新华联合投资(08159) - 2020 Q1 - 季度财报

Report Overview GEM Listing Features and Disclaimer The report emphasizes GEM's high-risk nature for investors, with HKEX disclaiming responsibility and directors affirming data accuracy - The GEM market is positioned as a listing platform for small and medium-sized companies with higher investment risks, and investors should understand potential risks and invest cautiously[2] - Hong Kong Exchanges and Clearing Limited and the Stock Exchange are not responsible for the content of this report, make no representation, and expressly disclaim any liability for any loss[2] - The company's directors collectively and individually accept full responsibility for the information in this report, confirming its accuracy, completeness, and absence of misleading or fraudulent content[3] Financial Performance Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group reported a HK$8,699 thousand loss for the period, a significant decline from profit, driven by a 29.3% revenue drop and 56.7% gross profit decrease, leading to a 1.32 HK cents basic loss per share Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the three months ended March 31) | Metric | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--------------------------- | :------------------ | :------------------ | :--------- | | Revenue | 55,390 | 78,369 | -29.3% | | Cost of sales | (50,696) | (67,525) | -24.9% | | Gross profit | 4,694 | 10,844 | -56.7% | | Other income | 854 | 913 | -6.57% | | Profit (Loss) before tax | (8,279) | 1,168 | -809.0% | | Income tax expense | (420) | (723) | -41.9% | | Profit (Loss) for the period | (8,699) | 445 | -2054.8% | | Earnings (Loss) per share | (1.32) HK cents | 0.07 HK cents | -1985.7% | - Total comprehensive income (expense) for the period was (HK$7,703 thousand), compared to HK$777 thousand in the same period last year, primarily impacted by the loss for the period[6] Notes to the Financial Statements These notes provide essential background on the company's accounting policies, revenue recognition, segment data, tax treatment, dividends, earnings per share, and reserve changes General Information and Basis of Presentation The Company, an investment holding entity listed on GEM since 2002, presents its consolidated financial statements in HKD, with USD as its functional currency, adhering to GEM Listing Rules and HKFRS - The Company is an investment holding company, with its shares listed on GEM on January 4, 2002[8][9] - The consolidated financial statements are presented in Hong Kong dollars, with the functional currency being US dollars, prepared in accordance with GEM Listing Rules and Hong Kong Financial Reporting Standards[8][9] Significant Accounting Policies The unreviewed three-month consolidated financial statements are prepared using historical cost, with investment properties at fair value, consistent with 2019 policies - The financial statements are prepared under the historical cost convention, with investment properties measured at fair value[10] - Accounting policies are consistent with those in the 2019 annual financial statements[10] Revenue Recognition Revenue is recognized from connector product sales (net of discounts) and architectural services, based on completion stage or cost recovery, with immediate expense recognition for expected losses - Revenue refers to the sale of connector products (used in computers, consumer electronics, communications, automotive electronics, medical equipment, etc.) and the provision of subcontracting services, recognized after deducting discounts and returns[11] - Revenue and costs from comprehensive architectural services are recognized based on contract pricing and stage of completion; if results cannot be reliably estimated, they are recognized when costs are likely to be recovered[14] - When total contract costs are likely to exceed total contract revenue, expected losses are immediately recognized as expenses[15] Segment Information The Group's segments, based on customer type and business, saw reduced sales across OEM, retail, and architectural services, with South Korea experiencing the most significant regional decline Major Customer Information (For the three months ended March 31) | Customer Category | 2020 (HK$ thousand) | 2020 (%) | 2019 (HK$ thousand) | 2019 (%) | | :------------------------------------- | :------------------ | :------- | :------------------ | :------- | | OEM Customers | 28,846 | 52.1 | 42,162 | 53.8 | | Retail Distributors | 20,523 | 37.0 | 26,661 | 34.0 | | Provision of comprehensive architectural services | 6,021 | 10.9 | 9,546 | 12.2 | | Total | 55,390 | 100.0| 78,369 | 100.0| Sales Analysis by Customer Market Region (For the three months ended March 31) | Region | 2020 (HK$ thousand) | 2020 (%) | 2019 (HK$ thousand) | 2019 (%) | | :-------------------------- | :------------------ | :------- | :------------------ | :------- | | United States of America | 15,112 | 27.3 | 15,439 | 19.7 | | Japan | 13,583 | 24.5 | 18,337 | 23.4 | | South Korea | 9,910 | 17.9 | 24,808 | 31.7 | | People's Republic of China | 7,591 | 13.7 | 9,901 | 12.6 | | Taiwan | 6,225 | 11.2 | 6,835 | 8.7 | | Other regions | 2,969 | 5.4 | 3,049 | 3.9 | | Total | 55,390 | 100.0| 78,369 | 100.0| Profit (Loss) Before Tax The Group reported a HK$8,279 thousand loss before tax for the period, a significant decline from the prior year's profit, after accounting for depreciation and amortization Composition of Profit (Loss) Before Tax (For the three months ended March 31) | Metric | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :----------------------- | :------------------ | :------------------ | | Depreciation and amortization | 1,634 | 1,814 | - The loss before tax for the period was HK$8,279 thousand, compared to a profit of