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DIT Group Limited — Interim / Quarterly Report 2022
Aug 26, 2022
49427_rns_2022-08-26_74975ffc-3cf8-40d8-8f52-e01916bff62c.pdf
Interim / Quarterly Report
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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited 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.
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DIT GROUP LIMITED 築友智造科技集團有限公司
(Incorporated in Bermuda with limited liability)
(Stock Code: 726)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022
FINANCIAL SUMMARY
| Six months ended 30 June | Six months ended 30 June | Changes | |
|---|---|---|---|
| 2022 | 2021 | ||
| HK$’000 | HK$’000 | ||
| Revenue | 825,926 | 593,811 | +39.1% |
| Gross profit | 198,224 | 169,861 | +16.7% |
| Gross profit margin | 24.0% | 28.6% | -4.6* |
| Profit attributable to owners of the Company | 20,969 | 26,288 | -20.2% |
| Basic and diluted earnings per share (HK$ cents) | 0.68 | 0.94 | -27.7% |
Note: * Change in percentage point
During the Reporting Period, the Group’s sales revenue increased by approximately 39.1% yearon-year to approximately HK$826 million, of which the sales revenue of prefabricated construction units was approximately HK$586 million, a year-on-year increase of approximately 31.6%, and the revenue from the new business line of decoration and landscaping services was approximately HK$154 million.
For the six months ended 30 June 2022, the gross profit was approximately HK$198 million, representing an increase of about 16.7% as compared with the same period last year.
The board (the “ Board ”) of directors (the “ Directors ”) of DIT Group Limited (the “ Company ”) announces the unaudited condensed consolidated results of the Company and its subsidiaries (the “ Group ”) for the six months ended 30 June 2022 (the “ Reporting Period ”) with comparative figures for the corresponding period of 2021 as follows:
– 1 –
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2022
| Notes Revenue 4 Cost of sales 7 Gross profit Government grants Other income 5 Other gains — net 6 Selling and distribution expenses 7 Administrative expenses 7 Share of (losses)/gains of associates Net impairment losses on financial assets Operating profit Finance costs Profit before income tax Income tax expenses 8 Profit for the period Profit for the period, attributable to — Owners of the Company — Non-controlling interests Earnings per share attributable to owners of the Company (expressed in HK$ cents per share) — Basic and diluted 10 |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 825,926 593,811 (627,702) (423,950) 198,224 169,861 10,350 15,322 9,161 7,617 643 1,240 (43,805) (30,695) (95,268) (90,062) (8,809) 2,067 (7,292) (4,859) 63,204 70,491 (32,124) (23,740) 31,080 46,751 (10,896) (16,546) 20,184 30,205 20,969 26,288 (785) 3,917 20,184 30,205 0.68 0.94 |
|---|---|
– 2 –
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (Continued)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
| Profit for the period Other comprehensive (loss)/income,which may be reclassified subsequently to profit or loss — Currency translation differences Other comprehensive (loss)/income for the period, net of tax Total comprehensive (loss)/income for the period Total comprehensive (loss)/income for the period, attributable to — Owners of the Company — Non-controlling interests |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 20,184 30,205 (139,913) 31,532 (139,913) 31,532 (119,729) 61,737 (118,968) 57,866 (761) 3,871 (119,729) 61,737 |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 20,184 30,205 (139,913) 31,532 (139,913) 31,532 (119,729) 61,737 (118,968) 57,866 (761) 3,871 (119,729) 61,737 |
|---|---|---|
| 31,532 | ||
| 31,532 | ||
| 61,737 | ||
| 57,866 3,871 |
||
| 61,737 |
– 3 –
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
| Note ASSETS Non-current assets Property, plant and equipment Right-of-use assets Investment properties Intangible assets Deferred income tax assets Investments in associates Financial assets at fair value through profit or loss Current assets Inventories Trade and other receivables and prepayments 11 Financial assets at fair value through profit or loss Cash and cash equivalents Restricted cash Total assets EQUITY Equity attributable to owners of the Company Share capital (nominal value) Reserves Non-controlling interests Total equity |
30 June 2022 HK$’000 (unaudited) 3,067,008 1,051,775 17,497 4,085 52,377 227,054 49,717 4,469,513 166,478 2,287,099 – 144,070 157,128 2,754,775 7,224,288 1,240,960 1,278,679 2,519,639 693,957 3,213,596 |
31 December 2021 HK$’000 (audited) 2,951,508 1,119,436 18,591 4,346 61,745 241,514 52,003 4,449,143 211,424 2,238,936 12,231 461,351 187,717 3,111,659 7,560,802 1,240,960 1,425,619 2,666,579 694,718 3,361,297 |
|---|---|---|
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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued) AS AT 30 JUNE 2022
| Notes LIABILITIES Non-current liabilities Amount due to a related party Deferred income Deferred income tax liabilities Lease liabilities Borrowings 13 Current liabilities Trade and other payables 12 Contract liabilities Current income tax liabilities Lease liabilities Borrowings 13 Total liabilities Total equity and liabilities |
30 June 2022 HK$’000 (unaudited) 81,438 1,631 17,495 99,301 1,071,479 1,271,344 1,842,792 67,406 38,676 12,535 777,939 2,739,348 4,010,692 7,224,288 |
31 December 2021 HK$’000 (audited) – 2,672 14,323 105,472 1,341,120 1,463,587 1,772,008 60,890 51,113 13,749 838,158 2,735,918 4,199,505 7,560,802 |
|---|---|---|
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NOTES:
1. BASIS OF PREPARATION
The condensed consolidated interim financial statements of the Group for the six months ended 30 June 2022 have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and investment properties, which are carried at fair value, and in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting”, issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).
The condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2021, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the HKICPA.
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied in the preparation of the unaudited condensed consolidated financial statements are consistent with those of the annual consolidated financial statements of the Company for the year ended 31 December 2021, as described in those annual financial statements, except for estimation of income tax for the interim periods using the tax rate that would be applicable to expected total annual earnings, and the adoption of the new and amended standards of HKFRSs effective for the financial year ending 31 December 2022, which did not have any significant impact on the Group’s financial statements and did not require retrospective adjustments.
There are no standards, amendments and interpretations to existing standards that are not effective and would be expected to result in any significant impact on the Group’s financial positions and results of operations.
3. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of the Company that makes strategic decisions.
The Group is managed centrally and the Directors are of the view that the whole Group is one single business segment and hence no segment information is presented.
– 6 –
4. REVENUE
| Revenue from sales of prefabricated construction units Revenue from decoration and landscaping services Revenue from granting licenses Revenue from consulting services Revenue from sales of prefabricated construction equipments Rental income |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 585,578 444,917 154,061 63,721 41,911 53,403 24,341 17,720 10,325 3,280 9,710 10,770 825,926 593,811 |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 585,578 444,917 154,061 63,721 41,911 53,403 24,341 17,720 10,325 3,280 9,710 10,770 825,926 593,811 |
|---|---|---|
| 593,811 |
5. OTHER INCOME
| Financing component from a related party Interest income on bank deposits Dividends Others |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 6,461 4,313 1,706 2,988 577 – 417 316 9,161 7,617 |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 6,461 4,313 1,706 2,988 577 – 417 316 9,161 7,617 |
|---|---|---|
| 7,617 |
6. OTHER GAINS — NET
| Net exchange gain/(losses) Gains on disposal of equipments Others |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 205 (142 45 2,068 393 (686 643 1,240 |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 205 (142 45 2,068 393 (686 643 1,240 |
|---|---|---|
| 1,240 |
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7. EXPENSES BY NATURE
Expenses included in cost of sales, selling and distribution expenses and administrative expenses are analysed as follows:
| Raw materials and consumables used Changes in inventories of finished goods, goods in transit and work in progress Employee benefits expenses Labour outsourcing Subcontracting charges in relation to decoration and landscaping services Depreciation Amortisation of right-of-use assets Transportation Land use tax and value-added tax surcharges Legal and professional fees Entertainment and travelling expenses Repairs and maintenance Office expenses Provision for inventories impairment Others Total of cost of sales, selling and distribution expenses and administrative expenses |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 334,193 277,111 11,928 (54,936) 122,166 120,993 33,895 27,093 103,614 49,902 67,971 46,249 14,892 16,008 34,475 23,443 11,964 10,900 9,411 4,260 3,520 2,892 2,185 916 599 316 65 3,632 15,897 15,928 766,775 544,707 |
|---|---|
8. INCOME TAX EXPENSES
Hong Kong profits tax has not been provided for as the Group has no estimated assessable profits in Hong Kong for the six months ended 30 June 2022 (six months ended 30 June 2021: Nil). Taxation on PRC profits is recognised based on management’s estimate of the weighted average annual income tax rate expected for the full financial year.
Under the Corporate Income Tax (the “ CIT ”) Law of the PRC, the CIT rate applicable to the Group’s subsidiaries established in mainland China is 25%, while certain subsidiaries are applicable to the preferential tax rate of 15%.
– 8 –
| Current income tax — PRC corporate income tax Deferred income tax Total income tax expenses for the period |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 6,914 24,843 3,982 (8,297) 10,896 16,546 |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 6,914 24,843 3,982 (8,297) 10,896 16,546 |
|---|---|---|
| 16,546 |
9. DIVIDEND
The Board of Directors did not recommend any payment of dividend in respect of the six months ended 30 June 2022 (six months ended 30 June 2021: Nil).
