远洋集团(03377) - 2025 - 中期业绩

Performance Highlights The Group delivered approximately 12,000 residential units and achieved a profit attributable to owners of RMB 10.202 billion, primarily due to non-cash gains from offshore debt restructuring - The Group continued to ensure delivery, completing approximately 12,000 residential units during the period[2] - Profit attributable to owners of the Company was RMB 10.202 billion, compared to a loss of RMB 5.382 billion in the same period last year, mainly due to non-cash gains from completing offshore debt restructuring[2] - Offshore debt restructuring was completed during the period, with total loans decreasing to RMB 66.997 billion and total equity increasing to RMB 8.227 billion[2] 2025 H1 Performance Highlights | Indicator | Amount (RMB) | YoY Change | Remarks | | :--- | :--- | :--- | :--- | | Contracted Sales | 13.370 billion yuan | down 27% | | | Revenue | 6.203 billion yuan | down 53% | Asset-light business revenue share increased to 45% | | Gross Loss | 4.966 billion yuan | - | | | Profit Attributable to Owners of the Company | 10.202 billion yuan | turned loss into profit | Mainly from non-cash gains of offshore debt restructuring | | Total Loans | 66.997 billion yuan | decreased | Offshore debt restructuring completed | | Total Equity | 8.227 billion yuan | increased | Offshore debt restructuring completed | 2025 Interim Results The Group's H1 2025 revenue decreased by 53% to RMB 6.203 billion due to market adjustments, while profit attributable to owners turned positive at RMB 10.202 billion - Affected by the continuous adjustment in the domestic real estate market, the Group's H1 2025 revenue was RMB 6.203 billion, a 53% year-on-year decrease[4] - Profit attributable to owners of the Company was RMB 10.202 billion, with basic and diluted earnings per share of RMB 1.171 and RMB 0.919, respectively[4] 2025 H1 Key Financial Data | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 6.203 billion yuan | 13.313 billion yuan | down 53% | | Gross Loss/(Profit) | 4.966 billion yuan (loss) | 0.297 billion yuan (profit) | turned to loss | | Profit/(Loss) Attributable to Owners of the Company | 10.202 billion yuan (profit) | 5.382 billion yuan (loss) | turned loss into profit | | Basic Earnings/(Loss) Per Share | 1.171 yuan | -0.707 yuan | turned loss into profit | | Diluted Earnings/(Loss) Per Share | 0.919 yuan | -0.707 yuan | turned loss into profit | Market Review and Outlook China's real estate market remained in deep adjustment in H1 2025, with sales declining, and the second half is expected to continue market risk resolution and focus on asset-light business opportunities - In H1 2025, China's real estate market was in a deep adjustment phase, with homebuyer demand needing a boost, industry growth momentum facing challenges, and overall operations remaining at a low level[5] - National commercial property sales amounted to approximately RMB 4.4 trillion, a 5.5% year-on-year decrease, and a 52% decrease compared to the same period in 2021[5] - Looking ahead to H2, the market is expected to take time to turn around, with industry risks in the process of being cleared[6] - The industry will fully enter a new stage of improving quality and efficiency of existing assets, with business opportunities emerging in commercial and asset management, elderly care services, property services, urban renewal, and disposal of existing assets[6] Financial Review A comprehensive review of the Group's financial performance, including revenue composition, costs, other income/losses, expenses, and liquidity, highlighting the impact of market adjustments and debt restructuring Analysis of Revenue Components The Group's H1 2025 revenue decreased by approximately 53% to RMB 6.203 billion, with property development remaining the largest contributor at 53% and asset-light businesses increasing to 45% 2025 H1 Revenue Composition | Business Segment | 2025 (RMB million) | 2024 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Property Development | 3,296 | 10,300 | -68% | | Property Investment | 144 | 181 | -20% | | Property Management and Related Services | 1,348 | 1,361 | -1% | | Other Real Estate Related Businesses | 1,415 | 1,471 | -4% | | Total | 6,203 | 13,313 | -53% | - Property development revenue accounted for approximately 53% of total revenue, mainly from Beijing (29%), Central China (22%), Southern China (20%), and Bohai Rim (18%) regions[7] - Property management and related services cover property management services, community value-added services, and non-owner value-added services[8] - Other real estate related businesses include full industry chain services for construction, data real estate, and elderly care services[9] Cost of Sales and Gross Loss The Group's H1 2025 total cost of sales decreased, but a gross loss of RMB 4.966 billion was recorded, with a gross loss margin of approximately 80%, mainly due to market adjustments and increased inventory impairment Cost of Sales and Gross Loss | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Total Cost of Sales | 11.169 billion yuan | 13.016 billion yuan | down 