正荣地产(06158) - 2025 - 中期业绩

Interim Results and Operations Summary Interim Results Zhenro Properties Group Limited (the Group) announced its unaudited condensed consolidated interim results for the six months ended June 30, 2025, showing significant deterioration in contracted sales, revenue, and loss attributable to owners of the parent, alongside a reduction in land reserves | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Contracted Sales Amount | 2,365.2 | 3,427.8 | -31.0% | | Revenue | 4,645.4 | 24,658.4 | -81.2% | | Loss Attributable to Owners of the Parent | (6,463.1) | (2,343.4) | 175.8% (Loss widened) | | Land Reserve (million sq.m.) | 9.71 | 9.95 (December 31, 2024) | -2.4% | Condensed Consolidated Interim Financial Statements Condensed Consolidated Interim Statement of Profit or Loss The Group's statement of profit or loss for the six months ended June 30, 2025, shows a significant decline in revenue, sharp reduction in gross profit, and substantial increases in various expenses, leading to a significant widening of loss for the period and basic loss per share | Indicator | June 30, 2025 (RMB thousand) | June 30, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 4,645,377 | 24,658,401 | -81.2% | | Cost of Sales | (4,513,712) | (23,344,275) | -80.7% | | Gross Profit | 131,665 | 1,314,126 | -90.0% | | Net Impairment Loss on Financial Assets | (1,344,660) | (119,340) | 1027.2% | | Other Expenses | (2,495,201) | (1,262,005) | 97.7% | | Finance Costs | (1,946,317) | (1,564,696) | 24.4% | | Loss Before Tax | (6,769,508) | (2,645,597) | 155.9% | | Loss for the Period | (6,657,578) | (2,508,370) | 165.4% | | Loss Attributable to Owners of the Parent | (6,463,094) | (2,343,441) | 175.8% | | Basic and Diluted Loss Per Share | RMB (1.48) | RMB (0.54) | 174.1% | Condensed Consolidated Interim Statement of Comprehensive Income The Group's total comprehensive expenses for the period significantly increased, primarily due to the widening loss for the period, partially offset by other comprehensive income from exchange differences | Indicator | June 30, 2025 (RMB thousand) | June 30, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Loss for the Period | (6,657,578) | (2,508,370) | 165.4% | | Exchange Differences Arising from Translation of Overseas Operations | 537,497 | (182,126) | 394.0% | | Total Comprehensive Expenses for the Period, Net of Tax | (6,120,081) | (2,690,496) | 127.5% | | Total Comprehensive Expenses Attributable to Owners of the Parent | (5,925,597) | (2,525,567) | 134.6% | Condensed Consolidated Interim Statement of Financial Position As of June 30, 2025, the Group's financial position continued to deteriorate, with a significant increase in net current liabilities and net debt, and total equity turning negative, reflecting severe liquidity pressure | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 15,788,274 | 16,811,768 | -6.1% | | Total Current Assets | 85,907,105 | 96,570,399 | -11.1% | | Total Current Liabilities | 103,824,342 | 109,438,139 | -5.2% | | Net Current Liabilities | (17,917,237) | (12,867,740) | 39.2% (Deficit widened) | | Total Assets Less Current Liabilities | (2,128,963) | 3,944,028 | -154.0% (Turned negative) | | Total Non-current Liabilities | 6,292,001 | 6,223,813 | 1.1% | | Total Equity | (8,420,964) | (2,279,785) | 269.4% (Deficit widened) | Notes to the Condensed Consolidated Interim Financial Information Company Information Zhenro Properties Group Limited is incorporated in the Cayman Islands, with shares listed on the Hong Kong Stock Exchange, primarily engaged in property development and property leasing - The Company is a limited liability company incorporated in the Cayman Islands, with its shares listed on the Main Board of the Hong Kong Stock Exchange on January 16, 2018[11] - The Group is principally engaged in property development and property leasing businesses[11] Basis of Preparation The interim financial information is prepared in accordance with IAS 34 and should be read in conjunction with the annual consolidated financial statements; the Group faces severe going concern uncertainties, but the Board believes that preparing financial information on a going concern basis remains appropriate after implementing various measures Going Concern Basis The Group faces severe going concern uncertainties, including substantial losses, current liabilities exceeding current assets, significant borrowings maturing soon, and multiple debt defaults, yet management is actively pursuing offshore debt restructuring, loan extensions, new financing, accelerated property sales, cash collection, cost control, and equity disposals, with the Board still deeming the going concern basis appropriate - The Group recorded a net loss of RMB 6,657,578,000 and its current liabilities exceeded current assets by RMB 17,917,237,000[13] - Of the total RMB 59,551,166,000 in bank and other borrowings, senior notes, corporate bonds, perpetual capital securities, and asset-backed securities, RMB 53,559,327,000 is repayable within the next twelve months or on demand, while cash and cash equivalents are only RMB 467,615,000[13] - The Group has defaulted on multiple debts, including principal and interest on senior