REGAL INT'L(HK:00078)2023-08-25 13:03Financial Performance - The company recorded a consolidated loss attributable to shareholders of HKD 762.6 million for the six months ended June 30, 2023, compared to a profit of HKD 138.3 million in the same period of 2022, representing a significant decline [3]. - Revenue for the period was HKD 776.4 million, a decrease of 25.3% from HKD 1,039.9 million in the same period last year [2]. - Gross profit fell to HKD 234.9 million, down 62.2% from HKD 621.2 million year-on-year [2]. - Core business net loss attributable to shareholders, excluding fair value changes and depreciation (non-cash items), was HKD 234.4 million for the period [6]. - The group recorded a comprehensive profit of HKD 105.2 million for the six months ending June 30, 2023, down from HKD 613.1 million in the same period last year [10]. - Core business loss for the group was HKD 14.8 million, primarily due to rising financing costs from increased HIBOR rates [10]. - The group reported a pre-tax loss of HKD 833.2 million, compared to a profit of HKD 136.6 million in the prior year [60]. - The group’s net loss attributable to equity holders was HKD 762.6 million, compared to a profit of HKD 138.3 million in the previous year [60]. - The company reported a basic loss per share of HKD 762.6 million for the six months ended June 30, 2023, compared to a profit of HKD 138.3 million for the same period in 2022 [68]. Revenue and Occupancy Trends - The overall revenue from the hotel business in Hong Kong remained significantly below the levels of the same period in 2022, primarily due to changes in revenue structure related to quarantine operations [3]. - The average occupancy rate and average room rate for hotel operations showed gradual improvement in July and August 2023, indicating a positive trend [5]. - Average hotel occupancy rate in Hong Kong increased from 63.0% in 2022 to 80.0% in 2023, with RevPAR rising by 59.1% [7]. - Hotel operations and management revenue decreased to HKD 681.2 million from HKD 959.4 million, a decline of approximately 29.0% year-over-year [62]. Economic and Market Conditions - Global economic growth is expected to slow to 2.1% in 2023, down from 3.1% in the previous year [7]. - Hong Kong's GDP grew by 2.9% in Q1 2023 but slowed to 1.5% in Q2, indicating a slower-than-expected recovery [7]. - The Hong Kong government has revised its economic growth forecast for 2023 from 3.5%-5.5% to 4.0%-5.0%, reflecting a cautious outlook for the business environment in the second half of the year [16]. Financing and Cash Flow - The loss during the review period was primarily attributed to a sharp increase in financing costs due to rising interest rates and fair value losses on financial assets [3]. - Interest expenses for the period amounted to HKD 366,200,000, compared to net interest income of HKD 2,200,000 in 2022 [43]. - The group's financing costs increased significantly to HKD 413.1 million from HKD 145.0 million, marking an increase of approximately 184.5% year-over-year [65]. - The group reported a net cash flow from operating activities of HKD 201,100,000 during the review period, compared to HKD 17,300,000 in 2022 [43]. Asset and Liability Management - The adjusted net asset value per share is HKD 21.93, reflecting a decrease of 3.0% from HKD 22.61 as of December 31, 2022 [2]. - The total net asset value attributable to equity holders of the parent company is HKD 10,438.9 million, with an adjusted net asset value per share of HKD 21.93 [41]. - The group's total liabilities, after deducting cash and bank balances, were HKD 14,147.7 million, up from HKD 13,831.2 million as of December 31, 2022 [44]. - The asset-liability ratio as of June 30, 2023, was 48.0%, an increase from 45.7% as of December 31, 2022 [44]. Property and Development Projects - The group is currently converting some residential units in The Queens project into rental units to generate recurring income due to increasing demand for serviced apartments [14]. - The group is undertaking a commercial/residential redevelopment project in Sham Shui Po, with a total floor area of approximately 3,691 square meters planned for development [21]. - The group manages four Regal Hotels in mainland China, with a new hotel in Chengdu under development [12]. - The hotel project at 2 Yan Ka Street, Mong Kok, has a total floor area of approximately 6,529 square meters (70,278 square feet) and opened in March 2019, currently operated by P&R [31]. Corporate Governance and Compliance - The company has adhered to corporate governance codes as per the Hong Kong Stock Exchange regulations during the reporting period [76]. - The company has maintained a rigorous monitoring system for its accounts receivable, with no significant concentration of credit risk [71].