EURO-ASIA AGRIC<00932> - Results Announcement (Summary)
Euro-Asia Agricultural (Holdings) Company Limited announced on 12/9/2002:
(stock code: 932)
Year end date: 31/12/2002
Currency: RMB
Auditors' Report: N/A
Review of Interim Report by: Audit Committee
(Unaudited)
(Unaudited) Last
Current Corresponding
Period Period
from 1/1/2002 from 1/1/2001
to 30/6/2002 to 30/6/2001
(As Restated)
('000) ('000)
Turnover : 795,934 507,119
Profit/(Loss) from Operations : 300,639 267,505
Finance cost : (10,014) -
Share of Profit/(Loss) of Associates : - -
Share of Profit/(Loss) of
Jointly Controlled Entities : - -
Profit/(Loss) after Tax & MI : 290,625 267,505
% Change over Last Period : +8.6%
EPS/(LPS)-Basic : 17.51 cents 22.29 cents
-Diluted : N/A N/A
Extraordinary (ETD) Gain/(Loss) : - -
Profit/(Loss) after ETD Items : 290,625 267,505
Interim Dividend per Share : RMB2.12 cents N/A
(HK 2 cents)
(Specify if with other options) : N/A N/A
Record Date for Interim Dividend : 4:00 p.m. 30/9/2002
Payable Date : 15/11/2002
B/C Dates for (-) General Meeting : N/A
Other Distribution for Current Period : N/A
B/C Dates for Other Distribution : N/A
Remarks:
1. Basis of preparation and accounting policies
These unaudited consolidated condensed accounts are prepared in accordance
with Hong Kong Statement of Standard Accounting Practice ("SSAP") 25,
Interim Financial Reporting, issued by the Hong Kong Society of
Accountants.
These condensed accounts should be read in conjunction with the 2001
annual financial statements.
(a) Change of accounting policies
The accounting policies and methods of computation used in the
preparation of these condensed accounts are consistent with those used in
the annual accounts for the year ended 31 December 2001 except that the
Group has changed certain of its accounting policies following its
adoption of the following Statements of Standard Accounting Practice
(SSAPs) issued by the Hong Kong Society of Accountants which are effective
for accounting periods commencing on or after 1st January 2002:
SSAP 1 (revised): Presentation of financial statements
SSAP 11 (revised): Foreign currency translation
SSAP 15 (revised): Cash flow statements
SSAP 25 (revised): Interim financial reporting
SSAP 34: Employee benefits
The changes to the Group's accounting policies and the effect of adopting
these new policies are set out below:
(1) SSAP 11 (revised): Foreign currency translation
The balance sheet of subsidiaries expressed in foreign currencies
are translated at the rates of exchange ruling at the balance sheet date
whilst the profit and loss is translated at an average rate. Exchange
differences are dealt with as a movement in reserves.
In prior periods, the profit and loss of foreign enterprises was
translated at closing rate. This is a change in accounting policy,
however, the translation of the profit and loss of foreign enterprises in
prior periods has not been restated as the effect of this change is not
material to the current and prior periods.
(2) SSAP 34: Employee benefits
(i) Employee leave entitlements
Employee entitlements to annual leave and long service leave are
recognised when they accrue to employees. A provision is made for the
estimated liability for annual leave and long-service leave as a result of
services rendered by employees up to the balance sheet date.
Employee entitlements to sick leave and maternity or paternity leave are
not recognised until the time of leave.
In prior periods, no provision was made for employee annual and long
service leave entitlements. The adoption of SSAP 34 has meant that
adjustments on provision for employee annual and long service leave
entitlements have been made retrospectively so that the comparatives
presented have been restated.
(ii) Pension obligations
The Group contributes to a defined contribution retirement scheme which is
available to all employees. Contributions to the scheme by the Group and
employees are calculated as a percentage of employees' basic salaries. The
retirement benefit scheme cost charged to the profit and loss account
represents contributions payable by the company to the fund.
The Group's contributions to the defined contribution retirement scheme
are expensed as incurred and are not reduced by contributions forfeited by
those employees who leave the scheme prior to vesting fully in the
contributions. When the contributions do not fall due wholly within twelve
months after the end of period in which the employees render the related
service, the contributions should be discounted using the discount rate
determined by reference to market yields at the balance sheet date on high
quality investments.
