Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
Powerlong Commercial Management Holdings Limited
寶 龍 商 業 管 理 控 股 有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 9909)
INTERIM RESULTS ANNOUNCEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2020
SUMMARY OF RESULTS
- Revenue of the Group for the six months ended 30 June 2020 amounted to approximately RMB868.6 million, representing an increase of approximately 16.0% as compared with approximately RMB749.1 million over the corresponding period in 2019.
- Gross profit of the Group for the six months ended 30 June 2020 amounted to approximately RMB254.8 million, representing an increase of approximately 28.8% as compared with approximately RMB197.9 million over the corresponding period in 2019.
- Profit of the Group for the six months ended 30 June 2020 amounted to approximately RMB144.9 million, representing an increase of 66.4% as compared with approximately RMB87.1 million over the corresponding period in 2019.
- As at 30 June 2020, the gross floor area ("GFA")Note under management of the Group's commercial operational services amounted to 7.0 million square meters, representing an increase of approximately 0.6 million square meters as compared with 6.4 million square meters as at 30 June 2019; and the GFA under management of residential property management services amounted to 11.6 million square meters, representing an increase of approximately 1.0 million square meters as compared with 10.6 million square meters as at 30 June 2019.
- The Board recommends the payment of an interim dividend of HK$0.1 per ordinary share for the six months ended 30 June 2020.
Note: Unless otherwise stated, all "GFA" of commercial properties referred to in this announcement include car parks.
- 1 -
INTERIM RESULTS
The board of directors (the "Board") of Powerlong Commercial Management Holdings Limited (the "Company" or "Powerlong CM") is pleased to announce the unaudited interim condensed consolidated results of the Company and its subsidiaries (collectively, the "Group") for the six months ended 30 June 2020 (the "Reporting Period"), together with comparative figures for the corresponding period in 2019, as follows.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended 30 June | |||||
2020 | 2019 | ||||
(Unaudited) | (Audited) | ||||
Note | RMB'000 | RMB'000 | |||
Revenue | 4 | 868,621 | 749,059 | ||
Cost of services | (613,788) | (551,172) | |||
Gross profit | 254,833 | 197,887 | |||
Selling and marketing expenses | (9,785) | (17,033) | |||
Administrative expenses | (46,077) | (46,883) | |||
Other income and gains | 5 | 11,104 | 8,533 | ||
Net impairment losses on financial assets | (19,909) | (3,627) | |||
Operating profit | 190,166 | 138,877 | |||
Finance income/(costs) - net | 6 | 4,100 | (19,196) | ||
Share of loss of investments in joint ventures | (1,482) | - | |||
Profit before income tax | 192,784 | 119,681 | |||
Income tax expenses | 7 | (47,872) | (32,545) | ||
Profit for the period | 144,912 | 87,136 | |||
Total other comprehensive income for the period, | |||||
net of tax | - | - | |||
Total comprehensive income for the period | 144,912 | 87,136 | |||
Total comprehensive income for the period | |||||
attributable to: | 144,912 | ||||
- Shareholders of the Company | 87,136 | ||||
Earnings per share for profit attributable to | |||||
shareholders of the Company for the period | |||||
(expressed in RMB cents per share) | 23.40 | ||||
- Basic and diluted earnings per share | 8 | 19.36 |
- 2 -
INTERIM CONDENSED CONSOLIDATED BALANCE SHEET | ||||
30 June | 31 December | |||
2020 | 2019 | |||
(Unaudited) | (Audited) | |||
Note | RMB'000 | RMB'000 | ||
Assets | ||||
Non-current assets | 7,546 | |||
Property and equipment | 6,928 | |||
Investment properties | 9 | 355,464 | 207,207 | |
Deferred income tax assets | 62,998 | 48,421 | ||
Investments in joint ventures | 3,218 | 4,700 | ||
429,226 | 267,256 | |||
Current assets | ||||
146,625 | ||||
Operating lease and trade receivables | 10 | 113,881 | ||
Prepayments and other receivables | 98,994 | 91,114 | ||
Current income tax recoverables | 2,235 | 2,705 | ||
Restricted cash | 42 | 19 | ||
Cash and cash equivalents | 2,950,420 | 2,616,113 | ||
3,198,316 | 2,823,832 | |||
Total assets | 3,627,542 | 3,091,088 | ||
- 3 -
INTERIM CONDENSED CONSOLIDATED BALANCE SHEET (continued)
30 June | 31 December | |||
2020 | 2019 | |||
(Unaudited) | (Audited) | |||
Note | RMB'000 | RMB'000 | ||
Equity | ||||
Capital and reserves attributable to | ||||
shareholders of the Company | 1,413,002 | |||
Share capital and premium | 11 | 1,236,907 | ||
Other reserves | 22,430 | 22,430 | ||
Retained earnings | 359,206 | 327,835 | ||
Total equity | 1,794,638 | 1,587,172 | ||
Liabilities | ||||
Non-current liabilities | 349,708 | |||
Lease liabilities | 13 | 190,487 | ||
349,708 | 190,487 | |||
Current liabilities | ||||
833,518 | ||||
Trade and other payables | 14 | 763,111 | ||
Advances from lessees | 7,925 | 27,488 | ||
Current income tax liabilities | 61,600 | 33,562 | ||
Lease liabilities | 13 | 190,320 | 226,066 | |
Contract liabilities | 4 | 276,292 | 263,202 | |
Dividend payables | 12 | 113,541 | - | |
1,483,196 | 1,313,429 | |||
Total liabilities | 1,832,904 | 1,503,916 | ||
Total equity and liabilities | 3,627,542 | 3,091,088 | ||
- 4 -
NOTES TO THE INTERIM FINANCIAL INFORMATION
-
GENERAL INFORMATION
The Company was established in the Cayman Islands on 25 March 2019 as an exempted company with limited liability under the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. The address of the Company's registered office is Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
The Group is primarily engaged in the provision of commercial operational services and residential property management services in the People's Republic of China (the "PRC").
The Company was listed on The Stock Exchange of Hong Kong Limited on 30 December 2019 (the "Listing").
The Company's immediate holding company is Powerlong Real Estate (BVI) Holdings Limited. The Company's intermediate holding company is Powerlong Real Estate Holdings Limited ("Powerlong Holdings") whose shares have been listed on the Main Board of the Stock Exchange since 14 October 2009.
Powerlong Holdings and its subsidiaries exclusive of the Group are collectively referred to as the Remaining Powerlong Group in these interim condensed consolidated financial statements.
These financial statements are presented in Renminbi ("RMB"), unless otherwise stated. These interim condensed consolidated financial statements have been approved for issue by the board of directors (the "Board") of the Company on 18 August 2020.
-
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The interim financial information for the six months ended 30 June 2020 has been prepared in accordance with HKAS 34 "Interim Financial Reporting".
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2019, as described in those annual financial statements, except for the adoption of new and amended standards and interpretation as described below. - New and amended standards and interpretation adopted by the Group
HKAS 1 and HKAS 8 (Amendment) Amendment to HKFRS 3 Amendment to HKFRS 7,
HKFRS 9 and HKAS 39 Amendments to HKFRS 16 Revised Financial Reporting
Definition of material
Definition of a business
Interest rate benchmark reform
Covid-19-related rent concessions
Revised conceptual framework for financial reporting
The adoption of the above new and amended standards and interpretation did not have any material impact on the interim financial information.
- 5 -
-
New standards, amendments and interpretations not yet adopted
The following new standards and amendments and interpretation to standards have been published that are not mandatory for the year beginning on or after 1 January 2021 and have not been early adopted by the Group:
Effective for | ||
annual periods | ||
beginning | ||
on or after | ||
HKFRS 17 | Insurance contracts | Originally |
1 January 2021, | ||
but extended to | ||
1 January 2023 | ||
Amendments to HKAS 1 | Classification of liabilities as current or | 1 January 2022 |
non-current | ||
Amendments to HKFRS 3 | Reference to the conceptual framework | 1 January 2022 |
Amendments to HKAS 16 | Property, plant and equipment: proceeds | 1 January 2022 |
before intended use | ||
Amendments to HKAS 37 | Onerous contracts - cost of fulfilling a | 1 January 2022 |
contract | ||
Annual Improvements | Annual improvements to HKFRS Standards | 1 January 2022 |
2018-2020 Cycle | ||
Amendments to HKFRS 10 | Sale or contribution of assets between an | To be determined |
and HKAS 28 | investor and its associate or joint venture |
The above new and amended standards are effective for annual periods beginning on or after 1 January 2021 and have not been applied in preparing this interim condensed consolidated financial information. The impact of new and amended standards above is still under assessment by the Group.
