TIDMGTS
RNS Number : 3155A
GTS Chemical Holdings PLC
28 September 2015
28 September 2015
GTS Chemical Holdings plc
(The "Company" or "GTS")
Interim Results for the six months ended 30 June 2015
GTS Chemical Holdings plc (AIM:GTS), the specialty chemicals and
lubricating oil producer, is pleased to announce its results for
the six months ended 30 June 2015.
Financial Highlights
-- Performance ahead of market expectations
-- Turnover up 34.5% to RMB 415 million (period to 30 June 2014: RMB 309 million)
-- Gross profit up 39.2% to RMB 88 million (period to 30 June 2014: RMB 63 million)
-- Gross margin of 21.2% (period to 30 June 2014: 20.4%)
-- Net profit up 34.3% to RMB 53 million (period to 30 June 2014: RMB 39 million)
Chairman's Statement
I am pleased to report that GTS continues to grow strongly. This
is particularly pleasing in light of the issues that are now
impacting the Chinese economy. Our continued success is founded
upon our commitment to product compliance and the way we
manufacture. In addition, we are focused on ensuring that our
products are attractive to the widest possible market.
Sales in H1 2015 grew by 34.5% to RMB 415 million from RMB 309
million in H1 2014; this is analysed by segment below:
Revenue Six months Six months Year ended
ended 30 ended 30 31 December
June 2015 June 2014 2014
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
Specialty chemicals 280,112 214,186 504,205
Lubricant oils 100,962 62,811 138,627
Recarburizer 34,351 31,963 61,735
----------- ----------- -------------
Total 415,425 308,960 704,567
Speciality Chemicals
Our largest segment, specialty chemicals, grew by 30.8% compared
with H1 2014, generating RMB 280 million of revenue during the
period and now amounts to 67.4% of total revenue.
We remain the largest and only significant specialist
manufacturer of ammonium sulfite in China. We are increasingly
focusing on the production of ammonium sulfite, which now accounts
for 86% of total speciality chemicals sales.
Set out below is an analysis of sales of ammonium sulfite by
type of customer:
Six months ended Six months ended Year ended 31
30 June 2015 30 June 2014 December 2014
RMB'000 % RMB'000 % RMB'000 %
Chemical industry 96,674 34.5 87,085 40.7 193,411 38.4
Paper making industry 60,954 21.8 56,091 26.2 148,336 29.4
Food industry 35,440 12.7 32,545 15.2 70,410 14.0
Trading businesses 55,903 20.0 22,437 10.5 56,686 11.2
Manufacturing industry 15,219 5.4 10,381 4.8 21,007 4.2
R&D industry 3,035 1.1 3,256 1.5 7,803 1.5
Pharmaceutical industry 12,887 4.6 2,391 1.1 6,552 1.3
Total 280,112 100.0 214,186 100.0 504,205 100.0
Whilst the chemical and paper industries remain the largest end
users of our products, we are pleased to see that sales to other
industry segments are increasing as a result of our marketing
efforts, in particular to the trading companies (the wholesalers)
and the pharmaceutical sectors. We continue to target the food
sector and expect this to increase over the next 12 months,
particularly as we have recently been approved by a leading US
Corporation as a supplier of ammonium sulfite in the manufacturing
of soft drinks, where it is used as a colouring agent.
Lubricant Oils
Sales in the lubricant oils division, which began trading in
July 2013, are in line with the Company's expectations reaching RMB
101 million in H1 2015 (H1 2014: RMB 63 million). The division now
represents 24.3% of Group revenue (H1 2014: 20.3%). Our success in
this area is founded upon our commitment to quality and compliance
with the latest regulatory standards and we are in the final stages
in the process of getting approved by the American Petroleum
Institute ("API").
Around 90% of our lubricant oil output is used in the automotive
aftermarket. By offering quality products at a reasonable price we
have had great success in increasing our brand awareness and this
has led to an increasing number of distributors stocking our
product. As a result, we have enlarged our distributor network and
increased national coverage, from 48 distributors across 18
provinces at the beginning of the period, to 61 covering 20
provinces by 30 June 2015.
