中国上城(02330) - 2024 - 中期业绩

Interim Results Announcement Condensed Consolidated Statement of Profit or Loss During the reporting period, the company's revenue significantly increased, but sales costs and various expenses also rose substantially, leading to a narrowed loss for the period Condensed Consolidated Statement of Profit or Loss Key Data | Metric | 2024 (RMB '000) | 2023 (RMB '000) | | :--- | :------------------ | :------------------ | | Revenue | 23,328 | 4,468 | | Cost of sales | (23,305) | (4,262) | | Gross profit | 23 | 206 | | Loss before tax | (19,646) | (43,812) | | Loss for the period | (19,636) | (43,012) | | Loss for the period attributable to owners of the Company | (16,414) | (32,831) | | Loss per share (RMB cents) | (5.63) | (12.71) | - The company's revenue significantly increased from RMB 4,468 thousand in 2023 to RMB 23,328 thousand in 2024[1] - Loss for the period narrowed from RMB (43,012) thousand in 2023 to RMB (19,636) thousand in 2024[1] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The company's total comprehensive expenses for the period significantly decreased year-on-year, primarily due to changes in exchange differences, despite a narrowed loss for the period Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data | Metric | 2024 (RMB '000) | 2023 (RMB '000) | | :--- | :------------------ | :------------------ | | Loss for the period | (19,636) | (43,012) | | Exchange differences arising from translating functional currency to presentation currency | 16,297 | 31,803 | | Exchange differences arising from translating financial statements of overseas operations | (16,435) | (33,294) | | Total comprehensive expenses for the period | (19,774) | (44,503) | - Total comprehensive expenses for the period significantly decreased from RMB (44,503) thousand in 2023 to RMB (19,774) thousand in 2024[3] Condensed Consolidated Statement of Financial Position As of June 30, 2024, the company's total assets slightly increased, but net assets decreased, and the non-current liabilities structure changed Condensed Consolidated Statement of Financial Position Key Data | Metric | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | | :--- | :------------------------- | :-------------------------- | | Non-current assets | 17,875 | 19,232 | | Current assets | 642,519 | 632,502 | | Current liabilities | 510,939 | 497,641 | | Net current assets | 131,580 | 134,861 | | Net assets | 134,846 | 148,075 | | Total equity | 134,846 | 148,075 | - Total assets slightly increased from RMB 651,734 thousand as of December 31, 2023, to RMB 660,394 thousand as of June 30, 2024[4][34] - Net assets decreased from RMB 148,075 thousand as of December 31, 2023, to RMB 134,846 thousand as of June 30, 2024[5][34] - Non-current liabilities increased from RMB 6,018 thousand as of December 31, 2023, to RMB 14,609 thousand as of June 30, 2024, primarily due to an increase in other borrowings[5] Notes to the Condensed Consolidated Financial Statements 1. Basis of Preparation The condensed consolidated financial statements are prepared in accordance with HKAS 34, but the company faces significant going concern uncertainties due to continuous losses and insufficient liquidity to repay maturing debts; the Board has formulated measures to address liquidity needs and considers the going concern assumption appropriate - The company incurred a net loss of approximately RMB 19,636,000 during the reporting period and has frequently incurred net losses over the past four years, indicating significant going concern uncertainties[6][54] - As of June 30, 2024, the company had high total current liabilities of approximately RMB 241,934,000 while cash and bank balances were only approximately RMB 12,102,000, indicating tight liquidity[6][54] - The company has adopted several measures to address liquidity issues, including renewing borrowings, obtaining written confirmation from non-controlling interests not to demand repayment, pre-selling properties, placing and rights issue fundraising, and controlling administrative costs and capital expenditures[6][7][55] 2. Principal Accounting Policies The financial statements are prepared on a historical cost basis, except for investment properties measured at fair value; several HKFRS amendments were first applied this period but had no significant impact on financial position and performance - The condensed consolidated financial statements are primarily prepared on a historical cost basis, except for investment properties[8] - Several amendments to Hong Kong Financial Reporting Standards were first applied this period, including classification of liabilities, non-current liabilities with covenants, lease liabilities in a sale and leaseback, and supplier finance arrangements, but had no significant impact on financial position and