TIDMGLOK
RNS Number : 0050G
Global Lock Safety (Intl) Grp CoLtd
31 May 2013
Global Lock Safety (International) Group Co., Limited
("Global Lock" or the "Company")
Final results and notice of AGM
Global Lock, the provider of security solutions to retailers and
other organisations in China, announces its final results for the
year ended 31 December 2012.
Highlights:
-- Billing fees income for the year RMB 89.36m (an increase of 180% over 2011's RMB 31.86m)
-- Profit for the year RMB 1.46m (2011: loss of RMB 24.42m)
-- Net assets (including minority interests) RMB 47.10m (2011: RMB 49.64m)
-- Cash and cash equivalents RMB 5.39m (2011: RMB 3.26m)
-- Loss per share RMB cents 0.45 (2011: loss of RMB cents 1.79)
Chairman's Statement
2012 saw a dramatic improvement for the Global Lock Group
despite continuing tough trading conditions in China. For the first
time since Global Lock listed on AIM in 2010, the Group moved into
profitability with profits of RMB 1.46m, a vast improvement on the
previous year's loss of RMB 24.42m. This was achieved on the back
of a significantincrease inturnover, from RMB 31.86m to RMB 89.36m,
an increase of more than 180%. This reflects Global Lock's focus on
improving the revenues and profitability of the branch network and
although the number of branches remained the same as in 2011 at 67,
a number of unprofitable branches were closed and new ones opened.
The number of customers at the year end increased to 24,107 (an
increase of 35% on the 2011 figure of 17,850). The average number
of customers per branch was 360 at the end of 2012, compared with
266 a year earlier.
As at 31 December 2012, the Group had 67 branches, 24,107
customers and 1,320 employees. These compare with 2011 as shown in
the following table:
2011 2012 % increase
--------------- ------- ------- -----------
No. Branches 67 67 -
--------------- ------- ------- -----------
No. Customers 17,850 24,107 35%
--------------- ------- ------- -----------
No. Employees 1,250 1,320 6%
--------------- ------- ------- -----------
Revenues (RMB
m) 31.86 89.36 180%
--------------- ------- ------- -----------
The improved performance in 2012 is attributable, inter-alia, to
the following factors:
1. increased accountability of branch level management,
following the changes set in place at the beginning of 2012,
focussing on the number of customers obtained by each branch as the
key operating metric;
2. further market expansion through developing mid-and-low level
retail store customers, which has resulted in both an increased
number of customers and reduced operating costs for those customers
as well as reducing the per-customer costs for Global Lock;
3. successful penetration into a new market segment; namely the
provision of remote monitoring services for a major security system
integration and power substation project (Xiangtan Jiuhua);
4. comprehensive technical modifications of Global Lock's
security equipment to improve its technical performance resulting
in significantly fewer incidents of false alarms thereby reducing
wasted staff time and eliminating unnecessary costs;
5. management improvements at all levels of the organisation to
eliminate duplication, improve focus and reduce costs;
6. extraction of the Company from a previous loss making
investment project (International Security Union building) and the
recovery of the investment; and
7. clarifying the complicated relationship with Henan Xinxiang
Jingan and consolidating Global Lock's 30% holding in this company
as a minority interest.
For 2013, Global Lock's Board have planned a number of
initiatives and developments that aim to consolidate and build upon
the achievements of 2012 and to entrench Global Lock as a leading
provider of security services in China. These measures include
further refining the operational management system to focus each
branch on its revenues and profits as the key benchmark, together
with numbers of customers. Global Lock intends to expand the
mid-and-low level market segment further as well as developing
additional sales channels. Through these measures Global Lock aims
to continue to increase its customer base, as well as building
customer numbers through acquisitions and business cooperation.
Following on from the success of the Xiangtan Jiuhua security
project, the Group will further undertake carefully selected
projects where these will add sufficiently to the bottom line.
Global Lock has ambitious plans to expand into the provision of
value added services for its customer base and these include
earning commissions for introducing its customers to an unconnected
loan finance provider. The Board is also cognisant of the need to
optimise and strengthen the Board and senior management of Global
Lock in order to improve operational efficiency; necessary tasks
include the improvement and streamlining of internal administrative
systems, reviewing wages and salaries and employee incentives;
improving the functioning of the ERP information
system,strengthening the treasury and capital management platform,
and enhancing branch monitoring.
In China, in recent years, incidents of theft suffered by
retailers have been increasing steadily,primarily as a result of
economic circumstances and a lessening of social stability. In the
nine months from June 2012 to February 2013, branches of Global
Lock have successfully prevented more than 8,000 potential thefts,
and there were in total around 140 cases where insurance pay-outs
were made. These numbers exceeded the combined total for the prior
five years. Global Lock's security technology and patrol guard
business, coupled with the provision of insurance has proved to be
successful in face of a variety of technical and other challenges.
As a Chinese saying goes "A vice rises one foot, virtue rises ten."
Global Lock's Board is convinced that in order to combat the
increasingly sophisticated criminals now being encountered,
increased investment on research and development of security
technologies with lower false detection rates and higher safety and
cost-efficiency to combat theft, reduce insurance claims and lessen
operating costs, will pay off many times over for Global Lock.
Technical Developments in 2012
In 2012 Global Lock's Research & Development Institute has
completed research and development for the following products as
well as initiating their batch production:
1. low power wireless infrared detectors aimed at significantly
reducing false alarms, 8,000 units of which have been
produced.;
2. wireless magnetic switch detector, 5,000 units have been produced;
3. GPRS/PSTN single module / double module alarm host, 6,000 units have been produced;
4. C/S frame-GPRS/PSTN/GSM triple-integrated alarm and video
platform, the platform has already been utilised by 15
branches;
5. central remote-control tear GPRS alarm host and alarm
receiving platform (applicable to an unmanned telecommunication
base station). The initial pilot was carried out at Heyuan Branch.
The platform performs strongly to prevent on-site theft, helping to
eliminate problems in remote areas which are not easily accessible
for facilities and patrol guards; and
6. FW-2A-B phone line alarm host (wire), applicable to lower
level customers. Batch production has been started.
Proposed 2013 technical enhancements include:
1. a wired infrared detector;
2. a wired microwave and passive infrared detector;
3. 3G image/video transmission alarm host;
4. a network alarm monitoring integrated platform, compatible
with alarm hosts manufactured by Global Lock and main alarm hosts,
integrated with a network camera and digital video recorder;
and
5. monitoring software operated by smartphones based on
GPRS/3G/WAN data channels.This enables customers, patrol guards, as
well as alarm receiving, technical and management personnel to
access the alarm system to check records of real-time operation,
alarm notifications, image/video browsing and recent events through
their smart phones.
Recent developments and trading update
At 30 April 2013, Global Lock had a total of 25,630 clients, an
increase of 6.3% from the end of 2012's 24,107. The number of
branches remained unchanged from the year end at 67.
The Group held its Annual Planning Meeting in Changsha from 9 to
11 January 2013 to review the achievements of 2012 and to plan for
2013, as well as to determine the operating targets for the
forthcoming year. Attendees included the Group's Chairman, members
of Senior Management, and 63 Branch Managers and accountants.
Outstanding branches were rewarded for achieving exceptional profit
levels, in meeting their operating targets and for attaining
excellent security service levels. In addition, numbers of
high-achieving individuals were also rewarded. Later in the year
from 21 to 22 March 2013 the Group held a further meeting for its
branches in Changsha in order to set individual branch revenue and
profits targets for the year.
