闽信集团(00222) - 2023 - 中期业绩

Financial Summary The group's profit attributable to shareholders declined by 51.8% to HK$115.52 million, while total assets increased by 0.7% Key Financial Data for H1 2023 | Indicator | Amount (HK$) | | :--- | :--- | | Profit attributable to shareholders | HK$115.52 million (51.8% decrease) | | Basic earnings per share | 19.34 HK cents | | Total assets | HK$9.28 billion (0.7% increase) | | Total equity attributable to shareholders | HK$8.13 billion (1.6% decrease) | | 2022 final dividend | 12 HK cents per share (paid on July 14, 2023) | Condensed Consolidated Statement of Profit or Loss This statement details the group's financial performance, reflecting a shift from operating profit to loss and a substantial decline in profit for the period Condensed Consolidated Statement of Profit or Loss (for the six months ended June 30, 2023) | Indicator | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Insurance revenue | 99,793 | 90,158 | | Total revenue | 109,377 | 97,443 | | Operating revenue | 126,170 | 115,302 | | Operating (loss)/profit | (9,392) | 4,743 | | Finance costs | (16,074) | (8,002) | | Share of results of associates | 145,469 | 247,043 | | Profit before tax | 120,003 | 243,784 | | Income tax expense | (4,481) | (3,987) | | Profit for the period | 115,522 | 239,797 | | Basic and diluted earnings per share | 19.34 HK cents | 40.15 HK cents | Condensed Consolidated Statement of Comprehensive Income This statement outlines the group's total comprehensive income, which recorded a net loss for the period primarily due to foreign exchange differences Condensed Consolidated Statement of Comprehensive Income (for the six months ended June 30, 2023) | Indicator | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Profit for the period | 115,522 | 239,797 | | Net change in fair value reserve for equity investments at fair value through other comprehensive income (non-recycling) | 93,525 | (245,826) | | Share of other comprehensive income of associates | 25 | (20,261) | | Exchange differences arising from translation of financial statements of overseas subsidiaries and associates | (348,841) | (343,438) | | Reversal on dilution of interest in an associate | 2,962 | – | | Other comprehensive income for the period, net of tax | (177,355) | (632,069) | | Total comprehensive income for the period | (61,833) | (392,272) | Condensed Consolidated Statement of Financial Position This statement presents the group's financial position, showing a slight increase in total assets and a decrease in total equity attributable to shareholders Condensed Consolidated Statement of Financial Position (as of June 30, 2023) | Indicator | June 30, 2023 (HK$ thousand) | December 31, 2022 (HK$ thousand) | | :--- | :--- | :--- | | Non-current assets | | | | Associates | 6,446,214 | 6,550,270 | | Financial assets at fair value through other comprehensive income | 733,250 | 606,943 | | Total non-current assets | 7,985,602 | 7,826,583 | | Current assets | | | | Cash and bank balances | 724,926 | 562,120 | | Total current assets | 1,292,958 | 1,389,738 | | Current liabilities | | | | Bank borrowings | 606,330 | 494,031 | | Dividends payable | 71,671 | – | | Total current liabilities | 905,339 | 706,623 | | Non-current liabilities | | | | Bank borrowings | 198,571 | 198,563 | | Total non-current liabilities | 245,516 | 248,489 | | Equity | | | | Total equity attributable to shareholders of the Company | 8,127,705 | 8,261,209 | Notes to the Condensed Consolidated Interim Financial Statements These notes provide detailed explanations and disclosures for the condensed consolidated interim financial statements, covering accounting policies, segment information, and other financial details 1 Basis of Preparation and Accounting Policies The interim financial statements are prepared in accordance with HKAS 34 and the Listing Rules, with HFRS 17 adopted retrospectively, leading to a restatement of comparative figures - The interim financial statements are prepared in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[54] - The Group has retrospectively adopted Hong Kong Financial Reporting Standard 17 Insurance Contracts, with comparative figures restated from the transition date of January 1, 2022, resulting in a decrease of HK$1.32 million in total equity attributable to shareholders of the Company[57][87] - Hong Kong Financial Reporting Standard 17 requires separate presentation of insurance revenue, insurance service expenses, insurance finance income or expenses, and income or expenses from