RNS Number:8842U
China Biodiesel International Hold
16 April 2007
FOR IMMEDIATE RELEASE Monday, 16 April 2007
China Biodiesel International Holding Co., Ltd.
("CBI" or "the Company")
Key financials
Figures in RMBm Growth (%) Year to Year to
31 December 31 December
2006 2005
Turnover (including other income) + 51.1 105.3 69.7
Profit from operations + 34.3 38.8 28.9
Profit before tax + 37.6 38.8 28.2
Earning per share (RMB)
- basic + 21.8 0.910 0.747
- diluted + 21.7 0.909 0.747
Proposed 2006 final dividend per share n/a 0.0816 nil
Highlights
* Growth in turnover and profit for 2006 reflects the expansion of
production with demand for biodiesel exceeding supply
* New 30,000-tonne facility at Longyan is almost complete and a further
50,000-tonne facility at Xiamen is expected to start production in the third
quarter of 2007
* New market channels established in China, Asia and Europe
* Technological breakthroughs increased oil conversion rates by 2% and
reduced energy consumption by 20%
* Cash flow from operating activities increased by 132 per cent to RMB
31.7 million
* Government support, through approvals, favourable tax policies and
financial subsidies, has increased
* Proposed final dividend of RMB 0.0816 per share
China Biodiesel's Chairman, Huodong Ye, commented:
"Our focus going forward will continue to be on expanding production to meet
demand, in China and abroad, whilst developing our technology and ensuring that
the business is managed with maximum efficiency. We are confident that the
progress we have achieved in 2006 has laid a solid foundation for strong,
profitable growth in the future."
Enquiries:
Gloria He, CFO: +86 (592) 7890366
James King Wang, Company Secretary: +86 (597) 2283825
Mailing address of the Company Zhuoyue New Energy,
Tieshan Economic Development Zone,
Longyan, Fujian, China, 364001.
Simon Bloomfield
Bankside Consultants +44 (0) 207 367 8888
For further details please visit the CBI website at :
http://www.chinabiodiesel.cn/ or http://www.chinabiodiesel.net/
Chairman's Statement
2006 was a key year in the development of China Biodiesel. The results and
strategic progress we achieved demonstrate the high quality of our products,
efficiency of our production and the strength of our management team. We have
laid a solid foundation for the Company to continue its robust growth and to
build on its leading role in China's biodiesel industry and its contribution to
environmental preservation.
Throughout 2006, China Biodiesel continued to achieve strong growth. In June, we
successfully floated on the AIM market of the London Stock Exchange raising #8
million before expenses, through a placing of new shares, to fund expansion of
biodiesel production capacity.
Implementation of our expansion strategy is progressing smoothly. Construction
of a new 30,000-tonne per annum facility in Longyan is almost complete. Work is
also under way in Xiamen on a 50,000-tonne per annum facility where production
is expected to start in the third quarter of 2007. We also acquired a site in
Longyan where we have carried out initial work for our third facility, which
will have an annual capacity of 100,000-tonnes, with building scheduled to begin
by the end of 2007.
At a time of demand for biodiesel exceeding our current production, we have
expanded our market channels and established new dealerships in the Chinese
market, as well as in Asia and Europe. In anticipation of our growing needs, we
successfully secured the supply of raw materials by expanding our supply
networks in Southeast Asia and Europe.
Our proprietary technology, for producing biodiesel from used cooking oil, is a
core asset which we continue to develop through a focus on research. As part of
this effort we are continually seeking to improve and upgrade our production
processes through technological innovation, which has resulted in a significant
reduction in production costs during 2006. Since the second half of 2006, the
price of fossil oil declined whilst the price of plant oils rose, including
soybean oil and rapeseed oil. We responded to the challenge this situation
created for the whole biodiesel industry by improving our proprietary
technologies as well as securing the supply of a broad range of feedstock,
including renewable sources such as waste animal and vegetable oils, on a
cost-effective basis.
