TIDMGCH
RNS Number : 9211O
Green China Holdings Limited
26 September 2013
26 September 2013
Green China Holdings Limited
("Green China" or the "Company")
Half Yearly Report
Green China HoldingsLimited (AIM: GCH), a fertiliser franchise
operator and leading provider of fertiliser products in Hunan
Province, the People's Republic of China (the "PRC"), today
releases its halfyearly report for the six months ended 30 June
2013.
Highlights
* Revenue RMB 98.6 million (GBPGBP10.04million) (1H
2012: RMB 95.5 million (GBPGBP9.72million));
* Profit before tax RMB7.67million (GBPGBP781,000) (1H
2012: RMB 4.35 million (GBPGBP442,000));
* Continued development of Company strategy to create a
higher profit margin business;
* GCH branded franchise stores remains 767 at the end
of the reporting period (1H 2012: 744) with a further
200+ new franchise stores awaiting Government VAT
exemption approval to open and renovate in H2 2013.
Delays in new store opening as a result of new
Government taking their seats in April 2013 and
implementing of new guidelines for the fertiliser
industry in China.
*Exchange rate:GBPGBP1 : RMB9.82
Business Review
During the first half of 2013 the Company has continued to build
on the changes implemented in the business during 2012. The gradual
move away from a direct sales model to the current focus on
franchise stores has increased our gross profit margin to 10.9% (1H
2012: 8.4%) during the period under review. This has resulted in a
76.3% increase in profit before tax to RMB7.67million (2012: RMB
4.35million) based on moderately higher overall revenues.
Trading during the first half of 2013 has been difficult in the
PRC as prices of fertilizer have fallen by up to 20% and the
effects of the economic slowdown have been felt. In addition, as
the new government in the PRC only took their positions in April,
many businesses in China have postponed any spending until it is
clear what changes, if any, the new government would implement to
the industry. In reality, there have been positive and negative
developments.
On the positive side, new opportunities have been created in
international markets with many contracts in the food and
agriculture sector being put up for renewal. The Board has been
examining how best we might take advantage of this position and has
been discussing several opportunities in the wider agricultural
sector.
The main change that has affected our business has been
concerning VAT exemptions given to potential new franchisees. Most
of our franchisees require this VAT exemption to begin trading. In
order to receive the VAT exemption, local Government has directed
that GCH now has to provide one month's credit terms and pay for
any new store renovations upfront. Although GCH is in a position to
provide this, it does mean that more work is required by the
Company to open a new store. This means store openings will be
slower than envisaged but is in line with our strategy set out in
our 2012 Annual Accounts to open fewer, larger stores to maximise
operational efficiency. However, this has created a "bottleneck" in
the opening of new stores as the Government has only made its new
policy clear in mid-September 2013. Therefore, although the Company
has over 200 potential stores lined up for opening, we have been
unable to proceed, as most new store owners are still waiting to
receive their VAT exemptions. The Board believes that this will
slowly rectify itself over the remaining months of 2013 as market
participants adjust to the new regime and the Hunan Government work
through any backlog. The GCH management team are in constant
dialogue with local Government and we will keep shareholders
updated as to new store openings over the remaining months of
2013.
Financial Results
For the six months ended June 2013, turnover was RMB 98,645,000
(H1 2012: RMB 95,513,000). Turnover for direct sales was RMB
85,594,000 (H1 2012: RMB 76,941,000), and accounted for
approximately 86.77% (H1 2012: 80.56%) of the Company's turnover.
Turnover from sales to franchise stores was RMB 6,964,000 (H1 2012:
RMB13,893,000) representing around 7.06% (H1 2012 14.55%) of the
Company's turnover. Turnover from franchise and consultancy fees
was RMB 6,087,000 (H1 2012: RMB 4,679,000). Due to the better
margin from franchise & consultancy fees, the Company has an
overall gross profit margin of 10.9% in the first half of 2013
compared to 8.4% margin in the corresponding period in last year.
The Company achieved a net profit of RMB 5,430,000 (H1 2012: RMB
2,763,000) for the period, an increase of 96.5%.
The drop in revenue to franchise stores was due to the fall in
fertilizer price and the increasingly difficult trading conditions
our franchisees were encountering. In order to offset this, the
Company took on more direct sales contracts while effectively
managing its working capital position. Through effective use of its
sales channels and added operational efficiency the Company has
managed to reduce its inventory days down from 6 to 3 compared to
the same period in 2012.
The following table shows a breakdown of the Group's unaudited
turnover by category for the six months ended 30 June 2011, for the
six months ended 30 June 2012 and the six months ended 30 June
2013.
