首惠产业金融(00730) - 2023 - 中期财报

Corporate Information This chapter provides the company's basic information, governance structure, and contact details, including board members, committee composition, registration information, and auditors - The company's Chairman of the Board is Sun Yajie, Managing Director is Liang Hengyi, and Executive Director is Tian Gang[20] - The company's stock code is 730, and its official website is **www.capital-ifs.com**[3](index=3&type=chunk)[4] - The company's auditor is PricewaterhouseCoopers[16][22][28] Interim Results This chapter outlines the Group's unaudited condensed consolidated interim results for the six months ended June 30, 2023, which have been reviewed by the Board's audit committee and the company's auditor Condensed Consolidated Statement of Comprehensive Income This statement presents the Group's revenue from continuing operations, gross profit, operating profit, and profit for the period for the six months ended June 30, 2023, compared to the same period in 2022 Key Data from Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Indicator | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue from continuing operations | 100,020 | 125,595 | -20.4% | | Revenue from sale and leaseback arrangements | 86,499 | 43,445 | +99.1% | | Revenue from supply chain management business | 11,220 | 79,818 | -85.9% | | Property rental income | 2,301 | 2,332 | -1.3% | | Gross profit | 53,743 | 47,329 | +13.6% | | Other income | 9,827 | 3,219 | +205.3% | | Operating profit | 39,324 | 30,322 | +29.7% | | Profit before income tax | 40,327 | 28,430 | +41.8% | | Profit from continuing operations | 30,120 | 18,832 | +60.0% | | Profit for the period | 30,120 | 17,568 | +71.4% | | Profit attributable to owners of the Company | 22,406 | 9,302 | +140.9% | | Basic earnings per share (HK Cents) | 0.56 | 0.23 | +143.5% | - The total comprehensive loss for the period was HK$(25,683) thousand, a narrowing from HK$(48,370) thousand in the same period of 2022[30] Condensed Consolidated Statement of Financial Position This statement presents the Group's assets, liabilities, and equity as of June 30, 2023, and December 31, 2022 Key Data from Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Total non-current assets | 568,043 | 633,581 | -10.4% | | Total current assets | 1,304,669 | 1,372,650 | -4.9% | | Total assets | 1,872,712 | 2,006,231 | -6.7% | | Total equity | 1,715,526 | 1,755,376 | -2.3% | | Total non-current liabilities | 24,537 | 27,495 | -10.8% | | Total current liabilities | 132,649 | 223,360 | -40.6% | | Total liabilities | 157,186 | 250,855 | -37.3% | - Restricted bank deposits decreased from HK$75,817 thousand as of December 31, 2022, to zero as of June 30, 2023[12] - Cash and cash equivalents increased from HK$322,904 thousand as of December 31, 2022, to HK$378,239 thousand as of June 30, 2023[12] Condensed Consolidated Statement of Changes in Equity This statement presents the Group's changes in share capital, reserves, and non-controlling interests for the six months ended June 30, 2023 Key Data from Condensed Consolidated Statement of Changes in Equity (As of June 30) | Indicator | June 30, 2023 (HK$ Thousand) | January 1, 2023 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Equity and reserves attributable to owners of the Company | 1,381,171 | 1,417,068 | -2.5% | | Non-controlling interests | 334,355 | 338,308 | -1.2% | | Total equity | 1,715,526 | 1,755,376 | -2.3% | - The total comprehensive loss for the period was HK$(25,683) thousand, of which the loss attributable to owners of the Company was HK$(23,943) thousand[322] - Declared dividends of HK$11,954 thousand resulted in a reduction in retained earnings attributable to owners of the Company[322] Condensed Consolidated Statement of Cash Flows This statement presents the Group's cash flows from operating, investing, and financing activities, as well as cash and cash equivalents at the end of the period, for the six months ended June 30, 2023 Key Data from Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Net cash (used in) / generated from operating activities | (12,126) | 65,144 | -118.6% | | Net cash generated from investing activities | 17,863 | 5,351 | +233.8% | | Net cash generated from financing activities | 60,306 | 15,077 | +300.0% | | Net increase in cash and cash equivalents | 66,043 | 85,572 | -22.8% | | Cash and cash equivalents at end of period | 378,239 | 459,404 | -17.7% | - Cash flow from operating activities shifted from net inflow to net outflow, primarily due to an increase in income tax paid[333] - Net cash generated from financing activities significantly increased, mainly benefiting from changes in restricted bank deposits[333] Notes to the Condensed Consolidated Interim Financial Information This section provides detailed notes for various financial statement figures, covering company overview, accounting policies, valuation methods, segment information, and related party transactions, offering context and explanation for understanding the