北京北辰实业股份(00588) - 2024 - 中期财报

2024 Interim Report Summary This section provides a high-level overview of the company's financial performance for the first half of 2024, highlighting significant declines in revenue and a shift to operating and net losses Key Financial Highlights For the six months ended June 30, 2024, the company experienced a significant 52.81% year-over-year revenue decline, reporting operating and net losses attributable to ordinary equity holders, with a loss per share of RMB 0.2286, and no interim dividend declared 2024 First Half Key Financial Data | Metric | 2024 First Half (RMB thousands) | Year-over-year Change | Notes | | :--- | :--- | :--- | :--- | | Revenue | 3,429,871 | -52.81% | | | Operating Loss | (355,699) | -147.10% | Operating profit in prior period | | Loss attributable to ordinary equity holders | (769,580) | Decreased by 902,546 | Profit in prior period | | Loss per share (RMB) | (0.2286) | EPS of 0.0395 in prior period | | | Interim Dividend | Not distributed | Prior period: None | | | Core operating loss (excluding fair value changes) | (586,427) | Decreased by 696,127 | | | Fair value change loss on investment properties (after tax) | (183,153) | | | Condensed Consolidated Interim Financial Statements This section presents the condensed consolidated interim financial statements, including the balance sheet, income statement, comprehensive income statement, statement of changes in equity, and cash flow statement Condensed Consolidated Interim Balance Sheet As of June 30, 2024, the company's total assets and total liabilities both decreased, resulting in a reduction in net assets, reflecting operating losses and equity changes Consolidated Balance Sheet Key Data | Metric | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 61,526,823 | 65,155,827 | -5.57% | | Non-current Assets | 20,877,787 | 21,477,985 | -2.79% | | Current Assets | 40,649,036 | 43,677,842 | -6.93% | | Total Liabilities | 40,465,893 | 42,927,967 | -5.74% | | Non-current Liabilities | 20,171,032 | 22,869,681 | -11.80% | | Current Liabilities | 20,294,861 | 20,058,286 | +1.18% | | Net Assets | 21,060,930 | 22,227,860 | -5.25% | | Equity attributable to ordinary equity holders | 18,446,551 | 19,544,170 | -5.62% | Condensed Consolidated Interim Income Statement In the first half of 2024, the company experienced a significant revenue decline, leading to reduced gross profit, and ultimately reported a loss before income tax and a loss for the period due to increased impairment losses on financial assets and fair value changes in investment properties Consolidated Income Statement Key Data | Metric | 2024 First Half (RMB thousands) | 2023 First Half (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 3,429,871 | 7,268,886 | -52.81% | | Cost of Sales | (2,941,989) | (5,977,765) | -50.80% | | Gross Profit | 487,882 | 1,291,121 | -62.21% | | Operating (Loss)/Profit | (355,699) | 755,275 | Turned from profit to loss | | Finance Costs – Net | (350,972) | (387,441) | Costs decreased by 9.42% | | (Loss)/Profit before Income Tax | (706,872) | 379,984 | Turned from profit to loss | | Income Tax Expense | (173,560) | (286,299) | Expense decreased by 39.38% | | (Loss)/Profit for the Period | (880,432) | 93,685 | Turned from profit to loss | | Attributable to ordinary equity holders | (769,580) | 132,966 | Turned from profit to loss | | (Loss)/Earnings per share (RMB cents) | (22.86) | 3.95 | Turned from profit to loss | Condensed Consolidated Interim Statement of Comprehensive Income In the first half of 2024, the company reported a total comprehensive loss for the period, primarily driven by the loss attributable to ordinary equity holders Consolidated Statement of Comprehensive Income Key Data | Metric | 2024 First Half (RMB thousands) | 2023 First Half (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | (Loss)/Profit for the Period | (880,432) | 93,685 | Turned from profit to loss | | Other Comprehensive Income | – | – | | | Total Comprehensive (Loss)/Income for the Period | (880,432) | 93,685 | Turned from profit to loss | | Attributable to ordinary equity holders | (769,580) | 132,966 | Turned from profit to loss | Condensed Consolidated Interim Statement of Changes in Equity As of June 30, 2024, equity attributable to ordinary equity holders decreased due to the loss for the period and changes in other reserves, leading to a corresponding decline in total equity Consolidated Statement of Changes in Equity Key Data | Metric | January 1, 2024 (RMB thousands) | June 30, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Share Capital | 3,367,020 | 3,367,020 | 0% | | Other Reserves | 4,948,137 | 4,687,438 | -5.30% | | Retained Earnings | 11,229,013 | 10,392,093 | -7.45% | | Equity attributable to ordinary equity holders | 19,544,170 | 18,446,551 | -5.62% | | Non-controlling Interests | 2,683,690 | 2,614,379 | -2.58% | | Total Equity | 22,227,860 | 21,060,930 | -5.25% | Condensed Consolidated Interim Cash Flow Statement In the first half of 2024, the company's operating cash flow shifted from positive to negative, investment cash flow significantly decreased, and financing cash flow turned from net inflow to net outflow, resulting in a net decrease in cash and cash equivalents Consolidated Cash Flow Statement Key Data | Metric | 2024 First Half (RMB thousands) | 2023 