DESON DEV INT'L<00262> - Results Announcement
Deson Development International Holdings Limited announced on 21/07/2006:
(stock code: 00262 )
Year end date: 31/03/2006
Currency: HKD
Auditors' Report: Unqualified
(Audited )
(Audited ) Last
Current Corresponding
Period Period
from 01/04/2005 from 01/04/2004
to 31/03/2006 to 31/03/2005
Note ('000 ) ('000 )
Turnover 2 : 617,414 570,827
Profit/(Loss) from Operations 2 : 12,332 66,697
Finance cost : (2,369) (2,784)
Share of Profit/(Loss) of
Associates : 101 184
Share of Profit/(Loss) of
Jointly Controlled Entities : 55 16
Profit/(Loss) after Tax & MI : 10,181 40,242
% Change over Last Period : -74.7 %
EPS
-Continuing operations
-Basic (in dollars) 4 : 0.0204 (0.1601)
-Diluted (in dollars) 4 : 0.0204 (0.1582)
-Discontinuing operations
-Basic (in dollars) 3 : N/A 0.2408
-Diluted (in dollars) 3 : N/A 0.2380
Extraordinary (ETD) Gain/(Loss) : 0 0
Profit/(Loss) after ETD Items : 10,181 40,242
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 : 17/08/2006 to 22/08/2006 bdi.
Other Distribution for : N/A
Current Period
B/C Dates for Other
Distribution : N/A
Remarks:
1 POTENTIAL IMPACT ARISING FROM THE RECENTLY ISSUED ACCOUNTING
STANDARDS
In the current year, the Group has adopted a number of new Hong
Kong Financial Reporting Standards ("HKFRS"s), Hong Kong Accounting
Standards ("HKASs") and Interpretations (hereinafter collectively referred
to as "new HKFRSs") issued by the Hong Kong Institute of Certified Public
Accountants that are relevant to its operations and effective for
accounting periods beginning on or after 1 January 2005. The application
of the new HKFRSs has resulted in a change in the presentation of the
income statement, balance sheet and the statement of changes in equity. In
particular:
HKAS1 - Presentation of Financial Statements
HKAS 1 has affected the presentation of minority interests on the
face of the consolidated balance sheet, consolidated income statement,
consolidated statement of changes in equity and other disclosures. In
addition, in prior periods, the Group's share of tax attributable to
associates was presented as a component of the Group's total tax charge in
the consolidated income statement. Upon the adoption of HKAS 1, the
Group's share of the post-acquisition results of associates is presented
net of the Group's share of tax attributable to associates. The changes in
presentation have been adopted retrospectively.
HKAS 17 - Leases and HK-Int 4 - Leases - Determination of the
Length of Lease Term in respect of Hong Kong Land Leases
In prior years, leasehold land and buildings held for own use were
stated at valuation less accumulated depreciation and any impairment
losses.
Upon the adoption of HKAS 17, the Group's leasehold interest in
land and buildings is separated into leasehold land and leasehold
buildings. The Group's leasehold land is classified as an operating
lease, because the title of the land is not expected to pass to the Group
by the end of the lease term, and is reclassified from property, plant and
equipment to prepaid land lease payments, while leasehold buildings
continue to be classified as part of property, plant and equipment.
Prepaid land lease payments under operating leases are initially stated at
cost and subsequently amortised on the straight-line basis over the lease
term.
The comparative amounts for the year ended 31 March 2005 in the
consolidated balance sheet have been restated to reflect the
reclassification of the leasehold land.
HKAS 32 and HKAS 39 - Financial Instruments
Equity securities
In prior years, the Group classified its
investments in equity securities as long term investments, which were held
for non-trading purposes and were stated at cost less any impairment
losses. Upon the adoption of HKAS 39, these securities held by the Group
at 1 April 2005 were designated as available-for-sale investment under the
transitional provisions of HKAS 39 and accordingly are stated at fair
value with gains or losses being recognised as a separate component of
equity until subsequent derecognition or impairment.
In accordance with the transitional provisions of HKAS 39, the
opening balance of investment revaluation reserve has been restated to
reflect this change prospectively.
