CONTENT | ||
Corporate Information | 2 | |
Management Discussion and Analysis | 4 | |
Corporate Governance and Other Information | 14 | |
Independent Review Report | 18 | |
Statement of Profit or Loss and Other Comprehensive Income | 19 | |
Statement of Financial Position | 20 | |
Statement of Changes in Equity | 21 | |
Cash Flow Statement | 22 | |
Notes to the Unaudited Interim Financial Report | 23 | |
Definitions | 61 |
2 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
CORPORATE INFORMATION
BOARD OF DIRECTORS
Executive Directors
Mr. Lin Fan (Chairman)
Mr. Shao Yongjun
Non-executive Directors
Mr. Koh Tee Choong
Mr. Li Guozhou
Independent Non-executive Directors
Mr. Wong Man Chung Francis (appointed on 24 February 2020)
Ms. Liang Yanjun
Mr. Lin Zheying (resigned on 30 June 2020)
RISK MANAGEMENT COMMITTEE
Mr. Lin Fan (Chairman) Mr. Shao Yongjun
Mr. Wong Man Chung Francis (appointed on 24 February 2020)
Ms. Liang Yanjun (resigned on 24 February 2020)
JOINT COMPANY SECRETARIES
Ms. Yao Wen
Mr. Chan Pak Hung
AUTHORISED REPRESENTATIVES
Mr. Shao Yongjun
Ms. Yao Wen
BOARD OF SUPERVISORS
Mr. Li Huihua (Chairman)
Mr. Li Tao
Ms. Wang Qing
AUDIT COMMITTEE
Mr. Wong Man Chung Francis (Chairman) (appointed on 24 February 2020)
Ms. Liang Yanjun
Mr. Lin Zheying (resigned on 30 June 2020)
REMUNERATION AND EVALUATION COMMITTEE
Mr. Wong Man Chung Francis (Chairman) (appointed on 24 February 2020)
Mr. Koh Tee Choong
Ms. Liang Yanjun (resigned on 24 February 2020 and appointed on 30 June 2020)
Mr. Lin Zheying (resigned on 30 June 2020)
NOMINATION COMMITTEE
Ms. Liang Yanjun (Chairlady) Mr. Koh Tee Choong
Mr. Wong Man Chung Francis (appointed on 30 June 2020)
Mr. Lin Zheying (resigned on 30 June 2020)
AUDITORS
KPMG
Certified Public Accountants 8th Floor, Prince's Building 10 Chater Road
Central, Hong Kong
LEGAL ADVISORS
YTL LLP (as to Hong Kong laws)
Suites 2606-08, China Resources Building 26 Harbour Road
Wanchai, Hong Kong
Hubei Ruoyan Law Firm (as to PRC laws)
17th Floor, Block B, Chutian Metropolis Garden No. 1 Zhongbei Road
Wuchang District, Wuhan Hubei, China
COMPLIANCE ADVISOR
Altus Capital Limited
21 Wing Wo Street
Central
Hong Kong
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 3 |
INTERIM REPORT 2020
CORPORATE INFORMATION
H SHARE REGISTRAR
Computershare Hong Kong Investor Services Limited
17M Floor, Hopewell Centre
183 Queen's Road East
Wanchai, Hong Kong
WEBSITE
www.dongzhengafc.com
STOCK CODE
2718
REGISTERED ADDRESS AND
ADDRESS OF THE HEAD OFFICE IN
THE PRC
Unit ABC, 30/F., Mirae Asset Tower
No. 166, Lu Jia Zui Ring Road
Shanghai, PRC
PRINCIPAL PLACE OF BUSINESS
IN HONG KONG
Unit 5905, 59/F
The Center
99 Queen's Road Central
Hong Kong
4 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW
The Company is an automotive finance company licensed and regulated by the CBIRC focusing on the luxury vehicle market. The Company's principal business comprises (i) retail loan business, where the Company provides retail loans, direct leasing products and other financial services to the end customers, major customers and corporate clients who wish to purchase vehicles; and (ii) dealer loan business, where the Company provides dealers with inventory financing to facilitate the procurement and sale of vehicles to end customers.
In the first half of 2020, the outbreak of the COVID-19 pandemic and subsequent national lockdown in China brought changes and challenges to all sectors with the automobile industry being stagnant for a period of time. Due to the consumption promotion policies launched since the easing of the COVID-19 pandemic in the second quarter of 2020, the passenger vehicles market has gradually recovered. According to the China Association of Automobile Manufacturers, in the first half of 2020, the production and sales volume of passenger vehicles in China amounted to 7.75 million and 7.87 million units, representing a year-on-year decrease of 22.3% and 22.3%, respectively.
As for the auto finance industry, automotive finance companies, as licensed institutions, are subject to the strict regulation of the CBIRC. As at 30 June 2020, there are 25 (31 December 2019: 25) licensed automotive finance companies in China, all of which are in competition with commercial banks, financial leasing companies and internet finance companies. Automotive finance companies, being in close relationship with automobile manufacturers and dealers, deliver enhanced product offerings and better service to customers. In addition to self-operated products through conventional financing channels such as inter-bank lending and banking facilities leveraging on our advantages as a licensed institution, the Company actively cooperated with major banks to launch joint loan products as a complement to its self-operated products, so as to facilitate the Company's asset allocation based on market conditions and maintain steady growth in asset scale.
Due to the outbreak of the COVID-19 pandemic, consumer's consumption demand for passenger vehicle purchase has substantively lowered and new loans disbursed by the Company has decreased in the first half of 2020 comparing with the corresponding period of 2019. The Company's loan portfolio decreased by 18.5% to RMB8.15 billion as at 30 June 2020 from RMB10.00 billion as at 31 December 2019. For the six months ended 30 June 2020, the Company's net interest income amounted to RMB289 million, representing an increase of 30.1% as compared to the same period of 2019. The Company's operating income amounted to RMB338 million, representing a decrease of 12.5% as compared to the same period last year. The Company recorded a net profit of RMB143 million in the first half of 2020, representing a decrease of 29.3% as compared to the net profit of RMB202 million for the same period of 2019. Notwithstanding the increase in net interest income, the decrease in profit is mainly attributable to (i) the increase in the Company's allowances for impairment losses relating to its loans and advances to customers and finance lease receivables due to the negative impact of the pandemic on repayment capabilities of some of its customers; and (ii) the reduction in fee and commission income as a result of the adjustment made by the Company in its arrangements for collecting service fees from customers since 2019.
During the period, the Company operated and optimised its dealer network, including 4S dealership channels under ZhengTong and external dealer network. The Company extended its business network to more than 900 partnership- based dealers in more than 180 cities in China. Furthermore, by focusing on sales to middle and high-end brands, these sales channels keep abreast with customers base of consumption upgrade demographic. The strengths of the sales network and reasonably established market presence enable the Company to introduce good user experience and services to the consumers.
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
Number of sales networks | 923 | 913 |
Including: ZhengTong dealers | 118 | 118 |
External dealers | 805 | 795 |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 5 |
INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
During the period, total amount of loans disbursed by the Company was RMB3.785 billion, representing a decrease of 48.7% as compared to that of the same period of 2019. In terms of retail loans, the Company disbursed a total of 1,686 retail loans throughout the first half of 2020, representing a decrease of 89.7% as compared to that of the same period of 2019. Among them, 1,496 were disbursed to ZhengTong clients and 190 were disbursed to external clients. The decrease was mainly due to the pandemic which has substantively lowered consumer's consumption demand for passenger vehicle purchase as well as the Company being more cautious in granting new loans.
The Company's net fee and commission income mainly consists of non-interest income received by the Company for referral of retail customers to commercial banks or other financial institutions and provision of loan-related services. The Company's net fee and commission income for the six months ended 30 June 2020 amounted to approximately RMB40 million, representing a decrease of 69% as compared to that of RMB128 million for the same period of 2019. This was mainly due to the lower income from consultancy services as a result of the adjustment made by the Company in its arrangements for collecting service fees from customers in response to changes in the market operating environment.
In terms of dealer loan business, as at 30 June 2020, the loan balance of RMB2.62 billion remained stable as compared to that at the end of 2019. For the six months ended 30 June 2020, the Company's average yield of dealer loan was 10.02% (for the six months ended 30 June 2019: 8.79%).
As at/For the six months | |||
ended 30 June | |||
2020 | 2019 | ||
Amount of loans disbursed (RMB million) | 3,785 | 7,377 | |
Number of self-operated retail loan disbursed | 1,686 | 16,436 | |
Including: | Standard self-operated loans | 1,516 | 12,266 |
Joint loans | 170 | 4,170 | |
Including: | ZhengTong customers | 1,496 | 11,227 |
External customers | 190 | 5,209 | |
Gross outstanding loan balance (RMB million) (before adjustment) | 8,313 | 10,311 | |
Including: | Retail loan | 5,690 | 8,368 |
Dealer loan | 2,623 | 1,943 | |
6 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
For the purposes of risk management, in the first half of 2020, the Company has established risk control policies and management system targeted to different business scenarios, achieving comprehensive risk identification and control in respect of various business scenarios. By revising the criteria of customers and dealers admission with a focus on credit risk prevention and operation risk management, the Company continuously strengthened the application of big data tools for risk control to the operation and management of credit approval, disbursement review and post-loan collection. In addition, by incorporating the big data tools into staff training and assessment mechanism, the Company consolidated comprehensive risk management, operation management and other related systems and procedures. In the second half of the year, the Company will upgrade and optimise the automated approval tool, so as to ensure continuous monitoring and control on the capability of identifying risks from customers and provide a strong guarantee for the Company's loan business.
In terms of loan quality, the Company's balance of non-performing loans as of 30 June 2020 was RMB34 million, representing a decrease of 25.6% as compared to that of RMB45 million at the end of 2019. As of 30 June 2020, the Company's non-performing loan ratio was 0.41%, the loan provision rate was 2.19%, and the provision coverage ratio was 538.28%. The Company shall proactively monitor the status of customers and implement additional measures to enhance debt collection.
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
Non-performing loan (NPL) ratio (60+) | 0.41% | 0.44% |
Loan provision rate | 2.19% | 1.89% |
Provision coverage ratio | 538.28% | 423.97% |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 7 |
INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
FINANCIAL REVIEW
Net Interest Income
The Company's net interest income increased by 30.1% from approximately RMB222 million for the six months ended 30 June 2019 to approximately RMB289 million for the six months ended 30 June 2020.
Set out below are the comparative figures for the six months ended 30 June 2020 and 2019.
For the six months | ||
ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Interest income | ||
Loans and advances to customers | 439,960 | 453,222 |
Deposits with central bank and other banks | 1,454 | 7,981 |
Finance lease receivables | 1,937 | 4,184 |
443,351 | 465,387 | |
Interest expenses | ||
Placements from banks | (154,565) | (243,256) |
Deposits from shareholders | - | (133) |
(154,565) | (243,389) | |
Net interest income | 288,786 | 221,998 |
8 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
1. Interest income: For the six months ended 30 June 2020, the Company recorded an interest income of approximately RMB443 million, representing a decrease of 4.7% as compared to approximately RMB465 million in the same period of 2019. The decrease in interest income was mainly due to reduction of loan portfolio by RMB1.85 billion. During the period, the average yield of retail loans was 9.52%, which remained stable as compared to the same period of 2019, while the average yield of dealer loans increased to 10.02% from 8.79% in the same period of 2019.
For the six months | |||
ended 30 June | |||
2020 | 2019 | ||
% | % | ||
Net interest margin | 6.03 | 4.16 | |
Average yield of loans and advances to customers | 9.66 | 9.68 | |
Including: | average yield of retail loans | 9.52 | 9.81 |
average yield of dealer loans | 10.02 | 8.79 | |
2. Interest expenses: Interest expenses of the Company decreased from RMB243 million for the six months ended 30 June 2019 to approximately RMB155 million for the six months ended 30 June 2020, mainly due to the decrease in borrowings resulting from the reduction in loan portfolio. As of 30 June 2020, the Company's outstanding balance of placements from banks was RMB4.06 billion (as at 30 June 2019: RMB7.52 billion), with average cost of interest-bearing liabilities of 6.10% (for the six months ended 30 June 2019: 6.76%).
For the six months | ||
ended 30 June | ||
2020 | 2019 | |
% | % | |
Average cost of interest-bearing liabilities | 6.10 | 6.76 |
Average cost of additional new interest-bearing liabilities | 6.31 | 6.23 |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 9 |
INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
Non-interest Income
For the six months ended 30 June 2020, the Company received non-interest income of approximately RMB50 million, representing a decrease of 70.0% as compared to that of RMB165 million for the same period of 2019.
1. Net fee and commission income: Net fee and commission income of the Company for the six months ended 30 June 2020 was RMB40 million. Set forth below is a detailed breakdown:
For the six months | ||
ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Fee and commission income | ||
Consulting services | 5,993 | 90,962 |
Joint loan services | 28,303 | 33,772 |
Others | 5,907 | 4,191 |
Sub-total | 40,203 | 128,925 |
Fee and commission expenses | ||
Commission fees | - | (221) |
Others | (477) | (470) |
Sub-total | (477) | (691) |
Net fee and commission income | 39,726 | 128,234 |
The Company's net fee and commission income in the first half of 2020 decreased by 69% as compared to that in 2019. This was mainly due to the decrease in income from consultancy services as a result of the adjustment made by the Company in its arrangements for collecting service fees from customers in response to the changes in the market operating environment, including the limitation and restriction imposed on the fee income for auto finance services.
