Investor Relations

Management Discussion & Analysis


For the financial year ended 30 June 2017 (“FY2017”), the Group recorded revenue of approximately HK$760.1 million, representing a 21.7% increase over the revenue of approximately HK$624.5 million for the year ended 30 June 2016(“FY2016”).The increase over the previous year was mainly due to the increased revenues generated by our wine trading operations and by the newly launched dining and leasing businesses. Gross profit for the year under review amounted to HK$529.0 million, which represented an increase of 51.8% compared with that of HK$348.4 million in FY2016. The rise in gross profit mainly resulted from the improved profit margin for our wine products traded in the current year under review. Profit attributable to owners of the Company was approximately HK$1,419.6 million, which represented a 58.9% increase compared with the figure of approximately HK$893.2 million for FY2016. The increase was mainly due to a fair value gain of HK$2,321.7 million recorded for the Group’s investment property, compared with that of HK$1,549.2 million for the previous year. As a result, basic and diluted earnings per share for the FY2017 were HK20.31 cents and HK20.19 cents (FY2016: HK12.78 cents and HK12.56 cents) respectively, representing corresponding increases of 58.9% and 60.7%.


The FY2017 marked further consolidation and expansion of the Group’s businesses. In the real estate business, the Group marked a key accomplishment in its property development by winning a tender for the Ho Man Tin Station Package One Development in December 2016. This added to the portfolio of the residential property projects which had already contained the Ho Man Tin Sheung Shing Street Project that the Group had won through a tender in March 2016. In addition, the Group also saw its investment property Goldin Financial Global Centre officially opened in October 2016. In the wine and wine-related businesses, the Group had launched four specialty and fine-dining restaurants in the Goldin Financial Global Centre which also served as an additional point of wine sale to cater for retail clientele in Hong Kong.

Real Estate Business

Property Investment
Rents for office spaces in Central had surged to record highs as a result of sustained demand from Chinese corporations and persistent high building occupancy rates. International corporations continued to seek cost-effective office spaces outside Central. Kowloon East, which is positioned as Hong Kong’s second central business district, has become a thriving commercial district that serves as an alternative for these enterprises. In contrast with conventional business areas, Kowloon East offers sizable, high quality and cost effective office spaces that drove a number of companies engaged in finance, insurance and information technology sectors to relocate. Activities of office decentralization, split office and office expansion are set to continue and it was evident that high quality office buildings, e.g. Goldin Financial Global Centre were benefited from the trend.

Located at CBD2 in Kowloon Bay, Goldin Financial Global Centre is a super Grade-A office building which comprises of approximately 800,000 square feet of premium office space and 100,000 square feet of dining area. Ground floor, first and second floors are designated as food and beverage zone in which our specialty and fine-dining restaurants are currently in operation. Following its grand opening in late October 2016, Goldin Financial Global Centre saw its office occupancy rate improve progressively and it started to generate rental income for the Group. The Group has been actively marketing the office building and negotiating with various international corporations who are looking for premium office spaces. During the FY2017, rental and property management revenues amounted to HK$22.1 million (FY2016: Nil). In addition, the Group recorded a fair value gain of approximately HK$2,321.7 million in respect of Goldin Financial Global Centre (FY2016: HK$1,549.2 million), owing to a significant appreciation in the value of the commercial properties in CBD2.

Property Development

Ho Man Tin Sheung Shing Street Project
Acquired in March 2016, the Group’s property development project at Sheung Shing Street, Ho Man Tin, covered a total site area of approximately 9,074 square metres for residential purpose. The project will be developed into a top-class apartment complex with luxury club house facilities, targeting high-end customers who enjoy a luxury home in the traditional high-class residential district. Over 400 private residential units will be built in the project that has total maximum gross floor area of approximately 586,000 square feet. The site formation and foundation works are currently in progress. It is expected that the property development will be completed by the end of 2020. During the year under review, the Group transferred a 40% equity interest in the property development project to its controlling shareholder, Mr. Pan Sutong (“Mr. Pan”). The move enabled the Group to reduce its capital commitment to the development of the project while retaining the project as a source of income.

Ho Man Tin Station Package One Development Project
During FY2017, the Group’s 50.1%-owned joint venture (“the Joint Venture”) successfully tendered for the development right for a new residential property project at the northern portion of the Ho Man Tin Station of HongKong’s Mass Transit Railway(“MTR”). The project is known as the Ho Man Tin Station Package One Project Development. The Group and MTR entered into an agreement over the project in January 2017. The maximum gross floor area of this property development project will be approximately 742,700 square feet and will be developed to provide about 800 to 1,000 residential units. Synergy is expected to be achieved between this project and the Group’s Sheung Shing Street project and the Group’s presence in Hong Kong’s luxury housing market can thus be enhanced. We are progressing well at the design and planning stage of the Ho Man Tin Station Package One Project Development, and the development is expected to be completed by the end of 2022.

