合景悠活(03913) - 2023 - 中期业绩

Interim Results Announcement Interim Results Summary For the six months ended June 30, 2023, the Group's revenue decreased by 8.5% year-on-year to RMB1,888.1 million, and gross profit decreased by 4.2% to RMB596.1 million; profit for the period was RMB81.6 million, and core net profit decreased by approximately 23.0% year-on-year to RMB257.8 million | Metric | For the six months ended June 30, 2023 (RMB million) | For the same period in 2022 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,888.1 | 2,064.3 | -8.5 | | Gross Profit | 596.1 | 622.1 | -4.2 | | Profit for the Period | 81.6 | 329.6 | -75.2 | | Core Net Profit | 257.8 | 334.8 | -23.0 | Change of Company Secretary and Authorized Representative Ms. Chan Ching Nga has resigned as company secretary and authorized representative, effective August 29, 2023; Mr. You Jinquan has been appointed as the new company secretary and authorized representative, effective the same day - Ms. Chan Ching Nga resigned as company secretary and authorized representative, effective August 29, 2023[140] - Mr. You Jinquan was appointed as company secretary and authorized representative, effective August 29, 2023[140] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2023, the Group's revenue was RMB1,888,073 thousand, cost of sales was RMB1,291,961 thousand, and gross profit was RMB596,112 thousand; profit for the period was RMB81,557 thousand, a significant decrease from RMB329,632 thousand in the prior period | Metric | For the six months ended June 30, 2023 (RMB thousand) | For the six months ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 1,888,073 | 2,064,331 | | Cost of sales | (1,291,961) | (1,442,265) | | Gross profit | 596,112 | 622,066 | | Other income and gains | 26,404 | 37,258 | | Selling and distribution expenses | (1,980) | (978) | | Administrative expenses | (262,081) | (232,627) | | Other expenses, net | (219,678) | (10,357) | | Finance costs | (17,647) | (1,443) | | Profit before tax | 123,133 | 415,656 | | Income tax expense | (41,576) | (86,024) | | Profit for the period | 81,557 | 329,632 | | Profit attributable to owners of the parent | 62,570 | 313,873 | | Profit attributable to non-controlling interests | 18,987 | 15,759 | | Basic earnings per share (RMB cents) | 3 | 16 | | Diluted earnings per share (RMB cents) | 3 | 16 | Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2023, the Group's profit for the period was RMB81,557 thousand; other comprehensive loss primarily resulted from exchange differences on translating overseas operations, leading to a total comprehensive income of RMB110,766 thousand for the period | Metric | For the six months ended June 30, 2023 (RMB thousand) | For the six months ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Profit for the period | 81,557 | 329,632 | | Exchange differences on translating overseas operations | (45,938) | (95,132) | | Exchange differences on translating the Company | 75,147 | 103,496 | | Other comprehensive income for the period | 29,209 | 8,364 | | Total comprehensive income for the period | 110,766 | 337,996 | | Total comprehensive income attributable to owners of the parent | 91,779 | 322,237 | | Total comprehensive income attributable to non-controlling interests | 18,987 | 15,759 | Condensed Consolidated Statement of Financial Position As of June 30, 2023, the Group's total non-current assets were RMB2,441,368 thousand, total current assets were RMB4,708,385 thousand; total current liabilities were RMB2,749,767 thousand, and net assets were RMB3,749,523 thousand | Metric | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Non-current assets | | | | Property, plant and equipment | 79,080 | 87,868 | | Goodwill | 1,520,021 | 1,599,744 | | Other intangible assets | 632,679 | 698,583 | | Total non-current assets | 2,441,368 | 2,560,486 | | Current assets | | | | Trade receivables | 2,319,223 | 2,052,449 | | Cash and cash equivalents | 1,652,200 | 1,847,501 | | Total current assets | 4,708,385 | 4,384,205 | | Current liabilities | | | | Trade payables | 567,492 | 575,369 | | Interest-bearing bank and other borrowings | 151,826 | 174,244 | | Total current liabilities | 2,749,767 | 2,960,307 | | Non-current liabilities | | | | Interest-bearing bank and other borrowings | 490,395 | 377,306 | | Total non-current liabilities | 650,463 | 555,865 | | Total equity | 3,749,523 | 3,428,519 | Notes to Condensed Consolidated Interim Financial Information Company and Group Information The Company was incorporated in the Cayman Islands on September 11, 2019, as an investment holding company; for