14.2% | | Average Land Cost for Property Development (excluding parking spaces) | 6,300 yuan/square meter | 8,400 yuan/square meter | down 25% | | Average Construction Cost for Property Development (excluding parking spaces) | 5,700 yuan/square meter | 5,800 yuan/square meter | largely flat | | Gross Loss/(Profit) | 4.966 billion yuan (loss) | 0.297 billion yuan (profit) | turned to loss | | Gross Loss Margin/(Gross Profit Margin) | 80% (loss) | 2% (profit) | turned to loss | - The decrease in average land cost for property development was mainly due to fewer projects in first-tier and core second-tier cities being recognized in H1 2025[9] - The gross loss was mainly due to the continuous adjustment in the domestic real estate market, leading to no significant recovery in industry gross profit margins and increased impairment provisions for inventories[11] Other Income and Losses Interest and other income increased by 27% to RMB 448 million, while other losses (net) significantly rose to RMB 3.326 billion, driven by fair value losses on financial assets/liabilities, litigation provisions, and goodwill impairment Other Income and Losses | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Interest and Other Income | 0.448 billion yuan | 0.353 billion yuan | up 27% | | Other Losses (Net) | 3.326 billion yuan | 0.479 billion yuan | significantly increased | | Offshore Debt Restructuring Gain | 31.756 billion yuan | N/A | newly added | | Decrease in Fair Value of Investment Properties | 0.644 billion yuan | 0.293 billion yuan | increased 120% | - Other losses (net) primarily included fair value losses on financial assets and liabilities at fair value through profit or loss, litigation provisions, and goodwill impairment losses[12] - An offshore debt restructuring gain of RMB 31.756 billion was recorded, which was a one-off non-cash gain[12] Expenses and Impairment H1 2025 sales and marketing expenses increased to RMB 361 million, while administrative expenses slightly decreased but rose as a percentage of revenue; impairment losses under ECL model significantly increased to RMB 9.725 billion due to market adjustments Expenses and Impairment | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Selling and Marketing Expenses | 0.361 billion yuan | 0.282 billion yuan | increased 27.9% | | Proportion of Contracted Sales | 2.7% | 1.5% | up | | Administrative Expenses | 0.632 billion yuan | 0.658 billion yuan | down 4% | | Proportion of Total Revenue | 10.2% | 4.9% | up | | Net Impairment Losses under Expected Credit Loss Model | 9.725 billion yuan | 0.297 billion yuan | significantly increased | | Corporate Income Tax and Deferred Income Tax | 0.162 billion yuan (credit) | 0.216 billion yuan (expense) | turned to credit | | Land Appreciation Tax | 0.081 billion yuan | -0.646 billion yuan (credit) | turned to expense | - The increase in selling and marketing expenses was mainly due to the increase in new project launches in first-tier cities during the period[13] - The tax credit recorded was mainly due to a combination of factors such as decreased revenue and gross loss during the reporting period[16] Finance Costs and Profitability H1 2025 weighted average interest rate increased to 5.84%, while total interest expenses slightly decreased; profit attributable to owners was RMB 10.202 billion, primarily driven by non-cash gains from offshore debt restructuring Finance Costs and Profitability | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Weighted Average Interest Rate | 5.84% | 5.60% | up | | Total Interest Paid or Accrued | 2.765 billion yuan | 2.813 billion yuan | down 1.7% | | Interest Not Capitalized and Expensed | 2.065 billion yuan | 1.948 billion yuan | up 6% | | Profit/(Loss) Attributable to Owners of the Company | 10.202 billion yuan (profit) | 5.382 billion yuan (loss) | turned loss into profit | - Excluding the one-off offshore debt restructuring gain, the Group would have recorded a loss attributable to owners of the Company during the period[17] Liquidity and Debt Structure As of June 30, 2025, the Group's total cash resources were RMB 5.831 billion, with a current ratio of 0.93 and a net gearing ratio of approximately 743%; total loans decreased to RMB 66.997 billion due to offshore debt restructuring Liquidity and Debt Structure | Indicator | June 30, 2025 (RMB) | December 31, 2024 (RMB) | Change | | :--- | :--- | :--- | :--- | | Total Cash Resources | 5.831 billion yuan | - | - | | Current Ratio | 0.93 | - | - | | Net Gearing Ratio | approx. 743% | - | - | | Total Loans | 66.997 billion yuan | 98.373 billion yuan | down 31.9% | | Loans Due Within 1 Year | 41.676 billion yuan (62%) | 65.935 billion yuan (67%) | decreased | | Total Pledged Assets as % of Total Assets | approx. 