Financial Performance - The company's revenue for the fiscal year ended December 31, 2022, was RMB 27.338 million, a decrease of approximately 36% compared to RMB 42.896 million in 2021[4] - Net profit for the year was RMB 14.596 million, down about 42% from RMB 25.363 million in the previous year[4] - Total revenue for the year ended December 31, 2022, was approximately RMB 27.3 million, a decrease of 36% from approximately RMB 42.9 million for the year ended December 31, 2021[19] - The auction segment reported a revenue of RMB 0.3 million, a decrease of 73% from RMB 1.1 million in the previous year, resulting in a loss of RMB 1.1 million compared to a loss of RMB 0.7 million in 2021[16] - The total comprehensive income for the year decreased by approximately RMB 10.8 million or 43% to approximately RMB 14.5 million for the year ended December 31, 2022[27] - The pre-tax profit decreased by approximately RMB 13.2 million or 38% to approximately RMB 21.9 million for the year ended December 31, 2022, compared to approximately RMB 35.1 million in 2021[25] - The revenue for He Xin Pawnshop decreased to RMB 26,998,000 in 2022 from RMB 41,829,000 in 2021, representing a decline of approximately 35.5%[175] - The profit for He Xin Pawnshop also fell to RMB 20,808,000 in 2022, down from RMB 28,210,000 in 2021, a decrease of about 26.3%[175] - He Xin Auction's revenue dropped to RMB 340,000 in 2022 from RMB 1,067,000 in 2021, marking a decline of around 68.2%[175] - The profit for He Xin Auction decreased to RMB 194,000 in 2022 from RMB 904,000 in 2021, a decline of approximately 78.6%[175] Assets and Liabilities - Total assets as of December 31, 2022, amounted to RMB 1,108.546 million, a slight increase from RMB 1,093.064 million in 2021[4] - The company's loan receivables increased to RMB 493.489 million from RMB 370.538 million in 2021, reflecting a growth of approximately 33%[4] - The total amount of new loans secured by art as collateral for the year ended December 31, 2022, was RMB 775.7 million, an increase from RMB 715.2 million in 2021[15] - The number of new loans issued for art collateral decreased to 85 in 2022 from 92 in 2021, with a renewal rate of new loans at 55% compared to 75% in the previous year[15] - The current ratio as of December 31, 2022, was 75.4 times, compared to 80.4 times in 2021[28] - The asset-liability ratio was 0.7% as of December 31, 2022, compared to 0.6% in 2021[31] Risk Management - The company maintained a conservative approach in granting loans due to the ongoing impact of the COVID-19 pandemic and global financial market instability[11] - The company has implemented a multi-layer internal approval system and effective risk management protocols to mitigate risks in its pawn business[12] - Due to the COVID-19 pandemic, the company anticipates an increase in loan risks and aims to minimize credit risk while ensuring capital safety in its pawn loan business[49] - The company has a strong focus on risk management and internal controls, leveraging the experience of its founder who has over 15 years in the banking industry[53] Corporate Governance - The company has a commitment to maintaining high standards of corporate governance, as evidenced by the composition of its board and committees[58] - The board of directors held nine meetings during the reporting year, with attendance rates as follows: Chairman Mr. Fan Zhijun 9/9, Mr. Li Cheng 7/7, Mr. Chen Yunwei 5/9, Mr. Liang Shuxin 6/9, and Ms. Yin Xuhong 7/9[73] - The company has adopted the standard code of conduct for securities trading as per the listing rules, confirming compliance by all directors during the reporting year[70] - The board is responsible for overseeing the group's business, decision-making, and operational performance, delegating authority to management for execution[71] - The company has maintained at least three independent non-executive directors, constituting over one-third of the board, ensuring compliance with listing rules[74] - The company’s internal control and risk management policies are overseen by the internal control director and risk control director, ensuring effective governance[65][66] - The company has established various committees, including the audit committee, remuneration committee, nomination committee, and risk management committee, to enhance governance[71] - The independent non-executive directors have confirmed their independence in accordance with the listing rules, maintaining governance integrity[74] Strategic Goals and Future Plans - The company aims to leverage its unique advantages to become the largest comprehensive art financial service provider in China[9] - The company plans to utilize the unallocated net proceeds from the initial public offering entirely for buying and selling artworks by December 2023[45] - The company expects to generate profits through the difference between acquisition prices and selling prices of artworks, as well as auction commissions from future sales[50] - The company remains vigilant and adaptable in the face of ongoing economic and geopolitical challenges, focusing on long-term goals for future success[47] Employee and Management - The management team includes experienced professionals with backgrounds in finance, law, and human resources, enhancing the company's operational capabilities[57][59][61] - The management team has a diverse educational background, with qualifications in accounting, business administration, and law, supporting the company's strategic initiatives[55][59][62] - The company has a competitive compensation package for employees, including contributions to various social security funds[155] - The company’s employee retirement benefits details are included in the financial statements[157] Shareholder Information - The company reported a significant shareholding by Mr. Fan Zhijun, holding approximately 59.64% of the shares[141] - The largest customer accounted for approximately 5.9% of the group's revenue for the year ended December 31, 2022, compared to 5.7% in 2021[153] - The top five customers collectively contributed about 22.7% of the group's revenue for the year ended December 31, 2022, up from 19.8% in 2021[153] - The largest supplier represented approximately 15.8% of the group's total procurement for the year ended December 31, 2022, consistent with 2021[153] - The top five suppliers accounted for about 40.2% of the group's total procurement for the year ended December 31, 2022, down from 42.6% in 2021[153] Contractual Arrangements - The company operates through contractual arrangements to control its Chinese operating entities, ensuring effective control over financial and operational policies[168] - The