华兴资本控股(01911) - 2024 - 年度业绩

Annual Results Announcement 2023 Annual Consolidated Results Summary The company faced severe market challenges in fiscal year 2023, with significant reductions in total revenue and net investment income, and an expanded net loss attributable to owners of the company. To supplement IFRS, the company introduced adjusted net loss to better reflect operating performance - Huaxing Capital Holdings Limited announced its audited consolidated results for the year ended December 31, 2023[1] - This announcement refers to the company's previous announcement on March 28, 2024, regarding the delay in publishing the audited 2023 annual results[1] Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income The company experienced a significant decline in total revenue and net investment income in 2023, leading to an increased operating loss and net loss attributable to owners of the company 2023 and 2022 Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 1,006,094 | 1,585,380 | -36.5% | | Total Revenue and Net Investment Income or Loss | 797,944 | 1,586,889 | -49.7% | | Total Operating Expenses | (995,761) | (1,690,755) | -41.1% | | Operating Loss | (197,817) | (103,866) | +90.5% | | Loss for the Year | (460,993) | (453,978) | +1.5% | | Loss for the Year Attributable to Owners of the Company | (471,903) | (429,901) | +9.8% | Adjustments for Non-IFRS Measures The company uses "Adjusted Net Loss Attributable to Owners of the Company" as a non-IFRS measure to better reflect operating performance by adjusting for non-recurring and certain non-cash items - The company adopted "Adjusted Net Loss Attributable to Owners of the Company" as a non-IFRS measure, adjusting for non-recurring and certain non-cash items to better reflect operating performance[2] Adjusted Net Loss Attributable to Owners of the Company (Unaudited) | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Loss for the Year Attributable to Owners of the Company | (471,903) | (429,901) | | Add: Share-based Payment Expenses | 61,432 | 113,478 | | Add: Fair Value Change of Share Options | 154,048 | 82,000 | | Subtotal before Carried Interest Related Adjustments | (256,423) | (234,423) | | Add: Unrealized Net Carried Interest Reversal | (336,023) | (216,630) | | Adjusted Net Loss Attributable to Owners of the Company | (592,446) | (451,053) | - Unrealized net carried interest reversal is primarily calculated based on fair value changes of funds managed by the investment management business, with cumulative unrealized gross carried interest of RMB 2.6 billion (net carried interest of RMB 0.8 billion) as of December 31, 2023[4] Management Discussion and Analysis Business Review In 2023, the company faced a challenging market, resulting in a significant decline in total revenue and net investment income, and an expanded net loss attributable to owners of the company, while its investment banking and wealth management businesses showed resilience and growth in specific areas - The market environment was severe in 2023, with a decline in both the transaction value and number of private equity deals across the market, and a sluggish IPO market[6] 2023 Group Overall Performance Overview | Indicator | Amount (RMB) | YoY Change | | :--- | :--- | :--- | | Total Revenue | RMB 1 billion | Reduced by approximately 37% | | Total Revenue and Net Investment Income | Approximately RMB 0.8 billion | Reduced by approximately 50% | | Net Loss Attributable to Owners of the Company | RMB 472 million | Expanded | | Number of Employees | 566 | Reduced by 25% | - Investment management business accounted for 34% of total revenue, with RMB 3.1 billion in exited fund projects, and DPI for RMB Phase I, Phase II, USD Phase I, Phase II, and Healthcare Phase I funds all exceeding 100%[6] - Huaxing New Economy RMB Phase IV Fund and USD Phase IV Fund's fundraising and investment periods were terminated early due to Mr. Bao Fan's situation[6] - Investment banking revenue declined, with a significant drop in private placement business, but secondary market equity sales and trading business showed high resilience, accounting for 46% of investment banking revenue[6] - Huaxing Securities' total revenue and net investment income reached RMB 261 million, a 27% year-on-year increase, accounting for 33% of the Group's total revenue and net investment income[7] - Huaxing Securities' Duoduo Gold APP saw cumulative registered users and opened accounts grow by 64% and 82% respectively, with client asset under management growing by approximately 4.7 times[7] Business Outlook Looking ahead to 2024, with Mr. Bao Fan's resignation and the board's re-election, Huaxing Capital will continue to focus on its core investment management and investment banking businesses, actively integrate into national development strategies, and seek development amidst adjustments to support strategic emerging industries - In early 2024, Mr. Bao Fan resigned, and Huaxing Capital's board of directors was re-elected, marking a new chapter[8] - The Group will uphold its original mission of serving new economy enterprises, rooted in its core investment management and investment banking businesses, seeking development amidst adjustments[8] Financial Review Segment Performance In 2023, the Group's business segments showed mixed performance, with investment banking and investment management experiencing significant declines in revenue and net investment income, both recording operating losses, while Huaxing Securities was the only segment to achieve revenue growth and a substantial reduction in operating loss 2023 and 2022 Revenue and Net Investment Income or Loss by Reporting Segment | Business Segment | 2023 (RMB thousands) | 2022 (RMB thousands) | Change (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | :--- | | Investment Banking | 192,194 | 422,824 | (230,630) | -54.5% | | Investment Management | 270,015 | 847,531 | (577,516) | -68.1% | | Huaxing Securities | 261,043 | 204,820 | 56,223 | 27.4% | | Others | 74,692 | 111,714 | (37,022) | -33.1% | | Total Revenue and Net Investment Income or Loss | 797,944 | 1,586,889 | (788,945) | -49.7% | 2023 and 2022 Operating (Loss) / Profit by Reporting Segment | Business Segment | 2023 (RMB thousands) | 2022 (RMB thousands) | Change (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | :--- | | Investment Banking | (69,287) | (61,384) | (7,903) | 12.9% | | Investment Management | (12,277) | 174,897 | (187,174) | N/A | | Huaxing Securities | (86,726) | (147,526) | 60,800 | -41.2% | | Others | (29,527) | (69,853) | 