CNR Announces Its Results for the Six Months Ended September 30, 2014

NEW YORK, NY--(Marketwired - Nov 26, 2014) - China Metro-Rural Holdings Limited (NYSE MKT: CNR) (the "Company") is pleased to announce its unaudited consolidated financial results of the Company and its subsidiaries (collectively the "Group") for the six months ended September 30, 2014. 

Major Events:

• Commencement of project in Zhoukou City, Henan Province of the PRC
  
  During the period, the Group has commenced a new project in Zhoukou City (the "Zhoukou Project") which is focused on agricultural logistics as well as urban rural migration re-development businesses. The planned site area of the Zhoukou Project is approximately 5.5 million square meters with corresponding maximum gross floor area of approximately 10 million square meters. The Group already entered into auctions and has acquired 414,192 square meters of land. The first phase of construction with total gross floor area of approximately 392,000 square meters has commenced. The official pre-sale is expected to commence on November 29, 2014.
  
  
• Acquisition of a hotel operation in Tieling City, Liaoning Province of the PRC
  
  During the period, the Group has acquired a hotel operation (the "Hotel") located at our Tieling Project at a consideration of RMB15,000,000 (approximately HK$18,860,000). The acquisition gave rise to goodwill of approximately HK$919,000. The Hotel has 168 rooms with a gross floor area of approximately 28,692 square meters. The Hotel is currently closed for minor renovations and repositioning and will be re-opened in 2015.
  
  
• Set up of a joint venture company
  
  During the period, the Group has set up a company which is inactive and pending for capital injection from the Company. As at September 30, 2014, the Group has a capital commitment of RMB11,608,000 (approximately HK$14,638,000) toward this company.
  
  

Financial Highlights:
The Group has two reportable operating segments, agricultural logistics business and rural-urban migration and city re-development business. Our agricultural logistics business is comprised of (1) development, sales and leasing properties of integrated agricultural logistics and trade centers and supporting facilities and (2) property management which engages in the management of developed properties within the logistics platforms. Our rural-urban migration and city re-development business is comprised of (1) servicing and assignments of development rights and (2) development and sales of residential, commercial and other auxiliary properties in new city center districts.

Agricultural Logistics Business

• Net revenue generated by the Group decreased from HK$152,471,000 for the six months ended September 30, 2013 to HK$43,405,000 for the six months ended September 30, 2014, representing a year-over-year decrease of 71.5%. The decrease was primarily due to lack of newly completed properties held for sale as they are still under construction during the current period.
• Sales of gross floor area decreased from 24,391 square meters for the six months ended September 30, 2013 to 10,025 square meters for the six months ended September 30, 2014, representing a year-over-year decrease of 58.9%. 
• Gross profit percentage increased from 35.2% for the six months ended September 30, 2013 to 41.3% for the six months ended September 30, 2014.
• Other income and losses, net were a loss of approximately HK$5,680,000 for the six months ended September 30, 2013. Other income and gains, net were approximately HK$81,526,000 for the six months ended September 30, 2014. Included in other income and gains/(losses), net, was a government subsidy of HK$9,744,000 (2013: HK$11,657,000) for the six months ended September 30, 2014, representing a year-over-year decrease of 16.4%, a gain of HK$71,660,000 (2013: a loss of HK$12,623,000) arising from fair value changes of derivative components of convertible bonds and warrants. Selling expenses decreased from HK$13,686,000 for the six months ended September 30, 2013 to HK$12,792,000 for the six months ended September 30, 2014, representing a year-over-year decrease of 6.5%.
• Administrative expenses increased from HK$49,211,000 for the six months ended September 30, 2013 to HK$53,442,000 for the six months ended September 30, 2014, representing a year-over-year increase of 8.6%.
• Finance income decreased from HK$19,943,000 for the six months ended September 30, 2013 to HK$7,198,000 for the six months ended September 30, 2014, representing a year-over-year decrease of 63.9%. Included in finance income was an interest income on other receivables of HK$6,601,000 (2013: HK$19,491,000) for the six months ended September 30, 2014, representing a year-over-year decrease of 66.1%.
• Income tax expenses increased from HK$20,099,000 for the six months ended September 30, 2013 to HK$22,738,000 for the six months ended September 30, 2014, representing a year-over-year increase of 13.1%. The effective tax rate decrease from 480.3% for the six months ended September 30, 2013 to 71.0% for the six months ended September 30, 2014. The income tax expenses for the six months ended September 30, 2014 included an additional PRC land appreciation tax of approximately HK$28,314,000 arising from our project in Dezhou City. The additional provision arose from the land appreciation tax clearance procedures conducted by the local tax bureau during the six months ended September 30, 2014. During this process, the local tax bureau took a different interpretation of the taxability and deductibility of certain items differently from that previously adopted by the Group, thus giving rise to this additional tax. As the interpretation of the taxability and deductibility of these items are highly subjective, the additional tax could only be confirmed upon completion of the tax clearance procedures.
• Net loss attributable to the equity holders of the Company was HK$20,584,000 for the six months ended September 30, 2013. Net profit attributable to equity holders of the Company was HK$13,477,000 for the six months ended September 30, 2014.

