卓越商企服务(06989) - 2022 - 年度财报

Chairman's Statement The Chairman acknowledges 2022 was challenging due to the pandemic, economic downturn, and property market decline, leading to missed performance targets - The company acknowledges that its 2022 performance did not meet expectations, primarily due to the triple pressures of the pandemic in China, economic recession, and the real estate downturn[29] - The company's future strategy will focus on deepening cooperation with strategic clients, building a second growth curve through M&A, and accelerating digital transformation and talent development[22][47][5] - The Board of Directors resolved to maintain a high dividend payout policy, with a final dividend payout ratio of 70% for 2022 to reward shareholder support[61] - Management is optimistic about business in 2023, expecting a good growth momentum from the beginning of the year and a solid recovery in annual performance[63] Management Discussion and Analysis This section analyzes the company's 2022 business and financial performance, highlighting revenue growth, profit decline, and business expansion Business Overview The company operates as a leading commercial property service provider in China, with core businesses in basic property management and value-added services Basic Property Management Services This core business focuses on commercial, public, industrial, and residential properties, with a strategic emphasis on commercial real estate - The company's basic property management services primarily target three types of properties: commercial, public and industrial, and residential[51] - Commercial property management is the company's main development track, serving clients mainly from Fortune 500 and high-tech enterprises with customized integrated facility management (FM) and commercial office building (PM) services[52][31][66] - The company is actively exploring new tracks in public and industrial properties, focusing on government public buildings, urban services, education, and healthcare facilities[35][53] Value-added Services The company's value-added services aim to meet diverse client needs, focusing on asset services, Zhuopin business services, and M&E engineering services - Key development areas for value-added services include asset services, Zhuopin business services, and M&E engineering services[73][24] - Zhuopin business services adopt a B to B for C model, providing one-stop support services such as high-end business solutions, corporate value-added services, and digital empowerment for high-tech and Fortune 500 companies[74][36] - M&E engineering services, through its subsidiary Shenghengda M&E, offer an integrated solution of "hardware + software + platform + service" to build a green and smart M&E ecosystem[10][86] Operating Performance Review In 2022, revenue grew slightly, but profits declined due to the real estate downturn's impact on non-owner value-added services, while business scale expanded significantly Performance Overview In 2022, total revenue was RMB 3.53 billion, but net profit declined due to non-owner value-added services, while business scale expanded Key Financial Indicators for FY2022 | Indicator | 2022 (RMB million) | 2021 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 3,527.40 | 3,467.07 | +1.7% | | Gross Profit | 844.35 | 959.63 | -12.0% | | Overall Gross Profit Margin | 23.9% | 27.7% | -3.8 p.p. | | Net Profit Attributable to Owners | 403.49 | 510.09 | -20.9% | | Net Profit Margin | 12.1% | 15.8% | -3.7 p.p. | | Core Net Profit Attributable to Owners (excluding non-owner value-added services) | - | - | +17.4% | Changes in Gross Floor Area (GFA) Under Management ('000 sqm) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Opening GFA Under Management | 36,635 | 32,018 | | New Engagements | 17,066 | 11,091 | | New Acquisitions | 4,505 | – | | Terminations/Disposals | (4,446) | (6,474) | | Closing GFA Under Management | 53,760 | 36,635 | Revenue and GFA Under Management by Geographical Region (2022) | Region | GFA Under Management ('000 sqm) | GFA Share (%) | Revenue (RMB '000) | Revenue Share (%) | | :--- | :--- | :--- | :--- | :--- | | Greater Bay Area | 23,378 | 43.5 | 1,616,597 | 57.4 | | Yangtze River Delta | 10,591 | 19.7 | 391,693 | 13.9 | | Other Regions | 19,790 | 36.8 | 806,503 | 28.7 | | Total | 53,760 | 100.0 | 2,814,793 | 100.0 | Gross Profit Margin of Basic Property Services