KAM HING INT'L<02307> - Results Announcement
Kam Hing International Holdings Limited announced on 16/09/2005:
(stock code: 02307 )
Year end date: 31/12/2005
Currency: HKD
Auditors' Report: N/A
Interim report reviewed by: Audit Committee
(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 : 760,005 702,640
Profit/(Loss) from Operations : 89,410 85,361
Finance cost : (9,107) (7,045)
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 : 69,933 66,636
% Change over Last Period : +4.9 %
EPS/(LPS)-Basic (in dollars) : 0.1093 0.139
-Diluted (in dollars) : 0.1090 N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : 69,933 66,636
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. The basis of presentation and accounting policies
The unaudited condensed consolidated accounts have been prepared on a
basis consistent with the principal accounting policies adopted in the
2004 annual accounts, except that the group has changed certain of its
accounting policies following the adoption of the new Hong Kong Financial
Reporting Standards ("HKFRSs") and Hong Kong Accounting Standards ("HKASs
") (collectively the "HKFRSs") issued by the Hong Kong Institute of
Certified Public Accountants ("HKICPA"), which are effective for
accounting periods beginning on or after 1 January 2005. Apart from
certain presentational changes by the adoption of new applicable HKFRSs as
set out below, the other new HKFRSs have no material effect on how the
results for the current or prior accounting periods are prepared and
presented.
(a) Lease Prepayments
The adoption of revised HKAS 17 has resulted in a change in the accounting
policy relating to the reclassification of leasehold land and land use
rights from fixed assets to operating leases. In previous periods, owner
-occupied leasehold land and buildings were included in fixed assets and
measured using the cost model at cost less accumulated depreciation and
any impairment losses. In current period, the Group has applied HKAS 17
Leases. Under HKAS 17, the land elements of a lease of land and buildings
are considered separately for the purposes of lease classification, unless
the lease payments cannot be allocated reliably between the land and
buildings elements, in which case, the entire lease is generally treated
as a finance lease. To the extent that the allocation of the lease
payments between the land and buildings elements can be made reliably, the
leasehold interests in land are reclassified to prepaid lease payments
under operating leases, which are carried at cost and amortized over the
lease term on a straight-line basis. This change in accounting policy has
no material effect on the opening balance of the retained profits, no
prior year adjustment is made accordingly.
(b) Financial Instruments
In the current period, the Group has applied HKAS 39 Financial
Instruments: Recognition and Measurement. HKAS 39, which is effective for
annual periods beginning on or after 1 January 2005, generally does not
permit to recognize, derecognize or measure financial assets and
liabilities on a retrospective basis. Under HKAS 39, a financial assets
is derecognized, 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 Group has applied
the revised accounting policy prospectively for transfers of financial
assets on or after 1 January 2005.
In accordance with HKAS 39, the Group's discounted bills with recourse
have now been accounted for as collateralized bank advances prospectively
as at 30 June 2005 as the financial assets derecognition conditions as
stipulated in HKAS 39 have not been fulfilled, and the balance as at 31
December 2004, which were previously treated as contingent liabilities
prior to 1 January 2005, have not been restated.
(c) Share-based Payments
In the current period, the Group has applied HKFRS 2 Share-based Payments
which requires an expense to be recognized 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 HKFRS 2 on the Group is in
relation to the expensing of the fair value of share options of the
Company determined at the date of grant of the share options over the
vesting period. Prior to the application of HKFRS 2, the Group did not
recognize the financial effect of these share options until they were
exercised.
Following the adoption of HKFRS 2, the fair value of share options at
grant date is charged to the consolidated profit and loss account of
relevant accounting periods. As a transitional provision, HKFRS 2 has
been applied retrospectively for all share options granted after 7
November 2002 and had not yet vested upon 1 January 2005. The adoption of
HKFRS 2 resulted in a decrease in the opening balance of the retained
profits as at 1 January 2005 by HK$1 million since the grant of the share
option in October 2004.
