中国长白山国际(00989) - 2025 - 中期财报

Corporate Information The company's corporate structure includes its board, committees, and key advisors, with its primary operations based in Hong Kong Board of Directors and Committees The company's Board comprises executive, non-executive, and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance - The Board members include Cui Xintong (Chairperson), Li Junjie (CEO), Cong Peifeng, Xu Yingchuan as executive directors, Cui Mindong as non-executive director, and Zeng Hongji, Wang Xiaochu, Wang Xueguang as independent non-executive directors[234] - The Audit, Remuneration, and Nomination Committees are all chaired by independent non-executive director Zeng Hongji[234] Company Details and Advisors The company is registered in Bermuda with main operations in Hong Kong, engaging professional advisors and banks, with stock code 989 - The company secretary is Ng Man Kit, with the registered office located at Clarendon House, Bermuda[235] - The principal place of business in Hong Kong is located at Room 1305, 13/F, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong[21] - The auditor is Fruition Partners CPA Limited, and the principal bankers are Hang Seng Bank Limited[237] Management Discussion and Analysis Management is focused on capital structure optimization, debt reduction, and new business models, with post-period plans for asset disposal and capital restructuring Overview and Outlook Management is prudently balancing capital structure, reducing debt, and exploring new business models, with recent plans for asset disposal and capital restructuring - Company management deems it necessary to balance the overall capital structure by redeeming existing debts, including bank and other loans, shareholder loans, and convertible bonds[238] - In October 2024, the company entered into an equity transfer agreement with an independent third party to dispose of its entire equity interest in Jilin Guangze Tourism Development Co Ltd for a nominal consideration of RMB 1, aiming to reduce debt and financing costs[43] - In November 2024, the company proposed a capital reorganization, including share consolidation, par value reduction, and share subdivision, to adjust its capital structure[43] - Future plans include prudent operation of property development and management, development of Changbai Mountain resources (e.g., ginseng, mineral water), and exploration of online-to-offline consumer retail businesses[252] Business Review Revenue significantly increased by 193.6% to RMB 129.2 million, driven by property sales, while the company proceeds with property development and asset divestment 2024 Half-Year Business Performance | Indicator | Six Months Ended September 30, 2024 (RMB thousands) | Six Months Ended September 30, 2023 (RMB thousands) | Year-on-Year Growth Rate | | :--------- | :--------------------------------- | :--------------------------------- | :--------- | | Total Revenue | 129,200 | 44,000 | 193.6% | | Gross Profit | 18,300 | 15,800 | 15.8% | | Net Loss for the Period | (601,100) | (79,900) | 652.3% | - Property sales amounted to approximately RMB 95.1 million, covering a total gross floor area of 21,597 square meters, primarily from sales of Guangze Lanting Phase IIA[273] - Parking space sales amounted to approximately RMB 12.2 million (2023: RMB 2.4 million), with 67 parking spaces sold[273] - Fair value of investment properties decreased from RMB 486.2 million to RMB 479.7 million, with an average occupancy rate of 75% (March 31, 2024: 73%)[273] - The company decided to dispose of the Fusong property project and has entered into an equity transfer agreement to sell the entire equity interest in the project company[272] Financial Review Revenue grew substantially, but gross margin declined, and a significant loss was recorded due to property write-downs, worsening financial position and raising going concern issues - For the six months ended September 30, 2024, the Group recorded a net loss of RMB 601.1 million, and as of that date, the Group's net current liabilities and net liabilities were RMB 562.0 million and RMB 365.1 million respectively[208] - The carrying value of cash and bank balances was approximately RMB 10.1 million, a decrease of approximately 81.2% compared to March 31, 2024[101] - The capital gearing ratio (excluding disposal group) increased from 80% as of March 31, 2024, to 128% as of September 30, 2024, primarily due to a decrease in adjusted capital from accumulated losses[7] Key Changes to Profit or Loss Profit or loss saw significant revenue growth but reduced gross margin, increased other expenses due to property write-downs, and a substantial net loss Key Changes to Profit or Loss | Indicator | Six Months Ended September 30, 2024 (RMB thousands) | Six Months Ended September 30, 2023 (RMB thousands) | Change (RMB thousands) | Change Percentage | | :--------------- | :--------------------------------- | :--------------------------------- | :---------------- | :--------- | | Revenue | 129,233 | 44,002 | 