TIDMGTS
RNS Number : 9654N
GTS Chemical Holdings PLC
01 August 2014
1 August 2014
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE
UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER
JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION
WOULD BE UNLAWFUL.
This announcement is not an offer of securities for sale in the
United States, Canada, Japan, Australia, South Africa or any other
jurisdiction. Investors should not subscribe for or purchase any
transferable securities referred to in this announcement except on
the basis of information in the admission document (the "Admission
Document") published by GTS Chemical Holdings plc ("GTS" or the
"Company" and, together with its subsidiary undertakings, the
"Group") in connection with the admission of the Company's ordinary
shares of one pence each ("Ordinary Shares") to trading on the AIM
market ("AIM") of the London Stock Exchange plc (the "London Stock
Exchange").
GTS Chemical Holdings plc
("GTS" or the "Company")
Admission to AIM
GTS Chemical Holdings plc, the Chinese specialty chemicals
producer, is pleased to announce today its admission to AIM
("Admission"), its fundraising of GBP3.1 million (gross) through a
placing and equity loan ("Fundraising") and the commencement of
dealings in its ordinary shares under the ticker GTS.
The Company has published the Admission Document, which can be
found on its website, www.gtschemical.com,
The Company is the largest Chinese producer of ammonium sulfite,
a chemical which is a key element of the process of manufacturing
paper from straw using the ammonium sulfite process. The Company
uses waste products from the fertilising and coking industries as
its raw material and by-products of manufacturing paper from straw
using ammonium sulfite can be turned into fertiliser. As part of
the Chinese Government's drive to increase efficiency and reduce
emissions, the production of paper using ammonium sulfite is being
promoted and accordingly, from 2014 to 2020, sales of ammonium
sulfite in China are expected to grow at an annual compound rate of
12%.
The Fundraising will predominantly be used to expand the
Company's production capacity of ammonium sulfite to enable it to
meet anticipated additional customer demand, the majority of which
is already contracted.
The market capitalisation of GTS on Admission at the Placing
Price is approximately GBP36.8 million.
Highlights
-- GTS is an established, profitable and fast growing specialty
chemical producer. It is the largest producer of ammonium sulfite
in China, representing 34.8 per cent. of Chinese output in 2013.
Ammonium sulfite is a key feedstock for the growing straw based
paper manufacturing industry, which is supported by the Government
to address, in part, the environmental impact of the disposal of
700 million tons of straw produced annually.
-- In July 2013 the Company expanded its business activities to
include the blending and distribution of lubricating oils. Demand
for higher quality lubricating oils has increased, driven in part
by increasing regulation of the market and consumer awareness. This
new business line has shown considerable growth since
commencement.
-- GTS's revenue has grown from RMB 174.2 million in 2011 to RMB
482.9 million in 2013, a compound annual growth rate of 66.5 per
cent. Over the same period, gross profit has risen from RMB 36.7
million to RMB 102.4 million, a compound annual growth rate of 67.0
per cent.
-- GTS is located in Shandong Province, one of the largest
provinces in China, ranked by GDP. Shandong is rich in downstream
industries, and the total output of its paper making industry,
chemical engineering industry, pharmaceutical industry and food
industry rank highest amongst the 31 provinces and municipalities
in China, and the second highest for paper output in China.
-- The Group's location has been important in building and
maintaining relationships both with customers and suppliers of raw
materials. The Group's largest customer, Shandong Tralin Paper
Industry Co., Ltd ("Tralin Paper"), is located approximately 10km
away from the Group's operation and has received funding to treble
its production capacity by the end of 2016.
-- GTS's planned increase in specialty chemicals production
capacity should allow the Group to meet contracted demand that is
expected to drive growth between 2014 and 2017.
-- The Directors expect GTS to benefit from the growing
awareness of environmental and pollution issues in China. In the
specialty chemicals segment, the Group recycles waste materials
from local coking and fertiliser plants, utilizing these in its
production processes. Waste sulfur formed approximately 93 per
cent. of the segment's sulfur purchases by weight in 2013. This
provides the Group with a significant raw material cost advantage.
