中国金融发展(03623) - 2021 - 中期财报

Company Information Company Information This section provides fundamental company details Overview Overview During the reporting period, the Group's revenue decreased by 17.3% year-on-year, but successfully turned losses into profits, achieving a pre-tax profit of approximately RMB 13.96 million, while total assets slightly decreased and total equity increased Financial Summary For the six months ended June 30, 2021, the Group's revenue was RMB 62.39 million, a 17.3% year-on-year decrease, yet it successfully turned losses into profits, recording a profit of RMB 4.97 million for the period, with total assets decreasing to RMB 1.08 billion and total equity increasing to RMB 495.39 million Financial Performance and Position | Indicator | H1 2021 (RMB thousands) | H1 2020 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Revenue | 62,386 | 75,434 | -17.3% | | Profit/(Loss) before tax | 13,957 | (2,713) | -614.4% (Turned profitable) | | Profit/(Loss) for the period | 4,970 | (17,464) | -128.5% (Turned profitable) | | Earnings/(Loss) per share (RMB) | 0.02 | (0.03) | -166.7% (Turned profitable) | | Assets & Equity (Period-end comparison) | As at June 30, 2021 | As at December 31, 2020 | Change % | | Total assets | 1,082,562 | 1,198,874 | -9.7% | | Total equity | 495,386 | 479,903 | 3.2% | Chairman's Report Chairman's Report Despite a complex market and recurring pandemic in H1 2021, the Group prudently developed traditional financial businesses, actively pursued Greater Bay Area opportunities, and explored a "finance + real economy" model, with its pig farm commencing operations, while planning future strategic investments to enhance competitiveness - Facing a complex market environment, the Group adhered to prudent and stable principles, strategically developed traditional guarantee businesses, and continuously optimized its business structure, deeply cultivating the FinTech sector[12] - The Group actively explored a "finance + real economy" integration model, with its pig farm in the Greater Bay Area completing basic construction and officially commencing operations during the period, laying the foundation for future development of integrated supply chain financial services[14] - Looking ahead to the second half of the year, the Group will continue to prudently develop traditional businesses, seize policy opportunities for financial support to SMEs, and operate the pig farm in a modernized, large-scale manner, developing full industry chain financial products[16] - The Group plans to seek new commercial investment opportunities through investment, equity participation, or acquisition, providing integrated industry chain financial services point-by-point to enhance overall competitiveness[19] Management Discussion and Analysis Management Discussion and Analysis In H1 2021, the Group adopted a prudent strategy, slowing traditional financial business but seeking new growth through Greater Bay Area services and pig farming, successfully turning losses into profits with a pre-tax profit of RMB 14 million due to controlled expenses and impairment reversals, leading to an optimized financial structure Business Review The Group prudently developed traditional financial businesses while actively promoting Greater Bay Area integrated services and deepening cooperation, notably exploring a "finance + real economy" model with its invested pig farm commencing operations, laying the foundation for developing supply chain finance - Traditional guarantee business adopted a prudent strategy, with slower business development, while continuing to strategically position in FinTech and explore diversified cooperation with financial institutions[25] - Seized opportunities from Greater Bay Area construction, integrating resource advantages to strategically position integrated financial services[27] - The invested Greater Bay Area modernized pig farm officially commenced operations, with an existing sow inventory of 1,998 heads, expected to sell 60,000 commercial pigs annually. Despite initial investments and a decline in pig prices, no profit was realized in the reporting period, but it laid the foundation for supply chain financial services[30] Financial Review In H1 2021, the Group's total revenue decreased by 19.6% to RMB 66.4 million, primarily due to reduced financing guarantee income, but effective operating expense control and impairment reversals led to a pre-tax profit of RMB 14 million, successfully turning losses into profits and optimizing the capital structure Revenue Sources | Revenue Source | H1 2021 (RMB millions) | H1 2020 (RMB millions) | Change | | :--- | :--- | :--- | :--- | | Financing guarantee services | 44.1 | 91.3 | -51.7% | | Non-financing guarantee services | 0.3 | 0.4 | -25.0% | | Financial advisory services | 0.02 | 1.4 | -98.6% | | Commercial pig sales | 27.8 | 0 | New | | Total Revenue | Approx. 