东方大学城控股(08067) - 2020 Q3 - 季度财报

Company Information This section provides an overview of Oriental University City Holdings (Hong Kong) Limited, a GEM-listed company, and its primary business of leasing education facilities across Asia - The subject of this report is Oriental University City Holdings (Hong Kong) Limited, a company incorporated in Hong Kong and listed on GEM (Stock Code: 8067), with its ultimate parent company being Raffles Education Corporation Limited, listed in Singapore[1][13] - The Company primarily engages in the leasing of education facilities in China, Malaysia, and Indonesia[13] Financial Highlights The company reported a slight revenue increase but a significant decline in profit attributable to owners and basic earnings per share for the nine months ended March 31, 2020 Financial Highlights for the Nine Months Ended March 31, 2020 | Metric | For the Nine Months Ended March 31, 2020 | Compared to Same Period in 2019 | Change | | :--- | :--- | :--- | :--- | | Revenue | Approx. RMB 58.4 million | Approx. RMB 57.1 million | +2.4% | | Profit Attributable to Owners of the Company | Approx. RMB 20.3 million | Approx. RMB 27.2 million | -25.5% | | Basic Earnings Per Share | RMB 0.11 yuan | RMB 0.15 yuan | -26.7% | Financial Statements This section presents the company's condensed consolidated financial statements, including the statement of profit or loss and other comprehensive income, and the statement of changes in equity, highlighting key financial performance and position changes Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the nine months ended March 31, 2020, the Company recorded a slight revenue increase of 2.4%, but profit for the period decreased by 25.4% year-on-year to RMB 20.5 million due to significant increases in staff costs, repair and maintenance, legal and professional fees, and interest expenses Key Items from Consolidated Statement of Profit or Loss (For the Nine Months Ended March 31, 2020) | Item | 2020 (RMB '000) | 2019 (RMB '000) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 58,448 | 57,080 | +2.4% | | Operating Profit | 27,184 | 31,825 | -14.6% | | Profit Before Income Tax | 24,192 | 31,933 | -24.2% | | Profit for the Period | 20,548 | 27,527 | -25.4% | | Profit Attributable to Owners of the Company | 20,285 | 27,216 | -25.5% | - Significant increases in costs and expenses were the primary reasons for the profit decline, with staff costs growing by 99.2%, repair and maintenance expenses by 72.8%, legal and professional fees by 49.6%, and interest expenses surging by 375.1%[8] Condensed Consolidated Statement of Changes in Equity As of March 31, 2020, total equity attributable to owners of the Company was RMB 1,229.0 million, an increase from RMB 1,155.0 million as of July 1, 2019, primarily driven by profit for the period and the equity component of convertible bonds, partially offset by exchange differences Summary of Changes in Equity (For the Nine Months Ended March 31, 2020) | Item | Amount (RMB '000) | | :--- | :--- | | Balance as at July 1, 2019 | 1,155,043 | | Profit for the Period | 20,285 | | Equity Component of Convertible Bonds | 59,678 | | Exchange Differences and Others | (4,944) | | Balance as at March 31, 2020 | 1,228,967 | Notes to the Condensed Consolidated Third Quarterly Results This section provides detailed notes to the condensed consolidated third quarterly results, covering segment information, connected transactions, earnings per share, and dividends Segment Information Company revenue primarily derives from education facility leasing and commercial leasing of ancillary facilities, with the latter doubling and becoming the main growth driver, while core education facility leasing revenue slightly decreased Revenue by Category (For the Nine Months Ended March 31) | Revenue Category | 2020 (RMB '000) | 2019 (RMB '000) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Leasing of Education Facilities | 52,835 | 54,421 | -2.9% | | Commercial Leasing of Ancillary Facilities | 5,613 | 2,659 | +111.1% | | Total | 58,448 | 57,080 | +2.4% | Connected Transactions and Continuing Connected Transactions During the reporting period, the Company completed the acquisition of "Zhuyun Property" from its controlling shareholder, Raffles, partially paid by issuing convertible bonds worth approximately HKD 200 million to the vendor, and also has a continuing connected property lease transaction in Malaysia with a Raffles subsidiary - To acquire "Zhuyun Property", the Company issued convertible bonds valued at HKD 200,379,982 to its controlling shareholder, Raffles Education Corporation Limited, on November 19, 