兴业控股(00132) - 2018 - 年度财报

Corporate Information The report details core company information including board members, committee structures, registered office, principal place of business, share registrar, principal bankers, auditor, and company secretary - The report details core company information including board members, committee structures, registered office, principal place of business, share registrar, principal bankers, auditor, and company secretary[6][10] Chairman's Statement This section provides an overview of the Group's performance, strategic initiatives, and future outlook across its diverse business segments Business Review and Financial Performance In 2018, the Group achieved significant growth with total revenue increasing by 167% to HK$79.55 million and net profit by 102% to HK$55.82 million, driven by new businesses, hotel recovery, and government subsidies 2018 Annual Key Financial Indicators | Indicator | 2018 (HK$) | 2017 (HK$) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Revenue | 79,550,000 | 29,846,000 (See Five-Year Financial Summary) | +167% | | Net Profit | 55,815,000 | 27,630,000 | +102% | - Revenue growth was primarily driven by financial leasing business contributing approximately HK$25.22 million, big data business contributing approximately HK$12.06 million, and the recovery of Guilin Sightseeing Hotel business adding approximately HK$8.81 million[13][16] - The Group received other income, including government subsidies for the Danzao Industrial Park project, totaling approximately HK$74.77 million, significantly contributing to the substantial increase in annual net profit[14][16] Financial Leasing Business The Group expanded its financial leasing business through Guangdong Yueshengke Financial Leasing Co., Ltd., focusing on public utilities, environmental protection, new energy, and telecommunications, generating HK$25.22 million in revenue and HK$14.50 million in operating profit 2018 Financial Leasing Business Performance | Indicator | Amount (HK$) | | :--- | :--- | | Operating Revenue | 25,221,000 | | Operating Profit | 14,498,000 | - The Group is optimistic about the prospects of China's financial leasing industry and has established a wholly-owned subsidiary to deepen business expansion, focusing on public utilities, environmental protection, new energy, and telecommunications sectors[15][17] Property Investments Overall rental income increased by 6% to HK$6.78 million in 2018, driven by improved occupancy at Foshan Zhongkong Building, while property sales generated HK$17.10 million in cash and HK$8.24 million in profit, with new industrial park development underway - Overall rental income increased by 6%, with Foshan Zhongkong Building's rental income significantly growing by 54% due to improved facilities and an 82% occupancy rate[21][24] - During the period, the Group completed the sale of seven units in Huizhou Guoshang Building and 33 units in Shantou International Commercial Building, generating approximately HK$17.10 million in cash and HK$8.24 million in profit[22][25] - The Group is developing an industrial park in Danzao Town, Nanhai, Foshan, for new energy vehicle production, R&D, and supporting facilities through its 80%-owned joint venture, Zhongyan Taike, with construction expected to start in the first half of 2019 and complete in 2020[23][25] Wellness and Elderly Care Business Guangdong Yibaijian, 70% owned by the Group, launched its smart elderly care service platform in Nanhai District, recording HK$4.41 million in revenue but a net loss of HK$1.17 million during its initial investment and promotion phase 2018 Wellness and Elderly Care Business Performance | Indicator | Amount (HK$) | | :--- | :--- | | Operating Revenue | 4,406,000 | | Loss | 1,165,000 | - The business centers on a 'smart elderly care service platform,' with Phase II construction completed and value-added health management services being explored, aiming to build a three-tier elderly care system encompassing institutional, community, and home-based care[27][28] Big Data Business The Group officially entered the big data business in February 2018 through its wholly-owned subsidiary, Guangdong Xinxing Technology Co., Ltd., achieving HK$12.06 million in revenue and HK$0.78 million in gross profit, despite a slight operating loss of HK$0.39 million in its initial investment phase 2018 Big Data Business Performance | Indicator | Amount (HK$) | | :--- | :--- | | Operating Revenue | 12,057,000 | | Gross Profit | 782,000 | | Operating Loss | 387,000 | - The 'Industrial Internet Identification Secondary Node (Foshan)' project was selected as a national pilot demonstration project, the National Safety Industry Big Data Platform (South China) node officially launched, and Alibaba Cloud Innovation Center (Foshan) began recruiting enterprises[31][33] Hotel