中庆股份(01855) - 2021 - 中期财报

Company Information The report provides fundamental company information, including details on board members, committees, auditors, legal counsel, principal bankers, and share registrar - The report provides fundamental company information, including details on board members, committee compositions, auditors, legal advisors, principal bankers, and share registrar[4][6] Management Discussion and Analysis Business Review and Outlook In H1 2021, group revenue slightly increased by 1.2% to RMB 362.1 million, driven by landscape and ecological restoration, with new qualifications and major project wins increasing bid value by RMB 268.8 million, and future growth expected from national environmental policies and expanded qualifications Business Review H1 2021 revenue reached RMB 362.1 million, a 1.2% increase, with landscape and ecological restoration as primary contributors, alongside securing three new qualifications and winning major projects that boosted total bid value by RMB 268.8 million H1 2021 Business Overview | Metric | Value | | :--- | :--- | | Total Revenue | Approximately RMB 362.1 million | | Revenue Y-o-Y Growth | Approximately 1.2% | | Landscape Business Revenue Share | 73.2% | | Ecological Restoration Business Revenue Share | 24.8% | | Bid Value Y-o-Y Growth | Approximately RMB 268.8 million | - The Group obtained three new enterprise qualifications in building construction, hydraulic and hydropower engineering, and urban road lighting engineering during the period, which will facilitate future business undertakings[7] - The Group successfully bid for several major projects, including Changchun Beihu Science and Technology Development Zone Landscape Greening Project (RMB 107.6 million), Lianhuashan Road Greening Project (RMB 113.6 million), and Hangzhou Huangjinfan Ecological Landscape Project (RMB 36 million)[7] Risk Management Management assists the Board in assessing significant risks, including investment, interest rate, and liquidity, and implements corresponding risk management and internal control measures, with no material internal control deficiencies in financial reporting during the period - The Group had no material internal control deficiencies in financial reporting during H1 2021[8] Outlook Benefiting from national policies like the '14th Five-Year Plan' and carbon neutrality goals, the ecological and environmental protection sector offers broad prospects, with the Group planning to acquire Grade I municipal public works construction qualification to expand its business scope and enhance competitiveness - The national '14th Five-Year Plan' and carbon peak and neutrality targets provide a favorable policy environment for the Group[10] - The Group plans to acquire Grade I municipal public works construction general contracting qualification in H2, and considers Grade II highway engineering construction general contracting qualification to expand municipal and highway engineering services[10] Financial Review In H1 2021, revenue slightly increased by 1.2% to RMB 362.1 million, but gross profit decreased by 7.2% to RMB 81.2 million, with gross margin falling to 22.4%; income tax expense significantly reduced by 54.3% due to high-tech enterprise status, while net current assets grew by 50.5% and gearing ratio decreased to 0.9 Operating Results H1 2021 revenue was RMB 362.1 million, up 1.2%, with landscape revenue growing 42.2% while ecological restoration and other businesses declined; gross profit fell 7.2% to RMB 81.2 million, with gross margin at 22.4%, primarily due to reduced contribution from high-margin 'other' businesses, and income tax decreased 54.3% due to tax incentives H1 2021 Segment Revenue (RMB million) | Business Segment | H1 2021 | H1 2020 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Landscape | 265.2 | 186.5 | +42.2% | | Ecological Restoration | 90.0 | 144.8 | -37.8% | | Other | 6.9 | 26.6 | -74.1% | | Total | 362.1 | 357.9 | +1.2% | - Gross profit decreased by 7.2% from RMB 87.5 million to RMB 81.2 million, with gross margin falling from 24.5% to 22.4%, primarily due to reduced contribution from higher-margin 'other' businesses[17] - Income tax expense decreased by 54.3% from RMB 7 million to RMB 3.2 million, mainly because subsidiary Zhongbang Landscape was recognized as a high-tech enterprise, enjoying a 15% preferential tax rate[24] Assets and Liabilities As of June 30, 2021, net current assets increased by 50.5% to RMB 265 million, driven by listing proceeds and profitability; total borrowings were approximately RMB 518 million, with the gearing ratio decreasing