中国汇融(01290) - 2023 - 中期业绩

Interim Results Announcement Summary Disclaimer and Report Title This announcement details the interim results and a supplemental disclosure for China Huirong Financial Holdings Limited for the six months ended June 30, 2023 - This announcement is the interim results announcement and a supplemental announcement for disclosable transactions of China Huirong Financial Holdings Limited for the six months ended June 30, 2023[7] - Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, making no representation as to its accuracy or completeness[6] Key Financial Highlights For the six months ended June 30, 2023, revenue increased by 4% to RMB 317,157 thousand, profit attributable to owners surged by 52% to RMB 27,619 thousand, and basic earnings per share grew by 47% to RMB 0.025 Key Financial Data for the Six Months Ended June 30 | Indicator | 2023 (RMB '000) | 2022 (RMB '000) | Change % | | :--- | :--- | :--- | :--- | | Operating Revenue | 317,157 | 305,419 | 4% | | Operating Expenses | 202,974 | 191,717 | 6% | | Profit Attributable to Owners of the Company | 27,619 | 18,149 | 52% | | Basic Earnings Per Share (RMB) | 0.025 | 0.017 | 47% | | Financial Position (Period End): | | | | | Total Assets | 2,975,311 | 2,985,146 | 0% | | Total Liabilities | 834,324 | 873,816 | -5% | | Loans to Customers | 2,120,233 | 2,107,055 | 1% | | Bank Balances and Cash | 287,205 | 309,139 | -7% | | Net Assets | 2,140,987 | 2,111,330 | 1% | Interim Condensed Consolidated Financial Statements Interim Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2023, the Group's operating revenue increased to RMB 317,157 thousand, driven by interest and goods sales, with profit for the period at RMB 36,527 thousand Summary of Interim Condensed Consolidated Statement of Comprehensive Income (For the Six Months Ended June 30) | Indicator | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Interest Income | 128,610 | 125,126 | | Revenue from Sales of Goods | 187,980 | 178,474 | | Consulting Fee Income | 109 | 723 | | Handling Fee Income | 415 | 1,096 | | Finance Lease Income | 43 | — | | Operating Revenue | 317,157 | 305,419 | | Operating Costs | (202,974) | (191,717) | | Net Investment Income/(Loss) | 3,994 | (286) | | Credit Impairment Losses | (39,453) | (39,966) | | Other Operating Income/(Expenses) | 5,215 | (1,711) | | Net Operating Income | 83,939 | 73,650 | | Administrative Expenses | (39,774) | (34,514) | | Other Gains, Net | 949 | 1,755 | | Share of Net Profit of Joint Ventures | 2,134 | — | | Profit Before Income Tax | 47,248 | 40,891 | | Income Tax Expense | (10,721) | (12,399) | | Profit for the Period | 36,527 | 28,492 | | Profit Attributable to Owners of the Company | 27,619 | 18,149 | | Profit Attributable to Non-controlling Interests | 8,908 | 10,343 | | Basic Earnings Per Share (RMB) | 0.025 | 0.017 | | Diluted Earnings Per Share (RMB) | 0.025 | 0.017 | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2023, the Group's total assets were RMB 2,975,311 thousand, total liabilities RMB 834,324 thousand, and total equity RMB 2,140,987 thousand Summary of Interim Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Assets | | | | Property, Plant and Equipment | 54,486 | 54,682 | | Right-of-use Assets | 16,029 | 17,690 | | Investments Accounted for Using the Equity Method | 8,934 | 26,005 | | Investment Properties | 192,969 | 192,969 | | Intangible Assets | 770 | 1,127 | | Non-current Loans to Customers | 272,251 | 258,969 | | Finance Lease Receivables (Non-current) | 9,404 | — | | Deferred Income Tax Assets | 96,400 | 85,555 | | Other Non-current Assets | 718 | — | | Total Non-current Assets | 651,961 | 636,997 | | Inventories | 13,761 | 2,163 | | Other Current Assets | 55,722 | 66,127 | | Fee Receivables | 162 | 3 | | Current Loans to Customers | 1,847,982 | 1,848,086 | | Finance Lease Receivables (Current) | 9,640 | — | | Financial Assets at Fair Value Through Profit or Loss | 108,878 | 122,631 | | Bank Balances and Cash | 287,205 | 309,139 | | Total Current Assets | 2,323,350 | 2,348,149 | | Total Assets | 2,975,311 | 2,985,146 | | Equity | | | | Equity Attributable to Owners of the Company | 1,870,986 | 1,872,587 | | Non-controlling Interests | 270,001 | 238,743 | | Total Equity | 2,140,987 | 2,111,330 | | Liabilities | | | | Lease Liabilities (Non-current) | 2,078 | 2,597 | | Borrowings (Non-current) | 193,000 | 197,000 | | Deferred Income Tax Liabilities | 21,931 | 18,508 | | Total Non-current Liabilities | 217,009 | 218,105 | | Other Current Liabilities | 62,250 | 90,835 | | Current Income Tax Liabilities | 23,907 | 28,127 | | Amounts Due to Related Parties | 633 | 633 | | Dividends Payable | 30,481 | 1,261 | | Lease Liabilities (Current) | 1,897 | 2,627 | | Borrowings (Current) | 498,147 | 532,228 | | Total Current Liabilities | 617,315 | 655,711 | | Total Liabilities | 834,324 | 873,816 | | Total Equity and Liabilities | 2,975,311 | 2,985,146 | Notes to Interim Condensed Consolidated Financial Information General Information and Basis of Preparation The company, incorporated in the Cayman Islands, primarily offers secured and unsecured lending services in mainland China, with interim financial information prepared under HKAS 34 - The Company was incorporated in the Cayman Islands as an exempted company with limited liability on November 11, 2011, and listed on The Stock Exchange of Hong Kong Limited on October 28, 2013[17][18] - The Group primarily provides lending services through secured and unsecured loans to customers in mainland China[36] - The interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and on a going concern basis, with accounting policies consistent with those applied in the consolidated financial statements for the year ended December 31, 2022[19][37][38] Significant Accounting Policies and Estimates The Group has adopted new or revised standards applicable to the current reporting period, with no significant impact expected, and management's key accounting estimates remain consistent with the prior year - The Group did not need to change its accounting policies or make retrospective adjustments upon adopting new and revised standards, and other standards not yet effective are not expected to have a significant impact on the Group in the current or future reporting periods[20][61] - The significant judgments and key sources of estimation uncertainty made by management in preparing the interim condensed consolidated financial information are the same as those applied in the consolidated financial statements for the year ended December 31, 2022[21][63] Segment Information The Group manages its operations through two segments: Inclusive Finance, providing lending services, and Ecological Finance, focusing on supply chain technology, factoring, and equity investments - The Group manages its businesses through two operating and reportable segments for the six months ended June 30, 2023: Inclusive Finance Business Segment and Ecological Finance Business Segment[23][64] - The