company has received legal opinions confirming that its contractual arrangements are valid and enforceable under current Chinese law[169] - The structural contracts for He Xin Pawnshop and He Xin Auction were established on April 15, 2016, with supplementary agreements made on October 24, 2016[176] - The agreement includes provisions for the foreign-invested enterprise to appoint or remove directors and senior management of He Xin Pawnshop[185] - The foreign-invested enterprise has the right to exercise options for acquiring He Xin Pawnshop's equity and assets, potentially making it a wholly-owned subsidiary[186] Compliance and Legal Matters - Compliance risk is monitored continuously, ensuring adherence to local and overseas laws and regulations affecting the company's operations[110] - The company has arranged for directors and officers liability insurance during the year to protect its executives[112] - The company’s legal department will handle compliance matters and government inquiries, reporting regularly to the board[199] - The company’s internal monitoring department will review compliance with the conditions of the contractual arrangements regularly[199]

Revenue and Profit Performance - The revenue for the six months ended June 30, 2022, decreased by approximately 4.6% to about RMB 200 million compared to the same period last year, primarily due to a reduction in average loan balances in the art and asset pawn loan segment and decreased auction service revenue[28]. - The pawn loan segment generated revenue of approximately RMB 199 million, a decrease of about 4.1% from RMB 207 million in the same period last year, while the segment's profit increased by approximately 4.1% to RMB 212 million[23]. - The art auction segment recorded revenue of approximately RMB 61,000, a significant decrease of about 64.5% from RMB 172,000 in the previous year, resulting in a loss of approximately RMB 392,000[24]. - The profit for the period increased by approximately 1.9% to about RMB 141 million for the six months ended June 30, 2022[36]. - The pre-tax profit for the review period increased by approximately 4.3% to about RMB 200 million, mainly due to an increase in the reversal of impairment losses and a decrease in administrative expenses[34]. - The company reported a net profit attributable to the owners of the company increased to RMB 14,050,000, representing a growth of 1.9% compared to RMB 13,782,000 in the previous year[101]. - The company's profit for the six months ended June 30, 2022, was RMB 14,050,000, compared to RMB 13,782,000 for the same period in 2021, representing an increase of approximately 1.94%[165]. Cash Flow and Financial Position - The net cash generated from operating activities for the six months ended June 30, 2022, was RMB 139.2 million, compared to RMB 80.2 million in the same period of 2021[39]. - As of June 30, 2022, the total cash and bank balances amounted to approximately RMB 859.1 million, an increase of 19.8% from RMB 717.1 million as of December 31, 2021[39]. - The company reported a net cash increase of RMB 142,021,000 for the period, compared to RMB 85,607,000 in the previous year[108]. - The company’s total comprehensive income for the period was RMB 14,110,000, compared to RMB 13,759,000 in the previous year[101]. - The total assets as of June 30, 2022, amounted to RMB 1,105,901,000, an increase from RMB 1,093,064,000 as of December 31, 2021[140]. - The total liabilities as of June 30, 2022, were RMB 12,682,000, a decrease from RMB 13,955,000 as of December 31, 2021, indicating a reduction of about 9.2%[140]. Expenses and Cost Management - Administrative expenses decreased by approximately 39.7% to about RMB 24 million, primarily due to reduced employee costs and professional fees[32]. - Total employee costs for the period were RMB 1,443,000, a decrease from RMB 2,458,000 in the previous year, indicating a reduction of about 41.2%[165]. - Total remuneration for key management personnel was RMB 688,000 for the six months ended June 30, 2022, down from RMB 1,491,000 in 2021, reflecting a decrease of 53.92%[189]. - Salary and other benefits for key management personnel were RMB 656,000 for the six months ended June 30, 2022, compared to RMB 1,455,000 in 2021, showing a decline of 54.91%[189]. Shareholder and Ownership Structure - The company reported a total of 1,000,768,000 shares held, representing approximately 59.64% of the total issued share capital[63]. - The major shareholder, Hanxin Investment, holds 1,000,768,000 shares, which also accounts for 59.64% of the total issued share capital[68]. - The company has a significant concentration of ownership, with key individuals controlling 1,000,768,000 shares, representing 59.64% of the total issued share capital[74]. - The report indicates that the company has no other individuals or entities holding 5% or more of the shares as of June 30, 2022[77]. - The ownership structure shows that Hanxin Investment is owned 69.5% by Jinsand Investment, which is further controlled by Diyi Investment at 74.1%[73]. Corporate Governance and Compliance - The company has complied with the corporate governance code as set out in Appendix 14 of the Listing Rules during the six months ended June 30, 2022[92]. - The audit committee reviewed the unaudited condensed consolidated interim financial statements for the six months ended June 30, 2022, and found no objections to the accounting treatments adopted by the company[85]. - The company has established contractual arrangements to control its Chinese operating entities, ensuring effective control over financial and operational policies[96]. - The company has appointed legal advisors to review the contractual arrangements, confirming their validity and enforceability under current Chinese law[97]. Market Environment and Future Outlook - The business environment for 2022 is expected to be challenging due to the COVID-19 pandemic and geopolitical tensions, impacting the company's growth prospects[55]. - The company plans to allocate the unutilized net proceeds from the IPO primarily towards art trading, with a total of HKD 192.2 million (approximately RMB 172.5 million) designated for this purpose[54]. Changes in Management - The company has undergone a leadership change, with Lin Xiaomei resigning as executive director and being appointed as CEO on March 23, 2022[91]. Dividend and Share Options - The company did not recommend the payment of an interim dividend for the six months ended June 30, 2022, consistent with 2021, where no dividend was paid[88]. - All stock options granted under the stock option plan have expired during the review period, totaling 79,000,000 options granted[81].

