华营建筑(01582) - 2024 - 中期业绩

Financial Highlights Financial Highlights For the six months ended June 30, 2024, the Group's total revenue slightly decreased to HKD 2.77 billion, while gross profit significantly increased to HKD 188.1 million, though profit attributable to owners declined to approximately HKD 35.8 million, with the Board resolving to declare an interim dividend of HKD 1.5 cents per share Financial Performance Summary | Metric | Six Months Ended June 30, 2024 (Million HKD) | Six Months Ended June 30, 2023 (Million HKD) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 2,773.2 | 2,832.1 | -2.1% | | Gross Profit | 188.1 | 150.5 | +25.0% | | Profit Attributable to Owners | 35.8 | 45.5 | -21.3% | - The Board has resolved to declare an interim dividend of HKD 1.5 cents per share[1] Interim Financial Statements Interim Condensed Consolidated Statement of Profit or Loss During the reporting period, revenue was HKD 2.77 billion, a slight decrease of 2.1% year-on-year, while gross profit increased by 25.0% to HKD 188.06 million due to effective cost control, but profit for the period decreased by 21.2% to HKD 36.22 million, with basic earnings per share at HKD 7.17 cents Interim Condensed Consolidated Statement of Profit or Loss | Item | Six Months Ended June 30, 2024 (Thousand HKD) | Six Months Ended June 30, 2023 (Thousand HKD) | | :--- | :--- | :--- | | Revenue | 2,773,188 | 2,832,073 | | Gross Profit | 188,062 | 150,480 | | Administrative Expenses | (98,612) | (80,890) | | Profit Before Tax | 49,869 | 54,818 | | Profit for the Period | 36,220 | 45,954 | | Profit Attributable to Owners of the Company | 35,845 | 45,457 | | Basic Earnings Per Share | 7.17 HK cents | 9.09 HK cents | Interim Condensed Consolidated Statement of Comprehensive Income During the reporting period, total comprehensive income for the period decreased from HKD 27.49 million in the prior period to HKD 25.80 million, primarily due to an exchange difference loss of HKD 10.42 million arising from the translation of overseas operations - Other comprehensive loss for the period from exchange differences on translation of overseas operations was HKD 10.42 million (compared to a loss of HKD 18.47 million in the prior period)[3] - Total comprehensive income for the period was HKD 25.80 million, a decrease from HKD 27.49 million in the prior period[3] Interim Condensed Consolidated Statement of Financial Position As of June 30, 2024, the Group's total assets were HKD 4.24 billion, total liabilities were HKD 3.59 billion, and net assets increased to HKD 652 million, with net current assets improving from HKD 374 million to HKD 411 million, indicating enhanced liquidity Interim Condensed Consolidated Statement of Financial Position | Item | June 30, 2024 (Thousand HKD) | December 31, 2023 (Thousand HKD) | | :--- | :--- | :--- | | Total Non-current Assets | 350,952 | 353,693 | | Total Current Assets | 3,887,915 | 3,777,662 | | Total Current Liabilities | 3,476,514 | 3,403,201 | | Net Current Assets | 411,401 | 374,461 | | Total Non-current Liabilities | 110,702 | 93,305 | | Net Assets | 651,651 | 634,849 | Notes to the Interim Condensed Consolidated Financial Information Operating Segment Information The Group's operations are divided into two main segments: construction and environmental protection, with construction remaining the core business, contributing 97.5% of revenue and 89.1% of segment results, while environmental protection revenue decreased by 40.5% year-on-year, leading to a reduction in its segment results Segment Performance | Segment | Revenue (Thousand HKD) | Segment Results (Thousand HKD) | | :--- | :--- | :--- | | Construction Business | 2,704,868 | 65,794 | | Environmental Protection Business | 68,320 | 8,056 | | Total | 2,773,188 | 73,850 | - The Construction Business segment primarily engages in building construction and RMAA works in Hong Kong, Malaysia, and the United Kingdom[12] - The Environmental Protection Business segment is involved in the construction and operation of wastewater treatment and related facilities in Mainland China[12] Revenue and Other Income Total revenue primarily derived from contracts with customers, with building construction works being the largest contributor, and Hong Kong market accounting for over 84% of revenue by geographical segment, while other income significantly increased due to HKD 5.7 million in insurance compensation received Revenue by Type | Revenue Type | Amount (Thousand HKD) | | :--- | :--- | | Building Construction Works | 2,414,268 | | RMAA Works | 290,600 | | Environmental Protection Business | 62,892 | | Total Revenue from Contracts with Customers | 2,767,760 | Revenue by Geographical Market | Geographical Market | Amount (Thousand HKD) | | :--- | :--- | | Hong Kong | 2,329,939 | | United Kingdom | 320,994 | | Mainland China | 62,892 | | Malaysia | 53,935 | - Other income amounted to HKD 6.95 million, primarily comprising HKD 5.7 million in insurance compensation[17] Finance Costs Finance costs significantly increased by 55.3% year-on-year to HKD 29.68 million, primarily due to higher interest on bank borrowings and interest on discounting amounts due from retention monies Finance Costs Breakdown | Item | Six Months Ended June 30, 2024 (Thousand HKD) | Six Months Ended June 30, 2023 (Thousand HKD) | | :--- | :--- | :--- | | Interest on bank borrowings | 17,161 | 10,865 | | Interest on discounting amounts due from retention monies | 9,988 | 3,208 | | Total | 29,677 | 19,109 | Dividends The Board declared an interim dividend of HKD 1.5 cents per share for the six months ended June 30, 2024, consistent with the prior period, and the final dividend of HKD 1.8 cents per share for 2023 was paid in July 2024 - A proposed interim dividend of HKD 1.5 cents per share[64] - The Board declared an interim dividend of HKD 1.5 cents per ordinary share, consistent with the prior period (HKD 1.5 cents), totaling HKD 7.5 million[24] - The final dividend for 2023 of HKD 9 million (HKD 1.8 