In addition, we have been approved as a lubricant oil supplier
on Jingdong Mall (the second largest ecommerce platform after
Alibaba), which has further established our brand in the market, as
we are one of only three domestic brands with such approval.
Recarburizer
The recarburizer division showed a slight revenue increase to
RMB 34 million (H1 2014: RMB 32 million). This division remains
profitable without the need for any major capital expenditure,
although our strategy remains that this will continue to be a
relatively modest part of our business.
Gross profit
Gross profit in the period has risen by 39.2% to RMB 88 million
from RMB 63 million in H1 2014.
Gross profit Six months Six months Year ended
ended 30 ended 30 31 December
June 2015 June 2014 2014
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
Specialty chemicals 61,048 45,699 108,954
Lubricant oils 21,007 12,260 29,912
Recarburizer 7,903 6,356 13,357
----------- ----------- -------------
Gross profit 89,958 64,315 152,223
Local taxation1 (2,061) (1,178) (3,485)
----------- ----------- -------------
Gross profit (after sales taxes) 87,897 63,137 148,738
Gross margin % 21.2 20.4 21.1
(1) Comprises urban maintenance and construction tax, education and local education surtax and water conservation construction fund
Gross margin has increased over the period to 21.2% from 20.4%
in H1 2014, primarily due to quality and efficiency improvements
resulting from the upgrade of our production lines.
Working Capital
Net cash generated from operating activities over the period was
RMB 40.6 million (H1 2014: RMB 18.5 million). We continue to manage
our working capital position despite our continued growth. Most
importantly, trade debtors fell by RMB 23 million since the
beginning of the year, whilst trade creditors increased by a
similar amount. Inventory increased due to stocking in preparation
for anticipated sales to new customers and increased demand from
Shandong Tralin Paper Co., Ltd. ("Tralin").
Investment and financing
We have made investments of RMB 106.4 million in the period.
We are building our new lubricant oil facility on the land we
acquired at the end of last year, which will have an annual
capacity of 16,667 tonnes, hence our annual capacity will increase
to 26,667 tonnes. So far we have invested RMB 39 million in
construction and RMB35 million to acquire equipment for the new
site.
The Group has also invested RMB 7.9 million upgrading the
existing special chemicals production lines, and RMB13.4 million to
construct a new production line, which is expected to go into
operation in October 2015.
The Group's investment objective is to enlarge production
capacity and improve quality of products, in order to meet the
increasingly stringent regulatory and customer requirements.
Impact of current events in China
Economic factors
The slowdown in growth in China has been widely reported
although, it should be remembered that China is still growing at a
faster rate than, for example, all of the EU countries and the US.
We are aware of the potential impact that this might have on our
business and have positioned ourselves accordingly.
Speciality Chemicals
In relation to our speciality chemicals division, our major
target markets for growth are paper, pharmaceuticals and food.
The paper market is going through various structural changes
driven by government reform in order to reduce environmental damage
and the reliance upon imported pulp and paper for recycling. In
particular, the government is supporting the manufacture of paper
from straw as it provides a partial solution to deal with the vast
amounts of straw produced in China every year and because by using
the ammonium sulfite process the major by-product is organic
fertiliser.
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As we are the largest and only significant specialist provider
of ammonium sulfite in China, a key component of producing paper
from straw, we continue to benefit from the investment that is
being made into, and the government support for, the manufacture of
paper from straw. We are the major supplier of ammonium sulfite to
Tralin, which is by far the largest manufacturer of paper from
straw in China. Tralin continues to increase production at their
factory which is located just 10km from our factory and are in the
process of constructing new plants in the North East of China. We
have an offtake agreement with Tralin in relation to its existing
facility and expect to negotiate a similar agreement in relation to
their new plants. Accordingly, even if growth in consumption of
paper suffers as a result of the slowing rate of growth we believe
that demand for ammonium sulfite by Tralin, and other manufacturers
that might enter the market, will continue to outstrip growth in
the market as a whole. Hence the growth in demand for ammonium
sulfite by this industry sector will likewise outstrip the overall
increase in the demand for paper.
We have also been concentrating our marketing efforts on the
pharmaceuticals and food sectors, although sales to the food sector
remains small we anticipate this to grow over the next 12 months.
