TIDMCTEK
RNS Number : 4692H
China Chaintek United Co., Ltd
16 March 2015
Press Release 16 March 2015
China Chaintek United Co., Ltd
("Chaintek", the "Company" or the "Group")
Final Results
Chaintek (AIM:CTEK), the provider of logistics services to
manufacturers of consumer goods in China, today announces its final
results for the year ended 31 December 2014 (the "period").
Financial Highlights
-- Revenue up 3.7% to RMB 363.7 million (2013: RMB 350.6 million)
-- Profit before tax up 1.0% to RMB 287.4 million (2013: RMB 284.9
million)
-- EBITDA up 0.9% to RMB 292.9 million (2013: RMB 290.5 million)
-- Pre-tax profit margin of 79.0% (2013: 81.3%)
-- Cash position of RMB 472.2 million (2013: RMB 319.3 million)
-- A maintained final dividend of 4 pence per share is now proposed,
which will be offered by way of scrip dividend only, giving
a total dividend of 6 pence per share for this financial year
-- Purchase of a transit warehouse for the logistics services
division for a total cost of RMB 75.8 million
Commenting on the final results, Shufang Zhuang, Executive
Director and the Group's founder, said: "During the past financial
year, China Chaintek has retained its leading position in logistics
services. Group revenues and profit before tax were slightly ahead
of last year. This was achieved against a background of slower
economic growth in China. In view of this, I am pleased with the
continued progress that China Chaintek has made in 2014, and the
Group remains focused on expanding capacity and growing its
customer base.
"Despite the slowdown in the growth of the China economy and the
changes being implemented by our manufacturing customers, the
Company remains focused on expanding capacity. The new transit
warehouse facility will maintain the high standards of service that
our customers expect. In the short term, changes to shoe and
apparel manufacturers business model and reduced transport charges
will have a significant negative impact on 2015 results and the
Board considers that revenues for the current year are likely to be
approximately 35% down on 2014 and profit before tax approximately
50% lower than that for 2014.
"Our strategy for growth in logistic and inventory solutions,
coupled with e-commerce opportunities, remains unchanged. The delay
in the new logistics park is frustrating for all shareholders. But
China Chaintek is meeting the challenges caused by the delay. I
remain confident that the Company is building a solid foundation to
continue the strong growth desired by management and shareholders.
We are a profitable cash generative company with very substantial
cash reserves."
- Ends -
For further information:
China Chaintek United Co., Ltd www.chaintek-united-ir.com
Derrick Wong (Finance Director) Tel: +65 9227 8485
Tel: +86 159 8597 3034
Nominated Advisor and Broker
ZAI Corporate Finance Limited
Peter Trevelyan-Clark / Wei Wang Tel: +44 (0) 20 7060 2220
(Nomad)
Steven Baird (Broker)
Abchurch Communications Limited
Henry Harrison-Topham / Quincy Tel: +44 (0) 20 7398 7702
Allan
chaintek@abchurch-group.com www.abchurch-group.com
Dividend Timetable
Ex-dividend date 23 April 2015
Dividend record date 24 April 2015
Annual General Meeting 8 May 2015
Dividend payment date 20 May 2015
----------------------- --------------
The financial statements for the year ended 31 December 2014
will shortly be available on the Company's website at
www.chaintek-united-ir.com
Chairman's Statement
It is with pleasure that I present to you the report and
consolidated financial statements of China Chaintek United Co., Ltd
for the year ended 31 December 2014, the third since the Group was
admitted to trading on the AIM market in August 2012.
Performance
Revenues increased from RMB 350.7 million to RMB 363.6 million
and profit before tax from RMB 284.9 million to RMB 287.4 million.
As a highly cash generative business, the Company retained a strong
year end cash position of RMB 472.1 million after payments in
respect of the new transit warehouse facility of RMB 60
million.
Strategy
The Strategic Report, set out after the Chief Executive's
Review, is designed to assess and inform you about your Company's
approach to its business, business risks, and strategy for the
development of the business and management style. In addition to
what is in the Report, your Board wishes to emphasise its belief in
the logistics sector in China in which the Company is serving.
Consumerism and the accelerating use of e-commerce in China are key
to the future growth of the Company. Investing now in greater
logistical supply capacity and, over time, in the information
technology systems that support it is crucial.
Outlook
E-commerce in China proliferates throughout many supply sectors
and during 2014 statistical evidence pointed to the activity
surpassing that of the United States by volume. This trend is good
for your Company. The far-reaching economic and systemic reforms
announced following the 2014 third plenum of the General Committee
of the Party are enhancing the growth of consumerism generated by
the increasing use of mobile telephony by an aspirational
generation for ordering goods and services online. It is these
trends that are driving the growth of the historically fragmented
logistics sector which is a good omen for the growth of Chaintek's
business. However, the macro economic slowdown in the economy is
resulting in structural changes which are impacting both
manufacturers and, in the near term, Chaintek as noted in the Chief
Executive's Review.
Revenue and Dividends
On 22 September 2014, the Group announced an interim scrip
dividend of 2 pence net per share with a 1 pence per share cash
alternative, in respect of the six month period ended 30 June 2014,
paid on 17 November 2014 to shareholders.
A maintained final dividend of 4 pence per share is now
proposed, which will be by way of scrip dividend only, giving a
total dividend of 6 pence per share for this financial year.
Board Governance
The Board meets quarterly with up to two meetings per annum in
China. It has also met on an ad-hoc basis on three occasions during
the period. Through its Nomination Committee the Board carries out
evaluations of each of its Directors, Chairman, the Board itself
and its committees. The Board also reviews on an ongoing basis each
of its service providers, their scope, cost and quality of service.
Regular liaison is maintained between the Board's Audit Committee
and the Company's Auditors.
Annual General Meeting
This year's Annual General Meeting will be held at the Company's
Head Office at 16.00 hours Beijing time (09.00 hours BST) on 8 May
2015. If you have any detailed questions, you may wish to raise
these in advance with the Company Secretary. Shareholders who
cannot attend the Annual General Meeting in person are encouraged
to use their proxy votes. Shareholders who hold their shares
through CREST are able to lodge their votes electronically.
William Knight
Non-Executive Chairman
16 March 2015
Chief Executive's Review
During the past financial year, China Chaintek has retained its
leading position in logistics services. Group revenues of RMB 363.6
million and profit before tax of RMB 287.3 million were slightly
ahead of last year. This was achieved against a background of
slower economic growth in China. In view of this, I am pleased with
the continued progress that China Chaintek has made in 2014, and
the Group remains focused on expanding capacity and growing its
customer base. The Group remains highly cash-generative with a
year-end cash position of RMB 472.1 million (2013: RMB 319.3
million) after payments in respect of the new transit warehouse
facility of RMB 60 million.
Logistics Services Division
This Division achieved a 3% increase in revenues. The Division
added six new customers, including Joeone, a Shanghai Stock
Exchange listed men's business and casual wear manufacturer, which
contributed approximately 2% to the Division's total revenues. The
Group has diversified the Division's customer base, notably into
the food and building materials industries which now comprise 23%
of the Division's revenues (22% in 2013). Shoes and apparel are an
unchanged 69% and other categories 8% of divisional revenue.
As announced on 9 December 2014, the Company has purchased
another transit warehouse for the logistics services division,
located near the Chaintek head office in Fujian Province and close
to a number of factories belonging to Chaintek's major customers.
This facility is expected over time to reduce the impact of
increasingly stringent daytime travel restrictions on larger
lorries used by the Company's third party transport carriers.
Operations at the new facility have commenced. In the longer term,
the facility should allow the Group to capture an anticipated
increase in demand from the market. It is also important in
ensuring the Company maintains the high service levels expected by
its clients.
Fuel costs in China during 2014 reduced by some 20%. This
impacts on the delivery costs charged to the manufacturing
customers, which during the current financial year will reduce by
10%, thereby reducing the revenue of the logistics division by the
same amount. In addition, the Group will incur some additional
costs in addressing such problems as more stringent traffic
controls.
Many of the major shoe and apparel manufacturers in Fujian
Province have traditionally operated on a business model of
producing large volumes sold over a lengthy period with promotions
and discounting as appropriate. This traditional model is unsuited
to a changing market requiring greater and more timely choice.
Accordingly, manufacturers are adapting their business model to one
which produces more innovative designs to meet customer demand and
capable of shorter production runs requiring timely and efficient
delivery. This process is being encouraged by Central Government.
During the period while manufacturers implement these changes, they
expect their volumes to fall significantly. This reduction in
volumes will directly impact the Division and we anticipate revenue
in 2015 from such customers will, taken with the affect of reduced
delivery costs, decline by approximately 35%. However, these
changes will ultimately result in an increased demand for
efficient, modern and cost effective logistical services. China
Chaintek already has the ability to meet such criteria and intends
to increase its capacity to cope with accelerated demand.
Inventory Solutions Business
This Division achieved a 7.3% increase in revenues, despite no
new distribution centre being added in the year. The Division
accounts for approximately 14% of Group revenues.
Inventory solutions customers are undertaking the same changes
as our logistics customers and we are anticipating a reduction of
approximately 20% in the Division's revenues in 2015.
New Logistics Park
The Board is most disappointed not to be able to report progress
in relation to the planned new Logistics Park over a parcel of land
in Cizao Town, Jinjiang City, Fujian Province, China. Prospective
development is based on the purchase of certain Land Use Rights
("LUR"), fully paid for during 2013 at a cost of RMB 273 million.
