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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ztc Tele. | LSE:ZTC | London | Ordinary Share | GB00B1RDDK95 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.75 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMZTC
RNS Number : 6676P
ZTC Telecommunications plc
30 March 2009
ZTC Telecommunications Plc
("ZTC" or the "Company")
Unaudited Interim Results for the 6 Months Ended 31 December 2008
The Company announces that it has sent its unaudited interim results for the 6
months ended 31 December 2008 to shareholders. The Chairman's Statement and
financial statements are reproduced below.
Contact:
ZTC Telecommunications plc
Frank Lewis, Chairman
+44 (0)7775 504 313
Fairfax I.S. PLC
Nominated Adviser and Broker
Adam Hart / Laura Littley
+44 (0)207 598 5368
Chairman's Statement
I would like to refer you to my statements in the audited accounts for the year
ended 30 June 2008 and to my letter in the Circular to Shareholders dated 27
March 2009 (the "Chairman's Letter").
Financial Review
As detailed in the Chairman's Letter, due to the sealing of the Group's factory
and the sequestering of the Group's assets by the People's Court, the Directors
have not had access to the financial information with regards to the trading of
the Subsidiaries. Even though the Subsidiaries continued to trade normally up to
the date of Charles Huang's disappearance, the Directors only have trading
information in relation to the first two months of the 6 month period to 31
December 2008. Therefore, the unaudited interim statements only represent normal
trading activity in July and August 2008. No trading information since 1
September 2008 is available to be included within the interim financial
statements.
On the balance sheet all of the Zhong Tian assets have been written down to nil
and liabilities for Zhong Tian have been estimated, based on the year-end
values.
Based on the above assumptions, in preparing the consolidated income statement,
a loss of GBP396,000 (after tax) has been reflected.
Frank Lewis
Chairman
27 March 2009
Consolidated Income Statement
+-----------------------------------------+----------------+----------------+----------------+
| | Six months | Six months | Year ended |
| | ended | ended | 30 June 2008 |
| | 31 December | 31 December | GBP'000 |
| | 2008 | 2007 | Audited |
| | GBP'000 | GBP'000 | |
| | Unaudited | Unaudited | |
+-----------------------------------------+----------------+----------------+----------------+
| Revenue | 1,667 | 12,852 | 26,532 |
+-----------------------------------------+----------------+----------------+----------------+
| Cost of sales | (1,322) | (9,812) | (20,990) |
+-----------------------------------------+----------------+----------------+----------------+
| Gross profit | 345 | 3,040 | 5,542 |
+-----------------------------------------+----------------+----------------+----------------+
| Other Operating Income | - | 135 | 445 |
+-----------------------------------------+----------------+----------------+----------------+
| Impairment of assets in subsidiary | - | - | (18,996) |
+-----------------------------------------+----------------+----------------+----------------+
| Administrative expenses | (616) | (870) | (1,464) |
+-----------------------------------------+----------------+----------------+----------------+
| Total administrative expenses | (616) | (870) | (20,460) |
+-----------------------------------------+----------------+----------------+----------------+
| Distribution costs | (84) | (943) | (1,828) |
+-----------------------------------------+----------------+----------------+----------------+
| Other operating expenses | (2) | (13) | (219) |
+-----------------------------------------+----------------+----------------+----------------+
| Operating (loss)/profit | (357) | 1,349 | (16,520) |
+-----------------------------------------+----------------+----------------+----------------+
| Finance income | 5 | 35 | 70 |
+-----------------------------------------+----------------+----------------+----------------+
| Finance costs | (36) | (39) | (131) |
+-----------------------------------------+----------------+----------------+----------------+
| (Loss)/profit before tax | (388) | 1,345 | (16,581) |
+-----------------------------------------+----------------+----------------+----------------+
| Tax | (8) | (133) | (251) |
+-----------------------------------------+----------------+----------------+----------------+
| (Loss)/profit for the period | (396) | 1,212 | (16,832) |
| attributable to equity holders of the | | | |
| parent | | | |
+-----------------------------------------+----------------+----------------+----------------+
| Basic (loss)/earnings per share | (0.39p) | 1.3p | (16.6p) |