Wine Business

The wine market in China has been growing robustly. The 2017 World Vitiviniculture Situation of the International Organization of Vine and Wine showed that China’s fast-growing wine consumption accounted for 7.2% of the annual global wine consumption (including that of sparkling and special wines) in 2016.

The country’s expanding wine market is now comprised of a younger middle-class and the affluent people with increasing disposable income. Having easier access to a wider variety of wines at more affordable prices, the consumers now care more about the healthy way to drink for personal enjoyment. Furthermore, the improving distribution logistics has made wines available to the even lower-tier cities in the country#. This phenomenon has supported the statistics of the General Administration of Customs of the PRC that indicated strong growth in bottled wine imports at a lower average price in recent years.

# Source: China Landscapes 2017

In FY2017, the Group continued to consolidate its wine and wine- related businesses, thus laying the solid foundations for its strategic business development. The Group continued to implement global marketing and distribution strategies. New distributors were appointed in key markets of the world to enhance visibility and branding. In the PRC, the Group has focused on expanding its customer base by integrating its wine cellar in Guangzhou into its overall wine business. Marketing efforts such as wine tasting and fine dining gatherings were organised to develop the Group’s network and promote its wine business and wine club.

For retail clientele, the Group has established additional points of sale for its wines at the four new specialty and fine-dining restaurants at the Goldin Financial Global Centre. These restaurants offer exquisite Asian and Western cuisines, namely the “Congeodle (江南庭敍)” which offers home-style Cantonese cooking, the “Dynasty Garden (皇御園)” which provides authentic Cantonese cuisine, the “LePan” which offers fine French cuisine and the “Matsunichi (大松日)” which serves modern Japanese cuisine. Events with specially designed meals for wine and food pairing were held at these restaurants so as to introduce the Group’s wines to the wine and food lovers. Besides, the Group also supplies its self-produced French wines to other local restaurants in Hong Kong in order to increase its presence in the market.

In FY2017, the Group recorded revenue of approximately HK$550.8 million (FY2016: HK$392.4 million) from the wine and wine-related businesses. This represented an increase of 40.4% over that of FY2016. Segment profit was approximately HK$168.3 million (FY2016: HK$40.9 million), which represented an increase of 311.5% over FY2016. This increase was mainly due to the larger gross profit generated by the trade in the Group’s self-produced wines in FY2017 than in FY2016, even though the increased gross profit was partially offset by the costs for setting up its dining business and the increased operating expenses of such business during the year under review.

During the year under review, the Group determined to optimise its business segments so as to make a better allocation of resources by disposing its wine cellar in Tianjin to Mr. Pan on 30 June 2017. Upon the completion of the transaction, the capital owed by the Group to Mr. Pan relating to the acquisition of the Tianjin wine cellar in 2015 had been fully set-off and cleared, and this increased the Group’s financial flexibility.


According to the data from Factors Chain International, the growth of the global factoring volume for 2016 had slowed down compared with that for 2015. Whilst the annual growth in global trade had been curtailed to 2.4%# for the year, the ongoing geopolitical and economic risks also weighed on the factoring markets around the world. The PRC remained the second largest factoring market in the world and accounted for 12.7% of the global factoring volume in 2016, even though the country’s annual factoring volume fell by one- seventh.

# Source: The World Bank — Global Monthly (July 2017)

In FY2017, competition persisted in China’s factoring market. On one hand, the favorable conditions supported by the Chinese government’s stimulus measures have resulted in the significant growth in the number of registered commercial factors. Based on the Fifth China Commercial Factoring Industry Summit (2017) (第五屆 (2017)中國商業保理行業峰會), there were over 5,000 domestic commercial factors and 300 new foreign-owned commercial factors in China at the end of 2016. On the other hand, the People’s Bank of China’s move to lower the short-term Renminbi benchmark lending rate during 2015 has reduced the financing cost for local enterprises. However, the move also unavoidably decreased the factoring revenues in terms of handling fees and discounting charges.

Against this backdrop, the Group’s factoring business faced headwinds, including the strong competition in China and a lowered profit margin. For FY2017, our factoring business recorded revenue of approximately HK$187.2 million (FY2016: HK$232.1 million), down by 19.4%, and profit from this business segment decreased by 43.8% to approximately HK$77.9 million, compared with the HK$138.6 million for FY2016.


