金慧科技(08295) - 2021 - 中期财报

Company and Report Overview Financial and Business Summary The company's mid-2020 loss narrowed due to investment and exchange gains, despite a sharp drop in advisory revenue and rising operating expenses from an acquisition 2020 Interim Key Financial Data Overview | Metric | Mid-2020 | Mid-2019 | | :--- | :--- | :--- | | Corporate Advisory Revenue | Approx. HK$0.3 million | HK$7.95 million | | Interest Income from Lending | HK$0.82 million | HK$0.75 million | | Net Investment Income | HK$2.84 million | (HK$1.33 million) | | Net Exchange Gain (Loss) | HK$8.12 million | (HK$11.79 million) | | Operating Expenses | HK$32.10 million | HK$21.59 million | | Loss for the Period | (HK$12.84 million) | (HK$19.09 million) | | Basic Loss Per Share | 0.36 HK cents | 0.54 HK cents | | Total Assets (at period end) | Approx. HK$713 million | - | | Net Assets (at period end) | Approx. HK$698 million | - | - Operating expenses increased by approximately 48.7% year-over-year, primarily due to professional fees and staff costs arising from an acquisition project[7] - The Board of Directors does not recommend the payment of an interim dividend for mid-2020[7] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Revenue fell sharply due to lower advisory fees, but the period's loss narrowed significantly thanks to positive investment returns and foreign exchange gains Core Data from the Statement of Profit or Loss for the Six Months Ended September 30 | Item (HK$'000) | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 1,124 | 8,693 | -87.1% | | Of which: Corporate Advisory Revenue | 300 | 7,945 | -96.2% | | Net Investment Income (Loss) | 2,835 | (1,325) | From loss to profit | | Other Income and Net Losses | 8,590 | (11,905) | From loss to profit | | Operating Expenses | (32,096) | (21,594) | +48.6% | | Loss Before Tax | (12,835) | (19,092) | Loss narrowed 32.8% | | Loss for the Period | (12,835) | (19,093) | Loss narrowed 32.8% | | Basic Loss Per Share (HK cents) | (0.36) | (0.54) | Loss narrowed | Condensed Consolidated Statement of Financial Position Total assets and net assets slightly decreased, with a significant shift in current assets from receivables to cash following a major collection Core Data from the Statement of Financial Position (as of September 30, 2020) | Item (HK$'000) | 30 Sep 2020 | 31 Mar 2020 | | :--- | :--- | :--- | | Total Assets | 713,008 | 731,851 | | Non-current Assets | 25,217 | 26,559 | | Current Assets | 687,791 | 705,292 | | Total Liabilities | 15,289 | 21,957 | | Current Liabilities | 14,251 | 18,950 | | Non-current Liabilities | 1,038 | 3,007 | | Net Assets | 697,719 | 709,894 | | Total Equity | 697,719 | 709,894 | - Bank balances and cash increased from HK$474 million to HK$673 million, while other assets and receivables decreased from HK$222 million to HK$8.29 million, mainly due to the collection of approximately HK$217 million in consideration for the transfer of convertible loans receivable[16][86][120] Condensed Consolidated Statement of Changes in Equity Total equity decreased from HK$710 million to HK$698 million, primarily driven by the period's loss, which was partially offset by translation reserve gains Summary of Changes in Equity (for the six months ended September 30, 2020) | Item (HK$'000) | Amount | | :--- | :--- | | As at 1 April 2020 | 709,894 | | Loss for the period | (12,835) | | Other comprehensive income for the period | 660 | | As at 30 September 2020 | 697,719 | Condensed Consolidated Statement of Cash Flows Cash and cash equivalents increased by HK$198 million, driven by a strong net cash inflow from operations due to the collection of significant receivables Summary of Cash Flows (for the six months ended September 30) | Item (HK$'000) | 2020 | 2019 | | :--- | :--- | :--- | | Net cash from (used in) operating activities | 193,681 | (4,618) | | Net cash from investing activities | 6,770 | 9,650 | | Cash used in financing activities | (2,024) | – | | Net increase in cash and cash equivalents | 198,427 | 5,032 | Notes to the Unaudited Condensed Consolidated Financial Statements Corporate Information and Principal Activities The company