瑞港建设(06816) - 2024 - 中期财报

Management Discussion and Analysis Business Review and Outlook The company faced significant business challenges in H1 2024, with general building and marine construction revenues declining sharply, but holds over HKD 3 billion in contract backlog for future revenue - Revenue from the company's general building and marine construction business segments significantly declined during the period, impacted by a sluggish real estate market and a lack of major marine projects in Hong Kong and Macau[4] Revenue Changes by Business Segment | Business Segment | Revenue Change | | :--- | :--- | | General Building Contracting | Decreased by approx. 39% YoY | | Marine Construction | Decreased by approx. 62% YoY | - To address challenges, the company actively expanded into Guangdong and Hainan provinces, securing several large projects expected to contribute revenue starting in the second half of 2024[5] - The company successfully recovered a trade receivable with a book value exceeding HKD 40 million that was over 6 years old, demonstrating effective working capital management[5] - Despite business contraction in the first half, the company holds seven relatively large projects with a total contract backlog exceeding HKD 3 billion, anticipated to provide additional revenue to the Group in the second half of 2024[5] Financial Review For the period, the Group's total revenue decreased by 41.8% to HKD 509 million, with gross profit falling by 30.2% to HKD 33.7 million despite lower cost of sales, while increased administrative and finance costs led to an expanded loss for the period of HKD 59.0 million Key Financial Indicators for H1 2024 | Indicator | H1 2024 (HKD Million) | H1 2023 (HKD Million) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 509.0 | 874.3 | -41.8% | | Gross Profit | 33.7 | 48.2 | -30.2% | | Gross Profit Margin | 6.6% | 5.5% | +1.1pp | | Other Administrative Expenses | 56.8 | 48.5 | +17.1% | | Finance Costs | 42.2 | 31.6 | +33.4% | | Loss for the Period | (59.0) | (43.6) | +35.3% | - The increase in other administrative expenses was primarily due to a HKD 17.5 million rise in vessel and equipment maintenance and idle costs within the marine construction segment[11] - The rise in finance costs was mainly attributable to increased bank borrowings for China operations and a general increase in interest rates[12] Analysis of Financial Position As of June 30, 2024, the Group's financial position showed a decrease in both trade receivables and contract assets, reflecting collection efforts, while the Group held 40 vessels and 195 sets of machinery and equipment, with a slight improvement in trade receivables aging - As of June 30, 2024, the Group owned 40 vessels, 195 sets of machinery and equipment, and an office building located in Qingdao, China[15] Changes in Key Balance Sheet Items | Item | June 30, 2024 (HKD Million) | December 31, 2023 (HKD Million) | Change | | :--- | :--- | :--- | :--- | | Trade and Retention Receivables | 1,502.5 | 1,638.7 (Estimated) | -136.2 | | Contract Assets | 1,337.3 | 1,736.6 | -399.3 | - The aging profile of trade receivables and amounts due from fellow subsidiaries slightly improved at period-end, and management will continue to intensify collection efforts in the second half of 2024[17] Liquidity, Financial Resources, and Capital Structure As of June 30, 2024, the Group's net current assets significantly increased to HKD 487 million, and net debt decreased to HKD 1.401 billion; however, the gearing ratio rose from 366.0% to 425.5% due to a decline in equity balance from the loss for the period, with the Group primarily operating in RMB, HKD, MOP, and USD without hedging policies Liquidity and Capital Structure Indicators | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Net Current Assets | HKD 486.8 Million | HKD 210.5 Million | | Net Debt | HKD 1,401.1 Million | HKD 1,553.1 Million | | Gearing Ratio | 425.5% | 366.0% | - The primary reason for the increase in the gearing ratio was the decrease in the Group's equity balance due to the loss incurred during the period[19] - The Group's operations are primarily conducted in RMB, HKD, MOP, and USD, with no hedging policies adopted, mitigating foreign exchange risk by settling contracts and expenses in major currencies[20] Other Disclosures During the period, the Group's