SHANGHAI, May 25, 2011 /PRNewswire-Asia-FirstCall/ --
Chemspec International Limited (NYSE: CPC; "Chemspec" or the
"Company"), a leading China-based
contract manufacturer of highly-engineered specialty chemicals,
today announced its unaudited financial results(1) for the first
quarter ended March 31, 2011.
First Quarter 2011 Financial Highlights
- Total sales reached RMB209.0
million (US$31.9 million),
representing a decrease of 5.1% from the first quarter of 2010 and
a decrease of 22.7% from the fourth quarter of 2010.
- Gross profit totaled RMB76.8
million (US$11.7 million),
representing a decrease of 20.3% and 22.2% from the first quarter
of 2010 and the fourth quarter of 2010, respectively.
- Income from operations was RMB28.4
million (US$4.3 million),
representing a decrease of 52.4% and 44.9% from the first quarter
of 2010 and the fourth quarter of 2010, respectively.
- Net income attributable to the Company's shareholders was
RMB22.6 million (US$3.5 million), representing a decrease of 56.8%
and 50.1% from the first quarter of 2010 and the fourth quarter of
2010, respectively.
- Basic and diluted earnings per ADS(2) were both RMB0.63 (US$0.10).
Basic and diluted earnings per ADS were both RMB1.44 (US$0.21)
in the first quarter of 2010. Basic and diluted earnings per ADS in
the fourth quarter of 2010 were both RMB1.26 (US$0.19).
(1) Certain Renminbi (RMB)
amounts in this press release have been translated into U.S. dollar
(USD) solely for the convenience of the reader. The
conversion of RMB into USD in this release is based on the noon
buying rate in the City of New York for cable transfers in RMB per
U.S. dollar as certified for customs purposes by the Federal
Reserve Bank of New York on March 31, 2011, which was RMB 6.5483 to
USD1.00. The percentages stated are calculated based on
RMB.
|
|
(2) 1 ADS=60 ordinary
shares
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|
Dr. Jianhua Yang, Chairman and
Chief Executive Officer of Chemspec, commented, "The total sales of
the first quarter of 2011 was in line with the guidance we provided
in April. Although the past quarter was not outstanding, especially
compared with our relatively stronger performance in 2010, I want
to emphasize two key factors that we value in our business. First,
we have strong chemical process and development capabilities and
are highly competitive compared to our global peers. Secondly, we
have maintained a strong client relationship with our customers.
Both factors will greatly help our business when the market demand
grows."
Mr. Zixin Wang, Vice President of
Finance, commented, "As the inventory level has been a concern for
the management, we have closely monitored the inventory level and
implemented certain measures. For the first quarter of 2011, we
were able to slightly lower the inventory level. Going forward, we
will continue our efforts to bring down the inventory level
gradually."
First Quarter 2011 Financial Results
Total Sales
For the three months ended March 31,
2011, we generated total sales of RMB209.0 million (US$31.9
million), representing a decrease of 5.1% from the first
quarter of 2010 and a decrease of 22.7% from the fourth quarter of
2010.
A strong recovery in the electronics end-market occurred in the
first quarter of 2010 after the global financial crisis. However,
our sales to the electronics end-market was relatively weaker in
the first quarter of 2011, which caused the decline in the total
sales compared with the first quarter of 2010. Compared with the
fourth quarter of 2010, the decrease in our total sales was
primarily attributable to seasonality, as the first quarter of each
year usually has lower demand for chemicals used in the electronics
end-market.
Gross Profit and Gross Margin
In the first quarter of 2011, we generated gross profit of
RMB76.8 million (US$11.7 million), representing a decrease of
20.3% from the first quarter of 2010 and a decrease of 22.2% from
the fourth quarter of 2010. We attribute the decreases in the gross
profit primarily to the corresponding declines in the total sales
in the corresponding quarters.
