Silkwave Inc — Earnings Release 2004

Apr 21, 2005

Listed Company Information

Listed Company Information
SOUTH CHINA H<00265> - Results Announcement South China Holdings Limited announced on 21/04/2005: (stock code: 00265 ) Year end date: 31/12/2004 Currency: HKD Auditors' Report: Unqualified (Audited ) (Audited ) Last Current Corresponding Period Period from 01/01/2004 from 01/01/2003 to 31/12/2004 to 31/12/2003 Note ('000 ) ('000 ) Turnover : 3,785,632 3,407,870 Profit/(Loss) from Operations : 213,831 165,463 Finance cost : (10,408) (11,523) Share of Profit/(Loss) of Associates : (10,608) (5,923) Share of Profit/(Loss) of Jointly Controlled Entities : N/A N/A Profit/(Loss) after Tax & MI : 124,201 93,383 % Change over Last Period : +33 % EPS/(LPS)-Basic (in dollars) : 0.068 0.051 -Diluted (in dollars) : N/A N/A Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit/(Loss) after ETD Items : 124,201 93,383 Final Dividend : Nil 0.55 cent 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 : 24/05/2005 to 25/05/2005 bdi. Other Distribution for : N/A Current Period B/C Dates for Other Distribution : N/A Remarks: 1. Principal accounting policies The Hong Kong Institute of Certified Public Accountants (the "HKICPA") issued a number of new and revised Hong Kong Financial Reporting Standards ("HKFRSs") and Hong Kong Accounting Standards ("HKAS") (hereinafter collectively referred to as "new HKFRSs") which are effective for accounting periods beginning on or after 1 January 2005. The Group has not early adopted these new HKFRSs in the financial statements for the year ended 31 December 2004, except for the following new HKFRSs as further explained below: HKFRS 3 Business combinations HKAS 36 Impairment of assets HKAS 38 Intangible assets HKAS 17 Leases HKAS 40 Investment property HKFRS 3 "Business combinations", HKAS 36 "Impairment of assets" and HKAS 38 "Intangible assets" HKFRS 3 applies to accounting for business combination for which the agreement date is on or after 1 January 2005. The early adoption of HKFRS 3 and HKAS 36 from 1 January 2004 has resulted in the Group ceasing annual amortisation of goodwill and to test for impairment annually at the cash generating unit level (unless an event occurs during the year which requires the goodwill to be tested more frequently). Discount on acquisition is credited to the income statement in the period of acquisition. The transitional provisions of HKFRS 3 have required the Group to eliminate the carrying amount of the accumulated amortisation by approximately HK$3,036,000 with a corresponding entry to the cost of goodwill. In addition, the Group's negative goodwill at 1 January 2004 with a carrying amount of HK$1,114,000 has been derecognised at 1 January 2004, with corresponding adjustment to the Group's accumulated profits at 1 January 2004 of HK$833,000 and the minority interests of HK$281,000. As a result of this change in accounting policy, the profit of the Group for the year has been increased by approximately HK$10,470,000. HKAS 38 requires the Group to reassess the useful lives of its intangible assets in accordance with the provisions of HKAS 38. No adjustment resulted from this reassessment. HKAS 17 "Leases" and HKAS 40 "Investment property" HKAS 17 requires the finance lease methodology be used for investment properties held under leases. The standard requires the land and buildings elements be considered separately when classifying a lease of land and buildings. Separate measurement of the land and buildings elements is not required if the interest in both the land and buildings is classified as an investment property in accordance with HKAS 40 and the fair value model is adopted. HKAS 40 introduces both cost model and fair value model for the measurement of investment property. For fair value model, HKAS 40 requires fair value changes be recognised to the income statement in the period in which they arise. The Group has elected to apply the fair value model in measuring its investment property and recognises the fair value changes to the income statement in the period in which they arise. HKAS 40 allows a property interest that is held under an operating lease and that the property meets the definition of an investment property and the lessee recognises the asset by using the fair value model set out in the standard be classified and accounted for as investment property. The adoption of HKAS 40 has no material effect on the Group's results for the current or prior accounting periods other than presentation changes. Accordingly, no prior period adjustment is required. For those new HKFRSs that the Group has not early adopted in the financial statements for the year ended 31 December 2004, the Group has commenced considering the potential impact of those new HKFRSs but is not yet in a position to determine whether those HKFRSs would have a significant impact on how its results of operations and financial position are prepared and presented. Those HKFRSs may result in changes in the future as to how the results and financial position are prepared and presented. 2. Basic earnings per share The calculation of basic earnings per share is based on the profit attributable to shareholders of approximately HK$124,201,000 (2003: HK$93 ,383,000) and on approximately 1,823,401,000 shares (2003: approximately 1,823,401,000 shares) in issue during the year. In 2004, no diluted earnings per share is presented because there is no dilutive instrument. In 2003, no diluted earnings per share is presented because the exercise price of the Company's warrants was higher than the average market price for shares.