45% | 40% | up | | Total Mortgage Loan Guarantees | 11.711 billion yuan | 12.716 billion yuan | down 7.9% | - Approximately 98% of cash resources were in RMB, with the remainder mainly in USD and HKD[18] - Approximately 68% of loans were fixed-rate, and approximately 85% of loans were in RMB[19][20] - The Group bears net currency risk from exchange rate fluctuations, prudently uses non-RMB currency loans, and will continue to monitor exchange rate movements[20] Business Review A review of the Group's core business segments, including property development and investment properties, highlighting operational performance, sales, land bank, and strategic initiatives Property Development H1 2025 property development revenue decreased by approximately 68% to RMB 3.296 billion, with contracted sales down 27% to RMB 13.370 billion, while average selling price increased due to more first-tier city project launches Key Property Development Data | Indicator | 2025 H1 | 2024 H1 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 3.296 billion yuan | 10.300 billion yuan | down 68% | | Deliverable Saleable GFA | 340,000 square meters | 755,000 square meters | down 55% | | Average Recognized Sales Price (excluding parking spaces) | 11,000 yuan/square meter | 15,000 yuan/square meter | down 26.7% | | Contracted Sales | 13.370 billion yuan | 18.330 billion yuan | down 27% | | Saleable GFA | 849,000 square meters | 1,514,100 square meters | down 44% | | Average Selling Price (excluding parking spaces) | 18,900 yuan/square meter | 13,400 yuan/square meter | up 41% | | Total Land Bank (as of June 30, 2025) | 27,232,000 square meters | 31,072,000 square meters (as of Dec 31, 2024) | down 12.4% | | Attributable Portion of Land Bank (as of June 30, 2025) | 14,592,000 square meters | 16,464,000 square meters (as of Dec 31, 2024) | down 11.4% | | Average Land Cost of Land Bank (as of June 30, 2025) | 6,400 yuan/square meter | 6,200 yuan/square meter (as of Dec 31, 2024) | up 3.2% | - The decrease in average recognized sales price was mainly due to fewer projects in first-tier and core second-tier cities being recognized in 2025[23] - The increase in average selling price was mainly due to more first-tier city projects launched in H1 2025[26] - In H1 2025, there were approximately 130 saleable projects, with contracted sales from first- and second-tier cities accounting for approximately 94% of the total[26] - In H1 2025, the Group and its joint ventures and associates did not acquire any new land[30] Investment Properties H1 2025 property investment revenue decreased by approximately 20% to RMB 144 million; the Group holds over 23 operating investment properties and continues to pursue an asset-light strategy to enhance cash recovery Investment Property Revenue | Indicator | 2025 H1 (RMB) | 2024 H1 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Property Investment Revenue | 0.144 billion yuan | 0.181 billion yuan | decreased 20% | - As of June 30, 2025, the Group and its joint ventures and associates collectively held over 23 operating investment properties[37] - Wuhan Sino-Ocean Li officially opened in April 2025; the Group will continue to advance its asset-light strategy for investment properties to strengthen cash recovery[37] Employees and Human Resources The total number of employees decreased to 12,218, mainly due to the Group's continuous streamlining of its core development business and related operations, while maintaining a performance-oriented compensation and incentive mechanism Changes in Employee Numbers | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Employees | 12,218 people | 12,586 people | decreased by 368 people | - The decrease in employee numbers was mainly due to the Group's continuous streamlining of personnel in its core development business and related operations[39] - The Group adheres to a performance-oriented compensation philosophy and incentive mechanism, focusing limited resources on frontline teams and key performance contributors who ensure property delivery, mitigate risks, and enhance revenue[40] Completion of Overall Debt Management for Relevant Offshore Debts The offshore debt restructuring became effective on March 27, 2025, involving the release and discharge of approximately USD 6.315 billion in debt, significantly reducing leverage and alleviating offshore liquidity pressure - The offshore debt restructuring became effective on March 27, 2025, involving the release and discharge of approximately USD 6.315 billion of in-scope debt[42] - The consideration included new debt (new loans and new notes) with a principal amount of USD 2.2 billion and mandatory convertible bonds and/or new perpetual securities totaling approximately USD 4.115 billion[42] - Following the successful implementation of the offshore debt restructuring, the Group's leverage was reduced by approximately USD 4 billion, its asset-liability structure significantly improved, and offshore liquidity pressure was substantially alleviated[42] Information on Domestic Public Market Debts The Group is advancing a comprehensive restructuring plan for its domestic public market debts, including adjusting principal and interest payment arrangements and offering various settlement options to bondholders - The first bondholder meeting for four domestic corporate bonds in 2025 was effectively convened, approving proposals such as adjusting principal and interest payment arrangements[44] - Sino-Ocean Holdings will provide an overall restructuring