Inclusive Finance Business Segment primarily provides lending services in China, including secured and unsecured loans[65] - The Ecological Finance Business Segment primarily focuses on supply chain technology, technology-assisted lending, factoring, insurance brokerage, and equity investment businesses[40] Summary of Segment Results (For the Six Months Ended June 30) | Indicator | Inclusive Finance Business Segment (2023) | Ecological Finance Business Segment (2023) | Headquarters and Others (2023) | Total (2023) | | :--- | :--- | :--- | :--- | :--- | | External Operating Revenue (RMB '000) | 105,975 | 205,941 | 5,241 | 317,157 | | External Operating Costs (RMB '000) | (4,799) | (189,293) | (8,882) | (202,974) | | Net Investment Income (RMB '000) | 1 | 304 | 3,689 | 3,994 | | Credit Impairment Losses (RMB '000) | (40,863) | (1,186) | 2,596 | (39,453) | | Profit/(Loss) Before Income Tax (RMB '000) | 41,944 | 12,412 | (7,108) | 47,248 | | Segment Assets (Period End) | | | | | | Segment Assets (RMB '000) | 1,540,763 | 833,798 | 607,338 | 2,975,311 | | Segment Liabilities (RMB '000) | (215,096) | (207,034) | (418,248) | (834,324) | Revenue and Cost Analysis For the six months ended June 30, 2023, interest income primarily derived from customer loans, and goods sales revenue was RMB 187,980 thousand, while consulting and handling fee income decreased Interest Income Total interest income for the six months ended June 30, 2023, was RMB 128,610 thousand, mainly from secured and unsecured customer loans Interest Income Details (For the Six Months Ended June 30) | Source | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Secured Loans to Customers | 82,639 | 74,978 | | Unsecured Loans to Customers | 43,125 | 47,209 | | Bank Deposit Interest Income | 2,846 | 2,939 | | Total | 128,610 | 125,126 | Revenue and Cost of Goods Sold For the six months ended June 30, 2023, revenue from sales of goods was RMB 187,980 thousand, with cost of goods sold at RMB 185,782 thousand, both increasing year-on-year Revenue and Cost of Goods Sold (For the Six Months Ended June 30) | Indicator | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Revenue from Sales of Goods — as principal | 187,980 | 178,474 | | Cost of Goods Sold — as principal | (185,782) | (177,099) | Consulting and Handling Fee Income For the six months ended June 30, 2023, loan consulting fee income significantly decreased to RMB 109 thousand, and handling fee income, mainly from insurance brokerage, also decreased to RMB 415 thousand Consulting Fee Income (For the Six Months Ended June 30) | Source | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Loan Consulting Fee Income | 109 | 723 | Handling Fee Income (For the Six Months Ended June 30) | Source | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Guarantee Business Handling Fee Income | — | 755 | | Insurance Brokerage Handling Fee Income | 415 | 341 | | Total | 415 | 1,096 | Expenses and Other Income For the six months ended June 30, 2023, total interest expense increased, net investment income turned positive, credit impairment losses slightly decreased, and other operating income significantly improved Interest Expense Total interest expense for the six months ended June 30, 2023, increased to RMB 17,192 thousand, primarily due to higher bank borrowing interest expenses Interest Expense Details (For the Six Months Ended June 30) | Source | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Bank Borrowing Interest Expense | 12,302 | 14,379 | | Micro-credit Company Borrowing Interest Expense | 2,033 | 3 | | Other Borrowing Interest Expense | 2,432 | — | | Other Interest Expense | 425 | 236 | | Total | 17,192 | 14,618 | Net Investment Income/(Loss) For the six months ended June 30, 2023, net investment income was RMB 3,994 thousand, a turnaround from a net loss in the prior year, mainly driven by fair value changes in financial assets at FVTPL Net Investment Income/(Loss) Details (For the Six Months Ended June 30) | Source | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Fair Value Change Gain/(Loss) — Financial Assets at FVTPL | 5,608 | (626) | | Net (Loss)/Gain on Disposal of Financial Assets | (1,937) | 340 | | Others | 323 | — | | Total | 3,994 | (286) | Credit Impairment Losses For the six months ended June 30, 2023, credit impairment losses slightly decreased to RMB 39,453 thousand, primarily from customer loans Credit Impairment Losses Details (For the Six Months Ended June 30) | Source | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Credit Impairment Losses on Loans to Customers | 39,371 | 41,170 | | Credit Impairment Losses on Financial Guarantees | — | (1,359) | | Credit Impairment Losses on Other Current Assets | 82 | 155 | | Total | 39,453 | 39,966 | Other Operating Income/(Expenses) For the six months ended June 30, 2023, other operating income significantly improved to RMB 5,215 thousand, primarily due to rental income and net gains from disposal of repossessed assets Other Operating Income/(Expenses) Details (For the Six Months Ended June 30) | Source | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Net Gain/(Loss) on Disposal of Repossessed Assets | 1,015 | (2,367) | | Rental Income | 3,681 | 399 | | Others | 519 | 257 | | Total | 5,215 | (1,711) | Other Gains, Net For the six months ended June 30, 2023, other gains, net, decreased to RMB 949 thousand, mainly from net exchange gains Other Gains, Net Details (For the Six Months Ended June 30) | Source | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Net Exchange Gains | 880 | 1,755 | | Government Grants | 69 | — | | Total | 949 | 1,755 | Income Tax Expense For the six months ended June 30, 2023, income tax expense decreased to RMB 10,721 thousand, with mainland China operations taxed at 25% and Hong Kong profits at 16.5% Income Tax Expense Details (For the Six Months Ended June 30) | Source | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Current Income Tax | 18,143 | 8,875 | | Deferred Income Tax | (7,422) | 3,524 | | Total | 10,721 | 12,399 | - The Group's income tax provision for its operations in mainland China has been calculated based on the estimated taxable profit at the applicable corporate income tax rate of 25% in accordance with existing laws, interpretations, and practices[109] - For the six months ended June 30, 2023, the applicable Hong Kong profits tax rate for taxable profits earned or derived in Hong Kong by the Group was 16.5%[58] Earnings Per Share For the six months ended June 30, 2023, profit attributable to owners was RMB 27,619 thousand, resulting in basic earnings per share of RMB 0.025, with diluted EPS being the same due to no dilutive potential ordinary shares Earnings Per Share Calculation (For the Six Months Ended June 30) | Indicator | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company for the Period | 27,619 | 18,149 | | Weighted Average Number of Ordinary Shares in Issue ('000 shares) | 1,090,335 | 1,090,335 | | Basic Earnings Per Share (RMB) | 0.025 | 0.017 | | Diluted