中国唐商(00674) - 2022 - 中期财报

MANAGEMENT DISCUSSION AND ANALYSIS CONSOLIDATED RESULTS The Group's revenue decreased by 20.5% to HKD 24.5 million, but loss significantly narrowed to HKD 8.8 million, primarily due to disposals, cost controls, and reduced fair value losses on investment properties - Loss significantly narrowed due to the disposal of loss-making subsidiaries, cost controls, no financial guarantee provisions, and reduced fair value losses on investment properties[5][8] Consolidated Performance Overview | Metric | Six Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2020 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | approx. 24.5 million HKD | approx. 30.8 million HKD | -20.5% | | Loss for the period | approx. 8.8 million HKD | approx. 48.1 million HKD | -81.7% | BUSINESS REVIEW The Group's core businesses include property sub-leasing and investment, property development, and financial services, with all revenue from property sub-leasing and investment, while financial services were largely suspended PROPERTY SUB-LEASING AND INVESTMENT BUSINESS As the Group's sole revenue source, this business generated HKD 24.5 million, a 19.7% decrease, but turned profitable with HKD 2 million due to reduced fair value losses Property Sub-leasing and Investment Business Performance | Metric | Six Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Revenue | approx. 24.5 million HKD | approx. 30.5 million HKD | | Profit / (Loss) | approx. 2 million HKD | approx. (25.3) million HKD | PROPERTY DEVELOPMENT BUSINESS The property development business generated no revenue, with losses expanding to HKD 5.3 million, and management plans to invest in more projects in China for sustainable growth - This business segment generated no revenue during the period, with losses expanding to approximately HKD 5.3 million (2020 corresponding period: loss of HKD 3.2 million)[12][14] FINANCIAL SERVICES BUSINESS The financial services business has contracted, with no money lending activities and the surrender of securities, futures, and asset management licenses in November 2020 to refocus resources - The Group did not engage in money lending business during the period and had no corresponding interest income[17][20] - To concentrate resources, the Group surrendered its securities, futures, and asset management licenses in November 2020, exiting related businesses[18][21] PROSPECTS Despite global economic challenges, the Group remains prudent, seeking investment opportunities to enhance profitability, leveraging its management's extensive experience and network in China's real estate sector - The Board remains prudent regarding business prospects while seeking potential investment opportunities to enhance the Group's financial profitability[19][22] - The Group will leverage its experienced management team's knowledge, resources, and network in China's property development industry to drive future property sub-leasing, development, and investment projects[24][25] FINANCIAL REVIEW The Group maintains a robust financial position with total bank borrowings at HKD 270 million, a net cash position, and a current ratio of 1.5, with borrowings secured by various assets and guarantees LIQUIDITY AND FINANCIAL RESOURCES As of September 30, 2021, total bank borrowings were HKD 270.1 million, all short-term at 7.24% interest, with a healthy current ratio of 1.5 and no gearing ratio due to a net cash position Key Financial Ratios | Metric | Sep 30, 2021 | Mar 31, 2021 | | :--- | :--- | :--- | | Total Bank Borrowings | approx. 270.1 million HKD | approx. 289.5 million HKD | | Gearing Ratio | Not applicable (Net cash) | 31.1% | | Current Ratio | 1.5 | 1.6 | FUND RAISING ACTIVITIES The report details the use of proceeds from 2017 and 2018 convertible bonds, noting HKD 17.2 million from 2018, originally for money lending, was reallocated to general working capital - Of the proceeds from convertible bonds issued in 2018, HKD 17.2 million remains unutilized, originally for money lending, now reallocated to general working capital and planned for use by March 31, 2022[41] CHARGES AND GUARANTEES As of September 30, 2021, the Group's HKD 270.1 million bank borrowings are secured by corporate and personal guarantees, subsidiary equity, and HKD 901.3 million in properties under development - The Group's bank borrowings are secured by multiple assets, primarily