ASIA COMM HOLD<00104> - Results Announcement
Asia Commercial Holdings Limited announced on 18/07/2006:
(stock code: 00104 )
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 : 330,233 255,650
Profit/(Loss) from Operations : 8,883 6,544
Finance cost : (1,348) (1,349)
Share of Profit/(Loss) of
Associates : (100) (167)
Share of Profit/(Loss) of
Jointly Controlled Entities : N/A N/A
Profit/(Loss) after Tax & MI : 5,414 4,386
% Change over Last Period : +23.4 %
EPS/(LPS)-Basic (in dollars) : 0.0162 0.0131
-Diluted (in dollars) : N/A N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : 5,414 4,386
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 (-)
General Meeting : N/A
Other Distribution for : N/A
Current Period
B/C Dates for Other
Distribution : N/A
Remarks:
1. APPLICATION OF HONG KONG FINANCIAL REPORTING STANDARDS/CHANGES IN
ACCOUNTING POLICIES
In the current year, the Group has applied, for the first time, a number
of new Hong Kong Financial Reporting Standards ("HKFRSs"), Hong Kong
Accounting Standards ("HKASs") and Interpretations ("INT") (hereinafter
collectively referred to as "new HKFRSs") issued by the Hong Kong
Institute of Certified Public Accountants (the "HKICPA") that are
effective for accounting periods beginning on or after 1st January, 2005.
The application of the new HKFRSs has resulted in a change in the
presentation of the consolidated income statement, consolidated balance
sheet and 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
HKFRSs has also resulted in changes to the Group's accounting policies in
the following areas that have an effect on how the results for the current
or prior accounting years are prepared and presented:
(i) Share-based payments
In prior years, no amounts were recognised when employees (which term
includes directors) were granted share options over shares in the Company.
If the employees chose to exercise the options, the nominal amount of
share capital and share premium were credited only to the extent of the
option's exercise price receivable.
With effect from accounting period commencing from 1st January, 2005, in
order to comply with HKFRS 2, the Group has adopted a new policy for share
options. Under the new policy, the Group recognises the fair value of such
share options as an expense with a corresponding increase recognised in a
capital reserve within equity.
The new accounting policy has been applied retrospectively with
comparatives restated, except that the Group has taken advantage of the
transitional provisions set out in HKFRS 2, under which the new
recognition and measurement policies have not been applied to the
following grants of options:
(a) all options granted to employees on or before 7th November, 2002; and
(b) all options granted to employees after 7th November, 2002 but which
had vested before 1st April, 2005.
No adjustments to the opening balances as at 1st April, 2004 are required
as no options existed at that time which were unvested at 1st April, 2005.
(ii) Amortisation of positive and negative goodwill (HKFRS 3,
Business combinations and HKAS 36, Impairment of assets)
In prior years:
- positive or negative goodwill which arose prior to 1st January, 2001 was
taken directly to reserves at the time it arose, and was not recognised in
the income statement until disposal or impairment of the acquired
business;
- positive goodwill which arose on or after 1st January, 2001 was
amortised on a straight line basis over its useful life and was subject to
impairment testing when there were indications of impairment; and
- negative goodwill which arose on or after 1st January, 2001 was
amortised over the weighted average useful life of the depreciable/
amortisable non-monetary assets acquired, except to the extent it related
to identified expected future losses as at the date of acquisition. In
such cases it was recognised in the income statement as those expected
losses were incurred.
With effect from accounting period commencing from 1st January, 2005, in
order to comply with HKFRS 3 and HKAS 36, the Group has changed its
accounting policies relating to goodwill. Under the new policy, the Group
no longer amortises positive goodwill but tests it at least annually for
impairment. Also with effect from accounting period commencing from 1st
January, 2005 and in accordance with HKFRS 3, if the fair value of the net
assets acquired in a business combination exceeds the consideration paid
(i.e. an amount arises which would have been known as negative goodwill
under the previous accounting policy), the excess is recognised
immediately in profit or loss as it arises.
