积木集团(08187) - 2020 Q1 - 季度财报

Report Overview GEM Market Characteristics and Disclaimer The report emphasizes the GEM Board's high investment risks for SMEs, with the Stock Exchange disclaiming responsibility and the Board assuming full accountability for content accuracy - The GEM Board is positioned for small and medium-sized companies, entailing higher investment risks, potential for significant market volatility, and uncertain liquidity[3] - Hong Kong Exchanges and Clearing Limited and the Stock Exchange bear no responsibility for the report's content, make no representations, and accept no liability for any losses[3] - The Company's Directors jointly and individually assume full responsibility for this report, confirming the information is accurate, complete, and not misleading or fraudulent in all material aspects[3] Financial Results Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the three months ended March 31, 2020, the Group's revenue significantly decreased by 76.2% to HKD 7,707 thousand, leading to an expanded loss of HKD 11,820 thousand and a basic loss per share of HK 2.46 cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary (For the three months ended March 31) | Metric | 2020 (HKD thousands) | 2019 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue from goods and services | 7,707 | 32,378 | -76.2% | | Other income | 405 | 3,037 | -86.7% | | Loss before tax | (14,100) | (4,552) | 209.7% (Loss widened) | | Income tax credit | 2,280 | 99 | 2203.0% | | Loss for the period | (11,820) | (4,453) | 165.4% (Loss widened) | | Total comprehensive expense for the period | (11,858) | (4,396) | 169.7% (Expense widened) | | Basic loss per share (HK cents) | (2.46) | (0.93) | 164.5% (Loss widened) | - The significant decline in revenue was primarily due to the underperformance of loan intermediation services and footwear business[6] - Despite a significant increase in income tax credit, it was insufficient to offset the expanded loss before tax[6] Condensed Consolidated Statement of Changes in Equity As of March 31, 2020, total equity attributable to owners of the Company turned negative, from HKD 2,849 thousand to HKD (9,009) thousand, driven by a HKD 11,820 thousand loss and a HKD 38 thousand decrease in exchange reserve Condensed Consolidated Statement of Changes in Equity Summary (For the three months ended March 31) | Metric | March 31, 2020 (HKD thousands) | January 1, 2020 (HKD thousands) | March 31, 2019 (HKD thousands) | January 1, 2019 (Restated) (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Share capital | 4,800 | 4,800 | 4,800 | 4,800 | | Share premium | 46,917 | 46,917 | 46,917 | 46,917 | | Exchange reserve | (215) | (177) | (10) | (67) | | Capital reserve | (67) | (67) | (67) | (67) | | Accumulated losses | (60,444) | (48,624) | (19,732) | (15,279) | | Total attributable to owners of the Company | (9,009) | 2,849 | 31,908 | 36,304 | - In Q1 2020, total equity attributable to owners of the Company shifted from positive to negative, reflecting deteriorating operating conditions[7] - On January 1, 2019, accumulated losses were adjusted due to the initial application of HKFRS 16, recognizing an impairment loss of HKD 4,240 thousand[7] Notes to the Financial Statements General Information Jimu Group Limited, a public company incorporated in the Cayman Islands and listed on the GEM Board, presents its financial statements in HKD, with Jimu Holdings Limited as its ultimate holding company - The Company is a public company incorporated in the Cayman Islands, with its shares listed on the GEM Board of the Hong Kong Stock Exchange[9] - The Company's ultimate holding company and ultimate controlling shareholder is Jimu Holdings Limited[9] - The unaudited condensed consolidated financial statements are presented in HKD, chosen due to its Hong Kong listing and primary investor base, despite a different functional currency[9] Basis of Preparation and Principal Accounting Policies The unaudited condensed consolidated financial statements are prepared under Hong Kong Financial Reporting Standards and GEM Listing Rules disclosure requirements on a historical cost basis, with current period amendments having no significant impact on financial performance or position - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and Chapter 18 of the GEM Listing Rules, on a historical cost basis[10][11] - Amendments to HKFRS 3, HKAS 1 and 8, and interest rate benchmark reform-related amendments were applied in the current period[13] - The application of these amendments had no significant impact on the Group's financial performance and position for the three months ended March 31, 2020 and 2019[13] Segment Information The Group's two segments, loan intermediation and footwear, reported HKD 7,707 thousand revenue and HKD 11,835 thousand loss for loan intermediation, and no revenue with HKD 284 thousand loss for footwear, reflecting significant declines from the prior year - The Group's operating segments include loan