Zhongguancun Science Tech Leasing : ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2020

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

中 關 村 科 技 租 賃 股 份 有 限 公 司

ZHONGGUANCUN SCIENCE-TECH LEASING CO., LTD.

(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1601)

ANNOUNCEMENT OF INTERIM RESULTS FOR

THE SIX MONTHS ENDED JUNE 30, 2020

FINANCIAL HIGHLIGHTS

• For the six months ended June 30, 2020, the revenue amounted to approximately RMB284.4 million, representing an increase of approximately 13.7% as compared with that of approximately RMB250.1 million for the corresponding period of last year.
• For the six months ended June 30, 2020, the profit before taxation amounted to approximately RMB104.2 million, representing an increase of approximately 5.1% as compared with that of approximately RMB99.1 million for the corresponding period of last year.
• For the six months ended June 30, 2020, the profit for the period amounted to approximately RMB77.9 million, representing an increase of approximately 5.0% as compared with that of approximately RMB74.2 million for the corresponding period of last year.
• As of June 30, 2020, the total assets amounted to approximately RMB7,404.3 million, representing an increase of approximately 5.9% as compared with that of approximately RMB6,989.0 million as at the end of last year.
• As of June 30, 2020, the total shareholders' equity amounted to approximately RMB1,831.9 million, representing an increase of approximately 31.6% as compared with that of approximately RMB1,392.3 million as at the end of last year.
• For the six months ended June 30, 2020, the return on average equity was 9.7%.
• For the six months ended June 30, 2020, the return on average assets was 2.2%.

- 1 -

INTERIM RESULTS

The Board of Zhongguancun Science-Tech Leasing Co., Ltd. ( 中 關 村 科 技 租 賃 股 份 有 限 公 司) is pleased to announce that the unaudited consolidated interim results of the Company and its consolidated structured entities for the six months ended June 30, 2020 with the comparative figures for the corresponding period or the end of 2019 are as follows:

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended June 30, 2020 - unaudited
(Expressed in Renminbi ("RMB"))
		Six months ended June 30,
		2020		2019
	Note	RMB'000	RMB'000
Interest income		232,766		204,628
Advisory fee income		51,600		45,423
Revenue	3	284,366		250,051
Other net income	4	7,830		13,779
Interest expense	5	(115,441)	(105,606)
Operating expense	6	(50,257)	(43,607)
Impairment losses charged	7	(25,327)	(15,549)
Share of losses of associates		(935)	-
Net foreign exchange gains		3,960		-
Profit before taxation		104,196		99,068
Income tax expense	8	(26,265)	(24,855)
Profit for the period		77,931		74,213
Attributable to:
Equity shareholders of the Company		77,931		74,213
Profit for the period		77,931		74,213
Basic and diluted earnings per share (in RMB)	9	0.06		0.07

- 2 -

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended June 30, 2020 - unaudited
(Expressed in RMB)
	Six months ended June 30,
	2020	2019
Note	RMB'000		RMB'000
Profit for the period	77,931	74,213
Other comprehensive income for the period (after tax
and reclassification adjustments)
Items that will not be reclassified to profit or loss:
- Equity investments at fair value through other
comprehensive income
- net movement in fair value reserves
(non-recycling)	-	60
Total comprehensive income for the period	77,931	74,273
Attributable to:
Equity shareholders of the Company	77,931	74,273
Total comprehensive income for the period	77,931	74,273

- 3 -

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at June 30, 2020 - unaudited
(Expressed in RMB)
		June 30,		December 31,
		2020	2019
	Note	RMB'000		RMB'000
Non-current assets
Property and equipment	10	17,388	22,348
Intangible assets		5,819	6,394
Finance lease receivables	11	2,899,118	2,966,628
Financial assets at fair value through other comprehensive
income		11,026	11,026
Interest in associates		48,580	49,515
Other assets	12	142	16
Deferred tax assets	13(b)	48,483	43,621
		3,030,556	3,099,548
Current assets
Finance lease receivables	11	3,699,450	3,457,499
Other assets	12	84,647	138,268
Pledged and restricted deposits		66,679	41,564
Cash and cash equivalents	14	522,955	252,106
		4,373,731	3,889,437
Current liabilities
Borrowings	15	2,952,820	2,649,676
Income tax payable	13(a)	18,426	14,494
Trade and other liabilities	16	891,291	639,975
		3,862,537	3,304,145
Net current assets		511,194	585,292
Total assets less current liabilities		3,541,750	3,684,840

- 4 -

		June 30,		December 31,
		2020	2019
	Note	RMB'000		RMB'000
Non-current liabilities
Borrowings	15	941,971	1,508,706
Trade and other liabilities	16	767,871	783,878
		1,709,842	2,292,584
NET ASSETS		1,831,908	1,392,256
CAPITAL AND RESERVES	17
Share capital		1,333,334	1,000,000
Reserves		498,574	392,256
Total equity attributable to equity shareholders of the
Company		1,831,908	1,392,256
TOTAL EQUITY		1,831,908	1,392,256

- 5 -

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended June 30, 2020 - unaudited (Expressed in RMB)

								Attributable to equity shareholders of the Company
		Share/paid-in		Capital		Surplus	Fair value	General	Retained
			capital		reserve		reserve	reserve	reserve	profits	Total equity
	Note		RMB'000		RMB'000		RMB'000	RMB'000	RMB'000	RMB'000		RMB'000
Balance at January 1, 2019		1,000,000		-	45,396		4,780		43,707			193,878		1,287,761
Changes in equity for the six
months ended June 30, 2019:
Profit for the period			-		-		-	-	-	74,213		74,213
Other comprehensive income			-		-		-	60		-	-	60
Total comprehensive income			-		-		-	60		-	74,213		74,273
Dividends approved in respect of
the previous years	17(d)		-		-		-	-	-	(35,000)	(35,000)
Balance at June 30, 2019 and
July 1, 2019		1,000,000		-	45,396		4,840		43,707			233,091		1,327,034
Changes in equity for the six
months ended December 31,
2019
Profit for the period			-		-		-	-	-	64,043		64,043
Other comprehensive income			-		-		-	1,179		-	-	1,179
Total comprehensive income			-		-		-	1,179		-	64,043		65,222
Appropriation to statutory reserve	17(c)		-		-	13,814		-	-	(13,814)		-
Conversion into joint stock
company	17(b)		-	252,761			(45,396)	(4,780)	(43,707)	(158,878)		-
Balance at December 31, 2019
	1,000,000	252,761			13,814		1,239		-	124,442		1,392,256

- 6 -

							Attributable to equity shareholders of the Company
					Capital		Surplus		Fair value		General	Retained
		Share capital		reserve		reserve		reserve		reserve	profits	Total equity
	Note		RMB'000		RMB'000		RMB'000		RMB'000		RMB'000	RMB'000		RMB'000
Balance at January 1, 2020		1,000,000	252,761		13,814	1,239		-	124,442		1,392,256
Changes in equity for the six
months ended June 30,
2020:
Profit for the period			-		-		-		-		-	77,931		77,931
Total comprehensive income			-		-		-		-		-	77,931		77,931
Capital contribution by equity
shareholders	17(a)/(b)	333,334	78,387			-		-		-	-	411,721
Dividends approved in respect
of the previous year	17(d)		-		-		-		-		-	(50,000)	(50,000)
Balance at June 30, 2020		1,333,334	331,148		13,814	1,239		-	152,373		1,831,908

- 7 -

CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended June 30, 2020 - unaudited
(Expressed in RMB)
		Six months ended June 30,
		2020		2019
	Note	RMB'000	RMB'000
Operating activities
Cash generated from/(used in) operations		240,846		(83,910)
PRC income taxes paid	13 (a)	(27,195)	(25,062)
Net cash generated from/(used in) operating activities		213,651		(108,972)
Investing activities
Payment for purchase of equipment and intangible assets		(1,966)	(1,449)
Proceeds from disposal and redemption of investments		280		314,361
Payments on acquisition of investments		-	(314,269)
Net cash used in investing activities		(1,686)	(1,357)
Financing activities
Proceeds from borrowings		1,429,766		1,290,578
Proceeds from capital contribution by equity shareholders		451,099		-
Repayment of borrowings		(1,693,885)	(1,009,865)
Interest paid		(100,908)	(81,480)
Payments for listing expenses		(17,258)	(3,325)
Capital element of lease rentals paid		(6,152)	(4,666)
Interest element of lease rentals paid		(447)	(455)
Other borrowing costs paid		(3,418)	(3,435)
Net cash generated from financing activities		58,797		187,352
Net increase in cash and cash equivalents		270,762		77,023
Cash and cash equivalents at January 1		252,106		306,620
Effect of foreign exchanges rates changes		87		-
Cash and cash equivalents at June 30	14	522,955		383,643

- 8 -

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in RMB unless otherwise indicated)

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 International Accounting Standard ("IAS") 34, Interim financial reporting , issued by the International Accounting Standards Board (the "IASB"). It was authorised for issue on August 28, 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 IAS 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 consolidated 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 Group since the 2019 annual financial statements. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for full set of financial statements prepared in accordance with International Financial Reporting Standards ("IFRSs").
   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 Hong Kong Institute of Certified Public Accountants.
2. CHANGES IN ACCOUNTING POLICIES
   The Group has applied the following amendments to IFRSs issued by the IASB to these financial statements for the current accounting period:
3. • Amendments to IFRS 3, Definition of a Business
   • Amendment to IFRS 16, Covid-19-Related Rent Concessions

Other than the amendment to IFRS 16, the Group has not applied any new standard or interpretation that is not yet effective for the current accounting period. Impacts of the adoption of the amended IFRSs are disclosed below:

Amendments to IFRS 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.

As the Group did not enter into any acquisition during the interim reporting period, the amendments have no impact on the Group's interim financial report.

- 9 -

Amendment to IFRS 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-relatedrent concessions") are lease modifications and, instead, account for those rent concessions as if they were not lease modifications.

The Group has elected to early adopt the amendments and applies the practical expedient to all qualifying COVID-19-related rent concessions granted to the Group during the interim reporting period. Consequently, rent concessions received have been accounted for as negative variable lease payments recognised in profit or loss in the period in which the event or condition that triggers those payments occurred (see Note 10). There is no impact on the opening balance of equity at January 1, 2020.

3 REVENUE

The principal activities of the Group are providing finance lease services, and related advisory services to customers in the PRC. The Group has no lessee for the six months ended June 30, 2020 and 2019, with whom transactions have exceeded 10% of the Group's aggregate revenues.

No segment information is presented as the Group is principally engaged in a single line of business. Revenue represents interest income and advisory fee net of value added taxes and other charges.

The amount of each significant category of revenue is as follows:

		Six months ended June 30,
		2020	2019
	Note	RMB'000		RMB'000
Interest income from finance leases		232,766	204,628
Advisory fee income	(i)
- Policy advisory fee income		37,488	36,838
- Management advisory fee income		14,112	8,585
		284,366	250,051

Note:

1. Advisory fee income arises from contracts with customers within the scope of IFRS 15, and is recognised at a point in time.

