PPS INTERNATIONAL (HOLDINGS) LIMITED Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
PPS INTERNATIONAL (HOLDINGS) LIMITED寶 聯 控 股 有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 8201) THIRD QUARTERLY RESULTS ANNOUNCEMENT FOR THE NINE MONTHS ENDED 31 MARCH 2017 CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET ("GEM") OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.This announcement, for which the directors (the "Directors") of PPS International (Holdings) Limited (the "Company") collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the "GEM Listing Rules") for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.
UNAUDITED QUARTERLY RESULTSThe board of Directors (the "Board") is pleased to announce that the unaudited condensed consolidated results of the Company and its subsidiaries (collectively, the "Group") for the three months and the nine months ended 31 March 2017, together with the unaudited comparative figures for the corresponding periods in 2016, as follows:
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFor the three months and the nine months ended 31 March 2017
Nine months ended 31 March Three months ended 31 March 2017 2016 2017 2016 (Unaudited) (Unaudited) (Unaudited) (Unaudited)Continuing operations | Notes | HK$'000 | HK$'000 | HK$'000 | HK$'000 |
Revenue | 3 | 198,575 | 190,471 | 67,691 | 65,449 |
Cost of services | (177,293) | (175,237) | (61,730) | (59,133) | |
Gross profit | 21,282 | 15,234 | 5,961 | 6,316 | |
Other income and gains | 4 | 957 | 1,331 | 14 | 2 |
Selling and marketing expenses | (1,761) | (2,338) | (833) | (790) | |
Administrative expenses | (25,739) | (39,560) | (12,029) | (14,641) | |
Finance costs | (631) | (631) | (211) | (114) | |
Loss before taxation | 5 | (5,892) | (25,964) | (7,098) | (9,227) |
Income tax credit/(expenses) | 6 | (833) | 39 | (15) | 36 |
Loss for the period from continuing operations | (6,725) | (25,925) | (7,113) | (9,191) | |
Discontinued operations | |||||
Profit/(Loss) for the period from discontinued operations | 8(c) | 2,118 | (4,230) | 7,067 | (1,310) |
Loss for the period | (4,607) | (30,155) | (46) | (10,501) |
Notes HK$'000 HK$'000 HK$'000 HK$'000
Other comprehensive lossItem that may be reclassified subsequently to profit or loss:
Exchange differences arising on
translating foreign operations (146) (606) 3 101
Reclassification of cumulative | |||||
exchange reserve from equity to profit or loss upon disposal of subsidiaries | (884) | - (884) | - | ||
Total comprehensive loss for the period | (5,637) | (30,761) (927) | (10,400) | ||
Loss for the period attributable to: Owners of the Company | (4,516) | (30,045) (24) | (10,470) | ||
Non-controlling interests | (91) | (110) (22) | (31) | ||
(4,607) | (30,155) (46) | (10,501) | |||
Total comprehensive loss for the period attributable to: | |||||
Owners of the Company | (5,546) | (30,651) | (905) | (10,369) | |
Non-controlling interests | (91) | (110) | (22) | (31) | |
(Loss)/earnings per share
From continuing and discontinuing operations
(restated) (restated)
- Basic and diluted (HK cents) 9 (0.203) (1.959) 0.001 (0.624)
From continuing operations
- Basic and diluted (HK cents) 9 (0.301) (1.690) (0.268) (0.548)
From discontinued operations
- Basic and diluted (HK cents) 9 0.098 (0.269) 0.267 (0.076)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATIONFor the three months and the nine months ended 31 March 2017
GENERAL INFORMATION
The Company was incorporated as an exempted company with limited liability in the Cayman Islands on 31 May 2012. The registered office of the Company is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. The principal place of business is located at 24/F., SUP Tower, 75-83 King's Road, North Point, Hong Kong.
The Company had its primary listing on the Growth Enterprise Market (the "GEM") of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 17 June 2013. The Company's principal activity is investment holding and the principal activity of its principal subsidiaries is the provision of environmental cleaning services.
BASIS OF PREPARATION
The unaudited condensed consolidated results have been prepared in accordance with accounting principles generally accepted in Hong Kong which include Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations (collectively, "HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") and the applicable disclosures required by the GEM Listing Rules. The principal accounting policies used in the third quarterly unaudited condensed consolidated results are consistent with those adopted in the preparation of the Group's annual financial statements for the year ended 30 June 2016.
The HKICPA has issued a number of new and revised HKFRSs. For those which are relevant to the Group's operations and effective for its accounting period beginning on 1 July 2016, the adoption has no significant changes on the Group's accounting policies, the presentation, the reported results and the financial position of the Group for the current or prior accounting periods.