Segment | Property Type | 2022 (%) | 2021 (%) | | :--- | :--- | :--- | | Commercial Properties | 23.1 | 25.5 | | Public and Industrial Properties | 11.0 | 13.8 | | Residential Properties | 15.9 | 17.0 | | Total | 21.1 | 22.9 | Core Competency Analysis The company's core strengths lie in its premium brand, standardized services, strategic talent development, and continuous digital innovation - The company has established a premium brand image by winning numerous industry awards for its leading comprehensive strength and service quality[493][508] - The company has formed a comprehensive service standard by obtaining multiple international management system certifications like ISO 9001 and ISO 14001, and memberships in associations like BOMA and IFMA[494] - The company deeply invests in strategic talent cultivation and reserves, supporting business development through programs like the Management Trainee Program, Zhuo Jiang Program, and COE Forum[496] - The company is committed to digital innovation, leveraging its E+FM smart dual platforms with IoT and big data to reduce costs and increase efficiency, and enhancing management efficiency through its "business-finance integration" platform[509][533][497] Financial Review Total revenue grew 1.7% to RMB 3.53 billion, driven by basic property services, while profits fell due to declining value-added services and increased impairment losses Revenue Composition and Changes (RMB million) | Business Segment | 2022 Revenue | Share (%) | 2021 Revenue | Share (%) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Basic Property Management Services | 2,814.8 | 79.8 | 2,630.8 | 75.9 | +7.0% | | Value-added Services | 668.7 | 19.0 | 780.5 | 22.5 | -14.3% | | Other Businesses | 43.9 | 1.2 | 55.8 | 1.6 | -21.3% | | Total Revenue | 3,527.4 | 100.0 | 3,467.1 | 100.0 | +1.7% | Gross Profit and Gross Profit Margin Composition (RMB million) | Business Segment | 2022 Gross Profit | Gross Profit Margin (%) | 2021 Gross Profit | Gross Profit Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Basic Property Management Services | 593.2 | 21.1 | 602.2 | 22.9 | | Value-added Services | 221.3 | 33.1 | 323.6 | 41.5 | | Other Businesses | 29.8 | 68.0 | 33.8 | 60.7 | | Total | 844.3 | 23.9 | 959.6 | 27.7 | - Impairment losses on receivables, contract assets, and financial guarantees amounted to RMB 84.18 million, a significant increase from RMB 12.9 million last year, mainly due to stricter provisions for trade receivables and credit impairment on a financial guarantee for Beijing Universal[574] - Administrative expenses decreased by 14.4% YoY to RMB 174 million, primarily due to reduced staff costs[576] - As of the end of 2022, the company held RMB 2.56 billion in cash and equivalents with a gearing ratio of 28%, maintaining a sound financial position[241][237] Future Prospects The company will focus on growth and cost efficiency in 2023 by deepening client relationships, expanding through M&A, and driving digital transformation Strategic Planning The company's long-term strategy focuses on organizational, business, and capability building, driven by value distribution and management culture - The company's long-term strategic direction is "Three Constructions (Organization, Business, Capability) and Two Drivers (Value Distribution, Management Culture)"[534] - The core of the 2023 business deployment is "Focus on Growth, Reduce Costs and Increase Efficiency," supported by talent development and digital transformation[535] Business Development Strategy The company will drive growth by deepening its main business, expanding through M&A, and productizing value-added services while improving efficiency via digitalization - Main Business Track: Continue to deepen relationships with strategic clients through full life-cycle management, aligning with their development to create value and expand market share513[536] - Extended Business: Adhere to a multi-engine drive, continuing to expand into new tracks through joint ventures and M&A, focusing on quality targets in first-tier and new first-tier cities[515][537] - Value-added Business: Focus on productizing professional value-added services, targeting the needs of property owners' living circles and corporate administrative demands to enhance overall profitability[516] - Cost Reduction and Efficiency Improvement: Achieve transparent project management and improve operational