首惠产业金融(00730) - 2025 - 中期业绩

I. Company Information and Interim Results Announcement This section provides an overview of the company and its interim results announcement, reviewed by the audit committee and auditors 1.1 Company Overview and Announcement Statement This announcement, issued by HKEX and SEHK, presents Shouhui Industrial Financial Services Group Limited's (stock code: 730) unaudited condensed consolidated interim results for the six months ended June 30, 2025, reviewed by the Board's audit committee and auditors - Shouhui Industrial Financial Services Group Limited (stock code: 730) released its unaudited condensed consolidated interim results for the six months ended June 30, 2025[3] - The interim results have been reviewed by the company's Board Audit Committee and auditors[3] II. Condensed Consolidated Financial Statements This section presents the company's condensed consolidated statements of profit or loss and other comprehensive income, and financial position 2.1 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, total revenue significantly decreased by 56% to HKD 47,822 thousand, while profit for the period slightly increased by 5% to HKD 27,493 thousand, driven by a 111% rise in other income and reversal of financial asset impairment losses Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (HKD thousand) | 2024 (HKD thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 47,822 | 109,452 | -56% | | Revenue from sale and leaseback arrangements | 29,650 | 93,805 | -68% | | Revenue from supply chain management and fintech business | 16,149 | 13,513 | +19.5% | | Property rental income | 2,023 | 2,134 | -5.2% | | Gross profit | 40,799 | 57,723 | -29.4% | | Other income | 11,094 | 5,253 | +111.2% | | Administrative expenses | (25,198) | (25,014) | +0.7% | | Fair value change of investment properties | (8,452) | (2,341) | +261.0% | | Reversal of impairment loss on financial assets (impairment loss) | 17,727 | (559) | N/A | | Operating profit | 35,970 | 35,052 | +2.6% | | Finance costs | (326) | (583) | -44.0% | | Share of profit of an associate | 1,354 | 2,556 | -47.0% | | Profit before income tax | 36,998 | 37,025 | -0.1% | | Income tax expense | (9,505) | (10,764) | -11.7% | | Profit for the period | 27,493 | 26,261 | +4.7% | | Profit attributable to owners of the Company | 19,838 | 17,981 | +10.3% | | Non-controlling interests | 7,655 | 8,280 | -7.6% | | Total comprehensive income for the period | 14,331 | 53,317 | -73.1% | | Basic and diluted earnings per ordinary share attributable to owners of the Company (HK cents) | 0.50 | 0.45 | +11.1% | - The increase in profit for the period was primarily due to significant investment in risk management for sale and leaseback customers, reducing financial asset impairment losses[49] - The decrease in total revenue was mainly due to a shift in business focus, reallocating more resources from individual customers to corporate clients within the sale and leaseback arrangements business segment[49][50] 2.2 Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets slightly decreased by 1% to HKD 1,863,590 thousand, while total liabilities significantly reduced by 23% to HKD 104,830 thousand, primarily due to a decrease in current liabilities, leading to a current ratio increase to 1,133% Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | 2025 (HKD thousand) | 2024 (HKD thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Assets | | | | | Total non-current assets | 909,294 | 624,742 | +45.5% | | Total current assets | 954,296 | 1,243,280 | -23.3% | | Total assets | 1,863,590 | 1,868,022 | -0.2% | | Equity | | | | | Share capital and reserves attributable to owners of the Company | 1,423,097 | 1,394,912 | +2.0% | | Non-controlling interests | 335,663 | 336,132 | -0.1% | | Total equity | 1,758,760 | 1,731,044 | +1.6% | | Liabilities | | | | | Total non-current liabilities | 20,613 | 21,749 | -5.3% | | Total current liabilities | 115,229 | 84,217 | +36.8% | | Total liabilities | 104,830 | 136,978 | -23.4% | | Total equity and liabilities | 1,863,590 | 1,868,022 | -0.2% | | Cash and cash equivalents | 330,152 | 282,810 | +16.7% | | Receivables under sale and leaseback arrangements (non-current) | 648,501 | 358,308 | +81.0% | | Receivables under sale and leaseback arrangements (current) | 112,860 | 566,938 | -80.1% | | Receivables under credit financing arrangements | 492,955 | 377,580 | +30.6% | | Trade receivables | 2,194 | 2,752 | -20.3% | | Trade payables | 4 | 1,783 | -99.8% | | Other payables and accrued expenses | 100,360 | 77,341 | +29.8% | | Current ratio | 1,133% | 1,079% | +54% | | Total borrowings (non-current) | 16,525 | 16,274 | +1.5% | - Total non-current assets significantly increased by 45.5%, primarily due to a substantial rise in non-current receivables under sale and leaseback arrangements[7] - Total current liabilities increased by 36.8%, but overall total liabilities decreased, reflecting an optimized liability structure[8] III. Notes to the Condensed Consolidated Interim Financial Information This section provides detailed notes on the company's general information, basis of preparation, accounting policies, segment information, and other financial disclosures 3.1 General Information Shouhui Industrial Financial Services Group Limited is an investment holding company incorporated in Bermuda, with principal businesses including sale and leaseback arrangements, property leasing, and supply chain management and fintech services, with financial information presented