悦达国际控股(00629) - 2024 - 中期财报

Company Information This section details the company's governance structure, including board and committee members, and essential administrative and listing information Board of Directors and Committees Yueda International Holdings Limited discloses its board composition, including executive, non-executive, and independent non-executive directors, and lists the members and chairs of its audit, remuneration, and nomination committees - The Board of Directors includes Mr. Wu Yinghua (Chairman), Mr. Yu Guangshan, Mr. Pan Mingfeng, Mr. Wu Shengquan (Executive Directors), Mr. Li Biao, Mr. Hu Huaimin (Non-executive Directors), and Dr. Liu Yongping, Mr. Zhang Tingji, Ms. Zhang Yan (Independent Non-executive Directors)[2] - Key committee chairs: The Audit Committee is chaired by Mr. Zhang Tingji, the Remuneration Committee by Ms. Zhang Yan, and the Nomination Committee by Mr. Wu Yinghua[2] Company Basic Information The company provides key administrative information such as authorized representatives, company secretary, auditor, and legal counsel, along with operational and listing details including registered office, Hong Kong head office, share registrar, listing venue, and principal bankers - The Company Secretary is Mr. Zheng Wenhong, the auditor is Deloitte Touche Tohmatsu, and the legal counsel (Hong Kong law) is JunHe LLP[2] - The company is listed on the Main Board of The Stock Exchange of Hong Kong Limited, with stock code 00629[3] - Principal bankers include China Construction Bank and Bank of Communications[3] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the company's financial performance over the period, detailing revenue, expenses, and overall profitability Overview of Financial Performance for the Period For the six months ended June 30, 2024, total revenue decreased by 20.76% year-on-year to RMB 38,299 thousand, primarily due to a significant reduction in telecommunication factoring business revenue, while profit and total comprehensive income for the period increased by 10.06% to RMB 18,342 thousand, with basic earnings per share rising to RMB 1.57 cents Financial Performance Overview | Indicator | June 30, 2024 (RMB thousands) | June 30, 2023 (RMB thousands) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 38,299 | 48,326 | -20.76% | | Traditional Factoring Business Revenue | 21,990 | 16,021 | +37.26% | | Telecommunication Factoring Business Revenue | 16,309 | 32,305 | -49.49% | | Net Other Gains and Losses | 2,404 | 5,337 | -54.99% | | Profit Before Tax | 26,198 | 28,235 | -7.21% | | Income Tax Expense | (7,856) | (11,569) | -32.01% | | Profit and Total Comprehensive Income for the Period | 18,342 | 16,666 | +10.06% | | Basic Earnings Per Share (RMB cents) | 1.57 | 1.43 | +9.79% | Condensed Consolidated Statement of Financial Position This statement provides a snapshot of the company's assets, liabilities, and equity at a specific point in time, reflecting its financial health Overview of Financial Position at Period End As of June 30, 2024, the company's total assets less current liabilities were RMB 460,007 thousand, a 5.73% decrease from the end of 2023, with non-current assets and non-current liabilities decreasing, current assets increasing, and equity attributable to owners increasing to RMB 445,471 thousand Financial Position Overview | Indicator | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current Assets | 80,742 | 107,655 | -24.99% | | Current Assets | 712,727 | 626,564 | +13.75% | | Current Liabilities | 333,462 | 246,220 | +35.43% | | Non-current Liabilities | 14,536 | 56,301 | -74.19% | | Equity Attributable to Owners of the Company | 445,471 | 431,698 | +3.19% | | Net Current Assets | 379,265 | 380,344 | -0.28% | | Total Assets Less Current Liabilities | 460,007 | 487,999 | -5.73% | - Within factoring receivables and other assets, traditional factoring business receivables increased from RMB 449,642 thousand at the end of 2023 to RMB 593,447 thousand, while telecommunication factoring business receivables decreased from RMB 181,298 thousand to RMB 122,816 thousand[5][12] - Cash and cash equivalents significantly decreased from RMB 41,061 thousand at the end of 2023 to RMB 11,038 thousand[5] Condensed Consolidated Statement of Changes in Equity This statement outlines the changes in the company's equity components over the reporting period, including profit, dividends, and other adjustments Changes in Equity for the Period For the six months ended June 30, 2024, equity attributable to owners of the company increased from RMB 431,698 thousand at the beginning of the period to RMB 445,471 thousand, primarily driven by profit and total comprehensive income for the period, despite dividend payments Equity Changes in 2024 | Indicator | January 1, 2024 (RMB thousands) | June 30, 2024 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | 431,698 | 445,471 | +13,773 | | Profit and Total Comprehensive Income for the Period | - | 18,342 | +18,342 | | Dividends Paid | - | (4,588) | (4,588) | Equity Changes