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First Quarter Financial Statement And Dividend Announcement 2018

Financials Archive

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UNAUDITED FINANCIAL STATEMENTS FOR THE FIRST QUARTER ENDED 31 MARCH 2018 ("Q1 2018") IN RESPECT OF THE FINANCIAL YEAR ENDING 31 DECEMBER 2018 ("FY2018")

Income Statement

"Q1 2017" and "Q1 2018" denotes the 3 financial months of financial period ended 31 March 2017 and 31 March 2018 respectively

"% Change" denotes increase/(decrease) in the relevant profit or loss item as compared with the comparative figure

"N/M" denotes "Not meaningful"

Balance Sheet

Review of Performance

(a) Review of consolidated statement of comprehensive income of the Group for Q1 2018 (relative to that for Q1 2017)

Revenue

Our overall turnover, generated mainly from the sales of developed properties,increased by RMB13.0 million from RMB267,000 in Q1 2017 to RMB13.2 million in Q1 2018. The increase was principally attributed to morecompleted units being delivered to the buyers concerned in Q1 2018(relative to Q1 2017) in respect of the Xinxiang Sunny Town Project (新 乡阳光新城项目).

Gross profit

In line with the higher revenue attained in Q1 2018, the Group registered a higher gross profit of RMB6.5 million in Q1 2018 compared to that of RMB11,000 in Q1 2017. A higher gross profit margin of 49% was also attained by the Group in Q1 2018 compared to that of 4% in Q1 2017, chiefly as a result of the cost containment efforts of the Group and more completed units of higher value being delivered to the buyers concerned in Q1 2017.

Selling and distribution expenses

Our selling and distribution expenses increased by RMB2.3 million from RMB18,000 in Q1 2017 to RMB2.3 million in Q1 2018. The increase was due principally to increased commission payable to sales representatives with a view to incentivize them to speed-up the sales of our remaining completed property units atthe Xinxiang Sunny Town Project (新乡阳光新城 项目).

General and administrative expenses

In line with our decreased business activities and coupled with our concerted cost-control efforts, our general and administrative expenses decreased by RMB350,000 or 8% from RMB4.3 million in Q1 2017 to RMB3.9 million in Q1 2018.

Other Expenses

Our other expenses decreased by RMB100,000 or 81% from RMB123,000 in Q1 2017 to RMB23,000 in Q1 2018.

The other expenses recognized in Q1 2017 and Q1 2018 were due principally to exchange losses resulting from weakened Renminbi against Singapore dollar and US dollar.

Share of losses of joint ventures

The Group’s share of losses of joint ventures decreased by RMB16,000 or 73% from RMB22,000 in Q1 2017 to RMB6,000 in Q1 2018. The decrease was attributed mainly to decreased operating expenses incurred by the Company’s 50% equity interest in Tian Cheng Holdings Limited (天晟控股有限公司), particularly in respect of the 2 iron ore mines held through its 2 mining joint ventures which have yet to commence production.

Finance income

Our finance income increased by RMB241,000 or over 7-fold from RMB33,000 in Q1 2017 to RMB274,000 in Q1 2018.

Our finance income attained in Q1 2017 and Q1 2018 was principally attributed to interest earned on the placement of the short-term investment deposits placed with local PRC banks.

Loss before tax

Consequence to the above, we registered a loss before tax of RMB4.4 million in Q1 2017 vis-à-vis an gain before tax of RMB560,000 in Q1 2018.

Income tax (expense)/credit

We registered an income tax credit of RMB57,000 in Q1 2017 vis-à-vis an income tax expense of RMB1.3 million in Q1 2018.

The income tax credit for Q1 2017 was principally attributed to write-back of over accrued income tax.

The income tax expense for Q1 2018 was principally attributed to income tax on sales of completed properties.

Net loss attributable to owners of the Company

Accordingly, the net loss attributable to the shareholders of the Company narrowed from RMB4.3 million in Q1 2017 to RMB764,000 in Q1 2018.

(b) Review of statements of financial position of the Group as at 31 March 2018 (relative to that as at 31 December 2017)

Current assets

The decrease in completed properties for sale by RMB6.7 million or 11% was due principally to the delivery of completed units to the buyers concerned.

The decrease in available-for-sales in respect to the short-term investment deposits placed with local PRC banks (the “Deposits”) was due principally to the maturity of these Deposits which thereafter had had the money there from returned to the Company’s bank accounts.

The decrease in pledged bank deposits by RMB731,000 or 14% was mainly attributed to a decrease in deposits placed with local banks to facilitate the procurement of housing loans by buyers of the Group’s properties; pledged bank deposits will be released to the Group upon the issuance of the relevant property ownership certificates to the buyers concerned.

The increase in prepayments and other receivables by RMB468,000 or 11% were due principally of repayment to suppliers .

The increase in amount due from joint ventures by RMB645,000 or 18% was due principally to advances made to the mining joint ventures in support of their operational needs.

The increase in cash and bank balances by RMB14.9 million or 95% was principally attributed to the maturity of the Deposits and sales of completed property units during the period.

Taken as a whole, our current assets decreased by RMB4.4 million or 4% from RMB119.6 million as at 31 December 2017 to RMB115.2 million as at 31 March 2018.

Current liabilities

Our trade payable decreased by RMB1.2 million or 11% from RMB11.6 million as at 31 December 2017 to RMB10.3 million as at 31 March 2018 due principally to repayments made to suppliers and contractors during the period.

Our sales and rental deposits decreased by RMB2.4 million or 6% from RMB43.9 million as at 31 December 2017 to RMB41.4 million as at 31 March 2018 due principally to the recognition of sales deposits as revenue upon the delivery of the completed property units to the buyers concerned.

Taken as a whole, our current liabilities decreased by RMB4.1 million or 4% from RMB106.2 million as at 31 December 2017 to RMB102.2 million as at 31 March 2018.

Consequence to the above, we registered a net cash generated from operating activities of RMB2.3 million in Q1 2018 compared to net cash used in operating activities of RMB6.1 million in Q1 2017.

Commentary

As regards the reverse takeover transaction as first announced by the Company on 11 July 2013 and periodically thereafter on its progress, the latest being made on 30 June 2017 (the “Proposed RTO”),the relevant parties still await for certain technical reports to be completed in order that they may work out possible revised terms to the transaction, which may include, but not limited to, the portfolio of the exploration and mining projects that will form part of the group of companies to be acquired by the Company pursuant to the Proposed RTO. Appropriate announcement concerning the Proposed RTO will be made as and when there is any significant development.

Some of the statements in this release constitute "forward-looking statements" that do not directly or exclusively relate to historical facts. These forward-looking statements reflect our current intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside our control. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Because actual results could differ materially from our intentions, plans, expectations, assumptions and beliefs about the future, undue reliance must not be placed on these statements.