RNS Number:6808E
China Western Investments PLC
28 September 2007
China Western Investments Plc
Financial Statements for the year ended 31st March 2007
Chairman's Statement
In the full year to 31st March 2007, the Group continued to reduce trading
losses. The post-tax loss was #0.980m which was a reduction from #2.375m loss
last year.
The disposal of the UK properties, as outlined in last year's statement,
progressed. The sale of Oakridge Ventures Limited was completed in September
2006 with no further write down in value - in fact a small write back of the
impairment eventuated. Oakridge had continued to make losses after interest
however the sale curtailed the UK rental deficits. The cash generated from the
sale was used to repay creditors and to inject some funds into the China
operations. No assets are now held in the UK and all investment in the short
term will be directed at China.
The name of the Company was changed from Hemisphere Properties plc to the
present name during the course of the year to reflect the ongoing focus of the
Company's business.
Trading in China through LITBC showed a small profit before interest costs.
This profit was offset by the first year's losses from the Tien Shui hospital.
It is expected that LITBC trading will continue to improve and that the hospital
will break even during the coming year or possibly move into profit. Funds to
cover the first year's losses for the hospital were provided by a shareholder
loan. No further investment has been made in the operations in China whilst
development funding continues to be sought.
A website, www.chwi.co.uk , has been created during the last few months which
will be enhanced to provide news on future developments. At this stage the
website is used to provide a source for the latest accounts, shareholder details
and stock exchange announcements.
Michael A Shields
Chairman
The directors present their report and the financial statements of the group for
the year ended 31st March 2007.
The Company changed its name from Hemisphere Properties plc to China Western
Investments plc on 6th March 2007.
Principal Activity
The principal activity of the company during the period under review was
property investment and property trading activities
Review of the business
Property investment assets amount to #29 million which are situated in China.
The property in China consists of the 10 storey Lanzhou International Trade
Centre and its adjacent resettlement buildings. The lower ground floor and
levels 1 to 5 are fully let; development of the remaining floors of the shopping
centre is planned once investment funds have been raised The group also has an
investment in Tien Shui hospital.
Future developments
Concentration on investment in China through development of the Lanzhou project
will be the principal area of activity in the immediate future. The operation
of the hospital facilities in Tien Shui will also be extended.
Both of these developments are expected to generate positive cash flows that
will enable further investment to be made in both of these operations.
Principal Risks and Uncertainties
The Group's operations expose it to a variety of financial risks that include
the effect of changes in interest rate risk, liquidity risk and currency risk.
The key business risks and uncertainties facing the group are considered to be
those deriving from the property market and in particular the effects that the
market has on property prices and rental returns. The group also faces the risk
in its ability to raise finance and the impact of interest rate rises.
Key Performance Indicators
The Board monitors progress of the overall group strategy and the individual
strategic elements by reference to three key performance indicators. These are
return on property investment, rental yield and cost of capital.
Results and dividends
The trading results for the year and the group's financial position at the end
of the year are shown in the attached financial statements.
A review of the Group's results including future prospects is set out in the
Chairman's statement on page 3.
The directors have not recommended a dividend.
The directors and their interests
The directors who served the company during the period together with their
beneficial interests in the shares of the company were as follows:
Ordinary Shares of 1p each
At 31 March 2007 At 1 April 2006
or later date
of appointment
M A Shields - -
D A Thomas - -
Chan Yim Sang *** 100,980,000 100,980,000
J Ho ** 23,760,000 23,760,000
Zhan Chun Hu **** 100,980,000 100,980,000
191,999,700 of the shares are held by Ho King Assets Corporation
which is owned by John Ho (65%) and Chan Yim Sang (35%)
** Shares shown against John Ho's name are held by Pointex Enterprises Ltd,
a company owned as to 60% by May Ling Leung (John Ho's spouse) and 40%
by Paul Ho (a son of John Ho)
*** Shares shown against Chan Yim Sang's name are held by Wing Kit
Enterprise Ltd The whole of the share capital of Wing Kit Enterprise
Ltd is held by Yeung May Chor who holds 50% of the shares in trust for
Chan Yim Sang
**** Zhan Chun Hu is directly interested in shares representing 1% of the
issued capital of LITBC by virtue of his interest in Gansu Economic
Co-operative Commerce Trading Company.