First Half (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Net Cash (Used in)/Generated from Operating Activities | (456,580) | 868,838 | Turned from inflow to outflow | | Net Cash Generated from Investing Activities | 16,822 | 67,452 | -75.06% | | Net Cash (Used in)/Generated from Financing Activities | (764,002) | 1,031,781 | Turned from inflow to outflow | | Net (Decrease)/Increase in Cash and Cash Equivalents | (1,203,760) | 1,968,071 | Turned from increase to decrease | | Cash and Cash Equivalents at End of Period | 7,301,722 | 10,356,222 | -29.49% | Notes to the Condensed Consolidated Interim Financial Information This section provides detailed notes to the condensed consolidated interim financial information, covering general information, basis of preparation, accounting policies, estimates, financial risk management, segment information, and other financial disclosures 1. General Information Beijing North Star Company Limited, established in China in 1997 as part of the state-owned North Star Group's restructuring, is listed on both the Hong Kong and Shanghai stock exchanges, primarily engaging in real estate development, convention and exhibition (including hotel), and commercial property operation and management - The company was established in China on April 2, 1997, as part of the restructuring of Beijing North Star Industrial Group Co., Ltd., its ultimate parent company[7] - The company issued H shares and listed on the Hong Kong Stock Exchange on May 14, 1997, and issued A shares and listed on the Shanghai Stock Exchange on October 16, 2006, becoming a dual-listed company[7] - The Group's principal activities are real estate development, convention and exhibition (including hotels), and commercial property operation and management in China[7] 2. Basis of Preparation The interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and should be read in conjunction with the Group's consolidated financial statements for the year ended December 31, 2023 - The interim financial information has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[8] - This interim financial information has been reviewed but not audited[7] 3. Accounting Policies Several amendments to Hong Kong Accounting Standards were adopted during the period, but they are not expected to have a significant impact on the Group's interim financial information - The accounting policies applied in this interim financial information are consistent with those applied in the Group's consolidated financial statements for the year ended December 31, 2023, except for the adoption of the following amendments to standards[9] - Amendments to standards effective and adopted for the first time include: Classification of Liabilities as Current or Non-current, Non-current Liabilities with Covenants, Lease Liability in a Sale and Leaseback, Supplier Finance Arrangements, etc[9] - The adoption of these amendments to standards is not expected to have a significant impact on the Group's interim financial information[9] 4. Estimates The preparation of interim financial information requires management's judgment, estimates, and assumptions regarding the application of accounting policies and the amounts reported in the financial statements, and actual results may differ from these estimates - The preparation of interim financial information requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses[11] - Actual results may differ from these estimates[11] 5. Financial Risk Management The company faces market, credit, and liquidity risks, with no changes in risk management policies since year-end, and contractual cash flows for non-derivative financial liabilities indicate significant short-term (under 1 year) debt pressure - The Group's activities are exposed to various financial risks: market risk (including foreign exchange risk, fair value interest rate risk, and cash flow interest rate risk), credit risk, and liquidity risk[11] - There have been no changes in risk management policies since year-end[11] Non-derivative Financial Liabilities Maturity Analysis (RMB thousands) | Term | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Less than 1 year | 17,904,119 | 17,015,532 | | 1 to 2 years | 7,561,429 | 5,957,165 | | 2 to 5 years | 4,521,509 | 9,117,884 | | More than 5 years | 8,581,909 | 8,179,795 | | Total | 38,568,966 | 40,270,376 | 5.1. Financial Risk Factors The company is exposed to market risks (exchange rate, interest rate), credit risk, and liquidity risk, with no changes in its risk management policies - The Group's activities are exposed to various financial risks: market risk (including foreign exchange risk, fair value interest rate risk, and cash flow interest rate risk), credit risk, and liquidity risk[11] - There have been no changes in risk management policies since year-end[11] 5.2. Liquidity Risk The company's non-derivative financial liabilities' contractual cash flows indicate that as of June 30, 2024, borrowings and payables due within one year totaled approximately RMB 17.9 billion, posing liquidity management challenges Non-derivative Financial Liabilities Maturity Analysis (RMB thousands) | Term | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Less than 1 year | 17,904,119 | 17,015,532 | | 1 to 2 years | 7,561,429 | 5,957,165 | | 2 to 5 years | 4,521,509 | 9,117,884 | | More