Six months ended 30 Six months ended 30 Six months ended 30
June 2011 June 2012 June 2013
---------------- ---------------------- ---------------------- ----------------------
RMB'000 % RMB'000 % RMB'000 %
---------------- ----------- --------- ----------- --------- ----------- ---------
Direct Sales 203,578 95.77% 76,941 80.56% 85,594 86.77%
---------------- ----------- --------- ----------- --------- ----------- ---------
sales to
franchise
store 4,900 2.31% 13,893 14.55% 6,964 7.06%
---------------- ----------- --------- ----------- --------- ----------- ---------
Franchise
& Consultancy
Fees 4100 1.93% 4,679 4.90% 6,087 6.17%
---------------- ----------- --------- ----------- --------- ----------- ---------
Totals 212,578 100 95,513 100 98,645 100
---------------- ----------- --------- ----------- --------- ----------- ---------
franchise
shop number 584 744 767
---------------- ----------- --------- ----------- --------- ----------- ---------
Given the changing environment in the agriculture sector in the
PRC, the Company has had to manage its working capital in 2013 more
closely. As explained above, we have deployed more working capital
to direct sales as sales to franchisees have dropped off. This has
meant that the total revenue attributable to direct sales has risen
slightly to 86.77%. The Board believes that the trend towards
franchise-based revenue will continue as more shops are added and
fertilizer prices stabilize.
Outlook
Although the Company has increased its revenue, margins and
profits during the first 6 months of 2013, the Board believes that
a more considered approach to the growth of its franchise network
is prudent as changes in the fertiliser market are felt in the
short term. This mirrors the approach taken by the new Chinese
government which will favour longer term sustainability over short
term growth. However, we believe that in the medium term this will
help us as it will prevent new entrants to our market and
potentially provide us with acquisition opportunities. In addition,
we are developing relationships in the wider agriculture sector
both in China and internationally in order to potentially diversify
our revenue streams and we hope to update shareholders in due
course.
CONSOLIDATED STATEMENT of comprehensive income
For the Six months ended 30 JUNE 2013
Six months ended Six months ended
NOTES 30 June2013 30 June2012
RMB'000 RMB'000
(unaudited) (unaudited)
Revenue 4 98,645 95,513
Cost of sales (87,935) (87,511)
__________ __________
Gross profit 10,710 8,002
Other income 132 849
Distributing and selling expenses (674) (922)
Administrative expenses (1,968) (2,570)
Finance costs (532) (1,007)
__________ __________
Profit before tax 7,668 4,352
Income tax expense 5 (2,238) (1,589)
__________ __________
Profit for the period 5,430 2,763
Other comprehensive income
Exchange differences on translating foreign operations 15 33
__________ __________
Total comprehensive (expenses)income
for the period 5,445 2,796
__________
__________
Profit for the period attributable to:
Equity holders of the Company 5,304 2,672
Non-controlling interests 125 91
__________ __________
5,430 2,763
__________
__________
Total comprehensive income
for the period attributable to:
Equity holders of the Company 5,319 2,705
Non-controlling interests 125 91
__________ __________
5,445 2,796
__________
__________
Earnings per share
- Basic and diluted 7 RMB 10.3 cents RMB 5.3 cents
__________
__________
CONSOLIDATED statement of financial position
at 30 JUNE 2013
As at 30 As at 31
NOTES June 2013 December 2012
RMB'000 RMB'000
(unaudited) (audited)
Non-current Assets
Property, plant and equipment 9 942 1,025
Goodwill 7,839 7,839
Deferred tax assets 49 49
___________ ___________
Total non-current assets 8,830 8,913
___________ ___________
Current Assets
Inventories 1,444 640
Trade and other receivables 8 118,139 88,313
Pledged bank deposit - 5,000
Cash and bank balances 2,332 13,331
___________ ___________
Total current assets 121,915 107,284
___________ ___________
Total assets 130,745 116,197
___________ ___________
___________ ___________
Capital and Reserves
Share capital 65 65
Reserves 50,184 44,865
___________ ___________
Equity attributable to owners of the Company 50,249 44,930
Non-controlling interests 1,034 909
___________ ___________
Total Equity 51,283 45,839
___________ ___________
Non-current Liabilities
Deferred taxation liabilities 707 707
___________ ___________
Current Liabilities