intermediation services (providing pre-loan and post-loan intermediation) and footwear business (design, development, sourcing, promotion, and sales)[14][16] Segment Revenue and Results (For the three months ended March 31) | Segment | 2020 Revenue (HKD thousands) | 2020 Segment Results (HKD thousands) | 2019 Revenue (HKD thousands) | 2019 Segment Results (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Loan intermediation services | 7,707 | (11,835) | 17,758 | 36 | | Footwear business | – | (284) | 14,620 | (3,333) | | Total | 7,707 | (12,119) | 32,378 | (3,297) | | Loss before tax | | (14,100) | | (4,552) | - In Q1 2020, loan intermediation services shifted from profit to loss, and the footwear business ceased accepting orders, resulting in zero revenue[15][17] Revenue Analysis For the three months ended March 31, 2020, the Group's total revenue from goods and services significantly decreased to HKD 7,707 thousand from HKD 32,378 thousand in the prior year, with loan intermediation revenue falling to HKD 7,707 thousand and footwear trade revenue dropping to zero Revenue from Goods and Services Analysis (For the three months ended March 31) | Service Type | 2020 (HKD thousands) | 2019 (HKD thousands) | YoY Change (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | Provision of loan intermediation services | 7,707 | 17,758 | (10,051) | -56.6% | | Footwear trading | – | 14,620 | (14,620) | -100.0% | | Total | 7,707 | 32,378 | (24,671) | -76.2% | - The footwear trading business ceased generating revenue in Q1 2020, reflecting management's decision not to accept orders to avoid potential losses[18] - The significant decrease in loan intermediation service revenue is one of the primary reasons for the reduction in total revenue[18] Income Tax Credit For the three months ended March 31, 2020, the Group recorded a significant increase in income tax credit to approximately HKD 2,280 thousand from HKD 99 thousand in the prior year, primarily due to the recognition of deferred tax credit, with no Hong Kong profits tax provision made due to the absence of taxable profits Income Tax Credit (For the three months ended March 31) | Tax Type | 2020 (HKD thousands) | 2019 (HKD thousands) | YoY Change (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | PRC enterprise income tax – current tax | – | – | – | – | | Deferred tax | 2,280 | 99 | 2,181 | 2203.0% | | Total | 2,280 | 99 | 2,181 | 2203.0% | - The significant increase in income tax credit is primarily attributable to the recognition of deferred tax credit[18][46] - The applicable tax rate for PRC subsidiaries is 25%, but no Hong Kong profits tax provision was made as the Group had no taxable profits[19] Components of Loss for the Period For the three months ended March 31, 2020, the loss for the period primarily comprised employee benefit expenses, depreciation of property, plant and equipment, depreciation of right-of-use assets, and short-term lease expenses, with total staff costs decreasing to HKD 17,346 thousand due to minimal footwear business operations Components of Loss for the Period (For the three months ended March 31) | Item | 2020 (HKD thousands) | 2019 (HKD thousands) | YoY Change (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | Directors' emoluments | 453 | 891 | (438) | -49.2% | | Other staff costs | 16,893 | 18,430 | (1,537) | -8.3% | | Total staff costs | 17,346 | 19,321 | (1,975) | -10.2% | | Depreciation of property, plant and equipment | 77 | 438 | (361) | -82.4% | | Depreciation of right-of-use assets | 383 | 1,713 | (1,330) | -77.6% | | Expenses relating to short-term leases | 219 | 326 | (107) | -32.8% | | Interest income | (49) | (39) | (10) | 25.6% (Income increased) | - The decrease in total staff costs was primarily due to reduced wage expenses resulting from the extremely low operating level of the footwear business[21][44] - Depreciation expenses, including property, plant and equipment and right-of-use assets, both significantly decreased[21] Dividends For the three months ended March 31, 2020 and 2019, the Company neither paid, declared, nor proposed any dividends, and the Directors do not recommend an interim dividend for the period ended March 31, 2020 - The Company neither paid, declared, nor proposed any dividends during the reporting period or the corresponding period last year[21] - The Board of Directors does not recommend the payment of an interim dividend for the three months ended March 31, 2020[21] Loss Per Share For the three months ended March 31, 2020, basic loss per share attributable to owners of the Company significantly widened to HK 2.46 cents from HK 0.93 cents in the prior year, calculated using a weighted average of 480,000 thousand ordinary shares for both periods, with no diluted loss per share presented due to the absence of potential ordinary shares Loss Per Share (For the three months ended March 31) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Loss used in calculating basic loss per share (HKD