大生地产(00089) - 2023 - 中期业绩

Financial Highlights Overview For the six months ended June 30, 2023, the Group's revenue grew 7.9% to HK$230.3 million, but profit for the period decreased to HK$146.5 million, mainly due to lower fair value gains on investment properties Financial Summary for the Six Months Ended June 30, 2023 | Metric | 2023 (HK$ million) | 2022 (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 230.3 | 213.4 | +7.9% | | Profit for the Period | 146.5 | 261.4 | -44.0% | | Fair Value Gain on Investment Properties (net of US deferred tax) | 152.0 | 220.0 | -30.9% | | Underlying Profit/(Loss) Excluding Property Revaluation Gains | (5.5) | 41.4 | -113.3% | | Interim Dividend Per Ordinary Share | HK 6 cents | HK 14 cents | -57.1% | Condensed Consolidated Interim Financial Information Condensed Consolidated Statement of Profit or Loss - Unaudited For the six months ended June 30, 2023, the Group reported revenue of HK$230,280 thousand and gross profit of HK$131,489 thousand, with profit for the period significantly decreasing to HK$146,523 thousand from HK$261,418 thousand in the prior year Key Figures from Condensed Consolidated Statement of Profit or Loss | Metric | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 230,280 | 213,429 | | Cost of Sales | (98,791) | (80,453) | | Gross Profit | 131,489 | 132,976 | | Fair Value Gain on Investment Properties | 130,580 | 187,181 | | Operating Profit | 191,998 | 257,045 | | Net Finance Costs | (62,284) | (21,627) | | Profit for the Period | 146,523 | 261,418 | | Earnings Per Share (Basic and Diluted) | HK$0.43 | HK$0.82 | Condensed Consolidated Statement of Comprehensive Income - Unaudited For the six months ended June 30, 2023, the Group's total comprehensive income decreased to HK$145,942 thousand from HK$261,839 thousand in the prior year, with HK$123,291 thousand attributable to company shareholders Key Figures from Condensed Consolidated Statement of Comprehensive Income | Metric | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Profit for the Period | 146,523 | 261,418 | | Other Comprehensive Income | (581) | 421 | | Total Comprehensive Income for the Period | 145,942 | 261,839 | | Total Comprehensive Income Attributable to Company Shareholders | 123,291 | 236,651 | | Total Comprehensive Income Attributable to Non-controlling Interests | 22,651 | 25,188 | Condensed Consolidated Statement of Financial Position - Unaudited As of June 30, 2023, the Group's total assets slightly increased to HK$12,237,676 thousand, with total equity at HK$9,242,666 thousand and net current liabilities at HK$1,002,226 thousand, primarily due to short-term bank loans Key Figures from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2023 (HK$ thousand) | December 31, 2022 (HK$ thousand) | | :--- | :--- | :--- | | Total Assets | 12,237,676 | 12,133,849 | | Non-current Assets | 11,955,125 | 11,839,719 | | Current Assets | 282,551 | 294,130 | | Total Equity | 9,242,666 | 9,115,120 | | Total Liabilities | 2,995,010 | 3,018,729 | | Net Current Liabilities | (1,002,226) | (820,403) | Notes to the Condensed Consolidated Interim Financial Information Basis of Preparation and Accounting Policies The condensed consolidated interim financial information is prepared under the historical cost convention, with fair value adjustments for investment properties and financial assets at fair value through other comprehensive income, in compliance with HKAS 34 - The condensed consolidated interim financial information is prepared under the historical cost convention, with fair value adjustments for investment properties and financial assets at fair value through other comprehensive income, in compliance with Hong Kong Accounting Standard 34[9] - The Group's net current liabilities as of June 30, 2023, were HK$1,002,226 thousand (December 31, 2022: HK$820,403 thousand), primarily comprising short-term bank loans of HK$298,000 thousand and the current portion of long-term bank loans of HK$851,908 thousand[10] - The directors believe the Group has sufficient financial resources for operations and to meet liabilities, intending to secure new loan facilities to replace those maturing within one year, thus preparing the condensed consolidated interim financial information on a going concern basis[10] Revenue and Segment Information The Group's operating segments are primarily Hong Kong and North America, with total revenue of HK$230,280 thousand for the six months ended June 30, 2023, mainly from property leasing, and performance is assessed based on geographical segment profit/loss, assets, and liabilities - The chief operating decision maker, identified as the Company's executive directors, considers business from a geographical perspective, confirming the Group's operating segments as Hong Kong and North America[13] - The chief operating decision maker assesses operating segment performance based on profit/(loss) after tax, excluding fair value changes of investment properties (net of US deferred income tax), and their segment assets and