(A joint stock company incorporated in the People's Republic of China with limited liability)
Stock code:0 6 0 4 9 . H K
INTERIM
REPORT
To Build a Human-oriented Community To Live a Prosperous Life
CONTENTS
COMPANY OVERVIEW | 2 |
CORPORATE INFORMATION | 3 |
FINANCIAL SUMMARY | 5 |
AWARDS AND HONOURS | 6 |
MANAGEMENT DISCUSSION AND ANALYSIS | 7 |
CORPORATE GOVERNANCE AND OTHER | |
INFORMATION | 22 |
REPORT ON REVIEW OF INTERIM CONDENSED | |
CONSOLIDATED FINANCIAL STATEMENTS | 26 |
CONDENSED CONSOLIDATED STATEMENT OF | |
PROFIT OR LOSS AND OTHER COMPREHENSIVE | |
INCOME | 27 |
CONDENSED CONSOLIDATED STATEMENT OF | |
FINANCIAL POSITION | 28 |
CONDENSED CONSOLIDATED STATEMENT OF | |
CHANGES IN EQUITY | 30 |
CONDENSED CONSOLIDATED STATEMENT OF | |
CASH FLOWS | 32 |
NOTES TO THE CONDENSED CONSOLIDATED | |
FINANCIAL STATEMENTS | 33 |
COMPANY OVERVIEW
Poly Property Services Co., Ltd. (the "Company" or "Poly Property", and together with its subsidiaries, the "Group" or "we") is a leading comprehensive property management service provider in China with extensive property management scale and state- owned background. According to the 2020 Ranking of Top 100 Property Management Companies in China of the China Index Academy (the "CIA"), the Group ranked third among the top 100 property management companies in China and first among the top 100 property management companies with state-owned background. With high-quality services and brand strength, we have enjoyed an industry-wide reputation. Our brand was valued at more than RMB9.0 billion in 2019. The Group's three main business lines, namely, property management services, value-added services to non-property owners, and community value-added services, form a comprehensive service offering to its customers along the value chain of property management. As of 30 June 2020, the Group has entered 172 cities in 29 provinces, autonomous regions and municipalities across the country, and recorded a gross floor area ("GFA") under management of approximately 316.8 million sq.m. with 1,142 projects under management, and a contracted GFA of approximately 493.4 million sq.m. with 1,647 contracted projects. The Group continuously pushes forward the "Comprehensive Property" strategy and its business portfolio covers residential communities, commercial and office buildings and public and other properties.
黑龍江 Heilongjiang
吉林 Jilin
新疆 Xinjiang | 北京 Beijing | ||||
遼寧 Liaoning | |||||
甘肅 Gansu | 內蒙古 Inner Mongolia | 天津 Tianjin | |||
河北 Hebei |
合同管理面積(百萬平方米)
Contracted GFA (Million sq.m.)
< 1
1 - 5
5 - 10
10 - 15
≧ 15
在管面積(百萬平方米) GFA Under Management (Million sq.m.)
< 1
1 - 5
5 - 10
10 - 15
≧ 15
青海 Qinghai | 寧夏 Ningxia | 山西 Shanxi | 山東 Shandong | |
陝西 Shaanxi 河南 Henan | 江蘇 Jiangsu | |||
西藏 Xizang | 安徽 Anhui | 上海 Shanghai | ||
四川 Sichuan | 湖北 Hubei | |||
重慶 Chongqing | 浙江 Zhejiang | |||
湖南 Hunan 江西 Jiangxi | ||||
貴州 Guizhou | 福建 Fujian | 台灣 Taiwan | ||
雲南 Yunnan | ||||
廣東 Guangdong | ||||
廣西 Guangxi | ||||
香港 Hong Kong | ||||
澳門 Macau | ||||
海南 Hainan |
南海諸島
Islands of South
China Sea
- POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
CORPORATE INFORMATION
BOARD OF DIRECTORS
Non-executive Directors
Mr. Huang Hai (Chairman)
Mr. Hu Zaixin
Executive Directors
Mr. Li Jiahe
Ms. Wu Lanyu (General Manager)
Independent Non-executive Directors
Mr. Wang Xiaojun
Ms. Tan Yan
Mr. Wang Peng
BOARD COMMITTEES
Audit Committee
Ms. Tan Yan (Chairlady)
Mr. Huang Hai
Mr. Hu Zaixin
Mr. Wang Xiaojun
Mr. Wang Peng
Remuneration Committee
Mr. Wang Xiaojun (Chairman)
Mr. Hu Zaixin
Mr. Li Jiahe
Ms. Tan Yan
Mr. Wang Peng
Nomination Committee
Mr. Huang Hai (Chairman)
Ms. Wu Lanyu
Mr. Wang Xiaojun
Ms. Tan Yan
Mr. Wang Peng
SUPERVISORY COMMITTEE
Ms. Liu Huiyan (Chairlady)
Ms. Chen Shuping
Ms. Zhong Yu
JOINT COMPANY SECRETARIES
Mr. Yin Chao (appointed on 21 February 2020) Mr. Lau Kwok Yin
AUTHORISED REPRESENTATIVES
Ms. Wu Lanyu
Mr. Lau Kwok Yin
AUDITOR
BDO Limited
25/F, Wing On Centre
111 Connaught Road Central
Hong Kong
LEGAL ADVISER
Allen & Overy
9th Floor, Three Exchange Square Central
Hong Kong
COMPLIANCE ADVISER
GF Capital (Hong Kong) Limited
29-30/F, Li Po Chun Chambers
189 Des Voeux Road Central
Hong Kong
PRINCIPAL BANKER
China Construction Bank
Poly Grand Mansion Branch
Shop 102, No.3 Chen Yue Road
Hai Zhu District, Guangzhou, Guangdong Province
The PRC
POLY PROPERTY SERVICES CO., LTD. | 3 |
INTERIM REPORT 2020 |
CORPORATE INFORMATION
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS IN THE PRC
Rooms 201-208
No. 688 Yue Jiang Zhong Road
Hai Zhu District, Guangzhou, Guangdong Province
The PRC
PRINCIPAL PLACE OF BUSINESS IN HONG KONG
40/F, Sunlight Tower
248 Queen's Road East
Wanchai
Hong Kong
H SHARE REGISTRAR AND TRANSFER OFFICE
Tricor Investor Services Limited
Level 54, Hopewell Centre
183 Queen's Road East
Hong Kong
INVESTOR RELATIONS
Telephone: (86) 20 8989 9959
E-mail: stock@polywuye.com
COMPANY WEBSITE
www.polywuye.com
STOCK CODE ON THE HONG KONG STOCK EXCHANGE
06049
- POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
FINANCIAL SUMMARY
SUMMARY OF THE CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the six months ended 30 June | ||
2020 | 2019 | |
Revenue (RMB million) | 3,600.9 | 2,822.0 |
Gross profit (RMB million) | 734.0 | 666.5 |
Gross profit margin | 20.4% | 23.6% |
Profit for the Period (RMB million) | 410.7 | 320.8 |
Net profit margin | 11.4% | 11.4% |
Profit for the Period attributable to owners of the Company (RMB million) | 399.6 | 313.6 |
Basic earnings per share (RMB)* | 0.72 | 0.78 |
Return on shareholders' equity (weighted average) | 6.9% | 40.2% |
- The H shares of the Company were listed on 19 December 2019. The over-allotment option was exercised in full on 10 January 2020, and the shares were issued on 17 January 2020. The weighted average number of ordinary shares for the six months ended 30 June 2020 (the "Period") and for the six months ended 30 June 2019 was 551,575,000 and 400,000,000, respectively. Details are set out in note 11 in the notes to the condensed consolidated financial statements of this interim report.
SUMMARY OF THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at | As at | |
30 June 2020 | 31 December 2019 | |
Total assets (RMB million) | 8,782.3 | 7,571.1 |
Cash and cash equivalents (RMB million) | 7,245.4 | 6,508.6 |
Total equity (RMB million) | 5,964.4 | 5,122.2 |
Total liabilities/Total assets | 32.1% | 32.3% |
POLY PROPERTY SERVICES CO., LTD. | 5 |
INTERIM REPORT 2020 |
AWARDS AND HONOURS
2020 Top 10 Listed Company of Property Management Service
2020 TOP100 Property Management Companies in China in terms of Leading Customer Satisfaction
2020 TOP100 Property Management Companies
in China in terms of Business Size TOP10
2020 TOP100 Property Management Companies in China in terms of Business Performance TOP10
2020 Top 10 Listed Company of Property Management Service in terms of Leading Innovation
2020 Property Management Companies in China in terms of Social Responsibility
2020 Property Management Companies in China in terms of Leading Urban Services
2020 TOP100 Property Management Companies in China (TOP 3)
2020 China Leading Property Management Companies in terms of Characteristic Service
- Nebula Ecology - Commercial and Office Service Brand
- POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW
In 2020, in the face of the severe challenges of the novel coronavirus, property management companies took the lead and spared full effort to protect the communities and homes, safeguard the health and normal life of property owners, and cooperate with the government to build a gridded pandemic prevention front. As a large-scale and comprehensive state-owned property management service provider, Poly Property has always upheld a high sense of responsibility for protecting the country and the people, and focused on both pandemic prevention and control and customer service, which has been highly recognized by the government, society and property owners.
As of 30 June 2020, the Group has entered 172 cities in 29 provinces, autonomous regions and municipalities across the country, providing professional, humanistic and valuable property management services for 1,142 projects including residential, commercial office and diversified public service businesses. The Group recorded a GFA under management of approximately
316.8 million sq.m., representing an increase of 29.9 million sq.m. as compared to the end of 2019. The Group recorded a contracted GFA of 493.4 million sq.m. with 1,647 contracted projects, representing an increase of 157 as compared to the end of 2019.
For the six months ended 30 June 2020, the Group recorded a revenue of approximately RMB3,600.9 million, representing an increase of approximately 27.6% as compared to the corresponding period of 2019; a gross profit of approximately RMB734.0 million, representing an increase of approximately 10.1% as compared to the corresponding period of 2019; a profit for the Period of approximately RMB410.7 million, representing an increase of approximately 28.0% as compared to the corresponding period of 2019; and a profit for the Period attributable to owners of the Group of approximately RMB399.6 million, representing an increase of approximately 27.4% as compared to the corresponding period of 2019.
According to the CIA's 2020 Ranking of Top 100 Property Management Companies in China, the Group ranked third among the top 100 property management companies in China and first among the top 100 property management companies with state-owned background. With high-quality service capabilities and brand strength, the Group has won a good reputation in the industry. The brand value of the Group in 2019 exceeded RMB9 billion.
The Group derives revenue from three main business lines: (i) property management services; (ii) value-added services to non- property owners; and (iii) community value-added services.
Property management services - representing approximately 63.5% of total revenue
For the six months ended 30 June 2020, the Group's revenue from property management services amounted to approximately RMB2,285.9 million, representing an increase of approximately 25.4% as compared to the corresponding period of 2019, which is mainly due to the expansion of GFA under management and the increase in the number of projects under management of the Group.
POLY PROPERTY SERVICES CO., LTD. | 7 |
INTERIM REPORT 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
The following table sets out the changes in the Group's contracted GFA:
As at 30 June | ||||||
2020 | 2019 | |||||
Percentage | Percentage | |||||
Contracted | of contracted | Contracted | of contracted | New GFA | ||
Source of projects | GFA | GFA | GFA | GFA | acquired | Growth rate |
'000 sq.m. | % | '000 sq.m. | % | '000 sq.m. | % | |
Poly Developments and | ||||||
Holdings Group (Note) | 218,935 | 44.4 | 185,844 | 40.9 | 33,091 | 17.8 |
Third parties | 274,498 | 55.6 | 269,071 | 59.1 | 5,427 | 2.0 |
Total | 493,433 | 100.0 | 454,915 | 100.0 | 38,518 | 8.5 |
Note: "Poly Developments and Holdings Group" refers to properties developed, solely or jointly with other parties, by members of Poly Developments and Holdings Group (including its joint ventures and associates).
As the benchmark leader in the real estate industry in China, the steady development of our controlling shareholder, Poly Developments and Holdings Group Co., Ltd. ("Poly Developments and Holdings"), has brought us continuous business growth. As of 30 June 2020, the contracted GFA from Poly Developments and Holdings Group reached approximately 218.9 million sq.m., representing an increase of approximately 9.1 million sq.m. and approximately 33.1 million sq.m. as compared to the end of 2019 and the corresponding period of 2019, respectively.
