智欣集团控股(02187) - 2022 - 年度业绩

Company Information Company Overview Zhixin Group Holding Company Limited primarily engages in the manufacturing and sale of ready-mixed concrete and precast concrete components in China. Following the acquisition of Ruitu Mingsheng in December 2021, the Group commenced manufacturing and selling eco-friendly bricks in 2022, with its headquarters in Xiamen, Fujian Province, China - Zhixin Group Holding Company Limited (Stock Code: 2187) was incorporated in the Cayman Islands as an exempted company on November 14, 2018[4][111] - The Group's principal business involves the manufacturing and sale of ready-mixed concrete and precast concrete components, and it began manufacturing and selling eco-friendly bricks in 2022, headquartered in Xiamen, Fujian Province, China[119] - In December 2021, the Group acquired 100% equity interest in Ruitu Mingsheng, a company engaged in recycling iron ore tailings and producing eco-friendly bricks[5] Shareholding Structure and Management The Company's ultimate controlling shareholder and major shareholders are Mr. Ye Zhijie (Chairman and Executive Director) and Mr. Huang Wengui (Executive Director), respectively - The Company's ultimate controlling shareholder and major shareholders are Mr. Ye Zhijie (Chairman and Executive Director) and Mr. Huang Wengui (Executive Director), respectively[136] - As of the announcement date, the Board of Directors comprises five executive directors (Mr. Ye Zhijie, Mr. Huang Wengui, Mr. Qiu Limiao, Mr. Ye Dan, and Mr. Huang Kaining) and three independent non-executive directors (Ms. Wang Duanxiu, Mr. Cai Huinong, and Mr. Jiang Qinjian)[233] Listing Information The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since March 26, 2021 - The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since March 26, 2021[13] Financial Highlights Consolidated Statement of Comprehensive Income For the year ended December 31, 2022, the Group's revenue decreased by 17.1% year-on-year to RMB 634.2 million, and gross profit decreased by 44.9% to RMB 57.4 million. Profit for the year significantly reduced to RMB 1.3 million, compared to RMB 20.4 million in 2021 Key Data from Consolidated Statement of Comprehensive Income | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | Change (%) | | :--------------- | :------------------ | :------------------ | :------- | | Revenue | 634,152 | 765,088 | -17.1% | | Cost of Sales | (576,727) | (660,828) | -12.7% | | Gross Profit | 57,425 | 104,260 | -44.9% | | Other Income | 19,529 | 20,764 | -5.9% | | Selling Expenses | (20,878) | (19,636) | +6.3% | | Administrative Expenses | (42,443) | (43,579) | -2.6% | | Operating Profit | 11,000 | 46,512 | -76.4% | | Net Finance Costs | (13,132) | (13,002) | +1.0% | | (Loss)/Profit Before Income Tax | (2,132) | 33,510 | -106.4% | | Income Tax Credit/(Expense) | 3,385 | (13,112) | -125.8% | | Profit and Total Comprehensive Income for the Year | 1,253 | 20,398 | -93.9% | Consolidated Statement of Financial Position As of December 31, 2022, the Group's total assets increased to RMB 1,385.1 million, and total liabilities increased to RMB 942.0 million. Property, plant and equipment within non-current assets significantly increased, while borrowings within non-current liabilities also rose substantially Key Data from Consolidated Statement of Financial Position | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | Change (%) | | :--------------- | :------------------ | :------------------ | :------- | | Assets | | | | | Non-current Assets | 600,625 | 439,116 | +36.8% | | Property, Plant and Equipment | 390,405 | 206,589 | +89.0% | | Right-of-Use Assets | 104,547 | 118,115 | -11.4% | | Investment Properties | 36,347 | 37,536 | -3.1% | | Intangible Assets | 39,513 | 39,458 | +0.1% | | Current Assets | 784,474 | 809,817 | -3.1% | | Inventories | 22,571 | 29,909 | -24.6% | | Trade Receivables | 692,387 | 634,413 | +9.1% | | Cash and Bank Balances | 17,483 | 107,199 | -83.7% | | Liabilities | | | | | Non-current Liabilities | 197,363 | 86,659 | +127.8% | | Borrowings | 186,208 | 65,950 | +182.3% | | Current Liabilities | 744,666 | 720,457 | +3.4% | | Trade and Bills Payables | 348,408 | 328,289 | +6.1% | | Borrowings | 257,387 | 259,039 | -0.6% | | Equity | | | | | Total Equity | 443,070 | 441,817 | +0.3% | | Total Assets | 1,385,099 | 1,248,933 | +10.9% | | Total Liabilities | 942,029 | 807,116 | +16.7% | Earnings Per Share and Dividends For the year ended December 31, 2022, profit attributable to owners of the Company significantly decreased, leading to a drop in basic earnings per share from RMB 0.029 in 2021 to RMB 0.002 in 2022. No dividends were paid, declared, or proposed for the year Earnings Per Share | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------------------- | :------------------ | :------------------ | | Profit Attributable to Owners of