中策资本控股(00235) - 2023 - 中期业绩

Mid-term Results Announcement Overview This announcement presents the unaudited condensed consolidated interim results of China Strategic Holdings Limited and its subsidiaries for the six months ended June 30, 2023, including financial statements and business review - This announcement publishes the unaudited condensed consolidated interim results of China Strategic Holdings Limited and its subsidiaries for the six months ended June 30, 2023[102] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2023, the company's revenue significantly decreased by 80% to HKD 51,267 thousand, and loss attributable to owners narrowed by 89% to HKD 11,996 thousand, primarily due to income tax credit and reduced fair value losses on financial assets Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary | Metric | June 30, 2023 (HKD thousands) | June 30, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 51,267 | 258,750 | -80.1% | | Loss before tax | (22,312) | (72,582) | -69.3% | | Income tax credit (expense) | 10,316 | (31,768) | N/A | | Loss for the period attributable to owners of the Company | (11,996) | (104,350) | -88.5% | | Total comprehensive expense for the period attributable to owners of the Company | (14,759) | (126,073) | -88.3% | | Basic loss per share | (0.06) HK cents | (0.51) HK cents | -88.2% | - Revenue significantly decreased by 80% to HKD 51,267 thousand, primarily due to reduced interest income from money lending business and suspension of coke product trading activities[3][42] - Loss attributable to owners significantly narrowed by 89% to HKD 11,996 thousand, mainly due to reduced losses recognized from securities investments[42][81] Condensed Consolidated Statement of Financial Position As of June 30, 2023, the company's total assets slightly decreased, non-current assets significantly increased, while current assets and current liabilities both decreased, and net assets remained stable Condensed Consolidated Statement of Financial Position Summary | Metric | June 30, 2023 (HKD thousands) | December 31, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total non-current assets | 291,855 | 50,435 | +478.7% | | Total current assets | 1,946,513 | 2,189,628 | -11.1% | | Total current liabilities | 46,894 | 48,039 | -2.4% | | Net current assets | 1,899,619 | 2,141,589 | -11.4% | | Total assets less current liabilities | 2,191,474 | 2,192,024 | -0.02% | | Net assets | 2,176,378 | 2,191,137 | -0.67% | | Total equity | 2,176,378 | 2,191,137 | -0.67% | - Total non-current assets significantly increased by 478.7% to HKD 291,855 thousand, primarily due to an increase in the non-current portion of loans receivable[4][123] - Total current assets decreased by 11.1% to HKD 1,946,513 thousand, and total current liabilities slightly decreased by 2.4% to HKD 46,894 thousand[4] Notes to the Condensed Consolidated Financial Statements This section details the basis of preparation, significant accounting policies, revenue and results by business segment, other income and losses, finance costs, taxation, impairment provisions, dividend policy, loss per share, and specific details of various financial assets and liabilities 1. Basis of Preparation The condensed consolidated financial statements are prepared in accordance with HKAS 34 and Appendix 16 of the Listing Rules, measured at historical cost, with HKD as the functional currency - The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA and the applicable disclosure requirements of Appendix 16 to the Listing Rules of the Stock Exchange of Hong Kong Limited[20] - The condensed consolidated financial statements have been prepared under the historical cost convention, except for certain financial instruments which are measured at fair value[5] - The financial statements are presented in Hong Kong Dollars, and all amounts have been rounded to the nearest thousand[112] 2. Significant Accounting Policies The accounting policies adopted in this interim period are consistent with the audited consolidated financial statements for 2022, with no significant impact from new HKFRS and amendments on financial position and performance - The accounting policies and methods of computation used in the preparation of the condensed consolidated financial statements for the six months ended June 30, 2023, are consistent with