in HKD - The company is an investment holding company incorporated in Bermuda, with shares listed on the Hong Kong Stock Exchange[9] - Its principal businesses are providing sale and leaseback arrangements, property leasing services, and supply chain management and fintech business[9] - The condensed consolidated interim financial information is presented in HKD and is unaudited[9][10] 3.2 Basis of Preparation This interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 issued by the HKICPA and should be read in conjunction with the Group's consolidated financial statements for the year ended December 31, 2024; the company's functional currency is RMB, but financial information is presented in HKD - The condensed consolidated interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[11] - The company's functional currency is RMB, but the condensed consolidated interim financial information is presented in HKD[12] 3.3 Accounting Policies, Estimates, and Judgments The accounting policies adopted in this period are consistent with the previous financial year, with only the HKAS 21 amendment adopted, which had no significant impact on financial performance; management's significant judgments and estimates are consistent with the prior year's consolidated financial statements - Accounting policies are consistent with those adopted in the previous financial year and relevant interim reporting period, except for the adoption of new and revised standards and interpretations[13] - The application of amendments to Hong Kong Financial Reporting Standards (Amendments to HKAS 21: Lack of Exchangeability) had no significant impact on the Group's financial performance and position[14][15] - The significant judgments and key sources of estimation uncertainty made by management in preparing the condensed consolidated interim financial information are consistent with those applied in the prior year's consolidated financial statements[16] 3.4 Segment Information The Group operates in three segments: sale and leaseback arrangements, property leasing, and supply chain management and fintech; in H1 2025, sale and leaseback revenue significantly decreased, while supply chain management and fintech revenue grew, and property leasing revenue remained stable but incurred higher losses due to fair value changes 3.4.1 Overview of Operating Segments The Group's main operating segments include sale and leaseback arrangements, property leasing, and supply chain management and fintech, with segment results not allocating central administrative costs, fair value changes of financial assets, unallocated other income, finance costs, and share of profit of an associate - The Group is divided into three operating segments: sale and leaseback arrangements business, property leasing business, and supply chain management and fintech business[17] - Segment results refer to the profit or loss of each segment, excluding central administrative costs, fair value changes of financial assets, unallocated other income, finance costs, and share of profit of an associate[18] 3.4.2 H1 2025 Segment Revenue and Results In H1 2025, sale and leaseback business generated HKD 29,650 thousand in revenue and HKD 38,525 thousand in segment profit; supply chain management and fintech business generated HKD 16,149 thousand in revenue and HKD 3,699 thousand in segment profit; property leasing business generated HKD 2,023 thousand in revenue but incurred a HKD 6,494 thousand segment loss H1 2025 Segment Revenue and Results (For the six months ended June 30) | Segment | Revenue (HKD thousand) | Results (HKD thousand) | | :--- | :--- | :--- | | Sale and leaseback arrangements business | 29,650 | 38,525 | | Property leasing business | 2,023 | (6,494) | | Supply chain management and fintech business | 16,149 | 3,699 | | Total | 47,822 | 35,730 | | Unallocated central administrative costs | - | (9,868) | | Unallocated other income | - | 10,108 | | Finance costs | - | (326) | | Share of profit of an associate | - | 1,354 | | Profit before income tax | - | 36,998 | 3.4.3 H1 2024 Segment Revenue and Results In H1 2024, sale and leaseback business generated HKD 93,805 thousand in revenue and HKD 39,219 thousand in segment profit; supply chain management and fintech business generated HKD 13,513 thousand in revenue and HKD 4,135 thousand in segment profit; property leasing business generated HKD 2,134 thousand in revenue but incurred a HKD 264 thousand segment loss H1 2024 Segment Revenue and Results (For the six months ended June 30) | Segment | Revenue (HKD thousand) | Results (HKD thousand) | | :--- | :--- | :--- | | Sale and leaseback arrangements business | 93,805 | 39,219 | | Property leasing business | 2,134 | (264) | | Supply chain management and fintech business | 13,513 | 4,135 | | Total | 109,452 | 43,090 | | Unallocated central administrative costs | - | (12,437) | | Unallocated other income | - | 4,409 | | Fair value change of financial assets at fair value through profit or loss | - | (10) | | Finance costs | - | (583) | | Share of profit of an associate | - | 2,556 | | Profit before income tax | - | 37,025 | 3.4.4 Segment Assets and Liabilities As of June 30, 2025, sale and leaseback segment assets totaled HKD 986,216 thousand, supply chain management and fintech HKD 96,307 thousand, and property leasing HKD 94,191 thousand, with unallocated assets significantly increasing to HKD 597,169 thousand; segment liabilities were HKD 58,980 thousand for sale and leaseback, HKD 5,018 thousand for