the Company | 1,210 | 20,398 | | Weighted Average Number of Ordinary Shares Issued | 748,000,000 | 704,452,055 | | Basic Earnings Per Share (RMB) | 0.002 | 0.029 | | Diluted Earnings Per Share (RMB) | 0.002 | 0.029 | - As there were no potential dilutive ordinary shares outstanding as of December 31, 2022, the diluted earnings per share presented is the same as the basic earnings per share[70] - For the year ended December 31, 2022, no dividends were paid, declared, or proposed (2021: nil)[71] Management Discussion and Analysis Business Review The Group's business is categorized into ready-mixed concrete, precast concrete components, and iron ore tailings recycling and eco-friendly bricks. Total revenue for FY2022 decreased by 17.1%, primarily due to adverse weather, market competition, and reduced sales of ready-mixed concrete and precast concrete components. The iron ore tailings recycling and eco-friendly bricks business contributed RMB 27.9 million in revenue in 2022 - The Group's business segments can be broadly categorized into three types: ready-mixed concrete, precast concrete components, and iron ore tailings recycling and eco-friendly bricks[187] - The Group's total revenue decreased by approximately 17.1% from approximately RMB 765.1 million in FY2021 to approximately RMB 634.2 million in FY2022[190] Ready-Mixed Concrete and Precast Concrete Components Business In FY2022, ready-mixed concrete revenue decreased by 13.2% to RMB 463.3 million, and precast concrete components revenue decreased by 38.2% to RMB 143.0 million. This was primarily due to adverse weather causing suspensions and delays in some construction projects, as well as low-price competition from new market entrants - Revenue from sales of ready-mixed concrete decreased by approximately 13.2% from approximately RMB 533.8 million in FY2021 to approximately RMB 463.3 million in FY2022[160] - Revenue from sales of precast concrete components decreased by approximately 38.2% from approximately RMB 231.3 million in FY2021 to approximately RMB 143.0 million in FY2022[191] - The decrease in revenue was mainly due to the suspension and delay of some construction projects affected by an increase in adverse weather days in FY2022, and competition from new market entrants using low-price strategies[41] Iron Ore Tailings Recycling and Eco-Friendly Bricks Business The Group's revenue from sales of eco-friendly bricks produced from iron ore tailings recycling was approximately RMB 27.9 million in FY2022, primarily stemming from the acquisition of Ruitu Mingsheng in December 2021. The Group made significant investments in advanced automated production lines, achieving an annual processing capacity of 3 million tons of iron ore tailings and an annual production capacity of 1 million square meters of eco-friendly bricks - Revenue from sales of eco-friendly bricks produced from iron ore tailings recycling was approximately RMB 27.9 million in FY2022, primarily due to sales from Ruitu Mingsheng, which the Group acquired in December 2021[192] - The Group made significant investments in advanced automated assembly lines, achieving an annual processing capacity of 3 million tons of iron ore tailings and establishing fully automated molding production lines capable of manufacturing 1 million square meters of eco-friendly bricks annually[37] Financial Review In FY2022, the Group's overall gross profit and gross margin significantly declined, primarily due to reduced revenue from ready-mixed concrete and precast concrete components businesses and a narrower decrease in cost of sales. Other income and administrative expenses slightly decreased, while selling expenses increased due to higher transportation costs. Net finance costs slightly rose, income tax shifted from expense to credit, and profit for the year substantially decreased - The Group's overall gross profit decreased by approximately 44.9% from approximately RMB 104.3 million in FY2021 to approximately RMB 57.4 million in FY2022. The overall gross margin decreased from approximately 13.6% in FY2021 to approximately 9.1% in FY2022[163] - Profit for the year decreased from approximately RMB 20.4 million in FY2021 to approximately RMB 1.3 million in FY2022[168] Revenue The Group's total revenue decreased by 17.1% to RMB 634.2 million in FY2022. Specifically, ready-mixed concrete revenue decreased by 13.2%, precast concrete components revenue decreased by 38.2%, while the iron ore tailings recycling and eco-friendly bricks business contributed RMB 27.9 million in new revenue - The Group's revenue decreased by approximately RMB 130.9 million or approximately 17.1% from approximately RMB 765.1 million in FY2021 to approximately RMB 634.2 million in FY2022[190] - Revenue from sales of ready-mixed concrete decreased by approximately 13.2% to RMB 463.3 million[160] - Revenue from sales of precast concrete