10 Dec 2015 12:15
10 December 2015
Zibao Metals Recycling Holdings Plc("Zibao" or the "Company")
Half Year Results
Zibao Metals Recycling Holdings Plc (AIM: ZBO), a Hong Kong based, recyclable metal trader is pleased to announce its half year results for the six months ended 30 September 2015.
The Group figures are presented in Hong Kong Dollars (HKD 11.63 to £1.00 on 8 December 2015).
Highlights
· Revenue reduced by 23% to HKD 161 million from HKD 208.3 million
· PBT decreased 97% to HKD 0.2 million (2014: HKD 5.9 million before admission costs) mainly due to lower gross profit margins
· Profit from operations decreased 95% to HKD 0.2 million (2014: HKD 4.4 million)
· Cash position at period end at HKD 3.1 million (2014: HKD 1.9 million)
Joe Zhou, Zibao Chairman commented: "The market condition the PRC and Europe continues to be challenging. The Group will continue to control its costs and manage the credit risks prudently. The Group believes that it will be well positioned to benefit from a future recovery."
For further information please contact:
Zibao Metals Recycling Holdings PLC Wenjie "Joe" Zhou, Chairman Jianfeng "Eddy" Li, Chief Executive Officer Chor Wei "Alan" Ong, Finance Director
| Tel: +852 2769 7662 www.zibaometals.com |
ZAI Corporate Finance Limited (Nominated Adviser and Broker) Ray Zimmerman/Tim Cofman/ Songdi Lin
| Tel: +44 (0)20 7060 2220 www.zaicf.com |
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 in non-ferrous metals - principally aluminium and copper. It imports these from a variety of international sources and resells them into the People's Republic of China to operators who process them into a 'clean' form for sale to foundries.
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 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 2015,
Results
The Group's turnover was HKD 161 million, a decline of approximately 23% mainly due to decline in sales to existing customers. Profit before tax declined in the period by 97% to HKD 0.2 million mainly due to lower margins from sale to new customers with shorter credit periods., During the six months ended 30 September 2015, as a result of market uncertainty, the Group diversified away from its previous customer base and tightened its credit policy.
Suppliers
Two new suppliers have been secured in the first half of the year, which strengthens the overall supplier panel to over 57 members. Each supplier is vetted by the Group before becoming an approved trading partner. As a result of this process, the Group cultivates strong and long-term relationships with its suppliers, reducing the risk of lower product quality and promoting integrity and reliability throughout our supply chain.
Customers
New potential customers were approached in the first half of the year. During the period, the Group has seen customers struggle with their levels of working capital due to Chinese banks tightening their credit policies and the directors welcome the recently announced drop in interest rates, which they believe should have a positive impact on demand. During the six months ended 30 September 2015, the Group diversified away from its previous customer base due to the Group's tightening credit policy due to market uncertainty.
Outlook
The market condition the PRC and Europe continues to be challenging. The Group will continue to control its costs and manage the credit risks prudently. The Group believes that it will be well positioned to benefit from a future recovery.
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
10 December 2015
Consolidated Statement of Comprehensive Income
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| Notes | 6 months to 30 September 2015 | 6 months to 30 September 2014 |
Year to 31 March 2015 |
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| HKD'000 | HKD'000 | HKD'000 |
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| Unaudited | Unaudited | Audited |
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Continuing operations |
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Revenue | 3 | 160,989 | 208,280 | 403,798 |
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Cost of sales |
| (156,806) | (197,862) | (386,189) |
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| ─────── | ─────── | ─────── |
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Gross profit |
| 4,183 | 10,418 | 17,609 |
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Other revenues |
| 2 | - | 1,031 |
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Selling and distribution expenses |
| (265) | (454) | (692) |
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Administrative expenses |
| (3,731) | (4,460) | (8,524) |
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- Admission expenses |
| - | (581) | (581) |
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- Other administrative expenses |
| (3,731) | (3,879) | (7,943) |
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| ─────── | ─────── | ─────── |