Earnings Per Share (RMB) | 0.025 | 0.017 | - The Group has not issued any categories of potential dilutive ordinary shares, therefore, diluted earnings per share are the same as basic earnings per share[86] Dividends On July 7, 2023, the company paid a dividend of HKD 0.03 per ordinary share, totaling HKD 32.7 million (equivalent to RMB 29.2 million), for the operating results as of December 31, 2022 - At the Company's annual general meeting held on June 12, 2023, a dividend of HKD 0.03 per ordinary share, totaling HKD 32.7 million (equivalent to RMB 29.2 million), was proposed for the operating results as of December 31, 2022, and was paid on July 7, 2023[87][112] Assets Breakdown The Group's non-current assets primarily include property, plant and equipment, right-of-use assets, investments accounted for using the equity method, investment properties, and loans to customers Property, Plant and Equipment As of June 30, 2023, the carrying value of property, plant and equipment was RMB 54,486 thousand, mainly comprising buildings, vehicles, and electronic equipment Carrying Value of Property, Plant and Equipment (As of June 30) | Category | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Buildings | 50,108 | 50,583 | | Vehicles | 442 | 258 | | Electronic Equipment and Others | 3,936 | 3,841 | | Total | 54,486 | 54,682 | Leases As of June 30, 2023, right-of-use assets had a carrying value of RMB 16,029 thousand, primarily land use rights and properties, with current lease liabilities at RMB 1,897 thousand and non-current at RMB 2,078 thousand Carrying Value of Right-of-use Assets (As of June 30) | Category | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Land Use Rights | 12,088 | 12,259 | | Properties | 3,941 | 5,431 | | Total | 16,029 | 17,690 | Lease Liabilities (As of June 30) | Category | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Current | 1,897 | 2,627 | | Non-current | 2,078 | 2,597 | | Total | 3,975 | 5,224 | - As of June 30, 2023, land use rights of RMB 193.0 million were pledged as collateral for non-current dedicated borrowings used to finance the construction and operation costs of Huirong Financial Tower[96] Investments Accounted for Using the Equity Method As of June 30, 2023, investments accounted for using the equity method decreased significantly to RMB 8,934 thousand, mainly due to capital reduction and dividends received Changes in Investments Accounted for Using the Equity Method (For the Six Months Ended June 30) | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | As at January 1 | 26,005 | 17,475 | | Capital Contribution | — | 13,490 | | Capital Reduction | (17,071) | — | | Profit for the Period | 2,134 | — | | Dividends Received | (2,134) | — | | As at June 30 | 8,934 | 30,965 | - The Group has joint control over Suzhou Cibei, hence the investment is accounted for using the equity method[98] Investment Properties As of June 30, 2023, the fair value of investment properties was RMB 192,969 thousand, remaining stable, with Huirong Financial Tower pledged for non-current dedicated bank borrowings Fair Value of Investment Properties (As of June 30) | Category | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Huirong Financial Tower | 191,289 | 191,289 | | Others | 1,680 | 1,680 | | Total | 192,969 | 192,969 | - Huirong Financial Tower is pledged as collateral for non-current dedicated bank borrowings of RMB 193.0 million, which were used to finance its construction and operation costs[102][394] Loans to Customers As of June 30, 2023, net loans to customers totaled RMB 2,120,233 thousand, with current loans at RMB 1,847,982 thousand and non-current at RMB 272,251 thousand, and interest rates ranging from 5.5% to 54.0% Net Loans to Customers (As of June 30) | Category | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Non-current | | | | Unsecured Loans | 278,619 | 264,828 | | Less: Provision for Expected Credit Losses | (6,368) | (5,859) | | Non-current Loans to Customers, Net | 272,251 | 258,969 | | Current | | | | Loans to Customers, Gross | 2,593,766 | 2,558,086 | | Less: Provision for Expected Credit Losses | (745,784) | (710,000) | | Current Loans to Customers, Net | 1,847,982 | 1,848,086 | | Total Loans to Customers, Net | 2,120,233 | 2,107,055 | - For the six months ended June 30, 2023, fixed annual interest rates for real estate mortgage loans and equity pledge loans ranged from 8.0% to 24.0%, chattel mortgage loans from 8.0% to 54.0%, guarantee loans from 5.5% to 18.0%, and other unsecured loans from 8.0% to 16.0%[104] Deferred Income Tax As of June 30, 2023, net deferred income tax assets were RMB 96,400 thousand, primarily from expected credit losses and deductible losses, while net deferred income tax liabilities were RMB 21,931 thousand, mainly from investment property gains Composition of Deferred Income Tax Assets (As of June 30) | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Expected Credit Losses on Financial Assets | 95,589 | 85,525 | | Net Losses from Financial Instruments at FVTPL | — | 981 | | Deductible Losses | 4,708 | 6,151 | | Total Deferred Income Tax Assets | 100,297 | 92,657 | | Offset against Deferred Income Tax Liabilities | (3,897) | (7,102) | | Net Deferred Income Tax Assets | 96,400 | 85,555 | Composition of Deferred Income Tax Liabilities (As of June 30) | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Net Gains on Investment Properties | 24,925 | 24,925 | | Net Gains from Financial Instruments at FVTPL | 903 | 685 | | Total Deferred Income Tax Liabilities | 25,828 | 25,610 | | Offset against Deferred Income Tax Assets | (3,897) | (7,102) | | Net Deferred Income Tax Liabilities | 21,931 | 18,508 | Financial Assets at Fair Value Through Profit or Loss As of June 30, 2023, financial assets at fair value through profit or loss totaled RMB 108,878 thousand, mainly comprising equity securities and structured deposits, with RMB 20.0 million of structured deposits pledged for bank borrowings Financial Assets at Fair Value Through Profit or Loss (As of June 30) | Category | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Equity Securities | 88,259 | 72,129 | | Structured Deposits | 20,619 | 50,502 | | Total | 108,878 | 122,631 | - As of June 30, 2023, RMB 20.0 million of structured deposits were pledged as collateral for the Group's RMB 20.0 million bank borrowings[165] Bank Balances and Cash As of June 30, 2023, total bank balances and cash decreased to RMB 287,205 thousand, with RMB 52.1 million in restricted bank time deposits pledged for bank borrowings Bank Balances and Cash by Currency (As of June 30) | Currency | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Renminbi | 282,037 | 299,772 | | US Dollar | 3,850 | 6,835 | | Hong Kong Dollar | 1,318 | 2,532 | | Total | 287,205 | 309,139 | - As of June 30, 2023, time deposits of RMB 52.1 million were restricted as collateral for the Group's RMB 50.0 million bank borrowings[194] Equity and Liabilities Breakdown As of June 30, 2023, the company's share capital remained