Half Yearly Report

Gowin New Energy Group Limited ("GNE" or the "Group")

(AIM: GWIN)

Interim Results for the Six Months Ended 30 June 2014

London: Friday, 26 September 2014: GNE, the China-based group engaged in the research and development, manufacturing and sales of LED lighting products, today announces its unaudited financial results for the six months ended 30 June 2014.

Chairman's Statement

Macro Environment

Generally, it's fair to say that there have not been significant fundamental changes in 2014 in the Chinese and global economic landscape compared to 2013. We are witnessing continuing restructuring of the Chinese economy, which naturally poses some uncertainties ahead. Additionally, the quantitative easing (QE) regime in the United States (US) may soon become history. But according to Zhu Min, Deputy Managing Director of the International Monetary Fund, in a speech to the Hong Kong Association of Banks, China has no cause to worry about US policy changes as its robust growth and current account surplus bode well for its economy. Hence overall, China's economy (and energy policy framework) remains intact and still very advantageous for LED products and services. Nevertheless, wise business managers must prepare for the worst, including any ripple effect on the Chinese economy, should a global asset bubble emerge as a consequence of QE changes in the US.

Financial Results

During the six months ending 30 June 2014, the Group recorded a turnover of RMB 51 million (for six months ended 30 June 2013: RMB 60 million). This decline in turnover year on year arose despite an encouraging first quarter of the year, which benefited from the order book built in 2013 and the traditional Chinese New Year seasonal demand. As for the second quarter, the Group suffered short term effects from implementation of better credit policies and the Group's tougher qualification criteria for government street lighting projects in relation to the Chinese market as well as investments and preparation for potentially exciting export growth in the near future. The Group's top five sales customers for the first half of the year were primarily indoor lighting solutions in domestic commercial properties, especially T8 Series lamps, a change from the past. This is an immediate outcome of business restructuring towards indoor lighting customers and eventually to the export sector. New sales (as opposed to 2013 backlog sales) accounted for 40% of sales volume. Additionally, a number of large scale government sector street lighting and tunnel projects were turned down by the Group, primarily because of an increased attention to government client risk with their potentially long accounts receivables cycles. The Group's continuing working capital constraints were also a factor.

The Group observed a trend internationally to indoor and home lighting products and has engaged selected international 'big name / high volume' retailers. In the first six months of 2014, the Group has provided indoor products test reports and samples to these prominent retailers. All key milestones to date have been achieved. We hope to be receiving and fulfilling orders in the second half of the year leading up to the Christmas season.

Profit after tax for the six months ended 30 June 2014 amounted to RMB 2 million (for six months ended 30 June 2013: RMB 6.7 million). This includes a one-off tax adjustment of RMB 2.3 million (for six months ended 30 June 2013: nil) for the under-provision in Enterprise Income Tax of one of the Group's subsidiaries in the People's Republic of China ("the PRC"). During the period under review, an annual review carried out by the relevant tax authorities on the subsidiary's status on its accreditation of High and New Technology Enterprisefor the year ended 31 December 2013 had determined the subsidiary was unable to meet some of the requirements in order to enjoy the preferential rate of 15% and that the subsidiary's tax rate should have been 25% for the year ended 31 December 2013, and this difference is recognised as an under-provision of tax expenses in the current period.

The Group's major operating expenses, comprising research and development and administration, amounted to RMB 5.2 million (for six months ended 30 June 2013: RMB 4.7 million). Such expenses mainly comprised (i) research and development expenses to the sum of RMB 1.1 million (for six months ended 30 June 2013: RMB 1.1 million) and (ii) total staff costs to the sum of RMB 3.3 million (for six months ended 30 June 2013: RMB 1.6 million).

The Group's Accounts Receivable value in the first half of 2014 is RMB 133 million (31 December 2013: RMB 91 million). The negative trend is a legacy of the Group's previous emphasis on opportunistic government outdoor projects and an inability to take legal action against overdue government debtors or obtain bank factoring solutions for those contracts.

Key Developments

As was communicated in the Group's 2013 Annual Report, the new sales and marketing emphasis is on export business growth, especially to global retail stores requiring indoor lighting solutions, jointly developing and selling all types of household and commercial lighting. The Group continues to anticipate the first results from this effort later in 2014. Additionally, the Group will continue to pursue selective Chinese government and commercial outdoor lighting solutions, where it meets our new tighter customer qualification guidelines.