in 2023 | Indicator | January 1, 2023 (RMB thousands) | June 30, 2023 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | 425,402 | 442,068 | +16,666 | | Profit and Total Comprehensive Income for the Period | - | 16,666 | +16,666 | Condensed Consolidated Statement of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities, illustrating the company's liquidity Overview of Cash Flows for the Period For the six months ended June 30, 2024, net cash outflow from operating activities was RMB 65,759 thousand, compared to a net inflow of RMB 173,059 thousand in the prior period, primarily due to changes in factoring receivables, with net cash outflow from investing activities of RMB 382 thousand and net cash inflow from financing activities of RMB 36,118 thousand, resulting in a significant decrease in cash and cash equivalents to RMB 11,038 thousand at period end Cash Flow Overview | Indicator | June 30, 2024 (RMB thousands) | June 30, 2023 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Net Cash (Used in) Generated from Operating Activities | (65,759) | 173,059 | -238,818 | | Net Cash Used in Investing Activities | (382) | (5,943) | +5,561 | | Net Cash Generated from (Used in) Financing Activities | 36,118 | (152,382) | +188,500 | | Net (Decrease) Increase in Cash and Cash Equivalents | (30,023) | 14,734 | -44,757 | | Cash and Cash Equivalents at Period End | 11,038 | 41,001 | -29,963 | - Financing activities primarily included new bank and other borrowings of RMB 100,000 thousand, repayment of bank and other borrowings of RMB 30,000 thousand, advances from related parties of RMB 190,000 thousand, and repayment of amounts due to related parties of RMB 156,433 thousand[12] Notes to the Condensed Consolidated Financial Statements These notes provide detailed explanations and breakdowns of the figures presented in the financial statements, clarifying accounting policies and significant transactions 1. Basis of Preparation The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA and the applicable disclosure requirements of Appendix D2 to the Listing Rules of The Stock Exchange of Hong Kong Limited - The preparation standards follow Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA and Appendix D2 of the Listing Rules[15] 2. Principal Accounting Policies The condensed consolidated financial statements are prepared on a historical cost basis, with accounting policies consistent with the 2023 annual financial statements, and the initial application of HKFRS amendments had no material impact on the financial position or performance for the current and prior periods - The condensed consolidated financial statements are prepared on a historical cost basis[16] - The amendments to HKFRS 16, HKAS 1, and HKAS 7 were first applied in this interim period, but had no material impact on the Group's financial position, performance, and/or disclosures for the current and prior periods[17] 3. Revenue and Segment Information Revenue primarily derives from interest income generated by traditional and telecommunication factoring services, with total revenue for the six months ended June 30, 2024, at RMB 38,299 thousand, showing significant growth in traditional factoring revenue and a substantial decline in telecommunication factoring revenue Revenue Sources | Revenue Source | June 30, 2024 (RMB thousands) | June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | Traditional Factoring Business | 21,990 | 16,021 | | Telecommunication Factoring Business | 16,309 | 32,305 | | Total Revenue | 38,299 | 48,326 | - Traditional factoring business revenue includes a fee of RMB 4,497 thousand, which is considered a component of the effective interest rate[18] - Segment information primarily focuses on revenue analysis by traditional and telecommunication factoring businesses for resource allocation and evaluation purposes[19] 4. Net Other Gains and Losses For the six months ended June 30, 2024, net other gains and losses were RMB 2,404 thousand, a significant decrease from RMB 5,337 thousand in the prior period, primarily due to increased fair value gains on financial assets at fair value through profit or loss, offset by gains from early settlement of asset-backed financing arrangements in the prior period Details of Net Other Gains and Losses | Item | June 30, 2024 (RMB thousands) | June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | Net Exchange (Losses)/Gains | (439) | 14 | | Loss on Remeasurement of Financial Guarantee Contracts | (1,429) | (3,376) | | Fair Value Gains on Financial Assets at Fair Value Through Profit or Loss | 4,291 | – | | Gains from Early Settlement of Asset-backed Financing Arrangements | – | 8,699 | | Loss on Disposal of Property, Plant and Equipment | (19) | – | | Total | 2,404 | 5,337 | 5. Finance Costs For the six months ended June 30, 2024, finance costs significantly decreased to RMB 6,269 thousand from RMB 10,429 thousand in the prior period, primarily due to a substantial reduction in interest on commitments arising from asset-backed financing arrangements