山高控股(00412) - 2023 - 中期业绩

Company Information and Financial Performance Overview Company Profile SDHG Group Limited is an exempted company incorporated in Bermuda, with its shares listed on the Hong Kong Stock Exchange and its principal place of business in Central, Hong Kong - The company is an exempted company incorporated in Bermuda, with its shares listed on the Hong Kong Stock Exchange[9] Condensed Consolidated Statement of Profit or Loss Revenue grew significantly, but profit for the period and attributable to owners turned to loss, mainly due to fair value losses on financial assets and higher finance costs Key Data from Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Metric | 2023 (HKD thousands) | 2022 (HKD thousands) | Change (%) | | :------------- | :-------------- | :-------------- | :--------- | | Revenue | 3,074,206 | 1,216,778 | 152.66 | | Gross Profit | 1,662,430 | 680,917 | 144.16 | | Other Income | 66,326 | 28,660 | 131.42 | | Other Gains and Losses, Net | (26,806) | 1,152,140 | -102.33 | | Impairment Losses on Financial Assets, Net | 271,048 | (355,828) | -176.17 | | Fair Value Losses on Financial Assets at FVTPL, Net | (203,120) | (686,844) | 70.47 | | Finance Costs | (991,226) | (386,274) | -156.62 | | Profit Before Tax | 176,507 | 231,451 | -23.74 | | Profit for the Period | 90,048 | 300,921 | -70.08 | | Profit/(Loss) for the Period Attributable to Owners of the Company | (294,432) | 75,863 | -488.18 | | Basic (Loss)/Earnings Per Share (HK cents) | (4.89) | 1.26 | -488.10 | Condensed Consolidated Statement of Comprehensive Income The Group's total comprehensive loss for the period significantly increased, primarily due to fair value changes in financial assets at FVTOCI and exchange differences from overseas operations Key Data from Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Metric | 2023 (HKD thousands) | 2022 (HKD thousands) | Change (%) | | :----------------- | :-------------- | :-------------- | :--------- | | Profit for the Period | 90,048 | 300,921 | -70.08 | | Total Other Comprehensive Loss | (1,190,679) | (316,435) | -276.29 | | Total Comprehensive Loss for the Period | (1,100,631) | (15,514) | -7000.00 | | Total Comprehensive Income/(Loss) for the Period Attributable to Owners of the Company | (910,819) | (240,471) | -278.85 | - Exchange differences from overseas operations led to a significant increase in total other comprehensive loss for the period, from HKD (38,486) thousands in 2022 to HKD (974,207) thousands in 2023[6] Condensed Consolidated Statement of Financial Position As of June 30, 2023, the Group's total assets and liabilities decreased, with net current assets and net assets also declining, reflecting challenges in asset structure and financial health Key Data from Condensed Consolidated Statement of Financial Position (As of June 30) | Metric | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :------------- | :-------------- | :---------------------- | :--------- | | Total Non-current Assets | 38,968,932 | 41,202,190 | -5.56 | | Total Current Assets | 27,851,904 | 27,755,419 | 0.35 | | Total Current Liabilities | 19,099,957 | 18,301,999 | 4.36 | | Net Current Assets | 8,751,947 | 9,453,420 | -7.42 | | Total Non-current Liabilities | 33,400,108 | 35,080,832 | -4.79 | | Net Assets | 14,320,771 | 15,574,778 | -8.05 | | Total Equity | 14,320,771 | 15,574,778 | -8.05 | - Equity attributable to owners of the Company significantly decreased from HKD (36,053) thousands as of December 31, 2022, to HKD (942,280) thousands as of June 30, 2023, indicating substantial shareholder losses[8] Notes to the Financial Statements Basis of Preparation These interim financial statements are prepared in accordance with the HKEX Listing Rules and HKAS 34, with the first-time adoption of several new and revised HKFRSs, notably HKAS 12 amendments impacting deferred tax asset and liability component disclosures - The interim financial statements are presented in HKD and prepared in accordance with Appendix 16 of the Listing Rules and HKAS 34[10] - First-time adoption of HKFRS 17 and amendments to HKAS 1, HKAS 8, and HKAS 12, with HKAS 12 amendments affecting deferred tax asset and liability component disclosures but not the overall deferred tax balance[11][12] Compliance Statement These interim financial statements comply with HKEX Listing Rules Appendix 16 disclosure requirements and HKAS 34 'Interim Financial Reporting', presented in HKD as functional currency - The interim financial statements are presented in HKD and prepared in accordance with Appendix 16 of the Listing Rules and HKAS 34[10] Application of New and Revised HKFRSs The Group first adopted several new and revised HKFRSs, with HKAS 12 (Amendments) 'Deferred Tax related to Assets and Liabilities arising from a Single Transaction' primarily affecting deferred tax asset and liability component disclosures, but not materially impacting the overall deferred tax balance - The Group first adopted HKFRS 17, and amendments to HKAS 1, HKAS 8, and HKAS 12[11][12] - HKAS 12 (Amendments) narrowed the scope of deferred tax exemption, leading to separate determination of deferred tax related to right-of-use assets and lease liabilities, primarily affecting disclosure components but not the overall deferred tax balance in the condensed consolidated statement of financial position[13] Judgements and Estimates Significant management judgements and estimates made in preparing these interim financial statements are consistent with those