+-----------------------------------------+----------------+----------------+----------------+
| Diluted (loss)/earnings per share | (0.39p) | 1.3p | (16.6p) |
+-----------------------------------------+----------------+----------------+----------------+
Consolidated Statement of Changes in Equity
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| | Share | Reverse | Share | General | Merger | Translation | 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 | | | | GBP'000 | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| At 1 July 2007 | 9,368 | (12,583) | 6,377 | 427 | 766 | (96) | - | 3,495 | 7,754 |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Foreign currency | - | - | - | - | - | 48 | - | - | 48 |
| translation | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Net expense | - | - | - | - | - | 48 | - | - | 48 |
| recognised | | | | | | | | | |
| directly in | | | | | | | | | |
| equity | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Profit for the | - | - | - | - | - | - | - | 1,212 | 1,212 |
| period | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Total recognised | - | - | - | - | - | 48 | - | 1,212 | 1,260 |
| income and | | | | | | | | | |
| expense for the | | | | | | | | | |
| period | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Transfer of | - | - | - | 164 | - | - | - | (164) | - |
| profit to general | | | | | | | | | |
| reserve | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Issue of share | - | - | - | - | - | - | 448 | - | 448 |
| capital by | | | | | | | | | |
| subsidiary | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Issue of deferred | 1,500 | (1,987) | 487 | - | - | - | - | - | - |
| shares | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Recognition of | - | - | - | - | - | - | - | 121 | 121 |
| share based | | | | | | | | | |
| payments | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| At 31 December | 10,868 | (14,570) | 6,864 | 591 | 766 | (48) | 448 | 4,664 | 9,583 |
| 2007 (Unaudited) | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Foreign currency | - | - | - | - | - | 540 | - | - | 540 |
| translation | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Net income | - | - | - | - | - | 540 | - | - | 540 |
| recognised | | | | | | | | | |
| directly in | | | | | | | | | |
| equity | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Loss for the | - | - | - | - | - | - | - | (18,044) | (18,044) |
| period | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Total recognised | - | - | - | - | - | 540 | - | (18,044) | (17,504) |
| income and | | | | | | | | | |
| expense for the | | | | | | | | | |
| period | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Transfer of loss | - | - | - | (591) | - | - | - | 591 | - |
| to general | | | | | | | | | |
| reserve | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Recognition of | - | - | - | - | - | - | - | 51 | 51 |
| share based | | | | | | | | | |
| payments | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| At 30 June 2008 | 10,868 | (14,570) | 6,864 | - | 766 | 492 | 448 | (12,738) | (7,870) |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Foreign currency | - | - | - | - | - | (5) | - | - | (5) |
| translation | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Net (loss) | - | - | - | - | - | (5) | - | - | (5) |
| recognised | | | | | | | | | |
| directly in | | | | | | | | | |
| equity | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| (Loss) for the | - | - | - | - | - | - | - | (396) | (396) |
| period | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| Total recognised | - | - | - | - | - | (5) | - | (396) | (401) |
| income and | | | | | | | | | |
| expense for the | | | | | | | | | |
| period | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
| At 31 December | 10,868 | (14,570) | 6,864 | - | 766 | 487 | 448 | (13,134) | (8,271) |
| 2008 (Unaudited) | | | | | | | | | |
+-------------------+---------+-------------+---------+---------+---------+-------------+--------------+----------+----------+
Consolidated Balance Sheet
+------------------------------------------+----------------+----------------+---------------+
| | 31 December | 31 December | 30 June 2008 |
| | 2008 | 2007 | GBP'000 |
| | GBP'000 | GBP'000 | Audited |
| | Unaudited | Unaudited | |
+------------------------------------------+----------------+----------------+---------------+
| Non-current assets | | | |
+------------------------------------------+----------------+----------------+---------------+
| Property, plant and equipment | - | 537 | 90 |
+------------------------------------------+----------------+----------------+---------------+
| Deferred taxation | - | 1 | - |
+------------------------------------------+----------------+----------------+---------------+
| Total non-current assets | - | 538 | 90 |
