TIDMWCC
RNS Number : 2657Y
West China Cement Limited
01 September 2009
West China Cement Limited
('WCC" or 'The Company")
Unaudited Interim Results for the Six Months Ended 30 June 2009
1 September 2009
Financial Highlights
* Operating Profit increased 121% to RMB 225.2 million (June 2008: RMB 102.1
million), mainly as a result of higher cement prices and reflecting maiden sales
of RMB 122 million from Ankang.
* Group Revenue rose 70% to RMB 575 million (June 2008: RMB 338 million).
* Gross Margin increased from 33.1% for the first half of 2008 to 39.6%, as a
result of the higher prices achieved in the second half of 2008 being
maintained, and some reduction in input costs. Average selling price has
increased by 36% compared with the first half of 2008.
* Net Profit Margin increased from 25.9% for the first half of 2008 to 29.7%,
despite higher finance costs.
* Other operating income of RMB 31.5 million (June 2008: RMB 16.1 million)
includes RMB 26.7 million VAT rebates (June 2008: RMB 14.5 million).
* In addition to the usual interest expenses, the Group charged RMB 26.1 million
to finance costs as a result of the increase in valuation of the warrants that
were issued to the loan creditors.
Operational Highlights
* Sales amounted to 1.94 million tonnes (June 2008 1.54 million tonnes).
* Ankang started production and sales of cement in April 2009. It is currently
producing at about 80% of its design capacity. Completion of the conveyor belt
has been delayed to Q4 2009, from which time full capacity should be achieved.
* The Lantian waste heat recycling plant, which was completed in August 2008,
generated 20.6 gigawatt hours of electricity during the reporting period. The
Ankang waste heat recycling plant is currently undertaking a trial run and is
expected to run normally by the end of October 2009.
* Both the Hanzhong plants are on schedule for completion in Q2 and Q3 2010.
* Cement demand remains buoyant. Selling price and input costs remain stable.
Robert Robertson, Non-Executive Chairman of WCC commented:
"I am delighted with WCC's performance which has been helped by higher cement
prices and margins as well as a maiden contribution from the Ankang plant. WCC
is on track to produce around 7.5 million tonnes from next year and will
actively seek opportunities for further growth by investment in new capacity or
by acquisition."
For further information, please contact:
West China Cement Limited
Robert Robertson Tel: + 44 118 974 4636
NCB Stockbrokers Ltd
Christopher Caldwell Tel: + 44 20 7071 5200
Citigate Dewe Rogerson Asia
Pui Shan Lee Tel: + 86 21 6340 4186 / Mob: + 86 138 1712 5781
ps.lee@citigate.com.cn
Susanna Gale Tel: + 852 2533 4607 / Mob: + 852 9457 4356
susanna.gale@citigate.com.hk
Notes to Editors:
West China Cement listed on the AIM market of the London Stock Exchange on 4
December 2006, raising approximately GBP20.1 million net of expenses.
Prior to the listing, the Company, which is headquartered in Xi'an the
provincial capital of Shaanxi Province, had operated three cement production
plants in Pucheng with a combined production capacity of 1.5 million tonnes per
annum since 2003.
In order to service the growing demand for cement in the region, a new plant
running two cement production lines, funded by money raised at the IPO, opened
in Lantian in 2007 and has a production capacity of 2 million tonnes.
The company's 1.8 million tonne third plant at Ankang started producing and
selling cement in March 2009 and is expected to reach full capacity in the
second half of 2009.
Approval for the building of two new cement plants, Yangxian and Mianxian, each
with a capacity of 1 million tonnes per annum, was announced in March 2009. With
the massive government spend on infrastructure as part of the RMB 4 trillion
fiscal stimulus package and the need to rebuild in the wake of the Sichuan
earthquake which occurred in this area, the Company has chosen the appropriate
location to build these latest projects.
Chairman's Statement
I am delighted to report that WCC more than doubled Pre-tax Profits to RMB 186.9
million (GBP16.5 million) in the first half of 2009, mainly reflecting higher
cement prices and margins and a maiden contribution from the Ankang plant. Net
Profit amounted to RMB 170.4 million (GBP15.0 million) compared with RMB 87.7
million (GBP6.4 million) in the same period of 2008.
The Ankang plant, which was commissioned in March 2009 produced 0.4 million
tonnes in the first half. The plant has operated well and has only been
constrained from consistently operating at full capacity by delays in completion
of the conveyor belt between the quarry and the plant. During the period
limestone and clinker have been bought in and the cement plant has operated at
about 80% capacity. The conveyor will operate over a distance of 7.5 kilometres,
passing underneath a railway bridge and the crossing of both a river and a road.