Also in January 2013 the Hunan Family Fortune Security Services
Shenzhen Branch was awarded its Security Service Provider
Registration Certificate which confirms the compliance and legality
of Global Lock's network security alarm service.
The Group's new ERP Information System has been in use since 1
March 2013 and is proving a very valuable management tool.
Finally, as announced on 27 February 2013 the Group transferred
its holding of 15.789% shares in Shenzhen Zhong An Fang Investment
Holdings, and recovered its RMB 1.0m investment. Also the Group
purchased the remaining 50% shares of Yuxi Branch in order to
achieve 100% ownership of the Branch, further details of which were
announced on 21 March 2013.
Directorate changes
On 13 March 2012, Mr Yong Luo, Mr Xuean Yan and Mr Jun Gai
ceased to act as Directors, and on 12 September 2012, four new
directors, Mr Jianbing Wang, Mr Hualiang Jiang, Mr You Feng and Mr
Xiaohua Zhang were appointed, and Mr Moxiang Li was appointed as
Chairman and CEO. On 11 February 2013, Mr Xiaohua Zhang ceased to
act as Director and on 18 March 2013, Mr Yong Luo was re-appointed
as Chairman in place of Mr Moxiang Li who continued as CEO.
On behalf of the Board, I want to extend our warmest thanks to
our investors, business partners, associates and customers for
their support during the year and lastly, but by no means least, we
wish to thank the management and staff of the Global Lock family
for their tremendous efforts and dedicated hard work throughout the
year.
Emphasis of matter - going concern
The financial statements include an emphasis of matter from the
Group's auditors, UHY Hacker Young, in relation to the Group's
ability to continue as going concern arising from its net current
liabilities of RMB 11.99m as at 31 December 2012. Notwithstanding
this, the Directors consider that the Group's prospects remain
sound.
Posting of annual report
The annual report and accounts for the year ended 31 December
2012 will be posted to shareholders shortly together with a notice
of AGM which will be held at 19/F, Shenzhen Cadre Group Centre
Mansion, No. 168 Tongsha Road, Xili, Nanshan District, Shenzhen,
Guangdong Province, China on 30 June 2013 at 3pm Beijing time.
These documents are also in the process of being added to the
Company's website, www.globallock.com, in accordance with AIM Rule
20.
Mr. Yong Luo
Chairman
Global Lock Safety (International) Group Limited
Enquiries:
Global Lock Safety (International) Group Limited
Moxiang Li, Chief ExecutiveOfficer Tel:+86 755 8366 0755
Andrew Gee, Non-Executive Director Tel: +44 777 565 3564
Allenby Capital Limited Tel: +44 203 328 5656
Nick Naylor
Alex Price
- Ends -
CONSOLIDATED AND COMPANY STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED31 DECEMBER 2012
Group Company
-------------------------------------- -------------------
2012 2011 2012 2011
Note RMB'000 RMB'000 RMB'000 RMB'000
Revenue
Billing fees income 89,355 31,857 - -
Sales business tax (3,599) (1,780) - -
--------------------------- --------- --------- --------
85,756 30,077 - -
Cost of sales (21,863) (8,011) - -
--------------------------- --------- --------- --------
Gross profit 63,893 22,066 - -
Selling and distribution
costs (49,664) (34,178) - -
Administrative expenses (12,032) (12,176) (1,888) (3,241)
Listing costs - - - -
Other income 535 214 - -
--------------------------- --------- --------- --------
Profit /(loss) from
operations 2,732 (24,074) (1,888) (3,241)
Finance income - 7 - -
Finance cost (974) (354) - (2)
--------------------------- --------- --------- --------
Profit /(loss) on ordinary
activities before taxation 1,758 (24,421) (1,888) (3,243)
Taxation 3 (300) - - -
--------------------------- --------- --------- --------
Profit /(loss) for
the year 1,458 (24,421) (1,888) (3,243)
Other comprehensive - - - -
income
--------------------------- --------- --------- --------
Total comprehensive
Profit /(loss) for
the year 1,458 (24,421) (1,888) (3,243)
=========================== ========= ========= ========
Profit /(loss) attributable
to:
Owners of the parent (1,114) (4,466)
Non-controlling interests 2,572 (19,955)
--------------------------- ---------
1,458 (24,421)
=========================== =========
Total comprehensive
Profit (loss) attributable
to:
Owners of the parent (1,114) (4,466)
Non-controlling interests 2,572 (19,955)
--------------------------- ---------
1,458 (24,421)
=========================== =========
Loss per share 4
Basic (in cents) (0.45) (1.79)
=========================== =========
Diluted (in cents) (0.45) (1.79)
=========================== =========
All amounts are derived from continuing operations.
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2012
Group Company
------------------- ------------------
2012 2011 2012 2011
Note RMB'000 RMB'000 RMB'000 RMB'000
Non-current assets
Intangible assets 5 36,260 38,863 - -
Property, plant and equipment 22,696 22,731 - -
Investment in subsidiary 6 3,000 7,500 9 4,009
--------- -------- -------- --------
Total non-current assets 61,956 69,094 9 4,009
Current assets
Inventories 2,472 1,301 - -
Due from customers for
construction contracts 15,110 - - -
Trade and other receivables 9 36,196 27,154 14,942 18,614
Cash and cash equivalents 10 5,388 3,257 94 14
--------- -------- -------- --------
Total current assets 59,166 31,712 15,036 18,628
--------- -------- -------- --------
Total assets 121,122 100,806 15,045 22,637
========= ======== ======== ========
Equity and reserves
Share capital 11 20,324 20,324 20,324 20,324
Shares to be issued - 4,000 - 4,000
Statutory reserve 66
Reserves 963 963 963 963
Accumulated losses (7,335) (6,155) (6,752) (4,864)
--------- -------- -------- --------
14,018 19,132 14,535 20,423
Non-controlling interest 12 33,083 30,511 - -
--------- -------- -------- --------
Total equity 47,101 49,643 14,535 20,423
--------- -------- -------- --------
Current liabilities
Borrowings 2,169 750 - -
Trade and other payables 13 68,352 49,498 510 2,214
Taxation 632 429 - -
--------- -------- -------- --------
71,153 50,677 510 2,214
Non-Current liabilities
Long-term payables 2,868 486 - -
Total liability 74,021 51,163 510 2,214
--------- -------- -------- --------
Total equity and liabilities 121,122 100,806 15,045 22,637
========= ======== ======== ========
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2012
Group Company
-------------------- -------------------
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Cash flows from operating activities
Profit/ (loss) on ordinary
activities before taxation 1,758 (24,421) (1,888) (3,243)
Adjustments for:
Amortization of intangible
assets 3,368 3,010 - -
Depreciation of property, plant
and equipment 5,389 4,103 - -
Loss on disposal (500) 13 - -
Share based payment charge - 963 - 963
Loss of investment - 500 - -
Financial income - (7) - -
Financial costs 974 347 - 3
Impairment of property, plant
and equipment 622 - - -
--------- --------- -------- ---------
11,611 (15,492) (1,785) (2,277)
Increase in inventories (1,171) (650) -
Increase in trade and other
receivables (23,066) (5,466) 3,672 (8,324)
Increase in trade and other
payables 5,006 34,825 (1,704) 414
--------- --------- -------- ---------
Cash from/(used in) operations (7,620) 13,217 80 (10,187)
Income taxes paid (174) - - -
--------- --------- -------- ---------
Net cash from/(used in) operating
activities (7,794) 13,217 80 (10,187)
--------- --------- -------- ---------
Cash flows from investing activities
Purchase of property, plant
and equipment (5,976) (9,340) - -
Research and development costs (765) (2,221) - -
Proceed from disposal of property,
plant and equipment - 2 - -
Acquisition of subsidiary - (4,000) - -
Acquisition of new branch - (3,350) - -
--------- --------- -------- ---------
Net cash used in investing
activities (6,741) (18,909) - -
--------- --------- -------- ---------
Cash flows from financing activities
Loan from directors 13,839 100 - 100
Financial income - 7 - -
Financial costs (974) (347) - (3)
Borrowings 5,037 1,236 - -
Repayment of borrowing (1,236) - - -
Loan repayment from subsidiary - - - 10,000
--------- --------- -------- ---------
Net cash from financing activities 16,666 996 - 10,097
