中绿(00904) - 2022 - 中期财报

Financial Summary and Performance Review Key Financial Data For H1 2021/22, the Group's turnover slightly decreased by 0.5% to RMB 368.06 million, with loss narrowing to RMB 54.61 million, yet significant net current liabilities and net liabilities at period-end raise substantial going concern uncertainties Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric (RMB '000) | 2021/22 H1 (Unaudited) | 2020/21 H1 (Unaudited) | YoY Change | | :--- | :--- | :--- | :--- | | Turnover | 368,062 | 370,037 | -0.5% | | Gross Profit | 22,736 | 33,023 | -31.1% | | Operating Loss | (38,165) | (41,490) | -8.0% | | Loss Attributable to Owners of the Company for the Period | (54,612) | (55,783) | -2.1% | | Basic Loss Per Share (RMB Cents) | 12.5 | 15.3 | -18.3% | Balance Sheet Summary | Balance Sheet Item (RMB '000) | October 31, 2021 (Unaudited) | April 30, 2021 (Audited) | | :--- | :--- | :--- | | Total Assets | 877,796 | 977,111 | | Total Liabilities | 1,110,144 | 1,168,204 | | Net Current Liabilities | (237,261) | (256,588) | | Net Liabilities | (232,348) | (191,093) | - The company faces significant going concern uncertainties, primarily due to net current liabilities of approximately RMB 237 million and net liabilities of approximately RMB 232 million as of October 31, 2021. Additionally, convertible notes with a principal amount of approximately HKD 190 million matured in August 2019 and remain unpaid[26] Business Segment Performance The Group's two main business segments showed divergent performance, with 'Fresh Agricultural and Processed Products' revenue slightly declining by 1.14% due to weather-related output reduction, while 'Branded Food Products and Other Products' revenue grew by 8.21% benefiting from recovering domestic consumption Revenue by Business Segment | Business Segment (RMB '000) | 2021/22 H1 (Unaudited) | 2020/21 H1 (Unaudited) | YoY Change | | :--- | :--- | :--- | :--- | | Fresh Agricultural and Processed Products | 342,035 | 345,985 | -1.14% | | Branded Food Products and Other Products | 26,027 | 24,052 | +8.21% | | Total | 368,062 | 370,037 | -0.53% | - The slight decrease in revenue from Fresh Agricultural and Processed Products was due to a slight reduction in fresh agricultural product output caused by a sharp drop in temperature in Northeast China during the latter part of the review period[60] - The growth in revenue from Branded Food Products and Other Products primarily benefited from the overall control of the COVID-19 pandemic in mainland China and the gradual recovery of consumer demand[61] Profitability Analysis During the reporting period, both the Group's gross profit and gross profit margin significantly declined, primarily due to reduced output and revenue in the core agricultural products segment impacted by weather; however, loss attributable to owners of the company narrowed by 2.1% year-over-year, driven by increased other income from government land acquisition, effective sales expense control, and fair value gains on biological assets - Gross profit decreased from RMB 33.023 million in the prior period to RMB 22.736 million, with gross profit margin falling from 8.92% to 6.18%, primarily due to reduced output from Baicheng farmland caused by a sharp temperature drop in Northeast China, leading to lower revenue in the fresh agricultural products segment[64] - Total operating expenses decreased from RMB 80.713 million in the prior period to RMB 76.643 million, mainly due to reduced promotion expenses and lower administrative expenses from staff streamlining[66] - Loss attributable to owners of the company narrowed to RMB 54.612 million, primarily due to (i) increased other income from government acquisition of Hubei land assets; (ii) reduced sales and distribution expenses; and (iii) gains from fair value changes of biological assets[67] Management Discussion and Analysis Liquidity and Capital Resources The Group faces severe liquidity risk, with net current liabilities reaching RMB 237 million and a current ratio of 0.6x at period-end, primarily pressured by defaulted HKD 190 million convertible notes and RMB 238 million in bank loans; management is actively pursuing debt restructuring and has secured financial support from the Chairman Liquidity Metrics | Metric | October 31, 2021 | April 30, 2021 | | :--- | :--- | :--- | | Net Current Liabilities | RMB 237 million | RMB 257 million | | Current Ratio | 0.60 times | 0.60 times | | Cash and Cash Equivalents | RMB 133 million | RMB 147 million | | Bank Borrowings | RMB 238 million | RMB 239 million | - Current liabilities primarily include HKD 190 million convertible notes that matured and defaulted in August 2019, and RMB 238 million in bank loans from mainland China[69] - Mitigation measures include debt restructuring negotiations with noteholders, contacting banks for credit financing, and a written confirmation from Chairman Mr. Sun Shaofeng to continue providing financial support to the Group[30][69] Capital Structure and Financing Activities During the reporting period, the company successfully raised approximately HKD 14.2 million net proceeds from a placing of 73.03 million new shares for general working capital, yet an overdue defaulted HKD 190 million convertible note remains unresolved with a statutory demand for payment issued, and a planned USD 30 million bond issuance has been cancelled - The company completed a placing of 73,031,674 new shares at HKD 0.2 per share in July 2021, raising net proceeds of approximately