TIDMACHP
RNS Number : 8482E
Asia Ceramics Holdings PLC
06 June 2012
Asia Ceramics Holdings Plc
('the Company' or together with its subsidiaries 'the
Group')
Final Results for the year ended 31 December 2011
The Directors of Asia Ceramics Holdings Plc are pleased to
present the Company's final results for the year ended 31 December
2011.
A copy of the Company's annual report will be sent to
shareholders today and will be available on the Company's website
at www.asiaceramicplc.com.
Enquiries
Frank Lewis Asia Ceramics Holdings Tel: 07775 504 313
plc
James Joyce / James Bavister WH Ireland Limited Tel: 020 7220 1666
Highlights include:
-- Loss for the year at GBP225k (2010: GBP225k)
-- Net assets at GBP386k (2010: GBP514k)
-- Cash at bank of GBP669k (2010: GBP834k)
-- Basic loss per shares of 2.18pence (2010: 4.06pence)
CHAIRMAN'S STATEMENT
Introduction
I have great pleasure in presenting the Report and Accounts for
Asia Ceramics Holdings Plc for the financial year ending 31
December 2011.
Results
The Group's turnover for the year to 31 December 2011 was
GBP4,252k (2010: 347k for 6 months). The loss for the year was
GBP225k (2010: GBP225k for 6 months).
Review for the year
The Group is an early stage business with its head office in
Foshan, Guangdong. It was established to distribute and sell
ceramic wall and floor tiles, sanitary ware products and other home
improvement products in China. The Group's strategy was to
initially establish its own retail stores together with a chain of
franchise outlets within two years of Admission. The Group
currently operates three of its own stores, one of which is in Hong
Kong.
As previously announced the Board has decided to establish a
wholesale division in China to service the domestic property
market. It was also previously announced that an export division
was being set up to focus on sale of ceramic products
internationally.
During the year under review, export sales has attributed to
approximate 65% of the total turnover of the Group mainly to Far
East, Europe and South America.
Employees
The Board would like to extend their personal thanks to all
employees of the Group for their enthusiasm, hard work and
commitments. In particular the Board would like to thank the Chief
Executive officer, Dr Dingxin Pu, for his continued contribution to
the development of the Group.
In April 2011, we were pleased to welcome Mr Shouyuan Wu to our
Board as executive finance director.
Outlook
With the stores and the growth of the wholesale division in
China, there should be steady growth in volume and sales to the
continued urbanisation of the Chinese population.
With the setting up of the export division, despite the complex
global economic environment, the Board remains confident for
further growth in the current financial year.
Due to a clear strategy, and a strong team to drive the business
forward, the Board believes that there is the ambition and
commitment to take the Group to the next stage of its
development.
I look forward to reporting further progress in my interim
statement at the half year.
Frank Lewis
Chairman
6 June 2012
CHIEF EXECUTIVE OFFICER'S STATEMENT
The Group was established in July 2010 to distribute and sell
ceramic wall and floor tiles, sanitary ware products and other home
improvement products in China and internationally.
Financial Performance
-- Group net sales of GBP4,252k (2010: GBP347k)
-- Loss for the year of GBP225k (2010: GBP225k)
Group operating net cash used for the year ended 31 December
2011 was GBP540k (2010: GBP291k). Cash at bank at 31 December 2011
was GBP669k (2010: GBP834k).
Operations
During the year to 31 December 2011, the Group employed 53
members of staff. The head office is in Foshan as well as the main
showroom.
The Group's administration, information technology, human
resources, finance, sales and marketing is controlled from the head
office in Foshan. The Group also designs its own ceramic tiles, and
enters into contracts with OEM suppliers to manufacture its own
designed products. The Group currently operates three retail
stores.
It was previously announced that the Group had set up a
wholesale division to cater for the domestic market as well as an
export division to distribute ceramics internationally.
The head office in Foshan:
-- seeks appropriate locations for stores;
-- provides IT, logistics, finance and administration support;
-- manages the wholesale and export division;
-- provides training for the staff;
-- ensures that all rules and regulations are complied with;
-- ensures that the UK Bribery Act of 2010 is complied with.
Outlook
At this point we believe that China will continue to experience
economic growth. This is due to the continued urbanisation of our
cities, combined with healthy market conditions, the Board is
confident the Group will make further progress in domestic market,
also see good growth prospects in our recently set up export
division.
I look forward therefore to demonstrating further growth in the
business and building shareholders' value in 2012.
Dr Dingxin Pu
Chief Executive Officer
6 June 2012
CONSOLIDATED AND COMPANY STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2011
Notes Group Year Group Company Company
ended 31 6 months Year ended 6 months
December to 31 31 December to 31 December
2011 December 2011 2010
2010
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 5 4,252 347 - -
Cost of sales (3,691) (250) - -
----------- ---------- ------------- ----------------
Gross profit 561 97 - -
Distribution expenses (123) (58) - -
Administrative expenses (634) (285) (252) (72)
----------- ---------- ------------- ----------------
(Loss) from operation (196) (246) (252) (72)
Non-operating income net - - - -
of expenses
Net finance costs 8 4 23 (1) -
----------- ---------- ------------- ----------------
Loss before taxation (192) (223) (253) (72)
Income tax expenses 9 (33) (2) - -
----------- ---------- ------------- ----------------
Loss for the year (225) (225) (253) (72)
----------- ========== ------------- ----------------
Other comprehensive income
Exchange difference arising
on translation of foreign
operations 48 (25)
----------- ----------
Total comprehensive income
for the year attributable
to equity holders (177) (250)
=========== ==========
Earnings per ordinary
share (pence) 10
Basic (2.18) (4.06)
=========== ==========
Diluted (2.17) (3.99)
=========== ==========
All amounts are derived from continuing operations
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITIONS
AT 31 DECEMBER 2011
Notes 20 11 20 10 20 11 20 10
GBP'000 GBP'000 GBP'000 GBP'000
Group Group Company Company
Non-current assets
Property, plant and equipment 11 244 113 - -
Investments 12 - - 1 1
Trade and other receivables - - 907 863
----------- -----------
244 113 908 864
----------- ----------- ----------- ----------
Current assets
Inventory 13 56 - - -
Trade and other receivables 14 1,308 207 - 2
Cash and cash equivalents 15 669 834 134 379
----------- ----------- ----------- ----------
2,033 1,041 134 381
----------- ----------- ----------- ----------
Total assets 2,277 1,154 1,042 1,245
=========== =========== =========== ==========
Equity and reserves
Share capital 16 52 52 52 52
Share premium 16 712 712 712 712
Other reserves 18 82 (25) 49 -
Retained earnings (460) (225) (325) (72)
----------- ----------- ----------- ----------
386 514 488 692
----------- ----------- ----------- ----------
Current liabilities
Other borrowings 19 346 - - -
Income tax liabilities 39 2 - -
Trade and other payables 20 1,339 138 54 53
----------- ----------- ----------- ----------
1,724 140 54 53
----------- ----------- ----------- ----------
Non-current liabilities
Other borrowings 19 167 500 500 500
----------- ----------- ----------- ----------
167 500 500 500
----------- ----------- ----------- ----------
Total equity and liabilities 2,277 1,154 1,042 1,245
=========== =========== =========== ==========
The financial statements were approved by the Board of Directors
and authorised for issue on 6 June 2012.