Our gross margin was 36.8% in the first quarter of 2011, as
compared with 43.8% in the first quarter of 2010 and 36.5% in the
fourth quarter of 2010. Compared with the first quarter of 2010,
the gross margin decreased primarily due to a less favorable
product mix in the first quarter of 2011. Compared with the fourth
quarter of 2010, the gross margin slightly increased because
minimal inventory was written down in the first quarter of 2011,
but the effect was offset by the unfavorable product mix in the
first quarter of 2011.
Operating Expenses
Selling expenses and general and administrative (SG&A)
expenses were RMB36.5 million
(US$5.6 million), representing an
increase of 56.7% from RMB23.3
million in the first quarter of 2010 and an increase of
36.1% from RMB26.8 million in the
fourth quarter of 2010. The increases were mainly attributed to the
professional service fees involved in the proposed "going-private
transaction", for which a Schedule 13E-3 has been filed with United
States Securities and Exchange Commission ("SEC") on May 3, 2011. Going forward with the process, we
expect to incur further professional service fees.
Research and development (R&D) expenses were RMB12.0 million (US$1.8
million), representing a decrease of 12.8% from RMB13.7 million in the first quarter of 2010 and
a decrease of 46.0% from RMB22.1
million in the fourth quarter of 2010. The fluctuation in
R&D expenses was mainly due to the change of material
consumption expenses that were related to the number of active
R&D projects during each period.
Income from Operations and
Earnings Before Income
Taxes
As a result of factors mentioned above, income from operations
was RMB28.4 million (US$4.3 million) and earnings before income taxes
was RMB28.2 million (US$4.3 million), respectively, in the first
quarter of 2011, representing decreases of 52.4% and 53.1%,
respectively, from the first quarter of 2010, and decreases of
44.9% and 45.3%, respectively, from the fourth quarter of 2010.
Net Income Attributable to Chemspec International Limited
Shareholders
Net income attributable to Chemspec International Limited was
RMB22.6 million (US$3.5 million), representing a decrease of 56.8%
from the first quarter of 2010 and of 50.1% from the fourth quarter
of 2010, respectively.
Basic and diluted earnings per ADS were RMB0.63 (US$0.10),
as compared to RMB1.44 (US$0.21) in the first quarter of 2010 and
RMB1.26 (US$0.19), in the fourth quarter of 2010.
Conference Call
The Company will not host a conference call for the first
quarter of 2011 financial results.
Statement Regarding Unaudited Financial Information
The financial information set forth above is based on the
Company's unaudited interim consolidated financial statements and
is subject to adjustments that may be identified by us and/or our
auditors during the audit of our annual consolidated financial
statements.
About Chemspec
Chemspec is a leading China-based contract manufacturer of highly
engineered specialty chemicals, especially, the fluorinated
specialty chemicals. In manufacturing specialty chemicals, Chemspec
also provides process design and process development services,
which enable efficient and rapid production of specialty chemicals
that are incorporated into the products of Chemspec's end users.
Chemspec's customers and end users include electronics,
pharmaceutical and agrochemical companies. For more information,
please visit www.chemspec.com.cn.
Safe Harbor Statements
This announcement contains forward-looking statements. These
statements constitute "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
and as defined in the U.S. Private Securities Litigation Reform Act
of 1995. These forward-looking statements can be identified by
terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates" and similar statements.
Such statements involve certain risks and uncertainties that could
cause actual results to differ materially from those in the
forward-looking statements. Further information regarding these and
other risks is included in Chemspec's filings with the U.S.
Securities and Exchange Commission, as amended from time to time.
Chemspec does not undertake any obligation to update any
forward-looking statement, except as required under applicable
law.
For further information, please contact:
Chemspec International Ltd.