Rural-Urban Migration and City Re-Development Business

There were no results generated from this segment during the current and prior period.

ABOUT CHINA METRO-RURAL HOLDINGS LIMITED

China Metro-Rural Holdings Limited is a leading agricultural logistics platform development and rural-urban migration redevelopment company in China.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are, by their nature, subject to risks and uncertainties. This Act provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements, including statements regarding industry prospects and future results of operations or financial position, made in this press release are forward looking.

Words such as "anticipate", "believe", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would" and similar expressions may identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to: the Company's future performance, the Company's expansion efforts, the state of economic conditions, the Company's market and the governmental policy. These forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors the Company believes to be appropriate in particular circumstances. However, whether actual results and developments will meet the Company's expectations and predictions depends on a number of known and unknown risks and uncertainties and other factors, any or all of which could cause actual results, performance or achievements to differ materially from the Company's expectations, whether expressed or implied by such forward-looking statements.

CHINA METRO-RURAL HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED SEPTEMBER 30
			2014				2014				2013
			US$'000				HK$'000				HK$'000
			(Unaudited)				(Unaudited)				(Unaudited)
			(Note 2)
Revenue				5,565				43,405				152,471
Cost of sales				(3,265	)			(25,467	)			(98,802	)
Gross profit				2,300				17,938				53,669
Other income, net				1,302				10,157				12,072
Other gains/(losses), net				9,150				71,369				(17,752	)
Selling expenses				(1,640	)			(12,792	)			(13,686	)
Administrative expenses				(6,852	)			(53,442	)			(49,211	)
Operating profit/(loss)				4,260				33,230				(14,908	)
Finance income				923				7,198				19,943
Finance costs				(323	)			(2,519	)			-
Finance income -net				600				4,679				19,943
Share of losses of an associate				(752	)			(5,865	)			(850	)
Profit before income tax				4,108				32,044				4,185
Income tax expenses				(2,915	)			(22,738	)			(20,099	)
Profit/(loss) for the period				1,193				9,306				(15,914	)
Attributable to:
	Equity holders of the Company			1,728				13,477				(20,584	)
	Non-controlling interests			(535	)			(4,171	)			4,670
				1,193				9,306				(15,914	)
Profit/(loss) per share attributable to equity holders of the Company during the period
	Basic profit/(loss) per share		US$	0.02			HK$	0.18			HK$	(0.28	)
	Diluted loss per share		US$	(0.04	)		HK$	(0.33	)		HK$	(0.28	)

The accompanying notes are an integral part of this press release.

CHINA METRO-RURAL HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED SEPTEMBER 30
			2014			2014			2013
			US$'000			HK$'000			HK$'000
			(Unaudited)			(Unaudited)			(Unaudited)
			(Note 2)
Profit/(loss) for the period			1,193			9,306			(15,914	)
Other comprehensive income, net of tax:
Items that may be reclassified to income statement
	Exchange difference on translation of foreign operations		569			4,440			35,187
Total comprehensive income for the period			1,762			13,746			19,273
Total comprehensive (loss)/income for the period attributable to:
	Equity holders of the Company		2,274			17,737			12,875
	Non-controlling interests		(512	)		(3,991	)		6,398
			1,762			13,746			19,273

The accompanying notes are an integral part of this press release.

