正通汽车(01728) - 2022 - 年度业绩

Performance Highlights The Group significantly narrowed its loss in 2022, driven by comprehensive efforts in business recovery, expansion, and internal management, supported by its state-owned shareholder, laying a solid foundation for sustainable development | Indicator | 2022 (RMB million) | 2021 (RMB million) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 22,607 | 20,986 | +7.7% | | Gross Profit | 1,587 | 1,236 | +28.4% | | Operating Profit/(Loss) | 834 | (957) | Turnaround to profit (increase of 1,791) | | Finance Costs | 1,007 | 1,302 | -22.7% | | Loss for the Year | 297 | 3,781 | -92.1% | | Net Assets (as of December 31, 2022) | 224 | N/A | N/A | | Adjusted Net Assets (Non-GAAP) | 1,224 | N/A | N/A | - Total gross profit margin increased by 1.1 percentage points from 5.9% in 2021 to 7.0% in 2022[197] - Adjusted net assets (non-GAAP financial measure) consider a RMB 1 billion long-term loan from the largest shareholder Xiamen C&D Group Co., Ltd. to reflect its positive impact on the company's going concern ability[199] Consolidated Financial Statements This section presents the Group's consolidated financial results and position for 2022, including income, comprehensive income, and balance sheets, showing a significant reduction in net loss and increased total assets Consolidated Income Statement The consolidated income statement shows the Group achieved significant operating performance improvement in 2022, turning an operating loss into profit and substantially reducing the loss for the year | Indicator (RMB thousand) | 2022 | 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 22,606,790 | 20,985,529 | +7.7% | | Cost of Sales | (21,019,912) | (19,749,970) | +6.4% | | Gross Profit | 1,586,878 | 1,235,559 | +28.4% | | Other Income | 1,506,316 | 556,634 | +170.6% | | Selling and Distribution Expenses | (1,211,482) | (1,281,469) | -5.5% | | Administrative Expenses | (1,280,537) | (1,151,222) | +11.2% | | Reversal of Impairment Loss/(Loss) on Intangible Assets | 232,426 | (316,617) | N/A | | Operating Profit/(Loss) | 833,601 | (957,115) | Turnaround to profit | | Finance Costs | (1,006,998) | (1,301,874) | -22.7% | | Share of Profits of Associates | 43,055 | 45,340 | -5.0% | | Loss Before Tax | (130,342) | (2,213,649) | -94.1% | | Income Tax | (167,079) | 9,641 | N/A | | Loss for the Year | (297,421) | (3,780,767) | -92.1% | | Loss for the Year Attributable to Equity Holders of the Company (Continuing Operations) | (296,285) | (2,200,181) | -86.5% | | Basic and Diluted Loss Per Share (Continuing Operations, RMB cents) | (10.9) | (81.3) | -86.6% | Consolidated Statement of Comprehensive Income The consolidated statement of comprehensive income reflects a substantial narrowing of the Group's total comprehensive loss in 2022, primarily due to reduced net loss, despite foreign currency translation differences | Indicator (RMB thousand) | 2022 | 2021 | | :--- | :--- | :--- | | Loss for the Year | (297,421) | (3,780,767) | | Other Comprehensive Income (after tax): | | | | Exchange differences on translation of financial statements of overseas companies | (20,623) | 6,541 | | Total Comprehensive Income for the Year | (318,044) | (3,774,226) | | Attributable to Equity Holders of the Company (Continuing Operations) | (316,908) | (2,193,640) | | Attributable to Equity Holders of the Company (Discontinued Operations) | — | (1,421,950) | | Attributable to Non-controlling Interests (Continuing Operations) | (1,136) | (3,827) | | Attributable to Non-controlling Interests (Discontinued Operations) | — | (154,809) | Consolidated Balance Sheet The consolidated balance sheet shows increased non-current and current assets by year-end 2022, with improved net assets due to reduced current liabilities, reflecting asset-liability structure adjustments | Asset/Liability Category (RMB thousand) | December 31, 2022 | December 31, 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Non-current Assets | | | | | Property, Plant and Equipment | 5,766,306 | 5,688,860 | +1.4% | | Investment Properties | 303,593 | 115,631 | +162.5% | | Right-of-use Assets | 2,606,585 | 2,915,812 | -10.7% | | Intangible Assets | 2,705,072 | 2,631,734 | +2.8% | | Goodwill | 566,736 | 566,736 | 0.0% | | Interests in Associates | 15,341 | 533,367 | -97.1% | | Deferred Tax Assets | 673,051 | 616,626 | +9.2% | | Long-term Trade and Other Receivables | 321,037 | 270,075 | +18.9% | | Other Financial Assets | 944,947 | — | N/A | | Current Assets | | | | | Inventories | 4,064,270 | 2,649,031 | +53.4% | | Trade Receivables and Bills Receivable | 907,442 | 1,005,066 | -9.7% | | Prepayments, Deposits and Other Receivables | 4,063,517 | 4,294,473 | -5.4% | | Other Financial Assets | 103,561 | 122,589 | -15.5% | | Pledged Bank Deposits | 3,957,215 | 2,696,460 | +46.7% | | Time Deposits | — | 413,841 | -100.0% | | Cash and Cash Equivalents | 734,086 | 208,771 | +251.6% | | Assets Held for Sale | — | 1,400,714 | -100.0% | | Current Liabilities | | | | | Loans and Borrowings | 12,234,030 | 14,776,527 | -17.2% | | Bonds Payable | — | 365,936 | -100.0% | | Lease Liabilities | 363,493 | 309,477 | +17.4% | | Trade and Other Payables | 5,827,775 | 5,974,680 | -2.5% | | Income Tax Payable | 394,662 | 414,378 | -4.8% | | Other Financial Liabilities | 91,516 | — | N/A | | Non-current Liabilities | | | | | Loans and Borrowings | 6,439,857 | 1,519,457 | +323.8% | | Lease Liabilities | 981,073 | 1,169,334 | -16.2% | | Deferred Tax Liabilities | 989,261 | 839,606 | +17.8% | | Trade and Other Payables | 186,648 | 219,770 | -15.1% | | Net Assets | 224,444 | 540,621 | -58.5% | Notes to Consolidated Financial Statements This section details consolidated financial statement data, covering company overview, accounting policies, revenue, expenses, taxes, loss per share, asset valuation, liabilities, and financial risk management General Information The Group primarily operates 4S dealership, supply chain, and integrated property businesses in China, incorporated in the Cayman Islands in 2010 - China Zhengtong Auto Services Holdings Limited was incorporated in the Cayman Islands on July 9, 2010[220] - The Group primarily engages in 4S dealership business, supply chain business, and integrated property business in the People's Republic of China[220] - The consolidated financial statements are presented in RMB and prepared on a historical cost basis, except for certain financial assets[208] Significant Accounting Policies The Group's financial statements are prepared under Hong Kong Financial Reporting Standards on a going concern basis, supported by its major shareholder despite net loss and net current liabilities - The financial statements are prepared in accordance with all applicable Hong Kong Financial Reporting Standards, Hong Kong Generally Accepted Accounting Principles, and the disclosure requirements of the Hong Kong Companies Ordinance[221] - The Group adopted several new and revised Hong Kong