万嘉集团(00401) - 2020 - 中期财报

Company Information Provides fundamental details about the company's registration and operational scope Financial Summary and Statements Presents an overview of the company's financial performance and position through key statements Financial Highlights The Group's revenue increased by 7.95% to HKD 51.44 million, primarily from hemodialysis, with operating loss significantly narrowing and basic loss per share at 1.25 HK cents - Revenue increased by 7.95% year-on-year to approximately HKD 51.44 million, primarily contributed by the hemodialysis treatment and consulting services business[8] - Operating loss attributable to owners of the Company significantly narrowed from HKD 57.16 million in the prior period to HKD 11.64 million, mainly due to reduced administrative expenses and no goodwill impairment[8] Key Financial Indicators | Indicator | September 30, 2019 | March 31, 2019 | Change | | :--- | :--- | :--- | :--- | | Total Cash and Cash Equivalents | HKD 28.07 million | HKD 28.82 million | -2.57% | | Indicator | For the six months ended September 30, 2019 | For the six months ended September 30, 2018 | Change | | :--- | :--- | :--- | :--- | | Basic and Diluted Loss Per Share | 1.25 HK cents | 7.54 HK cents | Loss Narrowed | | Interim Dividend | Not Paid | None | Unchanged | Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income During the reporting period, the Group recorded revenue of HKD 51.44 million, a 7.95% year-on-year increase, with gross profit surging 91.98% to HKD 12.20 million, and net loss attributable to owners significantly narrowed to HKD 11.64 million Consolidated Statement of Profit or Loss Summary (thousand HKD) | Item | For the six months ended September 30, 2019 | For the six months ended September 30, 2018 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 51,441 | 47,654 | +7.95% | | Gross Profit | 12,195 | 6,352 | +91.98% | | Operating Loss | (3,554) | (41,086) | Loss Narrowed 91.35% | | Loss Before Tax | (11,329) | (48,639) | Loss Narrowed 76.71% | | Loss for the Period Attributable to Owners of the Company | (11,637) | (57,155) | Loss Narrowed 79.64% | | Total Comprehensive Loss for the Period | (31,239) | (82,645) | Loss Narrowed 62.20% | - Goodwill impairment loss of HKD 35.46 million recorded in the same period of 2018 was a primary reason for the larger operating loss that year, with no such impairment in the current period[9] Condensed Consolidated Statement of Financial Position As of September 30, 2019, the Group's total assets were HKD 226.83 million, stable compared to March 31, 2019, with the adoption of HKFRS 16 introducing new right-of-use assets and lease liabilities, resulting in a net current liability of HKD 44.42 million and tighter liquidity Consolidated Statement of Financial Position Summary (thousand HKD) | Item | September 30, 2019 | March 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 154,343 | 128,080 | | Current Assets | 72,490 | 98,509 | | Total Assets | 226,833 | 226,589 | | Equity and Liabilities | | | | Equity Attributable to Owners of the Company | 96,181 | 84,948 | | Total Equity | 98,046 | 135,095 | | Current Liabilities | 116,905 | 91,494 | | Non-current Liabilities | 11,882 | – | | Total Equity and Liabilities | 226,833 | 226,589 | - The Group recorded a net current liability of approximately HKD 44.42 million as of September 30, 2019, compared to a net current asset of approximately HKD 7.02 million as of March 31, 2019, indicating a decrease in liquidity[13] Condensed Consolidated Statement of Changes in Equity For the six months ended September 30, 2019, equity attributable to owners increased from HKD 84.95 million to HKD 96.18 million, primarily due to proceeds from ordinary share issuance, partially offset by period loss and exchange differences - During the period, total equity attributable to owners of the Company increased from HKD 84.95 million to HKD 96.18 million[15] - Changes in equity were primarily influenced by: - Increases: Proceeds from issuance of ordinary shares totaling HKD 8.40 million - Decreases: Loss for the period of HKD 11.63 million and a decrease in exchange reserve of HKD 19.32 million[15] Condensed Consolidated Statement of Cash Flows During the reporting period, the Group's operating cash flow turned from net outflow to a net inflow of HKD 19.32 million, indicating improved operations, while cash and cash equivalents at period-end were HKD 28.07 million Consolidated Statement of Cash Flows Summary (thousand HKD) | Item | For the six months ended September 30, 2019 | For the six months ended September 30, 2018 | | :--- | :--- | :--- | | Net Cash From / (Used In) Operating Activities | 19,316 | (16,824) | | Net Cash Used In Investing Activities | (24,029) | (45,679) | | Net Cash From Financing Activities | 16,210 | 1,500 | | Net Increase / (Decrease) in Cash and Cash Equivalents | 11,497 | (61,003) | | Cash and Cash Equivalents at April 1 | 28,816 | 91,922 | | Cash and Cash Equivalents at September 30 | 28,074 | 24,032 | Notes to the Condensed Consolidated Interim Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated interim financial statements Company Information, Basis of Preparation and