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Freetech Road Recycling Technology Announces 2013 Annual Results
Revenue and Net Profit Before Extraordinary Items Rose 29.4% and 35.3% Respectively
HONG KONG, Mar 26, 2014 - (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 using "Hot-in-Place" recycling technology, today announced its annual results for the year ended 31 December 2013 (the "Year").
The Group's revenue was approximately HK$628.7 million, representing an increase of approximately 29.4% compared with 2012. Gross profit reached HK$341.1 million, representing an increase of 29.7%, while gross profit margin also rose to 54.3% (2012: 54.1%). Profit attributable to owners of the parent rose 24.5% to HK$182.5 million. If excluding extraordinary items for the Year, profit attributable to owners of the parent increased by approximately 35.3% to HK$198.8 million. Basic earnings per share were 19.93 HK cents (2012: 19.73 HK cents).
Mr Sze Wai Pan, Chairman of Freetech said, "With the government's supportive policy of recycling technology, Freetech remains a leading and fast-growing service provider by utilising its unique "Hot-in-Place" recycling technology in the asphalt pavement maintenance industry in China. We have further expanded our customer base and market share via our new strategy of appointing local experienced APM service providers as franchisees. In addition, we are thrilled that the application of our technology has extended from road maintenance into a new business area of road expansion and reconstruction during the Year. With our strong technological capabilities, we are confident we can tap the enormous potential presented by the increasing demand for road replacement and highway construction in China."
Business Review
The Group's business comprises 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
The Group's strategy to expand its market has continued with the establishment of three (2012: four) new joint ventures and associates and as at 31 December 2013, had a total of nine (as at 31 December 2012: six) joint ventures and associates. Revenue of this segment increased by 19.8 %, primarily because of recent PRC government supportive policies encouraging the use of recycling technology. Moreover, the higher revenue was also due to: (i) an increase in the total APM area that the Group serviced; (ii) an increase in the Group's average selling price of using "Hot-in-place" technology; and (iii) new revenue generated from the Group's pioneering technology, city excavation rapid backfilling restoration process, which has a higher average selling price than "Hot-in-Place" technology.
Moreover, the Group also successfully widened the application of "Hot-in-Place" technology from road maintenance projects into new areas of road expansion and reconstruction projects during the Year . A subsidiary of the Group entered into a contract with Ordos Dongfang Road & Bridge Group Co., Ltd*. Under this contract, the Group is to provide APM services by using "Hot-in-Place" recycling technology on a road expansion and reconstruction project at Dongkang expressway, Ordos, in the Inner Mongolia Autonomous Region of PRC.
In the fourth quarter of 2013, the Group has also embarked on a new market expansion strategy and appointed local experienced APM service providers as its franchisees to promote its "Hot-in-Place" recycling technology within specified cities. As at 31 December 2013, the Group's had appointed 6 local APM service providers as franchisees. As of today, the group has appointed 10 franchisees in total.
APM Equipment
During the Year, the Group further expanded its customer base and market share by establishing three new joint ventures in Guangdong Province, Fujian Province and Jiangsu Province with local service providers or investors. Riding on the strong demand of the Group's standard series products and its business strategy of establishing joint ventures and sales of the more modular series models, revenue for the APM equipment segment increased by 43.3% as compared to 2012. With the increasing sales of higher margin modular series products, gross profit margin improved from 68.7 % in 2012 to 69.2% in 2013.
Research and Development (R&D)
To maintain the leading position in the use of "Hot-in-Place" recycling technology in the APM industry, the Group continues to invest in technological innovation. As at 31 December 2013, the Group had registered 87 patents (31 December 2012: 79). The Group also intends to invest in a multi-purpose road surveying vehicle which will enable it to collect, analyse and generate all road quality indices more accurately and quickly.
Outlook
Looking ahead, the Group remains optimistic about the industry's prospects against the backdrop of encouragement of the use of recycling technology in the APM market by the PRC government. Thus, the Group will continue to expand its market position through: (i) investing in more resources to maintain its leading role in providing APM services through establishing more sales offices and appointing more salesmen in different cities; (ii) increasing market penetration, particularly in cities where the use of "Hot-in-Place" recycling technology is currently relatively limited; (iii) establishing new joint ventures; (iv) appointing more local APM service providers as its franchisees; and (v) further strengthening its R&D capabilities and increasing its equipment production and service capacities. To better cope with the soaring demand of the APM industry, the new production facility is also expected to become operational by the second quarter of 2014 and its production output capacity will increase by more than double when construction is completed by the end of 2014.
Mr. Sze concluded, "As a leading service provider of "Hot-in-Place" recycling technology in the APM industry, our strong R&D capabilities and state-of-the-art asphalt recycling technology has provided us with first-mover advantage, enabling us to tap the surging industry demand. The Group intends to further advance our technology by continuing our "4 in 1" business model, through setting up the Road Recycling Training Institute. We are embarking on this initiative as the key to advancing technology research and innovation is the development of new professionals while at the same time we can promote our reputation under the "Road Doctor" brand and generate favourable returns for our shareholders."
Contact:Strategic Financial Relations Limited
Vicky Lee Tel: (852) 2864 4834 / 9471 2009 Email: vicky.lee@sprg.com.hk
Kate Kwan Tel: (852) 2864 4873 / 9077 1337 Email: kate.kwan@sprg.com.hk
Stephanie Liu Tel: (852) 2864 4852 / 9616 6167 Email: stephanie.liu@sprg.com.hk
Fax: (852) 2527 1196
Source: Freetech Road Recycling Technology (Holdings) Ltd
Sectors: Daily Finance, Daily News
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