CHEUK NANG (HOLDINGS) LIMITED
(Stock Code: 131)
INTERIM REPORT
FOR THE SIX MONTHS ENDED 31/12/2020
CHEUK NANG (HOLDINGS) LIMITED
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2020
CHAIRMAN STATEMENT
RESULTS
I herewith announce that the unaudited consolidated loss after taxation for the six months ended 31 December 2020 of our Group is HK$62,176,000 (2019: profit HK$34,122,000) as set out in the unaudited consolidated income statement which has been reviewed by the Company's audit committee.
The Directors resolved the payment of an interim dividend of HK2.0 cents per share (2019: HK7.5 cents).
REVIEW OF OPERATIONS Hong Kong Properties
Hong Kong economy were affected by the outbreak of coronavirus. Office, shop, hotel etc. sectors were more seriously damped. The tendency of work at home made grade A office rental reducing by over 20%.
The progress of our projects is as follows:
1.
One Kowloon Peak, No. 8 Po Fung Terrace, Ting Kau, Tsuen Wan
Phase 1 has been obtained Occupation Permit which consisted of 49 residential units, out of which 13 units are sold and 21 units are rented. Phase 2 consisted of 5 deluxe residential villas and Clubhouse Facility. The whole development provides 70 no. of car parks.
The Occupation Permit of Phase 2 was obtained on 28 July 2020. The application for Certificate of Compliance was submitted in August 2020. The District Lands Office is currently vetting the submitted documents. It is anticipated that the Certificate of Compliance may be obtained in the second half of this year barring unforeseen circumstances such as the coronavirus pandemic can be under controlled.
2. | Villa Cecil Phase II, 192 Victoria Road, Pokfulam |
The occupancy rate maintained at 85%. | |
3. | Villa Cecil Phase III, 216 Victoria Road, Pokfulam |
The occupancy rate of the two blocks has reached 95% which contributed good | |
rental income to the Group. | |
4. | Cheuk Nang Lookout, 30 Severn Road, The Peak |
The renovation of the two villas (Villa Begonia and Villa Crocus) to enhance the | |
quality is completed and due to the present situation, are still under marketing. | |
5. | New Villa Cecil, 33 Cheung Chau Sai Tai Road, Cheung Chau |
All the villas in Phase 1 are leased out. The construction work of Phase 2 and the | |
overall site improvement work are in progress. | |
China | Properties |
Since the second half of last year, the economy in China has gradually recovered from coronavirus pandemic. It is anticipating the tendency will continue and possibly improve in long run. China's real estate market has grown positively in the past years and is a key component in the economy. Currently, China's economy has slowed down partly due to the escalating trade war with the US which may be counteracting by internal spending and opening the market and improve trade with other nations.
Cheuk Nang Garden
Longhwa, Shenzhen
Upto the date of this report, a total of 769 units have been sold and the sales transactions amount achieved is RMB3,729 million.
Cheuk Nang • Riverside
Yue Hang Qu, Hangzhou
ྌ᜕ϗ has been approved and issued by the Government. Submission of ܔጘ᜕ϗ and other certificates required by the Authority have been applied by us for final approval. Sales marketing will commence afterwards.
Macau Properties
Although the coronavirus in Macau is well under control, the economy is very much deteriorated by the pandemic situation in the surrounding cities which deterred the tourists from visiting Macau while gambling business has been seriously affected.
Golden Cotai No. 1
Estrada de Seac Pai Van, Coloane
Although building plans (ante projecto) has been approved and numerous contacts and conferences with the new government, we are still waiting for the permission for our premium payment application for change of land use.
Malaysia Properties
For 2020 as a whole, under the midst of the coronavirus, the economy was contracted due to the restrictions on mobility, especially on inter-district and inter-state travel and all economic sectors have recorded negative growth.
Phase I "Parkview"
Lot 1359, Section 57, Lorong Perak, Kuala Lumpur, Malaysia
The first stage renovation of the vacant serviced apartments is completed. The occupancy and the income from the business was very much reduced.
Phases II "Cecil Central Residence"
Lot 11385 and 11386, Section 57, Lorong Perak, Kuala Lumpur, Malaysia
The amended Development Order has been approved. New application for approval of the amended building plans was submitted. Due to the poor market situation, the construction plan will be delayed.
INVESTMENT IN BONDS AND HONG KONG STOCK MARKET
The investment in Bond market as at 31 December 2020 was HK$178,737,000. During the period, a total of HK$11,544,000 was sold and no Bond was purchased.
The market price of our investment in the Hong Kong stocks as at 31 December 2020 was HK$31,758,000. During the period, there is no purchase nor sold of Hong Kong Stock.
OUTLOOK
The outbreak of coronavirus has been lasted for over one year. The unemployment rate in Hong Kong has reached 17 years' high up to 7%. The Hong Kong government has put their effort to fight against the virus by trying to cut the transmission chain. Coronavirus vaccines has arrived Hong Kong and it is crucial to the resumption of the normal ways of life.
Although we are now facing the most difficult time, we still looking forward to the economy may resume gradually in the second half of this year, following the coronavirus may be better controlled.
DIRECTORS AND STAFF
I would also like on behalf of the Group to thank all our directors and staff for their dedication and contribution to the steady work of the Company during the difficult period.
As at the date of this report, the Executive Directors are Dr. Chao Sze Tsung Cecil (Chairman), Ms. Chao Gigi (Vice Chairman), Mr. Yung Philip and Ms. Ho Sau Fun, Connie; the Non-Executive Directors are Mr. Chao Howard and Mr. Lee Ding Yue Joseph; the Independent Non-Executive Directors are Dr. Sun Ping Hsu, Samson, Mr. Ting Woo Shou, Kenneth and Mr. Lam Ka Wai, Graham.