properties under development with a carrying value of HKD 901.3 million[49][52] CONTINGENT LIABILITIES The Group's contingent liabilities, primarily mortgage loan guarantees for property purchasers, significantly increased to HKD 310 million, though directors deem losses unlikely due to repossession rights - The Group has significant contingent liabilities; details can be found in Note 22 of this report[51][53] EMOLUMENT POLICY As of September 30, 2021, the Group employed 43 staff, with total emoluments of HKD 5.5 million, a significant decrease, and its policy includes discretionary bonuses and share option schemes Staff and Emolument Changes | Metric | Sep 30, 2021 | Mar 31, 2021 | | :--- | :--- | :--- | | Number of Employees | 43 | 44 | | Total Emoluments for Six Months | approx. 5.5 million HKD | approx. 12.3 million HKD (2020 corresponding period) | SIGNIFICANT INVESTMENTS HELD, MATERIAL ACQUISITIONS AND DISPOSALS The most significant corporate action was the agreement to acquire an additional 55% equity in indirect subsidiary 'Huachuang Wenzhidi,' increasing the stake to 90%, which is approved but still pending completion with an extended deadline - The Group has agreed to acquire an additional 55% equity interest in its subsidiary Huachuang Wenzhidi, increasing its total stake to 90%, with consideration including cash, shares, and convertible bonds[59][61] - This acquisition was approved by shareholders on October 20, 2021, but the completion date has been extended from October 31, 2021, to December 31, 2021[59][61] INTERIM DIVIDEND The Board resolved not to declare any interim dividend for the six months ended September 30, 2021 - No interim dividend was declared for the current reporting period[66] DIRECTORS, SHAREHOLDERS AND CORPORATE GOVERNANCE DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS As of September 30, 2021, Executive Director and Chairman Mr. Chan Wai Mo held approximately 59.76% of the company's issued share capital through direct and indirect interests Mr. Chan Wai Mo's Shareholding Details | Nature of Interest | Number of Shares | Percentage of Total Share Capital | | :--- | :--- | :--- | | Beneficial Owner | 800,000,000 | 34.65% | | Interest in Controlled Corporation | 579,806,977 | 25.11% | | Total | 1,379,806,977 | 59.76% | SUBSTANTIAL SHAREHOLDERS Grand Nice International Limited, wholly owned by Executive Director Mr. Chan Wai Mo, is a substantial shareholder holding 25.11% of the company's shares - Substantial shareholder Grand Nice International Limited holds 579,806,977 shares, representing 25.11% of the company, and is wholly owned by Chairman Mr. Chan Wai Mo[74][75] SHARE OPTION SCHEME The company's 2012 share option scheme had 27,942,462 outstanding options as of September 30, 2021, representing 1.2% of issued shares, granted in 2013 with an exercise price of HKD 0.513 Unexercised Share Options | Metric | Quantity/Details | | :--- | :--- | | Number of Unexercised Share Options | 27,942,462 | | Percentage of Issued Shares | approx. 1.2% | | Grant Date | December 23, 2013 | | Exercise Price | HKD 0.513 | | Exercise Period | December 23, 2013 – December 22, 2023 | CORPORATE GOVERNANCE The company largely complied with corporate governance codes, with one deviation regarding board meeting frequency, explained by executive director oversight and written resolutions, while the audit committee reviewed interim results - The company had one corporate governance deviation: Board meetings did not meet the annual requirement of at least four times, with only two meetings held[94][96] - The Audit Committee, comprising three independent non-executive directors, has reviewed the current financial report[103] CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the six months ended September 30, 2021, revenue decreased by 20.5% to HKD 24.54 million, while net loss significantly narrowed to HKD 8.83 million, driven by reduced fair value losses on investment properties Key Data from Consolidated Statement of Comprehensive Income | Metric (HKD) | Six Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Revenue | 24,543,234 | 30,805,336 | | Finance Costs | (15,971,422) | (11,854,004) | | Loss Before Tax | (8,453,657) | (47,943,909) | | Loss for the period | (8,831,953) | (48,127,953) | | Basic Loss Per Share (HK cents) | (0.25) | (1.99) | CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As of