40,326 | -57.7% | | Operating Loss | (197,817) | (103,866) | (93,951) | 90.5% | Investment Banking Business The investment banking segment experienced a significant decline in revenue and net investment income in 2023, primarily due to reduced advisory services and equity underwriting, leading to an increased operating loss despite reduced operating expenses 2023 and 2022 Investment Banking Segment Revenue and Net Investment Income | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Advisory Services | 90,344 | 268,832 | -66.4% | | Equity Underwriting | 13,061 | 17,873 | -26.9% | | Sales, Trading and Brokerage | 88,422 | 134,739 | -34.4% | | Segment Revenue | 191,827 | 421,444 | -54.5% | | Net Investment Income | 367 | 1,380 | -73.4% | | Segment Revenue and Net Investment Income | 192,194 | 422,824 | -54.5% | 2023 and 2022 Investment Banking Transaction Value | Transaction Type | 2023 (RMB millions) | 2022 (RMB millions) | Change % | | :--- | :--- | :--- | :--- | | Advisory Services | 15,905 | 38,607 | -58.8% | | Equity Underwriting | 580 | 2,839 | -79.6% | | Total | 16,485 | 41,446 | -60.2% | - Segment operating expenses decreased by 46.0% to RMB 261.5 million, primarily due to reduced staff costs and benefits[14] - Segment operating loss increased from RMB 61.4 million in 2022 to RMB 69.3 million in 2023[15] Investment Management Business The investment management segment experienced a substantial decline in revenue and net investment loss in 2023, primarily driven by reduced realized carried interest income and increased net investment losses, despite a decrease in operating expenses 2023 and 2022 Investment Management Segment Revenue and Net Investment Loss | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Management Fees | 434,252 | 495,036 | -12.3% | | Realized Carried Interest Income | 151,855 | 402,353 | -62.3% | | Net Investment Loss | (346,819) | (70,252) | +393.7% | | Segment Revenue and Net Investment Loss | 270,015 | 847,531 | -68.1% | 2023 and 2022 Changes in Investments in Self-Managed Private Equity Funds and Third-Party Private Equity Funds | Fund Type | Balance as of December 31, 2023 (RMB thousands) | Balance as of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Investments in Self-Managed Funds | 1,261,600 | 1,363,650 | | Investments in Third-Party Funds | 659,907 | 1,092,716 | - As of December 31, 2023, the internal rate of return for self-managed private equity funds and third-party private equity funds was 21.2% and 16.3% respectively[17] 2023 and 2022 Investment Management Segment Operating Data | Indicator | As of December 31, 2023 (RMB millions) | As of December 31, 2022 (RMB millions) | | :--- | :--- | :--- | | AUM generating management fees | 22,945 | 26,904 | | Total AUM | 36,694 | 42,896 | - The increase in net investment loss was primarily due to the depreciation in the value of investments in third-party private equity funds and convertible bonds, with a RMB 110.7 million decrease in the fair value of convertible bonds issued by Worbey Medical Holdings Limited[21] - Segment operating expenses decreased by 58.0% to RMB 282.3 million, mainly due to reduced carried interest provision for management teams and other parties, staff costs and benefits, and impairment provisions for expected credit losses[22] Huaxing Securities Business Huaxing Securities segment achieved a 27.4% increase in revenue and net investment income in 2023, primarily driven by a significant rise in net investment income, leading to a substantial reduction in operating loss 2023 and 2022 Huaxing Securities Segment Revenue and Net Investment Income | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Transaction and Advisory Fees | 121,116 | 157,428 | -23.1% | | Interest Income | 10,682 | 18,751 | -43.0% | | Net Investment Income | 129,245 | 28,641 | +351.3% | | Segment Revenue and Net Investment Income | 261,043 | 204,820 | +27.4% | - Segment operating expenses decreased by 1.3% to RMB 347.8 million, primarily due to reduced staff costs and benefits, partially offset by increased other operating expenses for innovative brokerage business[25] - Segment operating loss narrowed from RMB 147.5 million in 2022 to RMB 86.7 million in 2023[26] Other Businesses The Other Businesses segment experienced a decline in revenue and net investment income in 2023, but significantly reduced its operating loss due to substantial decreases in operating expenses, particularly staff costs and financing costs 2023 and 2022 Other Segment Revenue and Net Investment Income | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Segment Revenue | 65,635 | 69,974 | -6.2% | | Segment Revenue and Net Investment Income | 74,692 | 111,714 | -33.1% | - Segment operating expenses decreased by 42.6% to RMB 104.2 million, primarily due to significant reductions in staff costs and benefits and financing costs[27][28] - Segment operating loss narrowed from RMB 69.9 million in 2022 to RMB 29.5 million in 2023[29] Consolidated Revenue and Net Investment Income or Loss In 2023, the Group's total revenue and net investment income or loss significantly decreased by 49.7% to RMB 797.9 million, primarily due to substantial declines in transaction and advisory fees, management fees, and carried interest income, with net investment turning from income to loss 2023 and 2022 Revenue and Net Investment Income or Loss by Type | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Transaction and Advisory Fees | 312,943 | 578,872 | -45.9% | | Management Fees | 456,432 | 529,032 | -13.7% | | Interest Income | 84,864 | 75,123 | +13.0% | | Carried Interest Income | 151,855 | 402,353 | -62.3% | | Total Revenue | 1,006,094 | 1,585,380 | -36.5% | | Net Investment (Loss) / Income | (208,150) | 1,509 | N/A | | Total Revenue and Net Investment Income or Loss | 797,944 | 1,586,889 | -49.7% | - Net investment turned from an income of RMB 1.5 million in 2022 to a loss of RMB 208.2 million in 2023, primarily from investments in self-managed private equity funds, third-party private equity funds, and convertible bonds[31] Operating Expenses Total operating expenses decreased by 41.1% to RMB 995.8 million in 2023, driven by significant reductions in staff costs and benefits, financing costs, and impairment provisions for expected credit losses, including a reversal of bonus expense provisions 2023 and 2022 Changes in Key Operating Expenses | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Total Operating Expenses | 995,761 | 1,690,755 | -41.1% | | Staff Costs and Benefits | 478,176 | 753,232 | -36.5% | | Share-based Payment Expenses | 61,432 | 113,478 | -45.9% | | Financing Costs | 50,553 | 112,453 | -55.0% | | Impairment Provisions for Expected Credit Losses | 16,815 | 244,501 | -93.1% | | Carried Interest Provision for Management Teams and Other Parties | 111,773 | 259,288 | -56.9% | - In 2023, a total of RMB 166.1 million in bonus expense provisions was reversed, reflecting an assessment of market conditions, company performance, and future forecasts[32] Operating Loss and Other Profit or Loss Items Operating loss expanded by 90.5% to RMB 197.8 million in 2023. Other income, gains or losses turned from a loss to a gain, but fair value changes of share options and certain incidental and auxiliary investment losses continued to negatively impact performance, while loss before tax and loss for the year both narrowed 2023 and 2022 Operating Loss and Other Profit or Loss Items | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Operating Loss | (197,817) | (103,866) | +90.5% | | Other Income, Gains or Losses | 28,140 | (19,408) | Turned from loss to gain | | Losses from Certain Incidental and Auxiliary Investments | (18,311) | (171,489) | -89.3% | | Fair Value Change of Share Options Loss | (154,048) | (82,000) | +87.9% | | Loss Before Tax | (340,650) | (383,007) | -11.1% | | Income Tax Expense | (120,343) | (70,971) | +69.6% | | Loss for the Year | (460,993) | (453,978) | +1.5% | | Loss for the Year Attributable to Owners of the Company | (471,903) | (429,901) | +9.8% | - Fair value change of share options loss increased to RMB 154.0 million, primarily due to share options for the acquisition of non-controlling interests in Huaxing Securities being recognized at fair value through profit or loss[36] Capital Structure and Balance Sheet The Group actively reduced its debt levels in 2023, with no outstanding bank borrowings at year-end and sufficient cash and highly liquid financial assets, resulting in a significantly reduced asset-liability ratio of 12.6%, indicating an improved financial structure - The Group actively reduced its debt levels in 2023, with no outstanding bank borrowings as of December 31, 2023[39] Group Liquidity Assets as of December 31, 2023 | Indicator | Amount (RMB millions) | | :--- | :--- | | Cash and cash equivalents and highly liquid cash management products | 1,636.7 | | Highly liquid financial assets, primarily listed company bonds | 2,415.3 | - As of December 31, 2023, the asset-liability ratio (calculated as total liabilities divided by total assets) significantly decreased to 12.6% from 31.6% at the end of 2022[40] Significant Investments As of December 31, 2023, the total fair value of the Group's major investment activities decreased by 18.6% to RMB 2,397.4 million, with fair values of investments in both self-managed and third-party private equity funds declining 2023 and 2022 Fair Value of Major Investment Activities | Investment Type | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Investments in Self-Managed Private Equity Funds | 1,261,600 | 1,363,650 | -7.5% | | Investments in Third-Party Private Equity Funds | 659,907 | 1,092,716 | -39.6% | | Strategic Minority Equity Investments | 475,895 | 490,553 | -3.0% | | Total | 2,397,402 | 2,946,919 | -18.6% | - As of December 31, 2023, each investment individually accounted for less than 5% of the Group's total assets[41] - Post-reporting period, on March 11, 2024, the company signed a settlement agreement with Huaxing New Economy RMB Phase IV Fund to acquire certain equity investment-related interests for approximately RMB 790.8 million[42] Employees and Remuneration Policy As of December 31, 2023, the Group had 566 full-time employees, with over 85% being consultants and investment professionals, and attracts and retains talent through basic salaries, cash performance bonuses, and equity incentive schemes 2023 Employee Count by Function as of December 31 | Function | Number of Employees | Percentage | | :--- | :--- | :--- | | Investment Banking | 145 | 26% | | Investment Management | 55 | 10% | | Huaxing Securities | 262 | 46% | | Others | 19 | 3% | | Group Middle and Back Office | 85 | 15% | | Total | 566 | 100% | 2023 Employee Count by Region as of December 31 | Region | Number of Employees | Percentage | | :--- | :--- | :--- | | Beijing, China | 239 | 42% | | Shanghai, China | 214 | 38% | | Other Cities, China | 22 | 4% | | Hong Kong | 79 | 14% | | United States | 10 | 2% | | Singapore | 2 | —% | | Total | 566 | 100% | - For the year ended December 31, 2023, total staff costs (including share-based payment expenses) amounted to RMB 478.2 million[45] Other Financial Information Foreign Exchange Risk The Group's primary subsidiaries operate in China, with most transactions settled in RMB, and foreign currency risk mainly arises from overseas operations; as of December 31, 2023, the company had not hedged any financial instruments - The Group's main subsidiaries operate in China, with most transactions settled in RMB, and foreign currency risk arises from overseas operations[46] - As of December 31, 2023, the company had not hedged any financial instruments[46] Pledge of Assets As of December 31, 2023, the Group had not pledged any assets - As of December 31, 2023, the Group had not pledged any assets[46] Contingent Liabilities As of December 31, 2023, the Group had no other significant contingent liabilities apart from restricted funds related to Mr. Bao Fan's cooperation with investigations, as disclosed in note 27 of the annual report, and no provision was made due to the uncertainty of the matter - As of December 31, 2023, the Group had no significant contingent liabilities other than those disclosed in note 27[46] - The Group paid approximately RMB 77,669,000 in restricted funds related to Mr. Bao Fan's cooperation with investigations, but no provision was made for the year ended December 31, 2023, due to uncertainty[127] Final Dividend The Board recommended no final dividend for the year ended December 31, 2023; the company has adopted a dividend policy but currently has no fixed payout ratio, with dividend decisions depending on various factors - The Board recommended no final dividend for the year ended December 31, 2023[46] - For the year ended December 31, 2023, the company neither declared nor paid any dividends[46] Dividends Paid to Shareholders in 2022 | Indicator | 2022 (RMB thousands) | | :--- | :--- | | Dividends Paid to Shareholders | 201,114 | Corporate Governance and Other Information Compliance with Corporate Governance Code During