CONSOLIDATED AND COMPANY STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2011
20 11 20 10 20 11 20 10
Notes GBP'000 GBP'000 GBP'000 GBP'000
Group Group Company Company
Net cash used in operating
activities 21 (540) (291) - (19)
---------- ----------- ----------- ----------
Investing activities
Purchase of property, plant
and equipment (122) (114) - -
Investment in subsidiaries - - - (1)
Interest received 1 - -
---------- -----------
Net cash used in investing
activities (121) (114) - (1)
---------- ----------- ----------- ----------
Financing activities
Loans to subsidiaries Loans
from shareholders - - (245) (865)
- 500 - 500
Proceed from potential investor 492 - -
Shares issued - 1,245 - 1,245
Share Issue Costs - (481) - (481)
---------- -----------
Net cash from financing activities 492 1,264 (245) 399
---------- ----------- ----------- ----------
Net (decrease)/increase in
cash and cash equivalents (169) 859 (245) 379
Cash and cash equivalents at
beginning of period 834 - 379 -
Exchange difference 4 (25) - -
Cash and cash equivalents at
end of period 15 669 834 134 379
========== =========== =========== ==========
CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2011
Group Share Share Other Retained Total
capital premium reserves earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 6 July - - - - -
2010
============ ============ ============= ============= ============
Comprehensive
income
Exchange
difference
arising
on the
translation of
foreign
operations - - (25) - (25)
Loss for the year - - - (225) (225)
------------ ------------ ------------- ------------- ------------
Total
comprehensive
income
for the year - - (25) (225) (250)
------------ ------------ ------------- ------------- ------------
Transaction with
owner
Issue of shares 52 1,193 - - 1,245
Share issue cost - (481) - - (481)
Balance at 31
December 2010 52 712 (25) (225) 514
============ ============ ============= ============= ============
Comprehensive
income
Exchange
difference
arising
on the
translation of
foreign
operations - - 48 - 48
Loss for the year - - - (225) (225)
------------ ------------ ------------- ------------- ------------
Total
comprehensive
income
for the year - - 48 (225) (177)
------------ ------------ ------------- ------------- ------------
Transaction with
owner
Transfer statutory
reserves - - 10 (10) -
Share-based
payment - - 49 - 49
------------ ------------ ------------- ------------- ------------
Balance at 31
December 2011 52 712 82 (460) 386
============ ============ ============= ============= ============
Company Share Share Other Retained Total
capital premium reserves earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 6 July - - - - -
2010
============ ============ ============= ============= ============
Comprehensive
income
Loss for the year - - - (72) (72)
------------ ------------ ------------- ------------- ------------
Total
comprehensive
income
for the year - - - (72) (72)
------------ ------------ ------------- ------------- ------------
Transaction with
owner
Issue of shares 52 1,193 - - 1,245
Share issue cost - (481) - - (481)
-------------
Balance at 31
December 2010 52 712 - (72) 692
------------ ------------ ------------- ------------- ------------
Comprehensive
income
Loss for the year - - - (253) (253)
------------ ------------ ------------- ------------- ------------
Total
comprehensive
income
for the year - - - (253) (253)
------------ ------------ ------------- ------------- ------------
Transaction with
owner
Share-based
payment - - 49 - 49
------------ ------------ ------------- ------------- ------------
Balance at 31
December 2011 52 712 49 (325) 488
============ ============ ============= ============= ============
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
1 GENERAL INFORMATION
Asia Ceramics Holdings Plc is a company incorporated in Jersey
under the Companies (Jersey) Law 1991. The company is governed by
its articles of association and the principal statute governing the
company is Jersey law. The company has an unlimited life and the
liability of the members of the company is limited. The company is
domiciled in Jersey and its registered office is 12 Castle Street,
St. Helier, Jersey JE2 3RT. The principal places of the business of
the Group's are at G/F, No 17 Wah Hong Building, 13 - 20 Hong Lok
Street, Mongkok, Kowloon in Hong Kong and No 9 Zhangcuo Street,
Tancheng Disctrict, Foshan City in People's Republic of China
("PRC").
The principal activity of the company is that of an investment
holding company. The principal activities of its subsidiaries are
set out in note 12.
These financial statements are presented in pounds sterling and
rounded to the nearest thousand ('000).
2 ADOPTION OF NEW AND REVISED STANDARDS
Asia Ceramics Holding Plc has adopted all relevant standards
effective for accounting periods beginning on or after 1 January
2011.
At the date of authorisation of these financial statements, the
Group has not adopted the following standards andinterpretations as
they are either not effective of not applicable to the Group's
business.
Standards and interpretations
Amendment to IFRS 7 - Enhanced Derecognition Disclosure
Requirements - effective 1 July 2011
The IASB introduced enhanced disclosure requirements to IFRS 7
Financial Instruments as part of its comprehensive review of
off-balance sheet activities. The amendments are designed to ensure
that users of financial statements are able to more readily
understand transactions involving the transfer of financial assets
(for example, securitisations), including the possible effects of
any risks that may remain with the entity that transferred the
assets. The amendments also require additional disclosures if a
disproportionate amount of transfer transactions are undertaken
around the end of a reporting period. As the change only results in
additional disclosures, there is no impact on the company's
financial statement.
It is considered that this does not apply to the Group and that
this standards is not expected to result in changes in accounting
policies, changes to the carrying amounts of assets or liabilities
or the published results. If any, but expect there will be no
material impact to the income statement and balance sheet when
implemented, although further disclosure may be required.
3 SIGNIFICANT ACCOUNTING POLICIES
3.1 Statement of compliance
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), IFRIC
interpretations and the AIM Rules.
3.2 Basis of preparation
These consolidated financial statements have been prepared on
the historical cost basis except as disclosed in the accounting
policies below. Historical cost is generally based on the fair
value of the consideration given in exchange for assets.
The Board has reviewed the accounting policies set out in these
financial statements and consider them to be the most appropriate
to the Group's business activities.