85,231 | 193.6% | | Cost of Sales and Services | (110,972) | (28,161) | (82,811) | 294.0% | | Gross Profit | 18,261 | 15,841 | 2,420 | 15.3% | | Administrative Expenses | (18,345) | (22,068) | 3,723 | -16.9% | | Other Expenses | (642,440) | (989) | (641,451) | 64858.5% | | Loss Before Tax | (672,474) | (86,159) | (586,315) | 680.5% | | Loss for the Period | (601,140) | (79,919) | (521,221) | 652.2% | - Gross profit margin decreased from 36.0% to 14.1%, mainly due to the delivery of more properties with lower profit margins during the period[280] - Other expenses significantly increased to RMB 642.4 million, primarily due to the write-down of properties under development for the Fusong property project[53] - Finance costs decreased by RMB 4.0 million to RMB 21.2 million, mainly due to more interest being capitalized to properties under development during the period[56] - Fair value loss on investment properties was RMB 6.5 million (2023: RMB 28.0 million), primarily due to a decrease in the time value of leases and stable market rents[56] - Deferred tax recorded a tax credit of RMB 71.4 million, mainly due to the reversal of taxable temporary differences from the write-down of the Fusong property project and the decrease in fair value of investment properties[59] Key Changes to Financial Position Financial position deteriorated with reduced investment properties, significant write-downs of properties under development, increased net liabilities, and reduced cash - Fair value of investment properties decreased by RMB 6.5 million compared to March 31, 2024[59] - Properties under development and completed properties held for sale decreased to approximately RMB 337.5 million (March 31, 2024: approximately RMB 1.6068 billion), mainly due to the reclassification of the Fusong property project to the disposal group and a further write-down of RMB 637.9 million[268] - Net trade receivables decreased from RMB 7.106 million to RMB 6.162 million[64] - Trade payables and accrued construction costs decreased to RMB 35.9 million and RMB 242.2 million respectively, mainly due to settlement of construction payments and reclassification to liabilities associated with the disposal group[69] - Total contract liabilities decreased from RMB 166.5 million to RMB 73.2 million, primarily due to a reduction in property sales deposits from the delivery of Guangze Lanting Phase IIA[71][88] - Bank and other borrowings decreased by RMB 408.3 million, mainly due to the reclassification of certain bank and entrusted loans to liabilities associated with the disposal group classified as held for sale[3] - Commitments for development expenditure were RMB 75.1 million (March 31, 2024: RMB 93.3 million), to be funded by internal resources and/or project loans[34] - As of September 30, 2024, the Group had 173 full-time employees (March 31, 2024: 226), with total staff costs decreasing to approximately RMB 9.0 million (2023: RMB 9.7 million), mainly due to a reduction in headcount[41] Report on Review of Interim Financial Information This section presents the independent auditor's review and conclusion on the interim financial information, including an emphasis on going concern Auditor's Review and Conclusion The independent auditor reviewed the interim financial information in accordance with HKSRS 2410, concluding it was prepared in all material respects under HKAS 34 - The auditor conducted the review in accordance with Hong Kong Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity," issued by the Hong Kong Institute of Certified Public Accountants[111] - The auditor is not aware of any matter that causes them to believe the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[96] Emphasis of Matter - Going Concern The auditor highlights significant uncertainties regarding the company's going concern due to substantial losses, net liabilities, and tight cash flow - For the six months ended September 30, 2024, the company incurred a loss of RMB 601.1 million, and as of that date, net current liabilities and net liabilities were approximately RMB 561.9 million and RMB 365.1 million respectively[113] - The current portion of bank and other borrowings was RMB 12.3 million, while unrestricted cash and cash equivalents amounted to RMB 10.1 million[113] - These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern[98] - The Board has considered several measures, including negotiating renewals and new borrowings with financial institutions, expecting sufficient cash flows, planning the disposal of the Fusong property project, and obtaining continuous financial support from major shareholders, believing the Group can continue as a going concern[188][211] Condensed Consolidated Financial Statements This section provides the condensed consolidated financial statements, including profit or loss, comprehensive income, financial position, equity changes, and cash flows Condensed Consolidated Statement of Profit or Loss The company reported RMB 129.2 million in revenue and RMB 18.3 million in gross profit, but