TIDMWCC
RNS Number : 1455I
West China Cement Limited
05 March 2010
West China Cement Limited ("WCC" or "The Company")
Full Year 2009 Preliminary Results
5 March 2010
West China Cement, the AIM listed cement production and sales company located in
Shaanxi Province, China, today announces its preliminary results for the year
ended 31 December 2009.
Key Financial Highlights
*Revenue increased by 75% from RMB866 million in 2008 to RMB1,517 million in
2009.
*Operating profit increased by 118% from RMB283 million in 2008 to RMB616
million in 2009.
*Gross profit margins improved from 36% to 42% and operating profit margins
improved from 33% to 41%, reflecting strong product prices, efficiency gains and
economies of scale.
* Redemption of the 7.8 million warrants in November 2009, giving rise to an
exceptional charge of RMB168 million, removing liquidity risk and risk of
substantial dilution to our shareholders.
*Pre-tax profit increased by 111% to RMB544million before the exceptional item
and 45% to RMB375 million after the exceptional item. Earnings per share
amounted to RMB7.73 before this exceptional charge and RMB5.12 after the
exceptional charge.
*Return on Capital Employed (EBIT/Net Assets) of 47.6% (2008: 30.5%).
*We are on schedule for listing on the Main Board of the Hong Kong Stock
Exchange before 30 June, 2010.
Key Operational Highlights
*We sold a total of 5.08million tonnes of cement in 2009 (2008: 3.45 million
tonnes).
*Our Pucheng and Lantian plants produced around capacity, with Pucheng producing
1.38 million tonnes (2008: 1.43 million tonnes) and Lantian producing 2.15
million tonnes (2008: 2.03 million).
*Our new Ankang plant, commissioned in January, contributed 1.34 million tonnes
of production in its first year of operation compared with design capacity in
2009 of 1.8 million tonnes.
*In the Hanzhong Region, in the South West of Shaanxi, the Yangxian plant will
start cement production ahead of schedule this month and the Mianxian plant is
due to be commissioned in the third quarter. Both plants have a design capacity
of 1.1 million tonnes.
*We embarked on our first strategic acquisitions in 2009 - the Xiushan Cement
Plant with a capacity of 700,000 tonnes and an 80% investment in the Lonqiao
Cement Plant which has a capacity of 1.1 million tonnes. Both of these plants
are in Shangluo Region, allowing us to achieve a market leading position in
Southern Shaanxi.
CHAIRMAN'S REVIEW
2009 was a momentous year for your company. We achieved an Operating Profit of
RMB616 million, more than double that of 2008, which itself was 62% higher than
2007. Sales increased by 48% to 5.08 million tonnes. The Ankang plant was
completed and produced 1.34 million tonnes, compared with its 2009 design
capacity of 1.8 million tonnes. Work began on the Yangxian and Mianxian plants,
near Hanzhong in the South West of the province. Located approximately 100
kilometres to the South of the provincial capital, Xi'an, the 700,000 tonne
Xiushan cement plant in Zhen'an County ("the Zhen'an Plant") was acquired and
subsequently the investment was announced of an 80% stake in the 1.1 million
tonne Shangluo Longqiao Yaobai Cement Plant in Danfeng county ("the Danfeng
Plant"), South East of Xi'an. I am delighted to report that the Yangxian plant
kiln was fired up at the end of the year and commissioning is scheduled for the
current quarter. This, and the neighbouring Mianxian plant, which is due to
start up in the third quarter, are on budget.
The effect of all this may be quantified in tonnage terms as increasing our
capacity from 3.6 million tonnes at the start of 2009 to 9.6 million tonnes by
mid 2010, after adding Yangxian, Mianxian and Danfeng. In addition, we have two
1.1 million tonne lines in the late stages of consideration. We are therefore on
track to exceed our objective of getting to production of 8 to 10 million tonnes
by 2010. Equally importantly, these expansions give the company market
leadership across the South of the province, as well as in Weinan to the North.
It is against this background that the board decided to list the company on the
Main Board of the Hong Kong Stock Exchange (HKEx). At the time of the Company's
admission to the AIM market in 2006, the Company was relatively small with
capacity of 1.5 million tonnes. AIM enabled the Company to take advantage of the
remarkable growth opportunity afforded by its local market. It has now matured
such that a main board listing is appropriate. We considered the alternatives of
London and Hong Kong, with appropriate input from advisers, and decided that
Hong Kong was its natural home. The Hong Kong investment community will better
understand the company, and be able to value it against a peer group of Chinese
cement producers. We believe that a dual listing would give rise to unnecessary
complexity, and therefore intend to delist on AIM at the time of the Hong Kong
listing. We are anxious to ensure that current shareholders are able to retain
their shares, and have access to a market in them, and have made arrangements to
ensure this.
In preparation for the relisting, we redeemed the warrants which were granted to
loan creditors in 2008. This gave rise to an exceptional charge of RMB168
million to our 2009 consolidated statement of comprehensive income. Pre-tax
profit before this exceptional item amounted to RMB544 million, an increase of
111% on the prior year. Pre-tax profit after the exceptional item was RMB375
million, a 45% increase. Earnings per share amounted to RMB7.73 before this
exceptional charge and RMB5.12 after the exceptional charge.
I would like to draw your attention to the notice of annual general meeting,
being sent out with this report. This sets out in some detail the proposed
listing on the HKEx, cancellation of the listing on AIM (conditional on and
with effect from HKEx Listing), and the steps shareholders may wish to take
relative to their shares on the Hong Kong market if and when the relisting there
takes place.
WCC has made significant progress in terms of health and safety during the year.
Sadly there was a fatal injury. The company is committed to eradicating injuries
of any sort, and has embarked on a new safety strategy to this end.
Finally, and with some sadness, I have to report that Brett Miller and I intend
to stand down from the board at the time of the Hong Kong listing. At that time
I expect that Mr. Jimin Zhang, the Chief Executive, will assume the role of
Chairman, Mr. Zhenjun Tian will rejoin the board as Chief Operating Officer, and
that a number of well qualified Chinese non-executive directors will join the
board. It is absolutely appropriate that the board will be based in China and
Hong Kong. Furthermore I believe that Mr. Zhang has proved his credentials as
an outstanding leader, and that he has a great team. I think the company's
record speaks for itself.
This year in which WCC 'came of age' would not have happened without an
exceptional level of commitment from the management and all employees of WCC. I
thank them on behalf of shareholders for their outstanding achievements.
Robert Robertson
Non Executive Chairman
CHIEF EXECUTIVE'S REVIEW
Whilst 2009 has proved to be an extremely difficult year for the global economy,
I am pleased to report that West China Cement ("WCC") has been able to build on
its excellent operational performance and acquisition and organic growth
execution capabilities to gain an increasingly strong position in the Southern
Shaanxi cement market. The Shaanxi economy has remained robust during the global
financial crisis - due to a lower reliance on exports compared to the coastal
provinces as well as the continued focus on infrastructure development
underlined by the PRC Government's fiscal stimulus measures. We have been able
to take full advantage of this macro economic backdrop to significantly
strengthen our competitive position in our market.
Our operating environment has remained buoyant. We have sold a total of 5.08
million tonnes of cement in 2009 (2008: 3.45 million tonnes). Our new Ankang
plant contributed 1.34 million tonnes of production in its first year of
operation. Our margins have strengthened as a result of increased production
efficiencies, stability in our input costs and maintaining the higher prices
achieved in the second half of 2008. Gross profit margins rose from 36% to 42%
and operating profit margins rose from 33% to 41%, reflecting efficiency gains
and economies of scale.
Our expansion in 2009 has been rapid. We have continued our organic growth
strategy of new build plants in key areas in the South of our Province with the
completion of our Ankang plant. The construction of our Yangxian and Mianxian
plants are on schedule. We have also embarked on our first strategic
acquisitions, both of these in Shangluo Region - the acquisition of the Xiushan
cement plant and business in Zhen'an county ("the Zhen'an plant") and the
investment in an 80% stake of the Longqiao plant in Danfeng county ("the Danfeng
plant").
On the financial side we have taken two extremely significant steps for the
future development of our company. Firstly, in October we negotiated redemption
of the 7.8 million warrants held by the lenders of the US$60 million loan
facility entered into in May 2008. We believe that the redemption of these
Warrants secures the long term interest of the Company and its shareholders, not
only facilitating our proposed Hong Kong Listing, but also removing the effect
of volatility on earnings in future periods, cash flow risk and the possibility
of dilution at a low share price. Secondly, we have in late 2009 commenced work
on a listing of our shares on the Main Board of the Hong Kong Stock Exchange
(HKEx). Whilst the London AIM market has served the company and its shareholders
very well since 2006, we feel that the HKEx will provide us with a larger, more
liquid equity platform that allows our shares to be benchmarked against our HKEx
listed Chinese cement peer group.
Financial Results
2009 has been another record year in terms of our financial performance. We
again achieved our highest ever sales revenue of RMB1,517 million (2008: RMB866
million), operating profit of RMB616 million (2008: RMB283 million) and profit
after tax of RMB330 million (2008: RMB246 million). This is especially
commendable considering the costs of the redemption of the 7.8 million warrants
took RMB168 million off our bottom line. The cash cost for the warrant
redemption was US$30.2 million (RMB206million) of which the difference of
RMB38million has been written off against warrants classified as liabilities.
Some of the years significant financial highlights include:
*Revenue increased by 75% from RMB866 million in 2008 to RMB1,517 million in
2009.
*Operating profit increased by 118% from RMB283 million in 2008 to RMB616
million in 2009.
*Gross profit margins improved from 36% to 42% and operating profit margins
improved from 33% to 41%, reflecting strong product prices, efficiency gains and
economies of scale.
* Redemption of the 7.8 million warrants in November 2009, giving rise to an
exceptional charge of RMB168 million, removing liquidity risk and risk of
substantial dilution to our shareholders.
*Pre-tax profit increased by 111% to RMB544 million before the exceptional item
and 45% to RMB375 million after the exceptional item. Earnings per share
amounted to RMB7.73 before this exceptional charge and RMB5.12 after the
exceptional charge.
*Return on Capital Employed (EBIT/Net Assets) of 47.6% (2008: 30.5%).
Expansion and Acquisitions
We have continued to make significant progress in our organic expansion
strategy. The Ankang plant, in the South East of Shaanxi, was commissioned in
January and has produced 1.34 million tonnes of cement in 2009 compared with
design capacity of 1.8 million tonnes. The waste heat recycling plant was
completed in August, generating 11 gigawatt hours of electricity, equivalent to
RMB4 million electricity cost savings in 2009. The conveyor belt between the
quarry and the plant was completed in November, further reducing cement
production costs.
In the Hanzhong Region, in the South West of Shaanxi, the Yangxian plant started
clinker production in January 2010 and will start to sell cement in March 2010.
The Mianxian plant is due to be commissioned in the third quarter of 2010. Both
plants have a design capacity of 1.1 million tonnes.
We also completed our first acquisitions, moves that we see as strategically
crucial in achieving a market leading position in southern Shaanxi. We completed
the acquisition of the Zhen'an plant, a 700,000 tonne facility situated in
between our Lantian and Ankang plants. The results from this plant have been
consolidated into the Group's financial statements with effect from 1 August
2009. We have also entered into a joint venture arrangement whereby we acquired
an 80% investment in the Danfeng plant, located approximately 150km east of the
Zhen'an plant. These are the only two modern cement facilities in Shangluo
County and give us a very strong position in this market.
Operational and Financial Review
2009 has been a remarkable year for the Company. Driven by continued strong
fixed asset investment growth, demand for our cement products remained buoyant
and prices have remained stable. Our cement has been used in numerous
infrastructure projects - including the Zhengzhou (Henan) to Xi'an Rail
Passenger Line, the Baotou (Inner Mongolia) to Xi'an Railway and the Shiyan
(Hubei) to Tianshui (Gansu) Expressway. In addition, we have also won tenders
for new projects such as the Xi'an to Ankang and Xi'an to Chengdu (Sichuan)
Railway lines. For the year ended 31 December 2009, we produced 5.13 million
tonnes (2008: 3.47 million tonnes) of cement. The increased volume represents
contribution from our new Ankang and Zhen'an plants.
Selling prices
Our selling prices are primarily affected by the supply and demand for cement in
the regions where we operate. The average selling price of our cement was RMB297
(2008: RMB255) per tonne in 2009. In mid 2008, we increased prices of our cement
products to pass on the increased cost of coal to the end user. Prices remained
stable in 2009 as a result of increased building and construction activity in
the region.
Costs
Our operations are significantly affected by the cost of coal and electricity.
