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Legend Holdings Corporation Announces 2016 Interim Results Releases Strategic Investments Business Value Gradually, Net Profit amounted to RMB4.214 billion

(August 30, 2016)

EQS-News / 30/08/2016 / 18:24 UTC+8


(A joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock code: 3396.HK)

Legend Holdings Corporation Announces 2016 Interim Results

Releases Strategic Investments Business Value Gradually,
Net Profit amounted to RMB4.214 billion

Financial Highlights

Six months ended 30 June, 2016

- Revenue of the Company and its subsidiaries was RMB134.984 billion

- Consolidated Net Profit of the Company was RMB4.214 billion; Net profit attributable to equity holders of the Company was RMB2.584 billion

- Basic earnings per share were RMB1.10

(30 August, 2016 - Hong Kong) Legend Holdings Corporation ( the "Company" or "Legend Holdings"; stock code: 3396.HK) is pleased to announce the unaudited condensed consolidated interim results of the Company for the six months ended June 30, 2016 (the "Review Period"). For the six months ended June 30, 2016, Legend Holdings realized revenue of RMB134.984 billion, with net profits attributable to the Company's equity holders amounting to RMB2.584 billion, and basic earnings per share were RMB1.10.

With the unique and creative "Strategic investments + Financial investments" two-wheel-drive business model, Legend Holdings seizes domestic and overseas investment opportunities in the focus domain, and offers proactive value-added services to upgrade and unlock the value of the investment portfolio. In addition, the Company optimizes the debt structure to bring down long-term cost of capital; meanwhile, mid-term and long-term incentive scheme of the Company after listing attracts and encourages talents to create values for improvements of sustainable development, thereby fostering the achievement of the Company's strategic objectives.

"In the first half year of 2016, there remained considerable uncertainties over the global economy and geopolitical landscape. In China, structural reforms have advanced to a critical stage, and it brought short-term impact on the development of enterprises. In this context of our insight and understanding of Chinese economy and corporate management & operations for over 30 years, and complete allocation of financial investments for over 10 years, Legend Holdings' strategy focused on emerging economy drivers in financial services, healthcare services, agriculture and food and consumer innovations, and brought initiative to create own value, and strategic investments business was growing steadily with value releasing continually, while financial investments maintained to contribute profit." Mr. Zhu Linan, President of Legend Holdings, stated, "Looking forward, when it comes to value enhancement of strategic investments, we will step up our management and service support to invested businesses in line with the New Normal trend of China. We will help investees to seize the opportunities to grow into the outstanding enterprises in the industry, and achieve growth in both value and financial return; help investees which are more susceptible to the external environment further unearth their potential. As for certain businesses, we leave open the option of making adjustments through optimization; timely improve and fine-tune our debt structure, which effectively minimizes the cost of funding and in turn augment our profitability. As far as our financial investments are concerned, aside from continuing to allocate into emerging and innovative industries, we will also follow closely the capital markets and seize the right window to realize IPO or exits for our investees."

Strategic investments
Value Sustained Release in Focus Domain and Allocation of Overseas Quality Assets

During the Review Period, Legend Holdings has registered continuous growth in the strategic investments segments of financial services, modern services, modern food & agribusiness, and chemicals and energy materials, and the Company has also made outbound investments into quality assets from financial services and agriculture. Among them:

Out of our strategic investments, financial services segment continued its healthy development, represented by robust business growth of Zhengqi Financial and JC Finance & Leasing and constant profit growth of Lakala. Modern services segment further capitalized on the momentum of invested themes, with Bybo Dental expanding its national footprint smoothly, and the Company further expanded alongside initiatives in other private healthcare practices. CAR Inc. consolidated its leading position in China with contributing substantial net income. In modern food & agribusiness segment, improvements in profit-making and business synergy have been realized for the fruit business of Joyvio Golden Wing Mau. Funglian Group turned from deficit to profits. Meanwhile, chemicals and energy materials segment has witnessed significant growth in revenue and net profit.

Among the new investment projects, the Company has invested in Pension Insurance Corporation Group, UK's leading pension insurance company, pulling off allocation into quality financial assets overseas. The Company has also acquired KB Seafoods, Australia's leading seafood supply chain operator, working to build it into a leader in China's seafood industry by eyeing the Chinese market as its next stop.

