24 Sep 2013 10:14
24 September 2013
Walcom Group Limited
("Walcom" or the "Company")
Half-yearly unaudited results for the six months ended 30 June 2013
The Board of Walcom Group Limited presents the Company's unaudited results for the six months ended 30 June 2013.
Highlights
² Loss per share increased by 112 per cent. to 3.18 HK cents
² Revenue and gross profit rose by 8 per cent. to HK$21.5 million and 6 per cent. to HK$13.5 million respectively
² PRC and overseas sales increased by 2 per cent. to HK$14.9 million and 23 per cent. to HK$6.6 million respectively
Further enquiries:
Walcom Group Limited | +852 2494 0133 |
Francis Chi (Chief Executive Officer) | |
Albert Wong (Chief Financial Officer) | |
Sanlam Securities Limited (Nominated adviser & broker) | +44 20 7628 2200 |
Lindsay Mair/Virginia Bull |
CHAIRMAN'S STATEMENT
Introduction
Despite the slowing down in the Chinese economy, the Company is pleased to report that due to the improvement of sales in Thailand, the Company's revenue grew by 8 per cent. compared with the same period last year. However, due to the increased production costs and operating expenses the Company incurred a loss per share of HK$3.18 cents, an increase of 112 per cent. over the loss of HK$1.50 cents per share in June 2012.
Results for the Period
The Company generated revenues during the period of HK$21.5 million (June 2012: HK$20.0 million) and gross profits of HK$13.5 million (June 2012: HK$12.7 million), representing increases of 8 per cent. and 6 per cent. respectively compared with the same period last year. In addition, there was a minor decrease of the gross profit margin for the period from 64 per cent. in the same period last year to 63 per cent. during this financial period, owing to escalating production costs. With the impact of increasing operating expenses and in particular a compensation expense of HK$1 million for terminating the sales distributorship in Hunan Province, China, the Company increased its net loss by 225 per cent. to HK$1.7 million (June 2012: loss of HK$0.5 million) and recorded a loss of HK$0.6 million at the EBITDA level compared to a profit of HK$1.1 million over the same period last year.
Review of Activities and Market
In the six months to 30 June 2013, sales in the PRC and overseas improved by 2 per cent. and 23 per cent. to HK$14.9 million (June 2012: HK$14.6 million) and HK$6.6 million (June 2012: HK$5.4 million) respectively. The sales in the PRC during the period were maintained at approximately the same level as last year despite the slower Chinese economy and the weak demand for porkcaused by the outbreak of the lethal H7N9 avian flu during the second quarter of the year. Strong sales in Thailand remained the driving force behind the improvement in overseas sales.
In addition to the slower economy under the new Chinese leadership, the Company's sales in China also faced the following hardships during the first half year of 2013:
1. The price of pork dropped significantly between the beginning of the year and June after which it recovered to the breakeven point in the pig farming industry. There was a material reduction in the pig population while the pig farms cut down their farming scale to minimise their loss. This in turn affected the feed consumption and thus the sales of the Walcom products;
2. The outbreak of the lethal H7N9 avian flu during the second quarter had a further hit on the pig farming industry as there was a wide spread rumour that the H7N9 virus was closely connected with pigs. During the second quarter, the Chinese avoided eating birds and some more cautious consumers even skipped pork in their meals.
With the recent rise in the farm gate price and in the number of pigs in farms, the management expects an improvement in the sales of feeds which will in turn increase the sales of Walcom products. The management also projects a greater demand for the Company¡¦s products due to the higher seasonal demand in the last quarter of the year.
As in the same period last year, sales in Thailand remained the major contributor to the Company's overseas market results. They increased by 24 per cent. to HK$6.4million (June 2012: HK$5.2million) during the period under review. The sales effort implemented in the past few years has started to produce rewards as proved by a larger portfolio of customers achieved.
Outlook
Although the Chinese economy has slowed, the rising production costs and operating expenses will be the most unfavourable factors faced by the Company in the remaining months of the year. However, the management expects the Company's business portfolio will improve by breaking through the sales to new customers and expanding the sales coverage geographically. The Directors are optimistic that the Company will present a satisfactory result for the full year 2013.
