Final Results

China Chaintek United Co., Ltd

("ChainTek", the "Company" or the "Group")

Final Results

ChainTek (AIM:CTEK), the provider of logistics services to manufacturers of consumer goods in China, today announces its final results for the year ended 31 December 2013 (the "period").

Financial Highlights

Commenting on the final results, Shufang Zhuang, Executive Director and the Group's founder, said: "The Board is pleased with the progress in terms of both profit and revenue for the Group during the period. Our plans for the new logistics park are continuing to progress, and the land use rights have now been purchased in full.

"We are particularly pleased to be announcing the Group's final dividend, which is indicative of the Board's confidence in the growth potential for ChainTek. The market environment is ideally poised for the Group, with the accelerating rate of growth in the e-commerce space, as well as the government's investment into infrastructure and the reforms that are anticipated to drive growth in the consumer sector in China, and consequently the logistics sector. The dynamics of the continuing migration from rural to urban areas in China, as well as the easing of the one child policy, also indicate that the outlook for the sector is positive, and the Board is confident that ChainTek's potential for further growth is strong."

- Ends -

For further information:

The financial statements for the year ended 31 December 2013 will shortly be available on the Company's website at www.chaintek-united.com

Chairman's Statement

It is with pleasure that I present to you the report and consolidated financial statements of China Chaintek for the year ended 31 December 2013, the second since the Group was admitted to trading on the AIM market in August 2012.

Performance

This has been an encouraging year for the Group with growth across each of its operations in line with market expectations. This is discussed in more detail in the Chief Executive's Statement. I am delighted to report that Group revenues increased from RMB340.6 million to RMB350.6 million, Profit Before Tax from RMB253.5 million to RMB284.8 million and EBITDA by 12.9% from RMB257.3 million to RMB290.5 million. As a highly cash-generative business, the Group retained a strong year-end cash position of RMB319.3 million after having paid the remaining balance of RMB221 million for the purchase of the Land Use Rights for the Group's new logistics park, referred to in last year's statement. Given the Group's strong cash position, the Board believes that a progressive Dividend Policy is appropriate, which is set out in more detail below.

Strategy

Your Board wishes to emphasise its belief in the strong future growth of the logistics sector in China in which the Group is serving. This is an exciting time to be involved with the growth and development of consumerism in China and the accelerated use of e-commerce, which is so important to the future growth of the Group. Investing now in greater logistical supply capacity and in the information technology systems that support it is as far-sighted as it is crucial.

Outlook

Evoking the spirit of Deng Xiao Ping in 1978, China is embarking on far-reaching economic and systemic reforms following the third plenum of the Central Committee. It is anticipated that these reforms will enhance the growth of consumerism in China, including the logistics sector. An easing of the one child policy is helpful for future market growth as well as the continuing migration of families from rural to urban areas and the easing of restrictions on the sale of rural land. The outlook is for many reasons therefore positive for the sector. The scale of the growth of e-commerce during 2013, even before these reforms have been introduced, as outlined in the Chief Executive's report, is an early indicator of what we believe will be a period of sustainable development and growth for your Company.

Revenue and Dividends

In my Statement last year, I indicated that the Board intended to pay cash dividends when it became appropriate and feasible to do so. We have now reached that point. On 6 November 2013, we announced our first interim dividend of 2 pence per share, in respect of the six month period ended 30 June 2013. We are pleased that we can now declare that for this financial year we are proposing to pay a final dividend of 4 pence per share, giving a total dividend of 6 pence per share for this financial year. A separate circular will be sent to shareholders detailing the process, timing and mechanism for the payment following the Annual General Meeting.

Board Governance

The Board meets quarterly including twice a year in China. It has also met on an ad-hoc basis on three occasions during the period. Through its Nomination Committee the Board carries out evaluations of each of its Directors, Chairman, the Board itself and its committees. The Board also reviews on an ongoing basis each of its service providers for their scope, cost and quality of service. Regular liaison is maintained between the Board's Audit Committee and the Company's Auditors. The Board's Remuneration Committee maintains an ongoing review of the Company's remuneration policy.

