瓦普思瑞元宇宙(08093) - 2019 Q3 - 季度财报

Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the nine months ended March 31, 2019, revenue from continuing operations decreased by 22.5% to HK$227,362 thousand, with profit for the period significantly reduced to HK$3,215 thousand due to narrower margins and discontinued operations loss Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 227,362 | 293,596 | -22.5% | | Cost of sales | (190,006) | (146,410) | +29.8% | | Gross profit | 37,356 | 147,186 | -74.6% | | Profit from operations | 5,159 | 115,472 | -95.5% | | Profit before tax | 4,696 | 115,472 | -95.9% | | Income tax expense | (1,413) | (243) | +481.5% | | Profit for the period from continuing operations | 3,283 | 115,229 | -97.2% | | (Loss)/Profit for the period from discontinued operation, net of tax | (68) | 1,880 | -103.6% | | Profit for the period | 3,215 | 117,109 | -97.2% | | Profit for the period attributable to owners of the Company | 3,215 | 112,023 | -97.1% | | Basic and diluted earnings per share (continuing and discontinued operations) | HK$0.80 cents | HK$28.01 cents | -97.1% | | Basic and diluted earnings per share (continuing operations) | HK$0.82 cents | HK$27.54 cents | -97.0% | - Total comprehensive income for the period significantly decreased from HK$125,361 thousand in 2018 to (HK$431) thousand in 2019, primarily due to exchange differences turning from gain to loss[13] Unaudited Condensed Consolidated Statement of Changes in Equity Total equity attributable to owners slightly decreased to HK$260,746 thousand for the nine months ended March 31, 2019, as profit was offset by negative exchange reserve movements and statutory reserve reduction from subsidiary disposal Condensed Consolidated Statement of Changes in Equity (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :--- | :--- | :--- | | At July 1 (audited) | 261,177 | 59,593 | | Profit for the period | 3,215 | 117,109 | | Exchange differences on translation of foreign operations | (3,646) | 8,252 | | Total comprehensive income for the period | (431) | 125,361 | | Disposal of a subsidiary | – | 28 | | Transfer to statutory reserve | – | – | | Acquisition of non-controlling interests | – | – | | At March 31 (unaudited) | 260,746 | 184,982 | - Statutory reserve is transferred from profit according to relevant PRC laws and regulations, with usage restrictions for offsetting losses or increasing capital while maintaining minimum capital ratios[16][19] - Exchange reserve reflects exchange differences arising from the translation of net assets of foreign operations, recognized directly in other comprehensive income and reclassified to profit or loss upon disposal of foreign operations[17][20] - Other reserves originate from the difference between the issue price of shares for the GEM listing reorganization and the nominal value of subsidiary share capital[18][21] Notes to The Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This section details the basis of preparation, revenue sources, profit before tax, income tax expense, discontinued operations impact, and earnings per share calculation for the unaudited condensed consolidated financial statements for the nine months ended March 31, 2019, confirming no dividends declared 1. BASIS OF PREPARATION AND BASIS OF PRESENTATION The Group's unaudited condensed consolidated financial statements are prepared on a historical cost basis under HKFRSs, reviewed by the audit committee but not audited, with no significant impact from new or revised HKFRSs - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards (HKFRSs) issued by the Hong Kong Institute of Certified Public Accountants and Chapter 18 of the GEM Listing Rules[23][26] - Preparation adopts the historical cost basis and has been reviewed by the audit committee but not audited by the company's auditors[28][31] - The adoption of new and revised HKFRSs has no significant impact on the financial statements, and there have been no material changes in accounting policies[25][26] 2. REVENUE The Group's revenue primarily derives from providing internet advertising agency services - Revenue mainly refers to income from providing internet advertising agency services[29][32] 3. PROFIT BEFORE TAX The Group's profit before tax is determined after deducting items such as depreciation of property, plant, and equipment Profit Before Tax Deductions (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 1,114 | 489 | 4. INCOME TAX EXPENSE The Group's income tax expense includes Hong Kong profits