3.3 Going Concern policy
The financial statements have been prepared assuming the Group
will continue as a going concern. Under the going concern
assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the necessity of
liquidation, nor ceasing trading or seeking protection from
creditors pursuant to laws or regulations. In assessing whether the
going concern assumption is appropriate, management takes into
account all available information for the foreseeable future, in
particular for the twelve months from the date of approval of the
financial statements. Based on the budgets prepared, management
have a reasonable expectation that the group has adequate resources
to continue its operational exercises for the foreseeable future
and the group has adopted the going concern basis of accounting in
preparing the financial statements.
3.4 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the company and entities controlled by the Company
(its subsidiaries). Control is achieved where the Company has the
power to govern the financial and operating policies of an investee
entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the Consolidated Statement of Comprehensive
Income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. The consideration transferred in
a business combination is measured at the aggregate of the fair
values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity instruments issued by the Group in
exchange for control of the acquire. Acquisition related costs are
generally recognised in profit or loss. The acquiree's identifiable
assets, liabilities and contingent liabilities that meet the
conditions for recognition under IFRS 3: Business Combinations are
recognised at their fair value at the acquisition date, except for
non-current assets (or disposal groups) that are classified as held
for sale in accordance with IFRS 5: Non-Current Assets Held for
Sale and Discontinued Operations, which are recognised and measured
at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and
initially measured as the excess of the consideration transferred
over the Group's interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities recognised. If,
after reassessment, the Group's interest in the net fair value of
the acquiree's identifiable assets, liabilities and contingent
liabilities exceed the consideration transferred, the excess is
recognised immediately in the profit and loss as a bargain
purchase.
Non-controlling interests that are present ownership interest
and entitle their holders to a proportionate share of the entity's
net assets in the event of liquidation may be initially measured
either at fair value or at the non- controlling interests'
proportionate share of the recognised amounts of the acquiree's
identifiable net assets. The choice of measurement basis is made on
a transaction-by-transaction basis. Other types of non-controlling
interests are measured at fair value, when applicable, on the basis
specified in another IFRS.
3.5 Foreign currencies
Functional and presentational currency
Items included in the financial statements of each group entity
are presented in the currency of the primary economic environment
in which the entity operates. The functional currencies of the
operating subsidiaries are Renminibi (RMB) and Hong Kong Dollars
(HKD). For the purpose of the consolidated financial statements,
the results and financial position of the Group is expressed in
Pounds Sterling ("GBP"), for reporting in the United Kingdom, which
is the company's presentational currency.
The presentational currency of the Group is Pounds Sterling and
therefore the financial statements have been translated from RMB to
GBP and from HKD to GBP at the following exchange rates:
Year end rates Average rates
31 December 2011 GBP1 = RMB9.76 GBP1 = RMB10.39
GBP1 = HKD12.04 GBP1 = HKD12.47
31 December 2010 GBP1 = RMB10.23 GBP1 = RMB10.40
GBP1 = HKD12.04 GBP1 = HKD 12.13
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the re-translation at
period end exchange rates of the monetary assets and liabilities
denominated in foreign currencies are recognised in profit and loss
in the period. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not re-translated.
Group companies
The results and financial position of the Group's foreign
operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the
presentational currency are translated into the presentational
currency as follows:
-- assets and liabilities of the Group's foreign operations are
translated using exchange rates prevailing at the end of the
reporting period;
-- income and expense items are translated at average exchange
rates for the period unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expense items are
translated at the rate on the dates of the transactions; and all
resulting exchange differences are recognised in other
comprehensive income and accumulated in equity (attributed to
non-controlling interest as appropriate).
3.6 Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of
discounts, VAT and other sales related taxes.
Domestic sales
Sales of goods are recognised when goods are delivered and title
has passed and all revenue recognised is in respect of the sale of
goods.
Export sales
Sales of goods are recognised when the goods cleared the customs
and the title has passed.
3.7 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker is responsible for allocating
resources and assessing performance of the operating segments.
3.8 Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because it excludes
items of income or expense that are taxable or deductible in other
years and items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting
period.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted
for using the balance sheet method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Such assets and liabilities are
not recognised if the temporary difference arises from the initial
recognition of goodwill or from the initial recognition (other than
in a business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting
profit.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the profit and
loss, except when it relates to items charged or credited directly
to equity, in which case it is recognised in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
3.9 Leases
Leases in which a significant portion of the risks and rewards
of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to the profit and loss on a
straight-line basis over the period of the lease.)
3.10 Share-based payment arrangement
Equity-settled share-based payment transactions with parties
other than employees are measured at the fair value of the goods or
services received, except where that fair value cannot be estimated
reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains
the goods or the counterparty renders the services. Details
regarding the determination of the fair value of equity-settled
share-based transactions are set out in note 17.
Fair value is measured by use of the Black-Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
3.11 Property, plant and equipment
Property, plant and equipment are stated in the consolidated
statement of financial position at cost less any subsequent
accumulated depreciation and any recognised impairment loss.
Cost includes purchase price and all directly attributable costs
of bringing the asset to its location and condition necessary to
operate as intended.
Depreciation is provided at rates calculated to write off the
cost less estimated residual value from 0-10% of each asset over
its estimated useful economic life as follows
Furniture, fixtures and equipment 2 - 5 years
Motor vehicles 5 years
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount (refer note 3.18.2).
Gains and losses on disposals are determined by comparing the
disposal proceeds with the carrying amount and are included in the
profit and loss.
Asset in the course of construction is stated at cost less
impairment losses. Cost comprises direct costs of construction
capitalised during the periods of construction. Capitalisation of
these costs ceases and construction-in-progress is transferred to
property, plant and equipment when substantially all the activities
necessary to prepare the assets for their intended use are
completed. No depreciation is provided for in respect of
construction-in-progress until it is completed and ready for its
intended use.
3.12 Investment in subsidiaries
Investment in subsidiaries is stated at cost less provision for
impairment.
3.13 Inventories
Inventories and work in progress are measured at the lower of
cost and net realisable value.
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. Cost includes
all costs of purchase, costs of conversion and other costs incurred
in bringing the inventories to their present location and
condition. The cost of inventories and work in progress, other than
those for which specific identification of costs are appropriate,
is assigned by using the first-in, first-out (FIFO basis). When the
inventories and work in progress are sold, the carrying amount of
those inventories and work in progress are recognised as an expense
in the same period as the revenue.
The amount of any write-down of inventories and work in progress
to net realisable value are recognised as an expense in the period
the write-down or loss occurs. The amount of any reversal of a
write-down of inventories and work in progress are recognised as a
reduction in the amount of inventories and work in progress
recognised as an expense in the period in which the reversal
occurs.
3.14 Financial instruments
Financial assets and financial liabilities are recognised when a
group entity becomes a party to the contractual provisions of the
instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
3.15 Financial assets
Financial assets within the scope of IAS 39 are classified as
either financial asset at 'fair value through profit and loss'
(FVTPL), loans and receivables, held to maturity investments, or
available-for-sale financial assets, as appropriate.
