Impairment and Credit Risk - The company recorded an impairment provision for other receivables of approximately HKD 100 million in the fiscal year 2021, compared to HKD 9 million in 2020, indicating a significant increase in credit risk exposure [4]. - The balance of impaired receivables increased to approximately HKD 144.1 million as of December 31, 2021, up from HKD 16.6 million in 2020, reflecting a substantial rise in defaulted payments [4]. - The goodwill impairment loss for the fiscal year 2021 was HKD 98.5 million, a significant increase from HKD 32.7 million in 2020, due to higher-than-expected default payments [9]. - The company’s management has revised future forecasts based on past performance due to an increasing trend in credit impairment defaults [9]. Financial Performance - The average revenue for the cash-generating unit in 2021 was HKD 287 million, compared to HKD 213 million in 2020, showing growth despite the challenges faced [10]. - The final cash flow projections for the fourth year and beyond were estimated at HKD 428 million, down from HKD 634 million in the previous year [10]. Loss Rate and EBIT Margin - The company adjusted the loss rate for each transaction from 3% to 4%, resulting in a 33% increase in the loss rate, which negatively impacted the EBIT margin, reducing it from 35% to 24% [12]. Risk Mitigation Strategies - The company plans to maintain the proportion of guaranteed loans in the overall loan referral portfolio below 50% to reduce default payment risks in the long term [7]. - The company has implemented thorough credit assessment procedures for tobacco retailers to mitigate risks associated with loan defaults [6]. - The company has initiated discussions with existing and new funding providers to adjust business cooperation, aiming to enhance recovery rates [7]. Goodwill Valuation - The group has appointed an independent professional valuer to support the calculation of goodwill impairment losses [13]. - The valuation method used is discounted cash flow, applicable for calculating the value in use of cash-generating units [13]. - The recoverable amount must exceed both fair value less costs to sell and value in use, with the latter being chosen for valuation due to it being the higher figure [13]. - The value in use is based on estimated future cash flows generated from cash-generating units, discounted to present value using a pre-tax discount rate [13].
大中华金融(00431) - 2021 Q4 - 年度财报