efficiency through digital transformation; enhance organizational effectiveness and achieve flatter management through business and functional integration[518][539] Use of IPO Proceeds The company utilized approximately HK$1.09 billion of its net IPO proceeds by year-end 2022 and reallocated the remaining funds for business expansion Use of IPO Proceeds and Utilization Status (as of December 31, 2022) | Main Category | Reallocated Planned Use (HK$ million) | Reallocated Share (%) | Amount Utilized (HK$ million) | Unutilized Amount (HK$ million) | | :--- | :--- | :--- | :--- | :--- | | Business Expansion | 1,853.8 | 55.00% | 522.4 | 1,331.4 | | Development of IT Systems | 402.7 | 12.00% | 91.2 | 311.5 | | Facility Upgrades | 168.0 | 5.00% | 131.1 | 36.9 | | Talent Acquisition and Training | 601.7 | 18.00% | 131.4 | 470.3 | | Working Capital and General Purposes | 336.0 | 10.00% | 209.2 | 126.8 | | Total | 3,362.2 | 100.00% | 1,085.3 | 2,276.9 | Material Investments, Acquisitions, and Disposals During the reporting period, the company terminated an agreement to sell its entire equity interest in Shenzhen Zhuotou Microfinance Co, Ltd - The company terminated the plan to sell its equity in Shenzhen Zhuotou Microfinance Co, Ltd, due to the failure to obtain approval from the industry's competent authority[101] - According to the termination agreement, the company has refunded the total consideration of RMB 305.1 million to the buyer without interest[101] Directors and Senior Management This chapter details the backgrounds of the company's Board of Directors and senior management team, showcasing their extensive professional experience - Executive Directors Mr Li Xiaoping (Chairman) and Ms Guo Ying are responsible for the company's overall strategic planning and daily operations[103][665] - Non-executive Directors Mr Wang Dou and Mr Wang Yinhu primarily provide guidance on the Group's overall development[640][641] - Independent Non-executive Directors Mr Huang Mingxiang, Mr Kam Chi Shing, and Ms Liu Xiaolan are responsible for providing independent advice on the Group's operations and management[643][644][645] - The senior management team includes COO Mr Yang Zhidong, CFO Mr Jia Jie, and CHRO Ms Zhang Yan, who possess extensive industry experience in their respective fields[675][702][649] Report of the Directors This report covers statutory disclosures for 2022, including business performance, dividend policy, share capital, and connected transactions Business Review and Dividends The Board recommends a final dividend of HK 6.09 cents per share and discloses customer and supplier concentration for the year - The Board recommends the payment of a final dividend of HK 6.09 cents per share, subject to approval at the Annual General Meeting[143] - As of the end of 2022, the top five customers accounted for 32.7% of total revenue, with the largest customer contributing 18.1%; the top five suppliers accounted for 27.4% of total purchases, with the largest supplier at 7.3%[124][147] Share Capital, Reserves, and Directors The company's distributable reserves amounted to approximately RMB 3.086 billion, and all independent non-executive directors met independence requirements - As of December 31, 2022, the company's distributable reserves amounted to approximately RMB 3.086 billion[688] - The company has received confirmation of independence from each Independent Non-executive Director and considers them all to be independent[129] Directors' and Shareholders' Interests This section discloses the interests of directors and substantial shareholders, with the controlling shareholder Mr Li Hua holding a 59.04% interest Substantial Shareholders' Interests (as of December 31, 2022) | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage (%) | | :--- | :--- | :--- | :--- | | Mr Li Hua | Interest in a controlled corporation | 721,801,000 | 59.04 | | Ms Xiao Xingping | Controlled corporation/Beneficial/Spouse interest | 129,192,000 | 10.58 | | Mr Li Yuan | Interest in a controlled corporation | 63,000,000 | 5.30 | - The company has a Pre-IPO Share Option Scheme, under which a total of 28,200,000 share options were granted on September 9, 2020[178] - The vesting of share options is linked to the profit growth attributable to the Group's shareholders; as the vesting conditions for 2022 were not met, the corresponding one-third of the options for that year have