a RMB 601.1 million loss due to increased other expenses Condensed Consolidated Statement of Profit or Loss Summary | Indicator | Six Months Ended September 30, 2024 (RMB thousands) | Six Months Ended September 30, 2023 (RMB thousands) | | :--------------- | :--------------------------------- | :--------------------------------- | | Revenue | 129,233 | 44,002 | | Gross Profit | 18,261 | 15,841 | | Other Expenses | (642,440) | (989) | | Loss Before Tax | (672,474) | (86,159) | | Loss for the Period | (601,140) | (79,919) | | Basic Loss Per Share | (8.34) cents | (1.11) cents | Condensed Consolidated Statement of Comprehensive Income The company recorded a RMB 601.1 million loss for the period, resulting in a total comprehensive loss of RMB 593.9 million after exchange differences Condensed Consolidated Statement of Comprehensive Income Summary | Indicator | Six Months Ended September 30, 2024 (RMB thousands) | Six Months Ended September 30, 2023 (RMB thousands) | | :--------------- | :--------------------------------- | :--------------------------------- | | Loss for the Period | (601,140) | (79,919) | | Exchange Differences | 7,204 | (15,653) | | Total Comprehensive Loss for the Period | (593,936) | (95,572) | Condensed Consolidated Statement of Financial Position Total non-current assets slightly decreased, while current assets significantly dropped due to property reclassification and write-downs, leading to negative net current and total assets Condensed Consolidated Statement of Financial Position Summary | Indicator | September 30, 2024 (RMB thousands) | March 31, 2024 (RMB thousands) | | :------------------- | :------------------------- | :------------------------- | | Total Non-Current Assets | 506,014 | 516,901 | | Total Current Assets | 978,310 | 1,751,614 | | Total Current Liabilities | 1,540,267 | 1,643,598 | | Net Current (Liabilities) Assets | (561,957) | 108,016 | | Total Net (Liabilities) Assets | (365,062) | 228,874 | Condensed Consolidated Statement of Changes in Equity Total equity shifted from a positive RMB 228.9 million to a deficit of RMB 365.1 million, primarily driven by the substantial loss for the period Condensed Consolidated Statement of Changes in Equity Summary | Indicator | April 1, 2024 (RMB thousands) | September 30, 2024 (RMB thousands) | | :--------------- | :------------------------ | :------------------------ | | Share Capital | 311,453 | 311,453 | | Reserves | (180,884) | (774,820) | | Total Equity | 228,874 | (365,062) | - A loss for the period of RMB 601.1 million was the primary reason for the significant decrease in total equity[180] Condensed Consolidated Statement of Cash Flows Net cash outflows from operating, investing, and financing activities increased, leading to a significant decrease in cash and cash equivalents at period-end Condensed Consolidated Statement of Cash Flows Summary | Indicator | Six Months Ended September 30, 2024 (RMB thousands) | Six Months Ended September 30, 2023 (RMB thousands) | | :------------------- | :--------------------------------- | :--------------------------------- | | Net Cash Outflow from Operating Activities | (26,660) | (5,214) | | Net Cash Outflow from Investing Activities | (573) | – | | Net Cash Outflow from Financing Activities | (16,211) | 13,624 | | Net Change in Cash and Cash Equivalents | (43,444) | 8,410 | | Cash and Cash Equivalents at End of Period | 10,068 | 78,371 | Notes to the Condensed Consolidated Financial Statements This section provides detailed notes explaining the basis of preparation, accounting policies, segment information, and other financial disclosures General Information Huayin International Holdings Limited and its subsidiaries primarily engage in property development and management and property investment businesses, mainly operating within China - The company primarily engages in investment holding, while the Group's main activities are property development and management (including planning, design, budgeting, licensing, contract tendering, and contract management) and property investment, primarily conducted in China[205] Basis of Preparation Interim financial information is prepared under HKAS 34 on a going concern basis, despite significant uncertainties, supported by management's mitigating actions - The interim financial information is prepared in accordance with the applicable disclosure requirements of Appendix D2 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[207] - The company recorded a net loss of RMB 601.1 million for the six months ended September 30, 2024, and had net current liabilities and net liabilities, indicating a material uncertainty regarding its ability to continue as a going concern[208] - Management has taken measures, including negotiating loan renewals with financial institutions, expecting sufficient cash flows, planning the disposal of the Fusong property project, and obtaining continuous financial support from major shareholders, to maintain going concern[211] Change in Accounting Policies New/revised HKFRSs