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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| China Wonder | LSE:CWO | London | Ordinary Share | GB00B030LW50 | ORD 2.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 19.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMCWO
RNS Number : 5266I
China Wonder Limited
16 June 2011
China Wonder Limited
Results for the year ended 31 December 2010
China Wonder Limited ("China Wonder" or "Company") and its subsidiaries (the "Group") are pleased to present the Group's results for the year ended 31 December 2010.
For the year ended 31 December 2010, the Group recorded a profit from continuing operations of GBP212,434 (2009 GBP270,855), a profit from discontinued operations of GBP723,144 (2009 GBP259,740), sales revenue from continued operations amounted to GBP2,020,431 (2009 GBP1,844,525) and from discontinued operations GBP3,253,840 (2009 GBP2,682,678). Basic earnings per ordinary share amounted to 5.07p (2009 2.76p). At the year end, Group cash and cash equivalents amounted to GBP3,269,428 (2009 GBP740,336).
These are the final accounts for China Wonder in its original form. Following an unsolicited approach for Wonder Packing, the board felt that disposing of all the Company's subsidiaries would be of benefit to all the stakeholders of the Company.
Despite the very best efforts of the board and employees, the relatively small size of both Wonder Packing and Wonder Equipment in their respective areas meant that growing the business was very difficult. Although our share price had performed better in 2010, it was still very difficult to raise funds for our operations through the market.
The disposal of Wonder Equipment was completed in late 2010 and is reflected in these accounts. The disposal of Wonder Packing was completed on 15 June 2011.
Copies of the annual report and accounts and a notice of the annual general meeting to be held on 1 July 2011 are being sent to shareholders today.
Mark Chapman
Chairman
For further information please contact:
China Wonder Limited Mark Chapman Tel 01483 894 627 Northland Capital Partners Limited (Nominated Adviser and Broker) William Vandyk Tel 020 7796 8800 Tim Metcalfe
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2010
Hot Features
Premium
2010 2009
Note GBP GBP
REVENUE 3 2,020,431 1,844,525
Cost of sales (1,150,583) (1,042,731)
GROSS PROFIT 869,848 801,794
OTHER OPERATING INCOME 3 3,399 4,963
OPERATING EXPENSES
Distribution expenses (185,459) (171,508)
Administrative expenses (500,556) (584,655)
(686,015) (756,163)
PROFIT FROM OPERATIONS 187,232 50,594
Fair value gain on derivative
financial instrument 3 1,776 189,728
Income from subsidies 3 95,539 70,931
Finance income 3 24,702 1,101
Finance costs 9 (56,598) (12,672)
PROFIT BEFORE TAX 252,651 299,682
TAXATION 11 (40,217) (28,827)
PROFIT FOR THE YEAR FROM CONTINUING
OPERATIONS 212,434 270,855
------------ ------------
PROFIT FOR THE YEAR FROM DISCONTINUED
OPERATIONS 5 723,144 259,740
------------ ------------
PROFIT FOR THE YEAR 935,578 530,595
------------ ------------
OTHER COMPREHENSIVE INCOME/(LOSS)
Foreign currency reserve movement 263,232 (192,372)
Revaluation of available-for-sale
investment 7,500 80,000
------------ ------------
OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE
YEAR,
NET OF TAX 270,732 (112,372)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,206,310 418,223
============ ============
PROFIT ATTRIBUTABLE TO
Equity holders of
the company 912,358 495,900
Non-controlling interests 23,220 34,695
------------ ------------
935,578 530,595
------------ ------------
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE
TO
Equity holders of
the company 1,158,330 390,843
Non-controlling interests 47,980 27,380
------------ ------------
1,206,310 418,223
============ ============
EARNINGS PER SHARE 10
From continuing and discontinued
operations
Basic 5.07 2.76
p p
Diluted 4.98 2.76
p p
------------ ------------
From continuing operations
Basic 1.18 1.51
p p
Diluted 1.20 1.51
p p
------------ ------------
From discontinued
operations
Basic 3.89 1.25
p p
Diluted 3.78 1.25
p p
------------ ------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2010
31 December 2010 31 December 2009
Note GBP GBP GBP GBP
ASSETS
Non-current
assets
Property, plant and
equipment 13 651,513 1,462,598
Long term prepaid
expenses 18,863 2,153
Intangible
assets 14 84,959 1,437,651
Deferred tax
asset 11 22,358 51,673
Available-for-sale
financial asset 18 287,500 280,000
Derivative financial
instrument 15 191,504 189,728
1,256,697 3,423,803
Current assets
Inventories 19 711,682 1,356,186
Trade and other
receivables 20 1,768,513 2,403,452
Cash and cash
equivalents 3,269,428 740,336
5,749,623 4,499,974
---------- ------------
TOTAL ASSETS 7,006,320 7,923,777
LIABILITIES
Current liabilities
Short-term
loan 21 - (63,210)
Trade and other
payables 22 (721,408) (2,516,637)
Tax liability (115,440) (36,488)
(836,848) (2,616,335)
TOTAL ASSETS LESS CURRENT LIABILITIES 6,169,472 5,307,442
LONG TERM LOAN 23 (892,980) (632,100)
NET ASSETS 5,276,492 4,675,342
========== ============
EQUITY
Share capital 24 450,000 450,000
Share premium 1,935,980 1,935,980
Statutory
reserves 219,882 187,194
Translation
reserve 588,805 480,663
Available-for-sale
financial asset reserve 87,500 80,000
Retained earnings 1,994,325 1,114,655
---------- ------------
Equity attributable to
owners of the company 5,276,492 4,248,492
Non- controlling
interests - 426,850
TOTAL EQUITY 5,276,492 4,675,342
========== ============
Approved and authorised for issue by the
Board on 15 June 2011
and signed on its
behalf by:
ZENG QING DONG HAO QIANG
Director Director
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2010
2010 2009
Note GBP GBP
OPERATING EXPENSES
Administrative expenses (11,491) (104,274)
LOSS FROM OPERATIONS (11,491) (104,274)
Profit on disposal of subsidiary
companies 3 1,041,131 -
Fair value gain on derivative
financial instrument 3 1,776 189,728
Finance income 3 3 2
Finance costs 9 (10,000) -
Dividend received 3 310,700 -
PROFIT BEFORE TAX 1,332,119 85,456
TAXATION 11 (106,240) (600)
PROFIT FOR THE YEAR 1,225,879 84,856
---------- ----------
OTHER COMPREHENSIVE INCOME
Revaluation of available-for-sale
investment 7,500 80,000
---------- ----------
OTHER COMPREHENSIVE INCOME FOR THE YEAR,
NET OF TAX 7,500 80,000
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,233,379 164,856
========== ==========
COMPANY STATEMENT OF FINANCIAL POSITION
At 31 December 2010
31 December 2010 31 December 2009
Note GBP GBP GBP GBP
ASSETS
Non-current
assets
Investment in
subsidiary 12 1,129,537 2,784,670
Available-for-sale
financial asset 18 287,500 280,000
Derivative financial
instrument 15 191,504 189,728
---------- ----------
1,608,541 3,254,398
---------- ----------
Current assets
Trade and other
receivables 20 56,868 1,231
Cash and cash
equivalents 2,986,682 4,489
3,043,550 5,720
---------- ----------
TOTAL ASSETS 4,652,091 3,260,118
LIABILITIES
Current liabilities
Trade and other
payables 22 (504,705) (661,751)
Tax liability (105,640) -
---------- ----------
(610,345) (661,751)
---------- ----------
TOTAL ASSETS LESS
CURRENT
LIABILITIES 4,041,746 2,598,367
LONG TERM LOAN 23 (210,000) -
NET ASSETS 3,831,746 2,598,367
========== ==========
EQUITY
Share capital 24 450,000 450,000
Share premium 1,935,980 1,935,980
Available-for-sale
financial asset reserve 87,500 80,000
Retained earnings 1,358,266 132,387
TOTAL EQUITY 3,831,746 2,598,367
========== ==========
Approved and authorised for issue by the Board
on 15 June 2011
and signed on its
behalf by:
ZENG QING DONG HAO QIANG
Director Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2010
Available-
For-Sale Non-
Share Share Statutory Translation Financial Retained Controlling Total
Asset
Capital Premium Reserve Reserve Reserve Earnings Total Interests Equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 1
