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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| China Evoline | LSE:CEVO | London | Ordinary Share | GB00B3N52J55 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 50.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 4002D
China Evoline PLC
01 December 2009
China Evoline Plc
Final Results
1 December 2009
China Evoline Plc ("China Evoline" or "the Company" or "the Group") announces
its final results for the year ended 30 June 2009.
The financial statements for the year ended 30 June 2009 will be posted to
shareholders today and will also be available on the Company's website
www.chinaevoline.com.
Contact:
China Evoline plc
Frank Lewis, Chairman
07775 504 313
Fairfax I.S. PLC
Ewan Leggat/Laura Littley
0207 598 5368
CHAIRMAN'S STATEMENT
Dear Shareholder
This Report & Financial Statements covers the year ended 30 June 2009 - a period
during which the business of the Company changed from an assembler and
wholesaler of mobile telephones into an investing company seeking acquisition
opportunities with a focus on China, particularly in the natural resources and
technology sectors. The Company changed its name from ZTC Telecommunications plc
to China Evoline plc on 21 April 2009.
Operating Results - 2009
During the year, the Company's operation in China, Zhong Tian, continued to
trade normally as an assembler and wholesaler of mobile telephones up until the
date of the disappearance in November 2008 of Charles Huang, the former Chief
Executive. However, due to the subsequent sealing of the Group's factory in
Shenzhen, China, and the sequestering of the Group's assets by the People's
Court in Longgang, China, the Directors have not had access to the financial
information with regards to the trading of its subsidiaries since 31 August
2008, and no trading information since that date is available to be included
within the financial statements. The audited financial statements therefore only
represent normal trading activity for the first two months of the financial year
ended 30 June 2009.
Further details of the events leading up to the fundamental change in business
of the Company in April 2009 is set out in the Operating Review below.
Fundamental Change in Business
After due investigations following the disappearance of Charles Huang, and
taking into account the limited resources of the Company, the Directors
concluded that the Company's operation in China would be unable to resume
trading and, as such, the ability to realise any net assets for the benefit of
shareholders would be extremely difficult and not cost-effective. Given the
potentially long recovery procedures and the Company's limited resources, the
Directors concluded that the subsidiaries of the Company had negligible or no
recoverable value.
Following approval by shareholders at the Annual General Meeting held on 21
April 2009, the investment in Praise Ease and its subsidiary, Zhong Tian, was
sold for a nominal consideration.
Introduction of new Investors - April 2009
At the end of November 2008, it transpired that Tomorrow's Focus Limited
("Tomorrow's Focus"), the company which then held 68 million Ordinary shares of
10p in the Company beneficially owned by Charles Huang, had, without the
knowledge of the Company or the Directors and in contravention of the AIM Rules,
entered into loan agreements with Maiden Undertaking Limited ("Maiden
Undertaking"), a company beneficially owned by Mr Tong. Documentation produced
to the Company showed that Maiden Undertaking had lent an aggregate amount of
HK$27.4 million (approximately GBP2 million) to Tomorrow's Focus, and that the
repayment of the loans was secured against the Ordinary shares held by
Tomorrow's Focus (representing approximately 62.57% of the total issued share
capital) and by personal guarantees given by Charles Huang in favour of Maiden
Undertaking (the "Charges").
It further transpired that on 14 April 2008 Charles Huang transferred his
holding of shares in Pan Europe Capital Limited, the legal entity which held
12,750,000 Ordinary shares of 10p in the Company amounting at that time to
approximately 11.7% of the Company's then issued Ordinary share capital, to
Ms.Cheung Yiu Shan. Following discussions between the Company and Maiden
Undertaking, and on the basis that there had been a breach by Tomorrow's Focus
and Charles Huang of the terms of the two loan agreements dated 16 May 2008 and
3 June 2008, it was agreed that Maiden Undertaking would assert its rights under
the Charges and assign the charged Ordinary shares to Staybest Limited
("Staybest"), an associated company, and, subject to the passing of resolutions
by shareholders at the Annual General Meeting held on 21 April 2009, that
Staybest and Wellhigh Limited ("Wellhigh") (a company introduced to ZTC
Telecommunications plc by the principals of Maiden Undertaking) would support
the Company by making an investment in the Company of an aggregate amount of
GBP280,000 consisting of the subscription by Staybest for 92,885 new Ordinary
shares of 1p and the subscription by Wellhigh for GBP258,636.45 convertible
unsecured loan notes 2011 (together, the "Investment"). The purpose of the
Investment was to allow the Company to continue to operate and in due course,
seek to acquire new businesses.
On the basis that the Board had no reason to believe that the Charges were not
enforceable and against appropriate indemnities received from Staybest, the
Directors, pursuant to an Investment Agreement, on 27 March 2009 agreed to
register Staybest as the holder of the Charged Shares.
Following approval by shareholders at the Annual General Meeting held on 21
April 2009, Staybest and Wellhigh subscribed an aggregate amount of GBP280,000
to provide the Company with sufficient working capital to operate for at least
the following 12 months. Following the passing of the Resolutions, the
suspension of dealings in the Company's shares on AIM was lifted.
Potential investment targets
The Investment Strategy of the Company was approved by shareholders at the
Annual General Meeting held on 21 April 2009 and is set out below.
Since that date, your Directors have reviewed a number of potential projects for
investment, primarily in the Resources and Technology sectors, in line with the
Company's aims. All of the options reviewed thus far are not suitable for
investment, either because they represent an unattractive investment horizon or
for valuation reasons. We continue to conduct initial due diligence appraisals
of potential projects. Where we believe further investigation is warranted the
Board will appoint suitably qualified and, where appropriate, independent
persons to conduct further detailed due diligence.
As at the date of these financial statements, the Directors are pursuing a
number of potential investment opportunities which they believe will result in a
successful acquisition being completed by October 2010.
Board Changes
Following Charles Huang's disappearance in November 2008 and his failure to
reappear, the Board resolved to remove him as a director of the Company on 22
December 2008. Dr Yi Xie, Non-executive director, resigned from the Board on 18
December 2008.
Following the Annual General Meeting on 21 April 2009, Mr. Yumao Zheng, Mr. Jian
(aka Jeffery) Xin and Mr. Xuedong (aka Louge) Lou were appointed as
Non-executive Directors.
