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Freetech Road Recycling Technology Announces 2013 Interim Results
Revenue and Net Profit Before Extraordinary Items Rose 67.4% and 91.9%
Record Highs of HK$261.4 Million and HK$81.5 Million Respectively
HONG KONG, Aug 28, 2013 - (ACN Newswire) - Freetech Road Recycling Technology (Holdings) Limited ("Freetech", or the "Group;" stock code: 6888), a leading and fast-growing service provider in the asphalt pavement maintenance ("APM") industry by using "Hot-in-Place" recycling technology, today announced its first interim results for the six months ended 30 June 2013 (the "Period") after the Group's successful listing on the HKEx in June 2013.
The Group's revenue surged 67.4% year on year to approximately HK$261.4 million. Gross profit reached a record high of HK$138.9 million, representing an increase of 68.3%, while gross profit margin reached 53.2% (1H 2012: 52.9%). Profit attributable to owners of the Company rose 42.1% to HK$65.8 million. If excluding extraordinary items for the Period, profit attributable to owners of the Company before extraordinary items increased by approximately 91.9% to HK$81.5 million. Basic earnings per share were 8.72 HK cents (1H 2012: 6.23 HK cents). The Group maintained a strong financial position with cash and bank balances of HK$633.5 million and a net cash position.
Mr Sze Wai Pan, Chairman of Freetech Road Recycling Technology said, "We are delighted to announce our first interim results with promising earning growth. Thanks to our strong R&D capabilities and state-of-the-art asphalt recycling technology, and benefitting from supportive policies of the PRC government, the Group has enjoyed first-mover advantage and has tapped the promising market demand. We continue to promote our reputation under (Road Doctor) brand and strengthen our market position as a leading APM service provider and APM equipment producer in the PRC and to increase our market share."
Business Review
The Group consists of two main business segments: the APM service segment, where it provides asphalt pavement maintenance services under the registered trademark (Road Doctor) to repair damaged asphalt pavement surfaces, and the APM equipment segment, where it manufactures and sells a wide range of APM equipment.
APM Services
Revenue soared by 84.7% reaching HK$150.1 million, primarily because the uniqueness of our leading technology, the unreluctant effort constributed by the employees of our Group and recycling technology is encouraged by recent policies initiated by the PRC government. Gross profit also increased substantially by 87.7%, reaching HK$65.1 million. Increase in revenue in the Period was due to: (i) increase in the total APM area it serviced; (ii) increase in the average selling price of using "Hot-in-place" technology; and (iii) new revenue generated from the Group's city excavation rapid backfilling restoration process, which has higher average selling price than "Hot-in-Place" technology. During the Period, gross profit margin remained at a high level of 43.4% (1H 2012: 43.7%). This segment accounted for 57.4% of the Group's total revenue (1H 2012: 52.0%).
APM Equipment
Revenue also strongly increased by 48.7% reaching HK$111.3 million. During the Period, the Group established three new jointly-controlled entities in Guangdong Province, Fujian Province and Jiangsu Province with local service providers or investors which have broadened its customer base and increase its market share. Gross profit and gross profit margin rose 54.3% to HK$73.9 million (1H 2012: HK$47.1 million) and 12.1% points to 66.4% (1H 2012: 54.3%) respectively. The increase was mainly attributable to the increase in sales of higher margin products, i.e., modular series products with an additional four sets sold. This segment accounted for 42.6% of the Group's total revenue (1H 2012: 48.0%).
Research and Development (R&D)
To maintain Freetech's leading position in using "Hot-in-Place" recycling technology in APM industry, the Group persists in technological innovation. As at 30 June 2013, the Group had registered 85 patents (31 December 2012: 79). The Group will also invest on a multi-purposed road surveying vehicle soon to enable the collecting, analysing and generating of all road quality indexes in a more accurate and much faster manner.
Production Capacity
With the introduction of certain favorable policies by the PRC government to encourage the use of recycling technology in the APM, the Group anticipates an increase in sales of its APM equipment, modular series to joint ventures and an increase in demand for its own use as the Group continues to expand its APM service operations. In February 2013, the Group commenced the construction of a new plant to increase its APM equipment production capacity. Construction progress is in line with its plans and it is expected that the new production facility will become operational by late 2013 upon partial completion. The new facility is expected to increase production output capacity by more than double at the end of 2014 when construction has been completed.
Outlook
Looking ahead, the Group remains optimistic about the industry's prospects and will continue to strengthen its market position and increase its market share through: (i) investing more resources to maintain the Group's dominant role in providing APM services through set up more sales offices in different city; (ii) increasing its market penetration, particularly in the cities where the use of Hot-in-Place Asphalt Recycling Technology has been relatively limited; (iii) setting up new joint ventures; and (iv) further strengthening its R&D capabilities and increasing equipment production and service capacities. In addition, the Group has recently developed a new and unique sub-series under its existing modular series equipment named HiPav 5 which integrates the functions of a Hot-in-place recycling unit and a traditional asphalt paver. HiPav 5 owns 4 registered patents and equips with high flexibility, reliability and efficiency features. It is capable to further explore new markets, including secondary or narrow asphalt roads where traditional recycling trains cannot gain access to. The introduction of the HiPav5's technology marks a significant technology breakthrough into the worldwide APM industry. We believe that this equipment will provide a favourable return to the Group in the near future.
Mr. Sze concluded, "As a leading and fast-growing service provider in the asphalt pavement maintenance industry, we are very proud of our strong R&D capabilities and will continue to adopt the most advanced technologies in providing customised solutions to our customers and maintain our competitive advantages. We are committed to uphold our development principle - 'Efficient use of technology to create multi-win situations', and to generate sustainable returns for our shareholders in the long run."
Contact:Strategic Financial Relations Limited
Vicky Lee
Tel: (852) 2864 4834 / 9471 2009
Email: vicky.lee@sprg.com.hk
Beatrice Wong
Tel: (852) 2114 4953 / 9732 8223
Email: beatricehy.wong@sprg.com.hk
Jessica Siu
Tel: (852) 2864 4847 / 9756 9366
Email: jessica.siu@sprg.com.hk
Fax: (852) 2527 1196
Source: Freetech Road Recycling Technology (Holdings) Ltd
Sectors: Daily Finance, Daily News
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