TIDMQIH
RNS Number : 3893G
Qihang Equipment Company Limited
06 June 2013
Qihang Equipment Company Limited
Results for the year ended 31 December 2012
2012 was a very disappointing year for Qihang. The Board and
Management were too slow in recognising the exaggerated effect that
the slowdown in China would have on your Company. The Board did
take significant costs out of the business. In addition we
appointed a new CEO to run the operating subsidiary.
The new CEO is restructuring the business as part of our cost
cutting measure. We hope to see the results reflected in the
figures for the second half of the year.
We remain optimistic that growth in sales is resuming. However,
as expected margins still remain disappointing. Notwithstanding
this we expect to return to profit in the second half of the
year.
The Board is aware that borrowings remain too large and consume
too much of our operating cash flow. We believe that our return to
profit will allow us to manage this better.
The Board is not complacent. We know that we must continue to
improve both our production and financial performance
constantly.
I would like to thank all the staff for their hard work in what
has been a difficult year.
Mark E. Chapman
Chairman
For further information:
Qihang Equipment Company Limited
Li Yuanqing Tel: 0086 139 2159 4638
Mark Chapman Tel: 01483 892130/07449 842717
Northland Capital Partners Limited
William Vandyk Tel: 020 7796 8800
CONSOLIDATED AND COMPANY STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2012
Note Group Group Company Company
2012 2011 2012 2011
Continuing operations RMB'000 RMB'000 RMB'000 RMB'000
Revenue 4 151,503 262,107 - -
Cost of sales (111,268) (189,903) - -
----------- ---------- ---------- ---------
Gross profit 40,235 72,204 - -
Other operating income 797 1,597 - -
Distribution expenses (9,458) (18,024) - -
Administrative expenses (33,471) (30,161) (3,344) (980)
Listing costs 7 - (6,747) - (3,763)
(Loss)/profit from
operation (1,897) 18,869 (3,344) (4,743)
Non-operating income
net of expenses 206 5 - -
Other gains/(losses) 8 1,283 - 1,289 -
Profit/(loss) on disposal
of subsidiaries 31.3 5 (63) - 21,556
Fair value loss on
financial instrument 18 - (461) - (1,962)
Income from subsidies 225 50 - -
Investment income 9 1,091 2,799 2 92
Finance costs 10 (15,940) (12,331) - (103)
----------- ---------- ---------- ---------
(Loss)/profit before
taxation (15,027) 8,868 (2,053) 14,840
Income tax credit/(expense) 11 1,006 (754) - -
----------- ---------- ---------- ---------
(Loss)/profit for the
year from continuing
operations (14,021) 8,114 (2,053) 14,840
----------- ========== ---------- ---------
Discontinued operations
Profit for the year 12 - -
from discontinued operation
=========== ==========
Other comprehensive
income
Exchange difference - (380) - (378)
Revaluation of available-for-sale
investment 17 - (1,241) - (2,141)
Total comprehensive
income for the year (14,021) 6,493 (2,053) 12,321
=========== ========== ========== =========
Profit attributable
to equity holders of
the company (14,021) 6,493
==========
(Loss)/earnings per
share 13
From continuing and
discontinued operations:
Basic and diluted (RMB) (0.24) 0.17
=========== ==========
Basic and diluted (pence) (2.40) 1.73
=========== ==========
All amounts are derived from continuing operations
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
At 31 December 2012
Note 2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Group Group Company Company
Non-current assets
Property, plant and equipment 14 192,287 201,454 6 8
Intangible assets 15 41,591 42,920 - -
Investments 16 - - 130,000 130,000
Available-for-sale financial
asset 17 - 657 - 657
Derivative financial instrument 18 - - - -
Deferred tax asset 26 1,448 456 - -
---------- ----------
235,326 245,487 130,006 130,665
---------- ---------- --------- ---------
Current assets
Inventories 19 97,836 92,264 - -
Trade and other receivables 20 63,489 55,129 260 6
Available-for-sale-financial
asset 8 - 100 - -
Cash and cash equivalents 21 26,460 47,160 2,528 4,235
---------- ---------- --------- ---------
187,785 194,653 2,788 4,241
---------- ---------- --------- ---------
Total assets 423,111 440,140 132,794 134,906
========== ========== ========= =========
Equity and reserves
Share capital 22 15,196 15,196 15,196 15,196
Share premium 22 86,711 86,711 86,711 86,711
Other reserves 23 (13,635) (15,344) - (1,622)
Retained earnings 3,034 18,764 25,086 28,761
---------- ---------- --------- ---------
91,306 105,327 126,993 129,046
---------- ---------- --------- ---------
Current liabilities
Bank borrowings 24 163,000 186,350 - -
Income tax liabilities 1,070 2,399 1,028 1,028
Trade and other payables 25 114,080 90,964 4,773 2,387
---------- ---------- --------- ---------
278,150 279,713 5,801 3,415
---------- ---------- --------- ---------
Non-current liabilities
Other borrowings 24 44,000 45,445 - 2,445
Deferred tax liabilities 26 9,655 9,655 - -
---------- ---------- --------- ---------
53,655 55,100 - 2,445
---------- ---------- --------- ---------
Total liabilities 331,805 334,813 5,801 5,860
========== ========== ========= =========
Total equity and liabilities 423,111 440,140 132,794 134,906
========== ========== ========= =========
The financial statements were approved by the Board of Directors
and authorised for issue on 6 June 2013
Li Yuanqing Hao Qiang
Chief ExecutiveDirector Executive Finance Director
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2012
2012 2011 2012 2011
Note RMB'000 RMB'000 RMB'000 RMB000
Group Group Company Company
Net cash used in operating
activities 27 (28,314) (6,808) (1,709) (7,110)
----------- ----------- ---------- -----------
Investing activities
Purchase of property, plant
and equipment (24,463) (49,561) - (8)
Refund on cancellation of plant 19,500 - - -
ordered
Proceeds from sale of plant 358 - - -
and equipment
Purchase of intangible assets (85) (3,548) - -
Purchase of investments - (2,484) - -
Investment in subsidiaries - - - (53,000)
Proceeds from sale of investment 94 - - -
Proceeds from disposal of subsidiary - - - 33,000
Net cash inflow from business - 10,805 - -
combination
Net cash inflow from disposal
of subsidiary 31.2/3 16,573 5,893 - -
Net cash inflow from acquisition
of subsidiary 31.1 8,396 - - -
Interest received 1,091 2,799 2 92
----------- -----------
Net cash generated from/(used
in) investing activities 21,464 (36,096) 2 (19,916)
----------- ----------- ---------- -----------
Financing activities
Proceeds from bank borrowings 235,100 191,350 - -
Repayment of bank borrowings (249,950) (138,400) - -
Proceeds from other borrowings 1,000 3,555 - 304
Shares issued - 3,437 - 3,437
Share Issue Costs - (2,984) - (2,984)
----------- -----------
Net cash (used in)/generated
from financing activities (13,850) 56,958 - 757
----------- ----------- ---------- -----------
Net (decrease)/increase in
cash and cash equivalents (20,700) 14,054 (1,707) (26,269)
Cash and cash equivalents at
beginning of period 47,160 32,632 4,235 30,611
Exchange difference - 474 - (107)
Cash and cash equivalents at
end of period 21 26,460 47,160 2,528 4,235
=========== =========== ========== ===========
CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2012
Group Share Share Other Retained Total
capital premium reserves earnings
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Balance at 1 January 2011 4,612 19,842 59,776 2,507 86,737
========= ========= =========== ========== ==========
Comprehensive income
Profit for the year - - - 8,114 8,114
Exchange difference - - (380) - (380)
Revaluation of available-for-sale financial assets - - (1,241) - (1,241)
--------- --------- ----------- ---------- ----------
Total comprehensive income for the year - - (1,621) 8,114 6,493
--------- --------- ----------- ---------- ----------
Transaction with owner
Issue of shares 10,584 69,853 - - 80,437
Transfer statutory reserves - - 2,106 (2,106) -
Disposal of subsidiary - - (8) 8 -
Capital structuring after merger - (2,984) (75,597) 10,241 (68,340)
--------- --------- ----------- ---------- ----------
Total transaction with owner 10,584 66,869 (73,499) 8,143 12,097
--------- --------- ----------- ---------- ----------
Balance at 31 December 2011 15,196 86,711 (15,344) 18,764 105,327
========= ========= =========== ========== ==========
Comprehensive income
Loss for the year - - - (14,021) (14,021)
Total comprehensive income for the year - - - (14,021) (14,021)
--------- --------- ----------- ---------- ----------
Transaction with owner
Transfer statutory reserves - - 88 (88) -
Transfer exchange difference - - 380 (380) -
Settlement of available-for-sale financial assets - - 1,241 (1,241) -
--------- ----------- ---------- ----------
Total transaction with owner - - 1,709 (1,709) -
--------- --------- ----------- ---------- ----------
Balance at 31 December 2012 15,196 86,711 (13,635) 3,034 91,306
========= ========= =========== ========== ==========
Company Share Share Other Retained Total
capital premium reserves earnings
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Balance at 1 January 2011 4,612 19,842 897 13,921 39,272
========= ========= ========== ========== ==========
Comprehensive income
Profit for the year - - - 14,840 14,840
Exchange difference - - (378) - (378)
Revaluation of available-for-sale financial asset - - (2,141) - (2,141)
--------- --------- ---------- ---------- ----------
Total comprehensive income for the year - - (2,519) 14,840 12,321
--------- --------- ---------- ---------- ----------
Transaction with owner
Issue of shares 10,584 69,853 - - 80,437
Share issue cost - (2,984) - - (2,984)
--------- --------- ---------- ---------- ----------
Total transaction with owner 10,584 66,869 - - 77,453
--------- --------- ---------- ---------- ----------
Balance at 31 December 2011 15,196 86,711 (1,622) 28,761 129,046
========= ========= ========== ========== ==========
Comprehensive income
Loss for the year - - - (2,053) (2,053)
--------- --------- ---------- ---------- ----------
Total comprehensive income for the year - - - (2,053) (2,053)
--------- --------- ---------- ---------- ----------
Transaction with owner
Transfer exchange difference - - 378 (378) -
Settlement of available-for-sale financial assets - - 1,244 (1,244) -
--------- --------- ---------- ---------- ----------
Total transaction with owner - - 1,622 (1,622) -
--------- --------- ---------- ---------- ----------
Balance at 31 December 2012 15,196 86,711 - 25,086 126,993
========= ========= ========== ========== ==========
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2012
1 GENERAL INFORMATION
Qihang Equipment Company Limited is a company incorporated in
Jersey under the Companies (Jersey) Law 1991.The address of the
registered office is given on page 1. The nature of the Group's
operation and its principal activities are set out in the
Directors' Report. The principal place of business of the Group's
operation is Zhenjiang New Development Area, Dingmao Nanwei Road 2,
Zhenjiang Province, P. R. China ("PRC").
