SOURCE: China Metro-Rural Holdings Limited

China Metro-Rural Holdings Limited

November 27, 2015 08:15 ET

CNR Announces Its Results for the Six Months ended September 30, 2015

NEW YORK, NY--(Marketwired - Nov 27, 2015) - China Metro-Rural Holdings Limited (the "Company") (NYSE MKT: CNR) 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, 2015. 

Major Events:

  • Pre-sale in Zhoukou City, Henan Province of the PRC

    Following the completion and sale of certain trade centers from the first phase of our project located in Zhoukou City (the "Zhoukou Project") during the last fiscal year, the Group has commenced the pre-sale of certain trade centers with total gross floor area of approximately 141,000 square meters in October 2015. These pre-sales are expected to be completed and the corresponding trade centers are expected to be delivered within the next six to twelve months from September 30, 2015.

  • Pre-sale in Hengyang City, Hunan Province of the PRC

    During the period, the Group has commenced the pre-sale of certain trade centers from our project located in Hengyang City (the "Hengyang Project") with total gross floor area of approximately 353,000 square meters. The first phase construction of the Hengyang Project consists of total gross floor area of approximately 504,000 square meters. As of September 30, 2015, the Group has successfully pre-sold gross floor area of approximately 97,000 square meters for the Hengyang Project. These pre-sales of the corresponding trade centers are expected to be completed and delivered within the next six to twelve months from September 30, 2015.

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$43,405,000 for the six months ended September 30, 2014 to HK$17,306,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 60.1%. 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 10,025 square meters for the six months ended September 30, 2014 to 2,131 square meters for the six months ended September 30, 2015, representing a year-over-year decrease of 78.7%. 
  • Gross profit percentage decreased from 41.3% for the six months ended September 30, 2014 to 22.8% for the six months ended September 30, 2015.
  • Other income and other gains/(losses), net were approximately HK$8,829,000 for the six months ended September 30, 2014. Other income and other gains/(losses), net were approximately HK$3,435,000 net loss for the six months ended September 30, 2015. Included in other income and gains/(losses), net, was mainly a government subsidy of HK$9,744,000 for the six months ended September 30, 2014 while there was no government subsidy for the six months ended September 30, 2015 and the loss in fair values of leasehold land and buildings of HK$4,033,000 for the six months ended September 30, 2015.
  • Selling expenses decreased from HK$6,466,000 for the six months ended September 30, 2014 to HK$4,504,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 69.7%. The decrease was mainly due to the decrease in advertising activities as the Group is yet to launch its sales campaign for its properties that are still under construction during the current period.
  • Administrative expenses increased from HK$37,014,000 for the six months ended September 30, 2014 to HK$43,242,000 for the six months ended September 30, 2015, representing a year-over-year increase of 16.8%. The increase was mainly attributable to the increase in impairment of trade and other receivables of HK$3,817,000.
  • Finance income decreased from HK$6,900,000 for the six months ended September 30, 2014 to HK$88,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 98.7%. Included in finance income in the six months ended September 30, 2014 was mainly an interest income on other receivables of HK$6,601,000.
  • Income tax expenses decreased from HK$26,323,000 for the six months ended September 30, 2014 to income tax credit of HK$884,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 103%. The effective tax rate decrease from 145.0% for the six months ended September 30, 2014 to -1.67% for the six months ended September 30, 2015. 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 from that previously adopted by the Group, thus giving rise to this additional tax. 
  • Net loss attributable to the equity holders of the Company was HK$40,315,000 for the six months ended September 30, 2014. Net loss attributable to equity holders of the Company was HK$50,667,000 for the six months ended September 30, 2015.