Payments were made to Fujian Jinjiang Industrial Park Development
and Construction Co., Ltd. ("LDC"), a land development company
established and owned by Local Government ("LDC"). The formal LUR
Certificate that is required before the Group is able to use the
land has still to be issued. Consequent to the delay in the issue
of the formal LUR Certificate, the Group has signed a supplementary
agreement with the LDC dated 6 March 2015. This agreement confirms
inter alia, that the LUR in respect of the parcel of land specified
in the initial purchase agreement is not now able to be obtained
from the LDC, that the LDC is seeking to locate an acceptable
alternate parcel of land for the Group and that the Group has the
right to request full payment of RMB 273 million from the LDC at
any time up to the date that a formal LUR Certificate is issued by
the LDC.
The Company is taking all practicable steps to progress a new
logistics park. In the interim, initiatives such as the recent
purchase of the additional transit warehouse help to maintain the
Company's position.
Outlook
Despite the slowdown in the growth of the China economy and the
changes being implemented by our manufacturing customers, the
Company remains focused on expanding capacity. The new transit
warehouse facility will maintain the high standards of service that
our customers expect.
In the light of the factors I have referred to above, the Board
considers that revenues for the current year are likely to be
approximately 35% down on 2014 and profits before tax approximately
50% lower than those for 2014.
Our strategy for growth in logistic and inventory solutions,
coupled with e-commerce opportunities, remains unchanged. The delay
in the new logistics park is frustrating for all shareholders. But
China Chaintek is meeting the challenges caused by the delay. I
remain confident that the Company is building a solid foundation to
continue the strong growth desired by management and shareholders.
We are a profitable cash generative company with very substantial
cash reserves. Finally, my thanks to the Company's management and
employees for their hard work.
Meijin Xu
Chief Executive Officer
16 March 2015
Strategic Report
The Strategic Report is used to inform shareholders and to help
them to assess how the Directors have performed their duty to
promote the success of the Company during the year under
review.
Strategy Objective and Operations of the Company
The Company was formed by Shufang Zhuang and Meijin Xu when they
created its operational subsidiary, Xingtai Logistics in 2000,
principally to provide domestic logistics services to fast moving
consumer goods manufacturers in Jinjiang City, Fujian Province,
where the Company's main business operations are headquartered.
Jinjiang City is a fast-growing and important light manufacturing
centre where approximately 70% of the entire production volume of
sports shoes and apparel in China is produced.
The Company operates through its two business divisions; its
Logistics Services and its Inventory Solutions Services Division.
The Logistics Services Division provides logistics connections
between the Group's manufacturer customer base and their retail
markets in the PRC using a network of eight independent transport
agents. Efficiencies are achieved for both the transport agents and
the manufacturers by consolidating the goods of several
manufacturers to be delivered to similar destinations at the same
time, thereby increasing the loading rate on the transport agents'
trucks and reducing the per unit transportation cost.
The Inventory Solutions Services Division provides inventory
storage and management services including sorting, packaging,
labelling and short term storage; an activity that began in 2010 in
response to customer needs. It should be noted that manufacturers
in China acknowledge that managing logistics and warehousing is not
only a complex but relatively costly element of the manufacturing
process and by providing these services to its customer base, your
Company is assisting them to reduce warehousing costs.
All the Group's logistics' customers are based in Fujian
Province, emphasising the importance of operating close to its
customer base and seven of the Group's top ten customers are now
listed in one or other of the stock exchanges of Hong Kong,
Singapore, the PRC and United States. The rapidly expanding
requirement for logistics, their supply and related inventory
services in China is being enhanced by Central Government
initiatives to promote a more efficient manufacturing sector.
Fair Review of the Business
Key Performance Indicators
Indicator 2011 2012 2013 2014
------------------------------- ----- ----- ----- -----
Revenue (RMB in million) 263 341 351 364
Gross Profit (RMB in million) 218 284 306 312
Profit before taxation (RMB
in million) 200 254 285 287
Net cash and cash equivalents
(RMB in million) 98 343 319 472
A comprehensive review of the Group's performance during the
year is given in the Chief Executive's Review and referred to in
the Chairman's Statement.
Principal Risks and Uncertainties
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework. The Group's risk management policies are established to
set out its overall business strategies, tolerance of risk and
general risk management philosophy. Risk management policies and
systems are reviewed regularly to reflect changes in market
conditions and the Group's activities.
Risks which the Group faces are given in Note 24 to the
consolidated financial statements.
The Board is disappointed not to be able to report any progress
in relation to its planned new Logistics Park over a parcel of land
in Cizao Town, Jinjiang City, Fujian Province, China. Prospective
development is based on the purchase of certain Land Use Rights
("LUR"), fully paid for during 2013 at a cost of RMB 273 million.
Payments were made to Fujian Jinjiang Industrial Park Development
and Construction Co., Ltd. ("LDC"), a land development company
established and owned by Local Government ("LDC"). The formal LUR
Certificate that is required before the Group is able to use the
land has still to be issued. Consequent to the delay in the issue
of the formal LUR Certificate, the Group has signed a supplementary
agreement with the LDC dated 6 March 2015. This agreement confirms
inter alia, that the LUR in respect of the parcel of land specified
in the initial purchase agreement is not now able to be obtained
from the LDC, that the LDC is seeking to locate an acceptable
alternate parcel of land for the Group and that the Group has the
right to request full payment of RMB 273 million from the LDC at
any time up to the date that a formal LUR Certificate is issued by
the LDC. The Board is of the view that the LDC will have the funds
available to make such repayment if requested. The Board is unable
to say when the formal LUR Certification process will be
completed.
People
People are a very important part of China Chaintek and its
ability to maintain the shared values that will enable the Company
to deliver shareholder value and excellent customer service.
To retain and develop its people, emphasis is placed on greater
employee involvement in delivering its vision through continual
training, employee feedbacks and dissemination of information
through regular employee update meetings.
Gender Representation
As at 16 March 2015, there were five male Directors and one
female Director on the Board. The Company's policy on gender is
detailed under the Nomination and Remuneration Committee section in
the Annual Report.
Social and Environmental Policies
Chaintek United believes that companies should act in a socially
responsible manner. Although the Company's priority at all times is
to act in the best interests of its customers, it recognises that,
increasingly, non-financial issues such as social environmental
factors have the potential to impact the share price as well as the
reputation of companies. Good practice, honesty and integrity at
all times are our stated aims and objectives.
Future Developments
The development of a new logistics park remains important to the
Company. Pending that development, the Group has purchased an
additional transit warehouse for the logistics services
division.
This additional facility, which is located near the China
Chaintek Head Office and within proximity of a number of factories
belonging to China Chaintek's major customers, became operational
in January 2015. The cost of this warehouse is RMB 75.8 million of
which RMB 60 million has already been paid to secure the
facility.
The Group remains focused on the planned strategy for growth and
construction of a new Logistics Park and the delay in land use
rights connected to this development is considered in more detail
in the section above.
Despite the delays, the Group believes that with its healthy
cash-generating financial position, capital expenditure can
continue to be financed from within internal financial
resources.
