2014 LIVE LIFE TO the THIRD QUARTERLY REPORT
Characteristics of the Growth Enterprise Market ( GEM ) of the Stock Exchange of Hong Kong Limited (the Stock Exchange ) GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM. Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report. This report, for which the directors (the Directors ) of Sino-Life Group Limited (the Company, together with its subsidiaries, the Group ) collectively and individually accept full responsibility, include particulars given in compliance with the Rules Governing the Listing of Securities on the GEM of the Stock Exchange (the GEM Listing Rules ) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this report is accurate and complete in all material respects and not misleading or deceptive; and (2) there are no other matters the omission of which would make any statement in this report misleading. (1) (2) 中國生命集團有限公司第三季季度報告 2014 01
Condensed Consolidated Quarterly Results for the nine months ended 30 September 2014 (Unaudited) The board of Directors (the Board ) hereby presents the unaudited condensed consolidated results of the Group for the three months and the nine months ended 30 September 2014 together with the comparative unaudited figures for the corresponding periods in 2013, as follows: Condensed Consolidated Statement of Comprehensive Income Three months ended 30 September Nine months ended 30 September 2014 2013 2014 2013 Note RMB 000 RMB 000 RMB 000 RMB 000 (unaudited) (unaudited) (unaudited) (unaudited) Turnover 3 16,580 15,978 57,451 45,708 Cost of sales (3,558) (4,175) (13,997) (11,782) Gross profit 13,022 11,803 43,454 33,926 Other revenue and other net gain 550 1,233 2,070 3,217 Selling expenses (5,910) (6,083) (18,137) (18,143) Administrative expenses (7,109) (8,772) (24,208) (27,593) Other operating expenses (1) (322) (470) Profit/(loss) from operations 552 (1,819) 2,857 (9,063) Finance costs (129) (50) (257) (189) Profit/(loss) before taxation 423 (1,869) 2,600 (9,252) Income tax 4 (259) (193) (1,006) (442) Profit/(loss) for the period 164 (2,062) 1,594 (9,694) Other comprehensive income/loss) for the period (after tax and reclassification adjustments) TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE PERIOD (1,609) 705 496 (4,001) (1,445) (1,357) 2,090 (13,695) Profit/(loss) attributable to: Owners of the Company 304 (1,856) 1,672 (9,231) Non-controlling interests (140) (206) (78) (463) 164 (2,062) 1,594 (9,694) Total comprehensive profit/(loss) attributable to: Owners of the Company (1,381) (1,266) 1,773 (13,281) Non-controlling interests (64) (91) 317 (414) Earning/(loss) per share Basic and diluted 5 RMB0.04 cent 0.04 (1,445) (1,357) 2,090 (13,695) RMB0.25 cent (0.25) RMB0.23 cent 0.23 RMB(1.24) cent (1.24) 02 Sino-Life Group Limited Third Quarterly Report 2014
Combined Statement of Changes in Equity Attributable to owners of the Company Foreign Share capital Share premium Merger reserve Statutory reserve Statutory surplus reserve Properties revaluation reserve currency Share-based Accumulated translation compensation reserve reserve losses Total Noncontrolling Total interests equity RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 1 January 2013 (audited) 69,218 220,633 (16,261) 225 1,550 1,067 (12,038) 7,720 (65,979) 206,135 4,159 210,294 Comprehensive loss Loss for the period (9,231) (9,231) (463) (9,694) Other comprehensive loss Surplus on revaluation of land and buildings held for own use 242 242 242 Exchange differences on translation of financial statements of non-prc operations (4,292) (4,292) 49 (4,243) Total other comprehensive loss 242 (4,292) (4,050) 49 (4,001) Total comprehensive loss for the period 242 (4,292) (9,231) (13,281) (414) (13,695) Transactions with owners Equity-settled share-based transactions 310 310 310 Lapse of share option grants (45) 45 Capital contribution received by a non-wholly owned subsidiary from non-controlling interests 300 300 Total transactions with owners 265 45 310 300 610 At 30 September 2013 (unaudited) 69,218 220,633 (16,261) 225 1,550 1,309 (16,330) 7,985 (75,165) 193,164 4,045 197,209 中國生命集團有限公司第三季季度報告 2014 03
Combined Statement of Changes in Equity (Continued) Attributable to owners of the Company Foreign Share capital Share premium Merger reserve Statutory reserve Statutory surplus reserve Properties revaluation reserve currency Share-based Accumulated translation compensation reserve reserve losses Total Noncontrolling Total interests equity RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 1 January 2014 (audited) 69,218 220,633 (16,261) 225 1,550 1,188 (18,535) 8,004 (81,686) 184,336 2,284 186,620 Comprehensive profit Profit/(loss) for the period 1,672 1,672 (78) 1,594 Other comprehensive profit Surplus on revaluation of land and buildings held for own use 175 175 175 Exchange differences on translation of financial statements of non-prc operations (74) (74) 395 321 Total other comprehensive profit 175 (74) 101 395 496 Total comprehensive profit for the period 175 (74) 1,672 1,773 317 2,090 Transactions with owners Equity-settled share-based transactions 1 1 1 Lapse of share option grants (16) 16 Total transactions with owners (15) 16 1 1 At 30 September 2014 (unaudited) 69,218 220,633 (16,261) 225 1,550 1,363 (18,609) 7,989 (79,998) 186,110 2,601 188,711 04 Sino-Life Group Limited Third Quarterly Report 2014