components decreased by approximately 38.2% to RMB 143.0 million[191] - Revenue from sales of eco-friendly bricks produced from iron ore tailings recycling was approximately RMB 27.9 million in FY2022[192] Cost of Sales, Gross Profit, and Gross Margin Cost of sales decreased by 12.7% year-on-year to RMB 576.7 million, mainly due to lower concrete product sales. Overall gross profit decreased by 44.9% year-on-year to RMB 57.4 million, with the overall gross margin falling to 9.1%. Both gross profit and gross margin for ready-mixed concrete and precast concrete components declined, while the iron ore tailings recycling and eco-friendly bricks business achieved a gross margin of 41.0% - Cost of sales decreased by approximately 12.7% from approximately RMB 660.8 million in FY2021 to approximately RMB 576.7 million in FY2022, primarily due to a decrease in sales of ready-mixed concrete and precast concrete components[162] - The Group's overall gross profit decreased by approximately 44.9% from approximately RMB 104.3 million in FY2021 to approximately RMB 57.4 million in FY2022. The overall gross margin decreased from approximately 13.6% in FY2021 to approximately 9.1% in FY2022[163] - The gross margin for ready-mixed concrete decreased from approximately 15.9% in FY2021 to approximately 8.1% in FY2022. The gross margin for precast concrete components decreased from approximately 8.3% in FY2021 to approximately 5.8% in FY2022. The gross margin for iron ore tailings recycling and eco-friendly bricks was approximately 41.0%[44][194][195] Other Income and Expenses Other income decreased by 5.9% year-on-year to RMB 19.5 million, mainly due to reduced rental income. Administrative expenses decreased by 2.6% year-on-year to RMB 42.4 million, primarily attributable to a reduction in one-off listing-related expenses in FY2021. Selling expenses increased by 6.3% year-on-year to RMB 20.9 million, mainly due to higher transportation costs - Other income decreased by approximately 5.9% from approximately RMB 20.8 million in FY2021 to approximately RMB 19.5 million in FY2022, primarily due to a decrease in rental income[165] - Administrative expenses decreased by approximately 2.6% from approximately RMB 43.6 million in FY2021 to approximately RMB 42.4 million in FY2022, primarily attributable to a reduction in one-off expenses related to the listing celebration incurred in FY2021[166] - Selling expenses increased by approximately 6.3% from approximately RMB 19.6 million in FY2021 to approximately RMB 20.9 million in FY2022, primarily due to an increase in transportation expenses[196] Net Finance Costs Net finance costs slightly increased by approximately 1.0% from RMB 13.0 million in FY2021 to RMB 13.1 million in FY2022 - Net finance costs slightly increased by approximately RMB 0.1 million or approximately 1.0% from approximately RMB 13.0 million in FY2021 to approximately RMB 13.1 million in FY2022[47] Income Tax Expense An income tax credit of approximately RMB 3.4 million was recorded in FY2022, compared to an income tax expense of approximately RMB 13.1 million in FY2021. This was primarily due to a decrease in taxable profit from China operations and an increase in deferred income tax credit - An income tax credit of approximately RMB 3.4 million was recorded in FY2022, compared to an income tax expense of approximately RMB 13.1 million in FY2021. The decrease in income tax expense was mainly due to a reduction in the Group's taxable profit from China operations and an increase in deferred income tax credit arising from previously unrecognized tax losses[217] Profit for the Year Given the aforementioned factors, profit for the year significantly decreased from RMB 20.4 million in FY2021 to RMB 1.3 million in FY2022 - Given the aforementioned factors, profit for the year significantly decreased from RMB 20.4 million in FY2021 to RMB 1.3 million in FY2022[168] Liquidity and Financial Resources The Group primarily funds its operations through cash generated from operating activities and borrowings. At the end of 2022, both net current assets and cash and cash equivalents significantly decreased. The gearing ratio increased to 52%, and total borrowings rose. Capital commitments decreased, and there were no significant contingent liabilities - In FY2022, the Group primarily funded its operations through cash generated from operating activities and borrowings[199] - As of December 31, 2022, the Group's net current assets were approximately RMB 39.8 million (2021: approximately RMB 89.4 million), and cash and cash equivalents were approximately RMB 17.5 million (2021: approximately RMB 107.2 million)[199] Gearing Ratio As of December 31, 2022, the Group's gearing ratio was approximately 52%, an increase from 33% in 2021 - The Group's gearing ratio was approximately 52% as of December 31, 2022 (December 31, 2021: 33%)[49] Borrowings