4	OTHER NET INCOME
			Six months ended June 30,
			2020	2019
		Note	RMB'000		RMB'000
	Government grants	(i)	5,000	11,542
	Interest from deposits		2,480	1,727
	Others		350	510
			7,830	13,779

Note:

1. The government grants were provided to reward enterprises who complete initial public offering in well-known overseas capital markets for the six months ended June 30, 2020. The government grants were provided to support small and medium enterprises of leasing business for the six months ended June 30, 2019. These grants were unconditional and were therefore recognised as income when received.

- 10 -

5	INTEREST EXPENSE
			Six months ended June 30,
			2020	2019
			RMB'000		RMB'000
	Borrowings	69,088	49,658
	Borrowings from related parties	23,786	37,676
	Imputed interest expense on interest-free guaranteed deposits from lessees	22,120	17,817
	Interest expense on lease liabilities	447	455
			115,441	105,606
6	OPERATING EXPENSE
	Profit before taxation is arrived at after charging:
	(a)	Staff costs
			Six months ended June 30,
			2020	2019
			RMB'000		RMB'000
		Salaries, bonuses and allowances	27,100	25,021
		Social insurance and other benefits	4,912	6,251
		Subtotal	32,012	31,272

1. Other items

			Six months ended June 30,
			2020	2019
			RMB'000		RMB'000
	Depreciation charge
	- owned equipment		262	123
	- right-of-use assets		5,148	4,360
	Amortisation cost of
	- intangible assets		931	527
	- others		11	30
	Listing expense		3,199		-
	Other rental expenses		772	979
7	IMPAIRMENT LOSSES CHARGED
			Six months ended June 30,
			2020	2019
		Note	RMB'000		RMB'000
	Finance lease receivables	11(b)	25,131	16,541
	Credit commitments	16(a)	196	(992)
			25,327	15,549

- 11 -

8 INCOME TAX IN THE CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

		Six months ended June 30,
		2020		2019
	Note	RMB'000	RMB'000
Current tax
- PRC Enterprise Income Tax ("EIT") Provision for the period		31,127		24,136
Deferred income tax
- (Origination)/reversal of temporary differences	13(b)	(4,862)	719
		26,265		24,855

Notes:

1. The Company is subject to PRC EIT at the statutory rate of 25%. The consolidated structured entities are not subject to PRC EIT.
2. No provision for Hong Kong Profits Tax has been made for the Company and the consolidated structured entities as the Company and the consolidated structured entities have not derived any income subject to Hong Kong Profits Tax.

1. BASIC AND DILUTED EARNINGS PER SHARE
   The calculation of basic earnings per share is based on the profit attributable to equity shareholders of the Company of RMB77.9 million (six months ended June 30, 2019: RMB74.2 million) and the weighted average of 1,296.7 million shares (six months ended June 30, 2019: 1,000.0 million shares) in issue during the interim period.
   There is no difference between basic and diluted earnings per share as there were no potentially dilutive shares outstanding for the six months ended June 30, 2020 and 2019.
2. PROPERTY AND EQUIPMENT

		Other
		properties
	leased for own
	use carried at		Electronic	Office
		cost		equipment	equipment	Others	Total
		RMB'000		RMB'000	RMB'000	RMB'000	RMB'000
Cost
As at January 1, 2019	20,942	896	839	562		23,239
Additions	9,540	656	-	251		10,447
Disposals		-	(13)	(3)	(14)	(30)
As at December 31, 2019/
January 1, 2020	30,482	1,539	836	799		33,656
Additions		-	814	-	-	814
As at June 30, 2020	30,482	2,353	836	799		34,470

- 12 -

		Other
		properties
	leased for own
	use carried at	Electronic	Office
		cost	equipment	equipment	Others	Total
		RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Accumulated depreciation
As at January 1, 2019		-	(703)	(428)	(34)	(1,165)
Charge for the year	(9,563)	(148)	(109)	(351)	(10,171)
Written back on disposals		-	12	2	14			28
As at December 31, 2019/
January 1, 2020	(9,563)	(839)	(535)	(371)	(11,308)
Charge for the period	(5,373)	(209)	(46)	(146)	(5,774)
As at June 30, 2020	(14,936)	(1,048)	(581)	(517)	(17,082)
Net carrying amount
As at June 30, 2020	15,546				1,305	255	282			17,388
As at December 31, 2019	20,919				700	301	428			22,348

1. Right-of-useassets
   The Group has obtained the right to use other properties as its office through tenancy agreements. During the six months ended June 30, 2020, the Group received rent concessions in the form of a discount on fixed payments during the period of severe social distancing and travel restriction measures introduced to contain the spread of COVID-19. The amount of fixed lease payments for the interim reporting period is summarised below:

				June 30, 2020
				Variable	COVID-19 rent
	Fixed payments		payments		concessions	Total payments
		RMB'000		RMB'000		RMB'000		RMB'000
Rented office	6,245		-	(364)	5,881
				June 30, 2019
				Variable		COVID-19 rent
		Fixed payments		payments		concessions		Total payments
		RMB'000		RMB'000		RMB'000		RMB'000
Rented office	4,906		-		-	4,906

As disclosed in Note 2, the Group has early adopted the Amendment to IFRS 16, Leases, Covid-19-RelatedRent Concessions , and has applied the practical expedient introduced by the Amendment to all eligible rent concessions received by the Group during the period.

- 13 -

11	FINANCE LEASE RECEIVABLES
		June 30, 2020	December 31, 2019
		RMB'000	RMB'000
	Minimum finance lease receivables
	Not later than one year	4,201,058		3,918,424
	Later than one year and not later than five years	3,108,740		3,204,484
	Gross amount of finance lease receivables	7,309,798		7,122,908
	Less: Unearned finance income	(548,469)	(561,151)
	Net amount of finance lease receivables	6,761,329		6,561,757
	Less: Allowances for impairment losses	(162,761)	(137,630)
	Carrying amount of finance lease receivables	6,598,568		6,424,127
	Present value of minimum finance lease receivables
	Not later than one year	3,842,410		3,556,390
	Later than one year and not later than five years	2,918,919		3,005,367
	Total	6,761,329		6,561,757
	Analysis for reporting purpose as:
		June 30, 2020	December 31, 2019
		RMB'000	RMB'000
	Non-current assets	2,899,118		2,966,628
	Current assets	3,699,450		3,457,499
	Total	6,598,568		6,424,127

- 14 -

1. Finance lease receivables and allowances for impairment losses:

				Six months ended June 30, 2020
			Lifetime ECL not			Lifetime ECL
	12-month ECL	credit-impaired	credit-impaired	Total
Net amount of finance lease
receivables	6,168,117		158,914	434,298		6,761,329
Less: Allowances for
impairment losses	(30,079)	(5,208)	(127,474)	(162,761)
Carrying amount of finance lease
receivables	6,138,038		153,706	306,824		6,598,568
				December 31, 2019
			Lifetime ECL not			Lifetime ECL
	12-month ECL		credit-impaired			credit-impaired	Total
Net amount of finance lease
receivables	6,074,976		74,616	412,165		6,561,757
Less: Allowances for
impairment losses	(25,391)	(2,422)	(109,817)	(137,630)
Carrying amount of finance lease
receivables	6,049,585		72,194	302,348		6,424,127

1. Changes in allowance for impairment losses of finance lease receivables are as follows:

				Six months ended June 30, 2020
			Lifetime ECL not			Lifetime ECL
	12-month ECL	credit-impaired	credit-impaired	Total
Balance at January 1, 2020	25,391		2,422	109,817		137,630
Transfer:
- to 12-month ECL	45			-	(45)	-
- to lifetime ECL not
credit-impaired	(304)	1,246	(942)	-
- to lifetime ECL credit-impaired	(416)	(622)	1,038		-
Charge	5,363		2,162	17,606		25,131
Balance at June 30, 2020	30,079		5,208	127,474		162,761
				December 31, 2019
			Lifetime ECL not			Lifetime ECL
	12-month ECL		credit-impaired			credit-impaired	Total
Balance at January 1, 2019	18,185		3,336	87,329		108,850
Transfer:
- to 12-month ECL	36			-	(36)	-
- to lifetime ECL not
credit-impaired	(359)	359			-	-
- to lifetime ECL credit-impaired	(757)	(3,211)	3,968		-
Charge	8,286		1,938	18,556		28,780
Balance at December 31, 2019	25,391		2,422	109,817		137,630

- 15 -

12	OTHER ASSETS
			June 30, 2020
		Note	RMB'000
	Non-current assets
	Other assets		142
	Current assets
	Deductible value-added tax (VAT)		70,043
	Advance payments		7,970
	Due from related parties	20(c)	2,675
	Notes receivable		1,776
	Prepaid listing expenses		-
	Other receivables		2,183
			84,647
	Total		84,789

13 INCOME TAX IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

1. Income tax payable

	June 30, 2020
	RMB'000
At the beginning of the period/year	14,494
Provision for income tax for the period/year	31,127
Income tax paid	(27,195)
At the end of the period/year	18,426

December 31, 2019

RMB'000

16

107,614

4,079

2,955

4,148

17,835

1,637

138,268

138,284

December 31, 2019

RMB'000

12,397

54,469

(52,372)

14,494

1. The components of deferred tax assets/(liabilities) recognised in the consolidated statement of financial position and the movements during the period are as follows:

	Revaluation of
	financial assets
			at fair value
	through other
	comprehensive	Revenue with	Allowance for
			income	EIT paid in	impairment			Accrued staff
Deferred tax arising from:			("FVOCI")	prior years	losses			costs	Total
			RMB'000	RMB'000	RMB'000			RMB'000	RMB'000
January 1, 2019	(1,593)	10,234		27,554			-	36,195
(Credited)/charged to profit or loss			-	(4,081)	6,942	4,978	7,839
Credited to other comprehensive income	(413)	-	-			-	(413)
December 31, 2019/
January 1, 2020	(2,006)	6,153		34,496	4,978	43,621
(Credited)/charged to profit or loss			-	(1,086)	6,332	(384)	4,862
June 30, 2020	(2,006)	5,067		40,828	4,594	48,483

- 16 -

14	CASH AND CASH EQUIVALENTS
		June 30, 2020		December 31, 2019
		RMB'000		RMB'000
	Cash on hand	8	5
	Deposits with banks	522,947	252,101
	Cash and cash equivalents	522,955	252,106
15	BORROWINGS
		June 30, 2020		December 31, 2019
		RMB'000		RMB'000
	Bank loans
	- pledged	1,114,104	1,272,332
	- unsecured	594,800	611,800
	Borrowings from related parties
	- pledged	1,200,000	1,200,000
	Asset-backed securities	985,887	1,074,250
		3,894,791	4,158,382
	Analysis for reporting purpose as:
		June 30, 2020		December 31, 2019
		RMB'000		RMB'000
	Non-current liabilities	941,971	1,508,706
	Current liabilities	2,952,820	2,649,676
		3,894,791	4,158,382
	As at June 30, 2020, the borrowings were repayable as follows:
		June 30, 2020		December 31, 2019
		RMB'000		RMB'000
	Within one year	2,952,820	2,649,676
	After 1 year but within 2 years	770,378	1,340,122
	After 2 years but within 5 years	171,593	168,584
		3,894,791	4,158,382
	The ranges of contractual interest rates on the borrowings are as follows:
		June 30, 2020		December 31, 2019
	Range of interest rates:	3.79% - 5.70%		4.15% - 5.70%

