China Tire e-commerce.com Limited (Former
Name: China Tire Holdings Limited)
Press Release
Consolidated Results for the Year Ended December 31, 2000
NEW YORK, April 23 China Tire e-commerce.com Limited ("China Tire" or the "Company")
announced today its audited consolidated results for the year ended
December 31, 2000:
Financial Highlights
Year ended Year ended Change%
December 31, December 31,
1999 2000
Revenues Rmb 2,622.4 M Rmb 2,815.6 M up 7.4%
Net loss Rmb (153.2 M) Rmb (79.4 M) down 48.2%
Net loss per share Rmb (16.83) Rmb (8.75) down 48.0%
For details of the audited consolidated results of The Company and its
subsidiaries for the year ended December 31, 2000, please refer to financial
highlights. In 2000 the subsidiaries under China Tire included five
Sino-foreign equity joint ventures in the People's Republic of China ("PRC
Subsidiaries"): Double Happiness, Hangzhou Zhongee, Yinchuan CSI, Yantai CSI
and Shandong Synthetic, and four international corporations: Orion Tire, Orion
B.V.I., Container Limited and CSI Rubber.
For the year under review, the Chinese tire industry experienced a
difficult operating environment, due to oversupply of tire products, high
level of inventories, and an increase in oil price which translates to
increase in raw material prices. As a result, margins were eroded due to
higher raw material prices for synthetic rubber, carbon black and an increase
in distribution cost. The situation is exacerbated by consumers taking
advantage of present warranty system by claiming replacement of tires due to
overloading of vehicles, especially trucks. According to China Rubber
Association of Tire division, 27 out of 58 tire manufacturers incurred losses
in the year of 2000.
Year 2000 was a record year of the Company and it achieved total revenues
of Rmb2.8 billion representing a 7.4% increase over the 1999 revenues of
Rmb2.6 billion. This was mainly due to export sales increasing dramatically.
Export sales constitute approximately 28% of the total turnover as compared
with 23% of the total turnover, representing a growth of 27% over 1999 in
monetary amount. China Tire sold a total of 7.4 million units of tires in the
year of 2000 representing a unit volume increase of approximately 7% over
1999.
The Company's gross profit margin fell slightly from 11.5% for the year
1999 to 10.1% for the year 2000. The lower gross margin was mainly due to
lower margin in export sales, increase in warranty claims and raw material
prices.
Due to increase in revenues, the Company was able to generate
Rmb285.3 million of gross profit versus Rmb300.7 million with a marginal
decrease of approximately 5.1% when compared with 1999.
Operating loss increase to Rmb50.9 million in 2000 as compared with a loss
of Rmb30.5 million in 1999. This is mainly due to decline in gross profit,
increase in distribution cost due to the increase in sales volume and keen
competition in the China tire market.
China Tire's consolidated net loss was Rmb79.4 million for the year ended
December 31, 2000 as compared to a net loss of Rmb153.2 million for 1999. The
loss for the year was partially due to the provision for long overdue of
court-awarded compensation receivable from Chongqing Tire factory amounting to
approximately Rmb15.0 million. The loss in 1999 was mainly attributable to
the provision of impairment loss of Rmb122.0 million for The Double Happiness
radial tire project and a provision of Rmb34.9 million for investment in
Chongqing.
During 1995, the Company began to renegotiate the terms of its joint
venture agreement for Chongqing CSI Tyre Co. Limited ("Chongqing CSI") with
its joint venture partner, Chongqing Tire Chief Factory ("Chongqing Factory").