the six months ended June 30, 2023, the Group primarily provided residential property management and non-residential property management and commercial operation services in China - The Company was incorporated in the Cayman Islands on September 11, 2019, as an investment holding company[16] - For the six months ended June 30, 2023, the Group primarily provided residential property management services and non-residential property management and commercial operation services in China[16] Basis of Presentation and Changes in Accounting Policies The interim financial information is prepared in accordance with HKAS 34 and should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2022; new and revised standards adopted for the first time in this period had no significant financial impact on the interim financial information - The interim financial information is prepared in accordance with HKAS 34 and should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2022[17] - New and revised standards adopted for the first time in this period had no significant financial impact on the interim financial information[1] Operating Segment Information The Group is organized into two reportable operating segments: residential property management services and non-residential property management and commercial operation services; for the six months ended June 30, 2023, total revenue was RMB1,888,073 thousand, and segment results were RMB406,502 thousand, with all revenue and non-current assets derived from China - The Group is organized into two reportable operating segments: residential property management services and non-residential property management and commercial operation services[2][137] | Metric | Residential property management services (RMB thousand) | Non-residential property management and commercial operation services (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | | For the six months ended June 30, 2023 | | | | | Segment revenue | 849,630 | 1,038,443 | 1,888,073 | | Segment results | 224,893 | 181,609 | 406,502 | | Profit before tax | | | 123,133 | | Profit for the period | | | 81,557 | | For the six months ended June 30, 2022 | | | | | Segment revenue | 951,801 | 1,112,530 | 2,064,331 | | Segment results | 272,433 | 221,667 | 494,100 | | Profit before tax | | | 415,656 | | Profit for the period | | | 329,632 | - All the Group's revenue from customers and non-current assets are derived solely from its operations and services provided in China[8] - For the six months ended June 30, 2023, revenue from KWG Group Holdings Limited and its associates was approximately RMB350,392,000, a decrease from approximately RMB469,417,000 in the same period of 2022[9] Revenue and Contract Liabilities For the six months ended June 30, 2023, total revenue from contracts with customers was RMB1,888,073 thousand, primarily from residential property management services and non-residential property management and commercial operation services; contract liabilities, mainly from customer prepayments, amounted to RMB256,887 thousand as of June 30, 2023 | Service Category | For the six months ended June 30, 2023 (RMB thousand) | For the six months ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Residential property management services | | | | Pre-sale management services | 98,912 | 134,361 | | Property management services | 653,398 | 625,844 | | Community value-added services | 97,320 | 191,596 | | Subtotal | 849,630 | 951,801 | | Non-residential property management and commercial operation services | | | | Pre-sale management services | 11,746 | 18,144 | | Property management services | 908,573 | 988,482 | | Commercial operation services | 60,709 | 61,186 | | Other value-added services | 57,415 | 44,718 | | Subtotal | 1,038,443 | 1,112,530 | | Total revenue from contracts with customers | 1,888,073 | 2,064,331 | | Revenue recognized over time | 1,803,293 | 1,889,533 | | Revenue recognized at a point in time | 84,780 | 174,798 | | Source of Contract Liabilities | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Third parties | 252,656 | 223,113 | | Related parties | 4,231 | 2,832 | | Total | 256,887 | 225,945 | - Contract liabilities primarily arise from customer prepayments for services not yet rendered[120] Other Income and Gains For the six months ended June 30, 2023, total other income and gains were RMB26,404 thousand, a decrease from RMB37,258 thousand in the prior period, mainly comprising government grants of RMB13,709 thousand and VAT tax incentives of RMB6,458 thousand | Item | For the six months ended June 30, 2023 (RMB thousand) | For