--------- --------- -------- ---------
Net change in cash and cash
equivalents 2,131 (4,696) 80 (90)
Cash and cash equivalents at
beginning of year 3,257 7,953 14 104
--------- --------- -------- ---------
Cash and cash equivalents at
end of year 5,388 3,257 94 14
========= ========= ======== =========
CONDOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2012
Shares
Share to be Statutory Accumulated Non-controlling Total
capital issued reserve Other reserve losses Total interest equity
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Group
At 1 January
2011 20,324 - - - (1,689) 18,635 50,467 69,101
Loss for the
year - - - - (4,466) (4,466) (19,955) (24,421)
--------- -------- ---------- -------------- ------------ -------- ---------------- ---------
Total
comprehensive
loss for the
year - - - - (4,466) (4,466) (19,955) (24,421)
--------- -------- ---------- -------------- ------------ -------- ---------------- ---------
Deferred share
consideration
to acquire new
subsidiary - 4,000 - - - 4,000 - 4,000
Share based
payment
transaction - - - 963 - 963 - 963
At 31 December
2011 20,324 4,000 - 963 (6,155) 19,132 30,511 49,643
========= ======== ========== ============== ============ ======== ================ =========
Profit (Loss)
for the year - - - - (1,114) (1,114) 2,572 1,458
--------- -------- ---------- -------------- ------------ -------- ---------------- ---------
Total
comprehensive
profit (loss)
for the year - - - - (1,114) (1,114) 2,572 1,458
--------- -------- ---------- -------------- ------------ -------- ---------------- ---------
Deferred share
consideration
withdrawn - (4,000) - - (4,000) - (4,000)
Share based
payment
transaction - - - - - - -
Transfer of
statutory
reserve - - 66 - (66) - - -
At 31 December
2012 20,324 - 66 963 (7,335) 14,018 33,083 47,101
========= ======== ========== ============== ============ ======== ================ =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2012
Shares Accumulated
Share capital to be issued Other reserve losses Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Company
At 1 January 2011 20,324 - - (1,620) 18,703
Loss for the year - - - (3,243) (3,243)
-------------- -------------- -------------- ------------ --------
Total comprehensive loss
for the year - - - (3,243) (3,243)
-------------- -------------- -------------- ------------ --------
Deferred share consideration
to acquire new subsidiary - 4,000 - - 4,000
Share based payment transaction - - 963 - 963
At 31 December 2011 20,324 4,000 963 (4,863) 20,423
============== ============== ============== ============ ========
Loss for the year - - - (1,888) (1,888)
-------------- -------------- -------------- ------------ --------
Total comprehensive loss
for the year - - - (1,888) (1.888)
-------------- -------------- -------------- ------------ --------
Deferred share consideration
withdrawn - (4,000) - - (4,000)
At 31 December 2012 20,324 - 963 (6,752) 14,535
============== ============== ============== ============ ========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2012
1 Accounting policies
1.1 General information
The Company is a company incorporated in the British Virgin
Islands ("BVI") under the BVI Law. The Company is governed by its
articles of association and the principal statute governing the
company is BVI law. The company has an unlimited life. The
liability of the members of the company is limited. The Company is
domiciled and has its registered office in BVI and the company's
registration number is given on page 1. The nature of the Group's
operations and its principal activities are set out in the
Directors' report on pages 8 to 11.
The Group's places of business are in the People's Republic of
China ("PRC"). The principal place of business of the Global Lock
Group's operation is at 19/F Cadre Group Centre Building, 168 Tong
Sha Road, Xi Li, Nanshan District, 518055 Shenzhen, PRC
These non-statutory consolidated financial statements are
rounded to the nearest thousand ('000) and they are presented in
Renminbi ("RMB") which is also the functional currency of the
company
1.2 Basis of preparation
The non-statutory financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the EU (together, "IFRS"). These financial statements
are for the year ended 31 December 2012.
New IFRS standards and interpretations newly adopted
The Group has adopted the following new and amended IFRS
standards and IFRIC interpretations:
-- IFRIC 19 Extinguishing financial liabilities with equity instruments
-- IAS 24 Related Party Disclosures (2009)
-- Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement
-- Annual improvements to IFRSs (2010)
The adoption of these revised standards has not had a material
impact for the Group's result for the year and equity
New IFRS standards and interpretations not yet adopted
The following standards, amendments and interpretations are not
yet effective and have not yet been adopted early by the Group:
-- Amendments to IFRS 7 Financial Instruments: Disclosures
-- IAS 27 Separate Financial Statements (2011).
-- IAS 28 Investments in Associates and Joint Ventures (2011).
-- IFRS 9 Financial Instruments
-- IFRS 10 Consolidated Financial Statements
-- IFRS 12 Disclosure of Interests in Other Entities
-- IFRS 13 Fair Value Measurement.
-- Amendments to IAS 19 Employee Benefits
-- Amendments to IAS 1 Presentation of Items of Other Comprehensive Income
-- Amendments to IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities
-- Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities
-- Annual improvements to IFRSs (2009 - 2011)
The management does not anticipate that the adoption of the
above IFRS (including consequential amendments) and interpretations
will result in any material impact to the financial statements in
the period of initial application.
1.3 Going concern policy
Despite the Group return into profitability, the Group had net
current liabilities of RMB 11.99m at 31 December 2012. The Group
has been monitored its cash flow and constantly negotiated with its
creditors for acceptable trading terms and payment arrangements for
its liabilities to ensure continuity in its operations. The
directors and certain substantial shareholders have expressed their
willingness to continue supporting the Group for the foreseeable
future. They have also provided assurance that they will not call
on their loans. Transaction with the directors are disclosed in
Note 25
Under the going concern assumption, an entity is ordinarily
viewed as continuing in business for the foreseeable future with
neither the necessity of liquidation, nor ceasing trading or
seeking protection from creditors pursuant to laws or regulations.
In assessing whether the going concern assumption is appropriate,
management takes into account all available information for the
foreseeable future, in particular for the twelve months from the
date of approval of the non-statutory financial statements. Based
on the budgets prepared, management have a reasonable expectation
that the group has adequate resources to continue its operational
exercises for the foreseeable future and the group has adopted the
going concern basis of accounting in preparing the non-statutory
financial statements.
1.4 Basis of consolidation
The consolidated non-statutory financial statements incorporate
the financial statements of the Company and entities controlled by
the Company (its subsidiaries). Control is achieved where the
Company has the power to govern the financial and operating
policies of an investee entity so as to obtain benefits from its
activities.
Non-controlling interests in the net assets of consolidated
subsidiaries are identified separately from the Group's equity
therein. Non-controlling interests consist of the amount of those
interests at the date of the original business combination (see
below) and the non-controlling interests' share of changes in
equity since the date of the combination. Losses applicable to the
minority in excess of the non-controlling interest in the
subsidiary's equity are allocated against the interests of the
Group except to the extent that the non-controlling interest has a
binding obligation and is able to make an additional investment to
cover the losses.