The Group has not applied the new and revised HKFRSs which have been issued but are not yet effective. The Group is currently in the process of making an assessment of the impact of these new and revised HKFRSs but is not yet in a position to state whether they would have a material impact on the Group's results and financial position.
The unaudited condensed consolidated results have not been audited by the Company's auditors, but have been reviewed by the Company's audit committee.
SEGMENT INFORMATION
Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on types of services provided.
The Group's operating and reportable segments under HKFRS 8 are as follows:
Continuing operations
Environmental and Cleaning Provision of environmental and cleaning services in Hong Kong
and Shanghai, the People's Republic of China (the "PRC")
Investments Investments in financial assets
Money Lending Provision of money lending business in Hong Kong under the Money Lenders Ordinance in Hong Kong
Discontinued operations
AUTO Provision of car beauty services in Hong Kong
Management Services Provision of property and car park management services in Shenzhen, the PRC Information regarding the Group's reportable segments is presented below:
Revenue
Turnover represents the aggregate of service income from Environmental and Cleaning, AUTO, Management Services and Money Lending.
An analysis of the Group's turnover is as follows:
Nine months ended 31 March
Three months ended 31 March
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
HK$'000 HK$'000 HK$'000 HK$'000
Continuing operations
Service income from Environmental and Cleaning 197,097 190,471 66,363 65,449 Interest income from Money Lending 1,478 - 1,328 -
198,575 190,471 67,691 65,449
Discontinued operations
Services income from AUTO 3,122 5,980 - 2,066 Services income from Management Services 8,658 - 1,652 -
11,780 5,980 1,652 2,066
OTHER INCOME and OTHER GAINS
Nine months ended 31 March
Three months ended 31 March
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
HK$'000 HK$'000 HK$'000 HK$'000
Continuing operations Other income:
Interest income 42 25 10 2
Sundry income 422 554 - -
464 579 10 2
Other gains:
Gain on disposals of property, plant and equipment, net 4 752 4 - Realised gain on financial assets of FVTPL 489 - - -
493 752 4 -
957 1,331 14 2
LOSS BEFORE TAXATION
Loss before taxation has been arrived at after charging:
Nine months ended 31 March
Three months ended 31 March
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
HK$'000 HK$'000 HK$'000 HK$'000
Continuing operations
Amortisation of intangible assets 167 - 56 -
Depreciation of property, plant and equipment 2,324 4,550 744 4,563
Cost of consumable goods 2,301 2,631 1,149 929
Gain on disposals of property, plant and equipment 4 752 4 - Loss on written off of property, plant and equipment 10 363 - - Staff costs including Directors' emoluments:
Salaries and wages 121,274 123,382 41,788 39,362
Long service payment 453 150 300 64
Allowances and others 142 160 52 69
Contributions to defined contribution retirement plans 4,379 4,559 1,472 1,584 Share-based payment expenses - - - -
126,248 128,251 43,612 41,079
Minimum lease payments under operating leases 3,393 2,272 1,542 387
INCOME TAX (CREDIT)/EXPENSES
Nine months ended 31 March
Three months ended 31 March
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
HK$'000 HK$'000 HK$'000 HK$'000
Continuing operations:
Current tax:
Hong Kong Profits Tax
Current year provision 1,042 264 89 61
PRC-EIT
Over provision in prior years (45) - (17) -
997 264 72 61
Deferred tax (164) (303) (57) (97)
Income tax expenses/(credit) 833 (39) 15 (36)
Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits of the Hong Kong subsidiaries of the Group for the nine months ended 31 March 2016 and 2017 and three months ended 31 March 2016 and 2017.
No provision for PRC EIT had been made as the PRC subsidiaries of the Group did not generate any assessable profits in the PRC for the nine months ended 31 March 2016 and 2017 and the three months ended 31 March 2016 and 2017.
DIVIDENDS
The Board does not recommend the payment of any dividend for the nine months ended 31 March 2017 (nine months ended 31 March 2016: HK$Nil).
PROFIT/(LOSS) FOR THE PERIOD FROM DISCOUNTINUED OPERATIONS
Disposal of Elite Car Services Limited
On 11 January 2017, Go Million Limited ("Go Million"), a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with an independent third party purchaser, pursuant to which Go Million agreed to sell and the purchaser agreed to acquire the entire issued share capital of Elite Car Services Limited at a cash consideration of HK$1 (the "AUTO Disposal"). Elite Car Services Limited, through its subsidiaries, is principally engaged in the provision of auto beauty services in Hong Kong.
