REX FINANCIAL H<00555> - Results Announcement
REXCAPITAL Financial Holdings Limited announced on 27/04/2006:
(stock code: 00555 )
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 : 41,938 169,137
Profit/(Loss) from Operations : (41,113) (67,890)
Finance cost : (12,839) (13,930)
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 : (50,700) (77,674)
% Change over Last Period : N/A %
EPS/(LPS)-Basic (in dollars) : (0.0169) (0.0259)
-Diluted (in dollars) : N/A N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : (50,700) (77,674)
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
The consolidated financial statements have been prepared in accordance
with Hong Kong Financial Reporting Standards ("HKFRS"), which also include
Hong Kong Accounting Standards ("HKAS") and Interpretations ("Int") issued
by the Hong Kong Institute of Certified Public Accountants and accounting
principles generally accepted in Hong Kong. The consolidated financial
statements have been prepared under the historical cost convenion, as
modified by the revaluation of other financial assets at fair value
through profit or loss, which are carried at fair value.
The preparation of financial statements in conformity with HKFRS 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, are disclosed in Note 4.
The adoption of new / revised HKFRS
In 2005, the Group adopted the new / revised standards and interpretations
of HKFRS below, which are relevant to its operations.
HKAS 1 Presentation of Financial Statements
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 18 Revenue
HKAS 21 The Effects of Changes in Foreign Exchange Rates
HKAS 24 Related Party Disclosures
HKAS 27 Consolidated and Separate Financial Statements
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
HK (SIC)-Int 15 Operating Leases - Incentives
HKFRS 2 Share-based Payments
HKFRS 3 Business Combination
The adoption of new / revised HKASs 1, 7, 8, 10, 16, 17, 18, 21, 24, 27,
33, 36, HK(SIC)-Int 15 and HKFRS 3 did not result in substantial changes
to the Group's accounting policies. In summary:
- HKASs 1, 7, 8, 10, 16, 17, 18, 27, 33, 36, HK(SIC)-Int 15 and
HKFRS 3 had no material effect on the Group's policies.
- HKAS 21 had no material effect on the Group's policy. The
functional currency of each of the entities has been re-evaluated based on
the guidance to the revised standard. The Group has the same functional
currency as the presentation currency for respective entity financial
statements.
- HKAS 24 has affected the identification of related parties and
some other related party disclosures.
The adoption of HKASs 32 and 39 has resulted in a change in the accounting
policy for recognition, measurement, derecognition and disclosure of
financial instruments.
Until 31 December 2004 investments of the Group were classified into
investment securities and other investments, which were stated in the
balance sheet at cost less any accumulated impairment losses and at fair
value, respectively, and any impairment losses on investment securities
and other investments were recognised in the income statement in the
period in which they arise.
In accordance with the provisions of HKAS 39, the investments have been
classified into available-for-sale financial assets and financial assets
at fair value through profit or loss. The classification depends on the
purpose for which the investments were held. As a result of the adoption
of HKAS 39, all the investments are now stated at fair value in the
balance sheet. In addition, all the investments as at 31 December 2004
that should be measured at fair value on adoption of HKAS 39 should be
remeasured at 1 January 2005 and any adjustment of the previous carrying
amount should be recognised as an adjustment of the balance of retained
profits at 1 January 2005. However the adoption of HKAS 39 has had no
material effect on the Group's results and equity.
The effect of the changes in accounting policies on these financial
statements as a result of the adoption of HKAS 32 and HKAS 39 is
summarised as follows:
- investment security of the Group as at 31 December 2004 was
redesignated into available-for-sale financial asset on 1 January 2005.
The aggregate differences between the respective carrying value of each
investment as at 31 December 2004 and the respective fair value at 1
January 2005 is insignificant and hence, no adjustment has been made
against the retained profits at 1 January 2005;
- other investments of the Group as at 31 December 2004 were
redesignated into financial assets at fair value through profit or loss on
1 January 2005. There is no effect on remeasurement as the accounting
policy on measurement of the Group's trading securities as at 31 December
2004 is the same as that for financial assets at fair value through profit
or loss.
The adoption of HKFRS 2 has resulted in a change in the accounting policy
for share-based payments. In prior years, no amounts were recognised when
employees (which term includes directors) were granted share options over
shares in the Group. If the employees choose 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 1 January 2005, in order to comply with HKFRS 2, the
Group recognises the fair value of such share options as an expense in the
income statement, or as an asset, if the cost qualifies for recognition as
an asset under the Group's accounting policies. A corresponding increase
is recognised in a capital reserve within equity.
Where the employees 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 employee 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.
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 to the following grants of options:
(a) all options granted to employees on or before 7 November 2002; and
(b) all options granted to employees after 7 November 2002 but which
had vested before 1 January 2005.