liabilities[58] Revenue from External Customers For the six months ended June 30, 2023, total revenue from external customers increased by 7.9% to HK$230,280 thousand, driven by stable investment property rental income and significant growth in hotel and catering operations Revenue from External Customers | Revenue Source | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Property Leasing - Investment Properties | 157,575 | 157,021 | | Property Leasing - Properties Held for Sale | 12,139 | 14,066 | | Property Related Services | 14,217 | 13,511 | | Hotel Operations | 37,767 | 23,785 | | Catering Operations | 8,582 | 5,046 | | Total Revenue | 230,280 | 213,429 | Segment Results, Assets and Liabilities For the six months ended June 30, 2023, the Hong Kong segment reported total revenue of HK$199,325 thousand and profit of HK$199,669 thousand, while the North America segment recorded total revenue of HK$30,955 thousand and a loss of HK$53,146 thousand Segment Revenue (For the Six Months Ended June 30, 2023) | Segment | Property Leasing (HK$ thousand) | Property Related Services (HK$ thousand) | Hotel Operations (HK$ thousand) | Catering Operations (HK$ thousand) | Total Revenue (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 138,759 | 14,217 | 37,767 | 8,582 | 199,325 | | North America | 30,955 | - | - | - | 30,955 | | Total | 169,714 | 14,217 | 37,767 | 8,582 | 230,280 | Segment Results (For the Six Months Ended June 30, 2023) | Segment | Profit/(Loss) for the Period (HK$ thousand) | | :--- | :--- | | Hong Kong | 199,669 | | North America | (53,146) | | Total | 146,523 | Segment Assets (As of June 30, 2023) | Segment | Segment Assets (HK$ thousand) | | :--- | :--- | | Hong Kong | 11,518,118 | | North America | 719,558 | | Total | 12,237,676 | Net Costs and Expenses For the six months ended June 30, 2023, the Group's total cost of sales, administrative expenses, and other operating expenses net increased to HK$172,591 thousand, driven by higher depreciation, investment property expenses, hotel and catering operating expenses, and employee benefits Net Costs and Expenses | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Depreciation | 24,034 | 27,108 | | Investment Property Related Expenses | 33,025 | 28,974 | | Hotel and Catering Operating Expenses | 31,814 | 22,036 | | Other Employee Benefits Expenses, Net | 40,574 | 36,578 | | Government Subsidies | - | (1,900) | | Total Cost of Sales, Administrative Expenses and Other Operating Expenses, Net | 172,591 | 144,129 | - In 2022, Hong Kong government subsidies for the hotel and catering industries amounted to HK$1.9 million, while wage subsidies of HK$1.512 million under the Employment Support Scheme were offset against other employee benefits expenses[34] Other Net Gains For the six months ended June 30, 2023, the Group's other net gains significantly increased to HK$3,729 thousand from HK$564 thousand in the prior year, primarily due to gains from the disposal of investment properties and assets classified as held for sale Other Net Gains | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Dividend Income from Financial Assets at Fair Value Through Other Comprehensive Income | 688 | 679 | | Gain on Disposal of Investment Properties | 1,080 | - | | Gain on Disposal of Assets Classified as Held for Sale | 2,000 | - | | Net Loss on Disposal of Property, Plant and Equipment | (39) | (115) | | Total | 3,729 | 564 | Finance Income and Finance Costs For the six months ended June 30, 2023, the Group's net finance costs significantly increased to HK$(62,284) thousand from HK$(21,627) thousand in the prior year, mainly due to a substantial rise in interest expenses on bank loans Finance Income and Finance Costs | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Bank Interest Income | 564 | 131 | | Interest Expense on Bank Loans | (62,848) | (21,758) | | Net Finance Costs | (62,284) | (21,627) | Income Tax Reversal For the six months ended June 30, 2023, the Group recorded an income tax reversal of HK$16,809 thousand, a decrease from HK$26,000 thousand in the prior year, primarily due to a reduction in US deferred income tax reversal Income Tax Reversal | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Current Income Tax - Hong Kong Profits Tax | (2,786) | (4,479) | | Current Income Tax - US Tax | (13) | (13) | | Deferred Income Tax Reversal/(Expense) - Hong Kong | (1,792) | (2,391) | | Deferred Income Tax Reversal/(Expense) - US | 21,400 | 32,830 | | Total Income Tax Reversal | 16,809 | 26,000 | - Hong Kong profits tax provision is calculated at a rate of 16.5% on estimated assessable profits for the period, with no overseas tax provision required as overseas subsidiaries had no estimated assessable profits (except for US minimum state tax)[63] Earnings Per Share For the six months ended June 30, 2023, profit attributable to company shareholders was HK$123,594 thousand, resulting in basic earnings per share of HK$0.43, a decrease from HK$0.82 in the prior year, with diluted earnings per share equal to basic earnings