financial data General Information The Company is an investment holding company incorporated in Bermuda, with principal subsidiaries engaged in sale and leaseback arrangements, property leasing, and supply chain management businesses; its functional currency is RMB, but financial information is presented in HKD - The Company's principal businesses include sale and leaseback arrangements, property leasing services, and supply chain management business[68][326] - The Company's functional currency is RMB, but the condensed consolidated interim financial information is presented in HKD[69][341] Basis of Preparation This condensed consolidated interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA and should be read in conjunction with the annual consolidated financial statements - The financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[67][80][336] - This interim financial information does not include all notes normally included in annual financial statements and should be read in conjunction with the annual consolidated financial statements[67][80] Accounting Policies The accounting policies adopted by the Group are consistent with the previous financial year, with initial application of amendments to HKAS 8, HKAS 12, and HKFRS 17, while certain new standards issued but not yet effective are still under evaluation - Accounting policies are consistent with those applied in the previous financial year and relevant interim reporting period[71][72] - Initial application of amendments to HKAS 8 (Definition of Accounting Estimates), HKAS 12 (Deferred Tax related to Assets and Liabilities arising from a Single Transaction), and HKFRS 17 (Insurance Contracts)[71][81][82][337] - The Group is evaluating the impact of new and revised standards and interpretations issued but not yet effective, and currently cannot determine if they will have a significant impact[75][359] Estimates Significant judgments, estimates, and assumptions made by management in preparing the condensed consolidated interim financial information are consistent with those applied in the annual consolidated financial statements for the year ended December 31, 2022 - Significant judgments made by management in applying accounting policies and in estimating uncertainties are consistent with the 2022 annual consolidated financial statements[94][376] Fair Value Measurements of Financial Instruments This section updates judgments and estimates for fair value measurements of financial instruments, categorizing them into three levels based on the observability of input data, primarily involving financial assets measured at fair value through profit or loss - The Group categorizes financial instruments into three fair value levels, with financial instruments traded in active markets (e.g., listed equity securities) belonging to Level 1[97][110][362][366] Financial Assets Measured at Fair Value Through Profit or Loss | Indicator | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Financial assets measured at fair value through profit or loss | 2,140 | 2,809 | - There were no transfers between Level 1, Level 2, and Level 3 during the periods ended June 30, 2023, and December 31, 2022[353][363] Segment Information The Group is currently divided into three operating segments: sale and leaseback arrangements, property leasing, and supply chain management businesses; the asset management and consultancy services segment was discontinued in 2022, and executive directors assess segment performance and allocate resources based on internal reports - The Group's operating segments include sale and leaseback arrangements, property leasing services, and supply chain management business[130][131] - The asset management and consultancy services segment was discontinued in 2022[130][131] Segment Revenue and Results (For the six months ended June 30) | Segment | 2023 Revenue (HK$ Thousand) | 2022 Revenue (HK$ Thousand) | Revenue Change Rate | 2023 Results (HK$ Thousand) | 2022 Results (HK$ Thousand) | Results Change Rate | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sale and leaseback arrangements services | 86,499 | 43,445 | +99.1% | 34,994 | 34,616 | +1.1% | | Property leasing services | 2,301 | 2,332 | -1.3% | 2,197 | 5,141 | -57.3% | | Supply chain management business | 11,220 | 79,818 | -85.9% | 5,113 | 2,053 | +149.1% | | Total (Continuing Operations) | 100,020 | 125,595 | -20.4% | 42,304 | 41,810 | +1.2% | Other Income The Group's other income for the six months ended June 30, 2023, significantly increased by 205%, primarily due to interest income from credit financing arrangements with related parties and government subsidies Composition of Other Income (For the six months ended June 30) | Income Source | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Bank deposit interest income | 2,630 | 3,034 | -13.3% | | Credit financing arrangement income from related parties | 4,152 | – | N/A | | Government grants | 2,343 | 88 | +2562.5% | | Others | 702 | 97 | +623.7% | | Total | 9,827 | 3,219 | +205.3% | - HK$2,343 thousand in government grants were received in the first half of 2023 for VAT deductions[144][156] Other Gains For the six months ended June 30, 2023, the Group recorded no other gains, whereas the same period in 2022 primarily saw gains from the recovery of previously written-off receivables under sale and leaseback arrangements Other Gains (For the six months ended June 30) | Gain Source | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Recovery of receivables under sale and leaseback arrangements previously written off | – | 5,464 | Profit for the Period This section lists the expenses deducted when calculating profit for the period, including legal and professional fees, employee benefit expenses, depreciation, and amortization Profit for the Period Deductions (For the six months ended June 30) | Expense Item | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Legal and professional fees | 2,330 | 469 | +396.8% | | Employee benefit expenses | 13,247 | 13,500 | -1.9% | | Depreciation of property, plant and equipment | 210 | 351 | -40.2% | | Amortisation of intangible assets | 692 | 920 | -24.8% | | Depreciation of right-of-use assets | 1,163 | 2,197 | -47.1% | Finance Costs The Group's total finance costs for the six months ended June 30, 2023, significantly decreased to HK$875 thousand from HK$2,333 thousand in the same period of 2022, primarily due to reduced interest on bank borrowings Composition of Finance Costs (For the six months ended June 30) | Cost Item | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Interest on bank borrowings and bills receivable | 159 | 6,381 | -97.5% | | Less: Amounts capitalised in cost of sale and leaseback arrangements | (141) | (4,388) | -96.8% | | Interest on loan from a related party | 631 | – | N/A | | Interest on lease liabilities | 226 | 340 | -33.5% | | Total | 875 | 2,333 | -62.5% | Income Tax Expense The Group's income tax expense for the six months ended June 30, 2023, was HK$10,207 thousand, primarily from its Chinese subsidiaries, which are subject to a 25% tax rate Income Tax Expense (For the six months ended June 30) | Tax Type | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Current tax – China | 9,546 | 8,381 | +13.9% | | Deferred income tax | 661 | 1,217 | -45.7% | | Total Income Tax Expense | 10,207 | 9,598 | +6.3% | - The corporate income tax rate for Chinese subsidiaries is 25%[149] Dividends On May 22, 2023, the Company approved a final dividend of HK$0.003 per share for the year ended December 31, 2022, totaling approximately HK$11,954 thousand; no interim dividends were paid or declared for the six months ended June 30, 2023 - The 2022 final dividend was HK$0.003 per share, totaling approximately HK$11,954 thousand[149] - No interim dividends were paid or declared by the Company for the six months ended June 30, 2023, and 2022[149] Earnings Per Share Basic earnings per share from continuing operations attributable to owners of the Company significantly increased to HK 0.56 cents from HK 0.26 cents in the same period of 2022; there were no diluted earnings per share as no potential dilutive shares existed during the period Earnings Per Share (For the six months ended June 30) | Indicator | 2023 (HK Cents) | 2022 (HK Cents) | Change Rate | | :--- | :--- | :--- | :--- | | Basic and diluted earnings per share from continuing operations attributable to ordinary equity holders of the Company | 0.56 | 0.26 | +115.4% | | Basic and diluted earnings per share attributable to ordinary equity holders of the Company | 0.56 | 0.23 | +143.5% | - For the six months ended June 30, 2023, and 2022, there were no diluted earnings per share as no potential dilutive shares existed[153] Movements in Property, Plant and Equipment For the six months ended June 30, 2023, the Group did not make any additions to property, plant, and equipment - For the six months ended June 30, 2023, the Group made no additions to property, plant, and equipment[175] Investment Properties The Group's investment properties include residential units in Hong Kong and commercial units in Mainland China, with fair values calculated by independent professional valuers; as of June 30, 2023, investment property fair values decreased, and some were disposed of through the sale of a subsidiary Fair Value of Investment Properties | Property Type | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Residential property units in Hong Kong | 20,500 | 32,900 | -37.7% | | Commercial property units in Mainland China | 97,180 | 100,302 | -3.1% | | Total | 117,680 | 133,202 | -11.6% | - For the six months ended June 30, 2023, investment properties of HK$12,500 thousand were disposed of through the sale of a subsidiary[165] - The fair value of investment properties is valued by Richfield Global Appraisal Advisory Limited, an independent professional valuer[166][176] Intangible Assets The Group's intangible assets primarily comprise goodwill and a supply chain finance platform; as of June 30, 2023, the net book value of intangible