66.4 | Approx. 82.6 | -19.6% | - Operating expenses decreased by 27.4% year-on-year to RMB 27 million, primarily due to reduced intermediary consulting fees and business entertainment expenses resulting from business structure adjustments[47][49] - From a pre-tax loss of RMB 2.7 million in the same period last year, the Group recorded a pre-tax profit of RMB 14 million in the current period, mainly due to significant reductions in operating expenses and losses from investments in associates, as well as an impairment and provision reversal of RMB 5.1 million[51] - The capital gearing ratio decreased from 149.8% at the end of 2020 to 118.5%, primarily due to a decrease in total liabilities resulting from reduced guarantee liabilities and other payables[60] Prospects and Outlook Looking ahead to H2 2021, the Group will continue to prudently develop traditional businesses, deepen FinTech cooperation, accelerate the "finance + real economy" model in pig farming, promote Greater Bay Area services, and seek new growth through investments to enhance core competitiveness - Guarantee business will continue to explore FinTech and cooperate with financial institutions to design new products to increase revenue streams[66] - Accelerate the exploration of a "finance + real economy" integration model, operating pig farms in a modernized, large-scale manner, and developing full industry chain financial products in response to national financial support policies for agriculture[69] - Will continue to seize opportunities from Greater Bay Area construction, providing specialized financial services to enterprises in the region[70] - Plans to seek new commercial investment opportunities through investment, equity participation, or acquisition to expand business markets and enhance overall competitiveness[71] Interim Financial Information Review Report Interim Financial Information Review Report KPMG reviewed the Group's interim financial report for the six months ended June 30, 2021, and found no material issues indicating non-compliance with Hong Kong Accounting Standard 34 - Auditor KPMG issued an unqualified review conclusion on the interim financial report[76] Consolidated Financial Statements Consolidated Financial Statements This section presents the Group's consolidated financial performance and position, including income, balance sheet, and cash flow statements Consolidated Statement of Profit or Loss For the six months ended June 30, 2021, the Group recorded revenue of RMB 62.39 million and achieved a profit for the period of RMB 4.97 million, successfully reversing last year's loss, with profit attributable to equity holders of the company at RMB 8.20 million Consolidated Statement of Profit or Loss | Item (RMB thousands) | For the six months ended June 30, 2021 | For the six months ended June 30, 2020 | | :--- | :--- | :--- | | Revenue | 62,386 | 75,434 | | Profit/(Loss) before tax | 13,957 | (2,713) | | Profit/(Loss) for the period | 4,970 | (17,464) | | Profit/(Loss) attributable to equity holders of the Company | 8,195 | (17,994) | Consolidated Statement of Financial Position As at June 30, 2021, the Group's total assets decreased to RMB 1.083 billion, total liabilities decreased to RMB 587 million, and net assets (total equity) increased to RMB 495 million Consolidated Statement of Financial Position | Item (RMB thousands) | As at June 30, 2021 | As at December 31, 2020 | | :--- | :--- | :--- | | Total assets | 1,082,562 | 1,198,874 | | Total liabilities | 587,176 | 718,971 | | Net assets | 495,386 | 479,903 | | Total equity attributable to equity holders of the Company | 499,065 | 480,357 | Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2021, operating and investing activities resulted in net cash outflows of RMB 36.4 million and RMB 60.8 million respectively, while financing activities generated a net inflow of RMB 49.74 million, leading to a net decrease in cash and cash equivalents of RMB 47.45 million Condensed Consolidated Statement of Cash Flows | Activity (RMB thousands) | For the six months ended June 30, 2021 | For the six months ended June 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | (36,395) | (75,746) | | Net cash used in investing activities | (60,797) | (23,282) | | Net cash from/(used in) financing