2. Other net income: The Company's other net income amounted to approximately RMB10 million (for the six months
ended 30 June 2019: RMB36 million), which comprised mainly of government grants of RMB12 million for the financial sector received from the People's Government of Pudong New District and foreign exchange losses of approximately RMB3 million.
Operating Expenses
For the six months ended 30 June 2020, the Company's operating expenses amounted to RMB55 million, representing a decrease of RMB14 million as compared to RMB69 million for the same period of 2019, which was mainly due to absence of one-off listing expenses during the reporting period and decrease in labour cost and other operating expenses as a result of the Company's cost control measures.
10 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
Impairment Loss
The Company has adopted the HKFRS 9 Expected Credit Loss Model to categorise the risk assets of the Company into three stages. For the six months ended 30 June 2020, total impairment loss amounted to RMB91 million (for the six months ended 30 June 2019: RMB48 million), representing an increase of 92% as compared to the same period in 2019. The increase in impairment loss is mainly due to the outbreak of the COVID-19 pandemic in early 2020 and subsequent nationwide lockdown which resulted in a negative impact on repayment capabilities of some of its customers. For details, please refer to the table set out below:
For the six months
ended 30 June
20202019
RMB'000 RMB'000
Loans and advances to customers | 88,461 | 50,525 |
Finance lease receivables | 2,849 | (2,979) |
Total | 91,310 | 47,546 |
Net Profit
For the six months ended 30 June 2020, the Company recorded a net profit of RMB143 million, representing a decrease of RMB59 million as compared to RMB202 million for same period in 2019.
Cash and Deposits with Central Bank
As at 30 June 2020, the Company's cash and deposits with central bank amounted to RMB10 million (as at 31 December 2019: RMB9 million). The deposits with central bank mainly comprise statutory deposit reserves and surplus deposit reserves. In accordance with the rules set by the People's Bank of China, the Company deposited 6% of the guarantee deposits and deposits from shareholders to the statutory deposit reserves.
Deposits with Banks
As at 30 June 2020, deposits with banks amounted to RMB177 million, representing an increase of 40.2% as compared to RMB127 million as at 31 December 2019. The increase was mainly attributable to repayment of loans from certain customers prior to 30 June 2020.
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 11 |
INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
Loans and Advances to Customers
As of 30 June 2020, net loans and advances to customers amounted to RMB8.15 billion, representing a decrease of 18.5% as compared to RMB10.00 billion at the end of 2019. The Company's loan business mainly comprises retail loan business and dealer loan business, among which, the gross balance of retail loans amounted to RMB5.62 billion, representing a decrease of 25.3% as compared to RMB7.52 billion at the end of 2019, while the gross balance of dealer loans amounted to RMB2.62 billion (as at 31 December 2019: RMB2.63 billion). The decrease in loan size during the period was mainly due to the outbreak of COVID-19 pandemic which substantively lowered consumer's consumption demand for vehicle purchase, and thus the demand for vehicle financing.
As at | ||
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Retail loans | 5,621,546 | 7,522,352 |
Dealer's loans | 2,623,002 | 2,625,086 |
Gross loans and advances to customers | 8,244,548 | 10,147,438 |
Accrued interest | 87,302 | 48,079 |
Less: allowances for impairment loss | (180,835) | (191,364) |
Net loans and advances to customers | 8,151,015 | 10,004,153 |
Placements from Banks
The Company's placements from banks as of 30 June 2020 was RMB4.06 billion, representing a decrease of 31.1% as compared to RMB5.89 billion as of 31 December 2019, which was in line with the reduction in loan size during the period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements are mainly satisfied by share capital, placements from commercial banks and proceeds from loan products and services which provided strong financial support to the Company's loans business. As of 30 June 2020, the Company's deposits with banks amounted to RMB177 million, representing an increase of 40.2% as compared to RMB127 million as at the end of 2019. The Company's placements from banks amounted to RMB4.06 billion, representing a decrease of 31.1% as compared to RMB5.89 billion as at the end of 2019. The Company established co-operations with a total of 38 banks, with total facilities of over RMB9.16 billion and an unutilised balance of over RMB5.12 billion.
12 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
The Company's capital adequacy ratio increased from 41.62% at the end of 2019 to 49.76% at 30 June 2020.
As at | ||
30 June | 31 December | |
2020 | 2019 | |
Core tier-one capital adequacy ratio | 48.71% | 40.54% |
Tier-one capital adequacy ratio | 48.71% | 40.54% |
Capital adequacy ratio | 49.76% | 41.62% |
Liquidity ratio | 167.41% | 137.12% |
Leverage ratio | 47.63% | 37.90% |
Note: Leverage ratio = Net tier-one capital/(balance of adjusted on-balance sheet assets + adjusted off-balance sheet items)* 100%.
At the 2020 first Unlisted Foreign Share class meeting, the 2020 first Domestic Share class meeting, the 2020 first H Share class meeting and the 2020 first extraordinary general meeting of the Company held on 10 June 2020, the Shareholders approved, among others, the New H Share Issue and the H Share Full Circulation (as defined in the Company's circular dated 22 April 2020), which are subject to approval of the relevant authorities. For details, please refer to the Company's circular dated 22 April 2020.
FOREIGN EXCHANGE RISK
As the Company's business is primarily operated in mainland China and settled in Renminbi, there is no material foreign exchange risks. As at 30 June 2020, the Company had certain deposits with banks and other liabilities denominated in foreign currencies with a net position of approximately RMB18 million. The foreign exchange risk is considered to be low.
MATERIAL ACQUISITION OR DISPOSAL OF ASSETS
During the six months ended 30 June 2020, there was no material acquisition and disposal of the Company's material assets.
SIGNIFICANT INVESTMENT
As at 30 June 2020, the Company did not hold any significant investment in equity interest in any company.
CHARGES ON ASSETS
As at 30 June 2020, there were no charges on the Company's assets.
FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS
As at 30 June 2020, the Company did not have any plans for material investments and capital assets.
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 13 |
INTERIM REPORT 2020
MANAGEMENT DISCUSSION AND ANALYSIS
HUMAN RESOURCES AND REMUNERATION POLICIES
As of 30 June 2020, the Company had 247 employees, most of whom are located in the PRC. The Company has a team of highly educated and talented individuals. As of 30 June 2020, approximately 81% of the Company's employees hold a bachelor's degrees or above, and 16% hold a master's degree or above, with approximately 69% of the Company's employees are under the age of 35. For the six months ended 30 June 2020, total staff costs of the Company amounted to approximately RMB32.8 million (for the six months ended 30 June 2019: RMB41.8 million).
The Company endeavored to create a competitive and fair system for compensation and welfare, by adjusting employees' remuneration and benefits based on their business performance on an annual basis. The Company has been constantly improving its policies on remuneration and incentives and has also refined the long-term incentive scheme for employees and optimized the remuneration structure thereof to link employees' benefits to the overall business operation, for the purpose of enhancing employees' loyalty.
SIGNIFICANT LITIGATION AND ARBITRATION
During the six months ended 30 June 2020, there was no litigation and arbitration which had a significant impact on the operating activities of the Company.
CONTINGENT LIABILITIES
The Company did not have any material contingent liabilities as at 30 June 2020.
CORPORATE DEVELOPMENT STRATEGY AND OUTLOOK
The outbreak of the COVID-19 pandemic since the beginning of 2020 brought pressure on the economic environment and the auto industry in the first half of the year. The Company believes that automotive finance will play an important role in the recovery of the industry. For the second half of the year, the Company will deploy its efforts surrounding the strategy of "dedication to principle business, strategic extension, innovation and exploration", so as to secure a speedy resumption of our normal business as well as our steady development after the pandemic.
As regards the strategy of "dedication to principle business", the Company intends to introduce more products based on its principal business of automotive finance, including co-operations with more automobile manufacturers to offer a wider selection of auto brands to customers. In the meantime, on top of leveraging its cooperation with a network of more than 900 dealers, the Company will continue to identify quality dealers, and explore collaborations with secondhand vehicles trading platforms and direct leasing platforms, etc in order to optimise sales network, expand customer base as well as drive the growth of automotive finance business.
As regards the strategy of "strategic extension", in addition to its internal resources and traditional financing, the Company will leverage on the resource advantages of cooperative banks to strengthen the development of joint loans business so as to rapidly promote its lending business and increase non-interest income. Also, by leveraging its status as a listed company and a CBIRC licensed corporation, the Company will continue to explore various financing channels and enhance its capital base.
The Company will continue to pursue "innovation and exploration" strategy with a focus on longer-term development plan. The Company will actively explore and innovate along the automotive industry chain by spearheading the efforts on online marketing, with an aim to break the traditional offline model of automotive finance industry. It will bring more effective marketing resources to business partners of the Company and provide customers with a more convenient and intuitive service experience.
14 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
CORPORATE GOVERNANCE AND OTHER INFORMATION
INTERIM DIVIDEND
The Board did not recommend the payment of interim dividend for the six months ended 30 June 2020 (for the six months ended 30 June 2019: RMB0.08 per share (tax inclusive)).
MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS AND SUPERVISORS
The Company has adopted its own code of conduct regarding securities transaction by the Directors and the Supervisors on terms no less exacting than the required standard in the Model Code. The Company has made specific enquiries to all the Directors and Supervisors and they have confirmed that each of them has complied with the above- mentioned code during the six months ended 30 June 2020.
CORPORATE GOVERNANCE
The Company is committed to maintaining high standards of corporate governance to safeguard the interests of the Shareholders and enhance the corporate value and accountability of the Company. The Company has adopted the code provisions as set out under the Corporate Governance Code.
For the six months ended 30 June 2020, the Company has complied with all code provisions of the Corporate Governance Code.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
During the six months ended 30 June 2020, the Company did not purchase, sell or redeem any of the Company's listed securities.
SHARE OPTION SCHEME
The Company did not adopt any share option scheme as at 30 June 2020.
INTERESTS AND SHORT POSITIONS OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE
As at 30 June 2020, none of the Directors, Supervisors, chief executive of the Company or any of their associates had any interests or short positions in any shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO), which were required to be entered in the register required to be kept under section 352 of the SFO, or were required to be notified to the Company and the Stock Exchange under the Model Code.
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 15 |
INTERIM REPORT 2020
CORPORATE GOVERNANCE AND OTHER INFORMATION
INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS
So far as the Directors are aware, as at 30 June 2020, the interests or short positions of the other persons (other than Directors, Supervisors, and the chief executive of the Company) in the Shares and underlying Shares which were required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or to be recorded in the register required to be kept pursuant to section 336 of the SFO were as follows:
Number of | Percentage of | Percentage of | ||||
Shares held | issued Shares | total issued | ||||
Long/Short | directly or | of the | ordinary | |||
Name of Substantial Shareholder | Class of Shares | positions | Capacity | indirectly | relevant class | Shares |
(Shares) | (%) | (%) | ||||
China ZhengTong Auto Services Holdings | Unlisted Foreign Shares | Long | Beneficial owner1 | 1,520,000,000 | 100.00 | 71.04 |
Limited | ||||||
(中國正通汽車服務控股有限公司) | ||||||
Joy Capital Holdings Limited | Unlisted Foreign Shares | Long | Interest in a controlled | 1,520,000,000 | 100.00 | 71.04 |
corporation2 | ||||||
Wang Muqing (王木清) | Unlisted Foreign Shares | Long | Founder of trusts3 | 1,520,000,000 | 100.00 | 71.04 |
Wang Weize (王偉澤) | Unlisted Foreign Shares | Long | Founder of trusts3 | 1,520,000,000 | 100.00 | 71.04 |
Dongfeng Motor Corporation | Domestic Shares | Long | Beneficial owner | 80,000,000 | 100.00 | 3.74 |
(東風汽車集團有限公司) | ||||||
Global Precise Assets Limited | H Shares | Long | Beneficial owner | 80,000,400 | 14.82 | 3.74 |
Xingtai Capital Management Limited | H Shares | Long | Investment manager4 | 62,000,000 | 11.49 | 2.90 |
TX Capital (HK) Limited | H Shares | Long | Investment manager5 | 44,948,000 | 8.33 | 2.10 |
Seahawk China Dynamic Fund | H Shares | Long | Beneficial owner | 33,335,000 | 6.18 | 1.56 |
Notes:
- These 1,520,000,000 Shares were registered in the name of and beneficially owned by China ZhengTong Auto Services Holdings Limited (中國正通汽車服務控股有限公司).
- China ZhengTong Auto Services Holdings Limited (中國正通汽車服務控股有限公司) is owned by Joy Capital Holdings Limited as to 56.42% and Joy Capital Holdings Limited is deemed under the SFO to be interested in the Shares held by China ZhengTong Auto Services Holdings Limited.
- Mr. Wang Muqing and Mr. Wang Weize were the founders of the family trusts that own all the issued shares of Joy Capital Holdings Limited, which were deemed under the SFO to be interested in the Shares held by Joy Capital Holdings Limited. Credit Suisse Trust Limited in Guernsey is the trustee of these family trusts. The Wang family members are discretionary beneficiaries of these trusts.
