长城环亚控股(00583) - 2021 - 中期财报

Corporate Information This section outlines the company's fundamental corporate information, including board members, committee structures, and key personnel appointments - This section details the company's fundamental information, including board and committee compositions, key administrative contacts, and significant personnel changes such as the appointment of Mr. Wang Hai and Mr. Yu Xianqing as Executive and Non-executive Directors on August 20, 2021[3][4][6] Management Discussion and Analysis This section provides a comprehensive analysis of the Group's financial performance, business operations, and future outlook Operating Results of the Group The Group achieved a significant turnaround in the first half of 2021, reporting substantial profit attributable to owners primarily due to fair value gains on investment properties and increased share of associate profits Condensed Consolidated Operating Results for H1 2021 | Indicator (million HKD) | H1 2021 | H1 2020 | Change Percentage | | :--- | :--- | :--- | :--- | | Revenue | 52.4 | 67.9 | (22.8%) | | Operating Profit/(Loss) | 51.4 | (51.6) | ** | | Profit/(Loss) Before Income Tax | 413.4 | (216.7) | ** | | Profit/(Loss) for the Period | 412.3 | (219.7) | ** | | Profit/(Loss) Attributable to Owners of the Company | 412.3 | (219.7) | ** | | Earnings/(Loss) Per Share (HK cents) | 26.3 | (14.0) | ** | - Key drivers for the turnaround include a fair value gain on investment properties of HKD 35.2 million, compared to a loss of HKD 84.6 million in the prior period, and a share of profit from associates of HKD 435.4 million, compared to a loss of HKD 82.4 million in the prior period[12][15] Business Review The Group's excellent performance in the first half of 2021 was primarily driven by the property investment segment, while financial services revenue declined due to expiring agreements and market volatility - The Group's core businesses are divided into property investment and financial services segments[18] - The property investment segment was the primary contributor to the period's performance, maintaining a stable and diversified investment portfolio[19] - Financial services segment revenue decreased year-on-year, mainly due to the expiration of an asset management agreement with an intermediate holding company and financial market volatility[26] Financial Review by Operating Segments This section reviews the financial performance of the property investment and financial services segments, highlighting the significant contribution from the investment in associate Everwell City Limited Property Investment The property investment segment showed robust performance in H1 2021, with increased revenue and a significant turnaround in fair value gains on investment properties, leading to substantial profit attributable to owners Property Investment Segment Financial Performance | Indicator (million HKD) | H1 2021 | H1 2020 | Change Percentage | | :--- | :--- | :--- | :--- | | Revenue | 52.4 | 51.1 | 2.5% | | Adjusted Operating Profit | 14.6 | 23.8 | (38.7%) | | Fair Value Gain/(Loss) on Investment Properties | 35.2 | (84.6) | ** | | Profit/(Loss) Attributable to Owners of the Company | 49.0 | (71.7) | ** | - The fair value of investment properties turned from loss to gain, primarily due to the gradual recovery of the Hong Kong property market since the COVID-19 outbreak in early 2020[44][45] Financial Services The financial services segment recorded no revenue in H1 2021, a 100% decrease year-on-year, primarily due to the expiration of an asset management agreement and fewer corporate finance service projects Financial Services Segment Financial Performance | Indicator (million HKD) | H1 2021 | H1 2020 | Change Percentage | | :--- | :--- | :--- | :--- | | Revenue | – | 16.8 | (100%) | | Adjusted Operating (Loss)/Profit | (3.0) | 3.8 | ** | | (Loss)/Profit Attributable to Owners of the Company | (3.0) | 2.7 | ** | - The 100% revenue decrease was primarily due to the expiration of an asset management agreement with an intermediate holding company in October 2020 and a reduction in corporate finance service projects[52] Significant Investment in an Associate The Group's significant investment in Everwell City Limited, a joint venture with 16 commercial properties in Hong Kong, contributed substantial profit in H1 2021 due to fair value revaluation gains - The Group holds a 35.78% equity interest in Everwell City Limited, a joint venture that owns 16 commercial properties and shopping centers in Hong Kong[55] Key Data for Investment in Associate | Indicator | June 30, 2021 | June 30, 2020 | | :--- | :--- | :--- | | Fair Value of Investment (billion HKD) | 4.2991 | 3.7236 | | Proportion of Total Assets | 51.7% | 47.3% | | Share of Profit/(Loss) (million HKD) | 435.5 | (83.3) | Liquidity and Capital Resources The Group maintains a robust financial position with