SOHO中国(00410) - 2025 - 中期财报

Business Review and Market Outlook Market Review and Outlook In H1 2025, China's commercial real estate market faced challenges, but SOHO China maintained an 80% occupancy rate through strategic initiatives, with future opportunities in smart and green development - Market Challenges: China's commercial real estate market faced multiple challenges, including insufficient investment in commercial and office properties, slow recovery in leasing demand, and persistently low rents, indicating a deep market adjustment[5] - Company Response Strategy: SOHO China actively enhanced property service quality, improving product competitiveness through renovation, price promotions, and service upgrades[5] - Occupancy Rate: The Group's overall occupancy rate remained stable at 80%[5] - New Client Expansion: Successfully attracted The University of Hong Kong to Bund SOHO, Xiaohongshu expanded its lease at SOHO Fuxing Plaza, and several foreign enterprises moved in, demonstrating the strategic effectiveness of serving new economy industries[6] - Market Outlook: The office market in H2 2025 presents both opportunities and challenges, with intelligence and green development as key trends; intense market competition and downward rental pressure persist, but policy support and emerging industries are expected to bring development opportunities[8] Sustainable Development (ESG) Practices SOHO China deepened its ESG commitment, achieving 21% energy savings and 32,000 metric tons of carbon reduction across 24 projects, with 98.4% of managed area receiving WELL HSR certification - ESG Value Philosophy: Comprehensively promoting sustainable development around six pillars: 'Resilient Development, Green and Low-Carbon, Dedicated Service, Win-Win Cooperation, People-Oriented, and Grateful Giving'[7] - Environmental Achievements: The Group's 24 managed property projects achieved a total energy saving of 38.07 million kWh compared to national standards, with an energy saving rate of 21%, resulting in 32,000 metric tons of carbon reduction[7] - Health and Safety Certification: 24 projects successfully obtained WELL HSR Health and Safety Rating certification, covering 98.4% of the managed area, achieving 100% coverage for commercial and office projects[8] Key Lease Property Portfolio SOHO China's core commercial property portfolio in Beijing and Shanghai, including eight key projects, represents significant leasable area and primary revenue sources due to strategic locations - Wangjing SOHO: A landmark office and retail project in Beijing's Wangjing area, with a total construction area of approximately 522,272 square meters; the Group holds the entire Tower 3 and parts of Towers 1 and 2, with a leasable area of approximately 133,766 square meters[9] - Guanghualu SOHO II: Located in the core of Beijing's Central Business District, with a total construction area of approximately 117,179 square meters and a leasable area of approximately 94,279 square meters[12] - Qianmen Avenue Project: Located south of Tiananmen Square, with a leasable retail construction area of approximately 51,889 square meters, aiming to develop into a tourist attraction[14] - Lize SOHO: Located in the core of Beijing's Lize Financial Business District, with a planned total construction area of approximately 156,485 square meters and a total leasable area of approximately 135,637 square meters[16] - SOHO Fuxing Plaza: Located on Shanghai's Huaihai Middle Road, with a total construction area of approximately 124,068 square meters and a leasable area of approximately 88,234 square meters[18] - Bund SOHO: Located in Shanghai's Bund area, with a leasable construction area of approximately 72,006 square meters[20] - SOHO Tianshan Plaza: Located in the core of Shanghai's Hongqiao Foreign Trade Center, with a total construction area of approximately 155,827 square meters and a total leasable area of approximately 97,751 square meters[22] - Gubei SOHO: Located in the core of Shanghai's Hongqiao Foreign Trade Center, with a total construction area of approximately 146,692 square meters and a total leasable area of approximately 112,541 square meters[24] Management Discussion and Analysis Financial Review In H1 2025, SOHO China's revenue and gross profit declined due to weak leasing demand, but reduced administrative and finance costs, coupled with an income tax credit, improved overall profitability Operating Revenue | Indicator | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 689,825 | 799,362 | -13.6% | - The decrease in operating revenue was primarily due to weak demand in the office