盐城港(08310) - 2019 Q1 - 季度财报

GEM Market Features GEM Market Positioning and Risk Disclosure The GEM market is positioned for high-risk companies, suitable for professional investors, with securities subject to significant market volatility and uncertain liquidity - GEM market is positioned as a listing platform for high-investment-risk companies, suitable for professional and experienced investors[2] - GEM securities may be subject to significant market volatility, and high liquidity cannot be guaranteed[2] - Hong Kong Exchanges and Clearing Limited and the Stock Exchange are not responsible for this report's content, make no statement as to its accuracy or completeness, and accept no liability for any loss[2] Financial Highlights Q1 2019 Financial Performance Overview The Group's Q1 2019 financial performance showed a significant revenue decline and increased losses across key metrics Q1 2019 Financial Summary (For the three months ended March 31) | Indicator | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Total Revenue | 474,400 | 797,700 | -40.5% | | Loss Before Tax | (25,800) | (22,000) | +17.3% | | Loss Attributable to Equity Holders of the Company | (29,500) | (19,400) | +52.1% | | Loss Per Share (HK cents) | (2.29) | (1.51) | +51.7% | Condensed Consolidated Statement of Comprehensive Income Q1 2019 Consolidated Comprehensive Income The Group's Q1 2019 comprehensive income statement shows HK$474.4 million revenue, a small gross profit, and an overall comprehensive loss Condensed Consolidated Statement of Comprehensive Income (For the three months ended March 31) | Indicator | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 474,408 | 797,654 | | Cost of Sales | (472,294) | (789,921) | | Gross Profit | 2,114 | 7,733 | | Loss Before Tax | (25,790) | (22,039) | | Loss for the Period | (25,790) | (22,039) | | Exchange Differences Arising from Translation of Overseas Operations | 21,785 | 4,119 | | Total Comprehensive Loss for the Period | (4,005) | (17,920) | | Loss Attributable to Equity Holders of the Company | (29,537) | (19,442) | | Basic and Diluted Loss Per Share (HK cents) | (2.29) | (1.51) | Consolidated Statement of Changes in Equity Q1 2019 Consolidated Changes in Equity The Group's Q1 2019 equity changes reflect a total comprehensive loss for equity holders and non-controlling interests, resulting in HK$8.8 million total equity Consolidated Statement of Changes in Equity (For the three months ended March 31) | Indicator | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Equity Attributable to Equity Holders of the Company at Beginning of Period | (6,353) | 161,728 | | Loss for the Period (Attributable to Equity Holders of the Company) | (29,537) | (19,442) | | Exchange Differences Arising from Translation of Overseas Operations (Attributable to Equity Holders of the Company) | 18,322 | 3,245 | | Total Comprehensive Loss for the Period (Attributable to Equity Holders of the Company) | (11,215) | (16,197) | | Disposal of a Subsidiary (Non-controlling Interests) | (4,114) | 2,877 | | Total Equity at End of Period | 8,808 | 182,019 | Notes to Unaudited Q1 Financial Statements Company Information The Company, incorporated on September 13, 2011, in the Cayman Islands, primarily operates as an investment holding company - The Company was incorporated on September 13, 2011, in the Cayman Islands as an investment holding company[29] Basis of Preparation Q1 financial statements adhere to HKFRSs, HK GAAP, and GEM Listing Rules, consistent with 2018 audited statements, except for new HKFRSs adoption - Financial statements are prepared in accordance with Hong Kong Financial Reporting Standards (HKFRSs), Hong Kong Generally Accepted Accounting Principles (HK GAAP), and disclosure requirements of the Hong Kong Companies Ordinance, complying with GEM Listing Rules[30] - The basis of preparation is consistent with the 2018 audited financial statements, except for accounting policy changes due to the adoption of new HKFRSs[30] Adoption of New/Revised HKFRSs The Group adopted new/revised HKFRSs, notably HKFRS 16 "Leases," which significantly impacted accounting by recognizing right-of-use assets and lease liabilities - The Group first applied HKFRS 16 "Leases" and other revised standards, effective from January 1, 2019[31] - HKFRS 16 resulted in future minimum operating lease payments being recognized as right-of-use assets and lease liabilities, along with interest expense and depreciation expense[34] Impact of HKFRS 16 Adoption (As at January 1, 2019) | Indicator | January 1, 2019 (HK$ Thousand) | December 31, 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Right-of-use Assets | 4,758 | - | | Lease Liabilities | 