Kingwell Group Limited — Earnings Release 2006

Oct 5, 2006

Listed Company Information

Listed Company Information
HUA YI COPPER<00559> - Results Announcement Hua Yi Copper Holdings Limited announced on 05/10/2006: (stock code: 00559 ) Year end date: 30/06/2006 Currency: HKD Auditors' Report: Unqualified (Audited ) (Audited ) Last Current Corresponding Period Period from 01/07/2005 from 01/01/2004 to 30/06/2006 to 30/06/2005 Note ('000 ) ('000 ) Turnover : 1,513,166 1,453,821 Profit/(Loss) from Operations : 137,868 52,970 Finance cost : (28,389) (27,041) Share of Profit/(Loss) of Associates : N/A N/A Share of Profit/(Loss) of Jointly Controlled Entities : 10 N/A Profit/(Loss) after Tax & MI : 90,304 20,443 % Change over Last Period : +341.74 % EPS/(LPS)-Basic (in dollars) : 0.1366 0.0426 -Diluted (in dollars) : 0.1366 0.0426 Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit/(Loss) after ETD Items : 90,304 20,443 Final Dividend : 2.5 cents N/A per Share (Specify if with other : N/A N/A options) B/C Dates for Final Dividend : 23/11/2006 to 24/11/2006 bdi. Payable Date : 30/11/2006 B/C Dates for Annual General Meeting : To Be Announced Other Distribution for : N/A Current Period B/C Dates for Other Distribution : N/A Remarks: 1. GENERAL As described in the consolidated financial statements of the Group for the period ended 30 June 2005, the Company underwent a group restructuring which involved, inter alia, the acquisition (the "Acquisition") of Solartech's interest in certain companies (the "Copper Group") and other plant and machinery and land and buildings engaging in the business of manufacture and trading of copper rods and related products. The Acquisition was completed on 11 August 2004. The business combination has been accounted for as a reverse acquisition. For the purpose of the preparation of the Group's consolidated financial statements, the Copper Group is treated as the acquirer while the Company and its subsidiaries before the completion of Acquisition (the "Former FT Group") were deemed to have been acquired by the Copper Group. Following the completion of the reverse acquisition, the financial year end date of the Company changed from 31 December to 30 June and as a result, the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement of the Group for the prior period covered 18 months period ended 30 June 2005 and the current year covered 12 months year ended 30 June 2006, and therefore may not be comparable. 2. ADOPTION OF NEW/ REVISED HONG KONG FINANCIAL REPORTING STANDARDS/ CHANGES IN ACCOUNTING POLICIES In the current year, the Group has applied, for the first time, a number of new Hong Kong Financial Reporting Standards ("HKFRSs"), Hong Kong Accounting Standards ("HKASs") and Interpretations ("INTs") (hereinafter collectively referred to as "new HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") that are effective for accounting periods beginning on or after 1 January 2005 except for HKFRS 3 "Business combinations", HKAS 36 "Impairment of assets" and HKAS 38 "Intangible assets" which the Group had early adopted in the accounting period ended 30 June 2005. The application of the other new HKFRSs has resulted in a change in the presentation of the income statement, balance sheet and the statement of changes in equity. The changes in presentation have been applied retrospectively. The adoption of the new HKFRSs has resulted in changes to the Group's accounting polices in the following areas that have an effect on how the results for the current or prior accounting periods are prepared and presented: Owner-occupied leasehold interest in land ----------------------------------------- The Group has land use rights in the People's Republic of China (the "PRC "), with buildings erected on them for manufacturing purposes. In previous years, these property interests were included in property, plant and equipment and measured using the revaluation model. Under HKAS 17 " Leases", the land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification, unless the lease payments cannot be allocated reliably between the land and buildings elements, in which case, the entire lease is 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 and reverse the amount held in the asset revaluation reserve and corresponding deferred taxation accordingly .. This change in accounting policy has been applied retrospectively. 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". HKAS 32 requires retrospective application. The application of HKAS 32 has had no material effect on the presentation of financial instruments in the financial statements of the Group. HKAS 39, which is effective for accounting periods beginning on or after 1 January 2005, generally does not permit the recognition, derecognition or measurement of financial assets and liabilities on a retrospective basis. Derivative financial instruments -------------------------------- By 30 June 2005, the Group's derivative financial instruments, mainly comprised future contracts, foreign exchange forward contracts and interest rates swaps, were previously recorded off balance sheet. Realised gain or loss of these derivative financial instruments were recognised in the income statement on settlement date, except for net interest on interest rate swaps, which were previously accounted for on an accrual basis. From 1 July 2005 onwards, HKAS 39 requires derivative financial instruments that are within the scope of HKAS 39 to be carried at fair value at each balance sheet date, regardless of whether they are