those presented in the audited consolidated financial statements of the Group for the year ended December 31, 2022[21] - The application of new and revised Hong Kong Financial Reporting Standards and amendments during this interim period has had no significant impact on the financial position and performance of the Group and/or the disclosures contained in the condensed consolidated financial statements for the current and prior periods[6] 3. Revenue Total revenue for the period was HKD 51,267 thousand, a significant decrease from the same period last year, mainly due to zero revenue from coke product trading and reduced interest income from money lending business Revenue Breakdown | Revenue Category | June 30, 2023 (HKD thousands) | June 30, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Coke product trading | – | 188,301 | -100% | | Arrangement fee income from money lending business | – | 200 | -100% | | Commission and handling fee income from securities brokerage business | 983 | 2,418 | -59.3% | | Interest income from securities margin financing business | 3,697 | 3,562 | +3.8% | | Interest income from money lending business | 46,587 | 64,269 | -27.5% | | Total Revenue | 51,267 | 258,750 | -80.1% | - Revenue from coke product trading decreased from HKD 188,301 thousand to zero, which is the primary reason for the overall revenue decline[7] - Interest income from money lending business decreased by 27.5% to HKD 46,587 thousand[7] 4. Segment Information The Group primarily operates in securities investment, trading, money lending, and securities brokerage businesses. In the first half of 2023, money lending and securities brokerage businesses achieved segment profit, while securities investment recorded a loss, and trading business turned profitable Segment Revenue and Results | Business Segment | June 30, 2023 Segment Revenue (HKD thousands) | June 30, 2023 Segment Results (HKD thousands) | June 30, 2022 Segment Revenue (HKD thousands) | June 30, 2022 Segment Results (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Securities Investment | – | (12,166) | – | (21,280) | | Trading | – | 5,118 | 188,301 | 626 | | Money Lending | 46,587 | 4,489 | 64,469 | (19,023) | | Securities Brokerage | 4,680 | 4,859 | 5,980 | 4,449 | | Total | 51,267 | 2,300 | 258,750 | (35,228) | - Trading business profit significantly increased from HKD 626 thousand in the same period of 2022 to HKD 5,118 thousand in the first half of 2023, despite zero revenue[26] - Money lending business turned profitable, from a loss of HKD 19,023 thousand in the same period of 2022 to a profit of HKD 4,489 thousand in the first half of 2023[26] 5. Other Income Total other income for the first half of 2023 amounted to HKD 20,465 thousand, primarily contributed by bank interest income, representing a significant increase from the same period last year Other Income Breakdown | Income Category | June 30, 2023 (HKD thousands) | June 30, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Bank interest income | 16,910 | 666 | +2439.1% | | Government subsidies | – | 308 | -100% | | Others | 3,555 | 23 | +15356.5% | | Total | 20,465 | 997 | +1952.7% | - Bank interest income significantly increased from HKD 666 thousand to HKD 16,910 thousand, being the main driver of other income growth[10] 6. Other Gains and Losses, Net In the first half of 2023, the company recorded a net loss of HKD 1 thousand from other gains and losses, primarily affected by exchange losses, compared to a gain of HKD 243 thousand in the same period last year Other Gains and Losses, Net | Category | June 30, 2023 (HKD thousands) | June 30, 2022 (HKD thousands) | | :--- | :--- | :--- | | Gain on disposal of property, plant and equipment | – | 9 | | Gain on termination of leases | – | 213 | | Exchange (loss) gain, net | (1) | 21 | | Total | (1) | 243 | - Net exchange loss was HKD 1 thousand, compared to a gain of HKD 21 thousand in the same period last year[27] 7. Net Loss on Financial Assets at Fair Value Through Profit or Loss In the first half of 2023, the net loss on financial assets at fair value through profit or loss was HKD 3,809 thousand, a slight decrease from HKD 3,933 thousand in the same period last year Unrealized Net Loss on Financial Assets at Fair Value Through Profit or Loss | Metric | June 30, 2023 (HKD thousands) | June 30, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Unrealized net loss | 3,809 | 3,933 | -3.2% | - The unrealized net loss was primarily due to a decrease in the fair value of the listed equity securities portfolio[65] 8. Finance Costs Finance costs significantly decreased to HKD 289 thousand in the first half of 2023, mainly due to the full redemption of interest-bearing notes in the previous period, resulting in zero interest on notes payable Finance Costs Breakdown | Category | June 30, 2023 (HKD thousands) | June 30, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Interest on discounted bills receivable with full recourse | – | 38 | -100% | | Interest on notes payable | – | 12,726 | -100% | | Interest on lease liabilities | 289 | 191 | +51.3% | | Total | 289 | 12,955 | -97.8% | - Interest on notes payable decreased from HKD 12,726 thousand to zero, which is the primary reason for the significant decline in finance costs[14][96] 9. Income Tax Credit (Expense) In the first half of 2023, the company recorded an income tax credit of HKD 10,316 thousand, compared to an expense of HKD 31,768 thousand in the same period last year, primarily due to changes in current and deferred tax Income Tax Credit (Expense) Breakdown | Category | June 30, 2023 (HKD thousands) | June 30, 2022 (HKD thousands) | | :--- | :--- | :--- | | Current tax | 8,825 | (2,884) | | Deferred tax | 1,491 | (28,884) | | Income tax credit (expense) recognized in profit or loss | 10,316 | (31,768) | - Under the two-tiered profits tax regime in Hong Kong, the first HKD 2 million of assessable profits are taxed at 8.25%, and the remainder at 16.5%[15][119] 10. Loss for the Period The loss for the period was HKD 11,996 thousand, primarily influenced by a reduction in impairment loss provisions, with a significant decrease in impairment provision for loans receivable Loss for the Period Composition | Category | June 30, 2023 (HKD thousands) | June 30, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Impairment provision for debt instruments at fair value through other comprehensive income | 336 | 17,133 | -98.0% | | Impairment provision for loans receivable | 40,614 | 78,981 | -48.6% | | Impairment provision for other receivables | 8,069 | – | N/A | | Total impairment losses | 49,019 | 96,114 | -49.0% | | Depreciation of property, plant and equipment | 1,411 | 1,481 | -4.7% | | Depreciation of right-of-use assets | 4,506 | 3,728 | +20.9% | - Impairment provision for loans receivable significantly decreased by 48.6% to HKD 40,614 thousand[16][34] - The loss for the period was HKD 11,996 thousand, a significant reduction from HKD 104,350 thousand in the same period last year[53] 11. Dividends The Board of Directors decided not to declare any dividends for the six months ended June 30, 2023, consistent with the same period last year - No dividends were paid, declared, or proposed during this interim period (June 30, 2022: nil)[16][30][40] 12. Loss Per Share For the six months ended June 30, 2023, basic loss per share was HKD 0.06 cents, a significant narrowing from HKD 0.51 cents in the same period last year, with no dilutive potential Basic Loss Per Share | Metric | June 30, 2023 | June 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company (HKD thousands) | 11,996 | 104,350 | -88.5% | | Weighted average number of ordinary shares (thousands) | 20,385,254 | 20,385,254 | 0% | | Basic loss per share (HK cents) | (0.06) | (0.51) | -88.2% | - Diluted loss per share is not presented as there were no ordinary shares with dilutive potential outstanding during the current and prior periods[31] 13. Debt Instruments at Fair Value Through Other Comprehensive Income As of June 30, 2023, the portfolio value of these debt instruments was HKD 18,976 thousand, primarily debt securities listed overseas, with an impairment loss of HKD 336 thousand recognized in the current period Debt Instruments at Fair Value Through Other Comprehensive Income | Metric | June 30, 2023 (HKD thousands) | December 31, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Listed investments, at fair value | 18,976 | 22,077 | -14.1% | | Current portion | 18,976 | – | N/A | | Non-current portion | – | 22,077 | -100% | - An impairment provision of HKD 336 thousand was recognized in this interim period, a significant decrease from HKD 17,133 thousand in the same period