thousands) | (11,820) | (4,453) | | Weighted average number of ordinary shares used in calculating basic loss per share (thousands) | 480,000 | 480,000 | | Basic loss per share (HK cents) | (2.46) | (0.93) | - The widening basic loss per share reflects the Company's deteriorating profitability[24] - Diluted loss per share is not presented as there were no potential ordinary shares outstanding during both periods[26] Events After the Reporting Period In April 2020, a subsidiary of the ultimate holding company, Jimu Holdings Limited, agreed to provide the Group with a two-year, unsecured, interest-free loan facility of RMB 40,000,000 for financial support, repayable in full by April 2022 - A subsidiary of the ultimate holding company, Jimu Holdings Limited, provided a RMB 40,000,000 loan facility in April 2020[27] - The loan is for two years, unsecured, interest-free, intended to provide financial support to the Group, and repayable in April 2022[27] Management Discussion and Analysis Business Review and Outlook The Group's primary businesses, loan intermediation and footwear, were severely impacted by the COVID-19 pandemic in Q1 2020, leading to significant revenue decline, prompting management to implement cost-cutting measures and actively seek new funding sources - The Group's principal businesses are loan intermediation services and footwear business[29] - The COVID-19 pandemic severely impacted both businesses, leading to a sharp decline in demand and a worsening global retail market[33][34] - Management has implemented cost-cutting plans, including closing branches, reducing staff, and ceasing Dongguan footwear operations, while actively seeking new funding sources[33][34] Loan Intermediation Business The Group's loan intermediation business, serving individual clients in China's third and fourth-tier cities, faced a sharp demand decline in Q1 2020 due to the pandemic, leading management to plan cost reductions and seek new funding - The Group has established over 50 branches in China, focusing on individual clients in third and fourth-tier cities, and has developed a credit rating system[30] - The loan intermediation business experienced a significant decline in Q1 2020 due to the COVID-19 pandemic and reduced willingness of funding sources to lend[31][33] - Management has adopted plans to reduce costs and improve efficiency by closing certain branches and reducing underperforming staff, while actively seeking other funding sources[33] Footwear Business The Group's footwear business, serving international wholesalers and retailers, experienced declining profit margins due to global economic uncertainty and the pandemic, prompting management to cease Dongguan operations and maintain minimal Hong Kong operations, declining new orders to avoid losses - The footwear business provides design, development, production management, and logistics services, primarily to international wholesalers and retailers[34] - Global economic uncertainty, intensified industry competition, and the COVID-19 pandemic led to declining profit margins and reduced revenue[34] - Management has ceased Dongguan business operations and maintains the Hong Kong footwear business at an extremely low operating level, deciding not to accept any new orders[34] Financial Review This quarter saw a significant deterioration in financial performance, with total revenue decreasing by 76.2% to HKD 7,700 thousand, driven by a 56.6% drop in loan intermediation revenue and zero footwear revenue, leading to an expanded loss of HKD 11,800 thousand, primarily due to the pandemic's impact on loan intermediation Key Financial Indicators Changes (For the three months ended March 31) | Metric | 2020 (HKD thousands) | 2019 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total revenue | 7,700 | 32,400 | -76.2% | | Loan intermediation service revenue | 7,700 | 17,800 | -56.6% | | Footwear business revenue | – | 14,600 | -100.0% | | Purchases and changes in inventories | – | 12,800 | -100.0% | | Other income | 400 | 3,000 | -86.7% | | Finance costs | 200 | 500 | -60.0% | | Employee benefit expenses | 17,300 | 19,300 | -10.4% | | Other operating expenses | 4,700 | 7,400 | -36.6% | | Income tax credit | 2,300 | 99 | 2223.2% | | Loss for the period | 11,800 | 4,500 | 162.2% (Loss widened) | - The loan intermediation services segment shifted from a profit before tax in the prior year to a HKD 11,800 thousand loss in the current period, which is the primary reason for the expanded loss for the period[47] - The footwear business segment's loss decreased, primarily due to reductions in employee benefit expenses and other operating expenses, rather than an improvement in business performance[47] Other Information Directors' Interests in Securities As of March 31, 2020, Mr. Ho Kin Wai held a 2% interest in the Company, while Mr. Dong Jun and Mr. Wen Junming held significant interests in the associated corporation, Jimu Holdings Limited, through controlled corporations Directors' Long Positions in Shares