+------------------------------------------+----------------+----------------+---------------+
| Current assets | | | |
+------------------------------------------+----------------+----------------+---------------+
| Inventories | - | 2,361 | - |
+------------------------------------------+----------------+----------------+---------------+
| Trade and other receivables | 15 | 15,630 | 2,919 |
+------------------------------------------+----------------+----------------+---------------+
| Cash and cash equivalents | 89 | 1,865 | 1,962 |
+------------------------------------------+----------------+----------------+---------------+
| Total current assets | 104 | 19,856 | 4,881 |
+------------------------------------------+----------------+----------------+---------------+
| Total assets | 104 | 20,394 | 4,971 |
+------------------------------------------+----------------+----------------+---------------+
| Current liabilities | | | |
+------------------------------------------+----------------+----------------+---------------+
| Trade and other payables | (3,637) | (7,049) | (6,977) |
+------------------------------------------+----------------+----------------+---------------+
| Interest bearing liabilities | (1,743) | (2,294) | (2,877) |
+------------------------------------------+----------------+----------------+---------------+
| Current tax liabilities | (2,995) | (1,468) | (2,987) |
+------------------------------------------+----------------+----------------+---------------+
| Total current liabilities | (8,375) | (10,811) | (12,841) |
+------------------------------------------+----------------+----------------+---------------+
| Total liabilities | (8,375) | (10,811) | (12,841) |
+------------------------------------------+----------------+----------------+---------------+
| Net (liabilities)/assets | (8,271) | 9,583 | (7,870) |
+------------------------------------------+----------------+----------------+---------------+
| Equity | | | |
+------------------------------------------+----------------+----------------+---------------+
| Share capital | 10,868 | 10,868 | 10,868 |
+------------------------------------------+----------------+----------------+---------------+
| Reverse acquisition reserve | (14,570) | (14,570) | (14,570) |
+------------------------------------------+----------------+----------------+---------------+
| Share premium reserve | 6,864 | 6,864 | 6,864 |
+------------------------------------------+----------------+----------------+---------------+
| General reserve | - | 591 | - |
+------------------------------------------+----------------+----------------+---------------+
| Merger reserve | 766 | 766 | 766 |
+------------------------------------------+----------------+----------------+---------------+
| Translation reserve | 487 | (48) | 492 |
+------------------------------------------+----------------+----------------+---------------+
| Capital contribution reserve | 448 | 448 | 448 |
+------------------------------------------+----------------+----------------+---------------+
| Retained earnings | (13,134) | 4,664 | (12,738) |
+------------------------------------------+----------------+----------------+---------------+
| Total equity attributable to equity | (8,271) | 9,583 | (7,870) |
| holders of the parent | | | |
+------------------------------------------+----------------+----------------+---------------+
Consolidated Cash Flow Statement
+-----------------------------------------+----------------+----------------+----------------+
| | Six months | Six months | Year ended |
| | ended | ended | 30 June 2008 |
| | 31 December | 31 December | GBP'000 |
| | 2008 | 2007 | Audited |
| | GBP'000 | GBP'000 | |
| | Unaudited | Unaudited | |
+-----------------------------------------+----------------+----------------+----------------+
| Cash flows from operations | | | |
+-----------------------------------------+----------------+----------------+----------------+
| Net cash outflow from operations | (1,919) | (2,045) | (734) |
+-----------------------------------------+----------------+----------------+----------------+
| Tax received | - | 441 | - |
+-----------------------------------------+----------------+----------------+----------------+
| Tax refunded | - | - | 1 |
+-----------------------------------------+----------------+----------------+----------------+
| Net cash outflows from operating | (1,919) | (1,604) | (733) |
| activities | | | |
+-----------------------------------------+----------------+----------------+----------------+
| Investing activities | | | |
+-----------------------------------------+----------------+----------------+----------------+
| Interest received | 5 | 35 | 37 |
+-----------------------------------------+----------------+----------------+----------------+