supply chain management and fintech, and HKD 129 thousand for property leasing Segment Assets and Liabilities (As of June 30) | Segment | 2025 Assets (HKD thousand) | 2024 Assets (HKD thousand) | 2025 Liabilities (HKD thousand) | 2024 Liabilities (HKD thousand) | | :--- | :--- | :--- | :--- | :--- | | Sale and leaseback arrangements business | 986,216 | 1,145,871 | 58,980 | 99,681 | | Supply chain management and fintech business | 96,307 | 94,540 | 5,018 | 9,640 | | Property leasing business | 94,191 | 101,220 | 129 | 44 | | Total segment assets/liabilities | 1,176,714 | 1,341,631 | 64,127 | 109,365 | | Interests in an associate | 89,707 | 86,337 | - | - | | Other unallocated assets | 597,169 | 440,054 | - | - | | Other unallocated liabilities | - | - | 40,703 | 27,613 | | Total consolidated assets/liabilities | 1,863,590 | 1,868,022 | 104,830 | 136,978 | - All assets are allocated to reportable segments, excluding interests in associates and other unallocated assets (primarily including property, plant and equipment, right-of-use assets, receivables under credit financing arrangements, cash and cash equivalents, etc.)[21] - All liabilities are allocated to reportable segments, excluding other unallocated liabilities (primarily including loans from related parties, lease liabilities, deferred tax liabilities, other payables and accrued expenses, and current tax liabilities)[21] 3.5 Other Income For the six months ended June 30, 2025, other income significantly increased by 111% to HKD 11,094 thousand, primarily from interest income on credit financing arrangements with a related party Other Income (For the six months ended June 30) | Source | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Bank deposit interest income | 184 | 593 | | Interest income from deposit services from a related party | 864 | 294 | | Interest income from credit financing arrangements from a related party | 9,970 | 3,936 | | Others | 76 | 430 | | Total | 11,094 | 5,253 | - Other income significantly increased by 111%, primarily due to increased income from credit financing arrangements with a related party[51] 3.6 Profit for the Period Profit for the period is stated after deducting employee benefit expenses of HKD 20,831 thousand, depreciation of property, plant and equipment of HKD 182 thousand, amortization of intangible assets of HKD 1,472 thousand, and depreciation of right-of-use assets of HKD 1,863 thousand Items Deducted from Profit for the Period (For the six months ended June 30) | Item | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Employee benefit expenses | 20,831 | 22,460 | | Depreciation of property, plant and equipment | 182 | 163 | | Amortization of intangible assets | 1,472 | 1,126 | | Depreciation of right-of-use assets | 1,863 | 1,885 | 3.7 Finance Costs For the six months ended June 30, 2025, finance costs were HKD 326 thousand, a 44% year-on-year decrease, primarily comprising interest on loans from a related party of HKD 217 thousand and interest on lease liabilities of HKD 109 thousand Finance Costs (For the six months ended June 30) | Item | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Interest on loans from a related party | 217 | 373 | | Interest on lease liabilities | 109 | 210 | | Total | 326 | 583 | 3.8 Income Tax Expense For the six months ended June 30, 2025, income tax expense was HKD 9,505 thousand, an 11.7% year-on-year decrease, mainly comprising China corporate income tax of HKD 9,577 thousand and deferred income tax of HKD -72 thousand; Hong Kong profits tax is levied at 16.5%, and China subsidiaries' tax rate is 25% Income Tax Expense (For the six months ended June 30) | Item | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Current tax: China corporate income tax | 9,577 | 12,000 | | Deferred income tax | (72) | (1,236) | | Income tax expense | 9,505 | 10,764 | - Hong Kong profits tax is provided at a rate of 16.5%, and the tax rate for China subsidiaries is 25%[26] 3.9 Earnings Per Share For the six months ended June 30, 2025, basic earnings per share attributable to owners of the Company was 0.50 HK cents, an 11.1% increase from 0.45 HK cents in the prior year, with diluted earnings per share being consistent with basic earnings per share due to no potential dilutive shares Earnings Per Share Calculation (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit attributable to owners of the Company (HKD thousand) | 19,838 | 17,981 | | Weighted average number of ordinary shares (thousand shares) | 3,953,963 | 3,973,037 | | Basic earnings per share (HK cents) | 0.50 | 0.45 | | Diluted earnings per share | Nil | Nil | - As there were no potential dilutive shares during the period, diluted earnings per share was consistent with basic earnings per share[27] 3.10 Receivables Under Sale and Leaseback Arrangements As of June 30, 2025, total receivables under sale and leaseback arrangements amounted to HKD 925,246 thousand, with a significant increase in non-current assets; all receivables are not overdue, and annual interest rates range from 5.0% to 5.5% Receivables Under Sale and Leaseback Arrangements (As of June 30) | Type | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Current assets | 112,860 | 566,938 | | Non-current assets | 648,501 | 358,308 | | Total | 925,246 | 761,361 | | Allowance for impairment loss | (66,804) | (49,793) | Repayment Terms for Receivables Under Sale and Leaseback Arrangements (As of June 30) | Term | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Within one year | 112,860 | 