and commercial property leasing market[27] Profitability | Indicator | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | YoY Change | | :--- | :--- | :--- | :--- | | Gross Profit | 548,756 | 648,418 | -15.3% | | Gross Profit Margin | 80% | 81% | -1% | Expense Control | Indicator | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | YoY Change | | :--- | :--- | :--- | :--- | | Selling Expenses | 20,999 | 19,615 | +7.1% | | Administrative Expenses | 39,284 | 49,530 | -20.7% | Finance Income and Costs | Indicator | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | YoY Change | | :--- | :--- | :--- | :--- | | Finance Income | 1,384 | 2,527 | -45.2% | | Finance Costs | 329,593 | 367,366 | -10.3% | - The reduction in finance costs was mainly due to a decrease in the average borrowing balance during the period[31] Income Tax Credit / (Expense) | Indicator | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | YoY Change | | :--- | :--- | :--- | :--- | | Income Tax Credit / (Expense) | 473 (Credit) | (124,662) (Expense) | Decrease 126,135 | Liquidity and Capital Structure As of June 30, 2025, SOHO China's total borrowings were RMB 15.31 billion with a 40% net gearing ratio, facing cross-default risks from overdue land appreciation tax, while financing costs and commitments remained stable Bank Loans, Other Borrowings, and Asset Pledges | Indicator | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Total Borrowings | 15,310,452 | 15,555,736 | | Portion Due Within One Year | 5,720,350 | 5,732,567 | | Net Gearing Ratio | 40% | 41% | - Approximately RMB 15.31 billion of borrowings are secured by the Group's investment properties[33] Exchange Rate Fluctuations and Interest Rate Risk | Indicator | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Total Foreign Currency Debt | 212,000 | 348,000 | | Percentage of Total Borrowings | 1.4% | 2.2% | | Average Financing Cost | 4.2% | 4.3% | - During the period, the Group's operating cash flow and liquidity were not significantly affected by exchange rate fluctuations[34] Contingent Liabilities | Indicator | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Total Amount of Mortgage Loan Guarantees | 3,000 | 3,000 | Capital Commitments | Indicator | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Total Capital Commitments | 8,000 | 8,000 | Employees and Remuneration Policy As of June 30, 2025, SOHO China employed 1,640 individuals, with 1,478 in property management, and their compensation comprises basic and performance-based salaries - Employee Count: As of June 30, 2025, the Group had 1,640 employees, including 1,478 employees of property management companies[37] - Remuneration Policy: Employee remuneration primarily includes basic salaries and performance-based salaries, with performance-based salaries determined monthly based on performance appraisals[38] Other Information Business Overview SOHO China's principal activities, property leasing and real estate development in China, remained unchanged during the period - Principal Activities: The Group is principally engaged in providing property leasing and related services and real estate development in the People's Republic of China[40] - Business Changes: There were no significant changes in the Group's principal activities during the period[40] Dividend Policy The Board resolved not to declare an interim dividend for the period, consistent with the prior year - Dividend Distribution: The Board resolved not to declare an interim dividend for the period (H1 2024: nil)[41] Share Capital Information As of June 30, 2025, the Company's total issued shares remained unchanged at 5,199,524,031 - Shares Issued: As of June 30, 2025, the total number of shares issued by the Company remained at 5,199,524,031 shares[42] Directors' and Major Shareholders' Interests Mr. Pan Shiyi and Ms. Pan Zhangxin, along with Cititrust Private Trust (Cayman) Limited and its entities, jointly hold approximately 63.9309% of the Company's ordinary shares Directors' and Chief Executive's Interests As of June 30, 2025, Mr. Pan Shiyi and Ms. Pan Zhangxin each held interests in 3,324,100,000 ordinary shares, representing 63.9309% of the Company's share capital Directors' Interests in the Company's Issued Ordinary Shares | Name | Number of Ordinary Shares (shares) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | | Pan Shiyi | 3,324,100,000(L) | 63.9309% | | Pan Zhangxin | 3,324,100,000(L) | 63.9309% | - Mr. Pan Shiyi's interest is deemed to be held by his spouse, Ms. Pan Zhangxin, through a discretionary trust[43] - Ms. Pan Zhangxin's interests are held through Boyce Limited and