the six months ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Interest income | 1,788 | 4,338 | | Government grants | 13,709 | 14,259 | | Net gain on disposal of items of property, plant and equipment | 185 | 94 | | Overdue penalty income | 1,492 | 2,588 | | VAT tax incentives | 6,458 | 10,128 | | Others | 2,772 | 5,851 | | Total | 26,404 | 37,258 | Profit Before Tax For the six months ended June 30, 2023, profit before tax was RMB123,133 thousand; key deductions included cost of services rendered of RMB1,291,961 thousand, employee benefit expenses of RMB608,970 thousand, impairment loss on goodwill of RMB79,723 thousand, and impairment loss on trade receivables of RMB119,038 thousand | Item | For the six months ended June 30, 2023 (RMB thousand) | For the six months ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Cost of services rendered | 1,291,961 | 1,442,265 | | Depreciation of property, plant and equipment | 11,083 | 9,895 | | Amortisation of other intangible assets | 66,341 | 40,718 | | Employee benefit expenses | 608,970 | 781,396 | | Impairment loss on goodwill | 79,723 | — | | Impairment loss on trade receivables | 119,038 | 12,740 | Income Tax For the six months ended June 30, 2023, the Group's income tax expense was RMB41,576 thousand, a decrease from RMB86,024 thousand in the prior period; income tax is primarily calculated at a 25% rate for China operations, with some subsidiaries enjoying a preferential 15% corporate income tax rate | Item | For the six months ended June 30, 2023 (RMB thousand) | For the six months ended June 30, 2022 (RMB thousand) | | :--- | :--- | :--- | | Current income tax | 97,267 | 95,065 | | Deferred income tax | (55,691) | (9,041) | | Total | 41,576 | 86,024 | - Income tax provision for the Group's subsidiaries established in China for their operations in China is calculated at a tax rate of 25%, with some subsidiaries enjoying a preferential corporate income tax rate of 15%[124] Earnings Per Share Attributable to Owners of the Parent For the six months ended June 30, 2023, both basic and diluted earnings per share attributable to owners of the parent were RMB3 cents, a significant decrease from RMB16 cents in the prior period | Metric | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 | | :--- | :--- | :--- | | Profit attributable to owners of the parent (RMB thousand) | 62,570 | 313,873 | | Weighted average number of shares in issue | 2,025,858,916 | 2,017,110,233 | | Basic earnings per share (RMB cents) | 3 | 16 | | Diluted earnings per share (RMB cents) | 3 | 16 | Trade Receivables As of June 30, 2023, the Group's total trade receivables were RMB2,319,223 thousand, an increase of 13.0% from December 31, 2022; related party receivables amounted to RMB1,554,782 thousand, and third-party receivables were RMB1,470,795 thousand | Item | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Related parties | 1,554,782 | 1,387,036 | | Third parties | 1,470,795 | 1,255,874 | | Impairment allowance for trade receivables | (706,354) | (590,461) | | Trade receivables, net | 2,319,223 | 2,052,449 | | Aging | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Within 1 year | 1,512,279 | 1,356,263 | | 1 to 2 years | 641,469 | 579,389 | | 2 to 3 years | 138,011 | 107,517 | | Over 3 years | 27,464 | 9,280 | | Total | 2,319,223 | 2,052,449 | Trade Payables As of June 30, 2023, the Group's total trade payables were RMB567,492 thousand, a slight decrease of 1.4% from December 31, 2022, with third-party payables accounting for the vast majority at RMB561,489 thousand | Item | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Related parties | 6,003 | 6,665 | | Third parties | 561,489 | 568,704 | | Total | 567,492 | 575,369 | | Aging | As of June 30, 2023 (RMB thousand) | As of December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Within 1 year | 481,304 | 507,502 | | 1 to 2 years | 74,045 | 56,755 | | 2 to 3 years | 7,012 | 7,277 | | Over 3 years | 5,131 | 3,835 | | Total | 567,492 | 575,369 | Dividends The Board resolved not to declare any interim dividend for the six months ended June 30, 2023 - The Board resolved not to declare any interim dividend for the six months ended June 30, 2023[132] Chairman's Statement Overview In the first half of 2023, facing domestic economic fluctuations and a sluggish real estate industry, the Group actively responded to challenges, with revenue decreasing by 8.5% year-on-year to RMB1,888.1 million; gross profit margin increased by 1.5 percentage points to 31.6%, and core net profit was RMB257.8 million, as the Group is in an adjustment year, focusing