performance[9][10] 3. Revenue from Contracts with Customers During the reporting period, all company revenue was derived from electronic product sales in Hong Kong, whereas the prior period's revenue primarily came from property sales in China Revenue from Contracts with Customers Analysis | Revenue Source | 2024 (RMB '000) | 2023 (RMB '000) | | :------- | :------------------ | :------------------ | | Sales of electronic products | 23,328 | – | | Property sales | – | 4,464 | | Rental - other sources | – | 4 | | Total Revenue | 23,328 | 4,468 | - In the first half of 2024, all company revenue was derived from electronic product sales in Hong Kong, while the corresponding period in 2023 primarily came from property sales in China[11][12] 4. Segment Information The company operates two reportable segments: Property Development and Investment (Mainland China) and Electronic Product Trading (Hong Kong); this period, electronic product trading became the primary revenue source and achieved profitability, while the property segment recorded a loss (a) Segment Revenue and Results In the first half of 2024, the electronic product trading segment contributed all revenue and achieved a marginal profit, while the property development and investment segment generated no revenue and recorded a significant loss Segment Revenue and Results (For the six months ended June 30, 2024) | Segment | Revenue (RMB '000) | Segment (Loss) Profit (RMB '000) | | :--- | :---------------- | :-------------------------- | | Property Development and Investment | – | (11,621) | | Electronic Product Trading | 23,328 | 13 | | Total | 23,328 | (11,608) | Segment Revenue and Results (For the six months ended June 30, 2023) | Segment | Revenue (RMB '000) | Segment Loss (RMB '000) | | :--- | :---------------- | :-------------------- | | Property Development and Investment | 4,468 | (35,192) | | Total | 4,468 | (35,192) | - In the first half of 2024, the Electronic Product Trading segment contributed all revenue of RMB 23,328 thousand and achieved a segment profit of RMB 13 thousand[14] (b) Segment Assets and Liabilities As of June 30, 2024, the Property Development and Investment segment remained the primary component of assets and liabilities, with the Electronic Product Trading segment having a smaller scale of assets and liabilities Segment Assets and Liabilities (As of June 30, 2024) | Segment | Assets (RMB '000) | Liabilities (RMB '000) | | :--- | :---------------- | :---------------- | | Property Development and Investment | 616,567 | 469,696 | | Electronic Product Trading | 23,928 | 23,543 | | Consolidated Total | 660,394 | 525,548 | - The Property Development and Investment segment's assets and liabilities are significantly larger than those of the Electronic Product Trading segment[16] 5. Other Income Other income primarily comprises bank interest income and other sundry income, with the total amount decreasing year-on-year this period Other Income (For the six months ended June 30) | Item | 2024 (RMB '000) | 2023 (RMB '000) | | :--- | :------------------ | :------------------ | | Bank interest income | 58 | 54 | | Others | 5 | 53 | | Total | 63 | 107 | - Total other income decreased from RMB 107 thousand in 2023 to RMB 63 thousand in 2024[17] 6. Finance Costs Finance costs significantly increased year-on-year, primarily due to a substantial rise in interest expenses on other borrowings Finance Costs (For the six months ended June 30) | Item | 2024 (RMB '000) | 2023 (RMB '000) | | :--- | :------------------ | :------------------ | | Interest on secured bank borrowings | – | 218 | | Interest on other borrowings | 1,666 | 265 | | Interest on lease liabilities | 109 | 2 | | Interest on bank overdrafts | – | 63 | | Total | 1,775 | 548 | - Total finance costs significantly increased from RMB 548 thousand in 2023 to RMB 1,775 thousand in 2024[17] - Interest expenses on other borrowings increased from RMB 265 thousand in 2023 to RMB 1,666 thousand in 2024, being the primary reason for the rise in finance costs[17] 7. Income Tax Credit This period's income tax credit primarily stemmed from deferred tax, significantly decreasing year-on-year, and no provision was made for Hong Kong profits tax due to the absence of assessable profits Income Tax Credit (For the six months ended June 30) | Item | 2024 (RMB '000) | 2023 (RMB '000) | | :--- | :------------------ | :------------------ | | Current tax | – | – | | Deferred tax | 10 | 800 | | Total | 10 | 800 | - Total income tax credit significantly decreased from RMB 800 thousand in 2023 to RMB 10 thousand in 2024[18] - No provision for Hong Kong profits tax was made as the Group had no assessable profits for the period[19] 8. Loss for the Period Loss for the period was net of various provisions and depreciation expenses, with significant