TIDMACHP
RNS Number : 5600R
Asia Ceramics Holdings PLC
29 June 2015
Asia Ceramics Holdings plc
('Asia Ceramics' or 'the Company' or together with its
subsidiaries 'the Group')
Final Results for the year ended 31 December 2014
The Directors of Asia Ceramics are pleased to present the
Company's final results for the year ended 31 December 2014.
A copy of the Company's annual report will be sent to
shareholders and will be available shortly on the Company's website
at www.asiaceramicplc.com.
Enquiries:
Alei Duan Asia Ceramics Holdings Tel: 07776 481 237
plc
James Joyce / James WH Ireland Limited Tel: 0207 220 1666
Bavister
Highlights:
-- Profit for the year at GBP50k (2013: GBP21k)
-- Net assets at GBP1,025k (2013: GBP956k)
-- Cash at bank of GBP33k (2013: GBP288k)
-- Basic EPS 0.46 pence (2013: 0.20 pence)
CHAIRMAN'S STATEMENT
Introduction
I have great pleasure in presenting the annual report and
financial statements for Asia Ceramics Holdings Plc for the
financial year ending 31 December 2014.
Results
The Group's turnover for the year to 31 December 2014 was GBP11
million (2013: GBP11 million). The profit for the year was GBP50k
(2013: GBP21k).
Review for the year
The Group's main trading activity is the export of ceramic
products from China, which has grown by approximately 10 per cent
during the year under review. The Group's main export markets are
Europe, Asia, Far East, America and Australia. Export sales for the
year ended 31 December 2014 amounted to GBP8.4million of sales
(2013: GBP7.6 million), which represented 78% (2013: 69%) of Group
turnover for the year.
An improvement in the in gross margin led to an increase in the
Group's profitability for the year on similar levels of
turnover.
Employees
The Board would like to extend their personal thanks to all
employees of the Group for their enthusiasm, hard work and
commitments. In particular the Board would like to thank the Chief
Executive Officer, Dr Dingxin Pu, for his continued contribution to
the development of the Group.
Outlook
The Board is actively taking steps to improve the gross margin
further as well as to achieve further sales in its export markets,
as well as in China, and thus increase the Group's profit in
2015.
I look forward to reporting further progress in 2015.
CHIEF EXECUTIVE OFFICER'S STATEMENT
The Group was established in July 2010 to distribute and sell
ceramic wall and floor tiles, sanitary ware products and other home
improvement products in China and internationally.
Financial Performance
-- Group net sales of GBP11 million (2013: GBP11 million)
-- Profit for the year of GBP50k (2013: GBP21k)
Group operating net cash used for the year ended 31 December
2014 was GBP10k (2013: GBP49k). Cash at bank at 31 December 2014
was GBP33k (2013: GBP288k).
Operations
During the year to 31 December 2014, the Group employed 70
(2013: 69) members of staff. The head office is in Foshan as well
as the main showroom.
The Group's administration, information technology, human
resources, finance, sales and marketing are controlled from the
head office in Foshan. The Group also designs its own ceramic
tiles, and enters into contracts with OEM suppliers to manufacture
its own designed products.
The Group's main trading operations are:
-- Our export division that exports ceramic and sanitary ware product internationally; and
-- Three retail stores, one in Hong Kong, the other two in
mainland China that sell ceramic and sanitary ware products.
The head office in Foshan:
-- seeks appropriate locations for stores;
-- provides IT, logistics, finance and administration support;
-- manages the wholesale and export division;
-- provides training for the staff;
-- ensures that all rules and regulations are complied with; and
-- ensures that the UK Bribery Act of 2010 is complied with.
Outlook
We are looking to make further progress in increasing sales in
our export division and improving gross margin, despite the
difficult trading conditions as well as in our domestic markets. I
look forward therefore, to demonstrating further growth in profits
and building shareholders' value in 2015.
CORPORATE GOVERNANCE STATEMENT
Principles of Corporate Governance
As a company listed on AIM, the company is not governed by the
Combined Code adopted by the London Stock Exchange ('the Combined
Code') but is required to operate principles of good governance and
best practice. Accordingly, the directors are committed to the
Combined Code and believe that an effective system of corporate
governance supports the enhancement of shareholder value. These
principles have been in place since the company's listing on 6
September 2010.
The directors acknowledge the importance of the Combined Code
and intend, following Admission, to continue to apply its
principles so far as is practicable taking into account the
company's size and stage of development. The company has three
non-executive directors.
The directors have established an audit committee (the "Audit
Committee"), a remuneration committee (the "Remuneration
Committee") and an AIM rules compliance committee (the "AIM Rules
Compliance Committee") with formally delegated duties and
responsibilities to operate with effect from Admission.
Audit Committee
The Audit Committee, which initially comprise Alei Duan as
Chairman, as well as Wenxian Liu and Marcus Paciocco, will
determine and examine any matters relating to the financial affairs
of the company including the terms of engagement of the Group's
auditor and, in consultation with the auditors, the scope of the
audit. The Audit Committee will receive and review reports from the
management and the external auditors of the Group relating to the
annual and interim accounts and the accounting and internal control
systems of the Group. In addition, it will consider the financial
performance, position and prospects of the company and ensure they
are properly monitored and reported on.
Remuneration Committee
The Remuneration Committee is responsible for making
recommendations to the Board on the company's framework of
executive remuneration and its cost. The Committee determines the
contract terms, remuneration and other benefits for each of the
executive directors and senior employees, including performance
related bonus schemes, pension rights and compensation
payments.
The Remuneration Committee, which comprise Alei Duan, Wenxian
Liu and Marcus Paciocco with Alei Duan acting as Chairman, will
review the performance of the executive directors and senior
management, set and review their remunerations and the terms of
their service contracts, determine the payment of bonuses to the
executive directors and consider the Group's bonus and option
schemes.
AIM Compliance Committee
In addition, the Board has established an AIM Rules Compliance
Committee comprising Alei Duan and Shouyuan Wu which has
responsibility for ensuring that the company complies fully with
the AIM Rules.
The directors will comply with Rule 21 of the AIM Rules relating
to directors' dealings and will take all reasonable steps to ensure
compliance by the company's applicable employees. The company has
adopted and operates a share dealing code for directors, and
employees in accordance with the AIM Rules.
The Board
The Board is responsible to shareholders for the proper
management of the company. The non-executive directors have a
particular responsibility to ensure that the strategies proposed by
the executive directors are fully considered. The Board has a
formal schedule of matters reserved to it and has discussions on a
monthly basis since its listing on the AIM. The Board is
responsible for overall strategies, reviewing management accounts,
approval of major capital expenditure projects and consider of
significant financing matters.
