(Alliance News) - Zibao Metals Recycling Holdings PLC said Monday its future viability is "under review" after changes to the Chinese legislative environment led to a sharp swing to an annual loss and drop in revenue.
For the year to the end of March, the recyclable metals trader reported a pretax loss of HKD64.8 million, around USD8.3 million, compared to a profit of HKD1.8 million the year before.
This was on revenue that declined by 58% to HKD363.2 million from HKD857.1 million the prior year, resulting from a fall in the price of recycled metals and new laws reducing the import of scrap metals, thus limiting Zibao's access to inputs.
In April 2018, China's Ministry of Ecology & Environment banned the importation of 32 types of scrap materials including plastic waste and unsorted waste paper. The Chinese government also said it will impose tighter quality standards on all scrap metal imports starting in March 2019.
Zibao said the new regulations had a severe impact on trading, leading the group to scale back operations at its Zhengbao facility, leading to additional costs such as a stock write-off and impairments of asset values.
Due to the tough trading environment, Zibao said it has not been able to implement its trading strategy, and said its future viability in its current form is now "under review".
Shares in Zibao Metals were untraded in London on Monday, last quoted at 0.31 pence.
By Dayo Laniyan; dayolaniyan@alliancenews.com
Copyright 2019 Alliance News Limited. All Rights Reserved.