notes of RMB 25,514,182,000, principal on interest-bearing bank and other borrowings of RMB 20,619,286,000, principal and interest on corporate bonds of RMB 2,532,335,000, principal and interest on perpetual capital securities of RMB 1,799,698,000, and principal and interest on asset-backed securities of RMB 1,120,284,000[13] - Management is actively collaborating with legal and financial advisors to advance an offshore overall debt management plan, considering various options for a revised restructuring plan and exploring new offshore restructuring solutions[14] - The Group successfully extended the maturity dates of approximately RMB 1.95 billion in borrowings by one to six years, with annual interest cost reductions ranging from 0.4% to 7.4%[15] - The Group has formulated a business strategic plan primarily focused on accelerating property sales, but due to the sluggish market, significant price reductions for quick sales have not been adopted[17] Changes in Accounting Policies and Disclosures This period saw the first-time adoption of amendments to IAS 21 'Lack of Exchangeability', which had no impact on the condensed consolidated interim financial information as all currencies transacted by the Group are exchangeable - This period saw the first-time adoption of amendments to IAS 21 'Lack of Exchangeability', which specifies how an entity should assess whether a currency is exchangeable and how to estimate the spot exchange rate in the absence of exchangeability[19] - As all currencies transacted by the Group are exchangeable, these amendments had no impact on the condensed consolidated interim financial information[19] Operating Segment Information The Group aggregates all its businesses into a single reportable operating segment due to similar economic characteristics across project locations and comparable nature, processes, customer types, and service delivery methods for property development, leasing, and management services, with revenue primarily from mainland China and no significant non-current assets outside mainland China - Management monitors the Group's business by project location, but all businesses are aggregated into a single reportable operating segment due to similar economic characteristics across all locations[20] - The Group's revenue from external customers is solely derived from its operations in mainland China, and it has no significant non-current assets located outside mainland China[21] - Sales to a single customer or a group of customers under common control did not account for 10% or more of the Group's revenue during the period[22] Revenue The Group's revenue primarily derives from property sales, with total revenue for the period significantly decreasing by 81.2% due to a sharp decline in property sales revenue, while property leasing income saw a slight increase | Revenue Source | June 30, 2025 (RMB thousand) | June 30, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue from Contracts with Customers | 4,600,123 | 24,617,558 | -81.3% | | Gross Rental Income from Operating Leases of Investment Properties | 45,254 | 40,843 | 10.8% | | Total | 4,645,377 | 24,658,401 | -81.2% | | Type of Goods or Services | June 30, 2025 (RMB thousand) | June 30, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Property Sales | 4,598,119 | 24,609,579 | -81.3% | | Management Consulting Services | 2,004 | 7,979 | -74.9% | Other Expenses The Group's other expenses significantly increased by 97.7%, primarily due to a substantial rise in impairment losses on properties under development and completed properties held for sale, as well as net exchange losses | Expense Item | June 30, 2025 (RMB thousand) | June 30, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Impairment Loss Recognized on Properties Under Development and Completed Properties Held for Sale | 1,971,541 | 1,198,502 | 64.5% | | Net Exchange Loss | 336,566 | 33,783 | 896.1% | | Loss on Disposal of an Associate | 93,050 | – | N/A | | Liquidated Damages and Overdue Payment Compensation | 91,004 | 28,609 | 218.1% | | Total | 2,495,201 | 1,262,005 | 97.7% | Finance Costs The Group's finance costs increased by 24.4%, mainly due to a significant reduction in capitalized interest, despite a decrease in total interest on bank and other borrowings | Finance Cost Item | June 30, 2025 (RMB thousand) | June 30, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Interest on Bank and Other Borrowings, Corporate Bonds, Senior Notes and Asset-backed Securities | 2,382,698 | 2,452,715 | -2.9% | | Interest Expense Arising from Revenue Contracts | 12,580 | 423,550 | -97.0% | | Total Interest Expense on Financial Liabilities Not at Fair Value Through Profit or Loss | 2,395,340 | 2,877,258 | -16.8% | | Less: Capitalized Interest | (449,023) | (1,312,562) | -65.8% | | Total | 1,946,317 | 1,564,696 | 24.4% | Loss Before Tax The Group's loss before tax significantly widened, primarily influenced by factors such as cost of properties sold, impairment losses, fair value losses, and exchange losses | Item | June 30, 2025 (RMB thousand) | June 30, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of Properties Sold | 4,505,148 | 23,336,626 | -80.7% | | Impairment Loss Recognized