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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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China Rerun | LSE:CHRR | London | Ordinary Share | KYG216261092 | ORD USD0.000007874 (DI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 6.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMCHRR
RNS Number : 9363Y
China Rerun Chemical Group Ltd
31 January 2014
CHINA RERUN CHEMICAL GROUP LTD
("China Rerun" or the "Group")
Final results for the period from 30 May 2012 to 31 August 2013
China Rerun Chemical Group Ltd (CHRR.L), the producer of lubricant products for the People's Republic of China's ("PRC") domestic automotive, industrial and agricultural markets, today announces its audited consolidated results for the period from 30 May 2012 to 31 August 2013.
As part of the Group's restructuring in anticipation of its Admission to AIM, a new operating subsidiary was incorporated in May 2012 which took over and commenced trading activities in March 2013. The final results therefore are for the 15 month period from incorporation to 31 August 2013 of which only six months trading results, from 1 March 2013 to 31 August 2013 ("the period"), are included. For comparative purposes, trading results for the year ended 31 August 2012 and 31 August 2013 (pro-forma results) are included in the Chairman's Statement and Financial Review. The pro-forma results are presented separately in the note 5 of the announcement results.
Financial Highlights
Audited Pro forma FY2012 Growth (FY2013 30 May 2012 FY2013 and FY2012) to 31 August 2013 ---------------- -------------- ----------- ------------ --------------- Revenue RMB 150.71m RMB273.29m RMB 226.13m + 20.9% ---------------- -------------- ----------- ------------ --------------- Gross profit RMB 39.35m RMB 72.78m RMB59.78m +21.7% ---------------- -------------- ----------- ------------ --------------- Gross margin 26.1% 26.6% 26.4% 20bps ---------------- -------------- ----------- ------------ --------------- Pre-tax profit RMB25.58m RMB45.02m RMB26.87 +67.6% ---------------- -------------- ----------- ------------ ---------------
Indicative exchange rate as at 31 August 2013: GBP1: RMB 9.56
Source: www.oanda.com
Operational Highlights
-- Like for like sales volume was 14,488,965 litres, up 15% compared with FY2012
-- Introduced eight new types of lubricant oils, raising quality and specification of the Group's lubricants offering
-- Attained ISO 14001 accreditation for environmental controls and OHSAS 18001 accreditation for health and safety
-- Brand recognition and product quality allowed for passing on of raw material costs, maintaining margin
-- Consolidated distribution network, with fewer distributors covering larger sale areas, setting higher sales targets with average revenue per distributor increasing to RMB 7.6m (2012: RMB 5.6m)
-- Reduction in sales commission enabled savings to be made to distribution costs
-- Meeting growing demand for high quality lubricants in the PRC driven by the rise in volume of automotive sales
Commenting on the results, Mr Xinghe Wu, Executive Chairman of China Rerun said:
"In our 20(th) year, we are delighted to present an excellent set of results coupled with our recent admission to AIM. The market is growing and changing rapidly and with our robust financial base and our high quality branded products, we are strongly positioned to take advantage of commercial opportunities and grow our market share."
For further enquiries, please visit www.chinarerun.com/ or contact:
China Rerun Xinghe Wu +86 459 666 9777 Yan Liu www.chinarerun.com/ Nick Lyth +44 776 990 6686 -------------------------- ----------------------- ----------------------------- Cairn Financial Advisers LLP Jo Turner (Nominated Adviser) Liam Murray +44 20 7148 7905 -------------------------- ----------------------- ----------------------------- Beaufort Securities Limited Guy Wheatley (Broker) Chris Rourke +44 20 7382 8300 -------------------------- ----------------------- ----------------------------- Cardew Group Shan Shan Willenbrock +44 20 7930 0777 (Financial PR) Georgina Hall Tom Horsman chinarerun@cardewgroup.com. -------------------------- ----------------------- -----------------------------
Notes to Editors
China Rerun Chemical Group Ltd is an established and profitable producer of lubricant products for the PRC's domestic automotive, industrial and agricultural markets. Based in Daqing, northeastern China, it operates principally under the "Runyuan" and "Black E" brands. The Group's products are sold through a network of third party distributors across 13 provinces and two municipalities of the PRC to end users, some of whom operate branded automotive garages.
Chairman's Statement
Introduction
I am pleased to report our first set of financial results since China Rerun was admitted to trading on AIM on 16 October 2013, which also marked our 20(th) anniversary. Our listing on AIM represents a significant milestone for the business and we believe it will create commercial opportunities as well as enhance our profile and position as a leading lubricant oil producer in the PRC.