William Knight
Chairman
16 March 2015
Consolidated statement of financial position
As at 31 December 2014
(All amounts in RMB unless otherwise stated)
31 December 31 December
2014 2013
Note RMB RMB
Assets
Non-Current
Land use right prepayments 5 360,337,726 302,436,208
Property, plant and equipment 6 75,965,619 80,407,090
------------------------------- ----- -------------- ------------
436,303,345 382,843,298
Current
Land use right prepayments 5 2,098,482 669,911
Trade and other receivables 7 95,098,771 97,188,052
Cash and cash equivalents 8 472,166,608 319,283,433
------------------------------- ----- -------------- ------------
569,363,861 417,141,396
Total assets 1,005,667,206 799,984,694
=============================== ===== ============== ============
Equity and Liabilities
Capital and reserves
Share capital 9 382,249 357,254
Share premium 12 105,291,900 66,838,371
Merger reserve 10 (204,100) (204,100)
Statutory common reserve 11 5,000,000 5,000,000
Capital reserve 12 9,821,903 9,821,903
Warrant reserve 13 13,184,433 13,184,433
Retained earnings 847,400,679 678,183,830
------------------------------- ----- -------------- ------------
980,877,064 773,181,691
Liabilities
Current
Trade and other payables 14 11,477,171 11,733,085
Current tax payable 13,312,971 15,069,918
------------------------------- ----- -------------- ------------
Total liabilities 24,790,142 26,803,003
Total equity and liabilities 1,005,667,206 799,984,694
=============================== ===== ============== ============
Consolidated statement of comprehensive income
for the financial year ended 31 December 2014
(All amounts in RMB unless otherwise stated)
Year ended Year ended
31 December 31 December
2014 2013
Note RMB RMB
Revenue 15 363,665,980 350,625,538
Cost of sales (51,861,544) (44,702,868)
-------------------------------- ----- ------------- -------------
Gross profit 311,804,436 305,922,670
Other income 16 1,333,460 955,929
Distribution expenses (1,133,985) (642,892)
Administrative expenses (24,629,064) (21,327,814)
-------------------------------- ----- ------------- -------------
Profit before taxation 17 287,374,847 284,907,893
Income tax expense 18 (73,299,898) (72,518,637)
-------------------------------- ----- ------------- -------------
Profit for the year 214,074,949 212,389,256
Other comprehensive income:
Other comprehensive income (at
nil tax) - -
-------------------------------- ----- ------------- -------------
Total comprehensive income for
the year 214,074,949 212,389,256
================================ ===== ============= =============
Earnings per share (RMB)
- Basic 22 3.79 3.88
- Diluted 22 3.68 3.77
================================ ===== ============= =============
Consolidated statement of changes in equity
for the financial year ended 31 December 2014
(All amounts in RMB unless otherwise stated)
Statutory
Share Share Merger common Capital Warrant Retained
capital Premium reserve reserve reserve reserve earnings Total
RMB RMB RMB RMB RMB RMB RMB RMB
Balance as at 1
January 2013 357,254 66,838,371 (204,100) 5,000,000 9,821,903 13,184,433 465,794,574 560,792,435
Total
comprehensive
income for
the year
- Profit for
the year - - - - - - 212,389,256 212,398,256
---------------- -------- ------------ ---------- ---------- ---------- ----------- ------------- ------------
Balance as at
31 December
2014 357,254 66,838,371 (204,100) 5,000,000 9,821,903 13,184,433 678,183,830 773,181,691
Total
comprehensive
income for
the year
- Profit for
the year - - - - - 214,074,949 214,074,949
Transactions
with owners
recognised
directly in
equity
contributions
by and
distributions
to owners
- Dividends
(Note 23) 24,995 38,453,529 - - - - (44,858,100) (6,379,576)
Balance as at
31 December
2013 382,249 105,291,900 (204,100) 5,000,000 9,821,903 13,184,433 847,400,679 980,877,064
================ ======== ============ ========== ========== ========== =========== ============= ============
Consolidated statement of cash flows
for the financial year ended 31 December 2014
(All amounts in RMB unless otherwise stated)
Year ended Year ended
Note 31 December 31 December
2014 2013
RMB RMB
Cash Flows from Operating Activities
Profit before taxation 287,374,847 284,907,893
Adjustments for:
Amortisation of land use rights
prepayments 5 669,911 669,911
Depreciation of property, plant
and equipment 6 6,203,360 5,785,860
Loss (Gain) on disposal of property,
plant and equipment 17 84,223 (68,975)
Interest income 16 (1,333,460) (886,954)
Operating profit before working
capital changes 292,998,881 290,407,735
Changes in trade and other receivables 2,089,281 (4,727,362)
Changes in trade and other payables (255,914) 44,451
---------------------------------------- ----- -------------- ---------------
Cash generated from operations 294,832,248 285,724,824
Income tax paid (75,056,845) (71,735,071)
---------------------------------------- ----- -------------- ---------------
Net cash generated from operating
activities 219,775,403 213,989,753
Cash Flows from Investing Activities
Acquisition of property, plant
and equipment (1,870,612) (10,435,248)
Acquisition of land use rights (60,000,000) (221,000,000)
Proceeds from disposal of property,
plant and equipment 24,500 105,000
Interest received 1,333,460 886,954
---------------------------------------- ----- -------------- ---------------
Net cash used in investing activities (60,512,652) (230,443,294)
Cash Flows from Financing Activities
Repayment of advance from a
Shareholder - (6,975,275)
Dividends paid 23 (6,379,576) -
---------------------------------------- ----- -------------- ---------------
Net cash (used in) generated
from financing activities (6,379,576) (6,975,275)
Net (decrease) increase in cash
and cash equivalents 152,883,175 (23,428,816)
Cash and cash equivalents at
beginning of year 319,283,433 342,712,249
---------------------------------------- ----- -------------- ---------------
Cash and cash equivalents at
end of year 8 472,166,608 319,283,433
======================================== ===== ============== ===============
Notes to the final results announcement
for the financial year ended 31 December 2014
1 General information
The financial information for the years ended 31 December 2014
and 31 December 2013 contained in this announcement do not
constitute the Group's audited financial statements. The
comparative financial information is based on the audited Group
financial statements for the financial year ended 31 December 2013.
Those financial statements, upon which the auditors issued an
unqualified audit opinion, are available on the Company's website.
The financial information for the year ended 31 December 2014 has
been extracted from the Group's audited financial statements which
will be available on the Company's website in due course and which
are expected to be posted to shareholders on or around 23 March
2015. The auditors have issued an audit report on the Group's
financial statements for the year ended 31 December 2014 which
contains an unqualified audit opinion but includes an emphasis of
matter paragraph relating to the significant uncertainty (which is
explained in the Chief Executives Review and Note 5 to this
financial information) whether or not a land use rights contract
and supplementary agreement will be completed by the certification
by Local Government of an acceptable alternative parcel of land
that will available for use by the Group or the Group will request
a full refund of the land use rights prepayment made.
China Chaintek United Co., Ltd. ("China Chaintek" or the
"Company") was incorporated as an exempted limited liability
company in the Cayman Islands on 13 April 2011. The Company's
registered office is at Floor 4, Willow House, PO Box 2804, Grand
Cayman, KY1-1112, Cayman Islands. The Company's shares were
admitted to trading on the AIM market of the London Stock Exchange
on 20 August 2012.
The principal activities of the Company are those related to
investment holding. The principal activities of the subsidiaries
are logistics services and inventory solutions as indicated in Note
4.
2(a) Restructuring exercise and historical information
On 3 March 2000, Fujian Xingtai Logistics Co., Ltd. ("Fujian
Xingtai") was incorporated as a limited liability company in the
People's Republic of China (the "PRC") controlled by Mr Shufang
Zhuang(Mr Zhuang). The registered office is located at Mei Ling
Industrial Park, Jinjiang City, Fujian Province, PRC.
On 5 March 2010, Fujian Xingtai became a wholly owned entity of
Mr Zhuang and his wife Mrs Meijin Xu (Mrs Xu).
On 7 December 2010, Chaintek United Holdings Ltd
("ChaintekUnited") was incorporated as a limited liability company
in Hong Kong SAR. ChaintekUnited, an investment holding company,
has its registered office at Room 1613, 16F, Tai Yau Building, 181
Johnson Road, Wan Chai, Hong Kong SAR. ChaintekUnited is wholly
owned by Mr Zhuang and Mrs Xu.
On 29 January 2011, ChaintekUnited acquired 100% of the equity
interest of Fujian Xingtai for a purchase consideration of RMB
10,204,100, fully paid in cash with an advance from Mrs Xu.
On 13 April 2011, the Company was incorporated in the Cayman
Islands for the proposed listing of the Company's shares on the AIM
market of the London Stock Exchange. The Company is majority owned
and controlled by Mr Zhuang and Mrs Xu.
On 27 June 2011, the Company acquired 100% of the equity
interest of ChaintekUnited for a purchase consideration of HK$
10,000 based on the nominal issued share capital of
ChaintekUnited.
The acquisitions of Fujian Xingtai by ChaintekUnited and
ChaintekUnited by the Company were a combination of businesses
under common control by Mr Zhuang and Mrs Xu. As a result, the
Company accounted for the acquisitions in a manner similar to a
pooling of interests.
2(b) Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standardsas
adopted by the European Union.
(b) Basis of measurement
The financial statements have been prepared on the historical
cost basis.
(c) Functional and presentation currency
The consolidated financial statements are presented in Renminbi
(RMB), which is the presentation currency of the Group and the
functional currency of the principal operating subsidiaries of the
Group. All financial information has been presented in RMB, unless
otherwise stated.
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements, and have been applied consistently by Group
entities.
(d) Use of estimates and judgements
The preparation of the financial information in accordance with
this basis of preparation requires the use of judgements, estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial information and the reported amounts of
revenues and expenses during the financial year. Although these
estimates are based on management's best knowledge of current
events and actions, actual results may differ from those
estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
Critical judgements
Impairment of land use rights and property, plant and
equipment
The use of estimates is required in the area of asset
impairment, particularly in assessing: (1) whether an event has
occurred that may indicate that the related asset values may not be
recoverable; (2) whether the carrying value of an asset can be
supported by the net present value of future cash flows which are
estimated based upon the value-in-use calculation; (3) the
appropriate key assumptions to be applied in preparing cash flow
projections including whether these cash flow projections are
discounted using an appropriate rate. Changing the assumptions
selected by management to determine the level, if any, of
impairment, including the discount rates or the growth rate
assumptions in the cash flow projections could materially affect
the net present value used in the impairment test and as a result
affects the Group's results. Land use rights and property, plant
and equipment are reviewed to determine whether there is any
indication that the carrying value of these assets may not be
recoverable and have suffered impairment loss. If any such
indication exists, the assets are tested for impairment. The
recoverable amounts of the assets are estimated in order to
determine the extent of the impairment loss, if any. The
recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. Such impairment loss is recognised
in profit or loss. The Directors do not consider that any
impairment of land use rights is required to be made for 2014.
Further information on the delay in the granting of land use
rights related to a specific parcel of land in Jinjiang City is
included at note 5.
Classification of land use right prepayments as operating
leases
Within the PRC it is the practice for the State to issue land
use rights to individuals or entities. Such rights are evidenced
through the granting of a land use rights certificate, which gives
the holder the right to use the land (including the construction of
buildings thereon) for a given length of time. An upfront payment
is made for these rights. The Directors judge that the substance of
these arrangements is an operating lease over the land, and that
the upfront payment represents prepaid lease rentals. As such, a
prepayment is recognised in the statement of financial position,
analysed between current and non-current assets. The prepayment is
amortised to spread the lease cost over the duration of the term of
the land use rights, as specified in the lease certificate.
Critical accounting estimates and assumptions
Useful lives of property, plant and equipment
Property, plant and equipment are depreciated on a straight-line
basis over their estimated useful lives. The Group performs annual
reviews on whether the assumptions made on useful lives continue to
be valid. As changes in the expected level of usage, competitors'
actions and technological obsolescence arising from changes in the
market demands or service output of the assets could impact the
economic useful lives and the residual values of these assets, this
could lead to potential changes in future depreciation charges,
impairment losses and/or write-offs. A 5% difference in the
expected useful lives of these assets from management's estimates
would result in approximately 0.1% (2013: 0.1%) variance in the
Group's profit for the financial year ended 31 December 2014.