We believe that both of these sectors will be less affected by the
economic issues facing China as a whole. We are also increasing our
market reach to smaller users through an expanding network of
distributors as can be seen from the significant increase in sales
to Trading businesses.
Lubricant oils
90% of our lubricant oil sales are made to the automotive
aftermarket. GTS does not supply the manufacturers. Our products
are high quality and meet with all the current regulatory standards
in China. In addition, we are going through the process of getting
API certification. We are currently in the final stage of this
process and expect to receive full accreditation by the end of this
year. Whilst we are a relatively small producer of lubricant oils,
our facilities are amongst the most modern and we benefit as
increasing numbers of producers are forced to close as they do not
meet the increasingly stringent demands of the Chinese consumer and
the Chinese Government. Accordingly, by focussing on quality we
believe that we continue to gain market share, which will
counteract the impact from external economic factors.
Safety issues
There have also been two recent well-publicised explosions in
China, which have had an impact upon regulation in the chemical
sector. The first, at the port in Tianjin, did not involve a
manufacturing facility but clearly heightened domestic and
international awareness of health and safety issues in China. The
second involved a chemical manufacturing facility in our province
of Shandong. As a result regulations surrounding health and safety
particularly in the chemical sector have been strengthened and a
number of factories have been required to close. We on the other
hand have always been committed to exercising the highest standards
of health and safety and it is our belief that we can only benefit
from the recent heightened focus on these issues. GTS has been
awarded "The Enterprise of Safety Production Standard Grade Three
(Hazardous Chemical)" certificate, which is the appropriate grade
for our operations.
Dividend
We expect to continue to pay dividends on an annual basis that
are consistent with the profitability of the group and its
investment requirements.
Outlook
The outlook for each of our production segments is strong.
Growth in specialty chemicals continues to be underpinned by our
contracts with Tralin which itself is continuing with its own
expansion plan and our increasing exposure to the pharmaceuticals
and food sectors. We expect the growth in lubricant oils sales to
continue to rise as we focus on quality, achieve our API
accreditation and increase our distributor network and brand
recognition. We continue to invest in our two main sectors in order
to be able to meet the expected increase in demand.
I would like to thank our Board of Directors, our employees and
our shareholders for their support throughout the period and look
forward to the rest of this year with confidence.
Andrew Harding
Non-Executive Chairman
25 September 2015
Enquiries:
GTS
Mr Roy Su, CFO Tel: +86 159 5935 8899
SP Angel Corporate Finance LLP Tel: +44 (0)20 3463 2260
Nominated Adviser and Broker
David Facey and Stuart Gledhill
Yellow Jersey PR Limited Tel: +44 (0) 7738 076 304
Dominic Barretto / Alistair de Kare-Silver
About GTS Chemical Holdings plc
GTS is the largest Chinese producer of ammonium sulfite, a
specialty chemical used in the paper, chemical engineering, food
and pharmaceutical industries. GTS is also the second largest
producer of ammonium bisulfite, a preservative and reducing agent
used in the petroleum drilling, water treatment and chemical
engineering industries. The manufacturing of these two specialty
chemicals comprises the Group's core business segment, Specialty
Chemicals. This division manufactures its high quality products
mainly from recycled waste materials. Additionally, GTS has a
rapidly growing lubricant oil division, which services the
automotive and industrial markets. Trading in recarburizer is its
third division, which accounts for less than 10% of Group
revenue.
The Group is located in Shandong Province, one of the largest
provinces in China, ranked by GDP, and an area rich in downstream
industries. GTS' location also means it is close to several
chemical plants and paper factories, which gives it a distinct
advantage over its competitors.
The Company is exposed to structural growth in the paper
industry and chemicals sector, and market research estimates that
from 2014 to 2020, China's demand for ammonium sulfite, led by the
paper industry, is set to grow at an annual compound growth rate of
12%. The Company's two main divisions continue to benefit from
government backed environmental changes that are currently taking
place in China. GTS' biggest product, ammonium sulfite, is in
increasing demand as the production of paper from straw continues
to grow. The Company believes that the increase in production of
paper from straw will continue to exceed the overall increase in
demand for paper in China as smaller, less environmentally
friendly, producers leave the market.
