China Beidahuang Industry Group Holdings Limited 中國北大荒產業集團控股有限公司 Windows Market Amazdan (於開曼群島註冊成立的有限公司) (Stock Code 股份代號: 00039) ANNUAL REPORT 年 報 2019 Contents 目錄 CONTENTS 目錄 Page 頁次 | --- | --- | |----------------------------------------------|----------------------------| | | | | Corporate Information | 公司資料 | | Financial Highlights | 財務摘要 | | Management Discussion and Analysis | 管理層討論及分析 | | Corporate Governance Report | 企業管治報告 | | Directors' Biographies | 董事履歷 | | Report of the Directors | 董事會報告 | | I ...

Financial Performance - Revenue for the six months ended June 30, 2019, was HK$294,755,000, a decrease of 45% compared to HK$535,263,000 in 2018[11] - Gross profit for the same period was HK$56,519,000, down from HK$93,315,000, reflecting a decline of 39.5%[11] - The company reported a loss before tax of HK$2,372,000, compared to a profit of HK$26,654,000 in the previous year[11] - Profit attributable to owners of the parent was HK$1,568,000, a significant decrease from HK$9,040,000 in 2018[13] - Basic and diluted earnings per share were HK0.03 cents, down from HK0.17 cents in the prior year[14] - Profit for the period was HK$582,000, a significant decrease from HK$23,482,000 in the same period last year, representing a decline of approximately 97.5%[15] - Other income for the period was HK$12,988,000, compared to HK$24,103,000 in 2018, showing a decline of 46%[11] - The company recorded a gain on disposal of a subsidiary amounting to HK$2,490,000, down from HK$9,547,000 in the previous year[11] - The income tax credit for the period was HK$2,954,000, compared to an expense of HK$3,172,000 in 2018[11] - Total comprehensive income for the period amounted to HK$1,039,000, contrasting with a loss of HK$4,001,000 in the same period of 2018[15] Assets and Liabilities - Non-current assets increased to HK$2,265,851,000 from HK$1,206,862,000, reflecting a growth of approximately 88%[17] - Current assets decreased slightly to HK$1,266,874,000 from HK$1,341,107,000, a decline of about 5.5%[17] - Current liabilities decreased significantly to HK$969,111,000 from HK$988,535,000, a reduction of approximately 2%[19] - Total equity increased to HK$1,622,867,000 from HK$1,511,989,000, representing a growth of about 7.3%[19] - The company’s cash and cash equivalents decreased to HK$26,975,000 from HK$37,277,000, a decline of approximately 27.5%[17] - The carrying amount of property, plant, and equipment as of June 30, 2019, was HK$345,585,000, an increase from HK$321,173,000 as of December 31, 2018[150] - The carrying amount of other intangible assets decreased to HK$112,334,000 as of June 30, 2019, from HK$123,495,000 at the end of 2018[152] - Total liabilities decreased to HK$285,674,000 as of June 30, 2019, from HK$333,424,000 as of December 31, 2018[192] Cash Flow - Net cash flows generated from operating activities for the six months ended June 30, 2019, were HK$74,750,000, compared to a net cash outflow of HK$174,422,000 in the same period of 2018[25] - The net decrease in cash and cash equivalents for the six months ended June 30, 2019, was HK$5,465,000, an improvement from a decrease of HK$24,208,000 in 2018[25] - Cash and cash equivalents at the end of the period on June 30, 2019, were HK$26,975,000, down from HK$32,622,000 at the beginning of the period[25] - The company reported a significant cash outflow from financing activities of HK$60,741,000 for the six months ended June 30, 2019, compared to an inflow of HK$91,609,000 in 2018[25] Segment Performance - Revenue from trading food products decreased significantly to HK$100,282,000, down 70% from HK$338,052,000 in the previous year[131] - Segment results showed a profit of HK$33,477,000 for the trading of mineral products, up from HK$90,670,000 in 2018[109] - Rental income increased to HK$120,480,000, up from HK$110,969,000 in 2018, reflecting a growth of 11%[131] - Compensation income rose significantly to HK$11,479,000, compared to HK$3,132,000 in the previous year, marking an increase of 267%[131] Accounting Standards and Policies - The company applied new accounting standards, including HKFRS 16 on leases, effective from January 1, 2019, which may impact future financial reporting[33] - The Group has adopted HKFRS 16 from January 1, 2019, recognizing lease liabilities measured at the present value of remaining lease payments[47] - The Group's lease liabilities were classified as "operating leases" under HKAS 17 prior to the adoption of HKFRS 16[49] - Payments associated with short-term leases and leases of low-value assets are recognized as an expense in profit or loss on a straight-line basis[47] Shareholder Information - No dividend was recommended for the six months ended June 30, 2019, consistent with the previous year[143] - The weighted average number of ordinary shares in issue increased to 5,890,531,000 from 5,426,181,000 in 2018[146] Debt Instruments - The Group issued convertible bonds with a total principal value of HK$200,000,000 and a coupon rate of 10% per annum on June 8, 2017[194] - The convertible bonds can be converted into 500,000,000 shares at a conversion price of HK$0.4 per share[194] - The bonds will mature on June 7, 2019, and if not converted, will be redeemed at face value[195] - The total proceeds from the issuance of the bonds were HK$200,000,000[198]