plan for holders of outstanding domestic corporate bonds and interbank directional debt financing instruments (target bonds), adjusting principal and interest repayment arrangements and offering multiple settlement options including cash repurchase, equity economic interest rights, and asset-for-debt swaps[45] - Seven outstanding corporate bonds of Sino-Ocean Holdings were suspended from trading on the Shanghai Stock Exchange starting August 15, 2025, to facilitate the restructuring of the target bonds[46] Significant Events After the Period Ended June 30, 2025 Key events after the reporting period include an internal asset restructuring where the Company reacquired 2,684 parking spaces from Sino-Ocean Service, increasing its ownership to 100% Internal Asset Restructuring The Company and Sino-Ocean Service entered into a framework agreement to return 2,684 parking spaces in China to the Group for RMB 323.2 million, an internal asset restructuring increasing the Group's ownership to 100% - On July 16, 2025, the Company and Sino-Ocean Service entered into a framework agreement to return 2,684 parking spaces located in China to the Group, with a transfer price of RMB 323.2 million[49] - The return will be conducted by rescinding the original asset transfer, with the original transfer price to be returned and settled by Sino-Ocean Service providing a long-term loan[49] - This internal asset restructuring will result in the Group net acquiring approximately 36.18% equity interest in the target assets, increasing its ownership from 63.82% to 100%[50] Interim Condensed Consolidated Financial Statements Presentation of the Group's interim condensed consolidated financial statements, including the statement of profit or loss, comprehensive income, and financial position, reflecting the impact of market conditions and debt restructuring Interim Condensed Consolidated Statement of Profit or Loss The Group recorded H1 2025 revenue of RMB 6.203 billion and a gross loss of RMB 4.966 billion, but achieved a profit attributable to owners of RMB 10.202 billion, turning loss into profit, driven by a RMB 31.756 billion offshore debt restructuring gain Summary of Interim Condensed Consolidated Statement of Profit or Loss | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand, restated) | | :--- | :--- | :--- | | Revenue | 6,203,069 | 13,313,451 | | Cost of sales | (11,169,233) | (13,016,643) | | Gross (loss)/profit | (4,966,164) | 296,808 | | Interest and other income | 447,672 | 353,276 | | Other losses — net | (3,326,486) | (478,723) | | Fair value changes of investment properties | (643,676) | (292,770) | | Selling and marketing expenses | (360,808) | (282,350) | | Impairment losses under expected credit loss model | (9,724,988) | (296,780) | | Administrative expenses | (631,543) | (657,843) | | Operating loss | (19,205,993) | (3,065,012) | | Offshore debt restructuring gain | 31,756,397 | – | | Finance costs | (2,064,729) | (1,948,086) | | Share of results of joint ventures | (1,173,565) | (751,265) | | Share of results of associates | (337,339) | (55,983) | | Profit/(loss) before income tax | 8,974,771 | (5,820,346) | | Income tax credit/(expense) | 81,386 | 429,950 | | Profit/(loss) for the period | 9,056,157 | (5,390,396) | | Profit/(loss) attributable to owners of the Company | 10,202,141 | (5,381,705) | | Non-controlling interests | (1,145,984) | (8,691) | | Basic earnings/(loss) per share | 1.171 | (0.707) | | Diluted earnings/(loss) per share | 0.919 | (0.707) | Interim Condensed Consolidated Statement of Comprehensive Income The Group's H1 2025 total comprehensive income for the period was RMB 9.551 billion, a significant improvement from the prior year's loss of RMB 5.881 billion, primarily due to increased profit and positive foreign exchange differences Summary of Interim Condensed Consolidated Statement of Comprehensive Income | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand, restated) | | :--- | :--- | :--- | | Profit/(loss) for the period | 9,056,157 | (5,390,396) | | Other comprehensive income/(loss) (after tax) | | | | Fair value changes of financial assets at fair value through other comprehensive income | 25,888 | (43,829) | | Exchange differences | 496,686 | (133,173) | | Share of other comprehensive income of investments accounted for using equity method | (27,421) | (313,407) | | Other comprehensive income/(loss) for the period | 495,153 | (490,409) | | Total comprehensive income/(loss) for the period | 9,551,310 | (5,880,805) | | Total comprehensive income/(loss) attributable to owners of the Company | 10,706,576 | (5,900,271) | | Non-controlling interests | (1,155,266) | 19,466 | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2025, the Group's total assets were RMB 165.240 billion, total liabilities RMB 157.013 billion, and net assets RMB 8.227 billion, a significant improvement from the negative equity position at year-end 2024, though liquidity pressure persists Summary of Interim Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand, restated) | | :--- | :--- | :--- | | ASSETS | | | | Total non-current assets | 45,451,226 | 