- 17 -

16	TRADE AND OTHER LIABILITIES
			June 30, 2020		December 31, 2019
		Note	RMB'000		RMB'000
	Current liabilities
	Guaranteed deposits from lessees		348,778	315,782
	Notes payable		290,850	93,760
	VAT to be collected in the following period		81,885	92,325
	Accounts payable		66,466	82,786
	Dividends payable		50,000		-
	Accrued staff costs		21,020	21,820
	Interest payable		16,760	18,790
	Lease liabilities		6,533	8,856
	Receipts in advance		5,982	1,653
	VAT payable and other tax payable		957	844
	Other payables		2,060	3,359
			891,291	639,975
	Non-current liabilities
	Guaranteed deposits from lessees		646,847	646,548
	Deferred revenue		79,494	72,784
	VAT to be collected in the following period		35,982	55,533
	Lease liabilities		4,997	8,658
	Provision for credit commitments	16(a)	551	355
			767,871	783,878
	Total		1,659,162	1,423,853

1. Provision for credit commitments

				June 30, 2020
			Lifetime ECL not			Lifetime ECL
	12-month ECL	credit-impaired	credit-impaired		Total
	RMB'000		RMB'000			RMB'000		RMB'000
Balance at January 1, 2020	355			-			-	355
Charge	196			-			-	196
Balance at June 30, 2020	551			-			-	551
				December 31, 2019
			Lifetime ECL not			Lifetime ECL
	12-month ECL		credit-impaired			credit-impaired		Total
	RMB'000		RMB'000			RMB'000		RMB'000
Balance at January 1, 2019	1,367			-			-	1,367
Reversal	(1,012)		-			-	(1,012)
Balance at December 31, 2019	355			-			-	355

- 18 -

17 CAPTIAL, RESERVES AND DIVIDENDS

1. Share capital
   The Company was established in Beijing, the PRC on November 27, 2012, with a registered capital of RMB500.0 million. All equity shareholders made the full capital contributions for which they subscribed in three instalments before May 1, 2013.
   On June 9, 2017, the Company's equity shareholders convened the third extraordinary general meeting for 2017 and decided on a capital increase of RMB500.0 million in proportion to the equity shareholders' initial paid-in capital contribution. The registered capital of the Company was therefore increased to RMB1.0 billion.
   On August 16, 2019, the Company was converted into a joint stock company and was renamed to Zhongguancun Science-Tech Leasing Co., Ltd.
   On January 21, 2020, the Company global offered 333,334,000 H Shares (nominal value RMB1.00 per H Share) on the Hong Kong Stock Exchange at a price of HK$1.52 per H Share. Following the completion of the global offering, the Company's registered share capital includes 1,000,000,000 Domestic Shares and 333,334,000 H Shares.
2. Capital reserve
   On August 16, 2019, the Company was converted into a joint stock company and was renamed to Zhongguancun Science-Tech Leasing Co., Ltd. The audited net assets of the Company were RMB1,287.8 million as at December 31, 2018, of which RMB1,000.0 million was converted into 1,000.0 million shares of the joint stock company with a par value of RMB1.0 per share, RMB35.0 million was recorded as the retained profits of the Company which was used for the dividends distribution in respect of 2018, and RMB252.8 million was transferred to the capital reserve of the Company.
   On January 21, 2020, the Company initial public offered 333,334,000 H Shares (nominal value RMB1.00 per H Share) on the Hong Kong Stock Exchange at a price of HK$1.52 per H Share. The net proceeds after deducting the listing expenses were approximately RMB411.7 million, out of which RMB333.3 million and RMB78.4 million were recorded in share capital and capital reserve respectively.
3. Reserves
4. 1. Surplus reserve
      The Company is required to appropriate 10% of its net profit, as determined under the China Accounting Standards for Business Enterprises and other relevant regulations issued by the Ministry of Finance of the PRC ("MOF"), to the statutory surplus reserve until the balance reaches 50% of the registered capital.
      Subject to the approval of equity shareholders of the Company, statutory surplus reserve may be used to net off against 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 before capitalisation.
      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 equity shareholders.
   2. Fair value reserve (non-recycling)
      The fair value reserve (non-recycling) comprises the cumulative net change in the fair value of equity investments designated at FVOCI under IFRS 9 that are held at the end of the reporting period.

- 19 -

1. 1. General reserve
      According to the resolution of the meeting of the Board, the Company elected to appropriate 20% of its net profit, as determined under the China Accounting Standards for Business Enterprises and other relevant regulations issued by the MOF, to a general risk reserve starting in the year 2017 until the reserve accumulatively reaches an amount equal to 1.5% of the ending balance of the Company's leased assets.
      On August 16, 2019, the Company was converted into a joint stock company and amended the Articles of Association. According to the amended Articles of Association, there is no requirement for the Company to appropriate its net profit to general reserve in future.
2. Dividends
   Final dividend in respect of the previous financial year, approved and paid during the interim period was nil (six months ended June 30, 2019: RMB35.0 million), approved but not paid during the interim period was RMB50.0 million (six months ended June 30, 2019: nil).

18 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS

Fair value estimates are generally subjective in nature, and are made as of a specific point in time based on the characteristics of the financial instruments and relevant market information. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

			June 30, 2020
	Level 1		Level 2	Level 3		Total
Financial assets at FVOCI	-		-	11,026	11,026
			December 31, 2019
	Level 1		Level 2	Level 3		Total
Financial assets at FVOCI	-		-	11,026	11,026

For the six months ended June 30, 2020 and 2019, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3. The Group's policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.

- 20 -

Information about Level 3 fair value measurements

The following table presents the related valuation techniques and inputs of the major financial instruments in Level 3.

		Valuation	Significant
Financial assets/	Fair value	Technique(s) and	Unobservable	Relationship of unobservable
liabilities	hierarchy	Key input(s)	Input(s)	input(s) to fair value
Unlisted equity	Level 3	Market comparable	Discount for lack of	The higher the discount, the lower
securities		companies	marketability	the fair value

The fair value of unlisted equity instruments is determined using the price/earning ratios of comparable listed companies adjusted for lack of marketability discount. The fair value measurement is negatively correlated to the discount for lack of market ability.

The movements during the period/year in the balance of these Level 3 fair value measurements are as follows:

	June 30, 2020		December 31, 2019
	RMB'000		RMB'000
Unlisted equity securities:
At the beginning of the period/year	11,026	9,374
Net unrealised gains or losses recognised in other comprehensive income
during the period/year	-	1,652
At the end of the period/year	11,026	11,026

19 COMMITMENTS

1. Credit commitments
   The Group's non-cancellable credit commitments are primarily finance leases that have been contracted, but not provided for. As at June 30, 2020, the Group's non-cancellable lease commitments amounted to RMB93.2 million (December 31, 2019: RMB60.8 million).
2. Capital commitments
   As at June 30, 2020, the unpaid capital investment against Beijing Zhongnuo Tongchuang Investment Fund Management Co., Ltd. ( 北京中諾同創投資基金管理有限公司) and Jiangsu Zhongguancun Zhongnuo Xietong Investment Fund (Limited Partnership) ( 江蘇中關村中諾協同投資基金合夥企業 ( 有限合夥)) was RMB3.1 million and RMB49.0 million (December 31, 2019: RMB3.1 million and RMB49.0 million), respectively.

- 21 -

20 MATERIAL RELATED PARTY TRANSACTIONS

1. Transactions with key management personnel

		Six months ended June 30,
		2020	2019
		RMB'000	RMB'000
	Key management personnel remuneration	6,369	5,062
(b)	Transaction amounts with related parties:
		Six months ended June 30,
		2020	2019
		RMB'000	RMB'000
	Trade related
	Interest income from leases to a related party	233	416
	Repayment of finance lease receivable from a related party	2,172	2,252
	Non-trade related
	Borrowing related
	Repayment of borrowings from related parties	300,000	18,000
	Borrowings from a related party	300,000	300,000
	Interest expenses arising from borrowings from related parties	23,786	37,676
	Lending related
	Lending to a related party	-	314,269
	Repayment from a related party	280	314,361
	Interest income from a related party	-	102
	Guarantee related
	Release of guarantees from a related party	4,948	-
	Others
	Payment for the lease of house rental, property management and
	parking fee to related parties	6,273	5,199
	Repayment other receivables from related parties	-	157
	Payment of other receivables of related parties	-	83
	Payment of other payables of a related party	-	18

- 22 -

(c)	The balances of transactions with related parties:
		June 30, 2020	December 31, 2019
		RMB'000	RMB'000
	Trade related
	Finance lease receivable from a related party	6,437	8,364
	Security deposits payable to a related party	1,585	1,585
	Non-trade related
	Borrowing related
	Borrowings payable to a related party	1,200,000	1,200,000
	Interest payable to a related party	15,770	14,984
	Lending related
	Due from a related party	-	280
	Guarantee related
	Outstanding balance of guarantees from a related party	241,374	246,322
	Others
	Lease prepayment to a related party	2,769	3,123
	Deposits for rental	2,674	2,674
	Other receivables from a related party	1	1

1. CONSOLIDATED STRUCTURED ENTITIES
   In the course of its ordinary activities, the Group enters into asset securitisation transactions and transfers the finance receivables to special purpose entities, which are structured entities created to provide opportunities for investors to invest in the finance lease receivables. Where a structured entity conducts activities according to contractual arrangements, the voting rights in it are not one of the main factors to consider in assessing whether the Group controls the structured entity. The Group obtains control over a structured entity when it involves itself in the entity's operations and is exposed to variable returns from such involvement, and when it has the ability to affect those returns through its power over the structured entity. In this case, the Group includes the structured entities in its consolidation scope.
   As at June 30, 2020, the number of consolidated structured entities of the Group was two (December 31, 2019: two). As at June 30, 2020, the total assets of the consolidated structured entities amounted to RMB1,075.1 million (December 31, 2019: RMB1,198.6 million).
2. IMPACTS OF COVID-19 PANDEMIC
   The COVID-19 pandemic since early 2020 has brought about additional uncertainties in the Group's operating environment and has impacted the Group's operations and financial position.
   The Group has been closely monitoring the impact of the developments on the Group's business and has put in place contingency measures. These contingency measures include: assessing the quality of finance lease receivables and extension of leasing contracts with particular leases. The Group will keep the contingency measures under review as the situation evolves.

