2016 INTERIM REPORT Tiande Chemical Holdings Limited (incorporated in the Cayman Islands with limited liability) (Stock Code: 609)

Transcription

1 2016 INTERIM REPORT Tiande Chemical Holdings Limited (incorporated in the Cayman Islands with limited liability) (Stock Code: 609)

2 目錄 Contents 2 Corporate Information 5 Condensed Consolidated Income Statement 6 Condensed Consolidated Statement of Comprehensive Income 7 Condensed Consolidated Statement of Financial Position 9 Condensed Consolidated Statement of Cash Flows 11 Condensed Consolidated Statement of Changes in Equity 13 Notes to the Condensed Consolidated Financial Statements 42 Management Discussion and Analysis 62 Other Information Interim Report 2016 Tiande Chemical Holdings Limited 1

3 公司資料 Corporate Information 執行董事 獨立非執行董事 審核委員會 薪酬委員會 提名委員會 安全及環保委員會 BOARD OF DIRECTORS Executive Directors Mr. Gao Feng (Chairman) Mr. Guo Xitian (General manager) Mr. Liu Hongliang Mr. Wang Zijiang Independent Non-Executive Directors Mr. Gao Baoyu Mr. Leung Kam Wan Mr. Liu Chenguang BOARD COMMITTEES Audit Committee Mr. Leung Kam Wan (Chairman) Mr. Gao Baoyu Mr. Liu Chenguang Remuneration Committee Mr. Liu Chenguang (Chairman) Mr. Gao Baoyu Mr. Leung Kam Wan Mr. Gao Feng (appointed on 1 July 2016) Mr. Liu Hongliang (resigned on 1 July 2016) Nomination Committee Mr. Gao Feng (Chairman) (appointed as a chairman on 1 July 2016) Mr. Leung Kam Wan Mr. Liu Chenguang Mr. Liu Hongliang (resigned as a chairman on 1 July 2016) Safety and Environmental Protection Committee Mr. Guo Xitian (Chairman) Mr. Gao Baoyu Mr. Sun Zhenmin 2 天德化工控股有限公司 二零一六年中期報告

4 公司資料 Corporate Information ( ) Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY Cayman Islands A COMPANY SECRETARY Ms. Lau Wai Chun INDEPENDENT AUDITOR BDO Limited PRINCIPAL BANKERS Bank of China (Hong Kong) Limited Agricultural Bank of China, Weifang High Tech Industry Development Zone Branch China Construction Bank, Weifang Branch HONG KONG SHARE REGISTRAR AND TRANSFER OFFICE Computershare Hong Kong Investor Services Limited Shops on the 17th Floor Hopewell Centre 183 Queen s Road East Wan Chai Hong Kong REGISTERED OFFICE Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY Cayman Islands PRINCIPAL PLACE OF BUSINESS IN HONG KONG Room 2204A on the 22nd Floor Bank of America Tower 12 Harcourt Road Central Hong Kong Interim Report 2016 Tiande Chemical Holdings Limited 3

5 公司資料 Corporate Information : A lauren.cheng@tdchem.com HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN THE PEOPLE S REPUBLIC OF CHINA (THE PRC ) Weifang High Tech Industry Development Zone Weifang City Shandong Province The PRC COMPANY WEBSITE STOCK CODE The Stock Exchange of Hong Kong Limited (the Stock Exchange ): 609 INVESTOR RELATIONS Room 2204A on the 22nd Floor Bank of America Tower 12 Harcourt Road Central Hong Kong Tel: Fax: lauren.cheng@tdchem.com 4 天德化工控股有限公司 二零一六年中期報告

6 簡明綜合收益表 Condensed Consolidated Income Statement 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 Notes RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) Revenue 4 595, ,237 Cost of sales (391,236) (420,577) 毛利 Gross profit 204, ,660 Other income 4 6,291 6,259 Selling expenses (22,140) (18,283) Administrative and other operating expenses (21,985) (20,545) Finance costs 5 (382) (355) Fair value gain on derivative financial instruments 1, Share of loss of a joint venture (2,307) (2,993) 除所得稅前溢利 Profit before income tax 6 165, ,254 Income tax expense 7 (49,373) (35,640) 本期溢利 Profit for the period 115,953 92,614 應佔本期溢利 : Profit for the period attributable to: Owners of the Company 115,953 92,614 Non-controlling interests 115,953 92,614 Earnings per share for profit attributable to owners of the Company for the period 9 Basic and diluted 人民幣 元 RMB0.137 RMB0.109 Interim Report 2016 Tiande Chemical Holdings Limited 5

7 簡明綜合全面收益表 Condensed Consolidated Statement of Comprehensive Income 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) 本期溢利 Profit for the period 115,953 92,614 其他全面收益 Other comprehensive income 其後可能重新分類 Items that may be 至收益表之項目 : reclassified subsequently to the income statement: Exchange gain/(loss) on translation of financial statements of foreign operations 243 (1,090) 本期其他全面收益 本期全面收益總額 Other comprehensive income for the period 243 (1,090) Total comprehensive income for the period 116,196 91,524 應佔本期全面收益 Total comprehensive income 總額 : attributable to: Owners of the Company 116,196 91,524 Non-controlling interests 116,196 91,524 6 天德化工控股有限公司 二零一六年中期報告

8 簡明綜合財務狀況表 Condensed Consolidated Statement of Financial Position 二零一六年 六月三十日 30 June 31 December 人民幣千元 Notes RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Audited) 資產與負債 ASSETS AND LIABILITIES 非流動資產 Non-current assets Property, plant and equipment , ,933 Prepaid land lease payments 49,475 50,122 Investment properties 15,730 15,730 Deposits paid for acquisition of property, plant and equipment 7,174 3,876 Interests in a joint venture 27,647 31,576 Finance lease receivable 13,015 13,413 Deferred tax assets 2,565 2, , ,072 流動資產 Current assets Inventories 106,481 96,301 Trade and bills receivable , ,631 Prepayments and other receivables 12 15,208 13,758 Amount due from a joint venture 45,938 40,546 Finance lease receivable Pledged bank deposits 3,043 Bank and cash balances 172, , , ,694 Interim Report 2016 Tiande Chemical Holdings Limited 7

9 簡明綜合財務狀況表 Condensed Consolidated Statement of Financial Position 二零一六年 六月三十日 30 June 31 December 人民幣千元 Notes RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Audited) 流動負債 Current liabilities Trade payables 13 34,454 23,176 Accruals and other payables 14 79, ,556 Bank borrowings 72,391 32,072 Current tax liabilities 23,499 19, , ,584 流動資產淨值 Net current assets 565, ,110 總資產減流動負債 Total assets less current liabilities 1,267,630 1,205,182 非流動負債 Non-current liabilities Deferred income 10,541 12,361 Deferred tax liabilities 9,523 7,496 Derivative financial instruments 5,781 7,325 25,845 27,182 資產淨值 Net assets 1,241,785 1,178,000 權益 EQUITY Share capital 15 7,786 7,786 Reserves 1,233,997 1,170,214 本公司擁有人 Equity attributable to 應佔權益 owners of the Company 1,241,783 1,178,000 非控制權益 Non-controlling interests 2 總權益 Total equity 1,241,785 1,178,000 8 天德化工控股有限公司 二零一六年中期報告

10 簡明綜合現金流量表 Condensed Consolidated Statement of Cash Flows 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) 經營業務產生之 Net cash generated from 現金淨額 operating activities 117,437 91,037 投資業務產生之 Cash flows from investing 現金流量 activities Purchases of property, plant and equipment (46,359) (54,876) Government grant for construction of property, plant and equipment 500 Increase in pledged bank deposits (3,043) Interest received Repayments of loan from a joint venture 373 投資業務所用之 Net cash used in investing 現金淨額 activities (48,328) (53,521) 融資業務產生之 Cash flows from financing 現金流量 activities Dividend paid (54,293) (30,610) Interest paid (359) (339) Repayments of bank borrowings (14,492) New bank borrowings raised 54,293 30,450 Capital contribution by non-controlling shareholder 2 融資業務所用之 Net cash used in financing 現金淨額 activities (14,849) (499) Interim Report 2016 Tiande Chemical Holdings Limited 9

