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].

[Annual Results Announcement](index=1&type=section&id=Annual%20Results%20Announcement) The Group's FY2022 revenue, new car sales, gross profit, and net profit attributable to owners all significantly declined, resulting in a full-year loss, with basic and diluted loss per share at RMB 1.08 [Performance Highlights](index=1&type=section&id=Performance%20Highlights) The Group's FY2022 revenue, new car sales, gross profit, and net profit attributable to owners all significantly declined, resulting in a full-year loss, with basic and diluted loss per share at RMB 1.08 FY2022 Performance Highlights | Metric | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 16,321.7 | 17,981.1 | -9.2% | | New Car Sales (units) | 35,506 | - | -13.0% | | Gross Profit | 1,079.7 | 1,751.3 | -38.3% | | Loss for the Year | (1,622.8) | 691.3 | N/A | | Profit after Non-Recurring Losses | 164.8 | - | N/A | | Basic and Diluted Loss Per Share (RMB) | (1.08) | 0.44 | N/A | - Gross profit from car sales and other businesses decreased by **64.6%** year-on-year, while gross profit from after-sales services decreased by **24.7%** year-on-year[33](index=33&type=chunk) [Annual Results](index=2&type=section&id=Annual%20Results) The Group transitioned from profit to loss in FY2022, with significant declines in revenue and gross profit, alongside a negative shift in other income and net gains [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) The Group shifted from profit to a loss of RMB 1,622.8 million in FY2022, with significant declines in revenue and gross profit, and a negative turn in other income and net gains leading to an operating loss Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 16,321,659 | 17,981,051 | -9.2% | | Cost of Sales and Services | (15,241,990) | (16,229,787) | -6.1% | | Gross Profit | 1,079,669 | 1,751,264 | -38.3% | | Other Income and Net Gains | (1,232,990) | 442,989 | N/A | | Operating (Loss)/Profit | (1,382,308) | 1,057,569 | N/A | | (Loss)/Profit for the Year | (1,622,804) | 691,271 | N/A | | (Loss)/Profit for the Year Attributable to Owners of the Company | (1,627,762) | 673,155 | N/A | | Basic (Loss)/Earnings Per Share (RMB) | (1.08) | 0.44 | N/A | - Total comprehensive loss for the year was **RMB 1,654.1 million**, compared to a total comprehensive income of **RMB 637.9 million** in 2021[49](index=49&type=chunk) [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2022, the Group's total assets and net assets decreased, with significant declines in non-current and current assets, particularly prepayments and other receivables, while trade payables and bills payable substantially increased Key Data from Consolidated Statement of Financial Position | Metric | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Total Non-Current Assets | 4,860,204 | 6,152,024 | -21.0% | | Total Current Assets | 5,942,353 | 7,096,574 | -16.3% | | Inventories | 1,540,438 | 1,129,635 | +36.4% | | Trade Receivables | 197,882 | 148,149 | +33.6% | | Prepayments, Other Receivables and Other Assets | 2,534,426 | 3,760,416 | -32.6% | | Cash and Bank Balances | 1,161,992 | 1,629,199 | -28.7% | | **Liabilities** | | | | | Total Current Liabilities | 3,899,527 | 4,355,319 | -10.5% | | Bank Loans and Other Borrowings | 2,083,023 | 2,629,978 | -20.8% | | Trade Payables and Bills Payable | 635,135 | 217,265 | +192.3% | | Total Non-Current Liabilities | 876,323 | 850,717 | +3.0% | | **Equity** | | | | | Net Assets | 6,026,707 | 8,042,562 | -25.1% | | Total Equity | 6,026,707 | 8,042,562 | -25.1% | - Investments at fair value through profit or loss decreased from **RMB 1,217,011 thousand** (non-current) and **RMB 81,504 thousand** (current) in 2021 to zero in 2022, indicating disposal or impairment of related investments[41](index=41&type=chunk) [Notes to Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details the Group's general information, accounting policies, segment reporting, and specific financial statement items, including revenue, expenses, and balance sheet components [General and Group Information](index=6&type=section&id=General%20and%20Group%20Information) China Harmony Auto Holding Limited was incorporated in the Cayman Islands in 2012 and listed on the HKEX in 2013, primarily engaging in car sales and after-sales services in mainland China, with Cititrust Private Trust (Cayman) Limited as the ultimate holding company and Mr. Feng Changge as the controlling shareholder - The Company was incorporated in the Cayman Islands on **September 24, 2012**, and listed on the Main Board of the HKEX on **June 13, 2013**[58](index=58&type=chunk) - The Group's principal activities are car sales and after-sales services in mainland China[58](index=58&type=chunk) - The Company's ultimate holding company is Cititrust Private Trust (Cayman) Limited, and Mr. Feng Changge is the Chairman, Executive Director, and controlling shareholder of the Company[59](index=59&type=chunk) [Basis of Preparation](index=7&type=section&id=Basis%20of%20Preparation) The consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA, applicable disclosure requirements of the HKEX Listing Rules, and the Hong Kong Companies Ordinance - The consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards (HKFRSs) issued by the HKICPA, and the applicable disclosure requirements of the HKEX Listing Rules and the Hong Kong Companies Ordinance[72](index=72&type=chunk) [Adoption of New and Revised HKFRSs](index=7&type=section&id=Adoption%20of%20New%20and%20Revised%20HKFRSs) The Group adopted all new and revised HKFRSs effective from January 1, 2022, this year, with no significant changes to its accounting policies, consolidated financial statement presentation, or reported amounts - All new and revised HKFRSs effective from **January 1, 2022**, have been adopted this year, with no significant impact on accounting policies or financial statements[73](index=73&type=chunk) [Operating Segment Information](index=7&type=section&id=Operating%20Segment%20Information) The