applied in the annual financial statements, though actual results may differ from estimates - Significant management judgements and estimation uncertainties in preparing the interim financial statements are consistent with those applied in the annual financial statements[14] Operating Segment Information The Group operates four reportable segments: Industrial Investment, Standardized Investment, Non-standardized Investment, and Licensed Financial Services. In H1 2023, Industrial Investment and Licensed Financial Services saw significant performance growth, Non-standardized Investment turned profitable, while Standardized Investment recorded a loss. Over 90% of the Group's revenue and assets are located in China - The Group has four reportable operating segments: Industrial Investment, Standardized Investment, Non-standardized Investment, and Licensed Financial Services[15] - Segment performance is assessed by adjusted profit before tax, excluding unallocated income, finance costs, expenses, and share of results of joint ventures and associates[16] Segment Overview The Group's business is divided into four reportable operating segments—Industrial Investment, Standardized Investment, Non-standardized Investment, and Licensed Financial Services—based on reports reviewed by the chief operating decision maker, with segment performance assessed by adjusted profit before tax - The Group's chief operating decision maker (Executive Directors) classifies business into four reportable segments: Industrial Investment, Standardized Investment, Non-standardized Investment, and Licensed Financial Services, based on strategic decision reports[15] - Segment performance is assessed by reportable segment results (adjusted profit before tax), excluding unallocated income, finance costs, expenses, and share of results of joint ventures and associates[16] Segment Results and Balance Sheet For the six months ended June 30, 2023, Industrial Investment segment revenue and performance grew significantly, Non-standardized Investment turned profitable, Licensed Financial Services improved substantially, while Standardized Investment recorded a loss. Total assets and liabilities both decreased Segment Revenue and Results (For the six months ended June 30) | Segment | 2023 Revenue (HKD thousands) | 2022 Revenue (HKD thousands) | 2023 Results (HKD thousands) | 2022 Results (HKD thousands) | | :------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Industrial Investment | 2,769,414 | 938,622 | 485,733 | 1,946,652 | | Standardized Investment | 68,351 | 164,585 | (293,676) | (234,969) | | Non-standardized Investment | 133,688 | 41,064 | 57,221 | (788,189) | | Licensed Financial Services | 102,753 | 72,507 | 107,547 | (633,792) | | Total | 3,074,206 | 1,216,778 | 356,825 | 289,702 | Segment Assets and Liabilities (As of June 30) | Segment | 2023 Assets (HKD thousands) | 2022 Dec 31 Assets (HKD thousands) | 2023 Liabilities (HKD thousands) | 2022 Dec 31 Liabilities (HKD thousands) | | :------------- | :------------------ | :-------------------------- | :------------------ | :-------------------------- | | Industrial Investment | 50,364,266 | 52,197,838 | 39,224,062 | 40,691,075 | | Standardized Investment | 2,725,811 | 3,237,270 | 3,928,730 | 2,847,036 | | Non-standardized Investment | 6,524,852 | 6,902,973 | 6,186,576 | 7,130,612 | | Licensed Financial Services | 4,057,283 | 3,445,289 | 3,015,505 | 2,586,741 | | Total Assets | 66,820,836 | 68,957,609 | | | | Total Liabilities | | | 52,500,065 | 53,382,831 | Geographical Information For the six months ended June 30, 2023, over 90% of the Group's revenue was generated in China, and over 90% of its assets were located in China, thus no detailed geographical segment information is presented - For the six months ended June 30, 2023, over 90% of the Group's revenue was generated in China[20] - As of June 30, 2023, and December 31, 2022, over 90% of the Group's assets were located in China[21] Revenue The Group's total revenue significantly increased by 152.66% to HKD 3,074,206 thousands, primarily driven by substantial growth in electricity sales and tariff subsidies, clean heating services, and entrusted operation services income Revenue from Contracts with Customers Classification (For the six months ended June 30) | Revenue Category | 2023 (HKD thousands) | 2022 (HKD thousands) | Change (%) | | :--------------- | :-------------- | :-------------- | :--------- | | Electricity Sales and Tariff Subsidies | 2,252,970 | 807,270 | 179.08 | | Construction Services | 53,001 | 79,404 | -33.26 | | Technical Consulting Services | 7,646 | 5,664 | 34.99 | | Entrusted Operation Services | 73,397 | 25,918 | 183.19 | | Provision of Clean Heating Services | 382,400 | 20,366 | 1772.60 | | Consultancy Services Income | 47,828 | 11,108 | 330.58 | | Brokerage Business Income | 11,119 | 10,801 | 2.94 | | Asset Management and Performance Income | 2,112 | 7,394 | -71.43 | | Total Revenue from Contracts with Customers | 2,830,473 | 970,359 | 191.70 | Revenue Reconciliation (For the six months ended June 30) | Revenue Source | 2023 (HKD thousands) | 2022 (HKD thousands) | Change (%) | | :--------------- | :-------------- | :-------------- | :--------- | | Revenue from Contracts with Customers | 2,830,473 | 970,359 | 191.70 | | Finance Lease Income | 1,944 | 8,452 | -77.00 | | Interest Income from Money Lending Business | 46,856 | 19,679 | 138.01 | | Interest Income from Debt Investments | 36,520 | 50,451 | -27.52 | | Dividend