The Group also uses the following estimates and assumptions that
do not have a significant risk of causing a material adjustment to
the carrying amount of assets and liabilities within the next
financial year. These are:
Allowance for trade and other receivables
Management reviews its loans and receivables for objective
evidence of impairment at least quarterly. Significant financial
difficulties of the debtor, the probability that the debtor will
enter bankruptcy, and default or significant delay in payments are
considered objective evidence that a receivable is impaired. In
determining this, management makes judgment as to whether there is
observable data indicating that there has been a significant change
in the payment ability of the debtor, or whether there have been
significant changes with adverse effect in the technological,
market, economic or legal environment in which the debtor operates
in.
Where there is objective evidence of impairment, management
makes judgment as to whether impairment in value should be recorded
in the income statement. In determining this, management uses
estimates based on historical loss experience for assets with
similar credit risk characteristics. The methodology and
assumptions used for estimating both the amount and timing of
future cash flows are reviewed regularly to reduce any differences
between the estimated loss and actual loss experience.
The allowance policy for doubtful debts of the Group is based on
the ageing analysis and management's ongoing evaluation of the
recoverability of the outstanding receivables. A considerable
amount of judgment is required in assessing the ultimate
realisation of these receivables, including the assessment of the
creditworthiness and the past collection history of each customer.
If the financial conditions of these customers were to deteriorate,
resulting in an impairment of their ability to make payments,
additional allowances may be required.
3 Capital risk management
The Group defines capital as the total equity of the Group. The
Group's objectives when managing capital are to safeguard the
Group's ability to continue as a going concern, to maintain a
strong credit rating and healthy capital ratios in order to provide
returns for shareholders and benefits for other stakeholders, and
to maintain an optimal capital structure to reduce the cost of
capital.
The capital structure of the Group consists of equity
attributable to equity holders as disclosed in the statement of
financial position. The Group manages its capital structure and
makes adjustments to it, in light of changes in economic
conditions. To maintain or adjust the capital structure, the Group
may adjust the capital to shareholders or issue new shares. Changes
were made in the period as disclosed in the statement of changes in
equity. The Group monitors capital using a gearing ratio and debt
to equity ratio:
3.1 Gearing ratio
The gearing ratio is defined as and calculated by the Group as
total of interest-bearing borrowings to the owners' equity. Equity
includes equity attributable to the equity holders of the Group.
During the year ended 31 December 2013, the Group's strategy was to
maintain the gearing ratio at a moderate level in order to secure
access to finance at a reasonable cost. The gearing ratios as at
the financial position dates were as follows:
Group As at As at
31 December 31 December
2013 2012
Total interest bearing borrowings RMB'000 RMB'000
Short term loan 5,450 13,500
Long term loan 9,000 -
14,450 13,500
============= =============
Total equity 191,756 131,255
============= =============
Gearing ratio (%) 8% 10%
============= =============
3.1 Debt to equity ratio
The debt to equity ratio is defined and calculated by the Group
as total debt (total liabilities) to the owner's equity as at 31
December 2013 as follows:
Group As at As at
31 December 31 December
2013 2012
RMB'000 RMB'000
Total debts 40,130 45,720
------------- -------------
Total equity 191,756 131,255
------------- -------------
Debt to equity ratio (%) 21% 35%
============= =============
4. Turnover
Group As at As at
31 December 31 December
2013 2012
RMB'000 RMB'000
Sale of goods 250,854 218,309
============= =============
5. Operating segments
For the purpose of IFRS 8, the chief operating decision-maker
("CODM"), who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the
Board of Directors.
The Group is engaged in technology R&D and production and
sale of solar-powered and sale of water heater system. The Group's
revenue and profit before taxation were all derived from its
principal activity.
Revenues from all periods were derived from external customers
based in the PRC. The Group's operations are principally based in
China and its assets and liabilities related to this single
business segment.
6. Investments
Company As at As at
31 December 31 December
2013 2012
RMB'000 RMB'000
Investments in subsidiary 12,613 12,613
============= =============
7. Profit from operations
Profit from operations in the period under review has been
arrived after charging the following amounts:
Year ended Year ended
31 December 31 December
2013 2012
RMB'000 RMB'000
Inventory recognised as expense 141,419 117,857
Foreign exchange (profit)/loss 161 (6)
Depreciation of property, plant and
equipment included in:
- Cost of goods sold 3,595 3,510
- Operating expenses 553 343
---------------
4,148 3,853
=============== ============
8. Staff costs
Year ended Year ended
31 December
31 December 2013 2012
RMB'000 RMB'000
Staff costs during the year amounted
to:
Wages and salaries 8,894 9,474
Social security 1,837 1,872
Welfare 116 46
------------------- ------------
10,847 11,392
=================== ============
Included within staff costs are
Executive Directors' emoluments
amounting to:
Total emoluments 831 851
Other benefits 37 38
------------------- ------------
868 889
=================== ============
Average number of persons employed by the Group (including
Executive Directors) during the year: 260 (2012: 299)
9. Finance costs
Year ended Year ended
31 December 31 December
2013 2012
RMB'000 RMB'000
Interest expenses 1,568 1,014
Bank charges 33 109
------------- ---------------
1,601 1,123
============= ===============
10. Taxation
10.1 The major components of the income tax expense are as
follows:
Year ended Year ended
31 December
31 December 2013 2012
RMB'000 RMB'000
Current income tax for the year 17,891 17,857
Income tax expense recognised in the
income statement 17,891 17,857
================= ============
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