per share due to no potential dilutive ordinary shares - Basic earnings per share is calculated based on profit attributable to company shareholders of HK$123,594 thousand (2022: HK$236,439 thousand) and 287,670 thousand ordinary shares outstanding during the period[65] - Diluted earnings per share is equal to basic earnings per share as there were no potentially dilutive ordinary shares for the six months ended June 30, 2023 and 2022[65] Dividends The Board declared an interim dividend of HK 6 cents per ordinary share for the year ending December 31, 2023, totaling HK$17,260 thousand, a reduction from HK 14 cents (totaling HK$40,274 thousand) in the prior year Interim Dividends Declared | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Interim dividend declared of HK 6 cents (2022: HK 14 cents) per ordinary share | 17,260 | 40,274 | - The Board declared an interim dividend of HK 6 cents per ordinary share for the year ending December 31, 2023, on August 28, 2023, which has not been recognized as a liability in the condensed consolidated interim financial information[65] Trade and Other Receivables As of June 30, 2023, the Group's net trade receivables were HK$3,342 thousand, slightly lower than HK$3,527 thousand as of December 31, 2022, primarily comprising rental and management fee receivables, with a 30-day credit period for management fees - Net trade receivables amounted to HK$3,342 thousand (December 31, 2022: HK$3,527 thousand), primarily comprising rental and management fee receivables[36][37] Ageing Analysis of Trade Receivables | Ageing | June 30, 2023 (HK$ thousand) | December 31, 2022 (HK$ thousand) | | :--- | :--- | :--- | | 0 to 30 days | 1,352 | 1,584 | | 31 to 60 days | 189 | 147 | | 61 to 90 days | 164 | 110 | | Over 90 days | 1,637 | 1,686 | | Total | 3,342 | 3,527 | Trade and Other Payables As of June 30, 2023, the Group's trade payables decreased to HK$10,572 thousand from HK$13,817 thousand as of December 31, 2022 Ageing Analysis of Trade Payables | Ageing | June 30, 2023 (HK$ thousand) | December 31, 2022 (HK$ thousand) | | :--- | :--- | :--- | | 0 to 30 days | 9,095 | 11,540 | | 31 to 60 days | 741 | 1,167 | | 61 to 90 days | 109 | 379 | | Over 90 days | 627 | 731 | | Total | 10,572 | 13,817 | Chairman's Statement Results The Group's consolidated profit for the first half of 2023 decreased by 44.0% to HK$146.5 million, primarily due to reduced fair value gains on investment properties and significantly increased interest expenses, resulting in an underlying loss of HK$5.5 million - The Group's consolidated profit for the first half of 2023 was HK$146.5 million, a decrease of HK$114.9 million or 44.0% compared to the same period in 2022[69] - Excluding the impact of fair value changes in investment properties, the Group recorded an underlying loss of approximately HK$5.5 million, compared to an underlying profit of HK$41.4 million in the prior year, mainly due to a 188.1% increase in interest expenses to HK$62.8 million[41] - The Group's total revenue increased by HK$16.9 million or 7.9% to HK$230.3 million, with hotel and catering operations contributing a significant increase of HK$17.5 million or 60.8%[70] - As of June 30, 2023, the Group's investment properties were valued at HK$9.941 billion, an increase of 0.9% compared to December 31, 2022[42] Dividends The directors declared an interim dividend of HK 6 cents per ordinary share, a decrease from HK 14 cents in the prior year - The directors declared an interim dividend of HK 6 cents per ordinary share (2022: HK 14 cents)[43] Outlook The global economy remains affected by geopolitical conflicts, high inflation, and interest rates, while the lifting of travel restrictions and recovery of inbound tourism are key drivers for Hong Kong's economy, with the Group maintaining a cautious and prudent policy - The global economy continues to be negatively impacted by the ongoing Russia-Ukraine conflict, high inflation, and high interest rates in major Western economies, with persistent US-China and geopolitical tensions hindering export trade in mainland China and Hong Kong[43] - The lifting of global travel restrictions and the recovery of inbound tourism are major drivers for Hong Kong's economic growth[43] - The US federal funds rate is expected to remain high for the rest of 2023, and Hong Kong's interest rates are also anticipated to stay at current high levels[71] - The Group will continue to monitor current developments cautiously and make appropriate adjustments as circumstances dictate, adhering to a prudent policy[44] Management Discussion and Analysis Business Review The Group's business review covers property leasing performance in Hong Kong and the US, alongside significant growth in hotel and catering operations, with Hong Kong property rental income slightly up and US property rental income down due to market downturn Hong Kong Property Leasing Gross rental income in Hong Kong for the first half of 2023 increased by 3.2% to HK$138.8 million, primarily due to rent increases at