(i) The effect of changes in the above accounting policies on the
consolidated profit and loss account is as follows:
HKAS 17 HKFRS 2 Total
Increase/ (decrease) in profit HK$'000 HK$'000 HK$'000
For the six months ended 30 June 2005
(unaudited)
Increase in employee share option
benefits - (2,000) (2,000)
Decrease in depreciation 224 - 224
Increase in amortization of lease
prepayment (224) - (224)
------- ------- --------
Total decrease in profit - (2,000) (2,000)
------- ------- --------
Decrease in basic earnings per
share (HK cents) - (0.31) (0.31)
------- ------- --------
for the six months ended 30 June 2004
(unaudited)
Decrease in depreciation 213 - -
Increase in amortization of lease
prepayment (213) - -
------- ------- --------
No change in profit - - -
======= ======= ========
(ii) The effect of changes in the above accounting policies on the
consolidated balance sheet is as follows:
HKAS 17 HKAS 39 HKFRS 2 Total
HK$'000 HK$'000 HK$'000 HK$'000
At 1 Jan 2005 (audited and restated)
Decrease in fixed assets (20,262)- - (20,262)
Increase in prepaid lease premiums
for land 20,262 - - 20,262
Increase in employee share-based
compensation reserve - - 1,000 1,000
Retained profits - - (1,000) (1,000)
At 30 June 2005 (unaudited)
Decrease in fixed assets (20,038)- - (20,038)
Increase in prepaid lease premiums
for land 20,038 - - 20,038
Increase in bills receivable - 175,014 - 175,014
Increase in discounted bills
with recourse - (175,014)- (175,014)
Increase in employee share-based
compensation reserve - - 3,000 3,000
Retained profits - - (3,000) (3,000)
The condensed consolidated accounts have been prepared in accordance with
the HKAS 34 "Interim financial reports" issued by the HKICPA and the
disclosure requirements of the Listing Rules on the Stock Exchange.
2. Turnover and revenue
Turnover represents the net invoiced value of goods sold, after allowances
for returns and trade discounts, and knitting and dyeing services
rendered. All significant intra-group transactions have been eliminated
on combination.
An analysis of the Group's turnover and other revenue is as follows:
Six months Six months
ended ended
30 June 30 June
2005 2004
HK$'000 HK$'000
(Unaudited) (Unaudited)
Turnover
Sale of goods 760,005 698,950
Fee income from knitting and dyeing
services - 3,690
---------- -----------
760,005 702,640
Other revenue
Fee income from freight handling
services 2,806 1,642
Interest income 166 93
Others 866 891
---------- -----------
3,838 2,626
---------- -----------
763,843 705,266
========== ===========
3. Profit from operating activities
The Group's profit from operating activities is arrived at after charging
/(crediting):
Six months Six months
ended ended
30 June 30 June
2005 2004
HK$'000 HK$'000
(Unaudited) (Unaudited and
restated)
Cost of inventories sold 571,012 533,985
Cost of services provided 2,688 4,220
Auditors' remuneration 470 782
Research and development costs 1,528 1,060
Depreciation for fixed assets 25,814 15,126
Amortisation for prepaid land premiums 224 213
Staff costs (including directors'
remuneration):
Wages and salaries 42,565 31,452
Pension scheme contributions 1,421 1,817
--------- --------
Total staff costs 43,986 33,269
Employee share option expenses 2,000 -
Minimum lease payments under operating
leases in respect of buildings 445 249
Loss on disposal of fixed assets - 8
Write back of provision for doubtful
debts (147) (107)
Write back of provision against other
receivables - (200)
Exchange gains, net (1,078) (2,118)
========== ==========
4. Finance costs
Six months Six months
ended ended
30 June 30 June
2005 2004
HK$'000 HK$'000
(Unaudited) (Unaudited)
Interest on bank loans and other loans
wholly repayable within five years 7,675 5,937
Interest on finance leases 1,432 1,108
------------ -----------
9,107 7,045
============ ===========
5. Tax
Six months Six months
ended ended
30 June 30 June
2005 2004
HK$'000 HK$'000
(Unaudited) (Unaudited)
Current tax - Hong Kong
Charge for the period 4,760 9,141
(Over-provision) in respect of
prior periods (660) -
Current tax - Elsewhere
Charge for the period 6,149 3,015
Under-provision/ (over-provision) in
respect of prior periods 121 (476)
--------- ---------
Total tax charge for the period 10,370 11,680
========= =========
6. Interim Dividend
The Board has resolved not to declare any interim dividend for the period
(2004: nil)
7. Earnings per share
The calculation of basic earnings per share is based on the net profit
from ordinary activities attributable to shareholders for the period of
HK$69,933,000 (2004: HK$66,636,000) and the weighted average of 640,000,
000 (2004: 480,000,000) shares in issue during the period.
The calculation of diluted earnings per share for the period ended 30 June
2005 is based on the net profit attributable to shareholders for the
period of HK$69,933,000 and the weighted average of 641,324,000 shares in
issue during the period, comprising 640,000,000 shares used in the basic
earnings per share calculation and the weighted average of 1,324,000
shares assumed to have been issued on the deemed exercise of all share
options outstanding during the period.
There were no dilutive potential ordinary shares in existence for the
period ended 30 June 2004 and, accordingly, no diluted earnings per share
has been presented.
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