china coke profit 14 million

ROCKLANDS RICHFIELD ANNOUNCES MAIDEN PROFIT
Rocklands Richfield Limited (ASX:RCI) today announced a Net Profit after Tax of
$14.85 million on consolidated revenues of $49 million for the half year ending
31st December 2007.
This is the company’s maiden profit and follows the acquisition of China Coke
and Chemicals Limited in October 2007. The acquisition of China Coke is
considered a reverse acquisition for accounting purposes, accordingly, the
results include six months contribution from China Coke and Chemicals and only
three months of outlays pertaining to RCI.
The result was positively impacted by abnormal non-operating revenues totalling
$12.9 million relating to the waiver of loans by the owner of China Coke and
Chemicals, required as a condition precedent to acquisition.
RCI’s group profit after tax from ongoing activities was $1.87 million including a
number of non recurring expenses amounting to $0.3 million relating to the failed
takeover attempt by Bowen Coal Limited and administration costs incurred prior
to the re-listing of the company’s shares on the ASX.
The Chinese operations contributed a pleasing $3.2 million to operating earnings
in the December 2007 quarter. This result evidences the buoyant nature of the
coke business in China with profitability poised to further improve on the back of
improved coke prices received in early 2008.
The company retains a strong balance sheet, with modest gearing levels and
continues to be well positioned to deliver strong growth.
In commenting on the results, Mr Wu Pun Yan, Executive Chairman of
Rocklands Richfield said,
“This is an excellent result and vindicates the company’s decision to merge with
China Coke and Chemicals which provides outstanding leverage to the fast
growing Chinese economy.”
Coke Operating Results
The newly acquired coke works, in Huaibei, located in Anhui province in eastern
China, performed well for the full 2007 year to December with total coke
production reaching 459,000 tonnes, an increase of 22% over 2006. In the
December quarter, and during RCI stewardship, the coke facility produced
122,478 tonnes, which at an annualised rate of 489,912 exceeded the facility’s
name plate capacity. Record production was also delivered in by - products
comprising Tar, Coal Gas, Ammonium Sulphate and Benzol.
Ongoing exploration activities in Australia have confirmed company expectations
regarding the existence of semi soft coking coal in its Rocklands and Hillalong
tenements and the prospect for semi anthracite deposits in Richfield. The
company has completed comprehensive testing of drill core samples which has
largely confirmed attractive coal quality and recoveries.
Outlook
There continues to be high demand for the company’s coke products with stable
monthly production expected at around 40,000 tonnes and full year production
targeted between 480,000 and 500,000 tonnes.
Delivery of coal gas to newly constructed ceramic plants commenced in October
2007 and soda plants in January 2008, both located in the vicinity of the
company’s coke plant. This was flagged during merger talks and will further
contribute to the company’s revenues whilst improving environmental protection.
For the full 2008 financial year, RCI expects to deliver group operating profit
(before interest & tax) of more than $7million, with the company aiming to
improve profitability in the following year on the back of continued growth in the
Chinese economy.
Strategic Investment
Rocklands will continue to seek new business opportunities both in Australia and
China leveraging off its unique presence and experience in both countries.
Planning work has progressed for the construction of new coke ovens, which will
provide for an additional 800,000 tonnes of coke to existing capacity and take
capacity to 1.2 million tonnes per annum.
The works encompass the construction of two 4.3 metre high oven batteries and
attendant by product chemical lines. A new hydro-de sulphurising system to
effectively reduce H2S will provide the foundation for establishing a green
plant with more environmental protection and in the interim, protect operating
equipment, reduce pollution and create a valuable new product, being sulphur.
A new means for the better refinement of chemical products including tar and
benzene and the construction of a dedicated railway connecting to the national
railway network, aimed at guaranteeing transport options and lower railway
charges, are also planned.
Total investment cost is estimated at A$72 million. The project has been
approved by the municipal government and submitted to the provincial
government for endorsement. It has been nominated as the major project to be
directly supervised by the municipal government.
Ugo Cario
Chief Executive Officer