Revised Reporting Requirements

Shareholders will note that there have been a number of changes in reporting requirements for listed companies with years beginning on or after 1 October 2012. As an AIM traded company we aspire towards meeting these requirements. In particular, there has been the addition of a Strategic Report and changes to the structure of the Directors' Remuneration Report in the audited financial statements. The Strategic Report is designed to replace and enhance reporting previously included in the Business Review section of the Directors' Report. Its purpose is to inform members and help them to assess how the Directors have performed their duties to promote the success of the Company during the year under review.

Annual General Meeting

This year's Annual General Meeting will be held at Becket House, 36 Old Jewry, London, EC2R 8DD on 20 May 2014. If you have any detailed questions, you may wish to raise these in advance with the Company Secretary. Shareholders who cannot attend the Annual General Meeting in person are encouraged to use their proxy votes. Shareholders who hold their shares through CREST are able to lodge their votes electronically.

William Knight

Non-Executive Chairman

7 April 2014

Chief Executive's Review

During the past financial year, China Chaintek has continued to achieve robust growth across its operations. Group revenues of RMB350.6 million and profit before tax of RMB284.9 million are in line with your Board's expectations. The Group remains highly cash-generative with a year-end cash position of RMB319.3 million (2012: RMB342.7 million) despite having paid a further RMB221 million to purchase the Land Use Rights for a new Logistics Park. I am also pleased that our financial strength has enabled the Group to initiate a progressive dividend policy. Equally importantly, the Board has taken significant initiatives to ensure that China Chaintek is well placed to capitalise on the very considerable opportunities in its market. But markets are dynamic and China Chaintek will continue to prosper by remaining proactive and ensuring that the Group is positioned to meet the developing needs of its customer base and to provide effective solutions to their problems. In order to achieve this, the Group has, for example, further developed its Inventory Solutions business, continued to invest in IT systems and it has also acquired the site for the new Logistics Park.

The growth of the e-commerce market in China provides China Chaintek with a superb opportunity for remarkable growth and the Board is focussed on achieving that.

The past financial year indeed has been an important period of development for the Group and I have pleasure in providing details below of the developments to which I have referred above.

Logistics Services Division

This Division achieved, on a like-for-like basis, a 9% increase in revenues which is in line with the Board's expectations although the audited revenue figure shows only a 3% increase over the previous year to RMB303.7 million (2012: RMB293.8 million). This reflects the introduction of value-added tax ("VAT") to replace sales tax. The rate for both taxes is 6% but sales tax was recognised under cost of sales whereas VAT is netted against revenue. Accordingly, the change resulted in lowering reported revenues by 6%. It also had the effect of increasing the gross margin from 90% to 93%.

The Division continued to develop strongly and during the year won a total of 16 new customers. These included VIPshop, one of China's leading online discount retailers for brands. The Board has continued its stated strategy of diversifying the Division's customer base, notably into the food and building materials industries which now comprise 22% of the Division's revenues (19% in 2012). The historic emphasis on shoes and apparel has further reduced, now comprising 69% of Divisional revenues (72% in 2012).

The customer list of this Division remains broadly based with about 300 customers, 75 of whom account for the majority of revenue with 10 accounting for 34% of revenue. The Division operates from the Transit Warehouse and Head Office in Jinjiang. To meet current and projected demand, there is a requirement for additional facilities. This requirement is being met by the development of a new Logistics Park, details of which are provided below.

Inventory Solutions Business

This Division maintained its revenue contribution as expected with audited revenues of RMB46.9 million. The tax changes referred to above mean that, on a like-for- like basis, the revenues would have been 6% higher. Gross margins are 48% (43% in 2012) and the Division accounted for 13% of total Group revenues. Your Board believes there is significant scope to grow the revenues of this Division, which is summarised in the 'Strategy for Growth' section later in this report.

The Division operates from a Central Distribution Centre ("CDC") in Jinjiang and two Regional Distribution Centres ("RDCs") including one in Hangzhou and one in Guangzhou. As with the Logistics Services Division, there is a need for increased facilities to meet demand. This will be met by the opening of the new Logistics Park and the opening of further RDCs to meet demand.