- 23 -

MANAGEMENT DISCUSSION AND ANALYSIS
	For the six months ended		For the year ended
	June 30,			December 31,
	2020	2019	2019	2018	2017
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Operating Performance
Revenue	284,366	250,051	515,340	412,783	358,581
Interest income	232,766	204,628	420,698	340,571	283,771
Advisory fee income	51,600	45,423	94,642	72,212	74,810
Other net income	7,830	13,779	18,759	16,331	9,606
Interest expense	(115,441)	(105,606)	(220,978)	(168,012)	(155,134)
Operating expense	(50,257)	(43,607)	(100,190)	(74,854)	(56,820)
Impairment losses charged	(25,327)	(15,549)	(27,768)	(27,364)	(25,969)
Share of losses of associates	(935)	-	(265)	-	-
Net foreign exchange gains/
(losses)	3,960	-	(12)	-	-
Profit before taxation	104,196	99,068	184,886	158,884	130,264
Profit for the period/year	77,931	74,213	138,256	118,996	97,435
Basic and diluted earnings
per share (in RMB)	0.06	0.07	0.14	0.12	0.13
Profitability
Return on average equity(1)	9.7%	11.4%	10.3%	9.6%	10.6%
Return on average assets(2)	2.2%	2.4%	2.1%	2.2%	2.0%
Net interest margin(3)	3.6%	3.5%	3.4%	3.6%	3.1%
Net interest spread(4)	2.5%	2.3%	2.2%	2.4%	2.2%
Net profit margin(5)	27.4%	29.7%	26.8%	28.8%	27.2%

Notes:

1. Calculated by dividing profit for the period/year by the average balance of total equity at the beginning and the end of the period/year, presented on an annualized basis.
2. Calculated by dividing profit for the period/year by the average balance of total assets at the beginning and the end of the period/year, presented on an annualized basis.
3. Calculated by dividing net interest income for the period/year by the average balance of interest-earning assets, presented on an annualized basis.
4. Calculated as the difference between interest income yield and interest expense yield, presented on an annualized basis.
5. Calculated by dividing profit for the period/year by the total revenue for the period/year.

- 24 -

	As of June 30,		As of December 31,
	2020	2019	2019	2018	2017
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Assets and liabilities
Total assets	7,404,287	6,248,657	6,988,985	5,968,956	4,999,834
Finance lease receivables	6,598,568	5,659,404	6,424,127	5,376,794	4,421,144
Total liabilities	5,572,379	4,921,623	5,596,729	4,681,195	3,797,118
Borrowings	3,894,791	3,600,378	4,158,382	3,319,747	2,612,265
Total equity	1,831,908	1,327,034	1,392,256	1,287,761	1,202,716
Net assets per share (in RMB)	1.37	1.33	1.39	1.29	1.20
Liquidity
Liability to asset ratio(1)	75.3%	78.8%	80.1%	78.4%	75.9%
Risk asset to equity ratio(2)	372.0%	441.7%	480.9%	437.6%	387.6%
Liquidity ratio(3)	113.2%	112.4%	117.7%	112.2%	145.5%
Asset quality ratios
NPA ratio(4)	1.5%	1.4%	1.3%	1.3%	1.5%
Allowance coverage ratio for NPAs(5)	157.6%	155.4%	158.0%	151.2%	118.0%

Notes:

1. Calculated by dividing total liabilities by total assets.
2. Calculated by dividing risk assets by total equity. Risk assets are the total assets net of cash and cash equivalents and pledged and restricted deposits.
3. Calculated by dividing current assets by current liabilities as of the end of the period/year.
4. Represent the percentage of non-performing assets ("NPA") in the total interest-earning assets before deducting allowances for impairment losses.
5. Calculated by dividing allowances for impairment losses of interest-earning assets by the balance of non-performinginterest-earning assets.

- 25 -

1. BUSINESS REVIEW

1. Economic Conditions
   Since the first half of 2020, global political and economic environments have been in great uncertainty. In particular, the Coronavirus Disease 2019 (the "COVID-19") is spreading all over the world, and the intensified trade frictions among powerful countries led to significant decline in global trade. With the global financial market becoming more vulnerable, the performance of major economies was sluggish. After entering the development stage of new normal, China's economy is shifting to a new dual-cycle pattern dominated by the "domestic economic cycle" at a faster pace.
   In response to the downward economic pressure, China implemented active fiscal policies and loose monetary policies to facilitate the development in "new infrastructure", "new consumption" and other relevant industries, which delivered remarkable results in supporting the national economic development. China recorded a year-on-year increase of 3.2% in gross domestic product in the second quarter of 2020, becoming the first major economy to grow since the outbreak of the COVID-19.
   With the relatively loose monetary policies in the first half of 2020, finance industry increased its efforts in supporting the real economy, which led to significant increase in the aggregate financing for the economy as compared to the corresponding period of last year. Under the political environment of strict regulation, the scale of total assets in finance lease industry continued to increase but showed a slowdown in overall growth rate. In addition, the
   promulgation of Interim Measures for Supervision and Administration of Finance Leasing Companies 《( 融 資 租 賃 公 司 監 督 管 理 暫 行 辦 法》), Guidelines for Supervision and Administration of Finance Leasing Companies in Beijing (Trial) 《( 北京市融資租賃公司 監督管理指引 ( 試行)》) and other relevant policies may help regulate the market order, thereby facilitating the industry development.
2. Company's Response
   In the first half of 2020, based on the general direction set at the beginning of the year, the Group calmly tackled the challenges from the COVID-19 outbreak, continued to serve the five major industries of big data, eco-solutions, life sciences & healthcare, intelligent manufacturing, and internet-based products & services, and further promoted professional development, which led to continuous enhancement of comprehensive strengths and steady increase in operating results. Our main response measures are as follows:

- 26 -

Finance leasing business bucked the weaker trend. We continued to focus on serving technology and new economy companies, and we still maintained the steady increase in business scale and increased the efforts in developing customers in intelligent manufacturing and digital economy sectors in the economic downturn environment. In the first half of 2020, we achieved new lease principle amount of RMB2,150.0 million, representing a growth of 18.1% as compared to that of the corresponding period in 2019, and our revenue amounted to approximately RMB284.4 million, representing a growth of 13.7% as compared to that of the corresponding period in 2019, and our profit before taxation amounted to approximately RMB104.2 million, representing an increase of 5.2% as compared to that of the corresponding period of last year, which maintained a favourable development trend.

The investment business got off to a good start. We set up an equity investment fund, built a "financial lease + investment" platform to help customers develop in an all-round way. In the first half of 2020, our investment fund officially commenced operation, and launched five projects with an investment amount of nearly RMB48.4 million, which greatly improved the comprehensive service ability for customers.

The cost of financing decreased significantly. We optimized the financing structure and established long-term and stable partnership in both direct financing and indirect financing markets by expanding the financing channels, issuing asset-backed securities and carrying out strategic cooperation with banks, to implement various measures to reduce the financing cost, thereby driving the decrease in cost of existing capital. In the first half of 2020, our interest expense yield is 4.6%, representing a decrease of 6.1% as compared to that of the corresponding period of last year.

Asset quality remained stable. We carried out research and development of a two-dimensional asset management model that covers "the asset credit rating and subject growth potential" to improve our performance in asset management. We established a multi-factor rating system to assess the customers in terms of "assets, subject and debts" to control the risks at source. We also adhered to "refined management", continuously improved the asset monitoring system, gathered information on risk profile of assets and implemented effective classified management.

2. ANALYSIS OF PROFIT OR LOSS

2.1 Overview

During the Reporting Period, the Group realized a total revenue of RMB284.4 million, representing an increase of 13.7% as compared to the total revenue of RMB250.1 million for the corresponding period of last year, and the net profit for the period amounted to RMB77.9 million, representing an increase of 5.0% as compared to the net profit of RMB74.2 million for the corresponding period of last year.

- 27 -

2.2 Revenue

During the Reporting Period, the Group realized a total revenue of RMB284.4 million, representing an increase of 13.7% as compared to the total revenue of RMB250.1 million for the corresponding period of last year, and the interest income and advisory fee income recorded stable growth. During the Reporting Period, interest income amounted to RMB232.8 million, accounting for 81.9% of the total revenue and representing an increase of 13.8% as compared to that of the corresponding period of last year. Advisory fee income amounted to RMB51.6 million, representing an increase of 13.6% as compared to that of the corresponding period of last year, which was because the Group actively delivered a variety of advisory value-added services to the customers.

The following table sets forth the Group's revenue from interest income and advisory fee income for the periods indicated:

			For the six months ended June 30,
	2020	2019			Changes
	RMB'000	% of total		RMB'000	% of total
Interest income	232,766	81.9%	204,628		81.8%	13.8%
Advisory fee income	51,600	18.1%	45,423		18.2%	13.6%
Total revenue	284,366	100.0%	250,051			100.0%	13.7%

2.2.1 Interest Income

The interest income of the Group increased by 13.8% from RMB204.6 million for the corresponding period of last year to RMB232.8 million for the Reporting Period, accounting for 81.9% of the total revenue of the Group, primarily due to the expansion of our business.

The following tables sets forth the amount of average balance of finance lease receivables, interest income and average comprehensive yield of interest-earning assets for the periods indicated:

					For the six months ended June 30,
			2020					2019
			Interest	Comprehensive			Interest	Comprehensive
	Amount(1)	income	yield(2)	Amount(1)	income	yield(2)
	RMB'000	RMB'000	%	RMB'000	RMB'000	%
Total	6,661,543		232,766	7.0%	5,635,220		204,628	7.3%

- 28 -

Notes:

1. Calculated by dividing the sum of finance lease receivables before allowances for impairment losses at the beginning of the period and at the end of the period by two.
2. In calculating comprehensive yields for the six months ended June 30, 2019 and 2020, we annualized our interest income by multiplying the interest income in the six months ended June 30, 2019 and 2020, respectively, by two and then divided the annualized interest income by average balance of interest-earning assets.

Analysis by Average Balance of Interest-earning Assets

The average balance of interest-earning assets of the Group increased by 18.2% from RMB5,635.2 million for the corresponding period of last year to RMB6,661.5 million for the Reporting Period, primarily due to the expansion of our business.

Analysis by Comprehensive Yield

During the Reporting Period, the comprehensive yield of the Group was 7.0%, representing a decrease of 0.3% from 7.3% in the corresponding period of last year, mainly because during the Reporting Period, affected by the COVID-19 outbreak, the state implemented a series of policy to reduce the tax and fee, the rent and interest to help enterprises, and the domestic market interest rate showed a downward trend, which led to the slight decrease in comprehensive yield.

2.2.2 Advisory Fee Income

During the Reporting Period, the advisory fee income of the Group increased by 13.6% from RMB45.4 million for the corresponding period of last year to RMB51.6 million for the Reporting Period, accounting for 18.1% of the total revenue of the Group. The increase was mainly due to the increase of the Group's customers.

The Group delivered a variety of advisory services to its customers, including management and business consulting and policy advisory.

The following table sets forth the Group's contribution by service category to advisory fee income for the periods indicated:

			For the six months ended June 30,
	2020	2019		Changes
	RMB'000	% of total	RMB'000	% of total
Policy advisory fee
income	37,488	72.7%	36,838	81.1%	1.8%
Management advisory
fee income	14,112	27.3%	8,585	18.9%	64.4%
Total advisory fee
income	51,600	100.0%	45,423	100.0%	13.6%

- 29 -

2.3 Interest Expense

During the Reporting Period, the interest expense of the Group amounted to RMB115.4 million, representing an increase of 9.3% as compared to RMB105.6 million for the corresponding period of last year, which was mainly because with the rapid growth in finance lease business, the Group increased the investment in financing to support its business development. In response to the constantly changing economic and capital market environment, the Group adhered to its flexible and diverse funding strategy, continued to deepen the cooperation with financial institutions, strengthened the communication with credit rating agencies and investors, and strived to effectively control the finance costs in a reasonable manner. It also optimized the financing structure by increasing the proportion of direct financing and continuously exploring new financing channels.