Eddie K M Chan
Chairman
24 September 2013
UNAUDITED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2013
Note | Unauditedsix monthsended30 June 2013 | Unauditedsix monthsended30 June 2012 |
Auditedyear ended 31 December 2012 | ||||
HK$ | HK$ | HK$ | |||||
Revenue | 3 | 21,499,898 | 19,976,736 | 47,239,167 | |||
Cost of sales | (8,027,980) | (7,276,481) | (17,683,088) | ||||
Gross profit | 13,471,918 | 12,700,255 | 29,556,079 | ||||
Other income | 4 | 19,590 | 20,218 | 379,894 | |||
Research and development expenses | (819,412) | (851,173) | ( 1,434,131) | ||||
Selling and distribution expenses | (5,143,730) | (4,988,588) | (10,905,767) | ||||
General and administrative expenses | (8,667,359) | (6,657,385) | (13,870,697) | ||||
(Loss) / profit from operations | 5 | (1,138,993) | 223,327 | 3,725,378 | |||
Net finance expenses | 6 | (34,889) | (49,473) | (108,922) | |||
(Loss) / profit before income tax | (1,173,882) | 173,854 | 3,616,456 | ||||
Income tax expense | 7 | (526,482) | (696,587) | (1,915,658) | |||
(Loss) / profit for the period / year | (1,700,364) | (522,733) | 1,700,798 | ||||
(Loss) / profit attributable to: | |||||||
Owners of the Company | (2,187,134) | (1,034,047) | 850,980 | ||||
Non-controlling interests | 486,770 | 511,314 | 849,818 | ||||
(Loss) / profit for the period / year | (1,700,364) | (522,733) | 1,700,798 | ||||
(Loss) / earnings per share - basic, HK cents |
8 |
(3.18) |
(1.50) |
1.24 | |||
- diluted, HK cents | (3.18) | (1.50) | 1.24 | ||||
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2013
Note | Unauditedsix monthsended30 June 2013 | Unauditedsix monthsended30 June 2012 |
Auditedyear ended 31 December 2012 | ||||
HK$ | HK$ | HK$ | |||||
(Loss) / profit for the period / year | (1,700,364) | (522,733) | 1,700,798 | ||||
Other comprehensive income | |||||||
Exchange difference on translation of | |||||||
financial statements of overseas subsidiaries | 434,206 | (179,164) | 111,796 | ||||
Total comprehensive (loss) / income | |||||||
for the period / year | (1,266,158) | (701,897) | 1,812,594 | ||||
Total comprehensive (loss) / income | |||||||
attributable to: | |||||||
Owners of the Company | (1,717,700) | (1,200,678) | 915,274 | ||||
Non-controlling interests | 451,542 | 498,781 | 897,320 | ||||
Total comprehensive (loss) / income | |||||||
for the period / year | (1,266,158) | (701,897) | 1,812,594 |
UNAUDITED CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2013
Note | Unaudited30 June 2013 | Unaudited30 June 2012 | Audited 31 December 2012 | ||||
HK$ | HK$ | HK$ | |||||
ASSETS | |||||||
| |||||||
NON-CURRENT ASSETS | |||||||
Property, plant and equipment | 2,316,211 | 2,029,851 | 1,841,668 | ||||
Patents | 2,842,405 | 3,783,659 | 3,097,696 | ||||
5,158,616 | 5,813,510 | 4,939,364 | |||||
CURRENT ASSETS | |||||||
Inventories | 2,703,695 | 1,907,922 | 1,418,664 | ||||
Trade and other receivables | 11 | 7,529,722 | 6,737,884 | 9,586,394 | |||
Amounts due from an associate | 10 | - | 928,663 | - | |||
Cash and cash equivalents | 12 | 10,566,479 | 12,271,809 | 14,831,853 | |||
20,799,896 | 21,846,278 | 25,836,911 | |||||
| |||||||
TOTAL ASSETS | 25,958,512 | 27,659,788 | 30,776,275 | ||||
| |||||||
EQUITY AND LIABILITIES | |||||||
| |||||||
EQUITY | |||||||
Share capital | 13 | 688,344 | 688,344 | 688,344 | |||
Reserves | 16,864,336 | 16,210,054 | 18,463,809 | ||||
TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY |
17,552,680 |
16,898,398 |
19,152,153 | ||||
Non-controlling interests | 2,147,848 | 1,567,456 | 1,696,306 | ||||
TOTAL EQUITY | 19,700,528 | 18,465,854 | 20,848,459 | ||||
| |||||||
CURRENT LIABILITIES | |||||||
Trade and other payables | 14 | 5,743,447 | 6,138,869 | 6,457,925 | |||
Tax payables | 514,537 | 601,679 | 1,003,496 | ||||
