DNA SECURITY<01051> - Results Announcement
Credit Card DNA Security System (Holdings) Limited announced on 28/10/2003:
(stock code: 01051 )
Year end date: 30/6/2003
Currency: HKD
Auditors' Report: Qualified
(Audited )
(Audited ) Last
Current Corresponding
Period Period
from 1/7/2002 from 1/7/2001
to 30/6/2003 to 30/6/2002
Note ('000 ) ('000 )
Turnover : 11,176 28,221
Profit/(Loss) from Operations : (45,564) (47,887)
Finance cost : (650) (1,637)
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 : (59,577) (31,006)
% Change over Last Period : N/A %
EPS/(LPS)-Basic (in dollars) : (0.0116) (0.0223)
-Diluted (in dollars) : N/A N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : (59,577) (31,006)
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 opinion
We conducted our audit in accordance with Statements of Auditing Standards
issued by the Hong Kong Society of Accountants, except that the scope of
our work was limited as explained below.
An audit includes examination, on a test basis, of evidence relevant to
the amounts and disclosures in the financial statements. It also includes
an assessment of the significant estimates and judgments made by the
directors in the preparation of the financial statements, and of whether
the accounting policies are appropriate to the circumstances of the
Company and the Group, consistently applied and adequately disclosed.
We planned 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
available to us was limited as set out below.
(i) the Group's interest in an associate represents a 30% interest in Ming
Yuen Assets Limited ("Ming Yuen") stated at a carrying value of
HK$28,500,000. However, we were unable to obtain sufficient audit
evidence to assess whether any impairment loss is required to be
recognized in respect of the goodwill arising on acquisition of Ming Yuen.
Accordingly, we were unable to satisfy ourselves that the Group's
interest in Ming Yuen was fairly stated.
(ii) In related to unlisted investments securities of HK$3,420,000, we
were unable to obtain sufficient audit evidence to assess whether any
impairment is required in respect of the unlisted securities.
Accordingly, we are unable to satisfy ourselves that the carrying value of
the investment in securities amounting to Hk$3,420,000 was fairly stated.
Any adjustments to the figures in (I) and (ii) above would have a
consequential effect as appropriate on the net liabilities of the Group
and the company as at 30th June, 2003 and on the net loss of the Group for
the year then ended.
Fundamental uncertainty relating to the going concern basis
In forming our opinion, we have considered the adequacy of the disclosure
made in note 2 to the financial statements concerning the uncertainty
relating to the going concern status of the Group in light of its net
liabilities of approximate Hk$9,841,000 of the Group. As disclosed in
Note 33, after the balance sheet date, the Company issued and allotted
200,000,000 shares of HK$0.01 to an independent third party for
HK$3,200,000 under a private share placement. 101,800,000 shares of
HK$0.01 each are issued for HK$1,444,000 as a result of the exercise of
share options. In addition, convertible notes with principal amount of
HK$11,200,000 are converted into ordinary shares after the balance sheet
date. However, in the light of normal operational expenditures to be
incurred by the Group in the foreseeable future, the directors are
currently actively seeking equity investment from certain potential
strategic investors. And the Group has recently entered into agreements
with certain banks in PRC to provide credit card security device and
digital network authorization services. Provided that the Group
successfully obtain equity investment form these potential strategic
investors and the credit card security device and digital network
authorization service generate budgeted cash inflow, the Group will be
able to meet in full its financial obligations as they fall due for the
foreseeable future. Accordingly, the financial statements have even
prepared on a going concern basis. The financial statements do not
include any adjustments that would result from a failure to obtain such
funding. In view of the extent of the uncertainty surrounding the new
equity capital injection for the Group, we disclaim our opinion in respect
of the fundamental uncertainty relating to the going concern basis.