Details of Finance Costs | Item | June 30, 2024 (RMB thousands) | June 30, 2023 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Interest on Bank and Other Borrowings | 2,886 | 2,060 | +40.10% | | Interest on Commitments Arising from Asset-backed Financing Arrangements | 3,338 | 8,344 | -60.00% | | Interest on Lease Liabilities | 45 | 25 | +80.00% | | Total | 6,269 | 10,429 | -39.90% | 6. Income Tax Expense For the six months ended June 30, 2024, income tax expense decreased to RMB 7,856 thousand from RMB 11,569 thousand in the prior period, primarily due to changes in deferred tax, with Chinese subsidiaries subject to an income tax rate of 25% Details of Income Tax Expense | Item | June 30, 2024 (RMB thousands) | June 30, 2023 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Current Tax (PRC Enterprise Income Tax) | 7,880 | 8,320 | -5.30% | | Deferred Tax | (24) | 3,249 | -100.74% | | Total | 7,856 | 11,569 | -32.01% | - The applicable income tax rate for the Group's PRC subsidiaries for both periods is 25%[23] 7. Profit and Total Comprehensive Income for the Period Profit and total comprehensive income for the period are achieved after deducting or including depreciation expenses and interest income from bank deposits Adjustments to Profit and Total Comprehensive Income for the Period | Item | June 30, 2024 (RMB thousands) | June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | Depreciation of Property, Plant and Equipment | 47 | 47 | | Depreciation of Right-of-use Assets | 759 | 315 | | Interest Income from Bank Deposits | (48) | (64) | 8. Dividends The company recognized a final dividend of RMB 4,569 thousand for 2023 during the period, but the Board does not recommend paying any interim dividend for the six months ended June 30, 2024 - The final dividend for 2023 recognized during the period was RMB 4,569 thousand[26] - The Board has determined that no dividend will be paid for the six months ended June 30, 2024[26] 9. Earnings Per Share For the six months ended June 30, 2024, basic earnings per share increased to RMB 1.57 cents from RMB 1.43 cents in the prior period, with no diluted earnings per share presented due to the absence of outstanding potential ordinary shares Earnings Per Share Calculation | Indicator | June 30, 2024 (RMB thousands/number) | June 30, 2023 (RMB thousands/number) | | :--- | :--- | :--- | | Profit for the Period Attributable to Owners of the Company | 18,342 | 16,666 | | Weighted Average Number of Ordinary Shares | 1,168,626,516 | 1,168,626,516 | | Basic Earnings Per Share (RMB cents) | 1.57 | 1.43 | - Diluted earnings per share are not presented as there were no outstanding potential ordinary shares during both periods[27] 10. Movements in Property, Plant and Equipment and Right-of-use Assets For the six months ended June 30, 2024, the Group acquired property, plant and equipment amounting to RMB 6 thousand, and recognized right-of-use assets and lease liabilities of RMB 1,421 thousand due to a new office lease agreement - For the six months ended June 30, 2024, the Group incurred RMB 6 thousand for the acquisition of property, plant and equipment (2023: RMB 7 thousand)[28] - The Group recognized right-of-use assets of RMB 1,421 thousand and lease liabilities of RMB 1,421 thousand for the six months ended June 30, 2024, due to a newly entered three-year office lease agreement[28] 11. Financial Assets at Fair Value Through Profit or Loss As of June 30, 2024, financial assets at fair value through profit or loss primarily consisted of subordinated tranche investments, totaling RMB 45,629 thousand, an increase from the end of 2023 Financial Assets at Fair Value Through Profit or Loss | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Subordinated Tranche Investments | 45,629 | 41,338 | 12. Factoring Receivables and Other Assets As of June 30, 2024, total factoring receivables and other assets amounted to RMB 724,799 thousand, with a significant increase in traditional factoring business receivables and a decrease in telecommunication factoring business receivables Details of Factoring Receivables and Other Assets | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Traditional Factoring Business | 593,447 | 449,642 | | Telecommunication Factoring Business | 122,816 | 181,298 | | Compensation Assets | 2,896 | 4,325 | | Other Receivables and Prepayments | 5,640 | 2,601 | | Total | 724,799 | 637,866 | - Factoring receivables are analyzed into current portion of RMB 692,589 thousand and non-current portion of RMB 32,210 thousand[30] - Compensation assets refer to amounts expected to be compensated by guarantors of telecommunication factoring receivables upon default settlement, recognized only when compensation is virtually certain to be received and the amount can be reliably measured[31] 13. Amounts Due from/to Related Parties As of June 30, 2024, total amounts due from related parties were RMB 9,100 thousand, and total amounts due to related parties were RMB 121,690 thousand, all unsecured, interest-free, and repayable