莱蒙国际(03688) - 2023 - 中期业绩

Summary Major Financial and Operating Highlights The Group's presales and average selling price declined, while recurring rental income remained stable, gross margin improved, and profit attributable to equity shareholders grew significantly Changes in Presales and Average Selling Price | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Total Presales of Properties and Car Parks | 421,700,000 | 558,100,000 | -24.4% | | Presales of Properties | 419,400,000 | - | - | | Presales of Car Parks | 2,300,000 | - | - | | Presold GFA | 4,962 sq.m. | 5,821 sq.m. | -14.8% | | Average Selling Price of Presold Properties | 84,522.4 HKD/sq.m. | 92,733.2 HKD/sq.m. | -8.9% | Rental Income from Investment Properties | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Recurring Rental Income | 105,900,000 | 105,700,000 | +0.2% | Changes in Gross Profit Margin | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Gross Profit Margin | 32.2% | 13.9% | Profit Attributable to Equity Shareholders of the Company | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Profit Attributable to Equity Shareholders | 23,400,000 | 6,300,000 | +271.4% | Basic and Diluted Earnings Per Share | Indicator | H1 2023 (HK cents) | H1 2022 (HK cents) | | :--- | :--- | :--- | | Basic Earnings Per Share | 1.5 | 0.4 | | Diluted Earnings Per Share | 1.5 | 0.4 | Net Gearing Ratio | Indicator | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Net Gearing Ratio | 55.7% | 54.7% | - For the six months ended June 30, 2023, the Company did not declare an interim dividend, consistent with the same period last year[2][84] Interim Results Consolidated Statement of Profit or Loss The Group's revenue decreased by 82.7% to HK$499 million, while gross margin improved significantly, and profit attributable to equity shareholders rose to HK$23.4 million Revenue Change | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 498,669 | 2,883,680 | -82.7% | Changes in Gross Profit and Gross Profit Margin | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 160,559 | 400,598 | -59.9% | | Gross Profit Margin | 32.2% | 13.9% | +18.3pp | Profit Attributable to Equity Shareholders of the Company | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Profit Attributable to Equity Shareholders of the Company | 23,428 | 6,307 | +271.4% | Valuation Gains on Investment Properties | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | | :--- | :--- | :--- | | Valuation Gains on Investment Properties | 35,218 | 35,649 | Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group's total comprehensive loss for the period narrowed to HK$313 million from HK$567 million in the prior year, mainly due to improved other comprehensive income from associates and joint ventures Total Comprehensive Income for the Period | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Total Comprehensive Income for the Period | (313,432) | (567,321) | +44.8% (Loss Narrowed) | Share of Other Comprehensive Income of Associates and Joint Ventures | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | | :--- | :--- | :--- | | Share of Other Comprehensive Income of Associates and Joint Ventures | 188 | (11,864) | Consolidated Statement of Financial Position As of June 30, 2023, the Group's total assets slightly decreased, while net assets declined marginally and the net gearing ratio rose, reflecting financial pressure amid a market slowdown Changes in Total Assets and Net Assets | Indicator | June 30, 2023 (HK$'000) | December 31, 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets less Current Liabilities | 14,957,240 | 15,688,656 | -4.79% | | Net Assets | 8,953,283 | 9,282,006 | -3.54% | Fair Value of Investment Properties | Indicator | June 30, 2023 (HK$'000) | December 31, 2022 (HK$'000) | | :--- | :--- | :--- | | Investment Properties | 7,971,579 | 8,297,230 | Current Assets and Liabilities | Indicator | June 30, 2023 (HK$'000) | December 31, 2022 (HK$'000) | | :--- | :--- | :--- | | Current Assets | 11,013,781 | 11,415,801 | | Current Liabilities | 6,063,774 | 6,143,984 | | Net Current Assets | 4,950,007 | 5,271,817 | Notes to the Financial Statements Basis of Preparation The interim financial information is prepared in accordance with HKAS 34 Interim Financial Reporting and is expected to reflect changes in accounting policies for the 2023 annual financial statements - The interim financial information is prepared in accordance with Hong Kong Accounting Standard (HKAS) 34 Interim Financial Reporting[45][63] - The accounting policies are the same as those for the 2022 annual financial statements but are expected to reflect changes for the 2023 annual financial statements[63] Material Uncertainties Related to Going Concern The Group faces material uncertainties regarding its going concern status