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Operating profit |
| 189 | 5,504 | 9,424 |
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Finance cost |
| - | (150) | (250) |
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| ─────── | ─────── | ─────── |
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Profit before tax |
| 189 | 5,354 | 9,174 |
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Income tax expense |
| - | (963) | (1,431) |
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| ─────── | ─────── | ─────── |
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Profit and total comprehensive income for the period |
| 189 | 4,391 | 7,743 |
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| ═══════ | ═══════ | ═══════ |
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Profit and total comprehensive income for the year attributable to the owners of the Company |
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189 |
4,391 |
7,743 |
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Earnings per share
| 5 | HKD | HKD | HKD |
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Basic |
| 0.002 | 0.049 | 0.082 |
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Diluted |
| 0.002 | 0.048 | 0.080 |
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| ═════ | ═════ | ═════ |
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Consolidated Statement of Financial Position
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| Notes | As at 30 September 2015 | As at 30 September 2014 | As at 31 March 2015 |
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| HKD'000 Unaudited | HKD'000 Unaudited | HKD'000 Audited |
Assets |
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Non-Current Assets |
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Property, plant and equipment |
| 44,563 | 115 | 45,448 |
Intangible assets |
| 1,772 | - | 1,772 |
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| ─────── | ─────── | ─────── |
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| 46,335 | 115 | 47,220 |
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| ─────── | ─────── | ─────── |
Current Assets |
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Inventories |
| 18,355 | 23,805 | 17,233 |
Trade receivables |
| 9,099 | 29,900 | 14,774 |
Taxes recoverable |
| 9,107 | - | - |
Prepayments, deposits and other receivables |
| 4,864 | 8,497 | 22,905 |
Cash and cash equivalents | 7 | 3,077 | 1,938 | 1,104 |
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| ─────── | ─────── | ─────── |
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| 44,502 | 64,140 | 56,016 |
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| ─────── | ─────── | ─────── |
Total Assets |
| 90,837 | 64,255 | 103,236 |
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| ═══════ | ═══════ | ═══════ |
Equity and liabilities |
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Equity attributable to owners of the company |
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Share capital | 8 | 15,549 | 12,643 | 15,549 |
Share premium |
| 42,167 | 13,821 | 42,167 |
Group reorganisation reserve |
| (527) | (527) | (527) |
Share based payments reserve |
| 589 | 589 | 589 |
Retained earnings |
| 6,779 | 3,238 | 6,590 |
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| ─────── | ─────── | ─────── |
Total Equity |
| 64,557 | 29,764 | 64,368 |
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| ─────── | ─────── | ─────── |
Non-current liabilities |
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Deferred tax |
| 200 | - | 200 |
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| ─────── | ─────── | ─────── |
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| 200 | - | 200 |
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| ─────── | ─────── | ─────── |
Current liabilities |
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Trade payables |
| 8,981 | 3,231 | 22,792 |
Accrued liabilities and other payables |
| 4,979 | 17,279 | 3,518 |
Amount due to a director |
| 3,004 | 3,004 | 3,004 |
Corporate Tax payable |
| 9,116 | 8,648 | 9,354 |
Dividends payable | 6 | - | 2,329 | - |
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| ─────── | ─────── | ─────── |
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| 26,080 | 34,491 | 38,668 |
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| ─────── | ─────── | ─────── |
Total Liabilities |
| 26,280 | 34,491 | 38,868 |
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| ─────── | ─────── | ─────── |
Total Equity and Liabilities |
| 90,837 | 64,255 | 103,236 |
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Consolidated Statement of Cash Flows
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| Notes | 6 months to 30 September 2015 | 6 months to 30 September 2014 | Year to 31 March 2015 | |||
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| HKD'000 Unaudited | HKD'000 Unaudited | HKD'000 Audited | |||