The cost of coal remained stable throughout 2009. In 2009, coal prices declined
compared with 2008 due to reduced demand as a result of the global financial
crisis. Our average purchase price of coal was RMB 443 per ton in 2009 (2008:
RMB 521 per ton). In November 2009, the Shaanxi Electric Power Company increased
the electricity tariff by RMB 0.0367 per kwh. This is equivalent to an addition
of approximately RMB 3 per ton of cement produced. During the period of
increasing electricity prices, the contribution from our waste heat recycling
plants has become more evident.
Capital Expenditure
In order to meet the growing demand for our products, we have expanded our
capacity both through the construction of new production lines and through
acquisitions.
After receiving board approval in March 2009, we embarked on the construction of
the Yangxian and Mianxian plants. The kiln at Yangxian plant was successfully
fired up on 31 December 2009 and clinker production has met designed capacity
levels with production and sales of cement expected to commence in March after
the Chinese New Year holiday. I am pleased that our Yangxian plant has been
completed ahead of schedule and within budget. The Mianxian plant is due for
completion in the third quarter of this year and to date construction is within
the planned timetable and budget.
We have also completed improvements to some of our existing plants with the aim
of increasing productivity during peak season periods and reducing production
costs during normal operations. In early 2009, we installed new grinding
machines at the Lantian and Pucheng plants. In December of 2009 we modified the
cement milling facility, which was part of the Xiushan acquisition and is
located approximately 10 kilometres from our Ankang plant, to grind slag. The
ground slag will be mixed into our Ankang cement production, allowing us to
increase sales by 200,000 tonnes per annum.
In connection with this expansion, we incurred capital expenditure of RMB750
million in 2009 (2008: RMB669 million). We plan to continue our expansion
strategy, by acquisition or the addition of new capacity, in order to strengthen
our market position in Shaanxi Province, where we are now the second largest
producer. We are currently planning the construction of two additional 2500t/d
production lines which are subject to Board approval. On completion at year end
our total production capacity will increase to 11.8 million tonnes per annum and
we expect to be the largest cement producer in Shaanxi.
Financing
In addition to cash flow generated from operations, we have raised additional
debt financing in order to finance our working capital needs, expansion,
acquisitions and the redemption of the warrants. We raised net bank borrowings
of RMB776 million during 2009, comprising an offshore loan of US$50 million and
Renminbi loans. Our gearing (total debts, net of cash and restricted cash,
divided by total capital which comprises net debt and total equity) has
increased from 41% in 2008 to 50% in 2009. I believe the gearing ratios are at a
reasonable level for a fast growing cement business in the PRC. I am also glad
that WCC has gained recognition and support from major financial institutions
both in China and internationally.
Since the year end, a number of steps have been taken to extend the term of our
debt, including an agreement to raise a two-year facility to repay the US$60
million loan facility in full before June and agreements to lengthen the terms
of existing loans. The effect of these arrangements will be to reduce our
current liabilities by at least RMB1 billion and reduce the interest rates
payable on our debt.
Research and Development
Our primary focus in our research and development efforts is to increase the
percentage of additives in our clinker, thus lowering our production costs. We
conduct research on various materials and their compatibility as additives to
clinker. We substitute natural gypsum by recycling desulfurised gypsum - a waste
product from power stations. We also use shale and mine tailings in our
production of clinker.
In addition to our own research and development efforts, we leverage our
cooperation with leading research institutions, such as the Xi'an University of
Architecture and Technology and The Tianjin Cement Industrial Design Institute.
We believe that continuous technological innovation will allow us to further
lower our production costs and improve the quality of our products.
Safety and Environment
We continue in our efforts to reduce emissions and energy consumption. The
Lantian waste heat recycling plant, which was completed in August 2008,
generated 14 gigawatt hours of electricity during the reporting period, cutting
our consumption of electricity at Lantian by approximately 20% over the year.
The Ankang waste heat recycling plant started running in the third quarter of
2009 and will cut our electricity consumption by a similar amount at the Ankang
plant in 2010 and going forward. We are planning the construction of waste heat
recycling plants at our other plants in the future.
We continue to focus on safety and other environmental procedures. During 2009,
we have set up the Safety and Environmental Protection Department, as a separate
department from our Production Department where this function was located
previously. This Department will continuously monitor and review our safety
procedures and we will continue to strive for the best safety standards possible
in our industry.
People
Our operations continue to grow rapidly - from 2 operational plants at the end
of 2008 to 6 operational plants at the end of 2009. This has led to a growth in
our headcount to 2,600 people by the end of 2009 (2008: 1,353 people). We
believe that our staff are the Company's most valuable assets and they are
essential to the long term success of the Group. We continue to invest in the
development of our people and to attract and retain the best talents in the
region and beyond.
At the senior management and board level, there will be some changes in
preparation for the HKEx listing. I will be taking up the position of Chairman
and will be focusing on the strategic aspects of the business. Mr Tian Zhenjun,
who was the Financial Director prior to Ms Low Po Ling, will take up the
position of COO and will focus on the day to day operational issues. We will
also be joined on the board by one new non-executive director and three
independent non-executive directors upon Listing on the HKEx.
I would also like to express my deepest gratitude to our Non Executive Chairman
Robbie Robertson and Non Executive Director Brett Miller, who subject to our
successful listing on the Main Board of the HKEx will step down from the Board.
Whilst we have all identified that it is appropriate that the board of directors
is based in Hong Kong and China for our HKEx listing, the company remains
indebted to Robbie and Brett for their hard work, expertise and guidance over
the past 3 years.
2010 Outlook
We plan to continue our growth strategy into 2010. If reasonable opportunities
arise, this may include expansion of our production through new capacity
construction or acquisitions, within Shaanxi Province or into neighbouring
provinces. Subject to the Board's approval, we plan to embark on the
construction of two additional 2500t/d production lines. Based on this, our
planned production capacity will increase to 11.8 million tonnes per annum by
the end of 2010. Our trading in the first two months of this year has the
reflected the normal seasonal patterns influenced by the winter weather and the
Chinese New Year holidays. We expect continued robust demand for our cement
products in 2010, led by infrastructure growth and urbanisation trends in
Shaanxi Province.
Another major event for WCC in 2010 is the planned Listing of WCC's shares on
the HKEx. On 9 February 2010, we submitted our application for a new listing of
the shares of the Company on the main board of HKEx (the "Listing"). The Listing
is subject to, amongst other things, the approval of the listing sub-committee
of the board of directors of the HKEx, and, subject to this approval, it is
expected that the Listing on the HKEx may occur by June 2010.
WCC has grown from a RMB0.3 billion revenue company in 2006 to RMB 1.5 billion
in 2009.. This remarkable achievement is attributable to all our hard-working
employees, our dedicated management team, our customers and suppliers, the
various government authorities, our bankers, our advisers, and last but not
least, our supportive shareholders. My many thanks to all of you. I would like
to reassure all stakeholders that WCC's dedication to growth and excellence
remains resolute.
Jimin Zhang
Chief Executive
Consolidated statement of comprehensive income
For the year ended 31 December 2009
(All amounts in RMB thousands unless otherwise stated)
+-------------------------------------+-----------+------------+
| | Year ended 31 |
| | December |
+-------------------------------------+------------------------+
| | 2009 | 2008 |
+-------------------------------------+-----------+------------+
| | | (Restated) |
+-------------------------------------+-----------+------------+
| Revenue | 1,516,766 | 866,126 |
+-------------------------------------+-----------+------------+
| Cost of sales | (878,087) | (556,073) |
+-------------------------------------+-----------+------------+
| Gross profit | 638,679 | 310,053 |
+-------------------------------------+-----------+------------+
| | | |
+-------------------------------------+-----------+------------+
| Selling and marketing expenses | (15,064) | (12,018) |
+-------------------------------------+-----------+------------+
| Administrative expenses | (77,846) | (55,224) |
+-------------------------------------+-----------+------------+
| Other income | 71,526 | 40,617 |
+-------------------------------------+-----------+------------+
| Other gainslosses- net | (1,057) | (184) |
+-------------------------------------+-----------+------------+
| Operating profit | 616,238 | 283,244 |
+-------------------------------------+-----------+------------+
| | | |
+-------------------------------------+-----------+------------+
| Finance income | 1,190 | 2,600 |
+-------------------------------------+-----------+------------+
| Finance costs | | |
+-------------------------------------+-----------+------------+
| - Loss on redemption of warrants | (168,451) | - |
+-------------------------------------+-----------+------------+
| - Other finance costs | (73,830) | (28,115) |
+-------------------------------------+-----------+------------+
| Finance costs - net | (241,091) | (25,515) |
+-------------------------------------+-----------+------------+
| | | |
+-------------------------------------+-----------+------------+
| Profit before income tax | 375,147 | 257,729 |
+-------------------------------------+-----------+------------+
| Income tax expense | (44,687) | (11,566) |
+-------------------------------------+-----------+------------+
| Profit for the year | 330,460 | 246,163 |
+-------------------------------------+-----------+------------+
| | | |
+-------------------------------------+-----------+------------+
| Other comprehensive income | - | - |
+-------------------------------------+-----------+------------+
| | | |
+-------------------------------------+-----------+------------+
| Total comprehensive income for the | 330,460 | 246,163 |
| year | | |
+-------------------------------------+-----------+------------+
| | | |
+-------------------------------------+-----------+------------+
| Attributable to shareholders of the | 330,460 | 246,163 |
| Company | | |
+-------------------------------------+-----------+------------+
| | | |
+-------------------------------------+-----------+------------+
| Earnings per share for profit | | |
| attributable to the shareholders of | | |
| the Company during the year | | |
| (expressed in Renminbi per share) | | |
+-------------------------------------+-----------+------------+
| Basic earnings per share | 5.12 | 3.84 |
+-------------------------------------+-----------+------------+
| | | |
+-------------------------------------+-----------+------------+
| Diluted earnings per share | 5.07 | 3.83 |
+-------------------------------------+-----------+------------+
| | | |
+-------------------------------------+-----------+------------+
| Dividends | - | - |
+-------------------------------------+-----------+------------+
Consolidated balance sheet
As at 31 December 2009
(All amounts in RMB thousands unless otherwise stated)
+----------------------------------------+--------------+------------+
| | As at 31 December |
+----------------------------------------+---------------------------+
| | 2009 | 2008 |
+----------------------------------------+--------------+------------+
| | | (Restated) |
+----------------------------------------+--------------+------------+
| ASSETS | | |
+----------------------------------------+--------------+------------+
| Non-current assets | | |
+----------------------------------------+--------------+------------+
| Property, plant and equipment | 2,611,502 | 1,540,533 |
+----------------------------------------+--------------+------------+
| Land use rights | 124,571 | 76,521 |
+----------------------------------------+--------------+------------+
| Mining rights | 46,373 | 27,907 |
+----------------------------------------+--------------+------------+
| Other intangible assets | 65,104 | - |
+----------------------------------------+--------------+------------+
| Deferred income tax assets | 13,540 | 798 |
+----------------------------------------+--------------+------------+
| | 2,861,090 | 1,645,759 |
+----------------------------------------+--------------+------------+
| Current assets | | |
+----------------------------------------+--------------+------------+
| Inventories | 128,979 | 81,507 |
+----------------------------------------+--------------+------------+
| Trade and other receivables and | 317,670 | 125,770 |
| prepayments | | |
+----------------------------------------+--------------+------------+
| Cash and cash equivalents | 346,258 | 37,038 |
+----------------------------------------+--------------+------------+
| Restricted cash | 19,582 | 35,999 |
+----------------------------------------+--------------+------------+
| | 812,489 | 280,314 |
+----------------------------------------+--------------+------------+
| Total assets | 3,673,579 | 1,926,073 |
+----------------------------------------+--------------+------------+
| | | |
+----------------------------------------+--------------+------------+
| EQUITY | | |
+----------------------------------------+--------------+------------+
| Capital and reserves attributable to | | |
| shareholders of the Company | | |
+----------------------------------------+--------------+------------+
| Share capital | 97,623 | 96,811 |
+----------------------------------------+--------------+------------+
| Share premium | 672,775 | 662,636 |
+----------------------------------------+--------------+------------+
| Share options reserve | 5,439 | 6,708 |
+----------------------------------------+--------------+------------+
| Reverse acquisition reserve | (341,304) | (341,304) |
+----------------------------------------+--------------+------------+
| Statutory reserves | 118,140 | 63,163 |
+----------------------------------------+--------------+------------+
| Retained earnings | 717,553 | 442,070 |
+----------------------------------------+--------------+------------+
| | 1,270,226 | 930,084 |
+----------------------------------------+--------------+------------+
| Minority interest | 25,000 | - |
+----------------------------------------+--------------+------------+
| Total equity | 1,295,226 | 930,084 |
+----------------------------------------+--------------+------------+
| | | |
+----------------------------------------+--------------+------------+
| LIABILITIES | | |
+----------------------------------------+--------------+------------+
| Non-current liabilities | | |
+----------------------------------------+--------------+------------+
| Borrowings | 360,058 | 407,069 |
+----------------------------------------+--------------+------------+
| Warrants classified as liabilities | - | 32,908 |
+----------------------------------------+--------------+------------+
| Provisions for other liabilities and | 6,265 | - |
| charges | | |
+----------------------------------------+--------------+------------+
| Deferred income tax liabilities | 8,079 | - |
+----------------------------------------+--------------+------------+
| Other liabilities | 117,049 | 17,317 |
+----------------------------------------+--------------+------------+
| | 491,451 | 457,294 |
+----------------------------------------+--------------+------------+
| Current liabilities | | |
+----------------------------------------+--------------+------------+
| Trade and other payables | 559,395 | 269,511 |
+----------------------------------------+--------------+------------+
| Current income tax liabilities | 38,639 | - |
+----------------------------------------+--------------+------------+
| Borrowings | 1,288,868 | 269,184 |
+----------------------------------------+--------------+------------+
| | 1,886,902 | 538,695 |
+----------------------------------------+--------------+------------+
| | | |
+----------------------------------------+--------------+------------+
| Total liabilities | 2,378,353 | 995,989 |
+----------------------------------------+--------------+------------+
| | | |
+----------------------------------------+--------------+------------+
| Total equity and liabilities | 3,673,579 | 1,926,073 |
+----------------------------------------+--------------+------------+