Substantial shareholdings
The company has been notified of the following shareholdings of more than 3% as
at 1 September 2007:
1p Ordinary Shares %
Ho King Assets Corp * 191,999,700 26.4
Zhan Chun Hu 100,980,000 13.9
Wing Kit Enterprise Ltd ** 100,980,000 13.9
Pacific Continental Securities (UK) Nominees Ltd 100,234,063 12.6
Wong Wing Hay 54,648,000 7.5
Roy Nominees Ltd 48,417,000 6.4
Pointex Enterprises Ltd *** 23,760,000 3.3
HSBC Global Custody Nominees (UK) Ltd 23,100,000 3.2
Ng Kin Wah **** 21,333,300 3.0
* Ho King Assets Corporation is owned by John Ho (65%) and Chan Yim
Sang (35%)
*** Pointex Enterprises Limited is wholly owned by the family of J Ho
** Y S Chan has a beneficial interest in 50% of Wing Kit Enterprises
Limited
**** Ng Kin Wah holds the shares as security for a loan granted to Ho King
Assets Corporation which will be transferred back to Ho King Assets
Corporation upon repayment of the loan.
Policy on the payment of creditors
The Group seeks to settle payment in agreement with suppliers' terms and
conditions. At the year end the balance disclosed as trade creditors consists
predominantly of professional fees. Trade creditors of the group at 31 March
2007 expressed in relation to total amounts invoiced by suppliers for services
during period were equivalent to 360 days (2006: 336 days).
Corporate governance
In recognising the need for the highest standards of corporate behaviour and
accountability, the directors of China Western Investments plc support and have
adhered to the principles of good corporate governance. The company has now
established an audit committee and a remuneration committee, which comprises the
two independent non-executive directors, namely M A Shields and D A Thomas. The
primary duties of the committees are to review and supervise the financial
reporting and internal control procedures of the group.
Directors' responsibilities
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the group at the end of the year and of the group's profit or
loss for the year then ended. In preparing those financial statements, the
directors are required to:
select suitable accounting policies, as described on pages 14 to 16
and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements; and
prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the group will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
group and to enable them to ensure that the financial statements comply with the
Companies Act 1985. The directors are also responsible for safeguarding the
assets of the group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities. The Directors are responsible for
ensuring that the Directors' Report is prepared in accordance with company law
in the United Kingdom
Going Concern
The Directors have formed a judgement at the time of approving the financial
statements that there is a reasonable expectation that the company and group
have adequate resources to continue its operations for the foreseeable future.
This judgement is based on the fact that the shareholder loans will remain in
place and that interest will accrue but will not be paid. Further shareholder
loans will be made available to fund any short term cash flows. Investment funds
are being sought to develop the assets in China which will create further
positive cash flows. For this reason, the Directors continue to adopt the going
concern basis in preparing the financial statements.
Provision of Information to Auditors
So far as each of the Directors is aware at the time the report is approved:
there is no relevant audit information of which the company's auditors are
unaware, and
the Directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
auditors are aware of that information
Auditors
The auditors, CLB Littlejohn Frazer, will be proposed for reappointment in
accordance with section 385 of the Companies Act 1985.
This report was approved by the board on 26th September 2007 and signed on its
behalf
H Jeffs
Company Secretary
We have audited the Group and Parent Company Financial Statements (the "
Financial Statements") of China Western Investments plc for the year ended 31st
March 2007 which comprise the Group Profit and Loss Account, the Group and
Company Balance Sheets, the Group Cash Flow Statement, the Group Statement of
Total Recognised Gains and Losses and the related notes 1 to 25. These
Financial Statements have been prepared under the accounting policies set out
therein.
This report is made solely to the Company's shareholders, as a body, in
accordance with Section 235 of the Companies Act 1985. Our audit work has been
undertaken so that we might state to the Company's shareholders those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's shareholders
as a body, for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of the directors and the auditors
The Directors' responsibilities for preparing the Annual Report and the
Financial Statements in accordance with applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are
set out in the Statement of Directors' Responsibilities.
Our responsibility is to audit the Financial Statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the Financial Statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you whether in our opinion the information given in the
Directors' Report is consistent with the Financial Statements.
In addition we report to you if, in our opinion, the Company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law regarding
directors' remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report and consider whether it
is consistent with the audited Financial Statements. This other information
comprises only the Directors' Report and the Chairman's Statement. We consider
the implications for our report if we become aware of any apparent misstatements
or material inconsistencies with the Financial Statements. Our responsibilities
do not extend to any other information.
Basis of opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the Financial Statements. It also includes an assessment of the
significant estimates and judgments made by the Directors in the preparation of
the Financial Statements, and of whether the accounting policies are appropriate
to the Group's and Company's circumstances, consistently applied and adequately
disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the Financial Statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the Financial Statements.
Opinion
In our opinion:
the Financial Statements give a true and fair view, in accordance with United
Kingdom Generally Accepted Accounting Practice, of the state of the Group's and
the Parent Company's affairs as at 31st March 2007 and of the Group's loss for
the year then ended;
the Financial Statements have been properly prepared in accordance with the
Companies Act 1985; and
the information given in the Directors' Report is consistent with the Financial
Statements.
