东方企控集团(00018) - 2024 - 中期业绩

Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended September 30, 2023, the Group's revenue decreased by approximately 9% year-on-year to HKD 312.085 million, with profit attributable to owners of the Company significantly down 64% to approximately HKD 30.744 million, and basic earnings per share falling from 3.53 HK cents to 1.28 HK cents Consolidated Statement of Profit or Loss Key Data | Indicator | For the 6 months ended Sep 30, 2023 (HKD thousands) | For the 6 months ended Sep 30, 2022 (HKD thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 312,085 | 344,429 | -9.4% | | Profit before tax | 34,758 | 103,059 | -66.3% | | Profit for the period | 31,789 | 85,549 | -62.8% | | Profit attributable to owners of the Company | 30,744 | 84,690 | -63.7% | | Basic earnings per share | 1.28 HK cents | 3.53 HK cents | -63.7% | - Other comprehensive loss for the period primarily resulted from exchange differences arising from the translation of overseas operations, amounting to a net loss of approximately HKD 17.11 million[34] Condensed Consolidated Statement of Financial Position As of September 30, 2023, the Group's total assets were approximately HKD 1.948 billion, total equity approximately HKD 1.745 billion, with net current assets increasing from HKD 1.034 billion to HKD 1.076 billion primarily due to a significant rise in loans and interest receivables, while cash and cash equivalents decreased from HKD 665.196 million to HKD 531.673 million Balance Sheet Overview | Indicator | Sep 30, 2023 (HKD thousands) | Mar 31, 2023 (HKD thousands) | | :--- | :--- | :--- | | Non-current assets | 743,720 | 772,362 | | Current assets | 1,204,685 | 1,119,815 | | Of which: Cash and cash equivalents | 531,673 | 665,196 | | Of which: Loans and interest receivables (current) | 520,602 | 292,832 | | Current liabilities | 128,388 | 86,163 | | Net current assets | 1,076,297 | 1,033,652 | | Net assets/Total equity | 1,744,535 | 1,729,855 | Condensed Consolidated Statement of Changes in Equity As of September 30, 2023, total equity attributable to owners of the Company slightly increased to HKD 1.732 billion from HKD 1.718 billion on April 1, 2023, primarily influenced by profit for the period of HKD 30.744 million and exchange difference losses of HKD 16.57 million - During the reporting period, equity attributable to owners of the Company increased from approximately HKD 1.718 billion to approximately HKD 1.732 billion[40] - Total comprehensive income for the period was approximately HKD 14.68 million, comprising profit of approximately HKD 31.79 million and exchange losses from overseas operations of approximately HKD 17.11 million[40][30] Notes to the Condensed Consolidated Financial Statements Basis of Preparation and Principal Accounting Policies These condensed consolidated interim financial statements are prepared in accordance with HKAS 34 and the Listing Rules, with accounting policies consistent with the annual financial statements as of March 31, 2023, and the adoption of new standards had no significant impact on the Group's accounting policies - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[42] - Several new or revised accounting standards were adopted during the reporting period, but they had no significant impact on the Group's accounting policies[67][45] Revenue and Segment Information The Group's revenue primarily derives from three segments: newspaper publishing, loan business, and other operations, with newspaper publishing remaining the main source despite a year-on-year decline, while loan business revenue grew, and the vast majority of revenue and non-current assets are located in Hong Kong Revenue and Results by Business Segment (HKD thousands) | Reportable Segment | Revenue (2023 H1) | Revenue (2022 H1) | Profit/(Loss) (2023 H1) | Profit/(Loss) (2022 H1) | | :--- | :--- | :--- | :--- | :--- | | Newspaper publishing | 283,757 | 314,607 | 20,984 | 60,929 | | Loan business | 19,046 | 16,891 | 16,973 | 15,833 | | All other operating segments | 9,282 | 12,931 | (1,375) | 21,295 | | Total | 312,085 | 344,429 | 36,582 | 98,057 | Revenue and Non-current Assets by Geographical Area (HKD thousands) | Region | Revenue from External Customers (2023 H1) | Non-current Assets (Sep 30, 2023) | | :--- | :--- | :--- | | Hong Kong | 306,748 | 521,479 | | Australia | 5,337 | 204,318 | - During the reporting period, two major customers from the newspaper publishing segment contributed approximately HKD 160 million in revenue, accounting for approximately 51% of total revenue[86] - Government subsidies (Employment Support Scheme) of approximately HKD 15.12 million in the prior corresponding period were not available in the current reporting