| | | |
+----------------------------------------+--------------+------------+
| Net current liabilities | (1,074,413) | (258,381) |
+----------------------------------------+--------------+------------+
| | | |
+----------------------------------------+--------------+------------+
| Total assets less current liabilities | 1,786,677 | 1,387,378 |
+----------------------------------------+--------------+------------+
| | | |
+----------------------------------------+--------------+------------+
Company Balance sheet
As at 31 December 2009
(All amounts in RMB thousands unless otherwise stated)
+------------------------------------+-----------+---------------+
| | As at 31 December |
+------------------------------------+---------------------------+
| | 2009 | 2008 |
+------------------------------------+-----------+---------------+
| | | (Restated) |
+------------------------------------+-----------+---------------+
| ASSETS | | |
+------------------------------------+-----------+---------------+
| Non-current assets | | |
+------------------------------------+-----------+---------------+
| Investments in subsidiaries | 447,285 | 447,285 |
+------------------------------------+-----------+---------------+
| | | |
+------------------------------------+-----------+---------------+
| Current assets | | |
+------------------------------------+-----------+---------------+
| Amounts due from subsidiary | 726,691 | 658,647 |
| undertakings | | |
+------------------------------------+-----------+---------------+
| Other receivables | 14,592 | 26 |
+------------------------------------+-----------+---------------+
| Dividend receivable | 44,078 | 3,026 |
+------------------------------------+-----------+---------------+
| Cash and cash equivalents | 27,758 | 4,200 |
+------------------------------------+-----------+---------------+
| Restricted cash | 14,572 | 14,659 |
+------------------------------------+-----------+---------------+
| | 827,691 | 680,558 |
+------------------------------------+-----------+---------------+
| | | |
+------------------------------------+-----------+---------------+
| Total assets | 1,274,976 | 1,127,843 |
+------------------------------------+-----------+---------------+
| | | |
+------------------------------------+-----------+---------------+
| EQUITY | | |
+------------------------------------+-----------+---------------+
| Capital and reserves attributable | | |
| to the | | |
| Company's shareholders | | |
+------------------------------------+-----------+---------------+
| Share capital | 97,623 | 96,811 |
+------------------------------------+-----------+---------------+
| Share premium | 672,775 | 662,636 |
+------------------------------------+-----------+---------------+
| Share options reserves | 5,439 | 6,708 |
+------------------------------------+-----------+---------------+
| Accumulated losses | (211,977) | (50,705) |
+------------------------------------+-----------+---------------+
| Total equity | 563,860 | 715,450 |
+------------------------------------+-----------+---------------+
| | | |
+------------------------------------+-----------+---------------+
| LIABILITIES | | |
+------------------------------------+-----------+---------------+
| Non-current liabilities | | |
+------------------------------------+-----------+---------------+
| Borrowings | 77,258 | 371,269 |
+------------------------------------+-----------+---------------+
| Warrants classified as liabilities | - | 32,908 |
+------------------------------------+-----------+---------------+
| | 77,258 | 404,177 |
+------------------------------------+-----------+---------------+
| Current liabilities | | |
+------------------------------------+-----------+---------------+
| Trade and other payables | 10,790 | 8,216 |
+------------------------------------+-----------+---------------+
| Borrowings | 623,068 | - |
+------------------------------------+-----------+---------------+
| | 633,858 | 8,216 |
+------------------------------------+-----------+---------------+
| | | |
+------------------------------------+-----------+---------------+
| Total liabilities | 711,116 | 412,393 |
+------------------------------------+-----------+---------------+
| | | |
+------------------------------------+-----------+---------------+
| Total equity and liabilities | 1,274,976 | 1,127,843 |
+------------------------------------+-----------+---------------+
| | | |
+------------------------------------+-----------+---------------+
| Net current assets | 193,833 | 672,342 |
+------------------------------------+-----------+---------------+
| | | |
+------------------------------------+-----------+---------------+
| Total assets less current | 641,118 | 1,119,627 |
| liabilities | | |
+------------------------------------+-----------+---------------+
Consolidated statement of changes in equity
For the year ended 31 December 2009
(All amounts in RMB thousands unless otherwise stated)
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| | Share | Share | Reverse | Share |Statutory | Retained | Total | Minority | Total |
| | capital | premium | acquisition |options | reserve | earnings | | interest | equity |
| | | | reserve |reserve | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| At 1 | 96,811 |662,636 | (341,304) | 6,708 | 63,163 | 442,070 | 930,084 | - | 930,084 |
| January | | | | | | | | | |
| 2009 | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| Profit for | - | - | - | - | - | 330,460 | 330,460 | - | 330,460 |
| the year | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| Transfer | - | - | - | - | 54,977 |(54,977) | - | - | - |
| to | | | | | | | | | |
| statutory | | | | | | | | | |
| reserve | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| Share | - | - | - | 1,161 | - | - | 1,161 | - | 1,161 |
| options | | | | | | | | | |
| scheme | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| Proceeds | 812 | 10,139 | - |(2,430) | - | - | 8,521 | - | 8,521 |
| from | | | | | | | | | |
| shares | | | | | | | | | |
| issued | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| Capital | - | - | - | - | - | - | - | 25,000 | 25,000 |
| contribution | | | | | | | | | |
| from | | | | | | | | | |
| minority | | | | | | | | | |
| interest | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| At 31 | 97,623 |672,775 | (341,304) | 5,439 | 118,140 | 717,553 |1,270,226 | 25,000 |1,295,226 |
| December | | | | | | | | | |
| 2009 | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| At 1 | 96,811 |662,636 | (341,304) | 5,228 | 36,420 | 222,650 | 682,441 | - | 682,441 |
| January | | | | | | | | | |
| 2008 | | | | | | | | | |
| (Restated) | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| Profit for | - | - | - | - | - | 246,163 | 246,163 | - | 246,163 |
| the year | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| Transfer | - | - | - | - | 26,743 |(26,743) | - | - | - |
| to | | | | | | | | | |
| statutory | | | | | | | | | |
| reserve | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| Share | - | - | - | 1,480 | - | - | 1,480 | - | 1,480 |
| options | | | | | | | | | |
| scheme | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
| At 31 | 96,811 |662,636 | (341,304) | 6,708 | 63,163 | 442,070 | 930,084 | - | 930,084 |
| December | | | | | | | | | |
| 2008 | | | | | | | | | |
| (Restated) | | | | | | | | | |
+--------------+---------+---------+-------------+---------+-----------+----------+-----------+----------+-----------+
Consolidated cash flow statement
For the year ended 31 December 2009
(All amounts in RMB thousands unless otherwise stated)
+---------------------------------+------------+-------------+
| | Year ended 31 December |
+---------------------------------+--------------------------+
| | 2009 | 2008 |
+---------------------------------+------------+-------------+
| | | (Restated) |
+---------------------------------+------------+-------------+
| Cash flows from operating | | |
| activities | | |
+---------------------------------+------------+-------------+
| Cash generated from operations | 696,738 | 349,709 |
+---------------------------------+------------+-------------+
| Interest paid | (57,975) | (26,617) |
+---------------------------------+------------+-------------+
| Income tax paid | (19,087) | - |
+---------------------------------+------------+-------------+
| Net cash generated from | 619,676 | 323,092 |
| operating activities | | |
+---------------------------------+------------+-------------+
| | | |
+---------------------------------+------------+-------------+
| Cash flows from investing | | |
| activities | | |
+---------------------------------+------------+-------------+
| Proceeds from disposal of | 1,899 | 138 |
| property, plant and equipment | | |
+---------------------------------+------------+-------------+
| Interest received | 803 | 1,023 |
+---------------------------------+------------+-------------+
| Acquisition of subsidiary, net | (120,922) | - |
| of cash acquired | | |
+---------------------------------+------------+-------------+
| Holding deposit for potential | (100,000) | - |
| acquisition | | |
+---------------------------------+------------+-------------+
| Purchase of property, plant and | (599,998) | (603,246) |
| equipment | | |
+---------------------------------+------------+-------------+
| Purchase of land use rights | (27,398) | (61,731) |
+---------------------------------+------------+-------------+
| Purchase of mining rights | (1,807) | (4,107) |
+---------------------------------+------------+-------------+
| Purchase of other intangible | (80) | - |
| assets | | |
+---------------------------------+------------+-------------+
| Net cash used in investing | (847,503) | (667,923) |
| activities | | |
+---------------------------------+------------+-------------+
| | | |
+---------------------------------+------------+-------------+
| Cash flows from financing | | |
| activities | | |
+---------------------------------+------------+-------------+
| Proceeds from issuance of | 8,521 | - |
| ordinary shares | | |
+---------------------------------+------------+-------------+
| Proceeds from bank borrowings | 1,066,205 | 625,104 |
+---------------------------------+------------+-------------+
| Proceeds from other borrowings | 8,374 | 10,031 |
+---------------------------------+------------+-------------+
| Decrease/ (increase) in | 16,417 | (11,663) |
| restricted cash | | |
+---------------------------------+------------+-------------+
| Repayments of bank borrowings | (302,848) | (260,400) |
+---------------------------------+------------+-------------+
| Repayments of other borrowings | (53,167) | (11,200) |
+---------------------------------+------------+-------------+
| Redemption of the warrants | (206,455) | - |
+---------------------------------+------------+-------------+
| Net cash generated from | 537,047 | 351,872 |
| financing activities | | |
+---------------------------------+------------+-------------+
| | | |
+---------------------------------+------------+-------------+
| Net increase in cash and cash | 309,220 | 7,041 |
| equivalents | | |
+---------------------------------+------------+-------------+
| Cash and cash equivalents at | 37,038 | 29,997 |
| beginning of year | | |
+---------------------------------+------------+-------------+
| Cash and cash equivalents at | 346,258 | 37,038 |
| end of year | | |
+---------------------------------+------------+-------------+
| | | |
+---------------------------------+------------+-------------+
Selected Notes from the Consolidated Financial Statements
+-----------------------------------------------+-----------------------+
| 1. Summary of significant accounting policies |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The principal accounting policies applied in the preparation of the |
| consolidated financial statements are |
| set out below. These policies have been consistently applied to all |
| the years presented, unless otherwise |
| stated. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.1 Basis of preparation |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The consolidated financial statements of the Company and its |
| subsidiaries have been prepared in |
| accordance with International Financial Reporting Standards |
| ("IFRSs"), as adopted by the European |
| Union and have been prepared in accordance with the Companies |
| (Jersey) Law 1991. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The consolidated financial statements have been prepared under the |
| historical cost convention, as |
| modified by the revaluation of financial instruments at fair value |
| through profit or loss. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The preparation of the consolidated financial statements in |
| conformity with IFRSs requires the use of |
| certain critical accounting estimates. It also requires management to |
| exercise its judgement in the |
| process of applying the group's accounting policies. |
| The areas involving a higher degree of judgement or complexity, or |
| areas where assumptions and |
| estimates are significant to the Consolidated financial statements |
| are disclosed in Note 2. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Standards, amendments and interpretations that have been issued but |
| are not yet effective and have |
| not been early adopted by the Group for the relevant period are as |
| follows: |
+-----------------------------------------------------------------------+
| | |
+-----------------------------------------------+-----------------------+
| | Effective for annual |
| | periods beginning on |
| | or after |
+-----------------------------------------------+-----------------------+
| IFRS 3 (Revised) Business Combinations | 1 July 2009 2009 |
+-----------------------------------------------+-----------------------+
| IAS 27 (Revised) Consolidated and Separate | 1 July 2009 2009 |
| Financial Statements | |
+-----------------------------------------------+-----------------------+
| IFRIC 17 Distribution of Non-cash Assets to | 1 July 2009 2009 |
| Owners | |
+-----------------------------------------------+-----------------------+
| IFRIC 18 Transfers of Assets From Customers | 1 July 2009 2009 |
+-----------------------------------------------+-----------------------+
| IFRIC 19 Extinguishing Financial Liabilities | 1 July 2009 2009 |
| with Equity Instruments | |
+-----------------------------------------------+-----------------------+
| Amendment to IFRS 2 Group Cash-settled | 1 January 2010 2010 |
| Share-based | |
| Payment Transactions | |
+-----------------------------------------------+-----------------------+
| Amendment to IFRS 5 Non-current Assets Held | 1 January 2010 2010 |
| for Sale | |
| and Discontinued Operations | |
+-----------------------------------------------+-----------------------+
| Amendment to IFRS 8 Operating Segments | 1 January 2010 2010 |
+-----------------------------------------------+-----------------------+
| Amendment to IAS 1 Presentation of Financial | 1 January 2010 2010 |
| Statements | |
+-----------------------------------------------+-----------------------+
| Amendment to IAS 7 Statements of Cash Flows | 1 January 2010 2010 |
+-----------------------------------------------+-----------------------+
| Amendment to IAS 17 Leases | 1 January 2010 2010 |
+-----------------------------------------------+-----------------------+
| Amendment to Appendix to IAS 18 Revenue | 1 July 2009 2009 |
+-----------------------------------------------+-----------------------+
| Amendment to IAS 36 Impairment of Assets | 1 January 2010 2010 |
+-----------------------------------------------+-----------------------+
| Amendment to IAS 38 Intangible Assets | 1 July 2009 2009 |
+-----------------------------------------------+-----------------------+
| Amendment to IAS 39 Financial Instrument: | 1 July 2009 2009 |
| Recognition | |
| and Measurement | |
+-----------------------------------------------+-----------------------+
| Amendment to IFRIC 9 Reassessment of Embedded | 1 July 2009 2009 |
| Derivatives | |
+-----------------------------------------------+-----------------------+
| Amendment to IFRIC 16 Interpretation Hedges | 1 July 2009 2009 |
| of a Net Investment in | |
| a Foreign Operation | |
+-----------------------------------------------+-----------------------+
| | |
+-----------------------------------------------+-----------------------+
| The application of these standards, amendments and interpretations is |
| not expected to have a |
| material effect on the Group's operating results or financial |
| position. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Going concern basis |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| As at 31 December 2009, the Group's current liabilities exceeded its |
| current assets by approximately |
| RMB 1.074 billion. The Group's current liabilities mainly included |
| bank borrowings, trade and other |
| payables and advance from customers. Since the year end the Group has |
| reached a number of agreements |
| to extend its current borrowings and to obtain new loan facilities, |
| such as to reduce current liabilities by |
| RMB 1.1 billion. |
| |
| The management have also prepared cash flow projections for the 18 |
| month period ending 30 June |
| 2011. The Group's projections, taking account of reasonably possible |
| changes in trading |
| performance, required capital expenditure and other commitments, show |
| that the Group should be |
| able to operate within the levels of current facilities and required |
| banking covenants. |
| |
| On the above basis, the directors believe that the Group will |
| continue as a going concern and |
