TIDMQIH
RNS Number : 8640O
Qihang Equipment Company Limited
26 September 2011
Qihang Equipment Company Limited (Formerly China Wonder
Limited)
(The "Company" or "Qihang")
Interim Results for the six months ended 30(th) June 2011
Qihang (AIM:QIH) was admitted to AIM on 4(th) July 2011 via the
reverse acquisition of China Wonder Limited which had become a cash
shell in April 2011 following the disposal of its operating
businesses.
Qihang, based in Zhenjiang, Jiangsu Province, Eastern China, is
a fast growing machine tool manufacturer including large lathe and
milling machines capable of creating huge components of greater
than one metre in diameter and sixty tonnes in weight. The Company
is one of the few businesses which can manufacture milling machines
for processing complicated screws used in the plastic and
petrochemical industry in China.
Highlights (Machine tool business)
-- Strong Financial Performance (RMB10 = GBP1, today's rate)
o Profit up 69% to RMB10.25m (approximately GBP1.03m)
o Turnover up 31% to RMB137.24m (approximately GBP13.72m)
o Margins improved due to increased sales of CNC and large
machines
o Invested in new equipment: RMB19m (approximately GBP1.9m)
-- Diversified Customer Base
o Qihang has a diversified client base with products going to a
wide range of end markets. Qihang is amongst the second tier of
producers with the top tier dominated by two large Government-owned
enterprises.
-- Commitment to ongoing R&D
-- The China advantage
o Qihang located in Jiangsu Province, Eastern China in close
proximity to Shanghai and a major industrial area for both heavy
industry and small and medium enterprise.
o Chinese GDP growth of 9% and the government's commitment to
the continuing development of heavy industry will underpin Qihang's
end markets.
Mr Yuanqing Li, Chief Executive Officer, commented:
"Our significant growth during the period ended 30(th) June,
2011, in part followed a strategy of focusing on higher-margin,
more technically advanced machinery, improving the Company's gross
margin. We hope to continually increase the proportion of CNC
machine tools output and export turnover. In addition, a key aspect
of the Company's growth strategy is to extend the sales agent
network into new geographical regions in all over China. This, we
believe, is a cost effective and deliverable strategy."
26 September 2011
Enquiries:
Qihang Tel: 0086 139 2159 4638
Mr Yuanqing Li, CEO Tel: 0044 (0)1483 894 627
Mark Chapman, Chairman
-------------------------------------------- ---------------------------
Nominated Adviser and Joint Broker Tel: 0044 (0)20 7796 8800
Northland Capital Partners Limited
William Vandyk / Tim Metcalfe
-------------------------------------------- ---------------------------
Joint Broker Tel: 0044 (0)20 7562 3384
Rivington Street Corporate Finance Limited
Dru Edmondstone
-------------------------------------------- ---------------------------
Financial PR Tel: 0044 (0) 207 245 1100
Hansard
Nicholas Nelson/Guy McDougall/Heather
Armstrong
-------------------------------------------- ---------------------------
Chairman's Statement
Introduction
For the purposes of clarity following the recent acquisition,
the Company is reporting on two sets of financial statements: 1.
Six months of trading of Qihang Equipment Company Limited (formerly
China Wonder Limited) which includes the trading of subsidiary
businesses disposed of in April 2011 and the costs associated with
the reverse acquisition of Win Yu International Investments Company
Limited ("Win Yu") to form the Qihang group as it is today; and 2.
The interim accounts showing six months of trading of Win Yu, the
now on-going Qihang business.
Financial Summary
Qihang Equipment Company Limited
On 4 April 2011, the Company announced the disposal of Wonder
Packaging Machinery Co for a cash consideration of RMB33 million
(approximately GBP3.1 million).
On 15 June 2011, the Company announced that it had conditionally
agreed, subject to shareholder approval, to acquire the entire
issued share capital of Win Yu, a company incorporated in Hong Kong
with operating subsidiaries in the People's Republic of China
("China"). The consideration for the acquisition was satisfied by a
cash payment of RMB53 million (approximate GBP5 million) and the
issue of 38,325,737 new ordinary shares of 2.5 pence each in the
Company ("Ordinary Shares") to the vendor.
At the time of the acquisition of Win Yu, the Company also
raised GBP325,000, before expenses, by means of a placing of
1,710,526 new Ordinary Shares at a price of 19p per share to fund
the costs of the acquisition.
Win Yu International Investments Company Limited
For the period ended 30(th) June, 2011, Win Yu's turnover
increased 31% year on year to RMB137.24m, EBIT increased by 84% to
RMB 16.35m and net profit increased by 69% to RMB 10.25m. The Gross
profit margin increased from 21% in the period ended 30(th) June,
2010 to 28% in the period ended 30(th) June, 2011. The higher
proportion of new products and CNC machine tools has contributed to
the increase of gross profit margin. We continued to make great
efforts to R&D input, and the R&D expense reached RMB5.27
million, a 216% increase year on year.