By order of the Board CECIL CHAO SZE TSUNG
Executive Chairman
Hong Kong, 25 February 2021
RESULTS
The unaudited accounts of the Company and its subsidiaries (collectively referred to as the "Group") which have been reviewed by the Company's audit committee are listed as follows:
Condensed Consolidated Income Statement
For the six months ended 31 December 2020
Six months ended
31 December 2020
2019
Notes | HK$'000 | HK$'000 | |
(Unaudited) | (Unaudited) | ||
Revenue | 3 | 878,860 | 304,226 |
Direct costs | (139,450) | (114,725) | |
Gross profit | 739,410 | 189,501 | |
Other income, net | 4 | 39,896 | 50,424 |
Change in fair value of investment | |||
properties | (147,554) | (23,648) | |
Change in fair value of financial assets at fair | |||
value through profit or loss ("FVTPL") | 590 | (154) | |
Administrative expenses | (37,309) | (50,735) | |
Finance costs | 5a | (13,973) | (17,085) |
Profit before income tax | 5 | 581,060 | 148,303 |
Income tax expense | 6 | (643,236) | (114,181) |
(Loss)/profit for the period | (62,176) | 34,122 | |
(Loss)/profit for the period | |||
attributable to: | |||
Owners of the Company | (62,110) | 33,565 | |
Non-controlling interests | (66) | 557 | |
(62,176) | 34,122 | ||
(Loss)/Earnings per share for (loss)/ | |||
profit attributable to the owners of | |||
the Company during the period | 8 | ||
Basic | HK$(0.1) | HK$0.06 | |
Diluted | HK$(0.1) | HK$0.06 | |
5 |
Condensed Consolidated Statement of Comprehensive Income As at 31 December 2020
Six months ended
31 December
2020
HK$'000 (Unaudited)
(Loss)/profit for the period
Other comprehensive (expense)/income for the period, net of tax
Item that will be reclassified subsequently to profit or loss:
Change in fair value of financial assets at fair value through other comprehensive income
("FVTOCI") (recycling)
Exchange gain/(loss) on translation of financial statements of foreign operations
Item that will not be reclassified subsequently to profit or loss:
Change in fair value of land and buildings held for own use
Income tax relating to components of other comprehensive income
Other comprehensive income/(expense)
for the period, net of tax
(62,176)
(423)
276,456
528
(87)
2019
HK$'000 (Unaudited)
34,122
(412)
(71,852)
728
(120)
276,474 (71,656)
Total comprehensive income/(expense) for the period
Total comprehensive income/(expense) for the period attributable to:
Owners of the Company Non-controlling interests
214,298 (37,534)
214,364 (38,091)
(66)
557
214,298
(37,534)
Condensed Consolidated Statement of Financial Position As at 31 December 2020
At | At | ||
31 December | 30 June | ||
2020 | 2020 | ||
Notes | HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | ||
ASSETS AND LIABILITIES | |||
Non-current assets | |||
Investment properties | 9 | 6,792,744 | 7,084,875 |
Property, plant and equipment | 40,865 | 42,365 | |
Other non-current asset | 950 | 950 | |
Other financial assets | 10 | 170,238 | 184,232 |
Deferred tax assets | 16,290 | 16,290 | |
7,021,087 | 7,328,712 | ||
Current assets | |||
Properties under development for sale | 9 | 1,557,792 | 1,496,021 |
Completed properties for sale | 412,449 | 511,224 | |
Other financial assets | 10 | 8,499 | 6,472 |
Financial assets at fair value through | |||
profit or loss | 11 | 1,153,193 | 458,046 |
Trade and other receivables | 12 | 295,909 | 30,333 |
Bank balances and cash | 13 | 842,934 | 1,236,667 |
4,270,776 | 3,738,763 | ||
Current liabilities | |||
Other payables | 141,240 | 151,611 | |
Contract liabilities | 16 | 185,349 | 436,470 |
Amounts due to non-controlling | |||
shareholders | 239,990 | 239,990 | |
Amount due to a related company | 1,513 | 1,547 | |
Interest-bearing borrowings | 950,920 | 1,261,920 | |
Lease liabilities | 15 | 2,323 | 2,627 |
Tax payable | 1,783,490 | 989,395 | |
3,304,825 | 3,083,560 | ||
Net current assets | 965,951 | 655,203 | |
Total assets less current liabilities | 7,987,038 | 7,983,915 | |
7 | |||
At | At | ||
31 December | 30 June | ||
2020 | 2020 | ||
Notes | HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | ||
Non-current liabilities | |||
Interest-bearing borrowings | 10,746 | 10,351 | |
Advance from a director | 100,632 | 170,182 | |
Lease liabilities | 15 | - | 1,004 |
Deferred tax liabilities | 933,993 | 1,070,462 | |
1,045,371 | 1,251,999 | ||
Net assets | 6,941,667 | 6,731,916 | |
EQUITY | |||
Share capital | 14 | 2,468,985 | 2,441,551 |
Reserves | 4,296,455 | 4,114,072 | |
Equity attributable to the owners of | |||
the Company | 6,765,440 | 6,555,623 | |
Non-controlling interests | 176,227 | 176,293 | |
Total equity | 6,941,667 | 6,731,916 | |
8 |
Condensed Consolidated Statement of Cash Flows For the six months ended 31 December 2020
Net cash generated from operating activities
Investing activities
Additions of investment properties Purchase of structured deposits
Proceeds from redemption of structured deposits Purchase of financial assets at FVTOCI Proceeds from disposal of investment properties (Placement)/release of fixed deposits with original maturity of over three months placement
Other investing activities
Six months ended
31 December 2020
2019
HK$'000 (Unaudited)
HK$'000 (Unaudited)
204,016
180,237
(29,388) (8,719)
(1,358,977) (221,684)
700,749 -
- (31,595)
355,925 175,097
(13,738) 193,368
18,880 14,865
Net cash (used in)/generated from investing activities
Financing activities
(Repayment to)/advances from a director New bank and other loans raised Repayment of bank loans
Other financing activities
(326,549) 121,332
(69,550) 5,500
- 655,791
(310,605) (590,979)
(6,284) (13,648)Net cash (used in)/generated from financing activities
(386,439) 56,664
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 July Effect of foreign exchange rate changes, on cash held
(508,972) 358,233
1,232,907 398,298
101,501
(24,145)
Cash and cash equivalents at 31 December, represented by cash at bank
825,436
732,386
Condensed Consolidated Statement of Changes in Equity For the six months ended 31 December 2020
Equity attributable to the owners of the CompanyShare capital HK$'000 (Unaudited)
Balance at 1 July 2019
Adjustment from the adoption of HKFRS 16 (Note 2(a))Adjusted balance at 1 July 2019
Profit for the period
Other comprehensive income/
(expenses) for the period Exchange loss on translation of financial statements of foreign operations Change in fair value of financial assets at FVTOCI Change in fair value of land and buildings held for own use Income tax relating to components of other comprehensive income
Total comprehensive (expense)/ income for the period
2019 final dividend approved and paid (Note 7)
Issue of share capital: Pursuant to scrip dividend scheme
Balance at 31 December 2019
2,326,486
2,326,486
2,402,183
75,697
-
-
- - -
-
-
-
Financial | |||
assets at | |||
Property FVTOCI | |||
Exchange revaluation reserve Retained | controlling | Total | |
reserve* reserve* (recycling)* profits* | Total | interests | equity |
HK$'000 HK$'000 HK$'000 HK$'000 | HK$'000 | HK$'000 | HK$'000 |
(Unaudited) (Unaudited) (Unaudited) (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
6,638,727 | 190,982 | 6,829,709 | |
(136) | - | (136) | |
6,638,591 | 190,982 | 6,829,573 | |
33,565 | 557 | 34,122 | |
(71,852) | - | (71,852) | |
(412) | - | (412) | |
728 | - | 728 | |
(120) | - | (120) | |
(38,091) | 557 | (37,534) | |
(89,345) | - | (89,345) | |
75,697 | - | 75,697 | |
6,568,852 | 191,539 | 6,778,391 |
Non-
(378,944)
28,160
(7,117)
4,670,142
-
-
-
(136)
(378,944)
28,160
(7,117)
4,670,006
-
-
-
33,565
(71,852)
- -
- - 728
(412)
-
-
- - -
-
(120)
-
-
(71,852)
608
(412)
33,565
-
-
-
(89,345)
-
-
-
-
(450,796)
28,768
(7,529)
4,614,226
Balance at 1 July 2020
Loss for the period
Other comprehensive income/
(expenses) for the period Exchange gain on translation of financial statements of foreign operations
Change in fair value of financial assets at FVTOCI
Change in fair value of land and buildings held for own use Income tax relating to components of other comprehensive income
Total comprehensive (expense)/ income for the period
2020 final dividend approved and paid (Note 7)
Issue of share capital:
Pursuant to scrip dividend scheme Transfer to statutory reserve
Balance at 31 December 2020
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)Share capital HK$'000
2,441,551
2,468,985
27,434 -
-
-
-
-
-
-
-
Exchange reserve* HK$'000
Equity attributable to the owners of the Company | |
Financial | |
assets at | |
Property FVTOCI | Non- |
controlling | Total |
interests | equity |
HK$'000 | HK$'000 |
(Unaudited) | (Unaudited) |
176,293 | 6,731,916 |
(66) | (62,176) |
- | 276,456 |
- | (423) |
- | 528 |
- | (87) |
(66) | 214,298 |
- | (31,981) |
- | 27,434 |
- | - |
176,227 | 6,941,667 |
Statutory revaluationreserve* HK$'000
HK$'000
reserve* (recycling)*
HK$'000
reserveRetained profits* HK$'000
Total HK$'000
(479,310)
- -
28,768
(17,178)
4,581,792 6,555,623
-
-
-
(62,110) (62,110)
276,456 - - - - 276,456
-
-
-
(423) - (423)
-
-
528 - - 528
-
-
(87) - - (87)
276,456
-
441
(423) (62,110) 214,364
-
-
-
-
(31,981) (31,981)
- -
- 281,562
- -
- -
- 27,434
(281,562)
-
(202,854)
281,562
29,209
(17,601)
4,206,139
6,765,440
*These reserve accounts comprise the Group's reserves of HK$4,296,455,000 (As at 30 June 2020 (Audited): HK$4,114,072,000) in the condensed consolidated statement of financial position.