Liquidity, Financial Resources and Gearing

As at 30 June 2017, the Group’s working capital stood at approximately HK$11,998.3 million, representing an increase of 6,562.0% over the HK$180.1 million figure recorded at the end of FY2016. Cash and cash equivalents totaled approximately HK$488.7 million, representing an increase of 475.6% over the HK$84.9 million at the end of FY2016.

As at 30 June 2017, the Group had outstanding bank loans of approximately HK$14,338.7 million (30 June 2016: HK$9,272.9 million). During the year, the Group had re-financed its bank borrowings drawn down in the previous years for the construction of the Goldin Financial Global Centre and the Ho Man Tin Sheung Shing Street residential project upon their maturity with long term loans maturing in four to five years. In addition, the Group had also drawn down an additional bank borrowing for financing the acquisition of the new property development project at Ho Man Tin MTR station in Hong Kong.

The Group maintained a borrowing facility of US$500 million (equivalent to HK$3,875 million) from a related company in which Mr. Pan, the controlling shareholder of the Company, has a beneficial interest. As at 30 June 2017, approximately US$66.8 million (equivalent to HK$518 million) (30 June 2016: US$8.5 million (equivalent to HK$66 million)) of the facilities were utilized. The undrawn borrowing facility as at 30 June 2017 was approximately US$433.2 million (equivalent to HK$3,357 million) (30 June 2016: US$491.5 million (equivalent to HK$3,813 million)). During the year, the Group had also drawn down a loan from a non-controlling interest amounting to HK$518.3 million (30 June 2016: Nil), which represented the funding contribution from the joint venture partner for financing the acquisition of the Group’s properties under development.

The debt-to-total assets ratio is calculated as total bank and other borrowings divided by total assets of the Group. As at 30 June 2017, the debt-to-total assets ratio was maintained at a healthy level of 42.9%, when compared with 33.4% as at 30 June 2016. The ratio of net debts (total bank and other borrowings net of cash and bank balances) divided by total assets was approximately 41.5% (30 June 2016: 33.1%).

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 HK$, RMB, US$ and Euro. While we have yet to establish a formal foreign currency hedging policy, we will, as always, continue to monitor our exposure to foreign exchange fluctuations carefully and may introduce appropriate hedging measures should the need ever arise.


The Group’s businesses, results of operations, financial conditions and prospects are subject to risks and uncertainties. The Group has established policies and procedures for managing its business risks arising from its core business segments covering factoring, wine, and property investment and development businesses.

Management of key customers

The Group’s revenue is mainly derived from certain major customers of the Group’s factoring and wine businesses. For the year ended 30 June 2017, the aggregate revenue attributable to the Group’s five largest customers (who are from the factoring and wine business segment) represented approximately 70% (2016: 83%) of the Group’s revenue for the year. The major customers of the factoring business are PRC-based enterprises manufacturing high-end digital electronic products for reputable end-buyers in Hong Kong, China and the United States. The major customers of our wine business are premium wine collectors and investors with sound financial backgrounds in Hong Kong and China. These customers’ business relationships with the Group last for periods ranging from one to eight years.

Given our good established business relationships, the present customers of the factoring business may continue to account for a significant percentage of the Group’s sales in FY2018. In the current year, the Group’s revenue source is diversified with new revenues from the newly launched restaurant operation and the rental income generated from the leasing activities of the Goldin Financial Global Centre since 2nd half of FY2017. It is expected that these new businesses will have higher contribution to the Group’s revenues in the coming year.

Credit risk management

The Group is selective about its customers and will only deal with creditworthy parties. In order to minimize the credit risks, the Group has formulated credit policies, and delegated a team to determine credit limits, approve credit and monitor progress in recovering overdue debts. The Group only accepts the factoring of quality trade receivables whose associated credit risks are either covered by trade credit insurance or by import factors which are international financial institutions. In addition, the Group regularly reviews the aging and recoverable amount of each individual trade debt and takes appropriate follow-up actions to recover any long overdue debts.

As at 30 June 2017, approximately 83% of the Group’s trade receivables, which were factored to the Group by our factoring customers, are due from three debtors who are international corporations with exceptionally low risk of default. As of 20 September 2017, over 99% of the trade receivables arose from the provision of factoring services that were past due as at 30 June 2017 have been subsequently settled.

Real estate business risk management

The Group has established measures to ensure that (i) the property development related costs of the property development projects are within budgets; (ii) the progress of the property development projects is in pace with the scheduled time to avoid delay in completion; and (iii) the quality of the properties under construction is high and complies with the applicable rules, regulations, laws and standards.

The risk arising from property investment business is relatively low. The Group will maintain a portfolio of tenants who are reputable and creditworthy. In addition, the leasing team keeps monitoring the market conditions with a view to maintaining the competitive position of Goldin Financial Global Centre.


