Qihang Equipment Company Limited Half Yearly -3-

The condensed financial statements have been prepared under the historical cost convention, except for the revaluation of certain properties and financial instruments. The same accounting policies, presentation and methods of computation have been followed in these condensed financial statements as were applied in the preparation of the group's financial statements for the year ended 31 December 2012, except for the impact of the adoption of the Standards and Interpretations described below.

   --      IAS 27 Separate Financial Statements (2011) - effective 1 January 2013 
   --      IFRS 10 Consolidated Financial Statements - effective 1 January 2013 
   --      IFRS 13 Fair Value Measurement - effective 1 January 2013 

-- Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) - effective 1 July 2012

The revised Standards and Interpretations above have had no impact on the reporting results or financial position of the group.

   4      Seasonality of interim operation 

The group is sensitive to the seasonality of sales. Traditionally and historically, the first quarter of the year is very quiet due to the festive season in China. The revenue of the group decreased significantly compared to the first six months of last year, mainly due to the slowdown of the machine tool industry within China has yet to pick up and disposal of the coal mining equipment operation at the end of 2012.

During the period, the company has consolidated its product range and made modification to the structure of its various products. Orders received were mainly customised products.

   5     Segment information 

The sales revenue arises from the sale of universal lathes, CNC machinery, large-scale machinery and relevant spare parts which forms the group's main business. All the activities are within P. R. China. Therefore management considers no detail of the operating and geographical segments information is to be reported.

17.04% (6 months ended 30 June 2012: 7.05%) of sales are made via P. R. China agents to customers overseas.

Analysis of revenue from the sale of goods and services are analysed as follows:

 
                                        Six months   Six months     Year ended 
                                             ended        ended    31 December 
                                           30 June      30 June           2012 
                                              2013         2012        Audited 
                                         Unaudited    Unaudited 
                                         RMB!--000    RMB!--000      RMB!--000 
 
 Universal                                  22,696       54,698         60,656 
 CNC                                        15,816       31,510         58,172 
 Large-scale                                12,190       14,799         32,156 
 Coal mining equipment                           -       14,918              - 
 Others                                      1,340        2,520          1,483 
 Sales and other sales related taxes          (59)        (672)          (964) 
                                       -----------  -----------  ------------- 
 
                                            51,983      117,773        151,503 
                                       ===========  ===========  ============= 
 
   6      Taxation 

The company is regarded as resident for tax purposes in Jersey and on the basis that the company is neither a financial services company nor a utility company for the purposes of the Income Tax (Jersey) Law 1961, as amended; the company is subject to income tax in Jersey at a rate of zero per cent.

Win Yu, an intermediate parent company is regarded as resident for the tax purposes in Hong Kong.

The group's operating subsidiary in PRC is subject to income tax rate at 25%. Due to its high technology enterprise status, the subsidiary is entitled to a reduction in tax rate at 15%.

Interim income tax charged was related to prior year adjustment. There is no tax liability due to losses during the period.

   7        Loss per share 

Basic loss per share is calculated by dividing the lost attributable to equity shareholders of the company by the weighted average number of ordinary shares in issue during the period.

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. There is no dilutive potential ordinary share in the company.

 
                                                                  Six       Year ended 
                                                               months      31 December 
                                                             ended 30             2012 
                                                            June 2013          Audited 
                                                            Unaudited 
                                                                  RMB              RMB 
  Earnings 
  Earnings for the purposes of basic and diluted 
   earnings per share being net profit attributable 
   to equity holders of the parent                       (10,306,212)     (14,021,110) 
                                                      ===============  =============== 
 
 
                                                        Number         Number 
   Number of shares 
  Weighted average number of ordinary shares 
   for the purpose of basic earnings per share      58,036,263     58,036,263 
                                                 =============  ============= 
 
 
   8        Property, plant and equipment 

During the period, the company has spent approximate RMB7.3 million on plant and machinery to upgrade its manufacturing capabilities for advance CNC and large-scale equipment. The estimated total to spend is RMB50 million. The upgrade has been delayed due to the company still in the stage of technical tuning and modification of its various products.

   9        Share capital 

The total authorised number of ordinary shares is 200,000,000 at 2.5 pence per share. The issued share capital of the company as at 30 June 2013 is GBP1,450,906 fully paid. There were no movements in the issued share capital of the company in the current reporting period.

   10      Borrowings 

During the period, there is no new bank loan obtained by the company other than those renewable loans which bear interest at fixed rates and are repayable within one year.

   11     Guarantee 

No additional guarantee.

   12     Related party transactions 

None

   13     Events after the reporting date 

None

This information is provided by RNS

The company news service from the London Stock Exchange

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