The principal activity of the Company is that of an investment
holding company. The principal activities of its subsidiaries are
set out in note 16.
On 1 July 2011, by special resolution, the name of the Company
changed to Qihang Equipment Company Limited to reflect the new
business; and the Company changed its presentational currency to
produce its annual report to shareholders in Renminbi ("RMB") of
the PRC for the year ended 31 December 2011 and subsequent
periods.
As of result of the above, these financial statements present
information about the Company on a stand-alone basis and as a
consolidated group of companies, and are set out in RMB, which is
the functional currency of the Group's operating subsidiaries in
PRC.
These financial statements are rounded to the nearest thousand
('000).
2 ACCOUNTING POLICIES
2.1 Statement of compliance
These financial statements have been prepared in accordance with
International Financial Reporting Standards and Interpretation in
force ("IFRSs"), as adopted by European Union, in accordance with
the provision of the Companies (Jersey) Law 1991, and the AIM
Rules.
The Group has adopted all relevant standards effective for
accounting periods beginning on or after 1 January 2012.
At the date of authorisation of these financial statements, the
Group has not adopted the following standardas it is either not
effective of not applicable to the Group's business.
Standards, interpretations and amendments
IAS 27 Separate Financial Statements (2011) - effective 1
January 2013
Amended version of IAS 27 which now only deals with the
requirements for separate financial statements, which have been
carried over largely unchanged from IAS 27 Consolidated and
Separate Financial Statements; Requirements for consolidated
financial statements are now contained in IFRS 10 Consolidated
Financial Statements.
The Standard requires that when an entity prepares separate
financial statements, investments in subsidiaries, associates, and
jointly controlled entitles are accounted for either at cost, or in
accordance with IFRS 9 Financial Instruments.
The Standard also deals with the recognition of dividends,
certain group reorganisations and includes a number of disclosure
requirements.
IFRS 10 Consolidated Financial Statements - effective 1 January
2013
This requires a parent to present consolidated financial
statements as those of a single economic entity, replacing the
requirement previously contained in IAS27 and SIC12.
IFRS 10 uses control as a single basis for consolidation,
irrespective of the nature of the investee, thus elimination the
risks and rewards approach included in SIC-12.
An investor must possess all the three elements to conclude it
controls an investee.
-- power over the investee;
-- exposure, or rights, to variable returns from involvement with the investee; and
-- the ability to use power over the investee to affect the amount of the investor's returns
IFRS 13 Fair Value Measurement - effective 1 January 2013
Establishes a single framework for measuring fair value and is
applicable for both financial and non-financial items. The Standard
does not include requirements on when fair value measurement is
required; it prescribes how fair value is to be measured if
required by another standard.
Presentation of Items of Other Comprehensive Income (Amendments
to IAS 1) - effective 1 July 2012
The amendment revises the way other comprehensive income ("OCI")
is presented.
-- It preserves the amendments made to IAS 1 in 2007 to require
profit and loss and OCI to be presented together;
-- require entitles to group items presented in OCI based on
whether they are potentially reclassifiable to profit or loss
subsequently; and
-- require tax associated with items presented before tax to be
shown separately for each of the two groups of OCI items (without
changing the option to present items of OCI either before tax or
net of tax).
Standards, interpretations and amendments (not yet endorsed by
EU at 5 April 2013)
IFRS 9 Financial Instrument - Classification and Measurement of
Financial Assets - effective 1 January 2015
IFRS 9 introduces new requirements for classifying and measuring
financial assets as follow:
-- debt instruments meeting both a 'business model' test and a
'cash flow characteristics' test are measured at amortised cost
(the use of fair value is optional in some limited
circumstances';
-- investments in equity instruments can be designed as 'fair
value through other comprehensive income' with only dividends being
recognised in profit or loss; and
-- all other instruments (including all derivatives) are
measured at fair value with changes recognised in the profit and
loss.
The concept of 'embedded derivatives' does not apply to
financial assets within the scope of the Standard and the entire
instrument must be classified and measured in accordance with the
above guidelines.
IFRS 9 - Incorporation of requirements on the accounting for
financial liabilities- effective 1 January 2015
The guidance in IFRS 9 retains the classification criteria for
financial liabilities currently contained in IAS 39. However, there
are two key differences, relating to presentation and
measurement:
-- the presentation of the effects of changes in fair value
attributable to a liability's credit risk; and
-- the elimination of the cost exemption for derivative
liabilities to be settled by delivery of unquoted equity
instruments.
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
- effective date 1 January 2014
-- to provide "investment entities" an exemption from the
consolidation of particular subsidiaries and instead require that
an investment entity measure the investment in each eligible
subsidiary at fair value through profit or loss in accordance with
IFRS 9 or IAS 39;
-- require additional disclosure about why the entity is
considered an investment entity, details of the entity's
unconsolidated subsidiaries, and the nature of relationship and
certain transactions between the investment entity and its
subsidiaries; and
-- require an investment entity to account for its investment in
a relevant subsidiary in the same way in its consolidated and
separate financial statements (or to only provide separate
financial statements if all subsidiaries are unconsolidated).
There are no other standards, interpretations and amendments in
issue but not yet adopted that the directors anticipate will have
material effect on the reported income or net assets of the
Group.
2.2 Basis of preparation
These consolidated financial statements have been prepared on
the historical cost basis except for certain properties and
financial instruments that are measure at revalued amounts or fair
values, as explained in the accounting policies below. Historical
cost is generally based on the fair value of the consideration
given in exchange for assets.
Win Yu Group financial information is presented separately on
note 33 to these financial statements.
2.3 Basis of consolidation
(a) Subsidiaries
The consolidated 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.
The results of subsidiaries acquired or disposed of during the
period are included in the consolidated income statement 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 linewith those used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
(b) Non-controlling interests
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 and the
minority's share of changes in equity since the date of the
combination. Losses applicable to the minority in excess of the
minority's interest in the subsidiary's equity are allocated
against the interests of the Group except to the extent that the
minority has a binding obligation and is able to make an additional
investment to cover the losses.
(c) Associates
Associates are all entitles over which the Group has significant
influence but not control, generally accompanying by a shareholding
of between 20% - 50% of the voting rights. Investments in
associates are accounted for using the equity method of accounting
and are initially recognised at cost.
2.4 Business combinations
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. The consideration transferred in
a business combination 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 acquire. Acquisition related costs are
generally recognised in profit or loss. 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.
Goodwill arising on acquisition is recognised as an asset and
initially measured as the excess of the consideration transferred
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 consideration transferred, the excess is
recognised immediately in the profit and loss as a bargain
purchase.
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.
2.5 Reverse acquisitions
A reverse acquisition occurs when the entity that issues
securities (the legal acquirer) is identified as the acquiree for
accounting purposes under business combination. The entity whose
equity interests are acquired (the legal acquiree) must be the
acquirer for accounting purposes for the transaction to be
considered a reverse acquisition.