As of 30 June 2020, the Group's contracted GFA from third parties was approximately 274.5 million sq.m., representing a decrease of approximately 13.8 million sq.m. as compared to the end of 2019, primarily due to the expiry of certain project contracts with a larger contracted area. During the Period, we further expanded our market expansion efforts and optimized the quality of project development. We strengthened the layout of key non-residentialbusinesses and key projects, highlighted the resource advantages of a state-ownedenterprise, vigorously explored joint investment and cooperation with state-ownedenterprises and local state-ownedcapital investment and operation platforms, and established a comprehensive strategic partnership with Huaihua Economic Development Zone Wushui State-ownedAssets Operation Management Co., Ltd.* ( 懷化經 濟開發區舞水國有資產經營管理有限公司) and Jiujiang Industrial Investment Holdings Development Co., Ltd.* ( 九江工投控股發 展有限公司).
For the six months ended 30 June 2020, the Group completed the signing of 137 new third-party projects with a single-year contract value of approximately RMB650 million, more than half of which were projects regarding non-residential business. In the expansion of third-party residential projects, we still maintained a good momentum of expansion. The contracted area of third-party residential projects increased by approximately 11.2 million sq.m. to approximately 78.9 million sq.m. as compared to the end of 2019.
- POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
The following table sets out a breakdown of the Group's revenue, GFA under management and number of projects under management by the source of projects for the periods or as at the dates indicated:
For the six months ended or as at 30 June | ||||||||||
2020 | 2019 | |||||||||
Number of | Number of | |||||||||
projects | projects | |||||||||
GFA under | under | GFA under | under | |||||||
Source of projects | Revenue | management | management | Revenue | management | management | ||||
RMB'000 | % | '000 sq.m. | % | RMB'000 | % | '000 sq.m. | % | |||
Poly Developments and | ||||||||||
Holdings Group | 1,734,353 | 75.9 | 136,909 | 43.2 | 657 | 1,509,079 | 82.8 | 112,131 | 43.1 | 532 |
Third parties | 551,577 | 24.1 | 179,927 | 56.8 | 485 | 313,896 | 17.2 | 148,202 | 56.9 | 314 |
Total | 2,285,930 | 100.0 | 316,836 | 100.0 | 1,142 | 1,822,975 | 100.0 | 260,333 | 100.0 | 846 |
As of 30 June 2020, the GFA under management of the Group was approximately 316.8 million sq.m., of which approximately
136.9 million sq.m. was from the projects of Poly Developments and Holdings Group and approximately 179.9 million sq.m. was from the projects of third parties. In addition, revenue from property management services to third parties amounted to approximately RMB551.6 million, representing a significant increase of approximately 75.7% as compared to the corresponding period of 2019 and accounting for approximately 24.1% of the total revenue from property management services, representing a year-on-year increase of nearly 7 percentage points.
Equal emphasis on residential and non-residential businesses
For the six months ended 30 June 2020, the Group accelerated its "Comprehensive Property Strategy". Based on the steady growth of the residential management scale, the diversified business structure has been further optimized. The non-residential business has become one of the important driving forces for the scale development of the Group. During the Period, the GFA under management of non-residential business increased to approximately 167.0 million sq.m., accounting for approximately 52.7% of the total GFA under management. During the Period, we recorded property management revenue from non- residential properties of approximately RMB655.0 million, representing an increase of approximately 42.9% as compared to the corresponding period of 2019. The proportion of such revenue to the overall property management revenue increased by 3.6 percentage points year-on-year to 28.7%.
POLY PROPERTY SERVICES CO., LTD. | 9 |
INTERIM REPORT 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
The following table sets out a breakdown of the Group's revenue, GFA under management and number of projects under management by property type for the periods or as at the dates indicated:
For the six months ended or as at 30 June | ||||||||||
2020 | 2019 | |||||||||
Number of | Number of | |||||||||
projects | projects | |||||||||
GFA under | under | GFA under | under | |||||||
Source of projects | Revenue | management | management | Revenue | management | management | ||||
RMB'000 | % | '000 sq.m. | % | RMB'000 | % | '000 sq.m. | % | |||
Residential communities | 1,630,962 | 71.3 | 149,820 | 47.3 | 724 | 1,364,616 | 74.9 | 121,165 | 46.5 | 565 |
Non-residential properties | 654,968 | 28.7 | 167,015 | 52.7 | 418 | 458,359 | 25.1 | 139,168 | 53.5 | 281 |
- Commercial and office | ||||||||||
buildings | 308,377 | 13.5 | 8,584 | 2.7 | 110 | 241,934 | 13.2 | 6,974 | 2.7 | 71 |
- Public and other properties | 346,591 | 15.2 | 158,431 | 50.0 | 308 | 216,425 | 11.9 | 132,194 | 50.8 | 210 |
Total | 2,285,930 | 100.0 | 316,835 | 100.0 | 1,142 | 1,822,975 | 100.0 | 260,333 | 100.0 | 846 |
For residential communities, the Group has established two major property service brands of "Harmony Courtyard" and "Oriental Courtesy" as part of its dedicated effort to provide high-quality residential experience for property owners with refined management and standardized services. As of 30 June 2020, the GFA under management of the Group's residential communities was approximately 149.8 million sq.m., accounting for approximately 47.3% of the total GFA under management. For the six months ended 30 June 2020, revenue from property management services for residential communities amounted to approximately RMB1,631.0 million, representing an increase of approximately 19.5% as compared to the corresponding period of 2019 and accounting for approximately 71.3% of total revenue from the Group's property management services.
For commercial and office buildings, the Group has established the property service brand of "Nebula Ecology" to provide a trinity service system including property management, asset management and corporate services around the service concept of "scenario operation" while taking into account the commercial and office needs of Chinese enterprises. During the Period, we signed new contracts for landmark projects such as the China Development Bank Tower and the International Convention and Exhibition Center in Heping District, Shenyang. As of 30 June 2020, the GFA under management of the Group's commercial and office buildings was approximately 8.6 million sq.m. For the six months ended 30 June 2020, revenue from property management services for commercial and office buildings amounted to approximately RMB308.4 million, representing an increase of approximately 27.5% as compared to the corresponding period of 2019.
In the field of public services, the need for grid management in pandemic prevention and control and the in-depth promotion of the policy of strengthening the modernization of grassroots governance are expected to further accelerate the marketization of public services, and a number of property management peers' active layout in diversified public service fields including urban services will also accelerate the promotion of market-oriented service models.
10 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
Poly Property adheres to its original mission of serving the government, serving the society, and serving the residents. In the development of public services, it insists on scale growth, quality assurance, and model innovation, and has achieved certain results:
First, the scale of our public service projects saw continuous growth. As of 30 June 2020, the number of projects under management increased by 42 to 308 as compared to the end of 2019, with a total GFA under management of approximately
158.4 million sq.m. During the Period, we completed the signing of 66 new projects. For the six months ended 30 June 2020, the Group's revenue from public and other properties amounted to approximately RMB346.6 million, representing an increase of 60.1% as compared to the corresponding period of 2019 and accounting for approximately 15.2% of the total revenue from property management services, which reflected an increase of approximately 3.3 percentage points in its percentage of revenue as compared to the corresponding period of 2019.
Second, we focused on three core property types, i.e. higher education, teaching and research properties, railway and transportation properties, and properties in towns and scenic areas, accelerated the implementation of landmark projects, and continuously improved the depth and breadth of services through deep project development and superimposed services. As of 30 June 2020, the number of projects under management for the three property types reached 176, accounting for more than 50% of the total number of public service projects. During the Period, new contracted projects regarding public services included urban and transportation comprehensive management for Yaozhuang Town, Adou Village Scenic Area in Henan, Zhengzhou Rail Transit Line 3, Hunan Institute of Technology and other landmark projects.
Third, we actively explored public service-related industries such as the integration of environmental sanitation, smart towns, improved special service skills, increased industrial synergies, and provided full-process solutions for the government's grassroots governance. During the Period, we successfully signed contracts for environmental sanitation service projects such as road sweeping and cleaning services for Jianxi District, Luoyang City, and urban and rural environmental sanitation of Tancheng County. We launched the pilot of the urban smart information platform, and realized the digitalization and visualization of urban management through applications such as public facility sensing systems and smart patrol systems, which further improved governance efficiency.
Fourth, we continuously strengthened quality control and training of professional talents. During the Period, we have completed the formulation of service standard manuals for industrial parks, railway and transportation properties, properties in towns and scenic areas, higher education, teaching and research properties, and achieved continuous improvement in service quality by continuously standardizing work processes and service standards. On the other hand, we have cultivated the core capabilities of public service through the "Starlight Public Service Professional Talents Plan", actively prepared the establishment of public service institutes, improved the construction of public service talent pipelines, and supported the rapid development of our business.
POLY PROPERTY SERVICES CO., LTD. | 11 |
INTERIM REPORT 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
Average property management fee per unit
Benefiting from higher pricing standards for new projects, price increases for certain projects under management, and higher standards for third-party projects, the average property management fee per unit of the Group continued to increase.
The following table sets out the average property management fee per unit of residential communities and commercial and office buildings for the periods indicated:
For the six months ended 30 June | |||
2020 | 2019 | Changes | |
(RMB/sq. m./month) | (RMB) | ||
Residential communities | 2.22 | 2.18 | Increase 0.04 |
- Poly Developments and Holdings Group | 2.30 | 2.27 | Increase 0.03 |
- Third parties | 1.70 | 1.48 | Increase 0.22 |
Commercial and office buildings | 7.94 | 6.71 | Increase 1.23 |
- Poly Developments and Holdings Group | 8.95 | 7.97 | Increase 0.98 |
- Third parties | 5.90 | 3.15 | Increase 2.75 |
Value-added services to non-property owners - representing 15.4% of total revenue
The Group provides value-added services to non-property owners (mainly property developers), including (i) pre-delivery services to property developers to assist with their sales and marketing activities at property sales venues and display units, mainly including visitor reception, cleaning, security inspection and maintenance; and (ii) other value-added services to non-property owners, such as consultancy, inspection, delivery and commercial operation services.
The following table sets out a breakdown of the Group's revenue from value-added services to non-property owners by service type for the periods indicated:
For the six months ended 30 June | ||||
2020 | 2019 | |||
Service Type | Percentage | Percentage | ||
RMB'000 | of revenue % | RMB'000 | of revenue % | |
Pre-delivery services | 443,752 | 80.1 | 358,633 | 78.2 |
Other value-added services to | ||||
non-property owners | 110,171 | 19.9 | 100,013 | 21.8 |
Total | 553,923 | 100.0 | 458,646 | 100.0 |
12 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
For the six months ended 30 June 2020, the Group's revenue from value-added services to non-property owners amounted to approximately RMB553.9 million, representing an increase of approximately 20.8% as compared to the corresponding period of 2019, which was mainly due to (i) the continuous increase in the number of projects providing pre-delivery services to Poly Developments and Holdings; and (ii) the rapid growth of value-added services to non-property owners in projects of third-party developers.
Community value-added services - representing approximately 21.1% of total revenue
Affected by the COVID-19 pandemic, the development of community value-added services such as home-entryvalue-added services, community media operations, and community space operations was subject to phased restrictions. Poly Property, which is committed to meeting the needs of its customers, actively initiated special services such as delivery of vegetables and fresh produce to communities, and cumulatively delivered more than 300,000 orders of fresh vegetables to over 330 communities across the country, using its best efforts to ensure the normal life of property owners in communities, especially those in key pandemic areas.
Despite the impact of the pandemic, we are still actively exploring and reforming. Through a combined model of "convenience services + vertical services + special pandemic services", we have achieved rapid growth in revenue from community value-added services. For the six months ended 30 June 2020, the Group's revenue from community value-added services amounted to approximately RMB761.1 million, representing an increase of approximately 40.8% as compared to the corresponding period of 2019.
In the field of convenience services, based on the premise of solid basic property services, we provide property owners in communities with convenience services in various categories such as household cleaning, maintenance, household appliance cleaning, maternity care and babysitting. We also launched special anti-pandemic and disinfection services for families and cars during the pandemic, and cumulatively provided disinfection services for more than 30,000 families, protecting the health and safety of property owners in communities.
