SIM Technology Group Limited — Earnings Release 2005

Mar 16, 2006

Listed Company Information

Listed Company Information
SIM TECH<02000> - Results Announcement SIM Technology Group Limited announced on 16/03/2006: (stock code: 02000 ) 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 : 2,719,585 1,567,074 Profit/(Loss) from Operations : 313,001 217,465 Finance cost : (4,516) (4,768) Share of Profit/(Loss) of Associates : N/A N/A Share of Profit/(Loss) of Jointly Controlled Entities : N/A N/A Profit/(Loss) after Tax & MI : 290,662 155,534 % Change over Last Period : +86.9 % EPS/(LPS)-Basic (in dollars) : 0.221 0.138 -Diluted (in dollars) : N/A N/A Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit/(Loss) after ETD Items : 290,662 155,534 Final Dividend : $0.14 Nil per Share (Specify if with other : N/A N/A options) B/C Dates for Final Dividend : 18/04/2006 to 21/04/2006 bdi. Payable Date : 28/04/2006 B/C Dates for Annual General Meeting : 18/04/2006 to 21/04/2006 bdi. Other Distribution for : N/A Current Period B/C Dates for Other Distribution : N/A Remarks: 1. General information and group reorganisation General information SIM Technology Group Limited (the "Company") was incorporated in Bermuda on 27 October 2004 as a limited company under the Companies Act 1981 of Bermuda (as amended) with limited liability. Its ultimate holding company is Info Dynasty Group Limited, a company incorporated in the British Virgin Islands. The addresses of the registered office and principal place of business of the Company are disclosed in the introduction to the annual report. The Company is an investment holding company. The principal activities of its subsidiaries are the manufacturing, design and development and sales of liquid crystal display modules, complete mobile handsets, handsets design solutions (in Semi Knock-Down/Complete Knock-Down form), and wireless communication module solutions. Reorganisation Pursuant to a reorganisation (the "Reorganisation") to rationalise the structure of the Company and its subsidiaries (the "Group") in preparation for the listing of the Company's shares on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), the Company became the holding company of the Group on 3 June 2005 by issuing shares in exchange for the entire issued share capital of SIM Technology Group (BVI) Limited. Details of the Reorganisation are set out in the Prospectus dated 21 June 2005. The shares of the Company have been listed on the Main Board of the Stock Exchange since 30 June 2005. The Group resulting from the Reorganisation is regarded as a continuing entity. Accordingly, the consolidated financial statements have been prepared in a manner consistent with pooling of interest and in accordance with the respective equity interests in the individual companies attributable to the common controlling shareholders. 2. Presentation of financial statements The presentation currency of the financial statements of the Group was changed from Renminbi to Hong Kong dollars, which is the functional currency of the Company, during the current year. The directors consider that the change has resulted in a more appropriate presentation. Comparative amounts have been restated in Hong Kong dollars in order to achieve a consistent presentation. 3. Adoption of new and revised international financial reporting standards In the current year, the Group has adopted all the new and revised Standards and Interpretations (hereinafter collectively referred to as " new IFRSs") issued by the International Accounting Standards Board ("IASB ") and the International Financial Reporting Interpretations Committee (" IFRIC") of the IASB that are relevant to its operations and effective for accounting periods beginning on or after 1 January 2005. The adoption of the new IFRSs has resulted in a change in the presentation of the consolidated income statement, consolidated balance sheet and the consolidated statement of changes in equity. In particular, the presentation of minority interests has been changed. The changes in presentation have been applied retrospectively. The adoption of the new IFRSs 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 accounting periods are prepared and presented. The impact of the changes in accounting policies is discussed below. The impact on basic and diluted earnings per share is discussed in note 5. Business combinations In the current year, the Group has applied IFRS 3 "Business Combinations" which is effective for business combinations for which the agreement date is on or after 1 January 2005. The principal effects of the application of IFRS 3 to the Group are summarised below: Excess of the Group's interest in the net fair value of acquiree's identifiable assets, liabilities and contingent liabilities over cost ( previously known as "negative goodwill") In accordance with IFRS 3, any