10. EARNINGS PER SHARE
(a) Basic
Basic earnings per share for the period is calculated by dividing the consolidated profit of the Group attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period.
| Six months ended | 30 June | |
|---|---|---|
| 2022 | 2021 | |
| (unaudited) | (unaudited) | |
| Consolidated profit attributable to owners of the Company | ||
| (HK$’000) | 20,969 | 26,288 |
| Weighted average number of ordinary shares in issue_(’000)_ | 3,102,401 | 2,802,401 |
| Basic earnings per share_(HK cents)_ | 0.68 | 0.94 |
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(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. For the six months ended 30 June 2022 and 2021, the calculation of diluted earnings per share excluded the share options granted to directors, senior management and other employees on 30 November 2020, as their inclusion would have been antidilutive. Therefore, diluted earnings per share for the six months ended 30 June 2022 and 2021 is equal to basic earnings per share.
11. TRADE AND OTHER RECEIVABLES AND PREPAYMENTS
| Trade receivables — third parties Trade receivables — related parties Amounts due from related parties Prepayments Value-added tax recoverable Land auction deposits Deposits Notes receivable Receivables relating to disposal of subsidiaries Government grants receivable Others Less: Provision for impairment of trade receivables and other receivables |
As at 30 June 2022 HK$’000 (unaudited) 1,337,152 807,277 47,036 30,670 20,257 19,129 18,289 14,572 1,980 292 57,046 2,353,700 (66,601) 2,287,099 |
As at 31 December 2021 HK$’000 (audited) 1,217,674 795,443 39,638 22,569 119,873 20,008 17,292 31,118 2,071 2,630 34,700 2,303,016 (64,080) 2,238,936 |
|---|---|---|
– 10 –
The ageing analysis of trade receivables as at 30 June 2022 and 31 December 2021 based on the invoice issue date or demand note were as follows:
| Less than 1 year 1 to 2 years Over 2 years |
As at 30 June 2022 HK$’000 (unaudited) 2,033,099 97,945 13,385 2,144,429 |
As at 31 December 2021 HK$’000 (audited) 1,912,328 74,610 26,179 2,013,117 |
|---|---|---|
The maximum exposure to credit risk as at 30 June 2022 and 31 December 2021 is the carrying value of each class of receivables mentioned above.
As at 30 June 2022 and 31 December 2021, the fair values of trade and other receivables approximate their carrying amounts.
The carrying amounts of the Group’s trade and other receivables and prepayments are denominated in the following currencies:
| HK dollar Renminbi |
As at 30 June 2022 HK$’000 (unaudited) 13,476 2,273,623 2,287,099 |
As at 31 December 2021 HK$’000 (audited) 10,907 2,228,029 2,238,936 |
|---|---|---|
The creation of provision for impairment of receivables has been included in “Net impairment losses on financial assets” in the condensed consolidated statement of profit or loss and other comprehensive income.
– 11 –
12. TRADE AND OTHER PAYABLES
| Trade payables — third parties Trade payables — related parties Accrued payable for property, plant and equipment construction — third parties Accrued payable for property, plant and equipment construction — related parties Notes payable Amounts due to related parties Accrued tax payable Accrued payroll Deposits Provision for onerous contract Interest payable Others |
As at 30 June 2022 HK$’000 (unaudited) 1,154,907 16,099 64,991 71,894 54,922 338,196 80,927 10,151 9,293 2,216 123 39,073 1,842,792 |
As at 31 December 2021 HK$’000 (audited) 1,223,820 10,015 68,338 64,786 58,977 205,769 62,399 11,493 15,989 2,318 256 47,848 1,772,008 |
|---|---|---|
The ageing analysis of trade payables as at 30 June 2022 and 31 December 2021 based on the invoice issue date or demand note were as follows:
| Less than 1 year Over 1 year |
As at 30 June 2022 HK$’000 (unaudited) 1,059,920 111,086 1,171,006 |
As at 31 December 2021 HK$’000 (audited) 1,182,500 51,335 1,233,835 |
|---|---|---|
As at 30 June 2022 and 31 December 2021, the fair values of trade and other payables approximate their carrying amounts.
The carrying amounts of the Group’s trade and other payables are primarily denominated in Renminbi.
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13. BORROWINGS
| Non-current, secured — Bank borrowings — Other financial institution borrowings Non-current, unsecured — Bank borrowings Less: Current portion of non-current borrowings Non-current, total Current, secured — Bank borrowings — Other financial institution borrowings Current, unsecured — Bank borrowings Current portion of non-current borrowings Current, total Notes: |
As at 30 June 2022 HK$’000 (unaudited) 1,535,772 – 49,697 1,585,469 (513,990) 1,071,479 106,538 4,093 153,318 263,949 513,990 777,939 |
As at 31 December 2021 HK$’000 (audited) 1,672,723 18,366 64,212 1,755,301 (414,181) 1,341,120 174,902 – 249,075 423,977 414,181 838,158 |
|---|---|---|
-
(a) These borrowings of the Group are secured by property, plant and equipment, right-of-use assets and restricted cash deposit of the Group and/or guaranteed by subsidiaries of the Company or related parties.
-
(b) The borrowings are all denominated in RMB and their fair values approximate their carrying amounts.