IT?During the Review Period, the revenue was RMB125.234 billion. Lenovo continued to outperform the PC market through solid execution of its strategy and further solidified its number one position, with continuously increase market share. Its worldwide PC market share was 21.1% for quarter two, 2016, an increase of 0.4 percentage point year-on-year, according to preliminary industry estimates. Meanwhile, capturing the potential high growth opportunities of smart devices, Lenovo has announced the world's first augmented reality (AR) capable smart device P-HAB2 Pro, which demonstrates Lenovo's strong R&D capability. Through the business transformation of Mobile Business, products was cut back and operating profit margin increased. While the business in China was in the transformation plan, the rest of world continued to be stable or realized growth. Lenovo will pursue the efficient organization structure, coupled with the competitive cost structure across all of its business, and drive stronger innovation, more customer-centric products and experiences, in order to realize its business transformation and gradually deliver the planned benefits.

Financial Services?During the Review Period, the revenue was RMB 555 million. Legend Holdings has established a broad presence in the financial services business. Our subsidiaries or associates have obtained various financial licenses and permits. Based on a large pool of our portfolio and customer resources, we promote synergic development of our financial business. The net profits of financial services segment amounted RMB1,122 million, representing a growth of 78%. After development of more than 3 years, Zhengqi Financial has gradually become a cross-province SME financial services provider of considerable influence throughout China. In the first half of 2016, net profits of Zhengqi Financial increased approximately 143% to RMB578 million. Since JC Finance & Leasing established in November 2015, Lenovo's financial leasing business realized mutual growth and benefits. Lakala's profitability continued to grow. Leading business advantage of its symbiotic and integrated financial services platform, steady development of payment services and rapid growth of financial business combined to contribute to growing profits to Legend Holdings. In May 2016, Legend Holdings invested?111 million in PICG, whose subsidiary Pension Insurance Corporation is one of the leading pension insurance companies in Britain, representing 5.44% of the total share capital issued by PICG. Being optimistic in the development of the global pension insurance market in the long run, Legend Holdings will continue to look for quality overseas financial assets.

Modern Services: During the Review Period, the revenue was RMB941 million. Bybo Dental continued to accelerate its network consolidation and paid attention to development of business scale and medical technology. As of 30 June, 2016, it has opened 180 hospitals and clinics, representing a year-on-year increase of 89.5%. The number of dental chairs increased 201% to 2,290, and the number of dentists increased 39.0% to 934. CAR completed a series of shareholding reorganization and organizational structure changes to further enhance and comb business collaboration between traditional car rental business and Internet innovative business, so as to better capture the emerging growth opportunities. The net profit increased 160.9% to 1,062 million, the total number of fleet increased 17.7% to 99,727. Until now, CAR had 764 directly operating service outlets in 93 cities of all provinces in China, the number of "CAR quasi-new" shops that sell used cars through a B2C platform increased to 14.

Modern Food & Agribusiness?During the Review Period, the revenue was RMB1,225 million. Modern food & agribusiness segment kept finding significant investment opportunities around the circumstances among upgrading of consumer products, innovative model, industrial integration and overseas resources, to realize great growth with 33.2% and achieve overall profitability Through integration with distribution channels of Golden Wing Mau, the business performance of Joyvio Group was significantly enhanced with more balanced capability in different segments of supply chain. Joyvio Golden Wing Mau has become the country's largest industrially integrated fruit company. Through systematic integration with supply chain premium resources in China including the largest domestic planting bases of blueberries and kiwifruits, the largest supermarket supplier, Chile's premium fruit planting bases, Joyvio Golden Wing Mau has developed its unique "triple model". During the production season in 2016, blueberry production set record with an increase of 30%. The average price rose by 15%, output rate of fresh fruit outperformed the sector's average by more than 90%. Meanwhile, the Company optimized sales structure and improved capital structure of Funglian Group. During the Review Period, Funglian Group turned from deficit to profits. As of the end of June, 2016, we made a new controlling investment in KB Food which holds 100% equity of KB Seafoods, the largest seafood ingredient supplier in Australia. KB Seafoods cooperates with more than 500 suppliers in the world and successfully created the "global resources + Australian consumption" business model. Post-investment integration with the original business went smoothly, and we aims to successfully build the business model of "Global Resources + Chinese Consumption" in the future and help KB Food to develop into a leader of the PRC's seafood industry by leveraging on the resources and experience accumulated by KB Seafoods.

Property?During the Review Period, the revenue was RMB4.487 billion. There was a significant growth both in the contracted sales area and sales outstanding of Raycom Real Estate, our subsidiary. Raycom successfully issued public offering bonds amounting to RMB2.5 billion on May 31, 2016. Under interest expense significantly reduced, the bonds changed Raycom's debt sources and term structure, which laid a foundation for further development.