Bank borrowings | 15 | - | 2,453,386 | 2,466,395 | |||
6,257,984 | 9,193,934 | 9,927,816 | |||||
TOTAL LIABILITIES |
6,257,984 |
9,193,934 |
9,927,816 | ||||
| |||||||
TOTAL EQUITY AND LIABILITIES | 25,958,512 | 27,659,788 | 30,776,275 | ||||
NET CURRENT ASSETS | 14,541,912 | 12,652,344 |
| 15,909,095 | |||
TOTAL ASSETS LESS CURRENT LIABILITIES | 19,700,528 | 18,465,854 | 20,848,459 |
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2013
Share-based | Non- | ||||||||||||||||
Share | Share | Merger | compensation | Exchange | Accumulated | controlling | Total | ||||||||||
capital | premium | reserve | reserve | reserve | losses | Total | interests | equity | |||||||||
HK$ | HK$ | HK$ | HK$ | HK$ | HK$ | HK$ | HK$ | HK$ | |||||||||
At 1 January 2012 | 688,344 | 95,298,644 | 23,852,469 | 2,047,819 | 2,123,085 | (106,220,980) | 17,789,381 | 1,398,458 | 19,187,839 | ||||||||
Comprehensive loss | |||||||||||||||||
Loss for the period | - | - | - | - | - | (1,034,047) | (1,034,047) | 511,314 | (522,733) | ||||||||
Other comprehensive income | |||||||||||||||||
Exchange difference on translation of | |||||||||||||||||
financial statements of overseas subsidiaries | - | - | - | - | (166,631) | - | (166,631) | ( 12,533) | 179,164 | ||||||||
Total comprehensive loss for the period | - | - | - | - | (166,361) | (1,034,047) | (1,200,678) | 498,781 | (701,897) | ||||||||
Dividends to non-controlling interests
| - | - | - | - | - | - | - | (329,783) | (329,783) | ||||||||
Recognition of equity-settled | |||||||||||||||||
share-based payments | - | - | - | 309,695 | - | - | 309,695 | - | 309,695 | ||||||||
| |||||||||||||||||
At 30 June 2012 | 688,344 | 95,298,644 | 23,852,469 | 2,357,514 | 1,956,454 | (107,255,027) | 16,898,398 | 1,567,456 | 18,465,854 | ||||||||
At 1 January 2013 | 688,344 | 95,298,644 | 23,852,469 | 2,455,408 | 2,187,379 | (105,330,091) | 19,152,153 | 1,696,306 | 20,848,459 | ||||||||
Comprehensive loss | |||||||||||||||||
Loss for the period | - | - | - | - | - | (2,187,134) | (2,187,134) | 486,770 | (1,700,364) | ||||||||
Other comprehensive income | |||||||||||||||||
Exchange difference on translation of | |||||||||||||||||
financial statements of overseas subsidiaries | - | - | - | - | 469,434 | - | 469,434 | (35,228) | 434,206 | ||||||||
Total comprehensive loss for the period | - | - | - | - | 469,434 | (2,187,134) | (1,717,700) | 451,542 | (1,266,158) | ||||||||
Recognition of equity-settled | |||||||||||||||||
share-based payments | - | - | - | 118,227 | - | - | 118,227 | - | 118,227 | ||||||||
| |||||||||||||||||
At 30 June 2013 | 688,344 | 95,298,644 | 23,852,469 | 2,573,635 | 2,656,813 | (107,517,225) | 17,552,680 | 2,147,848 | 19,700,528 |
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2013
Note | Unauditedsix monthsended30 June 2013 | Unauditedsix monthsended30 June 2012 |
Auditedyear ended 31 December 2012 | ||||
HK$ | HK$ | HK$ | |||||
Cash flow from operating activities | |||||||
(Loss) / profit before income tax | (1,173,882) | 173,854 | 3,616,456 | ||||
Amortisation of patents | 141,940 | 167,610 | 335,728 | ||||
Bad debts written off | - | - | 2,011 | ||||
Interest received | (52,547) | (35,827) | (66,971) | ||||
Depreciation | 174,147 | 333,057 | 620,951 | ||||
Foreign exchange loss / (gain), net | 295,581 | (84,960) | 3,021 | ||||
Interest paid | 87,436 | 85,300 | 175,893 | ||||
(Gain) / loss on disposal of property, plant and equipment |
(12,603) |
11,740 |
77,451 | ||||
Written off of amounts due from associate | - | - | 580,273 | ||||
Patents written off | 113,351 | 83,140 | 655,021 | ||||
Inventories written off | - | - | 18,740 | ||||
Share-based compensation | 118,227 | 309,695 | 447,498 | ||||
Operating profit before | |||||||