on Properties Under Development and Completed Properties Held for Sale | 1,971,541 | 1,198,502 | 64.5% | | Net Impairment Loss on Financial Assets | 1,344,660 | 119,340 | 1027.2% | | Fair Value Loss on Investment Properties | 259,300 | 225,600 | 15.0% | | Net Exchange Loss | 336,566 | 33,783 | 896.1% | | Employee Benefit Expenses | 141,472 | 190,562 | -25.7% | Income Tax Credit The Group's income tax credit for the period decreased, mainly due to a reduction in over-provision for prior years, despite an increase in land appreciation tax - The Group's subsidiaries operating in mainland China are subject to corporate income tax at a rate of 25% and land appreciation tax at progressive rates ranging from 30% to 60%[28] | Tax Item | June 30, 2025 (RMB thousand) | June 30, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Corporate Income Tax | — | 70,167 | -100.0% | | Land Appreciation Tax | 27,872 | 18,740 | 48.7% | | Over-provision in Prior Years | (167,372) | (294,488) | -43.1% | | Total Tax Credit for the Period | (111,930) | (137,227) | -18.4% | Dividends The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025[30] Loss Per Share Attributable to Ordinary Equity Holders of the Parent The Group's basic loss per share significantly widened to RMB (1.48), reflecting a substantial increase in loss attributable to owners of the parent | Indicator | June 30, 2025 (RMB thousand) | June 30, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Loss Attributable to Ordinary Equity Holders of the Parent | (6,463,094) | (2,343,441) | 175.8% | | Weighted Average Number of Ordinary Shares Issued During the Period | 4,367,756,000 | 4,367,756,000 | 0.0% | | Basic and Diluted Loss Per Share | RMB (1.48) | RMB (0.54) | 174.1% | - As the Group had no potential dilutive ordinary shares outstanding during the reporting period, no diluted adjustment was made to the basic loss per share amount[31] Trade and Other Receivables The Group's total trade and other receivables slightly decreased, with a significant reduction in receivables within one year and a notable increase in receivables over one year, while the expected credit loss rate remained stable | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Within One Year | 19,376 | 104,306 | -81.4% | | Over One Year | 235,075 | 158,364 | 48.4% | | Total | 254,451 | 262,670 | -3.1% | - The expected loss rate for trade and other receivables was assessed at 0.7% (2024: 0.7%), and the directors believe that the expected credit losses are not material, thus no loss allowance was recognized[33] Trade and Other Payables and Bills Payable The Group's total trade and other payables and bills payable decreased, but payables over one year significantly increased, with overdue commercial acceptance bills outstanding | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Within One Year | 2,372,189 | 15,194,182 | -84.4% | | Over One Year | 11,228,684 | 1,155,507 | 871.7% | | Total | 13,600,873 | 16,349,689 | -16.8% | - As of June 30, 2025, approximately RMB 1,171,134,000 of commercial acceptance bills issued by the Company's subsidiaries were overdue and unpaid[34] Chairman's Report — 2025 Interim Results The Group's revenue for the period was approximately RMB 4,645.4 million, with a loss of approximately RMB 6,657.6 million, and loss attributable to owners of the parent of RMB 6,463.1 million; the Board does not recommend an interim dividend | Indicator | Amount (RMB million) | | :--- | :--- | | Revenue | 4,645.4 | | Loss | 6,657.6 | | Loss Attributable to Owners of the Parent | 6,463.1 | - The Board does not recommend the payment of any interim dividend for the period[36] Market and Operations Review In the first half of 2025, China's real estate market remained sluggish, and the Group, facing difficulties, strived to maintain overall operational stability by ensuring project construction, advancing existing asset operations, implementing liquidity management and cost-saving measures, and actively promoting offshore debt restructuring - In the first half of 2025, China's real estate market continued to operate at a low level, with real estate enterprises facing immense operational pressure[37] - The Group delivered approximately 2,000 new homes on schedule, committed to building high-quality products and services[37] - The Group continued to implement liquidity management and cost-saving measures, including seeking extensions for domestic and overseas financing, improving the quality of new home sales, revitalizing existing assets and accelerating cash recovery, streamlining corporate structure, and reducing administrative expenses[37] - The Group is actively collaborating with legal and financial advisors to advance the overall offshore debt restructuring to achieve a long-term sustainable capital structure[37] Outlook Looking ahead to the second half of 2025, the Group anticipates continued challenges in China's real estate sector and plans to leverage policy opportunities to restart key projects, advance ongoing construction, enhance existing asset operational capabilities, strengthen financial risk management, optimize asset structure, strictly control operating costs, and improve management efficiency and team