Financial Performance - For the fiscal year ending December 31, 2021, the company's revenue was RMB 42.896 million, a decrease of 24.4% from RMB 56.736 million in 2020[9] - The net profit for the year was RMB 25.363 million, down 42.2% from RMB 43.901 million in the previous year[9] - Total assets amounted to RMB 1,093.064 million, a decline of 5.5% compared to RMB 1,157.134 million in 2020[9] - Cash and bank balances were RMB 717.053 million, down 13.4% from RMB 827.661 million in 2020[9] - The total liabilities decreased significantly to RMB 13.955 million, down 86.5% from RMB 103.311 million in 2020[9] - The total revenue for the year ended December 31, 2021, was approximately RMB 42.9 million, a decrease of 24% from RMB 56.7 million in the previous year[28] - Operating expenses decreased by approximately RMB 0.8 million or 24% to RMB 2.5 million for the year ended December 31, 2021[29] - The pre-tax profit decreased by approximately RMB 22.6 million or 39% to about RMB 35.1 million for the year ended December 31, 2021[34] - The total comprehensive income for the year decreased by approximately RMB 18.7 million or 43% to about RMB 25.3 million[36] - As of December 31, 2021, the net cash flow from operating activities was negative RMB 25.5 million, compared to positive RMB 232.4 million in the previous year[40] Art and Asset Auction Segment - The art and asset auction segment generated revenue of RMB 1.1 million, a 100% increase from the previous year[20] - The art and asset auction segment reported a loss of RMB 0.7 million, compared to a profit of approximately RMB 3.6 million in the previous year[20] Art and Asset Pawn Business - The revenue from the art and asset pawn business was approximately RMB 41.8 million, a decrease of about 22% from RMB 53.6 million last year[21] - The profit from the art and asset pawn segment was RMB 36.3 million, down approximately 28% from RMB 50.3 million last year[21] - The total amount of new loans issued for art pawns was RMB 715.2 million, a decrease from RMB 756 million in the previous year[23] - The number of new loans issued for art pawns was 92, down from 113 in the previous year[23] - The average initial loan period decreased to 31 days from 45 days in the previous year[23] Strategic Goals and Market Position - The company aims to leverage its resources and networks in the art market to strengthen relationships with collectors and business partners[17] - The company is committed to becoming the largest integrated service provider in China's art finance market, driving rapid development in the sector[17] - The company expects loan risks to rise in 2022 and aims to minimize credit risk to ensure capital safety[62] - The company aims to generate profits through the difference between acquisition and selling prices, as well as auction commissions[63] - The company plans to leverage its expertise in art evaluation to enhance its service offerings and attract more clients in the high-end market[68] - The company aims to increase its market share through strategic partnerships and potential acquisitions in the art finance sector[70] - The management has set ambitious performance targets for the upcoming fiscal year, aiming for a revenue growth of over 20%[70] Technological Advancements and New Products - Future outlook includes a commitment to technological advancements in the auction process to improve efficiency and user experience[70] - New product development includes the launch of a digital art trading platform, expected to enhance user engagement and drive additional revenue streams[83] - The company has invested approximately HKD 50 million in research and development for new technologies aimed at improving operational efficiency[83] Governance and Compliance - The company has complied with corporate governance codes, ensuring a balanced structure with three executive directors and three independent non-executive directors[86] - The company has established compliance procedures to ensure adherence to environmental laws that significantly impact operations[152] - The company has arranged for directors and officers liability insurance to protect its executives from potential legal claims[138] - The company confirms that its shares have sufficient public float as of the report date[140] - The board of directors is responsible for preparing the financial statements and ensuring a fair and comprehensive review of the company's performance and outlook[126] Risk Management - The company emphasizes the importance of risk management in its operational strategy to ensure sustainable growth[67] - The company plans to implement a new risk management framework to better address potential market fluctuations and enhance overall financial stability[83] - The company has established multiple risk management procedures and guidelines to ensure effective internal controls, including regular assessments of potential risks across various departments[119] Shareholder Information - As of December 31, 2021, Mr. Fan Zhijun holds 1,000,768,000 shares, representing 59.64% of the total shares[181] - The company has significant ownership structures, with Hanxin Investment holding 69.5% of Jinsha Investment, which in turn is controlled by Fifth Investment at 74.1%[200] - The total equity interests of major shareholders include Zhang Xiaoxing, who holds 1,000,768,000 shares (59.64%) as a spouse of Mr. Fan[196] - The ownership percentages indicate a stable governance structure, with major shareholders holding over 5% of the equity[196] Market Risks - The company faces significant market risks due to its reliance on the Chinese economy and the art pawn loan and auction market, which could impact financial performance[135] - Compliance risks are monitored continuously to ensure adherence to local and overseas laws and regulations affecting the company's operations[136]