on de-risking, diversification, and efficiency improvement - In the first half of 2023, the Group's revenue decreased by 8.5% year-on-year to approximately RMB1,888.1 million, primarily due to a slight decrease in GFA under management and reduced revenue from pre-sale management services and community value-added services[61] - For the six months ended June 30, 2023, the gross profit margin was approximately 31.6%, an increase of 1.5 percentage points compared to the same period last year[61] - Core net profit reached approximately RMB257.8 million[61] - The Group is in an adjustment year, continuously focusing on de-risking, diversification, and efficiency improvement, actively adjusting high-risk, low-efficiency projects, and optimizing business direction towards non-residential and existing residential markets[61] Optimizing Structure for Sustainable Development, Steadfast in Market-Oriented Approach The Group actively optimized its business structure, reducing reliance on developer-related businesses and increasing the proportion of third-party business; in the first half of 2023, revenue from third parties increased from 77.3% to 81.4%, as the Group remains committed to market-oriented development, continuous full-spectrum business layout, and deep cultivation in key regions, focusing on first and second-tier cities - The Group actively optimized its business structure, reducing developer-related businesses such as sales venue services and sales agency services, and increasing the proportion of third-party business[63] - In the first half of 2023, the proportion of revenue from third parties increased from 77.3% in the same period last year to 81.4%[63] - The Group is committed to a market-oriented approach, continuously implementing a full-spectrum business layout, providing customized service solutions for residential, office buildings, shopping malls, municipal agencies, hospitals, and schools[63] - Regionally, the Group deeply cultivates key areas, focusing on first and second-tier cities with higher commercial activity levels[63] - As of June 30, 2023, the Group's GFA under management and contracted GFA were 205.4 million square meters and 278.1 million square meters, respectively, with third-party project management GFA reaching 179.2 million square meters, accounting for 87.3%[19] Seizing Consumption Recovery Opportunities, Lean Operation of Commercial Assets Facing the normalization of China's economy and intensified competition in commercial asset operations, the Group seizes consumption recovery opportunities, enhancing the resilience of commercial assets through innovation and transformation; for shopping malls, it adjusts business formats based on data insights to improve customer consumption experience, and for office buildings, it optimizes tenant structure and refines operations to capture growth dividends in the existing stock era - The Group will seize the opportunity of consumption recovery, and through innovation and transformation, fully unleash the anti-risk resilience of commercial assets to navigate cycles[21] - For shopping malls, leveraging the operating team's insights into consumers, the Group adjusts weak business formats, deploys strong business formats and brands, and enhances customer consumption experience[22] - For office buildings, the Group actively optimizes tenant structure and captures operating growth dividends in the existing stock era through refined operations[22] Adhering to Digital Transformation, Enhancing Space Operation Efficiency The Group is committed to digital transformation, building a digital commercial ecosystem centered on consumers; in May 2023, it formed a strategic partnership with Tencent Cloud to jointly build "future communities," leveraging IoT, cloud computing, big data, and AI to improve service quality and operational efficiency, and using digital tools to transform quality customer service experience into algorithmic models for automated work order flow, empowering employees to provide better services - The Group focuses on building new business systems and designing new service frameworks, reconstructing a digital commercial ecosystem centered on consumers[24] - In May 2023, the Group entered into a strategic partnership with Tencent Cloud Computing (Beijing) Co., Ltd. to collaborate on digital transformation of property services and jointly build "future communities"[24] - Leveraging IoT, cloud computing, big data, and AI to improve quality and efficiency, promoting enterprise transformation and upgrading, and providing customers with high-quality service