The Group continues its commitment to research and development; a critical success factor for sustainable business success. The R&D team is experienced and working on a number of indoor and outdoor lighting innovations across the value chain including power supply, integrated chips and energy efficiency. A number of special purpose lighting solutions are also in development. Some of these innovations arise from customer requirements - the R&D team consistently demonstrates its ability to customise the Group's LED products to customer requirements.

Corporate Governance

The Board conducts regular Audit Committee meetings in 2014, designed to add value to management in the attainment of the highest standards of financial management. A new CFO, Mr. Brian Ho, joined the Group in September 2014 and will add significant quality to the Group's financial management, given his depth and breadth of CFO experience which includes AIM quoted companies.

As communicated in the Group's 2013 Annual Report, the Board has committed itself to a strong agenda on Business Strategy, aimed at ensuring the Group maintains and increases its differentiation in the market place, enhancing export sales and increasing the quality and scale of its clients and eco-system of partners along with its products and service delivery. In broad terms the key elements of the current business strategy are:

· Building a stable Group; managing the Group's capital well with sustainable growth in sales, profits and earnings per share. This is the key current focus.

· Introducing more factory automation with productivity and quality benefits - a 2015 objective.

· Capturing meaningful market share in the domestic and international indoor lighting (commercial and home use) segments. This should drive mass production, economies of scale and lower cost LED solutions. This strategic imperative is already under way.

· Lodging special purpose lighting patents, in potential areas of motor cycles, automobile head lights, shipping and fishing fleets and stage lighting. This is a 2015 objective.

· Pursuing selective outdoor lighting (streets and tunnels) domestically, that meets the Group's new tougher qualification criteria. This aligns with China's LED lighting deployment policy which will drive significant demand over the next two years. These are necessarily high working capital projects. Accounts Receivable risk will be reduced by working through qualified agents, who in turn will make early payments to the Group and carry the customer collection risk burden.

· Strengthening the Group's stakeholder network - actively consider joint ventures and alliances to grow global market share and profitability as well as attract institutional investors. Market scans are already in progress and will be a key focus in 2015.

· Continuing to restructuring the Group's business and aim for 50% of Group sales in the export sector by 2016. In so doing the Group will also achieve diversity of products, geographies, client groups and risk. This restructuring is already under way as of second quarter 2014.

· Continuing to focus on human resources and talent management - skills and innovation. The R&D team will always be a priority and we will seek to enhance it with youthful talent. Finance, Marketing (especially digital marketing) and Sales skills will be enhanced. This is already under way and will gather momentum over the next 18 months.

· Enhancing corporate governance in line with the UK Quoted Companies Alliance (QCA) code. The Group will also focus on Board culture and diversity in line with the Group's "6 Duty of C's" mantra assigned to Directors individually and collectively: Duty of Care; Duty of Compliance; Duty of Communication Effectiveness and Disclosure; Duty of Concern for all Stakeholders; Duty of Conflict of Interest management and Duty of Curiosity.

This is a journey already under way and will continue into 2015 and beyond.

Looking slightly ahead, the Board's key focus is the continuing implementation of more effective Accounts Receivables policies, cash flow management and additional financing. Additionally, the Board agenda items include completion of ERP system rollout, development of a long term marketing strategy including digital marketing campaigns and higher quality website, design and implementation of Corporate and Social Responsibility (CSR) programs that will enhance the effectiveness of risk and enhance the Group's reputation.

Current Trading and Outlook

Given the Group's deliberate slowdown in signing of domestic government business and the investment cycle for international contracts, sales and earnings in the year to 31 December 2014 may be lower than management expectations. Should that occur, the Group believes the lag will be picked up in 2015 and be sustainable going forward. Overall gross margins should be maintained. The emphasis will be on increasing export sales (with commensurate attractive trading terms) and growing the indoor lighting sales domestically and internationally.

The Group continues to focus on significantly improving its working capital efficiency, including reducing its cash conversion cycle by better controlling credit terms and cooperating with agents to manage accounts receivables risk.

Accounts Receivable management will continue to be a very key focus of the Group. The Group collected an encouraging RMB 32.5 million since the end of the reporting period to the date of this report, albeit aided by government payment cycles that often favour the second half of the year as the annual budget year comes to an end. The Group has implemented and is implementing a number of measures it expects to yield sustainable improvements to Accounts Receivable going forward.