Notes to the Condensed Consolidated Financial Statements For the nine months ended 30 September 2014 1. GENERAL The Company was incorporated and registered as an exempted company with limited liability under the Companies Law of the Cayman Islands and acts as an investment holding company. Its shares are listed on GEM of the Stock Exchange on 9 September 2009. The Group is mainly engaged in the provision of funeral services, sale of graves and provision of cemetery maintenance services in Taiwan, Hong Kong, the People s Republic of China (the PRC ) and Vietnam. 2. BASIS OF PREPARATION The Group s unaudited condensed consolidated third quarterly financial statements have been prepared in accordance with the applicable disclosure requirements set out in Chapter 18 of the GEM Listing Rules and Hong Kong Financial Reporting Standards ( HKFRS ) issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ). The HKICPA has issued a number of new and revised HKFRSs and interpretations that are third effective or available for early adoption for the current accounting period of the company. There have been no significant changes to the accounting policies applied in these financial statements for the years presented as a result of these developments. The unaudited condensed consolidated third quarterly financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and financial liabilities at fair value through profit or loss. The preparation of financial statements in conformity with the HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise their judgements in the process of applying the Group s accounting policies. The accounting policies adopted in the 2013 annual financial statements have been consistently applied to these financial statements except that in the current period, the Group has applied for the first time certain new standards, amendments and interpretations (the new HKFRSs ) issued by the Hong Kong Institute of Certified Public Accountants, which are relevant to and effective for the Group s financial statements for the annual period beginning on 1 January 2014. The adoption of the new HKFRSs had no material impact on how the results and financial position for the current and prior periods have been prepared and presented. These unaudited condensed consolidated third quarterly financial statements are presented in Renminbi and all values are rounded to the nearest thousand (RMB 000), unless otherwise stated. The condensed consolidated accounts have not been audited by the Company s auditors, but have been reviewed by the Company s audit committee. 1. 2. 18 中國生命集團有限公司第三季季度報告 2014 05
3. TURNOVER The amount of each significant category of revenue recognised in turnover for the nine months ended 30 September 2014 is as follows: 3. Funeral services provided in funeral parlours and funeral services centres under the Group s management Nine months ended 30 September 2014 2013 RMB 000 RMB 000 (unaudited) (unaudited) 35,917 29,630 Cremation services 9,215 9,856 Funeral arrangement services 5,426 3,622 Cemetery sales and services 6,893 2,600 57,451 45,708 The following table sets out information about the geographical location of the Group s revenue from external customers. Revenues from external customers Nine months ended 30 September 2014 2013 RMB 000 RMB 000 (unaudited) (unaudited) The PRC 47,918 42,086 Taiwan 3,813 2,320 Hong Kong 1,613 1,302 Vietnam 4,107 57,451 45,708 06 Sino-Life Group Limited Third Quarterly Report 2014
4. INCOME TAX 4. (a) No provision for Hong Kong profits tax has been made as the Group has no assessable profits in Hong Kong for the nine months ended 30 September 2014 (2013: RMBNil). (a) (b) The Group is not subject to any taxation under the jurisdiction of the Cayman Islands and British Virgin Islands for the nine months ended 30 September 2014 (2013: RMBNil). (b) (c) The subsidiaries operating in the PRC are subject to enterprise income tax rate at 25% (2013: 25%) in accordance with the Law of the People s Republic of China on Enterprises Income Taxexcept that Chongqing Xizhou Funeral Service Company Limited ( Xizhou ), an indirect wholly owned subsidiary of the Company, is entitled to a preferential tax rate of 15% for the enterprise income tax in accordance with, which is retrospectively applied to Xizhou from January 2011 and, provided that the conditions precedent to entitlement of preferential tax rate are fulfilled by Xizhou in each of subsequent years, the preferential tax rate can be applied to Xizhou up to December 2020. For the nine months ended 30 September 