lapsed[164][180][184] Connected Transactions This section details ongoing connected transactions with related parties, primarily the controlling shareholder, which were confirmed to be fair and reasonable Major Continuing Connected Transactions and Actual Amounts for 2022 (RMB) | Transaction Type | 2022 Actual Amount (million) | Counterparty | | :--- | :--- | :--- | | Property Management Services | 400.51 | Mr Li's Companies | | System Supply and Installation Services | 172.65 | Mr Li's Companies | | Trading of Construction Materials | 126.81 | Mr Li's Companies | | Leasing of Commercial Properties | 78.92 | Mr Li's Companies | | Marketing and Promotion Services | 49.45 | Mr Li's Companies | | Acquisition of Parking Space Usage Rights | 33.53 | Mr Li's Companies | - The Independent Non-executive Directors have reviewed all non-exempt continuing connected transactions and confirmed they were conducted on normal commercial terms in the ordinary course of business and are in the overall interests of the shareholders[352] - The company's auditor has issued a letter on the continuing connected transactions in accordance with the Listing Rules, confirming that the transactions were approved by the Board, consistent with the pricing policy, conducted under the relevant agreements, and did not exceed the annual caps[332][352] Corporate Governance Report This report confirms the company's compliance with the Corporate Governance Code and details its governance structure, board committees, and risk management systems Board of Directors and Governance Structure The company complied with the Corporate Governance Code, with a board structure that meets independence and diversity requirements and ensures a clear separation of roles - The company has complied with all applicable code provisions of the Corporate Governance Code throughout 2022[359] - The Board consists of 7 members, including 3 Independent Non-executive Directors (over one-third), meeting Listing Rules requirements; women comprise 29% of the Board[377]407[404] - The roles of Chairman and General Manager are held by different individuals with clear responsibilities, in compliance with the Corporate Governance Code[406] - A total of 18 board meetings were held during the year, with 100% attendance from all directors[411] Board Committees The company has established Audit, Nomination, and Remuneration Committees, each with a majority of independent directors, to assist the Board - The Audit Committee, chaired by Mr Kam Chi Shing, consists of one non-executive director and three independent non-executive directors, and oversees financial reporting, risk management, and internal controls[393][416] - The Nomination Committee, chaired by Mr Li Xiaoping, consists of the chairman and three independent non-executive directors, and is responsible for reviewing the board structure and nominating directors[397][398] - The Remuneration Committee, chaired by Mr Huang Mingxiang (an INED), consists of Mr Li Xiaoping and two other independent non-executive directors, and is responsible for reviewing and recommending remuneration policies for directors and senior management[420][400] Risk Management and Internal Control The company has a four-tier risk management framework, with the Board holding ultimate responsibility for maintaining and reviewing the system's effectiveness - The company has established a four-tier risk management and internal control framework comprising the Board, Audit Committee, Senior Management, and Risk Control Department[444] - The Board has ultimate responsibility for the effectiveness of the system and has conducted an annual review covering financial, operational, and compliance controls[595][425] - The Group has an internal audit function (performed by the Risk Control Department) to supervise and evaluate the establishment and implementation of the internal control system[448] Auditor and Shareholder Communication Total remuneration paid to the auditor KPMG was RMB 6.225 million, and the company maintains effective communication with shareholders through various channels Auditor's Remuneration for FY2022 (RMB '000) | Service Category | Amount | | :--- | :--- | | Audit Services | 3,000 | | Other Services | 3,225 | | Total | 6,225 | - The company has adopted a shareholder communication policy to ensure effective communication with shareholders through channels such as the company