· Use of an in-house lawyer to write contracts that make payment terms more favourable to the Group.

· Implementation of agreed payment installment plans in government contracts in advance.

· Restructuring the customer base with increased emphasis on export and indoor lighting projects. Letters of credit will be used for export sales.

· Appointing Energy Management Contracting (EMC) agents for significant government street lighting and tunnel projects - such agents do the financing of the projects, offering the Group earlier recovery of costs and earlier returns of profits than would otherwise be the case. This is the future model for such projects, at least one of is expected to be signed in the second half of 2014.

· Implementation of an Accounts Receivables team in the Finance Department, when the Group's capacity to hire more personnel improves.

· Drafting of a plan to allocate a higher portion of sales commission to cash collection outcomes at the sales team and sale representative levels in 2015.

· The Group will continue to monitor its Accounts Receivable situation throughout the rest of 2014 and will consider impairments of very long DSO contracts in the context of the relationship quality of the particular government client.

Market and industry feedback has been reassuring to the Group about its competitive positioning in the marketplace as follows:

· The Group's inherent strength in exploiting its own R&D and innovation advantages, which reflect the heritage of the Group since its inception. Often a new innovation will stem from a particular customer requirement which can then be replicated. This can lead to new patent applications.

· The Group can capitalise on its increasing industry recognition and from its presence and public visibility on the London Stock Exchange, to attract strategic and institutional investors as well as new clients internationally. A number of key prospects and agents from across the world have met with the Group this year, including from North America, Europe and ASEAN. These prospects would not have been realised if it wasn't for the Group's listing on the London AIM Board. This gives the Group the potential to penetrate export markets ahead of some competitors.

· The Group cooperates with an eco-system of suppliers and partners across the supply chain and value chain in the product design and use of materials eg, power supplies, integrated circuits. This gives the Group a potentially lower cost producer outcome employing smarter technologies and increased efficiencies. Additionally, the Group is able to more effectively customise solutions to specific customer needs.

Notes of Appreciation

I wish to once again thank our shareholders, customers and business partners for their support to the Group in 2014. As the Group continues to restructure, there may be volatility in business results in the short term. But the Board is confident about the future prospects of the Group's business and believes shareholder patience will be rewarded. Finally, on behalf of the Board and senior management, I would like to extend our sincere appreciation to all our indispensable staff for their ongoing hard work and business contribution in 2014.

Garry Willinge

Non-Executive Chairman

25th September 2014

-ENDS-

For further information please visit www.gowinyichia.com or contact the following:

Gowin New Energy Group Limited Telephone: +852 9100 9972

Garry Willinge

Cairn Financial Advisers LLP Telephone: +44 20 7148 7900

James Caithie

Avi Robinson

Alexander David Securities Limited Telephone: +44 20 7448 9800

David Scott

Fiona Kinghorn

Gowin New Energy Group Limited

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2014

Gowin New Energy Group Limited

Condensed consolidated statement of financial position

As at 30 June 2014

Gowin New Energy Group Limited

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2014

 *Issued share capital was £0.01, being one share of £0.01 par value.

Gowin New Energy Group Limited

Condensed consolidated statement of cash flows

For the six months ended 30 June 2014

Gowin New Energy Group Limited

Notes to the condensed consolidated interim financial information

For the six months ended 30 June 2014

1. General information

Gowin New Energy Group Limited ("Gowin") was incorporated in the Cayman Islands. The registered office of the Company is located at Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands and the principal place business is located at Xiakeng Village, Tangjiano Management Zone, ChaShan Town, DongGuan, GuangDong, China

The principal activity of the Company is investment holding. The principal activity of the Company's subsidiaries (together with the Company referred as to the "Group") is engaged in the research and development (R&D), manufacturing and sales of LED lighting products in the People's Republic of China (the "PRC"). There is no seasonality or cyclicality of the Group's operations.

The Company's shares are listed on the Alternative Investment Market of the London Stock Exchange (AIM).

The condensed consolidated interim financial statements are presented in Renminbi ("RMB"), which is the functional currency of the Group, and all values are rounded to the nearest thousand except when indicated otherwise. 

2. Basis of preparation

The condensed consolidated interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards and in accordance with International Accounting Standard 34 Interim Financial Reporting. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2013, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The condensed interim financial statements set out above do not constitute statutory accounts. They have been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union. Statutory financial statements for the year ended 31 December 2013 were approved by the Board of Directors on 27 June 2014 . The report of the auditors on those financial statements was unqualified.