reinsurance contracts held[58][90] 2 Segment Information The group's business is segmented into financial services, insurance, property investment, and strategic investments, with detailed disclosures on performance, assets, liabilities, and geographical information - The Group has four reportable segments: financial services (banking and micro-lending), insurance, property investment, and strategic investments[92][74][93] 2(a) Segment Results, Assets and Liabilities Segment performance, assets, and liabilities are assessed based on directly identifiable revenues and expenses, with inter-segment transactions priced at market terms and eliminated in consolidation - The Group's chief operating decision maker monitors segment performance and allocates resources based on the results, assets, and liabilities of each reportable segment[95] Segment Performance Overview (for the six months ended June 30, 2023) | Segment | Operating (loss)/profit (HK$ thousand) | Share of results of associates (HK$ thousand) | | :--- | :--- | :--- | | Financial services | (7,609) | 145,149 | | Insurance | 3,689 | (115) | | Property investment | (1,706) | – | | Strategic investments | 942 | 170 | | Corporate business activities | (3,903) | (16,005) | | Consolidated | (9,397) | 145,469 | 2(b) Geographical Information The group's revenue is primarily derived from Hong Kong, mainland China, and Macau, with Macau contributing the largest share of external customer revenue External Customer Revenue (for the six months ended June 30, 2023) | Region | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 45,842 | 39,060 | | Mainland China | 6,625 | 4,363 | | Macau | 56,910 | 54,020 | | Consolidated | 109,377 | 97,443 | Specified Non-current Assets (as of June 30, 2023) | Region | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 135,298 | 133,387 | | Mainland China | 6,509,366 | 6,616,999 | | Macau | 1,271 | 1,440 | | Consolidated | 6,645,935 | 6,751,826 | 3 Other Income The group's other income primarily consists of bank deposit interest income, totaling HK$16.79 million for the first half of 2023, a decrease from the prior year Other Income (for the six months ended June 30, 2023) | Income Source | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Interest income from bank deposits | 16,027 | 16,959 | | Interest income from debt investments measured at amortised cost | 340 | – | | Dividend income from financial assets at fair value through profit or loss | 298 | 237 | | Government grants | – | 5 | | Others | 128 | 658 | | Total | 16,793 | 17,859 | 4 Other Losses - Net The group recorded a net other loss of HK$15.15 million in H1 2023, primarily due to dilution loss from an associate and net exchange losses Other Losses - Net (for the six months ended June 30, 2023) | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Net realised and unrealised gains from financial assets at fair value through profit or loss | 10,325 | 7,799 | | Loss on disposal of debt investments measured at amortised cost | (10) | – | | Fair value (loss)/gain on revaluation of investment properties | (744) | 1,412 | | Loss on dilution of interest in an associate | (15,724) | – | | Net exchange losses | (9,000) | (16,005) | | Total | (15,153) | (6,794) | 5 Operating (Loss)/Profit The group reported an operating loss of HK$9.39 million in H1 2023, driven by increased staff costs, depreciation, and net exchange losses, alongside reduced rental income Components of Operating (Loss)/Profit (for the six months ended June 30, 2023) | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Rental income received and receivable from investment properties, net of direct expenses | 3,889 | 4,519 | | Staff costs, including directors' emoluments | 21,052 | 18,853 | | Depreciation and amortisation | 1,086 | 938 | | Management fees | 940 | 940 | | Loss on disposal of property, plant and equipment | 8 | 1 | | Net exchange losses | 9,000 | 16,005 | 6 Finance Costs The group's finance costs significantly increased to HK$16.07 million in H1 2023, primarily due to a substantial rise in interest expenses on bank borrowings Finance Costs (for the six months ended June 30, 2023) | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 16,065 | 6,873 | | Interest expense on loans from controlling shareholder | – | 1,117 | | Interest expense on lease liabilities | 9 | 12 | | Total | 16,074 | 8,002 | 7 Income Tax Expense The group's income tax expense for H1 2023 was HK$4.48 million, a slight increase mainly due to the recognition of PRC withholding income tax Income Tax Expense (for the six months ended June 30, 2023) | Item | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong profits tax | 142 | 122 | | PRC enterprise income tax | 3,075 | 4,375 | | PRC withholding income tax | 1,028 | – | | Macau tax | 1,702 | 1,058 | | Over-provision of PRC enterprise income tax in prior years | – | (182) | | Deferred tax - origination and reversal of temporary differences | (1,466) | (1,386) | | Total income tax expense | 4,481 | 3,987 | - When dividends are declared by PRC-incorporated subsidiaries and investees, the Group is subject to PRC withholding income tax at 5% and 10% respectively on dividend income[104] 8 Earnings Per Share Basic earnings per share for H1 2023 significantly decreased by 51.8% to 19.34 HK cents, primarily due to a reduction in profit attributable to shareholders - Basic earnings per share is calculated based on the profit attributable to shareholders of the Company of HK$115.522 million (2022: HK$239.797 million) for the six months ended June 30, 2023, and the weighted average number of 597,257,252 shares in issue during the period[105] - The Group had no dilutive potential ordinary shares in issue during the period and prior periods, thus diluted earnings per share is the same as basic earnings per share[129] 9 Dividends The Board resolved not to declare an interim dividend for H1 2023, while the 2022 final dividend of 12 HK cents per share was paid on July 14, 2023 - The Board resolved not to declare an interim dividend for the six months ended June 30, 2023 (2022: nil)[130] 10 Credit-Impaired Customer Loans and Interest Receivables Net credit-impaired customer loans and interest receivables decreased to HK$15.03 million as of June 30, 2023, with legal proceedings initiated for all impaired loans Credit-Impaired Customer Loans and Interest Receivables (HK$ thousand) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Guaranteed loans | 87,819 | 93,977 | | Mortgage loans | 63,858 | 68,825 | | Pledged and guaranteed loans | 10,378 | 10,866 | | Mortgage, pledged and guaranteed loans | 4,108 | 4,301 | | Credit-impaired customer loans | 166,163 | 177,969 | | Credit-impaired interest receivables | 7,356 | 8,008 | | Impairment allowance | (158,490) | (170,056) | | Net | 15,029 | 15,921 | - The Group has initiated legal proceedings against all borrowers of credit-impaired loans, and these proceedings are ongoing[131] Chairman's Statement This statement provides an overview of the group's performance, strategic direction, and outlook amidst challenging market conditions Our Performance The group's profit attributable to shareholders fell by 51.8% to HK$115.52 million, mainly due to XIB's performance, RMB depreciation, and equity dilution loss, despite a 0.7% increase in total assets - The Group recorded unaudited profit attributable to shareholders of the Company of HK$115.52 million for the first half of 2023, representing a 51.8% decrease compared to the same period in 2022[3] - The decline in profit was primarily due to the combined impact of a decrease in XIB's profit attributable to shareholders and the depreciation of RMB against HKD, as well as a one-off dilution loss recognised from the Company's equity interest in XIB[3][111] - As of June 30, 2023, the Group's total assets recorded HK$9.28 billion, an increase of 0.7% compared to the end of 2022[109] - XIB Group's total assets recorded RMB1,132.45 billion as of June 30, 2023, an increase of 4.1% compared to the end of 2022[5] - The Group's share of XIB Group's profit after tax for the first half of 2023 was HK$145.30 million, a 41.2% decrease compared to the same period in 2022[110] - The Company's equity interest in XIB was diluted from approximately 8.8543% to 8.689% in March 2023, resulting in a one-off dilution loss of approximately HK$15.72 million[111] - As of June 30, 2023, the Group's banking business accounted for 69.2% of total assets, with net asset value per share reaching HK$13.61, of which 79% was from XIB investment[134] Outlook The group will focus on financial services investment, risk control, and exploring opportunities in Greater China for diversification, while XIB strengthens cross-border linkages and insurance accelerates digital transformation - The Group will adhere to the principle of "stability first, progress while maintaining stability," focusing on core financial services investment, maintaining prudent financial management strategies, and seizing market opportunities to explore investment opportunities in the Greater China region[7] - XIB Group will continue to