Rural-Urban Migration and City Re-Development Business

  • There was no revenue generated by the Group for the six months ended September 30, 2014 while net revenue generated by the Group was HK$43,910,000 for the six months ended September 30, 2015. The increase in sales was primarily due to the completion of a project at China Glorious City - Zhoukou.
  • Sales of gross floor area were 5,343 square meters for the six months ended September 30, 2015. 
  • Gross profit percentage for the six months ended September 30, 2015 was 55.5%.
  • Other income and other gains/(losses), net were approximately HK$1,289,000 for the six months ended September 30, 2014. Other income and other gains/(losses), net were approximately HK$25,822,000 for the six months ended September 30, 2015. Included in other income and other gains/(losses), net, was mainly a government subsidy of HK$23,795,000 (2014: Nil) for the six months ended September 30, 2015.
  • Selling expenses increased from HK$6,326,000 for the six months ended September 30, 2014 to HK$26,874,000 for the six months ended September 30, 2015, representing a year-over-year increase of 324.8%. The increase was mainly due to the increase in advertising, promotion and related expenses as a result of pre-sale campaigns in China Glorious City - Zhoukou and China Glorious City - Hengyang.
  • Administrative expenses increased from HK$9,862,000 for the six months ended September 30, 2014 to HK$33,583,000 for the six months ended September 30, 2015, representing a year-over-year increase of 241.0%. The increase was mainly due to the increase in headcount as a result of expansion of operations.
  • Finance income increased from HK$263,000 for the six months ended September 30, 2014 to HK$477,000 for the six months ended September 30, 2015, representing a year-over-year increase of 81.0%.
  • Income tax expenses increased from income tax credit of HK$3,585,000 for the six months ended September 30, 2014 to income tax expenses of HK$5,123,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 242.9%. The effective tax rate decrease from negative 24.5% for the six months ended September 30, 2014 to negative 20.5% for the six months ended September 30, 2015. 
  • Net loss attributable to the equity holders of the Company was HK$11,050,000 for the six months ended September 30, 2014. Net loss attributable to equity holders of the Company was HK$14,923,000 for the six months ended September 30, 2015.

Corporate

  • Other income and gains, net were approximately HK$71,407,000 for the six months ended September 30, 2014. Other income and other gains/(losses), net were approximately HK$71,775,000 for the six months ended September 30, 2015. Included in other income and other gains/(losses), net was a gain of HK$67,944,000 (2014: HK$71,660,000) mainly arising from fair value changes of derivative components of convertible bonds and warrants.
  • Administrative expenses decreased from HK$6,566,000 for the six months ended September 30, 2014 to HK$5,934,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 9.6%.

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  
   
    2015     2015     2014  
    US$'000     HK$'000     HK$'000  
    (Unaudited)     (Unaudited)     (Unaudited)  
    (Note 2)              
                         
Revenue     7,848       61,216       43,405  
Cost of sales     (4,219 )     (32,909 )     (25,467 )
                         
Gross profit     3,629       28,307       17,938  
                         
Other income, net     3,156       24,614       10,157  
Other gains, net     8,916       69,548       71,369  
Selling expenses     (4,023 )     (31,378 )     (12,792 )
Administrative expenses     (10,610 )     (82,759 )     (53,442 )
Operating profit     1,068       8,332       33,230  
                         
Finance income     72       565       7,198  
Finance costs     (404 )     (3,148 )     (2,519 )
Finance (cost)/income, net     (332 )     (2,583 )     4,679  
Share of losses of an associate     (342 )     (2,673 )     (5,865 )
Profit before income tax     394       3,076       32,044  
                         
Income tax expenses     (543 )     (4,239 )     (22,738 )
(Loss)/profit for the period     (149 )     (1,163 )     9,306  
                         
Attributable to:                        
  Equity holders of the Company     33       253       13,477  
  Non-controlling interests     (182 )     (1,416 )     (4,171 )
      (149 )     (1,163 )     9,306  
                         
(Loss)/profit per share attributable to equity holders of the Company during the period                        
                         
  Basic profit per share   US$ 0.00     HK$ 0.00     HK$ 0.18  
                         
  Diluted loss per share   US$ (0.05 )   HK$ (0.36 )   HK$ (0.33 )
                         

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  
   
    2015     2015     2014  
    US$'000     HK$'000     HK$'000  
    (Unaudited)     (Unaudited)     (Unaudited)  
    (Note 2)              
                   