The condensed consolidated interim financial statements of the Company have not been audited but have been reviewed by the Company's auditor, PKF Littlejohn LLP.

3. Going Concern

The Group meets its day-to-day working capital requirements through its bank facilities and operational cash flows. The current economic conditions continue to create uncertainty, particularly over (a) the delays in receiving payments from its trading counter-parties; (b) the availability of existing or new bank finance on acceptable terms; (c) whether the expired bank loan will be called for re-payment by the lending institution; and (d) whether the Group's suppliers will continue to provide extended payment terms.

Note 14 details the amounts due from trade receivables and the ageing of those trade receivables. Since the year end, cash collections from these counter-parties have not been in accordance with the agreed terms of trade. A number of the trade receivables are related to government building projects, and there have been significant delays in contractors receiving payment for such projects from the government, which has in turn led to delays in the Group receiving payments. However, Management remains confident, after discussions with the counter-parties, that payment will eventually be received by the counter-parties who will then be able to meet their obligations to the Group.

Note 17 details the bank borrowings of the Group. Certain loans are past their agreed redemption date, but the lender has not formally sought repayment of these sums and a higher rate of interest continues to be charged. General conditions in the PRC banking sector have been constrained over recent months. The PRC government has made it harder for banks to lend to SMEs which has had an impact on both competitors and customers, has led to the above-mentioned increase in accounts receivable and the availability of new or additional borrowing to the Group. These factors may have a bearing on whether existing borrowings will be renewed or renewed on terms acceptable to the Group.

The Directors have prepared cash flow forecasts for the Group which reflect reasonably possible changes in trading performance. These show that the Group should be able to operate within the level of its current borrowing facilities. Management has taken certain measures including the securing of further contracts, which Management has assessed to be profitable, negotiating with certain Directors to obtain their undertaking not to demand repayment of amounts owed to them until there are funds available for repayment, securing new funding from existing shareholders and/or new investors and negotiating with its bank to renew bank facilities of the Group.

The Directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its condensed consolidated interim financial statements.

4. Risks and uncertainties

The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Group's medium term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group's 2013 Annual Report and Financial Statements, a copy of which is available on the Group's website: www.gowinyichia.com. The key financial risks are credit risk; interest rate risk; liquidity risk and foreign exchange risk.

5. Critical accounting estimates and judgements

The preparation of condensed consolidated interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in note 5 of the Group's 2013 Annual Report and Financial Statements. The nature and amounts of such estimates have not changed significantly during the interim period.

6. Significant accounting policies

The condensed interim accounts have been prepared under the historical cost convention.

The accounting policies and methods of computation used in the preparation of these condensed interim accounts are consistent with those used in the 2013 annual accounts, except for the adoption of the amendments and interpretations issued by the International Accounting Standards Board that are the mandatory for annual periods beginning 1 January 2014.

The effect of the adoption of these amendments and interpretations was not material to the Group's results or financial position.

7. Revenue and segment information

Revenue represents invoiced value of goods sold and is net of value-added tax and sales return. There is no seasonality or cyclicality of the Group's operations.

For the periods presented, the Group as a whole is an operating segment since the Group is only engaged in optoelectronic products and related business. No Group's geographical information has been disclosed as the majority of the Group's operating activities are carried out in the PRC (for the purpose of preparing the financial statements, the PRC refers to the Mainland China and Hong Kong) and the Group's assets are all located in the PRC.

The Group is not subject to taxation in the Cayman Islands and British Virgin Islands.

No provision for Hong Kong profits tax has been made as the Group did not generate any assessable profits arising in Hong Kong during the six months ended 30 June 2014 (six months ended 30 June 2013: nil). Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the jurisdictions in which the Group operates.

Under the law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25% from 1st January, 2008 onwards.

During the six months ended 30 June 2013, the Group was accredited as a State-encouraged High and New Technology Enterprise ("HNTE") and is subjected to a preferential tax rate of 15% in the PRC, subject to annual review by the relevant tax authority.

During the reporting period, an annual review carried out by the relevant tax authorities on the accreditation of HNTE for the year ended 31 December 2013 had determined the Group was unable to meet some of requirements in order to enjoy the preferential tax rate of 15%. Thus, the subsidiary's tax rate should be 25% for the year ended 31 December 2013, and the difference is recognized as under provision of tax expenses in current period.