| Purchase of property, plant and | - | (39) | (26) |
| equipment | | | |
+-----------------------------------------+----------------+----------------+----------------+
| Net cash used in investing activities | 5 | (4) | 11 |
+-----------------------------------------+----------------+----------------+----------------+
| Financing activities | | | |
+-----------------------------------------+----------------+----------------+----------------+
| Interest paid | (36) | (39) | - |
+-----------------------------------------+----------------+----------------+----------------+
| New loans | - | 1,106 | - |
+-----------------------------------------+----------------+----------------+----------------+
| Net (decrease) / increase in cash from | (36) | 1,067 | - |
| financing activities | | | |
+-----------------------------------------+----------------+----------------+----------------+
| Net (decrease) in cash and cash | (1,950) | (541) | (722) |
| equivalents | | | |
+-----------------------------------------+----------------+----------------+----------------+
| Cash and cash equivalents at beginning | 1,962 | 2,499 | 2,499 |
| of period | | | |
+-----------------------------------------+----------------+----------------+----------------+
| Exchange gains on cash and cash | 77 | (93) | 185 |
| equivalents | | | |
+-----------------------------------------+----------------+----------------+----------------+
| Cash and cash equivalents at end of | 89 | 1,865 | 1,962 |
| period | | | |
+-----------------------------------------+----------------+----------------+----------------+
Notes to the Interim Financial Statements
Accounting policies
Basis of accounting
The interim financial information in this condensed report is prepared on the
basis of the accounting policies set out in the 2008 annual report and accounts
and using accounting policies consistent with IFRS. The interim financial
information for the 6 months ended 31 December 2008 and 31 December 2007 is
unaudited and does not constitute statutory accounts as defined in section 240
of the Companies Act 1985.
Shenzhen Zhong Tian Communication Equipments Co. Ltd (Zhong Tian), the main
trading entity in the Group is unable to continue trading. This is 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 these extraordinary circumstances, a break-up
basis of accounting has been adopted for Zhong Tian and its asset values have
been written down accordingly. Where necessary in order to value the assets and
liabilities in Zhong Tian, the Directors have used estimates based upon amounts
recovered and expected to be recovered after the balance sheet date and a
precise valuation of those assets and liabilities is not available.
The financial statements of ZTC Plc continue to be prepared on a going concern
basis due to it having sufficient access to funds in order to continue meet its
liabilities and its expected operating costs for the foreseeable future. Details
of the change of circumstances and proposed change in investment strategy which
are critical to ZTC's future trading are set out in the 2008 annual report and
in the Circular to Shareholders.
Due to the loss of access to the factory the Directors have consequently not had
access to the accounting records of Zhong Tian. This report, although covering
the six months to 31 December 2008, therefore only includes the results for
Zhong Tian for the two months to August 2008.
As all assets were written down at 30 June 2008, no value has been attributed to
any trading activity from 1 September to 31 December 2008. The balance sheet at
31 December 2008 represents the assets and liabilities of ZTC plc and the
estimated liabilities of Zhong Tian.
Details of the adjustments made to the asset values of Zhong Tian are again set
out in the 2008 annual accounts.
The 2008 annual report and accounts, which received a qualified opinion from the
auditors, and did include a reference to matters to which the auditors drew
attention to by way of emphasis, and did contain a statement under section
237(2) or (3) of the Companies Act 1985, have been filed with the Registrar of
Companies.
Basis of consolidation
The consolidated interim financial statements incorporate the financial
statements of ZTC Telecommunications Plc and all its subsidiaries made up to 31
December 2008.
These interim accounts for ZTC Plc incorporate the consolidated financial
statements of ZTC, Praise Ease and Shenzhen Zhong Tian Communications Equipment
Co., Ltd ("Zhong Tian") for the six months ended 31 December 2008. Under IFRS
comparative figures for the year ended 31 December 2007 have also been included.
Praise Ease and Zhong Tian were acquired by ZTC Plc in March 2007 and, due to
the relative size of the acquisition, was required to be accounted for under the
"Reverse Acquisition" method.