September 30, 2021, total assets increased to HKD 2.15 billion, driven by properties under development and cash, while total liabilities rose to HKD 1.59 billion, with net assets remaining stable at HKD 560 million Key Data from Statement of Financial Position | Metric (HKD) | Sep 30, 2021 | Mar 31, 2021 | | :--- | :--- | :--- | | Total Assets | 2,154,795,465 | 1,896,678,339 | | Of which: Properties Under Development | 901,265,292 | 770,392,961 | | Total Liabilities | 1,594,480,926 | 1,334,565,591 | | Of which: Bank Borrowings | 270,088,091 | 289,531,436 | | Net Assets | 560,314,539 | 562,112,748 | CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY As of September 30, 2021, total equity attributable to owners slightly decreased to HKD 363 million from HKD 365 million, primarily due to a HKD 5.79 million loss, partially offset by foreign exchange gains - During the period, total comprehensive income attributable to owners was negative HKD 1.56 million, leading to a decrease in shareholders' equity from HKD 365 million to HKD 363 million[123] CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Operating activities generated a strong HKD 202 million net cash inflow, while investing and financing activities resulted in net outflows, leading to a significant increase in cash and cash equivalents to HKD 198 million Key Data from Cash Flow Statement | Metric (HKD) | Six Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 201,856,071 | 60,726,064 | | Net Cash from Investing Activities | (3,629,061) | 11,040,180 | | Net Cash from Financing Activities | (61,652,278) | 2,311,885 | | Cash and Cash Equivalents at End of Period | 197,683,055 | 225,698,502 | NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 SEGMENT INFORMATION The Group's business is reorganized into three segments: property sub-leasing and investment, property development, and money lending, with all HKD 24.54 million external revenue from China's property sub-leasing and investment segment - Following business reorganization, the Group is currently divided into three operating segments: property sub-leasing and investment, property development, and money lending[147][148] - During the reporting period, all revenue (HKD 24.54 million) was derived from property sub-leasing and investment business in mainland China[154][179] - The Group terminated its exhibition-related business and catering business in the latter half of the year ended March 31, 2021[160][162] NOTE 14 PROPERTIES UNDER DEVELOPMENT As of September 30, 2021, properties under development significantly increased to HKD 901 million from HKD 770 million, expected to be completed within one operating cycle, with capitalized borrowing costs at 7.24% Composition of Properties Under Development | Component (HKD) | Sep 30, 2021 | Mar 31, 2021 | | :--- | :--- | :--- | | Land Costs | 632,842,472 | 623,767,422 | | Construction Costs | 244,811,976 | 133,479,681 | | Capitalized Borrowing Costs | 23,610,844 | 13,145,858 | | Total | 901,265,292 | 770,392,961 | NOTE 18 BANK BORROWINGS As of September 30, 2021, all HKD 270 million bank borrowings are current liabilities repayable within one year, secured by properties under development, subsidiary equity, and personal/corporate guarantees at 7.24% interest - All HKD 270 million in bank borrowings are current liabilities due within one year[258][259] - The borrowings are secured by properties under development valued at HKD 901 million, equity in subsidiaries, and directors' personal guarantees, among others[259][260] NOTE 22 CONTINGENT LIABILITIES The Group's contingent liabilities, primarily mortgage loan guarantees for property purchasers, significantly increased to HKD 310 million, though directors deem losses unlikely due to repossession rights Changes in Contingent Liabilities | Metric (HKD) | Sep 30, 2021 | Mar 31, 2021 | | :--- | :--- | :--- | | Guarantees for Property Purchasers | 310,178,193 | 136,822,542 | NOTE 25 EVENTS AFTER THE REPORTING PERIOD The most significant post-reporting event is the acquisition of an additional 55% equity in subsidiary Huachuang Wenzhidi, approved by shareholders but with an extended deadline for completion due to pending conditions - After the reporting period, the significant acquisition to increase the equity interest in subsidiary Huachuang Wenzhidi to 90% is still ongoing, with the final deadline extended[288][289]