Income tax
Judgement is involved in determining the provision for income
taxes. There are certain transactions and computations for which
the ultimate tax determination is uncertain during the ordinary
course of business. The Group recognises liabilities for expected
tax 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 recognised, such differences will
impact the income tax and deferred tax provisions in the period in
which such determination is made.
2(c) New accounting standards and interpretations
a) Standards, amendments and interpretations effective in 2014:
The following new standards and amendments to standards are
mandatory for the first time for the Group for the financial year
beginning 1 January 2014. The implementation of these standards did
not have a material effect on the Group:
IAS 32 (Amendment 2011) Offsetting financial assets and
financial liabilities
IFRS 11 Joint arrangements
IFRS 10 Consolidated financial statements
IFRS 12 Disclosure of interest in other entities
IAS 27 (Amendment 2011) Separate financial statements
IAS 28 (Amendment 2011) Investments in associates and joint
ventures
IAS 36 (Amendment 2013) Recoverable amount disclosures for
non-financial assets
IFRIC 21 Levies
b) Standards, amendments and interpretations that are not yet
effective and have not been early adopted:
Standard Impact on initial application Effective date
------------------------------------------------------- ----------------
Annual Improvements to IFRSs 2010-2012 Cycle 1 January 2015**
Annual Improvements to IFRSs 2011-2013 Cycle 1 January 2015**
Annual Improvements to IFRSs 2012-2014 Cycle 1 January 2016*
Amendments to IAS 38 and IAS 36: Clarification
of acceptable methods of depreciation and amortisation 1 January 2016*
Disclosure initiative: Amendments to IAS 1 1 January 2016*
IFRS 9 Financial instruments 1 January 2018*
IFRS 15 Revenue from contracts with customers 1 January 2017
* Not yet endorsed in the EU.
** Effective date in EU
The Group does not expect the pronouncements to have a material
impact on the Group's earnings or shareholders' funds.
3 Summary of significant accounting policies
Basis of Consolidation
Business combinations
The consolidated financial statements relate to the Company and
its subsidiaries (together referred to as the "Group"). As
explained in note 1 the acquisitions of Fujian Xingtai by Chaintek
United and Chaintek United by the Company were a combination of
businesses under common control by Mr Zhuang and Mrs Xu and were
therefore accounted for in a manner similar to a pooling of
interests.
Subsidiaries
Where the Company has control over an investee, it is classified
as a subsidiary. The Company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control. The
results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained. Subsidiaries are deconsolidated from the date on which
control ceases.
Transactions eliminated on consolidation
All inter-company balances and significant inter-company
transactions and resulting unrealised profits or losses are
eliminated on consolidation and the consolidated financial
statements reflect external transactions and balances only.
Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the
respective functional currencies of the Group entities at the
exchange rate at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the reporting date
are translated to the functional currency at the exchange rate at
the reporting date. Non-monetary items that are measured in terms
of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction.
Foreign currency differences arising on translation are
recognised in profit or loss as incurred.
Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses, if any.
The cost of property, plant and equipment includes expenditure
that is directly attributable to the acquisition of the items.
Dismantlement, removal or restoration costs are included as part of
the cost of property, plant and equipment if the obligation for
dismantlement, removal or restoration is incurred as a consequence
of acquiring or using the asset.
Depreciation is computed utilising the straight-line method to
write off the cost of these assets over their estimated useful
lives as follows:
Buildings 30 years
Plant and machinery 10 years
Computers and office equipment 2 - 10years
Motor vehicles 5 - 10 years
No depreciation is provided on construction work-in-progress.
Depreciation will commence when the asset is completed and ready
for its intended use.
The residual values, depreciation methods and useful lives of
property, plant and equipment are reviewed and adjusted as
appropriate at the reporting date.
Subsequent expenditure relating to property, plant and equipment
that has already been recognised is added to the carrying amount of
the asset when it is probable that future economic benefits, in
excess of the standard of performance of the asset before that
expenditure was made, will flow to the Group and the cost can be
reliably measured. Other subsequent expenditure is recognised as an
expense during the financial year in which it is incurred.
For acquisitions and disposals during the financial year,
depreciation is provided from the month of acquisition and to the
month before disposal respectively. Fully depreciated property,
plant and equipment are retained in the books of accounts until
they are no longer in use.
The gain or loss arising on disposal or retirement of an item of
plant and equipment is determined as the difference between the
sales proceeds and the carrying amounts of the asset and is
recognised in profit or loss.
Land use rights
The land use rights are stated at cost less accumulated
amortisation and any impairment losses. Amortisation is calculated
on a straight-line basis to write off the cost of the land use
rights over the period for which the rights have been granted.
Financial assets
The Group's financial assets include loans and receivables.
The Group initially recognises loans and receivables and
deposits on the date they are originated.
Derecognition of financial instruments occurs when the rights to
receive cash flows from the investments expire or are transferred
and substantially all of the risks and rewards of ownership have
been transferred. An assessment for impairment is undertaken at
least at each reporting date whether or not there is objective
evidence that a financial asset or a groupof financial assets is
impaired.
Receivables
Receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise when the Group provides money, goods or services directly to
a debtor with no intention of trading the receivables. They are
included in current assets, except for maturities greater than 12
months after the reporting date which are classified as non-current
assets.
Receivables are recognised initially at fair value plus any
directly attributable transaction costs. Subsequent to initial
recognition, loans and receivables are measured at amortised cost
using the effective interest method, less provision for
impairment.
The Group considers evidence of impairment for receivables at
both a specific asset and collective level. All individually
significant receivables are assessed for specific impairment. All
individually significant receivables found not to be specifically
impaired are then collectively assessed for any impairment that has
been incurred but not yet identified. Receivables that are not
individually significant are collectively assessed for impairment
by grouping together receivables with similar risk
characteristics.
In assessing collective impairment, the Group uses historical
trends of the probability of default, the timing of recoveries and
the amount of loss incurred, adjusted for management's judgement as
to whether current economic and credit conditions are such that the
actual losses are likely to be greater or less than suggested by
historical trends.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows,
discounted at the asset's original effective interest rate. Losses
are recognised in profit or loss and reflected in an allowance
account against loans and receivables. Interest on the impaired
asset continues to be recognised. When a subsequent event (e.g.
repayment by a debtor) causes the amount of impairment loss to
decrease, the decrease in impairment loss is reversed through
profit or loss.
Receivables comprise trade receivables, other receivables,
deposits and prepayments, other than land use right
prepayments.
Cash and cash equivalents
Cash and cash equivalents include cash and bank balancesthat
have maturities of three months or less from inception.
Impairment of non-financial assets
The carrying amounts of non-financial assets subject to
impairment are reviewed at the end of each reporting period to
determine whether there is any indication of impairment. If any
such indication exists, the asset's recoverable amount is
estimated.
Dividends
Final dividends proposed by the Directors are not accounted for
in Shareholders' equity as an appropriation of retained earnings,
until they have been approved by the Shareholders in a general
meeting. When these dividends have been approved by the
Shareholders and declared, they are recognised as a liability.
Interim dividends are simultaneously proposed and declared,
because the Articles of Association of the Company grant the
Directors the authority to declare interim dividends. However,
interim dividends are not charged to reserves until the relevant
date of payment to shareholders.
Where the Company pays its dividends in the form of shares or
gives the shareholder the right to receive a dividend in either
cash or shares (scrip dividend) the dividend paid is calculated as
the value of the cash paid and the value of shares issued with the
value of shares issued being calculated at the market value of
shares at the date of payment of the dividend.
Statutory common reserve
The subsidiary incorporated in the PRC is required to transfer
between 5% and 10% of its profit after taxation to the statutory
common reserve until the common reserve balance reaches 50% of the
registered capital. For the purpose of calculating the transfer to
this reserve, the profit after taxation shall be the amount
determined under the PRC accounting standards. The transfer to this
reserve must be made before the distribution of dividends to
Shareholders. The statutory common reserve can only be used to set
off against accumulated losses or to increase the registered
capital of the subsidiary, subject to approval from the PRC
authorities.
The statutory common reserve is not available for dividend
appropriation to the Shareholders.
Share capital
Ordinary Shares are classified as equity.
Incremental costs directly attributable to the issue of Ordinary
Shares and share options are recognised as a deduction from
equity.
Warrants
The fair value of Warrants issued to vendors and Shareholders is
measured using the Black-Scholes option pricing model. Measurement
inputs include the share price on the measurement date, the
exercise price of the instrument, expected volatility, expected
term of the instrument, expected dividend, and the risk-free
interest rate.
Financial liabilities
The Group's financial liabilities include trade and other
payables.
Trade and other payables are initially recognised at fair value,
and subsequently carried at amortised cost using the effective
interest method.
Financial liabilities are recognised when the Group becomes a
party to the contractual agreements of the instrument. All
interest-related charges are recognised as an expense in "finance
costs" in profit or loss. Financial liabilities are derecognised if
the Group's obligations specified in the contract expire or are
discharged or cancelled.
Gains and losses are recognised in profit or loss when the
liabilities are derecognised.
Related parties
For the purposes of this consolidated historical financial
information, parties are considered to be related to the Group if
the Group has the ability, directly or indirectly, to control the
party or exercise significant influence over the party in making
financial and operating decisions, or vice versa, or where the
Group and the party are subject to common control or common
significant influence. Related parties may be individuals or other
entities.