As of December 31, 2022, the Group's current borrowings were approximately RMB 257.4 million, non-current borrowings were approximately RMB 186.2 million, and total borrowings increased to RMB 443.6 million. The weighted average effective interest rate for bank borrowings was 5.08% per annum - As of December 31, 2022, the Group's current borrowings were approximately RMB 257.4 million (2021: approximately RMB 259.0 million), and non-current borrowings were approximately RMB 186.2 million (2021: approximately RMB 66.0 million)[219] - For the year ended December 31, 2022, the weighted average effective interest rate for bank borrowings was 5.08% per annum (2021: 5.65%)[154] Total Borrowings | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------- | :------------------ | :------------------ | | Total Borrowings | 443,595 | 324,989 | Capital Commitments and Pledged Assets As of December 31, 2022, the Group's capital commitments were approximately RMB 148.3 million, a decrease from RMB 235.0 million in 2021. Several of the Group's assets have been pledged to secure borrowings, including property, plant and equipment, construction in progress, right-of-use assets, investment properties, and transferred receivables - As of December 31, 2022, the Group's capital commitments were approximately RMB 148.3 million (December 31, 2021: RMB 235.0 million)[221] Total Pledged Assets | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Property, Plant and Equipment | 80,877 | 78,982 | | Construction in Progress | 208,434 | — | | Right-of-Use Assets | 104,167 | 107,519 | | Investment Properties | 33,807 | 34,852 | | Transferred Receivables | 19,586 | 10,470 | | Total | 446,871 | 231,823 | Contingent Liabilities As of December 31, 2022, the Group had no significant contingent liabilities, whereas as of December 31, 2021, contingent liabilities arising from the acquisition of Ruitu Mingsheng were approximately RMB 2.9 million - As of December 31, 2022, the Group had no significant contingent liabilities (December 31, 2021: contingent liabilities of approximately RMB 2.9 million arising from the acquisition of Ruitu Mingsheng)[96] Outlook The Group is optimistic about the prospects of integrated utilization of iron ore tailings in Hainan Province, expecting it to provide long-term raw material supply and generate synergistic effects with existing concrete businesses, leading to additional revenue. Concurrently, the Group anticipates that government policies encouraging precast concrete components will increase demand, and it plans to enhance production capacity through new production lines to meet future demand - The Group is quite optimistic about the prospects of integrated utilization of iron ore tailings in Hainan Province, expecting it to ensure long-term supply, create synergies with existing ready-mixed concrete and precast concrete components businesses, expand the raw material industry chain, and generate additional revenue[159] - Government policies encouraging the use of precast concrete components in new building construction are expected to increase the usage of this building material, which will undoubtedly provide a continuous demand for the Group's precast concrete components[188] - The Group eagerly anticipates that the new production lines currently under construction will enhance its production capacity, enabling it to meet the expected increase in future demand[188] Significant Accounting Policies and Notes to Financial Statements Basis of Preparation The consolidated financial statements are prepared under the historical cost convention in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance. The Group has adopted certain new or revised standards but has not changed its accounting policies or made retrospective adjustments as a result, nor has it applied any new standards or interpretations not yet effective for the current accounting period - The consolidated financial statements are prepared under the historical cost convention in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance (Chapter 622)[121] - Certain new or revised standards have been applied, but the Group has not changed its accounting policies or made retrospective adjustments as a result of adopting these standards[7] - The Group has not applied any new standards or interpretations that are not yet effective for the current accounting period[16] Segment Information The Group's reportable segments include ready-mixed concrete, precast concrete components, and recycling iron ore tailings and bricks. In 2022, gross profit for both ready-mixed concrete and precast concrete components significantly decreased, while the recycling iron ore tailings and bricks business contributed RMB 11.4 million in gross profit Segment Results for 2022 | Segment | Revenue (RMB thousands) | Cost of Sales (RMB thousands) | Gross Profit (RMB