CLB Littlejohn Frazer
1 Park Place
Chartered Accountants Canary Wharf
and Registered Auditors London E14 4HJ
27th September 2007
2007 2006
Note #000 #000
Group turnover - income from properties 2
Continuing operations 342 846
Acquisitions 116 -
Discontinued operations 182 223
__________ _________
640 1,069
Cost of sales (294) (353)
Gross profit (loss)
Continuing operations 303 705
Acquisitions ( 85) -
Discontinued operations 128 11
------------ -----------
346 716
Net operating expenses 3 (265) (1,107)
------------ -----------
Operating profit (loss)
Continuing operations 11 (402)
Acquisitions (245) -
Discontinued operations 315 11
__________ __________
4 81 (391)
Interest receivable 1 12
Interest payable 7 (1,024) (1,955)
------------ -----------
(Loss) on ordinary activities before taxation (942) (2,334)
Tax on (loss) on ordinary activities 8 (38) (41)
------------ -----------
(Loss) on ordinary activities after tax 9 (980) (2,375)
Minority Interest ( 2) 4
_________ _________
(Loss) for the financial year (982) (2,371)
_________ _________
Earnings per share (pence) 10 (0.14) (0.34)
============ ===========
The company has taken advantage of section 230 of the Companies Act 1985 not to
publish its own Profit and Loss Account.
Statement of Total Recognised Gains and Losses
for the year ended 31st March 2007
2007 2006
Note #000 #000
Loss for the financial year (982) (2,371)
Foreign exchange translation adjustments (1,723) 2,237
Gain on revaluation of investment properties 1,177 -
_________ _________
Total gains and losses recognised since last annual report (1,528) ( 134)
_________ _________
Intangible assets 11 (1,584) (1,584)
Investment properties 12 29,117 40,449
Tangible assets 13 638 247
_________ _________
28,171 39,112
_________ _________
Current assets
Property under construction 1 18,752 18,752
Stock 15 17 -
Debtors 16 220 158
Cash at bank 47 115
_________ _________
19,036 19,025
Creditors: Amounts falling due within one year 17 (13,345) (22,858)
_________ _________
Net current assets (liabilities) 5,691 (3,833)
_________ _________
Total assets less current liabilities 33,862 35,279
Creditors: Amounts falling due after more than one year 18 (338) (329)
_________ _________
33,524 34,950
========= =========
Capital and reserves
Called-up equity share capital 21 7,283 7,183
Share premium account 22 32,919 32,919
Revaluation Reserve 22 19,439 18,262
Merger Reserve 22 3 3
Profit and loss account 22 (26,332) (23,627)
Minority Interest 212 210
_________ _________
Shareholders' funds 23 33,524 34,950
========= =========
Fixed assets
Investments 14 35,640 35,640
_________ _________
35,640 35,640
_________ _________
Current assets
Debtors 16 847 1,011
Cash at bank 15 89
_________ _________
862 1,100
Creditors: Amounts falling due within one year 17 (2,682) (2,644)
_________ _________
Net current liabilities (1,820) (1,544)
_________ _________
Total assets less current liabilities 33,820 34,096
Creditors: Amounts falling due after more than one year 18 (270) (270)
_________ _________
33,550 33,826
========= =========
Capital and reserves
Called-up equity share capital 21 7,283 7,183
Share premium account 22 32,919 32,919
Profit and loss account 22 (6,652) (6,276)
_________ _________
Shareholders' funds 33,550 33,826
========= =========
Net cash inflow / (outflow) from operating activities 24 878 (3,077)
Returns on investments and servicing of finance 24 (602) (1,943)
Disposal of subsidiary company 24 789 -
_________ _________
Net cash (outflow) / inflow from capital expenditure 24 (522) 5,375
_________ _________
543 355
Financing 24 (611) 540
_________ _________
(Decrease) / Increase in cash 24 ( 68) 895
========= =========
1. Accounting policies
Basis of accounting
The financial statements have been prepared under the historical cost convention
as modified by the revaluation of investment properties and in accordance with
United Kingdom generally accepted accounting principles. There were no material
departures from these standards.
Basis of consolidation
The group financial statements consolidate those of the Company and of its
subsidiary undertakings. Profits or losses on inter-group transactions and intra
group balances are eliminated on consolidation. Tien Shui hospital is owned and
operated by a charitable trust but managed by LITBC. All income and costs are
consolidated into LITBC because the risks and rewards flow through LITBC.
Goodwill arising has not been amortised. In line with Financial Reporting
Standard 10, the directors will perform an impairment review at the end of each
year to ensure its recoverable value does not fall below its carrying value.
Turnover
Turnover comprises the value of rental income receivable by the group for the
year, net of Value Added Tax.
