中华国际(01064) - 2024 - 年度业绩

Financial Highlights The company swung to a significant loss in FY2023, primarily due to a large deconsolidation loss, impacting key financial metrics and balance sheet items Consolidated Income Statement The company swung to an annual loss of HKD 1.85 billion in FY2023, primarily driven by a HKD 1.71 billion deconsolidation loss from a former subsidiary, despite a slight revenue decrease Key Consolidated Income Statement Data | Metric | 2023 (HKD thousands) | 2022 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 28,363 | 30,283 | -6.3% | | Deconsolidation loss of a former subsidiary | (1,708,355) | – | N/A | | Loss before tax | (1,739,488) | 54,950 (Profit) | Swung from profit to loss | | Annual loss | (1,849,358) | 34,050 (Profit) | Swung from profit to loss | | Loss attributable to owners of the Company | (482,140) | 3,273 (Profit) | Swung from profit to loss | Consolidated Balance Sheet As of year-end 2023, total assets significantly decreased by 66% to HKD 1.5 billion, primarily due to a reduction in investment property value following subsidiary deconsolidation, while total liabilities and net assets also declined Consolidated Balance Sheet Summary | Metric | 2023 (HKD thousands) | 2022 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Non-current assets | 1,403,623 | 4,277,572 | -67.2% | | Total assets | 1,496,606 | 4,415,959 | -66.1% | | Total liabilities | 433,507 | 1,394,436 | -68.9% | | Net assets | 1,063,099 | 3,021,523 | -64.8% | | Equity attributable to owners of the Company | 375,814 | 873,970 | -57.0% | Key Financial Metrics Impacted by the substantial loss, basic loss per share was HKD 62.73 cents, with no final dividend proposed, though adjusted EBITDA remained positive at HKD 6.06 million, indicating core operational profitability - Basic loss per share was HKD 62.73 cents, compared to earnings per share of HKD 0.46 cents in the prior year[139][57] - The Board did not recommend a final dividend for the year ended December 31, 2023[56] - Adjusted EBITDA was a profit of HKD 6.06 million, a decrease from HKD 7.447 million in 2022, primarily reflecting core business profitability[180] Independent Auditor's Report The auditor issued a qualified opinion on the 2023 financial statements due to significant uncertainties regarding the final asset distribution of a former subsidiary undergoing liquidation Qualified Opinion The auditor issued a qualified opinion on the 2023 consolidated financial statements due to significant uncertainty regarding the final asset distribution of Guangzhou Zhengda, a former subsidiary undergoing liquidation, impacting the valuation of its equity and related deconsolidation loss - The auditor issued a qualified opinion, stating that, except for the potential effects of the uncertainty regarding Guangzhou Zhengda's liquidation asset distribution, the financial statements present a true and fair view of the Group's financial position[51][19] - The core of the qualified opinion is the inability to obtain sufficient audit evidence regarding the final distribution of Guangzhou Zhengda's remaining assets during liquidation, which may affect its equity valuation and the related deconsolidation loss amount[49][50] Management's Response Management, supported by the Audit Committee, believes its wholly-owned subsidiary, Hong Kong Zhengda, holds 100% ownership of Guangzhou Zhengda's remaining assets post-liquidation and remains optimistic about a favorable legal outcome despite potential claims - Management believes that, based on the cooperation agreement and Chinese law, Hong Kong Zhengda owns all remaining assets in Guangzhou Zhengda's liquidation and is optimistic about winning any potential legal disputes[145] Management Discussion & Analysis Management discusses the financial performance, business operations, and significant litigation concerning a former subsidiary, along with the outlook for the property market and future investment strategies Financial Review The annual swing to loss was primarily due to a non-cash, one-off HKD 1.71 billion deconsolidation loss from Guangzhou Zhengda and a fair value loss on investment properties, though core operating cash flow remained stable, and the gearing ratio stayed low - The annual swing from profit to loss was primarily due to (i) a HKD 1.71 billion deconsolidation loss from a former subsidiary; (ii) a HKD 16.25 million fair value gain on equity instruments at fair value through profit or loss; and (iii) a HKD 52.30 million fair value loss on investment properties (compared to a HKD 50.69 million gain last year)[181] - The deconsolidation loss of Guangzhou Zhengda was a non-cash transaction and had no impact on the Group's liquidity[161] Liquidity and Financial Resources | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Cash and bank balances | HKD 90.761 million | HKD 84.874 million | | Net cash flow from operating activities | HKD 24.263 million | HKD 26.456 million | | Gearing ratio | 0.10 | 0.04 | Business Review The Group primarily engages in property investment and development in mainland China, with its core investment property, 'Gangyu Plaza' in Chongqing, providing stable cash flow, while the former subsidiary Guangzhou Zhengda's planned commercial complex development in Guangzhou is stalled due to legal disputes - The investment property 'Gangyu Plaza' in Chongqing operates stably with nearly full occupancy, providing the Group with stable cash flow and working capital[189][171] - Former subsidiary Guangzhou Zhengda owns property in a prime location in Guangzhou, originally planned for a multi-functional commercial complex with a total GFA of approximately 