4,758 | - | Revenue The Group's Q1 2019 revenue, primarily from trading and logistics, significantly decreased to HK$474.4 million, driven by reduced trading business - Revenue primarily derives from integrated logistics processing and related ancillary services, trading business, and petrochemical products storage business[44] Revenue by Category (For the three months ended March 31) | Business Category | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Integrated Logistics Processing and Related Ancillary Services | 2,421 | 46,834 | | Trading Business | 469,856 | 749,638 | | Petrochemical Products Storage Business | 2,131 | 1,182 | | Total Revenue | 474,408 | 797,654 | Loss Before Tax Q1 2019 loss before tax increased to HK$25.8 million, mainly due to a significant rise in finance costs from bonds and acquisition loans, despite lower staff costs Components of Loss Before Tax (For the three months ended March 31) | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Finance Costs | 14,348 | 5,383 | | Cost of Inventories | 460,551 | 750,695 | | Depreciation | 8,014 | 4,107 | | Depreciation Expense for Right-of-use Assets | 703 | 2,277 | | Staff Costs | 10,275 | 22,707 | - Finance costs significantly increased to HK$14,348 thousand, primarily due to interest on the placement of unlisted secured bonds and borrowing for the acquisition of Jiangsu Hairong[48] - Staff costs decreased substantially year-on-year from HK$22,707 thousand to HK$10,275 thousand[48] Taxation The Group recognized no Q1 2019 income tax due to a loss, with varying corporate tax rates across jurisdictions, including 16.5% in Hong Kong and 25% in China - The Group recorded a loss for the period, thus no income tax was recognized in profit or loss for the period[51] - Hong Kong profits tax rate is 16.5%, Qianhai Mingtian enjoys a 15% preferential corporate income tax rate, and China corporate income tax rate is 25%[51] Dividends The Board does not recommend paying any interim dividend for Q1 2019, consistent with the same period in 2018 - The Board does not recommend paying any interim dividend for the period[52] Loss Per Share Q1 2019 basic loss per share increased to 2.29 HK cents from 1.51 HK cents, with basic and diluted loss per share being identical due to no potential dilutive ordinary shares Loss Per Share Calculation (For the three months ended March 31) | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Loss Attributable to Equity Holders of the Company (HK$ Thousand) | (29,537) | (19,442) | | Weighted Average Number of Ordinary Shares in Issue | 1,288,000,000 | 1,288,000,000 | | Basic Loss Per Share (HK cents) | (2.29) | (1.51) | - Basic and diluted loss per share amounts are identical due to the absence of potential dilutive ordinary shares in the Company[57] Approval of Q1 Financial Statements The Q1 financial statements were approved and authorized for issue by the Board on May 9, 2019 - The Q1 financial statements were approved and authorized for issue by the Board on May 9, 2019[58] Management Discussion and Analysis Financial Review The Group's Q1 2019 revenue declined significantly due to business adjustments and restructuring, resulting in a reduced gross margin and an expanded loss for the period Q1 2019 Financial Review (For the three months ended March 31) | Indicator | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 474,400 | 797,700 | -40.5% | | Cost of Sales | 472,300 | 789,900 | -40.2% | | Gross Profit Margin | 0.5% | 1.0% | -0.5% | | Finance Costs | 14,300 | 5,400 | +164.8% | | Loss for the Period | (25,800) | (22,000) | +17.3% | - Revenue decreased primarily due to the termination of certain trading businesses with higher operational risks or gross losses, and the integrated logistics processing business being in a resource restructuring phase[70] - Gross profit margin decreased to 0.5%, mainly because fixed costs for integrated logistics processing business remained constant while revenue decreased, and synergistic benefits were not yet achieved[70] Trading Business Trading Business Revenue (For the three months ended March 31) | Indicator | 2019 (HK$) | 2018 (HK$) | | :--- | :--- | :--- | | Trading Business Revenue | 469,900,000 | 749,600,000 | - Revenue reduction primarily resulted from the termination of certain product trading businesses that had higher operational risks or recorded gross losses[64] Integrated Logistics Processing and Related Ancillary Services Business Integrated Logistics Processing Business Revenue (For the three months ended March 31) | Indicator | 2019 (HK$) | 2018 (HK$) | | :--- | :--- | :--- | | Integrated Logistics Processing Business Revenue | 2,400,000 | 46,800,000 | - Revenue significantly