中国网成(01920) - 2025 - 年度业绩

Announcement Overview This announcement provides supplementary details on expected credit loss (ECL) impairment losses for the 2024 annual report Purpose and Background of Announcement This announcement provides supplementary information on expected credit loss (ECL) impairment losses disclosed in the 'Management Discussion and Analysis' section of China Netcom Group Corporation Limited's 2024 annual report - This is a supplementary announcement to the 2024 annual report of China Netcom Group Corporation Limited (Stock Code: 1920)[2][3] - It primarily provides additional information regarding expected credit loss (ECL) impairment losses in the 'Management Discussion and Analysis' section of the 2024 annual report[3] Expected Credit Loss (ECL) Impairment Details This section details the specific impairment projects, amounts, and the methodology and assumptions used for calculating expected credit losses Impairment Projects and Amounts The company recognized impairment losses due to significant uncertainties in receivables of approximately HKD 15.7 million and HKD 3.6 million for two construction projects in Chai Wan and Kwun Tong, despite the client indicating payment processing | Project | Impairment Loss Amount (HKD) | | :--- | :--- | | Chai Wan Construction Project | Approx. 15.7 million | | Kwun Tong Construction Project | Approx. 3.6 million | - The company submitted payment applications for these projects in February 2022 and January 2024, but the client has not issued payment confirmation for a long time[4] - By December 2024, the client communicated that payment applications were still being processed and required more time, leading directors to first recognize significant collection uncertainty and the need for impairment[4] Impairment Calculation Methodology and Assumptions Impairment is calculated based on an independent valuer's report issued in March 2025 under HKFRS 9, using a probability-weighted loss default model and key inputs such as receivables grouping, probability of default, recovery rates, and forward-looking adjustment factors Receivables Grouping All receivables and unbilled revenue are categorized into three groups (A, B, C) based on repayment status, days past due, and credit risk, with Group C considered in default - Receivables and unbilled revenue are categorized into three groups: * Group A: Timely repayment, lower credit risk * Group B: Delayed repayment or 60-90 days past due, with supporting repayment evidence, relatively higher credit risk requiring individual analysis * Group C: Long overdue (over 90 days), no supporting repayment evidence, considered in default[5][7][9][10] Key Input Data and Assumptions Key input data includes probability of default, recovery rates, and forward-looking adjustment factors, primarily referencing Moody's rating reports and IMF GDP data, adjusted for forward-looking considerations | Metric | Group A (Accounts Receivable/Retention Money/Unbilled Revenue) | Group C (All Accounts Receivable/Retention Money/Unbilled Revenue) | Source | | :--- | :--- | :--- | :--- | | Probability of Default | 0.0% to 9.7% (Accounts Receivable)
0.0% to 3.1% (Retention Money)
0.0% to 100% (Unbilled Revenue) | 100% | Moody's Ratings (February 28, 2025) | | Recovery Rate | 37.9% (Accounts Receivable)
37.9% (Retention Money)
0.0% to 37.9% (Unbilled Revenue) | 0% | Moody's Ratings (February 28, 2025) | - Forward-looking adjustment factors are estimated using regression analysis, linking probability of default to GDP, with historical GDP data sourced from the International Monetary Fund (IMF)[12] - Forward-looking adjustment factors are set separately for investment-grade and speculative-grade assets based on economic conditions (stable, improving, deteriorating)[12] Significant Changes There are no significant changes in input data or assumptions compared to previous years, only an update of market data from 2023 to 2024 - No significant changes in input data or assumptions occurred compared to previous years, only an update of market data from 2023 to 2024 market data[11] Valuation Methodology The valuation report adopts the general approach for expected credit losses as described in HKFRS 9, paragraph 5.5.17, utilizing a probability-weighted loss default model consistently applied in 2023 and 2024 - The valuation report employs the general approach for expected credit losses as per HKFRS 9, paragraph 5.5.17, specifically a probability-weighted loss default model[13] - The same valuation model was applied in both 2023 and 2024[13] Company Subsequent Actions This section outlines the company's actions taken after recognizing the impairment, including cessation of business with the client and debt recovery efforts Post-Impairment Actions Following impairment recognition, the company ceased business with the client and is actively pursuing debt recovery through payment reminders, communication with relevant parties, and considering legal action - The company has ceased business dealings with the client[13] - The company continues to pursue outstanding debts, with measures including: * Continuously issuing payment reminders to the client * Proactively responding to quantity surveyors' inquiries * Actively communicating with developers and main contractors of the relevant construction projects to seek assistance in expediting payment of outstanding debts[13] - The company is considering seeking legal advice regarding potential legal actions against the client, but no concrete plans are in place due to potential additional legal costs and time implications[13] Other Information This section provides additional details, including the composition of the Board of Directors Board of Directors Members The announcement discloses the list of Board of Directors members as of September 12, 2025, including Executive Directors Zhou Zhenlin, Peng Yunying, Guo Xianjiao, and Independent Non-executive Directors Ding Xin, Zhang Lingke, and Professor Lin Chengguang - As of September 12, 2025, the Board of Directors members include: * Executive Directors: Mr. Zhou Zhenlin, Ms. Peng Yunying, Mr. Guo Xianjiao * Independent Non-executive Directors: Ms. Ding Xin, Ms. Zhang Lingke, Professor Lin Chengguang[14]