The company was always aware of the challenge of constructing a facility in the
mountainous topography of the Ankang district, but we underestimated the
difficulty associated with the conveyor. We expect it to be complete, and the
plant to operate at full capacity of 1.8 million tonnes, from Q4 2009. We then
expect to benefit fully from operating in this region, with no other local
suppliers of substance.
The Lantian and Pucheng plants operated satisfactorily during the period.
Gross Margin increased from 33.1% in the first half of 2008 to 39.6%, building
on the progress in the second half of 2008, when significant price increases
were made. Demand has been robust, and average selling price has increased by
36% compared with that of 2008. Operating Profit margin rose further from 30.2%
in the first half of 2008 to 39.2%, with overheads growing at a much lower rate
than turnover.
WCC is expected to operate at full capacity of 5.3m tonnes from the next
quarter. This capacity is scheduled to increase by 2 million tonnes next year,
with commissioning of the Mianxian and Yangxian plants in the second and third
quarters. These plants are in the Hanzhong district in the South-West of the
province, where demand is underpinned by the reconstruction requirements
following the Sichuan earthquake. Compared with the Ankang project these are
very straightforward, and are on schedule and on budget, which amounts to RMB
763 million. These plants are to be financed by internally generated funds and
some local debt, which is available on attractive terms.
WCC is therefore on track to produce at around 7.5 million tonnes from next
year. We expect to be able to add to this by de-bottlenecking our existing
plants, and will actively seek opportunities for further growth by investment in
new capacity or by acquisition, particularly in our core market in Southern
Shaanxi. We will also seek profit improvement projects, like the waste heat
projects at Lantian and Ankang. Our Cash Flow should be strong, and
opportunities ample. Given the very substantial growth in profit, cash flow and
value which the company has achieved since it became public almost three years
ago, we believe it is now appropriate to consider a main board listing, either
in London or Hong Kong. We expect to comment further on this at the year end. In
the meantime, our markets remain buoyant and we are determined to capitalise on
the opportunities we face.
Robert Robertson
Non-Executive Chairman
Unaudited Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2009
+----------------+--------+-------------+--------+-------------+--------+------------+
| | Note | 6 | | 6 | | 12 |
| | | months | | months | | months |
| | | ended | | ended | | ended |
| | | | | | | |
| | | 30/06/2009 | | 30/06/2008 | | 31/12/2008 |
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+----------------+--------+-------------+--------+-------------+--------+------------+
| | | RMB | | RMB | | RMB |
| | | 000 | | 000 | | 000 |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Continuing | | | | | | |
| Operations | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Revenue | 2 | 574,716 | | 338,016 | | 866,126 |
| | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Cost | | (347,039) | | (226,300) | | (556,073) |
| of | | | | | | |
| sales | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Gross | | 227,677 | | 111,716 | | 310,053 |
| profit | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Other | 2 | 31,490 | | 16,059 | | 44,075 |
| operating | | | | | | |
| income | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Selling | | (7,249) | | (5,660) | | (12,018) |
| and | | | | | | |
| distribution | | | | | | |
| costs | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Administrative | | (26,681) | | (20,061) | | (57,289) |
| expenses | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Operating | | 225,237 | | 102,054 | | 284,821 |
| profit | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Investment | 2 | 426 | | 536 | | 1,023 |
| income | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Finance | 3,6 | (38,744) | | (14,907) | | (28,115) |
| costs | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Profit | | 186,919 | | 87,683 | | 257,729 |
| before | | | | | | |
| income | | | | | | |
| tax | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Income | 4 | (16,472) | | (5) | | (11,566) |
| tax | | | | | | |
| expense | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| PROFIT | | 170,447 | | 87,678 | | 246,163 |
| FOR | | | | | | |
| THE | | | | | | |
| PERIOD | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| TOTAL | | 170,447 | | 87,678 | | 246,163 |
| COMPREHENSIVE | | | | | | |
| INCOME FOR | | | | | | |
| THE PERIOD | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Profit | | | | | | |
| attributable | | | | | | |
| to: | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Owners | | 170,447 | | 87,678 | | 246,163 |
| of the | | | | | | |
| Company | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Total | | | | | | |
| comprehensive | | | | | | |
| income | | | | | | |
| attributable | | | | | | |
| to: | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Owners | | 170,447 | | 87,678 | | 246,163 |
| of the | | | | | | |
| Company | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Earnings | | | | | | |
| per | | | | | | |
| share | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Basic | 5 | 2.65 | | 1.37 | | 3.84 |
| (RMB | | | | | | |
| per | | | | | | |
| share) | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| Diluted | 5 | 2.65 | | 1.21 | | 3.84 |
| (RMB | | | | | | |
| per | | | | | | |
| share) | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
| | | | | | | |
+----------------+--------+-------------+--------+-------------+--------+------------+
Unaudited Consolidated Statement of Financial Position
as at 30 June 2009
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | Note | At | | At | | At |
| | | 30/06/2009 | | 30/06/2008 | | 31/12/2008 |
| | | (Unaudited) | | (Unaudited) | | (Audited) |
| | | | | Restated | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | RMB 000 | | RMB 000 | | RMB 000 |
| | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Non current assets | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Intangible assets | | 56,705 | | 56,171 | | 57,274 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Property, plant and | | 1,825,065 | | 1,194,066 | | 1,528,846 |