Financial Performance - For the six months ended June 30, 2021, the company's revenue decreased by approximately 19.4% to about RMB 20.9 million compared to the same period last year[26]. - The revenue from the pawn loan segment was approximately RMB 20.7 million, a decrease of about 16.2% from RMB 24.7 million in the previous year[22]. - The company's profit for the period was approximately RMB 13.8 million, down about 18.6% from the same period last year[29]. - Other income decreased by approximately 65.7% to about RMB 1.5 million, primarily due to the absence of interest income from art auction financing clients[26]. - The company reported a pre-tax profit of approximately RMB 19.2 million, a decrease of about 19.8% compared to the previous year[29]. - The pawn loan segment generated a profit of approximately RMB 20.4 million, down about 16.4% from RMB 24.4 million in the previous year[22]. - Total revenue for the six months ended June 30, 2021, was RMB 20,746 thousand, a decrease of 16.4% compared to RMB 24,672 thousand for the same period in 2020[85]. - The net profit attributable to the owners of the company for the same period was RMB 13,782 thousand, down 18.3% from RMB 16,927 thousand in 2020[85]. - The profit before tax for the six months ended June 30, 2021, was RMB 19,151,000, compared to RMB 23,877,000 for the same period in 2020, reflecting a decline of 19.5%[105]. - The segment profit for the pawn business was RMB 20,384,000, while the auction business generated a profit of RMB 8,000, indicating a significant contribution from the pawn segment[105]. Cash Flow and Financial Position - For the six months ended June 30, 2021, the net cash generated from operating activities was RMB 80.2 million, a decrease of 51.9% compared to RMB 166.7 million in the same period of 2020[32]. - As of June 30, 2021, the total bank balance and cash amounted to approximately RMB 913.3 million, an increase of 10.3% from RMB 827.7 million as of December 31, 2020, primarily due to a decrease in receivables[32]. - The net cash increase for cash and cash equivalents was RMB 85,607 thousand, compared to RMB 171,154 thousand for the same period in 2020, indicating a significant decline[91]. - The cash and cash equivalents at the end of the period amounted to RMB 913,265 thousand, up from RMB 759,272 thousand at the end of June 30, 2020[91]. - The company maintained a strong financial position, primarily funding operations through internally generated cash flows[31]. Operational Highlights - The company introduced a new service for art and asset sales, which is expected to generate additional brokerage income in the future[23]. - The company implemented a multi-layer internal approval system and effective risk management to mitigate risks in the pawn loan business, achieving no defaults in the first half of 2021[22]. - The company has established contractual arrangements to maintain effective control over its operations in China, ensuring compliance with local laws and regulations[81]. - The company has received legal opinions confirming that its contractual arrangements are valid and enforceable under current Chinese law[82]. - The company plans to continue exploring opportunities for market expansion and potential acquisitions in the future[81]. Shareholder Structure - As of June 30, 2021, the company has a significant shareholder, Fan Zhijun, who holds 1,000,768,000 shares, representing approximately 59.64% of the total issued share capital[44]. - The shares held by Hanxin Investment Limited, which is controlled by Fan Zhijun, also account for 1,000,768,000 shares, maintaining the same percentage of 59.64%[50]. - The ownership structure shows that Hanxin Investment is 69.5% owned by Jinsand Investment, which in turn is 74.1% owned by Ziyu Investment, ultimately controlled by Fan Zhijun and his family[45]. - The company has a total of 1,000,768,000 shares under the beneficial ownership of major shareholders, indicating a strong concentration of ownership[58]. - The company’s major shareholders, including Fan Zhijun and his family, collectively control approximately 59.64% of the company's issued share capital[58]. - The company has established a confirmation letter for joint action among major shareholders, ensuring unified decision-making on significant business matters[47]. Governance and Compliance - The company has complied with the corporate governance code provisions since April 14, 2021, following the appointment of a new CEO[78]. - The company has maintained compliance with the corporate governance code, except for the separation of roles between the chairman and CEO until April 14, 2021[77]. - The audit committee reviewed the unaudited condensed consolidated interim financial statements for the six months ended June 30, 2021, and found no discrepancies in the accounting treatments adopted by the company[66]. - The company has not entered into any arrangements that would grant directors rights to subscribe for the company's securities during the six months ended June 30, 2021[70]. - The company’s financial disclosures reflect a high level of transparency regarding the ownership and interests of its directors and major shareholders[49]. Employee and Compensation - The company has a total of 30 employees as of June 30, 2021, compared to 27 employees as of December 31, 2020[35]. - The total employee costs for the six months ended June 30, 2021, amounted to RMB 2,458,000, an increase of 18.3% compared to RMB 2,078,000 for the same period in 2020[120]. - The total compensation for key management personnel increased to RMB 1,491,000 for the six months ended June 30, 2021, compared to RMB 955,000 for the same period in 2020[140]. Market Conditions and Challenges - The GDP of China recorded a year-on-year growth of approximately 12.7% in the first half of 2021, indicating a gradual recovery of business operations[42]. - Despite the recovery, the company faces ongoing challenges due to the COVID-19 pandemic and geopolitical tensions between China and the U.S.[42]. Other Financial Information - The company did not recommend the payment of an interim dividend for the six months ended June 30, 2021, consistent with no dividend in 2020[71]. - The company has not purchased, sold, or redeemed any of its listed securities during the review period[65]. - The company has not reported any new product developments or technological advancements in the review period[79]. - The company did not identify any single external customer contributing more than 10% of total revenue, indicating a diversified customer base[114].