innovation to foster new development for the enterprise - China's real estate industry is expected to continue facing difficulties in the second half of 2025[38] - The Group will seize policy opportunities for economic revitalization and stabilization of the real estate market, striving to restart key challenging projects and orderly advance the construction of ongoing projects[38] - The Group will focus on enhancing its existing asset operational capabilities to further improve the effectiveness of asset value recovery[39] - The Group will strengthen financial risk management, optimize its asset structure, strictly control operating costs, while enhancing management efficiency and operational effectiveness, and improving the team's innovative and pioneering spirit and capabilities[39] Management Discussion and Analysis Property Development The Group's property development business faces challenges, with significant declines in contracted sales and gross floor area, though average selling price increased; recognized revenue sharply decreased due to fewer deliveries, and both completed properties held for sale and properties under development saw reduced amounts Contracted Sales The Group's contracted sales amount and gross floor area both significantly decreased during the period, but the contracted average selling price increased | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Contracted Sales Amount (RMB million) | 2,365.2 | 3,427.8 | -31.0% | | Total Contracted Sales Gross Floor Area (sq.m.) | 142,620 | 248,700 | -42.7% | | Contracted Average Selling Price (RMB/sq.m.) | 16,584 | 13,781 | 20.3% | Revenue Recognized from Property Sales Revenue recognized from property sales for the period significantly decreased by 81.3%, primarily due to a reduction in gross floor area delivered, though the recognized average selling price increased due to higher property prices in the cities where properties were delivered | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue Recognized from Property Sales | 4,598.1 | 24,609.6 | -81.3% | | Recognized Average Selling Price (RMB/sq.m.) | 23,236.1 | 15,912.0 | 46.0% | - The significant decrease in revenue was primarily due to a reduction in gross floor area delivered[42] - The increase in recognized average selling price was mainly due to higher property prices in the cities where properties were delivered during the period[42] Completed Properties Held for Sale As of June 30, 2025, the amount of completed properties held for sale decreased by 21.2%, primarily due to a reduction in fair value caused by declining property market conditions | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Completed Properties Held for Sale | 23,236.1 | 29,483.4 | -21.2% | - The decrease was primarily due to a reduction in the fair value of completed properties held for sale recognized during the period, caused by declining property market conditions[43] Properties Under Development As of June 30, 2025, the amount of properties under development decreased by 1.6%, primarily due to a reduction in the number of development projects in the first half of the year | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Properties Under Development | 32,848.9 | 33,373.4 | -1.6% | - The decrease was primarily due to a reduction in the number of development projects undertaken by the Group in the first half of 2025[45] Property Investment The Group's property investment business saw an increase in rental income, mainly benefiting from improved occupancy rates of investment properties; as of the period-end, the Group held 11 investment properties, with 8 already leased out Rental Income The Group's rental income increased by 10.8% during the period, primarily due to an improvement in the occupancy rate of investment properties | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Rental Income | 45.3 | 40.8 | 10.8% | - The increase in rental income was due to an improvement in the occupancy rate of the Group's investment properties during the period[46] Investment Properties As of June 30, 2025, the Group held 11 investment properties with a total gross floor area of 684,476 sq.m., of which 8 properties with a total gross floor area of 429,429 sq.m. have commenced leasing - As of June 30, 2025, the Group held 11 investment properties with a total gross floor area of 684,476 sq.m.[47] - Of these, 8 investment properties with a total gross floor area of 429,429 sq.m. have commenced leasing[47] Land Bank The Group did not acquire any land during the period, and as of June 30, 2025, its total land bank gross floor area was 9.71 million sq.m. - The Group did not acquire any land during the period[48] - As of June 30, 2025, the Group, together with its joint ventures and associates, held a land bank with a total gross floor area of 9.71 million sq.m.