In 1997, the Company proposed a termination of the joint venture agreement of
Chongqing CSI (the "Termination") with Chongqing Factory which was agreed by
the supervisory authority of Chongqing Factory. Both parties also agrees that
the capital injected by the Company amounting to Rmb57.0 million would be
treated as an interest bearing loan from the date of contribution. However,
as recovery of the investment/loan was not forthcoming, the Company initiated
arbitration proceedings (the "Proceedings") in the PRC against Chongqing
Factory to enforce the Termination, and to recover the loan and accrued
interest in the amount of Rmb89.3 million as well as the related legal
expenses for the Proceedings. The application for the arbitration was
accepted by the China International Economic and Trade Arbitration Commission,
Shenzhen Commission and the Commission issued a judgement in favour of China
Tire on March 31, 2000 as follows:
1) The joint venture agreement of Chongqing CSI with Chongqing Factory
was terminated and the joint venture is to be liquidated according to
the relevant rules and regulation.
2) China Tire was entitled to damages of Rmb 15.8 million as compensation
for financial losses suffered. Such amount should be paid to China
Tire by Chongqing Factory within 45 days from the date of judgment.
3) All other claims by China Tire were dismissed.
Up to the date of this report the Company has not yet received the
compensation from Chongqing Factory except for Rmb0.2 million on April 2001.
The Company reserves all rights to take further action against Chongqing
Factory to recover its capital investment, economic losses and damages. The
Board took a prudent view and made a provision against the outstanding
principal balance of the loan receivable amounting to Rmb41.8 million and
Rmb15.0 million in the 1999 and 2000 accounts respectively.
During the year of 2000, Orion Tire's major banker, Pacific Bank, N.A.,
lodged a legal claim against China Tire in Hong Kong to enforce a corporate
guarantee amounting to approximately US$2.1 million provided to Orion Tire for
its banking facilities by China Tire. On November 1, 2000, the Company paid
an agreed sum of US$1.98 million to settle the amount drawn down under the
facility and the accrued interest expenses.
During 2000, China Tire paid total divides of US$724,932.80. In 2001, the
Board of Directors also declared and paid a quarterly dividend of US$0.02 per
share of Supervoting Common Stock and Common Stock for the first quarter of
2001.
The Annual General Meeting for China Tire will be held in Hong Kong on
May 31, 2001. Based on the record date of April 4, 2001, the Company will
send notice of the meeting and proxy statement to shareholders on May 5, 2001.
** For the convenience of readers, the translation of amounts from
Renminbi (Rmb) into United States Dollar (US$) has been made at the unified
exchange rate quoted by The People's Bank of China on December 31, 2000 of
US$ 1.00 = Rmb8.28. No representation is made that the Renminbi amounts could
have been, or could be, converted into United States Dollar at that rate on
December 31, 2000 or at any other rate.
For more information, please contact:
Hong Kong New York
China Tire e-commerce.com Limited Dewe Rogerson Inc.
Mr. Lien Kait Long
Tel. 852-2372-0130 Tel: 212-688-6840
The Operating Subsidiaries
Hangzhou Zhongee
Hangzhou Zhongee - Summary Financial Information
For the year ended For the year ended
December 31, 1999 December 31, 2000
(amounts in thousands Rmb)
Revenues 1,337,513 1,605,842
Gross Profit 137,676 162,115
Operating Income (1) 51,797 49,115
Net income (loss) 11,163 (1,637)
(1) Operating income means income before income taxes and net interest
expenses.
For the years ended December 31, 2000 and 1999
Revenues soared 20.1% or Rmb268.3 million to Rmb1.6 billion in the year of
2000 from 1999. The increase was principally attributable to a 13% increase
in sales volume in vehicle/truck tires and 24% increase in bicycle tires. The
increase in revenues was mainly due to the improved quality of tires and
management's effort on rationalization of the product mix toward more
marketable products.
Gross profit amount increased 17.8% to Rmb162 million in the year of 2000
from Rmb137.7 million in the year of 1999 and decreased slightly as percentage
of revenues to 10.1% in the year of 2000 as compared with 10.3% in the year of
1999. The decrease in the gross margin is mainly due to additional provision
for warranty claims, lower export sales margin as compared with the domestic
sales and the impact of increase in oil price which resulted in increase in
raw material prices.
