China Pipe Group Limited — Earnings Release 2005

Apr 20, 2006

Listed Company Information

Listed Company Information
PRIME SUCCESS<00210> - Results Announcement Prime Success International Group Limited announced on 20/04/2006: (stock code: 00210 ) 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 : 2,622,677 1,788,539 Profit/(Loss) from Operations : 323,404 236,895 Finance cost : (4,441) (3,085) Share of Profit/(Loss) of Associates : 253 187 Share of Profit/(Loss) of Jointly Controlled Entities : N/A N/A Profit/(Loss) after Tax & MI : 254,593 176,220 % Change over Last Period : +44 % EPS/(LPS)-Basic (in dollars) : 0.1572 0.1133 -Diluted (in dollars) : N/A 0.1107 Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit/(Loss) after ETD Items : 254,593 176,220 Final Dividend : 2.5 cents 2.0 cents per Share (Specify if with other : N/A N/A options) B/C Dates for Final Dividend : 16/05/2006 to 19/05/2006 bdi. Payable Date : 26/05/2006 B/C Dates for Annual General Meeting : 16/05/2006 to 19/05/2006 bdi. Other Distribution for : N/A Current Period B/C Dates for Other Distribution : N/A Remarks: 1. Basis of preparation The consolidated accounts have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards ("HKFRSs") and Hong Kong Accounting Standards ("HKASs") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). The consolidated accounts have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets and financial assets and liabilities (including derivative instruments) at fair value through profit and loss, which are carried at fair value. 2. Changes in accounting policies In 2005, the Group adopted the new/revised HKFRSs and HKASs below, which are relevant to its operations. The 2004 comparatives have been amended in accordance with the relevant requirements. HKAS 1 Presentation of Financial Statements HKAS 2 Inventories HKAS 7 Cash Flow Statements HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors HKAS 10 Events after the Balance Sheet Date HKAS 16 Property, Plant and Equipment HKAS 17 Leases HKAS 21 The Effects of Changes in Foreign Exchange Rates HKAS 23 Borrowing Costs HKAS 24 Related Party Disclosures HKAS 27 Consolidated and Separate Financial Statements HKAS 28 Investments in Associates HKAS 32 Financial Instruments: Disclosures and Presentation HKAS 33 Earnings per Share HKAS 36 Impairment of Assets HKAS 37 Provisions, Contingent Liabilities and Contingent Assets HKAS 39 Financial Instruments: Recognition and Measurement HKAS 39 (Amendment) Transitional and Initial Recognition of Financial Assets and Financial Liabilities HKFRS 2 Share-based Payment The adoption of new/revised HKASs 1, 2, 7, 8, 10, 16, 21, 23, 24, 27, 28, 33, 36, 37 did not result in substantial changes to the Group's accounting policies. In summary: - HKAS 1 has affected the presentation of minority interests, share of net after-tax results of an associated company and other disclosures. - HKASs 2, 7, 8, 10, 16, 23, 27, 28, 33, 36 and 37 had no material effect on the Group's policies. - HKAS 21 had no material effect on the Group's policy. The functional currency of each of the consolidated entities has been re-evaluated based on the guidance to the revised standard. - HKAS 24 has affected the identification of related parties and some other related-party disclosures. The adoption of HKAS 17 has resulted in a change in the accounting policy relating to the classification of payments for the acquisitions of land use rights. In prior years, land use rights were accounted for at cost or valuation less accumulated depreciation and accumulated impairment. Under HKAS 17, the up-front prepayments made for land use rights are expensed in the consolidated profit and loss account on a straight-line basis over the period of the lease or where there is impairment, the impairment is expensed in the consolidated profit and loss account. HKAS 17 has been applied retrospectively. The adoption of HKASs 32 and 39 has resulted in a change in the accounting policy relating to the classification of financial assets at fair value through profit and loss and available-for-sale financial assets. It has also resulted in the recognition of derivative financial instruments at fair value and the change in the recognition and measurement of hedging activities. HKAS 39 does not permit to recognise, derecognise and measure financial assets and liabilities in accordance with this standard on a retrospective