HKFRS 3 - Business Combinations and HKAS 36 - Impairment of Assets
In prior years, goodwill and negative goodwill arising on
acquisitions prior to 1 January 2001 were eliminated against the
consolidated capital reserve in the year of acquisition and were not
recognised in the income statement until disposal or impairment of the
acquired businesses.
Goodwill arising on acquisitions on or after 1 January 2001 was
capitalised and amortised on the straight-line basis over its estimated
useful life and was subject to impairment testing when there was any
indication of impairment.
The adoption of HKFRS 3 and HKAS 36 has resulted in the Group ceasing
annual goodwill amortisation and commencing testing for impairment at the
cash-generating unit level annually (or more frequently if events or
changes in circumstances indicate that the carrying value may be impaired
).
Any excess of the Group's interest in the net fair value of the acquirees'
identifiable assets, liabilities and contingent liabilities over the cost
of the acquisition of subsidiaries (previously referred to as negative
goodwill), after reassessment, is recognised immediately in the income
statement.
The transitional provisions of HKFRS 3 have required the Group to
eliminate at 1 April 2005 the carrying amounts of accumulated amortisation
with a corresponding adjustment to the cost of goodwill and to derecognise
at 1 April 2005 the carrying amounts of negative goodwill that remained in
the consolidated capital reserve against retained profits. Goodwill
previously eliminated against the consolidated capital reserve remains
eliminated against the consolidated capital reserve and is not recognised
in the income statement when all or part of the business to which the
goodwill relates is disposed of or when a cash-generating unit to which
the goodwill relates becomes impaired.
HKFRS 2 - Share-based Payment
In prior years, no recognition and measurement of share-based
payment transactions in which employees (including directors) were granted
share options over shares in the Company were required until such options
were exercised by employees, at which time the share capital and share
premium were credited with the proceeds received.
Upon the adoption of HKFRS 2, when employees (including directors) render
services as consideration for equity instruments ("equity-settled
transactions"), the cost of the equity-settled transactions with
employees is measured by reference to the fair value at the date at which
the instruments are granted.
The main impact of HKFRS 2 on the Group is the recognition of the cost of
these transactions and a corresponding entry to equity for employee share
options.
The Group has adopted the transitional provisions of HKFRS 2 under which
the new measurement policies have not been applied to (i) options granted
to employees on or before 7 November 2002; and (ii) options granted to
employees after 7 November 2002 but which had vested before 1 April 2005.
As the Group did not have any employee share options which were granted
during the period from 7 November 2002 to 31 March 2005 but had not yet
vested as at 1 April 2005, the adoption of HKFRS 2 has had no impact on
the retained profits as at 31 March 2004 and 2005. The Group has
recognised the cost of options which were granted during the year in the
current year's income statement in accordance with the revised accounting
policy.
HKFRS 5 - Non-current Assets Held for Sale and Discontinued
Operations
The Group has applied HKFRS 5 prospectively in accordance with
the transitional provisions of HKFRS 5, which has resulted in a change in
accounting policy on the recognition of a discontinued operation. Under
the previous Statement of Standard Accounting Practice ("SSAP") 33
"Discontinuing Operations", the Group would recognise a discontinued
operation at the earlier of:
- the date the Group entered into a binding sale agreement; and
- the date the board of directors had approved and announced a formal
disposal plan.
HKFRS 5 requires a component of the Group to be classified as
discontinued when the criteria to be classified as held for sale have been
met or when that component of the Group has been disposed of. An item is
classified as held for sale if its carrying amount will be recovered
principally through a sale transaction rather than through continuing use.
Such a component represents a separate major line of business or
geographical area of operations, is part of a single co-ordinated plan to
dispose of a separate major line of business or geographical area of
operations or is a subsidiary acquired exclusively with a view to resale.
The principal impact of this change in accounting policy is that a
discontinued operation is recognised by the Group at a later point than it
would be under SSAP 33 due to the stricter criteria in HKFRS 5, and that
the income statement for the year ended 31 March 2005 attributable to the
discontinued operation have been reclassified to the "profit for the year
from a discontinued operation" on the face of the consolidated income
statement of the Group
2 SEGMENT INFORMATION
Segment information is presented by way of two segment formats: (
i) on a primary segment reporting basis, by business segment; and (ii) on
a secondary segment reporting basis, by geographical segment.
