万城控股(02892) - 2024 - 中期业绩

Financial Summary and Key Financial Statements This section presents the Group's condensed consolidated interim financial statements, including the statements of profit or loss, comprehensive income, and financial position, highlighting key financial performance and position indicators Financial Summary The Group's financial performance for the six months ended June 30, 2024, significantly deteriorated, with substantial declines in revenue and gross profit, shifting from a profit in the prior period to a loss per share of RMB 8.2 cents | Indicator | For the six months ended June 30, 2024 (RMB millions) | For the six months ended June 30, 2023 (RMB millions) | Change (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 46.1 | 327.7 | –281.6 | –85.9% | | Gross profit | 14.8 | 125.2 | –110.4 | –88.2% | | Gross profit margin | 32.0% | 38.2% | Not applicable | –6.2% | | (Loss)/Profit attributable to owners of the Company | (61.7) | 0.7 | –62.4 | Not applicable | | (Loss)/Earnings per share (RMB cents) | (8.2) | 0.1 | –8.3 | Not applicable | | Interim dividend per share (RMB cents) | — | — | — | Not applicable | Consolidated Statement of Profit or Loss The Group shifted from profit to loss in the first half of 2024, primarily due to an 85.9% revenue decline to RMB 46,119 thousand, leading to a sharp reduction in gross profit, and recognition of losses from associates and income tax expenses | Indicator | For the six months ended June 30, 2024 (RMB thousands) | For the six months ended June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 46,119 | 327,663 | | Cost of sales | (31,362) | (202,467) | | Gross profit | 14,757 | 125,196 | | Gain on fair value measurement of investment properties | 1,048 | 23,724 | | Net other income | 7,836 | 4,187 | | Impairment loss on other receivables | (1,341) | — | | Selling expenses | (3,724) | (32,924) | | Administrative expenses | (23,047) | (21,370) | | Other expenses | (309) | (842) | | Operating (loss)/profit | (4,780) | 97,971 | | Finance costs | (5) | (4,488) | | Share of profits less losses of associates | (38,006) | (15,179) | | (Loss)/Profit before tax | (42,791) | 78,304 | | Income tax | (22,442) | (66,243) | | (Loss)/Profit for the period | (65,233) | 12,061 | | Attributable to owners of the Company | (61,722) | 730 | | Non-controlling interests | (3,511) | 11,331 | | Basic and diluted (loss)/earnings per share (RMB cents) | (8.23) | 0.10 | Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group recorded a total comprehensive loss of RMB 66,889 thousand in the first half of 2024, a significant deterioration from the RMB 5,370 thousand total comprehensive income in the prior period, primarily due to the loss for the period and exchange differences | Indicator | For the six months ended June 30, 2024 (RMB thousands) | For the six months ended June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | (Loss)/Profit for the period | (65,233) | 12,061 | | Other comprehensive income for the period: | | | | Exchange differences on translation of financial statements: | | | | — Associates | (517) | (2,286) | | — Hong Kong and overseas subsidiaries | (1,139) | (4,405) | | Other comprehensive income for the period | (1,656) | (6,691) | | Total comprehensive income for the period | (66,889) | 5,370 | | Attributable to owners of the Company | (59,812) | 1,492 | | Non-controlling interests | (7,077) | 3,878 | Consolidated Statement of Financial Position As of June 30, 2024, the Group's total assets were RMB 1,574,851 thousand, a decrease from the end of 2023, with net assets falling to RMB 783,006 thousand, mainly due to reduced non-current assets and changes in current liabilities structure | Indicator | As of June 30, 2024 (RMB thousands) | As of December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Non-current assets | | | | Property, plant and equipment | 45,657 | 46,164 | | Investment properties | 57,560 | 54,850 | | Interests in associates | 196,387 | 211,602 | | Deferred tax assets | 62,977 | 59,769 | | Other non-current assets | — | 97,733 | | Total non-current assets | 362,581 | 470,118 | | Current assets | | | | Inventories and other contract costs | 646,083 | 660,304 | | Trade and other receivables | 233,550 | 150,095 | | Prepaid taxes | 2,807 | 11,948 | | Pledged and restricted deposits | 15,414 | 16,641 | | Cash and cash equivalents | 314,416 | 363,294 | | Total current assets | 1,212,270 | 1,202,282 | | Total assets | 1,574,851 | 1,672,400 | | Current liabilities | | | | Contract liabilities | 68,299 | 78,161 | | Trade and other payables | 499,187 | 499,599 | | Lease liabilities | 129 | 28 | | Tax payable | 219,937 | 223,427 | | Provisions | — | 18,108 | | Total current liabilities | 787,552 | 819,323 | | Net current assets | 424,718 | 382,959 | | Total assets less current liabilities | 787,299 | 853,077 | | Non-current liabilities | | | | Lease liabilities | 619 | — | | Deferred tax liabilities | 3,674 | 3,182 | | Total non-current liabilities | 4,293 | 3,182 | | Net assets | 783,006 | 849,895 | | Capital