stable, share premium and other reserves were unchanged, and total borrowings were RMB 691,147 thousand, with a decrease in other current liabilities Share Capital and Reserves As of June 30, 2023, the company's issued and fully paid share capital remained at 1,090,335,000 ordinary shares, totaling RMB 8,662 thousand, with no changes in ordinary shares, share premium, or other reserves during the period Share Capital (As of June 30) | Category | Number of Shares | Ordinary Shares (HKD) | Ordinary Shares (RMB) | | :--- | :--- | :--- | :--- | | As at June 30, 2023 | 1,090,335,000 | 10,903,350 | 8,662,017 | | As at December 31, 2022 | 1,090,335,000 | 10,903,350 | 8,662,017 | - There were no changes in ordinary shares during the period[168] - Share premium, capital reserve, statutory reserve, general reserve, and share-based payment reserve totaled RMB 1,197,600 thousand, consistent with the beginning of the year[196] Borrowings As of June 30, 2023, the Group's total borrowings were RMB 691,147 thousand, including RMB 193,000 thousand in non-current bank borrowings and RMB 498,147 thousand in current borrowings, with several bank borrowings secured by assets or third-party guarantees Borrowings Details (As of June 30) | Category | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Non-current | | | | Bank Borrowings | 193,000 | 197,000 | | Current | | | | Bank Borrowings | 328,897 | 402,128 | | Borrowings from Other Companies | 52,000 | 52,000 | | Borrowings from Micro-credit Companies | 67,500 | 45,500 | | Borrowings from Employees within the Group | 49,750 | 32,600 | | Total Current Borrowings | 498,147 | 532,228 | | Total Borrowings | 691,147 | 729,228 | - RMB 193.0 million of non-current dedicated borrowings are secured by Huirong Financial Tower and bear a floating interest rate of the People's Bank of China's five-year loan prime rate minus 35 basis points[170][414] - Multiple bank borrowings are pledged by restricted bank time deposits, structured deposits, or guaranteed by Jiangsu Wuzhong Jiaye Group Co., Ltd., the ultimate shareholder, Jiangsu Wuzhong Group Co., Ltd., and Suzhou Guofa Financing Guarantee Co., Ltd[171][172][173][198][199][200][415][421] Other Current Liabilities As of June 30, 2023, total other current liabilities decreased to RMB 62,250 thousand, primarily including payables for construction, prepayments from financial asset transferees, and sales prepayments Other Current Liabilities Details (As of June 30) | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Payables for Construction | 19,958 | 34,844 | | Prepayments from Financial Asset Transferees | 22,146 | 25,471 | | Sales Prepayments | 7,004 | 8,609 | | Accrued Employee Benefits | 4,371 | 7,871 | | Business Tax and Other Taxes Payable | 1,511 | 1,992 | | Redemption Deposits | 290 | — | | Other Financial Liabilities | 6,970 | 12,048 | | Total | 62,250 | 90,835 | Contingent Liabilities and Commitments As of June 30, 2023, the Group had no significant contingent liabilities, and total capital commitments were RMB 37,495 thousand, mainly for agreed capital injections into several investees - As of June 30, 2023, the Group had no significant contingent liabilities[177][204][418] Capital Commitments Details (As of June 30) | Investee Company Name | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Suzhou Cibei | 20,495 | 20,495 | | Qianhui Tongcui | 10,000 | 10,000 | | Tiankai Huirui | — | 10,000 | | Kangli Junzhuo | 5,000 | 8,000 | | Qianrong Yuanfeng | — | 8,000 | | Zhongxin Hengyuan | 2,000 | 2,000 | | Total | 37,495 | 58,495 | Management Discussion and Analysis Business Review and Development The Group's overall operations significantly improved year-on-year, driven by its dual-wheel strategy of Inclusive Finance and Ecological Finance, with progress across various business segments - The Company, guided by a nationwide orientation and leveraging its Hong Kong listed company platform, adheres to a dual-wheel strategy of Inclusive Finance and Ecological Finance to provide comprehensive financial services to SMEs and individuals[182] - During the reporting period, the Company's overall operating performance significantly improved compared to the same period last year, adhering to the operating philosophy of "intensive operation and refined management"[208] Inclusive Finance Business Segment The Inclusive Finance Business Segment, operating across multiple platforms, offers pawn, micro-credit, relending fund, art investment, and luxury goods sales services, primarily addressing short-term funding needs for SMEs and individuals - The Inclusive Finance Business Segment primarily provides lending services to customers through secured loans (real estate mortgage loans, chattel mortgage loans) and unsecured loans (equity pledge loans, guarantee loans, and other unsecured loans), focusing on solving short-term operational turnover problems for SMEs and short-term funding needs for individuals[183] - Currently, the business primarily covers Suzhou, Chengdu, Wuhan, Hefei, Wuxi, Changsha, and Nanchang, continuously striving to become a leading inclusive financial service provider in China[184] Pawn Business Pawn business includes real estate mortgage, chattel mortgage, and unsecured loans, with real estate mortgage loan balance rising but interest income falling, while chattel mortgage and unsecured loans saw increases in both balance and interest income Pawn Business Loan Details (As of June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Total New Real Estate Mortgage Loans Granted | 298 | 342 | | Total New Chattel Mortgage Loans Granted | 1,697 | 1,140 | | Total New Real Estate Mortgage Loan Amount (RMB million) | 211 | 205 | | Total New Chattel Mortgage Loan Amount (RMB million) | 164 | 58 | | Real Estate Mortgage Loan Balance at Period End (Principal, RMB million) | 708 | 687 | | Chattel Mortgage Loan Balance at Period End (Principal, RMB million) | 158 | 79 | | Real Estate Mortgage Loan Interest Income (RMB '000) | 48,159 | 50,991 | | Chattel Mortgage Loan Interest Income (RMB '000) | 11,190 | 6,802 | | Total New Unsecured Loans Granted | 20 | 25 | | Total New Unsecured Loan Amount (RMB million) | 362 | 401 | | Unsecured Loan Balance at Period End (Principal, RMB million) | 397 | 375 | | Unsecured Loan Interest Income (RMB '000) | 12,464 | 11,997 | - The decrease in real estate mortgage loan interest income was primarily due to the recovery of some large loans in the third stage, leading to a reduction in discounted interest income reversal[241] - The significant increase in chattel mortgage loan balance and interest income was mainly due to intensified marketing efforts, focus on art pawn business, and the creation of a "cloud pawn" platform[243] - The increase in unsecured loan balance and interest income was primarily due to slightly increased loan support for long-term cooperative clients[245] Micro-credit Business Micro-credit business ended the period with a balance of RMB 416 million and interest income of RMB 20,579 