九龙仓集团(00004) - 2020 - 中期财报

Performance Summary The Group experienced a significant turnaround from profit to loss in H1 2020, primarily due to property impairments and revaluation losses Group Overall Performance In H1 2020, the Group turned from profit to loss, recording a loss attributable to shareholders of HKD 1.741 billion, a stark contrast to the profit in the same period last year - The pandemic led to economic difficulties, with slowed port activity, delayed mainland development property sales, significant impairment provisions for Hong Kong development properties, stunted investment property growth, and a sharp drop in hotel occupancy rates being the main causes of the performance loss[5] Key Performance Indicators for H1 2020 | Metric | H1 2020 | H1 2019 | | :--- | :--- | :--- | | (Loss)/Profit Attributable to Shareholders | (HKD 1.741 billion) | HKD 2.450 billion | | Underlying Net (Loss)/Profit | (HKD 1.132 billion) | HKD 2.236 billion | | Basic (Loss)/Earnings Per Share | (HKD 0.57) | HKD 0.80 | Interim Dividend The Board declared a first interim dividend of HKD 0.20 per share, a 20% decrease from the prior year, totaling approximately HKD 0.61 billion Interim Dividend Details | Item | 2020 | 2019 | | :--- | :--- | :--- | | First Interim Dividend (Per Share) | HKD 0.20 | HKD 0.25 | | Total Dividend Amount | HKD 0.61 billion | HKD 0.762 billion | Business Review This section provides an overview of the Group's diverse business segments and their performance during the period Hong Kong Properties The Hong Kong property portfolio performed steadily, with a high-value transaction for Mount Nicholson and multiple redevelopment projects progressing as planned - A stratified unit at Mount Nicholson, The Peak, was sold for HKD 0.533 billion, with a price per square foot reaching HKD 0.116 million[8] - Multiple redevelopment projects are progressing well, including 11 Plantation Road (7 houses), 77 Peak Road (8 houses), and 1 Plantation Road (20 houses)[8] - The Group also has significant layouts in Kowloon Tong and the former Kai Tak Airport runway in Kowloon East, advancing foundation works for residential projects and holding a 30% interest in a large waterfront site, respectively[9][10] Mainland China Development Properties Affected by the pandemic, recognized revenue and operating profit declined significantly, yet contracted sales grew by 24% H1 2020 Mainland China Development Properties Performance (Attributable Share) | Metric | H1 2020 | H1 2019 | Change | | :--- | :--- | :--- | :--- | | Recognized Revenue | HKD 4.275 billion | HKD 5.232 billion | -18% | | Operating Profit | HKD 1.172 billion | HKD 1.828 billion | -36% | | Contracted Sales | RMB 8.1 billion | RMB 6.498 billion | +24% | | Unrecognized Sales (Period-end) | RMB 31.4 billion | RMB 27.4 billion | +14% | - The Group did not acquire additional land during the period, with land reserves remaining at 3.3 million square meters as of end-June[13] Mainland China Investment Properties Despite initial pandemic impact, retail demand rebounded in Q2, leading to a slight revenue decrease but an increase in operating profit, with Changsha IFS performing exceptionally well H1 2020 Mainland China Investment Properties Performance | Metric | Amount | YoY Change | | :--- | :--- | :--- | | Revenue | HKD 1.851 billion | -5% | | Operating Profit | HKD 1.183 billion | +2% | - Changsha IFS showed strong performance, with revenue up 6% and operating profit significantly up 51%, and the mall was fully leased by end-June[15] - Chengdu IFS was less affected by the pandemic, with revenue down 8% and operating profit up 4%, and the mall's occupancy rate remained high at 98%[16] - Wheelock Square, Shanghai, maintained a high occupancy rate of 91%[17] Wharf Hotels The hotel sector was severely impacted by global travel halts, leading to plummeting occupancy rates, with the Group focusing on health measures and cost control - The Group manages 17 hotels across Mainland China, Hong Kong, and the Philippines, offering nearly 6,000 rooms[17] - During the period, the Group focused on health and safety measures and cost control to navigate the unprecedented challenging market conditions[17] Logistics The logistics business faced challenges in H1 due to global supply chain disruptions, geopolitical tensions, and economic slowdown, resulting in declining container throughput at major terminals H1 2020 Major Terminal Throughput | Terminal | Throughput (TEUs) | YoY Change | | :--- | :--- | :--- | | Modern Terminals (Hong Kong) | 2.4 million | -5% | | Shenzhen Da Chan Bay Terminal | 0.6 million | -11% | | Shekou Container Terminals | 2.5 million | -12% | - Hong Kong Air Cargo Terminals (the Group holds a 21% interest) benefited from market opportunities arising from the pandemic, handling a total of 0.7 million tonnes of cargo in H1[19] Financial Review This section provides an in-depth analysis of the Group's financial performance, liquidity, and capital commitments Interim Results Review In H1 2020, the Group turned from profit to loss, recording a loss attributable to shareholders of HKD 1.741 billion, primarily due to a significant impairment provision for a Hong Kong development property project Overview of Revenue and Operating Profit by Business Segment (H1 2020) | Business Segment | Revenue (HKD million) | YoY Change | Operating (Loss)/Profit (HKD million) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Investment Properties | 1,932 | -5% | 1,227 | +0.6% | | Development Properties | 1,176 | -62% | 486 | -63% | | Hotels | 123 | -54% | (49) | Turned to loss | | Logistics | 1,202 | -4% | 196 | -13% | | Investments and Others | 1,118 | -21% | 888 | -28% | - Other net expenses amounted to HKD 2.94 billion, primarily including an impairment provision of HKD 2.864 billion for a Hong Kong development property project[24] - Finance costs increased by 39% to HKD 0.594 billion, mainly due to increased unrealized losses on cross-currency and interest rate swap contracts[25] Liquidity, Financial