SHANGHAI LAND<00067> - Results Announcement (Summary)
Shanghai Land Holdings Limited (Receivers Appointed) announced on
23/3/2004:
(stock code: 00067 )
Year end date: 30/6/2004
Currency: HKD
Auditors' Report: N/A
Interim report reviewed by: Auditors
(Unaudited and
Restated)
(Unaudited ) Last
Current Corresponding
Period Period
from 1/7/2003 from 1/7/2002
to 31/12/2003 to 31/12/2002
Note ('000 ) ('000 )
Turnover : 26,865 744
Profit/(Loss) from Operations : (29,342) 2,490
Finance cost : (10,326) 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 : (40,057) 2,281
% Change over Last Period : N/A %
EPS/(LPS)-Basic (in dollars) : (0.0131) 0.0007
-Diluted (in dollars) : N/A N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : (40,057) 2,281
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. Basis of preparation of the interim financial report and principal
accounting policies
a. On 7 June 2003, the High Court of Hong Kong appointed Mr. Stephen
Liu Yiu Keung and Mr. Yeo Boon Ann, of Ernst and Young Transactions
Limited, as the joint and several receivers (the "Receivers") of Shanghai
Land Holdings Limited (Receivers Appointed) (the "Company"). The
appointment requires the Receivers to take all appropriate actions to
preserve the assets of the Company, to carry on the businesses of the
Company and to do all other things as reasonably necessary for the purpose
of protecting the value of the Company's assets and businesses.
On 16 December 2003, the Shanghai Administrative Bureau for
Industry and Commerce ("Shanghai AIC") endorsed:
" the change of legal representative for Shanghai Yihe Longbai Hotel
Limited ("Longbai"), an indirect wholly owned subsidiary of the Company,
to Mr. Yeo Boon Ann; and
" the appointment of the Receivers and Mr. Laurence Yegene Ip as
Longbai's directors.
Subsequent to the balance sheet date on 15 January 2004, the
Shanghai AIC further endorsed:
" the change of legal representative for Shanghai Hongxin Real
Estate Development Company Limited ("Hongxin"), an indirect wholly owned
subsidiary of the Company, to Mr. Yeo Boon Ann; and
" the appointment of the Receivers and Mr. Laurence Yegene Ip as
Hongxin's directors.
The Receivers have taken all reasonable steps and have used their best
endeavours to prepare the interim financial report of the Company and its
subsidiaries (collectively the "Group") for the six months ended 31
December 2003.
Despite their efforts in ascertaining the affairs of the Group, the
Receivers have only had limited access to the books and records of Hongxin
and certain original documents of Longbai are not available. The
management accounts of Hongxin as at 30 June 2003 were used in the
preparation of the interim financial report because Hongxin's management
accounts for the period from 1 July 2003 to 31 December 2003 are not
available as the former legal representative of Hongxin has refused to
surrender the relevant books and records.
In addition, Bowyer Profits Limited ("Bowyer"), an indirect wholly owned
subsidiary of the Company, appointed Shanghai Nongkai Development Group
Limited ("Shanghai Nongkai") as manager to act on its behalf for all
matters relating to the leasing of its investment properties in Jun Ling
Plaza and to act as trustee to receive income and to make payments of
expenses related thereto. Shanghai Nongkai was supposed to prepare
monthly financial reports in respect of the leasing status and cash
position of Bowyer's investment properties in Jun Ling Plaza. However,
the Receivers have not yet received sufficient information or documents
from Shanghai Nongkai to ascertain whether Bowyer's transactions have been
properly accounted for in the interim financial report.
In light of the above, the Receivers are unable to give an unqualified
representation that all transactions affecting the Group during the six
months ended 31 December 2003 have been included in the interim financial
report and also as to whether the interim financial report presents a true
and fair view of the Group's operations and cash flows for the six months
ended 31 December 2003 and the Group's financial position as at that date.
