Creo Medical Regulatory News (CREO)

22 Jan 2007 12:00

China Real Estate Opportunities SA22 January 2007 News Release 22 January 2007 China Real Estate Opportunities S.A. Final Results for the year ended 31 December 2006 CHAIRMAN'S STATEMENT I am pleased to announce the maiden period end results of your company, ChinaReal Estate Opportunities S.A. (CREO or "the Company"). The results cover theperiod from its incorporation on 6 December 2005 to 31 December 2006. For this period the Company made an operating loss of €5,091,782 and had netcash of €16,071,203, at the end of the period. As reported in the interim statement, CREO, through its associate TreasuryHoldings, has committed significant resources to China, with three TreasuryDirectors working full time in China for the majority of the period along withapproximately 20 full time staff. With the assistance of Treasury Holdings theBoard of CREO has evaluated a number of potential transactions over the period.These efforts culminated in the Company's announcement of 14 December regardingthe conditional exchange of contracts for the acquisition of a prime developmentproperty in Beijing known as Xidan Centrepoint Shopping Centre, Office Complexand Hotel. As under AIM rules the proposed acquisition was classified as areverse takeover the shares of the Company were suspended from trading witheffect from 8 December at the Company's request. Following the announcement the Board reviewed the existing structure of theCompany and taking various factors into account including tax advice, the Boardconcluded that it would serve Shareholders interests better over the long termif the Company were to relocate from Luxembourg to Jersey. It is thereforeproposed to liquidate the Company and to transfer its assets to a new holdingcompany in Jersey. In order to achieve this, the Board is proposing withShareholders' approval that the Company is liquidated and its assets transferredto a Jersey company in consideration for the Jersey company issuing new sharesto the existing shareholders of CREO Luxembourg. A circular detailing thisproposal and convening an EGM for 12 February 2007 is with this document. 2007 promises to be a year of major change. The programme to redomicile toJersey, to gain admission of the new holding company to AIM, to gain Shareholderapproval for the purchase of the Xidan acquisition and complete the acquisition,and to execute a fund raising exercise is an ambitious and challenging one. Itis a programme however that the Board believes will give the Company theplatform to achieve major success during 2007 and onwards. Ray HorneyChairman Enquiries to: CREOGuy Leech, Non-Executive DirectorTel: +353 1 6189300 Teather & GreenwoodPaul FinchamTel: +44 (0) 20 7426 7736 Bankside ConsultantsSimon RothschildOliver WintersTel: +44 (0) 20 7367 8871 Independent auditor's report to the Directors' of China Real EstateOpportunities S.A. We have audited the accompanying consolidated financial statements of China RealEstate Opportunities S.A. ("the Company"), which comprise the consolidatedbalance sheet as at 31 December 2006, and the consolidated income statement, andconsolidated cash flow statement for the period then ended, and a summary ofsignificant accounting policies and other explanatory notes. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of theseconsolidated financial statements in accordance with International FinancialReporting Standards. This responsibility includes: designing, implementing andmaintaining internal control relevant to the preparation and fair presentationof financial statements that are free from material misstatements, whether dueto fraud or error; selecting and applying appropriate accounting policies; andmaking accounting estimates that are reasonable in the circumstances. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financialstatements based on our audit. We conducted our audit in accordance withInternational Standards on Auditing. Those standards require that we comply withrelevant ethical requirements and plan and perform the audit to obtainreasonable assurance whether the financial statements are free of materialmisstatement. An audit involves performing procedures to obtain audit evidence about theamounts and disclosures in the financial statements. The procedures selecteddepend on our judgement, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. Inmaking those risk assessments, we consider internal control relevant to theentity's preparation and fair presentation of the financial statements in orderto design audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the entity'sinternal control. An audit also includes evaluating the appropriateness ofaccounting principles used and the reasonableness of accounting estimates madeby management, as well as evaluating the overall presentation of the financialstatements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion. Opinion In our opinion, the consolidated financial statements give a true and fair viewof the consolidated financial position of the Company as at 31 December 2006,and of its consolidated financial performance and its consolidated cash flowsfor the period then ended in accordance with International Financial ReportingStandards. KPMGChartered AccountantsDublin, Ireland19 January 2007 Statement of accounting policiesfor the 13 month period ended 31 December 2006 The following accounting policies have been applied consistently in dealing withitems which are considered material in relation to the financial statements. Statement of Compliance The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) and their interpretations adopted by theInternational Accounting Standards Board (IASB). The financial statements alsocomply with IFRS as endorsed by the European Commission. Basis of preparation These financial statements are not the statutory financial statements of theCompany which Luxembourg law requires to be prepared in accordance withLuxembourg GAAP and company law. The Company has the ability and financial resources to continue on a goingconcern basis however managements' intention, subject