Cash flows from operating activities |
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Net cash from operating activities |
| 1,814 | (20,025) | (18,837) | |||
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Investing activities |
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Disposals of property, plant and equipment |
| 397 | - | - | |||
Interest received |
| - | - | 1 | |||
Acquisition of subsidiary net of cash acquired |
| - | - | 304 | |||
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| ───── | ───── | ───── | |||
Net generated from / (cash used) in investing activities |
| 397 | - | 305 | |||
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| ───── | ───── | ───── | |||
Financing activities |
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Dividend paid | 6 | - | - | (2,329) | |||
Net proceeds from the issue of Ordinary shares |
| - | 15,933 | 15,935 | |||
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Net cash from / (used in) in financing activities |
| - | 15,933 | 13,606 | |||
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Taxation |
| (238) | - | - | |||
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Net increase / (decrease) in cash and cash equivalents |
| 1,973 | (4,092) | (4,926) | |||
Cash and cash equivalents at beginning of the period |
| 1,104 | 6,030 | 6,030 | |||
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| ───── | ───── | ───── | |||
Cash and cash equivalents at the end of the period |
| 3,077 | 1,938 | 1,104 | |||
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Represented by: |
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Bank balances and cash |
| 3,077 | 1,938 | 1,104 | |||
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| ───── | ───── | ───── | |||
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| 3,077 | 1,938 | 1,104 | |||
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Notes for Consolidated Statement of Cash Flows
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| 6 months to 30 September 2015 | 6 months to 30 September 2014 |
Year to 31 March 2015 | |||
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| HKD'000 Unaudited | HKD'000 Unaudited | HKD'000 Audited | |||
Profit before income tax |
| 189 | 5,354 | 9,174 | |||
Adjustments for: |
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Depreciation on property, plant and equipment |
| 488 | 37 | 498 | |||
Interest income |
| (2) | - | (1) | |||
Written off for property, plant and equipment |
| - | - | 9 | |||
Share option charge |
| - | 28 | 28 | |||
Charge for Warrants |
| - | 561 | 561 | |||
(Increase) / decrease in inventories |
| (1,122) | (7,615) | 3,379 | |||
Decrease/(Increase) in trade receivables |
| 5,675 | (4,540) | 19,539 | |||
Decrease / (Increase) in prepayments, deposits and other receivables |
| 8,934 | (1,877) | 29,763 | |||
Increase / (decrease) in trade payables |
| (13,809) | (2,866) | (26,791) | |||
Increase / (decrease) in accrued liabilities and other payables |
| 1,461 | (12,111) | (58,000) | |||
(Decrease) / increase in amounts due to a director |
| - | 3,004 | 3,004 | |||
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| ───── | ───── | ───── | |||
Cash generated from / (used in) operations |
| 1,814 | (20,025) | (18,837) | |||
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Consolidated Statement of Changes in Equity
| Share Capital | Share premium | Share based payment reserves | Group Reorgan-isation Reserve | Retained Earnings | Total |
| HKD'000 | HKD'000 | HKD'000 | HKD'000 | HKD'000 | HKD'000 |
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As at 31 March 2014 | 10,530 | - | - | (527) | 1,176 | 11,179 |
Total comprehensive income for the period | - | - | - | - | 4,391 | 4,391 |
Shares issued during the period | 2,113 | 13,821 | - | - | - | 15,934 |
Share options and warrants issued in the period | - | - | 589 | - | - | 589 |
Dividends payable to equity holders of the Company | - | - | - | - | (2,329) | (2,329) |
| ───── | ───── | ───── | ───── | ───── | ───── |
As at 30 September 2014 | 12,643 | 13,821 | 589 | (527) | 3,238 | 29,764 |
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Total comprehensive income for the period | - | - | - | - | 3,352 | 3,352 |
Shares issued during the period | 2,906 | 28,346 | - | - | - | 31,252 |
| ───── | ───── | ───── | ───── | ───── | ───── |
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As at 31 March 2015 | 15,549 | 42,167 | 589 | (527) | 6,590 | 64,368 |
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Total comprehensive income for the period | - | - | - | - | 189 | 189 |
| ───── | ───── | ───── | ───── | ───── | ───── |
As at 30 September 2015 | 15,549 | 42,167 | 589 | (527) | 6,779 | 64,557 |
| ───── | ───── | ───── | ───── | ───── | ───── |
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 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 2015.
