TIDMYGH
RNS Number : 5598H
Yinggao Holdings PLC
31 May 2011
Yinggao Holdings plc
("Yinggao" or the "Company")
Annual Results
The Board of Yinggao is pleased to announce the Company's
results for the year ended 31 December 2010, which are set out
below. These have been despatched to shareholders earlier
today.
Copies of these financial statements will be available from the
offices of Daniel Stewart & Company Plc, Becket House, 36 Old
Jewry, London EC2R 8DD. A copy will also be available on the
Company's website www.yinggaoholdings.com. The AGM will be held at
the offices of Baker Tilly UK Audit LLP at 25 Farringdon Street,
London EC4A 4AB on 30 June 2011 at 10:30 a.m.
FINANCIAL HIGHLIGHTS
-- Operating profit before gain on disposal of subsidiaries
increased by 66.8% to HK$44.7 million (2009: HK$26.8 million).
-- Profit attributable to equity shareholders up 77.5% to
HK$29.3million (2009: HK$16.5million), after taking out an
exceptional item arising on the gain on disposals of subsidiaries
in 2009 of HK$51.1million.
-- Net cash position at 31 December 2010 at HK$32.6 million
(2009: HK$ 16.7 million).
-- Terminal services' operating profit increased by 43.9% to
HK$29.8 million (2009: HK$20.7 million). Revenue increased by 9.7%
to HK$124 million (2009: HK$113 million).
-- Barging services' operating profit increased by 70.8% to
HK$17.2 million (2009: HK$10.1 million). Revenue increased by 19.4%
to HK$ 83.4 million (2009: HK$69.8 million).
OPERATIONAL HIGHLIGHTS
-- Yinggao achieved record profits across all key business
segments.
-- New business in non ferrous metal trading commenced in April
2010, contributing HK$3.5million operating profit for the
group.
-- 17 container vessels, corresponding to carrying capacity of
approximately 37,000 tonnes (size ranging from 96TEU to 228TEU), in
operation during the year 2010, compared to 8 container vessels in
2009.
-- Post year end, 2 sets of brand-new quayside container cranes
and 4 sets of brand-new rail-mounted container cranes, with total
value of approximately HK$31.2million and HK$29.3million
respectively have been delivered and started operation.
Enquiries
Angela Leung Tel: + 852 2219 9999
Yinggao Holdings plc
www.yinggaoholdings.com
Paul Shackleton Tel: +44 (0) 207 776 6550
Daniel Stewart & Co
www.danielstewart.co.uk
Yinggao Holdings plc
CHAIRMAN'S STATEMENT
I am pleased to report another year of growth following my
appointment as Chairman of the Company in September 2009.
BUSINESS REVIEW
We place the delivery of strong operating performance at the
heart of our approach to the business, as demonstrated again by
this year's results. Our focus remains on our core businesses of
operating the Keen Chance Container Terminal based in the Huangpu
district of Guangzhou, China ("Terminal Services") and managing a
fleet of 17 custom built 96-228 TEU Yinggao-class river barges
("Barging Services"). In both areas turnover and profit have
continued to grow. The broad customer base with repeating business
from blue chip international shipping companies means that the
quality of revenue continues to be high.
During the year we commenced non ferrous metal trading,
exploiting a market opportunity. This division has immediately made
a contribution to the profitability of the group, and accounts for
a significant part of the increase in turnover for the year.
Terminal Services
Revenue from Terminal Services increased by 9.7% to HK$124
million (2009: HK$113 million), and underlying operating profits
increased by 23.9%. Although those activities continued to be
strong in 2010, an increase in operating cost was a major challenge
which caused the gross margin to drop by 1.75%.
The first phase of the extension of the adjacent quay has now
been completed and since the period end two sets of new 45 tonnes
quayside container cranes and four sets of new 45 tonnes
railed-mounted gantry container cranes have been delivered and
started operation.
Barging Services
Turnover from barging services was HK$83.4 million, an increase
of 19.4% (2009: HK$69.8 million). Underlying operating profits
increased by 24.8% and gross margin increased by 6%. In my
statement to shareholders last year, I mentioned that we would
benefit from the delivery of the new container vessels. There were
17 container vessels in operation at the end of 2010, representing
a carrying capacity of approximately 37,000 tonnes (size ranging
from 96TEU to 228TEU), compared to 8 vessels in the equivalent
period of last year.
We have used our knowledge of the local container shipping
market to commence a container leasing operation during the year in
order to increase the utilization of our assets. This has been
immediately successful, contributing 11.2% of the total
revenue.
Non ferrous metal trading
Our newly formed non ferrous metal trading division reported a
turnover of HK$274 million and a contribution to profit of
HK$3.5million. Substantially all of the trading was in electrolytic
copper cathodes.
FINANCIAL RESULTS
For the year ended 31 December 2010 Yinggao achieved revenues of
HK$482 million, which represented growth of 164% compared to the
prior year (2009: HK$182 million). As a result of the non ferrous
metal trading overall gross margin decreased to 13.4% (2009:
29.9%), the gross profit recorded an increase by 20.7% to HK$65.7
million (2009: HK$54.5 million). Profit attributable to equity
shareholder for the year under review was HK$29.3 million (2009:
HK$67.6 million), representing an increase of 77.5%, after taking
out an exceptional item arising on the gain on disposals of
subsidiaries in 2009 of HK$51.1 million. The resulting basic profit
per share was HK$1.48 cents (2009: HK$3.42 cents, or HK$0.84 cents
after taking out the exceptional item).
Net cash generated from operating activities amounted to HK$50.5
million compared to HK$59.8 million last year. The net cash
position of the Company continued to be strong with a 94% increase
at HK$32.5 million (2009: HK$16.7 million). Despite the fact that
trade receivables increased by 43.7% to HK$32.7 million (2009:
HK$22.2 million), I am pleased to report there was a progressive
improvement on collection of debts as 88% of trade receivables were
either current or less than 1 month old, compared with 70% at 31
December 2009.
OUTLOOK
The overriding commercial objectives of the Company remain that
of strengthening the competitiveness of the operation of our
container terminal amongst the industry peers, and expanding the
market share of our barging activities. As a result, we intend to
re invest the cash generated from operations in continuing to
optimize the utilisation of the space of the depot and terminal,
replacing old equipment and machinery, and increasing the size of
our fleet. There are a further eight 228TEU vessels (corresponding
to an aggregate carrying capacity of approximately 21,000 tonnes)
under construction and expected to be delivered gradually between
now and the end of 2011.
Overall, despite the uncertain world economic conditions and a
competitive market, the outlook for the Company is positive, based
on strong continued growth in revenues. I am glad to report to you
that 2010 was the third consecutive profitable year for the
Company. We are confident that Yinggao will continue to build on
its long track record of sustainable, profitable growth.
THANKS
I wish to thank the other members of the board and our staff who
have worked so hard and so effectively to bring the Company to this
point, and also to thank our shareholders for their continuing
support and confidence in Yinggao.
Leung Suk Ching, Angela
Chairman
31 May 2011
DIRECTORS' REPORT
The directors submit their report and the financial statements
of Yinggao Holdings plc for the year ended 31 December 2010.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were
terminal operation and barging service provision. On 23 March 2010,
the Group established a non ferrous trading company, Yinggao
Resources Limited.
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
A review of the business and future developments is given in the
Chairman's statement below.
RISKS AND UNCERTAINITIES
The management of the business and the execution of the Group's
strategy are subject to a number of risks.
The key business risks affecting the Group are considered to
relate to competition from other shipping agents and employee
retention.
Competition
The Group operates in a highly competitive market particularly
around price and service availability/quality. This results not
only in downward pressure on our margins but also in the risk that
we will not meet our customers' expectations. In order to mitigate
this risk, management monitors market prices on an ongoing basis so
as to keep prices competitive.
Employees
The Group's performance depends largely on regional managers and
local staff. The resignation of key individuals and the inability
to recruit people with the right experience and skills could
adversely impact the Group's results. To mitigate these issues, the
Group has implemented schemes linked to the Group's results that
are designed to retain key individuals.
KEY PERFORMANCE INDICATORS (KPIs)
There has been significant progress in the year on the Group's
overriding objective of revenue growth. The board monitors progress
with respect to the Group's strategy by reference to five KPIs.
Performance during the year, together with historical trend data
is set out in the following table:
2010 2009 (Restated)
---------------------------- ----------- ----------------
Growth in sales (%) 164.32% 64.78%
---------------------------- ----------- ----------------
Gross margin (%) 13.64% 29.86%
---------------------------- ----------- ----------------
Net profit margin (%) 7.81% 40.66%
---------------------------- ----------- ----------------
Net current ratio 1.76 times 1.48 times
---------------------------- ----------- ----------------
Return on invested capital
(%) 10.59% 24.13%
---------------------------- ----------- ----------------
DIVIDENDS
The directors are unable to recommend the payment of a dividend
(2009: Nil).
DIRECTORS
The following directors have held office since 1 January
2010:
LEUNG Suk Ching, Angela
LIU Sheng Rong
CHUN Yuet Ming, Jessica (Appointed on 30 September 2010)
CHAN Ping Kwan (Resigned on 19 May 2011)
David THOMAS
FENG Yue Ying
DIRECTORS' INTERESTS IN THE SHARES OF THE COMPANY
The directors who served the Company during the year together
with their beneficial interests, including family holdings, in the
shares of the Company were as follows:
Ordinary shares
At 1 January 2010(or
At 31 December date of appointment,
2010 if later)
LEUNG Suk Ching, Angela 870,000 870,000
LIU Sheng Rong - -
CHUN Yuet Ming, Jessica(Appointed on - -
30 September 2010)
CHAN Ping Kwan(Resigned on 19 May 2011) - -
David THOMAS - -
FENG Yue Ying - -
DIRECTORS'
REMUNERATION
2010 2009 2009
Pension Pension
Salary costs Total Salary costs Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
LEUNG Suk Ching,
Angela 698 12 710 635 12 647
LIU Sheng Rong 81 - 81 85 - 85
CHUN Yuet Ming,
Jessica(Appointed
on 30 September
2010) 61 1 62 - - -
CHAN Ping
Kwan(Resigned on
19 May 2011) - - - - - -
David THOMAS 242 242 233 233
FENG Yue Ying - - - - - -
1082 13 1,095 953 12 965
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate
behaviour and accountability, the directors of Yinggao Holdings plc
support the principles of good corporate governance. The Company
has appointed an audit committee, which comprises the two
independent non-executive directors, Mr David Thomas and Mr Liu
Sheng Rong. The primary duties of the audit committee are to review
and supervise the financial reporting and internal control
procedures of the Group. Due to the size of the staff of the Group,
it has been decided unanimously by the board that the remuneration
committee will be dispensed with for the time being and matters
involving any changes to the remuneration to the directors or
senior employees will be determined by the board as a whole (with
no director being involved in the consideration of his own
remuneration).
Employees
Group management are committed to training and motivating staff,
and offering promotional prospects where possible. Where
appropriate, company information is shared with staff, and
employees are encouraged to work towards a continual improvement in
the Group's performance.
ENVIRONMENT POLICY
The Group is committed to operating in an environmentally
responsible manner and endeavours to adopt the best practicable
means to reduce or eliminate polluting releases to the environment,
or in the disposal of waste products. The Group is committed to
complying with environmental legislative requirements.
DIRECTORS' INDEMNITY INSURANCE
The directors have not taken out an insurance policy to cover
directors' and officers' liabilities. The Articles of Association
of the Company permit the Company to indemnify directors to the
extent permitted by the Companies Act.
SUBSTANTIAL INTERESTS
At the date of this report, the Company had been notified of the
following substantial interest in the shares of the Company:
Chin Dynasty Foundation - 1,851,776,422 shares in the Company
(92.06%) through Keen Lloyd Holdings Limited, a company
incorporated in the British Virgin Islands.
CREDITOR PAYMENT POLICY
In order to maintain good relationships with major suppliers, it
is the Group's policy to settle payment to creditors within the
negotiated credit terms. The Group's creditor payment days in 2010
have been lengthened to approximately 13 days (2009: 12 days).
FINANCIAL INSTRUMENTS
Disclosures in respect of the Group's financial risk objectives
and policies are set out in note 26 to the financial
statements.
