CNR Announces Its Results for the Six Months ended September 30, 2015

NEW YORK, NY--(Marketwired - Nov 27, 2015) - China Metro-Rural Holdings Limited (the "Company") (NYSE MKT: CNR) 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, 2015. 

Major Events:

• Pre-sale in Zhoukou City, Henan Province of the PRC
  
  Following the completion and sale of certain trade centers from the first phase of our project located in Zhoukou City (the "Zhoukou Project") during the last fiscal year, the Group has commenced the pre-sale of certain trade centers with total gross floor area of approximately 141,000 square meters in October 2015. These pre-sales are expected to be completed and the corresponding trade centers are expected to be delivered within the next six to twelve months from September 30, 2015.
  
  
• Pre-sale in Hengyang City, Hunan Province of the PRC
  
  During the period, the Group has commenced the pre-sale of certain trade centers from our project located in Hengyang City (the "Hengyang Project") with total gross floor area of approximately 353,000 square meters. The first phase construction of the Hengyang Project consists of total gross floor area of approximately 504,000 square meters. As of September 30, 2015, the Group has successfully pre-sold gross floor area of approximately 97,000 square meters for the Hengyang Project. These pre-sales of the corresponding trade centers are expected to be completed and delivered within the next six to twelve months from September 30, 2015.
  
  

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$43,405,000 for the six months ended September 30, 2014 to HK$17,306,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 60.1%. 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 10,025 square meters for the six months ended September 30, 2014 to 2,131 square meters for the six months ended September 30, 2015, representing a year-over-year decrease of 78.7%. 
• Gross profit percentage decreased from 41.3% for the six months ended September 30, 2014 to 22.8% for the six months ended September 30, 2015.
• Other income and other gains/(losses), net were approximately HK$8,829,000 for the six months ended September 30, 2014. Other income and other gains/(losses), net were approximately HK$3,435,000 net loss for the six months ended September 30, 2015. Included in other income and gains/(losses), net, was mainly a government subsidy of HK$9,744,000 for the six months ended September 30, 2014 while there was no government subsidy for the six months ended September 30, 2015 and the loss in fair values of leasehold land and buildings of HK$4,033,000 for the six months ended September 30, 2015.
• Selling expenses decreased from HK$6,466,000 for the six months ended September 30, 2014 to HK$4,504,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 69.7%. The decrease was mainly due to the decrease in advertising activities as the Group is yet to launch its sales campaign for its properties that are still under construction during the current period.
• Administrative expenses increased from HK$37,014,000 for the six months ended September 30, 2014 to HK$43,242,000 for the six months ended September 30, 2015, representing a year-over-year increase of 16.8%. The increase was mainly attributable to the increase in impairment of trade and other receivables of HK$3,817,000.
• Finance income decreased from HK$6,900,000 for the six months ended September 30, 2014 to HK$88,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 98.7%. Included in finance income in the six months ended September 30, 2014 was mainly an interest income on other receivables of HK$6,601,000.
• Income tax expenses decreased from HK$26,323,000 for the six months ended September 30, 2014 to income tax credit of HK$884,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 103%. The effective tax rate decrease from 145.0% for the six months ended September 30, 2014 to -1.67% for the six months ended September 30, 2015. 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 from that previously adopted by the Group, thus giving rise to this additional tax. 
• Net loss attributable to the equity holders of the Company was HK$40,315,000 for the six months ended September 30, 2014. Net loss attributable to equity holders of the Company was HK$50,667,000 for the six months ended September 30, 2015.

Rural-Urban Migration and City Re-Development Business

• There was no revenue generated by the Group for the six months ended September 30, 2014 while net revenue generated by the Group was HK$43,910,000 for the six months ended September 30, 2015. The increase in sales was primarily due to the completion of a project at China Glorious City - Zhoukou.
• Sales of gross floor area were 5,343 square meters for the six months ended September 30, 2015. 
• Gross profit percentage for the six months ended September 30, 2015 was 55.5%.
• Other income and other gains/(losses), net were approximately HK$1,289,000 for the six months ended September 30, 2014. Other income and other gains/(losses), net were approximately HK$25,822,000 for the six months ended September 30, 2015. Included in other income and other gains/(losses), net, was mainly a government subsidy of HK$23,795,000 (2014: Nil) for the six months ended September 30, 2015.
• Selling expenses increased from HK$6,326,000 for the six months ended September 30, 2014 to HK$26,874,000 for the six months ended September 30, 2015, representing a year-over-year increase of 324.8%. The increase was mainly due to the increase in advertising, promotion and related expenses as a result of pre-sale campaigns in China Glorious City - Zhoukou and China Glorious City - Hengyang.
• Administrative expenses increased from HK$9,862,000 for the six months ended September 30, 2014 to HK$33,583,000 for the six months ended September 30, 2015, representing a year-over-year increase of 241.0%. The increase was mainly due to the increase in headcount as a result of expansion of operations.
• Finance income increased from HK$263,000 for the six months ended September 30, 2014 to HK$477,000 for the six months ended September 30, 2015, representing a year-over-year increase of 81.0%.
• Income tax expenses increased from income tax credit of HK$3,585,000 for the six months ended September 30, 2014 to income tax expenses of HK$5,123,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 242.9%. The effective tax rate decrease from negative 24.5% for the six months ended September 30, 2014 to negative 20.5% for the six months ended September 30, 2015. 
• Net loss attributable to the equity holders of the Company was HK$11,050,000 for the six months ended September 30, 2014. Net loss attributable to equity holders of the Company was HK$14,923,000 for the six months ended September 30, 2015.

