CHINA NETCOM<00906> - Results Announcement
China Netcom Group Corporation (Hong Kong) Limited announced on 23/08/2006:
(stock code: 00906 )
Year end date: 31/12/2006
Currency: RMB
Auditors' Report: Unqualified
Interim report reviewed by: Both Audit Committee and Auditors
(Restated)
(Unaudited )
(Unaudited ) Last
Current Corresponding
Period Period
from 01/01/2006 from 01/01/2005
to 30/06/2006 to 30/06/2005
Note ('Million ) ('Million )
Turnover : 43,181 42,773
Profit/(Loss) from Operations : 11,730 12,191
Finance cost : (1,937) (1,701)
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 : 7,094 7,688
% Change over Last Period : -7.7 %
EPS/(LPS) from continuing
operations
-Basic (in dollars) : 1.08 1.17
-Diluted (in dollars) : 1.07 1.17
EPS/(LPS) from discontinued
operations
-Basic (in dollars) : (0.01) (0.01)
-Diluted (in dollars) : (0.01) (0.01)
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : 7,094 7,688
Interim Dividend : N/A N/A
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 presentation
These unaudited condensed consolidated financial statements (the "interim
financial statements") have been prepared in accordance with Hong Kong
Accounting Standard ("HKAS") 34, "Interim Financial Reporting" issued by
the Hong Kong Institute of Certified Public Accountants (the "HKICPA") and
the disclosure requirements of the Hong Kong Companies Ordinance and the
Rules Governing the Listing of Securities on The Stock Exchange of Hong
Kong Limited.
The interim financial statements include the financial information of the
China Netcom Group Corporation (Hong Kong) Limited (the "Company") and its
subsidiary (collectively the "Group") and have been prepared in accordance
with the same accounting policies adopted in 2005 financial statements and
the new accounting policies as set out in Note 2 below. These interim
financial statements should be read in conjunction with the Group's 2005
financial statements.
In respect of the 2005 comparative figures, prior to the acquisition of
the principal telecommunications operations and assets in the four
northern provinces/autonomous region, namely Shanxi Province, Neimenggu
Autonomous Region, Jilin Province and Heilongjiang Province from China
Netcom Communications Group Corporation (the "China Netcom Group") on 25
October, 2005 (the "Acquisition"), China Netcom Group held the entire
telecommunications operations and assets of four northern provinces/
autonomous region. Since China Netcom Group is the Group's ultimate
holding company, the Acquisition constitutes a business combination under
common control. Acquisition under common control is outside the scope of
HKFRS 3. Accordingly, the Company has used merger accounting to record
the Acquisition in accordance with the Accounting Guideline 5 "Merger
Accounting For Common Control Acquisition" ("AG 5") issued by the HKICPA,
and the acquired assets are stated at carrying amounts as if the fixed
line telecommunications operations and assets of the four provinces/
autonomous region have been held by the Company from the beginning of the
earliest period presented. The 2005 comparatives of the income statement
have been restated accordingly.
On 2 June 2006, the Group entered into an agreement with third party
buyers to dispose of the entire interests in the Asia Netcom Corporation
Limited and its subsidiaries (the "ANC Group") and the disposal was
completed on 22 August 2006. The assets and liabilities of the ANC Group
have been classified as held for sales and carried at the lower of
carrying amount and fair value less costs to sell since their carrying
amount is recovered principally through a sales transaction rather than
through a continuing use since 2 June 2006 in accordance with HKFRS 5 "
Non-current assets held for sales and discontinued operations" issued by
the HKICPA. The results of the operations of the ANC Group have been
presented as discontinued operations. The 2005 comparative figure of the
income statement related to the ANC Group have been re-presented as
discontinued operations accordingly.
A significant percentage of the Group's funding requirements is achieved
through short term borrowings. Consequently, the balance sheet indicates a
significant working capital deficit. In the past, a substantial portion of
the Group's short term borrowings have been rolled over upon maturity. In
addition, on 20 July 2006, the Group issued commercial papers to raise
additional funding of RMB10 billion. Based on the Group's history of
obtaining finance, its current finance, its relationships with its bankers
and its operating performance, the directors consider that the Group will
continue to be able to roll over such short term financing, or will be
able to obtain sufficient alternative sources of financing to enable it to
operate and meet its liabilities as and when they fall due.
2 Changes in accounting policies
In 2006, the Group adopted the new and revised HKFRSs as listed below,
which are relevant to its operations.
HKAS21(revised) Movement impact of foreign currency-net investment
in foreign operations
HKAS 39(revised) Predictive accounting of cash flow hedging of
inner group transaction
HKAS 39(revised) Fair value option
HKAS 39(revised) Financial guarantee contract
HKFRS 4(revised) Financial guarantee contract
The adoption of these new and revised HKFRSs by the Company did not have
any significant impact on its results of operations and financial
position.
3 Earnings per share
Basic earnings per share is computed using the weighted average number of
ordinary shares outstanding during the period. Diluted earnings per share
is computed using the weighted average number of ordinary shares and
potential ordinary shares outstanding during the period.
The following table sets forth the computation of basic and diluted net
earnings/(loss) per share:
Six months ended 30 June
------------------------------
2006 2005
------------------------------
(in RMB millions, except share
and per share data)
Unaudited Unaudited
Restated
(Note 1)
Numerator:
Profit/(loss) for the period 7,094 7,688
===============================
- Continuing operations 7,145 7,740
- Discontinued operations (51) (52)
Denominator:
Weighted average number of ordinary shares outstanding and shares used in
computing basic earnings per share
6,596,123,569 6,593,529,000
Diluted equivalent shares arising from share options
50,441,318 34,754,749
--------------------------------------
Shares used in computing diluted earnings per share
6,646,564,887 6,628,283,749
--------------------------------------
Basic earnings/(loss) per share
- Continuing operations RMB1.08 RMB1.17
=================================
- Discontinued operations RMB(0.01) RMB(0.01)
=================================
Diluted earnings/(loss) per share
- Continuing operations RMB1.07 RMB1.17
=================================
- Discontinued operations RMB(0.01) RMB(0.01)
=================================
4 Discontinued operations
On 2 June 2006, the Group entered into agreement to dispose of its entire
interest in the ANC Group. The disposal was completed on 22 August 2006.
The results of the ANC Group are presented in this interim financial
statement as discontinued operations.
The income statement of the ANC Group are set out below:
Six months ended 30 June
-------------------------
2006 2005
-------------------------
RMB RMB
million million
Unaudited Unaudited
Discontinued operations:
Revenues 726 663
Expenses (776) (716)
-----------------------------
Loss before taxation of discontinued operations
(50) (53)
Taxation (1) 1
------------------------------
Loss after tax of discontinued operations
(51) (52)
=================================
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