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ZBO - Zibao Metals Recycling Holdings News Story

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Sector
Basic Materials
Size
Micro Cap
Market Cap £488k
Enterprise Value £-251k
Revenue £33.9m
Position in Universe 1820th / 1838

Zibao Metals Rec Hol - Half Year Results

Fri 21st December, 2018 10:24am
RNS Number : 2707L
Zibao Metals Recycling Holdings PLC
21 December 2018
 

21 December 2018

 

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 unaudited half year results for the six months ended 30 September 2018

 

The Group figures are presented in Hong Kong Dollars.

 

Highlights

·      Revenue decreased by 71% to HKD 139 million from HKD 479 million.

 

·      Gross profit decreased by 91% to HKD 0.3 million from HKD 3.83 million mainly due to lower revenues whilst selling and distribution expenses have decreased marginally to HKD 29,500 from HKD79,500.

 

·      Loss before tax was HKD 2.36million (2017: Profit before tax HKD0.47million) mainly due to lower revenues and margins as a result of the impact of new regulations which came into effect in 2018. The decrease in profit was partially offset by a reduction in administration expenses of HKD0.5 million.

 

·      The closing cash position at period end was HKD 5.4 million (2017: HKD 3.13 million).

 

Joe Zhou, Zibao Chairman commented: 

 

Market conditions in the PRC and Europe continue to be challenging. New regulations restricting imports into the PRC, introduced earlier in the year, have had a significant and negative impact on the  business. The new regulations, imposing higher quality requirements for importation, have,  in turn  increased the cost of supplies. This has made recycled metals less competitive compared with non-recycled material which has resulted in a significant reduction in demand in the PRC. for recycled metals  

 

As well as exercising tight control of costs and managing the credit risks prudently we continue to seek competitively priced supplies which meet the new requirements. Despite the uncertainties arising from pressures globally, added to local factors in the PRC, we believe the Group is well positioned to benefit from a future recovery and from the re-establishment of a steady and compliant supply source. The flexibility shown by the Group in adapting to changing circumstances is  encouraging and we continue to explore opportunities to increase shareholder value.

 

The Board continues to work very hard to restructure our existing business given the regulatory changes in the PRC.  Given the significant fall in revenue in the first half of the year, we are very conscious of the need to preserve our cash resources as we try to find alternative sources of supply and revenue to comply with the new PRC regulations or additional business lines to diversify our operations.  We continue to explore both trading and corporate solutions, which may include seeking additional funding, to the issues that we have encountered since April and will keep shareholders informed as to progress.  

 

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

SPARK Advisory Partners Limited (Nominated Adviser)

Mark Brady/Neil Baldwin

Tel: +852 2769 7662

www.zibaometals.com

 

 

 

+44 203 368 3551

 

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 unaudited interim results for the six months ended 30 September 2018.

 

Results

The Group's turnover was HKD 139 million, a decrease of approximately 71% on the corresponding period last year, mainly due to impact of new regulations in the PRC restricting importation of scrap materials. Loss before tax increased during the period to HKD2.36 million reflecting lower gross profit margins due to competition and lower revenues. 

 

Suppliers

Three new suppliers have been secured in the first half of the year, adding to the overall supplier base. However, the current supplier base, together with the new suppliers secured, cannot meet the quality and quantity of materials required to meet customer demand.

 

Customers

Two 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. However, due to tighter restrictions on the quality of imports, the amount of materials available to be sold has been significantly reduced.

 

Outlook

 

Market conditions in the PRC and Europe continue to be challenging. New regulations restricting imports into the PRC, introduced earlier in the year, have had a significant and negative impact on the  business. The new regulations, imposing higher quality requirements for importation, have,  in turn  increased the cost of supplies. This has made recycled metals less competitive compared with non-recycled material which has resulted in a significant reduction in demand in the PRC. for recycled metals  

 

As well as exercising tight control of costs and managing the credit risks prudently we continue to seek competitively priced supplies which meet the new requirements. Despite the uncertainties arising from pressures globally, added to local factors in the PRC, we believe the Group is well positioned to benefit from a future recovery and from the re-establishment of a steady and compliant supply source. The flexibility shown by the Group in adapting to changing circumstances is encouraging and we continue to explore opportunities to increase shareholder value.

