恒和集团(00513) - 2023 - 中期财报

Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended December 31, 2022, the Group's performance shifted from profit to loss, with total revenue decreasing by 19.6% to HK$270 million Consolidated Statement of Profit or Loss and Other Comprehensive Income (Selected Items) | Indicator | For the six months ended December 31, 2022 (HK$'000) | For the six months ended December 31, 2021 (HK$'000) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 269,864 | 335,607 | -19.6% | | Gross Profit | 73,049 | 84,239 | -13.3% | | (Loss) / Profit before Income Tax | (7,640) | 17,011 | Shift from Profit to Loss | | (Loss) / Profit for the Period | (7,659) | 17,094 | Shift from Profit to Loss | | (Loss) / Profit attributable to Owners of the Company | (6,261) | 15,855 | Shift from Profit to Loss | | Basic (Loss) / Earnings per Share (HK cents) | (0.92) | 2.32 | Shift from Profit to Loss | Consolidated Statement of Financial Position As of December 31, 2022, the Group's total assets and net assets slightly decreased, recording net current liabilities of HK$122 million primarily due to reclassified bank loans Consolidated Statement of Financial Position (Selected Items) | Indicator | As at December 31, 2022 (HK$'000) | As at June 30, 2022 (HK$'000) | | :--- | :--- | :--- | | Non-current Assets | 2,733,981 | 2,755,018 | | Current Assets | 1,141,315 | 1,110,006 | | Current Liabilities | (1,263,720) | (1,063,782) | | Net Current (Liabilities) / Assets | (122,405) | 46,224 | | Non-current Liabilities | (202,084) | (354,876) | | Net Assets | 2,409,492 | 2,446,366 | Consolidated Statement of Cash Flows Cash flow from operating activities significantly improved, with net outflow narrowing to HK$5.15 million, though financing cash inflow decreased, leading to a period-end cash balance of HK$139 million Consolidated Statement of Cash Flows (Selected Items) | Indicator | For the six months ended December 31, 2022 (HK$'000) | For the six months ended December 31, 2021 (HK$'000) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (5,149) | (258,137) | | Net Cash Used in Investing Activities | (13,693) | (36,171) | | Net Cash From Financing Activities | 13,126 | 167,509 | | Decrease in Cash and Cash Equivalents | (5,716) | (126,799) | | Cash and Cash Equivalents at End of Period | 138,848 | 213,185 | Consolidated Statement of Changes in Equity Total equity decreased from HK$2.446 billion to HK$2.409 billion as of December 31, 2022, primarily due to a total comprehensive loss and final dividend distribution - Total equity decreased by HK$36.874 million during the period, primarily comprising two components[13] - Transactions with owners: Distribution of HK$13.662 million as final dividend for 2022[13] - Total comprehensive income: Recording a total comprehensive loss of HK$23.212 million, which includes a loss for the period of HK$7.659 million and other comprehensive loss of HK$15.553 million (mainly exchange differences)[13] Notes to the Financial Statements Note 1 Basis of Preparation Financial statements are prepared on a going concern basis, as the Board believes sufficient working capital exists despite net current liabilities and a period loss, supported by unutilized bank credit facilities - Management confirms that despite net current liabilities of HK$122 million, the going concern basis for financial statement preparation is appropriate, supported by over HK$400 million in unutilized bank credit facilities and good banking relationships[15] Note 3 Segment Information The Group operates in Jewellery, Property Investment and Development, Mining, and Investment segments, with Jewellery revenue and profit significantly declining, while Property segment loss expanded due to increased finance costs Segment Revenue and Results | Segment (For the six months ended December 31) | Revenue (HK$'000) | Segment Results (HK$'000) | | :--- | :--- | :--- | | 2022 | | | | Jewellery Business | 262,237 | 15,599 | | Property Investment and Development | 5,395 | (17,100) | | Mining Business | – | (3,399) | | Investment | 2,232 | 311 | | 2021 | | | | Jewellery Business | 329,943 | 30,344 | | Property Investment and Development | 3,875 | (2,609) | | Mining Business | – | (4,947) | | Investment | 1,789 | (2,679) | Note 4 & 5 Revenue and Finance Costs Total revenue decreased primarily due to a 20.5% reduction in Jewellery sales, while finance costs surged to HK$15.80 million as borrowing costs were no longer capitalized after property development completion - Sales of goods, primarily Jewellery, decreased from HK$330 million to HK$262 million, accounting for the main decline in total revenue[25] - Finance costs significantly increased, mainly due to total borrowing costs rising from HK$7.87 million to HK$19.90 million, coupled with a reduction in capitalized interest amounts[27] Note 8 & 9 Dividends and EPS The Board does not recommend an interim dividend, and basic loss per share was 0.92 HK cents due to the shift from profit to loss, compared to earnings per share of 2.32 HK cents in the prior period - The Board does not recommend an interim dividend (2021 corresponding period: nil)[34] Basic (Loss) / Earnings Per Share | Indicator | For the six months ended December 31, 2022 | For the six months ended December 31, 2021 | | :--- | :--- | :--- | | (Loss) / Profit attributable to owners (HK$'000) | (6,261) | 15,855 | | Weighted average number of ordinary shares | 683,118,258 | 683,118,258 | | Basic (Loss) / Earnings per share (HK cents) | (0.92) | 2.32 | Note 10, 14, 17 Key Assets and Liabilities The Group's core assets, investment properties (HK$2.11 billion) and properties under development (HK$697 million), are