assets slightly decreased, and the directors believe there are no indications of impairment Net Book Value of Intangible Assets | Asset Type | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Goodwill | 53,814 | 55,543 | -3.1% | | Supply chain finance platform | 8,516 | 9,482 | -10.2% | | Total | 62,330 | 65,025 | -4.2% | - Goodwill has been allocated to the sale and leaseback arrangements services segment and the supply chain management business segment[182][184] - For the six months ended June 30, 2023, amortization expense for intangible assets was approximately HK$692 thousand[172][192] Receivables Under Sale and Leaseback Arrangements The Group's receivables under sale and leaseback arrangements totaled HK$1,039,972 thousand as of June 30, 2023, with no overdue amounts; fixed-rate receivables increased as a proportion, while floating-rate receivables decreased, and no receivables were pledged during the period Receivables Under Sale and Leaseback Arrangements (As of June 30) | Type | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Current portion (receivable within twelve months) | 767,627 | 772,246 | -0.6% | | Non-current portion (receivable after twelve months) | 296,994 | 339,516 | -12.5% | | Provision for impairment loss | (24,649) | (21,648) | +13.9% | | Total | 1,039,972 | 1,090,114 | -4.7% | Interest Rate Types of Receivables Under Sale and Leaseback Arrangements (As of June 30) | Interest Rate Type | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Fixed-rate receivables | 931,713 | 840,390 | +10.9% | | Floating-rate receivables | 108,259 | 249,724 | -56.6% | - As of June 30, 2023, no receivables under sale and leaseback arrangements were pledged as collateral for bank borrowings[211] Trade and Bill Receivables As of June 30, 2023, total trade and bill receivables amounted to HK$3,426 thousand, a significant decrease from December 31, 2022; credit terms typically range from 30 to 90 days, and bill maturities from 6 to 12 months Trade and Bill Receivables (As of June 30) | Indicator | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Trade and bill receivables | 3,426 | 15,061 | -77.2% | | Provision for impairment loss | – | (28) | N/A | | Total | 3,426 | 15,033 | -77.2% | - The credit period for trade receivables is typically 30 to 90 days, and the maturity period for bills receivable is typically 6 to 12 months[201] Interest in an Associate As of June 30, 2023, the Group's interest in an associate had a carrying amount of HK$83,099 thousand, with an increase in its share of operating profit during the period, and management believes there are no indications of impairment Movements in Interest in an Associate | Indicator | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | At beginning of period/year | 83,951 | 92,930 | -9.7% | | Share of operating profit | 1,838 | 523 | +251.4% | | Share of other comprehensive loss | (2,690) | (7,573) | -64.5% | | Dividends received | – | (1,929) | N/A | | Interest in an Associate | 83,099 | 83,951 | -1.0% | - The cost of investment in an associate includes goodwill of approximately HK$23,458 thousand[206][214] - Management believes there are no indications of impairment for the investment in an associate[206][214] Secured Bank Borrowings As of June 30, 2023, the Group's bank borrowings were fully settled, compared to HK$13,639 thousand outstanding as of December 31, 2022 Secured Bank Borrowings (As of June 30) | Indicator | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Secured bank borrowings | – | 13,639 | -100% | - As of June 30, 2023, the Group's borrowings were fully settled[216] - As of December 31, 2022, the effective interest rate for secured floating-rate bank borrowings ranged from 4.75% to 5.77%[219] Discontinued Operation The Group's asset management and consultancy services operating segment was discontinued in 2022, resulting in no revenue or loss recorded for this segment for the six months ended June 30, 2023 - The asset management and consultancy services operating segment was discontinued in 2022[229][230] Financial Data of Discontinued Operation (For the six months ended June 30) | Indicator | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | – | – | | Gross profit | – | – | | Loss before income tax | – | (1,264) | | Loss from discontinued operation | – | (1,264) | | Total comprehensive loss for the period | – | (2,840) | | Net cash used in operating activities | – | (2,563) | Share Capital As of June 30, 2023, the Company's authorized share capital comprised 10,000,000,000 ordinary shares of HK$0.01 par value each, with 3,984,639,703 shares issued and fully paid, amounting to HK$39,846 thousand, remaining unchanged from 2022 Share Capital Information (As of June 30) | Indicator | Number of Shares | Amount (HK$ Thousand) | | :--- | :--- | :--- | | Authorised share capital (ordinary shares of HK$0.01 par value each) | 10,000,000,000 | 100,000 | | Issued and fully paid share capital (ordinary shares of HK$0.01 par value each) | 3,984,639,703 | 39,846 | - As of