Income from Financial Assets at FVTPL | 5,065 | 19,858 | -74.40 | | Interest Income from Financial Assets at FVTPL | 56,676 | 75,146 | -24.58 | | Interest Income from Financial Assets at FVTOCI | 96,672 | 72,833 | 32.73 | | Total Revenue | 3,074,206 | 1,216,778 | 152.66 | Revenue from Contracts with Customers Classification The Group's revenue from contracts with customers significantly increased by 191.70% to HKD 2,830,473 thousands, primarily benefiting from strong growth in electricity sales and tariff subsidies, clean heating services, and entrusted operation services Key Growth Drivers of Revenue from Contracts with Customers (For the six months ended June 30) | Revenue Category | 2023 (HKD thousands) | 2022 (HKD thousands) | Change (%) | | :--------------- | :-------------- | :-------------- | :--------- | | Electricity Sales and Tariff Subsidies | 2,252,970 | 807,270 | 179.08 | | Provision of Clean Heating Services | 382,400 | 20,366 | 1772.60 | | Entrusted Operation Services | 73,397 | 25,918 | 183.19 | - The vast majority of revenue from contracts with customers (HKD 2,760,300 thousands) is recognized at a point in time, with HKD 70,173 thousands recognized over time[22] Revenue Reconciliation The Group's total revenue comprises revenue from contracts with customers and various financial business incomes, with interest income from money lending and financial assets at FVTOCI increasing, while finance lease income and dividend/interest income from financial assets at FVTPL decreased Non-Customer Contract Revenue Reconciliation (For the six months ended June 30) | Revenue Source | 2023 (HKD thousands) | 2022 (HKD thousands) | Change (%) | | :--------------- | :-------------- | :-------------- | :--------- | | Finance Lease Income | 1,944 | 8,452 | -77.00 | | Interest Income from Money Lending Business | 46,856 | 19,679 | 138.01 | | Interest Income from Debt Investments | 36,520 | 50,451 | -27.52 | | Dividend Income from Financial Assets at FVTPL | 5,065 | 19,858 | -74.40 | | Interest Income from Financial Assets at FVTPL | 56,676 | 75,146 | -24.58 | | Interest Income from Financial Assets at FVTOCI | 96,672 | 72,833 | 32.73 | Other Gains and Losses, Net The Group's net other gains and losses significantly shifted from a gain of HKD 1,152,140 thousands in the prior period to a loss of HKD 26,806 thousands, mainly due to a substantial decrease in bargain purchase gains from subsidiary acquisitions and increased exchange losses Other Gains and Losses, Net (For the six months ended June 30) | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | Change (%) | | :--------------- | :-------------- | :-------------- | :--------- | | Bargain Purchase Gain on Acquisition of Subsidiaries | 44,556 | 1,601,839 | -97.22 | | Exchange Losses, Net | (38,794) | (28,630) | -35.57 | | Fair Value Gain on Investment Properties | 10,000 | – | N/A | | Total | (26,806) | 1,152,140 | -102.33 | - No impairment losses on goodwill and intangible assets were recorded in H1 2023, compared to HKD (13,228) thousands and HKD (400,279) thousands respectively in the prior period[24] Impairment Losses on Financial Assets, Net The Group's net impairment losses on financial assets shifted from a recognized loss of HKD 355,828 thousands in the prior period to a reversal gain of HKD 271,048 thousands, primarily due to reversals of impairment losses on loans receivable, trade and other receivables Impairment Losses on Financial Assets, Net (For the six months ended June 30) | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | Change (%) | | :--------------- | :-------------- | :-------------- | :--------- | | Finance Lease Receivables | 18,159 | (105,269) | -117.25 | | Loans Receivable | 112,748 | (338,054) | -133.35 | | Trade and Other Receivables | 140,141 | 251,003 | -44.10 | | Contract Assets | – | 257 | -100.00 | | Debt Instruments at FVTOCI | – | (163,765) | -100.00 | | Total | 271,048 | (355,828) | -176.17 | Finance Costs The Group's finance costs significantly increased by 156.62% to HKD 991,226 thousands, primarily due to substantial growth in interest on bank borrowings and lease liabilities Composition of Finance Costs (For the six months ended June 30) | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | Change (%) | | :------------- | :-------------- | :-------------- | :--------- | | Interest on Bank Borrowings | 881,109 | 238,320 | 269.72 | | Interest on Other Borrowings | 3,169 | 15,334 | -79.34 | | Interest on Bonds | 114,397 | 155,337 | -26.36 | | Interest on Lease Liabilities | 135,207 | 82,801 | 63.29 | | Less: Interest Capitalized | (11,263) | – | N/A | | Total | 991,226 | 386,274 | 156.62 | Profit Before Tax The Group's profit before tax decreased by 23.74% to HKD 176,507 thousands, mainly due to increased fair value losses on financial assets at FVTPL, higher employee benefit expenses, and a significant increase in depreciation of property, plant and equipment Key Deductions from Profit Before Tax (For the six months ended June 30) | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | Change (%) | | :--------------- | :-------------- | :-------------- | :--------- | | Total Employee Benefit Expenses | 189,875 | 127,578 | 48.83 | | Fair Value Losses on Financial Assets at FVTPL, Net | 203,120 | 686,844 | -70.47 | | Cost of Electricity Sales and Entrusted Operation Services | 899,488 | 254,532 | 253.39 | | Cost of Clean Heating Services | 323,597 | 34,724 | 831.93 | | Depreciation of Property, Plant and Equipment | 557,860 | 