than 5 years | 8,581,909 | 8,179,795 | | Total | 38,568,966 | 40,270,376 | 5.3 Fair Value Estimation The company has no assets measured at fair value other than investment properties, whose fair values are assessed by independent valuers with no transfers between fair value hierarchy levels or changes in valuation techniques during the period - As of June 30, 2024, and December 31, 2023, the Group had no assets measured at fair value other than investment properties[14] - Detailed disclosures on the fair value of investment properties are provided in Note 7[14] - There were no transfers between fair value hierarchy levels and no changes in valuation techniques during the period[14] 6. Segment Information The company's business segments include real estate development, convention and exhibition (including hotels) and commercial properties, and other segments; in the first half of 2024, real estate development revenue significantly declined, while convention and commercial property revenue slightly increased, but the real estate development segment reported a substantial adjusted loss before income tax - The company's principal business segments are real estate development, convention and exhibition (including hotels) and commercial properties, and other businesses[15] Segment Revenue (RMB thousands) | Segment | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Real Estate Development Segment | 2,079,049 | 5,992,742 | -65.31% | | Convention and Exhibition (including Hotels) and Commercial Property Segment | 1,248,098 | 1,191,616 | +4.74% | | Other Segments | 102,724 | 84,528 | +21.53% | | Total Revenue | 3,429,871 | 7,268,886 | -52.81% | Adjusted (Loss)/Profit Before Income Tax (RMB thousands) | Segment | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Real Estate Development | (801,340) | 155,932 | Turned from profit to loss | | Convention and Exhibition (including Hotels) and Commercial Property | 198,372 | 205,907 | -3.66% | | Other Segments | (34,567) | (19,819) | Loss widened | | Total | (637,535) | 342,020 | Turned from profit to loss | 7. Right-of-Use Assets, Property, Plant and Equipment, and Investment Properties As of June 30, 2024, the company's net book values for right-of-use assets, property, plant and equipment, and investment properties all decreased, with investment properties recording fair value losses assessed by independent valuers Asset Net Book Values (RMB thousands) | Asset Type | January 1, 2024 (RMB thousands) | June 30, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Right-of-Use Assets | 414,133 | 398,210 | -3.84% | | Property, Plant and Equipment | 2,433,403 | 2,365,331 | -2.79% | | Investment Properties | 16,739,636 | 16,503,166 | -1.41% | - Fair value loss on investment properties of RMB 245,672 thousand was recognized in profit or loss[27] - Investment properties were valued by Han Hua Appraisal Limited, an independent professionally qualified valuer[28] 7.a Fair Value Hierarchy Fair value measurement of investment properties primarily utilizes Level 3 (unobservable inputs), with no transfers between fair value hierarchy levels during the period - Fair value information for investment properties measured in accordance with HKFRS 13 shows no transfers between Level 1, 2, and 3 during the period[29] Investment Properties Fair Value Measurement (Level 3) (RMB thousands) | Investment Property Type | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Office Buildings | 6,580,000 | 6,693,605 | | Apartments | 2,151,000 | 2,173,600 | | Convention Centers | 4,130,000 | 4,091,000 | | Shopping Malls | 3,636,100 | 3,769,300 | | Others | 6,066 | 12,131 | | Total | 16,503,166 | 16,739,636 | 7.b The Group's Valuation Process The company's investment properties are valued by independent professional valuer Han Hua Appraisal Limited, with the finance department team regularly reviewing valuation results and reporting to the CFO - The Group's investment properties were valued by Han Hua Appraisal Limited as of June 30, 2024, a valuer holding relevant recognized professional qualifications and having recent experience in the location and category of the investment properties valued[30] - The Group's finance department has a team responsible for reviewing the valuations performed by independent valuers for financial reporting purposes, reporting directly to the Chief Financial Officer (CFO)[30] 7.c Valuation Techniques Office buildings, apartments, and shopping malls are valued using the income capitalization approach, while convention centers and Apartment Building A use the discounted cash flow forecast method, and investment properties under construction are valued assuming renovation and completion, considering conversion costs - Valuations for office buildings, apartments (excluding Block A), and shopping malls are based on the income capitalization approach (term and reversion method), primarily using unobservable inputs (e.g., market rent, yield rates)[32] - Valuations for convention centers and Apartment Block A utilize the discounted cash flow forecast method, determined by significant unobservable inputs[32] - For investment properties under construction, valuations assume renovation and completion according to the latest proposed renovation plans, taking into account conversion costs[32] 8. Properties Under Development As of June 