锦艺集团控股(00565) - 2023 - 年度业绩

Consolidated Statement of Profit or Loss and Other Comprehensive Income Continuing Operations For the year ended June 30, 2023, the company's continuing operations recorded a loss of HK$683,448 thousand, a significant increase from HK$77,683 thousand in the prior year, with total comprehensive expense for the year being HK$743,982 thousand, primarily due to exchange differences Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Loss Before Tax | (857,397) | (105,084) | | Income Tax Credit | 173,949 | 27,401 | | Loss for the Year from Continuing Operations | (683,448) | (77,683) | | Loss for the Year from Discontinued Operations | – | (10,476) | | Loss for the Year | (683,448) | (88,159) | | Total Comprehensive Expense for the Year | (743,982) | (117,127) | Loss Per Share (HK cents) | Metric | 2023 (HK cents) | 2022 (HK cents) | | :--- | :--- | :--- | | Basic and Diluted Loss from Continuing Operations | (25.42) | (3.21) | | Basic and Diluted Loss from Discontinued Operations | – | (0.38) | | Basic and Diluted Loss from Continuing and Discontinued Operations | (25.42) | (3.60) | Consolidated Statement of Financial Position Asset and Liability Structure As of June 30, 2023, the company's total equity significantly decreased to HK$268,442 thousand, with net current liabilities of HK$117,001 thousand, compared to net current assets in the prior year, and a notable reduction in investment property carrying value reflecting a subdued market Summary of Consolidated Statement of Financial Position | Metric | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Non-current Assets | | | | Investment Properties | 995,699 | 1,843,529 | | Current Assets | | | | Trade and Other Receivables | 30,538 | 22,949 | | Loans Receivable | – | 213,709 | | Bank Balances and Cash | 33,152 | 21,526 | | Current Liabilities | | | | Lease Liabilities | 120,545 | 88,808 | | Amounts Due to a Major Shareholder | 192 | 47,496 | | Total Equity | 268,442 | 1,012,424 | | Net Current (Liabilities) / Assets | (117,001) | 50,381 | | Total Assets Less Current Liabilities | 1,052,451 | 2,089,655 | - The company generated net current liabilities of HK$117,001 thousand as of June 30, 2023, but the Board believes there will be sufficient operating cash inflows to cover operating outflows in the next 12 months, thus the consolidated financial statements are prepared on a going concern basis[65][86] Notes to the Consolidated Financial Statements 1. General Information The company is a public limited company incorporated in the Cayman Islands, primarily engaged in property operation businesses, with its direct and ultimate holding company being Shengduo Limited and the ultimate controlling party being Mr. Chen Jinyan - The Company is an investment holding company, and its subsidiaries are engaged in property operation businesses[82] - The Company's direct and ultimate holding company is Shengduo Limited, and the ultimate controlling party is Mr. Chen Jinyan[81] 2. Application of New and Revised Hong Kong Financial Reporting Standards The Group has applied amendments to Hong Kong Financial Reporting Standards effective for the annual period beginning July 1, 2022, but these amendments are not expected to have a significant impact on financial position and performance - The Group has first applied the amendments to Hong Kong Financial Reporting Standards that are mandatorily effective for the annual period beginning on July 1, 2022[83] - The Directors anticipate that the application of all new and revised Hong Kong Financial Reporting Standards will not have a significant impact on the Group's financial position, performance, and disclosures in the foreseeable future[84] 3. Basis of Preparation of Consolidated Financial Statements and Principal Accounting Policies The consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and measured at historical cost, except for investment properties measured at fair value, with the Board having reviewed cash flow forecasts and prepared the statements on a going concern basis - The consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants[64] - The consolidated financial statements are prepared on a historical cost basis, except for certain investment properties which are measured at fair value at the end of each reporting period[66] - The Directors believe that the Group will be able to meet its financial obligations as they fall due in the foreseeable future, and therefore, the consolidated financial statements have been prepared on a going concern basis[86] 4. Revenue and Segment Information The Group's revenue primarily derives from property leasing and property management services, with total revenue of HK$143,233 thousand in 2023, a decrease from 2022, and property operation being the sole reportable segment whose performance is assessed by the chief operating decision maker Revenue Breakdown from Continuing Operations | Revenue Source | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Rental income from property leasing | 60,174 | 74,516 | | Property management fee income | 81,312 | 107,556 | | Property management – other related services | 1,747 | 2,529 | | Total Revenue | 143,233 | 184,601 | - The Group has only one single reportable segment in the People's Republic of China, which is the property operation segment[121] - A single tenant accounted for 10% or more of the