Revenue and Sales Performance - Total revenue from customer contracts reached RMB 16,529,150 thousand in 2023, up from RMB 16,261,600 thousand in 2022, representing a growth of approximately 1.6%[8] - The revenue from after-sales services was RMB 1,437,264 thousand in 2023, up from RMB 1,152,069 thousand in 2022, marking an increase of approximately 24.8%[21] - For the year ended December 31, 2023, the company's revenue was approximately RMB 16,579.2 million, an increase of 1.6% compared to RMB 16,321.7 million in the same period of 2022[51] - The company sold 38,475 new vehicles in the year ended December 31, 2023, representing an increase of 8.4% compared to the same period in 2022[51] - Total revenue from automobile sales and other income was RMB 14,209.3 million in 2023, accounting for 85.7% of total revenue, a slight decrease of 0.8% from RMB 14,324.8 million in 2022[95] - After-sales service revenue increased by 19.8% to RMB 2,319.8 million in 2023, compared to RMB 1,936.8 million in 2022[95] Financial Performance - The company reported a net loss for the year, with total expenses including depreciation and amortization amounting to RMB 15,615,198 thousand in 2023, compared to RMB 15,241,990 thousand in 2022[21] - The company recorded a net loss of RMB 241.5 million for the year ended December 31, 2023, compared to a net loss of RMB 1,622.8 million in 2022[51] - The adjusted profit for the year, excluding non-recurring losses, was RMB 171.6 million[51] - The group's annual loss for 2023 was RMB 241.5 million, while the adjusted profit, excluding non-recurring losses of RMB 413.1 million, was RMB 171.6 million[102] - The basic and diluted loss per share for the year ended December 31, 2023, was RMB 0.17[51] Costs and Expenses - The cost of automobile sales was RMB 14,177,934 thousand in 2023, compared to RMB 14,089,921 thousand in 2022, indicating an increase of about 0.6%[21] - The financial expenses for 2023 totaled RMB 132,036 thousand, an increase from RMB 121,289 thousand in 2022, reflecting a rise of approximately 8.7%[15] - The cost of sales for 2023 was RMB 14,177.9 million, up 0.6% from RMB 14,089.9 million in 2022, while after-sales service costs rose by 24.8% to RMB 1,437.3 million[122] - Employee benefits expenses included in the after-sales service costs were RMB 167.8 million for 2023, compared to RMB 142.4 million in 2022[47] Assets and Liabilities - The company’s equity attributable to owners decreased to RMB 5,572,299 thousand in 2023 from RMB 5,946,823 thousand in 2022, a decline of about 6.3%[22] - The company’s total liabilities included lease liabilities of RMB 806,261 thousand in 2023, slightly down from RMB 819,071 thousand in 2022, a decrease of about 1.6%[3] - As of December 31, 2023, the company's current liabilities totaled RMB 4,308,122,000, an increase from RMB 3,899,527,000 in 2022[77] - The company's trade receivables amounted to RMB 253,424,000 as of December 31, 2023, compared to RMB 197,882,000 in 2022[76] - The total non-current assets decreased to RMB 4,498,947,000 in 2023 from RMB 4,860,204,000 in 2022[76] - The company's debt-to-asset ratio increased to 47.7% as of December 31, 2023, compared to 44.2% as of December 31, 2022, reflecting a growth of 3.5%[156] Market and Operational Insights - The total retail sales volume of the Chinese passenger car market reached 21.7 million units in 2023, representing a year-on-year growth of 5.6%[71] - The luxury car market in China saw sales of 3.4 million units in 2023, with BMW leading at 824,900 units, followed by Mercedes-Benz at 765,000 units, and Audi at 729,000 units[115] - The forecast for 2024 predicts a 3% increase in overall retail sales of passenger cars to 22.2 million units, with the new energy vehicle market expected to grow by 22% to 11 million units[117] - The company maintained a cautious optimism regarding market recovery, emphasizing efficient operations and strong cash flow to enhance profitability and market share[72] Share Repurchase and Dividends - As of December 31, 2023, the company repurchased a total of 7,340,000 ordinary shares at a total cost of approximately HKD 6,821,944.79, excluding transaction costs[139] - The total number of shares repurchased reached 22,271,500, which were canceled on May 2 and June 7, 2023[139] - The board may propose a final dividend for the year ended December 31, 2023, with the previous year's dividend being HKD 0.066 per share[143] Employee and Operational Changes - The company employed a total of 3,642 employees as of December 31, 2023, down from 3,925 employees in 2022[158] - The company has adopted a share incentive plan effective from February 28, 2019, allowing for the grant of existing shares to selected participants, with a maximum of 60,000,000 shares available for purchase[137] - As of December 31, 2023, 30,000,000 shares have been granted and vested under the share incentive plan, with 59,987,500 shares purchased since the plan's adoption[137]

