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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Haike Chemical | LSE:HAIK | London | Ordinary Share | KYG423181083 | ORD USD0.002 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 38.00 | 1.00 | 75.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMHAIK
RNS Number : 4891P
HaiKe Chemical Group Ltd.
01 September 2017
HAIKE CHEMICAL GROUP LIMITED
INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHSED 30 JUNE 2017
(UNAUDITED)
HaiKe Chemical Group Ltd. ("HaiKe" or "the Company" or "the Group"), the AIM quoted (AIM: HAIK) specialty chemical company based in Shandong Province, China, announces its unaudited consolidated results for the six months ended 30 June 2017.
The Group has delivered a profitable performance despite facing challenging market conditions and a reduction in output as a result of the planned annual plant shutdown and upgrades. The Board continues to be mindful of the difficult trading environment and expects to make further technical upgrades and develop new products in H2 2017 to ensure continued profitability.
Financial highlights*
-- Total revenues increased by 14.9% to CNY402.8 million / GBP46.6 million (H1 2016: CNY350.7 million / GBP37.5 million)
-- Gross profit increased slightly to CNY61.6 million / GBP7.1 million (H1 2016: CNY61.2 million / GBP6.5 million)
-- Profit for the period decreased by 10.7% to CNY10.2 million / GBP1.2 million (H1 2016: CNY11.4 million / GBP1.3 million)
-- Cash and cash equivalents balance as at 30 June 2017 was CNY44.7 million / GBP5.1 million (31 December 2016: CNY CNY55.0 million / GBP6.5 million)
-- Total borrowings at 30 June 2017 were CNY80.0 million / GBP9.1 million (31 December 2016: CNY80.0 million / GBP9.4 million)
* As at 30 June 2017 the GBP/CNY exchange rate was 1:8.8144. The arithmetic average of the exchange rate for the first half of 2017 was 1:8.6483
Operational highlights
-- Selling price of products increased significantly, driven by the increase in price of raw materials, while sales volumes decreased due to the planned annual plant shutdown for maintenance and upgrade of the Company's principal production facility
-- Profit for the period decreased due to costs associated with the annual shutdown of the aforementioned production facility
-- Investment in a new electrolyte solvent plant which produces higher-end battery grade products
-- One high-end product of the new electrolyte solvent plant has passed acceptance testing and been successfully sold to customers since May
Outlook
-- Continue to focus on product innovation and enhancing customer service to mitigate difficult trading conditions, which are expected for the remainder of the year
-- Investment in a new pulverized coal stove to meet increased heating demand for higher-end products; this will also reduce shutdown frequency and meet enhanced environmental regulations
-- July 2017 recorded a loss of CNY0.98m due to lower than expected sales. Upgrades required by enhanced environmental regulations meant downstream companies have had to shut down operations in recent weeks, impacting sales. The Group therefore expects August 2017 to be a loss-making month.
Mr. Xiaohong Yang, Executive Chairman, said:
"The Board is pleased with the performance of the Group and, despite facing challenging market conditions and a reduction in output as a result of the planned annual plant shutdown, HaiKe has made good progress in its long-term strategy of focusing on the higher margin specialty chemicals business. The Company is planning further technical upgrades and expects to develop new products in H2 to ensure continued profitability."
For further information please contact:
Hot Features
Premium
HaiKe Chemical Jes Cui, Chief Financial +86 546 7787789
Group Officer cuizhiqiang@haikegroup.com
yolanda.zhang@haikegroup.com
Richard Johnson / +44 (0) 20 7601
Stockdale Securities Antonio Bossi 6100
Shan Shan Willenbrock
/
Joe McGregor +44 (0) 20 7930
Cardew Group haike@cardewgroup.com 0777
A copy of this half yearly financial report is available on the Company's website www.haikechemical.com.
CHAIRMAN'S STATEMENT
1. Review of operating results
In H1 2017, the Group sold 58,000 tons of specialty chemicals, representing a volume decrease of 14.2% when compared to the same period in the previous year. The sales of high-end specialty chemicals accounted for 14.5% of total sales in H1 2017, compared to 3.4% in H1 2016.