STATEMENT AS TO DISCLOSURE INFORMATION TO THE AUDITOR
The directors who were in office on the date of approval of
these financial statements have confirmed that, as far as they are
aware, there is no relevant audit information of which the auditor
is unaware. Each of the directors have confirmed that they have
taken all the steps that they ought to have taken as directors in
order to make themselves aware of any relevant audit information
and to establish that it has been communicated to the auditor.
By order of the board
Leung Suk Ching, Angela
Chairman
31 May 2011
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN THE PREPARATION OF
FINANCIAL STATEMENTS
The directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare group and company
Financial Statements for each financial year. The directors are
required by the AIM Rules of the London Stock Exchange to prepare
group financial statements in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union ("EU") and have elected under Company law to prepare the
company financial statements in accordance with IFRS as adopted by
the EU.
The financial statements are required by law and IFRS adopted by
the EU to present fairly the financial position of the group and
the company and the financial performance of the group. The
Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that Act to
financial statements giving a true and fair view are references to
their achieving a fair presentation.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and the company and of
the profit or loss of the group for that period.
In preparing the group and company financial statements, the
directors are required to:
a. select suitable accounting policies and then apply them
consistently;
b. make judgements and estimates that are reasonable and
prudent;
c. state whether they have been prepared in accordance with
IFRSs adopted by the EU;
d. prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the
company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group's and the
company's transactions and disclose with reasonable accuracy at any
time the financial position of the group and the company and enable
them to ensure that the financial statements comply with the
Companies Act 2006. 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.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF YINGGAO HOLDINGS
PLC
We have audited the financial statements which comprise the
consolidated income statement, the consolidated statement of
comprehensive income, the consolidated and parent company balance
sheets, the group and parent company statements of changes in
equity and the group and company statements of cash flows. 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 and, as regards
the parent company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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 auditors
As more fully explained in the Directors' Responsibilities
Statement set out below, 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
and express an opinion on the financial statements in accordance
with applicable law 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.
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 the financial statements
In our opinion;
-- the financial statements give a true and fair view of the
state of the group's and the parent company's affairs as at 31
December 2010 and of the group's profit for the year then
ended;
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the parent Company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the Companies Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion the information given in the Directors' Report
for the financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by
law are not made; or
-- we have not received all the information and explanations we
require for our audit.
DAVID CLARK (Senior Statutory Auditor)
for and on behalf of BAKER TILLY UK AUDIT LLP, Statutory
Auditor
Chartered Accountants
25 Farringdon Street
London EC4A 4AB
31 May 2011
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
2010 2009
(Restated )
Notes HK$'000 HK$'000
Revenue 5 482,016 182,363
Cost of sales 5 (416,284) (127,909)
-------- ---------
Gross profit 65,732 54,454
Other income 6 3,290 3,087
Gain on disposals of subsidiaries 15 - 51,119
Administrative expenses 7(c) (24,313) (30,750)
Profit from operations 44,709 77,910
Finance costs 7(a) (283) (622)
-------- ---------
Profit before taxation 7 44,426 77,288
Taxation 8 (6,780) (3,220)
-------- ---------
Profit for the year 37,646 74,068
======== =========
Attributable to :
Owners of the parent 29,339 67,646
Non-controlling interests 8,307 6,422
-------- ---------
37,646 74,068
======== =========
HK cents HK cents
Earnings per share
- Basic and diluted 11 1.48 3.42
======== =========
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
2010 2009
(Restated )
HK$'000 HK$'000
Profit for the year 37,646 74,068
Other comprehensive income for the year
Exchange differences arising on translation
of foreign operations 11,039 (23)
------- ---------
Total comprehensive income for the year 48,685 74,045
======= =========
Total comprehensive income attributable
to:
Owners of the parent 36,531 67,623
Non-controlling interests 12,154 6,422
------- ---------
48,685 74,045
======= =========
BALANCE SHEETS
AS AT 31 DECEMBER 2010
(Expressed in Hong Kong dollars) Company Registration No.:
1366078
Group Company
2010 2009 2008 2010 2009 2008
(Restated) (Restated) (Restated) (Restated)
Notes HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
NON-CURRENT ASSETS
Goodwill 12 14,168 14,168 14,168 - - -
Property, plant and
equipment 13 292,308 275,571 238,779 - - -
Investments in
subsidiaries 14 - - - 406,602 227,297 144,834
Available-for-sale
investment 16 - - 94 - - -
------- ---------- ---------- -------- ---------- ----------
306,476 289,739 253,041 406,602 227,297 144,834
------- ---------- ---------- -------- ---------- ----------
CURRENT ASSETS
Inventories 17 2,078 1,200 1,058 - - -
Trade and other
receivables 18 105,761 63,343 62,337 5 5 12
Amounts due from
subsidiaries - - - 5,536 2,270 926
Cash and cash
equivalents 19 32,563 16,726 6,024 181 83 12
------- ---------- ---------- -------- ---------- ----------
140,402 81,269 69,419 5,722 2,358 950
------- ---------- ---------- -------- ---------- ----------
CURRENT LIABILITIES
Trade and other
payables 20 67,361 41,061 30,174 634 714 241
Amounts due to
subsidiaries - - - 21,730 19,463 14,791
Obligations under
finance leases 21 4,476 6,714 4,624 - - -
Taxation 8,051 7,077 5,370 - - -
------- ---------- ---------- -------- ---------- ----------
79,888 54,852 40,168 22,364 20,177 15,032
------- ---------- ---------- -------- ---------- ----------
NET CURRENT
ASSETS/(LIABILITIES) 60,514 26,417 29,251 (16,642) (17,819) (14,082)
TOTAL ASSETS LESS
CURRENT
LIABILITIES 366,990 316,156 282,292 389,960 209,478 130,752
------- ---------- ---------- -------- ---------- ----------
NON CURRENT
LIABILITIES
Bank loan 22 - - 14,790 - - -
Obligations under
finance leases 21 1,289 3,155 2,545 - - -
Loans from fellow
investors in
subsidiaries 23 6,946 5,544 6,075 - - -
Deferred tax
liabilities 24 3,135 522 - - - -
------- ---------- ---------- -------- ---------- ----------
11,370 9,221 23,410 - - -
------- ---------- ---------- -------- ---------- ----------
NET ASSETS 355,620 306,935 258,882 389,960 209,478 130,752
======= ========== ========== ======== ========== ==========
EQUITY
Share capital 25(a) 115,224 115,224 115,224 115,224 115,224 115,224
Reserves 150,458 113,927 42,675 274,736 94,254 15,528
------- ---------- ---------- -------- ---------- ----------
Total equity
attributable to
owners
of the parent 265,682 229,151 157,899 389,960 209,478 130,752
Non-controlling
interests 89,938 77,784 100,983 - - -
------- ---------- ---------- -------- ---------- ----------
TOTAL EQUITY 355,620 306,935 258,882 389,960 209,478 130,752
======= ========== ========== ======== ========== ==========
The consolidated financial statements below were approved and
authorised for issue by the board of directors on 31 May 2011, and
signed on its on behalf by:
Leung Suk Ching, Angela Feng Yue Ying
Director Director
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
Attributable to owners of the parent
---------------------------------------------------------------------------------
(Note i) (Note
Statutory ii)
Share Share surplus Merger Exchange Accumulated Non-controlling Total
capital premium reserve reserve reserve losses Total interests equity
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Balance at 1 January
2008 (Restated) 115,224 120,942 12,980 201,104 41,357 (344,002) 147,605 92,877 240,482
Comprehensive income
Profit for the year - - - - - 2,799 2,799 5,508 8,307
Other comprehensive
income
Exchange differences
arising on translation
of foreign operations - - 202 - 7,293 - 7,495 2,598 10,093
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- --------
Total comprehensive
income for the year - - 202 - 7,293 2,799 10,294 8,106 18,400
Transactions with
owners
Transfer of statutory
surplus reserve - - (1,229) - - 1,229 - - -
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- --------
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
Attributable to owners of the parent
---------------------------------------------------------------------------------
(Note i) (Note
Statutory ii)
Share Share surplus Merger Exchange Accumulated Non-controlling Total
capital premium reserve reserve reserve losses Total interests equity
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Balance at 31 December
2008 and 1 January
2009 (Restated) 115,224 120,942 11,953 201,104 48,650 (339,974) 157,899 100,983 258,882
Comprehensive income
Profit for the year - - - - - 67,646 67,646 6,422 74,068
Other comprehensive
income
Exchange differences
arising on
translation
of foreign operations - - - - (23) - (23) - (23)
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- ---------
Total comprehensive
income for the year - - - - (23) 67,646 67,623 6,422 74,045
Transactions with
owners
Disposals of
subsidiaries - - (8,516) - 3,629 8,516 3,629 (29,621) (25,992)
Transfer of statutory
surplus reserve - - 912 - - (912) - - -
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- ---------
- - (7,604) - 3,629 7,604 3,629 (29,621) (25,992)
Balance at 31 December
2009
and 1 January 2010
(Restated) 115,224 120,942 4,349 201,104 52,256 (264,724) 229,151 77,784 306,935
Comprehensive income
Profit for the year - - - - - 29,339 29,339 8,307 37,646
Other comprehensive
income
Exchange differences
arising on
translation
of foreign operations - - - - 7,192 - 7,192 3,847 11,039
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- ---------
Total comprehensive
income for the year - - - - 7,192 29,339 36,531 12,154 48,685
Transactions with
owners
Transfer of statutory
surplus reserve - - 1,421 - - (1,421) - - -
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- ---------
- - - - - - - - -
Balance at 31 December
2010 115,224 120,942 5,770 201,104 59,448 (236,806) 265,682 89,938 355,620
======== ======== ========== ======== ========= ============ ============== ================ =========
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
(Note ii)
Share Share Merger Exchange Accumulated
capital premium reserve reserve losses Total
Company HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Balance at 1
January 2008
(Restated) 115,224 120,942 201,104 - (268,790) 168,480
Comprehensive
income
Loss for the
year - - - - (43,172) (43,172)
Other
comprehensive
income
Exchange
differences
arising on
translation - - - 5,444 - 5,444
-------- -------- ---------- --------- ------------ ---------
Total
comprehensive
income for
the year - - - 5,444 (43,172) (37,728)
-------- -------- ---------- --------- ------------ ---------
Balance at 31
December 2008
and 1 January
2009
(Restated) 115,224 120,942 201,104 5,444 (311,962) 130,752
Comprehensive
income
Profit for the
year - - - - 67,574 67,574
Other
comprehensive
income
Exchange
differences
arising on
translation - - - 11,152 - 11,152
-------- -------- ---------- --------- ------------ ---------
Total
comprehensive
income for
the year - - - 11,152 67,574 78,726
-------- -------- ---------- --------- ------------ ---------
Balance at 31
December 2009
and 1 January
2010
(Restated) 115,224 120,942 201,104 16,596 (244,388) 209,478
Comprehensive
income
Profit for the
year - - - - 188,199 188,199
Other
comprehensive
income
Exchange
differences
arising on
translation - - - (7,717) - (7,717)
-------- -------- ---------- --------- ------------ ---------
Total
comprehensive
income for
the year - - - (7,717) 188,199 180,482)
-------- -------- ---------- --------- ------------ ---------
Balance at 31
December
2010 115,224 120,942 201,104 8,879 (56,189) 389,960
======== ======== ========== ========= ============ =========
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
Notes:
(i) Statutory surplus reserve:
In accordance with the law of the People's Republic of China
(the "PRC") and the articles of association of certain of the
Company's subsidiaries, directors of these subsidiaries may at
their discretion make appropriations to a statutory surplus reserve
equivalent to 10% of the subsidiaries' net profits until the
balance reached 50% of the registered capital of that subsidiary.
Distribution of profits to shareholders can only be made after such
appropriations.
The statutory surplus reserve may be used to reduce any losses
incurred or be capitalised as paid up capital. The statutory
surplus reserve is not available for distribution.