The results of subsidiaries acquired or disposed of during the
year are included in the Consolidated Statement of Comprehensive
Income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.All intra-group
transactions, balances, income and expenses are eliminated on
consolidation.
The Group entered into the following agreements on 17 October
2010:
-- An Exclusive Technology Support Agreement between Global Lock
Safety (Shenzhen) Limited ("Global Lock WFOE") and Shenzhen Global
Lock Security System Engineering Co., Ltd ("Shenzhen Global Lock"),
with a quarterly services fee of 20 to 25 per cent of total monthly
operating revenues is payable by Shenzhen Global Lock to Global
Lock WFOE on a quarterly basis. The condition requires Shenzhen
Global Lock has profitability in the financial year in order to
meet this obligation.
-- A Business Operation Agreement between Global Lock WFOE and
Shenzhen Global Lock and the shareholders of Shenzhen Global Lock
(who are also the founder and controlling shareholders of the
Company) under which Shenzhen Global Lock cannot carry out any
activities which may affect its capital, personnel, obligations,
rights or business operations. In addition, the Founder
Shareholders grant Global Lock WFOE the rights to exercise their
respective voting rights in Shenzhen Global Lock.
1.4 Basis of consolidation - continued
-- An Exclusive Option Agreement entered into between Global
Lock WFOE, the Founder Shareholders and Shenzhen Global Lock, under
which Global Lock WFOE has an exclusive option to purchase by
itself or through a nominee, to the extent permitted by the laws of
the PRC, all or any part of the equity interests of each Founder
Shareholder in Shenzhen Global Lock. Each Founder Shareholder has
agreed that Shenzhen Global Lock will accept payment from Global
Lock WFOE on their behalf and that the payment received shall be a
loan to Shenzhen Global Lock to be used for the business operations
of Shenzhen Global Lock.
-- An Exclusive Sales Agreement entered into by Shenzhen Global
Lock and Global Lock WFOE, under which, Global Lock WFOE is allowed
to sell the various antitheft systems and ancillary products of
Shenzhen Global Lock, exclusively within the territories and period
as agreed between the parties.
-- An Equity Pledge Agreement entered into between Global Lock
WFOE, Shenzhen Global Lock and the Founder Shareholders under which
the Founder Shareholders have pledged their respective equity
interests in Shenzhen Global Lock to Global Lock WFOE as security
for the protection of the rights of Global Lock WFOE under the
Exclusive Technology Support Agreements, the Business Operation
Agreement, the Exclusive Option Agreement and the Exclusive Sales
Agreement referred to above (the "Contractual Arrangements"). In
addition, the Founder Shareholders have agreed not to transfer,
sell, pledge, dispose or create any encumbrance over their equity
interests in Shenzhen Global Lock.
The Group, through these contractual agreements, gained control
of Shenzhen Global Lock on that date.
In determining the appropriate accounting treatment for this
transaction, the Directors considered IFRS 3 "Business
Combinations" (Revised 2008). However, they concluded that this
transaction fell outside the scope of IFRS 3 (revised 2008) since
the transaction described above represents a combination of
entities under common control as the same group of individuals
acting in concert were shareholders of Shenzhen Global Lock as well
as the controlling shareholders of the Company
In accordance with IAS 8 "Accounting Policies, changes in
accounting estimates and errors", in developing an appropriate
accounting policy, the Directors have considered the pronouncements
of other standard setting bodies and specifically looked to
accounting principles generally accepted in the United Kingdom ("UK
GAAP") for guidance (FRS 6 - Acquisitions and mergers) which does
not conflict with IFRS and reflects the economic substance of the
transaction.
Under UK GAAP, the assets and liabilities of both entities are
recorded at book value, not fair value (although adjustments are
made to achieve uniform accounting policies), intangible assets and
contingent liabilities are recognised only to the extent that they
were recognised by the legal acquiree in accordance within
applicable IFRS, no goodwill is recognised, any expenses of the
combination are written off immediately to the income statement and
comparative amounts, if applicable, are restated as if the
combination had taken place at the beginning of the earliest
accounting period presented.
Therefore, although the Group reconstruction did not become
unconditional until 17 October 2010, these consolidated financial
statements are presented as if the Group structure has always been
in place, including the activity from incorporation of the group's
principal trading subsidiary. Both entities had the same management
as well as majority shareholders.
Business combinations
The acquisition of subsidiaries is accounted for using the
purchase method of accounting. The cost of the acquisition is
measured at the aggregate of the fair values, at the date of
exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control of
the acquiree, plus any costs directly attributable to the business
combination. The acquiree's identifiable assets, liabilities and
contingent liabilities that meet the conditions for recognition
under IFRS 3: Business Combinations are recognised at their fair
value at the acquisition date, except for non-current assets (or
disposal groups) that are classified as held for sale in accordance
with IFRS 5: Non-Current Assets Held for Sale and Discontinued
Operations, which are recognised and measured at fair value less
costs to sell.
1.4 Basis of consolidation - continued
Business combinations - continued
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities recognised. If, after reassessment, the Group's
interest in the net fair value of the acquiree's identifiable
assets, liabilities and contingent liabilities exceed the cost of
the business combination, the excess is recognised immediately in
the Statement of Comprehensive Income.
Non-controlling interests that are present ownership interest
and entitle their holders to a proportionate share of the entity's
net assets in the event of liquidation may be initially measured
either at fair value or at the non- controlling interests'
proportionate share of the recognised amounts of the acquiree's
identifiable net assets. The choice of measurement basis is made on
a transaction-by-transaction basis. Other types of non-controlling
interests are measured at fair value, when applicable, on the basis
specified in another IFRS.
1.5 Intangible assets
(a) Patent rights
Patent rights acquired are initially recognised at cost and are
subsequently carried at cost less accumulated amortisation and
accumulated impairment losses. These costs are amortised to the
income statement using the straight-line method over 14.6 years,
which is the shorter of the remaining useful life and periods of
contractual rights. The remaining useful life of 14.6 years of the
20 years patent is calculated from the date the patent was
transferred to the Group on 1 August 2009.
(b) Research and development expenditure
Research expenditure is recognised as an expense as
incurred.
Costs incurred on development projects are recognised as
internally generated intangible assets only if all of the following
conditions are met by the Company:
- the technical feasibility of completing the intangible assets
so that it will be available for use or sales;
- its intention to complete the intangible asset and use or sell it;
- its ability to use or sell the intangible assets;
- it is probable that the intangible asset created will generate future economic benefits;
- the availability of adequate technical financial and other
resources to complete the development and use or sell the
intangible assets; and
- its ability to measure reliably the expenditure attributable
to the intangible assets during its development.
Internally generated intangible assets are amortised on a
straight-line basis over their estimated useful lives, from the
date the intangible is ready for use. Amortisation charge is
recognised in the income statement within "Cost of sales".
Development costs that have been capitalised as intangible
assets are amortised on a straight-line basis over the period of
its expected benefits.
(c) Customer relationship
Customer relationships are measured initially at purchase cost
and are amortised on a straight-line basis over their estimated
useful life of 5 years.
1.6 Property, plant and equipment
Property, plant and equipment are stated at cost less any
subsequent accumulated depreciation and subsequent accumulated
impairment losses.