The IPA plant was shut down for annual maintenance from 11 May to 13 June 2017. During this period, the Company carried out additional upgrades to support the planned focus on higher-end products and in compliance with enhanced environment regulations. As a result of increased heating demand for higher-end products, the Company is building a new pulverized coal stove. In order to manage the heating capacity prior to the completion of the stove, the Board, as previously announced on 26 June 2017, has decided to reduce the operating capacity of the DMC plant which produces lower margin products. The DMC plant is expected to be fully operational by the year end, in line with the completion of the coal stove.
As previously stated in the final results, the Company is focused on upgrading various products and supplying multiple types of supporting products. To facilitate the upgrade, the Company has invested CNY 62 million, funded from existing cashflow, in a new electrolyte solvent plant which is expected to produce a range of higher-end battery grade products including DiMethyl Carbonate (DMC), battery grade Propylene Carbonate (PC), battery grade Ethyl Methyl Carbonate (EMC), battery grade Diethyl Carbonate (DEC), and battery grade Ethylene Carbonate (EC). DEC, one of new high-end products produced from the new electrolyte solvent plant has passed the acceptance testing and has been sold to customers since May.
The selling price of products increased significantly, driven by the increase in the price of raw materials and the rise in oil prices.
Average Realized
Sales Volume Price
('000 ton) (CNY/ton)
6 months 6 months Change 6 months 6 months Change
ended ended y-o-y ended ended y-o-y
30-Jun-17 30-Jun-16 (%) 30-Jun-17 30-Jun-16 (%)
DiMethyl
Carbonate 19 24 -20.3% 5,176 3,782 36.9%
Propylene
glycol 16 19 -12.3% 7,961 6,618 20.3%
Isopropyl
alcohol 21 24 -12.1% 6,446 4,705 37%
Diisopropyl
ether 2 1 14.3% 10,705 9,688 10.5%
Diethyl carbonate 0.2 0 10,958
Total 58 68 -14.2% 6,593 5,013 31.5%
2. Financial Analysis
Turnover
The Group's turnover increased by 14.9% to CNY402.8 million in the first half of 2017 (H1 2016: CNY350.7 million). Selling prices of DMC and IPA rose 36.9% and 37% respectively. This was attributable to the rise in raw materials.
The price of propylene is closely related to that of crude oil which increased 26% compared with H1 2016. In addition, some companies producing propylene as a main product shut down for maintenance which reduced the supply of propylene sharply, resulting in the Company not producing any new propylene products in the period. For propylene oxide, the average operating rate was 79% for H1 2017, down by 4% compared to the same period last year. The government has implemented more stringent environment inspections and regulation, causing some factories to cease operation.
While the overall average realized price increased by 31.5% in the period, total sales volumes decreased by 14.2% due to the shutdown of some of the Company's plants. The IPA plant was closed for annual maintenance for one month. The smaller 15,000 tons per annum DMC plant which produces lower margin products was shut down from 24 April until the end of this year to manage the heating capacity prior to the completion of the coal stove. The larger 30,000 tons per annum DMC plant continues to operate normally.
Gross Profit
Gross profit increased slightly to CNY61.6 million compared with the same period in 2017 (H1 2016: CNY61.2 million). The price of propylene and propylene oxide increased by 29% and 28% respectively. This led to a rise in the cost of sales of 17.8%. The Company maintains a reasonable stock of raw materials.
Selling, General and Administrative Expenses
Selling and distribution expenses decreased to CNY20.4 million in H1 2017 (H1 2016: CNY20.8 million). Freight costs decreased by 14.5% and commission fell by 68.3% due to a reduction in sales volume.
General and administrative expenses increased to CNY28.4 million in H1 2017 (H1 2016: CNY25.2 million) which was mainly attributable to an increase in labour cost as a result of an increase in domestic inflation.
Net Interest Expenses
Interest income decreased by 5% year-on-year to CNY0.87 million for H1 2017 (H1 2016: CNY0.91 million).
Interest expenses were CNY1.9 million for H1 2017 (H1 2016: CNY1.9 million). Bank loans remained unchanged.