| equipment | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Deferred tax asset | | 798 | | 12,364 | | 798 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | 1,882,568 | | 1,262,601 | | 1,586,918 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Current assets | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Inventories | | 125,387 | | 62,837 | | 81,507 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Trade and other | | 177,924 | | 299,767 | | 150,178 |
| receivables | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Pledged deposits | | 7,140 | | 19,539 | | 21,340 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Cash and cash equivalents | | 122,171 | | 40,632 | | 51,698 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | 432,622 | | 422,775 | | 304,723 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Total assets | | 2,315,190 | | 1,685,376 | | 1,891,641 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Current liabilities | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Trade and other payables | | (364,847) | | (163,623) | | (234,459) |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Bank borrowings | 6 | (304,957) | | (23,000) | | (23,000) |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Other borrowings | | (7,400) | | (3,644) | | (7,400) |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Financial derivative | 6 | (26,060) | | - | | - |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | (703,264) | | (190,267) | | (264,859) |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Net current assets | | (270,642) | | 232,508 | | 39,864 |
| (liabilities) | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Non-current liabilities | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Bank borrowings | 6 | (442,187) | | (655,905) | | (637,469) |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Other borrowings | | (16,275) | | (17,176) | | (15,221) |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Warrants classified as | 6 | (35,878) | | (41,151) | | (32,908) |
| liabilities | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Other liabilities | | (11,100) | | (14,800) | | (11,100) |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | (505,440) | | (729,032) | | (696,698) |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Net assets | | 1,106,486 | | 766,077 | | 930,084 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
Unaudited Consolidated Statement of Financial Position
as at 30 June 2009 (continued)
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | At | | At | | At |
| | | 30/06/2009 | | 30/06/2008 | | 31/12/2008 |
| | | (Unaudited) | | (Unaudited) | | (Audited) |
| | | | | Restated | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | RMB 000 | | RMB 000 | | RMB 000 |
| | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Equity | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Share capital | | 93,962 | | 93,482 | | 93,482 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Share premium | | 644,096 | | 638,070 | | 638,070 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Reverse acquisition | | (354,452) | | (354,452) | | (354,452) |
| reserve | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Share options reserve | | 6,157 | | 6,253 | | 6,708 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Statutory reserve | | 82,002 | | 45,188 | | 61,996 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Foreign currency | | 37,158 | | 32,404 | | 37,158 |
| translation reserve | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Retained earnings | | 597,563 | | 305,132 | | 447,122 |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| Equity attributable to | | 1,106,486 | | 766,077 | | 930,084 |
| equity holders of the | | | | | | |
| parent company | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
| | | | | | | |
+----------------------------+--------+-------------+---+-------------+----+-------------+
Unaudited Consolidated Statement of Changes in Equity
for the six months ended 30 June 2009
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| | Attributable to Equity Holders of the Parent |
+----------------------------------+---------------------------------------------------------------------------------------------------+
| | Share | Share | Reverse | Share | Statutory | Foreign | Retained | Total |
| | capital | premium | acquisition | options | reserve | currency | earnings | |
| | | | reserve | reserve | | translation | | |
| | | | | | | reserve | | |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| | RMB 000 | RMB 000 | RMB 000 | RMB 000 | RMB 000 | RMB 000 | RMB 000 | RMB 000 |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| | | | | | | | | |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Balance at 30 June 2007 | 97,914 | 668,321 | (354,452) | 3,629 | 26,054 | 5,260 | 142,224 | 588,950 |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| | | | | | | | | |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Total comprehensive income for | - | - | - | - | - | 5,720 | 94,364 | 100,084 |
| the period | | | | | | | | |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Share options reserve | - | - | - | 1,743 | - | - | - | 1,743 |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Transfer to reserve | - | - | - | - | 10,366 | - | (10,366) | - |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Foreign exchange reserve | (4,432) | (30,251) | - | (144) | - | 26,491 | - | (8,336) |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Balance at 31 December 2007 | 93,482 | 638,070 | (354,452) | 5,228 | 36,420 | 37,471 | 226,222 | 682,441 |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| | | | | | | | | |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Total comprehensive income for | - | - | - | - | - | - | 87,678 | 87,678 |
| the period | | | | | | | | |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Share options reserve | - | - | - | 1,025 | - | - | - | 1,025 |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Transfer to reserve | - | - | - | - | 8,768 | - | (8,768) | - |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Foreign exchange reserve | - | - | - | - | - | (5,067) | - | (5,067) |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Balance at 30 June 2008 | 93,482 | 638,070 | (354,452) | 6,253 | 45,188 | 32,404 | 305,132 | 766,077 |
| (restated) | | | | | | | | |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| | | | | | | | | |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Total comprehensive income for | - | - | - | - | - | 1,536 | 158,485 | 160,021 |