the reporting period, the company complied with all applicable provisions of the HKEX Corporate Governance Code, with a deviation where the roles of Chairman and Chief Executive Officer were held by the same person, an arrangement the Board believes ensures leadership consistency and will be continuously reviewed - During the reporting period, the company complied with all applicable provisions of the HKEX Corporate Governance Code, but there was a deviation where the roles of Chairman and Chief Executive Officer were held by the same person[49] - As of the announcement date, Mr. Xie Yijing serves as the company's Chairman and Chief Executive Officer[49] Directors' Compliance with Standard Securities Dealing Code Following inquiries, all directors and relevant employees confirmed compliance with the Standard Securities Dealing Code set out in Appendix C3 of the Listing Rules during the reporting period - After specific inquiries to all directors and relevant employees, they confirmed compliance with the Standard Code during the reporting period[50] Auditor's Scope of Work and Audit Committee The auditor has reconciled the financial information in the annual results announcement but has not expressed an assurance opinion; the Audit Committee has reviewed the audited consolidated financial statements and annual results, discussing accounting policies and internal controls with the auditor and senior management - The auditor, ZHONGHUI ANDA CPA Limited, has reconciled the financial information in the annual results announcement but has not performed an assurance engagement and therefore has not expressed any assurance opinion[51] - The Audit Committee, comprising three independent non-executive directors, has reviewed the Group's audited consolidated financial statements and annual results for 2023, and discussed accounting policies and internal controls[52] Other Board Committees In addition to the Audit Committee, the company has established a Nomination Committee, Remuneration Committee, Executive Committee, and Environmental, Social and Governance Committee - The company has established a Nomination Committee, Remuneration Committee, Executive Committee, and Environmental, Social and Governance Committee[53] Changes in Directors' Information Effective February 2, 2024, Mr. Bao Fan resigned from multiple positions, Mr. Xie Yijing was appointed Chairman and CEO, Mr. Lin Jiachang and Mr. Du Yongbo were appointed Executive Directors, Mr. Wang Lixing and Mr. Du Yongbo were appointed Co-Presidents, and Ms. Sun Qianhong was appointed Non-Executive Director - Effective February 2, 2024, Mr. Bao Fan resigned as Executive Director, Chairman of the Board, Chief Executive Officer, and other positions of the company[54] - Mr. Xie Yijing was appointed Chairman of the Board, Chief Executive Officer, and other positions of the company[54] - Mr. Lin Jiachang was appointed Executive Director and Vice Chairman of the Board, and Mr. Du Yongbo was appointed Executive Director[54] - Mr. Wang Lixing and Mr. Du Yongbo were appointed Co-Presidents of the Group, in addition to their existing roles as Executive Directors[54] - Ms. Sun Qianhong was appointed Non-Executive Director[54] Purchase, Sale or Redemption of Listed Securities During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities, except for acting as an agent for the company's restricted share unit scheme trustee - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities, except for acting as an agent for the company's restricted share unit scheme trustee[55] Major Litigation During the reporting period, the company was not involved in any major litigation or arbitration, and the directors were unaware of any pending or potential major litigation or claims against the Group - During the reporting period, the company was not involved in any major litigation or arbitration[56] Use of Proceeds from Global Offering As of December 31, 2023, the net proceeds of approximately HKD 2,517.6 million from the global offering had been fully utilized, consistent with the prospectus disclosure, primarily for expanding investment banking, investment management, private wealth management businesses, and technology development - As of December 31, 2023, the net proceeds of approximately HKD 2,517.6 million from the global offering had been fully utilized[57] Use of IPO Proceeds (as of December 31, 2023) | Purpose | % of Proceeds Used | Net IPO Proceeds (HKD millions) | Actual Amount Used as of Dec 31, 2022 (HKD millions) | Actual Amount Used During the Year Ended Dec 31, 2023 (HKD millions) | Balance of Net Proceeds as of Dec 31, 2023 (HKD millions) | | :--- | :--- | :--- | :--- | :--- | :--- | | Expansion of Investment Banking Business | 40% | 1,007.0 | 1,007.0 | — | — | | Expansion of Investment Management Business | 20% | 503.5 | 503.5 | — | — | | Development of Private Wealth Management Business | 20% | 503.5 | 503.5 | — | — | | Investment in Technology Development for All Business Lines | 10% | 251.8 | 215.4 | 36.4 | — | | General Corporate Purposes | 10% | 251.8 | 251.8 | — | — | | Total | | 2,517.6 | 2,481.2 | 36.4 | — | Auditor's Qualified Opinion and Company's View The auditor issued a qualified opinion on the 2023 consolidated financial statements due to insufficient appropriate audit evidence regarding the recoverability of restricted funds related to Mr. Bao Fan's investigation and whether a provision was needed; the company believes the qualified opinion may not be removed until the outcome of the event is clear or other appropriate evidence is obtained - The auditor issued a qualified opinion on the 2023 consolidated financial statements due to insufficient appropriate audit evidence to assess the recoverability of approximately RMB 77,669,000 in restricted funds and whether a provision was needed[59][60] - The company understands that the payment of restricted funds itself does not constitute a finding of illegality, and the paid funds may be partially or fully refunded or confiscated, or additional payments may be required[61] - The company believes that the audit qualified opinion may only be removed when the status or outcome of the restricted funds and related events become clearer, and/or when the auditor can obtain other appropriate evidence[61] Events After Reporting Period Subsequent to the reporting period, the company entered into a settlement agreement with Huaxing New Economy RMB Phase IV Fund to acquire its equity investment interests for approximately RMB 790.8 million; additionally, a subsidiary