Additional Finance
Since 30 June 2009, Staybest Limited (the "Lender") has agreed to make available
to the Company an unsecured loan of GBP160,000 (the "Loan") in order to provide
additional working capital. The Loan is irrevocably available for drawdown in
two tranches, as to GBP80,000 within two weeks of the date of the Loan Letter
and as to GBP80,000 during a two week period commencing six months after the
date of the Loan Letter. The loan is repayable 16 months after the date of the
Loan Letter, and bears interest at 2.5 per cent per annum which is payable on
final repayment of the loan.
If at any time the Company makes an offer by way of rights of new Ordinary
Shares to its existing shareholders, at a time when the Lender is the holder of
Ordinary Shares of the Company, the Lender may require that all or any part of
the principal amount of the Loan is to be applied in paying up the amount to be
subscribed by the Lender for any Ordinary Shares for which the Lender accepts
the offer made by the Company, at the subscription price and otherwise on the
terms of that offer.
Basis of preparation - going concern
Zhong Tian, the main trading entity in the Group was unable to continue trading
during the year ended 30 June 2009. This was due to the major shareholder and
Chief Executive Officer of ZTC plc leaving the company and the factory and
offices being closed off, with no access being given to employees or the
directors. Given the extraordinary circumstances, the going concern assumption
for Zhong Tian was no longer appropriate. The effect was so pervasive that a
fundamental change in the basis of accounting to a break-up basis was adopted
for Zhong Tian in the financial statements for the year ended 30 June 2008, and
its asset values were written down accordingly, in accordance with IAS 10
paragraphs 14-16. Where necessary in order to value the assets and liabilities
in Zhong Tian, the Directors used estimates based upon amounts recovered and
expected to be recovered after the balance sheet date as a precise valuation of
those assets and liabilities was not available. Further detail on the
revaluation of the asset values in Zhong Tian at 30 June 2008 can be found in
note 3 to the financial statements for the year ended 30 June 2008. In addition,
in the parent company, the investment and intercompany receivables were written
down to zero value at 30 June 2008 to reflect the non-recoverability of these
assets. A total charge of GBP18,066,000 was reflected in the financial
statements of the parent company for the year ended 30 June 2008 in respect of
these write-downs.
Following approval by shareholders at the AGM on 21 April 2009, Praise Ease,
together with its wholly owned subsidiary Zhong Tian, were disposed off for HKD1
on that date.
Subsequent to the year end, the majority shareholder has irrevocably committed
to lend the Company an additional GBP160,000 (with the first tranche of
GBP80,000 having been drawn upon subsequent to the year end). Having prepared
the cash flow forecasts to December 2010 the Directors are of the opinion that
this will provide the Company with sufficient working capital in order to
finance the Company for 12 months irrespective of whether a new investment in a
new acquisition is made by the Company.
A critical element to the change in strategy as set out in the Operating Review
below is securing a substantial acquisition. In the event no substantial
acquisition is made by 21 April 2010, being 12 months from the date of the 2009
AGM, in accordance with the AIM rules for Companies, trading in the Company's
shares will be suspended and if no reverse transaction is achieved in the
following 6 months, the London Stock Exchange will cancel the admission of the
shares.
In the event that the London Stock Exchange were to cancel the admission of the
Company's shares, it is not certain that the majority shareholder will continue
to provide financial support to the Company's ongoing activities, and it is
likely that any other sources of financing would be further restricted.
Therefore, although the Company has sufficient funds to continue for 12 months,
it is uncertain that the Company will continue as a going concern after 12
months in the event of failing to complete an acquisition of a new investment or
securing additional finance.
If the Company successfully identifies a suitable investment opportunity, the
ability of the Company to continue as a going concern will depend on being able
to raise the necessary finance in order to fund the appropriate due diligence
and purchase price consideration, and being able to successfully integrate the
target into the Group so as to generate cash in the future.
If the Company fails to secure a new investment opportunity and fails to secure
any additional finance, the Company will be unable to continue as a going
concern as it will have insufficient funds to trade after 12 months. The ability
of the Company to continue as a going concern will therefore depend on further
continued financial support of the majority shareholder.
Despite the above material uncertainties, the Directors consider that China
Evoline plc is a going concern and the accounts of the parent entity have been
prepared on a going concern basis. The Directors consider this appropriate based
on the refinancing of the Company which was approved by shareholders on 21 April
2009, the additional loan finance secured subsequent to the balance sheet date
and on the assumption that the investment strategy will be successfully
implemented by October 2010. As at the date of these accounts the Directors are
pursuing a number of potential investment opportunities which they believe will
result in a successful acquisition being completed by October 2010.
The above conditions represent a material uncertainty that may cast significant
doubt as to the Company's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the Company were
unable to continue as a going concern.
Frank Lewis
Chairman
30 November 2009
OPERATING REVIEW
Shenzhen Zhongtian Communication Equipments Co Ltd
During the period from March 2007 until November 2008, the Company operated,
through its wholly owned subsidiary in China, Shenzhen Zhongtian Communication
Equipments Co Ltd ("Zhong Tian") as an assembler and wholesaler of mobile
telephones.
On 13 October 2008, we informed shareholders that trading and credit conditions
for small and medium-sized entities in the People's Republic of China (PRC) had
become increasingly difficult throughout the third quarter of 2008. This was due
to deteriorating macro economic conditions outside the PRC, slowing economic
growth and restrictive credit policies in China. As a consequence, our markets
became increasingly competitive, disrupted and oversupplied.
Following this announcement, on 10 November 2008, the Directors announced that
they had become aware that Charles Huang, then a major shareholder in the
Company and CEO of Zhong Tian, and Yang Ruqiang, the General Manager of Zhong
Tian and Charles Huang's brother in law, had been absent from the Group's
offices and factory in Longgang, Shenzhen (China), and had been uncontactable
for the previous 5 days.
This unexplained absence of key personnel in the highly charged economic
environment of southern China during November 2008 destabilised the Group's
employees and creditors. The Board believes that this resulted in the
unauthorised removal of some of Zhong Tian's assets from its factory site in
Longgang. The local authorities subsequently moved to take control of the
situation and the local People's Court sealed the factory and its buildings,
sequestering all of the assets. None of the Directors or employees of the Group
were able to gain access to the factory and its buildings which remained sealed.
As a result of the management control issues arising, and in order to ensure
that an orderly market in the Company's shares was maintained, the Directors
requested a suspension of trading in the Existing Ordinary Shares on AIM which
was granted by the London Stock Exchange on 7 November 2008.