and reserves | | | | Share capital | 6,605 | 6,605 | | Reserves | 619,004 | 678,816 | | Total equity attributable to owners of the Company | 625,609 | 685,421 | | Non-controlling interests | 157,397 | 164,474 | | Total equity | 783,006 | 849,895 | Notes to the Condensed Consolidated Interim Financial Information This section provides detailed notes to the condensed consolidated interim financial information, covering general information, accounting policy changes, revenue and segment data, and other financial disclosures General Information and Basis of Preparation This condensed consolidated interim financial information, presented in RMB thousands, was approved for issue by the Board on August 26, 2024, prepared in accordance with HKAS 34 and HKEX Listing Rules, using consistent accounting policies with the 2023 annual financial statements, and has been reviewed by KPMG but not audited - This condensed consolidated interim financial information is presented in RMB thousands and was approved for issue by the Board on August 26, 2024[6] - It is prepared in accordance with the HKEX Listing Rules and HKAS 34, adopting the same accounting policies as the 2023 annual financial statements[7] - This information is unaudited but has been reviewed by KPMG in accordance with HKSRE 2410[7] Changes in Accounting Policies The Group has adopted amendments to HKFRS, including HKAS 1 and HKFRS 16, but these changes have no material impact on the results or financial position for the current or prior periods - The Group has adopted amendments to HKAS 1 (Classification of Liabilities, Non-current Liabilities with Covenants) and HKFRS 16 (Lease Liability in a Sale and Leaseback)[8] - These changes in accounting policies have no material impact on the results or financial position for the current or prior periods[8] Revenue and Segment Information The Group's primary revenue is derived from property development and sales in Mainland China, with a significant 85.9% decline in revenue in the first half of 2024, and management considers the Group to have only one operating segment concentrated in Huizhou, Tianjin, and Zhumadian - The Group's principal activities are property development and sales in China[9] - Management considers the Group to have only one operating segment, as resource allocation and performance assessment are focused on overall property development[10][54] Revenue Breakdown The Group's total revenue for the first half of 2024 was RMB 46,119 thousand, a substantial 85.9% year-on-year decrease, primarily due to reduced property sales revenue, while property rental income increased | Revenue Source | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Property sales (recognized at a point in time) | 43,498 | 325,846 | | Gross property rental | 2,621 | 1,817 | | Total Revenue | 46,119 | 327,663 | Operating Segments and Geographical Information The Group's operating segment is identified as a single segment, with major revenue and designated non-current assets concentrated in Huizhou, followed by Tianjin and Zhumadian, where Huizhou's revenue significantly decreased year-on-year | Region | For the six months ended June 30, 2024 Revenue (RMB thousands) | For the six months ended June 30, 2023 Revenue (RMB thousands) | As of June 30, 2024 Designated non-current assets (RMB thousands) | As of December 31, 2023 Designated non-current assets (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Huizhou | 44,449 | 302,711 | 158,976 | 267,210 | | Tianjin | 1,670 | 24,952 | 54,198 | 52,235 | | Zhumadian | — | — | 86,374 | 90,848 | | Others | — | — | 56 | 56 | | Total | 46,119 | 327,663 | 299,604 | 410,349 | Net Other Income The Group's net other income increased to RMB 7,836 thousand in the first half of 2024, a substantial 87.2% year-on-year growth, primarily driven by increased interest income from bank deposits and loans | Income Source | For the six months ended June 30, 2024 (RMB thousands) | For the six months ended June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | Interest income from bank deposits | 4,610 | 1,851 | | Interest income from loans | 1,951 | 1,904 | | Net exchange gain/(loss) | 279 | (90) | | Others | 996 | 522 | | Total | 7,836 | 4,187 | - Net other income increased by 87.2% year-on-year, primarily due to increased interest income[13][38] Components of (Loss)/Profit Before Tax The Group's loss before tax was primarily influenced by a significant decrease in finance costs, reduced staff costs, and other items such as reversal of inventory write-downs Finance Costs The Group's finance costs for the first half of 2024 significantly decreased by 99.9% to RMB 5 thousand, mainly because all bank loans were repaid before December 31, 2023 | Finance Costs | For the six months ended June 30, 2024 (RMB thousands) | For the six months ended June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | Interest on bank borrowings | — | 4,484 | | Interest on lease liabilities | 5 | 4 | | Total | 5 | 4,488 | - Finance costs decreased by 99.9% year-on-year, primarily due to the