友联国际教育租赁(01563) - 2023 - 中期财报

Company Information Company Name and Stock Code Union International Education Leasing Holdings Limited, formerly International Union Financial Leasing Co., Ltd., is listed under stock code 1563 - Company name is Union International Education Leasing Holdings Limited, formerly International Union Financial Leasing Co., Ltd., stock code is 1563[36][40] Board of Directors The Board comprises executive, non-executive, and independent non-executive directors, with new appointments during the reporting period - Executive Directors include Mr. Li Luqiang (CEO), Mr. Liu Zhenjiang, Mr. Luo Zhenming, Mr. Qiao Renjie, and Mr. Yuan Jianshan (appointed on January 9, 2023)[40] - Non-executive Directors include Mr. Song Jianbo (Chairman of the Board, appointed on January 9, 2023) and Mr. Jiao Jianbin[40] - Independent Non-executive Directors include Mr. Liu Changxiang, Mr. Liu Xuewei, Mr. Jiao Jian, Mr. Shih Lai Him, and Ms. Xing Li (appointed on January 9, 2023)[40] Board Committees (Company Information) The company has Audit, Remuneration, Strategic Investment, and Nomination Committees, each with designated chairpersons and responsibilities - The Audit, Remuneration, and Nomination Committees comprise Mr. Liu Xuewei, Mr. Liu Changxiang, and Mr. Jiao Jian, with Mr. Liu Xuewei chairing the Audit and Remuneration Committees, and Mr. Song Jianbo chairing the Strategic Investment Committee[40][41][44] Registered Office and Principal Place of Business The company's registered office is in the Cayman Islands, with its principal place of business in Hong Kong at One Hennessy, Wan Chai - Registered office is located at Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY1-1111, Cayman Islands[44] - Principal place of business in Hong Kong is Unit 2602, 26/F, One Hennessy, 1 Hennessy Road, Wan Chai, Hong Kong[44] Other Company Information The company's website is www.aiel-holdings.com, auditor is Shinewing (HK) CPA Limited, and principal bankers include Industrial Bank Longkou Branch - Company website is **www.aiel-holdings.com**[44](index=44&type=chunk) - Auditor is Shinewing (HK) CPA Limited[44] - Principal bankers include Industrial Bank Longkou Branch, Shanghai Pudong Development Bank Co., Ltd. Tianjin Branch, and Bank of China[45] Management Discussion and Analysis Business Review The Group adopted a dual-track strategy of higher education and financial leasing, benefiting from China's economic recovery, acquiring 70% equity in Yantai Nanshan University and establishing Union Shipping Fund I - The Group adopted a dual-track strategy by operating both higher education and financial leasing business segments to capture overall domestic economic growth[46] - The Group completed the acquisition of 70% equity interest in Yantai Nanshan University in August 2022, with its financial data consolidated into the Group's financial statements[11][46] - To expand financial leasing business into the shipping sector, the Group established Union Shipping Fund I Limited Partnership in May 2023, focusing on acquiring shares and interests in special purpose vehicles holding vessels or marine vessels[46] Financial Review The Group achieved significant growth in revenue and profit, driven by the consolidation of Yantai Nanshan University and stable financial leasing performance, with improved gross margin, reduced administrative expenses ratio, and lower finance costs Major Financial Indicators Changes | Indicator | For the six months ended June 30, 2023 (RMB million) | For the six months ended June 30, 2022 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 298.2 | 133.2 | 123.9% | | Profit | 153.8 | 46.0 | 234.3% | | Gross Profit | 171.2 | 133.2 | 28.6% | | Gross Profit Margin | 57.4% | 100% | -42.6% | | Administrative Expenses | 32.4 | 23.5 | 37.9% | | Administrative Expenses as % of Total Revenue | 10.9% | 17.7% | -6.8% | | Finance Costs | 33.0 | 50.5 | -34.6% | - Higher education business contributed approximately RMB 219.3 million in revenue and approximately RMB 82.7 million in profit before income tax[49] - Financial leasing business contributed approximately RMB 79.0 million in revenue and approximately RMB 92.5 million in profit before income tax[53] - Other income, gains or losses significantly increased from approximately RMB 3.6 million to approximately RMB 49.6 million, primarily due to government subsidies, exchange gains, rental income, and investment interest income[12][17] - The Board does not recommend the payment of any interim dividend for the reporting period[61] Liquidity, Financial Resources and Capital Structure The Group's cash and cash equivalents, working capital, and total equity increased, while total borrowings and gearing ratio decreased, indicating improved liquidity and optimized financial structure Liquidity and Financial Resources | Indicator | June 30, 2023 (RMB million) | December 31, 2022 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 242.4 | 125.8 | 92.7% | | Working Capital | 730.2 | 563.6 | 29.6% | | Total Equity | 2,747.3 | 2,598.0 | 5.7% | | Borrowings Balance | 232.7 | 329.3 | -29.3% | | Gearing Ratio | 7.8% | 11.3% | -3.5% | | Borrowings Due Within One Year | 220.5 | 308.5 | -28.6% | | Borrowings Due After One Year | 12.2 | 20.9 | -41.6% | Finance Lease Receivables The Group's total finance lease receivables decreased, but improved business environment, particularly enhanced repayment ability of healthcare industry lessees, led to a net reversal of impairment losses during the period Composition of Finance Lease Receivables | Item | June 30, 2023 (RMB million) | | :--- | :--- | | Gross finance lease receivables | 1,857.6 | | Less: Unearned finance income | 199.8 | | Less: Provision for impairment losses | 215.7 | - Finance lease receivables decreased by approximately 32.7% from approximately RMB 2,142.6 million as of December 31, 2022, to approximately RMB 1,442.1 million as of June 30, 2023[63] - During the reporting period, a net reversal of impairment losses on finance lease receivables was recognized, mainly due to an improved business environment in China, especially the timely repayment by lessees in the healthcare industry[3][68] - The Group continues to take various measures to recover finance lease receivables, including calling customers, on-site visits, and legal proceedings[64] Employees and Remuneration Policy As of June 30, 2023, the Group's full-time employee count increased, and employee benefit expenses rose significantly, with the company offering competitive remuneration, medical, and retirement benefits, and a share option scheme to attract and retain talent Employee Count and Benefit Expenses | Indicator | June 30, 2023 | December 31, 2022 | For the six months ended June 30, 2023 (RMB million) | For the six months ended June 30, 2022 (RMB million) | | :--- | :--- | :--- | :--- | :--- | | Full-time Employee Count | 1,832 | 1,692 | - | - | | Employee Benefit Expenses | - | - | 88.6 | 6.7 | - The Group continues to provide employees with remuneration packages with reference to Group and individual performance and market remuneration levels, along with medical and retirement benefits[72] - Eligible employees may be granted share options under the terms of the share option scheme, aiming to attract and retain outstanding talent[72] Significant Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures The Group did not undertake any significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the reporting period - During the reporting period, the Group had no significant acquisitions or disposals of subsidiaries, associates, and joint ventures[10] Significant Investments The company did not make any significant investments during the reporting period - During the reporting period, the Company had no significant investments (including significant investments representing 5% or more of the Group's total assets)[70] Risk Management The Group faces various risks including credit, liquidity, marketing, compliance, legal, operational, and reputational risks, and has established comprehensive risk management and internal control procedures, particularly for higher education and financial leasing businesses - The Group's business operations are subject to various risks, including credit, liquidity, marketing, compliance, legal, operational, and reputational risks[32] - The higher education business primarily faces personnel, enrollment, and market risks, with a risk management framework and measures established under the responsibility of the Board and the President[32][33] - In the financial leasing business, credit risk is the primary concern, and the Group has developed a comprehensive risk management system to control risks through customer due diligence, independent data review, and multi-level approval processes[7][29][32] - The Group voluntarily adopted the guidelines of the China Banking and Insurance Regulatory Commission to monitor finance lease receivables under a five-category classification: normal, special mention, substandard, doubtful, and loss[13][18][75][76][80] - The Group is exposed to foreign exchange risk arising from assets and liabilities denominated in RMB, USD, and HKD, with management closely monitoring and taking hedging measures when necessary[33][73] Events After Reporting Period After the reporting period, the Group established Union Shipping Fund I Limited Partnership, revised the annual caps for continuing connected transactions, and terminated the agreement for subscription of new shares under general mandate - Union Fund I GP Limited entered into an agreement with Xinhai Bulk (Singapore) Pte. Ltd. to establish Union Shipping Fund I Limited Partnership, with Union Shipping Leasing Co., Ltd. subsequently joining as an additional limited partner[16][23][79] - Due to actual demand for goods and services under the framework procurement agreement exceeding expectations, the