23rd Jul 2008 14:01
HaiKe Chemical Group Ltd.
Trading update
HaiKe Chemical Group Ltd ("HaiKe" or the "Company"), the AIM quoted (AIM: HAIK) petrochemical, speciality chemical and biochemical business based in China, today announces that it is temporarily shutting down its oil refinery facilities for a major overhaul.
As a result of consistently high oil prices and in the absence of further price adjustment notices for oil products, the margins of the petrochemical side of the business have reduced to a level at which operations are not profitable. The Directors of HaiKe have therefore determined that now is an appropriate time for essential maintenance to be carried out, which will involve a complete shut-down of the refining operations and help reduce the Company's exposure to further risk at this current time.
The Company does not anticipate any near-term increases in the price of refined oil products. However, the Directors of HaiKe do expect further price adjustments to be announced by the PRC National Development and Reform Commission prior to the end of the current financial year. As a result, the Directors of HaiKe expect oil refining operations to resume during the current financial year, following an increase in the price of refined oil products.
However, with the majority of privately-owned refiners in China having either already ceased operations or being in the process of doing so, the Company will closely monitor the market situation and determine the most opportune time to resume operations.
This shut-down of the refining operations will enable senior management of the Company to focus their energy on the operation and management of the speciality chemical and biochemical businesses, which have been the largest contributors to profit during this financial year. These businesses will not be impacted by the closure of the refining operations and the Directors' expectations for the financial performance for this division, in the current financial year, remain unchanged.
With this temporary shut-down, the Company expects debt levels to fall back from their increased June 2008 level. As a result of the shut-down, future capital expenditure plans for the petrochemical side of the business have been deferred; however, speciality chemical expansion plans will continue as previously announced.
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For further information please contact:
|
HaiKe |
Johnson Lau, Chief Finance Officer |
+86 (0) 546 8289173 +852 37520631 |
|
Evolution Securities Limited (Nominated adviser) |
Stuart Andrews |
+44 (0) 20 7071 4300 |
|
Evolution Securities China Limited (Financial adviser and broker) |
Barry Saint / Esther Lee |
+44 (0) 20 7220 4850 |
|
Cardew Group |
Rupert Pittman / Shan Willenbrock |
+44 (0) 20 7930 0777 |
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