Notes to the Condensed Consolidated Financial Statements For the six months ended 31 December 2020
BASIS OF PREPARATION
The unaudited condensed consolidated interim financial statements have been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"), and also comply with the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. These condensed consolidated interim financial statements were authorised for issue on 25 February 2021, and have been reviewed by the Company's Audit Committee.
The unaudited condensed consolidated interim financial statements have been prepared in accordance with the same accounting policies adopted in the annual financial statements for the year ended 30 June 2020, except for the adoption of new or amended HKFRSs effective on or after 1 July 2020 as disclosed in Note 2 and the accounting policy changes that are expected to be reflected in the 2020 annual financial statements.
These condensed consolidated interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements for the year ended 30 June 2020.
The financial information relating to the financial year ended 30 June 2020 that is included in the interim financial statements for the six months ended 31 December 2020 as comparative information does not constitute the Company's statutory annual consolidated financial statements for that financial year but is derived from those financial statements. Further information relating to these statutory financial statements disclosed in accordance with section 436 of the Hong Kong Companies Ordinance (Cap. 622) is as follows:
The Company has delivered the financial statements for the year ended 30 June 2020 to the Registrar of Companies in accordance with section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance.
ADOPTION OF NEW AND AMENDED HKFRSs
(a)New and amended HKFRSs that are effective for annual periods beginning on or after 1 July 2020
The condensed consolidated interim financial statements for the six months ended 31 December 2020 have been prepared in accordance with the accounting policies adopted in the Group's annual financial statements for the year ended 30 June 2020, except for the adoption of the following new and amended HKFRs effective as of 1 July 2020. The Group has not early adopted any other standards, interpretation or amendment that has been issued but not yet effective.
Amendments to HKFRS 3 | Definition of a Business |
Amendments to HKFRS 9, | Interest Rate Benchmark Reform |
HKAS 39 and HKFRS 7 | |
Amendments to HKAS 1 | Definition of Material |
and HKAS 8 | |
Amendments to HKFRS 16 | Covid-19-Related Rent Concessions |
Except for those mentioned below, the adoption of the new and amended HKFRSs had no material impact on how the results and financial position for the current and prior periods have been prepared and presented.
Amendments to HKAS 1 and HKAS 8 "Definition of Material"
The amendments clarify the definition of material and state that "information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity". Materiality depends on nature or magnitude of information or both.
The amendments also:
•
introduce the concept of obscuring information when considering materiality and provide some examples of circumstances that may result in material information being obscured;
•
clarify that materiality assessment will need to take into account how primary users could reasonably be expected to be influenced in making economic decisions by replacing the threshold "could influence" with "could reasonably be expected to influence" in the definition of material; and
•
clarify that materiality assessment will need to take into account of information provided to primary users of general purpose financial statements (i.e. existing and potential investors, lenders and other creditors that rely on general purpose financial statements for much of the financial information they need).
ADOPTION OF NEW AND AMENDED HKFRSs (Continued)
(a) New and amended HKFRSs that are effective for annual periods beginning on or after 1 July 2020 (Continued)
Amendments to HKAS 1 and HKAS 8 "Definition of Material" (Continued)
The directors of the Company anticipate that the application of these amendments has had no impact on the Group's condensed consolidated interim financial statements.
(b) Issued but not yet effective HKFRSs
The Group has not applied any new and amended HKFRSs that have been published by the HKICPA but are not yet effective for the current accounting period. The Group has commenced an assessment of the impact of these new standards and amendments, but is not yet in a position to state whether they would have a significant impact on its results and financial position.
3.
SEGMENT INFORMATION
The Group is principally engaged in property development and investment and provision of property management and related services. Turnover of the Group is the revenue from these activities.
In accordance with the Group's internal financial reporting provided to the executive directors of the Company, being the chief operating decision makers who is responsible for allocating resources, assessing performance of the operating segments and making strategic decision, the executive directors consider the business from business perspective.
From business perspective, the Group organised into the following main business segments:
- - - -
Property sales; Property rental;
Estate management; and
Others - securities trading, investments in financial instruments and debenturesThe chief operating decision makers assesses the performance of the operating segments based on the profit before income tax for the period.
SEGMENT INFORMATION (Continued)
Information regarding the Group's reportable segments as provided to the chief operating decision maker is set out below:
For the six months ended 31 December 2020 (Unaudited)
Property | Property | Estate | |||
sales | rental | management | Others | Total | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
Revenue | |||||
From external customers | 836,598 | 31,921 | 10,341 | - | 878,860 |
Inter-segment revenue | - | - | 10,700 | - | 10,700 |
Reportable segment revenue | 836,598 | 31,921 | 21,041 | - | 889,560 |
Reportable segment profit/(loss) | 647,008 | (40,365) | 3,816 | 7,699 | 618,158 |
Other information: | |||||
Interest income | 1,972 | 61 | - | 7,487 | 9,520 |
Interest expense | 6,297 | 7,429 | - | 247 | 13,973 |
Income tax expense | 642,588 | 648 | - | - | 643,236 |
Depreciation | 18 | 1,035 | 1,291 | - | 2,344 |
Decrease in fair value of | |||||
investment properties | - | (147,554) | - | - | (147,554) |
Decrease in fair value of financial assets at fair | |||||
value through profit or loss ("FVTPL") | - | - | - | 590 | 590 |
As at 31 December 2020 (Unaudited) | |||||
Reportable segment assets | 3,038,834 | 6,018,322 | 6,205 | 1,153,194 | 10,216,555 |
Reportable segment liabilities | 298,593 | 263,513 | 3,260 | 5,048 | 570,414 |
15 |
Property | Property | Estate | |||
sales | rental | management | Others | Total | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
Revenue | |||||
From external customers | 267,773 | 32,151 | 4,302 | - | 304,226 |
Inter-segment revenue | - | - | 10,367 | - | 10,367 |
Reportable segment revenue | 267,773 | 32,151 | 14,669 | - | 314,593 |
Reportable segment profit | 157,055 | 55,855 | 1,965 | - | 214,875 |
Other information: | |||||
Interest income | 4,806 | 7,695 | - | 351 | 12,852 |
Interest expense | 1,797 | 12,409 | - | - | 14,206 |
Income tax expense | 224,080 | (109,899) | - | - | 114,181 |
