SOURCE: China Metro-Rural Holdings Limited

China Metro-Rural Holdings Limited

November 26, 2014 08:30 ET

CNR Announces Its Results for the Six Months Ended September 30, 2014

NEW YORK, NY--(Marketwired - Nov 26, 2014) - 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, 2014. 

Major Events:

  • Commencement of project in Zhoukou City, Henan Province of the PRC

    During the period, the Group has commenced a new project in Zhoukou City (the "Zhoukou Project") which is focused on agricultural logistics as well as urban rural migration re-development businesses. The planned site area of the Zhoukou Project is approximately 5.5 million square meters with corresponding maximum gross floor area of approximately 10 million square meters. The Group already entered into auctions and has acquired 414,192 square meters of land. The first phase of construction with total gross floor area of approximately 392,000 square meters has commenced. The official pre-sale is expected to commence on November 29, 2014.

  • Acquisition of a hotel operation in Tieling City, Liaoning Province of the PRC

    During the period, the Group has acquired a hotel operation (the "Hotel") located at our Tieling Project at a consideration of RMB15,000,000 (approximately HK$18,860,000). The acquisition gave rise to goodwill of approximately HK$919,000. The Hotel has 168 rooms with a gross floor area of approximately 28,692 square meters. The Hotel is currently closed for minor renovations and repositioning and will be re-opened in 2015.

  • Set up of a joint venture company

    During the period, the Group has set up a company which is inactive and pending for capital injection from the Company. As at September 30, 2014, the Group has a capital commitment of RMB11,608,000 (approximately HK$14,638,000) toward this company.

Financial Highlights:
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$152,471,000 for the six months ended September 30, 2013 to HK$43,405,000 for the six months ended September 30, 2014, representing a year-over-year decrease of 71.5%. The decrease was primarily due to lack of newly completed properties held for sale as they are still under construction during the current period.
  • Sales of gross floor area decreased from 24,391 square meters for the six months ended September 30, 2013 to 10,025 square meters for the six months ended September 30, 2014, representing a year-over-year decrease of 58.9%. 
  • Gross profit percentage increased from 35.2% for the six months ended September 30, 2013 to 41.3% for the six months ended September 30, 2014.
  • Other income and losses, net were a loss of approximately HK$5,680,000 for the six months ended September 30, 2013. Other income and gains, net were approximately HK$81,526,000 for the six months ended September 30, 2014. Included in other income and gains/(losses), net, was a government subsidy of HK$9,744,000 (2013: HK$11,657,000) for the six months ended September 30, 2014, representing a year-over-year decrease of 16.4%, a gain of HK$71,660,000 (2013: a loss of HK$12,623,000) arising from fair value changes of derivative components of convertible bonds and warrants. Selling expenses decreased from HK$13,686,000 for the six months ended September 30, 2013 to HK$12,792,000 for the six months ended September 30, 2014, representing a year-over-year decrease of 6.5%.
  • Administrative expenses increased from HK$49,211,000 for the six months ended September 30, 2013 to HK$53,442,000 for the six months ended September 30, 2014, representing a year-over-year increase of 8.6%.
  • Finance income decreased from HK$19,943,000 for the six months ended September 30, 2013 to HK$7,198,000 for the six months ended September 30, 2014, representing a year-over-year decrease of 63.9%. Included in finance income was an interest income on other receivables of HK$6,601,000 (2013: HK$19,491,000) for the six months ended September 30, 2014, representing a year-over-year decrease of 66.1%.
  • Income tax expenses increased from HK$20,099,000 for the six months ended September 30, 2013 to HK$22,738,000 for the six months ended September 30, 2014, representing a year-over-year increase of 13.1%. The effective tax rate decrease from 480.3% for the six months ended September 30, 2013 to 71.0% for the six months ended September 30, 2014. The income tax expenses for the six months ended September 30, 2014 included an additional PRC land appreciation tax of approximately HK$28,314,000 arising from our project in Dezhou City. The additional provision arose from the land appreciation tax clearance procedures conducted by the local tax bureau during the six months ended September 30, 2014. During this process, the local tax bureau took a different interpretation of the taxability and deductibility of certain items differently from that previously adopted by the Group, thus giving rise to this additional tax. As the interpretation of the taxability and deductibility of these items are highly subjective, the additional tax could only be confirmed upon completion of the tax clearance procedures.
  • Net loss attributable to the equity holders of the Company was HK$20,584,000 for the six months ended September 30, 2013. Net profit attributable to equity holders of the Company was HK$13,477,000 for the six months ended September 30, 2014.

Rural-Urban Migration and City Re-Development Business

There were no results generated from this segment during the current and prior period.