June 30, 2023, the share capital structure remained consistent with December 31, 2022[223] Other Payables and Accruals As of June 30, 2023, the Group's total other payables and accruals increased to HK$85,352 thousand from December 31, 2022, primarily due to an increase in guarantee deposits received and dividends payable Other Payables and Accruals (As of June 30) | Item | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Accrued salaries and bonuses | 6,521 | 9,511 | -31.4% | | Accrued legal and professional fees | 2,074 | 3,255 | -36.3% | | Guarantee deposits received | 40,910 | 29,957 | +36.5% | | Other taxes payable | 15,604 | 11,535 | +35.3% | | Dividends payable | 14,074 | – | N/A | | Interest payable | – | 23 | N/A | | Advances from customers | – | 15 | N/A | | Others | 6,169 | 15,744 | -60.8% | | Total | 85,352 | 70,040 | +21.9% | - As of June 30, 2023, amounts due to suppliers were HK$1,793 thousand, a decrease from HK$3,295 thousand as of December 31, 2022[236][241] Assets Pledged as Security As of June 30, 2023, the Group had no investment properties or receivables under sale and leaseback arrangements pledged as collateral for bank borrowings - As of June 30, 2023, no investment properties were pledged to banks[236][242] - As of June 30, 2023, no receivables under sale and leaseback arrangements were pledged to banks[235][236] Related Party Disclosure This section discloses the Group's transactions and outstanding balances with related parties, primarily Shougang Group and its subsidiaries, including revenue, interest income, management fees, receivables, payables, and deposits - The Company and the Group are ultimately controlled by Shougang Group Co., Ltd[237][245] Transactions with Related Parties (For the six months ended June 30) | Transaction Type | Related Party | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Revenue from supply chain management services | Subsidiaries of Shougang Group | 2,843 | – | | Revenue from sale and leaseback arrangements | Subsidiaries of Shougang Group | 8,554 | 16,517 | | Revenue from sale and leaseback arrangements | Associate of Shougang Group | – | 684 | | Interest income from credit financing arrangements | Subsidiaries of Shougang Group | 4,152 | – | | Management fee expenses | Subsidiaries of Shougang Group | 42 | 1,440 | | Lease payments | Subsidiaries of Shougang Group | 240 | 1,173 | | Purchase of trading goods | Subsidiaries of Shougang Group | – | 43,581 | | Purchase of trading goods | Associate of Shougang Group | – | 25,735 | - As of June 30, 2023, current deposits placed with financial institutions of Shougang Group's subsidiaries amounted to HK$77,006 thousand, with an annual interest rate of 0.35%[261] Report on Review of Interim Financial Information This chapter presents the independent auditor's review report by PricewaterhouseCoopers on the Group's interim financial information for the six months ended June 30, 2023, confirming that the financial information complies in all material respects with Hong Kong Accounting Standard 34 - PricewaterhouseCoopers reviewed the interim financial information in accordance with Hong Kong Standard on Review Engagements 2410[278][289] - The review concluded that nothing has come to the auditor's attention that causes them to believe the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[267][290] Management Discussion and Analysis This chapter provides management's detailed analysis of the Group's financial performance, business operations, and future outlook for the six months ended June 30, 2023, emphasizing business transformation, supply chain finance platform development, and risk management Key Financial Performance Indicators The Group's financial results for the six months ended June 30, 2023, show a 141% significant increase in profit attributable to owners of the Company and a substantial improvement in gross profit margin, despite a decrease in revenue from continuing operations Key Financial Performance Indicators (As of June 30) | Indicator | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue from continuing operations | 100,020 | 125,595 | -20% | | Gross profit margin from continuing operations (%) | 54% | 38% | +16% | | Profit for the period from continuing operations | 30,120 | 18,832 | +60% | | Profit attributable to owners of the Company | 22,406 | 9,302 | +141% | | Basic earnings per share (HK Cents) | 0.56 | 0.23 | +143% | Key Financial Indicators (As of June 30) | Indicator | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Total cash | 378,239 | 322,904 | +17% | | Total assets | 1,872,712 | 2,006,231 | -7% | | Total liabilities | 157,186 | 250,855 | -37% | | Bank borrowings | – | 13,639 | -100% | | Equity and reserves attributable to owners of the Company | 1,381,171 | 1,417,068 | -3% | | Current ratio | 984% | 615% | +369% | Financial Overview The Group's revenue from continuing operations decreased by 20% to HK$100.02 million, primarily due to the transformation of its supply chain management business; gross profit