- According to the disclosure of interests form filed by Xingtai Capital Management Limited, Xingtai Capital Management Limited held 33,000,000 H Shares, 17,000,000 H Shares and 12,000,000 H Shares in the capacity as an investment manager to Xingtai China Master Fund, Canepa Funds ICAV- XINGTAI CHINA FUND and Milltrust International Investments SPC - Milltrust Xingtai China Fund SP respectively.
- According to the disclosure of interests form filed by TX Capital (HK) Limited dated 31 July 2019, TX Capital (HK) Limited held 44,948,000 H Shares in the capacity as an investment advisor to TX Capital Value Fund. Accordingly, it is deemed to be interested in the H shares of the Company held by TX Capital Value Fund.
Save as disclosed above, as at 30 June 2020, the Directors are not aware of any other person (other than the Directors, Supervisors and chief executive of the Company) having any interests or short positions in the Shares or underlying Shares which were required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or to be recorded in the register required to be kept pursuant to section 336 of the SFO.
16 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
CORPORATE GOVERNANCE AND OTHER INFORMATION
CHANGES IN INFORMATION ON DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE
Pursuant to Rule 13.51B(1) of the Listing Rules, the changes in information on Directors, Supervisors and chief executive of the Company since the Company's 2019 annual report and up to the date of this interim report as notified to the Company, are set out below:
Mr. Koh Tee Choong, a non-executive Director, has retired as an executive director and ceased to be the chief executive officer of ZhengTong with effect from 12 June 2020.
NON-COMPLIANCE WITH LISTING RULES
Following the resignation of Mr. Lin Zheying as an independent non-executive Director on 30 June 2020, the Company fails to meet the requirements of (i) having at least three independent non-executive Directors on the Board under Rule 3.10(1) of the Listing Rules; and (ii) the Audit Committee comprising only non-executive Directors with a minimum of three members under Rule 3.21 of the Listing Rules. In order to ensure compliance with the Listing Rules, the Company is actively identifying suitable candidate(s) with a view to fill the vacancies on the Board as soon as practicable.
ADDITIONAL INFORMATION TO THE 2019 ANNUAL REPORT
Reference is made to the Company's 2019 annual report for the year ended 31 December 2019 (the "2019 Annual Report"). The Company provides further information as follows:
The Directors consider that save for the transactions relating to subsidies received from an automaker which were settled through related parties pursuant to the pass-through arrangement (as disclosed in note 28 on pages 118 and 119 of the 2019 Annual Report) which do not constitute connected transactions, the material related party transactions disclosed in note 28 to the audited financial statements constituted connected transactions under Chapter 14A of the Listing Rules. The Company has complied with the applicable requirements under Chapter 14A of the Listing Rules in respect of those transactions.
USE OF NET PROCEEDS FROM THE GLOBAL OFFERING
The Shares were listed on the Stock Exchange on 3 April 2019. The net proceeds from the global offering (including the exercise of the over-allotment option) amounted to HK$1,552.3 million (approximately RMB1,368.97 million). There was no change in the intended use of net proceeds as previously disclosed in the supplemental prospectus dated 25 March
2019 of the Company. As at 30 June 2020, the Company had utilised the proceeds as follows:
Net proceeds | |||
from the | Utilised | Unutilised | |
Use of net proceeds | Global Offering | net proceeds | net proceeds |
(RMB million) | (RMB million) | (RMB million) | |
Fund the self-operated retail loans to be disbursed to | |||
external customers | 889.83 | 889.83 | - |
Develop network of external dealers | 68.45 | 29.13 | 39.32 |
Fund self-operated retail loans to be disbursed to | |||
ZhengTong customers | 205.34 | 205.34 | - |
Develop technological, operational and risk management | |||
capabilities | 68.45 | 16.21 | 52.24 |
General working capital | 136.90 | 136.90 | - |
Total | 1,368.97 | 1,277.41 | 91.56 |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 17 |
INTERIM REPORT 2020
CORPORATE GOVERNANCE AND OTHER INFORMATION
The unutilised net proceeds of approximately RMB91.56 million was placed in bank deposits with banks in the PRC and Hong Kong. The Company expects 70% and 30% of the unutilised net proceeds shall be utilised as intended by 31 December 2021 and 31 December 2022 respectively.
REVIEW OF ACCOUNTS
The Audit Committee currently comprises two independent non-executive Directors, namely Mr. Wong Man Chung Francis (chairman) and Ms. Liang Yanjun. The unaudited interim financial report of the Company for the six months ended 30 June 2020 has been reviewed by the Company's auditor, KPMG, Certified Public Accountants, in accordance with Hong Kong Standards 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.
The Audit Committee has reviewed the unaudited interim financial report of the Company for the six months ended 30 June 2020. The Audit Committee has also discussed matters with respect to the accounting policies and practices adopted by the Company and internal control with senior management and KPMG. Based on the review and discussions with the management, the Audit Committee was satisfied that the Company's unaudited interim financial report was prepared in accordance with applicable accounting standards and fairly present the Company's financial position and results for the period under review.
APPRECIATION
The Board would like to express its sincere gratitude to the management and employees for their diligence and contribution, and would also like to thank the Shareholders and business associates for their strong support to the Company.
On behalf of the Board
Shanghai Dongzheng Automotive Finance Co., Ltd.*
Lin Fan
Chairman
28 August 2020
18 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
INDEPENDENT REVIEW REPORT
Review report to the board of directors
of Shanghai Dongzheng Automotive Finance Co., Ltd.
(A joint stock company incorporated in the People's Republic of China with limited liability)
INTRODUCTION
We have reviewed the interim financial report set out on pages 19 to 60 which comprises the statement of financial position of Shanghai Dongzheng Automotive Finance Co., Ltd. (the "Company") as of 30 June 2020 and the related statement of profit or loss and other comprehensive income and statement of changes in equity and cash flow statement for the six months period then ended and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of an interim financial report to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34, Interim financial reporting , issued by the Hong Kong Institute of Certified Public Accountants. The directors are responsible for the preparation and presentation of the interim financial report in accordance with Hong Kong Accounting Standard 34.
Our responsibility is to form a conclusion, based on our review, on the interim financial report and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
SCOPE OF REVIEW
We conducted our review 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. A review of the interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the interim financial report as at 30 June 2020 is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34, Interim financial reporting .
KPMG
Certified Public Accountants
8th Floor, Prince's Building
10 Chater Road
Central, Hong Kong
28 August 2020
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 19 |
INTERIM REPORT 2020
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the six months ended 30 June 2020 - unaudited (Express in thousands of Renminbi, unless otherwise stated)
Six months ended 30 June | |||
Note | 2020 | 2019 | |
(unaudited) | (unaudited) | ||
RMB'000 | RMB'000 | ||
Interest income | 443,351 | 465,387 | |
Interest expenses | (154,565) | (243,389) | |
Net interest income | 3 | 288,786 | 221,998 |
Fee and commission income | 40,203 | 128,925 | |
Fee and commission expenses | (477) | (691) | |
Net fee and commission income | 4 | 39,726 | 128,234 |
Other net income | 5 | 9,828 | 36,601 |
Operating income | 338,340 | 386,833 | |
Operating expenses | (55,582) | (69,185) | |
Impairment losses | (91,310) | (47,546) | |
Finance costs | (1,025) | (781) | |
Profit before taxation | 6 | 190,423 | 269,321 |
Income tax | 7 | (47,702) | (67,465) |
Profit and total comprehensive income for the period | 142,721 | 201,856 | |
Earnings per share | |||
Basic and diluted (RMB) | 8 | 0.07 | 0.11 |
The notes on pages 23 to 60 form part of this interim financial report.
20 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
STATEMENT OF FINANCIAL POSITION
at 30 June 2020 - unaudited
(Express in thousands of Renminbi, unless otherwise stated)
At | At | ||
30 June | 31 December | ||
Note | 2020 | 2019 | |
(unaudited) | (audited) | ||
RMB'000 | RMB'000 | ||
Assets | |||
Cash and deposits with central bank | 9 | 9,556 | 9,479 |
Deposits with banks | 10 | 177,391 | 126,524 |
Loans and advances to customers | 11 | 8,151,015 | 10,004,153 |
Finance lease receivables | 12 | 32,821 | 52,001 |
Property and equipment | 13 | 34,398 | 40,532 |
Intangible assets | 14 | 13,458 | 16,512 |
Deferred tax assets | 19(b) | 41,877 | 54,852 |
Other assets | 15 | 40,857 | 23,990 |
Total assets | 8,501,373 | 10,328,043 | |
Liabilities | |||
Placements from banks | 16 | 4,057,335 | 5,891,421 |
Guarantee deposits | 17 | 154,736 | 156,845 |
Lease liabilities | 18 | 27,875 | 32,388 |
Current taxation | 19(a) | 30,456 | 70,961 |
Other liabilities | 20 | 78,675 | 166,853 |
Total liabilities | 4,349,077 | 6,318,468 | |
NET ASSETS | 4,152,296 | 4,009,575 | |
CAPITAL AND RESERVES | |||
Share capital | 21(c) | 2,139,651 | 2,139,651 |
Reserves | 21(d) | 2,012,645 | 1,869,924 |
TOTAL EQUITY | 4,152,296 | 4,009,575 | |
Approved and authorised for issue by the board of directors on 28 August 2020.
Lin Fan | Li Yi |
Chairman of the Board of Directors | President and the principal person |
Executive Director | in charge of accounting affairs |
The notes on pages 23 to 60 form part of this interim financial report.
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 21 |
INTERIM REPORT 2020 |
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2020 - unaudited (Express in thousands of Renminbi, unless otherwise stated)
Share | Capital | Surplus | General risk | Retained | Total | ||
Note | capital | reserve | reserve | reserve | earnings | equity | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||
Balance at 1 January 2019 | 1,600,000 | 404,340 | 45,252 | 107,041 | 325,545 | 2,482,178 | |
Changes in equity for the six | |||||||
months ended 30 June 2019: | |||||||
1. Profit and total comprehensive | |||||||
income for the period | - | - | - | - | 201,856 | 201,856 | |
2. Issue of H shares | 21(c) | 539,651 | 769,517 | - | - | - | 1,309,168 |
Balance at 30 June 2019 and | |||||||
1 July 2019 (unaudited) | 2,139,651 | 1,173,857 | 45,252 | 107,041 | 527,401 | 3,993,202 | |
Changes in equity for | |||||||
the six months ended | |||||||
31 December 2019: | |||||||
1. Profit and total comprehensive | |||||||
income for the period | - | - | - | - | 187,545 | 187,545 | |
2. Appropriation of profits | |||||||
- Dividends declared in respect of | |||||||
the current period | 21(b) | - | - | - | - | (171,172) | (171,172) |
- Appropriation for surplus reserve | 21(d) | - | - | 38,940 | - | (38,940) | - |
- Appropriation for general risk | |||||||
reserve | 21(d) | - | - | - | 49,006 | (49,006) | - |
Balance at 31 December 2019 | |||||||
(audited) | 2,139,651 | 1,173,857 | 84,192 | 156,047 | 455,828 | 4,009,575 | |
Changes in equity for the six | |||||||
months ended 30 June 2020: | |||||||
Profit and total comprehensive income | |||||||
for the period | - | - | - | - | 142,721 | 142,721 | |
Balance at 30 June 2020 (unaudited) | 2,139,651 | 1,173,857 | 84,192 | 156,047 | 598,549 | 4,152,296 | |
The notes on pages 23 to 60 form part of this interim financial report.
22 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
CASH FLOW STATEMENT
for the six months ended 30 June 2020 - unaudited (Express in thousands of Renminbi, unless otherwise stated)
Six months ended 30 June | |||
Note | 2020 | 2019 | |
(unaudited) | (unaudited) | ||
RMB'000 | RMB'000 | ||
Operating activities | |||
Profit before taxation | 190,423 | 269,321 | |
Adjustments for: | |||
Impairment losses | 6(b) | 91,310 | 47,546 |
Depreciation and amortisation | 6(c) | 9,493 | 8,622 |
Listing expenses | 6(c) | - | 9,207 |
Finance costs | 6(c) | 1,025 | 781 |
Changes in operating assets | |||
Net decrease in deposits with central bank | 158 | 7,538 | |
Net increase in deposits with other banks | (523) | - | |
Net decrease/(increase) in loans and advances to customers | 1,803,900 | (1,553,489) | |
Net decrease in finance lease receivables | 16,331 | 22,124 | |
Net increase in other assets | (55,704) | (21,891) | |
Changes in operating liabilities | |||
Net (decrease)/increase in placements from banks | (1,808,768) | 1,378,799 | |
Net (decrease)/increase in guarantee deposits | (2,109) | 44,043 | |
Net decrease in deposits from shareholders | - | (600,000) | |
Net decrease in other liabilities | (104,783) | (35,179) | |
Cash generated from/(used in) operations | 140,753 | (422,578) | |
Income tax paid | 19(a) | (75,232) | (74,435) |
Net cash generated from/(used in) operating activities | 65,521 | (497,013) | |
Investing activity | |||
Payments for purchase of property and equipment, intangible | |||
assets and other assets | (8,494) | (6,891) | |
Net cash used in investing activity | (8,494) | (6,891) | |
Financing activities | |||
Capital element of lease rentals paid | 22(b) | (4,513) | (4,260) |
Interest element of lease rentals paid | 22(b) | (1,025) | (781) |
Net proceeds from issuance of H-shares upon the public | - | ||
offering | 1,365,216 | ||
Net cash (used in)/generated from financing activities | (5,538) | 1,360,175 | |
Net increase in cash and cash equivalents | 51,489 | 856,271 | |
Cash and cash equivalents at 1 January | 22 | 116,519 | 800,997 |
Cash and cash equivalents at 30 June | 22 | 168,008 | 1,657,268 |
The notes on pages 23 to 60 form part of this interim financial report.
