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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Yinggao Hldgs | LSE:YGH | London | Ordinary Share | GB0003754743 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.75 | 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
TIDMYGH
RNS Number : 5598H
Yinggao Holdings PLC
31 May 2011
Yinggao Holdings plc
("Yinggao" or the "Company")
Annual Results
The Board of Yinggao is pleased to announce the Company's results for the year ended 31 December 2010, which are set out below. These have been despatched to shareholders earlier today.
Copies of these financial statements will be available from the offices of Daniel Stewart & Company Plc, Becket House, 36 Old Jewry, London EC2R 8DD. A copy will also be available on the Company's website www.yinggaoholdings.com. The AGM will be held at the offices of Baker Tilly UK Audit LLP at 25 Farringdon Street, London EC4A 4AB on 30 June 2011 at 10:30 a.m.
FINANCIAL HIGHLIGHTS
-- Operating profit before gain on disposal of subsidiaries increased by 66.8% to HK$44.7 million (2009: HK$26.8 million).
-- Profit attributable to equity shareholders up 77.5% to HK$29.3million (2009: HK$16.5million), after taking out an exceptional item arising on the gain on disposals of subsidiaries in 2009 of HK$51.1million.
-- Net cash position at 31 December 2010 at HK$32.6 million (2009: HK$ 16.7 million).
-- Terminal services' operating profit increased by 43.9% to HK$29.8 million (2009: HK$20.7 million). Revenue increased by 9.7% to HK$124 million (2009: HK$113 million).
-- Barging services' operating profit increased by 70.8% to HK$17.2 million (2009: HK$10.1 million). Revenue increased by 19.4% to HK$ 83.4 million (2009: HK$69.8 million).
OPERATIONAL HIGHLIGHTS
-- Yinggao achieved record profits across all key business segments.
-- New business in non ferrous metal trading commenced in April 2010, contributing HK$3.5million operating profit for the group.
-- 17 container vessels, corresponding to carrying capacity of approximately 37,000 tonnes (size ranging from 96TEU to 228TEU), in operation during the year 2010, compared to 8 container vessels in 2009.
-- Post year end, 2 sets of brand-new quayside container cranes and 4 sets of brand-new rail-mounted container cranes, with total value of approximately HK$31.2million and HK$29.3million respectively have been delivered and started operation.
Enquiries
Angela Leung Tel: + 852 2219 9999
Yinggao Holdings plc
www.yinggaoholdings.com
Paul Shackleton Tel: +44 (0) 207 776 6550
Daniel Stewart & Co
www.danielstewart.co.uk
Yinggao Holdings plc
CHAIRMAN'S STATEMENT
I am pleased to report another year of growth following my appointment as Chairman of the Company in September 2009.
BUSINESS REVIEW
We place the delivery of strong operating performance at the heart of our approach to the business, as demonstrated again by this year's results. Our focus remains on our core businesses of operating the Keen Chance Container Terminal based in the Huangpu district of Guangzhou, China ("Terminal Services") and managing a fleet of 17 custom built 96-228 TEU Yinggao-class river barges ("Barging Services"). In both areas turnover and profit have continued to grow. The broad customer base with repeating business from blue chip international shipping companies means that the quality of revenue continues to be high.
During the year we commenced non ferrous metal trading, exploiting a market opportunity. This division has immediately made a contribution to the profitability of the group, and accounts for a significant part of the increase in turnover for the year.
Terminal Services
Revenue from Terminal Services increased by 9.7% to HK$124 million (2009: HK$113 million), and underlying operating profits increased by 23.9%. Although those activities continued to be strong in 2010, an increase in operating cost was a major challenge which caused the gross margin to drop by 1.75%.
The first phase of the extension of the adjacent quay has now been completed and since the period end two sets of new 45 tonnes quayside container cranes and four sets of new 45 tonnes railed-mounted gantry container cranes have been delivered and started operation.
Barging Services
Turnover from barging services was HK$83.4 million, an increase of 19.4% (2009: HK$69.8 million). Underlying operating profits increased by 24.8% and gross margin increased by 6%. In my statement to shareholders last year, I mentioned that we would benefit from the delivery of the new container vessels. There were 17 container vessels in operation at the end of 2010, representing a carrying capacity of approximately 37,000 tonnes (size ranging from 96TEU to 228TEU), compared to 8 vessels in the equivalent period of last year.
We have used our knowledge of the local container shipping market to commence a container leasing operation during the year in order to increase the utilization of our assets. This has been immediately successful, contributing 11.2% of the total revenue.
Non ferrous metal trading
Our newly formed non ferrous metal trading division reported a turnover of HK$274 million and a contribution to profit of HK$3.5million. Substantially all of the trading was in electrolytic copper cathodes.
FINANCIAL RESULTS
For the year ended 31 December 2010 Yinggao achieved revenues of HK$482 million, which represented growth of 164% compared to the prior year (2009: HK$182 million). As a result of the non ferrous metal trading overall gross margin decreased to 13.4% (2009: 29.9%), the gross profit recorded an increase by 20.7% to HK$65.7 million (2009: HK$54.5 million). Profit attributable to equity shareholder for the year under review was HK$29.3 million (2009: HK$67.6 million), representing an increase of 77.5%, after taking out an exceptional item arising on the gain on disposals of subsidiaries in 2009 of HK$51.1 million. The resulting basic profit per share was HK$1.48 cents (2009: HK$3.42 cents, or HK$0.84 cents after taking out the exceptional item).
Net cash generated from operating activities amounted to HK$50.5 million compared to HK$59.8 million last year. The net cash position of the Company continued to be strong with a 94% increase at HK$32.5 million (2009: HK$16.7 million). Despite the fact that trade receivables increased by 43.7% to HK$32.7 million (2009: HK$22.2 million), I am pleased to report there was a progressive improvement on collection of debts as 88% of trade receivables were either current or less than 1 month old, compared with 70% at 31 December 2009.
OUTLOOK
The overriding commercial objectives of the Company remain that of strengthening the competitiveness of the operation of our container terminal amongst the industry peers, and expanding the market share of our barging activities. As a result, we intend to re invest the cash generated from operations in continuing to optimize the utilisation of the space of the depot and terminal, replacing old equipment and machinery, and increasing the size of our fleet. There are a further eight 228TEU vessels (corresponding to an aggregate carrying capacity of approximately 21,000 tonnes) under construction and expected to be delivered gradually between now and the end of 2011.
Overall, despite the uncertain world economic conditions and a competitive market, the outlook for the Company is positive, based on strong continued growth in revenues. I am glad to report to you that 2010 was the third consecutive profitable year for the Company. We are confident that Yinggao will continue to build on its long track record of sustainable, profitable growth.
THANKS
I wish to thank the other members of the board and our staff who have worked so hard and so effectively to bring the Company to this point, and also to thank our shareholders for their continuing support and confidence in Yinggao.
Leung Suk Ching, Angela
Chairman
31 May 2011
DIRECTORS' REPORT
The directors submit their report and the financial statements of Yinggao Holdings plc for the year ended 31 December 2010.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were terminal operation and barging service provision. On 23 March 2010, the Group established a non ferrous trading company, Yinggao Resources Limited.
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
A review of the business and future developments is given in the Chairman's statement below.
RISKS AND UNCERTAINITIES
The management of the business and the execution of the Group's strategy are subject to a number of risks.
The key business risks affecting the Group are considered to relate to competition from other shipping agents and employee retention.
Competition
The Group operates in a highly competitive market particularly around price and service availability/quality. This results not only in downward pressure on our margins but also in the risk that we will not meet our customers' expectations. In order to mitigate this risk, management monitors market prices on an ongoing basis so as to keep prices competitive.
Employees
The Group's performance depends largely on regional managers and local staff. The resignation of key individuals and the inability to recruit people with the right experience and skills could adversely impact the Group's results. To mitigate these issues, the Group has implemented schemes linked to the Group's results that are designed to retain key individuals.
KEY PERFORMANCE INDICATORS (KPIs)
There has been significant progress in the year on the Group's overriding objective of revenue growth. The board monitors progress with respect to the Group's strategy by reference to five KPIs.
Performance during the year, together with historical trend data is set out in the following table:
Hot Features
Premium
2010 2009 (Restated)
---------------------------- ----------- ----------------
Growth in sales (%) 164.32% 64.78%
---------------------------- ----------- ----------------
Gross margin (%) 13.64% 29.86%
---------------------------- ----------- ----------------
Net profit margin (%) 7.81% 40.66%
---------------------------- ----------- ----------------
Net current ratio 1.76 times 1.48 times
---------------------------- ----------- ----------------
Return on invested capital
(%) 10.59% 24.13%
---------------------------- ----------- ----------------
DIVIDENDS
The directors are unable to recommend the payment of a dividend (2009: Nil).
DIRECTORS
The following directors have held office since 1 January 2010:
LEUNG Suk Ching, Angela LIU Sheng Rong CHUN Yuet Ming, Jessica (Appointed on 30 September 2010) CHAN Ping Kwan (Resigned on 19 May 2011) David THOMAS FENG Yue Ying
DIRECTORS' INTERESTS IN THE SHARES OF THE COMPANY
The directors who served the Company during the year together with their beneficial interests, including family holdings, in the shares of the Company were as follows:
Ordinary shares
At 1 January 2010(or
At 31 December date of appointment,
2010 if later)
LEUNG Suk Ching, Angela 870,000 870,000
LIU Sheng Rong - -
CHUN Yuet Ming, Jessica(Appointed on - -
30 September 2010)
CHAN Ping Kwan(Resigned on 19 May 2011) - -
David THOMAS - -
FENG Yue Ying - -
DIRECTORS'
REMUNERATION
2010 2009 2009
Pension Pension
Salary costs Total Salary costs Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
LEUNG Suk Ching,
Angela 698 12 710 635 12 647
LIU Sheng Rong 81 - 81 85 - 85
CHUN Yuet Ming,
Jessica(Appointed
on 30 September
2010) 61 1 62 - - -
CHAN Ping
Kwan(Resigned on
19 May 2011) - - - - - -
David THOMAS 242 242 233 233
FENG Yue Ying - - - - - -
1082 13 1,095 953 12 965
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Yinggao Holdings plc support the principles of good corporate governance. The Company has appointed an audit committee, which comprises the two independent non-executive directors, Mr David Thomas and Mr Liu Sheng Rong. The primary duties of the audit committee are to review and supervise the financial reporting and internal control procedures of the Group. Due to the size of the staff of the Group, it has been decided unanimously by the board that the remuneration committee will be dispensed with for the time being and matters involving any changes to the remuneration to the directors or senior employees will be determined by the board as a whole (with no director being involved in the consideration of his own remuneration).
Employees
Group management are committed to training and motivating staff, and offering promotional prospects where possible. Where appropriate, company information is shared with staff, and employees are encouraged to work towards a continual improvement in the Group's performance.
ENVIRONMENT POLICY
The Group is committed to operating in an environmentally responsible manner and endeavours to adopt the best practicable means to reduce or eliminate polluting releases to the environment, or in the disposal of waste products. The Group is committed to complying with environmental legislative requirements.