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MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW
In the first half of 2022, affected by the new wave of global pandemic caused by the novel coronavirus variants, coupled with the continued domestic and overseas debt and liquidity problems in the real estate industry, China’s national economic and social uncertainty have increased. However, under the orderly and appropriate prevention and control of the pandemic, the economic operation has been stable with progress. At the same time, China adhered to the general principle that “houses are for living in, not speculation”, promoted the construction of affordable housing, and consolidated the prominent position of the construction industry as the pillar industry in the national economy. Benefiting from China’s increased efforts to achieve high-quality development of the construction industry, the promotion of goals of carbon peaking and carbon neutrality, and the intensive implementation of prefabricated construction industry policies in various provinces and cities, the market demand has further increased. Based on the Group’s well-established whole industry chain business model and scientific research advantages, we optimized and upgraded the production capacity of precast concrete (“ PC ”) components. In the first half of 2022, the Group’s business scale grew steadily, and business and operational efficiency continued to improve. As of 30 June 2022, the Group recorded sales revenue of approximately HK$825.9 million, a year-on-year increase of approximately 39.1%. Its gross margin was approximately HK$198.2 million, a year-on-year increase of approximately 16.7%.
I. Perfect business layout of the whole industry chain, and steady growth of core business
During the Reporting Period, the Group continued to develop prefabricated building, and actively expanded the smart landscaping and smart decoration business, forming a business layout of the whole industry chain, and driving the steady growth of the business. In addition, the Group continued to deepen its PC business layout and strengthened its regional layout in the Yangtze River Delta and the Greater Bay Area, among which the Group’s market share in the Greater Bay Area continued to be industryleading, providing a solid foundation for business orders. In the first half of 2022, contract sales of prefabricated components were approximately RMB1.6 billion; annual output of prefabricated components business reached 184,200 cubic meters, a year-onyear increase of approximately 19.14%. As of 30 June 2022, The Group had a total of 21 self-run smart PC factories and 1 Prefabricated Decoration Industrial Park nationwide. During the Reporting Period, new factories in Ruyang, Queshan and Jiangxia were in operation, which further improved the Group’s production capacity across China.
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The Group has been committed to the pursuit of high-quality component products and continued to provide overall solution services for smart buildings. It has won many awards and recognitions, setting a new benchmark for the development of the prefabricated building industry. In the first half of 2022, Huizhou factory obtained the “Quality Scheme for the Production and Supply of Concrete” certification issued by the Hong Kong Quality Assurance Agency. Its component products can be directly supplied to construction projects in Hong Kong, which fully reflects the Group’s competitive advantage in product quality. As a technologically innovative enterprise in the construction industry, the Group’s Decoration Industrial Park has given full play to the development potential of industrialization and intelligence, and has been awarded as “2022 Demonstration Enterprise of Henan Province in Energy and Carbon Management” and “2022 Henan Province Smart Workshop”, its “Replacing People with Machines” demonstration application project also won the special highest award of RMB 5 million; Foshan factory and Zhoukou factory were rated as “SME of Specialty, Refinement, Uniqueness and Novelty”, highlighting the Group’s independent innovation capability and core competitiveness. In addition, the pandemic situation in Henan Province was severe in early April. During the Reporting Period, the Group’s Special Project Department No. 1 actively assumed social responsibilities and responded to the construction of the makeshift hospital in Shangqiu City, which was praised by the government.
II. Official launch of strategic cooperation with Glodon to accelerate digital transformation of buildings
In line with China’s “14th Five-Year Plan for the Development of the Digital Economy” and the “Dual Carbon” goals of “carbon peaking” and “carbon neutrality”, the digitalization of the construction industry has become an indispensable part of the industry development. To realize the digital and intelligent transformation and upgrading of the whole industry chain of the construction industry, the Company signed an equity subscription agreement with Glodon (Hong Kong) Software Limited, a wholly-owned subsidiary of Glodon Company Limited (“ Glodon ”), the largest engineering cost software company in China, in August 2021, and completed the closing at the end of November 2021. Glodon then was introduced as the second largest shareholder of the Company, by subscribing for approximately 9.67% of the Company’s enlarged issued share capital for an amount of HK$288 million, among which, HK$90 million was earmarked for digitalization and software development related to the construction industry, and other funds were mainly used for the operation of directly-operated factories under the Group and working capital.
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In the first half of 2022, based on the SaaS prefabricated construction industry Internet platform, and centred on the integrated development of “digitalization + industrialization”, the Group and Glodon officially launched strategic cooperation of operations. The Group used its own industrialized technology system, combined with Glodon’s digital construction solutions, to create a vertical integration platform for the industry, jointly developed with Glodon the project management system (PMS) for prefabricated building construction sites, and applied in the Engineering, Manufacture, Procurement, and Construction (EMPC) general contracting project. In terms of project cost, the Group leveraged on Glodon’s traditional advantages to effectively improve the Group’s Quick Quotation System (QQS) for prefabricated buildings, formed market linkages and jointly conducted market expansion with Glodon, marking a new milestone in the Group’s digital transformation.