50,234,407 | | Total current assets | 119,788,889 | 131,170,739 | | TOTAL ASSETS | 165,240,115 | 181,405,146 | | LIABILITIES | | | | Total current liabilities | 128,849,857 | 148,357,977 | | Total non-current liabilities | 28,163,471 | 35,509,326 | | TOTAL LIABILITIES | 157,013,328 | 183,867,303 | | NET ASSETS/(NET LIABILITIES) | 8,226,787 | (2,462,157) | | EQUITY | | | | Equity attributable to owners of the Company | 4,117,119 | (12,659,291) | | Non-controlling interests | 4,109,668 | 10,197,134 | | TOTAL EQUITY | 8,226,787 | (2,462,157) | - Current liabilities exceeded current assets by approximately RMB 9.06 billion[61] - Total loans were approximately RMB 67.00 billion, of which current loans were approximately RMB 41.68 billion, while cash and cash equivalents were approximately RMB 2.00 billion[61] Notes to the Interim Condensed Consolidated Financial Statements Detailed notes to the interim condensed consolidated financial statements, covering general information, basis of preparation, accounting policies, segment information, and specific financial line items 1. General Information Sino-Ocean Group Holding Limited and its subsidiaries primarily engage in investment holding, property development, and property investment in China, with shares listed on the HKEX Main Board, and these unaudited interim financial statements are presented in RMB - The Group's principal activities are investment holding, property development, and property investment in Mainland China[57] - The Company was incorporated in Hong Kong on March 12, 2007, and its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited[57] - These interim condensed consolidated financial statements are unaudited and presented in RMB[57] 2. Basis of Preparation and Prior Period Adjustments These interim condensed consolidated financial statements are prepared in accordance with HKAS 34 and Listing Rules, and should be read with the 2024 annual financial statements, for which the auditor issued a disclaimer of opinion - These interim condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[58] - These interim condensed consolidated financial statements should be read in conjunction with the Group's annual financial statements for the year ended December 31, 2024, prepared in accordance with Hong Kong Financial Reporting Standards[58] - The Company's auditor issued a disclaimer of opinion on the financial statements for the year ended December 31, 2024[60] 2.1 Going Concern Assumption The Group faces significant going concern uncertainties, including a net loss of RMB 22.70 billion (excluding offshore debt restructuring gain), current liabilities exceeding current assets by RMB 9.06 billion, and substantial overdue loans and domestic bonds, despite ongoing restructuring efforts - Excluding the offshore debt restructuring gain, the Group incurred a net loss of RMB 22.70 billion for the six months ended June 30, 2025[61] - As of June 30, 2025, the Group's current liabilities exceeded current assets by approximately RMB 9.06 billion, with total loans of approximately RMB 67.00 billion, of which current loans were approximately RMB 41.68 billion[61] - The Group has outstanding loans with a principal amount of approximately RMB 14.03 billion and domestic bonds of RMB 3.53 billion, and borrowings with a principal amount of approximately RMB 11.97 billion may be subject to accelerated repayment[62] - The Group has initiated a domestic debt restructuring plan involving domestic bonds with a total carrying amount of approximately RMB 18.07 billion and is actively negotiating with creditors[63][65] - The Group has completed its offshore debt restructuring, releasing approximately USD 6.38 billion of existing debt[67] - The Company's directors believe that the validity of the going concern assumption depends on the successful implementation of these plans and measures, but there are multiple significant uncertainties[68][70] 2.2 Prior Period Adjustments The Group reclassified perpetual bonds totaling approximately RMB 2.679 billion from non-controlling interests to borrowings, which further expanded the H1 2024 loss to RMB 5.390 billion and impacted total equity at the beginning and end of 2024 - The Group reclassified perpetual bonds totaling approximately RMB 2.679 billion (including issue amount of approximately RMB 2.359 billion and interest of RMB 320 million) from non-controlling interests to borrowings[72] Impact of Prior Period Adjustments on Financial Statements | Indicator | June 30, 2024 Impact (RMB thousand) | December 31, 2024 Impact (RMB thousand) | January 1, 2024 Impact (RMB thousand) | | :--- | :--- | :--- | :--- | | Increase in finance costs | (73,222) | - | - | | Increase in loss before income tax | (73,222) | - | - | | Increase in loss for the period | (73,222) | - | - | | Increase in loss for the period attributable to non-controlling interests | (73,222) | - | - | | Increase in current loans | - | 2,359,000 | 2,359,000 | | Increase in trade and other payables | - | 320,159 | 220,796 | | Decrease in total equity | - | (2,679,159) | (2,579,796) | | Decrease in total equity attributable to