爱得威建设集团(06189) - 2024 - 中期业绩

Financial Summary The company experienced a severe financial deterioration in the first half of 2024, marked by significant revenue decline and a shift from profit to substantial loss Financial Highlights In H1 2024, the company's performance severely deteriorated, with revenue plummeting 87.37% to RMB 5.53 million and gross profit sharply decreasing by 98.71%, shifting from profit to a loss of RMB 8.52 million Key Financial Indicators for H1 2024 (Six Months Ended June 30) | Indicator | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue (RMB Million) | 5.53 | 43.79 | -87.37% | | Gross Profit (RMB Million) | 0.09 | 6.96 | -98.71% | | Gross Margin | 1.61% | 15.89% | -89.87% | | Loss for the Period (RMB Million) | (8.52) | 64.24 | -113.26% | | Basic and Diluted Loss Per Share (RMB) | (0.04) | 0.27 | -114.81% | Consolidated Financial Statements The consolidated financial statements reveal a significant net loss and a severe negative equity position, indicating profound financial distress Consolidated Statement of Comprehensive Income During the reporting period, the company recorded a net loss of RMB 8.518 million, a significant reversal from a profit of RMB 64.243 million in the prior year, primarily due to a sharp decline in revenue failing to cover administrative expenses and substantial net finance costs Summary of Consolidated Statement of Comprehensive Income (Six Months Ended June 30, RMB Thousand) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | 5,534 | 43,794 | | Gross Profit | 89 | 6,959 | | Operating Loss | 8,004 | 76,882 | | Finance Costs - Net | (13,922) | (11,317) | | Loss Before Income Tax | (5,918) | 65,565 | | Loss for the Period | (8,518) | 64,243 | Consolidated Statement of Financial Position As of June 30, 2024, the company is severely insolvent with total liabilities of RMB 724.129 million against total assets of only RMB 67.639 million, resulting in a negative total equity of RMB 656.49 million and a highly vulnerable financial position with net current liabilities of RMB 698.157 million and cash equivalents of only RMB 0.483 million Summary of Consolidated Statement of Financial Position (RMB Thousand) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | 67,639 | 93,566 | | Total Liabilities | 724,129 | 741,537 | | Total Equity | (656,490) | (647,971) | | Current Assets | 24,668 | 40,938 | | Current Liabilities | 722,826 | 740,197 | | Net Current Liabilities | (698,157) | (699,259) | Notes to Financial Information The notes provide critical details on the company's going concern issues, revenue composition, and the significant impairment of trade receivables Going Concern The report explicitly states significant uncertainties regarding the group's ability to continue as a going concern due to net loss, net current liabilities, net liabilities, and extremely low cash and cash equivalents, with management pursuing debt restructuring, new financing, and cost control measures - As of June 30, 2024, the Group recorded a net loss of approximately RMB 8.518 million, net current liabilities of approximately RMB 698 million, net liabilities of approximately RMB 656 million, and cash and cash equivalents of only RMB 0.483 million, indicating significant uncertainties that may cast substantial doubt on the Group's ability to continue as a going concern[8] - To alleviate liquidity pressure, the directors plan to implement the following measures: - Negotiate debt restructuring and secure new funding with creditors and potential investors - Actively seek new financing channels - Implement various measures to control administrative expenses to conserve liquidity[8] Revenue and Loss Per Share Total revenue for the reporting period was RMB 5.534 million, predominantly from construction contracts, resulting in a basic and diluted loss per share of RMB 0.04, a reversal from a profit of RMB 0.27 per share in the prior year Revenue Composition (Six Months Ended June 30, RMB Thousand) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Revenue from construction contracts | 5,519 | 43,717 | | Sales, design, and other income | 15 | 77 | | Total | 5,534 | 43,794 | - For the six months ended June 30, 2024, basic loss per share was RMB 0.04, compared to basic earnings per share of RMB 0.27 in the prior year[15] Dividends The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2024 - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2024 (2023: nil)[16] Key Balance Sheet Items Analysis At period-end, net trade receivables decreased to RMB 14.315 million, but a substantial impairment provision of RMB 711.461 million reflects high collection risk, while trade payables of RMB 316 million and total borrowings of RMB 226 million, all due within one year, indicate immense short-term repayment pressure Trade Receivables (RMB Thousand) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Trade receivables | 725,776 | 758,468 | | Less: Impairment allowance | (711,461) | (745,351) | | Trade receivables - Net | 14,315 | 13,117 | - As of June 30, 2024, the Group's total borrowings were approximately RMB 226 million (December 31, 2023: RMB 241 million), all repayable within one year, with a weighted average effective annual interest rate of 9.21%[19][21] Management