excess of the Group's interest in the net fair value of acquiree's identifiable assets, liabilities and contingent liabilities over the cost of acquisition ("discount on acquisition") is recognised immediately in profit or loss in the period in which the acquisition takes place. In previous periods, negative goodwill arising on acquisitions prior to 1 January 2001 was held in reserves, and negative goodwill arising on acquisitions after 1 January 2001 was presented as a deduction from assets and released to income based on an analysis of the circumstances from which the balance resulted. The change in accounting policy has had no impact to the financial statements and no prior year adjustment has been required. IFRS 2 Share-based payments In the current year, the Group has applied IFRS 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 IFRS 2 on the Group is in relation to the expensing of the fair value of directors' and employees' share options of the Company determined at the date of grant of the share options over the vesting period. The Group has applied IFRS 2 to share options granted on or after 1 January 2005. The effect of the changes in the accounting policy has resulted in the decrease of the net profit for the current year by approximately HK$6,670,000 (included in administrative expenses), being the recognition of share based payments for the current year, and a corresponding increase to share options reserve. The Company did not grant any option before 1 January 2005 and no prior year adjustment has been required. The Group has not early applied, the following new standards and interpretations and amendments that were issued but are not yet effective: IAS 1 (Amendment) Capital disclosures 1 IAS 19 (Amendment) Actuarial gains and losses, group plans and disclosures 2 IAS 21 (Amendment) Net investment in foreign operation 2 IAS 39 (Amendment) Cash flow hedge accounting of forecast intragroup transactions 2 IAS 39 (Amendment) The fair value option 2 IAS 39 & IFRS 4 Financial guarantee contracts 2 (Amendments) IFRS 6 Exploration for and evaluation of mineral resources 2 IFRS 7 Financial instruments: Disclosures 1 IFRIC - INT 4 Determining whether an arrangement contains a lease 2 IFRIC - INT 5 Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds 2 IFRIC - INT 6 Liabilities arising from participating in a specific market - waste electrical and electronic equipment 3 IFRIC - INT 7 Applying the restatement approach under IAS 29 Financial Reporting in Hyperinflationary Economies 4 IFRIC - INT 8 Scope of IFRS 2 5 IFRIC - INT 9 Reassessment of Embedded Derivatives 6 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. The Group has considered these standards, interpretations and amendments but does not expect they will have material effect on how the results of the operations and financial position of the Group are prepared and presented. 4. Significant accounting policies The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards. In addition, the consolidated financial statements include applicable disclosure required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance. The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are initially measured at fair value. 5. Earnings per share The calculation of earnings per share is based on profit attributable to equity holders of the parent of approximately HK$290,662,000 (2004: HK$ 155,534,000) and on 1,315,068,000 (2004: 1,125,000,000) weighted average number of ordinary shares in issue for the year. The calculation of weighted average number of ordinary shares for the year ended 31 December 2005 and 2004 were based on the assumption that the Reorganisation had been completed on 1 January 2005 and 1 January 2004 respectively. No diluted earnings per share has been presented for the year ended 31 December 2005 because the exercise price of the Company's options, after taken into account of the effect of share-based payment, was higher than the average market price for shares during the year. Diluted earnings per share for the year ended 31 December 2004 was not disclosed as there were no potential ordinary shares outstanding during the year. Impact of changes in accounting policy Changes in the Group's accounting policies during the year are described in details in note 3. To the extent that those changes have had an impact on results reported for the year ended 31 December 2005, they have had an impact on the amounts reported for earnings per share. The following table summaries that impact on earnings per share: 2005 Impact on earnings per share HK cents Recognition of share-based payments as expenses 0.51 ------------------- The changes in the Group's accounting policies during the year had no impact on results reported for the year ended 31 December 2004, hence they had no impact on the amounts reported for earnings per share.