repayment of all bank loans before December 31, 2023[14][42] Staff Costs The Group's staff costs (net of capitalized portion) decreased to RMB 11,632 thousand in the first half of 2024, a 20.4% reduction from the prior period, reflecting lower salaries, wages, and other benefits | Staff Costs | For the six months ended June 30, 2024 (RMB thousands) | For the six months ended June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | Salaries, wages and other benefits | 11,905 | 17,206 | | Contributions to defined contribution retirement plans | 479 | 534 | | Less: Staff costs capitalized to inventories | (752) | (3,132) | | Total | 11,632 | 14,608 | Other Items Other items for the Group in the first half of 2024 included depreciation, a reversal of inventory write-down of RMB 443 thousand (compared to a write-down of RMB 36,222 thousand in the prior period), impairment of other receivables of RMB 1,341 thousand, and increased rental income from investment properties | Item | For the six months ended June 30, 2024 (RMB thousands) | For the six months ended June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | Depreciation — Property, plant and equipment | 1,332 | 1,589 | | Depreciation — Right-of-use assets | 26 | 59 | | Inventories (write-down reversal)/write-down | (443) | 36,222 | | Impairment of other receivables | 1,341 | — | | Rental income from investment properties | (1,322) | (990) | Income Tax The Group's total income tax for the first half of 2024 was RMB 22,442 thousand, a significant 66.2% decrease from the prior period, primarily due to reduced operating profit, with both corporate income tax and land appreciation tax provisions declining | Tax Type | For the six months ended June 30, 2024 (RMB thousands) | For the six months ended June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | Current tax: | | | | Provision for corporate income tax | 10,080 | 17,803 | | Provision for land appreciation tax | 15,078 | 40,202 | | Total current tax | 25,158 | 58,005 | | Deferred tax: | | | | Origination and reversal of temporary differences | (2,716) | 8,238 | | Total income tax | 22,442 | 66,243 | - Total income tax decreased by 66.2% year-on-year, primarily due to reduced operating profit[15][43] Corporate Income Tax and Hong Kong Profits Tax The Group's principal subsidiaries in Mainland China are subject to a 25% corporate income tax rate, while Hong Kong subsidiaries had no assessable profits and thus no Hong Kong profits tax provision was recognized for the period - Principal subsidiaries in Mainland China are subject to a 25% corporate income tax rate[16] - Hong Kong subsidiaries had no assessable profits for the period, and thus no Hong Kong profits tax provision was recognized[16] Land Appreciation Tax Land Appreciation Tax is levied at progressive rates from 30% to 60%, calculated based on proceeds from property sales less deductible expenditures - Land Appreciation Tax is levied at progressive rates from 30% to 60%, calculated based on proceeds from property sales less deductible expenditures[17] Cayman Islands and British Virgin Islands Taxation The Group is not subject to any income tax in the Cayman Islands and British Virgin Islands under relevant regulations - The Group is not subject to any income tax in the Cayman Islands and British Virgin Islands[17] Loss/Earnings Per Share The Group's basic and diluted loss per share for the first half of 2024 was RMB 8.23 cents, compared to earnings per share of RMB 0.10 cents in the prior period, primarily due to the loss attributable to owners of the Company | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | | :--- | :--- | :--- | | (Loss)/Profit attributable to owners of the Company | RMB 61,722,000 (Loss) | RMB 730,000 (Profit) | | Weighted average number of ordinary shares in issue | 750,000,000 shares | 750,000,000 shares | | Basic and diluted (loss)/earnings per share (RMB cents) | (8.23) | 0.10 | Basic Loss/Earnings Per Share For the six months ended June 30, 2024, basic loss per share was RMB 8.23 cents, calculated based on the loss attributable to owners of the Company of RMB 61,722,000 and 750,000,000 weighted average ordinary shares in issue - Basic loss per share was RMB 8.23 cents, calculated based on the loss attributable to owners of the Company of RMB 61,722,000 and 750,000,000 weighted average ordinary shares in issue[18] Diluted Loss/Earnings Per Share Diluted loss/earnings per share for the six months ended June 30, 2024 and 2023 was the same as basic loss/earnings per share, as the share options granted had an anti-dilutive effect - Diluted loss/earnings per share is the same as basic loss/earnings per share due to the anti-dilutive effect of share options granted[19] Dividends The Board has resolved not to declare an interim dividend for the six months ended June 30, 2024, consistent with the prior period - The Board resolved not to declare an interim dividend for the six months ended June 30, 2024[20] Investment Properties The Group's investment properties were revalued at fair value by an