Operating income decreased 5.2% to Rmb49.1 million in the year of 2000
from Rmb51.8 million in the year of 1999. The decrease was mainly due to
increase in distribution cost incurred as a result of increase in sales
volume.
Hangzhou Zhongee reported a net loss of Rmb1.6 million in the year of 2000
and a net income of Rmb11.2 million in the year of 1999. The decrease was
mainly attributable to the lower operating income and increase in interest
expenses for bank loans for working capital purposes.
Double Happiness
Double Happiness - Summary Financial Information
For the year ended For the year ended
December 31, 1999 December 31, 2000
(amounts in thousands Rmb)
Revenues 488,197 516,115
Gross profit 62,466 52,090
Operating income (loss) (1) 4,591 (13,008)
Provision for impairment loss
of long-lived assets (122,000) --
Net loss (132,100) (26,637)
(1) Operating income (loss) means income (loss) before income taxes
and interest expenses and provision for impairment loss of
long-lived assets.
For the years ended December 31, 2000 and 1999
Revenues of Double Happiness increased by 5.7% to Rmb516.1 million in the
year of 2000 from Rmb488.2 million in the year of 1999. This was primarily
due to increase in sales volume.
Gross profit decreased by 16.6% to RMb52.1 million in the year of 2000
from Rmb62.5 million in the year of 1999, and also decreased to 10.1% as a
percentage of revenues in the year of 2000 compared with 12.8% in the year of
1999. The decrease was mainly due to increase in major raw material costs,
provision to write-down inventories to their net realizable values and
provision for tire warranty claims.
The Company suffered an operating loss of Rmb13.0 million compared
Rmb4.6 million operating income achieved in 1999. This loss was mainly due to
the decrease in gross profit, increase in delivery charges and packaging
expenses due to the increase in sales.
Net loss decreased by Rmb105.5 million to Rmb26.6 million in the year of
2000 from a net loss of Rmb132.1 million in the year of 1999. This was mainly
due to a provision for impairment loss of the assests of a radial tire project
in the amount of Rmb122.0 million made in 1999.
Yinchuan CSI
Yinchuan CSI - Summary Financial Information
For the year ended For the year ended
December 31, 1999 December 31, 2000
(amounts in thousands Rmb)
Revenues 728,210 654,580
Gross Profit 87,408 61,729
Operating loss (1) (18,062) (40,220)
Net loss (23,317) (47,828)
(1) Operating loss means loss before income taxes and net interest
expenses.
For the years ended December 31, 2000 and 1999
Revenues decreased by 10.1% to Rmb654.6 million in the year of 2000 from
Rmb728.2 million in the year of 1999. The decrease in revenues amount was due
to a decrease in the sales volume by approximately 9% and reducing in selling
price about 10% of a major product due to keen competition in the northern
part of China.
Yinchuan CSI's gross profit decreased 29.4% to Rmb61.7 million in the year
of 2000 from Rmb87.4 million in the year of 1999 and decreased as a percentage
of revenues to 9.4% in the year of 2000 compared to 12.0% in the year of 1999.
The slight decrease in gross profit was mainly attributable to the effect of
decrease in selling prices, additional provision to write-down inventories to
their net realizable values and provision for tire warranty claims.
Yinchuan CSI had an operating loss of Rmb40.2 million in the year of 2000
compared with an operating loss of Rmb18.1 million in the year of 1999. The
increase in loss was due to the lower gross profit margin and provision for
doubtful debts.
Net loss was Rmb47.8 million in the year of 2000 compared with a net loss
of Rmb23.3 million in the year of 1999. This increase in loss was primarily
due to lower gross profit margin and increase in provision for doubtful debts.
Yantai CSI, Shandong Synthetic, CSI Rubber, Container Limited, Orion Tire
and Orion B.V.I.
No summary financial information has been provided for Yantai CSI,
Shandong Synthetic, CSI Rubber, Container Limited, Orion Tire and Orion B.V.I.
as their operations are insignificant when compared to the other subsidiaries.
