SHANGHAI LAND<00067> - Results Announcement (Summary)
Shanghai Land Holdings Limited (Receivers Appointed) announced on
27/10/2003:
(stock code: 00067 )
Year end date: 30/06/2003
Currency: HKD
Auditors' Report: Qualified
(Audited )
(Audited ) Last
Current Corresponding
Period Period
from 01/07/2002 from 01/07/2001
to 30/06/2003 to 30/06/2002
Note ('000 ) ('000 )
Turnover : 15,106 11,954
Profit/(Loss) from Operations : (815) 20,875
Finance cost : (2,716) N/A
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 : (261,313) (46,252)
% Change over Last Period : N/A %
EPS/(LPS)-Basic (in dollars) : (0.0856) (0.0152)
-Diluted (in dollars) : N/A N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : (261,313) (46,252)
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. TURNOVER AND SEGMENTAL INFORMATION
Turnover represents income from hotel investment and rental income from
investment properties earned during the year and is analysed as follows:
Business segments
Business segment analysis is chosen as the primary reporting format as the
Company and its subsidiaries' (collectively the "Group") results were
principally affected by property investment, hotel investment and property
development activities during the current year and property investment and
wireless technology investment activities in the previous year.
Property
Hotel investment Property investment development
2003 2002 2003 2002 2003 2002
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Turnover:
Continuing
Operations
13,290 - 1,816 - - -
Discontinued
Operations
- - - 11,954 - -
========================================================================
Segment results
3,058 - 1,445 8,655 - -
========================================================================
Loss on disposal of subsidiaries
- - - (40,297)* - -
Impairment losses on non-trading securities
- - - - - -
Deficit on revaluation of investment and hotel properties
(111,500)- (12,360) - - -
Impairment losses on property under development
- - - - (136,925) -
Negative goodwill recognized as income
3,171 - 309 - - -
Taxation
- - (477) (564) - -
Wireless technology investment Consolidated
2003 2002 2003 2002
HK$'000 HK$'000 HK$'000 HK$'000
Turnover:
Continuing
Operations - - 15,106 -
Discontinued
Operations - - - 11,954
========================================================
Segment results
(181) (19,478) 4,322 (10,823)
==============================
Interest income 26,737 50,486
Unallocated administrative expenses net of other revenue
(31,874) (18,788)
========================
Profit/(loss) from:
Continuing
Operations (634) 31,698
Discontinued
Operations (181) (10,823)
Loss on disposal of subsidiaries
- - - (40,297)
Impairment losses on non-trading securities
- (26,266)* - (26,266)
Deficit on revaluation of investment and hotel properties
- - (123,860) -
Impairment losses on property under development
- - (136,925) -
Negative goodwill recognized as income
- - 3,480 -
Finance costs (2,716) -
Taxation - - (477) (564)
------------------------
Loss attributable to shareholders (261,313) (46,252)
========================
Other information:
Depreciation 1,485 1,195
========================
* Discontinued Operations
2. TAXATION
The Group
2003 2002
HK$ '000 HK$ '000
Hong Kong - (564)
Elsewhere in the PRC (477) -
(477) (564)
No provision for Hong Kong profits tax has been made as the Group did not
have any assessable profits for the current year. Hong Kong profits tax
in 2002 was provided at the rate of 16% on the estimated assessable
profits arising in Hong Kong for that year. Taxes on profits assessable
elsewhere have been calculated at the rates of tax prevailing in the
countries in which the Group operates, based on existing legislation,
interpretations and practices in respect thereof.
3. LOSS PER SHARE
The calculation of basic loss per share is based on the loss attributable
to shareholders for the year of HK$261,313,000 (2002: HK$46,252,000) and
on 3,051,438,765 (2002: 3,051,438,765) ordinary shares in issue during the
year.
No diluted loss per share is presented as the potential issue of ordinary
shares in connection with the Company's share options did not give rise to
an increase in loss per share and therefore had no dilutive effect on the
calculation of the diluted loss per share.
4. SUMMARY OF AUDITORS' REPORT
BASIS OF OPINION
The Company's auditors planned their audit so as to obtain all the
information and explanations which they considered necessary in order to
provide them with sufficient evidence to give reasonable assurance as to
whether the financial statements are free from material misstatement.
However, the evidence available to them was limited as set out below:
1. Disclaimers of liabilities by the Joint and Several Receivers of the
Company (the "Receivers") and the Board of Directors (the "Board")
The Receivers and the Board were unable to give an unqualified
representation that all transactions affecting the Group during the year
have been included in the financial statements and also as to whether the
financial statements present a true and fair view of the Group's
operations and the cash flows for the year ended 30 June 2003 and
financial position as at 30 June 2003. Further, the Receivers disclaim
any liabilities in respect of the financial statements of the Group in
relation to the affairs of the Group for the year ended 30 June 2003. The
Board at a meeting on 27 October 2003 has resolved to disclaim any
liabilities in respect of the financial statements of the Group for the
year ended 30 June 2003. As a consequence, the auditors have been unable
to carry out auditing procedures necessary to obtain adequate assurance
regarding the completeness and accuracy of the assets, liabilities, income
and expenses, the cash flow as well as commitments and contingent
liabilities, the related party transactions and the disclosures appearing
in the financial statements.
2. Accounting records and documents of subsidiaries
a. The accounting records and relevant documents of Shanghai Hongxin
Real Estate Development Company Limited ("Hongxin") and certain original
documents of Shanghai Yihe Longbai Hotel Limited ("Longbai") are kept by
Shanghai Nongkai Development Group Limited ("Shanghai Nongkai"). The
Receivers have only had limited access to these records and/or documents.
