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中国智能健康(00348) - 2019 - 中期财报

Financial Summary Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended September 30, 2019, revenue from continuing operations decreased by 7.5% to HKD 239.8 million, gross profit fell 49% to HKD 56.5 million, and loss for the period expanded to HKD 79.05 million due to investment losses | Metric (Continuing Operations) | H1 2019 (HKD thousands) | H1 2018 (HKD thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 239,836 | 259,211 | -7.5% | | Gross Profit | 56,497 | 110,990 | -49.1% | | Loss Before Income Tax | (75,499) | (19,524) | +286.7% | | Loss for the Period | (79,048) | (19,524) | +304.9% | | Loss Attributable to Owners of the Company | (76,977) | (18,712) | +311.4% | | Basic Loss Per Share (HK cents) | (0.93) | (0.22) | +322.7% | - The company had discontinued operations in the prior period, resulting in a loss of HKD 20.39 million, with no such operations in the current period78 Condensed Consolidated Statement of Financial Position As of September 30, 2019, total assets increased slightly to HKD 714.7 million, but total liabilities rose to HKD 414.1 million, reducing net assets to HKD 300.6 million while maintaining a healthy current ratio of 2.1x | Metric | Sep 30, 2019 (HKD thousands) | Mar 31, 2019 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Non-current Assets | 103,214 | 109,426 | -5.7% | | Current Assets | 611,497 | 588,366 | +3.9% | | Total Assets | 714,711 | 697,792 | +2.4% | | Current Liabilities | 288,835 | 198,854 | +45.2% | | Non-current Liabilities | 125,279 | 105,498 | +18.8% | | Total Liabilities | 414,114 | 304,352 | +36.1% | | Net Assets | 300,597 | 393,440 | -23.6% | - The balance sheet first recognized right-of-use assets (HKD 21.07 million) and lease liabilities (HKD 21.36 million) due to the adoption of Hong Kong Financial Reporting Standard 16 (HKFRS 16)101128 Condensed Consolidated Statement of Cash Flows Operating cash flow significantly improved from a net outflow of HKD 140.9 million to a net inflow of HKD 94.6 million, with cash and cash equivalents increasing to HKD 123.1 million at period-end | Metric | H1 2019 (HKD thousands) | H1 2018 (HKD thousands) | | :--- | :--- | :--- | | Net Cash Inflow/(Outflow) from Operating Activities | 94,602 | (140,891) | | Net Cash Outflow from Investing Activities | (2,820) | (2,391) | | Net Cash (Outflow)/Inflow from Financing Activities | (21,753) | 123,707 | | Net Increase/(Decrease) in Cash and Cash Equivalents | 70,029 | (19,575) | | Cash and Cash Equivalents at End of Period | 123,081 | 31,978 | Management Discussion and Analysis Results, Business Review and Prospects During the period, revenue from continuing operations declined 7% to HKD 240 million, gross margin fell from 43% to 24%, and loss attributable to owners expanded to HKD 77 million, primarily due to a significant increase in losses from financial instrument investments - Revenue decline was mainly due to zero revenue from consumer electronics and a drop in Chinese health products due to a weak Hong Kong retail market154159 - Gross margin decline was primarily due to a HKD 2 million loss on financial instrument sales in the current period, compared to a HKD 44 million realized gain in the prior period155159 - The core driver of the expanded overall loss was a sharp increase in losses from the investment in financial instruments segment from approximately HKD 6 million in the prior period to HKD 54 million in the current period156159 Segment Business Review and Prospects Segment performance varied, with OBM toys seeing strong growth, Chinese health products declining due to local unrest, consumer electronics divested, money lending stable, and financial instrument investments incurring significant losses Own Brand Manufacturing (OBM) Toys This segment's revenue increased by 66% to HKD 179 million, driven by strong North American market recovery and increased deliveries to key retail channels, though future sales may decline due to tariff uncertainties - OBM toy business revenue increased by approximately 66% from HKD 108 million in the prior period to HKD 179 million168172 - The North American market was the primary growth driver, with shipments to the region reaching HKD 173 million, accounting for 72% of the Group's total revenue170 - The company expects a slight decline in 2020 sales, with profit margins potentially impacted by tariff threats187 Chinese Health Products Revenue for this segment decreased from HKD 58 million to HKD 49 million, resulting in a loss of HKD 6 million, primarily due to reduced tourist numbers and a weak retail market in Hong Kong caused by social unrest | Metric | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Revenue | Approx. HKD 49 million | Approx. HKD 58 million | | Segment (Loss)/Profit | Approx. (HKD 6) million | Approx. (HKD 1) million | - Performance decline was mainly due to local social unrest since June 2019 impacting Hong Kong's retail market and tourist numbers192196 Consumer Electronic Products This segment generated no revenue and incurred a HKD 3 million loss due to the expiration of a supply contract, leading to its divestment after the reporting period to improve the Group's financial position - No revenue contribution in the current period (compared to HKD 37 million in the prior period), with a segment loss of HKD 3 million161165 - Due to continuous losses, the company sold this business segment on October 27, 2019, to improve the Group's financial position162165 Money Lending Business The money lending business remained stable, generating approximately HKD 14 million in interest income and HKD 8 million in segment profit, with the Group planning to continue prudent development and strengthen risk control | Metric | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Interest Income | Approx. HKD 14 million | Approx. HKD 11 million | | Segment Profit (Pre-tax) | Approx. HKD 8 million | Approx. HKD 7 million | - During the period, the Group granted new loans totaling HKD 199 million, with customers repaying HKD 115 million, and outstanding loan balances at period-end were HKD 196 million175198 Investment in Financial Instruments This segment recorded a significant loss of HKD 54 million, primarily due to unfavorable stock market conditions, including HKD 52 million in fair value changes and HKD 2 million in realized sales losses, causing the market value of listed equities to drop to HKD 145 million - Segment loss of approximately HKD 54 million, a significant increase from HKD 6 million in the prior period176178 | Major Holdings (as of Sep 30, 2019) | Fair Value (HKD thousands) | % of Total Assets | Fair Value (Loss)/Gain for the Period (HKD thousands) | | :--- | :--- | :--- | :--- | | IDG Energy Investment Limited (650) | 46,000 | 6.4% | 400 | | Yunfeng Financial Group Limited (376) | 26,040 | 3.6% | (9,709) | | Global Mastermind Capital Holdings Limited (905) | 19,745 | 2.8% | (19,159) | Group Resources and Liquidity As of September 30, 2019, the Group's financial position remained stable with cash increasing to HKD 123 million and a current ratio of 212%, though the debt-to-equity ratio rose to 44% due to share repurchases and operating losses | Metric | Sep 30, 2019 | Mar 31, 2019 | | :--- | :--- | :--- | | Cash and Bank Balances | Approx. HKD 123 million | Approx. HKD 55 million | | Debt-to-Equity Ratio | Approx. 44% | Approx. 29% | | Current Ratio | Approx. 212% | Approx. 296% | - Trade receivables significantly increased by 315% to HKD 129 million, primarily due to increased OBM toy orders from US customers seeking to mitigate tariff uncertainties206211 - Shareholders' equity decreased from HKD 393 million to HKD 301 million, mainly due to share repurchases and operating losses during the period200203 Notes to the Unaudited Condensed Consolidated Interim Financial Statements Changes in HKFRSs The Group adopted HKFRS 16 'Leases' for the first time, significantly impacting the financial statements by recognizing new right-of-use assets and lease liabilities, with a cumulative effect transition approach - The adoption of HKFRS 16 is the most significant accounting policy change this period, replacing the previous HKAS 17 Leases standard2831 | Impact on Statement of Financial Position as of April 1, 2019 | Amount (HKD thousands) | | :--- | :--- | | Increase: Right-of-use assets | 15,290 | | Increase: Lease liabilities (current) | 6,108 | | Increase: Lease liabilities (non-current) | 9,182 | Revenue, other revenue, gains and losses, net and segmental information Total revenue from continuing operations was HKD 240 million, with OBM toys as the largest contributor at HKD 179 million, and the US and Canada being the largest market, accounting for over 72% of revenue | Continuing Operations Segment | Revenue (HKD thousands) | (Loss)/Profit Before Income Tax (HKD thousands) | | :--- | :--- | :--- | | Own Brand Manufacturing Toys | 179,172 | (7,883) | | Chinese Health Products | 48,801 | (5,515) | | Money Lending Business | 14,263 | 8,177 | | Investment in Financial Instruments | (2,400) | (53,995) | | Consumer Electronic Products | – | (3,300) | | Revenue from Continuing Operations by Geographical Region | H1 2019 (HKD thousands) | H1 2018 (HKD thousands) | | :--- | :--- | :--- | | United States and Canada | 173,035 | 103,889 | | Mainland China and Hong Kong | 63,252 | 149,599 | | Europe | 2,859 | 3,025 | Business Divestitures and Disposals The Group completed the disposal of its OEM Toys business in January 2019 and sold Notton Limited in September 2019, recognizing a gain of HKD 4.05 million, with Keytime Global Limited also divested post-period - The Original Equipment Manufacturing (OEM) Toys business was disposed of on January 30, 2019, with its H1 2018 performance (revenue of HKD 46.42 million, loss of HKD 20.39 million) classified as discontinued operations949596 - On September 26, 2019, the Group sold its entire equity interest in subsidiary Notton Limited for a total consideration of HKD 1, recognizing a disposal gain of approximately HKD 4.05 million130131132 - Post-reporting period, the Group sold Keytime Global Limited, a subsidiary engaged in consumer electronic product sales, on October 27, 2019148149 Share Capital and Share Repurchases During the six months ended September 30, 2019, the company repurchased 655.85 million ordinary shares for HKD 28.92 million, all of which were cancelled, aiming to enhance net asset value per share | Month of Repurchase | Number of Ordinary Shares (thousands) | Price Per Share (HKD) | Total Consideration (HKD thousands) | | :--- | :--- | :--- | :--- | | June 2019 | 77,750 | 0.038 - 0.039 | 3,030 | | July 2019 | 578,100 | 0.039 - 0.050 | 25,889 | | Total | 655,850 | | 28,919 | - After the repurchases, the total number of issued ordinary shares decreased from 8,521,308 thousand to 7,865,458 thousand133 Corporate Governance and Other Information Substantial Shareholders As of September 30, 2019, Eternity Finance Group Limited was the largest shareholder with 18.86% of issued ordinary shares, while Heng Tai Finance Limited held convertible bonds convertible into 1.2 billion shares | Shareholder Name | Capacity | Number of Ordinary Shares Held | % of Issued Share Capital | | :--- | :--- | :--- | :--- | | Eternity Finance Group Limited | Beneficial Owner | 1,483,728,240 | 18.86% | - Heng Tai Finance Limited holds convertible bonds corresponding to 1,200,000,000 relevant shares227 Share Option Scheme At the beginning of the period, 340 million unexercised share options granted to directors existed, all of which lapsed during the period, resulting in no outstanding options at period-end - As of April 1, 2019, there were 340,000,000 unexercised share options, all held by the company's directors235 - During the six months ended September 30, 2019, all 340,000,000 share options lapsed144235 Corporate Governance The company largely complied with the Corporate Governance Code, with one non-executive director's absence from the AGM noted, and board composition changes occurring post-reporting period, including a new Vice Chairman appointment - The company complied with most provisions of the Corporate Governance Code, except for one non-executive director's absence from the Annual General Meeting251253 - Board member changes: Mr. Zhang Guowei was appointed Vice Chairman and Executive Director on October 28, 2019; Mr. Diao Yunfeng resigned as Non-executive Director on the same day245247