伟禄集团(01196) - 2019 - 中期财报

Financial Statements This section presents the Group's condensed consolidated financial statements, including profit or loss, comprehensive income, financial position, cash flows, and changes in equity Condensed Consolidated Statement of Profit or Loss The company's total revenue grew 83.1% to HKD 403.4 million, but profit for the period significantly decreased to HKD 57.06 million due to higher finance costs Comparison of Profit or Loss Statements for H1 2019 vs H1 2018 (thousand HKD) | Indicator | For the six months ended June 30, 2019 (thousand HKD) | For the six months ended June 30, 2018 (thousand HKD) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Revenue | 403,401 | 220,308 | +83.1% | | Gross Profit | 101,084 | 61,468 | +64.5% | | Other Income and Losses | 505,092 | 680,302 | -25.8% | | Finance Costs | (280,354) | (162,671) | +72.3% | | Profit Before Tax | 252,824 | 504,265 | -49.9% | | Profit for the Period | 57,059 | 347,216 | -83.6% | | Profit Attributable to Owners of the Company | 44,486 | 343,992 | -87.1% | | Basic Earnings Per Share (HK cents) | 3.10 | 27.21 | -88.6% | Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Total comprehensive income for the period significantly decreased by 59.4% to HKD 33.14 million, mainly due to exchange losses from overseas operations Total Comprehensive Income for H1 2019 (thousand HKD) | Indicator | For the six months ended June 30, 2019 (thousand HKD) | For the six months ended June 30, 2018 (thousand HKD) | | :--- | :--- | :--- | | Profit for the Period | 57,059 | 347,216 | | Other Comprehensive Expenses for the Period | (23,916) | (265,649) | | Total Comprehensive Income for the Period | 33,143 | 81,567 | Condensed Consolidated Statement of Financial Position Total assets increased to HKD 12.87 billion, driven by investment properties, while total liabilities rose to HKD 10.21 billion due to increased bank borrowings Key Financial Position Indicators (thousand HKD) | Indicator | June 30, 2019 (thousand HKD) | December 31, 2018 (thousand HKD) | | :--- | :--- | :--- | | Non-current Assets | 10,628,605 | 9,409,334 | | Of which: Investment Properties | 10,099,503 | 9,081,879 | | Current Assets | 2,240,415 | 2,012,335 | | Total Assets | 12,869,020 | 11,421,669 | | Current Liabilities | 1,374,395 | 933,835 | | Non-current Liabilities | 8,840,100 | 7,555,408 | | Of which: Bank Borrowings | 7,335,385 | 4,864,046 | | Total Liabilities | 10,214,495 | 8,489,243 | | Equity Attributable to Owners of the Company | 2,458,616 | 2,878,448 | Condensed Consolidated Statement of Cash Flows Operating activities generated a net cash inflow of HKD 86.57 million, while investing and financing activities resulted in net outflows and inflows respectively, leading to a net increase in cash of HKD 97.33 million Cash Flow Statement Summary (thousand HKD) | Indicator | For the six months ended June 30, 2019 (thousand HKD) | For the six months ended June 30, 2018 (thousand HKD) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 86,570 | (81,772) | | Net Cash Used in Investing Activities | (635,296) | (4,569,930) | | Net Cash from Financing Activities | 646,059 | 4,792,740 | | Net Increase in Cash and Cash Equivalents | 97,333 | 141,038 | | Cash and Cash Equivalents at Beginning of Period | 876,544 | 46,632 | | Cash and Cash Equivalents at End of Period | 966,970 | 217,020 | Condensed Consolidated Statement of Changes in Equity Equity attributable to owners of the company decreased to HKD 2.459 billion, primarily due to a reduction in capital reserves from acceptance bill redemption, partially offset by profit for the period - Equity attributable to owners of the company decreased from HKD 2,878,448 thousand at the beginning of the period to HKD 2,458,616 thousand at the end of the period, with key changes including: - Profit for the period increased by HKD 44,486 thousand - Other comprehensive income (loss) decreased by HKD 24,537 thousand - Redemption of acceptance bills led to a HKD 439,781 thousand decrease in capital reserves - Acquisitions resulted in non-controlling interests increasing from HKD 53,978 thousand to HKD 195,909 thousand[9] Notes to the Condensed Consolidated Financial Statements This section provides detailed notes explaining the accounting policies, revenue breakdown, segment information, business combinations, and bank borrowings 2. Principal Accounting Policies The Group adopted new accounting standards, notably HKFRS 16 Leases, leading to the recognition of new right-of-use assets and lease liabilities - The Group first applied HKFRS 16 