Financial Performance - Operating profit for the reporting period was RMB 336.8 million, a turnaround from an operating loss of RMB 774 million in the first half of 2022[11] - Profit attributable to equity holders of the parent was RMB 201.2 million, compared to a loss of RMB 914.8 million in the same period of 2022[12] - The company recorded revenue of RMB 8,109.5 million for the first half of 2023, an increase of 2.1% compared to RMB 7,940.1 million in the same period last year[73] - Revenue from automobile sales and others decreased by 0.8% to RMB 6,852.6 million, accounting for 84.5% of total revenue in the first half of 2023[73] - Revenue from after-sales services increased by 23.0% to RMB 1,231.4 million, representing 15.2% of total revenue in the first half of 2023[73] - Gross profit decreased by 16.0% to RMB 581.3 million compared to RMB 691.8 million in the first half of 2022[74] - The group reported a net profit of RMB 208,255 thousand for the period, compared to a net loss of RMB 908,360 thousand in the same period last year[175] Assets and Liabilities - Total bank loans and borrowings amounted to RMB 1,864.2 million, a reduction of 10.5% from RMB 2,083 million as of December 31, 2022[5] - The group's debt-to-asset ratio was 41.6% as of June 30, 2023, down by 2.6% from December 31, 2022[5] - Current assets net increased by 12.1% to RMB 2,289.4 million compared to RMB 2,042.8 million as of December 31, 2022[19] - As of June 30, 2023, the total current liabilities decreased to RMB 3,555,071 thousand from RMB 3,899,527 thousand, representing a reduction of approximately 8.8%[159] - The total assets less current liabilities rose to RMB 7,056,442 thousand compared to RMB 6,903,030 thousand, reflecting an increase of approximately 2.2%[159] - The equity attributable to the owners of the parent company increased to RMB 6,110,421 thousand from RMB 5,946,823 thousand, marking an increase of about 2.8%[159] Inventory and Sales - Inventory decreased by RMB 147.4 million to RMB 1,393 million as of June 30, 2023, with an average turnover period of 35.6 days, up from 30.6 days in the same period of 2022[4] - In the first half of 2023, the company achieved sales of 17,571 units, representing a year-on-year growth of 2.2%[40] - The sales of luxury brands such as Lincoln, Volvo, Audi, and Land Rover increased by 17.2%, 10.1%, 9.6%, and 36.0% respectively[40] - The sales of BMW electric vehicles reached 44,900 units in the first half of 2023, a significant year-on-year increase of 283%[34] - The overall profit margin from new car sales for dealers dropped from 19.7% at the end of 2022 to 4.9% in the first half of 2023[34] - The group sold 3,799 used cars in the first half of 2023, reflecting a year-on-year growth of 24.0%[52] Employee and Operational Efficiency - The group employed a total of 3,787 employees as of June 30, 2023, down from 3,925 employees as of December 31, 2022[8] - The group plans to continue optimizing expense ratios and improving operational efficiency to enhance profitability[53] - The group has established a systematic training system to enhance employees' business capabilities and professional skills, emphasizing talent development[65] Cash Flow and Financial Management - The group's cash and deposits totaled RMB 1,255 million as of June 30, 2023, with a net cash inflow from operating activities of RMB 448.5 million during the first half of 2023[13] - Net cash generated from operating activities was RMB 448,548 thousand, down from RMB 618,081 thousand year-on-year, indicating a decrease of approximately 27.5%[175] - Cash and cash equivalents as of June 30, 2023, amounted to RMB 1,254,957 thousand, a slight decrease from RMB 1,622,352 thousand at the end of 2022[178] Corporate Governance and Compliance - The company complied with the Corporate Governance Code and maintained high standards of corporate governance throughout the reporting period[137] - The audit committee reviewed the unaudited interim results for the six months ended June 30, 2023, and found them to comply with relevant accounting standards[153] Market Trends and Future Outlook - The government policies supporting the new energy vehicle market are expected to continue driving growth, with a stable outlook for the second half of 2023[39] - The luxury car retail market showed strong performance with a year-on-year growth of 11% from January to July 2023[38] - The company aims to actively collaborate with domestic new energy vehicle brands to support industry development[41] - The cumulative retail sales volume of new energy vehicles in China for the first half of 2023 was 3.086 million units, representing a significant year-on-year growth of 37.3%[49] Share Options and Awards - As of January 1, 2023, the company had 42,191,000 unexercised stock options, representing approximately 2.7% of the issued shares[73] - As of June 30, 2023, the company still had 42,191,000 unexercised stock options, now representing approximately 2.8% of the issued shares[73] - The company adopted a share award plan on February 28, 2019, aimed at incentivizing and retaining employees and aligning their interests with shareholders[117] - The share award plan does not grant new shares but allows for existing shares to be awarded to selected participants[117] - The company has no outstanding stock options that were granted under the stock option plan as of June 30, 2023[110]

香港交易及結算所有限公司及香港聯合交易所有限公司（「聯交所」）對本公告的內容概不負責， 對其準確性或完整性亦不發表任何聲明，並明確表示概不就因本公告全部或任何部分內容而 產生或因倚賴該等內容而引致的任何損失承擔任何責任。 China Harmony Auto Holding Limited 中 國 和 諧 汽 車 控 股 有 限 公 司 （於開曼群島註冊成立的有限公司） （股份代號 ：03836） 截 至 2023 年 6 月 30 日 止 六 個 月 的 中 期 業 績 公 告 業績摘要 截至2023年6月30日止六個月： ‧ 本集團錄得新車銷量17,571台，較上年同期增加2.2%。 ‧ 本集團2023年上半年錄得收入為人民幣8,109.5百萬元，較上年同期的人 民幣7,940.1百萬元增加2.1%。其中， — 銷售汽車及其他的收入較上年同期減少0.8%至本年度的人民幣6,852.6 ...