January 2010 450,000 1,935,980 187,194 480,663 80,000 1,114,655 4,248,492 426,850 4,675,342
Total
comprehensive
income for
year - - - 238,472 7,500 912,358 1,158,330 47,980 1,206,310
Transactions
with owners - - - - - - - - -
Other changes:
Transfer to
statutory
reserve - - 32,688 - - (32,688) - - -
Acquisition of
further shares
in subsidiary
company - - - - - - - (148,062) (148,062)
Disposal of
subsidiary
companies - - - (130,330) - - (130,330) (326,768) (457,098)
Balance at 31
December 2010 450,000 1,935,980 219,882 588,805 87,500 1,994,325 5,276,492 - 5,276,492
======== ========== ========== ============ =========== ========== ========== ============ ==========
Balance at 1
January 2009 450,000 1,935,980 160,995 665,720 - 644,954 3,857,649 73,613 3,931,262
Total
comprehensive
income for
year - - - (185,057) 80,000 495,900 390,843 27,380 418,223
Transactions
with owners - - - - - - - - -
Other changes:
Transfer to
statutory
reserve - - 26,199 - - (26,199) - - -
Acquisition of
subsidiary
companies - - - - - - - 325,857 325,857
Balance at 31
December 2009 450,000 1,935,980 187,194 480,663 80,000 1,114,655 4,248,492 426,850 4,675,342
======== ========== ========== ============ =========== ========== ========== ============ ==========
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2010
Available-
For-Sale
Share Share Financial Retained Total
Asset
Capital Premium Reserve Earnings Equity
GBP GBP GBP GBP GBP
Balance at 1
January 2010 450,000 1,935,980 80,000 132,387 2,598,367
Total
comprehensive
income for
year - - 7,500 1,225,879 1,233,379
Transactions
with owners - - - - -
Balance at 31
December 2010 450,000 1,935,980 87,500 1,358,266 3,831,746
======== ========== ============= ========== ==========
Balance at 1
January 2009 450,000 1,935,980 - 47,531 2,433,511
Total
comprehensive
income for
year - - 80,000 84,856 164,856
Transactions
with owners - - - - -
Balance at 31
December 2009 450,000 1,935,980 80,000 132,387 2,598,367
======== ========== ============= ========== ==========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2010
2010 2009
GBP GBP GBP GBP
PROFIT FOR THE YEAR 935,578 530,595
Income tax expense
recognised in profit 207,787 105,948
Depreciation of property,
plant and equipment 143,429 103,971
Amortisation of
intangible assets 2,573 2,316
Provision for warranty (39,314) 10,702
Adjustments
for:
interest
paid 98,852 39,416
interest received (26,715) (5,332)
Fair value gain on
derivative financial
instrument (1,776) (189,728)
Gain on bargain purchase
of subsidiary company (34,548) (36,281)
Gain on disposal of
investment in subsidiary
companies (503,721) -
Loss disposal of
property, plant and
equipment - 4,330
OPERATING PROFIT BEFORE
CHANGES IN WORKING
CAPITAL 782,145 565,937
(Increase)/decrease
in inventories (105,164) 286,104
Increase in trade
and other receivables (808,009) (726,736)
(Decrease)/increase in
trade and other
payables (161,032) 393,866
Tax
paid (64,940) (39,529)
NET CASH (USED)/GENERATED
BY
OPERATING ACTIVITIES (357,000) 479,642
INVESTING ACTIVITIES
Additions of property,
plant and equipment (135,221) (487,820)
(Increase)/decrease of
long term prepaid
expenses (18,422) 4,262
Interest received 26,715 5,332
Proceeds from disposal of
property, plant and
equipment 2,582 2,619
Additions to intangible
assets (1,130) -
Acquisition of subsidiary
company (113,514) (245,980)
Cash acquired on
acquisition of
subsidiary company - 284,187
Net cash in flow on
disposal of subsidiary
companies 2,793,797 -
---------- ----------
Net cash from/(used in)
investing activities 2,554,807 (437,400)
FINANCING ACTIVITIES
Interest paid (88,852) (39,416)
Proceeds from bank
borrowings 963,131 731,645
Repayment of bank
borrowings (783,722) (138,437)
Net cash from financing
activities 90,557 553,792
---------- ----------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 2,288,364 596,034
Cash and cash equivalents
at the beginning
of the year 740,336 334,666
Effect of foreign
exchange differences 240,728 (190,364)
CASH AND CASH EQUIVALENTS
AT THE END OF THE YEAR 3,269,428 740,336
========== ==========
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 December 2010
2010 2009
GBP GBP GBP GBP
PROFIT FOR THE YEAR 1,225,879 84,856
Adjustments
for:
Income tax expense
recognised in profit 106,240 600
Gain on disposal of investment
in subsidiary companies (1,041,131) -
Interest
paid 10,000 -
Interest
received (3) (2)
Dividends received (310,700) -
Fair value gain on derivative financial
instrument (1,776) (189,728)
OPERATING LOSS BEFORE CHANGES
IN WORKING CAPITAL (11,491) (104,274)
Increase in trade
and other receivables (55,637) (43)
(Decrease)/increase in trade
and other payables (157,046) 107,794
Tax paid (600) (600)
NET CASH (USED) /GENERATED
BY
OPERATING ACTIVITIES (224,774) 2,877
INVESTING ACTIVITIES
Investment in subsidiary
company (113,514) -
Interest received 3 2
Dividends
received 310,700 -
Proceeds on disposal of
investment in subsidiary
company 2,809,778 -
---------- ----
Net cash from investing
activities 3,006,967 2
FINANCING ACTIVITIES
Proceeds from long
term loan 200,000 -
---------- ----
Net cash from financing
activities 200,000 -
NET INCREASE IN CASH
AND CASH EQUIVALENTS 2,982,193 2,879
Cash and cash equivalents
at the beginning
of the year 4,489 1,610
CASH AND CASH EQUIVALENTS
AT THE END OF THE YEAR 2,986,682 4,489
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
For the year ended 31 December 2010
1. GENERAL INFORMATION
The Company is a public limited company incorporated in Jersey under Companies
(Jersey) Law 1991. The nature of the Group's operations and its principal activities
are set out in the Directors' Report. The principal place of business of the
Group's operations is Qilihe Village Economic Development District, Jinzhou
City, Liaoning Province, People's Republic of China.
These financial statements present information about the Company on a stand-alone
basis and as a consolidated group of companies, and are set out in pounds sterling
reflecting the company's quotation on the UK Alternative Investment Market.
The functional currency of the Company's subsidiaries is the Renminbi of the
People's Republic of China.
2. ACCOUNTING POLICIES
Statement of
compliance
The financial statements have been prepared in accordance with those International
Financial Reporting Standards and Interpretations in force ('IFRSs'), as adopted
by the European Union, and in accordance with the provisions of the Companies
(Jersey) Law 1991.
New IFRS standards and interpretations
In preparing the financial statements of the Group for the current year, the
Group has adopted the following pronouncements of the IASB for the first time.
These pronouncements have not had a material impact on the results or net assets
of the Group.
Revised IFRS3 "Business Combinations" incorporates the following changes:
- The definition of a business has been broadened, which is likely to result
in more acquisitions being treated as business combinations;
- Contingent considerations are to be measured at fair value, with subsequent
changes therein recognised in profit or loss;
- Transaction costs, other than share and debt issue costs, are to be expensed
as incurred;
- Any pre-existing interest in the acquiree is to be measured at fair value
with the gain or loss recognised in profit or loss; and
- Any non-controlling (minority) interest is to be measured at either fair
value, or at its proportionate interest in the identifiable assets and liabilities
of the acquiree, on a transaction by transaction basis.
Amended IAS27 "Consolidated and Separate Financial Statements" requires accounting
changes in ownership interests by the Group in a subsidiary, while maintaining
control, to be recognised as an equity transaction. When the Group loses control
of a subsidiary, any interest retained in the former subsidiary is to be measured
at fair value with the gain or loss recognised in profit or loss.