working capital changes | (308,350) | 1,043,609 | 6,466,072 | ||||
| Increase in inventories | (1,285,031) | (686,770) | (216,252) | ||||
| Increase / (decrease) in trade and other receivables | 2,056,672 | 1,657,808 | (1,439,335) | ||||
| Decrease in amount due from associate ¡V trade related | - | 19,500 | - | ||||
| (Decrease) / increase in trade and other payables | (714,478) | 433,061 | 796,967 | ||||
| Net cash (used in) / generated from operations | (251,187) | 2,467,208 | 5,607,452 | ||||
Corporate income tax paid | (1,015,441) | (997,854) | (1,568,486) | ||||
Interest paid | (87,437) | (85,300) | (175,893) | ||||
Net cash (used in) / generated from operating activities |
(1,354,065) |
1,384,054 |
3,863,073 | ||||
| |||||||
Cash flow from investing activities | |||||||
Purchase of property, plant and equipment | (676,923) | (234,164) | (363,229) | ||||
Payment for patents | - | (75,421) | (129,456) | ||||
Proceeds from sales of property, plant and equipment | 43,735 | - | 3,060 | ||||
Amounts due from associates-non-trade related | - | (195,000) | 172,890 | ||||
Interest received | 52,547 | 35,827 | 66,971 | ||||
Net cash used in investing activities | (580,641) | (468,758) | (249,764) | ||||
Cash flow from financing activities | |||||||
Repayment of bank borrowings | (2,466,395) | (2,467,004) | (2,467,004) | ||||
Dividend paid to minority interests | - | (329,783) | (599,472) | ||||
Proceeds from new bank borrowings | - | 2,453,386 | 2,466,395 | ||||
| Net cash used in financing activities | (2,466,395) | (343,401) | (600,081) | ||||
Net (decrease) / increase in cash and cash equivalents | (4,401,101) | 571,895 | 3,013,228 | ||||
| |||||||
Cash and cash equivalents at the beginning of the period / year | 14,831,853 | 11,736,464 | 11,736,464 | ||||
| |||||||
Exchange gain / (loss) on cash and cash equivalents | 135,727 | (36,550) | 82,161 | ||||
| |||||||
Cash and cash equivalents at the end of the period / year | 12 | 10,566,479 | 12,271,809 | 14,831,853 |
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2013
(1) BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
The unaudited consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards and in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.
The unaudited consolidated financial statements have been prepared under the historical cost convention. The same accounting policies, presentation and methods of computation are followed in these unaudited consolidated financial statements as were applied in the preparation of the Group¡¦s financial statements for the year ended 31 December 2012.
(2) SEGMENT REPORTING
(a) Primary reporting format - Geographical Segment
The Group's operations are mainly located in Hong Kong, PRC and Thailand. The Group's sales revenue by geographical location of customers are analysed as follows:
Unauditedsix monthsended30 June 2013 | Unauditedsix monthsended30 June 2012 |
Auditedyear ended 31 December 2012 | |||
HK$ | HK$ | HK$ | |||
PRC | 14,852,920 | 14,589,412 | 34,707,282 | ||
Thailand | 6,415,474 | 5,186,396 | 11,819,121 | ||
The Philippines | - | 78,000 | - | ||
Others | 231,504 | 122,928 | 712,764 | ||
21,499,898 | 19,976,736 | 47,239,167 |
(b) Secondary reporting format - Business Segment
The Group is principally engaged in the manufacture, distribution and sale of chemical feed and additive products. All of the Group's products are of a similar nature and subject to similar risk and returns. Accordingly, the Group's activities are attributable to a single business segment and no business segment analysis is presented.
(3) REVENUE
Revenue represents the sales value of goods supplied to the customers less returns, discounts, value added tax and sales taxes.