In Shanghai
Carol Fang
Manager, Investor Relations
Tel: +86-21-63638108
Email: ir@chemspec.com.cn
Chemspec
International Limited
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Unaudited
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
March 31,
|
|
March 31,
|
|
|
2010
|
|
2011
|
|
2011
|
|
|
RMB'000
|
|
RMB'000
|
|
USD'000
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash
|
98,719
|
|
74,385
|
|
11,359
|
|
Pledged bank
deposits
|
56,746
|
|
44,303
|
|
6,766
|
|
Accounts receivable,
net
|
137,873
|
|
95,664
|
|
14,609
|
|
Bills
receivable
|
1,200
|
|
150
|
|
23
|
|
Inventories
|
470,432
|
|
464,991
|
|
71,010
|
|
Prepayment and other
receivables
|
73,449
|
|
60,267
|
|
9,203
|
|
Income tax
recoverable
|
-
|
|
1,454
|
|
222
|
|
Deferred income tax
assets
|
6,369
|
|
8,305
|
|
1,268
|
|
Total
current assets
|
844,788
|
|
749,519
|
|
114,460
|
|
Property, plant and
equipment, net
|
871,398
|
|
869,612
|
|
132,800
|
|
Land use rights
|
59,201
|
|
58,864
|
|
8,989
|
|
Deposit for purchases of
intangible assets
|
-
|
|
9,000
|
|
1,374
|
|
Deposit for purchases of
other investment
|
-
|
|
5,000
|
|
764
|
|
Intangible
assets
|
730
|
|
703
|
|
107
|
|
Goodwill
|
7,446
|
|
7,446
|
|
1,137
|
|
Investment in an
affiliate
|
12,793
|
|
12,668
|
|
1,935
|
|
Cost-method
investment
|
-
|
|
25,026
|
|
3,822
|
|
Total
assets
|
1,796,356
|
|
1,737,838
|
|
265,388
|
|
|
|
|
|
|
|
|
LIABILITIES
AND EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Bank borrowings
|
25,000
|
|
25,000
|
|
3,818
|
|
Accounts
payable
|
142,319
|
|
111,460
|
|
17,022
|
|
Bills payable
|
64,340
|
|
52,994
|
|
8,093
|
|
Accrued expenses and other
payables
|
148,238
|
|
89,376
|
|
13,649
|
|
Amounts due to related
parties
|
5,559
|
|
58
|
|
9
|
|
Deferred income
|
14,215
|
|
16,315
|
|
2,491
|
|
Income taxes
payable
|
5,408
|
|
-
|
|
-
|
|
Total
current liabilities
|
405,079
|
|
295,203
|
|
45,082
|
|
Bank borrowings
|
-
|
|
30,000
|
|
4,581
|
|
Deferred income tax
liabilities
|
21,517
|
|
22,043
|
|
3,366
|
|
Deferred income
|
3,280
|
|
1,380
|
|
211
|
|
Total
liabilities
|
429,876
|
|
348,626
|
|
53,240
|
|
Equity
|
|
|
|
|
|
|
Equity
attributable to Chemspec International Limited
|
|
|
|
|
|
|
Ordinary
shares:
Par value: HK$
0.01;
Authorized:
20,000,000,000 shares
as of December 31,
2010 and March 31,
2011;
Issued and
outstanding:
2,163,190,740
shares
as of
December 31, 2010 and
March 31,
2011;
|
21,649
|
|
21,649
|
|
3,306
|
|
Additional paid-in
capital
|
319,048
|
|
320,370
|
|
48,924
|
|
Statutory
reserves
|
85,820
|
|
85,820
|
|
13,106
|
|
Accumulated other
comprehensive income
|
5,197
|
|
5,037
|
|
769
|
|
Retained
earnings
|
929,108
|
|
951,726
|
|
145,339
|
|
Equity
attributable to Chemspec International Limited
|
|
|
|
|
|
|
1,360,822
|
|
1,384,602
|
|
211,444
|
|
Noncontrolling
interests
|
5,658
|
|
4,610
|
|
704
|
|
|
|
|
|
|
|
|
Total
equity
|
1,366,480
|
|
1,389,212
|
|
212,148
|
|
Total
liabilities and equity
|
1,796,356
|
|
1,737,838
|
|
265,388
|
|
|