In the field of vertical services, we have carried out intensive cultivation around business lines such as move-in and furnishing and community retail. On the one hand, we continued to expand our regional coverage and penetration rate, and accelerated the implementation of standardized service systems. The coverage of our move-in and furnishing business in the delivery of furnished properties has greatly improved. On the other hand, we continued to optimize the supply chain system, make use of economies of scale, and actively introduce large-scalehigh-quality brands to enrich the supply categories, so as to meet the multi-level needs of property owners. In addition, we built a three-dimensional marketing channel integrating online and offline channels, and created a convenient consumer experience through multiple channels such as online shopping malls and live broadcast marketing. By strengthening follow-up services with property owners, we paid attention to customer feedback in a timely manner and formulated targeted improvement measures to promote a positive business cycle.
POLY PROPERTY SERVICES CO., LTD. | 13 |
INTERIM REPORT 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
Move-in and furnishing services: realising approximately RMB199.3 million in revenue, accounting for approximately 26.2% of the total revenue from community value-added services
Being user-driven at its core and enabled by technology, our move-in and furnishing services reconstruct the chain of channels of pan-home products and services and aim at providing a full coverage housing solution from design, installation, delivery to repair and maintenance, with a focus on three major service scopes, namely decoration of furnished houses, house renovation and smart home services.
Community retail: realising approximately RMB176.1 million in revenue, accounting for approximately 23.1% of the total revenue from community value-added services
Community retail offers value-for-money products to property owners for their selection through different ways such as direct supply, centralized procurement and prepositioned warehouses. We have optimized our product supply chains and delivery capabilities through mutual access of online and offline resources in order to provide property owners with a cost-effective shopping experience.
Parking lot management services: realising approximately RMB100.8 million in revenue, accounting for approximately 13.2% of the total revenue from community value-added services
Parking lot management services aim at providing operation solutions targeting order management and control, operation and development and toll management with reference to a thorough combination of distinctive factors in relation to the carparks, including facilities, geographical location, distribution of carpark spaces and customer demands.
Community media: realising approximately RMB34.4 million in revenue, accounting for approximately 4.5% of the total revenue from community value-added services
Community media services are committed to developing a multi-dimensional value chain of media operation. We have developed the resources of core areas in our projects such as elevators and carparks, in depth to actively integrate the resources of suppliers.
Community space management: realising approximately RMB49.1 million in revenue, accounting for approximately 6.5% of the total revenue from community value-added services
Our community space management provided services such as venue rental, courier service, charging service, sharing service and recycling service by optimizing the usage of public resources.
Community convenience and other services: realising approximately RMB201.4 million in revenue, accounting for approximately 26.5% of the total revenue from community value-added services
We provided diversified convenience and living services according to the needs of property owners, including home cleaning, housekeeping and maintenance, theme-based education and realtor services, business ancillary services as well as property- specific services such as garbage disposal and removal.
14 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
FUTURE DEVELOPMENT
The COVID-19 pandemic has had a profound impact on the development of the property management industry. The value of quality services is perceived and recognized faster. Property management companies with brand influence, industry reputation and excellent service capabilities will be met with new development opportunities. Changes in residents' living needs and consumption habits under the pandemic will provide property management services with the potential to expand its boundaries, and promote category innovation and model upgrade of community value-added services. In addition, the property management industry is accelerating its integration into the social governance service system. Cross-industry cooperation with related upstream and downstream industries, complementary advantages, and joint efforts in public utilities including urban services will become a new trend of industry growth. Technology-based and intelligent infrastructure in property management will accelerate the upgrading and transformation of industry development models and become a necessary tool for property management companies to reduce costs, increase efficiency, and drive the scale development.
Poly Property will maintain a high degree of strategic determination, follow its established development rhythm, adhere to the path of scale development, comprehensively strengthen its operation and management capabilities, continue to strengthen informatization construction and investment in technology, and maintain rapid and healthy development of the Company.
First, we will highlight development themes and continue to improve the way we grow at a larger scale. We will make full use of the resource advantages of a state-ownedenterprise, and promote the implementation of joint investment and cooperation with large state-ownedenterprises and local state-ownedcapital investment and operation platforms. We will highlight the strategic function of investment, mergers and acquisitions in industrial development, expand our industry layout in public services, community value-addedservices and other fields, and create industry portfolio advantages.
Second, we will comprehensively strengthen our operational capabilities and facilitate improvements in quality
and efficiency. We will accelerate the promotion of the national implementation of ultimate standardized management, and comprehensively improve operational efficiency and stabilize service quality in six standard systems including service standards, operating standards, staffing standards, management and control standards, assessment and incentive standards, and personnel competence standards. In addition, we will further refine the multi-layered incentive and evaluation mechanism, optimize the "United Spirit" performance assessment system, and continuously stimulate the internal vitality of our development.
Third, we will strengthen technology empowerment and increase investment in informatization and
intelligentization. We will accelerate the overall upgrade of information infrastructure such as management information systems and smart parking systems, actively carry out the exploration and application of the Internet of Things and big data technologies in community scenarios, and promote the research and pilot projects of special informatization tools such as smart towns, smart buildings, and smart campuses. In addition, we will further improve our customer service system through informatization means, improve the timeliness, convenience and accessibility of various services, and continuously improve service experience.
POLY PROPERTY SERVICES CO., LTD. | 15 |
INTERIM REPORT 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
FINANCIAL REVIEW
Revenue
The Group derives revenue from three main business lines: (i) property management services; (ii) value-added services to non- property owners; and (iii) community value-added services.
The following table sets out a breakdown of the revenue by business line for the periods indicated:
For the six months ended 30 June | |||||
2020 | 2019 | ||||
Percentage | Percentage | ||||
RMB'000 | of revenue % | RMB'000 | of revenue % | Growth rate % | |
Property management | |||||
services | 2,285,930 | 63.5 | 1,822,975 | 64.6 | 25.4 |
Value-added services to non- | |||||
property owners | 553,923 | 15.4 | 458,646 | 16.3 | 20.8 |
Community value-added | |||||
services | 761,066 | 21.1 | 540,399 | 19.1 | 40.8 |
Total | 3,600,919 | 100.0 | 2,822,020 | 100.0 | 27.6 |
For the six months ended 30 June 2020, total revenue of the Group amounted to approximately RMB3,600.9 million (for the six months ended 30 June 2019: approximately RMB2,822.0 million), representing an increase of approximately 27.6% as compared to the corresponding period of 2019. It was primarily due to: (i) an increase in revenue driven by the continuous increase in the management scale of the Group; and (ii) the rapid growth of various value-added services of the Group during the Period.
Cost of services
During the Period, the cost of services of the Group amounted to approximately RMB2,867.0 million (for the six months ended 30 June 2019: approximately RMB2,155.5 million), representing an increase of approximately 33.0% as compared to the corresponding period of 2019. The increase in the cost of services was primarily due to (i) the expansion of GFA under management and the increase in the number of projects under management of the Group, which resulted in a corresponding increase in staff costs and subcontracting costs; (ii) a faster growth of vertical value-added services, including move-in and furnishing services and community retail, which resulted in an increase in the corresponding raw material costs.
16 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
Gross profit and gross profit margin
The following table sets out a breakdown of the Group's gross profit and gross profit margin by business line for the periods indicated:
For the six months ended 30 June | ||||||
2020 | 2019 | |||||
Percentage | Gross profit | Percentage | Gross profit | |||
Gross profit | of gross profit | margin | Gross profit | of gross profit | margin | |
(RMB'000) | % | % | (RMB'000) | % | % | |
Property management services | 389,152 | 53.0 | 17.0 | 330,753 | 49.7 | 18.1 |
Value-added services to | ||||||
non-property owners | 114,679 | 15.6 | 20.7 | 97,611 | 14.6 | 21.3 |
Community value-added services | 230,122 | 31.4 | 30.2 | 238,154 | 35.7 | 44.1 |
Total | 733,953 | 100.0 | 20.4 | 666,518 | 100.0 | 23.6 |
For the six months ended 30 June 2020, the Group's gross profit was approximately RMB734.0 million, representing an increase of approximately 10.1% as compared to approximately RMB666.5 million of the corresponding period of 2019. The Group's gross profit margin decreased from approximately 23.6% in the corresponding period of 2019 to approximately 20.4%.
For the six months ended 30 June 2020, the Group's gross profit margin for property management services was approximately 17.0% (for the six months ended 30 June 2019: approximately 18.1%), representing a slight decrease, which was primarily due to increased maintenance of public equipment and facilities in certain projects to improve service quality.
For the six months ended 30 June 2020, the gross profit margin for value-added services to non-property owners was approximately 20.7% (for the six months ended 30 June 2019: approximately 21.3%), representing a slight decrease, which was primarily due to the corresponding delay in the commencement of construction, sales and delivery of projects due to the pandemic, and the preparation cost of the projects having been incurred.
For the six months ended 30 June 2020, the Group's gross profit margin for community value-added services was approximately 30.2% (for the six months ended 30 June 2019: approximately 44.1%), representing a decrease of approximately 13.9 percentage points as compared to the corresponding period of 2019, which was primarily due to changes in the business structure during the Period: (i) affected by the pandemic, the development of high-margin businesses such as certain home-entryvalue-added services, community media and community space was periodically restricted, which led to a decline in revenue; (ii) during the pandemic, in order to satisfy the living needs of property owners, the Group actively carried out community retail businesses to ensure people's livelihood such as the provision of fresh vegetables and fruits; and (iii) vertical businesses which are still in the growth stage such as move-in and furnishing have grown rapidly and their proportion of revenue has increased.
POLY PROPERTY SERVICES CO., LTD. | 17 |
INTERIM REPORT 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
Administrative expenses
For the six months ended 30 June 2020, the total administrative expenses of the Group were approximately RMB307.5 million, representing an increase of approximately 26.0% as compared to approximately RMB244.1 million for the six months ended 30 June 2019. Such increase was primarily due to an increase in employee wages and welfare and relevant expenses as compared to the corresponding period of 2019 as a result of the Group's increased headcount to cope with its rapid business development. The administrative expenses of the Group accounted for approximately 8.5% (for the six months ended 30 June 2019: approximately 8.7%) of the total revenue, representing a decrease of approximately 0.2 percentage points as compared to the corresponding period of 2019.
Other income and other net gain
For the six months ended 30 June 2020, other income and other net gain was approximately RMB122.9 million, representing an increase of approximately 1,762.1% as compared to approximately RMB6.6 million for the six months ended 30 June 2019. Such increase was primarily due to (i) an increase in interest income and government grants; and (ii) the net exchange gain recognised in respect of changes in foreign exchange rates.
Profit for the Period
For the six months ended 30 June 2020, the profit for the Period of the Group was approximately RMB410.7 million, representing an increase of approximately 28.0% as compared to approximately RMB320.8 million of the corresponding period of 2019. The profit for the Period attributable to owners of the Company was approximately RMB399.6 million, representing an increase of approximately 27.4% as compared to approximately RMB313.6 million of the corresponding period of 2019. The net profit margin was approximately 11.4%, which was constant as compared to the corresponding period of 2019.
Current assets, reserves and capital structure
For the six months ended 30 June 2020, the Group maintained a sound financial position. As at 30 June 2020, the current assets amounted to approximately RMB8,502.6 million, representing an increase of approximately 16.4% as compared to approximately RMB7,303.3 million as at 31 December 2019. Cash and cash equivalents of the Group as at 30 June 2020 amounted to approximately RMB7,245.4 million, representing an increase of approximately 11.3% as compared to approximately RMB6,508.6 million as at 31 December 2019, primarily due to additional funds raised from the Company's over- allotment of H shares. As at 30 June 2020, the gearing ratio of the Group was approximately 32.1%, representing a decrease of approximately 0.2 percentage points as compared to approximately 32.3% as at 31 December 2019. Gearing ratio represents the ratio of total liabilities over total assets.
As at 30 June 2020, the Group's total equity was approximately RMB5,964.4 million, representing an increase of approximately RMB842.2 million or approximately 16.4% as compared to approximately RMB5,122.2 million as at 31 December 2019, which was primarily due to the funds raised from the over-allotment which resulted in an increase in the Company's equity and the contributions of the realised profits for the Period.