leverage its network of over 140 operating branches in the Greater China region, strengthen business collaboration among its institutions in mainland China, Hong Kong, and Macau, enhance financial service capabilities, and support the development of the real economy[135] - XIB ranked 154th globally by total assets and 161st globally by Tier 1 capital in the "Top 1000 World Banks 2023" ranking[136] - The insurance business management team will continue to allocate resources to accelerate digital transformation, enhance service quality and underwriting professionalism, and promote sustainable business development[137] - Xiamen International Investment Co., Ltd., a wholly-owned subsidiary of XIB, has submitted a listing application to the Hong Kong Stock Exchange, aiming to provide comprehensive financial services with leading technological capabilities and distinctive overseas Chinese characteristics[6] Management Discussion and Analysis This section provides an in-depth analysis of the group's operating results and financial position, highlighting key performance drivers and financial health indicators Operating Results The group's profit attributable to shareholders decreased by 51.8% in H1 2023, primarily due to financial services and insurance performance, despite positive contributions from micro-lending and strategic investments - The Group recorded unaudited profit attributable to shareholders of the Company of HK$115.52 million for the first half of 2023, a 51.8% decrease compared to the same period in 2022[117] - Basic earnings per share for the period was 19.34 HK cents, a 51.8% decrease compared to the same period in 2022[117] Financial Services Financial services profit after tax declined by 45.2% due to XIB's performance, RMB depreciation, and equity dilution, while micro-lending profit significantly increased Banking Business XIB Group's profit after tax decreased by 31.8% to RMB1.59 billion, with net interest income falling 17.7% due to higher interest expenses, and the Company's equity in XIB diluted to 8.689% - The Group's financial services business recorded unaudited profit after tax of HK$137.69 million for the first half of 2023, a 45.2% decrease compared to the same period in 2022[9] - XIB Group recorded unaudited profit after tax of RMB1.59 billion, a 31.8% decrease compared to the same period in 2022[118] - XIB Group's net interest income for the first half of 2023 decreased by 17.7% compared to the same period in 2022, primarily due to a 36.4% increase in interest expenses, while interest income rose by 13.7%[118] - XIB Group's total assets increased by 4.1% from RMB1,088.11 billion at the end of 2022 to RMB1,132.45 billion[10] - The Company's equity interest in XIB was diluted from approximately 8.8543% to 8.689% in March 2023, resulting in a one-off dilution loss of approximately HK$15.72 million[9][144] Micro-Lending Business San Yuan Micro-Lending's profit after tax surged by 112.1% to RMB7.21 million, driven by significant recoveries of credit-impaired loan principal and interest income, leading to a 2.2% decrease in impaired loan balance - San Yuan Micro-Lending recorded profit after tax of RMB7.21 million (equivalent to HK$8.12 million) for the first half of 2023, an increase of 112.1% compared to the same period in 2022[27] - San Yuan Micro-Lending recovered RMB3.52 million in principal and RMB2.50 million in interest income from credit-impaired loans, compared to RMB1.61 million and RMB0.60 million respectively in the same period of 2022[27] - As of June 30, 2023, the balance of credit-impaired loans was RMB153.71 million, a 2.2% decrease compared to the end of 2022, primarily due to the recovery of credit-impaired loan principal[27] Insurance Business Minxin Insurance's profit after tax declined by 73.9% to HK$2.02 million, mainly due to a decrease in insurance service results, despite a 10.7% increase in insurance revenue - Minxin Insurance recorded profit after tax of HK$2.02 million for the first half of 2023, a 73.9% decrease compared to the same period in 2022, primarily due to a decline in insurance service results[13] - Minxin Insurance recorded insurance revenue of HK$99.79 million for the first half of 2023, a 10.7% increase compared to the same period in 2022[28] - Insurance service result surplus was HK$4.08 million, a 41.1% decrease compared to the same period in 2022, primarily due to increased claims costs and reinsurance expenses[28] - Minxin Insurance retrospectively adopted the requirements of Hong Kong Financial Reporting Standard 17 Insurance