Investor Relations

Management Discussion & Analysis


For the financial year ended 30 June 2019 (“FY2019”), the Group recorded revenue of approximately HK$604.0 million, representing a decrease of 23.9% from the revenue of approximately HK$793.3 million for the year ended 30 June 2018 (“FY2018”). The decrease was mainly attributable to the drop in the revenues generated by the wine and related businesses, and they were partially offset by the increase in revenues from the property leasing business. Gross profit for the year amounted to HK$459.0 million, down by 13.2% compared with that of HK$528.7 million in FY2018 as a result of a drop in revenues. The Group recorded a fair value gain of HK$1,299.7 million from the investment properties, Goldin Financial Global Centre, in the year. The fair value gain was 30.3% less than that of HK$1,864.5 million for FY2018. Profit attributable to owners of the Company was approximately HK$6,255.0 million, which represented 4.2 times increase compared with the figure of approximately HK$1,202.3 million for FY2018. The increase in profit attributable to the owners of the Company was mainly due to an one-off gain of HK$5,727.9 million on disposals of certain subsidiaries that engaged in the property development business. The basic and diluted earnings per share for the FY2019 were 89.48 HK cents and 89.23 HK cents respectively (FY2018: 17.20 HK cents and 17.09 HK cents respectively), representing corresponding increases of 420.2% and 422.1%.


The FY2019 was the second year of the consolidation of the Group’s businesses. During the year, the Group completed the disposals of its equity interests in two residential property development projects in the Ho Man Tin district, and took a full control of its investment properties, Goldin Financial Global Centre, by acquiring an additional 40% interest in Goldin Financial Global Centre indirectly. The Group also refocused its property development efforts on Kowloon East. For instance, it acquired a new residential property project in the Kai Tak Area. The Group has streamlined its real estate business in the past two years by holding primarily properties in Kowloon East in its portfolio. The streamlining and consolidation of the real estate business are aimed at strengthening the Group for further business development.

Real Estate Business

Property Investment
The prime office market in Hong Kong has become cautious as the uncertainties loom large over the Sino-United States trade negotiations which, in turn, led to a bleak outlook for global economy. According to the research reports by Colliers, as of June 2019, year-on-year growth in overall net effective rent for Hong Kong’s grade-A offices decelerated to 1.4% from that as of 30 June 2018. Island East outperformed other regions by recording a year-on-year increase of 9.5% in net effective rent for grade-A offices, thanks to the office decentralization trend in which the Securities and Futures Commission, certain large corporations and professional firms moved their offices from Central, the traditional central business district, to Island East as a result of the improved infrastructures and transportation between Central and Island East. Meanwhile, Kowloon East as an alternative central business district (“CBD2”) also benefited from the office decentralization trend as the large corporations continued to seek for business expansion at lower costs for office space. As of 30 June 2019, Kowloon East reported an increase of 4.5% in net effective rent, which was the second highest year-on-year growth among those in all the districts. The office decentralization from the core business areas continued firmly. The net take-up of office spaces in Kowloon East by June 2019 has reached 25% of the annual grade-A office supply for 2019, with the completion of the Quayside during the year#. Kowloon East reported several major office leasing transactions that involved large corporations such as the Hong Kong-based insurance company FT Life. The relocation of large corporations to Kowloon East has brightened up the prospect of the area as Hong Kong’s CBD2.

# Source: Market statistics of Colliers, Knight Frank and Savills

During the year, the Company completed the indirect acquisition of a 40% interest in the Group’s investment properties, Goldin Financial Global Centre, and has thus taken an entire equity stake and full control of the property. Goldin Financial Global Centre is located in the heart of CBD2 in Kowloon East. It is a premium grade-A office building providing approximately 800,000 square feet of premium office space and approximately 100,000 square feet of fine dining area. During FY2019, the increasing office occupancy rate and increasing number of multinational corporations as tenants boosted the Group’s rental income. In FY2019, rental income, revenue from property management services and project management services amounted to HK$166.6 million (FY2018: HK$84.6 million), up by 96.9% compared with that for FY2018. In addition, the Group recorded a fair value gain of approximately HK$1,299.7 million from Goldin Financial Global Centre (FY2018: HK$1,864.5 million). The fair value gain was 30.3% less compared with that for FY2018 because the commercial properties in Kowloon East appreciated to a lesser degree in FY2019.