Business Description
Established in the 1960s as a state-owned enterprise under the
name of Zhenjiang Machine Tool Factory, Qihang is located in
Zhenjiang, Jiangsu Province, Eastern China, within easy reach of
Shanghai. The Company has a wide supplier network and good
transport links as a result of its location in the Yangtze River
Delta Economic Zone, and is therefore able to maintain a
competitive advantage.
The Company's manufacturing facilities occupy around 40,000
square metres of factory space on a 16.5 acre site in the High Tech
Development Zone supported by a strong research and development
department comprising around 80 staff which has been instrumental
in the development of a range of patented products.
The Company's business comprises the design, manufacture and
sale of lathe and milling machine tools falling into three
categories:
Universal: standard manually-operated machine tools which can be
used by any customer;
CNC: machine tools digitally controlled such that precision and
efficiency is improved and the end-user is able to adjust the
parameters from time to time; and
Heavy Duty: large installations which are capable of processing
raw materials more than one metre in diameter and sixty tonnes in
weight. Only a limited number of competitors have the capability to
produce these machines.
The majority of the Company's sales are made through its network
of approximately 180 distributors who are based throughout China
with a growing level of exports into almost thirty countries
including Brazil, Turkey, Malaysia, United States, Germany, UK and
Russia. All exports are made via PRC agents.
The Company continues to increase the sale of CNC machine tools
whilst displaying ever increasing exports particularly in recent
months.
Trading over the past six months
Whilst global markets have shown that we live in unpredictable
times, these past six months have been a period of solid progress
for the Company. The machine tool industry has remained relatively
resilient, due in part to the strength of major industrial
exporting countries such as Germany and China. The Chinese market
slowed in 2009 but nevertheless exhibited growth of 18.7%, with
2010 seeing growth increase to 41% (source: China Machine Tool
Association).
I am delighted to report a 31% growth in revenue to RMB137.24m,
versus RMB105.17m for the same period last year. I am also pleased
to report that the new management team has already taken great
strides in improving efficiencies within the business with a
reduction in overhead without compromise to productivity. The
ability to produce the same quality equipment, with a significantly
reduced cost base has set us on a firm footing for the six months
to come. Like any business aiming for sustained growth, we are
constantly looking for ways to improve efficiency beyond the recent
round of cost cutting.
Strong customer relationships are obviously of great importance
to us and we are committed to high levels of product fulfilment and
after-sales service. Our sales team currently has 60 staff
specialising in different global geographic regions with a third of
these focussed on after-sales care, parts and accessories. The
remainder comes from 180 sales agents located across China. The
majority of these remain located in the Company's regional
provinces of Jiangsu, Shandong and Zhejiang reflecting the
geographical make-up of the Company's sales profile. It is our
intention to connect with other international agents in key areas
in the near future.
The Company operates in a highly competitive marketplace and
while its product portfolio is increasingly becoming more bespoke
and technically advanced, it is exposed to competitive pressures.
This is particularly true as the domestic Chinese market is
dominated by two large government-backed companies. By
manufacturing our products on a bespoke basis, the Company achieves
a competitive advantage, accordingly we feel that it is essential
to strengthen our R&D operation and invest in the future.
It is our intention to establish operations in Liaoning province
in North Eastern China within the next year. The costs of this are
expected to be minimal as the Chinese Government is investing
heavily in equipment manufacturing industry in this area making
this step highly attractive to us. It is also important to note
that the talent pool in this region is of a significantly higher
quality than elsewhere in China.
Outlook
Chinese GDP growth of 9% and the Government's commitment to the
continued development of heavy industry will, we believe, underpin
Qihang's end markets. This will allow the Company to generate
strong earnings growth and pay down debt.
As a management team, we are employing a strategy of focusing on
higher-margin, more technically advanced machinery. This will
increase the operational gearing of the business whilst
significantly improving the gross margin.
Our current purpose built facility in Jiangsu is superbly
located in a major industrial area for both heavy industry and
small and medium enterprises; Qihang's main target customer base.
We generate about 60% of sales from Jiangsu and the adjacent
regions of Shandong and Zhejiang.
As mentioned above, a key aspect of the Company's growth
strategy is to extend the sales network into new geographical
regions. This is a cost effective and deliverable strategy, rather
than increasing the internal sales team which could prove expensive
and less impactful overall.
While the market for machine tools is global (although
concentrated towards economies with significant manufacturing
capabilities), demand is generally met locally. This is
particularly true for generic machinery special for medium and
small size enterprises; transportation costs provide local
producers with a significant cost advantage.
The Chinese market is showing better fundamental operating
dynamics than the global market as a whole. In 2010, it is
estimated that Chinese production by value accounted for only 66%
of domestic demand and the proportion of CNC is even less. This
would appear to offer Qihang a stable and growing market
opportunity to exploit, and also explains the relatively-benign
pricing environment.
We believe we are perfectly placed to take advantage of global
growth markets and are developing excellent supply partnerships
with the market leaders in those sectors. This allows us to bring
broader products and services to those customers from our
specialist niches, which - coupled with our deeper manufacturing
and design skills - means we are ready to take maximum advantage of
any opportunities, as they arise.