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  
   
    2014     2014     2013  
    US$'000     HK$'000     HK$'000  
    (Unaudited)     (Unaudited)     (Unaudited)  
    (Note 2)              
                         
Revenue     5,565       43,405       152,471  
Cost of sales     (3,265 )     (25,467 )     (98,802 )
                         
Gross profit     2,300       17,938       53,669  
                         
Other income, net     1,302       10,157       12,072  
Other gains/(losses), net     9,150       71,369       (17,752 )
Selling expenses     (1,640 )     (12,792 )     (13,686 )
Administrative expenses     (6,852 )     (53,442 )     (49,211 )
Operating profit/(loss)     4,260       33,230       (14,908 )
                         
Finance income     923       7,198       19,943  
Finance costs     (323 )     (2,519 )     -  
Finance income -net     600       4,679       19,943  
Share of losses of an associate     (752 )     (5,865 )     (850 )
Profit before income tax     4,108       32,044       4,185  
                         
Income tax expenses     (2,915 )     (22,738 )     (20,099 )
Profit/(loss) for the period     1,193       9,306       (15,914 )
                         
Attributable to:                        
  Equity holders of the Company     1,728       13,477       (20,584 )
  Non-controlling interests     (535 )     (4,171 )     4,670  
      1,193       9,306       (15,914 )
                         
Profit/(loss) per share attributable to equity holders of the Company during the period                        
                         
  Basic profit/(loss) per share   US$ 0.02     HK$ 0.18     HK$ (0.28 )
                         
  Diluted loss per share   US$ (0.04 )   HK$ (0.33 )   HK$ (0.28 )
                         

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  
   
    2014     2014     2013  
    US$'000     HK$'000     HK$'000  
    (Unaudited)     (Unaudited)     (Unaudited)  
    (Note 2)              
                   
Profit/(loss) for the period   1,193     9,306     (15,914 )
Other comprehensive income, net of tax:                  
Items that may be reclassified to income statement                  
  Exchange difference on translation of foreign operations   569     4,440     35,187  
                   
Total comprehensive income for the period   1,762     13,746     19,273  
                   
Total comprehensive (loss)/income for the period attributable to:                  
  Equity holders of the Company   2,274     17,737     12,875  
  Non-controlling interests   (512 )   (3,991 )   6,398  
    1,762     13,746     19,273  
                   

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,
    2014   2014   2014
    US$'000   HK$'000   HK$'000
    (Unaudited)   (Unaudited)   (Unaudited)
    (Note 2)        
             
Non-current assets            
  Investment properties   78,233   610,214   608,909
  Property, plant and equipment   34,244   267,104   103,467
  Land use rights   16,237   126,645   77,560
  Goodwill   118   919   -
  Deposit for investment properties   1,617   12,610   12,583
  Deposit for acquisition of land use rights   16,426   128,121   127,847
  Interest in an associate   2,396   18,692   24,522
  Restricted and pledged bank deposits   1,778   13,871   13,842
  Deferred income tax assets   1,771   13,818   1,210
    152,820   1,191,994   969,940
Current assets            
  Completed properties held for sale   48,193   375,904   396,136
  Properties under development   309,598   2,414,868   1,631,992
  Land use rights   23,422   182,689   184,809
  Deposit for acquisition of land use rights   61,329   478,370   664,493
  Trade and other receivables   34,012   265,295   313,388
  Restricted and pledged bank deposits   3,418   26,659   36,844
  Cash and cash equivalents   17,104   133,409   146,192
    497,076   3,877,194   3,373,854
Current liabilities            
  Trade payables, other payables and accruals   131,756   1,027,698   587,519
  Receipt in advance   14,237   111,044   28,160
  Current income tax liabilities   40,395   315,081   325,351
  Derivative financial liabilities   30,847   240,608   312,267
  Bank and other borrowings   64,945   506,570   720,843
  Convertible bonds   49,786   388,330   -
    331,966   2,589,331   1,974,140
             
Net current assets   165,110   1,287,863   1,399,714
Total assets less current liabilities   317,930   2,479,857   2,369,654
Non-current liabilities            
  Deferred income tax liabilities   11,476   89,514   89,323
  Bank and other borrowings   97,488   760,403   386,309
  Loans from a shareholder   8,333   65,000   -
  Convertible bonds   21,707   169,318   512,146
  Loan from a non-controlling interest of a subsidiary   7,539   58,800   58,800
    146,543   1,143,035   1,046,578
Net assets   171,387   1,336,822   1,323,076
             

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,
    2014   2014   2014
    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   167,637   1,307,572   1,289,835
    167,710   1,308,145   1,290,408
Non-controlling interests   3,677   28,677   32,668
Total equity   171,387   1,336,822   1,323,076
             

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  
                   
    2014     2014     2013  
    US$'000     HK$'000     HK$'000  
    (Unaudited)     (Unaudited)     (Unaudited)  
    (Note 2)              
                   
Net cash used in operating activities   (12,180 )   (95,004 )   (434,395 )
                   
Net cash used in investing activities   (9,469 )   (73,857 )   (1,853 )
                   
Net cash generated from financing activities   19,958     155,675     302,663  
                   
Net decrease in cash and cash equivalents   (1,691 )   (13,186 )   (133,585 )
                   
Cash and cash equivalents at beginning of the period   18,743     146,192     364,539  
Effect of foreign exchange rate changes   52     403     4,846  
                   
Cash and cash equivalents at end of the period   17,104     133,409     235,800  
                   

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, 2014.

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, 2014 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.

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