Listed Company Information
 

WINFOONG INT'L<00063> - Results Announcement

Winfoong International Limited announced on 23/03/2006:
(stock code: 00063 )
Year end date: 31/12/2005
Currency: HKD
Auditors' Report: Unqualified

                                                        (Audited   )
                                     (Audited   )       Last
                                     Current            Corresponding
                                     Period             Period
                                     from 01/01/2005    from 01/01/2004
                                     to 31/12/2005      to 31/12/2004
                               Note  ('000      )       ('000      )
Turnover                           : 128,349            46,441            
Profit/(Loss) from Operations      : 130,002            558,194           
Finance cost                       : (20,168)           (10,516)          
Share of Profit/(Loss) of 
  Associates                       : 30,472             (448)             
Share of Profit/(Loss) of
  Jointly Controlled Entities      : N/A                N/A               
Profit/(Loss) after Tax & MI       : 115,131            454,440           
% Change over Last Period          : -75       %
EPS/(LPS)-Basic (in dollars)       : 0.0771             0.3045            
         -Diluted (in dollars)     : 0.0766             N/A               
Extraordinary (ETD) Gain/(Loss)    : N/A                N/A               
Profit/(Loss) after ETD Items      : 115,131            454,440           
Final Dividend                     : NIL                NIL
  per Share                                              
(Specify if with other             : N/A                N/A
  options)                                               
                                                         
B/C Dates for 
  Final Dividend                   : N/A   
Payable Date                       : N/A
B/C Dates for (-)            
  General Meeting                  : N/A   
Other Distribution for             : N/A
  Current Period                     
                                     
B/C Dates for Other 
  Distribution                     : N/A   
  
Remarks:

1.Turnover and profit from operations

                                Turnover        Profit
                                HK$'000         HK$'000
                        
From continuing operations      128,349         130,002
From discontinued operations    -               -
                                ---------       --------
                                128,349         130,002
                                =========       ========

2.Earnings per share

(a)     Basic earnings per share

The calculation of basic earnings per share is based on the profit 
attributable to ordinary equity shareholders of the Company of HK$115,131
,000 (2004 (restated): HK$454,440,000) and the weighted average of 1,492,
410,986 (2004: 1,492,410,986) ordinary shares in issue during the year.

(b)     Diluted earnings per share

The calculation of diluted earnings per share for the year ended 31 
December 2005 is based on the profit attributable to ordinary equity 
shareholders of the Company of HK$115,131,000 and the weighted average 
number of ordinary shares of 1,503,304,597 shares, calculated as follows:
        
                                                2005
        
Weighted average number of ordinary shares
 at 31 December                                 1,492,410,986
Effect of deemed issue of shares under the
 Company's share option scheme for nil
 consideration                                  10,893,611
                                                --------------
Weighted average number of ordinary shares
 (diluted) at 31 December                       1,503,304,597
                                                ==============

The diluted earnings per share for the year ended 31 December 2004 is not 
shown because there was no dilutive potential ordinary shares in existence 
as at 31 December 2004.

3.Changes in accounting policies

The Hong Kong Institute of Certified Public Accountants has issued a 
number of new and revised Hong Kong Financial Reporting Standards ("
HKFRSs") that are effective for accounting periods beginning on or after 1 
January 2005.

The following sets out information on the significant changes in 
accounting policies for the current and prior accounting years reflected 
in these financial statements.

The Group has not applied any new standard or interpretation that is not 
yet effective for the current accounting year.

(a)     Restatement of prior years and opening balances

The following tables disclose the adjustments that have been made in 
accordance with the transitional provisions of the respective HKFRSs to 
each of the line items in the consolidated income statement and balance 
sheet as previously reported for the year ended 31 December 2004.

Consolidated income statement for the year ended 31 December 2004

                                        Effect of new policy
                                        (increase/(decrease)    
                        2004 (as        on profit for the year)
                        previously      HKAS 1          HKAS 17
                        reported)       (note 2(e))     (note 2(f))
                        HK$'000         HK$'000         HK$'000
Turnover                46,441          -               -
Cost of sales           (20,760)        -               -
                        ----------      -----------     -----------             
Gross profit            25,681          -               -
                                        
Valuation gains on
 investment property    -               -               -
Operating and
 administrative
 expenses               (28,867)        -               194
Other income and
 expenses               35,373          -               (7,203)
                        -----------     -------------   -------------           
Profit from operations  32,187          -               (7,009)
                                        
Finance costs           (10,516)        -               -
Profit on disposal of 
 subsidiaries           1,073           -               -
Share of profit/(loss)
 of an associate        116             (564)           -
                        -----------     -------------   -------------           
Profit before taxation  22,860          (564)           (7,009)
                                        
