Thursday November 14 11:54 AM EDT
China Resources Reports Strong Third Quarter Earnings
Third Quarter Net Income Increases Three-Fold
HONG KONG--(BUSINESS WIRE)--Nov. 14, 1996--
Shareholders To Vote On Proposed One-For-Ten Reverse Stock Split
China Resources Development, Inc. (Nasdaq Small-Cap: CHRB), a U.S. Corporation with rubber and other
agricultural raw material operations in the People's Republic 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 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 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 operations. Significantly enhanced gross profit and operating margins
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 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 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 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 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 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 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, and procures production materials and supplies for major customers. The Hainan
Province supplies over 60% of the PRC's natural rubber production.
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
(a) Based on an exchange rate of U.S.$1.00=Rmb8.30 on September
30, 1996.
CONTACT: Edward Wong
Financial Controller
011/852/28107205
or
Joseph N. Jaffoni, Robert L. Rinderman
Jaffoni & Collins Incorporated
212/505-3015 or jciir@aol.com |
