BEIDA JADE BIRD<08095> - Results Announcement (Final, 2005, Summary) Beijing Beida Jade Bird Universal Sci-Tech Company Limited announced on 11/5/2006: (stock code: 08095 ) Year end date :31/12/2005 Currency :RMB Auditors' report :Qualified Important Note : This result announcement form only contains extracted information from and should be read in conjunction with the detailed results announcement of the issuer, which can be viewed on the GEM website at http://www.hkgem.com (Audited) (Audited) Current Last Corresponding Period Period from 01/01/2005 from 01/01/2004 to 31/12/2005 to 31/12/2004 $'000 '000 Turnover : 143,733 130,503 Profit/(Loss) from Operations : (42,129) 243,179 Finance cost : (14,482) (8,233) Share of Profit/(Loss) of Associates : (816) N/A Share of Profit/(Loss) of Jointly Controlled Entites : N/A N/A Profit/(Loss) after Taxation & MI : (59,843) 234,185 % Change Over the Last Period : N/A EPS / (LPS) Basic (in dollar) : (RMB 0.051) RMB 0.204 Diluted (in dollar) : N/A N/A Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit (Loss) after ETD Items : (59,843) 234,185 Final Dividends per Share : NIL NIL (specify if with other options) : N/A N/A B/C Dates for Final Dividends : N/A Payable Date : N/A B/C Dates for (-) General Meeting : N/A Other Distribution for Current Period : NIL B/C Dates for Other Distribution : N/A (bdi: both days inclusive) For and on behalf of Beijing Beida Jade Bird Universal Sci-Tech Company Limited Signature : Name : Wong Tak Chuen Title : Company Secretary Responsibility statement The directors of the Company (the "Directors") as at the date hereof hereby collectively and individually accept full responsibility for the accuracy of the information contained in this results announcement form (the "Information") and confirm, having made all reasonable inquiries, that to the best of their knowledge and belief the Information are accurate and complete in all material respects and not misleading and that there are no other matters the omission of which would make the Information herein inaccurate or misleading.The Directors acknowledge that the Stock Exchange has no responsibility whatsoever with regard to the Information and undertake to indemnify the Exchange against all liability incurred and all losses suffered by the Exchange in connection with or relating to the Information. Remarks: The directors of the Company (the "Directors") as at the date hereof hereby collectively and individually accept full responsibility for the accuracy of the information contained in this results announcement form (the "Information") and confirm, having made all reasonable inquiries, that to the best of their knowledge and belief the Information are accurate and complete in all material respects and not misleading and that there are no other matters the omission of which would make the Information herein inaccurate or misleading.The Directors acknowledge that the Stock Exchange has no responsibility whatsoever with regard to the Information and undertake to indemnify the Exchange against all liability incurred and all losses suffered by the Exchange in connection with or relating to the Information. 1. Principal Activities and Basis of Presentation The Group is principally engaged in the research, development, manufacturing, marketing and sale of embedded systems, including network security products ("NET"), wireless fire alarm systems ("WFAS"), application specific integrated circuits ("ASIC"), global positioning system application systems ("GPS"), smart card application systems ("IC"), remote automatic meter-reading systems ("RMR") and related products. The Group is also engaged in the sale of computer products ("Computer") and the provision of total solution services through the application of its existing embedded system products. In addition, the Group was also engaged in the properties development activities during the year. The principal accounting policies adopted by the Group conform to Hong Kong Financial Reporting Standards (which also include Hong Kong Accounting Standards and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants, accounting principles generally accepted in Hong Kong. 2. Adoption of New and Revised Hong Kong Financial Reporting Standards In the current year, the Group has adopted all of the new and revised Hong Kong Financial Reporting Standards ("HKFRSs") and Hong Kong Accounting Standards ("HKASs") (collectively "HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants which are relevant to its operations and effective for accounting periods beginning on or after 1 January 2005 for the preparation of these financial statements. 