Income tax              (589)           564             -
                        -----------     -------------   -------------           
                        22,271          -               (7,009)
Minority interest       79              (79)            -
                        -----------     -------------   -------------           
Profit for the year     22,350          (79)            (7,009)
                        ===========     =============   =============
Earnings per share                                      
 Basic                  HK1.50 cents    -               HK(0.47) cents
                        =============   =============   ==============          
                        
Other significant
 disclosure items:                                      
  Depreciation          (1,189)         -               241
  Amortisation of
   land lease
   premium              -               -               (47)
  Revaluation gains
   on building          7,336           -               (7,203)

                        Effect of new policy
                        (increase/(decrease)            2004
                        on profit for the year)         (at
                        HKAS 40         Sub-total       restated)
                        (note 2(h))             
                        HK$'000         HK$'000         HK$'000
Turnover                -               -               46,441
Cost of sales           -               -               (20,760)
                        -----------     -------------   -------------
Gross profit            -               -               25,681
                                        
Valuation gains on
 investment property    533,016         533,016         533,016
Operating and
 administrative
 expenses               -               194             (28,673)
Other income and
 expenses               -               (7,203)         28,170
                        -----------     -------------   -------------           
Profit from operations  533,016         526,007         558,194
Finance costs           -               -               (10,516)
Profit on disposal of 
 subsidiaries           (917)           (917)           156
Share of profit/(loss)
 of an associate        -               (564)           (448)
                        -----------     -------------   -------------
Profit before taxation  532,099         524,526         547,386
Income tax              (93,000)        (92,436)        (93,025)
                        -----------     -------------   -------------           
                        439,099         423,090         454,361
Minority interest       -               (79)            -
                        -----------     -------------   -------------           
Profit for the year     439,099         432,011         454,361
                        ===========     =============   =============
Earnings per share                                      
 Basic                  HK29.42 cents   HK28.95 cents   HK30.45 cents
                        =============   =============   =============
Other significant
 disclosure items:                                      
  Depreciation          -               241             (948)
  Amortisation of
   land lease
   premium              -               (47)            (47)
  Revaluation gains
   on building          -               (7,203)         133

(b)     Estimated effect of changes in accounting policies on the current 
year

Estimated effect on the consolidated income statement for the year ended 
31 December 2005:

                        Estimated effect of new policy
                        (increase/(decrease) 
                        on profit for the year)
                        HKFRS 2         HKAS 1          HKAS 17 
                        (note 2(c))     (note 2(e))     (note 2(f))
                        HK$'000         HK$'000         HK$'000
                                        
Valuation gains on
 investment property    -               -               -
Other net (loss)/income -               -               14,040
Operating and
 administrative
 expenses               (8,911)         -               318
                        -----------     -------------   -------------
Profit from operations  (8,911)         -               14,358
                                        
Share of profit/(loss)
 of an associate        -               (185)           -
                        -----------     -------------   -------------           
Profit before taxation  (8,911)         (185)           14,358
Income tax              -               185             -
                        -----------     -------------   -------------           
Profit for the year     (8,911)         -               14,358
                        ===========     =============   =============           
Attributable to:                                        
Equity shareholders
 of the company         (8,911)         -               14,358
Minority interests      -               -               -
                        -----------     -------------   -------------           
Profit for the year     (8,911)         -               14,358
                        ===========     =============   =============           
Earnings per share                                      
 Basic                  HK(0.60) cents  -               HK0.96 cents
                        ==============  =============   =============           
Diluted                 HK(0.59) cents  -               HK0.95 cents
                        ==============  =============   =============
Other significant
 disclosure items:                                      
  Staff costs           (8,911)         -               -
  Depreciation          -               -               353
  Amortistation of
   land lease premium   -               -               (35)
  Net loss on sale
   of fixed assets      -               -               14,187
  Revaluation losses
   on buildings         -               -               (147)


                                        Estimated effect of new policy
                                        (increase/(decrease) 
                                        on profit for the year)
                                        HKAS 40         Total
                                        (note 2(h))
                                        HK$'000         HK$'000
Valuation gains on investment property  166,000         166,000
Other net (loss)/income                 -               14,040
Operating and administrative expenses   -               (8,593)
                                        ------------    ----------
Profit from operations                  166,000         171,447
Share of profit/(loss) of an associate  -               (185)
                                        ------------    ----------
Profit before taxation                  166,000         171,262
                        
