EGANA JEWELLERY<00926> - Results Announcement
Egana Jewellery & Pearls Limited announced on 21/09/2006:
(stock code: 00926 )
Year end date: 31/05/2006
Currency: HKD
Auditors' Report: Unqualified
(Restated)
(Audited )
(Audited ) Last
Current Corresponding
Period Period
from 01/06/2005 from 01/06/2004
to 31/05/2006 to 31/05/2005
Note ('000 ) ('000 )
Turnover : 1,086,684 851,352
Profit/(Loss) from Operations : 114,147 93,361
Finance cost : (38,264) (25,515)
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 : 78,307 73,504
% Change over Last Period : +7 %
EPS/(LPS)-Basic (in dollars) : 0.1805 0.1999
-Diluted (in dollars) : N/A N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : 78,307 73,504
Final Dividend : NIL 1.85 cents
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 principal accounting policies
______________________________________________________
The accounts have been prepared in accordance with accounting principles
generally accepted in Hong Kong and comply with accounting standards
issued by the Hong Kong Institute of Certified Public Accountants ("
HKICPA"). They have been prepared under the historical cost convention as
modified by the revaluation of available-for-sale financial assets,
investments held for trading and certain financial instruments, which are
carried at fair values.
The accounting policies used in the accounts are consistent with those
followed in the preparation of the Group's annual accounts for the year
ended 31st May, 2005 except as described below.
In the current year, the Group has applied, for the first time, a number
of new Hong Kong Financial Reporting Standards ("HKFRSs"), Hong Kong
Accounting Standards ("HKASs") and Interpretations (hereinafter
collectively referred to as the "new HKFRSs") issued by the HKICPA that
are effective for accounting periods beginning on or after 1st January,
2005. The application of the new HKFRSs has resulted in a change in the
presentation of the profit and loss account, balance sheet and the
statement of changes in equity. In particular, the presentation of
minority interests and share of tax of associated companies have been
changed under HKAS 1 "Presentation of Financial Statements" and HKAS 27 "
Consolidated and Separate Financial Statements", respectively. The changes
in presentation have been applied retrospectively.
The adoption of the new HKFRSs has resulted in changes to the Group's
accounting policies in the following areas that have major impacts on how
the results for the current or prior accounting periods are prepared and
presented:
Leasehold land
In prior years, leasehold land and buildings held for own use were stated
at revalued amounts less accumulated depreciation and accumulated
impairment losses. Movements of revaluation surpluses or deficits were
normally taken to the land and buildings revaluation reserve.
The adoption of revised HKAS 17 "Leases" has resulted in a change in the
accounting policy relating to the reclassification of leasehold land and
land use rights from fixed assets to operating leases. The up-front
prepayments made for the leasehold land and land use rights are expensed
in the profit and loss account on a straight-line basis over the period of
the lease or where there is impairment, the impairment is expensed in the
profit and loss account.
All buildings held for own use which are situated on freehold and
leasehold land are presented as part of fixed assets and are stated at
cost less accumulated depreciation, rather than at fair value.
The new accounting policies have been adopted retrospectively, with the
opening balances of retained profits and the comparative information
adjusted for the amounts relating to prior year. As a result, the opening
retained profits as at 1st June, 2005 is increased by approximately HK$0.5
million. The adoption of HKAS 17 has no material impact on the Group's
results for the current and prior years.
Financial instruments
In the current year, the Group has applied HKAS 32 "Financial Instruments:
Disclosures and Presentation" and HKAS 39 "Financial Instruments:
Recognition and Measurement". HKAS 32 requires retrospective application.
HKAS 39, which is effective for accounting periods beginning on or after
1st January, 2005, generally does not permit to recognise, derecognise or
measure financial assets and liabilities on a retrospective basis. The
principal effects resulting from the implementation of HKAS 32 and HKAS 39
are summarised below:
(a) Classification and measurement of financial assets and financial
liabilities
The Group has applied the relevant transitional provisions in HKAS 39 with
respect to classification and measurement of financial assets and
financial liabilities that are within the scope of HKAS 39.