No adjustments to the opening balances as at 1 January 2004 are required
as no options existed at that time which were unvested at 1 January 2005.
The adoption of HKAS 38 has resulted in a change in the accounting policy
for intangible assets.
By 31 December 2004, intangible assets were amortised over their estimated
useful lives. HKAS 38 Intangible Assets requires intangible assets to be
assessed at the individual asset level as having either finite or
indefinite life. A finite-life intangible asset is amortised over its
estimated useful life whereas an intangible asset with an indefinite
useful life is carried at cost less any accumulated impairment losses.
Intangible assets with indefinite lives are not subject to amortisation
but are tested for impairment annually or more frequently when there are
indications of impairment. In accordance with the transitional provisions
in HKAS 38, the Group reassessed the useful lives of its trading rights in
the exchanges in Hong Kong on 1 January 2005 and concluded that the
trading rights have indefinite useful lives. The Group has applied these
transitional provisions prospectively and no adjustment was resulted from
this reassessment.
All changes in the accounting policies have been made in accordance with
the transitional provisions in the respective standards, wherever
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 SSAP 24 "Accounting
for investments in securities" to investments in securities. The
adjustments required for the accounting differences between SSAP 24 and
HKAS 39 are determined and recognised at 1 January 2005;
- HKFRS 2 - only retrospective application for all equity
instruments granted after 7 November 2002 and not vested at 1 January
2005.
The adoption of HKFRS 2 resulted in:
2005 2004
HK$ HK$
Increase in capital reserve 7,040,000 -
Increase in staff costs 1,005,715 -
Increase in other operating expenses 6,034,285 -
No early adoption of the following new Standards or Interpretations that
have been issued but are not yet effective for the year ended 31 December
2005. The adoption of such Standards or Interpretations will not result
in substantial changes to the Group's accounting policies.
Hong Kong Companies (Amendment) Ordinance 2005
HKAS 1(Amendment) Capital Disclosures
HKAS 19 (Amendment) Actuarial Gains and Losses, Group Plans and
Disclosures
HKAS 21 (Amendment) Net investment in a Foreign Operation
HKAS 39 (Amendment) Cash Flow Hedge Accounting of Forecast Intragroup
Transactions
HKAS 39 (Amendment) The Fair Value Option
HKAS 39 (Amendment) &
HKFRS 4 (Amendment) Financial Guarantee Contracts
HKFRS 6 Exploration for and Evaluation of Mineral
Resources
HKFRS 7 Financial Instruments: Disclosures
HK(IFRIC)-Int 3 Emission Rights
HK(IFRIC)-Int 4 Determining whether an Arrangement contains A
Lease
HK(IFRIC)-Int 5 Rights to Interests Arising from Decommissioning,
Restoration and Environmental Rehabilitation Funds
HK(IFRIC)-Int 6 Liabilities arising from Participating in a
Specific Market-Waste Electrical and Electronic
Equipment
HK(IFRIC)-Int 7 Applying the Restatement Approcah under HKAS 29
Financial Reporting in Hyperinflationary Economies
2. TURNOVER AND PROFIT/(LOSS) ATTRIBUTED TO THE BUSINESS SEGMENTS FOR
THE YEAR
2005 2004
HK$'000 HK$'000
TURNOVER
Broking 12,778 32,343
Securities margin financing 14,270 21,899
Corporate finance and asset management 1,202 2,407
Money lending 13,071 20,533
Investment trading and holding 617 91,955
-----------------------
41,938 169,137
=======================
SEGMENT RESULTS
Broking (24,586) (14,683)
Securities margin financing 7,904 (39,201)
Corporate finance and asset management (1,283) (903)
Money lending (16,171) (23,487)
Investment trading and holding (9,273) (95)
-----------------------
(43,409) (78,369)
NET UNALLOCATED EXPENSES (10,543) (3,451)
------------------------
LOSS BEFORE TAXATION (53,952) (81,820)
TAXATION 3,252 4,146
------------------------
LOSS FOR THE YEAR (50,700) (77,674)
========================
3. LOSS PER SHARE
The basic loss per share is calculated by dividing the loss attributable
to equity holders of the Company by the weighted average number of
ordinary shares in issue during the year.
2005 2004
HK$ HK$
Loss attributable to equity holders of the Company
50,699,774 77,673,575
--------------------------
Weighted average number of ordinary shares in issue
3,000,000,000 3,000,000,000
--------------------------
Basic loss per share 1.69 cents 2.59 cents
--------------------------
Diluted loss per share for the year ended 31 December 2005 and 2004 has
not been shown as the options outstanding during these years had an anti-
diluted effect on the basic loss per share for these years.
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