友联国际教育租赁(01563) - 2023 - 中期业绩

Financial Highlights The company's financial performance shows significant profit growth and asset structure changes, with a notable increase in shareholder equity | Metric | For the Six Months Ended June 30, 2023 (RMB million) | For the Six Months Ended June 30, 2022 (RMB million) | | :--- | :--- | :--- | | Revenue | 298.2 | 133.2 | | Profit for the Period | 153.8 | 46.0 | | Statement of Financial Position (Period-end): | | | | Total Assets | 3,563.8 | 4,174.6 (December 31, 2022) | | Total Equity | 2,747.3 | 2,598.0 (December 31, 2022) | | Financial Ratios: | | | | Return on Equity | 5.8% | - | | Return on Assets | 4.0% | - | - Total assets decreased by approximately 14.6% from December 31, 2022, while total equity increased by approximately 5.7%[40] Condensed Consolidated Financial Statements This section presents the condensed consolidated financial statements, including income, balance, equity, and cash flow statements, reflecting the company's financial position and performance Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The company achieved significant growth in revenue and profit for the period, primarily due to the consolidation of Yantai Nanshan University, which also led to increased service costs, offset by other income and reversal of impairment losses on financial assets | Metric | For the Six Months Ended June 30, 2023 (RMB thousand) | For the Six Months Ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 298,208 | 133,178 | | Service Costs | (126,991) | — | | Gross Profit | 171,217 | 133,178 | | Other income, gains or losses | 49,575 | 3,628 | | Administrative Expenses | (32,435) | (23,518) | | Finance Costs | (33,034) | (50,480) | | Reversal (recognition) of impairment losses on financial assets | 41,579 | (2,701) | | Profit before income tax | 194,579 | 60,107 | | Profit for the period | 153,796 | 45,990 | | Basic and diluted earnings per share (RMB) | 0.0749 | 0.0307 | - Profit for the period increased by approximately 234% year-on-year, primarily benefiting from the consolidation of Yantai Nanshan University[41][115] - Other income, gains or losses significantly increased from RMB 3.6 million in the same period of 2022 to RMB 49.6 million[41][138] Condensed Consolidated Statement of Financial Position As of June 30, 2023, total assets slightly decreased, while net current assets and total equity increased, reflecting changes in asset structure and growth in shareholders' equity | Metric | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Non-current assets: | | | | Property and equipment | 812,340 | 824,078 | | Right-of-use assets | 452,105 | 460,780 | | Finance lease receivables | 625,959 | 916,068 | | Financial assets at fair value through other comprehensive income | 180,275 | — | | Current assets: | | | | Finance lease receivables | 816,117 | 1,226,508 | | Bank balances | 242,448 | 225,832 | | Current liabilities: | | | | Trade payables, bills payable and other payables | 216,932 | 535,378 | | Borrowings | 220,462 | 308,475 | | Total: | | | | Net current assets | 730,204 | 563,640 | | Total equity | 2,747,320 | 2,597,960 | - Finance lease receivables within non-current assets significantly decreased from RMB 916,068 thousand to RMB 625,959 thousand[60] - Trade payables, bills payable, and other payables within current liabilities substantially decreased from RMB 535,378 thousand to RMB 216,932 thousand[60] Condensed Consolidated Statement of Changes in Equity During the reporting period, the company's total equity increased due to profit for the period and an increase in non-controlling interests, though exchange rate changes led to a decrease in translation reserves | Metric | As of June 30, 2023 (RMB thousand) | As of January 1, 2022 (RMB thousand) | | :--- | :--- | :--- | | Equity attributable to owners of the Company | 2,361,480 | 1,273,474 | | Non-controlling interests | 385,840 | — | | Total equity | 2,747,320 | 1,273,474 | | Profit for the period and total comprehensive (expense) income | 149,360 | 47,337 (For the Six Months Ended June 30, 2022) | - Non-controlling interests emerged from zero, reflecting the consolidation of minority shareholder interests after the acquisition of Yantai Nanshan University[45] - Translation reserves turned negative due to exchange differences during the period, changing from RMB 2,985 thousand to RMB (1,451) thousand[45] Condensed Consolidated Statement of Cash Flows During the reporting period, operating cash flow significantly increased, investment cash outflows were primarily for financial asset purchases and consideration paid, and financing cash outflows decreased, resulting in a net increase in cash and cash equivalents | Metric | For the Six Months Ended June 30, 2023 (RMB thousand) | For the Six Months Ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Net cash generated from operating activities | 539,465 | 274,724 | | Net cash (used in) generated from investing activities | (321,703) | 3,821 | | Net cash used in financing activities | (107,752) | (350,917) | | Net increase (decrease) in cash and cash equivalents | 110,010 | (72,372) | | Cash and cash equivalents at end of period | 242,448 | 69,195 | - Cash outflow from investing activities primarily included the purchase of financial assets at fair value through profit or loss (RMB 1,307,997 thousand) and consideration paid (RMB 295,000 thousand)[65] - Cash outflow from financing activities significantly decreased, mainly due to reduced repayment of borrowings[65] Notes to the Condensed Consolidated Interim Financial Information This section provides detailed notes to the condensed consolidated interim financial information, covering general information, accounting policies, segment reporting, and financial instrument disclosures General Information The Group primarily engages in finance lease services and private higher education services, expanding its private higher education business through the acquisition of a 70% equity interest in Yantai Nanshan University - The Company was incorporated in the Cayman Islands on January 19, 2015, and listed on the Hong Kong Stock Exchange on March 15, 2019[66] - In August 2022, the Group acquired a 70% equity interest in Yantai Nanshan University, expanding its private higher education services[50] - Comparative information for the six months ended June 30, 2022, has been restated in the condensed consolidated statement of profit or loss and other comprehensive income to reflect the impact of the acquisition[51][67] Basis of Preparation and Principal Accounting Policies This interim financial information is prepared in accordance with IAS 34, based on historical cost, except for certain financial instruments measured at fair value. New and revised IFRSs were first applied this period, with no significant impact on financial performance Basis of Preparation The condensed consolidated interim financial information is prepared in accordance with IAS 34 "Interim Financial Reporting" and Appendix 16 of the Listing Rules, presented in RMB - The financial information is prepared in accordance with IAS 34 "Interim Financial Reporting" and the applicable disclosure requirements of Appendix 16 to the Listing Rules[68] - The condensed consolidated financial statements are presented in RMB, with all amounts rounded to the nearest thousand[86] Principal Accounting Policies The condensed consolidated financial information is prepared on a historical cost basis, except for certain financial instruments measured at fair value. The accounting policies adopted by the Group are consistent with those followed in preparing the 2022 annual consolidated financial statements - The condensed consolidated financial information is prepared on a historical cost basis, except for certain financial instruments measured at fair value[89] - The accounting policies adopted in this interim period are consistent with those followed in preparing the annual consolidated financial statements for the year ended December 31, 2022[69] Application of New and Revised International Financial Reporting Standards The Group first applied new and revised IFRSs issued by the IASB and effective from January 1, 2023, which had no significant impact on the financial performance and position for the current and prior periods - The Group first applied new and revised standards such as IAS 8 (Amendments), IAS 12 (Amendments), and IFRS 17[53][69][90] - The new and revised standards had no significant impact on the Group's condensed consolidated interim financial statements and are expected to affect accounting policy disclosures in the 2024 annual consolidated financial statements[70][71] - IAS 12 (Amendments) narrowed the scope of initial recognition exemption, changing the recognition of deferred tax assets and liabilities, but will not affect the overall deferred tax balance presented in the consolidated statement of financial position[72][92] Revenue and Segment Information The Group's revenue primarily derives from higher education and finance lease services. With the acquisition of Yantai Nanshan University, higher education became a new reportable operating segment, contributing significant revenue and segment profit Revenue by Source | Revenue Source | For the Six Months Ended June 30, 2023 (RMB thousand) | For the Six Months Ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Tuition fees | 201,693 | — | | Accommodation fees | 17,557 | — | | Finance lease services | 78,958 | 133,178 | | Total Revenue | 298,208 | 133,178 | - For the six months ended June 30, 