30, 2024, the net book value of properties under development decreased, primarily due to reductions in land use rights and capitalized finance costs, alongside a decrease in accumulated impairment Properties Under Development (RMB thousands) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Land Use Rights | 8,150,407 | 8,778,115 | -7.15% | | Development Costs and Capitalized Expenses | 3,983,477 | 3,463,306 | +15.02% | | Capitalized Finance Costs | 1,415,069 | 2,053,889 | -31.10% | | Accumulated Impairment | (406,505) | (678,291) | -40.07% | | Net Book Value | 13,142,448 | 13,617,019 | -3.34% | 9. Trade and Other Receivables and Prepayments As of June 30, 2024, the company's total trade and other receivables decreased, with amounts due from other related parties and non-controlling interests being major components, and a notable increase in allowance for doubtful debts Trade and Other Receivables and Prepayments (RMB thousands) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Trade and Other Receivables | 1,539,330 | 1,789,102 | -13.96% | | Prepayments for Taxes, Construction, and Other Items | 1,787,390 | 1,788,654 | -0.07% | | Total | 3,326,720 | 3,577,756 | -7.02% | Trade and Other Receivables Details (RMB thousands) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Trade Receivables – Net | 226,123 | 195,199 | +15.84% | | Amounts Due from Other Related Parties | 834,176 | 873,177 | -4.47% | | Amounts Due from Non-controlling Interests | 760,995 | 859,822 | -11.49% | | Other Receivables – Net | 1,313,207 | 1,593,903 | -17.50% | | Allowance for Doubtful Debts (Other Receivables) | (570,124) | (447,398) | +27.42% | 9.a Trade and Other Receivables Net trade receivables increased, while amounts due from other related parties and non-controlling interests decreased, with a significant rise in allowance for doubtful debts reflecting increased credit risk Trade and Other Receivables Details (RMB thousands) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Trade Receivables – Net | 226,123 | 195,199 | +15.84% | | Amounts Due from Other Related Parties | 834,176 | 873,177 | -4.47% | | Amounts Due from Non-controlling Interests | 760,995 | 859,822 | -11.49% | | Other Receivables – Net | 1,313,207 | 1,593,903 | -17.50% | | Allowance for Doubtful Debts (Other Receivables) | (570,124) | (447,398) | +27.42% | Trade Receivables Ageing Analysis (RMB thousands) | Ageing | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | 0 to 30 days | 96,485 | 146,463 | | 31 to 90 days | 37,170 | 16,456 | | Over 90 days | 164,424 | 93,515 | | Total | 298,079 | 256,434 | 10. Share Capital As of June 30, 2024, the company's authorized, issued, and fully paid share capital remained unchanged at 3,367,020,000 shares of RMB 1 each Share Capital Information (RMB thousands) | Metric | December 31, 2023 (Audited) | Changes during the period (RMB thousands) | June 30, 2024 (Unaudited) | | :--- | :--- | :--- | :--- | | Authorized, Issued, and Fully Paid Share Capital (3,367,020,000 shares of RMB 1 each) | 3,367,020 | – | 3,367,020 | 11. Trade and Other Payables and Borrowings/Amounts from Other Parties As of June 30, 2024, the company's total trade and other payables decreased, and borrowings/amounts from other parties also significantly reduced, reflecting an optimized liability structure Trade and Other Payables and Borrowings/Amounts from Other Parties (RMB thousands) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Trade and Other Payables | 6,368,020 | 7,273,603 | -12.45% | | Borrowings/Amounts from Other Parties | 7,393,340 | 8,944,193 | -17.34% | | Total | 13,761,360 | 16,217,796 | -15.15% | 11.a Trade and Other Payables Trade payables to third parties and related parties both decreased, as did other taxes payable, indicating the company's efforts in managing payables Trade and Other Payables Details (RMB thousands) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Trade Payables to Third Parties | 4,206,538 | 4,744,431 | -11.34% | | Trade Payables to Related Parties | 735,202 | 1,024,351 | -28.23% | | Lease Prepayments Received | 96,891 | 164,171 | -41.09% | | Other Taxes Payable | 201,028 | 261,487 | -23.13% | | Other Payables | 1,053,542 | 980,818 | +7.41% | 11.b Borrowings/Amounts from Other Parties Loans from non-controlling shareholders of subsidiaries, amounts due to North Star Group, and related party borrowings all decreased, while the amount of asset-backed special plans remained relatively stable Borrowings/Amounts from Other Parties Details (RMB thousands) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Loans from Non-controlling Shareholders of Subsidiaries | 1,973,519 | 2,060,858 | -4.24% | | Amounts Due to North Star Group | 1,601,733 | 2,902,871 | -44.82% | | Asset-backed Special Plans Issued by the Company | 3,597,695 | 3,610,848 | -0.36% | | Related Party Borrowings/Loans | 172,119 | 321,342 | -46.44% | - Among the loans due to non-controlling shareholders of subsidiaries, RMB 1,604,390 thousand and RMB 282,378 thousand bear fixed annual interest rates of 6.5% and 7%, respectively[41] - The asset-backed special plans issued by the company include the Tianfeng-North Star Changsha Intercontinental Hotel Asset-Backed Special Plan (raised RMB 1.05 billion, 18-year term) and the CITIC Securities-Tianfeng-North Star Century Center Asset-Backed Special Plan (raised