The merger of a private operating entity into a non-operating
public shell corporation with nominal net assets typically results
in the owners of the private entity gaining control over the
combined entity after the transaction and the shareholders of the
former public shell corporation continuing only as passive
investors. IRFS 3 clarifies that this transaction is usually not
considered a business combination, instead this transactions are
considered to be a capital transactions of the legal acquiree.
However, the accounting result is similar to reverse acquisition
accounting.
The Group's financial statements have been prepared in the name
of Qihang on the basis of continuing business of Win Yu ("acquirer
accounting") and business combination with Qihang, the parent
company ("acquiree accounting") occurs on date of business
combination.
The standalone financial statements of the parent company have
been prepared of on the basis of continuing operation of
Qihang.
2.6 Going concern
The Group had net current liabilities of RMB90 million at 31
December 2012. The Group has been monitored its cash flow and
constantly negotiated with its sales agents and creditors for
acceptable trading terms and payment arrangements for its
liabilities to ensure continuity in its operations.
The directors are required to report that the business is a
going concern, with supporting assumptions or qualifications as
necessary. After making enquiries, the directors consider that the
Group has adequate resources and committed borrowing facilities to
continue in operational existence for the foreseeable future. The
directors are confident that the short term bank borrowings
facilities are renewable in the normal course of business when they
fall due. In addition, the directors have obtained confirmation
from the majority shareholder that he will continue to support the
Group for the foreseeable future. Consequently, they have adopted
the going concern basis in preparing these financial
statements.
2.7 Foreign currency
Transactions entered into by Group entities in a currency other
than the currency of the primary economic environment in which it
operates (the "functional currency") are recorded at the rates
ruling when the transactions occur. Foreign currency monetary
assets and liabilities are translated at the rates ruling at the
balance sheet date and the gains and losses on translation are
included in the income statement.
2.8 Borrowing costs
All borrowings costs are recognised in the income statement in
the period in which they are incurred except for borrowing costs
attributable to qualifying assets. Borrowing costs that are
directly attributable to the acquisition, construction or
production of a qualifying asset is to be capitalised as a cost of
that asset. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or
sale.
2.9 Income tax
Income tax for the financial year comprises current and deferred
tax. Income tax is recognised in the income statement except to the
extent that it relates to items recognised directly in other
comprehensive income or directly in equity. In this case the tax is
recognised in other comprehensive income or directly in equity,
respectively.
Current tax is the expected tax payable on the taxable income
for the financial year, using tax rates enacted or substantively
enacted at the statement of financial position date, and any
adjustment to tax payable in respect of previous financial
years.
Deferred tax is provided using the liability method, providing
for temporary differences as at the statement of financial position
date between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes except for differences arising on:
- the initial recognition of goodwill;
- the initial recognition of an asset or liability in a
transaction which is not a business combination and,
at the time of the transaction, affects neither accounting or taxable profit; and
- investment in subsidiaries and jointly controlled entities
where the group is able to control the timing of the reversal of
the difference and it is probable that the difference will not
reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively
enacted at the statement of financial position date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax
benefit will be realised.
2.10 Property, plant and equipment
Land use rights (note 2.11a) and buildings are stated at their
revalued amounts, being the fair value at the date of revaluation,
less any subsequent accumulated depreciation and subsequent
accumulated impairment losses. Revaluations are performed with
sufficient regularity such that the carrying amounts do not differ
materially from those that would be determined using fair values at
the end of the reporting period. Any revaluation increase arising
is recognised in other comprehensive income and accumulated in
equity, except to the extent that it reverses a revaluation
decrease for the same asset previously recognised in profit and
loss, in which case the increase is credited to profit and loss to
the extent of the decrease previously expensed. A decrease in the
carrying amount arising on the revaluation is recognised in profit
or loss to the extent that it exceeds the balance, if any, held in
the revaluation reserve relating to a previous revaluation of that
asset.
Plant and equipment are stated at cost less accumulated
depreciation and impairment. The cost of an asset comprises its
purchase price and any directly attributable costs of bringing the
asset to its working condition and location for its intended use.
Depreciation is calculated so as to write off the cost of an asset,
less its estimated residual value, over its useful economic life,
using the straight-line method. The estimated useful lives are as
follows:
Buildings 20 years
Plant and machinery 5-10 years
Motor vehicles 5 years
Fixtures, fittings and equipment 5 years
Other assets 5 years over cost
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount (refer note 2.12).
Gains and losses on disposals are determined by comparing the
disposal proceeds with the carrying amount and are included in the
profit and loss.
Asset in the course of construction is stated at cost less
impairment losses. Cost comprises direct costs of construction
capitalised during the periods of construction. Capitalisation of
these costs ceases and construction-in-progress is transferred to
property, plant and equipment when substantially all the activities
necessary to prepare the assets for their intended use are
completed. No depreciation is provided for in respect of
construction-in-progress until it is completed and ready for its
intended use.
2.11 Intangible assets
(a) Land use rights
Land use rights are amortised through administrative expenses
over the period to which the rights relate. The estimated useful
lives are 50 years.
(b) Software Licences
Software licences are stated at cost less accumulated
amortisation and accumulated impairment losses. Amortisation is
calculated using the straight-line method to allocate the cost of
the licence over 5 years.
(c) Internally generated intangible assets - 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 Group:
- 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 administrative
expenses.
2.12 Impairment of non-current assets
The carrying amounts of assets are reviewed at each statement of
financial position date to determine whether there is any
indication of impairment. If any such indication exists, the
asset's recoverable amount is estimated. For goodwill, the
recoverable amount is estimated at each statement of financial
position date. An impairment loss is recognised whenever the
carrying amount of the asset or its cash-generating unit exceeds
its recoverable amount. Impairment losses are recognised through
administrative expenses in the income statement.
The recoverable amount is the higher of an asset's net selling
price and value in use. The net selling price is the amount
obtainable from the sale of an asset in an arm's length
transaction. Value in use is the present value of estimated future
cash flows expected to arise from the continuing use of an asset
and from its disposal at the end of its useful life.
Recoverable amounts are estimated for individual assets or, if
it is not possible, for the cash generating unit. An impairment
loss is reversed if there has been a change in the estimates used
to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation, if no impairment loss had been recognised. Reversals
of impairment losses are recognised in the income statement.
Impairment losses in respect of goodwill are not reversed.
2.13 Investment in subsidiary undertakings
Investments in subsidiaries are stated at cost less provision
for any impairment in value.
2.14 Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the weighted average cost method.
The cost of finished goods comprises raw materials, direct labour,
other direct costs and related production overheads but excludes
borrowing costs. Net realisable value is the estimated selling
price in the ordinary course of business, less the costs of
completion and selling expenses.
2.15 Financial instruments
Financial assets and financial liabilities are recognised when a
group entity becomes a party to the contractual provisions of the
instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
2.16 Financial assets
Financial assets within the scope of IAS 39 are classified as
either financial asset at 'fair value through profit and loss'
(FVTPL), loans and receivables, held to maturity investments, or
available-for-sale financial assets, as appropriate.
The Group determines the classification of its financial assets
after initial recognition and, where allowed and appropriate,
re-evaluates this designation or convention in the market place
concerned.
All arm's length purchases and sales of financial assets are
recognised on the trade date i.e. the date that the Group commits
to purchase the asset. Such purchases or sales are purchases or
sales of financial assets that require delivery of assets within
the period generally established by regulation or convention in the
market place concerned.
2.16.1 Effective interest method
This is a method of calculating the amortised cost of a debt
instrument and of allocating interest income over the relevant
period. The effective interest rate is the rate that exactly
discounts estimated future cash receipts (including all fees and
points paid or received that form an integral part of the effective
interest rate, transaction costs and other premiums or discounts)
through the expected life of debt instrument, or where appropriate,
a shorter period, to the net carrying amount on initial
recognition.
Income is recognised on an effective interest basis for debt
instruments other than those financial assets classified at
FVTPL.
2.16.2 Financial assets at FVTPL
Financial assets classified as held for trading are included in
the category financial assets at fair value through profit or loss.
Financial assets are classified as held for trading if they are
acquired for the purpose of sale in the short term. Derivative
financial instruments are also classified as held for trading
unless they are designated and effective as a hedging instrument.
Financial assets at FVTPL are stated at fair value with any gains
or losses arising on re-measurement recognised in profit or
loss.
2.16.3 Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are measured at amortised cost using the effective
interest method less any impairment and are included in current
assets, except for maturities greater than twelve months after the
statement of financial position date. These are classified as
non-current assets. The Group's loans and receivables comprise
"trade and other receivables" and "cash and cash equivalents" in
the statement of financial position.
Interest income is recognised by applying the effective interest
rate except for short-term receivables when the recognition of
interest would be immaterial.
