TOM GROUP<02383> - Results Announcement
TOM Group Limited announced on 21/03/2006:
(stock code: 02383 )
Year end date: 31/12/2005
Currency: HKD
Auditors' Report: Unqualified
(Restated)
(Audited )
(Audited ) Last
Current Corresponding
Period Period
from 01/01/2005 from 01/01/2004
to 31/12/2005 to 31/12/2004
Note ('000 ) ('000 )
Turnover : 3,105,317 2,595,245
Profit from Operations
before share of profits and losses
of associates and jointly controlled
entities : 474,358 948,839
Profit from Operations after share
of profits and losses of associates
and jointly controlled entities : 495,449 959,516
Finance cost : (103,973) (65,801)
Share of Profit/(Loss) of
Associates : 21,229 11,044
Share of Profit/(Loss) of
Jointly Controlled Entities : (138) (367)
Profit/(Loss) after Tax & MI : 259,526 773,448
% Change over Last Period : -66 %
EPS/(LPS)-Basic (in dollars) : 0.0667 0.1990
-Diluted (in dollars) : 0.0667 0.1945
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : 259,526 773,448
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 Basis of preparation and accounting policies
These consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in Hong Kong and
comply with Hong Kong Financial Reporting Standards ("HKFRS", which term
collectively includes Hong Kong Accounting Standards ("HKAS") and
Interpretations ("HK-INT")) issued by the Hong Kong Institute of Certified
Public Accountants ("HKICPA") and the disclosure requirements by the
Appendix 16 of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited. They have been prepared under the
historical cost convention except that available-for-sale financial assets
are stated at fair value.
The accounting policies and methods of computation used in
preparation of these condensed consolidated financial statements are
consistent with those used in the annual financial statements for the year
ended 31 December 2004 except that the Group has changed certain of its
accounting policies following its adoption of new HKFRS which are
effective for accounting periods commencing on or after 1 January 2005.
The changes to the Group's accounting policies and the effect of
adopting these new policies are set out in note 2 below.
2 Changes in accounting policies
In 2004, the Group has early adopted the following new HKFRS:
HKFRS 3 Business Combinations
HKFRS 36 Impairment of Assets
HKFRS 38 Intangible Assets
In preparing the consolidated financial statements for the year ended 31
December 2005, the Group has adopted the new/revised HKFRS below which are
relevant to the Group's operations. The 2004 comparatives have been
amended as required in accordance with the relevant requirements.
HKAS 1 Presentation of Financial Statements
HKAS 2 Inventories
HKAS 7 Cash Flow Statements
HKAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors
HKAS 10 Events after the Balance Sheet Date
HKAS 16 Property, Plant and Equipment
HKAS 17 Leases
HKAS 19 (Amendment) Actuarial Gains and Losses, Group Plans and
Disclosures
HKAS 21 The Effects of Changes in Foreign Exchange Rates
HKAS 23 Borrowing Costs
HKAS 24 Related Party Disclosures
HKAS 27 Consolidated and Separate Financial Statements
HKAS 28 Investments in Associates
HKAS 31 Investments in Joint Ventures
HKAS 32 Financial Instruments: Disclosures and
Presentation
HKAS 33 Earnings per Share
HKAS 39 Financial Instruments: Recognition and Measurement
HKFRS 2 Share-based Payments
HKFRS 5 Non-current Assets held for Sale and Discontinued
Operations
The adoption of HKAS 1, 2, 7, 8, 10, 16, 21, 23, 24, 27, 28, 31, 33 and
HKFRS 5 did not result in substantial changes to the Group's accounting
policies. In summary:
- HKAS 1 has affected the presentation of minority interests, share
of net after-tax results of associates and certain other disclosures in
the accounts;
- HKAS 21 requires goodwill and fair value adjustments arising on
acquisition of foreign entities be treated as assets and liabilities of
the foreign entities and translated at closing rates. Furthermore, the
functional currency of each of the consolidated companies has been re-
evaluated based on the guidance to the revised standard; and
- HKAS 2, 7, 8, 10, 16, 23, 24, 27, 28, 31, 33 and HKFRS 5 had no
material effect on the Group's accounting policies.