last year[32] - The debt instrument was issued by a mainland property company, with increased expected losses due to the issuer's default on interest and principal payments[48] 14. Loans Receivable As of June 30, 2023, the total carrying amount of loans receivable was HKD 1,545,359 thousand, with a net value of HKD 970,627 thousand after impairment provisions, of which 99% are secured and primarily due within one year Loans Receivable Breakdown | Metric | June 30, 2023 (HKD thousands) | December 31, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Fixed-rate loans receivable | 1,545,359 | 1,527,714 | +1.15% | | Less: Impairment provision | (574,732) | (507,116) | +13.3% | | Net Value | 970,627 | 1,020,598 | -4.89% | | Current portion | 720,222 | 1,020,598 | -29.4% | | Non-current portion | 250,405 | – | N/A | | Secured | 959,913 | 1,010,076 | -5.0% | | Unsecured | 10,714 | 10,522 | +1.8% | - The impairment provision balance increased by 13% to HKD 574,732 thousand, with HKD 41,112 thousand being the impairment provision for this interim period[77] - 99% of the loan portfolio is secured, primarily by properties, listed equity securities, and debt securities in Hong Kong[78] 15. Trade and Other Receivables As of June 30, 2023, total trade and other receivables amounted to HKD 129,416 thousand, mainly comprising trade receivables from margin clients in the securities brokerage business, with an impairment provision of HKD 8,069 thousand made for other receivables in the current period Trade and Other Receivables Breakdown | Category | June 30, 2023 (HKD thousands) | December 31, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Trade receivables from securities brokerage business | 114,125 | 118,408 | -3.6% | | Other receivables | 15,291 | 22,230 | -31.2% | | Total | 129,416 | 140,638 | -8.0% | - An impairment provision of HKD 8,069 thousand was made for other receivables in this interim period (June 30, 2022: nil)[58] - The market value of securities pledged by margin clients was HKD 586,865 thousand, exceeding the receivables, thus no impairment provision was made[57][94] 16. Financial Assets at Fair Value Through Profit or Loss As of June 30, 2023, these financial assets primarily consisted of listed equity securities in Hong Kong, valued at HKD 13,224 thousand, all classified as current portion Financial Assets at Fair Value Through Profit or Loss | Metric | June 30, 2023 (HKD thousands) | December 31, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Listed equity securities in Hong Kong | 13,224 | 17,033 | -22.4% | | Current portion | 13,224 | 17,033 | -22.4% | - The fair value of listed equity securities is determined based on the market closing prices reported by the Stock Exchange of Hong Kong Limited[60] 17. Trade and Other Payables As of June 30, 2023, total trade and other payables amounted to HKD 36,625 thousand, mainly comprising trade payables from securities brokerage business and accrued expenses Trade and Other Payables Breakdown | Category | June 30, 2023 (HKD thousands) | December 31, 2022 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Trade payables from securities brokerage business | 21,138 | 17,850 | +18.4% | | Accrued expenses and other payables | 15,487 | 20,049 | -22.7% | | Total | 36,625 | 37,899 | -3.4% | - Trade payables from securities brokerage business generally have a settlement period of two days after the transaction date[61] Business Review In the first half of 2023, the Group continued to primarily engage in securities investment, coke product trading, money lending, and securities brokerage businesses amidst a challenging macroeconomic environment, adopting a cautious and prudent approach to business management, with varied performance across segments Securities Investment The Group's securities investments include Hong Kong listed equity securities and overseas listed debt securities, recording an overall loss of HKD 12,166 thousand, but narrowing from the same period last year. The company closely monitors portfolio performance and adjusts investment strategies based on market conditions - Overall securities investment recorded a loss of HKD 12,166 thousand, which narrowed from HKD 21,280 thousand in the same period last year[42][65] - Investment decisions are made with reference to target company financial information, market