total employees decreased from 660 to 603, with a corresponding reduction in staff costs, minimal capital expenditure, no significant acquisitions or investments, and a pending litigation of HKD 112 million with uncertain outcome and no provision made, while the board decided not to declare an interim dividend - As of June 30, 2024, the Group's headcount was 603, a decrease from 660 at the end of 2023; total staff costs decreased by 27% year-on-year to HKD 64.4 million[22] - The Group faces a lawsuit with a claim amount of HKD 112 million, for which no provision has been made in the financial statements due to the early stage of the case and inability to assess the outcome[27][102] - Qingdao West Coast Holdings (International) Co., Ltd. is the company's major shareholder, holding a 62.25% equity stake[33] - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2024[37][74] Interim Condensed Consolidated Financial Statements Interim Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2024, the Group recorded revenue of HKD 509 million, a 41.8% year-on-year decrease, with loss for the period expanding to HKD 59.0 million from HKD 43.6 million in the prior year due to lower gross profit and increased expenses, resulting in a basic loss per share of HKD 6.70 cents Summary of Interim Condensed Consolidated Statement of Comprehensive Income | Item (HKD Thousand) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenue | 508,954 | 874,322 | | Gross Profit | 35,357 | 48,202 | | Operating Loss | (20,462) | (11,717) | | Loss Before Income Tax | (62,396) | (43,127) | | Loss for the Period | (59,029) | (43,585) | | Loss Attributable to Owners of the Company | (53,588) | (49,349) | | Basic Loss Per Share (HK Cents) | (6.70) | (6.17) | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2024, the Group's total assets were HKD 4.694 billion, total liabilities HKD 4.286 billion, and total equity HKD 409 million; total assets and liabilities decreased from year-end 2023, equity declined due to loss for the period, while net current assets significantly improved from HKD 211 million to HKD 487 million Summary of Interim Condensed Consolidated Statement of Financial Position | Item (HKD Thousand) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 456,345 | 481,762 | | Current Assets | 4,237,993 | 4,553,842 | | Total Assets | 4,694,338 | 5,035,604 | | Equity and Liabilities | | | | Total Equity | 408,560 | 480,475 | | Non-current Liabilities | 534,552 | 211,824 | | Current Liabilities | 3,751,226 | 4,343,305 | | Total Liabilities | 4,285,778 | 4,555,129 | | Total Equity and Liabilities | 4,694,338 | 5,035,604 | Interim Condensed Consolidated Statement of Changes in Equity As of June 30, 2024, the Group's total equity decreased from HKD 480 million at the beginning of the year to HKD 409 million, primarily due to a loss for the period of HKD 59.0 million and other comprehensive loss from currency translation differences of HKD 12.9 million Summary of Changes in Equity (HKD Thousand) | Item | Amount | | :--- | :--- | | Total Equity as at January 1, 2024 | 480,475 | | Loss for the Period | (59,029) | | Other Comprehensive Loss (Exchange Differences) | (12,886) | | Total Equity as at June 30, 2024 | 408,560 | Interim Condensed Consolidated Statement of Cash Flows During the period, the Group's cash flow significantly improved, with net cash generated from operating activities of HKD 130 million compared to a net outflow of HKD 409 million in the prior year, primarily due to effective collection of receivables and contract assets, increasing cash and cash equivalents to HKD 292 million at period-end Summary of Interim Condensed Consolidated Statement of Cash Flows | Item (HKD Thousand) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net Cash Generated From/(Used In) Operating Activities | 130,402 | (409,062) | | Net Cash Generated From Investing Activities | 7,377 | 99,068 | | Net Cash Generated From Financing Activities | 6,155 | 197,606 | | Net Increase/(Decrease) in Cash and Cash Equivalents | 143,934 | (112,388) | | Cash and Cash Equivalents at End of Period | 292,450 | 223,771 | Notes to the Interim Condensed Consolidated Financial Information Note 5: Revenue and Segment Information Total revenue for the period was HKD 509 million, with general building contracting services contributing the most at