The Group has a history of strong profit growth and consistently
high operating margins.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2015
Note Six months Six months Year ended
ended ended 31 December
30 June 30 June 2014
2015 2014 Audited
Unaudited Unaudited
RMB'000 RMB'000 RMB'000
Revenue 5 415,425 308,960 704,567
Cost of sales (327,528) (245,823) (555,829)
------------ ------------ --------------
Gross profit 87,897 63,137 148,738
Selling and distribution expenses (12,419) (8,121) (21,584)
Administrative expenses (9,247) (5,948) (18,139)
Operating profit 66,231 49,068 109,015
Non-operating income net of expenses 313 - 429
Finance costs (4,687) (3,372) (7,846)
Interest on bank deposits 389 451 783
Profit before tax 62,246 46,147 102,381
Income tax expense 6 (9,585) (6,930) (16,228)
------------ ------------ --------------
Profit for the period 52,661 39,217 86,153
============ ============ ==============
Other comprehensive income - - -
Total comprehensive income for
the period 52,661 39,217 86,153
============ ============ ==============
Profit attributable to
Equity holders of the company 52,661 39,217 86,153
Earnings per share 7
Basic (RMB) Diluted (RMB) 0.51 0.39 0.39 1.19
0.51 1.19
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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AS AT 30 JUNE 2015
Note 30 June 30 June 31 December
2015 2014 2014
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
Non-current assets
Property, plant and equipment 8 150,278 42,747 46,431
Intangible assets 28,481 9,003 28,763
178,759 51,750 75,194
----------- ----------- ------------
Current assets
Inventories 87,621 33,498 31,275
Trade and other receivables 125,202 134,033 148,280
Cash and cash equivalents 103,269 80,091 124,121
----------- ----------- ------------
316,092 247,622 303,676
----------- ----------- ------------
Total assets 494,851 299,372 378,870
=========== =========== ============
Capital and reserves
Share capital 10 10,241 10,000 10,241
Share premium 44,167 43,930 44,167
Merger reserve (6,167) (6,165) (6,167)
Capital reserves 11 51,209 51,403 51,277
Statutory reserve 1,648 1,648 1,648
Option reserve 197 - 197
Retained earnings 153,841 54,049 101,112
Total equity 255,136 154,865 202,475
----------- ----------- ------------
Current liabilities
Short-term borrowings 12 115,850 74,450 75,900
Trade and other payables 78,708 63,543 62,706
Income tax liabilities 6,789 4,708 4,660
201,347 142,701 143,266
Non-current liabilities
Long-term borrowings 12 11,400 1,806 6,590
Long term loans 9 26,968 - 26,539
38,368 1,806 33,129
----------- ----------- ------------
Total liabilities 239,715 144,507 176,395
=========== =========== ============
Total equity and liabilities 494,851 299,372 378,870
=========== =========== ============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2015
Share Share Capital Merger Statutory Option Retained
capital premium reserve reserve reserve reserve earnings Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Balance at 31 December 2013
(pro forma) 10,000 43,930 - (6,165) 1,648 - 14,832 64,245
Comprehensive income - - - - - - 86,153 86,153
Issue of new shares 241 8,439 - - - - - 8,680
Share issue costs - (8,202) - - - - - (8,202)
Capital contribution - - 51,404 - - - - 51,404
Merger reserve - - - (2) - - - (2)
Share based payment expenses - - - - - 197 - 197
Recognised interest expenses - - (127) - - - 127 -
-------- -------- -------- -------------------- ------------ -------- ----------- --------
Balance at 31 December 2014 10,241 44,167 51,277 (6,167) 1,648 197 101,112 202,475
======== ======== ======== ==================== ============ ======== =========== ========
Balance at 31 December 2013
(pro forma) 10,000 43,930 - (6,165) 1,648 - 14,832 64,245
Comprehensive income - - - - - - 39,217 39,217
Capital contribution - - 51,403 - - - 51,403
Balance at 30 June 2014 10,000 43,930 51,403 (6,165) 1,648 - 54,049 154,865
======== ======== ======== ==================== ============ ======== =========== ========
Balance at 31 December 2014 10,241 44,167 51,277 (6,167) 1,648 197 101,112 202,475
Comprehensive income - - - - - - 52,661 52,661
Recognised interest expenses - - (68) - - 68 -
-------- -------- -------- -------------------- ------------ -------- ----------- --------