The assets of the scheme are held separately from those of the Group in an
independently administered fund.
(iii) Equity compensation benefits
Share options are granted to directors and to employees at the discretion
of the directors. If the options are granted at the market price of the
shares on the date of the grant and are exercisable at that price, no
compensation cost is recognised. If the options are granted at a discount
on the market price, a compensation cost is recognised in the profit and
loss account based on that discount. When the options are exercised, the
proceeds received net of any transaction costs are credited to share
capital (nominal value) and share premium.
There is no material impact to the financial results and the financial
position of the Group by the adoption of SSAP 34.
(b) Grant of concessionary treatment for agricultural tax
As mentioned in Remark 3(c) below, the Group received a notice dated 12
December 2001 from the Shenyang Yu Hong District Finance Bureau that a
concessionary treatment in respect of agricultural tax was granted to the
Group for a tentative period of 3 years with effect from 1 January 2001 to
31 December 2003.
Taking into consideration that this concessionary treatment was
retrospectively effective since 1 January 2001, the unaudited consolidated
net profit for the six months ended 30 June 2001 has been revised from
RMB217 million to RMB267 million, as a result of the decrease of
agricultural tax of about RMB50 million, based on the turnover for the six
months ended 30 June 2001 of RMB507 million as reported in the interim
report of the Company published on 7 September 2001.
2. An analysis of turnover and profit from continuing operations:
(a) By Business Segments
Six months ended Six months ended
30 June 2002 30 June 2001
--------------------------------------------------------------------------
Sales of Sales of Sales of Sales of
seedlings trading self-grown seedlings
and flowers vegetables vegetables Total and flowers
--------------------------------------------------------------------------
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Turnover
657,801 126,532 11,601 795,934 507,119
Agricultural tax
(763) - (5) (768) (638)
--------------------------------------------------------------------------
Net sales
657,038 126,532 11,596 795,166 506,481
Cost of sales
(335,006) (102,167) (8,337) (445,510) (219,262)
--------------------------------------------------------------------------
Gross profit
322,032 24,365 3,259 349,656 287,219
Unallocated items:
Other revenues 1,984 103
Research and development expenses (3,450) -
Distribution expenses (20,819) (12,812)
General and administrative expenses (26,732) (7,005)
--------------------------
Operating profit 300,639 267,505
Finance costs (10,014) -
--------------------------
Profit before taxation 290,625 267,505
Taxation - -
--------------------------
Profit attributable to shareholders 290,625 267,505
==========================
During the six months ended 30 June 2002, there were no sales or other
transactions between the business segments.
(b) By geographical segments
(1) Six months ended 30 June 2002
Japan The Netherlands The PRC Total
RMB'000 RMB'000 RMB'000 RMB'000
Turnover
221,302 263,637 310,995 795,934
Agricultural tax
(66) (175) (527) (768)
------------------------------------------------------------------
Net sales
221,236 263,462 310,468 795,166
Cost of sales
(137,841) (76,646) (231,023) (445,510)
------------------------------------------------------------------
Gross profit
83,395 186,816 79,445 349,656
Unallocated items:
Other revenues 1,984
Research and development expenses (3,450)
Distribution expenses (20,819)
General and administrative expenses (26,732)
-----------
Operating profit 300,639
Finance costs (10,014)
-----------
Profit before taxation 290,625
Taxation -
----------
Profit attributable to shareholders 290,625
==========
(2) Six months ended 30 June 2001
Japan Korea The Netherlands The PRC Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Turnover
61,512 56,897 180,541 208,169 507,119
Agricultural tax
(47) (40) (176) (375) (638)
------------------------------------------------------------------------
Net sales
61,465 56,857 180,365 207,794 506,481
Cost of sales
(13,630) (16,292) (60,415) (128,925) (219,262)
-------------------------------------------------------------------------
Gross profit
47,835 40,565 119,950 78,869 287,219
Unallocated items:
Other revenues 103
Research and development expenses -
Distribution expenses (12,812)
General and administrative expenses (7,005)
---------
Operating profit 267,505
Finance costs -
--------
Profit before taxation 267,505
--------
Taxation -
--------
Profit attributable to shareholders 267,505
=======
(c) The Group's operations are primarily performed in the PRC, where
substantially all of its consolidated assets and liabilities are located.
