Investor Relations

Management Discussion & Analysis


The year ended 30 June 2016 (“FY2016”) was a year of consolidation and expansion. During the year under review, the Group recorded revenue of approximately HK$624.5 million, representing a 8.8% increase over the revenue of approximately HK$573.8 million for the year ended 30 June 2015 (“FY2015”). The increase over the previous year was mainly due to the increased revenues generated by our wine trading operations. Gross profit for the year under review amounted to HK$348.4 million, which represented a decrease of 17.7% compared with that of HK$423.4 million in FY2015. The lower gross profit was mainly resulted from our more competitive pricing strategies for our factoring and wine products in the current year under review. Profit attributable to owners of the Company was approximately HK$893.2 million, which represented a 26.4% decrease compared with the figure of approximately HK$1,214.0 million for FY2015. The decreased figure for FY2016 was mainly due to a lower fair value gain of HK$1,549.2 million recorded for our investment property under development, the Goldin Financial Global Centre, compared with that of HK$2,017.6 million for last year. As a result, basic and diluted earnings per share for the FY2016 were HK12.78 cents and HK12.56 cents (FY2015: HK17.39 cents and HK17.08 cents) respectively, representing corresponding decreases of 26.5% and 26.5%.



Global factoring market in 2015 showed a slight increase of 1.4% from 2014 in the total factoring volume because of the shrinkage of most of the regional factoring markets amid the persistent challenges in the global economy. China remained the largest factoring market in Asia despite a 13% decrease in the country’s factoring volume. The PRC accounted for 14.9% of the global factoring volume, and is secondly only to the United Kingdom, which had the largest factoring volume in the world.#

Due to the PRC government’s policies and strategies for stimulating the development of the country’s factoring industry, the domestic commercial factoring market has been growing robustly. According to the “中國商業保理行業發展報告2015” (The 2015 Report on the Development of China Commercial Factoring*), the number of new commercial factors in year 2015 more than doubled compared with that in the previous year, and the total number of registered commercial factors in China reached 2,514 by the end of 2015, of which over 50% were newly registered in the year.

Against this backdrop, our factoring business has by all means sustaining our current clientele amid the fierce competition in the China factoring market. For the year under review, the Group’s factoring business recorded revenue of approximately HK$232.1 million (FY2015: HK$243.9 million), representing a slight decrease of 4.8% over FY2015. Increasing market competition coupled with competitive pricing amongst the market participants has led to slight decreases in the revenue, and reduced the gross profit generated from our factoring business. Profit from this segment was approximately HK$138.6 million – down by 24.2% over the HK$182.8 million figure for FY2015.

With the strong government support to the commercial factoring in the country, the domestic commercial factoring market continues to develop in various innovative settings and ways, such as e-commerce and the FinTech platforms as well as the listing of securitized factoring receivables in the form of asset-backed securities on the stock exchange in China. Being one of pioneers in the commercial factoring market, Goldin Factoring is in a good position to further excel our capability in developing the factoring business through possible new ventures and alliances with other commercial factors and financial institutions and diversify into new products and services as to seize the increasingly business opportunities.

#Source: Factors Chain International
*English transliteration only


Wine has long been part of the cultural heritage and red wine, in particular, is cherished as an item of aristocratic lifestyle and is palate- pleasing to pair with the food. Nowadays the culture of wine has permeated the modern lifestyle around the world. It is common to serve red wine on celebratory occasions, social gatherings and family bonding time.

Based on the latest report by the International Organisation of Vine and Wine, the global wine consumption and the international wine trading, in terms of volume and value, have been burgeoning. This trend was flourishing in the PRC market, as evidenced by a double-digit growth in the volume of bottled wines imports during the first half of 2016 compared with that in the same period last year.#

#Source: China Wines Information Website

In FY2016, our wine and wine related business continued to consolidate and diversify the product mix. During the year, our French winery, Château Le Bon Pasteur introduced its second label “L’Etoile de Bon Pasteur”, targeting a broader market which may prefer more affordable fine wines than our prestigious Grand Vin. Our Bordeaux brands continued to achieve remarkable results in the world’s leading wine competitions. We have won high recognition for our resolute efforts in excellence and insistence to maintain the stringent standards of our meticulous wine-making.

During the year, the Group recorded revenue of approximately HK$392.4 million (FY2015: HK$329.9 million). This represented an increase of 18.9% over that of FY2015. Segment profit from our wine business was approximately HK$40.9 million (FY2015: HK$145.3 million), which decreased by 71.9% over FY2015. This contraction was mainly due to the lower profit margin at our wine trading business after the Group priced its wine products more competitively, as well as the higher operating expenses for the wine segment compared with that in FY2015 due to the start-up costs incurred for the wine-related business, the media and publishing and wine cellars, during the year under review.

