RNS Number:8489D
Jarlway Holdings plc
14 September 2007
Jarlway Holdings plc
14 September 2007
Jarlway Holdings plc
Interim Results and Chairman's Statement
for the 6 months ended 30 June 2007
Chairman Statement
I am pleased to report the results of the Company for the 6 months ended 30 June
2007. During the period, we continued our strategic development in strengthening
management and raising production efficiency to solidify the foundation of
developments put in place during 2006.
The construction machinery market in China remains very vibrant. As I pointed
out in the 2006 report, the main reason is the huge demand by large-scale
national infrastructure projects and the booming property market. Unfortunately,
shortage of supply of a major component used in the Company's trailer pumps has
hindered our ability to exploit this opportunity fully in the first 6 months of
2007. The Company has for some time been seeking alternative suppliers for this
component, but we have not been satisfied with the quality of available
alternatives, either in China or elsewhere. We have been in discussion with our
supplier with a view to them resuming the supply level we require, and we now
believe this is getting back on track.
To mitigate the effect of this supply shortage, we have accelerated the
diversification of our product range, as well as increased our efforts to sell
into new markets. We have, for example, already started our export sales of
tower cranes to customers as far afield as Argentina and Dubai, as well as South
East Asia. We believe that this overseas expansion, alongside an increase in our
domestic customer base, reflects both growing recognition of the Jarlway brand
and our dedication to product quality.
We continue to strengthen our management in credit control and the recovery of
accounts receivable. During the first 6 months of the year, 66.17% of sales in
the period were converted to cash and we have recovered RMB5,930,000 from
accounts receivable due before 31 December 2005.
With the support of our three bankers, the Company has been granted aggregate
banking facilities of RMB34,000,000. These banking facilities are mainly used to
finance the research and development, and manufacture, of tower cranes and our
new placing booms.
The Company's new subsidiary, Jarlway-Lishitong Machinery Inc, formed in March
2007, has already commenced operations in new product design and trial
production. The production of placing booms has already commenced at the
factory, and the subsidiary is also acting as a subcontractor for the Group for
the production of machine parts. Our objective at Lishitong is to use the site's
extensive facilities to manufacture products such as the tower cranes which it
would be difficult to do at our main factory. We are confident that this company
will play a significant role in the development of the Jarlway group, helping to
develop and expand our product range and production capacity.
Financial Results
Sales and profit after taxation of the Company for the 6 months ended 30 June
2007 amounted to #2,937,000 (6 months ended 30 June 2006: #3,637,000) and #
102,000 (6 months ended 30 June 2006: #344,000), respectively. The reasons for
the decrease in both sales and profit after taxation are:
1. The number of concrete pumps sold during the period under review
decreased to 138 from 161 compared with the same period last year. The decrease
was due to us being unable to satisfy existing orders as a result of the supply
shortage discussed above;
2. Despite an increase in the cost of raw materials (such as steel), a
drop in orders from higher margin customers (railway contractors), and the fact
that the Company offered discounts for early payment by customers, the gross
margin of the Company has been maintained above 30%, decreasing to 31.3% in the
6 months ended 30 June 2007 from 37.6% in the same period last year;
3. We have made a significant investment in research and development of
new products and facilities, including in Jarlway-Lishitong. The sales of those
new products have only just commenced, but we are confident that these sales
will be significant and will over time justify the level of investment.
Administrative expenses for the 6 months ended 30 June 2007 amounted to #
470,000, a decrease of #39,000 from the same period last year. Distribution
costs for the 6 months ended 30 June 2007 amounted to #290,000, a decrease of #
145,000 from the same period last year. We continue to work hard to reduce both
administrative expenses and distribution costs without compromising efficiency.
Inventories as of 30 June 2007 were #2,200,000, an increase of #1,330,000 from
30 June 2006. The increase is mainly due to the increase of inventories of raw
materials and finished goods of tower cranes and placing pumps, which is a
direct consequence of our increased order book for our new products.
Prospects
The prospects for the construction machinery industry in China continue to be
good, not only due to the booming domestic construction sector, but also due to
the huge international demand for construction machinery. This industry is one
that the Chinese government supports by providing incentives in areas such as
export customs duties, banking facilities and grants of land for plant
construction, etc. With this support, the Company has now completed the
development of its tower cranes and placing pumps, and expects increasing orders
from overseas markets. I strongly believe that export sales will greatly enhance
the Company's cash flows and lower the dependence on the local market. This will
contribute significantly to the Company's profit and scale of operations.