Capevale Limited, both incorporated in the British Virgin Islands[45] Major Shareholders' Interests As of June 30, 2025, Cititrust Private Trust (Cayman) Limited and its controlled entities held 3,324,100,000 shares, representing 63.9309% of the Company's issued share capital Major Shareholders' Interests in the Company's Shares and Related Shares | Name | Number of Shares (shares) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | | Cititrust Private Trust (Cayman) Limited | 3,324,100,000(L) | 63.9309%(L) | | Capevale Cayman | 3,324,100,000(L) | 63.9309%(L) | | Boyce Limited | 1,662,050,000(L) | 31.9654%(L) | | Capevale BVI | 1,662,050,000(L) | 31.9654%(L) | - Cititrust Private Trust (Cayman) Limited indirectly holds the entire interests in Boyce Limited and Capevale BVI through Capevale Cayman, and holds shares for the beneficiaries of the trust[49] Company Securities Transactions Neither the Company nor its subsidiaries engaged in any listed securities transactions, nor were any share purchase rights granted to or exercised by directors or their families during the period - Company Securities Transactions: Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period[50] - Directors' Share Rights: At no time during the period was any right granted by the Company to any director or their respective spouse or children under 18 years of age to acquire shares or debentures of the Company, nor were any such rights exercised by them[48] Significant Changes and Post-Balance Sheet Events No significant changes in the Company's business or material post-balance sheet events affecting the Group have occurred since the 2024 annual report - Significant Business Changes: Save as disclosed in this report, there have been no significant changes in the Company's business since the publication of the Company's annual report for the year ended December 31, 2024[51] - Post-Balance Sheet Events: No significant post-balance sheet events affecting the Group have occurred from the end of the period to the date of this report[52] Corporate Governance SOHO China complies with Listing Rules' governance codes, with a seven-member Board and distinct Chairman/Co-CEO roles; a new company secretary was appointed, and measures are in place for effective external secretarial service communication Compliance with Model Code The Company adopted the Listing Rules' Model Code for directors' securities transactions, with all directors confirming compliance during the period - Compliance Status: The Company has made specific enquiries of all directors, and all directors have confirmed their compliance with the standards set out in the Model Code during the period[53] Compliance with Corporate Governance Code The Board believes the Company complied with the Corporate Governance Code's provisions as per Appendix C1 of the Listing Rules throughout the period - Compliance Status: The Directors believe that the Company has complied with the code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules, which was in effect during the period[54] Board Composition and Responsibilities The Board leads and oversees the Company, approving strategies and supervising management through at least four annual meetings, comprising seven directors for balanced core competency - Board Responsibilities: Responsible for leading and overseeing the Company, collectively managing and supervising to promote its success, and approving and monitoring the Company's overall strategies and policies[55] - Meeting Frequency: The Board holds at least four regular meetings annually (once per quarter)[56] - Board Composition: As of June 30, 2025, the Board comprised seven directors, including four executive directors and three independent non-executive directors[57] Chairman and Co-CEOs' Responsibilities Ms. Xu Jin serves as Chairman, with Ms. Xu Jin and Mr. Qian Ting as Co-CEOs, ensuring clear division of responsibilities for strategic oversight and daily operations - Chairman and Co-CEOs: Ms. Xu Jin serves as the Chairman of the Board, and Ms. Xu Jin and Mr. Qian Ting jointly serve as Co-Chief Executive Officers, representing two clearly distinct positions[58] - Chairman's Responsibilities: Responsible for managing the Board and leading it in formulating the Company's overall strategies and business development directions[58] - Co-CEOs' Responsibilities: Responsible for managing the Company's daily operations and implementing the policies, business objectives, and plans formulated by the Board[58] Company Secretary Change Ms. Ng Sau Mei resigned as company secretary on August 28, 2025, succeeded by Ms. Leung Shui