2014, Xizhou is subject to enterprise income tax rate at 15% (2013: 15%). (c) 25%25% 15% 15%15% (d) Bau Shan Life Science Technology Co., Ltd. ( Bau Shan ), a direct subsidiary of the Company, and Bao De Life Enterprise Co., Ltd. ( Bao De ), an indirect subsidiary of the Company, are subject to Taiwan Enterprise Income Tax at 17% on taxable profits determined in accordance with the Income Tax Act and other relevant laws in Taiwan. (d) 17% (e) Bao Son Life Company Limited ( Bao Son Life ) and Hoan Loc Viet Duc Hoa Corporation ( HLV Duc Hoa ), indirect non-wholly-owned subsidiaries of the Company, are subject to Vietnam Corporate Income Tax at 25% and 20%, respectively, on taxable profits determined in accordance with the relevant laws and regulations in Vietnam. No provision for Vietnam Corporate Income Tax has been made as Bao Son Life has no assessable profits for the nine months ended 30 September 2014 (2013: RMBNil) and HLV Duc Hoa has accumulated tax losses brought forward which exceed the estimated taxable profits for the nine months ended 30 September 2014 (2013: RMB Nil). (e) Hoan Loc Viet Duc Hoa Corporation HLV Duc Hoa 25% 20% HLV Duc Hoa 5. EARNINGS/(LOSS) PER SHARE The calculation of the basic earnings/(loss) per share for the three months and nine months ended 30 September 2014 are based on the unaudited profit attributable to owners of the Company of RMB304,000 (2013: loss of RMB1,856,000) and profit of RMB1,672,000 (2013: loss of RMB9,231,000) respectively and on the weighted average number of 742,500,000 (2013: 742,500,000) and 742,500,000 (2013: 742,500,000) ordinary shares in issue during the periods. Diluted earnings per share is equal to basic earning per share as the impact of the share options had anti-dilutive effect on the basic earnings/(loss) per share during the periods. 6. DIVIDENDS The Directors do not recommend payment of any dividend for the nine months ended 30 September 2014 (2013: RMBNil). 5. 304,000 1,856,000 1,672,000 9,231,000 742,500,000 7 4 2, 5 0 0, 0 0 0 742,500,000 742,500,000 6. 中國生命集團有限公司第三季季度報告 2014 07
Management Discussion and Analysis Business review The PRC Funeral business in the PRC continues to be the driving force of the Group s operations. The Group s turnover derived from the PRC market was RMB47.9 million for the nine months ended 30 September 2014, representing a increase of 13.9% from the corresponding period last year, and accounted for 83.4% of the Group s turnover. Gross profit of the Group s core funeral services business in the PRC remained at a high level at approximately 80.8%. 業務回顧 中國 47,900,00013.9% 83.4% 80.8% In the PRC, the Group is principally engaged in provision of funeral, cremation and cemetery services in funeral parlours and funeral service centres under the Group s management, pursuant to respective management agreements entered into with the owners of funeral parlours and funeral service centres. Taiwan Turnover derived from the Taiwan market was RMB3.8 million for the nine months ended 30 September 2014, representing an increase of 64.4% from the corresponding period last year, and accounted for 6.6% of the Group s turnover. Hong Kong Turnover derived from the Hong Kong market was RMB1.6 million for the nine months ended 30 September 2014, representing an increase of 23.9% from the corresponding period last year, and accounted for 2.8% of the Group s turnover. In Taiwan and Hong Kong, the Group is principally engaged in the sales of funeral services deeds, which was accounted for by the Group as receipt in advance, and provides funeral arrangement services to funeral services Deed Holders and non-funeral services Deed Holders, which are accounted for by the Group as revenue. 台灣 3,800,000 64.4% 6.6% 香港 1,600,000 23.9% 2.8% Vietnam The Group s turnover derived from the sales of cemeteries in Vietnam was approximately RMB4.1 million for the nine months ended 30 September 2014 and accounted for 7.1% of the Group s turnover. 越南 4,100,000 7.1% 08 Sino-Life Group Limited Third Quarterly Report 2014
Financial review For the nine months ended 30 September 2014, the Group s turnover was approximately RMB57.5 million, representing an increase of 25.7% from approximately RMB45.7 million for the corresponding period of last year. The rise was mainly due to the increase in turnover of the Group s funeral services business in Chongqing, the PRC and the sales of cemeteries in Vietnam. 財務回顧 57,500,000 45,700,00025.7% Cost of sales for the nine months ended 30 September 2014 was approximately RMB14.0 million, rising by approximately 18.8% compared with the corresponding period in 2013. The increase in cost of sales was mainly attributable to the increase in the turnover of the Group s funeral services and sales of cemeteries. The other revenue and other net gain for the nine months ended 30 September 2014 was approximately RMB2.1 million compared with RMB3.2 million for the corresponding period in 2013. The decrease was mainly due to the decrease in bank interest income and net exchange gain for the nine months ended 30 September 2014 compared with the corresponding period of last year. Selling expenses for the nine months ended 30 September 2014 slightly decrease by approximately 0.03% to approximately RMB18.1 million as compared with the corresponding period in 2013. The decrease in the amount of selling expenses was mainly attributable to net effect of decrease in rental and management costs paid for the funeral parlours and funeral services centres under the Group s management and increase in commission expenses as the increase in the turnover for the period. 14,000,000 18.8% 2,100,000 3,200,000 0.03% 18,100,000 中國生命集團有限公司第三季季度報告 2014 09