The Group will also benefit from GTS's operating subsidiary's high
tech enterprise status, which will reduce the subsidiary's income
tax rate from 25 per cent. to 15 per cent. until 2019.
The Group's management have extensive combined experience of the
chemical industry, including pulp and paper chemicals, the steel
industry, China and the Chinese business environment including
accountancy, financial procedures and corporate governance.
SP Angel Corporate Finance LLP ("SP Angel") is acting as
Nominated Adviser and Broker to the Company.
Mr Cheng Liu, GTS Chemical Holdings plc, Chief Executive
Officer, said today:
"I am delighted to be able to announce our admission to AIM
today. Our IPO marks the start of the next major phase of
development for GTS. It will enable us to broaden our investor base
and assist in raising funds to expand our production
facilities.
Since we started production in 2007, we have grown to become
China's largest manufacturer of ammonium sulfite. We are an
established, profitable and fast growing company and in producing
our chemicals from waste, we generate cost savings and
environmental benefits, which are important to securing a more
sustainable future for China.
We now look forward to further developing the attractive
long-term growth opportunities in our business, with a view to
achieving continued profitable growth for the Company and our
stakeholders in the years ahead.
I would like to thank SP Angel for their whole hearted support
during this process."
Enquiries:
GTS Chemical Holdings plc Tel: +86 159 5935 8899
Roy Su, Chief Financial Officer Website: www.gtschemical.com
SP Angel Corporate Finance LLP Tel: +44 (0)20 3463 2260
(Nominated Adviser and Broker)
David Facey
Stuart Gledhill
Liz Yong
Kreab Gavin Anderson (PR Adviser) Tel: +44 (0)20 7074 1800
Robert Speed Email: gts@kreab.com
Renfeng Zhao
Marc Cohen
Natalie Biasin
SUMMARY INFORMATION ON GTS
Directors' Biographies
Andrew Harding, aged 52, Non Executive Chairman
Andrew qualified as a chartered accountant in 1986. In 1991, he
joined ACCA, the Association of Chartered Certified Accountants, as
a Training Manager, rising to Managing Director responsible for
Strategy and Development. In 2009, he joined CIMA, the Chartered
Institute of Management Accountants, where he is now Managing
Director. As part of his role at CIMA, he has gained significant
experience in China.
He holds a BSc in Economics and Accountancy, an MBA, and is a
FCMA and an honorary MSCPA in Macau.
Cheng Liu aged 41, Chief Executive Officer
Mr Liu has been involved with Shandong Tiantai Steel-Plastic
Co., Ltd., the Company's principal operating subsidiary, since it
was founded in 2005, becoming a majority shareholder in 2007. In
2010, he was recognised as an outstanding entrepreneur by the
Chinese Private Enterprise Joint Management Committee. Prior to
joining Shandong Tiantai, Mr Liu ran a trading business serving the
steel industry.
He holds a Diploma in Education and Management from Shandong
Normal University and an MBA from Macau City University. He is
currently pursuing a PhD degree in Management Philosophy at Renmin
University in China.
Xinlin (Roy) Su aged 41, Chief Financial Officer and Company
Secretary
Mr Su, an Australian citizen, was appointed as CFO of Shandong
Tiantai in 2013. His responsibilities include managing the Group's
internal controls and financial operations, including reviewing and
analysing the Group's financial results and implementing financial
forecasting.
He has more than 20 years of experience working in Australian,
multinational and Chinese state-owned companies, spanning the IT,
manufacturing, FMCG and finance sectors. Mr Su holds a Bachelor's
degree in Accounting from Xiamen University in China and a Master's
degree in Accounting from Macquarie University in Australia. He
also holds the Chinese Senior Accountant and the Australian CPA
(Certified Practising Accountant) qualification.
Xueying Zhang aged 39, Vice President
Miss Zhang joined Shandong Tiantai in 2011. She has more than 15
years of experience working in operations, finance and strategic
planning departments in both Chinese and foreign-invested
companies. Her responsibilities have included operations, finance
management, budgeting and financial supervision.
Miss Zhang holds a degree in law from Peking University as well
as the International Finance Manager (SIFM) qualification.