Profit Before Tax
Profit before taxation was CNY12.1 million for H1 2017 (H1 2016: CNY13.8 million). A lower profit was achieved in the period compared to H1 2016 as a result of a 4.6% increase in total expenses. This is attributable to shutdown costs of the IPA plant and start-up expenses of the new electrolyte solvent plant which accounted for CNY4.5 million.
Income Tax
Income tax charge was CNY1.9 million for H1 2017, as compared to CNY2.4 million for the same period in the previous year.
Profit for the Period
Profit for the half year was CNY10.2 million (H1 2016: CNY11.4 million).
Cash and Cash Equivalents
Cash and cash equivalents decreased to CNY44.7 million as at 30 June 2017 compared to CNY55.0 million as at 31 December 2016. The reduction in cash and cash equivalents was due to the investment in the new electrolyte solvent plant, associated start-up expenses and shutdown costs of the IPA plant.
Bank Loans
Bank loans were CNY80.0 million as at 30 June 2017, unchanged from 31 December 2016 (CNY 80.0 million).
Cash Flow from Operations
Cash flow from operating activities was CNY86.7 million for the six months ended 30 June 2017, compared to CNY68.0 million for the same period in 2016. This was mainly attributable to positive movements of working capital.
3. Outlook
The Group recorded an unaudited loss of CNY0.98 million for July due to demand being lower than expected. The output product of the operating DMC plant, propylene glycol, was used as raw material for the new electrolyte solvent plant, which reduced sales volume of propylene glycol. Sales of Diisopropyl ether were lower than expected due to weak market conditions.
In order to facilitate upgrades required by enhanced environmental regulations, some downstream companies have had to shut down operations in recent weeks, impacting sales. The Group therefore expects August 2017 to be a loss-making month.
As previously announced, the Company expects a further shutdown of the IPA plant in the second half of 2017 to fit a new catalyst which is anticipated to take no longer than one month. As a result of increased heating demand for our higher-end products, the Company is building a new pulverized coal stove. This action is intended to reduce shutdown frequency and allow the Company to meet enhanced environment regulations. Construction of the stove has begun, with completion expected toward the year end.
In order to continue to deliver a profitable performance for H2 in a challenging operating environment, our efforts will remain focused on:
-- Establishing strategic partnerships with customers for higher-end products
-- Providing specialist technical services to enhance product value and improve overall customer service
-- Continuing to increase marketing investment -- Product innovation to introduce new higher-end products to diversify our product portfolio
Xiaohong Yang
Executive Chairman
Condensed consolidated statement of comprehensive income
For the six months ended 30 June 2017
6 months 6 months ended Year ended
ended
30-Jun-17 30-Jun-16 31-Dec-16
Note (Unaudited) (Unaudited) (Audited)
CNY'000 CNY'000 CNY'000
-------------------- -------------------- -----------
Revenue 402,818 350,706 728,274
Cost of sales (341,178) (289,521) (613,367)
-------------------- -------------------- -----------
Gross profit 61,640 61,185 114,908
Other operating
income 300 (387) (1,070)
Administrative expenses (28,410) (25,160) (51,060)
Selling and distribution
expenses (20,398) (20,843) (40,542)
-------------------- -------------------- -----------
Profit from operations 13,132 14,795 22,237
Finance expenses (1,892) (1,877) (15,043)
Finance income 866 906 13,509
-------------------- -------------------- -----------
Profit / (loss)
before tax 12,106 13,824 20,703
Tax expense 7 (1,940) (2,435) (3,757)
Profit/(Loss) for
the period 10,166 11,389 16,946
-------------------- -------------------- -----------
Other comprehensive
profit, net of tax
Items that will
be reclassified
subsequently to
profit or loss
Exchange difference
arising from consolidation - - -
-------------------- -------------------- -----------
Total comprehensive
profit for the period,
net of tax 10,166 11,389 16,946
-------------------- -------------------- -----------
Profit / (loss)
for the period attributable
to:
Owners of parent 10,152 11,372 16,921
Non-controlling
interest 14 17 25
-------------------- -------------------- -----------
10,166 11,389 16,946
-------------------- -------------------- -----------
Total comprehensive
profit for the period
attributable to: 10,152 11,372 16,921
Owners of parent 14 17 25