thousand, a year-on-year increase, driven by interbank funding, business expansion, and successful loan recovery Micro-credit Business Operating Performance (As of June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Total New Loans Granted | 67 | 111 | | Total New Loan Amount (RMB million) | 194 | 187 | | Balance at Period End (Principal, RMB million) | 416 | 349 | | Interest Income (RMB '000) | 20,579 | 19,744 | - The increase in micro-credit business interest income was primarily due to obtaining interbank funding, expanding business scale, and achieving breakthroughs in the recovery of existing loans[223] - The future development direction is to increase services for technology-driven and low-carbon SMEs, fulfilling the social responsibility of inclusive finance in promoting regional economic development, while maintaining stable dividend returns for shareholders[224] Relending Fund Business Relending fund business ended the period with a balance of RMB 45 million, a significant increase, but interest income decreased significantly to RMB 3,856 thousand, due to short loan terms and the recovery of large loans Relending Fund Business Operating Performance (As of June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Total New Loans Granted | 453 | 312 | | Total New Loan Amount (RMB million) | 2,214 | 1,937 | | Balance at Period End (Principal, RMB million) | 45 | 13 | | Interest Income (RMB '000) | 3,856 | 6,234 | - The significant increase in the relending fund business balance at period-end was primarily due to the business's characteristics of short loan terms and high turnover rate, leading to large fluctuations in the period-end balance[228] - The significant decrease in relending fund business interest income was mainly due to the recovery of some large loans in the third stage, leading to a reduction in discounted interest income reversal[228] Art Investment Business Art investment business had an outstanding amount of RMB 148 million and operating income of RMB 9,502 thousand, a year-on-year increase, driven by deeper cooperation with auction houses and expanded investment scale Art Investment Business Operating Performance (As of June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Total New Art Transactions | 6 | 4 | | Total New Art Transaction Amount (RMB million) | 68 | 54 | | Art Transaction Outstanding Amount at Period End (RMB million) | 148 | 131 | | Art Operating Income (RMB '000) | 9,502 | 8,404 | - The increase in art operating income was primarily due to the Company deepening cooperation with major auction houses and effectively expanding its art investment scale after validating its business model[231] Luxury Goods Sales Business Luxury goods sales business recorded 648 transactions and sales revenue of RMB 7,502 thousand, a year-on-year increase, primarily due to opening mall stores and increased natural customer traffic Luxury Goods Sales Business Operating Performance (As of June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Total Transactions | 648 | 175 | | Sales Revenue (RMB '000) | 7,502 | 5,129 | - The increase in luxury goods sales revenue was primarily due to the Company opening mall stores, which led to increased natural customer traffic[290] Ecological Finance Business Segment The Ecological Finance Business Segment, driven by innovation, engages in commercial factoring, finance leasing, supply chain management, equity investment, special asset investment, and insurance agency businesses, focusing on integrating internal and external resources for performance breakthroughs - The Ecological Finance Business Segment, relying on multiple platforms and adhering to an innovation-led ecological finance philosophy, highly values the interactive integration of internal and external resources, conducting commercial factoring, finance leasing, supply chain management, equity investment, special asset investment, and insurance agency businesses[235] Commercial Factoring Business Commercial factoring business ended the period with a balance of RMB 359 million, interest income of RMB 15,525 thousand, and service fee income of RMB 1,882 thousand, all increasing year-on-year due to continuous bank financing and business expansion Commercial Factoring Business Operating Performance (As of June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Total New Accounts Receivable Transfer Transactions | 16 | 8 | | Total New Accounts Receivable Transfer Amount (RMB million) | 108 | 66 | | Balance at Period End (Principal, RMB million) | 359 | 304 | | Interest Income (RMB '000) | 15,525 | 14,435 | | Service Fee Income (RMB '000) | 1,882 | 1,297 | - The increase in interest income was primarily due to continuous bank financing and further expansion of business scale[266] - The future development direction is to focus on promoting multi-dimensional financing, continue to expand business scale, strengthen digitalization, and build a rich and diverse product system[238] Financial Leasing Business The financial leasing business, officially established in H1 2023, added 2 new transactions totaling RMB 19 million, with a period-end balance of RMB 19 million and interest income of RMB 43 thousand Financial Leasing Business Operating Performance (As of June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Total New Financing Transactions | 2 | — | | Total New Financing Transaction Amount (RMB million) | 19 | — | | Balance at Period End (RMB million) | 19 | — | | Interest Income (RMB '000) | 43 | — | - Huifang Rongzu was officially established and its team assembled in H1 2023 after being approved by the Jiangsu Provincial Local Financial Supervision and Administration Bureau[271] - The future development direction is to support innovation and entrepreneurship of SMEs and assist industrial transformation and upgrading, focusing on advanced manufacturing, healthcare, and public utilities[271] Supply Chain Management Business Supply chain management business completed 538 transactions, with sales revenue of RMB 187,980 thousand, a year-on-year increase, driven by focusing on high-margin businesses and adjusting product category structures Supply Chain Management Business Operating Performance (As of June 30) | Category | 2023 | 2022 | | :--- | :--- | :--- | | Total Transactions | 538 | 419 | | Grain and Oil Business Total Transactions | 98 | 109 | | Fresh Produce Business Total Transactions | 314 | 77 | | Baijiu Business Total Transactions | 109 | 55 | | Other Business Total Transactions | 17 | 178 | | Sales Revenue (RMB '000) | 187,980 | 178,474 | | Grain and Oil Sales Revenue | 116,818 | 125,571 | | Fresh Produce Sales Revenue | 24,284 | 11,881 | | Baijiu Sales Revenue | 905 | 926 | | Other Sales Revenue | 45,973 | 40,096 | - The increase in sales revenue was primarily due to focusing on high-margin businesses and adjusting the business structure of different product categories[301] - The future development direction is to independently build a supply chain SaaS platform, innovate in