Income tax                              (29,000)        (28,815)
                                        ------------    ----------
Profit for the year                     137,000         142,447
                                        ============    ==========
Attributable to:                        
 Equity shareholders of the company     137,000         142,447
 Minority interests                     -               -
                                        ------------    ----------
Profit for the year                     137,000         142,447
                                        ============    ==========
Earnings per share                      
 Basic                                  HK9.18 cents    HK9.54 cents
                                        ============    ============
 Diluted                                HK9.11 cents    HK9.47 cents
                                        ============    ============
Other significant disclosure items:                     
 Staff costs                            -               (8,911)
 Depreciation                           -               353
 Amortistation of land lease premium    -               (35)
 Net loss on sale of fixed assets       -               14,187
 Revaluation losses on buildings        -               (147)

(c)     Employee share option scheme (HKFRS 2, Share-based payment)

In prior years, no amounts were recognised when employees (which term 
includes directors) were granted share options over shares in the Company. 
If the employees chose to exercise the options, the nominal amount of 
share capital and share premium were credited only to the extent of the 
options' exercise price receivable.

With effect from 1 January 2005, in order to comply with HKFRS 2, the 
Group has adopted a new policy for employee share options. Under the new 
policy, the Group recognises the fair value of such share options as an 
expense with a corresponding increase recognised in a share-based 
compensation reserve within equity.

The new accounting policy has been applied retrospectively with 
comparatives restated, except that the Group has taken advantage of the 
transitional provisions set out in HKFRS 2, under which the new 
recognition and measurement policies have not been applied to the 
following grants of options:

(a)     all options granted to employees on or before 7 November 2002; and

(b)     all options granted to employees after 7 November 2002 but which 
had vested before 1 January 2005.

No adjustments to the opening balances as at 1 January 2004 and 1 January 
2005 are required as no options existed at that time which were unvested 
at 1 January 2005.

(d)     Amortisation of positive and negative goodwill (HKFRS 3, Business 
combinations and HKAS 36, impairment of assets)

(i)     Amortisation of goodwill
                
In prior periods:

-       positive or negative goodwill which arose prior to 1 January 2001 
was taken directly to reserves at the time it arose, and was not 
recognised in the income statement until disposal or impairment of the 
acquired business;

-       positive goodwill which arose on or after 1 January 2001 was 
amortised on a straight line basis over its useful life and was subject to 
impairment testing when there were indications of impairment; and

-       negative goodwill which arose on or after 1 January 2001 was 
amortised over the weighted average useful life of the depreciable/
amortisable non-monetary assets acquired, except to the extent it related 
to identified expected future losses as at the date of acquisition. In 
such cases it was recognised in the income statement as those expected 
losses were incurred.

With effect from 1 January 2005, in order to comply with HKFRS 3 and HKAS 
36, the Group has changed its accounting policies relating to goodwill. 
Under the new policy, the Group no longer amortises positive goodwill but 
tests it at least annually for impairment. Also with effect from 1 January 
2005 and in accordance with HKFRS 3, if the fair value of the net assets 
acquired in a business combination exceeds the consideration paid (i.e. an 
amount arises which would have been known as negative goodwill under the 
previous accounting policy), the excess is recognised immediately in 
profit or loss as it arises.

The new policy in respect of the amortisation of positive goodwill has 
been applied prospectively in accordance with the transitional 
arrangements under HKFRS 3. The change in policy relating to positive 
goodwill had no effect on the financial statements as there was no 
positive goodwill existed as at 31 December 2004.

Also in accordance with the transitional arrangements under HKFRS 3, 
goodwill which had previously been taken directly to reserves (i.e. 
goodwill which arose before 1 January 2001) will not be recognised in 
profit or loss on disposal of impairment of the acquired business, or 
under any other circumstances. The change in accounting policy relating to 
goodwill which had previously been taken directly to reserves (i.e. 
goodwill which arose before 1 January 2001) were adopted by way of opening 
balance adjustments to retained profits.

The change in policy relating to negative goodwill had no effect on the 
financial statements as there was no negative goodwill deferred as at 31 
December 2004.

(e)     Changes in presentation (HKAS 1, Presentation of financial 
statements)

Presentation of shares of associate's taxation (HKAS 1, Presentation of 
financial statements)

In prior years, the Group's share of taxation of the associate accounted 
for using the equity method was included as part of the Group's income tax 
in the consolidated income statement. With effect from 1 January 2005, in 
accordance with the implementation guidance in HKAS 1, the Group has 
changed the presentation and includes the share of taxation of associate 
accounted for using the equity method in the respective shares of profit 
or loss reported in the consolidated income statement before arriving at 
the Group's profit or loss before tax. These changes in presentation have 
been applied retrospectively with comparatives restated as shown in (a) 
above.
                
(f)     Leasehold land and buildings (HKAS 17, Leases)

(i)     Leasehold land and buildings held for own use

In prior years, leasehold land and buildings held for own use were stated 
at revalued amounts less accumulated depreciation and accumulated 
impairment losses. Movements of revaluation surpluses or deficits were 
normally taken to the land and buildings revaluation reserve.