New Logistics Park

The site acquired for the new Logistics Park is strategically located amongst the Group's existing and potential clients in the Jinjiang Industrial Zone. The site is 145,600m2 and is 14km from the Group's Headquarters. The Land Use Rights ("LUR") have been acquired by China Chaintek for a total consideration of RMB273 million and construction will take approximately 18 months before commencement of operations.

The new Logistics Park will enable China Chaintek to satisfy the growing demand from manufacturers for outsourced logistics. The Board expects the Logistics Park to be at full capacity within three years of completion and it will provide China Chaintek with the ability to double its turnover once full capacity has been reached. China Chaintek has paid for the Logistics Park from its own cash resources, as sale and lease back is not currently an option in China at present, and the Group will also have sufficient resources to fund the estimated RMB600 million construction costs to complete the whole project.

In 2013, the Chinese government issued a new policy and regulation to support the logistics and warehousing industry, especially in land supply at a favourable price for logistics companies. The Group is actively negotiating with the local government to obtain the preferential policy for the new Logistics Park, being a rebate on the land price paid to the government.

China's e-commerce market

China's e-commerce market has developed more quickly and more extensively than many envisaged. It has also proved increasingly dynamic in its offerings and the methods used to make purchases. In 2012 the total value of on-line transactions increased by 67% over the previous year, reaching US$190 billion. Since then, the Chinese market has overtaken the US as the world's largest e-commerce market. The number of people in China purchasing goods and services online in 2012 was 242 million. With China having an estimated total population today of 1.3 billion, there is considerable scope for further growth and research suggests the Chinese e-commerce market will be valued between US$420 billion and US$650 billion by 2020. It is also worth noting that on "Singles Day" in 2012, online sales of US$4 billion were generated in China, surpassing the figure for "Cyber Monday" in the United States in the same year.

The prevalence of online shopping is not restricted to China's four Tier 1 Cities but also extends to the 43 Tier 2 Cities as well as further afield. China Chaintek's operations cover more than 50 of China's major cities with the ability to achieve further penetration. Unlike other developed e-commerce markets, 70% of the e-commerce market in China is C2C (consumer to consumer) compared to less than 10% in most developed markets. This underscores the importance of smaller businesses in driving growth. Such businesses need efficient logistics. Chinese consumers in the larger cities are accustomed to next day delivery and this service is expanding to meet the expectations of consumers in smaller cities. This requires fast and efficient fulfilment, home delivery and handing of returned goods along with greater warehouse capacity. In summary, the development of e-commerce in China is proving to be remarkably fast. China Chaintek intends to position itself as a leading service provider in this fast growing market. The initiatives summarised under 'Strategy for Growth' below will assist in this process.

Strategy for Growth

The Group shortly will commence construction of the new Logistics Park already referred to. This will service and attract customers for both the Logistics Services and the Inventory Solutions Divisions.

The Group also intends to build a larger CDC in Jinjiang city, continue development of its IT systems and open more RDCs. The latter will be opened to meet proven demand and on average will cost £600,000 each. Finding suitable sites can be challenging but China Chaintek has tackled this by way of its agreement with Global Logistic Properties, a Singapore listed property logistics developer, whereby properties are provided when and where required.

As previously announced, the Group's Logistics Services business has been appointed as a Designated Service Provider for VIPshop. The business will provide VIPshop with just-in-time delivery services enabling VIPshop's suppliers to deliver goods efficiently from their manufacturing facilities in Jinjiang to VIPshop's regional operation centres.

The Board believes that by offering both logistics services and inventory solutions, allied with the Group's long standing relationships with major brands in the Jinjiang region, China Chaintek is providing a robust platform for continued growth. It will also enable China Chaintek to benefit from the growth of the e-commerce business of its existing customers as well as enabling the Group to attract new clients in this rapidly growing sector.

I would like to thank the management and employees of China Chaintek for their hard work and professionalism. We have achieved much since the Group was founded some thirteen years ago. I am confident that we will continue to grow China Chaintek in the years ahead to the benefit of our shareholders and staff. I look forward to meeting Shareholders following the announcement of the Group's results.

Meijin Xu

Chief Executive Officer

7 April 2014

Consolidated statement of financial position

As at 31 December 2013

(All amounts in RMB unless otherwise stated)

The financial statements were authorised for issue by the Board of Directors on 7 April 2014.