The following table sets forth the breakdown of the Group's interest expense by funding sources for the periods indicated:

			For the six months ended June 30,
	2020	2019		Changes
	RMB'000	% of total	RMB'000	% of total
Commercial banks	43,779	37.9%	39,507	37.4%	10.8%
Borrowings from related
parties⑴	23,786	20.6%	37,679	35.7%	(36.9%)
Asset-backed securities	25,309	21.9%	10,151	9.6%	149.3%
Imputed on interest-free
guaranteed deposits	22,120	19.2%	17,817	16.9%	24.2%
Lease liabilities	447	0.4%	455	0.4%	(1.7%)
Total interest expense	115,441	100.0%	105,606	100.0%	9.3%

Note:

1. Refer to pledged loans from ZGC Group and its subsidiaries.

- 30 -

The following table sets forth the Group's average balance, interest expense and interest expense yield of interest-bearing liabilities for the periods indicated:

					For the six months ended June 30,
				2020						2019
		Average		Interest	Average		Average		Interest	Average
Borrowings(1)		balance(2)		expense	cost(3)		balance(2)		expense	cost(3)
	RMB'000	RMB'000		RMB'000	RMB'000
Commercial banks	1,878,158		43,779	4.7%	1,633,085		39,507	4.8%
Borrowings from related
parties	1,114,286		23,786	4.3%	1,481,714		37,676	5.1%
Asset-backed securities	1,021,272		25,309	5.0%	377,542		10,151	5.4%
Borrowings	4,013,716		92,874	4.6%	3,495,341		87,334	5.0%

Notes:

1. Not including imputed interest expense on interest-free guaranteed deposits from lessees and interest expense on lease liabilities.
2. Calculated based on the average of the monthly balance of interest-bearing liabilities for the period indicated.
3. In calculating average cost for the six months ended June 30, 2019 and 2020, we annualized our interest expense by multiplying the interest expense in the six month ended June 30, 2019 and 2020, respectively, by two, and then divided the annualized interest expense by average balance of borrowings.

During the Reporting Period, the Group held an interest expense cost on borrowings of 4.6%, representing a decrease as compared to the corresponding period of last year, which was mainly due to repayment of high cost loans in hand, interest rate reduction and replacement, as well as the decreased cost of new financing.

2.4 Net Interest Spread and Net Interest Margin

The following table sets forth the Group's net interest margin and relevant figures for the periods indicated:

	For the six months ended June 30,
	2020	2019	Changes
	RMB'000	RMB'000
Interest income	232,766	204,628	13.8%
Interest expenses	(115,441)	(105,606)	9.3%
Net interest income	117,325	99,022	18.5%
Interest income yield(1)	7.1%	7.2%	(1.4%)
Interest expense yield(2)	4.6%	4.9%	(6.1%)
Net interest spread	2.5%	2.3%	8.7%
Net interest margin	3.6%	3.5%	2.9%

- 31 -

Notes:

1. Calculated by dividing annualized interest income by the monthly average balance of interest-earning assets.
2. Calculated by dividing annualized interest expenses by the monthly average balance of interest-bearing liabilities.

During the Reporting Period, the net interest spread of the Group was 2.5%, representing an increase of 0.2% as compared to the corresponding period of last year, which was mainly because the decrease in interest expense yield exceeded the decrease in interest income yield. For details of changes in interest expense yield, please refer to the discussion and analysis in item "2.3 Interest Expense" of this section. While the monthly average balance of interest-bearing liabilities of the Group for the Reporting Period increased by 16.4% as compared to the corresponding period of last year, the monthly average balance of interest-earning assets further increased by 18.2%, which primarily drove the growth rate of interest income higher than that of interest expenses. The net interest income of the Group increased by 18.5% to RMB117.3 million during the Reporting Period from RMB99.0 million in the corresponding period of last year. For the reasons mentioned above, the net interest margin of the Group increased by 0.1 percentage point to 3.6% from 3.5% in the corresponding period of last year.

2.5 Other Net Income

Other net income primarily included the government grant we received from the relevant authorities and interests from the bank deposits. During the Reporting Period, we received other net income of RMB7.8 million, a decrease of 43.2% over the corresponding period of last year, mainly due to the decrease of government subsidies.

The following table sets forth the breakdown of the Group's other net income for the periods indicated:

	For the six months ended June 30,
	2020	2019	Changes
		RMB'000		RMB'000
Government grants	5,000	11,542	(56.7%)
Interests from deposits	2,480	1,727	43.6%
Others	350	510	(31.4%)
Total other net income	7,830	13,779	(43.2%)

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2.6 Operating Expense

During the Reporting Period, operating expense of the Group amounted to RMB50.3 million, representing an increase of RMB6.7 million or 15.2% as compared to the corresponding period of last year, which was primarily due to: (i) increase in depreciation and amortization which led to increase in relevant cost of RMB1.3 million; and (ii) increase in non-recurring listing expenses of RMB3.2 million.

The following table sets forth the breakdown of the Group's operating expenses for the periods indicated:

				For the six months ended June 30,
	2020			2019		Changes
	RMB'000	% of total	RMB'000	% of total
Staff cost	32,012			63.7%	31,272		71.7%	2.4%
Rental expense	772			1.5%	979		2.2%	(21.1%)
Service expense	2,961			5.9%	2,892		6.6%	2.4%
Depreciation and
amortization	6,352			12.6%	5,040		11.6%	26.0%
Professional
service expense	2,692			5.4%	458		1.1%	487.8%
Listing expense	3,199			6.4%	-	0.0%	N/A
Others	2,269			4.5%	2,966		6.8%	(23.5%)
Total operating
expense	50,257			100.0%	43,607		100.0%	15.2%

2.7 Impairment Losses Charged

Impairment losses charged primarily related to finance lease receivables and credit commitments of the Group. During the Reporting Period, the expected credit impairment losses of the Group amounted to RMB25.3 million, representing an increase of 62.9% as compared to the expected credit impairment losses of RMB15.5 million for the corresponding period of last year, which was mainly because affected by the macroeconomic conditions, the Group took a prudent approach to assess the macroeconomic conditions in the future and estimate the expected credit losses of interest-earning assets, and made appropriate upward adjustment to the parameters for measurement of expected credit losses.

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The following table sets forth a breakdown of the Group's impairment losses charged for the periods indicated:

For the six months ended June 30,

20202019 Changes

RMB'000 RMB'000

Finance lease receivables	25,131	16,541	51.9%
Credit commitments(1)	196	(992)	(119.8%)
Impairment losses charged	25,327	15,549	62.9%

Note:

1. 1. The Group's non-cancellable credit commitments were primarily finance leases that have been contracted, but not yet commenced.
2. Income Tax Expense
   During the Reporting Period, the income tax expense of the Group amounted to RMB26.3 million, representing an increase of RMB1.4 million or 5.7% as compared to the corresponding period of last year, which was mainly due to the increase in profit before taxation.
   During the Reporting Period, the effective income tax rate of the Group was 25.2%.
3. Profit for the Period
   During the Reporting Period, the profit for the period of the Group amounted to RMB77.9 million, representing an increase of RMB3.7 million or 5.0% as compared to the corresponding period of last year. The increase in profit for the period was mainly because while the revenue of the Group increased by 13.7%, the interest expense and operating expense also increased by 9.3% and 15.2%, respectively, as compared to the corresponding period of last year. For details of changes in revenue, interest expense and operating expense, please refer to the discussion and analysis in items "2.2 Revenue", "2.3 Interest Expense" and "2.6 Operating Expense" of this section.
   In summary, faced with the mounting risks and challenges from the global economic environment and the downward pressure of the Chinese economy, the Group has adopted positive measures and achieved steady growth in leasing business revenue and overall stability in leased asset quality. It was expected that with the enhancement of the Group's net capital strength, the further expansion of the leasing business and the improvement of organizational effectiveness and operational quality, the Group's profitability for the year will maintain steady and continuous development in 2020.

- 34 -

1. Basic Earnings per Share
   During the Reporting Period, the Company's basic earnings per share amounted to RMB0.06, which is lower than that in the corresponding period of last year, due to the increase of capital caused by listing.

3. ANALYSIS OF FINANCIAL POSITION

1. Assets (Overview)
   As at the end of the Reporting Period, total assets of the Group amounted to RMB7,404.3 million, representing an increase of RMB415.3 million or 5.9% as compared to the end of last year. Finance lease receivables amounted to RMB6,598.6 million, representing an increase of RMB174.4 million or 2.7% as compared to the end of last year. In terms of the asset structure, cash and cash equivalents accounted for 7.1% of total assets, and financial leasing receivables accounted for 89.1% of total assets.

The following table sets forth the breakdown of the Group's total assets as of the dates indicated:

		As of June 30, 2020	As of December 31, 2019	Changes
	RMB'000	% of total		RMB'000		% of total
Finance lease receivables	6,598,568	89.1%	6,424,127	91.9%	2.7%
Pledged and restricted deposits	66,679	0.9%	41,564	0.6%	60.4%
Cash and cash equivalents	522,955	7.1%	252,106	3.6%	107.4%
Other assets	84,789	1.1%	138,284	2.0%	(38.7%)
Deferred tax assets	48,483	0.7%	43,621	0.6%	11.1%
Property and equipment	17,388	0.2%	22,348	0.3%	(22.2%)
Interest in associates	48,580	0.7%	49,515	0.7%	(1.9%)
Financial assets at fair value
through other comprehensive
income	11,026	0.1%	11,026	0.2%	0.0%
Intangible assets	5,819	0.1%	6,394	0.1%	(9.0%)
Total assets	7,404,287	100.0%	6,988,985	1.3%	5.9%

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3.2 Finance Lease Receivables

During the Reporting Period, the Group attracted 80 new customers for finance leasing and entered into 147 new contracts. Driven by the expansion of business scale, our financial leasing receivables continued to grow. As at the end of the Reporting Period, net amount of finance lease receivables of the Group amounted to RMB6,598.6 million, representing an increase of 2.7% as compared to the end of last year.

The following table sets forth the breakdown of the Group's finance lease receivables as of the dates indicated:

	As of June 30,	As of December
	2020	31, 2019	Changes
	RMB'000	RMB'000
Gross amount of finance lease
receivables	7,309,798	7,122,908	2.6%
Less: Unearned finance income	(548,469)	(561,151)	(2.3%)
Net amount of finance lease
receivables	6,761,329	6,561,757	3.0%
Less: Allowances for
impairment losses	(162,761)	(137,630)	18.3%
Carrying amount of finance lease
receivables	6,598,568	6,424,127	2.7%

3.2.1 Maturity Profile of Finance Lease Receivables

The following table sets forth the Group's maturity analysis of the net amount of finance lease receivables as of the dates indicated:

		As of June 30, 2020	As of December 31, 2019	Changes
	RMB'000	% of total	RMB'000	% of total
Maturity
Not later than 1
year	3,842,410	56.8%	3,556,390	54.2%	8.0%
1 to 2 years	1,882,370	27.8%	2,039,792	31.1%	(7.7%)
2 to 3 years	766,988	11.3%	721,545	11.0%	6.3%
Over 3 years	269,561	4.1%	244,030	3.7%	10.5%
Net amount of
finance lease
receivables	6,761,329	100.0%	6,561,757	100.0%	3.0%

As at the end of the Reporting Period, 56.8% of the net amount of finance lease receivables of the Group as set out in the table above was due not later than one year. As the Group promoted balanced business development, it is expected that the cash inflow from operation will remain stable in the future.