signed an exit agreement involving the repurchase of XunTou equity and Huaxing Financial's purchase of Huaxing Securities equity - On March 11, 2024, the company signed a settlement agreement with Huaxing New Economy RMB Phase IV Fund to acquire certain equity investment-related interests for approximately RMB 790,772,000[62] - On August 30, 2024, subsidiary Shanghai Huijia and Huaxing Financial signed an exit agreement with XunTou, involving Shanghai Huijia repurchasing 10% of XunTou's equity for RMB 202 million, and Huaxing Financial purchasing 40.8163% equity in a company (which holds approximately 3.49% of Huaxing Securities' equity) for RMB 100 million[63] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income In 2023, the Group's total revenue decreased by 36.5% year-on-year to RMB 1,006,094 thousand, and net investment turned from income to a loss of RMB 208,150 thousand, resulting in a 49.7% year-on-year decrease in total revenue and net investment income or loss, with both loss for the year and loss attributable to owners of the company expanding 2023 and 2022 Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Total Revenue | 1,006,094 | 1,585,380 | -36.5% | | Net Investment (Loss) / Income | (208,150) | 1,509 | N/A | | Total Revenue and Net Investment Income or Loss | 797,944 | 1,586,889 | -49.7% | | Operating Loss | (197,817) | (103,866) | +90.5% | | Loss for the Year | (460,993) | (453,978) | +1.5% | | Loss for the Year Attributable to Owners of the Company | (471,903) | (429,901) | +9.8% | | Basic and Diluted Loss Per Share | RMB (0.94) | RMB (0.85) | +10.6% | Consolidated Statement of Financial Position As of December 31, 2023, the Group's total assets decreased by 28.9% year-on-year to RMB 9,340,360 thousand, and total liabilities decreased by 60.9% to RMB 2,163,417 thousand; both non-current and current assets declined, but the significant reduction in liabilities maintained relatively stable net assets 2023 and 2022 Key Data from Consolidated Statement of Financial Position | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Non-current Assets | 3,192,831 | 4,093,724 | -22.1% | | Current Assets | 6,147,529 | 8,983,833 | -31.6% | | Total Assets | 9,340,360 | 13,077,557 | -28.7% | | Current Liabilities | 2,085,055 | 3,893,206 | -46.5% | | Non-current Liabilities | 78,362 | 1,645,071 | -95.2% | | Total Liabilities | 2,163,417 | 5,538,277 | -60.9% | | Net Assets | 7,176,943 | 7,539,280 | -4.8% | - Bank borrowings decreased from RMB 2,124,493 thousand in 2022 to zero in 2023, significantly improving the debt structure[67][121] Notes to the Consolidated Financial Statements General Information Huaxing Capital Holdings Limited is incorporated in the Cayman Islands and listed on the Hong Kong Stock Exchange, primarily providing investment banking and investment management services, with financial statements presented in RMB, and Mr. Bao Fan as the former ultimate controlling party - The company was incorporated in the Cayman Islands, and its shares were listed on the Main Board of the Hong Kong Stock Exchange on September 27, 2018[68] - The Group's principal activities are the provision of investment banking and investment management services[68] - Financial statements are presented in RMB, and all amounts are rounded to the nearest thousand[68] - The former ultimate controlling party was Mr. Bao Fan, who resigned as the company's former Chairman and Executive Director on February 2, 2024[68] Application of New and Revised IFRS During the current year, the Group adopted all new and revised IFRS effective January 1, 2023, but their adoption did not result in significant changes to accounting policies, financial statement presentation, or reported amounts for the current and prior years - During the current year, the Group adopted all new and revised IFRS effective January 1, 2023[69] - The adoption of these new and revised IFRS did not result in significant changes to the Group's accounting policies, financial statement presentation, or reported amounts for the current and prior years[69] Revenue and Segment Information The Group analyzes revenue and performance based on four reportable segments: Investment Banking, Investment Management, Huaxing Securities, and Other; in 2023, mainland China contributed the vast majority of revenue and non-current assets, with customer contract revenue primarily recognized at a point in time and over time Segment Classification The Group's reportable segments include Investment Banking, Investment Management, Huaxing Securities, and Other businesses - The Group's reportable segments include Investment Banking, Investment Management, Huaxing Securities, and Other businesses[70] - The Huaxing Securities segment operates independently, focusing on the regulated securities market in mainland China, and has an independent risk control structure[70] Segment Revenue and Performance Analysis The segment analysis reveals that Investment Banking and Investment Management experienced operating losses, while Huaxing Securities and Other segments also recorded losses, with net investment turning into a loss for the Group 2023 Revenue and Net Investment Income or Loss by Segment | Segment | Transaction and Advisory Fees (RMB thousands) | Management Fees (RMB thousands) | Interest Income (RMB thousands) | Carried Interest Income (RMB thousands) | Net Investment Income / (Loss) (RMB thousands) | Operating Loss (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Investment Banking | 191,827 | — | — | — | 367 | (69,287) | | Investment Management | — | 434,252 | 30,727 | 151,855 | (346,819) | (12,277) | | Huaxing Securities | 121,116 | — | 10,682 | — | 129,245 | (86,726) | | Others | — | 22,180 | 43,455 | — | 9,057 | (29,527) | | Total | 312,943 | 456,432 | 84,864 | 151,855 | (208,150) | (197,817) | - Investment management segment performance incorporates unrealized carried interest income (calculated on a liquidation basis) into segment information, as it is a key indicator for measuring value creation[73] - For the year ended December 31, 2023, unrealized carried interest income reversal amounted to RMB 1,133,465,000, primarily based on fair value changes related to funds[73] Geographical Information Mainland China remains the primary source of the Group's revenue and non-current assets, although both have seen declines in 2023 compared to 2022 2023 and 2022 Revenue from External Customers and Non-Current Assets by Geographical Location | Region | 2023 Revenue from External Customers (RMB thousands) | 2022 Revenue