independent valuer as of June 30, 2024, recording a fair value gain of RMB 1,048 thousand for the period, a significant decrease from the prior period - Investment properties were revalued at fair value by an independent valuer, Brightway Surveyors & Valuers Limited[21] - A fair value gain of RMB 1,048 thousand was recorded for the period, a significant decrease from RMB 23,724 thousand in the prior period[21][37] - Inventories with a carrying amount of RMB 1,662 thousand were transferred to investment properties, and a corresponding deferred tax of RMB 262 thousand was recognized[21] Other Non-current Assets The Group's loan of RMB 96,500,000 (at 4% annual interest) to a borrower and its accrued interest of RMB 1,951,000 were reclassified as "Other receivables" under current assets as of June 30, 2024 - The Group provided a loan of RMB 96,500,000 to a borrower at an annual interest rate of 4% for a term of three years[22] - As of June 30, 2024, the outstanding principal and accrued interest of RMB 98,451,000 were reclassified as "Other receivables" under current assets[22] Trade and Other Receivables As of June 30, 2024, the Group's total trade and other receivables were RMB 233,550 thousand, a significant increase from the end of 2023, primarily due to a substantial rise in other receivables (net of loss allowance) | Item | As of June 30, 2024 (RMB thousands) | As of December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Within 1 month | 53 | — | | 1 to 3 months | 4 | 1 | | 3 to 6 months | 313 | 2 | | Over 6 months | — | 311 | | Trade receivables (net of loss allowance) | 370 | 314 | | Amounts due from associates | 18,000 | 18,000 | | Amounts due from non-controlling interests | 62,841 | 64,411 | | Other receivables (net of loss allowance) | 137,293 | 48,236 | | Financial assets measured at amortized cost | 218,504 | 130,961 | | Deposits | 288 | 869 | | Prepayments | 14,758 | 18,265 | | Total | 233,550 | 150,095 | - As of June 30, 2024, there were no overdue trade receivables, and management believes no loss allowance is required[23] - Loss allowance for other receivables was RMB 1,341,000 (December 31, 2023: nil)[24] Trade and Other Payables As of June 30, 2024, the Group's total trade and other payables were RMB 499,187 thousand, largely consistent with the end of 2023, with the aging analysis of trade payables showing most are over 12 months, and the Group provided several financial guarantees for associates | Item | As of June 30, 2024 (RMB thousands) | As of December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Within 3 months | 215 | 1,737 | | 3 to 6 months | — | 1,606 | | 6 to 12 months | 1,162 | 2,724 | | Over 12 months | 65,600 | 68,356 | | Trade payables | 66,977 | 74,423 | | Other payables and accrued expenses | 50,320 | 59,794 | | Amounts due to related parties | 316,194 | 312,984 | | Financial liabilities measured at amortized cost | 433,491 | 447,201 | | Financial guarantees issued | 17,394 | 4,096 | | Amounts due to controlling shareholder and non-controlling interests | 48,302 | 48,302 | | Total | 499,187 | 499,599 | - The Group provided a counter-guarantee for 30% equity proportion to its associate, Longguang Junhong, involving total bank loans of RMB 23,100,000[26] - The Group provided a guarantee for its associate, Huigang China Knot, for an existing loan owed to Longguang Shenzhen, amounting to RMB 13,427,000[27] Management Discussion and Analysis This section provides an overview of the market, business performance, future outlook, and a detailed financial review, including liquidity, capital resources, and risk management Market Review In the first half of 2024, global economic recovery was weak, while China's economy progressed steadily, but the Chinese property sector remained in an adjustment cycle with insufficient demand, declining sales, and weak investment sentiment, despite government stimulus policies - In the first half of 2024, global economic recovery was weak, while China's economy progressed steadily, with GDP growing by approximately 5.0%[28] - The Chinese property sector remained in an adjustment cycle with insufficient market demand, as commercial housing sales area decreased by 19.5% and sales value decreased by 25.3% year-on-year in the first half[28] - The central government intensified stimulus policies, including lowering down payments, loan interest rates, removing commercial housing loan interest rate floors, and easing purchase restrictions, but market confidence and recovery pace remain constrained[28] Business Review During a period of deep adjustment in the real estate industry, the Group focused on financial stability, inventory reduction, cash flow improvement, and cost control, resulting in revenue of approximately RMB 46.1 million in the first half of 2024, an 85.9% year-on-year decrease, and a loss attributable to owners of the Company of approximately RMB 61.7 million - The Group focused on maintaining a sound financial position, reducing inventory, improving cash flow, and controlling costs[29] - Revenue for the first