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3.2.2 Asset Quality of Finance Lease Receivables

The Group has been closely monitoring the quality of lease assets and implemented five-level standard since 2013, which classifies finance lease receivables into five categories, namely (1) normal; (2) special mention; (3) sub-standard; (4) doubtful; and (5) loss. The latter three with credit impairment are classified as non-performing assets.

Lease Receivable Classification

1. Normal. The lessee is able to perform and has been performing its obligations under the lease agreement, and we have no reason to doubt our ability to recover the full amount of the lease receivable. Lease payments related to finance lease receivables under this classification have always been on time or overdue for not more than 30 days.
2. Special mention. The lessee is able to perform and has been performing its obligations under the lease agreement, but there are adverse factors which may negatively impact our ability to recover the full amount of the lease receivable. If the payment is overdue for more than 30 days but not more than 90 days, the leased assets under relevant contract will be classified as special mention or lower.
3. Sub-standard.
4. • The lessee has demonstrated clear difficulties in making timely lease payments, and is not able to obtain sufficient funds to pay through its normal course of business; or
   • Lease receivables face impairment risks primarily due to adverse changes in the fair value of the leased assets or due to adverse uncertain macro-economic reasons, or disposal of leased assets could lead to losses.

Lease payments related to finance lease receivables under this classification are typically overdue for over 90 days but not more than 180 days.

- 37 -

4. Doubtful.

• The lessee is not able to make full and timely periodic lease payments, leading to significant changes in the value of the lease receivables; or
• Macro-economicfactors have led to material impairment of lease receivables, or the disposal of leased assets would lead to significant losses.

Lease payments related to finance lease receivables under this classification are typically overdue for over 180 days.

5. Loss. After exhausting all necessary measures and legal remedies, we still cannot recover most of the lease receivable and interest income.

Leased Asset Management Measures

Continuously Improving the Leased Asset Process Monitoring Structure to Enable Comprehensive Identification, Assessment and Precise Control of Asset Risks

During the Reporting Period, the Group continued to improve the asset process monitoring structure. For organizational structure, we established a designated post-lease management team to facilitate the implementation of systematic asset management. For routine management, we continuously monitored the quality of accounts receivable of the Company, conducted comprehensive internal inspections periodically, and fully reviewed and continuously optimized the asset process monitoring structure in order to fully monitor the safety of leased assets. We also made active response to the impact from the COVID-19 outbreak, implemented asset classification, provided targeted support to companies affected by the COVID-19 outbreak, and offered discount to real economy companies in order to help relieve the temporary financial pressure faced by these companies. In terms of information monitoring for internet risk, we conducted public sentiment monitoring and risk warning through big data analysis. For customers with signs of risk, we took targeted risk prevention measures in time, and effectively safeguarded the overall stability of asset quality through strong collection, pre-litigation preservation, debt restructuring and increased risk countermeasures.

- 38 -

Focusing on the Original Purpose of Leasing and Deepening the Whole-process Management and Control of Leased Assets

During the Reporting Period, the Company continued to focus on the original purpose of leasing, implemented the concept of "real leasing", and optimized the screening, rating and value management of leased assets through system upgrade. Based on the rating of leased assets, we formulated differentiated management strategies and strengthened the interaction between asset credit rating model and the subject growth potential rating model. We strengthened the leased asset value process management and control to ensure that the value of lease assets effective covers the lease liabilities. We also increased our efforts in post-lease inspection of leased assets to implement the whole-process management and control of leased assets.

Optimizing Risk Disposal Management Structure to Accelerate the Disposal of Non-performing Assets

During the Reporting Period, the Group continued to optimize the risk disposal management structure to accelerate the disposal of non-performing assets and elimination of existing risks. We continued to optimize the risk decision-making mechanism to enhance the efficiency of disposal decisions; adhered to the principles of classified management and targeted breakthrough and managed the existing non-performing projects based on their respective business characteristics on a case-by-case basis to match them with suitable disposal resources; continuously consolidated the legal resources protection structure, actively expanded cooperation in disposal resources and explored the upgrade of judicial resources; optimized work mechanisms and division of labour, and conducted sharing and summing-up in respect of disposal progress; strengthened result-oriented performance assessment and increased assessment incentives; actively explored and expanded channels for disposal of non-performing assets, and expanded traditional and innovative methods and ideas for disposal.

- 39 -

The following table sets forth a breakdown of the Group's finance lease receivables by classifications as of the dates indicated:

	As of June 30, 2020		As of December 31, 2019	Changes
	RMB'000	% of total		RMB'000		% of total
Normal	6,261,939		92.6%	6,074,976	92.6%	3.1%
Special mention	396,143		5.9%	399,661	6.1%	(0.9%)
Sub-standard	47,396		0.7%	32,394	0.5%	46.3%
Doubtful	55,851		0.8%	54,726	0.8%	2.1%
Loss	-	-		-		-	0.0%
Net amount of finance
lease receivables	6,761,329		100.0%	6,561,757	100.0%	3.0%
Non-performing assets	103,247			87,120
NPA ratio	1.5%			1.3%

During the Reporting Period, the Group continued to adhere to prudent risk management, implemented comprehensive and stringent risk monitoring and management, and enhanced the core competitiveness of serving technology and new economy companies. In response to the downward pressure from external environment, the Group carried out precise identification, stringent management and control and efficient mitigation of risks, and maintained overall stable asset quality with the proportion of normal assets accounting for 92.6%. However, affected by the COVID-19 outbreak and other relevant factors, the balance of non-performing assets and NPA ratio recorded certain increase as compared to the beginning of the year.

As at the end of the Reporting Period, the assets under special mention accounted to 5.9% of total net amount of finance lease receivables of the Group, representing a decrease of 0.2 percentage point from 6.1% as compared to the end of last year.

- 40 -

3.2.3 Impairment and Allowances for Finance Lease Receivables

The following table sets forth a summary of the Group's allowance for finance lease receivables as of the dates indicated. The Group adopts new accounting standards for financial instruments and applies the expected credit loss ("ECL") model under the new standards. The allowances for interest-earning assets of the Group increased by RMB25.2 million from RMB137.6 million as at the end of last year to RMB162.8 million as at the end of the Reporting Period.

			As of		As of
			June 30, 2020		December 31, 2019
	RMB'000	% of total	RMB'000	% of total
Allowances for Non-performing
assets	60,789	37.3%	58,103	42.2%
Allowances for Normal and special
assets	101,972	62.7%	79,527	57.8%
Total allowance for finance lease
receivables	162,761	100.0%	137,630	100.0%
Non-performing assets	103,247			87,120
Ratio of allowances for
impairment losses to finance
lease receivables	157.6%			158.0%

As at the end of the Reporting Period, ratio of allowances for impairment losses to finance lease receivables of the Group was 157.6%, which was a decrease of 0.4 percentage point from 158.0% as compared to the end of last year. The management of the Group believes that prudent risk management policy is crucial to its sustainable growth, and therefore the Group strives to maintain a stable ratio of allowances for impairment losses to finance lease receivables.

- 41 -

The following table sets forth the breakdown of the Group's allowances measured based on ECL as of the dates indicated. The Group has been closely monitoring the credit quality of finance lease receivables by monitoring their ECL. As at the end of the Reporting Period, ECL rate of financial lease receivables of the Group in stage one, stage two and stage three was 0.5%, 3.3% and 29.4%, respectively, representing an increase of 0.1%, 0.0% and 2.7%, respectively, as compared to the end of last year. The Group has taken a prudent approach to make appropriate upward adjustment to the parameters for measurement of ECL in order to enhance the ratio of allowances to total loans and systematically strengthen the risk resistance capacity of its assets.

	Stage 1	Stage 2	Stage 3
	12-month ECL	Lifetime ECL	Lifetime ECL
	balance	not credit-impaired	credit-impaired	Total
	RMB'000	RMB'000	RMB'000	RMB'000
June 30, 2020
ECL rate	0.5%	3.3%	29.4%	2.4%
Net amount of finance lease receivables	6,168,117	158,914	434,298	6,761,329
Allowance for impairment loss	(30,079)	(5,208)	(127,474)	(162,761)
Carrying amount of finance lease receivables	6,138,038	153,706	306,824	6,598,568
December 31, 2019
ECL rate	0.4%	3.2%	26.6%	2.1%
Net amount of finance lease receivables	6,074,976	74,616	412,165	6,561,757
Allowance for impairment loss	(25,391)	(2,422)	(109,817)	(137,630)
Carrying amount of finance lease receivables	6,049,585	72,194	302,348	6,424,127

3.3 Others

As at the end of the Reporting Period, cash and cash equivalents of the Group amounted to RMB523.0 million. The Group retained adequate cash to support business expansion and ensures its liquidity and safety. Restricted deposit of the Group amounted to RMB66.7 million, primarily comprising restricted bank deposits for bank acceptances and factorings.

As at the end of the Reporting Period, the balance of trade and other receivables of the Group amounted to RMB84.8 million, mainly including advance payments to suppliers for purchase of equipment and deductible value-added input tax.

As at the end of the Reporting Period, the balance of deferred tax assets of the Group amounted to RMB48.5 million, which were mainly derived from the temporary difference between net profit and taxable income in the financial report.

As at the end of the Reporting Period, the balance of property and equipment of the Group amounted to RMB17.4 million, mainly including right-of-use assets and office equipment and computers for our employees.

- 42 -

As at the end of the Reporting Period, the balance of interest in associates/joint ventures of the Group amounted to RMB48.6 million, which was the equity investment in Beijing Zhongnuo Tongchuang Investment Fund Management Co., Ltd. ( 北京中諾同創投資基金

管理有限公司) and Jiangsu Zhongguancun Zhungnuo Xietong Investment Fund (Limited Partnership) ( 江蘇中關村中諾協同投資基金合夥企業（有限合夥）).

As at the end of the Reporting Period, the balance of financial assets at fair value through other comprehensive income of the Group amounted to RMB11.0 million, which was the strategic equity investment in Beijing Zhongguancun Synergetic Innovation Investment Fund Management Co., Ltd.

As at the end of the Reporting Period, the balance of intangible assets of the Group amounted to RMB5.8 million, mainly including software used in our business operations and risk management functions.

3.4 Liabilities

As at the end of the Reporting Period, total liabilities of the Group amounted to RMB5,572.4 million, representing a decrease of RMB24.4 million or 0.4% as compared to that as at December 31, 2019. In particular, borrowings were the main component of the liabilities of the Group, accounting for 69.9%, representing a decrease to 74.3% as compared to the end of last year.

The following table sets forth the Group's liability analysis as of the dates indicated:

		As of June 30, 2020	As of December 31, 2019	Changes
	RMB'000	% of total	RMB'000	% of total
Borrowings	3,894,791	69.9%	4,158,382	74.3%	(6.3%)
Trade and other liabilities	1,659,162	29.8%	1,423,853	25.4%	16.5%
Income tax payable	18,426	0.3%	14,494	0.3%	27.1%
Total liabilities	5,572,379	100.0%	5,596,729	100.0%	(0.4%)

3.5 Borrowings

The Group has established long-term and stable partnership in both direct financing and indirect financing markets.