Derrick Wong

Finance Director

Consolidated statement of comprehensive income

for the financial year ended 31 December 2013

(All amounts in RMB unless otherwise stated)

Consolidated statement of changes in equity

for the financial year ended 31 December 2013

(All amounts in RMB unless otherwise stated)

Consolidated statement of cash flow

for the financial year ended 31 December 2013

(All amounts in RMB unless otherwise stated)

The annexed notes form an integral part of and should be read in conjunction with these consolidated financial statements.

Notes to the consolidated financial statements

for the financial year ended 31 December 2013

1 General information

China Chaintek United Co., Ltd. ("China Chaintek" or the "Company") was incorporated as an exempted limited liability company in the Cayman Islands on 13 April 2011. The Company's registered office is at P. O. Box 1990, 3rd Floor, First Caribbean House, Cardinal Ave, KY1-1104, Cayman Islands. The Company's shares were admitted to trading on the AIM market of the London Stock Exchange on 20 August 2012.

The principal activities of the Company are those related to investment holding. The principal activities of the subsidiaries are logistics services and inventory solutions as indicated in Note 4.

2(a) Restructuring exercise and historical information

On 3 March 2000, Fujian Xingtai Logistics Co., Ltd. ("Fujian Xingtai") was incorporated as a limited liability company in the People's Republic of China (the "PRC") controlled by Mr Shufang Zhuang (Mr Zhuang). The registered office is located at Mei Ling Industrial Park, Jinjiang City, Fujian Province, PRC.

On 5 March 2010,Fujian Xingtai became a wholly owned entity of Mr Zhuang and his wife Mrs Meijin Xu (Mrs Xu).

On 7 December 2010, Chaintek United Holdings Ltd ("ChaintekUnited") was incorporated as a limited liability company in Hong Kong SAR. ChaintekUnited, an investment holding company, has its registered office at Room 1613, 16F, Tai Yau Building, 181 Johnson Road, Wan Chai, Hong Kong SAR. ChaintekUnited is wholly owned by Mr Zhuang and Mrs Xu.

On 29 January 2011, ChaintekUnited acquired 100% of the equity interest of Fujian Xingtai for a purchase consideration of RMB10,204,100, fully paid in cash with an advance from Mrs Xu.

On 13 April 2011, the Company was incorporated in the Cayman Islands for the proposed listing of the Company's shares on the AIM market of the London Stock Exchange. The Company is majority owned and controlled by Mr Zhuang and Mrs Xu.

On 27 June 2011, the Company acquired 100% of the equity interest of ChaintekUnited for a purchase consideration of HK$10,000 based on the nominal issued share capital of ChaintekUnited.

The acquisitions of Fujian Xingtai by ChaintekUnited and ChaintekUnited by the Company were a combination of businesses under common control by Mr Zhuang and Mrs Xu. As a result, the Company accounted for the acquisitions in a manner similar to a pooling of interests.

2(b) Basis of preparation

(a) Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standardsas adopted by the European Union.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis.

(c) Functional and presentation currency

The consolidated financial statements are presented in Renminbi (RMB), which is the presentation currency of the Group and the functional currency of the principal operating subsidiaries of the Group. All financial information has been presented in RMB, unless otherwise stated.

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

(d) Use of estimates and judgements

The preparation of the financial information in accordance with this basis of preparation requires the use of judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial information and the reported amounts of revenues and expenses during the financial year. Although these estimates are based on management's best knowledge of current events and actions, actual results may differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Critical judgements

Classification of land use right prepayments as operating leases

Within the PRC it is the practice for the State to issue land use rights to individuals or entities. Such rights are evidenced through the granting of a land use rights certificate, which gives the holder the right to use the land (including the construction of buildings thereon) for a given length of time. An upfront payment is made for these rights. The Directors judge that the substance of these arrangements is an operating lease over the land, and that the upfront payment represents prepaid lease rentals. As such, a prepayment is recognised in the statement of financial position, analysed between current and non-current assets. The prepayment is amortised to spread the lease cost over the duration of the term of the land use rights, as specified in the lease certificate.