half of 2024 was approximately RMB 46.1 million, a decrease of 85.9% year-on-year, primarily from sales of Huizhou Wancheng Mingzuo Phase III and Huangguan Haoyuan commercial properties[29] - The Group recorded a loss attributable to owners of the Company of approximately RMB 61.7 million for the period, compared to a profit of approximately RMB 0.7 million in the prior period[29] - Total contracted sales for the first half of 2024 were approximately RMB 106.2 million, with a total sold gross floor area of approximately 15,200 square meters, mainly from Huizhou Jiujingtai and Henan Julongwan projects[29] Future Prospects and Outlook The Group plans to reduce future losses by divesting underperforming projects and will continue to explore high-return, sustainable development opportunities, anticipating market stabilization in the second half of the year with global interest rate cuts and continued supportive Chinese government real estate policies - The Group will reduce future losses by disposing of projects with unsatisfactory net asset value or expected continuous losses[30] - In the second half of the year, with major global economies entering an interest rate cut cycle and the Chinese government continuing to strengthen macroeconomic support and real estate policies, the market is expected to bottom out and stabilize[30] - The Group will continue to explore potential business opportunities, prioritizing efficiency in project investments to create long-term value[30] Financial Review The Group's financial performance significantly deteriorated in the first half of 2024, with substantial declines in revenue, gross profit, gain on fair value measurement of investment properties, and operating profit, leading to a loss attributable to owners of the Company, primarily due to sharp reductions in property sales revenue, increased losses from associates, and impairment of other receivables - The Group's revenue primarily comes from property sales and rental, with property sales revenue accounting for a significant portion[31] - The loss attributable to owners of the Company for the period was approximately RMB 61.7 million, a decrease of approximately RMB 62.4 million from the profit in the prior period[43] - The loss was primarily due to a significant decrease in revenue from subsidiaries and associates, impairment loss on other receivables from associates, and accrued interest expenses from associates[44] Revenue Analysis The Group's revenue significantly decreased in the first half of 2024, primarily impacted by a sharp decline in property sales revenue, although rental income showed some growth Contracted Sales For the six months ended June 30, 2024, the Group (including associates) recorded total property contracted sales of approximately RMB 106.2 million, with a sold gross floor area of approximately 15,200 square meters - Total property contracted sales were approximately RMB 106.2 million, with a sold gross floor area of approximately 15,200 square meters[31] Land Bank As of June 30, 2024, the Group's total land bank had a gross floor area of approximately 1,306,627 square meters, comprising completed properties held for sale, unsold properties under development, and properties held for future development - Total land bank had a gross floor area of approximately 1,306,627 square meters, including 381,755 square meters of completed properties held for sale, 89,503 square meters of unsold properties under development, and 835,369 square meters of properties held for future development[32] Property Sales Revenue For the six months ended June 30, 2024, property sales revenue was approximately RMB 43.5 million, a substantial 86.6% year-on-year decrease, primarily because the prior period included sales of newly completed and delivered properties, while the current period mainly involved inventory sales - Property sales revenue was approximately RMB 43.5 million, a decrease of 86.6% year-on-year[33] - Revenue primarily came from inventory sales of Huizhou Wancheng Mingzuo Phase III and Huangguan Haoyuan commercial properties, rather than newly completed and delivered properties[33] Rental Income For the six months ended June 30, 2024, total rental income from investment properties and inventories was approximately RMB 2.6 million, a 44.4% year-on-year increase, mainly due to increased rental income from car parks and investment properties - Total rental income was approximately RMB 2.6 million, an increase of 44.4% year-on-year[34] - The increase was primarily due to increased rental income from car parks and investment properties[34] Cost of Sales For the six months ended June 30, 2024, cost of sales was approximately RMB 31.4 million, an 84.5% year-on-year decrease, primarily due to reduced property sales revenue and no inventory write-downs in the current period - Cost of sales was approximately RMB 31.4 million, a decrease of 84.5% year-on-year[35] - The decrease was primarily due to reduced property sales revenue and no inventory write-downs in the current period[35] Gross Profit