| consequently have prepared the financial statements on a going |
| concern basis. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Prior year adjustments |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| During the year ended 31 December 2009, the Group identified a number |
| of errors in accounting |
| estimations relating to previous years. The Group has corrected these |
| errors in the current year and |
| the comparative figures have been adjusted retrospectively. These |
| prior year adjustments are |
| summarised below. |
+-----------------------------------------------------------------------+
| |
| (i) Bank borrowings |
| |
| The Group recognised some borrowings of RMB230,400,000 as long-term |
| borrowings in prior years. |
| These borrowings actually had a maturity of less than one year and |
| were subject to renewal at the end |
| of their term. Accordingly, these borrowings have been reflected as |
| short term borrowings in the |
| current year and the comparative figure of RMB230,400,000 adjusted |
| from long term to short |
| term liabilities. The impact of this adjustment was to increase |
| current liabilities as at 31 December 2008, |
| by RMB230,400,000. |
| |
| (ii) Functional currency translation |
| |
| The group's primary economic environment and primary source of income |
| is China. Management has |
| assessed the group's functional currency to be RMB as opposed to GBP |
| and HKD used previously. The |
| company (an offshore holding company) and West China Cement Company |
| Limited (an intermediate |
| holding company incorporated in BVI) should have recorded |
| transactions in currency other than RMB as |
| foreign currency transactions. |
| |
| In the year ended 31 December 2009, the Group retrospectively |
| adjusted the comparative figures. As |
| a consequence of this change, the share premium account increased as |
| at 31 December 2008 by |
| RMB24,566,000 and the foreign currency translation reserve decreased |
| as at 31 December 2008 by |
| RMB37,471,000. |
| |
| (iii) Reclassify lease prepayments to Land Use Rights |
| |
| Lease prepayments represent payments made to acquire Land Use Rights. |
| The Group recorded |
| such prepayments as other receivables as at 31 December 2008 of |
| RMB27,035,000. These have |
| been reclassified during the current year to non-current assets (Land |
| Use Rights). |
| As a consequence of the reclassification, as at 31 December 2008 |
| non-current assets (Land |
| Use Rights) increased by RMB40,242,000, current assets (other |
| receivables) decreased by |
| RMB27,035,000 and other payables increased by RMB13,207,000. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (iv) Understatement of construction in progress |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The cost of construction in progress should be recognised on a |
| percentage completion basis. This method was not used in the past and |
| as a result, construction in progress was |
| understated as at 31 December 2008. This method has been adopted for |
| the year ended |
| 31 December 2009 and the comparative figures restated accordingly. As |
| a consequence of |
| this restatement, the cost of construction in progress as at 31 |
| December 2008 increased by |
| RMB18,599,000 and other payables increased by RMB18,599,000. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (v) Other reclassifications |
| |
| During the year, management identified a number of other incorrect |
| classifications in the |
| balance sheet as at 31 December 2008. These errors have been |
| corrected for 2009 |
| and the comparative figures for 2008 adjusted accordingly. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.2 Consolidation |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The consolidated financial statements include the financial |
| statements of the Company and |
| its subsidiaries. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (a) Subsidiaries |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Subsidiaries are all entities (including special purpose entities) |
| over which the Group has the |
| power to govern the financial and operating policies generally |
| accompanying a |
| shareholding of more than one half of the voting rights. The |
| existence and effect of potential |
| voting rights that are currently exercisable or convertible are |
| considered when assessing |
| whether the Group controls another entity. Subsidiaries are fully |
| consolidated from the |
| date on which control is transferred to the Group. They are |
| de-consolidated from the |
| date that control ceases. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The purchase method of accounting is used to account for the |
| acquisition of subsidiaries |
| by the Group. The cost of an acquisition is measured at the fair |
| value of the assets given, |
| equity instruments issued and liabilities incurred or assumed at the |
| date of exchange, plus costs directly attributable to the |
| acquisition. Identifiable assets acquired and liabilities and |
| contingent liabilities assumed in a business combination are measured |
| initially at their fair |
| values at the acquisition date, irrespective of the extent of any |
| minority interest. The excess |
| of the cost of acquisition over the fair value of the Group's share |
| of the identifiable net |
| assets acquired is recorded as goodwill. If the cost of acquisition |
| is less than the fair value |
| of the net assets of the subsidiary acquired, the difference is |
| recognised directly in the |
| consolidated statement of comprehensive income. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Inter-company transactions, balances and unrealised gains on |
| transactions between |
| group companies are eliminated. Unrealised losses are also |
| eliminated. Accounting |
| policies of subsidiaries have been changed where necessary in the |
| consolidated |
| financial statements to ensure consistency with the policies adopted |
| by the Group. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| In the Company's balance sheet the investments in subsidiaries are |
| stated at cost less |
| provision for impairment losses. The results of subsidiaries are |
| accounted |
| by the Company on the basis of dividends received and receivable. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (b) Transactions with minority interests |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The Group applies a policy of treating transactions with minority |
| interests as transactions with parties external to the Group. |
| Disposals to minority interests result in gains and losses for the |
| Group and are recorded in the consolidated statement of comprehensive |
| income. Purchases from minority interests result in goodwill, being |
| the difference between any consideration paid and the relevant share |
| acquired of the carrying value of net assets of the subsidiary. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.3 Segment reporting |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Operating segments are reported in a manner consistent with the |
| internal reporting provided to the chief operating decision-maker. |
| The chief operating decision-maker, who is responsible for allocating |
| resources and assessing performance of the operating segments, has |
| been identified as the steering committee that makes strategic |
| decisions. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.4 Foreign currency translation |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (a) Functional and presentation currency |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Items included in the financial statements of each of the Group's |
| entities are measured using the currency of the primary economic |
| environment in which the entity operates (the "functional currency"). |
| The consolidated financial statements are presented in Renminbi |
| ("RMB"), which is the functional and the presentation currency of the |
| Company. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (b) Transactions and balances |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Foreign currency transactions are translated into the functional |
| currency using the exchange rates prevailing at the dates of the |
| transactions or valuation where items are remeasured. Foreign |
| exchange gains and losses resulting from the settlement of such |
| transactions and from the translation at year-end exchange |
| rates of monetary assets and liabilities denominated in foreign |
| currencies are recognised in the consolidated statement of |
| comprehensive income, except when deferred in equity as qualifying |
| cash flow hedges or qualifying net investment hedges. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Foreign exchange gains and losses that relate to borrowings and cash |
| and cash equivalents are presented in the consolidated statement of |
| comprehensive income within 'finance income or cost'. All other |
| foreign exchange gains and losses are presented in the consolidated |
| statement of comprehensive income within 'other gains/ (losses) - |
| net'. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Translation difference on non-monetary financial assets and |
| liabilities such as equities held at fair value through profit or |
| loss are recognised in profit or loss as part of the fair valuegain |
| or loss. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (c) Group companies |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The results and financial position of all the Group entities (none of |
| which has the currency of a hyperinflationary economy) that have a |
| functional currency different from the presentation currency are |
| translated into the presentation currency as follows: |
+-----------------------------------------------------------------------+
| assets and liabilities for each balance sheet presented are |
| translated at the closing rate at the date of that balance sheet; |
+-----------------------------------------------------------------------+
| Income and expenses for each consolidated statement of comprehensive |
| income are translated at average exchange rates (unless this average |
| is not a reasonable approximation of the |
| cumulative effect of the rates prevailing on the transaction dates, |
| in which case income and expenses are translated at the dates of the |
| transactions); and |
+-----------------------------------------------------------------------+
| all resulting exchange differences are recognised as a separate |
| component of equity. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| On consolidation, exchange differences arising from the translation |
| of the net investment in foreign operations, and of borrowings and |
| other currency instruments designated as hedges of such investments, |
| are taken to shareholders' equity. When a foreign operation is |
| partially disposed of or sold, exchange differences that were |
| recorded in equity are recognised in the consolidated statement of |
| comprehensive income as part of the gain or loss on sale. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Goodwill and fair value adjustments arising on the acquisition of a |
| foreign entity are treated as assets and liabilities of the foreign |
| entity and translated at the closing rate. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.5 Property, plant and equipment ("PPE") |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Property, plant and equipment, other than construction in progress, |
| is stated at historical cost less accumulated depreciation and |
| provision for any impairment in value. Historical cost includes its |
| purchase price and any other expenditure that is directly |
| attributable to the acquisition of the items. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Subsequent costs are included in the asset's carrying amount or |
| recognised as a separate asset, as appropriate, only when it is |
| probable that future economic benefits associated with the item will |
| flow to the Group and the cost of the item can be measured reliably. |
| The carrying amount of the replaced part is derecognised. All other |
| repairs and maintenance are charged in the consolidated statement of |
| comprehensive income during the period in which they are incurred. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Except for mining assets (Note (a) and (b)), depreciation on property |
| and plant, motor vehicles, electronic and other equipment and |
| machinery is calculated using the straight-line method to allocate |
| their costs to their residual values of 5% over their estimated |
| useful lives, as follows: |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| - Property and plant 20 |
| years |
| - Motor vehicles 8 |
| years |
| - Electronic and other equipment 5 years |
| - Machinery |
| 12 years |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The assets' residual values and useful lives are reviewed, and |
| adjusted if appropriate, at each balance sheet date. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Construction in progress ("CIP") represents buildings, machinery and |
| equipment on which construction work has not been completed. It is |
| carried at cost which includes construction expenditure and other |
| direct costs less any impairment loss. On completion, construction in |
| progress is transferred to the appropriate categories of property, |
| plant and equipment at cost. No depreciation is provided for |
| construction in progress until it is completed and available for use. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| An asset's carrying amount is written down immediately to its |
| recoverable amount if the asset's carrying amount is greater than its |
| estimated recoverable amount. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Gains and losses on disposals are determined by comparing the |
| proceeds with the carrying amount and are recognised within "other |
| gains/ (losses) - net", in the consolidated statement of |
| comprehensive income. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Mining assets include development stripping costs and decommission |
| and restoration provisions. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (a) Stripping costs |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Stripping costs incurred during the development of a limestone mine |
| are capitalized into PPE. Stripping costs incurred during the |
| production phase are variable production costs that are included in |
| the costs of inventory produced during the period that the stripping |
| costs are incurred. Capitalized stripping costs are depleted on a |
| unit of production basis, using estimated resources as the depletion |
| base. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (b) Decommissioning, restoration and similar liabilities ("Asset |
| retirement obligation" or "ARO") |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The Company recognizes provision for statutory, contractual, |
| constructive or legal obligations, including those associated with |
| the reclamation of mineral properties and mineral assets under PPE, |
| when those obligations result from the acquisition, construction, or |
| normal operation of the assets. Initially, a provision for an asset |
| retirement obligation is recognized as its present value in the |
| period in which it is incurred. Upon initial recognition of the |
| liability, the corresponding asset retirement obligation is added to |
| the carrying amount of the related asset and the cost is amortized as |
| an expense over the economic life of the asset using either the unit |
| of production method or the straight-line method, as appropriate. |
| Following initial recognition of the asset retirement obligation, the |
| carrying amount of the liability is increased for the passage of time |
| and adjusted for changes to the current market-based discount rate, |
| amount or timing of the underlying cash flows needed to settle the |
| obligation. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.6 Lease prepayments - land use rights |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Lease prepayments represent payments made to acquire land use rights. |
| Land use rights are stated at cost less accumulated amortisation and |
| impairment losses. Amortisation of land use rights is charged to the |
| consolidated statement of comprehensive income on a straight-line |
| basis over the respective periods of the land use rights. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.7 Mining rights |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The cost of acquiring rights for the Group to explore a mine over a |
| certain period is capitalised and subsequently are stated at cost |
| less accumulated amortisation and impairment loss. Amortisation of |
| mining rights is calculated to write off the cost less accumulated |
| impairment of losses over the useful lives of the mines in accordance |
| with the production plans and reserves of the mines estimated on a |
| unit of production method. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.8 Other intangible assets |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (a) Goodwill |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Goodwill represents the excess of the cost of an acquisition over the |
| fair value of the Group's share of the net identifiable assets of the |
| acquired subsidiary at the acquisition date of acquisition. Goodwill |
| on acquisition of subsidiaries is included in intangible assets. |
| Goodwill is tested for impairment and carried at cost less |