Leases on January 1, 2019, replacing HKAS 17, using a modified retrospective approach with cumulative effects recognized at the beginning of the period without restating comparative data[14][30] Impact of HKFRS 16 Adoption on Statement of Financial Position as at January 1, 2019 (thousand HKD) | Item | Carrying Amount Before Adjustment (thousand HKD) | Adjustment (thousand HKD) | Reclassification (thousand HKD) | Carrying Amount After Adjustment (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Non-current Assets | | | | | | Right-of-use Assets | – | 66,086 | 5,082 | 71,168 | | Prepaid Lease Payments | 4,968 | – | (4,968) | – | | Current Assets | | | | | | Prepaid Lease Payments | 114 | – | (114) | – | | Current Liabilities | | | | | | Lease Liabilities | – | 22,402 | – | 22,402 | | Non-current Liabilities | | | | | | Lease Liabilities | – | 43,684 | – | 43,684 | 3. Revenue Total revenue for H1 2019 increased by 83.1% to HKD 403 million, primarily driven by strong growth in the environmental and financial services segments Revenue Breakdown by Business Segment (thousand HKD) | Business Segment | H1 2019 (thousand HKD) | H1 2018 (thousand HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Environmental | 292,088 | 113,775 | +156.7% | | Auto Parts | 50,710 | 46,447 | +9.2% | | Commercial Printing | 40,664 | 44,855 | -9.3% | | Financial Services | 14,003 | 4,960 | +182.3% | | Property Investment | 5,698 | 9,773 | -41.7% | | Labels | 238 | 498 | -52.2% | | Total | 403,401 | 220,308 | +83.1% | 4. Segment Information The Group operates in six segments, with property investment contributing the majority of segment results and total assets, while the environmental segment showed strong operating profit - The Group's six operating segments are: Commercial Printing, Labels, Auto Parts, Financial Services, Property Investment, and Environmental[45] Segment Results and Assets (thousand HKD) | Business Segment | H1 2019 Segment Results (thousand HKD) | H1 2018 Segment Results (thousand HKD) | Segment Assets as at June 30, 2019 (thousand HKD) | | :--- | :--- | :--- | :--- | | Property Investment | 304,635 | 353,660 | 10,532,537 | | Environmental | 42,918 | 11,147 | 443,591 | | Auto Parts | 5,425 | 76 | 152,679 | | Financial Services | 1,330 | 412 | 406,712 | | Commercial Printing | 705 | 2,094 | 48,780 | | Labels | (64) | (116) | 485 | | Total | 354,949 | 367,273 | 11,584,784 | 8. Business Combination The Group completed two key acquisitions, including a 60% stake in Grand Ascent Finance for HKD 96 million and an additional 2% stake in Shenzhen Yousheng Property - On April 30, 2019, the Group completed the acquisition of a 60% equity interest in Grand Ascent Finance Limited for a total consideration of HKD 96 million, resulting in goodwill of approximately HKD 58.89 million. Grand Ascent Finance primarily provides corporate finance advisory services in Hong Kong[56][59][60] - On April 22, 2019, the Group acquired an additional 2% equity interest in Yousheng Property for approximately HKD 45.48 million, increasing its stake to 51%, making Yousheng Property a subsidiary primarily engaged in property redevelopment[64] 20. Bank Borrowings and Overdrafts Total bank borrowings and overdrafts significantly increased to HKD 8.18 billion, with most being secured and non-current, reflecting higher leverage Summary of Bank Borrowings and Overdrafts (thousand HKD) | Item | June 30, 2019 (thousand HKD) | December 31, 2018 (thousand HKD) | | :--- | :--- | :--- | | Current Portion | 844,905 | 496,953 | | Non-current Portion | 7,335,385 | 4,864,046 | | Total | 8,180,290 | 5,360,999 | - The Group's bank credit facilities amount to HKD 8.95 billion, with HKD 8.18 billion utilized. Some borrowings are secured by company guarantees, investment properties (carrying value of HKD 9.0 billion), leasehold land and buildings (carrying value of HKD 66.5 million), and personal guarantees from controlling shareholders[91] Management Discussion and Analysis This section provides an overview of the Group's financial performance, segment-specific reviews, liquidity, capital structure, and future outlook Overall Financial Review Total revenue grew 83.1% to HKD 403 million, but profit declined 83.6% to HKD 57.1 million due to investment losses and higher finance costs - Revenue growth of 83.1% was primarily driven by the environmental segment's revenue increasing from HKD 114 million to HKD 292 million, and the financial services segment's revenue increasing from HKD 5 million to HKD 14 million[102] - The 83.6% decline in profit was mainly due to: - Losses of