The Group determines the classification of its financial assets
after initial recognition and, where allowed and appropriate,
re-evaluates this designation or convention in the market place
concerned.
All arm's length purchases and sales of financial assets are
recognised on the trade date i.e. the date that the Group commits
to purchase the asset. Such purchases or sales are purchases or
sales of financial assets that require delivery of assets within
the period generally established by regulation or convention in the
market place concerned.
3.15.1 Effective interest method
This is a method of calculating the amortised cost of a debt
instrument and of allocating interest income over the relevant
period. The effective interest rate is the rate that exactly
discounts estimated future cash receipts (including all fees and
points paid or received that form an integral part of the effective
interest rate, transaction costs and other premiums or discounts)
through the expected life of debt instrument, or where appropriate,
a shorter period, to the net carrying amount on initial
recognition.
Income is recognised on an effective interest basis for debt
instruments other than those financial assets classified at
FVTPL.
3.15.2 Financial assets at FVTPL
Financial assets classified as held for trading are included in
the category financial assets at fair value through profit or loss.
Financial assets are classified as held for trading if they are
acquired for the purpose of sale in the short term. Derivative
financial instruments are also classified as held for trading
unless they are designated and effective as a hedging instrument.
Financial assets at FVTPL are stated at fair value with any gains
or losses arising on re-measurement recognised in profit or
loss.
The Group does not designate any financial assets not held for
trading as financial assets as fair value through profit and
loss.
3.15.3 Held-to-maturity investments
Non-derivative financial assets with fixed or determinable
payments and fixed maturity are classified as held-to-maturity when
the Group has the positive intent and ability to hold the assets to
maturity. Investments intended to be held for an undefined period
are not included in this classification. Other long-term
investments that are intended to be held-to-maturity, such as
bonds, are subsequently measured at amortised cost using the
effective interest method less any impairment.
3.15.4 Loans and receivables
Non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market are classified as
loans and receivables. Loans and receivables (including trade and
other receivables, bank balances and cash) are measured at
amortised cost using the effective interest method less any
impairment.
Interest income is recognised by applying the effective interest
rate except for short-term receivables when the recognition of
interest would be immaterial.
3.15.5 Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial
assets that are designated as available-for-sale or are not
classified in any of the three preceding categories. After initial
recognition, available-for-sale assets are measured at fair value
with gains or losses being recognised in other comprehensive income
and accumulated under fair value adjustment reserve until the
investment is derecognised or until the investment is determined to
be impaired at which time the accumulate gain or loss previously
reported in equity is included in the profit or loss. The fair
value of investments that are traded in active market at the end of
each reporting period is determined by reference to the relevant
stock exchange's quoted market bid prices at the close of business
on the reporting period date. For investments where there is no
active market, fair value is determined using valuation techniques.
Such techniques include using recent arm's length market
transactions; reference to the current market value of another
instrument, which is substantially the same; discounted cash flow
analysis and option pricing models.
3.16 Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. Significant financial liabilities include trade payables and
other payables.
Trade and other payables are stated initially at their fair
value and subsequently measured at amortised cost suing the
effective interest method unless the effect of discounting would be
immaterial, in which case they are stated at cost.
Equity instruments are recorded at the fair value of
consideration received, net of direct issue costs.
3.17 Borrowings
Borrowings are recognised initially at the proceeds received,
net of transaction costs incurred, and subsequently measured at
amortised cost using the effective interest method. Borrowings are
classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at
least twelve months after the end of reporting date.
3.18 Impairment of assets
3.18.1 Financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at the end of each reporting date.
Financial assets are considered to be impaired when there is
objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial assets, the
estimated future cash flows of the investment have been
affected.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount, and present value of the estimated future cash flows
discounted at the original effective interest rate. An impairment
loss in respect of an available-for-sale financial asset is
calculated by reference to its fair value.
For certain categories of financial assets, such as trade
receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a
collective basis that share similar credit risk
characteristics.
For financial assets carried at cost, the amount of the
impairment loss is measured as the difference between the asset's
carrying amount and the present value of the estimated future cash
flows discounted at the current market rate of return for a similar
financial asset. Such impairment loss will not be reversed in
subsequent periods.
The carrying amount of the financial assets is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. Changes in the
carrying amount of the allowance account are recognised in profit
or loss.
When available-for-sale financial asset is considered to be
impaired, cumulative gains or losses previously recognised in other
comprehensive income are reclassified to profit or loss in the
period.
For financial assets measured at amortised cost, if, in a
subsequent period, the amount of the impairment loss decreases
which can be related objectively to an event occurring after the
impairment was recognised, the previously recognised impairment
loss is reversed through profit or loss to the extent that the
carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been
had the impairment not been recognised.
In respect of available-for-sale equity securities, impairment
losses previously recognised in profit or loss are not reversed
through profit or loss. Any increase in fair value subsequent to an
impairment loss is recognised in other comprehensive income and
accumulated under fair value adjustment reserve. In respect of
available-for-sale debt securities, impairment losses are
subsequently reversed through profit or loss if an increase in the
fair value of the investment can be objectively related to an event
occurring after the recognition of the impairment loss.
3.18.2 Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any
such indication exists, then the asset's recoverable amount is
estimated. For assets that have indefinite lives, the recoverable
amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. 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 the time value of money
and risk specific to the asset. For the purpose of impairment
testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or group of
assets (the "cash generating unit"). The goodwill acquired in a
business combination, for the purposes of impairment testing, is
allocated to cash-generating units that are expected to benefit
from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an
asset or its cash generating unit exceeds its estimated recoverable
amount. Impairment losses recognised in respect of cash generating
units are allocated first to reduce the carrying amount of the
other assets in the unit (or group of units) on a pro rata
basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that has been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
3.19 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits, bank
balances, demand deposits and other short term, highly liquid
investments that are readily convertible to known amount of cash
and are subject to an insignificant risk of changes in value.
3.20 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from
past events and whose existence will only be confirmed by the
occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Group. It can also be a
present obligation arising from past events that is not recognised
because it is not probable that outflow of economic resources will
be required or the amount of obligation cannot be measured
reliably.
A contingent liability is not recognised but is disclosed in the
notes to the accounts. When a change in the probability of an
outflow occurs so that the outflow is probable, it will then be
recognised as a provision. A contingent asset is a possible asset
that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain
events not wholly within the control of the Group. Contingent
assets are not recognised but are disclosed in the notes to the
accounts when an inflow of economic benefits is probable. When
inflow is virtually certain, an asset is recognised.