III. Focusing on scientific research, highlighting the advantages of digital intelligence
The Group is committed to becoming a leading smart building overall solution service provider, adhering to the development strategy of “technology leading”, and leveraging its own advantages with a leading core technology system, mastering the core technologies of digital intelligence such as Building Information Modeling (“ BIM ”), Internet of Things, big data, and artificial intelligence in the field of smart buildings. At the same time, the Group actively realizes the strategic goal of “home intelligence”, strives to expand the technological innovation of the whole industry chain such as smart housing, creates an innovative synergy model of the whole industry chain, and promotes the digital and intelligent development of the prefabricated construction industry. In the first half of 2022, the Group added four self-developed prefabricated technology patents. As of 30 June 2022, the Group’s total number of patents reached 1,912, continuing to rank the first in the industry.
In terms of research and development (“ R&D ”), the Group has continuously focused on scientific research and innovation, and has made intensive efforts in R&D and smart construction to promote prefabricated building technologies that reduce carbon emissions from construction activities. In the first half of 2022, the Group released the “CCRE Residential Green Technology Application Guidelines 1.0” through the integrated application research of more than 40 green and low-carbon technologies in the whole life cycle of building product design, manufacturing, construction and operation and maintenance, promoted the upgrade of low-carbon green building products, maximized resource utilization efficiency, protected the environment and reduced pollution, effectively controlled the carbon emissions of the construction industry, and helped China to achieve the “dual carbon” goals. In addition, in terms of smart construction, the Group independently developed “digitalization of engineering project management”. From project initiation to delivery, the entire process adopted digital and intelligent management, forming a digitally-intelligent closed-loop management model for “online construction standards, automated progress management, visualization of construction quality, and remote monitoring and management” of special projects.
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BUSINESS OUTLOOK
- I. China’s dual-carbon policy drives accelerated growth of the prefabricated building industry
With the strategic goals of “carbon peaking” and “carbon neutrality”, and the fact that carbon emission of the construction industry accounts for more than half of China’s carbon emission, the prefabricated building industry is regarded as an important solution for energy conservation and carbon reduction in the construction industry which can help achieving the “dual carbon” goals. The comprehensive advantages in green environmental protection will be further highlighted below.
In 2021, the area of newly constructed prefabricated buildings nationwide increased by 18% compared with 2020 to 740 million square meters, accounting for 24.5% of the newly constructed building area. To accelerate the realization of the “dual carbon” goals and promote the transformation and upgrading of the construction industry, the industry has issued a total of more than 1,500 policies in the past six years, building a complete industry policy system. In March 2022, the Ministry of Housing and Urban-Rural Development issued the “14th Five-Year Plan for Building Energy Efficiency and Green Building Development”, which requires that by 2025, all new urban buildings will be fully constructed as green buildings, and prefabricated buildings will account for 30% of the new urban buildings that year. In mid-July 2022, the Ministry of Housing and UrbanRural Development and the National Development and Reform Commission issued the Implementation Plan for Carbon Peaking in Urban-Rural Development, proposing to vigorously develop prefabricated buildings. By 2030, prefabricated buildings will account for 40% of new urban buildings that year. At present, twenty-five provinces (autonomous regions and municipalities) have issued the “14th Five-Year Plan” related to the construction industry, among which, ten provinces indicated that the proportion of prefabricated buildings in new buildings in 2025 will be higher than the national planning target. Hainan Province, which is the key layout of the Group, has made it clear that by 2030, the proportion of prefabricated buildings in the newly built buildings will reach more than 95%. In Shenzhen and Beijing, during the “14th Five-Year Plan” period, the penetration rate of prefabricated buildings will reach 60% and 55% respectively, which is beneficial to the Group’s future layout and business expansion.
Under the background of intensive policy introduction and with the “dual carbon” goals, the traditional construction industry will accelerate its transformation and upgrading, strengthen building energy conservation, implement green construction methods, and promote energy-efficient green building materials; on the other hand, prefabricated buildings have become the future development trend of construction in China so that the Group can further expand and develop its business.
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II. Deepen the layout of the whole industry chain, boost the development of the industry with low-carbon green building
The Group covers the whole industry chain of prefabricated buildings including R&D, design, general contracting of construction and landscaping, with six core technology systems, mastering core technologies such as BIM, Internet of Things, big data, and artificial intelligence in the field of smart buildings, and has industry-leading technology research and development capabilities. In addition to dedicating to the development of the core business of prefabricated buildings, the Group has also accelerated the layout of the landscaping business and decoration business, which have brought profit contribution to the Group since the second half of 2021, driving the Group’s whole industry chain business to achieve high-quality growth, and serving the whole life cycle of prefabricated buildings.