Accounting Policies The Company, an investment holding company registered in the Cayman Islands, primarily engages in pharmaceutical wholesale and hemodialysis services in China, with its interim financial statements prepared under HKFRS, notably adopting HKFRS 16 'Leases' for the first time this period - The Group primarily engages in pharmaceutical wholesale and distribution business and hemodialysis treatment and consulting services in China[19] - The Group adopted HKFRS 16 'Leases' for the first time this period, replacing HKAS 17, which resulted in changes to accounting policies, reported amounts, and disclosures[23][24] Revenue and Segment Information The Group's operations are divided into pharmaceutical wholesale and hemodialysis services, with hemodialysis revenue significantly increasing and becoming profitable, while pharmaceutical wholesale revenue declined and remained in a loss position Segment Revenue and Results (thousand HKD) | Business Segment | 2019 H1 Revenue | 2018 H1 Revenue | 2019 H1 Segment Result | 2018 H1 Segment Result | | :--- | :--- | :--- | :--- | :--- | | Pharmaceutical Wholesale and Distribution | 39,784 | 43,914 | (2,286) | (3,572) | | Hemodialysis Treatment and Consulting | 11,657 | 3,740 | 2,752 | 1,981 | | Total | 51,441 | 47,654 | 466 | (1,591) | Operating Loss, Finance Costs and Tax During the period, operating loss components included cost of inventories sold of HKD 39.25 million and staff costs of HKD 6.36 million, with finance costs of HKD 7.78 million entirely from other borrowings and tax expenses of HKD 0.31 million from PRC subsidiaries - Operating loss was net of depreciation of property, plant and equipment of HKD 3.35 million, cost of inventories sold of HKD 39.25 million, and staff costs of HKD 6.36 million[54] - Finance costs amounted to HKD 7.78 million, a slight year-on-year increase, primarily due to interest expenses on other borrowings[54] - Tax expenses for the period were HKD 0.31 million, entirely attributable to PRC corporate income tax[55] Loss Per Share For the six months ended September 30, 2019, basic loss per share significantly narrowed to 1.25 HK cents from 7.54 HK cents in the prior period, calculated based on a loss attributable to owners of HKD 11.63 million and 934 million weighted average ordinary shares, with no potential dilutive ordinary shares Loss Per Share Calculation | Item | For the six months ended September 30, 2019 | For the six months ended September 30, 2018 | | :--- | :--- | :--- | | Loss Attributable to Owners of the Company (thousand HKD) | 11,627 | 48,864 | | Weighted Average Number of Ordinary Shares (shares) | 933,703,560 | 648,405,300 | | Basic Loss Per Share (HK cents) | 1.25 | 7.54 | Key Asset and Liability Items As of September 30, 2019, goodwill had a carrying amount of HKD 87.22 million, net trade receivables significantly decreased to HKD 9.99 million with a high proportion over 365 days, and total other borrowings were HKD 67.10 million, including a HKD 60 million secured loan - Goodwill carrying amount decreased from HKD 95.21 million to HKD 87.22 million[58] - Net trade receivables decreased from HKD 20.02 million at the beginning of the period to HKD 9.99 million, with receivables over 365 days amounting to HKD 5.41 million[59][60] - Total other borrowings amounted to HKD 67.10 million, of which HKD 60 million is a secured loan with repayment extended to June 28, 2020[67] Share Capital, Dividends and Related Party Transactions In August 2019, the Company placed approximately 156 million new shares at HKD 0.054 per share, raising net proceeds of HKD 7.97 million, with no interim dividend proposed, and key related party transactions including key management personnel compensation and rental expenses - On August 23, 2019, the Company entered into a placing agreement to place 155,617,260 shares at HKD 0.054 per share, with net proceeds of approximately HKD 7.97 million, and the placing was completed on September 12, 2019[62] - The Board did not recommend the payment of an interim dividend for the period[69] - Total remuneration paid to key management personnel during the period was HKD 1.28 million[70] Management Discussion and Analysis Provides management's perspective on the Group's financial performance, operational results, and future outlook Business Review and Outlook The Group operates in pharmaceutical wholesale and hemodialysis in China, shifting resources towards the high-demand hemodialysis business due to healthcare reform pressures on wholesale, with a future focus on establishing more self-operated hemodialysis centers to expand scale and market share - The Group primarily engages in pharmaceutical wholesale and distribution business ('Wholesale Business') and hemodialysis treatment and consulting services business ('Hemodialysis Business')[75] - Due to the negative impact of healthcare reform policies on the Wholesale Business, the Group decided to allocate more resources to develop the high-demand Hemodialysis Business and will continue to execute its transformation strategy from wholesale to hemodialysis[79] - Future Outlook: The Group will primarily focus on establishing multiple new self-operated hemodialysis treatment