Discussion and Analysis Management discusses the severe impact of market downturns on business operations, the sharp decline in financial performance, and the critical liquidity challenges faced by the company Business Review The company's business was severely impacted by the downturn in China's real estate sector and macroeconomic slowdown, leading to a significant reduction in operations in H1 2024 due to debt defaults and funding chain disruptions, though a new RMB 600 million contract offers future prospects - The construction and decoration industry was severely affected by the slowdown in China's economic growth, influenced by the downturn in the Chinese real estate sector, the China-US trade war, and Western decoupling pressures[22] - Business operations continued to be significantly curtailed in H1 2024 due to bank debt defaults, broken capital chains, and an increase in lawsuits[23] - On May 30, 2024, the company signed an EPC contract for a 'Waste-Free Green Energy Integrated Super Charging Station' with a contract value of RMB 600 million, scheduled to commence construction on October 1, 2024[23] Financial Review In H1 2024, revenue plummeted 87.36% to RMB 5.53 million primarily due to a significant reduction in contract value, gross margin sharply declined from 15.89% to 1.61%, and the company recorded a loss of RMB 8.52 million as revenue failed to cover administrative and finance costs Revenue and Gross Profit Changes (Six Months Ended June 30) | Indicator | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | Approx. RMB 5.53 Million | Approx. RMB 43.79 Million | -87.36% | | Gross Profit | Approx. RMB 0.09 Million | Approx. RMB 6.96 Million | -98.72% | | Gross Margin | 1.61% | 15.89% | -14.28 percentage points | - For the six months ended June 30, 2024, a loss of approximately RMB 8.52 million was recorded, primarily because revenue could not cover administrative expenses and finance costs[25] Liquidity and Capital Resources The company faces extreme liquidity constraints with cash and bank balances of only RMB 9.43 million at period-end, has defaulted on debt, is unable to secure new financing, and is pursuing debt restructuring, with its debt-to-asset ratio soaring to 1,070.58%, indicating severe financial distress - As of June 30, 2024, the Group's cash and bank balances (including restricted cash) were approximately RMB 9.43 million, a decrease from RMB 10.23 million at the end of 2023, and the company is unable to obtain new external financing due to debt defaults[26] - As of the date of this announcement, the total amount of overdue and unpaid bank borrowings reached RMB 217.83 million[29] - The debt-to-asset ratio surged from 792.53% at the end of 2023 to 1,070.58% as of June 30, 2024, primarily due to further full impairment provisions for trade receivables and contract assets[31] - Due to multiple lawsuits, bank deposits totaling approximately RMB 8.95 million of the Group have been frozen by Chinese courts[34] Future Prospects and Strategies The company's future hinges on successful debt restructuring and new investment, with strategic plans to focus on niche markets, optimize management, and explore new energy and technology sectors Company Strategy The company's future survival and development are highly dependent on successful debt restructuring and the introduction of new investors, with a strategic focus on niche markets like healthcare and hotels, the Greater Bay Area, and exploring a transformation towards new energy and technology-driven sectors - The company is committed to achieving revitalization by leveraging debt restructuring and introducing new investors to resolve debt and liquidity risks[38] - Future strategies include: - Focusing on Regional and Niche Markets: Prioritizing business development in healthcare and hotel sectors, with a focus on the Greater Bay Area - Optimizing Management: Streamlining engineering management processes and strengthening risk control and liquidity management - Talent Reserve: Enhancing corporate culture and attracting excellent management talent - Exploring New Businesses: Collaborating with new investors to explore new energy and technology innovation sectors, transitioning towards a technology-driven enterprise[39][40][41][42] Other Information This section details critical events post-reporting period, including significant loan defaults and the rejection of the company's bankruptcy reorganization application Events After Reporting Period Post-reporting period, the company's crisis intensified with approximately RMB 217.83 million in loans overdue and unpaid as of the announcement date, and its bankruptcy reorganization application submitted on July 5, 2024, was rejected, prompting plans for re-application after adjusting the proposal - From the end of the reporting period to the date of this announcement, loans totaling approximately RMB 217.83 million have matured and the Group has failed to repay them, constituting a breach of loan agreements[48] - On July 5, 2024, the company announced that its application for bankruptcy reorganization submitted to the Shenzhen Intermediate People's Court was rejected, and the company plans to re-apply to the court after adjusting its reorganization proposal[49]