tax (16.5%) and PRC corporate income tax (25%), with the expense significantly increasing to HK$1,413 thousand for the period - Hong Kong profits tax rate is 16.5%, and PRC corporate income tax rate is 25%[35][36] Income Tax Expense (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong profits tax | 1,413 | 436 | | PRC corporate income tax | – | 243 | | Income tax expense for the period | 1,413 | 679 | 5. DISCONTINUED OPERATION On February 18, 2019, the company sold its leather products business (Odella Group) for HK$10,000,000, classifying it as a discontinued operation, which recorded a loss of HK$1,677 thousand for the nine months ended March 31, 2019 - The company disposed of its entire interest in Odella International Limited, which operates the leather products business, for HK$10,000,000 on February 18, 2019, classifying it as a discontinued operation[39][41] Results of Discontinued Operation (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :--- | :--- | :--- | | Turnover | 37,229 | 42,940 | | Cost of sales | (24,226) | (28,438) | | Gross profit | 13,003 | 14,502 | | (Loss)/Profit before tax | (1,652) | 2,316 | | (Loss)/Profit for the period from discontinued operation | (1,677) | 1,880 | Net Assets of Odella Group at Disposal Date | Net Asset Item | Amount (HK$ thousand) | | :--- | :--- | | Property, plant and equipment | 514 | | Bank and cash balances | 11,274 | | Trade and other receivables | 2,979 | | Inventories | 4,384 | | Trade and other payables | (9,896) | | Current tax liabilities | (859) | | Deferred tax liabilities | (5) | | Total net assets disposed of | 8,391 | | Gain on disposal | 1,609 | | Total consideration | 10,000 | 6. EARNING PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY Basic earnings per share (continuing and discontinued operations) attributable to owners for the nine months ended March 31, 2019, significantly decreased to HK$0.80 cents from HK$28.01 cents, with no dilutive potential ordinary shares Basic Earnings Per Share Calculation Data (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :--- | :--- | :--- | | Profit for basic EPS (continuing and discontinued operations) | 3,215 | 112,023 | | Profit for basic EPS (continuing operations) | 3,283 | 110,143 | | (Loss)/Profit for basic (loss)/earnings per share (discontinued operation) | (1,677) | 1,880 | Earnings Per Share (Nine Months Ended March 31) | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | (Loss)/Earnings per share from discontinued operation – Basic | (0.42) HK cents | 0.47 HK cents | - Diluted earnings per share for the nine months ended March 31, 2019, and 2018, were the same as basic earnings per share, as there were no dilutive potential ordinary shares outstanding during the periods[59][62] 7. DIVIDENDS No dividends were declared or paid by the company for the periods ended March 31, 2019, and 2018 - No dividends were declared or paid by the company for the periods ended March 31, 2019, and 2018[60][63] Management Discussion and Analysis This section reviews the Group's business performance and financial position for the nine months ended March 31, 2019, highlighting a focus on internet advertising agency services, suspension of mobile payment support, and disposal of leather products business due to policy and market changes, resulting in significant revenue and profit decline, with future investment planned for internet advertising INTERIM DIVIDEND The Board does not recommend the payment of any interim dividend for the nine months ended March 31, 2019 - The Board does not recommend the payment of any interim dividend for the nine months ended March 31, 2019 (2018: nil)[65][68] INTRODUCTION The Group is a diversified company primarily engaged in internet advertising agency services and the production and sale of own-brand leather products for clients during the period - The Group's main businesses are internet advertising agency services and the production and sale of leather products[66][69] BUSINESS REVIEW The Group's internet advertising agency services, primarily through Dongrun Network and Wanxing Network, generated HK$185 million and HK$39 million in revenue respectively, while Aiwanyue's business significantly decreased, mobile payment support was suspended due to policy changes, and the loss-making leather products business was sold - Dongrun Network (Mainland China) provides internet advertising agency services, achieving approximately HK$185 million in operating revenue during the period, with key clients including