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.
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