Financial Reporting Standards, which had no significant impact on the Group's results and financial position for the current or prior periods[221][212][223][240] - Financial guarantees issued are initially recognized at fair value, subsequently measured at the higher of the initial recognition amount less cumulative amortization and the expected credit loss provision[213][223][224][241][242] - Despite a net loss of RMB 297 million and net current liabilities of RMB 5.081 billion in 2022, the Group prepared its financial statements on a going concern basis, supported by financial assistance from its controlling shareholder C&D Group[211] Revenue The Group's 2022 revenue increased by 7.7%, primarily driven by passenger vehicle sales, especially luxury brands, while after-sales service revenue slightly decreased - The Group is primarily engaged in the sale of passenger vehicles, provision of after-sales services, provision of logistics services, sale of lubricants, and financial services[244] Revenue Sources (Continuing Operations, RMB thousand) | Revenue Source | 2022 | 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Sale of Passenger Vehicles | 18,844,892 | 16,988,912 | +10.9% | | Provision of After-sales Services | 3,081,406 | 3,104,557 | -0.8% | | Provision of Logistics Services | 472,588 | 613,298 | -22.9% | | Sale of Lubricants | 207,089 | 269,766 | -23.2% | | Total | 22,605,975 | 20,976,533 | +7.8% | - The Group does not include revenue information regarding remaining performance obligations for passenger vehicle sales contracts with an expected duration of one year or less[228] Other Income The Group's other income significantly increased by 170.6% in 2022, mainly due to increased service income and fair value remeasurement gains from Dongfeng Logistics Other Income Sources (Continuing Operations, RMB thousand) | Income Source | 2022 | 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Service Income | 633,895 | 389,932 | +62.6% | | Interest Income from Bank Deposits | 37,443 | 14,126 | +165.0% | | Net Gain on Disposal of Property, Plant and Equipment | 100,728 | 261,737 | -61.5% | | Gain on Remeasurement of Fair Value related to Dongfeng Logistics | 424,271 | — | N/A | | Realized/Unrealized Gain/(Loss) on Other Financial Instruments | 242,654 | (116,775) | N/A | | Gross Rental Income from Investment Properties | 15,787 | 2,958 | +433.7% | | Others | 51,538 | 4,656 | +1006.8% | | Total | 1,506,316 | 556,634 | +170.6% | Loss Before Tax The Group's loss before tax significantly narrowed in 2022, primarily due to reduced finance costs and improved exchange losses, with stable growth in staff and inventory costs Finance Costs (Continuing Operations, RMB thousand) | Indicator | 2022 | 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Interest on Loans and Borrowings and Bonds Payable | 957,414 | 1,254,898 | -23.7% | | Interest on Lease Liabilities | 90,556 | 89,807 | +0.8% | | Finance Costs on Business Combination Consideration | 9,083 | 16,048 | -43.4% | | Other Finance Costs | 22,852 | 23,717 | -3.7% | | Less: Capitalized Interest | (72,907) | (82,596) | -11.7% | | Total Finance Costs | 1,006,998 | 1,301,874 | -22.7% | Staff Costs (Continuing Operations, RMB thousand) | Indicator | 2022 | 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Salaries, Wages and Other Benefits | 924,812 | 1,009,023 | -8.3% | | Contributions to Defined Contribution Retirement Plans | 58,640 | 56,251 | +4.2% | | Equity-settled Share-based Transactions | 1,867 | 15,926 | -88.3% | | Total Staff Costs | 985,319 | 1,081,200 | -8.8% | Other Items (Continuing Operations, RMB thousand) | Indicator | 2022 | 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Cost of Inventories | 20,454,963 | 19,070,743 | +7.2% | | Depreciation (Owned Property, Plant and Equipment) | 306,469 | 361,024 | -15.0% | | Depreciation (Right-of-use Assets) | 342,546 | 379,291 | -9.7% | | Depreciation (Investment Properties) | 3,955 | 571 | +592.6% | | Amortization of Intangible Assets | 160,999 | 161,114 | -0.1% | | Operating Lease Expenses | 6,878 | 8,069 | -14.8% | | Net Exchange Loss/(Gain) | 398,206 | (181,000) | N/A | | Impairment (Reversal)/Loss (Goodwill) | — | 127,055 | N/A | | Impairment (Reversal)/Loss (Intangible Assets) | (232,426) | 189,562 | N/A | | Impairment (Reversal)/Loss (Property, Plant and Equipment) | (21,239) | 311,777 | N/A | | Auditor's Remuneration | 9,800 | 9,800 | 0.0% | Income Tax The Group's 2022 income tax expense was RMB 167 million, with a negative effective tax rate due to non-deductible expenses; Hong Kong subsidiaries were exempt, while Chinese subsidiaries faced a 25% corporate income tax rate Income Tax (Continuing Operations, RMB thousand) | Indicator | 2022 | 2021 | | :--- | :--- | :--- | | Current Tax: Provision for Income Tax for the Year | 73,849 | 113,148 | | Deferred Tax: Origination and Reversal of Temporary Differences | 93,230 | (122,789) | | Total Income Tax | 167,079 | (9,641) | Reconciliation of Income Tax to Accounting Loss (RMB thousand) | Indicator | 2022 | 2021 | | :--- | :--- | :--- | | Loss Before Tax | (130,342) | (2,213,649) | | Nominal Tax at PRC Income Tax Rate of 25% | (32,586) | (553,412) | | Non-deductible Expenses (net of non-taxable income) | 185,961 | 191,570 | | Unrecognized Unused Tax Losses | 24,468 | 363,536 | | Share of Profits Recognized by Equity Method | (10,764) | (11,335) | | Income Tax | 167,079 | (9,641) | - Hong Kong subsidiaries did not earn any assessable profits subject to Hong Kong profits tax during the year, thus no provision for Hong Kong profits tax was made[6] - The Group's PRC subsidiaries are subject to PRC corporate income tax at a rate of 25%[269] Loss Per Share The Group's basic loss per share significantly decreased in 2022, with diluted loss per share matching basic, reflecting a substantial narrowing of losses from continuing operations Basic Loss Per Share (RMB cents) | Indicator | 2022 | 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Continuing Operations | (10.9) | (81.3) | -86.6% | | Discontinued Operations | — | (52.5) | N/A | | Total | (10.9) | (133.8) | -91.8% | - Basic loss per share for 2022 is calculated based on the loss from continuing operations of RMB 296,285,000 and the weighted average number of ordinary shares outstanding of 2,720,254,036 shares[180][255] - Diluted loss per share is equal to basic loss per share as the potential ordinary shares from restricted shares have an anti-dilutive effect[271] Intangible Assets This section details the Group's intangible assets, including valuation, amortization, and impairment test results for automobile dealership rights and trademarks, with a significant impairment reversal for dealership rights in 2022 reflecting improved operations Automobile Dealership Rights Automobile dealership rights recognized an impairment loss reversal of approximately RMB 232 million in 2022 due to resumed normal operations and long-term agreements for some 