The following pronouncements from the IASB will become effective for future
financial reporting periods and have not yet been adopted by the Group.
International Financial Reporting Standards Effective
(IFRS/IFRIC) date
IAS24 Related Party 1 January
Disclosure (revised) 2011
IAS32 Amendments to IAS32: Classification to Rights 1 February
Issues 2010
1 January
IFRIC14 Amendment: Prepayments of a Minimum Funding Requirement 2011
IFRS9 Financial 1 January
Instruments 2013
IFRIC19 Extinguishing Financial Liabilities with Equity
Instruments 1 July 2010
There are no other standards and interpretations in issue but not yet adopted
that the Directors anticipate will have a material effect on the reported income
or net assets of the Group.
Critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRSs requires management
to make assumptions that affects the application of accounting policies and
the amounts of assets, liabilities, income and expenditure. The estimates and
associated assumptions are based on historical experience and other relevant
factors, the results of which form the basis for the judgements that underlie
the carrying value of the assets and liabilities. Actual results may differ
from these estimates. The most significant areas in which judgements are required
relate to the estimate of useful economic lives and residual values of non-current
assets and the recoverable amount of current and non-current assets (in particular
inventories and trade receivables). The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimates are revised if the revision affects only
that period, or in the period of revision and future periods if the revision
affects both the current and future periods.
Estimates and assumptions
The Group makes sales on credit. A proportion of the outstanding credit sales
may prove uncollectible in due course. An estimate is made of the uncollectible
portion of accounts receivables using a calculation based on prior experience
and an evaluation of the amounts outstanding. In aggregate, GBP129,437 (2009:
GBP219,188) is considered to be at risk in respect of amounts due from trade
customers. There is a degree of uncertainty as to actions the Group is able
to undertake to enforce collection of these debts, which may impact the eventual
recoverable amounts. Accordingly, the Directors have assessed their best estimate
of the recoverability of these debts. More details of the allowance for doubtful
trade and other receivables is provided in note 20.
The Group reviews the net realisable value of, and demand for, its inventory
on a regular basis to provide assurance that recorded inventory is stated at
the lower of cost and net realisable value. Factors that could impact estimated
demand and selling prices include the timing and success of future technological
innovations, competitor actions, supplier prices and economic trends. Changes
of the expected net realisable value of inventory could potentially result
in the reduction of the profit for the year. The Group has not made significant
provisions for slow moving and obsolete stock as its amount was negligible.
The Company holds share options as detailed in note 15. The fair value of these
options are calculated at each reported year end using a recognised valuation
model. Changes to the volatility or risk free rate may effect the fair value
of these options.
Basis of
consolidation
Where the company has the power, either directly or indirectly, to govern the
financial and operating policies of another entity or business so as to obtain
benefits from its activities, it is classified as a subsidiary. The consolidated
financial statements present the results of the Company and its subsidiaries
("the Group") as if they formed a single entity. Inter-company transactions
and balances between group companies are therefore eliminated in full.
Goodwill
Goodwill represents the excess of the cost of a business combination over the
interest in the fair value of identifiable assets, liabilities and contingent
liabilities acquired. Cost comprises the fair values of assets given, liabilities
assumed and equity instruments issued, plus any direct costs of acquisition.
Goodwill is capitalised as an intangible asset with any impairment in carrying
value being charged to the statement of comprehensive income, through administrative
expenses, and is not subsequently reversed.
Where the fair value of identifiable assets, liabilities and contingent liabilities
exceed the fair value of consideration paid, the excess is credited in full
to the statement of comprehensive income.
Foreign currency
Transactions entered into by Group entities in a currency other than the currency
of the primary economic environment in which it operates (the "functional currency")
are recorded at the rates ruling when the transactions occur. Foreign currency
monetary assets and liabilities are translated at the rates ruling at the statement
of financial position date.
The presentation currency of the Group is pounds sterling and therefore the
financial statements have been translated from RMB to pounds sterling at the
following exchange rates:
Year-end rates Average rates
31
December
2009 GBP1=RMB11.0742 GBP1=RMB10.6780
31
December
2010 GBP1=RMB10.2492 GBP1=RMB10.4624
On consolidation, the results of overseas operations are translated into sterling
at rates approximating to those ruling when the transactions took place. All
assets and liabilities of overseas operations, including goodwill arising on
the acquisition of those operations, are translated at the rate ruling at the
statement of financial position date. Exchange differences arising on translating
the opening net assets at opening rate and the results of overseas operations
at actual rate are recognised directly in equity (the "Translation reserve").
Exchange differences recognised in the statement of comprehensive income of
Group entities' separate financial statements on the translation of long-term
monetary items forming part of the Group's net investment in the overseas operation
concerned are reclassified to the Translation reserve.
On disposal of a foreign operation, the cumulative exchange differences recognised
in the foreign exchange reserve relating to that operation up to the date of
disposal are transferred to the statement of comprehensive income as part of
the profit or loss on disposal.
Borrowing costs
All borrowing costs are recognised in the statement of comprehensive income
in the period in which they are incurred except for qualifying assets. Borrowing
costs that are directly attributable to the acquisition, construction or production
of a qualifying asset is capitalised to that asset. A qualifying asset is an
asset that necessarily takes a substantial period of time to get ready for
its intended use or sale.
Income tax
Income tax for the financial year comprises current and deferred tax. Income
tax is recognised in the statement of comprehensive income except to the extent
that it relates to items recognised directly in equity, in which case such
tax is recognised in equity.
Current tax is the expected tax payable on the taxable income for the financial
year, using tax rates enacted or substantively enacted at the statement of
financial position date, and any adjustment to tax payable in respect of previous
financial years.
Deferred tax is provided using the liability method, providing for temporary
differences as at the statement of financial position date between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes except for differences arising on:
-- the initial recognition of goodwill,
the initial recognition of an asset or liability in a transaction which
is not a business combination and, at the time of the transaction, affects
-- neither accounting or taxable profit, and
investments in subsidiaries and jointly controlled entities where the group
is able to control the timing of the reversal of the difference and it is
-- probable that the difference will not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation
or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the statement of financial position date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be utilised.
Deferred tax assets are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
Dividends
Equity dividends are recognised when they become legally payable. In respect
of interim dividends to equity shareholders, this is when they are declared
and paid. In respect of final dividends to equity shareholders, this is when
they are approved by the members at the Annual General Meeting.
Property, plant and
equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment losses. The cost of an asset comprises its purchase price and
any directly attributable costs of bringing the asset to its working condition
and location for its intended use. Depreciation is calculated so as to write
off the cost of an asset, less its estimated residual value, over its useful
economic life, using the straight-line method. The estimated useful lives are
as follows:
Buildings 20 years
Plant,
machinery,
furniture
and
fixtures 5-10 years
Motor
vehicles 5 years
Office
equipment 5 years
Land use rights and
patent rights
Expenditure on land use rights and patents rights are capitalised and treated
as an intangible fixed asset.
Land use rights and patents are amortised through administrative expenses over
the period to which the rights or patent relate.
The estimated useful lives are as follows:
Land use
right 41-43 years
Patent
rights 10 years
Impairment of assets
The carrying amounts of assets are reviewed at each statement of financial
position date to determine whether there is any indication of impairment. If any
such indication exists, the asset's recoverable amount is estimated. For goodwill,
the recoverable amount is estimated at each statement of financial position date.
An impairment loss is recognised whenever the carrying amount of the asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised through administrative expenses in the statement of comprehensive
income.
The recoverable amount is the higher of an asset's net selling price and value
in use. The net selling price is the amount obtainable from the sale of an
asset in an arm's length transaction. Value in use is the present value of
estimated future cash flows expected to arise from the continuing use of an
asset and from its disposal at the end of its useful life. Recoverable amounts
are estimated for individual assets or, if it is not possible, for the cash
generating unit.
An impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is reversed only
to the extent that the asset's carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation, if no impairment
loss had been recognised. Reversals of impairment losses are recognised in
the statement of comprehensive income. Impairment losses in respect of goodwill
are not reversed.