period[70][48] Notes on Key Financial Items This section details key financial statement items, including a significant reduction in income tax expense, the board's decision not to declare an interim dividend, fair value losses on investment properties, a substantial increase in loans receivable, and a decrease in cash and cash equivalents partly due to new restricted bank deposits Income Tax Expense Income tax expense for the period was approximately HKD 2.97 million, a significant decrease from HKD 17.51 million in the prior year, primarily due to reductions in both current and deferred tax Composition of Income Tax Expense (HKD thousands) | Item | For the 6 months ended Sep 30, 2023 | For the 6 months ended Sep 30, 2022 | | :--- | :--- | :--- | | Current tax | 3,576 | 10,559 | | Deferred tax | (607) | 6,951 | | Total income tax expense | 2,969 | 17,510 | Dividends and Earnings Per Share The Board resolved not to declare an interim dividend for the current period, contrasting with the prior year's interim dividend of 3 HK cents and a special dividend of 2 HK cents per share, while basic earnings per share decreased by 64% year-on-year to 1.28 HK cents - The directors resolved not to declare an interim dividend for the six months ended September 30, 2023[26] - Basic earnings per share were 1.28 HK cents, calculated based on profit attributable to owners of the Company of approximately HKD 30.74 million and 2,397,917,898 ordinary shares in issue[15][36] Property, Plant and Equipment and Investment Properties During the period, the Group acquired approximately HKD 11.33 million in property, plant, and equipment, while the fair value of investment properties decreased by approximately HKD 6.55 million, mainly due to lower valuations of Hong Kong properties partially offset by increased valuations of Australian properties - During the reporting period, the Group purchased approximately HKD 11.33 million in property, plant and equipment, and recognized an impairment of approximately HKD 5.22 million for leasehold buildings[16] Fair Value Movement of Investment Properties (HKD thousands) | Item | Sep 30, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | | Fair value at beginning of period | 332,649 | 313,267 | | Fair value change | (6,553) | 38,613 | | Exchange adjustment | (8,942) | (19,231) | | Fair value at end of period | 317,154 | 332,649 | Trade and Other Receivables and Payables As of September 30, 2023, the Group's total trade and other receivables were HKD 44.421 million and total trade and other payables were HKD 8.643 million, both decreasing from the beginning of the period, with the majority of receivables aged within 60 days Ageing Analysis of Trade and Other Receivables and Payables (HKD thousands) | Item | Sep 30, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | | Trade and other receivables | 44,421 | 58,774 | | 0 – 60 days | 20,697 | 25,933 | | Trade and other payables | 8,643 | 11,376 | | 0 – 60 days | 8,105 | 10,980 | Related Party Transactions and Contingent Liabilities During the reporting period, the Group paid approximately HKD 622,000 in legal fees to a law firm where Mr. Lai Hing Chiu, a non-executive director, serves as a senior partner, and the Group has several outstanding lawsuits for which the directors believe adequate provisions have been made - Legal fees of approximately HKD 622,000 were paid to Messrs. Yiu, Lai, Li & Co, a related party[10] - The Group has several outstanding lawsuits involving defamation and other matters, for which the directors believe adequate provisions have been made for potential liabilities[31] Management Discussion and Analysis Review of Financial Performance During the reporting period, the Group's profit decreased by 64% year-on-year to HKD 30.744 million, and revenue declined by 9% to HKD 312.085 million, with the profit decrease primarily attributed to the absence of prior-period government subsidies, gains from Australian property sales, and current period investment property valuation decreases and impairment of leasehold buildings, resulting in an approximate 15% profit decline excluding these factors - The primary reasons for the profit decrease include: - Approximately HKD 15.12 million in government support subsidies in the prior corresponding period, with none in the current period - Approximately HKD 19.6 million in gains from the sale of Australian properties and reversal of provisions in the prior corresponding period - Approximately HKD 11.78 million in investment property valuation decreases and impairment of leasehold buildings in the current period[13] Business Review and Outlook The Group's three core businesses show mixed performance, with media business facing challenges due to weak