Financial Performance - The Group's revenue for the year ended December 31, 2022, was approximately HK$2,715,000, a decrease from approximately HK$3,157,000 for the year ended December 31, 2021, representing a decline of about 14%[22] - The loss attributable to owners of the Company for the year ended December 31, 2022, was approximately HK$227,735,000, compared to a loss of approximately HK$581,677,000 for the year ended December 31, 2021, indicating a reduction in loss by approximately 61%[22] - The loss arising on change in fair value of investment properties was approximately HK$3,393,000 in 2022, down from approximately HK$24,944,000 in 2021, reflecting a decrease of about 86%[22] - The impairment loss recognized in respect of property, plant, and equipment was HK$Nil in 2022, significantly improved from HK$113,999,000 in 2021[22] - The impairment loss recognized in respect of financial assets under expected credit losses model amounted to approximately HK$177,609,000 in 2022, compared to HK$192,300,000 in 2021, showing a decrease of about 8%[22] - The share of losses of associates was approximately HK$766,000 in 2022, a significant reduction from HK$169,558,000 in 2021[22] Impact of COVID-19 - The COVID-19 pandemic has had a negative impact on the Group's business operations during the financial year ended December 31, 2022, contributing to deteriorating macroeconomic conditions[21] - The Group's financial performance was affected by various precaution measures implemented by government authorities, including travel restrictions and business limitations due to the COVID-19 pandemic[21] - The Company continues to face challenges in the current economic environment, which may impact future performance and strategic decisions[21] Corporate Governance - The Company is committed to enhancing corporate governance practices to maximize shareholder value[70] - The Company complied with all code provisions of the Corporate Governance Code for the year ended December 31, 2022, with some deviations noted[71] - The roles of chairman and chief executive officer are held by the same individual, which the Board believes ensures consistent leadership[72] - The company complied with all provisions of the Corporate Governance Code, except for the insurance arrangement for directors, which was deemed unnecessary due to minimal risk of significant legal claims[74] - The Board held a total of two meetings during the financial year, with all directors achieving a 100% attendance rate[92] - The company does not currently have an internal audit function, as the Board believes there is no immediate need based on the size and complexity of the business[80] - The Board consists of three executive directors and three independent non-executive directors, with one having the required professional qualifications in accounting[84] - All directors confirmed compliance with the Model Code regarding securities transactions from the listing date until December 31, 2022[78] - The company’s articles of association require all directors to retire by rotation at least once every three years, ensuring regular re-evaluation of board members[85] - The Board has mechanisms in place to ensure independent views are available, including encouraging participation from independent non-executive directors[86] - The company’s governance structure aims to protect the interests of all shareholders through sound internal control and risk management systems[87] - The Board will review the effectiveness of its governance mechanisms annually to ensure continued compliance and effectiveness[86] - The company believes that the current arrangement of having the same individual serve as both Chairman and CEO enhances leadership consistency and strategic planning[74] - The Board did not hold the required four meetings during the year due to delays in financial results publication and trading suspension[94] - Independent non-executive directors (INEDs) represented at least one-third of the Board as of December 31, 2022, in compliance with listing rules[97] - The Company has a commitment to gender diversity, currently having one female director, with plans to increase this proportion over time[105] - The Group employed 14 individuals, with 50% being female, indicating achievement of gender diversity in its workforce[107] - All Directors participated in continuous professional development programs during the year, ensuring their contributions remain informed and relevant[112] - The Board Diversity Policy aims to achieve a balance of skills, experience, and perspectives to enhance decision-making effectiveness[101] - The Nomination Committee will review the Board Diversity Policy and measurable objectives at least annually to ensure effectiveness[106] - The Company has received annual confirmations of independence from each INED as required under listing rules[98] - The Board has a balanced mix of knowledge and skills, including business management, finance, and civil engineering[105] - The Company will strive to comply with the Code provision C.5.1 regarding regular board meetings going forward[94] - The roles of chairman and chief executive officer are held by the same individual, Mr. XU Xiao Jun, which the Board believes ensures consistent leadership and effective strategic planning[121] - The Board reserves decision-making on major matters, including overall strategies, budgets, and financial information, ensuring corporate governance principles are upheld[122] - The Remuneration Committee, chaired by an independent non-executive Director, reviewed remuneration packages based on individual performance and Group profitability during the financial year[130] - The Nomination Committee is responsible for recommending Director appointments and evaluating board composition, considering factors such as gender, age, and professional experience[136] - The Nomination