(4) OTHER INCOME
Unauditedsix monthsended30 June 2013 | Unauditedsix monthsended30 June 2012 |
Auditedyear ended 31 December 2012 | |||
HK$ | HK$ | HK$ | |||
Government subsidy | - | - | 340,217 | ||
Sundry income | 19,590 | 20,218 | 39,677 | ||
19,590 | 20,218 | 379,894 |
(5) OPERATING (LOSS) / PROFIT
Operating (loss) / profit is stated after charging the following items:-
Unauditedsix monthsended30 June 2013 | Unauditedsix monthsended30 June 2012 |
Auditedyear ended 31 December 2012 | |||
HK$ | HK$ | HK$ | |||
Amortisation of patents | 141,940 | 167,610 | 335,728 | ||
Auditor's remuneration | 155,000 | 145,000 | 261,311 | ||
Cost of inventories | 8,027,980 | 7,276,481 | 17,683,088 | ||
Depreciation | 114,216 | 139,304 | 290,334 | ||
(Gain) / loss on disposal of property, plant and equipment |
(12,603) |
- |
77,451 | ||
Rental charges under operating leases in respect of land and buildings |
424,140 |
309,467 |
739,762 | ||
Staff costs (including directors' emoluments) | |||||
- wages and salaries | 6,391,246 | 5,631,059 | 10,620,164 | ||
- contributions to defined contribution retirement plans |
424,084 |
410,690 |
814,571 | ||
- share-based compensation | 118,227 | 309,696 | 447,498 | ||
- other staff benefits | 1,321,446 | 1,212,035 | 2,788,715 |
(6) NET FINANCE EXPENSE
Unauditedsix monthsended 30 June 2013 | Unauditedsix monthsended30 June 2012 |
Auditedyear ended 31 December 2012 | |||
HK$ | HK$ | HK$ | |||
Bank interest income | 52,547 | 35,827 | 66,971 | ||
Interest expense on bank loans | (87,436) | (85,300) | (175,893) | ||
(34,889) | (49,473) | (108,922) |
(7) INCOME TAX EXPENSE
No provision for Hong Kong Profits Tax has been made (June 2012: HK$nil; 2012: HK$nil) as the group companies did not have assessable profit subject to Hong Kong profits tax purposes for the period/year.
Taxation on overseas profits has been calculated on the estimated assessable profit for the period/year at the rate of taxation prevailing in the countries in which the group companies operate. The overseas income tax provided for the six months ended 30 June 2013 is HK$526,482 (June 2012: HK$696,587; 2012: HK$1,915,658).
(8) (LOSS) / EARNINGS PER SHARE
The calculation of the basic loss per share for the six months ended 30 June 2013, is based on the loss attributable to ordinary equity shareholders of the company of HK$2,187,134 (June 2012: HK$1,034,047; 2012: profit of HK$850,980) during the period and the weighted average number of 68,834,388 ordinary shares (June 2012: 68,834,388; 2012: 68,834,388) in issue during the period/year. No diluted loss per share is to be reported for the period/year.
(9) DIVIDENDS
No payment of dividend was recommended for the first six months of 2013 (June 2012: HK$ nil; 2012: HK$nil).
(10) INVESTMENT IN ASSOCIATE
Unaudited 30 June 2013 | Unaudited 30 June 2012 | Audited 31 December 2012 | |||
HK$ | HK$ | HK$ | |||
Share of net assets | - | - | - | ||
Amounts due from an associate | |||||
- Trade related balance | - | 1,089,244 | - | ||
- Non-trade related balance | - | 2,303,438 | - | ||
Provision for impairment losses on trade related balances |
- |
(752,000) |
- | ||
Provision for impairment losses on non-trade related balances |
- |
(1,712,019) |
- | ||
- | 928,663 | - |
The amounts due from an associate is denominated in United States dollars. The credit period granted for the trade related balance ranges from 90 days to 180 days. The non-trade related balance is unsecured, interest free and has no fixed terms of repayment.
(11) TRADE AND OTHER RECEIVABLES
Unaudited 30 June 2013 | Unaudited 30 June 2012 | Audited31 December 2012 | |||
HK$ | HK$ | HK$ | |||
Trade receivables | 6,507,779 | 6,164,097 | 8,402,438 | ||
Less: provision for impairment loss | (387,346) | (542,885) | (440,942) | ||
6,120,433 | 5,621,212 | 7,961,496 | |||
Other receivables | 544,196 | 449,950 | 796,833 | ||
Prepayments and deposits | 865,093 | 666,722 | 828,065 | ||
7,529,722 | 6,737,884 | 9,586,394 |
(a) All trade and other receivables are expected to be recovered within one year.
