Financial Performance - The total revenue for the first half of 2023 was HKD 182,000,000, an increase of 2.3% compared to HKD 177,900,000 in the first half of 2022, primarily driven by a strong local market in the Russian Federation [4]. - Adjusted EBITDA for the first half of 2023 was HKD 57,000,000, down from HKD 60,000,000 in the same period of 2022 [4]. - The company recorded a loss attributable to owners of HKD 16,100,000 in the first half of 2023, compared to a profit of HKD 85,200,000 in the first half of 2022, with the loss mainly due to foreign exchange losses of HKD 35,200,000 from fluctuations in the Russian Ruble [4]. - The adjusted EBITDA for Crystal Tiger Palace in the first half of 2023 was HKD 57 million, a decrease from HKD 60 million in the same period of 2022, primarily due to increased gaming taxes and employee benefits expenses [39]. - The group reported a loss attributable to owners of the company of HKD 16.1 million for the first half of 2023, compared to a profit of HKD 85.2 million in the same period of 2022 [42]. - The company reported a loss before tax of HKD 21,001,000, compared to a profit of HKD 122,542,000 in the same period last year, indicating a significant decline [88]. - Total comprehensive loss for the period was HKD 21,099,000, compared to a total comprehensive income of HKD 123,809,000 in the previous year [88]. - Basic and diluted loss per share for the six months ended June 30, 2023, was HKD (0.356), compared to earnings of HKD 1.889 per share in the same period of 2022 [88]. Strategic Focus and Investments - The company has adjusted its business focus and optimized its strategies to concentrate on the local Russian market, including changes in supply chain and logistics to meet local demand [8]. - The company has temporarily suspended large capital expenditures, particularly the development of Phase II of the Tigre de Cristal project, until conditions improve [8]. - The company entered into agreements to acquire 100% equity of two companies for a total consideration of HKD 280,000,000, which includes land in Japan with a total area of approximately 108,799 square meters [9]. - The acquired land in Japan is intended to be developed into a luxury hotel with beachfront villas [10]. - The company plans to utilize approximately HKD 479.3 million from the net proceeds for the acquisition of Daqian and Joyful Award, future development planning, and general working capital [13]. - The company is focused on expanding its market presence through strategic acquisitions and financing arrangements [156][158]. Financing and Debt Management - A loan agreement was established for a maximum principal amount of PHP 25 billion (approximately HKD 3.6 billion) to finance a five-star hotel and entertainment complex in the Philippines [14]. - The company has agreed to terminate a revolving loan agreement, which was originally intended for the development of the Crystal Tiger Palace Phase II, with a total of HKD 479.3 million being redirected for interest income [15]. - The company issued convertible bonds with a total principal amount of PHP 5.6 billion and PHP 6.4 billion in 2020 and 2022, respectively, with initial conversion prices set at PHP 1.80 and PHP 1.65 per share [16]. - Suntrust issued convertible bonds with an annual interest rate of 6.0%, with total principal amount of PHP 336,000,000 due on December 30, 2022, and PHP 382,900,000 due on June 10, 2023 [17]. - SA Investments agreed to subscribe to new convertible bonds with a maximum principal amount of PHP 13,500,000,000 at an initial conversion price of PHP 1.10 per share, with a term of eight years [18]. - The overdue interest for the 2020 and 2022 convertible bonds is 8.0%, but SA Investments agreed to calculate accrued interest at 6.0%, waiving the additional 2.0% until the completion of the new convertible bond subscription [21]. - Suntrust must maintain a credit balance of at least USD 20,000,000 in a construction reserve account, as per the loan agreement with SA Investments [23]. - SA Investments will provide financing of up to USD 20,000,000 to Suntrust at an interest rate of 6.0%, effective for ten years, specifically for fulfilling CRA reserve requirements [23]. - The company has not made interest payments on the 2020 and 2022 convertible bonds due to financial conditions and cash flow needs, but has reached an agreement to restructure these payment obligations [17]. Operational Performance - The Crystal Tiger Palace remains the primary revenue source for the group, showing excellent performance in domestic operations during the first half of 2023 [34]. - Due to geopolitical tensions, the number of inbound travelers to the Russian Federation has seen an unprecedented decline, prompting the company to take measures to mitigate impacts [34]. - The company is exploring local strategic partnerships that could add value to the operations of the integrated resort during challenging times [34]. - The company is currently not pursuing further investment in the second phase of the Crystal Tiger Palace due to the ongoing geopolitical uncertainties and sanctions affecting financial flows [34]. - The company’s hotel business revenue increased to HKD 14.7 million in the first half of 2023, up from HKD 10.3 million in the same period of 2022 [40]. - The group’s total gaming and hotel revenue for the first half of 2023 was HKD 182 million, compared to HKD 177.9 million in the first half of 2022 [40]. - The Philippine gaming industry saw a 35.6% increase in total fees and tax revenue to PHP 36.2 billion (approximately HKD 5.1 billion) in the first half of 2023, with overall gaming revenue growing by 48.7% to PHP 136.4 billion (approximately HKD 19.4 billion) [37]. Cash Flow and Assets - The net cash generated from operating activities for the first half of 2023 was HKD 35.1 million, up from HKD 27.2 million in the same period of 2022, indicating positive cash flow from operations [70]. - The net cash used in investing activities for the first half of 2023 was HKD 0.6 million, a significant decrease from HKD 137 million in the first half of 2022, primarily due to reduced interest income from convertible bonds [71]. - The net cash used in financing activities for the first half of 2023 was HKD 62.6 million, mainly representing the repayment of loans amounting to approximately HKD 58.8 million and lease liabilities of HKD 3.7 million [71]. - As of June 30, 2023, cash and cash equivalents totaled HKD 762.3 million, down from HKD 831.9 million at the end of 2022, reflecting a net decrease of HKD 26.9 million during the period [70]. - The group has no pledged assets or encumbrances as of June 30, 2023, and December 31, 2022, indicating a strong asset position [74]. - The group’s net current assets amounted to HKD 906.2 million, an increase from HKD 901.7 million as of December 31, 2022, with a current ratio of 21.3 compared to 17.3 previously [69]. Shareholder and Corporate Governance - The company has granted share options to directors, with details provided in the report [166]. - The company has complied with the corporate governance code as per the Hong Kong Stock Exchange listing rules during the six months ending June 30, 2023 [180]. - The audit committee consists of three independent non-executive directors and has reviewed the interim report for the six months ending June 30, 2023, confirming compliance with applicable accounting standards [186]. - The company has established several board committees, including the audit committee, remuneration committee, nomination committee, and corporate governance committee [183]. - The remuneration for Mr. Lu includes a monthly director's fee of HKD 300,000 and a housing allowance of up to HKD 250,000, effective April 1, 2023 [185].
凯升控股(00102) - 2023 - 中期财报