3.21 Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past event, it is probable
that an outflow of economic benefit will be required to settle the
obligation, and a reliable estimate of the amount can be made.
3.22 Employee Benefits
Short Term Employee Benefits
Wages, salaries, annual leave and sick leave, social security
contributions, bonuses and non-monetary benefits are accrued in the
period in which the associated services are rendered by the
employees.
Post-employment benefits
For the subsidiary of the Group in PRC, there are contributory
retirement plans operated by the local government. The employees
participate in the defined contribution retirement plan whereby the
company is required to contribute to the schemes at fixed rates of
the employees' salary costs. The company's contributions to these
plans are charged to profit or loss when incurred. The company has
no obligation for the payment of retirement and other
post-retirement benefits of staff other than the contributions
described above.
Contribution made to the defined contribution retirement plan
includes basic pension insurance in PRC which is charged to the
profit and loss in the period to which they are related.
Under the pension plan which the Group pays fixed contributions
and will have no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay
all employee benefits relating to employee service in the current
or prior financial periods. Once the contributions have been paid,
the Group has no further payment obligations.
3.23 Capital Risk Management
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The capital structure of the Group consists of
debt, which includes the loan disclosed in note 19, cash and cash
equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained
earnings.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates, assumptions and judgements concerning the future are
made in the preparation of the Financial Statements. They affect
the application of the Group's accounting policies, reported
amounts of assets, liabilities, income and expenses and disclosures
made. They are assessed on an on-going basis and are based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances.
4.1 Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates and assumptions will, by
definition, seldom equal the related actual results. The 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 are discussed below.
(a) Income taxes
The Group is subject to income taxes in numerous jurisdictions.
Significant judgement is required in determining the worldwide
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 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.
(b) Provisions for doubtful debts
Each debtor balance is assessed to determine recoverability of
debt. Provisions are made for all those debtors where evidence
indicates that recoverability is doubtful. Amounts are written off
when they are deemed irrecoverable. Any changes to estimates made
in relation to debtors' recoverability may result in material
difference amounts being reported in the Group's financial
statements.
(c) Share-based payment
The Group has share option schemes for certain suppliers.
Judgements and estimates are required in determining the
share-based payment charge as an expense in the income statement.
The directors have used Black-Scholes model one of the most widely
used models in valuing the share based payment charge. The
directors are in the opinion that the model used has been adjusted
to their best estimate in arriving at the charge.
5. BUSINESS AND GEOGRAPHICAL SEGMENTS
For the purpose of IFRS 8, the chief operating decision maker
takes the form of the Board of Directors. The Directors are of the
opinion that the business of the Group comprises of a single
activity, being the sale of ceramic products in PRC (including Hong
Kong). In Sep 2011, the operating subsidiary in PRC obtained the
export licence. Therefore the Group has expanded its sales
overseas. At the meetings between the Directors, the income,
expenditure cash flows, assets and liabilities are reviewed on a
whole-group basis.
The Group has a policy to invest in prime locations in PRC.
Sub-division of sales by type, function, by town or city of
location in PRC is therefore of little significance in reviewing
operations.
Based on the above considerations, there is considered to be one
reportable business segment, the sale of ceramic products.
Internal and external reporting is on a consolidated basis, with
transactions between Group companies eliminated on consolidation.
Therefore the financial information of the single segment is the
same as that set out in the consolidated statement of comprehensive
income, the consolidated statement of financial position, the
consolidated statement of changes in equity and the consolidated
statement of cash flows.
All the Group's non-current assets are located within PRC. No
Group non-current assets are located in the entity's country of
domicile.
Geographical information:
Group Group
2011 2010
GBP'000 GBP'000
PRC (including Hong Kong) 1,486 347
Europe 596 -
Far East 1537 -
South America 633 -
------------- -------------
4,252 347
============= =============
Information about major customers
Including in revenue sales of approximate GBP3.16 million are
revenues which arose from sales to the Group's three largest
customers.
The Group export sales in PRC are exempted from Value-added tax.
In addition to this, approximate 9% of the Value-added tax paid on
purchases relating to export sales will be refunded by the tax
authority.
6. EXPENSES BY NATURE
Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Changes in inventories (56) - - -
Inventory costs 3,747 250 - -
Employee benefit expense (note
7) 363 64 42 14
Depreciation 4 1 - -
Operating lease payments 58 4 - -
Legal and professional 152 58 152 58
Share-based charge 49 - 49 -
Other expenses 131 216 9 -
------------- ------------- ------------- -------------
Total cost of sales,
distribution
costs and administrative
expenses 4,448 593 252 72
============= ============= ============= =============
Included in legal and professional, audit fees of GBP26,000
(2010: GBP30,000) for parent company and group auditors and
GBP3,333 (2010: GBP4,167) to overseas subsidiary auditors.
7. EMPLOYEE BENEFIT EXPENSE
Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Wages and salaries 344 57 42 14
Social security costs and welfare 9 4 - -
Pension costs 10 3 - -
363 64 42 14
============= ============= ============= =============
2011 2010
Number Number
The average monthly number of
employees:
Management (including Executive
Directors) 8 15
Sales and marketing staff 45 50
53 65
============ ============
8. NET FINANCE COSTS
Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Bank charges 8 - 1 -
Foreign exchange (gains)/losses (11) (23) - -
Bank interest received (1) - - -
(4) (23) 1 -
============= ============= ============= =============
9. INCOME TAX EXPENSE
2011 2010
GBP'000 GBP'000
Current tax charge (33) (2)
The income tax expense for the year can
be reconciled as follow:
Loss before taxation (192) (223)
============= =============
Income tax calculated at 25% (2010: 17%) (48) (38)
Effect of income that is exempt from taxation 64 -
Effect of different tax rate of subsidiary (2) -
operating in other jurisdiction
Effect of prior year adjustment (1) -
Unrelieved tax losses c/f 14 -
Others 6 36
(33) (2)
============= =============
The applicable tax of the Group is derived from the
consolidation of all Group companies applicable tax band on their
domestic tax rates. The applicable tax rate for Asia Ceramics (HK)
Ltd is 16.5% and 25% for all Chinese subsidiaries.
10. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss
attributable to equity shareholders of the company by the weighted
average number of ordinary shares in issue during the year.
Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all dilutive potential ordinary shares. The dilutive potential
ordinary shares in the company are share options. A calculation is
done to determine the number of shares that could have been
acquired at fair value (determined as the average annual market
share price of the company's shares) based on the monetary rights
attached to outstanding share options. The number of shares
calculated above is compared with the number of shares that would
have issued assuming the exercise of the share options.
