财务报表

Financial Statement Announcement for 1st Quarter ended 31 March 2017

Financials Archive

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Profit & Loss

profit and loss

Balance Sheet

Balance Sheet

Review of Performance
Statement of Comprehensive Income

Due to the nature of the industry that the Company operates in, recognition of revenue from the sale of properties is driven by project hand-over. Consequently, quarterly results may not be a good indication of profitability trend.

For the three months and quarter ended 31 March 2017

Revenue

Revenue

Revenue of the Group from the Sale of Properties increased by RMB112.9 million (307.4%) to RMB149.7 million as compared with 1QFY2016. The increase was a combination of continue handover of the residential units at San Ya Wan Phase 2 project, bespoke units at Ying Li International Electrical and Hardware Centre ("Ying Li IEC") Phase 1A and other properties.

Rental income decreased by RMB2.1 million (3.9%) as compared to the same period of last year. The decrease mainly due to the introduction of VAT* regime in China in May 2016, and loss of some rental income due to some properties being sold to tenants.

* With effect from 1 May 2016, Value Added Tax ("VAT") will be imposed on revenue received from customers in place of business tax. Revenue received will be deemed to be inclusive of VAT and the tax will be deducted directly from revenue and paid to the tax authorities.

Gross profit

Revenue

Gross profit of the Group for 1QFY2017 decreased by RMB8.7 million (13.8%) to RMB54.6 million as compared to the same period last year mainly due to lower contribution from the Sale of Properties segment. The mix of properties that were handed over in 1QFY2017 have lower gross profit as compared to the retail units at San Ya Wan Phase 2 handed over in 1QFY2016 which tend to have higher gross profit.

Gross profit margin

Revenue

The Group's gross profit margin for 1QFY2017 decreased by 42.3 percentage points to 27.0% as compared to the same period last year as the mix of properties that were handed over in 1QFY2017 have lower gross profit margin as compared to the retail units at San Ya Wan Phase 2 handed over in 1QFY2016 which tend to have higher gross profit margin.

Other income

Revenue

The year-on-year decrease in Other Income was mainly due to lower interest income from deposits.

Selling expenses

Selling expenses decreased marginally by RMB0.02 million (0.2%) in 1QFY2017 to RMB13.7 million as compared to 1QFY2016.

Administrative expenses

During the quarter under review, Administrative expenses were RMB3.8 million (22.7%) lower compared to 1QFY2017. The decrease was mainly due to part of expenses were offset by higher foreign exchange gains.

Finance costs

For the quarter under review, finance costs were RMB1.4 million (6.4%) higher as compared to 1QFY2016 due to new loan drawn down. Interest expense directly attributable to projects would generally be capitalised as part of the project costs.

Taxation

Taxation

During the quarter under review, tax expense decreased by RMB2.5 million (38.7%) as compared with 1Q2016 mainly due to lower taxable profits generated from the sale of properties in 1QFY2017.

Total comprehensive loss for the period

Total comprehensive loss for the period increased by RMB6.3 million as compared to 1QFY2016 mainly due to lower Profit for the period.

Profit attributable to ordinary shareholders of the Company

Revenue

Overall, net profit attributable to the ordinary shareholders of the Company decreased by RMB6.1 million (36.1%) to RMB10.7 million in 1QFY2017.

Statement of Financial Position

Total Assets of the Group decreased by RMB163.0 million to RMB11.7 billion during the quarter mainly due to a decrease in cash and cash equivalents of RMB136.6 million mainly due to the repayment of loans.

The Group's total liabilities decreased by RMB133.4 million to RMB6.7 billion during the period under review. The decrease in liabilities was mainly due to reduction in borrowings amounting to RMB104.3 million due to loan repayment combined with a decrease in trade and other payables of RMB26.5 million arising from a decrease in advances received from customers as some pre-sales units were handed over.

The Group's total equity decreased by RMB29.6 million to RMB5,032.4 million during the period under review, mainly due to a decrease in the Exchange fluctuation reserve because of RMB devalued against SGD in 1QFY2017. The Exchange fluctuation reserve mainly comprises cumulative unrealised exchange gains/losses arising from the translation of the financial statements of the entities where the functional currency differs from the presentation currency which is the Chinese Yuan ("RMB").

Statement of Cash Flow

The decrease in unrestricted cash and cash equivalent of RMB30.0 million for the quarter under review was mainly due to:

  1. net cash outflow of RMB37.3 million from operating activities; and
  2. net cash inflow of RMB7.4 million from financing activities.

The net cash outflow from operating activities of RMB37.3 million was mainly attributable to cash generated from operating profit of RMB31.5 million and a decrease in trade and other receivables of RMB31.4 million mainly due to collection of outstanding sums on contracted pre-sales and refund of deposits previously placed with a financial institution. This was off-set by i) a decrease in trade and other payables of RMB61.4million mainly due to the payment made to suppliers and transfers of amounts received in advance from customers to revenue as some pre-sales units were handed over; ii) increase in development costs amounting to RMB11.6 million incurred mainly on the ongoing construction of the Ying Li Financial Street project and the Ying Li International Electrical and Hardware Centre; and iii) net interest and income tax paid of RMB27.2 million.

Net cash from financing activities of RMB7.4 million includes: (i) increase in borrowing by RMB50 million to fund the construction of the Group's ongoing projects; ii) release of cash collaterals that were previously pledged upon loan repayment amounting to RMB106.3 million; and iii) repayment of borrowings amounting to RMB148.9 million.