Tencent, Toutiao, and Dianping[67][70] - Aiwanyue's (Mainland China) mobile internet advertising business significantly decreased due to changes in the domestic legal environment and to mitigate policy risks, recording approximately HK$1 million in operating revenue during the period[72][76] - Wanxing Network (Overseas) develops the overseas internet advertising market through its own platform and global mainstream platforms like Facebook and Yahoo, recording approximately HK$39 million in operating revenue during the period[73][76] - Mobile payment technical support services have been suspended to mitigate operational risks due to new laws and regulations and tightening government supervision in China[74][77] - The production and sale of leather products business experienced declining profits and recorded a net loss due to deteriorating market conditions and price competition, leading the Group to decide on its disposal to prevent further losses and streamline operations[75][78] OUTLOOK The Group plans to capitalize on internet advertising opportunities, increase investment, and expand its client base and business to deliver higher shareholder returns - The Group will seize development opportunities in the internet advertising industry, increase investment, and expand new clients and businesses to bring higher returns to shareholders[80][85] FINANCIAL REVIEW For the nine months ended March 31, 2019, the Group experienced significant declines in revenue and profit due to suspended mobile payment services, reduced mainland China mobile internet advertising, and narrower internet advertising agency margins, alongside increased operating expenses, decreased cash, new financing, and a higher debt-to-equity ratio Revenue The Group's revenue for the nine months ended March 31, 2019, was approximately HK$227 million, a 23% decrease from HK$294 million, primarily due to the suspension of mobile payment support and reduction in mainland China mobile internet advertising to mitigate operational or policy risks Revenue Change (Nine Months Ended March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 227 | 294 | -23% | - The decrease in revenue was mainly due to the suspension of mobile payment technical support services and the reduction of mainland China mobile internet advertising business to avoid potential operational or policy risks[82][86] Cost of Sales and Gross Profit For the nine months ended March 31, 2019, cost of sales increased by approximately 30% to HK$190 million, and gross profit margin significantly declined from 50% to 16%, mainly due to narrower margins in mainland China internet advertising agency services Cost of Sales and Gross Profit Margin Change (Nine Months Ended March 31) | Indicator | 2019 | 2018 | YoY Change | | :--- | :--- | :--- | :--- | | Cost of sales | Approx. HK$190 million | (Not provided) | Increased by approx. 30% | | Gross profit margin | Approx. 16% | Approx. 50% | Decreased by 34 percentage points | - The decline in gross profit margin is primarily attributable to narrower profit margins for internet advertising agency services in mainland China[84][87] Other Income and Other Gain/Loss, net For the nine months ended March 31, 2019, other income and other gain/loss, net, significantly increased to approximately HK$2 million from HK$0.1 million, primarily comprising interest income, net exchange differences, and reversal of impairment losses on trade receivables Other Income and Other Gain/Loss, net (Nine Months Ended March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | | :--- | :--- | :--- | | Other income and other gain/loss, net | Approx. 2 | Approx. 0.1 | - Primarily includes interest income, net exchange differences, and reversal of impairment losses on trade receivables[89][93] Selling and Distribution Expenses For the nine months ended March 31, 2019, selling and distribution expenses slightly increased to approximately HK$5.6 million, mainly due to higher salaries and wages for internet advertising agency services Selling and Distribution Expenses Change (Nine Months Ended March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | | :--- | :--- | :--- | | Selling and distribution expenses | Approx. 5.6 | Approx. 5.3 | - The increase in selling expenses is mainly due to higher salaries and wages incurred for internet advertising agency services during the period[90][94] Administrative Expenses For the nine months ended March 31, 2019, administrative expenses increased by approximately HK$1 million to HK$28 million, primarily due to higher salaries, wages, and office administrative expenses Administrative Expenses Change (Nine Months Ended March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | | :--- | :--- | :--- | | Administrative expenses | Approx. 