QIHANG EQUIPMENT COMPANY LIMITED (FORMERLY CHINA WONDER
LIMITED)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2011
Six Six Year
ended
months months 31
ended
30 ended December
June 2011 June 2010 2010
Unaudited Unaudited Audited
Restated Restated
GBP GBP GBP
Revenue - - -
Cost of sales - - -
---------- ---------- ----------
Gross profit - - -
Other operating income - - -
Administrative expenses (2,191) (5,008) (11,491)
Loss from operations (2,191) (5,008) (11,491)
Fair value gain on derivative
financial instrument (147,051) (55,110) 1,776
Finance income 4 - 3
Finance costs (5,000) (5,000) (10,000)
Loss before tax (154,238) (65,118) (19,712)
Taxation 5 (600) (600) (600)
---------- ---------- ----------
Loss for the period from continuing
operations (154,838) (65,718) (20,312)
Profit for the period from
discontinued operations 9 1,224,122 302,452 955,890
Profit for the period 1,069,284 236,734 935,578
---------- ---------- ----------
Other comprehensive income
Foreign currency reserve movement
Revaluation of available-for-sale - 424,013 263,232
investment (92,500) (30,000) 7,500
---------- ---------- ----------
Other comprehensive (loss)/income
for the period, net of tax (92,500) 394,013 270,732
---------- ---------- ----------
Total comprehensive income for the
period 976,784 630,747 1,206,310
========== ========== ==========
Profit attributable to
Equity holders of the company 1,069,284 224,406 912,358
Non-controlling interest - 12,328 23,220
---------- ---------- ----------
1,069,284 236,734 935,578
========== ========== ==========
Total comprehensive income
attributable to
Equity holders of the company 976,784 580,916 1,158,330
Non-controlling interest - 49,831 47,980
---------- ---------- ----------
976,784 630,747 1,206,310
========== ========== ==========
Earnings per share 6
From continuing and discontinued
operations
Basic 5.94p 1.25p 5.07p
Diluted 5.58p 1.25p 4.98p
From continuing operations
Basic (0.86p) (0.36p) (0.11p)
Diluted (0.78p) (0.36p) (0.06p)
From discontinued operations
Basic 6.80p 1.61p 5.18p
Diluted 6.36p 1.61p 5.04p
QIHANG EQUIPMENT COMPANY LIMITED (FORMERLY CHINA WONDER
LIMITED)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
30 June 30 June 31 December
2011 2010 2010
Notes Unaudited Unaudited Audited
GBP GBP GBP
ASSETS
Non-current assets
Property, plant and equipment - 1,590,052 651,513
Long term prepaid expenses - 7,512 18,863
Intangible assets - 1,444,750 84,959
Deferred tax assets - 29,680 22,358
Available-for-sale financial
assets 195,000 250,000 287,500
Derivative financial
instrument 8 44,453 134,618 191,504
----------- ----------- ------------
239,453 3,456,612 1,256,697
----------- ----------- ------------
Current assets
Inventories - 1,733,981 711,682
Trade and other receivables 249,098 3,363,095 1,768,513
Cash and cash equivalents 6,149,656 594,508 3,269,428
----------- ----------- ------------
6,398,754 5,691,584 5,749,623
----------- ----------- ------------
TOTAL ASSETS 6,638,207 9,148,196 7,006,320
=========== =========== ============
LIABILITIES
Current liabilities
Short term borrowings - 150,459 -
Trade and other payables 621,872 3,100,854 721,408
Current tax liabilities 105,640 51,220 115,440
727,512 3,302,533 836,848
----------- ----------- ------------
Net current assets 5,910,695 2,389,051 4,912,775
=========== =========== ============
Non-current liabilities
Long term loan 246,224 687,636 892,980
----------- ----------- ------------
246,224 687,636 892,980
TOTAL LIABILITIES 968,736 3,990,169 1,729,828
=========== =========== ============
NET ASSETS 5,664,471 5,158,027 5,276,492
=========== =========== ============
EQUITY
Share capital 7 450,000 450,000 450,000
Share premium 1,935,980 1,935,980 1,935,980
Statutory reserve - 187,194 219,882
Translation reserve - 867,173 588,805
Available-for-sale financial
asset reserve (5,000) 50,000 87,500
Retained earnings 3,283,491 1,339,061 1,994,325
----------- ----------- ------------
Equity attributable to owners
of the company 5,664,471 4,829,408 5,276,492
Non-controlling interest - 328,619 -
----------- ----------- ------------
TOTAL EQUITY 5,664,471 5,158,027 5,276,492
=========== =========== ============
QIHANG EQUIPMENT COMPANY LIMITED (FORMERLY CHINA WONDER
LIMITED)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2011
Available-for-sale
financial
Share Share Statutory Translation asset Retained Non-controlling Total
capital premium reserve Reserve Reserve earnings Total interests equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 1
January 2011 450,000 1,935,980 219,882 588,805 87,500 1,994,325 5,276,492 - 5,276,492
Total
comprehensive
income for
the period - - - - (92,500) 1,069,284 976,784 - 976,784
Transactions
with owners
Other
changes:
Disposal of
subsidiary
companies - - (219,882) (588,805) - 219,882 (588,805) - (588,805)
Balance at 30
June 2011 450,000 1,935,980 - - (5,000) 3,283,491 5,664,471 - 5,664,471
