C&D Property Management Group Co., Ltd — Earnings Release 2006

Oct 23, 2006

Listed Company Information

Listed Company Information
GOOD FELLOW GP<00910> - Results Announcement Good Fellow Group Limited announced on 23/10/2006: (stock code: 00910 ) Year end date: 30/06/2006 Currency: HKD Auditors' Report: Unqualified (Audited ) (Audited ) Last Current Corresponding Period Period from 01/07/2005 from 01/07/2004 to 30/06/2006 to 30/06/2005 Note ('000 ) ('000 ) Turnover : 360,770 138,262 Profit/(Loss) from Operations : 124,560 (118,778) Finance cost : (3,295) (152) Share of Profit/(Loss) of Associates : N/A N/A Share of Profit/(Loss) of Jointly Controlled Entities : 1,640 (30,838) Profit/(Loss) after Tax & MI : 83,208 (150,189) % Change over Last Period : N/A % EPS/(LPS)-Basic (in dollars) : 0.0272 (0.0561) -Diluted (in dollars) : 0.0256 N/A Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit/(Loss) after ETD Items : 83,208 (150,189) 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 Annual General Meeting : 22/11/2006 to 28/11/2006 bdi. Other Distribution for : N/A Current Period B/C Dates for Other Distribution : N/A Remarks: 1. BASIS OF PREPARATION These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") (which also include Hong Kong Accounting Standards ("HKASs") and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants, accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for the periodic remeasurement of leasehold properties, investment properties, financial assets and liabilities as well as certain biological assets. These financial statements are presented in Hong Kong dollar and all values are rounded to the nearest thousand (HK$'000) except when otherwise indicated. 2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS/CHANGES IN ACCOUNTING POLICIES In current year, the Group has applied, for the first time, a number of Hong Kong Financials Reporting Standards, Hong Kong Accounting Standards and Interpretations (hereinafter collectively referred to as "new HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants that are effective for accounting periods beginning on or after 1 January 2005. The adoption of the new HKFRSs has resulted in changes to the Group's accounting policies in the following areas that have an effect on how the results for the current and prior accounting years are prepared and presented: Owner-occupied leasehold interest in land In previous years, owner-occupied leasehold land and buildings were included in property, plant and equipment and measured using the cost model. In the current year, the Group has applied HKAS 17 "Leases". Under HKAS 17, the land and buildings elements of a lease of land and buildings are considered separately for the purpose of lease classification, unless the lease payments cannot be allocated reliably between the land and buildings elements, in which case, the entire lease in generally treated as a finance lease. To the extent that the allocation of the lease payments between the land and buildings elements can be made reliably, the leasehold interests in land are reclassified to prepaid lease payments under operating leases, which are carried at cost and amortised over the lease term on a straight-line basis. This change in accounting policy has been applied retrospectively. Investment properties In the current year, the Group has, for the first time, applied "HKAS 40 "Investment Property". The Group has elected to use the fair value model to account for its investment properties which requires gains or losses arising from changes in the fair values of investment properties to be recognised directly in profit or loss for the year in which they arise. In previous years, investment properties under the predecessor accounting standard were measured at open market markets values, with revaluation surplus or deficits credited or charged to investment property revaluation reserve unless the balance on this reserve was insufficient to cover a revaluation decrease, in which case the excess of the revaluation decrease over the balance on the investment property revaluation reserve was charged to the consolidated income statement. Where a decrease had previously been charged to the consolidated income statement and a revaluation surplus subsequently arose, that increase was credited to the consolidated income statement to the extent of the decrease previously charged. As a result of the adoption of the new accounting standard, the amount held in investment properties revaluation reserve at 1 July 2005 has been transferred to the Group's retained profits. Financial instruments In the current year, the Group has applied HKAS 32 "Financial Instruments: Disclosure and Presentation" and HKAS 39 "Financial Instruments: Recognition and Measurement". The adoption of these new HKASs has resulted in a change in accounting policy for the recognition, measurement, de- recognition and disclosure of financial instruments. Upon the adoption of HKASs 32 and 39, the financial assets of the Group have been classified into the respective categories of financial assets at fair value through profit and loss; available-for-sale financial assets; loans and receivables; and held-to-maturity financial assets. The classification depends on the purpose for which the assets are held. At 30 June 2005, the Group owned short term securities investment that are stated at their fair values on the basis of quoted market prices at the balance sheet date, on an individual investment basis. The gains or losses arising from changes in fair values of securities were credited or charged to the profit and loss account in the period in which they arise. Commencing the current financial year, as a result of the adoption of the new HKASs, the Group has reclassified these securities investment as " financial assets at fair value through profit or loss". The reclassification has no material effect on the results of the Group for the current and prior year. Convertible notes Previously, convertible notes were classified as liabilities and carried at proceeds received. In accordance with HKAS 32 and HKAS 