China Tire e-commerce.com Limited -- Financial Highlights
Consolidated statements of Operations
For the year ended December 31
1999 2000
Note (1) (1)
Rmb '000 Rmb '000 US$'000(3)
(except for net loss per share)
Revenues 2,622,410 2,815,609 340,049
Cost of revenues (2,321,743) (2,530,221) (305,582)
Selling and administrative
expenses (331,131) (336,244) (40,609)
Operating income (loss) (5) (30,464) (50,856) (6,142)
Interest Expenses, net (47,632) (47,009) (5,677)
Other losses (2) (156,935) (16,929) (2,045)
Loss before income taxes
and minority interests (235,031) (114,794) (13,864)
Provision for income taxes (5,289) (5,348) (646)
Loss before minority interest (240,320) (120,142) (14,510)
Minority interests 87,124 40,758 4,923
Net loss (153,196) (79,384) (9,587)
Net loss per share-Basic (4) (16.83) (8.75) (1.06)
Consolidated Balance Sheets Data:
As of December 31
1999 2000
Note (1) (1)
Rmb '000 Rmb '000 US$'000(3)
Working Capital 557,824 453,999 54,831
Property, plant
and Equipment, net 1,089,324 1,052,142 127,070
Total assets 3,316,944 3,326,983 401,810
Current Liabilities 1,492,226 1,673,725 202,141
Non-current portion
of long term bank loans 58,500 70,600 8,527
Due to Chinese joint
venture partners 122,625 70,451 8,508
Minority interests 601,337 559,280 67,546
Shareholders' equity 1,041,662 952,627 115,052
Consolidated Statements of Cash Flow Data:
For the year ended December 31
1999 2000
Note (1) (1)
Rmb '000 Rmb '000 US$'000(3)
Depreciation and Amortization 104,036 109,985 13,283
Capital expenditures on property,
plant and equipment (95,209) (72,016) (8,697)
Sales proceeds from disposal of
available-for-sales securities -- 8,554 1,033
Investment in an affiliate -- (11,855) (1,432)
Hangzhou Zhongee - Summary Financial Information
Year ended Year ended
Note December 31, December 31,
1999 2000
Rmb '000
Revenues 1,337,513 1,605,842
Gross profit 137,676 162,115
Operating income (5) 51,797 49,115
Net income (loss) 11,163 (1,637)
Double Happiness - Summary Financial Information
Year ended Year ended
Note December 31, December 31,
1999 2000
Rmb '000
Revenues 488,197 516,115
Gross profit 62,466 52,090
Operating income (loss) (5) 4,591 (13,008)
Provision for impairment
loss of long-lived assets (122,000) --
Net loss (132,100) (26,637)
Yinchuan CSI - Summary Financial Information
Year ended Year ended
Note December 31, December 31,
1999 2000
Rmb '000
Revenues 728,210 654,580
Gross profit 87,408 61,729
Operating loss (5) (18,062) (40,220)
Net loss (23,317) (47,828)
1. The Company was incorporated on January 28, 1993 and acquired from
China Strategic Holdings Limited ("CSH"), formerly known as China
Strategic Investment Limited, its interest in Hangzhou Zhongee on
April 25, 1993 and in Double Happiness on April 16, 1993. CSH held its
interests in Hangzhou Zhongee, and Double Happiness from the time of
their establishment on June 12, 1992 and April 16, 1992,
respectively. The Company later entered into agreements to form new
Sino-foreign equity joint ventures: Yantai CSI on October 29, 1993;
Yinchuan CSI on December 6, 1993; Shandong Synthetic on May 28, 1994.
The two joint ventures, Yantai CSI, and Yinchuan CSI commenced
operations effective from January 1, 1994. Shandong Synthetic
commenced operations effective from January 1, 1995. The Company also
acquired its 60% interests in Orion Tire and Orion BVI in March 1994
and accounted for these investments from May 1 and August 1, 1994
respectively. Dalian CSI is 70% owned by CSI Rubber Industries
Limited, Hong Kong incorporated company which was acquired by the
Company from CSH on April 19, 1994, and was accounted for with effect
from April 1, 1994. Container Limited, a British Virgin Islands
company, is a wholly-owned subsidiary of the Company set up in 1998.