Leases
Leases of assets in which a significant portion of the risks and
rewards of ownership are retained by the lessor are classified as
operating leases.
Rentals on operating leases are recognised in profit or loss on
a straight-line basis over the lease term unless another systematic
basis is more representative of the time pattern in which economic
benefits from the leased asset are consumed. Lease incentives
received are recognised as an integral part of the total lease
expense, over the term of the lease. Penalty payments on early
termination, if any, are recognised in profit or loss when
incurred.
The land use rights held by the Group are regarded as operating
leases. The amounts paid for these rights are treated as lease
prepayments and are amortised over the period for which the rights
have been granted in accordance with the land use rights
certificate.
Government grants
Grants that compensate the Group for expenses incurred are
recognised in profit or loss as other income on a systematic basis
in the same periods in which the expenses are recognised.
Employee benefits
Short-term employee benefits
Short-term benefit obligations are measured on an undiscounted
basis and are expensed as the related service is provided.
Defined contribution plans
Payments made to state-managed retirement benefit schemes, such
as the social security plans in the PRC, are dealt with as
contributions to defined contribution plans. The contributions were
recognized when the payment obligation existed.
The PRC subsidiary is required to contribute a certain
percentage of its employees' payroll costs to the state-managed
retirement benefit scheme operated by the municipal government.
The local municipal government undertakes to assume the
retirement benefit obligations of all existing and future retired
employees of the PRC subsidiary. The PRC subsidiary has no further
payment obligations once the contributions have been paid.
Key management personnel
Key management personnel are those persons having the authority
and responsibility for planning, directing and controlling the
activities of the entity. Directors and certain key executive
officers are considered key management personnel.
Income taxes
Income tax expense comprises current and deferred tax. Income
tax expense is recognised in the income statement except to the
extent that it relates to items recognised directly in equity, in
which case it is recognised in equity or other comprehensive
income.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for the following
temporary differences: the initial recognition of goodwill, the
initial recognition of an asset or liability in a transaction that
is not a business combination and that affects neither accounting
nor taxable profit, and differences relating to investments in
subsidiaries to the extent that the timing of the reversal of the
temporary difference can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable
future.
Deferred tax is measured at the tax rates that are expected to
be applied to the temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted at the
reporting date.
A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences, to the extent that it
is probable that future taxable profits will be available against
which they can be utilised. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and
assets and they relate to income taxes levied by the same tax
authorities on the same taxable entity, or on different tax
entities, provided they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities will
be realised simultaneously.
Earnings per share
The Group presents basic and diluted earnings per share ("EPS")
data for its Ordinary Shares. Basic EPS is calculated by dividing
the profit or loss attributable to Ordinary Shareholders of the
Company by the weighted average number of Ordinary Shares
outstanding during the period. Diluted EPS is determined by
adjusting the profit or loss attributable to Ordinary Shareholders
and the weighted average number of Ordinary Shares outstanding,
adjusted for the effects of all dilutive potential Ordinary Shares,
which comprise Warrants.
Operating segments
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components. Operating
segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief
operating decision-maker has been identified as the Chief Executive
Officer who makes strategic resources allocation decisions.
Revenue recognition
The Group derives its revenues from two principal sources: 1)
logistics services; and 2) inventory solutions.
Logistics services
Logistics services involving land transportation are provided
with the use of independent transportation contractors (carriers).
The Group bills the carrier its logistics arrangement fee after the
goods have been delivered by the carrier but recognises revenue at
the date that the logistics arrangement has been completed which is
regarded as the date the goods are transferred to the
responsibility of the carrier. The carrier bills the receiver
directly andbears the risk of loss of the goods during transit to
the receiver.
Inventory solutions
Inventory solutions relate to the provision of inventory storage
and custody, goods receipts and issues, packaging, changing product
labels and related services. The customer is billed a fixed fee per
unit of goods managed by the Group for all of these services. The
Group bills the customer directly for these services as the goods
are delivered to the Group but only recognises revenue over the
period that the service is provided.
Interest income
Interest income is recognised on a time proportion basis using
the effective interest method.
4 Subsidiaries
Country
of
incorporation
Name of subsidiary and operations Percentage of equity Principal activities
held
31 December 31 December
2014 2013
Held by Company
Chaintek United Holdings
Ltd Hong Kong 100% 100% Investment holding
Held by Chaintek
United
Holdings Ltd
Fujian Xingtai Logistics Provision of
Co., PRC 100% 100% logistics
Ltd. services and
inventory solutions
5 Land use rights prepayments
31 December 31 December
2014 2013
RMB RMB
Cost
At 1 January 306,495,525 33,495,525
Additions 60,000,000 273,000,000
-------------------------------- ------------ ------------
At 31 December 366,495,525 306,495,525
Accumulated amortisation
At 1 January 3,389,406 2,719,495
Amortisation for the year 669,911 669,911
-------------------------------- ------------ ------------
At 31 December 4,059,317 3,389,406
================================ ============ ============
Carrying amount at 31 December 362,436,208 303,106,119
================================ ============ ============
Presented as:
Current assets 2,098,482 669,911
Non-current assets 360,337,726 302,436,208
-------------------------------- ------------ ------------
362,436,208 303,106,119
================================ ============ ============
During the year, the Group purchased a transit warehouse for the
logistics services division from a third party. The warehouse will
cost RMB 75.8 million of which RMB 60 million has already been paid
to secure the facility. Based on the agreement, the Group had the
right to commence the operations on this warehouse from the date
the deposit was paid (before the year-end). The outstanding balance
of RMB 15.8 million will be paid once the land use rights ("LUR")
confirmation and other administrative procedures have been
completed (Note 19).
The Company requested an independent market valuation for the
newly acquired premises to analyse the total cost of RMB75.8
million between land use rights and property and this valuation
shows that the LUR element within total cost paid is in excess of
the RMB60 million value shown above. For these accounts the
directors have therefore allocated all of the RMB 60 million
deposit to land use rights and the final analysis between land use
rights and property will be completed in next year's accounts when
the residual payment is made. As the warehouse was not in
operational use until just before the year end no amortisation has
been charged on the allocated land use rights and in the event that
some element of the deposit had been allocated to property no
depreciation would have been charged on the property and therefore
the current method of allocation has no impact on recorded net
assets or results.
Included in the above figures is Land Use Rights ("LUR") at a
cost and net book value of RMB 273 million which cost was fully
paid during 2013 for a parcel of land in Cizao Town, Jinjiang City,
Fujian Province, China. The payments were made to Fujian Jinjiang
Industrial Park Development and Construction Co., Ltd. ("LDC"), a
land development company established and owned by Local Government
("LDC"). The formal LUR Certificate that is required before the
Group is able to use the land has still to be issued. Consequent to
the delay in the issue of the formal LUR Certificate, the Group has
signed a supplementary agreement with the LDC dated 6 March 2015.
This agreement confirms, inter alia, that the LUR in respect of the
parcel of land specified in the initial purchase agreement is not
now able to be obtained from the LDC, that the LDC is seeking to
locate an acceptable alternate parcel of land for the Group and
that the Group has the right to request full payment of RMB 273
million from the LDC at any time up to the date that a formal LUR
Certificate is issued by the LDC. The Board is of the view that the
LDC will have the funds available to make such repayment if
requested. The Board is unable to say when the formal LUR
Certification process will be completed.
6 Property, plant and equipment
Computers
Plant and and office Motor
Buildings machinery equipment vehicles Total
----------- ---------- ----------- ------------ ------------
RMB RMB RMB RMB RMB
Cost
At 1 January 2013 73,356,423 1,465,900 6,536,385 5,871,437 87,230,145
Additions 1,795,799 356,606 6,500,000 1,782,843 10,435,248
Disposals - - - (1,355,000) (1,410,000)
-------------------------- ----------- ---------- ----------- ------------ ------------
At 31 December 2013 75,152,222 1,767,506 13,036,385 6,299,280 96,255,393
Additions 936,522 477,734 - 456,356 1,870,612
Disposals - - - (498,815) (498,815)
-------------------------- ----------- ---------- ----------- ------------ ------------
At 31 December 2014 76,088,744 2,245,240 13,036,385 6,256,821 97,627,190
========================== =========== ========== =========== ============ ============
Accumulated depreciation
At 1 January 2013 4,902,864 481,480 2,436,640 3,615,434 11,436,418
Depreciation charge for
the year 3,580,153 261,156 588,663 1,355,888 5,785,860
Disposals - (49,041) - (1,324,934) (1,373,975)
-------------------------- ----------- ---------- ----------- ------------ ------------
At 31 December 2013 8,483,017 693,595 3,025,303 3,646,388 15,848,303
Depreciation charge for
the year 3,613,795 267,802 842,046 1,479,717 6,203,360
Disposals - - - (390,092) (390,092)
-------------------------- ----------- ---------- ----------- ------------ ------------
At 31 December 2014 12,096,812 961,397 3,867,349 4,736,013 21,661,571
========================== =========== ========== =========== ============ ============
Net book value
At 31 December 2013 66,669,205 1,073,911 10,011,082 2,652,892 80,407,090
========================== =========== ========== =========== ============ ============
At 31 December 2014 63,991,932 1,283,843 9,169,036 1,520,808 75,965,619
========================== =========== ========== =========== ============ ============
Please also refer to Note 5 above in respect of the transit
warehouse purchased during the year.