Last year the Renewable Energy Law came into effect in China which, combined
with a number of new tax and other financial policies introduced by the
government, will help support the growth of the biodiesel industry. In addition,
governments around the world, increasingly concerned about energy and
environmental issues, are actively promoting the use of renewable biodiesel.
Our focus going forward will continue to be on expanding production to meet
demand, in China and abroad, whilst developing our technology and ensuring that
the business is managed with maximum efficiency. We are confident that the
progress we have achieved in 2006 has laid a strong foundation for strong,
profitable growth in the future.
Operational Review
China Biodiesel owns an exclusive technology to produce biodiesel from waste
animal and vegetable oils, and was the first company in China to produce
biodiesel commercially. We are focused on implementing our stated growth
strategy by expanding our capacity as well as continuing to contribute
significantly to the development of China's renewable energy industry and to
protecting the environment.
In 2006, the Company achieved strong growth in production with turnover
(including other income) for the year of RMB105.3 million (2005: RMB 69.7
million) and profit before tax of RMB 38.8 million (2005: RMB 28.2 million), up
51.1 per cent and 37.6 per cent respectively. In addition to the continued
expansion of our business in the domestic market, our efforts to tap into the
international marketplace resulted in export orders in Norway and Korea. Raw
materials remained in plentiful supply and, in anticipation of further growth,
we established more domestic and international supply channels, as well as
procuring a number of new suppliers of used cooking oil and other plant oils,
such as palm acid oil. As a result, the Company is well positioned to meet
future demand in both domestic and international markets.
The importance of research in the development of the business continues to
increase. This is reflected in the fact that we have applied for three national
patents for equipment used in our production process. We have also received many
national and local awards and completed a research program under China's 10th
Five-Year Science and Technology Development Plan. In 2006, one of our new
production lines was included in the list of key projects under the National
Torch Program.
As a result of a major breakthrough in the development of our core technology
during the year, we have increased our waste oil conversion rate by 2 per cent
and reduced our energy consumption by 20 per cent. This significant reduction of
production costs has boosted China Biodiesel's competitiveness in the market as
well as enhancing profitability prospects for growth.
The Company enjoys a highly favourable regulatory environment, with the Chinese
government actively promoting the development of renewable energy. As a leading
manufacturer in China's biodiesel industry, the Company receives strong support
from the Chinese government. In December 2006, before land prices rose, the
Company acquired a piece of land in Longyan for building its third plant, with
capacity for producing 100,000 tonnes of biodiesel per annum. Building works are
scheduled to begin towards the end of 2007.
The Company believes it has established a robust platform for strong profits
growth in 2007 and we are confident that, with our high quality product and
developing proprietary technology, management expertise and leading position in
a growth market, we can achieve our ambitious objectives. We are currently on
target to reach a capacity of 350,000 tons of biodiesel per annum by 2010, which
we plan to achieve organically and through selective acquisitions.
Financial Review
Revenue
China Biodiesel's turnover (including other income) for 2006 increased by 51.1
per cent to RMB 105.3 million (2005: RMB 69.7 million), this was achieved mainly
through sales of biodiesel in PRC with the Company's output of biodiesel growing
by 32 per cent to 22,866 tonnes (2005: 17,365 tonnes). Meanwhile the average
price of biodiesel grew by 15 per cent, resulting from the demand for fuel in
China and the gradual opening of China's fuel market.
Although China Biodiesel focuses on the PRC market, it has successfully acquired
contracts in countries including Korea and North Europe, at international market
prices, which are higher than the controlled price in China. The Company expects
to increase the proportion of sales from exports, increasing margins achieved in
future.
Expenses
In order to maintain its competitive position, cost control is an important
focus for the Company's management.
Sales and administration expenses, as a proportion of turnover, were 0.62 per
cent and 2.43 per cent respectively. This was achieved through demand for
biodiesel substantially exceeding supply, enabling the Company to sell its
output with minimal promotional spending. Administration expenses reflect an
exchange gain of RMB 3 million.