increased cash and equity, a reduced gearing ratio, and no outstanding bank borrowings or asset pledges after full repayment Financial Position Summary | Indicator (million HKD) | June 30, 2021 | December 31, 2020 | Change Percentage | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 229.4 | 212.5 | 8.0% | | Equity Attributable to Owners | 3,053.2 | 2,640.7 | 15.6% | | Current Ratio | 0.27 | 0.25 | 8.0% | | Gearing Ratio | 59.7% | 63.2% | (5.5%) | - As of June 30, 2021, the Group had no outstanding bank borrowings, compared to HKD 901 million at the end of 2020, with unutilized bank facilities of approximately HKD 1,036.7 million[61][62] - Following the repayment of mortgage loans in February 2021, the Group had no assets pledged as of June 30, 2021[66][67] - Net cash from operating activities was HKD 22.3 million, a year-on-year decrease primarily due to lower revenue; net cash from investing activities was HKD 5.4 million, mainly from the release of restricted cash; and net cash used in financing activities was HKD 11.0 million, a decrease primarily due to lower interest expenses after mortgage repayment[68][70][74] Employees and Remuneration Policy The Group's employee count slightly decreased to 18 as of June 30, 2021, with a remuneration policy designed to attract and retain talent while aligning with business strategy and shareholder interests - As of June 30, 2021, the Group's total number of employees was 18[75] Interim Dividend The Board resolved not to declare any interim dividend for the six months ended June 30, 2021, consistent with the prior period - The Board resolved not to declare an interim dividend for 2021[78] Outlook Management is optimistic about Hong Kong's economic recovery and the Group's stable financial position, planning to leverage Greater Bay Area opportunities and synergies with its controlling shareholder to expand domestic business - Management is optimistic about Hong Kong's economic recovery and believes the Group's investment properties will continue to provide stable income[88] - Future strategic focus includes capitalizing on Greater Bay Area development opportunities and strengthening synergies with controlling shareholder China Great Wall Asset Management to expand domestic business[89] Corporate Governance This section details the company's adherence to corporate governance standards, including practices, committee structures, and significant board changes Corporate Governance Practices The company largely complied with the Corporate Governance Code during the reporting period, with one deviation related to committee members' attendance at the AGM due to COVID-19 regulations - The company complied with most provisions of the Corporate Governance Code during the reporting period[95] - One deviation occurred as the Audit Committee Chairman and members were unable to attend the Annual General Meeting due to pandemic-related regulations, violating Code Provision E.1.2[96] Board Committees The company maintains Audit, Remuneration, and Nomination Committees, with the Audit Committee reviewing financial information and the latter two having independent non-executive director majorities - The Audit Committee reviewed the interim financial report and found its preparation to be in compliance with applicable accounting standards and Listing Rules requirements[103] - The Remuneration Committee and Nomination Committee both have a majority of independent non-executive directors, meeting corporate governance requirements[104][106] Directors' Information and Changes This section discloses significant changes in the Board of Directors during and up to the latest practicable date, including resignations and new appointments for executive and non-executive roles - Several significant personnel changes occurred on the Board between July and August 2021, including changes in Executive Directors, Non-executive Directors, and the Chairman of the Board[119][121] Interests of Substantial Shareholders As of June 30, 2021, China Great Wall Asset Management Co, Ltd and Central Huijin Investment Ltd were the company's substantial shareholders, holding 74.89% and 9.89% of the issued share capital respectively Substantial Shareholders' Holdings (June 30, 2021) | Name of Substantial Shareholder | Number of Ordinary Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | | China Great Wall Asset Management Co, Ltd | 1,174,018,094 (L) | 74.89% | | Central Huijin Investment Ltd | 155,000,000 (L) | 9.89% | Report on Review of Condensed Consolidated Interim Financial Statements The auditor, BDO Limited, provided an unmodified review conclusion on the Group's condensed consolidated interim financial statements, confirming their preparation in accordance with HKAS 34 - The auditor, BDO Limited, has reviewed the Group's condensed consolidated interim financial statements in accordance with Hong Kong Standard on Review Engagements 