CNR Announces Its Results for the Six Months Ended September 30, 2013

NEW YORK, NY--(Marketwired - Nov 29, 2013) - China Metro-Rural Holdings Limited (NYSE MKT: CNR) (the "Company") is pleased to announce its unaudited consolidated financial results of the Company and its subsidiaries (collectively the "Group") for the six months ended September 30, 2013. 

Major Events:

• Commencement of project in Hengyang City, Hunan Province of the PRC
  
  During the period, the Group has commenced a new project in Hengyang City (the "Hengyang Project") which is focused on agricultural logistics as well as urban rural migration re-development businesses. The planned site area of the Hengyang Project is approximately 2.7 million square meters with corresponding maximum gross floor area of approximately 7.5 million square meters. The Group has already entered into auctions and has acquired 196,606 square meters of land. The Group is also currently in the planning stage and in the process of obtaining various permits for the development of the Hengyang Project. The first phase of construction with total gross floor area of approximately 144,000 square meters is expected to commence in the near future.

Financial Highlights:
Continuing operations
The Group has two reportable operating segments, agricultural logistics business and rural-urban migration and city re-development business. Our agricultural logistics business is comprised of (1) development, sales and leasing properties of integrated agricultural logistics and trade centers and supporting facilities and (2) property management which engages in the management of developed properties within the logistics platforms. Our rural-urban migration and city re-development business is comprised of (1) servicing and assignments of development rights and (2) development and sales of residential, commercial and other auxiliary properties in new city center districts.

Agricultural Logistics Business

• Net revenue generated by the Group decreased from HK$206,579,000 for the six months ended September 30, 2012 to HK$152,471,000 for the six months ended September 30, 2013, representing a year-over-year decrease of 26.2%.
• Sales of gross floor area decreased from 35,994 square meters for the six months ended September 30, 2012 to 24,391 square meters for the six months ended September 30, 2013, representing a year-over-year decrease of 32.2%. Gross floor area sold during the period consisted of trade centers of 24,270 square meters (2012: 35,994 square meters). Sales for the six months ended September 30, 2013 also included residential properties of 121 square meters.
• Gross profit percentage decreased from 37.1% for the six months ended September 30, 2012 to 35.2% for the six months ended September 30, 2013.
• Other income and gains, net were approximately HK$79,092,000 for the six months ended September 30, 2012. Other income and losses, net were a loss of approximately HK$5,680,000 for the six months ended September 30, 2013. Included in other income and (losses)/gains, net, was a government subsidy of HK$11,657,000 (2012: HK$35,027,000) for the six months ended September 30, 2013, representing a year-over-year decrease of 66.7%, a loss of HK$12,623,000 (2012: a gain of HK$52,221,000) arising from fair value changes of derivative components of convertible bonds and warrants. Other income and (losses)/gain, net, for the six month ended September 30, 2012 also included the transaction cost related to the derivative components of convertible bonds of HK$7,156,000.
• Selling expenses decreased from HK$32,123,000 for the six months ended September 30, 2012 to HK$13,686,000 for the six months ended September 30, 2013, representing a year-over-year decrease of 57.4%.
• Administrative expenses decreased from HK$54,155,000 for the six months ended September 30, 2012 to HK$49,211,000 for the six months ended September 30, 2013, representing a year-over-year decrease of 9.1%.
• Finance income increased from HK$512,000 for the six months ended September 30, 2012 to HK$19,943,000 for the six months ended September 30, 2013, representing a year-over-year increase of 3,795.1%. Included in finance income was an interest income on other receivables of HK$19,491,000 for the six months ended September 30, 2013.
• Income tax expenses decreased from HK$21,155,000 for the six months ended September 30, 2012 to HK$20,099,000 for the six months ended September 30, 2013, representing a year-over-year decrease of 5.0%. The effective tax rate increase from 39.3% for the six months ended September 30, 2012 to 480.3% for the six months ended September 30, 2013. The increase is contributed to expenses, including losses arising from the increase in fair value of derivative financial liabilities, which were non-deductible for tax purpose.
• Net profit attributable to the equity holders of the Company was HK$24,622,000 for the six months ended September 30, 2012. Net loss attributable to equity holders of the Company was HK$20,584,000 for the six months ended September 30, 2013.

Rural-Urban Migration and City Re-Development Business

Since the disposal of the Company's project in Qiqihar, the Group continues to operate its rural-urban migration and city re-development business through other subsidiaries and no results were generated in the six months ended September 30, 2013 and 2012 from this business.