3. Summary of the Impact of Changes in Accounting Policies (a) Effect on the consolidated balance sheet Effect of adopting At 1 January 2005 HKASs 32 and 39 HKAS 39 Change in Revaluation of Effect of new policies classification of available-for-sale (Increase/(decrease)) equity investments equity investments Total RMB'000 RMB'000 RMB'000 Assets Available-for-sale equity investments 362,581 323,818 686,399 Long term investments (362,581) - (362,581) Held for trading equity investments 2,000 - 2,000 Short term investments (2,000) - (2,000) 323,818 Equity Available-for-sale investments revaluation reserve - 323,818 323,818 Effect of adopting At 31 December 2005 HKASs 32 and 39 HKAS 39 Change in Revaluation of Effect of new policies classification of available-for-sale (Increase/(decrease)) equity investments equity investments Total RMB'000 RMB'000 RMB'000 Assets Available-for-sale equity investments 349,824 68,711 418,535 Long term investments (349,824) - (349,824) 68,711 Equity Available-for-sale investments revaluation reserve - 68,711 68,711 (b) Effect on the consolidated income statement for the years ended 31 December 2005 and 2004 Effect of adopting HKFRS 3 Effect of new policy Discontinuation of amortisation of goodwill Total RMB'000 RMB'000 Year ended 31 December 2005 Decrease in amortisation of goodwill and increase in profit 6,014 6,014 Increase in basic earnings per share 0.5 cents 0.5 cents Effect of adopting HKFRS 3 Effect of new policy Discontinuation of amortisation of goodwill Total RMB'000 RMB'000 Year ended 31 December 2004 Decrease in amortisation of goodwill and increase in profit - - Increase in basic earnings per share - - 4. Earnings/(loss) Per Share Attributable to Ordinary Equity Holders of the Parent The calculation of basic loss per share for the year ended 31 December 2005 is based on the net loss attributable to equity holders of the parent for the year ended 31 December 2005 of approximately RMB59,843,000, and the 1,184,800,000 ordinary shares in issue during the year. The calculation of basic earnings per share for the year ended 31 December 2004 is based on the net profit attributable to equity holders of the parent for the year ended 31 December 2004 of approximately RMB234,185,000, and the weighted average of 1,146,828,415 ordinary shares in issue during 2004 as adjusted to reflect the new placement of H shares during 2004. Diluted earnings per share amounts for the year ended 31 December 2005 and 31 December 2004 have not been calculated because no diluting events existed during the years. 5. Extract of the report of auditors Basis of opinion (extracts) We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. However, the evidence made available to us by the Group was limited because sufficient information and explanations necessary to enable us to understand and assess the recoverability of the Group's interest in its associate, Beijing Chengjian Donghua Real Estate Development Company Limited ("Chengjian Donghua"), of RMB313 million, details of which are set out in note 16 to the financial statements, have not been made available. We have not been provided with sufficient documentation and information as to the adequacy of the profitability and funding of the property development project (the "Project") currently being undertaken by Chengjian Donghua, the circumstances giving arise to which are as follows: (i) The estimated selling price of the hotel within the Project is critical to the assessment of the overall profitability of the Project. As of the date of this report, the verifiable evidential information made available to us by the Group as to the estimation of the average selling price of the hotel within the Project was limited. (ii) One of the critical assumptions underlying the cash flow projection of the Project made available to us by the directors is that Chengjian Donghua will obtain the pre-sale property approval document from the authorities in the third quarter of 2006. One of the crucial documents needed to apply for the pre-sale property approval document is a formal property development company qualification grading certificate under the name of Chengjian Donghua. As of the date of this report, Chengjian Donghua has only obtained a temporary property development company qualification grading certificate, which is valid for two years and will expire in mid-2006. This temporary property development company qualification grading certificate has to be upgraded to a formal property development company qualification grading certificate. However, as of the date of issuing this report, the formal property development company qualification grading certificate has yet to be obtained by Chengjian Donghua. There are no other satisfactory audit procedures that we could adopt to understand and assess the recoverability of the Group's interest in its associate. In addition, the information and explanations necessary to enable us to understand and assess the appropriateness of the classification of Beijing Yanyuan JinFeng International Trading Ltd., Beijing Anfu Property Development Ltd., and Beijing Runze Huiheng Commerce Ltd., as unrelated parties were insufficient. Further details are set out in note 22 to the financial statements. There are no other satisfactory audit procedures that we could adopt to understand and assess if the classification of Beijing Yanyuan JinFeng International Trading Ltd., Beijing Anfu Property Development Ltd., and Beijing Runze Huiheng Commerce Ltd., as unrelated parties is appropriate. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion. Fundamental uncertainty - litigation against the Group's key associate In forming our opinion, we have considered the adequacy of the disclosures made in the financial statements concerning the possible outcome of the litigation filed by Shenzhen Development Bank against Chengjian Donghua, details of which are set out in note 32 to the financial statements. The outcome of this litigation could result in additional liabilities to Chengjian Donghua and/or the cessation of the development right of the Project thereby causing uncertainty in the recoverability of the Group's interest in associate. The Group's interests in Chengjian Donghua included in the consolidated balance sheet at 31 December 2005 amounted to RMB313.4 million and the Group's share of loss of Chengjian Donghua for the year ended 31 December 2005 was RMB0.8 million, details of which are set out in note 16 to the financial statements. Details of the circumstances relating to this fundamental uncertainty are described in note 32 to these financial statements. We consider that the fundamental uncertainty has been adequately accounted for and disclosed in the financial statements and our opinion is not qualified in this respect alone. Qualified opinion arising from limitation of audit scope Except for any adjustments to both amounts and disclosures in the financial statements that might have been found to be necessary had we been able to obtain sufficient evidence concerning the recoverability of the Group's interest in an associate, Chengjian Donghua, of RMB313 million and the appropriateness of the classification of Beijing Yanyuan JinFeng International Trading Ltd., Beijing Anfu Property Development Ltd., and Beijing Runze Huiheng Commerce Ltd., as unrelated parties, in our opinion the financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2005 and of the loss and cash flows of the Group for the year then ended and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance. In respect alone of the limitation of our work relating to the recoverability of the Group's interest in its associate and the appropriate classification of Beijing Yanyuan JinFeng International Trading Ltd., Beijing Anfu Property Development Ltd., and Beijing Runze Huiheng Commerce Ltd., as unrelated parties, we have not obtained all the information and explanations that we considered necessary for the purpose of our audit. 6. Extracts of note 16 to the financial statements Interest in an Associate The Company entered into a share transfer agreement (the "Agreement") with Beijing Beida Jade Bird Limited ("Beida Jade Bird", one of the shareholders of the Company) on 24 March 2005 (note 21) to acquire a 44% equity interest in Beijing Chengjian Donghua Real Estate Development Company Limited ("Chengjian Donghua"). Based on the legal opinion provided by the Company's external PRC legal counsel, all the pre-completion conditions of the Agreement have been fulfilled and as such, the acquisition has been duly completed during the year. Chengjian Donghua's articles of association have been amended to reflect the Company as an investor of Chengjian Donghua holding a 44% equity interest in Chengjian Donghua. In addition, the Company has obtained a shareholder certificate from Chengjian Donghua on 19 August 2005 indicating that the Company holds a 44% equity interest in Chengjian Donghua. As of the date of issuing these financial statements, the approval documents from the Beijing Municipal Bureau of Commerce and Beijing Municipal Commission of Development and Reform have yet to be obtained by the Company in connection with the aforesaid acquisition of the 44% equity interest in Chengjian Donghua. In addition, pursuant to the Agreement, a loan receivable from Chengjian Donghua of RMB61,600,000 has been transferred from Beida Jade Bird to the Company upon the completion of the acquisition. Group Company 2005 2004 2005 2004 RMB'000 RMB'000 RMB'000 RMB'000 Equity interests, at cost - - 252,591 - Share of net assets 251,775 - - 251,775 - 252,591 Due from an associate (note 33(h)) 61,600 - 61,600 313,375 - 314,191 The amount due from an associate is unsecured, interest-free and has no fixed terms of repayment. Particulars of the Company's associate as at 31 December 2005 are as follows: Place of incorporation/ Percentage of establishment and Nominal value of equity attributable Name operations Legal status registered capital to the Company Chengjian Beijing, the PRC Limited liability RMB50,000,000 44 Donghua company Principal activity Property development Summarised financial information of the Group's associate as at and for the year