The Group commenced trading in March 2013 having taken over the principal operating activities of the business as part of its restructuring in anticipation of its Admission to AIM. The trading results therefore reflect the six months from 1 March 2013 to 31 August 2013 ("the period"). For comparative purposes, trading results for the year ended 31 August 2012 and 31 August 2013 (pro-forma results) are included in the Financial Review.
It is particularly pleasing to report a positive and strong set of results. The Group audited revenue for the fifteen-month period to 31 August 2013 was RMB 150.71m with the full year Group pro-forma revenue FY2013 being RMB 273.29m (FY2012: RMB 226.13m) representing growth of 20.9%. The Group achieved a pro-forma pre-tax profit of RMB 45.02m in FY2013, up 67.6% on the prior year (FY2012: RMB 26.87m) which takes into account the costs of listing. Pre-tax profit for the period was RMB 25.58m. The significant increase in revenue and profit continues the positive growth trend since we began trading 20 years ago, driven by a solid business, strong brand recognition, which is underpinned by increased demand for high quality lubricant oils in our domestic market.
We upgraded the quality and specification of our lubricant oils, raised prices by an average of 5%, consolidated the distributor network and reduced sales staff commissions. One of our stated goals was to restructure the distributor base to support our intentions of broadening our geographic representation in the PRC. At the period end, the Group had 36 distributors (FY2012: 40) which was a result of Group policy of retaining only high quality distributers that are able to meet higher sales targets for our premium quality lubricant oils. This also led to a reduction in pro-forma sales and distribution costs amounting to RMB14.19m (FY2012: RMB27.14 m). Sales volume was 14,488,965 litres, up 15% compared with FY2012 at 12,584,002 litres. Although this will have led to slower volume growth rate, management consider the shift in emphasis towards high quality distributors successful as the average revenue per distributor increased to RMB 7.6m (2012: RMB 5.6m). It remains our intention to continue to expand our network with high quality distributors.
Growing Demand
We manufacture 37 types of lubricant oils for the automotive, industrial and construction industries, as well as one anti-freeze product. More than 70% of our lubricant oils are supplied to the automotive industry, which continues to expand at an impressive rate. According to the Chinese Automotive Industry Association, car sales reached 22 million units in 2013 (2012: 19 million units) driven by increased purchasing power as more people aspire to owning a car, particularly in tier two, three and four cities across the PRC. The expansion of the primary market also means a growth in the secondary market, which is even more important for our business as these second hand cars are no longer under dealer warranty service restrictions. This growth in the domestic automotive industry has benefitted our business and we expect the trend to continue into FY2014 and beyond. As a direct result, demand for lubricant oils is expected to double in the next decade and the industry is estimated to be worth RMB200 billion by 2021 (source: Asia Markets Information and Development Co.). We expect this increase in demand to be met by financially strong domestic producers, like China Rerun.
At present, the lubricant oil market is highly fragmented, comprising approximately 4,000 enterprises, most of which are very small. It is estimated that only 5% of these companies have a turnover of RMB 100 million and above whilst China Rerun is positioned amongst the top 10% of the largest suppliers to the domestic market for lubricant oils. It is likely that with increased government intervention and enforcement of legislation in the sector, the market will, going forward, commence rationalisation and consolidation. China Rerun, as a larger, more mature and financially stronger business, which adheres to the highest industrial standards, would seek to gain market share as the industry begins to adjust to these external pressures. The Company is therefore well placed to grow both organically and by acquisition.
Research & Development, Quality Control
Research and Development is a key part of our business and we are dedicated to continuously improving our products to ensure they are of the highest quality and we retain our competitive edge. In 2013, we introduced eight new types of lubricant oils and upgraded the quality of our existing product base, which also enabled us to increase our prices. Our products are process tested regularly, and as a result, we have attained ISO 9001 accreditation for our quality control procedures. Furthermore, we have also attained ISO 14001 accreditation for environmental controls and OHSAS 18001 accreditation for health and safety.
Branding
We place a great deal of emphasis on our brands: Black E, Panther, Tiger, Deer and Horse. We have undertaken a number of marketing, advertising and promotional activities to reinforce the strong brand recognition that our flagship products enjoy. Our focus on branding is driving our sales growth and will allow us to integrate more distributors, in more provinces, into our network and protect our gross margin. We now have one of the best selling lubricant oils in the Heilongjiang province, as well as winning several awards along the way, including the "Well-known Brand of China".
