CLSA Premium sees income jump in H1 2023, as move to healthcare business pays off
CLSA Premium Limited (HKG:6877) today posted a set of solid results for the six months ended 30 June 2023 (the “2023 Interim Period”). The company returned to profit in the first half of 2023, as its shift to healthcare has apparently paid off.
The total income for the continuing operations of the Group increased by approximately 15 times to HK$143.01 million for the 2023 Interim Period from HK$8.54 million for the 2022 Interim Period.
The sales of goods for the continuing operations of the Group amounted to approximately HK$138.11 million for the 2023 Interim Period when compared with HK$7.60 million for the 2022 Interim Period, mainly driven by the expansion of the healthcare business of the Group in 2023.
The leveraged foreign exchange and other trading income for the continuing operations of the Group decreased by approximately 64% to HK$0.22 million for the 2023 Interim Period from HK$0.61 million for the 2022 Interim Period.
The other income for the continuing operations of the Group increased by approximately 13 times to HK$4.68 million for the 2023 Interim Period from HK$0.33 million for the 2022 Interim Period. The increase is mainly due to the increase in interest income from HK$0.18 million for the 2022 Interim Period to HK$4.68 million for the 2023 Interim Period.
The Group had a net profit for the continuing operations of HK$5.32 million for the 2023 Interim Period, compared with a net loss of HK$17.14 million for the 2022 Interim Period.
The Group has faced challenges in recent years due to the ongoing COVID-19 pandemic and unresolved legacy issues, which have negatively impacted the global economy and its business performance. In an effort to regain profitability and strengthen the Group’s financial standing, the management team has been working to seek out new opportunities.
Starting from 2022, the management has decided to (i) explore business opportunities in the healthcare industry, (ii) suspend the operation in New Zealand and Australia; and (iii) continue the cost reduction measures. These combined efforts have simultaneously increased the total revenue by more than 10 times and the Group recorded a profit again in the 2023 Interim Period.
In June 2022, CLSAP NZ returned its derivatives issuer licence to the Financial Markets Authority of New Zealand and it has returned all the clients’ money in the segregation account to the clients.
In November 2022, the Australian Financial Services Licence of CLSAP AU was cancelled by the Australian Securities and Investments Commission. CLSAP AU was in the process of returning the clients’ money and has not yet completed as at 30 June 2023. With the limited prospect for the Group’s remaining margin dealing and the bullion trading business in Hong Kong to obtain new clients and to improve its performance, the Board considered that the resources and effort deployed in the Margin Dealing Business could potentially be better utilized in the healthcare business, and has decided to suspend the operation of the Margin Dealing Business starting from June 2023. CLSAP HK was in the process of returning the clients’ money and has not yet completed as at 30 June 2023.
Regarding the Australian and New Zealand operation, as announced in 2022, the Group has suspended the operations due to regulatory and financial challenges in both countries. The suspension has significantly reduced the total operation costs by HK$6.8 million and HK$3.9 million for the Australian and New Zealand subsidiaries respectively for the 2023 Interim Period as compared with that for the 2022 Interim Period, contributing to a reduction of the related expense of the Group of approximately HK$10.9 million in the 2023 Interim Period.
After due consideration, the Group decided in April 2022 to pursue and commence the Healthcare Business and to monitor the on-going development of the pharmaceutical e-commerce business.
The aforementioned combined efforts have allowed the Group to significantly increase the total income and reduce the operating expenses (excluding healthcare business segment related expenses). As a result, the Group has a turnaround – from a loss before tax of HK$17.27 million in the 2022 Interim Period to a profit before tax of HK$6.86 million in the 2023 Interim Period.
The Company has been and is taking appropriate steps to resolve the issues causing its trading suspension and, in light of the complexity of the issues and amount of resources involved, has been in discussions with professional advisers to explore and consider opportunities and options available to the company in formulating a viable resumption plan to resolve the issues leading to the trading suspension and to address the matters set out in the Resumption Guidance.