provisions for properties held for sale and properties under development Loss for the Period Items Deducted (For the six months ended June 30) | Item | 2024 (RMB '000) | 2023 (RMB '000) | | :--- | :------------------ | :------------------ | | Provision recognised for properties held for sale | 2,681 | 6,514 | | Provision recognised for properties under development | 7,042 | 22,020 | | Depreciation of property, plant and equipment | 369 | 374 | | Depreciation of right-of-use assets | 717 | 332 | | Expenses relating to short-term leases | 108 | 21 | - Provision recognised for properties under development significantly decreased from RMB 22,020 thousand in 2023 to RMB 7,042 thousand in 2024[20] 9. Dividends During the reporting period, the company neither declared nor proposed any dividends - For the six months ended June 30, 2024 and 2023, the Company neither declared nor proposed any dividends[21] 10. Loss Per Share Basic and diluted loss per share significantly narrowed year-on-year this period, primarily due to a reduction in loss attributable to owners of the Company Loss Per Share Calculation Data (For the six months ended June 30) | Item | 2024 (RMB '000) | 2023 (RMB '000) | | :--- | :------------------ | :------------------ | | Loss attributable to owners of the Company | (16,414) | (32,831) | | Weighted average number of shares | 291,533,548 | 258,251,588 | | Basic and diluted loss per share (RMB cents) | (5.63) | (12.71) | - Basic and diluted loss per share narrowed from RMB (12.71) cents in 2023 to RMB (5.63) cents in 2024[2][23] - The calculation of diluted loss per share did not assume the exercise of share options as their exercise price was higher than the average market price of shares for the respective periods[24] 11. Trade and Other Receivables As of the end of the reporting period, total trade and other receivables significantly increased, primarily driven by a substantial rise in trade receivables Trade and Other Receivables (As of the end of the reporting period) | Item | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | | :--- | :------------------------- | :-------------------------- | | Trade receivables | 23,556 | – | | Other receivables | 8,566 | 8,122 | | Less: Provision for credit losses | (1,097) | (1,094) | | Deposits and prepayments | 3,504 | 4,408 | | VAT and other taxes recoverable | 25,074 | 24,804 | | Total | 59,603 | 36,240 | - Total trade and other receivables increased from RMB 36,240 thousand as of December 31, 2023, to RMB 59,603 thousand as of June 30, 2024[25] - Trade receivables increased from zero as of December 31, 2023, to RMB 23,556 thousand as of June 30, 2024, all within 30 days[25][26] 12. Trade and Other Payables As of the end of the reporting period, total trade and other payables increased, primarily driven by growth in trade payables and accrued expenses Trade and Other Payables (As of the end of the reporting period) | Item | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | | :--- | :------------------------- | :-------------------------- | | Trade payables | 29,906 | 6,284 | | VAT payable | 39,540 | 39,540 | | Other taxes payable | 3,036 | 3,036 | | Other payables | 4,627 | 10,331 | | Accrued expenses | 75,124 | 73,140 | | Total | 152,233 | 132,331 | - Total trade and other payables increased from RMB 132,331 thousand as of December 31, 2023, to RMB 152,233 thousand as of June 30, 2024[27] - Trade payables significantly increased from RMB 6,284 thousand as of December 31, 2023, to RMB 29,906 thousand as of June 30, 2024, all within 90 days[27] Management Discussion and Analysis Business Review The company's business focus shifted from property development to electronic product trading, which became the primary revenue source this period; property project development faced market and liquidity constraints, leading to delayed pre-sale plans Property Development and Investment This period, property development and investment business generated no revenue, a significant decrease from the prior period, mainly because sales of the first Maoming project were nearing completion, while the second Maoming project remained under development Property Development and Investment Business Revenue | Year | Revenue (RMB '000) | | :--- | :---------------- | | 2024 | 0 | | 2023 | 4,468 | - Revenue from property development and investment business was RMB zero for the current period, compared to RMB 4,468,000 for the same period last year[28] - The significant decrease in revenue was due to sales of the first Maoming project nearing completion, while the second Maoming project remained under development[28] Second Maoming Project The second Maoming project's development was delayed by the pandemic, liquidity constraints, and unfavorable market conditions, with approximately 63% construction completed; pre-sale