Group's revenue for the year ended June 30, 2023, with total revenue of HK$24,781 thousand (2022: HK$33,531 thousand)[71] 5. Other Income and Other Gains and Losses For the year ended June 30, 2023, other income and other gains and losses amounted to approximately HK$28,476 thousand, a decrease from the prior year, primarily due to reduced loan interest income as loans receivable matured Breakdown of Other Income and Other Gains and Losses | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Bank interest income | 57 | 572 | | Car park income | 7,159 | 6,653 | | Service income | 2,895 | 4,709 | | Exchange (loss) / gain | (1,724) | 1,187 | | Government grants | 99 | 176 | | Loan interest income | 13,964 | 20,923 | | Imputed interest income on lease deposits | 5,570 | 5,580 | | Others | 456 | 168 | | Loss on modification of loans receivable | – | (6,812) | | Total | 28,476 | 33,156 | - The decrease in other income and other gains and losses was primarily due to the maturity of loans receivable on April 27, 2023, whereas loan interest income was generated for the full year ended June 30, 2022[12] 6. Finance Costs For the year ended June 30, 2023, finance costs were approximately HK$43,761 thousand, a slight decrease from HK$47,711 thousand in the prior year, primarily comprising interest on lease liabilities Breakdown of Finance Costs | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Interest on secured bank borrowings | 19 | – | | Interest on bonds | 1,706 | 2,080 | | Interest on lease liabilities | 42,036 | 45,631 | | Total | 43,761 | 47,711 | 7. Income Tax Credit For the year ended June 30, 2023, the income tax credit was HK$173,949 thousand, primarily from deferred tax, with China corporate income tax levied at 25% and some subsidiaries enjoying a preferential tax rate of 5% Breakdown of Income Tax Credit | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Current income tax | 4,792 | 16,478 | | Underprovision / (overprovision) in prior years | 1,640 | (3,216) | | Deferred tax | (180,381) | (40,663) | | Total | (173,949) | (27,401) | - China corporate income tax is levied at 25% of profits, and Zhengzhou Xufu Commercial Operation Management Co., Ltd., a subsidiary of the Company, is a small-profit enterprise eligible for a preferential corporate income tax rate of 5%[105] 8. Loss for the Year The loss for the year was primarily impacted by losses from changes in fair value of investment properties, impairment losses on loans receivable, and impairment losses on lease deposits, with staff costs, depreciation, and auditor's remuneration also listed as expenses Key Factors Affecting Loss for the Year | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Loss from changes in fair value of investment properties | 720,225 | 162,651 | | Impairment loss on loans receivable | 184,361 | 51,551 | | Impairment loss on lease deposits | 19,247 | – | | Impairment loss on trade receivables | 2,225 | – | Breakdown of Key Expenses | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Staff costs | 20,635 | 22,579 | | Depreciation of property, plant and equipment | 196 | 115 | | Depreciation of right-of-use assets | 1,183 | 1,140 | | Auditor's remuneration | 1,200 | 1,300 | 9. Dividends The Board does not recommend the payment of any final dividend for the year ended June 30, 2023, consistent with the prior year - The Board does not recommend the payment of any final dividend for the year ended June 30, 2023 (2022: nil)[1] - For the year ended June 30, 2022, the Board declared and paid a special dividend of HK$0.08 per share to the Company's shareholders[153] 10. Loss Per Share For the year ended June 30, 2023, basic and diluted loss per share was HK$25.42 cents, a significant increase from HK$3.60 cents in the prior year, primarily due to the increased loss attributable to owners of the Company Basic and Diluted Loss Per Share | Metric | 2023 (HK cents) | 2022 (HK cents) | | :--- | :--- | :--- | | From continuing operations | (25.42) | (3.21) | | From discontinued operations | – | (0.38) | | From continuing and discontinued operations | (25.42) | (3.60) | - The calculation of diluted loss per share did not assume the exercise of the Company's outstanding share options because their assumed exercise would result in a reduction in loss per share for both years[114] 11. Trade and Other Receivables As of June 30, 2023, total trade receivables amounted to HK$15,290 thousand, with an impairment loss provision of HK$2,129 thousand, and trade receivables over 90 days significantly increased Breakdown of Trade and Other Receivables | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables | 15,290 | 11,036 | | Less: Provision for impairment loss | (2,129) | – | | Prepayments | 1,064 | 1,185 | | Other receivables | 16,313 | 10,728 | | Total | 30,538 | 22,949 | Ageing Analysis of Trade Receivables (Before Impairment) | Ageing | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | 0 to 60 days | 4,938 | 7,196 | | 61 to 90 days | 3,214 | 1,449 | | Over 90 days | 7,138 | 2,391 | | Total trade receivables | 15,290 | 11,036 | Operations and Financial Review Business Overview The Group primarily engages in property operation businesses in China, managing and developing shopping centers through Zhongyuan Jinyi, Zhengzhou Jinfu, and Zhengzhou Xufu, with Zhongyuan Jinyi operating Jiaochao Shopping Center and Shopping Center Zone