In the future, the Group will continue to focus on the development of prefabricated building technology, combined with the whole industry chain business including PC components, landscaping and decoration, to deploy intelligent digital factories across China, and to improve the production capacity layout. The Group will actively accelerate the layout of its PC factories through methods, such as direct sales, franchise and assetlight model, focusing on the Greater Bay Area, Yangtze River Delta, Beijing-TianjinHebei and Great Central China markets, expanding the customer base of third-party manufacturers, increasing the Group’s local market share, propelling growth momentum into business development, helping the promotion of energy-efficient and carbon-reducing green buildings, and accelerating the upgrading, transformation and development of the construction industry. At the same time, the Group attaches significant importance to the opportunities of affordable housing, public buildings and infrastructure construction, steadily strengthens cooperation with national platform companies and other institutions, and continuously focuses on the large-scale production of standardized components to enhance the competitiveness of the assembly building business.
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III. Implementation of the strategy of “Home Intelligence” to boost the application of the industry through digitalization
Since the launch of the ‘’home intelligence” strategy, the Group has been committed to creating an innovative whole-industry chain synergy model, relying on the technological innovation and integration of the core production links (i.e. design, manufacturing, and construction) in the whole industry chain of prefabricated buildings, and through digital technologies such as BIM technology, cloud computing, big data, and the Internet of Things, the technology is connected in series to realize standardized design, factory manufacturing, specialized construction, platform-based procurement, refined management, and intelligent operation in the whole industry chain by means of assembly, so as to achieve a comprehensive upgrade of building quality, construction period and cost. In terms of digital intelligence, the Group continued to improve the manufacturing management platform and online shopping mall platform, promote the construction of a smart community R&D platform, build product analysis models to support data decisionmaking, and consolidate the Group’s leading position in digital intelligence.
The Group adhered to the development policy of “technology leading”, while implementing the strategy of “home intelligence”, and with the fact that Glodon has also been introduced as a strategic shareholder of the Company, the “digitalization” and “industrialization” advantages of both parties are combined to achieve the synergy effect of “1+1>2”. In the future, both parties will continue to combine their strengths. Glodon’s top digital technology and big data, as well as information solutions and application services for the entire life cycle of buildings empower the Group’s whole industry chain system of prefabricated buildings to cover design, decoration, landscaping and smart homes, and working together with Glodon to develop SaaS software for digital product enables the Group to create a digital overall solution for the prefabricated construction industry, integrate digital construction and construction industrialization, and carry out industrialization platform planning, promote the marketization of digital products, and lead the construction industry to enter digital and intelligent upgrade.
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As of 30 June 2022, the Group has signed contracts with third parties for the sale of prefabricated components with a total contract amount of approximately RMB1,324.83 million and a total volume of 889,962 cubic metres.
| Sales revenue of prefabricated construction units — by region Foshan Nanjing Changsha Hefei Huizhou Zhengzhou Luoyang Tongxu Chongqing Jiaozhou Xiangtan Jiaozuo Zhoukou Huaian Nantong Zhumadian Kunshan Yuxi Dongli Jiangxia Hengyang Total Sales revenue of prefabricated construction units Sales revenue from third parties Sales revenue from related parties Total |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 105,483 57,926 86,915 69,254 57,607 57,141 55,927 34,235 45,751 63,030 41,142 15,238 39,834 5,982 25,102 – 21,679 1,114 20,330 773 18,738 23,840 16,413 49,602 13,573 34,188 9,771 3,498 9,249 5,667 8,076 1,622 3,476 13,048 2,937 1,884 2,468 – 1,064 – 43 6,875 585,578 444,917 Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 538,438 378,331 47,140 66,586 585,578 444,917 |
Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 105,483 57,926 86,915 69,254 57,607 57,141 55,927 34,235 45,751 63,030 41,142 15,238 39,834 5,982 25,102 – 21,679 1,114 20,330 773 18,738 23,840 16,413 49,602 13,573 34,188 9,771 3,498 9,249 5,667 8,076 1,622 3,476 13,048 2,937 1,884 2,468 – 1,064 – 43 6,875 585,578 444,917 Six months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 538,438 378,331 47,140 66,586 585,578 444,917 |
|---|---|---|
| 444,917 |
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Technology trademarks and patents obtained by the Group during the first half of 2022
Patents: For the six months ended 30 June 2022, 4 applications for patents have been made, and 55 patents were granted. As at 30 June 2022, there were approximately 1,912 applications for patents in aggregate, and 1,372 patents were granted.