Results for the year
Profit before tax was up 37.6 per cent at RMB 38.8 million in 2006 (2005: RMB
28.2 million).
Other income contributed RMB 4.21 million (2005: RMB 1.65 million) the majority
of which was generated through the sale of raw material drums and by-products,
mainly raw glycerin.
The Company received RMB 7.75 million in 2006 (2005: RMB 1.89 million) in state
subsidies relating to China Biodiesel's work in protecting the environment and
energy saving initiatives, as well as a local financial subsidy reflecting the
Company's high-tech status.
Gain on disposal of an associate of RMB 0.45 million represented the net gain
from the disposal of a non-core investment in Fujian Yuanhua Zhuoyue Energy
Technology (Fujian) Co., Ltd.
Financial expenses of RMB 0.625 million in 2006 (2005: RMB 0.755 million )
relate to bank debt.
Taxation
No tax was incurred in 2006 for LZNE (Longyan Zhuoyue New Energy Co., Ltd, CBI's
wholly owned subsidiary) and its subsidiary, ZBTD (Longyan Zhuoyue Biodiesel
Technology Development Co., Ltd, subsidiary of LZNE) reflecting the two-year tax
exemptions currently in force at the Company's principal operating subsidiary.
The tax charge of RMB1.72 million relates mainly to the Company's procurement
business, which is subject to tax at 33 per cent.
According to the relevant PRC tax rules, as a wholly owned foreign enterprise
engaged in production and in operation for more than 10 years, LZNE is exempt
from Enterprise Income Tax ("EIT") for the two fiscal years 2006 and 2007 and
for a 50% reduction in EIT for three fiscal years 2008, 2009 and 2010. XZBM
(Xiamen Zhuoyue Bio-mass Co., Ltd, CBI's wholly owned subsidiary) is eligible
for the same preferential tax treatment although it had not commenced operations
during the year ended 31 December 2006. According to the same rules, ZBTD
(Longyan Zhuoyue Biodiesel Technology Development Co., Ltd, subsidiary of LZNE),
being a recognized newly established service enterprise, is eligible for full
exemption from EIT for fiscal year 2006 (2005: 9.9%).
Once the preferential period has ended, LZNE and ZBTD will be subject to the
normal tax rate of 33% and XZBM, as a company located in a Special Economy Zone,
will be subjected to a tax rate of 15%.
Cash flow
Net cash flow from operating activities increase strongly by 132 per cent to RMB
31.65 million.
In June 2006, 9.4 million shares were issued and were admitted to trading on the
AIM market of the London Stock Exchange following a placing with institutional
investors, which raised new equity capital for the Company of RMB 96.6 million
net of expenses.
The proceeds from the disposal of Fujian Yuanhua Zhuoyue Energy Technology
(Fujian) Co., Ltd. were RMB 2 million.
During 2006, a bank loan of RMB 5 million was repaid.
As a result of the profitable growth achieved during 2006 and following the
funds raised on flotation, after capital expenditure cash at bank at 31 December
2006 was RMB69.3 million (2005:RMB9.5 million)
Capital expenditure
During the year, total capital expenditure was RMB 63.7 million, mainly
attributable to the construction of the two new biodiesel plants in Longyan and
Xiamen, in Fujian Province, of which RMB 8.1 million was spent on land and the
rest was invested in construction and equipment purchasing and installation.
Balance sheet
The expansion of the Company and the level of capital expenditure are reflected
in the growth in total assets for 2006 and current assets represented 57.5 per
cent of total assets at the end of the year. The cash balance of RMB 69.3
million at the end of the year, means that the Company will be able to complete
the plants under construction and fund its working capital requirements from
existing resources.
The increase in inventory by RMB 3.36 million to RMB 6.17 million reflects the
higher level of raw material stocks required for the planned growth in output.