Control is achieved where the Company has the power to govern the financial and
operational policies of an entity so as to gain benefit from its activities.
The Company's controlling interest in its indirectly held, wholly owned
subsidiary, Shenzhen Zhong Tian Communication Equipments Co. Limited was
acquired through a transaction under common control, as defined in IFRS 3,
Business Combinations. The directors noted at the time of the acquisition that
transactions under common control were outside the scope of IFRS 3 and that
there is no guidance elsewhere in IFRS covering such transactions. This remains
the case, with the International Accounting Standards Board commencing their
project on transactions under common control in December 2007.
IAS contain guidance where a transaction falls outside the scope of IFRS. This
guidance is covered in Paragraphs 10-12 of IAS 8, Accounting policies, Changes
in Accounting Estimates and Errors. This requires, inter alia, that where IFRS
does not contain guidance on a particular issue, the Directors may also consider
the most recent pronouncements of other standard setting bodies that use a
similar conceptual framework to develop accounting standards. In this regard it
is noted that the United States Financial Accounting Standards Board (FASB) has
issued an accounting standard covering Business Combinations (FAS 141), that is
similar in a number of respects to IFRS 3. Further there is currently a major
project being run jointly by the IASB and the FASB to converge IFRS and US GAAP.
In contrast to IFRS 3, FAS 141 does include, as an appendix, limited accounting
guidance for transactions under common control, which as with IFRS 3, are
outside the scope of that accounting standard. The guidance contained in FAS 141
indicates that a form of accounting that is similar to pooling of interests
accounting, which was previously set out in Accounting Principles Board (APB)
opinion 16, may be used when accounting for transactions under common control.
Having considered the requirements of IAS 8 and the guidance included within FAS
141, it is considered appropriate to use a form of accounting which is similar
to pooling of interests when dealing with the transaction in which the Group
acquired its controlling interest in Shenzhen Zhong Tian Communication
Equipments Co. Ltd.
Principle accounting policies adopted during the period
The principle accounting policies adopted during the period by the board are set
out below. The chairman's statement provides an updated assessment of the
financial position of the company.
Reverse acquisition accounting
The acquisition of Praise Ease Limited by ZTC Telecommunications Plc on 21 March
2007 was accounted for under the principles of reverse acquisition accounting.
Although the consolidated financial statements have been prepared in the name of
the legal parent, ZTC Telecommunications Plc, they are in substance a
continuation of the consolidated financial statements of the legal subsidiary,
Praise Ease Limited. The following accounting treatment was applied in respect
of the reverse acquisition:
* The assets and liabilities of the legal subsidiary, Praise Ease Limited are
recognised and measured in the consolidated financial statements at the
pre-combination carrying amounts, without restatement to fair value;
* The retained earnings and other equity balances recognised in the
consolidated financial statements reflect the retained earnings and other equity
balances of Praise Ease Limited immediately before the business combination and
the results of the period from 1 July 2006 to the date of the business
combination are those of Praise Ease Limited. However, the equity structure
appearing in the consolidated financial statements reflects the equity structure
of the legal parent, ZTC Telecommunications Plc, including the equity
instruments issued in order to effect the business combination; and
Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts received or receivable for goods provided in
the normal course of business, net of discounts and sales related taxes.
Sales of goods and services are recognised when goods are delivered and title
has passed.
Group property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and are depreciated over their estimated useful lives on the following annual
bases:
+----------------------------------+--------------------+
| Leasehold improvements | 4.5% |
| (straight line) | |
+----------------------------------+--------------------+
| Office equipment | 33.3% |
| (straight line) | |
+----------------------------------+--------------------+
| Motor vehicles | 11.25% |
| (straight line) | |
+----------------------------------+--------------------+
| Machinery | 18% |
| (straight line) | |
+----------------------------------+--------------------+
| Fixtures, fittings and equipment | 18% |
| (straight line) | |
+----------------------------------+--------------------+
Where any items of property, plant and equipment are deemed to be impaired, they
are written down to their recoverable value.