website and general meetings[452][453] Independent Auditor's Report The auditor issued an unmodified opinion on the financial statements, highlighting three key audit matters related to expected credit losses and goodwill impairment Audit Opinion The auditor, KPMG, concluded that the consolidated financial statements give a true and fair view of the Group's financial position and performance - The auditor issued an unmodified (clean) opinion on the consolidated financial statements[458] Key Audit Matters The audit identified three key matters: expected credit loss on trade receivables, potential goodwill impairment, and credit loss on a financial guarantee - Key Audit Matter 1: Expected credit loss provision for trade receivables; the net balance was RMB 936 million, and its impairment assessment involves significant management judgment[460] - Key Audit Matter 2: Potential impairment of goodwill; the carrying amount was RMB 253 million, and its impairment assessment relies on significant estimates of future cash flows, with an impairment of RMB 28.16 million recognized this year[463] - Key Audit Matter 3: Expected credit loss provision for a financial guarantee issued; arising from the acquisition of Beijing Universal, an expected credit loss of RMB 62.37 million was measured, involving significant judgment on the collateral's liquidation value[486] Consolidated Financial Statements This section presents the audited consolidated financial statements for the year ended December 31, 2022, including all primary statements and detailed notes Consolidated Statement of Profit or Loss and Other Comprehensive Income The company generated revenue of RMB 3.53 billion and profit attributable to equity holders of RMB 403 million in 2022 2022 Consolidated Income Statement Summary (RMB '000) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | 3,527,396 | 3,467,066 | | Gross Profit | 844,346 | 959,627 | | Operating Profit | 606,818 | 777,603 | | Profit Before Tax | 600,028 | 765,735 | | Profit for the Year | 426,455 | 547,481 | | Attributable to Equity Holders of the Company | 403,494 | 510,088 | | Basic Earnings Per Share (RMB Cents) | 33.1 | 41.7 | Consolidated Statement of Financial Position As of December 31, 2022, the company's total assets were RMB 5.01 billion, with total liabilities of RMB 1.42 billion and net assets of RMB 3.59 billion 2022 Consolidated Statement of Financial Position Summary (RMB '000) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Non-current Assets | 942,057 | 559,117 | | Current Assets | 4,070,075 | 4,513,019 | | Total Assets | 5,012,132 | 5,072,136 | | Current Liabilities | 1,224,506 | 1,473,479 | | Non-current Liabilities | 198,327 | 132,225 | | Total Liabilities | 1,422,833 | 1,605,704 | | Total Equity | 3,589,299 | 3,466,432 | Consolidated Statement of Changes in Equity Total equity increased from RMB 3.47 billion to RMB 3.59 billion, driven by profits for the year, partially offset by dividend payments Consolidated Statement of Cash Flows Net cash from operating activities decreased significantly to RMB 192 million, and year-end cash stood at RMB 2.56 billion 2022 Consolidated Statement of Cash Flows Summary (RMB '000) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 192,087 | 810,056 | | Net Cash Used in Investing Activities | (165,134) | (412,240) | | Net Cash Used in Financing Activities | (447,066) | (638,623) | | Net Decrease in Cash and Cash Equivalents | (420,113) | (240,807) | | Cash and Cash Equivalents at End of Year | 2,564,428 | 3,007,300 | Notes to the Consolidated Financial Statements The notes provide detailed explanations of accounting policies and breakdowns of items in the primary financial statements Five-Year Financial Summary This section presents key financial data from 2018 to 2022, showing sustained revenue growth and a significant expansion in assets post-IPO Five-Year Financial Data Summary (RMB million) | Indicator | 2018 | 2019 | 2020 | 2021 | 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,223.2 | 1,836.0 | 2,525.1 | 3,467.1 | 3,527.4 | | Gross Profit | 294.2 | 433.4 | 663.8 | 959.6 | 844.3 | | Profit for the Year | 156.6 | 233.6 | 355.9 | 547.5 | 426.5 | | Profit Attributable to Equity Holders of the Company | 125.8 | 178.5 | 325.0 | 510.1 | 403.5 | | Total Assets | 1,380.8 | 2,551.9 | 4,930.0 | 5,072.1 | 5,012.1 | | Total Equity | 362.8 | 455.9 | 3,256.3 | 3,466.4 | 3,589.3 |