Financial Performance - For the year ended December 31, 2018, the Group's revenue was approximately HK$1,267.14 million, representing a 13.68% increase from HK$1,114.64 million in 2017[13] - The Group's gross profit for the year was approximately HK$169.93 million, up from HK$119.31 million in 2017[13] - The net profit for the year was approximately HK$11.78 million, a significant decrease from HK$110.28 million in 2017, primarily due to a reduction in other income[13] - Earnings per share for the year were HK0.08 cents, down from HK2.20 cents in 2017[13] Revenue Breakdown - The wine and liquor business recorded a revenue of approximately HK$8.33 million, a 75.07% decrease from HK$33.41 million in 2017, accounting for only 0.66% of total revenue[20] - The trading of food products business generated revenue of approximately HK$772.71 million, which accounted for 60.98% of total revenue, up from 45.29% in 2017[21] - The rental business recorded revenue of approximately HK$249.97 million, representing 19.73% of total revenue, an increase from HK$162.30 million in 2017[23] - The liquor business recorded revenue of approximately HK$8.33 million, a decrease of 75.07% from HK$33.41 million in 2017, accounting for only 0.66% of total revenue[24] - The food trading business generated revenue of approximately HK$772.71 million, an increase of 53.03% from HK$504.8 million in 2017, representing 60.98% of total revenue[25] - The leasing business reported revenue of approximately HK$249.97 million, up 54.14% from HK$162.3 million in 2017, accounting for 19.73% of total revenue[26] - The money lending business recorded revenue of HK$36.56 million, down 25.2% from HK$48.93 million in 2017, representing 2.89% of total revenue[28] - The construction and development business had no revenue following the disposal of Fujian Fangrun, which generated HK$230.52 million in 2017, accounting for 20.68% of total revenue[29] - The mineral products business achieved revenue of approximately HK$199.57 million, an increase of 48.3% from HK$134.67 million in 2017, representing 15.75% of total revenue[30] Strategic Plans and Acquisitions - The Group plans to control costs and focus on existing resources while exploring acquisitions and diversifying its business mix, particularly in the PRC and Hong Kong[14] - The Group will continue to invest in potential renting facilities to further enhance revenue from the rental business segment[23] - The group plans to continue expanding its existing businesses and seek potential acquisitions in profitable sectors[37] - A memorandum of understanding was signed for a possible acquisition of 70% equity interests in two companies in the PRC, with land use rights for a total planned building area of 300,000 sq. m.[43] - The company entered into a non-binding memorandum of understanding (MOU) on April 27, 2018, to potentially acquire 70% equity in two target companies in China, which own land rights of 471 acres and a total planned construction area of 300,000 square meters[44] - Due diligence for the acquisition did not progress as expected, leading to the termination of the MOU on December 7, 2018, releasing all parties from obligations under the MOU[48] Corporate Governance - The Board comprised six executive directors, two non-executive directors, and four independent non-executive directors as of December 31, 2018, ensuring compliance with the Listing Rules[122] - The Company has complied with all code provisions of the Corporate Governance Code during the year ended December 31, 2018, except where otherwise stated[114] - The Company adopted share option schemes to provide incentives for employees, aiming to recruit and retain quality staff for long-term service[108] - The Company appointed new executive and independent non-executive directors on December 10, 2018, restoring compliance with the Listing Rules[127] - The Board is responsible for corporate governance practices, ensuring transparency and accountability to shareholders[113] - The independent non-executive directors ensure that the interests of all shareholders are considered in an objective manner[120] - The Audit Committee held two meetings in 2018 to review financial statements and compliance, including the audited financial statements for the year ended December 31, 2017[144] - The Remuneration Committee conducted four meetings in 2018 to review and recommend remuneration for directors and senior management[149] - The Company has established a Nomination Committee responsible for assessing the independence of independent non-executive directors and making recommendations for appointments[151] - The Company has appropriate insurance coverage for directors' liability[133] Financial Position and Ratios - The Group's net assets attributable to owners of the parent were approximately HK$1,459.01 million as of December 31, 2018, slightly down from HK$1,462.21 million in 2017[74] - The current ratio decreased to 1.36 in 2018 from 1.45 in 2017, indicating a decline in liquidity[74] - Total borrowings as of December 31, 2018, were approximately HK$533.83 million, down 13.39% from HK$616.56 million in 2017[74] - The gearing ratio increased to 37.21% in 2018 from 35.08% in 2017, indicating a slight rise in financial leverage[76] - The Group's unpledged cash and cash equivalents decreased to approximately HK$37.28 million in 2018 from HK$66.18 million in 2017[74] - Pledged deposits as of December 31, 2018, were approximately HK$83.58 million, down from HK$214.23 million in 2017[78] Employee and Management Information - As of December 31, 2018, the Group had approximately 174 employees, an increase from 165 in 2017, with total staff costs amounting to approximately HK$28.85 million, down from HK$35.24 million in 2017[108] - The total staff costs decreased by approximately 18.1% from 2017 to 2018, reflecting cost management efforts[108] - The Company encourages directors to participate in continuous professional development, with training records maintained to assist in tracking their training activities[192] Legal and Compliance Matters - The Company believes the probability of compensation being payable in relation to two civil litigations is low, and it is currently seeking further information from its PRC lawyers[107] - The Company is actively monitoring the legal proceedings and will provide updates as necessary[107] Risk Management - The Group did not engage in any hedging activities against foreign currency risk during the year, which may expose it to financial impacts from exchange rate fluctuations[96] - The Group's exposure to foreign exchange risk is primarily related to bank deposits in Hong Kong dollars and US dollars, with fluctuations in Renminbi contributing to exchange losses[90] - The Group is diversifying its business into logistics and mining, which is expected to reduce the risk associated with reliance on key suppliers in the future[88] - The Group has established strong relationships with its major suppliers, which may mitigate risks related to supplier retention[88]