C, achieving occupancy rates of 99.0% and 95.0% respectively - The Group is principally engaged in property operation businesses in China through its wholly-owned interests in Zhongyuan Jinyi, Zhengzhou Jinfu, and Zhengzhou Xufu[118] - As of June 30, 2023, approximately 99.0% of the leasable area of Jiaochao Shopping Center was leased to approximately 134 tenants[173] - As of June 30, 2023, approximately 95.0% of the leasable area of Shopping Center Zone C was leased to approximately 106 tenants[7] Impact of COVID-19 and Rent Concessions The COVID-19 pandemic significantly impacted the Group's business, leading to shopping mall closures and pandemic controls; to support tenants, the Group provided rent, management, and operating service fee concessions totaling approximately HK$23,025 thousand to over 275 tenants in FY2023 - The Group's business was significantly impacted by shopping mall closures and pandemic control measures during the year[175] - The Group provided support to over 275 tenants by reducing their rent, management, and operating service fees on different bases, totaling approximately HK$23,025 thousand for the year ended June 30, 2023 (2022: HK$8,087 thousand)[175] Financial Performance Analysis Financial performance significantly deteriorated this year, with revenue declining due to rent concessions and a corresponding decrease in gross profit margin; losses substantially increased, primarily driven by changes in fair value of investment properties and impairment losses on loans receivable, while discontinued operations no longer generated revenue or losses Revenue For the year ended June 30, 2023, the Group's revenue was approximately HK$143,233 thousand, a decrease of about 22.4% from 2022, primarily attributed to rent, management, and operating service fee concessions provided to tenants affected by the pandemic Revenue Changes | Metric | 2023 (HK$ thousand) | 2022 (HK$ thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 143,233 | 184,601 | -22.4% | - The decrease in revenue for the year was attributed to rent, management, and operating service fee concessions provided to over 275 tenants, totaling approximately HK$23,025 thousand (2022: HK$8,087 thousand)[146] Gross Profit The gross profit margin for the year was approximately 73.8%, a decrease from 79.8% in the prior year, primarily due to reduced revenue caused by rent concessions Gross Profit Margin Changes | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Gross Profit Margin | 73.8% | 79.8% | - The decrease in gross profit margin was due to reduced revenue resulting from rent, management, and operating service fee concessions provided to over 275 tenants of Jiaochao Shopping Center and Shopping Center Zone C, who were affected by the pandemic for the year ended June 30, 2023[177] Loss for the Year The Group incurred a loss of approximately HK$683,448 thousand for the year ended June 30, 2023, with a loss ratio of 477.2%, primarily attributable to a significant decrease in the fair value of investment properties and impairment losses on loans receivable Changes in Loss for the Year and Loss Ratio | Metric | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Loss | (683,448) | (77,683) | | Loss Ratio | 477.2% | 42.1% | - The significant increase in loss was primarily attributable to: (1) a substantial decrease in the fair value of investment properties of approximately HK$720,225 thousand (2022: HK$162,651 thousand); and (2) an impairment loss on loans receivable of approximately HK$184,361 thousand (2022: HK$51,551 thousand) due to default on the renewed loan[11] Other Income and Other Gains and Losses For the year ended June 30, 2023, other income and other gains and losses amounted to approximately HK$28,476 thousand, a decrease from the prior year, primarily due to reduced loan interest income as loans receivable matured Changes in Other Income and Other Gains and Losses | Metric | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Other income and other gains and losses | 28,476 | 33,156 | - The decrease was primarily due to the maturity of loans receivable on April 27, 2023, whereas loan interest income was generated for the full year ended June 30, 2022[12] Expenses Administrative expenses remained stable, but impairment losses on loans receivable significantly increased to HK$184,361 thousand, and lease deposits also incurred HK$19,247 thousand in impairment losses, mainly due to increased credit risk and the seizure of some shops Changes in Key Expenses | Metric | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Administrative expenses | 21,766 | 23,617 | | Impairment loss on loans receivable | 184,361 | 51,551 | | Impairment loss on lease deposits | 19,247 | – | - The significant increase in impairment loss on loans receivable was due to the renewed loan not being settled by its maturity date, leading to a substantial increase in credit risk[13] - The impairment loss on lease deposits was primarily due to certain banks and financial institutions seizing some shops, increasing credit risk[180] Finance Costs For the year ended June 30, 2023, finance costs were approximately HK$43,761 thousand, representing about 30.6% of revenue, remaining largely stable compared to the prior year Changes in Finance Costs | Metric | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Finance costs | 43,761 | 47,711 | | Percentage