Financial Performance - Revenue for the six months ended June 30, 2021, was HKD 25,440,000, an increase of 54.5% compared to HKD 16,445,000 for the same period in 2020[19] - Gross profit for the same period was HKD 7,895,000, representing a gross margin of 31.0%, up from 25.7% in 2020[19] - The company reported a loss before tax of HKD 8,660,000, compared to a loss of HKD 6,966,000 in the previous year, indicating a 24.4% increase in losses[19] - The company reported a total comprehensive loss attributable to owners of HKD 9,133,000 for the period, compared to HKD 7,623,000 in 2020[30] - The loss per share for the period was HKD 2.26, compared to HKD 1.82 in the previous year, reflecting a 24.2% increase in losses per share[30] - For the six months ended June 30, 2021, the company reported a total comprehensive income of approximately -8,660,000 HKD, compared to -9,133,000 HKD for the same period in 2020, indicating a 5.2% improvement year-over-year[43] - The company reported a basic loss attributable to owners of approximately HKD 8,660,000 for the six months ended June 30, 2021, compared to HKD 6,966,000 for the same period in 2020[94] - The group recorded a net loss attributable to shareholders of approximately HKD 8,660,000, compared to a loss of approximately HKD 6,966,000 for the same period in 2020[138] Assets and Liabilities - Total assets as of June 30, 2021, amounted to HKD 44,325,000, up from HKD 32,092,000 at the end of 2020[23] - Cash and cash equivalents decreased to HKD 945,000 from HKD 2,280,000, reflecting a decline of 58.6%[23] - The current ratio decreased to 0.60 from 0.75, indicating a decline in short-term financial health[25] - Total liabilities increased, with net liabilities reaching HKD 19,012,000, up from HKD 10,887,000, indicating a worsening financial position[40] - The company reported net current liabilities of approximately 18,646,000 HKD and total liabilities of 19,012,000 HKD as of June 30, 2021, indicating significant financial strain[54] - The company’s total equity decreased from -100,635,000 HKD at the beginning of the year to -109,295,000 HKD by June 30, 2021[43] Cash Flow - The net cash used in operating activities for the first half of 2021 was -5,230,000 HKD, a significant increase from -1,313,000 HKD in the same period of 2020[46] - The company recorded a net decrease in cash and cash equivalents of 1,115,000 HKD for the six months ended June 30, 2021, compared to a decrease of 3,263,000 HKD in the prior year[46] - As of June 30, 2021, the company had cash and cash equivalents of 945,000 HKD, a substantial decline from 12,330,000 HKD at the end of the previous year[46] Business Operations - The company has expanded its business into industrial hemp cultivation and hemp textile production since obtaining relevant licenses in June 2020[48] - The total revenue for the manufacturing segment was HKD 21,486,000, while the retail segment generated HKD 4,113,000, leading to a combined total revenue of HKD 25,599,000 for the six months ended June 30, 2021, compared to HKD 16,652,000 in the same period of 2020, representing a year-over-year increase of approximately 54.3%[74] - The production business generated revenue of approximately HKD 21,327,000, a 45.4% increase from approximately HKD 14,667,000 in the prior year[145] - Retail business revenue surged by approximately 131.3% to about HKD 4,113,000 from approximately HKD 1,778,000 in the same period last year[151] Expenses - Employee costs (excluding directors' remuneration) amounted to HKD 9,772,000 for the first half of 2021, compared to HKD 8,676,000 in the same period of 2020, representing an increase of about 12.6%[84] - Selling and distribution costs increased by approximately 100.8% to about HKD 3,460,000, primarily due to the opening of two retail stores and additional costs for domestic retail business development[138] - Administrative and other operating expenses rose by approximately 21.7% to about HKD 12,304,000, mainly due to exchange losses and impairment of right-of-use assets[138] Accounting and Compliance - The group has adopted new and revised accounting standards, including HKFRS 9 and HKAS 39, which address issues not previously covered in earlier amendments related to interest rate benchmark reforms[60] - The group has early adopted the revised HKFRS 16, allowing lessees to account for rent concessions directly related to COVID-19 without lease modifications, applicable to rent reductions affecting payments due on or before June 30, 2022[63] - The group is evaluating the impact of new accounting standards and initial results indicate no significant effect on financial performance and position[68] - Management's significant judgments and estimates in applying accounting policies remain consistent with those applied in the 2020 annual financial statements[69] Loans and Financing - The company has received a commitment letter from its executive director, Mr. Qin, to not demand repayment of the outstanding loan of 8,000,000 HKD until the company is able to repay[54] - A new loan agreement was established with Mr. Qin on August 28, 2021, providing up to 30,000,000 HKD in interest-free and unsecured loans for two years[54] - The company has also secured a loan financing agreement with Mr. Zhao for up to 20,000,000 HKD, which remains undrawn as of the reporting date[54] - The company has a loan agreement with a director for HKD 8,000,000, which is unsecured and interest-free[115] - The company received an interest-free loan of approximately HKD 3,374,000 from the ultimate holding shareholder, which is due by June 30, 2022[118] - The company has multiple loan agreements with the ultimate holding shareholder, totaling approximately HKD 3,003,000, which are also interest-free and unsecured[122] Taxation - The company did not recognize any tax expenses for the periods due to the absence of taxable profits in Hong Kong and China[89] - The company incurred additional Hong Kong profits tax assessments totaling HKD 648,000, HKD 485,000, and HKD 465,000 for the assessment years 2011-2012, 2012-2013, and 2013-2014 respectively, all of which are under dispute and have been conditionally deferred[90][92] - The tax review by the tax authority is still in the preliminary stage, and the outcome cannot be reasonably determined at this time[92] Inventory and Receivables - The total trade receivables as of June 30, 2021, amounted to HKD 13,623,000, compared to HKD 10,956,000 as of December 31, 2020, indicating a significant increase[106] - The expected credit loss for trade receivables as of June 30, 2021, totaled HKD 1,145,000, an increase from HKD 1,123,000 as of December 31, 2020[107] - The total accounts payable as of June 30, 2021, was HKD 4,089,000, an increase from HKD 2,746,000 as of December 31, 2020[109] - The overdue accounts payable of less than 30 days decreased to HKD 947,000 from HKD 1,185,000[109] Corporate Governance - The group has adhered to the corporate governance code principles and provisions as per the listing rules appendix 14 for the six months ending June 30, 2021, with the exception of certain deviations[200]
中联发展控股(00264) - 2021 - 中期财报