中国科技产业集团(08111) - 2020 Q1 - 季度财报

About GEM Market and Report Declaration This section introduces the GEM market's characteristics, emphasizing its high investment risks and the disclaimers from HKEX and the Stock Exchange regarding report content GEM Market Characteristics and Risk Disclosure This section outlines the characteristics of the GEM market, emphasizing its high investment risks and potential volatility, and clarifies the disclaimer from HKEX and the Stock Exchange regarding report content - The GEM market is positioned as a listing platform for small and medium-sized companies with higher investment risks compared to the Main Board, and investors should understand the potential risks[1] - Hong Kong Exchanges and Clearing Limited and the Stock Exchange are not responsible for the content of this report, and the directors bear full responsibility for its accuracy and completeness[1] Operating Performance and Business Review This section provides an overview of the Group's quarterly financial performance and operational activities, highlighting revenue growth, reduced losses, and segment-specific business developments Quarterly Performance Summary For the three months ended June 30, 2019, the loss attributable to owners of the company significantly decreased, revenue grew substantially year-on-year, but gross profit margin declined, with a corresponding reduction in basic loss per share Comparison of Key Financial Indicators for Q2 2019 | Indicator | 2019 Q2 (RMB) | 2018 Q2 (RMB, Restated) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Loss attributable to owners of the company | approx. RMB 5.5 million | approx. RMB 13.3 million | Loss decreased by 58.6% | | Revenue | approx. RMB 25.8 million | approx. RMB 0.9 million | Increased by approx. 2,696.7% | | Gross profit margin | approx. 15.4% | approx. 34.2% | Decreased by 18.8 percentage points | | Basic loss per share | approx. 0.30 cents | approx. 0.93 cents | Loss decreased by 67.7% | Overall Business Review The Group's main businesses include solar product sales, new energy power system integration, ATM/printing system sales, and technical support services; the reduction in loss this quarter was primarily due to increased revenue, especially from solar product sales, and reduced administrative expenses, while the gross margin decline resulted from selling pre-fabricated solar products this period instead of higher-margin customized products from the prior year - The Group's principal businesses include sales of solar-related products, new energy power system integration, sales of self-service ATM systems and printing systems, and provision of hardware and software technical support services[6] - The reduction in loss was primarily due to increased revenue and decreased administrative expenses resulting from cost control policies[6] - Gross profit margin decreased to 15.4% (34.2% in the prior year period) due to the sale of pre-fabricated solar products this period, compared to customized products in the prior year period[8] Comparison of Selling and Administrative Expenses | Indicator | 2019 Q2 (RMB) | 2018 Q2 (RMB, Restated) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Selling expenses | approx. RMB 0.6 million | approx. RMB 0.7 million | Decreased by approx. 14.7% | | Administrative expenses | approx. RMB 6.0 million | approx. RMB 7.7 million | Decreased by approx. 22.7% | Segment Business Analysis This section details the operational performance of the Group's business segments, with solar-related product sales being the primary revenue contributor this quarter, while new energy power system integration, despite significant project progress, did not recognize revenue, and ATM/printing system sales and technical support services generated no revenue due to business restructuring - Revenue from sales of solar-related products reached RMB 25.8 million, accounting for 100% of the Group's total revenue, a significant increase from the prior year period[9] - The new energy power system integration business generated no revenue this quarter, but the Zhangbei project construction is ongoing, with revenue expected to be recognized next quarter[11][13] - Sales of self-service ATM systems and printing systems, and provision of hardware and software technical support services, both generated no revenue this quarter due to business restructuring[14][15] Sales of Solar-Related Products This segment details the Group's solar-related product sales, including photovoltaic components and technical services, which were the sole revenue contributor this quarter - The business of selling solar-related products includes photovoltaic brackets, solar trackers, power station fences, and related R&D, sales, and technical consulting services[9] Revenue from Sales of Solar-Related Products | Indicator | 2019 Q2 (RMB) | 2018 Q2 (RMB, Restated) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue from sales of solar-related products | approx. RMB 25.8 million | approx. RMB 0.9 million | Increased by approx. 