7 Trade and other receivables
31 December 31 December
2014 2013
RMB RMB
Trade receivables 85,359,797 86,394,975
Rental deposits* 9,281,006 9,009,030
Insurance prepayments 457,968 465,466
Prepayment of interim dividend to
share registrar
(Note 23) - 1,318,581
9,738,974 10,793,077
Total 95,098,771 97,188,052
=================================== ============ ============
The Group allows an average credit period of 90 days to its
trade customers.
Trade and other receivables are denominated in RMB,except
prepayment of the interim dividend to the share registrar which is
denominated in GBP.
Rental deposits relate to refundable security deposits placed
with lessors for operating leases of warehousing facilities and
fall due for repayment within 12 months.
8 Cash and cash equivalents
31 December 31 December
2014 2013
RMB RMB
Cash and bank balances 472,166,608 319,283,433
======================== ============ ============
As at 31 December 2013 and 2014, bank balances of approximately
RMB 319,214,000 and RMB 472,122,000 are interest earning. The
weighted average effective interest rate of these interest-earning
bank balances as at 31 December 2013 and 2014 was 0.38% and 0.35%
per annum, respectively. In both periods the bank balances were
available on demand.
Cash and bank balances are denominated in the following
currencies:
31 December 31 December
2014 2013
RMB RMB
Chinese Renminbi 468,141,375 258,479,068
British Pound 3,990,077 60,768,983
United States Dollar 16,082 16,169
Singapore Dollar 1,178 1,478
Hong Kong Dollar 17,896 17,735
---------------------- ------------ ------------
472,166,608 319,283,433
====================== ============ ============
9 Share capital
31 December 31 December
2014 2013
No. of Ordinary No. of Ordinary
Shares Shares
Authorised:
Balance at beginning and end of year
* Ordinary Shares of US$0.001 each 200,000,000 200,000,000
========================================= ================ ================
Issued and fully paid:
Balance at beginning of year 54,696,875 54,696,875
Issue of shares pursuant to scrip
dividends paid to shareholders (Note
23) 4,028,730 -
----------------------------------------- ---------------- ----------------
Balance at end of year 58,725,605 54,696,875
========================================= ================ ================
RMB RMB
Value in RMB
Authorised:
Balance at beginning and end of year 1,272,067 1,272,067
========================================= ================ ================
31 December 31 December
2014 2013
RMB RMB
Issued and fully paid:
Balance at beginning of year 357,254 357,254
Issue of shares pursuant to scrip
dividends paid to shareholders (Note
23) 24,995 -
--------------------------------------- ------------ ------------
Balance at end of year 382,249 357,254
======================================= ============ ============
In August 2012, the Company issued 4,696,875 shares at GBP1.60
per share pursuant to its initial public offer of shares on the AIM
market of the London Stock Exchange which raised GBP7,515,000
(equivalent to RMB 75,075,459).
In connection with the IPO, the Company issued 586,913 free
Warrants to certain vendors for their services rendered and
1,098,437 free Warrants attached to 2,196,875 Ordinary Shares
issued to three new Shareholders. Each Warrant carries the right to
subscribe for one new Ordinary Share in the capital of the Company
at an exercise price of GBP1.60. The IPO proceeds of RMB 75,075,459
were allocated to Ordinary Shares and Warrants issued to
Shareholders using the fair value of the two instruments on a
pro-rata basis on the IPO date. As a result, RMB 66,868,186 was
recorded within share capital and share premium and RMB 8,207,273
in the Warrant reserve (Note 13).
The holders of Ordinary Shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company. All shares rank equally with
regard to the Company's residual assets.
10 Merger reserve
The merger reserve represented the excess of the purchase
consideration for the acquisition of the subsidiaries under common
control in the Restructuring Exercise described in Note 2(a) over
the combined paid-up registered capital of those subsidiaries.
11 Statutory common reserve
31 December 31 December
2014 2013
RMB RMB
Statutory common reserve
- Balance at beginning and end of
year 5,000,000 5,000,000
============ ============
According to PRC Company Law, Fujian Xingtai is required to
transfer between 5% and 10% of its profit after taxation to the
statutory common reserve until the statutory common reserve balance
reaches 50% of its registered capital. The amount of net profit
after taxation transferred to the statutory common reserve reached
50% of the registered capital during the year ended 31 December
2009.
12 Other reserves
(i) Capital reserve
31 December 31 December
2014 2013
RMB RMB
Advance from a Shareholder waived* 9,813,688 9,813,688
Amounts owing to Shareholders waived** 8,215 8,215
9,821,903 9,821,903
======================================== ============ ============
*At 31 December 2012, the advance from a Shareholder related to
an advance from Mrs Xu to provide working capital for Chaintek
United. The advance from a Shareholder was unsecured, interest-free
and repayable in cash on demand. Pursuant to an agreement entered
into with Mrs Xu, the Shareholder waived a portion of the advance
amounting to RMB 9,813,688 during the financial year ended 31
December 2012. The advance amount waived was considered as a
capital contribution from the Shareholder and recognised directly
in equity under capital reserve. The remaining amount of RMB
6,975,275 has been fully repaid in 2013.
**On 27 June 2011, in connection with the restructuring exercise
described in Note 2(a), the Company acquired 100% of the equity
interest of Chaintek United for a purchase consideration of
HK$10,000 (RMB 8,215) based on the nominal issued share capital of
Chaintek United. The purchase consideration was outstanding at 31
December 2011. During the financial year ended 31 December 2012,
the former Shareholders of Chaintek United, Mr Zhuang and Mrs Xu,
waived the amount which was unsecured and interest free. Mr Zhuang
and Mrs Xu are Shareholders of the Company after the restructuring
exercise. The amount waived was considered as capital contributions
from the Shareholders and recognised directly in equity under
capital reserve.
(ii) Share premium
31 December 31 December
2014 2013
RMB RMB
Issue of shares at a premium to
par value:
Balance at beginning of year 66,838,371 66,838,371
Scrip dividends paid to the shareholder 38,453,529 -
(Note 23)
------------ ------------
105,291,900 66,838,371
============ ============
13 Warrant reserve
The Warrant reserve comprises the cumulative value of the
portion of IPO proceeds ascribed to the attached Warrants, as
described in share capital above. When a Warrant is exercised, the
related balance in the Warrant reserve will be transferred to share
capital. A number of warrants were granted to certain service
providers as part of the listing process in 2012. The Directors
consider that these warrants primarily related to services in
support of the listing process rather than in supporting the main
fund raising process and therefore have recorded the costs as a
share based payment expense of RMB 4,977,160 for the year ended 31
December 2012.
Each Warrant carries the right to subscribe for one new Ordinary
Share in the capital of the Company at an exercise price of
GBP1.60.
The 1,500 Warrants issued to the vendors are exercisable at any
time for a period of three years from 20 August 2012. The fair
value of the Warrants was determined using the Black-Scholes option
pricing formula with the following assumptions: volatility of
55.71%; risk free interest rate of 0.23%; and expected life of
three years.
The 1,683,850 Warrants issued to the Shareholders and vendors
are exercisable at any time for a period of five years from 20
August 2012. The share price at date of grant was 160p per share.
The fair value of the Warrants was determined using the
Black-Scholes option pricing formula with the following
assumptions: volatility of 62.80%; risk free interest rate of
0.62%; and expected life of five years.