or Related Shares of the Company (As at March 31, 2020) | Name of Director | Capacity | Number of Shares Held (Ordinary Shares) | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Mr. Ho Kin Wai | Interest in controlled corporation | 9,600,000 | 2% | Directors' Long Positions in Shares or Related Shares of Associated Corporations (As at March 31, 2020) | Name of Director | Name of Associated Corporation | Capacity/Nature | Number of Shares Held | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | :--- | | Mr. Dong Jun | Jimu Holdings Limited | Interest in controlled corporation | 21,524,698 shares (Ordinary Shares) | 29.90% | | Mr. Wen Junming | Jimu Holdings Limited | Interest in controlled corporation | 2,210,630 shares (Series C Preference Shares) | 5.17% | | Mr. Wen Junming | Jimu Holdings Limited | Interest in controlled corporation | 235,000 shares (Ordinary Shares) | 0.33% | - Save as disclosed above, no other Director or chief executive had any interests or short positions in the securities of the Company or its associated corporations required to be disclosed[52] Interests Discloseable Under the SFO and Major Shareholders As of March 31, 2020, Jimu Group Holdings Limited was the Company's major shareholder, beneficially owning 350,400,000 shares, representing a 73% interest, with Huawen Industry Group Limited and Jimu Holdings Limited also deemed to hold the same number of shares due to controlled corporate interests Major Shareholders' Long Positions in Shares or Related Shares of the Company (As at March 31, 2020) | Name of Shareholder | Capacity | Number of Shares Held | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Jimu Group Holdings Limited | Beneficial owner | 350,400,000 | 73% | | Huawen Industry Group Limited | Interest in controlled corporation | 350,400,000 | 73% | | Jimu Holdings Limited | Interest in controlled corporation | 350,400,000 | 73% | - Jimu Group Holdings Limited is the registered owner of 73% of the Company's equity, with Huawen Industry Group Limited and Jimu Holdings Limited deemed to hold the same interest due to their controlling relationship[53] - Save as disclosed above, the Directors are not aware of any other persons holding substantial interests or short positions required to be disclosed under the Securities and Futures Ordinance[54] Purchase, Sale or Redemption of the Company's Listed Securities For the period ended March 31, 2020, neither the Company nor its subsidiaries redeemed, purchased, or sold any of the Company's listed securities - The Company and its subsidiaries did not engage in any redemption, purchase, or sale activities of listed securities during the reporting period[55] Code of Conduct Regarding Securities Transactions by Directors The Group has adopted the dealing standards set out in the GEM Listing Rules as the code of conduct for Directors' securities transactions, and all Directors confirmed full compliance during the review period - The Group has adopted the required dealing standards set out in Rules 5.48 to 5.67 of the GEM Listing Rules as the code of conduct for Directors' securities transactions[56] - All Directors confirmed full compliance with the code of conduct during the review period[56] Interests in Competing Business For the three months ended March 31, 2020, no Director or their close associates engaged in any business competing or potentially competing with the Group's business, nor were there any other conflicts of interest - No Director or their close associates engaged in any business directly or indirectly competing with the Group's business[57] - No other conflicts of interest between such persons and the Group were identified[57] Audit Committee The Company's Audit Committee, established on May 11, 2016, comprises three independent non-executive directors and has reviewed the Group's unaudited condensed consolidated financial statements for the three months ended March 31, 2020, confirming compliance with applicable accounting standards and Listing Rules - The Audit Committee comprises three independent non-executive Directors: Mr. Hon Ping Cho, Andy (Chairman), Mr. Kwok Chung Yung, and Mr. Li Tixing[58] - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the three months ended March 31, 2020[58] - The Committee confirmed that the disclosure of financial information complies with applicable accounting standards, the GEM Listing Rules, and other relevant legal requirements[58] Events After the Review Period Except for the loan facility provided by the ultimate holding company as disclosed in Note 10 to the financial statements, no other significant post-reporting period events occurred for the Company or the Group as of the report date - Details of significant events occurring after the reporting date are set out in Note 10 to the unaudited condensed consolidated financial statements[60] - Save for the loan facility mentioned in Note 10, no other significant post-reporting period events were undertaken by the Company or the Group[60]