97,350 | 472.99 | | Depreciation of Right-of-Use Assets | 130,884 | 45,931 | 184.96 | - Realized losses on financial assets at FVTPL amounted to HKD 59,248 thousands, while unrealized losses were HKD 143,872 thousands[27] Income Tax Expense/(Credit) The Group's income tax shifted from a credit of HKD 69,470 thousands in the prior period to an expense of HKD 86,459 thousands, mainly due to deferred tax turning from credit to expense and increased PRC corporate income tax Composition of Income Tax Expense/(Credit) (For the six months ended June 30) | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | Change (%) | | :------------- | :-------------- | :-------------- | :--------- | | PRC Corporate Income Tax | 110,650 | 73,192 | 51.18 | | Singapore Corporate Income Tax | 2,270 | 2,309 | -1.69 | | Deferred Tax | (26,461) | (144,971) | 81.74 | | Total | 86,459 | (69,470) | -224.40 | - No provision for Hong Kong profits tax was made for the period as no assessable profits arose in Hong Kong[29] - Certain PRC subsidiaries enjoy income tax exemptions and reductions due to operating photovoltaic and wind power stations and meeting preferential corporate income tax rate conditions in specific regions[30] Loss/Earnings Per Share Attributable to Owners of the Company Basic and diluted earnings per share attributable to owners of the Company shifted from 1.26 HK cents in the prior period to a loss of 4.89 HK cents per share, primarily due to a significant increase in loss attributable to owners of the Company Loss/Earnings Per Share (For the six months ended June 30) | Metric | 2023 (HK cents) | 2022 (HK cents) | Change (%) | | :------------- | :------------ | :------------ | :--------- | | Basic (Loss)/Earnings Per Share | (4.89) | 1.26 | -488.10 | | Diluted (Loss)/Earnings Per Share | (4.89) | 1.26 | -488.10 | Basic (Loss)/Earnings Per Share For the six months ended June 30, 2023, the loss attributable to owners of the Company was HKD 294,432 thousands, resulting in a basic loss of 4.89 HK cents per share, compared to earnings of 1.26 HK cents per share in the prior period Basic (Loss)/Earnings Per Share Calculation (For the six months ended June 30) | Metric | 2023 (HKD thousands) | 2022 (HKD thousands) | | :------------- | :-------------- | :-------------- | | Loss/Profit for the Period Attributable to Owners of the Company | (294,432) | 75,863 | | Weighted Average Number of Ordinary Shares (thousands) | 6,019,431 | 6,022,346 | | Basic (Loss)/Earnings Per Share (HK cents) | (4.89) | 1.26 | Diluted (Loss)/Earnings Per Share For the six months ended June 30, 2023, diluted loss per share was the same as basic loss per share at 4.89 HK cents, as the assumed exercise of share options had an anti-dilutive effect on loss per share - For the six months ended June 30, 2023, diluted loss per share was not assumed to be exercised and was the same as basic loss per share, as the assumed exercise of share options had an anti-dilutive effect on loss per share[35] Dividends The Board decided not to declare any interim dividend for the period - The Board did not declare any interim dividend for the period (prior period: nil)[36] Property, Plant and Equipment For the six months ended June 30, 2023, the Group added approximately HKD 784,147 thousands in property, plant and equipment, a significant increase from the prior period, excluding assets from business combinations and transfers from investment properties - For the six months ended June 30, 2023, the Group added approximately HKD 784,147 thousands in property, plant and equipment, a significant increase from HKD 196,165 thousands in the prior period[36] - Additions exclude property, plant and equipment with a gross carrying amount of approximately HKD 1,017,948 thousands acquired in business combinations and approximately HKD 540,000 thousands transferred from investment properties[36] Interests in Associates As of June 30, 2023, the Group's total interests in associates amounted to HKD 3,465,696 thousands, a decrease from December 31, 2022, primarily due to exchange adjustments Interests in Associates (As of June 30) | Item | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :--------------- | :-------------- | :---------------------- | :--------- | | Cost of Investment | 3,517,963 | 3,498,158 | 0.57 | | Exchange Adjustments | (52,951) | (13,513) | -291.86 | | Total Interests | 3,465,696 | 3,558,337 | -2.60 | | Amounts Due from Associates | 335,417 | 357,553 | -6.20 | Financial Assets at Fair Value Through Other Comprehensive Income (FVTOCI) As of June 30, 2023, the Group's total financial assets at FVTOCI amounted to HKD 4,324,916 thousands, a decrease from year-end 2022, mainly due to fair value changes in unlisted equity investments and listed bonds Financial Assets at FVTOCI (As of June 30) | Asset Class | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :--------------- | :-------------- | :---------------------- | :--------- | | Total Non-current Assets | 851,993 | 1,270,726 | -32.95 | | Total Current Assets | 3,472,923 | 3,248,546 | 6.91 | | Total | 4,324,916 | 4,519,272 | -4.30 | - The Group designated certain listed equity instruments to be measured at FVTOCI, as they are intended for long-term holding[39] Fair Value Changes of Financial Assets at FVTOCI (For the period ended June 30) | Nature of Investment | 2023 Fair Value Change (HKD thousands) | 2022 Fair Value Change (HKD thousands) | | :--------------- | :------------------------ | :------------------------ | | Unlisted