ended 31 December 2005 is as follows: RMB'000 Total assets 1,787,758 (a) Total liabilities 1,793,799 (b) Revenue - Loss for the year 3,139 (a) Consisting mainly of the following: RMB'000 Property development costs 1,631,689 Other receivables 155,691 * * Subsequent to 31 December 2005 and prior to the date of issuing these financial statements, Chengjian Donghua transferred the legal title to certain of its receivables from three unrelated companies aggregating RMB113.1 million as at 31 December 2005 to Beida Jade Bird. Chengjian Donghua and Beida Jade Bird signed a tri-partite agreement with each of the three companies above respectively whereby Beida Jade Bird agreed to take up these receivables and recognised them as partial settlement made by Chengjian Donghua of its payable to Beida Jade Bird. (b) Consisting mainly of the following: RMB'000 Amount due to Beida Jade Bird 1,614,847 # Amount due to the Company 61,600 Amount due to Beijing Donghua Company, a fellow subsidiary of the Company 42,491Payable to contractors 70,483 # This amount arose, in part, from the repayment of an amount due to Beijing Donghua Company of RMB700 million that Chengjian Donghua received from Beijing Donghua Company in 2003 being the first phase payment made by Beijing Donghua Company to Chengjian Donghua in relation to certain property development business cooperation. The property development business cooperation was cancelled by a cancellation agreement dated 12 December 2004. Further details of the above are set out in note 32 to these financial statements. Since the property development project of Chengjian Donghua was still in the construction phase in 2005 and Chengjian Donghua has not obtained banking facilities, Chengjian Donghua has to rely on certain of the related parties/fellow subsidiaries of the Company, including Beida Jade Bird, Beijing Teli Investment Management Ltd. and Beijing Donghua Company, to fund its construction and working capital requirements and to settle construction costs on its behalf. 7. Extracts of note 22 to the financial statements Prepayments, Deposits and Other Receivables Group Company 2005 2004 2005 2004 RMB'000 RMB'000 RMB'000 RMB'000 Advances to suppliers 8,207 2,168 32 303 Prepayments 21,010 234 20,970 159 Advances to staff 2,827 1,786 426 443 Deposits 494 558 306 309 Other receivables * 58,268 3,895 56,966 1,050 90,806 8,641 78,700 2,264 * Subsequent to 31 December 2005 and prior to the date of issuing these financial statements, an aggregate amount of RMB53,415,000 and RMB52,320,000 has been recovered by the Group and Company, respectively. On 2 April 2005, the Company entered into a purchase agreement with each of the three domestic companies: Beijing Huoju investment Limited, Beijing Yanyuan JinFeng International Trading Ltd. and Beijing Runze Huiheng Commerce Ltd. for the purchase of computer equipment, details of which are as follows: (i) According to the computer purchase agreement signed by the Company with Beijing Huoju investment Limited, an unrelated independent third party, on 2 April 2005 for a total purchase consideration of RMB16 million, the Company was required to make an advance payment of 50% of the purchase consideration to Beijing Huoju investment Limited amounting to RMB8 million on 13 April 2005. This computer purchase transaction was subsequently terminated by the Company and Beijing Huoju investment Limited. Cash advances totalling RMB16 million were subsequently made to Beijing Huoju investment Limited by the Company. Prior to the date of issuing these financial statements, Beijing Huoju investment Limited settled an aggregate amount of RMB9.4 million due to the Company. For the remaining RMB6.6 million, a provision for doubtful debts of RMB3.3 million was made as at 31 December 2005. (ii) According to the computer purchase agreement signed by the Company with Beijing Yanyuan JinFeng International Trading Ltd., an unrelated independent third party, on 2 April 2005 for a total purchase consideration of RMB33 million, the Company made an advance payment of 50% of the purchase consideration to Beijing Yanyuan JinFeng International Trading Ltd. amounting to RMB16.5 million on 8 April 2005. This computer purchase transaction was subsequently terminated by the Company and Beijing Yanyuan JinFeng International Trading Ltd. Prior to the date of issuing these financial statements, Beijing Yanyuan JinFeng International Trading Ltd. fully settled the amount of RMB16.5 million due to the Company. (iii) According to the computer purchase agreement signed by the Company with Beijing Runze Huiheng Commerce Ltd., an unrelated independent third party, on 2 April 2005 for a total purchase consideration of RMB11.2 million, the Company made an advance payment of 50% of the purchase consideration to Beijing Runze Huiheng Commerce Ltd. amounting to RMB5.6 million on 4 April 2005. This computer purchase transaction was subsequently terminated by the Company