| accumulated impairment losses. Impairment losses on goodwill are not |
| reversed. Gains and losses on the disposal of an entity include the |
| carrying amount of goodwill relating to the entity sold. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Goodwill is allocated to cash-generating units for the purpose of |
| impairment testing. The allocation is made to those cash-generating |
| units or groups of cash-generating units that are expected to benefit |
| from the business combination in which the goodwill arose. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (b) Computer software |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Acquired computer software licenses are capitalised on the basis of |
| the costs incurred to acquire the specific software. These costs are |
| amortised over the estimated useful lives of the licences. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (c) Customer relationships |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Customer relationships acquired in a business combination are |
| recognised at fair value at the acquisition date. Customer |
| relationships have a finite useful life and are carried at cost less |
| accumulated amortisation. Amortisation is calculated using the |
| straight-line method over the expected life of the customer |
| relationships. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.9 Impairment of investments in subsidiaries and non-financial |
| assets |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Assets that have an indefinite useful life, which are not subject to |
| amortisation, are tested annually for impairment. Assets that are |
| subject to amortisation are reviewed for impairment whenever events |
| or changes in circumstances indicate that the carrying amount may not |
| be recoverable. An impairment loss is recognised for the amount by |
| which the asset's carrying amount exceeds its recoverable amount. The |
| recoverable amount is the higher of an asset's fair value less costs |
| to sell and value in use. For the purposes of assessing impairment, |
| assets are grouped at the lowest levels for which there are |
| separately identifiable cash flows (cash-generating units). |
| Non-financial assets other than goodwill that have suffered |
| impairment are reviewed for possible reversal of the impairment at |
| each balance sheet date. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Impairment testing of investments in subsidiaries is required when a |
| company becomes entitled to dividends from the investments and the |
| dividend exceeds the total comprehensive income of the subsidiary in |
| the period the dividend is declared or if the carrying amount of the |
| investment in the separate financial statements exceeds the carrying |
| amount in the financial statements of the investee's net assets |
| including goodwill. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.10 Financial assets - loan and receivable |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Loans and receivables are non-derivative financial assets with fixed |
| or determinable payments that are not quoted in an active market. |
| They are included in current assets, except for those with maturities |
| greater than 12 months after the balance sheet date. These are |
| classified as non-current assets. The Group's loans and receivables |
| comprise 'trade and other receivables', 'cash and cash equivalents' |
| and 'restricted cash' in the balance sheet. Loans and receivables are |
| carried at amortised cost using the effective interest method. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.11 Inventories |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Inventories are stated at the lower of cost and net realisable value. |
| Cost is determined using the weighted average method. The cost of |
| finished goods and work in progress comprises raw materials, direct |
| labour, other direct costs and related production overheads (based on |
| normal operating capacity). Net realisable value is the estimated |
| selling price in the ordinary course of business, less applicable |
| variable selling expenses. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.12 Trade and other receivables |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Trade receivables are amounts due from customers for merchandise sold |
| in the ordinary course of business. If collection of trade and other |
| receivables is expected in one year or less (or in the normal |
| operating cycle of the business if longer), they are classified as |
| current assets. If not, they are presented as non-current assets. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Trade and other receivables are recognised initially at fair value |
| and subsequently measured at amortised cost using the effective |
| interest method, less provision for impairment. A provision for |
| impairment of trade and other receivables is established when there |
| is objective evidence that the Group will not be able to collect all |
| amounts due according to the original terms of the receivables. |
| Significant financial difficulties of the debtor, the probability |
| that the debtor will become bankrupt, financial reorganisation, and |
| default of payments are considered indicators that the receivable is |
| impaired. The amount of the provision is the difference between the |
| asset's carrying amount and the present value of estimated future |
| cash flows, discounted at the original effective interest rate. The |
| carrying amount of the assets is reduced through the use of an |
| allowance account, and the amount of the loss is recognised in the |
| consolidated statement of comprehensive income. When a receivable is |
| uncollectible, it is written off against the allowance account for |
| receivables. Subsequent recoveries of amounts previously written off |
| are credited in the consolidated statement of comprehensive income. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.13 Cash and cash equivalents |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Cash and cash equivalents includes cash in hand, deposits held at |
| call with banks, other short-term highly liquid investments with |
| original maturities of three months or less. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.14 Restricted cash |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Restricted cash is short-term cash deposits held in a separate |
| reserve account to be used only for a specific purpose. These monies |
| are pledged to the bank for issuance of trade facilities such as |
| bills payable and bankers' guarantee, and as security deposits under |
| bank borrowing agreement. Restricted cash cannot be withdrawn until |
| the relevant trade facilities or loan interests are repaid. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.15 Share capital |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Ordinary shares are classified as equity. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Incremental costs directly attributable to the issue of new shares |
| are shown in equity as a deduction, net of tax, from the proceeds. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.16 Trade and other payables |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Trade payables are obligations to pay for goods or services that have |
| been acquired in the ordinary course of business from suppliers. |
| Trade and other payable are classified as current liabilities if |
| payment is due within one year or less (or in the normal operating |
| cycle of the business if longer). If not, they are presented as |
| non-current liabilities. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Trade and other payables are recognised initially at fair value and |
| subsequently measured at amortised cost using the effective interest |
| method. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.17 Borrowings |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Borrowings are recognised initially at fair value, net of transaction |
| costs incurred. Borrowings are subsequently stated at amortised cost |
| using the effective interest rate method. Amortised cost is |
| calculated by taking into account any issue costs, and any discount |
| or premium on settlement. Any difference between the proceeds (net of |
| transaction costs) and the redemption value is recognised in the |
| consolidated statement of comprehensive income over the period of the |
| borrowings using the effective interest method. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Fees paid on the establishment of loan facilities are recognised as |
| transaction costs of the loan to the extent that it is probable that |
| some or all of the facility will be drawn down. In this case, the fee |
| is deferred until the draw-down occurs. To the extent there is no |
| evidence that it is probable that some or all of the facility will be |
| drawn down, the fee is capitalised as a prepayment for liquidity |
| services and amortised over the period of the facility to which it |
| relates. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Borrowings are classified as current liabilities unless the Group has |
| an unconditional right to defer settlement of the liability for at |
| least 12 months after the balance sheet date. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Borrowing costs that are directly attributable to the acquisition, |
| construction or production of assets that necessarily take a |
| substantial period of time to be ready for their intended use or sale |
| are capitalised as part of the costs of the assets. All other |
| borrowing costs are expensed. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.18 Derivative |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Derivative financial instruments are recognised at fair value. At |
| each balance sheet date the fair value is remeasured. The gain or |
| loss on remeasurement of fair value is charged immediately to the |
| consolidated statement of comprehensive income. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.19 Current and deferred income tax |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The tax expense for the period comprises current and deferred tax. |
| Tax is recognised in the consolidated statement of comprehensive |
| income, except to the extent that it relates to items recognised |
| directly in equity. In this case, the tax is recognised directly in |
| equity. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The current income tax charge is calculated on the basis of the tax |
| laws enacted or substantively enacted at the balance sheet date in |
| the countries where the Company and its subsidiaries operate and |
| generate taxable income. Management periodically evaluates positions |
| taken in tax returns with respect to situations in which applicable |
| tax regulation is subject to interpretation. It establishes |
| provisions where appropriate on the basis of amounts expected to be |
| paid to the tax authorities. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Deferred income tax is recognised, using the liability method, on |
| temporary differences arising between the tax bases of assets and |
| liabilities and their carrying amounts in the consolidated financial |
| statements. However, the deferred income tax is not accounted for if |
| it arises from initial recognition of an asset or liability in a |
| transaction other than a business combination that at the time of the |
| transaction affects neither accounting nor taxable profit or loss. |
| Deferred income tax is determined using tax rates (and laws) that |
| have been enacted or substantively enacted by the balance sheet date |
| and are expected to apply when the related deferred income tax asset |
| is realised or the deferred income tax liability is settled. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Deferred income tax assets are recognised only to the extent that it |
| is probable that future taxable profit will be available against |
| which the temporary differences can be utilised. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Deferred income tax is provided on temporary differences arising on |
| investments in subsidiaries except where the timing of the reversal |
| of the temporary difference is controlled by the Group and it is |
| probable that the temporary difference will not reverse in the |
| foreseeable future. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Deferred income tax assets and liabilities are offset when there is a |
| legally enforceable right to offset current tax assets against |
| current tax liabilities and when the deferred income taxes assets and |
| liabilities relate to income taxes levied by the same taxation |
| authority on either the taxable entity or different taxable entities |
| where there is an intention to settle the balances on a net basis. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.20 Employee benefits |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (a) Pension obligations |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The full-time employees of the Group are covered by various |
| government-sponsored defined-contribution pension plans under which |
| the employees become entitled to a monthly pension based on certain |
| formulas. The relevant government agencies are responsible for the |
| pension liability to these employees when they retire. The Group |
| contributes on a monthly basis to these pension plans for the |
| employees which are determined at a certain percentage of their |
| salaries. Under these plans, the Group has no obligation for |
| post-retirement benefits beyond the contributions made. Contributions |
| to these plans are expensed as incurred. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (b) Housing benefits |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The full-time employees of the Group are entitled to participate in |
| various government-sponsored housing funds. The Group contributes on |
| a monthly basis to these funds based on certain percentages of the |
| employees' salaries. The Group's liability in respect of these funds |
| is limited to the contributions payable in each period. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (c) Share-based compensation |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The Group operates a number of equity-settled, share-based |
| compensation plans, under which the entity receives services from |
| employees as consideration for equity instruments (options) of the |
| Group. The fair value of the services received in exchange for the |
| grant of the options is recognised as an expense on a straight-line |
| basis over the vesting period based on the Group's estimate of shares |
| that will eventually vest. These share-based payments are measured at |
| fair value at the date of grant. At each balance sheet date, the |
| entity revises its estimates of the number of options that are |
| expected to vest based on the non-marketing vesting conditions. It |
| recognises the impact of the revision of original estimates, if any, |
| in the consolidated statement of comprehensive income with a |
| corresponding adjustment to equity. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| For equity-settled transactions with non-employees, the costs are |
| recognised through the consolidated statement of comprehensive income |
| (or where they relate to issue costs, taken against the share premium |
| account if appropriate) with measurement based on the fair value of |
| goods or services received. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.21 Government grants |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Grants from the government are recognised at their fair value where |
| there is a reasonable assurance that the grant will be received and |
| the Group will comply with all the attached conditions. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Government grants relating to costs are recognised in the |
| consolidated statement of comprehensive income. Grants with no future |
| related costs are recognised on receipt basis. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Government grants relating to property, plant and equipment are |
| included in non-current liabilities as deferred income and are |
| credited to the consolidated statement of comprehensive income on a |
| straight-line basis over the expected useful lives of the related |
| assets. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| 1.22 Revenue recognition |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| Revenue comprises the fair value of the consideration received or |
| receivable for the sale of goods and services in the ordinary course |
| of the Group's activities. Revenue is shown net of value-added tax, |
| returns, rebates and discounts and after eliminating sales within the |
| Group. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| The Group recognises revenue when the amount of revenue can be |
| reliably measured, it is probable that future economic benefits will |
| flow to the entity and specific criteria have been met for each of |
| the Group's activities as described below. The amount of revenue is |
| not considered to be reliably measurable until all contingencies |
| relating to the sale have been resolved. The Group bases its |
| estimates on historical results, taking into consideration the type |
| of customer, the type of transaction and the specifics of each |
| arrangement. |
+-----------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------+
| (a) Sale of goods |