Business Guilin Sightseeing Hotel's operations recovered in 2018 after renovation, with revenue increasing by 199% to HK$13.23 million and operating loss narrowing by 65% to HK$6.02 million, while a new homestay business incurred an initial operating loss of HK$3.64 million - Guilin Sightseeing Hotel's revenue increased by 199% to HK$13,233,000, and its operating loss narrowed by 65% to HK$6,015,000[32][34] - To diversify hotel-related businesses, the Group established Xingye Homestay Mutual Aid Co., Ltd. (51% owned), offering comprehensive services including T-BOX® mobile homes, direct sales management software, and financing solutions, but currently recorded an operating loss of HK$3,642,000[36][37] Profit from Investments in Associates Associates significantly contributed to profitability, with Nanhai Changhai Power's contribution increasing by 7% to HK$63.17 million, Guangdong Yueke Financial Leasing's contribution decreasing by 41% to HK$9.79 million due to accounting changes, and a new investment in Guangdong Tiannuo Civil Explosives contributing HK$5.26 million 2018 Key Associate Profit Contributions | Associate | Equity Stake | Profit Contribution (HK$) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Nanhai Changhai Power | 32.636% | 63,169,000 | +7% | | Guangdong Yueke Financial Leasing | 25% | 9,785,000 | -41% | | Guangdong Tiannuo Civil Explosives | 49% | 5,264,000 | N/A | - The Group completed its investment in Guangdong Tiannuo Civil Explosives Co., Ltd. in August 2018, acquiring a 49% equity stake to expand into the domestic civil explosives market[44][45] Financial Position and Analysis As of year-end 2018, total assets increased to HK$3.46 billion, total liabilities to HK$2.13 billion, raising the debt-to-asset ratio from 48.3% to 61.5%, with HK$1.22 billion in bank deposits and cash ensuring a robust financial position, while timely USD-RMB conversion generated exchange gains Financial Position Summary (As of Year-End) | Indicator | 2018 (HK$) | 2017 (HK$) | | :--- | :--- | :--- | | Total Assets | 3,460,537,000 | 2,277,412,000 | | Total Liabilities | 2,129,217,000 | 1,099,553,000 | | Debt-to-Asset Ratio | 61.5% | 48.3% | | Bank Deposits and Cash | 1,221,671,000 | 886,861,000 | | Total Assets Pledged | 899,816,000 | 387,660,000 | - Despite significant RMB asset exposure to depreciation risk, the Group effectively hedged by timely converting US$70 million of registered capital into RMB in the second half, offsetting losses and recording an exchange gain of HK$5.79 million[52][53] Outlook The Group will focus on four core segments: industrial park/property development, finance, technology, and wellness/elderly care, pursuing strategic initiatives to achieve stable shareholder returns - The Group has identified four key future development segments: Industrial Park/Property Development and Investment (centered on Foshan Danzao New Energy Vehicle Industrial Park), Finance (expanding financial leasing), Technology (developing big data with smart city opportunities), and Wellness and Elderly Care (building a three-tier system based on smart elderly care platforms)[55][56] Corporate Governance Report This report outlines the company's governance framework, board operations, committee functions, risk management, internal controls, and shareholder rights, demonstrating adherence to corporate governance codes Corporate Governance Structure and Board Operations The company adheres strictly to the Corporate Governance Code, maintaining a balanced board of five executive and three independent non-executive directors, with all directors demonstrating high engagement by attending all nine board meetings in 2018 - The company consistently complied with all code provisions of the Corporate Governance Code throughout 2018[60] - The Board comprises 8 directors, including 5 executive directors and 3 independent non-executive directors, ensuring a balanced and effective structure[68][70] 2018 Board Meeting Attendance | Director Name | Position | Meetings Attended/Held | Attendance Rate | | :--- | :--- | :--- | :--- | | He Xiangming | Chairman | 9/9 | 100% | | Lin Pingwu | Managing Director | 9/9 | 100% | | You Guangwu | Director | 9/9 | 100% | | Huang Zhihe | Director and Deputy Managing Director | 9/9 | 100% | | Wang Xin | Director and Deputy Managing Director | 9/9 | 100% | | Chen Guowei | Independent Non-Executive Director | 9/9 | 100% | | Chen Dacheng | Independent Non-Executive Director | 9/9 | 100% | | Deng Hongping | Independent Non-Executive Director | 9/9 | 100% | Board Committees The company maintains Audit, Remuneration, and Nomination Committees, each chaired by an independent non-executive director, ensuring independence and expertise, with all members fully attending meetings and fulfilling key responsibilities including financial review, executive