Commentary On Current Year Prospects

Maintaining its position as the fastest-growing city in the People's Republic of China ("PRC"), Chongqing's 1Q2017 GDP grew at 10.5% Y-o-Y to RMB430.6 billion, outpacing the country's overall GDP growth of 6.9% Y-o-Y according to Chongqing Statistics Bureau. In tandem, disposable income per capita rose by 8.5% Y-o-Y to RMB9,386 while total retail sales of consumer goods expanded by 12.0% Y-o-Y to RMB197.8 billion in 1Q2017.

Chongqing Office Market

In 1Q2017, net absorption for Grade A office was 17,000 sqm and a new supply of 126,000 sqm mainly located in Jiangbeizui CBD was added to market. The financial sector continued to be the key driver of demand while landmark buildings were highly sought after in the quarter. As the preferred location for MNCs, office demand in Jiefangbei CBD remained healthy and the average office rental (Grade A and Non-Grade A offices) remained resilient at RMB92.7 per sqm per month as compared to the average office rental across Chongqing at RMB83.1 per sqm per month in 1Q2017. Notably, the average rental for Grade A office in Jiefangbei CBD continued to garner the highest rental at above RMB100 per sqm per month and the lowest vacancy rate amongst Chongqing's CBDs in 1Q2017.

(Sources: CBRE Research, Chongqing Property Market Overview Q1 2017; JLL Research, 1Q17 Chongqing Property Market At-a-glance)

Chongqing Retail Market

In 1Q2017, there was no new supply of retail malls in the quarter. The prime retail malls performance continued to improve with a drop in vacancy rate by dropped 0.8 percentage points to 10.3% in 1Q2017. In the quarter, international retailers continued their expansion in the city alongside Chinese F&B players particularly those serving specialty cuisines from Xinjiang and Mongolian. With the revolution of e-commerce and the rise of digital technologies reshaping the retail market, retail malls are placing more emphasis on customer experiences. As such, kids-related retailers such as education providers and entertainment-themed retailers continued to increase their presence in 1Q2017.

(Sources: CBRE Research, Chongqing Property Market Overview Q1 2017; JLL Research, 1Q17 Chongqing Property Market At-a-glance)

Chongqing Residential Market

Chongqing's residential market remained active in 1Q2017 with a total of 2,110 high-end units mainly concentrated in Nan'an and Yubei launched in 1Q2017. This is an increase of 277.5% Y-o-Y. Buying sentiments remained active driven by local upgrading demand. As a result, the average selling price (ASP) for high-end residential projects rose by 19.3% Y-o-Y to RMB13,788 per sqm in 1Q2017.

(Source: JLL Research, 1Q17 Chongqing Property Market At-a-glance)

Beijing Market

Due to cooling measures such as tightening of pre-sales certification issuance introduced by Beijing government in September 2016, only 17 residential projects received pre-sales certification in 1Q2017. As such, new supply for the mass market segment declined by 51.7% Y-o-Y and there was no new high-end residential project launched in 1Q2017 respectively. Despite the curbs, demand for high-end residential projects rebounded in March 2017 following two months of muted demand with the transaction volume increased by 47.0% Y-o-Y to 682 units in 1Q2017.

In March 2017, the Beijing government rolled out new property cooling measures in response to continue surge in home prices and sales. The new cooling measures, in particular, restrict upgrade demand as the minimum down payment for a second home purchase increased from 50% to 60% (mass market property) and 70% to 80% (non-mass market property) In addition, the maximum mortgage term has also been shortened to 25 years from 30 years for second home purchases.

(Source: JLL Research, Beijing High-end Residential Market Overview, 1Q17)

Outlook

Following the establishment of the One Belt One Road Initiative and the China-Singapore (Chongqing) Demonstrative Initiative on Strategic Connectivity (Singapore-Chongqing project), Chongqing Jiangbei airport has commenced several new flight routes to Europe, Middle East and Africa, in addition to the existing direct flights to major cities such as London, Tokyo, New York, Dubai, Auckland and Singapore. As the gateway city for foreign companies to establish their presence in western PRC, Chongqing new International airport, Jiangbei airport terminal 3 is on schedule to complete in 1H2017. According to CBRE Research, since the launch of the Singapore-Chongqing project, Chongqing is regarded as the top five Chinese cities for investments from Singapore and 244 Singapore companies have established presence in Chongqing.

The Group is currently developing three projects in Chongqing which are progressing on schedule. The construction of residential development Lion City Garden Phase 2A, 2B and 2C was completed and handover for these three phases will continue into 2017. Similarly, build-to-order mixed-development Ying Li International Hardware and Electrical Centre Phase 1A had started handover in 4Q2016 and will carry on into 2017. Construction for Phase 2A is still ongoing and on track for handover in 2017 and 2018. For the Group's landmark development Ying Li International Commercial Centre, pre-sales registration for Phase 1 had commenced.

In terms of the Group's retail malls - Ying LI IMIX Park Jiefangbei and Ying Li IMIX Park Daping, the Group continues to focus on their repositioning centered on in-store experiences, lifestyle, family/children and entertainment concepts tailored to the needs of their respective target audiences. Concurrently, the Group will increase its focus on residential and bespoke projects at prime locations in Chongqing as well as tier 1 and fast-growing Tier 2 cities in PRC while maintaining a watchful eye on market conditions and risks.