and Gross Profit Margin For the six months ended June 30, 2024, gross profit was approximately RMB 14.8 million, an 88.2% year-on-year decrease, with the gross profit margin falling from 38.2% to 32.0%, primarily impacted by reduced revenue - Gross profit was approximately RMB 14.8 million, an 88.2% decrease year-on-year[36] - Gross profit margin decreased from 38.2% to 32.0%[36] Gain on Fair Value Measurement of Investment Properties For the six months ended June 30, 2024, gain on fair value measurement of investment properties was approximately RMB 1.0 million, a decrease of approximately RMB 22.7 million year-on-year, primarily due to fewer new investment properties - Gain on fair value measurement of investment properties was approximately RMB 1.0 million, a decrease of approximately RMB 22.7 million year-on-year[37] - The decrease was primarily due to fewer new investment properties[37] Net Other Income For the six months ended June 30, 2024, net other income was approximately RMB 7.8 million, an 87.2% year-on-year increase, primarily due to increased interest income - Net other income was approximately RMB 7.8 million, an 87.2% increase year-on-year[38] - The increase was primarily due to increased interest income[38] Selling Expenses For the six months ended June 30, 2024, selling expenses were approximately RMB 3.7 million, an 88.7% year-on-year decrease, primarily due to reduced revenue - Selling expenses were approximately RMB 3.7 million, an 88.7% decrease year-on-year[39] - The decrease was primarily due to reduced revenue[39] Administrative Expenses For the six months ended June 30, 2024, administrative expenses were approximately RMB 23.0 million, close to RMB 21.4 million in the prior period - Administrative expenses were approximately RMB 23.0 million, close to RMB 21.4 million in the prior period[40] Share of Profits Less Losses of Associates For the six months ended June 30, 2024, share of losses of associates was approximately RMB 38.0 million, an increase of approximately RMB 22.8 million in losses compared to the prior period, primarily due to a significant decrease in associates' revenue, impairment loss on other receivables, and accrued interest expenses - Share of losses of associates was approximately RMB 38.0 million, an increase of approximately RMB 22.8 million in losses compared to the prior period[41] - The increased loss was primarily due to a significant decrease in associates' revenue, impairment loss on other receivables, and accrued interest expenses from Longguang Shenzhen[41] Finance Costs For the six months ended June 30, 2024, finance costs were approximately RMB 5 thousand, a substantial 99.9% year-on-year decrease, primarily because all bank loans were repaid before December 31, 2023 - Finance costs were approximately RMB 5 thousand, a 99.9% decrease year-on-year[42] - The decrease was primarily due to the repayment of all bank loans before December 31, 2023[42] Income Tax For the six months ended June 30, 2024, income tax was approximately RMB 22.4 million, a decrease of approximately RMB 43.8 million year-on-year, primarily due to reduced operating profit - Income tax was approximately RMB 22.4 million, a decrease of approximately RMB 43.8 million year-on-year[43] - The decrease was primarily due to reduced operating profit[43] Loss/Profit for the Period Attributable to Owners of the Company For the six months ended June 30, 2024, the loss for the period attributable to owners of the Company was approximately RMB 61.7 million, a decrease of approximately RMB 62.4 million from the profit in the prior period, primarily due to a significant decrease in revenue, impairment loss on other receivables from associates, and accrued interest expenses - The loss for the period attributable to owners of the Company was approximately RMB 61.7 million, a decrease of approximately RMB 62.4 million from the profit in the prior period[43] - The loss was primarily due to a significant decrease in revenue from subsidiaries and associates, impairment loss on other receivables from associates, and accrued interest expenses from Longguang Shenzhen[44] Other Financial Information The Group maintained a sound liquidity position in the first half of 2024 with no bank loans and a zero gearing ratio, actively managing financial risks with low foreign exchange risk and interest rate risk primarily from bank cash, ensuring sufficient liquidity through strict collection policies and bad debt provisions, while capital expenditure and commitments decreased, and asset pledges and contingent liabilities were disclosed - The Group had no bank loans and a zero gearing ratio as of June 30, 2024, and December 31, 2023[45] - Management has adopted policies to manage financial risks, including funding requirements, interest rate risk, credit risk, and liquidity risk[46] - The Group has only one operating segment, with revenue and results primarily derived from property development[54] Liquidity and Capital Resources As of June 30, 2024, the Group's cash and cash equivalents were