Investment in
subsidiary
undertakings
Investments in subsidiaries are stated at cost less provision for any impairment
in value.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
is determined using the weighted average cost method. The cost of finished
goods comprises raw materials, direct labour, other direct costs and related
production overheads but excludes borrowing costs. Net realisable value is
the estimated selling price in the ordinary course of business, less the costs
of completion and selling expenses.
Financial assets
Classification
The Group classifies its financial assets in the following categories: at fair
value through profit or loss, loans and receivables, and available for sale.
The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets
at initial recognition.
a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets
held for trade. A financial asset is classified in this category if acquired
principally for the purpose of selling in the short-term. Derivatives are also
categorised as held for trading unless they are designated as hedges.
b) Loans and receivables
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 maturities greater than 12 months after the statement of
financial position date. These are classified as non-current assets. The group's
loans and receivables comprise 'trade and other receivables' and cash and cash
equivalents in the statement of financial position.
c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated
in this category or not classified in any of the other categories. They are
included in non-current assets unless management intends to dispose of the
investment within 12 months of statement of financial position date.
Recognition and measurement
Regular purchases and sales of financial assets are recognised on the trade-date
- the date on which the group commits to purchase or sell the asset. Investments
are initially recognised at fair value plus transaction costs for all the financial
assets not carried at fair value through profit or loss. Financial assets carried
at fair value through profit or loss are initially recognised at fair value,
and transaction costs are expensed in the statement of comprehensive income.
Financial assets are derecognised when the rights to receive cashflows from
the investments have expired or have been transferred and the group has transferred
substantially all risks and rewards of ownership. Available-for-sale financial
assets and financial assets at fair value through profit or loss are subsequently
carried at fair value. Loans and receivables are carried at cost, as reduced
by appropriate allowances for estimated irrecoverable amounts.
Gains or losses arising from changes in the fair value of the 'financial assets
at fair value through profit or loss' category are presented in the statement
of comprehensive income within 'other (losses)/gains' in the period in which
they arise. Dividend income from financial assets at fair value through profit
or loss is recognised in the statement of comprehensive income as part of other
income when the group's right to receive payments is established.
The fair values of quoted investments are based on current market prices. If
the market for a financial asset is not active (and for unlisted securities),
the group establishes fair value by using valuation techniques. These include
the use of recent arm's length transactions, reference to other instruments
that are substantially the same, discounted cashflow analysis and option pricing
models, making maximum use of market inputs and relying as little as possible
on entity-specific inputs.
Cash and cash
equivalents
Cash comprises cash in hand and demand deposits. Cash equivalents are short-term,
highly liquid investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value. For
the purpose of the cashflow statement, cash equivalents would include advances
from banks repayable within 3 months from the date of the advance.
Financial liabilities
and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. Financial liabilities
include trade and other payables, amounts due to related parties and shareholders,
bank borrowings and notes payable.
Trade and other payables are carried at cost which is the fair value of the
consideration to be paid in the future for goods and services received, whether
or not billed to the Group.
All borrowings and overdrafts are recorded at fair value, being the proceeds
received, net of direct issue costs. Finance charges are charged to the statement
of comprehensive income on an accruals basis using the effective interest rate
method.
Equity instruments are recorded at the fair value of the consideration received,
net of direct issue costs.
Sales revenue
recognition
Sales revenue is recognised when goods are delivered and commissioned at the
customers' premises which is taken to be the point in time when the customer
has accepted the goods and the related risks and rewards of ownership. Sales
revenue excludes value added or other sales taxes and is after deduction of
any trade discounts.
Government grants
Government grants received on capital expenditure are deducted in arriving
at the carrying amount of the asset purchased. Grants for revenue expenditure
are presented separately on the face of the consolidated statements of comprehensive
income.
Where retention of the government grant is dependent on the Group satisfying
certain criteria it is initially recognised as deferred income. When the criteria
for retention have been satisfied, the deferred income balance is released
to the statement of comprehensive income or netted against the asset purchased
as appropriate.
Related parties
Parties are considered to be related if one party has the ability, directly
or indirectly, to control the other party, or exercise significant influence
over the other party in making financial and operating decisions. Parties are
also considered to be related if they are subject to common control or common
significant influence. Related parties may be individuals or corporate entities.
3. INCOME
The following is an analysis of the Group' s income for the year from continuing
operations:
The Group The Company
-------------------------- -----------------------------------------------
2010 2009 2010 2009
GBP GBP GBP GBP
Revenue from the sale
of goods 2,020,431 1,844,525 - -
Government subsidy
received 95,539 70,931 - -
Other sundry
operating income 3,399 4,963 - -
Interest received on
cash deposits 24,702 1,101 3 2
Fair value gain on
derivative financial
instrument (note
15) 1,776 189,728 1,776 189,728
Profit on disposal of
subsidiary companies - - 1,041,131 -
Dividend received - - 310,700 -
2,145,847 2,111,248 1,353,610 189,730
---------- -------------- ------------- -------------------
There are no unfulfilled conditions or contingencies attached to the government
subsidy that has been received.
4. SEGMENTAL INFORMATION
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 and that make strategic decisions, has been identified as
the Board of Directors.
In identifying its operating segments, management generally follows the Group's
service lines, which represent the main products and services provided by the
Group.
The Group's operating businesses are organised and managed separately according
to the nature of products produced and services provided, with each segment
representing a strategic business unit.
At 31 December 2010, the Group was organised into two main business
segments as follows:
1) Administrative - holding management company registered
in Jersey
2) Packaging machinery - Production of food and medicine
packaging machinery
Five operating segments (bespoke engineering, moulding manufacturing, science
and technological development, paper products and packing carton) were discontinued
in the current year. The segment information below does not include any amounts
for these discontinued operations, which are described in more detail in note
5.
Segmental information - continued
operations
For the year ended 31
December 2010 Jersey China
Packing
Administrative Machinery Total
GBP GBP GBP
Revenue from external
customers - 2,020,431 2,020,431
Intersegment revenues - - -
Segment result (9,715) 294,262 284,547
Finance income 3 24,699 24,702
Finance costs (10,000) (46,598) (56,598)
Profit before income
tax (19,712) 272,363 252,651
Other segment items included in the statement of comprehensive
income are as follows:
Jersey China
Packing
Administrative Machinery Total
GBP GBP GBP
Depreciation - 62,925 62,925
Amortisation - 2,573 2,573
Provisions for
doubtful debts - 27,381 27,381
Tax expense 600 39,617 40,217
Segmental assets and liabilities at 31 December 2010 and capital expenditure
for the year ended as follows:
Reportable segment
assets 3,522,554 3,483,766 7,006,320
Expenditure for reportable segment, non-current
assets - 28,986 28,986
Reportable segment
liabilities 406,823 1,323,005 1,729,828
For the year ended 31
December 2009 Jersey China
Packing
Administrative Machinery Total
GBP GBP GBP
Revenue from external
customers - 1,844,525 1,844,525
Intersegment revenues - 32,017 32,017
Segment result 85,454 291,011 376,465
Finance income 2 1,099 1,101
Finance costs - (12,672) (12,672)
Profit before income
tax 85,456 279,438 364,894
Other segment items included in the statement of comprehensive
income are as follows:
Depreciation - 56,185 56,185
Amortisation - 2,316 2,316
Provisions for
doubtful debts - (35,710) (35,710)
Segmental assets and liabilities at 31 December 2009 and capital expenditure
for the year ended as follows:
Reportable segment
assets 1,832,153 2,507,715 4,339,868
Expenditure for reportable segment, non-current
assets - 24,713 24,713
Reportable segment
liabilities 362,788 1,087,757 1,450,545
Reconciliations of reportable segment revenues, profit or loss
and assets and liabilities
2010 2009
Revenues GBP GBP
Total revenues for
reportable segments 2,020,431 1,876,542
Elimination of
intersegment
revenues - (32,017)
Entity's revenues 2,020,431 1,844,525
Profit or loss
Total profit or loss
for reportable
segments 252,651 364,894
Elimination of
intersegment profits - (65,212)
Income before income
tax expense 252,651 299,682
Assets
Total assets for
reportable segments 7,006,320 4,339,868
Assets relating to
discontinued
operations - 3,583,909
Entity's assets 7,006,320 7,923,777
Liabilities
Total liabilities for
reportable segments 1,729,828 1,450,545
Liabilities relating
to discontinued
operations - 1,797,890
Entity's liabilities 1,729,828 3,248,435
Geographical
information
Non-current assets Revenue
2010 2009 2010 2009
GBP GBP GBP GBP
China 736,472 716,018 1,931,087 1,844,525
Argentina - - 26,673 -
Syria - - 17,291 -
Yemen - - 16,540 -
Algeria - - 28,840 -
736,472 716,018 2,020,431 1,844,525
DISCONTINUED
5. OPERATIONS
(a) Disposal of subsidiaries companies
The Group disposed of its holding in the following subsidiary companies, each
of which is a separate reporting segment:
Company Percentage Disposed Date of Disposal
Jinzhou Wonder Machinery Equipment Co. Ltd
(WE) 100% 30 September 2010
Jinzhou Wonder Moulding Manufacturing Co.