Property Development
During the year, the Group had completed the disposals of the equity interest in each of the two residential property projects in Ho Man Tin, namely the property development at Sheung Shing Street and Ho Man Tin Station Package One Property Development. As a result, the Group reported a net gain of HK$5,727.9 million from such disposals which strengthened the financial position of the Group.

The Group continued to strengthen its residential property development business. Its newly established 60%-owned joint venture, Golden Sphere Developments Limited (“Golden Sphere”), acquired by tender a land plot at the former Kai Tak runway in the Kai Tak Area (the “Kai Tak Residential Development”). It is estimated that private residential properties with maximum gross floor area of approximately 53,394 sq. m. in total can be developed on the site. The formulation of development plan is underway and the construction work is expected to commence by the end of 2019. The project is scheduled to be completed on or before 30 September 2024.

In April 2019, the Company entered into a conditional sale and purchase agreement to acquire the remaining 40% equity interest in Golden Sphere, whose principal asset is the holding in the Kai Tak Residential Development. The transaction is estimated to be completed in the last quarter of 2019.

The Group’s another initiative in expanding its real estate business during the year was the proposed acquisition by tender of a commercial site in the Kai Tak Area, which is adjacent to the Kai Tak Residential Development. The proposed acquisition was intended to bring significant synergy to the Kai Tak Residential Development which the Group acquired in December 2018. The Group withdrew from the tender and forfeited the non-refundable deposit of HK$25 million. The Hong Kong Government shall be at liberty to resell the relevant land and the relevant new tender was closed on 20 September 2019. As at the date of this report, High Smart Investment Limited (“High Smart”), an investment vehicle formed to submit the tender, is currently undergoing the liquidation process. As no guarantee was given by the Group to High Smart, the Group considered that the impact of the withdrawal of the tender on the Group’s financial statements is minimal except for the HK$25 million already forfeited.

Wine and Related Businesses

China’s wine imports lost steam for the first time in 2018 after several years of rapid growth. According to the data released by the China Association of Imports and Export of Wine & Spirits (CAWS), China’s total wine imports fell by 8% by volume in 2018 while the value of the imports merely edged up by 2%. The situation worsened in the first six months of 2019 when the country’s wine imports decreased by 14% by volume and 19% by value, according to the data from CAWS. The decline resulted from China’s slowing economy, the depreciation of renminbi and the uncertainty of the protracted US-China trade war. The figures also showed the biggest drop in the imports of French and US wines. Australia overtook France as the country that exported the largest volume of wine to China as a result of the free trade agreement between Australia and China came into effect in 2019. On the other hand, China’s retaliatory tariffs on the US wine imports have indirectly encouraged the Chinese consumers to try imported wines from more other countries and brands. The consumers were also buying wines from more diverse sales channels such as internet, social medial platforms and DTC (direct-to-consumer) channels. As young adults in their 20s are emerging as a consumer group on China’s wine market, trade in lower-priced, light flavoured and healthier wines on platforms for easy and convenient purchase of wines is growing. China’s wine market is now becoming more diverse and fragmented.

During the year, the Group continued to promote its premium fine wines by offering full services to customers, from the sourcing of prestige wines from renowned producers to management of portfolios of premium wines and quality storage services at its well-equipped wine cellar in Guangzhou. It had also increased the portion of its self-produced wines for sales in France in order to enhance their visibility and branding.

In Hong Kong, the four fine-dining and specialty restaurants at Goldin Financial Global Centre offered a wide variety of wines and liquors to cater for local consumers’ expanding tastes. Through wine pairing dinners with specially designed menus, the Group’s wines were introduced to local food and wine connoisseurs. We had also opened a new café, “Sip”, at Goldin Financial Global Centre. Inspired by green living, “Sip” brings the eco-consciousness to daily dining through fresh and healthy light refreshments.