(Loss)/profit for the period   (149 )   (1,163 )   9,306  
Other comprehensive income, net of tax:                  
Items that may be reclassified to income statement                  
  Exchange difference on translation of foreign operations   (11,854 )   (92,464 )   4,440  
                   
Total comprehensive (loss)/income for the period   (12,003 )   (93,627 )   13,746  
                   
Total comprehensive (loss)/income for the period attributable to:                  
  Equity holders of the Company   (11,375 )   (88,727 )   17,737  
  Non-controlling interests   (628 )   (4,900 )   (3,991 )
    (12,003 )   (93,627 )   13,746  
                   

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,
    2015   2015   2015
    US$'000   HK$'000   HK$'000
    (Unaudited)   (Unaudited)   (Unaudited)
    (Note 2)        
             
Non-current assets            
  Investment properties   77,805   606,882   633,544
  Property, plant and equipment   35,974   280,598   312,560
  Land use rights   6,956   54,258   57,489
  Deposit for investment properties   1,559   12,160   12,694
  Goodwill   118   919   919
  Deposit for acquisition of land use rights   15,839   123,541   128,968
  Interest in an associate   1,121   8,741   11,840
  Interest in a joint venture   917   7,152   7,466
  Deferred income tax assets   2,635   20,553   9,777
      142,924   1,114,804   1,175,257
Current assets            
  Completed properties held for sale   65,817   513,369   561,278
  Properties under development   415,115   3,237,897   2,708,802
  Land use rights   52,532   409,750   215,084
  Deposit for acquisition of land use rights   -   -   201,417
  Trade and other receivables   19,937   155,509   515,512
  Restricted and pledged bank deposits   5,960   46,483   150,640
  Cash and cash equivalents   80,179   625,398   402,675
      639,540   4,988,406   4,755,408
Current liabilities            
  Trade payables, other payables and accruals   193,039   1,505,697   1,679,179
  Receipt in advance   92,120   718,537   63,618
  Current income tax liabilities   64,391   502,247   551,600
  Derivative financial liabilities   23,373   182,313   250,257
  Bank and other borrowings   103,634   808,346   621,695
  Convertible bonds   25,155   196,206   607,482
  Loans from a shareholder   8,333   65,000   -
    510,045   3,978,346   3,773,831
             
Net current assets   129,495   1,010,060   981,577
Total assets less current liabilities   272,419   2,124,864   2,156,834
Non-current liabilities            
  Deferred income tax liabilities   11,740   91,569   95,592
  Bank and other borrowings   11,224   87,549   528,059
  Convertible bonds   60,409   471,190   -
  Loans from a shareholder   12,821   100,000   65,000
  Loan from a non-controlling interest of a subsidiary   7,538   58,800   58,800
    103,732   809,108   747,451
Net assets   168,687   1,315,756   1,409,383
             
Equity            
Equity attributable to equity holders of the Company            
  Share capital   73   573   573
  Reserves   165,789   1,293,149   1,381,877
    165,862   1,293,722   1,382,450
Non-controlling interests   2,825   22,034   26,933
Total equity   168,687   1,315,756   1,409,383
             

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  
   
                       
    2015       2015       2014  
    US$'000       HK$'000       HK$'000  
    (Unaudited)       (Unaudited)       (Unaudited)  
    (Note 2)                  
                       
Net cash generated from/(used in) operating activities   33,713       262,959       (95,004 )
                       
Net cash used in investing activities   (48 )     (380 )     (73,857 )
                       
Net cash (used in)/generated from financing activities   (1,673 )     (13,055 )     155,675  
                       
Net increase/(decrease) in cash and cash equivalents   31,992       249,524       (13,186 )
                       
Cash and cash equivalents at beginning of the period   51,625       402,675       146,192  
Effect of foreign exchange rate changes   (3,436 )     (26,801 )     403  
                       
Cash and cash equivalents at end of the period   80,181       625,398       133,409  
                       

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, 2015.

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, 2015 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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