Group proposed to revise and increase the annual caps for continuing connected transactions[24][81] - The Company entered into termination agreements with various subscribers to terminate the subscription agreement for new shares originally signed on May 22, 2023[21][26][30] 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 (December 31, 2022: nil)[22] Public Float As of the report date, the Company maintained an adequate public float of its issued shares, complying with Listing Rules - As of the date of this report, the Company has maintained an adequate public float of its issued shares in accordance with the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[78] Outlook and Plans The Group anticipates a gradual improvement in global and Chinese economies, will continue to explore business expansion and suitable acquisition projects, especially in overseas vocational and higher education, while strengthening risk management and client relationships in financial leasing - The Board expects the global and Chinese economies to continue to improve gradually, positioning the Company's higher education and financial leasing businesses favorably to capture overall domestic economic growth[185] - The Group will continue to explore expanding existing businesses and seeking suitable acquisition projects, both domestically and internationally, including overseas vocational and higher education, to enrich its existing operations[85] - Yantai Nanshan University will maintain stable development, and the Company will deepen partnerships and continue to organize and design more advanced applied disciplines[185] - The financial leasing business will seize market opportunities, adhere to the principle of "quality over quantity" for steady progress, and continuously strengthen risk management, internal control, and asset management capabilities[90][185][186] - The Group will actively expand new clients (including new industries beyond the existing client base) and strive to maintain long-term cooperative relationships with existing high-quality clients[186] Other Information Board Committees (Other Information) The Company has Strategic Investment, Audit, Remuneration, and Nomination Committees, each operating under Board-established terms of reference and holding regular meetings to fulfill their duties - The Strategic Investment Committee is responsible for the Company's investment strategy, overseeing its implementation, and reporting to the Board, having held one meeting during the reporting period[87][198] - The Audit Committee reviews the Group's internal controls and annual results, recommending their adoption by the Board, having held two meetings during the reporting period[88][194][198] - The Remuneration Committee is responsible for formulating and reviewing the remuneration policies and structure for directors and senior management, having held two meetings during the reporting period and providing recommendations on directors' remuneration[89][195] - The Nomination Committee is responsible for making recommendations on director appointments and assessing the independence of independent non-executive directors, having held two meetings during the reporting period and approving new director appointments[93][205] Compliance with Corporate Governance Code The Group is committed to promoting good corporate governance and has complied with all code provisions of the Corporate Governance Code from the beginning of the reporting period to the report date - The Group has established corporate governance procedures in accordance with the principles set out in the Corporate Governance Code contained in Appendix 14 of the Listing Rules[197] - From the beginning of the reporting period up to the date of this report, the Company has complied with all code provisions of the Corporate Governance Code and adopted most of the recommended best practices[197] Standard Code for Securities Transactions by Directors The Company has adopted a securities dealing code no less exacting than the Listing Rules' Model Code, and all directors confirmed compliance during the reporting period - The Company has adopted a code of conduct regarding securities transactions by directors, the terms of which are no less exacting than the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules[200] - 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 report[200] Purchase, Sale or Redemption of the Company's Listed Securities During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[206] Use of Proceeds from Issue of Equity Securities The Company completed a placing and subscription of new shares in December 2022, raising net proceeds of approximately HKD 669.6 million, primarily for the Group's financial leasing business, with approximately HKD 512.0 million utilized as expected - The Company completed the placing and subscription of new shares on December 14, 2022, issuing a total of 190,914,000 new shares[99][230][232] - Both