12. Earnings per share

(a) Basic earnings per share/ paid in capital

The 2013 comparative disclosure is of the trading subsidiary registered in China and the capital is not divided into shares under PRC business registration. Earnings per share for the period ended 30 June 2014 is calculated by dividing RMB 2,481,813 profit for the period attributable to the equity holders of the Company by the weighted number of shares of 233,346,681. Earnings per share for the year ended 30 June 2013 has been based on the weighted number of shares of 233,346,681 of 2013 for the purpose of comparison.

(b) Diluted earnings per share

No diluted earnings per share are presented as there are no potential ordinary shares outstanding for the six months ended 30 June 2014 and 2013.

13. DIVIDEND

No dividends were proposed during the reporting period and the Directors do not recommend the payment of an interim dividend for the six months ended 30 June 2014.

The aging analysis of the Group's trade receivables after impairment based on delivery date is as follows:-

At 30 June 2014, an amount of approximately RMB 146,189,000 of trade and other receivables of the Group was denominated in RMB which are at fair value (At 31 December 2013: approximately RMB 109,252,000).

The amounts due from equity holders and related parties were unsecured, interest-free and repayable on demand. The related parties are controlled by a Director of the Group.

An ageing analysis of the Group's trade payables based on the invoice date is as follows:-

The amounts due to equity holders and related parties were unsecured, interest-free and repayable on demand. The related parties are controlled by a Director of the Group.

17. Bank borrowings

The short term bank borrowings are denominated in RMB and are repayable within one year. The ranges of annual interest rates are as follows:

As at 30 June 2013, 31 December 2013 and 30 June 2014, the Group's bank borrowings were supported by: (i) the personal guarantees put up by an equity holder and a key management personnel of the Group; and (ii) properties owned by an equity holder of the Group.

The bank borrowings as at 30 June 2014 represent a one-year loan of RMB 12,000,000 from China Construction Bank ("CCB") advanced on 5 January 2012 which was supported by the guarantee issued by a guarantee company, Dongguan Yin Tong Financial Guarantee Limited. The Group then sub-lent RMB 6,200,000 to Dongguan Hehe Shizheng Construction Co., Limited related to the guarantee company with terms including maturity date, interest and overdue interest which mirrored the terms between the Group and CCB.

The loan from CCB was due for repayment on 5 January 2013. The Group did not fully repay the loan and the outstanding amount was RMB 7,689,000 as at 30 June 2014. The Group was charged overdue interest at the annual rate of 11.316% instead of the original rate of 7.54%. The outstanding interest was approximately RMB 1,435,000 up to 30 June 2014. The Group did not obtain any renewal agreement from CCB at the approval date of these condensed financial statements.

The loan to the Dongguan Hehe Shizheng Construction Co., Limited was also due to be repaid on 5 January 2013 but neither the Dongguan Hehe Shizheng Construction Co., Limited nor the guarantee company repaid the principal, interest and overdue interest. The principal and interest outstanding at 30 June 2014 were RMB 6,100,000 and RMB 1,068,000 respectively.

CCB is aware of these sub-lending arrangements such that CCB would seek repayment of its debt directly from the guarantee company and the Group would only be liable for RMB 1,600,000 of the total RMB 7,689,000. The Directors have no reason to believe that the Group will become liable for the results of the sub-lending.

Bank borrowings at approximately RMB 7,689,000 carried loan covenant which required the borrowing company to maintain a liability to assets ratio determined under local accounting standards of below 60% at all times. Management continually evaluates compliance with the loan covenant and has concluded that there has been no breach to such covenant.

18. Share capital

(i) On 11 March 2013, the Company was incorporated with an authorised share capital of £3,000,000 divided and into 300,000,000 ordinary shares and issued 1 subscriber share of £0.01 par value at par. The value of the share at £0.01 each is translated to RMB 0.1 each with the fixed exchange rate of 1:10 per the subscription form.

(ii) On 24 September 2013, the Company has increased in authorised share capital from £3,000,000 divided and into 300,000,000 ordinary shares of £0.01 each to £5,000,000 divided and into 500,000,000 ordinary shares of £0.01 each by the creation of an additional 250,000,000 shares of £0.01 each in the capital of the Company which shares shall rank pari passu in all respects with the existing authorised and issued shares in the share capital of the Company.