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 23 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
1 BASIS OF PREPARATION
This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, including compliance with Hong Kong Accounting Standard (HKAS) 34, Interim financial reporting , issued by the Hong Kong Institute of Certified Public Accountants (HKICPA). It was authorised for issue on 28 August 2020.
The interim financial report has been prepared in accordance with the same accounting policies adopted in the 2019 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2020 annual financial statements. Details of any changes in accounting policies are set out in Note 2.
The preparation of an interim financial report in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.
This interim financial report contains condensed financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the 2019 annual financial statements. The condensed interim financial statements and notes thereon do not include all of the information required for a full set of financial statements prepared in accordance with HKFRSs.
The 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 HKICPA. KPMG's independent review report to the Board of Directors is included on page 18.
2 CHANGES IN ACCOUNTING POLICIES
The Company has applied the following amendments to Hong Kong Financial Reporting Standards (HKFRSs) issued by the HKICPA to these financial statements for the current accounting period:
- Amendments to HKFRS 3, Definition of a Business
- Amendment to HKFRS 16, Covid-19-Related Rent Concessions
Impacts of the adoption of the above amended HKFRSs are discussed below:
Amendments to HKFRS 3, Definition of a Business
The amendments clarify the definition of a business and provide further guidance on how to determine whether a transaction represents a business combination. In addition, the amendments introduce an optional "concentration test" that permits a simplified assessment of whether an acquired set of activities and assets is an asset rather than business acquisition, when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.
24 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
2 CHANGES IN ACCOUNTING POLICIES (CONTINUED)
Amendment to HKFRS 16, Covid-19-Related Rent Concessions
The amendment provides a practical expedient that allows a lessee to by-pass the need to evaluate whether certain qualifying rent concessions occurring as a direct consequence of the COVID-19 pandemic ("COVID-19-related rent concessions") are lease modifications and, instead, account for those rent concessions as if they were not lease modifications.
None of the above amendments has had a material effect on how the Company's results and financial position for current or prior periods have been prepared or presented in this interim financial report.
3 | NET INTEREST INCOME | |||
Six months ended 30 June | ||||
2020 | 2019 | |||
RMB'000 | RMB'000 | |||
Interest income arising from | ||||
Loans and advances to customers | 439,960 | 453,222 | ||
Finance lease receivables | 1,937 | 4,184 | ||
Deposits with central bank and other banks | 1,454 | 7,981 | ||
Sub-total | 443,351 | 465,387 | ||
Interest expenses arising from | ||||
Placements from banks | (154,565) | (243,256) | ||
Deposits from shareholders | - | (133) | ||
Sub-total | (154,565) | (243,389) | ||
Net interest income | 288,786 | 221,998 | ||
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 25 | ||||
INTERIM REPORT 2020 | |||||
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT | |||||
(Express in thousands of Renminbi, unless otherwise stated) | |||||
4 NET FEE AND COMMISSION INCOME | |||||
Six months ended 30 June | |||||
2020 | 2019 | ||||
RMB'000 | RMB'000 | ||||
Fee and commission income arising from | |||||
Joint loan services | 28,303 | 33,772 | |||
Consulting services | 5,993 | 90,962 | |||
Others | 5,907 | 4,191 | |||
Sub-total | 40,203 | 128,925 | |||
Fee and commission expenses arising from | |||||
Commission fees | - | (221) | |||
Others | (477) | (470) | |||
Sub-total | (477) | (691) | |||
Net fee and commission income | 39,726 | 128,234 | |||
The Company derives its fee and commission income arising from its consulting services at a point in time; fee and commission income arising from its joint loan services over time.
5 OTHER NET INCOME
Six months ended 30 June | |||
Note | 2020 | 2019 | |
RMB'000 | RMB'000 | ||
Government grants | (a) | 12,148 | - |
Net exchange (losses)/gains | (2,558) | 36,434 | |
Others | 238 | 167 | |
Total | 9,828 | 36,601 | |
- The government grants were received unconditionally by the Company from the local government where it resides.
26 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
6 | PROFIT BEFORE TAXATION | ||||
Profit before taxation is arrived at after charging/(crediting): | |||||
(a) | Staff costs | ||||
Six months ended 30 June | |||||
2020 | 2019 | ||||
RMB'000 | RMB'000 | ||||
Salaries, bonuses and allowances | 29,212 | 34,337 | |||
Other social welfare | 2,403 | 3,511 | |||
Contributions to pension schemes | 1,149 | 3,963 | |||
Total | 32,764 | 41,811 | |||
(b) | Impairment losses | ||||
Six months ended 30 June | |||||
Note | 2020 | 2019 | |||
RMB'000 | RMB'000 | ||||
Loans and advances to customers | 11(e) | 88,461 | 50,525 | ||
Finance lease receivables | 12(b) | 2,849 | (2,979) | ||
Total | 91,310 | 47,546 | |||
(c) | Other items | ||||
Six months ended 30 June | |||||
2020 | 2019 | ||||
RMB'000 | RMB'000 | ||||
Depreciation and amortisation | |||||
- right-of-use assets | 4,658 | 4,344 | |||
- intangible assets | 3,222 | 2,083 | |||
- property and equipment | 1,613 | 2,195 | |||
Tax and surcharges | 4,755 | 3,934 | |||
Maintenance fees | 1,619 | 343 | |||
Legal consultancy | 1,479 | 952 | |||
Travel expenses | 316 | 1,155 | |||
Office expenses | 190 | 630 | |||
Expense relating to short-term leases | 69 | 220 | |||
Listing expenses | - | 9,207 | |||
Others | 4,897 | 2,311 | |||
Sub-total | 22,818 | 27,374 | |||
Finance cost | 1,025 | 781 | |||
Total | 23,843 | 28,155 | |||
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 27 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
7 INCOME TAX IN THE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
- Taxation in the statement of profit or loss and other comprehensive income represents:
Six months ended 30 June | |||
Note | 2020 | 2019 | |
RMB'000 | RMB'000 | ||
Current tax | |||
Provision for the period | 34,870 | 48,986 | |
Over-provision in respect of prior years | (143) | - | |
Sub-total | 19(a) | 34,727 | 48,986 |
Deferred tax | |||
Origination of temporary differences | 19(b) | 12,975 | 18,479 |
Total | 47,702 | 67,465 | |
- Reconciliation between tax expense and accounting profit at applicable tax rates:
Six months ended 30 June | |||
Note | 2020 | 2019 | |
RMB'000 | RMB'000 | ||
Profit before taxation: | 190,423 | 269,321 | |
Notional tax on profit before taxation, calculated at | |||
the rates applicable to profits in the countries | |||
concerned | (i) | 47,606 | 67,330 |
Tax effect of non-deductible expenses | 239 | 135 | |
Over-provision in respect of prior years | (143) | - | |
Actual tax expense | 47,702 | 67,465 | |
- The Company is subject to PRC corporate income tax at the statutory tax rate of 25%.
28 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
8 EARNINGS PER SHARE
-
Basic and diluted earnings per share
The calculation of basic earnings per share is based on the profit attributable to ordinary equity shareholders of the Company of RMB142,721 thousands (six months ended 30 June 2019: RMB201,856 thousands) and the weighted average of 2,139,651 thousands ordinary shares (2019: 1,861,604 thousands ordinary shares) in issue during the interim period, which is set out as follows:
Weighted average number of ordinary shares
Six months ended 30 June | ||
2020 | 2019 | |
Number of ordinary shares at 1 January (in thousands) | 2,139,651 | 1,600,000 |
Effect of issuance of H-shares (in thousands) | - | 261,604 |
Weighted average number of ordinary shares at 30 June | ||
(in thousands) | 2,139,651 | 1,861,604 |
On 3 April 2019, the Company was listed on the Main Board of the HKSE, pursuant to which 533,336 thousands ordinary shares were issued. On 25 April 2019, the over-allotment option granted by the Company was partially exercised, pursuant to which 6,315 thousands ordinary shares were issued.
Six months ended 30 June | ||
2020 | 2019 | |
Profit attributable to ordinary equity shareholders of the | ||
Company (RMB'000) | 142,721 | 201,856 |
Weighted average number of ordinary shares issued | ||
(in thousands) | 2,139,651 | 1,861,604 |
Basic and diluted earnings per share attributable to | ||
shareholders (RMB) | 0.07 | 0.11 |
There were no dilutive potential ordinary shares for the period ended 30 June 2020 or 2019. Therefore, diluted earnings per share are equivalent to basic earnings per share.
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 29 | |||||
INTERIM REPORT 2020 | ||||||
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT | ||||||
(Express in thousands of Renminbi, unless otherwise stated) | ||||||
9 CASH AND DEPOSITS WITH CENTRAL BANK | ||||||
At | At | |||||
30 June | 31 December | |||||
Note | 2020 | 2019 | ||||
RMB'000 | RMB'000 | |||||
Deposits with central bank | ||||||
- Statutory deposit reserves | (a) | 9,266 | 9,424 | |||
- Surplus deposit reserves | (b) | 286 | 50 | |||
Sub-total | 9,552 | 9,474 | ||||
Accrued interest | 4 | 5 | ||||
Total | 9,556 | 9,479 | ||||
- The Company places statutory deposit reserves with the People's Bank of China ("PBOC") in accordance with relevant regulations.
At 30 June 2020 and 31 December 2019, the statutory deposit reserve ratios applicable to the Company were as follows:
At | At | |
30 June | 31 December | |
2020 | 2019 | |
Reserve ratio for deposits | 6.0% | 6.0% |
The statutory deposit reserves are not available for the Company's daily business.
- The surplus deposit reserves are maintained with the PBOC for the purpose of cash settlement.
10 DEPOSITS WITH BANKS
At | At | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Deposits with banks | 177,199 | 126,469 |
Accrued interest | 192 | 55 |
Total | 177,391 | 126,524 |
30 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
11 LOANS AND ADVANCES TO CUSTOMERS
- Analysed by nature
At | At | ||
30 June | 31 December | ||
2020 | 2019 | ||
RMB'000 | RMB'000 | ||
Retail loans | 5,621,546 | 7,522,352 | |
Dealer's loans | 2,623,002 | 2,625,086 | |
Gross loans and advances to customers | 8,244,548 | 10,147,438 | |
Accrued interest | 87,302 | 48,079 | |
Less: Allowances for impairment losses | (180,835) | (191,364) | |
Net loans and advances to customers | 8,151,015 | 10,004,153 | |
(b) Analysed by type of collateral | |||
At | At | ||
30 June | 31 December | ||
2020 | 2019 | ||
RMB'000 | RMB'000 | ||
Collateralized loans | 5,621,546 | 7,522,352 | |
Guaranteed loans | 2,623,002 | 2,625,086 | |
Gross loans and advances to customers | 8,244,548 | 10,147,438 | |
Accrued interest | 87,302 | 48,079 | |
Less: Allowances for impairment losses | (180,835) | (191,364) | |
Net loans and advances to customers | 8,151,015 | 10,004,153 | |
- Overdue loans (excluding accrued interest) analysed by type of collateral and overdue period
At 30 June 2020 | |||||
Overdue | Overdue | ||||
Overdue | more than | more than | |||
within | 3 months to | 6 months to | Overdue | ||
3 months | 6 months | one year | more than | ||
(inclusive) | (inclusive) | (inclusive) | one year | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Collateralized loans | 63,818 | 21,468 | 2,818 | - | 88,104 |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 31 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
11 LOANS AND ADVANCES TO CUSTOMERS (CONTINUED)
- Overdue loans (excluding accrued interest) analysed by type of collateral and overdue period (continued)
At 31 December 2019 | |||||
Overdue | Overdue | ||||
Overdue | more than | more than | |||
within | 3 months to | 6 months to | Overdue | ||
3 months | 6 months | one year | more than | ||
(inclusive) | (inclusive) | (inclusive) | one year | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Collateralized loans | 89,974 | 17,012 | 12,800 | 3,385 | 123,171 |
Overdue loans represent loans and advances to customers, of which the whole or part of the principal or interest was overdue for one day or more. All amounts are shown as gross amount of overdue loans and advances to customers before any allowances for impairment losses. As at 30 June 2020, there was no overdue guaranteed loan (as at 31 December 2019: Nil).