-
SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by the chief operating decision-makers ("CODM"). The CODM, who is responsible for allocating resources and assessing performance of the operating segment, has been identified as the executive directors of the Company.
The Group has two business segments: - Commercial operational services
The Group is engaged in (a) the provision of market research and positioning, business tenant sourcing and opening preparation services; (b) commercial operational services during the operation stage, including business tenant management, rent collection services and other value-added services (mainly including car parks, common areas and advertising space management services); and (c) commercial property management services including security, gardening, cleaning, repair and maintenance services.
Besides, to maximize its commercial operational efficiency, the Group leased certain retail commercial properties nearby the shopping malls under management by the Group, and sub-leased them for long-term rental yield.
- Commercial operational services
- 6 -
- Residential property management services
The Group provides residential property management services of residential properties, serviced apartments and office building, including pre-sale management services and other value-added services to property developers, property owners and residents.
As the CODM considers most of the Group's consolidated revenue and results are attributable to the market in the PRC and the Group's consolidated non-current assets are substantially located in the PRC, no geographical information is presented.
-
Segment results represent the profit earned by each segment without other income, unallocated operating costs, finance income/(costs) - net and income tax expenses. Revenue recognized at a point in time from contracts with customers represents revenue from market research and positioning services. Other revenue from contracts with customers is recognized over time. The following is the analysis of the Group's revenue and results by operating and reportable segments:
For the six months ended 30 June 2020 (Unaudited)
Residential | ||||||
Commercial | property | |||||
operational | management | |||||
services | services | Group | ||||
RMB'000 | RMB'000 | RMB'000 | ||||
Gross segment revenue | 700,407 | 168,214 | 868,621 | |||
Revenue from contracts with customers | 605,625 | 168,214 | 773,839 | |||
- at a point in time | 56,453 | - | 56,453 | |||
- over time | 549,172 | 168,214 | 717,386 | |||
Revenue from other sources | ||||||
- rental income | 94,782 | - | 94,782 | |||
Segment results | 185,524 | 23,830 | 209,354 | |||
Other income and gains | 11,104 | |||||
Unallocated operating costs | (30,293) | |||||
Interest expense | (14,434) | |||||
Interest income | 14,766 | |||||
Foreign exchange gains -net | 3,768 | |||||
Share of loss of investments in joint | ||||||
ventures | (1,481) | |||||
Profit before income tax | 192,784 | |||||
Income tax expenses | (47,872) | |||||
Profit for the period | 144,912 | |||||
Depreciation | 53,929 | 526 | 54,455 | |||
- 7 -
For the six months ended 30 June 2019 (Audited)
Residential | ||||||
Commercial | property | |||||
operational | management | |||||
services | services | Group | ||||
RMB'000 | RMB'000 | RMB'000 | ||||
Gross segment revenue | 621,162 | 127,897 | 749,059 | |||
Revenue from contracts with customers | 507,330 | 127,897 | 635,227 | |||
- at a point in time | 27,397 | - | 27,397 | |||
- over time | 479,933 | 127,897 | 607,830 | |||
Revenue from other sources | ||||||
- rental income | 113,832 | - | 113,832 | |||
Segment results | 147,456 | 7,966 | 155,422 | |||
Other income and gains | 8,533 | |||||
Unallocated operating costs | (25,078) | |||||
Interest expense | (27,268) | |||||
Interest income | 7,606 | |||||
Foreign exchange gains-net | 466 | |||||
Profit before income tax | 119,681 | |||||
Income tax expenses | (32,545) | |||||
Profit for the period | 87,136 | |||||
Depreciation | 36,436 | 3,829 | 40,265 | |||
- 8 -
-
The following is the analysis of the Group's segment assets and liabilities and capital expenditure for the period then ended:
As at 30 June 2020 (Unaudited)
Residential | |||||||
Commercial | property | ||||||
operational | management | ||||||
services | services | Elimination | Group | ||||
RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||||
Segment assets | 653,717 | 101,418 | (8,147) | 746,988 | |||
Other assets | 2,880,554 | ||||||
Total assets | 3,627,542 | ||||||
Segment liabilities | 1,304,706 | 205,283 | (8,147) | 1,501,842 | |||
Other liabilities | 331,062 | ||||||
Total liabilities | 1,832,904 | ||||||
Capital expenditure | 202,891 | 538 | - | 203,429 | |||
As at 31 December 2019 (Audited) | |||||||
Residential | |||||||
Commercial | property | ||||||
operational | management | ||||||
services | services | Elimination | Group | ||||
RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||||
Segment assets | 417,372 | 117,109 | (11,637) | 522,844 | |||
Other assets | 2,568,244 | ||||||
Total assets | 3,091,088 | ||||||
Segment liabilities | 1,184,514 | 189,617 | (11,637) | 1,362,494 | |||
Other liabilities | 141,422 | ||||||
Total liabilities | 1,503,916 | ||||||
Capital expenditure | 153,259 | 1,806 | - | 155,065 | |||
The amounts provided to the CODM with respect to total assets and liabilities are measured in a manner consistent with that of the interim condensed consolidated financial statements. These assets and liabilities are allocated based on the operations of the segments.
Segment assets consist primarily of property and equipment, investment properties, receivables and cash and cash equivalents.
Segment liabilities consist of operating liabilities.
Capital expenditure comprises additions to property and equipment and investment properties.
- 9 -
- REVENUE
- Revenue of the Group for six months ended 30 June 2020 is as follows:
Six months ended 30 June | ||||||
2020 | 2019 | |||||
(Unaudited) | (Audited) | |||||
RMB'000 | RMB'000 | |||||
Type of services | ||||||
Rental income: | ||||||
- Commercial property lease income | 94,782 | 113,832 | ||||
Revenue from customer: | ||||||
- | Commercial operational services | 605,625 | 507,330 | |||
- | Market research and positioning, business tenant | |||||
sourcing, opening preparation services | 90,933 | 48,605 | ||||
- Commercial operation and management services | 514,692 | 458,725 | ||||
- Commercial operation service during the operation | ||||||
stage | 147,961 | 147,731 | ||||
- Commercial property management service | 366,731 | 310,994 | ||||
- | Residential property management services | 168,214 | 127,897 | |||
- | Pre-sale management services | 9,206 | 6,867 | |||
- | Residential property management services | 116,131 | 101,265 | |||
- | Other value-added services | 42,877 | 19,765 | |||
868,621 | 749,059 | |||||
- For the six months ended 30 June 2020, revenue arising from the Remaining Powerlong Group and other entities controlled by Mr. Hoi Kin Hong ("Mr. Hoi") contributed 9.7% of the Group's revenue (six months ended 30 June 2019: 12.4%). Other than the Remaining Powerlong Group and other entities controlled by Mr. Hoi, the Group has a large number of customers, none of them contributed 10% or more of the Group's revenue during the period (six months ended 30 June 2019: none).
- 10 -
- OTHER INCOME AND GAINS
Six months ended 30 June | |||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
RMB'000 | RMB'000 | ||
Other income | |||
Government grants (Note (a)) | 3,823 | 667 | |
Penalty income | 4,713 | 3,604 | |
Others | 2,568 | 2,207 | |
11,104 | 6,478 | ||
Other gains | |||
Gains on lease termination | - | 2,055 | |
11,104 | 8,533 | ||
- The government grants represented mainly employment subsidies and tax refunds from local government without any conditions.
- FINANCE INCOME/(COSTS) - NET
Six months ended 30 June | ||||
2020 | 2019 | |||
(Unaudited) | (Audited) | |||
RMB'000 | RMB'000 | |||
Interest expense in respect of: | ||||
Bank borrowings | - | (19,161) | ||
Lease liabilities | (14,434) | (8,107) | ||
(14,434) | (27,268) | |||
Interest income in respect of: | ||||
Bank deposits | 14,766 | 7,606 | ||
Foreign exchange gains - net | 3,768 | 466 | ||
Finance income/(costs) - net | 4,100 | (19,196) | ||
- 11 -
7 | INCOME TAX EXPENSES | ||||
Six months ended 30 June | |||||
2020 | 2019 | ||||
(Unaudited) | (Audited) | ||||
RMB'000 | RMB'000 | ||||
Current income tax | |||||
- PRC corporate income tax | 62,449 | 35,100 | |||
Deferred income tax | |||||
- PRC corporate income tax | (14,577) | (2,555) | |||
47,872 | 32,545 | ||||
PRC corporate income tax | |||||
Income tax provision of the Group in respect of operations in the PRC has been calculated at the applicable tax rate on the estimated assessable profits for the period, based on the existing legislation, interpretations and practices in respect thereof.
The general corporate income tax rate in the PRC is 25%.
