Qihang Equipment Company Limited Half Yearly Report (6954O)

TIDMQIH

RNS Number : 6954O

Qihang Equipment Company Limited

24 September 2013

Qihang Equipment Company Limited

(The "Company" or "Qihang")

Interim Results for the six months ended 30 June 2013

Qihang, based in Zhenjiang, Jiangsu Province, Eastern China, is a fast growing machine tool manufacturer including large lathe and milling machines capable of creating huge components of greater than one metre in diameter and sixty tonnes in weight. The Company is one of the few businesses which can manufacture milling machines for processing complicated screws used in the plastic and petrochemical industry in China.

Financial Highlights

   --      Cash at period end of RMB28 million (at 31 December 2012: RMB26 million) 
   --      Turnover down 56% to RMB52 million (period to 30 June 2012: 118 million) 

-- Gross profit for the period down by 50% to RMB14 million (period to 30 June 2011: RMB28 million)

-- Loss from operations for the period is RMB3.2 million (period to 30 June 201: profit of RMB1.5 million)

Chairman's Statement:

I am pleased to announce the Interim results to June 30th 2013. The figures again make unhappy reading but mask some improvement in the company's trading.

As can be seen from the segmental figures sale of basic machinery was heavily down. We also hold too much stock of this type of machinery. Steps are being taken to deal with this but it will take some time before the effect on our balance sheet will be seen. Sales of the larger machines have held up well and efforts are being made to develop the export potential for this equipment. I am glad to say the management and staff have had some success in Russia and Turkey.

Our debt remains too large and a drain on our resources, The Board continue to work to find a solution to this. Despite the constraints that our debt has on the Company we have continued to spend on new equipment to improve production.

The Board remain conscious that we need to improve the situation. We have examined a number of options but have not yet been able to reach a conclusion.

City Code on Takeovers and Mergers

On 15 May 2013, the Takeover Panel announced that certain proposed changes to the City Code on Takeovers and Mergers (the "City Code") will be implemented on 30 September 2013.

Amongst other changes, the residency test in section 3(a)(ii) of the Introduction to the City Code will no longer apply to companies which have their registered offices in the UK, Channel Islands or the Isle of Man and which have their securities admitted to trading on a multi-lateral trading facility (which includes AIM) in the UK. This means that the Company will be subject to the City Code from 30 September 2013.

24 September 2013

Enquiries:

 
 Qihang 
  Mr Yuanqing Li, CEO                    Tel: [phone] 
  Mark Chapman, Chairman                 Tel: [phone]/ (0)7449 
                                         842717 
------------------------------------  ------------------------------------ 
 Nominated Adviser and Joint Broker    Tel: [phone] 
  Northland Capital Partners Limited 
  William Vandyk / Matthew Johnson 
------------------------------------  ------------------------------------ 
 Joint Broker                          Tel: [phone] 
  Peterhouse Corporate Finance 
  Lucy Williams 
------------------------------------  ------------------------------------ 
 

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 30 JUNE 2013

 
                                          Note    Six months    Six months      Year ended 
                                                       ended       ended       31 December 
                                                     30 June      30 June             2012 
                                                        2013       2012            Audited 
                                                   Unaudited     Unaudited 
                                                     RMB'000       RMB'000         RMB'000 
 
 Revenue                                     5        51,983       117,773         151,503 
 Cost of sales                                      (37,931)      (89,489)       (111,268) 
                                                ------------  ------------  -------------- 
 
 Gross profit                                         14,052        28,284          40,235 
 Other operating income                                  329           473             797 
 Distribution expenses                               (4,482)       (9,395)         (9,458) 
 Administrative expenses                            (13,141)      (17,911)        (33,471) 
 
 (Loss)/profit from operations                       (3,242)         1,451         (1,897) 
 Non-operating income net of expenses                    (7)            14             206 
 Profit on disposal of subsidiaries                        -             -               5 
 Other gains/(losses)                                      -         3,607           1,283 
 Income from subsidies                                     -             -             225 
 Investment income                                       146           531           1,091 
 Finance costs                                       (7,164)       (9,552)        (15,940) 
 
 Loss before tax                                    (10,267)       (3,949)        (15,027) 
 Income tax (expense)/credit                 6          (39)         (141)           1,006 
                                                ------------  ------------  -------------- 
 
 Loss for the period                                (10,306)       (4,090)        (14,021) 
                                                ============  ============  ============== 
 
 Other comprehensive income                                -             -               - 
 
 Total comprehensive income for 
  the period                                        (10,306)       (4,090)        (14,021) 
                                                ============  ============  ============== 
 
 Loss attributable to 
  Equity holders of the company                     (10,306)       (4,090)        (14,021) 
 
 Loss per share                              7 
 
 Basic and diluted (RMB)                              (0.09)       (0.035)          (0.24) 
 
 Basic and diluted (pence)                            (0.86)        (0.35)          (2.40) 
 
 
 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2013

 
                                  Note      30 June      30 June   31 December 
                                               2013         2012          2012 
                                          Unaudited    Unaudited       Audited 
                                            RMB'000      RMB'000       RMB'000 
 Non-current assets 
 Property, plant and equipment       8      193,765      188,765       192,287 
 Intangible assets                           40,905       51,533        41,591 
 Deferred tax assets                          1,448        3,416         1,448 
                                        -----------  -----------  ------------ 
                                            236,118      243,714       235,326 
                                        -----------  -----------  ------------ 
 Current assets 
 Inventories                                 98,084      128,584        97,836 
 Trade and other receivables                 40,607       98,198        63,489 
 Cash and cash equivalents                   27,949       61,454        26,460 
                                        -----------  -----------  ------------ 
                                            166,640      288,236       187,785 
                                        -----------  -----------  ------------ 
 
 Total assets                               402,758      531,950       423,111 
                                        ===========  ===========  ============ 
 
 Equity and reserves 
 Share capital                       9       15,196       15,196        15,196 
 Share premium                               86,711       86,711        86,711 
 Other reserves                            (13,635)     (13,952)      (13,635) 
 Retained earnings                          (7,272)       13,282         3,034 
                                             81,000      101,237        91,306 
                                        -----------  -----------  ------------ 
 Current liabilities 
 Bank borrowings                            161,500      226,750       163,000 
 Income tax liabilities                       1,028        1,291         1,070 
 Trade and other payables                   105,575      149,699       114,080 
                                        -----------  -----------  ------------ 
                                            268,103      377,740       278,150 
 
 Non-current liabilities 
 Other borrowings                            44,000       43,318        44,000 
 Deferred tax liabilities                     9,655        9,655         9,655 
                                        -----------  -----------  ------------ 
                                             53,655       52,973        53,655 
                                        -----------  -----------  ------------ 
 
 Total liabilities                          321,758      430,713       331,805 
                                        ===========  ===========  ============ 
 
 Total equity and liabilities               402,758      531,950       423,111 
                                        ===========  ===========  ============ 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY