GOOD FELLOW GP<00910> - Results Announcement
Good Fellow Group Limited announced on 23/10/2006:
(stock code: 00910 )
Year end date: 30/06/2006
Currency: HKD
Auditors' Report: Unqualified
(Audited )
(Audited ) Last
Current Corresponding
Period Period
from 01/07/2005 from 01/07/2004
to 30/06/2006 to 30/06/2005
Note ('000 ) ('000 )
Turnover : 360,770 138,262
Profit/(Loss) from Operations : 124,560 (118,778)
Finance cost : (3,295) (152)
Share of Profit/(Loss) of
Associates : N/A N/A
Share of Profit/(Loss) of
Jointly Controlled Entities : 1,640 (30,838)
Profit/(Loss) after Tax & MI : 83,208 (150,189)
% Change over Last Period : N/A %
EPS/(LPS)-Basic (in dollars) : 0.0272 (0.0561)
-Diluted (in dollars) : 0.0256 N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : 83,208 (150,189)
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 Annual
General Meeting : 22/11/2006 to 28/11/2006 bdi.
Other Distribution for : N/A
Current Period
B/C Dates for Other
Distribution : N/A
Remarks:
1. BASIS OF PREPARATION
These financial statements have been prepared in accordance with Hong Kong
Financial Reporting Standards ("HKFRSs") (which also include Hong Kong
Accounting Standards ("HKASs") and Interpretations) issued by the Hong
Kong Institute of Certified Public Accountants, accounting principles
generally accepted in Hong Kong and the disclosure requirements of the
Hong Kong Companies Ordinance. They have been prepared under the
historical cost convention, except for the periodic remeasurement of
leasehold properties, investment properties, financial assets and
liabilities as well as certain biological assets. These financial
statements are presented in Hong Kong dollar and all values are rounded to
the nearest thousand (HK$'000) except when otherwise indicated.
2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING
STANDARDS/CHANGES IN ACCOUNTING POLICIES
In current year, the Group has applied, for the first time, a number of
Hong Kong Financials Reporting Standards, Hong Kong Accounting Standards
and Interpretations (hereinafter collectively referred to as "new HKFRSs")
issued by the Hong Kong Institute of Certified Public Accountants that
are effective for accounting periods beginning on or after 1 January 2005.
The adoption of the new HKFRSs has resulted in changes to the Group's
accounting policies in the following areas that have an effect on how the
results for the current and prior accounting years are prepared and
presented:
Owner-occupied leasehold interest in land
In previous years, owner-occupied leasehold land and buildings were
included in property, plant and equipment and measured using the cost
model. In the current year, the Group has applied HKAS 17 "Leases". Under
HKAS 17, the land and buildings elements of a lease of land and buildings
are considered separately for the purpose of lease classification, unless
the lease payments cannot be allocated reliably between the land and
buildings elements, in which case, the entire lease in generally treated
as a finance lease. To the extent that the allocation of the lease
payments between the land and buildings elements can be made reliably, the
leasehold interests in land are reclassified to prepaid lease payments
under operating leases, which are carried at cost and amortised over the
lease term on a straight-line basis. This change in accounting policy has
been applied retrospectively.
Investment properties
In the current year, the Group has, for the first time, applied "HKAS 40
"Investment Property". The Group has elected to use the fair value model
to account for its investment properties which requires gains or losses
arising from changes in the fair values of investment properties to be
recognised directly in profit or loss for the year in which they arise. In
previous years, investment properties under the predecessor accounting
standard were measured at open market markets values, with revaluation
surplus or deficits credited or charged to investment property revaluation
reserve unless the balance on this reserve was insufficient to cover a
revaluation decrease, in which case the excess of the revaluation decrease
over the balance on the investment property revaluation reserve was
charged to the consolidated income statement. Where a decrease had
previously been charged to the consolidated income statement and a
revaluation surplus subsequently arose, that increase was credited to the
consolidated income statement to the extent of the decrease previously
charged. As a result of the adoption of the new accounting standard, the
amount held in investment properties revaluation reserve at 1 July 2005
has been transferred to the Group's retained profits.
Financial instruments
In the current year, the Group has applied HKAS 32 "Financial Instruments:
Disclosure and Presentation" and HKAS 39 "Financial Instruments:
Recognition and Measurement". The adoption of these new HKASs has resulted
in a change in accounting policy for the recognition, measurement, de-
recognition and disclosure of financial instruments. Upon the adoption of
HKASs 32 and 39, the financial assets of the Group have been classified
into the respective categories of financial assets at fair value through
profit and loss; available-for-sale financial assets; loans and
receivables; and held-to-maturity financial assets. The classification
depends on the purpose for which the assets are held.
At 30 June 2005, the Group owned short term securities investment that are
stated at their fair values on the basis of quoted market prices at the
balance sheet date, on an individual investment basis. The gains or losses
arising from changes in fair values of securities were credited or charged
to the profit and loss account in the period in which they arise.
Commencing the current financial year, as a result of the adoption of the
new HKASs, the Group has reclassified these securities investment as "
financial assets at fair value through profit or loss". The
reclassification has no material effect on the results of the Group for
the current and prior year.
