瓦普思瑞元宇宙(08093) - 2020 Q3 - 季度财报

Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Performance Summary Profit from continuing operations surged to HKD 21.57 million, primarily due to 62.0% revenue growth and a HKD 41.29 million impairment reversal, despite a gross profit decline Condensed Consolidated Statement of Profit or Loss Summary (For the nine months ended March 31) | Metric | 2020 (HKD thousands) | 2019 (HKD thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 368,376 | 227,362 | +62.0% | | Cost of sales | (356,967) | (190,006) | +87.9% | | Gross profit | 11,409 | 37,356 | -69.5% | | Reversal of impairment loss on trade receivables | 41,287 | – | Not applicable | | Profit from operations | 25,466 | 5,159 | +393.6% | | Profit for the period | 21,569 | 3,215 | +570.9% | | Total comprehensive income | 14,847 | (431) | Switched to profit | | Basic earnings per share (from continuing operations) | 5.14 HK cents | 0.82 HK cents | +526.8% | - Despite significant revenue growth, gross margin was significantly pressured due to a faster increase in cost of sales (+87.9%), leading to a 69.5% year-on-year decline in gross profit[11] - The significant increase in operating profit and net profit was primarily attributable to a HKD 41.29 million net reversal of impairment loss on trade and other receivables, which was a non-recurring gain[11] Unaudited Condensed Consolidated Statement of Changes in Equity Equity Changes Summary Total equity attributable to owners increased to HKD 230 million from HKD 210 million at the beginning of the period, driven by HKD 21.57 million in profit and HKD 5 million from new share subscriptions, partially offset by HKD 6.72 million in foreign exchange differences Equity Changes Summary (For the nine months ended March 31, 2020) | Item | Amount (HKD thousands) | | :--- | :--- | | As at July 1, 2019 (Beginning of period) | 209,865 | | Subscription of new shares | 5,000 | | Profit for the period | 21,569 | | Exchange differences on translation of foreign operations | (6,722) | | Total comprehensive income for the period | 14,847 | | As at March 31, 2020 (End of period) | 229,712 | Notes to The Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Basis of Preparation and Changes in Accounting Policies Financial information is prepared under HKFRS, with HKFRS 16 'Leases' adopted for the first time using a simplified transition approach, leading to the recognition of HKD 22.73 million in right-of-use assets and lease liabilities, and related depreciation and finance costs - The Group first applied HKFRS 16 'Leases' during this interim period, replacing the previous HKAS 17[27][29] - Upon adoption of the new leasing standard, the Group recognized HKD 22,725 thousand in right-of-use assets and HKD 22,725 thousand in lease liabilities as of July 1, 2019[55][57] - For the nine months ended March 31, 2020, the Group recognized HKD 6,043 thousand in depreciation expense and HKD 772 thousand in finance costs due to the new standard, replacing previous operating lease expenses[63][64] Revenue, Costs, and Tax Analysis All group revenue is from internet advertising agency services, while finance costs surged 743% due to increased other borrowings and lease liabilities interest, resulting in minimal income tax expense due to a five-year corporate income tax exemption for certain Horgos subsidiaries - The Group's revenue is solely derived from providing internet advertising agency services[66][67] Finance Costs Breakdown (For the nine months ended March 31) | Item | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Interest on bank borrowings | 698 | 328 | | Interest on other borrowings | 2,335 | 135 | | Interest on lease liabilities | 772 | – | | Total | 3,805 | 463 | - Three of the Group's subsidiaries in Horgos, Xinjiang (Horgos Sifan, Horgos Banana Superman, Horgos Dongrun) benefit from a corporate income tax exemption from 2017 to 2020, resulting in an income tax expense of only HKD 96 thousand for the period[78][80][82] Earnings Per Share and Dividends Basic earnings per share attributable to owners significantly increased to 5.14 HK cents for the nine months ended March 31, 2020, from 0.82 HK cents in the prior period, with no dividends declared or paid - Basic and diluted earnings per share from continuing operations were 5.14 HK cents, compared to 0.82 HK cents in the prior period[12][83] - No dividends were declared or paid by the company during the reporting period[85][87] Management Discussion and Analysis Business Review and Outlook The Group focuses on internet advertising agency services in mainland China and overseas, achieving approximately 62.0% year-on-year sales growth through promotional measures despite a challenging macroeconomic environment and intensified competition, with plans to further invest in