• 於中華人民共和國註冊成立之股份有限公司 )

Stock code 股份代號：1103

增強結構

發揮實力

PURSUIT OF

STRONG STRUCTURE

DEVELOPMENT

Interim Report

2020 中期報告

Corporate Information

BOARD OF DIRECTORS

Executive Directors

Lan Huasheng (Chairman)

Wang Liguo (Chief Executive Officer)

Yan Zebin

Non-Executive Directors

Lu Tingfu

Independent Non-Executive Directors

Chung Cheuk Ming

Yang Gaoyu

Liu Jun

Zhou Jianhao

  • (passed away on 3 February 2020)
    SUPERVISORS

Zheng Yong (Chairman)

Zhao Xufeng

Ye Mingzhu

Sun Ting

Wang Bin

AUDITOR

Asian Alliance (HK) CPA Limited

REGISTERED OFFICE

706 Renhe Building

2056 Pudong Road Pudong New Area Shanghai PRC Postal code: 200135

PRINCIPAL PLACE OF BUSINESS IN   CHINA

20F, Building G

Gateway International Plaza

No. 327 Tian Yao Qiao Road

Xuhui District

Shanghai, PRC

PLACE OF BUSINESS IN HONG KONG

Unit 2605, 26/F

Convention Plaza Office Tower

No. 1 Harbour Road

Wanchai

Hong Kong

COMPANY WEBSITE

www.dsgd-sh.co

COMPANY SECRETARY

Qian Di

AUTHORISED REPRESENTATIVES

Lan Huasheng

Wang Liguo

MEMBERS OF THE AUDIT COMMITTEE

Chung Cheuk Ming (Chairman)

Lu Tingfu

Yang Gaoyu

MEMBERS OF THE REMUNERATION AND   ASSESSMENT COMMITTEE

Yang Gaoyu (Chairman)

Lu Tingfu

Chung Cheuk Ming

MEMBERS OF THE NOMINATION   COMMITTEE

Lan Huasheng (Chairman)

Chung Cheuk Ming

Yang Gaoyu

HONG KONG H SHARE REGISTRAR AND   TRANSFER OFFICE

Computershare Hong Kong Investor Services

  • Limited Shop 1712-1716 17th Floor Hopewell Centre
    183 Queen's Road East Hong Kong

PRINCIPAL BANKERS

Bank of Communications

Bank of Shanghai

SPD Bank

STOCK CODE

1103

Interim Report 2020

1

The board of directors (the "Board") of Shanghai Dasheng Agriculture Finance Technology Co., Ltd. (the "Company") is pleased to present the unaudited condensed consolidated results of the Company and its subsidiaries (together the "Group") for the six months ended 30 June 2020 together with comparative unaudited result for the corresponding period in 2019.

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the six months

ended 30 June

2020

2019

Unaudited

Unaudited

Note

RMB'000

RMB'000

Continuing operations

Revenue

3

903,509

832,178

Cost of sales

(700,143)

(671,908)

Gross profit

203,366

160,270

Other income

3

12,899

13,733

Distribution costs

(30,801)

(31,215)

Administrative and other expenses

(107,307)

(89,221)

Impairment losses, net of reversal

2,392

(4)

Profit on disposal of subsidiaries

86,090

20,689

Finance costs

5

(103,567)

(86,854)

(Loss) profit before tax

6

63,072

(12,602)

Income tax expense

7

(12,695)

(1,062)

(Loss) profit for the period

  from continuing operations

50,377

(13,664)

Discontinued operations

Loss for the period from discontinued

  operations, net of income tax

8

-

(38,074)

(Loss) profit for the period

50,377

(51,738)

Other comprehensive (expense) income

Items that may be reclassified subsequently

  • to profit or loss:
  • Exchange differences arising on translation

    of foreign operations

561

60

561

60

Other comprehensive (expense) income

  for the period, net of income tax

561

60

Total comprehensive (expense) income

  for the period

50,938

(51,678)

2

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

Consolidated Statement of Profit or Loss and Other Comprehensive

Income (Continued)

For the six months

ended 30 June

2020

2019

Unaudited

Unaudited

Note

RMB'000

RMB'000

(Loss) profit for the period attributable to

  owners of the Company

  - from continuing operations

57,922

(14,873)

  - from discontinued operations

-

(34,762)

57,922

(49,635)

(Loss) profit for the period attributable to

non-controlling interests

  - from continuing operations

(7,545)

1,209

  - from discontinued operations

-

(3,312)

(7,545)

(2,103)

50,377

(51,738)

Total comprehensive (expense) income

  for the period attributable to:

  - Owners of the Company

58,483

(49,575)

  - Non-controlling interests

(7,545)

(2,103)

50,938

(51,678)

(Loss) profit per share

From continuing and discontinued operations

  - Basic and diluted (RMB)

9

0.006

(0.005)

From continuing operations

  - Basic and diluted (RMB)

0.006

(0.002)

Interim Report 2020

3

Consolidated Statement of Financial Position

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

Note

RMB'000

RMB'000

NON-CURRENT ASSETS

Property, plant and equipment

876,574

887,087

Right-of-use asset

94,821

96,100

Intangible assets

13,394

14,524

Interests in associates

39,893

24,493

Equity instruments at fair value through

  other comprehensive income

10,140

10,140

Trade and other receivables - non-current portion

12

30,037

66,552

Deferred tax assets

376

376

1,065,235

1,099,272

CURRENT ASSETS

Inventories

11

186,367

268,224

Trade and other receivables

12

1,293,218

1,121,465

Restricted bank deposits

143,265

151,277

Bank balances and cash

51,652

65,222

1,674,502

1,606,188

Assets classified as held for sale

8

-

3,259,843

1,674,502

4,866,031

4

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

Consolidated Statement of Financial Position (Continued)

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

Note

RMB'000

RMB'000

CURRENT LIABILITIES

Trade and other payables

13

1,299,919

1,253,747

Lease liabilities

1,010

945

Contract liabilities

174,404

282,203

Borrowings

14

1,715,674

2,112,786

Tax liabilities

94,780

85,598

3,285,787

3,735,279

Liabilities associated with assets classified

  as held for sale

8

-

2,755,913

3,285,787

6,491,192

NET CURRENT LIABILITIES

(1,611,285)

(1,625,161)

TOTAL ASSETS LESS CURRENT LIABILITIES

(546,050)

(525,889)

NON-CURRENT LIABILITIES

Other payables - non-current portion

4,455

4,950

Borrowings

14

134,661

139,061

Deferred tax liabilities

3,666

3,063

142,782

147,074

NET LIABILITIES

(688,832)

(672,963)

CAPITAL AND RESERVES

Share capital

15

955,108

955,108

Reserves

(1,027,747)

(1,067,525)

Equity attributable to owners of the Company

(72,639)

(112,417)

Non-controlling interests

(616,193)

(560,546)

TOTAL DEFICIT

(688,832)

(672,963)

Interim Report 2020

5

Condensed Consolidated Statement of Changes In Equity - Unaudited

Equity

Available-

Retained

attributable

Statutory

Currency

for-sale

earnings/

to owners

Non-

Share

Capital

reserve

Other

translation investments accumulated

of the

controlling

capital

reserve

fund

reserve

reserve

reserve

losses

Company

interests

Total

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

At 1 January 2020

955,108

2,366,184

116,333

17,912

3,554

5,050

(3,576,558)

(112,417)

(560,546)

(672,963)

Profit (loss) for the period

-

-

-

-

-

-

57,922

57,922

(7,545)