Chemicals and energy materials?During the Review Period, the revenue was RMB2,568 million. For supporting better independent development, the Company executed debt-to-equity swap to our subsidiary, Levima Group, so as to optimize its capital structure. From the perspective of business, new material business in Levima Group demonstrated a high profitability through continual improvement in its management level of production and operation of devices such as DMTO. Phylion Battery completed a new round of financing, and seized the opportunity from the rapid growth in the product market with its profitability significantly improved. The sales volume of lithium-ion batteries for all-electric delivery vehicles of in the first half of this year has already exceeded that of last year, and Phylion Battery's overseas sales revenue increased by 51% with the corresponding period of last year. The net profit of chemicals and energy materials segment reached RMB129 million, and the revenue of the segment achieved a significant year-on-year increase of 283%.

Financial Investments
Build the Whole Life Cycle of Value Chain and Continue to Create Investment Return

During the Review Period, great changes happened on capital market circumstances as compared with the corresponding period of last year, which effected fund portfolio and distribution of income, the investment income and gains of the Company's financial investments segment was RMB415 million, and the net profit was RMB832 million. Legend Holdings is a pioneer in China's alternative investment sector, seeking to capture investment opportunities at various stages of a company's development through angel investment, venture capital and private equity investment, and other investments, and new fund raising programs were also well underway. With the characteristics and advantages of financial investments business, Legend Holdings sought synergies and share resources with strategic investments business and among each investment arms, and continued to provide the Company with continuous growth in financial return and value. Meanwhile, through Legend Star, Legend Capital and Hony Capital, the Company had access to numerous investment opportunities, and was able to build a wider network in the investment community, expand information sources, capture more investment opportunities and diversify investment risk.

Legend Capital
(venture capital)
During the Review Period, Legend Capital managed 16 phases of USD and RMB funds in total, and the size of new funds amounted to RMB3.3 billion. Major investments include Chinese enterprises and cross-border opportunities at the start-up stage and growing stage of TMT and innovative consumption, modern services, healthcare, culture and sports sectors. During the Review Period, it completed 27 new project investments, and Legend Capital fully or partial exited 10 projects, another 2 enterprises were listed on the NEEQS.

As of June 30, 2016, 37 of Legend Capital's portfolio companies have been successfully listed and another 7 were listed on the NEEQS. Legend Capital exited from the projects with an average internal rate of return ranging from 35% to 40%.
Hony Capital
(private equity investment)
During the Review Period, Hony Capital managed 10 equity investment funds and mezzanine funds in total, Hony Capital raised equity investment funds with a size of USD2.2 billion. Hony Capital's PE funds focus on SOE reforms, development of private enterprises and cross-border mergers and acquisitions. It persistently carries out investment practice with specific industry focuses in consumption, services, healthcare, advanced manufacturing and mobile internet.
Hony PE funds completed 4 new projects or additional investment on existing projects, covering start-up stage and growing stage in enterprises in healthcare, TMT and culture& media and so on. Hony mezzanine funds completed 3 investments. During the Review Period, Hony PE funds fully or partially exited 5 projects, and 2 of its portfolio companies conducted IPO in domestic and international capital markets.

As of June 30, 2016, 35 of Hony's portfolio companies have been successfully listed onshore or offshore (including PIPE investment) and another 3 are listed on NEEQS. Hony Capital has fully withdrawn from its investments in 33 companies. The mid-points of internal rate of return of such investments are more than 20%.
Legend Star
(angel investment)
During the Review Period, Legend Star managed approximately RMB1.5 billion. By systematically deploying in three major areas, namely TMT, healthcare and intelligent machines, Legend Star provided investment enterprises with high value-added services and helped them grow rapidly. Legend Star has accumulatively invested in over 150 projects. In the first half of 2016, there were 23 new investment projects, of which 19 have finished another round of financing.

Looking forward, Mr. Liu Chuanzhi, Chairman of Legend Holdings, stated, "In the process of economic structure transition in China, the government, business and public are all looking for and tapping into drivers to fuel the country's economy into the future. We believe that consumption and services in general are gradually becoming new engines of growth in China. Legend Holdings will maintain the two-wheel-drive business model and focus on own strategic field, and continue to allocate and adjust business structure with the changes and trends of global economy, in order to promote the realization of the corporate strategy, further strive to build a diversified investment portfolio with sustained value growth."

- END -

Document title: Legend Holdings Corporation Announces 2016 Interim Results Releases Strategic Investments Business Value Gradually, Net Profit amounted to RMB4.214 billion

Key word(s): Quarter Results

30/08/2016 Dissemination of a Press Release, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.

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