the placing price and subscription price were HKD 3.52 per share, representing a discount of approximately 16.19% to 19.82% to the then market price[99] - The net proceeds from the placing and subscription amounted to HKD 669.6 million, of which approximately HKD 512.0 million had been utilized as expected as of June 30, 2023, primarily for the Group's financial leasing business[99] Share Option Scheme The Company adopted a share option scheme in 2019 to attract and retain talent, with no outstanding, granted, exercised, cancelled, or lapsed share options during the reporting period - The Company adopted a share option scheme on February 20, 2019, which became effective on March 15, 2019[95] - The share option scheme aims to attract and retain the best personnel and provide additional incentives to drive excellent performance for the Group's business[202] - During the reporting period, there were no outstanding, granted, agreed to be granted, exercised, cancelled, or lapsed share options under the share option scheme[105] Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or its Associated Corporations As of June 30, 2023, certain directors and chief executives held long positions in the Company's shares, with Mr. Song Jianbo holding a significant proportion due to spousal interests Directors' and Chief Executive's Long Positions in Shares | Director/Chief Executive Name | Capacity/Nature of Interest | Number and Class of Shares (L) | Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | Mr. Li Luqiang | Interest in controlled corporation | 7,881,797 | 0.47% | | Mr. Li Luqiang | Beneficial owner | 621,000 | 0.04% | | Mr. Song Jianbo | Spouse's interest | 768,475,221 | 45.45% | - Save as disclosed, no director or chief executive of the Company and/or any of their respective associates had any interests and short positions in the shares, underlying shares and/or debentures of the Company and/or any of its associated corporations required to be recorded or notified under the Securities and Futures Ordinance[211] Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares As of June 30, 2023, Union Capital Pte. Ltd. and its ultimate owner Ms. Sui Yongqing, Mr. Song Jianbo (spousal interest), and PA Investment Funds SPC and its associated companies were substantial shareholders of the Company Substantial Shareholders' Long Positions in Shares | Substantial Shareholder Name/Name | Capacity/Nature of Interest | Number and Class of Shares (L) | Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | Union Capital Pte. Ltd. | Beneficial owner | 768,475,221 | 45.45% | | Ms. Sui Yongqing | Interest in controlled corporation | 768,475,221 | 45.45% | | Mr. Song Jianbo | Spouse's interest | 768,475,221 | 45.45% | | PA Investment Funds SPC | Beneficial owner | 135,001,120 | 7.98% | | China Ping An Securities (Hong Kong) Company Limited | Interest in controlled corporation | 135,001,120 | 7.98% | | Ping An Securities Co., Ltd. | Interest in controlled corporation | 135,001,120 | 7.98% | | Ping An Trust Co., Ltd. | Interest in controlled corporation | 135,001,120 | 7.98% | | Ping An Insurance (Group) Company of China, Ltd. | Interest in controlled corporation | 135,001,120 | 7.98% | Changes in Directors' Information On January 9, 2023, Mr. Yuan Jianshan was appointed as an Executive Director, Mr. Song Jianbo as a Non-executive Director, and Ms. Xing Li as an Independent Non-executive Director - On January 9, 2023, Mr. Yuan Jianshan was appointed as an Executive Director, Mr. Song Jianbo as a Non-executive Director, and Ms. Xing Li as an Independent Non-executive Director[124][179] Review of Interim Financial Information The Audit Committee reviewed the condensed consolidated interim financial information and this report, deeming them compliant with applicable accounting standards, Listing Rules, and other legal requirements - The Audit Committee has reviewed the condensed consolidated interim financial information and this report and is of the opinion that the information complies with applicable accounting standards, the requirements of the Listing Rules, and other applicable legal requirements, and that adequate disclosures have been made[121] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Statement) For the six months ended June 30, 2023, the Group's revenue significantly grew by 123.9% to RMB 298.2 million, with profit for the period increasing by 234.3% to RMB 153.8 million, and basic and diluted earnings per share at RMB 0.0749 Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 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 | | Cost of Services | (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) | | Impairment Loss Reversal (Recognition) on Financial Assets | 41,579 | (2,701) | | Profit Before Income Tax | 194,579 | 60,107 | | Profit for the Period | 153,796 | 45,990 | | Profit for the Period Attributable to Owners of the Company | 126,680 | 45,990 | | Basic and