28 | Approx. 27 | - The increase in administrative expenses is primarily attributable to higher salaries and wages and office administrative expenses[92][96] Taxation The Group's income tax comprises Hong Kong profits tax (16.5%) and PRC corporate income tax (25%), with certain subsidiaries in Horgos Economic Development Zone enjoying a five-year corporate income tax exemption - Hong Kong profits tax rate is 16.5%, and PRC corporate income tax rate is 25%[97][102] - Subsidiaries registered in Horgos Economic Development Zone enjoy a five-year corporate income tax exemption policy[97][102] Profit for the Period For the nine months ended March 31, 2019, the Group recorded a profit of approximately HK$3 million, a significant decrease of HK$114 million from HK$117 million, primarily due to narrower internet advertising agency margins and reduced net profit from mobile payment technical support services Profit for the Period Change (Nine Months Ended March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | YoY Change (HK$ million) | | :--- | :--- | :--- | :--- | | Profit for the period | Approx. 3 | Approx. 117 | Decreased by approx. 114 | - The significant decrease in profit is mainly due to narrower profit margins from providing internet advertising agency services and reduced net profit from mobile payment technical support services[98][103] Financial Position, Liquidity and Financial Resources The Group maintains prudent cash and financial management policies; as of March 31, 2019, total cash and bank balances decreased significantly to HK$33 million, primarily due to shareholder repayment, while new bank facilities of HK$31 million and unsecured third-party loans of HK$10 million were obtained, leading to a rise in the debt-to-equity ratio from 0.19% to approximately 9% Liquidity and Borrowing Situation | Indicator | March 31, 2019 (HK$ million) | June 30, 2018 (HK$ million) | | :--- | :--- | :--- | | Cash and bank balances (including pledged bank deposits) | Approx. 33 | Approx. 114 | | Bank facilities | 31 | Nil | | Total bank borrowings | 12 | Nil | | Unsecured third-party loans | 10 | Nil | | Total debt to equity ratio | Approx. 9% | 0.19% | - The decrease in cash and bank balances is mainly due to the repayment of amounts due to a shareholder[100][104] - Floating rate bank borrowings bear interest at annual rates ranging from 5.48% to 5.63%[101][104] - Unsecured loans bear interest at a fixed annual rate of 3%[106][111] Financial Management Policies The Group's risk management policies aim to minimize adverse impacts from currency and interest rate risks, with minimal foreign exchange exposure due to cash denominated in USD, HKD, and RMB, and no interest rate hedging contracts due to low prevailing rates, though interest rate risk is closely monitored - The Group faces currency risk and interest rate risk, with risk management policies designed to minimize adverse impacts[108][112] - Cash is primarily denominated in USD, HKD, and RMB, resulting in minimal foreign exchange risk for the Group[109][110][112] - Due to low prevailing interest rates, the Group has not entered into any interest rate hedging contracts or derivative financial instruments but closely monitors related interest rate risks[113] Charge Over Assets of the Group As of March 31, 2019, the Group's bank facilities were secured by pledged bank deposits of approximately HK$8 million, an increase from HK$1 million as of June 30, 2018 Pledged Bank Deposits (As of March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | | :--- | :--- | :--- | | Pledged bank deposits | Approx. 8 | Approx. 