2023, higher education services (tuition and accommodation fees) contributed RMB 219,250 thousand in revenue, while finance lease services contributed RMB 78,958 thousand[73] - The Group now has two reportable operating segments: finance lease and private higher education services[96] Segment Performance | Segment | Revenue (RMB thousand) | Segment Profit (RMB thousand) | | :--- | :--- | :--- | | Finance Lease | 78,958 | 92,545 | | Private Higher Education Services | 219,250 | 82,712 | | Total | 298,208 | 175,257 | Other Income, Gains or Losses During the reporting period, other income, gains or losses significantly increased, primarily driven by higher net exchange gains and investment and interest income Other Income, Gains or Losses by Source | Source | For the Six Months Ended June 30, 2023 (RMB thousand) | For the Six Months Ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Net exchange gains (losses) | 25,608 | (1,584) | | Investment and interest income | 15,539 | 3,821 | | Rental income | 5,338 | — | | Government grants | 522 | 1,220 | | Others | 2,568 | 171 | | Total | 49,575 | 3,628 | - Net exchange gains turned from losses to gains, serving as a primary driver for the increase in other income[79] - Government grants primarily represent VAT refunds for finance lease enterprises, amounting to RMB 522 thousand for the current period[99] Finance Costs During the reporting period, finance costs significantly decreased, primarily due to reduced interest on borrowings and imputed interest from finance lease customer deposits Finance Costs by Source | Source | For the Six Months Ended June 30, 2023 (RMB thousand) | For the Six Months Ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Imputed interest on consideration payable | 13,851 | — | | Borrowings | 10,672 | 22,045 | | Imputed interest from finance lease customer deposits | 7,633 | 27,050 | | Lease liabilities | 878 | 24 | | Bills payable | — | 1,361 | | Total | 33,034 | 50,480 | - Finance costs decreased by approximately 34.6% year-on-year, primarily benefiting from a reduction in total borrowings[81][139][162] Reversal (Recognition) of Impairment Losses on Financial Assets During the reporting period, the Group recorded a net reversal of impairment losses on financial assets, primarily due to improved credit risk for finance lease receivables and partial repayments Impairment Losses on Financial Assets | Source | For the Six Months Ended June 30, 2023 (RMB thousand) | For the Six Months Ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Finance lease receivables | 42,347 | (2,701) | | Other receivables | (768) | — | | Total | 41,579 | (2,701) | - A net impairment provision of approximately RMB 42.3 million was recognized this period, primarily comprising impairment losses on finance lease receivables of RMB 40.1 million (due to increased credit risk) and a reversal of impairment losses of RMB 82.4 million (due to improved financial condition and repayments)[81] - In the same period of 2022, a net impairment provision of RMB 2.7 million was recognized, mainly from impairment losses on finance lease receivables[103] Profit Before Income Tax and Income Tax Expense During the reporting period, profit before income tax significantly increased, with a corresponding rise in income tax expense, primarily influenced by China's corporate income tax and deferred tax Profit Before Income Tax and Income Tax Expense | Metric | For the Six Months Ended June 30, 2023 (RMB thousand) | For the Six Months Ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Profit before income tax | 194,579 | 60,107 | | Income tax expense | 40,783 | 14,117 | | — China corporate income tax (current) | 24,649 | 14,792 | | — Deferred tax (current) | 16,134 | (675) | - Deferred income tax is primarily recognized for deductible temporary differences arising from impairment losses under the expected credit loss model and taxable temporary differences from China withholding tax[83] Dividends The Company's Board of Directors does not recommend the payment of any interim dividend for the reporting period - The Company neither paid nor proposed to pay any dividends for the six months ended June 30, 2023, and 2022[105][123] Earnings Per Share During the reporting period, basic and diluted earnings per share significantly increased, primarily due to higher profit for the period and changes in the weighted average number of ordinary shares Earnings Per Share Calculation | Metric | For the Six Months Ended June 30, 2023 | For the Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Profit for the purpose of calculating basic and diluted earnings per share (RMB thousand) | 126,680 | 45,990 | | Weighted average number of ordinary shares for the purpose of calculating basic and diluted earnings per share (thousand shares) | 1,690,914 | 1,500,000 | | Basic and diluted earnings per share (RMB) | 0.0749 | 0.0307 | - As there were no unexercised ordinary shares with dilutive potential during the period, diluted earnings per share equal basic earnings per share[125] Property and Equipment During the reporting period, the Group acquired new assets and wrote off some equipment - For the six months ended June 30, 2023, the Group acquired assets at a cost of approximately RMB 7,291,000[85] - Equipment with a carrying amount of approximately RMB 216,000 was written off during the period, resulting in a net write-off loss of approximately RMB 216,000[38] Leases The Group's right-of-use assets and lease liabilities remained relatively stable, with no new lease agreements extended during the period Right-of-Use Assets | Class of Right-of-Use Assets | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Land use rights | 412,616 | 419,036 | | Buildings | 36,489 | 38,656 | | Offices | 3,000 | 3,088 | | Total | 452,105 | 460,780 | - As of June 30, 2023, the carrying amount of lease liabilities was approximately RMB 38,330,000, largely consistent with the end of 2022[15] - During the period, the Group did not extend any lease agreements requiring recognition as right-of-use assets and lease liabilities[15] Finance Lease Receivables The Group's total finance lease receivables and present value both decreased, with credit risk assessed and provisions made based on overdue status Finance Lease Receivables Ageing | Ageing | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Not more than one year | 1,153,627 | 1,611,768 | | More than one year but within two years | 382,063 | 401,303 | | More than two years but within three years | 191,815 | 297,306 | | More than three years but within four years | 130,102 | 270,613 | | More than four years but within five years | — | 87,621 | | Gross investment in leases | 1,857,607 | 2,668,611 | | Present value of minimum lease receivables | 1,442,076 | 2,142,576 | - The present value of finance lease receivables decreased from RMB 2,142,576 thousand as of December 31, 2022, to RMB 1,442,076 thousand as of June 30, 2023[16] - If contractual payments are overdue by more than 30 days, the Group assumes a significant increase in credit risk; if overdue by more than 90 days, it assesses whether the credit is impaired[16][18] Trade and Other Receivables The Group's total trade and other receivables decreased, with short-term loans receivable and prepayments decreasing, but expenses paid on behalf of customers increasing Trade and Other Receivables Breakdown | Item | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 1,122 | 549 | | Prepayments | 303 | 1,457 | | Expenses paid on behalf of customers | 50,422 | 45,330 | | Short-term loans receivable | 238,441 | 280,961 | | Interest receivable | 10,598 | 2,441 | | Other receivables | 6,938 | 1,025 | | Subtotal | 317,136 | 340,515 | | Less: Provision for impairment losses | (46,325) | (44,238) | | Total | 270,811 | 296,277 | - Ageing analysis of trade receivables shows that amounts overdue within 30 days increased from RMB 549 thousand at the end of 2022 to RMB 1,122 thousand as of June 30, 2023[32] Bank Balances The Group's bank balances significantly increased, primarily due to the release of pledged bank balances Bank Balances and Cash Equivalents | Item | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Bank balances | 242,448 | 225,832 | | Less: Pledged bank balances | — | (100,000) | | Cash and cash equivalents | 242,448 | 125,832 | - For the six months ended June 30, 2023, pledged bank deposits were released, leading to a significant increase in cash and cash equivalents[36] Trade Payables, Bills Payable and Other Payables The Group's trade payables balance significantly decreased, and ageing analysis shows all amounts are due within one year - The trade payables balance was approximately RMB 1,041,000, a significant decrease from RMB 4,239,000 as of December 31, 2022[1] Trade Payables Ageing | Ageing | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Within one year | 1,041 | 4,239 | Borrowings During the reporting period, the Group obtained new borrowings for working capital, bearing interest at fixed market rates - For the six months ended June 30, 2023, the Group obtained new borrowings of RMB 305.0 million[3] - The loan bears interest at fixed market rates of 4.00% to 4.50% and is repayable in installments over a period exceeding 2 years[3] - The proceeds were used to fund the Group's operations[3] Share Capital of the Company The Company's authorized share capital remained unchanged, while issued share capital increased due to the placement and subscription of new shares completed in November 2022 Share Capital Details | Class | Par value