due to a sharp decline in property sales, current bank loans exceeding cash equivalents, and a slowing property market Property Sales Change | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Property Sales | 237,900,000 | 2,622,700,000 | -90.9% | Liquidity Position (June 30, 2023) | Indicator | Amount (HKD) | | :--- | :--- | | Current Bank Loans and Other Borrowings | 2,864,000,000 | | Cash and Cash Equivalents | 890,800,000 | - The Group has implemented several measures to mitigate liquidity pressure, including accelerating property sales, negotiating financing with banks, obtaining financial support letters from major shareholders, and controlling administrative and capital expenditures[48][65][49][50] - The Board believes that assuming the successful implementation of these measures, the Group will have sufficient working capital to meet its financial obligations and has prepared the consolidated financial statements on a going concern basis[67] Changes in Accounting Policies The Group applied new and amended HKFRSs issued by the HKICPA during the period, which had no material impact on its financial position or performance - The Group applied new and amended standards, including amendments to HKAS 8 and HKAS 12[68] - These changes in accounting policies did not have a material impact on the preparation or presentation of the Group's interim financial information[50] Revenue and Segment Reporting The Group's total revenue decreased by 82.7% year-on-year, primarily driven by a decline in property sales, which accounted for 47.7% of total revenue Revenue Composition and Changes | Revenue Source | H1 2023 (HK$'000) | H1 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Sale of properties | 237,915 | 2,622,739 | -90.9% | | Property management and related services | 134,029 | 141,649 | -5.4% | | Education related services | 20,859 | 13,554 | +53.9% | | Rental income | 105,866 | 105,738 | +0.1% | | Total Revenue | 498,669 | 2,883,680 | -82.7% | Revenue from Customers by Geographical Location | Geographical Location | H1 2023 (HK$'000) | H1 2022 (HK$'000) | | :--- | :--- | :--- | | Mainland China | 303,209 | 2,452,868 | | Hong Kong | 195,460 | 430,812 | - The Group uses "Adjusted EBITDA" as the measure for reporting segment profit, which is adjusted for specific non-recurring or unallocated items[72] Other Income Other income decreased by 34.8% year-on-year to HK$62.9 million, mainly due to a reduction in bank and other interest income Other Income Composition and Changes | Income Source | H1 2023 (HK$'000) | H1 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Bank interest income | 21,904 | 43,765 | -50.0% | | Other interest income | 23,577 | 32,982 | -28.6% | | Car park service income | 15,748 | 15,562 | +1.2% | | Others | 1,640 | 4,137 | -60.4% | | Total | 62,869 | 96,446 | -34.8% | Other Gains / (Losses), Net Other net gains turned from a loss in the prior year to a gain of HK$78.2 million, primarily due to additional compensation received from the Hong Kong Government for a land plot in Yuen Long Changes in Other Gains / (Losses), Net | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Other Gains / (Losses), Net | 78,150 | (12,717) | +714.6% (Turned to Profit) | - The main driver was the receipt of HK$81.981 million in additional compensation from the Hong Kong Government for the Yuen Long land plot[58][185] Profit Before Tax The Group's profit before tax decreased by 62.5% year-on-year to HK$57.1 million, mainly impacted by finance costs and losses from associates/joint ventures, while staff costs remained stable Profit Before Tax Change | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Profit Before Tax | 57,118 | 152,122 | -62.5% | Finance Costs | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Finance Costs | 119,143 | 158,272 | -24.8% | Staff Costs | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Salaries, wages and other benefits | 106,341 | 104,330 | +1.9% | | Contributions to defined contribution retirement plans | 5,173 | 6,198 | -16.6% | | Total Staff Costs | 111,514 | 110,528 | +0.9% | Income Tax Income tax expense for the period decreased significantly by 64.3% to HK$52.8 million, mainly due to reduced property sales and the reversal of temporary differences Income Tax Expense Change | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | | Income Tax Expense | 52,821 | 147,930 | -64.3% | - Income tax expense includes corporate income tax, land appreciation tax, and the origination and reversal of temporary differences[98] - The applicable corporate income tax rate for subsidiaries in Mainland China is 25%[80] Earnings Per Share Basic and diluted earnings per share for the period both increased to 1.5 HK cents, primarily due to higher profit attributable to equity shareholders of the Company Earnings