Property under construction
The Company acquired a 99% interest in Lanzhou International Trade Building
Company Limited ("LITBC") in 2004. The acquisition value was established based
on an independent valuation of LITBC property interests. These interests include
both investment properties and property under construction. In accordance with
UK GAAP the former is carried at valuation. In respect of the property under
construction, it is valued at the lower of replacement cost and net realisable
value. If the Company applied FRS7 to the consolidated balance sheet Goodwill of
#17,313,000 would arise which would then be subject to an annual impairment
review. In the Director's opinion no goodwill should be recorded as no premium
over market value has been paid by the Company.
Accordingly, the Directors believe it was necessary to invoke the true and fair
over-ride. The construction in progress has therefore been recorded at its then
fair value of #18,752,197 (cost #1,278,197). (If the property were disposed of
at the valuation at 31st March 2007 then this would give rise to a tax charge of
#5.55m.)
Investment properties
Investment properties are accounted for in accordance with SSAP 19 "Accounting
for investment properties", which provides that these should not be subject to
periodic depreciation charges (unless held on lease), but should be shown at
open market value. This is contrary to the Companies Act 1985 which states that,
subject to any provision for depreciation or diminution in value, fixed assets
are normally to be stated at purchase price or production cost. Current cost
accounting or the revaluation of specific assets to market value, as determined
at the date of the last valuation, is also permitted.
The treatment of investment properties under the Companies Act does not give a
true and fair view as these assets are not held for consumption in the business
but as investments, the disposal of which would not materially affect and
manufacturing or trading operations of the enterprise. In such a case it is the
current value of these investments, and changes in that current value, which are
of prime importance. Consequentially, for the proper appreciation of the
financial position, the accounting treatment required by SSAP 19 is considered
appropriate for investment properties.
Investment properties acquired are recognised only on practical completion. The
direct costs of the property and associated costs of acquisition are
capitalised. Interest is written off to the profit and loss account.
Revaluations of investment properties are undertaken annually.
Stock
Stock is valued at the lower of cost or net realisable value.
Pension costs
The company operates a defined contribution pension scheme for employees. The
assets of the scheme are held separately from those of the company. The annual
contributions payable are charged to the group profit and loss account.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date. Deferred tax assets are
recognised only to the extent that, in the opinion of the directors, they are
expected to be fully recoverable.
No provision is made for the taxation which would become payable under present
legislation if the Group's properties were sold at the amounts at which they are
carried in the financial statements.
Investments
Investments are valued at cost less any amounts written off for any permanent
impairment in value. Investments are carried in fixed assets unless the Board
have taken the decision to sell the investment within the following 12 months
from the balance sheet date.
Depreciation
Depreciation is calculated so as to write off the cost of an asset, less its
estimated residual value, over its useful economic life as follows:
Motor vehicles 9% - 18%
Fixtures & Fittings 9% - 18%
Office equipment 9% - 18%
Fixed Assets
All fixed assets are initially recorded at cost.
Going concern
United Kingdom law requires the company's directors to consider whether it is
appropriate to prepare financial statements on the basis that the group is a
going concern. In considering this matter the directors have reviewed the
group's budget for 2007 and 2008. This involved consideration of the cash flow
implications of the budget and the plan. The directors see no reason why the
group and company should not continue in operational existence for the
foreseeable future, given the subordinated loan and shareholder loans generated
during the previous and the current year. Interest on the shareholder loans will
continue to accrue but will not be paid until cash resources are generated from
the property development. Further shareholder loans will be available to cover
any short term cash flow deficits. For this reason they have adopted the going
concern basis in preparing the group's financial statements.
Functional Currency
The main trading is effected in the currency of the People's Republic of China.
The accounts are converted into sterling due to the company being incorporated
in England and listed on the London Stock Exchange.
Foreign Currencies
Transactions in foreign currencies are translated into sterling at the rate of
exchange ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated at the rate of exchange ruling
at the balance sheet date.
All exchange gains and losses in the normal course of business are taken to the
profit and loss account.
Where subsidiary undertakings prepare their financial statements in a currency
other than sterling, all revenue, expenses, assets and liabilities are
translated at the rate of exchange ruling at the balance sheet date.
Differences arising on the restatement of opening balance sheets of overseas
subsidiary undertakings are taken directly to reserves.
Taxation
Taxation for the year ended 31 March 2007 is based on the effective rate of tax
applicable to that year.
2. Turnover - income from properties
The turnover and loss before tax are attributable to the one
principal activity of the group.