RMB 2.861 billion, 18-year term)[41] 12. Borrowings As of June 30, 2024, the company's total borrowings slightly increased, but long-term borrowings (excluding current portion) decreased, with most borrowings secured or guaranteed, and the company having issued multiple tranches of corporate bonds and medium-term notes Total Borrowings (RMB thousands) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Long-term Borrowings (Non-current) | 12,593,114 | 14,984,857 | -15.96% | | Current Portion of Long-term Borrowings | 8,557,614 | 5,575,026 | +53.50% | | Total Borrowings | 21,150,728 | 20,559,883 | +2.87% | - Long-term borrowings of RMB 13,459,134 thousand are secured by certain right-of-use assets, investment properties, hotel properties, properties under development, and completed properties held for sale[45] - The company has issued multiple tranches of five-year corporate bonds and medium-term notes with coupon rates ranging from 3.10% to 4.80% per annum, some of which include put options[47][48] 13. Operating (Loss)/Profit In the first half of 2024, the company's operating loss was primarily impacted by fair value losses on investment properties, impairment of properties under development and completed properties held for sale, and increased impairment losses on financial assets Components of Operating (Loss)/Profit (RMB thousands) | Item | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Fair Value (Loss)/Gain on Investment Properties Recognized in Profit or Loss | (245,672) | 26,612 | Turned from gain to loss | | Impairment of Properties Under Development and Completed Properties Held for Sale | (478,572) | (191,681) | Impairment increased by 149.68% | | Net Impairment Loss on Financial Assets | (133,539) | (58,884) | Impairment increased by 126.79% | | (Loss)/Gain on Deregistration of Joint Ventures | (4,490) | 20,678 | Turned from gain to loss | - The Group had no non-financial assets with indefinite useful lives during the period[50] 14. Finance Income and Costs In the first half of 2024, the company's net finance costs decreased, primarily due to lower interest expenses and capitalized amounts, alongside an increase in interest income Finance Income and Costs (RMB thousands) | Item | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Interest Expense | (626,436) | (734,443) | Expense decreased by 14.69% | | Less: Capitalized Amount in Properties Under Development and Investment Properties | 206,150 | 304,710 | Capitalized amount decreased by 32.34% | | Finance Costs | (423,279) | (433,577) | Costs decreased by 2.38% | | Finance Income – Interest Income | 72,307 | 46,136 | Income increased by 56.73% | | Finance Costs – Net | (350,972) | (387,441) | Costs decreased by 9.42% | 15. Income Tax Expense In the first half of 2024, the company's income tax expense significantly decreased, primarily due to reductions in China corporate income tax and land appreciation tax, coupled with an increase in deferred income tax credits - China income tax is calculated in accordance with relevant Chinese laws and regulations, with an applicable income tax rate of 25%[52] - The company and certain Chinese subsidiaries are required to pay land appreciation tax on land appreciation amounts at progressive rates ranging from 30% to 60% in accordance with the Land Appreciation Tax Regulations of the People's Republic of China[52] Income Tax Expense (RMB thousands) | Item | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | Change | | :--- | :--- | :--- | :--- | | China Corporate Income Tax | 175,727 | 192,055 | -8.40% | | China Land Appreciation Tax | 78,128 | 98,645 | -20.81% | | Deferred Income Tax Credit | (80,295) | (4,401) | Credit increased by 1724.95% | | Total Income Tax Expense | 173,560 | 286,299 | -39.38% | 16. (Loss)/Earnings Per Share In the first half of 2024, the company reported a basic and diluted loss per share of RMB 0.2286, compared to an earnings per share of RMB 0.0395 in the prior period, primarily due to the loss attributable to ordinary equity holders - Basic (loss)/earnings per share is calculated based on the company's (loss)/profit attributable to ordinary equity holders and the weighted average number of ordinary shares outstanding during the six months ended June 30, 2024, and 2023[54] - The company had no potential dilutive ordinary shares during the six months ended June 30, 2024, and 2023, thus diluted (loss)/earnings per share is equal to basic (loss)/earnings per share[54] (Loss)/Earnings Per Share (RMB thousands) | Metric | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | | :--- | :--- | :--- | | (Loss)/Profit attributable to ordinary equity holders | (769,580) | 132,966 | | Number of ordinary shares outstanding (thousands) | 3,367,020 | 3,367,020 | | (Loss)/Earnings per share (RMB cents) (Basic and Diluted) | (22.86) | 3.95 | 17. Dividends The Board 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 (six months ended June 30, 2023: nil)[56] - Dividends related to the year ended December 31, 2023, amounting to RMB 67,340 thousand, were approved at the annual general meeting held in May 2024[56] 18. Pledged Assets As of June 30, 2024, the company pledged various assets, including investment properties, right-of-use assets, property, plant and equipment, properties under development, completed properties held for sale, and trade