increased by 14% to HK$53.743 million, with the gross profit margin rising to 54%, driven by the supply chain management business transformation and expansion of sale and leaseback operations, while other income surged by 205% and administrative expenses decreased by 8% - Revenue from continuing operations decreased by 20%, primarily due to the business transformation of the supply chain management segment, which suspended full-process services such as steel product trading and logistics based on market conditions[38][41][44] - Gross profit from continuing operations increased by 14% to HK$53,743 thousand, with the gross profit margin rising from 38% to 54%, mainly attributable to the successful transformation of the supply chain management business, the launch of the supply chain finance platform, and the continuous expansion of sale and leaseback arrangements[38][39][297][310] - Other income increased by 205% to HK$9,827 thousand, primarily due to increased interest income from credit financing arrangements with related parties and government grants[42][313] - Administrative expenses decreased by 8% to HK$20,303 thousand, mainly due to reduced administrative labor costs, lower depreciation of right-of-use assets, and the termination of consultancy management services[45][311] - Share of profit from an associate increased to HK$1,878 thousand, continuing to contribute to the Group's profit[43][298] Business Review and Outlook The Group continues to advance its development strategy centered on supply chain management services, finance leasing, and commercial factoring, aiming to build an industry-finance integrated supply chain financial technology service platform; segment performance varied, with supply chain management improving through platform transformation, sale and leaseback expanding, property leasing remaining stable, and asset management and consultancy services discontinued - The Group positions supply chain management services, finance leasing, and commercial factoring as its core businesses, aiming to build an industry-finance integrated supply chain financial technology service platform[49][315] - 2023 marks the inaugural year for the Group to build its supply chain finance service platform after business restructuring, making supply chain finance services its primary development task[403][415] Sale and Lease Back Arrangements Services Segment The sale and leaseback arrangements services segment's revenue significantly increased by 99% to HK$86.499 million, with stable segment results; business models include sale and leaseback and direct leasing, primarily serving customers in the steel industry and its upstream/downstream enterprises, while continuously expanding C-end consumer leasing business - Revenue from the sale and leaseback arrangements services segment increased by 99% to HK$86,499 thousand, with segment results recording a profit of HK$34,994 thousand, remaining stable and continuously contributing to the Group's profit[395][399] - Revenue growth was primarily due to the continuous expansion of C-end consumer leasing business[395][399] - As of June 30, 2023, the Group conducted a total of 90,331 finance lease transactions, of which 90,322 were with independent individual customers, with principal amounts ranging from RMB750 to RMB150 million[394][396] Supply Chain Management Business Segment The supply chain management business segment's revenue significantly decreased by 85.9% to HK$11.22 million, but segment results recorded a profit of HK$5.113 million, an increase of 149.1%; this was primarily due to business transformation, suspending spot trading and successfully launching the blockchain-based "Shougang Supply Chain Finance Platform" and "Shougang Jingpiao" - Revenue from the supply chain management business segment significantly decreased, but segment results recorded a profit of HK$5,113 thousand, an increase of 149.1%[402][414] - Business transformation was successful, suspending spot trading business and successfully launching the blockchain-based "Shougang Supply Chain Finance Platform" and "Shougang Jingpiao" by the end of 2022[402][414] - As of June 30, 2023, the total value of Shougang Jingpiao opened through the Shougang Supply Chain Finance Platform was approximately RMB5.13 billion, with approximately 1,858 suppliers and 2 financial institutions registered[403][415] Property Leasing Services Segment The property leasing services segment's revenue remained stable at HK$2.301 million, but segment results recorded a profit of HK$2.197 million, a 57.3% decrease, primarily because the increase in investment property fair value was less than in the same period last year - Revenue from the property leasing services segment remained stable, but segment results recorded a profit of HK$2,197 thousand, a 57.3% decrease[408][409] - The decrease in profit was mainly due to the fair value of investment properties increasing by approximately HK$100 thousand during the current period, which was lower than HK$2,927 thousand in