2.16.4 Held-to-maturity investments
Non-derivative financial assets with fixed or determinable
payments and fixed maturity are classified as held-to-maturity when
the Group has the positive intent and ability to hold the assets to
maturity. Investments intended to be held for an undefined period
are not included in this classification. Other long-term
investments that are intended to be held-to-maturity, such as
bonds, are subsequently measured at amortised cost using the
effective interest method less any impairment.
2.16.5 Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial
assets that are designated as available-for-sale or are not
classified in any of the three preceding categories. After initial
recognition, available-for-sale assets are measured at fair value
with gains or losses being recognised in other comprehensive income
and accumulated under fair value adjustment reserve until the
investment is derecognised or until the investment is determined to
be impaired at which time the accumulate gain or loss previously
reported in equity is included in the profit or loss. The fair
value of investments that are traded in active market at the end of
each reporting period is determined by reference to the relevant
stock exchange's quoted market bid prices at the close of business
on the reporting period date. For investments where there is no
active market, fair value is determined using valuation techniques.
Such techniques include using recent arm's length market
transactions; reference to the current market value of another
instrument, which is substantially the same; discounted cash flow
analysis and option pricing models.
2.17 Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash
equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value. For the purpose of
the cash flow statement, cash equivalents would include advances
from banks repayable within 3 months from the date of the
advance.
2.18 Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. Financial liabilities include trade and other payables,
amounts due to related parties and shareholders, bank borrowings
and notes payable.
Trade and other payables are carried at cost which is the fair
value of the consideration to be paid in the future for goods and
services received, whether or not billed to the Group.
All borrowings and overdrafts are recorded at the amount of the
proceeds received, net of direct issue costs. Finance charges are
charged to the income statement on an accruals basis using the
effective interest rate method.
Equity instruments are recorded at the fair value of the
consideration received, net of direct issue costs.
2.19 Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at the end of each reporting date.
Financial assets are considered to be impaired when there is
objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial assets, the
estimated future cash flows of the investment have been
affected.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount, and present value of the estimated future cash flows
discounted at the original effective interest rate. An impairment
loss in respect of an available-for-sale financial asset is
calculated by reference to its fair value.
For certain categories of financial assets, such as trade
receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a
collective basis that share similar credit risk
characteristics.
For financial assets carried at cost, the amount of the
impairment loss is measured as the difference between the asset's
carrying amount and the present value of the estimated future cash
flows discounted at the current market rate of return for a similar
financial asset. Such impairment loss will not be reversed in
subsequent periods.
The carrying amount of the financial assets is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. Changes in the
carrying amount of the allowance account are recognised in profit
or loss.
When available-for-sale financial asset is considered to be
impaired, cumulative gains or losses previously recognised in other
comprehensive income are reclassified to profit or loss in the
period.
For financial assets measured at amortised cost, if, in a
subsequent period, the amount of the impairment loss decreases
which can be related objectively to an event occurring after the
impairment was recognised, the previously recognised impairment
loss is reversed through profit or loss to the extent that the
carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been
had the impairment not been recognised.
In respect of available-for-sale equity securities, impairment
losses previously recognised in profit or loss are not reversed
through profit or loss. Any increase in fair value subsequent to an
impairment loss is recognised in other comprehensive income and
accumulated under fair value adjustment reserve. In respect of
available-for-sale debt securities, impairment losses are
subsequently reversed through profit or loss if an increase in the
fair value of the investment can be objectively related to an event
occurring after the recognition.
2.20 Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of
discounts, VAT and other sales related taxes.
Universal lathes and CNC machinery tools sales
Sales of goods are recognised when goods are delivered and title
has passed and all revenue recognised is in respect of the sale of
goods.
2.21 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker is responsible for allocating
resources and assessing performance of the operating segments.
2.22 Government grants
Government grants received on capital expenditure are deducted
in arriving at the carrying amount of the asset purchased.
Grants for revenue expenditure are presented separately on the
face of the consolidated income statement.
Where retention of the government grant is dependent on the
Group satisfying certain criteria it is initially recognised as
deferred income. When the criteria for retention have been
satisfied, the deferred income balance is released to the income
statement or netted against the asset purchased as appropriate.
2.23 Related parties
Parties are considered to be related if one party has the
ability, directly or indirectly, to control the other party, or
exercise significant influence over the other party in making
financial and operating decisions. Parties are also considered to
be related if they are subject to common control or common
significant influence. Related parties may be individuals or
corporate entities.
2.24 Leases
Leases in which a significant portion of the risks and rewards
of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to the profit and loss on a
straight-line basis over the period of the lease.)
2.25 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from
past events and whose existence will only be confirmed by the
occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Group. It can also be a
present obligation arising from past events that is not recognised
because it is not probable that outflow of economic resources will
be required or the amount of obligation cannot be measured
reliably.
A contingent liability is not recognised but is disclosed in the
notes to the accounts. When a change in the probability of an
outflow occurs so that the outflow is probable, it will then be
recognised as a provision. A contingent asset is a possible asset
that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain
events not wholly within the control of the Group. Contingent
assets are not recognised but are disclosed in the notes to the
accounts when an inflow of economic benefits is probable. When
inflow is virtually certain, an asset is recognised.
2.26 Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past event, it is probable
that an outflow of economic benefit will be required to settle the
obligation, and a reliable estimate of the amount can be made.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with IFRSs
requires management to make assumptions that affects the
application of accounting policies and the amounts of assets,
liabilities, income and expenditure. The estimates and associated
assumptions are based on historical experience and other relevant
factors, the results of which form the basis for the judgements
that underlie the carrying value of the assets and liabilities.
Actual results may differ from these estimates. The most
significant areas in which judgements are required relate to the
estimate of useful economic lives and residual values of
non-current assets and the recoverable amount of current and
non-current assets (in particular inventories and trade
receivables). The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised if the
revision affects only that period or in the period of revision and
future periods if the revision affects both the current and future
periods.
The Group makes estimates and assumptions concerning the future.
The estimates and assumptions 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.
(a) Provisions for doubtful debts
The Group makes sales on credit. A proportion of the outstanding
credit sales may prove uncollectible in due course. An estimate is
made of the uncollectible portion of accounts receivables using a
calculation based on prior experience and an evaluation of the
amounts outstanding. In aggregate, RMB380,896 (2011: RMB183,282) is
considered to be at risk in respect of amounts due from trade
customers. There is a degree of uncertainty as to actions the Group
is able to undertake to enforce collection of these debts, which
may impact the eventual recoverable amounts. Accordingly, the
Directors have assessed their best estimate of the recoverability
of these debts. More details of the allowance for doubtful trade
and other receivables are provided in note 20.
(b) Provisions for inventories
The Group reviews the net realisable value of, and demand for,
its inventory on a regular basis to provide assurance that recorded
inventory is stated at the lower of cost and net realisable value.
Factors that could impact estimated demand and selling prices
include the timing and success of future technological innovations,
competitor actions, supplier prices and economic trends. Changes of
the expected net realisable value of inventory could potentially
result in the reduction of the profit for the year. The Group has
made provision of RMB3,258,694 (2011: RMB312,820) for slow moving
and obsolete stock.
(c) Revaluation of land and buildings
The Group has used a valuation from an independent valuer to
estimate the fair value of land and property and to calculate the
deferred income tax liabilities accordingly based on management's
best judgement. The fair value of land and property relies upon
open market transactions. If the operating subsidiary in China
fails to maintain its high technology enterprise status the actual
outcome on deferred income tax liabilities would differ by 10 per
cent. from management's estimate and the Group would need to
increase the deferred tax liabilities by RMB6.44 million.
(d) Impairment of investment in subsidiary
Determining whether the investment in subsidiary is impaired
requires an estimation of the value in use of the cash-generating
unit ("CGU"). The value in use calculation requires the directors
to estimate the future cash flows expected to arise from the CGU
and a suitablediscount rate in order to calculate present
value.
The recoverable amount of this CGU is determined based on VIU
calculation which uses cash flow projections based on financial
budgets approved by the directors covering a two-year period and a
discount rate of 10.5% per annum.
Cash flows projections during the budget period are based on the
same expected gross margins and raw materials price inflation
throughout the budgeted period. The cash flows beyond that two-year
period have been extrapolated using a steady 15% per annum growth
rate which is half the projected long term average growth rate for
PRC market. The directors believe that any reasonable possible
change in the key assumptions on which recoverable amount is based
would not cause the carrying amount to exceed the recoverable
amount of the CGU. Therefore no impairment is provided.
4 SEGMENT INFORMATION
The sales revenue arises from the sale of universal lathes, CNC
machinery, large-scale machinery, and relevant spare parts which
forms the Group's main business.
All the activities are within the PRC. Therefore management
considers no detail of operating and geographical segments
information is to be reported.
10.66% (2011: 8.86%) of sales made via PRC agents to customers
overseas.