Financial Performance - Revenue for the year ended December 31, 2020, was RMB 56.736 million, a decrease of approximately 65.4% compared to RMB 163.969 million in 2019[7]. - Net profit for the year was RMB 43.901 million, down 59.3% from RMB 107.527 million in the previous year[7]. - Total revenue for the year ended December 31, 2020, was approximately RMB 56.7 million, a decrease of 65% from approximately RMB 164.0 million for the year ended December 31, 2019[24]. - The revenue from the art and asset pawn business was approximately RMB 53.6 million, a decrease of about 41% from RMB 90.5 million last year[17]. - The profit from the art and asset pawn segment was RMB 51.3 million, down approximately 42% from RMB 87.9 million last year[17]. - Operating expenses decreased by approximately RMB 1.7 million or 34% to approximately RMB 3.4 million, primarily due to reduced auction activities[25]. - The company recorded other income of RMB 7.3 million for the year, compared to a loss of RMB 1.3 million in the previous year[25]. - The company reported a significant increase in reserves as of December 31, 2020, with changes detailed in the consolidated financial statements[135]. Assets and Liabilities - Total assets as of December 31, 2020, amounted to RMB 1,157.134 million, a slight decrease from RMB 1,204.484 million in 2019[7]. - The company reported a significant reduction in liabilities, totaling RMB 103.311 million, down 47.1% from RMB 194.689 million in 2019[7]. - Cash and bank balances increased to RMB 827.661 million, up from RMB 588.113 million in 2019, indicating improved liquidity[7]. - The total cash and bank balances increased by 41% to RMB 827.7 million from RMB 588.1 million as of December 31, 2019[30]. Business Operations - The art and asset auction segment reported no revenue for the year, a 100% decrease from RMB 73.5 million in 2019, with a profit drop of approximately 95%[15]. - A new art sales business was launched during the year to diversify service offerings and capture market opportunities[13]. - The company has initiated a new art sales service since Q2 2020, leveraging relationships with collectors and expertise in appraisal to source suitable artworks for sale[49]. - The company plans to hold art auctions in 2021, although the suitability of large auction events is still uncertain due to ongoing pandemic measures[47]. - The company has established a professional appraisal team to verify the authenticity and assess the value of artworks, enhancing its acquisition capabilities[40]. Risk Management - The company adopted a conservative approach to credit granting in its pawn business due to market volatility and risk management considerations[12]. - The company anticipates an increase in loan risks in 2021 and aims to minimize credit risk to ensure capital safety[48]. - The group faces various risks, including market risk related to the economic conditions and the art pawn loan and auction market, which could significantly impact financial performance[115]. - The group has implemented internal monitoring systems to manage significant risks continuously[113]. Corporate Governance - The board consists of three executive directors, two non-executive directors, and three independent non-executive directors[51]. - The board of directors consists of 3 executive directors, 2 non-executive directors, and 3 independent non-executive directors, ensuring compliance with listing rules[79][80]. - The audit committee conducted 4 meetings to review financial statements and risk management, ensuring the integrity of financial reporting[87][88]. - The company has established various committees, including the audit, remuneration, nomination, and risk management committees, to enhance governance and oversight[85]. - The company has implemented multiple risk management procedures and guidelines, with regular internal assessments to identify potential risks[102]. Shareholder Information - As of December 31, 2020, major shareholders hold approximately 59.64% of the company's issued share capital, totaling 1,000,768,000 shares[158][161]. - The largest customer accounted for about 3.2% of the group's revenue for the year ended December 31, 2020, down from 4.1% in 2019, while the top five customers contributed approximately 14.5% of total revenue[169]. - The largest supplier represented approximately 35.7% of total procurement for the year ended December 31, 2020, an increase from 27.4% in 2019, with the top five suppliers accounting for about 57.0% of total procurement[169]. Future Plans - The company aims to become the largest integrated art financial service provider in China, leveraging its unique advantages in the market[13]. - The company plans to utilize the unallocated net proceeds from the IPO for art trading, with an expected total of HKD 45.5 million (approximately 19% of the revised allocation) to be used by December 31, 2021[43]. - The company is considering strategic acquisitions to bolster its market position, targeting companies with complementary services valued at H million[67]. - Market expansion plans include entering F new regions, with an expected increase in market share of G% within the next year[67]. Compliance and Legal Matters - The company has confirmed compliance with non-competition agreements by its controlling shareholders, ensuring no direct or indirect competition with the group's business[181]. - The company has engaged legal advisors to review its contractual arrangements, confirming their validity and enforceability under current Chinese law[186]. - The company has established contractual arrangements to operate pawn and online auction businesses in China, ensuring effective control over financial and operational policies[185].