In FY2019, the wine and related businesses recorded revenues of approximately HK$298.6 million (FY2018: HK$548.0 million), which represented a decrease of 45.5%. The drop was mainly due to the decrease in revenue generated by the wine trading business. The uncertainty of the Sino-United States trade war and the increasingly volatile financial markets had dampened the investor sentiment. Moreover, China’s demand for imported French and US wines decreased. All this was the headwind encountered by the sales of the Group’s premium French wines and wines under its owned brands. Less wines were sold to the wine investors in China. Segment profit from our wine and related businesses decreased by 69.3% to approximately HK$47.3 million for FY2019 from HK$154.3 million for FY2018, as a result of the decrease in revenues from wine trading for FY2019.


The Sino-US trade war and the persistently intense competition in China’s factoring market continued to exert pressure on the Group’s factoring business. As the Group reduced its factoring commission charged to its customers in June 2018, the factoring business recorded a 13.6% decrease in revenue to approximately HK$138.9 million for FY2019 (FY2018: HK$160.7 million). Profit from this business segment decreased by 19.1% to approximately HK$113.3 million, compared with the HK$140.1 million for FY2018.


Liquidity, Financial Resources and Gearing

As at 30 June 2019, the Group’s working capital stood at approximately HK$5,457.8 million, which is a significant increase of 71.9% over the HK$3,175.1 million recorded at the end of FY2018. The working capital increased mainly because the Group had refinanced its short term mortgage loan of approximately HK$10,206.1 million during FY2019, which approximately HK$6,589.2 million were refinanced by long term borrowings. Cash and cash equivalents and pledged bank deposits totaled approximately HK$4,231.0 million, which is approximately 14.2 times increased from the amount of HK$277.5 million at the end of FY2018. The significant increase in the cash and cash equivalents as at 30 June 2019 was mainly due to the net proceeds received during the year for the disposal of the Group’s equity interests in the two residential property projects in Ho Man Tin, and the draw down of a new bank loan of approximately HK$1,961.6 million near year end for financing the working capital needs of the Group.

As at 30 June 2019, the Group’s interest-bearing bank and other borrowings amounted to approximately HK$15,365.2 million (30 June 2018: HK$16,899.6 million). Besides, the Group had an outstanding non-interesting bearing loan of approximately HK$2,137.9 million (30 June 2018: HK$518.3 million) from a non-controlling interest which represented the funding contribution from the joint venture partner (a company beneficially owned by Mr. Pan, the controlling shareholder of the Company) for financing the acquisition of the Group’s properties under development in FY2019.

The Group maintained a borrowing facility of US$500 million (equivalent to HK$3,906.0 million) (30 June 2018: US$500 million (equivalent to HK$3,922.7 million)) from a related company in which Mr. Pan, the controlling shareholder of the Company, has a beneficial interest. During the year, the Group repaid approximately US$4.8 million (equivalent to HK$37.9 million), being the loan amount outstanding at 30 June 2018. As a result, none of the facilities was utilized as at 30 June 2019. The borrowing facility available for draw down as at 30 June 2019 was US$500 million (equivalent to HK$3,906.0 million) (30 June 2018: approximately US$495.2 million (equivalent to HK$3,884.8 million)).

As at 30 June 2019, the debt-to-total assets ratio, which is calculated as total bank and other borrowings (“Total Debts”) divided by total assets of the Group, was maintained at a healthy level of 40.1% (30 June 2018: 44.7%). The ratio of net debts (Total Debts net of cash and cash equivalents and pledged bank deposits) divided by total assets was approximately 29.1% (30 June 2018: 44.0%).

Foreign Exchange

As the Group’s key operations are located in Hong Kong, China, the US and France, its major assets and liabilities are primarily denominated in Hong Kong dollar, Renminbi, the US dollar and euro. While the Group has yet to formulate a formal policy on foreign currency hedging, it will, as always, continue to monitor its exposure to foreign exchange fluctuations carefully and may introduce appropriate hedging measures should the need arises.


As at 30 June 2019, the facilities granted to certain subsidiaries of the Company engaging in the businesses of property development, property investment and provision of factoring services, which are subject to guarantees given to the banks and financial institution by the Company for up to 60% and 100% (30 June 2018: 50.1% and 60%) of the funds drawn down, had been utilized to the extent of HK$14,330.5 million (30 June 2018: HK$9,881.3 million).