- 12 -
Overseas income tax
The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law, Cap 22 of Cayman Islands and pursuant to the rules and regulations of Cayman Islands, the Company is not subject to any income tax. The Company's subsidiaries in the British Virgin Islands were incorporated under the International Business Companies Act (as amended) of the British Virgin Islands and, accordingly are exempted from British Virgin Islands income tax.
Hong Kong profits tax
No provision for Hong Kong profits tax has been made in these interim condensed consolidated financial statements as the Company and the Group did not have assessable profit in Hong Kong during the six months ended 30 June 2020 (six months ended 30 June 2019: nil). The profit of the group entities in Hong Kong is mainly derived from dividend income, which is not subject to Hong Kong profits tax.
-
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of ordinary shares in issue during the six months ended 30 June 2020.
In determining the weighted average number of ordinary shares in issue during the six months ended 30 June 2019, the ordinary shares issued upon the incorporation of the Company, the ordinary shares issued in the reorganization undertaken for the initial listing on 19 July 2019, and the capitalization issue on 10 December 2019, were deemed to be issued on 1 January 2019 as if the Company has been incorporated by then.
Six months ended 30 June | |||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
RMB'000 | RMB'000 | ||
Profit attributable to the owners of the Company (RMB'000) | 144,912 | 87,136 | |
Weighted average number of ordinary shares in issue | |||
(thousands shares) | 619,158 | 450,000 | |
Basic earnings per share (RMB cents) | 23.40 | 19.36 | |
The Company had no dilutive potential shares in issue, thus the diluted earnings per share equals the basic earnings per share.
- 13 -
9 | INVESTMENT PROPERTIES | |||
Leased | ||||
commercial | ||||
properties | ||||
- right of | ||||
use assets | ||||
RMB'000 | ||||
Six months ended 30 June 2020 (Unaudited) | ||||
Opening net book amount | 207,207 | |||
Additions (Note (a)) | 199,901 | |||
Depreciation charge | (51,644) | |||
Closing net book amount | 355,464 | |||
As at 30 June 2020 | ||||
Cost | 763,864 | |||
Accumulated depreciation | (408,400) | |||
Net book amount | 355,464 | |||
Six months ended 30 June 2019 (Audited) | ||||
Opening net book amount | 155,632 | |||
Additions | 8,201 | |||
Depreciation charge | (35,466) | |||
Closing net book amount | ||||
128,367 | ||||
As at 30 June 2019 | ||||
Cost | 426,186 | |||
Accumulated depreciation | (297,819) | |||
Net book amount | ||||
128,367 | ||||
(a) | The Group entered into a new lease contract with an independent third party during the period, | |||
pursuant to which the Group leased in a commercial property with lease term of 20 years. |
- 14 -
10 OPERATING LEASE AND TRADE RECEIVABLES | ||||
30 June | 31 December | |||
2020 | 2019 | |||
(Unaudited) | (Audited) | |||
RMB'000 | RMB'000 | |||
Operating lease receivables (Note (a)) | ||||
- Third parties | 16,561 | 4,660 | ||
Trade receivables (Note (a)) | ||||
- Related parties | 29,492 | 47,707 | ||
- Third parties | 139,811 | 82,688 | ||
169,303 | 130,395 | |||
Less: allowance for impairment | (39,239) | (21,174) | ||
146,625 | 113,881 | |||
- The Group's revenue is derived from provision of commercial operational services, residential property management services and lease of properties. Proceeds in respect of service rendering and rental income are to be received in accordance with the terms of relevant property service agreements and tenant contracts.
As at the respective balance sheet date, the ageing analysis of the operating lease and trade receivables due from related parties and third parties based on the demand note dates is as follows:
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
RMB'000 | RMB'000 | ||
0-30 days | 31,359 | 23,070 | |
31-180 days | 72,164 | 46,391 | |
181-365 days | 21,933 | 14,472 | |
1 to 2 years | 21,599 | 29,036 | |
2-3 years | 26,181 | 14,338 | |
Over 3 years | 12,628 | 7,748 | |
185,864 | 135,055 | ||
The Group applies the simplified approach to provide for expected credit losses prescribed by HKFRS 9. As at 30 June 2020, a provision of RMB39,239,000 was made against the gross amounts of operating lease and trade receivables (31 December 2019: RMB21,174,000).
As at 30 June 2020 and 31 December 2019, the operating lease and trade receivables were denominated in RMB, and the fair values approximated their carrying amounts.
- 15 -
11 | SHARE CAPITAL AND PREMIUM | ||||||||||||
Number of | |||||||||||||
ordinary | Share | ||||||||||||
shares | Share capital | premium | Total | ||||||||||
HK$'000 | RMB'000 | RMB'000 | RMB'000 | ||||||||||
Authorized | |||||||||||||
At 1 January 2020 and 30 June 2020 | 2,000,000,000 | 20,000 | 17,905 | ||||||||||
Issued and fully paid: | |||||||||||||
Six months ended 30 June 2020 | |||||||||||||
(Unaudited) | |||||||||||||
At 1 January 2020 | 600,000,000 | 6,000 | 5,376 | 1,231,531 | 1,236,907 | ||||||||
Issued upon the exercise of the | |||||||||||||
over-allotment option | (a) | 22,500,000 | 225 | 199 | 184,448 | 184,647 | |||||||
Repurchased | (b) | (1,000,000) | (10) | (9) | (8,543) | (8,552) | |||||||
As at 30 June 2020 | 621,500,000 | 6,215 | 5,566 | 1,407,436 | 1,413,002 | ||||||||
- On 22 January 2020, 22,500,000 shares were issued upon the exercise of the over-allotment option in connection with the Listing at a price of HK$9.50 per share. Net proceeds of the additional offering, after net of transactions cost attributable to the exercise of the over-allotment option of approximately HK$5,788,000 (equivalent to approximately RMB5,170,000), amounted to approximately HK$207,962,000 (equivalent to approximately RMB184,647,000).
- On 30 January 2020 and 31 January 2020, the Company repurchased a total of 1,000,000 ordinary shares with cash considerations of approximately HK$9,518,000 (equivalent to approximately RMB8,552,000) and such ordinary shares were cancelled on 24 March 2020.
12 DIVIDEND
On 12 June 2020, the Annual General Meeting approved the payment of a final dividend of HK$20.0 cents (equivalent to RMB18.3 cents based on the exchange rate of 30 June 2020) per ordinary share. Total amount of final dividend would be HK$124,300,000 (equivalent to approximately RMB113,541,000).
On 18 August 2020, the Board recommended the payment of an interim dividend of HK$10.0 cents (equivalent to RMB9.1 cents based on the exchange rate of 30 June 2020) per ordinary share. Total amount of interim dividend would be HK$62,150,000 (equivalent to approximately RMB56,770,500) which is calculated according to the ordinary shares in issue as at 30 June 2020. These interim condensed consolidated financial statements do not reflect this dividend payable.
- 16 -
13 LEASES
- Amounts recognized in the interim condensed consolidated balance sheets
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
RMB'000 | RMB'000 | ||
Leased in properties for sub-lease to tenants | |||
- Leased commercial properties (Note 9) | 355,464 | 207,207 | |
355,464 | 207,207 | ||
Lease liabilities | |||
Current | 190,320 | 226,066 | |
Non-current | 349,708 | 190,487 | |
540,028 | 416,553 | ||
- Amounts recognized in the interim condensed consolidated statements of comprehensive income
Six months ended 30 June | |||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
RMB'000 | RMB'000 | ||
Depreciation charge | |||
Commercial properties (Note 9) | 51,644 | 35,466 | |
Car parks | - | 2,919 | |
51,644 | 38,385 | ||
Interest expense (included in finance income/(costs) - net) | 14,434 | 8,107 | |
Variable lease payments (included in cost of services) | 5,284 | 5,508 | |
Short-term lease expenditure for car parks and common | |||
areas and advertising space | 51,071 | 57,827 | |
Cash outflows for lease payments (including principal | |||
elements and relevant interest expense) | 90,860 | 92,166 |
- 17 -
- A maturity analysis of lease liabilities is shown in the table below during the period:
30 June | 31 December | ||||
2020 | 2019 | ||||
(Unaudited) | (Audited) | ||||
RMB'000 | RMB'000 | ||||
Leases are payable: | |||||
Within one year | 196,691 | 232,238 | |||
Later than one year but not later than two years | 81,421 | 115,428 | |||
Later than two years but not later than five years | 173,355 | 100,116 | |||
Later than five years | 298,934 | - | |||
Minimum lease payments | 750,401 | 447,782 | |||
Future finance charge | (210,373) | (31,229) | |||
Total lease liabilities | 540,028 | 416,553 | |||
The present value of lease liabilities is as follows: | |||||
Within one year | 190,320 | 226,066 | |||
Later than one year but not later than two years | 75,526 | 106,046 | |||
Later than two years but not later than five years | 134,275 | 84,441 | |||
Later than five years | 139,907 | - | |||
540,028 | 416,553 | ||||
14 | TRADE AND OTHER PAYABLES | ||||
30 June | 31 December | ||||
2020 | 2019 | ||||
(Unaudited) | (Audited) | ||||
RMB'000 | RMB'000 | ||||
Trade payables | |||||
- Related parties | 448 | 1,126 | |||
- Third parties | 98,953 | 88,668 | |||
99,401 | 89,794 | ||||
Other payables | |||||
- Related parties | 127,193 | 88,759 | |||
- Receipts on behalf of tenants or residents (Note (a)) | 170,331 | 144,158 | |||
- Deposits received (Note (b)) | 296,618 | 301,187 | |||
- Listing expenses payable | - | 14,461 | |||
- Others | 12,094 | 13,342 | |||
606,236 | 561,907 | ||||
Accrued payroll | 114,538 | 103,950 | |||
Other taxes payables | 13,343 | 7,460 | |||
833,518 | 763,111 | ||||
- 18 -
- Amounts represented the receipts on behalf of tenants or residents to settle the bills of utilities charges.
