中关村科技租赁(01601) - 2023 - 中期业绩

Financial Summary Key Financial Highlights For the six months ended June 30, 2023, the Group achieved significant growth in revenue, profit, and equity, maintaining healthy average returns | Indicator | For the six months ended June 30, 2023 (RMB million) | Change from prior period/year-end | | :--------------- | :----------------------------------- | :-------------------------------- | | Revenue | 398.4 | Growth 9.9% | | Profit before tax | 174.2 | Growth 16.6% | | Profit for the period | 131.0 | Growth 17.1% | | Total assets | 11,168.5 | Growth 2.3% | | Shareholders' equity | 2,271.4 | Growth 2.3% | | Average return on equity | 11.7% | - | | Average return on total assets | 2.4% | - | Interim Results (Unaudited Condensed Consolidated Financial Statements) Consolidated Income Statement For the six months ended June 30, 2023, the Group saw increased interest and consulting income, driving revenue and profit growth, with basic EPS of RMB 0.10 | Indicator | June 30, 2023 (RMB thousand) | June 30, 2022 (RMB thousand) | | :------------------- | :------------------------- | :------------------------- | | Interest income | 330,962 | 299,304 | | Consulting fee income | 67,400 | 63,255 | | Revenue | 398,362 | 362,559 | | Other net income | 11,103 | 6,803 | | Interest expense | (143,950) | (133,176) | | Operating expenses | (69,188) | (58,957) | | Impairment losses | (30,004) | (26,983) | | Share of profit/(loss) of associates | 7,830 | (925) | | Net exchange gain | 3 | 22 | | Profit before tax | 174,156 | 149,343 | | Income tax expense | (43,168) | (37,489) | | Profit for the period | 130,988 | 111,854 | | Basic and diluted earnings per share | 0.10 | 0.08 | Consolidated Statement of Comprehensive Income For the six months ended June 30, 2023, the Group's total comprehensive income was RMB 130,988 thousand, consistent with profit for the period and wholly attributable to the Company's shareholders | Indicator | June 30, 2023 (RMB thousand) | June 30, 2022 (RMB thousand) | | :--------------- | :------------------------- | :------------------------- | | Profit for the period | 130,988 | 111,854 | | Other comprehensive income for the period | – | – | | Total comprehensive income for the period | 130,988 | 111,854 | | Attributable to shareholders of the Company | 130,988 | 111,854 | Consolidated Statement of Financial Position As of June 30, 2023, the Group's total assets and liabilities increased, with loans and receivables as primary assets, and steady equity growth reflecting financial stability | Indicator | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :------------------- | :------------------------- | :-------------------------- | | Non-current assets | | | | Loans and receivables | 4,258,433 | 4,222,292 | | Investments in associates | 188,345 | 190,689 | | Deferred tax assets | 82,219 | 75,843 | | Current assets | | | | Loans and receivables | 5,838,279 | 5,597,360 | | Cash and cash equivalents | 636,012 | 634,987 | | Current liabilities | | | | Borrowings | 4,037,064 | 3,890,411 | | Trade and other payables | 1,331,759 | 1,263,411 | | Non-current liabilities | | | | Borrowings | 2,562,904 | 2,504,824 | | Trade and other payables | 954,242 | 1,017,687 | | Net assets | 2,271,408 | 2,220,420 | | Total equity attributable to shareholders of the Company | 2,271,408 | 2,220,420 | Consolidated Statement of Changes in Equity As of June 30, 2023, the Group's total equity increased to RMB 2,271,408 thousand, driven by profit for the period and after distributing RMB 80,000 thousand in prior year dividends | Indicator | Balance at January 1, 2023 (RMB thousand) | Balance at June 30, 2023 (RMB thousand) | | :------------------- | :---------------------------- | :----------------------------- | | Share capital | 1,333,334 | 1,333,334 | | Capital reserve | 331,149 | 331,149 | | Surplus reserve | 72,159 | 72,159 | | Fair value reserve | 2,194 | 2,194 | | General reserve | 110,470 | 110,470 | | Retained profits | 371,114 | 422,102 | | Total equity | 2,220,420 | 2,271,408 | | Profit for the period | - | 130,988 | | Approved dividends for prior years | - | (80,000) | Consolidated Cash Flow Statement For the six months ended June 30, 2023, the Group's operating activities resulted in a net cash outflow, while investing and financing activities generated inflows, leading to a stable period-end cash balance | Cash Flow Category | June 30, 2023 (RMB thousand) | June 30, 2022 (RMB thousand) | | :------------------- | :------------------------- | :------------------------- | | Net cash from operating activities | (116,035) | 231,985 | | Net cash from investing activities | 45,814 | 7,436 | | Net cash from financing activities | 71,243 | (419,545) | | Net increase in cash and cash equivalents | 1,022 | (180,124) | | Cash and cash equivalents at end of period | 636,012 | 470,061 | Notes to Unaudited Interim Financial Report Basis of Preparation and Accounting Policy Changes This interim financial report is prepared under IAS 34 and reviewed by KPMG, with the Group adopting IFRS 12 amendments for deferred tax assets and liabilities related to leases - This interim financial report is prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and International Accounting Standard 34 Interim Financial Reporting issued by the International Accounting Standards Board[132] - This interim financial report is unaudited but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Hong Kong Institute of Certified Public Accountants[134] - The Group adopted the amendments to IFRS 12 from January 1, 2022, recognizing deferred taxes related to leases and presenting related deferred tax assets and liabilities on a net basis[152] Revenue Notes The Group's principal business is providing finance lease and consulting services, with interest income and consulting fee income as main revenue sources for the six months ended June 30, 2023, and sale and leaseback interest income being the largest component - The Group's principal business is to provide finance lease services and related consulting services to customers in China[153] | Revenue Category | June 30, 2023 (RMB thousand) | June 30, 2022 (RMB thousand) | | :------------------- | :------------------------- | :------------------------- | | Finance lease interest income | 23,043 | 16,734 | | Sale and leaseback interest income | 276,908 | 270,330 | | Intellectual property lease interest income | 31,011 | 12,240 | | Management consulting fee income | 19,200 | 18,986 | | Policy consulting fee income | 48,200 | 44,269 | | Total Revenue | 398,362 | 