adopted this period had no material impact, and the board is assessing future effects of unadopted standards - The adoption of new/revised Hong Kong Financial Reporting Standards relevant to the Group and effective from the current period had no material impact on the Group's results and financial position for the current and prior accounting periods[215] - The directors are assessing the potential impact of new/revised Hong Kong Financial Reporting Standards not yet effective for future adoption but are not yet able to reasonably estimate their impact on the Group's results and financial position[214] Operating Segment Information The group operates in property development/management and property investment in China, with the former showing significant revenue growth but also expanded losses - The Group's principal operating segments include property development and management (engaging in property development and providing management services in China) and property investment (holding properties for long-term investment and leasing purposes in China)[220] 2024 Half-Year Segment Performance | Indicator | Property Development and Management (RMB thousands) | Property Investment (RMB thousands) | Total (RMB thousands) | | :--------- | :-------------------------- | :-------------------- | :---------------- | | Segment Revenue | 122,497 | 6,736 | 129,233 | | Segment Results | (642,754) | (924) | (643,678) | Revenue and Other Income Revenue primarily stemmed from property sales, which significantly increased, alongside property management and rental income, with other income from miscellaneous sources 2024 Half-Year Revenue Composition | Revenue Source | Six Months Ended September 30, 2024 (RMB thousands) | Share (%) | Six Months Ended September 30, 2023 (RMB thousands) | Share (%) | | :--------------- | :--------------------------------- | :------- | :--------------------------------- | :------- | | Property Sales | 107,352 | 83.1 | 21,009 | 47.8 | | Rental Income | 6,736 | 5.2 | 6,444 | 14.6 | | Property Management Service Income | 15,145 | 11.7 | 16,549 | 37.6 | | Total | 129,233 | 100.0 | 44,002 | 100.0 | - Total other income was RMB 313 thousand, primarily comprising miscellaneous income of RMB 305 thousand and exchange gains of RMB 8 thousand[602] Finance Costs Total finance costs decreased to RMB 21.219 million, mainly due to increased capitalization of interest to properties under development 2024 Half-Year Finance Costs Composition | Finance Cost Item | Six Months Ended September 30, 2024 (RMB thousands) | Six Months Ended September 30, 2023 (RMB thousands) | | :------------------- | :--------------------------------- | :--------------------------------- | | Interest on Bank and Other Borrowings | 27,241 | 24,182 | | Interest on Convertible Bonds | 4,886 | 2,752 | | Interest on Lease Liabilities | 1,686 | 817 | | Interest on Substantial/Controlling Shareholder Loans | 517 | 512 | | Less: Interest Capitalized to Properties Under Development | (13,111) | (3,100) | | Total Finance Costs | 21,219 | 25,163 | - Borrowing costs were capitalized at an annual interest rate ranging from 7.5% to 10% (2023: 7.3% to 7.35%)[608] Loss Before Tax The company reported a loss before tax of RMB 672.5 million, primarily influenced by property costs, write-downs of properties under development, and depreciation 2024 Half-Year Loss Before Tax Composition | Item | Six Months Ended September 30, 2024 (RMB thousands) | Six Months Ended September 30, 2023 (RMB thousands) | | :------------------- | :--------------------------------- | :--------------------------------- | | Cost of Properties Sold | 103,299 | 18,696 | | Write-down of Properties Under Development to Net Realizable Value | 637,925 | – | | Depreciation of Property, Plant and Equipment | 112 | 110 | | Depreciation of Right-of-Use Assets | 1,930 | 976 | Income Tax The company recorded an income tax credit of RMB 71.334 million, mainly from deferred tax adjustments, with no Hong Kong profits tax and Chinese corporate income tax provided at 25% 2024 Half-Year Income Tax Composition | Item | Six Months Ended September 30, 2024 (RMB thousands) | Six Months Ended September 30, 2023 (RMB thousands) | | :------------------- | :--------------------------------- | :--------------------------------- | | PRC Corporate Income Tax | 94 | – | | Initial and Reversal of Temporary Differences | (71,428) | (6,240) | | Total Credit | (71,334) | (6,240) | - No provision for Hong Kong profits tax was made as there was no assessable profit, while PRC corporate income tax was provided at the statutory rate of 25%[611] - No provision for land appreciation tax was made as it did not meet the levy requirements of relevant PRC tax laws and regulations[614] - The estimated withholding tax impact on unremitted retained earnings of PRC subsidiaries was approximately RMB 13.5 million, but directors believe these earnings will be used for ongoing operations and not distributed in the short term, thus no deferred tax provision was made[633] Loss Per