50,377

Exchange differences arising on

  translation of foreign operations

-

-

-

-

561

-

-

561

-

561

Total comprehensive income(expense)

  for the period

-

-

-

-

561

-

57,922

58,483

(7,545)

50,938

Transfer to statutory reserve fund

-

-

5,047

-

-

-

(5,047)

-

-

-

Disposal of a subsidiary

-

-

(30,589)

(17,912)

(793)

-

30,589

(18,705)

(48,102)

(66,807)

At 30 June 2020 (unaudited)

955,108

2,366,184

90,791

-

3,322

5,050

(3,493,094)

(72,639)

(616,193)

(688,832)

At 1 January 2019

955,108

2,366,184

168,334

17,912

(9,085)

5,650

(3,304,853)

199,250

97,169

296,419

Loss for the period

-

-

-

-

-

-

(49,635)

(49,635)

(2,103)

(51,738)

Exchange differences arising on

  translation of foreign operations

-

-

-

-

60

-

-

60

-

60

Total comprehensive income(expense)

  for the period

-

-

-

-

60

-

(49,635)

(49,575)

(2,103)

(51,678)

Dividends paid to non-controlling interests

-

-

-

-

-

-

-

-

(134,092)

(134,092)

At 30 June 2019 (unaudited)

955,108

2,366,184

168,334

17,912

(9,025)

5,650

(3,354,488)

149,675

(39,026)

110,649

6

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

Condensed Consolidated Statement of Cash Flows - Unaudited

For the six months

ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Net cash from/(used in) operating activities

82,927

287,461

Net cash from/(used in) investing activities

(82,436)

10,153

Net cash from/(used in) financing activities

(14,061)

(298,153)

Net increase/(decrease) in cash and cash equivalents

(13,570)

(539)

Cash and cash equivalents at beginning of the period

65,222

58,394

Cash and cash equivalents at end of the period

51,652

57,855

Interim Report 2020

7

Notes:

1. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES

The unaudited condensed consolidated interim financial statements of the Group for the six months ended 30 June 2020 ("Interim Financial Statements") have been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").

The accounting policies adopted in preparing the Interim Financial Statements are consistent with those followed in the preparation of the Company's annual financial statements for the year ended 31 December 2019, except for those accounting policy changes that are expected to be reflected in the 2020 annual financial statements as described in note 2.

The preparation of the Interim Financial Statements in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

The Interim Financial Statements 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 HKFRSs.

The Interim Financial Statements is unaudited, but it has been reviewed by the Company's audit committee.

The financial information relating to the financial year ended 31 December 2019 that is included in the Interim Financial Statements as comparative information does not constitute the Group's annual consolidated financial statements prepared under the Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the HKICPA ("HKFRS") for that financial year but is derived from those financial statements. The Group's financial information relating to the financial year ended 31 December 2019 which is included in the annual report for the year ended 31 December 2019 is available at the Company's registered office. The auditor had reported and had disclaimed their opinion on those financial statements.

8

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

1. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (Continued)

During the period, the Group had net current liabilities of RMB1,611,285,000 as at 30 June 2020. As at 30 June 2020, the Group's total borrowings amounted to approximately RMB1,850,335,000, of which approximately RMB1,715,674,000 were classified as current liabilities, while its cash and cash equivalents amounted to approximately RMB51,652,000 only. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern, and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

However, certain plans and measures have been taken to mitigate the liquidity problem and to improve the Group's financial position, which include, but are not limited to, the exploration of possible debt restructuring opportunities and the enhancement of the Group's agrochemical products supply chain services. For details, see "Action Plan of the Group to Address the Going Concern Issue" below.

The directors of the Company (the "Directors") have reviewed the Group's cash flow projections prepared by management. The cash flow projections cover a period of not less than twelve months from 30 June 2020. They are of the opinion that, taking into account the above-mentioned plans and measures, the Group will have sufficient working capital to finance its operations and to meet its financial obligations as and when they fall due within twelve months from 30 June 2020. Accordingly, the Directors are satisfied that it is appropriate to prepare the consolidated financial statements on a going concern basis.

There are significant uncertainties as to the outcomes of the above events or conditions that may cast significant doubt on the Group's ability to continue as a going concern and, therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Should the use of the going concern basis in preparation of the Interim Financial Statements be determined to be not appropriate, adjustments would have to be made to write down the carrying amounts of the Group's assets to their realisable values, to provide for any further liabilities which might arise and to reclassify non-current assets and non-current liabilities as current assets and current liabilities, respectively. The effects of these adjustments have not been reflected in the unaudited Interim Financial Statements. These unaudited Interim Financial Statements should be read in conjunction with the annual consolidated financial statements of the Company for the year ended 31 December 2019, which have been prepared in accordance with the HKFRS, the provisions of the Hong Kong Companies Ordinance which concern the preparation of financial statements and included applicable disclosures required by the Listing Rules.

Interim Report 2020

9

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

The HKICPA has issued several amendments to HKFRSs that are first effective for the current accounting period of the Group. None of these developments has had a material effect on how the Group's results and financial position for the current or prior periods have been prepared or presented in this Interim Financial Statements.

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

3. Turnover and other income and gains

Turnover represents the income from agricultural and petrochemical products supply chain services, provision of financial leasing and commercial factoring services, agricultural big-data services, agrochemical products supply chain services net of taxes, discounts, returns and allowances, where applicable and after eliminating sales within the Group.

For the six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Turnover:

  Agricultural and petrochemical products supply chain services

-

2,383

  Financial leasing and commercial factoring services

3,219

12,049

Agricultural big-data services

8,018

8,611

  Agrochemical products supply chain services

892,272

809,135

903,509

832,178

Other income and gains:

Government grants

4,693

2,912

Interest income

975

538

Others

7,231

9,905

12,899

13,733

10

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

4. SEGMENT INFORMATION

  1. Primary reporting format - business segments
    The Group determines its operating segments based on the internal reports reviewed by the chief operating decision maker (i.e. Chief Executive Officer of the Group) who makes strategic decisions.
    During the six months ended 30 June 2020, the Group has four reportable segments. The segments are managed separately as each business offers different products and services and requires different business strategies. The following summary describes the operations in each of the Group's reportable segments:
    • Agricultural and petrochemical products supply chain services - sale of chemical fertilizers, fuel oil, mixed aromatics, white sugar, food products and frozen products
    • Financial leasing and commercial factoring services
    • Agricultural big-data services - provision of software related services, collection and transportation and other services, including installation and technical support of payment platform systems
    • Agrochemical products supply chain services - production and sale of pesticides and chemical products

Operating segments regarding road and bridge construction business had been discontinued during the year ended 31 December 2019. The segment information reported below does not include any amounts for the discontinued operation, which are described in more details in Note 8 to the Interim Financial Statements.

