友联国际教育租赁(01563) - 2020 - 年度财报

Company Information This report details the company's fundamental information, including board members, committee structures, company secretary, registered office, principal place of business, auditor, and principal bankers - This report provides core information on the company's basic details, including board members, committee composition, company secretary, registered office, principal place of business, auditor, and principal bankers[5] CEO Statement The CEO reviews the 2020 operating environment, noting the group's successful turnaround despite global economic slowdown, COVID-19, and increased industry regulation - The CEO reviewed the 2020 operating environment, noting that despite multiple challenges such as global economic slowdown, the COVID-19 pandemic, and increased industry regulation, which led to rent arrears from some clients (especially in the medical sector), the Group successfully achieved a turnaround through the management team's efforts[6][7] - Looking ahead, the company is committed to improving operating performance and gradually implementing its FinTech strategy to achieve stable and long-term development[7] Management Discussion and Analysis This section provides an in-depth analysis of the company's operational performance, financial results, liquidity, and risk management strategies for the reporting period Business Review In 2020, China's finance lease industry experienced slower growth and increased competition due to macroeconomic factors and the pandemic, with national finance lease contract balances decreasing by 2.3% - In 2020, the development of China's finance lease industry slowed, with the national finance lease contract balance approximately RMB 6.50 trillion, a year-on-year decrease of 2.3%[8] - The China Banking and Insurance Regulatory Commission issued the "Interim Measures for the Supervision and Administration of Finance Lease Companies" in June 2020, strengthening regulatory requirements and making risk control a core industry issue[8] - Affected by the macroeconomic environment, some of the Group's lessees, particularly in the medical industry, experienced rent arrears, leading to further impairment provisions for finance lease receivables[9] Financial Review In FY2020, the Group successfully turned losses into profits, achieving a net profit of RMB 16.6 million, primarily due to significantly lower finance costs and reduced impairment provisions for finance lease receivables Revenue Group revenue, primarily from finance leases, decreased by 4.9% to RMB 248.0 million in 2020, mainly due to a reduction in new finance lease business during the year | Indicator | 2020 (RMB million) | 2019 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 248.0 | 260.9 | -4.9% | Finance Costs Finance costs decreased by 31.0% to RMB 128.8 million in 2020, primarily due to reduced borrowing costs and bond interest expenses following bond repayments | Indicator | 2020 (RMB million) | 2019 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Finance Costs | 128.8 | 186.7 | -31.0% | Profit (Loss) for the Year The Group achieved a turnaround in 2020, reporting a profit of approximately RMB 16.6 million, a significant improvement from the RMB 84.7 million loss in 2019, mainly due to reduced impairment provisions for finance lease receivables | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Profit (Loss) for the Year (RMB million) | 16.6 | (84.7) | | Net Profit Margin | 6.7% | -32.5% | Dividends The Board of Directors does not recommend the payment of any final dividend for the year ended December 31, 2020 - The Board of Directors does not recommend a final dividend for the year 2020 (2019: nil)[18] Liquidity, Financial Resources and Capital Sources As of the end of 2020, the Group's cash and cash equivalents significantly decreased to RMB 35.7 million, while total equity slightly increased to RMB 1,195.5 million, and the gearing ratio improved to 55.5% | Indicator (as at Dec 31) | 2020 (RMB million) | 2019 (RMB million) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 35.7 | 257.6 | | Total Equity | 1,195.5 | 1,183.1 | | Gearing Ratio | 55.5% | 58.6% | Finance Lease Receivables Net finance lease receivables slightly increased by 0.6% to RMB 2,703.9 million at the end of 2020, but impairment loss provisions significantly rose by 37.9% due to increased arrears, particularly in the medical sector | Indicator (as at Dec 31) | 2020 (RMB million) | 2019 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Finance Lease Receivables (Net) | 2,703.9 | 2,686.6 | +0.6% | | Impairment Loss Provisions | 287.9 | 208.8 | +37.9% | - The increase in impairment loss provisions was primarily due to rent arrears from some lessees, especially in the medical industry[21] Risk Management The Group considers credit risk its primary risk and has established a comprehensive risk management system, voluntarily adopting a five-category classification method for finance lease receivables based on overdue days - The Group adopts a five-category classification method to measure and monitor the asset quality of finance lease receivables, with specific classifications as follows: - Normal: Overdue for less than or equal to 90 days - Special Mention: Overdue for more than 90 days but less than or equal to 150 days - Substandard: Overdue for more than 150 days but less than or equal to 210 days - Doubtful: Overdue for more than 210 days but less than or equal to 270 days - Loss: Overdue for more than 270 days[25][26][27] Use of Proceeds from Global Offering The