approximately RMB 314.4 million, primarily denominated in HKD (19.4%) and RMB (80.6%), and the Company's subsidiaries had no bank loans, resulting in a zero gearing ratio - The Group's cash and cash equivalents were approximately RMB 314.4 million, denominated in HKD (19.4%) and RMB (80.6%)[45] - The Company's subsidiaries had no bank loans, resulting in a zero gearing ratio[45] Financial Risk Management Objectives and Policies The Group's management has established financial risk management policies aimed at ensuring appropriate funding strategies to meet short-term and long-term capital needs, while mitigating interest rate risk, credit risk, and liquidity risk - Management has adopted policies to ensure appropriate funding strategies and to mitigate interest rate risk, credit risk, and liquidity risk[46] Foreign Exchange Risk The Group primarily operates in Hong Kong and Mainland China, with most transactions settled in HKD and RMB, and foreign exchange risk is minimal as all sales, assets, and liabilities are denominated in RMB - The Group primarily operates in Hong Kong and Mainland China, with most transactions settled in HKD and RMB[47] - Foreign exchange risk is minimal as all sales, assets, and liabilities are denominated in RMB[47] Interest Rate Risk The Group repaid all bank loans by December 31, 2023, resulting in very low interest rate risk, which currently only arises from floating interest rates on bank cash - The Group repaid all bank loans by December 31, 2023, resulting in very low interest rate risk[48] - Interest rate risk only arises from floating interest rates on bank cash, and no interest rate risk was hedged during the period[48] Credit Risk The Group has low credit risk due to no significant overdue trade receivables and full payment collection before property delivery and title transfer, with a bad debt provision of RMB 1,341,000 for other receivables during the period - The Group has no significant overdue trade receivables and collects full payment before property delivery, resulting in low credit risk[49] - A bad debt provision of RMB 1,341,000 was made for other receivables for the six months ended June 30, 2024[49] - All bank balances and deposits are held with financial institutions of high credit quality[49] Liquidity Risk The Group manages liquidity risk by regularly monitoring funding requirements, complying with borrowing covenants, and maintaining sufficient cash reserves to ensure adequate standby facilities for both long-term and short-term needs - The Group regularly monitors liquidity requirements and ensures sufficient cash reserves and standby facilities are maintained[50] - The Group has not encountered, nor does it expect to encounter, any difficulties in meeting its credit obligations when due[50] Capital Expenditure For the six months ended June 30, 2024, capital expenditure for the purchase of property, plant, and equipment was RMB 199 thousand, a decrease from RMB 814 thousand in the prior period - Capital expenditure for the purchase of property, plant, and equipment was RMB 199 thousand, compared to RMB 814 thousand in the prior period[51] Capital Commitments As of June 30, 2024, the Group's capital commitments were approximately RMB 3.8 million, a decrease from RMB 4.5 million at the end of 2023, primarily related to development costs for properties under development - Capital commitments were approximately RMB 3.8 million, primarily related to development costs for properties under development[52] Pledge of Assets As of June 30, 2024, certain completed properties with a carrying amount of RMB 5,765,000 were restricted as collateral for litigation - Certain completed properties with a carrying amount of RMB 5,765,000 were restricted as collateral for litigation as of June 30, 2024[53] Contingent Liabilities As of June 30, 2024, the Group provided guarantees to banks for certain buyers' mortgage loans, with outstanding bank guarantees of approximately RMB 110 million, a significant decrease from the end of 2023, and the directors believe the Group will not incur significant losses as banks have the right to sell the properties - Outstanding bank guarantees were approximately RMB 110 million, a significant decrease from RMB 373.8 million as of December 31, 2023[53] - Directors believe the Group will not incur significant losses from buyers' defaults, as banks have the right to sell the properties[53] Other Information and Corporate Governance This section covers post-reporting period events, human resources, interim dividends, securities transactions, and adherence to corporate governance and directors' securities trading codes Events After Reporting Period On July 30, 2024, the Company published a circular, and on August 19, 2024, independent shareholders passed a resolution approving the subscription for the allotment and issue of 99 new shares of the target company to Ruixun Investment Limited - A circular was published on July 30, 2024, seeking independent shareholders' approval for the allotment and issue of 99 new shares of