PHM.L Regulatory News (PHM)

22 December 2017

Zibao Metals Recycling Holdings Plc("Zibao" or "the Company" or "the Group")

Half Year Results

Zibao Metals Recycling Holdings Plc (AIM: ZBO), a Hong Kong based, recyclable metal trader and processor is pleased to announce its half year results for the six months ended 30 September 2017.

The Group figures are presented in Hong Kong Dollars.

Highlights

· Revenue increased by 22% to HKD 479 million from HKD 394 million.

· Gross profit decreased by 10% to HKD 3.83 million from HKD 4.26 million while selling and distribution expenses have increased marginally to HKD 79,500 from HKD 53,000.

· Profit before tax decreased 6.8% to HKD 0.47 million (2016: HKD 0.51 million) mainly due to tighter margins caused by the difficult trading conditions. The decrease was partially offset by a reduction in administration expenses of HKD 0.41 million.

· The closing cash position at period end was HKD 3.13 million (2016: HKD 0.87 million).

Joe Zhou, Zibao Chairman commented: 

"The market conditions in the PRC and Europe continue to be challenging. However, we continue to control costs and manage the credit risks prudently. We believe that the Group is well positioned to benefit from a future recovery."

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About Zibao Metals Recycling Holdings PLC

Established in its current form in 2009, and incorporated as a UK registered company in 2014, Zibao is a trader and processor in non-ferrous metals - principally aluminium and copper. It imports these from a variety of international sources or indirectly from importers based in the People's Republic of China ('PRC') and resells them into the PRC to (a) operators who process them into a 'clean' form for sale to foundries (b) Customers who buy them in clean form. In addition, Zibao also operates a non-ferrous metal processing and stockholding yard based in Nanhai. The purchases by the yard are from importers based in the PRC and the customers are based in PRC.

The Company was formed by Wenjie 'Joe' Zhou, whose family has had interests in recyclable metals for nearly twenty years. During this period he has established good relationships with a range of overseas suppliers, importers based in the PRC and developed an in-depth knowledge of the PRC rules and regulations for the metals recycling industry.

Metals recycling is a multi-million pounds global industry and China is the world's leading importer of copper and aluminium and needs recycling to supplement its growing demand.

Chairman's Statement

We are pleased to report the Company's interim results for the six months ended 30 September 2017, in which Zibao further developed the business and continued to lay the foundation on which the business's future growth will be built.

Results

The Group's turnover was HKD 479 million, an increase of approximately 22% on the corresponding period last year, mainly due to an increasing demand from both new and existing customers. Profit before tax decreased during the period by 6.8% to HKD 0.47 million reflecting lower gross profit margins due to competition. A factor in the increase in orders was the slight loosening of credit in the PRC. Despite this, the overall PRC economy remains weak and margins continue to be tight. As a result, the Group's gross profit margins on sales have fallen due to increased competition from other suppliers.

Suppliers

Six new suppliers have been secured in the first half of the year, further strengthening the overall supplier base. Each supplier is vetted by the Group before becoming an approved trading partner. The Group seeks to cultivate strong and long-term relationships with its suppliers, helping maintain product quality and promoting integrity and reliability throughout its supply chain.

Customers

Ten new customers were added in the first half of the year and at the same time the Group also saw existing customers increase their order volumes.

Outlook

Market conditions in the PRC and Europe for the business remain challenging. The Group will continue its policy of tightly controlling costs and managing the credit risk prudently.

The Board believes that the Group is well positioned to benefit from any future recovery.

The Directors are currently carrying out a review of our current business, with a view to ensuring the Group is well placed to take advantage of any market recovery, whilst also ensuring that any potential future risks are mitigated as best as possible. In addition, the Board would consider looking at other opportunities which would add to our existing business; this may involve the Group acquiring complementary businesses, should suitable opportunities arise, although there is nothing in contemplation at this time.

Finally, I would like to take this opportunity to thank our long standing customers and suppliers as well as our employees for their loyalty and hard work.

Joe Zhou

Chairman

22 December 2017

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Equity

Notes to the interim financial information

1. General information

Zibao Metals Recycling Holdings Plc is a company incorporated in England on 9 October 2013 under the Companies Act 2006 but domiciled in Hong Kong. It was listed on the AIM market on 20 June 2014. The Group's principal activity is that of trading and processing scrap metals.

2. Basis of preparation and significant accounting policies

This interim report, which incorporates the financial information of the Company, has been prepared using the historical cost convention, on a going concern basis and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, using accounting policies which are consistent with those set out in the financial statements for the year ended 31 March 2017.

Taxes

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

Standards and Interpretations adopted with no material effect on financial statements

There are no IFRS or IFRIC interpretations that are effective for the first time in this financial period that would be expected to have a material impact on the Group.

Standards, interpretations and amendments to published standards that are not yet effective.

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial period beginning 1 April 2018 and have not been early adopted:

The directors anticipate that the adoption of these standards and the interpretations in future periods will have no material impact on the financial statements of the Group.

3. Segmental reporting

In the opinion of the directors, the Group has one class of business, being the trading of scrap materials. The Group's primary reporting format is determined by the geographical segment according to the location of its establishments. There is currently only one geographic reporting segment, which is China. All revenues and costs are derived from the single segment.

4. Directors' remuneration

5. Earnings per share

Profit per share data is based on the Group profit for the period and the weighted average number of shares in issue.

6.  Cash and cash equivalents Group

7. Share capital

The issued share capital as at 30 September 2017 was 122,010,000 ordinary shares of £0.01 each (30 September 2016: 122,010,000 ordinary shares of £0.01, 31 March 2017: 122,010,000 ordinary shares of £0.01)

8. Related-party transactions

During the period, the Group entered into the following trading transactions with related parties that are not members of the Group:

The following balances were outstanding at the end of the period:

Ben Lee is the brother in law of the director, and is a director of Wang Kei Yip Development Limited. Wang Kei Yip Development Limited is therefore a related party.

The amount due to Wenjie Zhou was unsecured, interest-free and had no fixed term of repayment. All the above transactions were done at arm's length.

9. The unaudited results for the period ended 30 September 2017 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The comparative figures for the period ended 31 March 2017 were extracted from the audited financial statements which contained an unqualified audit report and did not contain statements under Sections 498 to 502 of the Companies Act 2006.

10. This interim financial statement will be, in accordance with the AIM Rules for Companies, available shortly on the Company's website at www.zibaometals.com.

11. The Company is incorporated in the UK but is treated as a Hong Kong resident for tax purposes.

Macau and Hong Kong tax has been provided at a rate of 12% and 16.5% respectively.

There was deferred taxation in respect of the period.