experiences[24] - The Group utilizes advanced digital tools to train and distill high-quality customer service experience into algorithmic models, enabling automated work order flow and empowering employees to provide better services to customers[25] Future Outlook Looking ahead to the second half of 2023, the Group will continue to build its business foundation, properly manage the relationships between self-reliance and open cooperation, scale expansion and quality growth, and short-term returns and long-term development, to promote high-quality and healthy development - In the second half of 2023, the Group will continue to build its business foundation, properly managing the relationship between self-reliance and open cooperation[27] - Properly managing the relationship between scale expansion and quality growth, as well as the relationship between short-term returns and long-term development, to promote high-quality and healthy development[27] Management Discussion and Analysis Business Review In the first half of 2023, facing a challenging market environment, the Group actively reduced business risks and improved operational efficiency; total revenue decreased by 8.5% year-on-year to RMB1,888.1 million, primarily due to reduced revenue from pre-sale management services and community value-added services under real estate market pressure; the Group proactively withdrew from high-risk projects, optimized project portfolio quality, and continued to deepen its presence in the Greater Bay Area and Yangtze River Delta markets, with third-party projects accounting for 87.3% of GFA under management - As of June 30, 2023, the Group provided property management, commercial operation, and value-added services in 134 cities in China, with a total contracted GFA of approximately 278.1 million square meters and a total GFA under management of approximately 205.4 million square meters[29] - The slight decrease in GFA under management was primarily due to the Group's proactive management of its project portfolio, withdrawing from high-risk projects with safety hazards[29] - In the first half of 2023, the Group achieved total revenue of RMB1,888.1 million, a year-on-year decrease of 8.5%, mainly due to reduced revenue from pre-sale management services and community value-added services, affected by real estate market pressure[30] - Third-party projects accounted for 87.3% of the Group's GFA under management[43] Business Model The Group's business model is divided into two major segments: residential property management services and non-residential property management and commercial operation services; residential services include pre-sale management, property management, and community value-added services, while non-residential services cover pre-sale management, commercial property management, public and urban property services, commercial operations, and other value-added services; the Group is committed to digital efficiency enhancement and collaborates with Tencent Cloud to establish an innovation laboratory for the property management industry - The Group's revenue primarily derives from two major business segments: (i) residential property management services; and (ii) non-residential property management and commercial operation services[33] - Residential property management services include pre-sale management services, property management services, and community value-added services[35][38][39] - Non-residential property management and commercial operation services include pre-sale management services, property management services for commercial properties, public and urban property services, commercial operation services, and other value-added services[36][39][40] - In May 2023, the Group and Tencent Cloud announced a strategic partnership to jointly establish the first innovation laboratory for the property management industry, collaborating on the digital transformation of property management services[37] | Service Category | For the six months ended June 30, 2023 (RMB thousand) | Proportion (%) | For the six months ended June 30, 2022 (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Residential property management services | | | | | | Pre-sale management services | 98,912 | 5.2 | 134,361 | 6.5 | | Property management services | 653,398 | 34.6 | 625,844 | 30.3 | | Community value-added services | 97,320 | 5.2 | 191,596 | 9.3 | | Subtotal | 849,630 | 45.0 | 951,801 | 46.1 | | Non-residential property management and commercial operation services | | | | | | Pre-sale management services | 11,746 | 0.6 | 18,144 | 0.9 | | Commercial