As at 30 June 2017, the bank borrowings drawn by certain property investment and development subsidiaries are subject to corporate guarantees given to the banks by the Company, further details of which are set out in note 27 to the financial statements.


As at 30 June 2017, the Group’s secured bank loans were secured by (i) the investment property with an aggregate carrying value of HK$15,300 million (30 June 2016: HK$12,500 million); (ii) the properties under development with an aggregate carrying value of HK$6,756 million (30 June 2016: HK$6,521 million); (iii) the entire share capital of Smart Edge, a 60%-owned subsidiary which holds the investment property, and (iv) the entire share capital of Gold Topmont, a 60%-owned subsidiary of the Company which holds the properties under development.

In addition, the Group pledged its prepaid land lease payments with a net carrying amount of HK$48 million (30 June 2016: HK$101 million) and buildings with a net carrying amount of HK$1,608 million (30 June 2016:HK$2,902million) for a banking facility granted but not yet utilized as at 30 June 2017 and 30 June 2016.


Real Estate Business

Property Investment
Kowloon East is improving its infrastructure, as part of the move, it is increasing the supply of new, quality office spaces and residential units. The Hong Kong Government is expected to invite tenders for a plot of land in the city’s largest quarry site. This will help to accelerate Kowloon East’s development into the city’s second metropolitan area and prominent CBD2 where both multinational corporations and small and medium-sized enterprises can converge.

Both the accessibility to CBD2 and the transportation within the district are improving, better amenities are also being developed by the government and private developers, as such, the Group is optimistic about the prospect of CBD2 in Kowloon East becoming a favorable option for corporations who would like to relocate from Central and other business districts. We expect the office leasing market in CBD2 to develop healthily with a gradual tenant intake at competitive rentals.

We are positive about the medium and long-term prospect of Kowloon East and remain confident that Goldin Financial Global Centre will generate a steady stream of rental income in the future.

Property Development
The Ho Man Tin district is an urban area of Kowloon known for its well-established school network for young families and its luxury residences. It will be further developed into a transportation hub where a key interchange station of MTR is located in the future. The Group is confident that its two residential property development projects in the district have great potential for appreciation in value in the coming years. We are optimistic about the future revenues that the Group will generate upon the completion of the projects.

We remain confident that the Group’s real estate business will continue to be prosperous as it is bolstered by Goldin Financial Global Centre in terms of investment value and rental income and the contribution from the new residential property developments.

Wine Business

The flourishing wine industry in China and Hong Kong abounds with business opportunities as the number of wine enthusiasts is increasing. The trade in wine has sprouted in various distribution channels, from convenience retail outlets to the premier private wine clubs in Hong Kong. Eyeing the blossoming wine market, the global wine merchants and international wine companies have already set up their regional trading and distribution bases in Hong Kong and a reputable company was also reported of its intending to create a new platform for the wine exchange in the near future.

Our new dining business at the Goldin Financial Global Centre offer delectable cuisines with food and wine pairing service. As more tenants move to the Goldin Financial Global Centre, it is expected that the performance of our new dining business will further improve and bring in higher revenues in the coming year. In addition to enhancing its marketing mix for the wine and dining businesses, the Group will continue to expand its wine retail business for the local market. A new retail wine shop near the fine dining restaurants will also be established to cater for the retail customers. Meanwhile, we are contemplating how to capitalise on a niche in the liquor market in order to tap the demand of the discerning customers. The Group’s wine trading business will continue to develop steadily, aiming for wider market coverage in China’s key cities. The Group will continue to explore other possibilities in the wine business and other related businesses in order to increase its market penetration in China and Hong Kong.

Apart from the vineyards and winery in the Napa County and Bordeaux acquired in the previous years, the Group is also exploring possible overseas acquisitions with the aim of increasing the number of its wine production bases and the product variety while securing the stable supply of our self-produced wines. We will continue to develop our wine and related business, and remain optimistic about the prospect.

Factoring Business

The major markets are expecting a general recovery in the global economic activities in the remainder of 2017. However, the improving economic sentiments are likely to be undermined by the uncertainties over the international politics such as the intensifying regional geopolitical conflicts and rising protectionism, which have arisen from the change in European politics and the election of the United States’ president. In addition, China’s factoring market is likely to remain very competitive as more commercial factors enter the market. Therefore, the Group’s factoring business will continue to face a challenging business environment in the coming year.

In view of these market conditions, the Group will strive to maintain the competitive edge of its factoring business and continue its prudent approach to managing risks and selecting clients. We will also explore possibilities of cooperating with other commercial factors and financial institutions and develop new products and services in China’s financial sector.