Diluted Earnings Per Share (RMB) | 0.0749 | 0.0307 | Condensed Consolidated Statement of Financial Position Condensed Consolidated Statement of Financial Position (Statement) As of June 30, 2023, the Group's total assets less current liabilities were RMB 2,924.4 million, and total equity was RMB 2,747.3 million, with a decrease in finance lease receivables within non-current assets and a significant increase in net current assets Summary of Condensed Consolidated Statement of Financial Position | Item | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Non-current Assets | 2,194,238 | 2,341,487 | | Current Assets | 1,369,609 | 1,833,159 | | Current Liabilities | 639,405 | 1,269,519 | | Net Current Assets | 730,204 | 563,640 | | Total Assets Less Current Liabilities | 2,924,442 | 2,905,127 | | Equity Attributable to Owners of the Company | 2,361,480 | 2,239,236 | | Non-controlling Interests | 385,840 | 358,724 | | Total Equity | 2,747,320 | 2,597,960 | | Non-current Liabilities | 177,122 | 307,167 | Condensed Consolidated Statement of Changes in Equity Condensed Consolidated Statement of Changes in Equity (Statement) For the six months ended June 30, 2023, equity attributable to owners of the Company increased from RMB 2,239.2 million at the beginning of the period to RMB 2,361.5 million at the end, primarily driven by profit for the period Summary of Condensed Consolidated Statement of Changes in Equity | Item | January 1, 2023 (RMB thousand) | Profit for the Period (RMB thousand) | Other Comprehensive Expenses for the Period (RMB thousand) | June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | 2,239,236 | 126,680 | (4,436) | 2,361,480 | | Non-controlling Interests | 358,724 | 27,116 | — | 385,840 | | Total | 2,597,960 | 153,796 | (4,436) | 2,747,320 | Condensed Consolidated Statement of Cash Flows Condensed Consolidated Statement of Cash Flows (Statement) For the six months ended June 30, 2023, the Group's net cash from operating activities significantly increased, net cash from investing activities was an outflow, net cash from financing activities was an outflow, and cash and cash equivalents at period-end rose to RMB 242.4 million Summary of Condensed Consolidated Statement of Cash Flows | Item | For the six months ended June 30, 2023 (RMB thousand) | For the six months ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Net Cash From Operating Activities | 539,465 | 274,724 | | Net Cash (Used in) 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 | Notes to the Condensed Consolidated Interim Financial Information 1. General Information Union International Education Leasing Holdings Limited, incorporated in the Cayman Islands and listed on HKEX, primarily provides financial leasing and private higher education services - The Company was incorporated in the Cayman Islands on January 19, 2015, and listed on The Stock Exchange of Hong Kong Limited on March 15, 2019, with stock code 1563[176] - The Group primarily engages in providing financial leasing services and private higher education services, with Union Capital Pte. Ltd., wholly owned by Ms. Sui Yongqing, as the controlling shareholder[176][180] 2. Basis of Preparation The condensed consolidated interim financial information is prepared in accordance with IAS 34 and Appendix 16 of the Listing Rules, presented in RMB, with reclassification of prior period financial statements due to the acquisition of Yantai Nanshan University - The condensed consolidated interim financial information has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" issued by the International Accounting Standards Board and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange[140] - The condensed consolidated financial statements are presented in RMB, and all amounts are rounded to the nearest thousand[134] - Due to the acquisition of Yantai Nanshan University, 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, with staff costs and other operating expenses reclassified to administrative expenses, and other income and net exchange losses reclassified to other income, gains or losses[136][139][144] 3. Principal Accounting Policies The condensed consolidated financial statements are prepared on a historical cost basis, with the first-time application of new and revised IFRSs issued by the IASB, which had no significant impact on the interim period's financial performance and position - The condensed consolidated financial information has been prepared on the historical cost basis, except for certain financial instruments measured at fair value[148] - The Group has first-time applied the following new and revised International Financial Reporting Standards issued by the International Accounting Standards Board that are effective for the Group's financial year beginning on January 1, 2023: IFRS 17, IAS 1 and IFRS Practice Statement 2 (Amendments), IAS 8 (Amendments), IAS 12 (Amendments)[146][149] - These amendments had no impact on the