566,938 | | One to two years | 252,181 | 84,655 | | Two to three years | 301,436 | 199,569 | | Three to four years | 86,536 | 50,614 | | Four to five years | 8,348 | 23,470 | - All receivables are not yet overdue, with annual interest rates ranging from 5.0% to 5.5%[28][31] 3.11 Trade Receivables As of June 30, 2025, trade receivables amounted to HKD 2,194 thousand, a decrease from HKD 2,752 thousand as of December 31, 2024; the credit period is generally 30 days, and all accounts are within three months Trade Receivables (As of June 30) | Indicator | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Trade receivables | 2,194 | 2,752 | Aging Analysis of Trade Receivables (As of June 30) | Aging | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Within three months | 2,194 | 2,752 | - The credit period for trade receivables is generally 30 days[31] 3.12 Trade Payables As of June 30, 2025, trade payables were HKD 4 thousand, a significant decrease from HKD 1,783 thousand as of December 31, 2024; all payables are within 30 days Trade Payables (As of June 30) | Indicator | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Trade payables | 4 | 1,783 | Aging Analysis of Trade Payables (As of June 30) | Aging | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Within 30 days | 4 | 1,783 | 3.13 Share Capital As of June 30, 2025, the company's issued share capital was HKD 39,539 thousand, with approximately 3,953,938,703 ordinary shares issued; during the period, the company repurchased and cancelled 3,764,000 shares for a total consideration of approximately HKD 99 thousand Changes in Share Capital (As of June 30) | Change | Number of Shares | Amount (HKD thousand) | | :--- | :--- | :--- | | January 1, 2024 | 3,984,639,703 | 39,846 | | Shares cancelled | (12,064,000) | (120) | | June 30, 2024 | 3,972,575,703 | 39,726 | | January 1, 2025 | 3,957,702,703 | 39,577 | | Shares cancelled | (3,764,000) | (38) | | June 30, 2025 | 3,953,938,703 | 39,539 | - For the six months ended June 30, 2025, the company repurchased and cancelled 903,000 shares for a total consideration of approximately HKD 99,000[32] - All repurchased shares have been cancelled, and the difference between the consideration and the nominal value of the shares is recognized in share premium[33] 3.14 Related Party Disclosures The company is ultimately controlled by Shougang Group Co., Ltd., engaging in various related party transactions and balances with Shougang Group, its subsidiaries, and other China government-related financial institutions, covering revenue from sale and leaseback, supply chain management and fintech services, credit financing interest, deposit services interest, management fees, utility expenses, interest expenses, IT services expenses, and lease payments - The Company is ultimately controlled by Shougang Group Co., Ltd., a state-owned enterprise directly supervised by the State Council of China[34] - Multiple transactions and balances are conducted with Shougang Group, its subsidiaries, and other China government-related financial institutions[34] 3.14.1 Key Management Personnel Remuneration For the six months ended June 30, 2025, total key management personnel remuneration was HKD 3,244 thousand, a decrease from HKD 4,091 thousand in the prior year Key Management Personnel Remuneration (For the six months ended June 30) | Item | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Salaries, wages and other benefits | 2,909 | 3,859 | | Contributions to retirement benefit schemes | 335 | 232 | | Total employee benefit expenses | 3,244 | 4,091 | 3.14.2 Transactions with Related Parties For the six months ended June 30, 2025, the company engaged in various transactions with Shougang Group subsidiaries and associates, including HKD 12,451 thousand in sale and leaseback revenue, HKD 5,621 thousand in supply chain management and fintech services revenue, HKD 9,970 thousand in credit financing interest income, HKD 864 thousand in deposit services interest income, and expenses for management fees, utilities, interest, IT services, and lease payments Transactions with Related Parties (For the six months ended June 30) | Transaction Type | Related Party | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | :--- | | Revenue from sale and leaseback arrangements | Subsidiaries of Shougang Group | 12,451 | 7,726 | | Revenue from supply chain management and fintech services | Subsidiaries of Shougang Group | 5,586 | 5,530 | | Revenue from supply chain management and fintech services | Associates of Shougang Group | 35 | 22 | | Interest income from credit financing arrangements | Subsidiaries of Shougang Group | 9,970 | 3,936 | | Interest income from deposit services | Subsidiaries of Shougang Group | 864 | 294 | | Management fee expenses | Subsidiaries of Shougang Group | 236 | 187 | | Utility expenses | Subsidiaries of Shougang Group | 55 | 4 | | Interest expenses | Subsidiaries of Shougang Group | 217 | 373 | | Information technology service expenses | Subsidiaries of Shougang Group | 1,298 | – | | Lease payments | Subsidiaries of Shougang Group | 704 | 850 | - The company entered into a master credit facility agreement with Shougang Group Co., Ltd., providing an uncommitted credit facility of up to RMB 2,000,000,000[36] - Supply chain management and fintech service transactions are conducted under a master service agreement with Shougang Group for a period of 32 months[36] 3.14.3 Outstanding Balances of Sale and Leaseback Arrangements Business As of June 30, 2025, total