Share Basic and diluted loss per share both expanded significantly to RMB 8.34 cents, reflecting the increased loss for the period Loss Per Share Summary | Indicator | Six Months Ended September 30, 2024 | Six Months Ended September 30, 2023 | | :----------- | :-------------------- | :-------------------- | | Basic Loss Per Share | (8.34) cents | (1.11) cents | | Diluted Loss Per Share | (8.34) cents | (1.11) cents | - Basic loss per share was calculated based on the loss attributable to owners of the parent of RMB 601.1 million and the weighted average of 7,203,639,000 ordinary shares outstanding[636] - The calculation of diluted loss per share did not consider the dilutive effect of convertible bonds and unexercised share options because their exercise prices were higher than the company's average share price[615] Dividend The Board did not declare any interim dividend for the six months ended September 30, 2024 - The directors did not declare any interim dividend for the six months ended September 30, 2024 (2023: nil)[615] Investment Properties Investment properties, mainly retail units and parking spaces in Jilin, saw a decrease in fair value, with some pledged as collateral for bank loans Investment Properties Fair Value Changes | Indicator | September 30, 2024 (RMB thousands) | March 31, 2024 (RMB thousands) | | :--------------- | :------------------------- | :------------------------- | | Beginning Balance | 486,200 | 550,400 | | Net Fair Value Adjustment Loss | (6,500) | (64,200) | | Ending Balance | 479,700 | 486,200 | - Investment properties are stated at fair value and valued by Colliers International Land and Real Estate Valuation Limited, an independent professional qualified valuer[328] - As of September 30, 2024, investment properties with a total carrying value of RMB 350.4 million were pledged to banks as collateral for certain bank loans[310] Properties Under Development and Completed Properties Held for Sale The carrying value of properties under development and held for sale significantly decreased due to reclassification and write-downs of the Fusong property project Carrying Value of Properties Under Development and Completed Properties Held for Sale | Item | September 30, 2024 (RMB thousands) | March 31, 2024 (RMB thousands) | | :--------------- | :------------------------- | :------------------------- | | Properties Under Development | 223,913 | 2,059,053 | | Completed Properties Held for Sale | 155,862 | 121,053 | | Write-down to Net Realizable Value | (42,244) | (573,303) | | Total | 337,531 | 1,606,803 | - The carrying value of properties under development for the Fusong property project, RMB 541.2 million, was reclassified to "Assets related to disposal group classified as held for sale" and further written down by approximately RMB 637.9 million[407] - As of September 30, 2024, completed properties with a carrying value of RMB 8.8 million were pledged to banks[315] Trade and Other Receivables Net trade receivables and other receivables decreased, with increased impairment provisions due to deteriorating economic conditions and reclassification to disposal group assets Trade and Other Receivables Summary | Item | September 30, 2024 (RMB thousands) | March 31, 2024 (RMB thousands) | | :------------------- | :------------------------- | :------------------------- | | Net Trade Receivables | 6,162 | 7,106 | | Total Other Receivables | 58,773 | 69,215 | | Total | 64,935 | 76,321 | - Trade receivables primarily relate to rents due from tenants and property management fees due from property unit owners, with balances remaining stable[411] - Impairment provisions increased due to a significant increase in credit risk from the deteriorating local economic environment in Jilin Province and the extended aging of certain debtors[66] - Impairment provisions of RMB 46.8 million were reclassified to assets related to the disposal group classified as held for sale[66] Cash and Cash Equivalents and Pledged and Restricted Deposits Cash and bank balances significantly decreased, with most denominated in RMB and some restricted due to pre-sale property policies Cash and Deposits Summary | Item | September 30, 2024 (RMB thousands) | March 31, 2024 (RMB thousands) | | :------------------- | :------------------------- | :------------------------- | | Pledged and Restricted Bank Deposits | (3,794) | (5,366) | | Cash and Cash Equivalents | 10,065 | 53,635 | | Cash and Cash Equivalents Attributable to Disposal Group | 3 | – | | As Stated in Condensed Consolidated Statement of Cash Flows | 10,068 | 53,635 | - In accordance with local land and resources bureau policies in China, the company is required to place certain portions of pre-sale property proceeds as deposits for property construction, with restrictions to be released upon completion of construction[304] - As of the end of the reporting period, cash and bank balances denominated in RMB amounted to RMB 5.8 million (March 31, 2024: RMB 8.9 million)[304] Trade and Other Payables Trade payables and accrued