Supplier Relationships - The company maintains long-term and stable relationships with major automotive suppliers such as BMW, Maserati, Lexus, Land Rover, and Ferrari, ensuring stable development in automotive sales [2]. - The company has established over 15 years of business relationships with its top five suppliers, indicating strong supplier partnerships [3]. - The company regularly evaluates supplier performance to enhance supply standards and maintain relationships with high-performing suppliers [2]. - The company maintained stable partnerships with 206 domestic and 6 overseas suppliers for automotive-related equipment and parts during the reporting period [120]. Employee Management - Employee retention is prioritized through competitive salaries, excellent working conditions, and regular performance reviews, which are linked to the company's profitability [3]. - The company emphasizes equal and fair treatment of all employees, fostering a harmonious and healthy work environment [3]. - The company has established a comprehensive training system to enhance employees' business capabilities and professional skills [115]. - The training program saw 2,043 grassroots employees trained, representing 84% of the total, with an average training time of 10.49 hours per employee [118]. - The company has implemented a structured training program for new employees, including basic and position-specific training [144]. - The employee gender ratio was 1.50 males to 1 female in 2022, slightly increasing from the previous year [108]. - The number of employees decreased to 3,797 in 2022 from 4,551 in 2021, primarily due to the impact of the pandemic on store operations [108]. - The company reported a total of 2,277 employees in 2022, with a turnover rate of 52%, up from 47% in 2021 [139]. - The company has established a health and safety program for employees, including regular health check-ups and monitoring for occupational diseases [140]. - The company has taken measures to ensure employee safety during the COVID-19 pandemic, including temperature checks and remote communication [142]. Financial Performance - The company reported a net loss attributable to shareholders of RMB 1,627,762,000 for the year ended December 31, 2022, compared to a profit of RMB 673,155,000 in 2021 [178]. - Total revenue from operating activities was RMB 1,007,795,000, slightly down from RMB 1,132,537,000 in the previous year [168]. - The company reported a loss per share of 1.08 RMB in 2022, compared to a profit of 0.44 RMB per share in 2021 [162]. - The company's cash and bank balances were RMB 1,161,992 thousand in 2022, a significant decrease from RMB 1,629,199 thousand in 2021, representing a drop of approximately 29% [164]. - Current assets totaled RMB 5,942,353 thousand in 2022, down from RMB 7,096,574 thousand in 2021, indicating a decrease of about 16.3% [164]. - Total liabilities decreased to RMB 3,899,527 thousand in 2022 from RMB 4,355,319 thousand in 2021, reflecting a reduction of approximately 10.5% [164]. - The total comprehensive income attributable to the company's owners for the year was RMB 619,837 thousand, down from RMB 637,563 thousand in the previous year, a decline of about 2.5% [166]. - The company's financing lease receivables increased to RMB 485,205 thousand in 2022 from RMB 421,189 thousand in 2021, reflecting a growth of about 15.2% [164]. - The company declared a dividend of RMB 281,012,000 for the year, up from RMB 101,506,000 in 2021 [184]. Environmental and Social Responsibility - The company emphasizes compliance with national environmental laws and regulations, including the Environmental Protection Law of the People's Republic of China [61]. - The company has implemented various energy-saving measures, including encouraging employees to use public transportation and optimizing air conditioning usage [75]. - The company has adopted waste reduction initiatives, such as encouraging employees to bring their own utensils to minimize single-use waste [69]. - The company has established a robust ESG data collection system, although it is still in development, aiming for comprehensive and accurate reporting [53]. - The company is committed to improving its ESG performance and addressing stakeholder expectations through various initiatives [60]. - The company has established a governance structure for ESG management, including an ESG Governance Committee and a dedicated ESG Working Group [87]. - The company has actively participated in community service and social responsibility initiatives during the reporting period [154]. - The company made donations amounting to RMB 141,965 in the fiscal year 2022, a decrease from RMB 1,107,000 in 2021 [50]. - The company donated 129,000 RMB for community development on April 1, 2022 [125]. - The hazardous waste generated by the company showed a significant reduction compared to the previous year, adhering to strict management protocols [96]. Shareholder and Stock Management - The company has a stock option plan that allows options to be exercised within a period not exceeding 10 years from the offer date [10]. - As of December 31, 2022, the total number of stock options granted and not exercised was 43,516,000 [15]. - The company’s board believes that share repurchases align with the best interests of the company and its shareholders [47]. - The company repurchased a total of 32,366,000 shares at approximately HKD 96,263,669.53, enhancing earnings per share and benefiting shareholders [47]. - The remaining term of the share incentive plan is 2 years and 3 months, effective from February 28, 2019, to June 26, 2025 [21]. - The company has no maximum allocation for eligible participants under the share incentive plan, with no participant receiving more than 1% of the issued share capital [22]. - The company has not disclosed any tax benefits enjoyed by shareholders due to their holdings [34]. Market Focus and Strategy - The company plans to focus on the luxury and ultra-luxury market, enhancing customer retention and satisfaction while improving operational efficiency and quality [55]. - The company operates as a leading luxury and ultra-luxury car dealership group in China, with established dealership networks in 40 cities [61]. - The company emphasizes customer privacy protection and has strict policies in place to safeguard consumer information [122]. - The company is committed to enhancing customer satisfaction through continuous service improvement and feedback mechanisms [151]. Financial Reporting and Compliance - The group adopted all new and revised Hong Kong Financial Reporting Standards effective from January 1, 2022, without significant changes to accounting policies or reported amounts [187]. - The consolidated financial statements are prepared in accordance with the applicable disclosure requirements of the Hong Kong Financial Reporting Standards and the Stock Exchange Listing Rules [189]. - The acquisition costs exceeding the fair value of identifiable assets and liabilities of subsidiaries are recognized as goodwill [195]. - Non-controlling interests are initially measured at the proportionate share of identifiable assets and liabilities of the subsidiary at the acquisition date [197]. - The group recognizes its share of profits or losses from associates in the consolidated income statement after acquisition [199].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確 性或完整性亦不發表任何聲明，並明確表示概不就因本公告全部或任何部分內容而產生或因 依賴該等內容而引致的任何損失承擔任何責任。 China Harmony Auto Holding Limited 中 國 和 諧 汽 車 控 股 有 限 公 司 （於開曼群島註冊成立的有限公司） （股份代號 ：03836） 截至2022年12月31日止年度的年度業績公告 業績摘要： ‧ 截至2022年12月31日止年度，本集團的收入約為人民幣16,321.7百萬元， 較2021年同期收入約人民幣17,981.1百萬元減少9.2%。 ‧ 本集團於截至2022年12月31日止年度的新車銷量為35,506輛，較2021年同 期減少13.0%。 ‧ 截至2022年12月31日止年度，本集團的毛利約為人民幣1,079.7百萬元， 較2021年同期減少38.3%。於2022年，銷售汽車及其他以及提供售後服務 的毛利分別為人民幣234.9百萬元及人民幣784.7百萬元，相較於2021年分 ...