on demand Amounts Due from Related Parties | Related Party Name | Relationship | Nature | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Yueda Mining Co., Ltd. | Fellow subsidiary | Non-trade related | 4,135 | 4,109 | | Yueda Capital (Hong Kong) Co., Ltd. | Direct holding company | Non-trade related | 4,965 | 4,567 | | Total Due From | | | 9,100 | 8,676 | Amounts Due to Related Parties | Related Party Name | Relationship | Nature | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Yueda Capital Co., Ltd. | Intermediate holding company | Non-trade related | 46,000 | 4 | | Yueda Capital (Hong Kong) | Direct holding company | Non-trade related | 71,313 | 71,313 | | Yueda Hong Kong | Fellow subsidiary | Non-trade related | 4,377 | 3,838 | | Yueda Commercial Factoring Co., Ltd. | Fellow subsidiary | Non-trade related | – | 12,429 | | Total Due To | | | 121,690 | 87,584 | 14. Other Payables and Liabilities As of June 30, 2024, total other payables and liabilities amounted to RMB 14,908 thousand, a decrease from the end of 2023, primarily comprising accrued staff costs and other payables Details of Other Payables and Liabilities | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Accrued Staff Costs | 1,730 | 3,915 | | Other Payables and Accrued Expenses | 13,178 | 14,691 | | Total | 14,908 | 18,606 | 15. Bank and Other Borrowings As of June 30, 2024, total bank and other borrowings significantly increased to RMB 120,000 thousand from RMB 50,000 thousand at the end of 2023, primarily due to new other loans of RMB 70,000 thousand, with all borrowings repayable within one year Details of Bank and Other Borrowings | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Secured Bank Loans | 50,000 | 50,000 | | Other Loans | 70,000 | – | | Total | 120,000 | 50,000 | - During the period, the Group obtained new borrowings totaling RMB 100,000 thousand[35] - Bank loans are secured by factoring receivables of RMB 50,000 thousand and guaranteed by Jiangsu Yueda Group Co., Ltd.; other loans are secured by factoring receivables of RMB 100,000 thousand and guaranteed by Jiangsu Yueda[35][36] 16. Commitments Arising from Asset-backed Financing Arrangements As of June 30, 2024, total commitments arising from asset-backed financing arrangements significantly decreased to RMB 71,690 thousand from RMB 118,585 thousand at the end of 2023, as the Group retained substantially all risks and rewards of the transferred assets by subscribing to subordinated tranches, thus continuing to recognize factoring receivables and related commitments Commitments Arising from Asset-backed Financing Arrangements | Repayment Period | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Within one year | 71,690 | 76,490 | | More than one year but less than two years | – | 42,095 | | Total | 71,690 | 118,585 | - The Group has retained substantially all the risks and rewards of the transferred assets, thus continuing to recognize factoring receivables and the commitments arising from these financing arrangements[39] - The special purpose entity is not consolidated due to control by senior tranche holders; gains of RMB 8,699 thousand arose from early settlement of financing arrangements in the first half of 2023[37][40] 17. Share Capital As of June 30, 2024, the company's issued and fully paid ordinary share capital was RMB 105,965 thousand, with a par value of HKD 0.10 per share and 1,168,626,516 shares outstanding, remaining unchanged from the end of 2023 Issued and Fully Paid Ordinary Shares | Item | Number of Shares | Amount (HKD thousands) | Presented in Condensed Consolidated Financial Statements (RMB thousands) | | :--- | :--- | :--- | :--- | | Issued and fully paid ordinary shares | 1,168,626,516 | 116,863 | 105,965 | - The authorized share capital is 2,000,000,000 shares with a par value of HKD 0.10 per share, totaling HKD 200,000 thousand[42] 18. Related Party Disclosures The company is ultimately controlled by the Chinese government, with Yueda Capital (Hong Kong) as its parent and Jiangsu Yueda as the ultimate parent, and the report discloses transactions and balances with Jiangsu Yueda subsidiaries and other government-related entities, along with key management personnel compensation - The Company is ultimately controlled by the Chinese government, with Jiangsu Yueda Group Co., Ltd. as the ultimate parent company[42] Transactions and Balances with Related Parties | Related Party Name | Nature of Transaction | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | :--- | | Yancheng Yueda Real Estate Development Co., Ltd. | Factoring receivables | 29,925 | 30,108 | | Jiangsu Yueda Green Building Technology | Factoring receivables | 3,033 | 4,305 | | Jiangsu Yueda Commercial Real Estate | Factoring receivables | 48,816 | 14,764 | | Yueda Real Estate (Dongtai) Co., Ltd. | Factoring receivables | 39,202 | – | | Yueda Real Estate (Sheyang) Co., Ltd. | Factoring receivables | 32,320 | – | | Yueda Hong Kong | Short-term lease expenses | – | 1,725 | Key Management Personnel Compensation | Item | June 30, 