| the period | | | | | | | | |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Share options reserve | - | - | - | 455 | - | - | - | 455 |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Transfer to reserve | - | - | - | - | 16,808 | - | (16,808) | - |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Foreign exchange reserve | - | - | - | - | - | 3,218 | 313 | 3,531 |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Balance at 31 December 2008 | 93,482 | 638,070 | (354,452) | 6,708 | 61,996 | 37,158 | 447,122 | 930,084 |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| | | | | | | | | |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Total comprehensive income for | - | - | - | - | - | - | 170,447 | 170,447 |
| the period | | | | | | | | |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Exercise of warrants | 480 | 6,026 | - | (1,463) | - | - | - | 5,043 |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Share options reserve | - | - | - | 912 | - | - | - | 912 |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Transfer to reserve | - | - | - | - | 20,006 | - | (20,006) | - |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
| Balance at 30 June 2009 | 93,962 | 644,096 | (354,452) | 6,157 | 82,002 | 37,158 | 597,563 | 1,106,486 |
+----------------------------------+-----------+-----------+-------------+-----------+-----------+-------------+-----------+-----------+
Unaudited Consolidated Statement of Cash Flows
for the six months ended 30 June 2009
+---------------------------------------+--+-------------+--+-------------+--+------------+
| | | 6 months | | 6 months | | 12 |
| | | | | | | months |
| | | ended | | ended | | ended |
| | | 30/06/2009 | | 30/06/2008 | | 31/12/2008 |
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| | | RMB 000 | | RMB 000 | | RMB 000 |
| | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| OPERATING ACTIVITIES | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Operating profit | | 225,237 | | 102,054 | | 284,821 |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Adjustment for: | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Depreciation of property, plant and | | 44,926 | | 30,099 | | 61,366 |
| equipment | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Amortisation of land use rights | | 1,228 | | 1,065 | | 3,212 |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Allowances for doubtful debts | | - | | - | | 664 |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Gain on disposal of property, plant & | | (76) | | - | | (308) |
| equipment | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Share based payment | | 912 | | 1,025 | | 1,480 |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Movement of fair value of financial | | 26,060 | | - | | - |
| derivative | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Operating cashflow before movements | | 298,287 | | 134,243 | | 351,235 |
| in working capital | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| (Increase)/ decrease in inventories | | (43,880) | | (17,184) | | (35,854) |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| (Increase)/ decrease in receivables | | (27,746) | | (188,705) | | (36,921) |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Increase/ (decrease) in payables | | 121,733 | | (23,401) | | 45,508 |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Cash generated by operations | | 348,394 | | (95,047) | | 323,968 |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Taxes paid | | (7,817) | | - | | (2,859) |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Interest paid | | (66,889) | | (14,907) | | (54,786) |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| NET CASH GENERATED FROM OPERATING | | 273,688 | | (109,954) | | 266,323 |
| ACTIVITIES | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| INVESTING ACTIVITIES | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Interest received | | 426 | | 536 | | 1,023 |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Purchase of property, plant & | | (301,260) | | (279,238) | | (610,454) |
| equipment | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Acquisition of land use rights | | (659) | | - | | - |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Proceeds on disposal of property, | | 981 | | - | | 1,834 |
| plant & equipment | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Decrease in cash pledged deposits | | 14,200 | | 4,797 | | 2,996 |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| NET CASH USED IN INVESTING ACTIVITIES | | (286,312) | | (273,905) | | (604,601) |
| | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
Unaudited Consolidated Statement of Cash Flows
for the six months ended 30 June 2009 (continued)
+---------------------------------------+--+-------------+--+-------------+--+------------+
| | | 6 months | | 6 months | | 12 |
| | | | | | | months |
| | | ended | | ended | | ended |
| | | 30/06/2009 | | 30/06/2008 | | 31/12/2008 |
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| | | RMB 000 | | RMB 000 | | RMB 000 |
| | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| FINANCING ACTIVITIES | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Net proceeds from bank borrowings | | 77,000 | | 400,856 | | 363,173 |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Net proceeds from/ (repayment of) | | 1,054 | | (1,295) | | (3,194) |
| other borrowings | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Proceeds on issue of new shares (net) | | 5,043 | | - | | - |
| | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| NET CASH GENERATED FROM FINANCING | | 83,097 | | 399,561 | | 359,979 |
| ACTIVITIES | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| NET INCREASE IN CASH AND CASH | | 70,473 | | 15,702 | | 21,701 |
| EQUIVALENTS | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| CASH AND CASH EQUIVALENTS AT | | 51,698 | | 29,997 | | 29,997 |
| BEGINNING OF PERIOD | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| Foreign exchange difference | | - | | (5,067) | | - |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| CASH AND CASH EQUIVALENTS AT END OF | | 122,171 | | 40,632 | | 51,698 |
| PERIOD | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
| | | | | | | |
+---------------------------------------+--+-------------+--+-------------+--+------------+
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2009
1. Principal accounting policies
(a) Basis of preparation
The consolidated financial statements of West China Cement Limited and its
subsidiary undertakings (the "Group") for the period ended 31 December 2009 will
be prepared in accordance with those International Financial Reporting Standards
and Interpretations in force ("IFRS"), as adopted by the European Union, and
those parts of the Companies (Jersey) Law 1991 that are applicable to companies
preparing financial statements under IFRS.
