Attached files
PF-1
The pro forma consolidated financial statements on the companies comprised of SGB International Holdings Inc (“SGB”), Dragon International Resources Group Co., Ltd (“HK Dragon”) and Yongding Shangzhai Coal Mine Ltd (“Yonding Shangzhai”) (collectively, the “Companies”), based on the audited financial statements of the Companies for the financial year ended December 31, 2010, are based on the following principal assumptions:
| (a) | SGB issued $1,280,535 value of ordinary shares as the acquisition consideration for the 100% equity interests of HK Dragon (the “SGB Acquisition”) |
| (b) | The SGB Acquisition has taken place on October 5, 2010 (date of incorporation of HK Dragon) for the purpose of the pro forma consolidation; |
| (c) | HK Dragon paid $278,013 (equivalent to approximately RMB1.8mil) as the acquisition consideration for the 100% equity interests of Yongding Shangzhai (the “Yongding Shangzhai Acquisition”); |
| (d) | The acquisition consideration paid by HK Dragon are assumed to be financed by external borrowings; |
| (e) | The SGB Acquisition has taken place on January 1, 2010 for the purpose of the pro forma consolidation; and |
| (f) | transaction costs incurred for the acquisition are assumed to be insignificant and have been ignored for the purpose of computing the financial effects. |
PF-2
| BALANCE SHEET |
| As at 31 December 2010 |
| Yongding Shangzhai US$ |
HK Dragon US$ |
SGB US$ |
|
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | 526,564 | 1,530 | 6,526 |
| Due from a Director | - | 1,287,858 | - |
| Other receivables, net | 232,802.00 | - | 4,633.49 |
| Prepaid expenses | 2,065,542 | - | 5,001 |
| Total current assets | 2,824,908 | 1,289,388 | 16,161 |
| Non-current assets: | |||
| Plant and equipment, net | 15,056,286 | - | - |
| Intangible assets | 358,742 | - | - |
| Investment costs | 278,013 | 1,291,934 | |
| Total non-current assets | 15,415,028 | 278,013 | 1,291,934 |
| Total assets | 18,239,936 | 1,567,401 | 1,308,095 |
| LIABILITIES AND EQUITY | |||
| Current liabilities: | |||
| Other payables and accrued liabilities | 2,290,552 | 8,853 | 1,479 |
| Due to related parties | - | 278,013 | 275,644 |
| Total current liabilities | 2,290,552 | 286,866 | 277,123 |
| Non-current liabilities: | |||
| Long term borrowings | 11,495,312 | - | - |
| Total non-current liabilities | 11,495,312 | - | - |
| Capital and reserves: | |||
| Paid-in capital | 123,913 | 1,291,934 | 1,489,745 |
| Additional paid-in capital | 71,059 | ||
| Reserves | 73,191 | - | - |
| Retained earnings/(accumulated losses) | 4,200,339 | (7,334.00) | (529,832) |
| Effect of foreign currency translation | 56,629 | (4,065) | |
| Total equity | 4,454,072 | 1,280,535 | 1,030,972 |
| Total liabilities and stock holders' equity | 18,239,936 | 1,567,401 | 1,308,095 |
PF-3
| CONSOLIDATED PRO FORMA BALANCE SHEET |
| As at 31 December 2010 |
| TOTAL | |
| US$ | |
| ASSETS | |
| Current assets: | |
| Cash and cash equivalents | 534,620 |
| Due from a Director | 1,287,858 |
| Other receivables, net | 237,435 |
| Prepaid expenses | 2,070,543 |
| Total current assets | 4,130,457 |
| Non-current assets: | |
| Plant and equipment, net | 13,954,233 |
| Intangible assets | 358,742 |
| Investment costs | - |
| Total non-current assets | 14,312,975 |
| Total assets | 18,443,432 |
| LIABILITIES AND EQUITY | |
| Current liabilities: | |
| Other payables and accrued liabilities | 2,300,884 |
| Due to related parties | 553,657 |
| Total current liabilities | 2,854,541 |
| Non-current liabilities: | |
| Long term borrowings | 11,495,312 |
| Total non-current liabilities | 11,495,312 |
| Capital and reserves: | |
| Paid-in capital | 1,489,745 |
| Additional paid-in capital | 71,059 |
| Reserves | - |
| Retained earnings/(accumulated losses) | 2,480,211 |
| Effect of foreign currency translation | 52,564 |
| Total equity | 4,093,579 |
| Total liabilities and stock holders' equity | 18,443,432 |
PF-4
| CONSOLIDATED PRO FORMA INCOME STATEMENT |
| Year ended 31 December 2010 |
| Yongding Shangzhai US$ |
HK Dragon US$ |
SGB US$ |
TOTAL US$ |
|
| Sales | 13,666,807 | - | - | 13,666,807 |
| Sales Tax | (49,037) | - | - | (49,037) |
| Net sales | 13,617,770 | - | - | 13,617,770 |
| Cost of sales | (6,702,426) | - | - | (6,702,426) |
| Gross profit | 6,915,344 | - | - | 6,915,344 |
| Selling expenses | (570) | - | - | (570) |
| Administrative expenses | (1,912,758) | (7,334) | (164,421) | (2,084,513) |
| Depreciation and amortization | (120,889) | - | - | (120,889) |
| Other operating expense | (343,427) | - | - | (343,427) |
| Profit from operations | 4,537,700 | (7,334) | (164,421) | 4,365,945 |
| Other income and expense | 42,196 | - | - | 42,196 |
| Interest expense | (1,434,697) | - | - | (1,434,697) |
| Profit before income tax | 3,145,199 | (7,334) | (164,421) | 2,973,444 |
| Income tax expense / credit | (127,822) | (127,822) | ||
| Profit after income tax before extraordinary items | 3,017,377 | (7,334) | (164,421) | 2,845,622 |
| Extraordinary items | - | - | - | - |
| Net profit for the year | 3,017,377 | (7,334) | (164,421) | 2,845,622 |
| Other comprehensive income | ||||
| - Effects of foreign currency conversion | 92,929 | (4,065) | - | 88,864 |
| Comprehensive income | 3,110,306 | (11,399) | (164,421) | 2,934,486 |