Further investigations by the Directors revealed that, on 14 November 2008, the
local government paid compensation to, and dismissed, a majority of the
employees of Zhong Tian. It is believed that the People's Court subsequently
auctioned the Group's remaining inventory and equipment for RMB 1,220,765
(approximately GBP90,000) and this sum was, the Directors believe, credited
against the Government payments to employees. This has not been capable of
verification by the Directors.
Following this expected sequestration of assets, alleged looting at the factory,
and the continued absence of all key management of the subsidiaries, the Board
took the unanimous view that the value of any remaining equipment and inventory
was likely to be negligible and Zhong Tian was unlikely to be able to continue
as a going concern.
Recoverable Value of the Company's Subsidiaries
The whereabouts of Charles Huang and Mr Yang Ruqiang remained unknown, and
further legal opinion indicated that, in order for the Company to gain access to
the assets of Zhong Tian, it would have to replace Mr Huang as legal
representative of Zhong Tian, a lengthy and expensive procedure, and then
commence one of the following processes:
- The settlement of existing claims and/or appointment of a liquidation team.
Any voluntary liquidation process could take up to two years and would incur
considerable expense including the payment of uncalled capital, being
approximately RMB 170m (GBP12.4m); or
- An involuntary winding up process initiated by the local relevant authority of
Shenzhen which, the Directors believe, could also be very time consuming and the
likely focus on tangible assets would mean that any proceeds are likely to be
minimal.
After due investigations, taking into account the limited resources of the
Company, the Directors concluded that the Company's business in China would be
unable to resume trading and, as such, the ability to realise any net assets for
the benefit of Shareholders would be extremely difficult and not cost-effective.
Given the potentially long recovery procedures and the Company's limited
resources, the Directors concluded that the subsidiaries of the Company had
negligible or no recoverable value.
Appointment of Legal Counsel
The Directors of Praise Ease ("PE"), the Company's then wholly-owned Hong Kong
holding company and the sole shareholder of Zhong Tian, appointed China legal
counsel on 12 November 2008 to provide an opinion as to the prospects of any
economic recovery. Following the official authorisations and requisite payments,
China legal counsel commenced its investigations on 25 November 2008.
Creditor Claims and Loan Agreements with Maiden Undertaking Limited
China legal counsel determined that, as of 19 December 2008, 29 creditor claims
had been lodged against Zhong Tian, totalling approximately RMB21m
(approximately GBP2.2m).
At the end of November 2008, it transpired that Tomorrow's Focus Limited
("Tomorrow's Focus"), which then held 68 million ordinary shares of 10p in the
Company beneficially owned by Charles Huang had, without the knowledge of the
Company or the Directors and in contravention of the AIM Rules, entered into
loan agreements with Maiden Undertaking Limited ("Maiden Undertaking"), a
company beneficially owned by Mr Tong. Documentation produced to the Company
showed that Maiden Undertaking had lent an aggregate amount of HK$27.4 million
(approximately GBP2 million) to Tomorrow's Focus, and that the repayment of the
loans was secured against the ordinary shares held by Tomorrow's Focus
(representing approximately 62.57% of the total issued share capital) and by
personal guarantees given by Charles Huang in favour of Maiden Undertaking (the
"Charges").
It further transpired that on 14 April 2008 Charles Huang transferred his
holding of shares in Pan Europe Capital Limited, the legal entity which held
12,750,000 ordinary shares of 10p in the Company amounting at that time to
approximately 11.7% of the Company's then issued Ordinary share capital, to Ms
Cheung Yiu Shan.
Following discussions between the Company and Maiden Undertaking, and on the
basis that there had been a breach by Tomorrow's Focus and Charles Huang of the
terms of the two loan agreements dated 16 May 2008 and 3 June 2008, it was
agreed that Maiden Undertaking would assert its rights under the Charges and
assign the charged shares to Staybest Limited ("Staybest"), an associated
company, and, subject to the passing of resolutions by shareholders at the AGM
held on 21 April 2009, that Staybest and Wellhigh Limited ("Wellhigh") (a
company introduced by the principals of Maiden Undertaking) would support the
Company by making an investment in the Company of an aggregate amount of
GBP280,000 consisting of the subscription by Staybest for 92,885 new Ordinary
shares of 1p and the subscription by Wellhigh for GBP258,636.45 convertible
unsecured loan notes 2011 (together, the "Investment"). The purpose of the
Investment was to allow the Company to continue to operate and in due course,
seek to acquire new businesses.
On the basis that the Board had no reason to believe that the Charges were not
enforceable and against appropriate indemnities received from Staybest, the
Directors, pursuant to an Investment Agreement, on 27 March 2009 agreed to
register Staybest as the holder of the Charged Shares. Following approval by
shareholders at the Annual General Meeting held on 21 April 2009, Staybest and
Wellhigh subscribed an aggregate amount of GBP280,000 to provide the Company
with sufficient working capital to operate for at least the following 12 months.
Following the passing of the Resolutions, the suspension of dealings in the
Company's shares on AIM was lifted.
The Directors believe that Charles Huang's personal guarantee and the
indebtedness of his company to Maiden Undertaking may have been the reason for
his sudden disappearance. As at the date of these accounts, the Directors,
having made reasonable enquiries, are not aware of any other circumstances which
may relate to his disappearance.
Disposal of Praise Ease ("PE")
The disposal of PE was a condition precedent of the party wishing to assist in
the refinancing of the Company in preparation for the removal of the suspension
of trading of its shares, as described below.
PE was the intermediate holding company of Zhong Tian, and since Zhong Tian was
no longer considered a going concern, following shareholder approval on 21 April
2009, PE was disposed of for a nominal sum, on the terms that the Company would
participate in any economic recovery of PE. The Directors do not at present have
any reason to believe there will be any future economic recovery from this
source.
The Directors believe, based on legal advice, that China Evoline plc is not
liable for any of the liabilities within PE's subsidiary, Zhong Tian.
DESCRIPTION OF THE BUSINESS
Since the approval by shareholders on 21 April 2009 of inter alia the investment
by Staybest and Wellhigh, the investing strategy and the share capital
reorganisation, the Company is now an investing company seeking to identify a
suitable acquisition, preferably in the natural resources or technology sectors.
Cash expenditure is operated on a very restricted basis, and there are currently
no employees other than the Board of Directors.