Operating profit
Operating profit is stated before finance income and finance costs.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held at call with
banks and other short-term highly liquid investments with original maturities of
three months or less.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs
comprise direct materials and, where applicable, direct labour costs and those
overheads that have been incurred in bringing the inventories to their present
location and condition. Cost is calculated using the weighted average method.
Net realisable value represents the estimated selling price less all estimated
costs of completion and costs to be incurred in marketing, selling and
distribution. Where any items of property, plant and equipment are deemed to be
impaired, they are written down to their recoverable value.
Trade receivables
Trade receivables are measured at initial recognition at fair value and are
subsequently measured at amortised cost using the effective interest rate
method. Appropriate allowances for estimated irrecoverable amounts are
recognised in profit and loss when there is objective evidence that the asset is
impaired. Any impairment allowances made represent the difference between the
asset's carrying amount and the present value of the estimated future cash flows
from that asset. Any impairment losses are realised immediately in the income
statement.
Other financial liabilities
Trade payables and other short-term monetary liabilities are initially
recognised at fair value and subsequently carried at amortised cost using the
effective interest rate method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost, with any
difference between the proceeds (net of transaction costs) and the redemption
value recognised in the income statement over the period of the borrowings using
the effective interest method.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Group are recorded at the proceeds received, net of direct issue
costs.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.
Rentals payable under operating leases are charged to income on a straight line
basis over the term of the relevant lease.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised based on tax rates
that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is charged or credited in the income statement, except when it
relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity.
Foreign currencies
The separate financial statements of each Group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial statements,
the results and financial position of each Group company are expressed in pounds
sterling, which is the functional currency of the company and the presentational
currency for the consolidated financial statements.
The Directors have determined the currency of the primary economic environment
in which the Group operates to be Renminbi ("RMB"). Sales and major costs of
providing goods and services including major operating expenses are primarily
influenced by fluctuations in RMB. The presentation currency of the Group is
pounds sterling and therefore on consolidation the financial information of the
subsidiaries has been translated from RMB to pounds sterling.
Transactions in currencies other than the functional currency are initially
recorded at the rates of exchange prevailing on the dates of the transactions.
Monetary assets and liabilities denominated in such currencies are retranslated
at the rates prevailing on the balance sheet date. Profits and losses arising on
the retranslation are included in the income statement.
Share based payments
The Group issues equity settled share based payments to certain employees.
Equity settled share based payments are measured at fair value at the date of
the grant. The fair value determined at the grant date of the equity settled
share based payments is expensed on a straight line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest and
adjusted for the effect of non-market based vesting conditions.
Fair value is measured by use of the Black-Scholes model. The expected life used
in the model has been adjusted, based on management's best estimate, for the
effects on non-transferability, exercise restrictions and behavioural
considerations.