11 簡明綜合現金流量表 Condensed Consolidated Statement of Cash Flows 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) 現金及現金等值 Net increase in cash and 項目增加淨額 cash equivalents 54,260 37,017 期初之現金及 Cash and cash equivalents at 現金等值項目 the beginning of the period 117,661 62,942 外匯匯率變動之影響 Effect of foreign exchange rate changes 552 (1,095) 期終之現金及 Cash and cash equivalents 現金等值項目 at the end of the period 172,473 98,864 現金及現金等值 Analysis of balances of 項目結餘分析 cash and cash equivalents Bank and cash balances 172,473 98, 天德化工控股有限公司 二零一六年中期報告

12 簡明綜合權益變動表 Condensed Consolidated Statement of Changes in Equity 未經審核 Unaudited 本公司擁有人應佔權益 Equity attributable to owners of the Company 物業重估 外幣匯兌 購股權 非控制 股本 股份溢價 特別儲備 盈餘公積金 儲備 公益金 儲備 儲備 保留溢利 總額 權益 總權益 Foreign Surplus Property Public currency Share Non- Share Share Special reserve revaluation welfare translation option Retained controlling Total capital premium reserve fund reserve fund reserve reserve profits Total interests equity 人民幣千元 人民幣千元 人民幣千元 人民幣千元 人民幣千元 人民幣千元 人民幣千元 人民幣千元 人民幣千元 人民幣千元 人民幣千元 人民幣千元 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Balance as at 1 January , ,333 31,182 68,338 1, (5,814) 2, ,153 1,178,000 1,178,000 Equity-settled share-based payment expenses 1,880 1,880 1,880 Capital contribution by non-controlling shareholder final dividend paid 8 (note 8) (54,293) (54,293) (54,293) 與擁有人交易 Transactions with owners 1,880 (54,293) (52,413) 2 (52,411) 本期溢利 Profit for the period 115, , ,953 其他全面收益 Other comprehensive income Exchange gain on translation of financial statements of foreign operations 期內全面收益總額 Total comprehensive income for the period , , ,196 於二零一六年六月三十日 之結餘 Balance as at 30 June , ,333 31,182 68,338 1, (5,571) 4,616 1,026,813 1,241, ,241,785 Interim Report 2016 Tiande Chemical Holdings Limited 11

13 簡明綜合權益變動表 Condensed Consolidated Statement of Changes in Equity Unaudited Foreign Surplus Property Public currency Share Share Special reserve revaluation welfare translation Retained capital premium reserve fund reserve fund reserve profits Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Balance as at 1 January , ,333 31,182 67,040 1, (2,304) 842,094 1,054, final dividend 8 paid (note 8) (30,610) (30,610) 與擁有人交易 Transactions with owners (30,610) (30,610) 本期溢利 Profit for the period 92,614 92,614 其他全面收益 Other comprehensive income Exchange loss on translation of financial statements of foreign operations (1,090) (1,090) 期內全面收益總額 Total comprehensive income for the period (1,090) 92,614 91,524 於二零一五年六月三十日 Balance as 之結餘 at 30 June , ,333 31,182 67,040 1, (3,394) 904,098 1,115, 天德化工控股有限公司 二零一六年中期報告

14 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements 1. Cricket Square, Hutchins D r i v e, P. O. B o x , Grand Cayman KY1-1111, Cayman Islands General information and basis of preparation Tiande Chemical Holdings Limited (the Company ) was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands. The address of its registered office is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The Company s shares are listed on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). The principal activity of the Company is investment holding. The principal activities of the Company s subsidiaries (together with the Company referred to as the Group ) are research and development, manufacture and sale of fine chemical products. The directors of the Company (the Directors ) consider the ultimate holding company of the Group to be Cheerhill Group Limited, a company incorporated in the British Virgin Islands. The unaudited condensed consolidated interim financial statements for the six months ended 30 June 2016 (the Unaudited Condensed Financial Information ) have been prepared in accordance with Hong Kong Accounting Standard ( HKAS ) 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants (the HKICPA ) and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange (the Listing Rules ). Interim Report 2016 Tiande Chemical Holdings Limited 13

15 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements General information and basis of preparation (Continued) The Unaudited Condensed Financial Information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group s annual financial statements for the year ended 31 December 2015 (the 2015 Annual Financial Statements ). The Unaudited Condensed Financial Information has been prepared in accordance with the same accounting policies adopted in the 2015 Annual Financial Statements, except for the adoption of the new or revised Hong Kong Financial Reporting Standards ( HKFRSs ), which collective term includes all applicable individual Hong Kong Financial Reporting Standards ( HKFRS ), Hong Kong Accounting Standards and Interpretations issued by the HKICPA. The functional currency of the Company is Hong Kong Dollars ( HK$ ). The Unaudited Condensed Financial Information is presented in Renminbi ( RMB ) because the main operations of the Group are located in the People s Republic of China (the PRC ). All values are rounded to the nearest thousand except when otherwise stated. The Unaudited Condensed Financial Information has been approved for issue by the board of the Directors (the Board ) on 25 August 天德化工控股有限公司 二零一六年中期報告

16 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Adoption of new or amended HKFRSs In the current period, the Group has applied for the first time the following new standards, amendments and interpretations issued by the HKICPA, which are relevant to and effective for the Group s financial statements for the annual period beginning on 1 January Annual Improvements to HKFRSs Cycle Amendments to HKAS 1 Disclosure Initiative The adoption of these new or amended HKFRSs did not change the Group s accounting policies as followed in the preparation of the 2015 Annual Financial Statements. The Group has not early adopted the new or amended HKFRSs that have been issued but are not yet effective and is not yet in a position to state whether these new or amended HKFRSs will result in substantial changes to the Group s accounting policies and material impact on the results and the financial position of the Group. Interim Report 2016 Tiande Chemical Holdings Limited 15

17 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Segment information The Group manages its businesses by product and service lines. For the six months ended 30 June 2016, the Group has identified the following four product and service lines as its operating segments: (i) (i) Cyanide and its derivative products: Research and development, manufacture and sale of cyanide and its derivative products; (ii) (ii) Alcohol products: Research and development, manufacture and sale of alcohol products; (iii) (iii) Chloroacetic acid and its derivative products: Research and development, manufacture and sale of chloroacetic acid and its derivative products; and (iv) (iv) Other chemical products: Sale of other chemical products, e.g. steam and fine petrochemical products. These operating segments are monitored and strategic decisions are made on the basis of adjusted segment operating results. Each of these operating segments is managed separately as each of the product and service lines requires different resources as well as marketing approaches. Intersegment sales are priced with reference to prices charged to external parties for similar orders. 16 天德化工控股有限公司 二零一六年中期報告

18 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Segment information (Continued) 截至二零一六年六月三十日止六個月 Six months ended 30 June 2016 氰基化合物 氯乙酸及 其他 及其下游產品 醇類產品 其下游產品 化工產品 總額 Cyanide Chloroacetic and its acid and Other derivative Alcohol its derivative chemical products products products products Total 人民幣千元 人民幣千元 人民幣千元 人民幣千元 人民幣千元 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 ( 未經審核 ) ( 未經審核 ) ( 未經審核 ) ( 未經審核 ) ( 未經審核 ) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue: From external customers 558,533 13,809 9,305 13, ,541 Inter-segment revenue , ,817 Reportable segment revenue 558,533 14, ,577 13, ,358 Reportable segment profit 182,714 1,265 66,850 5, ,522 Reportable segment assets 831,700 7,975 75,447 79, ,386 Six months ended 30 June 2015 Cyanide Chloroacetic and its acid and Other derivative Alcohol its derivative chemical products products products products Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue: From external customers 510,623 49,977 14,664 8, ,237 Inter-segment revenue 8,492 88, ,563 Reportable segment revenue 510,623 58, ,330 9, ,800 Reportable segment profit 137,534 4,253 17,540 3, ,782 Reportable segment assets 723,929 18,058 87,798 80, ,562 Interim Report 2016 Tiande Chemical Holdings Limited 17

19 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Segment information (Continued) The totals presented for the Group s operating segments reconcile to the Group s key financial figures as presented in the financial statements as follows: 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) Reportable segment revenue 728, ,800 Elimination of inter-segment revenue (132,817) (97,563) Consolidated revenue 595, ,237 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) Reportable segment profit 256, ,782 Rental income Finance costs (382) (355) Equity-settled share-based payment expenses (1,880) Unallocated corporate income 2,471 3,506 Unallocated corporate expenses (23,196) (21,242) Fair value gain on derivative financial instruments 1, Share of loss of a joint venture (2,307) (2,993) Elimination of inter-segment profit (67,834) (14,317) Consolidated profit before income tax 165, , 天德化工控股有限公司 二零一六年中期報告