Shareholders' funds increased by 420 per cent to RMB 164 million (2005: RMB 31.7
million) at 31 December 2006 with total liabilities of RMB 14.5 million,
representing only 8.8 per cent of the shareholders' equity.
Dividend
The directors propose a final dividend for 2006 of RMB0.0816 per share which, if
approved by shareholders at the Company's annual general meeting on 16 May 2007,
will be paid on 29 June 2007 to shareholders on the register at 1 June 2007. The
Chairman, Huodong Ye, has waived his dividend entitlement for the year to 31
December 2006.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
Notes 2006 2005
RMB RMB
Turnover 1 101,098,548 68,035,957
Cost of sales (71,191,170) (40,705,390)
----------- -----------
Gross profit 29,907,378 27,330,567
Other income 2 4,212,324 1,654,079
Government grants 3 7,750,000 1,890,000
Distribution costs (625,462) (642,114)
Administrative expenses (2,453,939) (1,103,239)
Other operating expenses (22,658) (208,323)
----------- -----------
Profit from operations 4 38,767,643 28,920,970
Finance income 246,310 66,312
Finance costs (624,895) (755,087)
Gain on disposal of an associate 450,000 -
----------- -----------
Profit before income tax expense 38,839,058 28,232,195
Income tax expense 5 (1,719,826) (1,147,723)
----------- -----------
Profit for the year 37,119,232 27,084,472
=========== ===========
Attributable to:
- Equity holders of the Company 37,057,373 26,876,299
- Minority interests 61,859 208,173
----------- -----------
37,119,232 27,084,472
=========== ===========
Dividends 1,020,019 -
=========== ===========
Earnings per share 6
Basic 0.910 0.747
=========== ===========
Diluted 0.909 0.747
=========== ===========
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2006
Notes 2006 2005
RMB RMB
Assets
Non-current assets
Property, plant and equipment 43,617,764 12,741,361
Deposits for acquisition of property, plant
and 23,194,250 -
equipment
Payments for leasehold land held for own use
under operating leases 8,836,715 757,262
Other intangible assets 3,233 3,679
Interests in an associate - 1,550,000
Deferred tax assets 207,149 167,026
----------- ----------
Total non-current assets 75,859,111 15,219,328
----------- ----------
Current assets
Inventories 6,170,567 2,809,268
Trade and other receivables 27,276,313 19,664,337
Cash and cash equivalents 69,326,379 9,459,026
----------- ----------
Total current asset 102,773,259 31,932,631
----------- ----------
Total assets 178,632,370 47,151,959
----------- ----------
Liabilities
Current liabilities
Trade and other payables 5,970,095 3,064,152
Current tax liabilities 1,590,471 443,366
Other financial liabilities 7 6,323,324 11,010,396
----------- ----------
Total current liabilities 13,883,890 14,517,914
----------- ----------
Non-current liabilities
Other financial liabilities 8 617,924 870,664
----------- ----------
Total liabilities 14,501,814 15,388,578
----------- ----------
TOTAL NET ASSETS 164,130,556 31,763,381
=========== ==========
Capital and reserves attributable to
equity holders of the Company
Share capital 3,632,941 8
Reserves 159,157,564 31,505,200
Reserves 1,020,019 -
----------- ----------
Equity attributable to equity holders of the
Company 163,810,524 31,505,208
Minority interests 320,032 258,173
----------- ----------
TOTAL EQUITY 164,130,556 31,763,381
=========== ==========
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
Notes 2006 2005
RMB RMB
Cash flows from operating activities
Profit before income tax expense 38,839,058 28,232,195
Adjustments for:
Interest income (246,310) (66,312)
Depreciation of property, plant and 1,552,422 1,148,838
equipment
Amortisation of land lease payment 12,317 12,317
Amortisation of intangible assets 446 446
Interest expense 624,895 755,087
Profit from associate - 450,000
Gain on disposal of an associate (450,000) -