Group's condensed consolidated interim financial statements and are expected to affect accounting policy disclosures in the annual consolidated financial statements for the year ending March 31, 2024[147][149][153] 4. Revenue and Segment Information The Group's revenue primarily derives from higher education and financial leasing businesses, with total revenue of RMB 298.2 million for the period, where higher education, as a new reportable segment, contributed most of the revenue, and segment profit is allocated by service type, with key customer information disclosed Revenue by Service Type | Service Classification | 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 | — | | Financial Leasing Services | 78,958 | 133,178 | | Total Revenue | 298,208 | 133,178 | - The Group's reportable operating segments under IFRS 8 include financial leasing and private higher education services[172] Operating Segment Revenue and Profit | Segment | Revenue (RMB thousand) | Segment Profit (RMB thousand) | | :--- | :--- | :--- | | Financial Leasing | 78,958 | 92,545 | | Private Higher Education Services | 219,250 | 82,712 | | Total | 298,208 | 175,257 | | Profit Before Tax | - | 194,579 | - The original expected duration of contracts for tuition fees, accommodation fees, and other education service fees is less than one year, and the Group has elected not to disclose the transaction price allocated to the remaining performance obligations[161][168] - As of June 30, 2023, no single customer's revenue accounted for more than 10% of the Group's total revenue[112][116] 5. Other Income, Gains or Losses During the reporting period, the Group's other income, gains or losses significantly increased to RMB 49.6 million, mainly from exchange gains, investment and interest income, rental income, and government grants Composition of Other Income, Gains or Losses | Item | 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 | - Government grants represent value-added tax refunds granted by local governments to enterprises in the financial leasing industry, which are one-off subsidies with no specific conditions attached[178] 6. Finance Costs During the reporting period, the Group's finance costs significantly decreased to RMB 33.0 million, primarily due to reduced interest on borrowings and imputed interest from deposits by finance lease customers Composition of Finance Costs | Item | 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 | — | | Interest on Borrowings | 10,672 | 22,045 | | Imputed Interest from Deposits by Finance Lease Customers | 7,633 | 27,050 | | Interest on Lease Liabilities | 878 | 24 | | Interest on Bills Payable | — | 1,361 | | Total | 33,034 | 50,480 | 7. Impairment Loss Reversal (Recognition) on Financial Assets During the reporting period, the Group recorded a net reversal of impairment losses on financial assets of RMB 41.6 million, mainly due to impairment loss reversals on finance lease receivables offsetting some provisions Impairment Loss Reversal (Recognition) on Financial Assets | Item | 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) | - During the reporting period, the Group recognized a net impairment provision of approximately RMB 42.3 million, primarily from impairment loss provisions of RMB 40.1 million for finance lease receivables, offset by reversals of impairment losses on finance lease receivables of RMB 82.4 million due to improved financial conditions and repayment by certain finance lease customers[273] 8. Profit Before Income Tax Profit before income tax was RMB 194.6 million, primarily after deducting expenses such as staff costs, depreciation of property and equipment, depreciation of right-of-use assets, amortization of intangible assets, and operating lease payments Deductions from Profit Before Income Tax | Item | For the six months ended June 30, 2023 (RMB thousand) | For the six months ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Total Staff Costs | 88,585 | 6,689 | | Depreciation of Property and Equipment | 18,813 | 279 | | Depreciation of Right-of-Use Assets | 8,675 | 763 | | Amortization of Intangible Assets | 4,733 | 175 | | Lease Payments Under Operating Leases: Short-term Leases | 998 | 1,245 | 9. Income Tax Expense Income tax expense for the reporting period was RMB 40.8 million, mainly comprising PRC enterprise income tax and deferred tax, with deferred income tax primarily recognized for deductible temporary differences arising from impairment losses under the expected credit loss model Composition of Income Tax Expense | Item | For the six months ended June 30, 2023 (RMB thousand) | For the six months ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | PRC Enterprise Income Tax — Current | 24,649 | 14,792 | | Deferred Tax — Current | 16,134 | (675) | | Total | 40,783 | 14,117 | - Deferred income tax is primarily recognized for deductible temporary differences arising from impairment losses under the expected credit loss model