8,263,132 |
| 24,574,716 | |
|
|
|
|
|
|
|
Profit/(loss) after income tax expense |
|
|
|
|
| |
Total profit for reportable continuing segments | 1,391 |
| 4,650 |
| (10,150) | |
Total profit for reportable discontinuing segments | (393,634) |
| (321,273) |
| (761,475) | |
Income tax expenses |
| (4,415) |
| (5,407) |
| (12,426) |
Unallocated amounts: |
|
|
|
|
|
|
Other corporate expenses | 16,116 |
| (4,549) |
| (11,126) | |
Profit after income tax expense | (380,542) |
| (326,579) |
| (795,177) | |
|
| 6 months ended |
| 6 months ended |
| Year ended |
|
| 30-Jun-14 |
| 30-Jun-13 |
| 31-Dec-13 |
|
| (Unaudited) |
| (Unaudited) |
| (Audited) |
|
| CNY'000 |
| CNY'000 |
| CNY'000 |
Segment assets |
|
|
|
|
|
|
Petrochemical |
| - |
|
|
|
|
Chemical products |
| 623,616 |
| 563,806 |
| 11,797,374 |
Tiandong |
| - |
|
|
|
|
Unallocated assets |
| - |
|
|
|
|
Less: Intersegment balance | - |
|
|
|
| |
Included in disposal group |
|
| 8,528,838 |
| 11,046,967 | |
|
| 623,617 |
| 9,092,644 |
| 22,844,341 |
Segment liabilities |
|
|
|
|
|
|
Petrochemical |
| - |
|
|
|
|
Chemical products |
| 1,116,337 |
| 456,455 |
| 478,063 |
Tiandong |
| - |
|
|
|
|
Unallocated liabilities |
| - |
|
|
|
|
Less: Intersegment balance | - |
| - |
|
| |
Included in disposal group |
|
| 9,144,508 |
| 12,295,982 | |
|
| 1,116,337 |
| 9,600,963 |
| 12,774,045 |
Other segment information |
|
|
|
|
| |
Capital expenditures |
|
|
|
|
|
|
Petrochemical |
|
|
|
|
|
|
Chemical products |
| 7,676 |
| 3,018 |
| 9,326 |
Tiandong |
|
|
|
|
|
|
|
| 7,676 |
| 3,018 |
| 9,326 |
Depreciation and amortization |
|
|
|
|
| |
Petrochemical |
|
|
|
|
|
|
Chemical products |
| 13,173 |
| 15,426 |
| 30,795 |
Tiandong |
|
|
|
|
|
|
|
| 13,173 |
| 15,426 |
| 30,795 |
|
|
|
|
|
|
|
Finance income |
|
|
|
|
|
|
Petrochemical |
|
|
|
|
|
|
Chemical products |
| 1,312 |
| 3,799 |
| 14,066 |
Tiandong |
|
|
|
|
|
|
|
| 1,312 |
| 3,799 |
| 14,066 |
|
|
|
|
|
|
|
Finance expense |
|
|
|
|
|
|
Petrochemical |
|
|
|
|
|
|
Chemical products |
| 16,447 |
| 31,578 |
| 51,484 |
Tiandong |
|
|
|
|
|
|
|
| 16,447 |
| 31,578 |
| 51,484 |
Capital expenditures include additions to property, plant and equipment and intangible assets.
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.
| 6 months ended | 6 months ended | Year ended |
|
|
| |||||
| 30-Jun-14 | 30-Jun-13 | 31-Dec-13 |
|
|
| |||||
External Revenue | (Unaudited) | (Unaudited) | (Audited) |
|
|
| |||||
| CNY'000 | CNY'000 | CNY'000 |
|
|
| |||||
Sales to external customers |
|
|
|
|
|
| |||||
People's Republic of China | 306,949 | 343,386 | 706,209 |
|
|
| |||||
Exports | 153,093 | 125,585 | 275,291 |
|
|
| |||||
| 460,042 | 468,971 | 981,500 |
|
|
| |||||
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
| ||||
6 months ended 30 June 2014（Unaudited） | America | India | Russia | Hongkong | Others | Total |
| ||||
| CNY'000 | CNY'000 | CNY'000 | CNY'000 | CNY'000 | CNY'000 |
| ||||
Export sales to | 29,873 | 24,177 | 10,327 | 9,084 | 79,632 | 153,093 |
| ||||
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
| ||||
6 months ended 30 June 2013（Unaudited） | India | America | Hongkong | Australia | Others | Total |
| ||||
| CNY'000 | CNY'000 | CNY'000 | CNY'000 | CNY'001 | CNY'002 |
| ||||
Export sales to | 16,163 | 15,465 | 13,585 | 6,163 | 74,209 | 125,585 |
| ||||
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
| ||||
Year ended 31 December 2013（Audited） | India | HongKong | UAE | Switzerland | Others | Total |
| ||||
| CNY'000 | CNY'000 | CNY'000 | CNY'000 | CNY'001 | CNY'002 |
| ||||
Export sales to | 30,662 | 22,833 | 38,165 | 2,692 | 180,939 | 428,817 |