Financial Review
The financial review covers the period 30 May 2012 to 31 August 2013. As part of the restructuring for our IPO, trade passed the listed entity from 1 March 2013. These accounts therefore cover six month's trading results from 1 March 2013 to 31 August 2013. For the purposes of comparison, results for the year ended 31 August 2012 and 31 August 2013 (pro-forma results) are included in this review. The pro-forma results are presented separately in the note 5 of the financial statement.
The Group generated turnover of revenue of RMB 150.71m in the six months to 31 August 2013 and RMB 273.29m for FY2013 (FY2012: RMB 226.13m) representing a growth of 20.9%.
In FY2013, the Group achieved a pro forma gross profit of RMB 72.78m (FY2012: RMB 59.78m), with gross margins maintained at 26.6% and 26.4% in FY2013 and FY2012 respectively. In the six months to 31 August 2013, gross profit margin was 26.1%. We extended our range of lubricant oil products in the year. Raw materials and labour cost price increases were offset by raising our selling prices by 5% which was successfully passed on to our customers in the most part.
The Group achieved a pro-forma pre-tax profit of RMB 45.02m in FY2013, up 67.6% (FY2012: RMB 26.87m). In the period under review, the pre-tax profit was RMB 25.58m afterabsorbing one-off listing costs. By driving through a reduction in fixed overheads, the strong sales growth positively impacted the Group's net earnings. The pro-forma sales and distribution costs fell to RMB 14.91m (FY2012: 27.14m) driven by a reduction in the commission paid to sales staff of the Group from 5% to 1.5% and widening the distribution areas. The Group also decreased the number of distributors from 40 to 36, as a small number of these distributors failed to meet the increased sales targets set by the Group. Only high quality and higher performing distributors were retained.
The pro-forma tax charge for the 12 month period of RMB 12.04m was 26.7% of pre-tax profit compared to 25.0% in the previous year. The ongoing taxation rate is expected to remain at 25%. At the year end, the Group's Balance Sheet had RMB 3.7m of fixed assets, RMB 2.66m of inventory, minimal trade receivables and payables.
This is a positive performance for the business and we have a sound financial base from which to further expand our customer base and grow our market presence.
People
On behalf of the Board of Directors, I would like to thank all our employees for their hard work and efforts in our 20(th) year, which has seen us become a publicly-quoted company and deliver a positive set of financial results.
I would also like to welcome Yan Liu as our new Chief Financial Officer. Mr. Liu has over 16 years of accounting and corporate advisory experience in the PRC and Australia and was previously Vice President of Agile Partners, a financial advisory company based in the PRC, where he specialised in overseas IPO's, fundraising and M&A projects. Prior to this, he was Financial Controller at Legalwise Seminars Pty Limited based in New South Wales, Australia and had spent 8 years at Chinatex Corporation as an Assistant Accountant and latterly as a Project Manager in their Investment Management department. He holds a Bachelors degree in Economics from CUFE, Beijing, and a Masters degree in Commerce, specialised in finance, from the University of New South Wales, Australia. He is bilingual in Mandarin and English. We look forward to the contribution that he will make to our business as we continue with our focused growth strategy.
I would also like to take this opportunity to thank Mr. Liu's predecessor, Kenny Chow. We are very grateful for his dedication to China Rerun, particularly during the listing process and wish him the best in his future endeavours.
Outlook
We appointed four new distributors post the period end taking the total to 40. During the course of this year, we expect to make further appointments in the five regions we operate to increase our market presence. The Group is currently formulating a plan to roll out mobile lubrication services, via China Rerun branded service vehicles, which will serve as an additional distribution channel for our products, as well as having the added benefit of acting as a strong billboard for China Rerun's products.
The Company is satisfying a fundamental and fast growing need for high quality lubricant oils in its domestic market. With our focus on high quality products, branding and stringent control over our distribution network, we are well positioned to participate in the strong growth and evolution of the PRC's lubricant oil market going forward.