Hong Kong economic recovery, property investment maintaining stable rental income but experiencing valuation pressure in Hong Kong commercial properties partially offset by Australian hotel property appreciation, and the financing business demonstrating strong growth in loan portfolio size and interest income with an optimistic outlook Media Business The Group's media business faces significant challenges due to insufficient economic recovery in Hong Kong, population outflow, and increased competition, resulting in an 8% year-on-year decline in overall Oriental Daily News revenue and a 17% decline in digital media revenue, with future strategies focusing on cross-platform promotion and video content expansion to boost advertising revenue in the second half - Oriental Daily News revenue decreased by approximately HKD 20.49 million (-8%) year-on-year, and digital media business revenue decreased by approximately HKD 10.36 million (-17%) year-on-year[111] - The "on.cc Oriental Daily News" mobile application has accumulated over 10 million downloads and launched new programs like "East Watch" to attract users[109] - Looking ahead, government economic stimulus measures and major events are expected to help boost advertising revenue in the second half of the year[97] Property Investment Business In Hong Kong property investment, the North Point commercial property is fully leased with stable rental income but experienced a valuation decrease of approximately HKD 16.5 million due to economic downturn, while Australian hotel property valuation increased by AUD 1.92 million due to strong tourism, partially offsetting losses, and the Group is actively seeking buyers for the Australian hotel to lock in profits - Hong Kong investment property valuation decreased by approximately HKD 16.5 million (-13%) compared to March 31, 2023, and recorded an impairment loss of approximately HKD 5.22 million for leasehold properties[94] - The Australian hotel property valuation increased by AUD 1.92 million (+5%), and the Group continues to actively seek buyers to dispose of the hotel[94][116] Financing Business The financing business continues its strong growth, with loans receivable significantly increasing by 75% to approximately HKD 524 million at period-end, and interest income rising 13% year-on-year to HKD 19.05 million, as the Group focuses on high-quality clients primarily with first mortgages on properties and has no bad debt record, leading management to be optimistic about its prospects - Loans receivable increased by approximately HKD 224 million (+75%) compared to March 31, 2023, reaching approximately HKD 524 million[113] - Total loan interest income was approximately HKD 19.05 million, an increase of approximately HKD 2.16 million (+13%) year-on-year[113] - Management expects the financing business to expand steadily and is optimistic about its prospects[117] Liquidity and Capital Resources As of September 30, 2023, the Group maintained a solid financial position with net current assets of approximately HKD 1.076 billion, including HKD 531.673 million in cash and bank balances, while the gearing ratio slightly increased from 0.4% to 2.1%, with capital expenditure for the period at approximately HKD 11.33 million and no significant investment plans currently Liquidity and Capital Structure | Indicator | Sep 30, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | | Net current assets (HKD thousands) | 1,076,297 | 1,033,652 | | Cash and bank balances (HKD thousands) | 531,673 | 665,196 | | Gearing ratio | 2.1% | 0.4% | - Capital expenditure for the reporting period was approximately HKD 11.33 million, compared to HKD 1.6 million in the prior corresponding period[25] - Approximately HKD 278 million in short-term time deposits have been pledged as collateral for the Group's bank overdrafts[108] Other Information Corporate Governance and Other Disclosures The Group complied with all code provisions of the Corporate Governance Code during the reporting period, and the Audit Committee reviewed the interim financial statements without objection, while the Group currently has no foreign currency hedging policy but continuously monitors risks, employed 872 staff at period-end, and did not purchase, sell, or redeem any listed securities during the period - The Group has complied with all code provisions of Appendix 14 "Corporate Governance Code" of the Listing Rules[103] - The Audit Committee has discussed and reviewed the unaudited condensed consolidated interim financial statements with management and has no objections[102] - As of September 30, 2023, the Group employed 872 staff, a decrease from 908 as of March 31, 2023[101] - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[121]