plans are rescheduled from H2 2024 to H1 2026, and the company is actively exploring financing solutions - The second Maoming project is planned as a residential and commercial complex with a total saleable area of 84,000 square meters and 1,000 parking spaces[29] - Project development was further delayed due to liquidity constraints and unfavorable market conditions, with approximately 63% of construction completed as of June 2024[30] - Pre-sale plans have been rescheduled: residential properties (remaining two blocks) in H2 2024 and H1 2025, apartments and commercial properties in H2 2025, parking spaces and shops in H1 2026, with completion and delivery in H2 2026[30] Trading Business This period, the company diversified its business by engaging in electronic product trading, which became the primary revenue source, contributing approximately RMB 23,328,000 in revenue with a gross profit margin of approximately 0.1% Trading Business Revenue | Year | Revenue (RMB '000) | | :--- | :---------------- | | 2024 | 23,328 | | 2023 | 0 | - Revenue from electronic product trading for the period was approximately RMB 23,328,000, becoming the primary source of income[32] - The gross profit margin for the trading business was approximately 0.1%, and management will continue to take additional precautionary measures to mitigate related business risks[32] Market Outlook and Prospects Facing inflation, interest rate hikes, and geopolitical tensions, the Chinese government introduced policies to support real estate and capital markets; the economy shows overall improvement, but consumer confidence remains cautious, prompting the company to flexibly adjust strategies and seize development opportunities - Persistent inflation, interest rate hikes, and geopolitical tensions continue to challenge the overall business environment[33] - The Chinese government introduced various economic policies and measures to support the real estate market and revitalize the capital market, showing overall positive signs for the Chinese economy[33] - Consumer confidence remains cautious, and the real estate industry is still in a stabilization phase[33] Financial Review This period's revenue primarily came from trading business, with a narrowed loss attributable to owners of the Company; total assets slightly increased, but net assets decreased, while the current ratio remained stable and the gearing ratio slightly rose Key Financial Indicators Comparison | Metric | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | | :--- | :------------------------- | :-------------------------- | | Revenue | 23,328 | 4,468 | | Loss attributable to owners of the Company | (16,414) | (32,831) | | Bank balances and cash | 12,102 | 17,208 | | Total assets | 660,394 | 651,734 | | Net assets | 134,846 | 148,075 | | Total other borrowings | 30,713 | 29,994 | | Gearing ratio | 23% | 20% | | Current ratio | 1.3 | 1.3 | - Loss attributable to owners of the Company was approximately RMB 16,414,000, a narrowing from RMB 32,831,000 in the prior period[34] - The gearing ratio increased from 20% as of December 31, 2023, to 23% as of June 30, 2024, while the current ratio remained at 1.3[34] Capital Structure As of June 30, 2024, the company's issued ordinary share capital was HKD 3,053,570.52, divided into 305,357,052 shares with a par value of HKD 0.01 each Capital Structure Overview (As of June 30, 2024) | Item | Amount | | :--- | :--- | | Issued ordinary share capital | HKD 3,053,570.52 | | Par value per share | HKD 0.01 | | Number of shares | 305,357,052 shares | Placing of New Shares under General Mandate In March 2024, the company successfully placed 50,888,000 shares, with net proceeds of approximately HKD 6.88 million fully utilized for debt repayment and general working capital, aiming to strengthen its financial position - In March 2024, the company successfully placed 50,888,000 shares at a placing price of HKD 0.14 per share, with net proceeds of approximately HKD 6.88 million[36] - The net proceeds were fully utilized for repayment of the Group's outstanding liabilities and general working capital[36] - The Directors believe the placing will broaden the company's shareholder base and capital base, strengthening the Group's financial position[36] Foreign Exchange Risk The company's revenue and expenses are primarily denominated in RMB, USD, and HKD; currently, there is no foreign exchange hedging policy, but management closely monitors risks and considers hedging instruments - The Group's revenue earned and expenses incurred are primarily denominated in RMB, USD, and HKD, and monetary assets and liabilities are also measured in these three currencies[37] - Currently, the Group does not have any foreign exchange hedging policy, but management closely monitors foreign exchange risks and