国锐生活(00108) - 2020 - 中期财报

Corporate Information The report lists key corporate information including executive and independent non-executive directors, committee members, authorized representatives, auditor (EY), lawyers, share registrar, and registered office - The report lists key corporate information including executive directors, independent non-executive directors, committee members, authorized representatives, auditor (EY), lawyers, share registrar, and registered office[9][10][14] Management Discussion and Analysis This section reviews the group's business segments, financial performance, and future outlook for the period BUSINESS REVIEW The group's business is divided into property management, property development and investment, and recreational center operations, with the latter suspended due to COVID-19 Property management segment AOCEAN, a wholly-owned subsidiary, manages 23 large-scale residential and commercial properties in Beijing and Hebei Province, China - As of June 30, 2020, wholly-owned subsidiary AOCEAN manages 23 large-scale residential and commercial property projects in Beijing and Hebei Province, China[16][19] Property development and investment segment This segment operates in the US, UK, and China, focusing on mixed-use, residential, and office developments with stable rental income - Santa Monica project (US): Approximately 70% of the commercial area has signed lease agreements with a well-known supermarket chain, and marketing for residential units has commenced[24][27] - Culver City project (US): Plans are underway to develop a redevelopment site into a project comprising 139 residential units and commercial space[25][28] - Boundary House (UK): Office building with an occupancy rate of approximately 83%, generating annual rental income of approximately GBP 0.9 million, with plans for sale when a suitable buyer is found[32][34] - Juxon House (UK): A Grade A commercial building, fully leased, contributing approximately GBP 5 million in annual rental income to the Group[38][41] - Guorui Plaza Block B (China): An office building in Beijing, with some units leased under medium to long-term agreements, and directors plan to sell or lease the remaining units based on market conditions[39][44][47] Operation of the Recreational Centre segment The Beijing recreational center incurred a net loss and suspended operations since February 2020 due to the negative impact of the COVID-19 pandemic - The recreational center incurred a net loss during the period due to the adverse impact of the COVID-19 pandemic[46][48] - As a cost control measure, the Group temporarily suspended the recreational center's operations since February 2020[46][48] FINANCIAL REVIEW For the six months ended June 30, 2020, group revenue decreased to HKD 162 million, with loss widening to HKD 6.62 million primarily due to increased finance costs 2020 Interim Key Financial Indicators | Indicator | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Turnover (Thousand HKD) | 161,812 | 177,006 | | Loss for the period (Thousand HKD) | 6,623 | 3,179 | | | As of June 30, 2020 | As of December 31, 2019 | | Total assets (Thousand HKD) | 6,136,086 | 6,306,456 | | Total liabilities (Thousand HKD) | 2,805,882 | 2,869,659 | | Net assets (Thousand HKD) | 3,330,204 | 3,436,797 | | Gearing ratio (%) | 69.9% | 68.6% | - The increase in loss for the period was primarily due to an increase in finance costs of approximately HKD 29.895 million, partially offset by a revaluation gain of approximately HKD 40.983 million recognized from the reclassification of certain properties held for sale to investment properties[56][57] - As of June 30, 2020, the Group's cash and bank balances were approximately HKD 254 million[61] - The Board resolved not to declare any interim dividend for the period[61] - As of June 30, 2020, the Group pledged investment properties, properties held for sale, and non-current assets totaling approximately HKD 3.82 billion to secure bank and other borrowings and amounts due to related parties of approximately HKD 1.61 billion[62][64] FUTURE PROSPECT The Group will continue to focus on property development and investment, cautiously considering international markets while aiming to expand its revenue base through stable rental income - The Group will continue to primarily engage in property development and investment, but will be more cautious when considering investments in international markets such as the US and Europe[72][74] - The Group's focus will be on executing existing projects, including enhancing operational performance and promoting project development, while not ruling out divesting investments after achieving substantial returns[72][74] - The directors believe that through the execution of existing projects and potential acquisitions, the Group can expand its revenue base through property-generated stable rental income[72][74] General Information This section covers directors' and substantial