the target company to Ruixun Investment Limited[55] - On August 19, 2024, the relevant subscription agreement and the transactions contemplated thereunder were approved by independent shareholders[55] Human Resources As of June 30, 2024, the Group employed 45 full-time employees, with total staff costs of approximately RMB 12.4 million, and its remuneration policy is based on performance and experience, offering training programs for employee development - As of June 30, 2024, the Group employed 45 full-time employees (December 31, 2023: 60 employees)[56] - Total staff costs were approximately RMB 12.4 million (prior period: RMB 17.7 million), of which approximately RMB 0.8 million was capitalized[56] Human Resources and Remuneration Policy The Group's remuneration policy is based on employee performance and experience, offering benefits such as performance-linked bonuses, insurance, medical coverage, and share options, while also providing discretionary training programs for continuous employee development - Remuneration policy is based on employee performance and experience, aligned with salary trends in Hong Kong and Mainland China[56] - Benefits include performance-linked bonuses, insurance, medical coverage, and share options[56] - Discretionary training programs are provided to ensure continuous employee development and skill enhancement[56] Remuneration Policy for Directors and Senior Management Remuneration for directors and senior management includes salaries and discretionary bonuses linked to Group performance, with the Remuneration Committee regularly reviewing and determining their compensation based on market levels, responsibilities, and Group results - Directors and senior management receive salaries and discretionary bonuses linked to the Group's performance[57] - The Remuneration Committee regularly reviews and determines remuneration based on market levels, responsibilities, and the Group's results[57] Interim Dividends The Directors do not recommend the payment of any interim dividend for the six months ended June 30, 2024, consistent with the prior period - The Directors do not recommend the payment of any interim dividend for the six months ended June 30, 2024[58] Purchase, Sale or Redemption of the Company’s Listed Securities For the six months ended June 30, 2024, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities for the six months ended June 30, 2024[59] Corporate Governance Code The Company has adopted the Corporate Governance Code set out in Appendix C1 of the HKEX Listing Rules and is committed to maintaining high standards of corporate governance practices, with directors believing the Company has complied with all statutory code provisions during the reporting period - The Company has adopted the Corporate Governance Code set out in Appendix C1 of the HKEX Listing Rules[60] - The Directors believe the Company has complied with all statutory code provisions of the Corporate Governance Code for the six months ended June 30, 2024[60] Standard Code for Securities Transactions by Directors The Company has adopted the Standard Code set out in Appendix C3 of the Listing Rules as the code for directors' securities transactions and confirms that all directors fully complied with it during the reporting period, with relevant employees also required to adhere to guidelines no less exacting than the Standard Code - The Company has adopted the Standard Code set out in Appendix C3 of the Listing Rules as the code for directors' securities transactions[61] - All Directors confirm full compliance with the Standard Code and the Company's code of conduct during the reporting period[61] - Relevant employees who may possess inside information are also required to comply with guidelines no less exacting than the Standard Code[61] Audit Committee The Audit Committee, comprising three independent non-executive directors, is responsible for providing independent advice on financial reporting, internal controls, and risk management systems, and has reviewed the Group's unaudited interim financial information for the six months ended June 30, 2024 - The Audit Committee comprises three independent non-executive directors, with Mr. Li Yinquan as Chairman[62] - Its primary responsibility is to assist the Board in providing independent advice on financial reporting, internal controls, and risk management systems[62] - It has reviewed the Group's unaudited interim financial information for the six months ended June 30, 2024, which was also reviewed by KPMG[62] Publication of Interim Results and Interim Report The interim results announcement has been published on the HKEX and the Company's website, and the interim report for the six months ended June 30, 2024, will be dispatched to shareholders and published on the website in due course - The interim results announcement has been published on the HKEX website and the Company's website[63] - The interim report for the six months ended June 30, 2024, will be dispatched to shareholders and published on the website in due course[63]