designated as effective hedging instruments. Derivatives (including embedded derivatives separately accounted for from non-derivative host contracts) are deemed as held for trading financial assets or financial liabilities, unless they qualify and are designated as effective hedging instruments. Derivative financial instruments that do not qualify for hedge accounting are deemed as investments held for trading. Changes in fair value of such derivative financial instruments are recognised in profit or loss as they arise. The Group has applied the relevant transitional positions in HKAS 39. Share-based payments -------------------- In the current year, the Group has applied HKFRS 2 "Share-based Payment" which requires an expense to be recognised where the Group buys goods or obtains 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"). The principal impact of HKFRS 2 on the Group is in relation to the expensing of the fair value of employees' and other eligible parties' share options of the Company determined at the date of grant of the share options over the vesting period. Prior to the application of HKFRS 2, the Group did not recognise the financial effect of these share options until they were exercised. The Group has applied HKFRS 2 to share options granted on or after1 July 2005. In relation to share options granted before 1 July 2005, the Group has not applied HKFRS 2 to share options granted after 7 November 2002 and had vested before 1 July 2005 in accordance with the relevant transitional provisions. However, the Group is still required to apply HKFRS 2 retrospectively to share options that were granted after 7 November 2002 and had not yet vested on 1 July 2005. For the share options that were granted after 7 November 2002, they had been fully vested before 1 July 2005 and no prior period adjustments are made accordingly. For the share options that were granted by the Company on 1 July 2005, 11,806,000 out of 12,956,000 share options had been vested before 1 July 2005 and no prior period adjustments are made accordingly. For the remaining 1,150,000 share options which have not been vested on 1 July 2005, the Group considered the effect is not significant and no prior period adjustments are made. For the share options that were granted during the year, the fair value of share options has been expensed in the income statement over the vesting period. POTENTIAL IMPACT ARISING ON THE NEW OR REVISED ACCOUNTING STANDARDS NOT YET EFFECTIVE The Group has not early applied the following new standards, amendments and interpretations that have been issued but are not yet effective. The Group has already commenced an assessment of the impact of these new or revised standards, amendments and interpretations will have been applied early by the Group. Except for the impact of HKAS 39 & HKFRS 4 ( Amendments) "Financial guarantee contracts", which requires recognition of financial guarantee at fair value on initial recognition, the Group anticipates that the applications of these new or revised standards, amendments and interpretations would not have significant impact on the financial statements of the Group. HKAS 1 (Amendment) Capital disclosures1 HKAS 19 (Amendment) Actuarial gains and losses, group plans and disclosures2 HKAS 21 (Amendment) The effects of change in foreign exchange rate - net investment in a foreign operation2 HKAS 39 (Amendment) Cash flow hedge accounting of forecast intragroup transactions2 HKAS 39 (Amendment) The fair value option2 HKAS 39 & HKFRS 4 Financial guarantee contracts2 (Amendments) HKFRS 6 Exploration for and evaluation of mineral resources2 HKFRS 7 Financial instruments: Disclosures1 HK(IFRIC) - INT 4 Determining whether an arrangement contains a lease2 HK(IFRIC) - INT 5 Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds2 HK(IFRIC) - INT 6 Liabilities arising from participating in a specific market -waste electrical and electronic equipment3 HK(IFRIC) - INT 7 Applying the restatement approach under HKAS 29 Financial Reporting in Hyperinflationary Economics4 HK(IFRIC) - INT 8 Scope of HKFRS 2 5 HK(IFRIC) - INT 9 Reassessment of embedded derivatives6 HK(IFRIC) - INT 10 Interim financial reporting and impairment7 1 Effective for annual periods beginning on or after 1 January 2007. 2 Effective for annual periods beginning on or after 1 January 2006. 3 Effective for annual periods beginning on or after 1 December 2005. 4 Effective for annual periods beginning on or after 1 March 2006. 5 Effective for annual periods beginning on or after 1 May 2006. 6 Effective for annual periods beginning on or after 1 June 2006. 7 Effective for annual periods beginning on or after 1 November 2006. 3. EARNINGS PER SHARE The calculation of the basic earnings per share is based on the following data: 1.7.2005 1.1.2004 to to 30.6.2006 30.6.2005 ------------------------- HK$'000 HK$'000 Results for the year/period and results for the purpose of basic earnings per share 90,304 20,443 ========================= Number of shares 2006 2005 ------------------------- Weighted average number of ordinary shares for the purpose of basic earnings per share 661,126,599 480,050,213 Effect of dilutive potential ordinary shares: share options - 147,652 --------------------------- Weighted average number of ordinary shares for the purpose of diluted earnings per share 661,126,599 480,197,865 =========================== The effect of potential ordinary shares in respect of share options is anti-dilutive after taking into account the effect of share based payment for the current year.