Sales Performance - In the first half of 2022, China Harmony Auto Holding Limited delivered a total sales volume of 17,190 units, representing a year-on-year decline of 23.4%[12] - The sales of luxury brands showed resilience, with Ferrari, Bentley, and Rolls-Royce achieving year-on-year sales growth of 365.2%, 10.3%, and 2.4% respectively[12] - BMW (including Mini) deliveries totaled 13,090 units, down 23.5% year-on-year, while Lexus deliveries were 1,828 units, a decrease of 23.3%[12] - The overall luxury brand market share decreased from 14.8% to 13.7% year-on-year, indicating a 1 percentage point drop[8] - The overall retail market for passenger vehicles in China saw a sales volume of 9.396 million units in the first half of 2022, a decline of 6.8% year-on-year[8] Financial Performance - The company's revenue for the first half of 2022 was RMB 7,940.1 million, a decrease of 15.3% compared to RMB 9,373.9 million in the same period last year[17] - New car sales revenue decreased by 16.3% to RMB 6,906.3 million, accounting for 87.0% of total revenue[17] - The company recorded an operating loss of RMB 774.0 million, compared to an operating profit of RMB 564.9 million in the first half of 2021[25] - The gross profit decreased by 19.5% to RMB 691.8 million, with a gross margin of 8.7%[20] - The net loss for the six months ended June 30, 2022, was RMB 908,360 thousand, compared to a profit of RMB 400,586 thousand in the previous year[83] Inventory and Market Strategy - The average inventory level for dealers was approximately 1.68 months, slightly higher than the 1.55 months recorded in the same period of 2021[9] - The average inventory turnover days increased by 6.9 days to 30.6 days due to strict COVID-19 prevention policies[31] - The company aims to expand its market share in the luxury segment, particularly for Ferrari, which accounted for nearly 25% of its total sales in mainland China during the first half of 2022[12] - The company plans to focus on electric vehicle transformation as a key medium to long-term strategy[16] - The automotive industry in China is expected to see structural growth driven by policies promoting vehicle consumption, despite ongoing challenges such as chip shortages and high raw material prices[11] Cash Flow and Assets - The company’s cash and deposits totaled RMB 1,622.4 million as of June 30, 2022[27] - The company’s total assets as of June 30, 2022, were RMB 7,093,927 thousand, compared to RMB 8,042,562 thousand as of January 1, 2022, indicating a decrease of approximately 11.8%[103] - Cash and bank balances stood at RMB 1,622,352 thousand as of June 30, 2022, slightly down from RMB 1,629,199 thousand at the end of 2021[91] - Operating cash flow for the six months ended June 30, 2022, was RMB 618,081 thousand, an increase from RMB 462,541 thousand in the same period of 2021, reflecting a growth of approximately 33.6%[106] - The company’s financing activities resulted in a net cash outflow of RMB (595,553) thousand for the six months ended June 30, 2022, compared to RMB (120,818) thousand for the same period in 2021[106] Shareholder Information - The company has a total of 42,191,000 stock options remaining unexercised as of June 30, 2022, after 1,325,000 options were canceled during the period[61] - The company believes that the share repurchase is in the best interest of the company and its shareholders, potentially increasing earnings per share[71] - The company’s major shareholder, Foxconn, holds 128,734,000 shares, representing approximately 8.32% of the equity[67] - The company has not granted any shares under the share incentive plan during the six-month period ending June 30, 2022[65] - The company did not recommend the payment of an interim dividend for the six months ended June 30, 2022[77] Liabilities and Financial Health - As of June 30, 2022, the group's debt-to-asset ratio was 41.4%, an increase of 2.1 percentage points from December 31, 2021[34] - The group had no significant contingent liabilities or guarantees as of June 30, 2022, consistent with December 31, 2021[35] - The company’s total equity as of June 30, 2022, was RMB 7,093,927 thousand, a decrease from RMB 8,042,562 thousand at the end of 2021[98] - The company incurred a fair value loss on financial assets of RMB 1,217,011 thousand for the six months ended June 30, 2022, compared to a loss of RMB 13,665 thousand in the same period of 2021[153] - The income tax expense for the six months ended June 30, 2022, was RMB 76,704 thousand, a decrease of 26.0% from RMB 103,699 thousand in the same period of 2021[148] Employee and Operational Metrics - The group employed 3,901 employees as of June 30, 2022, down from 4,551 employees as of December 31, 2021[38] - There were no significant acquisitions, disposals, or investments in subsidiaries or associates during the six months ended June 30, 2022[39] - The company acquired property, plant, and equipment amounting to approximately RMB 271,040 thousand during the six months ended June 30, 2022[158] - The company has capital commitments of RMB 82,948,000 for property, plant, and equipment as of June 30, 2022[181] - The company has not used any financial derivatives to hedge interest rate risks as of the reporting date[37]

Financial Performance - In 2021, China Harmony Auto achieved new car sales of 40,791 units, representing a year-on-year growth of 11.5%, surpassing the industry average growth rate[27]. - The total revenue for 2021 was RMB 18.4 billion, an increase of 22.0% compared to the previous year, with new car sales revenue contributing RMB 15.6 billion, up 21.1%[27]. - The net profit for 2021, after excluding non-recurring items, reached RMB 757 million, marking a significant year-on-year increase of 49.6%[27]. - The net cash generated from operating activities was RMB 776 million, indicating a stable financial position[27]. - The gross profit for 2021 was RMB 1,751.3 million, up 34.8% from RMB 1,298.8 million in 2020[51]. - The gross margin improved to 9.7% in 2021, compared to 8.8% in 2020, with new car sales gross margin at 4.3%[51]. - The company's revenue for 2021 was RMB 17,981.1 million, an increase of 21.9% compared to RMB 14,746.9 million in 2020[49]. - New car sales revenue reached RMB 15,609.7 million, growing by 21.1% from the previous year[49]. - The company's net cash from operating activities was RMB 776.1 million in 2021[59]. - Capital expenditures for 2021 amounted to RMB 522.7 million, primarily for new