per share | Number of shares | Amount (USD) | | :--- | :--- | :--- | :--- | | Authorized share capital | USD 0.000001 | 50,000,000,000 | 50,000 | | Issued share capital (June 30, 2023) | USD 0.000001 | 1,690,914,000 | 1,691 | | Issued share capital (January 1, 2022) | USD 0.000001 | 1,500,000,000 | 1,500 | - On November 30, 2022, the Company completed the placement and subscription of a total of 190,914,000 new ordinary shares, with total proceeds of approximately RMB 600,992,000[5][37] - All new shares rank pari passu in all respects with the existing shares[21] Fair Value Measurement of Financial Instruments The Group measures financial instruments at fair value using valuation techniques such as discounted cash flow models, classifying them into different fair value hierarchies based on the observability of input data - The Group uses valuation techniques such as discounted cash flow models, with key parameters including recent transaction prices, interest yield curves, and exchange rates[22] - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable input data), and Level 3 (unobservable input data)[25][26][27] Fair Value Hierarchy of Financial Instruments | Financial Instrument | Fair Value Hierarchy | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | :--- | | Unlisted fund investments | Level 2 | 180,275 | — | | Listed bond investments | Level 1 | 39,000 | 83,000 | - During the period, there were no transfers into or out of Level 1 and Level 2 fair value hierarchies[6] Related Party Transactions The Group has multiple related party transactions with Nanshan Group and its subsidiaries, and Longkou Xinnanshan Investment Development Co., Ltd. and its subsidiaries, including finance lease income, lease expenses, services received, and asset purchases - Ms. Sui Yongqing, wife of Mr. Song Jianbo, one of the key management personnel of Nanshan Group, is the sole shareholder of Union Capital, the Company's ultimate shareholder[20] - Longkou Nanshan is wholly owned by Mr. Song Zuowen and Ms. Lü Shuling, and Ms. Sui is the daughter-in-law of Mr. Song and Ms. Lü[107] Related Party Transactions Summary | Transacting Party | Type of Transaction | For the Six Months Ended June 30, 2023 (RMB thousand) | For the Six Months Ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | :--- | | Nanshan Group and its subsidiaries | Finance lease income generated | 23,176 | 93,518 | | | Lease expenses paid | 944 | 993 | | | Services received | 10,081 | — | | Longkou Nanshan and its subsidiaries | Services received | 4,698 | — | | | Purchase of inventories | 1,780 | — | - As of June 30, 2023, finance lease receivables from Nanshan Group and its subsidiaries amounted to RMB 655,786 thousand[129] Management Discussion and Analysis This section provides management's perspective on the Group's business performance, financial position, risk management, and future outlook, highlighting key operational and financial trends Business Review The Group achieved significant profit growth during the reporting period through a dual-track strategy of higher education and finance leasing, primarily benefiting from the consolidation of Yantai Nanshan University and an improving Chinese economic environment Overall Business Overview The Group recorded a profit of approximately RMB 153.8 million during the reporting period, continuing last year's profitability trend, primarily benefiting from the acquisition and consolidation of Yantai Nanshan University - The Group recorded a profit of approximately RMB 153.8 million for the six months ended June 30, 2023[115] - In August 2022, the Group completed the acquisition of a 70% equity interest in Yantai Nanshan University, and in May 2023, established Union Shipping Phase I Fund Limited Partnership to expand into the shipping sector[131] - With China's economy gradually recovering, the Group is leveraging its dual-track strategy of higher education and finance leasing to capture domestic economic growth opportunities[154] Higher Education Business Yantai Nanshan University, as the Group's private higher education institution, offers undergraduate and diploma programs, adhering to a "production-education integration, school-enterprise cooperation" philosophy, and contributed significant revenue and profit before tax during the reporting period - Yantai Nanshan University offers 49 undergraduate programs and 40 diploma programs across 30 departments, committed to improving students' practical training and employment prospects[116] - During the reporting period, the higher education business generated revenue of approximately RMB 219.3 million and profit before tax of approximately RMB 82.7 million[133] - Higher education revenue primarily derives from tuition fees, accommodation fees, and other education