Interim Report 2020

11

4. SEGMENT INFORMATION (Continued)

  1. Primary reporting format - business segments (Continued)
    The segment results for the six months ended 30 June 2020 are as follows:

Agricultural

and

petrochemical

Financial

Agrochemical

products

leasing and

Agricultural

products

supply

commercial

big-data

supply chain

chain services

factoring

services

services

Total

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Reportable segment revenue

  from external customers

-

3,219

8,018

892,272

903,509

Reportable segment profit

(5,438)

1,146

4,084

80,757

80,549

Finance costs

(63,945)

(23,110)

-

(16,512)

(103,567)

Profit on disposal of subsidiaries

86,090

-

-

-

86,090

Profit before income tax expense

63,072

Income tax expense

(12,695)

Profit for the period

50,377

The segment results for the six months ended 30 June 2019 are as follows:

Agricultural

and

petrochemical

Financial

Agrochemical

products

leasing and

Agricultural

products

supply

commercial

big-data

supply chain

chain services

factoring

services

services

Total

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

(Restated)

Reportable segment revenue

from external customers

2,383

12,049

8,611

809,135

832,178

Reportable segment profit

(9,866)

512

3,071

59,846

53,563

Finance costs

(66,157)

(12)

(8)

(20,677)

(86,854)

Profit on disposal of subsidiaries

20,689

-

-

-

20,689

Loss before income tax expense

(12,602)

Income tax expense

(1,062)

Loss for the period

(13,664)

12

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

4. SEGMENT INFORMATION (Continued)

  1. Primary reporting format - business segments (Continued)
    Other segment items included in the condensed consolidated statement of comprehensive income are as follows:

Six months ended 30 June 2020

Six months ended 30 June 2019

Agricultural

Agricultural

and

and

petrochemical

Financial

Agrochemical

petrochemical

Financial

Agrochemical

products

leasing and

Agricultural

products

products

leasing and

Agricultural

products

supply chain

commercial

big-data

supply chain

supply chain

commercial

big-data

supply chain

services

factoring

services

services

Total

services

factoring

services

services

Total

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Depreciation

68

77

320

14,275

14,740

544

105

340

11,019

12,008

Amortisation

-

5

453

832

1,290

-

-

358

590

948

The reportable segment assets and liabilities at 30 June 2020 are as follows:

Agricultural

and

petrochemical

Financial

Agrochemical

products

leasing and

Agricultural

products

supply chain

commercial

big-data

supply chain

services

factoring

services

services

Total

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Reportable segment assets

635,716

373,267

172,844

1,557,910

2,739,737

Reportable segment liabilities

(1,674,422)

(768,519)

(112,074)

(873,554)

(3,428,569)

The reportable segment assets and liabilities at 31 December 2019 are as follows:

Agricultural

and

petrochemical

Financial

Agrochemical

products

leasing and

Agricultural

products

supply chain

commercial

big-data

supply chain

services

factoring

services

services

Total

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Reportable segment assets

579,149

382,420

201,349

1,542,542

2,705,460

Reportable segment liabilities

(2,004,783)

(754,709)

(143,259)

(979,602)

(3,882,353)

Interim Report 2020

13

  1. SEGMENT INFORMATION (Continued)
    1. Secondary reporting format - geographical segments
      No geographical segment information is presented as the entire Group's revenue from external customers is mainly derived from customers located in the PRC and all the Group's non-current assets are located in the PRC, which is considered as one geographic location with similar risks and returns.
  3. FINANCE COSTS

For the six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Interest expense on borrowing wholly repayable within

  five years and discounted commercial notes

103,533

86,854

Interest expense on lease liabilities

34

-

Total finance costs

103,567

86,854

6. (Loss)/PROFIT before income tax expense

(Loss)/profit before income tax expense is arrived at after charging/(crediting):

For the six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Depreciation of investment properties and

  property, plant and equipment

14,740

12,008

Staff costs

45,241

27,460

Cost of inventories recognised as expenses

696,615

658,847

Operating lease rental expenses in respect of

  - Land and buildings

696

1,232

Impairment loss recognised (reversed) on trade and

  other receivables

(25)

4

Impairment loss reversed on interests in associates

(2,367)

-

14

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

7. INCOME TAX EXPENSE

For the six months ended 30 June

2020

2019

Unaudited

Unaudited

RMB'000

RMB'000

Current income tax

  PRC enterprise income tax

12,092

2,205

  Hong Kong profits tax

-

-

Deferred income tax

603

(1,143)

12,695

1,062

Under the Law of the People's Republic of China on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25% for both periods.

Anhui Huaxing Chemical Industry Company Limited* ( 安徵華星化工有限公司 ) ("Anhui Huaxing"), one of the Company's subsidiaries, obtained the qualification of High and New Technology Enterprise from the relevant PRC government authorities and is subject to a preferential tax rate of 15%.

8. DISCONTINUED OPERATIONS AND DISPOSAL GROUP HELD FOR SALE

The loss for the period from discontinued operations is set out below:

For the six months ended 30 June

2020

2019

Unaudited

Unaudited

Note

RMB'000

RMB'000

Loss for the period from:

  Road and bridge construction business

(a)

-

(38,074)

-

(38,074)

Assets classified as held for sale is set out below:

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

Note

RMB'000

RMB'000

Assets classified as held for sale related to:

  Road and bridge construction business

(a)

-

3,255,714

  Prepaid lease payments

(b)

-

4,129

-

3,259,843

Interim Report 2020

15

8. DISCONTINUED OPERATIONS AND DISPOSAL GROUP HELD FOR SALE (Continued)

Liabilities associated with assets classified as held for sale is set out below:

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

Note

RMB'000

RMB'000

Liabilities associated with assets classified

  as held for sale related to:

  Road and bridge construction business

(a)

-

2,755,913

-

2,755,913

9. EARNINGS PER SHARE

Earnings per share is calculated by dividing the profit attributable to owners of the Company of RMB57,922,000 (six months ended 30 June 2019: RMB(49,635,000)) by the weighted average number of ordinary shares in issue throughout the period of 9,551,079,812 shares (six months ended 30 June 2019: 9,551,079,812 shares as restated).

For the six months ended 30 June

2020

2019

Unaudited

Unaudited

(Loss) profit attributable to owners of the Company (RMB'000)

57,922

(49,635)

Weighted average number of ordinary shares

  in issue (thousands)

9,551,080

9,551,080

Basic (loss) earnings per share (RMB per share)

0.006

(0.005)

Diluted (loss) earnings per share equals to basic (loss) earnings per share, as there were no potential dilutive ordinary shares issued during the six months ended 30 June 2020 and 2019.

10. INTERIM DIVIDEND

The Board does not recommend the payment of an interim dividend in respect of the six months ended 30 June 2020 (six months ended 30 June 2019: Nil).

16

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

11. INVENTORIES

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

Third party payment services equipments

153

169

Consumables

9,854

9,726

Work in progress

1,446

2,955

Finished goods

123,066

186,459

Raw materials

51,848

68,915

186,367

268,224

12. TRADE AND OTHER RECEIVABLES

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

Trade receivables

1,012,353

978,540

Bank notes receivable

4,748

13,370

Finance lease receivables

149,139

156,571

Factoring loan receivables

2,688,903

2,688,903

Total trade and notes receivables

3,855,143

3,837,384

Prepayments and deposits

41,385

38,775

Other receivables

2,176,641

2,061,682

Amount due from associates

110

110

Amount due from a related company

786

277

Less: Allowance for credit losses

(4,750,810)

(4,750,211)

1,323,255

1,188,017

Classified as:

Non-current assets

30,037

66,552

Current assets

1,293,218

1,121,465

1,323,255

1,188,017

Interim Report 2020

17

12. TRADE AND OTHER RECEIVABLES (Continued)

The ageing analysis of trade and notes receivables for agricultural and petrochemical products supply chain services, agricultural big-data services and agrochemical products supply chain services are prepared based on invoice dates. For the finance lease and commercial factoring business, the aging analysis is based on the lease and loan commencement dates set out in the relevant contracts. The details of aging analysis that are before impairment loss as follows:

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

Agricultural and petrochemical products supply

  chain services (note (a))

Less than 31 days

-

55

31 to 60 days

-

249

61 to 90 days

-

-

91 days to less than 1 year

109

500

1 year to less than 2 years

107,175

155,017

2 years to less than 3 years

640,465

674,630

Over 3 years

38,786

29,257

786,535

859,708

Finance lease and commercial factoring business (note (b))

