The Group is mainly engaged in energy and natural resources (including precious metals) related projects, provision of loan financing and investment and management consultation services in the PRC and provision of advising on securities and securities dealing and brokerage services in Hong Kong.
The Group's loss attributable to shareholders for the year ended 31-03-2019 amounted to HKD 63.34 million. Basic loss per share was HKD 0.0401. No dividend declared. Turnover amounted to HKD 34.97 million, an increase of 13.6% over the same period last year, gross profit margin down 0.3% to 97.0%. (Announcement Date: 27 Jun 2019)
Business Review - For the year ended March 31, 2019
The Group’s main operating segments are investment in energy and natural resources (including precious metals) related projects, Money lending business and Financial services business as set out in note 5 to the consolidated results of the Company.
Investment in energy and natural resources (including precious metals) related projects
a. The Aohan Qi Mine
The Group maintains the Aohan Qi Mine in Inner Mongolia which is undergoing a period of smallscale operation and the Group renewed the mining permit of Aohan Qi gold mine on 19 April 2018, which will remain valid until 19 April 2021. The Group has also obtained the Safety Mining Permit* （安全生產許可証）for the mining in the Aohan Qi Mine until 23 February 2020.
b. Consultancy business in mining industry
The current business scope of the consultancy business in mining industry included mining exploration advice, technical advice, economic and information consultancy services. With the relevant experience in acquisition, exploitation and exploration in mining business and the relevant professional experts retained by the Group, the Group has commenced its mining consultancy business with the customers by utilising its internal professional experts since July 2018.
The mining consultancy services provided to customers include operation management, licence application, licence extension, exploration management, geological and technical field services, assisting in exploration auditing, business development, and other related technical services. For the year ended 31 March 2019, the Group recorded approximately HK$6.7 million revenue from the mining consultancy services.
To the best knowledge of the Directors, the PRC government is implementing an indirect supervision and establishing a self-disciplinary norm on the mining consulting industry. Besides, most of the small and medium-sized enterprises engaged in mineral business in the PRC have weak professional skills and insufficient understanding of the relevant regulatory requirements. There is an increasing demand from these enterprises seeking professional advice and technical support.
Meanwhile, the PRC government has strengthened its governance in environmental protection and implemented more strict standards and policies in relation to environmental protection. The small and medium-sized enterprises engaged in the mining business need guidance from professional expert in order to comply with the tight requirement from the PRC government. Therefore, the Directors are of the view that there will be an increasing demand in the professional mining consultancy services in coming future.
Money lending business
The Directors are of the view that the demand for the Group’s loan financing business is increasing as small and medium enterprises in Jilin, the PRC may need more funding to finance their daily working capitals. Therefore, the Company will adopt a more prudent lending policy to strengthen the control on credit risks. The Directors are of the view that, the increasing demand for the loan financing business in Jilin together with the more prudent lending policy and other precautions measure for the loan financing business, the financial results of the loan financing business will improve.
Base on the present economic situation in Jilin, the Directors are of the view that the loan financing business is optimistic given that the demand of micro-loan financing would increase and the Group could then focus solely on the recoverability of the loans. After the litigation with the state-owned enterprises in 2014, the Group changed its strategy to avoid releasing large amount of loans to a single ultimate owner and to ensure the diversity of the loan portfolio. The Group would also request each borrower to be guaranteed by a professional guarantee company in order to protect the Group’s interest in general. Owing to the tighten control on credit risk, the matured loans receivables which were overdue decreased from approximately HK$69.8 million as at 31 March 2018 to nil as at 31 March 2019.
Financial services business
SP Securities Limited (“SP Securities”) was a company licensed under Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (providing asset management) regulated activities. SP Securities was also participant and direct clearing participant of the Hong Kong Exchanges and Clearing Limited.
Owing to (i) the loss of staff in the advisory team and consequential loss of clientele; (ii) a significant drop in its business and revenue; and (iii) the continuing increase in the segmental loss of the financial services business, the Board had ceased the business of SP Securities since November 2018. SP Securities returned all the funds and assets held or managed on clients’ behalf to clients and terminated all relevant existing contracts between SP Securities and its clients in accordance with the relevant provisions of such contracts. All the licences of SP Securities was revoked in March 2019.
Business Outlook - For the year ended March 31, 2019
While keeping its existing business intact, the Group will from time to time review the business development outlook of its project companies and make appropriate adjustments to ensure that the Group can cope with the economic prospects.
Meanwhile, the Company will keep pace with the trends by proactively seeking opportunities to invest in business with greater returns for shareholders of the Company (the “Shareholders”).
Source: Sino Prosper Group (00766) Annual Results Announcement