[48] Financial Review The Group's financial performance significantly deteriorated during the period, with substantial declines in revenue and gross profit, significant increases in various expenses (including impairment losses, exchange losses, and finance costs), leading to a widened loss for the period; share of loss of associates increased, and income tax credit decreased Revenue The Group's revenue significantly decreased by 81.2%, primarily due to a sharp decline in property sales revenue, while property leasing revenue saw a slight increase | Revenue Source | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Property Sales | 4,598,119 | 24,609,579 | -81.3% | | Property Leasing | 45,254 | 40,843 | 10.8% | | Management Consulting Services | 2,004 | 7,979 | -74.9% | | Total | 4,645,377 | 24,658,401 | -81.2% | Cost of Sales The Group's cost of sales significantly decreased by 80.7%, primarily due to a substantial reduction in the number of properties delivered during the period, leading to lower revenue | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of Sales | 4,513.7 | 23,344.3 | -80.7% | - The decrease in cost of sales was primarily due to a significant reduction in the number of properties delivered by the Group during the period, leading to lower revenue[52] Gross Profit and Gross Profit Margin The Group's gross profit significantly decreased by 90.0%, and gross profit margin fell by 2.5 percentage points to 2.8%, reflecting a notable deterioration in profitability | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 131.7 | 1,314.1 | -90.0% | | Gross Profit Margin | 2.8% | 5.3% | -2.5 percentage points | Other Income and Gains The Group's other income and gains increased by 37.2%, primarily due to higher interest income, government grants, and forfeited deposits | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Other Income and Gains | 20.3 | 14.8 | 37.2% | - The increase was primarily due to higher interest income, government grants, and forfeited deposits during the period[54] Selling and Distribution Expenses The Group's selling and distribution expenses decreased by 17.7%, consistent with the declining trend in contracted sales during the period | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Selling and Distribution Expenses | 397.7 | 483.4 | -17.7% | - The decrease was consistent with the declining trend in contracted sales during the period[55] Administrative Expenses The Group's administrative expenses decreased by 23.2%, mainly due to streamlining the corporate structure and strengthening cost control over administrative items | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Administrative Expenses | 248.9 | 324.1 | -23.2% | - The decrease was mainly due to the Group streamlining its corporate structure and strengthening cost control over administrative items during the period[56] Other Expenses The Group's other expenses significantly increased by 97.7%, primarily due to a substantial rise in impairment losses on properties under development and completed properties held for sale, as well as net exchange losses | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Other Expenses | 2,495.2 | 1,262.0 | 97.7% | | Of which: Impairment Loss on Properties Under Development and Completed Properties Held for Sale | 1,971.5 | 1,198.5 | 64.5% | | Of which: Net Exchange Loss | 336.6 | 33.8 | 896.1% | Net Impairment Loss on Financial Assets Net impairment loss on financial assets significantly increased by 1,027.2%, due to a substantial decline in the overall fair value of financial assets | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Net Impairment Loss on Financial Assets | 1,344.7 | 119.3 | 1027.2% | - The increase was due to a substantial decline in the overall fair value of financial assets[58] Fair Value Loss on Investment Properties The Group's fair value loss on investment properties increased, primarily due to the adverse macroeconomic environment and decreased demand for commercial properties | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Fair Value Loss on Investment Properties | 259.3 | 225.6 | 15.0% | - The increase in loss was primarily due to the adverse macroeconomic environment and decreased demand for commercial properties[59] Finance Costs The Group's finance costs increased by 24.4%, primarily due to a reduction in capitalized interest on borrowings for properties under construction during the period | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Finance Costs | 1,946.3 | 1,564.7 | 24.4% | - The increase was primarily due to a reduction in capitalized interest on borrowings for properties under construction during the period, resulting from lower interest on borrowings[60] Share of Loss of Joint Ventures and Associates The Group's share of loss of joint ventures decreased, but its share of loss of associates significantly increased, turning from profit to loss | Item | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Share of Loss of Joint Ventures | 0.6 | 17.3 | -96.5% | | Share of Loss/(Profit) of Associates | 228.8 | (21.9) | N/A (turned to loss) | - The decrease in share of loss of joint ventures was primarily due to reduced losses from projects delivered by joint ventures[61] - The increase in share of loss of associates was primarily due to increased losses from projects delivered by associates[61] Income Tax Credit The Group's income tax credit for the period decreased, mainly due to a reversal of land appreciation tax | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Income Tax Credit | 111.9 | 137.2 | -18.4% | - The change was mainly