Disclaimer of opinion
Because of the significance of the possible effect of the limitations in
evidence available to us referred to in the basis of opinion section of
this report and the fundamental uncertainty relating to the going concern
basis, we are unable to form an opinion as to whether the financial
statements give a true and fair view of the state of affairs of the
Company and the Group as at 30th June, 2003 and of the loss and cash flows
of the Group for the year then ended. In all other respects, in our
opinion the financial statements have been properly prepared in accordance
with the disclosure requirements of the Hong Kong Companies Ordinance.
In respect alone of the limitations on our work as set out in the basis of
opinion section of this report, we have not obtained all the information
and explanations that we considered necessary for the purpose of our
audit.
2) An analysis of turnover and profit/(loss) from continuing
operations and discontinued operations
Continuing
Discontinued
Operations
Operations
HK$'000
HK$'000
Turnover 3,491 7,685
Profit/(Loss) (28,015) (31,562)
In March 2003, the Group disposed of its entire interest in Thinking Group
Limited ("Thinking Group"). In June 2003, the Group disposed of its entire
interests in Star Paging Telecom Technology (Shenzhen) Co. Ltd. ("Star
Paging") and GSM Roaming Plug (H..K.) Ltd. ("GSM"). All these disposed
companies were mainly engaged in the manufacture and sales of electronic
products. Upon the completion of the disposal, the business segments of
manufacture and sales of electronic products was regarded as discontinuing
operations.
In August 2002, the Group disposed of its entire interest in Fu Yuk DNA
Holistic Limited ("Fu Yuk") and other subsidiaries, which was engaged in
the sales of health products. Upon the completion of the disposal, the
business segment of sales of health products was regarded as discontinued
operations.
In June 2002, the Group disposed of its entire interests in Chung Hwa Food
& Beverages Limited, Chung Hwa Food & Beverages Holdings Limited, Harbin
Dongfang (Hong Kong) Food Company Limited, Harbin HDL (New Zealand)
Limited, Xiamen Dongchen Food Industry Company Limited, Full Support
Technology Limited and other subsidiaries, which were mainly engaged in
the manufacture and sales of food products and provision of internet
consultancy services. Upon the completion of the disposal, the business
segments of manufacture and sales of food products and provision internet
consultancy services were regarded as discontinued operations.
3) Impairment Loss recognized in Respect of Goodwill
In view of the net selling price of Thinking Group Limited which was
engaged in trading of electronic products, the Group has recognised
impairment losses in respect of goodwill relating to that business and the
entire amount of HK$11,000,000 has been recognised in the consolidated
income statement during the year.
4) Discontinuing Operations
During the current year, the Group disposed of its entire interest in
subsidiaries engaged in the manufacture and sales of electronice products
and a loss on disposal of subsidiaries amounting to HK$12,714,000 was
recognised in the consolidated income statement.
The Group also disposed of its entire interest in a subsidiary engaged in
the sale of health products and other subsidiaries during the year and net
loss on disposal of HK$1,697,000 was recognised in the consolidated income
statement, accordingly.
For the year ended 30th June, 2002, the gain on disposal of subsidiaries
represented the gain on disposal of the Group's entire interest in certain
subsidiaries engaged in the manufacture and sales of food products of
HK$31,747,000 and a subsidiary engaged in provision of internet
consultancy services of HK$3,645,000.
5) Profit / (Loss) from Operations
1.7.2002 1.7.2001
to to
30.6.2003 30.6.2002
HK$'000 HK$'000
Loss from operations has been arrived at after charging:
Staff costs:
Dirctors' remumeration 7,148 11,774
Other staff costs 10,689 12,375
Pension scheme contributions 287 317
------------ -------
18,124 24,466
Auditors' remuneration:
Current year 800 1,085
Overprovision in prior year - (20)
------------ ---------
800 1,065
Depreciationand amortisation
Owned assets 2,562 3,999
Assets held under hire purchase
contracts 48 21
Loss on disposal of property,
plant and equipment 50 2,325
and after crediting:
Gain on disposal of property, plant and
equipment 401 -
Interest income 90 115
Rental income from properties under
operating leases, net of outgoings - 156
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