- Amounts represented mainly deposits received from tenants as performance securities in relation to tenant agreements or property management service agreements.
- As at 30 June 2020, the carrying amounts of trade and other payables approximated their fair values.
- As at the respective balance sheet date, the ageing analysis of the trade payables (including amounts due to related parties) based on invoice dates is as follows:
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
RMB'000 | RMB'000 | ||
Within 1 year | 96,990 | 86,024 | |
1 to 2 years | 1,959 | 1,585 | |
2 to 3 years | 452 | 2,185 | |
99,401 | 89,794 | ||
- Trade and other payables (excluding accrued payroll and other tax payables) were denominated in the following currencies:
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
RMB'000 | RMB'000 | ||
RMB | 705,637 | 630,500 | |
HK$ | - | 526 | |
US$ | - | 20,675 | |
705,637 | 651,701 | ||
15 EVENTS AFTER THE BALANCE SHEET DATE
On 3 July 2020, the Group entered into an investment agreement with shareholders of Zhejiang Xinghui Commercial Management Company Limited ("Zhejiang Xinghui"), independent third parties of the Group, pursuant to which the Group acquired 60% of equity interest of Zhejiang Xinghui at an investment cost of RMB40,550,000.
- 19 -
MANAGEMENT DISCUSSION AND ANALYSIS
OVERVIEW
The Group is a leading commercial operational service provider in China. As at 30 June 2020, the Group had 51 retail commercial properties under management, with an aggregate GFA under management of approximately 7.0 million square meters ("sq.m."); and was contracted to provide commercial operational services for a total of 85 retail commercial properties with an aggregate contracted GFA of 9.9 million sq.m. The Company enjoys considerable brand recognition in the markets where it operates. In March 2020, the Company was ranked fourth among the "2020 China Top 10 Commercial Real Estate" as awarded by China Index Academy. In March 2020, the Company was recognized as a "2020 Top 10 of China Commercial Real Estate Developers with Comprehensive Strengths" as awarded by China Real Estate Association. In June 2020, the Company was recognized as a "2019 High- growth Commercial Real Estate Developer" as jointly awarded by Linkshop.com (聯商網), Soupu.com (搜鋪網) and other online platforms.
The Group also provides property management services for residential properties, office buildings and serviced apartments. As at 30 June 2020, the Group had 52 projects under management of its residential property management services with an aggregate GFA under management of approximately 11.6 million sq.m., and was contracted to manage 87 projects with an aggregate contracted GFA of 19.9 million sq.m.
With the mission of "creating space full of love", the Company endeavours to link up living space with the well-being of everything, to promote love and care among people and within cities. It also seeks to deliver living space and services that represent the best experience to property owners, tenants and consumers.
BUSINESS REVIEW
For the six months ended 30 June 2020, the Company mainly conducted its business activities in the following business segments namely (i) commercial operational services; and (ii) residential property management services. The Group's revenue derived mainly from its commercial operational services.
Commercial operational services: The Company provided full-chain services covering positioning, tenant sourcing, opening, operation and management to shopping malls and shopping streets.
It primarily included:
- Market research and positioning, tenant sourcing and opening preparation services to property developers or property owners during the preparation stage before the opening of a retail commercial property;
- Commercial operation and management services to property owners or tenants during the operation stage of a retail commercial property; and
- Property leasing services with respect to units located within the shopping streets and shopping malls.
- 20 -
Residential property management services: The Group provided property management services for residential properties, office buildings and serviced apartments.
It primarily included:
- Pre-salemanagement services to property developers during their pre-sale activities, such as cleaning, security and maintenance of pre-sale display units and sales offices;
- Property management services to property owners or property owners' associations at the post-delivery stages, such as security, cleaning, gardening and repair and maintenance services; and
- Other value-added services to property owners, tenants or residents of properties under management, such as pre-delivery preparation and trash handling service, common area, advertising space and car park management services.
The table below sets forth the Group's gross profit and gross profit margin by business segments for the periods indicated:
Six months ended 30 June | ||||||||
2020 | 2019 | |||||||
Gross | Gross | |||||||
Gross | profit | Gross | profit | |||||
profit | margin | profit | margin | |||||
RMB'000 | % | RMB'000 | % | |||||
Commercial operational services | 218,025 | 31.1 | 182,001 | 29.3 | ||||
Residential property | ||||||||
management services | 36,808 | 21.9 | 15,886 | 12.4 | ||||
Total | 254,833 | 29.3 | 197,887 | 26.4 | ||||
- 21 -
Commercial Operational Management Services
The Group provided professional commercial operational management services to property owners, tenants and consumers under four brands, namely, "Powerlong One Mall" (寶龍一城), "Powerlong City" (寶龍城), "Powerlong Plaza" (寶龍廣場) and "Powerlong Land" (寶龍天 地).
For the six months ended 30 June 2020, the aggregate revenue of the Group's commercial operational management services amounted to approximately RMB700.4 million, representing an increase of 12.7% from approximately RMB621.2 million for the six months ended 30 June 2019; and the Group had GFA under management of 7.0 million sq.m., representing an increase of 0.6 million sq.m. from 6.4 million sq.m. for the corresponding period of 2019; 51 projects under management, representing an increase of 6 projects from 45 projects for the corresponding period of 2019; contracted GFA of 9.9 million sq.m., representing an increase of 2.4 million sq.m. from 7.5 million sq.m. for the corresponding period of 2019.
The table below sets forth a breakdown of the contracted GFA and GFA under management as at the dates indicated and the revenue from commercial operational service segment for the periods indicated by geographic region:
For the six months ended 30 June | |||||||||||||
2020 | 2019 | ||||||||||||
Contracted | GFA under | Contracted | GFA under | ||||||||||
GFA | management | Revenue | GFA | management | Revenue | ||||||||
sq.m. | sq.m. | RMB | sq.m. | sq.m. | RMB | ||||||||
(in thousands) | |||||||||||||
Yangtze River Delta | 5,496 | 3,160 | 452,341 | 3,562 | 2,630 | 406,519 | |||||||
Southeast China(1) | 1,121 | 679 | 87,351 | 792 | 679 | 65,015 | |||||||
Midwest China(2) | 1,499 | 1,385 | 95,635 | 1,404 | 1,385 | 89,612 | |||||||
Bohai Economic Rim(3) | 1,781 | 1,758 | 65,080 | 1,764 | 1,679 | 60,016 | |||||||
Total | 9,897 | 6,982 | 700,407 | 7,522 | 6,373 | 621,162 | |||||||
Notes:
- Comprises Fujian and Hainan Provinces.
- Comprises Anhui, Sichuan and Henan Provinces and Chongqing Municipality.
- Comprises Tianjin Municipality and Shandong Province.
- 22 -
The table below sets forth average occupancy rate and GFA under management of retail commercial property that commenced operation as at 30 June 2020 by brands.
Average occupancy rate(1) | |||||||
As of 30 June | |||||||
GFA under | |||||||
Brand | 2020(2) | 2019(2) | |||||
management | |||||||
% | % | (in thousands | |||||
sq. m.) | |||||||
Powerlong One Mall | 92.6 | 94.6 | 171 | ||||
Powerlong City | 90.7 | 94.5 | 437 | ||||
Powerlong Plaza | 85.4 | 85.5 | 5,990 | ||||
Powerlong Land | 87.9 | 85.3 | 384 | ||||
Total | 87.1 | 86.3 | 6,982 | ||||
- Occupancy rate is calculated as actual leased area divided by available lease area of a retail commercial property as of the end of each relevant period based on internal record. The occupancy rate only applies to retail commercial properties for which the Group has provided tenant sourcing services and may be higher or lower in different periods within one year.