HKD 468 million but significantly decreasing year-on-year, while marine construction and related services also saw substantial revenue reductions; Mainland China remained the primary revenue source, accounting for over 90%, and segment results showed losses for marine-related businesses but a slight profit for general building contracting services Revenue by Service Type (HKD Thousand) | Service Type | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Marine Construction Works | 38,289 | 73,728 | | Marine-Related Ancillary Services | 2,670 | 33,677 | | General Building Contracting Services | 467,995 | 766,917 | | Total | 508,954 | 874,322 | Revenue by Geographical Region (HKD Thousand) | Region | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Hong Kong | 38,750 | 74,242 | | Mainland China | 467,995 | 766,917 | | Philippines | – | 30,125 | | Indonesia | 2,208 | 3,038 | | Total | 508,953 | 874,322 | Segment Results (HKD Thousand) | Business Segment | H1 2024 Segment Results | | :--- | :--- | | Marine Construction Works | (7,694) | | Marine-Related Ancillary Services | (1,125) | | General Building Contracting Services | 363 | Note 14: Trade and Retention Receivables, Bills Receivable and Amounts Due from Fellow Subsidiaries As of June 30, 2024, total trade and retention receivables and bills receivable decreased to HKD 1.052 billion from year-end 2023, with a significant increase in trade receivables over one year old; concurrently, amounts due from fellow subsidiaries slightly rose to HKD 1.196 billion, with a substantial increase in amounts over one year old, indicating extended collection cycles Aging Analysis of Trade Receivables (HKD Thousand) | Aging | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Within 1 year | 350,203 | 722,566 | | 1 to 2 years | 304,778 | 189,299 | | Over 2 years | 322,350 | 64,480 | | Total | 977,331 | 976,345 | Aging Analysis of Amounts Due from Fellow Subsidiaries (HKD Thousand) | Aging | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Within 1 year | 112,732 | 678,155 | | 1 to 2 years | 767,825 | 366,507 | | Over 2 years | 315,818 | 128,476 | | Total | 1,196,375 | 1,173,138 | Note 19: Borrowings As of June 30, 2024, the Group's total borrowings were HKD 1.592 billion, largely stable from year-end 2023, with short-term borrowings comprising the majority at approximately HKD 1.190 billion; borrowings are primarily denominated in RMB, accounting for about 77%, and most bank facilities are secured by guarantees from the ultimate holding company, the Company, or subsidiaries, or by pledged assets Borrowing Structure (HKD Thousand) | Type | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Non-current (Long-term) | 402,729 | 78,423 | | Current (Short-term) | 1,189,757 | 1,534,260 | | Total Borrowings | 1,592,486 | 1,612,683 | Borrowings by Currency (HKD Thousand) | Currency | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | HKD | 323,020 | 321,119 | | MOP | 37,961 | 37,961 | | RMB | 1,231,505 | 1,253,603 | | Total | 1,592,486 | 1,612,683 | - The Group's loan facilities are largely supported by guarantees from the ultimate holding company, the Company, or subsidiaries, pledged deposits, or pledged property and equipment[98][99] Note 21: Related Party Transactions The Group has significant related party transactions with several fellow subsidiaries, primarily involving construction project revenue, totaling approximately HKD 121 million for the period; as of period-end, amounts due from fellow subsidiaries reached HKD 1.196 billion, amounts due to fellow subsidiaries were HKD 152 million, and loans from an intermediate holding company amounted to HKD 146 million - During the period, the Group derived construction project revenue from several fellow subsidiaries, including West Coast New Area, Haifa Investment, and West Coast Sci-Tech[108] Period-End Balances with Related Parties (HKD Thousand) | Item | June 30, 2024 | Nature | | :--- | :--- | :--- | | Amounts Due from Fellow Subsidiaries | 1,196,375 | Trade | | Amounts Due to Fellow Subsidiaries | (151,581) | Primarily Non-Trade | | Loan from an Intermediate Holding Company | (145,852) | Non-Trade | - Amounts due to Xifa Commercial Factoring originated from a supplier invoice factoring arrangement, essentially converting amounts payable to suppliers into amounts payable to a related party[110]