Group's primary business is car sales and after-sales services, with all revenue and over 90% of non-current assets and liabilities located in mainland China, thus no geographical segment information is presented, operating as a single business unit - The Group's principal activities are car sales and after-sales services, operating as a single business unit with one reportable segment[74](index=74&type=chunk) - No geographical segment information is presented as all revenue and over **90%** of non-current assets and liabilities are located in mainland China[64](index=64&type=chunk) - No sales to a single customer reached **10%** or more of the Group's revenue during the year, thus no major customer information is presented[77](index=77&type=chunk) [Revenue (Note 4)](index=8&type=section&id=Revenue%20(Note%204)) The Group's total revenue in 2022 was **RMB 16,321.7 million**, a **9.2%** year-on-year decrease, with car sales and other revenue being the largest component but declining, after-sales service revenue also decreasing, while finance lease service revenue increased Revenue Classification | Revenue Source | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Car Sales and Other | 14,324,782 | 15,609,705 | -8.2% | | After-Sales Services | 1,936,818 | 2,326,282 | -16.7% | | Finance Lease Services | 60,059 | 45,064 | +33.3% | | **Total Revenue** | **16,321,659** | **17,981,051** | **-9.2%** | - Total revenue from customer contracts decreased from **RMB 17,935,987 thousand** in 2021 to **RMB 16,261,600 thousand** in 2022[68](index=68&type=chunk) - Performance obligations for car sales and other businesses are satisfied upon customer receipt of goods, typically requiring upfront payments; after-sales service obligations are satisfied upon service provision, with payments usually collected at the time of service[78](index=78&type=chunk)[84](index=84&type=chunk) [Other Income and Net Gains (Note 5)](index=10&type=section&id=Other%20Income%20and%20Net%20Gains%20(Note%205)) The Group's other income and net gains were a negative **RMB 1,233.0 million** in 2022, compared to a positive **RMB 443.0 million** in 2021, primarily due to a significant increase in impairment losses on investments at fair value through profit or loss Other Income and Net Gains | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Commission Income | 412,049 | 420,628 | -2.0% | | Bank Interest Income | 23,572 | 14,472 | +62.9% | | Government Grants | 9,920 | 7,383 | +34.4% | | Impairment Loss on Investments at Fair Value Through Profit or Loss | (1,298,515) | (58,763) | N/A | | Impairment Loss on Equity Investments Loan at Fair Value Through Other Comprehensive Income | (354,577) | — | N/A | | Impairment Loss on Loans to Third Parties | (40,296) | — | N/A | | **Total** | **(1,232,990)** | **442,989** | **N/A** | - Government grants include various subsidies received by the Company's subsidiaries from relevant government authorities, with no unfulfilled conditions or contingencies[86](index=86&type=chunk) [Finance Costs (Note 6)](index=11&type=section&id=Finance%20Costs%20(Note%206)) The Group's finance costs in 2022 were **RMB 121.3 million**, a **7.3%** year-on-year decrease, primarily due to a reduced average borrowing balance and improved loan management capabilities Composition of Finance Costs | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Interest on Bank Loans and Other Borrowings | 72,480 | 90,996 | -20.4% | | Interest on Leases | 51,871 | 48,785 | +6.3% | | Less: Capitalized Interest | (3,062) | (8,928) | -65.7% | | **Total** | **121,289** | **130,853** | **-7.3%** | [Income Tax Expense (Note 7)](index=11&type=section&id=Income%20Tax%20Expense%20(Note%207)) The Group's income tax expense in 2022 was **RMB 115.5 million**, a significant decrease from **RMB 235.7 million** in 2021, with mainland China subsidiaries taxed at **25%**, Hong Kong subsidiaries having no taxable profit, and Cayman Islands and BVI registered companies being tax-exempt Income Tax Expense | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Current Mainland China Corporate Income Tax Annual Provision | 123,733 | 246,397 | -49.8% | | Deferred Tax | (8,214) | (10,703) | -23.2% | | **Total Income Tax Expense** | **115,519** | **235,694** | **-51.0%** | - The income tax rate for mainland China subsidiaries is **25%**[95](index=95&type=chunk) - Hong Kong registered subsidiaries had no taxable profit in 2022, thus no provision for Hong Kong profits tax was made[88](index=88&type=chunk) [Loss/Profit for the Year (Note 8)](index=13&type=section&id=Loss%2FProfit%20for%20the%20Year%20(Note%208)) The Group transitioned from profit to a loss of **RMB 1,622.8 million** in 2022, primarily impacted by impairment losses on investments at fair value through profit or loss and write-offs of property, plant, and equipment Major Deductions/(Additions) in Loss/Profit for the Year | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Amortization of Intangible Assets | 6,455 | 5,818 | +10.9% | | Cost of Car Sales | 14,089,921 | 14,945,370 | -5.7% | | Cost of After-Sales Services | 1,152,069 | 1,284,417 | -10.3% | | Depreciation of Property, Plant and Equipment | 201,377 | 193,928 | +3.8% | | Impairment Loss on Investments at Fair Value Through Profit or Loss | 1,298,515 | 58,763 | N/A | | Total Employee Costs | 421,902 | 464,061 | -9.0% | - Impairment provision for inventories of **RMB 4,223 thousand** was made in 2022, compared to none in 2021[1](index=1&type=chunk) - After-sales service costs included employee benefit expenses of **RMB 142,382 thousand**, an increase from **RMB 120,497 thousand** in 2021[1](index=1&type=chunk) [Earnings/Loss Per Share (Note 9)](index=14&type=section&id=Earnings%2FLoss%20Per%20Share%20(Note%209)) The Group's basic and diluted loss per share in 2022 was **RMB 1.08**, compared to basic and diluted earnings per share of **RMB 0.44** in 2021, with diluted loss per share being the same as basic loss per share in 2022 due to the