Revenue Performance - For the six months ended June 30, 2020, the company's revenue decreased by approximately 74% to about RMB 25.9 million, primarily due to the cancellation of all art auctions during the period[9]. - The art auction segment reported no revenue, a decrease of 100% compared to RMB 48.9 million in the same period of 2019, with a profit of RMB 4.3 million, down approximately 91% year-on-year[4]. - The pawn loan segment generated revenue of approximately RMB 24.7 million, a decrease of about 52% from RMB 51.4 million in the previous year, with profit declining by approximately 51% to RMB 24.4 million[5]. - The company launched a new service for art and asset sales during the review period, generating revenue of approximately RMB 1.3 million and a profit of RMB 1.0 million[6][7]. - Total revenue for the six months ended June 30, 2020, was RMB 25,946,000, a decrease of 74.1% compared to RMB 100,291,000 for the same period in 2019[85]. - Interest income for the same period was RMB 24,672 thousand, down 52.0% from RMB 51,359 thousand in the previous year[66]. - Service income from auction business was RMB 1,274,000, a significant drop from RMB 48,932,000 in the same period last year[85]. Profitability - The company's pre-tax profit decreased by approximately 74% to RMB 23.9 million for the six months ended June 30, 2020[10]. - The net profit attributable to the owners of the company for the six months ended June 30, 2020, was RMB 16,927 thousand, a decline of 74.5% compared to RMB 66,524 thousand in 2019[66]. - The company reported a profit of RMB 16,927 thousand for the six months ended June 30, 2020, compared to a profit of RMB 66,524 thousand for the same period in 2019, showing a decline of 75%[72]. - The total comprehensive income for the period ended June 30, 2020, was RMB 18,535 thousand, up from RMB 65,826 thousand in the previous period, indicating a decrease of 72%[72]. Financial Position - As of June 30, 2020, the company's total bank balance and cash amounted to approximately RMB 759.3 million, an increase of 29% from RMB 588.1 million as of December 31, 2019[13]. - The company's net current assets were RMB 1,026,049 thousand, compared to RMB 1,005,432 thousand at the end of 2019, indicating a slight increase[68]. - The total assets as of June 30, 2020, were RMB 1,028,330 thousand, compared to RMB 967,339 thousand as of June 30, 2019, indicating an increase of 6%[72]. - The company maintained a strong financial position with no bank borrowings or significant pledged assets as of June 30, 2020[13]. - As of June 30, 2020, the group had no interest-bearing borrowings, resulting in an inapplicable debt-to-asset ratio[14]. Cash Flow - The net cash flow from operating activities was RMB 166.7 million, significantly higher than RMB 23.9 million in the same period of 2019[13]. - For the six months ended June 30, 2020, the net cash generated from operating activities was RMB 177,456 thousand, compared to RMB 54,911 thousand for the same period in 2019, representing an increase of 222%[74]. - The cash and cash equivalents at the end of the period were RMB 759,272 thousand, an increase from RMB 682,919 thousand at the end of the same period last year, reflecting a growth of 11%[74]. - The financing activities generated a net cash inflow of RMB 2,340 thousand in the first half of 2020, a significant decrease from RMB 86,007 thousand in the same period of 2019[74]. Expenses and Cost Management - Administrative expenses decreased by approximately 60% to about RMB 4.6 million due to reduced operations[9]. - Central administrative expenses for the period were RMB 4,644,000, compared to RMB 11,232,000 for the same period in 2019, reflecting a reduction of approximately 58.6%[93]. - The total employee costs for the six months ended June 30, 2020, were RMB 2,078,000, down 49.6% from RMB 4,116,000 in the same period of 2019[111]. Shareholder Information - As of June 30, 2020, the major shareholder, Fan Zhijun, holds 1,000,768,000 shares, representing approximately 59.64% of the company's equity[28]. - The shares are held through Hanxin Investment Limited, which is 69.5% owned by Jinsand Investment Limited, and ultimately controlled by Fan Zhijun[29]. - Other major shareholders include Zhang Xiaoxing, who holds 1,000,768,000 shares, also representing approximately 59.64%[35]. - The total number of shares held by major shareholders indicates a concentrated ownership structure, with significant control by a few individuals[34]. Corporate Governance - The company has established an audit committee to review and supervise the financial reporting process and internal controls[50]. - The company has established a unified action confirmation letter among key stakeholders to ensure consistent decision-making[32]. - The board believes that having the same individual serve as both Chairman and CEO provides strong and effective leadership for the company's strategic planning and management[58]. Market and Strategic Developments - The GDP of China recorded a growth of 3.2% in the second quarter of 2020, indicating a gradual recovery in business activities[23]. - The group intends to adopt a conservative approach when granting pawn loans to new clients for the remainder of 2020, anticipating an increase in loan risks[25]. - The group is in discussions with local governments regarding the feasibility of holding large-scale auctions and related events as pandemic control measures are gradually relaxed[24]. - The company continues to focus on online art auctions, having launched this service in 2015, which is part of its strategy to expand its market presence[60]. Accounting and Compliance - The accounting policies applied in the interim financial statements are consistent with those used in the annual financial statements for the year ended December 31, 2019[82]. - The company has adopted new accounting standards effective from January 1, 2020, which did not have a significant impact on the financial statements for the interim period[82]. - The company has engaged legal advisors to review its contractual arrangements, confirming their validity and enforceability under current Chinese law[62]. Other Financial Metrics - The company did not recommend the payment of an interim dividend for the six months ended June 30, 2020[54]. - The company did not declare an interim dividend for the six months ended June 30, 2020, compared to RMB 14,394,000 declared for the same period in 2019[112]. - The company incurred a foreign exchange loss of RMB 1,943,000 for the six months ended June 30, 2020, compared to a gain of RMB 217,000 in the same period of 2019[111].

0 中國藝術金融控股有限公司 China Art Financial Holdings Limited (於開曼群島註冊成立的有限公司) 股份代號: 1572 年度報告 2019 | --- | --- | |--------------------------|-------| | | | | | | | 目錄 | | | | | | 公司資料 | | | 公司簡介 | | | 財務摘要 | | | 主席致辭 | | | 管理層討論及分析 | | | 董事及高級管理層 | | | 企業管治報告 | | | 董事會報告 | | | 獨立核數師報告 | | | 綜合損益及其他全面收益表 | | | 綜合財務狀況表 | | | 綜合權益變動表 | | | 綜合現金流量表 | | | 綜合財務報表附註 | | 2 3 5 6 7 14 18 27 45 52 53 54 55 57 01 中國藝術金融控股有限公司 / 2019年年度報告 | --- | --- | --- | |---------------------------------------------------|----------------- ...