The acquisition of the two illustrious wine cellars in Guangzhou and Tianjin was completed during the year under review and the Guangzhou wine cellar has been put into operation. In addition to the storage facilities being used by the Group, the wine cellars will complement our exclusive membership club that offers a full range of services to wine enthusiasts – from the reliable sourcing and storage of wines under bond in private VIP cellars, to the expert management of their portfolio. The Group has been focusing on the integration of the wine cellars, and marketing efforts such as educational wine dinners focused on a single winery in the presence of the owner, winemaker or manager were organized to develop our network and promote our wine business and the club. In addition, the two wine cellars, which are situated in the Guangzhou and Tianjin free trade zone, will be used as the strategic bases for setting up the distribution channels which cover the southern and northern markets in China. With this we will be able to tap into China’s fast growing wine market. China is now the world’s 5th largest wine consumption country, where the Group finds huge potential for profit growth.

Real Estate

In FY2016 our real estate business expanded and embarked on a luxury residential property project in Hong Kong. Our real estate portfolio now includes the “Goldin Financial Global Centre” complex which comprises Grade-A commercial office space, and the new luxury residential property development project.

The “Energizing Kowloon East” project of the Government of the Hong Kong Special Administrative Region has been revitalizing the Kowloon East district (comprising the Kai Tak Development, Kowloon Bay and Kwun Tong), which housed an alternative central business district (“CBD2”), that will evolve into an innovative and thriving “smart city” in the medium to long term. The cityscape of the Kowloon East as a sophisticated integrated community and the commercial, tourism and entertainment hub in Kowloon is going full steam ahead.

During FY2016 the office market in Kowloon East remained active as a number of financial institutions and large multinational corporations in different sectors were relocated or are planning to move from the traditional central business area to the CBD2 in Kowloon East, where the rentals are at a more competitive level than those across the harbour. This underlined the promising asset value of Goldin Financial Global Centre (“the Development”) in the Kowloon East and the potential rentals that the Group can derive from it in the coming years.

Our Goldin Financial Global Centre has recently completed the construction and is scheduled for opening in the last quarter of 2016. The Development has been named as one of the Key Green Buildings in the district and will become a contemporary landmark, which will contain premium and spacious office space, food and beverage zone with specialty and fine dining restaurants, and plentiful car parking spaces. Goldin Financial Global Centre has begun soliciting tenancy and is currently conducting negotiations with some potential tenants who are expected to be large commercial corporations seeking Grade-A office space.

Following a remarkable appreciation in the previous year, the Group recorded a further fair value increase of approximately HK$1,549.2 million in the FY2016 (FY2015: HK$2,017.6 million) in respect of the Development.

In March 2016, the Group has successfully acquired a new site at Sheung Shing Street of Ho Man Tin in a government tender at the premium of approximately HK$6,381.22 million. This project is strategically located in a cluster of newly-built luxury residential developments within a traditional good class residential district. We are progressing well at the initial planning stage and that the environmental impact assessment and the sewerage impact assessment reports in respect of the land parcel have recently been completed. We expect the property development project to commence by the end of the year.


Liquidity, Financial Resources and Gearing

As at 30 June 2016, the Group’s working capital stood at approximately HK$180.1 million, representing a decrease of 95.5% over the HK$4,008.7 million figure recorded at the end of FY2015. Cash and cash equivalents totalled approximately HK$84.9 million, representing an increase of 62.3% over the HK$52.3 million at the end of FY2015.

As at 30 June 2016, the Group had outstanding bank loans of approximately HK$9,272.9 million (30 June 2015: HK$1,051.7 million). The loan drawdown during the year was mainly for financing the construction and interior fitting costs of our Goldin Financial Global Centre and the acquisition of the new property development in Hong Kong.

The Group also maintained a borrowing facility of US$500 million (equivalent to HK$3,879.3 million) from a related company in which Mr. Pan Sutong (“Mr. Pan”), a controlling shareholder of the Company, has a beneficial interest. During the year, the Group had drawn down from the facilities of approximately US$8.5 million (equivalent to HK$66.3 million) (30 June 2015: Nil) which was solely for financing the Group’s acquisition of the wine cellars in the PRC. The undrawn borrowing facility was approximately US$491.5 million (equivalent to HK$3,813.0 million) as at 30 June 2016 (30 June 2015: US$500 million (equivalent to HK$3,876.1 million)).

The gearing ratio of total bank and other borrowings divided by total equities stood at approximately 64.7% (30 June 2015: 8.0%).

Risk Management

The Group has established policies and procedures for managing its business risks arising from its factoring and wine businesses. 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 2016, the aggregate revenue attributable to the Group’s five largest customers (one of them is a connected party while the remaining four are independent to the Group) represented approximately 83% (2015: 97%) 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 seven years.

The success of our factoring business lies in our prudent risk management and client selection strategies. Given our good established business relationships, the present customers of the factoring business may continue to account for a larger percentage of the Group’s sales in the coming year. On the other hand, the Group also strives to actively enhance and expand its customer base for the wine business and, at the same time, develops a wine club to reduce the risk of over-reliance on major customers. The Group will further diversify its revenue sources with the rental income generated from the leasing activities of the Goldin Financial Global Centre in the coming year.