- The statistics of occupancy rate excludes Tianjin Yujiapu Powerlong Plaza, Haiyang Powerlong Land and Dongying Powerlong Land.
- Tianjin Yujiapu Powerlong Plaza was opened in November 2011, which is currently under renovation and will reopen in December 2020;
- Haiyang Powerlong Land was at the preparation stage, for which we have not yet provided any business tenancy services;
- The property developer of Dongying Powerlong Land was in the process of assigning the units within the shopping streets to members of village collective economic organization, and the Group only provided limited management services.
- 23 -
Pipeline projects in the second half of 2020:
From the Remaining Powerlong Group and its joint ventures or associates:
Opening | Estimated | ||||
No. | Project | date(1) | Location | Geographic region | GFA |
(month-year) | (sq.m.) | ||||
1 | Jinjiang Powerlong Plaza (Phase 2) | September 2020 | Jinjiang | Southeast China | 46,486 |
(晉江寶龍廣場(二期)) | |||||
2 | Hangzhou Qingshan Lake Powerlong Plaza (Phase 1) | October 2020 | Hangzhou | Yangtze River Delta | 189,524 |
(杭州青山湖寶龍廣場(一期)) | |||||
3 | Hangzhou Dajiangdong Powerlong Plaza | November 2020 | Hangzhou | Yangtze River Delta | 95,373 |
(杭州大江東寶龍廣場) | |||||
4 | Yongkang Powerlong Plaza (永康寶龍廣場) | November 2020 | Jinhua | Yangtze River Delta | 89,900 |
5 | Quanzhou Taishang Powerlong Plaza (泉州台商寶龍廣場) | December 2020 | Quanzhou | Southeast China | 148,950 |
6 | Yancheng Chengdong Powerlong Plaza (鹽城城東寶龍廣場) | December 2020 | Yancheng | Yangtze River Delta | 135,932 |
7 | Tianjin Yujiapu Powerlong Plaza (天津於家堡寶龍廣場)(2) | December 2020 | Tianjin | Bohai Economic Rim | 162,836 |
8 | Zhangzhou Longwen Powerlong Plaza (漳州龍文寶龍廣場) | December 2020 | Zhangzhou | Southeast China | 66,186 |
9 | Zhuji Powerlong Plaza (諸暨寶龍廣場) | December 2020 | Shaoxing | Yangtze River Delta | 138,600 |
10 | Xinxiang Powerlong Land (新鄉寶龍天地) | September 2020 | Xinxiang | Midwest China | 33,738 |
11 | Huai'an Powerlong Land (Phase 2) (淮安寶龍天地(二期)) | December 2020 | Huai'an | Yangtze River Delta | 34,000 |
Sub-total | 1,141,525 | ||||
From independent third parties: | |||||
Opening | Estimated | ||||
No. | Project | date | Location | Geographic region | GFA |
(month-year) | (sq.m.) | ||||
1 | Shaoxing Keqiao Powerlong Plaza (紹興柯橋寶龍廣場) | November 2020 | Shaoxing | Yangtze River Delta | 100,007 |
2 | Hangzhou Qingshan Lake Powerlong Plaza (Phase 2) | December 2020 | Hangzhou | Yangtze River Delta | 110,000 |
(杭州青山湖寶龍廣場(二期)) | |||||
Sub-total | 210,007 | ||||
Grand total | 1,351,532 | ||||
- Opening dates of all the projects are estimated dates. Actual opening dates are subject to project progress.
- Tianjin Yujiapu Powerlong Plaza was opened in November 2011, which is currently under renovation and will reopen in December 2020.
- 24 -
Residential Property Management Services
For the six months ended 30 June 2020, revenue of the Group's residential property management service business segment amounted to approximately RMB168.2 million, representing an increase of 31.5% from RMB127.9 million for the six months ended 30 June 2019; and the Group had GFA under management of 11.6 million sq.m., representing an increase of 1.0 million sq.m. from 10.6 million sq.m. for the corresponding period of 2019; 52 projects under management, representing an increase of 8 projects from 44 projects for the corresponding period of 2019; contracted GFA of 19.9 million sq.m., representing an increase of 2.8 million sq.m. from 17.1 million sq.m. for the corresponding period of 2019.
The table below sets forth a breakdown of the contracted GFA and GFA under management as at the dates indicated and our revenue from residential property management service segment for the periods indicated by geographic region:
For the six months ended 30 June | ||||||||||||
2020 | 2019 | |||||||||||
Contracted | GFA under | Contracted | GFA under | |||||||||
GFA | management | Revenue | GFA | management | Revenue | |||||||
sq.m. | sq.m. | RMB | sq.m. | sq.m. | RMB | |||||||
(in thousands) | ||||||||||||
Yangtze River Delta | 10,977 | 5,189 | 80,971 | 8,377 | 4,188 | 61,692 | ||||||
Southeast China (1) | 3,316 | 1,558 | 22,682 | 3,075 | 1,484 | 18,883 | ||||||
Midwest China (2) | 2,766 | 2,594 | 32,731 | 2,766 | 2,594 | 20,564 | ||||||
Bohai Economic Rim (3) | 2,852 | 2,306 | 31,830 | 2,852 | 2,306 | 26,758 | ||||||
Total | 19,911 | 11,647 | 168,214 | 17,070 | 10,572 | 127,897 | ||||||
Notes:
- Comprises Fujian and Hainan Provinces.
- Comprises Anhui, Sichuan and Henan Provinces and Chongqing Municipality.
- Comprises Tianjin Municipality and Shandong Province.
- 25 -
First Acquisition under the Strategy of Focused Development in the Yangtze River Delta
On 6 July 2020, the Company announced that the Group had, on 3 July 2020, entered into an investment agreement (the "Investment Agreement") with the shareholders of Zhejiang Xinghui Commercial Management Company Limited (浙江星匯商業管理有限公司) ("Zhejiang Xinghui"), who are independent third parties of the Group, pursuant to which the Group acquired 60% of equity interest of Zhejiang Xinghui at an investment cost of RMB40.6 million. Zhejiang Xinghui is principally engaged in retail commercial property operation and management. As at 6 July 2020, it had 14 retail commercial projects under management, with a total GFA of approximately 890,000 square meters including car parks.
Further, Zhejiang Xinghui undertakes to the Group that during the following years, the annual net profit excluding extraordinary profit or loss attributable to the parent company will be not less than: RMB6.0 million for year 2020; RMB7.7 million for year 2021; RMB9.8 million for year 2022; RMB12.6 million for year 2023; and RMB16.1 million for year 2024.
In line with the Group's plan to reinforce its leading position in the retail commercial property operation and management field by, among others, further expansion of its commercial operational service segment through strategic acquisitions and investments, the Company has selectively evaluated opportunities with a focus on cities located in economically developed regions where there exist significant growth potential. Zhejiang Xinghui is deemed an ideal acquisition target to achieve the Company's aforementioned goals for the following reasons: Firstly, the management of Zhejiang Xinghui has extensive experience in operation and management of retail commercial properties and outstanding past performance. Secondly, Zhejiang Xinghui is located in Zhejiang province, which is consistent with the Group's general strategy to further develop, expand and strengthen its business in the Yangtze River Delta region. Thirdly, the urban locations of Zhejiang Xinghui's projects under management and the projects itself has rooms for enhancement, which the Group believes to raise profit levels thereafter by leveraging its resources. Fourthly, after the completion of the acquisition, Zhejiang Xinghui would be able to accelerate its expansions in the Zhejiang region and gain additional management projects by virtue of the Group's brand influence. Fifthly, the consideration of the acquisition is reasonable. Upon the completion of the acquisition, the Group would continue to expand its business by leveraging the existing team of Zhejiang Xinghui and would also consolidate the financial results of Zhejiang Xinghui to the Group's financial statements, resulting in a win-win to both the Group and Zhejiang Xinghui.
For further details on the Investment Agreement, please refer to the announcement of the Company dated 6 July 2020.
- 26 -
OUTLOOK
The outbreak of the Coronavirus Disease 2019 (the "COVID-19") in early 2020 has brought enormous impact on the industry. On a global basis, the PRC was the most rapid country to control the spread of the epidemic. Despite the spread of the COVID-19 around the globe, the Group is fully confident of the anti-epidemic measures adopted by the government of China and the country's leadership. The Group is therefore optimistic about the situation in the PRC, in the belief that we will achieve better results in the second half of the year in comparison to the first half.