Bing, with the Board implementing measures to ensure effective external secretarial functions - Company Secretary Change: On August 28, 2025, Ms. Ng Sau Mei resigned as company secretary, and Ms. Leung Shui Bing was appointed[59] - Mitigation Measures: The Board has implemented measures, including designating the Chief Financial Officer as the primary contact, to ensure Ms. Leung is promptly informed of the Company's business operations, developments, and strategic objectives[60] - Communication and Evaluation: The Company will maintain active communication with Ms. Leung through various channels and regularly assess the effectiveness of the company secretarial functions provided by her team[60] Interim Results Review The Audit Committee reviewed the unaudited H1 2025 interim consolidated results, confirming compliance with accounting standards, and these results were also reviewed by Grant Thornton Hong Kong Limited - Reviewing Body: The Company's Audit Committee has reviewed the Company's unaudited condensed interim consolidated results for the six months ended June 30, 2025[61] - Compliance: The Audit Committee believes that the Company has complied with all applicable accounting standards and requirements and has made adequate disclosures[61] - External Auditor Review: The condensed interim consolidated results for the six months ended June 30, 2025, although unaudited, have been reviewed by the Company's external auditor, Grant Thornton Hong Kong Limited[61] Company Information Board Members SOHO China's Board comprises four executive directors, including Chairman and Co-CEO Ms. Xu Jin and Co-CEO Mr. Qian Ting, and three non-executive directors - Executive Directors: Pan Shiyi, Pan Zhangxin, Xu Jin (Chairman of the Board and Co-Chief Executive Officer), Qian Ting (Co-Chief Executive Officer)[63] - Non-Executive Directors: Huang Jingsheng, Xiong Minghua, Zhang Minggeng[63] Company Secretary Ms. Leung Shui Bing serves as the Company's company secretary - Company Secretary: Leung Shui Bing[63] Committee Members Mr. Huang Jingsheng chairs the Audit, Remuneration, Nomination, and ESG Committees, which include executive and non-executive directors, ensuring effective corporate governance - Audit Committee Chairman: Huang Jingsheng[63] - Remuneration Committee Chairman: Huang Jingsheng[63] - Nomination Committee Chairman: Huang Jingsheng[63] - ESG Committee Chairman: Huang Jingsheng[63] Authorised Representatives Ms. Pan Zhangxin and Ms. Leung Shui Bing are the Company's authorised representatives - Authorised Representatives: Pan Zhangxin, Leung Shui Bing[63] Registered and Principal Place of Business SOHO China's registered office is in the Cayman Islands, with headquarters in Beijing, China, and a principal place of business in Hong Kong - Registered Office: Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1–1111, Cayman Islands[63] - Head Office: 11th Floor, Tower A, Chaowai SOHO, No. 6B Chaowai Street, Chaoyang District, Beijing, China[63] - Principal Place of Business in Hong Kong: 31st Floor, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong[64] Share Registrars The Company maintains its principal share registrar in the Cayman Islands and a branch share registrar in Hong Kong - Principal Share Registrar in Cayman Islands: Suntera (Cayman) Limited[64] - Branch Share Registrar in Hong Kong: Hong Kong Registrars Limited[64] Professional Advisors and Banks SOHO China's professional advisors include Stephenson Harwood and Grant Thornton Hong Kong Limited, maintaining relationships with major banks - Hong Kong Legal Advisor: Stephenson Harwood[64] - Auditor: Grant Thornton Hong Kong Limited[64] - Principal Banks: Including Agricultural Bank of China, Bank of China, Bank of Communications, China Everbright Bank, China Merchants Bank, Industrial and Commercial Bank of China, Standard Chartered Bank (Hong Kong), and The Hongkong and Shanghai Banking Corporation Limited[64] Company Contact Information The Company's official website is www.sohochina.com, with stock code 410 - Website: www.sohochina.com[64](index=64&type=chunk) - Stock Code: 410[64] Unaudited Interim Financial Report Independent Review Report Grant Thornton Hong Kong Limited reviewed SOHO China's H1 2025 interim financial information, noting no material non-compliance but emphasizing significant going concern uncertainties due to net current liabilities and potential cross-default risks - Review Conclusion: The auditor found no matters that caused them to believe the Group's interim financial information was not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[68] - Emphasis of