market expansion - The core business is internet advertising agency services, with primary clients located in mainland China[90][91][93] - Facing macroeconomic challenges and industry competition, the Group implemented promotional measures like increased rebates, achieving approximately 62.0% year-on-year sales growth[91][94] Revenue by Business Segment (For the nine months ended March 31, 2020) | Business Segment | Operating Entity | Revenue (HKD millions approx.) | | :--- | :--- | :--- | | Domestic Internet Advertising | Dongrun Network | 317.7 | | Overseas Internet Advertising | Wanxing Network (MSIM) | 49.0 | - Looking ahead, the Group plans to seize industry development opportunities, increase investment, and expand new clients, businesses, and revenue streams[98][100] Financial Review Revenue grew 62.0% to HKD 368 million, but gross margin sharply declined from 16.4% to 3.1% due to increased costs from promotions, while administrative expenses decreased 11.9%; profit for the period surged to HKD 21.6 million, mainly from a net reversal of impairment loss on receivables - Revenue increased 62.0% year-on-year to approximately HKD 368.4 million, primarily due to increased internet advertising agency service revenue[102][105] - Gross margin significantly decreased from 16.4% in the prior period to 3.1%, mainly due to the narrowing gross margin of internet advertising agency services in mainland China[104][106] - Administrative expenses decreased 11.9% year-on-year to HKD 25.1 million, primarily due to a HKD 2.3 million reduction in directors' salaries[110][111][114] - Profit for the period increased from HKD 3.2 million to HKD 21.6 million, primarily due to the net reversal of impairment loss on trade and other receivables[117][122] Financial Position, Liquidity and Financial Resources The Group maintains prudent financial management, with HKD 35.6 million in cash and bank balances and HKD 18.5 million in bank borrowings as of March 31, 2020, resulting in a healthy 9.1% debt-to-equity ratio, while currency risks from USD, HKD, and RMB are deemed minimal Key Financial Position Indicators | Metric | March 31, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Cash and bank balances (HKD millions) | 35.6 | 23.5 | | Total bank borrowings (HKD millions) | 18.5 | 8.1 | | Total debt to equity ratio | 9.1% | 7.0% | - The Group's treasury activities are centrally managed, with cash primarily held in banks in Hong Kong and mainland China[118][123] - The Group's bank financing is secured by pledged bank deposits of approximately HKD 5.9 million[133][137] Events After the Reporting Period Following the reporting period, the COVID-19 pandemic spread globally, prompting the Group to implement control measures like extended holidays and safe resumption of work, while continuously monitoring the situation and assessing its potential impact on financial position and operating results - The Group is actively responding to the impact of the COVID-19 pandemic, implementing control measures including extended holidays and safe resumption of work[136][140][141] - The company will continue to assess the pandemic's impact on its financial position and operating performance, maintaining vigilance in risk management[142][143][144] Other Information Directors' and Chief Executive's Interests and Substantial Shareholders As of March 31, 2020, Executive Directors Mr. Zhu Yongjun and Ms. Wang Fei held 9.14% and 9.52% of the company's shares respectively, with entities related to Zhongtian Financial Group collectively holding 33.24% equity Directors' Interests in the Company's Shares | Director Name | Capacity | Number of Shares Interested (Long Position) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhu Yongjun | Beneficial Owner | 38,398,786 | 9.14% | | Ms. Wang Fei | Beneficial Owner | 40,000,000 | 9.52% | - Among substantial shareholders, United Conquer Limited (UCL) holds 21.33% of shares, Seventh Road Holdings Limited holds 12.86%, and Shanghai Hutong Investment Center (Limited Partnership) holds 11.90%[154] - Through a series of controlled corporate interests, Jinshiqi International Holdings Co., Ltd. is deemed to hold 139,597,169 shares (long position), representing approximately 33.24% of the total share capital[156][161] Corporate Governance The company's audit committee, comprising three independent non-executive directors, has reviewed the quarterly results report, and neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities during the reporting period - The Audit Committee comprises three independent non-executive directors: Mr. Chen Ce (Chairman), Ms. Ji Fang, and Mr. Gao Shuo, and has reviewed the quarterly financial statements[165][168] - For the nine months ended March 31, 2020, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[164][167]