to shareholder approval,is to liquidate the Company. Consequently these financial statements areprepared on a going concern basis as the liquidation is subject to shareholderapproval. The results and financial position of the Company and Group on a windup basis would be the same except that liquidation costs of approximately€150,000 and wealth tax due on 1 January 2007 of €99,245 have not been accountedfor. The preparation of these financial statements in conformity with IFRS requiresmanagement to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets, liabilities, income andexpenses. The estimates and associated assumptions are based on management'sbest judgement as to what is reasonable under the circumstances, the results ofwhich form the basis of making the judgements about carrying values of assetsand liabilities that are not readily apparent from other sources. Actual resultsmay differ from these estimates. Consolidation The consolidated financial statements comprise the audited financial statementsof the Company and its subsidiary undertakings (subsidiaries) prepared to 31December 2006. Foreign currencies Transactions in foreign currencies are translated to euro at the spot foreignexchange rate ruling at the date of the transaction. Monetary assets andliabilities denominated in foreign currencies at the balance sheet date aretranslated to euro at the foreign exchange rate ruling at that date. Foreignexchange differences arising on translation are recognised in the incomestatement. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Cashequivalents are short-term, highly liquid investments that are readilyconvertible to known amounts of cash which are subject to an insignificant riskof changes in value. Statement of accounting policies (continued)for the 13 month period ended 31 December 2006 Income Tax Income tax on the profit or loss for the period comprises current and deferredtax. Income tax is recognised in the Income Statement except to the extent thatit relates to items recognised directly in equity, in which case it isrecognised in equity. Current tax is the expected tax payable on the taxable income for the period,using tax rates enacted or substantially enacted at the balance sheet date. Share-based payments The Company issued equity-settled share-based payments to certain employees.Equity-settled share-based payments are measured at fair value (excluding theeffect of non market-based vesting conditions) at the date of grant. The fairvalue determined at the grant date of the equity-settled share-based payments isexpensed on a straight line basis over the vesting period, based on theCompany's estimate of the shares that will eventually vest and adjusted for theeffect of non market-based vesting conditions. Fair value is measured using the Black Scholes pricing method. The expected lifeused has been adjusted, based on management's best estimate, for effects ofbehavioural considerations. Earnings per share Basic earnings per share is calculated by dividing the profit or lossattributable to ordinary equity shareholders by the weighted average number ofordinary shares outstanding during the period. Diluted earnings per share is calculated by adjusting profit or lossattributable to ordinary equity shareholders, and the weighted average number ofshares outstanding, for the effects of all potentially dilutive ordinary shares. Consolidated Income StatementFrom 6 December 2005 to 31 December 2006 Note 2006 • Operating expenses (5,393,685) Investment income 2 413,817 ---------------- Loss before taxation (4,979,868) Taxation 3 (111,914) ---------------- Loss for the period 8 (5,091,782) ================ Basic Loss per Ordinary Share 1 •(0.29) ================ Balance sheetAs at 31 December 2006 Group Note 2006 •Current assets Cash and cash equivalents 16,071,203Trade and other receivables 5 4,971,097 --------------Total current assets 21,042,300 -------------- --------------Total assets 21,042,300 ============== Equity Issued capital 6 23,000,000Share option reserve 7 1,828,874Retained loss 8 (5,091,782) --------------Total equity attributable to equity shareholders 19,737,092 -------------- Total current liabilities Trade and other payables 9 1,305,208 -------------- --------------Total equity and liabilities 21,042,300 ============== Consolidated Cash flow statementPeriod ended 31 December 2006 Operating activities 2006 • Net loss (5,091,782)Share based payments 1,828,874Increase in trade and other payables 1,305,208 ------------Cash flows from operating activities (1,957,700) ============ Investing activities 2006 • Refundable deposit paid (4,971,097) ------------Cashflows from investing activities (4,971,097) ============ 2006Financing •activities Proceeds from issue of share capital 23,000,000 ------------Cashflows from financing activities 23,000,000 ============ ------------Net increase in cash and cash equivalents 16,071,203 ============ Cash and cash equivalents At 6 At 31 December 2005 Cashflow December 2006 • • • Cash and cash equivalents - 16,071,203 16,071,203Bank overdrafts - - - ----------- -------- ------------ - 16,071,203 16,071,203 =========== ======== ============ The accompanying notes are an integral part of these financial statements. NotesForming part of the financial statements 1. Earnings per share The calculation of the basic earnings per share at 31 December 2006 was based onthe loss attributable to ordinary shareholders of €5,091,782 and a weightedaverage number of ordinary shares outstanding during the period ended 31December 2006 of 17,669,928 calculated as follows: 2006Attributable loss •(5,091,782) Weighted average number of shares 17,669,928 --------------------Loss per •(0.29)share ==================== Weighted average number of shares24,800 ordinary shares issued on 6 December 2005 24,80018,375,200 ordinary shares issued on 22December 2005 17,645,128 -------------------- 17,669,928 --------------------Diluted earnings per share is not presented as the potential ordinary sharesare anti - dilutive. 