considers using hedging instruments when necessary[37] Pledge of Assets As of the end of the reporting period, the company pledged certain leasehold land and buildings to secure borrowings and pledged bank deposits to secure mortgage loans for property buyers Pledge of Assets (As of the end of the reporting period) | Pledged Assets | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | | :------- | :------------------------- | :-------------------------- | | Leasehold land and buildings | 14,669 | 14,556 | | Pledged bank deposits | 3,135 | 3,133 | - The Group pledged certain leasehold land and buildings with a total carrying amount of approximately RMB 14,669,000 as security for other borrowings granted to certain subsidiaries[38] - Pledged bank deposits of RMB 3,135,000 were pledged to secure mortgage loans provided to certain buyers of the Group's properties[39] Capital and Other Commitments As of the end of the reporting period, the company's commitments for property development amounted to RMB 240,000,000, a slight decrease from the end of last year Commitments for Property Development | Date | Amount (RMB) | | :--- | :------------ | | June 30, 2024 | 240,000,000 | | December 31, 2023 | 242,952,000 | - As of June 30, 2024, the Group's commitments for property development amounted to RMB 240,000,000[41] Employees and Remuneration Policy As of the end of the reporting period, the company's number of full-time employees decreased, and total remuneration declined year-on-year; remuneration policy is based on market trends, future plans, and individual performance, with a share option scheme in place Employees and Remuneration | Metric | June 30, 2024 | December 31, 2023 | | :--- | :------------ | :------------- | | Number of full-time employees | 36 | 47 | | Total remuneration (for the period) | RMB 3,945,000 | RMB 5,837,000 | - As of June 30, 2024, the Group employed 36 full-time employees in Hong Kong and China, a decrease from 47 as of December 31, 2023[42] - The Group's total remuneration for the period was approximately RMB 3,945,000, a decrease from RMB 5,837,000 in 2023[42] Financial Guarantee Contracts As of the end of the reporting period, the company's maximum liability for financial guarantees provided for property buyers' mortgage loans was approximately RMB 92,542,000 Maximum Liability for Financial Guarantee Contracts | Date | Amount (RMB) | | :--- | :------------ | | June 30, 2024 | 92,542,000 | | December 31, 2023 | 94,046,000 | - As of June 30, 2024, the Group's maximum liability for mortgage loans provided to certain buyers of the Group's properties was approximately RMB 92,542,000[43] Dividends The Board resolved not to declare any dividends for the current period - No dividends were declared or proposed for the current period; the Board resolved not to declare any dividends for the period[44] Other Information Purchase, Sale and Redemption of the Company's Listed Securities During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[45] Major Investments and Plans for Acquisitions and Disposals As of the end of the reporting period, the company held no major investments, had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the period, and currently has no plans for future major investments or capital asset purchases - As of June 30, 2024, there were no major investments held, nor any significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the period[45] - As of the date of this announcement, there are no plans for major investments or purchases of capital assets[45] Contingent Liabilities As of the end of the reporting period, the company had no significant contingent liabilities - As of June 30, 2024, the Group had no significant contingent liabilities[46] Events After the Reporting Period Subsequent to the reporting period, the company completed a rights issue and placing under general mandate, raising net proceeds of approximately HKD 0.56 million for professional fees and general working capital Rights Issue and Placing under Special Mandate Subsequent to the reporting period, the company completed a rights issue and placing, allotting and issuing approximately 10,950,405 shares, with net proceeds of approximately HKD 0.56 million used for professional fees and general working capital - The company announced a rights issue on April 8, 2024, and completed the rights issue and placing on July 22, 2024, and August 5, 2024, respectively[46][47] - The estimated net proceeds from the rights issue and placing are approximately HKD 0.56 million, which will be used to pay professional fees and for the company's general working capital[47] Corporate Governance During the reporting period, the company complied with the Corporate Governance Code and the Model Code for Securities Transactions by Directors, and has an audit committee