(ii) 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 2002.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
2010 2009
(Restated)
Group Notes HK$'000 HK$'000
Cash flow from operating activities
Profit before taxation 44,426 77,288
Adjustments for:
- Finance costs 7(a) 283 622
- Impairment loss of property, plant
and equipment 7(c) 4,588 -
- (Gain)/loss on disposals of property,
plant and
equipment 7(c) (546) 1,115
- Exchange difference 7(c) (3,744) 2,632
- Depreciation 7(d) 19,697 13,740
- Gain on disposals of subsidiaries 15 - (51,119)
Operating cash flow before working
capital changes 64,704 44,278
Increase in inventories (878) (142)
Increase in trade and other receivables (35,556) (2,656)
Increase in trade and other payables 25,430 19,266
------- ----------
Net cash flow generated from operations 53,700 60,746
Income tax paid (3,193) (984)
------- ----------
Net cash generated from operating
activities 50,507 59,762
------- ----------
Cash flows from investing activities
Purchases of property, plant and equipment (40,274) (44,571)
Proceeds from disposals of property,
plant and equipment 14,686 2,510
Proceeds from disposal of
available-for-sale investment - 93
Disposals of subsidiaries 15 - (15)
Net cash used in investing activities (25,588) (41,983)
------- ----------
Cash flows from financing activities
Repayments on obligations under finance
leases (9,041) (6,463)
Interest paid (283) (622)
Net cash used in financing activities (9,324) (7,085)
------- ----------
Net increase in cash and cash equivalents 15,595 10,694
Cash and cash equivalents at 1 January 16,726 6,024
Effect of foreign exchange rate changes 242 8
------- ----------
Cash and cash equivalents at 31 December 32,563 16,726
======= ==========
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
2010 2009
(Restated )
Company HK$'000 HK$'000
Cash flow from operating activities
Profit for the year 188,199 67,574
Adjustments for:
- Reversal of impairment on investments
in subsidiaries (187,650) (69,652 )
- Exchange difference (58) 161
--------- ---------
Operating cash inflow/(outflow) before working
capital changes 491 (1,917)
Decrease in trade and other receivables - 7
Increase in amounts due from subsidiaries (3,338) (1,244 )
(Decrease)/increase in trade and other
payables (81) 473
Increase in amounts due to subsidiaries 3,026 2,752
--------- ---------
Net increase in cash and cash equivalents 98 71
Cash and cash equivalents at 1 January 83 12
--------- ---------
Cash and cash equivalents at 31 December 181 83
========= =========
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2010
(Expressed in Hong Kong dollars)
1. General information
The Company is a public limited company incorporated and
domiciled in the United Kingdom. The registered office of the
Company is located at 6(th) Floor, 25 Farringdon Street, London
EC4A 4AB. Its principal places of business are in Hong Kong and the
People's Republic of China ("PRC").
Following the annual general meeting of the Company held on 7
August 2009, the Company's name was changed to Yinggao Holdings
plc.
The principal activities of the Company and its subsidiaries
(hereinafter collectively referred to as the "Group") are terminal
services, barging services and non-ferrous metal trading.
The Company's shares were admitted to trading on the AIM Market
of the London Stock Exchange. These consolidated financial
statements were reviewed by the Audit Committee and approved for
issue by the board of directors on 31 May 2011.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation and statement of compliance
The consolidated financial statements have been prepared under
the historical cost convention.
The consolidated financial statements are presented in Hong Kong
dollars ("HKD"), rounded to the nearest thousand, which is the
presentation currency of the Group.
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRSs"), Interpretations ("IFRICs")
and the Companies Act 2006 applicable to Companies Reporting under
IFRSs.
(b) Subsidiaries and non-controlling interests
Subsidiaries are entities controlled by the Group. Control
exists when the Group has the power 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 are taken into account.
An investment in a subsidiary is consolidated into the
consolidated financial statements from the date that control
commences until the date that control ceases. Intra-group balances
and transactions and any unrealised profits arising from
intra-group transactions are eliminated in full in preparing the
consolidated financial statements. Unrealised losses resulting from
intra-group transactions are eliminated in the same way as
unrealised gains but only to the extent that there is no evidence
of impairment.
Non-controlling interests (previously known as "minority
interests") represent the equity in a subsidiary not attributable
directly or indirectly to the Company, and in respect of which the
Group has not agreed any additional terms with the holders of those
interests which would result in the Group as a whole having a
contractual obligation in respect of those interests that meets the
definition of a financial liability. For each business combination,
the Group can elect to measure any non-controlling interests either
at fair value or at their proportionate share of the subsidiary's
net identifiable assets.
Non-controlling interests are presented in the consolidated
balance sheet within equity, separately from equity attributable to
the equity shareholders of the Company. Non-controlling interests
in the results of the Group are presented on the face of the
consolidated statement of comprehensive income as an allocation of
the total comprehensive income for the year between non-controlling
interests and the equity shareholders of the Company. Loans from
holders of non-controlling interests and other contractual
obligations towards these holders are presented as financial
liabilities in the consolidated balance sheet.
Changes in the Group's interests in a subsidiary that do not
result in a loss of control are accounted for as equity
transactions, whereby adjustments are made to the amounts of
controlling and non-controlling interests within consolidated
equity to reflect the change in relative interests, but no
adjustments are made to goodwill and no gain or loss is
recognised.
When the Group loses control of a subsidiary, it is accounted
for as a disposal of the entire interest in that subsidiary, with a
resulting gain or loss being recognised in profit or loss. Any
interest retained in that former subsidiary at the date when
control is lost is recognised at fair value and this amount is
regarded as the fair value on initial recognition of a financial
asset or, when appropriate, the cost on initial recognition of an
investment in an associate or jointly controlled entity.
In the Company's balance sheet, an investment in a subsidiary is
stated at cost less any impairment losses, unless the investment is
classified as held for sale.
(c) Goodwill
Goodwill arising on an acquisition of a business is carried at
cost less any accumulated impairment losses.
For the purposes of impairment testing, goodwill arising from an
acquisition is allocated to each of the relevant cash-generating
units, that are expected to benefit from the synergies of the
acquisition. A cash-generating unit to which goodwill has been
allocated is tested for impairment annually, and whenever there is
an indication that the unit may be impaired. For goodwill arising
on an acquisition in a financial year, the cash-generating unit to
which goodwill has been allocated is tested for impairment before
the end of that financial year. When the recoverable amount of the
cash-generating unit is less than the carrying amount of the unit,
the impairment loss is allocated to reduce the carrying amount of
any goodwill allocated to the unit first, and then to the other
assets of the unit pro rata on the basis of the carrying amount of
each asset in the unit. Any impairment loss for goodwill is
recognised directly in profit or loss. An impairment loss for
goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the
attributable amount of goodwill capitalised is included in the
determination of the amount of profit or loss on disposal.
(d) Property, plant and equipment
Expenditure on additions and improvements is capitalised as
incurred. Non-current assets are included at historical cost less
accumulated depreciation and any impairment losses.
Property, plant and equipment, other than construction in
progress, are depreciated over their estimated useful lives on a
straight line basis. The following annual rates of depreciation
have been used.
Land and buildings 20-30 years
Plant and machinery 10-20 years
Furniture, fixtures and equipment 5-10 years
Motor vehicles 5-10 years
Vessels 10 years
Construction in progress is stated at cost less impairment. Cost
comprises the direct cost of construction.
Both the useful life of an asset and its residual value, if any,
are reviewed annually.
The carrying amounts of other property, plant and equipment are
reviewed for indications of impairment at each balance sheet date.
An impairment loss is recognised to the extent that the carrying
amount of an asset, or the cash-generating unit to which it
belongs, is more than its recoverable amount. The recoverable
amount of an asset, or of the cash generating unit to which it
belongs, is the greater of its net selling price and value in use.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of time value of money and
the risks specific to the assets. An impairment loss is reversed if
there has been a favourable change in estimates used to determine
the recoverable amount.
Gains or losses arising from the retirement or disposal of an
item of property, plant and equipment are determined as the
difference between the net disposal proceeds and the carrying
amount of the item and are recognised in profit or loss on the date
of retirement or disposal.
(e) Leased assets
An arrangement, comprising a transaction or a series of
transactions, is or contains a lease if the Group determines that
the arrangement conveys a right to use a specific asset or assets
for an agreed period of time in return for a payment or a series of
payments. Such a determination is made based on an evaluation of
the substance of the arrangement and is regardless of whether the
arrangement takes the legal form of a lease.
(i) Classification of assets leased to the Group
Assets that are held by the Group under leases which transfer to
the Group substantially all the risks and rewards of ownership are
classified as being held under finance leases. Leases which do not
transfer substantially all the risks and rewards of ownership to
the Group are classified as operating leases, with the exception
that land held for own use under an operating lease, the fair value
of which cannot be measured separately from the fair value of a
building situated thereon at the inception of the lease, is
accounted for as being held under a finance lease, unless the
building is also clearly held under an operating lease. For these
purposes, the inception of the lease is the time that the lease was
first entered into by the Group, or taken over from the previous
lessee.
(ii) Assets acquired under finance leases
Where the Groupacquires the use of assets under finance leases,
the amounts representing the fair value of the leased asset, or, if
lower, the present value of the minimum lease payments, of such
assets are included in property, plant and equipment and the
corresponding liabilities, net of finance charges, are recorded as
obligations under finance leases. Depreciation is provided at rates
which write off the cost of the assets over the term of the
relevant lease or, where it is likely the Group will obtain
ownership of the asset, the life of the asset, as set out in note
2(d). Impairment losses are accounted for in accordance with the
accounting policy as set out in note 2(d). Finance charges implicit
in the lease payments are charged to profit or loss over the period
of the leases so as to produce an approximately constant periodic
rate of charge on the remaining balance of the obligations for each
accounting period. Contingent rentals are charged to profit or loss
in the accounting period in which they are incurred.
(iii) Operating lease charges
Where the Group has the use of assets held under operating
leases, payments made under the leases are charged to profit or
loss in equal instalments over the accounting periods covered by
the lease term, except where an alternative basis is more
representative of the pattern of benefits to be derived from the
leased asset. Lease incentives received are recognised in profit or
loss as an integral part of the aggregate net lease payments made.
Contingent rentals are charged to profit or loss in the accounting
period in which they are incurred.
(f) Available-for-sale investments
Investments held for non-trading purposes are classified as
available-for-sale investments. At each balance sheet date the fair
value is remeasured, with resultant gain or loss being recognised
directly in equity, except foreign exchange gains and losses in
respect of monetary items such as debt securities which are
recognised directly in profit or loss. Where these investments are
interest-bearing, interest calculated using the effective interest
method is recognised in profit or loss. When these investments are
derecognised, the cumulative gain or loss previously recognised
directly in equity is recognised in profit or loss.
When there is objective evidence that available-for-sale
investments are impaired, the cumulative loss that has been
recognised directly in equity is removed from equity and is
recognised in profit or loss. The amount of the cumulative loss
that is recognised in profit or loss is the difference between the
acquisition cost (net of any principal repayment and amortisation)
and current fair value, less any impairment loss on that asset
previously recognised in profit or loss.
Impairment losses recognised in profit or loss in respect of
available-for-sale investments are not reversed through profit or
loss. Any subsequent increase in the fair value of such assets is
recognised directly in equity.
Impairment losses in respect of available-for-sale debt
investments are reversed if the subsequent increase in fair value
can be objectively related to an event occurring after the
impairment loss was recognised. Reversals of impairment losses in
such circumstances are recognised in profit or loss.
(g) Inventories
Inventories are carried at the lower of cost and net realisable
value.
Cost is calculated using the weighted average cost formula and
comprises all costs of purchase, costs of conversion and other
costs incurred in bringing the inventories to their present
location and condition.
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.
When inventories are sold, the carrying amount of those
inventories is recognised as an expense in the period in which the
related revenue is recognised. The amount of any write-down of
inventories to net realisable value and all losses of inventories
are recognised as an expense in the period the write-down or loss
occurs. The amount of any reversal of any write-down of inventories
is recognised as a reduction in the amount of inventories
recognised as an expense in the period in which the reversal
occurs.
(h) Trade and other receivables
Trade and other receivables are initially recognised at fair
value and thereafter stated at amortised cost less impairment
losses for bad and doubtful receivables, except where the
receivables are interest-free loans made to related parties without
any fixed repayment terms or the effect of discounting would be
immaterial. In such cases, the receivables are stated at cost less
impairment losses for bad and doubtful debts.
Impairment losses for bad and doubtful debts are measured as the
difference between the carrying amount of the financial asset and
the estimated future cash flows, discounted where the effect of
discounting is material.
(i) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand,
demand deposits with banks and other financial institutions, and
short-term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an
insignificant risk of changes in value, having been within three
months of maturity at acquisition.
(j) Trade and other payables
Trade and other payables are initially recognised at fair value.
Trade and other payables are subsequently stated at amortised cost
unless the effect of discounting would be immaterial, in which case
they are stated at cost.
(k) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair
value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised
cost with any difference between the amount initially recognised
and redemption value being recognised in profit or loss over the
period of the borrowings, together with any interest and fees
payable, using the effective interest method.