This Interim Report has been prepared in accordance with UK AIM listing rules
which require it to be presented and prepared in a form consistent with that
which will be adopted in the annual accounts having regard to the accounting
standards applicable to such annual accounts. It has not been prepared in
accordance with IAS 34 "Interim Financial Reporting".
The policies applied are consistent with those set out in the annual report for
the year ended 31 December 2008 and have been consistently applied, unless
otherwise stated.
The consolidated financial statements are presented in Renminbi ("RMB"), the
currency of the primary economic environment in which the Group operates.
Foreign operations are included in accordance with the policies set out below.
The financial information for the six months ended 30 June 2008 and 30 June 2009
have been extracted from the accounting records of the Group. The balances as at
31 December 2008 and the results for the year then ended have been extracted
from the audited financial statements. The auditors' report on those financial
statements was unqualified.
The consolidated financial statements are prepared on a going concern basis. The
Group has a negative working capital position of RMB 270,642,000 as at 30 June
2009. The Directors are confident that the Group will be able to meet working
capital needs and service debt obligations as and when they fall due based on
strong and positive cash flows from operations. Despite the low season in the
first half of 2009 (winter months and Chinese festive seasons), the Group
generated RMB 273.7 million cash from operating activities. The Directors are
confident that the cash flow from operations will be even stronger in the second
half of 2009 and in year 2010 as Ankang plant is ramping up and the Yangxian
plant is commencing operations in 1Q2010.
The results for the six months ended 30 June 2009 were approved by the Board on
28 August 2009 and are available on the Company's website
www.westchinacement.com from 1 September 2009.
(b) Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and its subsidiary undertakings using the purchase method of
accounting. The results of the subsidiary undertakings acquired or disposed of
during the period are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the effective date of
disposal, as appropriate.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation. The acquisition of West China Cement Co. Limited ("West China
(BVI)") by West China Cement Limited on October 27, 2006 was accounted for as a
reverse acquisition, in accordance with IFRS3 'Business Combinations'.
The Company became the legal parent of West China (BVI) by way of a share
exchange agreement. This business combination is regarded as a reverse
acquisition whereby West China (BVI), the legal subsidiary, is the acquirer and
has the power to govern the financial and operating policies of the legal parent
so as to obtain benefits from its activities.
1. Principal accounting policies (continued)
(c) Foreign exchange
The functional currency and the presentation currency of the Company and its
subsidiary undertakings are Renminbi ("RMB"). Transactions in currencies other
than RMB are recorded at the rates of exchange prevailing on the dates of the
transactions. At the end of each reporting period, monetary assets and
liabilities that are denominated in foreign currencies are retranslated at the
rates prevailing at the end of the reporting period, and gains or losses arising
on retranslation are included in the net profit for the year. Non-monetary
assets and liabilities are translated using historical rate.
In the consolidated financial statements for year ended 31 December 2008, the
functional currencies of West China Cement Limited and West China Cement Co.
Limited were changed to Renminbi because there was a change in the underlying
events and conditions, and the directors considered that the appropriate date of
change was 1 January 2008. This was different to the policy adopted in the
interim financial statements for period ended June 2008 but there were no
significant differences other than some movements between reserves, and the
comparative figures (for the period to June 2008) in these interim accounts have
been restated accordingly.