sales network establishment[61]. Sales and Market Trends - The sales volume in the second half of 2021 decreased by 16.5% to 18,344 units, while the first half saw a growth of 53.6%[43]. - The sales of BMW (including Mini) showed resilience with a year-on-year growth of 11.4% despite semiconductor shortages[43]. - The demand for ultra-luxury brands drove significant sales increases, with Ferrari, Rolls-Royce, Bentley, and Maserati achieving year-on-year growths of 94.3%, 36.7%, 126.9%, and 35.4% respectively[43]. - Electric vehicle sales in China surged by 169% in 2021, contrasting with a 4% decline in fuel vehicle sales[40]. - The penetration rate of electric vehicles in China rose from 5% in 2019 to 17% by the end of 2021[40]. - The overall retail market sales in China for 2021 reached 20,145,868 units, with a year-on-year growth of 4.4%[39]. Business Strategy and Expansion - The company plans to focus on core business operations, emphasizing luxury and ultra-luxury brand 4S store operations, while supporting investments in new energy vehicle manufacturing and after-sales services[29]. - The strategic focus for 2022 includes enhancing the positioning as a "full luxury and ultra-luxury automobile dealer group" and expanding into potential growth areas[29]. - The company plans to continue focusing on the luxury and ultra-luxury car market, optimizing brand structure and expanding the distribution network[35]. - The company added 5 new retail outlets, including 2 Ferrari, 2 Lexus, and 1 Lamborghini store, while also obtaining authorization for 4 additional outlets[28]. - The company aims to enhance operational efficiency through a flat organizational structure and performance-based reforms[34]. Corporate Governance - The company is committed to high standards of corporate governance and has complied with the relevant rules of the Hong Kong Stock Exchange[77]. - The company established three committees: Audit Committee, Remuneration Committee, and Nomination Committee to oversee specific affairs[92]. - The Audit Committee held four meetings during the year ending December 31, 2021, to review interim and annual financial performance and reports[96]. - The Remuneration Committee conducted two meetings in the year ending December 31, 2021, to review the remuneration of executive directors and senior management[98]. - The Nomination Committee is responsible for reviewing the composition of the board and providing recommendations for appointments and succession planning[100]. - The board currently consists of 7 male directors and 1 female director, reflecting the company's commitment to board diversity[100]. - The company emphasizes the importance of continuous professional development for directors to ensure informed contributions to the board[91]. - The company has adopted a board diversity policy to support its strategic goals and sustainable development[100]. Employee and Talent Management - Employee count increased to 4,551 as of December 31, 2021, from 4,206 in 2020, primarily due to business expansion[73]. - Employee costs for 2021 were approximately RMB 464.1 million, up from RMB 352.8 million in 2020[73]. - The company values employee relationships, providing competitive salaries and a superior working environment to retain talent and enhance productivity[178]. - The company has a stock option plan established in June 2015, aimed at attracting and retaining talented employees by offering them the opportunity to purchase shares[192]. - The company granted stock options for a total of 20 million shares to eligible employees in December 2019, further incentivizing employee performance[193]. Risk Management and Compliance - The company faced significant risks and uncertainties during the year, which were discussed in the management discussion and analysis section of the annual report[153]. - The board believes that the current risk management and internal control systems are effective and sufficient, and has accepted the improvement suggestions from the internal control consultant[120]. - The internal audit department plays a crucial role in monitoring the company's internal governance and conducts regular audits of all branches and subsidiaries[122]. - The company has established a three-tier risk control structure to implement its internal control and risk management policies[122]. - The company has no significant management contracts in place for the year ending December 31, 2021, indicating a focus on internal management[188]. Shareholder Relations - Shareholders holding at least 10% of the company's paid-up capital have the right to request a special general meeting within two months of submitting a written request[127]. - Shareholders are encouraged to submit written inquiries to the board, as the company typically does not handle verbal or anonymous inquiries[130]. - The company emphasizes the importance of effective communication with shareholders to enhance investor relations and understanding of business performance and strategy[132]. - The annual general meeting will be held with the presence of the board chairman and committee chairs to address shareholder inquiries[132]. - The company has adopted a dividend policy but does not have a preset dividend rate, allowing the board to propose dividends based on financial conditions[132]. Supplier Relationships - The company maintains long-term stable relationships with major automotive suppliers such as BMW, Maserati, Lexus, Land Rover, and Ferrari, ensuring stable development in automotive sales[177]. - The company collaborates with 31 domestic non-original automotive equipment and parts suppliers, emphasizing a fair and transparent selection process for suppliers[177]. - The company regularly reviews supplier performance to ensure high standards and to eliminate underperforming suppliers[177]. - The company's procurement from the top five suppliers accounted for approximately 88.1% of total procurement, with the largest supplier contributing 50.3%[174]. New Energy Vehicle Initiatives - The company has been actively involved in the development of new energy electric vehicles, utilizing funds raised from share placements for manufacturing[157]. - The company plans to allocate about 35% of the proceeds from a previous placement to invest in opportunities within the new energy vehicle sector[159]. - The company is closely monitoring macroeconomic conditions and industry policies that may impact the automotive sector[167][169].