due to a reversal of land appreciation tax during the period[62] Loss for the Period The Group's loss for the period significantly widened to RMB 6,657.6 million | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Loss for the Period | 6,657.6 | 2,508.4 | 165.4% | Liquidity, Financial and Capital Resources The Group's cash position deteriorated, total borrowings remained high, and it faced severe liquidity pressure; to address financial risks, the Group implemented various liquidity management and cost-saving measures and advanced its offshore debt management plan, with key financial ratios indicating ongoing pressure on liquidity and solvency Cash Position As of June 30, 2025, the Group's total cash and bank balances decreased, with a significant decline in cash and cash equivalents | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Cash and Bank Balances | 2,599.4 | 3,184.7 | -18.4% | | Of which: Cash and Cash Equivalents | 467.6 | 1,215.3 | -61.5% | | Of which: Restricted Cash | 2,076.7 | 1,905.5 | 9.0% | Total Borrowings The Group's total borrowings slightly decreased, but current borrowings still constitute the vast majority, indicating significant short-term repayment pressure | Borrowing Type | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Bank and Other Borrowings | 26,169,100 | 27,827,900 | -5.9% | | Corporate Bonds | 5,145,900 | 5,098,500 | 0.9% | | Senior Notes | 24,250,700 | 24,514,700 | -1.1% | | Perpetual Capital Securities | 1,406,800 | 1,412,700 | -0.4% | | Total | 56,972,581 | 58,853,779 | -3.2% | | Maturity | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Repayable Within One Year | 52,213,339 | 54,219,250 | -3.7% | | Repayable in the Second Year | 4,243,084 | 337,050 | 1159.0% | | Repayable in Three to Five Years | 736,741 | 4,297,479 | -82.8% | Pledged Assets As of June 30, 2025, several of the Group's assets, including property, plant and equipment, right-of-use assets, investment properties, properties under development, and completed properties held for sale, were pledged as collateral for secured borrowings - As of June 30, 2025, property, plant and equipment with a carrying amount of RMB 486.1 million, right-of-use assets of RMB 214.3 million, investment properties of RMB 7,174.4 million, properties under development of RMB 32,848.9 million, and completed properties held for sale of RMB 23,236.1 million were pledged as collateral for the Group's secured borrowings[69] Financial Risks The Group primarily faces foreign exchange risk (RMB depreciation affecting dividend value for offshore shareholders) and interest rate risk (market interest rate changes impacting borrowings), with no hedging currently undertaken; declining presales and financing difficulties for Chinese property developers adversely affect the Group's financing capabilities, leading to the implementation of liquidity management and cost-saving measures and the advancement of an offshore overall debt management plan - The Group faces foreign exchange risk (RMB depreciation adversely affecting dividend value for offshore shareholders) and interest rate risk (market interest rate changes impacting bank and other borrowings), and currently does not engage in hedging activities[70] - Declining presales by Chinese property developers and a difficult financing environment adversely affect the Group's ability to obtain financing from capital markets and other channels[70] - The Group implemented a series of liquidity management and cost-saving measures, including seeking financing extensions and waivers, pursuing asset disposals, accelerating sales and cash recovery, streamlining corporate structure, and reducing non-core business operations and administrative expenses[71] - The Company has commenced work on an offshore overall management plan for its debt[71] Key Financial Ratios Both the Group's current ratio and net debt-to-equity ratio indicate a continuous deterioration in financial position | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Current Ratio | 0.83 | 0.88 | Decreased | | Net Debt to Equity Ratio | -648.3% | -2,441.9% | Improved (negative narrowed) | Contingent Liabilities The Group's contingent liabilities primarily include mortgage guarantees and other financial guarantees, with mortgage guarantee amounts increasing; the Board confirmed no significant buyer defaults were encountered Mortgage Guarantees The Group provides guarantees for customers' mortgage loans, with significant contingent liabilities amounting to RMB 21,564.5 million as of June 30, 2025, an increase from year-end 2024; the directors confirmed no buyer defaults that would materially adversely affect the financial position were encountered | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Mortgage Guarantee Contingent Liabilities | 21,564.5 | 19,760.2 | 9.1% | - The directors confirmed that the Group has not encountered buyer defaults on its mortgage guarantees that would collectively have a material adverse effect on the Group's financial position and operating results[73] Other Financial Guarantees As of June 30, 2025, the Group's guarantees for borrowings by associated companies and third parties amounted to RMB 2,538.0 million, a decrease from