Administrative expenses decreased by approximately 12.3% to approximately RMB24.2 million for the nine months ended 30 September 2014 as a result of enhancing the efforts in cost control of staff cost, entertainment expenses and rental expenses. The profit attributable to the owners of the Company for the nine months ended 30 September 2014 was approximately RMB1.7 million (2013: loss of approximately RMB9.2 million) as a result of the cumulative effect from the above-mentioned factors. The Group remained in a healthy and sound liquidity position as at 30 September 2014. As at 30 September 2014, the Group had no other material capital commitments, material contracts or significant investment plans, except those disclosed in the listing document. It is the Group s policy to adopt a prudent financial management strategy and maintain a suitable level of liquidity facilities to meet operation requirements and acquisition opportunities. The Group s debt to equity ratio, defined as the Group s net debt divided by shareholders fund, was nil. Contingent liabilities As at 30 September 2014, the Group did not have any significant contingent liabilities. 12.3%24,200,000 1,700,000 9,200,000 或然負債 10 Sino-Life Group Limited Third Quarterly Report 2014
Corporate Governance and Other Information Directors interests and short positions in shares, underlying shares and debentures of the Company or any associated corporations As at 30 September 2014, the relevant interests and short positions of the Directors or chief executive in the shares (the Shares ), underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) ( SFO )), which will be required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of SFO (including interests or short positions which they have taken or deemed to have taken under such provisions of SFO) or required pursuant to section 352 of SFO, to be entered in the register referred to therein or required, pursuant to rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by the Directors to be notified to the Company and the Stock Exchange were as follows: 571 XV XV 7 8 352 5.465.67 Aggregate long positions in the Shares 於股份之好倉總額 Name of Director Nature of interest Number of Shares held Approximate percentage of the issued share capital of the Company Liu Tien-Tsai Personal 308,184,000 41.51% 中國生命集團有限公司第三季季度報告 2014 11
Substantial shareholders interests and short positions in the Shares and underlying shares The register of substantial shareholders required to be kept under section 336 of Part XV of SFO showed that as at 30 September 2014, the Company was notified of the following substantial shareholders interests, being 5% or more of the issued share capital of the Company. These interests were in addition to those disclosed above in respect of the Directors and chief executive: 主要股東於股份及相關股份之權益及淡倉 XV336 5% Aggregate long positions in the Shares 於股份之好倉總額 Name of Shareholders Nature of interest Number of Shares held Approximate percentage of the issued share capital of the Company Yang YongSheng (note 1) Personal 36,632,000 4.93% Family interest 5,152,000 0.69% 1 Yu WenPing (note 1) Personal 5,152,000 0.69% Family interest 36,632,000 4.93% 1 Note: 1. Yu WenPing, the spouse of Yang YongSheng, was deemed to be interested in all the interest of Yang YongSheng and vice versa. 1. Competing business As at 30 September 2014, none of the Directors, or any person, who was (or group of persons who together were) entitled to exercise or control the exercise of 5% or more of the voting power at general meetings of the Company and which was (or were) able, as a practical matter, to direct or influence the management of the Company or any of their respective associates (as defined under the GEM Listing Rules), had any interest in a business, which competed or might compete with the business of the Group. 競爭業務 5% 12 Sino-Life Group Limited Third Quarterly Report 2014