anti-dilutive effect of share options Loss/Earnings Per Share | Metric | 2022 (RMB) | 2021 (RMB) | | :--- | :--- | :--- | | Basic (Loss)/Earnings Per Share | (1.08) | 0.44 | | Diluted (Loss)/Earnings Per Share | (1.08) | 0.44 | - The loss/profit for the year attributable to owners of the Company used to calculate basic loss/earnings per share was **RMB (1,627,762) thousand** (2021: **RMB 673,155 thousand**)[104](index=104&type=chunk) - Due to the anti-dilutive effect of the Group's share options, diluted loss per share for the year ended **December 31, 2022**, was the same as basic loss per share[99](index=99&type=chunk) [Inventories (Note 10)](index=15&type=section&id=Inventories%20(Note%2010)) As of December 31, 2022, the Group's total inventories were **RMB 1,540.4 million**, a **36.4%** year-on-year increase, with car inventories being the largest component, and some inventories pledged as collateral for bank loans and bills payable Composition of Inventories | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Cars | 1,363,572 | 948,003 | +43.8% | | Parts and Accessories | 176,866 | 181,632 | -2.6% | | **Total** | **1,540,438** | **1,129,635** | **+36.4%** | - As of **December 31, 2022**, the Group pledged certain inventories with a total carrying amount of approximately **RMB 434,570 thousand** as collateral for bank loans and other borrowings[4](index=4&type=chunk) - As of **December 31, 2022**, the Group pledged certain inventories with a total carrying amount of approximately **RMB 206,671 thousand** as collateral for bills payable[101](index=101&type=chunk) [Trade Receivables (Note 11)](index=15&type=section&id=Trade%20Receivables%20(Note%2011)) As of December 31, 2022, the Group's total trade receivables were **RMB 197.9 million**, a **33.6%** year-on-year increase, with receivables within three months accounting for the largest portion, and the Group strictly monitors receivables through its credit control department, using lifetime expected credit loss provisions Aging Analysis of Trade Receivables | Aging | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Within 3 months | 191,481 | 128,297 | +49.2% | | 3 months to 1 year | 6,401 | 19,852 | -67.8% | | **Total** | **197,882** | **148,149** | **+33.6%** | - The Group is committed to strictly monitoring outstanding receivables and has a credit control department to minimize credit risk[106](index=106&type=chunk) - The Group applies the simplified approach under HKFRS 9, using lifetime expected credit loss provisions for all trade receivables[108](index=108&type=chunk) [Trade Payables and Bills Payable (Note 12)](index=16&type=section&id=Trade%20Payables%20and%20Bills%20Payable%20(Note%2012)) As of December 31, 2022, the Group's total trade payables and bills payable were **RMB 635.1 million**, a substantial **192.3%** year-on-year increase, with payables within three months accounting for the largest portion Aging Analysis of Trade Payables and Bills Payable | Aging | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Within 3 months | 596,491 | 212,083 | +181.2% | | 3 to 6 months | 16,257 | 2,762 | +488.6% | | 6 to 12 months | 21,429 | 636 | +3272.5% | | Over 12 months | 958 | 1,784 | -46.3% | | **Total** | **635,135** | **217,265** | **+192.3%** | - As of **December 31, 2022**, certain of the Group's bills payable were secured by inventories with a total carrying amount of approximately **RMB 206,671 thousand**[113](index=113&type=chunk) [Dividends (Note 13)](index=17&type=section&id=Dividends%20(Note%2013)) The Board does not recommend declaring any dividend for the year ended December 31, 2022, whereas a dividend of HKD 0.21 per share was distributed in 2021 - The Board does not recommend declaring any dividend for the year ended **December 31, 2022** (2021: **HKD 0.21** per share, totaling **RMB 281,012 thousand**, paid on **August 15, 2022**)[114](index=114&type=chunk)[145](index=145&type=chunk) [Management Discussion and Analysis](index=18&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the industry and company performance in 2022, outlines future business strategies, and provides a detailed financial overview, including revenue, costs, profitability, liquidity, and capital resources [Industry Review](index=18&type=section&id=Industry%20Review) In 2022, China's passenger car market grew **1.9%** amidst the pandemic, with luxury car sales up **6%** to **3.09 million units**, driven by a **49%** surge in new energy luxury vehicles, while top luxury brands like BBA saw sales decline but actively pursued electrification and increased China investments - In 2022, China's passenger car market recorded cumulative retail sales of **20.543 million units**, a **1.9%** year-on-year increase[30](index=30&type=chunk) - In 2022, luxury car market sales reached **3.09 million units**, a **6%** year-on-year increase, with the new energy luxury car market surging by **49%** against the trend[9](index=9&type=chunk) - BBA sales in China collectively declined (BMW **-6.4%**, Mercedes-Benz **-0.9%**, Audi **-8.4%**), but all announced the launch or production of pure electric vehicle factories in China with significant investments[9](index=9&type=chunk)[22](index=22&type=chunk) - In 2022, domestic new energy passenger vehicle retail sales reached **5.674 million units**, a **90%** year-on-year increase, with high-end electric vehicles increasingly becoming a mainstream family choice[115](index=115&type=chunk) [Industry Outlook](index=19&type=section&id=Industry%20Outlook) With fading pandemic impacts and stabilizing supply chains, the 2023 overall auto market is expected to improve, with new energy vehicles maintaining strong growth, potentially reaching a **36%** penetration rate, and luxury brands launching more new energy models while advancing brand reshaping, business model and channel optimization, and digital management - New energy passenger vehicle sales are expected to reach **8.5 million units** in 2023, with a projected penetration rate of **36%**[23](index=23&type=chunk) - The BBA family plans to launch more new energy vehicle models in 2023, with electrification transformation extending beyond product line enrichment to brand reshaping, business model and channel optimization, and advanced digital management models[116](index=116&type=chunk) [Company Review](index=20&type=section&id=Company%20Review) In 2022, the Company's total sales declined **13.0%** to **35,506 units** due to intermittent store closures and disrupted sales rhythms from pandemic lockdowns, with BMW (including MINI) and Lexus sales decreasing, but ultra-luxury brands like Ferrari, Bentley, and Rolls-Royce showing strong growth, while the Company continued to focus on used cars and EVs, strategically investing in Dangdang New Energy and securing authorizations for multiple mainstream EV brands - The Company's total sales in 2022 were **35,506 units**, a **13.0%** year-on-year decrease[112](index=112&type=chunk) 2022 Key Brand Sales Changes | Brand | 2022 Sales (units) | Year-on-Year Change (%) | | :--- | :--- | :--- | | BMW (incl. MINI) | 26,756 | -13.5% | | Lexus | 3,875 | -7.6% | | Ferrari | - | +250.0% | | Bentley | - | +14.1% | | Rolls-Royce | - | +7.3% | - The Company's operating network added a Bentley Beijing store and received awards such as '2022 Dealer of the Year' for Ferrari Greater China[16](index=16&type=chunk) - Average inventory turnover days increased by **7.0 days** year-on-year to **32.0 days**[16](index=16&type=chunk) - Strategic investment Dangdang New Energy has obtained authorizations from mainstream EV brands such as Li Auto, NIO Group, and XPeng, aiming to provide comprehensive sales and after-sales services[16](index=16&type=chunk) [Business Outlook](index=21&type=section&id=Business%20Outlook) The Company anticipates continued strong vitality in the high-end car market, will maintain its advantageous brand portfolio (BMW, Lexus, Ferrari, Bentley, and Rolls-Royce), and will pursue M&A strategies to expand market share, while enhancing profitability through optimized expense ratios and operational efficiency, and actively embracing electric and intelligent transformation to explore new business models - The Company will maintain its current advantageous brand portfolio and, when appropriate, pursue M&A strategies to consolidate and expand market share and influence[18](index=18&type=chunk) - The Company will further enhance profitability by optimizing various expense ratios and improving operational efficiency[18](index=18&type=chunk) - The transition to electric vehicles has become one of the Company's important mid-to-long-term strategies, and it will continue to focus on exploring new business models for traditional dealers under new trends[18](index=18&type=chunk) - Significant growth potential remains in the luxury and ultra-luxury brand segments, and the Company will actively embrace the transformation towards electric and intelligent vehicles[117](index=117&type=chunk) [Financial Overview](index=22&type=section&id=Financial%20Overview) The Group's 2022 financial performance faced challenges with declining revenue and gross profit, recording significant non-recurring losses, and while liquidity tightened, the Board believes existing resources are sufficient to meet funding needs, with the Company actively managing costs, debt, and employee remuneration and incentives - The Group's revenue in 2022 was **RMB 16,321.7 million**, a **9.2%** decrease compared to 2021[27](index=27&type=chunk) [Revenue](index=22&type=section&id=Revenue_Financial_Overview) In 2022, revenue from car sales and other businesses was **RMB 14,324.8 million**, an **8.2%** year-on-year decrease, while after-sales service revenue was **RMB 1,936.8 million**, a **16.7%** year-on-year decrease Revenue Composition | Revenue Source | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Car Sales and Other | 14,324.8 | 15,609.7 | -8.2% | | After-Sales Services | 1,936.8 | 2,326.3 | -16.7% | - Revenue from car sales and other businesses accounted for **87.8%** of total revenue in 2022, while after-sales service revenue accounted for **11.9%**[19](index=19&type=chunk) [Cost of Sales and Services](index=22&type=section&id=Cost%20of%20Sales%20and%20Services) In 2022, cost of sales and services was **RMB 15,242.0 million**, a **6.1%** year-on-year decrease, consistent with the overall revenue decline, with both car sales and other costs and after-sales service costs decreasing Composition of Cost of Sales and Services | Cost Type | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of Car Sales and Other | 14,089.9 | 14,945.4 | -5.7% | | Cost of After-Sales Services | 1,152.1 | 1,284.4 | -10.3% | | **Total** | **15,242.0** | **16,229.8** | **-6.1%** | - The decrease in costs was primarily due to lower revenue from car sales and other businesses, as well as after-sales services[28](index=28&type=chunk) [Gross Profit and Gross Margin](index=22&type=section&id=Gross%20Profit%20and%20Gross%20Margin) In 2022, gross profit was **RMB 1,079.7 million**, a **38.3%** year-on-year decrease, with gross margin at **6.6%**, down **3.1 percentage points**, primarily due to pandemic lockdowns and market oversupply affecting car sales and other gross margins, and reduced vehicle usage frequency impacting after-sales service gross margins Gross Profit and Gross Margin | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Gross Profit (RMB million) | 1,079.7 | 1,751.3 | -38.3% | | Gross Margin | 6.6% | 9.7% | -3.1 percentage points | | Gross Margin for Car Sales and Other | 1.6% | 4.2% | -2.6 percentage points | | Gross Margin for After-Sales Services | 40.5% | 44.8% | -4.3 percentage points | - Gross profit from car sales and other businesses was **RMB 234.9 million**, a **64.6%** year-on-year decrease; gross profit from after-sales services was **RMB 784.7 million**, a **24.7%** year-on-year decrease[29](index=29&type=chunk) - The decline in gross margin was primarily due to weakened market demand from pandemic lockdown measures, and