Policy has been adopted to outline the selection criteria and procedures for identifying and recommending candidates for Directors[140] - The Board comprises experienced individuals, including a sufficient number of independent non-executive Directors, to maintain a balance of power and authority[121] - No meetings were held for the Remuneration Committee or Nomination Committee during the financial year, indicating a potential area for improvement in governance practices[131][137] - The daily management and operations of the Group are delegated to senior management, with significant transactions requiring Board approval[123] - The Board has established internal committees, including remuneration, nomination, audit, and corporate governance committees, to ensure compliance with governance standards[124] - The Remuneration Committee ensures that no Director is involved in deciding their own remuneration, providing protection to shareholders[129] - As of December 31, 2022, all members of the Audit Committee were Independent Non-Executive Directors (INEDs), with one member possessing appropriate professional qualifications and financial management expertise[146] - The Audit Committee held one meeting during the financial year, with a 100% attendance rate from all members[150][153] - The Corporate Governance Committee consisted of four members as of December 31, 2022, including three INEDs and one executive director[154] - The Corporate Governance Committee is responsible for developing and reviewing the Company's corporate governance policies and practices[155] Financial Position and Strategies - The Group's capital structure includes debt, cash and bank balances, and equity attributable to owners of the Company[42] - As of December 31, 2022, the underlying current ratio was approximately 0.12, a decrease from 0.55 in 2021[53] - The underlying gearing ratio was approximately (30%) as of December 31, 2022, compared to (81%) in 2021[53] - The equity attributable to owners of the Company was a deficit of approximately HK$(315,683,000), an increase of approximately 290% from the previous year's deficit of HK$(80,917,000)[54] - Net current liabilities as of December 31, 2022, were approximately HK$402,555,000, up from HK$173,265,000 in 2021[54] - Cash and bank balances at December 31, 2022, were approximately HK$2,347,000, compared to HK$1,862,000 in 2021[54] - The Group had no material contingent liabilities other than a loan obligation of approximately HK$90,248,000 secured by properties of a subsidiary[57] - The Board resolved not to propose any final dividend for the year ended December 31, 2022[62] - The Company is actively negotiating to repay outstanding liabilities and is collecting account receivables to improve its financial position[174] - The Company plans to enforce cost-saving measures to minimize expenses, including administrative and operating costs[175] - The Group is exploring potential fundraising activities such as rights issues and the issuance of new shares or convertible bonds[177] - The Directors believe that if the above measures are successfully implemented, the Group will have sufficient cash resources for future working capital needs[178] - The Audit Committee has reviewed and agreed with the management's position regarding the going concern and liquidity issues[179] - The Company aims to expand its existing business internationally to improve operating results and cash flow[170] - The Group is actively seeking fundraising opportunities, including rights issues, placements of new shares, and/or convertible bonds, depending on current market conditions and business development[183] - The Board believes that successful implementation of fundraising measures will improve the Group's financial position, ensuring sufficient cash resources for future operational and financial needs[183] - As of December 31, 2022, the consolidated financial statements were prepared on a going concern basis, supported by the Board's detailed plans regarding liquidity and operational continuity[183] Risk Management and Internal Controls - The Audit Committee continuously reviews significant risk management and internal controls, ensuring adequacy of resources and qualifications of staff in accounting and financial reporting functions[186] - The Group's risk management procedures are designed to identify, evaluate, and manage significant risks, including ESG risks, with annual reviews conducted by the Board[191] - The internal control systems aim to reduce business-related risks and minimize adverse impacts, providing reasonable assurance against material misstatements or losses[193] - The Group has established a Whistleblowing Policy to allow employees and third parties to report concerns confidentially regarding possible improprieties[198] - The Board adopted an Anti-Bribery and Anti-Corruption Policy, outlining guidelines and responsibilities for employees to resist fraud and report suspected cases[199] - The risk management and internal control systems were deemed reasonably effective and adequate for the year ended December 31, 2022, covering all material controls[196] - The Group's risk management strategies include risk retention, avoidance, sharing, and transfer to mitigate potential losses[195] - The group has enhanced awareness of insider information confidentiality and regularly notifies relevant directors and employees about trading restrictions[200] - A whistleblowing policy has been adopted by the board to provide guidance and reporting channels for employees and third parties to report concerns about misconduct confidentially[200] - All reported matters will undergo independent investigation, ensuring confidentiality for whistleblowers[200] - The board and audit committee will regularly review the whistleblowing policy and mechanisms to improve effectiveness[200]
中国基建投资(00600) - 2023 - 年度业绩