The Group's operating businesses are structured and managed
separately, according to the nature of their operations and the products
and services they provide. Each of the Group's business segments
represents a strategic business unit that offers products and services
which are subject to risks and returns that are different from those of
the other business segments. Summary details of the business segments are
as follows:
(a) the construction business segment is engaged in construction contract
work as a main contractor as well as the provision of contracting
intelligent building engineering and electrical and mechanical engineering
services;
(b) the property development of residential and commercial properties; and
(c) the fitness centre operation and related business segment is engaged
in the operation of fitness centres, trading of fitness and medical
equipment and the provision of related installation and maintenance
services.
In prior year, the Group through its non-wholly- owned subsidiary, Chinese
People Gas Holdings Company Limited ("CPG"), acquired the entire interest
in Xin Hua Resources Investment Limited ("Xin Hua") for consideration of
HK$96,772,000. Xin Hua and its subsidiaries are engaged in natural gas
business in Mainland China. The segment of natural gas business is
regarded as a new business of the Group upon the completion of
acquisition. However, following the disposal of the Group's entire
interest in CPG in prior year, the natural gas business was discontinued.
In determining the Group's geographical segments, revenues are attributed
to the segments based on the location of customers, and assets are
attributed to the segments based on the location of the assets.
Intersegment sales and transfers are transacted with reference to the
selling prices used for sales made to third parties at the then prevailing
market prices.
(a) Business segments
The following tables present revenue, profit/[(losses)] and
certain asset, liability and expenditure information for the Group's
business segments for the years ended 31 March 2006 and 2005.
Group
Continuing operations Discontinued
operation
__________________________________________ ____________
Property Fitness Natural gas
Construction development centre business Consolidated
business and operation
investment and related
business
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
HK$'000
(Restated) (Restated) (Restated) (Restated)
(Restated)
Segment
revenue:
Sales to
external
customers
431,929 427,994 116,683 67,403 68,802 75,430 - 77,051 617,414
647,878
Other income
and gains
2,869 1,871 3,767 2,268 1,074 702 - 3,495 7,710
8,336
__________________________________________________________________________
Total
434,798 429,865 120,450 69,671 69,876 76,132 - 80,546 625,124
656,214
==========================================================================
Segment
results
15,510 (30,435) 16,217 7,686 (14,475) (16,954) - 33,838 17,252
(5,865)
=============================================================
Interest income
and dividend
income 5,491 989
Gain on disposal
of long term investments - 3,181
Gain on disposal
of discontinued
operation - 97,753 - 97,753
Unallocated expenses - - (6,411)
(13,966)
Impairment of goodwill (4,000) (12,668) - - (4,000)
(12,668)
Amortisation of goodwill (529) - (2,198) - (2,727)
Finance costs - - (2,369)
(2,784)
Share of profits
and losses of:
A jointly-controlled
entity
55 16 - - - - - - 55 16
Associates
101 184 - - - - - 2,784 101
2,968
_________
Profit before tax 10,119
66,897
Tax - (12,123) (1,656)
(13,850)
__________
Profit for the year 8,463
=====
53,047
======
Group
Continuing operations Discontinued
operation
__________________________________________ ____________
Property Fitness Natural gas
Construction development centre business Consolidated
business and operation
investment and related
business
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
HK$'000
(Restated) (Restated) (Restated) (Restated)
(Restated)
Other
segment
information:
Depreciation
1,293 891 254 378 2,339 2,441 - 1,518 3,886 5,228
Recognition
of prepaid
land lease
payment
250 250 250 250
Loss on
disposal of
items
of property,
plant and
equipment
- 123 - - 746 - - 1,941 746 2,064
Provision/
(write-back) of
provision for
doubtful debts
693 (2,693) 116 947 (1,266) 9,575 - - (457) 7,829
Provision/
(write-back)
for other
receivables
5,798 1,276 (3,169) 6,182 12 - - - 2,641 7,458
Provision for/
(write-back)
inventories
(209) 1 - - 1114 123 - - 905 124
==== ====
(b) Geographical segments
The following table presents revenue and certain asset and expenditure
information for the Group's geographical segments for the years ended 31
March 2006 and 2005.