service fees, all generated in China[136] Finance Lease Business The Group's finance lease business primarily serves the healthcare and aviation sectors, benefiting from a stable Chinese market and clear regulatory policies, resulting in a net reversal of impairment provisions during the reporting period - The Group's finance lease business primarily serves customers in the healthcare and aviation industries[118] - During the reporting period, the finance lease business generated revenue of approximately RMB 79.0 million and profit before tax of approximately RMB 92.5 million[135] - China's finance lease industry is entering a critical period of transformation with stricter regulation, but the "14th Five-Year Plan" is expected to guide manufacturing upgrades, providing clear prospects for finance lease companies serving the real economy[157] Financial Review The Group achieved significant revenue and profit growth during the reporting period, while effectively controlling finance costs, improving liquidity, and reversing impairment provisions for finance lease receivables Revenue During the reporting period, the Group's revenue significantly increased, primarily due to the consolidation of the higher education business - Revenue for the reporting period increased by approximately 123.9% from approximately RMB 133.2 million in the same period of 2022 to approximately RMB 298.2 million[120] - Revenue primarily originated from higher education and finance lease income[136] Service Costs During the reporting period, service costs significantly increased, primarily attributable to the operations of Yantai Nanshan University - Service costs for the reporting period were approximately RMB 127.0 million, compared to zero in the same period of 2022[161] Gross Profit and Gross Profit Margin Both the Group's gross profit and gross profit margin improved, reflecting enhanced business profitability - Gross profit for the reporting period was approximately RMB 171.2 million, with a gross profit margin of approximately 57.4%, representing an increase of approximately 28.6% compared to gross profit of approximately RMB 133.2 million in the same period of 2022[137] Other Income, Gains or Losses The Group's other income, gains or losses significantly increased, driven by government grants, exchange gains, rental income, and investment interest income - Other income, gains or losses increased from approximately RMB 3.6 million in the same period of 2022 to approximately RMB 49.6 million in the reporting period[138] Administrative Expenses The Group's administrative expenses increased, but their proportion of total revenue decreased, indicating improved operational efficiency - Administrative expenses for the reporting period were approximately RMB 32.4 million (2022: approximately RMB 23.5 million), accounting for 10.9% of total revenue (2022: 17.7%)[138] Finance Costs The Group's finance costs significantly decreased, primarily due to a reduction in total borrowings - Finance costs decreased by approximately 34.6% from approximately RMB 50.5 million in the same period of 2022 to approximately RMB 33.0 million in the reporting period[139] - Total borrowings decreased from RMB 467.7 million as of June 30, 2022, to RMB 232.7 million as of June 30, 2023[162] Profit for the Period The Group's profit for the period significantly increased, primarily benefiting from the consolidation of Yantai Nanshan University - Profit for the reporting period was approximately RMB 153.8 million, a significant increase of approximately 2.3 times compared to approximately RMB 46.0 million in the same period of 2022[141] - The increase was primarily due to stable net profit from the finance lease business and the consolidation of Yantai Nanshan University's net profit into the Group's profit[141] Dividends The Board does not recommend the payment of any interim dividend for the reporting period - The Board does not recommend the payment of any interim dividend for the reporting period (2022: nil)[142] Liquidity, Financial Resources and Capital Structure The Group maintains a healthy liquidity position with increased cash and cash equivalents, ample working capital, and a significantly reduced gearing ratio - As of June 30, 2023, cash and cash equivalents were approximately RMB 242.4 million (December 31, 2022: approximately RMB 125.8 million)[142] - Working capital (current assets less current liabilities) was approximately RMB 730.2 million (December 31, 2022: approximately RMB 563.6 million)[142] - The gearing ratio (total debt at period-end / total equity and debt) was approximately 7.8% (December 31, 2022: approximately 11.3%), primarily due to a reduction in borrowings relative to business scale[142] Finance Lease Receivables The Group's total finance