4S dealerships - Automobile dealership rights generated before business combinations have an estimated useful life of 10 years, with fair value determined using the multi-period excess earnings method[9] - Automobile dealership rights generated before business combinations have an estimated useful life of 40 years, with fair value determined using the multi-period excess earnings method[257] - In 2022, some dealerships resumed their original long-term dealership agreements, leading to an increase in future cash inflows and the recognition of an impairment loss reversal for intangible assets—automobile dealership rights of approximately RMB 232 million (2021: nil)[11][274][259] Trademark The Group's trademarks have an indefinite useful life, with no impairment loss recognized in 2022 - Trademarks arising from the acquisition of Tsinghua Tongfang Co., Ltd. have an indefinite useful life, with fair value determined using the relief from royalty method[16] - For the year ended December 31, 2022, no impairment loss was recognized for trademarks (2021: impairment loss of RMB 29,963,000)[187] Impairment Test of Intangible Assets and Goodwill Impairment tests, based on five-year budgets and industry forecasts, showed significant revenue growth rate changes in 2022 due to dealership recovery, with no further impairment losses for other intangible assets - The recoverable amount of cash-generating units is determined based on value in use, with cash flow forecasts based on management-approved five-year financial budgets and a 3% growth rate for periods beyond five years[13] - Key inputs and assumptions for impairment tests include annual revenue growth rate, gross profit margin, working capital as a percentage of revenue, and discount rate[291] Key Inputs and Assumptions for Impairment Tests | Input Value | 2023 | 2024 | 2025-2027 | | :--- | :--- | :--- | :--- | | Annual Revenue Growth Rate | 3.0%~46.4% | 3.0%~48.9% | 3.0%~30.0% | | Gross Profit Margin | 5.1%~13.0% | 5.2%~14.0% | | | Working Capital as % of Revenue | –11.4%~7.4% | –11.4%~14.2% | | | As of December 31, 2021 | 2022 | 2023 | 2024-2026 | | Annual Revenue Growth Rate | –1.6%~79.0% | 3.0%~36.1% | 3.0%~12.0% | | Gross Profit Margin | 5.3%~14.2% | 5.9%~14.5% | | | Working Capital as % of Revenue | –31.0%~13.9% | –31.0%~13.9% | | - The main change in 2022 was the variation in revenue growth, with a significant adjustment in the expected revenue growth rate for some dealerships that resumed normal operations, reflecting a return to pre-pandemic levels[19] - As of December 31, 2022, except for cash-generating units that resumed normal operations, no further impairment losses were recognized for other cash-generating units containing intangible assets (2021: intangible assets impairment loss of RMB 160 million, goodwill impairment loss of RMB 127 million)[181] Goodwill The Group's goodwill is primarily allocated to the 4S dealership business, with no impairment loss recognized in 2022 Goodwill Allocation (RMB thousand) | Goodwill Allocation | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | 4S Dealership Business | 566,736 | 566,736 | - For the year ended December 31, 2022, no impairment loss was recognized for goodwill (2021: impairment loss of RMB 127,055,000)[276] Interests in Associates The Group lost significant influence over Dongfeng Logistics in December 2022, ceasing equity method accounting and remeasuring its interest as a fair value financial asset, recognizing a RMB 424 million remeasurement gain - The Group has held a 14.43% equity interest in Dongfeng Logistics, which primarily provides logistics services, since January 16, 2020[21] - The Group lost significant influence over Dongfeng Logistics in December 2022 due to plans to dispose of all its equity interest and the resignation of nominated directors[279][296] - From the date of losing significant influence, the Group ceased to account for its investment in Dongfeng Logistics using the equity method and recognized it as a financial asset measured at fair value[279] - The Group recognized a remeasurement gain of RMB 424,271,000 in "Other Income" in 2022, representing the difference between the fair value and carrying amount on the date of losing significant influence[279] Financial Performance of Dongfeng Logistics | Indicator (RMB thousand) | Period up to Loss of Significant Influence | Year ended December 31, 2021 | | :--- | :--- | :--- | | Revenue | 4,374,626 | 5,304,961 | | Profit from Continuing Operations | 303,850 | 312,862 | | Total Comprehensive Income | 303,850 | 312,862 | Group's Share of Associate's Performance (RMB thousand) | Indicator | 2022 | 2021 | | :--- | :--- | :--- | | Group's Share of Associate's Continuing (Loss)/Profit | (790) | 1,210 | | Total Comprehensive Income | (790) | 1,210 | | Total Carrying Amount of Interests in Associates | 15,341 | 533,367 | Inventories The Group's total inventory significantly increased by 53.4% at year-end 2022, mainly due to increased automobile inventory, with some pledged as collateral and a reversal of write-downs due to consumer preference changes Inventory Categories (RMB thousand) | Inventory Category | December 31, 2022 | December 31, 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | 4S Dealership Business | | | | | Automobiles | 3,044,340 | 1,796,851 | +69.4% | | Auto Parts | 313,179 | 216,724 | +44.5% | | Others | 46,166 | 43,917 | +5.1% | | Integrated Property Business | | | | | Properties Under Development for Sale | 660,585 | 591,539 | +11.7% | | Total Inventories | 4,064,270 | 2,649,031 | +53.4% | - Inventories with a carrying amount of RMB 1,048,425,000 were pledged as collateral for bills payable (2021: RMB 565,866,000)[24] - Inventories with a carrying amount of RMB 1,121,577,000 were pledged as collateral for loans and borrowings from banks and other financial institutions (2021: RMB 901,237,000)[281] Inventory Amounts Recognized as Expense and Included in Profit or Loss (RMB thousand) | Indicator | 2022 | 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Carrying Amount of Inventories Sold | 20,426,938 | 18,975,817 | +7.6% | | Inventory Write-downs | 54,386 | 54,352 | +0.1% | | Reversal of Inventory Write-downs | (26,361) | (8,270) | +218.7% | | Reassessment of Rebates Receivable | — | 48,844 | N/A | | Total | 20,454,963 | 19,070,743 | +7.2% | - The reversal of inventory write-downs provided in prior years was due to consumer preference changes leading to an increase in the estimated net realizable value of certain automobiles[26] Trade and Other Receivables The Group's total trade receivables and bills receivable slightly decreased at year-end 2022, remaining high, with all amounts expected to be recovered within one year Receivables Categories (RMB thousand) | Receivables Category | December 31, 2022 | December 31, 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Trade Receivables | 907,123 | 1,004,158 | -9.6% | | Bills Receivable | 319 | 908 | -64.8% | | Total | 907,442 | 1,005,066 | -9.7% | - All trade receivables and bills receivable are expected to be recovered within one year[300] Aging Analysis (by Invoice Date, RMB thousand) | Aging Analysis | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Within 3 Months | 900,002 | 976,505 | | Over 3 Months but Within 1 Year | 2,178 | 7,565 | | Over 1 Year | 5,262 | 20,996 | | Total | 907,442 | 1,005,066 | Prepayments, Deposits and Other Receivables (RMB thousand) | Category | December 31, 2022 | December 31, 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Prepayments | 402,403 | 583,669 | -31.0% | | Deposits | 399,940 | 475,735 | -16.0% | | Other Receivables | 3,261,174 | 3,235,069 | +0.8% | | Total | 4,063,517 | 4,294,473 | -5.4% | - All prepayments, deposits, and other receivables are expected to be recovered within one year[285] Trade and Other Payables The Group's total trade and other payables slightly decreased at year-end 2022, with trade payables significantly down and bills payable up, some secured by inventory and bank deposits Payables Categories (RMB thousand) | Payables Category | December 31, 2022 | December 31, 2021 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Current | | | | | Trade Payables | 358,737 | 1,102,712 | -67.5% | | Bills Payable | 3,481,434 | 2,829,084 | +23.1% | | Contract Liabilities | 1,215,170 | 1,150,320 | +5.6% | | Other Payables and Accruals | 771,927 | 891,626 | -13.4% | | Amounts Due to Related Parties | 507 | 938 | -46.0% | | Non-current | | | | | Long-term Payables | 186,648 | 219,770 | -15.1% | | Total | 6,014,423 | 6,194,450 | -2.9% | - As of December 31, 2022, bills payable of RMB 3,481,434,000 were secured by inventories totaling RMB 1,048,425,000[302] - As of December 31, 2022, bills payable of RMB 2,574,097,000 were secured by pledged bank deposits of RMB 1,413,887,000[287] - The amount included in the opening balance of contract liabilities recognized as revenue during the year was RMB 1,129,473,000 (2021: RMB 890,824,000)[43] Aging Analysis (by Invoice Date, RMB thousand) | Aging Analysis | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Within 3 Months | 3,379,485 | 3,715,365 | | Over 3 Months but Within 6 Months | 454,091 | 211,543 | | Over 6 Months but Within 12 Months | 6,595 | 4,888 | | Total | 3,840,171 | 3,931,796 | Dividends The Group neither proposed nor paid any final dividends in 2022 and 2021 - For the years ended December 31, 2022 and 2021, no proposed dividends for the previous financial year were approved and paid[30][289] Financial Risk Management and Fair Value of Financial Instruments This section outlines the Group's liquidity risk management, details non-derivative financial liability maturities, and assesses issued financial guarantees and related legal proceedings Liquidity Risk The Group manages liquidity risk by maintaining sufficient cash reserves and bank financing to meet maturing obligations - Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due[44] - The Group manages liquidity risk by regularly monitoring current and expected liquidity requirements, ensuring sufficient cash reserves and committed financing from major financial institutions[304] Contractual Undiscounted Cash Outflows (RMB thousand) | Contractual Undiscounted Cash Outflows (RMB thousand) | Within 1 Year or On Demand (2022) | 1 to 5 Years (2022) | Over 5 Years (2022) | Total (2022) | Balance Sheet Carrying Amount (2022) | | :--- | :--- | :--- | :--- | :--- | :--- | | Loans and Borrowings | 12,260,131 | 6,889,521 | 22,095 | 19,171,747 | 18,673,887 | | Lease Liabilities | 369,019 | 939,532 | 394,460 | 1,703,011 | 1,344,566 | | Other Financial Liabilities | 91,578 | — | — | 91,578 | 91,516 | | Trade and Other Payables | 5,827,775 | 355,000 | — | 6,182,775 | 6,014,423 | | Total Liquidity Risk Excluding Issued Financial Guarantees | 18,548,503 | 8,184,053 | 416,555 | 27,149,111 | 26,124,392 | | | | | | | | | Contractual Undiscounted Cash Outflows (RMB thousand) | Within 1 Year or On Demand (2021) | 1 to 5 Years (2021) | Over 5 Years (2021) | Total (2021) | Balance Sheet Carrying Amount (2021) | | :--- | :--- | :--- | :--- | :--- | :--- | | Loans and Borrowings | 15,232,831 | 1,588,420 | — | 16,821,251 | 16,295,984 | | Lease Liabilities | 372,157 | 1,129,605 | 643,928 | 2,145,690 | 1,478,811 | | Bonds Payable | 374,286 | — | — | 374,286 | 365,936 | | Trade and Other Payables | 5,974,680 | 284,000 | 71,000 | 6,329,680 | 6,194,450 | | Total Liquidity Risk Excluding Issued Financial Guarantees | 21,953,954 | 3,002,025 | 714,928 | 25,670,907 | 24,335,181 | Issued Financial Guarantees Wuhan Zhengtong provided financial guarantees for Beijing Guangze's equity repurchase and loan repayment, with pledged assets; despite unfavorable rulings, the Group's cash exposure is expected to be immaterial via settlement and collateral disposal - Wuhan Zhengtong provided financial guarantees for Beijing Guangze's equity repurchase obligations and outstanding loan balances, secured by certain land use rights and properties of Beijing Zunbaocheng and Beijing Baoze[32][33][167][168] - In 2021, a court ruling required Beijing Guangze to pay an equity repurchase price of RMB 420 million and loan principal of RMB 1.35 billion plus interest, with Wuhan Zhengtong bearing joint and several liability[34][47][169][149][185][307] - In January 2023, Wuhan Zhengtong reached a settlement agreement with Yuchen Fengze, where Wuhan Zhengtong withdrew its appeal against the first-instance loan judgment, and Yuchen Fengze agreed to assist in disposing of the collateral to recover the debt[36][150] - In June 2022, the second-instance judgment for the equity repurchase first-instance ruling determined that Wuhan Zhengtong only bears general guarantee liability within the scope of payable amounts and has the right to seek recourse from Beijing Guangze after fulfilling its guarantee obligations[308][169] - As of December 31, 2022, the fair value and estimated net realizable value of the pledged assets were RMB 2.79 billion and RMB 1.97 billion, respectively[38] - The maximum amount guaranteed by Wuhan Zhengtong under the 2020 shortfall make-up agreement was RMB 1.93 billion (2021: RMB 1.83 billion)[50] - The expected credit loss provision for financial guarantees was assessed as immaterial, considering the value and volatility of pledged assets[51] Contingent Liabilities The Group faces contingent liabilities from a general contracting agreement, with a subcontractor's payment notice, but deems the likelihood of being pursued for payment as remote, thus no provision is made - In 2018, Wuhan Zhengtong entered into a general contracting agreement with Beijing Guangze to engage it in the development, construction, reconstruction, and expansion of 4S dealerships and related commercial projects[40] - In July 2022, due to Beijing Guangze's failure to fulfill its obligations, the Group received a payment notice of RMB 6 million from a subcontractor[40] - After