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 2015 and have not been early adopted:
Reference | Title | Summary | Application date of standard | Application date of Group |
IFRS 14 | Regulatory deferral accounts | Aims to enhance the comparability of financial reporting by entities subject to rate-regulations | Periods commencing on or after 1 January 2016 | 1 April 2016 |
IFRS 15 | Revenue from contracts with customers | Specifies how and when to recognise revenue from contracts as well as requiring more informative and relevant disclosures | Periods commencing on or after 1 January 2017 | 1 April 2017 |
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
| 6 months to 30 September 2015 | 6 months to 30 September 2014 |
Year to 31 March 2015 |
| Salaries, fees and options | Salaries, fees and options | Salaries, fees and options |
| HKD'000 | HKD'000 | HKD'000 |
| Unaudited | Unaudited | Audited |
Wenjie Zhou | 240 | 120 | 420 |
Jianfeng Li | 120 | 120 | 180 |
Alan Ong | 58 | 91 | 170 |
Chin Phang Kwok | 57 | 91 | 170 |
Peter Greenhalgh | 58 | 91 | 167 |
Ajay Rajpal | 57 | 91 | 169 |
| ─────── | ─────── | ─────── |
| 590 | 604 | 1,276 |
| _________ | _________ | _________ |
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 months to 30 September 2015 | 6 months to 30 September 2014 |
Year to 31 March 2015 |
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| HKD'000 | HKD'000 | HKD'000 |
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| Unaudited | Unaudited | Audited |
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Profit for the period attributable to owners of Company |
189 |
4,391 |
7,743 |
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Weighted average number of ordinary shares for the purposes of basic earnings per share (000's) | 122,010 | 90,057 | 94,662 |
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Weighted average number of ordinary shares for the purposes of diluted earnings per share (000's) | 125,452 | 92,051 | 97,378 |
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| 6 months to 30 September 2015 | 6 months to 30 September 2014 |
Year to 31 March 2015 |
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| HKD'000 Unaudited | HKD'000 Unaudited | HKD'000 Audited |
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Basic earnings per share |
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Total basic earnings per share | 0.002 | 0.049 | 0.082 |
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Diluted earnings per share |
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Total basic and diluted earnings per share | 0.002 | 0.048 | 0.080 |
| ───── | ───── | ───── |
6. Dividends
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| 6 months to 30 September 2015 | 6 months to 30 September 2014 |
Year to 31 March 2015 |
| HKD'000 Unaudited | HKD'000 Unaudited | HKD'000 Audited |
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Interim Dividends payable by the Company (HKD0.02 per share) | - | 2,329 | 2,329 |
Final Dividends | - | - | - |
| ───── | ───── | ───── |
| - | 2,329 | 2,329 |
| ═════ | ═════ | ═════ |
7. Cash and cash equivalents Group
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| As at 30 September 2015 | As at 30 September 2014 | As at 31 March 2015 |
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| HKD'000 | HKD'000 | HKD'000 |
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| Unaudited | Unaudited | Audited
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Cash and bank balances |
| 3,077 | 1,938 | 1,104 |
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| ─────── | ─────── | ─────── |
Cash and bank balances as presented in balance sheets |
| 3,077 | 1,938 | 1,104 |
Add: Pledged fixed deposits |
| - | - | - |
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| ─────── | ─────── | ─────── |
Cash and cash equivalents as presented in consolidated statement of cash flows |
| 3,077 | 1,938 | 1,104 |
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| _________ | _________ | _________ |
8. Share capital
The issued share capital as at 30 September 2015 was 122,010,000 ordinary shares of £0.01 each (30 September 2014: 97,250,000 ordinary share of £0.01, 31 March 2015: 122,010,000 ordinary shares of £0.01)
9. Related-party transactions
During the period, the Group entered into the following trading transactions with related parties that are not members of the Group:
| Sales of goods | Purchase of goods | ||||
| 6 months to 30 September 2015 | 6 months to 30 September 2014 | Year to 31 March 2015 | 6 months to 30 September 2015 | 6 months to 30 September 2014 | Year to 31 March 2015 |
| HKD' 000 | HKD' 000 | HKD' 000 | HKD' 000 | HKD' 000 | HKD' 000 |
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Trading Metals Pty Limited | - | - | - | - | 13,712 | 15,161 |
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Nanhai Tai Ping Metal Products Limited | - | 18,041 | 29,412 | - | - | - |
The following balances were outstanding at the end of the period:
| Amounts owed by related parties | Amounts owed to related parties | ||||
| As at 30 September 2015 | As at 30 September 2014 | As at 31 March 2015 | As at 30 September 2015 | As at 30 September 2014 | As at 31 March 2015 |
| HKD' 000 | HKD' 000 | HKD' 000 | HKD' 000 | HKD' 000 | HKD' 000 |
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Trading Metals Pty Limited | - | - | - | - | - | - |
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Nanhai Tai Ping Metal Products Limited | - | 871 | - | - | - | - |
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Wenjie Zhou | - | - | - | 3,004 | 3,004 | 3,004 |
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Zhou Yi is the director's father and owns 50% of the share capital of Trading Metals Pty Limited and is therefore a related party.
Ben Lee is the brother in law of the director, and is a director of Nanhai Tai Ping Metal Products Limited. Nanhai Tai Ping Metal Products 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.
10. The unaudited results for the period ended 30 September 2015 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 2015 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.
11. This interim financial statement will be, in accordance with Rule 26 of the AIM Rules for Companies, available shortly on the Company's website at www.zibaometals.com.
12. 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 no unprovided deferred taxation in respect of the period (31 March 2015: HKD Nil and 30 September 2014: HKD Nil).