and Beijing Runze Huiheng Commerce Ltd. Prior to the date of issuing these financial statements, Beijing Runze Huiheng Commerce Ltd. fully settled the amount of RMB5.6 million due to the Company. In addition, on 21 March 2005, the Company made an advance to Beijing Anfu Property Development Ltd., an unrelated independent third party, amounting to RMB28 million. During 2005, Beijing Anfu Property Development Ltd. has repaid an amount of RMB7.5 million to the Company. Prior to the date of issuing these financial statements, Beijing Anfu Property Development Ltd. fully settled the remaining balance of RMB20.5 million to the Company. Included in the Group's and the Company's prepayments, deposits and other receivable is the following amount due to a related party: Group Company 2005 2004 2005 2004 RMB'000 RMB'000 RMB'000 RMB'000 Amount due to a related party - 200 - 200 Extracts of note 32 to the financial statements Contingent Liabilities Chengjian Donghua, the sole associate of the Company which was acquired from Beida Jade Bird in August 2005, is currently a defendant in a civil litigation in Beijing. On 17 November 2005, Shenzhen Development Bank ("SDB"), as the plaintiff, obtained an order from the People's High Court of Beijing to freeze the assets of Beijing Donghua Company and Chengjian Donghua for a value equivalent to RMB1,530 million. The assets frozen by the order included the land use rights of a parcel of land (the "Land") located at Dongzhimen Wai, Dongcheng District, Beijing, currently registrated under the name of Chengjian Donghua. The Land is for the development of a transportation terminal and a large-scale commercial and residential complex (the "Dongzhimen Project"). Beijing Donghua Company is a Sino-foreign cooperative joint venture established by Chengjian Donghua and Strong Ground Investment Limited ("Strong Ground", a Company incorporated in the British Virgin Islands) in 2002 for the purpose of undertaking the Dongzhimen Project. Cooperation between Chengjian Donghua and Strong Ground for the development of the Dongzhimen Project was evidenced by a cooperation agreement (the "Cooperation Agreement") signed by Chengjian Donghua and Strong Ground on 19 November 2001 and a supplementary agreement (the "Supplementary Agreement") signed by both parties on 16 September 2003. By a cancellation agreement (the "Cancellation Agreement") signed by Chengjian Donghua and Strong Ground on 12 December 2004, Chengjian Donghua and Strong Ground agreed to cancel the Cooperation Agreement and the Supplementary Agreement, and to release each other from the obligations and liabilities under the Cooperation Agreement and the Supplementary Agreement. As designated by Strong Ground pursuant to the Cancellation Agreement, Chengjian Donghua repaid Beijing Donghua Company a sum of RMB700 million (note 16) previously received by Chengjian Donghua pursuant to the Cooperation Agreement, as amended by the Supplementary Agreement. Based on the documents filed with the People's High Court of Beijing, SDB's claim is for, among other things, an order for the transfer of the Land to Beijing Donghua Company and that Beijing Donghua Company be adjudged to be liable a guarantor for a principal sum of RMB1,500 million lent by SDB to Zhongcai State-owned Enterprise Investment Company Limited ("Zhongcai Enterprise") and Shouchuang Network Company Limited ("Shouchuang Network") together with interest accrued thereon of RMB30.74 million up to 31 October 2005. The directors of the Company are not aware of any relationship between Zhongcai Enterprise and Shouchuang Network, and the Company and connected persons (as defined in the Growth Enterprise Market Listing Rules) of the Company. On 24 February 2006, upon the application by Chengjian Donghua for discharge of the freeze order and upon the provision of a guarantee by Sino Investment Credit Guarantee Ltd., a limited liability company established in the PRC principally engaged in the provision of guarantees and related advisory services, for the performance of the obligations of Chengjian Donghua, the People's High Court of Beijing ordered the discharge of the freeze order. The directors of the Company understand that, upon the discharge of the freeze order, the Land is released as a security from the claim by SDB. However, the claim by SDB against Beijing Donghua Company and Chengjian Donghua for repayment of the principal sum of RMB1,500 million lent to Zhongcai Enterprise and Shouchuang Network together with the interest accrued thereon is still pending adjudication by the People's High Court of Beijing. Based on the legal opinion provided by the external legal advisors of Chengjian Donghua, the directors of the Company are of the view that Chengjian Donghua has a valid defence against the aforesaid litigation filed by SDB against Chengjian Donghua and therefore, no provision for such claim was required in the financial statements of Chengjian Donghua. |