Year 2013

During the year, the principal businesses of the Group underwent significant changes.  Upon the completion of the disposal of the 9 pervious subsidiaries in September 2013, the Group’s core business was changed from the production, distribution and sale of beer to property development and investment.  Profit for the year attributable to owners of the Company amounted to HK$3,427 million (2012: net loss of HK$168 million).

Discontinued Operations

As mentioned in the Chairman’s Statement in relation to the disposal of the equity interests in 9 previous subsidiaries by the Company during the year, on 5 February 2013, the Company entered into a master agreement with China Resources Snow Breweries Limited, pursuant to which the Company agreed to sell the entire equity interests in 9 previously wholly-owned subsidiaries and certain of their loans and debts owing to the remaining Group at a total consideration of RMB5.38 billion.  The said 9 pervious subsidiaries were principally engaged in the production, distribution and sale of beer.  The disposal of the equity interests of these subsidiaries were completed in September 2013.  Subsequent to the transactions, these subsidiaries ceased to be subsidiaries of the Company.  As a result, the financial results of these subsidiaries ceased to be consolidated into the financial statements of the Group.

The Group recorded an aggregated net gain from disposal of the 9 previous subsidiaries of HK$3,936 million during the year.  In respect of the discontinued operations, net profit for the year amounted to HK$3,400 million (2012: net loss of HK$170 million).  Detail of the results of the discontinued operation is presented in note 12 to the financial statements.

Continuing Operations

Since September 2013 and upon the completion of the transactions in relation to the disposal of the 9 previous subsidiaries, the Group engages in property development and investment.  The Group holds a few investment properties that generate rental income, as well as the Buxin Project which is under development, all of which are located in Shenzhen, Guangdong Province.

In particular, the Group is currently focusing its resources on developing the Buxin Project. It is currently intended that the Buxin Project will be divided into phases. During the year, the Group has filed the urban renewal unit planning proposal to the relevant urban renewal authorities of the Government of Shenzhen Municipality for approval, and is currently working closely with the relevant urban renewal authorities to fine tune the proposal. Once the approval on the proposal is received, the Group expects to, shortly thereafter, proceed with site clearance and demolition of the existing buildings, and thereafter, the construction of the Buxin Project. Concurrently, the Group is also undertaking various pre-construction works in preparation for the subsequent stages of the Buxin Project. Based on the Group’s internal estimation and the latest communications with the relevant government authorities on the progress regarding their review on the urban renewal unit planning proposal, the Group currently estimates that the urban renewal unit planning proposal will be finalized and the relevant approval will be received by the Group by around the end of 2014, after which, arrangements will be made for the signing of the land use right transfer agreement and payment of the land premium. As the urban renewal unit planning proposal is currently under review by the Government of Shenzhen Municipality and remains in flux, and more time than expected is required in the approval process, the Group is now working, based on the information currently available and the latest communications with the relevant governmental authorities, towards a plan which, subject to the requirements of the Government of Shenzhen Municipality, the market conditions and the available resources of the Group prevailing at the time, may involve reorganising and combining the preparation and implementation of various subsequent work stages for the Buxin Project (such as technical designing and planning, surveying, tendering and construction), so as to expedite and improve the overall planning and implementation of the project. If favourable market conditions permit, the Group will also consider commencing certain works for later phases in parallel with phase one of the Buxin Project. The Group currently anticipates that construction work for phase one of the Buxin Project will commence in the second quarter of 2015 (after completion of site clearance) and the pre-sale process will commence in around the last quarter of 2016.

For further information on the review and outlook of the Buxin Project, please refer to the Chairman’s Statements on the website.

In respect of the continuing operations, the Group did not record any consolidated revenue (2012: nil).  Net profit for the year was HK$27.09 million (2012: HK$1.42 million).

Operating Expenses and Finance Costs

In respect of the continuing operations, the Group’s administrative expenses for the year were HK$29.50 million (2012: HK$14.77 million), representing an increase of 99.7% over 2012, which was mainly attributable to the increase in the general administrative expenses and remuneration arising from the successful disposal of the 9 previous subsidiaries.

In respect of the continuing operations, the Group’s finance costs for the year amounted to HK$595 thousand (2012: nil), which was attributable to the increase in interest expenses arising from an increase in bank loan during the year. 

Taxation

In respect of the continuing operations, all remaining subsidiaries of the Group did not record income tax expenses during the year (2012: nil).

Capital Expenditure

The Group’s capital expenditure, on a cash basis, for the year was approximately HK$136 million (2012: HK$58 million), representing an increase of 134% over 2012.  Of this, capital expenditure related to the preliminary expenditures of the Buxin Project was approximately HK$6.0 million.

Financial Resources and Liquidity

As at 31 December 2013, the Group’s net asset value was HK$4.26 billion (2012: HK$2.95 billion), representing an increase of 44.4% over that of 2012. Based on the number of ordinary shares in issue as at 31 December 2013, the net asset value per share of the Group was HK$2.49 (2012: HK$1.72), an increase of 44.8% from that of 2012.

As at 31 December 2013, the Group had cash and bank balances of HK$3,104 million (2012: HK$194 million), representing an increase of 15 times over that of 31 December 2012, which was mainly attributable to the receipt of part of the proceeds from the disposal of the 9 previous subsidiaries.  Of the cash and bank balances, there was no pledged bank balances with restricted purposes (2012: HK$0.49 million) and HK$695 million (2012: HK$6.91 million) of restricted bank balances.  Of the Group’s cash and bank balances as at 31 December 2013, 99.8% was in RMB and 0.2% in HKD.  Net cash flows used in operating activities for the year were HK$4.00 million (2012: HK$22.90 million).  As most of the transactions from the Group’s daily operations were denominated in Renminbi, there will be low transaction exposure.  The Group did not perform currency hedge of the transactions actively.

As at the end of 2013, the Group did not have any outstanding bank loan. Given the Group’s existing cash balances, the Group will have sufficient financial resources to finance its existing continuing operations in the coming year.

None of the assets of the Group was pledged to any creditors and there was no material contingent liability recorded as at the end of the year.

Human Resources

The Group had 546 (2012: 2,835) employees as at the end of the year.  The change was mainly attributable to the disposal of the equity interests in the 9 previously wholly-owned subsidiaries.  The total employee remuneration and provident fund contributions (excluding directors’ remuneration) of the continuing operations for the year were HK$7.19 million (2012: HK$7.43 million).  Various basic benefits were provided to the Group’s staff with an incentive policy which was designed to remunerate staff by combined references to the Group’s operating results as well as the performance of the staff.