SIM Technology Group Limited — Interim / Quarterly Report 2005

Aug 23, 2005

Listed Company Information

Listed Company Information
SIM TECH<02000> - Results Announcement SIM Technology Group Limited announced on 23/08/2005: (stock code: 02000 ) Year end date: 31/12/2005 Currency: HKD Auditors' Report: N/A Interim report reviewed by: Both Audit Committee and Auditors (Unaudited ) (Unaudited ) Last Current Corresponding Period Period from 01/01/2005 from 01/01/2004 to 30/06/2005 to 30/06/2004 Note ('000 ) ('000 ) Turnover : 926,727 579,161 Profit/(Loss) from Operations : 122,584 77,425 Finance cost : (3,774) (1,196) 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 : 109,534 48,617 % Change over Last Period : +125.3 % EPS/(LPS)-Basic (in dollars) : 0.097 0.043 -Diluted (in dollars) : 0.096 N/A Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit/(Loss) after ETD Items : 109,534 48,617 Interim Dividend : Nil Nil per Share (Specify if with other : N/A N/A options) B/C Dates for Interim Dividend : N/A Payable Date : N/A B/C Dates for (-) General Meeting : N/A Other Distribution for : N/A Current Period B/C Dates for Other Distribution : N/A Remarks: 1. Basis of preparation and group reorganization The Company was incorporated in Bermuda on 27 October 2004 as an exempted company under the Companies Act 1981 of Bermuda (as amended) with limited liability. Its ultimate holding company is Info Dynasty Group Limited (" Info Dynasty"), a company incorporated in the British Virgin Islands. The Company is an investment holding company. The principal activities of its subsidiaries are the manufacturing, design, development and sales of liquid crystal display modules, complete mobile handsets, handset design solutions (in Semi Knock-Down ("SKD")/Complete Knock-Down ("CKD") form), and wireless communications modules. The condensed financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("SEHK") and with International Accounting Standard ("IAS") 34 " Interim Financial Reporting" issued by International Accounting Standards Board ("IASB"). Pursuant to the corporate reorganisation ("Reorganisation") to rationalise the structure of the Group in preparation for the listing of the Company's shares on SEHK, 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 ("STG"). Details of the Reorganisation are set out in the prospectus dated 21 June 2005 issued by the Company (the "Prospectus"). The shares of the Company have been listed on the Main Board of SEHK since 30 June 2005. The Group resulting from the Reorganisation is regarded as a continuing entity. Accordingly, the condensed consolidated financial statements for the six months ended 30 June 2005 have been prepared using the principle of merger accounting, except the changes in effective interest in subsidiaries which have been accounted for using the purchase method in accordance with International Financial Reporting Standard ("IFRS") 3 " Business Combination" of accounting from the effective date of acquisition. The condensed consolidated income statement and cash flow statement for the six months ended 30 June 2004 and the condensed consolidated balance sheet as at 31 December 2004 were prepared on a combined basis as if the current group structure, other than the changes disclosed below, had been in existence throughout these periods. The following changes in the effective interests in subsidiaries which were accounted for by the purchase method of accounting: a. The acquisition of 7% additional interests in Shanghai Sunrise Electronic Technology Co., Ltd., a non-wholly owned subsidiary of the Company, by Sunrise Electronic Industry Limited in June 2004. b. Acquisition of subsidiaries on 31 January 2005. 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 also the functional currency of the Company during the current period. 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. Significant accounting policies The condensed financial statements have been prepared under the historical cost convention. The accounting policies used in the condensed financial statements are consistent with those followed in the preparation of the Group's accountants' report for the three years ended 31 December 2004 for inclusion in the prospectus of the Company dated 21 June 2005, except as described below. In the current period, the Group has applied for the first time, a number of new IFRSs, IASs and Interpretations (hereinafter collectively referred to as "new IFRSs") issued by IASB and the International Financial Reporting Interpretations Committee of the IASB that are effective for accounting periods beginning on or after 1 January 2005. The application of the new IFRSs has resulted in a change in the presentation of the condensed consolidated income statement, condensed consolidated balance sheet and the condensed 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 effect on how the results for the current accounting periods are prepared and presented. Share-based payments In the current period, 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 period by approximately HK$1,128,000. Comparative figures had not been restated as the Company did not grant any option before 1 January 2005. Land use right In previous period, land use right is carried at cost less accumulated amortisation and any recognised impairment loss. In the current period, the Group has applied IAS 17 "Leases". Under IAS 17, land use right is carried at cost and amortised over the lease term on a straight-line basis. 4. Earnings per share The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the parent is based on the following data: Six months ended 30 June 2005 2004 HK$'000 HK$'000 Earnings Earnings for the purposes of basic and diluted earnings per share (profit for the period attributable to equity holders of the parent) 109,534 48,617 ========= ======== Number of shares '000 '000 Weighted average number of ordinary shares for the purpose of basic earnings per share 1,172,072 1,125,000 ========== Effect of dilutive potential ordinary shares: Share options 17,600 N/A -------- Weighted average number of ordinary shares for the purpose of dilute earnings per share 1,144,672 N/A ========== The calculation of weighted average number of ordinary shares for the six months ended 30 June 2005 were based on the assumption that the Reorganisation had been completed on 1 January 2005 and 1 January 2004 respectively. Diluted earnings per share for the six months ended 30 June 2004 was not disclosed as there was no dilutive potential ordinary shares.