WAI KEE HOLDINGS LIMITED INTERIM REPORT 2020
Positive Thinking Active Participation
CONTENTS
Page | |
Interim Results Highlights | 2 |
Business Review and Future Outlook | 3 |
Financial Review | 9 |
Dividend | 11 |
Disclosure of Interests | 12 |
Corporate Governance | 17 |
Other Information | 18 |
Report on Review of Condensed Consolidated Financial Statements | 20 |
Condensed Consolidated Statement of Profit or Loss | 21 |
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | 22 |
Condensed Consolidated Statement of Financial Position | 23 |
Condensed Consolidated Statement of Changes in Equity | 25 |
Condensed Consolidated Statement of Cash Flows | 26 |
Notes to the Condensed Consolidated Financial Statements | 27 |
Corporate Information | 44 |
Wai Kee Holdings Limited | Interim Report 2020 |
1
Interim Results Highlights
The board of directors (the "Board") of Wai Kee Holdings Limited (the "Company") announces the interim results of the Company and its subsidiaries (the "Group") for the six months ended 30th June, 2020.
FINANCIAL PERFORMANCE HIGHLIGHTS
Revenue | HK$3,892 | million |
Profit attributable to owners of the Company | HK$404 | million |
Basic earnings per share | HK$0.51 | |
Interim dividend per share | HK8 cents | |
Equity attributable to owners of the Company per share | HK$10.83 |
Wai Kee Holdings Limited | Interim Report 2020 |
2
Business Review and Future Outlook
BUSINESS REVIEW
For the six months ended 30th June, 2020, the Group's revenue was HK$3,892 million (six months ended 30th June, 2019: HK$3,738 million), generating an unaudited profit attributable to owners of the Company of HK$404 million (six months ended 30th June, 2019: HK$398 million), an increase of 2% as compared with that of 2019.
Property Development and Investment, Toll Road, Investment and Asset Management
For the six months ended 30th June, 2020, the Group shared a profit of HK$189 million (six months ended 30th June, 2019: HK$368 million) from Road King Infrastructure Limited ("Road King"), an associate of the Group. As of the date of this report, the Group holds 43.42% interest in Road King.
During the six months ended 30th June, 2020, the Group purchased 6,000,000 (six months ended 30th June, 2019: nil) ordinary shares in Road King and hence recognised gain on bargain purchase of HK$82 million (six months ended 30th June, 2019: nil) on acquisition of additional interest in Road King.
For the six months ended 30th June, 2020, Road King recorded an unaudited profit attributable to its owners of HK$430 million (six months ended 30th June, 2019: HK$868 million), a decrease of 50% as compared with that of 2019.
By closely following the market trend and adhering to the operating principle of ensuring a balance between sales volume and profitability, the operation team of Road King concerted their efforts and recorded property sales in Mainland China (including joint venture and associate projects) of RMB19,571 million in the first half of 2020, comprising the contracted sales of RMB17,451 million and outstanding subscribed sales of RMB2,120 million.
In the first half of 2020, property delivery of Road King (including joint venture and associate projects) in Mainland China were approximately RMB11,694 million, representing an increase of 39% as compared with the corresponding period of last year. The three projects in Hong Kong are going on well, one of which in Yuen Long is expected to be delivered for occupancy by end of the year and the other two projects are under construction.
For land reserve replenishment, Road King acquired four pieces of land in Mainland China for residential purpose through listing-for-sale and/or co-development in the first half of the year, with an aggregate floor area of 313,000 sqm. As of 30th June, 2020, Road King has a land reserve of 7,010,000 sqm in total, of which, the total area of properties pre-sold but yet to be delivered was 1,930,000 sqm. In July 2020, Road King further acquired four pieces of land for residential purpose through listing-for-sale, with an aggregate floor area of 438,000 sqm.
In the first half of 2020, the average daily traffic volume and toll revenue of Road King's expressway projects (including projects in Mainland China and Indonesia) reached 268,500 vehicles and an amount equivalent to RMB837 million respectively, representing an increase of 2% and a decrease of 48% as compared with the corresponding period of last year. Due to the outbreak of the novel coronavirus pandemic and the implementation of toll-free policy, the toll revenue of the expressway projects in Mainland China recorded a decrease. After the resumption of toll fee collection in May 2020, the toll revenue has gradually restored to the normal. The expressways recently acquired in Indonesia were also affected by the outbreak of the novel coronavirus pandemic during the period. As a result of the decrease in toll revenue in Mainland China and Indonesia, Road King's share of profits of infrastructure joint ventures decreased to HK$8 million for the first half of 2020, representing a significant decrease as compared with that of the corresponding period last year.
Wai Kee Holdings Limited | Interim Report 2020 |
3
Business Review and Future Outlook
BUSINESS REVIEW (Cont'd)
Property Development and Investment, Toll Road, Investment and Asset Management (Cont'd)
The novel coronavirus pandemic has imposed, to varying degrees, impacts on the investment mode, consumption habit, travel pattern and working style in the long run. Road King is conducting an in-depth review of its businesses and will, based on the review results, make appropriate adjustments to the non-core businesses such as property fund, cultural, tourist and commercial, entertainment and content development businesses.
With the gradual containment of the novel coronavirus pandemic, it is expected that the property market in Mainland China will recover in the second half of the year with stable and mildly increasing land supply. Road King stays cautiously optimistic in regard to the outlook of property business development in Mainland China.
In the second half of the year, the property management and operation team of Road King will continue its pragmatic approach and adhere to the operating strategy of striking a balance between profitability and sales volume, as well as striving to maintain the sales volume and the profit target. Road King will also continue to increase toll road assets and make adjustments to optimise its non-core businesses.
Construction, Sewage Treatment and Steam Fuel
For the six months ended 30th June, 2020, the Group shared a profit of HK$119 million (six months ended 30th June, 2019: HK$93 million) from Build King Holdings Limited ("Build King"). As of the date of this report, the Group holds 56.76% interest in Build King.
For the six months ended 30th June, 2020, Build King recorded revenue of HK$3,719 million (six months ended 30th June, 2019: HK$3,569 million) and an unaudited profit attributable to its owners of HK$209 million (six months ended 30th June, 2019: HK$164 million), an increase of 27% as compared with that of 2019.
At the early stage of the outbreak of the novel coronavirus pandemic in January 2020, Build King encountered logistic problems in construction materials and procurement of sanitizing supplies and tools. However, the problems were solved quickly and the disruption was contained to the least extent. Coupled with efforts in close monitoring of on-going projects and satisfactory settlement of some major projects, the gross profit margin of Build King increased from 9.9% to 11.2%.
As anticipated, sizable tenders of civil engineering projects are scarce, but in building sector the tendering results are encouraging. Since the publishing of Annual Report 2019 of Build King, Build King has won eight projects of total contract sum of HK$12 billion. Of these new projects, four projects are civil engineering of total contract sum of HK$2 billion and four are building projects of total contract sum of HK$10 billion. At the date of this report, the outstanding works was increased to HK$28 billion, an order book sufficient for turnover of coming three years.
The current projects were progressing well as planned. A few major projects were satisfactorily completed and final accounts agreed with the clients. Several projects were also completed on time and being handed over to the clients.
Wai Kee Holdings Limited | Interim Report 2020 |
4
Business Review and Future Outlook
BUSINESS REVIEW (Cont'd)
Construction, Sewage Treatment and Steam Fuel (Cont'd)
Build King's investment in PRC environmental infrastructure projects had significant progress.
For the sewage treatment plant in Wuxi, the current operation run smoothly and the upgrading works will be completed within its budget of HK$106 million in the third quarter of this year. Upon completion, the sewage treatment fee will then be increased by 80% and its profit contribution to Build King will increase significantly in future.
For the centralised provision of steam to factories in industrial parks, two steam plants in Gansu Province started trial operation in late 2019 but its resumption of works after Chinese New Year in 2020 was delayed to April 2020 due to the novel coronavirus pandemic. They are picking up its production volume and Build King expects each of them will reach 80% of the total design capacity of 50 tonnes per hour by end of 2020. In the past six months, Build King committed to further invest HK$220 million in building four steam plants of similar capacity of 50 tonnes per hour in Gansu Province and Hubei Province. Build King expects the construction of these new plants will be completed progressively in 2021 and start to contribute meaningful profit to Build King in 2022.
Construction Materials
For the six months ended 30th June, 2020, the construction materials division recorded revenue of HK$202 million (six months ended 30th June, 2019: HK$230 million) and a net profit of HK$0.2 million (six months ended 30th June, 2019: net loss of HK$44 million).
The substantial improvement for the construction materials division in comparison with the corresponding period of 2019 was mainly due to reduction in amortisation of intangible assets and depreciation of property, plant and equipment at Lam Tei Quarry resulting from the impairment losses of those assets made in 2018 and 2019. In addition, it was also due to savings of relevant costs including rental of land, fixed operation costs and dismantling costs incurred at Tin Wan concrete batching facilities which were ceased operation in March 2019.
In the first half year of 2020, the concrete business recorded slight profit. The performance of the concrete business remains challenge in 2020 as there is no sign of improvement in the concrete market. The concrete prices remained at low levels resulting in very low profit margins. As construction industry is disrupted by the novel coronavirus pandemic, construction projects are in general slowing down and being delayed thus directly affect the demand of concrete in the market.
For the asphalt business, slight loss was still recorded in the first half year of 2020. Due to low demand of the asphalt market, we strategically formed an alliance with another asphalt operator at Lam Tei Quarry in January 2020 for sharing the operating and fixed costs of asphalt production plant. There is no sign of improvement in the asphalt market as large infrastructure projects were delayed.