Alongside the arrival of the post-epidemic era will be a complicated international environment, in which industry players will be increasingly challenged by more uncertainties. The Group needs to innovate upon new product varieties, new scenarios and new approaches in tandem with the consumption trend. On products and services, this will involve making changes in response to the changes in consumption needs and consumption groups.
With firm commitment to the Group's initial intention, the Group will continue with its strategic plannings:
Reinforce the Group's leading position in the Yangtze River Delta
The Company plans to continue to dedicate significant resources to this region, particularly in economic hubs like Shanghai, Hangzhou, Ningbo and Nanjing. The PRC Government has issued various policies to promote the integrated development of the Yangtze River Delta, and expects it to become a center of modern service industry and a competitive world-class city cluster. As a result of rapid urbanization and rising purchasing power of Chinese households, there will be significant demand for quality commercial operational services and present new opportunities for our future growth.
Continue to replicate the Group's success to selected properties through asset-light business model
The Company plans to establish strategic cooperation with national and local leading property developers, and expects to obtain new engagements for retail commercial properties through such cooperation. The Company also plans to lease shopping malls that show significant renovation potential from property owners for repositioning and refurbishment and subsequent sublease. When evaluating a target shopping mall, the Company will take into account customer demographics and competitive environment of such shopping mall's market area, with a focus on increasing occupancy at the retail commercial properties with a sustainable occupancy cost. In addition, the Company plans to continue to improve the quality of its residential property management services and strives to secure new engagements from third- party developers to achieve organic growth and business expansion.
- 27 -
Further expand the Group's commercial operational service segment through strategic acquisitions and investments
The Company plans to selectively evaluate opportunities with a focus on cities located in economically developed regions where it believes there exist significant growth potential, such as the Yangtze River Delta. The Company plans to acquire or invest in small to mid- sized commercial operational service providers that meet its internal criteria in terms of management team, business profile, operating performance as well as growth potential. The Company expects the management team of a target company to possess appropriate capabilities and experience in managing retail commercial properties. The Company initially plans to target companies managing five or more retail commercial properties. The Company intends to target companies managing retail commercial properties that it believes can provide significant growth opportunities to it. The Company expects to broaden its geographic coverage and specialized service capabilities through such acquisition and investment strategy, and in turn drive its growth and improve its profitability. In addition, the Company plans to make equity investment in certain tenants with growth potential with an aim of establishing close strategic relationship with them. By investing in these tenants, the Company not only aims to realize return from such investment but also to enhance its capability in securing quality tenants to the retail commercial properties under its management.
Continue to deploy technology to enhance consumers' experience and engagement and improve the Group's operational efficiency
The Company plans to deploy technology, including artificial intelligence and internet of things to promote consumer interaction and improve consumers' shopping experience. The Company also plans to continue to invest in its integrated online ecosystem to enhance its data handling capabilities. The Company intends to enhance its capabilities in analyzing consumer data and other operational data collected through its online ecosystem and utilize such analysis to assist its senior management in making business decisions with respect to retail commercial property planning and positioning, tenant mix determination and precision marketing. In addition, the Company intends to use artificial intelligence to improve its operational efficiency and reduce labor costs.
Attract, retain and motivate talent through systematic training programs and constructive career development opportunities
The Company plans to continue to provide its employees with systematic training programs and constructive career development opportunities, including the "Vigorous Dragons" (潛龍) program designed for management trainees who are fresh university graduates, the "Rising Dragons" (飛龍) program designed for mid-level management personnel, the "Supreme Dragons" (臻龍) program designed for senior management as well as the "Ingenious Dragons" (蛟龍) program designed for personnel holding Doctorate degrees, to cultivate and retain key employees and support their ongoing career development. The Company also expects its focus on management development to drive strong operational performance and continuing innovation. In addition, the Company plans to continue to offer competitive remuneration packages to attract and retain talent. The Company believes that its employees are key to its success and it strives to instill an atmosphere of corporate collegiality and collective success.
- 28 -
FINANCIAL REVIEW
Revenue
For the six months ended 30 June 2020, the Group recorded a revenue of approximately RMB868.6 million, representing an increase of approximately RMB119.5 million as compared with approximately RMB749.1 million for the six months ended 30 June 2019.
The Group's revenue indicated by business segment and type of service are as follows:
For the six months ended 30 June | ||||||||
2020 | 2019 | |||||||
RMB'000 | % | RMB'000 | % | |||||
Commercial Operational Services | ||||||||
Market research and positioning, | ||||||||
tenant sourcing and opening | 90,933 | 10.5 | ||||||
preparation services | 48,605 | 6.5 | ||||||
Commercial operation and | 514,692 | 59.3 | ||||||
management services | 458,725 | 61.2 | ||||||
Property leasing services | 94,782 | 10.8 | 113,832 | 15.2 | ||||
700,407 | 80.6 | 621,162 | 82.9 | |||||
Residential Property Management | ||||||||
Services | 9,206 | 1.1 | ||||||
Pre-sale management services | 6,867 | 0.9 | ||||||
Property management services | 116,131 | 13.4 | 101,265 | 13.5 | ||||
Other value-added services | 42,877 | 4.9 | 19,765 | 2.7 | ||||
168,214 | 19.4 | 127,897 | 17.1 | |||||
Total | 868,621 | 100.0 | 749,059 | 100.0 | ||||
- 29 -
Market research and positioning, tenant sourcing and opening preparation services
The Group's market research and positioning, tenant sourcing and opening preparation services primarily include (i) market research and positioning services; and (ii) tenants sourcing and opening preparation services, provided to property developers or property owners before the opening of a retail commercial property.
For the six months ended 30 June 2020, the Group's revenue from market research and positioning, tenant sourcing and opening preparation services amounted to approximately RMB90.9 million, representing a period-on-period increase of 87.1% and accounting for approximately 10.5% of its total revenue.
The increase in the revenue from market research and positioning, tenant sourcing and opening preparation services was primarily due to the fact that the Group provided market research and positioning, tenant sourcing and opening preparation services with respect to 22 retail commercial properties for the six months ended 30 June 2020, compared to 9 for the six months ended 30 June 2019.
Commercial operation and management services
The Group's commercial operation and management services primarily include (i) retail commercial property management services; (ii) tenant management and rent collection services; and (iii) other value-added services, provided to property owners or tenants.
For the six months ended 30 June 2020, the Group's revenue from commercial operation and management services amounted to approximately RMB514.7 million, representing a period- on-period increase of 12.2% and accounting for approximately 59.3% of total revenue.
The increase in the revenue from commercial operation and management services was primarily driven by the increase in the aggregate GFA under management and business volume. For the six months ended 30 June 2020, the Group's commercial properties GFA under management was 7.0 million sq.m., representing a period-on-period increase of 9.4%.
Property leasing services
The Group provides property leasing services with respect to units located within the shopping streets and shopping malls.
For the six months ended 30 June 2020, the Group's revenue derived from property leasing services amounted to approximately RMB94.8 million, representing a period-on-period decrease of 16.7% and accounting for approximately 10.8% of total revenue.
The decrease in the revenue from property leasing services was primarily attributable to the expiration of some lease contracts.
- 30 -
Residential Property Management Services
The Group's residential property management services primarily include (i) pre-sale management services to property developers during their pre-sale activities, such as cleaning, security and maintenance services for pre-sale display units and sales offices; (ii) property management services such as security, cleaning, gardening and repair and maintenance services to property owners or property owners' associations at the post-delivery stages; and
- other value-added services such as pre-delivery preparation and trash handling services, common area, advertising space and car park management services to property owners, tenants or residents of the Group's managed properties.
For the six months ended 30 June 2020, the Group's revenue from residential property management services amounted to approximately RMB168.2 million, representing a period- on-period increase of 31.5% and accounting for approximately 19.4% of total revenue.
The increase in the revenue from residential property management services was primarily attributable to: (i) the increase in the residential properties GFA under management to 11.6 million sq.m. for the six months ended 30 June 2020, representing a period-on-period increase of 9.4%; (ii) the improvement of service quality and the increase in the number of contracts with residents, especially for other value-added services.