David Weir aged 67, Senior Non Executive Director
David is qualified as a chartered accountant and is a fellow of
the Institute of Chartered Accountants in England and Wales. He has
experience in both executive and non executive roles in UK public
companies, including as Group Chief Executive of Caird Group plc, a
waste management company which was quoted on the London Stock
Exchange. He is currently a non executive director of Dee Valley
Group plc (Premium Main Market of the LSE) and Renewable Energy
Holdings plc (AIM listed), as well as Webb Capital plc, a fund
management company. In a non executive capacity, he has held
positions of Chairman, Chairman of the Audit Committee and Chairman
of the Remuneration Committee.
Derek Welch aged 70, Non Executive Director
Derek has spent the majority of his career working for listed
chemicals and paints companies in the UK and Europe. From 2000 to
2011, Derek worked for AkzoNobel NV, the leading pulp and paper
chemical producer, in various roles including Director of Corporate
Strategy. He was responsible for planning and executing the
transformation of AkzoNobel, including the refocus of its chemicals
business and the $16bn acquisition of the British chemicals company
ICI plc. In 2011, Derek retired from AkzoNobel, continuing to work
with them on a consultancy basis until 2013. Previously, Derek
spent significant time in China with Courtaulds plc, establishing
joint ventures and overseeing chemical plant expansions. He was
previously a non executive director of ICI Pakistan, which was one
of the largest quoted companies in Pakistan, and is currently a
trustee of the ICI Pension Scheme in the UK.
Zhi (George) Zeng aged 42, Non Executive Director
George is a fellow of the Association of Chartered Certified
Accountants and a fellow of the Hong Kong Institute of Certified
Public Accountants. He trained at Arthur Anderson and since then
has held senior roles at a number of Hong Kong based companies.
Currently, he is CFO of HaiKe Chemical Group Ltd, an AIM listed
company based in the Shandong Province of China. He is fluent in
Chinese and English.
The Chinese ammonium sulfite market
The Chinese market for ammonium sulfite is dominated by the
paper industry, which accounted for 42 per cent. of Chinese usage
in 2013. Since 2010, the Chinese ammonium sulfite market has
experienced an annual growth rate of 15.8 per cent. per annum.
Growth dropped in 2013 as China initiated a reform of the paper
making industry, causing small, more heavily polluting enterprises
to be closed down, whilst larger companies using more
environmentally friendly technologies were expected to increase
their production capacity. The increase in production capacity by
these larger enterprises is expected to raise China's ammonium
sulfite demand going forward. From 2014 to 2020, China's demand for
ammonium sulfite, led by the paper industry (including Tralin
Paper), is expected to grow at an annual compound growth rate of 12
per cent. to 1.69 million tonnes.
Shandong Province is the largest consumer of ammonium sulfite in
China, at 26.0 per cent. (199,000 tonnes) of domestic sales in
2013. Neighbouring Hebei and Jiangsu provinces are the second and
fifth largest consumers of ammonium sulfite in China, accounting
for 15.3 per cent. and 8.4 per cent. of domestic usage
respectively.
The Group's ammonium sulfite production process
The Group is the largest manufacturer of ammonium sulfite in
China, with sales of 212,000 tonnes in solid form and 154,000
tonnes in liquid form in 2013, equating to a 34.8 per cent. market
share. In 2013, the top five producers in China accounted for 65.8
per cent. of sales. Amongst these top producers of ammonium
sulfite, the Group is the only enterprise that produces ammonium
sulfite as a primary product rather than as a by-product from
another chemical process, and the only company to use waste
products as its raw material.
The sulfite process for producing pulp
The sulfite process which is principally used with straw and
reed non-wood fibres, has a higher pulp yield, higher utilization
ratio of raw materials and lower levels of pollution than other
chemical processes such as the sulfate process. In addition,
by-products from the ammonium sulfite process can be turned into
organic fertilizers, whereas waste products from the sulfate
process have no further use and must be disposed of.