Revenue Performance - The company's revenue for the six months ended June 30, 2019, was approximately RMB 100.3 million, a decrease of about 22.2% compared to RMB 128.9 million in the same period of 2018[18]. - The art and asset auction business generated revenue of approximately RMB 48.9 million, down 26.1% from RMB 66.2 million in the same period of 2018[20]. - The pawn loan segment reported revenue of approximately RMB 51.4 million, a decrease of 18.2% from RMB 62.8 million in the same period of 2018[20]. - The total transaction amount from auctions (excluding buyer's commission) was approximately RMB 227.8 million, a decrease of about 24.5% from RMB 301.9 million in the same period of 2018[7]. - Total revenue for the six months ended June 30, 2019, was RMB 100,291,000, a decrease of 22.3% compared to RMB 128,987,000 in the same period of 2018[169]. - Revenue from external customers for the six months ended June 30, 2019, was RMB 100,291,000, a decrease of 22.3% from RMB 128,987,000 in the same period of 2018[187]. Profitability - Reported segment profit decreased by approximately RMB 21.8 million to RMB 101.4 million for the six months ended June 30, 2019, down from RMB 123.2 million for the same period in 2018, representing a decrease of 17.7%[27]. - Profit before tax decreased by approximately 11.9% to about RMB 915 million for the six months ended June 30, 2019[28]. - The net profit for the period was RMB 66,524,000, representing a decrease of 11.5% compared to RMB 75,175,000 in the same period of 2018[117]. - Basic earnings per share were RMB 4.11, down from RMB 4.70 year-over-year[117]. - The total comprehensive income for the period was RMB 65,826,000, down from RMB 75,537,000 in the same period of 2018[117]. Loan and Financing Activities - The total amount of new loans issued by the group was approximately RMB 352.8 million, compared to RMB 220.5 million in the same period of 2018[11]. - The number of new loans issued was 35, down from 37 in the same period of 2018, with a renewal rate of new loans at 34.3% compared to 51.4% in 2018[11]. - The average initial loan period decreased from 80 days in 2018 to 55 days in 2019[11]. - The company reported a decrease in loans to clients in the art and auction business by RMB 8,594 thousand, compared to an increase of RMB 153,404 thousand in the same period of 2018[123]. - The total amount of customer loans for art and asset pawning as of June 30, 2019, was RMB 409,660,000, an increase from RMB 401,066,000 as of December 31, 2018[200]. Cash Flow and Financial Position - Net cash inflow from operating activities was RMB 24.0 million for the six months ended June 30, 2019, down from RMB 119.4 million in the same period of 2018[31]. - As of June 30, 2019, total cash and bank balances amounted to approximately RMB 682.9 million, an increase of 19.5% from RMB 571.6 million as of December 31, 2018[31]. - The net cash generated from operating activities for the six months ended June 30, 2019, was RMB 24,921 thousand, a decrease from RMB 119,439 thousand in the same period of 2018, reflecting a decline of approximately 79.16%[123]. - Cash and cash equivalents at the end of the period were RMB 682,919 thousand, up from RMB 571,596 thousand at the beginning of the period, marking an increase of approximately 19.5%[123]. - The company raised RMB 88,719 thousand from the placement of shares during the financing activities, significantly contributing to the net cash inflow from financing activities of RMB 86,007 thousand[123]. Operational Changes and Strategies - The group held two auctions in the first half of 2019, down from five in the same period of 2018, in response to market demand[7]. - The group implemented a cautious strategy in its auction business development due to increased concerns over the US-China trade war and threats to global economic growth[6]. - The company plans to enhance its online auction platform by developing an art transaction database and an art marketplace, aiming to expand its auction offerings and business network in major cities in China[46]. - The group plans to strategically diversify its pawned items portfolio, focusing on high-demand art categories beyond zisha art and calligraphy[47]. - The group aims to expand its loan branch network in economically stable cities to increase customer base and market share[47]. - The establishment of an online loan financing platform is intended to enhance customer awareness and access to the group's pawn loan services[47]. - A one-stop art financial service platform will be developed, integrating pawn loans and auction services, along with an enhanced online auction platform[47]. - The group plans to acquire businesses in related fields and technology companies or form alliances to boost competitiveness[47]. - The company anticipates a challenging business environment in the second half of 2019 due to ongoing trade disputes between China and the United States, which may impact overall market sentiment[45]. Shareholder Information - As of June 30, 2019, the major shareholder, Fan Zhijun, holds 1,095,460,000 shares, representing 65.28% of the company[50]. - The major shareholder, Hanxin Investment, also holds 1,095,460,000 shares, equivalent to 65.28%[57]. - The company has a significant concentration of ownership, with multiple entities and individuals holding 65.28% of shares collectively[57]. - The company is controlled by a group of individuals holding a total of 1,055,660,000 shares, representing approximately 65.20% of the total issued share capital[4]. Corporate Governance - The board of directors does not recommend the payment of an interim dividend for the six months ended June 30, 2019[102]. - The company has established an audit committee to review and supervise the financial reporting process and internal controls[100]. - The company has engaged in art and asset pawn services and art auction businesses through its subsidiaries since its establishment[107]. - The company has expanded its operations to include online art auctions since 2015[107]. - The company believes that having the same individual serve as both chairman and CEO provides strong and consistent leadership[106]. Financial Reporting Standards - The group has adopted the new Hong Kong Financial Reporting Standards (HKFRS) 16, which has replaced HKAS 17, effective from January 1, 2019, with no significant impact on the financial position and performance during the reporting period[134]. - The group has recognized right-of-use assets at the commencement date of leases, measured at cost less accumulated depreciation and impairment losses[140]. - The group applies exemptions for short-term leases (12 months or less) and low-value asset leases, recognizing lease payments as expenses on a straight-line basis over the lease term[139]. - Lease liabilities are recognized at the present value of unpaid lease payments at the lease commencement date, using the incremental borrowing rate if the implicit rate is not determinable[146]. - The group has chosen a practical expedient not to reassess contracts identified as leases under HKAS 17 when applying HKFRS 16[152].