lease receivables decreased, but impairment loss provisions remain a significant component - As of June 30, 2023, the carrying amount of finance lease receivables was approximately RMB 1,442.1 million, a decrease of approximately 32.7% from approximately RMB 2,142.6 million as of December 31, 2022[143] - Finance lease receivables comprise a gross amount of approximately RMB 1,857.6 million, unearned finance income of approximately RMB 199.8 million, and impairment loss provisions of approximately RMB 215.7 million[143] Factors and Measures for Reversal of Impairment Losses During the reporting period, a net reversal of impairment losses on finance lease receivables occurred, primarily due to an improved business environment and timely repayments by lessees, with the Group continuing to take prudent measures to recover outstanding amounts - The improving business environment in China, particularly timely repayments by lessees in the healthcare sector, led to a net reversal of impairment losses on finance lease receivables[144] - During the reporting period, eight customers failed to repay relevant lease fees, and the Group recognized impairment provisions in accordance with IFRS 9[166] - The Group's recovery measures include contacting customers by phone, on-site visits, and legal proceedings, and these measures are considered effective[167][169] Employees and Remuneration Policy The Group's employee count and employee benefits expenses significantly increased, and it continues to offer competitive remuneration and benefits to attract and retain talent - As of June 30, 2023, the Group employed 1,832 full-time employees (December 31, 2022: 1,692 employees)[170] - Employee benefits expenses (including directors' emoluments) for the reporting period were approximately RMB 88.6 million (2022: approximately RMB 6.7 million)[170] - The Group provides remuneration, medical, and retirement benefits, and grants share options to eligible employees under its share option scheme[171] Risk Management The Group faces various risks, including credit, liquidity, and operational risks, and has established comprehensive risk management frameworks and internal control procedures for both its higher education and finance lease businesses Risk Management for Higher Education Business Yantai Nanshan University has established a principal responsibility system and a board strategic decision-making mechanism, and purchased insurance to manage its personnel, enrollment, and market risks - The principal is responsible for ongoing risk management, while the board is responsible for strategic decisions, including budget, investment, acquisitions, and future development[147][171] - The university purchased insurance (including public liability insurance), consistent with common practice in China's education industry[171] Risk Management for Finance Lease Business The Group has established a comprehensive risk management system for the credit risk of its finance lease business, including customer due diligence, independent data review, multi-level approval procedures, and asset quality classification, with regular evaluation of the expected credit loss model - The Group has developed a comprehensive risk management system to control credit risk through customer due diligence, independent data review, and multi-level approval procedures[190][172] - The Group voluntarily adopted a five-category classification for measuring and monitoring the asset quality of finance lease receivables: normal, special mention, substandard, doubtful, and loss[148][173][174][191] - The Group uses an Expected Credit Loss (ECL) model, considering factors such as industry customer nature, credit history, and economic conditions to assess provisions, and regularly evaluates and adjusts them[193] Contingent Liabilities As of the end of the reporting period, the Group had no significant contingent liabilities - As of June 30, 2023, the Group had no significant contingent liabilities (December 31, 2022: nil)[150] Share Option Scheme The Company adopted a share option scheme in 2019 to attract and retain talent and drive business development. No share options were granted or exercised during the reporting period - The Share Option Scheme aims to attract and retain the best personnel, provide additional incentives, and drive the Group's business to achieve excellent results[151] - Under the scheme, the total number of shares that may be issued is 150,000,000 shares[152] - For the six months ended June 30, 2023, there were no outstanding share options under the Share Option Scheme, nor were any share options granted, agreed to be granted, exercised, cancelled, or lapsed[196] Use of Proceeds from Issue of Equity Securities The Company completed the placement and subscription