Vision Values Holdings Ltd. — Earnings Release 2006

Oct 10, 2006

Listed Company Information

Listed Company Information
NW MOBILE<00862> - Results Announcement New World Mobile Holdings Limited announced on 10/10/2006: (stock code: 00862 ) Year end date: 30/06/2006 Currency: HKD Auditors' Report: Unqualified (Audited ) (Audited ) Last Current Corresponding Period Period from 01/07/2005 from 01/07/2004 to 30/06/2006 to 30/06/2005 Note ('000 ) ('000 ) (Restated) Turnover 3 : 1,419,342 1,667,134 Profit/(Loss) from Operations 4 : 985,889 75,954 Finance cost 5 : (97,105) (65,287) Share of Profit/(Loss) of Associates : 27,731 N/A Share of Profit/(Loss) of Jointly Controlled Entities : N/A N/A Profit/(Loss) after Tax & MI 6 : 911,642 (10,399) % Change over Last Period : N/A % EPS/(LPS)-Basic (in dollars) 7 : 10.08 (0.13) -Diluted (in dollars) 7 : N/A N/A Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit/(Loss) after ETD Items : 911,642 (10,399) Final Dividend : NIL NIL 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 : 14/11/2006 to 21/11/2006 bdi. Other Distribution for : N/A Current Period B/C Dates for Other Distribution : N/A Remarks: 1. Basis of preparation and accounting policies The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRS"). The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties, financial assets and financial liabilities at fair values. On 29 March 2004, the Company, formerly known as Asia Logistics Technologies Limited ("ALT"), entered into a conditional subscription agreement (the "Subscription Agreement") with Power Palace Group Limited ("PPG"), a wholly-owned subsidiary of New World Development Company Limited ("NWD"), pursuant to which PPG agreed to subscribe for: (a) 4,166,666,667 shares of newly issued ordinary share of the Company (the "Subscription Shares", equivalent to 41,666,666 consolidated shares after the share consolidation of the Company on 7 July 2004) at an issue price of HK$0.012 per Subscription Share, representing the closing price of the last trading day of the ALT shares prior to suspension; and (b) a convertible note (the "Subscription Note") of a principal amount of HK$1,200,000,000, unless previously converted, will be repaid by the Company upon its maturity on the business day immediate preceding the third anniversary of the date of its issue. It bears a coupon from its date of issue at the rate of 0.75% per annum and, at the discretion of the holder, can be converted, in whole or any part thereof, into ordinary shares of the Company at an initial conversion price of HK$0.012 per share, subject to adjustment. The conversion price was subsequently adjusted to HK$1.20 per share after the share consolidation of the Company on 7 July 2004. Both the Subscription Shares and Subscription Note were issued on 6 July 2004. The fair values of the liability component and the equity component of the Subscription Note were determined at issuance of the Subscription Note. The fair value of the liability component, included in long term borrowings, was calculated using a market interest rate for an equivalent non-convertible bond. The residual amount, representing the value of equity component, is included in shareholders' equity in other reserves net of deferred income taxes, if any. The fair value of the liability component of the Subscription Note as at 30 June 2006 approximated its carrying value. On 29 March 2004, the Company entered into a conditional sale and purchase agreement (the "S&P Agreement") with New World Telephone Holdings Limited ("NWTHL"), a wholly-owned subsidiary of NWD, pursuant to which the Company agreed to purchase the 100% equity interest of New World PCS Holdings Limited ("NWPCS Holdings") and its subsidiaries (collectively, the "NWPCS Group") from NWTHL at an aggregate cash consideration of HK$1,250,000,000. This transaction (the "Reverse Acquisition") was completed on 6 July 2004 (the "Completion Date"). Under the generally accepted accounting principles in Hong Kong, the Reverse Acquisition, after taking into account the issuance of Subscription Shares, should constitute a reverse acquisition from accounting perspective since NWD has become the controlling shareholder of the Company after the Reverse Acquisition. For accounting purposes, NWPCS Holdings is regarded as the acquirer while the Company and its subsidiaries before the Reverse Acquisition (collectively, the "Logistics Group") are deemed to have been acquired by NWPCS Holdings. As a result, these consolidated financial statements have been prepared as a continuation of the consolidated financial statements of the NWPCS Group which has a financial year end date of 30 June, and accordingly: (i) the assets and liabilities of the Logistics Group are recognised and recorded at the Completion Date at their fair values (the "Net Fair Value"); (ii) the assets and liabilities of the NWPCS Group are recognised and recorded at the Completion Date at their historical carrying values prior to the Reverse Acquisition; (iii) the purchase consideration is deemed to have been incurred by NWPCS Holdings for the Reverse Acquisition and is determined by the total fair value of all the issued shares of the Company at the Completion Date (the "Deemed Consideration"); (iv) the