Sales Performance - China Harmony Auto achieved new car sales of 22,447 units in the first half of 2021, representing a 53.6% increase year-on-year[11]. - BMW brand sales accounted for approximately 76.3% of total sales, with 17,116 units sold, a 51.2% increase compared to the same period last year[11]. - The luxury car market grew by 39.7% year-on-year, with sales reaching 1,471,689 units in the first half of 2021[9]. - Electric vehicle retail sales surged by 220.9% year-on-year, totaling 1,007,129 units sold in the first half of 2021[9]. - The sales momentum for luxury brands such as Lexus, Volvo, and Lincoln saw significant increases, with year-on-year growth rates of 28.8%, 46.6%, and 243.4% respectively[11]. Financial Performance - The company's revenue for the first half of 2021 was RMB 9,373.9 million, a 62.9% increase from RMB 5,754.7 million in the same period last year[16]. - New car sales revenue rose from RMB 5,021.4 million to RMB 8,251.3 million, accounting for 88.0% of total revenue in the first half of 2021[16]. - The gross profit increased by 65.3% to RMB 859.2 million, with a gross margin of 9.2%, slightly up from 9.0% in 2020[19]. - Operating profit for the first half of 2021 was RMB 564.9 million, representing a 54.2% growth compared to RMB 366.4 million in 2020[23]. - The company recorded a significant increase in net profit attributable to shareholders of RMB 390.8 million, up 66.5% from the previous year[26]. Inventory and Cash Management - The average inventory level for dealers was maintained at about 1.5 months, indicating a healthy inventory level[8]. - The company reduced its inventory days from 32 days last year to 23.7 days in the first half of 2021[11]. - Cash and deposits totaled RMB 1,926.6 million as of June 30, 2021, with net cash generated from operating activities amounting to RMB 462.5 million[27]. - Inventory slightly increased to RMB 1,117.8 million, with an average turnover period reduced by 16.2 days to 23.7 days[31]. Expansion and Growth Strategy - The company added four new authorized dealer outlets in the first half of 2021, including two for Ferrari and one each for Lamborghini and Lexus[11]. - The company is focusing on the used car and electric vehicle markets to drive future growth[12]. - The company anticipates strong performance in the second half of 2021, driven by robust demand for luxury and electric vehicles despite ongoing chip shortages[15]. - The company plans to open 4 new 4S stores, contributing to a capital expenditure of RMB 170.1 million in the first half of 2021[29]. - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[94]. Employee and Governance - As of June 30, 2021, the group had a total of 4,398 employees, an increase from 4,206 employees as of December 31, 2020, reflecting a growth of approximately 4.6%[38]. - The group has not engaged in any significant acquisitions or disposals during the six months ending June 30, 2021, apart from those disclosed in the interim report[39]. - The group has not granted any share awards under the share option scheme from January to June 2021 to protect the interests of all shareholders[38]. - The company has complied with the Corporate Governance Code during the reporting period[76]. - The company’s board will continue to review and monitor its corporate governance practices to maintain high standards[76]. Share Options and Financial Instruments - The group has 43,891,000 unexercised share options under the share option scheme, representing about 2.8% of the total issued shares as of June 30, 2021[38]. - The group’s share option plan aims to attract and retain capable employees, with a total of 70,000,000 new options granted in May 2017[53]. - The company repurchased a total of 6,287,000 shares at an average price of HKD 3.30, with a total cost of approximately HKD 20.93 million during the reporting period[73]. - The company has not utilized any financial derivatives to hedge against interest rate risks, which may arise from fluctuations in borrowing costs[37]. - The company recognized a foreign exchange loss of RMB 25.8 million during the six months ended June 30, 2021, compared to a loss of RMB 23.7 million in the same period last year, indicating increased volatility in foreign exchange rates[96].