Other operating income
+-------------------------------------------------+--------------+--------------+--------------+
| | Six months | Six months | Year ended |
| | ended | ended | 30 June 2008 |
| | 31 December | 31 December | GBP'000 |
| | 2008 | 2007 | Audited |
| | GBP'000 | GBP'000 | |
| | Unaudited | Unaudited | |
+-------------------------------------------------+--------------+--------------+--------------+
| Sales of components | - | - | 215 |
+-------------------------------------------------+--------------+--------------+--------------+
| Processing | - | - | 45 |
+-------------------------------------------------+--------------+--------------+--------------+
| Provision of value added services | - | 59 | 105 |
+-------------------------------------------------+--------------+--------------+--------------+
| Other | - | 76 | 80 |
+-------------------------------------------------+--------------+--------------+--------------+
| | - | 135 | 445 |
+-------------------------------------------------+--------------+--------------+--------------+
Loss for the financial year
+-------------------------------------------------+--------------+--------------+--------------+
| | Six months | Six months | Year ended |
| | ended | ended | 30 June 2008 |
| | 31 December | 31 December | GBP'000 |
| | 2008 | 2007 | Audited |
| | GBP'000 | GBP'000 | |
| | Unaudited | Unaudited | |
+-------------------------------------------------+--------------+--------------+--------------+
| Loss for the financial year is arrived at after | | | |
| charging: | | | |
+-------------------------------------------------+--------------+--------------+--------------+
| Depreciation on owned assets | - | 88 | 155 |
+-------------------------------------------------+--------------+--------------+--------------+
| Auditors' remuneration for audit services | - | - | 90 |
+-------------------------------------------------+--------------+--------------+--------------+
| Write down of inventories recognised as an | - | 2 | - |
| expense | | | |
+-------------------------------------------------+--------------+--------------+--------------+
| Operating lease payments | 8 | - | 88 |
+-------------------------------------------------+--------------+--------------+--------------+
| Impairment of assets in Zhong Tian to | - | - | 18,996 |
| "break-up" basis | | | |
+-------------------------------------------------+--------------+--------------+--------------+
| Share based payments expense | - | 121 | - |
+-------------------------------------------------+--------------+--------------+--------------+
(Loss)/Earnings per share
The calculation of basic and diluted (loss) / earnings per share is based on the
following data:
+------------------------------------------+----------------+----------------+----------------+
| | Six months | Six months | Year ended |
| | ended | ended | 30 June 2008 |
| | 31 December | 31 December | GBP'000 |
| | 2008 | 2007 | Audited |
| | GBP'000 | GBP'000 | |
| | Unaudited | Unaudited | |
+------------------------------------------+----------------+----------------+----------------+
| (Loss)/earnings for the purpose of basic | (396) | 1,212 | (16,832) |
| and diluted earnings per share | | | |
+------------------------------------------+----------------+----------------+----------------+
| Number of shares | '000 | '000 | '000 |
+------------------------------------------+----------------+----------------+----------------+
| Weighted average number of ordinary | 101,592 | 94,579 | 101,592 |
| shares for the purpose of basic earnings | | | |
| per share | | | |
+------------------------------------------+----------------+----------------+----------------+
The denominators for the purposes of calculating both basic and diluted earnings
per share in 2007 have been adjusted for the share division that took place in
2008.
Investments
The Company owns the following investments:
+--------------------------------+--------------------+--------------+--------------------------+
| Name of undertaking | Place of | % ownership | Principal activity |
| | Incorporation | | |
+--------------------------------+--------------------+--------------+--------------------------+
| Praise Ease Limited | Hong Kong | 100% | Holding company |
+--------------------------------+--------------------+--------------+--------------------------+
| Shenzhen Zhong Tian | China | 100%* | Design, distribution and |
| Communication Equipments Co. | | | assembly of mobile |
| Ltd | | | phones |
+--------------------------------+--------------------+--------------+--------------------------+
*This company is owned indirectly by ZTC Telecommunications Plc through Praise
Ease Limited
Inventories
+------------------------------------------------+--------------+--------------+--------------+
| | 31 December | 31 December | 30 June 2008 |
| | 2008 | 2007 | GBP'000 |
| | GBP'000 | GBP'000 | Audited |
| | Unaudited | Unaudited | |
+------------------------------------------------+--------------+--------------+--------------+
| Raw materials | - | 1,859 | 1,164 |
+------------------------------------------------+--------------+--------------+--------------+
| Finished goods | - | 502 | 5 |
+------------------------------------------------+--------------+--------------+--------------+
| Work in progress | - | - | 88 |
+------------------------------------------------+--------------+--------------+--------------+
| Provision | - | - | (2) |
+------------------------------------------------+--------------+--------------+--------------+
| Revaluation of assets to break-up value | - | - | (1,255) |
+------------------------------------------------+--------------+--------------+--------------+
| | - | 2,361 | - |
+------------------------------------------------+--------------+--------------+--------------+
Trade and other receivables
+------------------------------------------------+--------------+--------------+--------------+
| | 31 December | 31 December | 30 June |
| | 2008 | 2007 | 2008 |
| | GBP'000 | GBP'000 | GBP'000 |
| | Unaudited | Unaudited | Audited |
+------------------------------------------------+--------------+--------------+--------------+
| Due within one year: | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Amounts receivable for the sale of goods | - | 6,509 | 12,017 |
+------------------------------------------------+--------------+--------------+--------------+
| Other receivables | - | 1,972 | 1,053 |
+------------------------------------------------+--------------+--------------+--------------+
| Prepayments and accrued income | 15 | 7,149 | 7,184 |
+------------------------------------------------+--------------+--------------+--------------+
| Revaluation of assets to break-up value | - | - | (17,335) |
+------------------------------------------------+--------------+--------------+--------------+
| | 15 | 15,630 | 2,919 |
+------------------------------------------------+--------------+--------------+--------------+
The directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
All of the trade and other receivables recognised at 31 December 2008 are held
in ZTC Plc.