Resources, and Capital Commitments Despite an increase in the net debt to total equity ratio to 16.7%, the Group maintains a strong financial position with ample credit facilities and liquid assets Financial Position Summary | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Shareholders' Equity | HKD 139.9 billion | HKD 142.9 billion | | Total Assets | HKD 217.4 billion | HKD 214.9 billion | | Net Debt to Total Equity Ratio | 16.7% | 13.0% | Credit Facilities Analysis (HKD billion) | Item | Available Credit | Drawn Credit | Undrawn Credit | | :--- | :--- | :--- | :--- | | Total Group | 75.5 | 42.2 | 33.3 | - The Group holds a liquid listed investment portfolio with a market value of HKD 42.9 billion, available for use when needed[37] - As of June 30, 2020, the Group's estimated major expenditure commitments for the coming years amounted to HKD 20.6 billion, of which HKD 12.7 billion was committed, primarily for mainland development property projects[41] Human Resources As of June 30, 2020, the Group had approximately 7,700 employees, with remuneration policies linked to market trends and performance-based discretionary bonuses - As of June 30, 2020, the Group's total number of employees was approximately 7,700[42] Condensed Consolidated Financial Statements and Notes This section presents the Group's condensed consolidated financial statements and detailed explanatory notes Consolidated Income Statement For the six months ended June 30, 2020, the Group's revenue decreased by 31% to HKD 5.551 billion, resulting in a pre-tax loss of HKD 1.369 billion and a loss attributable to shareholders of HKD 1.741 billion due to significant property impairment Summary of Consolidated Income Statement (For the six months ended June 30) | Item (HKD million) | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 5,551 | 8,064 | | Operating Profit | 2,517 | 3,701 | | Other Net Expenses | (2,940) | (288) | | (Loss)/Profit Before Tax | (1,369) | 3,902 | | (Loss)/Profit for the Period | (1,721) | 2,473 | | (Loss)/Profit Attributable to Company Shareholders | (1,741) | 2,450 | Consolidated Statement of Financial Position As of June 30, 2020, the Group's total assets were HKD 235.78 billion, with investment properties being the largest component of non-current assets, and total equity at HKD 143.305 billion Summary of Consolidated Statement of Financial Position (HKD million) | Item | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 173,097 | 168,794 | | Current Assets | 62,683 | 73,424 | | Total Assets | 235,780 | 242,218 | | Liabilities and Equity | | | | Total Liabilities | 92,475 | 95,875 | | Shareholders' Equity | 139,868 | 142,874 | | Total Equity | 143,305 | 146,343 | Condensed Consolidated Cash Flow Statement In H1 2020, the Group generated net cash inflow from operating activities but experienced significant net cash outflows from investing and financing activities, resulting in a net decrease in cash and cash equivalents Summary of Condensed Consolidated Cash Flow Statement (For the six months ended June 30) | Item (HKD million) | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 2,785 | 4,897 | | Net Cash Used in Investing Activities | (4,813) | (2,760) | | Net Cash Used in Financing Activities | (4,467) | (571) | | Net Decrease in Cash and Cash Equivalents | (6,495) | 1,566 | | Cash and Cash Equivalents at End of Period | 18,339 | 18,963 | Notes to the Financial Statements The notes provide detailed explanations of accounting policies, segment performance, significant items, and capital commitments, highlighting the impact of property impairment and future expenditure Segment Results Summary (H1 2020) | Segment | Revenue (HKD million) | Operating Profit/(Loss) (HKD million) | | :--- | :--- | :--- | | Investment Properties | 1,932 | 1,227 | | Development Properties | 1,176 | 486 | | Hotels | 123 | (49) | | Logistics | 1,202 | 196 | - Other net expenses of HKD 2.94 billion primarily include an impairment provision of HKD 2.864 billion for Hong Kong development property assets[58] - As of June 30, 2020, the Group's total capital expenditure commitments amounted to HKD 20.57 billion, of which HKD 12.662 billion was committed, primarily for property development[78] Corporate Governance and Other Information This section outlines the Company's adherence to corporate governance principles and details regarding director and shareholder interests Corporate Governance Code The Company complied with the Corporate Governance Code, with the exception of the Chairman and CEO roles being held by the same individual, deemed effective for strategic planning - The Company deviated from Code Provision A.2.1 of the Corporate Governance Code, which states that the roles of Chairman and Chief Executive Officer should be performed by different individuals, an arrangement the Board believes is more effective for planning and executing long-term strategies[80] Directors' and Major Shareholders' Interests The report details the securities interests of directors and major shareholders, with Wheelock and Company Limited holding 72.99% of the total issued shares as the primary controlling shareholder Major Shareholders' Interests (June 30, 2020) | Shareholder Name | Number of Ordinary Shares Held | Percentage of Total Issued Shares | | :--- | :--- | :--- | | Wheelock and Company Limited | 2,225,691,608 | 72.99% | | HSBC Trustee (C.I.) Limited | 2,225,691,608 | 72.99% | - The report also details the share and option interests of directors such as Stephen Ng and Paul Chow in associated companies including the Company, Wheelock, Wharf REIC, and Greentown China[84][85][88] Share Option Scheme The report discloses changes in share options granted to directors and employees, with 6.6 million unexercised options at an exercise price of HKD 15.92 per share as of June 30, 2020 Share Option Movements (Granted to Employees) | Item | Number of Shares | | :--- | :--- | | As at January 1, 2020 | 6,800,000 | | Exercised during the period | (200,000) | | As at June 30, 2020 | 6,600,000 |