The following exchange rates have been used:
+----------------+----------------+----------------+----------------+----------------+
| | At 30 June | Average rates | At 30 June | Average rates |
| | 2009 | for period | 2008 | for period |
+----------------+----------------+----------------+----------------+----------------+
| RMB: GBP | 11.3379 | 10.2127 | 13.6836 | 13.9379 |
+----------------+----------------+----------------+----------------+----------------+
| RMB: HKD | 0.8815 | 0.8814 | 0.8792 | 0.9052 |
+----------------+----------------+----------------+----------------+----------------+
| RMB: USD | 6.8319 | 6.8327 | 6.8591 | 7.0579 |
+----------------+----------------+----------------+----------------+----------------+
2. Revenue and Income
The Group's revenue and income, all generated from continuing operations,
comprises:
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| | | 6 months | | 6 months | | 12 months |
| | | | | | | |
| | | ended | | ended | | ended |
| | | 30/06/2009 | | 30/06/2008 | | 31/12/2008 |
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| | | RMB 000 | | RMB 000 | | RMB 000 |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| Sales of cement | | 574,716 | | 338,016 | | 866,126 |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| | | | | | | |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| Other operating income | | | | | | |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| VAT rebates | | 26,618 | | 14,465 | | 39,167 |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| Rental income | | - | | 45 | | 129 |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| Government incentives | | 2,000 | | 700 | | 1,454 |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| Sundry income | | 2,232 | | 649 | | 650 |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| Exchange gain | | 374 | | - | | 1,577 |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| Profit on disposal of PPE | | 266 | | - | | - |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| Creditors written back | | - | | 200 | | 1,098 |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| | | 31,490 | | 16,059 | | 44,075 |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| Investment income | | | | | | |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| Interest from deposits | | 426 | | 536 | | 1,023 |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| | | | | | | |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| Total revenue and income | | 606,632 | | 354,611 | | 911,224 |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
| | | | | | | |
+-----------------------------+------+-------------+-----+-------------+-----+------------+
Sales of cement represents the invoiced value of cement sold, net of value added
tax (VAT) and other sales taxes and after allowances for goods returned and
trade discounts.
The VAT rebate relates to a local government incentive to environmental-friendly
enterprises for recycling industry waste as production input. Only certain
approved products are entitled to this rebate. The rebate is accounted for on an
accruals basis.
Government incentives of RMB 2 million relates to incentives for the Lantian
waste heat recycling project. The incentives for year 2008 included recycling
incentives of RMB 300,000, bulk cement sale incentive of RMB 450,000, industrial
development subsidy RMB 700,000 and government subsidies.
3. Finance costs
+-------------------------------------+--+-------------+--+-------------+---+------------+
| | | 6 months | | 6 months | | 12 months |
| | | ended | | | | |
| | | 30/06/2009 | | ended | | ended |
| | | (Unaudited) | | 30/06/2008 | | 31/12/2008 |
| | | | | (Unaudited) | | (Audited) |
+-------------------------------------+--+-------------+--+-------------+---+------------+
| | | RMB 000 | | RMB 000 | | RMB 000 |
+-------------------------------------+--+-------------+--+-------------+---+------------+
| Interest and bank charges | | 53,474 | | 14,907 | | 67,722 |
+-------------------------------------+--+-------------+--+-------------+---+------------+
| Movement of fair value of financial | | 26,060 | | - | | - |
| derivative | | | | | | |
+-------------------------------------+--+-------------+--+-------------+---+------------+
| | | 79,534 | | 14,907 | | 67,722 |
+-------------------------------------+--+-------------+--+-------------+---+------------+
| Less: Interest capitalised | | (40,790) | | - | | (39,607) |
+-------------------------------------+--+-------------+--+-------------+---+------------+
| | | 38,744 | | 14,907 | | 28,115 |
+-------------------------------------+--+-------------+--+-------------+---+------------+
4. Income tax
The Group is subject to income tax on an entity basis on profits arising on or
derived from the jurisdictions in which members of the Group are domiciled and
operate. The operating and income generating subsidiaries are entitled to the
preferential tax rate of 15% under the China Western Development Plan which run
till 2010.
In addition, Shaanxi Yaobai Special Cement Co. Ltd and Xi'an Lantian Yaobai
Cement Co. Ltd are entitled to two years tax holiday from the first
profit-making year and to a 50 percent tax relief, i.e. applicable tax rate of
7.5%, for another three years thereafter.
The applicable tax rates are as follows:
+--------------------------+----+--------------+--+--------------+--+---------------+
| | | Shaanxi | | Xi'an | | Ankang Yaobai |
| | | Yaobai | | Lantian | | Cement Co. |
| | | Special | | Yaobai | | Ltd |
| | | Cement Co. | | Cement Co. | | |
| | | Ltd | | Ltd | | |
+--------------------------+----+--------------+--+--------------+--+---------------+
| Year end 2006 | | Tax free | | N/A | | N/A |
+--------------------------+----+--------------+--+--------------+--+---------------+
| Year end 2007 | | Tax free | | Tax free | | N/A |
+--------------------------+----+--------------+--+--------------+--+---------------+
| Year end 2008 | | 7.5% | | Tax free | | N/A |
+--------------------------+----+--------------+--+--------------+--+---------------+
| Year end 2009 | | 7.5% | | 7.5% | | 15% |
+--------------------------+----+--------------+--+--------------+--+---------------+
| Year end 2010 | | 7.5% | | 7.5% | | 15% |
+--------------------------+----+--------------+--+--------------+--+---------------+
During the period ended 30 June 2008, tax provision was provided for Shaanxi
Yaobai Special Cement Co. Ltd. However, there is no tax payment liabilities as
the tax provision was being offset against the deferred tax assets previously
provided.