An analysis of turnover is given below:
2007 2006
#000 #000
United Kingdom - continuing operations - 446
United Kingdom - discontinued operations 182 223
------------- --------------
182 669
People's Republic of China
Property revenues 342 400
Hospital revenues 116 -
------------- --------------
640 1,069
========= ==========
3. Net Operating Expenses
2007 2006
Continue Discon Acquis Total Continue Total
#000's # #000's #000's #000's #000's
Administration expenses ( 420) ( 3) ( 172) ( 595) (918) (918)
Write back / (down) of
investment properties - 190 - 190 (196) (196)
Other operating income 128 - 12 140 7 7
_____ ______ ______ ______ ____ ______
( 292) 187 ( 160) ( 265) (1,107) (1,107)
======== ========== ========== ========= ======= ==========
Discontinued operations relate to the income and cost of sales of Oakridge
Ventures Limited.
4. Operating (loss)
Property Hospital Group
2007 2006 2007 2006 2007 2006
#000's #000's #000's #000's #000's #000's
Turnover 524 1,069 116 - 640 1,069
Operating profit
(loss)
326 (391) ( 245) - 81 (391)
_____ ______ ______ ______
Net interest - - - - (1,023) (1,943)
Group loss before - - - -
tax
( 942) (2,334)
Net Assets 32,769 34,950 (245) - 33,524 34,950
======== ========== ========== ========= ======= ==========
4 Operating (loss) - continued
Operating (loss) is stated after charging:
2007 2006
#000 #000
Depreciation 104 24
Impairment (190) 196
Auditors' remuneration
- as auditors 15 40
- tax fees 2 2
- other fees 23 31
5. Particulars of employees
The aggregate payroll costs were:
2007 2006
#000 #000
Wages and salaries 118 275
Social security costs 1 1
Other pension costs - 1
-------------- ------------
119 277
========= ========
Average number of employees 50 37
========= =========
6. Directors' emoluments
The directors' aggregate emoluments in respect of qualifying services were:
2007 2006
#000 #000
Emoluments receivable 92 280
Compensation for loss of office 30 -
Reduction in fees in respect of earlier years (139) -
---------------- ---------------
( 17) 280
========== ==========
Emoluments of highest paid director 32 80
========== ==========
7. Interest payable and similar charges
2007 2006
#000 #000
Interest payable on bank borrowing 567 1,910
Interest payable on other loans 457 45
----------------- ------------------
1,024 1,955
=========== ============
8. Taxation on ordinary activities
(a) Analysis of charge in the year
2007 2006
#000 #000
Current tax:
Overseas tax based on the results for the year 38 41
--------------- ---------------
Total current tax 38 41
========== ==========
The Group has estimated tax losses carried forward of #4,900,000 (2006:
#4,533,000) that are available for offset against future taxable profits. These
losses would give rise to a deferred tax asset of #1,470,000 (2006: #1,365,000),
however no asset has been recognised on the basis that the likelihood of future
economic benefit is unlikely.
(b) Factors affecting current tax charge
The tax assessed on the (loss) on ordinary activities for the year is
higher than the standard rate of corporation tax in the UK of 30% (2006 -
30%).
2007 2006
#000 #000
(Loss) on ordinary activities before taxation ( 942) (2,334)
======== =======
(Loss) on ordinary activities by rate of tax ( 283) (700)
Expenses not deductible for tax purposes 140 277
Loss carried forward 143 423
Overseas tax 38 41
------------ ------------
Total current tax (note 8 (a)) 38 41
======== ========
9. Loss attributable to members of the parent company
The loss dealt with in the accounts of the parent company was #376,000 (2006 -
#2,284,000).
10. Earnings per share
2007 2006
pence Pence
Loss per ordinary share (0.14) (0.34)
======== ========
Loss per ordinary share - discontinued operations (0.04) (0.01)
======== ========
Loss per share is based on the loss for the year ended 31 March 2007:
#982,000 and the loss for the year ended 31 March 2006: #2,371,000 divided by
the weighted average number of shares issued during the year ended 31 March
2007: 723,375,495 and the year ended 31 March 2006: 693,452,419. As the company
has made a loss for the year no option is potentially dilutive and hence both
basic and diluted loss per share are the same.
11. Intangible assets
Goodwill
2007
#000s
At 1st April 2006 (1,584)
---------------
At 31st March 2007 (1,584)
==========
12. Investment properties
Group Freehold Leasehold Total
investment investment
property property
#000 #000 #000
Cost or valuation
At 1st April 2006 41,645 - 41,645
Additions 5 - 5
Exchange variance (2,684) - (2,684)
Surplus on revaluation 1,177 - 1,177
Sales on disposal of company (11,026) - (11,026)
-------------------- -------------------- --------------------
At 31st March 2007 29,117 - 29,117
=============== =============== ===============
Depreciation
At 1st April 2006 1,196 - 1,196
Impairment written back ( 190) ( 190)
Released on sale of company (1,006) - (1,006)
-------------------- -------------------- -------------------
At 31st March 2007 - - -
=============== =============== ================
Net book value
At 31st March 2007 29,117 - 29,117
=============== =============== ================
At 31st March 2006 40,449 - 40,449
=============== =============== ================
Freehold investment Leasehold investment
Holding by geographical area property property Total
#000s #000s #000s
At 31st March 2007.