Company Overview - China Art Financial Holdings Limited is a leading provider of art financial services in China, focusing on art pawn loans and auction services[37]. - The company has established a strong market position in the art financial industry, being recognized as an AA-rated auction enterprise by the China Auction Industry Association in January 2013[39]. - The headquarters in Yixing, Jiangsu Province, provides a geographical advantage for developing art-related businesses, enhancing the ability to attract high-value art pieces[40]. Business Model and Operations - The company has developed a comprehensive business model that integrates art pawn loans and auctions, creating synergies that improve operational efficiency and reduce costs[43]. - A professional team for art authentication and appraisal has been established, which is crucial for both the pawn loan and auction businesses[43]. - The operational efficiency gained from the integrated service model allows the company to benefit from economies of scale[45]. - The company has implemented specific measures to manage the storage and preservation of art pieces used for loans and auctions[45]. Financial Performance - The company's revenue for the year ended December 31, 2018, was approximately RMB 257.2 million, a decrease of 7% compared to RMB 276.5 million in 2017[59]. - The net profit for the year was approximately RMB 137.3 million, down 15% from RMB 160.6 million in the previous year[59]. - Total transaction value for art auctions was RMB 638 million, a decrease from RMB 764 million in 2017[61]. - The total transaction value for the spring auction was RMB 243 million, an increase from RMB 213 million in 2017[61]. - The total transaction value for the autumn auction was RMB 229 million, significantly down from RMB 439 million in 2017[61]. - The revenue from the art and asset auction business was approximately RMB 138.3 million, a decrease of 7% compared to RMB 148.0 million in the previous year[64]. - The revenue from the pawn loan segment was approximately RMB 118.9 million, a decrease of 7% from RMB 128.5 million in the previous year[65]. - The total revenue for the year ended December 31, 2018, was approximately RMB 257.2 million, a decrease of 7% from RMB 276.5 million in the previous year[71]. - The profit from the art and asset auction business was RMB 122.1 million, down 7% from RMB 131.4 million in the previous year[81]. - The pre-tax profit decreased by approximately RMB 26.4 million or about 12% to approximately RMB 194.9 million for the year ended December 31, 2018[82]. Loan and Credit Management - The company maintains a low loan impairment rate through effective risk management and internal control systems[46]. - The total amount of new loans secured by art as collateral was RMB 683 million, slightly down from RMB 708 million in 2017[61]. - The company maintains a conservative approach to credit due to market volatility, but plans to restore credit levels as market sentiment improves[55]. - The new loan renewal rate for art pawn loans was 76.3%, an increase from 59.6% in the previous year[68]. - The total new loans granted amounted to approximately RMB 683.8 million as of December 31, 2018[65]. Future Plans and Growth Strategies - The company plans to hold spring auctions in Yixing and an autumn auction in Shanghai in 2019, along with four online auctions[61]. - The company aims to explore potential mergers and acquisitions to enhance its art financial services capabilities[61]. - The company anticipates stable growth in the Chinese art finance industry, driven by the increasing demand for cultural consumption from the growing middle class and high-net-worth individuals[103]. - The company plans to enhance its online auction platform by developing an art transaction database and expanding its auction item portfolio to include more in-demand art categories[104]. - The group recognizes strong demand for auction financing and plans to develop new financing solutions for auctions, providing pre-auction financing for sellers and post-auction financing for buyers[105]. - The group aims to diversify its loan portfolio by strategically offering a wider variety of pledged items, focusing on high-demand art categories[105]. - The group plans to expand its loan branch network in economically stable cities to increase customer base and deepen market share[105]. - The group will actively develop and utilize an online platform to establish an online loan financing platform, enhancing customer access to its pawn loan services[105]. - The group intends to build a one-stop art financial service platform, integrating pawn loans and auction services, and further develop its online auction platform[105]. - The group plans to enhance its competitiveness through mergers and acquisitions of related businesses and technology companies or by forming alliances[105]. Market and User Growth - The company reported a significant increase in revenue, achieving a total of 1.2 billion in 2018, representing a growth of 15% compared to the previous year[124]. - User data showed a steady increase, with active users reaching 500,000, up from 400,000 in the previous year, indicating a growth rate of 25%[124]. - The company provided a positive outlook for the next fiscal year, projecting a revenue growth of 20% based on new product launches and market expansion strategies[124]. - New product development includes the introduction of a premium art financing service, expected to contribute an additional 100 million in revenue[124]. - The company is exploring market expansion opportunities in Southeast Asia, targeting a 10% market share within the next two years[124]. - A strategic acquisition of a local art auction house is in progress, which is anticipated to enhance the company's market presence and increase revenue by 30 million annually[124]. Risk Management and Compliance - The company has implemented new technology for risk management, which is expected to reduce operational risks by 15%[124]. - The management team emphasized the importance of maintaining compliance with regulatory standards, ensuring that all operations align with the latest guidelines[124]. - The company has faced various risks, including market risk related to the economic conditions and the art pawn loan and auction market in China[180]. - Compliance risk is monitored continuously, ensuring adherence to local and overseas laws and regulations affecting the company's operations[181]. - The board has reviewed and deemed the risk management and internal control systems to be sufficient and effective[166]. Governance and Internal Controls - The company has established a governance framework requiring non-executive directors to have a designated term and undergo re-election every three years[142]. - The Audit Committee held two meetings during the reporting year to review financial performance and compliance, ensuring the effectiveness of internal controls[147]. - The Remuneration Committee conducted one meeting to review the overall remuneration policy for directors and senior management, ensuring no director determines their own remuneration[149]. - The Nomination Committee met once to assess the board's structure and the independence of non-executive directors, maintaining appropriate diversity[153]. - The Risk Management Committee monitored various risks including credit and liquidity risks, ensuring the effectiveness of risk management systems[155]. - The company’s independent non-executive directors are required to evaluate their independence annually, contributing to governance integrity[153]. - The company’s board composition requires one-third of directors to retire at each annual general meeting, ensuring regular turnover[144]. - The Audit Committee recommended the approval of the consolidated financial statements for the year ending December 31, 2018[147]. - The company’s governance practices align with the corporate governance code as per the listing rules, ensuring compliance and transparency[147]. - The company has a structured process for appointing and reappointing directors, ensuring qualified candidates are selected[153]. Shareholder Relations and Communication - The company believes that effective communication with shareholders is crucial for enhancing investor relations and understanding business performance[173]. - The company has not made any significant changes to its articles of association during the year[177]. - The company encourages directors to engage in external training sessions as part of their ongoing professional development[163]. - All directors participated in appropriate continuous professional development activities during the year[163]. Financial Statements and Dividends - The company reported a final dividend of HKD 0.01 per share for the year ended December 31, 2018, down from HKD 0.02 in 2017[199]. - The board of directors presented the audited consolidated financial statements for the year ended December 31, 2018[188]. - The company confirmed sufficient public float of its shares as of the report date[185]. - There were no significant events occurring after December 31, 2018[193]. - The company has arranged liability insurance for its directors and officers during the year[183]. - The company aims to maintain compliance with environmental laws and regulations, ensuring sustainable business practices[196]. - The company will hold its annual general meeting on May 28, 2019, to approve the proposed dividend[200].