The Group is selective about its customers and will only deal with creditworthy parties. In order to minimize the credit risk, the Group has formulated a credit policy 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 2016, approximately 86% 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 26 September 2016, over 99% of the trade receivables as at 30 June 2016 have been subsequently settled.

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.


As at 30 June 2016, the banking facilities granted to a property investment subsidiary, which is subject to guarantees given to the bank by the Company for up to 60% of funds drawn down, had been utilized to the extent of HK$3,647.5 million (30 June 2015: HK$630.5 million).

As at 30 June 2016, the banking facilities offered to a property development subsidiary which is subject to guarantees given to the bank by the Company for the facilities amount, had been fully drawn at HK$3,192 million (30 June 2015: Nil).


As at 30 June 2016, the Group’s secured bank loans were secured by (i) the investment property under development with an aggregate carrying value of HK$12,500 million (30 June 2015: HK$9,750 million); (ii) the properties under development with an aggregate carrying value of HK$6,521 million (30 June 2015: Nil); (iii) the entire share capital of Smart Edge Limited, a 60% owned subsidiary which holds the investment property under development, and (iv) the entire share capital of Gold Topmont Limited, an indirect wholly-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$101 million (30 June 2015: Nil) and buildings with a net carrying amount of HK$2,902 million (30 June 2015: Nil) for a banking facility which is under application.


The Board will continue to develop and sharpen its focus across the Group’s core business segments and capture on any new opportunities where they arise. In FY2016, our real estate segment has diversified to private residential property development which marked a milestone for Goldin Financial. Whilst pursuing our growth strategies, we will continue to streamline our existing operations and build a stronger foundation for our business. Our unfaltering efforts to drive for success have strengthened Goldin Financial’s fundamentals.


The global economy remains lackluster and uncertain and, as a result, the business environment for trade and finance worsens. It is expected that international cooperation in global and regional trade and investment will become closer with lower non-tariff barriers. A case in point is the proposed Regional Comprehensive Economic Partnership#. This will help to boost the productivity and competitiveness of companies and will contribute positively to the growth of international cross-border factoring.

# Source: The World Bank – Global Economic Prospects: East Asia and Pacific (June 2016)

To this end, we will strive to maintain the competitive edge of our factoring business by offering competitive factoring service and continuing our prudent risk management and client selection strategies. Goldin Factoring will continue to develop its business through possible new ventures and ally with other domestic and overseas factoring companies and financial institutions to develop and launch new products and services.


The wine industry in China and Hong Kong are promising. Hong Kong has been an active regional wine trading and distribution hub. Taking advantage of the zero wine duty in Hong Kong and the free trade agreement between mainland China and Hong Kong, the Closer Economic Partnership Arrangement (CEPA) which will benefit the business of importing wines to China, our wine trading business will continue to develop steadily, targeting a wider market coverage in China’s key cities. We will reinforce our sales and marketing teams to target deeper in these markets.

The Group will continue to tap the potential of its wine and wine related businesses in order to increase the market penetration in both the PRC and Hong Kong. We will further enhance our lifestyle business by opening our own restaurants and dining business at Goldin Financial Global Centre upon its grand opening this year.

Real Estate

As a leading international financial centre, Hong Kong’s office market remains strong. The overall prime office occupancy costs in the core central business area (Central) has been the highest in the world#. In view of the current global economic climate, it is highly likely that the enterprises will continue to re-evaluate their corporate strategies by following the precedent set by renowned conglomerates and financial institutions which have moved from the traditional central business districts to the new alternative central business area in Hong Kong, in particular the Kowloon East. The office decentralization activities to the Kowloon East district will remain strong.

# Source: Global Prime Office Occupancy Costs survey (CBRE Research)

Moreover, the stimulus of the coming “Shenzhen-Hong Kong Stock Connect” scheme will contribute positively to the banking and finance sector in Hong Kong. As a result, the China-based companies will continue to capture the tremendous business opportunities by leveraging Hong Kong’s status as an international financial centre. This will fuel the demand for premium grade office spaces in Hong Kong and the prominent CBD2 in Kowloon East will still be one of the favourites with the companies. Therefore, it is expected that the demand for Grade-A office space in Hong Kong and the CBD2 in the Kowloon East will be sustained in the coming years.

Our new property development in Ho Man Tin will target at the market for luxury residential properties. Given that the Ho Man Tin Station of Hong Kong’s Mass Transit Railway in the district will serve an interchange station for the future route between Shatin and Central, Ho Man Tin will become a busy area in the heart of Kowloon. We are optimistic about the future revenues that the Group will generate upon the completion of the project.

We remain confident that our real estate business will continue to be prosperous as it is bolstered by Goldin Financial Global Centre in terms of investment and rental incomes and the new residential property development. We will continue to strive to expand our real estate business by actively searching for suitable land investment in Hong Kong and China for acquisition in order to diversify our property development and investment portfolio that will enhance the shareholders value in the coming years.