fully considering legal advice, the Company's directors believe that the likelihood of the Group being sued by the subcontractor to claim payment is remote, and therefore no provision has been made[293] - In January 2023, the Group filed a lawsuit against Beijing Guangze, alleging its failure to fulfill obligations under the general contracting agreement[310] - As of December 31, 2022, the Group had no other significant contingent liabilities apart from the aforementioned matters[311] Non-Adjusting Events After Reporting Period The Board approved a plan to dispose of 100% equity interest in Shenzhen Huianqi Investment Consulting Co., Ltd., expected to be a major transaction under Listing Rules requiring shareholder approval - On February 28, 2023, the Board approved the disposal of 100% equity interest in Shenzhen Huianqi Investment Consulting Co., Ltd., which holds property interests in a plot of land in Shenzhen[54][133] - The potential disposal is intended to be conducted through public bidding, with a provisional initial price of approximately RMB 800 million[54][133] - The potential disposal, if materialized, is expected to constitute a major transaction under Chapter 14 of the Listing Rules, subject to reporting, announcement, circular, and shareholder approval requirements[106] Business Review In 2022, the Group significantly narrowed losses in a challenging market by focusing on luxury auto sales and after-sales services, achieving strong results in business recovery, expansion, and management with state-owned shareholder support Overall Business Performance In 2022, despite automotive industry pressures, the Group significantly improved operating performance and reduced losses by focusing on luxury and ultra-luxury brand businesses - In 2022, the automotive industry faced triple pressures of supply shocks, demand contraction, and weakening expectations due to chip shortages and recurring epidemics[52][53] - The Group continued to focus on luxury and ultra-luxury brands for automobile sales and after-sales service businesses, prioritizing business recovery and improving operational quality[52] - With the five-year strategic plan and state-owned shareholder support, the Group achieved good results in business recovery, authorization maintenance, business expansion, financing, internal control, and talent development, leading to a significant reduction in losses[52] - The Group recorded revenue of approximately RMB 22,607 million (2021: approximately RMB 20,986 million) and gross profit of approximately RMB 1,587 million (2021: RMB 1,236 million)[56] - Loss attributable to equity holders of the Group was approximately RMB 296 million (2021: approximately RMB 3,622 million) and basic loss per share was approximately RMB 10.9 cents (2021: approximately RMB 133.8 cents)[56] - In 2022, the Group's stores collectively received 249 awards from automobile manufacturers, local governments, industry media, and industry associations[56] Automobile Dealership Segment The automobile dealership segment saw new car sales growth in 2022, particularly for luxury brands, enhancing after-sales service and market layout through digital customer management and network optimization New Car Sales Business The Group's new car sales volume increased by 9.4% in 2022, with luxury and ultra-luxury brands growing by 14.2%, enhancing sales efficiency and customer experience through manufacturer cooperation and digital tools - For the year ended December 31, 2022, the Group's new car sales totaled 56,264 units, a year-on-year increase of approximately 9.4%[59] - Sales of luxury and ultra-luxury brand automobiles totaled 45,334 units, a year-on-year increase of approximately 14.2%[59] - The Group deepened communication and cooperation with brand manufacturers to obtain high-quality vehicle resources and successfully met manufacturer targets[80] - Launched electronic signature function for sales transaction documents, addressing customer difficulties in purchasing cars during the epidemic and improving sales business processing efficiency[80] After-Sales Service Business The Group's 2022 after-sales service revenue was approximately RMB 3.081 billion, continuously enhancing customer experience and satisfaction through digital customer management, personalized services, and innovative models - In 2022, the Group achieved 1,070,313 after-sales service visits, generating after-sales service revenue of approximately RMB 3,081 million[62] - The Group is committed to being customer-centric, promoting digital customer management based on its independently developed information management system, establishing multi-channel links, and promptly responding to customer needs[60] - Provided personalized product services to customers, supporting "one-stop" services for online payment, offline consumption, and after-sales consultation, enhancing customer experience[60] - Promoted "door-to-door pick-up and delivery service" and launched anti-epidemic packages during the epidemic, actively expanding business boundaries and customer base[60] Network Development and Layout The Group optimized brand structure and store profitability, operating 109 outlets and 7 planned outlets by year-end 2022, actively expanding its new energy brand layout - As of December 31, 2022, the Group operated 109 outlets in 38 cities across 17 provinces and municipalities nationwide, and had 7 authorized dealerships under construction[81] - The Group represents luxury and ultra-luxury automobile brands including Porsche, Mercedes-Benz, BMW, Audi, Jaguar Land Rover, Volvo, Hongqi, as well as mid-to-high-end brands such as FAW-Volkswagen, Buick, and Dongfeng Nissan[81] Outlets by Type | Outlet Type | Operating Outlets | Authorized Outlets Under Construction | Total | | :--- | :--- | :--- | :--- | | Luxury and Ultra-Luxury Brand 5S/4S Stores | 62 | 2 | 64 | | Mid-to-High-End and New Energy Brand 4S Stores | 12 | 2 | 14 | | Luxury Brand City Showrooms | 7 | 0 | 7 | | Luxury Brand Authorized Service Centers | 6 | 1 | 7 | | Mid-to-High-End and New Energy Brand Service Centers | 2 | 2 | 4 | | Self-operated Online Stores | 20 | 0 | 20 | | Total | 109 | 7 | 116 | - In 2022, a new Porsche Center, a Hozon Auto brand store, and a Tesla authorized body and paint center were opened, continuously expanding the industrial layout in the new energy sector[81] - The Group focused on promoting core and highly profitable brand projects, streamlining and strategically adjusting some less profitable brands and outlets to improve overall profitability[83] Derivative and Emerging Business Segment The Group's derivative and emerging business segments accelerated in 2022, with breakthrough growth in insurance agency and used car businesses, and active expansion into the new energy sector with multiple new energy brand authorizations Derivative Business The Group's derivative business performed strongly in 2022, with dual-protection product sales