Directors
During the year, the Board comprised the non-executive chairman
Alei Duan (London based), the chief executive officer, the finance
director, two executive directors and two further non-executive
directors.
Internal Controls
The directors are responsible for the company's system of
internal controls and reviewing its effectiveness. The Board has
designed the company's system of internal controls in order to
provide the directors with reasonable assurance that its assets are
safeguarded, that transactions are authorised and properly recorded
and that material errors and irregularities are either prevented or
would be detected within a timely period. However, no system of
internal controls can eliminate the risk of failure to achieve
business objectives or provide absolute assurance against material
misstatements or losses.
The key elements of the control systems in operation are:
-- the Board meets regularly with a formal schedule of matters reserved to it for decision;
-- it has put in place an organisational structure with clear
lines of responsibility defined and with appropriate delegation of
authority;
-- established procedures for the planning, approval and
monitoring of capital expenditure and information systems for
monitoring the company's financial performance against approved
budgets and forecasts;
-- departmental heads are required annually to undertake a full
assessment process to identify and quantify the risks that face
their businesses and functions and assess the adequacy of the
prevention, monitoring and modification practices in place for
those risks;
-- significant risks and associated controls and monitoring
procedures are reported regularly to the Board to enable the
directors to review the effectiveness of the system of internal
controls.
Relations with shareholders
The Board attaches great importance to maintain a good
relationship with shareholders. The Board regards the annual
general meeting as a good opportunity to communicate directly with
investors who are encouraged to make inquiries to officers of the
company.
DIRECTORS' REPORT
The Directors present their report and financial statements for
the year ended 31 December 2014.
Principal activities
The principal activity of the Group is the sale of ceramic wall
and floor tiles and sanitary ware products in China and
internationally.
Business review
A detailed review of the business and a description of the main
trends and factors likely to affect the future development,
performance and position of the Group can be found in the
Chairman's Statement and Chief Executive Officer's Statement.
Risks and uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance and could
cause actual results to differ materially from expected and
historic results. The Board monitors risks on an ongoing basis and
implements appropriate procedures and processes to try and mitigate
the adverse consequences of such risks.
The business faces two principal risks. Firstly, the Group needs
to expand and retain its current position in the retail ceramic
industry. Future growth will be both organic and through potential
acquisitions. There are a number of uncertainties relating to
future acquisitions and there can be no guarantee that the Group
will be able to expand as envisaged. Secondly, the Group may need
to raise additional capital to fund its future expansion. There can
be no assurance that the Group will be able to obtain such
funding.
In addition, the financial instruments and risk profiles of the
Group are set in note 24 on page 36.
Results and dividends
The results of the year are set out in the Statement of
Comprehensive Income.
The directors do not recommend a dividend payment for the
year.
Directors and their interests
The following directors have held office during the year and
their interests as at 31 December 2014, all of which are beneficial
unless otherwise stated; whether direct or indirect, of the
directors and their families in the issued share capital of the
company is as follows:
Number of Percentage
Ordinary of Ordinary
Director Shares Shares
Dr Dingxin Pu 7,572,071 68.90%
Yangjing Zhang 72,180 0.66%
Weifeng Liu 92,803 0.84%
Frank Lewis (Resigned - -
on 3 June 2015)
Alei Duan 185,700 1.69%
Wenxian Liu 742,424 6.76%
Shouyuan Wu - -
Marcus Paciocco (Appointed - -
on 11 May 2015)
Directors' remuneration
2014 2013
GBP'000 GBP'000
Frank Lewis (Resigned
on 3 June 2015) 32 32
Dr Dingxin Pu 59 61
Yangjing Zhang - 17
Weifeng Liu 12 17
Alei Duan 10 10
Wenxian Liu - -
Shouyuan Wu 18 18
Marcus Paciocco (Appointed - -
on 11 May 2015)
131 155
======== ========
Employment policies
The Group pursues a policy of equal opportunities to all
employees and potential employees. The Group has continued its
policy of giving fair consideration to applications for employment
made by disabled persons, bearing in mind the requirements for
skills and aptitude for the job. In the areas of planned employee
training and career development, the Group strives to ensure that
disabled employees receive equal treatments, including
opportunities for promotion. Every effort is made to ensure that
continuing employment and opportunities are also provided for
employees who become disabled. It is the Company's policy to take
views of employees into account in making decisions, and wherever
possible to encourage the involvement of employees in Group's
performance.
Payments to suppliers
The company's policy for the year ended 31 December 2014 is to
settle payments with suppliers when agreeing the terms of the
business transactions;
- ensure that suppliers are aware of the terms of payments by
the inclusion of the relevant terms in contracts;
- pay in accordance with the company's contractual and other legal obligations
The number of days of trade purchases outstanding for the Group
as at 31 December was 30 days.
Going concern
The directors are required to report that the business is a
going concern, with supporting assumptions or qualifications as
necessary. The directors consider that the Group has adequate
resources and committed borrowing facilities to continue in
operational existence for the foreseeable future. Consequently,
they have adopted the going concern basis in preparing the
financial statements.
Substantial shareholders
As at 30 April 2015, the company had been notified of the
following beneficial interest of 3% or more in its shares other
than directors:
Name of holder Number Percentage
of shares shareholding
Weiguo Peng 425,757 3.87%
Jianwei Huang 425,757 3.87%
Better Group (Holding) Co Limited 632,900 5.76%
Statement of Directors' responsibilities
The directors are responsible for preparing the annual report
and the financial statements. The directors are required to prepare
financial statements for the Group and Company in accordance with
International Financial Reporting Standards as adopted by the EU
(together, "IFRS").
International Accounting Standard 1 requires that financial
statements present fairly for each financial year the Group and
Company's financial position, financial performance and cash flows.
This requires the faithful representation of transactions, other
events and conditions in accordance with the definitions and
recognition criteria for the assets, liabilities, income and
expenses set out in by the International Accounting Standards
Board's
"Framework for the Preparation and Presentation of Financial
Statements". In virtually all circumstances, a fair representation
will be achieved by compliance with all IFRS. Directors are also
required to:
- select suitable accounting policies and then apply them consistently,
- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information, and
- provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the Group and Company's financial position and
financial performance.
The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time, the
financial position of the Group and Company. They are also
responsible for safeguarding the assets of the Group and the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Statement of disclosure to auditor
The Directors have confirmed that:
- so far as each Director is aware, there is no relevant audit
information of which the Group and Company's auditor is unaware;
and
- each Director has taken all the necessary steps he ought to
have taken as a Director in order to make himself aware of any
relevant audit information and to establish that the Group and
Company's auditor is aware of that information.
