Financial Performance - The company recorded a net loss of $970,513 for the year ended December 31, 2022, compared to a net loss of $708,245 in 2021, primarily due to increased losses from listed securities investments[7]. - The realized loss from the sale of listed securities was $480,912 in 2022, up from a realized loss of $154,799 in 2021, while the unrealized gain was $21,210, compared to an unrealized loss of $47,787 in the previous year[7]. - The overall loss from listed securities investments amounted to $435,686 in 2022, combined with operating costs of $544,441, leading to the net loss[7]. - The company's net asset value per share decreased by 32% to $0.19 as of December 31, 2022, down from $0.28 in the same period of 2021[9]. - The company's stock price was $0.176 as of December 31, 2022, representing a discount of 7.36% to the net asset value per share[9]. - The Hang Seng Index fell by 15.5% in 2022, while the company's listed securities portfolio recorded a loss of 14.9%, which was higher than the index performance by 0.6%[8]. - The company does not recommend any dividend distribution for the year ended December 31, 2022[10]. Investment Outlook - The investment outlook for 2023 is cautious, with expectations of strong economic recovery in China post-reopening, but potential risks from U.S. economic recession and geopolitical tensions remain[17]. - The company plans to focus on investing in sectors with foreseeable growth potential, including renewable energy, technology, consumer, telecommunications, and healthcare[17]. - The fund management company will continue to monitor a fully provisioned investment project and seek suitable exit opportunities[18]. Economic Context - In 2022, China's GDP growth was 3.0%, a significant decrease from 8.1% in 2021[21]. - Retail sales in December 2022 showed improvement, with nominal and real retail sales declining by -1.8% and -3.7% respectively, compared to -5.9% and -7.6% in November[22]. - Fixed asset investment growth rebounded to +3.6% in December, resulting in a year-to-date growth of +5.1% for 2022[23]. - High-tech investment accelerated to +18.9% in 2022, with high-tech manufacturing rising by +22.2%[23]. - The S&P 500 Index declined by 19.44% in 2022, reflecting broader market challenges[24]. - In December 2022, industrial production value growth slowed to +1.3%, exceeding market expectations of +0.1%[22]. - China's actual foreign investment utilization grew by 6.3% in 2022, down from 14.9% in 2021[21]. - The foreign trade surplus for 2022 was $87.76 billion, an increase from $67.64 billion in 2021[21]. Corporate Governance - The company has maintained a commitment to high standards of corporate governance, ensuring the integrity, transparency, and quality of information disclosure for long-term sustainable development[67]. - The board of directors is responsible for the overall management of the company, including setting long-term corporate goals and strategies, evaluating investment projects, and overseeing the fund management company[73]. - The company has established a series of long-term strategies and measures to promote a corporate culture based on integrity, openness, and accountability[69]. - The independent non-executive directors have extensive experience, with one having over 46 years in various sectors including manufacturing and investment banking[61]. - The company has not appointed a chairman or CEO, believing that all directors contribute equally to leadership and management[68]. - The board has reviewed and adopted the corporate governance code, ensuring compliance with the relevant regulations[67]. - The company emphasizes the importance of good corporate governance practices for long-term business development and enhancing investment value[69]. Risk Management - The company has established a risk management system that includes risk identification, assessment, and management processes to address significant risks related to its business operations[132]. - The investment committee monitors investment activities and recommends decisions based on global and local market conditions, ensuring regular reviews of investment management policies[134]. - The company’s internal control system aligns with the COSO 2013 framework, ensuring operational effectiveness, reliable financial reporting, and compliance with applicable laws[135]. - The board reviews the effectiveness of the risk management and internal control systems annually, considering changes in significant risks and the company's response capabilities[137]. Employee and Workplace Policies - The company employs two staff members and continues to engage a fund management company for investment management and administrative affairs[51]. - The company has two full-time employees as of December 31, 2022, both of whom are women aged between 50-59, with an employee turnover rate of 0% for the year[152]. - The company emphasizes a competitive compensation and benefits package, including mandatory provident fund contributions and discretionary bonuses, while maintaining a five-day work week for work-life balance[155]. - The company strictly adheres to the Occupational Safety and Health Ordinance, implementing various internal policies to ensure workplace safety and health[156]. - The company provides ongoing professional training funding to encourage employee development and continuous improvement[155]. Environmental and Social Responsibility - The company remains committed to sustainable development and corporate social responsibility, as outlined in its environmental, social, and governance report[142]. - The company has conducted a materiality assessment to identify significant ESG issues, including employment practices, operational compliance, and business ethics[152]. - The company integrates environmental and social factors into its investment portfolio to promote overall ESG goals[149]. - The company has identified risks related to climate change, including changes in precipitation patterns and extreme weather events, which may impact financial performance[172]. - The company is committed to exploring environmentally friendly and energy-saving measures to reduce its carbon footprint and achieve sustainable business development[171]. Shareholder Engagement - The company emphasizes effective communication with shareholders to enhance investor relations[106]. - The board conducts annual reviews of the shareholder communication policy to ensure its effectiveness[107]. - The company allows shareholders holding at least 10% of voting rights to request a general meeting[118]. - Shareholders must submit written proposals for director nominations at least seven days before the relevant meeting[114]. Audit and Compliance - The audit committee reviewed the company's financial statements and reports, ensuring compliance with accounting standards and internal controls[94]. - The external auditor, Ernst & Young, provided audit services for a total fee of $55,108 for the year 2022, which includes $50,944 for audit services and $4,164 for tax compliance and other services[140]. - The company has implemented measures to ensure the confidentiality of insider information and compliance with disclosure regulations[135]. - The internal audit function is independent and evaluates the risk management and internal control systems every six months, reporting findings to the board[136].
SHANGHAI GROWTH(00770) - 2022 - 年度财报