The new policy in respect of the amortisation of positive goodwill has
been applied prospectively in accordance with the transitional
arrangements under HKFRS 3. The adjustments for each consolidated
financial statement line affected for the year ended 31st March, 2006 are
set out in note 2.
Also in accordance with the transitional arrangements under HKFRS 3,
goodwill which had previously been taken directly to reserves (i.e.
goodwill which arose before 1st January, 2001) will not be recognised in
profit or loss on disposal or impairment of the acquired business, or
under any other circumstances.
The change in policy relating to negative goodwill had no effect on the
financial statements as there was no negative goodwill deferred as at 31st
March, 2005.
(iii) Financial instruments
HKAS 32 "Financial Instruments: Disclosure and Presentation" requires
retrospective application whereas HKAS 39 "Financial Instruments:
Recognition and Measurement", which is effective for accounting periods
beginning on or after 1st January, 2005, generally does not permit the
recognition, derecognition or measurement of financial assets and
liabilities on a retrospective basis. The adoption of HKAS 32 has had no
material effect on the Group's accumulated losses. The principal effects
on the Group as a result of implementation of HKAS 39 are summarised
below:
Classification and measurement of financial assets and financial
liabilities
The Group 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.
Financial assets and financial liabilities
From 1st April, 2005 onwards, the Group has classified and measured its
financial assets and financial liabilities in accordance with the
requirements of HKAS 39. Financial assets under HKAS 39 are classified as
"financial assets at fair value through profit or loss", "available-for-
sale financial assets", "loans and receivables" or "held-to-maturity
financial assets". Financial liabilities are generally classified as "
financial liabilities at fair value through profit or loss" or "other
financial liabilities". "Financial liabilities at fair value through
profit or loss" are measured at fair value, with changes in fair value
being recognised in profit or loss directly. "Other financial liabilities"
are carried at amortised cost using the effective interest method after
initial recognition. The adoption of HKAS 39 has had no material effect on
the Group's accumulated losses.
Convertible Notes
HKAS 32 requires an issuer of a compound financial instrument (that
contains both financial liability and equity components) to separate the
compound financial instrument into the liability and equity components on
its initial recognition and to account for these components separately.
In subsequent periods, the liability component as carried at amortised
cost using the effective interest method. The principal impact of HKAS 32
on the Group is in relation to convertible notes issued by the Company
that contain both liability and equity components. Given the convertible
notes of the Company contain only liability components and was previously
classified as liabilities on the balance sheet. Comparative figures need
not be restated. The fair value of the Convertible Notes at 31st March,
2006 approximated to the corresponding carrying amount in accordance with
a valuation report prepared by an independent valuer.
(iv) Leasehold land and buildings (HKAS 17, Leases)
Leasehold land and buildings held for own use
In prior years, leasehold land and buildings held for own use were stated
at revalued amounts less accumulated depreciation and accumulated
impairment losses. Movements of revaluation surpluses or deficits were
normally taken to the land and buildings revaluation reserve.
With effect from accounting period commencing from 1st January, 2005, in
order to comply with HKAS 17, the Group has adopted a new policy for
leasehold land and buildings held for own use. Under the new policy, the
leasehold interest in the land held for own use is accounted for as being
held under an operating lease where the cost of the interest in any
buildings situated on the leasehold land could be measured separately from
the cost of the leasehold interest in the land at the time the lease was
first entered into by the Group, or taken over from the previous lessee,
or at the date of construction of those buildings, if later.
(v) Investment property (HKAS 40, Investment property and HKAS
Interpretation 21, Income taxes - Recovery of revalued non-depreciable
assets)
Changes in accounting policies relating to investment properties are as
follows:
Timing of recognition of movements in fair value in the income statement
In prior years movements in the fair value of the Group's investment
property were recognised directly in the investment property revaluation
reserve except when, on a portfolio basis, the reserve was insufficient to
cover a deficit on the portfolio, or when a deficit previously recognised
in the income statement had reversed, or when an individual investment
property was disposed of. In these limited circumstances movements in the
fair value were recognised in the income statement.