Depreciation | 25 | 954 | 1,381 | - | 2,360 |
Decrease in fair value of investment properties | - | (23,648) | - | - | (23,648) |
Decrease in fair value of financial assets | |||||
at fair value through profit or loss ("FVTPL") | - | - | - | (154) | (154) |
As at 30 June 2020 (Audited) | |||||
Property | Property | Estate | |||
sales | rental | management | Others | Total | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
Reportable segment assets | 2,810,517 | 6,310,669 | 7,232 | 458,046 | 9,586,464 |
Reportable segment liabilities | 559,591 | 262,835 | 5,395 | 5,428 | 833,249 |
SEGMENT INFORMATION (Continued)
For the six months ended 31 December 2019 (Unaudited)SEGMENT INFORMATION (Continued)
The Group's principal activities are disclosed in above, and the revenue during the year is as follows:
Six months ended
31 December
2020
2019
HK$'000
HK$'000
Property sales |
Property rental |
Estate management |
Disaggregation of revenue from contracts with customers |
(Unaudited) | (Unaudited) |
836,598 | 267,773 |
31,921 | 32,151 |
10,341 | 4,302 |
878,860 | 304,226 |
The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines and geographical market:
Six months ended 31 December 2020
Property | Property | Estate | |
sales | rental | management | |
HK$'000 | HK$'000 | HK$'000 | |
Segments | (Unaudited) | (Unaudited) | (Unaudited) |
Geographical markets | |||
PRC | 836,598 | 5,887 | 4,913 |
Hong Kong | - | 25,700 | 5,428 |
Malaysia | - | 334 | - |
836,598 | 31,921 | 10,341 | |
Timing of revenue recognitions | |||
under HKFRS 15 from | |||
external customers | |||
At a point in time | 836,598 | - | 10,341 |
Rental income not in the | |||
scope of HKFRS 15 | - | 31,921 | - |
836,598 | 31,921 | 10,341 | |
17 |
Property | Property | Estate | |
sales | rental | management | |
HK$'000 | HK$'000 | HK$'000 | |
Segments | (Unaudited) | (Unaudited) | (Unaudited) |
Geographical markets | |||
PRC | 267,773 | 7,509 | 3,450 |
Hong Kong | - | 23,931 | 852 |
Malaysia | - | 711 | - |
267,773 | 32,151 | 4,302 | |
Timing of revenue recognitions | |||
under HKFRS 15 from | |||
external customers | |||
At a point in time | 267,773 | - | 4,302 |
Rental income not in the | |||
scope of HKFRS 15 | - | 32,151 | - |
267,773 | 32,151 | 4,302 | |
SEGMENT INFORMATION (Continued)
For the six months ended 31 December 2019 (Unaudited)
Six months ended 31 December 2019
3. SEGMENT INFORMATION (Continued)
The reportable segment profit can be reconciled to the Group's profit before income tax as presented in this interim financial report as follows:
Six months ended
31 December
2020
2019
HK$'000
HK$'000
(Unaudited)
(Unaudited)Reportable segment profit Unallocated corporate income Unallocated corporate expenses Finance costs
618,158 214,875
32,784 52,629
(55,909) (102,116)
(13,973) (17,085)
Profit before income tax of the Group
4. OTHER INCOME, NET
Dividend income from listed equity investments Interest received
Interest received from other financial assets Investment income
Gain on disposal of financial assets at FVTPL
Gain on disposal of investment properties, net of tax Government subsidies
Sundry income Exchange gain, net
581,060
Six months ended
31 December
148,303
2020
2019
HK$'000
HK$'000
(Unaudited)
(Unaudited)
1,023 512
2,033 5,173
7,487 7,679
6,086 - 20,946 452
- 108 36,679 -
1,869 268
- 5
39,896
50,424
PROFIT BEFORE INCOME TAX
Profit before income tax is arrived at after charging/(crediting) the following:
Six months ended
31 December
2020
2019
HK$'000
HK$'000
(Unaudited)
(Unaudited)
(a) Finance costs
Interest charges on:
Bank loans
Advances from a director
Other incidental borrowing costs
11,760 19,086
3,899 4,964
2,835 3,468
Total finance costs
Less: Interest capitalised into investment properties and properties under development for sale
(b) Other items
Depreciation
Gain on disposal of financial assets
at FVTPL
Gain on disposal of investment properties
Short term lease expenses
Staff costs (including directors' emoluments)
Salaries, wages and other benefits
Contribution to defined contribution plans
18,494 27,518
(4,521) (10,433)
13,973 17,085
2,344 2,360
- (108)
(20,946)
149 13,523 311
(36,679)
7 12,317 125
INCOME TAX EXPENSE
No Hong Kong Profits Tax has been provided in the condensed consolidated interim financial statements as the Group has no assessable profit in Hong Kong for the six months ended 31 December 2020 (2019: Nil).
Taxation on overseas profits has been calculated on the estimated assessable profit for the period at the rates of taxation prevailing in the countries in which the Group operates.
The taxation charge is made up as follows:
Six months ended
31 December
2020
2019
HK$'000
HK$'000
(Unaudited) | (Unaudited) | |
Current tax | ||
- Overseas | ||
PRC enterprise income tax | 285,049 | 60,948 |
PRC land appreciation tax | 400,041 | 163,132 |
685,090 | 224,080 | |
Deferred taxation | (41,854) | (109,899) |
Total income tax expense | 643,236 | 114,181 |
21 |
DIVIDENDS
Six months ended
31 December
2020
2019
HK$'000
HK$'000
(Unaudited)
(Unaudited)Final dividend declared and paid of HK5 cents
(2019: HK15 cents) per ordinary share Proposed interim dividend of HK2 cents
31,981 89,345
(2019: HK7.5 cents) per ordinary share
13,054 46,565
45,035 135,910
The interim dividend proposed after the end of the reporting period has not been recognised as a liability at the end of the reporting period.
During the six months ended 31 December 2020, scrip dividend alternative was offered to shareholders in respect of 2020 final dividend. This alternative was accepted by shareholders as follows:
Six months ended
31 December
2020
2019
HK$'000
HK$'000
(Unaudited)
(Unaudited)Dividends:
Cash
4,547 13,648
Share alternative (Note 14)
27,434 75,697
31,981 89,345
(LOSS)/EARNINGS PER SHARE
The calculation of the basic and diluted (loss)/earnings per share for the period is based on the following data:
Six months ended
31 December
2020
2019
HK$'000
HK$'000
(Unaudited)
(Unaudited)
(Loss)/Earnings
(Loss)/Profit attributable to the owners of the
Company for the purpose of calculating basic and diluted (loss)/earnings per share
(62,110)
33,565
Number of shares
Six months ended
31 December
2020
2019
(Unaudited)
(Unaudited)Weighted average number of ordinary shares for the purposes of basic (loss)/earnings per share
633,353,650
601,256,538
Diluted (loss)/earnings per share is the same as basic (loss)/earnings per share for six months ended 31 December 2020 as there was no potential ordinary shares outstanding as at 31
December 2020.
INVESTMENT PROPERTIES AND PROPERTIES UNDER DEVELOPMENT FOR SALE
During the six months ended 31 December 2020, capital expenditure on additions of the investment properties was HK$29,388,000 (31 December 2019: HK$8,719,000), on properties under development was HK$8,260,000 (31 December 2019: HK$14,353,000).
The valuations of investment properties carries at fair value were updated at 31 December 2020 by the Directors using the same valuation techniques as were used by the independent valuers when carrying out the 31 December 2019 valuations. As a result of the update, a net loss on fair value change of HK$147,554,000 (31 December 2019: net loss on fair value change of HK$23,648,000) has been recognised in the condensed consolidated income statement.
During the six months ended 31 December 2020, disposal of investment properties at the carrying value of HK$334,979,000 (31 December 2019: HK$116,790,000) at cash consideration of HK$355,925,000 (31 December 2019: HK$175,097,000) after deducting direct legal and professional fees.
10.
