(YGH) Yinggao

20 September 2011

Correction

The following clarifies the "Interim Results" announcement released on 20 September 2011 at 07:00 under RNS number 5326O. 

In the Chairman's Statement, where earnings per share are stated as being $HK1.01 in H1 2011 and $HK0.51 in H1 2010, this should actually read as HK$ 1.01cents in H1 2011 and HK$ 0.51cents in H1 2010.

There are no other changes.

The full amended announcement is set out below.

Yinggao Holdings plc

("Yinggao" or the "Company")

Interim Results

The Board of Yinggao announces the unaudited interim results of the Company for the period from 1 January 2011 to 30 June 2011. A copy of these financial statements will also be available on the Company's website www.yinggaoholdings.com.

Enquiries:

CHAIRMAN'S STATEMENT

Introduction

I am delighted to report that the Group's performance during the six months to 30 June 2011 has resulted in profits significantly higher than during the same period of prior year.  We have deployed our resources to achieve greater efficiency in our core operations including the continuing capital investment in the upgrade of the facilities at our container terminal and in the lease of new barges that will drive the future profitability of the Group.   The performance is particularly encouraging given the economic slowdown both in the USA and Europe.

Results

Record revenues for a six month period in the first half of 2011 of HK$276 million, up 76% on the corresponding period in 2010, have resulted in an EBITDA of HK$34 million (H1 2010: HK$21 million). Profit before taxation totalled HK$28 million (H1 2010: HK$14 million) and earnings per share totalled HK$ 1.01cents (H1 2010: HK$ 0.51cents), representing growth of 100% and 98% respectively.

The Group's gross profit increased by 31% to HK$39 million in H1 2011 from HK$30 million in H1 2010. However, the gross profit margin fell to 14% in the first half of 2011 from 19% in the corresponding period in 2010, due to 54% of group revenue being generated from trading of non-ferrous metal, up from 39%. In non-ferrous metal trading, the gross profit margin fell from 5.2% to 1.6%.

The container terminal segment delivered a gross profit margin of 28% compared to 29% in the previous period. The barging services segment's gross profit margin increased from 30% to 34% year-on-year, largely due to increased handling capacity of the barges, coupled with increased income generated from container leasing.

The Group's cash balances stood at HK$ 24 million as at 30 June 2011, compared to HK$6 million as at 30 June 2010. The Group made HK$102 million prepaid lease payments during the first six months of 2011(H1 2010: HK$ nil) which was paid to the owner of our new barges as a deposit payment so as to secure a long term lease as well as a competitive chartering fee.  These substantial lease payments resulted in the net cash generated from operation activities of minus HK$3.5 million.  However, management took the view that this is a one off expenditure which the board does not consider a long term working capital hurdle to the Group.

Operating Review

Operationally, the Group has performed well in the first half of the year.  It has made good progress with its strategy to increase its revenue year on year across all three business segments. 

The container terminal reported an increase in the half year both in revenue and throughput of 17% and 19% respectively, compared to the corresponding period last year.  We are very pleased to have expanded our customer base in domestic trade, which has alleviated the effect of the slowdown in export trade in China.  Despite the continuous growth in revenue of the container terminal, we do not expect its profit margin will grow in parallel as the depreciation cost will increase incrementally due to the installation of the new machinery and equipment.

It was particularly pleasing to see the strong performance of the barging service business during this period.  Its revenue continued to grow with an increase of 57% to HK$58 million from HK$37 million in the first half year which accounted for 21% (H1 2010: 24%) of the Group's total revenue.  Not only has the operating profit of this business segment itself increased (H1 2011 : HK$16 million vs H1 2010: HK$6.4 million), but its contribution to Group profit increased from 44% to 56% compared to the same period last year.  This has provided an incentive to the management to accelerate the strategy of expanding the barging services business so as to maximize shareholders' returns.  We are in fact benefiting from the planned operational synergies as the container leasing business provides auxiliary service to our customers in shipping.  

During the first six months of 2011, approximately 54% of the Group's revenues were derived from trading of non-ferrous metal. Whilst its profit margin is only 1.3%, its operating profit of HK$1.9 million represented 7% of the total operating profit of the Group. Though management recognises the trading profit margin is relatively low compared to the other two core businesses, the trading platform has proven to be a stimulus to the barging services business as some metal trading customers use our barges for shipment as well. 

Prospects

We now place the delivery of strong operating performance at the heart of our strategy for the business, as demonstrated again by these results.  Looking into the second half of 2011, the Group will continue to build its business and focus on Yinggao's strengths to achieve its ultimate goal of becoming the industry leader in the barging service business sector in the Pearl River Delta.  The size of our "228 TEU" barges has proved to be far more cost effective compared to the common size of "120 TEU" barges used by our competitors in the region.  We will continue expanding our fleet with an aim to increase our overall carrying capacity.

As for the Keen Chance Terminal, the board is optimistic on the outlook for growth of the throughput for the years to come.  The deployment of the advanced new cargo handling equipment and machinery, coupled with the facility upgrade project, has not only increased the cargo turnover efficiency but also increased the stacking capacity by approximately 20%.  In addition, we will adopt a cautious approach by diversifying the customer base so as to address the changing global economy. 

The Board would again like to thank all our staff for the commitment, professionalism and loyalty that they have shown during the last six-months of progress. We are looking forward to the future with confidence.

Angela Leung

Chairman

19 September 2011

FINANCIAL HIGHLIGHTS

For the six months ended 30 June 2011

(Expressed in Hong Kong dollars)

*Earnings attributable to owners of the parent before interest, tax, depreciation and amortisation

Condensed consolidated income statement

For the six months ended 30 June 2011

(Expressed in Hong Kong dollars)

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2011

(Expressed in Hong Kong dollars)

Condensed consolidated balance sheet

As at 30 June 2011

(Expressed in Hong Kong dollars)