Guangnan : Unaudited Quarterly Results Announcement For The Nine Months Ended 30 September 2018

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Unaudited Quarterly Results Announcement

For The Nine Months Ended 30 September 2018

This announcement is made on a voluntary basis by Guangnan (Holdings) Limited (the "Company") for the purpose of further increasing the level of corporate governance and enhancing its transparency.

Financial highlights

Nine months ended 30 September

2018 (Unaudited)

2017 (Unaudited)

HK$'000

HK$'000

Change

Revenue

2,179,870

1,640,249 32.9%

Profit/(loss) from operations

53,647

(4,827) 1211.4%

Profit attributable to shareholders

105,603

47,761 121.1%

At

At

30 September 2018 (Unaudited)

31 December 2017

(Audited)

HK$'000

HK$'000

Change

Total assets

3,058,572

• 3,003,711 1.8%

  Shareholders' equity

  2,442,264

• 2,452,849 -0.4%

Note:

The financial information relating to the year ended 31 December 2017 included in this announcement as comparative information does not constitute the statutory annual consolidated financial statements of the Company for that year but is derived from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance is as follows:

The Company has delivered the consolidated financial statements for the year ended 31 December 2017 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance. The Company's auditor has reported on those consolidated financial statements. The auditor's report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance.

SUMMARISED INFORMATION

Results

For the first three quarters of 2018, the unaudited consolidated revenue of the Company and its subsidiaries (collectively the "Group") was HK$2,179,870,000, representing an increase of 32.9% as compared to that for the corresponding period last year. The unaudited consolidated profit attributable to shareholders was HK$105,603,000, representing an increase of 121.1% as compared to that for the corresponding period last year. It is the Group's plan to consider dividends declaration at the half-year and year ends. Therefore, no dividend is proposed for the third quarter of 2018 (the third quarter of 2017: HK$Nil).

Tinplating business

In the first three quarters of 2018, the Group produced 250,844 tonnes of tinplate products, representing an increase of 25.3% as compared to that for the corresponding period last year, and sold 249,558 tonnes of tinplate products, representing an increase of 23.9% as compared to that for the corresponding period last year.

The revenue for the current period was HK$1,869,719,000, representing an increase of 39.1% as compared to that for the corresponding period last year. The segment loss was HK$9,285,000, representing a decrease of HK$63,494,000 from the segment loss of HK$72,779,000 for the corresponding period last year. The industry of tinplating business remained stable but weak and excess capacity has not been fundamentally changed. However, the demand from some downstream businesses increased and sales volume of tinplate products of the Group increased during the current period. Selling price of tinplate products increased during the current period as compared to that for the corresponding period last year due to the increase in prices of raw materials of tinplates, together with the increase in profit per unit, resulting in a significant decrease in the segment loss for the current period as compared to that for the corresponding period last year.

Fresh and Live Foodstuffs business

In the first three quarters of 2018, the revenue of the fresh and live foodstuffs business amounted to HK$293,795,000, representing an increase of 4.5% as compared to that for the corresponding period last year. Together with the share of losses of two associates of HK$6,091,000 (the first three quarters of 2017: share of profits of HK$8,612,000), the segment profit was HK$51,795,000, representing a decrease of 31.4% as compared to that for the corresponding period last year. The significant drop in the price of live pigs for the current period resulted in a decrease in the commission revenue from the distribution of live pigs business and losses were incurred by the two associates, which are engaged in pig farming and sales of pigs. The Group's overall market share in the live pigs supply into Hong Kong was about 46% (the first three quarters of 2017: 46%). This provided a certain contribution to the earnings of the Group.

Other information

In respect of our property leasing business, the value of investment properties held by the Group increased and valuation gains on investment properties of HK$64,193,000 (the first three quarters of 2017: HK$17,257,000) was recorded for the first three quarters of 2018.

In the first three quarters of 2018, Yellow Dragon Food Industry Co., Ltd., an associate of the Group engaged in the processing and sale of corn food and feed products, recorded a loss as a result of the increased purchase cost of raw materials and decreased government grants income. The Group's share of loss from this associate for the current period was HK$5,062,000 (the first three quarters of 2017: share of profit of HK$16,551,000).

CAUTION STATEMENT

The Group's tinplating business are affected by demands from customers and fluctuations of raw material prices, which is expected to continue. Although the Company is now issuing quarterly information, investors should be aware that due to fluctuations in market conditions, raw material prices, exchange rates of Renminbi against other currencies and changes in the operating environment from time to time, certain income and expenses may vary substantially from quarter to quarter. Hence, comparisons between different periods within a single financial year, or between different periods in different financial years, are not necessarily meaningful and cannot be relied upon as indicators of the Group's performance due to the seasonality factors. Also, quarterly results should not be used to estimate or extrapolate to project the Group's full-year performance.

In addition, the board of directors (the "Board") of the Company would like to remind investors that the information contained in this announcement is only based on internal records and management accounts of the Group and such financial information was not reviewed nor audited by the auditor of the Company. Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company.

By Order of the Board

Tan Yunbiao

Chairman

Hong Kong, 29 October 2018

As at the date of this announcement, the Board is composed of three Executive Directors, namely Messrs. Tan Yunbiao, He Jinzhou and Lau Kin Man; one Non-Executive Director, namely Ms. Liang Jianqin; and three Independent Non-Executive Directors, namely Mr. Gerard Joseph McMahon, Mr. Li Kar Keung, Caspar and Dr. Wong Yau Kar, David.