Critical accounting estimates and assumptions

Useful lives of property, plant and equipment

Property, plant and equipmentare depreciated on a straight-line basis over their estimated useful lives. The Group performs annual reviews on whether the assumptions made on useful lives continue to be valid. As changes in the expected level of usage, competitors' actions and technological obsolescence arising from changes in the market demands or service output of the assets could impact the economic useful lives and the residual values of these assets, this could lead to potential changes in future depreciation charges, impairment losses and/or write-offs. A 5% difference in the expected useful lives of these assets from management's estimates would result in approximately 0.1% (2012: 0.1%) variance in the Group's profit for the financial year ended 31 December 2013.

Impairment of land use rights and property, plant and equipment

Land use rights and property, plant and equipment are reviewed to determine whether there is any indication that the carrying value of these assets may not be recoverable and have suffered impairment loss. If any such indication exists, the assets are tested for impairment. The recoverable amounts of the assets are estimated in order to determine the extent of the impairment loss, if any. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Such impairment loss is recognised in profit or loss.

The use of estimates is required in the area of asset impairment, particularly in assessing: (1) whether an event has occurred that may indicate that the related asset values may not be recoverable; (2) whether the carrying value of an asset can be supported by the net present value of future cash flows which are estimated based upon the value-in-use calculation; (3) the appropriate key assumptions to be applied in preparing cash flow projections including whether these cash flow projections are discounted using an appropriate rate. Changing the assumptions selected by management to determine the level, if any, of impairment, including the discount rates or the growth rate assumptions in the cash flow projections could materially affect the net present value used in the impairment test and as a result affects the Group's results.

Allowance for bad and doubtful debts

The Group makes allowance for bad and doubtful debts, if any, based on an assessment of the recoverability of trade and other receivables. Allowances are applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of bad and doubtful debts requires the use of judgement and estimates. Where the expected outcome is different from the original estimate, such difference will impact carrying value of trade and other receivables and doubtful debt expenses in the year in which such estimate has been changed.  At 31 December 2013, there is no objective evidence that any of the trade and other receivables are impaired.

Income tax

Significant judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due.

Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

2(c) New accounting standards and interpretations

a) Standards, amendments and interpretations effective in 2013:

The following new standards and amendments to standards are mandatory for the first time for the Group for the financial year beginning 1 January 2013. The implementation of these standards did not have a material effect on the Group:

b) Standards, amendments and interpretations that are not yet effective and have not been early adopted:

* Effective date 1 January 2014 for the EU.

The Group does not expect the pronouncements to have a material impact on the Group's earnings or shareholders' funds.

3 Summary of significant accounting policies

Basis of Consolidation

Business combinations

The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the "Group"). As explained in note 1 the acquisitions of Fujian Xingtai by Chaintek United and Chaintek United by the Company were a combination of businesses under common control by Mr Zhuang and Mrs Xu and were therefore accounted for in a manner similar to a pooling of interests.

Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial information of subsidiaries is included in the consolidated financial statements from the date that control commences until the date that control ceases.

Transactions eliminated on consolidation

All inter-company balances and significant inter-company transactions and resulting unrealised profits or losses are eliminated on consolidation and the consolidated financial statements reflect external transactions and balances only.

Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on translation are recognised in the statement of comprehensive income.

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any.

The cost of property, plant and equipment includes expenditure that is directly attributable to the acquisition of the items. Dismantlement, removal or restoration costs are included as part of the cost of property, plant and equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset.

Depreciation is computed utilising the straight-line method to write off the cost of these assets over their estimated useful lives as follows:

Buildings 30 years

Plant and machinery 10 years

Computers and office equipment 2 - 10years

Motor vehicles 5 - 10 years

No depreciation is provided on construction work-in-progress. Depreciation will commence when the asset is completed and ready for its intended use.

The residual values, depreciation methods and useful lives of property, plant and equipment are reviewed and adjusted as appropriate at the reporting date.

Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the standard of performance of the asset before that expenditure was made, will flow to the Group and the cost can be reliably measured. Other subsequent expenditure is recognised as an expense during the financial year in which it is incurred.