======== ========== ========== ============ =================== ========== ========== ================ ==========
Balance at 1
January 2010 450,000 1,935,980 187,194 480,663 80,000 1,114,655 4,248,492 426,850 4,675,342
Total
comprehensive
income for
the period - - - 386,510 (30,000) 224,406 580,916 49,831 630,747
Transactions
with owners
Purchase of
shares in
subsidiary
company - - - - - - - (148,062) (148,062)
-------- ---------- ---------- ------------ ------------------- ---------- ---------- ---------------- ----------
Balance at 30
June 2010 450,000 1,935,980 187,194 867,173 50,000 1,339,061 4,829,408 328,619 5,158,027
======== ========== ========== ============ =================== ========== ========== ================ ==========
Balance at 1
January 2010 450,000 1,935,980 187,194 480,663 80,000 1,114,655 4,248,492 426,850 4,675,342
Total
comprehensive
income for
the period - - - 238,472 7,500 912,358 1,158,330 47,980 1,206,310
Transactions
with owners
Other
changes:
Transfer to
statutory
reserve - - 32,688 - - (32,688) - - -
Acquisition of
subsidiary
companies - - - - - - - (148,062) (148,062)
Disposal of
subsidiary
companies - - - (130,330) - - (130,330) (326,768) (457,098)
Balance at 31
December
2010 450,000 1,935,980 219,882 588,805 87,500 1,994,325 5,276,492 - 5,276,492
======== ========== ======== ========== ======= ========== ========== ========== ==========
QIHANG EQUIPMENT COMPANY LIMITED (FORMERLY CHINA WONDER
LIMITED)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2011
Six months
Six months ended Year ended
ended 30 30 June 31 December
June 2011 2010 2010
Unaudited Unaudited Audited
(Loss)/profit before tax (154,838) 275,704 1,143,365
Depreciation of property, plant and
equipment - 85,607 143,429
Amortisation of intangible assets - 1,046 2,573
Provision of warranty - 1,644 (39,314)
Interest paid 5,000 50,366 98,852
Interest received (4) (2,936) (26,715)
Fair value gain on derivative
financial instrument 147,051 55,110 (1,776)
Gain on bargain purchase of
subsidiary company - (34,548) (34,548)
Gain on disposal of investment in
subsidiary companies (1,224,122) - (503,721)
Profit on disposal of property,
plant and equipment - (6,866) -
------------ ----------- -------------
Operating (loss)/profit before
changes in working capital (1,226,913) 425,127 782,145
Increase in inventories - (377,795) (105,164)
Decrease/(Increase) in trade and
other receivables 192,230 (959,643) (808,009)
Increase/(decrease) in trade and
other payables 957,432 584,217 (161,032)
Tax paid (600) (7,261) (64,940)
------------ ----------- -------------
Net cash used in operating
activities (77,851) (335,355) (357,000)
============ =========== =============
Investing activities
Additions of property, plant and
equipment - (206,784) (135,221)
Increase of long term prepaid
expenses - (5,359) (18,422)
Interest received 4 2,936 26,715
Proceeds from disposal of property,
plant and equipment - 589 2,582
Additions to intangible assets - (8,145) (1,130)
Acquisition of subsidiary company - (113,514) (113,514)
Net cash inflow on disposal of
subsidiary companies 2,926,854 - 2,793,797
Net cash from investing activities 2,926,858 (330,277) 2,554,807
============ =========== =============
Financing activities
Interest paid (5,000) (50,366) (88,852)
Proceeds from borrowings 36,221 211,549 963,131
Repayment of borrowings - (68,764) (783,722)
Net cash from financing activities 31,221 92,419 90,557
============ =========== =============
Net increase in cash and cash
equivalents 2,880,228 (573,213) 2,288,364
Cash and cash equivalents at
beginning of period 3,269,428 740,336 740,336
Effect of foreign exchange
differences - 427,385 240,728
Cash and cash equivalents at end of
period 6,149,656 594,508 3,269,428
============ =========== =============
QIHANG EQUIPMENT COMPANY LIMITED (FORMERLY CHINA WONDER
LIMITED)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2011
1 General information
Qihang Equipment Company Limited ("Qihang") is a company
incorporated in Jersey under Companies (Jersey) Law, 1991. The
address of the registered office is 11 Bath Street, St. Helier,
Jersey JE2 4ST.
On 4 April 2011, the company announced the disposal of Wonder
Packaging Machinery Co for a cash consideration of RMB33 million
(approximately GBP3.1 million). Following the disposal,
representing the only trading operations, the company became an
investing company for the purposes of AIM Rules.
On 15 June 2011, the Company announced that it has conditionally
agreed, subject to shareholder approval, to acquire the entire
issued share capital of Win Yu, a company incorporated in Hong Kong
with operating subsidiaries in the Peoples Republic of China
("PRC"). The consideration for the acquisition was satisfied by a
cash payment of RMB53 million (approximate GBP5 million) and the
issue of 38,325,737 new ordinary shares of 2.5 pence each in the
Company ("Ordinary Shares") to the vendor.