+-----------------------------------------------+-----------------------+
+------------------------------------------------------------------------+
| The Group produces and sells cement products to customers in the |
| Shaanxi Province of the PRC. Customers include distributors, |
| constructors and property development companies. Sales of goods are |
| recognised when a group entity has delivered products and transferred |
| the significant risks and rewards of ownership of the product to the |
| customers, when there is no unfulfilled obligation that could affect |
| the customers' acceptance of the products, and collectability of the |
| related receivables is reasonably assured. |
+------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------+
| (b)Interest income |
+------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------+
| Interest income is recognised on a time-proportion basis using the |
| effective interest method. When a receivable is impaired, the Group |
| reduces the carrying amount to its recoverable amount, being the |
| estimated future cash flow discounted at the original effective |
| interest rate of the instrument, and continues unwinding the discount |
| as interest income. |
+------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------+
| 1.23 Operating leases |
+------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------+
| Leases in which a significant portion of the risks and rewards of |
| ownership are retained by the lessor are classified as operating |
| leases. Payments made under operating leases (net of any incentives |
| received from the lessor), are charged to the consolidated statement |
| of comprehensive income on a straight-line basis over the period of |
| the lease. |
+------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------+
| 1.24 Dividend distribution |
+------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------+
| Dividend distribution to the Company's shareholders is recognised as a |
| liability in the Group's consolidated financial statements in the |
| period in which the dividends are approved by the Company's |
| shareholders or Board of Directors, where appropriate. |
+------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------+
| 1.25 Contingent liability |
+------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------+
| A contingent liability is a possible obligation that arises from past |
| events and whose existence will only be confirmed by the occurrence or |
| non-occurrence of one or more uncertain future events not wholly |
| within the control of the Group. It can also be a present obligation |
| arising from past events that is not recognised because it is not |
| probable that outflow of economic resources will be required or the |
| amount of obligation cannot be measured reliably. |
+------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------+
| A contingent liability is not recognised but is disclosed in the notes |
| to the consolidated financial statements. When a change in the |
| probability of an outflow occurs so that outflow is probable, a |
| contingent liability is then recognised as a provision. |
+------------------------------------------------------------------------+
+------------------------------------------------------------------------+-+
| 2. Critical accounting estimates and judgements | |
+------------------------------------------------------------------------+-+
| | |
+------------------------------------------------------------------------+-+
| Estimates and judgements are continually evaluated and are based on | |
| historical experience and other factors, including expectations of | |
| future events that are believed to be reasonable under the | |
| circumstances. | |
+------------------------------------------------------------------------+-+
| | |
+------------------------------------------------------------------------+-+
| The Group makes estimates and assumptions concerning the future. The | |
| resulting accounting estimates will, by definition, seldom equal the | |
| related actual results. The estimates and assumptions that have a | |
| significant risk of causing a material adjustment to the carrying | |
| amounts of assets and liabilities within the next financial year are | |
| addressed below. | |
+------------------------------------------------------------------------+-+
| | |
+------------------------------------------------------------------------+-+
| (a) Carrying value of non-current assets |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| Non-current assets, including property, plant and equipment, land use |
| rights, mining rights and other intangible assets, are carried at cost |
| less accumulated depreciation/amortisation. These carrying amounts are |
| reviewed for impairment whenever events or changes in circumstances |
| indicate that the carrying amounts may not be recoverable. An impairment |
| loss is recognised for the amount by which an asset's carrying amount |
| exceeds its recoverable amount. The recoverable amount is the higher of |
| an asset's fair value less costs to sell and value in use. In estimating |
| the recoverable amounts of assets, various assumptions, including future |
| cash flows to be associated with non-current assets and discount rates, |
| are made. If future events do not correspond to such assumptions, the |
| recoverable amounts are revised, and this may have an impact on the |
| Group's results of operations or financial position. |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| (b) Useful lives of property, plant and equipment |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| The Group's management determines the estimated useful lives and related |
| depreciation charges for its property, plant and equipment. This |
| estimate is based on the historical experience of the actual useful |
| lives of property, plant and equipment of similar nature and functions. |
| These estimates may change in the future as a result of technical |
| innovations and competitor actions. Management will increase |
| depreciation charges where useful lives are less than previously |
| estimated lives, or will write off or write down technically obsolete or |
| non-strategic assets that have been abandoned or sold. |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| (c) Estimated impairment of goodwill |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| The Group tests annually whether goodwill has suffered any impairment, |
| in accordance with the accounting policy stated in Note 1.8. The |
| recoverable amounts of cash-generating units have been determined based |
| on value-in-use calculations. These calculations require the use of |
| estimates including budgeted gross margin, growth rate and discount |
| rate. Management determine budgeted gross margin based on past |
| performance and its expectations of market development. The weighted |
| average growth rates used are consistent with the forecasts included in |
| industry reports. The discount rates used are pre-tax and reflect |
| specific risks. |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| (d) Income tax |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| There are certain transactions and calculations for which the ultimate |
| tax determination is uncertain during the ordinary course of business. |
| Where the final tax outcome of these matters is different from the |
| amounts that were initially recorded, such differences will impact the |
| current income tax and deferred income tax provisions in the year in |
| which such determination is made. |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| (e) Fair value of derivatives and other financial instruments |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| The fair value of financial instruments that are not traded in an active |
| market (for example, over-the-counter derivatives) is determined using |
| valuation techniques. The Group uses its judgement to select a variety |
| of methods and makes assumptions that are mainly based on market |
| conditions existing at the end of each reporting period. The Group has |
| used discounted cash flow analysis for various financial instruments |
| that are not traded in active markets. |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| (f) Allowance for bad and doubtful debts |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| The Group performs ongoing credit evaluations of its customers and |
| adjusts credit limits based on payment history and customers' current |
| credit-worthiness, as determined by a review of current credit |
| information. |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| (g) Estimated impairment of inventories |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| The Group writes down inventories to net realisable value based on an |
| assessment of the realisability of inventories. The assessment of |
| write-downs requires the management's judgement and estimates. Where |
| expectation is different from an original estimate, the difference will |
| impact the carrying values of inventories and may result in write-downs |
| of inventories in the period in which such estimates have been changed. |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| (h) Environmental provision |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| Historically, the Group has not incurred any significant expenditure for |
| environmental remediation. Further, the Group is presently not involved |
| in any environmental remediation and has not accrued any amounts for |
| environmental remediation relating to its operations. The environmental |
| provision is based on management's best estimate in accordance with |
| information provided by a third party. Under existing legislation, |
| management believes that there are no further probable liabilities that |
| will have a material adverse effect on the financial position or |
| operating results of the Group. The PRC government, however, may move |
| further towards the adoption of more stringent environmental standards, |
| which could require increased expenditure in the future. |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| (i) Operating licences |
+--------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------+
| The group's licenses to operate at each of mines expire at various dates |
| from November 2013 to December 2022. Management believes that the Group |
| will be able to renew these licenses at their option and at minimal |
| cost, provided the Group complies with the terms of the licence. The |
| useful life of some of the Group's tangible and intangible assets would |
| be reduced if any licenses could not be renewed. |
+------------------------------------------------------------------------+-+
+-------------------------------+----------+--+--------------+---------------------+
| 3. Borrowings |
+----------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-------------------------------+----------+-----------------+---------------------+
| Non-current | | | |
+-------------------------------+----------+-----------------+---------------------+
| Bank borrowings-secured (Note | | 704,522 | 430,069 |
| (a)) | | | |
+-------------------------------+----------+-----------------+---------------------+
| Other borrowings (Note (b)) | | 32,000 | - |
+-------------------------------+----------+-----------------+---------------------+
| Less: current portion of | | (376,464) | (23,000) |
| non-current borrowings | | | |
+-------------------------------+----------+-----------------+---------------------+
| | | 360,058 | 407,069 |
+-------------------------------+----------+-----------------+---------------------+
| | | | |
+-------------------------------+----------+-----------------+---------------------+
| Current | | | |
+-------------------------------+----------+-----------------+---------------------+
| Bank borrowings-secured (Note | | 790,604 | 230,400 |
| (a)) | | | |
+-------------------------------+----------+-----------------+---------------------+
| Other borrowings (Note (b)) | | 121,800 | 15,784 |
+-------------------------------+----------+-----------------+---------------------+
| Current portion of | | 376,464 | 23,000 |
| non-current borrowings | | | |
+-------------------------------+----------+-----------------+---------------------+
| | | 1,288,868 | 269,184 |
+-------------------------------+----------+-----------------+---------------------+
| | | | |
+-------------------------------+----------+-----------------+---------------------+
| Total borrowings | | 1,648,926 | 676,253 |
+-------------------------------+----------+-----------------+---------------------+
| | | | |
+-------------------------------+----------+-----------------+---------------------+
| (a) Bank borrowings: |
+----------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------+
| The Group's borrowings are denominated in the following currencies: |
+----------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-------------------------------+-------------+--------------+---------------------+
| | | | |
+-------------------------------+-------------+--------------+---------------------+
| RMB | | | |
+-------------------------------+-------------+--------------+---------------------+
| - borrowing by subsidiaries | | 745,600 | 289,200 |
+-------------------------------+-------------+--------------+---------------------+
| - transferred from minority | | 49,200 | - |
| equity holder of a subsidiary | | | |
+-------------------------------+-------------+--------------+---------------------+
| USD | | | |
+-------------------------------+-------------+--------------+---------------------+
| -USD 60 million | | 358,921 | 371,269 |
+-------------------------------+-------------+--------------+---------------------+
| -USD 50 million | | 341,405 | - |
+-------------------------------+-------------+--------------+---------------------+
| | | 1,495,126 | 660,469 |
+-------------------------------+-------------+--------------+---------------------+
| Bank borrowings were secured as follows: |
+----------------------------------------------------------------------------------+
| | | | |
+-------------------------------+-------------+--------------+---------------------+
| | |
| | As at 31 December |
+-------------------------------+--------------------------------------------------+
| | | 2009 | 2008 |
+-------------------------------+-------------+--------------+---------------------+
| | | | |
+-------------------------------+-------------+--------------+---------------------+
| Jointly secured by land use | | 478,000 | 289,200 |
| rights and PPE (i) | | | |
+-------------------------------+-------------+--------------+---------------------+
| Jointly secured by land use | | 316,800 | - |
| rights, PPE and equity | | | |
| interests of subsidiaries | | | |
| (ii) | | | |
+-------------------------------+-------------+--------------+---------------------+
| Secured by a subsidiary's | | 358,921 | 371,269 |
| equity interests (iii) | | | |
+-------------------------------+-------------+--------------+---------------------+
| Secured by the Company's | | 341,405 | - |
| shares (iv) | | | |
+-------------------------------+-------------+--------------+---------------------+
| | | 1,495,126 | 660,469 |
+-------------------------------+-------------+--------------+---------------------+
| | | | | |
+-------------------------------+----------+--+--------------+---------------------+
+-------------------------------+----------+--+--+----------+--+-------+----------+----------+--+-------+-+------------------+
| (i) The bank borrowings were secured by certain land use rights and property and plant and equipment of the Group, with |
| total carrying values of RMB681,764,000 as at 31 December 2009 (2008: RMB 389,109,000). |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| (ii) The Group's bank borrowings of RMB330,000,000 as at 31 December 2009 were jointly secured by certain land use rights, |
| property and plant and equipment of the Group with total carrying values of RMB987,091,000 as at 31 December 2009, and |
| secured by 100% equity interests of Lantian Yaobai, Ankang Yaobai, Hanzhong Yaobai and Mianxian Yaobai. The loan was also |
| guaranteed by Lantian Yaobai, Ankang Yaobai, Hanzhong Yaobai and Mianxian Yaobai. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| (iii) The Group's bank borrowings of USD60,000,000 as at 31 December 2008 and 2009 were secured by 100% of the equity |
| interest of its subsidiary Shaanxi Yaobai as at 31 December 2008 and 2009. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| (iv) The Group's bank borrowings of USD50,000,000 as at 31 December 2009 were secured by 19,393,776 ordinary shares of the |
| Company held by Mr. Zhang Jimin as at 31 December 2009. The expire date of this borrowing was extended to 26 July 2011 |
| according to an extension agreement signed on 1March 2010. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
| The exposure of the Group's bank borrowings to interest rate changes and the contractual repricing dates or maturity date |
| whichever is earlier are as follows: |
+----------------------------------------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| | | | |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| 6 months or less | | 626,563 | 168,000 |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| 6-12 months | | 540,505 | 85,400 |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| 1-5 years | | 328,058 | 407,069 |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| | | 1,495,126 | 660,469 |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| | | | |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| The fair value of current bank borrowings equal their carrying amount as the discounting impact is not significant. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| The carrying amounts and fair value of non-current bank borrowings are as follows: |