Property, plant and equipment
The Group's property, plant and equipment primarily includes right-of-use assets, buildings, leasehold improvements, computer equipment, electronic equipment, transportation equipment, furniture and equipment. As at 30 June 2020, the Group's property, plant and equipment amounted to approximately RMB118.5 million, representing an increase of approximately RMB19.5 million as compared to approximately RMB99.0 million as at 31 December 2019, which was primarily due to the purchase of electronic equipment for office use and the increase in renovations for leasehold properties for the purpose of the Group's business operations.
18 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
Intangible assets
The Group's intangible assets primarily includes property management contracts and goodwill obtained from a business combination. As at 30 June 2020, the Group's intangible assets amounted to approximately RMB92.2 million, representing a decrease of approximately RMB3.5 million as compared to approximately RMB95.7 million as at 31 December 2019, which was primarily due to the amortisation of property management contracts.
Trade and bills receivables
As at 30 June 2020, trade and bills receivables amounted to approximately RMB775.4 million, representing an increase of approximately RMB384.0 million as compared to approximately RMB391.4 million as at 31 December 2019, which was primarily due to an increase in trade receivables in line with the continuous expansion of the Group's business scale, as well as cyclical fluctuations caused by certain property owners' preference for paying their property management fees before year-end.
Trade payables
As at 30 June 2020, trade payables amounted to approximately RMB427.1 million, representing an increase of approximately 68.5% as compared to approximately RMB253.4 million as at 31 December 2019, which was primarily due to the expansion of the Group's GFA under management and the increase in the scale of subcontracting of services to independent third-party service providers.
Borrowings
As at 30 June 2020, the Group had no borrowings or bank loans.
Pledge of Assets
As at 30 June 2020, the Group had no pledge of assets.
MAJOR INVESTMENT, ACQUISITION AND DISPOSAL
The Group had no major investment, acquisition and disposal during the Period.
POLY PROPERTY SERVICES CO., LTD. | 19 |
INTERIM REPORT 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
PROCEEDS FROM THE LISTING
The H shares of the Company (the "H Shares") were successfully listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 19 December 2019 (the "Listing Date") with 133,333,400 new H Shares issued and, upon the exercise of the over-allotment option in full, 153,333,400 H Shares were issued in aggregate. Net proceeds from the listing amounted to approximately HK$5,218.2 million after deducting the underwriting fees and relevant expenses. As of 30 June 2020, the Group has used approximately HK$5.6 million of the proceeds. Such used proceeds were allocated and used in accordance with the use of proceeds as set out in the prospectus of the Company dated 9 December 2019 (the "Prospectus"). The unutilised net proceeds are approximately HK$5,212.6 million, which will be allocated and used in accordance with the purposes and proportions as set out in the Prospectus. Details of the specific use are as follows:
Proceeds actually | Proceeds unutilised | ||||
Plan for the net proceeds in the Prospectus | utilised as of | as of 30 June 2020 | |||
30 June 2020 | Expected | ||||
Category | Percentage | Net amount | Net amount | Balance | timetable |
HK$ in millions | HK$ in millions | HK$ in millions | for the usage | ||
Pursuit of selective strategic investment and | 57.0% | 2,974.4 | 4.7 | 2,969.7 | On or before |
acquisition opportunities and further | 31 December 2022 | ||||
development of strategic alliances and | |||||
expansion of the scale of the Group's | |||||
property management business | |||||
Including: investment matters such as joint | 7.4% | 386.1 | 4.7 | 381.4 | On or before |
investment and cooperation in respect | 31 December 2022 | ||||
of public services property management | |||||
Further development of the Group's | 15% | 782.7 | 0.0 | 782.7 | On or before |
value-added services | 31 December 2022 | ||||
Upgrade of the Group's systems for | 18% | 939.3 | 0.0 | 939.3 | On or before |
digitisation and smart management | 31 December 2022 | ||||
Working capital and general purpose | 10% | 521.8 | 0.9 | 520.9 | N/A |
Total | 100% | 5,218.2 | 5.6 | 5,212.6 | |
CONTINGENT LIABILITIES
As at 30 June 2020, the Group did not have any significant contingent liabilities.
20 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
EXCHANGE RATE RISK
The Group conducts its business in Renminbi. Except for the bank deposits and payables denominated in foreign currencies, the Group was not subject to any significant risk relating to foreign exchange rate fluctuation. The management will continue to keep track of the exchange rate risk and take prudent measures to mitigate exchange rate risk.
SUBSEQUENT EVENTS
The Company's Chinese full name has been changed from "保利物業發展股份有限公司" to "保利物業服務股份有限公司" and its English full name has been changed from "POLY PROPERTY DEVELOPMENT CO., LTD." to "POLY PROPERTY SERVICES CO., LTD.". Its English stock short name has been changed from "POLY PPT DEV" to "POLY PPT SER" with effect from 9:00 a.m. on 30 July 2020, while its Chinese stock short name "保利物業" and stock code "06049" remain unchanged. For further details, please refer to the announcement of the Company dated 23 July 2020.
Save as disclosed above, the Group does not have any other subsequent events after 30 June 2020 until the date of this report.
EMPLOYEES AND REMUNERATION POLICIES
As at 30 June 2020, the Group had 40,026 employees (as at 30 June 2019: 35,190 employees). For the six months ended 30 June 2020, the total staff costs were approximately RMB1,617.2 million.
The Group has established a market-based, competitive and performance-oriented remuneration plan with reference to market standards and employee performance and contributions in order to encourage value creation of employees. In addition, the Group provides employees with employee benefits including pension funds, medical insurance, work injury insurance, maternity insurance, unemployment insurance and housing provident fund.
EMPLOYEE TRAINING AND DEVELOPMENT
The Group places a strong emphasis on recruiting high-quality personnel and provides employees with continuous training programmes and career development opportunities. In response to the recruitment under the pandemic, the Group made advance arrangements and took the lead in launching the national spring recruitment. Through the "Galaxy Talent Programme" and four recruitment campaigns, i.e. "Green Channel", "Commander Programme", "Companion Programme", and "Heartwarming Journey", the Group recruited for various professional management positions and project management positions across the country. The Group actively responded to the job stabilisation policy, and innovated the form of school recruitment by launching the recruitment live broadcast activities including CCTV Video APP's "National Recruitment Action" and GMW.cn's "2020 Guangming Live Broadcast for Enterprises' School Recruitment", to provide more jobs for the society and more development opportunities for young people. The Group launched the "Starlight Public Service Professional Talents Plan" to create special training for core development, forge "special forces" for the development of public services, and provide strong talent support for the Group.
POLY PROPERTY SERVICES CO., LTD. | 21 |
INTERIM REPORT 2020 |
CORPORATE GOVERNANCE AND OTHER INFORMATION
INTERIM DIVIDEND
The board of directors of the Company (the "Board") does not recommend the payment of an interim dividend for the six months ended 30 June 2020.
REVIEW OF ACCOUNTS
The audit committee of the Company (the "Audit Committee") was established with written terms of reference in accordance with the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules"). The Audit Committee is authorised by the Board and is responsible for reviewing and monitoring the financial reporting, risk management and internal control systems of the Company, and assisting the Board in fulfilling its responsibility over the audit of the Group.
The Audit Committee comprises Mr. Huang Hai and Mr. Hu Zaixin as non-executive Directors and Ms. Tan Yan, Mr. Wang Xiaojun and Mr. Wang Peng as independent non-executive Directors. Ms. Tan Yan is the chairlady of the Audit Committee.
The Audit Committee has reviewed the consolidated financial statements and interim results of the Group for the six months ended 30 June 2020, and discussed with the management of the Group regarding the accounting principles and practices adopted by the Group, and the internal control and financial reporting matters.
COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
The Company has adopted the code provisions in the Corporate Governance Code (the "Corporate Governance Code") contained in Appendix 14 to the Listing Rules as its own code of corporate governance. The Company has complied with all the applicable code provisions of the Corporate Governance Code during the six months ended 30 June 2020.
COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules as the code of conduct regarding dealing of securities transactions by the directors of the Company (the "Directors") and the supervisors of the Company (the "Supervisors"). Having made specific enquiries of all Directors and supervisors of the Company, each of them has confirmed that they have complied with the required standard as set out in the Model Code during the six months ended 30 June 2020.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
The Company exercised the over-allotment option in full on 10 January 2020, and issued a total of 20,000,000 new H Shares of par value of RMB1.0 each at HK$35.10 per share on 17 January 2020 (the closing price per share on 10 January 2020 was HK$52.00). The over-allotment shares were allotted to investors of the international offering. After the issue of the new H Shares, the Company had a total of 553,333,400 issued shares, comprising 400,000,000 domestic shares and 153,333,400 H Shares.
Save as disclosed above, during the six months ended 30 June 2020, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities.
22 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
CORPORATE GOVERNANCE AND OTHER INFORMATION
INTERESTS AND SHORT POSITIONS OF THE DIRECTORS, SUPERVISORS AND THE CHIEF EXECUTIVE IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY OF ITS ASSOCIATED CORPORATIONS
As at 30 June 2020, the interests and/or short positions of the Directors, Supervisors and chief executive in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")), as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code, were as follows:
Name of | Approximate | |||
Director/ | Number of | percentage of | ||
Supervisor | Name of associated corporation | Capacity | shares held | interests (%) |
Huang Hai | Poly Developments and Holdings | Beneficial owner | 862,984(L) | 0.007 |
Poly Developments and Holdings | Beneficial owner | 187,713(L)(2) | 0.002 | |
Hu Zaixin | Poly Developments and Holdings | Beneficial owner | 882,784(L) | 0.007 |
Poly Developments and Holdings | Beneficial owner | 187,713(L)(2) | 0.002 | |
Li Jiahe | Poly Developments and Holdings | Beneficial owner | 136,519(L)(2) | 0.001 |
Wu Lanyu | Poly Developments and Holdings | Beneficial owner | 102,388(L)(2) | 0.001 |
Poly Developments and Holdings | Interest of spouse | 100,000(L) | 0.001 | |
Poly Union Chemical Holding Group Co., Ltd.(3) | Beneficial owner | 1,900(L) | 0.00039 | |
Liu Huiyan | Poly Developments and Holdings | Beneficial owner | 53,001(L) | 0.00044 |
Beneficial owner | 216,021(L)(2) | 0.002 | ||
Chen Shuping | Poly Developments and Holdings | Beneficial owner | 2,707(L) | 0.00002 |
Notes:
- The letter "L" denotes the person's long position in the shares.
-
Such interest is in the form of share options of associated corporations as at 30 June 2020. The shareholding percentage is calculated
(i) by assuming full exercise of the relevant options; and (ii) based on the total number of shares of Poly Developments and Holdings without taking into account the share options granted but not yet exercised, as at 30 June 2020. - Poly Union Chemical Holding Group Co., Ltd. (保利聯合化工控股集團有限公司), formerly known as Guizhou Jiulian Industrial Explosive Material Development Co., Ltd. (貴州久聯民爆器材發展股份有限公司).
Save as disclosed above, as at 30 June 2020, none of the Directors, Supervisors and chief executive had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO); or which are recorded in the register required to be kept pursuant to Section 352 of the SFO; or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.