receivables, as collateral for borrowings totaling RMB 13,459,134 thousand - As of June 30, 2024, the Group pledged certain investment properties with a fair value of RMB 9,695,000 thousand, right-of-use assets with a net book value of RMB 246,248 thousand, property, plant and equipment with a net book value of RMB 1,462,500 thousand, properties under development with a carrying value of RMB 3,472,147 thousand, completed properties held for sale with a carrying value of RMB 250,433 thousand, and trade receivables with a carrying value of RMB 4,527 thousand as collateral for borrowings of RMB 13,459,134 thousand[57] 19. Financial Guarantees The company provides phased joint and several liability guarantees for mortgage loans granted by banks to property purchasers, with outstanding guaranteed amounts totaling RMB 5,553,911 thousand as of June 30, 2024, though directors consider the likelihood of significant loss to be remote - The Group provides phased joint and several liability guarantees for mortgage loans granted by banks to property purchasers[58] Outstanding Guaranteed Amounts (RMB thousands) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Outstanding Guaranteed Amounts | 5,553,911 | 7,137,252 | -22.20% | - The directors of the company believe that the possibility of the Group incurring any significant loss under these financial guarantee contracts is remote, and therefore no related liabilities have been recognized[58] 20. Commitments As of June 30, 2024, the company had significant capital commitments for properties under development and investment properties, while the total future minimum lease receivables from investment properties slightly decreased Capital Commitments (RMB thousands) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Properties Under Development (Contracted but not provided for) | 5,384,264 | 5,162,143 | +4.31% | | Properties Under Development (Authorized but not contracted for) | 2,456,374 | 2,197,717 | +11.77% | | Investment Properties (Contracted but not provided for) | 1,868 | 10,247 | -81.77% | | Investment Properties (Authorized but not contracted for) | 37,257 | 3,349 | +1012.45% | Future Minimum Lease Receivables from Investment Properties (RMB thousands) | Term | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Within 1 year | 699,924 | 749,998 | -6.79% | | 2 to 5 years | 874,238 | 901,478 | -3.02% | | After 5 years | 599,529 | 593,756 | +0.97% | | Total | 2,173,691 | 2,245,232 | -3.19% | 21. Significant Non-Cash Investing or Financing Activities Significant non-cash activities during the period included the recognition of right-of-use assets and lease liabilities for property and equipment, and the offset of dividends receivable from joint ventures against amounts received from joint ventures - The recognition of right-of-use assets and lease liabilities for property and equipment is considered a non-cash investing and financing activity[61] - During the six months ended June 30, 2024, dividends receivable from joint ventures of RMB 27,500 thousand were offset against amounts received from joint ventures[61] - During the six months ended June 30, 2024, amounts received by the Group from joint ventures of RMB 125,000 thousand were offset against the net gain on derecognition of that joint venture[61] 22. Related Party Transactions The company engages in numerous related party transactions with North Star Group and other government-controlled entities, including service provision and receipt, loan transactions, and project co-development funds, with changes in the identity of some related parties during the period - The Group is controlled by North Star Group, which holds 34.48% of the company's equity[62] - Significant transactions between the Group and entities controlled by the Chinese government (government-controlled entities) primarily include bank borrowings and certain purchases of goods and services[62] - During the period, some non-controlling shareholders (such as China Construction Jiuhua) were considered related parties, while Wuhan Base, Wuhan Jielong, and Shenzhen Jiangwan are no longer considered related parties[62] 22.i Services Received From/Provided To and Leases With Related Parties The company provides network and management services to related parties such as Beijing North Star Convention & Exhibition Investment Co., Ltd. and Chenxing Company, while receiving construction services from related parties like China Construction Revenue from Services Provided and Leases (RMB thousands) | Related Party | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | | :--- | :--- | :--- | | Beijing North Star Convention & Exhibition Investment Co., Ltd. | 1,925 | 2,494 | | Beijing Chenxing International Exhibition Co., Ltd. | 402 | 859 | | North Star Group | 1,620 | 1,054 | Expenses for Services Received and Leases (RMB thousands) | Related Party | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | | :--- | :--- | :--- | | Jingxi Sci-Fi Convention & Exhibition (Purchase of exhibition services) | 574 | 672 | | North Star Group (Trademark license fees, lease fees, and management service fees) | 465 | 1,483 | | China Construction (Receipt of construction services) | 398,651 | 352,087 | 22.ii Loans from North Star Group The company's outstanding loans from North Star Group significantly decreased at period-end, with