2. Investment income 2006 •Deposit interest receivable 413,817 ============== 3. Taxation Luxembourg wealth tax 111,914 ==================== No income tax arises due to losses incurred. A deferred tax asset has not been recognised in respect of the losses incurredas it is not probable that future taxable profits will be available to theCompany. 4. Employees and remuneration The Company did not employ any persons during the period, save for the directorswho received no remuneration during the financial period. 5. Trade receivables 2006 •Refundable Deposit 4,971,097 ============== Pursuant to an Escrow agreement dated 13 November 2006 and pre-sale contractdated 14 December 2006, the Company has deposited €4,971,097 into an escrowaccount opened by the escrow agent for benefit of the Company and the vendor.The pre-sale contract is conditional and as at the balance sheet date theseconditions have not been met. 6. Equity 2006 •Authorised: 20,000,000 ordinary shares of €1.25 each 25,000,000 ============== 2006Allocated and called up: • 18,400,000 ordinary shares of €1.25 each 23,000,000 ============== On 6 December 2005 24,800 ordinary shares were issued fully paid as subscribershares at a price of €1.25 each. On 22 December 2005 18,375,200 ordinary shares were issued at a price of €1.25each for cash. 7. Share option reserve Share options have been conditionally granted over 920,000 ordinary shares inthe Company, equivalent to 5 per cent. of its current issued share capital. Theoptions, which were granted on 1 February 2006, are not exercisable before 1February 2008, and their exercise is conditional, inter alia, on the Companyhaving made an acquisition or acquisitions with a gross value of £100 million ormore. The options, exercisable at €1.25 per share being the price at which ordinaryshares were issued when the Company was launched in December, 2005, were grantedto the directors of the Company and others involved in the day to day activitiesof the Company in China. The fair value of the options were calculated using the Black-Scholes optionpricing model. The inputs into the model were as follows: Share price at date of grant €6.22Strike price €1.25Expected volatility 100%Expected life 6 yearsRisk free rate 3.49% The number of options granted to directors of the Company is as follows: No. of share optionsRichard Barrett 365,000Raymond Horney 75,000Guy Leech 75,000Rory Williams 75,000 The share option reserve represents the directors best estimate of the fairvalue of the share options conditionally granted as at 31 December 2006. All options previously granted by the Company under the Share Option Plan willbe cancelled following passing of the resolutions at the forthcoming EGM.Cancellations of options are treated as an acceleration of vesting and theCompany will recognise immediately in income the amount that would otherwisehave been recognised for service over the remainder of the vesting period. 8. Reconciliation of movements in shareholders' funds 2006 • Total recognised losses for the period (5,091,782) Opening shareholders' funds - equity - Share option reserve 1,828,874 Share capital issued during the period 23,000,000 --------------Closing shareholders' funds - equity 19,737,092 ============== Loss for the financial period (5,091,782) Profit and loss account at beginning of period - --------------Profit and loss account at end of period (5,091,782) ============== 9. Trade and Other payables 2006 • Trade creditors 182,211Accrued expenses 1,011,083Wealth tax 111,914 -------------- 1,305,208 ============== 10. Related party disclosures The interests of the Directors in the share capital of the Company are asfollows: Number of Ordinary Percentage of issued share Shares at 31 December 2006 capital 31 December 2006 -------------------- --------------------Director Note---------- ------ ------------- --------------------Ray Horney 1 2,400,000 13.0Richard Barrett 2 8,014,000 43.6Guy Leech 300,000 1.6Rory Williams 120,000 0.7 Note: 1. This includes 600,000 Ordinary Shares acquired by family trusts associatedwith Mr Horney. Mr Horney also holds approximately 3.51 per cent of the issuedshare capital of REO which is a substantial shareholder of the company. 2. This includes 4,800,000 Ordinary Shares acquired by REO representingapproximately 26.1 per cent. of the issued share capital of the Company. Costs incurred by certain directors of the Company in carrying out their dutiesamounting to €50,000 are included within accrued expenses. These costs were paidto the directors by Treasury Holdings and will be reimbursed by the Company. During the period the Company paid a deposit of $5.125m on a property in China.Subsequently Real Estate Opportunities Limited ("REO") entered into an agreementto acquire this property replacing CREO as the purchaser. Therefore this depositwas refunded to the Company by REO during the period. During the period Treasury Holdings paid an amount of €220,000 on behalf of thecompany. This sum was refunded to Treasury Holdings during the period. Treasury Holdings provided certain administration and support services duringthe period at no cost to CREO. The Company has the following subsidiaries Name and registered Details of Proportion Principal activityoffice investments held by company China Real Estate 2 Ordinary shares 100% Property development Opportunities Jersey Limited of €1.25 each and investmentWhiteley Chambers, Don St,St Helier, Jersey JE 4 9WG CREO XIDAN (NO.1) Limited 2 ordinary shares 100% Property developmentWhiteley Chambers, Don St, of no par and investmentSt Helier, Jersey JE 4 value each9WG 11. Commitments As at 31 December 2006 the Company had not committed to any expenditure whichhas not been included in these financial statements. 12. Post balance sheet events As disclosed under principal activities in the Directors' report it is proposedto liquidate the Company and to transfer its assets to a new holding company inJersey. 13. Approval of financial statements These financial statements were approved by the directors on 19 January 2007. 14. Copies of the Company's report and accounts have been sent to Shareholders. This information is provided by RNS The company news service from the London Stock Exchange