DIRECTORS' INDEMNITY INSURANCE
The directors have not taken out an insurance policy to cover directors' and officers' liabilities. The Articles of Association of the Company permit the Company to indemnify directors to the extent permitted by the Companies Act.
SUBSTANTIAL INTERESTS
At the date of this report, the Company had been notified of the following substantial interest in the shares of the Company:
Chin Dynasty Foundation - 1,851,776,422 shares in the Company (92.06%) through Keen Lloyd Holdings Limited, a company incorporated in the British Virgin Islands.
CREDITOR PAYMENT POLICY
In order to maintain good relationships with major suppliers, it is the Group's policy to settle payment to creditors within the negotiated credit terms. The Group's creditor payment days in 2010 have been lengthened to approximately 13 days (2009: 12 days).
FINANCIAL INSTRUMENTS
Disclosures in respect of the Group's financial risk objectives and policies are set out in note 26 to the financial statements.
STATEMENT AS TO DISCLOSURE INFORMATION TO THE AUDITOR
The directors who were in office on the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the auditor is unaware. Each of the directors have confirmed that they have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.
By order of the board
Leung Suk Ching, Angela
Chairman
31 May 2011
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN THE PREPARATION OF FINANCIAL STATEMENTS
The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare group and company Financial Statements for each financial year. The directors are required by the AIM Rules of the London Stock Exchange to prepare group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and have elected under Company law to prepare the company financial statements in accordance with IFRS as adopted by the EU.
The financial statements are required by law and IFRS adopted by the EU to present fairly the financial position of the group and the company and the financial performance of the group. The Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the company and of the profit or loss of the group for that period.
In preparing the group and company financial statements, the directors are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and estimates that are reasonable and prudent;
c. state whether they have been prepared in accordance with IFRSs adopted by the EU;
d. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF YINGGAO HOLDINGS PLC
We have audited the financial statements which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated and parent company balance sheets, the group and parent company statements of changes in equity and the group and company statements of cash flows. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As more fully explained in the Directors' Responsibilities Statement set out below, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb.scope/private.cfm.
Opinion on the financial statements
In our opinion;
-- the financial statements give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2010 and of the group's profit for the year then ended;
-- the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
-- the parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the Companies Act 2006; and
-- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
-- the parent company financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
DAVID CLARK (Senior Statutory Auditor)
for and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London EC4A 4AB
31 May 2011
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
2010 2009
(Restated )
Notes HK$'000 HK$'000
Revenue 5 482,016 182,363
Cost of sales 5 (416,284) (127,909)
-------- ---------
Gross profit 65,732 54,454
Other income 6 3,290 3,087
Gain on disposals of subsidiaries 15 - 51,119
Administrative expenses 7(c) (24,313) (30,750)
Profit from operations 44,709 77,910
Finance costs 7(a) (283) (622)
-------- ---------
Profit before taxation 7 44,426 77,288
Taxation 8 (6,780) (3,220)
-------- ---------
Profit for the year 37,646 74,068
======== =========
Attributable to :
Owners of the parent 29,339 67,646
Non-controlling interests 8,307 6,422
-------- ---------
37,646 74,068
======== =========
HK cents HK cents
Earnings per share
- Basic and diluted 11 1.48 3.42
======== =========
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
2010 2009
(Restated )
HK$'000 HK$'000
Profit for the year 37,646 74,068
Other comprehensive income for the year
Exchange differences arising on translation
of foreign operations 11,039 (23)
------- ---------
Total comprehensive income for the year 48,685 74,045
======= =========
Total comprehensive income attributable
to:
Owners of the parent 36,531 67,623
Non-controlling interests 12,154 6,422
------- ---------
48,685 74,045
======= =========
BALANCE SHEETS
AS AT 31 DECEMBER 2010
(Expressed in Hong Kong dollars) Company Registration No.: 1366078
Group Company
2010 2009 2008 2010 2009 2008
(Restated) (Restated) (Restated) (Restated)
Notes HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
NON-CURRENT ASSETS
Goodwill 12 14,168 14,168 14,168 - - -
Property, plant and
equipment 13 292,308 275,571 238,779 - - -
Investments in
subsidiaries 14 - - - 406,602 227,297 144,834
Available-for-sale
investment 16 - - 94 - - -
------- ---------- ---------- -------- ---------- ----------
306,476 289,739 253,041 406,602 227,297 144,834
------- ---------- ---------- -------- ---------- ----------
CURRENT ASSETS
Inventories 17 2,078 1,200 1,058 - - -
Trade and other
receivables 18 105,761 63,343 62,337 5 5 12
Amounts due from
subsidiaries - - - 5,536 2,270 926
Cash and cash
equivalents 19 32,563 16,726 6,024 181 83 12
------- ---------- ---------- -------- ---------- ----------
140,402 81,269 69,419 5,722 2,358 950
------- ---------- ---------- -------- ---------- ----------
CURRENT LIABILITIES
Trade and other
payables 20 67,361 41,061 30,174 634 714 241
Amounts due to
subsidiaries - - - 21,730 19,463 14,791
Obligations under
finance leases 21 4,476 6,714 4,624 - - -
Taxation 8,051 7,077 5,370 - - -
------- ---------- ---------- -------- ---------- ----------
79,888 54,852 40,168 22,364 20,177 15,032
------- ---------- ---------- -------- ---------- ----------
NET CURRENT
ASSETS/(LIABILITIES) 60,514 26,417 29,251 (16,642) (17,819) (14,082)
TOTAL ASSETS LESS
CURRENT
LIABILITIES 366,990 316,156 282,292 389,960 209,478 130,752
------- ---------- ---------- -------- ---------- ----------
NON CURRENT
LIABILITIES
Bank loan 22 - - 14,790 - - -
Obligations under
finance leases 21 1,289 3,155 2,545 - - -
Loans from fellow
investors in
subsidiaries 23 6,946 5,544 6,075 - - -
Deferred tax
liabilities 24 3,135 522 - - - -
------- ---------- ---------- -------- ---------- ----------
11,370 9,221 23,410 - - -
------- ---------- ---------- -------- ---------- ----------
NET ASSETS 355,620 306,935 258,882 389,960 209,478 130,752
======= ========== ========== ======== ========== ==========
EQUITY
Share capital 25(a) 115,224 115,224 115,224 115,224 115,224 115,224
Reserves 150,458 113,927 42,675 274,736 94,254 15,528
------- ---------- ---------- -------- ---------- ----------
Total equity
attributable to
owners
of the parent 265,682 229,151 157,899 389,960 209,478 130,752
Non-controlling
interests 89,938 77,784 100,983 - - -
------- ---------- ---------- -------- ---------- ----------
TOTAL EQUITY 355,620 306,935 258,882 389,960 209,478 130,752
======= ========== ========== ======== ========== ==========
The consolidated financial statements below were approved and authorised for issue by the board of directors on 31 May 2011, and signed on its on behalf by:
Leung Suk Ching, Angela Feng Yue Ying
Director Director
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
Attributable to owners of the parent
---------------------------------------------------------------------------------
(Note i) (Note
Statutory ii)
Share Share surplus Merger Exchange Accumulated Non-controlling Total
capital premium reserve reserve reserve losses Total interests equity
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Balance at 1 January
2008 (Restated) 115,224 120,942 12,980 201,104 41,357 (344,002) 147,605 92,877 240,482
Comprehensive income
Profit for the year - - - - - 2,799 2,799 5,508 8,307
Other comprehensive
income
Exchange differences
arising on translation
of foreign operations - - 202 - 7,293 - 7,495 2,598 10,093
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- --------
Total comprehensive
income for the year - - 202 - 7,293 2,799 10,294 8,106 18,400
Transactions with
owners
Transfer of statutory
surplus reserve - - (1,229) - - 1,229 - - -
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- --------
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
Attributable to owners of the parent
---------------------------------------------------------------------------------
(Note i) (Note
Statutory ii)
Share Share surplus Merger Exchange Accumulated Non-controlling Total
capital premium reserve reserve reserve losses Total interests equity
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Balance at 31 December
2008 and 1 January
2009 (Restated) 115,224 120,942 11,953 201,104 48,650 (339,974) 157,899 100,983 258,882
Comprehensive income
Profit for the year - - - - - 67,646 67,646 6,422 74,068
Other comprehensive
income
Exchange differences
arising on
translation
of foreign operations - - - - (23) - (23) - (23)
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- ---------
Total comprehensive
income for the year - - - - (23) 67,646 67,623 6,422 74,045
Transactions with
owners
Disposals of
subsidiaries - - (8,516) - 3,629 8,516 3,629 (29,621) (25,992)
Transfer of statutory
surplus reserve - - 912 - - (912) - - -
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- ---------
- - (7,604) - 3,629 7,604 3,629 (29,621) (25,992)
Balance at 31 December
2009
and 1 January 2010
(Restated) 115,224 120,942 4,349 201,104 52,256 (264,724) 229,151 77,784 306,935
Comprehensive income
Profit for the year - - - - - 29,339 29,339 8,307 37,646
Other comprehensive
income
Exchange differences
arising on
translation
of foreign operations - - - - 7,192 - 7,192 3,847 11,039
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- ---------
Total comprehensive
income for the year - - - - 7,192 29,339 36,531 12,154 48,685
Transactions with
owners
Transfer of statutory
surplus reserve - - 1,421 - - (1,421) - - -
-------- -------- ---------- -------- --------- ------------ -------------- ---------------- ---------
- - - - - - - - -
Balance at 31 December
2010 115,224 120,942 5,770 201,104 59,448 (236,806) 265,682 89,938 355,620
======== ======== ========== ======== ========= ============ ============== ================ =========
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
(Note ii)
Share Share Merger Exchange Accumulated
capital premium reserve reserve losses Total
Company HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Balance at 1
January 2008
(Restated) 115,224 120,942 201,104 - (268,790) 168,480
Comprehensive
income
Loss for the
year - - - - (43,172) (43,172)
Other
comprehensive
income
Exchange
differences
arising on
translation - - - 5,444 - 5,444
-------- -------- ---------- --------- ------------ ---------
Total
comprehensive
income for
the year - - - 5,444 (43,172) (37,728)
-------- -------- ---------- --------- ------------ ---------
Balance at 31
December 2008
and 1 January
2009
(Restated) 115,224 120,942 201,104 5,444 (311,962) 130,752
Comprehensive
income
Profit for the
year - - - - 67,574 67,574
Other
comprehensive
income
Exchange
differences
arising on
translation - - - 11,152 - 11,152
-------- -------- ---------- --------- ------------ ---------
Total
comprehensive
income for
the year - - - 11,152 67,574 78,726
-------- -------- ---------- --------- ------------ ---------
Balance at 31
December 2009
and 1 January
2010
(Restated) 115,224 120,942 201,104 16,596 (244,388) 209,478
Comprehensive
income
Profit for the
year - - - - 188,199 188,199
Other
comprehensive
income
Exchange
differences
arising on
translation - - - (7,717) - (7,717)
-------- -------- ---------- --------- ------------ ---------
Total
comprehensive
income for
the year - - - (7,717) 188,199 180,482)
-------- -------- ---------- --------- ------------ ---------
Balance at 31
December
2010 115,224 120,942 201,104 8,879 (56,189) 389,960
======== ======== ========== ========= ============ =========
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
Notes:
(i) Statutory surplus reserve:
In accordance with the law of the People's Republic of China (the "PRC") and the articles of association of certain of the Company's subsidiaries, directors of these subsidiaries may at their discretion make appropriations to a statutory surplus reserve equivalent to 10% of the subsidiaries' net profits until the balance reached 50% of the registered capital of that subsidiary. Distribution of profits to shareholders can only be made after such appropriations.