Loss on disposal of property, plant and
equipment - 5,138
---------- ----------
Net cash flows from operating activities 40,332,828 30,537,709
Increase in inventories (3,361,299) (1,176,091)
Increase in trade and other receivables (7,611,976) (17,235,983)
Increase in trade and other payables 2,905,943 2,462,062
---------- ----------
Cash generated from operations 32,265,496 14,587,697
Income tax expense (612,844) (930,844)
---------- ----------
Net cash flows from operating activities 31,652,652 13,656,853
---------- ----------
Cash flows from investing activities
Acquisition of property, plant and (55,623,075) (1,931,100)
equipment
Land lease prepayment (8,091,770) (164,000)
Proceeds from disposal of an associate 2,000,000 -
Investment in an associate - (2,000,000)
Interest received 246,310 5,290
---------- ----------
Net cash used in investing activities (61,468,535) (4,089,810)
---------- ----------
CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2006
Notes 2006 2005
RMB RMB
Cash flows from financing activities
Repayment of bank loan (5,000,000) -
Contribution from equity holder - 8
Advance from /(Repayment to) equity holders 18,810 (216,770)
Net proceeds from shares placing 96,554,991 -
Interest paid (583,517) (713,185)
Contribution from minority equity holder of a
subsidiary - 50,000
Net bank loan raised - 300,000
---------- ---------
Net cash flows from/(used in) financing 90,990,284 (579,947)
activities ---------- ---------
Net increase in cash and cash equivalents 61,174,401 8,987,096
Cash and cash equivalents at beginning of year 9,459,026 471,930
Effect of foreign exchange rate changes (1,307,048) -
---------- ---------
Cash and cash equivalents at end of year 69,326,379 9,459,026
========== =========
1. TURNOVER
Turnover represents the net invoiced value of goods sold, service income earned
by the Group. The amounts of each significant category of revenue recognised in
turnover during the year are as follows:
2006 2005
RMB RMB
Revenue arises from:
Sale of biodiesel products 100,479,548 66,354,957
Provision of technology services and others 619,000 1,681,000
---------- ----------
101,098,548 68,035,957
========== ==========
2. OTHER INCOME
2006 2005
RMB RMB
Income from sale of used packaging materials 4,318,572 1,624,585
(Loss)/income from sale of auxiliary and scrap
products (106,248) 12,434
Others - 17,060
---------- ----------
4,212,324 1,654,079
========== ==========
3. GOVERNMENT GRANTS
Government grants represented the financial support from relevant government
authorities in connection with research and development of biodiesel products.
4. PROFIT FROM OPERATIONS
Profit from operations is arrived at after charging:
2006 2005
RMB RMB
Cost of inventories recognised as expense 71,191,170 40,705,390
Auditor's remuneration 524,542 -
Staff costs 2,387,715 664,069
Depreciation of property, plant and equipment 1,552,442 1,148,838
Amortisation of land lease payment 12,317 12,317
Amortisation of other intangible assets 446 446
Operating lease expense 10,800 8,100
Loss on disposal of property, plant and equipment - 5,138
and crediting:
Exchange gain, net (3,003,337) (11,560)
=========== ==========
5. INCOME TAX EXPENSE
The Company itself did not generate any taxable profit for the year ended 31
December 2006, accordingly, it was not subject to income tax in the PRC nor the
British Virgin Islands.
According to the relevant PRC tax rules and regulations, LZNE, its branch and
its subsidiary, Longyan Zhuoyue Biodiesel Technology Development Co., Limited
("ZBTD"), are normally subject to an Enterprise Income Tax ("EIT") at the
standard rate of 33%. Since Xiamen Zhuoyue Bio-mass Limited ("XZBM"), another
China Biodiesel subsidiary, is established in the Xiamen Special Economic Zone,
XZBM is subject to EIT at a rate of 15%, which is the standard tax rate in the
special economic zone.