property management services | 224,517 | 11.9 | 236,272 | 11.4 | | Public and urban area property management services | 684,056 | 36.2 | 752,210 | 36.4 | | Commercial operation services | 60,709 | 3.2 | 61,186 | 3.0 | | Other value-added services | 57,415 | 3.1 | 44,718 | 2.2 | | Subtotal | 1,038,443 | 55.0 | 1,112,530 | 53.9 | | Total | 1,888,073 | 100.0 | 2,064,331 | 100.0 | Business Development As of June 30, 2023, the Group's total GFA under management was 205.4 million square meters, a slight decrease mainly due to proactive withdrawal from high-risk projects; the Group adopted a strategy of "deep cultivation in key regions + third-party expansion + multi-format layout," with GFA under management in the Greater Bay Area and Yangtze River Delta accounting for 58.9%, and third-party projects accounting for 87.3%; residential property management services revenue decreased by 10.7% year-on-year, and non-residential property management and commercial operation services revenue decreased by 6.7%, primarily affected by real estate market pressure and contract term adjustments - As of June 30, 2023, the Group's total GFA under management reached 205.4 million square meters, a slight decrease compared to 215.5 million square meters as of December 31, 2022, primarily due to proactive management of the project portfolio and withdrawal from high-risk projects[43] - The Group adopted a strategy of "deep cultivation in key regions + third-party expansion + multi-format layout" to optimize its project portfolio and structure[43] - As of June 30, 2023, the GFA under management in the Greater Bay Area and Yangtze River Delta regions accounted for 58.9% of the Group's total[43] - As of June 30, 2023, third-party projects accounted for 87.3% of the Group's GFA under management[43] - Revenue from the residential property management services segment decreased by 10.7% year-on-year to approximately RMB849.6 million, mainly due to the continuous pressure on the real estate market, leading to a decrease in the number of residential property sales offices under management and reduced revenue from community value-added services[46] - Revenue from the non-residential property management services segment decreased by 6.7% year-on-year to approximately RMB1,038.4 million, primarily due to the adjustment of terms for certain management service contracts from a gross basis to a net basis upon renewal[52] | Region | For the six months ended June 30, 2023 Revenue (RMB thousand) | For the six months ended June 30, 2023 GFA under management (thousand square meters) | For the six months ended June 30, 2022 Revenue (RMB thousand) | For the six months ended June 30, 2022 GFA under management (thousand square meters) | | :--- | :--- | :--- | :--- | :--- | | Residential Properties | | | | | | Greater Bay Area | 317,268 | 25,062 | 361,297 | 25,106 | | Yangtze River Delta Region | 166,520 | 24,520 | 199,087 | 22,061 | | Central-Western Region and Hainan | 321,896 | 51,911 | 329,713 | 50,995 | | Bohai Rim Economic Circle | 43,946 | 3,773 | 61,704 | 3,322 | | Total | 849,630 | 105,266 | 951,801 | 101,484 | | Non-residential Properties | | | | | | Greater Bay Area | 461,250 | 44,557 | 527,596 | 53,688 | | Yangtze River Delta Region | 309,925 | 26,831 | 306,830 | 27,112 | | Central-Western Region and Hainan | 131,312 | 10,315 | 141,206 | 13,378 | | Bohai Rim Economic Circle | 135,956 | 18,405 | 136,898 | 18,553 | | Total | 1,038,443 | 100,108 | 1,112,530 | 112,731 | Financial Review The Group's total revenue for the first half of 2023 was RMB1,888,073 thousand, a year-on-year decrease of 8.5%; cost of sales decreased by 10.4%, leading to an improved gross profit margin of 31.6%; other income and gains decreased, while administrative expenses increased by 12.7% due to amortization of intangible assets; other expenses, net, significantly increased by 2,012.5%, mainly due to impairment losses on trade receivables and goodwill; income tax expense decreased - The Group's total revenue was RMB1,888,073 thousand, a year-on-year decrease of 8.5%[66] - Cost of sales was approximately RMB1,292.0 million, a decrease of 10.4% compared to the same period in 2022, with a larger decline than revenue, reflecting improved operations[80] - Gross profit was approximately RMB596.1 million, a year-on-year decrease of 4.2%; gross profit margin was 31.6%, an increase from 30.1% in the prior period[82] - Other income and gains were approximately RMB26.4 million, a year-on-year decrease of 29.2%, mainly comprising government grants and VAT tax incentives[83] - Administrative expenses were approximately