company raised approximately RMB 319.2 million net proceeds from its 2019 listing, with RMB 32.5 million remaining unutilized by the end of 2020 due to a slowdown in business development caused by the COVID-19 pandemic | Use of Net Proceeds | Planned Amount (RMB million) | Utilized Amount (RMB million) | Unutilized Amount (RMB million) | | :--- | :--- | :--- | :--- | | Healthcare Industry Expansion | 159.6 | 128.0 | 31.6 | | Aviation and Public Infrastructure Industry Expansion | 127.7 | 127.7 | – | | General Working Capital | 31.9 | 31.0 | 0.9 | | Total | 319.2 | 286.7 | 32.5 | Events After Reporting Period In January 2021, an indirect wholly-owned subsidiary of the Group entered into an agreement to sell a Gulfstream G550 aircraft for 23.2 million USD, terminating the corresponding finance lease agreement - In January 2021, the company sold a Gulfstream G550 aircraft for 23.2 million USD and terminated the related finance lease agreement[33] Outlook and Plans For 2021, the Board anticipates accelerated economic recovery with vaccine rollout and plans to steadily advance business, strengthen internal management, and seek new breakthroughs in industries and regions while strictly controlling risks - The Group plans to steadily advance its business in 2021, prioritizing risk prevention and asset monitoring, while seeking new breakthroughs in industries and regions[35] Biographies of Directors This section provides detailed personal and professional backgrounds of the company's executive, non-executive, and independent non-executive directors, including their roles within the Group - This section provides detailed personal biographies, professional backgrounds, and positions held within the Group for the company's executive directors, non-executive directors, and independent non-executive directors[37][39][42][44] - Key management personnel include: - Mr. Li Luqiang: Executive Director and CEO, responsible for the Group's strategic planning and overall management - Mr. Li Zhixuan: Executive Director and Deputy General Manager, responsible for operations and risk management - Mr. Jiao Jianbin: Non-executive Director, appointed on September 16, 2020 - Mr. Liu Changxiang, Mr. Liu Xuewei, Mr. Jiao Jian: All independent non-executive directors, responsible for providing independent opinions[37][39][42][44][45] Corporate Governance Report This report outlines the company's adherence to corporate governance principles, detailing the structure and activities of the Board of Directors and its committees, as well as risk management and shareholder rights Board of Directors During the reporting period, the company complied with corporate governance codes, with the Board comprising executive, non-executive, and independent non-executive directors, and held 10 meetings with high attendance - The position of Chairman has been vacant since October 9, 2019, with responsibilities jointly assumed by Board members[51] - During the reporting period, the Board held 10 meetings, with most directors attending all meetings[56] Board Committees The company has established Audit, Remuneration, and Nomination Committees, all composed of independent non-executive directors, with detailed responsibilities, members, and meeting frequencies outlined - The Audit Committee, chaired by Mr. Liu Xuewei, held 6 meetings during the year[60] - The Remuneration Committee, chaired by Mr. Liu Changxiang, held 3 meetings during the year[61] - The Nomination Committee, chaired by Mr. Liu Xuewei, held 3 meetings during the year[63] Risk Management and Internal Control The Board is ultimately responsible for the Group's risk management and internal control systems, which are reviewed annually, and confirmed to be adequate and effective as of the end of 2020 - The Group engaged external internal control consultants to review its internal control system for the year ended December 31, 2020, and no significant risks or control deficiencies were identified[80] - The Board and Audit Committee confirmed that the Group's risk management and internal control systems were adequate and effective for the year 2020[81] Shareholders' Rights This section outlines measures to protect shareholder rights, including communication policies and procedures for shareholders to convene extraordinary general meetings and propose resolutions, with a 10% paid-up capital threshold for EGM requests - Pursuant to Article 58 of the Company's Articles of Association, shareholders holding not less than 10% of the paid-up capital have the right to request the Board to convene an extraordinary general meeting[92] Directors' Report This report provides an overview of the company's operations, including customer and supplier relationships, directors' and major shareholders' interests, connected transactions, and significant litigation updates Customers and Suppliers In 2020, the Group's customer concentration increased, with the top five customers accounting for 32.62% of total revenue, up from 16.14% in 2019 | Customer Concentration | 2020 | 2019 | | :--- | :--- | :--- | | Top Five Customers as % of Total Revenue | 32.62% | 16.14% | | Largest Customer as % of Total Revenue | 10.93% | 3.97% | Directors' and Chief Executive's Interests in Shares and Debentures This report discloses the shareholdings of directors and key executives in the company, with CEO Mr. Li Luqiang holding approximately 0.57% of the company's shares as of the end of 2020 - CEO Mr. Li Luqiang holds approximately 0.57% of the company's shareholding interests, including interests through controlled corporations