永利地产发展(00864) - 2024 - 中期业绩

Interim Results Announcement Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, the Group turned from profit to loss, recording a pre-tax loss of HKD 60,226 thousand, with loss per share significantly increasing to HKD 15.87 cents. Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Revenue | 13,383 | 13,807 | | Direct operating expenses | (516) | (965) | | Other income | 1,310 | 1,036 | | Net change in fair value of investment properties | (67,880) | (7,100) | | Administrative expenses | (2,780) | (2,799) | | Finance costs | (3,743) | (2,881) | | (Loss)/Profit before tax | (60,226) | 1,098 | | Tax | (1,045) | (1,206) | | Loss for the period | (61,271) | (108) | | Net change in fair value reserve (non-recycling) of equity investments at fair value through other comprehensive income | (24,221) | (846) | | Total comprehensive expense for the period | (85,492) | (954) | | Loss per share - basic and diluted (HK cents) | (15.87) | (0.03) | Condensed Consolidated Statement of Financial Position As of June 30, 2024, total non-current assets decreased due to fair value reductions, while net current assets turned positive, and total equity decreased. Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | June 30, 2024 (HKD thousands) | December 31, 2023 (HKD thousands) | | :--- | :--- | :--- | | Non-current assets | 866,733 | 952,993 | | Current assets | 76,959 | 45,372 | | Current liabilities | 50,281 | 112,137 | | Net current assets/(liabilities) | 26,678 | (66,765) | | Total assets less current liabilities | 893,411 | 886,228 | | Non-current liabilities | 96,613 | 3,938 | | Net assets | 796,798 | 882,290 | | Total equity | 796,798 | 882,290 | Notes to the Condensed Consolidated Financial Statements This section provides detailed information on the basis of preparation, key accounting policies, segment data, and fair value measurements of financial instruments, along with other critical financial disclosures. 1. Basis of Preparation The condensed consolidated financial statements are prepared in accordance with HKAS 34 and applicable disclosure requirements of the Listing Rules. - Financial statements are prepared in accordance with HKAS 34 and Appendix D2 of the Listing Rules[3] 2. Significant Accounting Policies The condensed consolidated financial statements are prepared on a historical cost basis, with investment properties and designated equity instruments measured at fair value. - Accounting policies are consistent with the prior year, with investment properties and certain equity instruments measured at fair value[4] - Revisions to HKFRS applied this period had no significant impact on the financial statements[4] 3. Segment Information The Group operates a single segment of property investment, with revenue derived from rental income from operating leases, analyzed by geographical area and property type. - The Group operates a single segment: property investment, with revenue from rental income[5] Revenue from External Customers (For the six months ended June 30) | Region/Property Type | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Hong Kong - Hong Kong Island: Commercial | 7,005 | 7,269 | | Hong Kong - Hong Kong Island: Residential | 168 | 75 | | Hong Kong - Kowloon: Commercial | 3,286 | 3,360 | | Hong Kong - Kowloon: Residential | 1,756 | 1,654 | | Hong Kong - Kowloon: Industrial | 1,168 | 1,449 | | Total | 13,383 | 13,807 | 4. Finance Costs For the six months ended June 30, 2024, finance costs for bank loans increased to HKD 3,743 thousand from HKD 2,881 thousand in the prior period. Finance Costs (For the six months ended June 30) | Item | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Interest on bank loans | 3,743 | 2,881 | 5. (Loss)/Profit Before Tax The loss before tax was HKD 60,226 thousand, after deducting depreciation of property, plant and equipment and including interest income. - Loss before tax was HKD 60,226 thousand, including depreciation of property, plant and equipment of HKD 251 thousand and interest income of HKD 1,210 thousand[6] 6. Tax Tax expense for the period was HKD 1,045 thousand, primarily comprising Hong Kong profits tax and deferred tax expense, with Hong Kong profits tax rate at 16.5%. Tax (For the six months ended June 30) | Item | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Hong Kong profits tax - current period | 875 | 1,036 | | Deferred tax expense | 170 | 170 | | Total | 1,045 | 1,206 | - Hong Kong profits tax rate is 16.5%, with a two-tiered rate of 8.25% for the first HKD 2,000,000 of assessable profits for some subsidiaries[7] 7. Loss Per Share For the six months ended June 30, 2024, basic and diluted loss per share significantly increased to HKD 15.87 cents, mainly due to the expanded loss attributable to equity holders. Loss Per Share Calculation (For the six months ended June 30) | Indicator | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Loss for the period attributable to equity