RMB262.1 million, a year-on-year increase of 12.7%, primarily reflecting the amortization of intangible assets arising from acquisitions of subsidiaries in 2022 or earlier[84] - Other expenses, net, were approximately RMB219.7 million, a year-on-year increase of 2,012.5%, mainly including impairment loss on trade receivables of RMB119.0 million and impairment loss on goodwill of RMB79.7 million[85] - Income tax was approximately RMB41.6 million, a decrease from RMB86.0 million in the prior period[87] Revenue The Group's revenue primarily derives from residential property management services and non-residential property management and commercial operation services; residential property management services revenue decreased by 10.7%, mainly affected by reduced pre-sale management services and community value-added services; non-residential property management and commercial operation services revenue decreased by 6.7%, primarily due to adjustments in property management service contract terms, though other value-added services revenue increased | Business Segment | For the six months ended June 30, 2023 (RMB thousand) | Proportion (%) | For the six months ended June 30, 2022 (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Residential property management services | 849,630 | 45.0 | 951,801 | 46.1 | | Non-residential property management and commercial operation services | 1,038,443 | 55.0 | 1,112,530 | 53.9 | | Total | 1,888,073 | 100.0 | 2,064,331 | 100.0 | | Residential Property Management Services Line | For the six months ended June 30, 2023 (RMB thousand) | Proportion (%) | For the six months ended June 30, 2022 (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Pre-sale management services | 98,912 | 11.6 | 134,361 | 14.1 | | Property management services | 653,398 | 76.9 | 625,844 | 65.8 | | Community value-added services | 97,320 | 11.5 | 191,596 | 20.1 | | Total | 849,630 | 100.0 | 951,801 | 100.0 | - Revenue from pre-sale management services under the residential property management services segment decreased, mainly due to continuous pressure on the real estate market, leading to a reduction in the number of residential property sales offices under management[71] - Revenue from property management services under the residential property management services segment increased, mainly due to an increase in GFA under management for residential properties[72] - Revenue from community value-added services under the residential property management services segment decreased, mainly due to continuous pressure on the real estate market[73] | Non-residential Property Management and Commercial Operation Services Line | For the six months ended June 30, 2023 (RMB thousand) | Proportion (%) | For the six months ended June 30, 2022 (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Pre-sale management services | 11,746 | 1.1 | 18,144 | 1.6 | | Property management services | 908,573 | 87.5 | 988,482 | 88.9 | | Commercial operation services | 60,709 | 5.9 | 61,186 | 5.5 | | Other value-added services | 57,415 | 5.5 | 44,718 | 4.0 | | Total | 1,038,443 | 100.0 | 1,112,530 | 100.0 | - Revenue from property management services under the non-residential property management and commercial operation services segment decreased, mainly because the terms of certain management service contracts were adjusted from a gross basis to a net basis upon renewal[77] - Revenue from other value-added services under the non-residential property management and commercial operation services segment increased, mainly due to the Group's business diversification[79] Financial Position and Capital Structure As of June 30, 2023, the Group's total assets were RMB7,149.8 million, and total liabilities were RMB3,400.2 million; the current ratio was 1.71, and cash and cash equivalents were approximately RMB1,652.2 million, a decrease of 10.6% from the end of 2022; total borrowings were approximately RMB642.2 million, primarily denominated in RMB; the Group was in a net cash position with no significant contingent liabilities; net proceeds from the listing were mainly used for strategic acquisitions, upgrading smart service systems, and diversifying value-added services - As of June 30, 2023, the Group's total assets were approximately RMB7,149.8 million, and total liabilities were approximately RMB3,400.2 million[88] - As of June 30, 2023, the Group's current ratio was 1.71 (December 31, 2022: 1.48)[88] - As of June 30, 2023, the Group's cash and cash equivalents were approximately RMB1,652.2 million, a decrease of approximately 10.6% from December 31, 