Each of the business activities of trading vegetables and self-grown
vegetables accounted for less than 10% of the Group's consolidated assets
and liabilities. Therefore, an analysis of consolidated assets and
liabilities by business activity is not considered necessary.
3. Taxation
The Group is subject to income taxes on an entity basis on income arising
in or derived from the tax jurisdiction in which they operate.
(a) The Company is exempted from taxation in Bermuda until 28 March 2016.
No provision for Hong Kong profits tax has been made as there are no
estimated assessable profits (2001: Nil) generated from the operations in
Hong Kong during the year.
(b) Enterprise Income Tax ("EIT")
In accordance with the relevant tax rules and regulations applicable to
foreign investment enterprises in the PRC, Shenyang Euro-Asia Agriculture
Development Co., Ltd.("SEAA"), being a wholly foreign-owned enterprise
established by the Group in the PRC with an operating period of more than
ten years, is entitled to full exemption from state income tax and local
income tax for two years and five years respectively commencing from the
first profit-making year after offsetting prior year's losses (being the
year ended 31 December 2001), followed by a 50% reduction of both state
income tax and local income tax for the next three years. The rates of
state income tax and local income tax applicable to SEAA are 30% and 3%
respectively.
(c) Agricultural tax
Before 2001, the agricultural tax liability was calculated at a rate of
10% on the sales revenue of the floricultural produce sold by the Group.
Under a notice dated 12 December 2001 issued by Shenyang Yu Hong District
Finance Bureau, a special concessionary treatment was granted to the Group
under which the agricultural tax was calculated at an annual rate of
RMB5,000 and RMB200 per mu of farmland occupied by the Group for the
growth of flowers and vegetables respectively. The concessionary
treatment was granted by the local district finance bureau for a tentative
period of 3 years with effect from 1 January 2001 to 31 December 2003.
Taking into consideration that this concessionary treatment was
retrospectively effective since 1 January 2001, the unaudited consolidated
net profit for the six months ended 30 June 2001 has been revised from
RMB217 million to RMB267 million, as a result of the decrease of
agricultural tax of about RMB50 million, based on the turnover for the six
months ended 30 June 2001 of RMB507 million as reported in the interim
report of the Company published on 7 September 2001.
(d) Value-added tax
Value-added tax was calculated at a rate of 4% of the total trading sales
of vegetables.
(e) Deferred taxation
There was no material deferred taxation for the Group and the Company as
at 30 June 2002 or for the Group for the period then ended (2001: Nil).
(f) Taxation payable represents PRC agricultural tax and value-added tax
payable as at 30 June 2002.
4. Dividends
(a) At a meeting held on 12 September 2002, the directors declared an
interim dividend of HK$0.02 (equivalent to RMB0.0212) (2001: Nil) per
share for the year ending 31 December 2002. This proposed dividend is not
reflected as a dividend payable in the condensed accounts, but will be
reflected as an appropriation of retained earnings for the year ending 31
December 2002.
(b) At a meeting held on 10 April 2002, the directors proposed a final
dividend of HK$0.0681 (equivalent to RMB0.0722) per share for the year
ended 31 December 2001, which was paid on 31 May 2002 and has been
reflected as an appropriation of retained earnings for the six months
ended 30 June 2002.
5. Calculation for Earning Per Share
Basic earnings per share is calculated based on the profit attributable to
shareholders of approximately RMB290,625,000 and on the weighted average
number of 1,660,000,000 shares in issue during the six months ended 30
June 2002.
The comparative earnings per share is calculated based on the profit
attributable to shareholders of RMB267,505,000 and the 1,200,000,000
shares deemed to be in issue throughout the six months ended 30 June 2001.
As explained in Remark 3(c), due to the concessionary treatment for
agricultural tax, the profit figure is different from previously reported
in the interim report of the Company published on 7 September 2001.
There were no potential diluted shares in existence for the six months
ended 30 June 2002 and 2001; therefore, no diluted earnings per share is
presented.
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