receivables under sale and leaseback arrangements from Shougang Group subsidiaries amounted to HKD 410,219 thousand, an increase from HKD 398,325 thousand as of December 31, 2024 Outstanding Balances of Sale and Leaseback Arrangements Business (As of June 30) | Related Party | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Subsidiaries of Shougang Group | 410,219 | 398,325 | 3.14.4 Outstanding Balances of Supply Chain Management and Fintech Business As of June 30, 2025, receivables for supply chain management and fintech services from Shougang Group subsidiaries were HKD 2,013 thousand, a decrease from HKD 2,730 thousand as of December 31, 2024 Outstanding Balances of Supply Chain Management and Fintech Business (As of June 30) | Related Party | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Subsidiaries of Shougang Group | 2,013 | 2,730 | 3.14.5 Amounts Due from Related Parties As of June 30, 2025, there were no amounts due from related parties, compared to HKD 7,527 thousand as of December 31, 2024, primarily for management and financial consulting services and fintech services, all unsecured, repayable on demand, and interest-free - As of June 30, 2025, there were no amounts due from related parties for management and financial consulting services and fintech services[39] - As of December 31, 2024, total amounts due from related parties were HKD 7,527 thousand, including HKD 2,528 thousand for management and financial consulting services and HKD 4,999 thousand for fintech services[39] - These balances are unsecured, repayable on demand, and interest-free[39] 3.14.6 Amounts Due to Related Parties As of June 30, 2025, amounts due to related parties were HKD 315 thousand, a slight increase from HKD 292 thousand as of December 31, 2024, primarily for information technology services, all unsecured, repayable on demand, and interest-free Amounts Due to Related Parties (As of June 30) | Related Party | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Amounts due to related parties for information technology services | 315 | 292 | - These balances are unsecured, repayable on demand, and interest-free[40] 3.14.7 Receivables Under Credit Financing Arrangements As of June 30, 2025, receivables under credit financing arrangements amounted to HKD 492,955 thousand, bearing interest at an annual rate of 5%, with accrued interest receivable of HKD 11,310 thousand Receivables Under Credit Financing Arrangements (As of June 30) | Indicator | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Receivables | 492,955 | 377,580 | | Interest receivable | 11,310 | 628 | - The balances are unsecured, repayable on demand, and bear interest at an annual rate of 5%[42] 3.14.8 Loan from a Related Party As of June 30, 2025, the loan balance from a related party was HKD 16,525 thousand, unsecured, repayable on demand, and bearing interest at annual rates ranging from 2.48% to 2.76% Loan from a Related Party (As of June 30) | Indicator | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Loan balance | 16,525 | 16,274 | - The balance is unsecured, repayable on demand, and bears interest at annual rates ranging from 2.48% to 2.76%[43] 3.14.9 Deposits with a Related Company As of June 30, 2025, cash and cash equivalents included current deposits of HKD 208,731 thousand placed with a financial institution subsidiary of Shougang Group, bearing an annual interest rate of 1.35% Deposits with a Related Company (As of June 30) | Indicator | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Current deposits | 208,731 | 194,961 | | Annual interest rate | 1.35% | 0.35% to 1.55% | 3.14.10 Transactions and Balances with Other China Government-Related Entities The Group conducts various transactions, including deposits and general banking facilities, with several government-related banks and financial institutions in its ordinary course of business; as of June 30, 2025, 100% of bank balances were held by these government-related financial institutions - The Group entered into various transactions with several government-related banks and financial institutions, including deposits and other general banking facilities[45] - As of June 30, 2025, 100% of bank balances were held by these government-related financial institutions[45] IV. Management Discussion and Analysis This section provides management's discussion and analysis of the company's interim dividend, business development strategy, key financial performance indicators, business review and outlook, risk management, liquidity, capital structure, and other operational aspects 4.1 Interim Dividend The Board does not declare an interim dividend for the six months ended June 30, 2025 - The Board does not declare an interim dividend for the six months ended June 30, 2025 (2024: nil)[46] 4.2 Business Development Strategy The Group continues to focus on supply chain management and fintech, finance leasing, and commercial factoring as core businesses, aiming to build an industry-finance integrated supply chain fintech platform service provider to facilitate industrial upgrading, while maintaining steady progress and enhancing its ability to adapt to market changes - The Group continues to focus on supply chain management and fintech business, finance leasing, and commercial factoring as its core businesses[47] - It is committed to building an industry-finance integrated supply chain fintech platform service provider to facilitate industrial upgrading[47] - The Group adheres to the principle of seeking progress while