news, investment analysis reports, and macroeconomic outlook[42] - Long-term investments primarily focus on capital appreciation and dividend/interest income, while non-long-term investments focus on trading gains[43] Financial Assets at Fair Value Through Profit or Loss (Securities Investment) As of June 30, 2023, this portfolio was valued at HKD 13,224 thousand, primarily invested in property and other sector companies, with an unrealized net loss of HKD 3,809 thousand recognized in the current period Financial Assets at Fair Value Through Profit or Loss Portfolio Composition | Company Category | Proportion of Portfolio Market Value/Fair Value (%) | | :--- | :--- | | Property | 97.60 | | Other | 2.40 | | Total | 100.00 | - This portfolio generated no revenue in the first half of 2023[65] - A net loss of HKD 3,809 thousand was recognized, mainly due to a decrease in the fair value of the listed equity securities portfolio[65] Debt Instruments at Fair Value Through Other Comprehensive Income (Securities Investment) As of June 30, 2023, this debt instrument portfolio was valued at HKD 18,976 thousand, with an impairment loss of HKD 336 thousand recognized in the current period, primarily due to increased expected losses from a mainland property company's bond default - This portfolio generated no revenue in the first half of 2023[47] - An impairment loss of HKD 336 thousand was recognized, mainly due to increased credit risk of debt instruments, particularly the default of a mainland property company's bond[48] Overseas Debt Securities Investment Details | Company Category | Approximate Proportion of Total Assets Carrying Amount (%) | Yield to Maturity at Purchase (%) | Purchase Cost (HKD thousands) | Carrying Amount as of January 1, 2023 (HKD thousands) | Market Value/Fair Value as of June 30, 2023 (HKD thousands) | Cumulative Fair Value Loss (HKD thousands) | Fair Value Loss Recognized in Current Period (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Property | 0.85 | 9.50 | 312,000 | 22,077 | 18,976 | (293,024) | (3,101) | Trading In the first half of 2023, the trading business generated no revenue due to the suspension of commodity trading activities with European clients, but recorded a profit of HKD 5,118 thousand, mainly from interest income on bank credit financing guarantees - Trading business revenue was zero (June 30, 2022: HKD 188,301 thousand), primarily due to the suspension of commodity trading activities with European clients[70] - Business profit was HKD 5,118 thousand, mainly from interest income earned on reserved cash deposits[70] - Management will continue to monitor the European commodity market and explore business opportunities to improve performance[70] Money Lending Money lending business revenue decreased by 28% to HKD 46,587 thousand, but due to a 49% reduction in impairment loss provisions, the business turned profitable, recording a profit of HKD 4,489 thousand. The company strictly monitors its loan portfolio, with 99% of loans being secured - Money lending business revenue decreased by 28% to HKD 46,587 thousand, primarily due to a decrease in the average amount of performance loans advanced to borrowers[76] - The business turned profitable, recording a profit of HKD 4,489 thousand (June 30, 2022: loss of HKD 19,023 thousand), mainly due to a 49% reduction in impairment loss provisions to HKD 40,614 thousand[76] - The total carrying amount of the loan portfolio slightly increased to HKD 1,545,359 thousand, and management remains prudent in granting new loans[52] Loan Portfolio Borrower Categories and Maturity Dates | Borrower Category | Approximate Proportion of Loan Portfolio (%) | Annual Interest Rate (%) | Maturity Date | | :--- | :--- | :--- | :--- | | Individual | 26.16 | 9.50 - 18.00 | Within one year | | Corporate | 48.04 | 8.00 - 18.00 | Within one year | | Corporate | 25.80 | 8.50 - 12.00 | After one year but within three years | | Total | 100.00 | | | Securities Brokerage Securities brokerage business revenue decreased by 22% to HKD 4,680 thousand, mainly due to a decline in brokerage commission income amid weakening investment sentiment, but margin financing interest income increased, and bank interest income grew significantly, leading to a slight 9% increase in business profit to HKD 4,859 thousand - Business revenue decreased by 22% to