Disposal of Logon Clean Energy Group Limited
On 3 March 2017, the Company entered into a sale and purchase agreement with an independent third party purchaser, pursuant to which the Company agreed to sell and the purchaser agreed to acquire the entire issued share capital of Logon Clean Energy Group Limited at a cash consideration of HK$32,000,000 (the "Logon Disposal"). Logon Clean Energy Group Limited, through its subsidiaries, is principally engaged in the provision of property and car park management services in Shenzhen, the People's Republic of China (the "PRC").
The results from the discontinued operations included in for the period are set out as bellow:
Nine months ended 31 March
Three months ended 31 March
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue
Notes
3
HK$'000
11,780
HK$'000
5,980
HK$'000
1,652
HK$'000
2,066
Cost of services
(6,842)
-
(1,432)
-
Gross profit
4,938
5,980
220
2,066
Other income and gains
25
-
7
-
Selling and marketing expenses
(1,127)
(1,494)
(110)
(566)
Administrative expenses
(5,030)
(8,744)
(264)
(2,819)
Finance costs
(98)
-
(32)
-
Impairment loss on goodwill
(3,763)
-
-
-
Gain on disposals of subsidiaries
8(e)
7,178
-
7,178
-
Profit/(loss) before taxation
2,123
(4,258)
6,999
(1,319)
Income tax credit/(expenses)
(5)
28
68
9
Profit/(loss) for the period
2,118
(4,230)
7,067
(1,310)
Profit/(loss) for the period attributable to:
Owners of the Company
2,166
(4,120)
7,067
(1,279)
Non-controlling interests
(48)
(110)
-
(31)
2,118
(4,230)
7,067
(1,310)
The assets and liabilities disposed of at the completion dates are set out as bellow:
AUTO
Disposal
HK$'000
Logon Disposal HK$'000
Total
HK$'000
Property, plant and equipment
384
706
1,090
Goodwill
-
36,984
36,984
Trade and other receivables
1,073
2,904
3,977
Cash and cash equivalents Current tax recoverable Trade and other payables
467
- (245)
720
- (5,141)
1,187
- (5,386)
Deferred income
(4,989)
(1,270)
(6,259)
Current tax payable
-
(4,504)
(4,504)
Other borrowings
-
(1,668)
(1,668)
Non-controlling interests
285
-
285
Net assets/(liabilities) disposed of
(3,025)
28,731
25,706
(e)
Gain on disposals of subsidiaries is calculated as bellow:
AUTO
Disposal
Logon Disposal
Total
Note
HK$'000
HK$'000
HK$'000
Consideration settled in cash and cash equivalents Cumulative exchange gain reclassified from equity to profit or loss upon disposal of subsidiaries
- *
-
32,000
884
32,000
884
-
32,884
32,884
Less: Net assets/(liabilities) disposed of
8(d)
(3,025)
28,731
25,706
Gain on disposal
3,025
4,153
7,178
* The sale consideration is HK$1.
The gain on disposals from the AUTO Disposal and the Logon Disposal is included in the loss for the period from discontinued operations.
The actual gain on disposals is subject to the review by the Company's independent auditors and will be reflected in the annual results of the Company for the financial year ending 30 June 2017.
(LOSS)/Earnings PER SHARE
The calculation of basic and diluted earnings/loss per share is based on the following:
Nine months ended 31 March
Three months ended 31 March
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
HK$'000 HK$'000 HK$'000 HK$'000
(Loss)/earnings
Loss for the period attributable to
owners of the Company from the continuing operations for
of the Company from the discontinued operations for
the purposes of basic and diluted earnings/(loss) per share
2,166
(4,120)
7,067
(1,279)
Loss for the period attributable to owners of the Company for the purposes of basic and diluted earnings/(loss) per share
(4,516)
(30,045)
(24)
(10,470)
'000
'000
(Restated)
'000
'000
(Restated)
Number of shares
Weighted average number of ordinary shares for the purpose of basic and diluted loss per share
2,218,650
1,533,433
2,645,336
1,676,887
the purposes of basic and diluted loss per share (6,682) (25,925) (7,091) (9,191) Profit/(loss) for the period attributable to owners
The weighted average number of ordinary shares for the purpose of basic and diluted loss per share for the three months ended 31 March 2016 and the nine months ended 31 March 2016 has been adjusted for the issuance of shares upon the open offer completed on 9 December 2015, the share consolidation made on 15 March 2016 and the rights issue made on 13 February 2017.
The weighted average number of ordinary shares for the purpose of basic and diluted loss per share for the three months ended 31 March 2017 and the nine months ended 31 March 2017 has been adjusted for the rights issue made on 13 February 2017.
The outstanding share warrants are not included in the calculation of the diluted loss per share as they have anti-dilutive effect on the basic loss per share for the three months ended 31 March 2016 and the nine months ended 31 March 2016.