Auditors
A resolution proposing the reappointment of UHY Hacker Young as
auditors of the Group and authorising the Board to determine their
remuneration will be put to the Annual General Meeting.
By order of the Board
INDEPENDENT AUDITORS' REPORT
We have audited the financial statements of Asia Ceramics
Holdings Plc for the year ended 31 December 2014 which comprise the
Consolidated and Company Statement of Comprehensive Income, the
Consolidated and Company Statements of Financial Position, the
Consolidated and Company Statements of Cash Flows, the Consolidated
and Company Statements of Changes in Equity and the related notes.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union (together,
"IFRSs").
This report is made solely to the company's members, as a body.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement set out on page 9, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit
the financial statements in accordance with relevant legal and
regulatory requirements and International Standards on Auditing (UK
and Ireland). Those standards require us to comply with the
Auditing Practices Board's (APB's) Ethical Standards for Auditors.
We are not required to consider whether the board's statements on
internal control cover all risks and controls, or form an opinion
on the effectiveness of the company's corporate governance
procedures or its risk and control procedures.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the APB's website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the group's and of
the parent company's affairs as at 31 December 2014 and of the
group's and the parent company's profit or loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs as
adopted by the European Union; and
-- have been properly prepared in accordance with the
requirements of the Companies (Jersey) Law 1991.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Jersey) Law 1991 requires us to report to you
if, in our opinion:
-- proper accounting records have not been kept, or proper
returns adequate for our audit have not been received from branches
not visited by us; or
-- the financial statements are not in agreement with the
accounting records and returns; or
-- we have not received any information or explanation that was
necessary for our audit.
Julie Wilson
for and on behalf of UHY Hacker Young
Chartered Accountants
Statutory Auditors
Quadrant House
4 Thomas More Square
London E1W 1YW
29 June 2015
The maintenance and integrity of the Asia Ceramics Holdings Plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the website; and legislation
governing the preparation and dissemination of financial statements
may differ from one jurisdiction to another.
CONSOLIDATED AND COMPANY STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
Note Group Group Company Company
Year Year Year Year
ended ended ended ended
31 December 31 December 31 December 31 December
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 3 10,797 10,998 - -
Cost of sales (8,743) (9,204) - -
------------- ------------- ------------- -------------
Gross profit 2,054 1,794 - -
Selling and distribution
expenses (1,215) (766) - -
Administrative expenses (869) (914) (140) (144)
------------- ------------- ------------- -------------
Profit /(loss) from
operation (30) 114 (140) (144)
Net non-operating
income/(expenses) (1) (7) - -
Net finance income
/(costs) 6 35 (71)
------------- ------------- ------------- -------------
Profit /(loss) before
taxation 4 36 (140) (144)
Income tax expenses 7 46 (15) - -
------------- ------------- ------------- -------------
Profit /(loss) for
the year 50 21 (140) (144)
------------- ============= ------------- -------------
Other comprehensive
income
Exchange difference -
arising on translation 19
of foreign operations
------------- -------------
Total comprehensive
income for the year
attributable to equity
holders 69 21
============= =============
Earnings per ordinary
share (pence) 8
Basic 0.46 0.20
============= =============
Diluted 0.46 0.20
============= =============
All amounts are derived from continuing operations
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2014
Note 2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Group Group Company Company
Non-current assets
Property, plant and
equipment 9 110 151 - -
Investments 10 - - 1 1
Trade and other receivables 12 - - 1,118 1,211
Deferred tax assets 14 65 32 - -
-------- -------- -------- --------
175 183 1,119 1,212
-------- -------- -------- --------
Current assets
Inventory 11 11 5 - -
Trade and other receivables 12 5,032 3,808 - -
Cash and cash equivalents 13 33 288 3 3
-------- -------- -------- --------
5,076 4,101 3 3
-------- -------- -------- --------
Total assets 5,251 4,284 1,122 1,215
======== ======== ======== ========
Equity and reserves
Share capital 15 55 55 55 55
Share premium 15 1,201 1,201 1,201 1,201
Other reserves 17 111 92 27 27
Retained earnings (342) (392) (734) (594)
-------- -------- -------- --------
1,025 956 549 689
-------- -------- -------- --------
Non-current liabilities
Loan from director 18 501 500 501 500
-------- -------- -------- --------
501 500 501 500
-------- -------- -------- --------
Current liabilities
Income tax liabilities 15 68 - -
Trade and other payables 19 3,710 2,760 72 26
-------- -------- -------- --------
3,725 2,828 72 26
-------- -------- -------- --------
Total equity and liabilities 5,251 4,284 1,122 1,215
======== ======== ======== ========
The financial statements were approved by the Board of Directors
and authorised for issue on 29 June 2015.
