LONDON (Alliance News) - Zibao Metals Recycling Holdings PLC Monday said pretax profit halved in the full-year due to increased costs, despite revenues rising as the company secured new suppliers.
The Hong Kong-based, recyclable metal trader said pretax profit for the full-year to March 31 came in at HKD8 million, less than half of the HKD16.7 million reported in 2013.
Revenue for the period rose 1.8% to HKD444 million in 2014, from HKD436 million in the previous year.
Trading in the full-year was more difficult than had been anticipated, said Zibao Metals. The company faced issues such as growth in the Chinese economy softening somewhat during the period with prices of all metals falling in the first quarter of 2014. Additionally there was a tightening of liquidity by Chinese banks and restrictions were also put in place by the Chinese Government through 'Operation Green Fence,' said the company.
"Despite these difficulties... the group achieved a growth in revenue as a result of increasing the quantity of scrap sold. Although revenue had increased, a slight dip in the group's bottom line was recorded, caused mainly by an increase in the selling, distribution and transportation costs," it said.
Administrative expenses rose to HKD12.5 million in the full-year to March 31, compared to HKD3.8 million in the comparable period in 2013, accompanied by a HKD8 million admission expense to join the AIM market in June.
The group began working with four new suppliers in the full-year ended March 31, and now has a panel of over 50, it said. "The company continues to look to increase, by acquisition, the number of up-stream suppliers and the acquisition, or establishment of additional recycling yards. Several suitable targets have been identified and negotiations are currently progressing," said Zibao.
The softening of metal prices seen in the last quarter of 2014 continued into the first quarter of the current financial period, said the company. However, prices have since recovered strongly after the Beijing government announced the "micro stimulus package" and a 6-7% growth target was announced for Chinese infrastructure development, it added.
Looking ahead Zibao said it has made a steady start to the new year, and that it remains confident in being able to further consolidate its position and achieve further growth in meeting its targets in the second-half of the year. "Our focus for the year is to improve sales volumes and gross profit margins and further build our customer and supplier base. We remain confident about the future of Zibao and we look forward with cautious optimism to the second half of the year and beyond," said the metal trader.
Chairman Wenjie Zhou said "The current pressure facing the smaller scrap metal traders presents an attractive opportunity for Zibao which, as a larger operator with greater working capital, is able to consolidate its position and gain market share."
Shares in Zibao Metals were Monday untraded, quoted at 11.00 pence per share.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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