As a consequence, they have been unable to ascertain whether the following
balances relating to Hongxin and Longbai have been properly accounted for
in the financial statements:
- Negative goodwill of HK$3,171,000 recognised as income;
- Hotel properties of HK$361,000,000;
- Property under development of HK$198,000,000;
- Negative goodwill of HK$101,469,000;
- Deposits, prepayments and other receivables of HK$637,943,000;
- Short term loan receivable of HK$283,500,000;
- Cash and bank balances of HK$78,820,000;
- Accrued expenses and other payables of HK$10,367,000; and
- Purported loans of HK$614,250,000.
b. Bowyer Profits Limited ("Bowyer") appointed Shanghai Nongkai on 31
December 2002 as manager to act on its behalf for all matters relating to
the leasing of its investment properties and to act as trustee to receive
income and to make payments of expenses related thereto. However, the
Receivers have not yet been able to obtain sufficient information and
documents from Shanghai Nongkai to ascertain whether the following
balances, relating to Bowyer, have been properly accounted for in the
financial statements:
- Turnover of HK$1,816,000;
- Cash and bank balances of HK$3,446,000; and
- Tax payable of HK$1,296,000.
There were no other satisfactory auditing procedures that the auditors
could adopt to ascertain whether the balances referred to in paragraphs 2a
and 2b above have been properly accounted for and are fairly stated in the
financial statements. As a consequence, the auditors have been unable to
ascertain whether cash and bank balances of HK$82,266,000 have been
properly classified as cash and cash equivalents in the consolidated cash
flow statement.
3. Other payable
King Success Holdings Limtied ("King Success") has withheld a sum of
HK$10,000,000 as retention money for the profit guaranteed by the vendor
of two subsidiaries acquired by King Success. However, in the absence of
direct confirmation and other relevant financial information, the auditors
have been unable to ascertain whether this amount has been properly
accounted for in the financial statements.
Any adjustments arising in relation to the matters referred to in
paragraphs 1 to 3 above would have a consequential effect on the loss and
cash flows of the Group for the year ended 30 June 2003 and the net assets
of the Group and of the Company as at that date.
4. Amounts due from subsidiaries
The Receivers have only had limited access to the accounting records and
supporting documents of the subsidiaries as referred to in paragraph 2
above and as a consequence, they have been unable to ascertain whether the
amounts due to the Company by these subsidiaries of HK$1,069,446,000 are
fully recoverable. In addition, in view of the significant net
liabilities of Profitex Investments Limited ("Profitex"), the Receivers
have also been unable to ascertain whether the net amount due from
Profitex of HK$22,146,000 is fully recoverable. As a consequence, the
auditors have been unable to satisfy themselves as to whether these
amounts totaling HK$1,091,592,000 are fairly stated in the financial
statements. Any adjustments to these amounts might have a consequential
effect on the profit of the Company for the year ended 30 June 2003 and
the net assets of the Company as at that date.
In forming the auditors' opinion, the auditors also evaluated the overall
adequacy of the presentation of information in the financial statements.
The auditors believe that their audit provides a reasonable basis for
their opinion.
Fundamental uncertainty relating to the inclusion of interests in
subsidiaries to the Group
The Receivers have applied to replace the board of directors and legal
representatives of Hongxin and Longbai and have also lodged police reports
against the legal representatives. The Receivers' PRC legal advisors are
of the opinion that the Receivers, acting as the shareholder of Hongxin
and Longbai, should soon be in a position to exercise the sharholders'
rights to secure control of the management and operations of Hongxin and
Longbai upon completion of the registration procedures required by the
Shanghai AIC. Should the Receivers be unable to gain control of the
management and operations of Hongxin and Longbai, the financial statements
of these two subsidiaries might have to be excluded from the consolidated
financial statements. The auditors consider that the fundamental
uncertainty has been adequately disclosed in the financial statements and
their opinion is not qualified in this report.
Fundamental uncertainty relating to the going concern of certain
subsidiaries
In forming their opinion, the auditors have considered the adequacy of
disclosures made herein which explain the adoption of the going concern
basis in consolidating Hongxin and Longbai. Hongxin's property under
development and Longbai's hotel properties were allegedly secured against
loans purportedly advanced to them. According to the information obtained
by the Receivers, funds largely equivalent to the purported loans were
then deposited and/or advanced to two PRC entities. However, should these
receivables become irrecoverable and the proceeds from realisation of the
above properties be insufficient to cover the purported loans and
outstanding interest, Hongxin and Longbai might have a going concern
problem.
It is considered appropriate to consolidate Hongxin and Longbai on a going
concern basis. The financial statements do not include any adjustments
that would result should the going concern basis for Hongxin and Longbai
be inappropriate. However, should the going concern basis be
inappropriate for Hongxin and Longbai, adjustments would have to be made
to reclassify their non-current assets as current assets, non-current
liabilities as current liabilities, to restate the assets to their
recoverable amounts and to provide for any further liabilities that might
arise. The auditors consider that the fundamental uncertainty has been
adequately disclosed in the financial statements and their opinion is not
qualified in this respect.
Qualified opinion: disclaimer on view given by the financial statements
Because of the significance of the possible effect of the limitations in
evidence available to the auditors on matters specified in the "Basis of
opinion" section of their report, the auditors are unable to form an
opinion as to whether the financial statements give a true and fair view
of the state of affairs of the Group and of the Company as at 30 June 2003
and of the loss and cash flows of the Group for the year then ended and as
to whether the financial statements have been properly prepared in
accordance with the Hong Kong Companies Ordinance.
In respect alone of the limitations on the auditors' work relating to
matters specified in the "Basis of opinion" section:
- they have not obtained all the information and explanations that
they considered necessary for the purpose of our audit; and
- they were unable to determine whether proper books of account had
been kept.
For more details, please refer to the press announcement today.
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