United Kingdom - - -
People's Republic of China 29,117 - 29,117
------------------- ------------------- -------------------
Total 29,117 - 29,117
=============== =============== ===============
At 31st March 2006
United Kingdom 9,831 - 9,831
Peoples Republic of China 30,618 - 30,618
=============== =============== ===============
Total 40,449 - 40,449
=============== =============== ===============
12. Investment properties continued
Cost
In accordance with SSAP 19, "Accounting for Investment Properties", but
contrary to the requirements of the Companies Act 1985, investment properties
are not depreciated. Instead they are revalued annually, which the directors
consider necessary to show a true and fair view. The adoption of this policy has
no material effect on the net assets or the results for the period.
The review of the Lanzhou property completed by Vigers gives rise to an
increase in value of #1.177m which has been taken to revaluation reserve.
On a historical cost basis the investment properties would have been
included at #31,180,000 (2006: #42,206,000). The revaluation reserves for those
investment properties that have been revalued are shown within the financial
statements of the subsidiaries and occurred before acquisition by the Group took
place.
As stated in note 1 above, no provision has been made for the deferred tax
on gains recognised on revaluing property to its market value. If the property
were disposed of for this value then a tax charge of #353,000 would arise on
disposal.
13. Tangible fixed assets
Motor Fixtures Office Total
Vehicles & Fittings Equipment
#'000 #'000 #'000 #'000
Cost at 1st April 2006 134 318 28 480
Exchange variance (12) (28) (2) (42)
Additions 16 501 - 517
______ ______ _____ ______
At 31 March 2007 138 791 26 955
______ ______ _____ ______
Depreciation at 1st April 2006 92 118 23 233
Exchange variance (8) (10) (2) (20)
Charge for the period 6 95 3 104
______ ______ _____ ______
As at 31 March 2007 90 203 24 317
______ ______ _____ ______
At 31st March 2007 48 588 2 638
At 31st March 2006 42 200 5 247
______ ______ _____ ______
14. Investments
Company Fixed Current Asset Total
Asset
Cost #'000 #'000 #'000
At 1st April 2006 35,640 2,691 38,331
Disposal in the year - (2,691) (2,691)
---------- ---------- ----------
At 31 March 2007 35,640 - 35,640
---------- ---------- ----------
Provision
At 1st April 2006 - 2,691 2,691
Provision no longer required - (2,691) (2,691)
---------- ---------- ----------
At 31 March 2007 - - -
---------- ---------- ----------
Net Book Value at 31st March 2007 35,640 - 35,640
========= ========= ==========
Net book value at 31st March 2006 35,640 - 35,640
========= ========= ==========
Subsidiary undertakings
Name of Company Holding % held Nature of Business
Hemisphere Properties (Southern) Limited Ordinary 100% Property investment
Bemacroft Limited* Ordinary 100% Property investment
Punch Properties Limited* Ordinary 100% Property investment
Hemisphere Properties (Northern) Limited Ordinary 100% Property investment
Kayleigh Limited Ordinary 100% Property Investment
Uniplan Assets Limited Ordinary 100% Property investment
Fu Keung Venture Limited Ordinary 100% Property Investment
Lanzhou International Trade Building Company Ordinary 99% Property Investment
limited **
Ming Kong Property Limited*** Ordinary 100% Property Investment
* Held by Hemisphere Properties (Southern) Limited.
** 75% held by Ming Kong Property Limited and 24% held by Fu Keung
Venture Limited.
*** Held by Uniplan Limited
14. Subsidiary undertakings continued
Kayleigh Limited, Uniplan Assets Limited and Fu Keung Venture Limited are
incorporated in the British Virgin Islands. Lanzou International Trade Building
Company Limited is formed under the law of the People's Republic of China and
Ming Kong Property Limited is formed under the law of Hong Kong. All other
companies are incorporated in the United Kingdom.