The management and staff of the Company have put a significant effort into
tackling the many challenges we have faced in order to build the scale of
operation we have today. However, the board remains open to the possibility of
additional funding as this would allow us to push ahead with further
development. Bank borrowings granted to the Company in China are mostly
short-term and such borrowings are not suitable for capital investment. Lack of
capital investment in plant and machinery holds us back from implementing large
scale production across our product range, which would lower the average costs
of production. Bank borrowings also increase the costs of financing of the
Company which has a direct negative impact on the interests of shareholders in
the Company. If we can resolve these financing challenges, I believe we will
maintain and increase the competitive advantage we have now achieved.
I wish to thank my fellow directors and all our staff for the continued loyalty
and support. Their hard work and dedication are the basis of the Company's
success to date and its development in the future, and we are looking forward to
a return to improved performance during the second half.
WU Zhi Jia
Chairman
14 September 2007
Consolidated Income Statement
For the six months ended 30 June 2007
Six months ended 30 June Year ended
31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
Notes #'000 #'000 #'000
------- -------
Revenue 4 2,937 3,637 7,164
Cost of sales (2,018) (2,270) (4,352)
---------- ---------- ---------
Gross profit 919 1,367 2,812
Other revenue 12 12 13
Distribution costs (290) (435) (986)
Administrative expenses (470) (509) (1,044)
---------- ---------- ---------
Operating profit 171 435 795
Finance costs (43) - (52)
---------- ---------- ---------
Profit before taxation 128 435 743
Taxation 5 (26) (91) (111)
---------- ---------- ---------
Profit for the period 102 344 632
---------- ---------- ---------
Attributable to:
Equity holders of the 107 344 632
Company
Minority interest (5) - -
---------- ---------- ---------
102 344 632
---------- ---------- ---------
Earnings per share
Basic and diluted 6 0.44p 1.41p 2.59p
---------- ---------- ---------
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2007
Issued Employee Share Exchange Merger Retained Total Minority Total
share share-based premium ranslation reserve profits interests equity
capital compensation reserve
reserve
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Balance at
1 61 6 228 337 (49) 3,240 3,823 - 3,823
January
2006
Exchange
translation
difference - - - (170) - - (170) - (170)
Profit for
the - - - - - 344 344 - 344
period
Total
recognised
income and
expenses 61 6 228 167 (49) 3,584 3,997 - 3,997
Employee
share - 3 - - - - 3 - 3
option
benefit
At 30 June
2006 61 9 228 167 (49) 3,584 4,000 - 4,000
-
Balance at
1 61 20 228 (8) (49) 3,872 4,124 - 4,124
January
2007
Exchange
translation
difference - - - (3) - (3) - (3)
Profit
(Loss) - - - - - 107 107 (5) 102
for the
period
Total
recognised
income and
expenses 61 20 228 (11) (49) 3,979 4,228 (5) 4,223
Acquisition
of - - - - - - - 30 30
a
subsidiary
At 30 June
2007 61 20 228 (11) (49) 3,979 4,228 25 4,253
Consolidated Balance Sheet
For the six months ended 30 June 2007
As at As at As at
30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
Notes #'000 #'000 #'000
Non-current assets
Property, plant and
equipment 413 286 330
Intangible assets 10 36 - 46
Trade receivables 11 - 74 11
Restricted bank balances 9 - 146 78
Deferred tax assets 39 81 63
---------- ---------- ----------
488 587 528
---------- ---------- ----------
Current assets
Assets held for sale 8 707 316 312
Inventories 2,200 870 1,478
Trade and other
receivables 11 5,026 5,143 4,670
Financial assets at fair
value through profit or
loss 5 5 5
Restricted bank balances 9 205 134 265
Cash and cash equivalents 691 516 374
---------- ---------- ----------
8,834 6,984 7,104
---------- ---------- ----------
Total Asset 9,322 7,571 7,632
---------- ---------- ----------
Equity and liabilities
Capital and reserves
Share capital 14 61 61 61
Equity attributable to
equity holders of 15 4,167 3,939 4,063
the company
Minority interest 15 25 - -
Total equity 4,253 4,000 4,124
---------- ---------- ----------
Non-current liabilities
Non-current portion of
bank borrowings 12 - 57 11
---------- ---------- ----------
Current liabilities
Trade and other payables 13 3,138 3,165 2,763
Short-term bank
borrowings 1,793 - 519
Current portion of bank
borrowings 12 55 190 100
Income tax payable 83 159 115
---------- ---------- ----------
5,069 3,514 3,497
---------- ---------- ----------
Total liabilities 5,069 3,571 3,508
---------- ---------- ----------
Total equity and
liabilities 9,322 7,571 7,632
---------- ---------- ----------
Consolidated Cash Flow Statement
For the six months ended 30 June 2007
------------------ ---------
Six months ended 30 June Year ended
31 December
------------------ ---------