goodwill arising from the Reverse Acquisition is determined by the surplus of the Deemed Consideration over the Net Fair Value; (v) the capital and reserves of the Logistics Group upon the Completion Date are eliminated as the pre-acquisition reserves; (vi) the consolidated issued equity of the Group as shown in the consolidated balance sheet represents the issued share capital and share premium balances of NWPCS Holdings upon the Completion Date, plus all the post-acquisition changes in the issued share capital and share premium of the Company, if any. On the other hand, the number and type of issued shares presented represent the actual equity structure of the Company; and (vii) the difference between the actual consideration paid by the Company for the Reverse Acquisition and the Deemed Consideration is transferred to a consolidation reserve of the Group. Changes in accounting policies (i) The Hong Kong Institute of Certified Public Accountants ("HKICPA") has issued a number of new and revised standards and interpretations of HKFRS (collectively "new HKFRSs") below which are effective for accounting periods beginning on or after 1 January 2005. From 1 July 2005, the Group adopted the HKFRSs below, which are relevant to its operations. The 2005 comparatives have been amended as required, in accordance with the relevant requirements. HKAS 1 Presentation of Financial Statements HKAS 2 Inventories HKAS 7 Cash Flow Statements HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors HKAS 10 Events after the Balance Sheet Date HKAS 16 Property, Plant and Equipment HKAS 17 Leases HKAS 21 The Effects of Changes in Foreign Exchange rates HKAS 23 Borrowing Costs HKAS 24 Related Party Disclosures HKAS 27 Consolidated and Separate Financial Statements HKAS 28 Investments in Associates HKAS 32 Financial Instruments Disclosure and Presentation HKAS 33 Earnings per Share HKAS 39 Financial Instruments: Recognition and Measurement HKAS 39 Transitional and Initial Recognition of Financial Assets and (Amendment) Financial Liabilities HKAS 40 Investment Properties HKAS Int 15 Operating Leases - Incentives HKFRS 2 Share-based Payments HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations The adoption of HKASs 1, 2, 7, 8, 10, 17, 21, 23, 24, 27, 28, 33 and HKAS -Int 15 did not result in substantial changes to the Group's accounting policies. In summary: - HKAS 1 has affected certain presentation of the financial statements. - HKASs 2, 7, 8, 10, 17, 23, 27, 28, 33 and HKAS-Int 15 had no material effect on the Group's policies. - HKAS 21 had no material effect on the Group's policy. The functional currency of each of the consolidated entities has been re- evaluated based on the guidance to the revised standard. All the Group entities have the same functional currency as the presentation currency for respective entity financial statements. - HKAS 24 has affected the identification of related parties and certain other related-party disclosures. The effect of the adoption of new and revised HKFRSs and HKASs is as follows: The adoption of HKAS 16 has resulted in a change in accounting policy of which the costs of property, plant and equipment include the estimated obligations which arise from future reinstatement of leased properties. The adoption of HKASs 32, 39 and 39 (Amendment) has resulted in a change in accounting policy relating to the classification of financial assets at fair value through profit or loss and available-for-sale financial assets. Furthermore, the convertible bond and subscription note issued are split into the liability and equity components at initial recognition by recognising the liability component at its fair value and attributing to the equity component the difference between the proceeds from the issue and the fair value of the liability component. The liability component is subsequently carried at amortised cost. The equity component is recognised in the reserve until the convertible bond or subscription note is converted or redeemed. In prior years, the convertible bond and subscription note were recognised as liabilities only. The adoption of revised HKAS 40 has resulted in a change in the accounting policy of which the changes in fair values are recorded in the income statement as part of other income. Prior to the adoption of the standard, the increases in fair value, if any, would be credited to the investment properties revaluation reserves. Decrease in fair value was first set off against increases recognised in investment properties revaluation reserves on earlier valuations on a portfolio basis and thereafter expensed in the income statement. The adoption of HKFRS 2 has resulted in a change in accounting policy for share-based payments. Until 30 June 2006, the provision of share options to employees did not result in an expense in the income statement. Effective on 1 July 2005, the Group expenses the cost of share options in the income statement. As a transitional provision, the cost of share options granted after 7 November 2002 and had not yet vested on 1 July 2005 was expensed retrospectively in the income statement of respective periods. The adoption of HKFRS 5 has resulted in a change in accounting policy for discontinued operations. An operation is classified as