|
|
|
|
|
Chemspec
International Limited
|
|
Unaudited
Quarterly Consolidated Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month
periods ended
|
|
|
|
|
March 31,
|
|
December 31,
|
|
Mar 31,
|
|
Mar 31,
|
|
|
|
|
2010
|
|
2010
|
|
2011
|
|
2011
|
|
|
|
|
RMB'000
|
|
RMB'000
|
|
RMB'000
|
|
USD'000
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
220,151
|
|
270,357
|
|
208,967
|
|
31,912
|
|
Cost of sales
|
|
(123,813)
|
|
(171,629)
|
|
(132,139)
|
|
(20,179)
|
|
Gross
profit
|
|
96,338
|
|
98,728
|
|
76,828
|
|
11,733
|
|
Selling
expenses
|
|
(2,503)
|
|
(3,083)
|
|
(4,295)
|
|
(656)
|
|
General and administrative
expenses
|
|
(20,761)
|
|
(23,719)
|
|
(32,170)
|
|
(4,914)
|
|
Research and development
expenses
|
|
(13,705)
|
|
(22,129)
|
|
(11,952)
|
|
(1,825)
|
|
Other operating
expenses
|
|
(551)
|
|
(1,205)
|
|
(204)
|
|
(31)
|
|
Other operating
income
|
|
509
|
|
351
|
|
242
|
|
37
|
|
Government
grants
|
|
450
|
|
2,684
|
|
-
|
|
-
|
|
Income from
operations
|
|
59,777
|
|
51,627
|
|
28,449
|
|
4,344
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
558
|
|
525
|
|
471
|
|
72
|
|
Interest
expense
|
|
(80)
|
|
-
|
|
(295)
|
|
(45)
|
|
Foreign currency exchange
loss, net
|
|
(47)
|
|
(583)
|
|
(388)
|
|
(59)
|
|
Equity in loss of an
affiliate
|
|
(98)
|
|
(150)
|
|
(125)
|
|
(19)
|
|
Other income
|
|
48
|
|
142
|
|
73
|
|
11
|
|
Earnings
before income taxes
|
|
60,158
|
|
51,561
|
|
28,185
|
|
4,304
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
(7,718)
|
|
(6,408)
|
|
(5,815)
|
|
(888)
|
|
Net
income
|
|
52,440
|
|
45,153
|
|
22,370
|
|
3,416
|
|
Net (income)
loss attributable to
noncontrolling
interests
|
|
|
|
|
|
|
|
|
|
|
(127)
|
|
141
|
|
248
|
|
38
|
|
Net income
attributable to Chemspec
International
Limited shareholders
|
|
|
|
|
|
|
|
|
|
|
52,313
|
|
45,294
|
|
22,618
|
|
3,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
RMB
0.02
|
|
RMB
0.02
|
|
RMB
0.01
|
|
USD
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
RMB
0.02
|
|
RMB
0.02
|
|
RMB
0.01
|
|
USD
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per ADS
|
|
RMB
1.44
|
|
RMB
1.26
|
|
RMB
0.63
|
|
USD
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per ADS
|
|
RMB
1.44
|
|
RMB
1.26
|
|
RMB
0.63
|
|
USD
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chemspec
International Limited
|
|
Unaudited
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
|
2010
|
|
2011
|
|
2011
|
|
|
RMB'000
|
|
RMB'000
|
|
USD
'000
|
|
|
|
|
|
|
|
|
Cash flows
from operating activities
|
|
|
|
|
|
|
Net income
|
52,440
|
|
22,370
|
|
3,416
|
|
Adjustments to reconcile
net income to net cash
|
|
|
|
|
|
|
provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
of property, plant and
equipment
|
17,358
|
|
21,771
|
|
3,325
|
|
Land use rights
expenses
|
315
|
|
337
|
|
51
|
|
Loss on disposal of
property, plant and equipment
|
188
|
|
162
|
|
25
|
|
Amortization of intangible
assets
|
28
|
|
27
|
|
4
|
|
Equity in loss of an
affiliate
|
98
|
|
125
|