HKD 4,680 thousand, primarily due to a 59% decrease in brokerage commission income to HKD 983 thousand[79] - Margin financing interest income increased by 4% to HKD 3,697 thousand, partially offsetting the decline in commission income[79] - Business profit slightly increased by 9% to HKD 4,859 thousand, mainly benefiting from a more than 10-fold increase in bank interest income to HKD 1,902 thousand[79][80] - The Group has completed the acquisition of an asset management company and plans to engage in fund management activities to generate synergistic benefits[80] Financial Review The Group's loss significantly narrowed in the first half of 2023, demonstrating strong liquidity, a low gearing ratio, and a robust financial position Overall Results In the first half of 2023, loss attributable to owners of the Group decreased by 89% to HKD 11,996 thousand, with basic loss per share of HKD 0.06 cents, primarily due to reduced securities investment losses - Loss attributable to owners decreased by 89% to HKD 11,996 thousand[81] - Basic loss per share was HKD 0.06 cents, a significant narrowing from HKD 0.51 cents in the same period last year[81] - The Group recorded total comprehensive expense attributable to owners of HKD 14,759 thousand, including a net fair value loss of HKD 3,101 thousand on debt securities[81] Liquidity, Financial Resources and Capital Structure The Group maintains strong liquidity with a current ratio of approximately 41.5 times and a gearing ratio of approximately 3%, possessing sufficient financial resources to meet operational needs - Current assets amounted to HKD 1,946,513 thousand, and quick assets to HKD 1,053,158 thousand[94] - The current ratio was approximately 41.5 times (December 31, 2022: 45.6 times), indicating strong liquidity[83][92][94] - The gearing ratio was approximately 3% (December 31, 2022: 2%), reflecting a low level of financial leverage[84] - Equity attributable to owners of the Company was HKD 2,176,378 thousand, approximately HKD 10.68 cents per share[95] Prospects Facing global economic uncertainties, high inflation, and geopolitical tensions, the Group will continue to prudently manage its businesses and actively evaluate new business and investment opportunities in the financial industry to expand its business scale and diversify its revenue base - The macroeconomic environment remains challenging, including geopolitical tensions, high inflation, interest rate hikes, and a slow economic recovery in Hong Kong[85] - The Group will continue to manage its businesses with a cautious and prudent approach, and explore new business and investment opportunities expected to bring long-term benefits[85] - Management is evaluating investment opportunities in the financial industry, aiming to expand business scale and diversify the revenue base[85] Corporate Governance The company complied with all applicable code provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules during the reporting period, and the condensed consolidated financial statements have been reviewed by the Audit Committee and the auditor - The Company has complied with all applicable code provisions of the Corporate Governance Code set out in Appendix 14 to the Listing Rules[86] - The condensed consolidated financial statements have been reviewed by the Audit Committee and the auditor, Deloitte Touche Tohmatsu[86] Other Information During the reporting period, the company and its subsidiaries did not purchase, sell, or redeem any listed securities. The composition of the Board of Directors is listed Purchase, Sale or Redemption of the Company's Listed Securities During the six months ended June 30, 2023, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the six months ended June 30, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company’s listed securities[87] Board of Directors As of the date of this announcement, the Board of Directors comprises one non-executive chairman, three executive directors, and four independent non-executive directors - The Board of Directors includes Dr. Ko Ching Fai (Chairman, Non-executive Director); Mr. So Ka Lok (Chief Executive Officer, Executive Director), Mr. Chow Kam Wah and Mr. Chow Man Wai (Executive Directors); and Ms. Ma Yin Fan, Mr. Chow Yu Chun, Mr. Leung Hoi Ying and Mr. Lam Kin Fung (Independent Non-executive Directors)[88]