POLY PROPERTY SERVICES CO., LTD. | 23 |
INTERIM REPORT 2020 |
CORPORATE GOVERNANCE AND OTHER INFORMATION
INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS IN THE SHARES OR UNDERLYING SHARES OF THE COMPANY
As at 30 June 2020, the persons (other than Directors, Supervisors and chief executive of the Company) or corporations who had interest or short positions in the shares and/or underlying shares of the Company which were required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept under section 336 of the SFO were as follows:
Percentage of | |||||
Interests | Percentage of | the total | |||
held or | issued shares in | issued shares | |||
Class of | owned in | the relevant class | of the Company | ||
shares | Name of Shareholder | Capacity | the shares | (%) | (%) |
H Shares | Citigroup Inc. | Interest in controlled corporation | 2,060,700(L) | 1.34 | 0.37 |
1,986,231(S) | 1.29 | 0.35 | |||
Approved lending agent | 24,164,354(L) | 15.75 | 4.36 | ||
24,164,354(P) | 15.75 | 4.36 | |||
GIC Private Limited | Investment manager | 20,210,400(L) | 13.18 | 3.65 | |
JPMorgan Chase & Co. | Interest in controlled corporation | 2,975,200(L) | 1.94 | 0.53 | |
2,716,600(S) | 1.77 | 0.49 | |||
Investment manager | 2,546,600(L) | 1.66 | 0.46 | ||
Person having a security interest in shares | 698,800(L) | 0.46 | 0.12 | ||
Approved lending agent | 4,073,354(L) | 2.65 | 0.73 | ||
4,073,354(P) | 2.65 | 0.73 | |||
Gaoling Fund, L.P. | Beneficial owner | 7,795,000(L)(1) | 5.85(1) | 1.40 | |
Hillhouse Capital Advisors, Ltd. | Investment manager | 7,795,000(L)(1) | 5.85(1) | 1.40 | |
Schroders Plc | Investment manager | 8,863,000(L) | 5.78 | 1.60 | |
China International Capital Corporation | Interest in controlled corporation | 8,764,200(L)(2) | 5.72(2) | 1.58 | |
Limited (2) | |||||
6,642,000(S)(2) | 4.33(2) | 1.20 | |||
CCB Investment Funds Management | Interest in controlled corporation | 6,681,400(L)(3) | 5.01(3) | 1.20 | |
Co., Ltd.(3) |
24 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
CORPORATE GOVERNANCE AND OTHER INFORMATION
Percentage of | |||||
Interests | Percentage of | the total | |||
held or | issued shares in | issued shares | |||
Class of | owned in | the relevant class | of the Company | ||
shares | Name of Shareholder | Capacity | the shares | (%) | (%) |
Domestic | China Poly Group Corporation Limited(4) | Interest in controlled corporation | 400,000,000(L) | 100.00 | 72.289 |
shares | |||||
Poly Southern Group Co., Ltd.(4) | Interest in controlled corporation | 400,000,000(L) | 100.00 | 72.289 | |
Poly Developments and Holdings(4) | Beneficial owner | 380,000,000(L) | 95.00 | 68.675 | |
Interest in controlled corporation | 20,000,000(L) | 5.00 | 3.614 | ||
Xizang Yingyue Investment Management | Beneficial owner | 20,000,000(L) | 5.00 | 3.614 | |
Co., Ltd.(4) |
Notes:
As shown in the disclosed information:
Long position - (L); Short position - (S); Lending pool - (P)
- As at 30 June 2020, the Company had a total of 553,333,400 issued shares, comprising 400,000,000 domestic shares and 153,333,400 H Shares.
- Disclosure of the number of H Shares held is made pursuant to the latest disclosure of interests notice filed as of 30 June 2020 (date of the relevant event: 19 December 2019).
- China International Capital Corporation Limited has full control over several corporations, and is deemed by the SFO to be interested in the long positions held in a total of 8,764,200 H Shares and short positions in 6,642,000 H Shares of the Company. Disclosure of the number of H Shares held is made pursuant to the latest disclosure of interests notice filed as of 30 June 2020 (date of the relevant event: 26 February 2020).
- China Structural Reform Fund Co., Ltd ("China Structural Reform Fund") is held as to 38.20% by CCB Investment Funds Management Co., Ltd. ("CCB"), which is deemed by the SFO to be interested in the shares of the Company held by China Structural Reform Fund. Disclosure of the number of H Shares held is made pursuant to the latest disclosure of interests notice filed as of 30 June 2020 (date of the relevant event: 19 December 2019).
- (i) Poly Developments and Holdings is held as to 37.81% by Poly Southern Group Co., Ltd. ("Poly Southern"), which is a wholly-owned subsidiary of China Poly Group Corporation Limited ("China Poly Group"). Therefore, Poly Southern and China Poly Group are deemed by the SFO to be interested in the shares of the Company held by Poly Developments and Holdings; and (ii) Xizang Yingyue Investment Management Co., Ltd. ("Xizang Yingyue") is wholly owned by Poly Developments and Holdings. Therefore, Poly Developments and Holdings is deemed by the SFO to be interested in the shares of the Company held by Xizang Yingyue.
Save as disclosed above, as at 30 June 2020, the Company had not been notified of any other interests or short positions held by any other person in the shares or underlying shares of the Company which were required to be recorded or otherwise disclosed to the Company under the SFO.
POLY PROPERTY SERVICES CO., LTD. | 25 |
INTERIM REPORT 2020 |
REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TO THE BOARD OF DIRECTORS OF POLY PROPERTY SERVICES CO., LTD. (FORMERLY KNOWN AS POLY PROPERTY DEVELOPMENT CO., LTD.)
(a joint stock company incorporated in the People's Republic of China with limited liability)
OPINION
We have reviewed the interim condensed consolidated financial statements of Poly Property Services Co., Ltd. (formerly known as Poly Property Development Co., Ltd.) (the "Company") and its subsidiaries (together the "Group") set out on pages 27 to 56, which comprise the condensed consolidated statements of financial position as at 30 June 2020, and the related condensed consolidated statements of profit or loss and other comprehensive income, the condensed consolidated statements of changes in equity and the condensed consolidated statements of cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes (the "interim condensed consolidated financial statements").
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 directors are responsible for the preparation and presentation of the interim condensed consolidated financial statements in accordance with HKAS 34.
Our responsibility is to express a conclusion on the interim condensed consolidated financial statements based on our review. This report is made 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 Hong Kong Institute of Certified Public Accountants. A review of interim financial information 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 interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34.
BDO Limited
Certified Public Accountants
Wan Che Bun
Practising Certificate Number P05804
Hong Kong, 24 August 2020
26 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
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 | RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | ||
Revenue | 6 | 3,600,919 | 2,822,020 |
Cost of services | (2,866,966) | (2,155,502) | |
Gross profit | 733,953 | 666,518 | |
Other income and other net gain/ (loss) | 7 | 122,935 | 6,589 |
Selling and marketing expenses | (1,563) | (877) | |
Administrative expenses | (307,494) | (244,132) | |
Share of associates'/joint ventures' results | 9,018 | 10,002 | |
Finance cost | (399) | (435) | |
Other expense | (415) | (513) | |
Profit before income tax expense | 8 | 556,035 | 437,152 |
Income tax expense | 9 | (145,329) | (116,381) |
Profit for the period | 410,706 | 320,771 | |
Profits for the period attributable to: | |||
- Owners of the Company | 399,588 | 313,584 | |
- Non-controlling interests | 11,118 | 7,187 | |
Profit for the period | 410,706 | 320,771 | |
Other comprehensive income, net of tax | |||
Items that will not be reclassified subsequently to profit or loss: | |||
Financial assets at fair value through other comprehensive income ("FVTOCI") | |||
- Change in fair value | (6,000) | 2,900 | |
Profits and total comprehensive income for the period | 404,706 | 323,671 | |
Profits and total comprehensive income | |||
for the period attributable to: | |||
- Owners of the Company | 393,588 | 316,484 | |
- Non-controlling interests | 11,118 | 7,187 | |
Profits and total comprehensive income for the period | 404,706 | 323,671 | |
Earnings per share (expressed in RMB per share) | |||
Basic and diluted earnings per share | 11 | 0.72 | 0.78 |
POLY PROPERTY SERVICES CO., LTD. | 27 |
INTERIM REPORT 2020 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
As at | As at | |||
30 June | 31 December | |||
2020 | 2019 | |||
Notes | RMB'000 | RMB'000 | ||
(Unaudited) | (Audited) | |||
ASSETS AND LIABILITIES | ||||
Non-current assets | ||||
Interests in associates/joint ventures | 12 | 34,993 | 27,254 | |
Property, plant and equipment | 13 | 118,539 | 98,989 | |
Investment properties | 14 | 15,185 | 15,475 | |
Financial assets at fair value through other comprehensive income ("FVTOCI") | 15 | 7,000 | 13,000 | |
Intangible assets | 16 | 92,153 | 95,709 | |
Prepayments for property, plant and equipment | 19 | 757 | 10,698 | |
Deferred tax assets | 10,983 | 6,636 | ||
279,610 | 267,761 | |||
Current assets | ||||
Inventories | 17 | 45,064 | 46,268 | |
Trade and bills receivables | 18 | 775,422 | 391,388 | |
Prepayments, deposits and other receivables | 19 | 436,786 | 357,032 | |
Deposits and bank balances | 20 | 7,245,369 | 6,508,618 | |
8,502,641 | 7,303,306 | |||
Current liabilities | ||||
Trade payables | 21 | 427,134 | 253,359 | |
Accruals and other payables | 22 | 1,230,760 | 1,180,167 | |
Income tax payable | 128,752 | 51,024 | ||
Lease liabilities | 23 | 3,426 | 2,643 | |
Contract liabilities | 6 | 999,305 | 936,732 | |
2,789,377 | 2,423,925 | |||
Net current assets | 5,713,264 | 4,879,381 | ||
Total assets less current liabilities | 5,992,874 | 5,147,142 | ||
28 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
As at | As at | ||
30 June | 31 December | ||
2020 | 2019 | ||
Notes | RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | ||
Non-current liabilities | |||
Lease liabilities | 23 | 16,720 | 12,252 |
Deferred tax liabilities | 11,753 | 12,642 | |
28,473 | 24,894 | ||
Net assets | 5,964,401 | 5,122,248 | |
EQUITY | |||
Share capital and reserves attributable to owners of the Company | |||
Share capital | 24 | 553,333 | 533,333 |
Reserves | 5,345,636 | 4,522,154 | |
Equity attributable to owners of the Company | 5,898,969 | 5,055,487 | |
Non-controlling interests | 65,432 | 66,761 | |
Total equity | 5,964,401 | 5,122,248 | |
The interim condensed consolidated financial statements on pages 27 to 56 were approved and authorised for issue by the board of directors and are signed on its behalf by:
Huang Hai | Wu Lanyu |
Director | Director |
POLY PROPERTY SERVICES CO., LTD. | 29 |
INTERIM REPORT 2020 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2020
Reserves | |||||||||
Equity | |||||||||
attributable | Non- | ||||||||
Share | Capital | Statutory | Fair value | Retained | to owners of | Controlling | |||
Capital | premium* | reserves* | reserves* | reserves* | profits* | the Company | interests | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
(Note a) | (Note b) | (Note c) | |||||||
Balance at 1 January 2019 (Audited) | 100,000 | - | 85,594 | 45,456 | 9,300 | 409,508 | 649,858 | 43,271 | 693,129 |
Profit for the period | - | - | - | - | - | 313,584 | 313,584 | 7,187 | 320,771 |
Unrealised fair value change on financial | |||||||||
assets at FVTOCI | - | - | - | - | 2,900 | - | 2,900 | - | 2,900 |
Issue of shares (Note d) | 300,000 | - | (80,000) | - | - | (220,000) | - | - | - |
Capital contribution by non-controlling | |||||||||
shareholders | - | - | - | - | - | - | - | 6,980 | 6,980 |
Appropriation of statutory reserve | - | - | - | 40,341 | - | (40,341) | - | - | - |
Acquisition of a subsidiary | - | - | - | - | - | - | - | 3,051 | 3,051 |
Dividend approved in respect of the | |||||||||
previous period | - | - | - | - | - | (160,000) | (160,000) | - | (160,000) |
At 30 June 2019 (Audited) | 400,000 | - | 5,594 | 85,797 | 12,200 | 302,751 | 806,342 | 60,489 | 866,831 |
Balance at 31 December 2019 and | |||||||||
1 January 2020 (Audited) | 533,333 | 3,939,585 | 5,594 | 93,409 | 11,500 | 472,066 | 5,055,487 | 66,761 | 5,122,248 |
Profit for the period | - | - | - | - | - | 399,588 | 399,588 | 11,118 | 410,706 |
Unrealised fair value change on financial | |||||||||
assets at FVTOCI | - | - | - | - | (6,000) | - | (6,000) | - | (6,000) |
Shares issued pursuant to the over- | |||||||||
allotment (Note 24(c)) | 20,000 | 602,098 | - | - | - | - | 622,098 | - | 622,098 |
Transaction cost attributable to | |||||||||
the over-allotment of shares | |||||||||
(Note 24(c)) | - | (6,204) | - | - | - | - | (6,204) | - | (6,204) |
Capital contribution by non-controlling | |||||||||
shareholders | - | - | - | - | - | - | - | 3,630 | 3,630 |
Appropriation of statutory reserve | - | - | - | 43,518 | - | (43,518) | - | - | - |
Acquisition of a subsidiary | - | - | - | - | - | - | - | 853 | 853 |
Dividend approved in respect of the | |||||||||
previous period | - | - | - | - | - | (166,000) | (166,000) | (16,930) | (182,930) |
Balance at 30 June 2020 (Unaudited) | 553,333 | 4,535,479 | 5,594 | 136,927 | 5,500 | 662,136 | 5,898,969 | 65,432 | 5,964,401 |
- The total of these amounts as at the reporting dates represents "Reserves" in the interim condensed consolidated statements of financial position.