At the time of the acquisition of Win Yu, the Company also
raised GBP325,000 before expenses by means of a placing of
1,710,526 new Ordinary Shares at a price of 19p per share to fund
the costs of the acquisition.
On 1 July 2011, by special resolution:
i) the acquisition of Win Yu was approved by the shareholders of
Qihang;
ii) the company changed its name to Qihang Equipment Company
Limited; and
iii) It was resolved that the annual reports of Qihang will be
produced in Renminbi ("RMB") of People's Republic of China, which
is the functional currency of the company for the year ending 31
December 2011 and for the future accounting periods.
The enlarged share capital of the company was admitted to trade
on AIM on 4 July 2011.
These condensed financial statements present information about
the company as an investment company and are set out in pounds
sterling for consistency prior to reversed acquisition being
completed. The exchange rate used is GBP1: RMB10.3502.
2 Basic of preparation
The condensed financial statements have been prepared in
accordance with International Accounting Standard 34 Interim
Financial Reporting.
The report is unaudited and does not constitute the company's
statutory accounts for the six months ended 30 June 2011.
3 Significant accounting policies
The condensed financial statements have been prepared under the
historical cost convention, except for the revaluation of certain
financial instruments.
The same accounting policies, presentation and methods of
computation have been followed in these condensed financial
statements as were applied in the preparation of the group's
financial statements for the year ended 31 December 2010.
QIHANG EQUIPMENT COMPANY LIMITED (FORMERLY CHINA WONDER
LIMITED)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2011 - continued
4 Segment information
On 4 April 2011, the company disposed of net assets and
liabilities of Wonder Packaging Machinery Co as at 31 December
2010. As a result of this, the company is non-trading during the
period. Therefore, no segment information is reported.
5 Taxation
The company is an exempt company for taxation purposes under
which the company's liability to Jersey taxation is limited to
GBP600 per annum.
6 Earnings per share
Basic earnings per share
Basic earnings per share are calculated by dividing the profit
attributable to equity shareholders of the company by the weighted
average number of ordinary shares in issue during the year.
Six months
Six months ended Year ended
ended 30 June 31 December
30 June 2010 2010
2011 Restated Restated
GBP GBP GBP
Profit attributable to equity
holders of the company 1,069,284 224,406 912,358
=========== =========== =============
Earnings used in the calculation
of basic earnings per share 1,069,284 224,406 912,358
=========== =========== =============
Profit for the period from
discontinued operations used in the
calculation of basic earnings per
share from discontinued operations 1,224,122 290,124 932,670
=========== =========== =============
Earnings used in the calculation
of basic earnings per share from
continuing operations (154,838) (65,718) (20,312)
=========== =========== =============
Number Number Number
Weighted average number of ordinary
shares for the purpose of basic
earnings per share 18,000,000 18,000,000 18,000,000
=========== =========== ===========
Diluted earnings per share
Diluted earnings 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 convertible loan. 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 convertible loan. The number of
shares calculated above is compared with the number of shares that
would have issued assuming the loan has been converted.
QIHANG EQUIPMENT COMPANY LIMITED (FORMERLY CHINA WONDER
LIMITED)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2011 - continued
Six months
Six months ended Year ended
ended 30 June 31 December
30 June 2010 2010
2011 Restated Restated
GBP GBP GBP
Earnings used in the calculation
of basic earnings per share 1,069,284 224,406 912,358
Interest on convertible loan after
tax 5,000 5,000 10,000
----------- ----------- -------------
Earnings used in the calculation
of diluted earnings per share 1,074,284 229,406 922,358
=========== =========== =============
Profit for the year from
discontinued operations used in the
calculation of diluted earnings per
share from discontinued operations 1,224,122 290,124 932,670
=========== =========== =============
Earnings used in the calculation
of diluted earnings per share from
continuing operations (149,838) (60,718) (10,312)
=========== =========== =============
The weighted average number of ordinary shares for the purpose
of diluted earnings per share reconciles to the weighted average
number of ordinary shares used in the calculation of basic earnings
per share as follows:
Number Number Number
Weighted average number of ordinary
shares for the purpose of basic
earnings per share 18,000,000 18,000,000 18,000,000
Shares deemed to be issued for no
consideration in respect of
convertible loan 1,236,511 - 514,529
----------- ----------- -----------
Weighted average number of ordinary
shares used in the calculation of
diluted earnings per share 19,236,511 18,000,000 18,514,529
=========== =========== ===========
7 Share capital
The issued share capital of the company as at 30 June 2011 was
GBP450,000 fully paid. There were no movements in the issued share
capital of the company in either the current or the prior interim
reporting periods.
On 1 July 2011, by special resolution, the authorised share
capital of the company increased from GBP1,625,000 divided into
65,000,000 ordinary shares of 2.5 pence each in the capital of the
company by GBP3,375,000 to GBP5,000,000 divided into 200,000,000
ordinary shares.