Convertible notes
Previously, convertible notes were classified as liabilities and carried
at proceeds received. In accordance with HKAS 32 and HKAS 39, convertible
notes are regarded as compound instruments, consisting of a liability
component and an equity component, unless in certain circumstances when
the issuer is required to recognize the instrument as a whole as financial
liability with embedded derivatives. Derivatives embedded in a financial
instrument are treated as separate components when their economic risks
and characteristics are not closely related to those of the host contract
(the liability component) and the host contract is not carried at fair
value through profit or loss. Upon first time adoption of HKAS 32 and
HKAS 39, convertible notes issued by the Company are split into their
liability and equity components at initial recognition. The liability
component is subsequently carried at amortised cost. The equity component
is recognised as conversion option reserve, a separate component of
equity, until the convertible notes are either converted (in which case it
is transferred to share premium account) or redeemed (in which case it is
released directly to retained profits).
Share-based payments
In the current year, the Group has applied HKFRS 2 "Share-based Payments"
which requires an expense to be recognised where the Group buys goods or
obtain services in exchange for shares or rights over shares ("equity-
settled transactions"), or in exchange for other assets equivalent in
value to a given number of shares or rights over shares ("cash-settled
transactions"). Prior to the application of HKFRS 2, the Group did not
recognize the financial effect of share options until they are exercised.
As a result of the adoption of this new HKFRS, the Group's accounting
policy has been revised for the recognition of the fair value of share
options granted as an expense. In respect of share options outstanding as
at 30 June 2005, the Group was not required to account for these
outstanding share options in accordance with the relevant transitional
provisions of this new HKFRS, as they were either granted on or before 7
November 2002 or granted after 7 November 2002 and fully vested before 1
July 2005. The Group however has evaluated that impact on the results of
the Group for current or prior accounting periods.
3. EARNINGS/(LOSS) PER SHARE
(a) Basic earnings/(loss) per share
Basic earnings per share is calculated by dividing the profit attributable
to equity holders of the Company by the weighted average number of
ordinary shares in issue during the year. The calculation of the basic
earnings per share is based on the following data:
2006 2005
HK$'000 HK$'000
(restated)
Profit / (loss) attributable to
equity holders of the Company 83,208 (150,189)
==========================
Weighted average number of ordinary shares
in issue (thousands) 3,055,886 2,677,388
==========================
(b) Diluted earnings/(loss) per share
Diluted earnings per share is calculated adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The Company has two categories of dilutive
potential ordinary shares: convertible debt and share options. The
convertible debt is assumed to have been converted into ordinary shares
and the net profit is adjusted to eliminate the interest expense less tax
effect. For the share options a calculation is done to determine the
number of shares that could have been acquired at fair value (determined
as the average annual market share price of the Company's shares) based on
the monetary value of the subscription tights attached to outstanding
share options. The number of shares calculated as above is compared with
the number of shares that would have been issued assuming the exercise of
the share options. Reconciliation of the earnings and number of shares
used in the calculation of diluted earnings for shares is as follows:
2006 HK$'000
Earnings:
Profit for the year and earnings for the purposes of basic
earnings per share 83,208
Effect of dilutive potential ordinary shares in respect of
convertible notes 1,340
----------
Earnings for the purpose of diluted earnings per share 84,548
==========
Number of shares HK$'000
Weighted average number of ordinary shares for the purposes of
basic earnings per share 3,055,886
Effect of dilutive potential ordinary shares in respect of :
Share options 3,103
Convertible notes 248,781
----------
Weighted average number of ordinary shares for the purpose of
diluted earnings per share 3,307,770
==========
No diluted loss per share had been presented for the year ended 30 June
2005 since the assumed exercise of the Company's outstanding share options
would have no dilutive effect on loss per share.
4. TURNOVER AND REVENUE
Turnover represents the net invoiced value of goods, forestry products and
saplings sold, after allowances for returns and trade discounts.
Group
2006 2005
HK$'000 HK$'000
Turnover
Sale of goods and forestry products 233,847 138,262
Sale of paper mulberry saplings 126,923 -
------------------------
360,770 138,262
------------------------
Other revenue
Dividend income from
listed investments 148 67
Interest income 3,644 1,517
Rental income 93 259
Others 550 879
-------------------------
4,435 2,722
-------------------------
Total revenue 365,205 140,984
=========================
5. PROFIT/(LOSS) FROM OPERATING ACTIVITIES
The Group's profit/(loss) from operating activities is arrived at after
charging/(crediting) the following:
Group
2006 2005
HK$'000 HK$'000
(restated)
Amortisation of goodwill - 10,694
Amortisation of patent in application 9,064 -
Amortisation of paper mulberry saplings 17,833 -
Auditors' remuneration 800 735
Cost of goods and forestry products sold
140,019 126,776
Cost of saplings sold 26,833 -
Depreciation on property, plant & equipment
- owned assets 6,810 6,407
- leased assets - 110
Exchange loss / (gain) (64) 6
Gross rental income (93) (259)
Less: Outgoings 2 8
Net rental income (92) (251)
Impairment loss on goodwill
(included in other operating expenses) - 61,942
Impairment loss on long term investment
(included in other operating expenses) - 6,667
Minimum lease payments under operating leases on
leasehold properties - 544
Release of prepaid lease payments 154 125
Research and development cost 10,577 -
Net unrealised loss on financial assets
at fair value through profit or loss 3,611 4,951
Provision for doubtful debts 1,923 3,522
Provision for obsolete inventories - 13,421
Staff costs (excluding directors' emoluments)
Wages and salaries 11,353 9,472
Retirement benefits scheme contributions
295 338
=========================
6. COMPARATIVE FIGURES
Certain comparative figures have been adjusted or reclassified as a result
of the changes in accounting policies.
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