Pursuant to approval document dated on 12 April 2006 issued by the Longyan
Xinluo District Tax Bureau, LZNE, being incorporated as a wholly owned foreign
enterprise with business nature in production and over 10-year operating period,
is eligible to a preferential tax policy of full exemption from EIT for two
fiscal years 2006 and 2007 and 50% reduction of EIT for three fiscal years 2008,
2009 and 2010.
Pursuant to an approval document dated 4 April 2006 issued by the Longyan Xinluo
District Tax Bureau, ZBTD, being a recognised newly established service
enterprise, is eligible to full exemption from EIT for fiscal year 2006 (2005:
9.9%).
According to the relevant PRC tax rules and regulations, XZBM, being
incorporated as a wholly owned foreign enterprise with business nature in
production and over 10-year operating period, is eligible to a preferential tax
policy of two years' exemption and three years' half collection since the first
taxable year. During the year ended 31 December 2006, XZBM has still not yet
commenced its operation and therefore had no taxable profit.
Current tax expenses of the Group for the fiscal year 2006 represent PRC EIT
calculated at the standard income tax rate or preferential income tax rate on
the assessable income.
2006 2005
RMB RMB
Current tax
- tax for the year 1,759,949 1,292,281
---------- ----------
Deferred tax
- current year (40,123) (144,558)
---------- ----------
Income tax expense 1,719,826 1,147,723
========== ==========
The income tax expense for the year can be reconciled to profit per consolidated
income statement as follows:
2006 2005
RMB RMB
Profit before income tax expense 38,839,058 28,232,195
========== ==========
Expected tax charged based on the standard rate
of EIT in 12,816,889 9,316,624
the PRC of 33%
Tax exemption and concession (11,256,902) (8,552,021)
Tax effect of non-taxable revenue (213,323) -
Tax effect of non-deductible expenses 90,928 244,468
Effect of difference between standards rate and
expected rate at realisation of temporary
differences 282,234 138,652
---------- ----------
Income tax expense 1,719,826 1,147,723
========== ==========
6. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share attributable to the
ordinary equity holders of the Company is based on the following data:
2006 2005
Earnings
RMB RMB
Earnings for the purpose of basic earnings per share 37,057,373 26,876,299
Effect of dilutive potential ordinary shares - -
--------- ---------
Earnings for the purpose of diluted earnings per
share 37,057,373 26,876,299
========= =========
Number of shares
Weighted average number of ordinary shares for the 40,705,883 36,000,000
purpose of basic earnings per share
Effect of dilutive potential ordinary shares:
- share options 63,023 -
--------- ---------
Weighted average number of ordinary shares for the 40,768,906 36,000,000
purposeof diluted earnings per share
========= =========
Earnings per share
RMB RMB
Basic 0.910 0.747
======== =========
Diluted 0.909 0.747
======== =========
The weighted average number of ordinary shares for the purpose of basic earnings
per share has been adjusted for the bonus shares issued on 23 June 2006.
7. OTHER FINANCIAL LIABILITIES - CURRENT
2006 2005
RMB RMB
Bank loans due within one year
- Secured by the Company's own machineries 3,000,000 3,000,000
- Guaranteed by a related company 3,000,000 8,000,000
- Unsecured 294,118 -
---------- ----------
6,294,118 11,000,000
Amount due to an equity holder 29,206 10,396
---------- ----------
6,323,324 11,010,396
========== ==========
As at 31 December 2006, other financial liabilities were denominated in RMB.
8. OTHER FINANCIAL LIABILITIES - NON-CURRENT
2006 2005
RMB RMB
Bank loans due over one year
- Unsecured 617,924 870,664
========== ==========
As at 31 December 2006, other financial liabilities were denominated in RMB.
9. CAPITAL COMMITMENTS
As at 31 December 2006, the Group's commitments for the acquisition of property,
plant and equipment are listed as follows:
2006 2005
RMB RMB
Contracted for but not provided
- Equipment 30,181,217 6,265,000
- Land use right - 104,000
----------- ----------
30,181,217 6,369,000
=========== ==========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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