362,559 | Other Net Income Notes For the six months ended June 30, 2023, the Group's total other net income was RMB 11,103 thousand, primarily from investment income, VAT input tax deduction, and deposit interest, with government grants decreasing | Category | June 30, 2023 (RMB thousand) | June 30, 2022 (RMB thousand) | | :--------------- | :------------------------- | :------------------------- | | Investment income | 4,713 | 247 | | VAT input tax deduction | 2,668 | – | | Deposit interest | 2,311 | 2,234 | | Government grants | 437 | 4,033 | | Others | 974 | 289 | | Total | 11,103 | 6,803 | - Government grants are mainly for rewarding finance lease companies that provide financing services to technology innovation enterprises in specific regions, and these grants are unconditional, thus recognized as income upon receipt[141] Interest Expense Notes For the six months ended June 30, 2023, the Group's total interest expense was RMB 143,950 thousand, mainly from borrowings and related party borrowings, with estimated interest expense on lessees' interest-free deposits and lease liabilities decreasing | Category | June 30, 2023 (RMB thousand) | June 30, 2022 (RMB thousand) | | :------------------- | :------------------------- | :------------------------- | | Borrowings | 99,466 | 87,746 | | Borrowings from related parties | 16,078 | 14,379 | | Estimated interest expense on lessees' interest-free deposits | 27,712 | 29,942 | | Interest expense on lease liabilities | 694 | 1,109 | | Total | 143,950 | 133,176 | Operating Expenses Notes For the six months ended June 30, 2023, the Group's total staff costs were RMB 37,086 thousand, primarily comprising salaries, bonuses, and allowances, while other operating expenses included depreciation and amortization Staff Costs | Staff Cost Category | June 30, 2023 (RMB thousand) | June 30, 2022 (RMB thousand) | | :------------------- | :------------------------- | :------------------------- | | Salaries, bonuses and allowances | 26,259 | 22,316 | | Social insurance and other benefits | 10,641 | 9,576 | | Cash-settled share-based payments | 186 | 663 | | Subtotal | 37,086 | 32,555 | Other Operating Expenses | Other Operating Expense Category | June 30, 2023 (RMB thousand) | June 30, 2022 (RMB thousand) | | :--------------- | :------------------------- | :------------------------- | | Depreciation - owned equipment | 671 | 371 | | Depreciation - right-of-use assets | 6,756 | 6,439 | | Amortization - intangible assets | 995 | 2,216 | | Amortization - others | 201 | 184 | | Other lease expenses | 900 | 838 | Impairment Losses Notes For the six months ended June 30, 2023, the Group's total impairment losses were RMB 30,004 thousand, primarily related to loans and receivables, with total impairment loss provisions for loans and receivables increasing to RMB 314,676 thousand from the end of the previous year, reflecting prudent asset quality management Impairment Losses | Category | June 30, 2023 (RMB thousand) | June 30, 2022 (RMB thousand) | | :--------------- | :------------------------- | :------------------------- | | Loans and receivables | 30,004 | 26,785 | | Credit commitments | – | 198 | | Total | 30,004 | 26,983 | Impairment Loss Provisions for Loans and Receivables | Impairment Loss Provisions for Loans and Receivables | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :----------------------- | :------------------------- | :-------------------------- | | Provisions for finance lease receivables | (133,531) | (136,557) | | Provisions for sale and leaseback receivables | (171,324) | (139,932) | | Provisions for intellectual property lease receivables | (9,821) | (8,183) | | Total | (314,676) | (284,672) | Movement in Impairment Loss Provisions | Movement in Impairment Loss Provisions (RMB thousand) | 12-month Expected Credit Losses | Lifetime Expected Credit Losses – Not Credit-Impaired | Lifetime Expected Credit Losses – Credit-Impaired | Total | | :---------------------------- | :----------------- | :----------------------------- | :------------------------- | :------ | | Balance at January 1, 2023 | 33,862 | 524 | 250,286 | 284,672 | | Transfers | (308) | (312) | 620 | - | | Provisions | 67 | 368 | 29,569 | 30,004 | | Balance at June 30, 2023 | 33,621 | 580 | 280,475 | 314,676 | Income Tax Expense Notes For the six months ended June 30, 2023, the Group's income tax expense was RMB 43,168 thousand, mainly from current China corporate income tax and deferred tax changes, with the Company subject to a statutory tax rate of 25% | Category | June 30, 2023 (RMB thousand) | June 30, 2022 (RMB thousand) | | :--------------- | :------------------------- | :------------------------- | | Current tax | 49,544 | 37,938 | | Deferred tax | (6,376) | (449) | | Total | 43,168 | 37,489 | - The Company is subject to China corporate income tax at a statutory rate of 25%[161] Basic and Diluted Earnings Per Share Notes For the six months ended June 30, 2023, the Group's basic earnings per share was RMB 0.10, with no difference from diluted earnings per share, as there were no potentially dilutive ordinary shares outstanding during the period - Basic earnings per share is calculated based on the profit for the interim period attributable to shareholders of the Company of RMB 131.0 million and the weighted average number of ordinary shares outstanding of 1,333.3 million[147] - There was no difference between basic and diluted earnings per share for the six months ended June 30, 2023 and 2022, as there were no potentially dilutive ordinary shares outstanding during these periods[175] Property and Equipment Notes As of June 30, 2023, the Group's net book value of property and equipment was RMB 28,866 thousand, a decrease from the end of 2022, primarily due to disposals and depreciation during the period | Category | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--------------- | :------------------------- | :-------------------------- | | Leasehold properties for own use | 24,075 | 31,571 | | Electronic equipment | 4,333 | 4,332 | | Office equipment | 226 | 274 | | Others | 232 | 173 | | Total net book value | 28,866 | 36,350 | Loans and Receivables Notes As of June 30, 2023, the Group's total loans and receivables amounted to RMB 10,411,388 thousand, with a carrying value of RMB 10,096,712 thousand after impairment loss provisions, and receivables from sale and leaseback transactions being the main component Loans and Receivables | Category | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :------------------- | :------------------------- | :-------------------------- | | Net