from 1.0 to 0.9, and significant financial guarantees provided for PPP projects of associates and joint ventures resulted in high contingent liabilities - Net current assets increased by 50.5% from RMB 176 million at year-end 2020 to RMB 265 million[26] - The gearing ratio (bank and other borrowings/total equity) decreased from 1.0 at year-end 2020 to 0.9[28] - The Group provided guarantees for bank loans of joint venture Tianjun Tourism (loan balance RMB 375 million) and associate Changchun Xianbang (loan balance RMB 224 million)[30][31] Investments and Financing During the reporting period, the Group had no significant acquisitions, disposals, or major investments, but entered into a forward foreign exchange contract of approximately USD 7.59 million in July 2021 to hedge foreign exchange risk from USD loans - The Group had no significant acquisitions, disposals, or major investments during H1 2021[29] - To mitigate exchange rate risk from USD loans, the Group entered into a RMB/USD forward foreign exchange contract totaling approximately USD 7.59 million in July 2021[33] Use of Proceeds from Listing The company listed on January 6, 2021, with net proceeds of approximately HKD 54.7 million; as of the reporting date, HKD 17.8 million was utilized for regional design offices, bank loan repayment, and working capital, with the remaining HKD 36.9 million expected to be used as planned by end of 2022 Use of Proceeds from Listing (HKD million) | Purpose | Allocated Amount | Amount Utilized | Unutilized Amount | | :--- | :--- | :--- | :--- | | Establishment of regional design offices | 8.1 | 3.5 | 4.6 | | Pre-construction costs for Changchun Zoo project | 13.0 | 1.8 | 11.2 | | Investment in Ulanhot Tianjiao Tianjun | 14.3 | — | 14.3 | | Purchase of ERP system | 4.0 | 0.1 | 3.9 | | Repayment of bank loans | 9.8 | 9.8 | — | | General working capital | 5.5 | 2.6 | 2.9 | | Total | 54.7 | 17.8 | 36.9 | Other Information Dividends, Employees and Remuneration Policy The Board recommended no interim dividend for 2021; as of June 30, 2021, the Group had 504 employees and established a systematic remuneration management policy and welfare system, with a remuneration committee reviewing related policies - The Directors recommended no interim dividend for H1 2021[37] - As of June 30, 2021, the Group had 504 employees[38] Directors' and Major Shareholders' Interests The report details the interests and short positions of directors, chief executives, and major shareholders in the company and its associated corporations as of June 30, 2021, with controlling shareholder Zhongqing International holding 65.89% and Zhongbang International holding 5.11% of the shares Major Shareholder Holdings | Shareholder Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Zhongqing International | Beneficial owner | 181,202,166 | 65.89% | | Zhongbang International | Beneficial owner | 14,054,104 | 5.11% | Corporate Governance and Compliance The company maintained sufficient public float and disclosed limited potential competing businesses; a deviation from the Corporate Governance Code exists with the Chairman and CEO roles combined, and post-reporting period, related party transactions and company secretary change occurred, with the interim financial report reviewed by KPMG - The roles of Chairman and Chief Executive Officer are held concurrently by Mr. Liu Haitao, which deviates from Code Provision A.2.1 of the Corporate Governance Code[62] - Post-reporting event: To hedge the currency risk of USD loans, the Group entered into a forward foreign exchange contract with China Everbright Bank on July 30, 2021, with a maximum amount of USD 7,592,263.02[59] - The 2021 interim financial report was not audited but was reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[63] Condensed Consolidated Financial Statements Consolidated Statement of Profit or Loss For the six months ended June 30, 2021, revenue was RMB 362.1 million, a slight increase, but gross profit decreased to RMB 81.2 million; profit for the period was RMB 16.49 million, a 22.6% decrease from RMB 21.32 million in the prior year, with profit attributable to equity holders at RMB 16.33 million Consolidated Statement of Profit or Loss Summary (RMB thousand) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Revenue | 362,073 | 357,885 | | Gross Profit | 81,197 | 87,505 | | Operating Profit | 31,789 | 43,084 | | Profit Before Tax | 19,681 | 28,276 | | Profit for the Period | 16,487 | 21,315 | | Profit attributable to equity holders of the Company | 16,331 | 21,189 | Consolidated Statement of Financial Position As of June 