The construction materials division continues facing difficult market conditions and intensive competition. Delay of mega infrastructure projects in Hong Kong coupled with the outbreak of the novel coronavirus pandemic affect the market demands for concrete and asphalt. As a result of keen competition, the market prices of concrete and asphalt remain at low levels. Unless the concrete and asphalt prices rebound significantly, the performance of construction materials division will hardly be improved. The management continues to adopt prudent cost control measures and is committed to providing high quality of services to our customers in order to strengthen competitiveness.
Wai Kee Holdings Limited | Interim Report 2020 |
5
Business Review and Future Outlook
BUSINESS REVIEW (Cont'd)
Quarrying
For the six months ended 30th June, 2020, the quarrying division recorded revenue of HK$86 million (six months ended 30th June, 2019: HK$88 million) and a net loss of HK$0.3 million (six months ended 30th June, 2019: net loss of HK$15 million).
The result of quarrying division had noticeable improvement compared with the corresponding period of last year. Market prices of aggregates rose in the first quarter of 2020 resulting from the decline in aggregates supply from Mainland China to Hong Kong and then maintained stable since the second quarter of 2020. However, selling prices of our aggregates supply contracts committed with customers in previous years remained at low levels and the production capacity of the existing crushing facilities at Lam Tei Quarry limited the production volume of aggregates to secure additional sales volume with higher prices.
In order to increase the production capacity at Lam Tei Quarry, establishment of the new crushing facility with double production capacity of the existing crushing facilities was commenced in the fourth quarter of 2019. Due to the outbreak of the novel coronavirus pandemic since early 2020, the progress of establishment of the new crushing facility and the time for attending the environmental rules and regulations were delayed. The establishment was completed in the second quarter of 2020 and approval for compliance with the relevant environmental rules and regulations was obtained in July 2020. Fine tune of the new crushing facility is in progress and its production rate is picking up. The existing crushing facilities are being dismantled in order to vacant the area for the upcoming site formation work to be carried out in the remaining contract period as planned. The management has also been exercising cost control measures to minimise the production cost of aggregates.
Impairment Loss of Lam Tei Quarry
The management has performed impairment assessment on the carrying amounts of property, plant and equipment, and the intangible assets (representing the extraction right of rock reserve and the rehabilitation costs to be incurred) for Lam Tei Quarry during the six months ended 30th June, 2020. For the purpose of impairment assessment, assets of Lam Tei Quarry have been allocated to three individual cash generating units ("CGUs"), i.e. quarrying, concrete and asphalt CGUs, and the recoverable amounts of these CGUs have been determined based on the value in use calculation. The calculation uses cash flow projections based on financial budgets covering the remaining contract period of Lam Tei Quarry and discounted at a discount rate to calculate the present value. Other key assumptions for the value in use calculation relate to the estimation of the prices and budgeted gross margins of aggregates, concrete and asphalt, and the volume of rock reserve to be extracted for the remaining contract period. Based on the impairment assessment, the management considers that no further impairment on intangible assets and property, plant and equipment is necessary for the six months ended 30th June, 2020 (six months ended 30th June, 2019: nil).
Wai Kee Holdings Limited | Interim Report 2020 |
6
Business Review and Future Outlook
BUSINESS REVIEW (Cont'd)
Property Funds
The Group holds 30% effective interest in the Sunnyvale project by investment in a US investment company ("US Company") which in turn made capital contribution to another US company (the "Project Company") for the development of 3-storey townhouses on three lots of land in Sunnyvale. The Project Company sold one of the three lots of land in 2017 and gradually built and sold all of 314 townhouses on the remaining two lots of land from 2017 to the first half year of 2020. For the six months ended 30th June, 2020, the Group received the final cash distribution of US$15.3 million from US Company and recognised gain of HK$58 million on change in fair value of investment in US Company.
Lion Trade Global Limited ("Lion Trade"), which is owned 70% by a wholly owned subsidiary of the Company and 30% by a wholly owned subsidiary of Build King, indirectly holds 75% interest in Wisdom H6 LLC ("JV Fund I") and 34.35% interest in Estates at Fountain Lake LLC ("JV Fund II"), both of which are US joint venture companies. JV Fund I holds a 4-storey residential rental property in Houston and JV Fund II holds a 3-storey residential rental property in Stafford of Texas. In June 2020, the occupancy rates of these two residential properties were around 93.9% and 96.4% respectively. For the six months ended 30th June, 2020, Lion Trade shared loss of HK$15 million from these two US joint venture companies due to drop in revaluation amounts of both properties from December 2019 to June 2020. During the period, the Group received cash distribution of US$0.3 million from these two US joint venture companies.
Wai Kee Holdings Limited | Interim Report 2020 |
7
Business Review and Future Outlook
FUTURE OUTLOOK
The order book of the Group's construction, sewage treatment and steam fuel division on hand is HK$28 billion, representing approximately three years' current turnover. With this solid base, we projected a positive outlook for the construction division amid the novel coronavirus pandemic disruption of all industries and economy downturn in Hong Kong. The division continues seeking investment opportunities in environmental infrastructure projects in the PRC.
The government's stricter containment measures and higher alert levels of the public in response to the novel coronavirus pandemic has had impacts on the Group's operations. Facing with those challenges such as delay and slow down on construction activities, the Group has taken measures such as enhanced health monitoring at the production sites of both construction materials and quarrying divisions in order to avoid interruption proactively.
Since the new crushing facility with double production capacity at Lam Tei Quarry commences operation in the third quarter of 2020, the management has secured aggregates sales at higher prices. With the production rate of the new crushing facility is picking up and stable aggregates market prices, the performance of the quarrying division is expected to improve.
For construction materials division, there is no sign of improvements in prices and market demand of concrete and asphalt yet to be determined by recoverability of the construction industry. The operators of concrete and asphalt industries continue to face extremely challenging time in 2020. The Group would continue implementing cost control measures to strengthen our competitiveness.
The performance of the property funds in the first half of 2020 is in line with budget. The Group continues monitoring closely the performance of the property funds.
We are cautiously seeking investment opportunities that create synergy for the sustainable growth of the Group.
Wai Kee Holdings Limited | Interim Report 2020 |
8
Financial Review
LIQUIDITY AND FINANCIAL RESOURCES
During the period, total borrowings decreased from HK$1,186 million to HK$1,082 million, which included bonds with carrying amounts of HK$53 million (31st December, 2019: HK$130 million) carrying fixed coupon interest of 7% per annum and HK$113 million (31st December, 2019: HK$110 million) carrying no interest respectively, with the maturity profile summarised as follows:
30th June, | 31st December, | |
2020 | 2019 | |
HK$'million | HK$'million | |
Within one year | 570 | 576 |
In the second year | 371 | 363 |
In the third to fifth year inclusive | 141 | 247 |
1,082 | 1,186 | |
Classified under: | ||
Current liabilities (note) | 668 | 680 |
Non-current liabilities | 414 | 506 |
1,082 | 1,186 |
Note: At 30th June, 2020, bank loans that are repayable over one year after the end of the reporting period but contain a repayment on demand clause with an aggregate carrying amount of HK$98 million (31st December, 2019: HK$104 million) have been classified as current liabilities.
During the period, the Group had no financial instruments for hedging purpose. At 30th June, 2020, apart from the bonds described above, bank loans of HK$63 million also carried interest at fixed rate.
At 30th June, 2020, total amount of the Group's time deposits, bank balances and cash was HK$2,103 million (31st December, 2019: HK$2,202 million), of which bank deposits of Build King amounting to HK$65 million (31st December, 2019: HK$64 million) were pledged to banks to secure certain banking facilities granted to Build King. In addition, the Group has available unutilised banking facilities of HK$1,186 million (31st December, 2019: HK$1,389 million).
For the six months ended 30th June, 2020, the Group recorded finance costs of HK$35 million (six months ended 30th June, 2019: HK$37 million).
Wai Kee Holdings Limited | Interim Report 2020 |
9
Financial Review
LIQUIDITY AND FINANCIAL RESOURCES (Cont'd)
At 30th June, 2020, included in the financial assets at fair value through profit or loss, there were investment in equity securities listed in Hong Kong of HK$34 million (31st December, 2019: HK$49 million), investment in quoted equity securities of HK$11 million (31st December, 2019: HK$13 million) issued by a private entity engaged in manufacture and sale of pharmaceutical products in USA (the "USA Entity") and investment in quoted debt securities issued by listed entities of HK$151 million (31st December, 2019: nil). At 31st December, 2019, there was also investment in unlisted convertible bonds of HK$26 million issued by the USA Entity which was matured on 15th January, 2020, on which and on 15th June, 2020, the repayment of the principal amount was agreed by the USA Entity and the Group to extend to 15th June, 2020 and further extend to 15th June, 2023 respectively. The principal amount has been reclassified to non-current other debtors at 30th June, 2020. Out of these investments, HK$192 million (31st December, 2019: HK$57 million) was invested by Build King. For the six months ended 30th June, 2020, the Group recorded a net loss (net amount of change in fair value, dividend income and interest income) of HK$9 million (six months ended 30th June, 2019: net gain of HK$7 million) from these investments, of which net loss of HK$11 million (six months ended 30th June, 2019: net gain of HK$7 million) was derived from the investments made by Build King.