compensation, and board diversity - Audit Committee: Composed of three independent non-executive directors, held two meetings in 2018, reviewing annual and interim financial statements and internal control systems[108][111][112] - Remuneration Committee: Composed of three independent non-executive directors and two executive directors, held one meeting in 2018, reviewing remuneration policies and bonus schemes[114][117][118] - Nomination Committee: Composed of three independent non-executive directors and two executive directors, held one meeting in 2018, reviewing board structure, assessing independent directors' independence, and reviewing the board diversity policy[123][126][127] Risk Management and Internal Control The Group has established a risk management framework involving the Board, Audit Committee, and senior management, with an effective system for managing risks and internal controls, subject to annual review, and a robust inside information disclosure policy ensuring compliance and transparency - The Board oversees the design, implementation, and monitoring of risk management and internal control systems, aiming to manage rather than eliminate risks, and conducts annual effectiveness reviews[148][151] - The Group has an internal audit function to assist the Board and Audit Committee in continuous system monitoring, identifying deficiencies, and proposing improvements[150][151] - The company has adopted an inside information disclosure policy to regulate the handling and release of inside information, ensuring timeliness, accuracy, and confidentiality of disclosures[154] Shareholders' Rights The report clearly defines shareholders' rights and procedures for exercising them, including convening extraordinary general meetings, nominating director candidates, and proposing resolutions at general meetings, thereby safeguarding shareholder participation and oversight - Shareholders holding not less than 10% of the voting rights are entitled to request the convening of an extraordinary general meeting[165][167] - Shareholders may nominate director candidates in writing according to prescribed procedures at least 7 days before a general meeting[166][168] - Shareholders holding not less than 5% of the voting rights or at least 100 registered shareholders may propose resolutions at a general meeting according to procedures[170][172] Directors' Report This report provides a review of the Group's business, key risks, and compliance with relevant laws and regulations, directing readers to the Chairman's Statement for detailed analysis Business Review and Key Risks This section offers a fair review of the Group's business, referring readers to the Chairman's Statement for detailed analysis, and acknowledges multiple business, operational, and financial management risks while confirming compliance with all material laws and regulations - The Group's business review, future development, key risks, stakeholder relationships, and compliance are detailed in the Chairman's Statement, subsequent paragraphs of this report, and the Environmental, Social and Governance Report[177][183] - The Group confirms that its financial position, operating results, and prospects are influenced by multiple uncertainties, including business risks, operational risks, and financial management risks[179][185] Directors' and Major Shareholders' Interests The report discloses the Board members and their biographies as of year-end 2018, noting that only Chairman He Xiangming holds a 0.08% personal stake, while Guangdong Nanhai Holding Investment Co., Ltd. is the major shareholder with 84.18% of the company's shares - Chairman He Xiangming holds 1,441,000 ordinary shares, representing 0.08% of the issued shares, making him the only director with a shareholding[232] Major Shareholder Holdings (As of December 31, 2018) | Shareholder Name | Number of Shares Held | Capacity | Shareholding Percentage | | :--- | :--- | :--- | :--- | | Guangdong Nanhai Holding Investment Co., Ltd. | 1,441,439,842 | Corporate Interest | 84.18% | | Nam Keng Van Investment Company Limited | 121,864,487 | Beneficial Owner | 7.12% | Employees and Other Disclosures As of year-end 2018, the Group's total workforce increased to 183 employees, with an employee share option scheme in place but no options granted since its adoption in 2013, and a moderate concentration of suppliers and customers - The Group's total number of employees increased from 113 in 2017 to 183 in 2018[258] - The company adopted a ten-year share option scheme on April 26, 2013, but no share options have been granted to date[243][248] - The largest supplier accounted for 18% of total purchases, with the top five suppliers accounting for 42%; the largest customer accounted for 15% of total turnover, with the top five customers accounting for 