+----------------------------------------------------------------------------------------------------------------------------+
| | As at 31 December |
+-------------------------------+--------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| | | | |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| Carrying amount | | | |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| -USD bank borrowings | | 93,888 | 410,076 |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| -RMB bank borrowings | | 264,000 | 35,800 |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| | | 357,888 | 445,876 |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| Fair value | | | |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| -USD bank borrowings(i) | | 77,258 | 371,269 |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| -RMB bank borrowings(ii) | | 250,800 | 35,800 |
| (iii) | | | |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| | | 328,058 | 407,069 |
+-------------------------------+--------------------------------------+--------------------------------+--------------------+
| (i) The fair value of bank borrowings of USD60,000,000 as at 31 December 2009 is based on cash flows discounted using an |
| effective rate of 20.23% (2008: 20.23%) per annum. |
+----------------------------------------------------------------------------------------------------------------------------+
| (ii) The fair value of the bank borrowing of RMB330,000,000 is based on the cash flows discounted using an effective rate |
| of 8.29% per annum. |
+----------------------------------------------------------------------------------------------------------------------------+
| (iii) The fair value of RMB bank borrowings as at 31 December 2008 approximates to the carrying amount as the borrowing |
| carry floating interest rates. |
+----------------------------------------------------------------------------------------------------------------------------+
| The weighted average effective interest rates at each balance sheet date were as follows: |
+----------------------------------------------------------------------------------------------------------------------------+
| | | | |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| | As at 31 December |
+-------------------------------+--------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| | | | |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| RMB bank borrowings | | 6.03% | 8.44% |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| USD bank borrowings | | 12.94% | 20.23% |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| | As at 31 December |
+-------------------------------+--------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| | | | |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| Loan from employees | | - | 15,784 |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| Loan from third parties | | | |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| -transfer from minority equity holder of a subsidiary | 150,800 | - |
+----------------------------------------------------------------------+----------------------------------+------------------+
| -other | | 3,000 | - |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| | | 153,800 | 15,784 |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| | | | |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| Other borrowings are all unsecured and denominated in RMB. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| Other borrowings are repayable as follows: |
+----------------------------------------------------------------------------------------------------------------------------+
| | As at 31 December |
+-------------------------------+--------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| | | | |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| 6 months or less (i) | | 92,800 | 15,784 |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| 6-12 months | | 29,000 | - |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| 1-5 years | | 32,000 | - |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| | | 153,800 | 15,784 |
+-------------------------------+--------------------------------------+----------------------------------+------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| i) According to supplemental agreements on 25 February 2010, certain borrowings will be repaid on 31 December 2011. |
| |
+----------------------------------------------------------------------------------------------------------------------------+
| The fair values of other borrowings approximate to their carrying amount at each of the balance sheet dates because the |
| impact of discounting is not significant. |
| |
+----------------------------------------------------------------------------------------------------------------------------+
| The weighted average effective interest rates for other borrowings as at 31 December 2009 was 9.16% (2008: 11.64%). |
| |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| 4. Loan facility and warrants reclassified as liabilities |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| Bank borrowing of USD60 million |
+----------------------------------------------------------------------------------------------------------------------------+
| |
| On 29 May 2008, the Company entered into a loan facility agreement for USD 60 million with a financial institution. The |
| interest rate was 13.5% per annum, 50% of the loan was 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. |
| |
| According to the loan facility agreement, the Company should use its commercially reasonable efforts to achieve a |
| "Qualifying Re-listing" ('"QRL") 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 QRL not take place, the Company must repay the principal of the loan outstanding together with |
| accrued interests and break costs on the date falling 30 months from the date of agreements, if the Company issues any |
| equity interest upon a QRL, the Company must pay 50% of the outstanding loan to gather with accrued interest and break |
| costs immediately after QRL. |
| |
+----------------------------------------------------------------------------------------------------------------------------+
| QRL means any initial public offering and/or secondary offering of shares of the Company with a resulting listing of |
| shares in the Borrower on (i) the Hong Kong Stock Exchange, the Singapore Stock Exchange, the London Stock Exchange, the |
| New York Stock Exchange and the Frankfurt Stock Exchange or (ii) any other internationally recognised stock exchange |
| provided that such stock exchange shall have reasonably sufficient liquidity which is acceptable to the lender. |
| |
+----------------------------------------------------------------------------------------------------------------------------+
| Warrant instrument agreement |
+----------------------------------------------------------------------------------------------------------------------------+
| |
| On 29 May 2008, as part of the loan facility the Company also entered into a warrant agreement as part of the loan |
| facility. According to the warrant agreement, the warrant holders had the following rights: |
| |
| (1) Rights to subscribe warrant shares and strike price ("subscription right") |
| |
| The warrant holders received warrants to subscribe for 7,802,142 ordinary shares in the Company at a strike price of USD |
| 2.6916, representing a 15% premium to the average equivalent closing price per share over the 20 trading days immediately |
| preceding the date of the warrant agreement, subject to strike price resets under certain circumstances. The warrants may |
| could have been exercised at any time up to 36 months after issuance. |
| |
| (2) Cash settlement option |
| |
| The warrant holder had the option to require the Company to pay cash to it in lieu of issuing warrant shares. The warrant |
| holder could only elect for cash settlement in respect of all, but not only part, of the warrant shares in respect of |
| which such subscription rights are exercised. |
| |
| (3) Put option |
| |
| The warrant holders were also 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 bank borrowing of USD60 million. The Put Option could have been exercised |
| after 30 months in certain circumstances, or earlier in the event of default. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| As the exercise price of the warrants is denominated in a currency ("USD") other than the Group's functional currency |
| ("RMB"), IFRS requires that it be classified as a liability in the Group's balance sheet and adjusted to fair value at |
| each balance sheet date, with the change in fair value recorded within the consolidated statement of comprehensive income. |
| |
| The directors have identified that the warrants attached to the bank borrowing of USD 60 million was an embedded |
| derivative. The value of the warrant was derived from the strike price, the Company's share performance and the cash flow |
| relating to the Put Option. The warrant was therefore a financial derivative, which is classified as a financial liability |
| at fair value through profit and loss. |
| |
| The directors have identified that the warrants attached to the bank borrowing of USD60 million are embedded derivatives. |
| The value of the warrants derived from the strike price, the Company's share performance and the cash flow relating to the |
| Put option. The warrants are therefore a financial derivative, classified as a financial liability at fair value through |
| profit and loss. |
| |
| Redemption of warrants |
| |
| On 21 October 2009, the Company agreed an amendment deed with the warranty holder. Under the amendment deed, the Company |
| redeemed the warrants by paying the warrant holder with total amount, of approximately USD30,188,000. On 3 November 2009, |
| the Company completed the settlement of warrant redemption with total payment of RMB 206,435,000. |
| |
| The difference between the redemption amount and fair value of the put option as at 31 December 2008 was recognised as |
| finance costs in the consolidated statement of comprehensive income. |
| |
+----------------------------------------------------------------------------------------------------------------------------+
| The loss on the redemption of the warrants was approximately RMB168,451,000. It is expected that the Group's business will |
| sustain continuous growth in the future years. The directors believe the growth of the Group will have a positive impact |
| on the performance of the Group's future share price, and as a result, more loss will incur if no redemption happens and |
| warrant holders exercise their rights in the future. |
| |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| Fair values of the bank borrowing of USD60 million and the warrant |
+----------------------------------------------------------------------------------------------------------------------------+
| |
| As at 31 December 2008, the directors concluded that Qualifying Re-listing was not within the control of the Company, the |
| bank borrowings of USD60 million and warrants (put option) were the obligations to the Company that arose 30 months from |
| the date of utilisation of the bank borrowing of USD60 million. Accordingly the bank borrowing of USD60 million was |
| initially recorded at cost of USD53,106,000, being the fair value, and subsequently at amortised cost. The put option was |
| recognised as an other liability at cost, USD4,414,000, being the fair value, and amortised over a 30 month period. The |
| fair values of the bank borrowing of USD60 million and put option were calculated by discounting the future cash flow of |
| the loan and interest payments. Directly attributable transaction costs were debited to the loan liability. |
| |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| IAS 39 does not permit the initial value of the derivative be recognised as a loss at initiation. The Group's accounting |
| policy in respect of this initial loss is to recognise it through the statement of comprehensive on a straight-line basis |
| except to the extent of any subsequent reversal (if higher). Given the considerably lower share price at the 2008 year |
| end, the directors were of the opinion that the value of the derivative at the 2008 year end was approximately nil, and |
| consequently no net gain or loss had been recognised in this respect in the year and an insignificant amount has been |
| deferred as loss to future periods. |
| |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| After the redemption of the warrants, the warrants classified as liabilities were derecognised. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| As at 31 December 2009, 75% of the bank borrowing of USD60 million was classified as current liabilities. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| The fair value and effective interest rate of bank borrowings of USD60 million and the put option as 31 December 2008 and |
| 2009 are as follows: |
+----------------------------------------------------------------------------------------------------------------------------+
| | | |
+---------------------------------------------+-------------------------------------------------+----------------------------+
| | 31 December 2009 | 31 December 2008 |
+---------------------------------------------+-------------------------------------------------+----------------------------+
| | | |
+---------------------------------------------+-------------------------------------------------+----------------------------+
| Fair value of bank borrowing of USD60 | 358,922 | 371,269 |
| million | | |
+---------------------------------------------+-------------------------------------------------+----------------------------+
| Fair value of put option | N/A | 32,908 |
+---------------------------------------------+-------------------------------------------------+----------------------------+
| | 31 December 2009 | 31 December 2008 |
+---------------------------------------------+-------------------------------------------------+----------------------------+
| Effective interest rate of bank borrowing | 20.23% | 20.23% |
| of USD60 million | | |
+---------------------------------------------+-------------------------------------------------+----------------------------+
| Effective interest rate of put option | N/A | 17.78% |
+---------------------------------------------+-------------------------------------------------+----------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| The Company repaid bank borrowings of USD5 million in December 2009. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| 5. Earnings per share |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| (a) Basic |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the |
| weighted average number of ordinary shares in issue during the year excluding share options granted to directors or |
| selected employees during the periods. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| Profit attributable to equity holders of the Company | | 330,460 | 246,163 |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| Weighted average number of ordinary shares in issue | | 64,531 | 64,113 |
| (thousands) | | | |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| Basic earnings per share (RMB per share) | | 5.12 | 3.84 |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| | | | |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| (b) Diluted | | | |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| | | | |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume |
| conversion of all dilutive potential ordinary shares. The Company has share options as well as warrants. For the share |
| options and warrants, a calculation is performed to determine the number of shares that could have been acquired at fair |
| value (determined as the average annual market share price of the Company's shares) based on the monetary value of the |
| subscription rights attached to outstanding share options and warrants. The number of shares calculated is compared with |
| the number of shares that would have been issued assuming the exercise of the share options and warrants. |
+----------------------------------------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| | | | |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| Profit attributable to equity holders of the Company | | 330,460 | 246,163 |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| Profit used to determine diluted earnings per share | | 330,460 | 246,163 |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| Weighted average number of ordinary shares in issue | | 64,531 | 64,113 |
| (thousands) | | | |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| Adjustments for share options (thousands) | | 653 | 81 |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| Weighted average number of ordinary shares for diluted | | 65,184 | 64,194 |
| earnings per share (thousands) | | | |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| Diluted earnings per share (RMB per share) | | 5.07 | 3.83 |
+-----------------------------------------------------------+---------------------+---------------------+--------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| 6. Cash generated from operations |