These enterprises are collectively known as the "Operating
Subsidiaries".
The Company acquired its interest in Chongqing CSI during the fourth
quarter of 1993. Chongqing CSI commenced operations on January 1,
1994. During 1995, the Company began renegotiating the terms of the
joint venture agreement of Chongqing CSI. Pending the outcome of the
negotiations, the parties agreed that the capital injected by the
Company of Rmb57.0 million (US$6.6 million) would be treated as an
interest-bearing loan to Chongqing Tyre Chief Factory ("Chongqing
Factory"), the Chinese joint venture partner, with effect from the
date of contribution. Accordingly, the original capital contribution
of Rmb57.0 million (US$6.6 million) was accounted for as a loan
receivable from Chongqing Factory ("The Loan") since 1996 and the
financial position and results of operations of Chongqing CSI have
not been included in the consolidated financial statements since
1996. The Company has also made full provisions against recorded
interest income on the Loan of approximately Rmb14.0 million for the
year ended December 31, 1999.
In 1997, the Company proposed termination of the joint venture
agreement of Chongqing CSI (the "Termination") with Chongqing
Factory. Pursuant to an approval document issued by the supervisory
authority (the "Supervisor") of Chongqing Factory an April 10, 1997,
the Supervisor has agreed to the Termination as well as the transfer
of the original investment by the Company in Chongqing CSI to other
projects in the Chongqing region. However, as no potential project
was identified for reinvestment, the Company initiated
arbitration proceedings ("The Proceedings") in the PRC against
Chongqing Factory to enforce the Termination, and to recover the Loan
and in the amount of Rmb57.0 million as well as the related legal
expenses for the Proceedings (estimated in the amount of
Rmb3.0 million). The application for the arbitration was accepted by
the China International Economic and Trade Arbitration Commission.
Shenzhen Commission and the Commission finally issued a judgement in
favour of China Tire on March 31, 2000 as follows:
4) The joint venture agreement of Chongqing CSI with Chongqing
Factory was terminated and the joint venture is to be liquidated
according to the relevant rules and regulations
5) China Tire was entitled to damages of Rmb15,162,125 for the
compensation of financial losses suffered. Such amount should be
paid to China Tire by Chongqing Factory within 45 days from the
date of judgement.
6) All other claims by China Tire were dismissed.
Up to the date of this report, the Company has not yet received the
compensation from Chongqing Factory except for Rmb200,000 in April
2001. The Company reserves all its rights to take further action
against the Chinese Party to recover its capital investment, economic
losses and damages. The Board took a prudent view to make a provision
against the outstanding principal balance of the Loan amounting to
Rmb34.9 million and Rmb15.0 million in the 1999 and 2000 accounts
respectively.
2. Other losses included a provision for the compensation receivable from
Chongqing Factory amounting to approximately Rmb15.0 million in 2000
(1999:Rmb34.9 million). Included in 1999 also a provision for the
potential impairment loss on the radial tire facilities under
construction of an operating subsidiary amounting to Rmb122.0 million.
3. The U.S. dollar translation amounts have been translated using the
unified exchange rate quoted by the People's Bank of China in December
31, 2000 of US$1.00 = Rmb8.28. No representation is made that the
Renminbi amounts could have been, or could be, converted into U.S.
Dollars at that rate on December 31, 2000 or at any other certain
rate.
4. The calculation of the basic net loss per share for the years ended
December 31, 1999 and 2000 respectively is based on the weighted
average number of common shares outstanding during the years ended
December 31, 1999 which was 9,100,000 and 2000 which was 9,069,956.
5. Operating income (loss) means income (loss) before income taxes, net
interest expenses and other losses.
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