In addition, in prior years land (including leasehold land) which the
Group held for an undetermined future purpose was accounted for under the
valuation model in SSAP 17, Property, plant and equipment, whereby the
land was carried at fair value, with any movements in the fair value of
the land being normally taken to the land and buildings revaluation
reserve, net of deferred tax thereon.
Upon adoption of HKAS 40 as from accounting period commencing from 1st
January, 2005, the Group has adopted a new policy for investment property.
Under this new policy:
- all changes in the fair value of investment property are recognised
directly in the income statement ("profit or loss") in accordance with the
fair value model in HKAS 40; and
- land held for an undetermined future purpose is recognised as investment
property if the property is freehold or, if the property is leasehold, the
Group has chosen to recognise such land as investment property rather than
as land held under an operating lease.
Measurement of deferred tax on movements in fair value
In prior years the Group was required to apply the tax rate that would be
applicable to the sale of investment property to determine whether any
amounts of deferred tax should be recognised on the revaluation of
investment property. Consequently, deferred tax was only provided to the
extent that tax allowances already given would be clawed back if the
property were disposed of at its carrying value, as there would be no
additional tax payable on disposal.
As from accounting period commencing from 1st January, 2005, in accordance
with HKAS Interpretation 21, the Group recognises deferred tax on
movements in the value of an investment property using tax rates that are
applicable to the property's use, if the Group has no intention to sell it
and the property would have been depreciable had the Group not adopted the
fair value model.
(vi) Definition of related parties (HKAS 24, Related party disclosures)
As a result of the adoption of HKAS 24, Related party disclosures, the
definition of related parties has been expanded to clarify that related
parties include entities that are under the significant influence of a
related party that is an individual (i.e. key management personnel,
significant shareholders and/or their close family members) and post-
employment benefit plans which are for the benefit of employees of the
Group or of any entity that is a related party of the Group. The
clarification of the definition of related parties has not resulted in any
material changes to the previously reported disclosures of related party
transactions nor has it had any material effect on the disclosures made in
the current period, as compared to those that would have been reported had
SSAP 20, Related party disclosures, still been in effect.
2. SUMMARY OF THE EFFECTS OF THE CHANGES IN ACCOUNTING POLICIES
The effects of the changes in the accounting policies described in note 1
on the results is as follows:
The adoption of HKFRS 3 resulted in an increase in goodwill as at 31st
March, 2006 by HK$461,000 and decrease in administrative expense for the
year ended 31st March, 2006 by the same amount.
There was no impact on the balance sheet and income statement upon the
adoption of HKFRS 2.
The cumulative effects of the changes in accounting policies on 31st
March, 2005 and 1st April, 2005 are summarized below:
At 31st
March, At 31st
2005 HKAS 1 and March,
(Originally HKAS 27 HKAS 17 2005
stated) Adjustment Adjustment (Restated)
HK$'000 HK$'000 HK$'000 HK$'000
Property, plant and
equipment
23,146 - (3,302) 19,844
Prepaid lease payments
- non current portion
- - 3,272 3,272
- current portion
- - 30 30
Investment in securities
- investment securities
984 - - 984
Available-for-sale
investments
- - - -
--------------------------------------------------------
Total effects on assets
24,130 - - 24,130
========================================================
Accumulated losses
(331,993) - - (331,993)
Investment property
revaluation reserve
4,632 - - 4,632
Capital reserve
156,970 - - 156,970
Minority interests
- 531 - 531
-----------------------------------------------------------
Total effects on equity
(170,391) 531 - (169,860)
=========================================================
Minority interests
531 (531) - -
=========================================================
At 1st
April,
HKAS39 HKAS 40 HKFRS 3 2005
Adjustment Adjustment Adjustment (Restated)
HK$'000 HK$'000 HK$'000 HK$'000
Property, plant and
equipment - - - 19,844
Prepaid lease payments
- non current portion
- - - 3,272
- current portion
- - - 30
Investment in securities
- investment securities
(984) - - -
Available-for-sale
investments
984 - - 984
--------------------------------------------------------
Total effects on assets
- - - 24,130
========================================================
Accumulated losses
- 4,632 (95,411) (422,772)
Investment property
revaluation reserve
- (4,632) - -
Capital reserve
- - 95,411 252,381
Minority interests
- - - 531
---------------------------------------------------------
Total effects on equity
- - - (169,860)
==========================================================
Minority interests
- - - -
==========================================================
As a result of the application of HKAS 1 "Presentation of Financial
Statements" and HKAS 27 "Consolidated and Separate Financial Statements",
minority interests amounting to HK$531,000 as at 1st April, 2005 is
presented within equity.