2019, with a conversion price of HKD 2.30 per share and a maturity date of August 29, 2028[35][36] Earnings per Share and Dividends For the nine months ended March 31, 2020, basic earnings per share decreased to RMB 0.11 yuan from RMB 0.15 yuan in the prior period, and the Board resolved not to declare any dividend for this period - Basic earnings per share decreased from RMB 0.15 yuan in the prior period to RMB 0.11 yuan[40] - The Board did not recommend the payment of an interim dividend[41] Management Discussion and Analysis This section provides management's perspective on the company's financial performance, business operations, significant investments, and future plans for the reporting period Financial Review Financial performance for the period showed increased revenue but decreased profit, with revenue growing by 2.4% due to new leases, but profit significantly declining by 25.4% due to sharp increases in various costs and expenses, including staff costs, repair fees, acquisition-related legal fees, and interest expenses from new borrowings and convertible bonds - Staff costs increased by 99.2% year-on-year due to an increase in headcount[45] - Legal and professional fees increased by 49.6% due to expenses related to the acquisition of "Zhuyun Property"[48] - Interest expenses surged by 375.1% due to increased bank borrowings and the issuance of convertible bonds for the acquisition of "Zhuyun Property"[54] - Property tax and land use tax decreased by 8.7% due to tax exemption for student dormitories, being one of the few cost items to decline[46] Business Review and Outlook The company's core business involves leasing educational facilities such as teaching buildings and dormitories to educational institutions in China, Malaysia, and Indonesia, supplemented by minor commercial leasing, with management expecting student occupancy and related revenue from education facility leasing to remain relatively stable for the remainder of the fiscal year - The Company's core business is owning and leasing education facilities located in Langfang, China, Kuala Lumpur, Malaysia, and Jakarta, Indonesia[57] - Management expects revenue to remain relatively stable for the remainder of the current fiscal year[57] Significant Investments and Future Plans During the reporting period, the Company actively pursued overseas expansion by signing agreements to acquire properties in Jakarta, Indonesia, and Ulaanbaatar, Mongolia, which will be funded by internal resources and/or borrowings, demonstrating its strategic intent to expand international education facility leasing operations - In February 2020, the Company, through its indirect wholly-owned subsidiary, signed an agreement to acquire "Thamrin Property" located in Jakarta, Indonesia, for approximately HKD 53.4 million (plus VAT)[58] - In March 2020, the Company signed an agreement to acquire "Misheel Property" located in Ulaanbaatar, Mongolia, for RMB 32.71 million (approximately HKD 36.66 million)[60] Use of Proceeds from Listing The Company's net proceeds from its 2015 listing, approximately HKD 75.3 million, were earmarked for constructing new dormitories at its Langfang campus in Hebei, China, with approximately HKD 29.4 million spent as of March 31, 2020, and construction ongoing - Of the HKD 75.3 million raised from the listing, intended for new dormitory construction, approximately HKD 29.4 million has been utilized as of the reporting period end, with the project still in progress[63] Corporate Governance and Other Information This section details the company's corporate governance practices, including information on directors' and major shareholders' interests, and the audit committee's review of the financial results Interests of Directors and Chief Executive in Shares, Underlying Shares and Debentures As of March 31, 2020, Mr. Chew Hua Seng, the Company's Chairman and Executive Director, indirectly held 135,000,000 shares, representing 75% of the total issued shares, through Raffles Education Corporation Limited, which is the Company's direct controlling shareholder Major Shareholder Holdings | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Raffles | Beneficial Owner | 135,000,000 | 75% | | Mr. Chew Hua Seng | Interest of Controlled Corporation | 135,000,000 | 75% | Review by Audit Committee The Company's Audit Committee, comprising three independent non-executive directors, has reviewed the quarterly results and confirmed their preparation in compliance with applicable accounting standards and GEM Listing Rules, with sufficient disclosures made - The Audit Committee has reviewed the quarterly results report[77]