basis. The Group applied the previous Statement of Standard Accounting Practice 24 ("SSAP 24") "Accounting for investments in securities" to investment securities. The adjustments required for the accounting differences between SSAP 24 and HKAS 39 are determined and recognised on 1 January 2005. The adoption of HKFRS 2 has resulted in a change in the accounting policy for share-based payments. Until 31 December 2004, the grant of share options to employees did not result in an expense in the profit and loss account unless the options were granted at a discount of the market price, where the discount was expensed in the profit and loss account. Effective 1 January 2005, the Group expenses the fair value of share options granted in the profit and loss account. The Group has taken advantage of the transitional provisions of HKFRS 2 under which the new recognition and measurement policies have not been applied to share options granted on or before 7 November 2002 and all options granted to employees after 7 November 2002 but vested before 1 January 2005. No adjustments were resulted from the adoption of HKFRS 2. The effect of changes in the above accounting polices on the consolidated profit and loss account is as follows: Year ended 31 December -------------------------------------------------------- 2005 2004 HKAS 1 HKAS 17 HKAS 39 Total HKAS 1 HKAS 17 Total HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 Increase/(decrease) in profit for the year Decrease in share of profit of an associated company (94) - - (94) (69) - (69) Decrease in taxation charge 94 - - 94 69 - 69 Decrease in depreciation of fixed assets - (1,039) - (1,039) - (604) (604) Increase in amortisation of land use rights - 1,039 - 1,039 - 604 604 Increase in fair value of derivative financial instruments - - 268 268 - - - -------------------------------------------------------- Net increase in profit for the year - - 268 268 - - - ======================================================== The effect of changes in the above accounting polices on the consolidated balance sheet is as follows: As at 31 December ----------------------------------------------- 2005 2004 --------------------------------- ------- HKAS 17 HKAS 39 Total HKAS 17 HK$'000 HK$'000 HK$'000 HK$'000 Increase/(decrease) in assets Land use rights 19,197 - 19,197 14,891 Fixed assets (20,381) - (20,381) (16,075) Available-for-sale financial assets - 33,437 33,437 - Investment securities - (33,437) (33,437) - Derivative financial instruments - 268 268 - ---------------------------------------------------- Net (decrease)/increase in assets (1,184) 268 (916) (1,184) ==================================================== Increase/(decrease) in liabilities and equity Deferred tax liabilities (390) - (390) (390) Property revaluation reserve (794) - (794) (794) Retained profits - 268 268 - ------------------------------------------------ Net (decrease)/increase in liabilities and equity (1,184) 268 (916) (1,184) ================================================ 3. Dividends 2005 2004 HK$'000 HK$'000 Interim dividend, paid, of HK2.5 cents (2004: HK1.5 cents) per ordinary share 40,947 23,368 Final dividend, proposed, of HK2.5 cents (2004: HK2.0 cents) per ordinary share (Note) 40,947 32,758 ----------------------- 81,894 56,126 ======================= Note: At a meeting held on 20 April 2006, the board of directors recommended a final dividend of HK2.5 cents per ordinary share for the year ended 31 December 2005. This proposed dividend is not reflected as a dividend payable in these accounts, but will be reflected as an appropriation of retained profits for the year ending 31 December 2006. 4. Earnings per share The calculation of basic earnings per share is based on the Group's profit attributable to shareholders of HK$254,593,000 (2004: HK$176,220,000). The basic earnings per share is based on the weighted average number of 1,619,097,863 (2004: 1,555,791,014) ordinary shares in issue during the year. No diluted earnings per share has been presented as there were no dilutive potential shares in issue during the year. The diluted earnings per share for the year ended 31 December 2004 is based on 1,591,898,622 ordinary shares which is the weighted average number of ordinary shares in issue during the year plus the weighted average number of 36,107,608 ordinary shares deemed to be issued at no consideration if all outstanding options had been exercised.