2024 (RMB thousands) | June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | Short-term benefits | 1,548 | 1,635 | | Post-employment benefits | 224 | 191 | | Total Key Management Personnel Compensation | 1,772 | 1,826 | Management Discussion and Analysis This section offers management's perspective on the company's financial performance, operational review, business plans, and future outlook Financial Performance For the six months ended June 30, 2024, the Group's operating revenue decreased year-on-year to RMB 38,299 thousand, primarily due to a slower-than-expected recovery in China's consumer market and business mix adjustments, while profit and total comprehensive income for the period increased to RMB 18,342 thousand, with basic earnings per share rising to RMB 1.57 cents - Operating revenue for the period was RMB 38,299 thousand (prior period: RMB 48,326 thousand)[47] - Profit and total comprehensive income for the period amounted to RMB 18,342 thousand (prior period: RMB 16,666 thousand), with basic earnings per share of RMB 1.57 cents (prior period: RMB 1.43 cents)[47] - The decrease in operating revenue was primarily due to a slower-than-expected recovery in China's consumer market and the Group's adjustment of the proportion of different factoring-related businesses, leading to reduced telecommunication factoring business revenue[47] Interim Dividend The Board of Directors does not recommend paying any interim dividend for the period - The Company's Board of Directors does not recommend paying any interim dividend for the period[48] Business Review During the review period, the Group primarily engaged in commercial factoring business, providing factoring services, accounts receivable management, and collection services - The Group primarily engages in factoring-related businesses (commercial factoring business), providing factoring services, accounts receivable management, and collection services[49] Commercial Factoring Business Commercial factoring business operating revenue for the period was RMB 38,299 thousand, a year-on-year decrease, with the company conducting business through Yueda Commercial Factoring (Shenzhen) Co., Ltd. and implementing different risk management strategies for traditional and telecommunication factoring businesses to continuously monitor credit risk - Commercial factoring business recorded operating revenue of RMB 38,299 thousand for the period (prior period: RMB 48,326 thousand)[50] - The Company will continue to conduct its commercial factoring business through Yueda Commercial Factoring (Shenzhen) Co., Ltd.[50] Traditional Factoring The total principal amount of financing receivables under traditional factoring business increased to RMB 597,860 thousand, with both interest and management fee income growing, as the company primarily serves state-owned enterprise clients in the Yangtze River Delta region and maintains stringent risk control measures including due diligence, risk assessment, and multi-level approval processes - As of June 30, 2024, the total principal amount of financing receivables under traditional factoring business was approximately RMB 597,860 thousand (December 31, 2023: RMB 454,800 thousand)[51] - Interest income and management fee income for the period were approximately RMB 17,493 thousand and RMB 4,497 thousand, respectively (prior period: RMB 11,999 thousand and RMB 4,022 thousand)[51] Traditional Factoring Business Financing Receivables by Industry | Industry | June 30, 2024 (RMB thousands) | Percentage (%) | Number of Clients | | :--- | :--- | :--- | :--- | | Property Development | – | – | – | | Food Processing | 50,000 | 8.4 | 1 | | Metal Material Trading | 50,000 | 8.4 | 1 | | Industrial Product Trading | 50,000 | 8.4 | 1 | | Engineering Construction | 447,860 | 74.8 | 11 | | Total | 597,860 | 100.0 | 14 | Telecommunication Factoring Telecommunication factoring business service fee income for the period was RMB 16,309 thousand, a significant year-on-year decrease, with outstanding principal amounting to approximately RMB 126,788 thousand and a reduced number of end customers, as the company collaborates with third-party payment institutions and utilizes AI and manual efforts for credit assessment and risk control to address end-customer default risks - Service fee income from telecommunication factoring business for the period was approximately RMB 16,309 thousand (prior period: RMB 32,305 thousand)[57] - As of June 30, 2024, approximately 309,000 end customers (December 31, 2023: 453,000) had outstanding financing receivables totaling approximately RMB 126,788 thousand (December 31, 2023: RMB 187,602 thousand) with the Group[57] - The Group assesses the likelihood of end-customer default using an AI system, combined with manual verification, SMS reminders, and professional debt collectors to mitigate risks[58][60] Aging Analysis and Impairment of Traditional and Telecommunication Factoring Businesses As of June 30, 2024, total outstanding principal of financing receivables amounted to RMB 