Per Share Change | Indicator | H1 2023 (HK cents) | H1 2022 (HK cents) | | :--- | :--- | :--- | | Basic Earnings Per Share | 1.5 | 0.4 | | Diluted Earnings Per Share | 1.5 | 0.4 | - Earnings per share is calculated based on the profit attributable to equity shareholders and holders of perpetual convertible securities of HK$23.428 million and the weighted average number of 1.529 billion shares in issue[81] - Outstanding share options had an anti-dilutive effect on basic earnings per share, thus diluted earnings per share is the same as basic earnings per share[101] Dividends No interim dividend was declared for the reporting period, but the final dividend for the previous financial year of 1 HK cent per share was approved and paid - No interim dividend was declared for H1 2023, consistent with H1 2022[84][179] Final Dividend Paid | Indicator | H1 2023 (HK$'000) | H1 2022 (HK$'000) | | :--- | :--- | :--- | | Final dividend for the previous financial year (1 HK cent per share) | 15,291 | 15,322 | Financial Assets at Fair Value Through Profit or Loss As of June 30, 2023, total financial assets at FVTPL amounted to HK$1.289 billion, a decrease from year-end 2022, comprising mainly amounts due from third parties and unlisted securities Composition of Financial Assets at FVTPL | Indicator | June 30, 2023 (HK$'000) | December 31, 2022 (HK$'000) | | :--- | :--- | :--- | | Unlisted equity securities not held for trading | 36,986 | 36,840 | | Trading securities | 36,175 | 38,344 | | Amounts due from third parties | 1,216,250 | 1,266,330 | | Total | 1,289,411 | 1,341,514 | - The fair value gain on these financial assets during the period was HK$7.152 million, an increase from the same period last year[87] Inventories and Other Contract Costs As of June 30, 2023, the Group's total inventories and other contract costs were HK$6.942 billion, a slight decrease from year-end 2022 Composition of Inventories and Other Contract Costs | Indicator | June 30, 2023 (HK$'000) | December 31, 2022 (HK$'000) | | :--- | :--- | :--- | | Leasehold land under development for sale | 144,224 | 149,650 | | Properties under development for sale | 4,467,239 | 4,368,771 | | Completed properties for sale | 2,323,756 | 2,621,515 | | Other contract costs | 512 | 548 | | Other businesses (low-value consumables and supplies) | 5,779 | 5,382 | | Total | 6,941,510 | 7,145,866 | Trade and Other Receivables As of June 30, 2023, total trade and other receivables amounted to HK$1.359 billion, a decrease from year-end 2022, mainly comprising trade receivables, other receivables, deposits, and prepayments Composition of Trade and Other Receivables | Indicator | June 30, 2023 (HK$'000) | December 31, 2022 (HK$'000) | | :--- | :--- | :--- | | Trade receivables (net of loss allowance) | 74,918 | 69,129 | | Other receivables (net of loss allowance) | 302,764 | 449,255 | | Financial assets at amortised cost | 377,682 | 518,384 | | Deposits and prepayments | 981,611 | 1,059,984 | | Total | 1,359,293 | 1,578,368 | - The majority of trade receivables are due within one month[107] Composition of Deposits and Prepayments | Indicator | June 30, 2023 (HK$'000) | December 31, 2022 (HK$'000) | | :--- | :--- | :--- | | Prepayments for acquisition of land use rights | 736,663 | 771,349 | | Prepayments for acquisition of properties | 30,000 | 30,000 | | Others | 214,948 | 258,635 | | Total | 981,611 | 1,059,984 | Trade and Other Payables As of June 30, 2023, total trade and other payables amounted to HK$2.739 billion, a decrease from year-end 2022, mainly comprising trade payables, other payables, and accrued expenses Composition of Trade and Other Payables | Indicator | June 30, 2023 (HK$'000) | December 31, 2022 (HK$'000) | | :--- | :--- | :--- | | Trade payables | 306,320 | 194,065 | | Other payables and accrued expenses | 1,402,668 | 1,793,512 | | Amounts due to non-controlling interests | 1,030,350 | 1,038,430 | | Financial liabilities at amortised cost | 2,739,338 | 3,026,007 | | Rental and other deposits | 80,079 | 78,306 | | VAT and other tax payables | 60,975 | 92,016 | | Total | 2,880,392 | 3,196,329 | - The majority of trade payables are due within one month[133] - A portion of the amounts due to non-controlling interests is interest-bearing at an annual rate of 4.35%, unsecured, and repayable on demand[91] Commitments As of the reporting date, the Group's capital commitments, mainly related to development expenses and project acquisition costs, totaled HK$322.8 million for contracted but not provided for items Total Capital Commitments | Indicator | June 30, 2023 (HK$'000) | December 31, 2022 (HK$'000) | | :--- | :--- | :--- | | Contracted for | 141,355 | 334,045 | | Authorised but not contracted for | 181,453 | 187,253 | | Total | 322,808 | 521,298 | - Capital commitments are primarily