HK$1,168 thousand in the same period last year[6] Income Tax Expense Income tax expense decreased to HK$420 thousand, primarily China enterprise income tax, with no Hong Kong profits tax or deferred tax provisions due to no assessable profits or significant timing differences - Income tax expense for the period was approximately HK$420 thousand, a decrease from HK$723 thousand in the same period last year[40] - The tax provision made refers to China enterprise income tax; no Hong Kong profits tax provision was made as there were no assessable profits in Hong Kong[20] - No deferred tax provision was made for the period or at the reporting date due to the absence of significant timing differences[20] Dividends The Board does not recommend any dividend payment for the period, consistent with the prior year - The Board does not recommend the payment of any dividend for the period (for the three months ended March 31, 2019: nil)[23] Earnings (Loss) Per Share Basic loss per share was 1.32 HK cents, a decline from prior year's earnings, calculated from a HK$8,441 thousand loss attributable to shareholders and 640 million weighted average shares - Basic loss per share for the period was 1.32 HK cents, compared to earnings per share of 0.07 HK cents in the same period last year[6][24] - Loss per share is calculated based on a loss attributable to shareholders of approximately HK$8,441 thousand and a weighted average of 640,000,000 shares[24] Reserves Group reserves changed due to a HK$8,441 thousand loss attributable to shareholders and a HK$996 thousand increase in exchange fluctuation reserve - Changes in the Group's reserves primarily include a loss attributable to shareholders of approximately HK$8,441 thousand (2019: profit of HK$445 thousand) and an increase in exchange fluctuation reserve of approximately HK$996 thousand (2019: increase of HK$332 thousand)[25] Management Discussion and Analysis Business Review Both the electronics and architectural design businesses experienced significant revenue declines due to the COVID-19 pandemic, leading management to adopt a conservative outlook and implement mitigation strategies Electronics Business The electronics business, impacted by COVID-19 on global demand and China's production, saw revenue decrease by 28.3% to HK$49,369 thousand, prompting efforts to fulfill orders and launch high-value products - The electronics business primarily engages in the design, manufacturing, and sale of connector products, and is one of the world's leading VGA cable manufacturers[28] - During the period, the global COVID-19 pandemic adversely affected global consumer demand for electronic products and the Group's production capacity and efficiency in China[28] Electronics Business Revenue (For the three months ended March 31) | Metric | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :------------- | :------------------ | :------------------ | :--------- | | Business Revenue | 49,369 | 68,823 | -28.3% | - The Group has made every effort to fulfill orders, maintain close contact with customers, and launch high-value-added products to mitigate negative impacts[28] Architectural Design Business The architectural design business, despite prior growth, saw revenue decline by 36.9% to HK$6,021 thousand due to COVID-19-related project suspensions in China, leading to a conservative outlook - The architectural design business has shown satisfactory revenue growth since its launch in Q3 2017, but during the period, it was impacted by the COVID-19 pandemic, leading to the suspension of design projects in China[32] Architectural Design Business Revenue (For the three months ended March 31) | Metric | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :------------- | :------------------ | :------------------ | :--------- | | Business Revenue | 6,021 | 9,546 | -36.9% | - Given the adverse and uncertain economic conditions, the directors hold a conservative view on the Group's future quarterly performance[32] Financial Review The Group experienced a 29.3% turnover decrease, 56.7% gross profit reduction, and a 5.3 percentage point drop in gross margin to 8.5%, driven by pandemic-related production scale and fixed costs, alongside reduced selling expenses, increased administrative expenses, and lower income tax Turnover Turnover for the period was approximately HK$55,390 thousand, representing a 29.3% decrease from the prior year Turnover (For the three months ended March 31) | Metric | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :------- | :------------------ | :------------------ | :--------- | | Turnover | 55,390 | 78,369 | -29.3% | Gross Profit Gross profit decreased by 56.7% to HK$4,694 thousand, with gross margin falling from 13.8% to 8.5%, mainly due to reduced production scale and unreduced fixed costs during COVID-19 Gross Profit and Gross Margin (For the three months ended March 31) | Metric | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :----------- | :------------------ | :------------------ | :--------- | | Gross profit | 4,694 | 10,844 | -56.7% | | Gross margin | 8.5% | 13.8% | -5.3pp | - The decrease in gross margin was primarily due to reduced production scale during the COVID-19 pandemic, while some fixed costs could not be lowered[34] Other Income Other income for the period was approximately HK$854 thousand, a slight decrease from the prior year Other Income (For the three months ended March 31) | Metric | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--------- | :------------------ | :------------------ | :--------- | | Other income | 854 | 913 | -6.57% | Selling and Distribution Expenses Selling and distribution expenses decreased by 31.4% to HK$1,466 thousand, primarily attributable to reduced revenue during the period Selling and Distribution Expenses (For the three months ended March 31) | Metric | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :------------------------- | :------------------ | :------------------ | :--------- | | Selling and distribution expenses | 1,466 | 2,138 | -31.4% | - The decrease in selling and distribution expenses was due to reduced revenue during the period[36] Administrative Expenses Administrative expenses increased by approximately 23.0% to HK$10,163 thousand for the period Administrative Expenses (For the three months ended March 31) | Metric | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :----------------- | :------------------ | :------------------ | :--------- | | Administrative expenses | 10,163 | 8,261 | +23.0% | Finance Costs The Group incurred no finance costs during the current or prior period - The Group incurred no finance costs during the period or for the three months ended March 31, 2019[38] Income Tax Expense Income tax expense for the period was approximately HK$420 thousand, a decrease from the prior year Income Tax Expense (For the three months ended March 31) | Metric | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--------------- | :------------------ | :------------------ | :--------- | | Income tax expense | 420 | 723 | -41.9% | Equity and Corporate Governance Directors' and Chief Executive's Interests As of March 31, 2020, Mr. Wang Lifeng, through PT Design Group Holdings Limited, was the largest single shareholder, holding 55.57% of the issued share capital, with no other directors or executives holding interests Directors' and Chief Executive's Interests in Shares (As at March 31, 2020) | Name of Director/Entity | Capacity | Number of issued ordinary shares held | Percentage of the Company's issued share capital | | :------------------------------- | :-------------------------- | :------------------------------------ | :----------------------------------------------- | | Mr. Wang Lifeng | Interest in controlled corporation | 355,620,000 | 55.57% | | Wise Thinker Holdings Limited | Interest in controlled corporation | 355,620,000 | 55.57% | | PT Design Group Holdings Limited | Beneficial owner | 355,620,000 | 55.57% | - Mr. Wang Lifeng indirectly wholly owns 355,620,000 shares through PT Design Group Holdings Limited[41] - Save as disclosed above, no other directors, chief executives, or their associates held any interests or short positions in any shares or related shares[42] Substantial Shareholders' Interests As of March 31, 2020, Mr. Pang Kwok Sai, through Modern Wealth Assets Limited, held 11.63% of the Company's issued share capital, making him a substantial shareholder Substantial Shareholders' Interests in Shares (As at March 31, 2020) | Name of Shareholder | Capacity | Number of issued ordinary shares held | Percentage of the Company's issued share capital | | :--------------------------- | :-------------------------- | :------------------------------------ | :----------------------------------------------- | | Mr. Pang Kwok Sai | Interest in controlled corporation | 74,403,000 | 11.63% | | Modern Wealth Assets Limited | Beneficial owner | 74,403,000 | 11.63% | - Mr. Pang Kwok Sai is deemed to be interested in 74,403,000 shares held by his wholly-owned company, Modern Wealth Assets Limited[45] Share Option Scheme Adopted on December 13, 2001, the share option scheme incentivizes directors and employees, limiting grants to 30% of issued shares (1% per individual) with specific shareholder approval for substantial shareholders, and an exercise price based on market value or nominal value, with no options granted to date - The Company adopted a share option scheme on December 13, 2001, to incentivize directors and eligible employees[46] - The total number of shares involved in share options shall not exceed 30% of the issued shares, and grants to individuals shall not exceed 1%[46] - The exercise price is determined by the directors and shall not be less than the highest of the closing price of the shares on the date of grant, the average closing price for the five business days immediately preceding the date of grant, and the nominal value of the shares[48] - No share options have been granted by the Company under the scheme since its adoption[49] Arrangements for Share Transactions Apart from the share option scheme, no arrangements were made during the period for directors to benefit from purchasing shares or debentures of the Company or other entities - Save for the share option scheme, neither the Company nor any of its subsidiaries entered into any arrangements during the period that would enable directors to acquire benefits by purchasing shares or debentures of the Company or any other body corporate[50] Public Float and Compliance The Company maintained a sufficient public float and its directors confirmed compliance with GEM Listing Rules and the code of conduct for securities transactions - The Company maintained a sufficient public float throughout the period[51] - The directors confirmed that they have complied with the required standards of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules and the code of conduct for securities transactions by directors adopted by the Company throughout the period[53] Interests in Competing Businesses Mr. Wang Lifeng and former directors hold interests in architectural design entities, including PT Design Consulting, PT Shenzhen, and Shanghai PT, which compete with the Group, necessitating established conflict management mechanisms Directors' and Former Directors' Interests in Competing Businesses (As at March 31, 2020) | Name of Director and Former Director of the Company | Name of entity considered to be competing or potentially competing with the Group's business | Description of competing business | Nature of interest