Contracts on January 1, 2023[146] Investment in Huaneng Power International, Inc. The fair value of Huaneng A shares increased in H1 2023, leading to a net fair value change gain of HK$94.18 million, as Huaneng reported a profit of RMB6.31 billion, reversing prior-year losses - The closing bid price of Huaneng A shares increased from RMB7.61 per share as of December 31, 2022, to RMB9.25 per share as of June 30, 2023[120] - The Group recognised a gain from net fair value changes of HK$94.18 million in other comprehensive income for the first half of 2023[120] - Huaneng recorded profit attributable to shareholders of RMB6.31 billion for the first half of 2023, compared to a loss attributable to shareholders of RMB3.01 billion in the same period of 2022, primarily due to a year-on-year decrease in domestic coal prices and an increase in electricity generation[148] Property Investment Property investment recorded a tax-after loss of HK$0.20 million, mainly due to increased property revaluation losses and decreased rental income, despite stable occupancy rates for Fuzhou properties - The property investment business recorded a profit after tax loss of HK$0.20 million for the first half of 2023, compared to a profit after tax of HK$0.59 million in the same period of 2022, primarily due to increased property revaluation losses and decreased rental income[121] - As of June 30, 2023, the occupancy rates for Fuzhou properties were 88.2% (office) and 83.3% (parking spaces) respectively[14] - The Group recorded rental income of RMB1.34 million for the first half of 2023, a 26.4% decrease compared to the same period in 2022, primarily due to a year-on-year decrease in monthly rent and an increase in vacant units[14] - The fair value of Fuzhou properties was HK$46.97 million as of June 30, 2023, a 5.7% decrease compared to the end of 2022[14] Financial Review The group maintains a prudent financial management strategy, demonstrating healthy total liabilities to equity and current ratios, with sufficient borrowing facilities and a strong cash position - The Group has consistently adhered to and implemented a prudent financial management strategy to maintain a healthy financial position[122] - As of June 30, 2023, the Group's capital gearing ratio (total borrowings divided by net assets) was 9.9% (December 31, 2022: 8.4%)[164] Net Asset Value Per Share As of June 30, 2023, the group's net asset value per share was HK$13.61, a slight decrease from HK$13.83 at the end of 2022 - As of June 30, 2023, net asset value per share was HK$13.61 (December 31, 2022: HK$13.83)[15] Total Liabilities to Equity Ratio and Current Ratio As of June 30, 2023, the group's total liabilities to equity ratio was 14.2% and the current ratio was 1.4 times, indicating a healthy financial position - As of June 30, 2023, the Group's total liabilities were HK$1,150.86 million, with total liabilities representing 14.2% of equity attributable to shareholders (December 31, 2022: 11.6%)[123] - As of June 30, 2023, the Group's current ratio was 1.4 times (December 31, 2022: 2 times)[123] Borrowings and Pledges of Assets The group's total bank borrowings increased to HK$804.93 million, mostly at floating rates, with some secured by properties or bank deposits, and available revolving credit facilities - As of June 30, 2023, the Group's borrowings included bank borrowings of HK$804.93 million, an increase of 16.2% compared to the end of 2022[32] - HK$606.33 million of borrowings are due and repayable within one year, and HK$198.60 million of borrowings are due and repayable in more than one year but less than two years[32] - A three-year fixed-rate term loan of HK$198.60 million is secured by a standby letter of credit, which is collateralised by a three-year bank deposit of RMB200.00 million[17] - Revolving bank borrowings of HK$311.33 million are secured by an owner-occupied office property in Hong Kong owned by a wholly-owned subsidiary, with a fair value of HK$260.00 million[151] - As of June 30, 2023, the Group had available revolving bank borrowing facilities of approximately HK$243.67 million[163] Cash Position The group's total bank balances increased to HK$1,160.56 million, with RMB deposits accounting for 72.9% and HKD deposits for 23.2%, while Minxin Insurance maintains statutory deposits - As of June 30, 2023, the Group's total bank balances were HK$1,160.56 million (December 31, 2022: HK$1,018.25 million)[35] - Of these, HKD deposits accounted for 23.2%, RMB deposits for 72.9%, and other currency deposits for 3.9%[35] - Minxin