of revenue | 30.6% | 25.8% | Dividends The Board does not recommend the payment of a final dividend for the year ended June 30, 2023, consistent with the prior year - The Board does not recommend the payment of any final dividend for the year ended June 30, 2023 (2022: nil)[183] Discontinued Operations Due to the disposal of the biotechnology segment in FY2022, discontinued operations generated no revenue or losses in FY2023, as the segment ceased operations after failing to obtain a production license - Due to the disposal of the biotechnology segment in the year ended June 30, 2022, discontinued operations generated no revenue or losses for the year ended June 30, 2023[154] - The segment had not commenced commercial production since its establishment in 2019 due to the failure to obtain a cannabidiol production license from Chinese regulatory authorities, leading the Board to decide to cease its operations[154][174] Future Plans and Prospects Business Strategies and Development The Group will continue to focus on and actively expand its property operation business by diversifying tenant types, upgrading shopping centers, launching marketing campaigns, and potentially acquiring asset-light property operation businesses to enhance flexibility, efficiency, and profitability - The Group aims to provide leasing, management, and operating services to more tenants in various shopping centers located in different regions[19] - The Group will expand its tenant types by providing leasing services to more renowned brands and continuously upgrade the tenants of its two shopping centers[19] - The Group will continue to allocate resources to its property operation business, including recruiting high-quality talent, developing shopping centers of similar scale, and potentially acquiring asset-light property operation businesses in China[186] - The Group continues to implement conservative and stringent cost control policies by managing operating costs and capital expenditures and strengthening accounts receivable management[20] Market Outlook and Recovery With the Chinese government easing pandemic controls and implementing economic stimulus policies, the economy is expected to gradually recover, leading to a rebound in household consumption, shopping mall sales, and foot traffic, and the Group anticipates no further need for rent concessions to tenants - The Chinese government began lifting lockdowns and easing control restrictions in early 2023, implementing a series of economic stimulus policies across various industries[157] - The Board believes that the reopening will bring positive impacts to the economic recovery in the coming year, with demand for goods and services recovering and prices accelerating, especially in household consumption[157] - Shopping mall sales and foot traffic are expected to gradually recover in the future, and this anticipated robust growth will also boost tenant confidence; consequently, the Group will no longer need to provide rent concessions to tenants in the future[157] Liquidity and Financial Resources Financial Position As of June 30, 2023, the Group recorded net current liabilities of HK$117,001 thousand, with total equity significantly decreasing to HK$268,442 thousand, and the current ratio falling to 35.2%, though internal resources and major shareholder support are expected to cover commitments Summary of Liquidity and Financial Resources | Metric | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Net current liabilities | (117,001) | 50,381 (Net current assets) | | Total Equity | 268,442 | 1,012,424 | | Cash and bank deposits | 33,152 | 21,526 | | Current Ratio | 35.2% | 124.2% | - The Group anticipates that its business operations and financial support from a major shareholder of the Company will generate sufficient resources to meet short-term and long-term commitments[159] Financing and Capital Structure As of June 30, 2023, the Group had no loan financing, with total bonds amounting to approximately HK$10,003 thousand and a total debt-to-equity ratio of approximately 3.7%, and the company's share capital is entirely composed of ordinary shares - As of June 30, 2023, the Group had no loan financing (2022: nil)[190] Bonds and Debt Ratio | Metric | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Total bonds | 10,003 | 25,344 | | Total debt ratio (bonds to shareholders' funds) | 3.7% | 2.5% | - As of June 30, 2023, the Company's share capital was entirely composed of ordinary shares[191] Risk Management The Group's primary transactions are denominated in RMB, thus it is not exposed to significant foreign exchange risk and does not use financial instruments for hedging; the Board monitors interest rate risk and considers hedging policies when necessary - For the year ended June 30, 2023, the Group was not exposed to any significant foreign exchange risk as most of its transactions were denominated in RMB[25] - The Board monitors interest rate risk and may consider hedging policies when necessary[192] Pledged Assets and Capital Commitments As of June 30, 2023, the Group had not pledged any assets to banks or financial institutions, nor did it have any capital commitments related to property, plant, and equipment - As of June 30, 2023, the Group had not pledged any assets to any banks or financial institutions (2022: nil)[162] - As of June 30, 2023, the Group had no