Trade and other payables 10 59,049 52,356
Bank and other borrowings 17,611 13,000
Current tax liabilities 2,095 4,295
___________ ___________
78,755 69,651
___________ ___________
Total Equity and liabilities 130,745 116,197
___________ ___________
___________ ___________
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the SIX months ended 30 JUNE 2013
Attributable to equity holders of the Company
Share Share Merge Foreign PRC Retained Sub-Total Non-Controlling Total
Capital Premium Reserve Currency Summary Profit Interest
Translation Reserve
Reserve
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At 1 January,
2013
(audited) 65 9,481 1,298 376 2,839 30,871 44,930 909 45,839
-------- -------- -------- ------------ -------- --------- ---------- ---------------- --------
Profit for
the period - - - - - 5,304 5,304 125 5,429
Other
comprehensive
income for
the period - - - 15 - - 15 - 15
-------- -------- -------- ------------ -------- --------- ---------- ---------------- --------
Total
Comprehensive
for the
period - - - 15 - 5,304 5,319 125 5,444
-------- -------- -------- ------------ -------- --------- ---------- ---------------- --------
At 30 June,
2013
(unaudited) 65 9,481 1,298 391 2,839 36,175 50,249 1,034 51,283
-------- -------- -------- ------------ -------- --------- ---------- ---------------- --------
At 1 January,
2012
(audited) - - - 321 2,150 26,041 28,512 634 29,146
-------- -------- -------- ------------ -------- --------- ---------- ---------------- --------
Profit for
the period - - - - - 2,672 2,672 91 2,763
Other
comprehensive
income for
the period - - - 33 - - 33 - 33
-------- -------- -------- ------------ -------- --------- ---------- ---------------- --------
Total
Comprehensive
for the
period - - - 33 - 2,672 2,705 91 2,796
-------- -------- -------- ------------ -------- --------- ---------- ---------------- --------
Capital
injection 1,355 - - - - - 1,355 - 1,355
-------- -------- -------- ------------ -------- --------- ---------- ---------------- --------
At 30 June,
2012
(unaudited)
(Note) 1,355 - - 354 2,150 28,713 32,572 725 33,297
-------- -------- -------- ------------ -------- --------- ---------- ---------------- --------
Note: Share capital as at 30 June 2012 represent the share
capital of Green China Investments Limited before the group
reorganisation in November 2012.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the SIX months ended 30 JUNE 2013
Six months ended Six months ended
30 June2013 30 June2012
RMB'000 RMB'000
(unaudited) (unaudited)
OPERATING ACTIVITIES
Profit before tax 7,668 4,352
Adjustments for:
Depreciation of property, plant and equipment 88 86
Amortisation of intangible assets - 37
Finance costs recognised in profit and loss 532 1,007
Interest income (13) (9)
___________ ________
Operating cash flows before movements in working capital 8,275
5,473
(Increase)/decrease in inventories (804) 3,838
Increase in trade and other receivables (29,826) (11,481)
Increase in trade and other payables 6,693 5,580
Decrease in amount due to a director - (27)
__________ __________
Cash generated from (used in) operations (15,662) 3,383
Income tax paid (4,438) (3,586)
__________ __________
NET CASH USED IN OPERATING ACTIVITIES (20,100) (203)
__________ __________
INVESTING ACTIVITIES
Interest received 13 9
(Increase)/decrease in pledged bank deposit 5,000 (5,000)
Purchase of property, plant and equipment (5) (5)
__________ __________
NET CASH FROM/(USED IN) INVESTING ACTIVITIES 5,008 (4,996)
__________ __________
FINANCING ACTIVITY
Proceeds from capital injection - 1,355
Proceeds from bank and other borrowings 17,611 23,000
Repayment of bank and other borrowings (13,000) (22,469)
Interest paid (532) (1,007)
__________ __________
NET CASH GENERATED FROM FINANCING ACTIVITY 4,079 879
__________ __________
NET DECREASE IN CASH AND CASH EQUIVALENTS (11,013) (4,320)
CASH AND CASH EQUIVALENTS AT 1 JANUARY 13,331 13,177
Effect of foreign exchange rate changes, net 14 33
__________ __________
CASH AND CASH EQUIVALENTS AT 30 JUNE
represented by bank balances and cash 2,332 8,890
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the SIX months ended 30 JUNE 2013
1. GENERAL INFORMATION
Green China Holdings Limited (the "Company") was incorporated on
18 October 2012 as an exempted company in the Cayman Islands with
limited liability as a result of a corporate reorganisation in
preparation for the proposed listing of the Company's shares on the
AIM market of the London Stock Exchange plc.