The Group's borrowings, investments, time deposits and bank balances are principally denominated in Hong Kong dollar, Renminbi and United States dollar. As a result, the Group is exposed to the currency risks for fluctuation in exchange rates of Renminbi and United States dollar. However, there is no significant exposure to foreign exchange rate fluctuations during the period. The Group will continue to monitor its exposure to the currency risks closely.
CAPITAL STRUCTURE AND GEARING RATIO
At 30th June, 2020, the equity attributable to owners of the Company amounted to HK$8,587 million, representing HK$10.83 per share (31st December, 2019: HK$8,512 million, representing HK$10.73 per share).
At 30th June, 2020, the gearing ratio, representing the ratio of total borrowings to equity attributable to owners of the Company, was 12.6% (31st December, 2019: 13.9%) and the net gearing ratio, representing the ratio of net borrowings (total borrowings less time deposits, bank balances and cash) to equity attributable to owners of the Company, was -11.9% (31st December, 2019: -11.9%) as a result of total amount of time deposits, bank balances and cash exceeding total borrowings amount.
PLEDGE OF ASSETS
At 30th June, 2020, apart from the bank deposits pledged to secure certain banking facilities granted to the Group, the shares of certain subsidiaries of the Company were also pledged to secure certain bank loans and banking facilities granted to the Group.
CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
At 30th June, 2020, the Group committed capital expenditure contracted for but not provided in the Group's condensed consolidated financial statements of HK$44 million (31st December, 2019: HK$56 million) in respect of acquisition of property, plant and equipment. At 30th June, 2020, the Group had no contingent liabilities.
Wai Kee Holdings Limited | Interim Report 2020 |
10
Dividend
INTERIM DIVIDEND
The Board has declared an interim dividend of HK8 cents (six months ended 30th June, 2019: HK8 cents) per ordinary share for the six months ended 30th June, 2020 to the shareholders of the Company whose names appear in the register of members of the Company on Friday, 4th September, 2020.
It is expected that the payment of the interim dividend will be made on or before Wednesday, 7th October, 2020.
CLOSURE OF REGISTER OF MEMBERS
The register of members of the Company will be closed from Thursday, 3rd September, 2020 to Friday, 4th September, 2020, both days inclusive, during which period no transfer of shares will be registered. In order to qualify for the interim dividend, all transfers of shares accompanied by the relevant share certificates must be lodged with the Company's Branch Share Registrar in Hong Kong, Tricor Secretaries Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration not later than 4:00 p.m. on Wednesday, 2nd September, 2020.
Wai Kee Holdings Limited | Interim Report 2020 |
11
Disclosure of Interests
DIRECTORS' INTERESTS AND SHORT POSITIONS
As at 30th June, 2020, the interests and short positions of the Directors of the Company in the shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ("SFO")) which are required to be notified to the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or were required to be entered in the register maintained by the Company pursuant to section 352 of the SFO or were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") in the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules"), to be notified to the Company and the Stock Exchange were as follows:
(I) | The Company | ||||
Interests in shares | |||||
Capacity/ | Percentage of the | ||||
Nature of | Number of shares held | issued ordinary | |||
Name of Director | interest | Long position | Short position | share capital | |
(note) | |||||
% | |||||
Zen Wei Pao, William | Personal | 205,681,843 | - | 25.93 | |
Zen Wei Peu, Derek | Personal | 203,857,078 | - | 25.70 | |
Wong Che Ming, Steve | Personal | 900,000 | - | 0.11 | |
Note:
Long position in the shares (other than pursuant to equity derivatives such as share options, warrants to subscribe or convertible bonds).
Wai Kee Holdings Limited | Interim Report 2020 |
12
Disclosure of Interests
DIRECTORS' INTERESTS AND SHORT POSITIONS (Cont'd)
- Associated Corporations Interests in shares
Name of | Capacity/ | Number of shares held | Percentage of | ||||
Name of company | Nature of | the issued | |||||
Director | interest | Long position | Short position | share capital | |||
% | |||||||
Zen Wei Pao, William | Build King Holdings Limited | Personal | 1,400,000 | (note 1) | - | 0.11 | (note 2) |
Wai Kee (Zens) Construction & | Personal | 2,000,000 | (note 1) | - | 10.00 | ||
Transportation Company Limited | |||||||
(note 3) | |||||||
Wai Luen Stone Products Limited | Personal | 30,000 | (note 1) | - | 37.50 | ||
Zen Wei Peu, Derek | Build King Holdings Limited | Personal | 121,745,228 | (note 1) | - | 9.80 | |
Road King Infrastructure Limited | Personal | 24,649,000 | (notes 1 & 4) | - | 3.29 | ||
Wai Kee (Zens) Construction & | Personal | 2,000,000 | (note 1) | - | 10.00 | ||
Transportation Company Limited | |||||||
(note 3) | |||||||
Wai Luen Stone Products Limited | Personal | 30,000 | (note 1) | - | 37.50 | ||
Chiu Wai Yee, Anriena | Build King Holdings Limited | Personal | 1,116,000 | (note 1) | - | 0.09 | |
Road King Infrastructure Limited | Personal | 205,000 | (note 1) | - | 0.03 | ||
Wong Che Ming, Steve | Build King Holdings Limited | Personal | 407,448 | (note 1) | - | 0.03 | |
Notes:
- Long position in the shares (other than pursuant to equity derivatives such as share options, warrants to subscribe or convertible bonds).
- As at 30th June, 2020, the issued share capital of Build King was 1,241,877,992 shares. Accordingly, the percentage has been adjusted.
- With effect from 29th February, 2016, the name of Wai Kee (Zens) Construction & Transportation Company Limited has been changed to Build King (Zens) Engineering Limited.
- Included in the balance is 1,000,000 Road King shares held by Ms. Luk Chan, the spouse of Mr. Zen Wei Peu, Derek.
Save as disclosed above, none of the Directors nor their associates had any interests or short positions in any shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register to be kept by the Company under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange.
Wai Kee Holdings Limited | Interim Report 2020 |
13
Disclosure of Interests
DIRECTORS' INTERESTS AND SHORT POSITIONS (Cont'd)
- Associated Corporations (Cont'd) Interests in debentures
Capacity/ | ||||
Name of Director | Name of company | Nature of interest | Type of debenture | Principal amount held |
Zen Wei Peu, Derek | RKI Overseas Finance | Personal | US$300 million 7% senior | US$800,000 |
2017 (A) Limited (note 1) | guaranteed perpetual | (notes 2 & 3) | ||
capital securities | ||||
Ho Gilbert Chi Hang | RKI Overseas Finance | Personal | US$300 million 7% senior | US$200,000 |
2017 (A) Limited (note 1) | guaranteed perpetual | (note 2) | ||
capital securities | ||||
Notes:
- This company is a wholly owned subsidiary of Road King.
- Long position.
- The principal amount of US$400,000 of US$300 million 7% senior guaranteed perpetual capital securities is held by Ms. Luk Chan, the spouse of Mr. Zen Wei Peu, Derek.
SHARE OPTIONS
-
The Company
A share option scheme (the "Share Option Scheme") was adopted by the Company at the annual general meeting held on 15th May, 2012. No options have been granted under the Share Option Scheme since its adoption.
- Associated Corporation
The share option scheme was adopted by Road King on 8th May, 2013 ("Road King Share Option Scheme"). As at 30th June, 2020, Road King has granted 3,500,000 share options under Road King Share Option Scheme to two existing Directors of the Company, all share options granted to those Directors have been exercised.
Save as disclosed above, none of the Directors nor their associates had any interests in the securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO).
Save as disclosed above, none of the Directors nor their spouses or children under 18 years of age were granted or had exercised any rights to subscribe for any securities of the Company or any of its associated corporations.
Wai Kee Holdings Limited | Interim Report 2020 |
14
Disclosure of Interests
SUBSTANTIAL SHAREHOLDERS' INTERESTS
As at 30th June, 2020, so far as is known to any Director of the Company, the following persons (other than Directors of the Company) have interests or short positions in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO:
Percentage | ||||
Capacity/ | of the issued | |||
Nature of | Number of shares held | ordinary | ||
Name of shareholder | interest | Long position | Short position | share capital |
(note 1) | ||||
% | ||||
Cheng Yu Tung Family (Holdings) Limited | Corporate | 182,268,000 | - | 22.98 |
(note 2) | ||||
Cheng Yu Tung Family (Holdings II) Limited | Corporate | 182,268,000 | - | 22.98 |
(note 3) | ||||
Chow Tai Fook Capital Limited (note 4) | Corporate | 182,268,000 | - | 22.98 |
Chow Tai Fook (Holding) Limited (note 5) | Corporate | 182,268,000 | - | 22.98 |
Chow Tai Fook Enterprises Limited (note 6) | Corporate | 182,268,000 | - | 22.98 |
New World Development Company Limited | Corporate | 182,268,000 | - | 22.98 |
(note 7) | ||||
NWS Holdings Limited (note 8) | Corporate | 182,268,000 | - | 22.98 |
NWS Service Management Limited | Corporate | 182,268,000 | - | 22.98 |
(incorporated in the Cayman Islands) | ||||
(note 9) | ||||
NWS Service Management Limited | Corporate | 182,268,000 | - | 22.98 |
(incorporated in the British Virgin Islands) | ||||
(note 10) | ||||
Vast Earn Group Limited (note 11) | Beneficial owner | 182,268,000 | - | 22.98 |
Wai Kee Holdings Limited | Interim Report 2020 |
15
Disclosure of Interests
SUBSTANTIAL SHAREHOLDERS' INTERESTS (Cont'd)
Notes:
- Long position in the shares (other than pursuant to equity derivatives such as share options, warrants to subscribe or convertible bonds).