is a Cayman-incorporated investment holding firm listed on GEM, with subsidiaries in advisory, asset management, investment, and lending - The Company is an investment holding company, and its subsidiaries are principally engaged in corporate advisory services, investment advisory and asset management services, proprietary investment and lending[36] Revenue and Segment Information The company operates as a single segment where corporate advisory revenue fell 96.2% while loan interest income grew 10.2% in mid-2020 Analysis of Revenue from Major Services (for the six months ended September 30) | Revenue Type (HK$'000) | 2020 | 2019 | | :--- | :--- | :--- | | Corporate advisory income | 300 | 7,945 | | Loan interest income | 824 | 748 | | Total | 1,124 | 8,693 | Capital Commitments and Events After the Reporting Period Post-period, the company acquired KingNine Holdings for RMB 850 million to enter the internet services and data solutions market in mainland China - On October 15, 2020, the Company completed the acquisition of KingNine Holdings Limited, which became a wholly-owned subsidiary of the Company[110] - The total consideration for the acquisition was RMB 850 million, paid through the allotment and issuance of new Company shares (approximately RMB 180 million), cash payment (RMB 420 million), and settlement funds (RMB 250 million)[110] Management Discussion and Analysis Business Review The COVID-19 pandemic negatively impacted business opportunities, but the company's strategic acquisition of KingNine Holdings aims to expand future revenue streams - The COVID-19 pandemic led some potential clients to postpone or suspend their financing plans, negatively impacting the Group's business[114] - The Company completed the acquisition of KingNine Holdings Limited on October 15, 2020, aiming to expand its business, increase revenue sources, and enhance shareholder value[115][116] Financial Review The mid-2020 loss narrowed due to investment and exchange gains, while operating expenses rose from acquisition costs, and the company maintained a strong, debt-free financial position - The narrowed loss was mainly due to fair value changes in financial assets at FVTPL and exchange gains from the revaluation of RMB bank balances[118][119] - Operating expenses increased year-over-year, primarily comprising staff costs of HK$13.32 million and professional fees of HK$13.07 million, with the increase mainly driven by the acquisition project[119] - The Company maintains prudent financial management, holding bank balances and cash of HK$673 million as of September 30, 2020, with no borrowings and a zero gearing ratio[123] Outlook Management plans a diversification strategy, leveraging China's economic strength and a new acquisition to generate stable income amid a pessimistic Hong Kong outlook - Management expects China to be the only major economy to achieve positive growth in 2020 and is not optimistic about a short-term rebound for the Hong Kong economy[133] - The Group will pursue a diversification strategy, leveraging the newly acquired target company to bring more stable income and development opportunities while continuing to grow its existing businesses[134] Other Information Substantial Shareholders' Interests As of September 30, 2020, Mr. Xie Zhikun was the controlling shareholder with a 73.66% stake, which was diluted to 68.41% post-acquisition - As at 30 September 2020, Mr. Xie Zhikun was deemed to be interested in 2,615,372,627 shares of the Company, representing 73.66% of the issued share capital[143] - On 15 October 2020, after the allotment of new shares for the acquisition, the controlling shareholder's aggregate shareholding increased to 2,865,644,243 shares, representing approximately 68.41% of the enlarged share capital[142] Competing Business The controlling shareholder, Mr. Xie, has interests in other financial entities, including Zhongzhi Capital Management, whose operations potentially compete with the Group's business - The controlling shareholder, Mr. Xie, indirectly wholly owns Zhongzhi Capital Management Co., Ltd., whose business presents potential competition to the Group's business[146]