Financial Performance - In 2020, the company achieved new car sales of 36,573 units, representing a year-on-year growth of 11.5%, surpassing the industry average growth rate[15]. - Total revenue reached RMB 15.09 billion, an increase of 16.8% compared to the previous year[15]. - The net profit (excluding non-recurring items) was RMB 506.3 million, reflecting a year-on-year growth of 31.3%[15]. - The net cash generated from operating activities was RMB 779.5 million, a significant increase of 239.0% year-on-year[15]. - The total sales volume for the group in 2020 was 36,573 vehicles, representing a year-on-year increase of 11.5% compared to 2019[35]. - The group's revenue for 2020 was RMB 14,746.9 million, an increase of 16.8% from RMB 12,621.8 million in 2019[41]. - New car sales revenue reached RMB 12,893.0 million, growing by 18.2% compared to 2019[41]. - The gross profit for 2020 was RMB 1,298.8 million, up 19.5% from RMB 1,087.1 million in 2019[43]. - The gross margin for 2020 was 8.8%, an increase of 0.2% from 8.6% in 2019[45]. - The net profit attributable to the company's owners for 2020 was RMB 410.7 million, with a 32.7% increase in net profit excluding non-recurring items[49]. Operational Efficiency - Inventory turnover days decreased to 32 days, down by 5 days compared to the previous year[15]. - The average inventory turnover days decreased to 32 days in 2020, down by 5 days from 2019, indicating improved inventory management[54]. - The company aims to optimize its dealer network and improve efficiency through digitalization and better inventory management, focusing on core business growth[32]. - The company emphasizes performance and capability as its core operational principles, aiming to enhance shareholder value and societal contributions[24]. - The company is committed to deep reforms in organizational structure, budget targets, and performance compensation to improve operational efficiency[24]. Market Expansion and Strategy - The company expanded its network by adding 10 new outlets in 2020, including 5 BMW, 3 Bentley, 1 Ferrari, and 1 Lincoln outlet, primarily in new first-tier and second-tier cities[15]. - The company plans to achieve mass production of its electric vehicles by the first quarter of 2022, with current annual production capacity at 150,000 units, expandable to 300,000 units[18]. - The company has established strategic partnerships with 10 brands, including NIO, Tesla, and Xpeng, for its after-sales service network, which currently has 50 locations nationwide[18]. - The company focuses on luxury and ultra-luxury brand 4S store operations, achieving significant growth in this segment[18]. - The company’s long-term strategy involves a dual-wing approach, focusing on both luxury vehicle sales and the development of electric vehicle manufacturing and after-sales services[18]. - The company plans to open new outlets for BMW, Lexus, and Ferrari, primarily in first and second-tier cities in China, to enhance market presence[32]. - The group plans to continue expanding into the new energy vehicle sector, including strategic investments in brands like Byton and Dangdang[36]. Industry Trends - In 2020, China's overall passenger car sales were 21 million units, a year-on-year decline of 6.8%, marking the third consecutive year of decline since 2018[27]. - Luxury brand retail sales in China reached 2.5 million units in 2020, an increase of 14.7% compared to 2019, highlighting a strong growth segment in the market[27]. - The penetration rate of electric vehicles in China was approximately 6% by the end of 2020, with a target of 20% by 2025 as per the government's "14th Five-Year Plan"[29]. - The post-pandemic era is expected to drive consumption upgrades in China, fueling growth in the luxury car market, which is seen as a key growth driver for the company[33]. Governance and Compliance - The board of directors has complied with the listing rules regarding the appointment of at least three independent non-executive directors, ensuring proper governance standards[75]. - The audit committee held four meetings during the year ending December 31, 2020, to review interim and annual financial performance and reports[87]. - The remuneration committee conducted two meetings in the year ending December 31, 2020, to review the compensation of executive directors and senior management[89]. - The nomination committee is responsible for reviewing the composition of the board and providing recommendations for board diversity, considering factors such as gender, age, and professional experience[91]. - The company emphasizes the importance of continuous professional development for directors to ensure informed contributions to the board[83]. - The audit committee includes three independent non-executive directors, ensuring oversight of financial reporting and internal controls[87]. - The company has established a board diversity policy to support strategic goals and sustainable development[91]. - The remuneration committee's main responsibilities include reviewing the compensation policies for all directors and senior management[89]. - The nomination committee evaluates candidates for board positions based on qualifications, skills, and experience relevant to the company's business strategy[92]. - The company provides training and reading materials to all directors to ensure they are familiar with their responsibilities under listing rules[82]. - The board has established three committees: audit, remuneration, and nomination, each with defined written terms of reference[84]. - The company’s independent auditor confirmed no significant uncertainties affecting the company's ability to continue as a going concern[105]. - The board believes that the current risk management and internal control systems are effective and sufficient[110]. - The company established a three-tier risk control structure to implement internal control and risk management policies[112]. - The audit committee conducted a review of the effectiveness of the company's risk management and internal control systems during the year[110]. - The company has a dedicated internal audit department responsible for monitoring internal governance and conducting regular audits[110]. Shareholder Relations - The company allows shareholders holding at least 10% of the paid-up capital to request a special general meeting[117]. - The company emphasizes the importance of effective communication with shareholders to enhance investor relations and understanding of business performance and strategy[122]. - The company has adopted a dividend policy but does not have a preset payout ratio, allowing the board to propose dividends based on financial conditions and other factors[122]. - The board of directors and committee chairs will attend the annual general meeting to engage with shareholders and address their inquiries[122]. - The company maintains a website that provides updates on financial information, corporate governance, and other relevant data[122]. - The company has not made any changes to its articles of association for the year ending December 31, 2020[122]. Employee and Supplier Relations - The company emphasizes the importance of employees as its most valuable asset, providing competitive salaries and a favorable work environment to retain talent[171]. - The company conducts performance assessments of suppliers to ensure quality and promote continuous improvement[170]. - The company maintains long-term stable relationships with major automotive suppliers, including luxury brands such as BMW, Maserati, and Ferrari, ensuring stable business development[170]. - The largest supplier of the company has been in a business relationship for over 15 years, indicating strong supplier stability[174]. - The company does not rely on any single customer, diversifying its customer base to mitigate risks[173]. - The company has a stock option plan established in June 2015, aimed at attracting and retaining talented employees by offering them the opportunity to purchase shares[185]. - The company regularly reviews its salary policies based on employee performance and profitability, providing bonuses to encourage contributions[171]. Stock Options and Share Issuance - The total number of stock options granted was 82,631,000, with 4,940,000 exercised during the year[190]. - As of December 31, 2020, 22,675,000 stock options remained unexercised from the total granted[190]. - The exercise price for the stock options granted on May 9, 2017, was HKD 3.00 per share[190]. - The stock options granted on December 17, 2019, total 20,000,000, with a vesting period starting from February 16, 2020[194]. - 32,400,000 stock options were canceled on April 7, 2020, and October 9, 2020, both with an exercise price of HKD 3.00[195]. - The company’s stock option plan allows for the granting of options to eligible employees and directors, with specific terms outlined[193].

