Strawbear Entertainment Group — Earnings Release 2006

Apr 26, 2006

Listed Company Information

Listed Company Information
AEON CREDIT<00900> - Results Announcement Aeon Credit Service(Asia) Company Limited announced on 26/04/2006: (stock code: 00900 ) Year end date: 20/02/2006 Currency: HKD Auditors' Report: Unqualified (Audited ) (Audited ) Last Current Corresponding Period Period from 21/02/2005 from 21/02/2004 to 20/02/2006 to 20/02/2005 Note ('000 ) ('000 ) Turnover : 912,529 878,359 Profit/(Loss) from Operations : 335,100 267,036 Finance cost : (109,861) (85,421) Share of Profit/(Loss) of Associates : 340 (4,331) Share of Profit/(Loss) of Jointly Controlled Entities : N/A N/A Profit/(Loss) after Tax & MI : 186,113 145,873 % Change over Last Period : +27.6 % EPS/(LPS)-Basic (in dollars) : 0.4444 0.3483 -Diluted (in dollars) : N/A N/A Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit/(Loss) after ETD Items : 186,113 145,873 Final Dividend : 11.50 cents 10.50 cents per Share (Specify if with other : N/A N/A options) B/C Dates for Final Dividend : 08/06/2006 to 14/06/2006 bdi. Payable Date : 28/06/2006 B/C Dates for Annual General Meeting : 08/06/2006 to 14/06/2006 bdi. Other Distribution for : N/A Current Period B/C Dates for Other Distribution : N/A Remarks: Disclosure notes on presentation of financial statements 1. The condensed financial statements have been prepared in accordance with the Hong Kong Financial Reporting Standards ("HKFRSs"), the Hong Kong Accounting Standard ("HKAS") and Interpretations ( hereinafter collectively referred to as "HKFRSs"), issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"), accounting policies generally accepted in Hong Kong and the requirements of the Hong Kong Companies Ordinance. These financial statements also comply with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules"). 2. In the current year, the Company has adopted all of the new and revised Standards and Interpretations (hereinafter collectively referred to as "new HKFRSs") issued by the HKICPA that are relevant to its operations and effective for accounting periods beginning on or after 1st January 2005. The adoption of these new and revised Standards and Interpretations has resulted in changes to the Company's accounting policies in the following areas that have affected the amounts reported for the current and prior years: - financial instruments (HKAS 32 and HKAS 39); and - investments in associates (HKAS 28). The impact of these changes in accounting policies is discussed below. HKAS 32 Financial Instruments: Disclosure and Presentation & HKAS 39 Financial Instruments: Recognition and Measurement In the current year, the Company 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 Company. HKAS 39, which is effective for annual periods beginning on or after 1st January 2005, generally does not permit to recognise, derecognise or measure financial assets and liabilities on a retrospective basis. The principal effects resulting from the implementation of HKAS 39 are summarized below: Interest income In prior years, interest income was recognised in the income statement on an accrual basis, except in the case where a debt became doubtful at which stage interest ceased to be accrued. Interest income on instalment loans receivable was accounted for using the sum-of-digit method. Fees on loan origination were accounted for as and when they were receivable. HKAS 39 requires loans and receivables to be subsequently measured at amortised cost after initial recognition. Interest income is recognised on a time-proportion basis using the effective interest method. The. The calculation includes all origination fees and commissions paid or received between parties to the contract that are an integral part of the effective interest rate, and transaction costs. Interest income will continue to be recognised on impaired financial assets using the original rate of interest used to discount future cash flows for the purpose of measuring the related impairment loss. On application of HKAS39, a reduction of HK$ 22,564,000 on interest income has been made to the Company's accumulated profits to reflect the adjustment on the principal of instalment loan and other receivables of HK$ 5,909,000 and HK$ 16,655,000. Moreover, this change has resulted in a decrease in interest income of HK$ 2,082,000 for the current year. Classification and measurement of financial assets The Company has applied the relevant transitional provisions in HKAS 39 with respect to classification and measurement of financial assets and financial liabilities that are within the scope of HKAS 39. By 20th February 2005, the Company classified and measured its investments in debt and equity securities in accordance with the benchmark treatment of Statement of Standard Accounting Practice 24 ("SSAP 24"). Under SSAP 24, investments in debt or equity securities are classified as "investment