Matter: As of June 30, 2025, the Group's current liabilities exceeded its current assets by RMB 8,118,299,000. Concurrently, bank and other borrowings totaled RMB 15,310,452,000 (including a current portion of RMB 5,720,350,000), indicating a material uncertainty that may cast significant doubt on the ability to continue as a going concern[69] Condensed Interim Consolidated Statement of Profit or Loss For H1 2025, SOHO China's net loss narrowed to RMB 90.60 million, driven by reduced finance costs and an income tax credit, despite lower operating revenue Key Data from H1 2025 Condensed Interim Consolidated Statement of Profit or Loss | Indicator | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 689,825 | 799,362 | -13.6% | | Gross Profit | 548,756 | 648,418 | -15.3% | | Fair Value Changes of Investment Properties | (144,000) | (88,086) | Loss widened | | Operating Profit | 237,138 | 380,332 | -37.7% | | Finance Costs | (329,593) | (367,366) | -10.3% | | Income Tax Credit / (Expense) | 473 (Credit) | (124,662) (Expense) | Significantly improved | | Net Loss for the Period | (90,598) | (109,169) | Loss narrowed | | Basic Loss Per Share (RMB) | (0.02) | (0.02) | Unchanged | Condensed Interim Consolidated Statement of Comprehensive Income For H1 2025, SOHO China's total comprehensive loss narrowed to RMB 104.73 million, reflecting a smaller net loss, despite exchange differences from foreign operations shifting to a loss Key Data from H1 2025 Condensed Interim Consolidated Statement of Comprehensive Income | Indicator | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | YoY Change | | :--- | :--- | :--- | :--- | | Net Loss for the Period | (90,598) | (109,169) | Loss narrowed | | Exchange differences on translation of financial statements of foreign operations | (14,136) | 2,292 | Shifted from gain to loss | | Total Comprehensive Loss for the Period | (104,734) | (123,516) | Loss narrowed | Condensed Interim Consolidated Statement of Financial Position As of June 30, 2025, SOHO China's total assets slightly decreased to RMB 68.09 billion, total liabilities increased to RMB 31.13 billion, and net current liabilities reached RMB 8.12 billion, with investment properties as the largest asset Key Data from June 30, 2025 Condensed Interim Consolidated Statement of Financial Position | Indicator | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | Change | | :--- | :--- | :--- | :--- | | Investment Properties | 62,935,400 | 63,079,400 | -0.23% | | Total Non-current Assets | 64,939,121 | 65,148,362 | -0.32% | | Total Current Assets | 3,152,975 | 2,983,114 | +5.7% | | Cash and Cash Equivalents | 490,827 | 589,623 | -16.8% | | Total Assets | 68,092,096 | 68,131,476 | -0.06% | | Total Equity | 36,963,338 | 37,068,072 | -0.28% | | Total Non-current Liabilities | 19,857,484 | 20,125,800 | -1.33% | | Total Current Liabilities | 11,271,274 | 10,937,604 | +3.05% | | Total Liabilities | 31,128,758 | 31,063,404 | +0.21% | - As of June 30, 2025, the Group's net current liabilities amounted to RMB 8,118,299,000[87] Condensed Interim Consolidated Statement of Changes in Equity For H1 2025, total equity attributable to owners of the parent slightly decreased to RMB 36.04 billion, influenced by net loss and exchange reserve changes Key Data from H1 2025 Condensed Interim Consolidated Statement of Changes in Equity | Indicator | 2025 June 30 (RMB '000) | 2024 Jan 1 (RMB '000) | Change | | :--- | :--- | :--- | :--- | | Total Attributable to Owners of the Parent | 36,038,175 | 36,266,871 | -0.63% | | Loss / (Profit) for the Period | (91,578) | (107,546) | Loss narrowed | | Other Comprehensive Loss | (14,029) | (14,506) | Loss narrowed | | Total Comprehensive Loss / (Income) | (105,607) | (122,052) | Loss narrowed | Condensed Interim Consolidated Statement of Cash Flows For H1 2025, net cash from operating activities significantly increased to RMB 385 million, but a shift to cash outflow from investing activities and increased financing outflows led to a larger net decrease in cash and cash equivalents Key Data from H1 2025 Condensed Interim Consolidated Statement of Cash Flows | Indicator | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 384,699 | 109,886 | +250.1% | | Net Cash Flow (Used in) / From Investing Activities | (247,990) (Used) | 74,679 (From) | Shifted from inflow to outflow | | Net Cash Flow Used in Financing Activities | (235,710) | (186,031) | Expenditure increased | | Net Decrease in Cash and Cash Equivalents | (99,001) | (1,466) | Decrease widened | | Cash and Cash Equivalents at End of Period | 490,827 | 768,140 | -36.1% | Notes to the Condensed