Dr Dingxin Pu Shouyuan Wu
Chief Executive Director Executive Finance Director
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013 2014 2013
Notes GBP'000 GBP'000 GBP'000 GBP'000
Group Group Company Company
Profit/(loss) from operations 4 44 (140) (144)
Adjustment for:
Depreciation of property,
plant and equipment 50 50 - -
Loss on disposal of property, 2 - - -
plant and equipment
Movement due to exchange 14 - - -
difference
-------- -------- -------- --------
Operating cash flows
before movements in working
capital 70 94 (140) (144)
Decrease/(increase) in (6) - -
inventory
Decrease/(increase) in
trade and other receivables (990) (1,609) 94 (7)
Increase/(decrease) in
trade and other payables 931 1,477 46 151
-------- -------- -------- --------
Net cash generated from/(used
in) operations 5 (38) - -
Interest paid - (8) - -
Income tax paid (15) (3) - -
-------- -------- -------- --------
Net cash used in operating
activities (10) (49) - -
-------- -------- -------- --------
Investing activities
Purchase of property,
plant and equipment (7) (2) - -
Interest received - - - -
-------- --------
Net cash used in investing
activities (7) (2) - -
-------- -------- -------- --------
Financing activities
Loan to director (239) - - -
Repayment of bank loan - (158) - -
-------- --------
Net cash used in financing
activities (239) (158) - -
-------- -------- -------- --------
Net decrease in cash
and cash equivalents (256) (209) - -
Cash and cash equivalents
at beginning of period 288 497 3 3
Exchange difference 1 - - -
Cash and cash equivalents
at end of period 13 33 288 3 3
======== ======== ======== ========
CONDOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
Group Share Share Other Retained Total
capital premium reserves earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December
2012 55 1,201 114 (435) 935
========= ========= ========== ========== ========
Comprehensive income
Exchange difference
arising on the translation - - - - -
of foreign operations
Profit for the year - - - 21 21
--------- --------- ---------- ---------- --------
Total comprehensive
income for the year - - - 21 21
--------- --------- ---------- ---------- --------
Transfer of share
option reserve - - (22) 22 -
---------
Balance at 31 December
2013 55 1,201 92 (392) 956
========= ========= ========== ========== ========
Comprehensive income
Exchange difference
arising on the translation
of foreign operations - - 19 - 19
Profit for the year - - - 50 50
Total comprehensive
income for the year - - 19 50 69
--------- --------- ---------- ---------- --------
Balance at 31 December
2014 55 1,201 111 (342) 1,025
========= ========= ========== ========== ========
Company Share Share Other Retained Total
capital premium reserves earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December
2012 55 1,201 49 (472) 833
========= ========= ========== ========== ========
Comprehensive income
Loss for the year - - - (144) (144)
--------- --------- ---------- ---------- --------
Total comprehensive
income for the year - - - (144) (144)
--------- --------- ---------- ---------- --------
Share option reserve - - (22) 22 -
Balance at 31 December
2013 55 1,201 27 (594) 689
========= ========= ========== ========== ========
Comprehensive income
Loss for the year - - - (140) (140)
--------- --------- ---------- ---------- --------
Total comprehensive
income for the year - - - (140) (140)
--------- --------- ---------- ---------- --------
Balance at 31 December
2014 55 1,201 27 (734) 549
========= ========= ========== ========== ========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1 GENERAL INFORMATION
Asia Ceramics Holdings Plc is a company incorporated in Jersey
under the Companies (Jersey) Law 1991. The company is governed by
its articles of association and the principal statute governing the
company is Jersey law. The company has an unlimited life and the
liability of the members of the company is limited. The company is
domiciled in Jersey and its registered office is 12 Castle Street,
St. Helier, Jersey JE2 3RT. The principal places of the business of
the Group's are at G/F, No 17 Wah Hong Building, 13 - 20 Hong Lok
Street, Mongkok, Kowloon in Hong Kong and No 9 Zhangcuo Street,
Tancheng Disctrict, Foshan City in People's Republic of 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 10.
These financial statements are presented in pounds sterling and
rounded to the nearest thousand ('000).
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of compliance
The financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the EU
("IFRS") issued by the International Accounting Standard Board
(IASB) and interpretations of the International Financial Reporting
Interpretations Committee (IFRIC).
Asia Ceramics Holding Plc has adopted all relevant standards
effective for accounting periods beginning on or after 1 January
2014.
At the end of the reporting period, the Group has not adopted
the following standards and interpretations as they are either not
effective or not applicable to the Group's business.
Standards, amendments and interpretations (not yet endorsed by
EU at 31 December 2014)
- IAS 27 "Separate Financial Statements (2014)"
- IAS 28 "Investments in Associates and Joint Ventures (2014)"
- IFRS 9 "Financial Instruments"
- IFRS 10 "Consolidated Financial Statements"
- IFRS 12 "Disclosure of Interests in Other Entities"
- Amendments to IAS 32 "Offsetting Financial Assets and Financial Liabilities"
- Amendments to IAS 12 "Deferred Tax: recovery of Underlying Assets"
- Consolidated Financial Statements, Joint Arrangements and
Disclosure of Interests in Other Entities: Transition Guidance
- Amendments to IFRS 10, IFRS 12 and IAS 27 "Investment Entities"
- Amendments to IAS 36 "Recoverable amount disclosures for non-financial assets"
- IFRIC 21 "Levies"
- IFRS 9 "Financial Instruments (Hedge Accounting and amendments
to IFRS 9, IFRS 7 and IAS 39)"
There are no other standards, amendments and interpretations 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 as disclosed in the accounting
policies below. Historical cost is generally based on the fair
value of the consideration given in exchange for assets.
The Board has reviewed the accounting policies set out in these
financial statements and consider them to be the most appropriate
to the Group's business activities.
2.3 Going Concern policy
The financial statements have been prepared assuming the Group
will continue as a going concern. 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
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 financial statements.
2.4 Basis of consolidation
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
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.
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 recognised
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 Foreign currencies
.
Functional and presentational currency
Items included in the financial statements of each group entity
are presented in the currency of the primary economic environment
in which the entity operates. The functional currencies of the
operating subsidiaries are Renminibi (RMB), US Dollars (USD) and
Hong Kong Dollars (HKD). For the purpose of the consolidated
financial statements, the results and financial position of the
Group is expressed in Pounds Sterling (GBP), for reporting in the
United Kingdom, which is the company's presentational currency.
The presentational currency of the Group is Pounds Sterling and
therefore the financial statements have been translated from RMB to
GBP and from HKD to GBP at the following exchange rates:
Year end Average rates
rates
31 December 2014 GBP1 = RMB9.68 GBP1 = RMB10.15
GBP1 = HKD12.10 GBP1 = HKD12.78
31 December 2013 GBP1 = RMB10.01 GBP1 = RMB9.62
GBP1 = HKD12.82 GBP1 = HKD12.13
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the re-translation at
period end exchange rates of the monetary assets and liabilities
denominated in foreign currencies are recognised in profit and loss
in the period. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not re-translated.
Group companies
The results and financial position of the Group's foreign
operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the
presentational currency are translated into the presentational
currency as follows:
-- assets and liabilities of the Group's foreign operations are
translated using exchange rates prevailing at the end of the
reporting period;
-- income and expense items are translated at average exchange
rates for the period unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expense items are
translated at the rate on the dates of the transactions; and all
resulting exchange differences are recognised in other
comprehensive income and accumulated in equity (attributed to
non-controlling interest as appropriate).
2.6 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.
Domestic 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.
Export sales
Sales of goods are recognised when the goods cleared the customs
and the title has passed.
2.7 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.
2.8 Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because it excludes
items of income or expense that are taxable or deductible in other
years and items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting
period.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted
for using the balance sheet method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Such assets and liabilities are
not recognised if the temporary difference arises from the initial
recognition of goodwill or from the initial recognition (other than
in a business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting
profit.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the profit and
loss, except when it relates to items charged or credited directly
to equity, in which case it is recognised in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
2.9 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.)
2.10 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 16.
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.
2.11 Property, plant and equipment
Property, plant and equipment are stated in the consolidated
statement of financial position at cost less any subsequent
accumulated depreciation and any recognised impairment loss.
Cost includes purchase price and all directly attributable costs
of bringing the asset to its location and condition necessary to
operate as intended.