maintaining stability, tapping its own potential and continuously improving its ability to adapt to market changes, maintaining stable performance[47] 4.3 Key Financial Performance Indicators For the six months ended June 30, 2025, profit attributable to owners of the Company increased by 10% to HKD 19,838 thousand, and basic earnings per share rose to 0.50 HK cents; total revenue decreased by 56% to HKD 47,822 thousand, but gross profit margin improved to 85%; other income significantly grew by 111%, administrative expenses remained stable, and share of profit of an associate decreased Key Financial Performance Indicators (As of June 30) | Indicator | 2025 (HKD thousand/%) | 2024 (HKD thousand/%) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 47,822 | 109,452 | -56% | | Gross profit margin | 85% | 53% | +32% | | Profit for the period | 27,493 | 26,261 | +5% | | Profit attributable to owners of the Company | 19,838 | 17,981 | +10% | | Basic earnings per share (HK cents) | 0.50 | 0.45 | +11% | | Total cash | 330,152 | 282,810 | +17% | | Total assets | 1,863,590 | 1,868,022 | -1% | | Total liabilities | 104,830 | 136,978 | -23% | | Loan from a related party | 16,525 | 16,274 | +2% | | Share capital and reserves attributable to owners of the Company | 1,423,097 | 1,394,912 | +2% | | Current ratio | 1,133% | 1,079% | +54% | - Profit attributable to owners of the Company increased by 10%, primarily due to significant efforts in risk management and control for sale and leaseback customers, reducing financial asset impairment losses[49] - Total revenue decreased by 56%, mainly due to a shift in business focus, reallocating more resources from individual customers to corporate clients within the sale and leaseback arrangements business segment[49][50] - Gross profit margin increased to 85%, primarily due to a shift in business focus, reallocating more resources from individual customers to corporate clients within the sale and leaseback arrangements business segment[49][50] - Other income significantly increased by 111%, primarily due to increased income from credit financing arrangements with a related party[51] - Administrative expenses slightly increased by 1%, remaining stable overall[52] - Share of profit of an associate decreased to HKD 1,354 thousand, but continued to contribute to the Group's profit[52] 4.4 Business Review and Outlook The Group will continue to focus on core businesses like supply chain management and fintech, finance leasing, and commercial factoring to build an industry-finance integrated fintech service platform, while exploring new opportunities such as Energy Management Contracting (EMC); business segments showed varied performance, with sale and leaseback shifting to corporate clients, supply chain fintech expanding and enhancing platform intelligence, and property leasing affected by fair value declines - The Group will continue to fully advance its development strategy centered on supply chain management and fintech business, finance leasing, and commercial factoring[53] - It is committed to building an industry-finance integrated supply chain fintech service platform, providing customized comprehensive financial services to the steel industry and its upstream and downstream clients, corporate clients, and the individual consumer leasing market[53] - The Group will explore business opportunities related to Energy Management Contracting (EMC) and other potential businesses to maximize shareholder returns[53] 4.4.1 Sale and Leaseback Arrangements Business Segment Southern Leasing primarily provides finance leasing, including direct and sale and leaseback arrangements, with core clients in the steel industry and large domestic enterprises; in H1 2025, segment revenue decreased by 68% to HKD 29,650 thousand due to a shift from individual to corporate clients, with the Group planning to invest more resources in Energy Management Contracting (EMC) projects aligned with green and low-carbon development policies - Southern Leasing primarily engages in providing finance leasing services in China, including direct leasing and sale and leaseback arrangements[54][55] - Core clients are in the steel industry and large domestic enterprise groups, aiming for stable returns and lower risks[56] - As of June 30, 2025, approximately 95% of the total receivables under sale and leaseback arrangements were from three major customers, two of whom are related parties[56] Customer Distribution (As of June 30, 2025) | Customer | Receivables (HKD thousand) | Proportion (%) | | :--- | :--- | :--- | | Independent individual customers | 28,134 | 4 | | Beijing Enji Energy Saving Technology Co., Ltd. | 323,008 | 42 | | Tonghua Iron and Steel Co., Ltd. | 305,322 | 40 | | Shougang Shuicheng Iron and Steel (Group) Co., Ltd. | 101,134 | 13 | | Beijing Shougang International Engineering Technology Co., Ltd. | 3,763 | 1 | - Revenue from the sale and leaseback arrangements service segment decreased by 68% to HKD 29,650 thousand, primarily due to a shift in business focus from individual customers to corporate clients[58] - The Group will invest more resources in providing finance leasing services for Energy Management Contracting (EMC) projects and engineering companies, and explore related business opportunities[59] 4.4.2 Supply Chain Management and Fintech Business Segment This segment's revenue grew to HKD 16,149 thousand, but results slightly declined due to increased staff costs; the business model is based on real trade, focusing on 'Shougang