(March 29, 2018 - Hong Kong) Realord Group Holdings Limited (“Realord” or the “Company”, together with its subsidiaries collectively known as the “Group”, stock code: 1196.HK) is pleased to announce its audited annual results for the year ended 31 December 2017 (the “Year”).

 

 

	FY2017 (HK$’000)	FY2016 (HK$’000)	Changes (%)
Revenue	762,959	209,784	+263.7%
Gross Profit	141,508	90,999	+55.5%
Profit for the year	111,221	80,097	+38.9%
Profit attributable to the equity holders	93,254	80,097	+16.4%
Earnings Per Share (HK cents)	8.11	6.95	+16.7%

 

 

During the Year under review, the Group recorded total revenue of approximately HK$763.0 million, representing a significant increase of approximately 263.7% as compared with last year of HK$209.8 million. The Group recorded a profit of approximately HK$111.2 million for the Year, increased by 38.9% year-over-year (“YoY”). The gross profit recorded approximately HK$141.5 million, representing an increase of 55.5% YoY. The earnings per share was HK8.11 cents (2016: HK6.95 cents).

 

The huge increase in revenue was mainly due to consolidating revenue arising from the Environmental Protection Segment of approximately HK$572.4 million (2016: Nil) and the fair value gains on investment properties of approximately HK$155.7 million (2016: HK$270.5 million), which was partly offset by the deferred taxation imposed on the fair value gains of approximately HK$48.3 million (2016: HK$125.7 million) as well as the increase in finance cost by approximately HK$30.8 million. The increase in finance cost was mainly due to the increase in interest-bearing borrowings and loans during the Year.

 

Business review

Environmental Protection Segment contributed most of the revenue of the Group during the Year. Since the completion of acquisition of Realord Environmental Protection in February 2017, which engaged in dismantling and trading of scrap materials and acting as an agent by sourcing scrap material in the PRC, the Group commenced the operations in the Environmental Protection Segment. The Environmental Protection Segment generated a revenue of approximately HK$572.4 million, representing 75.0% of the Group’s total revenue since the Group consolidating result of Realord Environmental Protection during the year. The segment recorded an operating profit of approximately HK$52.3 million during the year.

 

The Property Investment Segment recorded a revenue of approximately HK$20.2 million during the year under review, representing 2.6% of the total revenue of the Group. Revenue from this segment increased by 18.6% from an amount of HK$17.0 million last year. The increase was due to more rental income resulted from the acquisition of the properties located at Qiankeng Industrial Zone, which contributed additional revenue to the business during the year. Due to the fair value gain on investment properties recorded during the Year amounted to approximately HK$155.7 million (2016: HK270.5 million), the profit from this business decreased from approximately HK$282.4 million last year to approximately 169.2 million.

 

The Financial Services Segment generated revenue of approximately HK$10.8 million, representing a slight decrease of 0.8% from HK$10.9 million YoY, contributing 1.4% of the Group’s total revenue during the Year. Due to the revenue remained stable, the segment recorded an operating profit of approximately HK$2.8 million for the Year as compared to approximately HK$2.4 million in 2016, with an increase of 14.7%.

 

The Motor Vehicle Parts Segment contributed revenue of approximately HK$86.9 million, representing a decrease of 13.7% from HK$100.6 million YoY, which accounted for 11.4% of the Group’s total revenue during the Year. However, due to the increase in administrative expenses for expansion of the operation and the increase in finance cost, the operating profit decreased from approximately HK$5.0 million last year to approximately HK$604,000.

 

The Commercial Printing Segment recorded a revenue of approximately HK$70.0 million, representing a slight decrease of 4.3% from HK$73.2 million YoY, which accounted for 9.3% of the Group’s total revenue during the year. However, due to the increase in the operation cost, this segment generated an operating loss of approximately HK$8.1 million.

 

The Hangtag Segment recorded a revenue of approximately HK$2.6 million, representing a decrease of 69.4% from HK$8.5 million YoY, which accounted for 0.3% of the Group’s total revenue during the Year. The decrease was mainly resulted from decrease in orders from customers, which were mainly from the garment industry. Through implementation of cost control measures, included outsourcing part of the manufacturing processes, the operating loss decreased to approximately HK$27,000 for the year from approximately HK$424,000 last year.

 

The Trading Segment recorded no revenue as the Group did not conduct any transactions under this segment during the year under review due to thin margin, with the operating loss recorded approximately HK$325,000.

 

Outlook

The Group has been enhancing different business segments to diversify business development. Property investment segment and environmental protection segment will become the main growing points for the Group.

 

In 2017, the Group’s property portfolio included six residential apartments and two car park spaces in Hong Kong, and one commercial building and two industrial properties in Shenzhen, with a total value of approximately HK$1.3 billion. In January 2018, the Group entered into an acquisition agreement to acquire Realord Ventures Limited and Manureen Ventures Limited, planning to acquire Guanlan, Guangming New District and Futian Duty Free Zone Properties for the consideration of RMB 6.2 billion in order to enhance the Group’s portfolio of rental properties to increase rental income and expand rental business.

 

In adherence to the government’s City Renewal Policies, the Group submitted applications to Shenzhen Longhua District Housing and Construction Bureau in February and May respectively last year to change the land use of the Zhangkengjing industrial property in Guanlan, Longhua District, Shenzhen, the Qiankeng industrial property and the industrial land in Zhangkengjing, of which the development right was granted by Shenzhen Zhangkengjing Joint Stock Company under the memorandum of understanding. According to the applications, the Group will plan to change the use of the Zhangkengjing industrial property and the industrial land in Zhangkengjing into residential and office use, and to change the use of the Qiankeng industrial property into public housing and residential use. It is expected that permission will be granted in 2018, subject to government schedules. If granted with permission, the Group will start the redevelopment works of the relevant project.

 

Environment Protection business will become another important revenue source for the Group. The Group plans to develop a processing plant for recycling and production of copper and aluminum ingots (the “Processing Plant”) in Wuzhou Import Renewable Resources Processing Park located in Wuzhou, Guangxi Province, the PRC, with target annual production capacity of 100,000 tonnes. The Group is planning to acquire land for the construction of the Processing Plant. It is expected that the land acquisition will be completed in mid- 2018 and the construction will commence in the third quarter of 2018. The construction of the Processing Plant will become a driver for a long-term growth of the Group’s business, bringing more revenue for environmental protection business.

 

Dr. Bryan Lin, Xiaohui, Chairman of Realord Group expresses “the Group is optimistic about the prospects of the property investment market and the acquisitions will significantly enhance the Group’s portfolio of investment properties and strengthen the property investment business. It also signifies a milestone of property investment business for the Group in China, aiming at the trend of property rental market which may enrich our group’s income sources. In addition, in view of the promotion of the recycling business development by the government, the Group upholds great expectation on the prospect of the industry of dismantling and trading of scrap materials. Developing environmental protection business will further diversify the Group’s business. The Group became a constituent stock of the Morgan Stanley Capital International (MSCI) China Small Cap Index during the Year, which reflects a high recognition of the Company’s good performance and industry position. The Group will be dedicated to maintaining stable development for different business segments and will strive for a better return to investors.