securities", "other investments" or "held-to-maturity investments" as appropriate. "Investment securities" are carried at cost less impairment losses (if any) while "other investments" are measured at fair value, with unrealized gains or losses included in the income statement. Held-to- maturity investments are carried at amortised cost less impairment losses (if any). From 21st February 2005 onwards, the Company classifies and measures its equity securities in accordance with HKAS 39. Under HKAS 39, financial assets are classified as "financial assets at fair value through profit or loss", "available-for-sale investments", "loans and receivables" or "held-to-maturity financial assets". "Financial assets at fair value through profit or loss" and "available-for-sale investments" are carried at fair value, with changes in fair values recognised in the income statement and equity respectively. "Loans and receivables" and "held-to -maturity financial assets" are measured at amortised cost using the effective interest method. On 21st February 2005, the Company classified and measured its investments in equity securities in accordance with the requirements of HKAS 39. Investment securities of HK$ 11,295,000 previously carried at cost are reclassified to available-for-sale investments and re-measured at fair value at 21st February 2005 upon the adoption of HKAS 39. An adjustment of HK$ 27,204,000 to the previous carrying amounts of assets at 21st February 2005 has been made to the Company's accumulated profits and will be included in the income statement upon disposal. Further revaluation gain of HK$ 12,479,000 has been made to the Company's investment revaluation reserve in the current year. Other investments of HK$1,239, 000 are reclassified to investments held for trading and measured at fair value with fair value changes through the income statement. Derivatives and hedging Derivatives arise from swap transactions are undertaken by the Company in the foreign exchange and interest rate markets. By 20th February 2005, transactions undertaken for hedging purposes were accounted on the same basis as the assets, liabilities or net positions that they were hedging. Any profit or loss was recognised in the income statement on the same basis as that arising from the related assets, liabilities or positions. From 21st February 2005 onwards, all derivatives that are within the scope of HKAS 39 are required to be carried at fair value at each balance sheet date regardless of whether they are deemed as held for trading or designated as effective hedging instruments. Under HKAS 39, derivatives (including embedded derivatives separately accounted for from the host contracts) are deemed as held-for-trading financial assets or financial liabilities, unless they qualify and are designated as effective hedging instruments. The corresponding adjustments on changes in fair values would depend on whether the derivatives are designated as effective hedging instruments and, if so, the nature of the item being hedged. For derivatives that are deemed as held for trading, changes in fair values of such derivatives are recognised in the income statement for the year in which they arise. There are three types of hedge relationships under HKAS 39, including fair value hedges, cash flow hedges and net investment hedges. The Company designates certain derivatives as hedging instruments to hedge against its exposure of interest rate movements. For cash flow hedges, changes in fair value of the effective portion of hedging instruments are recognised in equity and "recycled" into the income statement when the hedged items affect profit or loss. Changes in the fair value of the ineffective portion of hedging instruments are recognised directly in the income statement. The Company has applied the relevant transitional provisions in HKAS 39. For hedges that do not meet the requirements of hedge accounting in accordance with HKAS 39, the Company has, from 21st February 2005 onwards, discontinued using hedge accounting. For hedges that meet the requirements of hedge accounting set out in HKAS 39, the Company has, from 21st February 2005 onwards, applied hedge accounting in accordance with HKAS 39 to account for such hedges. For cash flow hedges that meet the requirements of hedge accounting set out in HKAS 39, the Company has, from 21st February 2005 onwards, applied cash flow hedge accounting. Interest rate swaps designated as effective cash flow hedging instruments are measured at fair value on 21 February 2005, the difference between the previous carrying amount recognised on the balance sheet and the fair value on 21st February 2005, amounting to HK$ 22,960,000 are included in the Company's hedging reserve. On subsequent revaluation, HK$ 23,118,000 change in fair value of the effective portion of hedging instruments is recognised in equity in the current year. For derivatives that do not meet the requirements