INVESTMENT STRATEGY OF THE COMPANY
The strategy of the Directors is for the Company to invest in one or more
companies established in the Asia Pacific region, which have a significant focus
on the PRC (assets, customers or suppliers) and have the need for capital prior
to them achieving a flotation on the public markets, either within or outside
the PRC, or achieving a trade sale in due course. Such companies will be sourced
largely through the contacts of the Directors, and any funding required by the
Company to make such an investment will be raised prior thereto. While the
Company is not currently able to identify the specific types of businesses in
which it might invest, it is likely that the sectors which will be targeted will
be resources, technology and property - all areas where the Directors have
existing knowledge and contacts.
The Board believes that the Directors have relevant experience in identifying,
assessing, and negotiating such acquisitions. The Directors believe that their
broad collective experience in acquisitions, accounting, corporate and financial
management together with their wide industry contacts will enable the Company to
achieve its objectives. Investment propositions will be considered when the
Directors consider that enhanced values may be achieved. A particular
consideration will be to identify investments where the Directors believe that
their expertise and experience can be deployed to facilitate growth or unlock
value. There is no limit to the number of projects in which the Company may
invest. The Directors may consider investing in a company which is geared when
they believe such gearing is appropriate.
The Directors will conduct initial due diligence appraisals of potential
projects and where they believe further investigation is warranted they will
appoint suitably qualified, and where appropriate independent, persons to
conduct further due diligence.
The Company, as currently proposed, is unlikely to have sufficient cash
resources to expend in undertaking due diligence on any potential projects. In
the event that a suitable project is identified, the Company would either seek
to raise further funds in order to finance any due diligence and acquisition
costs or seek to pass on the costs to a third party, possibly in return for a
success-related fee payable in shares or in cash. Staybest and Wellhigh have
indicated that they would be willing to participate in the funding of such
costs.
The Directors intend to take an active role in assessing and management of any
investment that the Company may make. Accordingly, the Company is likely to seek
participation in the board of directors of any company which the Company
acquires with a view to improving its performance and using of its assets in
such ways as should result in an increase in the value of such a company. The
Directors hope that the resulting benefit would provide a satisfactory return to
the Company's Shareholders. The Directors may consider borrowing in respect of
such investments if such funding was available and deemed appropriate by the
Directors at that time.
In the event that no substantial acquisition is made within 12 months of the
date of the 2009 AGM, namely 21 April 2010, in accordance with the AIM Rules for
Companies, trading in the Company's shares will be suspended and, if no reverse
transaction is achieved in the following 6 months, the London Stock Exchange
will cancel the admission of the shares.
Consolidated Income Statement for the year ended 30 June 2009
+------------------------------------------------------+----+-----------+------------+
| | | 2009 | 2008 |
| | | GBP'000 | GBP'000 |
+------------------------------------------------------+----+-----------+------------+
| Continuing Activities | | | |
+------------------------------------------------------+----+-----------+------------+
| Other administrative expenses | | (526) | (631) |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| Operating Loss | | (526) | (631) |
+------------------------------------------------------+----+-----------+------------+
| Finance income | | 5 | 38 |
+------------------------------------------------------+----+-----------+------------+
| Finance costs | | (4) | (1) |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| Loss before tax | | (525) | (594) |
+------------------------------------------------------+----+-----------+------------+
| Tax | | - | - |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| Loss from continuing activities | | (525) | (594) |
+------------------------------------------------------+----+-----------+------------+
| Discontinued activities | | | |
+------------------------------------------------------+----+-----------+------------+
| Revenue | | 1,667 | 26,532 |
+------------------------------------------------------+----+-----------+------------+
| Cost of sales | | (1,321) | (20,990) |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| Gross Profit | | 346 | 5,542 |
+------------------------------------------------------+----+-----------+------------+
| Other operating income | | - | 445 |
+------------------------------------------------------+----+-----------+------------+
| Other administrative expenses | | (120) | (833) |
+------------------------------------------------------+----+-----------+------------+
| Distribution costs | | (84) | (1,828) |
+------------------------------------------------------+----+-----------+------------+
| Other operating expenses | | (2) | (219) |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| Operating profit/(loss) | | 140 | 3,107 |
+------------------------------------------------------+----+-----------+------------+
| Finance income | | - | 32 |
+------------------------------------------------------+----+-----------+------------+
| Pre-tax gain on disposal of discontinued operation | | 10,944 | - |
+------------------------------------------------------+----+-----------+------------+
| Finance costs | | (35) | (130) |
+------------------------------------------------------+----+-----------+------------+
| Impairment of assets in subsidiary | | - | (18,996) |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| Profit/(loss) before tax | | 11,049 | (15,987) |
+------------------------------------------------------+----+-----------+------------+
| Tax | | (8) | (251) |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| Profit/(loss) from discontinued activities | | 11,041 | (16,238) |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| Profit/(loss) for the year | | 10,516 | (16,832) |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| Attributable to: | | | |
+------------------------------------------------------+----+-----------+------------+
| Owners of the parent | | | |
+------------------------------------------------------+----+-----------+------------+
| Loss for the year from continuing operations | | (525) | (594) |
+------------------------------------------------------+----+-----------+------------+
| Profit/(loss) for the year from discontinued | | 11,041 | (16,238) |
| operations | | | |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| Profit/(loss) for the year attributable to owners of | | 10,516 | (16,832) |
| the parent | | | |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| Earnings per share | | | |