digital finance, and expand more product categories[302] Equity Investment Business Equity investment business added RMB 21 million in new investments, with a period-end investment principal of RMB 81 million, having partnered with six experienced equity investment institutions Equity Investment Business Operating Performance (As of June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Total New Investment Amount (Principal, RMB million) | 21 | 9 | | Investment Principal Amount at Period End (Principal, RMB million) | 81 | 24 | | Investment Income (RMB '000) | — | — | - As of June 30, 2023, Huifang Rongcui has partnered with six experienced equity investment institutions, with an intended subscription of RMB 75 million and actual investment of RMB 68 million[277] - The future development direction is to further strengthen cooperation with experienced equity investment institutions, accelerate the implementation of a dual-GP cooperation model, and deeply participate in equity investment projects directly or indirectly[279] Special Asset Investment Business Special asset investment business ended the period with an investment amount of RMB 7 million, a decrease year-on-year, but investment income increased to RMB 2,456 thousand, as some projects were successfully disposed of Special Asset Investment Business Operating Performance (As of June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Total New Investment Transactions | — | 2 | | Total New Investment Amount (RMB million) | — | 16 | | Investment Amount at Period End (RMB million) | 7 | 32 | | Investment Income (RMB '000) | 2,456 | — | - The increase in investment income was primarily due to the successful disposal of some investment projects, leading to capital recovery and gradually emerging investment benefits[281] - The future development direction is to actively participate in the special asset circulation market in Jiangsu Province, explore potential projects, and deeply cultivate debt through bankruptcy, pre-reorganization, and other methods, building a deep cooperation network across upstream asset, midstream capital, and downstream disposal ends[282] Insurance Agency Business Insurance agency business recorded 182 transactions and sales revenue of RMB 415 thousand, a year-on-year increase, driven by focusing on external client expansion, internal integration, and increased product variety Insurance Agency Business Operating Performance (As of June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Total Transactions | 182 | 174 | | Sales Revenue (RMB '000) | 415 | 341 | - The increase in sales revenue was primarily due to the Company focusing on external client expansion, strengthening internal integration, and increasing product variety[284] - The future development direction is to strive for new co-insurance partnerships, introduce competitive agent teams, and explore life insurance agency business[285] Headquarters and Others Headquarters serves as an incubator for the company's strategic new businesses, with overseas financial business currently managed directly by headquarters as an attempt at global development - Headquarters serves as an incubator for the Company's strategic new businesses, undertaking the phased cultivation function of innovative businesses, with overseas financial business currently managed directly by headquarters as an attempt at global development[339] Overseas Financial Business Overseas financial business ended the period with a balance of HKD 26 million and interest income of HKD 754 thousand, flat year-on-year, with business expansion affected by increased overseas financing costs due to Fed rate hikes Overseas Financial Business Operating Performance (As of June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Total New Loans Granted | 1 | — | | Total New Loan Amount (HKD million) | 20 | — | | Balance at Period End (Principal, HKD million) | 26 | 26 | | Interest Income (HKD '000) | 754 | 754 | - Overseas financial business showed no significant change in performance during the reporting period, and business expansion was affected by increased overseas financing costs due to multiple Fed rate hikes[314] - The future development direction is to seek layout opportunities in pawn and digital assets in more overseas countries and regions such as Macau and Singapore[314] Financial Review As of June 30, 2023, the Group's operating revenue and profit attributable to owners increased, driven by expanded debt and investment businesses, loan recovery, and fair value gains on financial assets Overall Financial Data As of June 30, 2023, the Group's operating revenue was RMB 317,157 thousand, and profit attributable to owners was RMB 27,619 thousand, both showing year-on-year increases Overall Financial Data (For the Six Months Ended June 30) | Indicator | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Operating Revenue | 317,157 | 305,419 | | Net Operating Income | 83,939 | 73,650 | | Net Assets | 2,140,987 | 2,075,674 | | Administrative Expenses | 39,774 | 34,514 | | Income Tax Expense | 10,721 | 12,399 | | Profit Attributable to Owners of the Company | 27,619 | 18,149 | | Basic Earnings Per Share (RMB) | 0.025 | 0.017 | - The increase in operating revenue was primarily due to higher interest income and revenue from sales of goods, while the increase in profit attributable to owners was mainly due to expanded debt and investment businesses, progress in existing loan recovery, and fair value gains on financial assets at FVTPL[342] Financial Analysis by Business Segment Inclusive Finance saw increased revenue but decreased pre-tax profit due to higher credit impairment losses, while Ecological Finance experienced significant increases in both revenue and pre-tax profit, and Headquarters and Others reduced pre-tax losses Inclusive Finance Business Segment Financial Data (For the Six Months Ended June 30) | Indicator | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Operating Revenue | 106,039 | 105,616 | | Operating Costs | (8,138) | (7,101) | | Other Non-operating Losses | (55,957) | (45,818) | | Profit Before Tax | 41,944 | 52,697 | - The increase in Inclusive Finance Business Segment operating revenue was primarily due to the expansion of pawn and micro-credit businesses and increased operating income from art investment, while the decrease in pre-tax profit was mainly due to increased credit impairment losses[343] Ecological Finance Business Segment Financial Data (For the Six Months Ended June 30) | Indicator | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Operating Revenue | 206,202 | 194,352 | | Operating Costs | (193,174) | (182,172) | | Other Non-operating Losses | (616) | (5,351) | | Profit Before Tax | 12,412 | 6,829 | - The increase in Ecological Finance Business Segment operating revenue was primarily due to higher income from commercial factoring, finance leasing, supply chain management, and special asset investment businesses, with the significant increase in pre-tax profit attributed to these