Financial Performance - In 2020, the company achieved new car sales of 36,573 units, representing a year-on-year growth of 11.5%, surpassing the industry average growth rate[14]. - Total revenue reached RMB 15.09 billion, an increase of 16.8% compared to the previous year[14]. - The net profit (excluding non-recurring items) was RMB 5.063 billion, reflecting a year-on-year growth of 31.3%[14]. - The net cash generated from operating activities was RMB 7.795 billion, a significant increase of 239.0% year-on-year[14]. - The group’s capital expenditure for 2020 was RMB 404.6 million, primarily for new sales network establishment[52]. - The company’s net profit attributable to shareholders was RMB 410.7 million for 2020, a 32.7% increase compared to the previous year[48]. - Revenue for 2020 was RMB 14,746.9 million, a growth of 16.8% from RMB 12,621.8 million in 2019[40]. - The group’s gross profit for 2020 was RMB 1,298.8 million, up 19.5% from RMB 1,087.1 million in 2019[42]. - The gross margin improved to 8.8% in 2020, compared to 8.6% in 2019[44]. Market Expansion and Strategy - The company expanded its network by adding 10 new outlets, including 5 BMW, 3 Bentley, 1 Ferrari, and 1 Lincoln, primarily in new first-tier and second-tier cities in China[14]. - The company plans to achieve mass production of its electric vehicles by the first quarter of 2022, with current annual production capacity at 150,000 units, expandable to 300,000 units[17]. - The company is focusing on expanding its business into western and eastern China to tap into new car and replacement demand[31]. - The company plans to open new outlets for BMW, Lexus, and Ferrari, primarily in first and second-tier cities in China[31]. - The company aims to enhance operational efficiency and profitability through digitalization and improved inventory and customer relationship management[31]. - The company plans to continue expanding into the new energy vehicle sector, including strategic investments in brands like Byton and Dangdang[35]. Industry Context - In 2020, China's overall passenger car sales were 21 million units, a year-on-year decline of 6.8%, marking the third consecutive year of decline since 2018[26]. - Luxury brand retail sales in China reached 2.5 million units in 2020, an increase of 14.7% compared to 2019, highlighting a strong growth segment[26]. - The penetration rate of electric vehicles in China was approximately 6% by the end of 2020, with a target of reaching 20% by 2025 according to the government's "14th Five-Year Plan"[28]. Corporate Governance - The board of directors has complied with the corporate governance code and maintained high standards of corporate governance throughout the year[67]. - The audit committee held four meetings during the year ending December 31, 2020, to review interim and annual financial performance and reports[86]. - The remuneration committee conducted two meetings in the year ending December 31, 2020, to review the compensation of executive directors and senior management[88]. - The nomination committee is responsible for reviewing the composition of the board and providing recommendations for board member diversity, including factors such as gender and professional experience[90]. - The company emphasizes the importance of continuous professional development for directors to ensure informed contributions to the board[82]. - The audit committee includes three independent non-executive directors, ensuring oversight of financial reporting and internal controls[86]. Risk Management - The company faces interest rate risk due to fluctuations in debt interest rates, which could adversely affect financial expenses and profitability[59]. - The company has established a three-tier risk control structure to implement internal control and risk management policies[111]. - The board believes that the current risk management and internal control systems are effective and adequate[109]. - The company has faced major risks and uncertainties during the year, which were discussed in the business review section of the annual report[143]. Employee Relations - The company emphasizes employee relations, providing competitive salaries and a favorable work environment to enhance retention and productivity[170]. - The group employed a total of 4,206 employees as of December 31, 2020, compared to 3,589 employees in 2019, indicating business expansion[63]. - Employee costs for 2020 were approximately RMB 352.8 million, down from RMB 380.2 million in 2019, which included employee equity awards of RMB 26.2 million and RMB 85.6 million respectively[63]. - The company has a stock option plan established in June 2015, aimed at attracting and retaining talented employees[184]. Shareholder Communication - The company is committed to continuous communication with shareholders through various platforms, including the annual general meeting and its website[121]. - The annual general meeting provides an opportunity for the board to communicate with shareholders, with the chairman and committee heads present to address inquiries[121]. - The company ensures that all significant independent matters are presented as independent resolutions at the shareholders' meeting[115]. - The company has a policy to ensure that no insider information is disclosed to the public without board approval[112]. Financial Instruments and Capital Structure - The group has not utilized any derivative financial instruments to hedge its foreign exchange risk exposure[62]. - As of December 31, 2020, the total bank loans and other borrowings of the group amounted to RMB 2,604.4 million, representing a year-on-year increase of 4.4% compared to RMB 2,493.7 million as of December 31, 2019[55]. - The capital-to-debt ratio of the group as of December 31, 2020, was 38.9%, an increase of 3.0% from the ratio as of December 31, 2019[56]. - The company has adopted a dividend policy without a preset payout ratio, allowing the board to propose dividends based on financial conditions and other factors[121].