-------------------- -------------------- -----------
Non-controlling
interests 10,166 11,389 16,946
-------------------- -------------------- -----------
Earnings per share
for profit attributable
to the
ordinary equity
holders of the parent
during the period
Basic CNY0.265 CNY0.297 CNY0.442
Diluted CNY0.265 CNY0.297 CNY0.442
-------------------- -------------------- -----------
Condensed consolidated Statement of Financial Position
As at 30 June 2017
6 months 6 months Year ended
ended ended
30-Jun-17 30-Jun-16 31-Dec-16
Notes (Unaudited) (Unaudited) (Audited)
CNY'000 CNY'000 CNY'000
--------------------------------- --------------------------------- ------------------------
ASSETS
Non-current
assets
Property, plant
and equipment 209,691 148,632 181,287
Intangible assets 10,174 11,465 10,819
219,865 160,097 192,106
--------------------------------- --------------------------------- ------------------------
Current assets
Inventories 46,299 33,296 39,798
Trade and other
receivables 151,911 105,941 142,196
Amounts due from
related parties 204,789 580,931 149,221
Income tax
receivable -
Restricted cash 2,200 7,612 4,156
Cash and cash equivalents 44,700 73,541 54,978
---------------------------------
449,899 801,321 390,349
--------------------------------- --------------------------------- ------------------------
Total assets 669,764 961,418 582,455
--------------------------------- --------------------------------- ------------------------
LIABILITIES
Current
liabilities
Short-term loan 80,000 80,000 80,000
Trade and other
payables 184,473 180,202 121,570
Income tax payable 4,076 6,749 7,921
--------------------------------- ---------------------------------
Amounts due to
related parties 257,327 568,654 241,657
--------------------------------- ---------------------------------
525,876 835,605 451,148
--------------------------------- --------------------------------- ------------------------
Non-current
liabilities
Long-term loan
Deferred income 2,300 2,192 2,129
--------------------------------- ---------------------------------
2,300 2,192 2,129
--------------------------------- --------------------------------- ------------------------
Total liabilities 528,176 837,797 453,277
--------------------------------- --------------------------------- ------------------------
CAPITAL AND
RESERVES
Share capital 598 598 598
Share premium 1,564,667 1,564,667 1,564,667
Other reserves 1,818 1,818 1,818
Foreign currency
translation reserve (587) (587) (587)
Statutory reserves 34,205 32,268 34,205
Accumulated losses (1,459,224) (1,475,228) (1,471,616)
--------------------------------- --------------------------------- ------------------------
Equity attributable
to equity holders
of the parent 141,477 123,536 129,085
Non-controlling
interest 111 85 93
--------------------------------- ---------------------------------
Total equity 141,588 123,621 129,178
--------------------------------- --------------------------------- ------------------------
Total liabilities
and equity 669,764 961,418 582,455
--------------------------------- --------------------------------- ------------------------
Condensed consolidated Statement of Changes in Equity
For the 6 months ended 30 June 2017
Attributable to equity holders of the parent
For the 6 months Foreign
ended 30 June 2017 currency
Share Share Other translation Statutory Accumulated Non-controlling Total
capital premium reserves reserve reserves losses Total interest equity
(Unaudited) CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000
-------------- -------------- ------------- --------------- ----------------- ---------------- ------------------- --------------------- -----------
Balance as at 1 January
2017 598 1,564,667 1,818 (587) 34,205 (1,471,616) 129,085 93 129,178
Transfer to statutory
reserves
Previous year adjustment 2,239 2,239 2,239
Transactions with
owners - - - - 2,239 2,239 - 2,239-
Profit for the year 10,152 10,152 14 10,166
Other comprehensive
profit - - - - -
- Foreign currency
translation - - -
Total comprehensive
profit for the year - - - - - 10,152 10,152 14 10,166
Balance as at 30 June
2017 598 1,564,667 1,818 (587) 34,205 (1,459,225) 141,477 107 141,584
-------------- -------------- ------------- --------------- ----------------- ---------------- ------------------- --------------------- -----------
Attributable to equity holders of the parent
For the 6 months ended Foreign
30 June 2016 currency
Share Share Other translation Statutory Accumulated Non-controlling Total
capital premium reserves reserve reserves losses Total interest equity