30, 2021, total assets were RMB 2.107 billion, total liabilities RMB 1.527 billion, and total equity RMB 580 million, representing a 20% increase from year-end 2020, primarily due to listing proceeds and period profit, with net current assets at RMB 265 million Consolidated Statement of Financial Position Summary (RMB thousand) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Non-current Assets | 377,746 | 366,237 | | Current Assets | 1,729,405 | 1,699,903 | | Total Assets | 2,107,151 | 2,066,140 | | Current Liabilities | 1,464,022 | 1,523,553 | | Non-current Liabilities | 62,661 | 58,777 | | Total Liabilities | 1,526,683 | 1,582,330 | | Total Equity | 580,468 | 483,810 | Condensed Consolidated Statement of Cash Flows In H1 2021, net cash outflow from operating activities was RMB 96.34 million, an increase from the prior year; net cash inflow from investing activities was RMB 2.67 million, and from financing activities was RMB 53.35 million, mainly from new loans and listing proceeds, resulting in period-end cash and cash equivalents of RMB 104 million, a decrease of RMB 40.31 million from year-start Condensed Consolidated Statement of Cash Flows Summary (RMB thousand) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | (96,339) | (73,989) | | Net cash generated from investing activities | 2,674 | 37,145 | | Net cash generated from financing activities | 53,354 | 165 | | Net decrease in cash and cash equivalents | (40,311) | (36,679) | | Cash and cash equivalents at beginning of period | 143,997 | 73,615 | | Cash and cash equivalents at end of period | 103,681 | 36,941 | Notes to the Financial Statements Note 4 Revenue and Segment Reporting The Group operates in three segments: landscape, ecological restoration, and other; in H1 2021, the landscape segment contributed most of the gross profit increase, reaching RMB 58 million, while ecological restoration gross profit was RMB 21.37 million, and the 'other' segment's gross profit significantly declined to RMB 1.84 million, with most revenue (RMB 361 million) recognized over time H1 2021 Segment Gross Profit (RMB thousand) | Segment | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Landscape | 57,989 | 34,999 | | Ecological Restoration | 21,367 | 34,446 | | Other | 1,841 | 18,060 | | Total | 81,197 | 87,505 | Note 11 Trade and Bills Receivables As of June 30, 2021, total trade and bills receivables (net of loss allowance) significantly increased to RMB 868 million from RMB 697 million at year-start; receivables within one year accounted for approximately 57%, while those over one year were 43%, indicating collection pressure Trade and Bills Receivables Aging Analysis (RMB thousand) | Aging | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Within 1 year | 494,992 | 340,653 | | 1 to 2 years | 163,422 | 141,379 | | Over 2 years | 209,302 | 214,970 | | Total | 867,716 | 697,002 | Note 15 Bank and Other Borrowings As of June 30, 2021, total bank and other borrowings were RMB 518 million, with RMB 468 million due within one year; most loans were guaranteed by third parties or secured by trade receivables and contract assets, and unused bank facilities totaled RMB 143 million at period-end - Total bank and other borrowings amounted to RMB 517.6 million, of which RMB 467.6 million is repayable within one year[113][115] - The Group's bank borrowings are primarily guaranteed by third parties (some with counter-guarantees from related parties) and secured by trade receivables and contract assets[113][116] Note 21 Significant Related Party Transactions During the period, the Group engaged in multiple transactions with related parties, including the controlling shareholder Zhongqing Investment and its associates, joint ventures, and associates; key transactions involved providing construction services to and obtaining guarantees from related parties, with significant outstanding balances indicating close business ties - The Group provided construction services generating RMB 4.21 million in revenue from joint ventures and RMB 7.19 million from associates[139][140] - As of period-end, contract assets and trade receivables due from Zhongqing Investment and its associates totaled approximately RMB 184 million[143] Review Report KPMG Review Report KPMG reviewed the interim financial report in accordance with Hong Kong Standard on Review Engagements, and based on the review, found no matters leading them to believe the report was not prepared in all material respects in accordance with IAS 34 'Interim Financial Reporting' - KPMG issued an unqualified review report on the interim financial report[149]