Equity Investments | (172,400) | (31,000) | | Listed Equity Investments | 6,150 | (50,024) | | Listed Bonds | (7,145) | (102,283) | | Notes | – | (5,572) | | Unlisted Bonds | (8,747) | (38,300) | Financial Assets at Fair Value Through Profit or Loss (FVTPL) As of June 30, 2023, the Group's total financial assets at FVTPL amounted to HKD 2,916,220 thousands, a decrease from year-end 2022, mainly due to reductions in unlisted equity investments and offshore Hong Kong notes, with both unrealized and realized losses recorded during the period Financial Assets at FVTPL (As of June 30) | Asset Class | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :--------------- | :-------------- | :---------------------- | :--------- | | Total Current Assets | 2,916,220 | 3,370,194 | -13.50 | | Unlisted Equity Investments | 318,667 | 535,054 | -40.44 | | Offshore Hong Kong Notes | – | 531,117 | -100.00 | | Total | 2,916,220 | 3,374,382 | -13.58 | Unrealized (Losses)/Gains on Financial Assets at FVTPL, Net (For the six months ended June 30) | Nature of Investment | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--------------- | :-------------- | :-------------- | | Listed Equity Investments – Hong Kong | (4,188) | (36,051) | | Unlisted Equity Investments – PRC | 12,067 | (187,188) | | Listed Equity Investments Held for Trading | (115,557) | 26,828 | | Investment Funds Held for Trading | (3,827) | (52,207) | | Notes | 17,374 | (96,840) | | Other Investment Funds | (47,285) | 1,745 | | Total | (143,872) | (352,625) | Realized (Losses)/Gains on Financial Assets at FVTPL (For the six months ended June 30) | Nature of Investment | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--------------- | :-------------- | :-------------- | | Listed Equity Investments Held for Trading | (74,666) | (292,310) | | Other Investment Funds | 1,392 | (26,819) | | Notes | 14,026 | (23,945) | | Investment Funds Held for Trading | – | 11,695 | | Total | (59,248) | (334,219) | Finance Lease Receivables As of June 30, 2023, the Group's finance lease receivables decreased to HKD 459,354 thousands, with an increase in total overdue finance lease receivables, notably those overdue for over one year Carrying Amount of Finance Lease Receivables (As of June 30) | Item | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :------------- | :-------------- | :---------------------- | :--------- | | Within One Year | 459,354 | 481,834 | -4.67 | | After One Year but Within Two Years | – | 29,912 | -100.00 | | Total | 459,354 | 511,746 | -10.10 | Aging Analysis of Overdue Finance Lease Receivables (As of June 30) | Days Overdue | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :------------- | :-------------- | :---------------------- | :--------- | | Within 30 Days | – | 335,167 | -100.00 | | 91 to 180 Days | 101,768 | 66,287 | 53.54 | | 181 Days to 1 Year | 117,525 | 69,724 | 68.56 | | 1 to 2 Years | 181,923 | 725,640 | -74.93 | | 2 to 5 Years | 1,354,938 | 557,798 | 142.93 | | Total | 1,756,154 | 1,754,616 | 0.09 | Loans Receivable As of June 30, 2023, the Group's total loans receivable (net of impairment) increased to HKD 4,098,794 thousands, with a higher proportion of short-term loans and an increase in total overdue loans receivable Carrying Amount of Loans Receivable (As of June 30) | Item | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :------------- | :-------------- | :---------------------- | :--------- | | Gross Loans Receivable | 4,429,451 | 3,869,964 | 14.47 | | Less: Provision for Impairment Losses | (330,657) | (451,210) | 26.71 | | Net Amount | 4,098,794 | 3,418,754 | 19.90 | | Non-current Assets | 799,502 | 1,009,547 | -20.81 | | Current Assets | 3,299,292 | 2,409,207 | 37.09 | Aging Analysis of Overdue Loans Receivable (As of June 30) | Days Overdue | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :------------- | :-------------- | :---------------------- | :--------- | | Within 30 Days | 381,467 | – | N/A | | 31 to 90 Days | – | 787,250 | -100.00 | | 181 Days to 1 Year | 872,284 | – | N/A | | 1 to 2 Years | 782,498 | 865,712 | -9.50 | | 2 to 5 Years | 424,174 | 434,488 | -2.37 | | Over 5 Years | 2,000 | 2,000 | 0.00 | | Total | 2,462,423 | 2,089,450 | 17.85 | Contract Assets As of June 30, 2023, the Group's total contract assets decreased significantly to HKD 710,841 thousands from year-end 2022, primarily due to reductions in construction contracts and retention monies Composition of Contract Assets (As of June 30) | Item | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :------------- | :-------------- | :---------------------- | :--------- | | Tariff Subsidies Receivable | 656,596 | 587,320 | 11.79 | | Construction Services | 48,425 | 448,286 | -89.19 | | Retention Monies | 5,820 | 51,140 | -88.62 | | Total | 710,841 | 1,086,746 | -34.59 | - Tariff subsidies receivable included in contract assets refer to central government renewable energy subsidies for photovoltaic and wind power station projects, which will be invoiced and settled upon inclusion in the national renewable energy generation subsidy list[52] - Revenue from construction and related services is initially recognized as contract assets, and amounts are reclassified to trade receivables upon completion of agreed milestones with customers and acceptance[53] Trade and Other Receivables As of June 30, 2023, the Group's total trade and other receivables slightly decreased to HKD 14,560,163 thousands from year-end 2022, with significant growth in tariff subsidies