Jingpiao' electronic debt certificates, utilizing blockchain technology to provide transferable, divisible, and financiable digital certificates for the supply chain; future plans include developing diverse products, enhancing the intelligence of the 'Shougang Supply Chain Finance Platform,' and exploring other business opportunities - Revenue from the supply chain management and fintech business segment grew to HKD 16,149 thousand, primarily due to continuous business expansion[60] - Segment results recorded a profit of HKD 3,699 thousand, with the decrease mainly attributable to increased staff costs[60] - The business focuses on multi-level transferable electronic debt certificates ('Shougang Jingpiao') within the steel industry supply chain and related businesses, utilizing blockchain technology to provide immutable and traceable digital certificates for suppliers[60] - The Group will continue to develop diverse products to address financing difficulties and high costs for small and medium-sized suppliers[61] - The Group will continue to enhance the intelligence of the 'Shougang Supply Chain Finance Platform' (i.e., integration with DeepSeek) and explore other business opportunities within the supply chain[61] 4.4.3 Property Leasing Business Segment This segment's revenue slightly decreased to HKD 2,023 thousand, and segment results recorded a loss of HKD 6,494 thousand, primarily due to a HKD 8,452 thousand decline in the fair value of investment properties - Revenue from the property leasing business segment decreased to HKD 2,023 thousand, remaining stable[62] - Segment results recorded a loss of HKD 6,494 thousand, primarily due to a decline of approximately HKD 8,452 thousand in the fair value of investment properties during the period[62] 4.5 Risk Management Infrastructure The Group will focus on strengthening its risk control system, introducing information technology platforms, and advancing the construction of online risk control platforms based on asset securitization and industry supply chain businesses to achieve sustainable growth and create commercial value - The Group will seize policy opportunities in China's innovative modern supply chain sector and industrial upgrading strategies of target core enterprises' industries, providing innovative combined financial products to serve the real economy[63] - Through the supply chain finance platform, the Group aims to provide financing convenience for small and medium-sized merchants, reduce financing costs, and enhance supply chain stability[63] - The Group will focus on strengthening its risk control system, introducing information technology platforms, and advancing the construction of online risk control platforms based on asset securitization and industry supply chain businesses[64] 4.6 Liquidity, Financial Resources, and Financing Activities As of June 30, 2025, the Group's total cash increased to HKD 330,152 thousand, primarily from net cash generated from operating activities; total borrowings were HKD 16,525 thousand, all non-current and bearing fixed interest rates; the current ratio improved to 1,133% Liquidity and Financial Resources (As of June 30) | Indicator | 2025 (HKD thousand/%) | 2024 (HKD thousand/%) | | :--- | :--- | :--- | | Total borrowings (non-current) | 16,525 | 16,274 | | Total cash and cash equivalents | 330,152 | 282,810 | | Total equity | 1,758,760 | 1,731,044 | | Total assets | 1,863,590 | 1,868,022 | | Current ratio | 1,133% | 1,079% | - Total cash and cash equivalents increased by 17%, primarily due to net cash generated from operating activities of approximately HKD 49,503,000[66] - The Group's borrowings amounted to approximately HKD 16,525,000, all non-current and bearing fixed interest rates, with no new borrowings obtained during the period[66] 4.7 Capital Structure As of June 30, 2025, share capital and reserves attributable to owners of the Company increased to HKD 1,423,097 thousand, mainly due to exchange differences arising from translation during the period; issued share capital was HKD 39,539 thousand, with no new shares issued during the period Capital Structure (As of June 30) | Indicator | 2025 (HKD thousand) | 2024 (HKD thousand) | | :--- | :--- | :--- | | Share capital and reserves attributable to owners of the Company | 1,423,097 | 1,394,912 | | Issued share capital | 39,539 | 39,577 | | Issued ordinary shares (shares) | 3,953,938,703 | 3,957,702,703 | - Share capital and reserves attributable to owners of the Company increased, primarily due to exchange differences arising from translation during the period, totaling approximately HKD 18,796,000[67] - The Company did not issue any new shares during the review period[67] 4.8 Significant Acquisitions, Disposals, and Material Investments During the period, Southern Leasing sold receivables to Sichuan Xinhuang Jiuhe Financial Leasing Co., Ltd. for a consideration not exceeding RMB 300 million; apart from this, the Group had no other significant acquisitions, disposals, or material investments - Southern Leasing (an indirect non-wholly owned subsidiary of the Company) entered into a disposal agreement with Sichuan Xinhuang Jiuhe Financial Leasing Co., Ltd. to sell receivables for a consideration not exceeding RMB 300 million (approximately HKD 318.03 million)[68] - For the six months ended June 30, 2025, the Group had no other significant acquisitions, disposals, or material investments[68] 4.9 Pledge of Assets As of June 30, 2025, the Group had no pledged assets - As of June 30, 