3. TURNOVER AND OTHER REVENUE
Turnover represents the gross proceeds received and receivable derived
from the sales of watches, property rental and provision of programming
service and is summarized as follows:
2006 2005
HK$'000 HK$'000
Turnover
Sales of watches 327,125 249,378
Rental income
Investment properties 964 3,633
Others - 83
964 3,716
Programming service 2,144 2,556
_______ _______
330,233 255,650
Other revenue
Interest income from other than short-term bank deposits
301 104
Interest income from short-term bank deposits 2,633 802
Customer services income and others 9,867 8,163
12,801 9,069
_______ _______
343,034 264,719
======= =======
4. OTHER OPERATING EXPENSES, NET
2006 2005
HK$'000 HK$'000
Impairment for bad and doubtful debts - 1,169
Impairment on properties held for resale - 10
Impairment for slow-moving inventories 16,934 10,280
Reversal of impairment on properties held for resale
(294) -
Reversal of impairment for bad and doubtful debts
- (1,086)
Reversal of trade and other payables - (347)
_______ _______
16,640 10,026
======= =======
5. OTHER (EXPENSES)/INCOME, NET
2006 2005
HK$'000 HK$'000
Impairment loss recognized in respect of goodwill
(1,180) -
Impairment on available-for-sale investments (554) -
Write off of property, plant and equipment (93) (212)
Amortization of goodwill - (461)
Management fee - (6,013)
Impairment for leasehold property - (747)
Surplus/(deficit) arising from valuation of investment properties
728 (3,006)
Loss on disposal of property interests in Dongguan
- (170)
Profit on disposal of leasehold property - 283
Profit on liquidation of a subsidiary 5 -
Final receipt of consideration from disposal of the Lakeview Project
- 21,107
________ _______
(1,094) 10,781
======== =======
6. PROFIT BEFORE TAXATION
Profit before taxation has been arrived at after crediting and charging
the following:
2006 2005
HK$'000 HK$'000
Crediting:
Profit on disposal of property, plant and equipment
- 79
Profit on disposal of leasehold property - 283
Surplus arising from valuation of investment properties
728 -
_______ _______
Charging:
Depreciation and amortization 7,169 5,371
Amortization on goodwill - 461
Loss on disposal of property interest in Dongguan
- 170
Impairment on leasehold property - 747
Deficit arising from valuation of an investment property
- 3,006
Cost of inventories recognized as expenses 217,273 167,442
======= =======
7. EARNINGS PER SHARE
2006 2005
Earnings for the year attributable to equity
holders of the parent and earnings for the purpose
of basic earnings per share HK$5,414,000 HK$4,386,000
============ ============
Average number of ordinary share 333,719,516 333,719,516
============ ============
No disclosure of the diluted earning per share for the year under review
and the corresponding previous year is shown as the issue of potential
ordinary shares during both years from the exercise of the outstanding
share options will be anti-dilutive.
8. COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform with the
current year's presentation.
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