pledged for bank loans totaling HK$1.04 billion, with a significant portion classified as current liabilities due to demand clauses - Investment properties with a carrying value of HK$2.11 billion and properties under development of HK$697 million are pledged as security for bank borrowings[36][40] - Total bank loans amount to HK$1.041 billion, of which HK$732 million is classified as current liabilities due to "on demand" repayment clauses, despite repayment schedules extending beyond one year[45] Management Discussion and Analysis Operating Results and Business Review The Group shifted from profit to loss in H1 FY2022/23, recording a HK$6.26 million loss attributable to owners, primarily due to declining Jewellery business, increased finance costs, and exchange losses - The shift from profit to loss during the period was primarily attributable to[62] - A decrease in revenue and gross profit by HK$65.74 million and HK$11.19 million, respectively[62] - An increase in finance costs by HK$13.45 million due to interest no longer being capitalized after the completion of 'The Henley'[62] - Recording an exchange loss of HK$3.12 million (compared to a gain of HK$1.01 million in the prior period)[62] Jewellery Business The Jewellery business experienced weak demand due to global macroeconomic factors, resulting in a 20.5% revenue decrease to HK$262 million and segment profit nearly halving to HK$15.60 million - Due to global economic slowdown and rising inflation weakening market demand, Jewellery business revenue decreased by 20.5% from HK$330 million to HK$262 million[63] - Jewellery business segment profit was HK$15.60 million, a decrease of approximately 48.6% from HK$30.34 million in the prior year[63] Property Investment and Development The property segment performed strongly, with rental revenue increasing by 39.2% to HK$5.40 million due to 'The Henley' completion, and other residential projects progressing well for future growth - Rental income increased to HK$5.40 million (a 39.2% year-on-year increase), primarily due to the completion of 'The Henley' in Wan Chai and the commencement of rental income generation[64] - The Group is advancing multiple property projects, including the completed 'The Henley' in Wan Chai, the Cheung Sha Wan project expected to be completed in Q2 2023, and the planned redevelopment of a luxury residential project on Boundary Street[66] Mining Business The mining business remains largely stagnant with minimal operations, focusing solely on exploration in the Yuanling mining area, generating no revenue or significant capital investment - The operations of Hong Zhuang Gold Mine are minimal, with the Group focusing on exploration work in the Yuanling mining area, and no production activities or revenue generated during the period[67] Business Outlook The Group maintains a cautious outlook on global economic recovery, anticipating continued challenges for the Jewellery business, while cautiously optimistic about the property market's recovery driven by cross-border travel and efforts to enhance rental returns - The Group anticipates a moderate global economic recovery, but uncertainties such as the Russia-Ukraine conflict, high inflation, and the Sino-US trade war will continue to pressure the Jewellery business[69] - With the fading of the pandemic and the resumption of cross-border travel, the Hong Kong property market is expected to gradually recover, and the Group will continue to seek quality tenants for sustainable rental returns[69] Liquidity, Financial Resources and Gearing As of December 31, 2022, the Group's gearing ratio slightly increased to 29.68%, with cash and cash equivalents at HK$139 million and total bank loans of HK$1.04 billion, while the Board considers working capital ample Liquidity and Financial Resources | Indicator | As at December 31, 2022 | As at June 30, 2022 | | :--- | :--- | :--- | | Gearing Ratio | 0.2968 | 0.2903 | | Cash and Cash Equivalents (HK$'000) | 138,848 | 144,008 | | Bank Loans (HK$'000) | 1,040,952 | 1,027,421 | - The majority of the Group's bank loans are denominated in Hong Kong Dollars and US Dollars, with interest rates linked to HIBOR, Prime Rate, or US Prime Rate[74][76] Other Information Directors' and Shareholders' Interests The report details directors' and major shareholders' interests, with controlling shareholder Tamar Investments Group Limited holding 74.12% of issued share capital, and several directors holding interests via personal shares or share options - The controlling shareholder, Tamar Investments Group Limited, holds 506,339,522 shares, representing 74.12% of the company's issued share capital[83][86] - Several directors hold relevant share interests granted under the share option scheme, with Mr. Chan Wai Lap, Ms. Chan Wai Ki, and Mr. Wong Kwan Ting each holding 3,000,000 shares of relevant interests[83][84] Corporate Governance The company largely complied with corporate governance codes, with two deviations: unsegregated Chairman and CEO roles, and no independent internal audit function, which the Board deems sufficient - Deviation from Code Provision C.2.1: The roles of Chairman (Mr. Chan Wai Lap) and Chief Executive Officer are not segregated, but the Board believes the current structure, with responsibilities shared by the Chairman and Managing Director (Ms. Cheng Siu Yin), ensures sufficient balance of power[87] - Deviation from Code Provision D.2.5: The company has not established an internal audit function, but the Board believes the existing organizational structure and close monitoring by management provide adequate internal controls, and the need for such a function will be reviewed annually[88]