Corporate

• Other income and gains, net were approximately HK$71,407,000 for the six months ended September 30, 2014. Other income and other gains/(losses), net were approximately HK$71,775,000 for the six months ended September 30, 2015. Included in other income and other gains/(losses), net was a gain of HK$67,944,000 (2014: HK$71,660,000) mainly arising from fair value changes of derivative components of convertible bonds and warrants.
• Administrative expenses decreased from HK$6,566,000 for the six months ended September 30, 2014 to HK$5,934,000 for the six months ended September 30, 2015, representing a year-over-year decrease of 9.6%.

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
			2015				2015				2014
			US$'000				HK$'000				HK$'000
			(Unaudited)				(Unaudited)				(Unaudited)
			(Note 2)
Revenue				7,848				61,216				43,405
Cost of sales				(4,219	)			(32,909	)			(25,467	)
Gross profit				3,629				28,307				17,938
Other income, net				3,156				24,614				10,157
Other gains, net				8,916				69,548				71,369
Selling expenses				(4,023	)			(31,378	)			(12,792	)
Administrative expenses				(10,610	)			(82,759	)			(53,442	)
Operating profit				1,068				8,332				33,230
Finance income				72				565				7,198
Finance costs				(404	)			(3,148	)			(2,519	)
Finance (cost)/income, net				(332	)			(2,583	)			4,679
Share of losses of an associate				(342	)			(2,673	)			(5,865	)
Profit before income tax				394				3,076				32,044
Income tax expenses				(543	)			(4,239	)			(22,738	)
(Loss)/profit for the period				(149	)			(1,163	)			9,306
Attributable to:
	Equity holders of the Company			33				253				13,477
	Non-controlling interests			(182	)			(1,416	)			(4,171	)
				(149	)			(1,163	)			9,306
(Loss)/profit per share attributable to equity holders of the Company during the period
	Basic profit per share		US$	0.00			HK$	0.00			HK$	0.18
	Diluted loss per share		US$	(0.05	)		HK$	(0.36	)		HK$	(0.33	)

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
			2015			2015			2014
			US$'000			HK$'000			HK$'000
			(Unaudited)			(Unaudited)			(Unaudited)
			(Note 2)
(Loss)/profit for the period			(149	)		(1,163	)		9,306
Other comprehensive income, net of tax:
Items that may be reclassified to income statement
	Exchange difference on translation of foreign operations		(11,854	)		(92,464	)		4,440
Total comprehensive (loss)/income for the period			(12,003	)		(93,627	)		13,746
Total comprehensive (loss)/income for the period attributable to:
	Equity holders of the Company		(11,375	)		(88,727	)		17,737
	Non-controlling interests		(628	)		(4,900	)		(3,991	)
			(12,003	)		(93,627	)		13,746

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,
			2015		2015		2015
			US$'000		HK$'000		HK$'000
			(Unaudited)		(Unaudited)		(Unaudited)
			(Note 2)
Non-current assets
	Investment properties		77,805		606,882		633,544
	Property, plant and equipment		35,974		280,598		312,560
	Land use rights		6,956		54,258		57,489
	Deposit for investment properties		1,559		12,160		12,694
	Goodwill		118		919		919
	Deposit for acquisition of land use rights		15,839		123,541		128,968
	Interest in an associate		1,121		8,741		11,840
	Interest in a joint venture		917		7,152		7,466
	Deferred income tax assets		2,635		20,553		9,777
			142,924		1,114,804		1,175,257
Current assets
	Completed properties held for sale		65,817		513,369		561,278
	Properties under development		415,115		3,237,897		2,708,802
	Land use rights		52,532		409,750		215,084
	Deposit for acquisition of land use rights		-		-		201,417
	Trade and other receivables		19,937		155,509		515,512
	Restricted and pledged bank deposits		5,960		46,483		150,640
	Cash and cash equivalents		80,179		625,398		402,675
			639,540		4,988,406		4,755,408
Current liabilities
	Trade payables, other payables and accruals		193,039		1,505,697		1,679,179
	Receipt in advance		92,120		718,537		63,618
	Current income tax liabilities		64,391		502,247		551,600
	Derivative financial liabilities		23,373		182,313		250,257
	Bank and other borrowings		103,634		808,346		621,695
	Convertible bonds		25,155		196,206		607,482
	Loans from a shareholder		8,333		65,000		-
			510,045		3,978,346		3,773,831
Net current assets			129,495		1,010,060		981,577
Total assets less current liabilities			272,419		2,124,864		2,156,834
Non-current liabilities
	Deferred income tax liabilities		11,740		91,569		95,592
	Bank and other borrowings		11,224		87,549		528,059
	Convertible bonds		60,409		471,190		-
	Loans from a shareholder		12,821		100,000		65,000
	Loan from a non-controlling interest of a subsidiary		7,538		58,800		58,800
			103,732		809,108		747,451
Net assets			168,687		1,315,756		1,409,383
Equity
Equity attributable to equity holders of the Company
	Share capital		73		573		573
	Reserves		165,789		1,293,149		1,381,877
			165,862		1,293,722		1,382,450
Non-controlling interests			2,825		22,034		26,933
Total equity			168,687		1,315,756		1,409,383

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
		2015				2015				2014
		US$'000				HK$'000				HK$'000
		(Unaudited)				(Unaudited)				(Unaudited)
		(Note 2)
Net cash generated from/(used in) operating activities		33,713				262,959				(95,004	)
Net cash used in investing activities		(48	)			(380	)			(73,857	)
Net cash (used in)/generated from financing activities		(1,673	)			(13,055	)			155,675
Net increase/(decrease) in cash and cash equivalents		31,992				249,524				(13,186	)
Cash and cash equivalents at beginning of the period		51,625				402,675				146,192
Effect of foreign exchange rate changes		(3,436	)			(26,801	)			403
Cash and cash equivalents at end of the period		80,181				625,398				133,409

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, 2015.

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, 2015 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.