approximately HKD 82.5 million from the disposal of listed securities investments - An increase in finance costs of approximately HKD 118 million - A net decrease in exchange gains of approximately HKD 145 million[102] Financial and Business Review of Each Segment The environmental segment became the main revenue driver with significant growth, while financial services also surged due to acquisitions, and property investment saw fair value gains despite lower rental income - Environmental Segment: Revenue increased by 156.7% year-on-year to HKD 292 million, with operating profit growing 285.0% to HKD 42.9 million. This growth was primarily due to shifting operations to Malaysia and Japan in response to China's waste import policies[103] - Auto Parts Segment: Revenue increased by 9.2% year-on-year to HKD 50.7 million, and profit grew from HKD 0.1 million to HKD 5.4 million, mainly due to increased wholesale sales and improved credit control[104] - Commercial Printing Segment: Revenue decreased by 9.3% year-on-year to HKD 40.7 million, and operating profit fell from HKD 2.1 million to HKD 0.7 million, primarily impacted by negative capital market sentiment[105] - Financial Services Segment: Revenue increased by 182.3% year-on-year to HKD 14 million, and operating profit grew from HKD 0.4 million to HKD 1.3 million, mainly benefiting from revenue consolidation after the acquisition of Grand Ascent Finance[106] - Property Investment Segment: Rental income decreased from HKD 9.8 million to HKD 5.7 million due to the termination of the Xikeng property lease for urban redevelopment. Segment profit was HKD 305 million, primarily from fair value gains on investment properties[108] Liquidity, Financial Resources and Capital Structure The Group's financial position is sound with HKD 987 million in cash, but total interest-bearing borrowings reached HKD 8.99 billion, resulting in a high gearing ratio of 365.8% Key Capital Structure Indicators | Indicator | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Bank Balances and Cash (HKD) | 987 million | 897 million | | Interest-bearing Borrowings (HKD) | 8.99 billion | 7.67 billion | | Gearing Ratio | 365.8% | 266.6% | Review and Outlook Management is optimistic about the diversified business, with environmental and financial services segments poised for growth, and property investment advancing urban renewal projects - Environmental Segment: Operations in Malaysia and Japan are expected to be key growth drivers, with plans to commence local sales in Japan[114] - Financial Services Segment: The acquisition of Grand Ascent Finance strengthened Hong Kong operations, while an application is underway with the CSRC to establish a securities company in Guangzhou[116][117] - Property Investment Segment: Optimistic about the property markets in Shenzhen's Guanlan and Guangming districts. The urban renewal project for Xikeng property is expected to be approved in H2 2019[119][121] Shareholder and Corporate Governance Information This section details information regarding dividends, directors' and substantial shareholders' interests, and the company's corporate governance practices Dividend The Board does not recommend an interim dividend for the six months ended June 30, 2019 - The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2019 (H1 2018: nil)[121] Directors' and Chief Executive's Interests Chairman Dr. Lam Hiu Fung holds 74.62% of the company's shares through Merryland Holdings Limited, with his spouse also deemed to have the same interest Major Directors' Shareholding | Director's Name | Capacity | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Dr. Lam Hiu Fung | Corporate Interest | 1,073,160,000 | 74.62% | | Ms. So Kiu Wah | Spouse's Interest | 1,073,160,000 | 74.62% | Substantial Shareholders Merryland Holdings Limited is the sole substantial shareholder, beneficially owning 74.62% of the issued share capital - Merryland Holdings Limited holds 1,073,160,000 shares, representing 74.62% of the issued share capital, making it the controlling shareholder of the company[126] Corporate Governance The company maintains high corporate governance standards, complying with Listing Rules, and its Audit Committee has reviewed the interim results - For the six months ended June 30, 2019, the company consistently complied with all code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules[131] - The Audit Committee, comprising three independent non-executive Directors, has reviewed the unaudited interim results for the six months ended June 30, 2019, in conjunction with management[133]