The Receivers therefore disclaim any liabilities in respect of the
interim financial report of the Group in relation to the affairs of the
Group for the six months ended 31 December 2003.
The board of directors of the Company (the "Board") has relied on the
Receivers to carry on the business of the Company and to do all other
things as reasonably necessary for the purpose of protecting the value of
the Company's assets and its businesses. In view of the limitations on
the information accessed by the Receivers mentioned above, the Board has
not been able to give an unqualified representation that all transactions
affecting the Group during the six months ended 31 December 2003 have been
included and that the interim financial report presents a true and fair
view of the Group's operations and cash flows for the six months ended 31
December 2003 and the financial position of the Group as at that date.
The Board therefore disclaims any liabilities in respect of the interim
financial report of the Group in relation to the affairs of the Group for
the six months ended 31 December 2003.
b. The interim financial report is unaudited, but has been reviewed
by Nexia Charles Mar Fan & Co. ("NCMF") in accordance with Statement of
Auditing Standards 700 "Engagements to review interim financial reports"
issued by the Hong Kong Society of Accountants ("HKSA").
The interim financial report has been prepared in accordance with the
requirements of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited, including compliance with Statement of
Standard Accounting Practice ("SSAP") 25, "Interim financial reporting"
issued by the HKSA.
The financial information relating to the financial year ended 30 June
2003 included in this interim financial report does not constitute the
Company's statutory financial statements for that financial year but is
derived from those financial statements. Statutory financial statements
for the year ended 30 June 2003 are available from the Company's
registered office. The auditors had expressed a disclaimer opinion on
those financial statements in their report dated 27 October 2003.
The accounting policies and methods of computation adopted are consistent
with those followed in the preparation of the Group's audited financial
statements for the year ended 30 June 2003, except for the adoption of
SSAP 12 (Revised) " Income taxes" which became effective in the current
interim period.
SSAP 12 (Revised) principally prescribes the accounting treatment and
disclosures for deferred taxation. In prior years, deferred taxation is
provided for using the income statement liability method on all
significant timing differences to the extent it is probable that the
liability will crystallise in the foreseeable future. A deferred tax
asset is not recognised until its realisation is assured beyond reasonable
doubt. SSAP 12 (Revised) requires the adoption of the balance sheet
liability method, whereby deferred taxation is recognised in respect of
all temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases
used in the computation of taxable profit, with limited exceptions. In
the absence of any specific transitional requirements in SSAP 12
(Revised), the new accounting policy has been applied retrospectively.
The change in accounting policy has resulted in the following:
Balances per previous SSAP 12 Balances per SSAP 12 (Revised)
31 Dec 2003 30 June 2003 31 Dec 2003 30 June 2003
HK$'000 HK$'000 HK$'000 HK$'000
Deferred tax liabilities
- - 99,623 99,491
Negative goodwill
112,396 114,136 - -
As a consequence, the consolidated loss attributable to the shareholders
for the six months ended 31 December 2003 has been increased by
HK$1,872,000 and the consolidated profit attributable to the shareholders
for the six months ended 31 December 2002 has been decreased by HK$7,000,
and the consolidated accumulated losses at 1 July 2003 have been reduced
by HK$14,645,000, as detailed in the condensed consolidated statement of
changes in equity in the interim financial report. There was no effect on
the consolidated accumulated losses as at 1 July 2002.
As the Receivers have not been able to ascertain whether certain balances
relating to Hongxin, Longbai and Bowyer have been properly accounted for
in the consolidated balance sheet as at 30 June 2003, they are unable to
ascertain the correctness and completeness of the above adjustments
arising from the adoption of SSAP 12 (Revised).
2. Analysis of turnover
The Group is principally engaged in property investment and hotel
investment.
Business segments
Business segment analysis is chosen as the primary reporting format as the
Group's results were principally affected by hotel investment, property
investment and property development activities during the six months ended
31 December 2003 and property investment and wireless technology
investment activities during the six months ended 31 December 2002.