reaching RMB 80 million, car insurance new/renewal policies and premium scale increasing year-on-year, and used car business achieving breakthrough growth in scale and profitability - In 2022, the Group achieved dual-protection product sales of approximately RMB 80 million, with cumulative sales of nearly 10,000 units[67] - In the same year, new and renewal car insurance policies and premium scale increased by 11% and 15% year-on-year, respectively[67] - The "Dual Protection Worry-Free" product was vigorously promoted across the Group, with sales penetration exceeding 40%, contributing to increased output value and enhanced customer stickiness[84][85] - The Group reported used car sales of 10,564 units; the used car business contributed gross profit exceeding RMB 48 million, a year-on-year increase of over 20%[67] - The Group restructured its used car business management system, introduced several industry-leading auction platforms, broadened sales channels, improved turnover efficiency, and enhanced transaction transparency[86] Emerging Business The Group added multiple new energy brand authorizations in 2022 and established an emerging business team to actively expand its industrial layout and market opportunities in the new energy sector - In 2022, the Group added new energy brand authorizations, including Guangzhou Hozon Auto 4S store, Yichang and Xiangyang NIO service centers, and Jieyang Tesla body and paint center[68] - The company established an emerging business team to continuously expand its industrial layout in the new energy sector, actively promoting ongoing and reserve projects, and exploring and identifying opportunities for joint ventures and project acquisitions in the new energy market[68][88] Supply Chain Business Segment Shengze Jietong overcame logistics demand challenges in 2022, achieving nearly RMB 491 million in total revenue, improving gross profit margin and pre-tax profit through cost reduction, and successfully expanding vehicle logistics and spare parts warehousing - Shengze Jietong's vehicle logistics and spare parts warehousing businesses achieved total revenue of nearly RMB 491 million, with an overall gross profit margin increase of 2.02% and a year-on-year increase of 32.81% in pre-tax profit[69] - In terms of vehicle business, Shengze Jietong successfully participated in bidding projects for FAW-Volkswagen, Hongqi, Bestune, and Dongfeng Nissan's vehicle businesses for the next three years[89] - In terms of warehousing business, it successfully expanded Kangshifu and Dongfeng Fengshen warehousing businesses, and officially entered SAIC Anji's supplier logistics system during the year[89] - Shengze Jietong obtained high-tech enterprise qualification, was awarded "China's Auto Valley Top Ten Modern Service Enterprises," and was included in the "National Integrated Hub Supply Chain Strengthening" project library[90] Management Enhancement In 2022, the Group comprehensively optimized its management system, covering governance, structure, HR, IT, cost reduction, audit, and risk prevention, to enhance operational efficiency and market responsiveness Corporate Governance The company established and improved a standardized corporate governance structure and scientific rules, clarified decision-making, execution, and supervision responsibilities, and comprehensively revised its rules and regulations - The company established and improved a standardized corporate governance structure and scientific rules of procedure, formulating various rules and systems that comply with listing compliance requirements and business development needs[71] - During the year, a comprehensive revision of the company's rules and regulations was initiated, covering the optimization and improvement of core control systems such as risk management, investment management, procurement and bidding, expense management, and internal supervision[71] Organizational Structure The Group optimized its organizational structure, separating Board Chairman and President roles, re-adjusting executive responsibilities, and streamlining headquarters and brand department structures - Following the principles of effective management, flat and lean structure, and stable adaptability, the roles of Board Chairman and President were separated, and executive responsibilities were re-adjusted to ensure clearer management responsibilities[91] - The responsibilities of the company's headquarters departments were re-evaluated and integrated accordingly, and the organizational structure of brand departments was adjusted to standardize job settings across brand management departments[91] Human Resources The Group optimized its remuneration system and employee career management, promoted internal and market-based selection for middle/senior management, and strengthened multi-faceted training and corporate culture - Optimized a scientific and reasonable remuneration system and established an employee career management system adapted to the development strategy[72] - Optimized the cadre selection mechanism and promoted internal competition and market-based selection for middle and senior management positions based on principles of fairness, impartiality, and openness[72] - Established channels for internal excellent talent exchange and learning, continuously improving talent discovery, growth, development, and incentive mechanisms[92] - Strengthened multi-faceted training to enhance the professional knowledge and skills of management and business personnel, and organized diverse corporate culture activities[92] Information Technology Construction The Group independently developed automotive IT projects for digital customer lifecycle management and built a business indicator monitoring system to enhance refined management and data-driven decision support - Focused on digital operations and management throughout the customer full lifecycle, empowering the Group's innovative development and business upgrades[73] - Independently designed and developed a series of automotive information technology projects, including developing electronic signature functions, building client-side enterprise WeChat mini-programs, mobile terminal on-site vehicle inspection and registration for used cars, and dual-protection product system development[73] - Built a business indicator monitoring system and performance benchmarking system to solidify refined management and effectively respond to market changes and evolving consumer demands[73] Cost Reduction and Efficiency Improvement The Group effectively controlled procurement costs, improved capital utilization, and reduced financial expenses through standardized bidding, competitive negotiations, expanded financing, and debt restructuring - The company controlled overall procurement costs through standardized and unified bidding and procurement, and introduced competitive negotiations to reasonably extend supplier payment terms, improving capital utilization