Bridgepoint, partially offset by decreases at Early Bird Residence, with a recovery observed in the retail and industrial property leasing markets - Gross rental income in Hong Kong for the first half of 2023 was HK$138.8 million, an increase of HK$4.3 million or 3.2% compared to the same period last year[46] - This increase primarily stemmed from rent hikes at Bridgepoint, though slightly offset by a decrease in rent at Early Bird Residence[46] - The retail and industrial property leasing markets showed signs of recovery[46] US Property Leasing Gross rental income from Montgomery Plaza in the US for the first half of 2023 decreased by 15.5% to HK$31.0 million, with office occupancy at 74.0% amid a sluggish San Francisco office leasing market, anticipating further declines in future gross rental income - Gross rental income from Montgomery Plaza in the US for the first half of 2023 was HK$31.0 million, a decrease of HK$5.7 million or 15.5% compared to the same period last year[47] - As of the first half of 2023, Montgomery Plaza's office occupancy rate was 74.0%[47] - The San Francisco office leasing market remains sluggish, with negative absorption in the first half of 2023, and gross rental income from Montgomery Plaza is expected to decline further in the foreseeable future[47] Hotel and Catering Operations Hotel room and catering revenue for the first half of 2023 increased by 60.8% to HK$46.3 million, driven by the return of mainland Chinese tourists, with average occupancy rates at The Arca and The Figo reaching 81.4% and 96.3% respectively, and significant EBITDA growth for both hotels - Hotel room revenue and catering revenue for the first half of 2023 amounted to HK$46.3 million, an increase of HK$17.5 million or 60.8% compared to the same period last year, primarily driven by the return of tourists from mainland China[73] Hotel Average Occupancy Rate and EBITDA | Hotel | H1 2023 Average Occupancy Rate | H1 2022 Average Occupancy Rate | H1 2023 EBITDA (HK$ million) | H1 2022 EBITDA (HK$ million) | | :--- | :--- | :--- | :--- | :--- | | The Arca | 81.4% | 70.0% | 4.6 | 0.1 | | The Figo | 96.3% | 88.4% | 2.5 | 0.9 | Liquidity and Financial Resources The Group closely monitors cash flow and funding needs, possessing sufficient committed bank facilities and actively seeking refinancing for maturing loans, with proceeds from property disposals used to enhance working capital - The Group has sufficient committed and available bank facilities to meet current and future business needs, and has initiated contact with banks to seek financing and refinancing for loans maturing within one year, receiving positive responses[48] - In the first half of 2023, the Group disposed of two properties in Sing Win Factory Building, Kwai Chung, for a total consideration of HK$17.5 million, realizing a total disposal gain of approximately HK$3.1 million, with proceeds used to enhance the Group's working capital during the period[75] - There is no foreign exchange risk as bank borrowings are denominated in HKD or USD, and principal and interest will be repaid in the respective loan currencies[49] Group Capital Structure The Group's capital structure remained largely unchanged, with total bank borrowings slightly increasing to HK$2.5774 billion, primarily secured by properties and their rental income, and interest calculated at floating rates without significant foreign exchange risk - The Group's total bank borrowings increased by HK$3.4 million to HK$2.5774 billion (December 31, 2022: HK$2.574 billion), including outstanding long-term bank loans of HK$2.2794 billion[76] - Bank borrowings of approximately HK$2.5594 billion are secured by certain properties with an aggregate carrying value of HK$8.4164 billion and their rental income[52] - Interest on bank borrowings is calculated at floating rates (spread plus HIBOR or LIBOR), while overdraft interest is at the Hong Kong Prime Rate of 5.875%[52] - The Group's borrowings and cash and cash equivalents are primarily denominated in HKD and USD, thus posing no significant foreign exchange fluctuation risk[78] Long-term Bank Loan Maturity Schedule | Maturity Period | June 30, 2023 (HK$ thousand) | December 31, 2022 (HK$ thousand) | | :--- | :--- | :--- | | Within one year | 851,908 | 692,310 | | In the second year | 1,427,497 | 1,222,876 | | In the third to fifth year | - | 378,851 | | Total | 2,279,405 | 2,294,037 | Capital Expenditure Capital expenditure for the first half of 2023 was HK$18.3 million, primarily for property, plant, and equipment acquisition, property improvements, and construction works, with capital commitments of HK$12.6 million expected to be funded by future operating income, bank borrowings, and other financing - Capital expenditure for the first half of 2023 amounted to HK$18.3 million (2022: HK$13.5 million)[51] - Capital commitments as of June 30, 2023, were HK$12.6 million (December 31, 2022: HK$14.1 million)[51] - Capital expenditure and commitments are primarily related to the acquisition of property, plant and