(Unaudited) CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000
-------------- -------------- ------------- --------------- ----------------- ---------------- ------------------- --------------------- -----------
Balance as at 1 January
2016 598 1,564,667 1,818 (587) 32,268 (1,486,585) 112,179 68 112,247
Transfer to statutory
reserves (15) (15) (15)
Previous year adjustment (15)
Transactions with
owners - - - - (15) (15) - -
Profit for the year 11,372 11,372 17 11,389
Other comprehensive
profit -
- Foreign currency
translation - - - - - - -
Total comprehensive
profit for the year - - - - - 11,372 11,372 17 11,389
Balance as at 30 June
2016 598 1,564,667 1,818 (587) 32,268 (1,475,228) 123,536 85 123,621
-------------- -------------- ------------- --------------- ----------------- ---------------- ------------------- --------------------- -----------
Attributable to equity holders of the parent
For the year ended
31 December 2016
(Audited)
Foreign
currency
Share Share Other translation Statutory Accumulated Non-controlling Total
capital premium reserves reserve reserves losses Total interest equity
CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000
-------------- -------------- ------------- --------------- ----------------- ---------------- ------------------- --------------------- -----------
Balance as at 1 January
2016 598 1,564,667 1,818 (587) 32,268 (1,486,585) 112,179 68 112,247
Transfer to statutory
reserves - - 1,937 (1,937) -
Previous year adjustment (15) (15) (15)
Transactions with
owners - - - 1937 (1952) (15) (15)
Profit for the year 16,921 16,921 25 16,946
Other comprehensive
profit - - - - - 0
- Foreign currency
translation - - - - -
Total comprehensive
profit for the year - - - - - 16,921 16,921 25 16,946
Balance
as at 31
December
2016 598 1,564,667 1,818 (587) 34,205 (1,471,616) 129,085 93 129,178
-------------- -------------- ------------- --------------- ----------------- ---------------- ------------------- --------------------- -----------
Condensed consolidated Statement of Cash Flow
For the 6 months ended 30 June 2017
6 months 6 months Year
ended ended ended
----------------------------- ----------------------------- ----------
30-Jun-17 30-Jun-16 31-Dec-16
----------------------------- ----------------------------- ----------
(Unaudited) (Unaudited) (Audited)
----------------------------- ----------------------------- ----------
CNY'000 CNY'000 CNY'000
----------------------------- ----------------------------- ----------
Profit /(loss) before
tax 12,106 13,824 20,703
----------------------------- ----------------------------- ----------
Adjustments for: - -
----------------------------- ----------------------------- ----------
Amortisation of intangible
assets 646 646 1,291
----------------------------- ----------------------------- ----------
Provisions for doubtful
debts 885 136 885
----------------------------- ----------------------------- ----------
Depreciation of property,
plant and equipment 13,491 12,860 26,203
----------------------------- ----------------------------- ----------
Loss on disposal
of property, plant
and equipment (472) 1,448
----------------------------- ----------------------------- ----------
Amortisation of deferred
capital grants 102 250 1,050
----------------------------- ----------------------------- ----------
Interest income (110) (114) (11,062)
----------------------------- ----------------------------- ----------
Finance expense 1,892 953 15,043
----------------------------- ----------------------------- ----------
Operating cash flows
before working capital
changes 29,012 28,083 55,561
----------------------------- ----------------------------- ----------
Working capital changes:
----------------------------- ----------------------------- ----------
(Increase)/decrease
in:
----------------------------- ----------------------------- ----------
Inventories (6,500) (4,701) (11,204)
----------------------------- ----------------------------- ----------
Trade and other receivables (9,717) (4,634) (40,888)
----------------------------- ----------------------------- ----------
Movement in related
parties' balances 9,988 (49,803) 62,256
----------------------------- ----------------------------- ----------
Restricted cash 1,956 5,647 9,104
----------------------------- ----------------------------- ----------
Increase/(decrease)
in:
----------------------------- ----------------------------- ----------
Trade and other payables 59,059 91,020 32,388
----------------------------- ----------------------------- ----------
Cash generated from
operations 83,798 65,612 107,220