revenue increases[321] Headquarters and Others Financial Data (For the Six Months Ended June 30) | Indicator | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Operating Revenue | 11,690 | 11,910 | | Operating Costs | (8,882) | (8,623) | | Other Non-operating Losses | (9,916) | (21,922) | | Loss Before Tax | (7,108) | (18,635) | - The reduction in pre-tax loss for Headquarters and Others was primarily due to increased rental income from Huirong Financial Tower and fair value change gains on equity investments[322] Credit Risk Management The Group analyzes credit risk exposure for financial assets, measuring impairment provisions using an expected credit loss model, and maintains a comprehensive credit risk management and internal control system - As of June 30, 2023, the Group's impairment provisions for secured and unsecured loans to customers totaled RMB 752,152 thousand, representing approximately 26.19% of the total loans to customers (before provisions), with the overall impairment provision increasing by RMB 36,293 thousand compared to the end of the previous year[329] - The Group has established clear guidelines, policies, and measures for the entire loan process, from credit risk assessment and loan origination to post-loan monitoring and risk management[358] Loan Classification and Impairment Provisions The Group measures expected credit loss provisions using an ECL model, assessing secured and unsecured loans separately, with increases in Stage 1 and 2 provisions due to higher loan balances and Stage 3 unsecured loan provisions due to updated supporting documents Loans to Customers and Expected Credit Loss Provisions (As of June 30) | Category | Stage 1 (RMB '000) | Stage 2 (RMB '000) | Stage 3 (RMB '000) | Total (RMB '000) | | :--- | :--- | :--- | :--- | :--- | | Gross Carrying Amount of Loans to Customers | | | | | | Secured | 837,131 | 11,900 | 803,954 | 1,652,985 | | Unsecured | 960,080 | 35,309 | 224,011 | 1,219,400 | | Total | 1,797,211 | 47,209 | 1,027,965 | 2,872,385 | | Expected Credit Loss Provisions | | | | | | Secured (Stage 1 & 2) | 13,179 | | 488,545 | 501,724 | | Secured (Stage 3) | | | | | | Unsecured (Stage 1 & 2) | 37,562 | | 212,866 | 250,428 | | Unsecured (Stage 3) | | | | | | Total | 50,741 | 11,724 | 701,411 | 752,152 | | Carrying Value | 1,758,194 | 35,485 | 326,554 | 2,120,233 | - The increase in Stage 1 and Stage 2 expected credit loss provisions was primarily due to the increase in the balance of Stage 1 and Stage 2 loans to customers compared to the end of the previous year[330] - The increase in expected credit loss provisions for unsecured loans was mainly due to updating the expected credit loss provisions based on supporting documents such as customer bankruptcy liquidation plans[331] New Litigation Loans For the six months ended June 30, 2023, new litigation-involved secured loan balances decreased to RMB 31,460 thousand, with no new litigation-involved unsecured loans New Litigation Loans (For the Six Months Ended June 30) | Category | 2023 | 2022 | | :--- | :--- | :--- | | Number of New Secured Loan Customers | 35 | 33 | | New Secured Loan Balance (RMB '000) | 31,460 | 59,130 | | Number of New Unsecured Loan Customers | — | — | | New Unsecured Loan Balance (RMB '000) | — | — | - The balance of new litigation-involved secured loans decreased compared to the same period last year, with no new litigation-involved unsecured loans[357] Credit Risk Management and Internal Control Framework The Group has established clear guidelines for credit risk assessment, loan origination, post-loan monitoring, and risk management across its lending business units, supported by internal control measures for comprehensive risk management - The Group's lending business primarily includes four business units: pawn business, micro-credit business, and overseas financial business; relending fund business; commercial factoring business; and financial leasing business[375] - The Group has established clear guidelines, policies, and measures for the entire loan process, from credit risk assessment and loan origination to post-loan monitoring and risk management[358] - Key internal control measures include separation of credit assessment and loan origination processes, multi-level loan approval policies, post-loan monitoring and management procedures, a comprehensive management system with an early warning system, and policies for identifying and writing off defaulted debts and bad debts[428][429] Pawn, Micro-credit, and Overseas Financial Businesses These business units offer secured and unsecured loans, with credit risk assessed based on collateral value, client credit, repayment ability, and industry outlook, including regular client credit risk evaluations and legal recourse for overdue loans - Pawn business primarily includes providing real estate mortgage loans, chattel mortgage loans, and unsecured loans (mainly equity pledge loans)[376] - Micro-credit business primarily includes providing real estate mortgage loans and unsecured loans (mainly guarantee loans and credit loans)[377] - Overseas financial business includes providing unsecured loans, mainly guarantee loans[360] - Credit risk assessment is a comprehensive evaluation based on multiple factors, including the value of collateral provided, the client's credit record, the client's repayment ability, and an analysis of the client's industry and prospects[379] Relending Fund Business Relending fund business provides short-term loans to SMEs to ease their "repay first, then borrow" pressure, with credit risk assessment involving basic information and bank feedback, and a comprehensive monitoring and early warning system in place - The Group primarily conducts relending fund business through Huifang Rongtong as the legal entity, providing short-term loan funds to SMEs that wish to renew but find it difficult to fully repay their previous loans[3] - The Group provides short-term loan funds to SMEs for repaying maturing loans, alleviating the common "repay first, then borrow" cash flow pressure faced by SMEs in the loan issuance process in China[387] - The Group implements comprehensive tracking and supervision of relending funds, establishing an early warning mechanism for enterprise risks and changes in SMEs that expose the Group to further credit risk[438] Commercial Factoring Business Commercial factoring credit risk assessment categorizes clients and debtors into manufacturing/service or project-based enterprises, evaluating them based on establishment year, credit history, reputation, product quality, and market conditions, with close monitoring of operations and solvency - The Group categorizes clients and debtors into manufacturing (or service-oriented) enterprises and project-based enterprises, evaluating them based on two different sets of standards: establishment year, credit record, social reputation, product quality, and market conditions[459] - The Group closely monitors and tracks disputes between clients and