2,766.7% | | Percentage of total Group revenue | 100.0% | 100.0% | No change | New Energy Power System Integration Business This segment outlines the Group's new energy power system integration efforts, including progress on the Zhangbei project, despite no revenue recognition this quarter - The Chinese government continues to support the development of the solar industry, and the Group will continue to seek solar power generation projects and new energy power system integration services[10][11] - Construction of the Zhangbei Phase I 100MWp project is ongoing, with subcontracting and engineering consulting contracts approximately 22.0% and 60.0% complete, respectively[11] - The new energy power system integration business generated no revenue this quarter, with recognition expected next quarter[13] Sales of Self-Service ATM Systems and Printing Systems This segment reports no revenue from sales of self-service ATM and printing systems this quarter due to business restructuring, with ongoing discussions for new contracts - Sales of self-service ATM systems and printing systems generated no revenue this quarter, primarily due to business restructuring[14] - The Group is discussing new contracts with potential customers[14] Provision of Hardware and Software Technical Support Services This segment indicates no revenue from hardware and software technical support services this quarter, primarily due to business restructuring - Provision of hardware and software technical support services generated no revenue this quarter, primarily due to business restructuring[15] Major Investments, Acquisitions, and Disposals During the review period, the Group did not undertake any major investments or significant acquisitions and disposals of subsidiaries - During the review period, the Group had no major investments or significant acquisitions and disposals of subsidiaries[16] Financial Position and Resources This section reviews the Group's liquidity, financial resources, and treasury policies, including cash balances and financing strategies Liquidity, Financial Resources, and Treasury Policy As of June 30, 2019, the Group's cash and bank balances increased to approximately RMB 3.1 million from March 31, with no bank overdrafts, and primarily relies on internal cash flow and borrowings for business financing Cash and Bank Balances | Indicator | 2019 June 30 (RMB) | 2019 March 31 (RMB) | | :--- | :--- | :--- | | Cash and bank balances | approx. RMB 3.1 million | approx. RMB 2.6 million | - The Group finances its operations through internally generated cash flows and borrowings[19] Corporate Governance and Significant Matters This section covers significant corporate governance matters and events post-reporting period, including auditor changes, director appointments, and committee reorganizations Change of Auditor Tianqi CPA Limited resigned as the company's auditor on May 10, 2019, due to a change in business strategy, with the Board and Audit Committee confirming no disagreement with Tianqi, and Deloitte Touche Tohmatsu was appointed as the new auditor on May 24, 2019 - Tianqi CPA Limited resigned as the company's auditor on May 10, 2019, due to a change in business strategy[20] - The Board and Audit Committee confirmed no disagreement with Tianqi[21] - Deloitte Touche Tohmatsu was appointed as the new auditor on May 24, 2019[21] Post-Reporting Period Events Post-reporting period, significant events occurred including the sale of shares by a major shareholder, the appointment of a new executive director, and the reorganization of the corporate governance committee, which may impact the company's equity structure and governance - Major shareholder Baihao Investment Limited sold approximately 11.87% of its shares, ceasing to be a major shareholder after the sale[23][24] - Mr. Xie Wenjie, the Chief Financial Officer, was appointed as an Executive Director and Chairman of the Corporate Governance Committee, which has been reorganized[25][28] Sale of Shares by Major Shareholder and Executive Director This section details the sale of shares by a major shareholder and executive director, impacting the company's ownership structure - Major shareholder Baihao Investment Limited sold 217,766,038 company shares on July 11, 2019, representing approximately 11.87% of the issued share capital[23] - Following the sale, Baihao ceased to be a major shareholder[24] Appointment of Executive Director This section reports the appointment of the Chief Financial Officer as an Executive Director and Chairman of the Corporate Governance Committee - Mr. Xie Wenjie, the company's Chief Financial Officer, was appointed as an Executive Director and Chairman of the Corporate Governance Committee on July 12, 2019[25] Reorganization of Corporate Governance Committee This section outlines the reorganization of the Corporate Governance Committee, including changes in its composition - The Corporate Governance Committee was reorganized effective July 12, 2019, with Mr. Xie Wenjie as Chairman and Zhao Dongping, Yuan Qinglan, Hou Xiaobing, and Hu Xin as members[28] Business Outlook The Group will continue to focus on new energy power system integration, capitalize on solar industry opportunities, and seek