Group
Hong Kong Mainland China Consolidated
2006 2005 2006 2005 2006 2005
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
(Restated) (Restated) (Restated)
Segment revenue:
Sales to external
customers 333,769 346,423 283,645 301,455 617,414 647,878
Attributable to a
discontinued operation - - - (77,051) - (77,051)
_______ _______ _______ _______ _______ _______
Revenue for continuing
operations 333,769 346,423 283,645 224,404 617,414 570,827
======= ======= ======= ======= ======= =======
3 DISCONTINUED OPERATION
2006 2005
HK$'000 HK$'000
Gain on disposal of a discontinued
operation - 97,753
Profit for the year froma
discontinued operation - 22,301
------------------------
- 120,054
========================
Notes:
(i) In prior year, the Group disposed of the entire interest in Chinese
People Gas Holdings Liited ("CPG"), which was engaged in natural gas
business and following the disposal, the Group ceased to have any interest
in CPG. The business segment of natural gas was regarded as discontinued
operation. The details of the transactions are set out as follows:
On 30 April 2004, the Group acquired 49% equity interest in Xin Hua. The
consideration was satisfied by way of issuing 295,000,000 shares in CPG.
On the same date, the Group placed 400,000,000 new shares of CPG to third
parties at HK$0.10 each. The placement of new shares resulted in a deemed
disposal gain of approximately HK$15,908,000. On 11 August 2004, the Group
disposed of 175,000,000 shares of CPG of HK$0.10 each to third parties at
HK$0.30 each. The disposal resulted in a gain of approximately HK
$40,194,000.
On 15 March 2005, the Group disposed of its remaining interest in CPG of
approximately 52.08%, to a third party for a consideration of HK$136,172,
000 (before expenses). The disposal resulted in a gain of approximately
HK$41,651,000.
(ii) The results of CPG for the prior year are presented below:
2005
HK$'000
Revenue 77,051
Cost of sales (33,479)
Other income and gains 3,495
Administrative expenses (13,229)
Impairment of goodwill (2,198)
Share of profits of associates 2,784
---------
Profit before tax from the discontinued
operation 34,424
Tax (12,123)
---------
Profit for the year from the
discontinued operation 22,301
=========
The net cash flows incurred by CPG for the prior year are as
follows:
2005
HK$'000
Operating activities (28,167)
Investing activities 30,397
Financing activities 10,674
---------
Net cash inflow 12,904
=========
2005
Earnings per shares:
Basic, from the discontinued operation HK24.08 cents
Diluted, from the discontinued operation HK23.80 cents
=============
The calculations of basic and diluted earnings per share for the prior
year form the discontinued operations are based on:
2005
Net profit attributable to ordinary equity
holdrs of the parent from the discontinued
operation HK$120,054,000
==============
Weighted average number of ordinary shares
in issue during the prior year used in the
basic earnings per share calculation,
as adjusted to the share consolidation
during the year ended 31 March 2006 498,383,800
============
Weighted average number of ordinary shares
used in the dilutied earnings per share
calculation, as adjusted to the share
consolidation during the year ended 31 March 2006
504,420,800
============
4 EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE
PARENT
The calculation of basic earnings per share amounts is based on the net
profit for the year attributable to ordinary equity holders of the parent,
and the weighted average number of ordinary shares in issue during the
year, as adjusted to the share consolidation during the year ended 31
March 2006.
The calculation of diluted earnings per share amounts is based on the net
profit for the year attributable to ordinary equity holders of the parent.
The weighted average number of ordinary shares used in the calculation is
the ordinary shares in issue during the year, as used in the basic
earnings per share calculation and the weighted average number of ordinary
shares assumed to have been issued at no consideration on the deemed
exercise or conversion of all dilutive potential ordinary shares into
ordinary shares.
The calculations of basic and diluted earnings per share are based on:
2006 2005
HK$'000 HK$'000
Earnings
Net profit attributable to ordinary equity
holdrs of the parent, used in the basic
earnings per share calculation 10,181 40,242
========================
Attributable to:
Continuing operations 10,181 (79,812)
Discontinued operations (note 3) - 120,054
------------------------
10,181 40,242
========================
Number of Number
of
shares shares
Weighted average number of ordinary shares
in issue during the year used
in the basic earnings per share calculation
499,790,777 498,383,800
Effect of dilution - weighted average number
of ordinary shares:
Warrants - 6,037,000
Share options 255,573 -
-------------------------
500,046,350 504,420,800
=========================
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