----------------------------- ----------------------------- ----------
Income tax paid 2,881 2,388 3,496
----------------------------- ----------------------------- ----------
Net cash generated
from operating activities 86,679 68,000 110,716
----------------------------- ----------------------------- ----------
6 months 6 months Year
ended ended ended
----------------------------- ----------------------------- ----------
30-Jun-17 30-Jun-16 31-Dec-16
----------------------------- ----------------------------- ----------
(Unaudited) (Unaudited) (Audited)
----------------------------- ----------------------------- ----------
CNY'000 CNY'000 CNY'000
----------------------------- ----------------------------- ----------
Cash flow generated
from operating activities 86,679 68,000 110,716
----------------------------- ----------------------------- ----------
Cash flow from investing
activities
----------------------------- ----------------------------- ----------
Purchase of property,
plant and equipment (95,443) (29,085) (76,421)
----------------------------- ----------------------------- ----------
Purchase of intangible
assets -
----------------------------- ----------------------------- ----------
Interest received 114
----------------------------- ----------------------------- ----------
Government grant
received 377 60 321
----------------------------- ----------------------------- ----------
Purchase of shares
in subsidiary from
minorities -
----------------------------- ----------------------------- ----------
Cash flow (used in)/
generated from investing
activities (95,066) (28,911) (76,100)
----------------------------- ----------------------------- ----------
Cash flow from financing
activities
----------------------------- ----------------------------- ----------
Capital injection
from minority shareholders
in subsidiaires
----------------------------- ----------------------------- ----------
Proceeds from bank
borrowings 80,000 80,000 120,000
----------------------------- ----------------------------- ----------
Repayment of bank
borrowings (80,000) (80,000) (120,000)
----------------------------- ----------------------------- ----------
Loans(from)/to related
parties
----------------------------- ----------------------------- ----------
Interest paid (1,892) (953) (15,043)
----------------------------- ----------------------------- ----------
Dividends paid to
non-controlling interest - -
----------------------------- ----------------------------- ----------
Cash flow (used in)
/generated from financing
activities (1,892) (953) (15,043)
----------------------------- ----------------------------- ----------
Net (decrease) /increase
in cash and cash equivalents (10,279) 38,136 19,573
----------------------------- ----------------------------- ----------
Cash at beginning
of period 54,978 35,405 35,405
----------------------------- ----------------------------- ----------
Foreign currency translation
differences
----------------------------- ----------------------------- ----------
Cash at end of year 44,700 73,541 54,978
----------------------------- ----------------------------- ----------
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL INFORMATION
FOR SIX MONTHSED 30 JUNE 2017
(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 Company's ultimate parent company is HiTech Chemical Investment Ltd, a company incorporated in the British Virgin Islands.
The principal activities of the Company are manufacturing of specialty chemical products.
The principal place of business of the Company is Shengli Industrial Park, Dongying City, Shandong Province, China.
The interim consolidated financial information of the Company for the six months ended 30 June 2017 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 2017.
Financial information for the six months ended 30 June 2017 and 30 June 2016 is unaudited and does not constitute the Company's financial statements for these periods.
Comparative financial information for the full year ended 31 December 2016 has been derived from the audited financial statements for that period. The Board of Directors approved the interim statements on 31 August 2017.
3. Related Party Transactions
The Company undertook a restructuring in 2014 which resulted in the divestment of the Group's refinery and biochemical assets to leave a smaller, more focused specialty chemicals business. The disposed companies and HaiKe are controlled by HiTech Chemical Investment Ltd and therefore, in accordance with IAS24, the disposed companies are deemed to be related parties of the Group.