of hedge accounting, on 21st February 2005, the Company recognised the difference between the previous carrying amount recognised on the balance sheet and the fair value on 21st February 2005, amounting to HK$ 6,744,000, in the Company's accumulated profits, which has subsequently been included in the current year's income statement. Derecognition HKAS 39 provides more rigorous criteria for the derecognition of financial assets than the criteria applied in previous years. Under HKAS 39, a financial asset is derecognised, when and only when, either the contractual rights to the asset's cash flows expire, or the asset is transferred and the transfer qualifies for derecognition in accordance with HKAS 39. The decision as to whether a transfer qualifies for derecognition is made by applying a combination of risks and rewards and control tests. The Company has applied the relevant transitional provision and applied the revised accounting policy prospectively for transfers of financial assets under asset securitisations on or after 21st February 2005. As a result, the Company's credit card receivables transferred to a special purpose entity ("SPE") under asset securitisation, which were derecognised prior to 20th February 2005, have not been restated. Any new transfer of credit card receivables to the SPE after 21st February 2005 has not been derecognised and remained as credit card receivables in the Company's financial statements. This has resulted in a decrease in credit card securitisation income of HK$ 23,700 ,000 in the current year. Impairment of financial assets In prior years, allowances for bad and doubtful debts were made against loans and receivables as and when they were considered doubtful by the management. In addition, an amount was set aside as a general allowance for bad and doubtful debts. On adoption of HKAS 39, the Company assesses at each balance sheet date whether there is objective evidence that a loan / receivable or group of loans / receivables is impaired. Impairment allowances are made on loans and receivables when there is objective evidence of impairment as a result of the occurrence of certain loss events after the initial recognition of the loans and receivables, and these loss events will have impact on the estimated future cash flows of the loans and receivables. The Company first assesses whether objective evidence of impairment exists individually for loans and receivables that are individually significant, and individually or collectively for loans and receivables that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed loan / receivable, whether significant or not, it includes the loan / receivable in a group of loans and receivables and collectively assesses them for impairment. Evaluation is made on a portfolio basis by reference to the credit risk characteristics that are indicative of borrowers' ability to pay all amounts in accordance with the contractual terms. Expected future cash flows of loans and receivables that are assessed collectively for impairment are estimated on the basis of prior loan loss experience. This change has had no material effect on the results of the previous and current years. HKAS 28 Investments in Associates In prior years, investments in associates were stated at cost, as reduced by any identified impairment loss, and the results of associates were accounted for on the basis of dividends received or receivable during the year. On adoption of HKAS 28, investments in associates are accounted for using the equity method, with the cost of investments being adjusted by the share of the associates' post acquisition change in net assets. The Company's income statement reflects its share of the associates' post acquisition profit or loss. Dividends received from the associates reduce the carrying amount of the investments in associates. HKAS 28 has been adopted retrospectively and the comparative figures for 2004 have been restated to conform to the changed policy. Given that an investment in associate was reclassified to investment securities in the prior year upon dilution of the Company's interest from 20% to 12.2%, cumulative share of losses of an associate amounted to HK$ 5,829,000 has been adjusted to the carrying amount of investment securities. An adjustment to the previous carrying amount of investment in an associate of HK$ 974,000 on 20th February 2005 in respect of share of net asset with effect of equity accounting for an associate has been made to the Company's accumulated profits. Share of losses of associates of HK$ 4,331,000 have been restated in prior year's income statement. Share of current year's profit of an associate of HK$ 340,000 is recorded in the income statement. 3. The calculation of earnings per share is based on the profit for the year of HK$186,113,000 (2004/05: HK$145,873,000) and on the number of 418,766,000 (2004/05: 418,766,000) shares in issue during the year.