The outstanding share options are not included in the calculation of the diluted loss per share as they have anti-dilutive effect on the basic loss per share for the three months ended 31 March 2016 and the nine months ended 31 March 2016 and 2017.
There were no potential dilutive ordinary shares in issue during the three months ended 31 March 2017.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the nine months ended 31 March 2017
Attributable to owners of the Company
Equity
Foreign attributable
currency to owners Non-
Share Share Other Contribution translation Warrant Option Accumulated of the controlling Total capital premium reserve surplus reserve reserve reserve losses Company interests equity HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
(Note (a)) (Note (b)) (Note (c)) (Note (d))
As at 1 July 2016
1,800
108,514
1,000
21,400
(600)
- 6,459
(19,890)
118,683
(260)
118,423
Loss for the period
-
-
-
-
-
- -
(4,516)
(4,516)
(91)
(4,067)
Exchange differences arising on translation
of foreign operations - - - - (146) - - - (146) - (146)
Exchange differences reclassification upon disposals
of subsidiaries - - - - (884) - - - (884) - (884)
Total comprehensive loss for the period
-
-
- - (1,030)
- -
(4,516)
(5,546)
(91)
(5,637)
Release upon lapse and cancellation of share options
-
-
- - -
- (6,459)
6,459
-
-
-
Release upon disposal of subsidiaries
-
-
- - -
- -
-
-
285
285
Issue of shares pursuant to rights issue
900
47,700
- - -
- -
-
48,600
-
48,600
Shares issue expenses
-
(1,554)
- - -
- -
-
(1,554)
-
(1,554)
As at 31 March 2017 (unaudited) 2,700 154,660 1,000 21,400 (1,630) -- - (17,947) 160,183 (66) 160,117
For the nine months ended 31 March 2016
Attributable to owners of the Company
Equity
Foreign Retained attributable
currency earnings/ to owners Non-
Share Share Other Contribution translation Warrant Option (Accumulated of the controlling Total capital premium reserve surplus reserve reserve reserve losses) Company interests equity HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
(Note (a)) (Note (b)) (Note (c)) (Note (d))
As at 1 July 2015 1,000 22,360 1,000 21,400 (23) 39,500 - (8,498) 76,739 (99) 76,640
Loss for the period - - - - - - - (30,045) (30,045) (110) (30,155)
Exchange differences arising on translation
of foreign operations - - - - (606) - - - (606) - (606)
Total comprehensive loss for the period
-
-
- - (606)
-
-
(30,045)
(30,651)
(110)
(30,761)
Recognition of equity-settled share-based payments
-
-
- - -
-
6,625
-
6,625
-
6,625
Issue of shares pursuant to an open offer
500
64,500
- - -
-
-
-
65,000
-
65,000
Shares issue expenses
-
(2,476)
- - -
-
-
-
(2,476)
-
(2,476)
Expiry of the unlisted warrants
-
-
- - -
(39,500)
-
39,500
-
-
-
As at 31 March 2016 (unaudited) 1,500 84,384 1,000 21,400 (629) - 6,625 957 115,237 (209) 115,028
Notes:
The amount represented the difference between the nominal amount of shares issued by the Company and the aggregate amount of share capital of subsidiaries acquired under common control pursuant to the group reorganisation (the "Reorganisation") in preparation of the listing of the Company's shares on the Growth Enterprise Market ("GEM") of the Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 17 June 2013.
The amount represented the amounts due to shareholders capitalised before the listing of the Company's shares on the GEM of the Stock Exchange.
The amount represented the net proceeds received from the issue of unlisted warrants of the Company. This reserve will be transferred to the share capital and the share premium account upon exercise of the unlisted warrants, where the unlisted warrants remain unexercised at the expiry date, the amount recognised in the warrant reserve will be released to the retained earnings. During the nine months ended 31 March 2016, the balance of this reserve has been transferred to the retained earnings account upon expiry of unlisted warrants on 26 January 2016.
Option reserve represents the fair value of the actual or estimated number of unexercised share options granted to employees of the Company recognised in accordance with the accounting policy adopted for the equity- settled sharebased payments. During the nine months ended 31 March 2017, the balance of this reserve has been transferred to the retained earnings upon lapse and cancellation of the share options.
COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform to the current period presentation. The changes included the reclassification of certain expenses previously classified under cost of services to the selling and marketing expenses and the administrative expenses. The new classification of the accounting items was considered to provide a more appropriate presentation of the Group's results.
As a result of the separate presentation of the discontinued operations, certain comparative figures, including figures in the unaudited condensed consolidated statement of profit or loss and other comprehensive income and their related notes, have been represented to conform to changes in disclosure in this quarterly report.
PPS International Holdings Ltd. published this content on 11 May 2017 and is solely responsible for the information contained herein.
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