from External Customers (RMB thousands) | 2023 Non-Current Assets (RMB thousands) | 2022 Non-Current Assets (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 862,258 | 1,301,970 | 160,605 | 233,128 | | Hong Kong | 125,660 | 246,731 | 13,821 | 25,765 | | United States | 18,176 | 36,679 | 1,986 | 2,558 | | Total | 1,006,094 | 1,585,380 | 176,412 | 261,451 | Timing of Revenue Recognition from Customer Contracts and Performance Obligations Customer contract revenue is recognized both at a point in time and over time, with a significant portion recognized at a point in time, and the transaction price of unsatisfied performance obligations related to management fees has decreased 2023 and 2022 Timing of Customer Contract Revenue Recognition | Recognition Method | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | At a point in time | 464,798 | 981,225 | | Over time | 456,432 | 529,032 | | Total | 921,230 | 1,510,257 | 2023 and 2022 Transaction Price of Unsatisfied Performance Obligations Related to Management Fees | Term | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Within one year | 11,804 | 13,775 | | Over one year but not exceeding two years | 109 | 3,445 | | Over two years but not exceeding three years | — | 685 | | Total | 11,913 | 17,905 | Other Segment Information and Major Customers Depreciation and amortization expenses are allocated across all segments, with Huaxing Securities showing an increase in 2023, and one major customer in the investment management business contributing over 10% of the Group's total revenue 2023 and 2022 Depreciation and Amortization by Segment | Segment | 2023 Depreciation and Amortization (RMB thousands) | 2022 Depreciation and Amortization (RMB thousands) | | :--- | :--- | :--- | | Investment Banking | 33,982 | 33,583 | | Investment Management | 14,827 | 19,078 | | Huaxing Securities | 36,911 | 29,192 | | Others | 2,844 | 4,290 | | Total | 88,564 | 86,143 | - In 2023, Customer A (investment management business) contributed RMB 140,019 thousand in revenue, accounting for over 10% of the Group's total revenue[81] Net Investment (Loss) / Income In 2023, net investment turned from income to a loss of RMB 208,150 thousand, primarily due to net losses from convertible bonds and unlisted investment funds classified as financial assets at fair value through profit or loss, as well as total losses from investments in associates 2023 and 2022 Net Investment (Loss) / Income Details | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Realized and Unrealized Net Gains or Losses on Financial Assets at FVTPL | | | | — Wealth Management Related Products | 7,385 | (17,408) | | — Asset Management Schemes | 53,435 | 51,218 | | — Investments in Listed Equity Securities | 82,960 | 5,647 | | — Convertible Bonds | (110,655) | 12,736 | | — Unlisted Investment Funds Measured at Fair Value | (207,860) | (87,045) | | Total Losses from Investments in Associates | (47,386) | (154,193) | | Total | (208,150) | 1,509 | - In 2023, convertible bonds generated a net loss of RMB 110,655 thousand, and unlisted investment funds generated a net loss of RMB 207,860 thousand[82] Other Operating Expenses Total other operating expenses in 2023 were RMB 359,688 thousand, a slight increase from 2022, with professional service fees, project-related and business development expenses, technology expenses, and depreciation and amortization being the main components 2023 and 2022 Other Operating Expenses Details | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Professional Service Fees | 84,672 | 77,156 | | Project-Related and Business Development Expenses | 67,844 | 62,377 | | Office Expenses | 29,284 | 46,489 | | Technology Expenses | 40,940 | 39,171 | | Depreciation and Amortization | 88,564 | 86,143 | | Auditor's Remuneration | 13,010 | 8,460 | | Total | 359,688 | 354,860 | Financing Costs Financing costs in 2023 significantly decreased by 55.0% to RMB 50,553 thousand, primarily due to substantial reductions in interest on bank borrowings, lease liabilities, and financial assets sold under repurchase agreements 2023 and 2022 Financing Costs Details | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Interest on Bank Borrowings | 32,063 | 87,685 | | Interest on Lease Liabilities | 2,138 | 4,028 | | Interest on Financial Assets Sold Under Repurchase Agreements | 10,496 | 13,532 | | Interest on Income Certificates | 5,856 | 7,208 | | Total | 50,553 | 112,453 | Impairment Losses Under Expected Credit Loss Model, Net of Reversals Impairment losses under the expected credit loss model significantly decreased to RMB 16,815 thousand in 2023, a substantial improvement from RMB 244,501 thousand in 2022, mainly due to reduced impairment losses on trade receivables, loans to third parties, and amounts due from related parties 2023 and 2022 Impairment Losses Details | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Trade Receivables | (28,187) | 38,331 | | Loans to Third Parties | 24,463 | 115,599 | | Amounts Due from Related Parties | 24,197 | 90,685 | | Total | 16,815 | 244,501 | - Impairment provision of RMB 142,024 thousand was made for loans to third-party Worbey Medical Holdings Limited, with RMB 24,463 thousand recognized in 2023[103] Other Income, Gains or Losses In 2023, other income, gains or losses turned from a loss of RMB 19,408 thousand in 2022 to a gain of RMB 28,140 thousand, primarily benefiting from government grants and a reduction in net exchange losses 2023 and 2022 Other Income, Gains or Losses Details | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Government Grants | 25,657 | 37,553 | | Net Exchange Losses | (7,248) | (53,282) | | Gain on Partial Disposal of an Associate | — | 24,837 | | Impairment Loss on Investment in a Joint Venture | — | (37,492) | | Total | 28,140 | (19,408) | - Government grants primarily include tax incentives and industry support funds provided by local governments in Shanghai, China, and employment support scheme grants from the Hong Kong government[87] Investment Losses from Certain Incidental and Auxiliary Investments Investment losses from certain incidental and auxiliary investments significantly decreased to RMB 18,311 thousand in 2023, a substantial improvement from RMB 171,489 thousand in 2022, mainly due to reduced losses from investments in unlisted debt securities 2023 and 2022 Investment Losses from Certain Incidental and Auxiliary Investments Details | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Losses from Investments in Unlisted Debt Securities | (18,311) | (144,878) | | Investments