Analysis of revenue from the sale of goods and services are as
follows:
Group Group
2012 2011
RMB'000 RMB'000
Universal 60,656 142,540
CNC 58,172 74,892
Large-scale 32,156 44,245
Others 1,483 1,830
Sales related taxes (964) (1,400)
151,503 262,107
========= ===========
5 EXPENSES BY NATURE
Group Group
2012 2011
RMB'000 RMB'000
Changes in inventories of finished goods and
work in progress (5,572) (13,459)
Raw materials, consumables used, direct costs,
and overheads 97,626 183,998
Employee benefit expense (note 6) 32,649 33,030
Research and development costs 6,070 3,236
Exchange difference (14) (832)
Sales agents' commissions 860 5,074
Warranty costs 790 2,249
Depreciation, amortisation and impairment charges 14,486 12,060
Operating lease payments 622 446
Transportation costs 1,399 2,146
Travel and entertaining 2,780 4,606
Other expenses 2,501 5,534
---------- ----------
Total cost of sales, distribution costs and administrative
expenses 154,197 238,088
========== ==========
6 EMPLOYEE BENEFIT EXPENSE
Group Group
2012 2011
RMB'000 RMB'000
Wages and salaries - normal 22,808 20,284
Wages and salaries - annual bonus 2,848 6,538
Social security costs and welfare 8,469 9,780
--------- ---------
34,125 36,602
Included in inventories (1,476) (3,572)
32,649 33,030
========= =========
2012 2011
Number Number
The average monthly number of
people employed 707 760
======== ========
7 LISTING COSTS
Win Yu reversing into Qihang was to obtain the listing status.
The substance of this transaction is Qihang received approximate
RMB3.4 million in placing and incurred approximate RMB6.7 million
listing costs. This is an equity-settled share-based payment
transaction. Qihang received RMB3.4 million and obtained listing
status which does not quality for recognition as an asset.
Therefore it has recognised as an expense.
In the parent company standalone financial statements, the
listing costs which is incremental costs directly attributable to
the placement have been offset against the proceeds arising from
the issuance of shares by the company according to IAS 32 -
"Financial Instruments". The excess of the incremental cost was
charge to income statement.
8 OTHER GAINS/(LOSSES)
Other gains/(losses) include amount of RMB1,289,031 related to
the gain arising from the transfer of 25,000,000 ordinary shares
and 50,000,000 options to subscribe for ordinary shares in
Metroelectric plc to Wonder Employee Capital Limited ("WECL") in
full and final settlement of GBP200,000 loan.
Also included in the balance amount of RMB5,824 related to loss
arising from sale of investment in mutual fund under the Bank of
Communications in PRC.
9 INVESTMENT INCOME
Group Group Company Company
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Interest income on short-term
bank deposits 1,091 799 2 92
Interest income on loans to related - 1,133 - -
parties
Interest income on other loans - 867 - -
1,091 2799 2 92
========= ======== ======== ========
10 FINANCE COSTS
Group Group Company Company
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Interest on bank borrowings 14,198 11,793 - -
Bank charges 699 1,605 - -
Reversal of interest capitalised 1,043 - - -
Less: amount capitalised for qualifying - (1,119) - -
assets
Interest on other borrowings - 52 - 103
15,940 12,331 - 103
========= ========= ======== ========
11 INCOME TAX (CREDIT)/EXPENSE
2012 2011
RMB'000 RMB'000
Current income tax 155 3,417
Adjustment in respect of prior year (169) (2,761)
--------- ---------
Total tax (credit)/charge (14) 656
--------- ---------
Deferred tax assets (note 26)
Origination and reversal of timing
difference (244) 98
Deferred tax income and expense in (748) -
the current year
--------- ---------
Total deferred tax (992) 98
--------- ---------
Income tax (credit)/expense (1,006) 754
========= =========
Reconciliation at effective tax rates
Profit before tax (15,027) 8,868
========= =========
Tax on profit at the prevailing rate
applicable (3,757) 2,217
Zero tax rate 370 2,859
Preferential tax rate 1,042 (2,278)
Expenses not deductible for tax 1,616 638
Allowance for research and development (232) -
cost
On timing differences (244) 98
Adjustment in respect of prior years (169) (2,761)
Unrelieved tax losses c/f 226 65
Others 142 (84)
(1,006) 754
========= =========
The Company is regarded as resident for tax purposes in Jersey
and on the basis that the Company is neither a financial services
company nor a utility company for the purposes of the Income Tax
(Jersey) Law 1961, as amended; the company is subject to income tax
in Jersey at a rate of zero per cent.
Win Yu International Investments Company Limited is regarded as
resident for the tax purposes in Hong Kong. There is no tax
liability due to losses during the year.
The Group's operating subsidiaries in PRC are subject to income
tax rate at 25% (2011: 25%) except certain operating subsidiaries
which are entitled to a reduction in tax rate at 15% (2011: 15%)
and due to its high technology enterprise status.
12 DISCONTINUED OPERATION
On 6 January 2012, the Group acquired the entire share capital
of Zhenjiang Anda Coal Mine Special Equipment Co Ltd ("ZACM"), a
manufacturer of coal mining equipment such as drilling machines,
pumps, dust catchers, drill pipe and accessories for a cash
consideration up to RMB35 million. RMB30 million of the
consideration was payable immediately and the balance RMB5 million
is payable by 31 March 2013 conditional upon ZACM reporting profit
after tax of at least RMB9 million for the year ended 31 December
2012.
ZACM is not capable of meeting its profit target for the year
ended 31 December 2012. As a result, the directors have reached
agreement with the original vendors to sell ZACM back to them for a
consideration of RMB30 million in cash, representing the
consideration paid originally. The disposal was completed on 29
November 2012 on which date control of the company passed to the
original vendors.
Details of asset and liabilities acquired and disposed of, and
the calculation of the profit or loss on acquisition and disposal,
are disclosed in note 31.1 and 31.2.
Analysis of loss for the year from discontinued
operation
The results of ZACM included in the consolidated
income statement are set out below:
RMB'000
Profit for the year from discontinued operation
Revenue 35,103
Other income 100
---------
35,203
Expenses (40,818)
---------
Loss before tax (5,615)
Income tax expense (88)
(5,703)
=========
Bargain purchase (note 31.1) 2,324
Gain on disposal (note 31.2) 3,379
---------
5,703
=========
Profit for the year from discontinued operation -
=========
Cash flows from discontinued operation
Net cash inflows from operating activities (33,472)
Net cash inflows from investing activities -
Net cash inflows from financing activities 8,500
---------
Net cash outflows (24,972)
=========
13 EARNINGS PER SHARE
Basic loss per share is calculated by dividing the loss
attributable to equity shareholders of the Company by the weighted
average number of ordinary shares in issue during the year. There
is no dilutive potential ordinary sharein the Company.
For comparative, earnings per share are calculated by dividing
the profit attributable to equity shareholders of the Company by
the weighted average pre-combination ordinary shares multiplied by
exchange ratio established in the acquisition, and the weighted
average total actual shares of the parent in issue after the date
of acquisition.
2012 2011
(Loss)/earnings RMB RMB
Earnings for the purposes of basic and
diluted earnings per share being net
profit attributable to equity holders
of the parent (14,021,110) 8,113,560
Number of shares
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 58,036,263 48,099,998
=============== =============
14 PROPERTY, PLANT AND EQUIPMENT - Group
Asset Building Plant and Fixtures Motor vehicles Other Total
under construction machinery fittings assets
&
equipment
Cost or valuation RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At 1 January 2011 153 127,994 70,916 2,890 2,641 1,480 206,074
Adjustment - 3,236 - - - - 3,236
Additions 41,068 1,418 6,370 382 323 - 49,561
Transfers (2,059) 224 1,835 - - - -
Disposal of
subsidiary - - - (125) - - (125)
Disposals - - (264) (1) - - (265)
At 31 December 2011 39,162 132,872 78,857 3,146 2,964 1,480 258,481
Acquisition of
subsidiary - - 2,285 67 903 - 3,255
Additions 19,311 776 1,789 2,587 - - 24,463
Transfers (1,391) - 1,391 - - - -
Refunded on contract
cancelled (19,500) - - - - - (19,500)
Adjustment (1,344) 601 (1) - - - (744)
Disposal of
subsidiary - - (2,472) (76) (903) - (3,451)
Disposal - - (816) - - - (816)
-------------------- --------- ----------- ----------- --------------- -------- ---------
At 31 December 2012 36,238 134,249 81,033 5,724 2,964 1,480 261,688
==================== ========= =========== =========== =============== ======== =========
Accumulated
depreciation
At 1 January 2011 - 7,434 30,776 1,453 1,364 712 41,739
Adjustment - 3,236 - - - - 3,236
Charge for the year - 4,242 5,124 342 380 340 10,428
Charge for the
period -
on revaluation - 1,925 - - - - 1,925
On disposal of
subsidiary - - - (63) - - (63)
Disposals - - (237) (1) - - (238)
-------------------- --------- ----------- ----------- --------------- -------- ---------
At 31 December 2011 - 16,837 35,663 1,731 1,744 1,052 57,027
Charge for the
period - 4,699 5,659 406 534 237 11,535
Charge for the
period -
on revaluation - 1,925 - - - - 1,925
On disposal of
subsidiary - - (215) (14) (169) - (398)
On disposal - - (688) - - - (688)
-------------------- --------- ----------- ----------- --------------- -------- ---------
At 31 December 2012 - 23,461 40,419 2,123 2,109 1,289 69,401
==================== ========= =========== =========== =============== ======== =========
Carrying value
At 31 December 2012 36,238 110,788 40,614 3,601 855 191 192,287
==================== ========= =========== =========== =============== ======== =========
At 31 December 2011 39,162 116,035 43,194 1,415 1,220 428 201,454
==================== ========= =========== =========== =============== ======== =========
PROPERTY, PLANT AND EQUIPMENT - continue
a) Asset under construction
Asset under construction represent the construction of new
production line to increase the production capacity.