- Analysed by methods for assessing allowances for impairment losses
At 30 June 2020 | ||||
Lifetime ECL | Lifetime ECL | |||
for not credit- | for credit- | |||
12-month ECL | impaired | impaired | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Gross loans and advances to customers | ||||
(including accrued interest) | 8,243,681 | 54,574 | 33,595 | 8,331,850 |
Less: Allowances for impairment losses | (132,931) | (15,802) | (32,102) | (180,835) |
Net loans and advances to customers | 8,110,750 | 38,772 | 1,493 | 8,151,015 |
At 31 December 2019 | ||||
Lifetime ECL | Lifetime ECL | |||
for not credit- | for credit- | |||
12-month ECL | impaired | impaired | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Gross loans and advances to customers | ||||
(including accrued interest) | 10,072,109 | 78,175 | 45,233 | 10,195,517 |
Less: Allowances for impairment losses | (112,932) | (38,459) | (39,973) | (191,364) |
Net loans and advances to customers | 9,959,177 | 39,716 | 5,260 | 10,004,153 |
32 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
11 LOANS AND ADVANCES TO CUSTOMERS (CONTINUED)
- Movements of allowances for impairment losses
Six months ended 30 June 2020 | |||||
Lifetime | Lifetime | ||||
ECL for | ECL for | ||||
12-month | not credit- | credit- | |||
Note | ECL | impaired | impaired | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||
At 1 January 2020 | 112,932 | 38,459 | 39,973 | 191,364 | |
Transferred to: | |||||
- 12-month ECL | 5,612 | (5,053) | (559) | - | |
- lifetime ECL for not | |||||
credit-impaired | (716) | 1,649 | (933) | - | |
- lifetime ECL for credit-impaired | (338) | (2,783) | 3,121 | - | |
Charge/(reversal) for the period | 6(b) | 15,441 | (16,470) | 89,490 | 88,461 |
Write-off for the period | - | - | (105,399) | (105,399) | |
Recovery after write-off | - | - | 6,409 | 6,409 | |
At 30 June 2020 | 132,931 | 15,802 | 32,102 | 180,835 | |
Year ended 31 December 2019 | |||||
Lifetime | Lifetime | ||||
ECL for | ECL for | ||||
12-month | not credit- | credit- | |||
Note | ECL | impaired | impaired | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||
At 1 January 2019 | 89,071 | 26,522 | 20,386 | 135,979 | |
Transferred to: | |||||
- 12-month ECL | 7,104 | (7,104) | - | - | |
- lifetime ECL for not credit- | |||||
impaired | (780) | 860 | (80) | - | |
- lifetime ECL for credit-impaired | (419) | (1,908) | 2,327 | - | |
Charge for the year | 6(b) | 17,956 | 20,089 | 80,138 | 118,183 |
Write-off for the year | - | - | (66,750) | (66,750) | |
Recovery after write-off | - | - | 3,952 | 3,952 | |
At 31 December 2019 | 112,932 | 38,459 | 39,973 | 191,364 | |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 33 | ||||
INTERIM REPORT 2020 | |||||
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT | |||||
(Express in thousands of Renminbi, unless otherwise stated) | |||||
12 FINANCE LEASE RECEIVABLES | |||||
At | At | ||||
30 June | 31 December | ||||
2020 | 2019 | ||||
RMB'000 | RMB'000 | ||||
Minimum finance lease receivables | 43,808 | 60,577 | |||
Less: Unearned finance lease income | (3,005) | (3,443) | |||
Present value of finance lease receivables | 40,803 | 57,134 | |||
Less: Allowances for impairment losses | (7,982) | (5,133) | |||
Total | 32,821 | 52,001 | |||
- Finance lease receivables, unearned finance lease income and minimum finance lease receivables analysed by remaining period are listed as follows:
At 30 June 2020 | |||
Minimum | Unearned | Present value | |
finance lease | finance lease | of finance lease | |
receivables | income | receivables | |
RMB'000 | RMB'000 | RMB'000 | |
Within 1 year (inclusive) | 28,697 | (2,036) | 26,661 |
After 1 year but within 2 years (inclusive) | 10,356 | (808) | 9,548 |
After 2 years but within 3 years (inclusive) | 4,734 | (161) | 4,573 |
After 3 years but within 4 years (inclusive) | 21 | - | 21 |
Sub-total | 43,808 | (3,005) | 40,803 |
Less: Allowances for impairment losses | (7,982) | ||
Total | 32,821 | ||
At 31 December 2019 | |||
Minimum | Unearned | Present value | |
finance lease | finance lease | of finance lease | |
receivables | income | receivables | |
RMB'000 | RMB'000 | RMB'000 | |
Within 1 year (inclusive) | 47,399 | (3,002) | 44,397 |
After 1 year but within 2 years (inclusive) | 12,769 | (399) | 12,370 |
After 2 years but within 3 years (inclusive) | 294 | (36) | 258 |
After 3 years but within 4 years (inclusive) | 115 | (6) | 109 |
Sub-total | 60,577 | (3,443) | 57,134 |
Less: Allowances for impairment losses | (5,133) | ||
Total | 52,001 | ||
34 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
12 FINANCE LEASE RECEIVABLES (CONTINUED)
- Movements of allowances for impairment losses are as follows:
Six months ended 30 June 2020 | |||||
Lifetime | Lifetime | ||||
ECL for not | ECL for | ||||
12-month | credit- | credit- | |||
Note | ECL | impaired | impaired | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||
At 1 January 2020 | 388 | 795 | 3,950 | 5,133 | |
Transferred to: | |||||
- 12-month ECL | 53 | (53) | - | - | |
- lifetime ECL for not credit-impaired | (69) | 69 | - | - | |
- lifetime ECL for credit-impaired | (2) | - | 2 | - | |
(Reversal)/charge for the period | 6(b) | (172) | 2,160 | 861 | 2,849 |
At 30 June 2020 | 198 | 2,971 | 4,813 | 7,982 | |
Year ended 31 December 2019 | |||||
Lifetime ECL | |||||
for not | Lifetime ECL | ||||
12-month | credit- | for credit- | |||
ECL | impaired | impaired | Total | ||
RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||
At 1 January 2019 | 644 | 4,159 | 6,660 | 11,463 | |
Transferred to: | |||||
- 12-month ECL | 3,999 | (3,999) | - | - | |
- lifetime ECL for not credit-impaired | (33) | 33 | - | - | |
- lifetime ECL for credit-impaired | (1) | - | 1 | - | |
(Reversal)/charge for the year | (4,221) | 602 | (11) | (3,630) | |
Write-off for the year | - | - | (3,244) | (3,244) | |
Recovery after write-off | - | - | 544 | 544 | |
At 31 December 2019 | 388 | 795 | 3,950 | 5,133 | |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 35 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
13 PROPERTY AND EQUIPMENT
- Carrying amount
Properties | |||||
leased for | |||||
Improvement | own use | ||||
Electronic | Office | to leasehold | carried at | ||
equipment | furniture | property | cost | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Cost: | |||||
At 1 January 2019 | 3,597 | 1,032 | 7,060 | 33,918 | 45,607 |
Additions | 488 | 50 | 7,367 | 15,386 | 23,291 |
At 31 December 2019 | 4,085 | 1,082 | 14,427 | 49,304 | 68,898 |
Additions | 288 | - | 1 | - | 289 |
Disposal for lease | - | - | - | (179) | (179) |
At 30 June 2020 | 4,373 | 1,082 | 14,428 | 49,125 | 69,008 |
Accumulated depreciation: | |||||
At 1 January 2019 | (1,442) | (557) | (4,577) | (10,618) | (17,194) |
Charge for the year | (734) | (199) | (1,630) | (8,609) | (11,172) |
At 31 December 2019 | (2,176) | (756) | (6,207) | (19,227) | (28,366) |
Charge for the period | (370) | (86) | (1,157) | (4,658) | (6,271) |
Disposal for lease | - | - | - | 27 | 27 |
At 30 June 2020 | (2,546) | (842) | (7,364) | (23,858) | (34,610) |
Net book value: | |||||
At 30 June 2020 | 1,827 | 240 | 7,064 | 25,267 | 34,398 |
At 31 December 2019 | 1,909 | 326 | 8,220 | 30,077 | 40,532 |
36 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
13 PROPERTY AND EQUIPMENT (CONTINUED)
-
Right-of-useassets
The analysis of the net book value of right-of-use assets by class of underlying asset is as follows:
At | At | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Properties leased for own use carried at cost | 25,267 | 30,077 |
The analysis of expense items in relation to leases recognised in profit or loss is as follows: | ||
Six months ended 30 June | ||
2020 | 2019 | |
RMB'000 | RMB'000 | |
Depreciation charge of right-of-use assets | 4,658 | 4,344 |
Finance cost (Note 6(c)) | 1,025 | 781 |
Expense relating to short-term leases | 69 | 220 |
14 INTANGIBLE ASSETS
Computer | |
software | |
RMB'000 | |
Cost: | |
At 1 January 2019 | 30,185 |
Additions | 7,643 |
At 31 December 2019 | 37,828 |
Additions | 168 |
At 30 June 2020 | 37,996 |
Accumulated amortisation: | |
At 1 January 2019 | (14,828) |
Charge for the year | (6,488) |
At 31 December 2019 | (21,316) |
Charge for the period | (3,222) |
At 30 June 2020 | (24,538) |
Net book value: | |
At 30 June 2020 | 13,458 |
At 31 December 2019 | 16,512 |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 37 | ||||||
INTERIM REPORT 2020 | |||||||
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT | |||||||
(Express in thousands of Renminbi, unless otherwise stated) | |||||||
15 | OTHER ASSETS | ||||||
At | At | ||||||
30 June | 31 December | ||||||
Note | 2020 | 2019 | |||||
RMB'000 | RMB'000 | ||||||
Prepayments | 18,254 | 3,845 | |||||
Other receivables | (a) | 14,414 | 12,570 | ||||
Interest receivables | 7,645 | 7,300 | |||||
Others | 544 | 275 | |||||
Total | 40,857 | 23,990 | |||||
(a) Other receivables | |||||||
At | At | ||||||
30 June | 31 December | ||||||
2020 | 2019 | ||||||
RMB'000 | RMB'000 | ||||||
Commission receivables of joint loans | 11,002 | 9,255 | |||||
Deposits | 3,412 | 3,315 | |||||
Total | 14,414 | 12,570 | |||||
16 | PLACEMENTS FROM BANKS | ||||||
At | At | ||||||
30 June | 31 December | ||||||
2020 | 2019 | ||||||
RMB'000 | RMB'000 | ||||||
Placements from banks | 4,039,720 | 5,848,488 | |||||
Accrued interest | 17,615 | 42,933 | |||||
Total | 4,057,335 | 5,891,421 | |||||
17 | GUARANTEE DEPOSITS | ||||||
At | At | ||||||
30 June | 31 December | ||||||
2020 | 2019 | ||||||
RMB'000 | RMB'000 | ||||||
Deposits provided by dealers for dealer's loans | 135,685 | 135,585 | |||||
Deposits from finance lease clients | 13,821 | 15,005 | |||||
Deposits provided by dealers for retail business | 5,230 | 6,255 | |||||
Total | 154,736 | 156,845 | |||||
38 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
18 LEASE LIABILITIES
The following table shows the remaining contractual maturities of the Company's lease liabilities:
At 30 June 2020 | At 31 December 2019 | |||
Present | Present | |||
value of the | Total | value of the | Total | |
minimum | minimum | minimum | minimum | |
lease | lease | lease | lease | |
payments | payments | payments | payments | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Within 1 year (inclusive) | 9,288 | 10,881 | 8,982 | 10,887 |
After 1 year but within 2 years (inclusive) | 10,135 | 11,079 | 9,775 | 11,053 |
After 2 years but within 3 years (inclusive) | 7,024 | 7,345 | 9,419 | 10,023 |
More than 3 years | 1,428 | 1,444 | 4,212 | 4,332 |
18,587 | 19,868 | 23,406 | 25,408 | |
27,875 | 30,749 | 32,388 | 36,295 | |
Less: total future interest expenses | (2,874) | (3,907) | ||
Present value of lease liabilities | 27,875 | 32,388 | ||
19 INCOME TAX IN THE STATEMENT OF FINANCIAL POSITION
- Current taxation in the statement of financial position represents:
At | At | ||
30 June | 31 December | ||
Note | 2020 | 2019 | |
RMB'000 | RMB'000 | ||
Balance at the beginning of the period/year | 70,961 | 59,478 | |
Provision for current income tax for the period/year | 7(a) | 34,727 | 111,121 |
Payment during the period/year | (75,232) | (99,638) | |
Balance at the end of the period/year | 30,456 | 70,961 | |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 39 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
19 INCOME TAX IN THE STATEMENT OF FINANCIAL POSITION (CONTINUED)
- Deferred tax assets and liabilities recognised:
The components of deferred tax assets/(liabilities) recognised in the statement of financial position and the movements during the period/year are as follows:
Allowances | Depreciation | |||
for | charge of | |||
impairment | Subsidies for | right-of-use | ||
Deferred tax arising from: | losses | retail loans | assets | Total |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Balance at 1 January 2019 | 15,169 | 58,635 | 305 | 74,109 |
Charged/(credited) to profit or loss | 10,351 | (29,881) | 273 | (19,257) |
Balance at 31 December 2019 | 25,520 | 28,754 | 578 | 54,852 |
Charged/(credited) to profit or loss | 2,187 | (15,236) | 74 | (12,975) |
Balance at 30 June 2020 | 27,707 | 13,518 | 652 | 41,877 |
20 OTHER LIABILITIES
At | At | |||
30 June | 31 December | |||
Note | 2020 | 2019 | ||
RMB'000 | RMB'000 | |||
Other payables | (a) | 77,853 | 165,881 | |
Advance receipts | 822 | 972 | ||
Total | 78,675 | 166,853 | ||
(a) Other payables | ||||
At | At | |||
30 June | 31 December | |||
2020 | 2019 | |||
RMB'000 | RMB'000 | |||
Payables of joint loans | 39,006 | 76,133 | ||
Brokerage fees payable | 12,523 | 12,281 | ||
IPO service fees payable | 8,036 | 32,962 | ||
Accruals | 5,836 | 14,155 | ||
Employee benefits payables | 5,109 | 12,569 | ||
Tax and surcharges and other taxation payable | 3,695 | 12,707 | ||
Others | 3,648 | 5,074 | ||
Total | 77,853 | 165,881 | ||
40 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
21 CAPITAL AND RESERVES
-
Movement in components of equity
The reconciliation between the opening and closing balances of each component of the Company's equity is set out in the statement of changes in equity. - Dividends
Dividends paid to equity shareholders of the Company attributable to the period:
Six months ended 30 June
2020 | 2019 | |
RMB'000 | RMB'000 | |
Interim dividend propose after interim period | ||
(six months ended 30 June 2019: RMB0.08 per share) | - | 171,172 |
- Share capital
On 3 April 2019, the H-shares of the Company were listed on the Main Board of the Stock Exchange of Hong Kong Limited, pursuant to which 533,336 thousands ordinary shares of RMB1.00 each were issued at the price of HK$3.06 per share by the Company. The gross proceeds from the issue of these H-shares amounted to HK$1,632,008 thousands (equivalent to approximately RMB1,397,081 thousands). The premium arising from the issuance of H-shares upon public offering amounted to RMB760,080 thousands was recorded in capital reserve.