Six months ended 31 December
Hotel Property Property
investment investment development
2003 2002 2003 2002 2003 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited (Unaudited) (Unaudited)
and restated)
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Turnover
25,921 - 944 744 - -
==========================================================================
Segment results
8,789 - 780 582 - -
==========================================================================
Amortisation of goodwill
- - - (7) - -
Taxation
(132) - (257) (202) - -
Six months ended 31 December
Wireless technology investment Consolidated
2003 2002 2003 2002
(Unaudited) (Unaudited and restated) (Unaudited) (Unaudited and
restated)
HK$'000 HK$'000 HK$'000 HK$'000
Turnover
- - 26,865 744
==========================================================================
Segment results
- - 9,569 582
=====================================
Interest income 6,266 17,153
Management fee income - 166
Unallocated administrative expenses net of other revenue
(45,177) (15,411)
-------------------------
Profit/(loss) from operations (29,342) 2,490
Amortisation of goodwill
- - - (7)
Finance costs (10,326) -
-------------------------
Profit/(loss) from ordinary activities before taxation
(39,668) 2,483
Taxation
- - (389) (202)
-------------------------
Profit/(loss) attributable to shareholders (40,057) 2,281
========================
No inter-segment sales and transfers were transacted during the current
and prior interim periods.
The Group disposed of all its wireless technology companies on 28 March
2003 and since then ceased its wireless technology investment activity.
Geographical segments
No geographical analysis is provided as the hotel investment, property
investment and property development activities during the six months ended
31 December 2003 and the property investment activities during the six
months ended 31 December 2002 were carried out in the PRC.
3. Basic earnings/(loss) per share
The calculation of basic earnings/(loss) per share is based on the
consolidated loss attributable to shareholders for the six months ended 31
December 2003 of HK$40,057,000 (2002: Profit of HK$2,281,000, as restated)
and 3,051,438,765 (2002: 3,051,438,765 shares) shares in issue during the
interim period. There were no dilutive potential ordinary shares in
existence during the interim period.
4. Independent Review Report
The interim financial report has been reviewed by NCMF. Their independent
review report is set out below:
"INTRODUCTION
We have been instructed by the Company to review the interim financial
report for the six months ended 31 December 2003.
DIRECTORS' RESPONSIBILITIES
The Rules Governing the Listing of Securities on The Stock Exchange of
Hong Kong Limited require the preparation of an interim financial report
to be in compliance with Statement of Standard Accounting Practice 25
"Interim financial reporting" issued by the Hong Kong Society of
Accountants and the relevant provisions thereof. The interim financial
report is the responsibility of, and has been approved by, the Board of
Directors (the "Board").
REVIEW WORK PERFORMED
We conducted our review in accordance with Statement of Auditing Standards
700 "Engagements to review interim financial reports" issued by the Hong
Kong Society of Accountants, except that the scope of our review was
limited as explained below.
A review consists principally of making enquires of management and
applying analytical procedures to the interim financial report and based
thereon, assessing whether the accounting policies and presentation have
been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as test of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an
audit and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the interim financial
report.
The scope of our review was limited as set out below:
1. Opening balance sheet
Our audit report on the financial statements of the Group for the year
ended 30 June 2003 was disclaimed in view of the significance of the
possible effect of the limitations in evidence available to us, details of
which were set out in our report dated 27 October 2003. Any adjustments
to the opening balances of the Group as at 30 June 2003 would have a
consequential effect on the net assets of the Group as at 31 December 2003
and the results of the Group for the six months then ended. Also the
comparative figures in the condensed consolidated balance sheet as at 30
June 2003 may not be comparable to figures as at 31 December 2003.