discontinued when the criteria to be classified as "held for sale" have been met or the Group has disposed of the operation. The application of HKFRS 5 does not impact on the prior year financial statements other than a change in the presentation of the results and cash flows of the discontinued operations. All changes in the accounting policies have been made in accordance with the transitional provisions in the respective standards, whenever applicable. All standards adopted by the Group require retrospective application other than: - HKAS 39 - does not permit to recognise, derecognise and measure financial assets and liabilities in accordance with this standard on a retrospective basis. The adjustments required for the accounting differences between SSAP 24 and HKAS 39 are determined and recognised at 1 July 2005. - HKFRS 2 - only retrospective application for all equity instruments granted after 7 November 2002 and not vested at 1 July 2005. Year ended 30 June 2006 HKAS 32 HKFRS 5 HKAS 16 & 39 Total HK$'000 HK$'000 HK$'000 HK$'000 Reclassified turnover to discontinued operations (1,402,827) - - (1,402,827) Reclassified cost of sales to discontinued operations 836,095 - - 836,095 Reclassified other revenue to discontinued operations (716) - - (716) Reclassified other net income to discontinued operations (1,022,434) - - (1,022,434) Reclassified selling expenses to discontinued operations 85,313 - - 85,313 Reclassified administrative expenses to discontinued operations 420,168 - - 420,168 Reclassified finance costs to discontinued operations 34,319 - - 34,319 Reclassified taxation to discontinued operations 4,873 - - 4,873 Net results reclassified as profit from discontinued operations 1,045,209 - - 1,045,209 Increase in gain on disposal of subsidiaries - 3,945 - 3,945 Decrease in impairment loss on intangible asset (goodwill) - - 32 32 Increase in administrative expenses - (90) - (90) Increase in finance costs - (489) (37,820) (38,309) ------------- ------------ ----------- ----------- Increase/(decrease) in profit for the year - 3,366 (37,788) (34,422) ============ =========== =========== =========== Increase/(decrease) in basic earnings per share HK$0.00 HK$0.04 (HK$0.42) (HK$0.38) ========== =========== =========== =========== As at 30 June 2006 HKAS 32 HKFRS 5 HKAS 16 & 39 Total HK$'000 HK$'000 HK$'000 HK$'000 Decrease in investments in associated companies - (1,219) (1,219) Decrease in subscription note - - 39,869 39,869 Decrease in convertible bond - - 25 25 ---------- ----------- ----------- ----------- (Decrease)/increase in net assets - (1,219) 39,894 38,675 ========== =========== =========== =========== Increase in other reserves - - 112,695 112,695 Increase in accumulated losses - (1,219) (72,801) (74,020) ---------- ----------- ----------- --------- (Decrease)/increase in equity - (1,219) 39,894 38,675 =========== =========== =========== ========= Year ended 30 June 2005 HKAS 32 HKFRS 5 HKAS 16 & 39 Total HK$'000 HK$'000 HK$'000 HK$'000 Reclassified turnover to discontinued operations (1,662,873) - - (1,662,873) Reclassified cost of sales to discontinued operations 890,316 - - 890,316 Reclassified other revenue to discontinued operations (527) - - (527) Reclassified other charge to discontinued operations 1,081 - - 1,081 Reclassified selling expenses to discontinued operations 101,178 - - 101,178 Reclassified administrative expenses to discontinued operations 592,569 - - 592,569 Reclassified finance costs to discontinued operations 20,548 - - 20,548 Reclassified taxation to discontinued operations 21,015 - - 21,015 Net results reclassified as profit from discontinued operations 36,693 - - 36,693 Increase in administrative expenses - (423) - (423) Increase in finance costs - (621) (35,013) (35,634) ---------- ----------- ------------ ----------- Increase in loss for the year - (1,044) (35,013) (36,057) ========== =========== ============ =========== Decrease/(increase) in basic loss per share HK$0.00 (HK$0.01) (HK$0.45) (HK$0.46) ========== =========== ============ =========== As at 30 June 2005 HKAS 32 HKFRS 5 HKAS 16 & 39 Total HK$'000 HK$'000 HK$'000 HK$'000 Decrease in intangible assets (Note) - - (32) (32) Increase in property, plant and equipment - 1,944 - 1,944 Increase in rental and other deposits (non-current) - - 8,882 8,882 Decrease in rental and other deposits (current) - - (8,882) (8,882) Decrease in subscription note - - 77,678 77,678 Decrease in convertible bond - - 36 36 Increase in asset retirement obligations - (6,529) - (6,529) ------------ ------------- ----------- ---------- (Decrease)/increase in net assets - (4,585) 77,682 73,097 ============ ============= =========== =========== Increase in other reserves - - 112,695 112,695 Increase in accumulated losses - (4,585) (35,013) (39,598) ------------ ------------- ----------- ---------- (Decrease)/increase in equity - (4,585) 77,682 73,097 ============ ============= =========== =========== Note: As a result of the adoption of HKASs 32 and 39, the liability component of the convertible bond of the Logistics Group at the date of acquisition decreased by HK$32,000 from HK$28,286,000 to HK$28,254,000. Hence, the fair values of net assets of the Logistics Group at the date of acquisition increased by HK$32,000 and