The statutory surplus reserve may be used to reduce any losses incurred or be capitalised as paid up capital. The statutory surplus reserve is not available for distribution.
(ii) The merger reserve represents the difference between the nominal value of shares of the subsidiary company acquired, and the nominal value of the Company's shares issued in 2002.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
2010 2009
(Restated)
Group Notes HK$'000 HK$'000
Cash flow from operating activities
Profit before taxation 44,426 77,288
Adjustments for:
- Finance costs 7(a) 283 622
- Impairment loss of property, plant
and equipment 7(c) 4,588 -
- (Gain)/loss on disposals of property,
plant and
equipment 7(c) (546) 1,115
- Exchange difference 7(c) (3,744) 2,632
- Depreciation 7(d) 19,697 13,740
- Gain on disposals of subsidiaries 15 - (51,119)
Operating cash flow before working
capital changes 64,704 44,278
Increase in inventories (878) (142)
Increase in trade and other receivables (35,556) (2,656)
Increase in trade and other payables 25,430 19,266
------- ----------
Net cash flow generated from operations 53,700 60,746
Income tax paid (3,193) (984)
------- ----------
Net cash generated from operating
activities 50,507 59,762
------- ----------
Cash flows from investing activities
Purchases of property, plant and equipment (40,274) (44,571)
Proceeds from disposals of property,
plant and equipment 14,686 2,510
Proceeds from disposal of
available-for-sale investment - 93
Disposals of subsidiaries 15 - (15)
Net cash used in investing activities (25,588) (41,983)
------- ----------
Cash flows from financing activities
Repayments on obligations under finance
leases (9,041) (6,463)
Interest paid (283) (622)
Net cash used in financing activities (9,324) (7,085)
------- ----------
Net increase in cash and cash equivalents 15,595 10,694
Cash and cash equivalents at 1 January 16,726 6,024
Effect of foreign exchange rate changes 242 8
------- ----------
Cash and cash equivalents at 31 December 32,563 16,726
======= ==========
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
(Expressed in Hong Kong dollars)
2010 2009
(Restated )
Company HK$'000 HK$'000
Cash flow from operating activities
Profit for the year 188,199 67,574
Adjustments for:
- Reversal of impairment on investments
in subsidiaries (187,650) (69,652 )
- Exchange difference (58) 161
--------- ---------
Operating cash inflow/(outflow) before working
capital changes 491 (1,917)
Decrease in trade and other receivables - 7
Increase in amounts due from subsidiaries (3,338) (1,244 )
(Decrease)/increase in trade and other
payables (81) 473
Increase in amounts due to subsidiaries 3,026 2,752
--------- ---------
Net increase in cash and cash equivalents 98 71
Cash and cash equivalents at 1 January 83 12
--------- ---------
Cash and cash equivalents at 31 December 181 83
========= =========
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2010
(Expressed in Hong Kong dollars)
1. General information
The Company is a public limited company incorporated and domiciled in the United Kingdom. The registered office of the Company is located at 6(th) Floor, 25 Farringdon Street, London EC4A 4AB. Its principal places of business are in Hong Kong and the People's Republic of China ("PRC").
Following the annual general meeting of the Company held on 7 August 2009, the Company's name was changed to Yinggao Holdings plc.
The principal activities of the Company and its subsidiaries (hereinafter collectively referred to as the "Group") are terminal services, barging services and non-ferrous metal trading.
The Company's shares were admitted to trading on the AIM Market of the London Stock Exchange. These consolidated financial statements were reviewed by the Audit Committee and approved for issue by the board of directors on 31 May 2011.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation and statement of compliance
The consolidated financial statements have been prepared under the historical cost convention.
The consolidated financial statements are presented in Hong Kong dollars ("HKD"), rounded to the nearest thousand, which is the presentation currency of the Group.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRSs"), Interpretations ("IFRICs") and the Companies Act 2006 applicable to Companies Reporting under IFRSs.
(b) Subsidiaries and non-controlling interests
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.
An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions and any unrealised profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.
Non-controlling interests (previously known as "minority interests") represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in respect of which the Group has not agreed any additional terms with the holders of those interests which would result in the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. For each business combination, the Group can elect to measure any non-controlling interests either at fair value or at their proportionate share of the subsidiary's net identifiable assets.
Non-controlling interests are presented in the consolidated balance sheet within equity, separately from equity attributable to the equity shareholders of the Company. Non-controlling interests in the results of the Group are presented on the face of the consolidated statement of comprehensive income as an allocation of the total comprehensive income for the year between non-controlling interests and the equity shareholders of the Company. Loans from holders of non-controlling interests and other contractual obligations towards these holders are presented as financial liabilities in the consolidated balance sheet.
Changes in the Group's interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss is recognised.
When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial asset or, when appropriate, the cost on initial recognition of an investment in an associate or jointly controlled entity.
In the Company's balance sheet, an investment in a subsidiary is stated at cost less any impairment losses, unless the investment is classified as held for sale.
(c) Goodwill
Goodwill arising on an acquisition of a business is carried at cost less any accumulated impairment losses.
For the purposes of impairment testing, goodwill arising from an acquisition is allocated to each of the relevant cash-generating units, that are expected to benefit from the synergies of the acquisition. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, and whenever there is an indication that the unit may be impaired. For goodwill arising on an acquisition in a financial year, the cash-generating unit to which goodwill has been allocated is tested for impairment before the end of that financial year. When the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated to reduce the carrying amount of any goodwill allocated to the unit first, and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill capitalised is included in the determination of the amount of profit or loss on disposal.
(d) Property, plant and equipment
Expenditure on additions and improvements is capitalised as incurred. Non-current assets are included at historical cost less accumulated depreciation and any impairment losses.
Property, plant and equipment, other than construction in progress, are depreciated over their estimated useful lives on a straight line basis. The following annual rates of depreciation have been used.
Land and buildings 20-30 years
Plant and machinery 10-20 years
Furniture, fixtures and equipment 5-10 years
Motor vehicles 5-10 years
Vessels 10 years
Construction in progress is stated at cost less impairment. Cost comprises the direct cost of construction.
Both the useful life of an asset and its residual value, if any, are reviewed annually.
The carrying amounts of other property, plant and equipment are reviewed for indications of impairment at each balance sheet date. An impairment loss is recognised to the extent that the carrying amount of an asset, or the cash-generating unit to which it belongs, is more than its recoverable amount. The recoverable amount of an asset, or of the cash generating unit to which it belongs, is the greater of its net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of time value of money and the risks specific to the assets. An impairment loss is reversed if there has been a favourable change in estimates used to determine the recoverable amount.
Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal.
(e) Leased assets
An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.
(i) Classification of assets leased to the Group
Assets that are held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases, with the exception that land held for own use under an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also clearly held under an operating lease. For these purposes, the inception of the lease is the time that the lease was first entered into by the Group, or taken over from the previous lessee.
(ii) Assets acquired under finance leases
Where the Groupacquires the use of assets under finance leases, the amounts representing the fair value of the leased asset, or, if lower, the present value of the minimum lease payments, of such assets are included in property, plant and equipment and the corresponding liabilities, net of finance charges, are recorded as obligations under finance leases. Depreciation is provided at rates which write off the cost of the assets over the term of the relevant lease or, where it is likely the Group will obtain ownership of the asset, the life of the asset, as set out in note 2(d). Impairment losses are accounted for in accordance with the accounting policy as set out in note 2(d). Finance charges implicit in the lease payments are charged to profit or loss over the period of the leases so as to produce an approximately constant periodic rate of charge on the remaining balance of the obligations for each accounting period. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.
(iii) Operating lease charges
Where the Group has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.
(f) Available-for-sale investments
Investments held for non-trading purposes are classified as available-for-sale investments. At each balance sheet date the fair value is remeasured, with resultant gain or loss being recognised directly in equity, except foreign exchange gains and losses in respect of monetary items such as debt securities which are recognised directly in profit or loss. Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in profit or loss. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in profit or loss.
When there is objective evidence that available-for-sale investments are impaired, the cumulative loss that has been recognised directly in equity is removed from equity and is recognised in profit or loss. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost (net of any principal repayment and amortisation) and current fair value, less any impairment loss on that asset previously recognised in profit or loss.
Impairment losses recognised in profit or loss in respect of available-for-sale investments are not reversed through profit or loss. Any subsequent increase in the fair value of such assets is recognised directly in equity.
Impairment losses in respect of available-for-sale debt investments are reversed if the subsequent increase in fair value can be objectively related to an event occurring after the impairment loss was recognised. Reversals of impairment losses in such circumstances are recognised in profit or loss.
(g) Inventories
Inventories are carried at the lower of cost and net realisable value.
Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.
(h) Trade and other receivables
Trade and other receivables are initially recognised at fair value and thereafter stated at amortised cost less impairment losses for bad and doubtful receivables, except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less impairment losses for bad and doubtful debts.
Impairment losses for bad and doubtful debts are measured as the difference between the carrying amount of the financial asset and the estimated future cash flows, discounted where the effect of discounting is material.
(i) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.
(j) Trade and other payables
Trade and other payables are initially recognised at fair value. Trade and other payables are subsequently stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.
(k) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between the amount initially recognised and redemption value being recognised in profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.
(l) Revenue
Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as follows:
Service income comprises the value of sales in the year in respect of the operation of the terminal and provision of barging services rendered to the customers which is taken to be the point in time when the customer has accepted the services and the related risks and rewards been transferred.
(m) Employee benefits
(i) Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.
(ii) The employees of the subsidiaries in the PRC are members of the state-sponsored central retirement benefit scheme operated by the local municipal government in the PRC. The subsidiaries are required to contribute, based on a certain percentage of the payroll costs, to the central retirement benefit scheme to fund the benefits. The only obligation of the group with respect to the retirement benefit scheme is to make the required contributions under the scheme and such contributions are charged to the consolidated income statement as they become payable in accordance with the rules of the pension scheme.
(n) Translation of foreign currencies
(i) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The consolidated financial statements are presented in Hong Kong dollars as this is felt to be appropriate when taking into account the location of the Group's operation. This is different from the functional currency of the Company which is the Pound Sterling.
(ii) Transactions and balances
Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are recognised in profit or loss.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair value was determined.
(iii) Group companies
The results of the subsidiary company in the PRC are translated into HKD at the exchange rates approximating the foreign exchange rates ruling at the dates of the transactions. Balance sheet items are translated into HKD at the foreign exchange rates ruling at the balance sheet date. The resulting exchange differences are recognised directly in a separate component of equity.
On disposal of a foreign operation, the cumulative amount of the exchange differences recognised in equity which relate to that foreign operation is included in the calculation of the profit or loss on disposal.