(l) Revenue
Revenue is measured at the fair value of the consideration
received or receivable. Provided it is probable that the economic
benefits will flow to the Group and the revenue and costs, if
applicable, can be measured reliably, revenue is recognised in
profit or loss as follows:
Service income comprises the value of sales in the year in
respect of the operation of the terminal and provision of barging
services rendered to the customers which is taken to be the point
in time when the customer has accepted the services and the related
risks and rewards been transferred.
(m) Employee benefits
(i) Salaries, annual bonuses, paid annual leave, contributions
to defined contribution retirement plans and the cost of
non-monetary benefits are accrued in the year in which the
associated services are rendered by employees. Where payment or
settlement is deferred and the effect would be material, these
amounts are stated at their present values.
(ii) The employees of the subsidiaries in the PRC are members of
the state-sponsored central retirement benefit scheme operated by
the local municipal government in the PRC. The subsidiaries are
required to contribute, based on a certain percentage of the
payroll costs, to the central retirement benefit scheme to fund the
benefits. The only obligation of the group with respect to the
retirement benefit scheme is to make the required contributions
under the scheme and such contributions are charged to the
consolidated income statement as they become payable in accordance
with the rules of the pension scheme.
(n) Translation of foreign currencies
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the "functional
currency"). The consolidated financial statements are presented in
Hong Kong dollars as this is felt to be appropriate when taking
into account the location of the Group's operation. This is
different from the functional currency of the Company which is the
Pound Sterling.
(ii) Transactions and balances
Foreign currency transactions during the year are translated at
the foreign exchange rates ruling at the transaction dates.
Monetary assets and liabilities denominated in foreign currencies
are translated at the foreign exchange rates ruling at the balance
sheet date. Exchange gains and losses are recognised in profit or
loss.
Non-monetary assets and liabilities that are measured in terms
of historical cost in a foreign currency are translated using the
foreign exchange rates ruling at the transaction dates.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated using the
foreign exchange rates ruling at the dates the fair value was
determined.
(iii) Group companies
The results of the subsidiary company in the PRC are translated
into HKD at the exchange rates approximating the foreign exchange
rates ruling at the dates of the transactions. Balance sheet items
are translated into HKD at the foreign exchange rates ruling at the
balance sheet date. The resulting exchange differences are
recognised directly in a separate component of equity.
On disposal of a foreign operation, the cumulative amount of the
exchange differences recognised in equity which relate to that
foreign operation is included in the calculation of the profit or
loss on disposal.
(o) Income tax
Income tax for the year comprises current tax and movements in
deferred tax assets and liabilities. Current tax and movements in
deferred tax assets and liabilities are recognised in profit or
loss except to the extent that they relate to items recognised in
other comprehensive income or directly in equity, in which case the
relevant amounts of tax are recognised in other comprehensive
income or directly recognised in equity respectively.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the balance sheet date, and any adjustment to tax payable in
respect of previous years.
Deferred tax assets and liabilities arise from deductible and
taxable temporary differences respectively, being the differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and their tax bases. Deferred tax
assets also arise from unused tax losses and unused tax
credits.
Apart from differences which arise on initial recognition of
assets and liabilities, all deferred tax liabilities, and all
deferred tax assets to the extent that it is probable that future
taxable profits will be available against which the asset can be
utilised, are recognised.
The amount of deferred tax recognised is measured based on the
expected manner of realisation or settlement of the carrying amount
of the assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date. Deferred tax
assets and liabilities are not discounted.
(p) Provisions and contingent liabilities
Provisions are recognised for other liabilities of uncertain
timing or amount when the Group has a legal or constructive
obligation arising as a result of a past event, it is probable that
an outflow of economic benefits will be required to settle the
obligation and a reliable estimate can be made.
Where the time value of money is material, provisions are stated
at the present value of the expenditure expected to settle the
obligation.
Where it is not probable that an outflow of economic benefits
will be required, or the amount cannot be estimated reliably, the
obligation is disclosed as a contingent liability, unless the
probability of outflow of economic benefits is remote. Possible
obligations, whose existence will only be confirmed by the
occurrence or non-occurrence of one or more future events are also
disclosed as contingent liabilities unless the probability of
outflow of economic benefits is remote.
(q) Related parties
For the purposes of these consolidated financial statements, a
party is considered to be related to the Group if:
(i) the party has the ability, directly or indirectly through
one or more intermediaries, to control the Group or exercise
significant influence over the Group in making financial and
operating policy decisions, or has joint control over the
Group;
(ii) the Group and the party are subject to common control;
(iii) the party is an associate of the Group or a joint venture
in which the Group is a venturer;
(iv) the party is a member of key management personnel of the
Group or the Group's parent, or a close family member of such an
individual, or is an entity under the control, joint control or
significant influence of such individuals;
(v) the party is a close family member of a party referred to in
(i) or is an entity under the control, joint control or significant
influence of such individuals; or
(vi) the party is a post-employment benefit plan which is for
the benefit of employees of the Group or of any entity that is a
related party of the Group.
Close family members of an individual are those family members
who may be expected to influence, or be influenced by, that
individual in their dealings with the entity.
(r) Going concern
The Group's business activities, together with the factors
likely to affect its future performance and position are set out in
the Chairman's statement. Note 26 to the financial statements sets
out the Group's financial risk management policies, and its
exposure to credit risk and liquidity risk.
The Directors have assessed the financial risks facing the
business, and compared this risk assessment to the net current
assets position. The Directors have also reviewed relationships
with key customers and are satisfied that the appropriate contracts
and contingency plans are in place. The directors have prepared
income statement and cash flow forecasts to assess whether the
Group has adequate resources for the foreseeable future.
The directors consider that the Group has adequate resources to
continue in operational existence for the foreseeable future. For
this reason, they continue to adopt the going concern basis in
preparing the consolidated financial statements.
3. CHANGES IN ACCOUNTING POLICIES
(a) Change in presentation currency
During the year ended 31 December 2010, the Group changed its
presentation currency from the United States dollars to Hong Kong
dollars. This change in accounting policy has been applied
retrospectively. As a result, the comparative figures in these
financial statements are translated from the United States dollars
to Hong Kong dollars using the closing rate at the relevant balance
sheet date for balance sheet items, average rates for the relevant
period for income statement, statement of comprehensive income and
cash flow statement items and historical rates for the items in the
statement of changes in equity.
The change in presentation currency has no significant impact on
the financial position of the Group as at 31 December 2010 and
2009, or the results and cash flows for the years ended 31 December
2010 and 2009.
(b) Application of new and revised IFRSs
The International Accounting Standards Board ("IASB") has issued
certain revised IFRSs, a number of amendments to IFRSs and new
IFRICs that are first effective for the current accounting period
of the Group and the Company. Of these, the following developments
are relevant to the Group's financial statements:
- IFRS 3 (revised 2008), Business combinations
- Amendments to IAS 27, Consolidated and separate financial
statements
- Amendments to IAS 39, Financial instruments: Recognition and
measurement - eligible hedged items
- Improvements to IFRSs (2009)
The amendments to IAS 39 has had no material impact on the
Group's financial statements as the amendments' conclusion was
consistent with policies already adopted by the Group. The other
developments resulted in changes in accounting policy but none of
these changes in policy have a material impact on the current or
comparative periods, for the following reasons:
- The impact of the majority of the revisions to IFRS 3 and IAS
27 have not yet had a material effect on the Group's financial
statements as these changes will first be effective as and when the
Group enters into a relevant transaction (for example, a business
combination or a disposal of a subsidiary) and there is no
requirement to restate the amounts recorded in respect of previous
such transactions.
- The impact of the amendments to IFRS 3 (in respect of
recognition of acquiree's deferred tax assets) and IAS 27 (in
respect of allocation of losses to non-controlling interests
(previously known as "minority interests") in excess of their
equity interests) have had no material impact as there is no
requirement to restate amounts recorded in previous periods and no
such deferred tax assets or losses arose in the current period.
Further details of these changes in accounting policy are as
follows:
- As a result of the adoption of IFRS 3 (revised 2008), any
business combination acquired on or after 1 January 2010 will be
recognised in accordance with the new requirements and detailed
guidance contained in IFRS 3 (revised 2008). These include the
following changes in accounting policies:
- Transaction costs that the Group incurs in connection with a
business combination, such as finder's fees, legal fees, due
diligence fees, and other professional and consulting fees, will be
expensed as incurred, whereas previously they were accounted for as
part of the cost of the business combination and therefore impacted
the amount of goodwill recognised.
- If the Group holds interests in the acquiree immediately prior
to obtaining control, these interests will be treated as if
disposed of and re-acquired at fair value on the date of obtaining
control. Previously, the step-up approach would have been applied,
whereby goodwill was computed as if accumulated at each stage of
the acquisition.
- Contingent consideration will be measured at fair value at the
acquisition date. Subsequent changes in the measurement of that
contingent consideration unrelated to facts and circumstances that
existed at the acquisition date will be recognised in profit or
loss, whereas previously these changes were recognised as an
adjustment to the cost of the business combination and therefore
impacted the amount of goodwill recognised.
- If the acquiree has accumulated tax losses or other temporary
deductible differences and these fail to meet the recognition
criteria for deferred tax assets at the date of acquisition, then
any subsequent recognition of these assets will be recognised in
profit or loss, rather than as an adjustment to goodwill as was
previously the policy.
- In addition to the Group's existing policy of measuring the
non-controlling interests in the acquiree at the non-controlling
interest's proportionate share of the acquiree's net identifiable
assets, in future the Group may elect, on a transaction by
transaction basis, to measure the non-controlling interest at fair
value.
In accordance with the transitional provisions in IFRS 3
(revised 2008), these new accounting policies will be applied
prospectively to any business combinations in the current or future
periods. The new policy in respect of recognition in the movement
of deferred tax assets will also be applied prospectively to
accumulated tax losses and other temporary deductible differences
acquired in previous business combinations. No adjustments have
been made to the carrying values of assets and liabilities that
arose from business combinations whose acquisition dates preceded
the application of this revised standard.
- As a result of the adoption of IAS 27 (amended 2008), the
following changes in policies will be applied as from 1 January
2010:
- If the Group acquires an additional interest in a non-wholly
owned subsidiary, the transaction will be accounted for as a
transaction with equity shareholders (the non-controlling
interests) in their capacity as owners and therefore no goodwill
will be recognised as a result of such transactions. Similarly, if
the Group disposes of part of its interest in a subsidiary but
still retains control, this transaction will also be accounted for
as a transaction with equity shareholders (the non-controlling
interests) in their capacity as owners and therefore no profit or
loss will be recognised as a result of such transactions.
Previously the Group treated such transactions as step-up
transactions and partial disposals, respectively.
- If the Group loses control of a subsidiary, the transaction
will be accounted for as a disposal of the entire interest in that
subsidiary, with any remaining interest retained by the Group being
recognised at fair value as if reacquired. In addition, as a result
of the adoption of the amendment to IFRS 5, if at the balance sheet
date the Group has the intention to dispose of a controlling
interest in a subsidiary, the entire interest in that subsidiary
will be classified as held for sale (assuming that the held for
sale criteria in IFRS 5 are met) irrespective of the extent to
which the Group will retain an interest. Previously such
transactions were treated as partial disposals.
In accordance with the transitional provisions in IAS 27, these
new accounting policies will be applied prospectively to
transactions in current or future periods, therefore previous
periods have not been restated.
- In order to be consistent with the above amendments to IFRS 3
and IAS 27, and as a result of amendments to IAS 28, Investments in
associates, the following policies will be applied as from 1
January 2010:
- If the Group holds interests in the acquiree immediately prior
to obtaining significant influence, these interests will be treated
as if disposed of and reacquired at fair value on the date of
obtaining significant influence. Previously, the step-up approach
would have been applied, whereby goodwill was computed as if
accumulated at each stage of the acquisition.
- If the Group loses significant influence, the transaction will
be accounted for as a disposal of the entire interest in that
investee, with any remaining interest being recognised at fair
value as if reacquired. Previously such transactions were treated
as partial disposals.
Consistent with the transitional provisions in IFRS 3 and IAS
27, these new accounting policies will be applied prospectively to
transactions in current or future periods, therefore previous
periods have not been restated.