CHINA METRO-RURAL HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
			September 30,				March 31,
			2014		2014		2014
			US$'000		HK$'000		HK$'000
			(Unaudited)		(Unaudited)		(Unaudited)
			(Note 2)
Non-current assets
	Investment properties		78,233		610,214		608,909
	Property, plant and equipment		34,244		267,104		103,467
	Land use rights		16,237		126,645		77,560
	Goodwill		118		919		-
	Deposit for investment properties		1,617		12,610		12,583
	Deposit for acquisition of land use rights		16,426		128,121		127,847
	Interest in an associate		2,396		18,692		24,522
	Restricted and pledged bank deposits		1,778		13,871		13,842
	Deferred income tax assets		1,771		13,818		1,210
			152,820		1,191,994		969,940
Current assets
	Completed properties held for sale		48,193		375,904		396,136
	Properties under development		309,598		2,414,868		1,631,992
	Land use rights		23,422		182,689		184,809
	Deposit for acquisition of land use rights		61,329		478,370		664,493
	Trade and other receivables		34,012		265,295		313,388
	Restricted and pledged bank deposits		3,418		26,659		36,844
	Cash and cash equivalents		17,104		133,409		146,192
			497,076		3,877,194		3,373,854
Current liabilities
	Trade payables, other payables and accruals		131,756		1,027,698		587,519
	Receipt in advance		14,237		111,044		28,160
	Current income tax liabilities		40,395		315,081		325,351
	Derivative financial liabilities		30,847		240,608		312,267
	Bank and other borrowings		64,945		506,570		720,843
	Convertible bonds		49,786		388,330		-
			331,966		2,589,331		1,974,140
Net current assets			165,110		1,287,863		1,399,714
Total assets less current liabilities			317,930		2,479,857		2,369,654
Non-current liabilities
	Deferred income tax liabilities		11,476		89,514		89,323
	Bank and other borrowings		97,488		760,403		386,309
	Loans from a shareholder		8,333		65,000		-
	Convertible bonds		21,707		169,318		512,146
	Loan from a non-controlling interest of a subsidiary		7,539		58,800		58,800
			146,543		1,143,035		1,046,578
Net assets			171,387		1,336,822		1,323,076

The accompanying notes are an integral part of this press release.

CHINA METRO-RURAL HOLDINGS LIMITED
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION - (Continued)
			September 30,				March 31,
			2014		2014		2014
			US$'000		HK$'000		HK$'000
			(Unaudited)		(Unaudited)		(Unaudited)
			(Note 2)
Equity
Equity attributable to equity holders of the Company
	Share capital		73		573		573
	Reserves		167,637		1,307,572		1,289,835
			167,710		1,308,145		1,290,408
Non-controlling interests			3,677		28,677		32,668
Total equity			171,387		1,336,822		1,323,076

The accompanying notes are an integral part of this press release.

CHINA METRO-RURAL HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30
		2014			2014			2013
		US$'000			HK$'000			HK$'000
		(Unaudited)			(Unaudited)			(Unaudited)
		(Note 2)
Net cash used in operating activities		(12,180	)		(95,004	)		(434,395	)
Net cash used in investing activities		(9,469	)		(73,857	)		(1,853	)
Net cash generated from financing activities		19,958			155,675			302,663
Net decrease in cash and cash equivalents		(1,691	)		(13,186	)		(133,585	)
Cash and cash equivalents at beginning of the period		18,743			146,192			364,539
Effect of foreign exchange rate changes		52			403			4,846
Cash and cash equivalents at end of the period		17,104			133,409			235,800

The accompanying notes are an integral part of this press release.

CHINA METRO-RURAL HOLDINGS LIMITED 
NOTES TO UNAUDITED FINANCIAL INFORMATION

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The financial information presented herein have not been audited by an independent registered public accounting firm, but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of financial information. However, this information is not necessarily indicative of results of any other interim period or for the full fiscal year. The accounting policies and basis of preparation adopted in the preparation of the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of financial positions and condensed consolidated statement of cash flows (collectively the "Condensed Statements") are consistent with those used in the annual financial statements of the Group for the fiscal year ended March 31, 2014.

2. US DOLLAR EQUIVALENTS

The US dollar equivalents of the figures shown in the Condensed Statements are supplementary information and have been translated at HK$7.8 to US$1.0, representing the rate on September 30, 2014 for U.S. dollar in New York for cable transfers in Hong Kong dollars as certified for custom purposes by the Federal Reserve Bank of New York. Such translation should not be construed as representations that the Hong Kong dollar amounts represent, or have been or could be converted into, US dollar at that or any other rate.