Discontinued operations

Rural-Urban Migration and City Re-Development Business - Qiqihar

On November 30, 2012, the Company disposed of its entire equity interest in China Focus City (H.K.) Holdings Limited and, in effect, disposed of its entire equity interest in Qiqihar China Focus City (H.K.) Holdings Limited (Group) Co., Ltd. As a result of the disposal, our Rural-Urban Migration and City Re-development Business - Qiqihar was classified as discontinued operations, which comprised of (1) servicing and assignments of development rights and (2) development and sale of residential, commercial and other auxiliary properties in new city center district of Qiqihar City. As the discontinued operations ceased to operate during the year ended March 31, 2013, thus no results were generated in the six months ended September 30, 2013.

ABOUT CHINA METRO-RURAL HOLDINGS LIMITED

China Metro-Rural Holdings Limited is a leading agricultural logistics platform development and rural-urban migration redevelopment company in China.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are, by their nature, subject to risks and uncertainties. This Act provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements, including statements regarding industry prospects and future results of operations or financial position, made in this press release are forward looking.

Words such as "anticipate", "believe", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would" and similar expressions may identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to: the Company's future performance, the Company's expansion efforts, the state of economic conditions, the Company's market and the governmental policy. These forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors the Company believes to be appropriate in particular circumstances. However, whether actual results and developments will meet the Company's expectations and predictions depends on a number of known and unknown risks and uncertainties and other factors, any or all of which could cause actual results, performance or achievements to differ materially from the Company's expectations, whether expressed or implied by such forward-looking statements.

CHINA METRO-RURAL HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED SEPTEMBER 30
			2013			2013			2012
			US$'000			HK$'000			HK$'000
			(Unaudited)			(Unaudited)			(Unaudited)
			(Note 2)
Continuing Operations
Revenue			19,548			152,471			206,579
Cost of sales			(12,667	)		(98,802	)		(129,883	)
Gross profit			6,881			53,669			76,696
Other income, net			1,548			12,072			35,621
Other (losses)/gains, net			(2,276	)		(17,752	)		43,471
Selling expenses			(1,755	)		(13,686	)		(32,123	)
Administrative expenses			(6,309	)		(49,211	)		(54,155	)
Operating (loss)/profit			(1,911	)		(14,908	)		69,510
Finance income			2,557			19,943			512
Finance costs			-			-			(12,570	)
Finance income/(costs) -net			2,557			19,943			(12,058	)
Share of losses of an associate			(109	)		(850	)		(3,681	)
Profit before income tax			537			4,185			53,771
Income tax expenses			(2,577	)		(20,099	)		(21,155	)
(Loss)/profit for the period from continuing operations			(2,040	)		(15,914	)		32,616
Discontinued Operations
Loss for the period from discontinued operations, net of tax			-			-			(10,312	)
(Loss)/profit for the period			(2,040	)		(15,914	)		22,304
Attributable to:
	Equity holders of the Company		(2,639	)		(20,584	)		14,310
	Non-controlling interests		599			4,670			7,994
			(2,040	)		(15,914	)		22,304
(Loss)/earnings per share attributable to equity holders of the Company during the period
	Basic (loss)/earnings per share
	From continuing operations		US$ (0.04	)		HK$ (0.28	)		HK$ 0.33
	From discontinued operations		-			-			HK$ (0.14	)
			US$ (0.04	)		HK$ (0.28	)		HK$ 0.19
	Diluted loss per share
	From continuing operations		US$ (0.04	)		HK$ (0.28	)		HK$ (0.20	)
	From discontinued operations		-			-			HK$ (0.12	)
			US$ (0.04	)		HK$ (0.28	)		HK$ (0.32	)

The accompanying notes are an integral part of this press release.

CHINA METRO-RURAL HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED SEPTEMBER 30
				2013			2013			2012
				US$'000			HK$'000			HK$'000
				(Unaudited)			(Unaudited)			(Unaudited)
				(Note 2)
(Loss)/profit for the period				(2,040	)		(15,914	)		22,304
Other comprehensive income/(loss), net of tax:
Items that may be reclassified to income statement
	Exchange difference on translation of foreign operations			4,511			35,187			(4,251	)
Total comprehensive income for the period				2,471			19,273			18,053
Total comprehensive income/(loss) for the period attributable to:
	Equity holders of the Company
		Continuing operations		1,651			12,875			20,606
		Discontinued operations		-			-			(10,312	)
				1,651			12,875			10,294
	Non-controlling interests
		Continuing operations		820			6,398			7,759
		Discontinued operations		-			-			-
				820			6,398			7,759
				2,471			19,273			18,053

The accompanying notes are an integral part of this press release.