 

The Board continues to work very hard to restructure our existing business given the regulatory changes in the PRC.  Given the significant fall in revenue in the first half of the year, we are very conscious of the need to preserve our cash resources as we try to find alternative sources of supply and revenue to comply with the new PRC regulations or additional business lines to diversify our operations.  We continue to explore both trading and corporate solutions, which may include seeking additional funding, to the issues that we have encountered since April and will keep shareholders informed as to progress.  

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

21 December 2018

 

Consolidated Statement of Comprehensive Income

 

 

 

 

 

 

Notes

6 months to 30 September 2018

6 months to 30 September 2017

 

 

Year to 31 March 2018

 

 

 

HKD'000

HKD'000

HKD'000

 

 

 

UNAUDITED

UNAUDITED

AUDITED

 

Continuing operations

 

 

 

 

 

Revenue

3

138,777

478,904

857,145

 

Cost of sales

 

(138,434)

(475,075)

(847,884)

 

 

 

───────

───────

───────

 

Gross profit

 

343

3,829

9,261

 

 

 

 

 

 

 

Other revenues

 

157

6

11

 

Selling and distribution expenses

 

(29)

(79)

(139)

 

 

 

 

 

 

 

Administrative expenses

 

(2,826)

(3,283)

(7,338)

 

 

 

 

 

 

 

 

 

───────

───────

───────

 

Operating (loss)/  profit

 

(2,355)

473

1,795

 

 

Finance cost

 

-

-

-

 

 

 

───────

───────

───────

 

(Loss)/Profit before tax

 

(2,355)

473

1,795

 

 

 

 

 

 

 

Income tax expense

 

10

10

(102)

 

 

 

───────

───────

───────

 

(Loss)/Profit and total comprehensive income for the period

 

(2,345)

483

1,693

 

 

 

═══════

═══════

═══════

 

 

(Loss)/Profit and total comprehensive income for the year attributable to the owners of the Company

 

 

 

(2,345)

 

 

483

 

 

1,693

 

 

 

═══════

═══════

═══════

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/Earnings per share

 

5

HKD

HKD

HKD

 

Basic

 

(0.019)

0.004

0.014

 

Diluted

 

(0.019)

0.004

0.013

 

 

 

═════

═════

═════

 

 

 

 

 

 

 

             

 

 

 

Consolidated Statement of Financial Position

 

 

 

 

 

Notes

As at 30 September 2018

As at 30 September 2017

As at 31 March 2018

 

 

HKD'000

UNAUDITED

HKD'000

UNAUDITED

HKD'000

AUDITED

Assets

 

 

 

 

Non-Current Assets

 

 

 

 

Property, plant and equipment

 

39,778

37,395

40,571

Intangible assets

 

1,406

1,507

1,457

 

 

───────

───────

───────

 

 

41,184

38,902

42,028

 

 

───────

───────

───────

Current Assets

 

 

 

 

Inventories

 

22,286

21,620

25,792

Trade receivables

 

4,548

14,840

11,440

Prepayments, deposits and other receivables

 

10,019

9,425

10,066

Tax recoverable

 

3,268

-

2,367

Cash and cash equivalents

6

5,396

3,131

12,275

 

 

───────

───────

───────

 

 

45,517

49,016

61,940

 

 

───────

───────

───────

Total Assets

 

86,701

87,918

103,968

 

 

═══════

═══════

═══════

Equity and liabilities

 

 

 

 

Equity attributable to owners of the company

 

 

 

 

Share capital

7

15,549

15,549

15,549

Share premium

 

42,167

42,167

42,167

Group reorganisation reserve

 

(527)

(527)

(527)

Share based payments reserve

 

662

662

662

Foreign Exchange reserve

 

(910)

(3,394)

(910)

Retained earnings

 

7,576

8,711

9,921

 

 

───────

───────

───────

Total Equity

 

64,517

63,168

66,862

 

 

───────

───────

───────

Non-current liabilities

 

 

 