b) Revaluation of asset
The Group's land use right and buildings were revalued on 15
March 2013 by independent valuers. The revaluation amount are RMB41
million and RMB119 million respectively. The valuation was made on
the basis of recent market transactions on arm's length terms and
depreciated replacement cost for land and buildings respectively.
The Directors considered that the carrying value of the land use
right and buildings do not differ materially from that which would
be determined using revaluation amount at the end of the reporting
period. Therefore carrying amounts are at their approximate fair
value.
c) Assets pledged as security
Land use right and buildings with carrying amounts of
approximate RMB150 million and certain plant and machinery of the
company (value pledged at RMB9 million) have been pledged to secure
the borrowings of the Company (see note 24).
Had the Group's land use right and building been measured on a
historical cost basis, their carrying amount would have been as
follow:
2012 2011
RMB'000 RMB'000
Land use right 12,209 12,494
Buildings 78,069 81,391
========= ========
PROPERTY, PLANT AND EQUIPMENT - Company
Fixtures
fittings
&
equipment
RMB'000
Cost
At 1 January 2011 -
Additions 8
At 31 December 2011 8
Additions -
-----------
At 31 December 2012 8
===========
Accumulated depreciation
At 1 January 2011 -
Charge for the year -
At 31 December 2011 -
Charge for the year 2
-----------
At 31 December 2012 2
===========
Carrying value
At 31 December 2012 6
===========
At 31 December 2011 8
===========
15 INTANGIBLE ASSETS
Land use Purchased Patent Total
right software / know-how
Cost or valuation RMB'000 RMB'000 RMB'000 RMB'000
At 1 January 2011 42,037 258 - 42,295
Adjustment (1,447) - - (1,447)
Additions - 364 3,184 3,548
At 31 December 2011 40,590 622 3,184 44,396
Acquisition of subsidiary - - 9,833 9,833
Additions - 85 - 85
Disposal of subsidiary - - (9,833) (9,833)
--------- ---------- ------------ ---------
At 31 December 2012 40,590 707 3,184 44,481
========= ========== ============ =========
Amortisation
At 1 January 2011 1,460 117 - 1,577
Adjustment (1,447) - - (1,447)
Charge for the year 285 218 212 715
Charge for the year - on revaluation 631 - - 631
--------- ---------- ------------ ---------
At 31 December 2011 929 335 212 1,476
Charge for the year 285 178 819 1,282
Charge for the year - on revaluation 632 - - 632
Disposal of subsidiary - - (500) (500)
--------- ---------- ------------ ---------
At 31 December 2012 1,846 513 531 2,890
========= ========== ============ =========
Carrying value
At 31 December 2012 38,744 194 2,653 41,591
========= ========== ============ =========
At 31 December 2011 39,661 287 2,972 42,920
========= ========== ============ =========
The Company obtained the right to occupy the land at Zhenjiang
New Development Area, Dingmao Nanwei Road 2, Zhenjiang Province,
PRC for a period of 50 year from June 2005. The remaining period of
amortisation is approximate 44.5 years.
Refer to note 14(b) and 14(c) for revaluation of asset and
assets pledged as security.
16 INVESTMENTS
Company
2012 2011
RMB'000 RMB'000
At 1 January 130,000 11,577
Additions - 130,000
Disposals - (11,577)
At 31 December 130,000 130,000
========== ==========
In April 2011, the Company disposed of Wonder Packaging
Machinery Co. for a total cash consideration of RMB33 million.
RMB'000
Proceeds of disposal 33,000
Less: cost of investment (11,577)
Exchange difference 133
Gains recognised 21,556
=========
On 1 July 2011, The Company acquired the entire issued share
capital of Win Yu International Investments Company Limited ("Win
Yu"), a company incorporated in Hong Kong with operating
subsidiaries in PRC. The total consideration for the acquisition is
RMB130 million satisfied by a cash payment of RMB53 million and the
issue of 38,325,737 shares in the Company.
Details of the Company's investment in subsidiaries at 31
December 2012 are as follows:
Name of Place of Proportion Principal activities
subsidiary incorporation of ownership
(or registration) interest
and operation %
Win Yu International Investments Hong Kong 100% Holding company
Company Limited
Jiangsu Qihang CNC Machine PRC 100% Manufacture of
Tool Co., Limited** lathes and machinery
tools
** Held by subsidiary company
On 28 October 2011, Heng Tai Feng International Holdings Limited
transferred its 30% holding in Jiangsu Qihang CNC Machine Tool Co.,
Limited to Win Yu International Investments Company for cash
consideration of RMB19 million. As a result of this Win Yu
International Investments Company Limited owned entire share
capital of Jiangsu Qihang CNC Machine Tool Co., Limited.
On 30 October 2011, Win Yu disposed of the entire share capital
of Heng Tai Feng International Holdings Limited for a total cash
consideration of USD100. This transaction was omitted in previous
year's account. The effect on income statement is immaterial (note
31.3) and the earnings per share reported are not affected.
Therefore no prior year adjustment is considered necessary.
17 AVAILABLE FOR SALE FINANCIAL ASSET
Group Group Company Company
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
At 1 January 657 - 657 2,947
On business combination - 2,023 - -
Fair value adjustment - (1,241) - (2,141)
Exchange difference - (125) - (149)
On disposal (657) - (657) -
-------- --------
At 31 December - 657 - 657
======== ======== ========= ========
The above available-for-sale investment was settled by the loan
from Wonder Employee Capital Limited ("WECL") on 23 February
2012.
18 DERIVATIVE FINANCIAL INSTRUMENTS
Group Group Company Company
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
At 1 January - - - 1,963
On business combination - 461 - -
Fair value adjustment - (461) - (1,963)
At 31 December - - - -
========= ======== ========= ========
On 23 February 2012, the company has transferred 50,000,000
options to subscribe for ordinary shares, exercisable at 0.8 pence
per share, in Metroelectric plc to WECL in part settlement of the
loan of GBP200,000 received by the company from WECL in 2009, see
note 24.
19 INVENTORIES
2012 2011
RMB'000 RMB'000
Raw materials and consumables 23,169 33,000
Work in progress 63,211 57,403
Finished goods 11,456 1,861
97,836 92,264
========= =========
The cost of inventories recognised as an expense includes
RMB2,945,875 (2011: RMB51,103 write back) in respect of write down
of inventories to net realisable value.
20 TRADE AND OTHER RECEIVABLES
Group Group Company Company
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Trade receivables - net 13,570 11,652 - -
Notes receivables 27,195 17,435 - -
Other receivables - net 17,775 24,875 260 6
Prepayments and accrued income 4,949 1,167 - -
63,489 55,129 260 6
========= ========= ========= ========
Provision for impairment has been made for estimated
irrecoverable amount from the sale of goods and other loans which
has been determined by reference to past default experience. It is
the Group's policy to made general allowance for doubtful debts on
outstanding balances of more than 180 days as at period end.
Movements on the Group provision for impairment of trade
receivables are as follows:
2012 2011
RMB'000 RMB'000
At 1 January 183 180
Allowance for the year 198 3
At 31 December 381 183
========= ========
Movements on the Group provision for impairment of other
receivables are as follows:
2012 2011
RMB'000 RMB'000
At 1 January 400 2,779
Allowance for the year 1,181 (2,379)
At 31 December 1,581 400
========= ========
At 31 December 2012, the aging analysis of trade receivables is
as follows:
2012 2011
RMB'000 RMB'000
Up to 6 months 9,089 11,229
6 - 12 months 4,364 41
1 - 2 years 49 382
Over 2 years 68 -
At 31 December 13,570 11,652
========= =========
Included in other receivables are:
2012 2011
RMB'000 RMB'000
Payments on account to suppliers 8,058 10,116
Payment to be refunded on cancellation of
contract on plant ordered - 10,800
Deposit for guarantee on bank borrowings 6,778 3,571
VAT 1,364 -
Staffs advances and others 1,575 388
17,775 24,875
========= =========
The directors consider that the carrying amount of trade and
other receivables approximate their fair value.