related to development expenses for properties under development and project acquisition costs[135] Summary of Review Report Conclusion The auditor, KPMG, concluded their review without identifying any material misstatements but emphasized the material uncertainty related to going concern, advising investors to exercise caution - The auditor is not aware of any matter that would cause them to believe the interim financial report is not prepared in all material respects in accordance with HKAS 34 Interim Financial Reporting[137] - The review report highlights that the decline in property sales, the disparity between current bank loans and cash position, and the property market slowdown may cast significant doubt on the Group's ability to continue as a going concern[115] - Investors are advised to exercise caution when dealing in the Company's securities and should not place undue reliance on such information[222] Management Discussion and Analysis Presales During the period, the Group's total presales of properties and car parks decreased by 24.4% year-on-year to HK$421.7 million, with declines in both presold GFA and average selling price Changes in Total Presales and GFA | Indicator | H1 2023 | H1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Presales of Properties and Car Parks | 421,700,000 HKD | 558,100,000 HKD | -24.4% | | Presales of Properties | 419,400,000 HKD | - | - | | Presales of Car Parks | 2,300,000 HKD | - | - | | Total Presold GFA | 4,962 sq.m. | 5,821 sq.m. | -14.8% | | Average Selling Price of Presold Properties | 84,522.4 HKD/sq.m. | 92,733.2 HKD/sq.m. | -8.9% | Distribution of Major Presale Projects | City | Project and Property Type | Presold GFA (sq.m.) | Presale Value (HK$ million) | Average Presale Price (HKD/sq.m.) | | :--- | :--- | :--- | :--- | :--- | | Tianjin | Tianjin Top Spring Town - Residential | 3,081 | 34.6 | 11,230.1 | | Shenzhen | Shenzhen The Upper Hills - Residential | 784 | 48.9 | 62,372.4 | | Hong Kong | Hong Kong 128 WATERLOO - Residential | 1,097 | 335.9 | 306,198.7 | Delivered and Recognized Projects The Group recognized property sales revenue of HK$236.0 million from a recognized saleable GFA of 3,038 sq.m., with an average selling price of HK$77,682.7/sq.m Details of Recognized Property Sales | City | Project and Property Type | Recognized Saleable GFA (sq.m.) | Recognized Property Sales (HK$ million) | Recognized ASP (HKD/sq.m.) | | :--- | :--- | :--- | :--- | :--- | | Tianjin | Tianjin Top Spring Town - Residential | 1,573 | 15.7 | 9,980.9 | | Shenzhen | Shenzhen The Upper Hills - Residential | 867 | 45.7 | 52,710.5 | | Hong Kong | Hong Kong 128 WATERLOO - Residential | 598 | 174.6 | 291,973.2 | | Total | | 3,038 | 236.0 | 77,682.7 | - The Group recognized car park sales of approximately HK$1.9 million from the sale of 16 car parks[119][142] Investment Properties As of June 30, 2023, the Group's investment properties had a total fair value of approximately HK$7.99 billion, accounting for about 38.0% of total assets, with an overall occupancy rate of 79.1% Fair Value and Proportion of Investment Properties | Indicator | June 30, 2023 (HKD) | Proportion | | :--- | :--- | :--- | | Total Fair Value of Investment Properties | 7,992,500,000 | 38.0% | Leasable GFA and Occupancy Rate | Indicator | June 30, 2023 | | :--- | :--- | | Total Leasable GFA | 304,789 sq.m. | | Overall Occupancy Rate | 79.1% | Rental Income and Fair Value Gains | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Rental Income | 105,900,000 | 105,700,000 | +0.2% | | Fair Value Gains on Investment Properties | 35,200,000 | 35,600,000 | -1.1% | - The average monthly rental income was approximately HK$70.1/sq.m., a decrease from HK$71.3/sq.m. in the prior year period, mainly due to lower rents from existing investment properties in operation[16] - The Group has attracted major anchor tenants, whose leased GFA accounts for approximately 29.6% of the total leasable GFA of investment properties in operation[121] Land Bank As of June 30, 2023, the Group held 20 projects in 10 cities with a total land bank (net saleable/leasable GFA) of approximately 445,348 sq.m., primarily in the Greater Bay Area and first-tier cities Overview of Total Land Bank (June 30, 2023) | Indicator | Quantity | | :--- | :--- | | Number of Projects | 20 | | Number of Cities | 10 | | Estimated Net Saleable/Leasable GFA | 445,348 sq.m. | Composition of Land Bank | Category | Estimated Net Saleable/Leasable GFA (sq.m.) | | :--- | :--- | | Completed projects | 348,002 | | Projects under construction | 90,849 | | Projects contracted for purchase or with land use change in progress | 6,497 | Regional Distribution of Land Bank | Region/City | Estimated Net Saleable/Leasable GFA (sq.m.) | | :--- | :--- | | Shenzhen and surrounding areas (including Dongguan) | 