20 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Revenue and other income Revenue from the Group s principal activities and other income recognised during the period are as follows: 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) 營業額 Revenue Sales of cyanide and its derivative products 558, ,623 Sales of alcohol products 13,809 49,977 Sales of chloroacetic acid and its derivative products 9,305 14,664 Sales of other chemical products 13,894 8, , ,237 其他收入 Other income Government grants Bank interest income Interest income from a joint venture Interest income from finance lease Release of deferred income 1,820 1,370 Rental income Exchange gains, net 1,479 2,470 Sundry income ,291 6,259 Interim Report 2016 Tiande Chemical Holdings Limited 19

21 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Finance costs 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) Interest on bank loans Profit before income tax 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) Profit before income tax is arrived at after charging/(crediting): Directors remuneration Fees Salaries, discretionary bonus and other benefits 1,930 1,882 Retirement benefit scheme contributions ,143 2,083 Other employee costs 43,645 37,471 Equity-settled share-based payment expenses 1,880 Retirement benefit scheme contributions 2,879 2,491 Total employee costs 50,547 42, 天德化工控股有限公司 二零一六年中期報告

22 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Profit before income tax (Continued) 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) Amortisation of prepaid land lease payments Cost of inventories i recognised as an expense (note i), including 382, ,115 Reversal of write-down of inventories to net realisable value (7) (41) Write-down of inventories to net realisable value 794 Depreciation on property, plant and equipment 38,418 33,604 Exchange gains, net (1,479) (2,470) Impairment loss on trade receivables 1,500 Minimum lease payments under operating leases in respect of leasehold land and buildings Rental income less outgoings (384) (358) ii Research costs (note ii) 942 2,827 Interim Report 2016 Tiande Chemical Holdings Limited 21

23 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Profit before income tax (Continued) Notes: (i) 37,069,000 32,343,000 37,142,000 32,188,000 (i) Cost of inventories recognised as an expense includes RMB37,069,000 (six months ended 30 June 2015: RMB32,343,000) relating to depreciation expenses and RMB37,142,000 (six months ended 30 June 2015: RMB32,188,000) relating to staff costs. These amounts are also included in the respective total amounts disclosed separately above. 7,000 41,000 The write-down of inventories of RMB7,000 (six months ended 30 June 2015: RMB41,000) was reversed as the market price of these inventories was increased during the period. (ii) 345, , ,000 2,379,000 (ii) Research costs include RMB345,000 (six months ended 30 June 2015: RMB240,000) relating to depreciation expenses and RMB238,000 (six months ended 30 June 2015: RMB2,379,000) relating to staff costs. These amounts are also included in the respective total amounts disclosed separately above Income tax expense 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) Current tax PRC Enterprise Income Tax Tax for the period 45,193 33,939 PRC dividend withholding tax 2,297 1,800 47,490 35,739 Deferred tax 1,883 (99) 49,373 35, 天德化工控股有限公司 二零一六年中期報告

24 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements 7. 25% 25% Income tax expense (Continued) No provision for Hong Kong profits tax has been made as the Group s income neither arises in nor derives from Hong Kong (six months ended 30 June 2015: Nil). The subsidiaries established in the PRC are subject to PRC Enterprise Income Tax at the rate of 25% for the period (six months ended 30 June 2015: 25%). The Group has adopted the 10% withholding tax rate for PRC withholding tax purposes during the period ended 30 June A government grant obtained by Weifang Binhai Petro-Chem Co., Ltd. for subsidising the construction of production lines and ancillary facilities for manufacturing of high purity isobutylene, polyisobutylene and chloroacetic acid was recognised as a deferred income in As the construction was completed as at 31 December 2007, deferred income commenced to release to profit or loss over the useful lives of the relevant assets. Such income is taxable for the period in which it is released to profit or loss. Interim Report 2016 Tiande Chemical Holdings Limited 23

25 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Income tax expense (Continued) The government grant obtained by Weifang Parasia Chem Co., Ltd ( Weifang Parasia ) for subsidising the construction of production lines which was recognised as a deferred income in 2014 and As the construction was completed as at 31 December 2015, deferred income commenced to release to profit or loss over the useful lives of the relevant assets. The whole income is taxable when Weifang Parasia received the government grants in 2014 and Dividends 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) Final dividend paid in respect of prior year HK$0.075(2015: HK$0.045) per share ,293 30, At a meeting held on 25 August 2016, the Directors recommended an interim dividend HK$0.04 per ordinary share. The proposed dividend is not reflected as a dividend payable in these Unaudited Condensed Financial Information. 24 天德化工控股有限公司 二零一六年中期報告

26 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Earnings per share The calculations of basic and diluted earnings per share attributable to owners of the Company are based on the following data: 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) Profit for the period 115,953 92,614 普通股數目 Number of ordinary shares 截至六月三十日止六個月 Six months ended 30 June 二零一六年 千股 000 shares 000 shares ( 未經審核 ) (Unaudited) (Unaudited) Weighted average number of ordinary shares for the purpose of basic and diluted earnings per share 846, ,878 For the six months ended 30 June 2016, diluted earnings per share attributable to owners of the Company were not presented because the exercise price of the Company s share options was higher than the average market price for shares. There were no dilutive potential ordinary shares for the six months ended 30 June Interim Report 2016 Tiande Chemical Holdings Limited 25

27 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements ,800,000 52,100, Property, plant and equipment During the six months ended 30 June 2016, the Group acquired property, plant and equipment of approximately RMB22.8 million (six months ended 30 June 2015: RMB52.1 million). 11. Trade and bills receivable 二零一六年 六月三十日 30 June 31 December 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Audited) Trade receivables 195, ,804 Bills receivable 236, , , ,631 The Group allows a credit period normally ranging from one month to six months to its trade customers (31 December 2015: one month to six months). Bills receivable are noninterest bearing bank acceptance bills and aged within a year upon issuance. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by management. 26 天德化工控股有限公司 二零一六年中期報告

28 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Trade and bills receivable (Continued) Ageing analysis of trade and bills receivable at the reporting date, based on the invoice date, is as follows: 二零一六年 六月三十日 30 June 31 December 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Audited) to 90 days 308, , to 180 days 115,702 99, to 365 days 5,956 8, Over 365 days 1, , ,631 The below table reconciled the impairment loss of trade receivable for the period: 二零一六年 六月三十日 30 June 31 December 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Audited) At 1 January 3,232 Impairment loss recognised 3,232 At 30 June 2016/ 31 December ,232 3,232 Interim Report 2016 Tiande Chemical Holdings Limited 27

29 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Trade and bills receivable (Continued) Trade and bills receivable related to a large number of diversified customers for whom there was no recent history of default. Based on past credit policy, management believes that no further impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered to be fully recoverable. The Group did not hold any collateral in respect of trade receivables past due but not impaired. The Directors considered that the fair values of trade and bills receivable are not materially different from their carrying amounts because these amounts have short maturity periods. 12. Prepayments and other receivables 二零一六年 六月三十日 30 June 31 December 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Audited) Advanced to the suppliers 9,462 9,539 Prepayments 2,796 1,282 Other receivables 1,657 1,644 Prepaid land lease payments current portion 1,293 1,293 15,208 13, 天德化工控股有限公司 二零一六年中期報告

30 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Trade payables The Group was granted by its suppliers credit periods ranging from 30 to 180 days (31 December 2015: 30 to 180 days). Ageing analysis of trade payable at the reporting date, based on the invoice date, is as follows: 二零一六年 六月三十日 30 June 31 December 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Audited) to 90 days 32,115 21, to 180 days 1, to 365 days Over 365 days ,454 23,176 All amounts are short term and hence the carrying amounts of trade payables are considered to be a reasonable approximation of fair values. Interim Report 2016 Tiande Chemical Holdings Limited 29

31 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Accruals and other payables 二零一六年 六月三十日 30 June 31 December 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Audited) Payables for acquisition of property, plant and equipment 30,834 51,117 Advanced from the customers 2,295 6,886 Accrued expenses 8,542 6,800 Wages and welfare payables 4,750 6,330 Other tax payables 5,844 7,701 Other payables 23,463 20,082 Deferred income current portion 3,640 3,640 79, , 天德化工控股有限公司 二零一六年中期報告