centers in China to expand its operational scale and gain market share[79] Financial Review During the period, total revenue grew 7.95%, driven by a 211.68% surge in hemodialysis revenue, while gross margin improved to 23.71% due to effective cost control in hemodialysis, and net loss significantly narrowed by 79.64% to HKD 11.64 million despite increased selling expenses Revenue Performance by Business Segment | Business Segment | 2019 H1 Revenue (thousand HKD) | Year-on-year Change | | :--- | :--- | :--- | | Wholesale Business | 39,784 | -9.40% | | Hemodialysis Business | 11,657 | +211.68% | | Total | 51,441 | +7.95% | - Gross margin significantly improved from 13.33% in the prior period to 23.71%, primarily due to effective cost control in the hemodialysis business[83] - Selling and distribution expenses increased by 331.66% year-on-year, mainly due to increased marketing and promotional expenses for the hemodialysis business[85] - Administrative expenses decreased by 22.18% year-on-year, primarily benefiting from effective cost control in human resource management[86] - Net loss attributable to owners of the Company significantly decreased by 79.64%, mainly due to reduced administrative expenses and no goodwill impairment[90] Liquidity, Financial Resources and Risk Management As of September 30, 2019, the Group held HKD 28.07 million in cash and cash equivalents, with liquidity ratio decreasing to 0.62 and gearing ratio increasing to 40.58%, indicating higher financial leverage and liquidity risk, though foreign exchange risk is considered limited as most transactions are in RMB and HKD Liquidity and Financial Ratios | Indicator | September 30, 2019 | March 31, 2019 | | :--- | :--- | :--- | | Cash and Cash Equivalents | HKD 28.07 million | HKD 28.82 million | | Current Ratio | 0.62 | 1.077 | | Gearing Ratio | 40.58% | 36.71% | - The vast majority of the Group's transactions are denominated in RMB and HKD, and the Directors consider the potential foreign exchange risk to be limited, with no formal hedging policy implemented[97] Significant Events and Commitments During the period, the Group completed a capital reduction for its subsidiary Fuzhou Huihao Pharmaceutical Co., Ltd., pledged all its businesses, properties, and assets as a first floating charge to lenders for other borrowings, and had capital commitments of approximately HKD 13.91 million for leasehold improvements and plant and machinery purchases - The Group completed a capital reduction agreement for its subsidiary, the 'Target Company', which remains a subsidiary of the Company after the reduction[98] - The Group pledged all its businesses, properties, and assets as a first floating charge to the lenders of other borrowings[100] Capital Commitments (thousand HKD) | Item | September 30, 2019 | March 31, 2019 | | :--- | :--- | :--- | | Construction contracts for leasehold improvements | 4,115 | 5,732 | | Agreements for purchase of plant and machinery | 9,795 | – | Other Information Presents additional disclosures regarding corporate governance, shareholdings, and other relevant non-financial details Directors' and Shareholders' Interests As of September 30, 2019, Executive Director Mr. Wang Jia Jun was deemed to hold a 1.89% interest in the Company's shares, with several directors holding share options, and major shareholder New Hope International (Hong Kong) Co., Ltd. and its associates collectively holding 5.88% of the shares - Director Mr. Wang Jia Jun held an interest in 17,601,475 shares through a company owned by his spouse, representing 1.89% of the total issued shares[104] - Major shareholder New Hope International (Hong Kong) Co., Ltd. and its ultimate controllers (including Mr. Liu Yonghao) were deemed to hold 54,914,804 shares, representing 5.88% of the total issued shares[108][110] Share Option Scheme The Company adopted a share option scheme on September 24, 2013, under which 64.84 million share options were granted on October 26, 2018, representing approximately 10% of then-issued shares, with no further options granted during the reporting period ended September 30, 2019 - The Company granted a total of 64,840,000 share options on October 26, 2018[114] - No new share options were granted by the Company during the six months ended September 30, 2019[114] Corporate Governance The Company is committed to maintaining high corporate governance standards, fully complying with the Corporate Governance Code in Appendix 14 of the Listing Rules during the reporting period, with its Audit, Remuneration, and Nomination and Corporate Governance Committees all comprising independent non-executive directors, and the Audit Committee having reviewed the interim results - For the six months ended September 30, 2019, the Company fully complied with the code provisions of the Corporate Governance Code[119] - The Audit Committee, Remuneration Committee, and Nomination and Corporate Governance Committee are all comprised of three independent non-executive directors: Mr. Wong Hon Kit, Dr. Liu Yongping, and Mr. He Min[121][122][124] - The Audit Committee has reviewed the Group's unaudited condensed consolidated results for the six months ended September 30, 2019[124]