OTHER FINANCIAL ASSETS
Other financial assets included the following investment:
At | At | |
31 December | 30 June | |
2020 | 2020 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Non-current assets | ||
Financial assets at fair value through other | ||
comprehensive income ("FVTOCI"): | ||
Perpetual notes, listed in Hong Kong (Note (a)) | 112,368 | 123,174 |
Perpetual notes, listed outside Hong Kong | ||
(Note (b)) | 4,898 | 4,418 |
Debentures, listed in Hong Kong (Note (c)) | 1,813 | 4,495 |
Debentures, listed outside Hong Kong ((Note (d)) | 51,159 | 52,145 |
170,238 | 184,232 | |
Current assets | ||
Financial assets at fair value through other | ||
comprehensive income: | ||
Debentures, listed outside Hong Kong ((Note (d)) | 8,499 | 6,472 |
The Group held the above investments under a business model whose objective is hold to collect the associated cash flows and sale; and the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
10.
OTHER FINANCIAL ASSETS (Continued)
Note:
(a) The Group invested in perpetual notes with principal amounts ranging from US$500,000 to US$10,000,000 listed in Hong Kong without fixed maturity date at floating rate of 7.75% with reset rate on reset date ranging from 5.72% plus mid-market swap rate and fixed rates ranging from 4.85% to 6.50% per annum, payable semi-annually.
(b) The Group invested in perpetual notes with principal amount of US$240,000 and US$500,000 listed outside Hong Kong without fixed maturity date at a coupon rate ranging from 5.25% to 6.25% per annum, payable semi-annually.
(c) The Group invested in one (2019: two) listed debentures with principal amount of US$1,000,000 listed in Hong Kong with maturity date of 31 January 2028 at a fixed coupon rate of 6.50% per annum, payable semi-annually.
(d) The Group invested in five listed debentures with principal amounts ranging from US$250,000 to US$3,100,000 with fixed maturity date ranging from 27 March 2021 to 28 June 2026 at a coupon rates ranging from 6.75% to 11.88% per annum, payable semi-annually which carry forward from 30 June 2020.
(e) Financial assets at FVTOCI have been pledged to secure banking facilities granted to the Group (Note 18).
(f) The credit risk on listed perpetual notes and debentures are considered to be insignificant because the issuers with high credit ratings assigned by international credit rating agencies.
11. | FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS |
At | At |
31 December | 30 June |
2020 | 2020 |
HK$'000 | HK$'000 |
(Unaudited) | (Audited) |
Financial assets at fair value through profit or loss | ||
Equity securities listed in Hong Kong (Note (a)) | 31,758 | 31,168 |
Short-term investments (Note (b)) | 1,121,435 | 426,878 |
1,153,193 | 458,046 | |
Note: |
(a) The fair value of the Group's investments in listed equity securities have been measured as described in Note 20.
(b) The short-term investments represented structured deposits which are placed with bank in the PRC and contain embedded derivatives, the returns of which are determined by reference to the performance of the underlying assets of the structured deposits and the interest rate earning for the range from 1.40% to 3.50% (30 June 2020 (Audited): 1.65% - 3.97%) per annum quoted in the market.
12.
TRADE AND OTHER RECEIVABLES
At | At | |
31 December | 30 June | |
2020 | 2020 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Trade receivables | ||
From third parties | 269,796 | 1,704 |
Other receivables | ||
Prepaid expenses | 4,537 | 5,943 |
Costs for obtaining contracts | 6,258 | 6,398 |
Utilities deposits | 2,734 | 2,676 |
Other deposits | 693 | 693 |
Other receivables | 11,891 | 12,919 |
26,113 | 28,629 | |
295,909 | 30,333 |
The trade receivables of the Group represent receivables from sale of completed properties for sale and rental and management fee in arrears. The Group maintains a credit policy to minimise any credit risk associated with trade receivables. As at the end of the reporting period the ageing analysis of the trade receivables (which is included in trade and other receivables), based on the debit note or invoice date, is as follows:
At | At | |
31 December | 30 June | |
2020 | 2020 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
0 - 30 days | 268,288 | 1,009 |
31 - 60 days | 160 | 333 |
61 - 90 days | 89 | 125 |
Over 90 days | 1,259 | 237 |
269,796 | 1,704 | |
Trade receivables are due upon presentation of invoices. |
The Group has no significant concentrations of credit risk, and sufficient rental deposits are held to cover potential exposure to credit risk.
Other receivables included deposits paid to constructors to perform construct works for the Group's investment properties and properties under development. The credit risk of deposits paid are considered to be low, therefore the impact on expected credit loss is considered as immaterial.
13. BANK BALANCES AND CASH
At
At
31 December
30 June
2020
2020
HK$'000
HK$'000
(Unaudited)
(Audited)
Pledged deposits
17,498
3,760
Cash at bank
825,436
1,232,907
Total
842,934
1,236,667
Included in bank and cash balances of the Group is HK$751,968,000 (30 June 2020 (Audited): HK$1,160,060,000) of bank balances denominated are placed with banks in the PRC. Under the PRC's Foreign Exchange Control Regulations and Administration of Settlement and Sales and Payment of Foreign Exchange Regulations, the bank balances are not freely transferred.
The credit risk on pledged deposits and cash at bank are considered to be insignificant because the counterparties are banks with high credit ratings assigned by international credit-rating agencies.
14. SHARE CAPITAL
Unaudited
Audited
As at 31 December 2020
As at 30 June 2020
No. of sharesHK$'000
No. of sharesHK$'000
Voting ordinary shares:
At the beginning of the period/year
639,613,567 2,441,551
595,634,100 2,326,486
Issue of shares pursuant to scrip dividend scheme (Note 7)
13,063,214
27,434
43,979,467
115,065
At the end of the period/ year
652,676,781 2,468,985
639,613,567 2,441,551
15.
At | At | |
31 December | 30 June | |
2020 | 2020 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Total minimum lease payments: | ||
Due within one year | 2,362 | 2,711 |
Due in the second to fifth years | - | 1,012 |
2,362 | 3,723 | |
Future finance charges on leases liabilities | ||
(2020: finance lease liabilities) | (39) | (92) |
Present value of leases liabilities | ||
(2020: finance lease liabilities) | 2,323 | 3,631 |
Present value of minimum lease payments: | ||
Due within one year | 2,323 | 2,627 |
Due in the second to fifth years | - | 1,004 |
2,323 | 3,631 | |
Less: Portion due within one year included under | ||
current liabilities | (2,323) | (2,627) |
Portion due after one year included under | ||
non-current liabilities | - | 1,004 |
LEASE LIABILITIES
During the six-months ended 31 December 2020, the total cash outflows for the leases is approximately HK$1,420,000 (Six months ended 31 December 2019: HK$1,420,000).
The Group considered that no extension option or termination option would be exercised at the lease commencement date. All are for leasing office premises. The lease periods are for three to five years.
16.
CONTRACT LIABILITIES
At | At | |
31 December | 30 June | |
2020 | 2020 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Contract liabilities arising from receipt in advance | 185,349 | 436,470 |
The contract liabilities represented the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied as of the end of the reporting period. The Group expects the transaction price allocated to the unsatisfied performance obligations will be recognised as revenue when the Group transfers good or service to the customer.
During the six months ended 31 December 2020, the Group's contract liabilities amount to HK$185,349,000 (2020: HK$436,470,000) and are expected to be recognised as revenue within one year. As a practical expedient, the balance does not involve significant financing component.
Since all the contracts with an original duration of one year or less, as permitted under HKFRS 15, the transaction price allocated to these unsatisfied contracts is not disclosed.
Contract liabilities outstanding at the beginning of the period amounting to HK$436,470,000 have been recognised as revenue during the period.
17.