Trade and other payables
+------------------------------------------------+--------------+--------------+--------------+
| | 31 December | 31 December | 30 June 2008 |
| | 2008 | 2007 | GBP'000 |
| | GBP'000 | GBP'000 | Audited |
| | Unaudited | Unaudited | |
+------------------------------------------------+--------------+--------------+--------------+
| Trade payables | 3,637 | 4,902 | 4,377 |
+------------------------------------------------+--------------+--------------+--------------+
| Income tax payable | - | 83 | - |
+------------------------------------------------+--------------+--------------+--------------+
| Other payables | - | 962 | 1,169 |
+------------------------------------------------+--------------+--------------+--------------+
| Accruals and deferred income | - | 1,102 | 1,431 |
+------------------------------------------------+--------------+--------------+--------------+
| | 3,637 | 7,049 | 6,977 |
+------------------------------------------------+--------------+--------------+--------------+
The directors consider that the carrying of trade and other payables
approximates to their fair value.
Of the trade and other payables noted above, GBP59,000 are payable by ZTC Plc at
31 December 2008.
Notes to the cash flow statement
+------------------------------------------------+--------------+--------------+--------------+
| | Six months | Six months | Year ended |
| | ended | ended | 30 June 2007 |
| | 31 December | 31 December | GBP'000 |
| | 2008 | 2007 | Audited |
| | GBP'000 | GBP'000 | |
| | Unaudited | Unaudited | |
+------------------------------------------------+--------------+--------------+--------------+
| (Loss)/Profit for the financial period | (396) | 1,212 | (16,832) |
+------------------------------------------------+--------------+--------------+--------------+
| Adjustments for: | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Depreciation of property, plant and equipment | - | 88 | 155 |
+------------------------------------------------+--------------+--------------+--------------+
| Share based payment expense | - | 121 | 172 |
+------------------------------------------------+--------------+--------------+--------------+
| Finance income | (5) | (35) | (70) |
+------------------------------------------------+--------------+--------------+--------------+
| Finance costs | 36 | 39 | 131 |
+------------------------------------------------+--------------+--------------+--------------+
| Tax | 8 | 133 | 251 |
+------------------------------------------------+--------------+--------------+--------------+
| Impairment of assets to break up value | - | - | 18,996 |
+------------------------------------------------+--------------+--------------+--------------+
| Operating (loss)/profit before changes in | (357) | 1,558 | 2,803 |
| working capital | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Changes in working capital: | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Increase in inventories | - | (1,472) | (366) |
+------------------------------------------------+--------------+--------------+--------------+
| Decrease/(increase) in trade and other | 2,904 | (4,732) | (9,358) |
| receivables | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Decrease/(increase) in trade and other | (4,466) | 2,601 | 6,187 |
| payables | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Net cash outflow from operations | (1,919) | (2,045) | (734) |
+------------------------------------------------+--------------+--------------+--------------+
Of the cash recognised in the consolidated balance sheet at 31 December 2008,
GBP90,000 is held in an account owned and controlled by ZTC Plc.
Availability of interim statement
Copies of this interim statement will be available on request from the Company's
registered office at 14 New Street, London EC2M 4HE and on the Company's website
at www.chinaevoline.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR IFFIIVDIAFIA
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