Balance at 30 June 2015 10,241 44,167 51,209 (6,167) 1,648 197 153,841 255,136
======== ======== ======== ==================== ============ ======== =========== ========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2014
Six months Six months Year ended
ended 30 ended 31 December
June 2015 30 June 2014
2014
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
Profit before tax 62,246 46,150 102,381
Depreciation of property, plant and
equipment 2,697 2,212 4,714
Amortisation of intangible assets 282 100 340
Impairment of non-current assets - - -
Finance income (389) (451) (783)
Finance costs 4,682 3,345 7,846
Share based payment expense - - 197
Recognised interest expenses 68 - 127
Share for share exchange adjustments - - (2)
Reversal of impairment of non-current
assets - - (781)
Loss on disposal of property, plant
and equipment - - 781
Operating cash flow before movements
in working capital 69,586 51,356 114,820
(Increase)/Decrease in inventories (56,346) (1,817) 406
(Increase)/Decrease in trade and other
receivables 23,078 (1,174) (15,421)
Increase/(Decrease) in trade and other
payables 16,002 (14,961) (49,634)
Net cash generated from operations 52,320 33,404 50,171
Interest paid (4,253) (3,345) (7,846)
Income tax paid (7,456) (11,567) (16,620)
------------- ------------------ ----------------
Net cash generated from operating
activities 40,611 18,492 25,705
============= ================== ================
Investing activities
Purchase of property, plant and equipment (11,183) (6,865) (13,051)
Assets under construction (95,361) - -
Expenditure on intangible assets - - (20,000)
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Proceeds from disposal of property, - - -
plant and equipment
Interest received 389 451 783
Net cash used in investing activities (106,155) (6,414) (32,268)
============= ================== ================
Financing activities
Proceeds from issue of shares - - 8,677
Payment of listing costs - - (8,199)
Proceeds from bank borrowings 85,300 44,450 82,490
Repayment of bank borrowings (40,540) (39,450) (69,450)
Long term / short term loans from
directors - - 28,252
Long term / short term loan from subsidiary
directors - - 5,365
Loan from the Company's shareholders - - 668
Capital contribution (68) 53,209 51,277
Payment of dividend - (109,000) (87,200)
Net cash (used in)/from financing
activities 44,692 (50,791) 11,880
============= ================== ================
Net increase/(decrease) in cash and
cash equivalents (20,852) (38,713) 5,317
Cash and cash equivalents at beginning
of period 124,121 118,804 118,804
Cash and cash equivalents at end of
period 103,269 80,091 124,121
============= ================== ================
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2015
1 General information
GTS Chemical Holdings Plc (the "Company") was incorporated in
Jersey on 22 January 2014. The registered office of the Company is
11 Bath Street, St Helier, Jersey JE2 4ST.
The principal activity of the Company is that of an investment
holding company. The Company has a wholly-owned subsidiary Runtai
Environmental Protection International Limited ("Hong Kong Runtai")
which in turn owns all the equity of Shandong Tiantai Steel-Plastic
Co., Limited ("Shangdong Tiantai"). The principal activities of the
Group comprise the manufacturing of ammonium sulfite, ammonium
bisulfite, blending and distribution of lubricating oils and
trading of recarburizer. The principal place of business is at
Luzhuang Village, Jiangdian Town, Gaotang County, Shandong
Province, P. R. China.
2 Basis of preparation
The consolidated condensed financial statements have been
prepared in accordance with International Accounting Standard 34
Interim Financial Reporting.
The consolidated condensed financial statements have been
prepared on the historical cost basis except for certain financial
instruments, which are measured at fair values as explained in the
accounting policies set out below. Historical cost is generally
based on the fair value of the consideration given in exchange for
assets.
The consolidated condensed financial statements are rounded to
the nearest thousand ('000) and they are presented in Chinese
Renminbi (RMB), the official currency of the People's Republic of
China. RMB is the functional currency of the Company.