With effect from 1 January 2005, in order to comply with HKAS 17, the 
Group has adopted a new policy for leasehold land and buildings held for 
own use. Under the new policy, the leasehold interest in the land held for 
own use is accounted for as being held under an operating lease where the 
fair value of the interest in any buildings situated on the leasehold land 
could be measured separately from the fair value of the leasehold interest 
in the land at the time the lease was first entered into by the Group or 
taken over from the previous lessee, or at the date of construction of 
those buildings, if later.

Any buildings held for own use which are situated on such land leases 
continue to be presented as part of property, plant and equipment.

(ii)    Leasehold land held for redevelopment for sale

In prior years leasehold land held for redevelopment for resale was stated 
at the lower of cost and net realisable value.

With the adoption of HKAS 17 as from 1 January 2005, the Group has adopted 
a new policy for such land. Under the new policy any pre-paid land 
premiums for acquiring the land leases, or other lease payments, are 
amortised over the lease term.

(iii)   Description of transitional provisions and effect of adjustments

All the above new accounting policies relating to leases have been adopted 
retrospectively. The adjustments for each financial statements line item 
affected for 31 December 2004 and 2005 are set out in notes 2(a) and 2(b).

(g)     Financial instruments (HKAS 32, Financial instruments: Disclosure 
and presentation and HKAS 39, Financial instruments: Recognition and 
measurement)

With effect from 1 January 2005, in order to comply with HKAS 32 and HKAS 
39, the Group has changed its accounting policies relating to financial 
instruments. Further details of the changes are as follows.

(i)     Investments in debt and equity securities

In prior years, equity investments held on a continuing basis for an 
identifiable long-term purpose were classified as investment securities 
and stated at cost less provision. Other investments in securities (
including those held for trading and for non-trading purposes) were stated 
at fair value with changes in fair value recognised in profit or loss, 
with the exception of dated debt securities being held to maturity.

With effect from 1 January 2005, and in accordance with HKAS 39, all 
investments, with the exception of securities held for trading purposes, 
dated debt securities being held to maturity and certain unquoted equity 
investments, are classified as available-for-sale securities and carried 
at fair value. Changes in the fair value of available-for-sale securities 
are recognised in equity, unless there is objective evidence that an 
individual investment has been impaired. There are no material adjustments 
arising from the adoption of the new policies for securities held for 
trading purposes, debt securities being held to maturity and unquoted 
equity investments not carried at fair value.

(ii)    Description of transitional provisions and effect of adjustments

The changes in accounting policies relating to accounting for investments 
in debt and equity securities had no effect on the opening balance 
adjustments to reserves as at 1 January 2005. 

(h)     Investment property (HKAS 40, investment property and HK(SIC) 
interpretation 21, income taxes - Recovery of revalued non-depreciable 
assets)

Changes in accounting policies relating to investment properties are as 
follows:

(i)     Timing of recognition of movements in fair value in the income 
statement

In prior years movements in the fair value of the Group's investment 
property were recognised directly in the investment property revaluation 
reserve except when, on a portfolio basis, the reserve was insufficient to 
cover a deficit on the portfolio, or when a deficit previously recognised 
in the income statement had reversed, or when an individual investment 
property was disposed of. In these limited circumstances movements in the 
fair value were recognised in the income statement.

Upon adoption of HKAS 40 as from 1 January 2005, the Group has adopted a 
new policy for investment property. Under this new policy, all changes in 
the fair value of investment property ware recognised directly in the 
income statement ("profit or loss") in accordance with the fair value 
model in HKAS 40.

(ii)    Measurement of deferred tax on movements in fair value

In prior years, deferred tax on changes in fair value of investment 
properties arising from revaluation was not provided for on the basis that 
the recovery of the carrying amount would be through sale and was 
calculated at the tax rate applicable on eventual sale, which in Hong Kong 
is nil.

As from 1 January, 2005, in accordance with HK(SIC) Interpretation 21, the 
deferred tax is recognised on movements in the value of an investment 
property using tax rates that are applicable to the property's use as 
earning rental.

The directors are of the opinion that such deferred tax provision would 
not reflect the ultimate tax consequence since, should any such sale 
eventuate, any gain would be regarded as capital in nature and would not 
be subject to any tax in Hong Kong.

(iii)   Description of transitional provisions and effect of adjustments

All the above changes in accounting policies relating to investment 
property have been adopted retrospectively. The adjustments for each 
financial statement line affected for 31 December 2004 and 2005 are set 
out in notes 2(a) and (b).

4. Comparative figures

Certain comparative figures have been adjusted or re-classified as a 
result of the changes in accounting policies, details of which are 
disclosed in note 2. In addition, certain comparative figures have been 
reclassified to conform with the current year's presentation.