non-controlling interests | - | (2,679,159) | (2,579,796) | - The restatement resulted in the Group's loss for the period ended June 30, 2024, further expanding to RMB 5.390 billion[75] 3. Accounting Policies The Group's accounting policies are consistent with those of the 2024 annual financial statements, with the adoption of HKAS 21 and HKFRS 1 amendments (lack of exchangeability) not expected to have a significant impact - The accounting policies applied are consistent with those adopted in the annual financial statements for the year ended December 31, 2024, except for the adoption of amendments to HKAS 21 and HKFRS 1 (Lack of Exchangeability)[77] - These amendments had no impact and are not expected to have a significant impact on the Group's transactions in the current or future reporting periods and the foreseeable future[77] 4. Segment Information The Group determines operating segments based on reports reviewed by executive directors, primarily property development (by geographical location), property management, and property investment, with segment operating profit/loss excluding certain other income/losses and finance costs - Management determines operating segments based on reports reviewed by the Company's executive directors for strategic decisions, primarily considering business from geographical and product perspectives[78] - The measurement basis for segment operating profit/loss excludes the impact of other gains/losses of operating segments, as well as finance costs, corporate financial income, share of profit or loss of interests in joint ventures and associates, fair value changes of investment properties, etc[79] 2025 H1 Segment Revenue and Operating Profit/(Loss) | Segment | Revenue (RMB thousand) | Operating Profit/(Loss) (RMB thousand) | | :--- | :--- | :--- | | Property Development - Beijing Region | 990,857 | (513,271) | | Property Development - Bohai Rim Region | 593,176 | (837,045) | | Property Development - East China Region | 125,870 | (2,209,312) | | Property Development - South China Region | 650,459 | (2,066,719) | | Property Development - Central China Region | 718,597 | (534,849) | | Property Development - West China Region | 216,755 | (659,228) | | Property Investment | 143,540 | 121,340 | | Property Management | 1,347,545 | (44,779) | | All Other Segments | 1,416,270 | (8,425,358) | | Total | 6,203,069 | (15,169,221) | - The Group's revenue from external customers primarily originated from Mainland China; as of June 30, 2025, total non-current assets located in Mainland China were approximately RMB 33.392 billion[83] 5. Trade and Other Receivables and Prepayments As of June 30, 2025, total trade receivables were RMB 5.514 billion (with RMB 1.378 billion impairment), and other receivables and prepayments were RMB 55.338 billion (with RMB 2.037 billion impairment), showing an increase in trade receivables aged over one year Trade and Other Receivables and Prepayments | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 4,136,805 | 4,443,710 | | Other receivables and prepayments | 55,337,976 | 60,056,862 | | Total | 59,474,781 | 64,500,572 | | Less: Non-current portion | (6,675,150) | (6,725,443) | | Current portion | 52,799,631 | 57,775,129 | | Impairment provision for trade receivables | (1,377,662) | (991,607) | | Impairment provision for other receivables and prepayments | (2,037,401) | (1,253,493) | Ageing Analysis of Trade Receivables (as of June 30, 2025) | Ageing | Amount (RMB thousand) | | :--- | :--- | | Less than 6 months | 1,459,305 | | 6 months to 1 year | 2,422,555 | | 1 year to 2 years | 453,782 | | 2 years to 3 years | 611,492 | | Over 3 years | 567,333 | | Total | 5,514,467 | - As of June 30, 2025, trade receivables with a carrying amount of approximately RMB 316 million were pledged as collateral for the Group's loans[85] 6. Trade and Other Payables As of June 30, 2025, total trade payables were RMB 11.578 billion and other payables were RMB 35.628 billion, with a decrease in trade payables aged within 6 months and an increase in those over 1 year Trade and Other Payables | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand, restated) | | :--- | :--- | :--- | | Trade payables | 11,578,474 | 13,340,695 | | Accrued expenses | 6,333,044 | 7,542,128 | | Amounts due to joint ventures | 8,596,449 | 7,950,594 | | Amounts due to associates | 715,047 | 1,009,299 | | Amounts due to non-controlling interests | 961,659 | 926,122 | | Amounts due to government | 499,512 | 504,528 | | Other taxes payable | 4,251,019 | 4,046,311 | | Deposits received | 1,598,297 | 1,617,461 | | Other payables | 12,718,693 | 13,986,093 | | Total | 47,252,194 | 50,923,231 | | Less: Non-current portion | (45,313) | (47,762) | | Current portion | 47,206,881 | 50,875,469 | Ageing Analysis of Trade Payables (as of June 30, 2025) | Ageing | Amount (RMB thousand) | | :--- | :--- | | Within 6 months | 4,581,262 | | 6 months to 1 year | 899,873 | | 1 year to 2 years | 2,542,196 | | 2 years to 3 years | 2,501,237 | | 3 years and above | 2,816,127 | | Total | 13,340,695 | - Amounts due to joint ventures, associates, and non-controlling interests