- Cheng Yu Tung Family (Holdings) Limited is deemed to be interested in the shares through its interests in more than one-third of the issued share capital of Chow Tai Fook Capital Limited.
- Cheng Yu Tung Family (Holdings II) Limited is deemed to be interested in the shares through its interests in more than one-third of the issued share capital of Chow Tai Fook Capital Limited.
- Chow Tai Fook Capital Limited is deemed to be interested in the shares through its interests in its subsidiary, namely Chow Tai Fook (Holding) Limited.
- Chow Tai Fook (Holding) Limited is deemed to be interested in the shares through its interests in its wholly owned subsidiary, namely Chow Tai Fook Enterprises Limited.
- Chow Tai Fook Enterprises Limited is deemed to be interested in the shares through its interests in more than one-third of the issued share capital of New World Development Company Limited.
- New World Development Company Limited is deemed to be interested in the shares through its interests in its subsidiary, namely NWS Holdings Limited.
- NWS Holdings Limited is deemed to be interested in the shares through its interests in its wholly owned subsidiary, namely NWS Service Management Limited (incorporated in the Cayman Islands). Both Mr. Cheng Chi Ming, Brian and Mr. Ho Gilbert Chi Hang are executive directors of NWS Holdings Limited.
- NWS Service Management Limited (incorporated in the Cayman Islands) is deemed to be interested in the shares through its interests in its wholly owned subsidiary, namely NWS Service Management Limited (incorporated in the British Virgin Islands). Both Mr. Cheng Chi Ming, Brian and Mr. Ho Gilbert Chi Hang are directors of NWS Service Management Limited (incorporated in the Cayman Islands).
- NWS Service Management Limited (incorporated in the British Virgin Islands) is deemed to be interested in the shares through its interests in its wholly owned subsidiary, namely Vast Earn Group Limited. Both Mr. Cheng Chi Ming, Brian and Mr. Ho Gilbert Chi Hang are directors of NWS Service Management Limited (incorporated in the British Virgin Islands).
- Vast Earn Group Limited is a wholly owned subsidiary of NWS Service Management Limited (incorporated in the British Virgin Islands). Both Mr. Cheng Chi Ming, Brian and Mr. Ho Gilbert Chi Hang are directors of Vast Earn Group Limited.
Save as disclosed above, no other person (other than Directors of the Company) has an interest or a short position in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO.
Wai Kee Holdings Limited | Interim Report 2020 |
16
Corporate Governance
CORPORATE GOVERNANCE CODE
The Company has complied with the code provisions of Corporate Governance Code set out in Appendix 14 of the Listing Rules throughout the six months ended 30th June, 2020.
DIRECTORS' SECURITIES TRANSACTIONS
The Company has adopted the Model Code set out in Appendix 10 of the Listing Rules as its own code of conduct regarding Directors' Securities Transactions. All Directors of the Company have confirmed, following specific enquiry, that they have complied with the Model Code throughout the six months ended 30th June, 2020.
Wai Kee Holdings Limited | Interim Report 2020 |
17
Other Information
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the six months ended 30th June, 2020.
AUDIT COMMITTEE
The Audit Committee has reviewed with management, internal auditor and external auditor the accounting policies adopted by the Group and the unaudited interim financial information for the six months ended 30th June, 2020.
EMPLOYEES AND REMUNERATION POLICIES
At 30th June, 2020, the Group had 2,562 employees (31st December, 2019: 2,364 employees), of which 2,430
(31st December, 2019: 2,308) were located in Hong Kong, 131 (31st December, 2019: 55) were located in the PRC
and 1 (31st December, 2019: 1) was located in UAE. For the six months ended 30th June, 2020, the Group's total
staff costs were HK$633 million (six months ended 30th June, 2019: HK$645 million).
Competitive remuneration packages are structured to commensurate with individual responsibilities, qualification, experience and performance. In addition, discretionary bonuses may be paid depending upon the financial performance of the Group as well as the performance of the individual.
The emoluments of executive directors and senior management are determined by the Remuneration Committee with reference to salaries paid by comparable companies, their responsibilities, employment conditions and prevailing market conditions.
DISCLOSURES PURSUANT TO RULES 13.18 AND 13.21 OF THE LISTING RULES
- On 12th October, 2017, the Company confirmed its acceptance of a facility letter issued by a bank in respect of a term loan facility of up to HK$273 million (the "Banking Facility") with the final maturity date falling 3 years from the date of the bank's receipt of the Company's acceptance of the facility letter. Throughout the life of the Banking Facility, Mr. Zen Wei Pao, William and Mr. Zen Wei Peu, Derek should collectively maintain at least 43% shareholding interest in the Company and maintain management control in the Company.
- On 2nd November, 2018, Wai Kee Finance Limited, a wholly owned subsidiary of the Company, as borrower, the Company as guarantor and a bank as lender entered into a facility agreement in respect of HK$760 million term loan facility (the "Facility") with final maturity date falling on 42 months from the first utilisation date of the Facility. Throughout the life of the Facility, (i) Mr. Zen Wei Pao, William and Mr. Zen Wei Peu, Derek should be executive directors of the Company; and (ii) Mr. Zen Wei Pao, William and Mr. Zen Wei Peu, Derek collectively own (directly or indirectly) at least 40% of beneficial shareholding interest in the issued share capital of the Company.
Save as disclosed above, as at 30th June, 2020, the Company did not have other disclosure obligations under Rules 13.18 and 13.21 of the Listing Rules.
Wai Kee Holdings Limited | Interim Report 2020 |
18
Other Information
DISCLOSURE PURSUANT TO RULE 13.51B(1) OF THE LISTING RULES
Upon enquiry by the Company, save as disclosed below, there is no change in the information of the Directors required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules since the Company's last published annual report:
Name of Director | Details of changes |
Ho Gilbert Chi Hang | Mr. Ho has been appointed as a committee member of the Industry Advisory |
Committee of Insurance Authority with effect from 1st June, 2020. |
APPRECIATION
The Board would like to take this opportunity to extend its heartiest thanks to our shareholders, business partners, directors and our loyal and dedicated staff.
By Order of the Board
Wai Kee Holdings Limited
Zen Wei Pao, William
Chairman
Hong Kong, 18th August, 2020
Wai Kee Holdings Limited | Interim Report 2020 |
19
Report on Review of Condensed Consolidated Financial Statements
TO THE BOARD OF DIRECTORS OF WAI KEE HOLDINGS LIMITED (incorporated in Bermuda with limited liability)
INTRODUCTION
We have reviewed the condensed consolidated financial statements of Wai Kee Holdings Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 21 to 43, which comprise the condensed consolidated statement of financial position as of 30th June, 2020 and the related condensed consolidated statement of profit or loss, statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and certain explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 "Interim Financial Reporting" ("HKAS 34") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"). The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
SCOPE OF REVIEW
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the HKICPA. A review of these condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
18th August, 2020
Wai Kee Holdings Limited | Interim Report 2020 |
20
Condensed Consolidated Statement of Profit or Loss
For the six months ended 30th June, 2020
Six months ended 30th June, | |||
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
Notes | HK$'000 | HK$'000 | |
Revenue from goods and services | 3 | 3,892,407 | 3,738,115 |
Cost of sales | (3,425,584) | (3,367,956) | |
Gross profit | 466,823 | 370,159 | |
Other income | 5 | 43,621 | 41,859 |
Other gains and losses | 6 | 120,865 | 23,139 |
Selling and distribution costs | (37,976) | (45,007) | |
Administrative expenses | (228,758) | (221,068) | |
Finance costs | 7 | (34,814) | (37,437) |
Share of results of associates | 188,239 | 375,917 | |
Share of results of joint ventures | (12,262) | (2,309) | |
Profit before tax | 8 | 505,738 | 505,253 |
Income tax expense | 9 | (13,185) | (45,205) |
Profit for the period | 492,553 | 460,048 | |
Profit for the period attributable to: | |||
Owners of the Company | 403,935 | 397,660 | |
Non-controlling interests | 88,618 | 62,388 | |
492,553 | 460,048 | ||
HK$ | HK$ | ||
Earnings per share | 11 | ||
- Basic | 0.51 | 0.50 |
Wai Kee Holdings Limited | Interim Report 2020 |
21
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the six months ended 30th June, 2020
Six months ended 30th June, | ||
2020 | 2019 | |
(Unaudited) | (Unaudited) | |
HK$'000 | HK$'000 | |
Profit for the period | 492,553 | 460,048 |
Other comprehensive (expense) income | ||
Items that may be reclassified subsequently to profit or loss: | ||
Exchange differences arising on translation of foreign operations | (5,268) | (237) |
Share of translation reserve of an associate | (93,483) | 7,273 |
Share of translation reserves of joint ventures | (892) | (374) |
Share of cash flow hedging reserve of an associate | (41,432) | - |
Other comprehensive (expense) income for the period | (141,075) | 6,662 |