2007 2006 2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Cash (used in)/ generated from
operations before taxation (927) 715 450
Tax paid (34) (41) (85)
--------- --------- ---------
Net cash (used in)/ generated from
operating activities (961) 674 365
Net cash (used in)/ generated from
investing activities (108) 6 (151)
Net cash generated from/ (used in)
financing activities 1,354 (450) (57)
--------- --------- ---------
Net increase in cash and cash
equivalents 285 230 157
Cash and cash equivalents at 1 January 374 298 298
Effect of exchange rate differences 32 (12) (81)
--------- --------- ---------
Cash and cash equivalents at 30 June 691 516 374
--------- --------- ---------
Operating activities:
Profit for the period 128 435 743
Adjustment for:
Provision for doubtful debts - 109 230
Write-off of bad debts - - 48
Depreciation of property, plant and
equipment 25 20 44
Amortisation of intangible assets 10 14
Employee share based compensation - 3 14
Interest income (3) (2) (5)
Interest expense 43 16 52
--------- --------- ---------
Operating cash flows before movements
in working capital 203 581 1,140
Changes in assets held for sale (395) - (10)
Changes in inventories (724) (95) (706)
Changes in trade and other receivables (354) 61 134
Changes in trade and other payables 383 182 (113)
--------- --------- ---------
(887) 729 445
Interest received 3 2 5
Interest paid (43) (16) -
--------- --------- ---------
Cash (used in) from operations before
taxation (927) 715 450
--------- --------- ---------
Notes to the interim financial statement
For the six months ended 30 June 2007
1. General information
The interim results for the period ended 30 June 2007 are unaudited and do not
constitute statutory accounts within the meaning of s.240 of the Companies Act
1985. They have been prepared in accordance with accounting policies expected to
apply for year ending 31 December, 2007.
2. Basis of preparation
The Directors are responsible for the preparation of the Group's unaudited
interim financial statements. These unaudited interim financial statements have
been prepared in accordance with International Financial Reporting Standards
No.34 "Interim Financial Reporting". These interim financial statements should
be read in conjunction with the 2006 annual financial statements. The accounting
policies adopted in preparing the unaudited interim financial statements for the
six months ended 30 June 2007 are consistent with those in the preparation of
the Group's annual financial statements for the year ended 31 December 2006 and
are summarised as below.
3. Principal accounting policies
Consolidation
The Group comprises: Jarlway Holdings plc, the ultimate holding company; Jarlway
International Limited, an intermediate holding company; Jarlway Machinery Inc,
Jarlway Xinxin Machinery Inc and Jarlway Lishitong Machinery Inc. The Group
income statement for the six months ended 30 June 2007 comprises the results of
all of the above companies for the six months ended 30 June 2007.
Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the
Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable or
convertible are taken into account.
Property, plant and equipment
Property, plant and equipment other than construction in progress are stated at
cost less accumulated depreciation and impairment losses.
The cost of an item of property, plant and equipment comprises its purchase
price and any directly attributable costs of bringing the asset to its working
condition and location for its intended use. Improvements are capitalised only
when it is probable that future economic benefits associated with the item will
flow to the Group and the cost of the item can be measured reliably.
Expenditures incurred in restoring assets to their normal working condition and
other repairs and maintenance costs are charged to the income statement.
Depreciation is charged to the income statement on a straight-line basis over
the estimated useful life of each component of an item of property, plant and
equipment.
The estimated useful lives are as follows:
Machinery 5-10 years
Motor vehicles 10 years
Furniture, fittings and equipment 5-10 years
3. Principal accounting policies (Continued)
Property, plant and equipment (Continued)
No depreciation is provided in respect of construction in progress until it is
completed and is put into commercial operation.
Gains or losses arising from the retirement or disposal of property, plant and
equipment are determined as the difference between the net sale proceeds and the
carrying amount of the asset and are recognised as income or expense in the
income statement.
Intangible assets
The initial cost of acquiring technology know-how intangible assets is
capitalised. Technology know-how with finite useful lives are carried at cost
less accumulated amortisation and accumulated impairment losses. Amortisation is
provided on the straight-line basis over their estimated useful lives.