shareholders' interests, as well as corporate governance practices DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES The report discloses the interests of directors Mr. Wei Chunxian, Mr. Sun Zhongmin, and Ms. Liu Shuhua in the company's shares and underlying shares as of June 30, 2020 Directors' Shareholdings (June 30, 2020) | Director Name | Capacity | Number of Ordinary Shares Held (Long Position) | Number of Underlying Shares Held (Long Position) | Approximate Percentage of Total Issued Shares (%) | | :--- | :--- | :--- | :--- | :--- | | Mr. Wei Chunxian | Interest of controlled corporation | 2,246,160,464 | 1,342,317,340 | 112.16% | | Mr. Sun Zhongmin | Beneficial owner/Interest of controlled corporation | 136,752,350 | 109,086,735 / 8,669,925 | 7.68% / 0.27% | | Ms. Liu Shuhua | Beneficial owner | - | 5,020,500 | 0.16% | SUBSTANTIAL SHAREHOLDERS' AND OTHER PERSONS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES As of June 30, 2020, entities including Wintime Company Limited, Winluck Global Limited, and Guorui International Investment (Hong Kong) Limited were listed as substantial shareholders - Wintime Company Limited holds 1,434,421,537 ordinary shares and 1,254,654,765 underlying shares (via convertible bonds), representing a significant combined percentage[95][96] - Guorui International Investment (Hong Kong) Limited holds 811,738,927 ordinary shares, accounting for 25.37% of the total issued shares[95][96] Corporate Governance The company complied with the Corporate Governance Code during the period, with the Audit Committee reviewing interim results and maintaining sufficient public float - The company complied with the code provisions of the Corporate Governance Code throughout the reporting period[102][107] - The Audit Committee reviewed the Group's interim results for the period, comprising three independent non-executive directors[104][109] - The company maintained a sufficient public float during the period[113][114] Condensed Consolidated Financial Statements This section presents the condensed consolidated financial statements, including profit or loss, comprehensive income, financial position, changes in equity, and cash flows Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2020, the company reported revenue of HKD 161.8 million and an expanded loss for the period of HKD 6.623 million Condensed Consolidated Statement of Profit or Loss Summary (Six Months Ended June 30) | Item | 2020 (Thousand HKD) | 2019 (Thousand HKD) | | :--- | :--- | :--- | | REVENUE | 161,812 | 177,006 | | PROFIT BEFORE TAX | 6,785 | 2,540 | | Income tax | (13,408) | (5,719) | | LOSS FOR THE PERIOD | (6,623) | (3,179) | | Loss attributable to owners of the Company | (6,697) | (2,967) | | Loss per share (HK cents) | (0.21) | (0.09) | Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2020, the company recorded a loss for the period of HKD 6.623 million and total comprehensive loss of HKD 106.6 million, primarily due to exchange differences Condensed Consolidated Statement of Comprehensive Income Summary (Six Months Ended June 30) | Item | 2020 (Thousand HKD) | 2019 (Thousand HKD) | | :--- | :--- | :--- | | LOSS FOR THE PERIOD | (6,623) | (3,179) | | Exchange differences arising from translation of overseas operations | (100,299) | (7,303) | | Other comprehensive loss for the period, net of income tax | (99,970) | (7,045) | | TOTAL COMPREHENSIVE LOSS FOR THE PERIOD | (106,593) | (10,224) | Condensed Consolidated Statement of Financial Position As of June 30, 2020, total assets were HKD 6.136 billion, total liabilities HKD 2.806 billion, and net assets HKD 3.330 billion, with investment properties being a major non-current asset Condensed Consolidated Statement of Financial Position Summary | Item | June 30, 2020 (Thousand HKD) | December 31, 2019 (Thousand HKD) | | :--- | :--- | :--- | | Total non-current assets | 4,208,874 | 4,246,862 | | Of which: Investment properties | 4,152,939 | 4,179,648 | | Total current assets | 1,927,212 | 2,059,594 | | Of which: Properties held for sale | 1,087,042 | 1,182,025 | | Total assets | 6,136,086 | 6,306,456 | | Total current liabilities | 749,748 | 1,117,119 | | Total non-current liabilities | 2,056,134 | 1,752,540 | | Total liabilities | 2,805,882 | 2,869,659 | | Net assets | 3,330,204 | 3,436,797 | Condensed Consolidated Statement of Changes in Equity As of June 30, 2020, total equity decreased from HKD 3.437 billion to HKD 3.330 billion, primarily due to the total comprehensive loss for the period - Total equity at the beginning of the period was HKD 3,436,797 thousand, and at the end of the period was HKD 3,330,204 thousand[133] - The decrease in equity was primarily driven by a total comprehensive loss for the period of HKD 106,593 thousand, with exchange fluctuation reserve decreasing by HKD 99,826 thousand[133] Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2020, the company reported net cash outflow from operating activities, net