14 Trade and other payables
31 December 31 December
2014 2013
RMB RMB
Other payables
Deposits from transportation agents 4,000,000 4,000,000
Accrued payroll costs 3,469,673 3,029,986
Accrued professional fees 700,000 700,000
Accrued social insurance 948,074 931,552
Other tax payables 2,216,251 2,715,454
Others 143,143 356,093
------------------------------------- ------------ ------------
11,477,171 11,733,085
===================================== ============ ============
15 Revenue
Year ended Year ended
31 December 31 December
2014 2013
RMB RMB
Logistics services 313,277,490 303,685,617
Inventory solutions 50,388,490 46,939,921
--------------------- ------------- -------------
363,665,980 350,625,538
===================== ============= =============
16 Other income
Year ended Year ended
31 December 31 December
2014 2013
RMB RMB
Interest income 1,333,460 886,954
Gain on disposal of property, plant
and equipment - 68,975
1,333,460 955,929
===================================== ============= =============
17 Profit before taxation
(a) The following items have been included in arriving at profit before taxation:
Year ended Year ended
31 December 31 December
2014 2013
RMB RMB
Amortisation of land use rights 669,911 669,911
Loss (Gain) on disposal of property,
plant and equipment 84,223 (68,975)
Depreciation of property, plant and
equipment 6,203,360 5,785,860
Operating lease expense 6,951,731 7,008,002
Exchange loss (gain) 2,720,980 662,004
Staff costs
Key management personnel:
- Directors
------------- -------------
- Directors' remuneration 2,729,985 2,064,080
- Contributions to defined contribution
plans 2,772 2,750
- Other than Directors
- Salaries, wages and other related
costs 1,449,500 1,224,500
- Contributions to defined contribution
plans 7,410 7,355
Other than key management personnel:
- Salaries, wages and other related
costs 24,180,992 19,933,753
- Contributions to defined contribution
plans 2,958,763 2,538,777
------------- -------------
31,329,422 25,771,215
------------- -------------
Key management personnel include: Xu LiangYi, Group Chief
Operating Officer, who is a brother of Mrs Xu. Key management
personnel compensation for Chief Operating Officer is as
follows:
Included in:
Year ended Year ended
31 December 31 December
2014 2013
RMB RMB
Salaries, wages and other related
costs 480,000 324,000
Contributions to defined contribution
plans 1,866 1,855
------------------------- ------------------------
481,866 325,855
------------------------- ------------------------
(b) Amortisation of land use rights, depreciation of property,
plant and equipment, operating lease expense and staff costs
included in cost of sales, distribution expenses and administrative
expenses are as follows:
Included in:
Cost of Administrative
sales expenses Total
RMB RMB RMB
Year ended 31 December 2014
Amortisation of land use rights 588,617 81,294 669,911
Depreciation of property, plant
and equipment 4,619,017 1,584,343 6,203,360
Operating lease expense 6,951,731 - 6,951,731
Staff costs
Key management personnel:
- Directors
------------------ ----------------------- -----------------
- Directors' remuneration - 2,729,985 2,729,985
- Contributions to defined contribution
plans - 2,772 2,772
* Other than Directors
- Salaries, wages and other
related costs - 1,449,500 1,449,500
- Contributions to defined contribution
plans - 7,410 7,410
------------------ ----------------------- -----------------
Subtotal - 4,189,667 4,189,667
Other than key management personnel:
- Salaries, wages and other
related costs 20,520,354 3,660,638 24,180,992
- Contributions to defined contribution
plans 2,632,298 326,465 2,958,763
------------------ ----------------------- -----------------
23,152,652 8,176,770 31,329,422
------------------ ----------------------- -----------------
Included in:
Cost of Administrative
sales expenses Total
RMB RMB RMB
Year ended 31 December 2013
Amortisation of land use rights 588,617 81,294 669,911
Depreciation of property, plant
and equipment 4,353,612 1,432,248 5,785,860
Operating lease expense 7,008,002 - 7,008,002
Staff costs
Key management personnel:
* Directors
----------- --------------- -----------
- Directors' remuneration - 2,064,080 2,064,080
- Contributions to defined contribution
plans - 2,750 2,750
* Other than Directors
- Salaries, wages and other
related costs - 1,224,500 1,224,500
- Contributions to defined contribution
plans - 7,355 7,355
----------- --------------- -----------
Subtotal - 3,298,685 3,298,685
Other than key management personnel:
- Salaries, wages and other
related costs 18,328,450 1,605,303 19,933,753
- Contributions to defined contribution
plans 2,255,558 283,219 2,538,777
----------- --------------- -----------
20,584,008 5,187,207 25,771,215
----------- --------------- -----------
18 Income tax expense
Year ended Year ended
31 December 31 December
2014 2013
RMB RMB
Current taxation 73,299,898 72,518,637
====================================== ============= =============
Reconciliation of effective tax rate
Profit before taxation 287,374,847 284,907,893
====================================== ============= =============
Tax at the PRC statutory rate of
25% (2013: 25%) 71,843,712 71,226,973
Non-deductible expenses 135,427 -
Deferred tax assets on losses not
recognised 1,320,759 1,291,664
-------------------------------------- ------------- -------------
73,299,898 72,518,637
====================================== ============= =============
No deferred tax asset or liability is recognised, principally as
a result of the Group's taxable profit equating to its accounting
profit, and there being no differences between the tax basis of
assets and liabilities and the carrying values in the statement of
financial position.
At the reporting date, the Group has unabsorbed tax losses of
approximately RMB 19,233,000 (2013: RMB 13,950,000) attributable to
a subsidiary. The Group has not recognised a deferred tax asset in
respect of the tax losses because the companies have not generated
and are not expected to generate taxable profits that would absorb
these losses.
19 Commitments
Capital commitment
At the reporting date, the Group was committed to making the
following capital commitment in respect of property, plant and
equipment.
31 December 31 December
2014 2013
RMB RMB
Capital expenditure contracted but not
provided for
in the financial statements:
- Acquisition of a logistics warehouse 15,800,000- -
(Note 5 and 6)
========================================== ============ ============
Operating lease commitments
At the reporting date, the Group was committed to making the
following rental payments in respect of operating leases of
warehouses.
Year ended Year ended
31 December 31 December
2014 2013
RMB RMB
Not later than one year 5,050,813 4,942,268
Later than one year and not later - -
than five years
Later than five years - -
----------------------------------- ------------- -------------
5,050,813 4,942,268
=================================== ============= =============
These leases expire between September 2015 and December 2015,
with renewal options at prevailing market rents.
20 Significant related party transactions
Other than as disclosed in the Directors' Report (Directors'
Remuneration) and in Note 17, there were no transactions with
related parties during the financial years ended 31 December 2013
and 2014.
21 Operating segments
For management reporting purposes, the Group is organised into
the following reportable operating segments:
(a) Logistics services - includes the provision of land transportation services.
(b) Inventory solutions - includes the provision of warehousing services.
(c) Corporate - includes investment holdings and Corporate
Office which incurs general corporate expenses.
Segment accounting policies are the same as the policies
described in Note 3. Intra and inter-segment transactions were
carried out at terms agreed between the parties during the
financial year. Intra and inter-segment transactions were
eliminated in preparing the consolidated financial statements.
Segment revenue and expense:
Segment revenues and expenses are the operating revenues and
expenses reported in the Group's statement of comprehensive income
that are directly attributable to a segment and the relevant
portion of such revenue and expense that can be allocated on a
reasonable basis to a segment.
Segment assets and liabilities:
Segment assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis. Capital expenditure includes the total cost
incurred to acquire plant and equipment directly attributable to
the segment.
Group cash resources, financing activities and income taxes are
managed on a Group basis and are not allocated to operating
segments. Unallocated assets comprise cash and cash equivalents.
Unallocated liabilities comprise income tax payable.
The Group Chief Executive Officer ("Group CEO") monitors the
operating results of its operating segments for the purpose of
making decisions about resource allocation and performance
assessment.
Information regarding the results of each reportable segment is
included below. Performance is measured based on segment profit
before income tax, as included in the internal management reports
that are reviewed by the Group CEO.
Logistics Inventory solutions Consolidated
services
Year Year Year Year Year Year
ended ended ended ended ended ended
31 31 31 31 31 31
December December December December December December
2014 2013 2014 2013 2014 2013
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Sales to external
customers 313,278 303,686 50,388 46,940 363,666 350,626
------------- ---------------- ------------- --------------- ---------- ----------
Segment revenue 313,278 303,686 50,388 46,940 363,666 350,626
Segment results 286,427 284,387 26,624 22,483 313,051 306,870
Reconciling items (25,676) (21,962)
Profit before
taxation 287,375 284,908
Income tax expense (73,300) (72,519)
---------- ----------
Profit for the year 214,075 212,389
---------- ----------
Assets and
liabilities:
Segment assets 149,889 91,538 367,910 369,294 517,799 460,832
Unallocated assets
(cash and cash
equivalents) 472,167 319,283
Reconciling items 15,701 19,870
Total assets 1,005,667 799,985
---------- ----------
Segment liabilities 5,473 8,629 1,537 1,794 7,010 10,423
Unallocated
liabilities
(income tax payable) 13,313 15,070
Reconciling items 4,467 1,310
---------- ----------
Total liabilities 24,790 26,803
---------- ----------
Other segment
information:
Non-current assets 72,724 14,631 346,205 349,696 418,929 364,327
Reconciling items 17,374 18,516
---------- ----------
436,303 382,843
Acquisition of land
use right 60,000 - - 221,000 60,000 221,000
Acquisition of
property,
plant and equipment 589 258 930 8,314 1,519 8,572
Reconciling items 352 1,863
---------- ----------
1,871 10,435
Depreciation 525 566 4,094 3,787 4,619 4,353
Reconciling items 1,584 1,433
---------- ----------
6,203 5,786
Amortization of
land use rights
prepayments 140 140 449 449 589 589
Reconciling items 81 81
---------- ----------
670 670
====================== ============= ================ ============= =============== ========== =========
Reconciling items shown above include: administrative expenses
and other income in profit for the year, rental deposits and
partial fixed assets in total assets, and other tax payable and
partial employee benefits payable in total liabilities.
Geographical information
The Group's operations are located in the PRC and all of the
Group's revenue is derived from services provided to customers in
the PRC. Hence, no analysis by geographical area of operations is
provided.
Major customers
None of the manufacturing companies (that the Company regards as
its customers) for its logistics services business accounted for
10% or more of the Group's total revenues for the years ended 31
December 2013 and 2014. However, the Company receives all its
logistics services revenue from the transport companies that are
used to transport goods on behalf of the Company rather than from
its manufacturing customers. Whilst the Company has flexibility in
its choice of transport company it is noted that five of these
transport companies account individually for more than 10% of total
revenue in both the current and prior year. None of the
manufacturing companies that use the inventory solutions service
accounted for 10% or more of the Group's total revenues for the
years ended 31 December 2013 and 2014.
22 Earnings per share
Year ended Year ended
31 December 31 December
2014 2013
Net profit after taxation (RMB) 214,074,949 212,389,256
======================================== ============= =============
Weighted average number of Ordinary
Shares used in calculation of basic
earnings per share 56,526,046 54,696,875
Effect of dilutive potential Ordinary
Shares from weighted average number
of Warrants 1,683,850 1,683,850
---------------------------------------- ------------- -------------
Weighted average number of Ordinary
Shares used in calculation of diluted
earnings per share 58,209,896 56,380,725
======================================== ============= =============
Earnings per share -
Basic (RMB) 3.79 3.88
Diluted (RMB) 3.68 3.77
======================================== ============= =============
23 Dividends
(i) On 13 November 2013, the Group announced an interim maiden
dividend of 2 pence net per share, in respect of the six month
period ended 30 June 2013, paid on 3 January 2014 to shareholders
on the register on 13 December 2013, offered as a scrip dividend
with a cash alternative. Inconsequence, a total cash dividend
payment of GBP 131,412 (approximately RMB 1,318,581) was made on 3
January 2014 to shareholders so electing, and a total of 681,675
new ordinary shares was issued on 3 January 2014 in respect of the
scrip dividend.