Despite China's vast size, it lacks forest resources, mainly due
to a lack of suitable land on which to grow trees. Only 9.6 per
cent of pulp output in 2013 was wood based. However, China is a
large farming country, producing approximately 700 million tonnes
of crop straw annually, of which about 490 million tonnes are
wheat, straw, maize and cotton, which are suitable for use in
non-wood pulping. In 2013, wheat straw accounted for the majority
of non-wood pulp production. Other raw materials used in the
production of non-wood pulp include bamboo, reed and cane
waste.
Rising lubricating oil standards in China
In recent years, China has been focussed on increasing standards
and reducing emissions. In 2008, China introduced two committees
responsible for lubricating oil standards. Since then, 120
standards have been established, with China's standards now
considered largely equivalent to the US SAE standards. In addition,
from 2013, all new cars sold or imported into China were required
to conform to the latest China IV Stage Vehicle Exhaust Emission
Standard IV emission standard (the "IV Standard"), with the
corresponding standard for lubricating oils increasing at the same
time. Correspondingly, sales of higher quality lubricating oils
conforming with the IV Standard are forecast to rise. Furthermore,
rationalisation of the marketplace is expected to occur at the
lower end of the market as smaller lower quality lubricating oil
producers undergo consolidation or elimination.
Disclaimer
This announcement is for information purposes only and does not
constitute or form part of any offer or invitation to underwrite,
sell or issue, or any solicitation of any offer to purchase or
subscribe for, any Ordinary Shares or other securities in the
capital of the Company, nor shall it (or any part of it), or the
fact of its distribution, form the basis of, or be relied on in
connection with or act as any inducement to enter into, any
contract whatsoever relating to any Ordinary Shares or
securities.
This announcement, for which the Company and the directors of
the Company are solely responsible, has been approved by SP Angel
Corporate Finance LLP ("SP Angel"), whose registered address is at
35-39 Maddox Street, London, W1S 2PP, solely for the purpose of
section 21 of the Financial Services and Markets Act 2000 (as
amended). SP Angel is authorised and regulated by the Financial
Conduct Authority, and is acting exclusively for the Company and no
one else in connection with the Placing and Admission and will not
regard any other person (whether or not a recipient of this
announcement) as a client in relation to the Placing or Admission
and will not be responsible to anyone other than the Company for
providing the protections afforded to its clients or for providing
advice in relation to the Placing, Admission or any transaction,
arrangements or other matters referred to in this announcement.
Neither SP Angel, nor any of its subsidiary undertakings,
affiliates or any of its directors, officers, employees, advisers,
agents or any other person accepts any responsibility or liability
whatsoever for, or makes any representation or warranty, express or
implied, as to the truth, accuracy, completeness or fairness of the
information or opinions contained in this announcement (or whether
any information has been omitted from the announcement) or any
other information relating to the Company, its subsidiaries or
associated companies, whether written, oral or in a visual or
electronic form, and howsoever transmitted or made available or for
any loss howsoever arising from any use of this announcement or its
contents or otherwise arising in connection therewith and any
liability therefore is expressly disclaimed.
Neither this announcement nor any copy of it may be taken or
transmitted, published or distributed, directly or indirectly, in,
into or from the United States of America (including its
territories and possessions, any state of the United States (the
"United States" or the "US")), Australia, Canada, Japan or South
Africa or to any persons in any of those jurisdictions or any other
jurisdiction where to do so would constitute a violation of the
relevant securities laws of such jurisdiction (each a "Restricted
Jurisdiction"). Any failure to comply with this restriction may
constitute a violation of United States, Australian, Canadian,
Japanese or South African securities laws or the securities laws of
any other Restricted Jurisdiction.
This announcement does not constitute, or form part of, any
offer or invitation to sell or issue, or any solicitation of any
offer to purchase or subscribe for any shares or other securities
in any Restricted Jurisdiction. The Placing and the distribution of
this announcement and other information in connection with the
Placing and Admission in certain jurisdictions may be restricted by
law and persons into whose possession this announcement, any
document or other information referred to herein comes should
inform themselves about and observe any such restrictions. Any
failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdiction.
