CNAC<01110> - Results Announcement
China National Aviation Company Limited announced on 24/03/2006:
(stock code: 01110 )
Year end date: 31/12/2005
Currency: HKD
Auditors' Report: Unqualified
(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 : 2,351,384 1,871,763
Profit/(Loss) from Operations : (54,471) 14,591
Finance cost : N/A N/A
Share of Profit/(Loss) of
Associates : 277,243 390,450
Share of Profit/(Loss) of
Jointly Controlled Entities : (940) 1,520
Profit/(Loss) after Tax & MI : 225,000 360,969
% Change over Last Period : -37.67 %
EPS/(LPS)-Basic (in dollars) : 0.0679 0.1090
-Diluted (in dollars) : 0.0672 0.1081
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : 225,000 360,969
Final Dividend : $0.01 $0.01
per Share
(Specify if with other : N/A N/A
options)
B/C Dates for
Final Dividend : 22/05/2006 to 25/05/2006 bdi.
Payable Date : 29/06/2006
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
The consolidated accounts of China National Aviation Company Limited have
been prepared in accordance with Hong Kong Financial Reporting Standards
("HKFRS") and Hong Kong Accounting Standards ("HKAS") and interpretations
("HKAS-Int") (collectively the "HKFRSs") issued by the Hong Kong Institute
of Certified Public Accountants (the "HKICPA"). The financial statements
have been prepared under the historical cost convention except that
investment securities and derivative financial instruments are carried at
fair value.
The preparation of accounts in conformity with HKFRSs requires the use of
certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the financial
statements.
2. Effect of adoption of the new/revised HKFRSs
In 2005, the Group adopted the new/revised HKFRSs below, which are
relevant to its operations. The 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 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 36 Impairment of Assets
HKAS 38 Intangible Assets
HKAS 39 Financial Instruments: Recognition and Measurement
HKAS 39 (Amendment) Transition and Initial Recognition of Financial
Assets and Financial Liabilities
HKAS-Int 12 (Amendment) Scope of HKAS-Int 12 Consolidation - Special
Purpose Entities
HKAS-Int 15 Operating losses - Incentives
HKFRS 2 Share-based Payments
HKFRS 3 Business Combinations
The following is a summary of material changes in principal accounting
policies or presentation of financial statements as a result of the
adoption of the new HKFRSs:
(i) HKAS 1
The adoption of HKAS 1 has affected the presentation of minority interest,
share of net after-tax results of associates and other disclosures.
(ii) HKAS 16
The adoption of revised HKAS 16 has resulted in a change in the accounting
policy relating to the capitalisation of costs of regular overhaul and
major checks of owned aircraft and engines as a separate component of
property, plant and equipment and subject to depreciation over the
maintenance cycle. In prior years, costs of regular overhaul and major
checks are expensed as and when incurred.
(iii) HKAS 17
The adoption of revised HKAS 17 has resulted in a change in the
reclassification of land use right from property, plant and equipment.
The up-front prepayments made for the land use right are expensed in the
income statement on a straight-line basis over the term of the land use
right or where there is impairment, the impairment is expensed in the
income statement.
(iv) HKAS 24
The adoption of HKAS 24 has affected the identification of related parties
and some other related-party disclosures. Related parties include CNAH
and its related parties, other state-owned enterprises and their
subsidiaries directly or indirectly owned by the central government of the
Peoples' Republic of China, other entities and corporations in which the
Company is able to control or exercise significant influence, key
management personnel of the Company and CNAH Group as well as their close
family members.
(v) HKAS 31
The Group adopted the proportionate consolidation under HKAS 31 to account
for its interests in jointly controlled entities. In prior years, the
Group's interests in jointly controlled entities were accounted for by
using the equity method. The adoption of the proportionate consolidation
approach under HKAS 31 represents a change in accounting policy.
(vi) HKASs 32 and 29
The adoption of HKASs 32 and 39 has resulted in a change in the accounting
policy relating to the classification of available-for-sale financial
assets. It has also resulted in the recognition of financial instruments
at fair value and the change in the recognition and measurement of hedging
activities.
(vii) HKFRS 2
The adoption of HKFRS 2 has resulted in a change in the accounting policy
for share-based payments. Until 31st December 2004, the provision of
share options to employees did not result in an expense in the income
statement. Effective on 1st January 2005, the fair value of the employee
servcies received in the exchange for the grant of the options is
recognised as an expense.
(viii) HKFRS 3, HKAS 36 and HKAS 38
The adoption of HKFRS 3, HKAS 36 and HKAS 38 has resulted in a change in
the accounting policy for goodwill. Until 31st December 2004, goodwill
was:
- Amortised on a straight line basis over its estimated useful lives
of not more than 20 years; and
- Assessed for an indication of impairment at each balance sheet
date.