(o) Income tax
Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly recognised in equity respectively.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.
Apart from differences which arise on initial recognition of assets and liabilities, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised.
The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.
(p) Provisions and contingent liabilities
Provisions are recognised for other liabilities of uncertain timing or amount when the Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made.
Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
(q) Related parties
For the purposes of these consolidated financial statements, a party is considered to be related to the Group if:
(i) the party has the ability, directly or indirectly through one or more intermediaries, to control the Group or exercise significant influence over the Group in making financial and operating policy decisions, or has joint control over the Group;
(ii) the Group and the party are subject to common control;
(iii) the party is an associate of the Group or a joint venture in which the Group is a venturer;
(iv) the party is a member of key management personnel of the Group or the Group's parent, or a close family member of such an individual, or is an entity under the control, joint control or significant influence of such individuals;
(v) the party is a close family member of a party referred to in (i) or is an entity under the control, joint control or significant influence of such individuals; or
(vi) the party is a post-employment benefit plan which is for the benefit of employees of the Group or of any entity that is a related party of the Group.
Close family members of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.
(r) Going concern
The Group's business activities, together with the factors likely to affect its future performance and position are set out in the Chairman's statement. Note 26 to the financial statements sets out the Group's financial risk management policies, and its exposure to credit risk and liquidity risk.
The Directors have assessed the financial risks facing the business, and compared this risk assessment to the net current assets position. The Directors have also reviewed relationships with key customers and are satisfied that the appropriate contracts and contingency plans are in place. The directors have prepared income statement and cash flow forecasts to assess whether the Group has adequate resources for the foreseeable future.
The directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the consolidated financial statements.
3. CHANGES IN ACCOUNTING POLICIES
(a) Change in presentation currency
During the year ended 31 December 2010, the Group changed its presentation currency from the United States dollars to Hong Kong dollars. This change in accounting policy has been applied retrospectively. As a result, the comparative figures in these financial statements are translated from the United States dollars to Hong Kong dollars using the closing rate at the relevant balance sheet date for balance sheet items, average rates for the relevant period for income statement, statement of comprehensive income and cash flow statement items and historical rates for the items in the statement of changes in equity.
The change in presentation currency has no significant impact on the financial position of the Group as at 31 December 2010 and 2009, or the results and cash flows for the years ended 31 December 2010 and 2009.
(b) Application of new and revised IFRSs
The International Accounting Standards Board ("IASB") has issued certain revised IFRSs, a number of amendments to IFRSs and new IFRICs that are first effective for the current accounting period of the Group and the Company. Of these, the following developments are relevant to the Group's financial statements:
- IFRS 3 (revised 2008), Business combinations
- Amendments to IAS 27, Consolidated and separate financial statements
- Amendments to IAS 39, Financial instruments: Recognition and measurement - eligible hedged items
- Improvements to IFRSs (2009)
The amendments to IAS 39 has had no material impact on the Group's financial statements as the amendments' conclusion was consistent with policies already adopted by the Group. The other developments resulted in changes in accounting policy but none of these changes in policy have a material impact on the current or comparative periods, for the following reasons:
- The impact of the majority of the revisions to IFRS 3 and IAS 27 have not yet had a material effect on the Group's financial statements as these changes will first be effective as and when the Group enters into a relevant transaction (for example, a business combination or a disposal of a subsidiary) and there is no requirement to restate the amounts recorded in respect of previous such transactions.
- The impact of the amendments to IFRS 3 (in respect of recognition of acquiree's deferred tax assets) and IAS 27 (in respect of allocation of losses to non-controlling interests (previously known as "minority interests") in excess of their equity interests) have had no material impact as there is no requirement to restate amounts recorded in previous periods and no such deferred tax assets or losses arose in the current period.
Further details of these changes in accounting policy are as follows:
- As a result of the adoption of IFRS 3 (revised 2008), any business combination acquired on or after 1 January 2010 will be recognised in accordance with the new requirements and detailed guidance contained in IFRS 3 (revised 2008). These include the following changes in accounting policies:
- Transaction costs that the Group incurs in connection with a business combination, such as finder's fees, legal fees, due diligence fees, and other professional and consulting fees, will be expensed as incurred, whereas previously they were accounted for as part of the cost of the business combination and therefore impacted the amount of goodwill recognised.
- If the Group holds interests in the acquiree immediately prior to obtaining control, these interests will be treated as if disposed of and re-acquired at fair value on the date of obtaining control. Previously, the step-up approach would have been applied, whereby goodwill was computed as if accumulated at each stage of the acquisition.
- Contingent consideration will be measured at fair value at the acquisition date. Subsequent changes in the measurement of that contingent consideration unrelated to facts and circumstances that existed at the acquisition date will be recognised in profit or loss, whereas previously these changes were recognised as an adjustment to the cost of the business combination and therefore impacted the amount of goodwill recognised.
- If the acquiree has accumulated tax losses or other temporary deductible differences and these fail to meet the recognition criteria for deferred tax assets at the date of acquisition, then any subsequent recognition of these assets will be recognised in profit or loss, rather than as an adjustment to goodwill as was previously the policy.
- In addition to the Group's existing policy of measuring the non-controlling interests in the acquiree at the non-controlling interest's proportionate share of the acquiree's net identifiable assets, in future the Group may elect, on a transaction by transaction basis, to measure the non-controlling interest at fair value.
In accordance with the transitional provisions in IFRS 3 (revised 2008), these new accounting policies will be applied prospectively to any business combinations in the current or future periods. The new policy in respect of recognition in the movement of deferred tax assets will also be applied prospectively to accumulated tax losses and other temporary deductible differences acquired in previous business combinations. No adjustments have been made to the carrying values of assets and liabilities that arose from business combinations whose acquisition dates preceded the application of this revised standard.
- As a result of the adoption of IAS 27 (amended 2008), the following changes in policies will be applied as from 1 January 2010:
- If the Group acquires an additional interest in a non-wholly owned subsidiary, the transaction will be accounted for as a transaction with equity shareholders (the non-controlling interests) in their capacity as owners and therefore no goodwill will be recognised as a result of such transactions. Similarly, if the Group disposes of part of its interest in a subsidiary but still retains control, this transaction will also be accounted for as a transaction with equity shareholders (the non-controlling interests) in their capacity as owners and therefore no profit or loss will be recognised as a result of such transactions. Previously the Group treated such transactions as step-up transactions and partial disposals, respectively.
- If the Group loses control of a subsidiary, the transaction will be accounted for as a disposal of the entire interest in that subsidiary, with any remaining interest retained by the Group being recognised at fair value as if reacquired. In addition, as a result of the adoption of the amendment to IFRS 5, if at the balance sheet date the Group has the intention to dispose of a controlling interest in a subsidiary, the entire interest in that subsidiary will be classified as held for sale (assuming that the held for sale criteria in IFRS 5 are met) irrespective of the extent to which the Group will retain an interest. Previously such transactions were treated as partial disposals.
In accordance with the transitional provisions in IAS 27, these new accounting policies will be applied prospectively to transactions in current or future periods, therefore previous periods have not been restated.
- In order to be consistent with the above amendments to IFRS 3 and IAS 27, and as a result of amendments to IAS 28, Investments in associates, the following policies will be applied as from 1 January 2010:
- If the Group holds interests in the acquiree immediately prior to obtaining significant influence, these interests will be treated as if disposed of and reacquired at fair value on the date of obtaining significant influence. Previously, the step-up approach would have been applied, whereby goodwill was computed as if accumulated at each stage of the acquisition.
- If the Group loses significant influence, the transaction will be accounted for as a disposal of the entire interest in that investee, with any remaining interest being recognised at fair value as if reacquired. Previously such transactions were treated as partial disposals.
Consistent with the transitional provisions in IFRS 3 and IAS 27, these new accounting policies will be applied prospectively to transactions in current or future periods, therefore previous periods have not been restated.
Other changes in accounting policies which are relevant to the Group's financial statements are as follows:
- As a result of the amendments to IAS 27, as from 1 January 2010, any losses incurred by a non-wholly owned subsidiary will be allocated between the controlling and non-controlling interests in proportion to their interests in that entity, even if this results in a deficit balance within consolidated equity being attributed to the non-controlling interests. Previously, if the allocation of losses to the non-controlling interests would have resulted in a deficit balance, the losses were only allocated to the non-controlling interests if the non-controlling interests were under a binding obligation to make good the losses. In accordance with the transitional provisions in IAS 27, this new accounting policy is being applied prospectively and therefore previous periods have not been restated.
- As a result of the amendments to IAS 17, Leases, arising from the Improvements to IFRSs (2009) omnibus standard, the Group has re-evaluated the classification of its interests in leasehold land as to whether, in the Group's judgement, the lease transfers substantially all the risks and rewards of ownership of the land such that the Group is in a position economically similar to that of a purchaser. The Group has concluded that the classification of such leases as finance leases continues to be appropriate.
Up to the date of issue of these financial statements, the IASB has issued a number of amendments and interpretations and one new standard which are not yet effective for the year ended 31 December 2010 and which have not been adopted in these financial statements. These include the following which may be relevant to the Group:
Effective for accounting
periods beginning on or
after
Revised IAS 24, Related party disclosures 1 January 2011
IFRS 9, Financial instruments 1 January 2013
Improvements to IFRSs (2010) 1 July 2010 or 1 January
2011
Amendments to IAS 12, Income taxes 1 January 2012
The Group is in the process of assessing the impact of these amendments, new standards and new interpretations is expected to be in the period of initial application, but is not yet in a position to state whether these amendments, new standards and interpretations would have a significant impact on the Group's or the Company's results of operations and financial position.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are currently evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Apart from information disclosed elsewhere in these financial statements, the following disclosures summaries : (1) estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year and (2) significant judgements made in the process of applying the Group's accounting policies.
(i) Income taxes
The Group is subject to income taxes in the PRC, Hong Kong and the United Kingdom. Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
(ii) Provision for doubtful receivables
The Group provides for doubtful receivables based on an assessment of the collectibility of trade receivables. Provisions for doubtful receivables are applied to trade and other receivables where events or changes in circumstances indicate that the balance may not be collectible. The identification of doubtful receivables requires the use of judgments and estimates. Where the expectation is different from the original estimates, such difference will impact carrying value of receivables and doubtful debt expenses in the period in which such estimate has been changed.
5. REVENUE AND SEGMENT REPORTING
The principal activities of the Group are terminal services, barging services and non ferrous metal trading together with other related services including sea freight forwarding and barge hire.
(a) Segment results, assets and liabilities
The Group determines its operating segments based on information reported to the chief operating decision maker, which is focused on the category of customer for each type of goods and services. The principal categories of customers for these goods and services are terminal services, barging services, and non ferrous metal trading.