decreased by 94.9%, mainly because the business was in a resource restructuring period after the acquisition of Jiangsu Hairong and had not yet achieved synergistic benefits[65] Petrochemical Products Storage Business Petrochemical Products Storage Business Revenue (For the three months ended March 31) | Indicator | 2019 (HK$) | 2018 (HK$) | | :--- | :--- | :--- | | Petrochemical Products Storage Business Revenue | 2,100,000 | 1,200,000 | - Revenue increased by 75.0%, primarily due to the resumption of operations of certain existing petrochemical storage tanks[66] Capital Structure As of March 31, 2019, total equity attributable to equity holders further deteriorated to negative HK$17.6 million, with no changes in issued share capital during the period Total Equity Attributable to Equity Holders of the Company | Date | Amount (HK$) | | :--- | :--- | | March 31, 2019 | (17,600,000) | | December 31, 2018 | (6,400,000) | - There was no change in the Company's issued share capital during the period[72] Dividends The Board does not recommend paying any interim dividend for Q1 2019, consistent with the same period in 2018 - The Board does not recommend paying any interim dividend for the period[77] Pledge of Assets The Group's bank facilities and borrowings are secured by various assets, including property, plant and equipment, and pledged bank deposits, which amounted to HK$315.7 million as of March 31, 2019 - Secured borrowings are collateralized by property, plant and equipment, sea area usage right payments, prepaid lease payments, guarantees for third-party loans, and pledged bank deposits[78] Pledged Asset Values (As at March 31) | Asset Category | 2019 (HK$) | December 31, 2018 (HK$) | | :--- | :--- | :--- | | Property, Plant and Equipment | 57,200,000 | 66,500,000 | | Sea Area Usage Right Payments | 2,900,000 | 2,800,000 | | Prepaid Lease Payments | 36,000,000 | 35,100,000 | | Loan Guarantees | 3,500,000 | 3,400,000 | | Pledged Bank Deposits | 315,700,000 | 307,400,000 | Placement of Unlisted Secured Bonds up to US$50 Million and Pledge of Controlling Shareholder's Account The Company placed US$50 million unlisted secured bonds in March 2018, with a 7.5% interest rate, secured by a controlling shareholder's pledge, and proceeds used for petrochemical facilities and working capital - The Company completed the placement of unlisted secured bonds with a principal amount of US$50 million, bearing an annual interest rate of 7.5% for three years in March 2018[79] - Controlling shareholder Dafeng Port Overseas pledged all its rights, title, and interests in the pledged account (equivalent to approximately 57.46% of total issued shares) as repayment guarantee[79] - Proceeds were used for the construction and maintenance of petrochemical storage tanks, upgrading ancillary facilities, acquiring Jiangsu Hairong, and for the Group's general working capital[83] Disposal of Equity Interest in a Subsidiary On January 10, 2019, the Company disposed of 51% of Gamma Logistics' issued share capital for HK$4.15 million, resulting in Gamma Logistics ceasing to be a subsidiary - The Company completed the disposal of 51% of Gamma Logistics' issued share capital for HK$4.15 million on January 10, 2019[84] - Following the disposal, Gamma Logistics ceased to be a subsidiary of the Company[84] Significant Acquisitions and Disposals of Subsidiaries and Associates Excluding the Gamma Logistics disposal, the Group had no other significant acquisitions or disposals of subsidiaries and associates during the period - Apart from the disposal of 51% equity interest in Gamma Logistics, the Group had no other significant acquisitions or disposals during the period[84] Outlook The Group plans to leverage Dafeng Port's advantages to develop Jiangsu Hairong into a diversified group offering integrated logistics, petrochemical storage, and trading services - The Group will leverage Dafeng Port's unique geographical advantages to develop Jiangsu Hairong, aiming to become a diversified operating group[85] - Business development directions include integrated logistics processing services, petrochemical products storage services, and trading business[85] Contingent Liabilities As of March 31, 2019, the Group had no significant contingent liabilities, consistent with the situation as of December 31, 2018 - As of March 31, 2019, the Group had no significant contingent liabilities[86] Other Information Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares, and Debentures of the Company or Associated Corporations As of March 31, 2019, no directors or chief executives held disclosable interests or short positions in the Company's or associated corporations' shares, underlying