COMMITMENTS
(a)Capital commitments
Capital commitments in respect of properties under development outstanding at the reporting date not provided for in the consolidated financial statements are as follows:
(b)
At | At | |
31 December | 30 June | |
2020 | 2020 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Contracted but not provided for | 365,840 | 291,419 |
Operating lease commitments - as lessor |
At the reporting date, the Group had future aggregate minimum lease rental receipts under non-cancellable operating leases in respect of the Group's properties as follows:
Within one year
After 1 year but within 2 years After 2 years but within 3 years
(c)Operating lease commitments - as lessee
At
31 December 2020
At 30 June 2020
HK$'000 (Unaudited)
HK$'000 (Audited)
15,693 34,926
1,113 4,613
- 503
16,806 40,042
At 31 December 2020, the lease commitments for short-term leases (2020: total future minimum lease payments payable by the Group under non-cancellable operating leases) are payable as follows:
At | At | |
31 December | 30 June | |
2020 | 2020 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Within one year | 13 | 164 |
18. PLEDGE OF ASSETS
At 31 December 2020, the Group's total bank borrowings of HK$950,000,000 (30 June 2020 (Audited): HK$1,261,000,000) was secured by the following:
(i) legal charges on certain of the Group's investment properties, properties held for sales and land and building with carrying values of approximately HK$2,805,650,000 (30 June 2020 (Audited): HK$2,972,900,000), HK$1,539,000 (30 June 2020 (Audited): HK$1,539,000) and HK$36,200,000 (30 June 2020 (Audited): HK$36,400,000) respectively;
(ii) floating charge over all the assets and undertakings of certain subsidiaries;
(iii) charge over certain bank account balances with carrying values of approximately HK$17,498,000 (30 June 2020 (Audited): HK$3,760,000);
(iv) mortgages over the shares of certain subsidiaries;
(v) assignments of sale proceeds, insurance proceeds, rental income and deposits arising from the tenancy agreements of certain properties; and
(vi) financial assets at FVTOCI of approximately HK$178,737,000 (30 June 2020 (Audited): HK$190,704,000).
19. SIGNIFICANT RELATED PARTY TRANSACTIONS
Details of significant related party transactions which were carried out in the ordinary course of the Group's business are as follows:
Six months ended
31 December 2020
2019
Notes
HK$'000 (Unaudited)
HK$'000 (Unaudited)Salaries and other short-term employee benefits paid to key management personnel, including amounts paid to the Company's directors
Interest paid to Dr. Chao Sze-Tsung
Cecil
(a)
5,145 3,899
6,771 4,964
Architect and other professional service fees paid to Cecil Chao & Associates Limited ("CCAL") and Cecil Chao Design (Macau) Limited ("CCDML") Commission paid to Szehope Securities
(b)
Company Limited
(c)
- 32
2,100
76
19.
SIGNIFICANT RELATED PARTY TRANSACTIONS (Continued)
(a) Dr. Chao Sze Tsung Cecil has provided unsecured advances, to the Group at 1% over prime interest rate in Hong Kong per annum. At 31 December 2020, the advances from Dr. Chao Sze Tsung Cecil amounted to approximately HK$100,632,000 (30 June 2020 (Audited): HK$170,182,000). Dr. Chao Sze Tsung Cecil has confirmed that he will not request repayment of these advances in coming one year.
(b) CCAL and CCDML rendered architectural and related services to the Group on terms agreed between both parties. Dr. Chao Sze Tsung Cecil is the beneficial owner of CCAL and CCDML. These transactions constitute continuing connected transactions as defined in Chapter 14A of the Listing Rules. The disclosures required by Chapter 14A of the Listing Rules are provided in the reports of the directors.
(c) Dr. Chao Sze-Tsung Cecil is the beneficial owner of Szehope Securities Company Limited.
(d) Other than the above, no other transaction, arrangement or contract of significance to which the Company was a party and in which a director of the Company or a connected entity of the director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the period.
20.
FAIR VALUE MEASUREMENT
The following table presents the fair value of the Group's financial instruments measured at the end of the reporting period on a recurring basis, categorised into the three-level fair value hierarchy as defined in HKFRS 13 "Fair Value Measurement". The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:
-
Level 1 valuations: Fair value measured using only Level 1 inputs, i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.
-
Level 2 valuations: Fair value measured using Level 2, inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available.
-
Level 3 valuations: Fair value measured using significant unobservable inputs.
The level in the fair value hierarchy within which the financial asset or liability is categorised in its entirety is based on the lowest level of input that is significant to the fair value measurement.
20.
FAIR VALUE MEASUREMENT (Continued)
The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows:
At 31 December 2020 (Unaudited)
Level 1 Level 2 Total
Notes
HK$'000
HK$'000
Assets
Financial assets at FVTPL: Listed equity securities held for trading
Short-term investments
Financial assets at FVTOCI: Perpetual notes, listed in Hong Kong Perpetual notes, listed outside Hong Kong Debentures, listed in Hong Kong Debentures, listed outside Hong Kong
Assets
Financial assets at FVTPL: Listed equity securities held for trading
Short-term investments
Financial assets at FVTOCI: Perpetual notes, listed in
Hong Kong
Perpetual notes, listed outside Hong Kong Debentures, listed in Hong Kong Debentures, listed outside
(a) (c)
31,758
-
- 1,121,435
(b)
(b) (b)
(b)
- - - - 31,758
112,368 112,368
4,898 4,898 1,813 1,813 51,159 51,159
1,291,673
At 30 June 2020 (Audited)
Level 1 Level 2
NotesHK$'000
HK$'000
31,758 1,121,435
1,323,431
HK$'000
Total HK$'000
(a) (c)
31,168 -
- 31,168 426,878 426,878
(b)
- - -
123,174 123,174
Hong Kong
(b) (b)
(b)
-
4,418 4,418 4,495 4,495 58,617 58,617
31,168 617,582 648,750
20.
FAIR VALUE MEASUREMENT (Continued)
There have been no transfers between levels 1, 2 and 3 in the reporting period.
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting periods.
Note
(a) Listed equity securities held for trading
The listed equity securities are denominated in Hong Kong dollars. Fair values have been determined by reference to their quoted bid prices at the reporting date.
(b) Listed debt securities
The listed debt securities are denominated in United States dollars. Fair values have been determined by reference to their quoted bid prices at the reporting date.
(c) Short-term investments
Fair values have been determined by reference to the discounted cash flow approach.
MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL REVIEW
Financial Highlights
Revenue for the six months ended 31 December 2020 (the "Period") amounted to HK$878,860,000 (for the six months ended 31 December 2019: HK$304,226,000), a 188.9% increase as compared with the same period last year. It was mainly due to increase in properties sold in Shenzhen amounted to HK$836,598,000 during Period.
For property leasing, the Period recorded a decrease of 0.7% in rental income as compared with the corresponding Period in 2019, amounting HK$31,921,000 (31 December 2019: HK$32,151,000).
Gross profit for the Period amounted to HK$739,410,000, a 290.2% increase as compared with same period last year.
Other income recorded a decrease of 20.9% to HK$39,896,000 when compared with last year (31 December 2019: HK$50,424,000). The other income for the Period were mainly attributed to dividend income, interest income and gain on disposal of investment properties. Increase in fair value of financial assets at fair value through profit or loss amounted to HK$590,000 (31 December 2019: decrease HK$154,000). Decrease in fair value of investment properties amounted to HK$147,554,000 (31 December 2019: HK$23,648,000). Administrative expenses decreased by 26.5% to HK$37,309,000 as compared with the same period last year. Finance costs decreased by 18.2% to HK$13,973,000 as compared with same period last year. The decrease was mainly due to decrease in borrowing and interest rate during the period. Income tax expenses increased to HK$643,236,000 (31 December 2019: HK$114,181,000) which was mainly due to increase in land appreciation tax and profit tax on sale of properties in Shenzhen during the Period.