32 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Share capital 金額 Amount 普通股數目 港幣千元 人民幣千元 Number of ordinary shares HK$ 000 RMB 000 Authorised: 0.01 Ordinary shares of HK$0.01 each As at 1 January 2015, 31 December 2015, 1 January 2016 and 30 June 2016 (Unaudited) 100,000,000,000 1,000,000 Issued and fully paid: 0.01 Ordinary shares of HK$0.01 each As at 1 January 2015, 31 December 2015, 1 January 2016 and 30 June 2016 (Unaudited) 846,878,000 8,468 7,786 Interim Report 2016 Tiande Chemical Holdings Limited 31

33 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Commitments The Group s commitments at the reporting date are as follows: 二零一六年 六月三十日 30 June 31 December 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Audited) Commitments for acquisition of property, plant and equipment 133,498 99,209 Shareholder s loans to a joint venture (note) 61,249 58, , ,135 55% 11,880,000 3,575,000 30,048,000 8,305,000 61,249,000 Note: The Company agrees to make shareholder s loans of EURO11,880,000 to a joint venture, Dekel Investment Holdings Limited ( Dekel Investment ) in accordance with 55% shareholding of the Company in Dekel Investment, which is subject to the terms and conditions set out in the joint venture agreement dated 30 June As at 30 June 2016, the Group made a shareholder s loan of EURO3,575,000 (approximately RMB30,048,000) to Dekel Investment and therefore, the Group is committed to make the remaining balance of a shareholder s loan of EURO8,305,000 (approximately RMB61,249,000) to Dekel Investment accordingly. 32 天德化工控股有限公司 二零一六年中期報告

34 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements ,000,000 40,000,000 16,280,000 16,940, % 84,687,800 84,687, Share-based payments The Company has approved and adopted share option schemes on 4 October 2006 (the 2006 Share Option Scheme ) and 20 May 2016 (the 2016 Share Option Scheme ) for the purpose of providing incentives and rewards to the Directors, eligible employees, suppliers, customers, any shareholder of each member of the Group or associated company or any of their respective associates, and advisers or consultants of the Group who contribute to the success of the Group. The 2006 Share Option Scheme has become effective for a period of 10 years commencing on 4 October 2006 and up to 40,000,000 options entitling the holders thereof to subscribe for up to 40,000,000 shares may be granted under the 2006 Share Option Scheme, which was terminated on 20 May The granted outstanding options continue to be valid and exercisable in accordance with the terms of the 2006 Share Option Scheme. As at 30 June 2016, the number of shares in respect of which options had been granted and remained outstanding under the 2006 Share Option Scheme was 16,280,000 (31 December 2015: 16,940,000), representing 2.0% of the issued share capital of the Company at the date. The 2016 Share Option Scheme has become effective for a period of 10 years commencing on 20 May 2016 and up to 84,687,800 option entitling the holders thereof to subscribe for up to 84,687,800 shares may be granted under the 2016 Share Option Scheme. During the period, there was no share option granted under the 2016 Share Option Scheme. Interim Report 2016 Tiande Chemical Holdings Limited 33

35 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Share-based payments (Continued) Details of the specific categories of options are as follows: 承授人類別 授出日期 歸屬日期 行使期間 行使價 購股權數目 Category of Exercise Exercise Number of grantee Date of grant Vesting date period price share options ,000 Ms. Shi Huifang 10 July July July 2016 to HK$1.45 (Note) 9 July , July July July 2017 to HK$ July ,060,000 Employees 10 July July July 2016 to HK$ July ,940, July July July 2017 to HK$ July ,280,000 Note: Ms. Shi Huifang is one of the employees of the Group and is the spouse of Mr. Wang Zijiang who is an executive Director and therefore an associate of Mr. Wang Zijiang. 34 天德化工控股有限公司 二零一六年中期報告

36 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Share-based payments (Continued) The following table discloses movement of weighted average exercise prices of the Company s share options: 二零一六年六月三十日 30 June December 2015 加權平均 行使價 購股權數目 Weighted Weighted average Number of average Number of exercise price share option exercise price share option ( 未經審核 ) ( 未經審核 ) (Unaudited) (Unaudited) (Audited) (Audited) Outstanding at beginning 港幣 1.45 元 of the period/year HK$ ,940,000 Granted during the 1.45 period/year HK$ ,000,000 Forfeited during the 港幣 1.45 元 1.45 period/year HK$1.45 (660,000) HK$1.45 (60,000) Outstanding at the end 港幣 1.45 元 1.45 of the period/year HK$ ,280,000 HK$ ,940, The exercise price of share options outstanding at the end of the period was HK$1.45 (31 December 2015: HK$1.45) and their weighted average remaining contractual life was 7 years (31 December 2015: 7.5 years). No share options had vested and were exercisable at the end of the period/ year. The weighted average fair value of each option granted in 2015 is HK$0.54. Interim Report 2016 Tiande Chemical Holdings Limited 35

37 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Share-based payments (Continued) The following information is relevant in the determination of the fair value of options granted in 2015 under 2006 Share Option Scheme operated by the Group. 所用的購股權定價模型 Option pricing model used 二項式點陣模型 Binomial lattice Share price at grant date 1.45 HK$1.45 Exercise price 1.45 HK$1.45 Weighted average contractual life 8 8 years Expected volatility % Expected dividend rate 3% Risk-free interest rate 1.579% The binomial option pricing model has been used to estimate the fair value of the share options. 36 天德化工控股有限公司 二零一六年中期報告

38 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Related party transactions During the six months ended 30 June 2016, the Group entered into the following transactions with the related parties: 截至六月三十日止六個月 Six months ended 30 June 二零一六年 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Unaudited) Rental expenses to a related company in which all the executive Directors have beneficial interests and can exercise significant influence Sale of goods to a joint venture 12,521 4,005 Purchase of raw materials from a joint venture Rental income from a joint venture Acquisition of property, plant and equipment from a related company in which all the executive Directors have beneficial interests and can exercise significant influence 13,800 Interest income from finance lease from a joint venture Interest income from loans to a joint venture Interim Report 2016 Tiande Chemical Holdings Limited 37

39 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Fair value measurement of financial instruments The following table provides an analysis of financial instruments carried at fair value by level of fair value hierarchy: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset and liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3: Inputs for the asset and liability that are not based on observable market data (unobservable inputs). 第一級別 第二級別 第三級別 合計 Level 1 Level 2 Level 3 Total RMB 000 RMB 000 RMB 000 RMB 000 二零一六年六月三十日 30 June 2016 負債 : Liabilities: 按公平值計入損益的 Financial liabilities at fair 金融負債 value through profit or loss 衍生金融工具 Derivative financial instruments 5,781 5, December 2015 Liabilities: Financial liabilities at fair value through profit or loss Derivative financial instruments 7,325 7, 天德化工控股有限公司 二零一六年中期報告

40 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Fair value measurement of financial instruments (Continued) The fair value of derivative financial instruments is estimated using a binomial lattice model. 重要的不可觀察輸入值 二零一六年 Significant unobservable inputs 六月三十日 30 June 31 December ( 未經審核 ) (Unaudited) (Audited) Inflation rate 1.5%-2.5% 1.5%-2.5% Weighted average cost of capital ( WACC ) 15% 16% Expected volatility 42% 45% 5% 68,000 5% 67,000 5% 649,000 5% 790,000 5% 22,000 5% 25,000 Increase inflation rate by 5% would increase the fair value gain of derivative financial instruments by RMB68,000 whilst decreased inflation rate by 5% would decrease the fair value gain of derivative financial instruments by RMB67,000. Increase WACC by 5% would decrease the fair value gain of derivative financial instruments by RMB649,000. Lower WACC by 5% would increase the fair value gain of derivative financial instruments by RMB790,000. Increase expected volatility by 5% would increase the fair value gain of derivative financial instruments by RMB22,000. Lower expected volatility by 5% would decrease the fair value gain of derivative financial instruments by RMB25,000. Interim Report 2016 Tiande Chemical Holdings Limited 39

41 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements Fair value measurement of financial instruments (Continued) There were no changes in valuation techniques during the period. There were no transfers between levels during the period. The financial liabilities classified in Level 3 use valuation techniques based on significant inputs that are not based on observable market data. The financial instruments within this level are reconciled from opening to closing balances as follows: 二零一六年 六月三十日 30 June 31 December 人民幣千元 RMB 000 RMB 000 ( 未經審核 ) (Unaudited) (Audited) Derivative financial liabilities: At 1 January 7,325 10,486 Fair value gain on derivative financial instruments (1,544) (3,161) At 30 June 2016/ 31 December ,781 7, 天德化工控股有限公司 二零一六年中期報告