8 Derivative financial instrument
The fair value of the share options was calculated using a
Black-Scholes option prising model. The volatility was measured at
25%, the risk free rate was 0.5% and the expected dividend was nil.
The fair values and other details which were processed into the
model are as follows:
Number of options Grant date Option price Fair value Exercise period
50,000,000 22/12/2009 0.8p 0.09p 21/12/2012
QIHANG EQUIPMENT COMPANY LIMITED (FORMERLY CHINA WONDER
LIMITED)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2011 - continued
9 Disposal of subsidiary (discontinued operation)
On 4 April 2011, the company disposed of the only trading
operation Wonder Packaging Machinery Co for a cash consideration of
RMB33 million. 15% of this sale price, plus interest is kept in a
specified "Escrow Account" for at least a period of twelve ,months
from 21 June 2011 as security. Details of the disposal are as
follows:
9.1 Book value of net assets sold
GBP
Non-current assets
Property, plant and equipment
Long term prepaid expenses 651,513
Intangible assets 18,863
Deferred taxation 84,959
22,359
Current assets
Inventories 711,682
Trade and other receivables 2,125,167
Cash and cash equivalents 282,746
Current liabilities
Trade and other payables (640,026)
Non-current liabilities
Bank borrowings (682,980)
Net assets disposed of 2,574,283
Cash consideration (net received
of RMB33,220,000) 3,209,600
Profit on disposal 635,317
==========
9.2 Net cash inflow on disposal
Consideration received in cash 3,209,600
Less: cash and cash equivalent
balances disposed of (282,746)
2,926,854
==========
9.3 Gain on disposal
The gain on disposal is included in the profit for the period
from discontinued operations in the consolidated statement of
comprehensive income as follow:
Profit on disposal 635,317
Cumulative exchange differences
in respect of the subsidiaries
reclassified from equity to profit
or loss on disposal of subsidiary 588,805
1,224,122
==========
QIHANG EQUIPMENT COMPANY LIMITED (FORMERLY CHINA WONDER
LIMITED)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2011 - continued
10 Related party transactions
Included in trade and other payables amount of RMB2 million due
to Meirong Yuan, a director of the company; the loan has been
repaid on 20(th) August, 2011 and is interest free.
11 Events after the reporting date
On 4 July 2011, the enlarged share capital of China Wonder
Limited was re admitted on AIM trading. As a result of this, the
board has considered 4 July as date of completion of reversed
acquisition.
WIN YU INTERNATIONAL INVESTMENTS COMPANY LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2011
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2011 2010 2010
Notes Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
Revenue 5 137,235 105,172 209,670
Cost of sales (99,018) (83,073) (154,307)
----------- ----------- -------------
Gross profit 38,217 22,099 55,363
Other operating income 766 718 143
Operating expenses Other
gains and losses (63) - -
Distribution costs 10 (9,247) (5,679) (12,049)
Administrative expenses (13,380) (9,849) (21,707)
Specific bad debt written
off - (5,766) (5,947)
----------- ----------- -------------
Profit from operations 16,293 1,523 15,803
Non-operating income net of
expenses 15 (55) (240)
Income from subsidies 44 7,408 10,238
Investment income 1,175 1,009 2,295
Finance costs (5,321) (3,056) (6,330)
Profit before tax 12,206 6,829 21,766
Taxation 6 (1,958) (778) (2,213)
----------- ----------- -------------
Profit for the period 10,248 6,051 19,553
----------- ----------- -------------
Other comprehensive income:
Gains on revaluation of
land and buildings, net of
tax - - 54,712
----------- ----------- -------------
Total comprehensive income
for the period 10,248 6,051 74,265
=========== =========== =============
Profit attributable to
Equity holders of the
company 10,248 4,236 14,664
Non-controlling interest - 1,815 4,889
----------- ----------- -------------
10,248 6,051 19,553
=========== =========== =============
Total comprehensive income
attributable to
Equity holders of the
company 10,248 4,236 69,376
Non-controlling interest - 1,815 4,889
----------- ----------- -------------
10,248 6,051 74,265
=========== =========== =============
WIN YU INTERNATIONAL INVESTMENTS COMPANY LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
ASSETS
Non-current assets
Property, plant and equipment 177,519 116,338 164,336
Intangible assets 40,548 13,137 40,718
Deferred tax assets 554 - 554
----------- ----------- ------------
218,621 129,475 205,608
----------- ----------- ------------
Current assets
Inventories 72,395 58,234 78,805
Trade and other receivables 82,082 55,181 67,502
Available-for-sale financial
assets 100 100 100
Cash and cash equivalents 45,825 42,512 32,632
----------- ----------- ------------
200,402 156,027 179,039
----------- ----------- ------------
TOTAL ASSETS 419,023 285,502 384,647
=========== =========== ============
LIABILITIES
Current liabilities
Bank borrowings 127,000 113,400 97,350
Trade and other payables 127,360 90,619 97,446
Current tax liabilities 1,029 610 1,459
255,389 204,629 196,255
----------- ----------- ------------
Net current liabilities 54,987 48,602 17,216