2011 2010
GBP'000 GBP'000
Earnings
Earnings for the purposes of basic and
diluted earnings per share being net
profit attributable to equity holders
of the parent (225,194) (225,070)
Number of shares
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 10,311,444 5,550,136
Effect of dilutive potential ordinary
shares:
Share options 46,857 84,285
Weighted average number of ordinary shares
for the purposes of diluted earnings
per share 10,358,301 5,634,421
==================== ==============
Loss per share
Basic (pence) (2.18) (4.06)
==================== ==============
Diluted (pence) (2.17) (3.99)
==================== ==============
11. PROPERTY, PLANT AND EQUIPMENT
GROUP
Asset Fixtures Motor vehicles Total
under construction and
fittings
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 6 July 2010 - - - -
Additions 110 4 - 114
------------------------ --------------
At 31 December 2010 110 4 - 114
Additions 94 - 28 122
Exchange differences 11 - 1 12
------------------------ -------------- ------------------- ------------
At 31 December 2011 215 4 29 248
======================== ============== =================== ============
Accumulated depreciation
At 6 July 2010 - - - -
Charge for the period - 1 - 1
------------------------ -------------- ------------------- ------------
At 31 December 2010 - 1 - 1
Charge for the period - - 3 3
Exchange differences - - - -
------------------------ -------------- ------------------- ------------
At 31 December 2011 - 1 3 4
======================== ============== =================== ============
Carrying amount
At 31 December 2011 215 3 26 244
======================== ============== =================== ============
At 31 December 2010 110 3 - 113
======================== ============== =================== ============
Asset under construction comprises expenditure incurred on
construction and renovation to a showroom and office in Foshan,
Guangdong which has not fully completed at end of reporting period.
Payments on the construction contract are made in instalments as
the work progresses. The unpaid portion of the contract has not
been capitalised and is disclosed as a capital commitment.
No fixed assets were held by the Company.
12. INVESTMENTS
COMPANY
2011 2010
GBP'000 GBP'000
At beginning of the period 1 -
Investment in subsidiaries - 1
At 31 December 2011 1 1
============= =============
Details of the Company's investment in subsidiaries at 31
December 2011 are as follows:
Name of Place of Proportion Principal activities
subsidiary incorporation of ownership
(or registration) interest
and operation %
Asia Ceramics (HK) Hong Kong 100 Retail of ceramics products
Ltd in
Hong Kong market
Shenyang Louis Building P.R. China 100 Establishment of ceramics
Materials Co., Ltd retail shops in PRC and
** sale of ceramics products.
Foshan Louis Valentino P.R. China 100 Sale of ceramics products
Ceramics Co., Ltd in PRC and export market
**
** Held by subsidiary company
Foshan Louis Valentino Ceramics Co., Ltd was established on 5
July 2011 with registered share capital of RMB500,000. On the same
day, Shenyang Louis Buildings Materials Co., Ltd subscribed 50% of
the registered share capital of the company for RMB250,000. On 8
August 2011, the remaining 50% of the registered share capital was
transferred to Shenyang Louis Buildings Materials Co., Ltd for
RMB250,000. As a result of this, Foshan Louis Valentino Ceramics
Co., Ltd is wholly owned by the Group.
Foshan Louis Valentino Ceramics Co., Ltd commenced trading in
October 2011 and the results of the company were fully consolidated
in these financial statements.
13. INVENTORIES
GROUP
2011 2010
GBP'000 GBP'000
Finished goods 56 -
56 -
============= =============
All inventories can be sold in the normal business operating
process. No finished goods in the current year have been carried at
fair value less costs to sell, same for previous year.
14. TRADE AND OTHER RECEIVABLES
Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Non-current
Intercompany balances - - 907 863
------------ ------------ ------------ ------------
- - 907 863
============ ============ ============ ============
Current
Account receivables 662 6 - -
Payment on accounts 381 48 - -
Other debtors 197 153 - 2
VAT 68 - - -
1,308 207 - 2
============ ============ ============ ============
Intercompanybalances are deemed to be recoverable and are
carried at their approximate fair value.
15. CASH AND CASH EQUIVALENTS
Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 669 834 134 379
669 834 134 379
============ ============ ============= =============
Bank balances and cash comprise cash held by the Group and
short-term bank deposits with an original maturity of three months
or less. The carrying amount of these assets approximates their
fair value.
16. SHARE CAPITAL
The company has one class of ordinary share capital which carry
no rights to fixed income, any preferences or restrictions.
2011 2010
GBP'000 GBP'000
Authorised:
20,000,000,000 Ordinary shares of GBP0.005 each 100,000 100,000
============ ============
Issued and fully paid:
10,311,444 Ordinary shares of GBP0.005 each 52 52
============ ============
There were no new shares issued during the year and the shares
issued in previous year are as follow:
Note Number Share Share
of Capital Premium
shares
GBP GBP
On Incorporation (i) 2 2 -
On 12 July 2010 (ii) 42,448 42,448 -
On 15 July 2010 (iii) 8,490,000 42,450 -
On 2 August 2010 (iv) 1,821,444 9,107 1,193,046
Less share issue costs - - (480,955)
10,311,444 51,557 712,091
================ ================== ===============
(i) On incorporation, the company issued 2 shares at par value of GBP1 each.
(ii) On 12 July 2010, the company issued 42,448 additional
shares at its par value of GBP1 each.
(iii) Pursuant to a special resolution of the company dated 15
July 2010 the authorised share capital of the company was
sub-divided into 20,000,000,000 shares of GBP0.005 each.
(iv) On 2 August 2010, the company raised GBP1.2 million gross
of expenses in a private placing through the issue of 1,821,444
additional shares at GBP0.66 each.
On 17 March 2012 the company signed a share subscription
agreement with Better Group (Holding) Co., Ltd where Better Group
(Holding) Co., Ltd subscribes 678,627 shares at 72.5p each and the
company agrees to issue new shares within 90 days from date of this
agreement. The shares were issued on 29 March 2012 and fully
paid.
At 31 December 2011, the company had the following outstanding
share options:
Number Exercise Date of grant Exercise period
price
257,786 GBP0.66 31.08 2010 31.08.2010 - 06.09.2013
206,229 GBP0.66 31.08.2010 31.08.2010 - 06.09.2015
17. SHARE OPTIONS
On 31 August 2010 the company executed a deed poll constituting
warrants to subscribe for ordinary shares in favour of WH Ireland.
Pursuant to this instrument, WH Ireland will be entitled to
subscribe for such number of Ordinary Shares as is equal to 2.5 per
cent. of the fully diluted share capital of the company on
Admission at an exercise price of GBP0.66 until the third
anniversary of Admission.
On the same date, the company granted warrants to Alexander
David to subscribe for such number of Ordinary Shares as is equal
to 2 per cent. of the company's issued Ordinary Share capital
following Admission at an exercise price of GBP0.66 per Ordinary
Share. The warrants are exercisable at any time following Admission
until the fifth anniversary of Admission.