41%[253][256] Environmental, Social and Governance Report This report details the Group's commitment to environmental protection, social responsibility, and robust governance practices, including energy conservation, waste reduction, fair employment, and anti-corruption measures Environmental Performance The Group prioritizes environmental protection, particularly in its hotel business, implementing energy-saving and emission reduction measures through clean energy, efficient equipment, and enhanced resource management, effectively controlling waste gas, greenhouse gas emissions, and water consumption, with Guilin Sightseeing Hotel maintaining its "Silver Leaf Green Tourism Hotel" certification since 2007 - The hotel business reduced harmful gas emissions by converting fuel from diesel to natural gas and installing flue gas purification devices[268] - Electricity consumption was reduced through enhanced solar systems and LED lighting, with total electricity consumption in 2018 at 2,051,789 kWh and greenhouse gas emissions at 1,562.2 tons, increasing year-on-year due to the hotel's full operational recovery[272] - Total water consumption in 2018 was 33,516 cubic meters, a decrease from 38,690 cubic meters in 2017, achieved through water-saving fixtures and improved water usage protocols[274][278][281] Social Performance The Group is committed to corporate social responsibility, providing equal employment opportunities, a safe working environment, and continuous training for employees, while strictly adhering to labor laws, prohibiting child and forced labor, and establishing comprehensive supply chain management, product responsibility, and anti-corruption mechanisms, alongside active community investment Employee Composition (As of Year-End) | Category | 2018 | 2017 | | :--- | :--- | :--- | | Total Employees | 183 | 113 | | Male Employee Ratio | 52% | 48% | | Female Employee Ratio | 48% | 52% | | Under 30 Ratio | 22% | 13% | | 31-50 Age Ratio | 60% | 67% | | Over 50 Age Ratio | 18% | 20% | - The company provides safety production training and fire drills for employees, along with annual free professional health check-ups, ensuring employee health and safety[297][300] - In 2018, hotel employees received an average of 12 days of training across 6 courses, an increase from 8 days in 2017[302][304] - The company maintains a zero-tolerance policy towards bribery, fraud, and money laundering, establishing an Integrity and Safety Work Supervision and Inspection Team in June 2018[315][318] Independent Auditor's Report This report presents the independent auditor's opinion on the Group's consolidated financial statements and highlights key audit matters requiring significant attention and professional judgment Auditor's Opinion The auditor, Hengjian Certified Public Accountants LLP, concluded that the consolidated financial statements fairly and accurately represent the Group's financial position as of December 31, 2018, and its financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance - The auditor issued a standard unqualified opinion on the company's 2018 financial statements[323] Key Audit Matters The auditor identified five key audit matters requiring particular attention and professional judgment, primarily concerning the impairment assessment of finance lease receivables, valuation of investment and hotel properties, application of HKFRS 15 (Revenue), and accounting for and impairment assessment of interests in associates - Impairment of Finance Lease Receivables: Deemed a key audit matter due to its materiality to the financial statements and management's significant judgment in assessing recoverability; as of year-end, the carrying amount was HK$608 million[328] - Valuation of Investment Properties and China Hotel Properties: Considered a key audit matter because fair value determination relies on significant management judgments regarding key assumptions like market rent; as of year-end, fair values were HK$230 million and HK$115 million, respectively[357][367] - Revenue Recognition: Became a key audit matter due to the adoption of new Hong Kong Financial Reporting Standard 15, which requires significant management judgment and estimation in revenue recognition[369] - Accounting for and Impairment Assessment of Interests in Associates: Listed as a key audit matter due to the significant impact of associates on the Group's financial statements and the complex adjustments required to convert their financial information from Chinese accounting standards to Hong Kong Financial Reporting Standards; as of year-end, the carrying amount of interests in associates was HK$822 million[375][381][383] Consolidated Financial Statements This section presents the Group's comprehensive financial performance, position, and cash flows for the reporting period, along with detailed notes