=========== =========== ============
Non-current liabilities
Bank borrowings 15,000 20,000 50,000
Other borrowings 42,000 3,000 42,000
Deferred tax liabilities 9,655 359 9,655
----------- ----------- ------------
66,655 23,359 101,655
NET ASSETS 96,979 57,514 86,737
=========== =========== ============
EQUITY
Share capital 8 - 8
Revaluation reserve 54,712 - 54,712
Statutory reserve 3,185 2,430 3,191
Other reserve 26,318 26,318 26,318
Retained earnings 12,756 10,468 2,508
----------- ----------- ------------
Equity attributable to owners
of the company 96,979 39,216 86,737
Non-controlling interest - 18,298 -
----------- ----------- ------------
TOTAL EQUITY 96,979 57,514 86,737
=========== =========== ============
WIN YU INTERNATIONAL INVESTMENTS COMPANY LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2011
Share Revaluation Statutory Other Retained Non-controlling Total
capital Reserve reserve reserve earnings Total interests equity
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Balance at 1
January 2011 8 54,712 3,191 26,318 2,508 86,737 - 86,737
Comprehensive
income
Profit or loss - - - - 10,248 10,248 - 10,248
Transactions
with owners
Disposal of
subsidiary - - (6) - - (6) - (6)
-------- ------------ ---------- -------- --------- -------- ---------------- --------
Balance at 30
June 2011 8 54,712 3,185 26,318 12,756 96,979 - 96,979
======== ============ ========== ======== ========= ======== ================ ========
Balance at 1
January 2010 - - 2,430 26,318 6,232 34,980 16,483 51,463
Comprehensive
income
Profit or loss - - - - 4,236 4,236 1,815 6,051
Balance at 30
June 2010 - - 2,430 26,318 10,468 39,216 18,298 57,514
======== ============ ========== ======== ========= ======== ================ ========
Balance at 1
January 2010 - - 2,430 26,318 6,232 34,980 16,483 51,463
------- ------ ------- --------- --------- --------- ---------
Comprehensive
income
Profit or loss - - - - 14,664 14,664 4,889 19,553
Transfer - - 761 - (761) - - -
Other
comprehensive
income
Gains on the
revaluation of
land and
buildings, net
of tax - 54,712 - - - 54,712 - 54,712
------- ------ ------- --------- --------- --------- ---------
Total
comprehensive
income - 54,712 761 - 13,903 69,376 4,889 74,265
------- ------ ------- --------- --------- --------- ---------
Transactions
with owners
Shares issued 8 - - - - 8 - 8
Purchase of
shares from
non-controlling
party - - - - (17,627) (17,627) (21,372) (38,999)
------- ------ ------- --------- --------- --------- ---------
Total
transactions
with owners 8 - - - (17,627) (17,619) (21,372) (38,991)
------- ------ ------- --------- --------- --------- ---------
Balance at 31
December 2010 8 54,712 3,191 26,318 2,508 86,737 - 86,737
======= ====== ======= ========= ========= ========= =========
WIN YU INTERNATIONAL INVESTMENTS COMPANY LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2011
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
Profit before interest and tax 16,352 8,876 25,801
Depreciation of property, plant and
equipment 5,899 5,512 9,224
Amortisation of intangible assets 534 162 435
Allowance for doubtful debts - 5,766 5,947
Loss on disposal of subsidiary 63 - -
Loss on disposal of property, plant
and equipment 400 6,747 7,152
----------- ----------- -------------
Operating profit before changes in
working capital 23,248 27,063 48,559
Decrease/(increase) in inventories 5,812 (6,044) (26,615)
(Increase)/decrease in trade and
other receivables (37,396) 1,688 (10,706)
Increase in trade and other payables 33,479 4,511 10,998
Interest paid (5,321) (3,056) (6,330)
Tax paid (2,388) (534) (1,693)
----------- ----------- -------------
Net cash generated from operating
activities 17,434 23,628 14,213
=========== =========== =============
Investing activities
Purchase of property, plant and
equipment (19,545) (18,789) (34,487)
Purchase of intangible assets (364) (97) -
Purchase of investment - - (100)
Interest received 1,175 1,009 2,295
Net cash inflow on disposal of
subsidiary companies 5,893 - -
Net cash used in investing
activities (12,841) (17,877) (32,292)
=========== =========== =============
Financing activities
Proceeds from bank borrowings 109,600 81,100 127,350
Repayment of bank borrowings (101,000) (49,850) (82,150)
Net cash from financing activities 8,600 31,250 45,200
=========== =========== =============
Net increase in cash and cash
equivalents 13,193 37,001 27,121
Cash and cash equivalents at
beginning of period 32,632 5,511 5,511
Cash and cash equivalents at end of
period 45,825 42,512 32,632
=========== =========== =============
WIN YU INTERNATIONAL INVESTMENTS COMPANY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2011
1 General information
Win Yu International Investments Company Limited ("Win Yu") is a
company incorporated in Hong Kong under the Companies Ordinance and
the address of the registered office is Suites 2001 - 2005, 20(th)
Floor, Jardine House, 1 Connaught Place, Centre, Hong Kong. The
nature of the Win Yu group's operations and its principal
activities are manufacture of universal lathes, CNC machinery tool
and associated parts. The principal place of business of the Win Yu
group's operation is at Zhenjiang New Development Area, Dingmao
Nanwei Road, Jiangsu Province, PRC.