Insurance maintains fixed deposits of HK$16.00 million to comply with the statutory deposit requirements of the Insurance Authority and maintains MOP and HKD bank deposits to comply with Macau's Legal Regime for Insurance Business[165] Exchange Rate Fluctuation Risk The group faces exchange rate risks primarily from HKD and RMB fluctuations, which are regularly reviewed and monitored, with hedging considered for significant exposures - The Group's exchange rate risk primarily arises from fluctuations in the exchange rates between HKD and RMB[153] - The Group regularly reviews and monitors exchange rate fluctuation risks and considers hedging significant foreign currency exposures when necessary[153] - The Group did not enter into any derivative contracts aimed at mitigating foreign exchange risk during the review period[153] Capital Commitments As of June 30, 2023, the group's total capital commitments for property, plant and equipment and investment properties amounted to HK$0.65 million - As of June 30, 2023, the Group's total capital commitments for property, plant and equipment and investment properties amounted to HK$0.65 million (December 31, 2022: HK$0.66 million)[154] Contingent Liabilities As of June 30, 2023, and December 31, 2022, the group had no significant contingent liabilities - As of June 30, 2023, and December 31, 2022, the Group had no significant contingent liabilities[166] Employees and Remuneration Policy The group values its human resources, employing 70 staff as of June 30, 2023, and offering competitive remuneration, training, and recreational activities to foster professional development - As of June 30, 2023, the Group had a total of 70 employees[37] - Employee remuneration is determined based on individual performance and qualifications, with retirement benefits, medical benefits, on-the-job training, and recreational activities provided[37][167] Corporate Governance and Other Information This section details the group's adherence to corporate governance standards, including compliance with the Corporate Governance Code and directors' securities dealing code Compliance with the Corporate Governance Code The Board confirms the Company's compliance with all applicable code provisions of the Corporate Governance Code as set out in Appendix 14 of the Listing Rules for H1 2023 - The Directors believe that the Company has complied with all applicable code provisions of the Corporate Governance Code as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the six months ended June 30, 2023[155] Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers The Company has adopted a code of conduct for directors' securities transactions no less exacting than the Model Code, with all directors confirming compliance for H1 2023 - The Company has adopted its own code of conduct for directors' securities transactions, the terms of which are no less exacting than the standards set out in the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10 to the Listing Rules[39] - All Directors have confirmed that they have complied with the required standards set out in the Model Code and the Company's Code of Conduct for the six months ended June 30, 2023[39] Purchase, Sale or Redemption of Shares Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's issued shares during the review period - Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's issued shares during the review period[168] Review by Audit Committee The Audit Committee, comprising three independent non-executive directors, reviewed the group's accounting principles, risk management, internal controls, and financial reporting, including the interim results - The Audit Committee, comprising three independent non-executive Directors, has reviewed with management the accounting principles and practices adopted by the Group and discussed matters relating to risk management, internal control, and financial reporting[40][43] Publication of Interim Results Announcement and 2023 Interim Report The interim results announcement for H1 2023 has been published on the HKEX and Company websites, with the printed interim report to be dispatched to shareholders in due course - The interim results announcement for the six months ended June 30, 2023, has been published on the HKEX website (www.hkexnews.hk) and the Company's website (www.minxin.com.hk)[41](index=41&type=chunk)[170] - The interim report will be published on the aforementioned websites in due course, and printed copies of the 2023 Interim Report will be dispatched to shareholders[170]