In accordance with the provisions of HKFRS 3:
- The Group ceased amortisation of goodwill from 1st January 2005;
- Accumulated amortisation as at 31st December 2004 has been
eliminated with a corresponding decrease in the cost of goodwill; and
- From 1st January 2005 onwards, goodwill is tested annually for
impairment, as well as when there are indications of impairment.
The Group has reassessed the useful lives of its intangible assets in
accordance with the provisions of HKAS 38. No adjustment resulted from
this reassessment.
All changes in the accounting policies have been made in accordance with
the transition provisions in the respective standards, whenever
applicable. All standards adopted by the Group require retrospective
application other than:
- HKAS 39 - does not permit to recognise, derecognise and measure
financial assets and liabilities in accordance with this standard on a
retrospective basis. The Group applied the previous Statement of Standard
Accounting Practice ("SSAP") 24 "Accounting for investments in securities"
to investments in securities and also to hedge relationships for the 2004
comparative information. The adjustments required for the accounting
differences between SSAP 24 and HKAS 39 are determined and recognised at
1st January 2005.
- HKFRS 2 - only retrospective application for all equity
instruments granted after 7th November 2002 and not vested at 1st January
2005; and
- HKFRS 3 - prospectively after the adoption date.
The following is a summary of effects of adopting the new HKFRSs on the
financial statements:
(a) Consolidated income statement
For the year ended 31st December 2005
Increase/(decrease)
Effect of adopting
-------------------------------------------------------
HKAS 1 HKAS 16 HKAS 31 HKASs 32
& 39 HKFRS 3 Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Turnover
- - 268,649 - - 268,649
Other revenues
- - - - - -
-------------------------------------------------------
Total revenues
- - 268,649 - - 268,649
-------------------------------------------------------
Other gains
- - 365 11,957 - 12,322
-------------------------------------------------------
Staff costs
- - 114,946 - - 114,946
Passenger catering and service costs
- - 129,151 - - 129,151
Depreciation and amortisation costs
- - 11,516 - (33,974)(22,458)
Sales and promotion costs
- - 1,407 - - 1,407
Other operating costs
- - 9,840 - - 9,840
-------------------------------------------------------
Total operating expenses
- - 266,860 - (33,974)232,886
=======================================================
Operating loss
- - 2,154 11,957 33,974 48,085
Finance costs
- - (2,960) - - (2,960)
Share of profit less losses of associates
(29,437)1,069 - (1,033) 3,056 (26,345)
Share of profit less losses of jointly controlled entities
- - 940 - - 940
-------------------------------------------------------
Profit before income tax
(29,437)1,069 134 10,924 37,030 19,720
Income tax expenses
29,437 - (134) - - 29,303
-------------------------------------------------------
Profit for the year
- 1,069 - 10,924 37,030 49,023
======================================================
Earnings per share
HK centsHK centsHK cents HK centsHK centsHK cents
- Basic
- 0.03 - 0.33 1.12 1.48
- Diluted
- 0.03 - 0.32 1.11 1.46
=======================================================
For the year ended 31st December 2004
Increase/(decrease)
Effect of adopting
-------------------------------
HKAS 1 HKAS 16 HKAS 31 Total
HK$'000 HK$'000 HK$'000 HK$'000
Turnover - - 18,947 18,947
Other revenues - - - -
-------------------------------
Total revenues - - 18,947 18,947
===============================
Other gains - - 78 78
===============================
Staff costs - - 5,648 5,648
Passenger catering and service
costs - - 9,671 9,671
Depreciation and amortisation
costs - - 2,537 2,537
Sales and promotion costs - - 122 122
Other operating costs - - 166 166
-------------------------------
Total operating expenses - - 18,144 18,144
===============================
Operating profit - - 881 881
Finance costs - - (375) (375)
Share of profit less losses of
associates (83,293)(6,501) - (89,794)
Share of profit less losses of jointly
controlled entities - - (506) (506)
-------------------------------
Profit before income tax (83,293)(6,501) - (89,794)
Income tax expenses 83,293 - - 83,293
-------------------------------
Profit for the year - (6,501) - (6,501)
===============================
Earnings per share HK centsHK centsHK centsHK cents
- Basic (0.20) (0.20)
- Diluted (0.19) (0.19)
================================
(b) Consolidated balance sheet
As at 31st December 2005
Increase/(decrease)
Effect of adopting
-------------------------------------------------------
HKAS 16 HKAS 17 HKAS 31 HKASs 32
& 39 HKFRS 3 Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Property, plant and equipment