(b) Impairment of trade receivables
The movement in the provision of impairment for doubtful debts during the period/year, including both specific and collective loss components, is as follows:
Unaudited six months ended 30 June 2013 | Unaudited six months ended 30 June 2012 |
Audited year ended 31 December 2012 | |||
HK$ | HK$ | HK$ | |||
At 1 January | 440,942 | 545,899 | 545,899 | ||
Written off | (44,758) | - | (104,848) | ||
Exchange difference | (8,838) | (3,014) | (109) | ||
At 30 June/31 December | 387,346 | 542,885 | 440,942 |
(b) Impairment of trade receivables (continued)
At 30 June 2013, the Group¡¦s trade receivables of HK$387,346 (June 2012: HK$542,885, 2012: HK$440,942) have been outstanding for a certain period of time. The management assessed that only a portion of the receivables are expected to be recoverable. Consequently, specific allowance for doubtful debts were recognised for the individually impaired receivables.
The Group does not hold any collateral over these balances.
(12) CASH AND CASH EQUIVALENTS
Unaudited 30 June 2013 | Unaudited 30 June 2012 | Audited 31 December 2012 | |||
HK$ | HK$ | HK$ | |||
Cash at bank and on hand | 10,566,479 | 12,271,809 | 14,831,853 | ||
Cash and cash equivalents in the cash flow statement |
10,566,479 |
12,271,809 |
14,831,853 |
(13) SHARE CAPITAL
Unaudited 30 June 2013 | Unaudited 30 June 2012 | Audited 31 December 2012 | |||
HK$ | HK$ | HK$ | |||
Authorised | |||||
150,000,000 (June 2012: 150,000,000 and Dec 2012: 150,000,000) ordinary shares of HK$0.01 each |
1,500,000 |
1,500,000 |
1,500,000 | ||
Issued and fully paid | |||||
68,834,388 (June 2012: 68,834,388 and Dec 2012: 68,834,388) ordinary shares of HK$0.01 each |
688,344 |
688,344 |
688,344 |
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company's residual assets.
(14) TRADE AND OTHER PAYABLES
Unaudited 30 June 2013 | Unaudited 30 June 2012 | Audited31 December 2012 | |||
HK$ | HK$ | HK$ | |||
Trade payables | 2,624,381 | 3,016,406 | 2,914,956 | ||
Other payables and accrued expenses | 3,119,066 | 3,122,463 | 3,542,969 | ||
5,743,447 | 6,138,869 | 6,457,925 |
All of the trade and other payables are expected to be settled within one year.
(15) BANK BORROWINGS
Unaudited 30 June 2013 | Unaudited 30 June 2012 | Audited 31 December 2012 | ||||
HK$ | HK$ | HK$ | ||||
Current | ||||||
Bank borrowings, secured | (a) | - | 2,453,386 | 2,466,395 | ||
(a) The bank loan was repaid during the period.
(16) RELATED PARTY TRANSACTIONS
Unaudited six months ended 30 June 2013 | Unaudited six months ended 30 June 2012 |
Audited year ended 31 December 2012 | |||
HK$ | HK$ | HK$ | |||
Related companies | |||||
Legal and professional fees paid | 67,620 | 95,142 | 109,920 |
(17) RECONCILIATION OF (LOSS) / PROFIT BEFORE INCOME TAX TO EBITDA
| Unauditedsix monthsended 30 June 2013 | Unauditedsix monthsended 30 June 2012 |
Auditedyear ended 31 December 2012 | ||
HK$ | HK$ | HK$ | |||
(Loss) / profit before income tax | (1,173,882) | 173,854 | 3,616,456 | ||
Depreciation | 174,147 | 333,057 | 620,951 | ||
Amortisation of patents | 141,940 | 167,610 | 335,728 | ||
Interest income | (52,547) | (35,827) | (66,971) | ||
Interest expenses | 87,436 | 85,300 | 175,893 | ||
Patents written off | 113,351 | 83,140 | 655,021 | ||
(Gain) / loss on disposal of property, plant and equipment |
(12,603) |
11,740 |
77,451 | ||
Written off of amounts due from associate | - | - | 580,273 | ||
Bad debts written off | - | - | 2,011 | ||
Share-based compensation | 118,227 | 309,696 | 447,498 | ||
EBITDA | (603,931) | 1,128,570 | 6,444,311 |
EBITDA is defined herein as earnings before depreciation, amortization, interest and tax, plus specific charges which are considered non-recurring in nature. Specific charges include impairment loss in value and gain/loss in disposal of non-current assets, and amortization of fair value of share-based compensation. EBITDA is not a recognised term under generally accepted accounting principles and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, this presentation may not be comparable to other similarly titled measures of other companies.
(18) COPIES OF HALF YEARLY REPORT
Copies of the half-yearly report will be available shortly from the Company's website www.walcomgroup.com.