As at 31 December 2011, none of the above options had been
exercised.
Details of the share options outstanding during the year are as
follows:
2011 2010
--------------------------------------------- ----------------------------------------------
Average Option Option Average Option Option
exercise 1 2 exercise 1 2
price price
in GBP in GBP
per share per share
At beginning of
the year 0.66 257,786 206,229 - - -
Granted - - - 0.66 257,786 206,229
Forfeited - - - - - -
Executed - - - - - -
Expired - - - - - -
-------------
At end of year 0.66 257,786 206,229 0.66 257,786 206,229
=============== ============= ============= ================ ============= =============
The weighted average estimated fair value of each share option
granted in the share option agreements both dated 31 August 2010
are 8.72 pence for option 1 and 12.8 pence for option 2.
These estimated fair values were calculated using the
Black-Scholes option pricing model. The model inputs were as
follow:
Option Option
1 2
Bid price GBP0.58 GBP0.58
Exercise price GBP0.66 GBP0.66
Expected volatility 25% 25%
Expected dividend yield - -
Risk-free interest rate 2.75% 2.75%
The expected volatility is based on the historical share prices
to the management's best estimate. The expected life used in the
model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restriction and
behavioural considerations.
The management has discounted the bid price by 25% in the
calculation as the management estimated that in order to place
substantial block of shares in the market a discount in the region
of 20% to 25% of bid price would be needed.
18. OTHER RESERVES
Other reserves include translation reserves which arising from
the translation of foreign operations into presentational currency,
share option reserves and statutory reserves.
In accordance with the relevant regulations applicable in the
PRC, companies now comprising the Group established in the PRC are
required to transfer at least 10% of their statutory annual profits
after tax to the statutory reserve until the balance of the reserve
reaches 50% of their respective registered share capital. Subject
to certain restrictions as set out in the relevant PRC regulations,
the statutory reserve may be used to offset against accumulated
losses of the respective PRC companies. The amount of the transfer
is subject to the approval of the board of directors of the
respective companies.
19. BORROWINGS
Non-current Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Loan from a shareholder (note
24) 100 500 500 500
Other 67 - - -
167 500 500 500
============ ============ ============= =============
Current Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Loan from a shareholder (note 333 - - -
24)
Other 13 - - -
346 - - -
============ ============ ============= =============
Other borrowing represents personal bank loan taken on behalf of
the company by an employee for the purchase of vehicle. The
borrowing is free of interest and the directors consider that the
carrying amount of the borrowings approximate to their fair
value.
20. TRADE AND OTHER PAYABLES
Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 270 84 - -
Payments received in advance 298 - - -
Other creditors 771 54 54 53
1,339 138 54 53
============ ============ ============= =============
Included in other creditors amount of GBP492,005 (HKD 6 million)
consideration received in advance from Better Group (Holding) Co.,
Ltd for the subscription of shares in the company (see note
16).
21. NOTES TO THE CASH FLOW STATEMENT
Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Loss from operations (192) (223) (253) (72)
Adjustments for:
Share-based payments 49 - 49 -
Depreciation of property, plant
and equipment 4 1 - -
Operating cash flows before movements
in working capital (139) (222) (204) (72)
Increase in inventory (56) - - -
(Increase)/decrease in trade
and other receivables (1,101) (207) 203 -
Increase in trade and other payables 756 140 1 53
------------ ------------ ------------- -------------
Net cash used in operations (540) (289) - (19)
Income taxes paid - (2) - -
Net cash used in operating activities (540) (291) - (19)
============ ============ ============= =============
22. COMMITMENTS
GROUP
Capital commitments
2011 2010
GBP'000 GBP'000
Commitments for the renovation
of office and showroom (note 11) 41 110
============= =============
Commitments under operating leases
At the reporting date, the Group had outstanding commitments for
future minimum lease payments under non-cancellable operating
leases, which fall due as follow:
2011 2010
GBP'000 GBP'000
Land and buildings
Within one year 50 4
In two to five years 199 77
More than five years 100 -
------------- -------------
349 81
============= =============
Operating lease payments represent rentals payable by the Group
for its office and showroom
23. ULTIMATE CONTROLLING PARTY
The ultimate controlling party of the Group is Dingxin Pu, the
majority shareholder and a director of the company.
24. RELATED PARTY TRANSACTIONS
Transactions within the Group have been eliminated in the
preparation of the financial information set out in this report and
are not disclosed in this note. Balance with other related parties
have been disclosed under the relevant notes.
i) On 18 August 2010, Dr Dingxin Pu, the Chief Executive Officer
and the majority shareholder of the company entered into a loan
facility agreement with the company, whereby Dr Dingxin Pu agreed
to make available to the company a loan facility of GBP500,000. The
loan is interest free and is repayable over five equal quarterly
instalments commencing from 18 months following the date of the
loan facility agreement. The loan was fully drawn down on 18 August
2010.
ii) At 31 December 2011, included in other creditors an amount
of HKD5,319 due to (2010: HKD25,377 due from) Dr Dingxin Pu, Chief
Executive Officer and majority shareholder of the company. This
balance is unsecured, interest free and repayable on demand.
iii) At 31 December 2011, included in other debtors an amount of
HKD30,398 (2010: HKD54,036) due from Dongen Jin, a director of
Shenyang Louis Building Materials Co., Limited. The amount is
unsecured, interest free and repayable on demand.
iv) A property licence agreement dated 11 August 2010 entered
into by Better Group (Holding) Co Limited ("Better Group"), a
shareholder, and Asia Ceramics (HK) Limited pursuant to which
Better Group agreed to grant a licence to Asia Ceramics (HK)
Limited to use part of its property at G/F, No 17 Wah Hong
Building, 13 - 20 Hong Lok Street, Mongkok, Kowloon, Hong Kong. The
licence is for the period 11 August 2010 to 17 June 2011 and
extended to 11 August 2014 on 15 June 2011. No rent is payable
under the terms of the licence.
On 31 July 2011, the extended agreement was cancelled and from
August 2011 onwards, Asia Ceramics (HK) Limited is liable to pay
rent for the amount of HKD48,000 per month until further notice.