21 CASH AND CASH EQUIVALENTS
Group Group Company Company
2012 2011 2012 RMB'000 2011
RMB'000 RMB'000 RMB'000
Cash at bank and on hand 10,841 16,440 2,528 4,235
Short-term bank deposits 15,619 30,720 - -
26,460 47,160 2,528 4,235
========= ========= ============== =========
Bank balances and cash comprise cash held by the Group and
short-term bank deposits with an original maturity of six months or
less. The carrying amount of these assets approximates their fair
value.
22 SHARE CAPITALAND SHARE PREMIUM
2012 2011 2012 2011
GBP'000 GBP'000 RMB'000 RMB'000
Authorised:
200,000,000 ordinary shares of
2.5p each 5,000 5,000 52,343 52,343
======== ======== ======== ========
Pursuant to a special resolution of the company on 1 July 2011
the authorised share capital of theCompany was increased from
65,000,000 shares to 200,000,000 shares.
Issued and fully paid: Number Share Share
of Capital Premium
shares
GBP GBP
At 1 January and 31 December
2010 18,000,000 450,000 1,935,980
Placing on 4 July 2011 1,710,526 42,763 282,237
On 4 July 2011 38,325,737 958,143 6,323,747
Less share issue costs (note
7) - - (282,237)
------------- --------------- ------------
At 31 December 2011 58,036,263 1,450,906 8,259,727
============= =============== ============
RMB'000 RMB'000
At 31 December 2011 and 31 December
2012 15,196 86,711
=============== ============
On 4 July 2011, the Company's shares were re-admitted to AIM
market and received GBP325,000 in placing through the issue of
1,710,526 shares at 19p each.
On the same day, the Company issued 38,325,737 shares at 19p
each to the vendor of Win Yu as part of the consideration paid for
the acquisition of Win Yu Group.
23 OTHER RESERVES
Group Group Company Company
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Revaluation reserves 54,712 54,712 - -
Available-for-sale financial
assets - (1,241) - (1,244)
Other reserves 26,318 26,318 - -
Translation reserves - (380) - (378)
Statutory reserves 5,378 5,290 - -
Merger reserves (100,043) (100,043) - -
---------- ---------- -------- --------
(13,635) (15,344) - (1,622)
========== ========== ======== ========
Other reserves
Other reserves represent loans waived by Mr Li Yuanqing, a
shareholder and a director of the Company.
Statutory reserves
In accordance with the relevant regulations applicable in the
PRC, companies now comprising the Group established in the PRC are
required to transfer at least 10% of their statutory annual profits
after tax to the statutory reserve until the balance of the reserve
reaches 50% of their respective registered share capital. Subject
to certain restrictions as set out in the relevant PRC regulations,
the statutory reserve may be used to offset against accumulated
losses of the respective PRC companies. The amount of the transfer
is subject to the approval of the board of directors of the
respective companies.
Merger reserves
Merger reserves arose due to capital restructuring of the Group
whereby Win Yu Group reversing into Qihang, cash shell as at date
of business combination.
24 BORROWINGS
Non-current Group Group Company Company
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Loan from a director 42,000 42,000 - -
Loan from WECL - 2,445 - 2,445
Other 2,000 1,000 - -
44,000 45,445 - 2,445
======== ======== ========== ==========
Current Group Group Company Company
2012 2011 2011 2010
RMB'000 RMB'000 RMB'000 RMB'000
Bank borrowings 163,000 186,350 - -
163,000 186,350 - -
======== ======== ========== ==========
Loan from a director represents interest free loan from Mr Li
Yuanqing. The loan is repayable after 12 months subject to the
Company having sufficient funds to meet the repayments.
The loan from WECL was settled in full on 23 February 2012 by
transferring 25,000,000 ordinary shares and 50,000,000 options to
subscribe for ordinary shares in Metroelectric plc to WECL.
The bank borrowings are secured by:
- land use right and property of the Group (note 14 and 15);
- land use right and property owned by Zhenjiang Anda Machinery
Co Ltd;
- Zhenjiang SME Investments Security Co., Limited;
- Zhenjiang Investments Security Co;
- certain plant and machinery of the company; and
- personal guarantee from Mr Li Yuanqing
Zhenjiang Anda Machinery Co Ltd is the parent company of
Zhenjiang Anda Coal Mine Special Equipment Co Ltd (see note
31).
The average interest rate paid is 7.5% (2011: 7.5%) annually.
The borrowings are arranged at fixed interest rates and the
directors consider that the carrying amount of the borrowings
approximate to their fair value.
25 TRADE AND OTHER PAYABLES
Group Group Company Company
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
Trade payables 53,143 56,913 - -
Notes payables 28,739 21,038 - -
Customer advances 10,001 5,710 - -
Social security and other taxes 279 1,217 - -
Other creditors 21,918 6,086 4,773 2,387
114,080 90,964 4,773 2,387
======== ======== ========== ==========
The directors consider that the carrying amount of trade and
other payables approximate to their fair value.
26 DEFERRED INCOME TAX
2012 2011
RMB'000 RMB'000
The analysis of deferred tax assets and deferred
tax liabilities is as follows:
Deferred tax assets
- -
* Deferred tax assets to be recovered after more than
12 months
* Deferred tax assets to be recovered within 12 months (1,448) (456)
-------- --------
(1,448) (456)
-------- --------
Deferred tax liabilities
* Deferred tax liabilities due after more than 12
months 9,655 9,655
- -
* Deferred tax liabilities due within 12 months
-------- --------
9,655 9,655
-------- --------
Deferred tax liabilities (net) 8,207 9,199
======== ========
The movement in deferred income tax assets and liabilities
during the year, without taking into consideration the offsetting
of balances within the same jurisdiction, is as follow:
Deferred Accelerated Fair Total
income tax depreciation value
and expenses gains
RMB'000 RMB'000 RMB'000 RMB'000
At 1 January 2011 - (554) 9,655 9,101
Credit to income statement - 98 - 98
--------------
At 31 December 2011 - (456) 9,655 9,199
Charge to income statement (748) (244) - (992)
--------------
At 31 December 2012 (748) (700) 9,655 8,207
============== ================== ======== ========
27 NOTES TO THE CASH FLOW STATEMENT
Group Group Company Company
2012 2011 2012 2011
RMB'000 RMB'000 RMB'000 RMB'000
(Loss)/profit before interest
and tax (178) 18,400 (2,053) 14,851
Adjustments for:
Depreciation of property, plant
and equipment 13,460 12,353 2 -
Amortisation of intangibles 1,914 1,346 - -
(Gain)/loss on disposal of plant
and equipment (486) 27 - -
(Gain)/loss on business combination (5,701) 63 - (21,556)
Gain on disposal of financial
instrument (1,289) - (1,289) -
Fair value loss on derivative
financial instrument - 461 - 1,962
Bad debts provisions 1,379 (2,376) - -
Impairment of inventory 2,946 (51) - -
Operating cash flows before movements
in working capital 12,045 30,223 (3,340) (4,743)
Increase in inventory (8,325) (14,006) - -
(Increase)/decrease in trade and
other receivables (19,549) (8,067) (254) 577
Increase/(decrease) in trade and
other payables 3,727 (2,911) 1,885 (2,841)
--------- --------- -------- ---------
Net cash (used in)/generated from
operations (12,102) 5,239 (1,709) (7,007)
Finance costs paid (14,897) (12,331) - (103)
Income tax refunded - 2,761 - -
Income taxes paid (1,315) (2,477) - -
Net cash used in operating activities (28,314) (6,808) (1,709) (7,110)
========= ========= ======== =========
28 CAPITAL COMMITMENTS
2012 2011
RMB'000 RMB'000
Commitments for the construction
of additional production line
(note 14) 50,000 50,000
========= =========
29 GUARANTEE
The Group provided cash guarantees to bank borrowings of RMB12.5
million and RMB27.5 million taken out by Zhenjiang Anda Machine Co
Ltd and Zhenjiang Anda Coal Mine Special Equipment Co Ltd
respectively. The guarantees on borrowings of RMB12.5 million, RMB4
million , RMB5 million , RMB8.5 million and RMB10 million are
expiring on 23 April 2014, 14 November 2013, 20 November 2013, 10
February 2014, and 10 March 2014 respectively.
30 RELATED PARTY TRANSACTIONS
Transactions within the Group have been eliminated in the
preparation of the financial information set out in this report and
are not disclosed in this note. Balance with other related parties
have been disclosed under the relevant notes.