| ||||
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
| ||||
Non-current assets | 30-Jun-14 | 30-Jun-13 | 31-Dec-13 |
|
|
| |||||
| (Unaudited) | (Unaudited) | (Audited) |
|
|
| |||||
| CNY'000 | CNY'000 | CNY'000 |
|
|
| |||||
People's Republic of China | 144,028 | 159,200 | 149,525 |
|
|
| |||||
Exports | - | - | - |
|
|
| |||||
| 144,028 | 159,200 | 149,525 |
|
|
| |||||
4. Taxation
Major components of income tax expense/(credit)
The major components of income tax expense are as follows:
| 6 months ended |
| 6 months ended |
| Year ended |
| 30-Jun-14 |
| 30-Jun-13 |
| 31-Dec-13 |
| (Unaudited) |
| (Unaudited) |
| (Audited) |
| CNY'000 |
| CNY'000 |
| CNY'000 |
|
|
|
|
|
|
Current income tax | 1,752- |
| 2,823 |
| 1,564 |
Deferred tax: |
|
|
|
|
|
Originating and reversal of temporary differences |
|
|
|
| (729) |
Income tax recognised in income statement | 1,752- |
| 2,823 |
| 835 |
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-14 |
| 30-Jun-13 |
| 31-Dec-13 |
| (Unaudited) |
| (Unaudited) |
| (Audited) |
| CNY'000 |
| CNY'000 |
| CNY'000 |
|
|
|
|
|
|
Accounting profit/(loss) before income tax | 1,391 |
| 4,650 |
| (10,150) |
Tax at respective companies' domestic income tax rate | 348 |
| 1,163 |
| (2,538) |
Utilization of previous unrecongized tax loss | - |
| - |
| |
Nondeductible expenses | 1,404 |
| 1,660 |
| 3,372 |
Unrecognized tax losses |
|
| - |
| |
Tax credit |
|
| - |
|
|
Income tax expense recognized in income statement | 1,752 |
| 2,823 |
| 835 |
Deferred tax assets
| 6 months ended |
| 6 months ended |
| Year ended |
| 30-Jun-14 |
| 30-Jun-13 |
| 31-Dec-13 |
| (Unaudited) |
| (Unaudited) |
| (Audited) |
| CNY'000 |
| CNY'000 |
| CNY'000 |
At beginning of the financial year | - |
| 8,783 |
| 8,783 |
Transfer to income statement | - |
| - |
|
|
Included in continuing operation |
|
|
|
| (729) |
Included in disposal group |
|
|
|
| (8,054) |
At end of the financial year | - |
| 8,783 |
| - |
Deferred income tax relates to the following:
| 6 months ended |
| 6 months ended |
| Year ended |
| 30-Jun-14 |
| 30-Jun-13 |
| 31-Dec-13 |
| (Unaudited) |
| (Unaudited) |
| (Audited) |
| CNY'000 |
| CNY'000 |
| CNY'000 |
|
|
|
|
|
|
Provision for doubtful debts | - |
| 8,783 |
| - |
Allowance for long-term investment | - |
| - |
| - |
Provision for inventories | - |
|
|
| - |
Depreciation | - |
| - |
| - |
| - |
| 8,783 |
| - |
5. (Loss)/earnings per share from continuing operations
Loss for the purpose of basic and diluted loss per share are the net loss for six months ended 30 June 2014 attributable to equity holders of the parent of RMB362,956,000 (for the six months ended 30 June 2013: loss of RMB286,496,000, for the year ended 31 December 2013: loss of RMB709,546,000).
The (loss)/profit from continuing operations for the financial periods attributable to equity holders of the parent was as follows:
(Loss)/earnings per share from continuing operations | |||||
6 months ended | 6 months ended | Year ended | |||
30-Jun-14 | 30-Jun-13 | 31-Dec-13 | |||
(Unaudited) | (Unaudited) | (Audited) | |||
CNY'000 | CNY'000 | CNY'000 | |||
(Loss)/earnings per share from continuing operations | |||||
attributable to equity holders of the parent | (343,404) | (286,496) | （709,546） | ||
Number of ordinary shares | 6 months ended | 6 months ended | Year ended | ||
30-Jun-14 | 30-Jun-13 | 31-Dec-13 | |||
(Unaudited) | (Unaudited) | (Audited) | |||
'000 | '000 | '000 | |||
Weighted average number of ordinary shares - basic & diluted | |||||
38,354 | 38,354 | 38,354 |
Related Shares:
Haike Chemical Group