Less than 6 months

-

26,988

6 months to less than 1 year

26,988

-

1 year to less than 2 years

1,268,240

1,274,323

Over 2 years

1,542,814

1,545,163

2,838,042

2,845,474

Agricultural big-data services (note (c))

Less than 1 year

19

-

1 year to less than 2 years

7,020

7,020

7,039

7,020

18

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

12. TRADE AND OTHER RECEIVABLES (Continued)

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

Agrochemical products supply chain services (note (d))

Less than 6 months

188,279

97,181

6 months to less than 1 year

29,799

27,119

1 year to less than 2 years

4,838

172

2 years to less than 3 years

242

472

Over 3 years

369

238

223,527

125,182

Total

3,855,143

3,837,384

Notes:

  1. For agricultural and petrochemical products supply chain services, credit terms granted to individual customer vary on a customer-by-customer basis which is determined by management with reference to the creditability of respective customer. Normally, the general credit period is ranging from 30 to 180 days.
  2. For finance lease receivables, the customers are obliged to settle the amounts according to the terms set out in the relevant contracts, and must acquire the leased assets at the end of the lease period. The maturity date for each lease contract ranges from 1 to 3 years.
    For factoring loan receivables, the customers are obliged to settle the amounts according to the terms set out in the relevant contracts. The maturity date for each loan contract is normally not more than 1 year.
  3. For agricultural big-data services, the credit period is negotiated on individual basis and ranges from 0 day to 540 days.
  4. For agrochemical products supply chain services, the credit period is negotiated on individual basis and ranges from 30 days to 60 days.

Interim Report 2020

19

13. TRADE AND OTHER PAYABLES

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

Trade payables

156,606

132,157

Notes payable

30,900

5,000

187,506

137,157

Amount due to related companies

71,793

244,839

Other payables and accruals

1,045,075

876,701

1,304,374

1,258,697

Less: non-current portion

(4,455)

(4,950)

Current portion

1,299,919

1,253,747

The ageing analysis of trade payables is as follows:

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

Agricultural and petrochemical products supply chain services

Less than 6 months

-

13

6 months to less than 1 year

-

-

1 year to less than 2 years

-

27,815

2 years to less than 3 years

27,815

-

3 years and over

207

207

28,022

28,035

Provision of agricultural big data services

Less than 6 months

279

407

6 months to less than 1 year

34

-

1 year and over

-

-

313

407

20

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

13. TRADE AND OTHER PAYABLES (Continued)

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

Agrochemical products supply chain services

Less than 6 months

142,559

100,605

6 months to less than 1 year

11,593

1,861

1 year to less than 2 years

1,969

1,580

2 years to less than 3 years

2,649

4,150

3 years and over

401

519

159,171

108,715

Total

187,506

137,157

14. BORROWINGS

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

Bank borrowings

Secured - interest-bearing loans

435,050

828,294

Unsecured - interest-bearing loans

-

-

435,050

828,294

Other borrowings

Secured - interest-bearing loans

1,415,285

1,423,553

1,850,335

2,251,847

As at 30 June 2020 and 31 December 2019, total borrowings of the Group were repayable as follows:

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

On demand or within one year

1,715,674

2,112,786

More than one year, but not exceeding five years

134,661

139,061

1,850,335

2,251,847

Interim Report 2020

21

15. SHARE CAPITAL

Number of

ordinary shares

Amount

RMB'000

Authorised, issued and fully paid:

Ordinary share of RMB0.1 each

At 1 January 2019

9,551,079,812

955,108

At 30 June 2019 and 31 December 2019

9,551,079,812

955,108

At 30 June 2020

9,551,079,812

955,108

16. DISPOSAL OF SUBSIDIARIES

During the six months ended 30 June 2020

Nantong Road and Bridge Engineering Co., Ltd. ( 南通路橋工程有限公司) ("Nantong Road and Bridge")

As Shanghai Dasheng Agro-chemical Co., Ltd* ( 上海大生農化有限公司 ), a wholly-owned subsidiary of the Company, failed to fulfill its repayment obligations under enforcement notices it received on 18 April 2019, on 30 May 2019, the Company received an execution ruling dated 23 April 2019 issued by the Shanghai Second Intermediate People's Court* ( 上海市第二中級人民法院 ) (the "Shanghai Court"), pursuant to which the Shanghai Court ordered, inter alia, that the Company's 91.3% equity interests in Nantong Road and Bridge (the "Nantong Shares") be sealed up, distrained, auctioned or sold. After successful auction of the Nantong Shares pursuant to the said execution ruling, the disposal of Nantong Road and Bridge was completed on 19 January 2020.

22

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

16. DISPOSAL OF SUBSIDIARIES (Continued)

During the six months ended 30 June 2019 (Continued)

Nantong Road and Bridge (Continued)

Analysis of assets and liabilities over which control was lost:

RMB'000

Property, plant and equipment

62,957

Right of use asset

11,913

Investment property

17,128

Goodwill

-

Intangible assets

56

Investment in joint venture

121,864

Financial asset at fair value through profit or loss

171,000

Equity instruments at fair value through other comprehensive income ("FVTOCI")

5,000

Deferred tax assets

60,301

Contract asset

18,670

Inventory

11,137

Restricted bank deposits

46,531

Bank balances and cash

24,851

Trade and other receivables

2,704,306

Amount due from group companies

53,091

Deferred tax liabilities

(1,508)

Tax liability

(1,015)

Borrowings

(646,055)

Lease liability

(4,205)

Amounts due to customers for contract work

(108,919)

Trade and other payables

(1,994,211)

Net assets

552,892

Interim Report 2020

23

16. DISPOSAL OF SUBSIDIARIES (Continued)

During the six months ended 30 June 2020 (Continued)

Nantong Road and Bridge (Continued)

Profit on disposal of a subsidiary:

RMB'000

Auction results

456,320

Wavier of amount due to the Group

53,091

Trade and other receivables

62,764

Other reserve

17,912

Exchange reserve

793

Non-controlling interest

48,102

Net assets disposed of

(552,892)

Profit on disposal

86,090

Net cash outflow arising on disposal:

RMB'000

Cash consideration

-

Less: cash and cash equivalent balances disposed of

(24,851)

(24,851)

24

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

17. Financial Instruments

(a) Categories of Financial Instruments

As at

As at

30 June

31 December

2020

2019

Unaudited

Audited

RMB'000

RMB'000

Financial assets

Equity instruments at FVTOCI

10,140

10,140

Loan and receivables (including cash and cash equivalents)

1,476,785

1,365,741

1,486,925

1,375,881

Financial liabilities

Amortised cost

3,155,719

3,511,489

  1. Fair Value Measurements of Financial Instruments
    Fair value of the Group's financial assets that are measured at fair value on a recurring basis
    Some of the Group's financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation technique(s) and inputs used).

Fair value hierarchy as at 30 June 2020

Level 1

Level 2

Level 3

Total

RMB'000

RMB'000

RMB'000

RMB'000

Equity instruments at FVTOCI

1,890

-

8,250

10,140

Fair value hierarchy as at 31 December 2019

Level 1

Level 2

Level 3

Total

RMB'000

RMB'000

RMB'000

RMB'000

Equity instruments at FVTOCI

1,890

-

8,250

10,140

Interim Report 2020

25

Management Discussion and Analysis

Financial and Business Review

In the first half of 2020, the external economic and market environment remained in a haze, thereby the Group's operating strategies still focused on stabilising the agrochemical products supply chain services business segment, accelerating the adjustment and reorganisation of the existing businesses, while actively discussing with potential external investors about possible cooperation opportunities.