CONSOLIDATED AND COMPANY STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 AUGUST 2013
Group Company Period from Period from 30 May 2012 30 May 2012 to 31 August to 31 August 2013 2013 RMB'000 RMB'000 Revenue 150,714 - Cost of sales (111,359) - -------------- -------------- Gross profit 39,355 - Distribution costs (7,420) - Administrative expenses (1,823) (227) Listing costs (4,543) (3,424) -------------- -------------- Operating profit/(loss) 25,569 (3,651) Finance income 12 - -------------- -------------- Profit / (loss) before tax 25,581 (3,651) Income tax expense (7,308) - -------------- -------------- Profit/(loss) for the period 18,273 (3,651) Other comprehensive income - - Currency translation difference 108 61 -------------- -------------- Total comprehensive income/(loss) for the period 18,381 (3,590) ============== ============== Profit/(loss) for the year attributable to: Owners of the company 18,543 (3,651) Non-controlling interest (270) - -------------- -------------- 18,273 (3,651) ============== ============== Total comprehensive income/(loss) attributable to: Owners of the company 18,651 (3,590) Non-controlling interest (270) - -------------- -------------- 18,381 (3,590) ============== ============== Earnings per share Basic and diluted (in RMB 1.00) 9,272 (1,823) ============== ==============
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
AT 31 AUGUSUT 2013
Group Company 2013 2013 RMB'000 RMB'000 Non-current assets Property, plant and equipment 3,701 - Intangible assets -* - Investment in subsidiaries - 632 -------- -------- 3,701 632 -------- -------- Current assets Inventories 2,655 - Trade and other receivables 16,602 - Cash and cash equivalents 46,836 - -------- -------- 66,093 - -------- -------- Total assets 69,794 632 ======== ======== Equity attributable to owners of the parent Share capital 12 12 Share premium 620 620 Statutory reserve 2,287 - Translation reserve 108 61 Retained earnings 16,066 (3,651) -------- -------- 19,093 (2,958) Non-controlling interest - - -------- Total equity 19,093 (2,958) -------- Current liabilities Trade and other payables 43,393 3,590 Income tax liabilities 7,308 - -------- -------- Total current liabilities 50,701 3,590 -------- Total equity and liabilities 69,794 632 ======== ========
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 AUGUST 2013
The Group
Share Share Translation Statutory Retained Non-controlling capital premium reserve reserve earnings Total interest Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Balance at 30 May 2012 - - - - - - - ========= =========== ============ ========== =========== ======== ================ ======== Profit/(loss) for the year - - - - 18,543 18,543 (270) 18,273 Transfer to statutory reserve - - - 2,287 (2,287) - - - Exchange difference - - 108 - - 108 - 108 --------- ----------- ------------ ---------- ----------- -------- ---------------- -------- Total comprehensive income for the year - - 108 2,287 16,256 18,651 (270) 18,381 --------- ----------- ------------ ---------- ----------- -------- ---------------- -------- Issue of shares 12 620 - - - 632 - 632 Acquisition of non-controlling interest without a change in control (190) (190) 270 80 ------------ Balance at 31 August 2013 12 620 108 2,287 16,066 19,093 - 19,093 ========= =========== ============ ========== =========== ======== ================ ========
The Company
Share capital Share premium Translation reserve Retained earnings Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Balance at 30 May 2012 - - - - - ========= ============== ==================== ================== ======== Profit/(loss) for the year - - - (3,651) (3,651) Exchange difference - - 61 - 61 --------- -------------- -------------------- ------------------ -------- Total comprehensive income for the year - - 61 (3,651) (3,590) --------- -------------- -------------------- ------------------ -------- Issue of shares 12 620 - - 632 -------------------- Balance at 31 August 2013 12 620 61 (3,651) (2,958) ========= ============== ==================== ================== ========
Statutory reserve: The statutory reserve represents the amount set aside in accordance with the legislation in the People's Republic of China.
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOW
FOR THE PERIOD ENDED 31 AUGUST 2013
Group Company Period from Period from 30 May 2012 30 May 2012 to 31 August to 31 August 2013 2013 RMB'000 RMB'000 Cash flow from operating activities Profit /(loss) before tax 25,581 (3,651) Interest income (12) - Depreciation 368 - -------------- Operating cash inflows before movements in working capital 25,937 (3,651) Increase in inventories (2,655) - Increase in receivables (16,602) - Increase in payables 33,950 3,651 -------------- -------------- Net cash generated from operations 40,630 - Income tax paid - - -------------- -------------- Net cash generated from operating activities 40,630 - ============== ============== Investing activities Interest received 12 - Purchase of property, plant and equipment (112) - Acquisition of subsidiary - (632) -------------- -------------- Net cash used in investing activities (100) (632) ============== ============== Financing activities Loan from the director 5,674 Proceed from issue of shares 632 632 -------------- Net cash from financing activities 6,306 632 ============== ============== Net increase in cash and cash equivalents 46,836 - Cash and cash equivalents at beginning of period - - -------------- -------------- Cash and cash equivalents at end of period 46,836 - ============== ==============
NOTES
1 GENERAL INFORMATION
China Rerun Chemical Group Limited ("China Rerun" or the "Company") was incorporated on 30 May 2012 in Cayman Islands. The registered office of the Company is located at 89 Nexus Way, Camana Bay, Grand Cayman KY1-9007 Cayman Islands.