and taxable temporary differences arising from PRC withholding tax[280] 10. Dividends For the six months ended June 30, 2023, and 2022, the Company neither paid nor proposed to pay any dividends - The Company neither paid nor proposed to pay any dividends for the six months ended June 30, 2023, and 2022[282] 11. Earnings Per Share For the six months ended June 30, 2023, basic and diluted earnings per share attributable to owners of the Company were RMB 0.0749, a significant increase from the same period last year Earnings Per Share Calculation Data | Item | 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 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 outstanding dilutive potential ordinary shares for the six months ended June 30, 2023, and 2022, diluted earnings per share were equal to basic earnings per share[285] 12. Property and Equipment During the reporting period, the Group acquired assets at a cost of approximately RMB 7.3 million and recognized a loss of approximately RMB 0.2 million from the write-off of property and equipment - During the reporting period, the Group acquired assets at a cost of approximately RMB 7,291,000 (six months ended June 30, 2022: nil)[283] - During the reporting period, the Group wrote off equipment with a carrying amount of approximately RMB 216,000, resulting in a net write-off loss of approximately RMB 216,000[283] 13. Leases As of June 30, 2023, the Group's right-of-use assets primarily included land use rights, buildings, and offices, with a total carrying amount of RMB 452.1 million, and lease liabilities of approximately RMB 38.3 million, with no lease agreements extended during the period Composition of Right-of-Use Assets | Item | June 30, 2023 (RMB thousand) | 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 (December 31, 2022: RMB 37,869,000)[284] - For the six months ended June 30, 2023, and 2022, the Group did not extend any lease agreements required to be recognized as right-of-use assets and lease liabilities[288] 14. Finance Lease Receivables As of June 30, 2023, total finance lease receivables were RMB 1,857.6 million, with impairment loss provisions of RMB 215.7 million, classified based on credit risk into 12-month expected credit losses and lifetime expected credit losses for credit-impaired assets, and changes in impairment loss provisions were disclosed Composition and Maturity of Finance Lease Receivables | Item | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Receivables under finance leases not exceeding one year | 1,153,627 | 1,611,768 | | After one year but within two years | 382,063 | 401,303 | | After two years but within three years | 191,815 | 297,306 | | After three years but within four years | 130,102 | 270,613 | | After four years but within five years | — | 87,621 | | Total investment in leases | 1,857,607 | 2,668,611 | | Less: Unearned finance income | (199,817) | (266,810) | | Present value of minimum lease receivables | 1,657,790 | 2,401,801 | | Less: Provision for impairment losses | (215,714) | (259,225) | | Carrying Amount | 1,442,076 | 2,142,576 | Changes in Impairment Loss Provisions for Finance Lease Receivables | Item | 12-month Expected Credit Losses (RMB thousand) | Credit-impaired Lifetime Expected Credit Losses (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | | As at January 1, 2023 | 42,153 | 217,072 | 259,225 | | Provisions during the period | — | 40,066 | 40,066 | | Reversals during the period | (46,561) | (35,852) | (82,413) | | As at June 30, 2023 | 2,643 | 213,071 | 215,714 | | Expected Loss Rate | 0.21% | 53.65% | 13.01% | - The Group classifies finance lease receivables into 12-month expected credit losses, non-credit-impaired lifetime expected credit losses, and credit-impaired lifetime expected credit losses based on changes in credit risk levels compared to initial recognition[214][294][295] 15. Trade and Other Receivables As of June 30, 2023, total trade and other receivables were RMB 317.1 million, with impairment loss provisions of RMB 46.3 million, primarily including short-term loans receivable, expenses paid on behalf of customers, and interest receivable Composition of Trade and Other Receivables | Item | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Trade Receivables | 1,122 | 549 | | Prepayments | 303 | 1,457 | | Expenses Paid on Behalf of Customers | 50,422 | 45,330 | | Recoverable VAT | 9,342 | 8,752 | | 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) | | Carrying Amount | 270,811 | 296,277 | - Short-term loans receivable from independent parties are unsecured, bear interest at an annual rate of 15%, and are repayable on agreed dates, with no impairment losses recognized during the reporting period[218] - Trade receivables primarily refer to other tuition fees and service fees receivable from students applying for other tuition and services within the academic year, involving multiple individual students with no significant concentration