 

Deferred tax

 

128

148

137

 

 

───────

───────

───────

 

 

128

148

137

 

 

───────

───────

───────

Current liabilities

 

 

 

 

Trade payables

 

8,136

9,001

18,295

Accrued liabilities and other payables

 

4,746

5,971

9,500

Tax payable

 

9,174

9,630

9,174

 

 

───────

───────

───────

 

 

22,056

24,602

36,969

 

 

───────

───────

───────

Total Liabilities

 

22,184

24,750

37,106

 

 

───────

───────

───────

Total Equity and Liabilities

 

86,701

87,918

103,968

 

 

═══════

═══════

═══════

Consolidated Statement of Cash Flows

 

 

 

 

 

 

 

Notes

6 months to 30 September 2018

6 months to 30 September 2017

Year to 31 March 2018

 

 

HKD'000

UNAUDITED

HKD'000

UNAUDITED

HKD'000

AUDITED

Cash flows from operating activities

 

 

 

 

Net cash from operating activities

1

(6,879)

(786)

13,092

Taxation

 

-

(40)

(776)

 

 

─────

─────

─────

Net cash (used in)/ generated from operating activities

 

(6,879)

(826)

12,316

 

 

 

 

 

Investing activities

 

 

 

 

Addition of property, plant and equipment

 

-

(14)

-

 

 

─────

─────

─────

Net generated from / (cash used) in investing activities

 

-

(14)

-

 

 

─────

─────

─────

Net cash from / (used in) in financing activities

 

-

-

-

 

 

─────

─────

─────

 

 

 

 

 

Taxation

 

-

-

-

 

 

 

 

 

Net increase / (decrease) in cash and cash equivalents

 

(6,879)

(840)

12,316

Cash and cash equivalents at beginning of the period

 

12,275

1,288

1,288

Effect of foreign exchange rate changes

 

-

2,683

(1,329)

 

 

─────

─────

─────

Cash and cash equivalents at the end of the period

 

5,396

3,131

12,275

 

 

═════

═════

═════

Represented by:

 

 

 

 

Bank balances and cash

 

5,396

3,131

12,275

 

 

═════

═════

═════

               

 

 

 

 

Notes for Consolidated Statement of Cash Flows

 

 

 

 

 

1.  Net cash from operating activities

 

 

 

 

 

 

6 months to 30 September 2018

6 months to 30 September 2017

 

Year to 31 March 2018

 

 

HKD'000

UNAUDITED

HKD'000

UNAUDITED

HKD'000

AUDITED

 

 

 

 

 

Profit/(Loss) before income tax

 

(2,355)

473

1,795

Adjustments for:                 

 

 

 

 

Depreciation on property, plant and equipment

 

793

405

1,590

Interest income

 

-

6

-

Amortisation

 

50

50

100

Foreign Exchange Difference

 

-

(2,127)

-

(Increase) / decrease in inventories

 

3,507

13,534

9,361

Decrease/(Increase) in trade receivables

 

6,893

(13,155)

(9,755)

Decrease / (Increase) in prepayments, deposits and other receivables

 

(853)

(3,764)

(4,405)

Increase / (decrease) in trade payables

 

(10,160)

2,896

12,190

Increase / (decrease) in accrued liabilities and other payables

 

(4,754)

896

2,216

 

 

─────

─────

─────

Cash generated from / (used in) operations

 

(6,879)

(786)

13,092

 

 

═════

═════

═════

               

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Changes in Equity

 

 

Share Capital

Share premium

Share based payment reserves

Group Reorgan-isation

Reserve

Foreign exchange reserve

 

Retained Earnings

Total

 

HKD'000

HKD'000

HKD'000

HKD'000

HKD'000

HKD'000

HKD'000

 

 

 

 

 

 

 

 

As at 31 March 2017

15,549

42,167

662

(527)

(1,267)

8,228

64,812

 

═════

═════

═════

═════

═════

═════

═════

 

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

-

-

-

483

483

Foreign exchange difference

-

-

-

-

(2,127)

-

(2,127)

 

─────

─────

─────

─────

─────

─────

─────

As at 30 September 2017

15,549

42,167

662

(527)