For acquisitions and disposals during the financial year, depreciation is provided from the month of acquisition and to the month before disposal respectively. Fully depreciated property, plant and equipment are retained in the books of accounts until they are no longer in use.

The gain or loss arising on disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss.

Land use rights

The land use rights are stated at cost less accumulated amortisation and any impairment losses. Amortisation is calculated on a straight-line basis to write off the cost of the land use rights over the period for which the rights have been granted.

Financial assets

The Group's financial assets include loans and receivables.

The Group initially recognises loans and receivables and deposits on the date they are originated.

Derecognition of financial instruments occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred.  An assessment for impairment is undertaken at least at each reporting date whether or not there is objective evidence that a financial asset or a groupof financial assets is impaired.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivables. They are included in current assets, except for maturities greater than 12 months after the reporting date which are classified as non-current assets.

Loans and receivables are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less provision for impairment.

The Group considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually significant loans and receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and receivables that are not individually significant are collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics.

In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows, discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. Interest on the impaired asset continues to be recognised. When a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Loans and receivables comprise cash and cash equivalents, trade receivables, other receivables, deposits and prepayments, other than land use right prepayments, which are prepaid operating lease expenses and deposits for acquisition of land use rights.

Cash and cash equivalents

Cash and cash equivalents include cash and bank balancesthat have maturities of three months or less from inception.

Impairment of non-financial assets

The carrying amounts of non-financial assets subject to impairment are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.

Dividends

Final dividends proposed by the Directors are not accounted for in Shareholders' equity as an appropriation of retained earnings, until they have been approved by the Shareholders in a general meeting. When these dividends have been approved by the Shareholders and declared, they are recognised as a liability.

Interim dividends are simultaneously proposed and declared, because the Articles of Association of the Company grant the Directors the authority to declare interim dividends. However, interim dividends are not charged to reserves until the relevant date of payment to shareholders.

Statutory common reserve

The subsidiary incorporated in the PRC is required to transfer between 5% and 10% of its profit after taxation to the statutory common reserve until the common reserve balance reaches 50% of the registered capital. For the purpose of calculating the transfer to this reserve, the profit after taxation shall be the amount determined under the PRC accounting standards. The transfer to this reserve must be made before the distribution of dividends to Shareholders. The statutory common reserve can only be used to set off against accumulated losses or to increase the registered capital of the subsidiary, subject to approval from the PRC authorities.

The statutory common reserve is not available for dividend appropriation to the Shareholders.

Share capital

Ordinary Shares are classified as equity.

Incremental costs directly attributable to the issue of Ordinary Shares and share options are recognised as a deduction from equity.

Warrants

The fair value of Warrants issued to vendors and Shareholders is measured using the Black-Scholes option pricing model. Measurement inputs include the share price on the measurement date, the exercise price of the instrument, expected volatility, expected term of the instrument, expected dividend, and the risk-free interest rate.

Financial liabilities

The Group's financial liabilities include trade and other payables.

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method.

Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest-related charges are recognised as an expense in "finance costs" in profit or loss. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.

Gains and losses are recognised in profit or loss when the liabilities are derecognised.

Related parties

For the purposes of this consolidated historical financial information, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Leases

Leases of assets in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.

Rentals on operating leases are recognised in profit or loss on a straight-line basis over the lease term unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Penalty payments on early termination, if any, are recognised in profit or loss when incurred.

The land use rights held by the Group are regarded as operating leases. The amounts paid for these rights are treated as lease prepayments and are amortised over the period for which the rights have been granted in accordance with the land use rights certificate.

Government grants

Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a systematic basis in the same periods in which the expenses are recognised.

Employee benefits

Short-term employee benefits

Short-term benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

Defined contribution plans

Payments made to state-managed retirement benefit schemes, such as the social security plans in the PRC, are dealt with as contributions to defined contribution plans. The contributions were recognized when the payment obligation existed.

The PRC subsidiary is required to contribute a certain percentage of its employees' payroll costs to the state-managed retirement benefit scheme operated by the municipal government.

The local municipal government undertakes to assume the retirement benefit obligations of all existing and future retired employees of the PRC subsidiary. The PRC subsidiary has no further payment obligations once the contributions have been paid.