2022[89] - As of June 30, 2023, the Group's total borrowings were approximately RMB642.2 million, of which approximately RMB151.8 million is repayable within 1 year[98] - The Group was in a net cash position as of June 30, 2023, and December 31, 2022, thus the gearing ratio is not applicable[94] - As of June 30, 2023, among the net proceeds from the listing, RMB4.9 million was utilized for upgrading smart service systems, with RMB111.2 million remaining unutilized or without immediate plans[103] Employees and Remuneration Policy As of June 30, 2023, the Group had approximately 18,000 employees; remuneration policy is based on market levels, employee performance, and contributions, offering comprehensive benefit plans and career development opportunities, including performance bonuses, share options, retirement schemes, medical benefits, and training courses - As of June 30, 2023, the Group had approximately 18,000 employees[106] - Employee remuneration is determined based on market levels, individual employee performance, and contributions, with a widespread adoption of performance-based bonuses[106] - The Group provides comprehensive benefit plans and career development opportunities, including performance bonuses, share options, retirement schemes, medical benefits, and internal/external training courses[106] Interim Dividends The Board resolved not to declare any interim dividend for the six months ended June 30, 2023 - The Board resolved not to declare any interim dividend for the six months ended June 30, 2023[107] Other Information Corporate Governance The Group is committed to maintaining high-quality corporate governance and complies with the Corporate Governance Code set out in Appendix 14 of the Listing Rules; Mr. Kong Kin Ming, the Chairman of the Board, was unable to attend the EGM on January 13, 2023, and the AGM on June 1, 2023, due to other engagements, constituting a deviation from the code provisions - The Company has applied good corporate governance principles and complied with the code provisions in Part 2 of the Corporate Governance Code set out in Appendix 14 of the Listing Rules of the Stock Exchange[108] - Mr. Kong Kin Ming, the Chairman of the Board, was unable to attend the extraordinary general meeting held on January 13, 2023, and the annual general meeting held on June 1, 2023, due to other engagements, constituting a deviation from code provisions C.1.6 and F.2.2 of Part 2 of the Corporate Governance Code[108] Standard Code for Securities Transactions The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules; all Directors confirmed compliance with the Model Code for the six months ended June 30, 2023 - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules[110] - All Directors confirmed their compliance with the Model Code for the six months ended June 30, 2023[110] Purchase, Sale or Redemption of Listed Securities For the six months ended June 30, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended June 30, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[111] Audit Committee The Audit Committee comprises three independent non-executive directors and has reviewed the interim financial information - The Audit Committee comprises three members, all of whom are independent non-executive directors[112] - The Audit Committee has reviewed the interim financial information[113] Interim Report The Company's 2023 interim report will be published on the Company's website and the HKEXnews website by the end of September 2023, and printed copies will be dispatched to shareholders - The Company's 2023 interim report will be published on the Company's website (www.kwgliving.com) and the HKEXnews website (www.hkexnews.hk) by the end of September 2023, and printed copies will be dispatched to shareholders[114] Change of Company Secretary and Authorized Representative Ms. Chan Ching Nga resigned as company secretary and authorized representative, effective August 29, 2023; Mr. You Jinquan was appointed as the new company secretary and authorized representative, having joined the Group in March 2021 as Financial Controller with extensive financial reporting experience - Ms. Chan Ching Nga resigned as the Company's company secretary and ceased to be the authorized representative, effective August 29, 2023[115] - Mr. You Jinquan was appointed as company secretary and authorized representative, effective August 29, 2023[117] - Mr. You Jinquan joined the Group in March 2021 as Financial Controller, responsible for financial reporting, and previously served as Financial Controller at KWG Group Holdings Limited[117]