234,000 sq.m., but the project is stalled due to liquidation disputes[190][191] Update on Material Litigation (Guangzhou Zhengda) The core event of this period is the complex legal litigation surrounding former subsidiary Guangzhou Zhengda, where a court ruling in May 2023 mandated its liquidation, leading to deconsolidation and a significant loss, prompting the company to pursue multiple legal avenues to challenge the decision - Core dispute: Third-party 'Yuefang Private Enterprise' applied for compulsory liquidation of Guangzhou Zhengda, citing 'company operational deadlock'[91][70] - Key turning point: In May 2023, the Guangdong High Court overturned the lower court's decision to dismiss the liquidation application, ordering Guangzhou Zhengda's liquidation ('revocation of dismissal ruling'), which resulted in the Group losing control over Guangzhou Zhengda[69][37] - Countermeasures: The Group has applied for a retrial with the Supreme People's Court and initiated separate lawsuits, asserting that 'Yuefang Private Enterprise' lacks legal standing, aiming to fundamentally invalidate the liquidation decision[73][102][110] Outlook The Board anticipates the mainland China property market will require several years to rebound, while actively seeking investment opportunities aligned with 'new quality productive forces' and expecting improvement in the Hong Kong economy with impending US interest rate cuts - The Board anticipates the mainland China property market will require several years to rebound from the bear market and will closely monitor market dynamics[87] - The Group will actively explore investment opportunities related to 'new quality productive forces,' aiming to upgrade and transform traditional industrial chains[130] - It is anticipated that the US will begin interest rate cuts by year-end or early next year, at which point the economic downturn in Hong Kong is expected to improve[115] Notes to the Consolidated Financial Statements This section details the basis of financial statement preparation, accounting policy changes, segment information, and the financial impact of deconsolidating a former subsidiary Basis of Preparation and Changes in Accounting Policies The financial statements are prepared in accordance with HKFRS and the historical cost convention, with the adoption of new and revised HKFRS standards during the year having no significant impact on the Group's financial statements - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards (HKFRS) and the disclosure requirements of the Hong Kong Companies Ordinance[141] - Several new standards, including HKAS 1 (Revised), HKAS 8 (Revised), and HKAS 12 (Revised), were adopted during the year, none of which had a significant impact on the Group's financial statements[152][142][136] Revenue and Segment Information The Group operates in two segments: Property Investment and Development, and Corporate and Others, with all external revenue in 2023 derived from the former, which recorded a significant loss primarily due to subsidiary deconsolidation, and over 90% of the Group's revenue and assets are located in mainland China - The Group is organized into two reportable operating segments: (a) Property Investment and Development; and (b) Corporate and Others[14][144][29] Segment Results Summary (2023, HKD thousands) | Segment | Sales to external customers | Segment results | | :--- | :--- | :--- | | Property Investment and Development | 28,363 | (1,724,344) | | Corporate and Others | – | (14,678) | | Total | 28,363 | (1,739,022) | - For the year 2023, revenue from a single major customer A amounted to HKD 28.363 million, representing 100% of total revenue[3][28] Deconsolidation of a Former Subsidiary Due to a court-ordered liquidation, the Group lost control of Guangzhou Zhengda on May 15, 2023, leading to its deconsolidation and a significant HKD 1.71 billion loss recognized in the income statement, with the remaining equity reclassified as a financial asset at fair value - Due to the court's liquidation order, the Board determined that the Group lost control over Guangzhou Zhengda from May 15, 2023, and thus deconsolidated it[37] Financial Impact of Deconsolidation (HKD thousands) | Item | Amount | | :--- | :--- | | Release of exchange fluctuation reserve | 20,469 | | Net assets of Guangzhou Zhengda | 2,702,106 | | Deconsolidation loss of a former subsidiary | (1,708,355) | | Equity interest recognized as financial asset at fair value through profit or loss | 1,014,220 | - The fair value of Guangzhou Zhengda's equity interest was determined using the discounted net realizable value method, considering asset fair value, related taxes, recovery time, and discount rates[40] Corporate Governance and Other Information This section covers the company's adherence to corporate governance codes, the Audit Committee's review of annual results, and the status of share trading Corporate Governance and Compliance The Board believes the company largely complied with the Listing Rules' Corporate Governance Code during 2023, with a minor deviation regarding director rotation deemed in spirit with the code, and the Audit Committee has reviewed the annual results - The Board believes the company largely complied with the Corporate Governance Code throughout the year, with a deviation from Code Provision A.4.2 (regarding rotation of directors) but deemed to be in line with the spirit of the code[117][132] - The company's Audit Committee has reviewed the annual results[121] - The company's shares were suspended from trading from 9:00 a.m. on July 2, 2024, and an application has been made for resumption of trading after the announcement[123][134]