substantial repayments made and new credit loans obtained during the period Loans from North Star Group (RMB thousands) | Metric | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | | :--- | :--- | :--- | | Beginning of period | 2,902,871 | 1,601,907 | | Proceeds from loans | 950,000 | 800,000 | | Repayment of loans | (2,250,000) | (300,000) | | End of period | 1,601,733 | 2,102,275 | - Credit loans provided by North Star Group to the company bear a fixed annual interest rate of 3.90%[65][66] - During the six months ended June 30, 2024, the company repaid multiple loans from North Star Group and obtained new credit loans totaling RMB 950,000 thousand[66] 22.iii Loans from China Construction Jiuhua The company's outstanding loans from China Construction Jiuhua slightly increased at period-end, with these unsecured loans bearing a fixed annual interest rate of 6.50% Loans from China Construction Jiuhua (RMB thousands) | Metric | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | | :--- | :--- | :--- | | Beginning of period | 444,948 | 529,935 | | Proceeds from loans | 1,664 | 43,400 | | Repayment of loans | – | (124,000) | | End of period | 454,745 | 445,740 | - The loan is unsecured, bears a fixed annual interest rate of 6.50%, and is repayable in installments within one year[67] 22.iv Project Co-development Funds Provided to Associates and Joint Ventures The company provided project co-development funds to Wuhan Jinchen Yingchuang and Guangzhou Guangyue, with slightly reduced period-end balances, and some amounts bearing fixed interest rates Project Co-development Funds Provided to Associates and Joint Ventures (RMB thousands) | Related Party | June 30, 2024 (Unaudited) | January 1, 2023 (Unaudited) | | :--- | :--- | :--- | | Wuhan Jinchen Yingchuang | 282,918 | 287,942 | | Guangzhou Guangyue | 551,258 | 585,235 | | Total | 834,176 | 873,177 | - Of the amounts provided to Wuhan Jinchen Yingchuang, RMB 264,600 thousand bear a fixed annual interest rate of 6.5%, with the remainder being interest-free[71] - Amounts provided to Guangzhou Guangyue bear a fixed annual interest rate of 6.5%[72] 22.v Funds Received from Related Parties The company obtained funds from various joint ventures, associates, and non-controlling shareholders, with a reduced period-end balance, and some loans being interest-free or bearing fixed interest rates Funds Received from Related Parties (RMB thousands) | Related Party | June 30, 2024 (Unaudited) | January 1, 2023 (Unaudited) | | :--- | :--- | :--- | | Wuhan Dangdai | 42,000 | 42,000 | | Hangzhou Jinhu | – | 152,500 | | Beijing Chenxuan | 96,220 | – | | Wuxi Shengyang | – | 32,000 | | Wuxi Chenwan | 22,050 | 22,050 | | Jingxi Sci-Fi Convention & Exhibition | 11,864 | 1,115 | | Total | 172,248 | 321,416 | - Funds received from joint ventures and associates are unsecured, interest-free, and have no fixed repayment dates[74] - Loans from Wuhan Jielong and Wuhan Base are unsecured, bear a fixed annual interest rate of 10.5%, and have no fixed repayment dates[74] 22.vi Amounts Provided to Related Parties The company provided funds to Jinyu Real Estate, with the period-end balance remaining unchanged, and these funds are unsecured, non-interest-bearing, and have no fixed repayment terms Amounts Provided to Related Parties (RMB thousands) | Related Party | June 30, 2024 (Unaudited) | January 1, 2023 (Unaudited) | | :--- | :--- | :--- | | Jinyu Real Estate | 416,500 | 416,500 | | Total | 416,500 | 495,500 | - Amounts provided to related parties are unsecured, non-interest-bearing, and have no fixed repayment terms[79] 22.vii Advances Made on Behalf of Related Parties During the period, the company made advances totaling RMB 250 thousand on behalf of related parties, all of which have been fully repaid Advances Made on Behalf of Related Parties (RMB thousands) | Related Party | Advances Made This Year (RMB thousands) | Repayments (RMB thousands) | | :--- | :--- | :--- | | Chenxing Company | 224 | (224) | | Wuhan Dangdai | 13 | (13) | | North Star Group | 13 | (13) | | Total | 250 | (250) | - Amounts provided to related parties are unsecured, non-interest-bearing, and have no fixed repayment terms[79] 22.viii Balances, Advances, and Amounts for Purchases of Goods and Services As of June 30, 2024, both amounts due from and to related parties decreased, and loans/advances from related parties significantly declined, with the company recognizing a higher loss allowance for amounts due from related parties Amounts Due from Related Parties (RMB thousands) | Related Party | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Guangzhou Guangyue | 551,258 | 585,235 | | Wuhan Jinchen Yingchuang | 282,918 | 287,942 | | Jinyu Real Estate | 416,500 | 416,500 | | Total | 1,257,752 | 1,371,784 | Amounts Due to Related Parties (RMB thousands) | Related Party | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | North Star Group | 450 | 713 | | China Construction | 733,530 | 1,020,593 | | Total | 735,331 | 1,033,710 | Loans/Advances from Related Parties (RMB thousands) | Related Party | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | North Star Group | 1,601,733 | 2,902,871 | | China Construction Jiuhua | 454,745 | 444,948 | | Total | 2,228,597 | 3,782,488 | - As of June 30, 2024, the Group recognized a loss allowance of RMB 548,514 thousand for amounts