of credit risk[301] Ageing Analysis of Trade Receivables | Ageing | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Within 30 days | 1,122 | 549 | 16. Bank Balances As of June 30, 2023, the Group's bank balances were RMB 242.4 million, with pledged bank balances released during the reporting period Composition of Bank Balances | Item | June 30, 2023 (RMB thousand) | 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 | - Pledged bank balances refer to deposits pledged to banks for bills payable, which were released during the reporting period[222] 17. Trade Payables, Bills Payable and Other Payables As of June 30, 2023, trade payables, bills payable, and other payables included a trade payables balance of approximately RMB 1.0 million - Trade payables, bills payable, and other payables include a trade payables balance of approximately RMB 1,041,000 (December 31, 2022: RMB 4,239,000)[298] Ageing Analysis of Trade Payables | Ageing | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Within one year | — | 1,041 | | After one year | — | 4,239 | 18. Borrowings During the reporting period, the Group obtained new borrowings of RMB 305.0 million, bearing fixed market interest rates, used for working capital - During the reporting period, the Group obtained new borrowings of RMB 305.0 million (six months ended June 30, 2022: nil)[260] - The loans bear interest at fixed market rates of 4.00% to 4.50% and are repayable in installments over a period exceeding 2 years, with proceeds used to fund the Group's working capital[260] 19. Company's Share Capital As of June 30, 2023, the Company's authorized share capital was USD 50,000, with issued share capital of 1,690,914,000 shares at a par value of USD 1,691, and the placing and subscription of new shares completed in December 2022 increased share capital and share premium Company's Share Capital | Item | Par Value Per Share | Number of Shares | USD (thousand) | RMB (thousand) | | :--- | :--- | :--- | :--- | :--- | | Authorized Share Capital | USD 0.000001 | 50,000,000,000 shares | 50,000 | - | | Issued Share Capital (June 30, 2023) | USD 0.000001 | 1,690,914,000 shares | 1,691 | 11,366 | | Placing and Subscription of New Shares | USD 0.000001 | 190,914,000 shares | 191 | 1,327 | - The placing and subscription were completed on December 14, 2022, raising total proceeds of approximately RMB 600,992,000, resulting in a net increase in share capital and share premium of approximately RMB 1,000 and RMB 599,491,000, respectively[230][300] 20. Fair Value Measurement of Financial Instruments The Group uses valuation techniques such as discounted cash flow models for fair value measurement of financial instruments, classifying them into fair value hierarchies (Level 1 to 3) based on the observability of input data - The Group uses valuation techniques such as discounted cash flow models for finance lease receivables, lease liabilities, financial assets at fair value through other comprehensive income, financial assets at fair value through profit or loss, and financial assets measured at amortized cost[233] - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs directly or indirectly), and Level 3 (unobservable inputs)[243][244][249] Fair Value Measurement Hierarchy of Financial Assets | Financial Instrument | Fair Value Level | Fair Value as of June 30, 2023 (RMB thousand) | Fair Value as of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | :--- | | Unlisted Investment Funds | 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[245] 21. Related Party Transactions The Group has various related party transactions with Nanshan Group and its subsidiaries, and Longkou Nanshan and its subsidiaries, including finance lease income, rental expenses, services received, and purchases of inventory and property and equipment, with key management personnel compensation also disclosed Major Related Party Transactions | Related Party | Transaction Type | 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 | | Nanshan Group and its subsidiaries | Lease expenses paid | 944 | 993 | | Nanshan Group and its subsidiaries | Services received | 10,081 | — | | Longkou Nanshan and its subsidiaries | Services received | 4,698 | — | | Longkou Nanshan and its subsidiaries | Purchase of inventory | 1,780 | — | - 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[239] - Longkou Nanshan is wholly owned by Mr. Song Zuowen and Ms. Lü Shuling, and Ms. Sui Yongqing is the daughter-in-law of Mr. Song and Ms. Lü[240] Key Management Personnel Compensation | Item | For the six months ended June 30, 2023 (RMB thousand) | For the six months ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Basic Salaries and Allowances | 3,530 | 2,911 | | Employer's Contributions to Pension Schemes | 114 | 51 | | Other Social Benefits | 14 | 154 | | Total | 3,658 | 3,116 | - Key management personnel compensation is determined with reference to the Group's and individual performance[305]