Interim Consolidated Financial Information This section provides detailed notes to the interim financial statements, covering general information, basis of preparation, accounting policies, risk management, segment reporting, and asset/liability details, crucial for understanding the Company's financial position 1. General Information SOHO China, a Cayman Islands-incorporated limited liability company listed on HKEX since 2007, primarily engages in property leasing and real estate development in China - Principal Activities: The Group is principally engaged in providing property leasing and related services and real estate development within the People's Republic of China[84] - Company Incorporation and Listing: The Company is a limited liability company incorporated in the Cayman Islands and has been listed on The Stock Exchange of Hong Kong Limited since October 8, 2007[84][85] 2. Basis of Preparation The interim financial information, prepared under HKAS 34, highlights significant going concern uncertainties due to RMB 8.12 billion net current liabilities and potential cross-default risks on RMB 4.12 billion bank borrowings from unpaid land appreciation tax, with management implementing mitigation plans - Basis of Preparation: The condensed interim consolidated financial information for the six months ended June 30, 2025, has been prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[86] Key Liquidity Indicators | Indicator | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Net Current Liabilities | 8,118,299 | 7,954,490 | | Total Bank and Other Borrowings | 15,310,452 | 15,555,736 | | Unrestricted Cash and Cash Equivalents | 490,827 | 589,623 | - Land Appreciation Tax Arrears: Beijing Wangjing Company has unpaid land appreciation tax and related late payment surcharges of RMB 2,434,498,000, which could lead to a cross-default on RMB 4,123,000,000 of bank loan principal, reclassified as current liabilities[88][89] - Going Concern Uncertainty: All the aforementioned conditions indicate the existence of a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern[91] - Management's Mitigation Measures: Include active communication with local tax authorities, disposal of certain commercial properties to settle land appreciation tax, negotiation with lenders to revise repayment amounts and avoid early repayment, plans to sell certain properties to supplement liquidity, and control of administrative costs and capital expenditures[90] 3. Revised Hong Kong Financial Reporting Standards Adopted by the Group The Group adopted HKAS 21 amendment 'Lack of Exchangeability' effective January 1, 2025, with no significant impact, and other unadopted standards are not expected to have a material effect - Adopted Standards: The amendment to Hong Kong Accounting Standard 21 'Lack of Exchangeability', effective for annual periods beginning on or after January 1, 2025, had no significant impact on the preparation of the condensed interim consolidated financial information[95] - Unadopted Standards: The Group has not early adopted certain new and revised standards that have been issued but are not mandatory for the annual reporting period ending December 31, 2025, and these are not expected to have a material impact[96] 4. Estimates Preparation of interim financial information requires management judgments and estimates consistent with 2024 annual statements, though actual results may differ - Management Judgments and Estimates: The preparation of condensed interim consolidated financial information requires management to make judgments, estimates, and assumptions, and actual results may differ from these estimates[97] - Consistency: The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied in the consolidated financial statements for the year ended December 31, 2024[97] 5. Financial Risk Management and Financial Instruments The Group faces market, credit, and liquidity risks, with unchanged risk management policies since 2024; most financial instruments' fair values approximate carrying amounts, and Level 3 fair value measurements for investment properties are overseen by the finance department and reported to the CFO and Audit Committee - Financial Risk Factors: The Group's activities are exposed to various financial risks: market risk (including foreign currency risk, fair value interest rate risk, and cash flow interest rate risk), credit risk, and liquidity risk[98] - Risk Management Policies: There have been no significant changes in risk management policies since the year ended December 31, 2024[99] - Fair Value Measurement: Fair value estimates for investment