are unsecured, interest-free, and repayable on demand[89] 7. Other Losses — Net The Group's H1 2025 other losses net significantly increased to RMB 3.326 billion from RMB 479 million in the prior year, primarily due to fair value losses on financial assets/liabilities, exchange losses, litigation provisions, and impairment losses on property, plant, and equipment and goodwill Composition of Other Losses — Net | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Fair value changes of financial assets and financial liabilities at fair value through profit or loss | (1,422,241) | (238,463) | | Exchange losses | (363,368) | (56,491) | | Amounts used to discharge contractual obligations | (48,240) | (37,783) | | Gain/(loss) on disposal of interests in subsidiaries | 13,567 | (135,171) | | Loss on disposal of joint ventures and associates | (183,997) | (10,727) | | Net (loss)/gain on deemed disposal of joint ventures and associates | (163,221) | 4,189 | | Litigation provision | (422,183) | – | | Impairment loss on property, plant and equipment | (324,594) | – | | Impairment loss on goodwill | (409,008) | – | | Other losses | (3,557) | (4,277) | | Total | (3,326,486) | (478,723) | 8. Finance Costs The Group's H1 2025 total interest expenses were RMB 2.765 billion, with RMB 2.065 billion expensed through profit or loss due to non-capitalization, and the weighted average capitalization rate increased to 5.84% Composition of Finance Costs | Item | 2025 (RMB thousand) | 2024 (RMB thousand, restated) | | :--- | :--- | :--- | | Interest expense: bank loans | 1,250,425 | 1,081,799 | | Interest expense: other loans | 1,465,769 | 1,672,080 | | Interest expense: lease liabilities | 48,469 | 59,574 | | Total interest expense | 2,764,663 | 2,813,453 | | Less: Interest capitalised (at annual capitalisation rate of 5.84%) | (699,934) | (865,367) | | Finance costs | 2,064,729 | 1,948,086 | - The weighted average capitalisation rate increased from 5.60% (restated) in the same period of 2024 to 5.84% in the current period[92] 9. Income Tax Credit The Group recorded an income tax credit of RMB 81.386 million in H1 2025, primarily due to decreased revenue and gross loss, with China corporate income tax provisioned at a statutory rate of 25% Composition of Income Tax Credit | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current income tax: PRC corporate income tax | 116,121 | 403,404 | | Current income tax: PRC land appreciation tax | 80,572 | (646,028) | | Deferred income tax | (278,079) | (187,326) | | Total | (81,386) | (429,950) | - Most of the Group's subsidiaries are subject to PRC corporate income tax, with provisions made at the statutory income tax rate of 25%[94] - The tax credit amount recorded was mainly due to a combination of factors such as decreased revenue and gross loss during the reporting period[16] 10. Earnings/(Loss) Per Share The Group's H1 2025 basic earnings per share were RMB 1.171 and diluted earnings per share were RMB 0.919, both turning loss into profit, with potential dilutive ordinary shares including employee share options and mandatory convertible bonds Calculation of Earnings/(Loss) Per Share | Indicator | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Profit/(loss) attributable to owners of the Company (RMB thousand) | 10,202,141 | (5,381,705) | | Dividends on perpetual securities (RMB thousand) | (22,827) | – | | Profit/(loss) for the purpose of basic earnings per share (RMB thousand) | 10,179,314 | (5,381,705) | | Weighted average number of ordinary shares in issue (thousand shares) | 8,689,431 | 7,616,096 | | Basic earnings/(loss) per share | 1.171 | (0.707) | | Profit/(loss) for the purpose of diluted earnings/(loss) per share (RMB thousand) | 10,179,314 | (5,381,705) | | Weighted average number of ordinary shares for diluted earnings/(loss) per share (thousand shares) | 11,082,194 | 7,616,096 | | Diluted earnings/(loss) per share | 0.919 | (0.707) | - Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period[96] - The Company has two classes of potential dilutive ordinary shares: employee share options and mandatory convertible bonds[98] 11. Dividends The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025, or 2024 - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025, and 2024[100] 12. Events After the Reporting Period Apart from going concern disclosures and domestic public market debt information, no other significant events occurred after June 30, 2025, except for an internal restructuring where the Company reacquired 2,684 parking spaces from Sino-Ocean Service, increasing its ownership to 100% - On July 16, 2025, the Company and Sino-Ocean Service entered into a framework agreement to return 2,684 parking spaces located in China (with a transfer price of RMB 323.2 million) to the Group[102] - This transaction is an internal restructuring that will effectively increase the Group's asset ownership from 63.82% to 100%, resulting in a net acquisition of 36.18% equity interest[102] Purchase, Sale or Redemption of the Company's Listed Securities Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the six months ended June 