downstream growth potential businesses to diversify revenue streams, while for ATM/printing systems, it will focus on existing customers, and hardware/software technical support services will only be provided on an as-needed basis without further investment, with future business plans financed through internal cash flow and borrowings - The Group will continue to seek solar power generation projects and new energy power system integration services, and identify other business opportunities to diversify into downstream solar businesses[29] - For ATM/printing systems, the focus will be on existing customers; no further investment is planned for hardware and software technical support services, which will only be provided on an as-needed basis[29] - Future business plans will be financed through internally generated cash flows and borrowings[30] Unaudited Consolidated Financial Statements This section presents the Group's unaudited consolidated financial statements, including the statement of profit or loss, notes, and statement of changes in equity Consolidated Statement of Profit or Loss and Other Comprehensive Income For the three months ended June 30, 2019, the Group's revenue significantly increased to RMB 25,758 thousand, gross profit rose to RMB 3,965 thousand, and the loss for the period narrowed substantially to RMB 4,067 thousand, with loss attributable to owners of the company at RMB 5,501 thousand Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2019 Q2 (RMB thousands) | 2018 Q2 (RMB thousands, Restated) | | :--- | :--- | :--- | | Revenue | 25,758 | 921 | | Cost of sales | (21,793) | (606) | | Gross profit | 3,965 | 315 | | Loss before tax | (3,726) | (10,412) | | Loss for the period | (4,067) | (13,240) | | Loss for the period attributable to owners of the Company | (5,501) | (13,294) | Notes to the Financial Statements The notes to the financial statements detail the basis of preparation, changes in accounting policies (including retrospective adjustments for presentation and functional currencies), composition of various income and expenses, income tax calculation, and the method for calculating loss per share - The financial statements have been retrospectively adjusted for both presentation and functional currencies, changing from HKD to RMB[37][40] - During the reporting period, the Group's revenue primarily came from sales of solar-related products, with other businesses generating no revenue[43] - As of June 30, 2019, both basic and diluted loss per share were RMB 0.30 cents[50] - The Board does not recommend the payment of a quarterly dividend for this period[52] Basis of Preparation This section describes the basis of preparation for the unaudited consolidated results, including accounting standards and retrospective currency adjustments - The unaudited consolidated results are prepared in accordance with Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards, and the GEM Listing Rules, using the historical cost convention[33][34] - The presentation currency has been retrospectively changed from HKD to RMB to better reflect the Group's performance[37] - The functional currency has been retrospectively changed from HKD to RMB, as the company's principal business operates in the economic environment of China[40] Details of Revenue and Other Income This section provides a detailed breakdown of the Group's revenue and other income sources for the reporting period Details of Revenue and Other Income | Revenue Source | 2019 Q2 (RMB thousands) | 2018 Q2 (RMB thousands, Restated) | | :--- | :--- | :--- | | Sales of solar-related products | 25,758 | 921 | | New energy power system integration business | – | – | | Sales of self-service ATM systems and printing systems | – | – | | Provision of hardware and software technical support services | – | – | | Bank interest income | 3 | 9 | | Total Revenue | 25,761 | 930 | Components of Loss Before Tax This section details the primary components contributing to the Group's loss before tax, including cost of inventories and fair value changes Major Deductions for Loss Before Tax | Expense Item | 2019 Q2 (RMB thousands) | 2018 Q2 (RMB thousands, Restated) | | :--- | :--- | :--- | | Cost of inventories | 21,793 | 606 | | Depreciation | 8 | 54 | | Fair value changes of financial assets at fair value through profit or loss | 301 | 960 | | Equity-settled share-based payments | – | 2,070 | Finance Costs This section outlines the Group's finance costs, including effective interest on convertible bonds and other loan interest Details of Finance Costs | Expense Item | 2019 Q2 (RMB thousands) | 2018 Q2 (RMB thousands, Restated) | | :--- | :--- | :--- | | Effective interest rate on convertible bonds | 971 | 894 | | Interest on other loans | 9 | 489 | | Total Finance Costs | 980 | 1,383 | Income Tax Expense This section details the Group's income tax expenses, including applicable tax rates for subsidiaries in different jurisdictions - Hong Kong subsidiaries had no assessable profits, and no income tax is levied in the Cayman Islands and British Virgin Islands[47][48] - Chinese subsidiaries are subject to a 25% corporate