The Group has been actively managing its liquidity position and legal proceedings arisen form the Group's financial conditions as a result of the events occurred in March 2018 relating to 中國華信能源有限公司 (China CEFC Energy Company Limited) ("China CEFC") (the "CEFC Events"). In December 2019, the Nantong Shares were put on auction, and were successfully sold at the second auction in January 2020 at a revised reserve price of RMB456.32 million. Upon completion of the transfer of the Nantong Shares, Nantong Road and Bridge was no longer a subsidiary of the Company.

During the period under review, turnover of the Group was approximately RMB903,509,000, representing an increase of approximately 8.6% as compared to the same period last year. During the period under review, the Group recorded a gross profit of approximately RMB203,366,000, representing an increase of approximately 26.9% as compared to the same period last year. Profit attributable to owners of the Group was approximately RMB57,922,000, representing an increase in profit of approximately 216.7% as compared to the same period last year. The increase in profit attributable to owners of the Company was mainly attributable to the disposal of Nantong Road and Bridge.

Business Operations

The existing main businesses of the Group comprise four business sectors, namely "agrochemical products supply chain services", "agricultural big-data services", "financial leasing and commercial factoring business" and "agricultural and petrochemical products supply chain service business".

After the successful auction of the Nantong Shares on 6 January 2020 and the completion of its disposal on 19 January 2020, the Company no longer engages in road and bridge construction, and the Group has removed the "road and bridge construction business" from the Group. Please refer to the announcements of the Company dated 29 June 2018, 1 March 2019, 30 May 2019, 23 September 2019, 18 October 2019, 22 October 2019, 4 December 2019, 10 December 2019, 6 January 2020 and 24 February 2020 for details.

26

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

Management Discussion and Analysis (Continued)

Agrochemical Products Supply Chain Services Business

In the first half of 2020, Anhui Huaxing and its subsidiaries (the "Anhui Huaxing Group") demonstrated a satisfying performance in the agrochemical products supply chain services business. As a high-tech enterprise certified by China, by virtue of its own technologies, Anhui Huaxing had managed to produce specific items that were listed in the "New and High Technology Areas with the Government's Primary Support", including pesticide technical materials such as glyphosate, fipronil, nicosulfuron, monosultap, imidacloprid, 2-methyl-4- chlorophenoxyacetic acid and so forth. Compared with the corresponding period last year, the production and marketing of the items mentioned above assumed a steady increase. The accumulative production of the Group was approximately 181,000 tonnes, sales of products was approximately 165,000 tonnes, and the achieved production-to-sale ratio was approximately 90.8%.

During the reporting period, in the context of greater emphasis being applied on security and environmental protection by the PRC government, Anhui Huaxing had been committed to the research and development investment in environmental protection, with an investment of a total of RMB19,713,000, which achieved tangible results in improving the efficiency of devices, reducing production consumption, as well as upgrading the transformation and treatment process of both wastewater and waste gas. Under the guidance of the policies "Focus on environmental protection, maintain sales, and give full play to production efficiency", Anhui Huaxing commenced work on various aspects such as environmental protection, production, sales and scientific research, responded rapidly to market and policy changes, and maintained a stable business growth.

For the six months ended 30 June 2020, turnover of the Group's agrochemical products supply chain services was approximately RMB892,272,000, representing approximately 98.8% of the total turnover of the Group; the gross profit was approximately RMB193,053,000, and the gross profit margin was approximately 21.6%.

Financial Leasing and Commercial Factoring Business

For the six months ended 30 June 2020, turnover of the Group's financial leasing and commercial factoring business was approximately RMB3,219,000, accounting for approximately 0.4% of the total turnover of the Group; the gross profit was approximately RMB2,532,000 and the gross profit margin was approximately 78.7%.

Agricultural Big-Data Services

For the six months ended 30 June 2020, turnover of the Group's agricultural big-data services business was approximately RMB8,018,000, representing approximately 0.9% of the total turnover of the Group; the gross profit was approximately RMB7,782,000 and the gross profit margin was approximately 97.1%.

Interim Report 2020

27

Management Discussion and Analysis (Continued)

Agricultural and Petrochemical Products Supply Chain Service Business

For the six months ended 30 June 2020, turnover of the Group's agricultural and petrochemical product supply chain service business was nil.

Other Income and Gains

For the six months ended 30 June 2020, the Group's other income and gains, including government grants and interest income, were approximately RMB12,899,000 (six months ended 30 June 2019: approximately RMB13,733,000), which remained relatively stable.

Distribution Costs

For the six months ended 30 June 2020, the Group's distribution costs were approximately RMB30,801,000 (six months ended 30 June 2019: approximately RMB31,215,000), which remained relatively stable.

Administrative Expenses

For the six months ended 30 June 2020, administrative expenses of the Group were approximately RMB107,307,000 (six months ended 30 June 2019: approximately RMB89,221,000). The increase in administrative expenses of the Group was mainly attributable to the significant increase in the number of staff hired to cope with the expansion of Anhui Huaxing during the period.

Impairment losses, net of reversal

For the six months ended 30 June 2020, the impairment loss recognised (reversed) on trade and other receivables and interests in associates amounted to approximately RMB2,392,000.

Finance Costs

For the six months ended 30 June 2020, finance costs of the Group were approximately RMB103,567,000, representing an increase of approximately 19.2% as compared to RMB86,854,000 of the corresponding period last year.

28

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

Management Discussion and Analysis (Continued)

(Loss) Profit Attributable to Owners of the Company

For the six months ended 30 June 2020, profit attributable to owners of the Group was approximately RMB57,922,000 (six months ended 30 June 2019: approximately RMB(49,635,000)), representing an increase in profit of 216.7% as compared to the corresponding period last year. The basic and diluted profit per share attributable to owners of the Company during the period were approximately RMB0.006 (six months ended 30 June 2019: approximately RMB(0.005)), representing an increase in profit of approximately 221% as compared to the corresponding period last year.

Capital Structure, Liquidity and Financial Resources

Capital Structure

As at 30 June 2020, the Group had total assets less current liabilities of approximately RMB(546,050,000) (31 December 2019: approximately RMB(525,889,000)), including non- current assets of approximately RMB1,065,235,000 (31 December 2019: RMB1,099,272,000) and net current liabilities of approximately RMB1,611,285,000 (31 December 2019: net current liabilities of approximately RMB1,625,161,000).

As at 30 June 2020, the Group's equity attributable to owners of the Company was approximately RMB(72,639,000), representing an increase of approximately 35% as compared to that of 31 December 2019, which was mainly attributable to an increase in earnings from the disposal of the Nantong Shares and from the agrochemical products supply chain services segment during the period.

Liquidity and Financial Resources

As at 30 June 2020 and 31 December 2019, the Group had restricted bank deposits and cash and cash equivalents of approximately RMB194,917,000 and RMB216,499,000, respectively.

As at 30 June 2020 and 31 December 2019, the Group had short-term borrowings of approximately RMB1,715,674,000 and RMB2,112,786,000, respectively.

As at 30 June 2020 and 31 December 2019, the Group had long-term borrowings of approximately RMB134,661,000 and RMB139,061,000, respectively.

As at 30 June 2020 and 31 December 2019, debt asset ratios of the Group were approximately 125.1% and 111.3%, respectively. Debt asset ratio was calculated as the percentage of total liabilities divided by total assets.