Depreciation is charged so as to write off the cost, less
estimated residual value on assets other than land, over their
estimated useful lives, using the reducing balance method, on the
following bases:
Machinery equipment under construction straight line 5 years
Machinery equipment straight line 5 years
Office equipment and motor vehicles straight line 5 years
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount of the asset. These are included
in statement of comprehensive income.
1.7 Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss.
If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the
impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the group estimates the
recoverable amount of the cash-generating unit to which the asset
belongs.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects the current market assessments
of the time value of money and the risks specific to the asset. If
the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised immediately in profit or
loss, unless the relevant asset is carried at a re-valued amount,
in which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a re-valued amount, in
which case the reversal of the impairment loss is treated as a
revaluation increase.
1.8 Taxation
Current taxation
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or
paid to the tax authorities. The tax rates and the tax laws used to
compute the amount are those that are enacted, or substantively
enacted, by the balance sheet date.
Deferred taxation
Deferred tax is provided in full using the balance sheet
liability method for all taxable temporary timing differences
arising between the tax bases of assets and liabilities and their
carrying values for financial reporting purposes. Deferred tax is
measured using currently enacted or substantially enacted tax
rates.
Deferred tax assets are recognised to the extent the temporary
difference will reverse in the foreseeable future and that it is
probable that future taxable profit will be available against which
the asset can be utilised.
1.9 Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable in
accordance with the Group's principal activity, net of VAT and
trade discounts, also deducted sales business tax.
Security solutions
Revenue is general recognised in the period when the services
are provided, using a straight-line basis over the term of the
contract.
Security system integration centre
Contract revenue comprises the initial amount of revenue agreed
in the contract and variations in the contract work and claims that
can be measured reliably. A variation or a claim is recognised as
contract revenue when it is probable that the customer will approve
the variation, or negotiations have reached an advanced stage such
that it is probable that the customer will accept the claim.
The stage of completion is measured by reference to the
completion of a physical proportion of the contract work. When the
outcome of a construction contract cannot be estimated reliably,
contract revenue is recognised only to the extent of contract costs
incurred that are likely to be recoverable.
1.10 Leases
Leases in which a significant portion of the risks and rewards
of ownership are retained by the lesser are classified as operating
leases. Payments made under operating leases (net of any incentives
received from the lesser) are charged to the profit and loss on a
straight-line basis over the period of the lease.)
1.11 Investment in subsidiaries
Investments in subsidiaries are stated at cost less provision
for permanent diminution in value.
1.12 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits, bank
balances, demand deposits and other short term, highly liquid
investments that are readily convertible to known amount of cash
and are subject to an insignificant risk of changes in value.
1.13 Construction contracts in progress
Construction contract in progress represents the gross amount
expected to be collected from customers for contract work performed
to date. It is measured at costs incurred plus profits recognised
to date (see Note 1.9) less progress billings and recognised
losses. Cost includes all expenditure related directly to specific
projects and an allocation of fixed and variable overheads incurred
in the Group's contract activities based on normal operating
capacity.
At the balance sheet date, the aggregated costs incurred plus
recognised profit (less recognised loss) on each contract is
compared against the progress billings. Where costs incurred plus
the recognised profits (less recognised losses) exceed progress
billings, the balance is presented as due from customers on
construction contracts. Where progress billings exceed costs
incurred plus recognised profits (less recognised losses), the
balance is presented as due to customers on construction
contracts.
1.14 Financial instruments
Financial assets and financial liabilities are recognised on the
group's balance sheet when the group becomes a party to the
contractual provisions of the instrument.
Trade and other receivables
Trade and other receivables are initially measured at fair value
and are subsequently reassessed at the end of each accounting
period.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the group
are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument. An equity instrument is any
contract that evidences a residual interest in the assets of the
group after deducting all of its liabilities. The accounting
policies adopted for specific financial liabilities and equity
instruments are set out below.
Trade payables
Trade payables are initially measured at fair value and are
subsequently measured at amortised cost, using the effective
interest rate method.
Equity instruments
Equity instruments issued by the company are recorded at the
proceeds received, net of direct issue costs. Shares issued are
held at their fair value.
1.15 Inventory
Inventory is stated at the lower of cost and net realisable
value. Cost is determined on a first-in first-out basis. Net
realisable value is based on estimated selling price allowing for
all further costs to completion and disposal.
The inventory is included within finished goods (spare parts and
uniform) and low-value consumption goods.
1.16 Borrowings
Borrowings are recognised initially at the proceeds received,
net of transaction costs incurred, and subsequently measured at
amortised cost using the effective interest method. Borrowings are
classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at
least twelve months after the end of reporting date.
1.17 Provisions
Provisions are recognised when the group has a present
obligation (legal or constructive) as a result of a past event and
it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Where the
group expects some or all of a provision to be reimbursed, the
reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any
provision is presented in the income statement net of any
reimbursement. If the effect of the time value of money is
material, provisions are discounted using a current pre-tax rate
that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision
due to the passage of time is recognised as a borrowing cost.
1.18 Commitments and contingencies
Commitments and contingent liabilities are disclosed in the
financial statements. They are disclosed unless the possibility of
an outflow of resources embodying economic benefits is remote. A
contingent asset is not recognised in the financial statements but
disclosed when an inflow of economic benefits is probable.
1.19 Events after the balance sheet date
Post year-end events that provide additional information about a
company's position at the balance sheet date and are adjusting
events are reflected in the financial statements. Post year-end
events that are not adjusting events are disclosed in the notes
when material.
1.20 Foreign currencies
The financial information is presented in Renminbi ("RMB") which
is the functional currency of the Group.
Monetary assets and liabilities denominated in foreign
currencies in each company are translated at the rates of exchange
prevailing at the accounting date. Transactions in foreign
currencies are translated at the rate prevailing at the date of
transaction.
1.21 Share-based payment arrangement
Equity-settled share-based payment transactions with parties
other than employees are measured at the fair value of the goods or
services received, except where that fair value cannot be estimated
reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains
the goods or the counterparty renders the services. Details
regarding the determination of the fair value of equity-settled
share-based transactions are set out in note 22.
Fair value is measured by use of the Black-Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations
1.22 Employee Benefits
Short Term Employee Benefits
Wages, salaries, annual leave and sick leave, social security
contributions, bonuses and non-monetary benefits are accrued in the
period in which the associated services are rendered by the
employees.
Post-employment benefits
For the subsidiary of the Group in PRC, there are contributory
retirement plans operated by the local government. The employees
participate in the defined contribution retirement plan whereby the
company is required to contribute to the schemes at fixed rates of
the employees' salary costs. The company's contributions to these
plans are charged to profit or loss when incurred. The company has
no obligation for the payment of retirement and other
post-retirement benefits of staff other than the contributions
described above.
Contribution made to the defined contribution retirement plan
includes basic pension insurance in PRC which is charged to the
profit and loss in the period to which they are related.
Under the pension plan which the Group pays fixed contributions
and will have no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay
all employee benefits relating to employee service in the current
or prior financial periods. Once the contributions have been paid,
the Group has no further payment obligations.
1.23 Government grants
Government grants are recognised as income over the periods
necessary to match them with the related costs which they are
intended to compensate; and are recognised only when there is
reasonable assurance that:
- the company will comply with the conditions attached to them; and
- the grants will be received.
Unconditional government grant is recognised in profit or loss
as other income when the grant becomes receivables
1.24 Accounting estimates and judgments
The preparation of financial statements in conforming to adopted
IFRSs requires management to make judgments, estimates and
assumptions that affect the application of policies and reported
amounts of assets, liabilities, income and expenses. The estimates
and assumptions are based on historical experience and other
factors considered reasonable at the time, but actual results may
differ from those estimates. Revisions to these estimates are made
in the period in which they are recognised.