This is an arm's length transaction.
v) The company has entered into a relationship and non-compete
agreement dated 31 August 2010 with Dr Dingxin Pu, Asia Ceramics
(HK) Limited and China Ceramics Holdings Limited ("CCH") pursuant
to which Dr Dingxin Pu has agreed to certain conditions in respect
of his control of the company. The agreement contains terms and
conditions intended to ensure that the company will be at all times
capable of carrying on its business independently of Dr Dingxin Pu
and companies controlled by him, including CCH. This agreement also
contains obligations to ensure that CCH, Dr Dingxin Pu and
employees of companies controlled by him, do not compete with the
business carried on by the Group in the PRC and Hong Kong.
vi) The Company has entered into a brand licensing agreements
dated 22 August 2010 with Dr Dingxin Pu, Asia Ceramics (HK) Limited
and Shenyang Louis Building Materials Co., Limited pursuant to
which Dr Dingxin Pu has granted an exclusive, irrevocable and
royalty free licence to use the trademark "Baitao" and "Bally"in
the PRC and Hong Kong, and a non-exclusive licence throughout the
rest of the world, until such time as the trademark is registered
in the company's name.
vii) During the year, the Group made sales to Louis Valentino
Investment & Development Co. Ltd ("LVID") for the amount of
RMB17.7 million (2010: nil). Due to lack of export experience and
expertise in dealing with international business, the Group
requested LVID to assist its export business in the initial stage,
and will gradually takeover by signing contracts with customers on
its own name and receiving payments from customers directly. During
this period, LVID has not made profits or commissions from its
assistance.
At the end of reporting period, the balance due from LVID is
RMB5.36 million (2010: nil). LVID is company connected to Dr
Dingxin Pu, a director and majority shareholder of the Asia
Ceramics Holdings Plc.
Key management compensation
Key management includes directors of the company and its
subsidiaries. The compensation paid or payable to key management
for the employee services is shown on page 8 of the Directors'
Report.
25. EVENT AFTER THE REPORTING DATE
On 17 March 2012 the company signed a share subscription
agreement with Better Group (Holding) Co., Ltd where Better Group
(Holding) Co., Ltd subscribes 678,627 shares at 72.5p each and the
company agrees to issue new shares within 90 days from date of this
agreement. The shares were issued on 29 March 2012 and fully
paid.
26. FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives arise to both
a financial asset of one enterprise and a financial liability or
equity instrument of another enterprise.
The Group's financial instruments comprise cash and cash
equivalents, receivables, payables and borrowings. The accounting
policies and methods adopted, including the basis of measurement
applied are disclosed above, where relevant. The information about
the extent and nature of these recognised financial instruments,
including significant terms and conditions that may affect the
amount, timing and certainty of future cash flows are disclosed in
the respective notes above, where applicable.
The Group does not enter into derivative transactions (such as
interest rate swaps and forward foreign currency contracts) and it
is, and has been throughout the period under review, the Group's
policy that no trading in financial instruments shall be
undertaken.
The following table details the carrying amounts and fair values
of financial assets and financial liabilities:
GROUP Carrying value Fair value
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Cash and cash equivalents 669 834 669 834
Trade and other receivables 1,308 207 1,308 207
1,977 1,041 1,977 1,041
============= ============= ============= =============
Financial liabilities
Trade and other payables 1,339 138 1,339 138
Borrowings 513 500 513 500
1,852 638 1,852 638
============= ============= ============= =============
Carrying value Fair value
COMPANY
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Cash and cash equivalents 134 379 134 379
Trade and other receivables - 2 - 2
134 381 134 381
============= ============= ============= =============
Financial liabilities
Trade and other payables 54 53 54 53
Borrowings 500 500 500 500
554 553 554 553
======== ======== ======== ========
The Group's activities expose it to a variety of financial
risks; currency risk, credit risk, liquidity risk and interest rate
risk. These risks are limited by the Group's financial management
policies and practices as described below:
Credit Risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers and investment securities.
The Group has credit risk management policies in place and
exposure to credit risk is monitored on an ongoing basis.
Management generally adopts conservative strategies and tight
control on credit policy. The Group has limited the amount of
credit exposure to customers.
The average credit period on sales is 60 days. No interest is
charged on the trade receivables. Trade receivable due from LVID,
the connect party, is guaranteed by Dr Pu personally.
Before accepting any new customer, the Group will check the
credit worthiness of any new customers. No provision for doubtful
debts was made during the year.
The trade and other receivables do not contain impaired assets
as they are still considered recoverable by reference to no default
experience so far. In determining the recoverability of trade
receivable, the Group considers any change in the credit quality of
the trade receivable from the date credit was initially granted up
to the reporting date.
The credit risk on cash and cash equivalent is limited because
the counterparties are banks with high credit ratings recognised by
international credit rating agencies.
The Group does not hold any collateral as security.
Liquidity risks
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group's reputation.
To ensure liquidity, the Group maintains sufficient cash and
cash equivalents on demand to meet its obligations as and when they
fall due.
Market risks
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial
instrument. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising return on risk.
Foreign currency exchange risks
The Group does not hedge its foreign currencies. Transactions
with customers and vendors are mainly denominated in Hong Kong
Dollars (HKD), Chinese Yuan (RMB) and US Dollars (USD). Management
considered that the currency exposure arising from these
transactions is not significant to the Group. Transactions with
Group companies denominated in Pounds Sterling (GBP), which are
exposed to foreign currency translation risks, are not significant
to the Group. The Group has bank accounts in HKD, RMB, USD and GBP
in order to mitigate against exchange risks.
The Group's exposure to foreign currency risk was as follow:
2011 HKD RMB USD Total
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other receivables 18 679 430 1,127
Cash and cash equivalent 109 375 - 484
Trade and other payables - 467 - 467
127 1,521 430 2,078
============= ============= ============= =============
2010 HKD RMB USD Total
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other receivables 9 2 - 11
Cash and cash equivalent 47 362 - 409
Trade and other payables 73 13 - 86
129 377 - 506
============= ============= ============= =============
Sensitivity analysis
A 10% strengthening of GBP against the following currencies at
the reporting date would have increased/(decreased) equity and
profit or loss by amounts shown below. This analysis assumes that
all variables, in particular interest rates, remain constant.
2011 2010
Equity Effect Equity Effect
in profit in profit
or (loss) or (loss)
GBP'000 GBP'000 GBP'000 GBP'000
HKD (12) (12) (12) (12)
RMB (137) (137) (34) (34)
USD (39) (39) - -
A 10% weakening of GBP against the following currencies at the
reporting date would have increased/(decreased) equity and profit
or loss by amounts shown below. This analysis assumes that all
variables, in particular interest rates, remain constant.
2011 2010
Equity Effect Equity Effect
in profit in profit
or (loss) or (loss)
GBP'000 GBP'000 GBP'000 GBP'000
HKD 14 14 14 14
RMB 169 169 42 42
USD 48 48 - -
Cash flow and fair value interest rate risks
The Group's primary interest rate risk relates to interest
bearing debts. Investments in financial assets are mainly short
term in nature and are not held for speculative purposes but are
placed in fixed deposits.
The Group manages its interest rate exposure by maintaining a
fixed rate borrowing to mitigate the risk associated to interest
rate fluctuation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BKADPABKDFAK
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