Loss attributable to owners of the Company for the Year was HK$62,110,000 (31 December 2019: profit HK$33,565,000). Basic loss per share was HK$0.10 (31 December 2019: earnings per share HK$0.06) and fully diluted loss per share was HK$0.10 (31 December 2019: earnings per share HK$0.06).
Final dividend of HK5.0 cents for the year ended 30 June 2020 (30 June 2019: HK15.0 cents) was paid during the Period. Scrip dividend alternative was offered to shareholders in respect of 30 June 2020 final dividend.
The Board resolved an interim dividend for the six months ended 31 December 2020 of HK2.0 cents (31 December 2019: HK7.5 cents) payable in cash. The interim dividend will be dispatched to all shareholders on 15 April 2021.
Total Equity Attributable To The Owners Of The Company
As at 31 December 2020, the Group's total equity attributable to the owners of the Company amounted to approximately HK$6,765,440,000 (30 June 2020: HK$6,555,623,000), an increase of HK$209,817,000 or 3.2% when compared with 30 June 2020. With the total number of ordinary shares in issue of 652,676,781 as at 31 December 2020 (30 June 2020: 639,613,567 shares), the total equity attributable to the owners of the Company per share was HK$10.37, representing an increase of 1.2% compared to HK$10.25 as at 30 June 2020. The increase in total equity attributable to owners of the Company per share was mainly attributable to increase in structured deposits resulted from sale of properties in Shenzhen.
Other than the existing projects and those disclosed in the annual report, the Group did not have any confirmed future plans for material investment or acquiring capital assets.
Investment In Financial Assets At Fair Value Through Profit Or Loss And Other Comprehensive Income
As at 31 December 2020, the fair value of investment in listed securities and structured deposit, perpetual notes and debentures amounted to HK$31,758,000, HK$1,121,435,000 and HK$178,737,000 respectively were classified as the financial assets at fair value through profit or loss and at fair value through other comprehensive income. During the Period, the portfolio was increased by gain on fair value of HK$590,000 of listed securities and net disposal of perpetual notes and debentures HK$11,544,000 and loss fair value of HK$423,000. The investment in listed securities, bonds and structured deposit as at 31 December 2020 represented 11.8% (30 June 2020: 5.9%) of the total assets, which formed part of the Group's cash management activities.
Equity
The number of issued ordinary shares as at 31 December 2020 and 30 June 2020 were 652,676,781 and 639,613,567 respectively.
Debts And Gearing
As at 31 December 2020, the Group's bank and other borrowings amounted to HK$1,062,298,000 (30 June 2020: HK$1,442,453,000). Cash and bank balances and structural deposit amounted to HK$1,964,369,000 (30 June 2020: HK$1,663,545,000) and net deposit amounted to HK$902,071,000 (30 June 2020: HK$221,092,000).
Total debts to equity ratio was 15.7% (30 June 2020: 22.0%) and net deposit to equity ratio was 13.3% (30 June 2020: 3.4%).
The decrease in the total debt to equity ratio and increase in net deposit to equity ratio were mainly due to decrease in bank borrowing during the period and increase in cash and bank balances and structural deposit resulted from increase in sale of properties during period.
As at 31 December 2020, the Group's bank and other borrowings were denominated in Hong Kong dollars. Of the Group's total bank and other borrowings HK$1,062,298,000, 89.5% and 10.5% were repayable within 1 year and 1 to 2 years respectively by reference to the repayment schedule of the loan agreement. The Group's bank and other borrowings carried interest rates by reference to HIBOR.
Pledge Of Assets
As at 31 December 2020, the Group's investment properties, properties held for sales and land and building with carrying value of HK$2,805,650,000 (30 June 2020: HK$2,972,900,000), HK$1,539,000 (30 June 2020: HK$1,539,000) and HK$36,200,000 (30 June 2020: HK$36,400,000) were pledged to secure general banking facilities of the Group.
Finance Costs
Financial costs included interest expenses on bank and other loans, arrangement, facility and commitment fee expenses. Interest capitalized for the Period was HK$4,521,000 as compared to HK$10,433,000 for the same period last year. Interest expenses for the Period amounted to HK$18,494,000, representing 32.8% decrease over the interest expenses of HK$27,518,000 recorded for the same period last year. The decrease in interest expense was mainly due to decrease in bank loans interest and other borrowing cost during the Period. The average interest rate over the period under review was 3.0% (31 December 2019: 3.5%) which was expressed as a percentage of total interest expenses over the average total borrowing.
Property Valuation
A property valuation has been carried out by Roma Appraisals Limited and K.T. Liu Surveyors Limited in respect of the Group's investment properties and certain property, plant and equipment as at 31 December 2020 and that valuation was used in preparing financial statements for the six months ended 31 December 2020. The Group's investment properties and investment properties under development were valued at HK$5,107,932,000 and HK$1,684,812,000 respectively making the total HK$6,792,744,000 (30 June 2020: investment properties and investment properties under development were valued at HK$5,428,781,000 and HK$1,656,094,000 making the total HK$7,084,875,000). The decrease in fair value of approximately HK$147,554,000 was credited to the income statement for the Period. The Group land and building held for a director's quarter carried at fair value were valued at HK$36,200,000 (30 June 2020: HK$36,400,000). There is HK$200,000 decrease in fair value for the Period were recorded in the property revaluation reserves. Properties under development for sale of the Group were stated at lower of cost or net realisable value in the financial statements.
RISK MANAGEMENT
The Group has established adequate risk management procedures that enable it to identify, measure, monitor and control the various types of risk it faces. This is supplemented by active management involvement and effective internal controls in the best interests of the Group.
REMUNERATION POLICIES AND SHARE OPTION SCHEME
As at 31 December 2020, the Group employed a total of 80 (as at 31 December 2019: 90) staff.
Employees were remunerated on the basis of their performance, experience and prevailing industry practice. Remuneration packages comprised salary, year end double pay and year end discretionary bonus based on market conditions and individual performance. The Executive Directors continued to review employees' contributions and to provide them with necessary incentives and flexibility for their better commitment and performance. No share option scheme was adopted for the Year.
FINANCIAL KEY PERFORMANCE INDICATOR
Profit Attributable To Owners Of The Company and Earnings Per Share
The Company uses the profit attributable to owners of the company and earnings per share as the Group's as the financial key performance indicator. The Company's aim to increase the Group's profit attributable to owners of the company and earnings per share. We compare the profit against the previous period as a measure of the performance.
INTERNAL CONTROL
We have performed periodic review on the internal control of the Group. Current year review will be completed by the end of the financial year.
ENVIRONMENTAL POLICIES AND COMPLIANCE
Our environmental policy is to meet all the environmental legislations which relate to our operation.
A review on the performance on our environmental policy has been carried out and will be completed by the end of the financial year.
KEY RELATIONSHIPS
Relationships with vendors
We have established relationships with numbers of suppliers for the construction and renovation work in Hong Kong, PRC and Malaysia. Other than one supplier relating to our construction work which recently has financial problem, the work originally carried by the contractor has been reassigned to other contractor. Other than this, there is no major events affecting our relationships with our suppliers.
Relationships with customers
Our sale and leasing team maintain good relationship with our customers especially our tenants.
Relationships with employees
During the Period, we are not aware of any major event affecting our relationships with our employees.
BUSINESS REVIEW Hong Kong Properties
Hong Kong economy were affected by the outbreak of coronavirus. However the effect on residential sector is not as serious as the commercial sectors.