+------------------------------------------------------+----+-----------+------------+
| From continuing and discontinued operations | | | |
+------------------------------------------------------+----+-----------+------------+
| Basic earnings/(loss) per share | | GBP44.67 | (GBP82.84) |
+------------------------------------------------------+----+-----------+------------+
| Diluted earnings/(loss) per share | | GBP7.16 | (GBP82.84) |
+------------------------------------------------------+----+-----------+------------+
| | | | |
+------------------------------------------------------+----+-----------+------------+
| From continuing operations | | (GBP2.23) | (GBP2.92) |
+------------------------------------------------------+----+-----------+------------+
| Basic earnings/(loss) per share | | (GBP0.36) | (GBP2.92) |
+------------------------------------------------------+----+-----------+------------+
| Diluted earnings/(loss) per share | | | |
+------------------------------------------------------+----+-----------+------------+
Consolidated Statement of Changes in Equity for the year ended 30 June 2009
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| | Share | Reserve | Share | Merger | Translation | General | Capital | Retained | Total |
| | Capital | acquisition | premium | reserve | reserve | reserve | contribution | earnings | equity |
| | GBP'000 | reserve | reserve | GBP'000 | GBP'000 | GBP'000 | reserve | GBP'000 | GBP'000 |
| | | GBP'000 | GBP'000 | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| At 1 July | 9,368 | (12,583) | 6,377 | 766 | (96) | 427 | - | 3,495 | 7,754 |
| 2007 | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Foreign | - | - | - | - | 588 | - | - | - | 588 |
| currency | | | | | | | | | |
| translation | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Net income | - | - | - | - | 588 | - | - | - | 588 |
| recognised | | | | | | | | | |
| directly | | | | | | | | | |
| in equity | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Loss for | - | - | - | - | - | - | - | (16,832) | (16,832) |
| the year | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Total | - | - | - | - | 588 | - | - | (16,832) | (16,244) |
| recognised | | | | | | | | | |
| income and | | | | | | | | | |
| expense | | | | | | | | | |
| for the | | | | | | | | | |
| period | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Issue of | 1,500 | (1,987) | 487 | - | - | - | - | - | - |
| deferred | | | | | | | | | |
| consideration | | | | | | | | | |
| shares | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Issue of | - | - | - | - | - | - | 448 | - | 448 |
| share | | | | | | | | | |
| capital by | | | | | | | | | |
| subsidiary | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Transfer | - | - | - | - | - | (427) | - | 427 | - |
| of loss | | | | | | | | | |
| from | | | | | | | | | |
| general | | | | | | | | | |
| reserve | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Recognition | - | - | - | - | - | - | - | 172 | 172 |
| of share | | | | | | | | | |
| based | | | | | | | | | |
| payments | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| At 1 July | 10,868 | (14,570) | 6,864 | 766 | 492 | - | 448 | (12,738) | (7,870) |
| 2008 | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| | Share | Reserve | Share | Merger | Option | Translation | Capital | Retained | Total |
| | Capital | acquisition | premium | reserve | premium | reserve | contribution | earnings | equity |
| | GBP'000 | reserve | reserve | GBP'000 | on | GBP'000 | reserve | GBP'000 | GBP'000 |
| | | GBP'000 | GBP'000 | | convertible | | GBP'000 | | |
| | | | | | loan | | | | |
| | | | | | GBP'000 | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| At 1 July | 10,868 | (14,570) | 6,864 | 766 | - | 492 | 448 | (12,738) | (7,870) |
| 2008 | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Foreign | - | - | - | - | - | 56 | - | - | 56 |
| currency | | | | | | | | | |
| translation | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Net income | | | | | | | | | |
| recognised | | | | | | | | | |
| directly | | | | | | | | | |
| in equity | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Profit for | - | - | - | - | - | - | - | 10,516 | 10,516 |
| the year | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Total | 10,868 | (14,570) | 6,864 | 766 | - | 548 | 448 | (2,222) | 2,702 |
| recognised | | | | | | | | | |
| income and | | | | | | | | | |
| expense | | | | | | | | | |
| for the | | | | | | | | | |
| period | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Issue of | 2 | - | 21 | - | - | - | - | - | 23 |
| share | | | | | | | | | |
| capital | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Arising on | - | - | - | - | 26 | - | - | - | 26 |
| issue of | | | | | | | | | |
| convertible | | | | | | | | | |
| loan | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| Disposal | - | 14,570 | - | (766) | - | (548) | (448) | (15,765) | (2,957) |
| of | | | | | | | | | |
| subsidiary | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
| At 30 June | 10,870 | - | 6,885 | - | 26 | - | - | (17,987) | (206) |
| 2009 | | | | | | | | | |
+---------------+---------+-------------+---------+---------+-------------+-------------+--------------+----------+----------+
Share capital account
Share capital records the nominal value of shares in issue.
Reverse acquisition reserve
A reverse acquisition reserve is established to take account of acquisitions
that are deemed to be reverse acquisitions under International Financial
Reporting Standards.
Share premium reserve
Share premium records the receipts from issue of share capital above the nominal
value of the shares. Share premium is stated net of direct issue costs.
General reserve
In accordance with the "Law of China on Joint Ventures Using Chinese and Foreign
Investment", 10% of the retained earnings was transferred as China Evoline's
general reserve fund.
Merger reserve
The merger reserve arose as a result of the acquisition by the Group's former
subsidiary undertaking, Praise Ease Limited of Shenzhen Zhong Tian Communication
Equipments Co. Ltd, which was acquired through a transaction under common
control and accounted for using the pooling of interests method.
Option premium on convertible loan
Amount of proceeds on issue of convertible loan relating to the equity component
(i.e., option to convert the loan into share capital).
Translation reserve
Translation gains and losses arising on the retranslation of net assets of
subsidiaries whose presentational currency is not sterling are recognised
directly in equity in the Translation reserve. This reserve has been transferred
to the income statement as part of the gain received on the disposal of the
Company's subsidiaries.
Capital contribution reserve
Contributions provided to entities by shareholders that are not intended by
either party to be repaid are accounted for as capital contributions.
Retained earnings
Retained earnings records the cumulative profits less losses recognised in the
income statement, net of any distributions and share-based payments made.
Note:
The reverse acquisition reserve, the merger reserve, the non-distributable
reserve and the capital contribution reserve have been transferred to retained
earnings following the disposal of the company's subsidiaries during the year
ended 30 June 2009.