Intangible assets that are not yet in use or having an indefinite useful live
are reviewed for impairment annually or more frequently when indicator of
impairment arises during the reporting year indicating that the carrying value
may not be recoverable.
Revenue recognition
Revenue is recognised when it is probable that the economic benefits will flow
to the Group and when the revenue and costs, if applicable, can be measured
reliably and on the following bases.
Sales of goods are recognised on the transfer of the risks and rewards of
ownership, which generally coincides with the time when goods are delivered to
customers and title has passed.
Interest income is recognised by applying the effective interest method to the
net carrying amount of the financial assets.
Foreign currency
Renminbi ("RMB") is the currency of the primary economic environment in which
the entity operates ("The functional currency").
Pounds sterling is the currency in which the interim results are presented ("The
presentational currency"). For the purposes of the interim results, the
financial information has been translated from RMB to # at the exchange rate
ruling at 30 June 2007. The results of the foreign subsidiaries have been
translated at the average rate ruling during the six-month period.
The presentational currency does not reflect the economic substance of the
underlying events and circumstances of the enterprise.
Impairment of assets
At each balance sheet date, the Group reviews internal and external sources of
information to determine whether the carrying amounts of its property, plant and
equipment, investment in subsidiaries, have suffered an impairment loss or if an
impairment loss previously recognised no longer exists or may be reduced. If any
such indication exists, any impairment loss is determined and recognised as
follows:
3. Principal accounting policies (Continued)
Impairment of assets (Continued)
At each balance sheet date, the Group reviews internal and external sources of
information to determine whether the carrying amounts of its property, plant and
equipment, investment in subsidiaries, have suffered an impairment loss or if an
impairment loss previously recognised no longer exists or may be reduced. If any
such indication exists, any impairment loss is determined and recognised as
follows:
The recoverable amount of the asset is estimated, based on the higher of its
fair value less costs to sell and value in use. Where it is not possible to
estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the smallest group of assets that generates cash flows
independently (i.e. cash-generating unit).
If the recoverable amount of an asset or a cash-generating unit is estimated to
be less than its carrying amount, the carrying amount of the asset or
cash-generating unit is reduced to its recoverable amount. Impairment losses are
recognised as expense immediately.
A reversal of impairment loss is limited to the carrying amount of the asset or
cash-generating unit that would have been determined had no impairment loss been
recognised in prior years. Reversal of impairment losses in respect of other
assets is recognised as income immediately.
Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes
a party to the contractual provisions of the instruments and on the trade date
basis. Financial asset and financial liabilities are measured as follows:
Financial assets at fair value through profit or loss
Financial instruments classified as financial assets at fair value through
profit or loss include financial assets held for trading, and those designated
at fair value through profit or loss at inception. These items are measured at
fair value, with gains or losses recognised in the income statement.
At the balance sheet date, the financial assets are measured at fair value by
reference to the price quotation for equivalent instruments in an active market
provided by financial institutions. Any changes in fair value are recognised in
the income statements.
Trade and other receivables
Trade and other receivables are initially recognised at fair value and
thereafter stated at amortised cost less provision for impairment. Loans and
receivables without fixed or determinable repayment terms are stated at cost
less any accumulated impairment loss. A provision for impairment of receivables
is established when there is objective evidence that the Group will not be able
to collect all the amounts due according to the original terms of receivables.
The amount of the provision is the difference between the assets' carrying
amount and the present value of estimated future cash flows, discounted at the
effective interest rate. The amount of provision is recognised in the income
statements.
Trade and other payables
Trade and other payables are initially recognised at fair value and thereafter
stated at amortised cost.
The derecognition of a financial asset takes place when the Group's contractual
rights to future cash flows from the financial asset expire or the Group
transfers the contractual rights to future cash flows to a third party. The
Group derecognises a financial liability when, and only when the liability is
extinguished.
4. Revenue
The principal activity of the company is investment holding. Details of the
principal activities of the subsidiaries are as follows:
Subsidiaries Principal activities
-------------- ----------------------
Jarlway International Investment holding
Limited
Jarlway Machinery Inc. Developing, manufacturing and sale of large scale
construction machinery
Jarlway Xinxin Machinery Developing, manufacturing and sale of large scale
Inc. construction machinery
Jarlway Lishitong Inactive
Machinery Inc.
Revenue represented sales of concrete pumps and tower cranes. No segmental
reporting is presented as the Company's sales were primarily made of concrete
pumps in the People's Republc of China (the "PRC) with some overseas and tower
cranes sales just before the period end..