HKD 14.2 million for general working capital and potential investments[85][86][88] - In November 2021, the company received a statutory demand for payment from convertible noteholders, requesting repayment of HKD 190 million principal and accrued interest, totaling approximately HKD 242 million[92] - A previously planned bond issuance with a maximum principal amount of USD 30 million has lapsed and will not proceed, as no formal agreement was entered into within the stipulated timeframe[95] Significant Investments, Acquisitions, and Disposals During the reporting period, the Group actively disposed of assets to improve its financial position, completing the sale of land and assets in Hubei for RMB 4.8 million, agreeing with the Hebei local government to recover land use rights for approximately RMB 14.1 million in compensation, and selling a financial asset to resolve a prior audit qualification - The sale of state-owned construction land use rights and related assets in Hubei for RMB 4.8 million was completed in August 2021[101] - An agreement was entered into with the Wanquan District Government of Zhangjiakou City, Hebei, for the government to recover state-owned construction land use rights in the district, with compensation of RMB 14,097,374.64, though the transaction is not yet completed[103] - A financial asset (a 4.49% equity interest in a Hong Kong unlisted company) was sold for HKD 100,000, resolving a previous audit qualification[104][106] Litigation and Contingent Liabilities The Group is involved in multiple legal proceedings initiated by Convoy Global Holdings Limited and its affiliates; the company is vigorously defending all lawsuits and has not recognized any provision for contingent liabilities as of the reporting period end - The company is a defendant in multiple lawsuits, with plaintiffs including Convoy Global Holdings Limited, Convoy Finance Limited, and Convoy Investment Services Limited[73][76][81] - The company has vigorously defended the relevant lawsuits and submitted defense statements; as of the reporting period end, these lawsuits are ongoing[73][75] - As of October 31, 2021, the Group has not made any provision for contingent liabilities related to the lawsuits[98] Outlook and Prospects Management maintains cautious optimism for the future, anticipating opportunities from China's economic recovery and consumption upgrade driving demand for healthy branded foods, and plans to enhance market competitiveness through diversified marketing, new retail channel expansion, cost control, and brand investment - Management believes that consumption upgrades, domestic demand stimulation, and public attention to nutritious and healthy food provide a favorable environment for the Group's sales performance[70] - Future plans include increasing brand investment and promotion, expanding business volume through new retail and community retail models, and adhering to prudent financial management and cost control[72] Other Important Information Directors' and Shareholders' Interests As of the reporting period end, Chairman Mr. Sun Shaofeng held approximately 4.18% of the company's shares through his controlled entity, while Convoy Finance Limited, holding convertible notes, was deemed to have a potential interest of approximately 21.68%, making it a major shareholder; additionally, certain directors and employees held granted share options - Chairman and CEO Mr. Sun Shaofeng holds 18,327,330 shares, representing approximately 4.18% of the company's equity, through his controlled entity Capital Mate Limited[112] - Convoy Finance Limited and its holding company, Convoy Global Holdings Limited, are deemed to have approximately 21.68% interest in the company due to holding convertible notes convertible into 95,000,000 shares[121][122] - As of October 31, 2021, the company had 31,361,425 outstanding share options, with Executive Directors Mr. Sun Shaofeng and Mr. Wang Jinhuo holding 3.4 million and 3.25 million options respectively[115][118] Corporate Governance The company has adopted the Corporate Governance Code but had several deviations during the reporting period, including the Chairman also serving as CEO, no directors' liability insurance, and management not providing monthly updates to the board; the company provided explanations, deeming existing arrangements reasonable and risks controllable - Chairman Mr. Sun Shaofeng also serves as Chief Executive Officer, which the Board believes ensures consistent leadership for the Group, with the existing Board structure effectively balancing power[128] - The company has not purchased liability insurance for directors, as the Board considers the associated risks low and the cost of insurance potentially outweighing the benefits[126] - The Audit Committee, comprising three independent non-executive directors, has reviewed the interim results and deemed them compliant with applicable accounting standards and Listing Rules[131] Employees and Remuneration As of October 31, 2021, the Group employed 418 staff, with total employee and director remuneration for the period amounting to approximately RMB 9.21 million; the company bases remuneration on individual performance and market levels, also providing training opportunities Employee Statistics and Remuneration | Metric | October 31, 2021 | | :--- | :--- | | Total Employees | 418 persons | | Of which: Plantation Workers | 280 persons | | Total Employee and Director Remuneration for the Period | Approximately RMB 9,210,000 |