due from related parties based on the expected credit loss model[82] 22.ix Key Management Personnel Remuneration In the first half of 2024, the total remuneration for key management personnel, including salaries, other short-term employee benefits, and post-employment benefits, decreased Key Management Personnel Remuneration (RMB thousands) | Item | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Salaries and Other Short-term Employee Benefits | 6,485 | 9,644 | -32.76% | | Post-employment Benefits | 1,092 | 1,267 | -13.79% | | Total | 7,577 | 10,911 | -30.56% | 22.x Lease Liabilities As of June 30, 2024, the company's lease liabilities related to land with North Star Group slightly increased, and the final transfer of this land has not yet been completed Lease Liabilities (RMB thousands) | Related Party | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | North Star Group (Lease liabilities related to land) | 16,589 | 16,196 | - The company has entered into an asset transfer agreement with North Star Group to acquire a parcel of land, but the final transfer price has not yet been approved and requires independent shareholders' approval[84] 22.xi Dividends Received/Receivable During the period, the company's joint venture, Hangzhou Jinhu, declared a dividend, with the company's share amounting to RMB 42,730 thousand - The Group's joint venture, Hangzhou Jinhu, declared a dividend of RMB 170,920 thousand in April 2024, of which the Group's share is RMB 42,730 thousand[85] Supplementary Information This section provides supplementary information, including a reconciliation of consolidated interim financial information between China Accounting Standards and Hong Kong Financial Reporting Standards Reconciliation of Consolidated Interim Financial Information The company provides a reconciliation of consolidated interim financial information between China Accounting Standards and Hong Kong Financial Reporting Standards, with key differences arising from the reversal of depreciation and impairment provisions for investment properties and fair value adjustments Reconciliation of Consolidated Interim Financial Information (RMB thousands) | Item | 2024 First Half (Loss)/Profit Attributable to Owners of the Company | 2023 First Half (Loss)/Profit Attributable to Owners of the Company | June 30, 2024 (Equity Attributable to Owners of the Company) | December 31, 2023 (Equity Attributable to Owners of the Company) | | :--- | :--- | :--- | :--- | :--- | | Under China Accounting Standards | (738,317) | 9,570 | 11,779,227 | 12,845,583 | | 1. Reversal of depreciation and impairment provisions for investment properties under China Accounting Standards | 151,890 | 100,130 | 2,773,448 | 2,621,558 | | 2. Fair value adjustments for investment properties under HKFRS | (183,153) | 23,266 | 3,893,876 | 4,077,029 | | Under HKFRS (including attributable to ordinary equity holders) | (769,580) | 132,966 | 18,446,551 | 19,544,170 | Management Discussion and Analysis This section provides management's discussion and analysis of the company's operations, financial performance, industry conditions, core competencies, and future strategies I. Description of the Company's Industry and Principal Businesses During the Reporting Period The company's main businesses are convention and exhibition (including hotels) and commercial properties, and real estate development, synergistically developed through a "convention + real estate" model; in the first half of 2024, the convention industry innovated, the hotel sector faced pressure, and the office market slowly recovered, while the real estate market experienced significant supply-demand changes and weak overall activity - The company's principal businesses include convention and exhibition (including hotels) and commercial properties, and real estate development[88] - The convention and exhibition (including hotels) business, relying on Capital Exhibition, is committed to building "China's leading convention and exhibition brand enterprise"[88] - The real estate development business has established a multi-regional, multi-level national development layout, involving diverse property types such as residential, apartments, villas, affordable housing, office buildings, and commercial properties, actively innovating development models and promoting "convention + real estate" project synergy[88] - In the first half of 2024, the convention and exhibition industry showed a clear trend towards digitalization and intelligent transformation, hotel occupancy rates and average room rates declined, and the Beijing office market saw a slight decrease in vacancy rates but continued rental declines[90] - In the first half of 2024, China's real estate market experienced significant changes in supply and demand, with overall weak activity, a 21.9% year-on-year decrease in commercial residential sales area, and a 26.9% decrease in sales value[91][92] (I) Company Business Overview The company's core businesses are convention and exhibition (including hotels) and commercial properties, and real estate development, integrating resources through a "convention + real estate" model to achieve multi-business synergistic development - The company's principal businesses include convention and exhibition (including hotels) and commercial properties, and real estate development[8