30 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2020
Notes:
- Share premium account of the Company represents the excess of the proceeds received over the nominal value of the Company's share issued.
- Statutory reserves represented the amount transferred from net profit for the period of the subsidiaries established in the People's Republic of China ("PRC") (based on the subsidiaries PRC statutory financial statements) in accordance with the relevant PRC laws until the statutory reserves reach 50% of the registered capital of the subsidiaries. The statutory reserves cannot be reduced except either in setting off the accumulated losses or increasing capital.
- Fair value reserves represented the cumulative net change in the financial assets at FVTOCI held at the end of each period.
- Pursuant to the Company's shareholder's resolution dated 7 May 2019, the Company has increased its share capital from RMB100,000,000 to RMB400,000,000 divided into 400,000,000 shares of RMB1 each, by way of the capitalisation of capital reserves and retained earnings of the Company of RMB80,000,000 and RMB220,000,000 respectively.
POLY PROPERTY SERVICES CO., LTD. | 31 |
INTERIM REPORT 2020 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2020
Six months ended 30 June | ||
2020 | 2019 | |
Notes | RMB'000 | RMB'000 |
(Unaudited) | (Audited) | |
Cash flows from operating activities | ||
Cash generated from operations | 171,671 | 334,840 |
Income tax paid | (68,551) | (87,421) |
Interest paid | (399) | (435) |
Net cash generated from operating activities | 102,721 | 246,984 |
Cash flows from investing activities | ||
Acquisition of subsidiaries, net of cash acquired | 1,174 | 5,507 |
Purchase of property, plant and equipment | (20,632) | (13,282) |
Withdrawal of time deposits with original maturity over three months | - | 18,000 |
Proceeds from disposal of property, plant and equipment | 48 | 1,126 |
Proceeds from disposal of investment properties | - | 2,330 |
Bank interest income received | 46,650 | 1,382 |
Other interest income received | 9,818 | 9,863 |
Deposits paid for acquisition of property, plant and equipment | (840) | (7,213) |
Net cash generated from investing activities | 36,218 | 17,713 |
Cash flows from financing activities | ||
Dividends paid to owners of the Company | - | (160,000) |
Payment of lease liabilities | (2,508) | (2,839) |
Shares issued pursuant to the over-allotment | 622,098 | - |
Transaction costs attributable to the over-allotment of shares | (80,082) | - |
Capital injection from non-controlling interests | 3,630 | 6,980 |
Net cash generated from/(used in) financing activities | 543,138 | (155,859) |
Net increase in cash and cash equivalents | 682,077 | 108,838 |
Cash and cash equivalents at beginning of the period | 6,508,618 | 1,793,570 |
Effect of exchange rate changes on cash and cash equivalents | 54,674 | - |
Cash and cash equivalents at end of the period | 7,245,369 | 1,902,408 |
32 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
1. GENERAL INFORMATION
Poly Property Services Co., Ltd. (formerly known as Poly Property Development Co., Ltd.) (the "Company") was incorporated in the PRC on 26 June 1996 under the PRC Companies Law. On 25 October 2016, the Company was converted from a limited liability company into a joint stock company with limited liability. The address of the Company's registered office is located at Rooms 201-208, No.688 Yue Jiang Zhong Road, Hai Zhu District, Guangzhou, Guangdong Province, the PRC. The Company's principal place of business is located at the PRC.
The Company was listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 19 December 2019.
The parent company is Poly Developments and Holdings Group Co., Ltd. ("Poly Developments and Holdings") whose shares are listed on the Mainboard of Shanghai Stock Exchange in the PRC. The ultimate holding company is China Poly Group Corporation Limited ("China Poly Group"), a state-owned enterprise incorporated in the PRC.
The Company and its subsidiaries (the "Group") are principally engaged in provision of property management service, community value-added services and value-added services to non-property owners in the PRC.
The interim condensed consolidated financial statements were authorised for issue by the Board of Directors on 24 August 2020.
2. BASIS OF PREPARATION
These interim condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 ("HKAS 34"), issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
These interim condensed consolidated financial statements have been prepared with the same accounting policies adopted in the 2019 annual financial statements, except for those that relate to new standards or interpretations effective for the first time for periods beginning on or after 1 January 2020. The Group has not early adopted any new and revised HKFRSs that have been issued but not yet effective in the current accounting period.
The preparation of these interim condensed consolidated financial statements in compliance with HKAS 34 requires the use of certain judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.
POLY PROPERTY SERVICES CO., LTD. | 33 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
2. BASIS OF PREPARATION (Continued)
These interim condensed consolidated financial statements are presented in Renminbi ("RMB"), unless otherwise stated. These interim condensed consolidated financial statements contain condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the 2019 annual financial statements. These interim condensed consolidated financial statements and notes do not include all of the information required for a complete set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards (the "HKFRSs") and should be read in conjunction with the 2019 consolidated financial statements.
These interim condensed consolidated financial statements are unaudited, but have been reviewed by BDO Limited 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. BDO Limited's independent review report to the Board of Directors is included on page 26.
3. ADOPTION OF NEW AND REVISED STANDARDS
The HKICPA has issued a number of new or amended HKFRSs that are first effective for the current accounting period of the Group:
Amendments to HKAS 1 and HKAS 8 | Definition of Material |
Amendments to HKFRS 9, HKAS 39 and HKFRS 7 | Interest Rate Benchmark Reform |
Amendments to HKFRS 3 | Definition of a Business |
The new or amended HKFRSs that are effective from 1 January 2020 did not have any significant impact on the Group's accounting policies.
4. USE OF JUDGEMENTS AND ESTIMATES
In preparing these interim condensed consolidated financial statements, the significant judgements made by the management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the 2019 annual financial statements.
34 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
5. SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by the chief operating decision maker. The chief operating decision-maker, who is responsible for allocating resources and assessing the performance of the operating segment, has been identified as the executive directors of the Company.
Information about major customer
For the six months ended 30 June 2020 and 2019, revenue from a Shareholder - Poly Developments and Holdings and its subsidiaries ("Poly Developments and Holdings Group") contributed 13.7% and 15.5% of the Group's revenue respectively. Other than the Poly Developments and Holdings Group, the Group has a large number of customers, none of whom contributed 10% or more of the Group's revenue during the six months ended 30 June 2020 and 2019.
Operating segment information
The Group is principally engaged in the provision of property management services, value-added services to non-property owners and community value-added services in the PRC. Management reviews the operating results of the business as one operating segment to make decisions about resources to be allocated. Therefore, the chief operating decision-maker of the Company regards that there is only one segment which is used to make strategic decisions.
Information about geographical areas
The major operating entity of the Group is domiciled in the PRC. Accordingly, all of the Group's revenue was derived in the PRC during the six months ended 30 June 2020 and 2019.
As at 30 June 2020 and 31 December 2019, all of the non-current assets were located in the PRC.
6. REVENUE
Revenue mainly comprises of proceeds from property management services, value-added services to non-property owners and community value-added services. An analysis of the Group's revenue by category for the six months ended 30 June
2020 and 2019 was as follows:
Six months ended 30 June | |||
2020 | 2019 | ||
Revenue from | RMB'000 | RMB'000 | |
customers and recognised | (Unaudited) | (Audited) | |
Property management services | over time | 2,285,930 | 1,822,975 |
Value-added services to non-property | over time | 553,923 | 458,646 |
owners | |||
Community value-added services | |||
- Other value-added services | over time | 451,289 | 412,616 |
- Sales of goods | at a point in time | 309,777 | 127,783 |
3,600,919 | 2,822,020 | ||
POLY PROPERTY SERVICES CO., LTD. | 35 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
6. REVENUE (Continued)
For property management service, the performance obligation is satisfied upon services provided. For value-added service to non-property owners, the performance obligation is satisfied upon services provided. For community value-added service, the performance obligation is satisfied upon services provided and the service income is due for payment by the residents upon issuance of demand note.
- Unsatisfied performance obligations
For property management services and value-added services to non-property owners, the Group recognises revenue in the amount that equals to the right to invoice which corresponds directly with the value to the customer of the Group's performance to date, on a monthly basis. The Group has elected the practical expedient for not to disclose the remaining performance obligations for these types of contracts.
The majority of the property management service contracts do not have a fixed term. The term of the contracts for value-added services to non-property owners is generally set to expire when the counterparties notify the Group that the services are no longer required.
For community value-added services, they are rendered in short period of time and there is no unsatisfied performance obligation at the end of respective periods.
- Assets recognised from incremental costs to obtain a contract
During the six months ended 30 June 2020 and 2019, there were no significant incremental costs to obtain a contract.
- Details of contract liabilities
The Group has recognised the following revenue-related contract liabilities:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Contract liabilities | 999,305 | 936,732 |
Contract liabilities of the Group mainly arise from the advance payments made by customers while the underlying services are yet to be provided. RMB649,680,000 of the contract liabilities as of 1 January 2020 has been recognised as revenue for the six months ended 30 June 2020.
36 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
7. OTHER INCOME AND OTHER NET GAIN/(LOSS)
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Other income: | ||
Bank interest income | 47,938 | 2,243 |
Other interest income (Note a) | 10,043 | 7,540 |
Government grants (Note b) | 30,210 | 4,505 |
Penalty income | 596 | 608 |
Others | 393 | 371 |
89,180 | 15,267 | |
Other net gain/(loss): | ||
Gain on disposal of investment properties | - | 1,256 |
Loss on disposal of property, plant and equipment | (89) | (88) |
Impairment loss on trade receivables | (14,833) | (7,149) |
Impairment loss on other receivables | (2,554) | (2,697) |
Exchange gain, net | 51,231 | - |
122,935 | 6,589 | |
Notes:
- Other interest income represented the following:
- The interest received from the amount due from Poly Developments and Holdings Group during the six months ended 30 June 2020 and 2019, which is unsecured, interest-bearing and repayable on demand.
- The interest received from the amount due from a related party during the six months ended 30 June 2020 and 2019, which is unsecured, interest-bearing and repayable on demand.
- During the six months ended 30 June 2020 and 2019, interest was also received from the deposit maintained with a fellow subsidiary, Poly Finance Company Limited ("Poly Finance"), which is unsecured, interest-bearing and repayable on demand or with a 7-day notice.
- Government grants mainly included the financial support received from the local government as an incentive for business development and there are no unfulfilled conditions attached to the government grant.
POLY PROPERTY SERVICES CO., LTD. | 37 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
8. PROFIT BEFORE INCOME TAX EXPENSE
Profit before income tax expense is arrived at after charging the following:
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Auditor's remuneration | 400 | - |
Depreciation of property, plant and equipment | 19,650 | 16,155 |
Depreciation of investment properties | 290 | 337 |
Amortisation of intangible assets | 3,556 | 3,223 |
Impairment loss on trade receivables | 14,833 | 7,149 |
Impairment loss on other receivables | 2,554 | 2,697 |
Short-term leases expenses | 31,214 | 22,861 |
Finance cost - interest on lease liabilities | 399 | 435 |
Staff costs (including directors' emoluments): | ||
Salaries and bonus | 1,485,218 | 1,201,658 |
Pension costs, housing funds, medical insurances and other social insurances | 131,968 | 180,373 |
1,617,186 | 1,382,031 | |
9. | INCOME TAX EXPENSE | ||
Six months ended 30 June | |||
2020 | 2019 | ||
RMB'000 | RMB'000 | ||
(Unaudited) | (Audited) | ||
Current tax | |||
Tax for the current period and prior year | 150,565 | 118,955 | |
Deferred tax | |||
Credited to profit or loss for the period | (5,236) | (2,574) | |
145,329 | 116,381 | ||
No provision for Hong Kong Profits Tax has been made as the Group had no assessable profits arising in Hong Kong for the six months ended 30 June 2020 and 2019.