receivable offset by reductions in prepayments, deposits, and other receivables Composition of Trade and Other Receivables (As of June 30) | Item | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :--------------- | :-------------- | :---------------------- | :--------- | | Trade Receivables | 2,235,145 | 2,399,977 | -6.90 | | Tariff Subsidies Receivable | 6,759,787 | 5,938,240 | 13.84 | | Prepayments | 578,367 | 754,102 | -23.29 | | Deposits and Other Receivables | 3,764,920 | 4,929,951 | -23.63 | | Amounts Due from Joint Ventures | 554,489 | 293,643 | 88.83 | | Total | 14,560,163 | 14,822,208 | -1.77 | Aging Analysis of Trade Receivables and Bills Receivable (Excluding Tariff Subsidies) (As of June 30) | Aging | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | | :------------- | :-------------- | :---------------------- | | Within 90 Days | 631,106 | 903,681 | | 91 to 180 Days | 176,700 | 322,461 | | 181 Days to 1 Year | 748,357 | 260,807 | | 1 to 2 Years | 310,740 | 390,180 | | Over 2 Years | 396,022 | 558,960 | | Total | 2,262,925 | 2,436,089 | Aging Analysis of Tariff Subsidies Receivable (As of June 30) | Aging | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | | :------------- | :-------------- | :---------------------- | | Within 90 Days | 528,380 | 915,705 | | 91 to 180 Days | 549,239 | 544,856 | | 181 Days to 1 Year | 1,369,909 | 992,951 | | 1 to 2 Years | 2,186,819 | 1,275,165 | | Over 2 Years | 2,125,440 | 2,209,563 | | Total | 6,759,787 | 5,938,240 | Trade and Bills Payables As of June 30, 2023, the Group's total trade and bills payables decreased to HKD 1,697,088 thousands from year-end 2022, with a reduction in amounts overdue within 90 days - Trade payables are non-interest bearing and generally settled within 30 to 180 days[59] - Bills payable of approximately HKD 21,067 thousands are secured by pledged bank deposits[60] Aging Analysis of Trade and Bills Payables (As of June 30) | Aging | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :------------- | :-------------- | :---------------------- | :--------- | | Within 90 Days | 81,609 | 152,310 | -46.30 | | 91 to 180 Days | 160,646 | 145,828 | 10.16 | | 181 Days to 1 Year | 137,585 | 245,366 | -43.93 | | 1 to 2 Years | 280,661 | 285,510 | -1.70 | | Over 2 Years | 1,036,587 | 1,112,799 | -6.85 | | Total | 1,697,088 | 1,941,813 | -12.60 | Borrowings As of June 30, 2023, the Group's total borrowings increased to HKD 44,652,624 thousands, with significant increases in bank borrowings and borrowings repayable within one year, and several borrowings guaranteed by Shandong Hi-Speed Group or secured by the Group's assets Composition of Borrowings (As of June 30) | Borrowing Type | 2023 (HKD thousands) | 2022 Dec 31 (HKD thousands) | Change (%) | | :------------- | :-------------- | :---------------------- | :--------- | | Bank Borrowings | 30,252,381 | 26,767,180 | 13.39 | | Bonds | 6,693,777 | 8,521,297 | -21.44 | | Other Borrowings | 7,706,466 | 8,498,785 | -9.21 | | Total | 44,652,624 | 43,787,262 | 1.98 | | Non-current Liabilities | 29,942,374 | 30,341,403 | -1.32 | | Current Liabilities | 14,710,250 | 13,445,859 | 9.40 | - Certain bank and other borrowings of the Group are guaranteed by Shandong Hi-Speed Group Co., Ltd., or secured by the Group's financial assets, finance lease receivables, trade receivables, contract assets, property, plant and equipment, investment properties, concession rights, and equity interests in subsidiaries and associates[63] Comparative Amounts Certain comparative amounts have been reclassified to conform with the current period's presentation - Certain comparative amounts have been reclassified to conform with the current period's presentation[64] Management Discussion and Analysis Market Review In H1 2023, global economic recovery was weak, with high interest rates and geopolitical conflicts slowing world economic growth, though no recession signs emerged. China's economy showed post-pandemic recovery but lacked endogenous momentum, while Hong Kong's GDP growth underperformed expectations, with the Hang Seng Index falling by approximately 4% - In H1 2023, global economic recovery was weak, with high interest rates and geopolitical conflicts slowing world economic growth, though no signs of recession emerged[65] - Mainland China's economy experienced a wave-like recovery, with a strong start in Q1, but lacked endogenous momentum in Q2, showing marginal improvement after June[65] - Hong Kong's GDP growth underperformed expectations, with the Hang Seng Index falling by approximately 4% in the first half[65] Group Strategy and Operations The Group adheres to a core philosophy of prudent compliance and steady development, focusing on a strategic transformation towards 'specialization, focus, marketization, and institutionalization' to build an excellent industrial investment holding group. During the period, the Group strengthened its risk management system, implemented multiple measures to resolve existing risks, ensured ample liquidity, enhanced investment and management empowerment for its controlled entity SDHG New Energy, and sought investment opportunities in strategic emerging industries like new energy and new infrastructure - The Group adheres to the philosophy of 'prudent compliance and steady development', following a strategic transformation towards 'specialization, focus, marketization, and institutionalization', aiming to build an excellent industrial investment holding group[66] - During the