Consolidation
The Group does not consolidate the results of Henan Xinxiang
Jingan Security Technology Co., Limited ("Henan Xinxiang") as the
Directors are of the opinion the control is not significant
influence on its daily business operation.
1.25 Use of estimates
The assumptions concerning the future, and other key sources of
estimation at the balance sheet date, that have a significant risk
of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed
below:
Intangible Assets
Amortisation
Intangible assets (other than goodwill) are amortised over their
useful lives. Useful lives are based on management's estimates of
the periods over which the assets are expected to generate
revenues. These estimates are periodically reviewed for
reasonableness. Due to the long lives of these assets, especially
patent rights long lives (14 years) changes to the estimates can
result in significant changes to the carrying value. A decrease of
10% in the charge in the next year would reduce costs by RMB270,000
approximately.
Impairment review
The Group assesses the impairment of intangible assets subject
to amortisation or depreciation whenever events or changes in
circumstances suggest that the carrying amount of the asset may not
be recoverable or may have been impaired. Factors that may trigger
an impairment review include the following:
i. Significant underperformance relative to historical or projected operating results.
ii. Significant changes in the manner of the use of the assets
or the overall business strategy.
iii. Significant negative industry or macro-economic trends.
The key assumptions used in the value in use calculations for
the customer list included with intangible assets are customer
attrition rates, revenue growth rates and appropriate discount
rates.
Management has assessed the net present value and thereby
impairment on variety of bases and assumptions. The impairment test
are particularly sensitive to changes in the key assumptions and
changes to the assumptions could result in impairment; however all
of the varying bases indicate a net present value in excess of the
carrying value of the intangible assets.
The key assumptions in the value in use calculations are as
follows:
Customer Attrition Rate 5.3%
Growth Rate 50%
Discount Factor 14.26%
A decrease of 10% in the key assumptions rates would result in
the request for an impairment of the intangible asset.
Share-based payment
The Group has share option schemes for certain suppliers.
Judgements and estimates are required in determining the
share-based payment charge as an expense in the income statement.
The directors have used Black-Scholes model which has been widely
used in valuing the share based payment charge. The directors are
in the opinion that the model used has been adjusted to their best
estimate in arriving at the charge.
Construction contracts
Where the outcome of a construction contract can be estimated
reliably, the Group recognises revenue and costs by reference to
the stage of completion of the contract activity at the statement
of financial position, measured based on the physical proportion of
contract work performed to date, except where this would not be
representative of the stage of completion. Variations in contract
work, claims and incentive payments are included to the extent that
they have been agreed with the customer.
Where the outcome of a construction contract cannot be estimated
reliably, contract revenue is recognised to the extent it is
probable that contract costs incurred will be recoverable. Contract
costs are recognised as expenses in the period in which they are
incurred.
When it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised as an expense
immediately.
The Group's accounting approach reflects a sound judgement as
potential losses on contract are being considered and reflected
with its probability immediately upon occurrence while contract
revenue which cannot be estimated reliably is realised only after
confirmed by written agreement.
Depreciation of property, plant and equipment
The Group depreciates the property, plant and equipment, using
the straight-line method, over their estimated useful lives after
taking into account of their estimated residual values. The
estimated useful life reflects management's estimate of the period
that the Group intends to derive future economic benefits from the
use of the Group's property, plant and equipment. The residual
value reflects management's estimated amount that the Group would
currently obtain from the disposal of the asset, after deducting
the estimated costs of disposal, as if the asset were already of
the age and in the condition expected at the end of its useful
life. Changes in the expected level of usage and technological
developments could affect the economics, useful lives and the
residual values of these assets which could then consequentially
impact future depreciation charges.
2 Business segments
For the purpose of IFRS 8, the chief operating decision maker
takes the form of the Board of Directors. The Directors are of the
opinion that the business of the Group comprises of a single
activity, being the provider of security solutions to retail stores
in the PRC. At the meetings between the Directors, the income,
expenditure cash flows, assets and liabilities are reviewed on a
whole-group basis. Nonetheless the Group's revenue and results can
be classified into the following streams:
-- Security solution
-- Security system integration
Security Security system
solution integration Total
RMB'000 RMB'000 RMB'000
Fees income
Year ended 31 December 2012 56,245 33,110 89,355
Year ended 31 December 2011 31,857 - 31,857
Results
Year ended 31 December 2012 (18,777) 21,448 2,671
Year ended 31 December 2011 (19,562) - (19,562)
The investment criterion of the Group is to invest in sales
opportunities in prime locations. Sub-division of sales by type,
function or by town or city of location is therefore of little
significance in reviewing operations.
Based on the above considerations, there is considered to be one
reportable segment, the provider of security solutions to retail
stores in PRC. Internal and external reporting is on a consolidated
basis, with transactions between Group companies eliminated on
consolidation. Therefore the financial information of the single
segment is the same as that set out in the Consolidated Statement
of Comprehensive Income, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Financial Position and
Consolidated Statement of Cash Flows.
All Group non-current assets are located in the PRC. No Group
non-current assets are located in the entity's country of
domicile.
3 Taxation
Group Company
------------------- ------------------------------
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Current tax 300 - - -
Deferred tax - - - -
-------- --------- -------- --------------------
Tax charge/(credit)
on ordinary activities 300 - - -
======== ========= ======== ====================
Reconciliation of the tax expense
The tax assessed for the year is different from the standard
rate of corporation tax in the PRC (15%). The differences are
explained below:
Group Company
------------------- ------------------------------
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Loss on ordinary
activities before
taxation 1,758 (24,421) (1,785) (3,243)
======== ========= ======== ====================
Loss on ordinary
activities multiplied
by standard rate
of corporation tax
in the PRC of 25%
(2011: 15%) 440 (3,197) - -
Effects of:
Non-deductible expenses 97 202 - -
Tax exempt 472 - - -
Differences in foreign
tax rates 139 - - -
Utilized of tax
losses (34) - - -
Tax loss not recognised (814) 2,995 - -
Tax charge/(credit)
on ordinary activities 300 - - -
======== ========= ======== ====================
The company is regarded as resident for the tax purposes in BVI.
There are no applicable taxes in the BVI for the company.
The Group is regarded as residents for the tax purposes in PRC
and subject to national income tax rate at 25%.
A deferred tax asset of approximately RMB 3,200,000 (2011: RMB
3,900,000) has not been recognized in respect of timing differences
relating to losses not utilized and carried forward at the year end
as there is insufficient evidence that the amount will be recovered
in future years.
4 Loss per share
The calculation of basic and diluted loss per share at 31
December 2012 was based on the loss attributable to ordinary
shareholders of RMB 1,113,669 (2011: RMB 4,466,022). The weighted
average number of ordinary shares outstanding during the year ended
31 December 2011 and the effect of the potentially dilutive
ordinary shares to be issued are shown below.
Group
-----------------------------
2012 2011
Number Number
Issued ordinary shares at beginning
of the year 250,000,000 250,000,000
Effect of shares issued - -
--------------- ------------
Basic weighted average number
of shares in issue during the
year 250,000,000 250,000,000
=============== ============
Diluted weighted average number
of shares in issue during the
year 250,000,000 250,000,000
=============== ============
Group
-----------------------------
2012 2011
RMB RMB
Net loss for the year attributable
to equity holders (1,113,669) (4,466,022)
=============== ============
Basic loss per share (in cents) (0.45) (1.79)
=============== ============
Diluted loss per share (in cents) (0.45) (1.79)
=============== ============
At 31 December 2012, 2.5m share options (2011: 2.5m) were
excluded from the diluted weighted average number of ordinary
shares calculation as their effect would have been
anti-dilutive.