oversupply leading to lower selling prices after manufacturers pre-stocked due to chip shortages[29](index=29&type=chunk) [Other Income and Net Gains](index=23&type=section&id=Other%20Income%20and%20Net%20Gains_Financial_Overview) In 2022, other income and net gains were a negative **RMB 1,233.0 million**, primarily impacted by **RMB 1,787.6 million** in total non-recurring losses, including full impairment provisions for FMC equity investment, independent after-sales company loans, 4S store closures and relocations, William Financial Holdings M&A fund investment, and third-party loans Total Non-Recurring Losses | Loss Source | Amount (RMB million) | | :--- | :--- | | Full Impairment Provision for FMC Equity Investment | 1,217.0 | | Impairment Loss on Independent After-Sales Company Loans and Advances | 354.6 | | Impairment Loss on Property, Plant and Equipment (4S Store Closures/Relocations) | 94.2 | | Full Impairment Provision for William Financial Holdings M&A Fund Investment | 81.5 | | Full Impairment Provision for Third-Party Loans | 40.3 | | **Total** | **1,787.6** | - Commission income was **RMB 412.0 million**, and interest income was **RMB 71.6 million**[149](index=149&type=chunk) [Sales and Administrative Expenses](index=23&type=section&id=Sales%20and%20Administrative%20Expenses) In 2022, sales and administrative expenses were **RMB 1,229.0 million**, an **8.1%** year-on-year increase, primarily due to one-off repair costs from store renovations and increased depreciation and lease costs for operational store assets Sales and Administrative Expenses | Metric | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Sales and Administrative Expenses | 1,229.0 | 1,136.7 | +8.1% | - The increase was primarily due to one-off repair costs from store renovations and increased depreciation and lease costs for operational store assets[152](index=152&type=chunk) [Finance Costs](index=24&type=section&id=Finance%20Costs_Financial_Overview) In 2022, finance costs were **RMB 121.3 million**, a **7.3%** year-on-year decrease, primarily due to a reduced average borrowing balance and improved loan management capabilities during the reporting period Finance Costs | Metric | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Finance Costs | 121.3 | 130.9 | -7.3% | [Loss/Profit for the Year Attributable to Owners of the Company](index=24&type=section&id=Profit%2FLoss%20for%20the%20Year%20Attributable%20to%20Owners%20of%20the%20Company) In 2022, the loss for the year attributable to owners of the Company was **RMB 1,627.8 million**, which would have been a profit of **RMB 159.8 million** excluding the impact of non-recurring losses Loss/Profit for the Year Attributable to Owners of the Company | Metric | 2022 (RMB million) | | :--- | :--- | | Loss for the Year Attributable to Owners of the Company | (1,627.8) | | Profit after Non-Recurring Losses | 159.8 | [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The Group's cash and bank balances totaled **RMB 1,162.0 million**, a **28.7%** year-on-year decrease, with liquidity needs primarily met through short-term bank loans and operating cash flows, and the Board believes existing resources are sufficient Cash and Bank Balances | Metric | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 1,162.0 | 1,629.2 | -28.7% | - The Group's liquidity needs are primarily met through a combination of short-term bank loans and cash flows from operating activities[163](index=163&type=chunk) - The Board believes that the Group's liquidity needs can be met[164](index=164&type=chunk) [Capital Expenditure](index=25&type=section&id=Capital%20Expenditure) Capital expenditure in 2022 was **RMB 386.4 million**, a **26.1%** year-on-year decrease, primarily for purchasing property, plant, and equipment related to sales outlets Capital Expenditure | Metric | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Capital Expenditure | 386.4 | 522.7 | -26.1% | [Cash Flow](index=25&type=section&id=Cash%20Flow) In 2022, net cash from operating activities was **RMB 781.1 million**, net cash from investing activities was **RMB 4.7 million**, and net cash used in financing activities was **RMB 1,080.4 million** Cash Flow | Activity Type | 2022 (RMB million) | | :--- | :--- | | Net Cash from Operating Activities | 781.1 | | Net Cash from Investing Activities | 4.7 | | Net Cash Used in Financing Activities | (1,080.4) | [Net Current Assets](index=25&type=section&id=Net%20Current%20Assets) As of December 31, 2022, the Group's net current assets were **RMB 2,042.8 million**, a **25.5%** year-on-year decrease, primarily due to impairment of current assets Net Current Assets | Metric | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Net Current Assets | 2,042.8 | 2,741.3 | -25.5% | - The decrease was primarily due to impairment of current assets, as detailed in the 'Other Income and Net Gains' section[165](index=165&type=chunk) [Inventories](index=26&type=section&id=Inventories_Financial_Overview) As of December 31, 2022, inventories increased **36.4%** from **RMB 1,129.6 million** to **RMB 1,540.4 million**, with average inventory turnover days increasing by **7 days** to **32 days**, primarily due to strict pandemic prevention policies in mainland China Inventories and Turnover Days | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Inventories (RMB million) | 1,540.4 | 1,129.6 | +36.4% | | Average Inventory Turnover Days (days) | 32 | 25 | +7 days | - The increase in inventories and inventory turnover days was primarily due to strict pandemic prevention policies in mainland China, such as lockdowns[166](index=166&type=chunk) [Bank Loans and Other Borrowings](index=26&type=section&id=Bank%20Loans%20and%20Other%20Borrowings) As of December 31, 2022, total bank loans and other borrowings were **RMB 2,083.0 million**, a **20.8%** year-on-year decrease, with some borrowings secured by assets like inventories, property, plant, and equipment, and land use rights, or guaranteed by directors, subsidiaries, or legal