Corporate income tax provision of the Group in respect of operations in Mainland China has been calculated at the applicable tax rate on the estimated assessable profits for the periods, based on the existing legislation, interpretations and practices in respect thereof. The general corporate income tax rate in PRC is 25%. Certain subsidiaries of the Group are located in western cities in PRC, and are subjected to a preferential corporate income tax rate of 15% in certain periods.
38 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
10. DIVIDENDS
During the six months ended 30 June 2019, dividend of RMB160,000,000 in respect of 2018 was declared and paid by the Company to its Shareholders (Poly Developments and Holdings and Xizang Yingyue Investment Management Co., Ltd.).
During the six months ended 30 June 2020, dividend of RMB166,000,020 (tax inclusive) in respect of 2019 was declared and unpaid.
No interim dividend was declared for the six months ended 30 June 2020 and the six months ended 30 June 2019.
11. EARNINGS PER SHARE
Six months ended 30 June
20202019
RMB'000 RMB'000
(Unaudited) (Audited)
Profits
Profit attributable to owners of the Company | 399,588 | 313,584 |
Six months ended 30 June
2020 | 2019 | |
Number'000 | Number'000 | |
(Unaudited) | (Audited) | |
Number of shares | ||
Weighted average number of ordinary shares (Note) | 551,575 | 400,000 |
Basic and diluted earnings per share (RMB) | 0.72 | 0.78 |
Note: Weighted average of 551,575,000 ordinary shares for the six months ended 30 June 2020 includes the weighted average of 20,000,000 ordinary shares issued due to over-allotment, in addition to the 533,333,400 ordinary shares for the year ended 31 December 2019.
Weighted average of 400,000,000 ordinary shares for the six months ended 30 June 2019, being the number of shares in issue immediately after the completion of capitalisation issued on 7 May 2019 as detailed in Note 24, was deemed to have been issued throughout the year ended 31 December 2018 and until immediately before the global offering.
Diluted earnings per share were the same as the basic earnings per share as the Group had no dilutive potential shares for the six months ended 30 June 2020 and 2019.
POLY PROPERTY SERVICES CO., LTD. | 39 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
12. INTERESTS IN ASSOCIATES/JOINT VENTURES
As at | As at | |||
30 June | 31 December | |||
2020 | 2019 | |||
RMB'000 | RMB'000 | |||
(Unaudited) | (Audited) | |||
Share of net assets | 34,993 | 27,254 | ||
Details of the Group's associates and joint ventures are as follows: | ||||
Percentage of | ||||
Place of incorporation, | ownership interests/voting | |||
Name | operation and principal activity | Relationship | rights/profit share | |
30 June | 31 December | |||
2020 | 2019 | |||
Guangdong Xinzhihui Technology Co., Ltd. | Research and development in the Intelligent technology | Associate | 30 | 30 |
("Guangdong Xinzhihui"), | products, automatic system and electronic products | |||
廣東芯智慧科技有限公司 | in the PRC | |||
Xizang Poly Aijia Property Agency Co., Ltd., | Real estate agency services in the PRC | Associate | 30 | 30 |
("Xizang Poly Aijia"), | ||||
西藏保利愛家房地產經紀有限公司 | ||||
Poly (Ziyang) City Comprehensive Service | Property management service in the PRC | Joint venture | -# | 60# |
Co., Ltd. ("Poly Ziyang") | ||||
保利(資陽)城市綜合服務有限公司 | ||||
Shanxi Poly Deao Elevator Co., Ltd., | Elevator repair and maintenance services in the PRC | Joint venture | 45 | 45 |
("ShanXi Poly Deao"), |
山西保利德奧電梯工程有限公司
- The English names of associates and joint ventures listed above are translated for identification purpose only.
-
As of 31 December 2019, although the Group's ownership interest in Poly Ziyang is more than 50%, Poly Ziyang requires 80% votes to pass board resolutions and the Group only got 60% votes, so that the Group has no control over the financial and operating policies of Poly Ziyang but has joint control over it. The directors of the Company therefore treated the interest in Poly Ziyang as a joint venture.
During the six months ended 30 June 2020, the joint venture partners of Poly Ziyang signed a supplemental agreement. According to the supplemental agreement, the Group has the discretion in all significant financial and operating decisions that are approved at the shareholders meetings. Since the Group obtained effective control of Poly Ziyang, Poly Ziyang became a subsidiary of the Group and the assets, liabilities and financial results of Poly Ziyang were consolidated in the financial statements of the Group since then.
The Group has elected to measure the non-controlling interest in Poly Ziyang at acquisition-date at the non- controlling interest's proportionate share of Poly Ziyang's net identifiable assets.
Since the acquisition date 1 January 2020, Poly Ziyang has contributed RMB2,939,000 and RMB491,000 to the Group's revenue and profit for the period.
40 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
13. PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 June 2020, the Group acquired property, plant and equipment with an aggregate cost of RMB39,173,000 (six months ended 30 June 2019: RMB19,939,000). Property, plant and equipment with carrying amount of RMB101,000 (six months ended 30 June 2019: RMB1,214,000) were disposed of during the six months ended 30 June 2020. Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives and after taking into account of their estimate residual values.
In addition, the Group has entered into several leases for offices during the six months ended 30 June 2020. Right-of-use assets amounted to RMB7,760,000 has been recognised for the current period.
Buildings in property, plant and equipment are held for own use and situated in the PRC.
At 30 June 2020 and 31 December 2019, no property, plant and equipment was pledged.
14. INVESTMENT PROPERTIES
There were no acquisition of investment properties during the six months ended 30 June 2020 and 2019. Investment properties with carrying amount of RMBNil (six months ended 30 June 2019: RMB1,074,000) were disposed of during the six months ended 30 June 2020.
The Group's investment properties are measured using a cost model and depreciated so as to write off their costs net of estimated residual values over their estimated useful lives on straight line basis.
The Group's investment properties are located on land in the PRC with land use period from 2004 to 2054.
POLY PROPERTY SERVICES CO., LTD. | 41 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
15. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Equity investments at fair value through other comprehensive income | ||
Unlisted equity investments, at fair value | 7,000 | 13,000 |
The Group has designated these investments in equity instruments at FVTOCI as the Group plans to hold in the long term for strategic reasons.
42 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
16. INTANGIBLE ASSETS
Property | ||||
management | ||||
contracts | Goodwill | Total | ||
RMB'000 | RMB'000 | RMB'000 | ||
COST | ||||
At 1 January 2019 (Audited) | 55,000 | 46,129 | 101,129 | |
Acquired through acquisition of a subsidiary | 3,000 | 904 | 3,904 | |
At 31 December 2019 (Audited), 1 January | ||||
2020 (Audited) and 30 June 2020 (Unaudited) | 58,000 | 47,033 | 105,033 | |
ACCUMULATED AMORTISATION | ||||
At 1 January 2019 (Audited) | 2,546 | - | 2,546 | |
Amortisation | 6,778 | - | 6,778 | |
At 31 December 2019 and 1 January 2020 | ||||
(Audited) | 9,324 | - | 9,324 | |
Amortisation | 3,556 | - | 3,556 | |
At 30 | June 2020 (Unaudited) | 12,880 | - | 12,880 |
NET BOOK VALUE | ||||
At 30 | June 2020 (Unaudited) | 45,120 | 47,033 | 92,153 |
At 31 | December 2019 (Audited) | 48,676 | 47,033 | 95,709 |
POLY PROPERTY SERVICES CO., LTD. | 43 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
16. INTANGIBLE ASSETS (Continued)
Goodwill of RMB47,033,000 arising from the acquisition were allocated to the property management business operated by Hunan Poly Tianchuang CGU and Poly Huichuang Chongqing CGU.
The goodwill has been tested for impairment by management. The recoverable amount of each cash generating unit ("CGU") has been assessed by APAC Asset Valuation and Consulting Limited ("APAC"), an independent valuer and determined based on value-in-use ("VIU") calculation. The calculation used cash flow projections based on financial budgets covering a five-year period approved by management and as suggested by HKAS 36 "Impairment of Assets".
The following table sets forth each key assumptions on which management has based its cash flow projections to undertake impairment testing of goodwill:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
For Hunan Poly Tianchuang CGU | ||
- Long-term growth rate | 3.0% | 3.0% |
- Pre-tax discount rate | 15.2% | 15.2% |
For Poly Huichuang Chongqing CGU | ||
- Long-term growth rate | 3.0% | 3.0% |
- Pre-tax discount rate | 16.5% | 16.3% |
As at 30 June 2020 and 31 December 2019, the recoverable amounts of the Hunan Poly Tianchuang CGU calculated based on VIU exceeded carrying value by approximately RMB65,151,000 and RMB61,346,000 respectively.
As at 30 June 2020 and 31 December 2019, the recoverable amounts of the Poly Huichuang Chongqing CGU calculated based on VIU exceeded carrying value by approximately RMB9,476,000 and RMB2,435,000 respectively.
In the opinion of the directors of the Company, any reasonably possible change in key parameters on which the recoverable amount is based would not cause the carrying amount of each CGU to exceed its recoverable amount.
By reference to the recoverable amount assessed by the independent valuer, the directors of the Company determined that no impairment provision on goodwill was required as at 30 June 2020 and 31 December 2019. In addition, no impairment is considered necessary for the property management contracts as at 30 June 2020 and 31 December 2019.
44 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
17. INVENTORIES
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Carpark spaces | 40,725 | 43,900 |
Raw materials | 187 | 86 |
Consumables goods and other inventories | 4,152 | 2,282 |
45,064 | 46,268 | |
18. TRADE AND BILLS RECEIVABLES
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Related parties | 220,497 | 133,976 |
Third parties | 585,213 | 272,447 |
Total | 805,710 | 406,423 |
Less: allowance for impairment of trade receivables | (30,288) | (15,455) |
775,422 | 390,968 | |
Bills receivables | - | 420 |
775,422 | 391,388 | |
As at 30 June 2020 and 31 December 2019, the trade receivables were denominated in RMB, and the fair value of trade receivables approximated its carrying amounts. Trade receivables mainly arise from property management services income under lump sum basis and income under value-added services to non-property owners.
Property management services income under lump sum basis are received in accordance with the term of the relevant property service agreements. Service income from property management services is due for payment by the residents upon the issuance of demand note.
The maturity of the bills receivable of the Group as at 31 December 2019 is within 1 month. As at 31 December 2019, bills receivable is due from Poly Developments and Holdings Group.
POLY PROPERTY SERVICES CO., LTD. | 45 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
18. TRADE AND BILLS RECEIVABLES (Continued)
As at 30 June 2020 and 31 December 2019, the ageing analysis of the trade receivables based on invoice date was as follows:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Within 1 year | 744,225 | 383,526 |
1 to 2 years | 51,635 | 20,962 |
Over 2 years | 9,850 | 1,935 |
805,710 | 406,423 | |
19. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Non-current assets | ||
Prepayments for property, plant and equipment | 757 | 10,698 |
Current assets | ||
Deposits and other receivables | ||
- Related parties | 40,638 | 42,814 |
- Third parties | 351,433 | 279,654 |
Total | 392,071 | 322,468 |
Less: allowance for impairment of other receivables | (13,630) | (11,076) |
378,441 | 311,392 | |
VAT receivables | 8,224 | 4,175 |
Interest receivables (Note) | 3,844 | 2,807 |
Prepayments | 46,277 | 38,658 |
436,786 | 357,032 | |
Note: As at 30 June 2020 and 31 December 2019, included in the balance are the interest receivable from the deposit maintained with a fellow subsidiary, which amounts to RMB107,000 and RMB386,000 respectively. Please refer to note 7(a)(iii) for further details.
46 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
20. DEPOSITS AND BANK BALANCES
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Cash on hand | 122 | 79 |
Cash at banks and financial institution | 7,245,247 | 6,508,539 |
Total deposits and bank balances | 7,245,369 | 6,508,618 |
Notes:
-
At 30 June 2020, deposits and bank balances in the amount of RMB339,522,000 (31 December 2019: RMB4,220,845,000)
and RMB6,905,847,000 (31 December 2019: RMB2,287,773,000) are denominated in HK$ and RMB respectively. Cash on hand and cash at bank placed in the PRC are denominated in RMB. Under the PRC's Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for foreign currencies only through banks that are authorised to conduct foreign exchange business. RMB is not freely convertible to other currencies. - As at 30 June 2020 and 31 December 2019, the Group's deposits and bank balances include deposits in Poly Finance, a fellow subsidiary and a licenced financial institution, amounting to RMB1,162,167,000 and RMB1,102,469,000 respectively.