Details of the effects of the other applicable new/revised HKFRS
are as below:
HKAS 17
The adoption of revised HKAS 17 has resulted in a change in the
accounting policy relating to the reclassification of leasehold land from
fixed assets to prepaid operating leases. The up-front prepayments made
for the leasehold land are expensed in the profit and loss account on a
straight-line basis over the period of the lease and where there is
impairment, the impairment is expensed in the profit and loss account. In
prior years, the leasehold land was accounted for at cost less accumulated
depreciation and accumulated impairment. If the allocation between the
leasehold land and building elements cannot be made reliably, the
leasehold land is accounted for as properties within fixed assets.
HKAS 19 (Amendment)
The Group has early adopted HKAS 19 (Amendment) from 1 January
2005. This amendment introduces an additional recognition option for all
actuarial gains and losses arising from post-employment defined benefit
plans outside profit and loss account. The Group has elected to take this
option for recognition of all such actuarial gains and losses directly in
equity.
HKAS 32 and 39
The adoption of HKAS 32 and 39 has resulted in a change in the
accounting policy relating to the classification of financial assets from
investment securities to available-for-sale financial assets. These assets
are carried at fair value at the balance sheet date with movements in fair
value taken to reserves, or the part of any change in fair value
attributable to interest income calculated using the effective interest
method being recognised in profit and loss account. Furthermore, financial
liabilities, except for those carried at fair value through profit or
loss, are required to be carried at amortised cost using effective
interest method, instead of being carried at face values before the
adoption. Embedded derivatives are separated from the host contract and
accounted for as a derivative if the economic characteristics and risks of
the derivative are not closely related to that of the host contract.
HKFRS 2
By the adoption of HKFRS 2, the Group recognises the fair value of
share options granted to employees as an expense in the profit and loss
account and a corresponding increase in capital reserve.
All changes in the accounting policies have been made in
accordance with the transition provisions in the respective standards.
All standards adopted by the Group require retrospective application other
than:
HKAS 19 (Amendment) - the impacts on the prior periods by the adoption
of this standard are not material such that no
prior year adjustment has been made;
HKAS 21 - prospective accounting for goodwill and fair value
adjustments as part of foreign operations;
HKAS 39 - disallow recognition, derecognition and
measurement of financial assets and liabilities in
accordance with the standard on a retrospective
basis. The adjustments required are determined and
recognised on 1 January 2005; and
HKFRS 2 - only retrospective application for all equity
instruments granted after 7 November 2002 and not
vested on 1 January 2005.
Overall, the effects of changes in accounting policies on profit
attributable to equity holders of the Company and on shareholders' fund
are summarised as below:
HKAS 19 HKAS 32 &
(Amendment) HKAS 39 HKFRS 2 Total
HK$'000 HK$'000 HK$'000 HK$'000
For the year ended 31 December 2005:
(Increase)/decrease in profit attributable to equity
holders of the Company
(13) 32,114 37,264 69,365
======== ======== ======== ========
Decrease in basic earnings per share (HK cents)
- 0.82 0.96 1.78
======== ======== ======== ========
Decrease in diluted earnings per share (HK cents)
- - - -
======== ======== ======== ========
For the year ended 31 December 2004:
Decrease in profit attributable to equity holders of the Company
- 30,645 55,729 86,374
======== ======== ======== ========
Decrease in basic earnings per share (HK cents)
- 0.79 1.43 2.22
======== ======== ======== ========
Decrease in diluted earnings per share (HK cents)
- - 1.31 1.31
======== ======== ======== ========
As at 31 December 2005:
Increase in capital reserve - - 96,644 96,644
Increase in convertible bond reserve
- 174,327 - 174,327
Decrease in available-for-sale financial assets reserve
- (201) - (201)
Decrease /(Increase) in accumulated losses
4,185 (65,650) (96,644) (158,109)
-------- -------- -------- --------
Net increase in shareholders' fund
4,185 108,476 - 112,661
======== ======== ======== ========
As at 31 December 2004:
Increase in capital reserve - - 59,680 59,680
Increase in convertible bond reserve
- 179,036 - 179,036
Decrease in available-for-sale financial assets reserve
- (254) - (254)
Increase in accumulated losses
- (33,536) (59,680) (93,216)
-------- -------- -------- --------
Net increase in shareholders' fund
- 145,246 - 145,246
======== ======== ======== ========
3 Provision for receivables, net
Provision for receivables, net, amounting to HK$7,271,000 made in 2005,
represents a provision of HK$46,203,000 for accounts receivables in
respect of a sports event, offset by a write-back of provision of HK$38,
932,000 made in prior years in respect of loans and advances for certain
investee companies.