This announcement is directed only at persons whose ordinary
activities involve them in acquiring, holding, managing and
disposing of investments (as principal or agent) for the purposes
of their business and who have professional experience in matters
relating to investments and are: (i) if in a member state of the
European Economic Area, qualified investors within the meaning of
article 2(1)(e) of the Prospectus Directive ("Qualified
Investors"); or (ii) if in the United Kingdom, Qualified Investors
and fall within: (a) article 19(5) (investment professionals) of
the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005, as amended (the "Order"); or (b) article 49(2)(a) to
(d) (high net worth companies, unincorporated associations, etc.)
of the Order (all such persons together being referred to as
"Relevant Persons"). The term "Prospectus Directive" means
Directive 2003/71/EC as amended and includes any relevant
implementing measures in each member state of the European Economic
Area.
This announcement must not be acted on or relied on by persons
who are not Relevant Persons. Persons distributing this
announcement must satisfy themselves that it is lawful to do so.
Any investment or investment activity to which this announcement
relates is available only to Relevant Persons and will be engaged
in only with Relevant Persons.
The Ordinary Shares referred to in this announcement have not
been, and will not be, registered under the US Securities Act of
1933 (as amended) (the "US Securities Act"), or under the
securities laws of any state or other jurisdiction of the United
States, and may not be offered, sold or transferred within the
United States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the US
Securities Act. The Ordinary Shares have not been and will not be
approved or disapproved by the US Securities and Exchange
Commission, any state securities commission or other regulatory
authority in the United States, nor have any of the foregoing
authorities passed upon or endorsed the merits of the Placing or
the accuracy or adequacy of this announcement. The relevant
clearances have not been, and will not be, obtained from the
Securities Commission of any provision or territory of Canada; no
document in relation to the Placing has been, or will be, lodged
with, or registered by, the Australian Securities and Investments
Commission; the relevant clearances have not, and will not be,
obtained from the Johannesburg Stock Exchange and no registration
statement has been, or will be, filed with the Japanese Ministry of
Finance in relation to the Placing or the Ordinary Shares.
Accordingly, the Ordinary Shares may not, directly or indirectly,
be offered or sold within the United States, Canada, Australia,
South Africa or Japan or offered or sold to any resident, national
or citizen of the United States, Canada, Australia, South Africa or
Japan.
Before purchasing any Ordinary Shares, persons viewing this
announcement should ensure that they fully understand and accept
the risks set out in the Admission Document. Any subscription for
or purchase of Ordinary Shares in the Placing should be made solely
on the basis of the information contained in the final Admission
Document. The information in this announcement is for background
purposes only and does not purport to be full or complete. No
reliance may or should be placed by any person for any purpose
whatsoever on the information contained in this announcement or on
its completeness, accuracy or fairness. Investments to which this
announcement relates may expose an investor to a significant risk
of losing all of the amount invested. This announcement does not
constitute a recommendation concerning the Placing. The value of
shares and any income expected from them can decrease as well as
increase. Potential investors should consult a professional advisor
as to the suitability of the Placing for the person concerned.
Forward Looking Statements
Certain statements contained within the announcement are forward
looking statements and are based on current expectations, estimates
and projections about the potential returns of GTS and industry and
markets in which GTS operates, the Directors' beliefs and
assumptions made by the Directors. Words such as "expects",
"anticipates", "should", "intends", "plans", "believes", "seeks",
"estimates", "projects", "pipeline" and variations of such words
and similar expressions are intended to identify such forward
looking statements and expectations. These statements are not
guarantees of future performance or the ability to identify and
consummate investments and involve certain risks, uncertainties,
outcomes of negotiations and due diligence and assumptions that are
difficult to predict, qualify or quantify. Therefore, actual
outcomes and results may differ materially from what is expressed
in such forward looking statements or expectations. Among the
factors that could cause actual results to differ materially are:
the general economic climate, competition, interest rate levels,
loss of key personnel, the result of legal and commercial due
diligence, the availability of financing on acceptable terms and
changes in the legal or regulatory environment.
These forward-looking statements speak only as of the date of
this announcement. GTS expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statements contained herein to reflect any change
in GTS's expectations with regard thereto, any new information or
any change in events, conditions or circumstances on which any such
statements are based, unless required to do so by law or any
appropriate regulatory authority.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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