Interim Report 2020

29

Management Discussion and Analysis (Continued)

Foreign Exchange Risk

The Group's trade receivables were denominated in Renminbi while domestic and foreign purchases were either denominated in Renminbi or United States Dollars. As such, the Group does not have significant foreign currency exchange exposures for the time being. The management of the Group considers that no hedging or other relevant strategy is necessary currently, but will closely monitor the fluctuation of the exchange rates of the relevant foreign currencies against Renminbi.

Pledge of Assets for Continuing Operations

As at 30 June 2020, the Group's right-of-use assets with a net book value of approximately RMB56,414,000 (31 December 2019: RMB57,211,000) were pledged as security for the Group's bank borrowings. As at 30 June 2020, property, plant and equipment with a net book value of approximately RMB413,621,000 (31 December 2019: approximately RMB420,294,000) were pledged as security for the Group's borrowings. As at 30 June 2020, the Group had restricted bank deposits of approximately RMB31,548,000 (31 December 2019: approximately RMB5,548,000) as collateral for the bank borrowings and the issuance of commercial notes, performance bonds and bid bonds to customers.

EMPLOYEE INFORMATION

As at 30 June 2020, the Group had 1,443 employees (31 December 2019: 1,352 employees). During the period under review, total employees' remuneration (including Directors' remuneration) amounted to approximately RMB78,841,000 (six months ended 30 June 2019: approximately RMB58,650,000). Employees' remuneration is determined by reference to industry practice as well as the performance, qualification and working experience of individual employee. Remuneration packages comprised basic salary, discretionary bonus, state-managed retirement benefit schemes for employees in the PRC and mandatory provident funds schemes for employees in Hong Kong.

30

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

Management Discussion and Analysis (Continued)

SIGNIFICANT INVESTMENTS, MATERIAL ACQUISITIONS AND DISPOSAL OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

On 21 May 2018, the Company entered into an investment framework agreement with an independent third party and Nantong Road and Bridge (the "Possible Disposal"), pursuant to which the Company intended to sell and such purchaser intended to purchase part of the equity interest in Nantong Road and Bridge. As the Nantong Shares were put by the Shanghai Court on the first auction in December 2019, the Possible Disposal did not proceed. The Nantong Shares were successfully sold at the second auction in January 2020 with a revised reserve price of RMB456.32 million. On 19 January 2020, the disposal of the Nantong Shares was completed, and Nantong Road and Bridge was no longer a subsidiary of the Company after such disposal.

INVESTMENT BY POTENTIAL INVESTOR

On 4 March 2019, the Company entered into an intent cooperation framework agreement (the "Framework Agreement") with Guian Xinqu Xinxing Chanye Development Fund Management Company Limited* (貴安新區新興產業發展基金管理有限公司) (the "Potential Investor"), pursuant to which the Potential Investor intends to invest in the Company (the "Potential Investment"). The Potential Investment may result in the Potential Investor becoming a substantial shareholder of the Company. As at the date of this report, the terms and conditions of the formal agreement are yet to be determined and no agreement has been reached between the Company and the Potential Investor in relation thereto.

FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS

Save as disclosed in the Comapny's announcement dated 4 March 2019 in relation to the Potential Investment, the Company did not have any future plans for significant investments or capital assets as at the date of this report, but the Company may, at any point, be negotiating potential investments when considering it appropriate.

Interim Report 2020

31

Management Discussion and Analysis (Continued)

Significant events during the reporting period

Litigation with Jiujiang Bank Co., Ltd. Guangdong Free Trade Zone Nansha Sub-branch (the "Jiujiang Bank") (the "Jiujiang Legal Proceedings")

  1. On 15 January 2020, the Jiujiang Bank issued and filed a statement of claim against Ever Fortune Financial Leasing Co., Ltd.* (瑞盈信融(深圳)融資租賃有限公司) ("Ever Fortune"), an indirect non-wholly owned subsidiary of the Company, under the People's Court of Nansha District, Guangzhou* (廣州市南沙區人民法院) for breach of a factoring agreement due to default in repayment of the principal and related interests by Ever Fortune. The Jiujiang Bank requested the court, among other things, to order Ever Fortune to repay a principal amount of RMB3,711,000 and related interests. Shenzhen Dasheng Finance Holding Co., Ltd.* (深圳市大生金融控股有限公司), a direct wholly-owned subsidiary of the Company and the controlling shareholder of Ever Fortune, is one of the guarantors to such factoring agreement and was also named as one of the defendants. The court hearing of the proceedings was scheduled to be held on 24 March 2020.
    As at the date of this report, the Company had not received any judgment in relation to such proceedings. Details of the above proceedings are set out in the Company's announcement dated 18 March 2020.

32

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

Management Discussion and Analysis (Continued)

Significant events during the reporting period (Continued)

Litigation with CEFC Securities Shanghai Securities Limited (上海華信證券有限責任公司) ("CEFC Securities")

  1. On 16 January 2020, the Company received a civil judgment dated 19 December 2019 made by the Gansu Provincial Higher People's Court* (甘肅省高級人民法院) in relation to beach of loan agreement due to default in repayment of loan from CEFC Securities in a principal amount of RMB300,000,000 and all related interest. According to such civil judgment, the Company shall repay CEFC Securities, (i) the principal amount of the loan of RMB300,000,000; (ii) relevant overdue interest of approximately RMB10,732,000; (iii) relevant compound interest of approximately RMB52,000; (iv) relevant penalty interest of approximately RMB1,445,000; and (v) CEFC Securities' legal fees of approximately RMB350,000. The guarantors to the loan, namely, Shenzhen Dasheng Agricultural Group Co., Ltd.* (深圳市大生農業集團有限公司) ("Shenzhen Dasheng"), a substantial shareholder (as defined in the Listing Rules) of the Company, Dasheng (Fujian) Agricultural Ltd.* (大 生(福建)農業有限公司) and Hong Kong Dasheng Investment Holdings Company Limited* (香港大生投資控股有限公司) shall undertake joint and several guarantee liability for the repayment obligations of the Company under (i) to (v) mentioned above. In the event that the Company fails to fulfil its repayment obligations set out above, CEFC Securities is entitled to the priority of compensation claims against the Company's pledge of account receivables from two independent third parties of approximately RMB406,000,000, and the interest to be repaid shall be doubled.
    As at the date of this report, the Company did not make an appeal application on such civil judgment. Please refer to the Company's announcement dated 16 January 2020 for details.
  2. On 24 February 2020, the Company received an execution ruling dated 19 January 2020 issued by the Shanghai Court in relation to the CEFC Legal Proceedings (as defined in the announcement dated 24 February 2020) and the successful auction of the Nantong Shares. According to such execution ruling, the successful bidder is eligible to initiate the transfer of the Company's interest in the Nantong Shares from the date of receipt of such execution ruling. Upon completion of the transfer of the Nantong Shares, Nantong Road and Bridge ceased to be a subsidiary of the Company.