Information regarding the above segments is reported below.
non ferrous
Terminal services Barging services metal trading Other trading Unallocated Total
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
(Restated) (Restated) (Restated) (Restated) (Restated) (Restated)
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Revenue from
external
customers 124,362 112,520 83,374 69,843 274,280 - - - - - 482,016 182,363
========= =========== ========= =========== ========== =========== ======== =========== ======== =========== ========== ===========
Reportable
segment
revenue 124,362 112,520 83,374 69,843 274,280 - - - - - 482,016 182,363
Reportable
segment
cost of sales (88,076) (75,407) (57,403) (52,502) (270,805) - - - - (416,284) (127,909)
--------- ----------- --------- ----------- ---------- ----------- -------- ----------- -------- ----------- ---------- -----------
Reportable
segment
gross profit 36,286 37,113 25,971 17,341 3,475 - - - - - 65,732 54,454
========= =========== ========= =========== ========== =========== ======== =========== ======== =========== ========== ===========
Reportable
segment
profit/(loss) 29,773 20,692 17,182 10,057 3,458 - (717) (623) (4,987) (3,335) 44,709 26,791
Finance costs (272) (605) (11) (17) - - - - - - (283) (622)
Taxation (3,477) (2,694) (2,730) (526) (573) - - - - - (6,780) (3,220)
--------- ----------- --------- ----------- ---------- ----------- -------- ----------- -------- -----------
26,024 17,393 14,441 9,514 2,885 - (717) (623) (4,987) (3,335) 37,646 22,949
========= =========== ========= =========== ========== =========== ======== =========== ======== ===========
Gain on
disposals of
subsidiaries
(note 15) - 51,119
---------- -----------
Profit for the
year 37,646 74,068
========== ===========
Group
Reportable
segment
assets 354,812 317,386 58,041 30,124 22,090 - 448 239 11,487 23,259 446,878 371,008
========= =========== ========= =========== ========== =========== ======== =========== ======== =========== ========== ===========
Reportable
segment
liabilities (54,191) (46,545) (11,875) (9,822) (19,186) - (2,776) (1,768) (3,230) (5,938) (91,258) (64,073)
========= =========== ========= =========== ========== =========== ======== =========== ======== =========== ========== ===========
For the purposes of monitoring segment performance and allocating resources between segments:
-- all assets are allocated to reportable segments with the exception of unallocated corporate assets. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments; and
-- all liabilities are allocated to reportable segments with the exception of unallocated corporate liabilities. Liabilities for which reportable segments are jointly liable are allocated in proportion to segment assets.
(b) Other information
non ferrous
Terminal services Barging services metal trading Other trading Unallocated Total
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
(Restated) (Restated) (Restated) (Restated) (Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Capital
expenditure 29,361 42,976 15,503 11,123 - - 37 8 - - 44,901 54,107
Depreciation 15,095 10,882 3,876 503 - - 11 - 715 2,355 19,697 13,740
Loss/(gain)
on disposals
of
property,
plant and
equipment - 1,115 (546) - - - - - - - (546) 1,115
======= ========== ======= ========== ======= ========== ======= ========== ======= ========== ======= ==========
(c) Geographic information
The following table sets out information about the geographical location of (i) the Group's revenue from external customers and (ii) the Group's property, plant and equipment and goodwill ("specified non-current assets"). The geographical locations of customers are based on the locations at which the services are provided or the goods delivered. The geographical locations of the specified non-current assets are based on the physical locations of the assets, in the case of property, plant and equipment and the locations of the operations to which they are allocated, in the case of goodwill.
Revenue from Specified
external customers non-current assets
2010 2009 2010 2009
(Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000
Hong Kong 357,654 69,843 28,830 23,714
People's Republic of
China 124,362 112,520 277,646 266,025
482,016 182,363 306,476 289,739
========= =========== ========= ===========
(d) Information about major customers
For the year ended 31 December 2010, there was one customer which accounted for over 10% of total revenue with revenue of HK$274,280,000 relating to the non ferrous metal trading segment.
For the year ended 31 December 2009, there was one customer which accounted for over 10% of total revenue with revenue of HK$43,169,000 relating to the barging services segment.
6. OTHER INCOME
2010 2009
(Restated)
HK$'000 HK$'000
Bad debts recovered on other receivables 3,262 3,026
Others 28 61
------- ----------
3,290 3,087
======= ==========
7. PROFIT BEFORE TAXATION
Profit before taxation is stated after charging/(crediting):
2010 2009
(Restated)
HK$'000 HK$'000
(a) Finance costs
Interest on finance leases 283 622
======= ==========
(b) Staff costs (including directors'
remuneration)
Wages included in costs of sales 23,748 14,500
------ ------
Salaries 7,700 5,933
Other pension costs 216 292
Other staff welfare 77 107
Social security costs 22 30
------ ------
Staff costs included in administrative
expenses 8,015 6,362
------ ------
31,763 20,862
====== ======
2010 2009
Number of Number of
staff staff
--------- ----------
The average monthly number of persons
(including
directors) employed by the Group during
the year was:
Management and administration 48 42
Sales and distribution 16 18
Operations 473 421
--------- ----------
537 481
========= ==========
2010 2009
(Restated)
HK$'000 HK$'000
(c) Administrative expenses
Fees payable to Baker Tilly HK Audit LLP
for the statutory audit of the parent
and consolidated annual financial
statements 303 270
Fees payable to associates of the
Company's auditor for the statutory
audit of the company's subsidiaries 373 332
--------- ----------
676 602
Depreciation of property, plant and
equipment 3,405 5,229
Impairment loss of property, plant and
equipment 4,588 -
Staff costs 8,015 6,362
Rentals of land and buildings 1,378 1,436
Bad debt expenses 63 2,363
Travelling, entertainment and general
office expenses 5,693 6,583
(Gain)/loss on disposal of property,
plant and equipment (546) 1,115
Net exchange (gains)/losses (3,744) 2,632
Other administrative costs 4,785 4,428
--------- ----------
24,313 30,750
========= ==========
2010 2009
(Restated)
HK$'000 HK$'000
(d) Other items
Cost of inventories recognised as an
expense 270,805 -
Depreciation of property, plant and
equipment 19,697 13,740
Rentals under operating leases
- land and buildings 1,378 1,436
- barges and containers 15,262 5,614
========= ==========
8. TAXATION
The amount of income tax expense charged to the consolidated income statement represents:
2010 2009
(Restated)
HK$'000 HK$'000
Current tax:
- overseas tax for the year 4,167 2,698
------- ----------
Deferred tax (note 24):
- current year 2,386 522
- previous years 227 -
------- ----------
2,613 522
6,780 3,220
======= ==========
The actual tax expense can be reconciled to the profit before taxation in the consolidated income statement as follows:
2010 2009
(Restated)
HK$'000 HK$'000
Profit before taxation 44,426 77,288
------- ----------
Profit before taxation at the standard
rate of corporation
tax in the UK of 28% (2009: 28%) 12,439 21,640
Effects of:
Different tax rates on overseas earnings (4,187) (3,464)
Expenses not deductible for tax purposes 1,415 1,821
Non-taxable income (2,920) (16,182)
Temporary differences not recognised (1) (3)
Utilisation of tax losses previously not
recognised (193) (592)
Over-provision of deferred tax assets
previously
recognised 227 -
------- ----------
Tax charge for the year 6,780 3,220
======= ==========
In respect of subsidiaries operating in Hong Kong, no provision for Hong Kong profits tax are provided as there are sufficient tax losses brought forward to set off against current year's assessable profit.
Subsidiaries operating in the PRC are subject to Enterprise Income Tax ('EIT') at a rate of 25%. However, the Company's subsidiary in Guangzhou is now subject to a preferential tax rate of 22% as described below. Other subsidiaries had tax losses brought forward from previous years.
On 16 March 2007, the National People's Congress passed the Corporate Income Tax Law of the PRC (the "Tax Law"). Under the Tax Law, the EIT tax rate applicable to the Company's subsidiary in Guangzhou is to be increased from 15% to 25% progressively within five years from 1 January 2008 (2009: 18%; 2009: 20%; 2010: 22%; 2011: 25%). The Tax Law has been applied when measuring the Group's current tax payable as at 31 December 2010 and 2009.
9. DIRECTORS' REMUNERATION
Included in staff costs are amounts paid to directors for services during the year:
2010 2009
(Restated)
HK$'000 HK$'000
Directors' remuneration
- Directors' emoluments - salaries 1,082 953
- Directors' emoluments - pension costs 13 12
-------
1,095 965
======= ==========
The directors are considered to be the key management of the Group.
10. DIVIDEND
The directors do not recommend the payment of any dividend.
11. EARNINGS PER SHARE
Basic and diluted earnings per share are calculated by dividing the profit attributable to owners of the parent by the weighted average number of ordinary shares in issue during the years ended 31 December 2010 and 2009 respectively.
2010 2009
(Restated)
Profit attributable to owners of the
parent (HK$'000) 29,339 67,646
Weighted average number of shares in
issue 1,978,895,139 1,978,895,139
Basic and diluted earnings per share (HK cents)
1.48 3.42
============= =============
12. GOODWILL
2010 2009 2008
(Restated) (Restated)
Group HK$'000 HK$'000 HK$'000
Cost
At 1 January 83,675 176,084 176,084
Disposal of subsidiaries - (92,409) -
------- ---------- ----------
At 31 December 83,675 83,675 176,084
------- ---------- ----------
Impairment
At 1 January 69,507 161,916 161,916
Disposal of subsidiaries - (92,409) -
------- ---------- ----------
At 31 December 69,507 69,507 161,916
Carrying values
At 31 December 14,168 14,168 14,168
======= ========== ==========
At 1 January 14,168 14,168 14,168
======= ========== ==========
For the purpose of impairment testing, goodwill arising from an acquisition is allocated to individual cash generating units ("CGUs") that are expected to benefit from the business combination. At the balance sheet date, the carrying value of goodwill (net of accumulated impairment losses) is allocated to the following CGUs.
2010 2009 2008
(Restated) (Restated)
HK$'000 HK$'000 HK$'000
Terminal services 14,168 14,168 14,168
======= ========== ==========
During the year ended 31 December 2010, the directors of the Group determined that there is no further impairment (2009: HK$nil) of any goodwill of its CGUs.
The recoverable amount of the terminal services CGU has been determined based on a value in use calculation. That calculation uses cash flow projections based on financial budgets approved by management covering a five-year period, and a discount rate of 10% (2009: 10%). The key assumptions for the value in use calculations relate to the estimation of cash inflows/outflows which include budgeted sales and gross margin; such estimation is based on the unit's past performance and management's expectations for the market development. Management believes that any reasonably possible change in any of these assumptions would not cause the aggregate carrying amount of the terminal services unit to exceed the aggregate recoverable amount of that unit.