Consolidated Balance Sheet for the year ended 30 June 2009
+------------------------------------------------------+--+----------+----------+
| | | 2009 | 2008 |
| | | GBP'000 | GBP'000 |
+------------------------------------------------------+--+----------+----------+
| Non-current assets | | | |
+------------------------------------------------------+--+----------+----------+
| Property, plant and equipment | | - | 90 |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Total non-current assets | | - | 90 |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Current assets | | | |
+------------------------------------------------------+--+----------+----------+
| Inventories | | - | - |
+------------------------------------------------------+--+----------+----------+
| Trade and other receivables | | 15 | 2,919 |
+------------------------------------------------------+--+----------+----------+
| Cash and cash equivalents | | 127 | 1,962 |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Total current assets | | 142 | 4,881 |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Total assets | | 142 | 4,971 |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Current liabilities | | | |
+------------------------------------------------------+--+----------+----------+
| Trade and other payables | | (112) | (6,977) |
+------------------------------------------------------+--+----------+----------+
| Interest bearing liabilities | | - | (2,877) |
+------------------------------------------------------+--+----------+----------+
| Current tax liabilities | | - | (2,987) |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Total current liabilities | | (112) | (12,841) |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Non-current liabilities | | | |
+------------------------------------------------------+--+----------+----------+
| Interest bearing liabilities | | (236) | - |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Total non-current liabilities | | (236) | - |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Total liabilities | | (348) | (12,841) |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Net liabilities | | (206) | (7,870) |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Equity | | | |
+------------------------------------------------------+--+----------+----------+
| Share capital | | 10,870 | 10,868 |
+------------------------------------------------------+--+----------+----------+
| Reserve acquisition reserve | | - | (14,570) |
+------------------------------------------------------+--+----------+----------+
| Share premium reserve | | 6,885 | 6,864 |
+------------------------------------------------------+--+----------+----------+
| Merger reserve | | - | 766 |
+------------------------------------------------------+--+----------+----------+
| Capital contribution reserve | | - | 448 |
+------------------------------------------------------+--+----------+----------+
| Translation reserve | | - | 492 |
+------------------------------------------------------+--+----------+----------+
| Option premium on convertible loan | | 26 | - |
+------------------------------------------------------+--+----------+----------+
| Retained earnings | | (17,987) | (12,738) |
+------------------------------------------------------+--+----------+----------+
| | | | |
+------------------------------------------------------+--+----------+----------+
| Total equity | | (206) | (7,870) |
+------------------------------------------------------+--+----------+----------+
Consolidated Cash Flow Statement for the year ended 30 June 2009
+--------------------------------------------------------+--+---------+---------+
| | | 2009 | 2008 |
| | | GBP'000 | GBP'000 |
+--------------------------------------------------------+--+---------+---------+
| Cash flows from operations | | | |
+--------------------------------------------------------+--+---------+---------+
| Net cash inflow/(outflow) from operations | | (2,086) | (734) |
+--------------------------------------------------------+--+---------+---------+
| Tax refunded | | - | 1 |
+--------------------------------------------------------+--+---------+---------+
| | | | |
+--------------------------------------------------------+--+---------+---------+
| Net cash inflow/(outflow) from operating activities | | (2,086) | (733) |
+--------------------------------------------------------+--+---------+---------+
| | | | |
+--------------------------------------------------------+--+---------+---------+
| Investing activities | | | |
+--------------------------------------------------------+--+---------+---------+
| Interest received | | 5 | 37 |
+--------------------------------------------------------+--+---------+---------+
| Purchase of property, plant and equipment | | - | (26) |
+--------------------------------------------------------+--+---------+---------+
| | | | |
+--------------------------------------------------------+--+---------+---------+
| Net cash generated investing activities | | 5 | 11 |
+--------------------------------------------------------+--+---------+---------+
| | | | |
+--------------------------------------------------------+--+---------+---------+
| Financing activities | | | |
+--------------------------------------------------------+--+---------+---------+
| Issue of share capital | | 23 | - |
+--------------------------------------------------------+--+---------+---------+
| Interest paid | | (36) | - |
+--------------------------------------------------------+--+---------+---------+
| Issue of convertible loan | | 259 | - |
+--------------------------------------------------------+--+---------+---------+
| | | | |
+--------------------------------------------------------+--+---------+---------+
| Net increase in cash from financing activities | | 246 | - |
+--------------------------------------------------------+--+---------+---------+
| | | | |
+--------------------------------------------------------+--+---------+---------+
| Net decrease/(increase) in cash and cash equivalents | | (1,835) | (722) |
+--------------------------------------------------------+--+---------+---------+
| Cash and cash equivalents at the beginning of the year | | 1,962 | 2,499 |
+--------------------------------------------------------+--+---------+---------+
| Exchange gains on cash and cash equivalents | | - | 185 |
+--------------------------------------------------------+--+---------+---------+
| | | | |
+--------------------------------------------------------+--+---------+---------+
| Cash and cash equivalents at the end of the year | | 127 | 1,962 |
+--------------------------------------------------------+--+---------+---------+
Notes to the financial information for the year ended 30 June 2009
1. STATUS OF FINANCIAL INFORMATION
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 30 June 2009 or 2008. The
financial information for the year ended 30 June 2008 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was qualified,
did include references to matters to which the auditors drew attention by way of
emphasis and did contain a statement under s237(2) and (3) Companies Act 1985.
The audit of the statutory accounts for the year ended 30 June 2009 is
completed. The auditors reported on those accounts; their report was qualified,
did include references to matters to which the auditors drew attention by way of
emphasis and did contain a statement under s498(2) and (3) Companies Act 2006.
These accounts will be delivered to the Registrar of Companies following the
company's annual general meeting.
While the financial information included in this announcement has been prepared
in accordance with the recognition and measurement criteria of International
Financial Reporting Standards (IFRSs), this announcement does not itself contain
sufficient information to comply with IFRSs.
2. ACCOUNTING POLICIES
Basis of accounting
The Group financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and interpretations adopted
by the European Union and in accordance with the Companies Act 2006 for
companies reporting under International Financial Reporting Standards (IFRS).
Therefore the Group financial statements comply with Article 4 of the EU IAS
Regulation.
The financial statements have been prepared under the historical cost
convention.
Basis of preparation - going concern
Zhong Tian, the main trading entity in the Group was unable to continue trading
during the year ended 30 June 2009. This was due to the major shareholder and
Chief Executive Officer of ZTC plc leaving the Company and the factory and
offices being closed off, with no access being given to employees or the
Directors. Given the extraordinary circumstances, the going concern assumption
for Zhong Tian was no longer appropriate. The effect was so pervasive that a
fundamental change in the basis of accounting to a break-up basis was adopted
for Zhong Tian in the financial statements for the year ended 30 June 2008, and
its asset values were written down accordingly, in accordance with IAS 10
paragraphs 14-16. Where necessary in order to value the assets and liabilities
in Zhong Tian, the Directors used estimates based upon amounts recovered and
expected to be recovered after the balance sheet date as a precise valuation of
those assets and liabilities was not available. Further detail on the
revaluation of the asset values in Zhong Tian at 30 June 2008 can be found
in note 3 to the financial statements for the year ended 30 June 2008. In
addition, in the parent company, the investment and intercompany receivables
were written down to zero value at 30 June 2008 to reflect the
non-recoverability of these assets. A total charge of GBP18,066,000 was
reflected in the financial statements of the parent company for the year ended
30 June 2008 in respect of these write-downs.
Following approval by shareholders at the AGM on 21 April 2009, Praise Ease,
together with its wholly owned subsidiary Zhong Tian, were disposed off for HKD1
on that date.