The directors of the Company consider that the Company's
ultimate controlling party is Ms. Hellena Wang. The addresses of
the registered office and principal place of business of the
Company are Cricket Square, Hutchins Drive, P.O. Box 2681, Grand
Cayman KY1 - 1111, Cayman Islands and 150 Yellow River Road,
Tianyuan District, Zhuzhou, Hunan Province, China, respectively.
The Company's shares were admitted to trading on the AIM Market on
19 December 2012.
The Company is an investment holding company. The Company and
its subsidiaries (hereinafter collectively referred to as the
"Group") are principally engaged in the sale and distribution of
fertiliser products and the operation of a network of franchise
stores selling fertilisers and agricultural related products in the
People's Republic of China (the "PRC").
This condensed consolidated interim financial information has
not been audited.
2. THE REORGANISATION AND BASIS OF PREPARATION
Basis of Preparation
The consolidated interim financial report of Green China
Holdings Limited is presented in accordance with IAS 34 "Interim
Financial Reporting". It does not include all of the information
required for full annual financial statements, and should be read
in conjunction with the annual financial statements as at and for
the years ended 31 December 2011 and 2012, which have been prepared
in accordance with IFRSs.
The consolidated interim financial report has been prepared in
accordance with the accounting policies applied in the most recent
annual financial statements. For further information please refer
to Green China Holdings Limited's consolidated financial statements
for the year ended 31 December 2012.
Group Reorganisation
Through the Corporate Reorganisation as detailed in the
Company's annual report for the year ended 31 December 2012, the
Company became the holding company of the companies now comprising
the Group on 1 November 2012. The Group comprising the Company and
its subsidiaries resulting from the Corporate Reorganisation is
regarded as a continuing entity. Accordingly, for the purpose of
the preparation of the consolidated financial statements of the
Group, the Company has been considered as the holding company of
the companies now comprising the Group throughout the years
presented.
The consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash
flows which include the results, changes in equity and cash flows
of the companies comprising the Group have been prepared as if the
current group structure had been in existence throughout the years
presented, or since their respective dates of
incorporation/establishment where it is a shorter period.
Items included in the financial statements of each of the
Group's subsidiaries are measured using the currency of the primary
economic environment in which the respective entity operates (the
"functional currency"). The functional currencies of the Group's
operating subsidiaries and the Company are Renminbi ("RMB") and
United States dollars ("US$") respectively. The consolidated
financial statements are presented in RMB, which is different from
the functional currency of the Company. The choice of presentation
currency is to better reflect the currency that mainly determines
economic effects of transactions, events and conditions of the
Group.
3. RECENT ACCOUNTING PRONOUNCEMENTS ISSUED BUT NOT YET ADOPTED
As from 1 January 2013, the Company applied IFRS 10,
'Consolidated financial statements", IFRS 11, 'Joint arrangements',
IFRS 12, 'Disclosures of interests in other entities'. Those
standards did not materially affect the Company's financial
condition or results of the operations.
Also, as from 1 January 2013 the Company applied IFRS 13 "Fair
value measurement". This standard has not have a significant impact
on the balances recorded in the financial statements but would
require the company to apply different valuation techniques to
certain items (e.g. debt acquired as part of a business
combination) recognised at fair value as and when they arise in the
future.
4. REVENUE AND SEGMENT INFORMATION
The directors of the Company, being the chief operating decision
maker, review the Group's internal financial reporting and other
information and also obtain other relevant external information in
order to assess performance and allocate resources and operating
segment is identified with reference to these.
The directors of the Company consider that the business of the
Group is organised in one operating segment as sale and
distribution of fertiliser products and the operation of a network
of franchise stores selling fertilisers and agricultural related
products in the PRC. Additional disclosure in relation to segment
information is not presented as the directors of the Company assess
the performance of the only operating segment identified based on
the consistent information as disclosed in the consolidated
financial statements.
The total net segment income is equivalent to total
comprehensive income for the year as shown in the consolidated
statement of comprehensive income and the total segment assets and
total segment liabilities are equivalent to total assets and total
liabilities as shown in the consolidated statement of financial
position.
The Company is domiciled in the Cayman Islands with the Group's
major operations in the PRC. Total turnover and revenue as
disclosed represented the revenue from external customers arising
from sale of fertilisers and consultancy fee income from provision
of franchising management services in the PRC. Substantially all
assets of the Group are located in the PRC.