13. PROPERTY, PLANT AND EQUIPMENT
Furniture,
fixtures Oil
Land and Plant and and storage Motor Construction
buildings machinery equipment tanks Vessels vehicles in progress Total
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Cost
At 1 January 2008
(Restated) 192,719 225,609 71,689 1,334 16,389 7,081 7,171 521,992
Reclassification 69 1,064 (501) - - (632) - -
Additions 10,121 6,005 300 - 2,498 463 4,995 24,382
Disposals (208) - (31) - - - - (239)
Transfer - 7,439 - - - - (7,439) -
Exchange
differences 20,852 3,608 (840) - (1) 277 247 24,143
At 31 December
2008 and 1
January 2009
(Restated) 223,553 243,725 70,617 1,334 18,886 7,189 4,974 570,278
Additions 385 32,308 620 - 9,506 885 10,403 54,107
Disposals - - (70) (1,334) (2,502) (23) - (3,929)
Disposals of
subsidiaries (48,170) (125,134) (52,392) - - (1,722) - (227,418)
Transfer 15 - - - - - (15) -
Exchange
differences 96 131 - - 45 - - 272
At 31 December
2009 and 1
January 2010
(Restated) 175,879 151,030 18,775 - 25,935 6,329 15,362 393,310
Additions 2,440 13,644 476 - 12,374 - 15,967 44,901
Disposals - (20,439) (10) - (2,399) - - (22,848)
Transfer 15,061 - - - - (15,061) -
Exchange
differences 7,011 6,365 147 - - 249 624 14,396
At 31 December
2010 200,391 150,600 19,388 - 35,910 6,578 16,892 429,759
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2010
(Expressed in Hong Kong dollars)
13. PROPERTY, PLANT AND EQUIPMENT
Furniture,
fixtures Oil
Land and Plant and and storage Motor Construction
buildings machinery equipment tanks Vessels vehicles in progress Total
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Depreciation
At 1 January 2008
(Restated) 83,239 149,111 61,863 100 6,537 5,327 154 306,331
Reclassification (671) 971 (100) - - (200) - -
Charge for the
year 4,864 5,427 1,095 - 1,642 447 - 13,475
Disposals (208) - (8) - - - - (216)
Exchange
differences 14,277 (817) (1,519) - (8) 130 (154) 11,909
At 31 December
2008 and 1
January 2009
(Restated) 101,501 154,692 61,331 100 8,171 5,704 - 331,499
Charge for the
year 4,733 5,648 1,156 - 1,876 327 - 13,740
Disposals - - (15) (100) (170) (23) - (308)
Disposals of
subsidiaries (48,170) (125,134) (52,386) - - (1,722) - (227,412)
Exchange
differences 83 122 - - 15 - - 220
At 31 December
2009 and 1
January 2010
(Restated) 58,147 35,328 10,086 - 9,892 4,286 - 117,739
Charge for the
year 5,754 9,218 1,178 - 3,214 333 - 19,697
Disposals - (8,468) - - (240) - - (8,708)
Impairment loss
recognised in
profit or loss - - 4,588 - - - - 4,588
Exchange
differences 2,268 1,576 103 - - 188 - 4,135
At 31 December
2010 66,169 37,654 15,955 - 12,866 4,807 - 137,451
Carrying values
At 31 December
2010 134,222 112,946 3,433 - 23,044 1,771 16,892 292,308
At 31 December
2009 117,732 115,702 8,689 - 16,043 2,043 15,362 275,571
At 31 December
2008 122,052 89,033 9,286 1,234 10,715 1,485 4,974 238,779
Note: Of the depreciation charge for the year, HK$16,292,000 (2009: HK$8,511,000) is included in cost of sales and HK$3,405,000 (2009: HK$5,229,000) is included in administrative expenses in the consolidated income statement.
The net book values of property, plant and equipment held under finance leases are as follows:
2010 2009 2008
(Restated) (Restated)
HK$'000 HK$'000 HK$'000
Land and buildings 134,222 117,732 122,052
Plant and machinery 27,136 24,517 14,291
Motor vehicles 1,031 1,242 503
------- ---------- ----------
162,389 143,491 136,846
======= ========== ==========
At 31 December 2010, the carrying values of land and buildings, plant and machinery and furniture, fixtures and equipment are further analysed as follows:
Terminal Others Total
HK$'000 HK$'000 HK$'000
Land
- short lease 15,946 - 15,946
- unspecified leases 10,682 - 10,682
-------- ------- -------
26,628 - 26,628
Buildings 107,594 - 107,594
-------- ------- -------
Land and buildings 134,222 - 134,222
======== ======= =======
Plant and machinery 108,683 4,263 112,946
======== ======= =======
Furniture, fixtures and equipment 1,147 2,286 3,433
======== ======= =======
The Group has obtained land use right and real estates certificates on the terminal's land under short leases from the local land authority. Land with a value of approximately HK$10,682,000 held under unspecified leases of the terminal is land held for industrial use for which the relevant land use right certificate has not been obtained and thus the term of the lease has yet to be agreed.
Under the law of the PRC, land held for industrial use and the buildings without building ownership certificates can only be used for identified industrial purposes. The Group has not obtained any building ownership certificates in respect of the buildings of the Group. The Group cannot legally sell or mortgage such properties until the relevant land taxes have been paid to the local land authority. However there is no binding agreement for the taxes to be paid.
14. INVESTMENTS IN SUBSIDIARIES
2010 2009 2008
(Restated) (Restated)
Company HK$'000 HK$'000 HK$'000
Unlisted shares, at cost
At 1 January 470,818 432,548 432,548
Exchange differences (17,288) 38,270 -
--------- ---------- ----------
At 31 December 453,530 470,818 432,548
Impairment
At 1 January 243,521 287,714 245,536
Charge for the year - - 42,178
Impairment loss reversed in
income statement (187,650) (69,652) -
Exchange differences (8,943) 25,459 -
--------- ---------- ----------
At 31 December 46,928 243,521 287,714
--------- ---------- ----------
Carrying values
At 31 December 406,602 227,297 144,834
========= ========== ==========
At 1 January 227,297 144,834 187,012
========= ========== ==========
This impairment loss reversal relates to the container and terminal business.
At 31 December 2010, the Company held 100% of the ordinary shares of Yinggao Investments Limited, a company incorporated in the British Virgin Islands ("BVI"), whose principal activity was that of an investment holding company. Yinggao Investments Limited had the following subsidiary undertakings:
Equity interests
attributable Principal Place of
Name to the Group activities incorporation
2010 2009
Yinggao Providing
Consultants management
Limited * 100% 100% services BVI
Yinggao
International
Limited (#) 100% 100% Investment holding BVI
Sub-letting of
Sanko Mineral yachts, ships
Limited 100% 100% and vessels BVI
Providing
logistics and
Yinggao Shipping related
(H.K.) Limited 100% 100% services Hong Kong
Providing
logistics and
Yinggao Shipping related
Limited * 100% 100% services Hong Kong
Yinggao Ship
Chartering Barge hiring and
Limited 100% 100% agency services Hong Kong
Yinggao
Resources Trading of non
Limited 100% - ferrous metal Hong Kong
Yinggao Petro
Limited 100% - Dormant Hong Kong
Yinggao Ship
Investments
Limited 100% - Dormant Hong Kong
Arko Terminal
Limited ("ATL") Republic of
* 100% 100% Investment holding Seychelles
Investing in
and operation
of a terminal
Keen Chance and providing
Terminal (GZ) logistics People's Republic
Limited ("KCT") 40% 40% services of China
Fujian Sanko People's Republic
Mining Limited 70% 70% Dormant of China
Details of subsidiaries disposed of in the year are set out in note 15.
* Directly held by Yinggao Investments Limited. All other subsidiaries are indirectly held.
(#) During the year, the Group has changed the name of this subsidiary from Yinggao Pacific Limited to Yinggao International Limited on 17 March 2010.
The 40% equity interest in KCT previously held by Keen Lloyd Energy Limited ("KLEL"), a subsidiary of Keen Lloyd Holdings Limited ("KLHL"), was transferred to ATL. The transfer had been submitted for registration to the relevant PRC authorities.
Pursuant to an agreement dated 5 April 2002 entered into between KLEL and MEDCL, (a shareholder of KCT which held a 30% equity interest in KCT), MEDCL agreed to vote in accordance with the instructions of KLEL at board meetings in view of its indebtedness to KLEL, for an approximate sum of RMB78 million (equivalent to HK$9.4 million), and KLEL intended to convert the outstanding loan into registered capital of KCT.
On 22 April 2003, KLEL entered into a shareholder agreement with MEDCL and Harbour Economic Development Company Limited ("HEDCL"), another shareholder in KCT, whereby all parties agreed that MEDCL has unconditionally transferred the authority empowered to its directors representative (including their rights and obligations) to KLEL until KLEL transferred the 40% equity interests in KCL to ATL to reiterate the aforesaid agreement dated 5 April 2002.
On 16 May 2003, a supplemental agreement was entered into between ATL, KLEL, MEDCL and HEDCL by which all parties agreed that the above authority transferred to KLEL would be vested in ATL after KLEL completed the transfer of equity interests in KCT to ATL.
In accordance with the terms and conditions set out in the above agreements, KLEL effectively controls the board of KCT and this arrangement has been confirmed by the shareholders of KCT. In 2002, a Hong Kong lawyer expressed his view that KCT is a subsidiary of KLEL under Hong Kong Company Law. Control of KLEL has been transferred to ATL and therefore in the opinion of the directors, KCT is a subsidiary of ATL under the Companies Act 2006.
KCT will be a legal subsidiary of ATL immediately upon the registration of the transfer of the 40% of equity in KCT from KLEL to ATL.
15. DISPOSALS of subsidiarIES
For the year ended 31 December 2010
On 28 June 2010, the Group disposed of its 100% equity interest in Yinggao Energy Limited ("YEL") to Winko Foundation Limited ("WFL"), a wholly owned subsidiary of KLHL, at a consideration of HK$1.
The net assets of YEL as at the disposal date was HK$nil and therefore, gain on disposal of HK$1 was recognised in the consolidated income statement for the year. Net cash inflow arising on the disposal of YEL was HK$1.
For the year ended 31 December 2009
On 4 September 2009, the Group disposed of its 100% equity interest in Long Prosperity Industrial Limited ("LPIL") to WFL at a consideration of HK$8.
On 23 March 2009, the Group disposed of its 100% equity interest in Arko Satellite Limited ("ASL") to a third party at a consideration of HK$10,000.
In March 2009, the business licence of Arko Silicon (Hubei) Limited ("ASHL") was de-registered by the PRC Business Bureau. The Group has therefore written-off its 100% interests in ASHL.
The consolidated net liabilities of LPIL and its subsidiary (i.e. Changzhou Power Development Company Limited), net assets of ASL and net assets of ASHL disposed of were as follows:
LPIL and
its
subsidiary ASL ASHL Total
(Restated) (Restated) (Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000
Property, plant and
equipment - - 6 6
Other receivables 170 - - 170
Cash and cash
equivalents 23 - 2 25
Trade and other
payables (9,997) - - (9,997)
Bank loan (14,790) - - (14,790)
Loans from fellow
investors (531) - - (531)
---------- ---------- ---------- ----------
(25,125) - 8 (25,117)
Minority interest (29,621) - - (29,621)
Exchange loss
realised 3,629 - - 3,629
---------- ---------- ---------- ----------
(51,117) - 8 (51,109)
Gain/(loss) on
disposals 51,117 10 (8) 51,119
---------- ---------- ---------- ----------
Total consideration - 10 - 10
========== ========== ========== ==========
Net cash
inflow/(outflow)
arising on disposals:
Cash consideration
received - 10 - 10
Cash and cash
equivalents
disposed of (23) - (2) (25)
---------- ---------- ---------- ----------
(23) 10 (2) (15)
========== ========== ========== ==========
16. AVAILABLE-FOR-SALE INVESTMENT
2010 2009 2008
(Restated) (Restated)
HK$'000 HK$'000 HK$'000
Group
Unlisted in the PRC - - 94
======= ========== ==========
The above investment represents 20% of the ordinary shares in a company incorporated in the PRC of China, Guangzhou Tonglai Shipping Agents Company Limited, at consideration of RMB100,000 (approximately HK$94,000). The associate is principally engaged in provision of logistics and related services. It is not treated as an investment in associate on the ground of its immaterial amount. The investment was disposed of at book value during the year ended 31 December 2009.