(3,394)

8,711

63,168

 

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

-

-

-

1,210

1,210

Foreign exchange difference

-

-

-

-

2,484

-

2,484

 

─────

─────

─────

─────

─────

─────

─────

As at 31 March 2018

15,549

42,167

662

(527)

(910)

9,921

66,862

 

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

-

-

-

(2,345)

(2,345)

Foreign exchange difference

-

-

-

-

-

-

-

 

─────

─────

─────

─────

─────

─────

─────

As at 30 September 2018

15,549

42,167

662

(527)

(910)

7,576

64,517

 

─────

─────

─────

─────

─────

─────

─────

 

 

 

 

 

 

 

 

                                                                                 

                        

 

 

 

 

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 2018.

      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.

 

Reference

Title

Summary

Application date of standard

Application date of Group

 

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 2018

6 months to 30 September 2017

 

Year to 31 March 2018

 

Salaries, fees and options

Salaries, fees and options

Salaries, fees and options

 

HKD'000

HKD'000

HKD'000

 

UNAUDITED

UNAUDITED

AUDITED

Wenjie Zhou

120

120

240

Jianfeng Li

120

120

240

Alan Ong

66

58

116

Chin Phang Kwok

66

58

116

Peter Greenhalgh

66

58

116

Ajay Rajpal

66

58

116

 

───────

───────

───────

 

504

472

944

 

_________

_________

_________

 

 

5.   (Loss)/Earnings per share

 

      (Loss)/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 2018

6 months to 30 September 2017

 

Year to 31 March 2018

 

 

HKD'000

HKD'000

HKD'000

 

 

UNAUDITED

UNAUDITED

AUDITED

 


(Loss) /Profit for the period attributable to owners of Company

 

(2,345)

 

483

 

1,693

 

 

═════

═════

═════

 

 

 

 

 

 

Weighted average number of ordinary shares for the purposes of basic earnings per share (000's)

122,010

122,010

122,010

 

Weighted average number of ordinary shares for the purposes of diluted earnings per share (000's)

125,453

125,453

125,453

 

 

═════

═════

═════

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6 months to 30 September 2018

6 months to 30 September 2017

 

Year to 31 March 2018

 

 

HKD'000

UNAUDITED

HKD'000

UNAUDITED

HKD'000

AUDITED

 

Basic loss per share

 

 

 

 

Total basic losses per share

(0.019)

0.004

0.014

 

 

 

 

 

 

Diluted loss per share

 

 

 

Total basic and diluted earnings per share

(0.019)

0.004

0.013

 

─────

─────

─────

 

 

 

6.    Cash and cash equivalents Group

 

 

As at 30 September 2018

As at 30 September 2017

As at 31 March 2017

 

 

HKD'000

HKD'000

HKD'000

 

 

UNAUDITED

UNAUDITED

AUDITED

 

Cash and bank balances

 

5,396

3,131

12,275

 

 

───────

───────

───────

Cash and bank balances as presented in balance sheets

 

5,396

3,131

12,275

Add: Pledged fixed deposits

 

-

-

-

 

 

───────

───────

───────

Cash and cash equivalents as presented in consolidated statement of cash flows 

 

5,396

3,131

12,275

 

 

 _________

 _________

 _________

 

 

7.      Share capital

The issued share capital as at 30 September 2018 was 122,010,000 ordinary shares of £0.01 each (30 September 2017: 122,010,000 ordinary shares of £0.01, 31 March 2018: 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:

 

 

Sales of goods

 

6 months to 30 September 2018

 HKD'

000

6 months to 30 September 2017

HKD'

000

Year to 31 March 2018

HKD'

000

Wang Kei Yip Development Limited

-

4,387

11,288

 

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

2018

HKD'

000

As at 30 September

2017

HKD'

000

As at 31 March

2018

HKD'

000

As at 30 September

2018

HKD'

000

As at 30 September

2017

HKD'

000

As at 31 March

2018

HKD'

000

Wang Kei Yip Development Limited

-

-

-

-

597

-

 

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 2018 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 2018 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.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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