42 簡明綜合財務報表附註 Notes to the Condensed Consolidated Financial Statements 19. 1,544,000 3,161, Fair value measurement of financial instruments (Continued) During the period, fair value gain on derivative financial instruments of RMB1,544,000 (31 December 2015: RMB3,161,000) was recognised in the consolidated income statement. The Group s finance team performs valuations of financial instruments for financial reporting purposes, including Level 3 fair values, in consultation with independent third party valuer. Valuation techniques are selected based the characteristics of each instrument, with the overall objective of maximising the use of market-based information. The finance team of the Group reports directly to the Directors and to the audit committee of the Company. Valuation processes and fair value changes are discussed among the audit committee of the Company and the finance team of the Group at least six months, in line with the Group s reporting dates. Interim Report 2016 Tiande Chemical Holdings Limited 41

43 管理層討論及分析 Management Discussion and Analysis 業務回顧 6.9% 6.0% 0.2 Summary of operating results Business Review In the first half of 2016, affected by the increasing uncertainties of the global economy, the recovery paces varied and commodity prices were still at the low level. China s industrial structure continued to improve with its stepped up effort on the Supply-Side Reform, and industrial output became stable and even rose slightly in the first half of the year. According to the data of National Statistics Bureau of China, China s manufacturing industry grew by 6.9% as compared to the corresponding period last year. The value added by sizeable industrial corporations across the country increased by 6.0% in terms of comparable prices as comparable in the corresponding period in last year, which is 0.2 percentage points higher than that of the first quarter. However, downward pressure exerted on the economy remains strong, thus undermining the recovery of manufacturing industry and the real economy. 42 天德化工控股有限公司 二零一六年中期報告

44 管理層討論及分析 Management Discussion and Analysis 業務回顧 1.9% 595,500, % 19.9% 204,300, % 34.3% ,000, % Summary of operating results (Continued) Business Review (Continued) The Group s results for the period under review once again demonstrated its excellent profitability and effective deployment of established strategies. The Group overcame a number of economic uncertainties and marketed a selected product mix according to market conditions for the purpose of capturing the market share. Fortunately, satisfactory results have been recorded. Thanks to the strengthened sales force and the sustained competitive edges of its products, the Group s revenue increased by 1.9%, reaching approximately RMB595.5 million. Domestic revenue represented 80.1% of the total revenue of the Group, whereas overseas revenue represented the remaining 19.9%. In addition, commodity (e.g. raw materials for production) prices remained low, leading to a significant reduction in costs of raw materials for the Group s production activities. With a remarkable growth rate of 24.8% as comparable in the corresponding period in last year, the gross profit reached approximately RMB204.3 million, while the gross profit margin increased by 6.3 percentage point, reaching 34.3%. The Group s net profit for the first half of the year was approximately RMB116.0 million, representing an increase of 25.2% as comparable in the corresponding period in last year. Interim Report 2016 Tiande Chemical Holdings Limited 43

45 管理層討論及分析 Management Discussion and Analysis 業務回顧 氰基化合物及其下游產品 558,500, % Summary of operating results (Continued) Business Review (Continued) During the period under review, the Group continued to leverage on the established advantages arising from the vertical integration of the fine chemical industry chain, improved the internal allocation of resources alongside the industrial chain and further advanced automated production, thus enhancing its production efficiency, reducing waste emission and lowering production costs. All these accomplished the growth of its gross profit and gross profit margin for the period. With respect to the product mix and segmentation, the Group still managed its productivity allocation in a flexible and prudent way, strategically introduced key products to the market and promoted new products. The Group will put its new products with higher sales volume into a new segment in due course and detailed announcements will also be made then. The performance of each segment is analysed below. Cyanide and its derivative products Cyanide, esters derived from cyanide and other derivative products from the production chain illustrated the core competence of the Group. Given the effective marketing campaigns launched by the sales team and the expansion of the customer base of the Group, this segment performed remarkably during the period under review, boosting the revenue to approximately RMB558.5 million, representing an increase of 9.4% as comparable in the corresponding period in last year. 44 天德化工控股有限公司 二零一六年中期報告

46 管理層討論及分析 Management Discussion and Analysis 業務回顧 氰基化合物及其下游產品 Summary of operating results (Continued) Business Review (Continued) Cyanide and its derivative products (Continued) Key products in this segment included cyanoacetic acid esters (e.g. cyanoacetate series and malonate series) derived from sodium cyanide, a kind of base chemical product, produced by the Group s industry chain. They were the most competitive and profitable products of the Group. These products are widely used in the production of adhesives, medicines, dyes, flavour, fragrance, pesticides, fertilisers and other fine chemical intermediates. They could be applied in a wide range of industries, and are of low substitutability. Since these products are mainly based on sodium cyanide (the production of which is featured with a high entry barrier), the self-owned industry chain with adequate supply and reliable technologies has always supported the Group to stay in the leading position of the cyanoacetic acid ester industry. Thanks to the economy of scale of the Group s vertical industry chain and the lowered costs of raw materials, these products manifested outstanding profitability during the period under review. Interim Report 2016 Tiande Chemical Holdings Limited 45

47 管理層討論及分析 Management Discussion and Analysis 業務回顧 氰基化合物及其下游產品 EDTA EDTA EDTA Summary of operating results (Continued) Business Review (Continued) Cyanide and its derivative products (Continued) Sodium cyanide and cyanoacetic acid, key base products of the Group s industry chain, are important industrial raw materials. They were widely used in metallurgical industry (e.g. precious metal smelting), food and beverage, and pharmaceutical industries (e.g. synthesis of caffeine) and other fields. During the period under review, the Group further increased the productivity of such products to meet the external demand of the enlarged customer base as well as the internal demand since such products were important raw materials for the Group s derivative products. Furthermore, during the period under review, the Group focused on the strategic allocation of EDTA, a chelating agent. The potential for further development of this product has been great. The Group has not only set up a specific product division for EDTA, but also increased its input in this product by various means, such as improving production procedures, enhancing sales effort and exploring new markets. EDTA and its derivative products were essential additives for industrial production, commonly known as MSG for the manufacturing industry, and were used in various fields, such as household chemical products (e.g. detergents), food and beverage, pesticides and compound fertilisers and industrial cleaning. The demand for such products is steady and strong. The Group is confident in promoting such products as a new driver of its growth in the future. 46 天德化工控股有限公司 二零一六年中期報告

48 管理層討論及分析 Management Discussion and Analysis 業務回顧 氰基化合物及其下游產品 i ii 醇類產品 2% Summary of operating results (Continued) Business Review (Continued) Cyanide and its derivative products (Continued) The Group s key development strategies include: (i) fully capitalising on the vertical industry chain and the demanding technological platform of its existing products; and (ii) continuously developing fine chemical derivatives towards end products. Currently, various derivative adhesive products based on cyanide have been launched to the market in succession, aiming to meet different end users demands with products varying in formulae and applications. The Group s management believes that the contribution from the adhesive products to the Group s profitability will play a more important role in the future. Alcohol products The business of Group s alcohol products mainly consists of the production and sales of ethanol and the trading of tertbutanol products. These products are mainly used as one of the raw materials for the Group s vertical integration chain to enhance the cost efficiency of derivative products, thereby strengthening the Group s competitive advantages. Due to the sluggish market prices and intense competition in recent years, the external sales of these products decreased, representing only 2% of the Group s revenue. The main reason is that the Group has strategically adjusted the production output and sales of these products with references to market conditions. Interim Report 2016 Tiande Chemical Holdings Limited 47

49 管理層討論及分析 Management Discussion and Analysis 業務回顧 氯乙酸及其下游產品 Summary of operating results (Continued) Business Review (Continued) Chloroacetic acid and its derivative products Chloroacetic acid products are mainly used as intermediates for the production of dyes, medicines and pesticides. They are also one of the key raw materials for the Group s vertical integration industry chain. Accordingly, the Group put the steady and adequate internal supply of such products in the first place. In addition, due to the intense competition in the market of chemical materials over the recent years, the selling prices of chloroacetic acid and relevant products decreased continuously, weakening the profitability of such products. The Group will continue to increase its productivity by advancing automated procedures and enhancing the production efficiency so as to ensure that these products can play a crucial role in supporting the Group s overall industry chain. 48 天德化工控股有限公司 二零一六年中期報告