finance lease receivables | 825,878 | 877,944 | | Receivables from sale and leaseback transactions | 8,613,503 | 8,252,886 | | Intellectual property lease receivables | 972,007 | 973,494 | | Total loans and receivables | 10,411,388 | 10,104,324 | | Less: Impairment loss provisions | (314,676) | (284,672) | | Total | 10,096,712 | 9,819,652 | Analysis of Loans and Receivables | Analysis of Loans and Receivables | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :----------------- | :------------------------- | :-------------------------- | | Non-current assets | 4,258,433 | 4,222,292 | | Current assets | 5,838,279 | 5,597,360 | | Total | 10,096,712 | 9,819,652 | Other Assets Notes As of June 30, 2023, the Group's total other assets amounted to RMB 30,413 thousand, primarily including deductible VAT, prepayments, and amounts due from related parties | Category | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--------------- | :------------------------- | :-------------------------- | | Deductible VAT | 15,156 | 27,011 | | Prepayments | 9,428 | 6,782 | | Amounts due from related parties | 4,239 | 7,845 | | Bills receivable | 1,000 | – | | Other receivables | 305 | 406 | | Total | 30,413 | 42,311 | Income Tax in Consolidated Statement of Financial Position Notes As of June 30, 2023, the Group's income tax payable balance was RMB 11,081 thousand, and the deferred tax asset balance was RMB 82,219 thousand, mainly arising from impairment loss provisions and revaluation of investments in associates Income Tax Payable | Category | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--------------- | :------------------------- | :-------------------------- | | Income tax payable at period-end | 11,081 | 18,142 | Deferred Tax Sources | Deferred Tax Sources | June 30, 2023 (RMB thousand) | | :--------------- | :------------------------- | | Impairment loss provisions | 78,760 | | Revaluation of investments in associates | (4,537) | | Staff costs | 1,714 | | Right-of-use assets | (6,300) | | Lease liabilities | 6,594 | | Total | 82,219 | Cash and Cash Equivalents Notes As of June 30, 2023, the Group's cash and cash equivalents in the form of bank deposits amounted to RMB 636,012 thousand, remaining largely stable compared to the end of the previous year | Category | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :------- | :------------------------- | :-------------------------- | | Bank deposits | 636,012 | 634,987 | Borrowings Notes As of June 30, 2023, the Group's total borrowings amounted to RMB 6,599,968 thousand, primarily consisting of bank loans and asset-backed securities, with interest rates ranging from 3.65% to 4.70% Borrowings by Type | Category | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--------------- | :------------------------- | :-------------------------- | | Bank loans - secured | 1,631,658 | 1,628,795 | | Bank loans - unsecured | 1,345,353 | 1,168,643 | | Borrowings from related parties - secured | 615,000 | 1,000,000 | | Asset-backed securities | 3,007,957 | 2,597,797 | | Total borrowings | 6,599,968 | 6,395,235 | Borrowings by Maturity | Borrowing Term | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--------------- | :------------------------- | :-------------------------- | | Within one year | 4,037,064 | 3,890,411 | | After one year but within two years | 1,603,477 | 1,403,339 | | After two years but within five years | 959,427 | 1,101,485 | | Total | 6,599,968 | 6,395,235 | | Interest rate range | 3.65%-4.70% | 3.65%-4.75% | Trade and Other Payables Notes As of June 30, 2023, the Group's total trade and other payables amounted to RMB 2,286,001 thousand, with lessees' deposits, bills payable, and accounts payable being the main components | Category | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :------------------- | :------------------------- | :-------------------------- | | Current liabilities | | | | Bills payable | 588,795 | 646,756 | | Lessees' deposits | 464,308 | 347,811 | | Accounts payable | 84,017 | 134,607 | | Dividends payable | 80,000 | – | | VAT to be collected in subsequent periods | 59,110 | 61,930 | | Accrued staff costs | 11,412 | 28,544 | | Non-current liabilities | | | | Lessees' deposits | 809,758 | 861,439 | | Deferred income | 86,416 | 89,909 | | VAT to be collected in subsequent periods | 42,894 | 45,861 | | Total | 2,286,001 | 2,281,098 | Capital, Reserves and Dividends Notes The Company's registered capital is RMB 1.0 billion, with share capital comprising domestic and H shares, and reserves mainly including capital, surplus, and fair value reserves, while the Board does not recommend declaring any interim dividend for the six months ended June 30, 2023 - The Company was established in Beijing, China on November 27, 2012, with a registered capital of RMB 500.0 million, later increased to RMB 1.0 billion[187][203] - Following the full circulation of H shares on April 14, 2021, the Company's registered share capital comprises 840,000,000 domestic shares and 493,334,000 H shares[204] - The Board does not recommend declaring any interim dividend for the six months ended June 30, 2023[365] Fair Value of Financial Instruments Notes The Group determines and discloses the fair value of financial instruments based on a three-level fair value hierarchy, with financial assets measured at fair value through other comprehensive income and financial assets measured at fair value through profit or loss totaling RMB 13,803 thousand as of June 30, 2023, primarily consisting of unlisted investments - The Group determines and discloses the fair value of financial instruments based on the following hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable market data)[210][219] Financial Assets Measured at Fair Value | Category | Fair Value Hierarchy | June 30, 2023 (RMB thousand) | | :--------------------------------- | :----------- | :------------------------- | | Financial assets measured at fair value through other comprehensive income | Level 3 | 12,299 | | Financial assets measured at fair value through profit or loss | Level 3 | 1,504 | | Total | | 13,803 | Valuation Methods and Inputs for Financial Assets/Liabilities | Financial Asset/Liability | Fair Value Hierarchy | Valuation Method and Key Inputs | Significant Unobservable Inputs | Relationship between Unobservable Inputs and Fair Value | | :------------ | :----------- | :------------------- | :----------------- | :----------------------------- | | Unlisted investments | Level 3 | Market comparable companies | Lack of marketability discount | Higher discount, lower fair value | Commitments and Contingent Liabilities Notes As of June 30, 2023, the Group's irrevocable credit commitments amounted to RMB 45.17 million, and capital expenditure obligations, primarily for unpaid capital investments in associates, totaled RMB 124.44 million - The Group's irrevocable credit commitments primarily consist of contracted loans and receivables for which no provision has been made. As of June 30, 2023, the Group's irrevocable lease commitments amounted to RMB 45.17 million[222] Commitments | Category | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--------------- | :------------------------- | :-------------------------- | | Off-balance sheet credit commitments | 45,168 | 100,000 | | Capital expenditure commitments | 124,440 | 124,440 | - Capital expenditure commitments primarily represent unpaid capital investments in associates such as Beijing Zhongnuo Tongchuang Investment Fund Management Co, Ltd and Beijing Zhongnuo Yuanjian Innovation Investment Fund Center (Limited Partnership)[211] Significant Related Party Transactions Notes For the six months ended June 30, 2023, the Group engaged in various related party transactions, including repayment of related party borrowings, payment of interest expenses, guarantee fees, and rental payments, with related party borrowings payable amounting to RMB 615,000 thousand at period-end Related Party Transactions | Transaction Category | June 30, 2023 (RMB thousand) | June 30, 2022 (RMB thousand) | | :------------------- | :------------------------- | :------------------------- | | Repayment of related party borrowings | 385,000 | 820,000 | | Interest expense from related party borrowings | 16,078 | 14,379 | | Decrease in related party guarantee balance | 142,575 | 132,568 | | Rental payments to related parties | 3,603 | 6,787 | Balances with Related Parties | Related Party Transaction Balance | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :------------------- | :------------------------- | :-------------------------- | | Related party borrowings payable | 615,000 | 1,000,000 | | Related party interest payable | 883 | 1,436 | | Related party guarantee balance | 939,559 | 796,984 | | Amounts due to related parties | 25,268 | 32,481 | Consolidated Structured Entities Notes As of June 30, 2023, the Group consolidated 9 structured entities with total assets of RMB 3,345.8 million, gaining control and consolidating them by participating in their operations and bearing variable return risks - The Group enters into asset securitization transactions, transferring financial assets to special purpose entities, and consolidates them when control is obtained[228] - As of June 30, 2023, the Group consolidated 9 structured entities, with total assets of these consolidated structured entities amounting to RMB 3,345.8 million[350] Share-based Payment Arrangements Notes On December 23, 2020, the Group granted 12,670,000 share appreciation rights to employees, entitling them to cash payments upon meeting specific non-market performance conditions, with 4,223,333 unexercised rights and an exercise price of RMB 1 yuan as of June 30, 2023 - On December 23, 2020, the Group granted 12,670,000 share appreciation rights to employees, entitling them to cash payments upon meeting specific non-market performance conditions[229] Share Appreciation Rights Details | Indicator | June 30, 2023 | December 31, 2022 | | :------------------- | :------------ | :------------- | | Total carrying amount of liabilities arising from share appreciation rights | 832 | 646 | | Number of share appreciation rights (unexercised) | 4,223,333 | 4,223,333 | | Exercise price | RMB 1 yuan | RMB 1 yuan | | Expected remaining life (years) | 2.5 | 3.0 | Management Discussion and Analysis Operating Review In the first half of 2023, China's macro economy showed recovery growth, and facing a complex external environment, the Group achieved simultaneous growth in revenue and profit before tax by optimizing strategy, innovating business models, improving asset quality, and reducing financing costs - In the first half of 2023, China's macro economy showed a clear recovery growth trend, with GDP increasing by 5.5% year-on-year[238] - The Group's revenue increased by 9.9% year-on-year in the first half, and profit before tax increased by 16.6% year-on-year[240] - The Group optimized its corporate strategic system, forming a "1+2+3" strategic framework, and actively engaged in product innovation, with finance lease business disbursements of approximately RMB 3.691 billion, a year-on-year increase of 15.0%[258][259] - The Group successfully issued ABS, ABN, and other products, raising RMB 4.069 billion in financing, and reducing the cost rate of interest expense on borrowings to 3.8%[241] Profit and Loss Analysis During the reporting period, the Group's total revenue and net profit for the period both achieved steady growth, primarily driven by stable increases in interest income and consulting fee income, while effectively controlling the growth of interest expenses and operating expenses - The Group achieved total revenue of RMB 398.4 million, a year-on-year increase of 9.9%; and net profit for the period of RMB 131.0 million, a year-on-year increase of 17.1%[278] Revenue The Group's revenue primarily consists of interest income and consulting fee income, with interest income growing by 10.6% and accounting for 83.1% of total revenue due to business expansion, and consulting fee income growing by 6.6% mainly due to an increase in service clients | Revenue Category | 2023 (RMB thousand) | Proportion | 2022 (RMB thousand) | Proportion | | :--------- | :------------------ | :----- | :------------------ | :----- | | Interest income | 330,962 | 83.1% | 299,304 | 82.6% | | Consulting fee income | 67,400 | 16.9% | 63,255 | 17.4% | | Total Revenue | 398,362 | 100.0% | 362,559 | 100.0% | - The Group's interest income increased by 10.6% from RMB 299.3 million in the prior year to RMB 331.0 million in the reporting period[245] - The Group's average balance of interest-earning assets increased by 15.7% from RMB 8,865.9 million in the prior year to RMB 10,257.9 million in the reporting period[281] - The Group's consulting fee income increased by 6.6% from RMB 63.3 million in the prior year to RMB 67.4 million in the reporting period[266] Interest Expense During the reporting period, the Group's interest expense was RMB 144.0 million, an 8.1% increase from the prior year, mainly due to increased financing efforts driven by rapid growth in finance lease