cents per share) was paid on July 26, 2024[24] Management Discussion and Analysis Business Review and Outlook The Group maintains a leading position in its core construction business with 47 ongoing projects totaling HKD 28.5 billion in contracts, emphasizing technological innovation with HKD 11.6 million invested in R&D and its proprietary '4S Smart Site Safety System' achieving ISO 27001 certification, while anticipating positive impacts from Hong Kong's stable economic development, the imported labor scheme, and amendments to the compulsory sale for redevelopment ordinance - As of June 30, 2024, the Group had 47 ongoing projects with original contract sums totaling approximately HKD 28.5 billion[34] - During the reporting period, the Group was awarded 9 new projects with original contract sums totaling approximately HKD 4.1 billion[34] - The Group prioritizes technological innovation, with total R&D expenditure of approximately HKD 11.6 million during the reporting period, and its self-developed '4S Smart Site Safety System' successfully obtained ISO 27001 certification[37] - Looking ahead to the second half of the year, the imported labor scheme is expected to alleviate talent shortages, and amendments to the compulsory sale ordinance are anticipated to promote redevelopment projects, bringing positive impacts to the Group's business[38] Financial Review This period's financial performance is characterized by a slight revenue decrease, gross profit growth, and net profit decline, with total revenue down 2.1% to HKD 2.77 billion primarily due to reduced environmental protection business and building construction works revenue, while gross margin improved from 5.3% to 6.8% driven by significant improvement in RMAA works gross profit, but increased administrative expenses and expected credit loss provisions for receivables led to a 21.3% decline in net profit to HKD 36.2 million Revenue Total revenue decreased by 2.1% year-on-year, with building construction works revenue slightly down by 1.7%, RMAA works revenue up by 11.2%, and environmental protection business revenue significantly declining by 40.5% Revenue by Business Segment | Business Segment | Six Months Ended June 30, 2024 (Million HKD) | Six Months Ended June 30, 2023 (Million HKD) | Change | | :--- | :--- | :--- | :--- | | Building Construction Works | 2,414.3 | 2,455.9 | -1.7% | | RMAA Works | 290.6 | 261.4 | +11.2% | | Environmental Protection Business | 68.3 | 114.8 | -40.5% | | Total Revenue | 2,773.2 | 2,832.1 | -2.1% | Gross Profit and Gross Margin The Group's overall gross margin significantly improved from 5.3% to 6.8%, primarily driven by the RMAA works segment, which saw its gross margin reverse from -0.5% to 14.9%, while building construction works gross margin slightly decreased and environmental protection business gross margin increased - RMAA works gross profit turned from a loss of HKD 1.4 million in the prior period to a profit of HKD 43.2 million, with its gross margin increasing from -0.5% to 14.9%[46] - Environmental protection business gross margin increased from 18.5% to 26.6%, but the gross profit amount decreased due to reduced revenue from high-margin construction and rehabilitation services[47] Expenses and Profit Net profit declined primarily due to several expense changes: administrative expenses increased due to higher staff costs and R&D investment; other operating items shifted from net income to net expenses in the prior period, mainly due to a HKD 17.7 million provision for expected credit losses on receivables; finance costs rose due to increased interest rates; and income tax expense increased due to higher non-deductible expenses - Administrative expenses increased from HKD 80.9 million to HKD 98.6 million, primarily due to higher staff costs, bank charges, and R&D expenses[49] - Net other operating expenses amounted to HKD 16.9 million, compared to income of HKD 2.1 million in the prior period, mainly due to a HKD 17.7 million provision for expected credit losses on receivables[50] - Net profit decreased by 21.3% from HKD 46 million to HKD 36.2 million[53] Liquidity, Financial Resources and Capital Structure The Group maintains a robust financial position with ample liquidity, as cash and cash equivalents significantly increased to HKD 428 million at the end of the reporting period, and the gearing ratio substantially decreased from 42.3% at the end of last year to 29.2%, indicating reduced financial leverage Key Financial Metrics | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and Cash Equivalents | 427.6 Million HKD | 236.0 Million HKD | | Net Current Assets | 411.4 Million HKD | 374.5 Million HKD | | Gearing Ratio | 29.2% | 42.3% | | Interest-bearing Bank Borrowings | 493.5 Million HKD | 415.6 Million HKD | - The Group pledged receivables and contract assets with a net book value of HKD 184 million under service concession arrangements to banks to finance loans in China[61] Corporate Governance and Other Information Dividends and Share Registrar The Board recommended an interim dividend of HKD 1.5 cents per share, payable on or about September 30, 2024, with the share register to be closed from September 5 to September 9, 2024, to determine dividend entitlements - A proposed interim dividend of HKD 1.5 cents per share[64] - The share register will be closed from September 5 to September 9, 2024 (both dates inclusive)[65] Compliance and Review The Company complied with all applicable code provisions of the Corporate Governance Code during the reporting period, and the interim results were reviewed by the Company's auditor in accordance with Hong Kong Standard on Review Engagements 2410 and by the Company's Audit Committee - The Company has complied with all applicable code provisions set out in the Corporate Governance Code during the reporting period[66] - The unaudited interim condensed consolidated financial information has been reviewed by the Company's auditor and by the Company's Audit Committee[69]