Ltd. (WM) 75% 31 May 2010
Jinzhou Wonder Paper
Products Co. Ltd
(WPP) 81.25% 30 September 2010
Jinzhou Wonder Packing Carton Co. Ltd. (WPC) 50% 30 September 2010
Creative Legend Group Limited (CLGL) 100% 30 September 2010
The 100% shareholding in WE and 37.5% holding in WPP was transferred to CLGL
before the disposal date. China Wonder Limited disposed of its 100% holding
in CLGL on 30 September 2010. CLGL incurred no profit or loss during the current
year and has thus not been included in the analysis below.
Details of the assets and liabilities disposed and the calculation of the profit
and loss on disposal is disclosed in note 17.
Jinzhou Wonder Science and Tech Development Co., Ltd (WT) ceased trading and
was deregistered on 30 September 2010.
(b) Profit for the year from discontinued operations
The combined results of the discontinued operations included in the consolidated
statement of comprehensive income are set out below. The comparative profit
and cashflows from discontinued operations have been re-presented to include
those operations classified as discontinued in the current year.
WE WM WPP WPC WT
China China China China China Total
Science &
Bespoke Moulding Paper Packing Tech
engineering Manufacturing Products carton Development
For the year ended 31
December 2010 GBP GBP GBP GBP GBP GBP
Revenue 1,288,763 136,008 1,169,918 524,090 135,061 3,253,840
Cost of sales (870,535) (85,494) (888,711) (494,637) (124,877) (2,464,254)
GROSS PROFIT 418,228 50,514 281,207 29,453 10,184 789,586
Other operating
income/(expense) 6 - 12,080 28,731 (115) 40,702
Distribution costs (46,307) (982) (51,633) (37,460) (183) (136,565)
Administration costs (164,821) (25,234) (82,946) (18,691) (9,345) (301,037)
Finance income 1,995 - 3 - 15 2,013
Finance costs (27,563) (70) (4,073) (10,491) (57) (42,254)
Profit/(loss) before income
tax 181,538 24,228 154,638 (8,458) 499 352,445
Attributable income tax
expense (22,064) (1,417) (38,659) - 210 (61,930)
Profit/(loss) for the year after tax 159,474 22,811 115,979 (8,458) 709 290,515
Gain/(loss) on remeasurement to fair
value less costs to sell - - - - - -
Gain on bargain purchase of 37.5% in
Jinzhou Wonder Paper Products Co. Ltd on
20 January 2010. This holding was disposed
of during the year and is included in the
gain on disposal of operations as
disclosed below. 34,548
Gain on disposal of operation including a
cumulative exchange gain of GBP130,330
reclassified from foreign currency
translation reserve to profit and loss
(see note 17) 503,721
Attributable income tax
expense (105,640)
Profit for the year from discontinued
operations 723,144
Profit for the year from discontinued operations
attributable to:
Equity holders of the
company 699,924
Non-controlling interests 23,220
723,144
6. PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS
2010 2009
GBP GBP
Profit from operations has been arrived at after charging/(crediting):
Staff costs (note 7) 240,495 262,177
Depreciation on property, plant
and machinery 62,925 56,185
Amortisation of intangible
assets 2,502 2,316
Provision for bad debts 27,381 (35,710)
Auditors' fees 40,037 37,048
Research and development
expenses 117,979 88,165
Loss on disposal of property, plant
& equipment - 4,330
Audit services comprise GBP25,700 (2009:GBP23,000) for the parent company
and group auditors and GBP14,337 (2009:GBP14,048) to overseas subsidiary
auditors.
7. STAFF COSTS
2010 2009
Continuing operations GBP GBP
Short-term employee
benefits 210,042 234,797
Social security costs 30,453 27,380
240,495 262,177
The average number of persons, including directors, employed by the Group
during the year/period was:
2010 2009
Number Number
Management 54 52
Other 68 75
122 127
8. DIRECTORS
2010 2009
Continuing operations GBP GBP
Emoluments - executive 30,806 22,371
Emoluments - non-executive (32,500) 14,000
(1,694) 36,371
All directors' emoluments are payable to the individual directors. Included
in the non- executive directors emoluments is a balance of GBP34,500 (brought
forward less current year payment) which was due to Mark Chapman. He has
released the company from this obligation and the amount has been reversed
in the current year.
9. FINANCE COSTS
The Group The Company
2010 2009 2010 2009
Continuing operations GBP GBP GBP GBP
Interest on bank loans 46,598 12,672 - -
Interest on other
loans(note 23) 10,000 - 10,000 -
56,598 12,672 10,000 -
10. EARNINGS PER SHARE
2010 2009
Basic earnings per
share p p
From continuing operations 1.18 1.51
From discontinued
operations 3.89 1.25
Total basic earnings
per share 5.07 2.76
Diluted earnings per
share
From continuing operations 1.20 1.51
From discontinued
operations 3.78 1.25
Total diluted earnings
per share 4.98 2.76
(a) Basic earnings per share
The earnings and weighted average number of ordinary shares used in the calculation
of basic earnings per share are as follows:
2010 2009
GBP GBP
Profit for the year attributable to owners
of the Company 912,358 495,900
Earnings used in the calculation of basic earnings
per share 912,358 495,900
Profit for the year from discontinued operations used
in the calculation of basic earnings per share from discontinued
operations (699,924) (225,045)
Earnings used in the calculation of basic earnings
per share from continuing operations 212,434 270,855
2010 2009
Weighted average number of ordinary shares for
the purpose of basic earnings per share 18,000,000 18,000,000
(b) Diluted earnings per share
The earnings used in the calculation of diluted earnings per share are as
follows:
2010 2009
GBP GBP
Earnings used in the calculation of basic earnings
per share 912,358 495,900
Interest on convertible
loan after tax 10,000 -
Earnings used in the calculation of diluted
earnings per share 922,358 495,900
Profit for the year from discontinued operations used
in the calculation of diluted earnings per share from
discontinued operations (699,924) (225,045)
Earnings used in the calculation of diluted earnings
per share from continuing operations 222,434 270,855
The weighted average number of ordinary shares for the purpose of diluted
earnings per share reconciles to the weighted average number of ordinary
shares used in the calculation of basic earnings per share as follows.
2010 2009
Weighted average number of ordinary shares used
in the calculation of basic earnings per share 18,000,000 18,000,000
Shares deemed to be issued for no consideration
in respect of:
- convertible loan 514,529 -
Weighted average number of ordinary shares used
in the calculation of diluted earnings per share 18,514,529 18,000,000
11. TAXATION
Continuing operations
The income tax expense for the year (2009 - expense) comprises, in the main
Enterprise Income Taxes payable on profits made by the Group in the People's
Republic of China. Generally, the corporate income tax rate is 25% (2009
- 25%) in relation to profits made by the Group in the People's Republic
of China. Jinzhou Wonder Packing Machinery Co., Ltd and Jinzhou Wonder Equipment
Machinery Co., Ltd qualify as foreign investment production enterprises and
are established in a technological economic development zone. The effective
rate of tax for these two enterprises for 2010 is 15% (2009 - 15%). This
rate is expected to increase to 25% on 1 January 2012.