(iii) On 25 September 2013, 299,999,999 new ordinary shares have been allotted for no cash consideration.

(iv) On 31 October 2013, 27,231,513 new ordinary shares were issued at a placing price of GBP 0.06 per ordinary share for cash to increase the working capital of the Group.

(v) On 31 October 2013, 16,461,800 new ordinary shares were issued at a placing price of GBP 0.07 per ordinary share for cash to increase the working capital of the Group.

(vi) On 21 November 2013, 2,018,863 new ordinary shares were issued at a placing price of GBP 0.095 per ordinary share for cash to increase the working capital of the Group.

19. Operating leases

At the end of each financial period/year, the Group's future aggregate minimum lease payments under non-cancellable operating leases in respect of its factory premises are as following:

20. Related party transactions

The ultimate controlling party of the Group is Mr Chinlung Hsieh.

(a) Apart from the balances with related parties disclosed in the condensed consolidated statement of financial position and the transactions disclosed in notes 14 and 16 to the condensed consolidated interim financial information, the Group had no other material transactions with its related parties during the six months ended 30 June 2014 and 2013.

(b) Key management compensation

Key management includes directors and other key management personnel of the Company. The compensation paid or payable to key management for employee services is shown below :-

21. Contingent liabilities

Pursuant to judgment in two actions brought by China Guangfa Bank (''CGB'') against Dongguan Yichia Optoelectronics Technology Co., Limited ("Yichia") and others for liability under guarantees provided by Yichia and others in connection with loans made by CGB to third parties. The third parties and/or guarantors (including Yichia) are required to pay CGB the sum of RMB 4.3m plus interest, default interest and compound interest.

No provision in respect of the liability under the guarantee provided by Group has been recognized in the condensed consolidated financial statements as management considers the borrowers and guarantors are jointly and severally liable and the amount of the Yichia's part of the obligation cannot be reliably estimated.

Pursuant to a deed of indemnity dated 1 November 2013, Juping Cao, the sole shareholder of Yichia, has agreed to indemnify the Group for all liability incurred in connection with this judgment. In the event that Juping Cao defaults on her indemnity, Yichia will be liable to pay the entire amount of its obligation.

22. Approval of interim financial information

The condensed consolidated interim financial statements was approved by the Board of Directors on 25 Sep 2014.

INDEPENDENT REVIEW REPORT TO GOWIN NEW ENERGY GROUP LIMITED

Introduction

We have been engaged by the Company to review the condensed consolidated interim Financial Statements for the six months ended 30 June 2014 which comprise the condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed statement of changes in shareholders' equity, consolidated statement of cash flows and related notes. We have read the other information contained in the interim financial information and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated set of Financial Statements.

Directors' Responsibilities

The interim financial information is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim financial information in accordance with International Accounting Standard 34 "Interim Financial Reporting" ("IAS 34") and the AIM Rules for Companies.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed consolidated interim Financial Statements in the interim financial information based on our review. This report, including the conclusion, has been prepared for and only for the Company. We do not, in producing this report, accept or assume responsibility for any other purpose to any other person to whom this report is shown or into whose hands it may come, save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland), and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim Financial Statements in the financial information for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules for Companies.

Emphasis of matter

Without qualifying our review conclusion, we draw attention to the Going Concern section within Note 3 to these condensed consolidated Interim Financial Statements which describe the Directors' consideration on the going concern basis adopted in the preparation of these condensed consolidated interim Financial Statements. This section explains that the Group meets its day-to-day working capital requirements through its bank facilities and management of its operational cash flows. The current economic conditions facing the Group continue to create uncertainty, particularly over (a) the delays in receiving payments from its trading counter-parties; (b) the availability of existing or new bank finance on acceptable terms; (c) whether the expired bank loan will be called for repayment by the lending institution; and (d) whether the Group's suppliers will continue to provide extended payment terms.

Emphasis of matter (Continued)

These uncertainties, along with the other matters explained in Note 3 to the condensed consolidated Interim Financial Statements, indicate the existence of a material uncertainty which may cast doubt on the Company's and Group's ability to continue as a going concern. The condensed consolidated Interim Financial Statements do not include the adjustments that would result if the Company and Group were unable to continue as a going concern.

PKF Littlejohn LLP

Chartered Accountants

1 Westferry Circus

Canary Wharf

London E14 4HD

Date: 25th September 2014