Plants in operations
| Regions Changsha Technology Park Nanjing Technology Park Hefei Technology Park Hengyang Technology Park Foshan Technology Park Huizhou Technology Park Zhengzhou Technology Park Zhoukou Technology Park Qingdao Jiaozhou Technology Park Huidong Technology Park Luoyang Technology Park Jiaozuo Technology Park Zhumadian Technology Park Huaian Technology Park Nantong Technology Park Xiangtan Technology Park Shipeng Technology Park Chongqing Technology Park Wuhan Technology Park Total |
Annual estimated capacity (approximate ’000 cubic metre) 110 110 80 70 70 70 60 60 60 60 50 50 40 40 40 40 30 20 20 1,080 |
Area of land (approximate mu) 352 151 154 150 123 61 143 135 92 30 308 81 130 120 100 100 35 134 116 2,515 |
Area of plants (approximate square metre) 33,433 35,981 22,398 24,905 36,550 22,284 49,954 20,639 19,339 12,593 55,260 19,383 26,873 19,356 26,154 19,310 11,952 19,659 29,767 505,790 |
|---|---|---|---|
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Plants under construction
| Regions Proportion of attributable equity interest Tianjin Technology Park 100% Yuxi Technology Park 100% Total |
Amount of investment (approximate RMB100 million) 1.9 1.7 3.6 |
Area of land (approximate mu) 94 124 218 |
Area of plants (approximate square metre) 26,154 18,191 44,345 |
Annual estimated capacity (approximate ’000 cubic metre) 20 60 80 |
|---|---|---|---|---|
Incorporation of a new subsidary for the six months ended 30 June 2022
| Proportion | ||||
|---|---|---|---|---|
| Place of | of ordinary | |||
| incorporation | Particulars of | shares | ||
| and operation and | Principal | authorised | held by the | |
| Name | kind of legal entity | activities | share capital | Group (%) |
| Henan DIT Green Technology Limited* | China, limited | Construction | RMB10,000,000 | 100% |
| 河南築友綠色科技有限公司 | liability company | industrialisation |
- For identification purpose only
Government grants in the first half of 2022
As prefabricated construction industry has received strong support from central government of People’s Republic of China (the “ PRC ”), local governments are initiating relevant ancillary policies, offering honorary awards and fund subsidies. As a national high-tech enterprise, the technology innovation capability of the Group is widely recognized by the government authorities. The Group has been granted honorary awards such as Changsha Engineering Research Center and National Intellectual Property Advantageous Enterprises. We have also made great contributions to environmental energy-saving engineering, promotion of industry upgrade and transformation, and intelligent manufacturing, while encouraging local employment and industry development. In this regard, local governments offer direct cash incentives.
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| Six months ended 30 June | Six months ended 30 June | |
|---|---|---|
| 2022 | 2021 | |
| HK$’000 | HK$’000 | |
| (unaudited) | (unaudited) | |
| Government grants | 10,350 | 15,322 |
The Group has satisfied and complied with the relevant requirements and regulations in the PRC necessary for the receipt of the above government grants.
FINANCIAL REVIEW
Review of results
The principal activities of the Group are prefabricated construction work, decoration and landscaping services, granting licenses, consulting services and sales of equipment in the People’s Republic of China.
Revenue
The revenue of the Group increased by approximately HK$232.1 million from approximately HK$593.8 million for the six months ended 30 June 2021 to approximately HK$825.9 million for the six months ended 30 June 2022. The increase in revenue was mainly attributable to (i) the increase in revenue from sales of prefabricated construction units and consulting services as a result of the increasing number of customers for the six months ended 30 June 2022; and (ii) the increase in revenue from the smart landscaping business and smart decoration business as a result of the increasing number of customers for the six months ended 30 June 2022. As a result, the Group recorded sales revenue for the six months ended 30 June 2022 of prefabricated construction units of approximately HK$585.6 million (six months ended 30 June 2021: approximately HK$444.9 million), revenue from decoration and landscaping services of approximately HK$154.1 million (six months ended 30 June 2021: approximately HK$63.7 million), revenue from granting licenses of approximately HK$41.9 million (six months ended 30 June 2021: approximately HK$53.4 million), revenue from consulting services of approximately HK$24.3 million (six months ended 30 June 2021: approximately HK$17.7 million), rental income from investment properties of approximately HK$9.7 million (six months ended 30 June 2021: approximately HK$10.8 million) and revenue from sales of prefabricated construction equipments of approximately HK$10.3 million (six months ended 30 June 2021: approximately HK$3.3 million).
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Cost of sales
The Group recorded cost of sales of approximately HK$627.7 million (six months ended 30 June 2021: approximately HK$424.0 million) for the six months ended 30 June 2022. The increase was primarily attributable to the increase in sales of prefabricated construction units, and new costs brought by the newly deployed smart landscaping business and smart decoration business.
Other income
The other income of the Group increased by approximately HK$1.5 million from approximately HK$7.6 million for the six months ended 30 June 2021 to approximately HK$9.2 million for the six months ended 30 June 2022. Other income mainly came from financing component from a related party, interest income generated from bank deposits and dividend income.
Other gains — net
For the six months ended 30 June 2022, other gains — net amounting to approximately HK$0.6 million mainly comprised of (i) gains on disposal of equipments amounting to approximately HK$0.05 million; (ii) net exchange gains amounting to approximately HK$0.2 million; and (iii) non-business expenditures of approximately HK$0.4 million.
Selling and distribution expenses
For the six months ended 30 June 2022, the selling and distribution expenses increased by approximately HK$13.1 million to approximately HK$43.8 million for the six months ended 30 June 2022 from approximately HK$30.7 million for the six months ended 30 June 2021, such expenses are directly related to the sale of prefabricated construction units.