Subsequent to the year end, as set out in Note 7 Post Balance Sheet events, the
majority shareholder has irrevocably committed to lend the Company an additional
GBP160,000 (with the first tranche of GBP80,000 having been drawn upon
subsequent to the year end). Having prepared the cash flow forecasts to December
2010 the Directors are of the opinion that this will provide the Company with
sufficient working capital in order to finance the Company for 12 months
irrespective of whether a new investment in a new acquisition is made by the
Company.
A critical element to the change in strategy as set out in the Operating Review
above is securing a substantial acquisition. In the event no substantial
acquisition is made by 21 April 2010, being 12 months from the date of the 2009
AGM, in accordance with the AIM rules for Companies, trading in the Company's
shares will be suspended and if no reverse transaction is achieved in the
following 6 months, the London Stock Exchange will cancel the admission of the
shares.
In the event that the London Stock Exchange were to cancel the admission of the
Company's shares, it is not certain that the majority shareholder will continue
to provide financial support to the Company's ongoing activities, and it is
likely that any other sources of financing would be further restricted.
Therefore, although the Company has sufficient funds to continue for 12 months,
it is uncertain that the Company will continue as a going concern after 12
months in the event of failing to complete an acquisition of a new investment or
securing additional finance.
If the Company successfully identifies a suitable investment opportunity, the
ability of the Company to continue as a going concern will depend on being able
to raise the necessary finance in order to fund the appropriate due diligence
and purchase price consideration, and being able to successfully integrate the
target into the Group so as to generate cash in the future.
If the Company fails to secure a new investment opportunity and fails to secure
any additional finance, the Company will be unable to continue as a going
concern as it will have insufficient funds to trade after 12 months. The ability
of the Company to continue as a going concern will therefore depend on further
continued financial support of the majority shareholder.
Despite the above material uncertainties, the Directors consider that China
Evoline plc is a going concern and the accounts of the parent entity have been
prepared on a going concern basis. The Directors consider this appropriate based
on the refinancing of the Company which was approved by shareholders on 21 April
2009, the additional loan finance secured subsequent to the balance sheet date
and on the assumption that the revised investment strategy will be successfully
implemented by October 2010. As at the date of these accounts the Directors are
pursuing a number of potential investment opportunities which they believe will
result in a successful acquisition being completed by October 2010.
The above conditions represent a material uncertainty that may cast significant
doubt as to the Company's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the Company were
unable to continue as a going concern.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY
Critical judgements in applying the Group's accounting policies and key sources
of estimation and uncertainty
Valuation of remaining assets in, and consolidation of, Zhong Tian
In preparing the financial statements for the year ended 30 June 2008, the
Directors sought advice and used the limited information available to them
regarding the recoverability of assets in Zhong Tian as previously noted in the
Chairman's statement. In attributing a value to each class of asset, the
Directors in some cases used their judgement as to how much would be received.
The primary basis for the valuations was through assessing cash received after
the balance sheet date in respect of sales of assets after Charles Huang had
left the business. Where no cash had been received in respect of the assets,
these assets were deemed to have zero value, with the exception of cash and cash
equivalents, which were deemed to maintain their full book value. A precise
valuation of those assets and liabilities was not available. Of the cash held at
30 June 2008, GBP1.2m of this was restricted in its use and was used to repay
the outstanding loan notes. All adjustments arising from the valuations at 30
June 2008 were accounted for in the financial statements for the year ended 30
June 2008.
In preparing the financial statements for the year ended 30 June 2009, and as
explained in the Chairman's Statement, due to the sealing of the Group's factory
in Shenzhen, China, and the sequestering of the Group's assets by the People's
Court in Longgang, China, the Directors have not had access to the financial
information with regards to the trading of its subsidiaries since 31 August
2008, and no trading information since that date is available to be included
within the financial statements. The information contained within these
consolidated financial statements has therefore been based on the unaudited
management information for the first two months of the financial year ended 30
June 2009. No other information is available for the period 1 September 2008 up
to and including 21 April 2009, being the date of disposal of the subsidiaries.
The Directors have assumed that, following the sealing of the Group's factory,
the assets were disposed of for their written down value and the proceeds were
utilised in the partial repayment of creditors. The cash balance was treated as
irrecoverable as the parent company no longer had access to these funds. The
creditors remaining unpaid at that date have all been written back as part of
the gain on disposal of discontinued operation and included in the Consolidated
Income Statement for the year ended 30 June 2009.
Provisions
In preparing the financial statements for the year ended 30 June 2008, and in
the process of applying the Group's accounting policies, judgement was applied
by the Directors in estimating the provision for doubtful trade receivables and
obsolete stock.
Share based payments
Management have made numerous judgements regarding the calculation of the share
based payments expense in the accounts, including, the expected volatility of
the Company's shares, the share price to be used in the calculation and the most
appropriate risk free rate to use. In making these judgements, management
considered the share price volatility of a number of the Company's competitors
and current interest rates.
No other material judgements have been made by management that could have a
significant effect on the amounts recognised in the financial statements.
4. DISCONTINUED OPERATIONS
After due investigations, and taking into account the limited resources of the
Company, the Directors concluded that the Company's operation in China would be
unable to resume trading and, as such, the ability to realise any net assets for
the benefit of shareholders would be extremely difficult and not cost-effective.
Given the potentially long recovery procedures and the Company's limited
resources, the Directors concluded that the subsidiaries of the Company had
negligible or no recoverable value.
Following approval by shareholders at the Annual General Meeting held on 21
April 2009, the investment in Praise Ease and its subsidiary, Zhong Tian, was
sold for a nominal consideration.