Other changes in accounting policies which are relevant to the
Group's financial statements are as follows:
- As a result of the amendments to IAS 27, as from 1 January
2010, any losses incurred by a non-wholly owned subsidiary will be
allocated between the controlling and non-controlling interests in
proportion to their interests in that entity, even if this results
in a deficit balance within consolidated equity being attributed to
the non-controlling interests. Previously, if the allocation of
losses to the non-controlling interests would have resulted in a
deficit balance, the losses were only allocated to the
non-controlling interests if the non-controlling interests were
under a binding obligation to make good the losses. In accordance
with the transitional provisions in IAS 27, this new accounting
policy is being applied prospectively and therefore previous
periods have not been restated.
- As a result of the amendments to IAS 17, Leases, arising from
the Improvements to IFRSs (2009) omnibus standard, the Group has
re-evaluated the classification of its interests in leasehold land
as to whether, in the Group's judgement, the lease transfers
substantially all the risks and rewards of ownership of the land
such that the Group is in a position economically similar to that
of a purchaser. The Group has concluded that the classification of
such leases as finance leases continues to be appropriate.
Up to the date of issue of these financial statements, the IASB
has issued a number of amendments and interpretations and one new
standard which are not yet effective for the year ended 31 December
2010 and which have not been adopted in these financial statements.
These include the following which may be relevant to the Group:
Effective for accounting
periods beginning on or
after
Revised IAS 24, Related party disclosures 1 January 2011
IFRS 9, Financial instruments 1 January 2013
Improvements to IFRSs (2010) 1 July 2010 or 1 January
2011
Amendments to IAS 12, Income taxes 1 January 2012
The Group is in the process of assessing the impact of these
amendments, new standards and new interpretations is expected to be
in the period of initial application, but is not yet in a position
to state whether these amendments, new standards and
interpretations would have a significant impact on the Group's or
the Company's results of operations and financial position.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are currently evaluated and are based
on historical experience and other factors including expectations
of future events that are believed to be reasonable under the
circumstances. Apart from information disclosed elsewhere in these
financial statements, the following disclosures summaries : (1)
estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year and (2) significant
judgements made in the process of applying the Group's accounting
policies.
(i) Income taxes
The Group is subject to income taxes in the PRC, Hong Kong and
the United Kingdom. Significant judgement is required in
determining the provision for income taxes. There are many
transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business.
The Group 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 deferred tax provisions in the period in which
such determination is made.
(ii) Provision for doubtful receivables
The Group provides for doubtful receivables based on an
assessment of the collectibility of trade receivables. Provisions
for doubtful receivables are applied to trade and other receivables
where events or changes in circumstances indicate that the balance
may not be collectible. The identification of doubtful receivables
requires the use of judgments and estimates. Where the expectation
is different from the original estimates, such difference will
impact carrying value of receivables and doubtful debt expenses in
the period in which such estimate has been changed.
5. REVENUE AND SEGMENT REPORTING
The principal activities of the Group are terminal services,
barging services and non ferrous metal trading together with other
related services including sea freight forwarding and barge
hire.
(a) Segment results, assets and liabilities
The Group determines its operating segments based on information
reported to the chief operating decision maker, which is focused on
the category of customer for each type of goods and services. The
principal categories of customers for these goods and services are
terminal services, barging services, and non ferrous metal
trading.
Information regarding the above segments is reported below.
non ferrous
Terminal services Barging services metal trading Other trading Unallocated Total
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
(Restated) (Restated) (Restated) (Restated) (Restated) (Restated)
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Revenue from
external
customers 124,362 112,520 83,374 69,843 274,280 - - - - - 482,016 182,363
========= =========== ========= =========== ========== =========== ======== =========== ======== =========== ========== ===========
Reportable
segment
revenue 124,362 112,520 83,374 69,843 274,280 - - - - - 482,016 182,363
Reportable
segment
cost of sales (88,076) (75,407) (57,403) (52,502) (270,805) - - - - (416,284) (127,909)
--------- ----------- --------- ----------- ---------- ----------- -------- ----------- -------- ----------- ---------- -----------
Reportable
segment
gross profit 36,286 37,113 25,971 17,341 3,475 - - - - - 65,732 54,454
========= =========== ========= =========== ========== =========== ======== =========== ======== =========== ========== ===========
Reportable
segment
profit/(loss) 29,773 20,692 17,182 10,057 3,458 - (717) (623) (4,987) (3,335) 44,709 26,791
Finance costs (272) (605) (11) (17) - - - - - - (283) (622)
Taxation (3,477) (2,694) (2,730) (526) (573) - - - - - (6,780) (3,220)
--------- ----------- --------- ----------- ---------- ----------- -------- ----------- -------- -----------
26,024 17,393 14,441 9,514 2,885 - (717) (623) (4,987) (3,335) 37,646 22,949
========= =========== ========= =========== ========== =========== ======== =========== ======== ===========
Gain on
disposals of
subsidiaries
(note 15) - 51,119
---------- -----------
Profit for the
year 37,646 74,068
========== ===========
Group
Reportable
segment
assets 354,812 317,386 58,041 30,124 22,090 - 448 239 11,487 23,259 446,878 371,008
========= =========== ========= =========== ========== =========== ======== =========== ======== =========== ========== ===========
Reportable
segment
liabilities (54,191) (46,545) (11,875) (9,822) (19,186) - (2,776) (1,768) (3,230) (5,938) (91,258) (64,073)
========= =========== ========= =========== ========== =========== ======== =========== ======== =========== ========== ===========
For the purposes of monitoring segment performance and
allocating resources between segments:
-- all assets are allocated to reportable segments with the
exception of unallocated corporate assets. Assets used jointly by
reportable segments are allocated on the basis of the revenues
earned by individual reportable segments; and
-- all liabilities are allocated to reportable segments with the
exception of unallocated corporate liabilities. Liabilities for
which reportable segments are jointly liable are allocated in
proportion to segment assets.
(b) Other information
non ferrous
Terminal services Barging services metal trading Other trading Unallocated Total
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
(Restated) (Restated) (Restated) (Restated) (Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Capital
expenditure 29,361 42,976 15,503 11,123 - - 37 8 - - 44,901 54,107
Depreciation 15,095 10,882 3,876 503 - - 11 - 715 2,355 19,697 13,740
Loss/(gain)
on disposals
of
property,
plant and
equipment - 1,115 (546) - - - - - - - (546) 1,115
======= ========== ======= ========== ======= ========== ======= ========== ======= ========== ======= ==========
(c) Geographic information
The following table sets out information about the geographical
location of (i) the Group's revenue from external customers and
(ii) the Group's property, plant and equipment and goodwill
("specified non-current assets"). The geographical locations of
customers are based on the locations at which the services are
provided or the goods delivered. The geographical locations of the
specified non-current assets are based on the physical locations of
the assets, in the case of property, plant and equipment and the
locations of the operations to which they are allocated, in the
case of goodwill.
Revenue from Specified
external customers non-current assets
2010 2009 2010 2009
(Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000
Hong Kong 357,654 69,843 28,830 23,714
People's Republic of
China 124,362 112,520 277,646 266,025
482,016 182,363 306,476 289,739
========= =========== ========= ===========
(d) Information about major customers
For the year ended 31 December 2010, there was one customer
which accounted for over 10% of total revenue with revenue of
HK$274,280,000 relating to the non ferrous metal trading
segment.
For the year ended 31 December 2009, there was one customer
which accounted for over 10% of total revenue with revenue of
HK$43,169,000 relating to the barging services segment.
6. OTHER INCOME
2010 2009
(Restated)
HK$'000 HK$'000
Bad debts recovered on other receivables 3,262 3,026
Others 28 61
------- ----------
3,290 3,087
======= ==========
7. PROFIT BEFORE TAXATION
Profit before taxation is stated after charging/(crediting):
2010 2009
(Restated)
HK$'000 HK$'000
(a) Finance costs
Interest on finance leases 283 622
======= ==========
(b) Staff costs (including directors'
remuneration)
Wages included in costs of sales 23,748 14,500
------ ------
Salaries 7,700 5,933
Other pension costs 216 292
Other staff welfare 77 107
Social security costs 22 30
------ ------
Staff costs included in administrative
expenses 8,015 6,362
------ ------
31,763 20,862
====== ======
2010 2009
Number of Number of
staff staff
--------- ----------
The average monthly number of persons
(including
directors) employed by the Group during
the year was:
Management and administration 48 42
Sales and distribution 16 18
Operations 473 421
--------- ----------
537 481
========= ==========
2010 2009
(Restated)
HK$'000 HK$'000
(c) Administrative expenses
Fees payable to Baker Tilly HK Audit LLP
for the statutory audit of the parent
and consolidated annual financial
statements 303 270
Fees payable to associates of the
Company's auditor for the statutory
audit of the company's subsidiaries 373 332
--------- ----------
676 602
Depreciation of property, plant and
equipment 3,405 5,229
Impairment loss of property, plant and
equipment 4,588 -
Staff costs 8,015 6,362
Rentals of land and buildings 1,378 1,436
Bad debt expenses 63 2,363
Travelling, entertainment and general
office expenses 5,693 6,583
(Gain)/loss on disposal of property,
plant and equipment (546) 1,115
Net exchange (gains)/losses (3,744) 2,632
Other administrative costs 4,785 4,428
--------- ----------
24,313 30,750
========= ==========
2010 2009
(Restated)
HK$'000 HK$'000
(d) Other items
Cost of inventories recognised as an
expense 270,805 -
Depreciation of property, plant and
equipment 19,697 13,740
Rentals under operating leases
- land and buildings 1,378 1,436
- barges and containers 15,262 5,614
========= ==========
8. TAXATION
The amount of income tax expense charged to the consolidated
income statement represents:
2010 2009
(Restated)
HK$'000 HK$'000
Current tax:
- overseas tax for the year 4,167 2,698
------- ----------
Deferred tax (note 24):
- current year 2,386 522
- previous years 227 -
------- ----------
2,613 522
6,780 3,220
======= ==========
The actual tax expense can be reconciled to the profit before
taxation in the consolidated income statement as follows:
2010 2009
(Restated)
HK$'000 HK$'000
Profit before taxation 44,426 77,288
------- ----------
Profit before taxation at the standard
rate of corporation
tax in the UK of 28% (2009: 28%) 12,439 21,640
Effects of:
Different tax rates on overseas earnings (4,187) (3,464)
Expenses not deductible for tax purposes 1,415 1,821
Non-taxable income (2,920) (16,182)
Temporary differences not recognised (1) (3)
Utilisation of tax losses previously not
recognised (193) (592)
Over-provision of deferred tax assets
previously
recognised 227 -
------- ----------
Tax charge for the year 6,780 3,220
======= ==========
In respect of subsidiaries operating in Hong Kong, no provision
for Hong Kong profits tax are provided as there are sufficient tax
losses brought forward to set off against current year's assessable
profit.
Subsidiaries operating in the PRC are subject to Enterprise
Income Tax ('EIT') at a rate of 25%. However, the Company's
subsidiary in Guangzhou is now subject to a preferential tax rate
of 22% as described below. Other subsidiaries had tax losses
brought forward from previous years.
On 16 March 2007, the National People's Congress passed the
Corporate Income Tax Law of the PRC (the "Tax Law"). Under the Tax
Law, the EIT tax rate applicable to the Company's subsidiary in
Guangzhou is to be increased from 15% to 25% progressively within
five years from 1 January 2008 (2009: 18%; 2009: 20%; 2010: 22%;
2011: 25%). The Tax Law has been applied when measuring the Group's
current tax payable as at 31 December 2010 and 2009.
9. DIRECTORS' REMUNERATION
Included in staff costs are amounts paid to directors for
services during the year:
2010 2009
(Restated)
HK$'000 HK$'000
Directors' remuneration
- Directors' emoluments - salaries 1,082 953
- Directors' emoluments - pension costs 13 12
-------
1,095 965
======= ==========
The directors are considered to be the key management of the
Group.
10. DIVIDEND
The directors do not recommend the payment of any dividend.