On 25 April 2019, the over-allotment option granted by the Company was partially exercised, pursuant to which 6,315 thousands ordinary shares of RMB1.00 each were issued at the price of HK$3.06 per share by the Company. The gross proceeds from the issue of these shares amounted to HK$19,325 thousands (equivalent to approximately RMB16,589 thousands). The premium arising from the issuance of shares upon over-allotment amounted to RMB9,437 thousands was recorded in capital reserve. - Nature and purpose of reserves
-
Capital reserve
On 3 April 2019, the Company issued 533,336 thousands new H-shares by way of initial public offering ("IPO"). On 25 April 2019, the Company issued 6,315 thousands new H-shares by way of over-allotment. The premium arising from the issuance of H-shares upon public offering and over-allotment amounted to RMB760,080 thousands and RMB9,437 thousands, respectively, was recorded in capital reserve. - Surplus reserve
The surplus reserve represents statutory surplus reserve fund. Pursuant to the Company Law of the PRC and the Articles of Association of the Company, the Company is required to appropriate 10% of its net profit as on an annual basis determined under PRC GAAP after making good prior year's accumulated loss, to statutory surplus reserve fund until the reserve fund balance reaches 50% of its registered capital.
-
Capital reserve
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 41 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
21 CAPITAL AND RESERVES (CONTINUED)
- Nature and purpose of reserves (continued)
-
Surplus reserve (continued)
Subject to the approval of equity holders of the entities established in the PRC, statutory surplus reserves may be used to net off with accumulated losses, if any, and may be converted into capital, provided that the balance of statutory surplus reserve after such capitalisation is not less than 25% of the registered capital.
After making the appropriation to the statutory surplus reserve, the Company may also appropriate its net profit to the discretionary surplus reserve upon approval by shareholders. Subject to the approval of shareholders, discretionary surplus reserve may be used to offset previous years' losses, if any, and may be converted into capital.
-
Surplus reserve (continued)
- General risk reserve
Pursuant to "Measures on Impairment Allowances for Financial Enterprises (Cai Jin [2012] No. 20)" issued by the Ministry of Finance of the PRC, the Company is required to set aside a general reserve through profit appropriation which should not be lower than 1.5% of the ending balance of its gross risk-bearing assets on an annual basis. The general risk reserve balance of the Company as at 30 June 2020 amounted to RMB156,047 thousands (2019: RMB156,047 thousands), which has reached the requirement.
- General risk reserve
- Capital management
The Company's primary objectives when managing capital are to safeguard the Company's ability of sustainable development, so that it can continue to provide returns and benefits for shareholders, by pricing services commensurate with the level of risk and by securing access to finance at a reasonable cost.
The Company actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholders returns that might be accompanied by higher risk levels of borrowings and the advantages and stability resulted from a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.
There were no changes in the Company's approach to capital management during the reporting period.
42 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
21 CAPITAL AND RESERVES (CONTINUED)
-
Capital management (continued)
The Company calculates the capital adequacy ratios as at 30 June 2020 and 31 December 2019 in accordance with the Regulation Governing Capital of Commercial Banks (Provisional) (商業銀行資本管理辦 法(試行)) issued by the former China Banking Regulatory Commission (the "CBRC") in 2012 and relevant requirements promulgated by the China Banking and Insurance Regulatory Commission (the "CBIRC") as follows:
At | At | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Core tier-one capital | ||
- Share capital | 2,139,651 | 2,139,651 |
- Capital reserve | 1,173,857 | 1,173,857 |
- Surplus reserve | 84,192 | 84,192 |
- General risk reserve | 156,047 | 156,047 |
- Retained earnings | 598,549 | 455,828 |
Total core tier-one capital | 4,152,296 | 4,009,575 |
Core tier-one capital deductions | ||
- Net value of intangible asset after deduction of related deferred | ||
income tax liabilities | (13,458) | (16,512) |
Net core tier-one capital | 4,138,838 | 3,993,063 |
Net tier-one capital | 4,138,838 | 3,993,063 |
Tier-two capital | ||
- Surplus provision for loan impairment | 88,871 | 105,563 |
Net tier-two capital | 88,871 | 105,563 |
Net capital base | 4,227,709 | 4,098,626 |
Credit risk-weighted assets | 7,198,534 | 8,550,586 |
Operational risk-weighted assets | 1,297,962 | 1,297,962 |
Total risk-weighted assets | 8,496,496 | 9,848,548 |
Core tier-one capital adequacy ratio | 48.71% | 40.54% |
Tier-one capital adequacy ratio | 48.71% | 40.54% |
Capital adequacy ratio | 49.76% | 41.62% |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 43 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
22 NOTES TO CASH FLOW STATEMENTS
- Cash and cash equivalents comprise
At | At | ||
30 June | 31 December | ||
Note | 2020 | 2019 | |
RMB'000 | RMB'000 | ||
Deposit reserves with central bank | 9 | 286 | 50 |
Deposits with banks within original maturity of | |||
three months or less | 167,722 | 116,469 | |
Cash and cash equivalents in the cash flow | |||
statements | 168,008 | 116,519 | |
- Reconciliation of liabilities arising from financing activities
The table below details changes in the Company's liabilities from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are liabilities for which cash flows were, or future cash flows will be, classified in the Company's cash flow statement as cash flows from financing activities.
Lease | |
liabilities | |
(Note 18) | |
RMB'000 | |
At 1 January 2020 | 32,388 |
Changes from financing cash flows: | |
Capital element of finance lease rentals paid | (4,513) |
Interest element of finance lease rentals paid | (1,025) |
Total changes from financing cash flows | (5,538) |
Other change: | |
Finance cost (Note 6(c)) | 1,025 |
Total other change | 1,025 |
At 30 June 2020 | 27,875 |
44 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Express in thousands of Renminbi, unless otherwise stated)
22 NOTES TO CASH FLOW STATEMENTS (CONTINUED)
Lease | |
liabilities | |
(Note 18) | |
RMB'000 | |
At 1 January 2019 | 24,520 |
Changes from financing cash flows: | |
Capital element of finance lease rentals paid | (7,518) |
Interest element of finance lease rentals paid | (1,633) |
Total changes from financing cash flows | (9,151) |
Other changes: | |
Increase in lease liabilities from entering into new leases during the period | 15,386 |
Finance cost (Note 6(c)) | 1,633 |
Total other changes | 17,019 |
At 31 December 2019 | 32,388 |
23 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Exposure to credit, liquidity, interest rate, currency and operational risks arises in the normal course of the Company's business. The Company's exposure to these risks and the financial risk management policies and practice used by the Company to manage these risks are described below.
- Credit risk
-
Management of credit risk
Credit risk arises from a customer's inability or unwillingness to meet its financial obligations or commitment to the Company provided. It arises primarily from the Company's auto retail and dealer's loan credit business and finance lease business.
-
Management of credit risk
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 45 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
23 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
- Credit risk (continued)
-
Management of credit risk (continued)
In accordance with the requirements of external regulatory and related system, the Company has formulated operation rules of credit risk grading, credit risk operation, credit business approval, interview and collection for loans and advances to customers and finance lease receivables according to credit risk management. The work of Company's credit risk management runs through all aspects of pre credit investigation, credit business approval and post-credit management sessions. During the pre-credit investigation session, the Company will carry out a credit background survey of the borrower. During the approval session, all the credit business must be approved by the corresponding approver. During the post-credit management session, the Company will continue to monitor all the loans and advances to customers and finance lease receivables and take corresponding measures for any negative events that may affect the borrower's repayment ability in order to prevent and control the risk.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. At the end of each reporting period, the Company's maximum exposure to credit risk which will cause a financial loss to the Company due to failure to discharge an obligation by the counterparties arises from the carrying amount of the respective recognised financial assets as stated in the statement of financial position.
-
Management of credit risk (continued)
In order to minimize credit risk, the Company has tasked its risk management department to develop and maintain the Company's financial assets credit risk grading to categorize exposures according to their degree of risk of default. The credit rating information is supplied by independent rating agencies where available and, if not available, the risk management department uses other publicly available financial information and the Company's own trading records to rate its counterparties. The Company's exposure and the credit ratings of its counterparties are continuously monitored.
-
Assessing credit risk of financial assets
The Company adopts the Five-tier risk classification approach to manage its credit risk arising from loans and advances to customers and finance lease receivables. They are generally classified as normal, special mention, substandard, doubtful and loss according to their levels of risk.
46 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
23 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
- Credit risk (continued)
-
Assessing credit risk of financial assets (continued)
After adopting HKFR 9 at 1 January 2018, the Company's current credit risk grading framework in respect of financial assets also comprises the following categories:
-
Assessing credit risk of financial assets (continued)
Basis of | ||
recognizing | ||
Category | Description | ECL |
Performing | The counterparty has a low risk of default and does not have | 12-month ECL |
any past-due amounts | ||
Doubtful | There has been a significant increase in credit risk since initial | Lifetime ECL for not |
recognition | credit-impaired | |
In default | There is evidence indicating the asset is credit-impaired | Lifetime ECL for |
credit-impaired | ||
Write-of | There is evidence indicating that the debtor is in severe | Amount is |
financial difficulty and the Company has no realistic prospect | written off | |
of recovery |
For the period ended 30 June 2020, the Company has written off loans and advances to customers of RMB105,399 thousands (31 December 2019: RMB66,750 thousands) and finance lease receivables of 0 (31 December 2019: RMB3,244 thousands) as the Company had identified these debtors have financial difficulties.
For other receivables, the Company has applied the simplified approach in HKFRS 9 to measure them. Other receivables mainly consist of commission receivables of joint loans, deposits and consulting fees receivables, which are not considered meaningful due to the insignificant credit risk.
For deposits with banks, loans and advances to customers and interest receivables, the Company has identified multiple economic scenarios to consider the risk or probability that a credit loss occurs by weighting these different scenarios. Different economic scenarios will lead to a different probability of default.
The following table provides information about the Company's exposure to credit risk and ECLs for loans and advances to customers and finance lease receivables based on the Company's provision matrix. As the Company's historical credit loss experience does not indicate significantly different loss patterns for different customer segments, the loss allowance based on past due status is not further distinguished between the Company's different customer bases.