The post-tax loss on discontinued operations was determined as follows:
+---------------------------------------------+--+------------------------+
| | | GBP'000 |
+---------------------------------------------+--+------------------------+
| Consideration received | | - |
+---------------------------------------------+--+------------------------+
| Net assets disposed (excluding cash): | | |
+---------------------------------------------+--+------------------------+
| Trade and other payables | | 7,401 |
+---------------------------------------------+--+------------------------+
| Other financial liabilities | | 2,995 |
+---------------------------------------------+--+------------------------+
| Translation reserve | | 548 |
+---------------------------------------------+--+------------------------+
| | | |
+---------------------------------------------+--+------------------------+
| Pre-tax gain on disposal of discontinued | | 10,944 |
| operation | | |
+---------------------------------------------+--+------------------------+
| | | |
+---------------------------------------------+--+------------------------+
| The net cash inflow comprised: | | - |
+---------------------------------------------+--+------------------------+
| Cash received | | - |
+---------------------------------------------+--+------------------------+
| Bank overdraft disposed of | | - |
+---------------------------------------------+--+------------------------+
| | | 10,944 |
+---------------------------------------------+--+------------------------+
The cash flow statement includes the following amounts relating to discontinued
operations:
+----------------------------------+----------------+---+------------------+
| | 2009 | | 2008 |
+----------------------------------+----------------+---+------------------+
| | GBP'000 | | GBP'000 |
+----------------------------------+----------------+---+------------------+
| Operating activities | 1,296 | | (575) |
+----------------------------------+----------------+---+------------------+
| Investing activities | - | | (27) |
+----------------------------------+----------------+---+------------------+
| Financing activities | (2,913) | | 1,134 |
+----------------------------------+----------------+---+------------------+
| | | | |
+----------------------------------+----------------+---+------------------+
| Net cash from/(used in) | (1,617) | | 532 |
| discontinued operations | | | |
+----------------------------------+----------------+---+------------------+
5. EARNINGS PER SHARE
The calculation of basic and diluted earnings per share is based on the
following data:
+-----------------+------------+---------------+---------+------------+---------------+----------+
| Earning | Continuing | Discontinuing | Total | Continuing | Discontinuing | Total |
| | Operations | Operations | | Operations | Operations | |
+-----------------+------------+---------------+---------+------------+---------------+----------+
| | 2009 | 2009 | 2009 | 2008 | 2008 | 2008 |
+-----------------+------------+---------------+---------+------------+---------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------+------------+---------------+---------+------------+---------------+----------+
| (Loss)/earnings | (525) | 11,041 | 10,516 | (594) | (16,238) | (16,832) |
| for the purpose | | | | | | |
| of basic and | | | | | | |
| diluted | | | | | | |
| earnings per | | | | | | |
| share | | | | | | |
+-----------------+------------+---------------+---------+------------+---------------+----------+
| Number of | '000 | '000 | '000 | '000 | '000 | '000 |
| shares | | | | | | |
+-----------------+------------+---------------+---------+------------+---------------+----------+
| Weighted | 235 | 235 | 235 | 203 | 203 | 203 |
| average | | | | | | |
| number of | | | | | | |
| ordinary | | | | | | |
| shares for | | | | | | |
| the | | | | | | |
| purpose of | | | | | | |
| basic | | | | | | |
| earnings | | | | | | |
| per share | | | | | | |
+-----------------+------------+---------------+---------+------------+---------------+----------+
| Effect of | | | | | | |
| dilutive | | | | | | |
| potential | | | | | | |
| ordinary | | | | | | |
| shares: | | | | | | |
+-----------------+------------+---------------+---------+------------+---------------+----------+
| Convertible | 1,125 | - | 1,125 | - | - | - |
| loan note | | | | | | |
+-----------------+------------+---------------+---------+------------+---------------+----------+
| Directors' | 108 | - | 108 | - | - | - |
| remuneration | | | | | | |
+-----------------+------------+---------------+---------+------------+---------------+----------+
| Weighted | 1,468 | 235 | 1,468 | 203 | 203 | 203 |
| average | | | | | | |
| number of | | | | | | |
| ordinary | | | | | | |
| shares for | | | | | | |
| the | | | | | | |
| purpose of | | | | | | |
| diluted | | | | | | |
| earnings | | | | | | |
| per share | | | | | | |
+-----------------+------------+---------------+---------+------------+---------------+----------+
The denominators for the purposes of calculating both basic and diluted earnings
per share in 2008 have been adjusted for the share consolidation that took place
in 2009.
6. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
During the year, the Group entered into the following transactions with related
parties:
On 31 March 2009, Higher Performance Team Limited, a company beneficially owned
by Michael Liu 80 per cent. Mark Syropoulo 10 per cent. and James Guo 10 per
cent., subscribed for 4,990 Ordinary Shares of 10p and Frank Lewis subscribed
for 2,494 Ordinary Shares of 10p in order to ensure that the number of Ordinary
Shares of 10p in issue prior to the Share Capital Reorganisation was divisible
by a factor of 10,000. Higher Performance Team Limited and Frank Lewis agreed to
subscribe for those shares at a subscription price of 10 pence per Ordinary
Share, despite the fact that they would be "lost" following the consolidation
which was approved by shareholders on 21 April 2009.
An amount of GBPnil (30 June 2008: GBP1,487,209) was owed to C Huang (a former
Director of China Evoline plc) at 30 June 2008, being the balance of funds
loaned to China Evoline plc by C Huang.
A rental expense of circa GBPnil (year ended 30 June 2008: GBP67,813) was
incurred and payable to a relative of Charles Huang. A balance of GBPnil (30
June 2008: GBP255,694) was outstanding in respect of rental payments to C
Huang's relative at 30 June 2009.
7. EVENTS OCCURING AFTER THE BALANCE SHEET DATE
Additional Finance
Since 30 June 2009, Staybest Limited (the "Lender") has agreed to make available
to the Company an unsecured loan of GBP160,000 (the "Loan") in order to provide
additional working capital. The Loan is irrevocably available for drawdown in
two tranches, as to GBP80,000 within two weeks of the date of the Loan Letter
and as to GBP80,000 during a two week period commencing six months after the
date of the Loan Letter. The loan is repayable 16 months after the date of the
Loan Letter, and bears interest at 2.5 per cent per annum which is payable on
final repayment of the loan.
If at any time the Company makes an offer by way of rights of new Ordinary
shares to its existing shareholders, at a time when the Lender is the holder of
Ordinary Shares of the Company, the Lender may require that all or any part of
the principal amount of the Loan is to be applied in paying up the amount to be
subscribed by the Lender for any Ordinary shares for which the Lender accepts
the offer made by the Company, at the subscription price and otherwise on the
terms of that offer.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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