5. Taxation
Six months ended 30 June Year ended
31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
PRC Enterprise income tax on income
for the period - 91 111
Deferred taxation 26
---------- --------- ---------
26 91 111
---------- --------- ---------
No provision for Hong Kong Profits tax has been made in the Group as the Group's
Hong Kong subsidiary has no estimated taxable profit for the period.
The subsidiaries operating in the PRC are subject to state and local income
taxes in the PRC at their respective tax rates based on the taxable income
reported in their statutory financial statements in accordance with applicable
state and local income tax laws.
Jarlway Machinery is subject to state and local income taxes in the PRC at
standard rates of 12% and 3% respectively in accordance with the PRC foreign
enterprise income tax law, applicable to wholly owned foreign enterprises. The
effective foreign enterprise income tax rate for Jarlway Machinery was 15% for
the six months ended 30 June 2007 (2006: 12%).
Jarlway Xinxin is subject to state and local income taxes in the PRC at standard
rates of 12% and 3% respectively in accordance with the PRC foreign enterprise
income tax law, applicable to wholly owned foreign enterprises. The tax losses
brought forward can set off part of the estimated assessable profit. As a
result, the effective foreign enterprise income tax rate for Jarlway Xinxin was
3% for the six months ended 30 June 2007 (2006: Nil).
5. Taxation (con't)
Pursuant to the Income Tax Law and the Detailed Rules for the Implementation of
the Income Tax Law of the PRC for Foreign Investment Enterprises and Foreign
Enterprises, Jarlway Lishitong Machinery Inc. ("Jarlway Lishitong") and Jarlway
Xinxin Machinery Inc. ("Jarlway Xinxin") are entitled to a two-year exemption
from the PRC foreign enterprise income tax starting from its first profit making
year and followed by a 50% reduction from the PRC foreign enterprise income tax
for the subsequent three years. Jarlway Lishitong suffered a loss for this
period.
No provision for income tax is provided for these subsidiaries as all of them
incurred a loss for taxation purposes during the period.
6. Earnings per share
The calculation of basic earnings per share is based on the profit for the
period attributable to shareholders of the Company of #107,000 and the weighted
average number of 24,413,333 shares in issue during the period.
Diluted earnings per share for the six months ended 30 June 2007 are equal to
the basic earnings per shares as the exercise price of the share options granted
by the Company was higher than the average market price for shares during the
period. For the six months ended 30 June 2007, there were no dilutive potential
ordinary shares in issue.
7. Dividend
The directors do not propose an interim dividend for the six months ended 30
June 2007 (June and December 2006: nil).
8. Assets held for sale
Assets held for sale represent properties received from trade debtors in lieu of
settlement which are carried at the lower of cost and net realisable value. Net
realisable value represents the estimated selling price less all estimated costs
of completion and costs to be incurred in marketing and selling.
9. Restricted bank balances
As at As at As at
30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Current 205 134 265
Non-current - 146 78
--------- --------- ----------
205 280 343
--------- --------- ----------
Restricted bank balances were pledged to secure bank borrowings granted to
Jarlway Machinery Inc to finance certain trade receivables. Amounts that will be
released back to Jarlway Machinery Inc. within one year have been classified as
current.
10. Intangible assets
As at As at As at
30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
At cost 62 - 62
Amortisation (24) - (14)
Exchange rate movement (2) - (2)
--------- --------- ----------
36 - 46
--------- --------- ----------
Intangible assets represent technology know-how for the manufacture of placing
booms and improving the manufacture of concrete pumps
11. Trade and other receivables
As at As at As at
30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
Trade receivables #'000 #'000 #'000
From third parties 3,522 4,554 3,746
Less : Non-current portion - (74) (11)
--------- --------- ----------
Current portion 3,522 4,480 3,735
Other receivables
Deposits, prepayment and
other debtors 1,504 663 935
--------- --------- ----------
5,026 5,143 4,670
--------- --------- ----------
Trade receivables are shown net of accumulated provision for doubtful debt
amounting to #738,000 (June 2006: #652,000; December 2006: #687,000).
Included in trade receivables are amounts relating to bank financing
arrangements. These are comprised of a current element amounting to #55,000
(June 2006: #190,000; December 2006: #100,000) and a non-current element
amounting to #Nil (June 2006: #57,000; December 2006: #11,000).
The fair value of trade and other receivables approximate the carrying value.
