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

November 29, 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.