(ii) On 7 April 2014, the Group announced a final dividend of 4
pence net per share, in respect of the year ended 31 December 2013,
paid on 9 June 2014 to shareholders, offered as a scrip dividend
with a cash alternative. Inconsequence, a total cash dividend
payment of GBP 440,159 (approximately RMB 4,258,092) was made on 9
June 2014 to shareholders so electing, and a total of 1,674,441 new
ordinary shares was issued on 9 June 2014 in respect of the scrip
dividend.
(iii) On 22 September 2014, the Group announced an interim scrip
dividend of 2 pence net per share or 1 pence cash alternative, in
respect of the six month period ended 30 June 2014, paid on 17
November 2014 to shareholders. Inconsequence, a total cash dividend
payment of GBP 82,996 (approximately RMB 802,903) was made on 17
November 2014 to shareholders so electing, and a total of 1,672,543
new ordinary shares was issued on 17 November 2014 in respect of
the scrip dividend.
24 Financial risk management
Financial risk management objectives and policies
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework. The Group's risk management policies are established to
set out its overall business strategies, tolerance of risk and
general risk management philosophy. Risk management policies and
systems are reviewed regularly to reflect changes in market
conditions and the Group's activities.
(a) Market risk
Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of the Group's financial instruments will fluctuate
because of changes in market interest rates.
The Group is exposed to interest rate risk, in respect of
interest-bearing cash balances at variable rates, which is not
material.
Sensitivity analysis - Interest rate risk
A 30 basis points increase/decrease in interest rates on
interest-bearing cash balances at the reporting date would
increase/decrease profit before tax and equity by approximately RMB
958,000 and RMB 1,416,000 for the financial years ended 31 December
2013 and 2014, respectively. This analysis has not taken into
account the associated tax effects and assumes that all other
variables, in particular foreign currency rates, remain
constant.
Foreign currency risk
The Group carries on its business operations in the PRC through
Fujian Xingtai with sales and purchases, capital expenditure and
operating expenses denominated in RMB, which is the currency of all
Group entities.
At 31 December 2013 and 2014, the Group is exposed to foreign
currency risk in respect of transactions, primarily proceeds from
the initial public offer of shares and professional fees that are
denominated in a currency other than RMB. The currencies in which
these transactions primarily are denominated are the United States
Dollar (USD) and British Pound (GBP). Transactions denominated in
Singapore Dollar (SGD) and Hong Kong Dollar (HKD) is immaterial to
the Group. The Group does not hold or issue derivative financial
instruments to hedge against fluctuations in foreign exchange.
Sensitivity analysis for foreign currency risk
A 5% strengthening/weakening of the above currencies against RMB
at the reporting date would have increased/decreased equity and
profit before tax by the amounts shown below. This analysis is
based on foreign currency exchange rate variances that the Group
considered to be reasonably possible at the end of the reporting
period. This analysis has not taken into account the associated tax
effects and assumes that all other variables, in particular
interest rates, remain constant.
Profit before tax Equity
increase/(decrease) increase/(decrease)
RMB RMB
31 December 2014
USD against RMB
- strengthened (804) (804)
- weakened 804 804
GBP against RMB
- strengthened (199,504) (199,504)
- weakened 199,504 199,504
31 December 2013
USD against RMB
- strengthened (808) (808)
- weakened 808 808
GBP against RMB
- strengthened (3,104,378) (3,104,378)
- weakened 3,104,378) 3,104,378
================== ==================== ====================
Market price risk
Market price risk is the risk that the value of a financial
instrument will fluctuate due to changes in market prices.
The Group is not exposed to any movement inmarket price risk as
it does not hold any quoted or marketable financial
instruments.
(b) Credit risk
Credit risk refers to the risk that counterparties may default
on their contractual obligations resulting in financial loss to the
Group. The Group's exposure to credit risk arises primarily from
trade and other receivables.
The Group's objective is to seek continual growth while
minimising losses arising from credit risk exposure. For trade
receivables, the Group adopts the policy of dealing only with
customers of appropriate credit history, and obtaining sufficient
security where appropriate to mitigate credit risk. The Group
closely monitors and avoids any significant concentration of credit
risk. In addition, receivable balances and payment profile of the
debtors are monitored on an ongoing basis with the result that the
Group's exposure to bad debts is not significant. For other
financial assets, the Group adopts the policy of dealing only with
high credit quality counterparties.
The Group establishes an allowance for impairment that
represents its estimate of incurred losses in respect of trade and
other receivables. The allowance account in respect of trade and
other receivables is used to record impairment losses unless the
Group is satisfied that no recovery of the amount owing is
possible. When the asset becomes uncollectible, it is written off
against the allowance account.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of financial assets as follows:
31 December 31 December
2014 2013
RMB RMB
Financial assets
Financial assets measured at amortised
cost:
Trade and other receivables* 94,640,803 95,404,005
Cash and cash equivalents 472,166,608 319,283,433
---------------------------------------- ------------ ------------
566,807,411 414,687,438
======================================== ============ ============
* excluded insurance prepayments and prepayment of interim
dividend to share registrar.
The aging analysis of trade receivables not impaired is as
follows:
31 December 31 December
2014 2013
RMB RMB
Financial assets
Not past due 85,359,797 86,394,975
Past due one month or less - -
---------------------------- ------------ ------------
Trade receivables (Note 7) 85,359,797 86,394,975
============================ ============ ============
At the reporting date, no allowance for impairment is required
in respect of trade and other receivables based on the
creditworthiness of the counterparties and credit quality and past
collection history of the customers.
At the reporting date, five customers accounted for
approximately 73% (2013: 72%) of trade receivables. Other than
this, there is no concentration of credit risk.
Cash and cash equivalents are placed with financial institutions
which are regulated.
(c) Liquidity risk
Liquidity or funding risk is the risk that an enterprise will
encounter difficulty in raising funds to meet commitments
associated with financial instruments. Liquidity risk may result
from an inability to sell a financial asset quickly at close to its
fair value.
The Group's exposure to liquidity risk arises primarily from
mismatches of the maturities of financial assets and liabilities.
As part of its overall prudent liquidity management, the Group
maintains a sufficient level of cash to meet its working capital
requirement.
The table below analyses the maturity profile of the Group's
financial liabilities based on contractual undiscounted cash
flows.
Contractual cash flows
Carrying Less than Between Over 5
2
amount Total 1 year and 5 years
years
RMB RMB RMB RMB RMB
At 31 December 2014
Trade and other
payables 11,477,171 11,477,171 11,477,171 - -
===================== =========== =================== =================== ============== ===========
At 31 December 2013
Trade and other
payables 11,733,085 11,733,085 11,733,085 - -
===================== =========== =================== =================== ============== ===========
It is not expected that the cash flows included in the maturity
analysis could occur significantly earlier, or at significantly
different amounts.
(d) Financial instruments by category
31 December 31 December
2014 2013
RMB RMB
Financial assets
Financial assets measured at amortised
cost:
Trade and other receivables* 94,640,803 95,404,005
Cash and cash equivalents 472,166,608 319,283,433
---------------------------------------- ------------ ------------
566,807,411 414,687,438
======================================== ============ ============
* excludes insurance prepayments and prepayment of interim
dividend to share registrar.
31 December 31 December
2014 2013
RMB RMB
Financial liabilities
Financial liabilities measured at
amortised cost 9,260,920 9,017,631
=================================== ============ ============
(e) Fair values of financial instruments
The carrying amounts of other financial assets and liabilities
with a maturity of less than one year (including trade and other
receivables, cash and cash equivalents, and trade and other
payables) approximate their fair values because of the short period
to maturity.
24 Capital management
The Group's objectives when managing capital are:
(a) To safeguard the Group's ability to continue as a going concern;
(b) To support the Group's stability and growth; and
(c) To provide capital for the purpose of strengthening the
Group's risk management capability.
The Group actively and regularly reviews and manages its equity
capital structure to ensure optimal capital management and
Shareholder returns, taking into consideration the future capital
requirements of the Group and capital efficiency, prevailing and
projected profitability, projected operating cash flows, projected
capital expenditures and projected strategic investment
opportunities.
The Group manages its equity capital structure and makes
adjustments to it, whenever necessary, in the light of changes in
economic conditions. No changes were made in the objectives,
policies or processes during the financial years ended 31 December
2013 and 2014. The Group may consider debt financing options from
time to time to bolster its capital structure.
In 2013, the Group recognised the importance of a cash dividend
and had therefore decided to commence a modest dividend policy. In
the future, the Board intends to declare dividends, subject to it
being prudent to do so, with the financial results twice a
year.
The Group monitors capital using the Gearing Ratio, which is net
debt divided by total equity. Net debt represents borrowings less
cash and cash equivalents.
The Company and its subsidiaries are not subject to externally
imposed capital requirements.
31 December 31 December
2014 2013
RMB RMB
Total borrowings - -
Less: Cash and cash equivalents (472,166,608) (319,283,433)
---------------------------------------- -------------- --------------
Net cash (472,166,608) (319,283,433)
Total equity 980,877,064 773,181,691
---------------------------------------- -------------- --------------
Net-debt-to-total-equity ratio (times) # #
======================================== ============== ==============
# Not applicable. The Group had a net cash position.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UVUBRVAAOAAR
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