representatives, resulting in a **44.2%** gearing ratio, an increase of **4.9 percentage points** Bank Loans and Other Borrowings | Borrowing Type | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Bank Loans (within one year) | 1,436,133 | 1,622,591 | -11.5% | | Other Borrowings (within one year) | 646,890 | 1,007,387 | -35.8% | | **Total** | **2,083,023** | **2,629,978** | **-20.8%** | | Gearing Ratio | 44.2% | 39.3% | +4.9 percentage points | - Pledged assets include inventories of **RMB 434.6 million**, property, plant, and equipment of **RMB 13.1 million**, and land use rights of **RMB 4.4 million**[168](index=168&type=chunk) - Some bank loans and other borrowings are guaranteed by certain directors of the Company, subsidiaries of the Group, or legal representatives of certain subsidiaries of the Company[168](index=168&type=chunk) [Interest Rate Risk and Foreign Exchange Risk](index=27&type=section&id=Interest%20Rate%20Risk%20and%20Foreign%20Exchange%20Risk) The Group faces interest rate fluctuation risk, where rising rates could increase borrowing costs, and currently does not use financial derivatives to hedge this risk; while its business is primarily RMB-denominated, some cash deposits and bank borrowings are in HKD or USD, potentially leading to exchange differences from currency fluctuations, but no significant direct foreign exchange risk is currently perceived - The Group is exposed to risks arising from fluctuations in loan interest rates, where rising rates could lead to increased borrowing costs[174](index=174&type=chunk) - The Group does not use any financial derivative instruments to hedge interest rate risk[174](index=174&type=chunk) - The Group's business is primarily denominated in RMB, and it does not currently perceive any significant direct foreign exchange risk, nor does it use financial derivative instruments to hedge foreign exchange risk[169](index=169&type=chunk) [Employees and Remuneration Policy](index=27&type=section&id=Employees%20and%20Remuneration%20Policy) As of December 31, 2022, the Group employed **3,925** staff, a **13.7%** year-on-year decrease, with employee costs in 2022 at **RMB 421.9 million**, a **9.0%** year-on-year decrease, and the Company has share option and share award schemes to incentivize, reward, attract, and retain talent Employee Count and Costs | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Employee Count (persons) | 3,925 | 4,551 | -13.7% | | Employee Costs (RMB million) | 421.9 | 464.1 | -9.0% | - Employee remuneration packages are determined based on work experience, responsibilities, and performance, and are subject to annual review[175](index=175&type=chunk) - The Company has a share option scheme (effective 2015, approximately two years and three months remaining) and a share award scheme (adopted 2019, approximately two years and three months remaining), aimed at incentivizing and rewarding employees, and attracting and retaining talent[176](index=176&type=chunk)[183](index=183&type=chunk) [Other Information](index=29&type=section&id=Other%20Information) This section covers share repurchases, post-reporting period events, off-balance sheet arrangements, dividend policy, corporate governance, and administrative details for the upcoming AGM [Purchase, Sale or Redemption of Listed Securities](index=29&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the year ended December 31, 2022, the Company repurchased **32,366,000** ordinary shares on the HKEX for approximately **HKD 96,263,669.53**, with **15,974,000** repurchased shares cancelled on **June 10, 2022**, as the Directors believe share repurchases are in the best interest of the Company and its shareholders, enhancing earnings per share 2022 Share Repurchase Details | Month of Repurchase | Number of Shares | Total Consideration (HKD) | | :--- | :--- | :--- | | January 2022 | 5,638,500 | 26,325,433.25 | | February 2022 | 3,847,000 | 15,469,714.30 | | ... | ... | ... | | December 2022 | 1,139,500 | 1,394,200.00 | | **Total** | **32,366,000** | **96,263,669.53** | - **15,974,000** repurchased shares were subsequently cancelled on **June 10, 2022**[126](index=126&type=chunk) - The Directors believe that the share repurchases are in the best interests of the Company and its shareholders, and that such repurchases can enhance the Company's earnings per share[118](index=118&type=chunk) [Post-Reporting Period Events](index=29&type=section&id=Post-Reporting%20Period%20Events) As of the date of this announcement, no significant events have occurred that would have a material impact on the Group - No significant events that would have a material impact on the Group have occurred from the end of the reporting period on **December 31, 2022**, up to the date of this announcement[143](index=143&type=chunk) [Off-balance Sheet Commitments and Arrangements](index=30&type=section&id=Off-balance%20Sheet%20Commitments%20and%20Arrangements) As of the date of this announcement, the Group has not entered into any off-balance sheet transactions - As of the date of this announcement, the Group has not entered into any off-balance sheet transactions[144](index=144&type=chunk) [Final Dividend](index=30&type=section&id=Final%20Dividend) For the year ended December 31, 2022, the Company's Board of Directors recommends not declaring an annual dividend (2021: HKD 0.21 per ordinary share) - For the year ended **December 31, 2022**, the Company's Board of Directors recommends not declaring an annual dividend (2021: **HKD 0.21** per ordinary share)[145](index=145&type=chunk) [Compliance with Corporate Governance Code](index=30&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) For the year ended December 31, 2022, the Company complied with the applicable principles and code provisions of the Corporate Governance Code as set out in Appendix 14 of the HKEX Listing Rules - For the year ended **December 31, 2022**, the Company complied with the applicable principles and code provisions of the Corporate Governance Code as set out in