income tax rate, with some participating in the Western Development Program enjoying a 15% preferential rate[48] Income Tax Expense | Tax Source | 2019 Q2 (RMB thousands) | 2018 Q2 (RMB thousands, Restated) | | :--- | :--- | :--- | | Hong Kong profits tax | – | – | | PRC corporate income tax | 341 | 2,828 | | Income Tax | 341 | 2,828 | Loss Per Share This section presents the basic and diluted loss per share, explaining the anti-dilutive effect of convertible bonds Loss Per Share | Indicator | 2019 Q2 (RMB cents) | 2018 Q2 (RMB cents, Restated) | | :--- | :--- | :--- | | Basic loss per share | (0.30 cents) | (0.93 cents) | | Diluted loss per share | (0.30 cents) | (0.93 cents) | - Unexercised convertible bonds have an anti-dilutive effect, as their exercise or conversion would reduce the basic loss per share[50] Quarterly Dividends This section states the Board's recommendation regarding the payment of quarterly dividends - The Board does not recommend the payment of a quarterly dividend for the three months ended June 30, 2019[52] Consolidated Statement of Changes in Equity As of June 30, 2019, total equity attributable to owners of the company was RMB 21,826 thousand, a decrease from RMB 27,327 thousand on April 1, 2019, primarily due to the loss for the period Summary of Consolidated Statement of Changes in Equity | Indicator | 2019 June 30 (RMB thousands) | 2019 April 1 (RMB thousands) | | :--- | :--- | :--- | | Total attributable to owners of the Company | 21,826 | 27,327 | | Non-controlling interests | 14,068 | 12,634 | | Total | 35,894 | 39,961 | - As of June 30, 2019, accumulated losses attributable to owners of the company increased to RMB 237,893 thousand[53] Equity Disclosure and Corporate Governance This section provides disclosures on the equity interests of directors, chief executive, and substantial shareholders, along with other corporate governance matters Directors' and Chief Executive's Interests in Shares As of June 30, 2019, Executive Director Mr. Zhao Dongping and his spouse Ms. Yuan Qinglan held approximately 11.87% of the company's shares through controlled corporation Baihao Investment Limited, while Executive Director Mr. Hou Xiaobing beneficially owned approximately 7.15% of the company's shares and held 100% non-voting deferred share interests in two associated corporations Directors' and Chief Executive's Interests in the Company's Shares | Name of Director | Capacity | Number and Class of Securities | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhao Dongping | Interest of controlled corporation | 217,766,038 ordinary shares (L) | 11.87% | | Ms. Yuan Qinglan | Spouse's interest | 217,766,038 ordinary shares (L) | 11.87% | | Mr. Hou Xiaobing | Beneficial owner | 131,140,000 ordinary shares (L) | 7.15% | - Mr. Hou Xiaobing holds 100% non-voting deferred share interests in two associated corporations (E-Chuang Xinxing Limited and E-Chuang Investment Limited)[59] Interests of Substantial Shareholders and Other Persons in Shares As of June 30, 2019, besides the directors, Baihao Investment Limited and Chuangde Limited were substantial shareholders, holding approximately 11.87% and 11.79% of the company's shares respectively, with Ms. Sun Aihui indirectly holding approximately 11.79% through Chuangde Limited Interests of Substantial Shareholders and Other Persons in the Company's Shares | Name of Shareholder/Person | Number of Ordinary Shares | Capacity | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Baihao Investment Limited | 217,766,038 (L) | Beneficial owner | 11.87% | | Chuangde Limited | 216,363,636 (L) | Beneficial owner | 11.79% | | Ms. Sun Aihui | 216,363,636 (L) | Interest of controlled corporation | 11.79% | Audit Committee Established on December 13, 2000, the Audit Committee is responsible for handling audit matters within the Group, assessing the effectiveness of internal and external audits, and reviewing risk management and internal control systems, having reviewed and approved the unaudited consolidated results for this quarter - The Audit Committee is responsible for handling the Group's audit matters, assessing the effectiveness of internal and external audits, and reviewing risk management and internal control systems[64] - The Audit Committee has reviewed and approved the Group's unaudited consolidated results for the three months ended June 30, 2019[64] Directors' Competing Interests and Other Governance Matters For the three months ended June 30, 2019, no director or their close associates held any interests in businesses competing with the Group's operations, the company had no controlling shareholder, no shares were purchased, sold, or redeemed this quarter, and directors complied with the Model Code for Securities Transactions - No director or their close associates held any interests in businesses competing with the Group's operations[65] - The Company had no controlling shareholder for the three months ended June 30, 2019[66] - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any shares during this quarter[67] - The directors have complied with the Model Code for Securities Transactions[68]