cash inflow from investing activities, and net cash inflow from financing activities Condensed Consolidated Statement of Cash Flows Summary (Six Months Ended June 30) | Item | 2020 (Thousand HKD) | 2019 (Thousand HKD) | | :--- | :--- | :--- | | Net cash flows from operating activities | (47,915) | 487 | | Net cash flows from investing activities | 17,867 | (214,796) | | Net cash flows from financing activities | 37,230 | 66,509 | | Net increase/(decrease) in cash and cash equivalents | 7,182 | (147,800) | | Cash and cash equivalents at beginning of period | 246,877 | 345,163 | | Cash and cash equivalents at end of period | 254,105 | 197,069 | Notes to the Interim Condensed Consolidated Financial Information This section provides detailed notes to the interim condensed consolidated financial information, covering operating segments, revenue, investment properties, borrowings, contingent liabilities, and COVID-19 impact 4. OPERATING SEGMENT INFORMATION This note details the revenue, results, assets, and liabilities of the three operating segments, with property development and investment being the largest in terms of assets and liabilities Revenue and Results by Operating Segment (Six Months Ended June 30, 2020) | Segment | Segment Revenue (Thousand HKD) | Segment Results (Thousand HKD) | | :--- | :--- | :--- | | Property development and investment | 54,362 | 13,374 | | Property management | 97,856 | 17,234 | | Operation of recreational centre | 9,594 | (12,229) | | Total | 161,812 | 18,379 | Assets and Liabilities by Operating Segment (As of June 30, 2020) | Segment | Segment Assets (Thousand HKD) | Segment Liabilities (Thousand HKD) | | :--- | :--- | :--- | | Property development and investment | 5,814,253 | 2,330,633 | | Property management | 223,233 | 112,957 | | Operation of recreational centre | 60,727 | 222,218 | | Total | 6,098,213 | 2,665,808 | 5. REVENUE Total revenue for the period was HKD 161.8 million, primarily from property management services, investment property rentals, and recreational center operations, all from mainland China Revenue Analysis (Six Months Ended June 30) | Revenue Source | 2020 (Thousand HKD) | 2019 (Thousand HKD) | | :--- | :--- | :--- | | Provision of property management services | 97,856 | 104,858 | | Provision of services and sale of goods related to operation of recreational centre | 9,594 | 35,981 | | Gross rental income from investment properties operating leases | 54,362 | 36,167 | | Total | 161,812 | 177,006 | - All revenue from contracts with customers (property management and recreational center) was generated in mainland China[165][166] 11. INVESTMENT PROPERTIES As of June 30, 2020, investment properties were valued at HKD 4.153 billion, with a revaluation gain of HKD 40.893 million recognized from reclassified properties held for sale - During the period, certain properties held for sale were reclassified to completed investment properties due to operating lease agreements, resulting in a revaluation gain of HKD 40,893,000 recognized in profit or loss[196] - As of June 30, 2020, certain investment properties with a total carrying amount of HKD 2.549 billion were pledged to secure bank financing, financial institution loans, and joint venture partner loans[196] 17. BANK AND OTHER BORROWINGS As of June 30, 2020, total bank and other borrowings amounted to HKD 2.075 billion, comprising various secured and unsecured loans, mostly non-current liabilities Bank and Other Borrowings Details | Borrowing Type | June 30, 2020 (Thousand HKD) | December 31, 2019 (Thousand HKD) | | :--- | :--- | :--- | | Bank loans (secured) | 859,560 | 929,568 | | Loans from financial institutions (secured) | 236,507 | 213,959 | | Loan from a shareholder of the Company (unsecured) | 83,459 | 82,656 | | Loans from entities controlled by a director (unsecured) | 347,471 | 347,648 | | Quasi-loan interests contributed by a joint venture partner of a subsidiary (secured) | 517,727 | 722,590 | | Lease liabilities | 29,858 | 39,603 | | Total | 2,074,582 | 2,336,024 | 21. CONTINGENT LIABILITY The Group's US subsidiary faces a lawsuit for construction-related damages, but directors believe there are reasonable defenses and no significant adverse financial impact is expected - The Group's US subsidiary faces a lawsuit for damages and nuisance related to the construction of its US integrated property, with the plaintiff seeking USD 1 million in punitive damages[262][266] - Based on internal assessment and legal advice, the directors believe the Group has reasonable defenses and no significant adverse financial impact is expected[263][266] 24. IMPACT OF THE COVID-19 The COVID-19 pandemic negatively impacted certain group operations, particularly the recreational center in China, leading to cost control measures and cash flow management - The COVID-19 pandemic negatively impacted certain of the Group's business operations, particularly the recreational center segment in China[275][278]