2016-04-24-深交所-珠江B_2015年年度报告（英文版）_79页_730kb

Summary of HaiNan Pearl River Holdings Co., Ltd. 2015 Annual Report

Core Content

HaiNan Pearl River Holdings Co., Ltd. (stock code: 000505, 200505) is a company listed on the Shenzhen Stock Exchange, primarily engaged in real estate development, hotels & tourism, and property management. The company has 18 subsidiaries, 2 branch companies, and 3 business divisions. The property management division contributes about 70% of the operating revenues, but it has a low profit margin and can only break even due to rising labor and material costs.

The company faced a serious debt crisis in 2015, with a consolidated operating loss of RMB110 million and net assets of RMB-217 million. It also had a liquidity problem, with total overdue debt reaching RMB0.3 billion by the end of the year. According to Shenzhen Stock Exchange rules, the company was placed on alert for possible de-listing in 2016.

Main Business and Financial Performance

Real Estate Development

• The real estate business mainly came from Phase III of the Hubei Meilin Qingcheng project.
• By 31 December 2015, the project had completed about 73,000 square meters of major construction, with an accumulative construction investment of RMB487.71 million.
• Sales of 5,000 square meters of houses and buildings were achieved with a sales volume of RMB602 million (subscription).
• The company estimated that the real estate business could contribute about RMB0.1 billion in profits in 2016.

Tourism and Hotel Operations

• The hotel division, mainly Sanya Days Hotel & Suites, faced significant challenges due to market competition and aging facilities, leading to a decline in operating income and gross profit rate.
• The company decided to transfer the hotel's equity to raise funds and reduce losses.
• The controlling subsidiary, Mutankiang Pearl River Wanjia Tourism Group, operates the China Snow Country Scenic, which had an operating income of RMB31.87 million in 2015 and was expected to grow year by year.
• The company invested heavily in infrastructure and brand development for the Snow Country project, but due to capital shortages, the investment progress was slowed.

Property Management

• The property management division contributed about 70% of the company's operating revenues but had low profit margins.
• The company managed about 7.5 million square meters of properties, with 86 management projects.
• Operating income was RMB199.6697 million, operating cost was RMB198.0652 million, and net profit was RMB0.1341 million.

Financial Results

Operating Revenues and Net Profit

• Operating Revenues: RMB267,068,750.88 (up 11.79% YoY)
• Net Profit: RMB-107,573,743.92 (down 37.97% YoY)
• Net Profit after exceptional profit and loss: RMB-237,953,658.00 (down 32.65% YoY)
• Net Operating Cash Flow: RMB259,599,625.38 (up 206.53% YoY)

Shareholder Information

• Total number of common shareholders at the end of the period: 39,996
• Total number of common shareholders at the prior month-end: 40,864
• No preference shareholders with resumed voting rights.
• Top ten shareholders include Beijing Wanfa Real Estate Development Co., Ltd. (26.36%) and several foreign and domestic individuals.

Key Financial Metrics

Key Business and Strategic Developments

• The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital.
• The company is exploring new business models and strategies to improve sustainable operating ability.
• It aims to adjust the strategies of the Snow Country project to avoid cutthroat competition and focus on high-end tourism development.
• The company is also considering transferring low-efficient projects and subleasing them to achieve co-existing and co-winning.
• The company sold 7.75 million shares of Southwest Securities, generating RMB120 million in revenue, which was a key profit source in 2015.
• The company also transferred equity in its controlling subsidiary, Heilongjiang Loong Media Group Co., Ltd., for RMB20 million to alleviate capital pressure.

Financial Report Notes

• The company issued an audit report with emphasis on events-focused phase and without reservations, indicating potential issues with its financial stability.
• The Board of Directors and Supervisory Committee acknowledged the audit report and emphasized the need to adjust the operation strategy and business structure to improve the company's continuous operation ability.
• The Independent Directors also supported the audit report, stating it truly and objectively reflected the company's situation in 2015.

Conclusion

The company faced significant financial challenges in 2015, including a debt crisis, low profitability in its property management division, and declining hotel performance. Despite efforts to improve the situation through strategic adjustments and asset disposal, the company's net assets turned negative, and it was placed on alert for possible de-listing. The company's future development will focus on high-end tourism projects, adjusting its strategies to enhance sustainability and profitability.