Total comprehensive income for the period | 351,478 | 466,710 |
Total comprehensive income for the period attributable to: | ||
Owners of the Company | 265,556 | 404,256 |
Non-controlling interests | 85,922 | 62,454 |
351,478 | 466,710 |
Wai Kee Holdings Limited | Interim Report 2020 |
22
Condensed Consolidated Statement of Financial Position
At 30th June, 2020
30th June, | 31st December, | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
Notes | HK$'000 | HK$'000 | |
Non-current assets | 419,373 | ||
Property, plant and equipment | 12 | 300,436 | |
Right-of-use assets | 12 | 28,807 | 31,537 |
Intangible assets | 201,570 | 224,270 | |
Goodwill | 29,838 | 29,838 | |
Interests in associates | 13 | 7,970,539 | 8,053,725 |
Interests in joint ventures | 14 | 275,257 | 276,681 |
Financial assets at fair value through profit or loss ("FVTPL") | 15 | - | 60,805 |
Other financial asset at amortised cost | 34,447 | 36,144 | |
Debtors, deposits and prepayments | 16 | 82,374 | 55,875 |
9,042,205 | 9,069,311 | ||
Current assets | 51,670 | ||
Inventories | 49,706 | ||
Debtors, deposits and prepayments | 16 | 745,802 | 572,218 |
Contract assets | 17 | 1,528,616 | 2,135,584 |
Amounts due from associates | 10,026 | 10,089 | |
Amounts due from other partners of joint operations | 43,596 | 176,910 | |
Tax recoverable | 28,412 | 6,015 | |
Financial assets at FVTPL | 15 | 196,329 | 87,710 |
Cash held on behalf of customers | 18 | 15,283 | 42,960 |
Pledged bank deposits | 19 | 64,678 | 64,170 |
Time deposits with original maturity of not less than three months | 284 | 76,782 | |
Bank balances and cash | 2,038,497 | 2,061,360 | |
4,723,193 | 5,283,504 | ||
Current liabilities | 2,412,737 | ||
Creditors and accrued charges | 20 | 2,899,210 | |
Contract liabilities | 813,934 | 779,716 | |
Amount due to an associate | 19,896 | 18,791 | |
Amounts due to joint ventures | - | 1,142 | |
Amounts due to other partners of joint operations | 6,405 | 2,152 | |
Amounts due to non-controlling shareholders | 3,359 | 3,359 | |
Lease liabilities | 33,839 | 33,769 | |
Tax liabilities | 55,021 | 175,596 | |
Bank loans | 21 | 626,293 | 563,731 |
Bonds | 41,948 | 115,829 | |
4,013,432 | 4,593,295 | ||
Net current assets | 709,761 | 690,209 | |
Total assets less current liabilities | 9,751,966 | 9,759,520 |
Wai Kee Holdings Limited | Interim Report 2020 |
23
Condensed Consolidated Statement of Financial Position
At 30th June, 2020
30th June, | 31st December, | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
Notes | HK$'000 | HK$'000 | |
Non-current liabilities | 134,411 | ||
Payable for extraction right | 176,820 | ||
Provision for rehabilitation costs | 22,131 | 21,517 | |
Deferred tax liabilities | 5,750 | 5,750 | |
Obligations in excess of interests in associates | 13 | 15,289 | 15,511 |
Obligations in excess of interests in joint ventures | 14 | 110 | 27 |
Amount due to an associate | 1,933 | 2,712 | |
Lease liabilities | 16,036 | 23,837 | |
Bank loans | 21 | 289,900 | 382,050 |
Bonds | 123,680 | 123,925 | |
609,240 | 752,149 | ||
Net assets | 9,142,726 | 9,007,371 | |
Capital and reserves | 79,312 | ||
Share capital | 79,312 | ||
Share premium and reserves | 8,507,964 | 8,432,758 | |
Equity attributable to owners of the Company | 8,587,276 | 8,512,070 | |
Non-controlling interests | 555,450 | 495,301 | |
Total equity | 9,142,726 | 9,007,371 |
Wai Kee Holdings Limited | Interim Report 2020 |
24
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30th June, 2020
Equity attributable to owners of the Company | |||||||||||
Share | Share | Translation | Special | Assets | Other | Retained | Non- | Total | |||
revaluation | Total | controlling | |||||||||
capital | premium | reserve | reserve | reserve | reserve | profits | interests | equity | |||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||
(note a) | (note b) | ||||||||||
At 1st January, 2019 (audited) | 79,312 | 731,906 | 308,187 | (29,530) | 2,319 | 415,861 | 6,278,990 | 7,787,045 | 406,089 | 8,193,134 | |
Profit for the period | - | - | - | - | - | - | 397,660 | 397,660 | 62,388 | 460,048 | |
Other comprehensive income | - | - | 6,596 | - | - | - | - | 6,596 | 66 | 6,662 | |
for the period | |||||||||||
Total comprehensive income for | - | - | 6,596 | - | - | - | 397,660 | 404,256 | 62,454 | 466,710 | |
the period | |||||||||||
Sub-total | 79,312 | 731,906 | 314,783 | (29,530) | 2,319 | 415,861 | 6,676,650 | 8,191,301 | 468,543 | 8,659,844 | |
Acquisition of additional | |||||||||||
interests in subsidiaries | - | - | - | - | - | (172) | - | (172) | (9,911) | (10,083) | |
(note c) | |||||||||||
Distribution to non-controlling | - | - | - | - | - | - | - | - | (23,625) | (23,625) | |
shareholders | |||||||||||
Dividend paid (note 10) | - | - | - | - | - | - | (185,591) | (185,591) | - | (185,591) | |
At 30th June, 2019 (unaudited) | 79,312 | 731,906 | 314,783 | (29,530) | 2,319 | 415,689 | 6,491,059 | 8,005,538 | 435,007 | 8,440,545 | |
At 1st January, 2020 (audited) | 79,312 | 731,906 | 14,332 | (29,530) | 2,319 | 413,775 | 7,299,956 | 8,512,070 | 495,301 | 9,007,371 | |
Profit for the period | - | - | - | - | - | - | 403,935 | 403,935 | 88,618 | 492,553 | |
Other comprehensive expenses | - | - | (96,947) | - | - | (41,432) | - | (138,379) | (2,696) | (141,075) | |
for the period | |||||||||||
Total comprehensive (expenses) | - | - | (96,947) | - | - | (41,432) | 403,935 | 265,556 | 85,922 | 351,478 | |
income for the period | |||||||||||
Sub-total | 79,312 | 731,906 | (82,615) | (29,530) | 2,319 | 372,343 | 7,703,891 | 8,777,626 | 581,223 | 9,358,849 | |
Distribution to non-controlling | - | - | - | - | - | - | - | - | (25,773) | (25,773) | |
shareholders | |||||||||||
Dividend paid (note 10) | - | - | - | - | - | - | (190,350) | (190,350) | - | (190,350) | |
At 30th June, 2020 (unaudited) | 79,312 | 731,906 | (82,615) | (29,530) | 2,319 | 372,343 | 7,513,541 | 8,587,276 | 555,450 | 9,142,726 |
Notes:
- The special reserve represents the difference between the nominal value of the shares of the acquired subsidiaries and the nominal value of the Company's shares issued for the acquisition at the time of the group reorganisation in 1992.
- The other reserve represents (i) the difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company regarding the changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries; and (ii) the share of other reserve of an associate of the Group.
- During the six months ended 30th June, 2019, the Group had paid cash considerations of HK$1,516,000 and HK$8,567,000 to acquire 0.15% and 49% additional interests in two subsidiaries from non-controlling shareholders respectively. The difference between the considerations paid by the Group and the attributable equity interests in the subsidiaries was debited to other reserve.
Wai Kee Holdings Limited | Interim Report 2020 |
25
Condensed Consolidated Statement of Cash Flows
For the six months ended 30th June, 2020
Six months ended 30th June, | |||
2020 | 2019 | ||
Note | (Unaudited) | (Unaudited) | |
HK$'000 | HK$'000 | ||
Net cash (used in) from operating activities | (37,823) | 528,098 | |
Investing activities | 10,898 | 12,118 | |
Interest received | |||
Dividends received from associates | 284,236 | 291,160 | |
Dividends received from joint ventures | 5,464 | 4,079 | |
Net cash inflow arising from acquisition of a subsidiary | - | 133,161 | |
Proceeds from disposal of financial assets at FVTPL | 3,906 | 47,340 | |
Proceeds from disposal of property, plant and equipment | 4,629 | 1,151 | |
Purchase of property, plant and equipment | (168,067) | (8,442) | |
Purchase of right-of-use assets | (664) | - | |
Distribution received prior to the liquidation of financial asset | 118,938 | - | |
at FVTPL | |||
Acquisition of additional interest in an associate | (65,952) | - | |
Capital contribution to a joint venture | (12) | - | |
Repayments from associates | 63 | 396 | |
Loans to a joint venture | (17,098) | - | |
Loans repayment from joint ventures | - | 2,243 | |
Advance to a joint venture | - | (2,027) | |
Repayments from (advances to) other partners of joint operations | 126,419 | (33,321) | |
Placement of pledged bank deposits | (508) | (62,981) | |
Placement of time deposits | (284) | (290,000) | |
Withdrawal of time deposits | 76,782 | 254,400 | |
Net cash from investing activities | 378,750 | 349,277 | |
Financing activities | (23,410) | (23,688) | |
Interest paid | 10 | ||
Dividend paid | (190,350) | (185,591) | |
Acquisition of additional interests in subsidiaries | - | (10,083) | |
Distribution to non-controlling shareholders | (25,773) | (23,625) | |
Advances from (repayments to) other partners of joint operations | 4,253 | (680) | |
Repayments of lease liabilities | (20,419) | (15,904) | |
New bank loans raised | 59,045 | 55,649 | |
Repayments of bank loans | (87,410) | (184,285) | |
Bonds issued | - | 9,800 | |
Repayment of bonds | (77,000) | - | |
Net cash used in financing activities | (361,064) | (378,407) | |
Net (decrease) increase in cash and cash equivalents | (20,137) | 498,968 | |
Cash and cash equivalents at the beginning of the period | 2,061,360 | 1,526,070 | |
Effect of foreign exchange rate changes, net | (2,726) | (192) | |
Cash and cash equivalents at the end of the period | 2,038,497 | 2,024,846 | |
Analysis of the balance of cash and cash equivalents | 2,038,497 | 2,024,846 | |
Bank balances and cash |
Wai Kee Holdings Limited | Interim Report 2020 |
26
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
1. BASIS OF PREPARATION
The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange").
2. SIGNIFICANT ACCOUNTING POLICIES
The condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair values.
Other than changes in accounting policies resulting from application of amendments to Hong Kong Financial Reporting Standards ("HKFRSs"), the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30th June, 2020 are the same as those followed in the preparation of the consolidated financial statements for the year ended 31st December, 2019.
Application of amendments to HKFRSs
In the current interim period, the Group has applied the Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the HKICPA, for the first time, which are mandatory effective for the annual period beginning on or after 1st January, 2020 for the preparation of the Group's condensed consolidated financial statements:
Amendments to HKAS 1 and HKAS 8 | Definition of Material |
Amendments to HKFRS 3 | Definition of a Business |
Amendments to HKFRS 9, HKAS 39 | Interest Rate Benchmark Reform |
and HKFRS 7 |
Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current interim period has had no material effect on the Group's financial performance and positions for the current and prior periods and/or on the disclosures set out in the condensed consolidated financial statements.
Impacts of application on Amendments to HKAS 1 and HKAS 8 "Definition of Material"
The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence 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." The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.
The application of the amendments in the current period had no impact on the condensed consolidated financial statements. Changes in presentation and disclosures on the application of the amendments, if any, will be reflected on the consolidated financial statements for the year ending 31st December, 2020.
Wai Kee Holdings Limited | Interim Report 2020 |
27
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
3. REVENUE FROM GOODS AND SERVICES
Disaggregation of revenue from contracts with customers
Six months ended 30th June, | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Type of goods and services | ||
Construction contracts | 3,667,777 | 3,529,495 |
Sewage treatment plant operation | 13,367 | 11,468 |
Steam fuel plant operation | 8,233 | - |
Sale of construction materials | 157,466 | 167,388 |
Sale of quarry products | 45,564 | 29,764 |
3,892,407 | 3,738,115 | |
Timing of revenue recognition | ||
At a point in time | 203,030 | 197,152 |
Over time | 3,689,377 | 3,540,963 |
3,892,407 | 3,738,115 |
4. SEGMENT INFORMATION
Information reported to the executive directors of the Company, being the chief operating decision maker, for the purposes of resource allocation and assessment of segment performance focuses on types of goods delivered or services provided. This is also the basis upon which the Group is organised. No operating segments have been aggregated in arriving at the reportable segments of the Group. The Group's reportable and operating segments under HKFRS 8 are summarised as follows:
Construction, sewage treatment and steam fuel
- construction of civil engineering and building projects
- operation of sewage treatment plant
- operation of steam fuel plant
Construction materials
- production and sale of concrete
- production, sale and laying of asphalt
Quarrying
- production and sale of quarry products
Property development and investment, toll road, investment and asset management
- strategic investment in Road King Infrastructure Limited ("Road King"), the Group's 43.42% (31st December, 2019: 42.62%) associate whose shares are listed on the Main Board of the Stock Exchange
Wai Kee Holdings Limited | Interim Report 2020 |
28
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
4. SEGMENT INFORMATION (Cont'd)
Segment revenue and results
The following is an analysis of the segment revenue and profit (loss) for each reportable and operating segment:
Six months ended 30th June, 2020
Segment revenue | |||||
Inter-segment | Segment | ||||
Gross | elimination | External | profit (loss) | ||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||
Construction, sewage treatment and | |||||
steam fuel | 3,719,131 | (29,754) | 3,689,377 | 118,702 | |
Construction materials | 201,748 | (44,282) | 157,466 | 176 | |
Quarrying | 85,597 | (40,033) | 45,564 | (328) | |
Property development and investment, | |||||
toll road, investment and asset management | - | - | - | 189,352 | |
Total | 4,006,476 | (114,069) | 3,892,407 | 307,902 | |
Six months ended 30th June, 2019 | |||||
Segment revenue | |||||
Inter-segment | Segment | ||||
Gross | elimination | External | profit (loss) | ||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||
Construction and sewage treatment | 3,569,361 | (28,398) | 3,540,963 | 93,109 | |
Construction materials | 230,057 | (62,669) | 167,388 | (44,420) | |
Quarrying | 88,284 | (58,520) | 29,764 | (14,873) | |
Property development and investment, | |||||
toll road, investment and asset management | - | - | - | 368,090 | |
Total | 3,887,702 | (149,587) | 3,738,115 | 401,906 | |
Segment profit (loss) represents profit (loss) after tax and non-controlling interests for each reportable and operating segment and includes other income, other gains and losses, share of results of associates and share of results of joint ventures which are attributable to reportable and operating segments, but excluding corporate income and expenses (including staff costs, other administrative expenses and finance costs), other gains and losses, share of results of associates and share of results of joint ventures which are not attributable to any of the reportable and operating segments and are classified as unallocated items. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and performance assessment.
Wai Kee Holdings Limited | Interim Report 2020 |
29
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
4. SEGMENT INFORMATION (Cont'd)
Reconciliation of total segment profit to profit attributable to owners of the Company
Six months ended 30th June, | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Total segment profit | 307,902 | 401,906 |
Unallocated items | ||
Other income | 4,825 | 5,388 |
Other gains and losses | 141,957 | 21,342 |
Administrative expenses | (22,525) | (20,341) |
Finance costs | (17,301) | (17,559) |
Share of results of associates | (235) | 9,600 |
Share of results of joint ventures | (10,688) | (2,676) |
Profit attributable to owners of the Company | 403,935 | 397,660 |
5. | OTHER INCOME | ||
Six months ended 30th June, | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
Other income includes: | |||
Dividend income from financial asset at FVTPL | 2,642 | 2,641 | |
Interest on financial assets at FVTPL | 923 | - | |
Interest on other debtors | 4,234 | 253 | |
Interest on bank deposits | 8,685 | 9,878 | |
Interest on amounts due from associates | - | 74 | |
Interest on loans to a joint venture | - | 1,576 | |
Interest on other financial asset at amortised cost | 454 | 496 | |
Operation fee income | 18,666 | 8,954 | |
The People's Republic of China (the "PRC") value-added tax refund | - | 851 | |
Rental income from land and buildings | 231 | 275 | |
Rental income from plant and machinery | 1,342 | 1,320 | |
Service income from associates | 30 | 40 |
Wai Kee Holdings Limited | Interim Report 2020 |
30
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
6. | OTHER GAINS AND LOSSES | ||
Six months ended 30th June, | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
Gain on bargain purchase on acquisition of additional interest | |||
in an associate (note) | 81,996 | - | |
Gain on change in fair value of financial assets at FVTPL, net | 45,361 | 5,531 | |
Gain (loss) on disposal of property, plant and equipment, net | 518 | (2,602) | |
Gain on modification of terms of bond | - | 19,842 | |
Gain on bargain purchase on acquisition of a subsidiary | - | 368 | |
Impairment loss on amount due from other partner of | |||
a joint operation | (7,010) | - | |
120,865 | 23,139 |
Note: During the six months ended 30th June, 2020, the Group purchased 6,000,000 (six months ended 30th June, 2019: nil) ordinary shares in Road King at an aggregate consideration of HK$65,952,000 (six months ended 30th June, 2019: nil). The Group's interest in Road King increased in aggregate by 0.8% (six months ended 30th June, 2019: nil) resulting in gain on bargain purchase of HK$81,996,000 (six months ended 30th June, 2019: nil) on acquisition of additional interest in Road King.
7. | FINANCE COSTS | ||
Six months ended 30th June, | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
Interest on bank loans | 20,667 | 19,175 | |
Interest on bonds | 2,900 | 4,770 | |
Imputed interest on bonds | 2,717 | 2,157 | |
Imputed interest on payable for extraction right | 6,555 | 8,693 | |
Imputed interest on provision for rehabilitation costs | 814 | 1,167 | |
Imputed interest on non-currentinterest-free amount | |||
due to an associate | 326 | 312 | |
Interest on lease liabilities | 835 | 1,163 | |
34,814 | 37,437 |
Wai Kee Holdings Limited | Interim Report 2020 |
31
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
8. PROFIT BEFORE TAX
Profit before tax has been arrived at after charging:
Six months ended 30th June, | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Amortisation of intangible assets (note) | 21,262 | 21,651 |
Depreciation of property, plant and equipment (note) | 43,958 | 101,998 |
Depreciation of right-of-use assets | 15,221 | 15,344 |
Share of income tax expense of associates (included in | ||
share of results of associates) | 356,501 | 447,471 |
Note: Amortisation of intangible assets of HK$19,739,000 (six months ended 30th June, 2019: HK$20,959,000) and depreciation of property, plant and equipment of HK$12,382,000 (six months ended 30th June, 2019: HK$3,947,000) were capitalised in inventories.
9. INCOME TAX EXPENSE
Six months ended 30th June, | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Current tax | ||
Hong Kong | 13,454 | 45,207 |
(Overprovision) underprovision in prior years | ||
Hong Kong | (269) | (40) |
The PRC | - | 38 |
(269) | (2) | |
13,185 | 45,205 |
Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits for both periods.
Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of the EIT Law, the tax rate for the PRC subsidiaries is 25% for both periods. No provision for the PRC income tax has been made as there is no assessable profits for both periods.
Wai Kee Holdings Limited | Interim Report 2020 |
32
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
10. DIVIDEND
Dividend paid and recognised as distribution during the period:
Six months ended 30th June, | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
2019 final dividend - HK24.0 cents per share | ||
(six months ended 30th June, 2019: 2018 final dividend | ||
- HK23.4 cents per share) | 190,350 | 185,591 |
An interim dividend for the six months ended 30th June, 2020 of HK8 cents (six months ended 30th June, 2019: HK8 cents) per ordinary share amounting to HK$63,450,000 (six months ended 30th June, 2019: HK$63,450,000) was approved by the board of directors of the Company on 18th August, 2020. This interim dividend has not been included as a liability in the condensed consolidated financial statements.
11. EARNINGS PER SHARE
The calculation of the basic earnings per share attributable to owners of the Company is based on the following data:
Six months ended 30th June, | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Earnings for the purpose of basic earnings per share | ||
(Profit for the period attributable to owners of the Company) | 403,935 | 397,660 |
The Company has no dilutive potential ordinary shares in issue during both periods.
Six months ended 30th June,
20202019
Number of ordinary shares for the purpose of basic earnings per share | 793,124,034 | 793,124,034 |
Wai Kee Holdings Limited | Interim Report 2020 |
33
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
12. PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS
During the period, the Group spent HK$168,731,000 (six months ended 30th June, 2019: HK$8,442,000) on additions to property, plant and equipment and right-of-use assets.
13. INTERESTS IN ASSOCIATES/OBLIGATIONS IN EXCESS OF INTERESTS IN ASSOCIATES
30th June, | 31st December, | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Cost of investments in associates | ||
Listed in Hong Kong (note a) | 1,955,225 | 1,889,273 |
Unlisted | 15,090 | 15,090 |
Share of post-acquisition profits, losses and other comprehensive | 1,970,315 | 1,904,363 |
income, net of dividends received | 5,984,935 | 6,133,851 |
7,955,250 | 8,038,214 | |
Represented by: | ||
Interests in associates | 7,970,539 | 8,053,725 |
Obligations in excess of interests in associates (note b) | (15,289) | (15,511) |
7,955,250 | 8,038,214 | |
Fair value of listed investments | 3,409,526 | 4,821,980 |
Notes:
- Included in the cost of investment in the associate listed in Hong Kong, there is goodwill of HK$30,964,000 (31st December, 2019: HK$30,964,000) arising on acquisition of additional interest in the associate during the year ended 31st December, 2007.
- The Group has contractual obligations to share the net liabilities of certain associates.
Wai Kee Holdings Limited | Interim Report 2020 |
34
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
14. INTERESTS IN JOINT VENTURES/OBLIGATIONS IN EXCESS OF INTERESTS IN JOINT VENTURES
30th June, | 31st December, | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Cost of investments in unlisted joint ventures | 186,048 | 186,036 |
Share of post-acquisition profits and other comprehensive income, | ||
net of dividends received | 46,404 | 65,021 |
232,452 | 251,057 | |
Loans to joint ventures (note a) | 42,695 | 25,597 |
275,147 | 276,654 | |
Represented by: | ||
Interests in joint ventures | 275,257 | 276,681 |
Obligations in excess of interests in joint ventures (note b) | (110) | (27) |
275,147 | 276,654 |
Notes:
- The loans to joint ventures are unsecured, interest-free and have no fixed terms of repayment. In the opinion of the directors, the loans are considered as part of the Group's net investments in the joint ventures.
- The Group has contractual obligations to share the net liabilities of certain joint ventures.
Wai Kee Holdings Limited | Interim Report 2020 |
35
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
15. FINANCIAL ASSETS AT FVTPL
30th June, | 31st December, | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Financial assets mandatorily measured at FVTPL | ||
Listed equity securities in Hong Kong | 33,590 | 48,660 |
Unlisted convertible bonds (note a) | - | 25,674 |
33,590 | 74,334 | |
Financial assets designated at FVTPL | ||
Quoted equity securities (note b) | 11,286 | 13,376 |
Unlisted equity securities (note c) | - | 60,805 |
Quoted debt securities (note d) | 151,453 | - |
162,739 | 74,181 | |
196,329 | 148,515 | |
Classified under: | ||
Non-current assets | - | 60,805 |
Current assets | 196,329 | 87,710 |
196,329 | 148,515 |
Wai Kee Holdings Limited | Interim Report 2020 |
36
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
15. FINANCIAL ASSETS AT FVTPL (Cont'd)
Notes:
-
The unlisted convertible bonds were issued by a private entity (the "Private Entity") incorporated in the United States of America (the "USA"). The Private Entity is engaged in manufacture and sale of pharmaceutical products. The unlisted convertible bonds were matured on 15th January, 2020. On the same day, the Private Entity entered into an extension agreement with the Group pursuant to which the repayment date of the principal amount of US$3,150,000 (the "Loan") is extended to 15th June, 2020 and interest bearing at 11% per annum. On 15th June, 2020, the Private Entity and the Group further agreed that the repayment date of the Loan is further extended to 15th June, 2023 ("Loan Due Date") and interest bearing at 12% per annum. The amount is reclassified to non-current other debtors at 30th June, 2020.
On 13th July, 2020, the Private Entity issued contingent common stock purchase warrant (the "Warrant") to the Group to purchase from the Private Entity up to its 1,250,000 common shares ("Warrant Shares") at an exercise price of US$2.05 each. Pursuant to the terms of the Warrant, if full repayment of the Loan ("Repayment") is made on or before 15th June, 2022, the Warrant shall become exercisable for 500,000 Warrant Shares for the period from the date of Repayment to 15th June, 2025. If either Repayment is made during the period from 16th June, 2022 to Loan Due Date or no Repayment is made on Loan Due Date, the Warrant shall become exercisable for 1,250,000 Warrant Shares for the period from either the date of Repayment or Loan Due Date to 15th June, 2025. - The quoted equity securities represent investment in equity securities issued by a private entity incorporated in the USA. It has been acquired principally for the purpose of selling in the near term. The quoted equity securities are available for trading at the USA's Over-The-Counter ("OTC") market and are revalued according to the available quoted OTC price at the end of each reporting period.
- At 31st December, 2019, the unlisted equity securities represented investment in unlisted equity securities issued by a private entity incorporated in the USA which had invested in another US company for property development in the USA. During the six months ended 30th June, 2020, the property development project was completed and the private entity distributed the remaining cash to its shareholders prior to its liquidation, of which the Group received HK$118,938,000. For the six months ended 30th June, 2020, a gain on change in fair value of HK$58,133,000 (six months ended 30th June, 2019: HK$1,289,000) was recognised in profit or loss for this investment.
- The quoted debt securities represent investment in bonds issued by listed entities. It has been acquired principally for the purpose of selling in the near term.
Details of measurement of fair values of financial assets at FVTPL are disclosed in note 22.
Wai Kee Holdings Limited | Interim Report 2020 |
37
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
16. DEBTORS, DEPOSITS AND PREPAYMENTS
30th June, | 31st December, | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Trade debtors - contracts with customers | 576,683 | 343,643 |
Less: Allowance for credit losses | (5,187) | (5,187) |
571,496 | 338,456 | |
Bills receivables | 2,872 | 20,733 |
Other debtors | 161,284 | 157,958 |
Deposits and prepayments | 92,524 | 110,946 |
828,176 | 628,093 | |
Classified under: | ||
Non-current assets | 82,374 | 55,875 |
Current assets | 745,802 | 572,218 |
828,176 | 628,093 |
At 30th June, 2020, the Group's trade debtors included an amount of HK$22,795,000 (31st December, 2019: HK$11,433,000) due from related companies which are a subsidiary and an associate of a substantial shareholder of the Company.
The Group allows an average credit period of 60 days to its trade customers. The following is an aged analysis of trade debtors (net of allowance for credit losses) presented based on the invoice date:
30th June, | 31st December, | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Trade debtors | ||
0 to 60 days | 524,706 | 298,617 |
61 to 90 days | 13,800 | 8,167 |
Over 90 days | 32,990 | 31,672 |
571,496 | 338,456 |
Bills receivables of the Group normally mature within 90 days from the bills receipt date.
As part of the internal credit risk management, the Group applies internal credit rating for its customers. The exposure to credit risk for trade debtors are assessed collectively based on provision matrix within lifetime expected credit losses ("ECL") (not credit-impaired)/individually. Debtors with significant balances and credit- impaired with gross amount of HK$508,285,000 (31st December, 2019: HK$264,528,000) and HK$6,971,000 (31st December, 2019: HK$13,660,000), respectively at 30th June, 2020 were assessed individually. After the assessment performed by the Group, the impairment allowance on trade debtors based on the provision matrix is insignificant to the Group for both periods.
Wai Kee Holdings Limited | Interim Report 2020 |
38
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
17. CONTRACT ASSETS
30th June, | 31st December, | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Analysed as current: | ||
Unbilled revenue of construction contracts (note a) | 1,007,378 | 1,573,075 |
Retention receivables of construction contracts (note b) | 521,238 | 562,509 |
1,528,616 | 2,135,584 | |
Retention receivables of construction contracts | ||
Due within one year | 104,953 | 194,721 |
Due after one year | 416,285 | 367,788 |
521,238 | 562,509 |
Notes:
- Unbilled revenue included in contract assets represents the Group's right to receive consideration for work completed and not yet billed because the rights are conditional upon the satisfaction by the customers on the construction work completed by the Group and the work is pending for the certification by the customers. The contract assets are transferred to the trade debtors when the rights become unconditional, which is typically at the time the Group obtains the certification of the completed construction work from the customers.
- Retention receivables included in contract assets represents the Group's right to receive consideration for work performed and not yet billed because the rights are conditional on the satisfaction of the service quality by the customers over a certain period as stipulated in the contracts. The contract assets are transferred to the trade debtors when the rights become unconditional, which is typically at the expiry date of the period for the provision of assurance by the Group on the service quality of the construction work performed by the Group.
At 30th June, 2020, the Group's unbilled revenue and retention receivables included amounts of HK$39,120,000 (31st December, 2019: HK$78,883,000) and HK$14,761,000 (31st December, 2019: HK$35,100,000) respectively due from related companies which are subsidiaries of a substantial shareholder of the Company.
As part of the internal credit risk management, the Group applies internal credit rating for its customers in relation to construction contracts. The exposure to credit risk and ECL for contract assets are assessed individually. After the assessment performed by the Group, the impairment allowance on contract assets is insignificant to the Group for both periods.
Wai Kee Holdings Limited | Interim Report 2020 |
39
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
18. CASH HELD ON BEHALF OF CUSTOMERS
WK Securities Limited, a wholly owned subsidiary of the Company, maintains segregated account with authorised institution to hold client's money arising from its normal course of business.
The Group has classified the client's money as cash held on behalf of customers under current assets and recognised corresponding amount payable to respective client on the grounds that it is liable for any loss or misappropriation of client's money.
The cash held on behalf of customers is restricted and governed by the Hong Kong Securities and Futures (Client Money) Rules under the Hong Kong Securities and Futures Ordinance.
At 30th June, 2020, cash held on behalf of customers included an aggregate amount of HK$3,507,000 (31st December, 2019: HK$37,285,000) held on behalf of certain directors of the Company. The same amount is payable to these directors of the Company and included in creditors and accrued charges.
19. PLEDGED BANK DEPOSITS
At 30th June, 2020, bank deposits of the Group amounting to HK$64,678,000 (31st December, 2019: HK$64,170,000) were pledged to banks for securing certain banking facilities granted to the Group.
20. CREDITORS AND ACCRUED CHARGES
30th June, | 31st December, | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Trade creditors (aged analysis based on the invoice date): | ||
0 to 60 days | 149,798 | 290,780 |
61 to 90 days | 3,514 | 94,823 |
Over 90 days | 24,798 | 66,431 |
178,110 | 452,034 | |
Retention payables | 441,406 | 434,822 |
Accrued project costs | 1,584,502 | 1,751,318 |
Payable for extraction right | 83,665 | 81,406 |
Other creditors and accrued charges | 125,054 | 179,630 |
2,412,737 | 2,899,210 | |
Retention payables | ||
Due within one year | 128,912 | 154,626 |
Due after one year | 312,494 | 280,196 |
441,406 | 434,822 |
Wai Kee Holdings Limited | Interim Report 2020 |
40
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
21. BANK LOANS
30th June, | 31st December, | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
The maturity of the bank loans that based on repayment schedules of | ||
respective loan agreements is as follows: | ||
Within one year | 528,376 | 459,441 |
In the second year | 360,317 | 349,540 |
In the third to fifth year inclusive | 27,500 | 136,800 |
Total | 916,193 | 945,781 |
Less: Amount shown under current liabilities | (626,293) | (563,731) |
Amount shown under non-current liabilities | 289,900 | 382,050 |
Secured | 358,633 | 317,656 |
Unsecured | 557,560 | 628,125 |
916,193 | 945,781 |
At 30th June, 2020, the Group has bank loans in the amount of HK$250,843,000 (31st December, 2019: HK$174,625,000) contain a repayment on demand clause. Accordingly, the related bank loans that are repayable after one year after the end of the reporting period with an aggregate carrying amount of HK$97,917,000 (31st December, 2019: HK$104,290,000) have been classified as current liabilities.
The shares of certain subsidiaries of the Company and certain bank deposits are pledged to secure certain bank loans and banking facilities granted to the Group.
Wai Kee Holdings Limited | Interim Report 2020 |
41
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
22. FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair values of the Group's financial assets and financial liabilities that are measured at fair value on a recurring basis
Some of the Group's financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation techniques and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (Levels 1 to 3) based on the degree to which the inputs to the fair value measurements is observable.
- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Fair value | Valuation techniques | Significant | |||
Financial assets at FVTPL | Fair value at | hierarchy | and key inputs | unobservable inputs | |
30th | 31st | ||||
June, | December, | ||||
2020 | 2019 | ||||
HK$'000 | HK$'000 | ||||
Listed equity securities in Hong Kong | 33,590 | 48,660 | Level 1 | Quoted bid price in an active market | N/A |
Unlisted convertible bonds in USA | - | 25,674 | Level 3 | Discounted cash flow method was | Weighted average cost of capital at |
used to capture the present value | 24.65% | ||||
of the expected future economic | |||||
benefits to be derived from the | |||||
ownership of the debt instruments | |||||
Quoted equity securities in USA | 11,286 | 13,376 | Level 1 | Quoted bid price in the OTC market | N/A |
Unlisted equity securities in USA | - | 60,805 | Level 3 | Discounted cash flow method was | Weighted average cost of capital at |
used to capture the present value | 11.01% | ||||
of the expected future economic | |||||
benefits to be derived from the | |||||
ownership of the investees | |||||
Quoted debt securities | 151,453 | - | Level 1 | Quoted price in an active market | N/A |
The directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the condensed consolidated statement of financial position approximate to their fair values.
Wai Kee Holdings Limited | Interim Report 2020 |
42
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30th June, 2020
23. CAPITAL COMMITMENTS
30th June, | 31st December, | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Capital expenditure in respect of acquisition of property, | ||
plant and equipment contracted for but not provided | ||
in the condensed consolidated financial statements | 44,162 | 55,855 |
24. RELATED PARTY TRANSACTIONS
During the period, the Group entered into the following transactions with related parties:
Six months ended 30th June, | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Associates | ||
Construction contract revenue | 289,258 | 447,273 |
Interest income | - | 74 |
Service income | 30 | 40 |
Joint operations | ||
Sale of construction materials | 14,954 | 23,922 |
Related companies (note) | ||
Construction contract revenue | 10,094 | 111,324 |
Project management fee income | 2,530 | 12,227 |
Sale of construction materials | 40,805 | 8,327 |
Purchase of construction materials | 2 | - |
Compensation of key management personnel | ||
Short-term employee benefits | 74,125 | 47,081 |
Post-employment benefits | 2,009 | 1,780 |
76,134 | 48,861 |
Note: The related companies are subsidiaries and an associate of a substantial shareholder of the Company.
Wai Kee Holdings Limited | Interim Report 2020 |
43
Corporate Information
EXECUTIVE DIRECTORS
ZEN Wei Pao, William (Chairman)
ZEN Wei Peu, Derek
(Vice Chairman and Chief Executive Officer)
CHIU Wai Yee, Anriena
NON-EXECUTIVE DIRECTORS
CHENG Chi Ming, Brian
HO Gilbert Chi Hang
INDEPENDENT NON-EXECUTIVE DIRECTORS
WONG Che Ming, Steve
WAN Siu Kau, Samuel
WONG Man Chung, Francis
AUDIT COMMITTEE
WONG Man Chung, Francis (Chairman)
WONG Che Ming, Steve
WAN Siu Kau, Samuel
NOMINATION COMMITTEE
ZEN Wei Pao, William (Chairman)
WONG Che Ming, Steve
WAN Siu Kau, Samuel
WONG Man Chung, Francis
ZEN Wei Peu, Derek
REMUNERATION COMMITTEE
WAN Siu Kau, Samuel (Chairman)
WONG Che Ming, Steve
WONG Man Chung, Francis
ZEN Wei Pao, William
ZEN Wei Peu, Derek
COMPANY SECRETARY
CHIU Wai Yee, Anriena
AUDITOR
Deloitte Touche Tohmatsu
SOLICITORS
Reed Smith Richards Butler
Conyers Dill & Pearman
Wai Kee Holdings Limited | Interim Report 2020 |
PRINCIPAL BANKERS
The Hongkong and Shanghai Banking
Corporation Limited
The Bank of East Asia, Limited
Hang Seng Bank Limited
Bangkok Bank Public Company Limited
China CITIC Bank International Limited
Shinhan Bank
REGISTERED OFFICE
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
PRINCIPAL PLACE OF BUSINESS
Unit 1103, 11th Floor
East Ocean Centre
98 Granville Road
Tsimshatsui
Kowloon
Hong Kong
PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE
MUFG Fund Services (Bermuda) Limited 4th Floor
North Cedar House
41 Cedar Avenue
Hamilton HM 12 Bermuda
HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE
Tricor Secretaries Limited
Level 54, Hopewell Centre
183 Queen's Road East
Hong Kong
STOCK CODE
The Stock Exchange of Hong Kong Limited - 610
WEBSITE
www.waikee.com
44
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