debtors regarding accounts receivable or deterioration in debtors' financial conditions, and will take timely measures to address such risks[443] Financial Leasing Business Financial leasing loan origination considers client industry, reputation, cash flow, solvency, and lease asset liquidity, requiring deposits and potentially additional collateral or guarantees, with regular reviews of lessee operations and solvency - Financial leasing loan origination considers the client's industry and reputation, cash flow, solvency, and the liquidity of the leased assets[463] - Clients are required to pay a deposit to the Group as security for fulfilling their obligations under the finance lease agreement, and the Company may also require additional collateral or guarantees from lessees and third parties[435] - The Group regularly reviews the lessee's operating conditions, solvency, credit status, and changes in debts and credits; if the lessee fails to pay any installment or fulfill any obligation under the finance lease arrangement, the Group has the right to demand timely payment or immediately dispose of the relevant leased assets unilaterally[436] Internal Control Measures The Group employs various internal control measures, including separation of credit assessment and loan origination, multi-level approval, post-loan monitoring, an early warning system, and bad debt write-off policies, to establish a comprehensive, all-encompassing risk management system - The Group implements separation of credit assessment and loan origination processes, establishes multi-level loan approval policies, and clarifies responsibilities for different positions[428] - Post-loan monitoring and management procedures are implemented for continuous monitoring and management of credit risk and the entire loan process, with quarterly post-loan inspections and reviews[428] - A comprehensive management system with an early warning system is established to store all business information and documents related to loan transactions, and policies for identifying and writing off defaulted debts and bad debts are promulgated[429] Capital Expenditure For the six months ended June 30, 2023, the Group's capital expenditure increased to RMB 14,190 thousand, primarily for property, plant and equipment, intangible assets, and investment properties - Capital expenditure for the six months ended June 30, 2023, was RMB 14,190 thousand, compared to RMB 9,088 thousand in the same period last year[425] - Our capital expenditure primarily includes property, plant and equipment, intangible assets, and investment properties[425] Foreign Exchange Exposure For the six months ended June 30, 2023, the Group recorded net exchange gains of RMB 880 thousand, a decrease year-on-year, and faces no significant foreign exchange risk as its business transactions are primarily in RMB - For the six months ended June 30, 2023, the Group recorded net exchange gains of RMB 880 thousand, a decrease compared to net exchange gains of RMB 1,755 thousand in the same period last year[401] - The Group primarily conducts its business transactions in Renminbi, therefore, it does not face significant foreign exchange risk and has not undertaken any related hedging[401][426] Pledged Assets As of June 30, 2023, the Group had RMB 203.4 million in land use rights and investment properties pledged for RMB 193.0 million in bank borrowings, with additional structured deposits and restricted bank time deposits pledged for other bank borrowings - As of June 30, 2023, the Group's land use rights and investment properties totaling RMB 203.4 million were pledged as collateral for the Group's RMB 193.0 million bank borrowings[402] - As of June 30, 2023, the Group's RMB 20.0 million structured deposits were pledged as collateral for the Group's RMB 20.0 million bank borrowings[402] - As of June 30, 2023, RMB 50.0 million bank borrowings were pledged by the Group's RMB 52.1 million restricted bank time deposits[402] Significant Investments, Acquisitions and Disposals Huifang Rongzu was officially established in May 2023 to conduct finance leasing business with a registered capital of RMB 170 million, 70% held by Huifang Technology, aiming to serve the real economy, with no other significant acquisitions or disposals during the period - Huifang Rongzu was officially established on May 16, 2023, and commenced finance leasing business in China on May 24, 2023, after being approved by the Jiangsu Provincial Local Financial Supervision and Administration Bureau on May 8, 2023[405] - Huifang Rongzu's total registered capital is RMB 170,000,000, with Huifang Technology, a wholly-owned subsidiary of the Company, holding 70% of the shares[405] - The Group's strategy is to leverage its years of accumulated corporate client resources to serve the development of the real economy, providing personalized finance leasing services for the industrial upgrading of SMEs[416] Contingent Liabilities, Contractual Commitments, Cash Flow Analysis As of June 30, 2023, the Group had no significant contingent liabilities, capital commitments totaled RMB 37,495 thousand, and the period saw net cash inflows from operating and investing activities, with net cash outflow from financing activities Contingent Liabilities As of June 30, 2023, the Group had no significant contingent liabilities - As of June 30, 2023, the Group had no significant contingent liabilities[418] Commitments As of June 30, 2023, the Group's total capital commitments were RMB 37,495 thousand, primarily for agreed capital injections into Suzhou Cibei, Qianhui Tongcui, Kangli Junzhuo, and Zhongxin Hengyuan Capital Commitments Details (As of June 30) | Investee Company Name | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Suzhou Cibei | 20,495 | 20,495 | | Qianhui Tongcui | 10,000 | 10,000 | | Tiankai Huirui | — | 10,000 | | Kangli Junzhuo | 5,000 | 8,000 | | Qianrong Yuanfeng | — | 8,000 | | Zhongxin Hengyuan | 2,000 | 2,000 | | Total | 37,495 | 58,495 | Cash Flow Analysis As of June 30, 2023, the Group's cash and cash equivalents increased by RMB 36,006 thousand, with net cash inflows from operating and investing activities and net cash outflow from financing activities Cash Flow Summary (For the Six Months Ended June 30) | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Net Cash Inflow/(Outflow) from Operating Activities | 44,834 | (18,947) | | Net Cash Inflow/(Outflow) from Investing Activities | 13,942 | (26,907) | | Net Cash Outflow from Financing Activities | (22,876) | (1,399) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 35,900 | (47,253) | | Effect of Exchange Rate Changes on Cash and Cash Equivalents | 106 | 934 | - Net cash inflow from operating activities was primarily due to optimized product structure and improved operating conditions[427] - Net cash inflow from investing activities was primarily due to capital recovery from the successful disposal of some projects in the Group's special asset investment business[447](index=447&type=ch