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 47 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
23 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
- Credit risk (continued)
At 30 June 2020 | ||||
Loans and advances | Finance lease | |||
to customers | receivables | Total | ||
Provision | Provision | |||
RMB'000 | ratio (%) | RMB'000 | ratio (%) | RMB'000 |
Gross balance are assessed for 12-month ECL
- Neither overdue nor credit- | |||||
impaired (including accrued | |||||
interest) | 8,243,681 | 15,249 | 8,258,930 | ||
Allowances for impairment losses | (132,931) | (198) | (133,129) | ||
Net balance | 8,110,750 | 1.61% | 15,051 | 1.30% | 8,125,801 |
Gross balance are not credit- | |||||
impaired and assessed for | |||||
lifetime ECL | |||||
- Overdue but not credit-impaired | 54,509 | 6,309 | 60,818 | ||
- Neither overdue nor credit- | |||||
impaired (including accrued | |||||
interest) | 65 | 14,432 | 14,497 | ||
Sub-total | |||||
54,574 | 20,741 | 75,315 | |||
Allowances for impairment losses | (15,802) | (2,971) | (18,773) | ||
Net balance | 38,772 | 28.96% | 17,770 | 14.32% | 56,542 |
Gross balance are credit- | |||||
impaired and assessed for | |||||
lifetime ECL | |||||
- Overdue and credit-impaired | 33,595 | 4,813 | 38,408 | ||
Allowances for impairment losses | (32,102) | (4,813) | (36,915) | ||
Net balance | 1,493 | 95.56% | - | 100.00% | 1,493 |
Book value | 8,151,015 | 32,821 | 8,183,836 | ||
48 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
23 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
- Credit risk (continued)
At 31 December 2019 | ||||
Loans and advances | Finance lease | |||
to customers | receivables | Total | ||
Provision | Provision | |||
RMB'000 | ratio (%) | RMB'000 | ratio (%) | RMB'000 |
Gross balance are assessed for 12-month ECL
- Neither overdue nor credit- | |||||
impaired (including | |||||
accrued interest) | 10,072,109 | 49,394 | 10,121,503 | ||
Allowances for impairment losses | (112,932) | (388) | (113,320) | ||
Net balance | 9,959,177 | 1.12% | 49,006 | 0.79% | 10,008,183 |
Gross balance are not credit- | |||||
impaired and assessed for | |||||
lifetime ECL | |||||
- Overdue but not credit-impaired | 77,938 | 3,241 | 81,179 | ||
- Neither overdue nor credit- | |||||
impaired (including accrued | |||||
interest) | 237 | - | 237 | ||
Sub-total | 78,175 | 3,241 | 81,416 | ||
Allowances for impairment losses | (38,459) | (795) | (39,254) | ||
Net balance | 39,716 | 49.20% | 2,446 | 24.53% | 42,162 |
Gross balance are credit- | |||||
impaired and assessed for | |||||
lifetime ECL | |||||
- Overdue and credit-impaired | 45,233 | 4,499 | 49,732 | ||
Allowances for impairment losses | (39,973) | (3,950) | (43,923) | ||
Net balance | 5,260 | 88.37% | 549 | 87.79% | 5,809 |
Book value | 10,004,153 | 52,001 | 10,056,154 | ||
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 49 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
23 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
-
Liquidity risk
The Company aims to maintain sufficient cash and cash equivalents. Due to the dynamic nature of the underlying businesses, the policy of the Company is to regularly monitor the Company's liquidity risk and maintain adequate cash and cash equivalents to meet the Company's liquidity requirements.
Currently, the Company's main sources of funds are paid-in capital, placements from banks and the principal and interest charged by the loan service. Under the circumstance of insufficient source of capital cash, principal and interest received by loan service, the main method to supply liquidity is placements from banks. The funds are mostly used to disburse loans and to maintain daily operations of the Company. The use of funds also includes repayment of placements from banks and related interest expenses.
The following tables provide an analysis of the remaining contractual maturities, which are based on contractual undiscounted cash flows of the financial assets and liabilities of the Company at the end of the reporting periods.
At 30 June 2020 | ||||||||
Between | ||||||||
Repayable | Between | three | Between | |||||
on demand/ | Within | one month | months | one year | ||||
terms | one | and three | and one | and five | Carrying | |||
undated | month | months | year | years | Total | amount | ||
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||
Financial assets | ||||||||
Cash and deposits with | ||||||||
central bank | 9,556 | - | - | - | - | 9,556 | 9,556 | |
Deposits with banks | 167,391 | - | - | 10,073 | - | 177,464 | 177,391 | |
Loans and advances to | ||||||||
customers | 40,224 | 969,888 | 2,123,447 | 3,186,384 | 2,408,411 | 8,728,354 | 8,151,015 | |
Finance lease | ||||||||
receivables | 5,726 | 1,359 | 2,718 | 12,232 | 13,791 | 35,826 | 32,821 | |
Other assets | 22,059 | - | - | - | - | 22,059 | 22,059 | |
Total | 244,956 | 971,247 | 2,126,165 | 3,208,689 | 2,422,202 | 8,973,259 | 8,392,842 | |
Financial liabilities | ||||||||
Placements from banks | - | (785,507) | (909,259) | (2,447,506) | - | (4,142,272) | (4,057,335) | |
Guarantee deposits | (140,915) | (1,378) | - | (9,368) | (3,075) | (154,736) | (154,736) | |
Lease | liabilities | - | (996) | (1,992) | (7,893) | (19,868) | (30,749) | (27,875) |
Other | liabilities | (34,643) | (3,668) | (6,555) | (19,151) | (10,141) | (74,158) | (74,158) |
Total | (175,558) | (791,549) | (917,806) | (2,483,918) | (33,084) | (4,401,915) | (4,314,104) | |
Net position | 69,398 | 179,698 | 1,208,359 | 724,771 | 2,389,118 | 4,571,344 | 4,078,738 | |
50 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
23 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
- Liquidity risk (continued)
At 31 December 2019 | |||||||
Between | |||||||
Repayable | Between | three | Between | ||||
on demand/ | one month | months | one year | ||||
terms | Within one | and three | and one | and five | Carrying | ||
undated | month | months | year | years | Total | amount | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Financial assets | |||||||
Cash and deposits with | |||||||
central bank | 9,479 | - | - | - | - | 9,479 | 9,479 |
Deposits with banks | 86,523 | 30,004 | - | 10,172 | - | 126,699 | 126,524 |
Loans and advances to | |||||||
customers | 44,953 | 938,229 | 2,284,993 | 3,716,099 | 3,974,455 | 10,958,729 | 10,004,153 |
Finance lease | |||||||
receivables | 3,475 | 3,241 | 6,482 | 29,168 | 13,078 | 55,444 | 52,001 |
Other assets | 19,870 | - | - | - | - | 19,870 | 19,870 |
Total | 164,300 | 971,474 | 2,291,475 | 3,755,439 | 3,987,533 | 11,170,221 | 10,212,027 |
Financial liabilities | |||||||
Placements from banks | - | (761,987) | (1,722,338) | (3,456,366) | - | (5,940,691) | (5,891,421) |
Guarantee deposits | (141,840) | - | - | (2,537) | (12,468) | (156,845) | (156,845) |
Lease liabilities | - | (907) | (1,815) | (8,165) | (25,408) | (36,295) | (32,388) |
Other liabilities | (77,041) | (18,421) | (8,370) | (28,370) | (20,972) | (153,174) | (153,174) |
Total | (218,881) | (781,315) | (1,732,523) | (3,495,438) | (58,848) | (6,287,005) | (6,233,828) |
Net position | (54,581) | 190,159 | 558,952 | 260,001 | 3,928,685 | 4,883,216 | 3,978,199 |
- Interest rate risk
The interest rate risk of the Company mainly comes from credit business and inter-bank borrowings. The interest-bearing financial instruments of fixed rate and variable rate make the Company face fair value interest rate risk and cash flow interest rate risk, respectively. The Company's risk management committee reviews and supervises market operational risks.
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 51 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
23 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
- Interest rate risk (continued)
-
Interest rate profile
The following table details the interest rate profile of the Company's assets and liabilities as at the end of the reporting period.
-
Interest rate profile
At 30 June 2020 | At 31 December 2019 | |||
Effective | Effective | |||
interest rate | Amount | interest rate | Amount | |
% | RMB'000 | % | RMB'000 | |
Fixed interest rate: | ||||
Financial assets | ||||
Loans and advances to | ||||
customers | 7.51%-15.48% | 8,151,015 | 7.60%-15.48% | 10,004,153 |
Finance lease receivables | 7.86%-18.71% | 32,821 | 7.86%-18.71% | 52,001 |
Total | 8,183,836 | 10,056,154 | ||
Financial liability | ||||
Placements from banks | 4.60%-7.50% | (4,057,335) | 5.00%-8.00% | (5,891,421) |
Total | (4,057,335) | (5,891,421) | ||
Net position | 4,126,501 | 4,164,733 | ||
At 30 June 2020 | At 31 December 2019 | |||
Effective | Effective | |||
interest rate | Amount | interest rate | Amount | |
% | RMB'000 | % | RMB'000 | |
Variable interest rate: | ||||
Financial assets | ||||
Cash and deposits with | ||||
central bank | 0.72%-1.62% | 9,556 | 0.72%-1.62% | 9,479 |
Deposits with banks | 0.01%-2.17% | 177,391 | 0.01%-2.17% | 126,524 |
Total | 186,947 | 136,003 | ||
52 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
23 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
- Interest rate risk (continued)
- Sensitivity analysis
-
Fair value interest rate risk
The Company does not held any interest-bearing financial instruments of fixed interest measured at fair value, so the increase or decrease of interest rate would not influence the Company's profit after tax and equity through the change of fair value. - Cash flow interest rate risk
-
Fair value interest rate risk
At | At | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Increase/(decrease) in profit after tax and retained | ||
profits | ||
Interest rates increase by 100 bps | 1,227 | 893 |
Interest rates decrease by 100 bps | (1,226) | (892) |
The sensitivity analysis above is based on a static interest risk exposure profile of assets and liabilities. This analysis measures only the impact of changes in interest rates within one year, showing how profit after tax and equity would have been affected by repricing of the Company's assets and liabilities within the one-year period. The analysis does not take into account the effect of (i) the twisted shift in the yield curve with the changes in interest rates; (ii) risk management measures taken by the management. The analysis is also based on the assumption that there are no other changes to the portfolio and all positions will be retained and rolled over upon maturity.
-
Currency risk
The Company's functional currency is RMB. Except for the deposits with banks, which includes the proceeds from issuance of shares upon H-shares offering, there is no material currency risk for the Company as the majority of the business activities are within mainland China and settle in RMB. The currency giving rise to this risk is primarily Hong Kong Dollars (HKD). As most of the proceeds from issuance of shares upon public offering and over-allotment are converted into RMB by the Company during the reporting period and the remaining proceeds will be used to develop the Company's loan business, the currency risk is assessed to be low.
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 53 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
23 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
- Currency risk (continued)
- Exposure to currency risk
Exposure to foreign currencies | ||||
(expressed in RMB thousand) | ||||
At 30 June 2020 | At 31 December 2019 | |||
USD | HKD | USD | HKD | |
Deposits with banks | 56 | 2,277 | 56 | 32,878 |
Other liabilities | - | (20,559) | - | (45,243) |
Net position | 56 | (18,282) | 56 | (12,365) |
- Sensitivity analysis
The following table indicates the instantaneous changes in the Company's profit after tax and equity that would arise if foreign exchange rates to which the Company has significant exposure at the end of the reporting period had changed at that date, assuming all other risk variables remained constant.
At | At | |
30 June | 31 December | |
2020 | 2019 | |
RMB'000 | RMB'000 | |
Changes in profit after tax and equity | ||
Foreign exchange rate increase by 100 bps | (137) | (92) |
Foreign exchange rate decrease by 100 bps | 137 | 92 |
The foreign exchange sensitivity is the gain or loss recognised as a result of 100 basis point fluctuation in the foreign currency exchange rates against RMB on the closing rate of reporting date.
Results of the analysis as presented in the above table represent an aggregation of the instantaneous effects on the Company's profit after tax and equity measured in the respective foreign currencies, translated into RMB at the exchange rate ruling at the end of the reporting period for presentation purposes.
-
Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company's processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks. Operational risks arise from all of the Company's operations.
The Company has set a series of policies and procedures in the context of internal control measures to identify, evaluate, control, manage and report operational risk. This mechanism involves all the business aspects, hence the Company could identify all inherent operational risk of activities, processes and systems.
54 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
23 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
-
Fair value
The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows: - Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.
- Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available.
- Level 3 valuations: Fair value measured using significant unobservable inputs.
At the end of the reporting period, the Company has no financial assets and liabilities measured at fair value and the carrying amounts of the Company's financial instruments carried at cost or amortised cost are not materially different from their fair values.
24 MATERIAL RELATED PARTY TRANSACTIONS
The following significant transactions were carried out between the Company and its related parties during the reporting period. In the opinion of the directors of the Company, the related party transactions were carried out in the normal course of business and at terms negotiated between the Company and the respective related parties.
- Names and relationships with related parties
The following companies are related parties of the Company that had balances and/or transactions with the Company during the reporting period.