1 | Capital Commitments and Contingent Liabilities As of March 31, 2019, the Group had no significant capital commitments or contingent liabilities - As of March 31, 2019, the Group had no significant capital commitments (June 30, 2018: nil)[115][119] - As of March 31, 2019, the Group had no significant contingent liabilities (June 30, 2018: nil)[115][119] MATERIAL ACQUISITIONS AND DISPOSALS On February 18, 2019, the company completed the disposal of the entire issued share capital of Odella International Limited for HK$10,000,000, with no material acquisitions by the Group during the period - The company completed the disposal of the entire issued share capital of Odella International Limited for HK$10,000,000 on February 18, 2019[116][120] - The Group had no material acquisitions for the nine months ended March 31, 2019[117][121] Other Information This section discloses interests of directors, chief executives, and substantial shareholders in company shares, confirms no competing business interests for directors and controlling shareholders, no listed securities transactions by the company or its subsidiaries during the period, and outlines the audit committee's composition and review of the quarterly results report DIRECTORS AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES As of March 31, 2019, Mr. Zhu Yongjun held 45.49% of the company's shares through a controlled corporation, while Ms. Wang Fei beneficially owned 10.00% of the shares Directors' Interests in the Company's Shares (As of March 31, 2019) | Director's Name | Capacity | Interest in Shares | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhu Yongjun | Interest in controlled corporation | 181,995,955 (L) | 45.49% | | Ms. Wang Fei | Beneficial owner | 40,000,000 (L) | 10.00% | - Mr. Zhu Yongjun's interest is held through his 30% interest in Power View Group Limited (PVG), which holds 45.49% of the company's shares[127][130] INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS As of March 31, 2019, Power View Group Limited beneficially held 45.49% of the company's shares, with several entities holding between 45.49% and 57.99% through controlled corporations, and Mason Resources Finance Limited and Mason Group Holdings Limited holding 55.50% Substantial Shareholders' Interests in the Company's Shares (As of March 31, 2019) | Shareholder Name | Capacity | Interest in Shares | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Power View Group Limited | Beneficial owner | 181,995,955 (L) | 45.49% | | United Conquer Limited | Interest in controlled corporation | 181,995,955 (L) | 45.49% | | Shanghai Hutong Investments Centre (Limited Partnership)* | Beneficial owner | 50,000,000 (L) | 12.50% | | Shanghai Angell Asset Management Company Limited* | Interest in controlled corporation | 231,995,955 (L) | 57.99% | | Zhongtian Urban Development Group Shanghai Equity Investment Fund Partnership (Limited Partnership)* | Interest in controlled corporation | 231,995,955 (L) | 57.99% | | Guiyang Jinrong Konggu Company Limited* | Interest in controlled corporation | 231,995,955 (L) | 57.99% | | Zhongtian Urban Development Group Limited* | Interest in controlled corporation | 231,995,955 (L) | 57.99% | | Jin Shiqi Guoji Holdings Company Limited* | Interest in controlled corporation | 231,995,955 (L) | 57.99% | | Mason Resources Finance Limited | Person with security interest in shares | 221,995,955 (L) | 55.50% | | Mason Group Holdings Limited | Interest in controlled corporation | 221,995,955 (L) | 55.50% | - United Conquer Limited's deemed interest is held through its 70% equity interest in Power View Group Limited[140] - Shanghai Hutong Investments Centre (Limited Partnership)'s deemed interest is held through its 100% equity interest in United Conquer Limited[140] DIRECTORS AND CONTROLLING SHAREHOLDERS' INTEREST IN COMPETING BUSINESS For the nine months ended March 31, 2019, directors were unaware of any competing business interests or conflicts of interest held by directors or controlling shareholders - Directors were unaware of any business or interest held by directors or controlling shareholders that competes or may compete with the Group's business[142][145] PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities for the nine months ended March 31, 2019 - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities for the nine months ended March 31, 2019[143][146] AUDIT COMMITTEE AND REVIEW OF FINANCIAL STATEMENTS The Audit Committee, comprising three independent non-executive directors, was established under GEM Listing Rules and reviewed the quarterly results report, recommending approval of the unaudited consolidated results for the nine months ended March 31, 2019 - The Audit Committee was established in accordance with the GEM Listing Rules, comprising Mr. Chan Chak (Chairman), Ms. Ji Fang, and Mr. Gao Shuo, all independent non-executive directors[144][147] - The Audit Committee has reviewed the quarterly results report with management and recommended its approval to the Board[144][147] - The consolidated results for the nine months ended March 31, 2019, have not been audited by the company's auditors[149]