business, with the cost rate of interest expense on borrowings decreasing to 3.8%, reflecting effective financing cost management - The Group's interest expense was RMB 144.0 million, an 8.1% increase from RMB 133.2 million in the prior year[267] | Source of Funds | 2023 (RMB thousand) | Proportion | 2022 (RMB thousand) | Proportion | Change | | :--------------- | :------------------ | :----- | :------------------ | :----- | :----- | | Commercial banks | 56,683 | 39.3% | 48,399 | 36.4% | 17.1% | | Borrowings from related parties | 16,078 | 11.2% | 14,379 | 10.8% | 11.8% | | Asset-backed securities | 42,783 | 29.7% | 39,347 | 29.5% | 8.7% | | Lessees' interest-free deposits | 27,712 | 19.3% | 29,942 | 22.5% | (7.4%) | | Lease liabilities | 694 | 0.5% | 1,109 | 0.8% | (37.4%) | | Total | 143,950 | 100.0% | 133,176 | 100.0% | 8.1% | - The Group's cost rate of interest expense on borrowings was 3.8%, a decrease from the prior year, mainly due to active financing cost management[272] Net Interest Spread and Net Interest Margin During the reporting period, the Group's net interest spread was 2.7% and net interest margin was 3.8%, both increasing from the prior year, primarily due to enhanced business premium capability and a decrease in the cost rate of interest expense | Indicator | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 | Change | | :--------------- | :-------------------- | :-------------------- | :----- | | Interest income yield | 6.6% | 6.7% | (1.5%) | | Interest expense cost rate | 3.9% | 4.2% | (7.1%) | | Net interest spread | 2.7% | 2.5% | 8.0% | | Net interest margin | 3.8% | 3.7% | 2.7% | - The Group's net interest spread was 2.7% and net interest margin was 3.8%, both increasing from the prior year, mainly due to enhanced business premium capability, with interest income yield remaining stable while interest expense cost rate decreased[4] Other Net Income During the reporting period, the Group's other net income was RMB 11.1 million, a 63.2% increase from the prior year, primarily including investment income, VAT input tax deduction, and bank deposit interest - The Group's other net income was RMB 11.1 million, an increase of 63.2% from the prior year[276] | Category | 2023 (RMB thousand) | 2022 (RMB thousand) | Change | | :--------------- | :------------------ | :------------------ | :------- | | Investment income | 4,713 | 247 | 1,808.1% | | VAT input tax deduction | 2,668 | – | – | | Deposit interest | 2,311 | 2,234 | 3.5% | | Government grants | 437 | 4,033 | (89.2%) | | Others | 974 | 289 | 237.0% | | Total Other Net Income | 11,103 | 6,803 | 63.2% | Operating Expenses During the reporting period, the Group's operating expenses were RMB 69.2 million, a 17.4% increase from the prior year, with staff costs and service expenses growing particularly fast - The Group's operating expenses were RMB 69.2 million, an increase of RMB 10.2 million or 17.4% from the prior year[309] | Category | 2023 (RMB thousand) | Proportion | 2022 (RMB thousand) | Proportion | Change | | :----------- | :------------------ | :----- | :------------------ | :----- | :------ | | Staff costs | 37,086 | 53.5% | 32,555 | 55.0% | 13.9% | | Lease expenses | 900 | 1.3% | 838 | 1.4% | 7.4% | | Service expenses | 13,265 | 19.2% | 8,645 | 14.7% | 53.4% | | Depreciation and amortization | 8,623 | 12.5% | 9,210 | 15.6% | (6.4%) | | Professional service expenses | 2,260 | 3.3% | 4,361 | 7.4% | (48.2%) | | Others | 7,054 | 10.2% | 3,348 | 5.9% | 110.7% | | Total | 69,188 | 100.0% | 58,957 | 100.0% | 17.4% | Impairment Losses During the reporting period, the Group's expected credit impairment losses were RMB 30.0 million, an 11.2% increase from the prior year, primarily due to continuous advancement of the risk control system and enhanced credit identification capabilities - The Group's expected credit impairment losses were RMB 30.0 million, an 11.2% increase from RMB 27.0 million in the prior year[290] | Category | 2023 (RMB thousand) | 2022 (RMB thousand) | Change | | :--------------- | :------------------ | :------------------ | :----- | | Loans and receivables | 30,004 | 26,785 | 12.0% | | Off-balance sheet credit commitments | – | 198 | – | | Total Impairment Losses | 30,004 | 26,983 | 11.2% | Income Tax Expense During the reporting period, the Group's income tax expense was RMB 49.5 million, a 30.6% increase from the prior year, primarily due to increased profit before tax - The Group's income tax expense was RMB 49.5 million, an increase of RMB 11.6 million or 30.6% from the prior year, mainly due to increased profit before tax[312] - The Group's effective income tax rate for the reporting period was 24.8%[8] Profit for the Period During the reporting period, the Group's profit was RMB 131.0 million, a 17.1% increase from the prior year, primarily attributable to revenue growth and effective control of operating expenses - The Group's profit was RMB 131.0 million, an increase of RMB 19.1 million or 17.1% from the prior year[292] Basic Earnings Per Share During the reporting period, the Group's basic earnings per share was RMB 0.10, an increase from the prior year, mainly due to enhanced profitability - The Group's basic earnings per share for the first half of 2023 was RMB 0.10, an increase from the prior year, primarily due to enhanced profitability[9] Financial Position Analysis As of the end of the reporting period, the Group's total assets and liabilities both increased, with loans and receivables remaining the primary asset component, and the company continuously optimizing its asset structure and improving capital utilization efficiency - The Group's total assets were RMB 11,168.5 million, an increase of RMB 253.6 million or 2.3% from the end of the previous year[316] - Loans and receivables accounted for 90.4% of total assets, and cash and cash equivalents accounted for 5.7%[316] Assets Overview As of the end of the reporting period, the Group's total assets were RMB 11,168.5 million, with loans and receivables being the main component, accounting for 90.4% | Asset Category | June 30, 2023 (RMB thousand) | Proportion | December 31, 2022 (RMB thousand) | Proportion | Change | | :------------------- | :------------------------- | :----- | :-------------------------- | :----- | :------ | | Loans and receivables | 10,096,712 | 90.4% | 9,819,652 | 90.1% | 2.8% | | Cash and cash equivalents | 636,012 | 5.7% | 634,987 | 5.8% | 0.2% | | Investments in associates | 188,345 | 1.7% | 190,689 | 1.7% | (1.2%) | | Deferred tax assets | 82,219 | 0.7% | 75,843 | 0.7% | 8.4% | | Property and equipment | 28,866 | 0.3% | 36,350 | 0.3% | (20.6%) | | Total Assets | 11,168,458 | 100.0% | 10,914,895 | 100.0% | 2.3% | Loans and Receivables The Group's net loans and receivables amounted to RMB 10,411.4 million, a 3.0% increase from the end of the previous year, driven by the expansion of finance lease business, with asset quality remaining stable, normal assets accounting for 94.8%, and provision coverage ratio rising to 183.5% - The Group's net loans and receivables amounted to RMB 10,411.4 million, an increase of 3.0% from the end of the previous year[12] Loans and Receivables Details | Category | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | Change | | :--------------- | :------------------------- | :-------------------------- | :----- | | Total loans and receivables | 11,221,484 | 10,872,502 | 3.2% | | Less: Unearned finance income | (810,096) | (768,178) | 5.5% | | Net loans and receivables | 10,411,388 | 10,104,324 | 3.0% | | Less: Impairment loss provisions | (314,676) | (284,672) | 10.5% | | Carrying value of loans and receivables | 10,096,712 | 9,819,652 | 2.8% | - The proportion of net loans and receivables maturing within one year is 58.9%, indicating stable future business cash inflows[298] Five-Category Classification of Loans and Receivables | Five-Category Classification of Loans and Receivables | June 30, 2023 (RMB thousand) | Proportion | December 31, 2022 (RMB thousand) | Proportion | Change | | :------------------- | :------------------------- | :----- | :-------------------------- | :----- | :------ | | Normal | 9,869,110 | 94.8% | 9,564,672 | 94.6% | 3.2% | | Special Mention | 370,781 | 3.6% | 375,778 | 3.7% | (1.3%) | | Substandard | 85,666 | 0.8% | 78,302 | 0.8% | 11.6% | | Doubtful | 16,898 | 0.1% | 16,578 | 0.2% | (8.7%) | | Loss | 68,933 | 0.7% | 68,994 | 0.7% | (0.1%) | | Net Loans and Receivables | 10,411,388 | 100.0% | 10,104,324 | 100.0% | 3.0% | - The Group's expected credit loss rates for Stage 1, Stage 2, and Stage 3 loans and receivables are 0.3%, 1.4%, and 53.8%, respectively. The overall expected loss rate increased from 2.8% to 3.0%, systematically enhancing the Group's risk resilience[20] - The Group's provision coverage ratio for loans and receivables was 183.5%, an increase of 9.8 percentage points from the end of the previous year[327] Other Assets As of the end of the reporting period, the Group's cash and cash equivalents were RMB 636.0 million, restricted deposits were RMB 76.2 million, investments in joint ventures/associates amounted to RMB 188.3 million, and intangible assets were RMB 15.9 million - The Group's cash and cash equivalents denominated in RMB amounted to RMB 636.0 million[21] - The Group's restricted deposits amounted to RMB 76.2 million, representing bank deposits restricted for bank acceptance bill and factoring businesses[21] - The Group's balance of investments in joint ventures/associates was RMB 188.3 million[23] - The Group's balance of intangible assets was RMB 15.9 million, primarily software used for business operations and risk management functions[24] Liabilities As of the end of the reporting period, the Group's total liabilities amounted to RMB 8,897.1 million, a 2.3% increase from the end of the previous year, with borrowings being the main component, accounting for 74.2% - The Group's total liabilities were RMB 8,897.1 million, an increase of RMB 202.6 million or 2.3% from the end of the previous year[25] | Liability Category | June 30, 2023 (RMB thousand) | Proportion | December 31, 2022 (RMB thousand) | Proportion | Change | | :--------------- | :------------------------- | :----- | :-------------------------- | :----- | :------ | | Borrowings | 6,599,968 | 74.2% | 6,395,235 | 73.6% | 3.2% | | Trade and other payables | 2,286,001 | 25.7% | 2,281,098 | 26.2% | 0.2% | | Income tax payable | 11,081 | 0.1% | 18,142 | 0.2% | (38.9%) | | Total Liabilities | 8,897,050 | 100.0% | 8,694,475 | 100.0% | 2.3% | Borrowings As of the end of the reporting period, the Group's total borrowings amounted to RMB 6,600.0 million, a 3.2% increase from the end of the previous year, primarily composed of asset-backed securities (45.6%) and bank loans (45.1%), with current borrowings accounting for 61.2% - The Group's borrowings include commercial bank borrowings, related party borrowings, and asset-backed securities, with asset-backed securities being the primary financing source, accounting for 45.6%[44] - The Group's RMB-denominated borrowings amounted to RMB 6,600.0 million, an increase of RMB 204.7 million or 3.2% from the end of the previous year, mainly due to business expansion[44] Borrowings by Source | Source of Borrowings | June 30, 2023 (RMB thousand) | Proportion | December 31, 2022 (RMB thousand) | Proportion | Change | | :--------------- | :------------------------- | :----- | :-------------------------- | :----- | :------ | | Bank loans | 2,977,011 | 45.1% | 2,797,438 | 43.8% | 6.4% | | Borrowings from related parties | 615,000 | 9.3% | 1,000,000 | 15.6% | (38.5%) | | Asset-backed securities | 3,007,957 | 45.6% | 2,597,797 | 40.6% | 15.8% | | Total Borrowings | 6,599,968 | 100.0% | 6,395,235 | 100.0% | 3.2% | - The Group's current borrowings accounted for 61.2% of total borrowings, an increase of 3.8% from the end of the previous year[334] Trade and Other Payables As of the end of the reporting period, the Group's total trade and other payables amounted to RMB 2,286.0 million, a 0.2% increase from the end of the previous year, primarily including lessees' deposits, VAT, accounts payable, bills payable, and lease liabilities - The Group's total trade and other payables amounted to RMB 2,286.0 million, an increase of 0.2% from RMB 2,281.1 million at the end of the previous year[47] - Trade and other payables primarily include lessees' deposits, VAT to be collected in subsequent periods, accounts payable, bills payable, and lease liabilities[28] Capital and Reserves As of the end of the reporting period, the Group's total equity amounted to RMB 2,271.4 million, a 2.3% increase from the end of the previous year, with share capital remaining unchanged and reserves growing - The Group's total equity was RMB 2,271.4 million, an increase of RMB 51.0 million or 2.3% from the end of the previous year[90] Capital and Reserves Breakdown | Category | June 30, 2023 (RMB thousand) | Proportion | December 31, 2022 (RMB thousand) | Proportion | Change | | :------- | :------------------------- | :----- | :-------------------------- | :----- | :----- | | Share capital | 1,333,334 | 58.7% | 1,333,334 | 60.0% | 0.0% | | Reserves | 938,074 | 41.3% | 887,086 | 40.0% | 5.7% | | Total Equity | 2,271,408 | 100.0% | 2,220,420 | 100.0% | 2.3% | Capital Expenditure During the reporting period, the Group's capital expenditure was RMB 1.3 million, primarily for upgrading business operations and risk management information systems, and purchasing office and electronic equipment - The Group's capital expenditure was RMB 1.3 million, primarily for upgrading business operations and risk management information systems, and purchasing office and electronic equipment[48] Risk Management The Group has established a prudent, efficient, and innovative risk management system to balance risk and return, with primary operating risks including credit risk, interest rate risk, liquidity risk, and foreign exchange risk, and corresponding management policies and processes in place - The Group has established a prudent, efficient, and innovative risk management system, aiming to achieve an appropriate balance between the risks and returns generated from serving technology innovation enterprises[337] - The Group's primary operating risks are credit risk, interest rate risk, liquidity risk, and foreign exchange risk[49] Credit Risk The Group manages credit risk through strict customer admission, a scientific credit evaluation system, comprehensive due diligence, and a complete post-lease management system, continuously optimizing rating models to enhance risk profiling capabilities - Credit risk is one of the main risks faced by the Group, managed through strict industry and regional customer admission, a scientific credit evaluation system, a comprehensive due diligence system, and rigorous and scientific project approval decisions[31][32][51][65][66][67] - The Group optimized and iterated its original "asset credit + entity credit" two-dimensional rating model, strengthening asset risk management and further optimizing intellectual property asset ratings[339] - The post-lease management system established by the Group covers four aspects: lease asset management, lessee operation monitoring, lease asset classification, and non-performing asset disposal[33] Interest Rate Risk The Group's interest rate risk arises from mismatches in maturity dates and contractual reset dates of interest-earning assets and interest-bearing liabilities, managed by optimizing the time difference between these dates and managing the spread between pricing and LPR/PBOC benchmark rates - Interest rate risk arises from mismatches in the maturity dates and contractual reset dates of interest-earning assets and interest-bearing liabilities[69] - The Group manages interest rate risk by optimizing the time difference between the maturity dates and contractual reset dates of interest-earning assets and interest-bearing liabilities, and by managing the spread between the pricing of interest-earning assets and interest-bearing liabilities and the Loan Prime Rate (LPR) and the People's Bank of China benchmark interest rates[92][343] Liquidity Risk The Group maintains a healthy liquidity position by holding sufficient cash and cash equivalents and implementing comprehensive policies and processes to monitor and meet operational and sustainable development needs - Liquidity risk refers to the possibility that the Group may be unable to obtain sufficient funds at a reasonable cost, thereby failing to meet its payment obligations to support business operations and expansion[69] - The Group maintains a healthy liquidity position by assessing and monitoring its liquidity situation, holistically allocating financial assets and financial liabilities, and enhancing its ability to secure liquidity in a timely manner at a reasonable cost[70] Foreign Exchange Risk The Group's functional currency is RMB, with most income and expenses denominated in RMB, currently having no foreign exchange hedging policy, but management continues to monitor foreign exchange risk exposure - The Group's functional currency is RMB, and most of its income and expenses are denominated in RMB. The Group currently has no foreign exchange hedging policy[97] Pledge of Group Assets As of the end of the reporting period, the Group had RMB 6,233.6 million in loans and receivables pledged, and RMB 60.4 million in cash used for bank acceptance bills, bank factoring loans, and asset securitization businesses - The Group had RMB 6,233.6 million in loans and receivables pledged, and RMB 60.4 million in cash used for bank acceptance bills, bank factoring loans, and asset securitization businesses[72] Significant Investments, Acquisitions and Disposals During the reporting period, the Group had no significant investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures - The Group had no significant investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures during the reporting period[54] Human Resources As of June 30, 2023, the Group had 137 employees, with approximately 100% holding bachelor's degrees or above, and about 64.23% holding master's degrees or above, maintaining overall stable employee retention and establishing flexible, efficient compensation incentive plans and a competency-based training system - As of June 30, 2023, the Group had 137 employees, of whom approximately 100.0% held bachelor's degrees or above, and approximately 64.23% held master's degrees or above[56] - The Group's overall employee retention remained stable, with a high retention rate, and over 43.8% of on-the-job personnel having more than 5 years of service[56] - The Group has established and implemented a flexible and efficient employee compensation incentive plan, linking employee compensation to their overall performance and contribution to the company[57] - The Group values employee training and has initially established a competency-based training system, organizing multiple training courses on operational management and professional skills[76] Contingent Liabilities and Capital Commitments As of the end of the reporting period, the Group had no significant contingent liabilities, with capital commitments and credit commitments primarily including off-balance sheet credit commitments and capital expenditure commitments, the latter being unpaid capital contributions to associates - As of the end of the reporting period, the Group had no significant contingent liabilities[59] Commitments | Category | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--------------- | :------------------------- | :-------------------------- | | Off-balance sheet credit commitments | 45,168 | 100,000 | | Capital expenditure commitments | 124,440 | 124,440 | - The Group's irrevocable credit commitments primarily consist of finance leases that have been contracted but for which the lease term has not yet commenced[62] - Capital expenditure commitments primarily represent unpaid capital contributions to associates such as Beijing Zhongnuo Tongchuang Investment Fund Management Co, Ltd and Beijing Zhongnuo Yuanjian Innovation Investment Fund Center (Limited Partnership)[79] Use of Net Proceeds from Global Offering The Company's net proceeds from the global offering were approximately RMB 405.8 million, which will be gradually used as disclosed in the prospectus, primarily for expanding business operations, upgrading information systems, and recruiting talent - The Company's net proceeds from the global offering (after deducting underwriting commissions and related costs and expenses) were approximately RMB 405.8 million[80] - Approximately 70% or RMB 284.0 million of the net proceeds is for expanding business operations; approximately 10% or RMB 40.6 million is for upgrading information systems; approximately 10% or RMB 40.6 million is for recruiting more professional talent; and approximately 10% or RMB 40.6 million is for supplementing working capital[64][81][100] Use of Proceeds | Use of Proceeds | Expected Amount to be Used as Disclosed in Prospectus (RMB million) | Amount Used During the Period (RMB million) | Unused Amount (RMB million) | Expected Usage Time | | :----------- | :---------------------------------------- | :---------------------------- | :------------------------ | :-------------- | | Expand business operations | 284.0 | - | 284.0 | Not applicable | | Upgrade information systems | 40.6 | 25.9 | 14.7 | Gradually used until 2023 | | Recruit talent | 40.6 | 40.6 | - | Not applicable | | Supplement working capital | 40.6 | - | 40.6 | Not applicable | Future Outlook Strategic Development During the "14th Five-Year Plan" period, the Group will drive business model innovation, deepen industrial integration, focus on industry-finance integration and regional expansion, supported by standardization and digital operations, and driven by organizational reform, to achieve business structure transformation and upgrading, continuously enhancing the company's intrinsic value - During the "14th Five-Year Plan" period, the Group will drive business model innovation, further deepen industrial integration, focusing on industry-finance integration and regional expansion, supported by standardization and digital operations, and driven by organizational reform[361] - The Group will promote the deep integration of industrial operations and technology finance, achieve business structure transformation and upgrading, continuously enhance the company's intrinsic value, bring satisfactory returns to investors, and create greater value for society[361] Other Information Corporate Governance Practices The Company has adopted the Corporate Governance Code set out in Appendix 14 of the HKEX Listing Rules as its own corporate governance code and is committed to maintaining high standards of corporate governance to protect shareholders' interests and enhance corporate value and accountability - The Company has adopted the Corporate Governance Code set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as its own corporate governance code[355] - The Board regularly reviews and strengthens the Company's corporate governance practices to ensure continued compliance with the Corporate Governance Code[355] Standard Code for Securities Transactions by Directors and Supervisors The Company has established the "Management System for Securities Transactions by Directors, Supervisors, Senior Management, and Other Insiders" as a code of conduct, and all directors and supervisors confirmed compliance with this code during the reporting period - The Company has established the "Management System for Securities Transactions by Directors, Supervisors, Senior Management, and Other Insiders" as a code of conduct for all directors, supervisors, senior management, and other insiders engaging in securities transactions[364] - Following specific inquiries to all Directors and Supervisors, each Director and Supervisor confirmed that they had complied with the requirements set out in the aforementioned code of conduct during the reporting period[356] Interim Dividend The Board does not recommend declaring any interim dividend for the six months ended June 30, 2023 - The Board does not recommend declaring any interim dividend for the six months ended June 30, 2023[365] Audit Committee The Audit Committee comprises five members, with Mr. Wu Delong as Chairman, possessing professional accounting qualifications, and the committee has discussed and reviewed the Group's interim consolidated financial statements with management and external auditors - The Audit Committee comprises five members, including Mr. Wu Delong, Mr. Cheng Dongyue, and Ms. Lin Zhen as independent non-executive directors, and Ms. Wang Sujuan and Mr. Du Yunchao as non-executive directors[357] - Mr. Wu Delong is the Chairman of the Audit Committee and possesses professional accounting qualifications[357] - The Audit Committee has discussed with management and external auditors and reviewed the Group's unaudited interim consolidated financial statements and interim results for the six months ended June 30, 2023[366] Purchase, Sale or Redemption of Listed Securities During the reporting period, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the reporting period, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[358] Significant Legal, Litigation and Arbitration Matters As of the end of the reporting period, the Company had no pending lawsuits as a defendant - As of the end of the reporting period, the Company had no pending lawsuits as a defendant[359] Events After Reporting Period The Group had no significant events after the end of the reporting period - The Group had no significant events after the end of the reporting period[352] Publication of Interim Results Announcement and Interim Report This announcement has been published on the HKEX website and the Company's website, and the Company's 2023 interim report will be dispatched to shareholders and published on the HKEX and Company websites in due course - This announcement has been published on the HKEX website (www.hkexnews.hk) and the Company's website (www.zgclease.com)[353](index=353&type=chunk) - The Company's 2023 interim report will be dispatched to shareholders and published on the HKEX and Company websites in due course[353]