Depreciation is provided at rates calculated to write off the
cost less estimated residual value from 0-10% of each asset over
its estimated useful economic life as follows
Furniture, fixtures and equipment 2 - 5 years
Motor vehicles 5 years
Showroom and office renovation 5 years
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 2.18.2).
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.
2.12 Investment in subsidiaries
Investment in subsidiaries is stated at cost less provision for
impairment.
2.13 Inventories
Inventories and work in progress are measured at the lower of
cost and net realisable value.
Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale. Cost includes
all costs of purchase, costs of conversion and other costs incurred
in bringing the inventories to their present location and
condition. The cost of inventories and work in progress, other than
those for which specific identification of costs are appropriate,
is assigned by using the first-in, first-out (FIFO basis). When the
inventories and work in progress are sold, the carrying amount of
those inventories and work in progress are recognised as an expense
in the same period as the revenue.
The amount of any write-down of inventories and work in progress
to net realisable value are recognised as an expense in the period
the write-down or loss occurs. The amount of any reversal of a
write-down of inventories and work in progress are recognised as a
reduction in the amount of inventories and work in progress
recognised as an expense in the period in which the reversal
occurs.
2.14 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.
2.15 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.
2.15.1 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.
2.15.2 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.
The Group does not designate any financial assets not held for
trading as financial assets as fair value through profit and
loss.
2.15.3 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.
2.15.4 Loans and receivables
Non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market are classified as
loans and receivables. Loans and receivables (including trade and
other receivables, bank balances and cash) are measured at
amortised cost using the effective interest method less any
impairment.
Interest income is recognised by applying the effective interest
rate except for short-term receivables when the recognition of
interest would be immaterial.
2.15.5 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.
2.16 Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. Significant financial liabilities include trade payables and
other payables.
Trade and other payables are stated initially at their fair
value and subsequently measured at amortised cost suing the
effective interest method unless the effect of discounting would be
immaterial, in which case they are stated at cost.
Equity instruments are recorded at the fair value of
consideration received, net of direct issue costs.
2.17 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.
2.18 Impairment of assets
2.18.1 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 of the impairment loss.
2.18.2 Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any
such indication exists, then the asset's recoverable amount is
estimated. For assets that have indefinite lives, the recoverable
amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and risk specific to the asset. For the purpose of impairment
testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or group of
assets (the "cash generating unit"). The goodwill acquired in a
business combination, for the purposes of impairment testing, is
allocated to cash-generating units that are expected to benefit
from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an
asset or its cash generating unit exceeds its estimated recoverable
amount. Impairment losses recognised in respect of cash generating
units are allocated first to reduce the carrying amount of the
other assets in the unit (or group of units) on a pro rata
basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. 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 has been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
2.19 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.
2.20 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.
2.21 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.
2.22 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.
2.23 Capital Risk Management
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The capital structure of the Group consists of
debt, which includes the loan disclosed in Note 18, cash and cash
equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained
earnings.
2.24 Critical accounting estimates and judgements
The preparation of financial information requires management to
make judgement estimates and assumptions that effect the
application of accounting policies together with the reported
amounts of assets, liabilities, income and expenses.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates may differ from the related
actual results.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within future financial years are addressed below.
a) Impairment of property, plant and equipment
The carrying value of the property, plant and equipment is
reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable in accordance
with the accounting policies as disclosed in the relevant parts of
note 2.11. If such indication exists, the recoverable amounts of
the property, plant and equipment are determined on value-in-use
calculations, which require the use of judgment and estimates.
b) Depreciation
The Group's management determines the estimated residual value,
useful lives and related depreciation charges for the property,
plant and equipment with reference to the estimated periods that
the Company intends to derive future economic benefits from the use
of these assets. Management will revise the depreciation and
amortisation charge where useful lives are different to previously
estimated.
c) Net realisable value of inventories
Net realisable value of inventories is the estimated selling
price in the ordinary course of business, less estimated costs of
completion and selling expenses. These estimates are based on the
current market condition and the historical experience of
manufacturing and selling products of similar nature. It could
change significantly as a result of changes in customer demand and
competitor actions in response to severe industry cycle. Management
reassesses these estimates at each balance sheet date.
d) Income tax and other taxes
The Company's subsidiaries that operate in the People's Republic
of China are subject to corporate income tax in the People's
Republic of China. Significant judgement is required in determining
the provision for income taxes and other taxes. There are some
transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business.
The Company recognises liabilities for anticipated tax audit issues
based on estimates of whether additional taxes will be due. Where
the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact
the income tax and Value-added tax in the period in which such
determination is made.
e) Measurement of fair values
A number of the group's accounting policies and disclosures
require the measurement of fair values, for both financial and
non-financial assets and liabilities.
The group currently does not have a control framework with
respect to the measurement of fair values. The significant
unobservable inputs were provided by the management to their best
knowledge.
When measuring the fair value of an asset or a liability, the
management uses market observable data as far possible. Fair values
are categorised into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques as
follows.
-- Level 1: quoted prices (unadjusted) in active markets or identical assets or liabilities;
-- Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. prices) or indirectly (i.e. derived from prices);
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The information account the assumptions made in measuring fair
values is included in the relevant notes.
f) Provisions for doubtful debts
Each debtor balance is assessed to determine recoverability of
debt. Provisions are made for all those debtors where evidence
indicates that recoverability is doubtful. Amounts are written off
when they are deemed irrecoverable. Any changes to estimates made
in relation to debtors' recoverability may result in material
difference amounts being reported in the Group's financial
statements.
g) 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 one of the most widely
used models 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.
3. BUSINESS AND GEOGRAPHICAL 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 sale of ceramic products in PRC (including Hong
Kong). In Sep 2011, the operating subsidiary in PRC obtained the
export licence. Therefore the Group has expanded its sales
overseas. At the meetings between the Directors, the income,
expenditure cash flows, assets and liabilities are reviewed on a
whole-group basis.
The Group has a policy to invest in prime locations in PRC.
Sub-division of sales by type, function, by town or city of
location in PRC is therefore of little significance in reviewing
operations.
Based on the above considerations, there is considered to be one
reportable business segment, the sale of ceramic products.
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 financial position, the
consolidated statement of changes in equity and the consolidated
statement of cash flows.
All the Group's non-current assets are located within PRC. No
Group non-current assets are located in the entity's country of
domicile.
Geographical information:
Analysis of revenue by geographical area:
Group Group
2014 2013
GBP'000 GBP'000
PRC (included Hong Kong) 2,389 3,419
Asia (excluded PRC & HK) 3,737 2,933
Europe 2,494 2,208
America 844 1,082
Africa 1,333 1,356
--------- ---------
10,797 10,998
========= =========
Information about major customers
Including in revenue sales of approximate GBP2.58 million (2013:
GBP3.67 million) are revenues which arose from sales to the Group's
three largest customers.