properties, office properties, and other financial asset investments primarily use Level 3 (using significant unobservable inputs)[103][104][108] - Valuation Process: The Group's finance department includes a team responsible for valuing other financial asset investments, investment properties, and property and equipment, including those at Level 3, for financial reporting purposes, reporting directly to the Chief Financial Officer and the Audit Committee[109] 6. Operating Revenue and Segment Reporting The Group's operating revenue stems from rental income and property sales; it operates as a single segment, with all revenue and non-current assets originating from China Sources of Operating Revenue | Source of Revenue | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | | :--- | :--- | :--- | | Rental Income | 688,027 | 796,017 | | Sales of Property Units | 1,798 | 3,345 | | Total Operating Revenue | 689,825 | 799,362 | - Segment Reporting: The Group has only one operating segment, as the chief operating decision maker assesses real estate development and property leasing as a single integrated business to evaluate operating results[113] - Geographical Information: All of the Group's revenue is derived from China, and all non-current assets (excluding financial instruments and deferred income tax assets) are located within China[113] 7. Other Gains / (Losses) and Income, Net For H1 2025, net other gains/(losses) and income decreased to RMB 173.92 million, mainly due to lower property management income, fewer forfeited deposits, and increased losses on financial assets at fair value through profit or loss Details of Other Gains / (Losses) and Income, Net | Item | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | | :--- | :--- | :--- | | Property Management Service Income | 142,684 | 143,330 | | Hotel Operations Income | 28,105 | 28,946 | | Forfeited Customer Deposits | 14,450 | 19,138 | | Loss on Financial Assets Measured at Fair Value Through Profit or Loss | (13,082) | (10,082) | | Total | 173,921 | 182,879 | 8. Finance Income and Finance Costs For H1 2025, finance income was RMB 1.38 million and finance costs were RMB 329.59 million, a decrease from the prior year due to lower interest on bank and other borrowings Details of Finance Income and Finance Costs | Item | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | | :--- | :--- | :--- | | Interest Income | 1,384 | 2,527 | | Interest on Bank and Other Borrowings | 328,903 | 367,002 | | Net Foreign Exchange Loss | 350 | 6 | | Bank Charges and Others | 340 | 358 | | Total Finance Costs | 329,593 | 367,366 | 9. Income Tax Credit / (Expense) For H1 2025, the Group recorded an income tax credit of RMB 0.47 million, a significant improvement from the prior year's expense, primarily due to reduced corporate income and land appreciation taxes Details of Income Tax Credit / (Expense) | Item | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | | :--- | :--- | :--- | | Corporate Income Tax | (4,867) | 51,910 | | Land Appreciation Tax | – | 42,906 | | Deferred Income Tax | 4,394 | 29,846 | | Total | (473) (Credit) | 124,662 (Expense) | - Tax Rate Information: Chinese subsidiaries are subject to a corporate income tax rate of 25%, and land appreciation tax is levied at progressive rates ranging from 30% to 60% of the appreciation value[118] 10. Loss Per Share, Basic and Diluted For H1 2025, SOHO China's basic and diluted loss per share remained at RMB 0.02, calculated from a net loss of RMB 91.58 million and 5,199,524,031 weighted average shares Loss Per Share | Indicator | 2025 H1 (RMB per share) | 2024 H1 (RMB per share) | | :--- | :--- | :--- | | Basic Loss Per Share | (0.02) | (0.02) | | Diluted Loss Per Share | (0.02) | (0.02) | - Calculation Basis: Loss per share is calculated based on the net loss attributable to owners of the parent of RMB 91,578,000 for the six months ended June 30, 2025, and the weighted average number of ordinary shares issued during the period of 5,199,524,031 shares[121] 11. Fair Value Changes of Investment Properties As of June 30, 2025, the Group's completed investment properties were revalued at RMB 62.94 billion, incurring a RMB 144 million fair value loss, with valuation performed by Hong Kong Appraisal International Limited Fair Value Changes of Investment Properties | Indicator | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Balance at Beginning of Period | 63,079,400 | 63,421,300 | | Fair Value Changes | (144,000) | (88,086) | | Balance at End of Period | 62,935,400 | 63,137,300 | - Valuation: The Group's completed investment properties were revalued as