The Group had recognised deferred tax assets at 31 December 2007 and 30 June
2008 of RMB12,364,000, of which RMB 11,343,000 arose from tax relief from
capital investment under the "Investment in domestic product and equipment in
technology transformation" scheme. For the year ended 31 December 2008, RMB
6,091,000 offset the tax liabilities incurred by Shaanxi Yaobai Special Cement
Co. Ltd. The unutilised portion of RMB 5,475,000 was reversed out and charged as
an expense in the year ended 31 December 2008.
The Group's income tax expenses comprise:
+---------------------------------+---+-------------+----+-------------+----+------------+
| | | 6 months | | 6 | | 12 months |
| | | ended | | months | | |
| | | 30/06/2009 | | ended | | ended |
| | | (Unaudited) | | 30/06/2008 | | 31/12/2008 |
| | | | | (Unaudited) | | (Audited) |
+---------------------------------+---+-------------+----+-------------+----+------------+
| | | RMB 000 | | RMB 000 | | RMB 000 |
+---------------------------------+---+-------------+----+-------------+----+------------+
| PRC corporation tax | | | | | | |
+---------------------------------+---+-------------+----+-------------+----+------------+
| Current tax | | 16,472 | | - | | - |
+---------------------------------+---+-------------+----+-------------+----+------------+
| Deferred tax | | - | | 5 | | 11,566 |
+---------------------------------+---+-------------+----+-------------+----+------------+
| | | 16,472 | | 5 | | 11,566 |
+---------------------------------+---+-------------+----+-------------+----+------------+
| | | | | | | |
+---------------------------------+---+-------------+----+-------------+----+------------+
5. Earnings per share
Basic earnings per share
Basic earnings per share are calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary shares
in issue during the period.
+---------------------------------+---+-------------+----+-------------+----+------------+
| | | 6 months | | 6 | | 12 months |
| | | ended | | months | | |
| | | 30/06/2009 | | ended | | ended |
| | | (Unaudited) | | 30/06/2008 | | 31/12/2008 |
| | | | | (Unaudited) | | (Audited) |
+---------------------------------+---+-------------+----+-------------+----+------------+
| | | | | | | |
+---------------------------------+---+-------------+----+-------------+----+------------+
| Profit attributable to equity | | 170,447 | | 87,678 | | 246,163 |
| holders of the Company (RMB | | | | | | |
| 000) | | | | | | |
+---------------------------------+---+-------------+----+-------------+----+------------+
| Weighted average number of | | 64,414 | | 64,113 | | 64,113 |
| ordinary shares in issue | | | | | | |
| (thousands) | | | | | | |
+---------------------------------+---+-------------+----+-------------+----+------------+
| Earnings per share (RMB per | | 2.65 | | 1.37 | | 3.84 |
| share) | | | | | | |
+---------------------------------+---+-------------+----+-------------+----+------------+
| | | | | | | |
+---------------------------------+---+-------------+----+-------------+----+------------+
Diluted earnings per share
The Company has two categories of dilutive potential ordinary shares - share
options and share warrants to the loan creditor. For the period ended 30 June
2009 and the year ended 31 December 2008, the options and warrants were not
dilutive.
+--------------+--------+-------------+--------+-------------+--------+------------+
| | | 6 | | 6 | | 12 |
| | | months | | months | | months |
| | | ended | | ended | | ended |
| | | | | | | |
| | | 30/06/2009 | | 30/06/2008 | | 31/12/2008 |
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+--------------+--------+-------------+--------+-------------+--------+------------+
| | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+------------+
| Profit | | 170,447 | | 87,678 | | 246,163 |
| attributable | | | | | | |
| to equity | | | | | | |
| holders of | | | | | | |
| the Company | | | | | | |
| (RMB 000) | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+------------+
| | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+------------+
| Weighted | | 64,414 | | 64,113 | | 64,113 |
| average | | | | | | |
| number | | | | | | |
| of | | | | | | |
| ordinary | | | | | | |
| shares | | | | | | |
| in issue | | | | | | |
| (thousands) | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+------------+
| Adjustment | | - | | 8,198 | | - |
| for | | | | | | |
| dilutive | | | | | | |
| potential | | | | | | |
| ordinary | | | | | | |
| shares | | | | | | |
| (thousands) | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+------------+
| Weighted | | 64,414 | | 72,311 | | 64,113 |
| average | | | | | | |
| number | | | | | | |
| of | | | | | | |
| ordinary | | | | | | |
| shares | | | | | | |
| for | | | | | | |
| diluted | | | | | | |
| earnings | | | | | | |
| (thousands) | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+------------+
| | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+------------+
| Diluted | | 2.65 | | 1.21 | | 3.84 |
| Earnings | | | | | | |
| per | | | | | | |
| share | | | | | | |
| (RMB per | | | | | | |
| share) | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+------------+
| | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+------------+
6. Bank Borrowings and related liabilities
On 29 May 2008, the Company entered into a loan facility agreement for US$60
million with accompanying warrants. The interest rate is 13.5% per annum. As
part of the loan facility the Company also entered into a warrant agreement.