11. EARNINGS PER SHARE
Basic and diluted earnings per share are calculated by dividing
the profit attributable to owners of the parent by the weighted
average number of ordinary shares in issue during the years ended
31 December 2010 and 2009 respectively.
2010 2009
(Restated)
Profit attributable to owners of the
parent (HK$'000) 29,339 67,646
Weighted average number of shares in
issue 1,978,895,139 1,978,895,139
Basic and diluted earnings per share (HK cents)
1.48 3.42
============= =============
12. GOODWILL
2010 2009 2008
(Restated) (Restated)
Group HK$'000 HK$'000 HK$'000
Cost
At 1 January 83,675 176,084 176,084
Disposal of subsidiaries - (92,409) -
------- ---------- ----------
At 31 December 83,675 83,675 176,084
------- ---------- ----------
Impairment
At 1 January 69,507 161,916 161,916
Disposal of subsidiaries - (92,409) -
------- ---------- ----------
At 31 December 69,507 69,507 161,916
Carrying values
At 31 December 14,168 14,168 14,168
======= ========== ==========
At 1 January 14,168 14,168 14,168
======= ========== ==========
For the purpose of impairment testing, goodwill arising from an
acquisition is allocated to individual cash generating units
("CGUs") that are expected to benefit from the business
combination. At the balance sheet date, the carrying value of
goodwill (net of accumulated impairment losses) is allocated to the
following CGUs.
2010 2009 2008
(Restated) (Restated)
HK$'000 HK$'000 HK$'000
Terminal services 14,168 14,168 14,168
======= ========== ==========
During the year ended 31 December 2010, the directors of the
Group determined that there is no further impairment (2009: HK$nil)
of any goodwill of its CGUs.
The recoverable amount of the terminal services CGU has been
determined based on a value in use calculation. That calculation
uses cash flow projections based on financial budgets approved by
management covering a five-year period, and a discount rate of 10%
(2009: 10%). The key assumptions for the value in use calculations
relate to the estimation of cash inflows/outflows which include
budgeted sales and gross margin; such estimation is based on the
unit's past performance and management's expectations for the
market development. Management believes that any reasonably
possible change in any of these assumptions would not cause the
aggregate carrying amount of the terminal services unit to exceed
the aggregate recoverable amount of that unit.
13. PROPERTY, PLANT AND EQUIPMENT
Furniture,
fixtures Oil
Land and Plant and and storage Motor Construction
buildings machinery equipment tanks Vessels vehicles in progress Total
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Cost
At 1 January 2008
(Restated) 192,719 225,609 71,689 1,334 16,389 7,081 7,171 521,992
Reclassification 69 1,064 (501) - - (632) - -
Additions 10,121 6,005 300 - 2,498 463 4,995 24,382
Disposals (208) - (31) - - - - (239)
Transfer - 7,439 - - - - (7,439) -
Exchange
differences 20,852 3,608 (840) - (1) 277 247 24,143
At 31 December
2008 and 1
January 2009
(Restated) 223,553 243,725 70,617 1,334 18,886 7,189 4,974 570,278
Additions 385 32,308 620 - 9,506 885 10,403 54,107
Disposals - - (70) (1,334) (2,502) (23) - (3,929)
Disposals of
subsidiaries (48,170) (125,134) (52,392) - - (1,722) - (227,418)
Transfer 15 - - - - - (15) -
Exchange
differences 96 131 - - 45 - - 272
At 31 December
2009 and 1
January 2010
(Restated) 175,879 151,030 18,775 - 25,935 6,329 15,362 393,310
Additions 2,440 13,644 476 - 12,374 - 15,967 44,901
Disposals - (20,439) (10) - (2,399) - - (22,848)
Transfer 15,061 - - - - (15,061) -
Exchange
differences 7,011 6,365 147 - - 249 624 14,396
At 31 December
2010 200,391 150,600 19,388 - 35,910 6,578 16,892 429,759
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2010
(Expressed in Hong Kong dollars)
13. PROPERTY, PLANT AND EQUIPMENT
Furniture,
fixtures Oil
Land and Plant and and storage Motor Construction
buildings machinery equipment tanks Vessels vehicles in progress Total
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Depreciation
At 1 January 2008
(Restated) 83,239 149,111 61,863 100 6,537 5,327 154 306,331
Reclassification (671) 971 (100) - - (200) - -
Charge for the
year 4,864 5,427 1,095 - 1,642 447 - 13,475
Disposals (208) - (8) - - - - (216)
Exchange
differences 14,277 (817) (1,519) - (8) 130 (154) 11,909
At 31 December
2008 and 1
January 2009
(Restated) 101,501 154,692 61,331 100 8,171 5,704 - 331,499
Charge for the
year 4,733 5,648 1,156 - 1,876 327 - 13,740
Disposals - - (15) (100) (170) (23) - (308)
Disposals of
subsidiaries (48,170) (125,134) (52,386) - - (1,722) - (227,412)
Exchange
differences 83 122 - - 15 - - 220
At 31 December
2009 and 1
January 2010
(Restated) 58,147 35,328 10,086 - 9,892 4,286 - 117,739
Charge for the
year 5,754 9,218 1,178 - 3,214 333 - 19,697
Disposals - (8,468) - - (240) - - (8,708)
Impairment loss
recognised in
profit or loss - - 4,588 - - - - 4,588
Exchange
differences 2,268 1,576 103 - - 188 - 4,135
At 31 December
2010 66,169 37,654 15,955 - 12,866 4,807 - 137,451
Carrying values
At 31 December
2010 134,222 112,946 3,433 - 23,044 1,771 16,892 292,308
At 31 December
2009 117,732 115,702 8,689 - 16,043 2,043 15,362 275,571
At 31 December
2008 122,052 89,033 9,286 1,234 10,715 1,485 4,974 238,779
Note: Of the depreciation charge for the year, HK$16,292,000
(2009: HK$8,511,000) is included in cost of sales and HK$3,405,000
(2009: HK$5,229,000) is included in administrative expenses in the
consolidated income statement.
The net book values of property, plant and equipment held under
finance leases are as follows:
2010 2009 2008
(Restated) (Restated)
HK$'000 HK$'000 HK$'000
Land and buildings 134,222 117,732 122,052
Plant and machinery 27,136 24,517 14,291
Motor vehicles 1,031 1,242 503
------- ---------- ----------
162,389 143,491 136,846
======= ========== ==========
At 31 December 2010, the carrying values of land and buildings,
plant and machinery and furniture, fixtures and equipment are
further analysed as follows:
Terminal Others Total
HK$'000 HK$'000 HK$'000
Land
- short lease 15,946 - 15,946
- unspecified leases 10,682 - 10,682
-------- ------- -------
26,628 - 26,628
Buildings 107,594 - 107,594
-------- ------- -------
Land and buildings 134,222 - 134,222
======== ======= =======
Plant and machinery 108,683 4,263 112,946
======== ======= =======
Furniture, fixtures and equipment 1,147 2,286 3,433
======== ======= =======
The Group has obtained land use right and real estates
certificates on the terminal's land under short leases from the
local land authority. Land with a value of approximately
HK$10,682,000 held under unspecified leases of the terminal is land
held for industrial use for which the relevant land use right
certificate has not been obtained and thus the term of the lease
has yet to be agreed.
Under the law of the PRC, land held for industrial use and the
buildings without building ownership certificates can only be used
for identified industrial purposes. The Group has not obtained any
building ownership certificates in respect of the buildings of the
Group. The Group cannot legally sell or mortgage such properties
until the relevant land taxes have been paid to the local land
authority. However there is no binding agreement for the taxes to
be paid.
14. INVESTMENTS IN SUBSIDIARIES
2010 2009 2008
(Restated) (Restated)
Company HK$'000 HK$'000 HK$'000
Unlisted shares, at cost
At 1 January 470,818 432,548 432,548
Exchange differences (17,288) 38,270 -
--------- ---------- ----------
At 31 December 453,530 470,818 432,548
Impairment
At 1 January 243,521 287,714 245,536
Charge for the year - - 42,178
Impairment loss reversed in
income statement (187,650) (69,652) -
Exchange differences (8,943) 25,459 -
--------- ---------- ----------
At 31 December 46,928 243,521 287,714
--------- ---------- ----------
Carrying values
At 31 December 406,602 227,297 144,834
========= ========== ==========
At 1 January 227,297 144,834 187,012
========= ========== ==========
This impairment loss reversal relates to the container and
terminal business.
At 31 December 2010, the Company held 100% of the ordinary
shares of Yinggao Investments Limited, a company incorporated in
the British Virgin Islands ("BVI"), whose principal activity was
that of an investment holding company. Yinggao Investments Limited
had the following subsidiary undertakings:
Equity interests
attributable Principal Place of
Name to the Group activities incorporation
2010 2009
Yinggao Providing
Consultants management
Limited * 100% 100% services BVI
Yinggao
International
Limited (#) 100% 100% Investment holding BVI
Sub-letting of
Sanko Mineral yachts, ships
Limited 100% 100% and vessels BVI
Providing
logistics and
Yinggao Shipping related
(H.K.) Limited 100% 100% services Hong Kong
Providing
logistics and
Yinggao Shipping related
Limited * 100% 100% services Hong Kong
Yinggao Ship
Chartering Barge hiring and
Limited 100% 100% agency services Hong Kong
Yinggao
Resources Trading of non
Limited 100% - ferrous metal Hong Kong
Yinggao Petro
Limited 100% - Dormant Hong Kong
Yinggao Ship
Investments
Limited 100% - Dormant Hong Kong
Arko Terminal
Limited ("ATL") Republic of
* 100% 100% Investment holding Seychelles
Investing in
and operation
of a terminal
Keen Chance and providing
Terminal (GZ) logistics People's Republic
Limited ("KCT") 40% 40% services of China
Fujian Sanko People's Republic
Mining Limited 70% 70% Dormant of China
Details of subsidiaries disposed of in the year are set out in
note 15.
* Directly held by Yinggao Investments Limited. All other
subsidiaries are indirectly held.
(#) During the year, the Group has changed the name of this
subsidiary from Yinggao Pacific Limited to Yinggao International
Limited on 17 March 2010.
The 40% equity interest in KCT previously held by Keen Lloyd
Energy Limited ("KLEL"), a subsidiary of Keen Lloyd Holdings
Limited ("KLHL"), was transferred to ATL. The transfer had been
submitted for registration to the relevant PRC authorities.
Pursuant to an agreement dated 5 April 2002 entered into between
KLEL and MEDCL, (a shareholder of KCT which held a 30% equity
interest in KCT), MEDCL agreed to vote in accordance with the
instructions of KLEL at board meetings in view of its indebtedness
to KLEL, for an approximate sum of RMB78 million (equivalent to
HK$9.4 million), and KLEL intended to convert the outstanding loan
into registered capital of KCT.
On 22 April 2003, KLEL entered into a shareholder agreement with
MEDCL and Harbour Economic Development Company Limited ("HEDCL"),
another shareholder in KCT, whereby all parties agreed that MEDCL
has unconditionally transferred the authority empowered to its
directors representative (including their rights and obligations)
to KLEL until KLEL transferred the 40% equity interests in KCL to
ATL to reiterate the aforesaid agreement dated 5 April 2002.
On 16 May 2003, a supplemental agreement was entered into
between ATL, KLEL, MEDCL and HEDCL by which all parties agreed that
the above authority transferred to KLEL would be vested in ATL
after KLEL completed the transfer of equity interests in KCT to
ATL.
In accordance with the terms and conditions set out in the above
agreements, KLEL effectively controls the board of KCT and this
arrangement has been confirmed by the shareholders of KCT. In 2002,
a Hong Kong lawyer expressed his view that KCT is a subsidiary of
KLEL under Hong Kong Company Law. Control of KLEL has been
transferred to ATL and therefore in the opinion of the directors,
KCT is a subsidiary of ATL under the Companies Act 2006.
KCT will be a legal subsidiary of ATL immediately upon the
registration of the transfer of the 40% of equity in KCT from KLEL
to ATL.
15. DISPOSALS of subsidiarIES
For the year ended 31 December 2010
On 28 June 2010, the Group disposed of its 100% equity interest
in Yinggao Energy Limited ("YEL") to Winko Foundation Limited
("WFL"), a wholly owned subsidiary of KLHL, at a consideration of
HK$1.
The net assets of YEL as at the disposal date was HK$nil and
therefore, gain on disposal of HK$1 was recognised in the
consolidated income statement for the year. Net cash inflow arising
on the disposal of YEL was HK$1.
For the year ended 31 December 2009
On 4 September 2009, the Group disposed of its 100% equity
interest in Long Prosperity Industrial Limited ("LPIL") to WFL at a
consideration of HK$8.
On 23 March 2009, the Group disposed of its 100% equity interest
in Arko Satellite Limited ("ASL") to a third party at a
consideration of HK$10,000.