The consolidated condensed financial statements incorporate the
financial statements of the Company and entities controlled by the
Company (its subsidiaries). Control is achieved where the Company
has the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities.
All intra-group transactions, balances, income and expenses are
eliminated in full on consolidation.
The interim report was approved by the Board of Directors on 25
September 2015. The report is unaudited and does not constitute the
company's statutory accounts for the six months ended 30 June
2015.
3 Significant accounting policies
These consolidated condensed financial statements have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") issued by the International Accounting Standard
Board (IASB) and interpretations of the International Financial
Reporting Interpretations Committee (IFRIC), as adopted by European
Union.
From the beginning of the reporting period the Company has
adopted all relevant standards effective for accounting periods
beginning on or after 1 January 2015.
4 Seasonality of interim operation
Traditionally and historically, the first quarter of the year is
quiet due to the festive season in China. Therefore, the sales in
the second half year are normally higher than the first half
year.
5 Segment information
The sales revenue arises from the sale of ammonium sulfite,
ammonium bisulfite, lubricating oils (including cutting oil) and
recarburizer. All the activities are within China.
Analysis of revenue from the sale of goods and services are
analysed as follows:
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2014
2015 2014 Audited
Unaudited Unaudited
RMB'000 RMB'000 RMB'000
Solid ammonium sulfite 168,509 130,384 260,077
Liquid ammonium sulfite 75,799 54,610 173,419
Liquid ammonium bisulfite 35,804 29,192 70,709
Recarburizer 34,351 31,963 61,735
Lubricating Oils 100,962 62,811 138,627
415,425 308,960 704,567
=========== =========== =============
6 Taxation
The Company is regarded as resident for tax purposes in Jersey
and on the basis that the company is neither a financial services
company nor a utility company for the purposes of the Income Tax
(Jersey) Law 1961, as amended; the company is subject to income tax
in Jersey at a rate of zero per cent.
Hong Kong Runtai, an intermediate parent company is regarded as
resident for tax purposes in Hong Kong.
The Group's operating subsidiary in China is subject to income
tax rate at 25%. Due to its high technology enterprise status, the
subsidiary is entitled to a reduced rate of 15% until 31 December
2019.
7 Earnings per share
Basic earnings per share are calculated by dividing the profit
attributable to equity shareholders of the Company by the weighted
average number of ordinary shares in issue during the period.
Six months Six months
ended 30 ended 30
June 2015 June 2014
Unaudited Unaudited
RMB'000 RMB'000
Net profit attributable to equity holders
of parent company 52,661 39,217
============ ============
Weighted average number of ordinary shares
for the purpose of
* Basic earnings per share 102,313,056 100,000,000
============ ============
- Diluted earnings per share 102,313,056 100,000,000
============ ============
Basic earnings per share (RMB) 0.51 0.39
============ ============
Diluted earnings per share (RMB) 0.51 0.39
============ ============
8 Property, plant and equipment
Additional fixed assets are mainly assets under construction,
details are as follows:
-- RMB 7.8 million to upgrade existing special chemical
production lines, which was completed in July 2015 without further
capital commitment;
-- RMB 74.1 million to build and equip the new lubricating oil
workshop on the new site. The project cost is budgeted at RMB 85.7
million and it is expected to be completed in September 2015;
-- RMB13.4 million to construct a new production line for
manufacturing ammonium sulfite and ammonium bisulfite, which is
expected to go into operation in October 2015. Further expenditure
on this production line is budgeted as RMB 4.8 million
approximately.
9 Long term loans
On 21 February 2014, Guiping Li entered into a loan agreement
with Shandong Tiantai whereby Guiping Li granted an interest free
loan in the sum of the net dividend payable of RMB 53,209,440 for a
term of 50 years. This loan is ranked lower than other creditors in
the event of a winding up of the company. Guiping Li is a director
of Hong Kong Runtai and Shandong Tiantai. The accounting treatment
of this loan is described in Note 11.
On 15 July 2014, Cheng Liu, the CEO entered into a loan
agreement with Shandong Tiantai where by Cheng Liu granted a loan
of RMB24,267,200 over the period of 10 years at the interest rate
of 3% per annum.
10 Share capital
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