The warrant holders received warrants to subscribe for 7,802,142 ordinary shares
in the Company at a strike price representing a 15% premium to the average
equivalent closing price per share over the 20 trading days immediately
preceding the date of the facility agreement, subject to anti-dilution
adjustments and strike price resets under certain circumstances. The warrants
may be exercised at any time up to 36 months after the issuance. The warrant
holders are given the option to put the outstanding warrants ("Put Option") for
an amount that would provide an internal rate of return of 19% on the whole loan
and therefore the warrants have been classified as liabilities. The Put Option
can be exercised after 30 months in certain circumstances or earlier in the
event of default. Should the warrant holders choose to exercise their warrants
in the normal course, they can opt for either share or cash settlement on
exercise of the warrants, and the settlement option gives rise to a financial
derivative. The comparatives to 30 June 2008 have been restated to reflect the
Put Option associated with these warrants being classified as a liability.
50% of the loan is repayable on a date falling 24 months from the date of
utilisation and the remaining 50% on a date falling 36 months from the date of
utilisation of the Facility. The Company shall use its commercially reasonable
efforts to achieve a "Qualifying Re-listing" with various other conditions
within 30 months from the date of utilisation of the Facility. No assurance is,
however, given by the Company to investors as to the achievability of this
undertaking. However, should such a Qualifying Re-listing not take place, the
Company must repay the principal of the loan outstanding and the warrant holders
can exercise the Put Option on the portion of the outstanding warrants.
The loan was initially recorded at cost of US$53,106,000, being the fair value,
and subsequently at amortised cost. The Put Option was recognised in other
liabilities at cost, US$4,413,000, being the fair value, and amortised over a 30
month period. The fair values of the loan and put option were calculated by
discounting the future cash flow of the loan and interest payments. The directly
attributable transaction costs were debited to the loan liability.
The Directors have identified that the settlement option of the warrants
attached to the US$60 million loan facility was an embedded derivative. The
value of the settlement option is derived from the strike price, the Company's
share performance and the cash flow relating to the Put Option. The settlement
option is therefore a financial derivative, which is classified as a financial
liability at "fair value through profit or loss". This derivative therefore has
the potential to bring volatility in the future periods as there could be
significant movements in the fair value of the financial liability. At 30 June
2009, the fair value of this financial liability has been valued at RMB 26
million, and finance charges in the Consolidated Statement of Comprehensive
Income include a charge of RMB 26 million for the period. These warrants have
been valued using the Black-Scholes model with the following main assumptions:
+------------+--------+---------+
| Date | | 29 May |
| of | | 2008 |
| grant | | |
+------------+--------+---------+
| Spot | | GBP1.80 |
| price | | |
| as at | | |
| 30 | | |
| June | | |
| 2009 | | |
+------------+--------+---------+
| Expected | | 60% |
| volatility | | |
+------------+--------+---------+
Expected volatility was determined by calculating the historical volatility of
the Company's share price over the previous year. As an illustration of the
volatility of the warrants valuation, the charge to the Consolidated Statement
of Comprehensive Income at 30 June 2009 would have been RMB 114.6m if the share
price had been GBP3.00.
INDEPENDENT REVIEW REPORT TO WEST CHINA CEMENT LIMITED
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2009 which comprises the Unaudited Consolidated Statement of Comprehensive
Income, Unaudited Consolidated Statement of Financial Position, Unaudited
Consolidated Statement of Changes in Equity and Unaudited Consolidated Statement
of Cash Flows and the related notes. We have read the other information
contained in the half-yearly financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our
engagement. Our review has been undertaken so that we might state to the company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the AIM Rules of the London Stock Exchange.
As disclosed in note1, the annual financial statements of the group are prepared
in accordance with IFRSs as adopted by the European Union. The condensed set of
financial statements included in this half-yearly financial report has been
prepared using accounting policies consistent with those to be applied in the
next annual financial statements.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2009 is not prepared, in all material
aspects, in accordance with the AIM Rules of the London Stock Exchange.
PKF (UK) LLP
Chartered Accountants
Leeds 28 August 2009
This information is provided by RNS
The company news service from the London Stock Exchange
END
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