In March 2009, the business licence of Arko Silicon (Hubei)
Limited ("ASHL") was de-registered by the PRC Business Bureau. The
Group has therefore written-off its 100% interests in ASHL.
The consolidated net liabilities of LPIL and its subsidiary
(i.e. Changzhou Power Development Company Limited), net assets of
ASL and net assets of ASHL disposed of were as follows:
LPIL and
its
subsidiary ASL ASHL Total
(Restated) (Restated) (Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000
Property, plant and
equipment - - 6 6
Other receivables 170 - - 170
Cash and cash
equivalents 23 - 2 25
Trade and other
payables (9,997) - - (9,997)
Bank loan (14,790) - - (14,790)
Loans from fellow
investors (531) - - (531)
---------- ---------- ---------- ----------
(25,125) - 8 (25,117)
Minority interest (29,621) - - (29,621)
Exchange loss
realised 3,629 - - 3,629
---------- ---------- ---------- ----------
(51,117) - 8 (51,109)
Gain/(loss) on
disposals 51,117 10 (8) 51,119
---------- ---------- ---------- ----------
Total consideration - 10 - 10
========== ========== ========== ==========
Net cash
inflow/(outflow)
arising on disposals:
Cash consideration
received - 10 - 10
Cash and cash
equivalents
disposed of (23) - (2) (25)
---------- ---------- ---------- ----------
(23) 10 (2) (15)
========== ========== ========== ==========
16. AVAILABLE-FOR-SALE INVESTMENT
2010 2009 2008
(Restated) (Restated)
HK$'000 HK$'000 HK$'000
Group
Unlisted in the PRC - - 94
======= ========== ==========
The above investment represents 20% of the ordinary shares in a
company incorporated in the PRC of China, Guangzhou Tonglai
Shipping Agents Company Limited, at consideration of RMB100,000
(approximately HK$94,000). The associate is principally engaged in
provision of logistics and related services. It is not treated as
an investment in associate on the ground of its immaterial amount.
The investment was disposed of at book value during the year ended
31 December 2009.
17. INVENTORIES
Inventories represent consumables. There was no significant
difference between the replacement cost and the value shown in the
balance sheet.
18. TRADE AND OTHER RECEIVABLES
Group Company
2010 2009 2008 2010 2009 2008
(Restated) (Restated) (Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Trade
receivables 32,706 22,199 20,934 - - -
Less:
allowance
for doubtful
debts (699) (662) (501) - - -
-------- ----------- ----------- -------- ----------- -----------
32,007 21,537 20,433 - - -
Deposits 12,019 6,576 6,239 5 5 4
Prepayments 23,545 2,124 4,500 - - 8
Other
receivables 14,740 10,445 1,485 - - -
Amounts due
from fellow
investors of
a
subsidiary 23,450 22,661 22,425 - - -
Amounts due
from related
companies - - 7,255 - - -
-------- ----------- ----------- -------- ----------- -----------
105,761 63,343 62,337 5 5 12
======== =========== =========== ======== =========== ===========
Trade receivables are due within 30 days from the date of
billing. Further details on the Group's credit policy are set out
in note 26(a).
(a) Ageing analysis
The ageing analysis of the Group's trade receivables, net of
allowance for doubtful debts, that are neither individually nor
collectively considered to be impaired are as follows:
2010 2009 2008
(Restated) (Restated)
HK$'000 HK$'000 HK$'000
Neither past due nor impaired 19,694 10,228 7,570
------- ---------- ----------
Less than one month past due 8,275 4,987 5,875
1 to 3 months past due 3,946 5,627 6,888
>3 months past due 92 695 100
------- ---------- ----------
Total amounts past due 12,313 11,309 12,863
------- ---------- ----------
Total 32,007 21,537 20,433
======= ========== ==========
Receivables that were neither past due nor impaired relate to a
wide range of customers for whom there was no recent history of
default.
Receivables that were past due but not impaired relate to a
number of independent customers that have a good track record with
the Group. Based on past experience, management believes that no
impairment allowance is necessary in respect of these balances as
there has not been a significant change in credit quality and the
balances are considered fully recoverable. The Group does not hold
any collateral over these balances.
(b) Impairment of trade receivables
A provision is made for impairment losses in respect of trade
receivables unless the Group is satisfied that recovery of the
amount is remote, in which case the impairment loss is written off
against trade receivables directly (see note 2(h)).
The movement in the allowance for doubtful debts during the year
is as follows:
2010 2009 2008
(Restated) (Restated)
HK$'000 HK$'000 HK$'000
At 1 January 662 501 38
Impairment loss recognised
in the year 37 161 463
------- ---------- ----------
At 31 December 699 662 501
======= ========== ==========
Included in the allowance for doubtful debts are individually
impaired trade debtors with an aggregate balance of HK$699,000
(2009: HK$662,000; 2008: HKD501,000) where recovery is in doubt.
The Group does not hold any collateral over these balances.
19. CASH AND CASH EQUIVALENTS
Group Company
2010 2009 2008 2010 2009 2008
(Restated) (Restated) (Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Cash in
hand and
at bank 32,563 16,726 6,024 181 83 12
======== =========== =========== ======== =========== ===========
2010 2009 2008 2010 2009 2008
(Restated) (Restated) (Restated) (Restated)
Currency HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Hong Kong
Dollars 10,792 10,388 301 172 17 -
Chinese
Renminbi 7,547 6,272 5,711 - - -
British
Pound 9 66 12 9 66 12
United
States
Dollars 14,215 - - - - -
-------- ----------- ----------- -------- ----------- -----------
32,563 16,726 6,024 181 83 12
======== =========== =========== ======== =========== ===========
20. TRADE AND OTHER PAYABLES
Group Company
2010 2009 2008 2010 2009 2008
(Restated) (Restated) (Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Trade
payables 14,527 4,176 7,413 23 118 213
Other
payables
and sundry
creditors 25,211 21,704 10,985 - - -
Accruals 6,319 4,678 5,761 611 596 28
Amounts due
to related
companies 11,864 5,308 3,191 - - -
Amount due
to
immediate
holding
company 9,440 5,195 2,824 - - -
-------- ----------- ----------- -------- ----------- -----------
67,361 41,061 30,174 634 714 241
======== =========== =========== ======== =========== ===========
The average credit period on purchases of goods is 60 days. The
Group has financial risk management policies in place to ensure
that all payables are settled within the credit timeframe.
21. OBLIGATIONS UNDER FINANCE LEASES
2010 2009 2008
(Restated) (Restated)
Present Present Present
value of value of value of
the Total the Total the Total
minimum minimum minimum minimum minimum minimum
lease lease lease lease lease lease
payments payments payments payments payments payments
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Within 1
year 4,476 4,694 6,714 7,001 4,624 4,976
After 1 year
but within
5 years 1,289 1,316 3,155 3,341 2,545 2,750
-------- -------- -------- -------- -------- --------
5,765 6,010 9,869 10,342 7,169 7,726
======== ======== ========
Less : total
future
interest
expenses (245) (473) (557)
-------- -------- --------
Present
value of
lease
obligations 5,765 9,869 7,169
======== ======== ========
It is the Group's policy to lease certain of its motor vehicles
and fixtures and equipment under finance leases. The average lease
term is 2 years (2009: 2 years). Interest rate underlying all
obligations under finance leases are fixed at respective contract
dates ranging from 2.60% to 8.69% (2009: 2.60% to 6.15%).
22. BANK LOAN
2010 2009 2008
(Restated) (Restated)
Group HK$'000 HK$'000 HK$'000
Analysis of debt maturity:
Amounts payable and due within
two
to five years - - 14,790
======= ========== ==========
The bank loan at 31 December 2008 was unsecured, with interest
accruing at the fixed rate of 5.85% per annum. During the year
ended 31 December 2009, the Group disposed of its subsidiary
holding this bank loan to a related party as detailed in note
15.
23. LOANS FROM FELLOW INVESTORS IN SUBSIDIARIES
The amount represents advances from MEDCL of approximately
HK$6,946,000 (2009: HK$5,544,000; 2008: HK$5,544,000). The amount
advanced from MEDCL is unsecured, interest free and is not
repayable within next year. Another amount advanced from Walton
Enterprise Limited at 31 December 2008 of approximately HK$531,000
was assigned to a related party during the year ended 31 December
2009 upon disposal of subsidiaries of the Group as mentioned in
note 15.
24. deferred taxation
The components of the Group's deferred tax liabilities
recognised in the consolidated balance sheet and the movements
during the year are as follows:
Accumulated
temporary
difference
on tax Tax
depreciation losses Total
HK$'000 HK$'000 HK$'000
At 1 January 2008 and
31 December 2008 (Restated) - - -
Charged/(credited) to income
statement 1,148 (626) 522
------------ ------- -------
At 31 December 2009 (Restated) 1,148 (626) 522
Charged to income statement 1,987 626 2,613
------------ ------- -------
At 31 December 2010 3,135 - 3,135
============ ======= =======
No deferred tax is recognised on the unremitted earnings of the
overseas subsidiaries, as no dividend payments to the UK parent
company are expected to be made in the foreseeable future.
At 31 December 2010, the Group has unused tax losses of
HK$366,000 (2009: HK$5,360,000; 2008: HK$5,172,000) available for
offset against future profits. A deferred tax asset has been
recognised in respect of HK$nil (2009: HK$3,794,000; 2008: HK$nil)
of such losses. No deferred tax assets has been recognised in
respect of the remaining HK$366,000 (2009: HK$1,566,000; 2008:
HK$5,360,000) due to the unpredictability of future profit streams.
The unrecognised tax losses may be carried forward
indefinitely.
25. SHARE CAPITAL and capital management
(a) Share capital
2010 2009 and 2008
Number GBP'000 GBP'000
Authorised:
Ordinary
shares of
0.5p each 30,000,000,000 150,000 30,000,000,000 150,000
============== ========= ============== ==========
HK$'000 HK$'000
(Restated)
Equivalent to: 2,049,315 2,049,315
========= ==========
HK$'000 HK$'000
(Restated)
Allotted,
called up and
fully paid:
Ordinary
shares of
0.5p each 1,978,895,139 115,224 1,978,895,139 115,224
============== ========= ============== ==========
(b) Capital management
The Group's main objective when managing capital is to provide
returns to shareholders by ensuring the Group will continue to
trade in the foreseeable future. The Group also aims to maximise
its capital structure of debt and equity so as to minimise its cost
of capital.
The Group manages its capital with regard to the risks inherent
in the business and the sector within which it operates by
monitoring its gearing ratio on a regular basis.
The Group considers its capital to include share capital, share
premium, merger reserve, exchange reserve and accumulated
losses.
Net debt includes short and long-term borrowings net of cash and
cash equivalents.
2010 2009 2008
(Restated) (Restated)
Group HK$'000 HK$'000 HK$'000
Total debt 91,258 64,073 63,578
Less: Cash and cash
equivalents (32,563) (16,726) (6,024)
------- ---------- ----------
Net debt 58,695 47,347 57,554
------- ---------- ----------
Total equity 355,620 306,935 258,882
------- ---------- ----------
Debt to capital ratio 17% 15% 22%
======= ========== ==========
The Group does not have any externally imposed capital
requirements.
26. FINANCIAL RISK MANAGEMENT AND FAIR VALUES
The principal risks arising from the Group's financial
instruments are credit risk, liquidity risk, foreign currency risk
and interest rate risk. The directors review and agree policies for
managing each of these risks and these are summarised below. These
policies have been developed during the current accounting period
as a consequence of the Group's expansion.
(a) Credit risk
Credit risk is the potential financial loss resulting from the
failure of a customer or counterparty in setting their financial
and contractual obligations to the Group, as and when they fall
due.
The Group's primary exposure to credit risk arises through its
trade receivables. The management has a credit policy in place and
exposure to credit risk is monitored on an ongoing basis. Other
financial assets of the Group with exposure to credit risk include
cash and deposits that are placed with financial institutions which
are regulated.
At the balance sheet date, there was no significant
concentration of credit risk.
(b) Liquidity risk
The Group's policy is to regularly monitor current and expected
liquidity requirements to ensure that it maintains sufficient
reserves of cash and readily realisable marketable securities and
adequate committed lines of funding from major financial
institutions to meet its liquidity requirements in the short and
longer term.