12. Bank borrowings
As at As at As at
30 June 2007 30 June 2006 31 December
2006
Bank loan: (unaudited) (unaudited) (audited)
#'000 #'000 #'000
Current portion 55 190 100
Non-current portion - 57 11
--------- --------- ---------
55 247 111
--------- --------- ---------
12. Bank borrowings (Continued)
The bank borrowings are secured by certain trade receivables as well as
restricted bank balances (note 10). Interest is calculated at 6% to 7% per annum
and is borne by the customers concerned.
During the period, one of the subsidiaries has entered into an agreement
relating to a loan facility of up to RMB8 million (approximately GBP520,000) for
two years commencing from June, 2007. The interest rate of it is prime rate plus
10% per annum and is secured by the personal guarantee of a director. The bank
loan is repayable by 18 instalments commenced from January, 2008.
13. Trade and other payables
As at As at As at
30 June 2007 30 June 2006 31 December
2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Trade payables
To third parties 1,655 1,482 1,505
Other payables
Accrued charges and other
creditors 1,483 1,683 1,258
--------- --------- ---------
3,138 3,165 2,763
--------- --------- ---------
Included in other payables is an amount due to a director of #409,000 (June
2006: #518,000; December 2006: #441,000). The amount due is unsecured, has no
fixed term of repayment and interest is charged at 6% per annum.
The fair value of trade and other payables approximate the carrying value.
14. Share capital
Ordinary shares of #0.0025 each
-----------------
--- --------
No. of shares #'000
Authorised:
At 30 June 2006, 31 December 2006 and 30
June 2007 (unaudited) 50,000,000 125
--------- --------
Issued and fully paid:
At 30 June 2006, 31 December 2006 and 30
June 2007 (unaudited) 24,413,333 61
--------- --------
15. Reserves
Employee Share Exchange Merger Minority Retained Total
share-based premium translation reserve interests profits
compensation reserve (Note 1) (Note 2)
reserve
#'000 #'000 #'000 #'000 #'000 #'000 #'000
At 30 June
2006 9 228 167 (49) - 3,584 3,939
Exchange
translation
difference - - (175) - - - (175)
Employee
share 11 - - - - - 11
option
benefit
Profit for
the - - - - - 288 288
period
At 31
December 20 228 (8) (49) - 3,872 4,063
2006
Exchange
translation
difference - - (3) - - - (3)
Acquisition
of - - - - 30 - 30
subsidiary
Profit for
the - - - - (5) 107 102
period
At 30 June
2007 20 228 (11) (49) 25 3,979 4,192
Note:
1. The merger reserve represents the difference between the nominal value of
shares of the subsidiary company acquired, and the nominal value of the
Company's shares issued in 2005.
2. The Group's accumulated profits included an amount of approximately #138,000
(June 2006:#172,000, December 2006: #138,000) reserved by the subsidiary in the
PRC in accordance with the relevant PRC regulations. This reserve is only
distributable in the event of liquidation of this PRC subsidiary.
No options were exercised during the six months ended 30 June 2007 or in 2006.
16. Commitments
Capital expenditure commitments
As at As at As at
30 June 2007 30 June 2006 31 December
2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Contracted but not provided in
the financial statements 160 15 -
--------- --------- ---------
Capital expenditure commitments relates to the capital investment of subsidiary
of Jarlway-Lishitong Machinery Inc.
16. Commitments (Continued(
Commitments under operating leases
The company leases a number of properties under operating leases, which
typically run for an initial period of 2 - 5 years, with an option to renew the
lease when all terms are renegotiated. None of the leases include contingent
rentals.
At the balance sheet date, the Company had total future minimum lease payments
under non-cancellable operating leases, which are payable as follows:
As at As at As at
30 June 2007 30 June 2006 31 December
2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Within one year 101 42 83
In the second to fifth years
inclusively 282 17 284
Within five years 1 - -
--------- --------- ---------
384 59 367
--------- --------- ---------
17. Acquisition of subsidiary
During the period, the Group formed a subsidiary, Jarlway-Lishitong Machinery
Inc (Jarlway-Lishitong"), with Guangdong Lishitong Machinery Co. Ltd., a
predominantly state-owned Chinese manufacturer of engineering machinery. The
purpose of setting up Jarlway-Lishitong is to expand the Group's production
capacity and develop a market for line construction machinery products. The
registered capital of Jarlway-Lishitong is RMB5 million (approximately
GBP330,000) and the Group contributes RMB3.5 million (approximately GBP230,000)
in return for a 70% interest.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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