15. Stock
Group Company
2007 2006 2007 2006
#000 #000 #000 #000
Medicine consumables 9 - - -
Fuel 8 - - -
-------- -------- -------- -------
17 - - -
===== ===== ===== =====
16. Debtors
Group Company
2007 2006 2007 2006
#000 #000 #000 #000
Amounts owed by group undertakings - - 839 1,003
Other debtors 205 149 - -
Prepayments and accrued income 15 9 8 8
-------- -------- -------- -------
220 158 847 1,011
===== ===== ===== =====
17. Creditors: Amounts falling due within one year
Group Company
2007 2006 2007 2006
#000 #000 #000 #000
Bank loans and overdrafts 1,811 10,743 - -
Shareholder loans 2,079 1,943 2,079 1,943
Related party loans 6,104 6,550 - -
Trade creditors 1,214 1,156 - 41
Taxes 163 16 - 16
Other creditors 1,042 1,444 112 100
Accruals and deferred income 932 1,006 491 544
-------------- ---------- ------------ ------------
13,345 22,858 2,682 2,644
========= ======= ======== ========
The bank loans are secured over the related investment properties.
Shareholder loans are unsecured. No specific date is set for repayment.
Interest is accruing but is not being paid.
18. Creditors: Amounts falling due after more than one year
Group Company
2007 2006 2007 2006
#000 #000 #000 #000
Convertible loans 270 270 270 270
Other loans 68 59 - -
------- ----------- ------- ----------
338 329 270 270
===== ======= ===== =======
The convertible redeemable loan is unsecured, and subject to certain
restrictions, is convertible into ordinary shares at 6p per share. If the holder
has not has not had an opportunity to convert within 12 months of issue the
holder is entitled to redeem the loan note on giving notice. Interest is payable
bi-annually at the base rate of Barclays Bank and the final redemption date is
31 December 2020. The other loans are unsecured.
19. Capital instruments
Set out below are the disclosures relating to financial instruments.
The Group has taken advantage of the exemption available under Financial
Reporting Standard 13, "Derivatives and other financial instruments" not to
provide numerical disclosures in relation to short-term debtors and creditors.
Financial instruments
The Group's financial instruments comprise cash, overdraft facilities,
loans and various items such as short-term debtors that arise from its
operations. The main purpose of these financial instruments is to fund the
short term working capital requirements of the business.
The Group has no derivatives.
The main risks arising for the Group's financial instruments are foreign
currency exchange, interest and liquidity risk. The Board reviews and agrees
policies for managing each of these risks and they are summarised below. These
policies have remained unchanged throughout the year.
Interest rate risk
The Group finances its operations through retained profits, the use of
overdraft facilities and loans. The Group places its cash on deposit at which
interest rates are fixed in the short term but for sufficiently short periods
that there is no need to hedge against the implied risk.
Liquidity risk
Short term flexibility is achieved by overdraft facilities. These were used
during the year, for short periods of time. It is the Group's policy to keep
facilities in place in order to provide flexibility in the management of the
Group's liquidity.
Currency risk
The Group is exposed to currency risk in its Chinese operations. The Group
does not hedge its exposure.
Fair values and maturity of financial instruments
There is no material difference between the book value and the fair
value of the financial assets or liabilities.
Creditors include finance capital which is due for repayment as follows:
Group Company
2007 2006 2007 2006
#000 #000 #000 #000
Amounts repayable:
In one year or less or on demand 9,994 19,236 2,079 1,943
In more than one year but not more than 68 59 - -
two years
In more than five years 270 270 270 270
-------------- ------------ --------- ---------
10,332 19,565 2,349 2,213
========= ======== ====== ======
Group Company
2007 2006 2007 2006
#000 #000 #000 #000
Bank loan
Fixed rate 7.1% repayable 2007 - 8,622 - -
Floating rate 8% to 12% 1,811 2,121 - -
Shareholder loans 12% 2,079 1,943 2,079 1,943
Related party loan floating rate 8% to 12% 6,104 6,550 - -
Convertible notes bank base rate 270 270 270 270
Other loans over one year 68 59 - -
-------------- ------------ --------- ---------
Total 10,332 19,565 2,349 2,213
========= ======== ====== ======
20. Related party transactions
The company is exempt from the requirement to disclose related party
transactions with other group companies under the provisions of Financial
Reporting Standard No 8, "Related parties". All inter-group transactions were
eliminated on consolidation.
As at 31st March 2007 #6,104,000 (2006: #6,550,000) was owed to Gansu
Economic Co-operation Commerce Trade Company Limited a company controlled by Mr
C Zhan, a director. Interest of #222,107 was debited to the profit and loss
account in the year (2006: #324,883)
As at 31st March 2007 #2,079,000 (2006: #1,943,000) was owed to
Shareholders in respect of loans provided during the period. The loans, which
are unsecured, carry an interest rate of 12% per annum with no specified date
for repayment. Interest of #231,249 was debited to the profit and loss account
in the year (2006: #183,238)
As at 31st March 2007 #nil (2006: #262,000) was due from Gansu Economic Co-
operation Commerce Trade Company Limited, a company controlled by Mr C Zhan, a
director.