(i) Debt and equity securities previously accounted for under the
treatment of Statement of Standard Accounting Practice ("SSAP") 24
Up to 31st May, 2005, the Group classified its investments in debt and
equity securities, other than subsidiaries and associated companies, as
investments in non-trading securities and trading securities in accordance
with SSAP 24.
Non-trading securities
Investments which are held for non-trading purpose are stated at fair
value at the balance sheet date. Changes in the fair values of individual
securities are credited or debited to the revaluation reserve until the
security is sold, or is determined to be impaired. Upon disposal, the
cumulative gain or loss representing the difference between the net sales
proceeds and the carrying amount of the relevant securities, together with
any surplus/deficit transferred from the revaluation reserve, is dealt
with in the profit and loss account.
Where there is objective evidence that individual investment is impaired,
the cumulative loss recorded in the revaluation reserve is taken to the
profit and loss account.
Trading securities
Trading securities are carried at fair value. At each balance sheet date,
the net unrealised gains or losses arising from the changes in fair value
of trading securities are recognised in the profit and loss account.
Profits or losses on disposal of trading securities, representing the
difference between the net sales proceeds and the carrying amounts, are
recognised in the profit and loss account as they arise.
From 1st June, 2005 onwards, the Group classifies and measures its debt
and equity securities in accordance with HKAS 39. Financial assets are
classified as "available-for-sale financial assets", "investments held for
trading" (a category under "financial assets at fair value through profit
or loss"), "loans and receivables" or "held-to-maturity financial assets".
The classification depends on the purpose for which the assets are
acquired. "Available-for-sale financial assets" and "investments held for
trading" are carried at fair value, with changes in fair values recognised
in equity and profit or loss account, respectively. "Loans and
receivables" and "held-to-maturity financial assets" are measured at
amortised cost using the effective interest method.
On 1st June, 2005, following the adoption of HKAS 39, the Group has re-
designated "investments in non-trading securities" amounting to
approximately HK$150,760,000 and "short-term investments" (including "
investments in trading securities") amounting to approximately HK$113,000
recorded in the consolidated balance sheet as "available-for-sale
financial assets" and "investments held for trading", respectively.
(ii) Financial assets and financial liabilities other than debt and
equity securities
As mentioned above, financial assets under HKAS 39 are classified as "
financial assets at fair value through profit or loss", "available-for-
sale financial assets", "loans and receivables" or "held-to-maturity
financial assets". Financial liabilities are generally classified as "
financial liabilities at fair value through profit or loss" or "other
financial liabilities". "Other financial liabilities" are carried at
amortised cost using the effective interest method. The adoption of HKAS
39 has no material impact on the financial assets and financial
liabilities other than debt and equity securities of the Group.
(b) Derivative financial instruments
Consistent with prior years, derivative financial instruments arise from
forward, option and swap transactions undertaken by the Group in the
precious metals, foreign exchange and interest rate markets.
Derivative financial instruments are initially measured at fair value on
the contract date, and are re-measured to fair value at subsequent
reporting dates.
Changes in the fair value of derivative financial instruments that are
designated and effective as hedges of future cash flows are recognised
directly in equity and the ineffective portion or those which do not
qualify for hedge accounting is recognised immediately in the profit and
loss account.
Up to 31st May, 2005, assets related to derivative financial instruments
which are marked to market are included in "deposits, prepayments and
other receivables" in the accounts. Liabilities resulting from such
contracts are included in "accounts payable, accruals and other payables"
in the accounts.
With the adoption of HKAS 39, from 1st June, 2005 onwards, assets and
liabilities related to derivative financial instruments are recorded as "
derivative financial instruments" under assets and liabilities in the
consolidated balance sheet, respectively. The adoption of HKAS 39 in
respect of derivative financial instruments has no material impact on the
Group's results for the current year.