of new shares in December 2022, with net proceeds primarily used for the Group's finance lease business - On December 14, 2022, the Company completed the placement and subscription of a total of 190,914,000 new shares at a placing price of HKD 3.52 per share[153] - The net proceeds from the placing and subscription amounted to HKD 669.6 million, of which approximately HKD 512.0 million has been used as intended for the Group's finance lease business[153] Events After the Reporting Period After the reporting period, the Group established Union Shipping Phase I Fund Limited Partnership to expand into shipping, revised the annual caps for continuing connected transactions, and extended the deadline for new share subscriptions - On May 2, 2023, Union Fund I GP, an indirect wholly-owned subsidiary of the Company, entered into an agreement with Xiehai Bulk to establish Union Shipping Phase I Fund Limited Partnership, expanding into the shipping sector[198] - The Group proposed to revise the annual caps for continuing connected transactions to address Yantai Nanshan University's actual procurement needs exceeding expectations[180] - The Company and the subscriber agreed to extend the final closing date for the subscription of 109,080,000 new shares to September 14, 2023[181] Outlook and Plans The Group anticipates a gradual improvement in global and Chinese economies, will continue to deepen its higher education and finance lease businesses, explore new breakthroughs and acquisition projects, and continuously strengthen risk management and internal controls - The Group expects global and Chinese economies to continue improving gradually, with its higher education and finance lease businesses capturing overall domestic economic growth[182] - The higher education business will deepen cooperation, establish advanced applied disciplines, and develop upstream, downstream, and new enterprise collaborations[203] - The finance lease business will adhere to the "quality over quantity" principle, adapt to market changes, adjust operating strategies, strengthen asset management, and diversify customer and project categories[183][205] - The Group will continue to explore domestic and international business expansion and suitable acquisition projects, especially those with potential, stable cash flow, or synergistic effects[184] Other Information This section covers corporate governance, securities transactions, audit committee functions, and information publication, ensuring transparency and compliance with regulatory standards Compliance with Corporate Governance Code The Company complied with all code provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules during the reporting period - The Company has established corporate governance procedures in accordance with the principles of the Corporate Governance Code set out in Appendix 14 of the Listing Rules[206] - From the beginning of the reporting period up to the date of this announcement, the Company has complied with all code provisions of the Corporate Governance Code[206] Purchase, Sale or Redemption of the Company's Listed Securities Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the reporting period - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[188] Audit Committee The Company's Audit Committee, comprising three independent non-executive directors, is responsible for reviewing and overseeing financial reporting processes and internal controls, and has reviewed the Group's unaudited condensed consolidated financial statements - The Audit Committee comprises three independent non-executive directors, with Mr. Liu Xuewei as the chairman[188] - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the reporting period[188] Standard Code for Securities Transactions by Directors The Company has adopted a securities dealing code and confirmed that all directors complied with it during the reporting period - The Company has adopted a securities dealing code, the terms of which are no less exacting than those set out in the Model Code contained in Appendix 10 of the Listing Rules[188] - All Directors confirmed their compliance with the securities dealing code throughout the period from the beginning of the reporting period up to the date of this announcement[188] Publication of Information This announcement has been published on the Company's and HKEX websites, and the interim report will be dispatched to shareholders in due course - This announcement has been published on the Company's website (http://www.aiel-holdings.com/) and the HKEX website (www.hkexnews.hk)[210](index=210&type=chunk) - The Company's interim report for the reporting period will be dispatched to the Company's shareholders in due course and will be available on the aforementioned websites[210]