holders of the Company | (61,271) | (108) | | Weighted average number of ordinary shares | 386,175,758 | 386,175,758 | | Basic and diluted loss per share (HK cents) | (15.87) | (0.03) | - Diluted loss per share calculation did not assume the exercise of share options as their exercise price was higher than the average market price of shares[8] 8. Dividends The Directors do not recommend an interim dividend for the six months ended June 30, 2024, consistent with the prior period. - No dividends were paid, declared, or proposed for the current period or the prior period[9] 9. Investment Properties As of June 30, 2024, the fair value of investment properties was HKD 783,460 thousand, a decrease of HKD 67,880 thousand, with all properties located in Hong Kong and valued by independent professionals. Changes in Fair Value of Investment Properties | Item | June 30, 2024 (HKD thousands) | December 31, 2023 (HKD thousands) | | :--- | :--- | :--- | | At beginning of period | 851,340 | 908,010 | | Net decrease in fair value | (67,880) | (56,670) | | At end of period | 783,460 | 851,340 | - Investment properties' fair value is assessed by independent professional valuer Broadrich Corporate Consultancy Limited using the direct comparison method[10] - The Group does not recognize deferred tax liability on fair value changes of Hong Kong investment properties as their disposal is not subject to income tax[10] 10. Other Property, Plant and Equipment For the six months ended June 30, 2024, the Group made no new additions to property, plant and equipment, consistent with the prior period. - No new additions to property, plant and equipment were made during the period[11] 11. Other Financial Assets As of June 30, 2024, other financial assets primarily consisted of unlisted partnership investments designated at fair value through other comprehensive income, totaling HKD 71,497 thousand. Other Financial Assets | Item | June 30, 2024 (HKD thousands) | December 31, 2023 (HKD thousands) | | :--- | :--- | :--- | | Equity instruments designated at fair value through other comprehensive income (non-recycling) - unlisted partnership investment | 71,497 | 89,503 | - The investment represents a 10% equity interest in Epic Capital Development Fund I, L.P., primarily engaged in property redevelopment in Hong Kong[12] - The Company designated this equity instrument investment at fair value through other comprehensive income to reflect its long-term investment strategy[12] 12. Lease Receivables and Other Receivables As of June 30, 2024, total lease receivables and other receivables were HKD 1,501 thousand, with a net amount of HKD 1,251 thousand after deducting non-current portions. Lease Receivables and Other Receivables | Item | June 30, 2024 (HKD thousands) | December 31, 2023 (HKD thousands) | | :--- | :--- | :--- | | Lease receivables | 172 | 311 | | Deferred lease receivables | 513 | 654 | | Other receivables, deposits and prepayments | 816 | 841 | | Total | 1,501 | 1,806 | | Less: Non-current portion of deferred lease receivables | (250) | (373) | | Net amount | 1,251 | 1,433 | - The Group does not grant credit periods to tenants for leased properties and internally assesses the credit quality of potential tenants[14] 13. Deposits Received and Other Payables As of June 30, 2024, total deposits received and other payables were HKD 8,187 thousand, a decrease from HKD 11,445 thousand, mainly due to reduced accrued expenses. Deposits Received and Other Payables | Item | June 30, 2024 (HKD thousands) | December 31, 2023 (HKD thousands) | | :--- | :--- | :--- | | Rental deposits received | 7,028 | 7,019 | | Accrued expenses | 853 | 4,104 | | Other payables | 306 | 322 | | Total | 8,187 | 11,445 | - All deposits received and other payables, except for certain rental deposits, are expected to be settled or recognized as income within one year[16] 14. Share Capital As of June 30, 2024, the Company's issued and fully paid share capital remained unchanged at HKD 3,862 thousand, with 386,175,758 shares. Share Capital Information | Item | Number of Shares | Amount (HKD) | Shown in Condensed Consolidated Financial Statements (HKD thousands) | | :--- | :--- | :--- | :--- | | Issued and fully paid share capital (as of June 30, 2024) | 386,175,758 | 3,861,757 | 3,862 | - The Company's share capital remained unchanged during the period[18] 15. Fair Value Measurement of Financial Instruments The Group's financial assets primarily include equity instrument investments designated at fair value through other comprehensive income, valued at HKD 71,497 thousand, classified as Level 3 fair value measurement. Fair Value Measurement of Financial Assets | Financial Asset | Fair Value as of June 30, 2024 (HKD thousands) | Fair Value as of December 31, 2023 (HKD thousands) | Fair Value Hierarchy | | :--- | :--- | :--- | :--- | | Equity instrument investments designated at fair value through other comprehensive income | 71,497 | 89,503 | Level 3 | - The fair value of unlisted equity instruments is determined using the adjusted net asset method, referencing the fair value of underlying properties assessed by qualified external valuers[20] Changes in Level 3 Fair Value Measurements (Unlisted Equity Instruments) | Item | June 30, 2024 (HKD thousands) | December 31, 2023 (HKD thousands) | | :--- | :--- | :--- | | At beginning of period | 89,503 | 88,583 | | Payments for capital injection | 6,215 | 7,120 | | Net unrealized (loss) recognized in other comprehensive income during the period | (24,221) | (6,180) | | At end of period | 71,497 | 89,503 | 16. Related Party Transactions The Group leased two properties to companies wholly owned by the Chairman's spouse and CEO, receiving approximately HKD 786 thousand in rental income and holding HKD 393 thousand in rental deposits during the period. - The Group leased properties to related party companies, with rental income of HKD 786 thousand and rental deposits of HKD 393 thousand during the period[22] Management Discussion and Analysis Business Review The Group primarily invests in and leases commercial and residential properties in Hong Kong, with its investment property portfolio valued at approximately HKD 783.5 million, experiencing a decrease due to fair value adjustments and reduced rental income. - The Group's investment property portfolio is valued at approximately HKD 783.5 million, a decrease of approximately HKD 67.9 million from December 31, 2023, primarily due to a net decrease in the fair value of investment properties[23] - Total rental income was approximately HKD 13.4 million, a 3.1% year-on-year decrease, mainly due to offering more rental concessions to tenants[23] - The Group holds a 10% investment in Epic Capital Development Fund I, L.P. (the "Fund"), whose property has been redeveloped into an office building and began unit sales in June 2024[23] - Due to changes in office demand, oversupply, and reduced investment from mainland enterprises, the fair value of the Fund's property and the Fund itself continued to decline, resulting in the Fund investment's fair value of approximately HKD 71.5 million, accounting for approximately 7.6% of total assets[24] - Excluding the net impact of changes in fair value of investment properties, the Group recorded a net profit of approximately HKD 6.6 million, a decrease of approximately 5.7% from the prior year, mainly due to reduced rental income and increased finance costs[24] Prospects Hong Kong's retail market significantly declined in H1 2024 due to low consumer confidence and reduced competitiveness, while the Group plans to monitor market changes, adjust leasing policies, and explore diversification opportunities with a prudent financial approach. - Hong Kong's retail market experienced a significant decline in H1 2024, affected by low consumer confidence, reduced competitiveness, and a strong Hong Kong dollar[25] - The government has introduced various measures to stimulate retail demand and attract talent, such as expanding the Individual Visit Scheme and increasing the duty-free allowance for mainland visitors[26] - The Group will continue to closely monitor economic developments and property market changes, adjust leasing policies, and communicate with tenants to maintain high occupancy rates[26] - The Group is prudently exploring opportunities to diversify its business beyond the leased property market and will maintain a prudent financial policy, with no current plans for significant investments or acquisitions of capital assets[26] Financial Review Results Total comprehensive expense attributable to equity holders significantly increased to approximately HKD 85.5 million, primarily reflecting fair value changes in investment properties and the Epic Fund, leading to an increased loss per share. - Total comprehensive expense for the period was approximately HKD 85.5 million, a significant increase from approximately HKD 1.0 million in the prior period, mainly impacted by fair value changes of investment properties and the Epic Fund[27] - Loss per share was HKD 15.87 cents, an increase of HKD 15.84 cents from HKD 0.03 cents in the prior period[27] Liquidity and Capital Resources The Group's net current assets improved significantly to HKD 26.7 million from a net current liability of HKD 66.8 million, driven by bank loan renewals and new loans, increasing liquidity and the debt-to-equity ratio. - Net current assets improved from approximately HKD (66.8) million as of December 31, 2023, to approximately HKD 26.7 million as of June 30, 2024, with the current ratio increasing from approximately 0.40 to approximately 1.53[28] - Liquidity improved mainly due to the renewal of two bank loans (approximately HKD 49.2 million) for over 24 months and new bank loans (approximately HKD 48.5 million), reducing current liabilities[28] - Bank deposits and cash increased to approximately HKD 75.4 million, primarily from new