The Group is controlled by Proud Style Limited by virtue of its
shareholding, a company owned by Mr Li Yuanqing, a director of the
Group.
Key management compensation
Key management includes directors of the company and its
subsidiaries. The compensation paid or payable to key management
for the employee services is shown on page 5 of the Report of the
Directors.
31 BUSINESS COMBINATION
31.1 Acquisition of subsidiary
On 6 January 2012, the Group acquired the entire share capital
of Zhenjiang Anda Coal Mine Special Equipment Co Ltd ("ZACM"), a
manufacturer of coal mining equipment such as drilling machines,
pumps, dust catchers, drill pipe and accessories for a cash
consideration up to RMB35 million. RMB30 million of the
consideration was payable immediately and the balance RMB5 million
is payable by 31 March 2013 conditional upon ZACM reporting profit
after tax of at least RMB9 million for the year ended 31 December
2012. In the event that ZACM does not achieve this profit target
then the deferred consideration will be reduced proportionally.
Details of the acquisition are as follows:
Fair value of assets and liabilities acquired
Book value Fair value Fair
adjustment value
RMB'000 RMB'000 RMB'000
Non-current assets
Property, plant and equipment 2,977 278 3,255
Intangible assets 9,833 - 9,833
Deferred taxation 2,960 - 2,960
Current assets
Inventories 25,869 9,952 35,821
Trade and other receivables 35,252 - 35,252
Cash and cash equivalents 29,849 - 29,849
Current liabilities
Bank borrowings (19,000) - (19,000)
Trade and other payables (65,646) - (65,646)
22,094 10,230 32,324
Bargain purchase 2,324
---------
Fair value of consideration transferred 30,000
=========
Satisfied by:
Cash - paid 21,453
Cash - deferred 8,547
---------
30,000
=========
Net cash inflow arising on acquisition
Cash consideration paid 21,453
Cash and cash equivalent balances acquired 29,849
8,396
=======
31.2 Disposal of subsidiary
ZACM is not capable of meeting its profit target for the year
ended 31 December 2012. As a result, the directors have reached
agreement with the original vendors to sell ZACM back to them for a
consideration of RMB30 million in cash, representing the
consideration paid originally. The disposal was completed on 29
November 2012 on which date control of the company passed to the
original vendors.
Book value of net assets sold
RMB'000
Non-current assets
Property, plant and equipment 3,053
Intangible assets 9,333
Deferred taxation 2,960
Current assets
Inventories 35,627
Trade and other receivables 45,063
Cash and cash equivalents 4,877
Current liabilities
Bank borrowings (27,500)
Trade and other payables (46,792)
Net assets disposed of 26,621
Cash consideration 30,000
---------
Gain on disposal 3,379
=========
Net cash inflow on disposal
Consideration received 21,452
Cash and cash equivalent balances disposed off 4,877
---------
16,575
=========
31.3 Disposal of subsidiary
On 30 October 2011, Win Yu disposed of the entire share capital
of Tai Feng International Holdings Limited for a cash consideration
of USD100.
Book value of net assets sold
RMB'000
Current assets
Cash and cash equivalents 3
Current liabilities
Trade and other payables (7)
Net liabilities disposed of 4
Cash consideration 1
--------
Gain on disposal 5
========
Net cash outflow on disposal
Consideration received 1
Cash and cash equivalent balances disposed off 3
--------
2
========
32 FINANCIAL INSTRUMENTS
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. This note
describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods, unless otherwise stated in this
note.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
- Trade and other receivables
- Cash and cash equivalents
- Trade and other payables
- Borrowings
The above are designated as receivables and financial
liabilities which are measured at amortised cost.
- Available-for-sale financial assets
- Derivative financial instruments
The above are designated as investments and measured at fair
value.
General objective, policies and procedures
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes to executive
management.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details regarding
these policies are set out below:
(a) Credit risk
Credit risk arises principally from the Group's trade and other
receivables. Cash is placed with creditworthy financial
institutions.
The Group controls the credit risk from customers through
deposit payments prior to delivery of goods. Trade and other
receivables presented in the balance sheet are net of an allowance
for doubtful receivables, estimated by management based on current
economic conditions. Receivables net of this allowance for doubtful
receivables is the Group's maximum exposure to credit risk, being
RMB63 million (2011: RMB55 million).
Quantitative disclosures of the credit risk in relation to trade
and other receivables are disclosed in note 20.
(b) Liquidity risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
The Group's policy as regards liquidity is to ensure sufficient
cash resources are maintained to meet short-term liabilities. The
Group has no defaults or breaches on its financial liabilities.
(c) Currency risk
Foreign exchange risk refers to the risk that movement in
foreign currency exchange rates against the Group's functional or
reporting currency will affect the Group's financial results and
cash flows. The Group has transaction currency exposures. Such
exposure arises from sales by an operating unit in currencies other
than its functional currency.
During the period under review the Group has no export sales,
therefore, no foreign currency sales. The Group's policy, as it
relates to currency risk, is to limit payment terms to immediate
letters of credit or prepayment before transporting goods to
customers.
If the exchange rate on uncovered exposures were to move
significantly between the year end and date of payment or receipt,
there could be an impact on the Group's net income. As such,
financial assets and liabilities are short term in nature; this
risk is not considered to be substantial.
Foreign exchange risk has not been considered to be material in
either the current or preceding period.
(d) Interest rate risk
Interest rate risk arises from the potential changes in interest
rates that may have an adverse effect on the Group in the current
reporting period and in future years.
The Group is exposed to interest rate risk because entities in
the Group borrow fund at both fixed and floating interest rates.
The risk is managed by the Group by maintaining as appropriate mix
between fixed and floating rate borrowings.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the
exposure to interest rate for bank borrowings at the end of the
reporting period. The analysis is prepared assuming the amount of
the liability outstanding at the end of the reporting period was
outstanding for the whole year. A 50 basis point increase or
decrease is used when reporting interest rate risk internally to
key management personnel and represents management's assessment of
the reasonable possible change in interest rates.
If interest rate had been 50 basis points higher/lower and all
other variables were held constant, the Group's loss for the year
ended 31 December 2012 would increase/decrease by RMB968,000.
(e) Capital
The Group considers its capital to comprise its ordinary share
capital, share premium and retained earnings. In managing its
capital, the Group's primary objective is to ensure its continued
ability to provide a consistent return for its equity shareholders
through a combination of capital growth and distributions. The
Group has historically considered a mix of debt and equity funding
as the most appropriate form of capital for the Group.
33 ADDITIONAL FINANCIAL INFORMATION
Details of the financial information of Win Yu Group are as
follow:
Income statement
2012 2011
RMB'000 RMB'000
Revenue 151,503 262,107
Cost of sales (111,268) (189,903)
---------- ----------
Gross profit 40,235 72,204
Other operating income 797 1,597
Distribution expenses (9,458) (18,024)
Administrative expenses (30,127) (25,893)
----------
Profit from operation 1,447 29,884
Non-operating income net
of expenses 206 5
Other gains and losses (6) -
Profit/(loss) on disposal
of subsidiaries 5 (63)
Income from subsidies 224 50
Investment income 1,090 2,707
Finance costs (15,940) (12,279)
---------- ----------
(Loss)/profit before taxation (12,974) 20,304
Income tax credit/(expense) 1,006 (754)
---------- ----------
(Loss)/profit for the year (11,968) 19,550
========== ==========
Statement of financial position
2012 2011
RMB'000 RMB'000
Non-current assets
Property, plant and equipment 192,281 201,446
Intangible assets 41,591 42,920
Deferred tax asset 1,448 456
--------- --------
235,320 244,822
--------- --------
Current assets
Inventories 97,836 92,264
Trade and other receivables 65,360 55,728
Available-for-sale-financial asset - 100
Cash and cash equivalents 23,933 42,925
--------- --------
187,129 191,017
--------- --------
Total assets 422,449 435,839
========= ========
Equity and reserves
Share capital 8 8
Revaluation reserves 54,712 54,712
Other reserves 26,318 26,318
Statutory reserves 5,378 5,290
Retained earnings 7,896 19,952
--------- --------
94,312 106,280
--------- --------
Current liabilities
Bank borrowings 163,000 186,350
Income tax liabilities 42 1,371
Trade and other payables 111,440 89,183
--------- --------
274,482 276,904
--------- --------
Non-current liabilities
Other borrowings 44,000 43,000
Deferred tax liabilities 9,655 9,655
--------- --------
53,655 52,655
--------- --------
Total liabilities 328,137 329,559
========= ========
Total equity and liabilities 422,449 435,839
========= ========
Profit reconciliation
RMB'000 RMB'000
Win Yu Group (loss)/profit (11,968) 19,550
Qihang loss for the period from date of business
combination (2,053) (5,111)
Adjustment to listing cost due to capital restructuring - (6,325)
--------- --------
Qihang Group (loss)/profit (14,021) 8,114
========= ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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