The Group The Company
2010 2009 2010 2009
GBP GBP GBP GBP
Income tax expense
is as follows:
Current income tax 33,122 15,490 106,240 600
Deferred income tax - accelerated
capital allowances 7,095 13,337 - -
40,217 28,827 106,240 600
Deferred tax assets
At 1 January 51,673 65,547 - -
Disposal of subsidiaries (25,419) - - -
Transfer (from)/to statement of
comprehensive income- continued
operations (7,095) (13,337) - -
Transfer (from)/to statement of
comprehensive income- discontinued
operations - 5,704 - -
Exchange differences 3,199 (6,241) - -
At 31 December 22,358 51,673 - -
Tax effect of temporary differences
arising from the different treatment
of certain expenditure for tax
and financial reporting purposes 22,358 51,673 - -
Reconciliation at effective tax
rates
Profit before tax 252,651 299,682 1,332,119 85,456
Tax on profits at the prevailing
rate applicable 63,163 74,921 333,030 21,364
Charge for exempt company status 600 600 600 600
Expenses not deductible
for tax 197,243 (7,966) 5,372 26,068
Income exempted from
tax (78,119) (47,432) (78,119) (47,432)
Others (21,159) 19,439 - -
Effect of different tax rates (121,511) (10,735) (154,643) -
Tax expense for the period 40,217 28,827 106,240 600
12. INVESTMENTS
Shares in Shares in
Jinzhou Jinzhou
Shares in Shares in Wonder Wonder
Creative Jinzhou Wonder Packing Machinery
Legend Group Paper Produce Machinery Co Equipment
COMPANY Limited Limited Ltd Co Ltd Total
GBP GBP GBP GBP GBP
COST
At 1 January 2010 - - 1,129,537 1,655,133 2,784,670
Additions 31,608 113,514 - - 145,122
Disposals/ Transfer (31,608) (113,514) - (1,655,133) (1,800,255)
At 31 December 2010 - - 1,129,537 - 1,129,537
At 1 January 2009 and
31 December 2009 - - 1,129,537 1,655,133 2,784,670
The Company's subsidiary undertaking held as a fixed asset investment as
at 31 December 2010 is as follows:
Percentage
of ordinary
share
Country of capital
Incorporation Principal Activity held
Manufacture and sale
of packaging machines
Jinzhou Wonder Packing and associated spare
Machinery Co. Ltd China parts 100%
13. PROPERTY, PLANT AND EQUIPMENT
GROUP
Buildings Motor Office
and plant Machinery vehicles equipment Total
GBP GBP GBP GBP GBP
2010
COST
At 1 January 2010 758,819 911,435 207,044 85,691 1,962,989
Disposal of subsidiaries (131,165) (833,368) (136,757) (67,766) (1,169,056)
Exchange adjustment 55,077 102,270 29,831 12,490 199,668
Additions 41,651 32,972 40,205 20,393 135,221
Transfer (30,204) 30,204 - - -
Disposals (522) (697) (598) (1,242) (3,059)
At 31 December 2010 693,656 242,816 139,725 49,566 1,125,763
DEPRECIATION
At 1 January 2010 (170,752) (196,211) (84,130) (49,298) (500,391)
Disposal of subsidiaries 3,146 181,947 55,797 33,772 274,662
Exchange adjustment (14,259) (60,776) (21,431) (9,103) (105,569)
Charge for the year (28,116) (78,614) (24,490) (12,209) (143,429)
Disposals 329 - 148 - 477
At 31 December 2010 (209,652) (153,654) (74,106) (36,838) (474,250)
NET BOOK VALUE
At 31 December 2010 484,004 89,162 65,619 12,728 651,513
2009
COST
At 1 January 2009 717,021 513,512 142,219 75,361 1,448,113
Acquisition of subsidiary - 152,767 20,279 4,627 177,673
Exchange adjustment (69,738) (48,056) (13,738) (7,398) (138,930)
Additions 111,536 303,996 58,284 14,004 487,820
Disposals - (10,784) - (903) (11,687)
At 31 December 2009 758,819 911,435 207,044 85,691 1,962,989
DEPRECIATION
At 1 January 2009 (161,735) (170,832) (70,950) (44,811) (448,328)
Exchange adjustment 16,071 16,975 7,042 4,461 44,549
Charge for the year (25,088) (48,899) (20,222) (9,761) (103,970)
Disposals - 6,545 - 813 7,358
At 31 December 2009 (170,752) (196,211) (84,130) (49,298) (500,391)
NET BOOK VALUE
At 31 December 2009 588,067 715,224 122,914 36,393 1,462,598
14. INTANGIBLE ASSETS
GROUP
Land use
Goodwill right Patent rights Software Total
2010 GBP GBP GBP GBP GBP
COST
At 1 January 2010 1,356,705 85,577 257 - 1,442,539
Addtions - - - 1,130 1,130
Disposal of subsidiaries (1,356,705) - - (1,130) (1,357,835)
Exchange adjustment - 6,888 (257) - 6,631
At 31 December 2010 - 92,465 - - 92,465
AMORTISATION
At 1 January 2010 - (4,631) (257) - (4,888)
Charge for the year - (2,502) - (71) (2,573)
Disposal of subsidiaries - - - 71 71
Exchange adjustment - (373) 257 - (116)
At 31 December 2010 - (7,506) - - (7,506)
NET BOOK VALUE
At 31 December 2010 - 84,959 - - 84,959
2009
COST
At 1 January 2009 1,356,705 95,019 286 - 1,452,010
Exchange adjustment - (9,442) (29) - (9,471)
At 31 December 2009 1,356,705 85,577 257 - 1,442,539
AMORTISATION
At 1 January 2009 - (2,571) (286) - (2,857)
Exchange adjustment - 256 29 - 285
Charge for the year - (2,316) - - (2,316)
At 31 December 2009 - (4,631) (257) - (4,888)
NET BOOK VALUE
At 31 December 2009 1,356,705 80,946 - - 1,437,651
15. DERIVATIVE FINANCIAL INSTRUMENTS
GROUP AND COMPANY
2010 2009
GBP GBP
At 1 January 2010 189,728 -
Fair value adjustment 1,776 189,728
At 31 December 2010 191,504 189,728
The fair value of the share options was calculated using a Black-Scholes
option pricing model. The volatility was measured at 25%, the risk free rate
was 0.5% and the expected dividends was Nil. The fair values and other details
which were processed into the model are as follows:
Number of
options Grant date Option Price Fair value Exercise period
50,000,000 22/12/2009 0.8p 0.38p 21/12/2012
The above balance is sensitive to changes in the volatility rate that is
used to value the options. Such sensitity is illustrated as follows:
Number of
options Volatility Option Price Fair value Value
50,000,000 1% 0.8p 0.36p 178,980
50,000,000 50% 0.8p 0.48p 240,888
50,000,000 75% 0.8p 0.59p 296,456
16. ACQUISITION OF SUBSIDIARY COMPANIES
Acquisition of subsidiary company: Jinzhou Wonder Paper Products
Co. Ltd (WPP)
On the 20 January 2010, China Wonder Limited (CW) acquired a further 37.5%
interest in Jinzhou Wonder Paper Products Co. Ltd (WPP), a company incorporated
in China comprising 1,260,000 ordinary shares for a net consideration of
RMB 1,260,000 (GBP 113,514). The company had indirectly held 43.75% prior
to this investment and held a total of 81.25% following this transaction.
Details of the net assets acquired
are as follows:
Fair value Fair value
RMB GBP
Property, plant and
equipment 966,133 87,810
Long term prepaid expense 23,838 2,167
Inventories 1,058,000 96,159
Trade and other
receivables 4,342,196 394,652
Notes receivable 85,368 7,759
Cash and bank balances 145,465 13,221
Payables (2,276,845) (206,937)
Identifiable net assets 4,344,155 394,831
Identifiable net assets - 37.5%
acquired 1,629,058 148,062
Gain on bargain purchase (369,058) (34,548)
Purchase consideration 1,260,000 113,514
Acquisition of subsidiary company: Creative Legend Group
Limited (CLGL)
CLGL was incorporated on 19 August 2010 and 100% of the shares issued to
CW. The consideration of GBP31,608 (US$50,000) was not settled and CW disposed
of this investment on 30 September 2010. There were thus no net assets acquired
at the date of acquisition.