+----------------------------------------------------------------------------------------------------------------------------+
| | | | |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| | | 2009 | 2008 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| | | | |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| Profit for the year after income tax | | 330,460 | 246,163 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| Adjustments for: | | | |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| - Income tax expense | | 44,687 | 11,566 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| - Depreciation | | 99,286 | 62,317 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| - Amortisation | | 3,817 | 2,066 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| - Loss on disposal of PPE | | 2,733 | 74 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| - Provision for impairment loss for receivables | | 1,372 | 914 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| - Provision for impairment loss for inventories | | - | - |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| - Share-based payment | | 1,161 | 1,480 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| - Finance costs - net | | 241,091 | 25,515 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| Changes in working capital (excluding the effects of acquisition and exchange | | |
| differences on consolidation): | | |
+---------------------------------------------------------------------------------+---------------------+--------------------+
| - Inventories | | (29,881) | (35,854) |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| - Trade and bills receivable | | (4,936) | (14,655) |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| - Other receivables and prepayments | | (52,632) | (10,954) |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| - Trade and other payables | | 59,580 | 61,077 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| Cash generated from operations | | 696,738 | 349,709 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| In the consolidated cash flow statement, proceeds from sale of property, plant and equipment comprise: |
+----------------------------------------------------------------------------------------------------------------------------+
| | | | |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| | | 2009 | 2008 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| | | | |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| Net book amount | | 4,632 | 212 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| Profit/(loss) on disposal of property, plant and equipment | | (2,733) | (74) |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| Proceeds from disposal of property, plant and equipment | | 1,899 | 138 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| 7. Commitments |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| (a) Capital commitments |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| Capital expenditure contracted for at the balance sheet date, but not yet incurred was as follows: |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| | | | |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| Property, plant and equipment | | 558,336 | 449,035 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| | | | |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| (b) Operating lease commitments - Group companies as lessee |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| The Group leases various buildings and land as offices and warehouses under non-cancellable operating lease agreements. |
| The lease terms are between 5 and 10 years, and the majority of lease agreements are renewable at the end of the period at |
| market rate. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| The Group also leases various plant and machinery under cancellable operating lease agreements. The Group is required to |
| give six-month notice for the termination of these agreements. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| The future aggregate minimum lease payments under non-cancellable operating leases are as follows: |
+----------------------------------------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| | | | |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| No later than 1 year | | 74 | 484 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| Later than 1 year and no later than 5 years | | 209 | 217 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| Later than 5 years | | 446 | 496 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| | | 729 | 1,197 |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| | | | |
+--------------------------------------------------------------+------------------+---------------------+--------------------+
| 8. Business combination |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| (a) Acquisition of Xiushan Cement |
+----------------------------------------------------------------------------------------------------------------------------+
| Shaanxi Yaobai, a wholly owned subsidiary of the Company entered into Equity Transfer Agreements with Shaanxi Xiushan |
| Yaobai Cement Group Limited (" Xiushan Cement") to acquire 100% of its equity interest on 15 August 2009. The total |
| consideration for the acquisition of Xiushan Yaobai was RMB 180,700,000, according to the Equity Transfer Agreements. |
| There is no contingent consideration. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
| On 1 August 2009, the Group took control of Xiushan Cement, and therefore the acquisition date was 1 August 2009. After |
| the acquisition, Xiushan Cement was renamed to Xiushan Yaobai. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| Details of net assets acquired and goodwill are as follows: |
+----------------------------------------------------------------------------------------------------------------------------+
| | | |
+------------------------------------------------+---------------------+-----------------------------------------------------+
| Purchase consideration: | | |
+------------------------------------------------+---------------------+-----------------------------------------------------+
| - Cash paid | | 130,000 |
+------------------------------------------------+---------------------+-----------------------------------------------------+
| - Consideration pay to Xiushan Yaobai | | 14,650 |
+------------------------------------------------+---------------------+-----------------------------------------------------+
| - Consideration payable | | 36,050 |
+------------------------------------------------+---------------------+-----------------------------------------------------+
| Total purchase consideration | | 180,700 |
+------------------------------------------------+---------------------+-----------------------------------------------------+
| Provisional fair value of assets acquired (see | | 135,426 |
| below) | | |
+------------------------------------------------+---------------------+-----------------------------------------------------+
| | | |
+------------------------------------------------+---------------------+-----------------------------------------------------+
| Goodwill | | 45,274 |
+------------------------------------------------+---------------------+-----------------------------------------------------+
| | | |
+------------------------------------------------+---------------------+-----------------------------------------------------+
| (a) Accordingly to the Equity Transfer Agreement and revised agreements between Shaanxi Yaobai and the original equity |
| holders of Xiushan Cement, certain trade and other receivables due from original equity holders or third parties were |
| transferred as amounts due from Shaanxi Yaobai on the acquisition date. This balance is eliminated in the consolidated |
| balance sheet. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| (b) The balance represents the outstanding payables to the original equity holders of Xiushan Cement. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| The goodwill is attributable to the economies of scale anticipated as a result of combining the operations within the |
| Group. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| Management considers the fair value of the business acquired has not changed since acquisition and accordingly the value |
| of goodwill is not impaired. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
| The fair values of the acquired assets and liabilities as of 1 August 2009 are as follows: |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| | Provisional fair value | Acquiree's carrying amount |
+------------------------------------------+----------------------------------------------------+----------------------------+
| | RMB'000 | RMB'000 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Cash and cash equivalents | 9,078 | 9,078 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Property, plant and equipment | 140,475 | 130,542 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Land use rights | 6,924 | 5,176 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Trademarks | - | 461 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Mining rights | 5,250 | 3,576 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Customer relationship | 20,610 | - |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Long term deferred expenditure | 266 | 266 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Inventories | 17,591 | 17,591 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Trade and other receivables | 35,555 | 35,555 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Trade and other payables | (59,938) | (59,938) |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Borrowings | (32,009) | (32,009) |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Deferred tax liabilities | (8,376) | - |
+------------------------------------------+----------------------------------------------------+----------------------------+
| | | |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Fair value of net assets | 135,426 | 110,298 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| | | |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Goodwill | 45,274 | - |
+------------------------------------------+----------------------------------------------------+----------------------------+
| | | |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Total purchase consideration | 180,700 | 110,298 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| | | |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Purchase consideration settled in cash | | |
| | - | 130,000 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Cash and cash equivalents in subsidiary | | |
| acquired | - | (9,078) |
+------------------------------------------+----------------------------------------------------+----------------------------+
| | | |
+------------------------------------------+----------------------------------------------------+----------------------------+
| Cash outflow on acquisition | | |
| | - | 120,922 |
+------------------------------------------+----------------------------------------------------+----------------------------+
| |
| Following acquisition, Xiushan Yaobai Contributed revenue of RMB86,329,000 and profit of RMB15,773,000 to the Group during |
| the year ended 31 December 2009. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| 9. Formation of a subsidiary |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| On 28 December 2009, Shaanxi Yaobai entered into an agreement with Shaanxi Danshui Jiancai Co., Ltd. ("DJ") to form a new |
| company, Longqiao Yaobai. The registered paid-in capital of Longqiao Yaobai is RMB 125,000,000. Shaanxi Yaobai and DJ hold |
| 80% and 20% of the equity interests of Longqiao respectively. According to the agreement, Shaanxi Yaobai is required to |
| contribute cash amounting to RMB100,000,000 and DJ is required to contribute certain machinery with a fair value of to |
| RMB25,000,000. In addition to the captital contribution, DJ transferred a number of assets and liabilities to Longqiao |
| Yaobai. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| As at 31 December 2009, Longqiao Yaobai received the following assets and liabilities: |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| | RMB'000 |
+--------------------------------------------------------------------------------------------+-------------------------------+
| Cash contributed from Shaanxi Yaobai (Note (a)) | 50,000 |
+--------------------------------------------------------------------------------------------+-------------------------------+
| PPE contributed from DJ | 25,000 |
+--------------------------------------------------------------------------------------------+-------------------------------+
| | 75,000 |
+--------------------------------------------------------------------------------------------+-------------------------------+
| Assets transferred from DJ: | |
+--------------------------------------------------------------------------------------------+-------------------------------+
| PPE | 312,226 |
+--------------------------------------------------------------------------------------------+-------------------------------+
| Land use rights | 15,165 |
+--------------------------------------------------------------------------------------------+-------------------------------+
| Mining rights | 12,930 |
+--------------------------------------------------------------------------------------------+-------------------------------+
| | 340,321 |
+--------------------------------------------------------------------------------------------+-------------------------------+
| Liabilities transferred from DJ: | |
+--------------------------------------------------------------------------------------------+-------------------------------+
| Bank borrowings | (49,200) |
+--------------------------------------------------------------------------------------------+-------------------------------+
| Other borrowing | (150,800) |
+--------------------------------------------------------------------------------------------+-------------------------------+
| | (200,000) |
+--------------------------------------------------------------------------------------------+-------------------------------+
| | |
+--------------------------------------------------------------------------------------------+-------------------------------+
| Amount due to DJ | (140,321) |
+--------------------------------------------------------------------------------------------+-------------------------------+
| | |
+--------------------------------------------------------------------------------------------+-------------------------------+
| (a) Shaanxi Yaobai contributed another RMB50,000,000 of cash to Longqiao Yaobai in February 2010. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
| (b)The amount due to DJ represented the difference between the assets and the liabilities transferred from DJ, and was |
| recorded as a non-interest bearing amount due to a minority equity holder of a subsidiary. 50% of the payable will be |
| repaid in 2010 , and the remaining 50% of the payable will be repaid in 2011. On 25 February 2010, Longqiao Yaobao entered |
| into a supplementary agreement with DJ. The amount due to DJ will be totally repaid on 31 December 2011. |
+----------------------------------------------------------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------------------------------------------------------+
| 10. Events after the balance sheet date |
+----------------------------------------------------------------------------------------------------------------------------+
| On 15 January 2010, Shaanxi Yaobai entered into a credit facility arrangement with a local financial institution. |
| According to the facility arrangement, Shaanxi Yaobai has been granted a working capital facility of no more than |
| RMB300,000,000. The facility is valid for two years from 1 January 2010. |
| |
| On 25 February 2010, Longqiao Yaobai entered into three supplementary agreements with DJ and other two creditors. |
| According to the supplementary agreements, the amount due to DJ of RMB140,321,000 and other borrowings of RMB 70,000,000 |
| will be repaid on 31 December 2011. |
| |
| On 26 February 2010, the Company entered into a USD50 million term loan facility agreement with financial institutions. It |
| is the Company's intention to utilise this loan to repay the existing USD60 million facility. The drawdown of this |
| facility is subject to satisfying certain conditions precedent, one of which is obtaining consent from the USD 60 million |
| lenders for making an early repayment. At date of this report, the USD50 million loan has not been drawn down. |
| On 1 March 2010, the Company reached extension agreement with a financial institution to extend the expiry date of the |
| original USD50 million loan to 26 July 2011. |
+----------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | |
+-------------------------------+----------+--+--+----------+--+-------+----------+----------+--+-------+-+------------------+
- end -
For further information please contact:
West China Cement Limited
Anthony Schindler
Anthony.schindler@wcc_uk.com
Tel: +44 7710 1789 28
NCB Stockbrokers Ltd
Christopher Caldwell
Christopher.caldwell@ncb.ie
Tel: + 44 20 7071 5200
Citigate Dewe Rogerson Asia
Pui Shan Lee
Tel: +86 21 6340 4186
ps.lee@citigate.com.cn
This information is provided by RNS
The company news service from the London Stock Exchange
END
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