Company | Relationship |
China ZhengTong Auto Services Holding Limited | Parent Company |
Baoding Aoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Baotou Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Baotou Zhongrui Automobile Sales Service Co., Ltd. | Fellow subsidiary |
Baotou Luze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Beijing Baozehang Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Beijing Dewanlong Trading Co., Ltd. | Fellow subsidiary |
Beijing BWWR Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Beijing SCAS North China Automobile Services Co., Ltd. | Fellow subsidiary |
Beijing SCAS Zhongguan Automobile Sales Co., Ltd. | Fellow subsidiary |
Beijing Zhengtong Baozehang Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Beijing Zhengtong Dingwo Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Changsha Ruibao Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Chengdu Qibao Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Chenzhou Ruibao Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Dingze Insurance Agency Co., Ltd. | Fellow subsidiary |
Dongguan Aoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 55 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
24 MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)
- Names and relationships with related parties (continued)
Company | Relationship |
Dongguan Jieyunhang Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Dongguan Liaobu SCAS Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Dongguan Zhengtong Kaidi Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Dongguan SCAS Automobile Sales Service Co., Ltd. | Fellow subsidiary |
Foshan Aoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Foshan Dingbaohang Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Foshan Baoyunhang Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Foshan Zheng Tong Zhong Rui Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Fujian SCAS Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Fuzhou Dingwo Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Ganzhou Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Guangdong SCAS Shengwo Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Guangdong SCAS Automobile Sales Service Co., Ltd. | Fellow subsidiary |
Guangzhoushi Hengyuehang Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Guangzhou Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Hainan SCAS Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Henan Jintangsheng Automobile Co., Ltd. | Fellow subsidiary |
Hengyang Luze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Hunan SCAS Xingsha Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Hubei Aoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Hubei Bocheng Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Hubei Dingjie Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Hubei Jierui Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Hubei Xinrui Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Huhhot Jieyun Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Huhhot Qibao Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Hunan SCAS Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Inner Mongolia Dingze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Inner Mongolia Dingjie Automobile Trading Co., Ltd. | Fellow subsidiary |
Jiangxi Deao Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Jiangxi Zhengtong Zetian Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Jieyang Dingjie Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Jieyang Luze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Jingmen Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Langfangshi Luze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Nanchang Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Qingdao Huacheng Automobile Services Co., Ltd. | Fellow subsidiary |
Qingdao Aoze Automobile Sales Service Co., Ltd. | Fellow subsidiary |
Qingyuan Aoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Qingyuan SCAS Hezhong Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Qingyuan SCAS Toyota Motor Sales Services Co., Ltd. | Fellow subsidiary |
Shantou Hongxiang Materials Co., Ltd. | Fellow subsidiary |
Shantou Lujie Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shanghai Aohui Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shanghai Luda Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shanghai Shenxie Automobile Trading Co., Ltd. | Fellow subsidiary |
56 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
24 MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)
- Names and relationships with related parties (continued)
Company | Relationship |
Shanghai Qize Automobile Sales Service Co., Ltd. | Fellow subsidiary |
Shanghai Qibao Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shangrao Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shangrao Luze Automobile Sales Service Co., Ltd. | Fellow subsidiary |
Shantou Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shenzhen Aoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shenzhen Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shenzhen Dingwo Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shenzhen Hengshuo Advisory Services Co., Ltd. | Fellow subsidiary |
Shenzhen SCAS Tenglong Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shenzhen SCAS Infiniti Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shenzhen SCAS Electric Machinery Co., Ltd. | Fellow subsidiary |
Shengzhou Aoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Shenzhenshi SCAS Huawo Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Suzhou Anzhixing Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Tianjin SCAS Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Tianjin Automobile Industry SCAS Sales Co., Ltd. | Fellow subsidiary |
Weihai Luze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Wuhan Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Wuhan Zhengtong United Industrial Investment Group Co., Ltd. | Fellow subsidiary |
Wuhan Luze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Wuhan Kaitai Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Xiangtan Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Xiangyang Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Yichang Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Yichun Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Zhanjiang Zhengtong Kaidi Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Zhengzhou Aoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Zhengzhou Dingwo Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Zhongshan SCAS Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Zhuhai Baoze Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Zhuhai SCAS Jielu Automobile Sales Services Co., Ltd. | Fellow subsidiary |
Zhuhai SCAS Automobile Sales Service Co., Ltd. | Fellow subsidiary |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 57 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
24 MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)
-
Significant transactions with related parties
In the opinion of the executive directors of the Company, the related party transactions were carried out in the normal course of business and at terms negotiated between the Company and the respective parties.
Six months ended 30 June | |||
Note | 2020 | 2019 | |
RMB'000 | RMB'000 | ||
Subsidies receipt for retail loans | (i) | 852 | 33,827 |
Interest income | (i) | 118,803 | 140,068 |
Interest expenses | - | (133) | |
Operating expenses | (73) | (151) | |
Additions of deposits from shareholders | - | 362,280 | |
Decrease of deposits from shareholders | - | (962,280) | |
- Subsidies receipt for retail loans included subsidies received from the automaker which are settled through related parties pursuant to the pass-through arrangement. Interest income included the subsidies amortised to the income statement during the reporting period.
- Balances with related parties
As at the end of the reporting period, the Company had the following balances with related parties:
At | At | ||
30 June | 31 December | ||
Note | 2020 | 2019 | |
RMB'000 | RMB'000 | ||
Assets | |||
Dealer's loans (including accrued interest) | (i) | 1,520,693 | 1,497,265 |
Subsidies for retail loans | (ii) | (36,197) | (80,656) |
Mortgage service fees | (ii) | 844 | 1,559 |
Other assets | 345 | 345 | |
Liabilities | |||
Guarantee deposits | 75,000 | 75,000 | |
Other liabilities | 932 | 1,073 | |
Off-balance sheet items | |||
Guarantees received for dealer's loans | (iii) | 1,520,693 | 1,497,265 |
- In the first half of 2020, the Company granted extension to certain dealer's loan borrowers affected by COVID-19 to defer the loan interest payment by a quarter, which including dealer's loans principal and accrued interest with related parties amounted to RMB1,481,367 thousands and RMB39,326 thousands as of 30 June 2020 respectively.
- The subsidies for retail loans and mortgage service fees are initially recognised in loans and receivables at amortised method.
- The guarantees were provided by fellow subsidiaries of the Company for repayment of dealer's loans. These guarantees expire on the same date as the related loans.
All balances with related parties are related to main business of the Company except for other liabilities due to fellow subsidiaries amounting to RMB932 thousands and RMB1,073 thousands as of 30 June 2020 and 31 December 2019, respectively.
58 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
24 MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)
-
Directors and key management personnel remuneration
Remuneration for key management personnel of the Company is as follows:
Six months ended 30 June
2020 | 2019 | |
RMB'000 | RMB'000 | |
Remuneration of key management personnel | 4,087 | 4,735 |
25 SEGMENT REPORTING
-
Business segment
The Company manages its businesses by business segments. In a manner consistent with the way in which information is reported internally to the Company's most senior executive management for the purposes of resource allocation and performance assessment, the Company has presented the following reportable segments: - Retail business: this segment represents the Company's retail business provided to automotive end customers. The Company's retail business facilitates its customers' purchase of passenger vehicles. These products and services include direct loans where the Company issues automobile retail loans to customers with its own funding and charge interests on the loans, loan facilitation services, joint loan arrangement and direct lease services;
- Dealer's loan business: This segment represents the Company's dealer's loans provided to automobile dealers to facilitate their purchase of vehicles and accessories; and
- Others: These represent any other business which cannot form a single reportable segment.
Six months ended 30 June 2020 | ||||
Retail | Dealer's loan | |||
Business | Business | Others | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Net interest income | 201,791 | 85,541 | 1,454 | 288,786 |
Net fee and commission income | 39,726 | - | - | 39,726 |
Other net income | - | - | 9,828 | 9,828 |
Operating income | 241,517 | 85,541 | 11,282 | 338,340 |
Operating expenses | (40,415) | (15,167) | - | (55,582) |
Impairment losses | (78,262) | (13,048) | - | (91,310) |
Finance costs | (745) | (280) | - | (1,025) |
Profit before taxation | 122,095 | 57,046 | 11,282 | 190,423 |
Other segment information | ||||
- Depreciation and amortisation | 6,902 | 2,591 | - | 9,493 |
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 59 |
INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
25 SEGMENT REPORTING (CONTINUED)
- Business segment (continued)
At 30 June 2020 | ||||
Retail | Dealer's loan | |||
Business | Business | Others | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Reportable segment assets/total | ||||
assets | 5,525,720 | 2,677,307 | 298,346 | 8,501,373 |
Reportable segment liabilities/total | ||||
liabilities | (3,386,317) | (868,762) | (93,998) | (4,349,077) |
Six months ended 30 June 2019 | ||||
Retail | Dealer's loan | |||
Business | Business | Others | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Net interest income | 189,050 | 24,967 | 7,981 | 221,998 |
Net fee and commission income | 128,234 | - | - | 128,234 |
Other net income | - | - | 36,601 | 36,601 |
Operating income | 317,284 | 24,967 | 44,582 | 386,833 |
Operating expenses | (62,889) | (6,296) | - | (69,185) |
Impairment losses | (40,805) | (6,741) | - | (47,546) |
Finance costs | (710) | (71) | - | (781) |
Profit before taxation | 212,880 | 11,859 | 44,582 | 269,321 |
Other segment information | ||||
- Depreciation and amortisation | 7,837 | 785 | - | 8,622 |
At 31 December 2019 | ||||
Dealer's loan | ||||
Retail Business | Business | Others | Total | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Reportable segment assets/total | ||||
assets | 7,419,766 | 2,653,217 | 255,060 | 10,328,043 |
Reportable segment liabilities/total | ||||
liabilities | (4,894,400) | (1,203,270) | (220,798) | (6,318,468) |
- Geographical information
Geographically, the Company conducts its business in the PRC. The non-current assets are located in the PRC as well.
60 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT
(Express in thousands of Renminbi, unless otherwise stated)
- SEGMENT REPORTING (CONTINUED)
-
Information about major customers
During the reporting period, there was no revenue from transactions with a single external customer amounting to 10% or more of the Company's total revenue.
-
Information about major customers
- CONTINGENCIES
The Company did not have any material contingent liabilities at the end of the reporting period.
27 NON-ADJUSTING EVENT AFTER THE REPORTING PERIOD
Pledge of loans and advances to customers
On 1 July 2020, the Company signed a pledge contract with Bank of Shanghai Co., Ltd. ("Bank of Shanghai"). According to the contract, the Company has pledged its retail loans amounting to RMB1.5 billion as collateral to certain placements from Bank of Shanghai to the Company.
Potential disposal of parent company's shares by its controlling shareholder
On 30 July 2020, China ZhengTong Auto Services Holding Limited ("the parent company") announced that it was informed by Joy Capital Holdings Limited ("Joy Capital"), the controlling shareholder of the parent company, which holds 1,383,516,820 shares of the parent company (representing approximately 51.29% of the total issued shares of the parent company as at 30 July 2020), that on 29 July 2020, Joy Capital entered into a memorandum of understanding (the "MOU") with Xiamen ITG Holding Group Co., Ltd ("ITG Holding"), an independent third party, pursuant to which Joy Capital intends to sell, and ITG Holding intends to purchase, approximately 29.9% interests of the parent company, subject to formal agreement to be signed by Joy Capital and ITG Holding.
The MOU is not legally binding, save for the provisions regarding confidentiality, exclusivity, enforceability, governing law and arbitration. The MOU shall be effective from the date of the MOU and shall automatically terminate on 1 October 2020 if no legally binding agreement is entered into and the parties do not agree to further extend the term of the MOU.
Except for the above, the Company has no material events for disclosure subsequent to 30 June 2020 and up to the date of approval to the interim financial report.
28 COMPARATIVE FIGURES
For disclosure purposes of the interim financial report, the Company made reclassification adjustments to some comparative figures.
SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. | 61 |
INTERIM REPORT 2020
DEFINITIONS
In this report, unless the context otherwise requires, the following expressions shall have the following meanings:
"Audit Committee" | audit committee of the Board |
"Board" | the board of Directors of the Company |
"CBIRC" | the China Banking and Insurance Regulatory Commission (中國銀行保險監督管理委 |
員會) | |
"Company" | Shanghai Dongzheng Automotive Finance Co., Ltd*. (上海東正汽車金融股份有限公 |
司), a joint stock company incorporated in the PRC with limited liability and whose | |
H Shares are listed on the Stock Exchange (stock code: 2718) | |
"Corporate Governance Code" | the Corporate Governance Code and Corporate Governance Report as set out in |
Appendix 14 to the Listing Rules | |
"Director(s)" | the director(s) of the Company |
"Domestic Share(s)" | issued ordinary share(s) in the share capital of the Company with a nominal value of |
RMB1.00 each, which are subscribed for or credited as fully paid in Renminbi | |
"H Share(s)" | issued ordinary share(s) in the share capital of the Company with a nominal value of |
RMB1.00 each, which are subscribed for and traded in Hong Kong dollars and | |
listed on the Stock Exchange | |
"Hong Kong" | the Hong Kong Special Administrative Region of the PRC |
"Hong Kong dollars" or "HK$" | Hong Kong dollars, the lawful currency of Hong Kong |
"Listing Rules" | the Rules Governing the Listing of Securities on the Stock Exchange |
"Model Code" | the Model Code for Securities Transactions by Directors of Listed Issuers set out in |
Appendix 10 to the Listing Rules | |
"PRC" or "China" | the People's Republic of China, and for the purpose of this report only, excludes |
Hong Kong, Macau Special Administrative Region of the PRC and Taiwan | |
"PRC GAAP" | the accounting policies generally accepted in the PRC |
"Renminbi" or "RMB" | Renminbi, the lawful currency of the PRC |
"SFO" | the Securities and Futures Ordinance of Hong Kong (Chapter 571 of the Laws of |
Hong Kong) | |
"Share(s)" | ordinary shares in the share capital of the Company, including Domestic Shares, |
Unlisted Foreign Shares and H Shares | |
"Shareholder(s)" | the shareholder(s) of the Company |
"Stock Exchange" | The Stock Exchange of Hong Kong Limited |
62 SHANGHAI DONGZHENG AUTOMOTIVE FINANCE CO., LTD. INTERIM REPORT 2020
DEFINITIONS
"Supervisor(s)" | the supervisor(s) of the Company |
"Unlisted Foreign Share(s)" | issued ordinary share(s) in the share capital of the Company with a nominal value of |
RMB1.00 each, which are subscribed for and held by persons other than PRC | |
nationals or PRC-incorporated entities and are not listed on any stock exchange | |
"ZhengTong" | China ZhengTong Auto Services Holdings Limited (中國正通汽車服務控股有限公司), |
a controlling shareholder of the Company, a company incorporated on 9 July 2010 | |
as an exempted company with limited liability under the laws of the Cayman Islands | |
and the shares of which are listed on the main board of the Stock Exchange (stock | |
code: 1728) | |
"%" | per cent. |
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Shanghai Dongzheng Automotive Finance Co. Ltd. published this content on 17 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 September 2020 08:54:01 UTC