Key management personnel

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity. Directors and certain key executive officers are considered key management personnel.

Income taxes

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity or other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of an asset or liability in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at the reporting date.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authorities on the same taxable entity, or on different tax entities, provided they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

Earnings per share

The Group presents basic and diluted earnings per share ("EPS") data for its Ordinary Shares. Basic EPS is calculated by dividing the profit or loss attributable to Ordinary Shareholders of the Company by the weighted average number of Ordinary Shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to Ordinary Shareholders and the weighted average number of Ordinary Shares outstanding, adjusted for the effects of all dilutive potential Ordinary Shares, which comprise Warrants.

Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Chief Executive Officer who makes strategic resources allocation decisions.

Revenue recognition

The Group derives its revenues from two principal sources: 1) logistics services; and 2) inventory solutions.

Logistics services

Logistics services involving land transportation are provided with the use of independent transportation contractors (carriers). The Group bills the carrier its logistics arrangement fee after the goods have been delivered by the carrier but recognises revenue at the date that the logistics arrangement has been completed which is regarded as the date the goods are transferred to the responsibility of the carrier. The carrier bills the receiver directly andbears the risk of loss of the goods during transit to the receiver.

Inventory solutions

Inventory solutions relate to the provision of inventory storage and custody, goods receipts and issues, packaging, changing product labels and related services. The customer is billed a fixed fee per unit of goods managed by the Group for all of these services. The Group bills the customer directly for these services as the goods are collected by the carrier and recognises revenue at this same time.

Interest income

Interest income is recognised on a time proportion basis using the effective interest method.

4 Subsidiaries

5 Land use rights prepayments

On 6 March 2013, the company signed an agreement with the PRC's land authorities towards the right to use a parcel of land for construction of a warehouse. As at 31 December 2013, the Group had fully paid for the full amount of land use rights but yet to obtain the land use right certificate to commence use of the parcel of land, and amortisation has not yet commenced on this land use rightsaccordingly.

6 Property, plant and equipment

7 Trade and other receivables

The Group allows an average credit period of 90 days to its trade customers.

Trade and other receivables are denominated in RMB, except prepayment of interim dividend to share registrar which is denominated in GBP.

* Rental deposits relate to refundable security deposits placed with lessors for operating leases of warehousing facilities and fall due for repayment within 12 months.

** This relates to deposit payments made to the PRC's land authorities towards the right to use a parcel of land for constructions of a warehouse. The agreement was signed on 6 March 2013. As at 31 December 2013, the Group had fully paid for the full amount of land use rights but yet to obtain the land use right certificate to commence use of the parcel of land. It has been classified in Note 5 Land use rights prepaymentsin 2013.

8 Cash and cash equivalents

As at 31 December 2012 and 2013, bank balances of approximately RMB342,630,000 and RMB319,214,000 are interest earning. The weighted average effective interest rate of these interest-earning bank balances as at 31 December 2012 and 2013 was 0.38% per annum, respectively.

Cash and bank balances are denominated in the following currencies:

9 Share capital

* The Company was incorporated in the Cayman Islands in April 2011 with an authorised share capital of US$50,000 divided into 50,000 shares of US$1 each.

** Pursuant to an ordinary and special resolutions passed on 1 August 2012, the Company's Shareholders approved the subdivision of the Ordinary Shares, with each Ordinary Share of US$1 each subdivided into 1,000 Ordinary Shares of US$0.001 each; and the increase in the authorised share capital of the Company from US$50,000 comprising 50,000,000 Ordinary Shares of US$0.001 each to US$200,000 comprising 200,000,000 shares of US$0.001 each.

*** In August 2012, the Company issued 4,696,875 shares at £1.60 per share pursuant to its initial public offer of shares on the AIM market of the London Stock Exchange which raised £7,515,000 (equivalent to RMB75,075,459).

In connection with the IPO, the Company issued 586,913 free Warrants to certain vendors for their services rendered and 1,098,437 free Warrants attached to 2,196,875 Ordinary Shares issued to three new Shareholders. Each Warrant carries the right to subscribe for one new Ordinary Share in the capital of the Company at an exercise price of £1.60. The IPO proceeds of RMB75,075,459 were allocated to Ordinary Shares and Warrants issued to Shareholders using the fair value of the two instruments on a pro-rata basis on the IPO date. As a result, RMB66,868,186 was recorded within share capital and share premium and RMB8,207,273 in the Warrant reserve (Note 13).