Revenue indicated by type of customers is as follows:
For the six months ended 30 June | ||||||||
2020 | 2019 | |||||||
RMB'000 | % | RMB'000 | % | |||||
Commercial Operational Services | 58,812 | 6.8 | ||||||
Fellow subsidiaries(i) | 76,440 | 10.2 | ||||||
Other related parties(ii) | 35,881 | 4.1 | 10,736 | 1.4 | ||||
External customers(iii) | 605,714 | 69.7 | 533,986 | 71.3 | ||||
700,407 | 80.6 | 621,162 | 82.9 | |||||
Residential Property Management | ||||||||
Services | 25,844 | 3.0 | ||||||
Fellow subsidiaries(i) | 16,834 | 2.2 | ||||||
Other related parties(ii) | 1,020 | 0.1 | 1,146 | 0.2 | ||||
External customers(iii) | 141,350 | 16.3 | 109,917 | 14.7 | ||||
168,214 | 19.4 | 127,897 | 17.1 | |||||
Total | 868,621 | 100.0 | 749,059 | 100.0 | ||||
Notes:
- Fellow subsidiaries represented the Remaining Powerlong Group and other entities controlled by Mr. Hoi.
- Other related parties represented entities jointly controlled by the Remaining Powerlong Group.
- External customers represented independent third parties.
- 31 -
Revenue derived from external customers represents the largest source of the Group's revenue. For the six months ended 30 June 2020, revenue derived from external customers was approximately RMB747.1 million, representing an increase of approximately RMB103.2 million from approximately RMB643.9 million for the six months ended 30 June 2019, and accounting for 86.0% of the total revenue of the Group.
Revenue indicated by geographic regions is as follows:
For the six months ended 30 June | ||||||||
2020 | 2019 | |||||||
RMB'000 | % | RMB'000 | % | |||||
Commercial Operational Services | 452,341 | 52.0 | ||||||
Yangtze River Delta | 406,519 | 54.3 | ||||||
Southeast China | 87,351 | 10.1 | 65,015 | 8.7 | ||||
Midwest China | 95,635 | 11.0 | 89,612 | 12.0 | ||||
Bohai Economic Rim | 65,080 | 7.5 | 60,016 | 8.0 | ||||
700,407 | 80.6 | 621,162 | 83.0 | |||||
Residential Property Management | ||||||||
Services | 80,971 | 9.3 | ||||||
Yangtze River Delta | 61,692 | 8.2 | ||||||
Southeast China | 22,682 | 2.6 | 18,883 | 2.5 | ||||
Midwest China | 32,731 | 3.8 | 20,564 | 2.7 | ||||
Bohai Economic Rim | 31,830 | 3.7 | 26,758 | 3.6 | ||||
168,214 | 19.4 | 127,897 | 17.0 | |||||
Total | 868,621 | 100.0 | 749,059 | 100.0 | ||||
For the six months ended 30 June 2020, the Group's commercial operational properties and residential management properties were primarily located in the Yangtze River Delta and the revenue generated from this region had further increased.
Cost of services
The cost of services primarily include: (i) staff costs; (ii) subcontracting costs for security, greening and cleaning services; (iii) depreciation expenses; (iv) utility expenses; (v) variable lease payments; (vi) short-term lease expenditure; (vii) taxes and other levies; and (viii) other miscellaneous costs.
For the six months ended 30 June 2020, the Group's cost of services was approximately RMB613.8 million, representing a period-on-period increase of 11.4%. Such increase in cost of services was in line with the Group's business expansion. Subcontracting costs mainly include fees paid for the services outsourced to subcontractors, such as security, greening and cleaning, etc. The subcontracting cost for the six months ended 30 June 2020 recorded
- period-on-periodincrease of 61.8%, which was mainly due to the increase in the Group's aggregate GFA under management and scope of service subcontracted.
- 32 -
Gross profit and gross profit margin
The gross profit of the Group for the six months ended 30 June 2020 amounted to approximately RMB254.8 million, representing a period-on-period increase of 28.8%. For the six months ended 30 June 2020, the gross profit margin was 29.3%, representing an increase of 2.9% as compared to 26.4% for the six months ended 30 June 2019.
The gross profit margin of commercial operational services for the six months ended 30 June 2020 was 31.1%, representing an increase of 1.8% as compared to 29.3% for the six months ended 30 June 2019.
The gross profit margin of residential property management services for the six months ended 30 June 2020 was 21.9%, representing an increase of 9.5% as compared to 12.4% for the six months ended 30 June 2019, primarily due to the fact that the GFA of residential properties under management continued to increase, and the increase in the number of contracts with residents, especially for other value-added services.
The Group's gross profit and gross profit margin by segment are as follows:
For the six months ended 30 June | ||||||||
2020 | Gross | 2019 | ||||||
Gross | Gross | |||||||
profit | Gross | profit | ||||||
profit | margin | profit | margin | |||||
RMB'000 | % | RMB'000 | % | |||||
Commercial operational services | 218,025 | 31.1 | 182,001 | 29.3 | ||||
Residential property management | 36,808 | 21.9 | ||||||
services | 15,886 | 12.4 | ||||||
Total | 254,833 | 29.3 | 197,887 | 26.4 | ||||
For the six months ended 30 June 2020, the Group further fostered the project-regionalized integrated management. Meanwhile through technological upgrade and empowerment, the Group laid a sound foundation for increasing the gross profit of its business in future years.
Other income and gains
Other income and gains mainly represented the various government grants and subsidies income from local governments and the forfeited deposits from tenants due to their premature termination of contracts. For the six months ended 30 June 2020, the Group's other income and gains amounted to approximately RMB11.1 million, representing a period-on-period increase of 30.6%, which was mainly attributable to the increase in government grants.
- 33 -
Net impairment losses on financial assets
The Group's net impairment losses on financial assets mainly include the allowance for impairment made in respect of operating leases and trade receivables and other receivables. For the six months ended 30 June 2020, the Group's net impairment losses on financial assets amounted to approximately RMB19.9 million, representing a period-on-period increase of 452.8%. This was mainly attributable to the larger business scale and the increased provision made on the principle of prudency in view of the adverse effect of COVID-19 on some tenants' business operations.
Finance income/(costs) - net
The Group's net finance income/(costs) mainly include interest expense on bank borrowings, interest expense on lease liabilities and interest income from bank deposits.
For the six months ended 30 June 2020, the Group's net finance income amounted to approximately RMB4.1 million, as compared to the net finance costs of approximately RMB19.2 million for the corresponding period in 2019. This was mainly because interest expenses on borrowings were relatively substantial during the corresponding period in 2019.
Income tax expense
The Group's income tax expense mainly comprises PRC corporate income tax. For the six months ended 30 June 2020, the effective income tax rates were 24.8%, representing a decrease of 2.4 percentage points as compared to 27.2% for the six months ended 30 June 2019, primarily because certain listing expenses of the Company were not deductible from the taxable income of domestic enterprises during the corresponding period in 2019.
Profit for the period
For the six months ended 30 June 2020, the Group's net profit was approximately RMB144.9 million, representing an increase of 66.4% from RMB87.1 million for the six months ended 30 June 2019.
Investment properties
The Group's investment properties primarily consist of shopping malls and units within the shopping streets for which the Group entered into lease contracts with independent third parties who were properties owners. As at 30 June 2020, the Group's net amount of investment properties were approximately RMB355.5 million, representing an increase of approximately RMB148.3 million as compared with 31 December 2019, primarily due to a new leased in commercial property and the shopping street units for which the Group entered into new lease contracts.
- 34 -
Operating lease and trade receivables
The Group's operating lease and trade receivables primarily arose from property leasing services for units located within the shopping malls and shopping streets as well as the provision of various services under the Group's commercial operational service segment and residential property management service segment. As at 30 June 2020, the Group's operating lease and trade receivables were approximately RMB146.6 million, representing an increase of 28.7% as compared with that of approximately RMB113.9 million as at 31 December 2019, primarily attributable to the business growth of the Group.
Trade and other payables
The Group's trade and other payables primarily represent amounts due to suppliers/ subcontractors for the purchase of services and goods and amounts due to related parties, cash received on behalf of tenants or residents, deposits received from tenants or residents, accrued listing expenses and others. As at 30 June 2020, the Group's trade and other payables amounted to approximately RMB833.5 million, representing an increase of 9.2% as compared with approximately RMB763.1 million as at 31 December 2019. This was primarily attributable to the expansion of the Group's business scale.
Lease liabilities
The Group's lease liabilities primarily represent its commercial arrangements with the owners of units located within the shopping streets and owners of shopping malls, pursuant to which, the Group agrees to pay rents for such units located within the shopping streets and shopping malls during the agreed period. As at 30 June 2020, lease liabilities amounted to approximately RMB540.0 million, representing an increase of 29.6% as compared with approximately RMB416.6 million as at 31 December 2019. This was primarily attributable to the new contracts entered into by the Group.
Contract Liabilities
Contract liabilities mainly represent advance payments made by the customers of the Group's commercial operational services and residential property management services. As at 30 June 2020, contract liabilities amounted to approximately RMB276.3 million, representing an increase of 5.0% as compared with approximately RMB263.2 million as at 31 December 2019, which was mainly due to the expansion of business scale and improvement in collection rate.
Contingent liabilities
As at 30 June 2020, the Group did not have any material contingent liabilities.
- 35 -
Liquidity and capital resources
The Company has maintained stable financial condition and sufficient liquidity. As at 30 June 2020, the Group's cash and cash equivalents amounted to approximately RMB2,950.4 million, representing an increase of 12.8% as compared with approximately RMB2,616.1 million as at 31 December 2019. This was primarily attributable to cash generated from operating activities and proceeds from over-allotment of shares.
Cashflow from operating activities
For the six months ended 30 June 2020, the Group's net cashflow generated from operating activities amounted to approximately RMB262.4 million, compared to approximately RMB200.0 million in the corresponding period in 2019. This was primarily attributable to net increase in operating profit, net decrease in operating lease and trade receivables, net increase in trade and other payables and contract liabilities as result of the expansion of the Group's operating scale.
HUMAN RESOURCES
The Group believes that the expertise, experience and professional development of the employees contribute to the growth of the Group. The human resources department of the Company manages, trains and hires employees. As at 30 June 2020, the Group had 5,087 (31 December 2019: 5,019) employees. The Group believes in the importance of attraction, recruitment and retention of quality employees in achieving the Group's success. The Group's success depends on the Group's ability to attract, retain and motivate qualified personnel. As part of the Group's retention strategy, the Group offers employees performance-based cash bonuses and other incentives in addition to basic salaries. The Group also participates in various employee social security plans for its employees, including housing provident fund, pension, medical insurance, social insurance and unemployment insurance. During the six months ended 30 June 2020, the Group did not experience any significant labour disputes or any difficulty in recruiting employees.
FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS
The Group intends to utilize the net proceeds raised from the Listing to pursue strategic acquisition of and investment in other commercial operational service providers according to the prospectus of the Company dated 16 December 2019. On 3 July 2020, the Group entered into an Investment Agreement with shareholders of Zhejiang Xinghui, independent third parties of the Group. For further details on the Investment Agreement, please refer to the paragraph headed "First Acquisition under the Strategy of Focused Development in the Yangtze River Delta" of this announcement and the announcement of the Company dated 6 July 2020. Save as disclosed in this announcement, the Company had not authorised any plan for other material investments or acquisition of capital assets as at the date of this announcement.
S I G N I F I C A N T I N V E S T M E N T S , A C Q U I S I T I O N S A N D D I S P O S A L S O F SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
Save as disclosed in this announcement, the Company has no significant investments or significant acquisitions, and has no disposal of subsidiaries, associates and joint ventures.
- 36 -
IMPORTANT EVENTS AFTER THE REPORTING DATE
On 3 July 2020, Shanghai Yulong Property Management Company Limited, a wholly-owned subsidiary of the Company, entered into an Investment Agreement with the shareholders of Zhejiang Xinghui who are third parties independent of the Company and its connected persons (as defined under the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange")), pursuant to which the Group acquired 60% of equity interest of Zhejiang Xinghui at an investment cost of RMB40.6 million.
For further details on the Investment Agreement, please refer to the paragraph headed "First Acquisition under the Strategy of Focused Development in the Yangtze River Delta" of this announcement and the announcement of the Company dated 6 July 2020. Save as disclosed above, the Group does not have any other material subsequent events after the Reporting Period.
INTERIM DIVIDEND
At the Board meeting held on 18 August 2020, the Board recommended the payment of an interim dividend of HK$0.1 per ordinary share for the six months ended 30 June 2020, amounting to approximately HK$62.2 million in total. The interim dividend will be paid on or around Friday, 4 December 2020 to the shareholders whose names appear on the register of members of the Company on Wednesday, 25 November 2020.
CLOSURE OF REGISTER OF MEMBERS
For the purpose of determining the shareholders' entitlement to the proposed interim dividend for the six months ended 30 June 2020, the register of members of the Company will be closed from Friday, 20 November 2020 to Wednesday, 25 November 2020, both days inclusive, during which period no transfer of shares of the Company will be registered.
For the purpose of determining the entitlement to the proposed interim dividend for the six months ended 30 June 2020, all transfer documents accompanied by the relevant share certificates must be lodged with the Company's branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong for registration no later than 4:30 p.m. on Thursday, 19 November 2020.
CORPORATE GOVERNANCE
The Company is committed to the establishment of good corporate governance practices and procedures with a view to enhancing investors' confidence in the Company and the Company's accountability. The Company therefore strives to attain and maintain effective corporate governance practices and procedures.
The Directors are of the view that the Company had complied with all applicable code provisions as set out in the Corporate Governance Code in Appendix 14 of the Listing Rules throughout the Reporting Period.
- 37 -
MODEL CODE FOR SECURITIES TRANSACTIONS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 of the Listing Rules as the code for dealing in securities of the Company by the Directors. Having made specific enquiry by the Company to all the Directors, the Directors confirmed that they were in compliance with the required standard as set out in the Model Code during the Reporting Period. No incident of non-compliance was noted by the Company to date. Relevant employees who are likely to be in possession of unpublished inside information of the Group are also subject to compliance with written guidelines on no less exacting terms than the Model Code during the Reporting Period.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
During the six months period ended 30 June 2020, the Company repurchased 1,000,000 Shares on the Stock Exchange for an aggregate consideration of approximately HK$9.5 million including expenses. The repurchased Shares were subsequently cancelled. The repurchases reflected the confidence of the Board and the management team in the long-term strategy and the prospects of the Company. The Company considered that the repurchases were in the best interest of the Company and its shareholders as a whole.
Details of the Shares repurchased during the six months period ended 30 June 2020 are as follows:
No. of | Highest | Lowest | ||||
Date of repurchases | ordinary | price paid | price paid | Aggregate | ||
shares | per share | per share | Consideration | |||
(HK$) | (HK$) | (HK$) | ||||
30 January 2020 | 500,000 | 9.50 | 9.21 | 4,694,460 | ||
31 January 2020 | 500,000 | 9.90 | 9.49 | 4,782,055 | ||
1,000,000 | 9,476,515 | |||||
Save as disclosed above, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities during the Reporting Period.
- 38 -
REVIEW OF INTERIM RESULTS
The Company has established an audit committee (the "Audit Committee"), which comprises three independent non-executive Directors, in accordance with the requirements under Rule 3.21 of the Listing Rules.
The Audit Committee of the Company has reviewed the unaudited interim condensed consolidated financial information of the Group for the six months ended 30 June 2020 with the Company's management and considered that such information have been prepared in accordance with applicable accounting standards and requirements with sufficient disclosure.
PUBLICATION OF INTERIM RESULTS ANNOUNCEMENT AND INTERIM REPORT ON THE WEBSITES OF THE STOCK EXCHANGE AND THE COMPANY
This announcement is published on the website of the Stock Exchange (www.hkexnews.hk) as well as the website of the Company (www.powerlongcm.com).
The interim report of the Company for the six months ended 30 June 2020 will be despatched to the shareholders of the Company and made available on the abovementioned websites in due course.
APPRECIATION
The steady growth of the Group is attributable to the enormous support from the relevant parties for years. The Board would like to take this opportunity to express its sincere gratitude to the Group's investors, business partners and customers for their continuous trust and support. At the same time, the Board would also like to take this opportunity to thank the Board members for their work of high performance and the Group's staff for their contributions and dedication. The Group will continue to uphold its tradition of "Creditability, Courtesy, Innovation, Enthusiasm" while relying on an elite team with unified values, loyalty and commitment. It will adhere to its belief and rise to challenges in order to create better returns for its customers, shareholders and investors and to create greater values for the society.
By Order of the Board
Powerlong Commercial Management Holdings Limited
Hoi Wa Fong
Chairman
Hong Kong, 18 August 2020
As at the date of this announcement, the Board comprises three executive Directors, namely, Mr. Hoi Wa Fong, Mr. Chen Deli and Mr. Zhang Yunfeng, two non-executive Directors, namely, Ms. Hoi Wa Fan and Ms. Hoi Wa Lam, and three independent non-executive Directors, namely, Ms. Ng Yi Kum, Estella, Mr. Chan Wai Yan, Ronald and Dr. Lu Xiongwen.
T h i s a n n o u n c e m e n t i s a v a i l a b l e f o r v i e w i n g o n t h e C o m p a n y ' s w e b s i t e a t www.powerlongcm.com and the website of the Stock Exchange at www.hkexnews.hk.
- 39 -
Attachments
- Original document
- Permalink
Disclaimer
Powerlong Commerical Management Holdings Ltd published this content on 18 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 August 2020 08:35:12 UTC