As at the end of the Reporting Period, borrowings of the Group amounted to RMB3,894.8 million, representing a decrease of RMB263.6 million or 6.3% as compared to the end of last year, primarily due to (1) the reduction of financing loans as a result of the global offering of the Company's H Shares at the beginning of the year, and (2) the use of bank acceptance bills and letters of credit to support business launch during the Reporting Period.

With respect to direct financing market, the Group had launched four asset-backed securities programs worth RMB2.81 billion, and actively prepared for the issuance of diversified financing products, such as debt financing vehicles and asset-backed commercial paper.

• 43 -

With respect to indirect financing market, the Group has established long-term and stable cooperative relationship with over 20 commercial banks. Meanwhile, the Group will continue to expand and improve the diversified and multi-layer channels of bank financing, including the cooperation with small and medium banks and foreign banks.

In conclusion, the Group has established and will continue to improve its solid relationships with diverse funding sources. In the future, leveraging on our favorable business performance and growth potential, the Group believes our credit rating will gradually upgrade and competitiveness on funding cost will be further improved.

The following table sets forth a breakdown of the Group's borrowings by funding sources as of the dates indicated. The increase in the proportion of the pledged loans of the Group was mainly due to the increased proportion of long-term bank borrowings. By adjusting the mid to long-term funding structure, the Group continuously optimized the balancing of financial assets and financial liabilities.

	As of June 30, 2020	As of December 31, 2019	Changes
	RMB'000		% of total	RMB'000		% of total
Bank loans	1,708,904	43.9%	1,884,132	45.3%	(9.3%)
- pledged	1,114,104	28.6%	1,272,332	30.6%	(12.4%)
- unsecured	594,800	15.3%	611,800	14.7%	(2.8%)
Borrowings from related
parties (1)
- pledged	1,200,000	30.8%	1,200,000	28.9%	0.00%
Asset-backed securities	985,887	25.3%	1,074,250	25.8%	(8.2%)
Total borrowings	3,894,791	100.0%	4,158,382	100.00%	(6.3%)

Note:

1. Refer to pledged loans from the ZGC Group and its subsidiaries.

As at the end of the Reporting Period, the outstanding balance of bank loans of the Group was RMB1,708.9 million, accounting for 43.9% of the total borrowings, which was slightly lower as compared to the end of last year. The balance of borrowings from related parties accounted for 30.8% of the total borrowings; and the balance of asset-backed securities accounted for 25.3% of the total borrowings, which was generally the same as at the end of last year. To further expand our funding sources, the Group plans to actively explore debt financing products such as asset-backed securities and super short-term commercial paper.

- 44 -

The following table sets forth the distribution of the Group's borrowings by liquidity as of the dates indicated:

		As of June 30, 2020	As of December 31, 2019	Changes
	RMB'000	% of total	RMB'000	% of total
Current	2,952,820	75.8%	2,649,676	63.7%		11.4%
Non-current	941,971	24.2%	1,508,706	36.3%		(37.6%)
Total borrowings	3,894,791	100.0%	4,158,382	100.0%		(6.3%)

As at the end of the Reporting Period, the current proportion of borrowings (including short-term borrowings and portions that were due within one year in long-term borrowings) of the Group accounted for 75.8% of total borrowings of the Group, representing an increase of 11.4% as compared to the end of last year.

1. Trade and Other Liabilities
   Trade and other liabilities of the Group primarily includes guaranteed deposits from lessees, value-added taxes to be collected in the following period, accounts payables and notes payables, and lease liabilities.
   Trade and other liabilities of the Group increased by 16.5% from RMB1,423.9 million as at the end of last year to RMB1,659.2 million as at the end of the Reporting Period. This increase was primarily due to the increase of guaranteed deposits from lessees, notes payable and dividends payable.
2. Capital and Reserves
   As at the end of the Reporting Period, total equity of the Group amounted to RMB1,831.9 million, representing an increase of RMB439.7 million or 31.6% as compared to that as at the end of last year.
   The following table sets forth the details of the Group's total equity as of the dates indicated:

		As of June 30, 2020	As of December 31, 2019	Changes
	RMB'000	% of total	RMB'000	% of total
Share capital	1,333,334	72.8%	1,000,000	71.80%		33.3%
Reserves	498,574	27.2%	392,256	28.20%		27.1%
Total equity	1,831,908	100.0%	1,392,256	100.00%		31.6%

- 45 -

1. CAPITAL EXPENDITURES
   During the Reporting Period, the capital expenditure of the Group was RMB2.0 million, primarily including expenditures for upgrading information system regarding business operations and risk management, and purchase of office and electronic equipments.
2. RISK MANAGEMENT
   The Group has established a set of prudent, efficient and innovative risk management structure designed to balance the risks with benefits generated in the process of serving technology and new economy companies. While driving the growth of technology and new economy companies with continued efforts, the Group achieved its maximum value.
   The Group has been exposed to various operational risks, primarily including credit risks, interest rate risks, liquidity risks and foreign currency risks.
   5.1 Credit Risks
   Credit risks arise from our customers' failure to perform their payment obligations under the lease agreements or material and adverse changes in their creditworthiness. Credit risks are one of the major risks we are exposed to and may negatively impact our revenues, cash flow, and book value of leased assets. To manage and control the credit risks to which we are exposed, we have established and will keep updating the specialized and streamlined credit risk management policies and procedures.
   Firstly, we have strict selection mechanism of industries and customers. We adhered to the constant principles of evaluating industries and customers with strict criteria prior to the project initiation, which marked the first step of credit risk management and control. Our five business project teams continuously researched and monitored the technology and new economy industries they specialized in, formulated customer rating standards that reflect the characteristics of different industries, and further determined the selection policies, due diligence standards and customized service proposals based on the characteristics of the industries. We served selected technology and new economy industries that fit the Chinese policies and with sufficient development space, bright prospects and industrial creditworthiness. Our business project teams quantified each individual customer's ricks and strived to lower our exposures to credit risks with regards to new customers by carefully selecting leased assets and designing finance lease solutions with an eye towards ensuring the quality of finance lease receivables and reducing the possibility of impairments or losses.

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Secondly, we have established a comprehensive rating system that makes assessment based on "assets, subjects and debts". The greatest value of technology and new economy companies lies in their growth potentials, which is also an effective guarantee to defuse risks. As such, in the past two years, we have formulated two different subject rating models for service-orientedcompanies and manufacturing companies as well as the new enterprise model designed for companies with less than two years of operation history. The assessment result of each individual customer has been based on a score that takes into account both quantitative and qualitative factors. In particular, our quantitative factors included size, growth, business operation, profitability, debt repayment and liquidity, while our qualitative factors covered government policy, market size and potential, competitiveness, management capabilities and equity financing. These factors, together with the weights assigned to them, generated a final score for a potential customer. Based on the subject rating, we continued to explore and establish the asset (leased asset) credit rating model, which enabled us to assess the customers based on asset credit rating and subject credit rating.

Thirdly, we have a comprehensive project due diligence structure. Our project due diligence work comprises project due diligence, project assessment and leased asset assessment, and a report for each process will be prepared. The due diligence report is a thorough analysis of each individual customer's project related information, corporate information, financial information, credit history, use of funds, risk assessment and operational recommendations, prepared by our business project teams on the basis of on-siteand off-sitedue diligence investigations. Based on the information collected by our business project teams and included in the project due diligence report, our project assessment team conducted further risk assessments and prepared the project assessment report. For the leased asset report, our asset management team primarily assessed the genuine existence of the leased assets, the reasonableness of their prices and the clarity of their legal ownerships, and further determined whether the leased assets would maintain its value and whether they could be effectively controlled and efficiently disposed of.

Fourthly, we have rigorous project assessment and approval procedures. We have summed up three important experiences. We have adopted a three-vote decision-makingmechanism in selecting customers, initiating projects and conducting due diligence investigations. The three-vote decision-makingmechanism required business decisions be made by at least three designated senior employees from relevant teams, which scientifically ensured the fairness of our decisions. Specialization is another key feature of our project assessment procedures. Each of our assessment managers was responsible for assessing projects from the industry in which they specialize. The project assessment committee assigned five committee members to assess each lease project, namely the chairman, the industry assessment member, the financial assessment member, the legal assessment member and the comprehensive assessment member. Committee members generally discussed project information and cast votes in open sessions where all of our employees may attend. Such open sessions effectively ensured the openness and fairness of our decisions, and also promoted our employees' understanding of leased projects.

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Fifthly, we have a complete post-lease management structure. Our post management structure comprises leased asset management, customer business operation monitoring, lease receivable classifications and disposal of non-performingassets. We have formulated basic criteria for selection of leased assets, carried out leased assets ownership registration with relevant business administrative authorities and placed visible marks. In addition, we required our customers to take out insurance for the leased assets in favour of us, and inspected the operating status of the leased assets on a real time basis. We closely monitored the business operations of our customers through on-siteand off-siteinspection in an effort to early-detectcredit risk indicators and initiate relevant investigation, enabling us to prepare for exit strategies. We also closely monitored the quality of our lease receivables and classified finance lease receivables into five categories, namely normal, special mention, sub-standard,doubtful and loss, in order to make timely response to deteriorated assets. In case of non-performingassets, we promptly initiated leased asset disposal activities, including initiating legal actions, attaching leased assets and selling leased assets on the market to mitigate relevant risks. Our long-termspecialized development enabled us to establish a network of readily available potential buyers to dispose of our leased assets at reasonable prices.

1. Interest Rate Risk
   The Group's interest rate risk arises from the mismatch between the maturity date of interest-earning assets and interest-bearing liabilities and the contract repricing date. The risk of changes in the cash flow of financial instruments caused by the Group's interest rate changes was mainly related to financial lease. The Group adopts the following measures to manage its interest rate risk:
2. • Optimizing the time difference between the maturity dates of interest-earning assets and interest-bearing liabilities and the contract repricing date; and
   • Managing the difference between the pricing of interest-earning assets and interest-bearing liabilities and Loan Prime Rate and the benchmark interest rate of the PBOC.
3. Liquidity Risk
   Liquidity risk refers to our potential failure to secure sufficient funding at reasonable costs, leading to our failure to satisfy our various payment obligations and to support our business operations and expansions.
   In terms of liquidity risk management, the Group held cash and cash equivalents that the management considered sufficient and implemented comprehensive policies and process monitoring to meet our operating and sustainable development needs. Our management supervised the use of financing and ensured compliance with corresponding financing agreements.
   During the Reporting Period, the liquidity position of the Group has been sound. By assessing and monitoring the liquidity situation, the Group allocated financial assets and financial liabilities as a whole to improve its ability to ensure liquidity at a reasonable cost in a timely manner.
4. • 48 -

1. 1. Foreign Currency Risk
      The functional currency of the Group is RMB. The majority of the Group's revenue and expenditures are denominated in RMB. The Group currently does not have any foreign currency hedging policies. The management will continue to monitor the Group's foreign exchange risk exposure and consider adopting prudent measures as appropriate.
2. PLEDGE OF GROUP ASSETS
   As at the end of the Reporting Period, the Group held finance lease receivables of RMB3,414.2 million pledged to secure borrowings, and cash of RMB66.7 million pledged for bank acceptances, factorings and asset-backed securities.
3. SIGNIFICANT INVESTMENTS, MATERIAL ACQUISITIONS AND DISPOSALS
   During the Reporting Period, there were no significant investments, material acquisitions or disposals of subsidiaries, associated companies and joint ventures by the Group.
4. HUMAN RESOURCES
5. 1. Staff and Remuneration
      As of June 30, 2020, the Group had a total of 115 employees (As of December 31, 2019: 110), with approximately 99.1% of our staff holding bachelor's degrees or above, and approximately 60.0% of our staff holding master's degrees or above (45 employees obtained bachelor's degrees; 66 employees obtained master's degrees; and 3 employees obtained doctor's degrees). Approximately 13.9% (16 employees) have intermediate professional titles or above; and approximately 6.1% (7 employees) have associate senior professional titles or above.
      The Group's employees are generally stable with a high retention rate. In addition to the normal flow of people, approximately 31.3% of our employees (36 employees) have been worked for the Group for over five years. We did not experience any material labour disputes during the Reporting Period.
      During the Reporting Period, the staff costs of the Group amounted to approximately RMB32.0 million (the corresponding period of last year: approximately RMB31.3 million).