The principal activity of the Company is that of an investment holding company and the principal activities of the Group are production and distribution of lubricating oil for the automotive, agricultural and certain industrial markets in PRC. The principal place of business is at No 99, Zhongsan Road, Sa'ertu district, Daqing, Heilongjiang Province, PRC.
The company was set up as part of the group restructuring for proposed admission to AIM Market, the group is taking over the business and trade of Daqing Economic Development Zone Runyuan Chemical Co., Limited ("Daqing Runyuan"). The historical financial information of Daqing Runyuan can be found in Part III of the Admission Document. The group commenced trading in March 2013.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") issued by the International Accounting Standard Board (IASB) and interpretations of the International Financial Reporting Interpretations Committee (IFRIC).
2.2 Basis of preparation
The consolidated and company financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair values as explained in the accounting policies set out below. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
The consolidated financial statements are rounded to the nearest thousand ('000) and they are presented in Chinese Renminbi (RMB), the official currency of the People's Republic of China. RMB is the functional currency of the company.
The pro-forma income statements of the Group for the year ended 31 August 2013 will be presented with Daqing Runyuan's results for comparative purpose. This financial information is presented separately on note 5.
2.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interest even if this result in the non-controlling interest having a deficit balance.
Where necessary, adjustments are made to the consolidated and company financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.
2.4 Going concern
The financial statements have been prepared assuming the Group will continue as a going concern.
After making enquiries, the Directors consider that the Group has adequate resources and committed borrowing facilities to continue in operational existence for the foreseeable future. Consequently, they have adopted the going concern basis in preparing the Financial Statements.
4 EARNINGS PER SHARE
(a) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of ordinary shares in issue during the year.
2013 2013 RMB RMB Net profit / (loss) attributable to owners of parent (RMB'000) 18,543 (3,651) ======= ======== Number of ordinary shares ('000) 2 2 ======= ======== Basic earnings per share (RMB) 9,272 (1,823) ======= ========
(b) Diluted earnings per share
As there were no potential dilutive ordinary shares during the financial years and period presented in these consolidated financial statements, no diluted earnings per share is presented.
5 ADDITIONAL FINANCIAL INFORMATION
The Group commenced to trade on 1 March 2013 and the pro-forma income statements are presented to integrate with six months' trading results of Daqing Runyuan for the comparative purpose.
Details of the financial information of Daqing Runyuan (extracted from the Admission Document) are as follow:
Income statement
Daqing Audited Group's Daqing Runyuan's Pro-forma Runyuan's results results results results Period from Six month Period from 30 May 2013 to 28 February 30 May 2013 Year ended to 31 August 2013 to 31 August 31 August 2013 2013 2012 RMB'000 RMB'000 RMB'000 RMB'000 Revenue 150,714 122,579 273,293 226,133 Cost of sales (111,359) (89,153) (200,512) (166,352) -------------- ----------- Gross Profit 39,355 33,426 72,781 59,781 Distribution expense (7,420) (7,490) (14,910) (27,143) Administrative expense (1,823) (6,248) (8,071) (5,840) Listing costs (4,543) - (4,543) - Other losses - (270) (270) - ---------------- ----------------- -------------- ----------- Operating profit 25,569 19,418 44,987 26,798 Finance income 12 25 37 71 -------------- ----------- Profit before tax 25,581 19,443 45,024 26,869 Income tax (7,308) (4,732) (12,040) (6,727) Profit for the period 18,273 14,711 32,984 20,142 ================ ================= ============== =========== 6 POSTING OF ACCOUNTS
The Company will post a copy of the final report and accounts to all shareholders on or around 4 February 2014 which will include a Notice of Annual General Meeting.
7 ANNUAL GENERAL MEETING
The Group's Annual General Meeting will be held on Friday 28 February at 16.30 pm (China Time) Room 407, Block B-11, Service Outsourcing Industrial Park, High-tech Industrial Development Zone, Daqing, Heilongjiang, P.R. China 163316.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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