construction costs decreased due to settlement of construction payments and reclassification to disposal group liabilities Trade and Other Payables Summary | Item | September 30, 2024 (RMB thousands) | March 31, 2024 (RMB thousands) | | :--------------- | :------------------------- | :------------------------- | | Trade Payables | 35,923 | 49,192 | | Accrued Construction Costs | 242,157 | 301,670 | | Accrued Interest | 27,662 | 30,085 | | Other Payables and Accruals | 41,630 | 53,732 | | Other Deposits Received | 55,703 | 56,118 | | Total | 403,075 | 490,797 | - The net decrease in trade payables and accrued construction costs was primarily attributable to the settlement of construction payments during the period and RMB 48.4 million reclassified to liabilities associated with the disposal group classified as held for sale[69] Contract Liabilities Total contract liabilities significantly decreased, primarily due to a reduction in property sales deposits related to the delivery of Guangze Lanting Phase IIA Contract Liabilities Summary | Item | September 30, 2024 (RMB thousands) | March 31, 2024 (RMB thousands) | | :--------------- | :------------------------- | :------------------------- | | Deposits for Property Sales | 59,376 | 150,697 | | Advance Receipts for Management Services | 13,866 | 15,755 | | Total | 73,242 | 166,452 | - The decrease in deposits for property sales was mainly due to the delivery of Guangze Lanting Phase IIA during the period[89] Loans from a Substantial/Controlling Shareholder and Related Parties Total loans from a substantial/controlling shareholder amounted to RMB 337.9 million, mostly interest-free, with related party loans being unsecured and repayable on demand Substantial/Controlling Shareholder Loans Summary | Item | September 30, 2024 (RMB thousands) | March 31, 2024 (RMB thousands) | | :----------- | :------------------------- | :------------------------- | | Interest-Free | 337,947 | 329,414 | | Interest-Bearing | – | 15,435 | | Total | 337,947 | 344,849 | - Related party loans are unsecured, interest-free, and repayable within one year or on demand[375] Bank and Other Borrowings Total bank and other borrowings decreased significantly to RMB 243.3 million, comprising current and non-current portions, largely secured, with some reclassified to the disposal group Bank and Other Borrowings Summary | Item | September 30, 2024 (RMB thousands) | March 31, 2024 (RMB thousands) | | :--------------- | :------------------------- | :------------------------- | | Current Bank Loans | 12,340 | 420,640 | | Non-Current Bank Loans | 230,980 | 230,990 | | Total | 243,320 | 651,630 | - As of September 30, 2024, bank and other borrowings decreased by RMB 408.3 million, mainly due to the reclassification of certain bank and entrusted loans to liabilities associated with the disposal group classified as held for sale[3] - Some bank loans are secured by completed properties held for sale, equity interests in subsidiaries, and investment properties, and are guaranteed by related parties (individuals and corporations)[578] - Entrusted loans are secured by properties under development and guaranteed by related parties (corporations), and have been reclassified to liabilities associated with the disposal group[378] Derivative Financial Instruments and Convertible Bonds The company holds 2021 and 2023 convertible bonds, with early redemption rights classified as derivative financial instruments and re-measured at fair value - The 2021 convertible bonds have a total principal amount of HKD 103.1 million, with an initial maturity date of June 13, 2023, extended by 18 months to December 14, 2024, bearing an annual interest rate of 2%[396] - The 2023 convertible bonds have a total principal amount of HKD 60.0 million, with a maturity date of June 22, 2026, bearing an annual interest rate of 6%[399] - The early redemption option embedded in the convertible bonds is considered not closely related to the host debt component and is therefore accounted for separately as a derivative financial instrument, re-measured at fair value[383] Convertible Bonds Liability Component Changes | Item | September 30, 2024 (RMB thousands) | | :--------------- | :------------------------- | | April 1, 2024 | 141,676 | | September 30, 2024 | 139,638 | - As of September 30, 2024, the total principal amount of convertible bonds was approximately HKD 163.1 million, which, if fully exercised, could be converted into 399.1 million ordinary shares, representing approximately 5.5% of the issued share capital[429] Share Capital As of September 30, 2024, the company's authorized share capital was 15.6 billion ordinary shares of HKD 0.05 each, with 7.2036 billion shares issued and unchanged from March 31, 2024 Share Capital Summary | Item | Number of Ordinary Shares ('000) | Par Value (HKD thousands) | RMB thousands | | :--------------- | :----------------- | :------------ | :--------- | | Authorized Share Capital | 15,600,000 | 780,000 | 684,000 | | Issued Share Capital | 7,203,639 | 360,182 | 311,453 | Disposal Group Classified as Held for Sale The board approved the sale of Fusong property project, reclassifying its assets and liabilities as held for sale, with an agreement to sell for RMB 1 - The disposal group comprises Jilin Guangze Tourism Development Co Ltd and its three subsidiaries, sold for RMB 1[449] Principal Assets and Liabilities of Disposal Group | Item | September 30, 2024 (RMB thousands) | | :--------------- | :------------------------- | | Properties Under Development | 541,200 | | Bank and Other Borrowings | 408,300 | - No gain or loss arising from the initial recognition and subsequent measurement of the disposal group classified as held for sale was recognized in the consolidated statement of comprehensive income during the period[450] - The disposal group's bank and other borrowings include secured bank loans and entrusted loans, some secured by properties under development and guaranteed by related parties[452][439] Contingent Liabilities The company provided mortgage loan guarantees of RMB 177.1 million for property buyers, with directors deeming default risk low and no provision made - As of September 30, 2024, the amount of guarantees provided to banks for mortgage loans granted to property unit buyers was RMB 177.1 million (March 31, 2024: RMB 213.1 million)[440] - The directors believe the likelihood of buyers defaulting on payments is extremely low, and the net realizable value of the related property units would be sufficient to repay the outstanding mortgage loans, thus no provision has been made for these guarantees[440] Related Party Transactions The company engages in various related party transactions, including rental and management fee payments to entities controlled by the controlling shareholder's family, and interest payments on convertible bonds 2024 Half-Year Related Party Transactions Summary | Transaction Type | Six Months Ended September 30, 2024 (RMB thousands) | Six Months Ended September 30, 2023 (RMB thousands) | | :------------------- | :--------------------------------- | :--------------------------------- | | Rent Expenses Paid - Vehicles | 349 | 349 | | Rent Expenses Paid - Office Properties | 199 | 198 | | Building Management Fees Paid - Office Properties | 20 | 20 | | Coupon Interest on Convertible Bonds | 1,346 | 895 | | Total Remuneration Paid to Key Management Personnel | 3,942 | 4,310 | - Related party transactions involving rental expenses and building management fees constitute continuing connected transactions as defined under Chapter 14A of the Listing Rules and are exempt from reporting, announcement, and independent shareholders' approval requirements[476] Commitments As of September 30, 2024, the company had contracted but unprovided development expenditure commitments of RMB 75.135 million for properties under development Development Expenditure Commitments Summary | Item | September 30, 2024 (RMB thousands) | March 31, 2024 (RMB thousands) | | :--------------- | :------------------------- | :------------------------- | | Properties Under Development | 75,135 | 93,265 | Fair Value and Fair Value Hierarchy of Financial Instruments Differences exist between the carrying and fair values of financial instruments, with derivatives valued using a binomial option pricing model influenced by unobservable inputs like expected volatility Comparison of Carrying Value and Fair Value of Financial Instruments | Item | September 30, 2024 Carrying Value (RMB thousands) | September 30, 2024 Fair Value (RMB thousands) | | :------------------- | :------------------------------- | :------------------------------- | | Derivative Financial Instruments | 391 | 391 | | Loans from Substantial/Controlling Shareholder | 337,947 | 337,947 | | Bank and Other Borrowings | 243,320 | 247,912 | | Convertible Bonds Liability Component | 139,638 | 160,076 | - The fair value of bank and other borrowings and the convertible bonds liability component is calculated by discounting expected future cash flows[463] - The fair value of the early redemption option embedded in the convertible bonds is determined using a binomial option pricing model, with the key unobservable input being expected volatility (September 30, 2024: 121.8% to 145.4%)[488][467] Approval of the Interim Condensed Consolidated Financial Statements The interim condensed consolidated financial statements for the six months ended September 30, 2024, were authorized for issue by the Board on November 28, 2024 - The Group's interim condensed consolidated financial statements for the six months ended September 30, 2024, were authorized for issue by the Company's Board of Directors on November 28, 2024[508] Other Information This section covers corporate governance, directors' securities transactions, and interests of directors, chief executive, and substantial shareholders Corporate Governance Code The Board confirmed compliance with all applicable code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules during the reporting period - The Board believes