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1. Incentive Schemes
   We have established and implemented flexible and efficient employee incentive schemes to correlate the remuneration of our employees with their overall performance and contribution to the Group and have established a performance-based remuneration awards system that combines their performance and accomplishment of work targets. Employees of the Group are promoted in terms of positions, seniority, overall performance, as well as professional and administrative classification, with a clear career path. We implement comprehensive performance evaluations and well-directed training programs for all staff every year, in accordance with our business objective obligations and achievement of key objectives. Since the date of incorporation of the Company and up to the end of the Reporting Period, the Group did not adopt any share option scheme.
2. Employee Benefits
   In accordance with applicable PRC laws and regulations, we have made contributions to social security insurance funds (including pension plans, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance) and housing provident funds for our employees. We also provided supplemental commercial medical insurance and accident insurance in addition to the social security insurance and housing provident funds above.
3. Employee Training
   The Group valued staff training and established a preliminary training system based on job competency. In order to encourage the staff to study and upgrade themselves and cultivate and establish a team of professional and highly efficient talents, the Group adopted a people-oriented approach to provide trainings based on actual needs, and organized various training sessions on operating management and professional skills based on the principle of classified management, covering employees of all levels from front-line staff to senior management. The Group also implemented the plan for the cultivation of cadres and young talents.

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9. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

1. Contingent Liabilities
   As at the end of the Reporting Period, the Group did not have any material contingent liabilities.
2. Capital Commitments and Credit Commitments
   The Group has the following capital commitments and non-cancellable credit commitments as of the dates indicated:

	As of June 30,	As of December
	2020	31, 2019
	RMB'000	RMB'000
Credit commitments(1)	93,164	60,810
Capital commitments(2)	52,120	52,120

Notes:

1. The Group's non-cancellable credit commitments were primarily finance leases that have been contracted, but not yet commenced.
2. As at the end of the Reporting Period, the contracted capital commitments included the unpaid capital commitment to Beijing Zhongnuo Investment Fund Management Co., Ltd. ( 北京中諾同創投資基金管 理有限公司) and Jiangsu Zhongnuo Zhongnuo Xietong Investment Fund (Limited Partnership)( 江蘇中關 村中諾協同投資基金合夥企業（有限合夥）) of RMB3.1 million and RMB49.0 million, respectively.

10. USE OF NET PROCEEDS FROM THE GLOBAL OFFERING

H Shares have been listed on the Stock Exchange since January 21, 2020. The Company received net proceeds from the global offering (after deduction of underwriting commission and related costs and expenses) of approximately RMB405.8 million.

We proposed to gradually utilize the net proceeds from the global offering in the following manner as disclosed in the Prospectus:

• Approximately 70% of the net proceeds, or RMB284.0 million, will be used to expand our business operations;
• Approximately 10% of the net proceeds, or RMB40.6 million, will be used to improve our information systems;
• Approximately 10% of the net proceeds, or RMB40.6 million, will be used to recruit more talented specialized personnel with valuable experience, knowledge and skillsets; and
• Approximately 10% of the net proceeds, or RMB40.6 million, will be used to replenish our working capital.

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The table below sets forth a detailed breakdown and description of the use of net proceeds from the global offering:

	Amounts
	expected to
	be utilized as
	disclosed in the	Utilized	Unutilized	Expected time
Use of proceeds	Prospectus	amount	amount	of use
	(RMB in	(RMB in	(RMB in
	million)	million)	million)
Expansion of our business
operations	284.0	284.0	-	N/A
				To be gradually
Improvment of our				used in
information systems	40.6	0.7	39.9	2020-2023
				To be gradually
				used in
Recruitment of talents	40.6	3.3	37.3	2020-2022
Replenishment of working
capital	40.6	40.6	-	N/A

11. BUSINESS OUTLOOK

By capturing the market opportunities from the rapid development of technology and new economy industries, the Group will focus on "business specialization, investment banking operation and ecologization", actively innovate lease products and business models, and provide "leasing plus" comprehensive financial solutions, in order to become a financial service provider with global influence.

In the next five years, the Group will take proactive approach to expand its business nationwide by levering on its established advantages in Beijing-Tianjin-Hebei metropolitan area, active introduce governmental and industrial resources, and establish subsidiaries, branches and offices to serve the innovative technology companies in Beijing-Tianjin-Hebei metropolitan area, Yangtze River Delta and Guangdong-HongKong-Macau Greater Bay Area.

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OTHER INFORMATION

1. CORPORATE GOVERNANCE PRACTICE
   H Shares were listed on the Stock Exchange since January 21, 2020. Since the Listing Date, the Company has adopted the CG Code as contained in Appendix 14 to the Listing Rules as its own code of corporate governance. The Company has committed to maintaining high standards of corporate governance in order to safeguard the interests of Shareholders and enhance the corporate value and accountability of the Company.
   During the period from the Listing Date and up to the end of the Reporting Period, the Company has continuously complied with all applicable code provisions set out in the CG Code and adopted most of the recommended best practices therein.
2. DIRECTORS' AND SUPERVISORS' SECURITIES TRANSACTIONS
   The Company has formulated the Code of Dealing in Securities of the Company by Directors, Supervisors, Senior Management and Personnel with Inside Information 《( 董 事、監 事、高 級

管 理 人 員 及 其 他 內 幕 資 訊 知 情 人 員 證 券 交 易 管 理 制 度》) as the code of conduct of the securities transactions carried out by the Directors, Supervisors, senior management and personnel with inside information, the terms of which are not less favorable than the Model Code for Securities Transactions by Directors of Listed Issuers as contained in Appendix 10 to the Listing Rules.

Having made specific enquiry with the Directors and Supervisors, they have confirmed their compliance with the relevant standards stipulated in the aforesaid code during the period from the Listing Date and up to the end of the Reporting Period.

1. INTERIM DIVIDEND
   The Board does not recommend to declare any interim dividends for the six months ended June 30, 2020.
2. AUDIT COMMITTEE
   The Audit Committee consists of five members, being Mr. WU Tak Lung, Mr. CHENG Dongyue and Ms. LIN Zhen, independent non-executive Directors, Mr. LOU Yixiang and Mr. LI Peng, non-executive Directors. The Audit Committee is chaired by Mr. WU Tak Lung who has a professional qualification in accountancy as required by the Listing Rules.
   The Audit Committee has discussed with the management and the external auditor and reviewed the unaudited interim consolidated financial statements of the Group for the six months ended June 30, 2020 and the interim results. In addition, KPMG, the external auditor of the Company, has independently reviewed the unaudited interim consolidated financial statements of the Group for the six months ended June 30, 2020.

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1. PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
   From the Listing Date and up to the end of the Reporting Period, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the listed securities of the Company.
2. MATERIAL LEGAL, LITIGATION AND ARBITRATION MATTERS
   As at the end of the Reporting Period, the underlying amount in relation to the pending litigation against the Company as the defendant was RMB0 in aggregate. The Company expected this pending litigation would not have material adverse effect on the business, financial condition or operating performance of the Company.
3. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
   The Group did not have any significant events subsequent to the end of the Reporting Period.
4. PUBLICATION OF INTERIM RESULTS AND INTERIM REPORT
   This announcement was published on the website of Stock Exchange (www.hkexnews.hk) and on the website of the Company (www.zgclease.com). 2020 interim report of the Company will be despatched to the Shareholders and published on the websites of Stock Exchange and the Company in due course.
   This announcement was prepared in both Chinese and English versions, where there is a discrepancy between the Chinese and English versions, the English version shall prevail.

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DEFINITION
"Audit Committee"	the audit committee of the Board
"Board"	the board of directors of the Company
"CG Code"	the Corporate Governance Code as contained in Appendix 14 to the
	Listing Rules
"China" or "PRC"	the People's Republic of China, which for the purpose of this
	announcement and for geographical reference only, excluding Hong
	Kong, the Macau Special Administrative Region of the PRC and Taiwan
"Company", "Group" or "we"	Zhongguancun Science-Tech Leasing Co., Ltd. ( 中 關 村 科 技 租 賃 股
	份有限公司), a joint stock company incorporated under the laws of the
	PRC with limited liability on August 16, 2019, or its predecessor
"Director(s)"	the director(s) of the Company
"Domestic Share(s)"	the domestic share(s) with a nominal value of RMB1.00 each in the share
	capital of the Company, which are subscribed for or credited as fully
	paid in RMB
"H Share(s)"	the overseas listed foreign share(s) with a nominal value of RMB1.00
	each in the share capital of the Company, which are subscribed for and
	traded in HK dollars and listed on the Stock Exchange
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Listing"	listing of the H Shares on the Main Board of the Stock Exchange
"Listing Date"	January 21, 2020, on which the H Shares were listed and from which
	dealings therein are permitted to take place on the Stock Exchange
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock Exchange (as
	amended from time to time)
"PBOC"	People's Bank of China ( 中國人民銀行), the central bank of the PRC
"Prospectus"	the prospectus of the Company dated December 31, 2019
"RMB"	Renminbi, the lawful currency of the PRC
"Reporting Period"	the period from January 1, 2020 to June 30, 2020

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"end of the Reporting Period"	June 30, 2020
"Share(s)"	collectively, the Domestic Share(s) and the H Share(s)
"Shareholder(s)"	the holder(s) of Share(s)
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Supervisor(s)"	the supervisor(s) of the Company
"ZGC Group"	Zhongguancun Development Group Co., Ltd. ( 中關村發展集團股份
	有 限 公 司), a company incorporated under the laws of the PRC with
	limited liability on March 31, 2010 and also one of the Controlling
	Shareholders
"%"	per cent
	By order of the Board
	Zhongguancun Science-Tech Leasing Co., Ltd.
	DUAN Hongwei
	Chairman

Beijing, the PRC, August 28, 2020

As at the date of this announcement, the Board comprises Mr. HE Rongfeng and Mr. HUANG Wen as executive Directors, Mr. DUAN Hongwei, Mr. LOU Yixiang, Mr. ZHANG Shuqing and Mr. LI Peng as non-executive Directors, and Mr. CHENG Dongyue, Mr. WU Tak Lung and Ms. LIN Zhen as independent non-executive Directors.

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