2. Disclaimer of liabilities by the Receivers and the Board
As explained in Remark 1a to the interim financial report, the Receivers
and
the Board have not been able to give an unqualified representation as to
whether all transactions affecting the Group during the six months ended
31 December 2003 have been properly included in the interim financial
report and also as to whether the interim financial report presents a true
and fair view of the Group's operations and cash flows for the six months
ended 31 December 2003 as well as the Group's financial position as at
that date. The Receivers and the Board have also disclaimed any
liabilities on the interim financial report in relation to the affairs of
the Group for the six months ended 31 December 2003. As a consequence, we
have been unable to obtain adequate assurance regarding the completeness
and accuracy of the assets, liabilities, income and expenses, the cash
flows, as well as commitments, contingent liabilities and the disclosures
appearing in the interim financial report.
3. Accounting records and documents
As explained in Remark 1a to the interim financial report, despite the
Receivers' efforts in ascertaining the affairs of the Group, they have
only had limited access to the books and records of Shanghai Hongxin Real
Estate Development Company Limited ("Hongxin") and Bowyer Profits Limited
("Bowyer"). In addition, certain original documents of Shanghai Yihe
Longbai Hotel Limited ("Longbai") are not available.
Accordingly, we have been unable to ascertain whether the following
balances, related to Hongxin, Longbai and Bowyer, have been properly
accounted for in the interim financial report:
- Turnover of HK$944,000;
- Finance costs of HK$10,326,000;
- Prior period adjustment on deferred taxation of HK$14,645,000;
- Fixed assets of HK$559,000,000;
- Debtors, deposits and prepayments of HK$921,443,000;
- Cash, bank balances and deposits of HK$68,176,000;
- Creditors and accruals of HK$10,367,000;
- Tax payable of HK$1,376,000;
- Purported loans of HK$614,250,000; and
- Deferred tax liabilities of HK$99,623,000.
In addition, we have also been unable to ascertain whether cash and bank
balances of HK$68,176,000 have been properly classified as cash and cash
equivalents in the condensed consolidated cash flow statement.
4. Creditors and accruals
We have not been able to obtain sufficient evidence relating to the
retention consideration payable included in creditors and accruals of
HK$10,000,000 as at 31 December 2003. Accordingly, we have been unable to
ascertain whether this amount has been properly accounted for in the
interim financial report.
Any adjustments arising in relation to the matters referred to in
paragraphs 1 to 4 above would have a consequential significant effect on
the loss and cash flows of the Group for the six months ended 31 December
2003 and the net assets of the Group as at that date.
FUNDAMENTAL UNCERTAINTY RELATING TO THE GOING CONCERN OF CERTAIN
SUBSIDIARIES
In arriving at our review conclusion, we have considered the adoption of
the going concern basis in consolidating Hongxin and Longbai. The major
assets of Hongxin and Longbai were allegedly secured against loans
purportedly advanced to them and funds largely equivalent to the purported
loans were then deposited and/or advanced to certain parties. Should
these receivables become irrecoverable and the proceeds from realisation
of the assets be insufficient to cover the purported loans and outstanding
interest, Hongxin and Longbai might have a going concern problem.
Further, according to the latest business licence of Hongxin, the
registered capital of Hongxin is stated at US$30 million, of which only
US$16.7 million has been paid up. The Company has been informed by the
Shanghai AIC that if Hongxin cannot pay up all the registered capital
before 24 May 2004, the business licence of Hongxin issued on 15 January
2004 may be revoked. The Receivers have commenced negotiations with the
Shanghai AIC and the Shanghai Foreign Investment Commission regarding
whether the registered capital can be restored to US$16.7 million and the
consequence in the event of non-compliance by 24 May 2004.
It is considered appropriate to consolidate Hongxin and Longbai on a going
concern basis. The interim financial report does not include any
adjustments that would result should the going concern basis of 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.
INABILITY TO REACH A REVIEW CONCLUSION
Because of the significance of the possible effect of the limitations in
evidence available to us, we are unable to reach a review conclusion as to
whether material modifications should be made to the interim financial
report for the six months ended 31 December 2003."
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