reporting period, the Group established a comprehensive risk management system, advanced the disposal of existing risks (e.g., debt restructuring, debt transfer), and diversified financing channels to ensure ample liquidity[67] - The Group strengthened investment and management empowerment for its controlled entity SDHG New Energy, leveraging Shandong Hi-Speed Group's resources to promote integrated development of energy and infrastructure networks[67] - The Group seeks investment opportunities in strategic emerging industries such as new energy and new infrastructure to acquire platforms necessary for its transformation[67] Business Review The Group's four business segments showed varied performance in H1 2023: Industrial Investment recorded a profit due to strategic synergies; Standardized Investment incurred losses due to market fluctuations; Non-standardized Investment turned profitable by revitalizing existing businesses and adding quality projects; and Licensed Financial Services also turned from loss to profit Industrial Investment The Group's Industrial Investment business focuses on strategic emerging industries like new energy and new infrastructure, combining controlling and minority equity investments to explore sub-sectors such as semiconductors, big data, energy storage, and photovoltaic components. The Group enhanced investment and management empowerment for SDHG New Energy, promoting cooperation with leading enterprises like CGN Wind Power, and successfully secured several high-quality new energy projects. This segment recorded a profit of HKD 485,733 thousands during the reporting period - Industrial Investment focuses on strategic emerging industries like new energy and new infrastructure, combining controlling and minority equity investments to research sub-sectors such as semiconductors, big data, energy storage technology, and photovoltaic components[68] - The Group strengthened investment and management empowerment for SDHG New Energy, leveraging Shandong Hi-Speed Group's brand and resource advantages to promote business linkage and industrial synergy, establishing strategic partnerships with leading enterprises like CGN Wind Power[69] - SDHG New Energy's inclusion in the Hang Seng Composite Index and Stock Connect (Shanghai and Shenzhen) reflects capital market recognition of its development quality[69] - The Industrial Investment business segment recorded a profit of approximately HKD 485,733 thousands[69] Standardized Investment Business The Group's Standardized Investment business conducts equity and fixed-income investments using its own funds. Amidst sluggish A-share and Hong Kong stock markets and increased bond market volatility, the Group adopted strategies of low-position operation, diversified investment, and reduced duration, primarily focusing on technology, consumer, and new energy sectors, as well as short-term cash management products like US Treasury bonds, to control risk. During the reporting period, this business recorded a fair value loss of HKD 293,736 thousands - Standardized equity investments, amidst sluggish A-share and Hong Kong stock markets, prioritize risk control, maintain low positions, and primarily focus on technology, consumer, and new energy sectors[70] - Fixed-income standardized investments, through diversified investment and reduced duration strategies, primarily focus on short-term cash management products like US Treasury bonds or bank certificates of deposit, to address real estate liquidity crises and bond market volatility[70] - The Standardized Investment business recorded a fair value loss of approximately HKD 293,736 thousands, compared to a loss of approximately HKD 401,942 thousands in the prior period[71] Non-standardized Investment Business The Group's Non-standardized Investment business prioritizes resolving existing risks by reducing credit exposure through debt restructuring, debt transfer, and introducing relief funds, while moderately engaging in strong credit entity guarantees and high-quality asset-backed pledge businesses. This segment turned profitable, recording a profit of HKD 57,221 thousands - Non-standardized investment business prioritizes resolving existing risks by reducing credit exposure through debt restructuring, debt transfer, and introducing relief funds[72] - Prudently seize investment opportunities, moderately engage in strong credit entity guarantees and high-quality asset-backed pledge businesses, and strengthen synergy with industrial investment in real economy sectors such as new energy, new infrastructure, and new technology[72] - The Non-standardized Investment business recorded a profit of approximately HKD 57,221 thousands, compared to a loss of approximately HKD 788,189 thousands in the prior period, achieving a turnaround to profitability[72] Licensed Financial Services The Group holds Hong Kong SFC Type 1, 4, 5, 6, and 9 licenses, a Hong Kong Money Lenders License, and PRC QFLP fund manager and finance lease licenses, providing comprehensive cross-border investment and financing financial services to clients. During the reporting period, the Licensed Financial Services business recorded a profit of HKD 107,547 thousands, achieving a turnaround to profitability - The Group holds Hong Kong SFC Type 1, 4, 5, 6, and 9 licenses, a Hong Kong Money Lenders License, and PRC QFLP fund manager and finance lease licenses[73] - The Licensed Financial Services business recorded a profit of approximately HKD 107,547 thousands, compared