The financial information as reviewed by the Company's CODM is
as follows:
Six months ended Six months ended
30 June2013 30 June2012
RMB'000 RMB'000
(unaudited) (unaudited)
Sales of fertilisers 92,558 90,834
Consultancy fee income from provision of
franchising management services 6,087 4,679
---------------- ------------
98,645 95,513
5. INCOME TAX EXPENSE
Six months ended Six months ended
30 June2013 30 June2012
RMB'000 RMB'000
(unaudited) (unaudited)
Current tax:
PRC Enterprise Income Tax ("EIT") 2,238 1,527
Deferred tax - 62
_________ _________
2,238 1,589
Hong Kong Profits Tax is calculated at 16.5% of the estimated
assessable profits for both periods.
No provision for Hong Kong Profits Tax has been made as the
Green China Group had no estimated assessable profits arising in or
derived from Hong Kong for both periods.
PRC subsidiaries are subject to PRC Enterprise Income Tax
("EIT") at 25% for both periods.
6. DIVIDENDS
No dividend was paid or proposed during the period presented,
nor has any dividend has been proposed since the end of the
reporting period.
7. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share for
both periods is based on (i) the profit attributable to owners of
the Company; and (ii) the weighted average number of 51,553,332
(2012: 50,000,000) ordinary shares in issue during the year which
is on the assumption that the 50,000,000 shares issued as a result
of the Corporate Reorganisation (comprising 10,119 shares in issue,
898,810 shares issued under the Corporate Reorganisation and taking
into account the effect of subdivision of shares in November 2012)
were outstanding since 1 January 2011.
The diluted earnings per share is equal to the basic earnings
per share as there were no dilutive potential ordinary shares in
issue during both years.
8. TRADE AND OTHER RECEIVABLES AND PREPAYMENTS
At 31
At 30 June 2013 December2012
RMB'000 RMB'000
(unaudited) (audited)
Trade receivables 27,282 30,010
Less: allowance for doubtful debts (195) (195)
__________ __________
27,087 29,815
Prepayments to suppliers 85,817 52,988
Prepayment for expenses 8 22
Other deposits (Note (i)) 5,054 5,054
Other receivables 173 434
__________ __________
118,139 88,313
__________ __________
Notes:
(i) Included in the Group's other deposits as at 30 June 2013
was a security deposit of RMB5,000,000 (2012: RMB5,000,000) paid to
an independent supplier for the supply of fertiliser to the Group.
The deposit is refundable upon the expiry of the supply agreement
in year 2014 and is therefore classified as current as at 30 June
2013.
The Group generally allows an average credit period of 30 days
to certain trade customers with establishing trading records.
Before accepting any new customer, the Group assesses the potential
customer's credit quality and defines credit limits by
customers.
Trade receivables disclosed above include amounts (see below for
aged analysis) which are past due at the end of the reporting
period for which the Group has not recognised an allowance for
doubtful receivables because there has not been a significant
change in credit quality and the amounts are still considered
recoverable. The Group does not hold any collateral or other credit
enhancements over these balances nor does it have a legal right of
offset against any amounts owed by the Group to the
counterparty.
Age of receivables that are past due but not impaired
At 31
At 30 June2013 December 2012
RMB'000 RMB'000
(unaudited) (audited)
Past due
Within 90 days 1,335 3
91-180 days 643 468
Over 180 days 8,822 -
__________ __________
10,800 471
9. MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 June 2013, the Group spent
approximately RMB 5,000 on acquisition of property, plant and
equipment in order to upgrade its operating capacities.
10. TRADE AND OTHER PAYABLES AND ACCRUALS
At 31
At 30 June2013 December 2012
RMB'000 RMB'000
(unaudited) (audited)
Trade payables 1,824 9,875
Receipts in advance 52,146 28,232
Note payables - 10,000
Deposits received 173 173
Other payable and accruals (Note) 4,906 4,076
__________ __________
59,049 52,356
__________ __________
Notes: Included in the Group's other payable and accrual as at
30 June 2013 was RMB 1,666,000 due to Hellena Wang, a shareholder
of the Company; and RMB 115,000 due to Simon Ong, a related party
to the Company. These amounts due are unsecured, interest-free and
repayable on demand.
11. RELATED PARTY DISCLOSURES
Except for transactions and balances disclosed elsewhere in the
condensed consolidated financial statements, the Group has no other
significant transactions and balances with its related parties
during the six months ended 30 June 2013.
12. EVENT AFTER THE REPORTING PERIOD
There were no subsequent events requiring disclosure in the
consolidated financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUCGBUPWGQA
Green China (LSE:GCH)
Historical Stock Chart
From Oct 2024 to Nov 2024
Green China (LSE:GCH)
Historical Stock Chart
From Nov 2023 to Nov 2024