Appendix 14 of the HKEX Listing Rules[146](index=146&type=chunk) - The Board will continue to review and monitor the Company's corporate governance practices to comply with the Corporate Governance Code and maintain a high standard of corporate governance practices[121](index=121&type=chunk) [Standard Code for Securities Transactions by Directors](index=30&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company adopted the Standard Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix 10 of the Listing Rules, as its code of conduct, and all Directors confirmed compliance for the year ended December 31, 2022 - The Company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix 10 of the Listing Rules, as its code of conduct[128](index=128&type=chunk) - All Directors have confirmed compliance with the Standard Code for the year ended **December 31, 2022**[128](index=128&type=chunk) [Significant Investments, Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures](index=30&type=section&id=Significant%20Investments%2C%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%20and%20Joint%20Ventures) Except as disclosed in this announcement, the Group did not undertake any significant investments, acquisitions, or disposals of subsidiaries, associates, and joint ventures during the reporting period - Except as disclosed in this announcement, the Group did not undertake any significant investments, acquisitions, or disposals of subsidiaries, associates, and joint ventures during the reporting period[129](index=129&type=chunk) [Sufficiency of Public Float](index=30&type=section&id=Sufficiency%20of%20Public%20Float) Based on publicly available information and the Directors' knowledge, the Board confirms that the Company maintained sufficient public float as required under the Listing Rules during the reporting period - The Directors confirm that the Company maintained sufficient public float as required under the Listing Rules during the reporting period[130](index=130&type=chunk) [2023 Annual General Meeting](index=31&type=section&id=2023%20Annual%20General%20Meeting) The Company will hold its 2023 Annual General Meeting on Tuesday, June 13, 2023, with the notice of meeting to be published and dispatched to shareholders in due course in accordance with the Listing Rules - The Company will hold its 2023 Annual General Meeting on **Tuesday, June 13, 2023**[132](index=132&type=chunk) [Closure of Register of Members for 2023 Annual General Meeting](index=31&type=section&id=Closure%20of%20Register%20of%20Members%20for%202023%20Annual%20General%20Meeting) To determine eligibility for attending and voting at the 2023 Annual General Meeting, the Company will suspend its share transfer registration from Thursday, June 8, 2023, to Tuesday, June 13, 2023 - The Company will suspend its share transfer registration from **Thursday, June 8, 2023**, to **Tuesday, June 13, 2023**[123](index=123&type=chunk) - Investors should submit all share transfer documents to the Company's share registrar branch no later than **4:30 p.m. on Wednesday, June 7, 2023**, for registration[123](index=123&type=chunk) [Auditor's Scope of Work](index=31&type=section&id=Auditor%27s%20Scope%20of%20Work) The consolidated financial statement figures for the Group for the year ended December 31, 2022, in the preliminary announcement have been agreed by the Group's auditor, ZHONGHUI ANDA CPA Limited, but their work does not constitute an assurance engagement under HKICPA standards, thus no assurance is given on the preliminary announcement - The consolidated financial statement figures for the Group for the year ended **December 31, 2022**, in the preliminary announcement have been agreed by the Group's auditor, ZHONGHUI ANDA CPA Limited[134](index=134&type=chunk) - The auditor's work does not constitute an assurance engagement issued by the HKICPA, thus no assurance is given on the preliminary announcement[134](index=134&type=chunk) [Audit Committee](index=31&type=section&id=Audit%20Committee) The Company has established an Audit Committee in compliance with the Listing Rules and Corporate Governance Code, which has reviewed the annual results for the year ended December 31, 2022, and comprises three independent non-executive directors, with Mr. Wang Nengguang as Chairman - The Company has established an Audit Committee in accordance with the Listing Rules and Corporate Governance Code, and has formulated written terms of reference[135](index=135&type=chunk) - The Audit Committee comprises three independent non-executive directors: Mr. Wang Nengguang (Chairman), Mr. Liu Guoxun, and Mr. Chen Yinglong[135](index=135&type=chunk) - The Audit Committee has reviewed the annual results for the year ended **December 31, 2022**[136](index=136&type=chunk) [Publication of Annual Results and Annual Report on HKEX and Company Website](index=32&type=section&id=Publication%20of%20Annual%20Results%20and%20Annual%20Report%20on%20HKEX%20and%20Company%20Website) The annual results announcement is published on the HKEX website and the Company's website, and the annual report will be dispatched to shareholders and made available on both websites in due course - The annual results announcement is published on the HKEX website (http://www.hkexnews.hk) and the Company's website (http://www.hexieauto.com)[138](index=138&type=chunk) - The annual report will be dispatched to shareholders and made available on the HKEX website and the Company's website in due course[138](index=138&type=chunk) [Acknowledgement](index=32&type=section&id=Acknowledgement) The Board sincerely thanks all employees for their loyalty and contributions, and shareholders and business partners for their trust and support, enabling the Group's growth and progress amidst competition and challenges - The Board sincerely thanks all employees for their loyalty and contributions, and all shareholders and business partners for their trust and support[139](index=139&type=chunk)

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].