4 Net gain on deemed disposals of interests in subsidiaries
(a) Puccini International Limited ("Puccini")
On 19 November 2003, the Group completed the acquisition of the
100% beneficial interest in Beijing Lei Ting Wu Ji Network Technology
Limited from Cranwood Company Limited ("Cranwood") through the acquisition
of the entire share capital of Puccini. The purchase consideration was
contingent on the audited consolidated net profit of Puccini and its
subsidiaries (the "Puccini Group") for the year ended 31 December 2004,
and subject to a maximum consideration of US$150 million (approximately
HK$1,170 million). Half of the consideration is to be settled in cash and
the remaining half is to be satisfied by the issue of shares by TOM Online
Inc. ("TOM Online"), a non-wholly owned subsidiary of the Company. As at
31 December 2004, the total purchase consideration was estimated to be
US$132 million (approximately HK$1,030 million). Shares of TOM Online
worth of US$18.5 million (approximately HK$144.3 million) were issued at
an issue price of HK$1.50 each to Cranwood in March 2004 as initial
consideration.
The audited consolidated accounts of Puccini Group for the year
ended 31 December 2004 were issued on 6 April 2005 and the purchase
consideration was finalised at US$132 million (approximately HK$1,030
million). Accordingly, shares of TOM Online totalling US$47.5 million (
approximately HK$370.5 million) were issued by TOM Online at an issue
price of HK$1.2193 per share (being the average closing price of shares of
TOM Online during the 30 trading days immediately before the date of the
auditors' report of the 2004 accounts of Puccini Group) on 25 April 2005.
Cash consideration of US$66 million (approximately HK$515 million) was
paid by the Group by 29 April 2005.
As a result of the issuance of shares by TOM Online on 25 April
2005, the beneficial interest in TOM Online held by the Group was reduced
by 5.20%, resulting in a gain on deemed disposal of approximately HK$160,
872,000.
(b) Indiagames Limited ("Indiagames")
TOM Online Games Limited ("TOM Online Games"), a non-wholly owned
subsidiary of the Company, has acquired 76.29% beneficial interest in
Indiagames and its subsidiaries (the "Indiagames Group') on 24 February
2005. In May 2005, Indiagames allotted and issued a total of 112,683
shares to two independent parties for a total consideration of US$4
million (approximately HK$31.2 million). As a result, the beneficial
interest held by TOM Online Games in Indiagames Group was reduced by 13.
87%, resulting in a loss on deemed disposal of approximately HK$537,000.
5 Earnings per share
(a) Basic
The calculation of the basic earnings per share is based on consolidated
profit attributable to equity holders of the Company of HK$259,526,000 (
2004 (As restated): HK$773,448,000) and the weighted average of
3,890,885,006 (2004: 3,886,250,185) ordinary shares in issue during the
year.
(b) Diluted
No diluted earnings per share is presented for the year ended 31 December
2005 as the exercise price of the outstanding share options granted by the
Company were higher than the average market price of the share of the
Company, and the conversion of the outstanding convertible bonds would
have an anti-dilutive effect during the year.
Details of calculation of diluted earnings per share for the year ended 31
December 2004 are shown as follows:
2004
(As restated)
Profit attributable to equity holders of the Company (HK$'000) 773,448
Finance costs on convertible bonds (HK$'000) 51,267
------------
Profit used to determine diluted earnings per share (HK$'000) 824,715
============
Weighted average number of ordinary shares in issue 3,886,250,185
Adjustments for:
- assumed conversion of convertible bonds 352,941,176
- share options 220,296
------------
Weighted average number of ordinary shares
for diluted earnings per share 4,239,411,657
============
Diluted earnings per share (HK cents) 19.45
============
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