- Cash at banks and financial institution also included short-term time deposits made for varying periods between one day and three months depending on the immediate cash requirements of the Group and earn interest at the respective short-term time deposit rates. The remaining of the bank balance earns interest at floating rates based on daily bank deposit rates.
21. TRADE PAYABLES
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Related parties (Note) | 6,529 | 10,217 |
Third parties | 420,605 | 243,142 |
427,134 | 253,359 | |
POLY PROPERTY SERVICES CO., LTD. | 47 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
21. TRADE PAYABLES (Continued)
Based on the receipt of services and goods, which normally coincided with the invoice dates, the ageing analysis of the Group's trade payables as at the end of the period/year was as follows:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Within 1 year | 400,088 | 244,999 |
1 to 2 years | 26,136 | 8,194 |
Over 2 years | 910 | 166 |
427,134 | 253,359 | |
Note: The balance was unsecured, interest-free and repayable on demand.
22. ACCRUALS AND OTHER PAYABLES
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Accruals and other payables | ||
- Related parties | 29,628 | 28,335 |
- Third parties | 936,187 | 1,076,745 |
965,815 | 1,105,080 | |
Other tax payables | 57,283 | 50,697 |
Dividend payables (Note) | 196,510 | 13,580 |
Salaries payables | 11,152 | 10,810 |
1,230,760 | 1,180,167 | |
Note: The dividend payable as of 30 June 2020 and 31 December 2019 includes RMB13,580,000 dividend declared by Hunan Poly Tianchuang to its two then-shareholders prior to being acquired by the Group.
48 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
23. LEASE LIABILITIES
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Minimum lease payments due | ||
- Within 1 year | 6,664 | 4,426 |
- Between 1 to 2 years | 6,569 | 4,565 |
- Between 2 to 5 years | 13,688 | 9,457 |
- Later than 5 years | 3,797 | 4,319 |
30,718 | 22,767 | |
Less: future finance charges | (10,572) | (7,872) |
Present value of lease liabilities | 20,146 | 14,895 |
- Current | 3,426 | 2,643 |
- Non-current | 16,720 | 12,252 |
The Group leases various properties mainly as its office and these lease liabilities were measured at net present value of the lease payments during the lease terms that are not yet paid. Extension options are included in a number of property leases across the Group. Periods covered by the extension options were included in the lease terms if the Group was reasonably certain to exercise the options.
The total cash outflows for leases including payments of the lease liabilities, payments of interest expenses on leases for the six months ended 30 June 2020 was RMB2,907,000 (six months ended 30 June 2019: RMB3,274,000).
POLY PROPERTY SERVICES CO., LTD. | 49 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
24. | CAPITAL | |||||||
Domestic shares | Listed H shares | Total | ||||||
Number | Amount | Number | Amount | Number | Amount | |||
Notes | '000 | RMB'000 | '000 | RMB'000 | '000 | RMB'000 | ||
Registered, issued and fully paid: | ||||||||
At 1 January 2019 (Audited) | (a) | 100,000 | 100,000 | - | - | 100,000 | 100,000 | |
Issue of domestic shares upon | ||||||||
capitalisation | (b) | 300,000 | 300,000 | - | - | 300,000 | 300,000 | |
Issue of H shares upon global offering | (c) | - | - | 133,333 | 133,333 | 133,333 | 133,333 | |
At 31 December 2019 and | ||||||||
1 January 2020 (Audited) | 400,000 | 400,000 | 133,333 | 133,333 | 533,333 | 533,333 | ||
Issue of H shares upon over-allotment | (d) | - | - | 20,000 | 20,000 | 20,000 | 20,000 | |
At 30 June 2020 (Unaudited) | 400,000 | 400,000 | 153,333 | 153,333 | 553,333 | 553,333 | ||
Note:
- The Company was incorporated as a state-owned company under the laws of the PRC with limited liability on 26 June 1996 with a registered share capital of RMB3,000,000 divided into 3,000,000 domestic shares of par value of RMB1.00 each. The registered capital of Company was then increased to RMB5,000,000, RMB50,000,000 and RMB100,000,000 on 21 May 2003, 19 May 2011 and 26 September 2016 respectively.
- Pursuant to the written resolutions passed on 7 May 2019, the registered share capital was increased from approximately RMB100,000,000 to RMB400,000,000 by way of the capitalisation of capital reserves and retained earnings of the Company of RMB80,000,000 and RMB220,000,000 respectively.
- On 19 December 2019, 133,333,400 H shares of par value RMB1.00 each of the Company were issued at a price of HK$35.10 by way of a global offering. On the same date, the Company's H shares were listed on the Stock Exchange. Gross proceeds from the issue amounted to HK$4,680,002,000 (equivalent to RMB4,207,509,400). After deducting the underwriting fees and relevant expenses of RMB134,591,000, net proceeds from the issue amounted to RMB4,072,918,400, of which, RMB133,333,400 was recorded as capital and RMB3,939,585,000 was recorded as share premium.
- On 17 January 2020, 20,000,000 H shares of par value RMB1.00 each of the Company were issued pursuant to the exercise of over-allotment option in full on 10 January 2020 at HK$35.1 per share.
- Both holders of domestic shares and H shares are ordinary Shareholders and have equal rights and obligations.
50 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
25. CAPITAL COMMITMENTS
Capital expenditure contracted for at the end of the period but not yet incurred is as follow:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Property, plant and equipment | 437 | 4,936 |
26. MATERIAL RELATED PARTIES TRANSACTIONS
The Group entered into the following material related party transactions during the six months ended 30 June 2020 and 2019:
(a) | Name and relationship | |
Name of related parties | Relationship with the Group | |
Poly Developments and Holdings Group | Immediate Holding Company and its subsidiaries | |
Poly Finance | Subsidiary of China Poly Group |
POLY PROPERTY SERVICES CO., LTD. | 51 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
26. MATERIAL RELATED PARTIES TRANSACTIONS (Continued)
- Material related party transactions
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Poly Developments and Holdings Group | ||
Provision of services | ||
- Property management services | 64,241 | 75,056 |
- Value-added services to non-property owners | 396,337 | 346,953 |
- Community value-added services | 31,197 | 15,253 |
Interest income | 27 | 11 |
Lease contract arrangements | ||
- Right-of-use assets | 3,995 | 6,053 |
- Lease liabilities | 6,449 | 6,806 |
- Depreciation | 1,648 | 1,648 |
- Interest expense | 161 | 207 |
- Rental expense | 8,546 | 7,508 |
Software development expenses | - | 1,572 |
Hardware Procurement expenses | 1,051 | 549 |
Associates of Poly Developments and Holdings Group | ||
Provision of services | ||
- Property management services | 2,476 | 1,294 |
- Value-added services to non-property owners | 64,226 | 46,034 |
- Community value-added services | 2,162 | 744 |
Joint ventures of Poly Developments and Holdings Group | ||
Provision of services | ||
- Property management services | 2,221 | 808 |
- Value-added services to non-property owners | 32,615 | 30,439 |
- Community value-added services | 10,692 | 118 |
Lease contract arrangements | ||
- Right-of-use assets | 1,166 | 1,461 |
- Lease liabilities | 918 | 1,559 |
- Depreciation | 146 | 146 |
- Interest expense | 35 | 41 |
Poly Finance | ||
Interest income | 9,540 | 7,055 |
52 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
27. FINANCIAL RISK MANAGEMENT
- Financial instruments not measured at fair value
Financial instruments not measured at fair value include deposits and bank balances, trade receivables, deposits and other receivables, trade payables and accruals and other payables.
Due to their short term nature, the carrying values of these financial instruments approximates fair values.
- Financial instruments measured at fair value
The following table presents the fair value of the Group's financial instruments measured at the end of the periods on a recurring basis, categorised into the three-level fair value hierarchy as defined in HKFRS 13, Fair Value Measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:
- Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date;
- Level 2 valuations: Fair value measured using only Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs; and
- Level 3 valuations: Fair value measured using significant unobservable inputs
The fair value of the Group's unlisted equity investments at 30 June 2020 and 31 December 2019 has been arrived at on the basis of valuation carried out by APAC, a firm of independent professionally qualified valuers not connected with the Group.
The unlisted equity investments are categorized into level 3 of fair value measurement.
POLY PROPERTY SERVICES CO., LTD. | 53 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
27. FINANCIAL RISK MANAGEMENT (Continued)
- Financial instruments measured at fair value (Continued)
30 June 2020 (Unaudited) | ||||
Level 1 | Level 2 | Level 3 | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Financial assets at fair value through other | ||||
comprehensive income | ||||
- Unlisted equity investments | - | - | 7,000 | 7,000 |
31 December 2019 (Audited) | ||||
Level 1 | Level 2 | Level 3 | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Financial assets at fair value through other | ||||
comprehensive income | ||||
- Unlisted equity investments | - | - | 13,000 | 13,000 |
There were no transfers between levels during the periods.
54 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
27. FINANCIAL RISK MANAGEMENT (Continued)
- Financial instruments measured at fair value (Continued)
Valuation techniques and inputs used in Level 3 fair value measurements:
Fair value at | Relationship of | ||||
30 June | Valuation | Unobservable | inputs to | ||
2020 | technique | input | Range | fair value | |
RMB'000 | |||||
(Unaudited) | |||||
Financial assets at fair value through | |||||
other comprehensive income | |||||
- Unlisted equity investments | 7,000 | Market | Discount for | 40% | The higher the |
Comparable | lack of | discount rate the | |||
approaches | marketability | lower the fair | |||
value | |||||
Fair value at | Relationship of | ||||
31 December | Valuation | Unobservable | inputs to | ||
2019 | technique | input | Range | fair value | |
RMB'000 | |||||
(Audited) | |||||
Financial assets at fair value through | |||||
other comprehensive income | |||||
- Unlisted equity investments | 13,000 | Market | Discount for | 40% | The higher the |
Comparable | lack of | discount rate the | |||
approaches | marketability | lower the fair value | |||
The fair value of unlisted equity investments are determined using the price/book ratios of comparable listed companies adjusted for lack of marketability discount. The fair value measurement is negatively correlated to the discount for lack of marketability. As at 30 June 2020 and 31 December 2019, it is estimated that with all other variables held constant, a decrease/increase in discount for lack of marketability by 1% would have increased/ decreased the Group's other comprehensive income by RMB70,000 and RMB130,000 respectively.
POLY PROPERTY SERVICES CO., LTD. | 55 |
INTERIM REPORT 2020 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2020
27. FINANCIAL RISK MANAGEMENT (Continued)
- Financial instruments measured at fair value (Continued)
The movement during the six months ended 30 June 2020 and year ended 31 December 2019 in the balance of the level 3 fair value measurements are as follows:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
(Unaudited) | (Audited) | |
Unlisted equity investment: | ||
At 1 January | 13,000 | 10,800 |
Net unrealised (losses)/gains recognised in other comprehensive | ||
income during the period/year | (6,000) | 2,200 |
At 30 June / 31 December | 7,000 | 13,000 |
28. EVENTS AFTER THE REPORTING DATE
After the special resolution regarding the change of company name was passed by the shareholders of the Company at the 2019 Annual General Meeting, the Administration for Market Regulation of Guangzhou Municipality issued the business licence in relation to the changed company name on 30 June 2020, and the change of company name took effect on 30 June 2020 accordingly. The Companies Registry of Hong Kong issued the Certificate of Registration of Alteration of Name of Registered Non-Hong Kong Company on 16 July 2020. The English name of the Company has been changed from "POLY PROPERTY DEVELOPMENT CO., LTD." to "POLY PROPERTY SERVICES CO., LTD.", and the Chinese name of the Company has been changed from "保利物業發展股份有限公司" to "保利物業服務股份有限公司".
For details, please refer to the Company's circular dated 22 May 2020 and Company's announcements dated 22 May 2020 and 23 July 2020.
56 POLY PROPERTY SERVICES CO., LTD. INTERIM REPORT 2020
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Poly Property Development Co. Ltd. published this content on 15 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 September 2020 08:59:10 UTC