Trading Statement

23 January 2017

HaiKe Chemical Group Ltd

Trading Update

HaiKe Chemical Group Limited ("HaiKe" the "Group" or the "Company"), the AIM quoted (AIM: HAIK) specialty chemical business based in Shandong Province, China, today provides an update on trading ahead of its final results for the twelve-month period ended 31 December 2016.

The Group has delivered a positive operational performance in the second half of the year driven by the Company's focus on higher margin chemical products, product innovation and cost controls. As a result, the Group anticipates that it will report a profit for the year ended 31 December 2016 considerably ahead of last year.

· Unaudited profit for the year was CNY18.1 million (2015: CNY4.1 million).

· Unaudited total revenues were CNY725.9 million, marginally below FY2015 (2015: CNY727.5 million).

· Unaudited gross margins increased to 15.8% (2015: 11.6%) as the Company continued to adjust its product mix. Sales of more profitable, high-end products accounted for 8.1% of 2016 sales (2015: 3.0%).

· Unaudited overall sales volumes were 125,395 tons which were comparable to FY2015 (2015: 125,098 tons).

· Unaudited average selling prices decreased by 1.8% to CNY5,529 / ton (2015: CNY5,629 / ton), in the face of strong competition.

· Unaudited selling expenses rose by 16.7% to CNY40.5 million (2015: CNY34.7 million) due to more aggressive sales and marketing activities in restrained market conditions.

· Unaudited general and administrative expenses increased by 22.2% to CNY50.3 million (2015: CNY41.2 million). This was attributable to increases in labour costs and R&D expenses of 15.9% and 35.6% respectively.

· Unaudited interest expenses dropped to CNY3.9 million (2015: CNY20.7 million) following repayment of bank loans during 2015. Total borrowings at 31 December 2016 were CNY80 million (30 June 2016: CNY80 million). 

· At 31 December 2016 the Company's cash and cash equivalent balances were CNY57.2 million (30 June 2016: CNY73.5 million).

Note: as at 31 December 2016 the GBP/CNY exchange rate was 1:8.5094

Appointment of Chief Financial Officer 

The Company is pleased to announce that Jes Cui has joined the Company and will be appointed as Chief Financial Officer effective from 1 February 2017. It is expected that Mr Cui will join the Board in due course. Mr.Cui has more than a decade of experience working for Fortune 500 companies as Chief Financial Officer and held similar positions in China. Prior to joining the Company, he was Executive Vice President of ENN Group and President of ENN Solar Energy Group. From 2006 to 2008, he was the Chief Financial Officer and then Chief Executive Officer of Siemens Industrial Turbo machinery (Huludao) Co., Ltd. The Board would like to welcome Mr. Cui to the Company.

The Company considers this announcement to contain inside information which is disclosed in accordance with the Market Abuse Regulation.

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