The progress of our projects is as follows:-
1. One Kowloon Peak, No. 8 Po Fung Terrace, Ting Kau, Tsuen Wan
Construction of both Phase 1 and Phase 2 of the project is all completed. The occupation permit for Phase 1 and Phase 2 has been obtained. Application for Certificate of Compliance was submitted in August 2020. The District Lands Office is currently vetting the submitted documents. It is anticipated that the Certificate of Compliance may be obtained in the second half of this year barring unforeseen circumstances such as the coronavirus pandemic can be under controlled.
2. Villa Cecil Phase II, 192 Victoria Road, Pokfulam
The occupancy rate of the three blocks is 85% which contributed good rental income to the Group.
3. Villa Cecil Phase III, 216 Victoria Road, Pokfulam
The occupancy rate of the two blocks is 95% which contributed good rental income to the Group.
4. Cheuk Nang Lookout, 30 Severn Road, The Peak
Renovation works for the two villas to enhance the quality is completed and under marketing.
5. New Villa Cecil, 33 Cheung Chau Sai Tai Road, Cheung Chau
All units of the villas in Phase 1 were leased out. The overall site improvement work and construction of Phase 2 is in progress.
China Properties
Since the second half of last year, the economy in China has gradually recovered from coronavirus pandemic. It is anticipating the tendency will continue and possibly improve in long run. China's real estate market has grown positively in the past years and is a key component in the economy. Currently, China's economy has slowed down partly due to the escalating trade war with the US which may be counteracting by internal spending and opening the market and improve trade with other nations.
Cheuk Nang Garden
Longhwa, Shenzhen
Upto the date of this report, a total of 769 units have been sold and the sales transactions amount achieved is RMB3,729 million.
Cheuk Nang • Riverside
Yue Hang Qu, Hangzhou
ྌ᜕ϗ has been approved and issued by the Government. Submission of ܔጘ᜕ϗ and other certificates required by the Authority have been applied by us for final approval. Sales marketing will commence afterwards.
Macau Properties
Although the coronavirus in Macau is well under control, the economy is very much deteriorated by the pandemic situation in the surrounding cities which deterred the tourists from visiting Macau while gambling business has been seriously affected.
Golden Cotai No. 1
Estrada de Seac Pai Van, Coloane
Although building plans (ante projecto) has been approved and numerous contacts and conferences with the new government, we are still waiting for the permission for our premium payment application for change of land use.
Malaysia Properties
For 2020 as a whole, under the midst of the coronavirus, the economy was contracted due to the restrictions on mobility, especially on inter-district and inter-state travel and all economic sectors have recorded negative growth.
Phase I "Parkview"
Lot 1359, Section 57, Lorong Perak, Kuala Lumpur, Malaysia
The first stage renovation of the vacant serviced apartments is completed. The occupancy and the income from the business was very much reduced.
Phases II "Cecil Central Residence"
Lot 11385 and 11386, Section 57, Lorong Perak, Kuala Lumpur, Malaysia
The amended Development Order has been approved. New application for approval of the amended building plans was submitted. Due to the poor market situation, the construction plan will be delayed.
OUTLOOK
The outbreak of coronavirus has been lasted for over one year. The unemployment rate in Hong Kong has reached 17 years' high up to 7%. The Hong Kong government has put their effort to fight against the virus by trying to cut the transmission chain. Coronavirus vaccines has arrived Hong Kong and it is crucial to the resumption of the normal ways of life.
Although we are now facing the most difficult time, we still looking forward to the economy may resume gradually in the second half of this year, following the coronavirus may be better controlled.
INTERIM DIVIDEND
The Directors resolved to recommend the payment of an interim dividend of HK2.0 cents (2019: HK7.5 cents) per share payable to those shareholders whose names appeared in the register of members as at the close of business on 1 April 2021. The interim dividend is payable in cash and will be paid on 15 April 2021.
CLOSURE OF REGISTER
The register of members of the Company will be closed from 29 March to 1 April 2021 (both days inclusive) during which period no transfers of shares would be effected. In order to qualify for the interim dividend, all transfer of shares together with the relevant share certificates must be lodged with the Company's Share Registrars, Computershare Hong Kong Investor Services Limited at Room 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong not later than 4:30 p.m. on 26 March 2021.
PURCHASE AND CANCELLATION OF SHARES
There was no redemption, purchase or cancellation of shares by the Company or any of its subsidiaries during the six months ended 31 December 2020.
CORPORATE GOVERNANCE
Code on Corporate Governance Practices
The Board believes that good corporate governance is crucial to improve the efficiency and performance of the Group and to safeguard the interests of the shareholders. During the period, the Company had complied with the relevant provisions set out in the Corporate Governance Code (the "CG Code") based on the principles set out in Appendix 14 to the Listing Rules, save the following:
(i) the non-executive directors were not appointed for a specific term. However, they are subject to retirement by rotation and re-election at the annual general meetings of the Company pursuant to the Bye-Laws of the Company. As such, the Company considers that such provisions are sufficient to meet the underlying objectives of the relevant provisions of the CG Code;
(ii) the role and responsibilities of Chairman and the Chief Executive Officer are not separated as we are still looking for suitable person to act as Chief Executive Officer.
REVIEW OF INTERIM RESULTS
During the period, the Board Audit Committee comprises Mr. Lam Ka Wai, Graham (independent non-executive director), Dr. Sun Ping Hsu Samson (independent non-executive director) and Mr. Lee Ding Yue, Joseph (non-executive director). The Committee has reviewed with the management the accounting principles and practices adopted by the Company and discussed the auditing, internal controls and financial reporting matters including a review of the unaudited interim results of the Company for the six months ended 31 December, 2020. The Committee was satisfied that the accounting policies and methods of computation adopted by the Group. The Committee found no unusual items that were omitted from the financial statements and was satisfied with the disclosures of data and explanations shown in the financial statements.
The interim financial statements for the six months ended 31 December 2020 have not been audited but have been reviewed by the Company's external auditor.
The financial information disclosed above complies with the disclosure requirements of Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted codes of conduct regarding securities transactions by Directors (the "Securities Code") and relevant employees on terms no less exacting than the required standard set out in the Model Code contained in Appendix 10 of the Listing Rules throughout the six months ended 31 December 2020. The Company had also made specific enquiries of all Directors and the Company was not aware of any non-compliance with the required standard of dealings set out in the Model Code and its code of conduct regarding securities transactions by Directors.
DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS IN SHARES AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES
At 31 December 2020, the interests and short positions of the Directors and Chief Executive in the shares of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO"), as recorded in the register maintained by the Company pursuant to Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, were as follows:
Name | Equity | Personal interest | Corporate interests |
Chao Sze-Tsung Cecil | Ordinary Shares of | 32,573,397 shares | 453,408,112 shares |
Lee Ding Yue Joseph | Ordinary Shares of | 1,765,767 shares | - |
Note:
The shareholdings disclosed by Dr. Cecil Sze-Tsung Chao under the heading "Corporate Interests" in the above represents the shares held by Yan Yin Company Limited and Szehope
Securities Company Limited, substantial shareholders of the Company.
The Company did not grant to the Directors, Chief Executive or their associates any right to subscribe for shares in the Company.
Save as disclosed above, none of the Directors or their associates had any interest or short position in the shares of the Company or its subsidiaries as at 31 December 2020 that was required to be recorded pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies
At no time during the year was the Company, any of its subsidiaries, its fellow subsidiaries or its holding company a party to any arrangements to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
By order of the Board HO SAU FUN CONNIE
Company Secretary
Hong Kong, 25 February 2021
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Cheuk Nang (Holdings) Limited published this content on 18 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 March 2021 10:09:22 UTC.