39, convertible notes are regarded as compound instruments, consisting of a liability component and an equity component, unless in certain circumstances when the issuer is required to recognize the instrument as a whole as financial liability with embedded derivatives. Derivatives embedded in a financial instrument are treated as separate components when their economic risks and characteristics are not closely related to those of the host contract (the liability component) and the host contract is not carried at fair value through profit or loss. Upon first time adoption of HKAS 32 and HKAS 39, convertible notes issued by the Company are split into their liability and equity components at initial recognition. The liability component is subsequently carried at amortised cost. The equity component is recognised as conversion option reserve, a separate component of equity, until the convertible notes are either converted (in which case it is transferred to share premium account) or redeemed (in which case it is released directly to retained profits). Share-based payments In the current year, the Group has applied HKFRS 2 "Share-based Payments" which requires an expense to be recognised where the Group buys goods or obtain services in exchange for shares or rights over shares ("equity- settled transactions"), or in exchange for other assets equivalent in value to a given number of shares or rights over shares ("cash-settled transactions"). Prior to the application of HKFRS 2, the Group did not recognize the financial effect of share options until they are exercised. As a result of the adoption of this new HKFRS, the Group's accounting policy has been revised for the recognition of the fair value of share options granted as an expense. In respect of share options outstanding as at 30 June 2005, the Group was not required to account for these outstanding share options in accordance with the relevant transitional provisions of this new HKFRS, as they were either granted on or before 7 November 2002 or granted after 7 November 2002 and fully vested before 1 July 2005. The Group however has evaluated that impact on the results of the Group for current or prior accounting periods. 3. EARNINGS/(LOSS) PER SHARE (a) Basic earnings/(loss) per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. The calculation of the basic earnings per share is based on the following data: 2006 2005 HK$'000 HK$'000 (restated) Profit / (loss) attributable to equity holders of the Company 83,208 (150,189) ========================== Weighted average number of ordinary shares in issue (thousands) 3,055,886 2,677,388 ========================== (b) Diluted earnings/(loss) per share Diluted earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has two categories of dilutive potential ordinary shares: convertible debt and share options. The convertible debt is assumed to have been converted into ordinary shares and the net profit is adjusted to eliminate the interest expense less tax effect. For the share options a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription tights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options. Reconciliation of the earnings and number of shares used in the calculation of diluted earnings for shares is as follows: 2006 HK$'000 Earnings: Profit for the year and earnings for the purposes of basic earnings per share 83,208 Effect of dilutive potential ordinary shares in respect of convertible notes 1,340 ---------- Earnings for the purpose of diluted earnings per share 84,548 ========== Number of shares HK$'000 Weighted average number of ordinary shares for the purposes of basic earnings per share 3,055,886 Effect of dilutive potential ordinary shares in respect of : Share options 3,103 Convertible notes 248,781 ---------- Weighted average number of ordinary shares for the purpose of diluted earnings per share 3,307,770 ========== No diluted loss per share had been presented for the year ended 30 June 2005 since the assumed exercise of the Company's outstanding share options would have no dilutive effect on loss per share. 4. TURNOVER AND REVENUE Turnover represents the net invoiced value of goods, forestry products and saplings sold, after allowances for returns and trade discounts. Group 2006 2005 HK$'000 HK$'000 Turnover Sale of goods and forestry products 233,847 138,262 Sale of paper mulberry saplings 126,923 - ------------------------ 360,770 138,262 ------------------------ Other revenue Dividend income from listed investments 148 67 Interest income 3,644 1,517 Rental income 93 259 Others 550 879 ------------------------- 4,435 2,722 ------------------------- Total revenue 365,205 140,984 ========================= 5. PROFIT/(LOSS) FROM OPERATING ACTIVITIES The Group's profit/(loss) from operating activities is arrived at after charging/(crediting) the following: Group 2006 2005 HK$'000 HK$'000 (restated) Amortisation of goodwill - 10,694 Amortisation of patent in application 9,064 - Amortisation of paper mulberry saplings 17,833 - Auditors' remuneration 800 735 Cost of goods and forestry products sold 140,019 126,776 Cost of saplings sold 26,833 - Depreciation on property, plant & equipment - owned assets 6,810 6,407 - leased assets - 110 Exchange loss / (gain) (64) 6 Gross rental income (93) (259) Less: Outgoings 2 8 Net rental income (92) (251) Impairment loss on goodwill (included in other operating expenses) - 61,942 Impairment loss on long term investment (included in other operating expenses) - 6,667 Minimum lease payments under operating leases on leasehold properties - 544 Release of prepaid lease payments 154 125 Research and development cost 10,577 - Net unrealised loss on financial assets at fair value through profit or loss 3,611 4,951 Provision for doubtful debts 1,923 3,522 Provision for obsolete inventories - 13,421 Staff costs (excluding directors' emoluments) Wages and salaries 11,353 9,472 Retirement benefits scheme contributions 295 338 ========================= 6. COMPARATIVE FIGURES Certain comparative figures have been adjusted or reclassified as a result of the changes in accounting policies.