The Group export sales in PRC are exempted from value-added tax.
In addition to this, approximate 9% of the value-added tax paid on
purchases relating to export sales will be refunded by the tax
authority.
4. EXPENSES BY NATURE
Group Group Company Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Changes in inventories (6) 1 - -
Inventory costs 8,749 9,203 - -
Employee benefit expense
(note 5) 431 451 42 42
Depreciation 49 50 - -
Operating lease payments 84 111 - -
Legal and professional 103 116 98 102
Other expenses 1,417 952 - -
--------- --------- --------- ---------
Total cost of sales, distribution
costs and administrative
expenses 10,827 10,884 140 144
========= ========= ========= =========
Included in legal and professional, audit fees of GBP26k (2013:
GBP26k) for parent company and group auditors and GBP5k (2013:
GBP5k) to overseas subsidiary auditors.
5. EMPLOYEE BENEFIT EXPENSE
Group Group Company Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Wages and salaries 381 414 42 42
Social security costs
and welfare 50 37 - -
431 451 42 42
========= ========= ========= =========
2014 2013
Number Number
The average monthly number
of employees:
Management (including
Executive Directors) 10 22
Sales and marketing staff 60 47
Total 70 69
======== ========
6. NET FINANCE INCOME /(COSTS)
Group Group Company Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Bank interest paid - (8) - -
Bank charges (22) (16) - -
Foreign exchange (loss)
/ gains 57 (48) - -
Bank interest received - 1 - -
35 (71) - -
========= ========= ========= =========
7. INCOME TAX EXPENSE
2014 2013
GBP'000 GBP'000
Current income tax charge 19 45
Adjustment in respect of current
income tax of previous year (34) 2
Deferred tax (Note 14) (31) (32)
(46) 15
========= =========
The income tax expense for the
year can be reconciled as follow:
Profit before taxation 4 36
========= =========
Income tax calculated at 25% 1 9
Effect of income that is exempt
from taxation (22) 36
Effect of different tax rate of
subsidiary operating in other
jurisdiction (15) (23)
Adjustment in respect of current
income tax of previous year (34) 2
Unrelieved tax losses c/f 16 -
Unrelieved tax losses forfeited 35 22
Deferred tax arising from unused
tax losses (Note 14) (31) (32)
Other adjustment 4 1
(46) 15
========= =========
The applicable tax of the Group is derived from the
consolidation of all Group companies applicable tax band on their
domestic tax rates. The applicable tax rate for Asia Ceramics (HK)
Ltd is 16.5% and 25% for all Chinese subsidiaries.
8. EARNINGS PER SHARE
Basic profit per share is calculated by dividing the profit
attributable to equity shareholders of the company by the weighted
average number of ordinary shares in issue during the year.
Diluted profit per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all dilutive potential ordinary shares. The dilutive potential
ordinary shares in the company are share options. A calculation is
done to determine the number of shares that could have been
acquired at fair value (determined as the average annual market
share price of the company's shares) based on the monetary rights
attached to outstanding share options. The number of shares
calculated above is compared with the number of shares that would
have issued assuming the exercise of the share options.
2014 2013
GBP GBP
Earnings
Earnings for the purposes
of basic and diluted earnings
per share being net profit/(loss)
attributable to equity holders
of the parent 50,072 21,522
Number of shares
Weighted average number
of ordinary shares for the
purposes of basic earnings
per share 10,990,071 10,990,071
Effect of dilutive potential
ordinary shares:
Share options - -
Weighted average number
of ordinary shares for the
purposes of diluted earnings
per share 10,990,071 10,990,071
================ ================
Profit / (loss) per share
Basic (pence) 0.46 0.20
================ ================
Diluted (pence) 0.46 0.20
================ ================
9. PROPERTY, PLANT AND EQUIPMENT
GROUP
Showroom Fixtures Motor Total
and and vehicles
office fittings
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 December 2012 212 4 34 250
Additions - - 2 2
Exchange differences 3 - - 3
At 31 December 2013 215 4 36 255
Additions - 2 5 7
Disposals - - (2) (2)
Exchange differences 7 - 2 9
At 31 December 2014 222 6 41 269
========= ========== ========== ========
Accumulated depreciation
At 31 December 2012 42 2 9 53
Charge for the period 43 1 6 50
Exchange differences 1 - - 1
--------- ---------- ---------- --------
At 31 December 2013 86 3 15 104
Charge for the period 42 - 7 49
Exchange differences 5 - 1 6
--------- ---------- ---------- --------
At 31 December 2014 133 3 23 159
========= ========== ========== ========
Carrying amount
At 31 December 2014 89 3 18 110
========= ========== ========== ========
At 31 December 2013 129 1 21 151
========= ========== ========== ========
10. INVESTMENTS COMPANY
2014 2013
GBP'000 GBP'000
At beginning of the period 1 1
Investment in subsidiaries - -
At 31 December 2014 1 1
========= =========
Details of the Company's investment in subsidiaries at 31
December 2014 are as follows:
Name of Place of Proportion Principal activities
subsidiary incorporation of ownership
(or registration) interest
and operation %
Asia Ceramics Hong Kong 100 Retail of ceramics
(HK) Ltd products in
Hong Kong market
and export
market
Shenyang Louis P.R. China 100 Establishment of
Building Materials ceramics retail
Co., Ltd ** shops in PRC and
sale of ceramics
products.
Foshan Louis P.R. China 100 Sale of ceramics
Valentino Ceramics products in PRC
Co., Ltd ** and export market
** Held by subsidiary company
11. INVENTORIES
GROUP
2014 2013
GBP'000 GBP'000
Finished goods 11 5
11 5
========= =========
All inventories can be sold in the normal business operating
process. No finished goods in the current year have been carried at
fair value less costs to sell, same for previous year.
12. TRADE AND OTHER RECEIVABLES
Group Group Company Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Non-current
Intercompany balances - - 1,118 1,211
-------- -------- -------- --------
- - 1,118 1,211
======== ======== ======== ========
Current
Account receivables 1,158 1,657 - -
Payment on accounts 1,997 1,569 - -
Other debtors 1,022 21 - -
Amount due from related
party (note 22) 385 363 - -
Amount due from director
(note 22) 329 94 - -
VAT 141 104 - -
5,032 3,808 - -
======== ======== ======== ========
Intercompany balances are considered to be recoverable and are
carried at their approximate fair value.
13. CASH AND CASH EQUIVALENTS
Group Group Company Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 33 288 3 3
33 288 3 3
======== ======== ========== ==========
Bank balances and cash comprise cash held by the Group and
short-term bank deposits with an original maturity of three months
or less. The carrying amount of these assets approximates their
fair value.