to a loss of approximately HKD 633,792 thousands in the prior period, achieving a turnaround to profitability[73] Outlook Looking ahead to H2, global economic growth is expected to weaken, while China's economy is in a critical period of recovery and industrial upgrading, with central policies set to boost economic recovery and industrial development. The Group will optimize its asset allocation, focusing on industrial investment, supplemented by standardized and non-standardized investments, targeting strategic emerging industries like new energy and new infrastructure, while continuously resolving existing risks and enhancing comprehensive service capabilities - Global economic growth is expected to weaken in H2, while China's economy is in a critical period of recovery and industrial upgrading, with Central Political Bureau meeting deployments set to boost economic recovery and industrial development, positively impacting the Group's profit and balance sheet repair[74] - The Group will optimize its asset allocation structure, focusing on industrial investment, supplemented by standardized and non-standardized investments, to achieve long-term asset appreciation and maintain ample short-term liquidity[74] Industrial Investment Outlook The Group will continue to deepen its strategic transformation, focusing on new energy and new infrastructure, two strategic emerging industries, to expand industrial investment scale through an organic combination of strategic and controlling equity investments. Specifically, in new energy, it will enhance investment and M&A capabilities for wind and solar power station's vertical industry chain and horizontal peer assets; in new infrastructure, it will explore high-quality new infrastructure assets to create a 'power + computing' new business model - The Group will continue to steadily advance and deepen its strategic transformation, focusing on new energy and new infrastructure, two strategic emerging industries, selecting target companies with excellent business models and stable cash flows, and organically combining strategic and controlling equity investments[75] - In new energy, the Group will enhance investment and M&A capabilities for wind and solar power station's vertical industry chain and horizontal peer assets; in new infrastructure, it will explore high-quality new infrastructure assets to create a 'power + computing' new business model[76] - The Group will consolidate its 2022 industrial acquisition achievements, accelerate the enhancement of 'investment + investment management' momentum, and strengthen empowering post-investment management for invested targets such as SDHG New Energy and SDHG Huaneng[76] Standardized Investment Business Outlook Looking ahead to H2, domestic liquidity is expected to be relatively loose, and the Fed's rate hike cycle may be nearing its end, benefiting global capital markets. The Group will prioritize technology sectors aligned with national strategy, contributing to manufacturing upgrades and increased informatization/intelligence, as well as consumer sectors related to expanding domestic demand, to strategically invest in quality companies at low points - In H2, domestic liquidity is expected to be generally loose, and the Fed's rate hike cycle may be nearing its end, benefiting global capital market liquidity[77] - In terms of industry selection, the Group will prioritize technology sectors aligned with national strategy and consumer sectors related to expanding domestic demand, also considering industries and companies with bottoming-out performance or sustained high prosperity, to strategically invest at low points[77] Non-standardized Investment Business Outlook The Group will continue to prioritize resolving existing risks by reducing credit exposure through debt restructuring, debt transfer, and litigation collection. Concurrently, it will leverage the geographical advantages and professional capabilities of its Hong Kong, Mainland, and Singapore teams to focus on financing needs in new energy, new consumption, and high-tech sectors, providing capital support to high-quality leading enterprises - The Group will continue to prioritize resolving existing risks by reducing credit exposure within its portfolio through asset revitalization methods such as debt restructuring, debt transfer, and litigation collection[78] - Leverage the advantages of Hong Kong, Mainland, and Singapore teams to focus on financing needs in new energy, new consumption, and high-tech sectors, selecting high-quality leading enterprises to provide capital support aligned with industrial transformation directions[78] Licensed Financial Services Outlook The Group will prudently conduct Hong Kong and Mainland licensed financial services, primarily focusing on securities brokerage and QFLP/finance lease businesses that have synergistic effects with the Group's strategic transformation direction, to enhance comprehensive service capabilities - The Group will prudently conduct Hong Kong and Mainland licensed financial services, primarily focusing on securities brokerage and QFLP/finance lease businesses that have synergistic effects with the Group's strategic transformation direction, to enhance comprehensive service capabilities[79] Liquidity and Financial Resources Overall Liquidity and Financial Resources As of June 30, 2023, the Group's total cash and cash equivalents decreased to HKD 3,495,082 thousands from year-end 2022. Total assets and borrowings both