50 管理層討論及分析 Management Discussion and Analysis 業務回顧 合營公司 ( 合營公司 ) 展望 Summary of operating results (Continued) Business Review (Continued) Joint venture company (the JV ) During the period under review, the JV still endeavoured to expand the marketing channels for adhesive monomers and to develop both the domestic and overseas markets, resulting in promising market feedback. Certain potential customers started to acknowledge the product upon completion of long term performance testings, and positive opinions on product quality and technological specifications were received. The JV recorded growth in sales as comparable in the corresponding period in last year, and the base of domestic and overseas customers expanded gradually. More orders are expected in the future. The management is confident in the JV s prospect, and the Group will timely adjust its business strategies according to prevailing market conditions to unleash the economy scale brought about by the business development of the JV. Outlook Looking ahead, although China s economy is expected to stay steady in the second half of the year, the business environment for the manufacturing industry in China remains challenging. With the impact of low commodity prices, the demand of both the domestic and overseas trade is still sluggish and the capacity of the industry sector is still at the low side. However, thanks to the low raw material prices, the Group will benefit from the lowered costs, and its unique position in the industry and continued improvement in technologies will also facilitate the Group to maintain its market share and advantages in pricing, thus supporting the profitability of its products. Interim Report 2016 Tiande Chemical Holdings Limited 49

51 管理層討論及分析 Management Discussion and Analysis 業務回顧 展望 i ii iii iv Summary of operating results (Continued) Business Review (Continued) Outlook (Continued) As the concept of sustainable development has become prominent over the recent years, China s supervision and administration of environmental protection and production safety get increasingly stringent and these measures are largely focused on the industry where the Group operates. Given the industry s increasingly demanding requirements and tightened regulations on environmental protection and technology application, the chemical industry has started a process of integration and restructuring. Small and medium enterprises that are unable to meet the required standards or those that cannot afford substantial investment in environmental protection will be phased out gradually, giving enterprises equipped with strong core competence, like Tiande Chemical, plenty room for further development. The Group will capture the market share left behind by unqualified enterprises that had been forced to quit the market by upgrading its productivity. The Group s technical competence has always been at the top of the national standards on environmental protection and safety, ensuring that the Group can maintain a steady position in a longer term competition for its sustainable development. The established development strategies of the Group are as follows: (i) strengthening existing advantages; (ii) continuously expanding its product mix; (iii) vertically developing derivative products with the help of the traditional advantages of sodium cyanide and its derivative products; and (iv) identifying companies that are able to meet its business standards for merger, acquisition and cooperation for the purpose of expanding the business scope of derivative industries. The Group is confident that it can enhance its profitability on an on-going basis. 50 天德化工控股有限公司 二零一六年中期報告

52 管理層討論及分析 Management Discussion and Analysis 業務回顧 展望 Summary of operating results (Continued) Business Review (Continued) Outlook (Continued) The year of 2016 marks the 10th anniversary of the Group s listing in Hong Kong, and also celebrates the beginning of its new decade for development. With the experience accumulated from the business operations of the last ten-year, the management of the Group is able to formulate well-defined and feasible development strategies for the future, after taking into account its market knowledge and practical know-how in the fine chemical industry earned over the years. Currently, with the effort of its strengthened and integrated sales force, the Group is launching new products in a well-planned manner, and is able to gradually expand the market share. The Group also offers a variety of bespoke end-products with different functions and features to meet customers specific demands, thereby boosting the influence of the Group s products and brand name. The Group also emphasises the training of research and development personnel and the investment of equipment in this regard. Innovation is what the Group is in pursuit of. The Group s strict control on safety, environmental protection and emission reduction is also unparalleled in the industry. The Board believes that, as the Group remains dedicated to carrying on its excellent established business, the Group is well motivated and capable of maintaining its steady and sustainable development, providing its shareholders with continuous and steady returns. Interim Report 2016 Tiande Chemical Holdings Limited 51

53 管理層討論及分析 Management Discussion and Analysis 股息 暫停辦理股東登記手續 Summary of operating results (Continued) Dividend The Board has declared an interim dividend of HK$0.04 per ordinary share for the six months ended 30 June 2016 (six months ended 30 June 2015: HK$0.025). The interim dividend will be payable on 20 October 2016 to the Shareholders whose names appear on the register of members of the Company (the Register of Members ) on 6 October Closure of Register of Members For the purpose of ascertaining Shareholders entitlement to the interim dividend, the Register of Members will be closed from 4 October 2016 to 6 October 2016, both days inclusive, during which no transfer of shares of the Company will be registered. In order to qualify for the interim dividend for the six months ended 30 June 2016, all transfer documents accompanied by the relevant share certificate(s) must be lodged with the Company s share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops on the 17th Floor of Hopewell Centre, 183 Queen s Road East, Wanchai, Hong Kong, for registration no later than 4:30 p.m. on 3 October 天德化工控股有限公司 二零一六年中期報告

54 管理層討論及分析 Management Discussion and Analysis 財務回顧 營業額及毛利 595,500, ,300, ,200, ,700,000 11,300,000 40,600, % 24.8% % i ii Summary of operating results (Continued) Financial Review Revenue and gross profit Revenue and gross profit of the Group for the six months ended 30 June 2016 amounted to approximately RMB595.5 million and approximately RMB204.3 million respectively, representing an increase of approximately RMB11.3 million and approximately RMB40.6 million or 1.9% and 24.8% as compared with approximately RMB584.2 million and approximately RMB163.7 million recorded in the corresponding period in last year. The Group still consistently delivered a growth in revenue which was mainly attributable to the Group implemented effective sales and marketing strategy stimulating the growth of sales quantity despite the slowdown in the PRC economic and the decrease of average selling price during the period under review. In addition, the gross profit of the Group achieved a fair growth. The gross profit margin increased by 6.3 percentage points to 34.3% (six months ended 30 June 2015: 28.0%). Such satisfactory growth was primarily attributable to (i) the decrease in prices of raw materials, which outpaced the decrease in average selling prices of products sold and (ii) the advanced automation production process introduced in previous years has strengthened the overall productivity. Interim Report 2016 Tiande Chemical Holdings Limited 53

55 管理層討論及分析 Management Discussion and Analysis 財務回顧 營運開支 18,300,000 3,800,000 22,100, % 3.1% 22,000,000 20,500,000 1,500, % 3.5% 400, ,000 Summary of operating results (Continued) Financial Review (Continued) Operating expenses Selling expenses increased by approximately RMB3.8 million from approximately RMB18.3 million in the corresponding period in last year to approximately RMB22.1 million. Such increase was mainly due to the increase in transportation costs (which was in line with the increased in sales volume) and the staff costs. The selling expenses as a percentage of the Group s revenue was 3.7% (six months ended 30 June 2015: 3.1%). Administrative and other operating expenses amounted to approximately RMB22.0 million, which was increased by approximately RMB1.5 million from approximately RMB20.5 million in the corresponding period in last year. Such increase was principally due to the increase in staff costs during the period under review. The administrative and other operating expenses accounted for 3.7% of the Group s revenue, which was slightly higher than 3.5% from the corresponding period last year. Finance costs represented interest on bank borrowings which were flat at approximately RMB0.4 million (six months ended 30 June 2015: RMB0.4 million) due to the similar level of the weighted average bank borrowing amount as compared with the corresponding period in last year. 54 天德化工控股有限公司 二零一六年中期報告

56 管理層討論及分析 Management Discussion and Analysis 財務回顧 衍生金融工具的公平值收益 i ii 1,500,000 期內溢利 116,000,000 92,600,000 23,400, % Summary of operating results (Continued) Financial Review (Continued) Fair value gain on derivative financial instruments In 2011, the Company entered into a joint venture agreement (the JV Agreement ) with Henkel Hong Kong Limited ( Henkel ) to set up a joint venture company. Under the JV Agreement, (i) the Company was granted with a call option to require Henkel to sell or cause the sale of all of the equities of the JV held by Henkel and/or its affiliates to the Company at the call option price; and (ii) Henkel was granted with a put option to require the Company to purchase or cause the purchase of all of the equities of the JV held by Henkel and/or its affiliates at the put option price. Such options can only be exercised during the option period which set on a specified future dates (please refer to the announcement of the Company dated 3 July 2011 for details.) Thus, the JV Agreement deemed to contain derivatives financial instruments which are required to be carried at fair value under relevant Hong Kong financial reporting standards. For the six months ended 30 June 2016, the fair value gain on the derivative financial instruments was, being determined by an independent valuer by the adoption of a binomial lattice model, approximately RMB1.5 million. Profit for the period In view of the growth of revenue and gross profit and the improved operational efficiency, net profit amounted to approximately RMB116.0 million, representing an increase of approximately RMB23.4 million or 25.2% as compared with approximately RMB92.6 million recorded in the corresponding period in last year. Interim Report 2016 Tiande Chemical Holdings Limited 55