As at 30 June 2019, the Group’s secured bank and other borrowings were secured by the following assets of the Group:

(i) the investment properties with an aggregate carrying value of HK$18,500 million;
(ii) the properties under development with an aggregate carrying value of HK$9,202.4 million;
(iii) the entire shares capital of Rich Fast International Limited (“Rich Fast”), a 60% owned subsidiary which holds the properties under development;
(iv) the entire shares capital of Goldin Factoring Holdings Limited (“GFHL”) and Gold Podium Limited (“GPL”), the parent companies of certain subsidiaries carrying the factoring business and the wine and related businesses of the Group;
(v) floating charge over all the assets of Smart Edge Limited (“Smart Edge”), a subsidiary which holds the investment properties and Cheng Mei Holdings Limited and Goal Eagle Limited, being the holding companies of Smart Edge;
(vi) floating charge over all the assets of Rich Fast;
(vii) floating charge over all assets of Goldin Factoring Limited, a subsidiary of GFHL principally engaged in the provision of factoring service; and
(viii) floating charge over all the assets of Goldin Logistics (Hong Kong) Limited, a subsidiary of GPL and the immediate holding company of a subsidiary in the PRC which holds a wine cellar.

In addition, the Group pledged its prepaid land lease payments with a net carrying amount of HK$45.3 million and buildings with a net carrying amount of HK$1,514.7 million for a bank facility granted but not yet utilized as at 30 June 2019. As of 30 June 2019, the banking facility had expired but the relevant pledge has not yet been released.


Real Estate Business

Property Investment
The sentiment of Hong Kong’s office leasing market has been affected by the prospect of a sluggish global and local economy. Nevertheless, the Group is still reasonably optimistic about the steady uptrend of office decentralization as more corporations which are seeking to reduce their overheads are very willing to relocate to offices available on the submarket. In the light of this trend, the Group expects the take-up of office spaces in the CBD2 of Kowloon East to increase, and such momentum to grow as there will be an ample supply of office spaces to satisfy such a strong demand in the medium term. In fact, leasing revenue is growing at Goldin Financial Global Centre. The Group is negotiating with prospective tenants who are internationally well-known enterprises. It expects the occupancy rate of offices at Goldin Financial Global Centre to rise steadily in the years ahead.

Property Development
The Kai Tak Area, where the Group’s new residential property development project is situated, is a site of a huge urban development project undertaken by the Hong Kong Government. Infrastructure and facilities for community, housing, business and tourism will be built in the area. It will be served by the future Shatin to Central Link of the Mass Transit Railway. The Group’s residential property development project in the Kai Tak Area has a bright prospect.

All in all, the massive urban redevelopments, including the emerging CBD2 and large residential property development projects in Kowloon East, will transform the area into a prominent smart district in Hong Kong. The Group is well-positioned to capture opportunities in the property market in Kowloon East in the years ahead as its real estate business is consolidating its foothold in the district.

In the meantime, we will continue to explore other possibilities of real estate investment and will study them carefully should the opportunities arise.

Wine and Related Businesses

As the Sino-United States trade war has resulted in China’s slowing gross domestic product growth, the country’s wine imports are expected to face headwinds in the rest of 2019. We anticipate a temporary slowdown in the wine trading business. However, on the bright side, the Chinese consumers’ interest in wines (especially imported quality wines) remains strong, and the country’s per capita wine consumption is set to grow significantly from a very low base#. Therefore, healthy growth in China’s wine market can resume in the long run.

# Bottled wine imports to China declined sharply in H1, and market headwinds remain strong —NIMBILITY

The Group will continue to develop the wine-trading business and promote its premium wines in Hong Kong and China. It will organize more wine pairing dinners and wine and food appreciation events at its restaurants at Goldin Financial Global Centre in order to promote its premium wines in Hong Kong. The Group will enrich its wine list by introducing new and competitive fine wines of more brands to the local market. Besides, it will also try to explore different sale channels in order to expand its wine trading business in Hong Kong and mainland China. Meanwhile, the Group’s wine and related businesses will continue to explore other possibilities, including acquisitions in order to increase its market penetration in Hong Kong and mainland China as well as foreign countries.


China’s commercial factoring industry is expected to remain competitive, and the operating environment will remain complicated, especially when it is plagued by the ongoing Sino-US trade disputes. The Group will strive to maintain the competitive edge of its factoring business and continue its prudent approach to managing risks and selecting clients.