China Resources Reports Strong Third Quarter Earnings; Third Quarter Net Income Increases Three-Fold.HONG n. 1. A mercantile establishment or factory for foreign trade in China, as formerly at Canton; a succession of offices connected by a common passage and used for business or storage. KONG--(BUSINESS WIRE)--Nov. 14, 1996-- Shareholders To Vote On Proposed One-For-Ten Reverse Stock Split 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. (Nasdaq Small-Cap Small-cap A stock with a small capitalization, meaning a total equity value of less than $500 million. small-cap 1. Of or relating to the common stock of a relatively small firm having little equity and few shares of common stock : CHRB CHRB California Horse Racing Board CHRB Community Housing Resource Board (Montana) CHRB Commonwealth Health Research Board ), a U.S. Corporation with rubber and other agricultural raw material operations 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 third quarter and nine months ended September 30, 1996. The Company's Board of Directors also announced that shareholders of record on December 13, 1996 will be asked to approve a proposed one-for-ten reverse stock split at the Company's annual shareholders meeting on December 30, 1996. The reverse split is intended to result in a share price range that it is more attractive to certain institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. and other members of the investing public, as well as to keep it in compliance with Nasdaq listing maintenance requirements. For the nine months ended September 30, 1996, sales were Rmb1,282.5 million (U.S.$154.5 million) (Rmb or Renminbi is the lawful Licit; legally warranted or authorized. The terms lawful and legal differ in that the former contemplates the substance of law, whereas the latter alludes to the form of law. A lawful act is authorized, sanctioned, or not forbidden by law. currency of the PRC; the exchange rate on September 30, 1996 was U.S.$1.00= Rmb8.30), compared with sales of Rmb1,307.5 million (U.S.$157.5 million) in the year-earlier period. A strategic decision to decrease rubber sales during the 1996 nine months period was largely offset by a substantial increase in sales from the Company's higher margin materials procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. operations. Significantly enhanced gross profit and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: in the first nine months of 1996 caused net income to increase 117% to Rmb28.7 million (U.S.$3.5 million), or Rmb0.98 (U.S.$0.12) per share on a primary basis and Rmb0.91 per share (U.S.$0.11) on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, compared with net income of Rmb13.2 million ($1.6 million), or Rmb1.10 (U.S.$0.13) per share, in the comparable 1995 period. Per share results are based on 29,395,885 primary and 31,635,071 fully diluted weighted average shares outstanding compared to a weighted average of 12,000,000 primary and fully-diluted shares outstanding in the 1996 and 1995 nine month periods, respectively. For the three months ended September 30, 1996, sales declined to Rmb486.8 million (U.S.$58.6 million), compared with Rmb709.4 million (U.S.$85.5 million) during the year-ago third quarter. The decrease in sales during the period was primarily due to the Company's decision to reduce third quarter rubber sales in anticipation of improved rubber pricing in the fourth quarter, a period of seasonally lower rubber output. Third quarter net income increased more than three-fold to Rmb15.6 million (U.S.$1.9 million), or Rmb0.53 (U.S.$0.06) per share on a primary basis and Rmb0.49 per share (U.S.$0.06) on a fully diluted basis, compared with net income of Rmb5.1 million (U.S.$0.6 million), or Rmb0.43 (U.S.$0.05) per share, in the comparable 1995 period. Per share results are based on 29,395,885 primary and 31,635,071 fully diluted weighted average shares outstanding and a weighted average of 12,000,000 primary and fully-diluted shares outstanding for the 1996 and 1995 three month periods, respectively. Yang yang (yang) [Chinese] in Chinese philosophy, the active, positive, masculine principle that is complementary to yin; see yin, under principle. Jiangang, chairman of China Resources Development, Inc., commented on the results, "Notwithstanding our strategic decision to hold back rubber sales in the 1996 third quarter and ninemonths periods, we were able to achieve significant net income gains for both the quarter and nine months periods. These gains reflect improving 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. being achieved in our rubber operations, as well as an expanding emphasis on our highermargin agricultural commodities procurement business. Although 1996 nine months sales were essentially flat compared to last year, our operating improvements have enabled us to already surpass last year's full- year net income by more than 50%. Additionally, we look to an even stronger performance for the full year 1996, particularly as we expect to generate incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. sales in the fourth quarter from the sale of inventory that was held back in the third quarter due to pricing issues." 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 industry, quarterly fluctuations in results, 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. 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 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 and supplies for major customers. The Hainan Province supplies over 60% of the PRC's natural rubber production. -0-
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
Condensed Consolidated Income Statements (Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1996 1995 1996
RMB RMB US$(a) RMB RMB US$(a)
Sales 486,788 709,361 58,649 1,282,507 1,307,500 154,519
Cost of Sales 445,430 685,638 53,666 1,165,224 1,255,379 140,388
Gross Profit 41,358 23,723 4,983 117,283 52,121 14,131
Depreciation of
fixed assets 484 625 58 1,692 1,817 204
Selling and
administrative
expenses 14,132 10,962 1,703 39,305 33,690 4,736
Operating income 26,742 12,136 3,222 76,286 16,614 9,191
Financial
income/
(expenses), net (10,122) (975)(1,220) (31,798) (3,388) (3,831)
Other income
(losses), net 11,127 2,488 1,341 15,370 17,940 1,852
Income before
income taxes 27,747 13,649 3,343 59,858 31,166 7,212
Income taxes 2,335 2,399 281 7,912 5,011 953
Net income before
minority
interests 25,412 11,250 3,062 51,946 26,155 6,259
Minority
interests 9,807 6,106 1,182 23,208 12,913 2,796
Net income 15,605 5,144 1,880 28,738 13,242 3,463
Primary earnings
per share 0.53 0.43 0.06 0.98 1.10 0.12
Fully diluted
earnings per
share 0.49 0.43 0.06 0.91 1.10 0.11
Weighted average
number of
common and
common equivalent
primary shares
outstanding 29,396 12,000 29,396 29,396 12,000 29,396
Weighted average
number of
common and
common equivalent
fully-diluted
shares
outstanding 31,635 12,000 31,635 31,635 12,000 31,635
-0-
(a) Based on an exchange rate of U.S.$1.00=Rmb8.30 on September
30, 1996.
CONTACT: 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. Financial Controller 011/852/28107205 or Joseph N. Jaffoni, Robert L. Rinderman Jaffoni & Collins Incorporated 212/505-3015 or jciir@aol.com |
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