(c) Derecognition
HKAS 39 provides more rigorous criteria for the derecognition of financial
assets than the criteria applied in previous years. Under HKAS 39, a
financial asset is derecognised, when and only when, either the
contractual rights to the asset's cash flows expire, or the asset is
transferred and the transfer qualifies for derecognition is made by
applying a combination of risks and rewards and control tests. The Group
has applied the relevant transitional provisions and applied the revised
accounting policy prospectively for transfers of financial assets on or
after 1st June, 2005. In addition, the Group's discounted bills with
recourse, which were previously treated as contingent liabilities, have
been accounted for as actual liabilities prospectively on or after 1st
June, 2005, as the financial assets derecognition conditions as stipulated
in HKAS 39 have not been fulfilled.
(d) Convertible bonds
HKAS 32 requires an issuer of a compound financial instrument (that
contains both financial liability and equity components) to separate the
compound financial instrument into its liability and equity components. In
subsequent years, the liability component is carried at amortised cost
using the effective interest method. The principal impact of HKAS 32 on
the Group is in relation to convertible bonds issued by the Company that
contain both liability and equity components. Previously, convertible
bonds were classified as liabilities on the balance sheet. As HKAS 32
requires retrospective application, comparative figures have been
restated.
Minority interests
In prior years, minority interests at the balance sheet date were
presented in the consolidated balance sheet separately from liabilities
and as deduction from net assets. Minority interests in the results of the
Group for the year were also separately presented in the profit and loss
account as a deduction before arriving at the profit attributable to
shareholders.
With effect from 1st June, 2005, in order to comply with HKAS 1 and HKAS
27, minority interests at the balance sheet date are presented in the
consolidated balance sheet within equity, separately from the equity
attributable to equity holders of the Company, and minority interests in
the results of the Group for the year are presented on the face of the
consolidated profit and loss account as an allocation of the total profit
or loss for the year between the minority interests and the equity holders
of the Company.
The presentation of minority interests in the consolidated balance sheet,
profit and loss account and statement of changes in equity for the
comparative period has been restated accordingly.
Gain or loss arising from transactions with minority interests are now
recognised directly in equity.
Share-based payments
In prior years, no amounts were recognised when option holders were
granted share options over shares in the Company. If the option holders
chose to exercise the options, the nominal amount of share capital and
share premium were credited only to the extent of the option's exercise
price receivable.
With effect from 1st June, 2005, in order to comply with HKFRS 2 "Share-
based payment", the Group recognises the fair value of share options as an
expense in the profit and loss account, or as an asset, if the cost
qualifies for recognition as an asset under the Group's accounting
polices. A corresponding increase is recognised in capital reserve within
equity.
Where the option holders are required to meet vesting conditions before
they become entitled to the options, the Group recognises the fair value
of the options granted over the vesting period. Otherwise, the Group
recognises the fair value in the period in which the options are granted.
If an option holder chooses to exercise options, the related capital
reserve is transferred to share capital and share premium, together with
the exercise price. If the options lapse unexercised, the related capital
reserve is transferred directly to retained profits.
As all the Group's options were granted to option holders before 7th
November, 2002, the Group has taken advantage of the transitional
provisions set out in paragraph 53 of HKFRS 2 under which the new
recognition and measurement policies have not been applied. Accordingly,
the adoption of HKFRS 2 has no impact on the Group's net assets and
results for the current and prior years.
2. Earnings per share
__________________
Basic earnings per share
The basic earnings per share was calculated based on the consolidated
profit attributable to equity holders of the Company for the year of
approximately HK$78,307,000 (2005: HK$73,504,000) and the weighted average
number of ordinary shares of approximately 433,948,000 (2005: 367,754,000)
in issue during the year.
Diluted earnings per share
During the years ended 31st May, 2005 and 31st May, 2006, the Company's
share options exercise price was above the average fair value of one
ordinary share, thus there were no dilutive potential ordinary shares.
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