the same period last year[408][409] Assets Management and Consultancy Services Segment The asset management and consultancy services segment was discontinued in 2022, resulting in no revenue or loss for this segment for the six months ended June 30, 2023 - The asset management and consultancy services segment was discontinued in 2022, with no revenue or loss during the period[407][416] Future Outlook and Strategy The Group will continue to enhance the intelligence of its supply chain finance service platform, innovate financial products using high technology, provide financing convenience for small and medium-sized merchants, and strengthen its risk control system by building an online risk control platform to achieve sustainable growth - The Group considers supply chain management business as its future focus, continuing to enhance the intelligence of the Shougang Supply Chain Finance Platform and leverage high-tech advantages[401][403] - The supply chain finance platform will provide financing convenience for small and medium-sized merchants, reduce financing costs, and enhance supply chain stability[418][425] - The focus will be on strengthening the risk control system, introducing information technology platforms, and advancing the construction of an online risk control platform based on asset securitization and industry supply chain businesses[426][427] Liquidity, Financial Resources and Financing Activities As of June 30, 2023, the Group's cash and cash equivalents increased to HK$378.239 million, total borrowings significantly decreased to HK$30.514 million, and the current ratio substantially improved to 984% Liquidity and Financial Resources (As of June 30) | Indicator | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Current borrowings | 30,514 | 44,282 | -31.0% | | Total borrowings | 30,514 | 44,282 | -31.0% | | Cash and cash equivalents | 378,239 | 322,904 | +17.1% | | Total equity | 1,715,526 | 1,755,376 | -2.3% | | Total assets | 1,872,712 | 2,006,231 | -6.7% | | Current ratio | 984% | 615% | +369% | - The increase in cash and cash equivalents was primarily due to net cash generated from financing activities of approximately HK$60,306 thousand[429][431] - As of June 30, 2023, all of the Group's borrowings were repayable on demand or within twelve months, with no new borrowings for working capital[430][431] Capital Structure As of June 30, 2023, equity and reserves attributable to owners of the Company amounted to HK$1,381.171 million, a decrease from December 31, 2022, primarily due to exchange differences during the period; no new shares were issued during the period - Equity and reserves attributable to owners of the Company amounted to HK$1,381,171 thousand, a decrease from HK$1,417,068 thousand as of December 31, 2022, primarily due to exchange differences of approximately HK$46,349 thousand during the period[432][449] - The Company did not issue any new shares during the review period, with issued share capital at HK$39,846 thousand[432][449] Material Acquisitions, Disposals and Significant Investment For the six months ended June 30, 2023, the Group did not undertake any material acquisitions, disposals, or significant investments - For the six months ended June 30, 2023, the Group did not undertake any material acquisitions, disposals, or significant investments[433][437] Charge on Assets As of June 30, 2023, the Group had no assets pledged - As of June 30, 2023, the Group had no assets pledged as security[434][450] Foreign Exchange Exposure The Group primarily operates in Hong Kong and China, with revenues and expenses denominated in HKD and RMB, and the directors believe the Group has no significant foreign exchange exposure - The Group's principal businesses and investments are in Hong Kong and China, with revenues and expenses denominated in HKD and RMB[435][438] - The directors believe the Group has no significant foreign exchange exposure and will consider using forward foreign exchange contracts for hedging if necessary[435][438] Contingent Liabilities As of June 30, 2023, the Group had no significant contingent liabilities - As of June 30, 2023, the Group had no significant contingent liabilities[424][439] Employees As of June 30, 2023, the Group had 55 full-time employees, an increase from the end of 2022; employee remuneration is determined based on market practice, individual performance, and work experience, with various benefits provided - As of June 30, 2023, the Group had 55 full-time employees, an increase from 50 as of December 31, 2022[440][452] - Employee remuneration is primarily determined by market practice, individual performance, and work experience, with benefits including medical insurance, insurance schemes, mandatory provident fund, and discretionary bonuses[440][452] Other Information This chapter discloses information on interim dividend policy, directors' and chief executives' interests in shares, major shareholders' interests, share option schemes, compliance with corporate governance code, audit