|
19
|
|
Unrealized foreign
exchange loss, net
|
32
|
|
248
|
|
38
|
|
Share-based
compensation
|
1,872
|
|
1,322
|
|
202
|
|
Deferred income tax
benefit
|
(1,651)
|
|
(1,410)
|
|
(215)
|
|
Changes in operating
assets and liabilities, net of
|
|
|
|
|
|
|
effect of an
acquisition
|
|
|
|
|
|
|
Pledged bank deposits
related to purchase of inventories
|
(26,164)
|
|
14,189
|
|
2,167
|
|
Inventories
|
(54,285)
|
|
5,441
|
|
831
|
|
Accounts
receivable
|
(19,992)
|
|
41,958
|
|
6,407
|
|
Bills
receivable
|
1,279
|
|
1,050
|
|
160
|
|
Prepayment and other
receivables
|
(8,172)
|
|
4,182
|
|
639
|
|
Accounts
payable
|
22,072
|
|
(30,859)
|
|
(4,713)
|
|
Bills payable related to
purchase of inventories
|
17,904
|
|
(12,850)
|
|
(1,962)
|
|
Accrued expenses and other
payables
|
(4,371)
|
|
6,416
|
|
980
|
|
Deferred income
|
1,001
|
|
200
|
|
31
|
|
Income taxes
payable
|
298
|
|
(6,862)
|
|
(1,048)
|
|
Net cash
provided by operating activities
|
250
|
|
67,817
|
|
10,357
|
|
|
|
|
|
|
|
|
Cash flows
from investing activities
|
|
|
|
|
|
|
Capital expenditures,
including interest capitalized
|
(76,552)
|
|
(83,921)
|
|
(12,815)
|
|
Pledged bank deposits
related to purchase of property,
|
|
|
|
|
|
|
plant and
equipment
|
(1,542)
|
|
(1,746)
|
|
(267)
|
|
Payments for land use
rights
|
(400)
|
|
-
|
|
-
|
|
Deposit for purchase of
other investment
|
-
|
|
(5,000)
|
|
(764)
|
|
Purchase of
investment
|
-
|
|
(25,026)
|
|
(3,822)
|
|
Net cash
used in investing activities
|
(78,494)
|
|
(115,693)
|
|
(17,668)
|
|
|
|
|
|
|
|
|
Cash flows
from financing activities
|
|
|
|
|
|
|
Dividend by a subsidiary
to
noncontrolling
shareholders
|
|
|
|
|
|
|
-
|
|
(800)
|
|
(122)
|
|
Acquisition of additional
equity interest in subsidiaries
from noncontrolling
interests
|
|
|
|
|
|
|
(26,300)
|
|
-
|
|
-
|
|
Proceeds from long-term
bank borrowings
|
-
|
|
30,000
|
|
4,581
|
|
Repayments of
long-term bank borrowings
|
(5,000)
|
|
-
|
|
-
|
|
Repayments of non-interest
bearing borrowings
|
|
|
|
|
|
|
from related
parties
|
(1,000)
|
|
(5,500)
|
|
(840)
|
|
Net cash
(used in) provided by financing activities
|
(32,300)
|
|
23,700
|
|
3,619
|
|
|
|
|
|
|
|
|
Effect of foreign currency
exchange rate changes
|
|
|
|
|
|
|
on
cash
|
(19)
|
|
(158)
|
|
(24)
|
|
|
|
|
|
|
|
|
Net decrease
in cash
|
(110,563)
|
|
(24,334)
|
|
(3,716)
|
|
Cash at beginning of
year
|
351,097
|
|
98,719
|
|
15,075
|
|
Cash at end
of year
|
240,534
|
|
74,385
|
|
11,359
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
paid
|
9,071
|
|
14,087
|
|
2,151
|
|
Interest paid, net of
amounts capitalized
|
80
|
|
295
|
|
45
|
|
|
|
|
|
|
|
|
Noncash
investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable for purchase of
property, plant and equipment
|
86,848
|
|
64,045
|
|
9,780
|
|
Payable for acquisition of
Kangpeng Nong Hua
|
25,000
|
|
-
|
|
-
|
|
Bills payable for purchase
of property, plant and equipment
|
20,751
|
|
21,401
|
|
3,268
|
|
|
|
|
|
|
|
SOURCE Chemspec International Limited