that the company has applied the principles of the applicable code provisions of the Corporate Governance Code as set out in Appendix C1 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and has complied with all applicable code provisions during the reporting period[495] Code for Securities Transactions by Directors The company adopted the Model Code for Securities Transactions by Directors of Listed Issuers, with all directors confirming compliance during the reporting period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules as its code of conduct for directors' dealings in the company's securities[495] - Following specific inquiries made by the company, all directors confirmed compliance with the required standards set out in the Model Code during the reporting period[495] Directors' and Chief Executive's Interests in Securities Directors and the chief executive held interests in company shares, with Ms. Cui Xintong and Mr. Li Qiangyi holding significant stakes through controlled corporations and trusts Directors' and Chief Executive's Interests in Ordinary Shares | Name | Nature of Interest | Position | Number of Shares Held | Approximate Percentage | | :----------- | :--------------- | :--- | :----------------- | :--------- | | Ms. Cui Xintong | Interest in Controlled Corporation | Long | 2,229,101,065 | 30.94% | | Mr. Cui Mindong | Spouse's Interest | Long | 850,000 | 0.01% | | Mr. Xu Yingchuan | Beneficial Owner | Long | 1,000,000 | 0.01% | - Ms. Cui Xintong is deemed to have an interest in the company's securities held by Meicheng and Jiayi through Ground Trust, which she established as settlor and protector[101] - Jiayi entered into a sale and purchase agreement on July 29, 2022, to dispose of a total of 3.3 billion shares, but as of September 30, 2024, some transactions remained incomplete, and Jiayi remained the legal and beneficial owner of 1.66 billion shares[101] Substantial Shareholders' Interests in Securities Substantial shareholders, including Charm Success, Ka Yik, and TMF (Cayman) Ltd., held significant interests in the company's shares as of September 30, 2024 Substantial Shareholders' Interests in Ordinary Shares | Shareholder Name/Entity | Nature of Interest | Position | Number of Shares Held | Approximate Percentage | | :------------------- | :--------------- | :--- | :----------------- | :--------- | | Charm Success | Registered Owner | Long | 434,320,694 | 6.03% | | Ka Yik | Registered Owner | Long | 1,794,780,371 | 24.91% | | TMF (Cayman) Ltd. | Trustee | Long | 2,229,101,065 | 30.94% | | Deep Wealth Holding Limited | Interest in Controlled Corporation | Long | 2,229,101,065 | 30.94% | | Mr. Li Qiangyi | Spouse's Interest | Long | 2,229,101,065 | 30.94% | | Mr. Sui Guangyi | Interest in Controlled Corporation | Long | 1,042,000,000 | 14.46% | | Hong Kong Haofu Investment Co., Limited | Registered Owner | Long | 1,042,000,000 | 14.46% | | Benhui Asset Management (Asia) Limited | Beneficial Owner | Long | 647,398,307 | 8.99% | | Mr. Jiang Jinbo | Interest in Controlled Corporation and Beneficial Owner | Long | 630,000,000 | 8.75% | - Ms. Cui Xintong is deemed to have an interest in the shares held by Charm Success and Ka Yik through Ground Trust[107] - Mr. Sui Guangyi holds shares in Dingyifeng Holdings Group International Limited through wholly-owned subsidiaries including Hong Kong Haofu Investment Co., Limited[109] Share Option Scheme During the period, 36 million share options lapsed, leaving 15.4 million outstanding, with no new options available for grant as the scheme expired in 2022 Share Option Scheme Movement Summary | Grantee | Number of Options as of April 1, 2024 | Cancelled/Lapsed During Period | Number of Options as of September 30, 2024 | | :----- | :--------------------- | :------------ | :---------------------- | | Employees | 30,000,000 | 30,000,000 | – | | Others | 21,400,000 | 6,000,000 | 15,400,000 | | Total | 51,400,000 | 36,000,000 | 15,400,000 | - 36,000,000 share options granted on June 19, 2014, lapsed during the period[566] - The share option scheme expired on September 5, 2022, and no share options are available for grant under the scheme[566] Purchase, Sale or Redemption of the Company's Listed Securities Neither the company nor its subsidiaries purchased, sold, or redeemed any of its listed securities during the six months ended September 30, 2024 - For the six months ended September 30, 2024, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[552] Review of the Interim Results The unaudited interim financial information for the six months ended September 30, 2024, was reviewed by the company's auditor and the Audit Committee - The unaudited interim financial information for the six months ended September 30, 2024, has been reviewed by the company's auditor, Fruition Partners CPA Limited, in accordance with Hong Kong Standard on Review Engagements 2410[572] - The Group's interim financial information for the six months ended September 30, 2024, has also been reviewed by the Audit Committee[572]