2410[155] - The review concluded that nothing has come to the auditor's attention that causes them to believe the condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting", representing an unmodified review conclusion[156][160] Condensed Consolidated Interim Financial Information This section presents the Group's key financial statements, including the balance sheet, comprehensive income statement, and cash flow statement, reflecting its financial position and performance Condensed Consolidated Balance Sheet As of June 30, 2021, the Group's total assets increased to HKD 8.323 billion, with total liabilities at HKD 5.270 billion and total equity rising to HKD 3.053 billion, primarily driven by increased investment in associates Balance Sheet Key Items (million HKD) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | 8,323.4 | 7,838.8 | | Total Liabilities | 5,270.2 | 5,198.1 | | Total Equity | 3,053.2 | 2,640.7 | Condensed Consolidated Statement of Comprehensive Income In H1 2021, the Group's revenue decreased by 22.8% to HKD 52.39 million, but it successfully turned a prior-period loss into a profit of HKD 412.3 million, driven by fair value gains on investment properties and increased share of associate profits Condensed Consolidated Statement of Comprehensive Income Key Items (thousand HKD) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Revenue | 52,392 | 67,932 | | Operating Profit/(Loss) | 51,396 | (51,554) | | Profit/(Loss) for the Period | 412,293 | (219,751) | | Basic Earnings/(Loss) Per Share | 26.30 HK cents | (14.02) HK cents | Condensed Consolidated Statement of Cash Flows In H1 2021, the Group generated net cash from operating activities of HKD 22.27 million and from investing activities of HKD 5.42 million, while using HKD 10.98 million in financing activities, resulting in a net cash increase of HKD 16.71 million Cash Flow Statement Summary (thousand HKD) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 22,266 | 36,591 | | Net Cash Generated from/(Used in) Investing Activities | 5,420 | (884) | | Net Cash Used in Financing Activities | (10,981) | (18,799) | | Net Increase in Cash and Cash Equivalents | 16,705 | 16,908 | Notes to the Condensed Consolidated Interim Financial Information This section provides detailed notes to the interim financial statements, offering further insights into revenue, segment performance, investment properties, investments in associates, and financing activities 2. Revenue and Segment Information This note details revenue and profit/loss for the property investment and financial services segments, showing property investment as the sole revenue contributor with a net profit, while financial services recorded a net loss H1 2021 Segment Results (thousand HKD) | Segment | Revenue from External Customers | Net Profit/(Loss) for Reportable Segment | | :--- | :--- | :--- | | Property Investment | 52,392 | 49,024 | | Financial Services | – | (3,005) | 4. Investment Properties As of June 30, 2021, investment properties were valued at HKD 3.2195 billion, recording a fair value gain in H1 2021, reversing the prior year's loss, based on independent professional valuations - In H1 2021, investment properties recorded a fair value gain of HKD 35,246,000, compared to a fair value loss of HKD 170,576,000 for the full year 2020[190] 5. Investment in Associates The carrying value of the Group's investment in associates increased to HKD 4.30 billion, primarily due to a significant share of profit from associates, predominantly contributed by Everwell City Limited - Key associate Everwell City Limited achieved revenue of HKD 521 million and profit of HKD 1.217 billion in H1 2021[207] - The Group's share of Everwell City's net profit was HKD 435.5 million, based on its 35.78% equity interest[210] 10. Loans from an Intermediate Holding Company As of June 30, 2021, the Group had two HKD-denominated loans from its intermediate holding company, Great Wall International, totaling HKD 3.848 billion for associate investment and HKD 902 million for bank loan repayment, both bearing HIBOR-plus interest - During the period, the Group obtained a new loan of HKD 901.7 million from its intermediate holding company to fully repay bank borrowings[231] 11. Bank Borrowing The Group fully repaid all bank loans in February 2021, resulting in a zero balance as of June 30, 2021, with approximately HKD 1.037 billion in unutilized bank facilities - Bank loans were fully repaid in February 2021, resulting in a zero balance at period-end[234] Glossary This section defines key terms used throughout the report, such as "Board," "Company," "Corporate Governance Code," and "Controlling Shareholder," ensuring consistent reader understanding - This section defines key terms used in the report, such as "Board," "Company," "Corporate Governance Code," and "Controlling Shareholder," to ensure consistent reader understanding[275][281]