The immediate and ultimate parent company is HiTech Chemical Investment Ltd., a company incorporated in British Virgin Islands. Related parties include companies that fall under the common control provisions of IAS24. Details of transactions with related parties are as follows:
Sales, purchase of goods and loans
In H1 2017, the Group made the following sales, purchase and funds transfer with related parties:
Sales Purchase Loan Loan Loan
from to repayment
-------------------------- -------- --------- -------- -------- -----------
30-06-2017 CNY'000 CNY'000 CNY'000 CNY'000 CNY'000
-------------------------- -------- --------- -------- -------- -----------
Shareholder - - - 8 -
Haike Holding Hongkong
Limited - - 14,380 83,709 -
Haike International - - - 10 -
Holding Limited
HiTech Chemical - - - 397 -
Investment Ltd.
Dongying Hi-tech
Qifen Co., Ltd 1,921 112,990 - 75699 -
Shandong Hi-tech 119,423 - -
Ruilin Chemical
Co., Ltd
Dongying He-bang
Chemical Co., Ltd - 842 75,976 - -
Dongying Tiandong
Biochemical Co.,
Ltd - - 4,864 3,209 -
Shandong Hi-tech
Chemical Group Ltd - 52 35,811 37,892 -
Shanghai Yuanchuan - - 6,535 - -
Chemical Ltd
Dongying Hi-tech
Transport Co.,Ltd. - 370 337 - -
Shandong Hi-Tech - - - 390 -
Shengli Electrochemical
Co., Ltd
-------------------------- -------- --------- -------- -------- -----------
1,921 114,254 257,327 201,313 -
-------------------------- -------- --------- -------- -------- -----------
The sales of goods to the related parties are based on the market price.
4. Subsequent Event
No subsequent event occurred after the reporting period.
5. Capital commitments
Capital expenditure contracted for property, plant and equipment in continuing operations as at 30 June 2017 but not recognized in the financial statements, was CNY29.7 million (31 December 2016: CNY29.4 million).
6. Acquisitions and disposals of items of property, plant and equipment
Acquisitions of items of property, plant and equipment were CNY95.4 million (H1 2016: CNY29.1million). Loss on disposals of items of property, plant and equipment was CNY0 (H1 2016: CNY472,000).
7. Tax
Major components of income tax expense/(credit)
The major components of income tax expense are as follows:
6 months 6 months Year ended
ended ended
30-Jun-17 30-Jun-16 31-Dec-16
(Unaudited) (Unaudited) (Audited)
CNY'000 CNY'000 CNY'000
------------ ------------ ----------------------
Current income tax 1,940 2,435 3,757
Deferred tax:
Originating and reversal - - -
of temporary differences
------------ ------------
Income tax recognised
in income statement 1,940 2,435 3,757
------------ ------------ ----------------------
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 6 months Year ended
ended ended
30-Jun-17 30-Jun-16 31-Dec-16
(Unaudited) (Unaudited) (Audited)
CNY'000 CNY'000 CNY'000
------------------------ ------------------------ -----------
Accounting profit
before income tax 12,106 13,824 20,703
Tax at respective
companies' domestic
income tax rate 3,027 3,456 5,176
Nondeductible expenses (1,087) (1,021) (1,419)
Income tax expense
recognized in income
statement 1,940 2,435 3,757
------------------------ ------------------------ -----------
8. Profit per share from operations
Earnings for the purpose of basic and diluted earnings per share are the net profit for six months ended 30 June 2017 attributable to equity holders of the parent of CNY10,152,000 (for the six months ended 30 June 2016: profit of CNY11,372,000; for the year ended 31 December 2016: profit of CNY16,921,000).
The profit from operations for the financial periods attributable to equity holders of the parent was as follows:
Profit per share from
operations
6 months 6 months Year ended
ended ended
30-Jun-17 30-Jun-16 31-Dec-16
(Unaudited) (Unaudited) (Audited)
CNY'000 CNY'000 CNY'000
------------ ------------ -----------
Profit per share from
operations
attributable to equity
holders of the parent 10,152 11,372 16,921
------------ ------------ -----------
Number of ordinary shares 6 months 6 months Year ended
ended ended
30-Jun-17 30-Jun-16 31-Dec-16
(Unaudited) (Unaudited) (Audited)
'000 '000 '000
------------ ------------ -----------
Weighted average number
of ordinary shares - basic
& diluted
38,354 38,354 38,354
------------ ------------ -----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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