of June 30, 2025, by an independent professional qualified valuer, Hong Kong Appraisal International Limited[122] 12. Completed Properties Held for Sale As of June 30, 2025, completed properties held for sale were valued at RMB 1.60 billion, primarily commercial properties in China, with no impairment recognized Completed Properties Held for Sale | Indicator | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Completed Properties Held for Sale | 1,603,317 | 1,605,127 | - Impairment Provision: No impairment provision was recognized during the six months ended June 30, 2025, and the six months ended June 30, 2024[125] 13. Trade and Other Receivables As of June 30, 2025, the Group's net trade and other receivables totaled RMB 553 million, with current amounts dominating but also some overdue balances Trade and Other Receivables | Item | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Non-current Other Receivables | 68,743 | 68,743 | | Current Trade Receivables – Net | 342,237 | 323,967 | | Current Other Receivables – Net | 210,293 | 196,080 | | Total Current Portion | 552,530 | 520,047 | Aging Analysis of Trade Receivables | Aging | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Current | 309,162 | 289,334 | | Overdue less than 1 month | 11,542 | 768 | | Overdue 1 to 6 months | 10,298 | 8,253 | | Overdue 6 months to 1 year | 1,630 | 21,657 | | Overdue over 1 year | 55,114 | 51,245 | | Total Overdue Amount | 78,584 | 81,923 | 14. Share Capital, Reserves and Dividends As of June 30, 2025, the Company's issued ordinary shares and share capital remained unchanged, and the Board resolved not to declare an interim dividend - Dividends: The Board resolved not to declare an interim dividend for the period (2024 interim dividend: nil)[128] Issued and Fully Paid Ordinary Shares | Indicator | Number of Ordinary Shares ('000 shares) | Share Capital (RMB '000) | | :--- | :--- | :--- | | As of June 30, 2025 | 5,199,524 | 106,112 | 15. Bank and Other Borrowings As of June 30, 2025, the Group's total borrowings were RMB 15.31 billion, with RMB 5.72 billion current, and RMB 4.12 billion reclassified as current due to potential cross-default from overdue land appreciation tax, all secured by investment properties or subsidiary shares Total Bank and Other Borrowings | Indicator | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Current | 5,720,350 | 5,732,567 | | Non-current | 9,590,102 | 9,823,169 | | Total | 15,310,452 | 15,555,736 | - Borrowing Collateral: Borrowings of RMB 15,310,452,000 are secured by the Group's investment properties and/or shares of subsidiaries established in China[129] - Cross-Default Risk: Due to overdue land appreciation tax, bank loan principal of RMB 4,123,000,000 is subject to potential cross-default and has been reclassified as current liabilities[129] 16. Trade and Other Payables As of June 30, 2025, the Group's total trade and other payables increased to RMB 3.30 billion, driven by higher late payment surcharges, while related party payables remained stable Details of Trade and Other Payables | Item | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Trade Payables | 898,560 | 927,982 | | Amounts Due to Related Parties | 812,732 | 812,732 | | Late Payment Surcharges | 869,764 | 727,529 | | Rental Deposits | 223,187 | 231,813 | | Others | 414,268 | 221,256 | | Total | 3,302,739 | 3,011,512 | - Aging of Trade Payables: Trade payables due within 1 month or payable on demand amounted to RMB 898,560 thousand[133] 17. Commitments As of June 30, 2025, the Group's total investment commitments remained stable at approximately RMB 8.34 million Commitment Amounts | Indicator | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Investment Commitments | 8,336 | 8,347 | 18. Significant Related Party Transactions The Group disclosed related party transaction balances, including receivables from SOHO China Foundation and payables to Shanghai Electric and Shanghai Rural Commercial Bank, with H1 2025 key management compensation at RMB 6.48 million Related Party Transaction Balances | Related Party | 2025 June 30 (RMB '000) | 2024 Dec 31 (RMB '000) | | :--- | :--- | :--- | | Amounts Receivable from SOHO China Foundation | 24,740 | 24,740 | | Amounts Payable to Shanghai Electric (Group) Co., Ltd. | 406,366 | 406,366 | | Amounts Payable to Shanghai Rural Commercial Bank | 406,366 | 406,366 | Key Management Personnel Compensation | Indicator | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | | :--- | :--- | :--- | | Short-term Compensation | 6,199 | 6,611 | | Retirement Benefit Scheme Contributions | 283 | 106 | | Total | 6,482 | 6,717 |