17. DISPOSAL OF SUBSIDIARY COMPANIES
The Group disposed of its interest in the following companies during the
year:
Company Percentage Disposed Date of Disposal
Jinzhou Wonder Machinery Equipment Co. Ltd
(WE) 100% 30 September 2010
Jinzhou Wonder Moulding Manufacturing Co. Ltd.
(WM) 75% 31 May 2010
Jinzhou Wonder Paper Products Co.
Ltd (WPP) 81.25% 30 September 2010
Jinzhou Wonder Packing Carton Co. Ltd. (WPC) 50% 30 September 2010
Creative Legend Group Limited (CLGL) 100% 30 September 2010
The 100% shareholding in WE and 37.5% holding in WPP was transferred to CLGL
before the disposal date. China Wonder Limited then disposed of its 100% holding
in CLGL on 30 September 2010, which effectively disposed of the group's interest
in WE and 37.5% interest in WPP. CLGL incurred no profit or loss during the
current year and its net asset value at the date of disposal represented its
investment in the net assets of WE and WPP (37.5%). Amounts for CLGL have thus
not been included in the analysis below as it is indirectly included in the
analysis of WE and WPP.
(a) Consideration received
2010 2009
WE WM WPP WPC
China China China China Total Total
Bespoke Moulding Paper Packing
engineering Manufacturing Products carton
GBP GBP GBP GBP GBP GBP
Sales proceeds 2,312,482 271,662 512,562 - 3,096,706 -
Unpaid sales proceeds - - 130,639 209,256 339,895 -
Total consideration 2,312,482 271,662 643,201 209,256 3,436,601 -
(b) Analysis of assets and liabilities
over which control was lost
Current assets
Cash and cash equivalents 173,913 26,384 74,897 2,771 277,965 -
Trade receivables 864,307 145,663 438,409 196,155 1,644,534 -
Other receivables 454,845 3,418 113,171 51,100 622,534 -
Inventories 350,033 69,914 251,293 78,428 749,668 -
Non-current assets
Property, plant and
equipment 233,832 116,940 99,337 444,285 894,394 -
Intangible assets - - 1,059 - 1,059 -
Long term prepaid expenses - - 1,712 - 1,712 -
Deferred taxation 18,584 1,491 3,507 1,837 25,419 -
Current liabilities
Trade payables (386,116) (16,262) (168,358) (122,305) (693,041) -
Other payables (451,977) (11,269) (74,232) (364,364) (901,842) -
Short term loans (329,589) - (189,447) - (519,036) -
Taxes payable (41,354) - (28,739) - (70,093) -
Net assets disposed
of 886,478 336,279 522,609 287,907 2,033,273 -
18. AVAILABLE-FOR-SALE FINANCIAL ASSET
GROUP AND COMPANY
2010 2009
GBP GBP
At 1 January 2010 280,000 -
Additions at cost - 200,000
Fair value adjustment 7,500 80,000
At 31 December 2010 287,500 280,000
The above available-for-sale investment is fairly stated at its
fair value. The historical cost of the investment is GBP200,000.
19. INVENTORIES
GROUP
2010 2009
GBP GBP
Raw materials 108,592 349,620
Work in progress 490,448 688,607
Finished goods 112,642 317,959
711,682 1,356,186
All inventories can be sold in the normal business operating
process. No finished goods in the current year have been carried
at fair value less costs to sell (2009:GBP Nil)
TRADE AND OTHER
20. RECEIVABLES
The Group The Company
2010 2009 2010 2009
GBP GBP GBP GBP
Trade receivables 853,035 2,158,628 - -
Allowance for
doubtful
receivables (129,437) (219,188) - -
Trade receivables-net 723,598 1,939,440 - -
Notes receivable 73,679 87,351 - -
Other receivables 619,068 221,138 56,868 -
Sale proceeds
outstanding
Jinzhou Wonder Paper
Products Co. Ltd 216,812 - - -
Jinzhou Wonder
Packing Carton Co.
Ltd 135,356 - - -
Prepayments and
accrued income - 155,523 - 1,231
1,768,513 2,403,452 56,868 1,231
The average credit period taken on the sale of goods is 154 days
(2009: 174 days). A provision has been made for estimated
irrecoverable amounts from the sales of goods and other
receivables of GBP 129,437 (2009: GBP219,188). This provision has
been determined by reference to past default experience.
The directors consider that the carrying amount of trade and
other receivables approximates their fair values.
The movement of the allowances for doubtful
receivables is summarised below:
2010 2009
GBP GBP
Balance at 1 January 219,188 233,576
Disposal of
subsidiaries (109,586) -
Allowance for the
year 19,835 (14,388)
Balance at 31
December 129,437 219,188
At 31 December 2010 the ageing analysis of
trade receivables is as follows:
2010 2009
GBP GBP
Within 360 days 620,366 1,943,292
360 - 720 days 169,429 156,807
Over 720 days 63,240 58,529
Balance at 31
December 2010 853,035 2,158,628
21. SHORT-TERM LOAN
GROUP 2010 2009
GBP GBP
Bank loan - 63,210
TRADE AND OTHER
22. PAYABLES
The Group The Company
2010 2009 2010 2009
GBP GBP GBP GBP
Trade payables 351,466 822,666 5,000 5,000
Customer advances 177,502 713,149 - -
Provisions for
warranty - 39,314 - -
Other payables 103,040 721,459 463,205 581,781
Accrued employee's
welfare 52,900 137,584 - -
Accruals and deferred
income 36,500 82,465 36,500 74,970
721,408 2,516,637 504,705 661,751
The average credit period taken for trade purchases is 111 days
(2009:110 days)
The directors consider that the carrying amount of trade and
other payables approximates their fair value.
23. LONG-TERM LOAN
GROUP AND COMPANY
The Group The Company
2010 2009 2010 2009
GBP GBP GBP GBP
Bank loan 682,980 632,100 - -
Wonder Employee
Capital Limited 210,000 - 210,000 -
892,980 632,100 210,000 -
The bank loan of RMB7,000,000 (GBP682,980) is secured by factory
buildings and bears interest at the rate of 8.1% per annual and
is repayable by 21 May 2012.
The loan from Wonder Employee Capital Limited (WECL) was entered
into on 6 January 2010. The loan is for a 3 year period with
interest accruing at 5% per annum. WECL has the right to convert
the loan into ordinary shares in the capital of China Wonder
Limited at a price of 10p per ordinary share.
The book value of the loan approximates to their fair value.
24. SHARE CAPITAL
2010 2009
Authorised share
capital: GBP GBP
65,000,000 ordinary
shares of 2.5p each 1,625,000 1,625,000
Allotted and fully
paid:
18,000,000 ordinary
shares of 2.5p each 450,000 450,000
25. RESERVES
(a) Description of the nature and purpose of reserves
Share premium reserve
The share premium represents the amount subscribed for share
capital in excess of the nominal value, less allowable share
issue expenses.
Statutory reserve
The statutory reserve represents appropriations from the retained
earnings reserve in accordance with the People's Republic of
China law, to be used for certain restricted purposes.
Translation reserve
The foreign currency translation reserve comprises the gains and
losses arising on translating the net assets of overseas
operations into pounds sterling.
Retained earnings
The retained earnings reserve comprises the cumulative net gains
and losses recognised in the consolidated statement of
comprehensive income.
Available-for-sale
financial asset
reserve
The available-for-sale financial asset reserve comprises of fair
value adjustments for period end revaluations.
(b) Non-controlling interests
2010 2009
GBP GBP
Balance at the
beginning of the
year 426,850 73,613
Share of profits for the year
(total comprehensive income) 47,980 27,380
Additional interest acquired in
Jinzhou Wonder Paper Products
Co. Ltd (WPP). Refer to note
16. (148,062) -
Disposal of interest held in
Jinzhou Wonder Moulding
Manufacturing Co. Ltd (WM).