The average market value of the Company's shares for purposes of
calculating the dilutive effect of the share options was based on
quoted market prices for the period during which the options were
outstanding.
5 Intangible assets
Development Customer
Group Patent rights cost relationship Total
RMB'000 RMB'000 RMB'000 RMB'000
Cost
As at 1 January 2011 39,204 832 - 40,036
Additions - 2,222 3,413 5,635
--------------- ------------- --------------- --------
As at 31 December
2011 39,204 3,054 3,413 45,671
Additions - 765 - 765
--------------- ------------- --------------- --------
As at 31 December
2012 39,204 3,819 3,413 46,436
--------------- ------------- --------------- --------
Less:
Accumulated amortization
As at 1 January 2011 3,798 - - 3,798
Amortization for the
year 2,685 - 325 3,010
--------------- ------------- --------------- --------
As at 31 December
2011 6,483 - 325 6,808
Amortization for the
year 2,685 - 683 3,368
--------------- ------------- --------------- --------
As at 31 December
2012 9,168 - 1,008 10,176
--------------- ------------- --------------- --------
Carrying amounts
At 31 December 2012 30,036 3,819 2,405 36,260
=============== ============= =============== ========
At 31 December 2011 32,721 3,054 3,088 38,863
=============== ============= =============== ========
Intangible assets include patent rights, development costs and
customer relationship.
The Group undertakes development projects to improve and upgrade
its software solution that includes the peripheral devices used for
the security and the related software.
The goodwill arising on the acquisition of local business
operators is attributable to the anticipated profitability of the
foreseeable future contracts to be obtained by the customer
relationships in the security solutions sectors, the expertise of
the technical staffs and the anticipated future operating synergies
from the combination.
6 Property, plant and equipment
Security Security
equipment equipment Office equipment
not installed Assets under installed Security and motor
Group at customer construction at customer centre vehicles Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At cost
As at 1 January
2011 3,826 40 11,096 926 3,555 19,443
Additions 6,465 75 - 929 2,343 9,812
Disposal - - - - (26) (26)
Transfer (6,624) (45) 6,137 45 - (487)
As at 31 December
2011 3,667 70 17,233 1,900 5,872 28,742
--------------- -------------- ------------- --------- ----------------- --------
Accumulated
depreciation
As at 31 December
2010 - - 1,828 72 507 2,407
Charge for
the year - - 2,936 164 1,003 4,103
Eliminated - - - - (12) (12)
Transfer - - (487) - - (487)
--------------- -------------- ------------- --------- ----------------- --------
As at 31 December
2011 - - 4,277 236 1,498 6,011
--------------- -------------- ------------- --------- ----------------- --------
Net book value of property, plant
and equipment
At 31 December
2011 3,667 70 12,956 1.664 4.374 22,731
=============== ============== ============= ========= ================= ========
At 31 December
2010 3,826 40 9,268 854 3,048 17,036
=============== ============== ============= ========= ================= ========
Security
Security equipment equipment
not installed Assets under installed Security Office equipment
Group at customer construction at customer centre and motor vehicles Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At cost
As at 1 January
2012 3,667 70 17,233 1,900 5,872 28,742
Additions 4,960 3 - 266 1,513 6,742
Disposal - - - - - -
Impairment
loss (622) - - - - (622)
Transfer (4,873) (70) (746) 70 - (5,619)
------------------- -------------- ------------- --------- -------------------- --------
As at 31 December
2012 3,132 3 16,487 2,236 7,385 29,243
------------------- -------------- ------------- --------- -------------------- --------
Accumulated
depreciation
As at 31 December
2011 - - 4,277 236 1,498 6,011
Charge for
the year - - 4,423 336 630 5,389
Eliminated - - - - - -
Transfer - - (4,853) - - (4,853)
------------------- -------------- ------------- --------- -------------------- --------
As at 31 December
2012 - - 3,847 572 2,128 6,547
------------------- -------------- ------------- --------- -------------------- --------
Net book value of property,plant and
equipment
At 31 December
2012 3,132 3 12,640 1,664 5,257 22,696
=================== ============== ============= ========= ==================== ========
At 31 December
2011 3,667 70 12,956 1.664 4.374 22,731
=================== ============== ============= ========= ==================== ========
7 Shares in subsidiary undertakings
Group Company
------------------ ------------------
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Investment costs
As at 1 January 8,000 - 4,009 9
Additions - 16,000 - 4,000
Disposal (1,000) - - -
Withdrawn* (4,000) (8,000) (4,000) -
-------- -------- -------- --------
As at 31 December 3,000 8,000 9 4,009
-------- -------- -------- --------
Impairment
From 1 January 500 - - -
Impairment loss - 500 - -
Elimination (500) - - -
-------- -------- -------- --------
As at 31 December - 500 - -
-------- -------- -------- --------
Carrying value
As at 31 December 3,000 7,500 9 4,009
======== ======== ======== ========
On 16 February 2011, the Group subscribed the entire share
capital of Shenzhen Global Lock Security Technology Co., Limited
("Shenzhen Global Lock") for RMB 10 million at nominal, fully paid
and the company remainednon-trading.
On 14 March 2011, the Group subscribed 15.78% of the entire
share capital of Shenzhen China Security Investment Holding Co.,
Limited ("Shenzhen CSI") for RMB 30 million at nominal of which RMB
9 million has been invested. This investment is a joint venture
project to construct an office building in Shenzhen.
*Following to the failure in obtaining approval from the local
government for the construction site, the Group recovered RMB 8
million of its capital investment. On 27 February 2013, the Group
disposed its entire shareholding of Shenzhen CSI to 3(rd) party for
the consideration of RMB 9 million of which RMB 8 million will be
payable to the Shenzhen CSI as capital investment and the remaining
RMB 1 million will be payable to Shenzhen Global Lock. (See notes
26)
*On 31 August 2012, the Group has signed amendment agreement
with other shareholders in Henan Xinxiang Jingan Security
Electronic Co., Limited ("Henan Xinxiang") to pursuant the
cancellation of deferred consideration of RMB 4 million. The group
will therefore retain the 30% indirect interest held via Shenzhen
Global Lock. The Group does not consolidate the results of Henan
Xinxiang as the directors are of the opinion the control is not
significant influence on its daily business operation.
Global Lock Safety (Shenzhen) Limited has a contractual
agreement with Shenzhen Global Lock where full managerial,
operational and financial controls of Shenzhen Global Lock has been
granted to Global Lock Safety (Shenzhen) Limited. The contractual
agreement directs 25% of Shenzhen Global Lock's revenue and results
to the Group. (See notes 26)
Yuxi is consolidated in the financial statements due to deemed
control. The Group considers this company as a subsidiary because
it has control over the Board of Directors of the company. On 31
March 2013, the Group entered the share purchase agreement with
other shareholders, to pursuant the acquisition of the remaining
50% of the entire share capital of the company for the cash
consideration of RMB 500,000. (See notes 26)
Details of the subsidiaries, all of which have ordinary shares
and a year ended 31 December 2012, are as follows:
Effective Contractual
equity interest interest
held by held by Country
Subsidiary the Group the group of registration Nature of business
------------------------------ ----------------- ------------ ----------------- -------------------
HK Global Lock Safety 100% n/a Hong Kong Investment holding
(International) Group
Co Limited
Held by subsidiaries:
Global Lock Safety (Shenzhen) 100% n/a PRC Investment holding
Limited
Shenzhen Global Lock - 100% PRC Provide security
Security System Engineering solutions to
Co., Ltd. retail stores.