The following table details the remaining contractual maturities
at the balance sheet date of the Group's financial liabilities,
which are based on contractual undiscounted cash flows (including
interest payments computed using contractual rates) and the
earliest date the Group can be required to pay:
2010 2009 (Restated)
Contractual undiscounted cash Contractual undiscounted cash
outflow outflow
-------------------------------------------- ---------------------------------------------
More More
than 1 than 1
Consolidated year year
balance Within but Consolidated Within but
sheet 1 year less More balance 1 year less More
carrying or on than 2 than sheet carrying or on than 2 than
amount Total demand years 5 years amount Total demand years 5 years
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Trade and other
payables 67,361 67,361 67,361 - - 41,061 41,061 41,061 - -
Obligations under
finance leases 5,765 6,010 4,694 1,316 - 9,869 10,342 7,001 3,341 -
Loans from fellow
investors in
subsidiaries 6,946 6,946 - - 6,946 5,544 5,544 - - 5,544
------- ------- ------- ------- ----------------- ----------- ------- ------- ------- ------------------
80,072 80,317 72,055 1,316 6,946 56,474 56,947 48,062 3,341 5,544
------- ------- ------- ------- ----------------- ----------- ------- ------- ------- ------------------
2010 2009 (Restated)
Contractual undiscounted cash Contractual undiscounted cash
outflow outflow
---------------------------------- -----------------------------------
More More
than 1 than 1
year year
Balance Within but Balance Within but
sheet 1 year less More sheet 1 year less More
carrying or on than 2 than 5 carrying or on than 2 than
amount Total demand years years amount Total demand years 5 years
Company HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Trade and
other
payables 634 634 634 - - 714 714 714 - -
Amounts
due to
subsidiaries 21,730 21,730 21,730 - - 19,463 19,463 19,463 - -
-------- ------- ------- ------- ------- -------- ------- ------- ------- --------
22,364 22,364 22,364 - - 20,177 20,177 20,177 - -
-------- ------- ------- ------- ------- -------- ------- ------- ------- --------
(c) Foreign currency risk
The Group's businesses include revenue and the expenses which
are principally conducted in Chinese Renminbi ("RMB") through its
subsidiaries in the PRC. Foreign currency risk mainly arises from
recognised assets and liabilities and net investments in foreign
operations.
The Group did not use any forward contract or currency borrowing
to hedge its exposure to foreign currency risk. However, the
directors will monitor the related foreign currency exposure
closely and will consider hedging significant foreign currency
exposures should the need arise in the future.
No entity in the Group has material assets and liabilities
denominated in currency other than the functional currency of that
entity, therefore no material foreign exchange risk arises.
(d) Interest rate risk
Group borrowings are held in local currencies. Current
interest-bearing loans are at fixed rates. The Group's policy for
future borrowings will be to take floating rates unless fixed rate
finance is available at particularly attractive rates.
The Group is exposed to fair value interest rate risk as its
loan borrowings and obligations under finance leases are at a fixed
rate. Borrowings from fellow investors in subsidiaries are on an
interest free basis. The Group monitors closely its interest rate
exposure and will consider hedging significant interest rate
exposure should the need arise in the future.
The Company incurs no significant interest rate risk as it does
not have any liability to bank or other borrowings alike.
(i) Interest rate profile
The interest rate risk profile of the Group's financial
liabilities for the years ended 31 December 2010 and 2009 are as
follows:
Fixed
rate
weighted
Fixed average
rate period
weighted for
average which
Fixed interest rate is
Total Interest-free rate rate at fixed
HK$'000 HK$'000 HK$'000 % Years
2010
Obligations
under
finance
leases 5,765 121 5,644 4 2
Loans from
fellow
investors in
subsidiaries 6,946 6,946 - - N/A
------- ------------- -------
12,711 7,067 5,644
======= ============= =======
2009
(Restated)
Obligations
under
finance
leases 9,869 156 9,713 4 2
Loans from
fellow
investors in
subsidiaries 5,544 5,544 - - N/A
------- ------------- -------
15,413 5,700 9,713
======= ============= =======
(ii) Sensitivity analysis
At 31 December 2010, it is estimated that a general
increase/decrease of 100 basis points in interest rates, with all
other variables held constant, would decrease/increase the Group's
profit and equity by approximately HK$56,000 (2009: HK$97,000).
(e) Categories of financial instruments
Group Company
2010 2009 2010 2009
(Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000
Financial assets
Loan and receivables
- Trade and other
receivables 82,216 61,219 5 5
- Amounts due from
subsidiaries - - 5,536 2,270
- Cash and cash
equivalents 32,563 16,726 181 83
-------- ----------- -------- -----------
114,779 77,945 5,722 2,358
======== =========== ======== ===========
Financial liabilities
Financial liabilities at
amortised cost
- Trade and other
payables 67,361 41,061 634 714
- Amounts due to
subsidiaries - - 21,730 19,463
- Obligations under
finance leases 5,765 9,869 - -
- Loans from fellow
investors in
subsidiaries 6,946 5,544 - -
-------- ----------- -------- -----------
80,072 56,474 22,364 20,177
======== =========== ======== ===========
(f) Fair values
The carrying amounts of the Group's financial instruments
carried at cost or amortised cost are not materially different from
their fair values as at 31 December 2010 and 2009.
27. RELATED PARTY TRANSACTIONS
(a) Transactions with key management personnel
All members of key management personnel are the directors of the
Company, and their remuneration is disclosed in note 9.
(b) Transactions with other related parties
Group
The Group had the following material transactions which were
carried out on an arm's length basis with related parties during
the year:
Nature Notes 2010 2009
(Restated)
HK$'000 HK$'000
Agency charge paid by the Group (i) - 509
Barging services cost paid by the
Group (i) - 24,296
Barging services income received by
the Group (i) - 28,832
Disposals of property, plant and equipment - 2,500
Gain on disposal of subsidiaries (ii) - 51,117
Purchases of goods by the Group 148,488 -
Forwarding services income received
by the Group 2,499 -
Lifting charges received by the Group 1,200 1,000
======= ==========
Notes:
(i) Services provided/received by companies with significant
influence. These ceased to be related parties of the Group on 18
September 2009.
(ii) Details of the disposal of subsidiaries to WFL during the
year are set out in note 15.
Balances with related parties are disclosed in the balance sheet
and in notes 18 and 20.
Company
The Company had the following material transactions which were
carried out on an arm's length basis with related parties during
the year:
2010 2009
(Restated)
HK$'000 HK$'000
Management fee income received from
a subsidiary 3,373 1,213
Management fee paid to a subsidiary 582 606
======= ==========
28. OPERATING LEASE COMMITMENTS
At 31 December 2010, the Group's total future minimum lease
payments under non-cancellable operating leases are payable as
follows:
2010 2009
(Restated)
HK$'000 HK$'000
Leases which expire:
- in the next year 1,714 1,399
- in the second to fifth years 1,393 3,018
------- ----------
3,107 4,417
======= ==========
The Group is the lessee in respect of a number of properties
held under operating leases. The leases typically run for an
initial period of 1 to 2 years, at the end of which period all
terms are renegotiated. None of the leases includes contingent
rentals.
29. CAPITAL COMMITMENTS
The Group's capital commitments outstanding at 31 December 2010
in respect of the acquisition of property, plant and equipment in
the financial statements are as follows:
2010 2009
(Restated)
HK$'000 HK$'000
Contracted, but not provided for 61,751 6,199
======= ==========
30. CONTINGENT LIABILITIES
On 9 November 1999, KCT gave a guarantee for RMB18 million
(equivalent to approximately HK$2.1 million) in favour of Nangang
Rural Credit Co-operation Bank for banking facilities granted to
MEDCL, a fellow investor in KCT, secured over its equity interests
in KCT. MEDCL was unable to repay the outstanding loan.
On 27 September 2001, the Guangzhou Law Court delivered an order
and noticed that the guarantee above was invalid and MEDCL's equity
interest in KCT was frozen.
Based on legal advice, the equity interests had no material
impact on the operations of KCT and the directors consider that no
provision is required.
KCT maintains that the guarantee given was invalid on the
following grounds:
(i) such guarantee did not have approval from the board of
directors of KCT; and
(ii) in accordance with the law of the People's Republic of
China, the board of directors and the management of KCT cannot give
KCT's properties for guarantee to its shareholder.
Furthermore, KLHL, the Company's parent company, has indemnified
the Group against any loss KCT will suffer should the guarantee be
enforceable.
Accordingly, the directors are of the opinion that no provision
should be made in the financial statements for any possible claim
from the bank in respect of the litigation.
Save as disclosed above, the Group does not have any material
contingent liabilities as at balance sheet date.
31. ULTIMATE CONTROLLING PARTY
The directors consider that Chin Dynasty Foundation Limited
("CDFL"), a company incorporated in the British Virgin Islands is
the ultimate holding company. CDFL is controlled by the Chin
Dynasty Fund. No group financial statements for CDFL are
published.
The Chin Dynasty Fund is a discretionary trust where Mr. Qin
Shun Chao is the settler. Members of Mr. Qin's family are the
potential beneficiaries of the trust.
The Company's immediate parent company is Keen Lloyd Holdings
Limited, a company incorporated in the British Virgin Islands.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of the
Company will be held at 10:30a.m.on Wednesday, 30 June 2011 at the
Registered Office for the purpose of transacting the following
business:
ORDINARY BUSINESS
1. To receive and adopt the directors' report and financial
statements for the year ended 31 December 2010.
2. To re-elect LEUNG Suk Ching, Angela as a director of the
Company.
3. To re-elect FENG Yue Ying as a director of the Company.
4. To re-elect CHUN Yuet Ming, Jessica as a director of the
Company.
5. To re-elect LIU Sheng Rong as an independent non-executive
director of the Company.
6. To re-elect David Thomas as an independent non-executive
director of the Company.
7. To re-appoint Baker Tilly UK Audit LLP, Chartered Accountants
as auditors of the Company to hold office until the next General
Meeting at which financial statements are laid before the Company
and that their remuneration be fixed by the directors.
8. THAT, pursuant to Section 551 of the Companies Act 2006 (the
"Act"), the Directors be hereby generally and unconditionally
authorised to exercise all powers of the Company to allot equity
securities (as defined in Section 560 of the Act) up to an
aggregate nominal amount of GBP3,000,000: provided that this
authority shall expire on the date of the next annual general
meeting of the Company following the date of the passing of this
resolution, except that the Company may before such expiry make an
offer or agreement which would or might require equity securities
to be allotted after such expiry and the Directors may allot equity
securities in pursuance of any such offer or agreement as if the
authority conferred by this resolution had not expired.
SPECIAL BUSINESS
As special business, to consider and it thought fit pass, the
following resolution:
9. THAT, subject to the passing of Resolution 8, pursuant to
Section 570 of the Act, the Directors be hereby generally and
unconditionally authorised to exercise all powers of the Company to
allot equity securities (as defined in Section 560 of the Act) as
if Section 561(1) of the Act did not apply to any such allotment
provided that this power shall be limited to:
(i) the allotment of equity securities in connection with any
invitation made to the holders of Ordinary Shares to subscribe by
way of rights in the same proportions (as nearly as may be) to
their respective holdings, but subject to such exclusions or other
arrangements as the Directors consider necessary or expedient in
connection with Ordinary Shares representing fractional entitlement
to shares, or on account of either legal or practical problems
arising in connection with the laws of any territory or of the
requirements of any applicable regulatory body or stock exchange in
any territory; and
(ii) to the allotment (otherwise than pursuant to sub-paragraph
(i) of this Resolution) of equity securities up to an aggregate
nominal amount of GBP3,000,000;
and shall expire at the conclusion of the next annual general
meeting of the Company or, if earlier, fifteen months from the date
of the passing of this resolution, save that the Company may at any
time before such expiry make an offer or agreement which would or
might require equity securities to be allotted for cash after such
expiry and the Directors may allot equity securities in pursuance
of such an offer or agreement as if the power conferred hereby had
not expired.
By order of the Board
CHAN Kit Ching
Company Secretary
31 May 2011
Registered office:
25 Farringdon Street
London EC4A 4AB
Notes:
a. A shareholder entitled to attend and vote at the meeting may
appoint one or more proxies to attend and, on a poll, vote on his
behalf. A proxy need not be a member of the Company.
b. A form of proxy is enclosed with this notice for your use in
respect of the business set out above. To be effective, the form of
proxy together with the power of attorney or other authority (if
any) under which it is signed (or a notary certified or an office
copy of such power of authority) must be lodged at the Company's
Registrars, PXS 34 Beckenham Road, Beckenham BR3 4TU at least
forty-eight hours before the time appointed for the meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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