30, 2025, and no treasury shares were held - Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the six months ended June 30, 2025[103] - As of June 30, 2025, the Company did not hold any treasury shares[103] Review of Interim Financial Information The Group's interim condensed consolidated financial statements for the six months ended June 30, 2025, have been reviewed by the Company's auditor, and the Audit Committee has reviewed accounting policies, internal controls, and risk management - The Group's interim condensed consolidated financial statements for the six months ended June 30, 2025, have been reviewed by the Company's auditor, BDO Limited[104] - The Audit Committee has reviewed the accounting policies and practices adopted by the Group with the Company's management and discussed matters such as internal control, risk management, and financial reporting[104] Summary of Independent Auditor's Review Report on Interim Condensed Consolidated Financial Statements The independent auditor issued a disclaimer of conclusion on the interim condensed consolidated financial statements due to multiple significant uncertainties regarding the Group's ability to continue as a going concern Basis for Disclaimer of Conclusion The independent auditor disclaimed a conclusion on the interim financial statements due to significant going concern uncertainties, including a RMB 22.70 billion loss (excluding restructuring gain), current liabilities exceeding current assets by RMB 9.06 billion, and substantial overdue debts - The auditor issued a disclaimer of conclusion on the Group's interim condensed consolidated financial statements for the six months ended June 30, 2025[105] - Excluding the offshore debt restructuring gain, the Group recorded a loss of approximately RMB 22.70 billion, and current liabilities exceeded current assets by approximately RMB 9.06 billion[105] - The Group has outstanding loans with a principal amount of approximately RMB 14.03 billion and domestic bonds of RMB 3.53 billion, and borrowings with a principal amount of approximately RMB 11.97 billion may be subject to accelerated repayment[106] - The Group has initiated a domestic debt restructuring plan involving seven listed domestic bonds with a carrying amount of approximately RMB 13.07 billion and three other domestic bonds of approximately RMB 5.00 billion[107] - All these events or conditions indicate the existence of multiple material uncertainties that may cast significant doubt on the Group's ability to continue as a going concern[107] - The auditor was unable to conclude whether the use of the going concern basis of accounting is appropriate due to multiple uncertainties regarding the successful implementation of management's plans and measures[108][109][111] Compliance with Corporate Governance Code The Company has applied the principles of the Corporate Governance Code and complied with applicable code provisions, except for the combined roles of Chairman and Chief Executive Officer, which is deemed to maintain sufficient balance of power - The Company has applied the principles of the Corporate Governance Code to its corporate governance framework and practices and has complied with the applicable code provisions, except for the non-segregation of the roles of Chairman and Chief Executive Officer[113] - The Company believes that combining the roles of Chairman and Chief Executive Officer facilitates daily business operations, and all major decisions are made after consultation with the Board and senior management, thus maintaining a sufficient balance of power[114] Interim Dividends The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil) - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[115] Publication of Interim Results Announcement and Interim Report on HKEX and Company Website This announcement has been published on the HKEX and Company websites, and the interim report for the six months ended June 30, 2025, will be distributed to shareholders and published accordingly - This announcement has been published on the HKEX website (www.hkexnews.hk) and the Company's website (www.sinooceangroup.com)[116](index=116&type=chunk) - The Company's interim report for the six months ended June 30, 2025, will be distributed to shareholders and published on the HKEX and Company websites in due course[116] Acknowledgements The Board of Directors extends its sincere gratitude to shareholders, investors, local governments, partners, customers, and all directors, management, and staff for their strong support and efforts - The Board of Directors expresses its deep gratitude to shareholders, investors, local governments, partners, and customers for their strong support, and to the directors, management, and all staff for their efforts with the Company[117] Definitions This section provides definitions for key terms used in the announcement, such as "Audit Committee," "BDO Limited," "Board," "Company," "Group," and "RMB" - This section provides definitions for key terms used in the announcement, such as "Audit Committee," "BDO Limited," "Board," "Company," "Group," and "RMB"[118][119][122]