year-end 2024 | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Other Financial Guarantees | 2,538.0 | 2,760.5 | -8.0% | Legal Contingencies The Group believes that, as of the date of this announcement, liabilities arising from litigation and other legal proceedings in the ordinary course of business will not have a material adverse effect on the Group's business, financial position, or operating results - The Group believes that, as of the date of this announcement, liabilities arising from litigation and other legal proceedings in the ordinary course of business will not have a material adverse effect on the Group's business, financial position, or operating results[75] Commitments The Group's capital commitments contracted but not yet provided for amounted to RMB 6,160.2 million as of June 30, 2025, a decrease from year-end 2024 | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Capital Commitments | 6,160.2 | 7,955.2 | -22.6% | Off-balance Sheet Commitments and Arrangements Except for disclosed contingent liabilities and matters in the notes to the consolidated financial statements, the Group had no other significant off-balance sheet commitments and arrangements as of June 30, 2025 - Except for disclosed contingent liabilities and matters disclosed in the notes to the consolidated financial statements, the Group had no outstanding loan capital, bank overdrafts, loans, debt securities, borrowings or other similar indebtedness, acceptance credits (other than normal trade bills), acceptance credits, bonds, mortgages, charges, finance leases or hire purchase commitments, guarantees or other material contingent liabilities issued or agreed to be issued as of June 30, 2025[77] Non-payment of Principal, Interest and/or Distributions on Certain Senior Notes and Perpetual Capital Securities As of the date of this announcement, the Company failed to pay the overdue principal, distributions, and/or interest on multiple senior notes and perpetual capital securities, constituting events of default; however, the Company has not received any notices leading to acceleration of debt maturity - The Company failed to pay the overdue principal and/or interest on multiple senior notes, including RMB notes due June 2022 with 7.125% interest, notes due April 2022 with 5.98% interest, notes due September 2023 with 8.3% interest, notes due March 2024 with 8.35% interest, notes due April 2024 with 7.875% interest, notes due September 2024 with 7.1% interest, notes due February 2025 with 7.35% interest, notes due May 2023 with 9.15% interest, notes due August 2022 with 8.7% interest, notes due January 2026 with 6.63% interest, notes due August 2026 with 6.7% interest, notes due September 2022 with 6.50% interest, notes due March 2023 with 8.0% interest, and RMB notes due March 2023 with 8.0% interest[79][82][83][84] - The Company failed to pay the overdue principal and distributions on perpetual capital securities[84] - The non-payment constituted events of default under the respective debt securities[81][82] - As of June 30, 2025, and the date of this announcement, the Company had not received any acceleration notices due to the non-payment of the relevant perpetual capital securities and/or senior notes[85] Offshore Overall Debt Management Plan The Company will make further announcements regarding the progress of the offshore overall debt management plan as appropriate - The Company will make further announcements regarding the progress of the offshore overall debt management plan as appropriate[87] Material Investments Held by the Group The Group held no material investments during the period - The Group held no material investments during the period[88] Plans for Material Investments and Capital Assets The Group currently has no plans for any material investments or acquisitions of capital assets - The Group currently has no plans for any material investments or acquisitions of capital assets[89] Employees and Remuneration Policies As of June 30, 2025, the Group's employee count decreased to 574; the Group values talent, provides systematic training, competitive remuneration, and participates in social insurance and mandatory provident fund schemes | Indicator | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Number of Employees | 574 | 709 | -19.18% | - The Group recruits skilled and qualified personnel through various channels, valuing employees who are loyal to their work, identify with the corporate culture, and possess relevant work experience[90] - The Group offers competitive remuneration packages, including basic salary, discretionary bonuses, and performance-based pay, and has adopted a share option scheme[90] - The Group participates in social insurance contribution schemes and a retirement benefits scheme for its Hong Kong employees[91] Events After the Reporting Period Except for events disclosed in the 'Offshore Overall Debt Management Plan' section, the Group had no other material events from June 30, 2025, up to the date of this announcement - Except for events disclosed in the 'Offshore Overall Debt Management Plan' section, the Group had no other material events from June 30, 2025, up to the date of this announcement[92] Continuing