equipment, property improvements, and construction works, expected to be funded by future operating income, bank borrowings, and other applicable financing channels[51] Contingent Liabilities As of June 30, 2023, the Group had no significant contingent liabilities or guarantees - As of June 30, 2023, the Group had no significant contingent liabilities or guarantees (December 31, 2022: Nil)[53] Employees and Remuneration Policy As of June 30, 2023, the Group employed 276 full-time staff, offering competitive remuneration including discretionary bonuses, insurance, medical plans, and MPF, with annual reviews for promotion and compensation, and director remuneration determined by the Board based on the Remuneration Committee's recommendations - As of June 30, 2023, the Group employed a total of 276 full-time employees (including the Company's directors)[55] - In addition to salaries, other benefits include discretionary bonuses, insurance, medical plans, and a Mandatory Provident Fund Scheme, with annual reviews for employee promotion and remuneration[55][91] - The remuneration of the Company's directors is recommended by the Remuneration Committee based on the Group's operating results, individual duties and performance, and comparable market data, and decided by the Board[81] - The Company has not adopted any share option scheme as an incentive for directors and eligible employees[56] Significant Investments, Acquisitions or Disposals of Subsidiaries, Associates and Joint Ventures For the half-year ended June 30, 2023, the Group held no significant investments, nor were there any significant acquisitions or disposals of subsidiaries, associates, or joint ventures - For the half-year ended June 30, 2023, there were no significant investments held, nor any significant acquisitions or disposals of subsidiaries, associates, or joint ventures[82] Repurchase, Sale or Redemption of the Company's Shares During the period, neither the Company nor its subsidiaries repurchased, sold, or redeemed any of the Company's shares - During the period, the Company did not redeem any of its shares, nor did the Company or its subsidiaries repurchase or sell any of the Company's shares[92] Corporate Governance The Company complied with the Corporate Governance Code during the period, except for the combined roles of Chairman and Chief Executive Officer, which the Board believes provides consistent leadership and ensures a balance of power and authority through independent directors - The Company has complied with the code provisions of the Corporate Governance Code set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited during the period, except for the combined roles of Chairman and Chief Executive Officer[93][83] - The Board believes that combining the roles of Chairman and Chief Executive Officer provides strong and consistent leadership for the Company, facilitating effective planning and implementation of its strategies, which is in the best interests of the Company and its shareholders[83] - The Board includes one non-executive director and three independent non-executive directors who provide diverse experience, expertise, independent advice, and perspectives, ensuring a balance of power and authority[83] - All directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules during the period[93] Independent Review The Audit Committee reviewed the Group's key accounting policies and the condensed consolidated interim financial information for the six months ended June 30, 2023, without disagreement, and the interim financial information was reviewed by PricewaterhouseCoopers in accordance with HKSRS 2410 - The Audit Committee has reviewed the Group's principal accounting policies and the condensed consolidated interim financial information for the six months ended June 30, 2023, and has no disagreement[85] - The condensed consolidated interim financial information for the six months ended June 30, 2023, is unaudited but has been reviewed by PricewaterhouseCoopers in accordance with Hong Kong Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'[85] Interim Dividend and Record Date The Board resolved to declare an interim dividend of HK 6 cents per ordinary share, payable on September 29, 2023, to shareholders registered at the close of business on September 13, 2023 - The Board resolved to declare an interim dividend of HK 6 cents per ordinary share (2022: HK 14 cents)[85] - The interim dividend will be paid on September 29, 2023, to shareholders registered in the Company's register of members at the close of business on September 13, 2023[85] Interim Report The 2023 Interim Report, containing all information required by the Listing Rules, will be dispatched to shareholders in due course and published on the HKEX website and the Company's website - The 2023 Interim Report, containing all information required by the Listing Rules, will be dispatched to the Company's shareholders in due course and published on the HKEX website and the Company's website www.tsld.com[86](index=86&type=chunk)