17. INVENTORIES
Inventories represent consumables. There was no significant difference between the replacement cost and the value shown in the balance sheet.
18. TRADE AND OTHER RECEIVABLES
Group Company
2010 2009 2008 2010 2009 2008
(Restated) (Restated) (Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Trade
receivables 32,706 22,199 20,934 - - -
Less:
allowance
for doubtful
debts (699) (662) (501) - - -
-------- ----------- ----------- -------- ----------- -----------
32,007 21,537 20,433 - - -
Deposits 12,019 6,576 6,239 5 5 4
Prepayments 23,545 2,124 4,500 - - 8
Other
receivables 14,740 10,445 1,485 - - -
Amounts due
from fellow
investors of
a
subsidiary 23,450 22,661 22,425 - - -
Amounts due
from related
companies - - 7,255 - - -
-------- ----------- ----------- -------- ----------- -----------
105,761 63,343 62,337 5 5 12
======== =========== =========== ======== =========== ===========
Trade receivables are due within 30 days from the date of billing. Further details on the Group's credit policy are set out in note 26(a).
(a) Ageing analysis
The ageing analysis of the Group's trade receivables, net of allowance for doubtful debts, that are neither individually nor collectively considered to be impaired are as follows:
2010 2009 2008
(Restated) (Restated)
HK$'000 HK$'000 HK$'000
Neither past due nor impaired 19,694 10,228 7,570
------- ---------- ----------
Less than one month past due 8,275 4,987 5,875
1 to 3 months past due 3,946 5,627 6,888
>3 months past due 92 695 100
------- ---------- ----------
Total amounts past due 12,313 11,309 12,863
------- ---------- ----------
Total 32,007 21,537 20,433
======= ========== ==========
Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default.
Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are considered fully recoverable. The Group does not hold any collateral over these balances.
(b) Impairment of trade receivables
A provision is made for impairment losses in respect of trade receivables unless the Group is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against trade receivables directly (see note 2(h)).
The movement in the allowance for doubtful debts during the year is as follows:
2010 2009 2008
(Restated) (Restated)
HK$'000 HK$'000 HK$'000
At 1 January 662 501 38
Impairment loss recognised
in the year 37 161 463
------- ---------- ----------
At 31 December 699 662 501
======= ========== ==========
Included in the allowance for doubtful debts are individually impaired trade debtors with an aggregate balance of HK$699,000 (2009: HK$662,000; 2008: HKD501,000) where recovery is in doubt. The Group does not hold any collateral over these balances.
19. CASH AND CASH EQUIVALENTS
Group Company
2010 2009 2008 2010 2009 2008
(Restated) (Restated) (Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Cash in
hand and
at bank 32,563 16,726 6,024 181 83 12
======== =========== =========== ======== =========== ===========
2010 2009 2008 2010 2009 2008
(Restated) (Restated) (Restated) (Restated)
Currency HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Hong Kong
Dollars 10,792 10,388 301 172 17 -
Chinese
Renminbi 7,547 6,272 5,711 - - -
British
Pound 9 66 12 9 66 12
United
States
Dollars 14,215 - - - - -
-------- ----------- ----------- -------- ----------- -----------
32,563 16,726 6,024 181 83 12
======== =========== =========== ======== =========== ===========
20. TRADE AND OTHER PAYABLES
Group Company
2010 2009 2008 2010 2009 2008
(Restated) (Restated) (Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Trade
payables 14,527 4,176 7,413 23 118 213
Other
payables
and sundry
creditors 25,211 21,704 10,985 - - -
Accruals 6,319 4,678 5,761 611 596 28
Amounts due
to related
companies 11,864 5,308 3,191 - - -
Amount due
to
immediate
holding
company 9,440 5,195 2,824 - - -
-------- ----------- ----------- -------- ----------- -----------
67,361 41,061 30,174 634 714 241
======== =========== =========== ======== =========== ===========
The average credit period on purchases of goods is 60 days. The Group has financial risk management policies in place to ensure that all payables are settled within the credit timeframe.
21. OBLIGATIONS UNDER FINANCE LEASES
2010 2009 2008
(Restated) (Restated)
Present Present Present
value of value of value of
the Total the Total the Total
minimum minimum minimum minimum minimum minimum
lease lease lease lease lease lease
payments payments payments payments payments payments
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Within 1
year 4,476 4,694 6,714 7,001 4,624 4,976
After 1 year
but within
5 years 1,289 1,316 3,155 3,341 2,545 2,750
-------- -------- -------- -------- -------- --------
5,765 6,010 9,869 10,342 7,169 7,726
======== ======== ========
Less : total
future
interest
expenses (245) (473) (557)
-------- -------- --------
Present
value of
lease
obligations 5,765 9,869 7,169
======== ======== ========
It is the Group's policy to lease certain of its motor vehicles and fixtures and equipment under finance leases. The average lease term is 2 years (2009: 2 years). Interest rate underlying all obligations under finance leases are fixed at respective contract dates ranging from 2.60% to 8.69% (2009: 2.60% to 6.15%).
22. BANK LOAN
2010 2009 2008
(Restated) (Restated)
Group HK$'000 HK$'000 HK$'000
Analysis of debt maturity:
Amounts payable and due within
two
to five years - - 14,790
======= ========== ==========
The bank loan at 31 December 2008 was unsecured, with interest accruing at the fixed rate of 5.85% per annum. During the year ended 31 December 2009, the Group disposed of its subsidiary holding this bank loan to a related party as detailed in note 15.
23. LOANS FROM FELLOW INVESTORS IN SUBSIDIARIES
The amount represents advances from MEDCL of approximately HK$6,946,000 (2009: HK$5,544,000; 2008: HK$5,544,000). The amount advanced from MEDCL is unsecured, interest free and is not repayable within next year. Another amount advanced from Walton Enterprise Limited at 31 December 2008 of approximately HK$531,000 was assigned to a related party during the year ended 31 December 2009 upon disposal of subsidiaries of the Group as mentioned in note 15.
24. deferred taxation
The components of the Group's deferred tax liabilities recognised in the consolidated balance sheet and the movements during the year are as follows:
Accumulated
temporary
difference
on tax Tax
depreciation losses Total
HK$'000 HK$'000 HK$'000
At 1 January 2008 and
31 December 2008 (Restated) - - -
Charged/(credited) to income
statement 1,148 (626) 522
------------ ------- -------
At 31 December 2009 (Restated) 1,148 (626) 522
Charged to income statement 1,987 626 2,613
------------ ------- -------
At 31 December 2010 3,135 - 3,135
============ ======= =======
No deferred tax is recognised on the unremitted earnings of the overseas subsidiaries, as no dividend payments to the UK parent company are expected to be made in the foreseeable future.
At 31 December 2010, the Group has unused tax losses of HK$366,000 (2009: HK$5,360,000; 2008: HK$5,172,000) available for offset against future profits. A deferred tax asset has been recognised in respect of HK$nil (2009: HK$3,794,000; 2008: HK$nil) of such losses. No deferred tax assets has been recognised in respect of the remaining HK$366,000 (2009: HK$1,566,000; 2008: HK$5,360,000) due to the unpredictability of future profit streams. The unrecognised tax losses may be carried forward indefinitely.
25. SHARE CAPITAL and capital management
(a) Share capital
2010 2009 and 2008
Number GBP'000 GBP'000
Authorised:
Ordinary
shares of
0.5p each 30,000,000,000 150,000 30,000,000,000 150,000
============== ========= ============== ==========
HK$'000 HK$'000
(Restated)
Equivalent to: 2,049,315 2,049,315
========= ==========
HK$'000 HK$'000
(Restated)
Allotted,
called up and
fully paid:
Ordinary
shares of
0.5p each 1,978,895,139 115,224 1,978,895,139 115,224
============== ========= ============== ==========
(b) Capital management
The Group's main objective when managing capital is to provide returns to shareholders by ensuring the Group will continue to trade in the foreseeable future. The Group also aims to maximise its capital structure of debt and equity so as to minimise its cost of capital.
The Group manages its capital with regard to the risks inherent in the business and the sector within which it operates by monitoring its gearing ratio on a regular basis.
The Group considers its capital to include share capital, share premium, merger reserve, exchange reserve and accumulated losses.
Net debt includes short and long-term borrowings net of cash and cash equivalents.
2010 2009 2008
(Restated) (Restated)
Group HK$'000 HK$'000 HK$'000
Total debt 91,258 64,073 63,578
Less: Cash and cash
equivalents (32,563) (16,726) (6,024)
------- ---------- ----------
Net debt 58,695 47,347 57,554
------- ---------- ----------
Total equity 355,620 306,935 258,882
------- ---------- ----------
Debt to capital ratio 17% 15% 22%
======= ========== ==========
The Group does not have any externally imposed capital requirements.
26. FINANCIAL RISK MANAGEMENT AND FAIR VALUES
The principal risks arising from the Group's financial instruments are credit risk, liquidity risk, foreign currency risk and interest rate risk. The directors review and agree policies for managing each of these risks and these are summarised below. These policies have been developed during the current accounting period as a consequence of the Group's expansion.
(a) Credit risk
Credit risk is the potential financial loss resulting from the failure of a customer or counterparty in setting their financial and contractual obligations to the Group, as and when they fall due.
The Group's primary exposure to credit risk arises through its trade receivables. The management has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. Other financial assets of the Group with exposure to credit risk include cash and deposits that are placed with financial institutions which are regulated.
At the balance sheet date, there was no significant concentration of credit risk.
(b) Liquidity risk
The Group's policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash and readily realisable marketable securities and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term.
The following table details the remaining contractual maturities at the balance sheet date of the Group's financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates) and the earliest date the Group can be required to pay:
2010 2009 (Restated)
Contractual undiscounted cash Contractual undiscounted cash
outflow outflow
-------------------------------------------- ---------------------------------------------
More More
than 1 than 1
Consolidated year year
balance Within but Consolidated Within but
sheet 1 year less More balance 1 year less More
carrying or on than 2 than sheet carrying or on than 2 than
amount Total demand years 5 years amount Total demand years 5 years
Group HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Trade and other
payables 67,361 67,361 67,361 - - 41,061 41,061 41,061 - -
Obligations under
finance leases 5,765 6,010 4,694 1,316 - 9,869 10,342 7,001 3,341 -
Loans from fellow
investors in
subsidiaries 6,946 6,946 - - 6,946 5,544 5,544 - - 5,544
------- ------- ------- ------- ----------------- ----------- ------- ------- ------- ------------------
80,072 80,317 72,055 1,316 6,946 56,474 56,947 48,062 3,341 5,544
------- ------- ------- ------- ----------------- ----------- ------- ------- ------- ------------------
2010 2009 (Restated)
Contractual undiscounted cash Contractual undiscounted cash
outflow outflow
---------------------------------- -----------------------------------
More More
than 1 than 1
year year
Balance Within but Balance Within but
sheet 1 year less More sheet 1 year less More
carrying or on than 2 than 5 carrying or on than 2 than
amount Total demand years years amount Total demand years 5 years
Company HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Trade and
other
payables 634 634 634 - - 714 714 714 - -
Amounts
due to
subsidiaries 21,730 21,730 21,730 - - 19,463 19,463 19,463 - -
-------- ------- ------- ------- ------- -------- ------- ------- ------- --------
22,364 22,364 22,364 - - 20,177 20,177 20,177 - -
-------- ------- ------- ------- ------- -------- ------- ------- ------- --------
(c) Foreign currency risk
The Group's businesses include revenue and the expenses which are principally conducted in Chinese Renminbi ("RMB") through its subsidiaries in the PRC. Foreign currency risk mainly arises from recognised assets and liabilities and net investments in foreign operations.
