04/01 07:05 CHINA RESOURCES REPORTS 1996 YEAR-END AND FOURTH QUARTER
EARNINGS
BUSINESS EDITO
( BW)(CHINA-RESOURCES)(CHRB) China Resources reports 1996 year-end and fourth quarter earnings Business
Editors HONG KONG--(BUSINESS WIRE)--April 1, 1997-- Year-End Net Income Rises 87% to Record $4.32 Million
China Resources Development, Inc. (Nasdaq: CHRB), a leading natural rubber distributor based in the People's
Republic of China (PRC), today announced operating results for the year and fourth quarter ended December 31,
1996. 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 1996 Form
10-K report, which will include audited financial results, on or before April 15, 1997. Results have been
converted from Renminbi (the lawful currency of the PRC) to U.S. dollars (for information purposes), at the
prevailing exchange rate on December 31, 1996 (U.S. $1.00Rmb8.30). For the year ended December 31, 1996, net
sales were $220.2 million, compared to net sales of $235.8 million in 1995. The revenue decline in 1996 was
primarily attributable to a decline in natural rubber sales and a drop in natural rubber prices, partially offset by
an approximate 72% increase in year-over-year sales derivedfrom other agricultural products, materials and
supplies procurement. Enhanced gross profit and operating margins resulting from the Company's diversification
into the trading of other agricultural products in 1996 contributed to an 87% increase in net income to $4.32
million, or $1.18 per share, compared with net income of $2.31 million, or $1.87 per share, in the comparable
1995 period, reflecting the impact of shares converted pursuant to the Company's 1996 private placement via
Series B Convertible Preferred Shares, anda one-for-ten reverse stock split that was effective on December 31,
1996 and implemented on January 16, 1997. Per share results are based on 3,670,000 and 1,233,000 weighted
average shares and common stock equivalents outstanding in 1996 and 1995, respectively. As of April 1, 1997,
China Resources had a total of approximately 5.78 million common shares outstanding. For the three months
ended December 31, 1996, net sales were $65.7 million, compared with $78.3 million during the year-ago
fourthquarter. Fourth quarter net income increased 19% to $0.85 million, or $0.23 per share, compared with net
income of $0.71 million, or $0.58 per share, in the comparable 1995 period. Per share results are based on
3,670,000 and 1,233,000 weighted average shares and common stock equivalents outstanding for the 1996 and
1995 periods, respectively. Yang Jiangang, chairman of China Resources Development, Inc., commented on the
results, "Our net income rose approximately 87% in 1996 despite unfavorable natural rubber market conditions in
the PRC.During the year an influx of imported natural rubber weakened demand for domestic rubber and led to a
corresponding decline in rubber pricing. However, our diversification into the distribution of otherhigher margin
agricultural products as well as the hedging of our rubber inventory through the use of rubber futures contracts,
improved the Company's overall gross profit margin in 1996. We expect to continue to increase our distribution
of these and other higher margin products throughout 1997. Although natural rubber trading continues to be our
core business, we expect that its overallcontribution to Company results will continue to decline as a percentage
of total revenue and income as we further diversify our revenue sources." Mr. Yang added, "The recently announced
restructuring of operations at our Hainan Agricultural Resources Company Limited subsidiary (HARC), including
the streamlining of operations and elimination of duplicative job functions, has begun to benefit our financial
performance. These actions have resulted in a substantial decrease in staffing and the consolidation of
distribution operationsfrom 31 divisions - essentially one per product area - to a few principal divisions.
Similarly, our PRC operations were consolidatedinto one central facility. Lastly, indications from the first
quarter of 1997 point to continued year-over-year net income improvements." China Resources Development, Inc.,
with offices in Hong Kong 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, liquid latex and other
agricultural products, and procures production materials and suppliesfor major customers. The Hainan Province
supplies over 60% of the PRC's natural rubber production. Additional corporate information isavailable at the
Company's web site - www.chrb.com Except for the historical information in this press release, it includes
forward-looking statements 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.
reminder: China Resources management will conduct a conference call to discuss fourth quarter and year-end
earnings results on Wednesday, April 2, 1997 at 10:00 a.m. (EST). The dial-in number for the U.S. is
800/633-8421 while participants outside the U.S. may call 212/346-0267. -0-
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
Condensed Consolidated Income Statement
(Unaudited)
(Amounts in thousands, except share and per share data)
Three Months Ended Year Ended
December 31, December 31,
1996 1995 1996 1996 1995 1996
RMB RMB US$(a) RMB RMB US$(b)
Net sales 544,992 649,743 65,662 1,827,499 1,957,243 220,181
Income before
income taxes 24,469 13,071 2,948 84,327 44,237 10,160
Income taxes (6,079) (1,898) (732) (13,991) (6,909) (1,686)
Net income
before
minority
interests 18,390 11,173 2,216 70,336 37,328 8,474
Minority
interests (11,305) (5,240) (1,362) (34,513) (18,153) (4,158)
Net income 7,085 5,933 854 35,823 19,175 4,316
Earnings per
share(b) 1.93 4.81 0.23 9.76 15.55 1.18
Weighted
average number
of common and
common stock
equivalent
shares
out-
standing(b)3,670,000 1,233,000 3,670,000 3,670,000 1,233,000 3,670,000
(a) Based on an exchange rate of U.S. $1.00Rmb8.30 on December
31, 1996. 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.
(b) Adjusted for a one-for-ten reverse stock split of the
Company's outstanding common stock that was effective on December 31,
1996 and implemented on January 16, 1997.
NOTE: The above results are preliminary and unaudited. China
Resources has applied for an extension with the SEC, and plans to
file its 1996 Form 10-K report on or before April 15, 1997.
--30--rg/ny*
CONTACT: Edward Wong
Financial Controller
011/852/28107205 or fc@chrb.com
or
Joseph N. Jaffoni, Robert L. Rinderman
Jaffoni & Collins Incorporated
212/505-3015 or jci ir@aol.com
KEYWORD: NEW YORK
INDUSTRY KEYWORD: CHEMICALS/PLASTICS EARNINGS
REPEATS: New York 212-752-9600 or 800-221-2462; Boston 617-236-4266 or
800-225-2030; SF 415-986-4422 or 800-227-0845; LA 310-820-9473
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