Disclosure Obligations under the Listing Rules The Company failed to pay the overdue principal and/or interest on 2019 and 2020 loan facilities, constituting events of default; these agreements contain commitment revocation clauses related to major shareholder equity and management control, and the Company is working on an offshore overall debt management plan - The Company failed to pay the overdue principal and/or interest on the 2019 loan facility (HKD 234,000,000 and USD 90,000,000) and the 2020 loan facility (HKD 273,000,000 and USD 106,000,000), constituting events of default[93][95][97] - The 2019 financing agreement stipulates that if Mr. Ou Zongrong, Mr. Ou Guoqiang, and Mr. Ou Guowei collectively cease to directly or indirectly own at least 51% beneficial equity interest (with at least 51% voting rights) in the Company, or cease to be the single largest shareholder, or cease to have management control, the loan commitments may be revoked and all outstanding amounts become immediately due and payable[94] - The 2020 financing agreement stipulates that if the relevant parties collectively cease to directly or indirectly own at least 51% beneficial equity interest (with at least 51% voting rights) in the Company, or cease to be the single largest shareholder, or cease to have management control, and/or the Company's chairman is not Mr. Huang Xianzhi, Mr. Liu Weiliang, or Mr. Chen Weijian or any relevant person, the loan commitments may be revoked and all outstanding amounts become immediately due and payable[96] - The Company is working on an offshore overall debt management plan[97] Other Information Compliance with Corporate Governance Code The Company is committed to high standards of corporate governance, having adopted the Corporate Governance Code set out in Appendix C1 of the Listing Rules as its foundation, and complied with all applicable code provisions during the period - The Company has adopted the Corporate Governance Code set out in Appendix C1 of the Listing Rules as the basis for its corporate governance practices[98] - To the best of the directors' knowledge, the Company has complied with all applicable code provisions in Part 2 of the Corporate Governance Code during the period[98] Standard Code for Securities Transactions by Directors The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 of the Listing Rules, and all directors confirmed compliance with the code during the period - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 of the Listing Rules[99] - Following specific inquiries by the Company, all directors confirmed their compliance with the Model Code during the period[99] Purchase, Sale or Redemption of the Group's Listed Securities Except as disclosed in this announcement, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Group's listed securities during the period, and the Company held no treasury shares as of June 30, 2025 - Except as disclosed in this announcement, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Group's listed securities during the period[100] - As of June 30, 2025, the Company held no treasury shares[100] Interim Dividends The Board does not recommend the payment of any interim dividend for the period - The Board does not recommend the payment of any interim dividend for the period[101] Audit Committee The Company's Audit Committee comprises three independent non-executive directors, with Ms. Yang Wing Yee as Chairperson; its primary responsibilities include recommending external auditors, reviewing accounting policies and financial position, overseeing internal audit and control structures, and examining risk management; the Committee has reviewed the unaudited condensed consolidated interim results for the current period - The Audit Committee comprises three members, namely Ms. Yang Wing Yee, Mr. Wang Chuanxu, and Mr. Xie Jun, each being an independent non-executive director[102] - Ms. Yang Wing Yee was appointed as the Chairperson of the Audit Committee and is an independent non-executive director possessing the appropriate professional qualifications as required by Rule 3.10(2) of the Listing Rules[102] - The primary responsibilities of the Audit Committee include making recommendations on the appointment and removal of the Company's external auditors; reviewing the Company's accounting policies and financial position; examining and overseeing the Company's internal audit function and internal control structure; and reviewing and monitoring the Company's risk management[102] - The Company's unaudited condensed consolidated interim results and interim report for the six months ended June 30, 2025, were reviewed by the Audit Committee before being presented to the Board for approval[103] Publication of Interim Results and Interim Report on HKEX and Company Website The interim results announcement has been published on the HKEX website and the Company's website, and the interim report will be published in due course - The interim results announcement is published on the HKEX website (www.hkexnews.hk) and the Company's website (**www.zhenrodc.com**)[104](index=104&type=chunk) - The interim report will be published on the HKEX and the Company's website in due course[104]