Interim Report 2020

33

Management Discussion and Analysis (Continued)

Significant events during the reporting period (Continued)

Litigation with Zhenjiang City Zhiying Investment Management Centre (Limited Partnership), Mr. Wu Hongbin and Madam Yan Xiefang (the "Zhiying Legal Proceedings")

  1. On 19 January 2020, the Shanghai Higher People's Court* (上海市高級人民法院) issued a civil mediation order, pursuant to which the Company shall repay Mr. Wu Hongbin, Madam Yan Xiefang and Zhenjiang City Zhiying Investment Management Centre (Limited Partnership)* (鎮江市智贏投資管理中心(有限合夥)) (the "Pledgee")(collectively, the "Plaintiffs") under the Zhiying Legal Proceedings on or before 14 February 2020 (i) the consideration of RMB129,166,715; (ii) the overdue interests on the consideration of RMB129,166,715 at the rate of 8% per annum accrued from 10 October 2018 up to the date of repayment; (iii) the Plaintiffs' legal fee of RMB500,000; and (iv) the Plaintiffs' property preservation liability insurance premium of RMB119,000. In the event that the Company fail to fulfil its repayment obligations set out under the civil mediation order, the Plaintiffs are entitled to enter into an agreement with Shanghai Kaiyi Corporate Management Consultancy Co., Ltd.* (上海諧易企業管理諮詢有限公司) ("Shanghai Kaiyi"), a direct wholly-owned subsidiary of the Company and a guarantor to the outstanding sums due by the Company to the Pledgee, where the Plaintiffs may be compensated through the value conversion of the 80% equity interest in Shanghai Runtong Industrial and Investment Co., Limited* (上海潤通實業投資有限公司) ("Shanghai Runtong") pledged by Shanghai Kaiyi in favour of the Pledgee.

On 26 May 2020, the Company received an execution ruling dated 15 May 2020 issued by the Shanghai Court in relation to the Zhiying Legal Proceedings. Pursuant to such execution ruling, the Company shall repay the Plaintiffs (i) the consideration of RMB129,166,715 and all related overdue interests; (ii) their legal fee of RMB500,000; and

  1. their property preservation liability insurance premium of RMB119,000. The Company shall also pay enforcement fees in the amount of RMB197,185.72.

As at the date of this report, no agreement has been reached between the Plaintiffs and Shanghai Kaiyi and no auction procedure or realisation of the equity interest in Shanghai Runtong had been initiated. Details of the Zhiying Legal Proceedings are set out in the Company's announcements dated 11 July 2019, 22 January 2020 and 15 May 2020.

EVENTS AFTER THE REPORTING PERIOD

The Directors are not aware of any significant event requiring disclosure that has taken place subsequent to 30 June 2020 and up to the date of this report.

34

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

Management Discussion and Analysis (Continued)

Action plan of the group to address the going concern issue

As at the date of this report, the outstanding material debts from the Group's agricultural and petrochemical products supply chain services business remain stable and have not been called for repayment yet. Further, the Company's debts of approximately RMB387 million under the Jiujiang Legal Proceedings have been settled upon the successful auction of the Nantong Shares and the disposal of Nantong Road and Bridge in January 2020. However, the Company is of the view that, there is no further room for negotiation with the debtors on the probable settlement of the outstanding material debts (including extension/renewal/refinancing/cash repayment/debt conversion to equity) from the remaining business operations of the Group. The Company shall explore other ways to handle the outstanding debts. The Company's action plans to settle its total borrowings of approximately RMB1.85 billion as at 30 June 2020 are as follows:

  • The Group commenced agrochemical products supply chain services in 2018 through the acquisition of Anhui Huaxing and its subsidiary ("Anhui Huaxing Group") and strives to develop and enhance this continuing operations segment. For the six months ended 30 June 2020, Anhui Huaxing recorded positive operating cash flow. The Company is of the view that Anhui Huaxing would further improve the Group's liquidity going forward; and
  • the Company is proactive in exploring possible debt restructuring opportunities, including disposal of loss-making subsidiaries, devising probable new repayment plans with debtors and reaching out for new investors. As disclosed in the Company's announcement dated 4 March 2019, the Company entered into an intent cooperation framework agreement regarding the Potential Investment. As at the date of this report, the Potential Investment is still pending and the Company has no other concrete investment plans.

Prospect

Due to the impact of the coronavirus disease (COVID-19) pandemic in early 2020, the shadow of global food crisis is now looming. Meanwhile, with the gradual improvement of the seasonal raw material market of traditional pesticides, the pesticide market is expected to benefit from favorable support in Autumn 2020.

As an important production supplier in the agricultural materials industry chain, Anhui Huaxing will continue to seek opportunities amid the pandemic and will actively enhance its production capacity. Whilst adhering to the standards of environmental impact assessment, it consistently produces value adding and technical contents through its existing products and focuses on promoting the increase of 8-10 percentage points in the output proportion of the green and intelligent glyphosate preparations.

In addition, the management of the Group will focus on resolving the Company's outstanding material debts in the second half of 2020 and shall work closely with its creditors, relevant banks, and other financial institutions to explore appropriate solutions.

Interim Report 2020

35

Directors', Chief Executives' and Supervisors' Interests and Short Positions in Shares and Underlying Shares

As at 30 June 2020, the interests or short positions of the Directors, chief executives and supervisors (the "Supervisors") of the Company in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ("SFO")) which were required, (a) to be recorded in the register required to be kept under section 352 of the SFO; or (b) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") contained in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") were as follows:

LONG POSITION IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY:

Approximate

Approximate

percentage of

percentage of

shareholding in

shareholding in

Total number of

such class

the issued

Name of

shares and

of shares

shares capital

Directors/Supervisor

Type of shares

Capacity

underlying shares

of the Company

of the Company

1.

Lan Huasheng

domestic shares

Interest in controlled

1,818,013,540 (L)

54.29%

19.04%

(Executive Director)

corporation

(notes 1 and 2)

H shares

Interest in controlled

247,000,000 (L)

3.98%

2.59%

corporation

(notes 1 and 3)

2.

Lu Tingfu

domestic shares

Interest in controlled

1,818,013,540 (L)

54.29%

19.04%

(Non-executive

corporation

(notes 1 and 2)

Director)

H shares

Interest in controlled

247,000,000 (L)

3.98%

2.59%

corporation

(notes 1 and 3)

L = Long position

Notes:

  1. Shenzhen Dasheng and Hong Kong Dasheng Investment Holdings Company Limited ("Hong Kong Dasheng") hold 1,818,013,540 domestic shares and 247,000,000 H shares of the Company, respectively. Hong Kong Dasheng is wholly owned by Shenzhen Dasheng, which in turn is owned as to 70% by Shenzhen Qianhai Dasheng Equity Investment Fund Co., Ltd. ("Qianhai Dasheng") and 30% by Dasheng Holdings Limited ("Dasheng Holdings"), and each of Qianhai Dasheng and Dasheng Holdings is owned as to 70% and 30% by Lan Huasheng and Lu Tingfu, respectively. By virtue of the SFO, Lan Huasheng and Lu Tingfu are deemed to be interested in 1,818,013,540 domestic shares and 247,000,000 H shares of the Company held by Shenzhen Dasheng and Hong Kong Dasheng respectively.
  2. 1,818,013,540 domestic shares are charged by Shenzhen Dasheng in favour of a third party as security for a loan, and the loan amount is for Shenzhen Dasheng's own use.
  3. 200,000,000 H shares are pledged by Hong Kong Dasheng as security for a loan granted by a third party for its own use.

36

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

SUBSTANTIAL SHAREHOLDERS' INTERESTS AND OTHER PERSONS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

As at 30 June 2020, the persons (not being a Director, Supervisor or chief executive of the Company) or companies had interests or short positions in the shares or underlying shares of the Company which were required to be recorded in the register required to be kept under section 336 of the SFO, or who were deemed to be interested, directly and/or indirectly, in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company were listed as follows:

Approximate

Approximate

percentage of

percentage of

shareholding in

shareholding in

Total number of

such class

the issued

shares and

of shares

shares capital

Name of Shareholders

Type of shares

Capacity

Underlying shares

of the Company

of the Company

1.