Administrative expenses
For the six months ended 30 June 2022, the administrative expenses increased by approximately 5.8% from approximately HK$90.1 million for the six months ended 30 June 2021 to approximately HK$95.3 million for the six months ended 30 June 2022. Such increase was due to the increase in other general administrative expenses such as professional fees, entertainment, travelling expenses, and office expenses.
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Finance costs
For the six months ended 30 June 2022, the finance costs increased by approximately HK$8.4 million from approximately HK$23.7 million for the six months ended 30 June 2021 to approximately HK$32.1 million for the six month ended 30 June 2022. Such increase was mainly attributable to (i) the interest expenses of approximately HK$51.1 million for the bank borrowing; (ii) the interest expenses of approximately HK$2.9 million for the lease liabilities; and (iii) capitalisation interest of approximately HK$21.8 million in plant under development for prefabricated construction business for the period.
Profit for the period
As a result of the foregoing, our profit decreased by approximately HK$10.0 million to approximately HK$20.2 million for the six months ended 30 June 2022 as compared to a profit of approximately HK$30.2 million for the corresponding period of 2021.
Liquidity and financial resources
As at 30 June 2022, the Group had current assets of approximately HK$2,754.8 million (31 December 2021: approximately HK$3,111.7 million) and current liabilities of approximately HK$2,739.3 million (31 December 2021: approximately HK$2,735.9 million). The current ratio (which is calculated by dividing total current assets by total current liabilities) was approximately 1.0 as at 30 June 2022 (31 December 2021: 1.1).
As at 30 June 2022, the Group held borrowings amounted to approximately HK$1,849.4 million (31 December 2021: approximately HK$2,179.3 million) and the net gearing ratio (calculated as net debt dividend by total equity) was 52.5% (31 December 2021: 50.8%).
As at 30 June 2022, the Group had cash and cash equivalents of approximately HK$144.1 million, which include approximately HK$133.1 million denominated in RMB and approximately HK$10.9 million denominated in HKD (31 December 2021: approximately HK$461.4 million, in which approximately HK$443.3 million denominated in RMB and approximately HK$18.0 million denominated in HKD). As at 30 June 2022, the Group had restricted cash of approximately HK$157.1 million, which include approximately HK$130.0 million denominated in HKD and approximately HK$27.1 million denominated in RMB (31 December 2021: approximately HK$187.7 million, in which approximately HK$130.0 million denominated in HKD and approximately HK$57.7 million denominated in RMB).
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As at 30 June 2022, the Group had interest-bearing bank and other borrowings of approximately HK$1,849.4 million, all denominated in RMB with interest rate in a range of 3.75% to 12.00% per annum (31 December 2021: approximately HK$2,179.3 million, all denominated in RMB with interest rate in a range of 3.75% to 7.02% per annum).
Other than the matters above, there has been no material change from the information published in the annual report of the Company for the year ended 31 December 2021.
Capital structure
As at 30 June 2022, the total number of issued shares of the Company (the “ Share(s) ”) was 3,102,400,730 Shares with a par value of HK$0.4 each. Based on the closing price of HK$0.510 per Share as at 30 June 2022, the Company’s market value as at 30 June 2022 was approximately HK$1,582,224,000.
GENERAL INFORMATION
CORPORATE GOVERNANCE PRACTICES
The Company is committed to maintaining high standard corporate governance practices as the Board considers that good and effective corporate governance is essential for enhancing accountability and transparency of a company to the investing public and other stakeholders.
For the six months ended 30 June 2022, the Company has fully complied with the code provisions set out in the Corporate Governance Code contained in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”).
CODE FOR SECURITIES TRANSACTIONS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) contained in Appendix 10 to the Listing Rules as its code of conduct regarding Directors’ securities transactions. In response to the specific enquiry made by the Company, all the Directors confirmed that they fully complied with the required standard as set out in the Model Code throughout the six months ended 30 June 2022.
The Company has also adopted a code for dealing in the Company’s securities by relevant employees, who are likely to be in possession of inside information in relation to the securities of the Company, on no less exacting terms than the Model Code.
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PURCHASE, SALE OR REDEMPTION OF SECURITIES
During the six months ended 30 June 2022, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the listed securities of the Company.
REVIEW OF INTERIM RESULTS
The audit committee of the Company has reviewed the interim results and the unaudited condensed consolidated financial statements of the Group for the six months ended 30 June 2022.
By order of the Board of DIT Group Limited Liu Weixing Chairman and Executive Director
Hong Kong, 26 August 2022
As at the date of this announcement, the Board comprises Mr. Liu Weixing (Chairman), Mr. Guo Weiqiang and Ms. Wang Jing as executive Directors; Ms. Wu Wallis (alias Li Hua), Mr. Wang Jun and Mr. Guo Jianfeng as non-executive Directors; Mr. Jiang Hongqing, Mr. Lee Chi Ming, and Mr. Ma Lishan as independent non-executive Directors.
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