on accounting policies and significant estimates Consolidated Statement of Profit or Loss and Other Comprehensive Income For FY2018, the Group achieved total revenue of HK$79.55 million, a 167% increase, with gross profit significantly rising to HK$42.02 million; pre-tax profit reached HK$87.93 million, up 176%, driven by other operating income and associate contributions, resulting in a net profit of HK$55.82 million, a 102% increase 2018 Consolidated Statement of Profit or Loss Summary | Item (HK$ thousands) | 2018 | 2017 | | :--- | :--- | :--- | | Revenue | 79,550 | 29,846 | | Gross Profit | 42,016 | 7,295 | | Other Operating Income | 118,221 | 12,741 | | Share of Profit of Associates | 78,218 | 75,494 | | Finance Costs | (86,296) | (25,449) | | Profit Before Tax | 87,930 | 31,901 | | Profit for the Year | 55,815 | 27,630 | | Profit Attributable to Owners of the Company | 42,383 | 31,266 | | Basic Earnings Per Share | 2.48 cents | 1.83 cents | Consolidated Statement of Financial Position As of year-end 2018, total assets increased by 52% from HK$2.28 billion to HK$3.46 billion, driven by new finance lease receivables and increased cash, while total liabilities rose by 94% from HK$1.10 billion to HK$2.13 billion due to significant borrowings, bringing total equity to HK$1.33 billion 2018 Year-End Consolidated Statement of Financial Position Summary | Item (HK$ thousands) | 2018 | 2017 | | :--- | :--- | :--- | | Non-Current Assets | 1,857,307 | 1,270,348 | | Of which: Interests in Associates | 821,682 | 745,571 | | Of which: Finance Lease Receivables | 365,465 | – | | Current Assets | 1,603,230 | 1,007,064 | | Of which: Cash and Cash Equivalents | 1,221,671 | 886,861 | | Total Assets | 3,460,537 | 2,277,412 | | Current Liabilities | 1,390,517 | 762,287 | | Non-Current Liabilities | 738,700 | 337,266 | | Total Liabilities | 2,129,217 | 1,099,553 | | Total Equity | 1,331,320 | 1,177,859 | Consolidated Statement of Cash Flows In 2018, the Group reported a net cash outflow from operating activities of HK$556.45 million, primarily due to a significant increase in finance lease receivables, a net cash outflow from investing activities of HK$94.08 million for associate acquisitions, and a net cash inflow from financing activities of HK$972.81 million from new borrowings, resulting in a net increase of HK$322.27 million in cash and cash equivalents for the year 2018 Consolidated Statement of Cash Flows Summary | Item (HK$ thousands) | 2018 | 2017 | | :--- | :--- | :--- | | Net Cash Outflow from Operating Activities | (556,452) | (10,072) | | Net Cash Outflow from Investing Activities | (94,083) | (57,958) | | Net Cash Inflow from Financing Activities | 972,807 | 814,456 | | Net Increase in Cash and Cash Equivalents | 322,272 | 746,426 | | Cash and Cash Equivalents at Beginning of Year | 886,861 | 134,356 | | Cash and Cash Equivalents at End of Year | 1,166,858 | 886,861 | Notes to the Consolidated Financial Statements This section details the company's accounting policies, critical judgments, and estimates, highlighting the first-time application of HKFRS 9 (Financial Instruments), HKFRS 15 (Revenue), and early adoption of HKFRS 16 (Leases) in 2018, which impacted financial asset impairment, revenue recognition, and lease accounting - The company applied new Hong Kong Financial Reporting Standards HKFRS 9, HKFRS 15, and early adopted HKFRS 16 starting January 1, 2018[447][453] - The application of HKFRS 9 introduced the Expected Credit Loss (ECL) model for assessing financial asset impairment[454][481] - Early adoption of HKFRS 16 resulted in the company recognizing HK$148 million in right-of-use assets and HK$150 million in lease liabilities[493][499] Five-Year Financial Summary This section provides a concise overview of the Group's key financial performance and position indicators over the past five years, offering a historical perspective on its financial trends 2014-2018 Financial Summary (HK$ thousands) | Indicator | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 79,550 | 29,846 | 24,554 | 39,275 | 32,448 | | Profit/(Loss) for the Year | 55,815 | 27,630 | (2,703) | 5,773 | 81,038 | | Total Assets | 3,460,537 | 2,277,412 | 1,316,578 | 1,352,241 | 1,458,734 | | Total Liabilities | 2,129,217 | 1,099,553 | 385,291 | 377,822 | 463,152 | | Equity Attributable to Owners of the Company | 993,115 | 1,020,234 | 931,287 | 974,419 | 995,582 | Particulars of Major Properties This section lists the Group's significant properties held as of year-end 2018, including hotel, commercial, and commercial/residential properties in various locations - The report lists the Group's major properties held as of year-end 2018, including hotel properties in Guilin, commercial properties in Hong Kong and Foshan, and commercial/residential properties held for sale in Shantou[1220][1223][1249]