Economic Performance - In the first half of 2020, China's GDP growth rate dropped to -1.6%, with a recovery of 3.2% in Q2 compared to Q1[8]. - The contribution rate of final consumption expenditure to economic growth in 2019 was 57.8%, indicating strong domestic demand potential[11]. - The automotive industry remains a pillar of the national economy, with a focus on stabilizing and expanding automobile consumption[11]. Automotive Sales and Market Trends - The retail sales of passenger cars in China decreased by 22.5% year-on-year, totaling 7.7 million units in the first half of 2020[8]. - The luxury car market showed a V-shaped recovery, with retail sales increasing by 1% year-on-year, reaching 1.05 million units[8]. - The luxury car segment is increasingly favored by consumers, with a significant rise in purchasing intent observed post-COVID-19[9]. - The penetration rate of automotive financial loans is increasing, lowering the barriers for purchasing luxury vehicles[9]. - The luxury car market in China has seen a compound annual growth rate of 22% over the past eleven years, significantly outpacing the overall passenger car market's 8%[17]. Company Sales and Revenue - BMW's sales in China were 329,000 units, a decline of 5.8% year-on-year, but Q2 sales increased by 17.1%[9]. - Lexus achieved a year-on-year sales growth of 4.8%, selling 97,000 units in the first half of 2020[9]. - New car sales volume for the first half of 2020 reached 14,613 units, a year-on-year decline of 5.5%, with BMW (including MINI) sales down 5.4% and Lexus sales up 7.4%[15]. - Revenue for the first half of 2020 was RMB 5,754.7 million, a slight decrease of 2.3% compared to RMB 5,891.5 million in the same period of 2019[21]. - New car sales revenue accounted for 87.3% of total revenue, amounting to RMB 5,021.4 million, while after-sales service revenue was RMB 717.9 million, down 13.6%[21]. Profitability and Financial Performance - The gross profit for the first half of 2020 was RMB 519.8 million, a decrease of 10.0% from RMB 577.6 million in the same period of 2019[23]. - The gross margin for the group in the first half of 2020 was 9.0%, down from 9.8% in the previous year[23]. - The profit attributable to the owners of the parent company for the first half of 2020 was approximately RMB 2,348 million, a decrease of 18.0% compared to the same period in 2019[29]. - The net profit for the six months ended June 30, 2020, was RMB 242,252,000, compared to RMB 293,958,000 for the same period in 2019, representing a decline of 17.6%[86]. - Basic earnings per share for the period was RMB 0.15, down from RMB 0.19 in the previous year[86]. Expenses and Cost Management - In the first half of 2020, the group's administrative expenses were RMB 758 million, remaining stable compared to the same period last year[26]. - The group's financial expenses for the first half of 2020 were RMB 571 million, an increase of 2.8% from RMB 555 million in the same period of 2019[28]. - The company’s total tax expense for the six months ended June 30, 2020, was RMB 65,388,000, compared to RMB 69,621,000 in the same period of 2019, a decrease of 6.4%[127]. - The company’s advertising and promotional expenses decreased to RMB 18,810,000 for the six months ended June 30, 2020, down from RMB 27,437,000 in the same period of 2019, a decline of 31.6%[126]. Cash Flow and Liquidity - As of June 30, 2020, the total cash and deposits amounted to RMB 18,016 million, with a net cash inflow from operating activities of RMB 7,291 million[32]. - The net cash generated from operating activities was RMB 729,108 thousand, an increase of 27% compared to RMB 574,595 thousand for the same period in 2019[104]. - Cash and cash equivalents at the end of the period amounted to RMB 1,801,591 thousand, up from RMB 1,163,500 thousand at the end of June 30, 2019, representing a 55% increase[104]. - The company reported a net cash outflow from investing activities of RMB 118,496 thousand, compared to RMB 72,651 thousand in the same period of 2019[104]. Inventory and Asset Management - Inventory decreased from RMB 12,619 million as of December 31, 2019, to RMB 10,251 million as of June 30, 2020, reflecting improved order management[35]. - The total inventory as of June 30, 2020, was RMB 1,025,138,000, down from RMB 1,261,867,000 as of December 31, 2019, a decrease of 18.7%[139]. - Current assets amounted to RMB 5,746,148,000, up from RMB 5,548,083,000, indicating an increase of about 3.57%[92]. - The company's goodwill increased to RMB 141,791,000 from RMB 57,911,000, showing a significant rise of approximately 144.5%[92]. Shareholder and Stock Options - The company has granted a total of 70,000,000 stock options under the stock option plan, with an exercise price of HKD 3.00 per share[57]. - The stock options granted on December 17, 2019, total 20,000,000 shares with an exercise price of HKD 4.00 per share[58]. - The stock options have a validity period until June 28, 2025, unless the relevant grantees cease to be employees[65]. - The company aims to attract and retain capable employees through the stock option plan, which was adopted on June 26, 2015[57]. Future Strategies and Expansion Plans - The group plans to expand its dealership network with 8 new authorized locations in key cities, enhancing its presence in the luxury car market[12]. - Future strategies include focusing on core business, expanding dealership operations through acquisitions, and increasing after-sales market value[20]. - The group aims to enhance customer retention and satisfaction while improving operational efficiency through data-driven management strategies[16]. Acquisitions and Goodwill - The group acquired 100% equity of several automotive sales service companies for a total consideration of RMB 154,057,000 during the reporting period[174]. - The goodwill arising from the acquisition is provisionally estimated at RMB 83,880,000, reflecting the expected synergies and future market developments[179].

China Harmony New Energy Auto Holding Limited 中國和諧新能源汽車控股有限公司 (於開曼群島註冊成立的有限公司) 股份代號 : 3836 2019 年度報告 102 2 1 2012 1 Card ( 目錄 公司資料 2 主席致辭 4 管理層討論與分析 9 企業管治報告 17 董事及高級管理層 29 董事會報告 > 34 2019年度環境·社會及管治報告 52 74 78 80 82 84 87 186 獨立核數師報告 | --- | |--------------------------| | | | | | 綜合損益及其他全面收入表 | | 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 | | | 五年財務概要 公司資料 執行董事 馮長革先生(主席) 王能光先生(於2019年2月4日獲委任) 馮長革先生(主席) 陳英龍先生(於2020年3月27日獲委任) 劉風雷先生(總裁) 薛國平先生(於2020年3月27日辭任) 馬林濤女士(副總裁) 肖 長 年 先 生 ( 於 2019年 2 月 4 日 辭 任 ) 馮 果女士(副 ...