On 15 June 2011, the shareholders of Win Yu have entered into a
conditional agreement with China Wonder Limited, to dispose of the
entire issued share capital of the company. This disposal was
completed on 4 July 2011.
These condensed financial statements present information about
the company and are set out in Renminbi ("RMB") of the PRC, which
is the functional currency of the company.
These condensed financial statements are presented in the
nearest thousands.
2 Basic of preparation
The condensed financial statements have been prepared in
accordance with International Accounting Standard 34 Interim
Financial Reporting.
The report is unaudited and does not constitute the company's
statutory accounts for the six months ended 30 June 2011.
3 Significant accounting policies
The condensed financial statements have been prepared under the
historical cost convention, except for the revaluation of certain
properties and financial instruments.
The same accounting policies, presentation and methods of
computation have been followed in these condensed financial
statements as were applied in the preparation of the group's
financial information on Part III, Section C of the Admission
Document of China Wonder Limited dated 15 June 2011.
4 Seasonality of interim operation
The company is sensitive to the seasonality of sales.
Traditionally and historically, first quarter of the year is very
quiet due to festive season in PRC. With unexpected increased of
orders in this period, the sales have increased significantly
compared to the first six months of last year. This is mainly due
to the recovery of world economy crisis.
5 Segment information
The sales revenue arises from the sale of universal lathes, CNC
machinery, large-scale machinery and relevant spare parts which
forms the company's main business. All the activities are within
PRC. Therefore management considers no detail of the operating and
geographical segments information is to be reported.
6.27% (6 months ended 30 June 2010: 4.55%) of sales are made via
PRC agents to customers overseas.
WIN YU INTERNATIONAL INVESTMENTS COMPANY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2011 - continued
Revenue from the sale of goods and services are analysed as
follows:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2011 2010 2010
RMB'000 RMB'000 RMB'000
Universal 81,433 66,752 114,621
CNC 37,622 21,540 51,492
Large-scale 18,555 12,668 32,302
Others 578 4,242 11,543
Sales and other sales related taxes (953) (30) (288)
----------- ----------- -------------
137,235 105,172 209,670
=========== =========== =============
6 Taxation
The company is regarded as resident for the tax purposes in PRC
and subject to national income tax rate at 25% (same for calendar
year 2010). Due to its high technology enterprise status, the
company is entitled to a reduction in tax rate at 15% (same for
calendar year 2010).
Interim income tax is accrued based on 15% tax rate.
7 Property, plant and equipment
During the period, the company spent approximate RMB19 million
on plant and machinery to upgrade its manufacturing
capabilities.
8 Borrowings
During the period, the company obtained new short term bank loan
in the amount of RMB109.6 million. The loan bears interest at fixed
rates and is repayable with 1 year. The proceeds were used for
short term working capital needs. Repayments of other bank loans
amounting to RMB101 million were made in line with previously
disclosed repayment terms.
9 Share capital
The issued share capital of the company as at 30 June 2011 is
HKD10,000 fully paid. There were no movements in the registered
share capital of the company in either the current or the prior
interim reporting periods.
10 Disposal of subsidiary
On 1 January 2011, the company disposed of its 100% investment
in Jiangsu Anke Chilun Co., Limited for a cash consideration of
RMB10 million. Details of the disposal are as follows:
WIN YU INTERNATIONAL INVESTMENTS COMPANY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2011 - continued
10.1 Book value of net assets sold
RMB'000
Non-current assets
Property, plant and equipment 62
Current assets
Inventories 598
Trade and other receivables 22,816
Cash and cash equivalents 4,107
Current liabilities
Bank borrowings (13,950)
Trade and other payables (3,570)
---------
Net assets disposed of 10,063
Cash consideration 10,000
Loss on disposal 63
=========
10.2 Net cash inflow on disposal
Consideration received in cash
on 13 May 2011 10,000
Less: cash and cash equivalent
balances disposed of (4,107)
5,893
========
11 Related party transactions
On 15 March 2011, the loans of RMB11,333,785 and RMB8,666,215 to
Shenzhen Heng Tai Feng and Shenzhen Zhonghemei respectively were
transferred to Mr Ziqing Qin. Mr Yuanqing Li, a director of the
company has provided personal guarantees to these loans.
The company has provided cash guarantees of RMB11,980,000 to
bank borrowings of RMB13,950,000 taken out by Jiangsu Anke Chilun
Co., Limited. These guarantees are expected to expire by the end of
December 2012. On 25 April 2011, the company has entered into an
agreement with Jiangsu Anke Chilun Co., Limited to take over this
liability of RMB13,950,000 bank borrowings.
12 Events after the reporting date
On 4 July 2011, the enlarged share capital of China Wonder
Limited was re admitted on AIM trading. As a result of this, the
board has considered 4 July as date of completion of reversed
acquisition.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FMGZLKFZGMZM
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