in Unlisted Equity Securities | — | 3,590 | | Convertible Bonds | — | (30,201) | | Total | (18,311) | (171,489) | - These investments primarily include investments in the form of preferred shares of other companies and other equity holdings and derivative instruments in non-associates[89] Income Tax Expense Income tax expense increased to RMB 120,343 thousand in 2023, a 69.6% increase from 2022, primarily due to increased current tax in mainland China and the impact of non-deductible expenses and unrecognized tax losses 2023 and 2022 Income Tax Expense Details | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Current Tax - Mainland China | 90,413 | 48,581 | | Current Tax - Hong Kong | 1,040 | 13,991 | | Deferred Tax | 28,890 | 8,399 | | Total Income Tax Expense | 120,343 | 70,971 | - Reconciliation of income tax expense to loss before tax shows the impact of non-deductible expenses at RMB 110,203 thousand and unrecognized tax losses at RMB 123,757 thousand[92] Loss for the Year Loss for the year in 2023 was RMB 460,993 thousand, a slight increase from 2022, with total staff costs significantly decreasing and depreciation and amortization slightly increasing 2023 and 2022 Total Staff Costs | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Directors' Remuneration | 22,585 | 34,094 | | Other Staff Costs | 455,591 | 719,138 | | Total Staff Costs | 478,176 | 753,232 | 2023 and 2022 Depreciation and Amortization | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Depreciation of Property and Equipment | 60,702 | 68,659 | | Amortization of Intangible Assets | 27,862 | 17,484 | Loss Per Share Basic and diluted loss per share in 2023 was RMB (0.94), an increase from RMB (0.85) in 2022 2023 and 2022 Loss Per Share Data | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Loss for the Year Attributable to Owners of the Company (RMB thousands) | (471,903) | (429,901) | | Weighted Average Number of Ordinary Shares | 504,515,369 | 507,207,390 | | Basic and Diluted Loss Per Share (RMB) | (0.94) | (0.85) | - Given the anti-dilutive effect of share options and restricted share units, these effects were not considered in calculating diluted loss per share[94] Dividends For 2023, the Board recommended no final dividend, and the company neither declared nor paid any dividends, contrasting with a final dividend of RMB 0.38 per share paid in 2022 - For the year ended December 31, 2023, the directors recommended no final dividend, and the company neither declared nor paid any dividends[96] - In 2022, a final dividend of RMB 0.38 per share for the year ended December 31, 2021, totaling RMB 201,114,000, was declared and paid to owners of the company[96] Investments in Associates As of December 31, 2023, the Group's total investments in associates amounted to RMB 1,291,656 thousand, a decrease from 2022, with fair value changes in fund investments contributing RMB 329,929 thousand 2023 and 2022 Total Investments in Associates | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Investments in Unlisted Companies | 14,967 | 13,353 | | Investments in Funds | 1,276,689 | 1,404,604 | | Total | 1,291,656 | 1,417,957 | 2023 and 2022 Details of Investments in Funds | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Cost of Investments in Funds | 883,562 | 936,720 | | Fair Value Changes of Funds | 329,929 | 414,148 | | Exchange Adjustments | 63,198 | 53,736 | | Total | 1,276,689 | 1,404,604 | Financial Assets at Fair Value Through Profit or Loss As of December 31, 2023, total financial assets mandatorily measured at fair value through profit or loss decreased from 2022 to RMB 4,472,031 thousand, with increases in listed financial bonds offset by reductions in unlisted cash management products, money market funds, convertible bonds, and unlisted investment funds 2023 and 2022 Details of Financial Assets Mandatorily Measured at Fair Value Through Profit or Loss | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Unlisted Cash Management Products | 58,243 | 456,515 | | Money Market Funds | 468,329 | 579,909 | | Listed Financial Bonds | 2,415,343 | 1,854,255 | | Investments in Listed Equity Securities | — | 216,611 | | Convertible Bonds | 61,335 | 186,852 | | Unlisted Investment Funds Measured at Fair Value | 680,854 | 1,092,716 | | Share Options to Acquire Non-Controlling Interests | 282,032 | 436,080 | | Total | 4,472,031 | 5,365,153 | - The fair value of convertible bonds decreased from RMB 186,852 thousand to RMB 61,335 thousand, primarily due to the extension of the maturity date of loans to the investee Worbey Medical Holdings Limited and a debt moratorium agreement[99][100][103] - The fair value of share options to acquire non-controlling interests decreased from RMB 436,080 thousand to RMB 282,032 thousand, based on the fair value of Huaxing Securities' corresponding net assets and an estimate of the exercise timing of the share options[99][101] Financial Assets at Fair Value Through Other Comprehensive Income As of December 31, 2023, total financial assets at fair value through other comprehensive income, primarily listed financial bonds, significantly decreased to RMB 49,629 thousand from 2022 2023 and 2022 Financial Assets at Fair Value Through Other Comprehensive Income | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Listed Financial Bonds | 49,629 | 357,672 | | Total | 49,629 | 357,672 | - As of December 31, 2023, the expected credit loss for financial bonds was RMB 12,000[102] Loans to Third Parties As of December 31, 2023, net loans to third parties amounted to RMB 67,822 thousand, primarily consisting of loans to Worbey Medical Holdings Limited, for which an impairment provision of RMB 142,024 thousand has been made 2023 and 2022 Loans to Third Parties | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Worbey Medical Holdings Limited | 209,846 | 192,717 | | Song Huanping | — | 11,418 | | Less: Impairment Loss Provision | (142,024) | (117,561) | | Net Amount | 67,822 | 86,574 | - The loan to Worbey was extended to April 2025 in February 2024, and there is evidence of credit impairment[103] - The loan to Song Huanping was repaid early in 2023[104] Trade and Other Receivables As of December 31, 2023, net trade and other receivables amounted to RMB 885,586 thousand, a decrease from 2022, with receivables from unsettled transactions and restricted funds being the main components 2023 and 2022 Trade and Other Receivables Details | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Trade Receivables | 44,398 | 93,032 | | Receivables from