CHINA METRO-RURAL HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
			September 30,				March 31,
			2013		2013		2013
			US$'000		HK$'000		HK$'000
			(Unaudited)		(Unaudited)		(Unaudited)
			(Note 2)
Non-current assets
	Investment properties		72,401		564,730		553,633
	Investment properties under construction		1,973		15,393		15,077
	Property, plant and equipment		13,574		105,876		107,145
	Land use rights		10,111		78,867		78,407
	Deposit for investment properties		1,927		15,033		14,738
	Deposit for acquisition of land use rights		16,420		128,073		125,556
	Interest in an associate		3,330		25,970		26,298
	Deferred income tax assets		349		2,724		-
	Restricted and pledged bank deposits		1,778		13,866		13,594
			121,863		950,532		934,448
Current assets
	Completed properties held for sale		55,132		430,033		501,620
	Properties under development		157,964		1,232,118		931,404
	Land use rights		281		2,191		2,178
	Deposit for acquisition of land use rights		82,456		643,153		-
	Trade and other receivables		49,763		388,155		433,507
	Restricted and pledged bank deposits		4,605		35,920		35,182
	Cash and cash equivalents		30,231		235,800		364,539
			380,432		2,967,370		2,268,430
Current liabilities
	Trade payables, other payables and accruals		90,659		707,139		383,370
	Receipt in advance		4,285		33,427		37,469
	Current income tax liabilities		34,515		269,217		245,569
	Derivative financial liabilities		41,942		327,145		314,522
	Bank and other borrowings		73,048		569,772		286,703
			244,449		1,906,700		1,267,633
Net current assets			135,983		1,060,670		1,000,797
Total assets less current liabilities			257,846		2,011,202		1,935,245
Non-current liabilities
	Deferred income tax liabilities		10,866		84,755		83,090
	Bank and other borrowings		42,196		329,129		297,271
	Convertible bonds		42,286		329,830		306,669
	Loan from a non-controlling interest of a subsidiary		7,538		58,800		58,800
			102,886		802,514		745,830
Net assets			154,960		1,208,688		1,189,415

The accompanying notes are an integral part of this press release.

CHINA METRO-RURAL HOLDINGS LIMITED
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION - (Continued)
			September 30,				March 31,
			2013		2013		2013
			US$'000		HK$'000		HK$'000
			(Unaudited)		(Unaudited)		(Unaudited)
			(Note 2)
Equity
Equity attributable to equity holders of the Company
	Share capital		73		573		573
	Reserves		150,455		1,173,546		1,160,671
			150,528		1,174,119		1,161,244
Non-controlling interests			4,432		34,569		28,171
Total equity			154,960		1,208,688		1,189,415

The accompanying notes are an integral part of this press release.

CHINA METRO-RURAL HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30
		2013			2013			2012
		US$'000			HK$'000			HK$'000
		(Unaudited)			(Unaudited)			(Unaudited)
		(Note 2)
Net cash (used in)/generated from operating activities		(55,692	)		(434,395	)		1,169
Net cash used in investing activities		(238	)		(1,853	)		(19,318	)
Net cash generated from financing activities		38,803			302,663			239,079
Net (decrease)/increase in cash and cash equivalents		(17,127	)		(133,585	)		220,930
Cash and cash equivalents at beginning of the period		46,736			364,539			343,578
Effect of foreign exchange rate changes		622			4,846			(928	)
Cash and cash equivalents at end of the period		30,231			235,800			563,580

The accompanying notes are an integral part of this press release.

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO UNAUDITED FINANCIAL INFORMATION

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The financial information presented herein have not been audited by an independent registered public accounting firm, but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of financial information. However, this information is not necessarily indicative of results of any other interim period or for the full fiscal year. The accounting policies and basis of preparation adopted in the preparation of the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of financial positions and condensed consolidated statement of cash flows (collectively the "Condensed Statements") are consistent with those used in the annual financial statements of the Group for the fiscal year ended March 31, 2013.

2. US DOLLAR EQUIVALENTS

The US dollar equivalents of the figures shown in the Condensed Statements are supplementary information and have been translated at HK$7.8 to US$1.0, representing the rate on September 30, 2013 for U.S. dollar in New York for cable transfers in Hong Kong dollars as certified for custom purposes by the Federal Reserve Bank of New York. Such translation should not be construed as representations that the Hong Kong dollar amounts represent, or have been or could be converted into, US dollar at that or any other rate.