57 管理層討論及分析 Management Discussion and Analysis 財務回顧 貿易應收賬及應收票據 195,100, ,800,000 35,300, % 78% 19% 3% % 236,400, ,800,000 1,600, % Summary of operating results (Continued) Financial Review (Continued) Trade and bills receivable As at 30 June 2016, trade receivables increased to approximately RMB195.1 million, representing an increase of approximately RMB35.3 million or 22.1% as compared with approximately RMB159.8 million recorded as at 31 December About 78% of trade receivables were incurred in the second quarter of this year which are not yet due and 19% of trade receivables were incurred in the first quarter of this year. Only 3% of trade receivables are over 180 days. Up to the date of announcement of these condensed financial statements, over 48% of trade receivables have been subsequently settled. After assessing the creditworthiness of these customers, the Directors considered that no indication of bad debt allowance is required. As at 30 June 2016, bills receivable amount of approximately RMB236.4 million, slightly increased by approximately RMB1.6 million or 0.7% as compared with the balance of approximately RMB234.8 million as at 31 December Since all bills receivable are bank acceptance bills, which are non-interest bearing and most of them have a maximum maturity period of six months, the payments of which were made by the licensed banks in the PRC with the lowest default risk. Accordingly, the Directors considered that no allowance for doubtful debt is required. 56 天德化工控股有限公司 二零一六年中期報告

58 管理層討論及分析 Management Discussion and Analysis 財務回顧 短期銀行借款 72,400,000 32,100,000 40,300, % Summary of operating results (Continued) Financial Review (Continued) Short term bank borrowings All short term bank borrowings were arised in Hong Kong at floating interest rates and are denominated in Hong Kong dollars to finance the dividend payments of the Company. As at 30 June 2016, short term bank borrowings increased to approximately RMB72.4 million, representing a net increase of approximately RMB40.3 million or 125.7% as compared with the balance of an approximately RMB32.1 million as at 31 December Such an increase is mainly attributable to the financing the payment of final dividend of 2015 payable in June Interim Report 2016 Tiande Chemical Holdings Limited 57

59 管理層討論及分析 Management Discussion and Analysis 財務回顧 流動資金及財務資源 117,400,000 91,000,000 54,300,000 30,500, ,000 2, , ,000 46,400,000 54,900,000 14,500, , ,000 54,300,000 30,600,000 Summary of operating results (Continued) Financial Review (Continued) Liquidity and financial resources For the six months ended 30 June 2016, the Group s primary sources of funding included the net cash inflow generated from operating activities of approximately RMB117.4 million (six months ended 30 June 2015: RMB91.0 million); newly raised bank borrowings of approximately RMB54.3 million (six months ended 30 June 2015: RMB30.5 million); repayment of loan from a JV of approximately RMB0.4 million (six months ended 30 June 2015: nil); capital injection from non-controlling interests amount of approximately RMB2,000 (six months ended 30 June 2015: nil); and interest received of approximately RMB0.7 million (six months ended 30 June 2015: RMB0.9 million). With the financial resources obtained from the Group s operations, the Group had spent approximately RMB46.4 million (six months ended 30 June 2015: RMB54.9 million) in the acquisition of the property, plant and equipment, bank borrowing repayments of approximately RMB14.5 million (six months ended 30 June 2015: nil); interest paid of approximately RMB0.4 million (six months ended 30 June 2015: RMB0.3 million) and dividend paid of approximately RMB54.3 million (six months ended 30 June 2015: RMB30.6 million). 58 天德化工控股有限公司 二零一六年中期報告

60 管理層討論及分析 Management Discussion and Analysis 財務回顧 流動資金及財務資源 175,500, ,700,000 72,400,000 32,100, ,100,000 85,600, ,700, ,100,000 Summary of operating results (Continued) Financial Review (Continued) Liquidity and financial resources (Continued) As at 30 June 2016, the Group had pledged bank deposits and bank and cash balances of approximately RMB175.5 million (31 December 2015: RMB117.7 million). The total amount of outstanding borrowings was approximately RMB72.4 million (31 December 2015: RMB32.1 million). The Group committed to maintain a sound and sustainable financial position, the net pledged bank deposit and bank and cash balance of approximately RMB103.1 million (31 December 2015: RMB85.6 million) (total cash and cash equivalent net of total borrowings) as at 30 June Hence, gearing ratio is not available. The net current assets also increased to approximately RMB565.7 million (31 December 2015: RMB486.1 million) as a result of the continuous positive operating results during the period under review. The Group will continue to expand its business scale through enhancing productivity, optimising the products portfolio and seeking suitable investment opportunities that will add momentum to the long term growth of the Group. By virtue of the Group s healthy financial position with promising cash inflow generated from the operating activities and available banking facilities obtained from banks, the Group is capable to meet its foreseeable capital commitments and working capital requirements. Nevertheless, the Group will continue to manage its working capital closely and cautiously, and dedicate to keep a sound liquidity position to support future business expansion. Interim Report 2016 Tiande Chemical Holdings Limited 59

61 管理層討論及分析 Management Discussion and Analysis 財務回顧 流動資金及財務資源 資產抵押 3,000,000 或然負債 匯率波動風險 Summary of operating results (Continued) Financial Review (Continued) Liquidity and financial resources (Continued) During the period under review, the Group did not use any financial instruments for any hedging purposes. Pledge of assets As at 30 June 2016, a bank deposit of approximately RMB3.0 million (31 December 2015: Nil) was pledged for bills and letter of credit facilities. Contingent liabilities As at 30 June 2016, the Group had no material contingent liabilities. Exposure to fluctuations in exchange rates The Group s operations are mainly in the PRC and its assets, liabilities, revenues and transactions are mainly denominated in RMB, Hong Kong dollars and United States dollars. The Group s foremost exposure to the foreign exchange risk was caused by the fluctuation of RMB during the period under review. Most of the Group s income and expenses are denominated in RMB except for the Group s export sales which are, in majority, denominated in United States dollars. The Group has not experienced any material difficulties or effects on its operations or liquidity as a result of the fluctuations in currency exchange rates during the period under review. Besides, the Group will consider cost efficient hedging methods to cope with future foreign currency transactions when appropriate. 60 天德化工控股有限公司 二零一六年中期報告

62 管理層討論及分析 Management Discussion and Analysis 1,144 1,180 Human resources As at 30 June 2016, the Group had 1,144 full-time employees (31 December 2015: 1,180 full time employees). The decrease in the number of employees was mainly due to the advanced automation production process which reduced the workforce requirement during the period under review. The Group has established its human resources policies and scheme with a view to deploying more motivated incentives and rewards of the remuneration system which includes a wide range of training and personal development programs to the employees. The remuneration package offered to each staff member was in line with his or her duties and the prevailing market trends. Staff benefits, including medical coverage and provident funds, have also been provided to the employees of the Group. Employees of the Group would receive discretionary bonuses and monetary rewards based on their ratings in annual performance appraisals. The Group also offered rewards or other incentives to the employees in order to motivate their personal growth and career development, such as ongoing training to enhance their technical and product knowledge as well as their knowledge of industry quality standards. All new employees of the Group are required to attend an introduction course and there are also various types of training courses available to all the Group s employees. The Group has also adopted a share option scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group s operations. No share option of the Company has been granted during the period under review. Interim Report 2016 Tiande Chemical Holdings Limited 61

63 其他資料 Other Information XV XV 於股份之好倉 Directors and chief executive s interests in securities As at 30 June 2016, the interests and short positions of the Directors, chief executive of the Company and their associates in the shares of the Company (the Shares ), underlying Shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the SFO )) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which any such director or chief executive was taken or deemed to have under such provisions of the SFO) and were recorded in the register maintained by the Company pursuant to section 352 of the SFO, or which were notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code ) contained in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the Listing Rules ), were as follows: Long position in the Shares 佔已發行股本 公司 所持股份數目 總數概約 董事姓名 相聯法團名稱 股份權益 身份 百分比 (%) Name of Number of Approximate company/ Shares held/ % in the total Name of associated interest in the issued share Director corporation Shares Capacity capital 584,000, % Mr. Liu Cheerhill Group 2 Interest of Hongliang Limited (Note 2) controlled ( 1) corporation (Note 1) 62 天德化工控股有限公司 二零一六年中期報告