responsible for overseeing financial reporting and internal controls Compliance with the Corporate Governance Code The company's directors believe that all relevant code provisions of the Corporate Governance Code were complied with during the current period - During the period, the Directors considered that the Company had complied with all relevant code provisions set out in the Corporate Governance Code[48] Model Code for Securities Transactions by Directors Upon enquiry, all Directors confirmed compliance with the Model Code for Securities Transactions by Directors as set out in Appendix C3 of the Listing Rules - Following specific enquiry with all Directors, the Company confirmed that all Directors had complied with the required standards set out in the Model Code[49] Audit Committee The Audit Committee comprises three independent non-executive Directors, responsible for recommending external auditors, reviewing financial statements, and overseeing financial reporting, risk management, and internal control systems; the Committee has reviewed and recommended the Board to approve the current period's financial statements - The Audit Committee comprises three independent non-executive Directors: Mr. Yau Sze Yeung (Chairman), Mr. Chan Wai Keung, and Mr. Li Chun Tung[50][51] - The Audit Committee is primarily responsible for making recommendations to the Board on the appointment, reappointment, and removal of external auditors, and for reviewing interim reports, annual reports, and the Group's accounts[51] - The Audit Committee has reviewed and recommended the Board to approve the Group's unaudited condensed consolidated financial statements for the current period[51] Auditor's Review Report Independent auditor Evergreen (Hong Kong) CPA Limited reviewed the interim financial information, finding no material issues but highlighting significant uncertainties regarding the company's ability to continue as a going concern Review of this Interim Results Announcement The unaudited condensed consolidated financial statements in this interim results announcement have been reviewed by the company's independent auditor, Evergreen (Hong Kong) CPA Limited, in accordance with Hong Kong Standard on Review Engagements 2410 - The unaudited condensed consolidated financial statements for the six months ended June 30, 2024, have been reviewed by the Company's independent auditor, Evergreen (Hong Kong) CPA Limited[52] Conclusion Based on the review, the auditor found no matters that caused them to believe the condensed consolidated financial statements were not prepared, in all material respects, in accordance with HKAS 34 - Based on our review, we have not become aware of any matter that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34[53] Material Uncertainty Related to Going Concern The auditor draws attention to a material uncertainty regarding the company's going concern ability due to continuous losses, high current liabilities, and insufficient cash, despite the Board's formulated measures, whose successful implementation remains uncertain - The auditor draws attention to the company incurring a net loss of approximately RMB 19,636,000 for the six months ended June 30, 2024, and frequently incurring net losses over the past four years, indicating a material uncertainty that may cast significant doubt on its ability to continue as a going concern[54] - The company has high current liabilities of approximately RMB 241,934,000 while cash and bank balances are only approximately RMB 12,102,000, and may not be able to repay its debts as they fall due unless sufficient cash flows are generated[54] - Although the company's Directors have identified several measures to meet liquidity needs, the successful implementation of these measures indicates a material uncertainty, and the auditor's conclusion is not modified in respect of this matter[55] Publication of Interim Results and Interim Report This announcement has been published on the HKEX and company websites, and the interim report will be dispatched to shareholders and released as soon as practicable - This announcement is available on the HKEX website www.hkexnews.hk and the Company's website www.chinauptown.com.hk[56](index=56&type=chunk) - The interim report will be dispatched to shareholders and published on the aforementioned websites as soon as practicable[56] Composition of the Board of Directors As of the announcement date, the Board of Directors comprises four executive Directors and three independent non-executive Directors - As of the date of this announcement, the Board comprises four executive Directors (Mr. Peng Zhonghui, Mr. Fu Yongyuan, Mr. Zhang Xiaojun, and Mr. Liang Zhichao) and three independent non-executive Directors (Mr. Yau Sze Yeung, Mr. Chan Wai Keung, and Mr. Li Chun Tung)[57]