Refer to note 17. (85,150) -
Disposal of interest held in
Jinzhou Wonder Paper Products
Co. Ltd (WPP). Refer to note
17. (97,982) -
Disposal of interest held in
Jinzhou Wonder Packing Carton
Co. Ltd (WPC). Refer to note
17. (143,636) -
Non-controlling interest arising
on the acquisition of Jinzhou
Wonder Packing Carton Co. Ltd
(WPC) - 204,877
Non-controlling interest arising
on the acquisition of Jinzhou
Wonder Paper Products Co. Ltd
(WPP) - 120,980
- 426,850
The above closing
balance consists of
the follows:
Jinzhou Wonder Moulding
Manufacturing Co. Ltd (WM) - 70,376
Jinzhou Wonder Paper Products
Co. Ltd (WPP) - 158,125
Jinzhou Wonder Packing Carton
Co. Ltd (WPC) - 198,349
- 426,850
RECONCILIATION OF
26. EQUITY
The Group The Company
2010 2009 2010 2009
GBP GBP GBP GBP
At 1 January 4,675,342 3,931,262 2,598,367 2,433,511
Profit for the year 912,358 495,900 1,225,879 84,856
Foreign exchange
differences 238,472 (185,057) - -
Revaluation of
available-for-sale
investment 7,500 80,000 7,500 80,000
Total income and
expenses 5,833,672 4,322,105 3,831,746 2,598,367
Minority interest
profit 23,220 34,695 - -
Minority interest -
foreign exchange
difference 24,760 (7,315) - -
Acquisition of
further interest in
subsidiary company (148,062) 325,857 - -
Disposal of
subsidiary
companies (457,098) - - -
5,276,492 4,675,342 3,831,746 2,598,367
27. RELATED PARTIES
The company had the following related party transactions during
and at the year end:
The Parent Company owed at 31 December 2010 an amount of
GBP413,521 (2009 - GBP298,963) to Jinzhou Wonder Packing
Machinery Co. Ltd, a 100% held subsidiary company. The loan is
unsecured, interest free and is repayable on demand. The amount
has been included in "Other payables".
The company paid GBP7,935 (2009 - GBP9,439) to the Trident Trust
during the course of the year in relation to administrative
costs. This Trust is controlled by James Wolfson, a director of
the company.
The Company owed at 31 December 2010 an amount of GBP210,000
(2009 - GBPNil) to Wonder Employee Capital Limited (WECL). The
loan is for a fixed term of 3 years which commenced on 6 January
2010 with interest accruing at 5% per annum. WECL has the right
to convert the loan into ordinary shares in the capital of China
Wonder Limited at a price of 10p per ordinary share. The loan is
included in "Long term loans".
Mr Qingjie Zhao, a substantial shareholder and former director of
China Wonder Limited, is a director and sole shareholder of
WECL.
The Company also owed at 31 December 2010 an amount of GBP49,683
(2009 - GBP49,683) to Mr Qingjie Zhao. The loan is unsecured,
interest free and is repayable on demand. The amount has been
included in "Other payables".
28. FINANCIAL INSTRUMENTS
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. This
note describes the Group's objectives, policies and processes
for managing those risks and the methods used to measure them.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to
measure them from previous periods unless otherwise stated in
this note.
Principal financial instruments
The principal financial instruments used by the Group, from which
financial instrument risk arises, are as follows:
- Trade and other receivables
- Cash and cash equivalents
- Trade and other payables
- Bank borrowings
The above are designated as receivables and financial liabilities
which are measured at amortised cost.
- Available-for-sale financial assets
- Derivative financial instruments
The above are designated as investments and measured at fair
value.
General objective, polices and procedures
The Board has overall responsibility for the determination of the
Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes to executive
management.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details
regarding these policies are set out below:
a) Credit risk
Credit risk arises principally from the Group's trade and other
receivables.
The Group controls the credit risk from customers through deposit
payments prior to delivery of goods.
Trade and other receivables presented in the statement of
financial position are net of an allowance for doubtful
receivables, estimated by management based on current economic
conditions. Receivables net of this allowance for doubtful
receivables is the Group's maximum exposure to credit risk,
being GBP1,768,513 (2009 - GBP2,403,452).
The Group's credit risk is primarily attributable to its trade
and other receivables. Cash is placed with creditworthy
financial institutions. The trade and other receivables
presented in the statement of financial position are net of an
allowance for doubtful receivables, estimated by management
based on current economic conditions.
Quantitative disclosures of the credit risk in relation to trade
and other receivables are disclosed in Note 20.
The majority of cash and cash equivalents are kept with reputable
state-owned Chinese banks.
b) Liquidity Risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty
in meeting its financial obligations as they fall due.
The Group's policy as regards liquidity is to ensure sufficient
cash resources are maintained to meet short-term liabilities.
The Group has no defaults or breaches on its financial
liabilities.
c) Currency Risk
Foreign exchange risk refers to the risk that movement in foreign
currency exchange rates against the Group's functional or
reporting currency will affect the Group's financial results and
cash flows. The Group has transaction currency exposures. Such
exposure arises from sales by an operating unit in currencies
other than its functional currency. Approximates 4% of the
Group's sales are denominated in USD. The Group's policy as it
relates to currency risk is to limit payment terms to immediate
letters of credit or prepayment before transporting goods to
clients.
If the exchange rate on uncovered exposures were to move
significantly between the year end and date of payment or
receipt there could be an impact on the Group's net income. As
such financial assets and liabilities are short term in nature,
this risk is not considered to be substantial.
Foreign exchange risk has not been considered to be material in
either the current or preceding period.
d) Interest rate risk
Interest rate risk arises from the potential changes in interest
rates that may have an adverse effect on the Group in the
current reporting period and in future years.
The Group is exposed to interest rate risk through the impact of
change in interest rates on interest bearing debts and
interest-bearing cash. Other than the bank deposits, bank
borrowings and one external loan, the Group has no other
significant interest-bearing assets and liabilities. The Group's
policy is to secure all of its borrowings at fixed borrowing
rates.
Interest rate risk has not been considered to be material in
either the current or preceding period.
e) Capital
The Group considers its capital to comprise its ordinary share
capital, share premium and retained earnings. In managing its
capital, the Group's primary objective is to ensure its
continued ability to provide a consistent return for its equity
shareholders through a combination of capital growth and
distributions. The Group has historically considered a mix of
debt and equity funding as the most appropriate form of capital
for the Group.
f) Market price risk
The Group managers its market risks associated with quoted equity
shares on its own and does not engage the services of fund
managers. The Group monitors fluctuations of the indices on the
London Stock Exchange and trading is kept at a minimum.
29. EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE
On 4 April 2011, the Company announced the disposal of Wonder
Packaging Machinery Co. for a cash consideration of RMB
33,000,000 (approximately GBP3.1 million).
Following this disposal, representing the only remaining trading
operations, the Company became an investing company for the
purposes of the AIM Rules and adopted the following investing
policy at a General Meeting held on 27 April 2011:
- To acquire either (i) a controlling interest in, or the entire
share capital of, one or more trading companies involved
primarily in the engineering sector which will be capable of
significant growth; or (ii) the business and/or assets of such a
company or companies;
- To focus its acquisition strategy on China. Given the broad
nature of the sector which the Company will focus on, the
directors of the Company will consider opportunities in other
geographic locations should any such opportunities arise;
- To undertake a significant acquisition which constitutes a
reverse takeover under the AIM Rules within twelve months of the
General Meeting, failing which the Company will return any funds
it holds to the Shareholders by way of dividend;
- To undertake only one or two key acquisitions in the next
twelve months;
- To satisfy the consideration for any such acquisition by (i)
the utilisation of its current cash resources; (ii) the issue of
new Ordinary Shares to the relevant vendors; (iii) the
utilisation of cash raised pursuant to the issue of new Ordinary
Shares in conjunction with such acquisition; (iv) the
utilisation of cash made available through the securing of new
debt facilities; and/or (v) a combination of (i) to (iv); and
- If it chooses To invest by way of a share acquisition, the
Company intends To take, as a minimum, a controlling interest in
any Company whose shares it acquires and will be active in the
way it manages such investment.
30. ANNUAL REPORT
The Annual Report will be sent to shareholders before 30 June
2011. Additional copies will be available to the public, free of
charge, from the Company's website www.chinawonderlimited.com
31. ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held on 1 July 2011
at 10.00am at the conference room of Jinzhou Jinsha
International Hotel in No.91, Jiefang Road, Jinzhou, Liaoning
Province, People's Republic of China.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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