the goodwill arising from the acquisition also decreased by HK$32,000. (ii) In prior years, when handset and mobile subscription services were sold at a package with handset subsidies offered to customers, consideration would be allocated to handset sales and mobile subscription services using the relative fair value model. Accordingly, the portion allocated to handset sales was recognised as sales upon delivery of goods, and the remaining amount allocated to mobile subscription services was amortised on a straight-line basis over the contract period. Handset subsidies were capitalised and amortised on a straight-line basis over the same contract period. During the year, the Group changed its accounting policy to expense handset subsidies as incurred. The directors consider that the new accounting policy involves less subjective judgement and estimates. The financial impact has been restated retrospectively. The effect of the change resulted in: Year ended 30 June 2006 2005 HK$'000 HK$'000 Increase/(decrease) in turnover of discontinued operations 3,327 (41,920) Increase in cost of sales of discontinued operations (16,514) (25,533) Increase in gain on disposal of subsidiaries constituting discontinued operations 101,302 - ----------- ----------- Increase in profit/(loss) for the year 88,115 (67,453) =========== =========== Basic earnings/(loss) per share HK$0.97 (HK$0.86) =========== =========== As at 30 June 2006 2005 HK$'000 HK$'000 Decrease in handset subsidies - (34,886) Increase in accrued charges, other payables, deposits received and deferred income - (84,521) Decrease in investments in associated companies (31,292) - ----------- ---------- Decrease in net assets (31,292) (119,407) =========== ========== Increase in accumulated losses (31,292) (119,407) =========== ========== 2. Discontinued operations During the year, the Group entered into a merger agreement and amendment agreements (collectively the "Merger Agreement") pursuant to which the Group disposed of its entire interests in NWPCS Holdings to Telstra CSL Limited which has changed its name to CSL New World Mobility Limited ("CSL NWM") and made a cash payment of HK$244,024,000 in exchange for the acquisition of 23.6% of the issued share capital of CSL NWM and its subsidiaries (collectively the "CSL NWM Group"), the enlarged group combining Telstra CSL Limited and NWPCS Holdings, and an amount due from CSL NWM, the associated company, of HK$113,328,000. Hence, the NWPCS Group ceased to be subsidiaries of the Group. The Merger Agreement was approved by the shareholders of the Company at the Extraordinary General Meeting on 24 March 2006 and completed on 31 March 2006. 3. Turnover Year ended 30 June 2006 2005 HK$'000 HK$'000 Continuing operations 16,515 4,261 Discontinued operations 1,402,827 1,662,873 ----------- ---------- 1,419,342 1,667,134 =========== ========== 4. Profit/(loss) from operations Year ended 30 June 2006 2005 HK$'000 HK$'000 Continuing operations (98,512) (2,302) Discontinued operations (Note a) 1,084,401 78,256 --------- ---------- 985,889 75,954 ========= ========== Note a: Included in the profit from discontinued operations was gain on disposal of the NWPCS Group of HK$1,022,979,000 (2005: Nil). 5. Finance cost Year ended 30 June 2006 2005 HK$'000 HK$'000 Continuing operations (62,786) (44,739) Discontinued operations (34,319) (20,548) ---------- ----------- (97,105) (65,287) ========== =========== 6. The amount of tax charged to the profit/ (loss) after taxation & MI represents: Year ended 30 June 2006 2005 HK$'000 HK$'000 Continuing operations - (51) Discontinued operations (4,873) (21,015) --------- ---------- (4,873) (21,066) ========= ========== 7. Earnings/ (loss) per share Year ended 30 June 2006 2005 HK$ HK$ Basic earnings/(loss) per share - Continuing operations (1.48) (0.60) - Discontinued operations 11.56 0.47 ----------- --------- 10.08 (0.13) =========== ========= The calculations of basic earnings/ (loss) per share are based on the share capital of the Company as follows: Year ended 30 June 2006 2005 Loss from continuing operations attributable to shareholders (HK$'000) (133,567) (47,092) Profit from discontinued operations attributable to shareholders (HK$'000) 1,045,209 36,693 ---------- --------- Profit/(loss) attributable to shareholders (HK$'000) 911,642 (10,399) ========== ========= Weighted average number of ordinary shares for the purpose of calculating basic earnings/(loss) per share 90,379,272 78,668,311 =========== ========== No diluted earnings/(loss) per share are presented for the years ended 30 June 2006 and 2005 as the conversion of convertible bond and subscription note would not have dilutive effect on the loss from continuing operations. 8. Change of financial year-end date of the Company In order to have a coterminous financial year end date with NWD and the NWPCS Group, the Board has resolved on 10 December 2004 that the financial year end date of the Company be changed from 31 December to 30 June. The change of the accounting year end does not affect the consolidated financial statements as the consolidated financial statements have been prepared as a continuation of the consolidated financial statements of the NWPCS Group which has a financial year end date of 30 June.