142,745 | | Shanghai | 97,824 | | Nanjing | 717 | | Chengdu | 38,285 | | Hangzhou | 26,182 | | Tianjin | 21,130 | | Changzhou | 82,490 | | Kunming | 1,415 | | Hong Kong | 34,560 | | Total | 445,348 | - The Group's land bank strategy focuses on the Guangdong-Hong Kong-Macao Greater Bay Area and first-tier cities in China, such as Shenzhen, Shanghai, and Hong Kong[175] Business Review The Group's H1 business review shows stable rental income growth and expanding property management area, despite a decline in presales, with a strategic focus on the Greater Bay Area - Presales decreased year-on-year, but rental income from investment properties grew by approximately 0.2% to HK$105.9 million[152][127] - The total property management area reached approximately 16.012 million sq.m., with 11.372 million sq.m. from non-Group developed properties[127] - The land bank strategy is primarily focused on the Guangdong-Hong Kong-Macao Greater Bay Area and first-tier cities like Shenzhen, Shanghai, and Hong Kong[175] Future Outlook The Group will focus on development opportunities in core Greater Bay Area cities, maintain and moderately increase rental properties to stabilize cash flow, and explore new growth points - The Group will firmly focus on development opportunities in core cities of the Guangdong-Hong Kong-Macao Greater Bay Area, especially Hong Kong, Shenzhen, and Guangzhou[128][176] - It plans to maintain and moderately increase rental properties with stable growth to enhance rental income and profit levels, achieving property value preservation and appreciation[154][128] - The Group is optimistic about Hong Kong's role in the Greater Bay Area and will continue to deepen its presence in the Hong Kong market, actively seeking high-quality project opportunities[32][177] - It will focus on potential investment opportunities related to the new economy, integrate resources, invest prudently, and seek business breakthroughs and growth points for synergistic development[155][178] Financial Review Revenue The Group's total revenue decreased significantly by 82.7% to HK$498.7 million, primarily due to a reduction in property sales, while rental and property management income also fell slightly Total Revenue Change | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 498,700,000 | 2,883,700,000 | -82.7% | - Property sales amounted to approximately HK$237.9 million, accounting for about 47.7% of revenue; the remaining 52.3% came from rental income, property management, and education services[38] - Rental income and property management and related services income decreased by approximately 3.0% year-on-year, mainly due to exchange rate depreciation[158] Direct Costs The Group's direct costs decreased substantially by 86.4% to HK$338.1 million, in line with the reduction in property sales Direct Costs Change | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Direct Costs | 338,100,000 | 2,483,100,000 | -86.4% | - Direct costs mainly consist of the cost of completed properties sold, including land premiums, construction costs, capitalized borrowing costs, and costs of rental, property management, and education services[182] Gross Profit The Group's gross profit decreased by 59.9% to HK$160.6 million, but the gross profit margin significantly improved to 32.2% due to a reduction in lower-margin property sales Changes in Gross Profit and Gross Profit Margin | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 160,600,000 | 400,600,000 | -59.9% | | Gross Profit Margin | 32.2% | 13.9% | +18.3pp | - The increase in gross profit margin was mainly due to the reduction in sales of properties with lower profit margins[183] Other Income Other income decreased by 34.8% to HK$62.9 million, primarily due to a reduction in bank and other interest income Other Income Change | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Other Income | 62,900,000 | 96,400,000 | -34.8% | - The decrease was mainly due to a reduction in bank and other interest income[184] Other Gains / (Losses), Net Other net gains turned from a loss of HK$12.6 million to a gain of HK$78.2 million, mainly due to additional compensation received from the Hong Kong Government for a land plot in Yuen Long Changes in Other Gains / (Losses), Net | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Other Gains / (Losses), Net | 78,200,000 | (12,600,000) | +720.6% (Turned to Profit) | - The main driver was the receipt of additional compensation from the Hong Kong Government for the Yuen Long land plot[185] Selling and Marketing Expenses Selling and marketing expenses decreased by 37.3% to HK$41.8 million, consistent with the decline in property sales Selling and Marketing Expenses Change | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Selling and Marketing Expenses | 41,800,000 | 66,700,000 | -37.3% | - The decrease in expenses was in line with the reduction in property sales[186] Administrative Expenses Administrative expenses decreased by 19.3% to HK$108.0 million, primarily due to a reduction in staff costs Administrative Expenses Change | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Administrative Expenses | 108,000,000 | 133,900,000 | -19.3% | - The decrease was mainly due to a reduction in staff costs[187] Valuation Gains on Investment Properties Valuation gains on investment properties decreased slightly by 1.1% to HK$35.2 million Valuation Gains on Investment Properties Change | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Valuation Gains on Investment Properties | 35,200,000 | 35,600,000 | -1.1% | Finance Costs Finance costs decreased by 24.8% to HK$119.1 million, mainly due to the repayment of loans and bonds payable Finance Costs Change | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Finance Costs | 119,100,000 | 158,300,000 | -24.8% | - The decrease was mainly due to the repayment of loans and bonds payable[189] Income Tax Income tax expense decreased significantly by 64.3% to HK$52.8 million, in line with the reduction in property sales Income Tax Expense Change | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Income Tax Expense | 52,800,000 | 147,900,000 | -64.3% | - The decrease in expense was in line with the reduction in property sales[190] Non-controlling Interests Loss attributable to non-controlling interests increased to HK$19.1 million during the period, compared to a loss of HK$2.1 million in the prior year period Loss Attributable to Non-controlling Interests | Indicator | H1 2023 (HKD) | H1 2022 (HKD) | | :--- | :--- | :--- | | Loss Attributable to Non-controlling Interests | 19,100,000 | 2,100,000 | Liquidity, Financial and Capital Resources Cash Position As of June 30, 2023, the Group's cash and bank deposits carrying amount increased slightly by 1.1% to HK$2.665 billion Changes in Cash and Bank Deposits | Indicator | June 30, 2023 (HKD) | December 31, 2022 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Carrying Amount of Cash and Bank Deposits | 2,665,400,000 | 2,637,400,000 | +1.1% | - The Group's cash balances are primarily denominated in RMB, with small amounts in USD and AUD[212] Borrowings and Pledge of Group's Assets As of June 30, 2023, the Group's total borrowings were HK$7.65 billion, with approximately 37.5% repayable within one year, and HK$6.85 billion secured by assets valued at HK$13.42 billion Total Borrowings and Repayment Schedule (June 30, 2023) | Term | Amount (HKD) | Proportion | | :--- | :--- | :--- | | Repayable within one year | 2,871,900,000 | 37.5% | | Repayable after one year but within five years | 4,131,000,000 | 54.0% | | Repayable after five years | 649,100,000 | 8.5% | | Total Borrowings | 7,652,000,000 | 100% | - Approximately HK$6.8486 billion of bank loans are secured by investment properties, property, plant and equipment, land under development, properties for sale, pledged deposits, and rental receivables with a total carrying value of approximately HK$13.4218 billion[165] - The majority of bank loans and other borrowings are denominated in RMB, with some in HKD and USD[193] Cost of Borrowing The Group's average cost of borrowing for the six months ended June 30, 2023, increased to approximately 6.6% from 5.6% in the same period last year Average Cost of Borrowing Change | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Average Cost of Borrowing | 6.6% | 5.6% | Net Gearing Ratio As of June 30, 2023, the Group's net gearing ratio increased to 55.7%, mainly due to exchange rate depreciation Net Gearing Ratio Change | Indicator | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Net Gearing Ratio | 55.7% | 54.7% | - The increase in the net gearing ratio was mainly due to exchange rate depreciation during the six months ended June 30, 2023[195] Foreign Exchange Risk The Group faces foreign exchange risk from RMB against HKD, USD, or AUD but currently has no hedging policy, which the Board monitors closely - The Group is exposed to foreign exchange risk from RMB against HKD, USD, or AUD, as most operations are in China with RMB transactions, while some investments, expenses, and borrowings are in other currencies[196] - There is currently no foreign currency hedging policy, but the Board closely monitors the situation and may consider adopting one in the future[196] - The RMB is not freely convertible into foreign currencies and is subject to PRC government foreign exchange control regulations[196] Other Information Net Asset Value Per Share As of June 30, 2023, the net asset value per share attributable to equity shareholders and holders of perpetual convertible securities was HK$5.8, down from HK$6.0 at year-end 2022 Net Asset