Unsettled Transactions | 599,807 | 977,380 | | Restricted Funds | 77,669 | — | | Employee Loans | 28,179 | 45,482 | | Total (Net of Impairment Provision) | 885,586 | 1,252,730 | 2023 Trade Receivables Aging (Net of Impairment Loss Provision) | Aging | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | 0–30 Days | 30,232 | 39,473 | | 31–60 Days | 2,593 | 2,680 | | 61–90 Days | 2,239 | 4,365 | | 91–180 Days | 4,904 | 5,279 | | 181–360 Days | 1,594 | 1,815 | | Over one year | 411 | 1,067 | | Total | 41,973 | 54,679 | - Restricted funds of approximately RMB 77,669,000 are related to Mr. Bao Fan's cooperation with investigations[105][127] Financial Assets Purchased Under Resale Agreements As of December 31, 2023, financial assets purchased under resale agreements were zero, compared to RMB 4,715 thousand in 2022, primarily consisting of debt securities 2022 Financial Assets Purchased Under Resale Agreements | Indicator | 2022 (RMB thousands) | | :--- | :--- | | Debt Securities | 4,713 | | Accrued Interest | 2 | | Total | 4,715 | - As of December 31, 2023, financial assets purchased under resale agreements were zero[66] Amounts Due from Related Parties As of December 31, 2023, total amounts due from related parties significantly decreased to RMB 875,618 thousand from 2022, primarily including amounts due from Huaxing New Economy RMB Phase IV Fund, for which impairment provisions have been made 2023 and 2022 Amounts Due from Related Parties (Nature of Transaction) | Related Party | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Huaxing New Economy RMB Phase IV Fund | 893,907 | 1,076,392 | | Shenzhen Huasheng Lingxiang Equity Investment Partnership | 34,441 | 44,331 | | Huaxing Growth Capital IV, L.P. | 30,698 | 20,425 | | Less: Impairment Loss Provision | (116,344) | (92,206) | | Total | 868,478 | 1,324,781 | - Transaction balance refers to the total carrying amount of receivables for fund management services and carried interest of RMB 103,979 thousand, and receivables from the transfer of investment portfolios to Huaxing New Economy RMB Phase IV Fund of RMB 880,843 thousand[111] - As of December 31, 2023, an impairment provision of RMB 115,366 thousand was made for trade receivables that had incurred credit impairment[112] 2023 Aging of Amounts Due from Related Parties (Nature of Transaction) | Aging | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | 0–30 Days | 46,817 | 274,438 | | 181–360 Days | 7,715 | 1,001,429 | | Over one year | 807,447 | 24,156 | Trade and Other Payables As of December 31, 2023, total trade and other payables significantly decreased to RMB 904,923 thousand from 2022, primarily due to reductions in salaries, bonuses, and other benefits payable, as well as payables from unsettled transactions 2023 and 2022 Trade and Other Payables Details | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Salaries, Bonuses and Other Benefits Payable | 102,551 | 385,574 | | Payables from Unsettled Transactions | 628,104 | 979,576 | | Carried Interest to Management Teams and Other Parties | 46,077 | 238,122 | | Total | 904,923 | 1,718,928 | - As of December 31, 2023, carried interest to management teams and other parties measured at fair value was zero, compared to RMB 31,158 thousand in 2022[117] Financial Assets Sold Under Repurchase Agreements As of December 31, 2023, financial assets sold under repurchase agreements increased significantly to RMB 482,578 thousand from 2022, primarily consisting of debt securities with an effective annual interest rate ranging from 2.39% to 2.60% 2023 and 2022 Financial Assets Sold Under Repurchase Agreements Details | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Debt Securities | 482,034 | 150,000 | | Accrued Interest | 544 | 65 | | Total | 482,578 | 150,065 | - The effective annual interest rate for financial assets sold under repurchase agreements ranged from 2.39% to 2.60% (2022: 3.50% to 3.95%)[118] 2023 and 2022 Carrying Amounts of Transferred Financial Assets and Related Liabilities | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Carrying Amount of Transferred Assets | 1,031,640 | 838,457 | | Carrying Amount of Related Liabilities | (482,578) | (150,065) | | Net Position | 549,062 | 688,392 | Income Certificates As of December 31, 2023, total income certificates significantly decreased to RMB 93,806 thousand from 2022, with annual interest rates ranging from 3.10% to 3.30% 2023 and 2022 Income Certificates | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Income Certificates | 93,806 | 236,648 | - As of December 31, 2023, the annual interest rate for income certificates ranged from 3.10% to 3.30% (2022: 3.30% to 6.08%)[120] Bank Borrowings As of December 31, 2023, the Group had no bank borrowings, a significant reduction from RMB 2,124,493 thousand in 2022, which included both fixed and variable rate borrowings 2023 and 2022 Bank Borrowings | Indicator | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Unsecured Bank Borrowings at Fixed Interest Rates | — | 339,462 | | Unsecured Bank Borrowings at Variable Interest Rates | — | 1,785,031 | | Total | — | 2,124,493 | - As of December 31, 2023, the Group had no bank borrowings[67][121] Lease Liabilities As of December 31, 2023, total lease liabilities decreased to RMB 53,024 thousand from 2022, with RMB 35,540 thousand due for settlement within one year 2023 and 2022 Lease Liabilities | Term | As of December 31, 2023 (RMB thousands) | As of December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Within one year | 35,540 | 55,366 | | Over one year but not exceeding two years | 12,364 | 38,269 | | Over two years but not exceeding five years | 5,120 | 16,191 | | Total | 53,024 | 109,826 | - The weighted average incremental borrowing rate applied to lease liabilities was 2.87% (2022: 2.98%)[123] Share Capital As of December 31, 2023, the company's authorized share capital was 2,000,000,000 shares with a par value of USD 0.000025 per share, and issued share capital was 568,397,776 shares, amounting to RMB 93,194 thousand 2023 and 2022 Share Capital Information | Indicator | As of December 31, 2023 | As of December 31, 2022 | | :--- | :--- | :--- | | Authorized Shares | 2,000,000,000 | 2,000,000,000 | | Issued Shares | 568,397,776 | 568,397,776 | | Share Capital (RMB thousands) | 93,194 | 93,194 | - In 2022, 12,000,000 shares were issued to the trust, and 6,033,000 share options were exercised[126] Contingent Liabilities The Group paid approximately RMB 77,669,000 in restricted funds related to Mr. Bao Fan's cooperation with inve