724,648 thousand, with all traditional factoring business receivables being within one year and non-overdue, while some telecommunication factoring business receivables exceeded one year; the company uses an expected credit loss model for impairment assessment, with individual assessment for traditional factoring and collective assessment for telecommunication factoring Aging Analysis of Outstanding Principal of Financing Receivables | Aging | Traditional Factoring Business (RMB thousands) | Telecommunication Factoring Business (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | | Within one year | 597,860 | 35,550 | 633,410 | | More than one year but less than two years | – | 59,696 | 59,696 | | More than two years | – | 31,542 | 31,542 | | Total | 597,860 | 126,788 | 724,648 | Movements in Expected Credit Loss Provisions | Item | Traditional Factoring Business (RMB thousands) | Telecommunication Factoring Business (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | | December 31, 2023 | 1,119 | 6,304 | 7,423 | | Net impairment loss recognized (reversed) | 263 | (2,332) | (2,069) | | June 30, 2024 | 1,382 | 3,972 | 5,354 | Internal Credit Ratings and Average Loss Rates for Telecommunication Factoring Business | Internal Credit Rating | Average Loss Rate | Receivables as of June 30, 2024 (RMB thousands) | Receivables as of December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | :--- | | Low risk | 3.04% | 121,221 | 177,292 | | Doubtful | 5.05% | 5,567 | 10,310 | | Total | | 126,788 | 187,602 | Business Plan The Group plans to further develop its commercial factoring business, including deepening existing factoring financial services, expanding telecommunication factoring, and actively exploring potential investment opportunities for business diversification - The Group will further develop its commercial factoring business, specifically (i) existing factoring financial services, (ii) telecommunication factoring, and (iii) exploring potential investment opportunities[69] Existing Factoring Financial Services The Group will leverage its state-owned enterprise background and network advantages to continuously expand its factoring business, and in response to China's slowing economic growth, will conduct more stringent due diligence on potential new clients to enhance overall client quality - The Group intends to continuously expand its factoring business through its state-owned enterprise network in China[70] - Due to the slowdown in China's economic growth, due diligence on potential new clients will be more stringent to improve the overall quality of the client base[70] Telecommunication Factoring The Group has established cooperation arrangements with China's three major telecommunication operators for providing telecommunication factoring services, and the revenue rate for telecommunication factoring services is higher than that of traditional factoring - The Group has established cooperation arrangements with China's three major telecommunication operators for providing telecommunication factoring services[71] - The revenue rate for telecommunication factoring services is higher than that of traditional factoring[71] Exploring Potential Investment Opportunities The Group is exploring potential investment opportunities to further complement and diversify its existing businesses, but has not yet identified any potential targets or entered into any formal agreements in this regard - The Group is exploring potential investment opportunities that could further complement and diversify its existing businesses[72] - The Group is still exploring but has not identified any potential targets, nor has it entered into any formal agreements in this regard[72] Funding Requirements The Group will continue to utilize its internal resources, bank loans, and other borrowings to develop its commercial factoring business, and in addition to existing bank financing, the company is negotiating for several bank facilities and will continue to consider the future use of asset-backed financing arrangements - The Group will continue to utilize its internal resources, bank loans, and other borrowings to develop its commercial factoring business[73] - The Group is negotiating for several bank financing facilities and will continue to consider the possibility of utilizing asset-backed financing arrangements in the future[73] Prospects Looking ahead to the second half of 2024, the Group will focus on its factoring business and remain vigilant about the operational impacts of a slow global economic recovery, with the Board committed to seeking business opportunities in other sectors, such as the financial industry, to diversify its operations and enhance long-term shareholder value - The Group will focus on its factoring business in the future and remain highly vigilant about the operational impacts of a slow global recovery[74] - The Directors are committed to seeking more business opportunities in other sectors, such as the financial industry, to diversify the Group's existing business