- (2,274) 123,892 - - 121,618
Land use right
- 2,274 - - - 2,274
Intangible assets
- - 241,937 - 33,974 275,911
Interests in associates
(12,359)- - 5,263 3,056 (4,040)
Interests in jointly controlled entities
- - (368,617) - - (368,617)
Deferred income tax assets
- - 13,346 - - 13,346
Derivative financial instruments
- - - 11,957 - 11,957
Inventories
- - 6,478 - - 6,478
Trade and other receivables
- - 58,103 - - 58,103
Cash and cash equivalents
- - 47,625 - - 47,625
Pledged bank deposits
- - 9 - - 9
-------------------------------------------------------
Total assets
(12,359)- 122,773 17,220 37,030 164,664
=======================================================
Trade and other payables
- - 61,019 - - 61,019
Current income tax liabilities
- - 2,257 - - 2,257
Short-term bank loans - unsecured
- - 25,371 - - 25,371
Provision for housing allowances
- - 34,126 - - 34,126
-------------------------------------------------------
Total liabilities
- - 122,773 - - 122,773
=======================================================
Total equity
(12,359) - - 17,220 37,030 41,891
========================================================
As at 31st December 2004
Increase/(decrease)
Effect of adopting
---------------------------------
HKAS 16 HKAS 17 HKAS 31 Total
HK$'000 HK$'000 HK$'000 HK$'000
Property, plant and equipment - (2,355) 126,308 123,953
Land use right - 2,355 - 2,355
Intangible assets - - 241,937 241,937
Interests in associates (13,428)- - (13,428)
Interests in jointly controlled
entities - - (345,532)(345,532)
Deferred income tax assets - - 2,483 2,483
Investment securities - - 18,313 18,313
Inventories - - 7,574 7,574
Trade and other receivables - - 55,867 55,867
Cash and cash equivalents - - 21,201 21,201
Pledged bank deposits - - 6,235 6,235
---------------------------------
Total assets (13,428)- 134,386 120,958
=================================
Trade and other payables - - 62,833 62,833
Current income tax liabilities - - 2,336 2,336
Short-term bank loans
- unsecured - - 69,217 69,217
---------------------------------
Total liabilities - - 134,386 134,386
=================================
Total equity (13,428)- - (13,428)
=================================
The adoption of HKASs 32 and 39 has resulted in a decrease in opening
reserves and interests in associates at 1st January 2005 by the same
amount of approximately HK$19,023,000.
No early adoption of the following standards, interpretations and
amendments that have have been issued but are not yet effective. The
Group has already commenced an assessment of the related impact to the
Group but is not yet in a position to state whether substantial changes to
the Group's accounting policies and presentation of the financial
statements will be resulted.
Effective for accounting
periods beginning
on or after
HKFRS Interpretation 4 "Determining whether an Arrangement contains a
Lease" 1st January 2006
Amendments to HKAS 19 "Employee Benefits - Actuarial Gains and Losses,
Group Plans and Disclosures" 1st January 2006
Amendments to HKAS 39 "Financial Instruments: Recognition and Measurement
":
- Cash Flow Hedge Accounting of Forecast Intragroup
Transactions 1st January 2006
- The Fair Value Option 1st January 2006
Amendments, as a consequence of the Hong Kong Companies (Amendment)
Ordinance 2005, to:
- HKAS 1 "Presentation of Financial Statements" 1st January 2006
- HKAS 27 "Consolidated and Separate Financial
Statements" 1st January 2006
- HKFRS 3 "Business Combinations" 1st January 2006
Amendments HKAS 39 "Financial Instruments: Recognition and Measurement"
and HKFRS 4 "Insurance Contracts" - "Financial
Guarantee Contracts" 1st January 2006
HKFRS 7 "Financial Instruments: Disclosures" 1st January 2007
Amendments to HKAS 1 "Presentation of Financial Statements: Capital
Disclosures" 1st January 2007
As further explained above, due to the adoption of the new/revised HKFRSs
during the current year, the accounting treatment and presentation of
certain items in the consolidated accounts have been revised to comply
with the new requirements. Accordingly, certain comparatives have been
restated to conform with the current year presentation.
3. Basis of calculation for basic EPS and diluted EPS
The calculations of basic and diluted earnings/ (loss) per share are based
on the Group's profit attributable to shareholders of HK$ 225,000,000 (
2004: HK$ 360,969,000).
The basic earnings/(loss) per share is based on the weighted average of
3,312,680,000 (2004: 3,312,680,000) shares in issue during the year. The
diluted earnings per share for the year ended 31st December 2005 is based
on 3,348,524,000 shares representing the weighted average of
3,312,680,000 shares in issue during the year plus the weighted average of
35,844,000 shares which would be issued at no consideration on the
exercise of all dilutive options.
|