朸浚国际(01355) - 2024 - 年度业绩

Supplemental Announcement to the 2023 Annual Report: Analysis of Non-Financial Asset Impairment Loss Impairment Loss Overview This announcement details the company's non-financial asset impairment loss of approximately HKD 41.76 million in FY2023, primarily due to underperforming operations at Wuhan and Huizhou branches, affecting right-of-use assets, property, plant, and equipment, and goodwill Overall Impairment Loss The company recognized a total non-financial asset impairment loss of approximately HKD 41.76 million in FY2023, determined by an independent valuer comparing the carrying amount and recoverable amount of related cash-generating units FY2023 Impairment Loss by Asset Class | Asset Type | Impairment Loss (HKD thousands) | | :--- | :--- | | Right-of-use assets | 33,106 | | Property, plant and equipment | 6,796 | | Goodwill | 1,858 | | Total | 41,760 | By Location and Asset Class Impairment losses primarily concentrated in Wuhan (approximately HKD 36.74 million) and Huizhou (approximately HKD 5.02 million) branches, with Wuhan's impairment mainly affecting right-of-use assets and PPE, while Huizhou's also included full goodwill impairment Impairment Loss by Location | Location | Impairment Loss (HKD thousands) | Assets Involved | | :--- | :--- | :--- | | Wuhan Branch | 36,742 | Right-of-use assets, Property, plant and equipment | | Huizhou Branch | 5,018 | Right-of-use assets, Property, plant and equipment, Goodwill | - The goodwill of Huizhou Branch, approximately HKD 1.86 million, was fully impaired this year, stemming from the acquisition of its business in 2018[2][3] Reasons for Recognizing Impairment Loss Despite the 2023 market rebound post-pandemic, Wuhan and Huizhou branches failed to grow revenue due to intense competition and inability to retain long-term customers, with Wuhan's recovery severely impacted by underperforming surrounding commercial developments, triggering impairment assessment - The core reason is that Wuhan and Huizhou branches failed to grow revenue amidst a general market recovery due to intense competition and underperforming surrounding commercial environments[4] - Specific factors preventing Wuhan Branch from benefiting from market recovery include surrounding commercial projects and business activities not proceeding or completing as planned[4] Valuation Methodology and Key Assumptions The company engaged independent valuers who used the Discounted Cash Flow (DCF) method to assess asset recoverable amounts, basing valuations on management-approved financial budgets with conservative assumptions including lower 2023 actual room rates and occupancy, and reduced future F&B and long-term contract revenue expectations Valuation Methodology Valuers adopted the industry-standard Discounted Cash Flow (DCF) method to determine the value in use for Wuhan and Huizhou branches (cash-generating units), serving as their recoverable amounts - Recoverable amounts are determined using the Discounted Cash Flow (DCF) method based on their value in use, a common approach for impairment assessments of cash-generating units[5] Significant Input Data and Key Assumptions Key valuation assumptions show a significant decrease in expected average room rates for both branches in 2023 compared to 2022, with Huizhou's expected occupancy rate sharply dropping from 77.12% to 20.76%, and the discount rate lowered from 11.66% to 9.93%, reflecting current market assessments and management's conservative forecasting strategy Key Assumptions Comparison (2023 vs 2022 Valuation) | Metric | Location | 2023 Valuation | 2022 Valuation | | :--- | :--- | :--- | :--- | | Expected Average Occupancy Rate | Wuhan Branch | 58.51% | 57.50% | | | Huizhou Branch | 20.76% | 77.12% | | Expected Average Room Rate | Wuhan Branch | RMB 330 | RMB 440 | | | Huizhou Branch | RMB 216 | RMB 321 | | Pre-tax Discount Rate* | Overall | 9.93% | 11.66% | - Management adopted a conservative approach in preparing cash flow forecasts, utilizing lower historical room rates and occupancy from 2023, and assuming no F&B revenue for Wuhan Branch and no new long-term accommodation contract revenue for Huizhou Branch[7]