activities | 49,743 | (5,935) | | Net decrease in cash and cash equivalents | (47,449) | (104,963) | Notes to the Unaudited Interim Financial Report Notes to the Unaudited Interim Financial Report The financial report notes detail accounting policies and financial data changes, highlighting decreased financial services income, new pig sales business, fair value losses on biological assets, convertible bond covenant breaches under negotiation, and disclosures on related party transactions, share capital, and share option schemes Revenue and Segment Reporting During the reporting period, the Group's total revenue was RMB 62.39 million, with financial services contributing RMB 36.62 million in profit and the new pig sales segment contributing RMB 25.77 million in revenue but recording a pre-tax loss of RMB 6.51 million Reportable Segments | Reportable Segment (RMB thousands) | Financial Services | Pig Sales | Total | | :--- | :--- | :--- | :--- | | Reportable segment revenue | 36,621 | 25,765 | 62,386 | | Reportable segment profit/(loss) before tax | 20,466 | (6,509) | 13,957 | | Reportable segment assets (as at 2021/6/30) | 839,186 | 181,064 | 1,020,250 | | Reportable segment liabilities (as at 2021/6/30) | 401,576 | 169,670 | 571,246 | Biological Assets At the end of the reporting period, the fair value of the Group's biological assets, primarily commercial and breeding pigs, significantly decreased to RMB 11.03 million due to a RMB 17.73 million loss from fair value changes, with 1,998 breeding pigs owned - Due to pig price fluctuations, a net loss of approximately RMB 17.73 million from fair value changes of biological assets was recorded in the current period[200] - As at June 30, 2021, the Group owned 1,998 non-current biological assets (breeding pigs)[204] Convertible Bonds As at June 30, 2021, the Group failed to meet certain financial covenants of its convertible bonds, triggering a potential immediate repayment right, though no demand has been received and the company is negotiating with bond purchasers to update terms - The Group breached financial covenants of its convertible bonds, including net assets below the required level and capital gearing ratio exceeding the upper limit[249] - Despite the default, bond purchasers have not yet demanded immediate repayment. The Group is negotiating with them to update the agreement terms, and Chairman Mr. Zhang Tiewei will continue to provide personal guarantees for the bonds[250] Share Capital and Reserves During the reporting period, the company's ordinary shares increased due to convertible bond conversions and share option exercises, with no dividends declared, and total distributable reserves at period-end were approximately RMB 395 million - The Board did not recommend the payment of any dividend for the six months ended June 30, 2021[275][286] - Due to convertible bond conversions and share option exercises, issued ordinary shares increased from 534 million to 543 million shares[276] Other Information Other Information This section discloses dividend policy, director and major shareholder holdings, share option scheme changes, corporate governance compliance, and other significant matters, including the Board's decision not to declare an interim dividend and the pledging of a pig farming subsidiary's equity for bank financing Dividends The Board has resolved not to declare an interim dividend for the six months ended June 30, 2021 - The Board resolved not to declare an interim dividend for 2021[309] Share Option Schemes The company maintains pre-IPO and post-IPO share option schemes, with 15,000 pre-IPO options lapsing and 30,000 post-IPO options exercised during the period, and the post-IPO scheme limit was updated to 54,301,362 shares on May 27, 2021 - As at June 30, 2021, 6,458,000 unexercised share options remained under the pre-IPO share option scheme[335] - As at June 30, 2021, 31,725,400 unexercised share options remained under the post-IPO share option scheme[355] - Approved by the EGM, the limit of the post-IPO share option scheme was updated to 54,301,362 shares on May 27, 2021, representing 10% of the total issued shares at that time[363] Pledge of Group Assets To obtain RMB 105 million in bank financing, the Group pledged its entire 51% equity interest in Heshan City Luhuyangmian Mountain Agricultural Development Co., Ltd. to the bank and provided a joint and several liability guarantee - To enable its subsidiary Yangmian Mountain to obtain a RMB 105 million bank loan, the Group pledged its entire 51% equity interest in Yangmian Mountain to the bank[383]