The Group did not use any forward contract or currency borrowing to hedge its exposure to foreign currency risk. However, the directors will monitor the related foreign currency exposure closely and will consider hedging significant foreign currency exposures should the need arise in the future.
No entity in the Group has material assets and liabilities denominated in currency other than the functional currency of that entity, therefore no material foreign exchange risk arises.
(d) Interest rate risk
Group borrowings are held in local currencies. Current interest-bearing loans are at fixed rates. The Group's policy for future borrowings will be to take floating rates unless fixed rate finance is available at particularly attractive rates.
The Group is exposed to fair value interest rate risk as its loan borrowings and obligations under finance leases are at a fixed rate. Borrowings from fellow investors in subsidiaries are on an interest free basis. The Group monitors closely its interest rate exposure and will consider hedging significant interest rate exposure should the need arise in the future.
The Company incurs no significant interest rate risk as it does not have any liability to bank or other borrowings alike.
(i) Interest rate profile
The interest rate risk profile of the Group's financial liabilities for the years ended 31 December 2010 and 2009 are as follows:
Fixed
rate
weighted
Fixed average
rate period
weighted for
average which
Fixed interest rate is
Total Interest-free rate rate at fixed
HK$'000 HK$'000 HK$'000 % Years
2010
Obligations
under
finance
leases 5,765 121 5,644 4 2
Loans from
fellow
investors in
subsidiaries 6,946 6,946 - - N/A
------- ------------- -------
12,711 7,067 5,644
======= ============= =======
2009
(Restated)
Obligations
under
finance
leases 9,869 156 9,713 4 2
Loans from
fellow
investors in
subsidiaries 5,544 5,544 - - N/A
------- ------------- -------
15,413 5,700 9,713
======= ============= =======
(ii) Sensitivity analysis
At 31 December 2010, it is estimated that a general increase/decrease of 100 basis points in interest rates, with all other variables held constant, would decrease/increase the Group's profit and equity by approximately HK$56,000 (2009: HK$97,000).
(e) Categories of financial instruments
Group Company
2010 2009 2010 2009
(Restated) (Restated)
HK$'000 HK$'000 HK$'000 HK$'000
Financial assets
Loan and receivables
- Trade and other
receivables 82,216 61,219 5 5
- Amounts due from
subsidiaries - - 5,536 2,270
- Cash and cash
equivalents 32,563 16,726 181 83
-------- ----------- -------- -----------
114,779 77,945 5,722 2,358
======== =========== ======== ===========
Financial liabilities
Financial liabilities at
amortised cost
- Trade and other
payables 67,361 41,061 634 714
- Amounts due to
subsidiaries - - 21,730 19,463
- Obligations under
finance leases 5,765 9,869 - -
- Loans from fellow
investors in
subsidiaries 6,946 5,544 - -
-------- ----------- -------- -----------
80,072 56,474 22,364 20,177
======== =========== ======== ===========
(f) Fair values
The carrying amounts of the Group's financial instruments carried at cost or amortised cost are not materially different from their fair values as at 31 December 2010 and 2009.
27. RELATED PARTY TRANSACTIONS
(a) Transactions with key management personnel
All members of key management personnel are the directors of the Company, and their remuneration is disclosed in note 9.
(b) Transactions with other related parties
Group
The Group had the following material transactions which were carried out on an arm's length basis with related parties during the year:
Nature Notes 2010 2009
(Restated)
HK$'000 HK$'000
Agency charge paid by the Group (i) - 509
Barging services cost paid by the
Group (i) - 24,296
Barging services income received by
the Group (i) - 28,832
Disposals of property, plant and equipment - 2,500
Gain on disposal of subsidiaries (ii) - 51,117
Purchases of goods by the Group 148,488 -
Forwarding services income received
by the Group 2,499 -
Lifting charges received by the Group 1,200 1,000
======= ==========
Notes:
(i) Services provided/received by companies with significant influence. These ceased to be related parties of the Group on 18 September 2009.
(ii) Details of the disposal of subsidiaries to WFL during the year are set out in note 15.
Balances with related parties are disclosed in the balance sheet and in notes 18 and 20.
Company
The Company had the following material transactions which were carried out on an arm's length basis with related parties during the year:
2010 2009
(Restated)
HK$'000 HK$'000
Management fee income received from
a subsidiary 3,373 1,213
Management fee paid to a subsidiary 582 606
======= ==========
28. OPERATING LEASE COMMITMENTS
At 31 December 2010, the Group's total future minimum lease payments under non-cancellable operating leases are payable as follows:
2010 2009
(Restated)
HK$'000 HK$'000
Leases which expire:
- in the next year 1,714 1,399
- in the second to fifth years 1,393 3,018
------- ----------
3,107 4,417
======= ==========
The Group is the lessee in respect of a number of properties held under operating leases. The leases typically run for an initial period of 1 to 2 years, at the end of which period all terms are renegotiated. None of the leases includes contingent rentals.
29. CAPITAL COMMITMENTS
The Group's capital commitments outstanding at 31 December 2010 in respect of the acquisition of property, plant and equipment in the financial statements are as follows:
2010 2009
(Restated)
HK$'000 HK$'000
Contracted, but not provided for 61,751 6,199
======= ==========
30. CONTINGENT LIABILITIES
On 9 November 1999, KCT gave a guarantee for RMB18 million (equivalent to approximately HK$2.1 million) in favour of Nangang Rural Credit Co-operation Bank for banking facilities granted to MEDCL, a fellow investor in KCT, secured over its equity interests in KCT. MEDCL was unable to repay the outstanding loan.
On 27 September 2001, the Guangzhou Law Court delivered an order and noticed that the guarantee above was invalid and MEDCL's equity interest in KCT was frozen.
Based on legal advice, the equity interests had no material impact on the operations of KCT and the directors consider that no provision is required.
KCT maintains that the guarantee given was invalid on the following grounds:
(i) such guarantee did not have approval from the board of directors of KCT; and
(ii) in accordance with the law of the People's Republic of China, the board of directors and the management of KCT cannot give KCT's properties for guarantee to its shareholder.
Furthermore, KLHL, the Company's parent company, has indemnified the Group against any loss KCT will suffer should the guarantee be enforceable.
Accordingly, the directors are of the opinion that no provision should be made in the financial statements for any possible claim from the bank in respect of the litigation.
Save as disclosed above, the Group does not have any material contingent liabilities as at balance sheet date.
31. ULTIMATE CONTROLLING PARTY
The directors consider that Chin Dynasty Foundation Limited ("CDFL"), a company incorporated in the British Virgin Islands is the ultimate holding company. CDFL is controlled by the Chin Dynasty Fund. No group financial statements for CDFL are published.
The Chin Dynasty Fund is a discretionary trust where Mr. Qin Shun Chao is the settler. Members of Mr. Qin's family are the potential beneficiaries of the trust.
The Company's immediate parent company is Keen Lloyd Holdings Limited, a company incorporated in the British Virgin Islands.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of the Company will be held at 10:30a.m.on Wednesday, 30 June 2011 at the Registered Office for the purpose of transacting the following business:
ORDINARY BUSINESS
1. To receive and adopt the directors' report and financial statements for the year ended 31 December 2010.
2. To re-elect LEUNG Suk Ching, Angela as a director of the Company.
3. To re-elect FENG Yue Ying as a director of the Company.
4. To re-elect CHUN Yuet Ming, Jessica as a director of the Company.
5. To re-elect LIU Sheng Rong as an independent non-executive director of the Company.
6. To re-elect David Thomas as an independent non-executive director of the Company.
7. To re-appoint Baker Tilly UK Audit LLP, Chartered Accountants as auditors of the Company to hold office until the next General Meeting at which financial statements are laid before the Company and that their remuneration be fixed by the directors.
8. THAT, pursuant to Section 551 of the Companies Act 2006 (the "Act"), the Directors be hereby generally and unconditionally authorised to exercise all powers of the Company to allot equity securities (as defined in Section 560 of the Act) up to an aggregate nominal amount of GBP3,000,000: provided that this authority shall expire on the date of the next annual general meeting of the Company following the date of the passing of this resolution, except that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement as if the authority conferred by this resolution had not expired.
SPECIAL BUSINESS
As special business, to consider and it thought fit pass, the following resolution:
9. THAT, subject to the passing of Resolution 8, pursuant to Section 570 of the Act, the Directors be hereby generally and unconditionally authorised to exercise all powers of the Company to allot equity securities (as defined in Section 560 of the Act) as if Section 561(1) of the Act did not apply to any such allotment provided that this power shall be limited to:
(i) the allotment of equity securities in connection with any invitation made to the holders of Ordinary Shares to subscribe by way of rights in the same proportions (as nearly as may be) to their respective holdings, but subject to such exclusions or other arrangements as the Directors consider necessary or expedient in connection with Ordinary Shares representing fractional entitlement to shares, or on account of either legal or practical problems arising in connection with the laws of any territory or of the requirements of any applicable regulatory body or stock exchange in any territory; and
(ii) to the allotment (otherwise than pursuant to sub-paragraph (i) of this Resolution) of equity securities up to an aggregate nominal amount of GBP3,000,000;
and shall expire at the conclusion of the next annual general meeting of the Company or, if earlier, fifteen months from the date of the passing of this resolution, save that the Company may at any time before such expiry make an offer or agreement which would or might require equity securities to be allotted for cash after such expiry and the Directors may allot equity securities in pursuance of such an offer or agreement as if the power conferred hereby had not expired.
By order of the Board
CHAN Kit Ching
Company Secretary
31 May 2011
Registered office:
25 Farringdon Street
London EC4A 4AB
Notes:
a. A shareholder entitled to attend and vote at the meeting may appoint one or more proxies to attend and, on a poll, vote on his behalf. A proxy need not be a member of the Company.
b. A form of proxy is enclosed with this notice for your use in respect of the business set out above. To be effective, the form of proxy together with the power of attorney or other authority (if any) under which it is signed (or a notary certified or an office copy of such power of authority) must be lodged at the Company's Registrars, PXS 34 Beckenham Road, Beckenham BR3 4TU at least forty-eight hours before the time appointed for the meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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