China Resources Reports 1997 Year End and Fourth Quarter Earnings.HONG KONG--(BUSINESS WIRE)--April 14, 1998--China Resources Development Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CHRB CHRB California Horse Racing Board CHRB Community Housing Resource Board (Montana) CHRB Commonwealth Health Research Board ), a leading natural rubber distributor based in the People's Republic People's Republic n. A political organization founded and controlled by a national Communist party. of China (PRC), today announced operating results for the year and fourth quarter ended Dec. 31, 1997. Financial results are preliminary and unaudited; however, management believes that all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The company has filed an extension with the Securities and Exchange Commission and expects to file its 1997 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. report, which will include audited financial results, on or before April 15, 1998. Results have been converted from Renminbi (the lawful currency of the PRC) to U.S. dollars (for information purposes), at the prevailing exchange rate as quoted by the People's Bank of China The People's Bank of China (PBC or PBOC) (Simplified Chinese: 中国人民银行; Traditional Chinese: on Dec. 31, 1997 (U.S. $1.00 = Rmb8.28). For the year ended Dec. 31, 1997, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight were $138.8 million, compared to net sales of $220.7 million in 1996. The revenue decline in 1997 was primarily due to a drop in natural rubber price, weak consumption market and reduced trading of agricultural products other than rubber. The currency deflation deflation: see inflation. deflation Contraction in the volume of available money or credit that results in a general decline in prices. A less extreme condition is known as disinflation. in Thailand, Indonesia and Malaysia (three of the world's leading natural rubber producing countries) impacted the worldwide natural rubber market, pushing the average per-ton price down in 1997 to $1,160, versus $1,530 in the comparable 1996 period. Gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. also fell significantly because of a reduction in the trading of agricultural products which had made a high gross profit margin contribution in 1996. The reduction in gross profit, resulting from the decrease in net sales and profit margins, caused a 49% decrease in net income to $2.2 million for the year ended Dec. 31, 1997, compared with net income of $4.3 million in 1996. Basic earnings per share for years ended Dec. 31, 1997 and 1996 were $0.37 and $1.22, based on 5,958,171 and 3,533,512 weighted average number of common shares outstanding in 1997 and 1996, respectively. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the years ended Dec. 31, 1997 and 1996 were $0.37 and $1.21, based on 5,975,622 and 3,575,958 weighted average number of common shares and dilutive potential common shares outstanding in 1997 and 1996, respectively. As of April 1, 1998, the company had a total of approximately 6.03 million common shares outstanding. For the three months ended Dec. 31, 1997, net sales were $30.8 million, compared with $65.8 million in the comparable 1996 period. Net loss in the fourth quarter of 1997 was $84,000, compared with net income of $850,000 in the comparable 1996 period. Basic loss per share for the fourth quarter of 1997 was was $0.01, compared with earnings per share of $0.24 in the comparable 1996 period, based on weighted average number of common shares of 5,958,171 and 3,533,512 in 1997 and 1996, respectively. Diluted loss per share for the fourth quarter of 1997 was $0.01, compared with earnings per share of $0.24 in the comparable 1996 period, based on 5,975,622 and 3,575,958 weighted average number of common shares and dilutive potential common shares outstanding in 1997 and 1996, respectively. Li Shunxing, president of China Resources China Resources (Chinese: 華潤; HKSE: 0291 ) is a group of companies in wide variety of business in Hong Kong and mainland China. Some of its companies use the name the acronym CRC. Development Inc., commented on the results: "The unfavorable market conditions that have been impacting our operations continue to persist, and the Southeast Asian financial crisis has led to sales erosion in 1997. We have been successful in mitigating some of the adverse effects by hedging our exposure to falling natural rubber prices. Additionally, our corporate restructuring and streamlining program, instituted in the 1996 fourth quarter, has contributed to improved corporate efficiency and lower selling, general and administrative expenses for the year ended Dec. 31, 1997. The economic problems in Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. continue, but our conservative management policy, low gearing, tight financial controls and strong cash position put us in a very good position to face any possible difficulties. 1998 will be a difficult year. We shall continue to be on the lookout for in search of; looking for. See also: Lookout opportunities to expand business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets in a prudent manner. Difficult times may provide an opportunity to find and explore new businesses. Our company will continue to look for suitable opportunities which can enhance the asset and earning bases of the company." China Resources Development Inc., with offices in Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. and the Hainan Province in the PRC, through a subsidiary, owns a 56% interest in Hainan Zhongwei Agricultural Resources Co. Ltd. ("HARC"). HARC markets and distributes dry, natural rubber and liquid latex latex, emulsion of a polymer (e.g., rubber) in water (see colloid). Natural latexes are produced by a number of plants, are usually white in color, and often contain, in addition to rubber, various gums, oils, and waxes. , and procures production materials, supplies and other agricultural products. The Hainan Province supplies approximately 56% of the PRC's natural rubber production. -0- Except for the historical information in this press release, it includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties, including, but not limited to the impact of weather, competitive pressures from within the natural rubber and motorcycle industries, quarterly fluctuations in results, dividend income receivable, the management of growth, market dynamics and other risks detailed from time to time in the company's Securities and Exchange Commission filings. Actual results may differ materially from management expectations. -0-
CHINA RESOURCES DEVELOPMENT INC., AND SUBSIDIARIES
Consolidated Income Statement
(Unaudited)
(Amounts in thousands, except per share data)
Three Months Ended Year Ended
Dec. 31, Dec. 31,
1996 1997 1997 1996 1997 1997
Rmb Rmb (a)U.S.$ Rmb Rmb (a)U.S.$
Net sales 544,992 255,409 30,846 1,827,499 1,149,171 138,789
Income before
income
taxes 24,268 4,131 499 84,326 52,561 6,348
Income
taxes (6,079) (1,839) (222) (13,991) (9,798) (1,183)
Net income
before
minority
interests 18,389 2,292 277 70,335 42,763 5,165
Minority
interests(11,305) (2,986) (361) (34,513) (24,563) (2,967)
Net income 7,084 (694) (84) 35,822 18,200 2,198
Earnings/
(loss) per
share
Basic 2.00 (0.12) (0.01) 10.14 3.05 0.37
Diluted 1.98 (0.12) (0.01) 10.02 3.04 0.37
(a) Based on an exchange rate of U.S.$1.00 = Rmb8.28 on Dec. 31, 1997.
Amounts have been converted from Renminbi to U.S. dollars for
convenience, and no representation is made that Rmb amounts could have
been, or could be, converted into U.S. dollars at the stated rate or
any other rate.
Note: The above results are preliminary and unaudited
CONTACT: China Resources Development Inc. Edward Wong Edward Wong (born 14 November, 1972 in Washington, D.C.) is an American journalist and a foreign correspondent for The New York Times. He started out as an intern in 1998 and eventually worked at the Metro, Sports, and Business desks. 011-852-2810-7205 |
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