2025, the Group had no pledged assets[69] 4.10 Foreign Exchange Risk The Group primarily operates in Hong Kong and China, with revenues and expenditures denominated in HKD and RMB, and the Directors believe there is no significant foreign exchange risk; forward foreign exchange contracts will be considered for hedging if necessary - The Group primarily operates in Hong Kong and China, with revenues and expenditures denominated in HKD and RMB, and the Directors believe there is no significant foreign exchange risk[70] - If necessary, the Group will consider using forward foreign exchange contracts to hedge foreign exchange risk[70] 4.11 Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[71] 4.12 Employees As of June 30, 2025, the Group employed 61 full-time employees, with remuneration determined by market practice, individual performance, and work experience, offering benefits such as medical insurance, insurance plans, Mandatory Provident Fund, and discretionary bonuses - As of June 30, 2025, the Group employed 61 full-time employees (excluding employees of associates), a decrease from 63 as of December 31, 2024[72] - Remuneration is determined with reference to market practice, individual performance, and work experience, and benefits such as medical insurance, insurance plans, Mandatory Provident Fund, and discretionary bonuses are provided[72] - During the period, neither the Company nor its subsidiaries paid or undertook to pay any amount to any person as an inducement to join or upon joining[72] 4.13 Purchase, Sale, or Redemption of the Company's Listed Securities For the six months ended June 30, 2025, the company repurchased and cancelled 903,000 shares on the SEHK for a total consideration of HKD 98,595; apart from this, there were no other purchases, sales, or redemptions of listed securities during the period - For the six months ended June 30, 2025, the company repurchased a total of 903,000 shares on the SEHK for a total consideration (before expenses) of HKD 98,595[73] - All repurchased shares were cancelled during the review period[73] Details of Share Repurchases (January 2025) | Month | Number of Shares Repurchased | Highest Price Paid Per Share (HKD) | Lowest Price Paid Per Share (HKD) | Total Consideration Paid (HKD) | | :--- | :--- | :--- | :--- | :--- | | January | 903,000 | 0.114 | 0.108 | 98,595 | | Total | 903,000 | - | - | 98,595 | - Save as disclosed above, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities on the SEHK or any other securities exchange during the review period[74] V. Governance and Acknowledgements This section covers the company's corporate governance code compliance, audit committee's role, auditor's scope of work, and the Board's composition and acknowledgements 5.1 Corporate Governance Code The company is committed to maintaining good corporate governance standards and has complied with the code provisions of the Corporate Governance Code set out in Appendix 14 to the SEHK Listing Rules - The company is committed to maintaining good corporate governance standards and procedures to safeguard the interests of all shareholders and enhance accountability and transparency[75] - For the six months ended June 30, 2025, the company has complied with the code provisions of the Corporate Governance Code set out in Appendix 14 to the SEHK Listing Rules[75] 5.2 Audit Committee The Audit Committee, comprising four members including three independent non-executive directors and one non-executive director, is primarily responsible for financial reporting matters, risk management, and internal controls, and has reviewed these interim financial statements - The Audit Committee comprises four members, including three independent non-executive directors (Mr. Tam King Ching, Kenny; Mr. Ng Man Fung, Peter; Ms. Ann Yinlin) and one non-executive director (Mr. Huang Donglin)[76] - Its primary focus is on financial reporting matters, reviewing financial information, and overseeing financial reporting-related systems and controls, as well as advising the Board on high-risk related matters, risk management, and internal controls[76] - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025[76] 5.3 Auditor's Scope of Work Shinewing (HK) CPA Limited has reviewed the Group's unaudited interim condensed consolidated financial information for the six months ended June 30, 2025, in accordance with Hong Kong Standard on Review Engagements 2410 - Shinewing (HK) CPA Limited has reviewed the Group's unaudited interim condensed consolidated financial information for the six months ended June 30, 2025, in accordance with Hong Kong Standard on Review Engagements 2410[77] 5.4 Acknowledgements and Board Composition The Board Chairman, Sun Yajie, on behalf of the Board, expressed gratitude to clients, suppliers, shareholders, management, and staff; as of the announcement date, the Board comprises seven members, including the Chairman, Managing Director, Executive Director, Non-executive Director, and Independent Non-executive Directors - Board Chairman Sun Yajie, on behalf of the Board, expressed gratitude for the support of clients, suppliers, and shareholders, as well as the efforts of management and staff[78] - As of the announcement date, the Board comprises seven members, including Chairman Ms. Sun Yajie, Managing Director Ms. Fu Yao, Executive Director Mr. Tian Gang, Non-executive Director Mr. Huang Donglin, and three Independent Non-executive Directors: Mr. Tam King Ching, Kenny, Mr. Ng Man Fung, Peter, and Ms. Ann Yinlin[79]