Qianhai Dasheng

domestic shares

Interest in controlled

1,818,013,540

(L)

54.29%

19.04%

corporation

(notes 1 and 2)

H shares

Interest in controlled

247,000,000

(L)

3.98%

2.59%

corporation

(notes 1 and 3)

2.

Dasheng Holdings

domestic shares

Interest in controlled

1,818,013,540

(L)

54.29%

19.04%

corporation

(notes 1 and 2)

H shares

Interest in controlled

247,000,000

(L)

3.98%

2.59%

corporation

(notes 1 and 3)

3.

Shenzhen Dasheng

domestic shares

Beneficial owner

1,818,013,540

(L)

54.29%

19.04%

(notes 1 and 2)

H shares

Interest in controlled

247,000,000

(L)

3.98%

2.59%

corporation

(notes 1 and 3)

4.

Hong Kong Dasheng

H shares

Beneficial owner

247,000,000

(L)

3.98%

2.59%

(note 3)

5.

Zhenjiang Runde

domestic shares

Beneficial owner

1,530,986,460

(L)

45.71%

16.03%

  • Equity Investment
  • Fund Ltd.*
  • (鎮江潤得股權投資 基金有限公司)

6.

Xinzhong Stable

H shares

Beneficial owner

1,427,024,000 (L)

23.01%

14.94%

Investment

(note 4)

Fund Limited

7.

Zhong Hua

H shares

Interest in controlled

1,427,024,000 (L)

27.93%

18.13%

corporation

(note 5)

L = Long position

Interim Report 2020

37

Substantial Shareholders' Interests and Other Persons' Interests and Short Positions in Shares and Underlying Shares (Continued)

Notes:

  1. Hong Kong Dasheng is wholly owned by Shenzhen Dasheng, which in turn is owned as to 70% by Qianhai Dasheng and 30% by Dasheng Holdings, and each of Qianhai Dasheng and Dasheng Holdings is owned as to 70% and 30% by Lan Huasheng and Lu Tingfu, respectively. By virtue of the SFO, Qianhai Dasheng and Dasheng Holdings are deemed to be interested in 1,818,013,540 domestic shares and 247,000,000 H shares of the Company held by Shenzhen Dasheng and Hong Kong Dasheng, respectively, and Shenzhen Dasheng is deemed to be interested in the 247,000,000 H shares held by Hong Kong Dasheng.
  2. 1,818,013,540 domestic shares held by Shenzhen Dasheng are charged by Shenzhen Dasheng in favour of a third party as security for a loan, and the loan amount is for Shenzhen Dasheng's own use.
  3. 200,000,000 H shares are pledged by Hong Kong Dasheng as security for a loan granted by a third party for its own use.
  4. Based on the latest disclosure of interest filings made by Xinzhong Stable Investment Fund Limited ("Xinzhong Stable Investment"), Xinzhong Stable Investment is wholly owned by Zhong Hua as at 30 June 2020. By virtue of the SFO, Zhong Hua is deemed to be interested in the H shares held by Xinzhong Stable Investment.
  5. Based on the latest disclosure of interest filings made by Zhong Hua as at 30 June 2020.

Directors' and Supervisors' Right to Acquire Shares or Debentures

None of the Directors and Supervisors or their respective associates was granted by the Company or its subsidiaries any right to acquire shares or debentures of the Company or any other body corporate, or had exercised any such right during the six months ended 30 June 2020.

Corporate Governance

Corporate Governance Code

The Board is of the view that throughout the six months ended 30 June 2020, the Company has complied with the code provisions of the Corporate Governance Code (the "CG Code") as set out in Appendix 14 to the Listing Rules.

On 7 May 2020, the Board resolved to amend the terms of reference of the audit committee of the Board (the "Audit Committee") by revising the number of members of the Audit Committee from four non-executive Directors to at least three non-executive Directors. The revised terms of reference of the Audit Committee has been published on the website of the Stock Exchange on 7 May 2020.

Model Code for Securities Transactions

The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules as its own code of conduct regarding directors' and supervisors' securities transactions. Following a specific enquiry, all the Directors and the Supervisors confirmed that they have complied with the required standard as set out in the Model Code throughout the six months ended 30 June 2020.

38

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

Purchase, Sales or Redemption of Listed Securities

During the six months ended 30 June 2020, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities.

Audit Committee

The Audit Committee has adopted the terms of reference of Audit Committee aligned with the code provisions in the CG Code. The primary duties of the Audit Committee are to review and monitor the financial reporting process and internal controls system of the Group as well as overseeing the relationship with the Company's external auditor. The Audit Committee comprises two independent non-executive Directors, namely, Mr. Chung Cheuk Ming and Mr. Yang Gaoyu and one non-executive Director, namely, Mr. Lu Tingfu. The chairman of the Audit Committee is Mr. Chung Cheuk Ming.

The Audit Committee, together with the management of the Company, has reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended 30 June 2020 and had the opinion that the preparation of the interim results is in compliance with the applicable accounting standards and requirements (including on a going concern basis) and the Listing Rules.

Dividend

The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: Nil).

Directors' Interest in a Competing Business

None of the Directors or any of their respective associates had an interest in a business which competes or may compete with the business of the Group.

Change of Directors

The change of Directors during the six months ended 30 June 2020 are as follows:

On 3 February 2020, Mr. Zhou Jianhao, an independent non-executive Director, the chairman of the remuneration and assessment committee, a member of the nomination committee and a member of the audit committee, passed away due to ill health. Following the passing of Mr. Zhou, the Board comprises six members, including three executive Directors, one non-executive Director and two independent non-executive Directors, with the number of independent non-executive directors falling below the minimum number of three as required under Rule 3.10(1) of the Listing Rules. On 7 May 2020, the Stock Exchange granted to the Company a waiver from strict compliance with Rule 3.10(1) of the Listing Rules for the period from 3 May 2020 to 30 June 2020.

Interim Report 2020

39

Change of Directors (Continued)

On 30 June 2020, Mr. Liu Jun was elected and appointed as an independent non-executive Director of the sixth session of the Board. Following the appointment of Mr. Liu, the composition of the Board comprises three executive Directors, one non-executive Director and three independent non-executive Directors, and the Company has complied with the requirements under Rule 3.10(1) of the Listing Rules.

Amendment of Articles of Association

Based on the relevant regulations of the regulatory institutions and actual conditions of the Company, the Board proposed on 7 May 2020 to amend the relevant articles of the articles of association of the Company (the "Articles of Association"). The proposed amendments included the notice period and convening procedures for convening general meetings and other ancillary matters; (2) shares repurchase, including supplementing situations where share repurchase of the Company is allowed in accordance with the PRC Company Law, and make corresponding amendments to the duties and responsibilities of general meeting and the Board for shares repurchase; and (3) the Board seats specified in the relevant articles of the Articles of Association. The above amendments have been approved by shareholders at the annual general meeting and the class meetings of the Company on 30 June 2020. The revised Articles of Association has been published on the website of the Stock Exchange on 30 June 2020.

Appreciation

On behalf of the Board, I wish to express my sincere gratitude to the members of the Board, the management and the staff of the Group for their industrious performance and dedication during the past half year, and to the shareholders and business partners for their continuous support for the Group.

By Order of the Board

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

Lan Huasheng

Chairman

Shanghai, the PRC, 28 August 2020

40

Shanghai Dasheng Agriculture Finance Technology Co., Ltd.

www.dsgd-sh.co

This is an excerpt of the original content. To continue reading it, access the original document here.

Attachments

  • Original document
  • Permalink

Disclaimer

Shanghai Dasheng Agriculture Finance Technology Co. Ltd. published this content on 16 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 September 2020 08:04:01 UTC