efficiency[115] - Controlled financial expenses and reduced financing costs by expanding financing channels, debt restructuring, and moderately reducing debt scale[115] Internal Audit and Supervision The Group established a multi-level supervision and inspection system, assessing control implementation through regular audits, special investigations, and store inspections, using IT to pre-warn risks and improve professional ethics risk prevention - The company has established a multi-level supervision and inspection system covering headquarters and various subsidiaries, assessing and supervising the implementation of controls in various business areas through increased frequency of regular audits, special investigations, and store inspections[74] - Utilized IT technology and systems to automatically identify and pre-warn risks, established dedicated channels for reporting occupational fraud, and improved the company's professional ethics risk prevention system[74] Risk Prevention The Group dynamically conducts risk analysis and assessment, formulates operational risk management systems, strengthens risk identification, early warning, and control, and established an emergency and public opinion management team - Dynamically conducted risk analysis and assessment in conjunction with the company's development stage and business expansion, and adjusted risk response strategies accordingly[116] - Formulated operational risk management systems to strengthen risk identification, early warning, and control; established and optimized the company's financing, guarantee, and foreign exchange transaction management systems to strictly control financial and financing business execution risks[116] - Established a leading group for emergency management and public opinion management, and established mechanisms for emergency response and public opinion handling[116] Financial Review This section reviews the Group's 2022 financial performance, covering revenue, profitability, expenses, assets, liabilities, cash flow, capital expenditure, financing, exchange risk, and pledged assets Revenue The Group's total revenue increased by 7.7% in 2022, primarily driven by new car sales, with significant contributions from luxury and ultra-luxury brands, and a slight decrease in after-sales service revenue - For the year ended December 31, 2022, the Group recorded revenue of approximately RMB 22,607 million, an increase of approximately 7.7% compared to approximately RMB 20,986 million in 2021, mainly due to increased new car sales during the year[117] - New car sales revenue in 2022 was approximately RMB 18,845 million, an increase of approximately 10.9% compared to 2021, accounting for approximately 83.4% of total revenue in 2022 (2021: 81.0%)[117] - Revenue from luxury and ultra-luxury brand automobile sales was approximately RMB 17,491 million, an increase of approximately 13.0% year-on-year, accounting for approximately 92.8% of new car sales revenue in 2022 (2021: 91.1%)[117] - After-sales service revenue was approximately RMB 3,081 million, a decrease of approximately 0.8% compared to 2021, accounting for approximately 13.6% of total revenue (a year-on-year decrease of 1.2 percentage points)[117] Cost of Sales The Group's cost of sales increased by 6.4% in 2022, consistent with new car sales growth; after-sales service cost of sales decreased by 15.4%, mainly due to lower rental and labor expenses for some stores - For the year ended December 31, 2022, the Group's cost of sales was approximately RMB 21,020 million, an increase of approximately 6.4% year-on-year compared to approximately RMB 19,750 million in 2021, consistent with the increase in new car sales[118] - New car sales cost increased by approximately 10.8% to approximately RMB 18,630 million in 2022, mainly due to increased new car sales[118] - After-sales service cost of sales decreased by approximately 15.4% to approximately RMB 1,806 million, mainly due to lower rental and labor expenses for some stores[118] Gross Profit and Gross Margin The Group's gross profit increased by 28.4% in 2022, with gross margin rising to 7.0%, mainly due to increased new car sales revenue, controlled cost of sales, and significantly decreased after-sales service costs - For the year ended December 31, 2022, the Group's gross profit was approximately RMB 1,587 million, an increase of approximately 28.4% compared to 2021, with a gross profit margin of approximately 7.0% (2021: 5.9%)[77] - New car sales business generated gross profit of approximately RMB 215 million (2021: RMB 182 million), mainly due to increased revenue from new car sales and controlled cost of sales[119] - After-sales service gross profit increased by approximately 31.4% from approximately RMB 970 million in 2021 to approximately RMB 1,275 million, mainly due to cost-saving measures[119] Selling and Distribution Expenses The Group's selling and distribution expenses decreased by 5.5% year-on-year in 2022, mainly due to reduced staff salary costs and discretionary bonuses - For the year ended December 31, 2022, the Group's selling and distribution expenses were approximately RMB 1,211 million, a decrease of approximately 5.5% compared to 2021, mainly due to reduced staff salary costs and discretionary bonuses[78] Administrative Expenses The Group's administrative expenses increased by 11.3% year-on-year in 2022, mainly due to exchange losses on foreign currency loans and borrowings caused by RMB depreciation - For the year ended December 31, 2022, the Group's administrative expenses were approximately RMB 1,281 million, an increase of approximately 11.3% compared to 2021, mainly due to exchange losses on foreign currency loans and borrowings caused by RMB depreciation in 2022[121] Operating Profit The Group achieved an operating profit of approximately RMB 834 million in 2022, reversing the 2021 operating loss, with a 3.7% operating profit margin, mainly due to overall operational improvement - For the year ended December 31, 2022, the Group recorded an operating profit of approximately RMB 834 million, compared to an operating loss of approximately RMB 957 million in 2021, with the turnaround mainly due to overall improvement in Group operations[122] - The Group's 2022 operating profit margin was approximately 3.7%[122] Income Tax The Group's 2022 income tax was approximately RMB 167 million, with a negative effective tax rate, mainly influenced by the tax impact of non-deductible expenses - For the year ended December 31, 2022, the Group's income tax was approximately RMB 167 million, with an effective tax rate of approximately -128.2% (2021: 0.4%)[123] - The negative tax rate in 2022 was due to the tax impact of non-deductible expenses (net of non-taxable income)[123] Loss for the Year The Group's loss for the year significantly decreased by 92.1% in 2022, mainly due to a substantial increase in other income, business recovery, and cessation of losses at some stores - For the year ended December 31, 2022, the Group's loss for the year was approximately RMB 297 million, a decrease of approximately 92.1% compared to 2021[123] - The reduction in loss was mainly due to a substantial increase in other income, business recovery, and cessation of losses at some closed stores[123] - The Group's loss rate was approximately 1.3%, a decrease of 16.7 percentage points compared to 18.0% in 2021[123] Contingencies As of December 31, 2022, the Group had no other significant contingent liabilities apart from those disclosed - As of December 31, 2022, the Group had no other significant contingent liabilities apart from those disclosed in "Notes to Consolidated Financial Statements 17 Contingent Liabilities"[124] Current Assets and Liabilities The Group's current assets increased at year-end 2022, mainly due to increased inventory and pledged bank deposits; current liabilities decreased, primarily due to reduced short-term loans and borrowings - As of December 31, 2022, the Group's current assets were approximately RMB 13,830 million, an increase of approximately RMB 1,039 million compared to 2021, mainly due to increased inventory and pledged bank deposits[125] - As of December 31, 2022, the Group's current liabilities were approximately RMB 18,911 million, a decrease of approximately RMB 2,930 million compared to 2021, mainly due to a reduction in short-term loans and borrowings[126] Adjusted Net Assets The Company's reported net assets were RMB 224 million, with adjusted net assets (non-GAAP) of RMB 1.224 billion, reflecting long-term loan support from the largest shareholder - The Company's reported net assets were approximately RMB 224 million, with adjusted net assets (non-GAAP financial measure) of approximately RMB 1,224 million[127] - Adjusted net assets are based on the net assets reported in the balance sheet as of December 31, 2022, adjusted for the impact of a RMB 1 billion long-term loan from the largest shareholder Xiamen C&D Group Co., Ltd.[127] - This non-GAAP financial measure aims to reflect the positive impact of C&D Group's financial support on the Company's going concern ability, providing investors with clearer financial performance[127] Cash Flow The Group's cash and cash equivalents increased at year-end 2022, with stable net cash inflow from operating activities, primarily used for new car procurement, loan repayment, and working capital - As of December 31, 2022, the Group's cash and cash equivalents were approximately RMB 734 million, an increase of approximately RMB 525 million compared to 2021[128] - For the year ended December 31, 2022, the Group's net cash inflow from operating activities was approximately RMB 159 million (2021: RMB 156 million)[128] - The Group's funds were primarily used for purchasing new cars, spare parts, and automotive supplies, repaying loans, allocating working capital and daily expenses, and establishing or acquiring new dealerships[128] Capital Expenditure and Investment The Group's capital expenditure and investment increased in 2022, mainly for store upgrades and renovations - For the year ended December 31, 2022, the Group's capital expenditure and investment were approximately RMB 859 million (2021: RMB 661 million), with the increase mainly due to store upgrades and renovations[103] Inventories The Group's inventory increased at year-end 2022, leading to increased average inventory turnover days, mainly due to expanded operations and epidemic impact - The Group's inventory as of December 31, 2022, was approximately RMB 4,064 million, an increase of approximately RMB 1,415 million compared to 2021, mainly due to the Group increasing new car inventory based on market demand[103] - The Group's 2022 average inventory turnover days were 48.4 days, an increase of 16.9 days compared to 31.5 days in 2021, mainly due to expanded operations and increased year-end inventory caused by the epidemic[103] Exchange Rate Risk The Group primarily conducts business in RMB, with foreign currency assets/liabilities not significantly impacting operating cash flow or liquidity, using forward foreign exchange contracts to hedge risk - The Group primarily conducts business in RMB, and although certain bank deposits and bank loans are denominated in foreign currencies, operating cash flow and liquidity were not significantly impacted by exchange rate fluctuations[104] - The Group uses forward foreign exchange contracts to hedge foreign exchange risk related to USD-denominated loans and borrowings[104] Liquidity and Capital Resources The Group's working capital and capital expenditure primarily came from internal operating cash and bank borrowings, with both cash and cash equivalents and loans/borrowings increasing at year-end 2022 - The Group's working capital and capital expenditure primarily came from cash generated from internal operations and borrowings from major banks and other financial institutions[104] - As of December 31, 2022, the Group's cash and cash equivalents and bank deposits were approximately RMB 4,691 million (including: pledged bank deposits of approximately RMB 3,957 million, cash and cash equivalents of RMB 734 million), an increase of approximately RMB 1,372 million compared to 2021, mainly due to increased financing[104] - As of December 31, 2022, the Group's loans and borrowings and lease liabilities were approximately RMB 20,018 million (2021: approximately RMB 18,141 million), with the increase mainly due to new bank loans and borrowings[104] Pledged Assets The Group pledged certain assets as collateral for loans and borrowings, with total pledged assets increasing at year-end 2022, mainly due to increased inventory pledges for financing - The Group pledged certain assets as collateral for loans and borrowings, used as working capital for daily business operations[132] - As of December 31, 2022, the Group's pledged assets were approximately RMB 8,003 million (2021: approximately RMB 6,310 million), with the increase mainly due to increased inventory pledges required for financing[132] Foreign Currency Investments and Hedging The Group held no significant foreign currency investments in 2022, and operating cash flow or liquidity was not significantly affected by exchange rate changes - For the year ended December 31, 2022, the Group held no significant foreign currency investments[133] - The Group's working capital or liquidity was not significantly affected by changes in currency exchange rates[133] Significant Events After Accounting Year End The Board approved a plan to dispose of 100% equity interest in Shenzhen Huianqi Investment Consulting Co., Ltd., expected to be a major transaction requiring shareholder approval - On February 28, 2023, the Board approved a proposed plan to dispose of 100% equity interest in Shenzhen Huianqi Investment Consulting Co., Ltd.[133] - The potential disposal is intended to be conducted through public bidding, with a provisional initial pri