bank loans and operating cash flow, partially offset by capital contributions to the Epic Fund and bank loan repayments[28] - Total bank loans increased to approximately HKD 134.6 million, secured by investment properties, leasehold land, and buildings with a book value of approximately HKD 317.8 million, at interest rates ranging from 6.21% to 6.36%[29] - The total debt-to-equity ratio was approximately 16.9%, up from approximately 11.4% as of December 31, 2023[29] Capital Expenditure The Group incurred no significant capital expenditure during the period, with future capital expenditures expected to be funded by operating cash and bank borrowings. - No significant capital expenditure was incurred during the period, with future funding primarily from operating cash and bank borrowings[30] Capital Commitments As of June 30, 2024, the Group had no contracted but unprovided capital commitments for its investment in the Epic Fund. - No contracted but unprovided capital commitments were present during the period[31] Contingent Liabilities As of June 30, 2024, and December 31, 2023, the Group had no significant contingent liabilities. - The Group had no significant contingent liabilities[32] Pledged Assets As of June 30, 2024, investment properties with a book value of approximately HKD 306.3 million and leasehold land and buildings of HKD 11.5 million were pledged for bank facilities. - Investment properties with a book value of approximately HKD 306.3 million and leasehold land and buildings of approximately HKD 11.5 million were pledged for bank facilities[33] Material Acquisitions and Disposals of Subsidiaries The Company made no material acquisitions or disposals of subsidiaries, associates, or joint ventures during the period. - No material acquisitions or disposals of subsidiaries, associates, or joint ventures occurred during the period[34] Treasury Policy The Group maintains a prudent treasury policy, primarily denominated in HKD with minimal exchange rate risk, and does not use financial instruments for hedging. - The Group adopts a prudent treasury policy, primarily denominated in HKD, with minimal exchange rate risk[35] - Cash is typically held in short-term deposits, and financial instruments are not used for hedging purposes[35] Risk Management The Group has established and maintains adequate risk management procedures and internal controls to identify and manage internal and external risks. - The Group has established and maintains adequate risk management procedures and internal controls[36] Other Information Human Resources As of June 30, 2024, the Group had seven employees in Hong Kong, with staff costs of approximately HKD 1.1 million, and regularly reviews remuneration policies based on performance. - The Group had seven employees in Hong Kong, with staff costs of approximately HKD 1.1 million during the period[37] - Remuneration policies and benefits are regularly reviewed, with discretionary bonuses and share options granted based on operating results and individual performance[37] Interim Dividend The Directors do not recommend an interim dividend for the six months ended June 30, 2024, consistent with the prior period. - The Directors do not recommend an interim dividend for the period[38] Corporate Governance The Company has adopted and complied with all applicable code provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules. - The Company has adopted and complied with all applicable code provisions of the Corporate Governance Code[39] Standard Code for Securities Transactions by Directors The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all Directors confirmed compliance during the period. - The Company has adopted and complied with the Model Code for Securities Transactions by Directors of Listed Issuers, with all Directors confirming compliance[40] Purchase, Sale or Redemption of the Company's Listed Securities Neither the Company nor its subsidiaries redeemed, repurchased, or sold any of the Company's listed securities during the period. - Neither the Company nor its subsidiaries redeemed, repurchased, or sold any of the Company's listed securities during the period[41] Audit Committee The Audit Committee, comprising three independent non-executive Directors, has reviewed the unaudited interim results for the period. - The Audit Committee, composed of three independent non-executive Directors, has reviewed the unaudited interim results for the period[42] Acknowledgement The Board of Directors extends its sincere gratitude to all shareholders, tenants, professionals, and employees for their support. - The Board of Directors expresses gratitude to shareholders, tenants, professionals, and employees for their support[43] Board Composition The Board of Directors comprises four executive directors and three independent non-executive directors. - The Board of Directors comprises four executive directors and three independent non-executive directors[44]