14. DEFERRED TAX
Group Group Company Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Beginning of financial 32 - - -
year
Credited to profit and
loss (Note 7) 33 32 - -
65 32 - -
======== ======== ========== ==========
The PRC companies have estimated losses of RMB2.5 million (2013:
RMB1.3 million) available for carry forward against future trading
profits. Deferred tax asset was computed at PRC corporation tax
rate of 25%.
15. SHARE CAPITAL AND SHARE PREMIUM
The company has one class of ordinary share capital which carry
no rights to fixed income, any preferences or restrictions.
Share Capital 2014 2013
GBP'000 GBP'000
Authorised:
20,000,000,000 Ordinary shares of GBP0.005
each 100,000 100,000
======== ========
Issued and fully paid:
10,990,071 Ordinary shares of GBP0.005
each 55 55
======== ========
No movement of shares during the year.
Share Premium 2014 2013
GBP'000 GBP'000
Balance at 1 January
and 31 December 1,201 1,201
======== ========
At 31 December 2014, the company had the following outstanding
share options:
Number Exercise Date of Exercise period
price grant
206,229 GBP0.66 31.08.2010 31.08.2010
- 06.09.2015
16. SHARE OPTIONS
On 31 August 2010 the company executed a deed poll constituting
warrants to subscribe for ordinary shares in favour of WH Ireland.
Pursuant to this instrument, WH Ireland will be entitled to
subscribe for such number of Ordinary Shares as is equal to 2.5% of
the fully diluted share capital of the company on Admission at an
exercise price of GBP0.66 until the third anniversary of Admission.
On 6 September 2013, the share option has not been exercised and
has now been expired.
On the same date, the company granted warrants to Alexander
David to subscribe for such number of Ordinary Shares as is equal
to 2% of the company's issued Ordinary Share capital following
Admission at an exercise price of GBP0.66 per Ordinary Share. The
warrants are exercisable at any time following Admission until the
fifth anniversary of Admission.
As at 31 December 2014, none of the above options had been
exercised and the share option granted to WHI has been expired.
Details of the share options outstanding during the year are as
follows:
2014 2013
-------------------------------- -----------------------------------
Average Option Option Average Option Option
exercise 1 2 exercise 1 2
price price
in GBP in GBP
per per
share share
At beginning
of the year 0.66 - 206,229 0.66 257,786 206,229
Granted - - - - - -
Forfeited - - - - - -
Executed - - - - - -
Expired - - - - (257,786) -
----------
At end of
year 0.66 - 206,229 0.66 - 206,229
========== ======== ========== =========== ========== ==========
The weighted average estimated fair value of share option
granted in the share option agreements dated 31 August 2010 are
8.72 pence for option 1 and 12.8 pence for option 2.
These estimated fair values were calculated using the
Black-Scholes option pricing model. The model inputs were as
follow:
Option
2
Bid price GBP0.58
Exercise price GBP0.66
Expected volatility 25%
Expected dividend yield -
Risk-free interest rate 2.75%
The expected volatility is based on the historical share prices
to the management's best estimate. The expected life used in the
model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restriction and
behavioural considerations.
The management has discounted the bid price by 25% in the
calculation as the management estimated that in order to place
substantial block of shares in the market a discount in the region
of 20% to 25% of bid price would be needed.
17. OTHER RESERVES
Other reserves include translation reserves which arising from
the translation of foreign operations into presentational currency,
share option reserves and statutory reserves.
Group Group Company Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Share option reserve
(note 16) 27 27 27 27
Statutory reserve 42 42 - -
Foreign currency reserve 42 23 - -
111 92 27 27
======== ======== ========== ==========
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.
18. BORROWINGS
Non-current Group Group Company Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Loan from director (note
22) 501 500 501 500
501 500 501 500
======== ======== ========== ==========
19. TRADE AND OTHER PAYABLES
Group Group Company Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 457 405 - -
Payment received in advance 1,749 1,148 - -
Bills payable 418 1,095 - -
Other payables 1,086 112 72 26
3,710 2,760 72 26
======== ======== ========== ==========
20. COMMITMENTS GROUP
Capital commitments
2014 2013
GBP'000 GBP'000
Commitments for the renovation
of office and showroom - -
========= =========
Commitments under operating leases
At the reporting date, the Group had outstanding commitments for
future minimum lease payments under non-cancellable operating
leases, which fall due as follow:
2014 2013
GBP'000 GBP'000
Land and buildings
Within one year 127 84
In two to five years 195 194
More than five years - -
--------- ---------
322 278
========= =========
Operating lease payments represent rentals payable by the Group
for its office and showroom.
21. ULTIMATE CONTROLLING PARTY
The ultimate controlling party of the Group is Dr Dingxin Pu,
the majority shareholder and a director of the company.
22. 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.
i) On 18 August 2010, Dr Dingxin Pu, the Chief Executive Officer
and the majority shareholder of the company entered into a loan
facility agreement with the company, whereby Dr Dingxin Pu agreed
to make available to the company a loan facility of GBP500k. The
loan is interest free and is repayable over five equal quarterly
instalments commencing from 18 months following the date of the
loan facility agreement. The loan was fully drawn down on 18 August
2010.
On 20 February 2014, the loan has extended the date of repayment
to five equal instalments commencing on 31 January 2015 subject to
the Company having sufficient funds to meet the repayments.
On 11 May 2015, the loan facility has further extended with the
existing loan of GBP500,000 and by up to a further GBP250,000 to a
total of GBP750,000. The loan is repayable on 31 December 2018
subject to the Company having sufficient funds and is extendable at
the option of the Company by a further 3 years.
ii) At 31 December 2014, included in other debtors an amount of
HKD 755k due from (2013: HKD936.2k due to) Dr Dingxin Pu, Chief
Executive Officer and majority shareholder of the company. This
balance is unsecured, interest free and repayable on demand.
iii) The company has entered into a relationship and non-compete
agreement dated 31 August 2010 with Dr Dingxin Pu, Asia Ceramics
(HK) Limited and China Ceramics Holdings Limited ("CCH") pursuant
to which Dr Dingxin Pu has agreed to certain conditions in respect
of his control of the company. The agreement contains terms and
conditions intended to ensure that the company will be at all times
capable of carrying on its business independently of Dr Dingxin Pu
and companies controlled by him, including CCH. This agreement also
contains obligations to ensure that CCH, Dr Dingxin Pu and
employees of companies controlled by him, do not compete with the
business carried on by the Group in the PRC and Hong Kong.
iv) The Company has entered into a brand licensing agreements
dated 22 August 2010 with Dr Dingxin Pu, Asia Ceramics (HK) Limited
and Shenyang Louis Building Materials Co., Limited pursuant to
which Dr Dingxin Pu has granted an exclusive, irrevocable and
royalty free licence to use the trademark "Baitao" and "Bally"in
the PRC and Hong Kong, and a non-exclusive licence throughout the
rest of the world, until such time as the trademark is registered
in the company's name.
v) During the year, the Group made no sales (2013: GBP519k) to
Louis Valentino Investment & Development Co. Ltd ("LVID"). Due
to lack of export experience and expertise in dealing with
international business, the Group requested LVID to assist its
export business in the initial stage, and will gradually takeover
by signing contracts with customers on its own name and receiving
payments from customers directly. During this period, LVID has made
no profit from its assistance. On 5 March 2013, the company has
entered into an agreement with LVID and its parent company, CCH to
formalise this relationship.