shares, or debentures - As of March 31, 2019, no directors or chief executives held any disclosable interests or short positions in shares, underlying shares, and debentures[91] Share Option Scheme The Company has a share option scheme to incentivize eligible persons, valid until August 2, 2023; since the Company's GEM listing, no share options have been granted, exercised, or cancelled under the scheme, and no outstanding options existed as of March 31, 2019, or the report date - The share option scheme is valid until August 2, 2023, aiming to incentivize eligible persons[92] - Since the Company's GEM listing, no share options have been granted, exercised, or cancelled, and there are no outstanding options[92] Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares of the Company As of March 31, 2019, Dafeng Port Overseas held 57.46% of the Company's shares as beneficial owner, pledging them as collateral, with Jiangsu Dafeng and Dafeng District People's Government also deemed to hold similar interests Substantial Shareholders' Shareholding (As at March 31) | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held (L)/(S) | Percentage of Issued Share Capital (Approx.) | | :--- | :--- | :--- | :--- | | Dafeng Port Overseas | Beneficial owner · and has provided share interest as collateral to a person other than a qualified moneylender | 740,040,000 (L)/(S) | 57.46% | | Jiangsu Dafeng | Interest of controlled corporation | 740,040,000 (L)/(S) | 57.46% | | Dafeng District People's Government | Interest of controlled corporation | 740,040,000 (L)/(S) | 57.46% | - Dafeng Port Overseas is 40% owned by Jiangsu Dafeng, which is wholly owned by the Dafeng District People's Government[99] Purchase, Sale or Redemption of the Company's Listed Securities During Q1 2019, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[104] Competing Interests Controlling shareholder Jiangsu Dafeng Group's trading businesses potentially compete with the Group, but the Board believes no significant threat exists due to differing product focuses and target customers - Controlling shareholder Jiangsu Dafeng Group's subsidiaries engage in various trading businesses that constitute or may constitute competition with the Group[105] - The Board believes that due to different product type focuses and target customers, Jiangsu Dafeng Group's businesses do not pose a significant competitive threat to the Group[105] - Board members have clear fiduciary duties and a code of conduct for handling conflicts of interest[109] Code for Securities Transactions by Directors The Company has adopted a code for directors' securities transactions that complies with GEM Listing Rules, and no breaches were found during the period after inquiry - The Company has adopted a code for directors' securities transactions that complies with GEM Listing Rules[110] - No breaches of the code were found during the period[110] Corporate Governance Code The Company is committed to maintaining high corporate governance standards and has complied with the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules during the period, continuously reviewing practices to enhance standards - The Company has complied with the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules during the period[111] - The Company will continuously review its corporate governance practices to enhance standards and comply with regulatory requirements[111] Audit Committee The Audit Committee, established on August 3, 2013, comprises independent non-executive directors responsible for recommending auditors, reviewing financial statements, providing financial reporting advice, and overseeing internal control and risk management systems; the committee has reviewed the Q1 financial statements and found them compliant with applicable accounting standards, GEM Listing Rules, and legal requirements - The Audit Committee was established on August 3, 2013, and its members are all independent non-executive directors[116] - Committee responsibilities include recommending auditors, reviewing financial statements, providing financial reporting advice, and overseeing internal control and risk management[116] - The Audit Committee has reviewed the Q1 financial statements and found them compliant with applicable accounting standards, GEM Listing Rules, and legal requirements[116] Acknowledgements Board's Acknowledgements The Board, on behalf of the Company, extends its sincere gratitude to all management, staff, business partners, customers, and shareholders for their support and contributions - The Board sincerely thanks all management, staff, business partners, customers, and shareholders for their support and contributions[117]