committee work, compliance with model code for securities transactions by directors, and changes in directors' information Interim Dividend The Board did not declare an interim dividend for the six months ended June 30, 2023 - The Board did not declare an interim dividend for the six months ended June 30, 2023 (2022: nil)[454][465] Directors' and Chief Executives' Interests and Short Positions in Shares, Underlying Shares and Debentures As of June 30, 2023, company directors Liang Hengyi and Tian Gang held long positions in the Company's shares, complying with disclosure requirements under the SFO and Listing Rules Directors' Long Positions in Company Shares (As of June 30) | Director Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Total Issued Shares (%) | | :--- | :--- | :--- | :--- | | Liang Hengyi | Personal | 2,001,000 | 0.05% | | Tian Gang | Personal | 1,685,000 | 0.04% | - Save as disclosed, as of June 30, 2023, neither the Company's directors nor chief executives nor their associates had any other discloseable interests or short positions in shares, underlying shares, or debentures[467][470] Interests and Short Positions of Shareholders Discloseable Under the SFO As of June 30, 2023, Shougang Group and its subsidiaries were the Company's largest shareholders, holding 60.88% of the shares; other major shareholders included entities controlled by Ye Hongyi and Mak Siu Han Major Shareholders' Long Positions in Company Shares (As of June 30) | Shareholder Name | Capacity | Number of Shares Held | Approximate Percentage of Total Issued Shares (%) | | :--- | :--- | :--- | :--- | | Shougang Group | Interest in controlled corporation | 2,425,736,972 | 60.88% | | Wheeling Holdings Limited | Beneficial owner | 2,025,736,972 | 50.84% | | Beijing Shougang Fund Co., Ltd | Interest in controlled corporation | 400,000,000 | 10.04% | | Jingxi Holdings Limited | Beneficial owner | 400,000,000 | 10.04% | | Ye Hongyi | Interest in controlled corporation | 213,600,000 | 5.36% | | HY Holding Limited | Beneficial owner | 213,600,000 | 5.36% | | Mak Siu Han | Interest in controlled corporation | 254,413,000 | 6.38% | | VMS Investment Group Limited | Beneficial owner | 254,413,000 | 6.38% | - Shougang Group holds shares in the Company through its wholly-owned subsidiary Wheeling Holdings Limited and Shougang Fund (through Jingxi Holdings)[469][471] Share Option Schemes The Company's share option scheme adopted in 2012 expired on May 25, 2022, with all granted but unexercised share options lapsing; as of June 30, 2023, there were no outstanding share options - The Company's share option scheme expired on May 25, 2022[475][489] - As of June 30, 2023, there were no outstanding share options[475][489] Compliance with Corporate Governance Code The Company has complied with the code provisions of the Corporate Governance Code set out in Appendix 14 to the Listing Rules for the six months ended June 30, 2023 - The Company has complied with the code provisions of the Corporate Governance Code set out in Appendix 14 to the Listing Rules for the six months ended June 30, 2023[474][477] Audit Committee The Audit Committee met with the Company's auditor and management on August 18, 2023, to review the Group's interim results for the six months ended June 30, 2023 - The Audit Committee met with the Company's auditor and management on August 18, 2023, to review the Group's interim results for the six months ended June 30, 2023[476][490] Compliance with Model Code for Securities Transactions by Directors The Company has adopted the Model Code as its code of conduct for directors' securities transactions, and all directors complied with this code for the six months ended June 30, 2023 - The Company has adopted the Model Code as its code of conduct for directors' securities transactions[481][497] - All directors complied with the Model Code and the Company's code of conduct for the six months ended June 30, 2023[481][497] Disclosure of Director's Information Under Rule 13.51B of the Listing Rules This section discloses changes in directors' information required under Rule 13.51B of the Listing Rules since the publication date of the 2022 annual report, including Mr. Zhang Xingyu's resignation as an independent non-executive director and Mr. Tam King Ching's retirement as an independent non-executive director of another company - Mr. Zhang Xingyu resigned as an independent non-executive director and a member of relevant committees of the Company on March 19, 2023[482][484] - Mr. Tam King Ching retired as an independent non-executive director of Shanghai-Hong Kong United Holdings Limited on August 18, 2023[391][493] Appreciation Chairman of the Board Sun Yajie, on behalf of the Board, extends sincere gratitude to customers, suppliers, shareholders, and management and staff for their support and efforts during the period - Chairman of the Board Sun Yajie, on behalf of the Board, expresses sincere gratitude to customers, suppliers, shareholders, and management and staff[480][483][485][496]