YuxiCity Global Lock - 50% PRC Provide security
Security Engineering solutions to
Co., Ltd ("Yuxi") retail stores.
Shenzhen Global Lock - 100% PRC Dormant
Security Technology Co.,
Limited
Henan Xinxiang Jingan - 30% PRC Provide security
Security Electronic Co., solutions to
Limited retail stores.
Hunan Family Fortune - 100% PRC Provide security
Security Service Co., solutions to
Limited retail stores
8 Deferred tax assets
Group
------------------
2012 2011
RMB'000 RMB'000
At 1 January - -
Charged to income statement (Note 8) - -
At 31 December - -
======== ========
The Group has the following unutilised tax losses at end of the
financial year to offset against future profits in PRC:
Group
------------------
2012 2011
RMB'000 RMB'000
Unutilised tax losses 1,900 6,900
======== ========
There are no significant temporary differences. The realisation
of deferred tax is dependent on suitable taxable profits made in
future periods.
9 Trade and other receivables
Group Company
------------------- ------------------
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Trade receivables 5,311 334 - -
Loans to directors - 3,255 - -
Amount due from group
undertakings - - 14,785 18,394
Amount due from connected
party 3,251 5,063 9 1
Other receivables 19,246 10,905 - 103
Deposit 2,610 1,286 - -
Prepayments 3,820 2,287 148 116
Prepaid insurance 1,958 4,024 - -
36,196 27,154 14,942 18,614
======== ========= ======== ========
There are no trade or other receivables past due and the
carrying amount of trade and other receivables approximates their
fair value.
Amount owing by directors represents amount drawn on account
and, are non-trade, interest-free and payable on demand.
10 Cash and cash equivalents
Group Company
------------------ ------------------
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Cash on hand 1,752 966 - -
Bank balances 3,636 2,291 94 14
--------
5,388 3,257 94 14
======== ======== ======== ========
Cash and cash equivalents were denominated in the following
currencies:
Group Company
------------------ ------------------
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Great Britain
Pounds 73 - 73 -
United States
Dollars 39 371 21 14
Hong Kong Dollars 1 4 - -
Renminbi 5,275 2,882 - -
--------
5,388 3,257 94 14
======== ======== ======== ========
11 Share capital
Share capital
Share capital 2012 2012 2011 2011
Number RMB'000 Number RMB'000
Ordinary shares of
no face value
- brought forward 250,000,000 20,324 250,000,000 20,324
- share issues - - - -
250,000,000 20,324 250,000,000 20,324
============ ======== ============ ========
Authorized Unlimited Unlimited
============ ======== ============ ========
On 29 December 2009, the company issued 50,000 ordinary shares
of US$1 each at par.
On 20 September 2010, the company increased the authorised share
capital from 50,000 ordinary shares of US$1 each to 250,000,000
ordinary shares of US$1 each. The company subsequently converted
all the existing and issued ordinary shares of US$1 each par value
into 500 shares of no par value.
On 2 October 2010, the company further increase the authorised
share capital to an unlimited number of no par value shares.
On 2 October 2010, the company issued 212,500.000 ordinary
shares of no par value for US$0.000001 per share.
Subsequently, the company issued 12,500,000 ordinary shares of
no par value of RMB 20,000,000.
The holders of ordinary shares are entitled to receive dividends
from time to time and are entitled to one vote per share at
meetings of the company.
12 Non-controlling interests
Group
As at 31 December
2012 2011
RMB'000 RMB'000
At 1 January 30,511 50,466
Loss for the year 2,572 (19,955)
At 31 December 33,083 30,511
========== =========
13 Trade and other payables
Group Company
----------------------- ------------------
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Trade payables 1,770 1,845 7 1,380
Loan from directors 18,300 4,461 - 160
Amount due to connected
party - 234 - -
Net wages control 3,876 3,355 - -
Other creditors 12,904 16,024 - 64
Accruals 1,185 1,414 503 610
Deferred income 30.317 22,165 - -
68,352 49,498 510 2,214
============= ======== ======== ========
14 Financial commitments
Financial commitments in relation to non-cancellable operating
leases for office premises contracted for at the date of the
statement of financial position but not recognised as liabilities,
are payable as follows:
2012 2011
RMB'000 RMB'000
Less than 1 year 5,155 1,609
More than 1 year and not more than 5 years 2,566 1,479
More than 5 years 51
7,772 3,088
======== ========
Included within 1 year commitment consist of RMB 2.8m cash
consideration for the acquisition of business assets (see note 10
of the full accounts for the year ended 31 December 2012)
15 Related party transactions
Key management personnel are considered to be the directors and
their emoluments are included in Note 7.
As at balance sheet date, the amount due to Mr Moxiang Li is RMB
18,299,962 (2011: RMB 4,300,590). Further details of the loan were
announced on 24 September 2012.
In addition to the related party information disclosed elsewhere
in the financial statements, the following were significant related
party transactions during the year under review and at terms and
rates agreed between the parties:
Hunan Xiang Long Electronics Development Co., Ltd ("Hunan Xiang
Long")
Hunan Xiang Long, the key supplier of the Group's equipment, is
owned by some of the directors. Details of transactions with Hunan
Xiang are presented below:
2012 2011
RMB RMB
Purchase of equipment 4,959,476 6,464,815
Balance payable 2,654 12,297
Prepayment for machinery equipment 1,414,087 1,013,000
Amount due from - 233,030
Family Fortune International Investment Holding Co., Ltd
The Group has a non-trade balance receivable from a shareholder
of the Company, Family Fortune International Investment Holding
Co., Ltd, of RMB 102,650 (2011: RMB 103,311).
Shenzhen Family Fortune Investment Co., Ltd
The Group has non-trade balance receivable to Shenzhen Family
Fortune Investment Co., Ltd, a company with some common directors,
of RMB 1,323,450 (2011: RMB 1,501,355).
Shenzhen Global Lock Security Mobile Co., Ltd
The Group has non-trade balance receivable to Shenzhen Global
Lock Security Mobile Co., Ltd, a company with some common
directors, of RMB NIL (2011: RMB 2,272,430).
Shenzhen Lin En Energy Investment Co., Ltd
The Group has non-trade balance receivable to Shenzhen Lin En
Energy Investment Co., Ltd, a company with some common directors,
of RMB 198,418 (2011: RMB 184,823).
Shenzhen National Security Technology Co Limited
The Group has non-trade balance payable to Shenzhen National
Security Technology Co Limited, a company with some common
directors, of RMB 151,473 (2011: RMB NIL).
Shenzhen Family Fortune Security System Engineering Co., Ltd
The Group has non-trade balance payable to Shenzhen Family
Fortune National Security Engineering Co., Ltd
, a company with some common directors, of RMB 52,237 (2011: RMB
NIL).
16 Other matters
This statement was approved by the directors on 28 May 2013. The
financial information for the year ended 31 December 2012 set out
in this announcement does not constitute financial statements but
is based on the financial statements for the year then ended.
The auditors have reported on those financial statements and
their report contains an emphasis of matter in relation to the
Group's ability to continue as a going concern but did not contain
any formal qualification or disclaimer. The auditor's report of the
accounts for the year ended 31 December 2011 was unqualified.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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