and beneficial ownership[122] Major Shareholders' Interests in Shares As of the end of 2020, Union Capital Pte. Ltd., wholly owned by Ms. Sui Yongqing, was the company's controlling shareholder with a 51.23% stake, while PA Investment Funds SPC held 9.87% | Major Shareholder | Shareholding Percentage | | :--- | :--- | | Union Capital Pte. Ltd. (and associates) | 51.23% | | PA Investment Funds SPC (and associates) | 9.87% | Connected Transactions The report discloses the Group's connected transactions, primarily a finance lease framework agreement with Nanshan Group Co. Ltd. and its subsidiaries, confirmed by independent non-executive directors as fair and reasonable - The Group has a finance lease framework agreement with its associate, Nanshan Group Co. Ltd., providing sale-and-leaseback and direct finance lease services to the Group[128] Litigation The report updates on two significant lawsuits: the dispute with Shangqiu Fourth People's Hospital was resolved in September 2020 with full payment, and the lawsuit against Nehe People's Hospital resulted in a favorable judgment, with court enforcement underway - The lawsuit against Shangqiu Hospital was resolved, with the counterparty settling and repaying all outstanding amounts in September 2020[140] - The lawsuit against Nehe Hospital resulted in a favorable judgment, and the court is assessing the value of frozen guarantor assets to enforce the judgment[141][142] Independent Auditor's Report The auditor, Shinewing (HK) CPA Limited, issued an unqualified opinion on the Group's consolidated financial statements for the year ended December 31, 2020, highlighting impairment provisions for finance lease receivables as a key audit matter - Shinewing (HK) CPA Limited, the auditor, issued an unqualified opinion on the Group's consolidated financial statements for the year ended December 31, 2020[151] - The auditor identified "Expected Credit Loss Provisions for Finance Lease Receivables" as a key audit matter due to its materiality and the significant management judgment involved[155] Consolidated Financial Statements This section presents the Group's comprehensive financial performance, position, and cash flows for the reporting period, along with detailed notes explaining key accounting policies and financial items Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the Group's operating results for FY2020, showing a revenue of RMB 248.0 million and a profit for the year of RMB 16.6 million, successfully turning around from a loss of RMB 84.7 million in 2019 | Indicator (RMB thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 248,046 | 260,876 | | Profit (Loss) Before Tax | 12,817 | (101,589) | | Profit (Loss) for the Year | 16,610 | (84,692) | Consolidated Statement of Financial Position This statement reflects the Group's financial position at the end of 2020, with total assets of RMB 3,109.5 million and total equity of RMB 1,195.5 million, where finance lease receivables constitute the largest asset component | Indicator (as at Dec 31, RMB thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Non-current Assets | 1,495,892 | 1,780,925 | | Current Assets | 1,613,614 | 1,303,035 | | Total Assets | 3,109,506 | 3,083,960 | | Current Liabilities | 1,165,533 | 195,410 | | Non-current Liabilities | 748,523 | 1,705,478 | | Total Liabilities | 1,914,056 | 1,900,888 | | Total Equity | 1,195,450 | 1,183,072 | Consolidated Statement of Cash Flows This statement illustrates the cash movements for FY2020, showing net cash generated from operating activities of RMB 226.4 million, net cash used in investing activities of RMB 139.3 million, and net cash used in financing activities of RMB 306.1 million, resulting in a net decrease in cash and cash equivalents of RMB 219.0 million | Cash Flow (RMB thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 226,425 | 1,104,187 | | Net Cash Used in Investing Activities | (139,295) | (3,600) | | Net Cash Used in Financing Activities | (306,124) | (1,236,351) | | Net Decrease in Cash and Cash Equivalents | (218,994) | (135,764) | Notes to the Consolidated Financial Statements This section provides detailed explanations and supplementary information for items in the financial statements, including key accounting policies, segment information, asset and liability breakdowns, related party transactions, and financial risk management Finance Lease Receivables by Industry (2020) | Industry | Amount (RMB thousand) | Percentage (%) | | :--- | :--- | :--- | | Public Infrastructure | 951,233 | 35.18 | | Healthcare | 1,157,746 | 42.81 | | Aviation | 406,805 | 15.05 | | Others | 188,121 | 6.96 | | Total | 2,703,905 | 100.00 | - The Group has finance lease transactions with its associate, Nanshan Group Co. Ltd. and its subsidiaries, generating revenue of RMB 80,905 thousand in 2020, with an outstanding receivable balance of RMB 835,029 thousand at year-end[442] Financial Summary This section provides a concise overview of the Group's key financial performance and position indicators over the past five years, offering a quick reference for trends and overall financial health Five-Year Performance Summary (RMB thousand) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 248,046 | 260,876 | 358,061 | 308,747 | 300,870 | | Profit for the Year | 16,610 | (84,692) | 40,598 | 36,576 | 29,279 | Five-Year Financial Position Summary (RMB thousand) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 3,109,506 | 3,083,960 | 4,212,270 | 4,763,490 | 4,205,669 | | Total Equity | 1,195,450 | 1,183,072 | 941,996 | 909,496 | 804,724 |