There is no ultimate controlling party
21. Share capital
Authorised share capital:
2007 2006
#000 #000
1,500,000,000 Ordinary Shares of 1p each 15,000 15,000
============== ==============
Allotted and called up:
2007 2006
#000 #000
728,375,495 Ordinary Shares of 1p each (2006: 718,375,495 Ordinary Shares of 7,283 7,183
1p each)
============== ==============
On 10 October 2006, the company issued 10,000,000 ordinary shares at 1p,
credited as fully paid for commission costs of #100,000.
22. Reserves
Group Revaluation Share premium Merger reserve Profit and loss
reserve account account
#000 #000 #000 #000
Balance brought forward 18,262 32,919 3 (23,627)
Loss for the year - - - (982)
Exchange difference - - - (1,723)
Gain on revaluation 1,177 - - -
--------------- --------------- --------------- ---------------
Balance carried forward 19,439 32,919 3 (26,332)
========== ========== ========= =========
Company Share premium Profit and loss
account account
#000 #000
Balance brought forward 32,919 (6,276)
Loss for the period - (376)
--------------- ---------------
Balance carried forward 32,919 ( 6,652)
========== =========
23. Reconciliation of movements in shareholders' funds
2007 2006
#000 #000
(Loss) for the financial period (982) (2,371)
Exchange difference (1,723) 2,237
New equity share capital subscribed 100 270
Gain on revaluation 1,177 -
Minority interest 2 10
--------------- --------------
Net (reduction) / addition to funds (1,426) 146
Opening shareholders' equity funds 34,950 34,804
---------------- --------------
Closing shareholders' equity funds 33,524 34,950
========== =========
24. Notes to the statement of cash flows
Reconciliation of operating (loss) to net cash outflow from operating
activities
2007 2006
#000 #000
Operating (loss) 81 (391)
Write down & losses on sale of investment property - 296
Increase in stock (17) -
Depreciation 104 24
(Decrease) / Increase in debtors (74) 468
(Decrease) in creditors (74) (2,814)
Commissions paid by shares 100 120
Exchange gain / (loss) on cash, liquid resources and loans 758 (780)
----------- --------
Net cash inflow/(outflow) from operating activities 878 (3,077)
======= ======
Returns on investments and servicing of finance
2007 2006
#000 #000
Interest received 1 12
Interest paid (603) (1,955)
--------------- ---------------
Net cash outflow from returns on investments and servicing of finance (602) (1,943)
========== ==========
Capital expenditure
2007 2006
#000 #000
Payments to acquire tangible fixed assets (517) (277)
Increase in Investment properties ( 5) -
Increase in property under construction - (161)
Receipts from sale of tangible fixed assets and investment properties - 5,813
------------ ---------------
Net cash (outflow)/inflow from capital expenditure (522) 5,375
========= =========
Disposal of subsidiary company
2007 2006
#000 #000
Properties sold on disposal of subsidiary company 9,831 -
Redemption of loan on sale of company (8,621) -
Interest paid on redemption of loan (421) -
------------ ---------------
Net cash proceeds on sale of subsidiary company 789 -
========= =========
Financing
2007 2006
#000 #000
Issue of equity share capital - 150
Sale of properties held for resale - 325
(Decrease) / Increase in short term loans (620) 583
Increase / (decrease) in long term loans 9 (518)
--------- -------------
Net cash (outflow)/inflow from financing (611) 540
===== ========
Reconciliation of net cash flow to movement in net debt
2007 2006
#000 #000
(Decrease) / Increase in cash in the period ( 68) 895
Net cash outflow / (inflow) from loans 9,233 (65)
--------------- --------------
Change in net debt 9,165 830
Net debt at 1 April 2006 ( 19,450) (20,280)
-------------- --------------
Net debt at 31 March 2007 (10,285) (19,450)
========= =========
Analysis of changes in net debt
At Cash flows At
1 Apr 2006 31 Mar 2007
#000 #000 #000
Net cash:
Cash in hand and at bank 115 (68) 47
---------- ---------- ----------
115 (68) 47
---------- ---------- ---------
Debt:
Debt due within 1 year (19,236) 9,242 (9,994)
Debt due after 1 year (329) ( 9) (338)
---------- ---------- ----------
(19,565) 9,233 (10,332)
------------ ------------ -----------
Net debt (19,450) 9,165 (10,285)
======== ======= ========
25. Material non-cash transactions
On the 10th October 2006 the 14 June 2004 the company issued 10,000,000 at 1p
credited as fully paid as commission on sale of property.
Distribution
Copies of these financial statements will be sent to shareholders and the AIM
team and will be available on the company's website www.chwi.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UBVBRBARKUAR
China West. (LSE:CHWI)
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China West. (LSE:CHWI)
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