Value Per Share Change | Indicator | June 30, 2023 (HKD) | December 31, 2022 (HKD) | | :--- | :--- | :--- | | Net Asset Value Per Share | 5.8 | 6.0 | - The NAV per share is based on net assets attributable to equity shareholders and holders of perpetual convertible securities of HK$8.9201 billion and 1.529286 billion shares used for the calculation[197][214] Contingent Liabilities As of June 30, 2023, the Group's main contingent liability was providing guarantees for mortgage loans of property buyers, amounting to approximately HK$264.8 million - As of June 30, 2023, the Group provided guarantees of approximately HK$264.8 million for mortgage loans of property buyers[170] - The guarantee liability exists until the completion of the relevant properties and delivery of the property ownership certificates to the buyers; in case of default, the Group may be required to repurchase the property or cover the shortfall[215] Employees and Remuneration Policy As of June 30, 2023, the Group employed 807 staff with total employee costs of approximately HK$111.5 million, with remuneration based on performance, experience, and market rates - As of June 30, 2023, the Group employed 807 staff, a decrease from 883 at the end of 2022[199] - Total employee costs for H1 2023 were approximately HK$111.5 million, a slight increase from the same period last year[199] - The remuneration policy is based on performance, experience, skills, knowledge, and market wage levels, comprising basic salary, cash bonuses, and equity-settled share-based payments[199] Share Options The Group's Post-IPO Share Option Scheme expired in February 2021, but outstanding options remain valid; a new scheme has been adopted but no options have been granted yet - The Post-IPO Share Option Scheme expired on February 27, 2021, but options granted and outstanding remain valid[216] Outstanding Share Options (June 30, 2023) | Exercise Price (HKD) | Number of Outstanding Share Options | | :--- | :--- | | 4.14 | 3,950,000 | - A New Share Option Scheme has been adopted, but no options have been granted as of the announcement date[202] Significant Events After the End of the Interim Reporting Period There were no significant events affecting the Group after the end of the interim reporting period other than those disclosed in the announcement - There were no significant events affecting the Group after the end of the interim reporting period[203] Interim Dividend The Board has resolved not to declare an interim dividend for the six months ended June 30, 2023, consistent with the same period last year - The Board has resolved not to declare an interim dividend for the six months ended June 30, 2023, consistent with the same period last year[204] Purchase, Sale or Redemption of the Company's Listed Securities 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 - For 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[205] Corporate Governance Practices The Group complied with all code provisions of the Corporate Governance Code during the reporting period, except for the dual role of Chairman and CEO held by the same individual - The Company has complied with all code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules during the reporting period[206] - The roles of Chairman and Chief Executive Officer are both held by Mr Wong Chun Hong, an arrangement the Board believes ensures consistent leadership and will be reviewed in due course[218] Model Code for Securities Transactions by Directors All directors have confirmed their compliance with the Model Code for Securities Transactions by Directors as set out in Appendix 10 to the Listing Rules throughout the reporting period - All directors have confirmed their compliance with the Model Code for Securities Transactions by Directors as set out in Appendix 10 to the Listing Rules during the reporting period[220] Audit Committee's Review of Interim Results The Company's Audit Committee has reviewed the Group's accounting principles and practices and the interim results for the six months ended June 30, 2023 - The Company's Audit Committee consists of three independent non-executive directors[221] - The Audit Committee has reviewed the Group's accounting principles and practices and the interim results for the six months ended June 30, 2023[221] Publication of Results Announcement and Interim Report The results announcement is published on the websites of the Stock Exchange and the Company, and the interim report will be sent to shareholders and published in due course - The results announcement is published on the Stock Exchange's website (www.hkex.com.hk) and the Company's website (www.topspring.com)[223](index=223&type=chunk) - The interim report will be sent to the Company's shareholders and published on the above websites in due course[223]