areas and enhance the overall long-term interests of the Group and its shareholders[74] Liquidity and Financial Resources As of June 30, 2024, the Group's current assets increased to RMB 712,727 thousand, but cash and cash equivalents significantly decreased, with net assets growing by 3.2% and the gearing ratio slightly rising to 43.9%, while total current liabilities significantly increased and total non-current liabilities substantially decreased Overview of Liquidity and Financial Resources | Indicator | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Current Assets | 712,727 | 626,564 | | Cash and Cash Equivalents | 11,038 | 41,061 | | Net Assets | 445,471 | 431,698 | | Gearing Ratio | 43.9% | 41.2% | | Total Current Liabilities | 333,462 | 246,220 | | Total Non-current Liabilities | 14,536 | 56,301 | Capital Structure of the Group The Group's capital structure comprises debt (including bank and other borrowings, commitments arising from asset-backed financing arrangements, and amounts due to related parties) and equity attributable to owners of the company, with the Board regularly reviewing the capital structure to balance capital cost and risk, optimizing it through new share issuance, share repurchases, or debt issuance/redemption - The Group's capital structure comprises debt (including bank and other borrowings, commitments arising from asset-backed financing arrangements, and amounts due to related parties) and equity reserves attributable to owners of the company[76] - The Board reviews the capital structure semi-annually, considering the cost of capital and risks associated with each class of capital, and balances its overall capital structure through issuing new shares, repurchasing shares, and issuing new debt or redeeming existing debt[76] Debt Composition | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Bank and Other Borrowings | 120,000 | 50,000 | | Commitments Arising from Asset-backed Financing Arrangements | 71,690 | 118,585 | Contingent Liabilities and Pledge of the Group's Assets As of June 30, 2024, the Group's credit facilities are secured by factoring receivables totaling RMB 150,000 thousand, and there is a contractual obligation to transfer cash flows of RMB 66,476 thousand related to the Group's telecommunication factoring receivables as of June 30, 2024, under asset-backed financing arrangements - The Group's credit facilities are secured by factoring receivables totaling RMB 150,000 thousand (December 31, 2023: RMB 50,000 thousand)[78] - The Group has a contractual obligation to transfer cash flows of RMB 66,476 thousand related to its telecommunication factoring receivables as of June 30, 2024, under asset-backed financing arrangements (December 31, 2023: RMB 97,225 thousand)[78] Employees and Remuneration Policy As of June 30, 2024, the Group employed 25 management, administrative, and commercial factoring-related staff across mainland China and Hong Kong, with remuneration policies regularly reviewed by management based on employee performance, experience, and industry practices, including social insurance contributions and MPF schemes, and the Group experienced no significant recruitment difficulties, staff turnover, or labor disputes - As of June 30, 2024, the Group employed 25 staff across mainland China and Hong Kong[79] - Remuneration policies are regularly reviewed by management based on employee performance, experience, and current industry practices[79] - The Group experienced no significant recruitment difficulties, major staff turnover, or any significant labor disputes[79] Repurchase, Sale or Redemption of the Company's Securities Neither the Company nor any of its subsidiaries repurchased, sold, or redeemed any of the Company's securities during the period - Neither the Company nor any of its subsidiaries repurchased, sold, or redeemed any of the Company's securities during the period[80] Corporate Governance Code and Corporate Governance Report The Board believes that the Group has complied with all code provisions of the Corporate Governance Code as set out in Appendix C1 Part 2 of the Listing Rules throughout the period - The Group has complied with all code provisions of the Corporate Governance Code as set out in Appendix C1 Part 2 of the Listing Rules throughout the period[81] Standard Code for Securities Transactions by Directors The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules, and all Directors have confirmed compliance with its provisions throughout the period - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules[82] - All Directors have confirmed that they have complied with the provisions of the Model Code throughout the period[82] Audit Committee The Company's Audit Committee comprises independent non-executive directors Mr. Zhang Tingji (Chairman), Dr. Liu Yongping, and Ms. Zhang Yan, with functions including reviewing audit scope, financial statements, and internal controls, and has reviewed the Group's accounting principles, interim results, and discussed related matters with