China Zirconium Limited
TSX : CZL

China Zirconium Limited

May 15, 2009 12:42 ET

China Zirconium Limited: First Quarterly Results Announcement for the Three Months Ended 31 March 2009

TORONTO, ONTARIO--(Marketwire - May 15, 2009) - This announcement is made by China Zirconium Limited (TSX:CZL)(HKEX:0395) on a voluntary basis to comply with the listing requirement in Canada.

The financial data for the three months ended 31 March 2009 are based on the internal records and management accounts of the Group. These financial statements have not been audited, reviewed or otherwise verified for accuracy and completeness of information by the auditors of the Company.

The Company's shareholders and potential investors are urged to exercise caution in dealing in the shares of the Company and are recommended to consult their own professional advisers if they are in doubt as to their investment positions.

The Board of Directors (the "Board") of China Zirconium Limited (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the three months ended 31 March 2009 together with the comparative figures. The condensed consolidated interim financial statements (the "Interim Financial Statements") have not been audited, but have been reviewed by the Company's Audit Committee.



CONDENSED CONSOLIDATED INCOME STATEMENT
For the three months ended 31 March 2009

Unaudited
Three months ended 31 March
2009 2008
Note RMB'000 RMB'000
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Turnover 24,930 130,137

Cost of sales (29,610) (97,074)
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Gross (loss)/profit (4,680) 33,063

Other income 555 761
Distribution costs (767) (3,227)
Administrative expenses (4,132) (4,168)
Other operating expenses (280) (986)
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(Loss)/Profit from operations (9,304) 25,443
Net finance income/(costs) 195 (2,150)
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(Loss)/Profit before taxation (9,109) 23,293

Income tax - (6,439)
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(Loss)/Profit for the period (9,109) 16,854
--------------- -------------
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Attributable to:
Equity holders of the Company (9,041) 16,854
Minority interest (68) -
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(9,109) 16,854
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Dividends - -
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(restated)
Basic (loss)/earnings per share (RMB) 1 (0.13) 0.24
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Diluted (loss)/earnings per share (RMB) 1 (0.13) N/A
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CONDENSED CONSOLIDATED BALANCE SHEET
At 31 March 2009

As at As at
31 March 31 December
2009 2008
(unaudited) (audited)
RMB'000 RMB'000
----------------------------------------------------------------------------

Non-current assets

Property, plant and equipment 297,946 303,186
Construction in progress 89,656 85,938
Lease prepayments 67,544 68,037
Intangible assets 109 174
Long-term prepayments 35,245 35,119
Deferred tax assets 6,246 6,246
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496,746 498,700
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Current assets

Inventories 49,481 48,263
Trade and other receivables and prepayments 44,485 52,681
Amount due from related parties 75 170
Lease prepayments 1,629 1,617
Cash and cash equivalents 273,949 278,403
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369,619 381,134
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Total assets 866,365 879,834
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CONDENSED CONSOLIDATED BALANCE SHEET
At 31 March 2009

As at As at
31 March 31 December
2009 2008
(unaudited) (audited)
RMB'000 RMB'000
----------------------------------------------------------------------------

Current liabilities

Trade and other payables 57,775 54,167
Amounts due to related parties 9,634 10,185
Interest-bearing borrowings - 6,832
Current taxation 18,136 19,637
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85,545 90,821
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Net current assets 284,074 290,313
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Non-current liabilities

Deferred tax liabilities 530 530
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NET ASSETS 780,290 788,483
--------------- -------------
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Capital and reserves

Share capital 74,242 74,242
Retained profits 352,959 362,000
Reserves 348,153 348,382
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Total equity attributable to equity holders of
the Company 775,354 784,624
Minority interest 4,936 3,859
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TOTAL EQUITY 780,290 788,483
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Note:

1. (Loss)/Earnings Per Share

For the purposes of calculating the basic and diluted earnings per share, the weighted average number of ordinary shares outstanding for the three months ended 31 March 2008 has been retrospectively adjusted for the consolidation of the Company's ordinary shares on a 10 for 1 basis which took place on 30 June 2008.

OVERALL PERFORMANCE

The global economic downturn has had significant adverse impact on the Company's business. The Company's total turnover for the three months ended 31 March 2009 decreased by 81% as compared to the same period in the prior year. Sales in all three major business segments decreased substantially in this period. The dramatic economic downturn in the Company's major overseas markets (the United States, Japan and Netherland/Europe) has led to the significant drop in sales of zirconium chemicals. Sales of new energy materials and rechargeable batteries were indirectly affected by the declining demand for electronic products and small electrical appliances which use rechargeable batteries. The decrease in sales orders led to a low utilisation rate of the Company's zirconium chemicals production facilities which in turn has caused the unit cost of the zirconium chemical products to increase significantly. As a result, the Company, for the first time in its operating history, reported a negative gross profit for the three months ended 31 March 2009.

The Company suffered a net loss in the first quarter of 2009. During the three months ended 31 March 2009, there was no change in the income tax rate applicable to the Company's subsidiaries in the PRC and Indonesia. Since all of the Company's subsidiaries did not generate taxable profit for the three months ended 31 March 2009, no tax provision has been made in this period.

Despite the substantial decrease in the Company's sales and operating results, the Company continued to maintain a strong financial position. The Company has no long-term or short-term debt as of 31 March 2009. Working capital decreased by 2% from RMB290 million as at 31 December 2008 to RMB284 million as at 31 March 2009. As of 31 March 2009, the current ratio of 4.3:1 remained comparable to the current ratio as of 31 December 2008. The minority interest reported in the balance sheet as at 31 March 2009 represented the contribution made by the minority shareholder of the Company's joint venture in Indonesia (the "Indonesian Joint Venture") after taking into account its share of the results of the Indonesian Joint Venture for the three months ended 31 March 2009.

The Executive Directors and senior management of the Company will proactively impose measures to focus on the development of mining resources and mining products trading business. In addition, the Company will also speed up the development of its high technology products with intellectual property rights.

CAUTION STATEMENT

The Company's shareholders and potential investors should note that all the figures contained herein are unaudited. Accordingly, figures contained in this announcement should in no way be regarded as any assurance on the financial results of the Group for the period ended 31 March 2009 and the financial position as at 31 March 2009.

The Company's shareholders and potential investors are urged to exercise caution in dealing in the shares of the Company and are recommended to consult their own professional advisers if they are in doubt as to their investment positions.

By order of the Board

Yang Xin Min, Chairman

Hong Kong, 15 May 2009

As at the date of this announcement, the Directors of the Company are Mr. Yang Xin Min, Ms. Huang Yue Qin, Mr. Zhou Quan and Mr. Li Fu Ping as Executive Directors, Mr. Cheng Faat Ting Gary, Mr. Andrew Leinwand, Mr. Carl Steiss and Mr. Victor Tong as Independent Non-Executive Directors.

(i) For identification purposes only

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