64 其他資料 Other Information ,000,000 38% 26% 11.5% 11.5% 6.5% 6.5% 2. 38% 1 584,000, XV Directors and chief executive s interests in securities (Continued) Notes: 1. The 584,000,000 Shares were held by Cheerhill Group Limited ( Cheerhill ), the entire issued share capital of which is ultimately beneficially owned as to 38% by Mr. Liu Hongliang, 26% by Mr. Wang Zijiang, 11.5% by Mr. Guo Xitian, 11.5% by Ms. Zheng Hong, 6.5% by Mr. Guo Yucheng and 6.5% by Mr. Fu Anxu. Except for Mr. Fu Anxu, Mr. Guo Yucheng and Ms. Zheng Hong (her spouse is Mr. Gao Feng, who has became the executive Director since 22 May 2015), all others are the executive Directors. 2. Mr. Liu is deemed to be interested in 584,000,000 Shares referred to in Note 1 above by virtue of his 38% interests in Cheerhill. Save as disclosed above, as at 30 June 2016, none of the Directors and chief executive of the Company, nor their associates had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company and any of its associated corporations (within the meaning of Part XV of the SFO) which had been recorded in the register maintained by the Company pursuant to section 352 of the SFO or which had been notified to the Company and the Stock Exchange pursuant to the Model Code as set out in the Listing Rules. At no time during the period under review, was the Company or any of its holding companies, its subsidiaries or its fellow subsidiaries a party to any arrangement that enables the Directors and chief executive of the Company or their spouse and children under 18 years of age to purchase any shares or underlying shares in, or debentures of, the Company or its associated corporation. Interim Report 2016 Tiande Chemical Holdings Limited 63

65 其他資料 Other Information 5% 336 於股份之好倉 Substantial Shareholders As at 30 June 2016, the following person who held interests of 5% or more of the issued share capital of the Company, other than the Directors, was recorded in the register of members required to be kept by the Company pursuant to Section 336 of the SFO: Long position in the Shares 所持股份數目 佔已發行股本總數 股東名稱 股份權益及權益總額 身份 概約百分比 (%) Number of Shares held/ interest in the Approximate % Shares and in the total Name of aggregated issued share shareholder interest Capacity capital ( ) 584,000, % Cheerhill (Note) Beneficiary owner 584,000,000 38% 26% 11.5% 11.5% 6.5% 6.5% 336 Note: The 584,000,000 Shares were held by Cheerhill, the entire issued share capital of which is ultimately beneficially owned as to 38% by Mr. Liu Hongliang, 26% by Mr. Wang Zijiang, 11.5% by Mr. Guo Xitian, 11.5% by Ms. Zheng Hong, 6.5% by Mr. Guo Yucheng and 6.5% by Mr. Fu Anxu. Except for Mr. Fu Anxu, Mr. Guo Yucheng and Ms. Zheng Hong (her spouse is Mr. Gao Feng, who has became the executive Director since 22 May 2015), all others are the executive Directors. Save as disclosed above, as at 30 June 2016, the Company has not been notified by any persons who had any interest or short position in the Shares or underlying Shares which are required to be notified to the Company under the SFO or which are recorded in the register required to be kept by the Company pursuant to section 336 of the SFO. 64 天德化工控股有限公司 二零一六年中期報告

66 其他資料 Other Information 0.01 Share options Under the share option schemes adopted by the Company on 4 October 2006 (the 2006 Share Option Scheme ) and 20 May 2016 (the 2016 Share Option Scheme ) respectively, share options would granted to certain Directors, employees and other eligible participants of the Company entitling them to subscribe for shares of HK$0.01 each in the capital of the Company. The 2006 Share Option Scheme was expired and terminated on 20 May Details of the movement in outstanding share options, which have been granted under the 2006 Share Option Scheme during the period were as follows: 承授人類別 於年初尚未行使 期內授出 期內沒收 於期末尚未行使 Outstanding Granted Forfeited Outstanding Category of at beginning during during at end grantee of year the period the period of period 280, ,000 Ms. Shi Huifang (Note) 16,660,000 (660,000) 16,000,000 Employee 16,940,000 (660,000) 16,280,000 Note: Ms. Shi Huifang is the spouse of Mr. Wang Zijiang who is a Director and therefore an associate of Mr. Wang Zijiang. During the period under review, no share option has been granted under the 2016 Share Option Scheme. Interim Report 2016 Tiande Chemical Holdings Limited 65

67 其他資料 Other Information Model code for securities transactions by directors of listed companies The Company has adopted a code of conduct with standards no less than those prescribed under the Model Code as set out in Appendix 10 to the Listing Rules for securities transactions by Directors. Upon written enquiry by the Company, all Directors have confirmed that they had complied with the required standards as set out in the Model Code and the Company s code of conduct regarding securities transactions by Directors throughout the six months ended 30 June The senior management, who, because of their office in the Company, are likely to be in possession of unpublished price sensitive information, have been requested to comply with the provisions of the Model Code and the Company s code of conduct regarding securities transactions by Directors. Purchase, sale or redemption of the company s listed shares During the six months ended 30 June 2016, neither the Company nor any of its subsidiaries had redeemed, purchased or sold any of the Company s listed shares. Corporate governance practices None of the Directors is aware of information that would reasonably indicate that the Company was not, or had not been during the six months ended 30 June 2016, in compliance with the Corporate Governance Code as set out in Appendix 14 to the Listing Rules. 66 天德化工控股有限公司 二零一六年中期報告

68 其他資料 Other Information i ii iii iv v i ii iii Nomination committee The Nomination Committee currently comprises an executive Director, namely, Mr. Liu Hongliang (chairman of the Nomination Committee) (has been replaced by Mr. Gao Feng with effect from 1 July 2016) and the two independent nonexecutive Directors, namely, Mr. Leung Kam Wan and Mr. Liu Chenguang. During the period under review, the Nomination Committee had (i) reviewed the structure, size and diversity (including but not limited to the skills, knowledge and experience) of the Board; (ii) reviewed the diversity policy of the Company; (iii) assessed the independence of independent nonexecutive Directors; (iv) reviewed the Director succession plan; and (v) reviewed and assessed the retiring Directors and made recommendation to the Board on the re-appointment. Remuneration committee The Remuneration Committee currently comprises three independent non-executive Directors, namely, Mr. Liu Chenguang (chairman of the Remuneration Committee), Mr. Gao Baoyu, Mr. Leung Kam Wan and an executive Director Mr. Liu Hongliang (has been replaced by Mr. Gao Feng with effect from 1 July 2016). During the period under review, the Remuneration Committee had (i) reviewed the terms of services contracts with executive Directors and independent nonexecutive Directors; (ii) reviewed and approved the remuneration policy of Director and senior management of the Company; and (iii) reviewed and assessed the remuneration package for the all Directors and senior management of the Company by references to the scope of duties and responsibilities of the Directors, corporate goals and objectives of the Group, after taking into account also the comparable market conditions and made recommendation to the Board for approval. No Directors shall participate in any discussion and decision about his own remuneration. Interim Report 2016 Tiande Chemical Holdings Limited 67

69 其他資料 Other Information i ii iii iv v Audit committee Audit Committee of the Company comprises the three independent nonexecutive Directors, namely, Mr. Leung Kam Wan (chairman of the Audit Committee), Mr. Gao Baoyu and Mr. Liu Chenguang. During the period under review, the Audit Committee had (i) reviewed the accounting principles and practices, listing rules, internal controls and statutory compliance, and financial reporting matters adopted by the Company; (ii) reviewed the independence and objectivity of the independent auditor of the Company; (iii) reviewed and approved the continuing connected transactions of the Company; (iv) reviewed with the independent auditor of the Company on the nature and scope of the audit and reporting obligations; and (v) reviewed the independent auditor s management letter and made recommendations to the Board for improvement (if any). Audit Committee had discussed internal controls and financial reporting matters with the management and the independent auditor of the Company relating to the preparation of the unaudited condensed consolidated financial statements of the Group for the six months ended 30 June There is no disagreement raised by the Audit Committee on the accounting treatment adopted by the Company during the period under review. 高峰 By order of the Board Gao Feng Chairman Hong Kong, 25 August 天德化工控股有限公司 二零一六年中期報告