management - The Audit Committee comprises independent non-executive directors Mr. Zhang Tingji (Chairman), Dr. Liu Yongping, and Ms. Zhang Yan[85] - The Committee's functions include reviewing all matters related to the audit scope, including financial statements and internal controls, to safeguard the interests of the Company's shareholders[85] Remuneration Committee The Company's Remuneration Committee comprises independent non-executive director Ms. Zhang Yan (Chairman), independent non-executive director Dr. Liu Yongping, and executive director Mr. Pan Mingfeng, and regularly meets to review and discuss matters concerning remuneration policies, levels, and executive directors' remuneration - The Remuneration Committee members include independent non-executive director Ms. Zhang Yan (Chairman), independent non-executive director Dr. Liu Yongping, and executive director Mr. Pan Mingfeng[86] - The Committee regularly reviews and discusses matters concerning remuneration policies, remuneration levels, and executive directors' remuneration[86] Nomination Committee The Company's Nomination Committee comprises executive director and Board Chairman Mr. Wu Yinghua (Chairman), independent non-executive director Dr. Liu Yongping, and independent non-executive director Ms. Zhang Yan, with functions including reviewing the Board's composition and selecting and nominating candidates for Board appointment to match required skills, knowledge, and experience - The Nomination Committee members include executive director and Board Chairman Mr. Wu Yinghua (Chairman), independent non-executive director Dr. Liu Yongping, and independent non-executive director Ms. Zhang Yan[87] - The Committee's functions include reviewing the Board's composition and selecting and nominating candidates for Board appointment[87] Other Information This section includes additional disclosures such as directors' and major shareholders' interests, share option schemes, and board composition Directors' Interests in Shares, Related Shares and Debentures or Any Associated Corporations of the Company As of June 30, 2024, Mr. Hu Huaimin and Mr. Li Biao held 2,424,666 and 690,640 ordinary shares of the Company, respectively, representing 0.21% and 0.06% of the issued share capital, with no directors holding any short positions Directors' Interests in Shares | Name | Capacity | Number of Ordinary Shares | Approximate Percentage of Total Issued Share Capital of the Company (%) | | :--- | :--- | :--- | :--- | | Hu Huaimin | Beneficial owner | 2,424,666 | 0.21% | | Li Biao | Beneficial owner | 690,640 | 0.06% | - All interests in the Company's shares and related shares are long positions, and no Director holds any short positions in the Company's shares and related shares[88] Interests of Major Shareholders As of June 30, 2024, Yueda Capital (Hong Kong) Co., Ltd. and Yueda Group (Hong Kong) Co., Ltd. are major shareholders of the Company, holding 51.64% and 17.88% of the issued share capital, respectively, with Jiangsu Yueda Group Co., Ltd. deemed to have an interest of 69.52% in the Company through its control over these entities Interests of Major Shareholders | Shareholder Name | Capacity | Number of Shares | Approximate Percentage of Total Issued Share Capital of the Company (%) | | :--- | :--- | :--- | :--- | | Yueda Capital (Hong Kong) Co., Ltd. | Beneficial owner | 603,458,000 | 51.64% | | Yueda Group (Hong Kong) Co., Ltd. | Beneficial owner | 208,979,333 | 17.88% | | Yueda Capital Co., Ltd. | Interest in controlled corporation | 603,458,000 | 51.64% | | Jiangsu Yueda Group Co., Ltd. | Interest in controlled corporation | 812,437,333 | 69.52% | - Jiangsu Yueda Group Co., Ltd. holds 100% interest in Yueda Group (Hong Kong) Co., Ltd. and 61.03% interest in Yueda Capital Co., Ltd., and is therefore deemed to have an interest in the Company's shares beneficially owned by Yueda Group (Hong Kong) Co., Ltd. and Yueda Capital (Hong Kong) Co., Ltd.[92] Share Option Scheme The Company adopted a share option scheme on May 20, 2021, to incentivize participants who contribute to the Group, with no outstanding share options under the scheme as of June 30, 2024, and December 31, 2023 - The Company adopted a share option scheme pursuant to a resolution passed on May 20, 2021, primarily to encourage or reward selected participants who contribute to the Group[95] - As of June 30, 2024, and December 31, 2023, there were no outstanding share options under the share option scheme[95] Board Composition As of the report date, the Board of Directors comprises Wu Yinghua (Executive Director and Chairman), Yu Guangshan, Pan Mingfeng, Wu Shengquan (Executive Directors), Li Biao, Hu Huaimin (Non-executive Directors), Liu Yongping, Zhang Tingji, and Zhang Yan (Independent Non-executive Directors) - The Board of Directors includes Executive Directors Wu Yinghua (Chairman), Yu Guangshan, Pan Mingfeng, Wu Shengquan; Non-executive Directors Li Biao, Hu Huaimin; and Independent Non-executive Directors Liu Yongping, Zhang Tingji, Zhang Yan[94][95]