capital commitments in respect of property, plant and equipment (2022: nil)[33] Capital Expenditure For the year ended June 30, 2023, the Group invested approximately HK$203 thousand in property, plant, and equipment, primarily for furniture, fixtures, office equipment, and motor vehicles, a significant decrease from the prior year Changes in Capital Expenditure | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Investment in property, plant and equipment | 203 | 3,981 | - Investments were made for the purchase of furniture, fixtures, office equipment, and motor vehicles[193] Corporate Governance and Other Information Staff Policy As of June 30, 2023, the Group employed 144 staff in China and Hong Kong, offering competitive remuneration, retirement schemes, and benefits, and contributing to social security and provident funds in accordance with local regulations - As of June 30, 2023, the Group employed a total of 144 staff in China and Hong Kong[199] - The Group's employees enjoy a comprehensive and competitive remuneration, retirement scheme, and benefits package, with discretionary bonuses awarded based on their performance[199] - The Group is required to contribute to social security schemes in China and has established a provident fund scheme for its Hong Kong employees[199] Purchase, Sale or Redemption of the Company's Listed Securities For the year ended June 30, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the year ended June 30, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[28] Contingent Liabilities As of the end of the reporting period, neither the Group nor the Company had any significant contingent liabilities - As of the end of the reporting period, neither the Group nor the Company had any significant contingent liabilities[164] Audit Committee The Company's Audit Committee, comprising three independent non-executive directors, is responsible for reviewing financial reporting processes, risk management, internal controls, and financial performance, and has reviewed the consolidated financial statements for the year - The Company's Audit Committee is composed of three independent non-executive Directors of the Company[165] - The primary responsibilities of the Audit Committee include reviewing the Group's financial reporting processes, risk management, internal controls, and financial performance[165] - The Audit Committee, together with management and external auditors, has reviewed the accounting principles and practices adopted by the Group and discussed audit and financial reporting matters, including the review of the consolidated financial statements and annual results for the year ended June 30, 2023[165] Code on Corporate Governance Practices The Board believes that the Company has complied with the Code on Corporate Governance Practices set out in Appendix 14 to the Listing Rules throughout the year ended June 30, 2023 - The Board considers that the Company has complied with the Code on Corporate Governance Practices set out in Appendix 14 to the Listing Rules throughout the year ended June 30, 2023[36] Standard Code for Securities Transactions by Directors The Group has adopted the Standard Code set out in Appendix 10 to the Listing Rules as the code of conduct for directors' securities transactions, and all directors have confirmed compliance throughout the year - The Group has adopted the Standard Code set out in Appendix 10 to the Listing Rules as the code of conduct regarding directors' securities transactions[202] - All Directors of the Company have confirmed that they have complied with the required standards set out in the Standard Code throughout the year ended June 30, 2023[202] Events After the Reporting Period The Group has agreed with the borrower on a revised repayment schedule for the renewed loan, with the final repayment date set for January 31, 2024, and all interest will be waived - The Group has engaged in discussions with the borrower and agreed on a revised repayment schedule for the renewed loan, with the final repayment date set for January 31, 2024[29] - If the borrower repays the principal of the renewed loan according to the revised repayment schedule, the lender will waive all interest (including any penalty interest) arising from the renewed loan[29] Publication of Results Announcement and Annual Report This announcement has been published on the HKEXnews website and the Company's website, and the annual report for the year ended June 30, 2023, will be dispatched to shareholders and published on the aforementioned websites in due course - This announcement is published on the HKEXnews website (https://www.hkexnews.hk) and the Company's website (https://artgroup.etnet.com.hk)[37](index=37&type=chunk) - The annual report for the year ended June 30, 2023, will be dispatched to the Company's shareholders and published on the aforementioned websites in due course[37] Board Composition As of the date of this announcement, the Company's executive directors are Mr. Chen Jinyan and Mr. Chen Jindong, and the independent non-executive directors are Mr. Kwan Chi Fai, Ms. Cheung Sze Pui, and Ms. Wong Yuk Chun - As of the date of this announcement, the executive directors of the Company are Mr. Chen Jinyan and Mr. Chen Jindong; and the independent non-executive directors of the Company are Mr. Kwan Chi Fai, Ms. Cheung Sze Pui, and Ms. Wong Yuk Chun[203]