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 shares rank equally with regard to the Company's residual assets.

In the current year, the Company has disaggregated share capital between share capital and share premium, as a consequence the share premium balance has increased and the share capital balance has decreased by RMB 66,838,371 in the previous year.

10 Merger reserve

The merger reserve represented the excess of the purchase consideration for the acquisition of the subsidiaries under common control in the Restructuring Exercise described in Note 2(a) over the combined paid-up registered capital of those subsidiaries.

11 Statutory common reserve

According to PRC Company Law, Fujian Xingtai is required to transfer between 5% and 10% of its profit after taxation to the statutory common reserve until the statutory common reserve balance reaches 50% of the registered capital. The amount of net profit after taxation transferred to the statutory common reserve reached 50% of the registered capital during the year ended 31 December 2009.

12 Other reserves

Capital reserve

Share premium

13 Warrant reserve

The Warrant reserve comprises the cumulative value of the portion of IPO proceeds ascribed to the attached Warrants, as described in share capital above. When a Warrant is exercised, the related balance in the Warrant reserve will be transferred to share capital. A number of warrants were granted to certain service providers as part of the listing process in 2012. The directors consider that these warrants primarily related to services in support of the listing process rather than in supporting the main fund raising process and therefore have recorded the costs as a share based payment expense of RMB4,977,160 for the year ended 31 December 2012.

Each Warrant carries the right to subscribe for one new Ordinary Share in the capital of the Company at an exercise price of £1.60.

The 1,500 Warrants issued to the vendors are exercisable at any time for a period of three years from 20 August 2012. The fair value of the Warrants was determined using the Black-Scholes option pricing formula with the following assumptions: volatility of 55.71%; risk free interest rate of 0.23%; and expected life of three years.

The 1,683,850 Warrants issued to the Shareholders and vendors are exercisable at any time for a period of five years from 20 August 2012. The share price at date of grant was 160p per share. The fair value of the Warrants was determined using the Black-Scholes option pricing formula with the following assumptions: volatility of 62.80%; risk free interest rate of 0.62%; and expected life of five years.

14 Trade and other payables

* At 31 December 2012, the advance from a Shareholder related to an advance from Mrs Xu to provide working capital for Chaintek United. The advance from a Shareholder was unsecured, interest-free and repayable in cash on demand. Pursuant to an agreement entered into with Mrs Xu, the Shareholder waived a portion of the advance amounting to RMB9,813,688 during the financial year ended 31 December 2012. The advance amount waived was considered as a capital contribution from the Shareholder and recognised directly in equity under capital reserve. The remaining amount of RMB6,975,275 has been fully repaid in 2013.

** On 27 June 2011, in connection with the restructuring exercise described in Note 2(a), the Company acquired 100% of the equity interest of Chaintek United for a purchase consideration of HK$10,000 (RMB8,215) based on the nominal issued share capital of Chaintek United. The purchase consideration was outstanding at 31 December 2011. During the financial year ended 31 December 2012, the former Shareholders of Chaintek United, Mr Zhuang and Mrs Xu, waived the amount which was unsecured and interest free. Mr Zhuang and Mrs Xu are Shareholders of the Company after the restructuring exercise. The amount waived was considered as capital contributions from the Shareholders and recognised directly in equity under capital reserve.

Other payables are denominated in the following currencies:

15 Revenue

16 Other income

Government grant received by the Group during the year ended 31 December 2012 relates to a subsidy for the logistics business with no conditions attached.

17 Profit before taxation

(a) The following items have been included in arriving at profit before taxation:

Key management personnel includes Xu LiangYi, Group Chief Operating Officer, who is a brother of Mrs Xu. Key management personnel compensation for Chief Operating Officer is as follows:

(b) Amortisation of land use rights, depreciation of property, plant and equipment, operating lease expense and staff costs included in cost of sales, distribution expenses and administrative expenses are as follows: