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.
CHINA GRAPHENE GROUP LIMITED
中 國 烯 谷 集 團 有 限 公 司
(Incorporated in Bermuda with limited liability)
(Stock Code: 63)
ANNOUNCEMENT OF THE UNAUDITED CONSOLIDATED
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2020
The board of directors (the "Board") of China Graphene Group Limited (the "Company") announces that the unaudited consolidated interim results of the Company and its subsidiaries (collectively the "Group") for the six months ended 30 June 2020, together with the comparative figures for the six months ended
30 June 2019, are as follows:
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2020
Six months ended 30 June | |||||
2020 | 2019 | ||||
Notes | HK$'000 | HK$'000 | |||
(Unaudited) | (Unaudited) | ||||
Revenue | 4 | 6,943 | 6,647 | ||
Cost of sales | (384) | (394) | |||
Gross profit | 6,559 | 6,253 | |||
Other income | 5 | 587 | 200 | ||
Other gains and losses | 6 | - | 9,214 | ||
Operating and administrative expenses | (10,769) | (18,549) | |||
Loss from operations | (3,623) | (2,882) | |||
Finance costs | 7 | (2,903) | (4,493) | ||
Loss before taxation | (6,526) | (7,375) | |||
Income tax expenses | 8 | - | - | ||
Loss for the period attributable | |||||
to owners of the Company | 9 | (6,526) | (7,375) | ||
1
Six months ended 30 June | |||||
2020 | 2019 | ||||
Notes | HK$'000 | HK$'000 | |||
(Unaudited) | (Unaudited) | ||||
Other comprehensive expenses | |||||
Items that may be reclassified to profit or loss: | |||||
Exchange differences on translating foreign operations | (5) | (17) | |||
Other comprehensive expenses for the period, | |||||
net of tax | (5) | (17) | |||
Total comprehensive expenses for the period | |||||
attributable to owners of the Company | (6,531) | (7,392) | |||
Loss per share | 10 | ||||
Basic (HK cent per share) | HK cent (0.23) | HK cent (0.26) | |||
Diluted (HK cent per share) | HK cent (0.23) | HK cent (0.26) | |||
2
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
As at | As at | ||||||
30 June | 31 December | ||||||
2020 | 2019 | ||||||
Notes | HK$'000 | HK$'000 | |||||
(Unaudited) | (Audited) | ||||||
Non-current assets | |||||||
Property, plant and equipment | 12 | 2,633 | 3,087 | ||||
Right-of-use assets | 2,836 | 2,733 | |||||
Investment properties | 390,000 | 390,000 | |||||
Investment in associates | 12,211 | 12,211 | |||||
Pledged bank deposits | 10,317 | 10,275 | |||||
417,997 | 418,306 | ||||||
Current assets | |||||||
Inventories | 13 | 535 | 532 | ||||
Trade and other receivables | 14 | 5,337 | 6,602 | ||||
Cash and cash equivalents | 1,525 | 1,710 | |||||
7,397 | 8,844 | ||||||
Current liabilities | |||||||
Trade and other payables | 15 | 72,240 | 27,540 | ||||
Lease liabilities | 2,843 | 2,768 | |||||
Bank borrowings | 16 | 160,000 | 200,000 | ||||
235,083 | 230,308 | ||||||
Net current liabilities | (227,686) | (221,464) | |||||
NET ASSETS | 190,311 | 196,842 | |||||
Capital and reserves | |||||||
Share capital | 140,955 | 140,955 | |||||
Reserves | 49,356 | 55,887 | |||||
TOTAL EQUITY | 190,311 | 196,842 | |||||
3
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
-
COMPANY INFORMATION
China Graphene Group Limited (the "Company") was incorporated in Bermuda with limited liability. The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. The address of its principal place of business is Room 1237-1240, 12/F, Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong. The Company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange").
The Company is an investment holding company. The principal activities of its principal subsidiaries are property investment, plant sales and provision of horticultural services, manufacturing and selling graphene and graphene-related products, property management and money lending.
As at the date of issuing these condensed consolidated financial statements, in the opinion of the directors of the Company (the "Directors"), China Asia Graphene Holding Group Co. Limited (previously known as Zhonghan International Holding Group Limited) (the "China Asia Graphene"), a company incorporated in Hong Kong, is the immediate parent; and Zhengbo International Corporation, a company incorporated in the British Virgin Islands, is the ultimate parent, and controlled by Mr. Huang Binghuang (the "Controlling Shareholder"). - BASIS OF PREPARATION Going Concern
The Group incurred a loss of approximately HK$6,526,000 for the six months ended 30 June 2020, the Group had net current liabilities of approximately HK$227,686,000 as at 30 June 2020. Notwithstanding this fact, the Directors consider it is appropriate to prepare the condensed consolidated financial statements on a going concern basis as the Group is expected to have sufficient financial resources to meet its obligation as they fall due for at least the next twelve months based on its projected cash flow forecasts. The Group's Directors has reviewed the condensed consolidated statement of financial position of the Group as at 30 June 2020, including its working capital and bank and cash balances, together with the projected cash flow forecasts for the next twelve months and the Directors consider that the Group is financially viable to continue as a going concern.
Should the Group be unable to continue as a going concern, adjustments would have to be made to the condensed consolidated financial statements to adjust the value of the Group's assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify non-current assets as current assets. The effects of these potential adjustments have not been reflected in the condensed consolidated financial statements.
These 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 (the "HKICPA") and the applicable disclosures required by the Rules Governing the Listing of Securities on Stock Exchange.
These condensed consolidated financial statements should be read in conjunction with the 2019 annual financial statements. The accounting policies and methods of computation used in the preparation of these condensed consolidated financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2019.
4
-
ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS
In the current period, the Group has adopted all the new and revised Hong Kong Financial Reporting Standards ("HKFRSs") issued by the HKICPA that are relevant to its operations and effective for its accounting year beginning on 1 January 2020. HKFRSs comprise Hong Kong Financial Reporting Standards ("HKFRS"); Hong Kong Accounting Standards ("HKAS"); and Interpretations. The adoption of these new and revised HKFRSs did not result in significant changes to the Group's accounting policies, presentation of the Group's financial statements and amounts reported for the current period and prior years.
The Group has not applied the new and revised HKFRSs that have been issued but are not yet effective. The Group has already commenced an assessment of the impact of these new and revised HKFRSs but is not yet in a position to state whether these new and revised HKFRSs would have a material impact on its results of operations and financial position. - REVENUE AND SEGMENT REPORTING
The Group's operating segments are identified on the basis of internal report about the components of the Group that are regularly received by the chief operating decision maker in order to allocate resources to segments and to assess their performance. The chief operating decision maker is the Company's Directors.
The Group has five operating segments as follows:
Property investment - engages in leasing out residential properties Horticultural services - provides horticultural services
Graphene manufacturing and sales - manufactures and sells graphene and graphene-related products Property management and other related services - provides building management services
Money lending - provides loan financing to corporate entities and individuals
The Group's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.
The accounting policies of the operating segments are the same as those described in note 2 to the condensed consolidated financial statements. Segment profits or losses do not include unallocated administrative expenses, share of losses of associates, unallocated other income, unallocated other gains and losses, finance costs and income tax expense. Segment assets do not include pledged bank deposits, interests in associates and unallocated corporate assets. Segment liabilities do not include bank borrowings, unallocated corporate liabilities, current tax liabilities and deferred tax liabilities.
The Group accounts for intersegment sales and transfers as if the sales or transfers were to third parties, i.e. at current market prices.
5
-
Disaggregation of revenue
Disaggregation of revenue from contracts with customers by major products or service and geographical location of customers is as follows:
Six months ended 30 June | ||||||||||||||||||
2020 | 2019 | |||||||||||||||||
HK$'000 | HK$'000 | |||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||
Disaggregated by major products or services | ||||||||||||||||||
- Sale of plants and provision of horticultural services | 3,254 | 3,468 | ||||||||||||||||
Revenue from contracts with customers | 3,254 | 3,468 | ||||||||||||||||
- Rental income | 3,689 | 3,179 | ||||||||||||||||
Total revenue | 6,943 | 6,647 | ||||||||||||||||
Disaggregated by geographical location of customers | ||||||||||||||||||
- Hong Kong | 3,254 | 3,468 | ||||||||||||||||
Timing of revenue recognition | ||||||||||||||||||
Six months ended 30 June | ||||||||||||||||||
2020 | 2019 | |||||||||||||||||
At a point | At a point | |||||||||||||||||
in time | Over time | Total | in time | Over time | Total | |||||||||||||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |||||||||||||
Sale of plants and provision of | ||||||||||||||||||
horticultural services | 197 | 3,057 | 3,254 | 228 | 3,240 | 3,468 | ||||||||||||
6
-
Information about operating segment profit or loss, assets and liabilities:
Information regarding the Group's reportable segments as provided to the chief operation decision maker for the purposes of resource allocation and assessment of segment performance for the six months ended 30 June 2020 is set out below.
Certain comparative figures on segment information have been reclassified to conform to the current period's presentation. The new classification on segment information was considered to provide a more appropriate presentation.
Property | |||||||||||||||
management | |||||||||||||||
Graphene | and other | ||||||||||||||
Property | Horticultural | manufacturing | related | Money | |||||||||||
investment | services | and sales | services | lending | Total | ||||||||||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||||||||||
Six months ended 30 June 2020 (unaudited) | |||||||||||||||
Revenue from customers | 3,689 | 3,257 | - | - | - | 6,946 | |||||||||
Intersegment revenue | - | (3) | - | - | - | (3) | |||||||||
Revenue from external customers | 3,689 | 3,254 | - | - | - | 6,943 | |||||||||
Segment (loss)/profit | (380) | 1,320 | (1,129) | - | (7) | (196) | |||||||||
Depreciation of property, plant and | |||||||||||||||
equipment and right-of use assets | 1,111 | 47 | 222 | - | - | 1,380 | |||||||||
Additions to segment non-current assets | 111 | - | - | - | - | 111 | |||||||||
As at 30 June 2020 (unaudited) | |||||||||||||||
Segment assets | 395,028 | 2,764 | 3,516 | - | 587 | 401,895 | |||||||||
Segment liabilities | 8,995 | 1,580 | 8,025 | - | - | 18,600 | |||||||||
7
Property | |||||||||||||||||||
management | |||||||||||||||||||
Graphene | and other | ||||||||||||||||||
Property | Horticultural | manufacturing | related | Money | |||||||||||||||
investment | services | and sales | services | lending | Total | ||||||||||||||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||||||||||||||
Six months ended 30 June 2019 (unaudited) | |||||||||||||||||||
Revenue from external customers | 3,179 | 3,468 | - | - | - | 6,647 | |||||||||||||
Segment loss | (8,836) | (723) | (4) | (200) | - | (9,763) | |||||||||||||
Depreciation of property, plant and equipment | |||||||||||||||||||
and right-of use assets | 1,703 | 8 | - | - | - | 1,711 | |||||||||||||
Additions to segment non-current assets | - | 474 | - | - | - | 474 | |||||||||||||
As at 31 December 2019 (audited) | |||||||||||||||||||
Segment assets | 396,051 | 2,975 | 3,728 | - | 583 | 403,337 | |||||||||||||
Segment liabilities | 8,617 | 1,369 | 7,108 | - | - | 17,094 | |||||||||||||
Reconciliations of segment revenue and profit or loss | |||||||||||||||||||
Six months ended 30 June | |||||||||||||||||||
2020 | 2019 | ||||||||||||||||||
HK$'000 | HK$'000 | ||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||
Revenue | |||||||||||||||||||
Total revenue of reportable segments | 6,946 | 6,647 | |||||||||||||||||
Elimination of intersegment revenue | (3) | - | |||||||||||||||||
Consolidated revenue | 6,943 | 6,647 | |||||||||||||||||
Profit or loss | |||||||||||||||||||
Total loss of reportable segments | (196) | (9,763) | |||||||||||||||||
Elimination of intersegment profits | (3) | - | |||||||||||||||||
Unallocated amounts: | |||||||||||||||||||
- Depreciation of property, plant and equipment | (1) | - | |||||||||||||||||
- Finance costs | (2,903) | (4,493) | |||||||||||||||||
- Other income | 355 | 307 | |||||||||||||||||
- Gain on disposal of subsidiaries | - | 9,109 | |||||||||||||||||
- Unallocated corporate expenses | (3,778) | (2,535) | |||||||||||||||||
Consolidated loss before tax | (6,526) | (7,375) | |||||||||||||||||
8
Reconciliations of segment assets and liabilities | ||||
As at | As at | |||
30 June | 31 December | |||
2020 | 2019 | |||
HK$'000 | HK$'000 | |||
(unaudited) | (audited) | |||
Assets | ||||
Total assets of reportable segments | 401,895 | 403,337 | ||
Investment in associates | 12,211 | 12,211 | ||
Unallocated: | ||||
- Pledged bank deposits | 10,317 | 10,275 | ||
- Cash and cash equivalents | 284 | 294 | ||
- Other assets | 687 | 1,033 | ||
Consolidated total assets | 425,394 | 427,150 | ||
As at | As at | |||
30 June | 31 December | |||
2020 | 2019 | |||
HK$'000 | HK$'000 | |||
(unaudited) | (audited) | |||
Liabilities | ||||
Total liabilities of reportable segments | 18,600 | 17,094 | ||
Unallocated: | ||||
- Bank borrowings | 160,000 | 200,000 | ||
- Amount due to the ultimate parent | 40,000 | - | ||
- Other liabilities | 16,483 | 13,214 | ||
Consolidated total liabilities | 235,083 | 230,308 | ||
Geographical information:
The Group's revenue from external customers by location of operations and information about its non-current assets by location of assets are detailed below:
Revenue | Non-current assets | ||||||
Six months ended | As at | As at | |||||
30 June | 30 June | 31 December | |||||
2020 | 2019 | 2020 | 2019 | ||||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||||
(unaudited) | (unaudited) | (unaudited) | (audited) | ||||
Hong Kong | 6,943 | 6,647 | 393,784 | 393,919 | |||
Japan | - | - | 1,685 | 1,901 | |||
Consolidated total | 6,943 | 6,647 | 395,469 | 395,820 | |||
9
Revenue from major customers contributing 10% or more to the Group's revenue are as follows: | |||
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (unaudited) | ||
Rental income | |||
- Customer A | 2,040 | - | |
5. OTHER INCOME | |||
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (unaudited) | ||
Interest income on bank deposits | 43 | - | |
Government subsidies | 162 | - | |
Share of building management fee income | 166 | 107 | |
Others | 216 | 93 | |
587 | 200 | ||
6. OTHER GAINS AND LOSSES | |||
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (unaudited) | ||
Fair value gain on investments at fair value through profit or loss | - | 32 | |
Gain on disposal of subsidiaries (note) | - | 9,109 | |
Net gain on disposals of property, plant and equipment | - | 73 | |
- | 9,214 | ||
note:
Pursuant to a provisional agreement for sale and purchase of the entire issued share capital of a subsidiary of the Company entered into with an independent third party, the Group disposed of 100% interests in a wholly-owned subsidiary for a total cash consideration of approximately HK$9,500,000, resulting in a gain on disposal of a subsidiary of approximately HK$9,093,000. Completion took place on 11 April 2019.
Pursuant to an agreement entered into with an independent third party, the Group disposed of 100% interests in a wholly-owned subsidiary for a total cash consideration of approximately HK$200,000, resulting in a gain on disposal of a subsidiary of approximately HK$16,000. Completion took place on 4 January 2019.
10
7. FINANCE COSTS | |||
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (unaudited) | ||
Interest on bank borrowings | 2,867 | 3,078 | |
Interest on other borrowing | - | 1,354 | |
Lease interests | 36 | 61 | |
2,903 | 4,493 | ||
- INCOME TAX EXPENSES
No provision for Hong Kong Profits Tax has been made for the six months ended 30 June 2020 and 2019 as the Group has no assessable profits arising in Hong Kong during the periods.
No provision for overseas tax has been made for the six months ended 30 June 2020 and 2019 as the Group has no assessable profits arising outside Hong Kong during the periods. - LOSS FOR THE PERIOD
The Group's loss for the period is stated after charging the following:
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (unaudited) | ||
Depreciation of property, plant and equipment and right-of-use assets | 1,381 | 1,711 | |
Directors' remuneration | 822 | 7,144 | |
Expenses related to short-term leases | 85 | 85 | |
Cost of inventories sold | 384 | 394 | |
11
10. LOSS PER SHARE
The calculation of the basic and diluted loss per share attributable to owners of the Company is based on the following data:
Six months ended 30 June | ||||
2020 | 2019 | |||
HK$'000 | HK$'000 | |||
(unaudited) | (unaudited) | |||
Loss: | ||||
Loss for the purpose of calculating basic and diluted loss per share attributable to | ||||
owners of the Company | (6,526) | (7,375) | ||
Number of shares: | '000 | '000 | ||
Weighted average number of ordinary shares for the purpose of calculating basic and | ||||
diluted loss per share | 2,819,102 | 2,819,102 | ||
The basic and diluted loss per share for the six months ended 30 June 2020 and 2019 were the same as the Company had no dilutive potential ordinary shares in issue during the periods.
-
INTERIM DIVIDENDS
The Board does not recommend the payment of any dividend for the six months ended 30 June 2020 (Six months ended 30 June 2019: Nil). - PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 June 2020, the Group acquired items of property, plant and equipment with a cost of approximately HK$111,000 (six months ended 30 June 2019: approximately HK$482,000). Certain property, plant and equipment with a net book value of HK$Nil (six months ended 30 June 2019: approximately HK$243,000) were disposed of by the Group during the six months ended 30 June 2020, resulting in a net gain on disposals of HK$Nil (six months ended 30 June 2019: approximately HK$73,000). - INVENTORIES
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (audited) | ||
Horticultural plants | 535 | 532 | |
12
14. TRADE AND OTHER RECEIVABLES | |||
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (audited) | ||
Trade receivables | 1,321 | 1,672 | |
Other prepayments | 975 | 1,450 | |
Rental and other deposits | 1,830 | 2,278 | |
Other tax receivables | 443 | 442 | |
Other receivables | 768 | 760 | |
5,337 | 6,602 | ||
The credit term is generally 30 days. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by the Directors.
The aging analysis of trade receivables based on the invoice date, and net of allowance, is as follows:
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (audited) | ||
0 to 90 days | 1,268 | 1,671 | |
91 to 180 days | 53 | 1 | |
1,321 | 1,672 | ||
15. TRADE AND OTHER PAYABLES | |||
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (audited) | ||
Trade payables | 74 | 63 | |
Other payables and accrued charges | 16,981 | 14,768 | |
Amount due to the ultimate parent | 40,000 | - | |
Amount due to the immediate parent | 15,000 | 12,000 | |
Amount due to directors | 57 | 314 | |
Other tax payables | 128 | 128 | |
Receipt in advance | - | 267 | |
72,240 | 27,540 | ||
13
The aging analysis of trade payables, based on the date of receipt of goods, is as follows: | |||
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (audited) | ||
0 to 90 days | 74 | 63 | |
The amount due to ultimate parent, immediate and directors are unsecured, interest-free and repayable on demand.
16. BANK BORROWINGS | |||
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (audited) | ||
Bank loans | 160,000 | 200,000 | |
The bank borrowings are classified as current liabilities as they contain a repayment on demand clause. According to the repayment schedule, the bank borrowings are repayable as follow:
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (audited) | ||
Within 1 year | 160,000 | 200,000 | |
The carrying amounts of the Group's bank borrowings are denominated in HKD.
The interest rate of the Group's bank borrowings as at 30 June 2020 was 2% per annum over one-month HIBOR or 0.5% per annum below HKD prime rate, whichever is lower (31 December 2019: 2% per annum over one-month HIBOR or 2% per annum below HKD prime rate, whichever is lower).
The bank loans are arranged at floating rates, thus exposing the Group to cash flow interest rate risk.
Bank loans of HK$160,000,000 (31 December 2019: HK$200,000,000) are secured by (i) the investment properties of
HK$390,000,000 (31 December 2019: HK$390,000,000), (ii) a charge over deposits for the total principal amount of not less than HK$4,000,000 together with interest accrued thereon, (iii) bank deposits of not less than HK$6,000,000,
- assignment of rental income from properties to a designated bank account which is charged to the bank, and (v) maintain an occupancy rate of 60% or above.
14
BUSINESS REVIEW AND PROSPECT
During the six months ended in 30 June 2020 (the "Period"), the Group continued to engage in property related business (including property investment, property management and other related services), plant sales and provision of horticultural services, money lending business and trading of graphene and graphene-related products. During the Period, the results were mainly derived from the property related business segment and the plant sales and provision of horticultural services segment.
Revenue of the Group for the Period was HK$6,943,000, an increase of approximately 4.4%, when compared to HK$6,647,000 for the corresponding period in 2019. Net loss of the Group during the Period was HK$6,526,000, a decrease in loss of approximately 11.5%, when compared to the net loss amounted to HK$7,375,000 for the same period in 2019. Such improvement of performance was mainly due to the result of decrease in staff cost and finance cost
Property related business
During the Period, rental income for the Group's property related business was HK$ 3,689,000, year on year revenue increased by approximately 16.0%, as compared to the first half of 2019 amounted to HK$3,179,000. Such increase was due to the increase in occupancy rate, despite the average rental income per apartment unit was lower than that in the first six months of 2019. After the year ended
30 June 2020, the Group has through its wholly owned subsidiary 中亞烯谷物業管理(深圳)有限公 司 entered into a new property management contract with 深圳市後亭雅苑投資有限公司 with effect from 13 August 2020 to develop the Group's property management services in Mainland. The Group is expecting to increase the property related business income in the future.
Horticultural business
The Group also operates horticultural services business under brand name "Cheung Kee Garden Limited", which has over forty years of history. Plant sales and provision of horticultural services revenue during the Period was decreased to HK$3,254,000 by approximately 6.2% from HK$3,468,000 for the six months ended in 2019. The decrease was mainly due to the effect of COVID-19 pandemic in Hong Kong, some clients believe that the watering services may carry virus during the visit while others believe horticulture creates environmental friendly atmosphere, thus a net reduction of service income per contract volume and a slow down of new clients accounts opening. Given this business segment has a long established and diversified customer base, which the Group believes that it can contribute us a stable source of income.
Graphene Business
The Group's graphene business ceased operation in 2018 and no revenue was recorded for both six months ended in 30 June 2020 and 2019.
15
Bank Borrowings and Other Borrowings
As at 30 June 2020, there was HK$160,000,000 bank loans outstanding (31 December 2019: HK$200,000,000), shareholder's loan of approximately HK$55,000,000 (31 December 2019: HK$12,000,000).
Charge over the Group's assets
The Group has pledged its investment properties as collateral for bank borrowings. As at 30 June 2020, the fair value of the investment properties amounted to approximately HK$390,000,000 (31 December 2019: HK$390,000,000).
Bank loans of HK$160,000,000 (31 December 2019: HK$200,000,000) are secured by (i) the investment
properties of HK$390,000,000 (31 December 2019: HK$390,000,000), (ii) a charge of deposits for the total principal amount of not less than HK$4,000,000 together with interest accrued thereon, (iii) bank deposits of not less than HK$6,000,000 and (iv) assignment of rental income from properties to a designated bank account which is charged to the bank.
During the six months ended 30 June 2020, the Company did not aware that have any violation of bank covenants attached to the interest-bearing bank loan that triggers breaches of the covenants would permit the bank or lender to immediately call borrowings.
The net asset value of the Group per share as at 30 June 2020 was approximately HK$0.07 (31 December 2019: HK$0.07) based on the 2,819,102,084 (31 December 2019: 2,819,102,084) shares in issue.
Looking ahead, the Group targets to develop the property related business income which the Group is expecting to first increase this revenue stream.
LIQUIDITY AND FINANCIAL RESOURCES
All the Group's funding and treasury activities are centrally managed and controlled at the corporate level. There is no significant change in respect of treasury and financing policies from the information disclosed in the Company's latest annual report. The Group's monetary assets and liabilities are denominated and the Group conducts its business transactions principally in Hong Kong dollars. In view of the business segment in Japan, the Group manages its foreign currency risk by closely reviewing the movement of the foreign currency rate and considers hedging significant foreign currency exposure should the need arise.
As at 30 June 2020, there was bank loans in the sum of HK$160,000,000 outstanding (31 December 2019: HK$200,000,000). The Group's working capital requirements are funded by bank loans, shareholder's loan and cash generated from its ordinary course of business.
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The gearing ratio of the Group as at 30 June 2020 was 113% (31 December 2019: 108%). Gearing ratio was calculated based on total debts divided by total equity. The amount of total debts was calculated by aggregating the bank and other borrowings.
PROSPECT
The Group will strengthen the industrialization of property management and the platform-based consumption model, achieving a new win-win pattern in the industry chain through strategy promotion and the Internet. The Group will improve its sector with focus on the construction of a new generation of information technology and other high-tech industry management systems, make every effort to promote the development of smart community property management systems for living, working and travelling of a new generation, develop into the future to expand more property-related business income, develop first-class capabilities for corporate governance with collaborative development, actively contribute to the society and demonstrate the responsibility of enterprises with a high sense of social responsibility and seek the greatest return for shareholders by relying on the "industry + finance + platform + Internet collaboration" system.
DISCLOSURE OF INFORMATION ON DIRECTORS
During the Reporting Period, the changes in the directorship of the Company were as follows:
- Mr. Zhao Juqun was appointed as the vice chairman of the Board and an executive Director with effect from 12 June 2020;
- Mr. Duan Rihuang was appointed as an independent non-executive Director and a member of the Remuneration Committee, the Nomination Committee and the Audit Committee with effect from 12 June 2020;
- Mr. Wong Yun Kuen was appointed as an independent non-executive Director and the chairman of the Remuneration Committee and a member of the Nomination committee and the Audit Committee with effect from 12 June 2020;
- Mr. Zhou Chen retired from his position as an executive Director with effect from 12 June 2020;
- Mr. Gao Han retired from his positions as an independent non-executive Director, and a member of the Nomination Committee and the Audit Committee with effect from 12 June 2020;
- Mr. David Chow Chi-ping retired from his positions as an independent non-executive Director, and a member of the Remuneration Committee and the Audit Committee with effect from 12 June 2020.
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 30 June 2020.
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MODEL CODE FOR SECURITIES TRANSACTIONS
The Company has adopted the Model Code for Securities Transactions by Directors of the Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules as its own code of conduct regarding Director's securities transactions. Specific enquiry has been made to all the Directors, and the Directors have confirmed that they have complied with the required standard as set out in the Model Code during the six months ended 30 June 2020.
CORPORATE GOVERNANCE CODE
During the six months ended 30 June 2020, the Company had applied the principles of the Corporate Governance Code (the "CG Code") as set out in Appendix 14 of the Listing Rules and complied with all the applicable code provisions of the CG Code, except for the deviations as disclosed below:
- The Chairman of the Board was absent from the annual general meeting of the Company due to other important engagement at the relevant time and this deviate from code provision E1.2 of the CG Code as set forth in Appendix 14 of the Listing Rules; and
- The roles of Chairman and Chief Executive Officer of the Company are served by the same individual, Mr. Huang Binghuang and have not been segregated as required under code provision A.2.1 of the CG Code. Nevertheless, the Board believes that vesting the roles of both the Chairman of the Board and the Chief Executive Officer in same person can facilitate the execution of the Group's business strategies and boost effectiveness of its operation. Therefore, the Board considers that the deviation from the code provision A.2.1 of the CG Code is appropriate in such circumstance. In addition, under the supervision of the Board which is comprised of three executive Directors, one non-executive Director and three independent non-executive Directors, the Board appropriately structured with balance of power to provide sufficient checks to protect the interests of the Company and its shareholders.
EVENT SUBSEQUENT TO 30 JUNE 2020
Save and except for the following event, no major subsequent events affecting the Group have occurred since the end of the Reporting Period and up to the date of this announcement.
As announced by the Company on 14 January 2020, a winding-up petition was filed against China Asia Group (HK) Limited (中亞集團(香港)有限公司) ("CAG") in the High Court of the Hong Kong Special
Administrative Region (the "High Court") on 8 January 2020 (the "Winding-up Petition"). Upon joint application of the petitioner and CAG by way of consent summons, an order was made by the High Court on 10 August 2020 that, among others, the Winding-up Petition against CAG be struck out and dismissed.
INTERIM DIVIDEND
The Board has resolved not to declare any interim dividend for the six months ended 30 June 2020.
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REVIEW OF AUDIT COMMITTEE
The audit committee of the Company is responsible for reviewing and monitoring the financial reporting process, risk management and internal control systems of the Company.
The audit committee has reviewed with management the accounting principles and practices adopted by the Group and discussed internal control and financial reporting matters including the review of the unaudited interim financial statements of the Group for the six months ended 30 June 2020. They considered that the unaudited interim financial statements of the Group for the six months ended 30 June 2020 are in compliance with the relevant accounting standards, rules and regulations and that appropriate disclosures have been made.
PUBLICATION OF INTERIM REPORT
The interim report of the Company containing all the information required by the Listing Rules will be dispatched to its shareholders and published on the websites of the Stock Exchange of Hong Kong Limited (www.hkex.com.hk) and the Company (www.00063.cn) in due course.
By order of the Board of
China Graphene Group Limited
Huang Binghuang
Chairman
Hong Kong, 26 August 2020
As at the date of this announcement, the Board consists of Mr. Huang Binghuang (Chairman and Chief Executive Officer), Mr. Zhao Juqun (Vice chairman) and Ms. Xia Ping as executive Directors; Ms. Wang Lijiao as a non-executive Director; and Mr. Lum Pak Sum, Dr. Wong Yun Kuen and Mr. Duan Rihuang as independent non-executive Directors.
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China Graphene Group Limited published this content on 26 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 August 2020 12:56:10 UTC