At the end of reporting period, the balance due from LVID is
GBP385k (2013: GBP363k). LVID is company connected to Dr Dingxin
Pu, a director and majority shareholder of the Asia Ceramics
Holdings Plc.
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 Directors' Report (Page
8).
23. EVENT AFTER THE REPORTING DATE
There are no events after the reporting date to be
disclosed.
24. FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives arise to both
a financial asset of one enterprise and a financial liability or
equity instrument of another enterprise.
The Group's financial instruments comprise cash and cash
equivalents, receivables, payables and borrowings. The accounting
policies and methods adopted, including the basis of measurement
applied are disclosed above, where relevant. The information about
the extent and nature of these recognised financial instruments,
including significant terms and conditions that may affect the
amount, timing and certainty of future cash flows are disclosed in
the respective notes above, where applicable.
The Group does not enter into derivative transactions (such as
interest rate swaps and forward foreign currency contracts) and it
is, and has been throughout the period under review, the Group's
policy that no trading in financial instruments shall be
undertaken.
The following table details the carrying amounts and fair values
of financial assets and financial liabilities:
GROUP Carrying value Fair value
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Cash and cash equivalents 33 288 33 288
Trade and other receivables 5,032 3,808 5,032 3,808
5,065 4,096 5,065 4,096
========= ========= ========= =========
Financial liabilities
Trade and other payables 3,710 2,760 3,710 2,760
Borrowings 501 502 501 502
--------- --------- --------- ---------
4,211 3,262 4,211 3,262
========= ========= ========= =========
COMPANY Carrying value Fair value
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Cash and cash equivalents 3 3 3 3
Trade and other receivables - - - -
3 3 3 3
========= ========= ========= =========
Financial liabilities
Trade and other payables 72 26 72 26
Borrowings 501 500 501 500
573 534 573 534
==== ==== ==== ====
The Group's activities expose it to a variety of financial
risks; currency risk, credit risk, liquidity risk and interest rate
risk. These risks are limited by the Group's financial management
policies and practices as described below:
Credit Risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers and investment securities.
The Group has credit risk management policies in place and
exposure to credit risk is monitored on an ongoing basis.
Management generally adopts conservative strategies and tight
control on credit policy. The Group has limited the amount of
credit exposure to customers.
The average credit period on sales is 30 days. No interest is
charged on the trade receivables. Trade receivable due from LVID,
the connect party, is guaranteed by Dr Pu personally.
Before accepting any new customer, the Group will check the
credit worthiness of any new customers. No provision for doubtful
debts was made during the year.
The trade and other receivables do not contain impaired assets
as they are still considered recoverable by reference to no default
experience so far. In determining the recoverability of trade
receivable, the Group considers any change in the credit quality of
the trade receivable from the date credit was initially granted up
to the reporting date.
The credit risk on cash and cash equivalent is limited because
the counterparties are banks with high credit ratings recognised by
international credit rating agencies.
The Group does not hold any collateral as security.
Liquidity risks
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group's reputation.
To ensure liquidity, the Group maintains sufficient cash and
cash equivalents on demand to meet its obligations as and when they
fall due.
Market risks
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial
instrument. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising return on risk.
Foreign currency exchange risks
The Group does not hedge its foreign currencies. Transactions
with customers and vendors are mainly denominated in Hong Kong
Dollars (HKD), Chinese Yuan (RMB) and US Dollars (USD). Management
considered that the currency exposure arising from these
transactions is not significant to the Group. Transactions with
Group companies denominated in Pounds Sterling (GBP), which are
exposed to foreign currency translation risks, are not significant
to the Group. The Group has bank accounts in HKD, RMB, USD and GBP
in order to mitigate against exchange risks.
The Group's exposure to foreign currency risk was as follow:
2014 HKD RMB USD Others Total
GBP'000 GBP'000 GBP'000 GBP,000 GBP'000
Trade and other
receivables 23 3,657 1,320 17 5,017
Cash and cash equivalent 9 11 8 2 30
Trade and other
payables 11 731 1,635 - 2,377
43 4,399 2,963 19 7,424
========= ========= ========= ========= =========
2013 HKD RMB USD Total
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other receivables 671 1,564 1,560 3,795
Cash and cash equivalent 29 218 36 283
Trade and other payables 107 1,031 1,122 2,260
807 2,813 2,718 6,338
========= ========= ========= =========
Sensitivity analysis
A 10% strengthening of GBP against the following currencies at
the reporting date would have increased/(decreased) equity and
profit or loss by amounts shown below. This analysis assumes that
all variables, in particular interest rates, remain constant.
2014 2013
Equity Effect Equity Effect
in profit in profit
or (loss) or (loss)
GBP'000 GBP'000 GBP'000 GBP'000
HKD (4) (4) (73) (73)
RMB (400) (400) (256) (256)
USD (269) (269) (247) (247)
Others (2) (2) - -
A 10% weakening of GBP against the following currencies at the
reporting date would have increased/(decreased) equity and profit
or loss by amounts shown below. This analysis assumes that all
variables, in particular interest rates, remain constant.
2014 2013
Equity Effect Equity Effect
in profit in profit
or (loss) or (loss)
GBP'000 GBP'000 GBP'000 GBP'000
HKD 5 5 90 90
RMB 489 489 313 313
USD 329 329 302 302
Others 2 2 - -
Cash flow and fair value interest rate risks
The Group's primary interest rate risk relates to interest
bearing debts. Investments in financial assets are mainly short
term in nature and are not held for speculative purposes but are
placed in fixed deposits.
The Group manages its interest rate exposure by maintaining a
fixed rate borrowing to mitigate the risk associated to interest
rate fluctuation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PKCDKPBKDAAB
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