Share Option Scheme Pursuant to the written resolutions of the shareholders of the Company dated 24 August 2009, a share option scheme ( Share Option Scheme ) was approved and adopted. Details of the share options granted and remaining outstanding as at 30 September 2014 are as follows: 購股權計劃 Name/category of participants Date of grant Exercise price per share Exercisable period Directors of the Company Mr. Kim Eun Back 16 January 2012 HK$0.60 16 January 2013 to 15 January 2017 0.60 Number of share options At 1 January 2014 Lapsed At 30 September 2014 2,000,000 2,000,000 Directors of subsidiaries Ms. Pan Hsiu-Ying 16 January 2012 HK$0.60 16 January 2013 to 15 January 2017 0.60 Ms. Chang Hui-Lan 16 January 2012 HK$0.60 16 January 2013 to 15 January 2017 0.60 Continuous contract employees 11 February 2010 HK$1.18 11 August 2010 to 11 February 2020 1.18 16 January 2012 HK$0.60 16 January 2013 to 15 January 2017 0.60 Consultants 11 February 2010 HK$1.18 11 August 2010 to 11 February 2020 1.18 1,000,000 1,000,000 1,000,000 1,000,000 10,172,000 (500,000) 9,672,000 6,480,000 (480,000) 6,000,000 41,900,000 41,900,000 62,552,000 (980,000) 61,752,000 中國生命集團有限公司第三季季度報告 2014 13
The options granted on 11 February 2010 expire ten years from the date of grant. As at 30 September 2014, 2,984,000 of 52,736,000 options were exercisable in the same year of the date of grant with 50% each of the options granted exercisable at six months and at the end of the year from the date of grant and 49,752,000 of 52,736,000 options are exercisable over five years from the date of grant, with 20% each of the options granted exercisable at six months and first calendar date following four years from the date of grant. The options granted on 16 January 2012 expire five years from the date of grant and will be exercisable after one year from the date of grant. Save as disclosed above, as at 30 September 2014, none of the Directors, chief executives or substantial shareholders of the Company or their respective associates have been granted share options under the Share Option Scheme. Purchase, Sale or Redemption of Securities During the nine months ended 30 September 2014, there was no purchase, sale or redemption by the Company, or any of its subsidiaries, of the listed securities of the Company. 52,736,000 2,984,000 50% 52,736,000 49,752,000 20% 14 Sino-Life Group Limited Third Quarterly Report 2014
Corporate Governance For nine months ended 30 September 2014 up to the date hereof, the Company had complied with the code provisions ( Code Provisions ) set out in the Corporate Governance Code (taking effect from 1 April 2012) as contained in Appendix 15 to the GEM Listing Rules, except for Code Provision A.2.1. Code Provision A.2.1 provides that the roles of the chairman and chief executive officer should be separate and should not be performed by the same individual. The positions of Chairman of the Board and Chief Executive Officer ( CEO ) of the Company are both currently carried on by Mr. Liu Tien-Tsai. The Board considers that the Group s size is still relatively small and thus not justified in separating the role of Chairman and CEO. The Group has in place internal control system to perform the check and balance function. The Board believes that having the same person performing the roles of both Chairman and CEO does provide the Group with strong and consistent leadership and that, operating in this manner allows for more effective and efficient overall strategic planning of the Group. Securities Transactions by Directors During the period under review, the Company has adopted the standards set out in Rules 5.48 to 5.67 of the GEM Listing Rules as the code of conduct regarding the Directors securities transactions in securities of the Company. Having made specific enquiry to all Directors, the Company was not aware of any non-compliance with the required standards of dealings as set out in its code of conduct regarding securities transactions by Directors. 15 A.2.1 A.2.1 5.48 5.67 中國生命集團有限公司第三季季度報告 2014 15
Audit Committee The Company has established an audit committee with written terms of reference in compliance with the GEM Listing Rules. The primary duties of the audit committee are to review and supervise the financial reporting process and internal control systems of the Group. The audit committee comprises three independent nonexecutive Directors, namely Mr. Ching Clement Yat-biu (chairman of the audit committee), Mr. Chai Chung Wai, and Mr. Lee Koon Hung. The audit committee has reviewed the financial statements of the Group for the nine months ended 30 September 2014 pursuant to the relevant provisions contained in the Code Provisions and was of the opinion that the preparation of such statements complied with applicable accounting standards and that adequate disclosure has been made in respect thereof. By order of the Board Sino-Life Group Limited Liu Tien-Tsai Chairman and Executive Director Hong Kong, 11 November 2014 As at the date hereof, the Board comprises Mr. Liu Tien-Tsai and Mr. Kim Eun Back being executive Directors of the Company; and Mr. Chai Chung Wai, Mr. Ching Clement Yat-biu, and Mr. Lee Koon Hung being independent non-executive Directors of the Company. 16 Sino-Life Group Limited Third Quarterly Report 2014