thousands) | Selling Expenses (RMB thousands) | Administrative Expenses (RMB thousands) | Segment Results (RMB thousands) | | :--------------- | :---------------- | :-------------------- | :---------------- | :-------------------- | :-------------------- | :-------------------- | | Ready-Mixed Concrete | 463,282 | (425,609) | 37,673 | (11,442) | (21,991) | 4,240 | | Precast Concrete Components | 142,959 | (134,651) | 8,308 | (8,828) | (12,871) | (13,391) | | Recycling Iron Ore Tailings and Bricks | 27,911 | (16,467) | 11,444 | (608) | (4,042) | 6,794 | | Total | 634,152 | (576,727) | 57,425 | (20,878) | (38,904) | (2,357) | Segment Results for 2021 | Segment | Revenue (RMB thousands) | Cost of Sales (RMB thousands) | Gross Profit (RMB thousands) | Selling Expenses (RMB thousands) | Administrative Expenses (RMB thousands) | Segment Results (RMB thousands) | | :--------------- | :---------------- | :-------------------- | :---------------- | :-------------------- | :-------------------- | :-------------------- | | Ready-Mixed Concrete | 533,761 | (448,763) | 84,998 | (6,578) | (18,506) | 59,914 | | Precast Concrete Components | 231,327 | (212,065) | 19,262 | (13,058) | (22,530) | (16,326) | | Recycling Iron Ore Tailings and Bricks | — | — | — | — | — | — | | Total | 765,088 | (660,828) | 104,260 | (19,636) | (41,036) | 43,588 | Property, Plant and Equipment As of December 31, 2022, the Group's property, plant and equipment net book value increased to RMB 390.4 million, primarily due to additions and transfers from construction in progress. Total depreciation expense for the year was RMB 18.8 million, with RMB 4.1 million in borrowing interest capitalized to construction in progress Net Book Value of Property, Plant and Equipment | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Net Book Value at Year-End | 390,405 | 206,589 | - For the year ended December 31, 2022, general borrowing interest of approximately RMB 4,123,000 was capitalized to property, plant and equipment, with an average borrowing rate of 5.17% per annum[85] Depreciation Expense | Category | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Cost of Sales | 14,043 | 12,964 | | Selling Expenses | 911 | 536 | | Administrative Expenses | 3,837 | 2,192 | | Total | 18,791 | 15,692 | - As of December 31, 2022, buildings and machinery with a total net book value of RMB 80,877,000, and construction in progress for an iron ore tailings recycling plant with a book value of RMB 208,434,000, were pledged to secure the Group's borrowings[84] Right-of-Use Assets As of December 31, 2022, the net book value of right-of-use assets was approximately RMB 104.5 million, primarily comprising land use rights, leased warehouses and plants, and leased vehicles. Among these, land use rights have been pledged to secure the Group's borrowings. Depreciation and amortization expenses for the year amounted to RMB 4.6 million Net Book Value of Right-of-Use Assets | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :----------- | :------------------ | :------------------ | | Net Book Value at Year-End | 104,547 | 118,115 | - Land use rights refer to the Group's interests in leased land in China, with lease terms ranging from 20 to 42 years, and Ruitu Mingsheng's land use rights having a lease term of 50 years[125] - As of December 31, 2022, land use rights with a total net book value of RMB 104,167,000 were pledged to secure the Group's borrowings[140] Profit or Loss and Cash Flows Related to Leases | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------------------- | :------------------ | :------------------ | | Depreciation of Right-of-Use Assets | 4,585 | 6,003 | | Interest Expense on Lease Liabilities | 68 | 706 | | Short-term Lease Rental Expense | 3,005 | 4,612 | | Cash Outflow for Short-term Leases from Operating Activities | 2,647 | 4,612 | | Cash Outflow for Leases from Financing Activities | 6,503 | 4,336 | Investment Properties As of December 31, 2022, the Group's investment properties had a net book value of RMB 36.3 million, stated at historical cost less accumulated depreciation and impairment losses. The total fair value of investment properties was RMB 45.3 million, determined by independent valuers using income and market approaches, with a portion pledged to secure Group borrowings Net Book Value of Investment Properties | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :----------- | :------------------ | :------------------ | | Net Book Value at Year-End | 36,347 | 37,536 | - The Group's investment properties are stated at historical cost less subsequent accumulated depreciation and any accumulated impairment losses at the end of each reporting period[142] - As of December 31, 2022, the total fair value of the Group's investment properties was RMB 45,300,000 (2021: RMB 45,200,000), determined by independent property valuers based on valuations calculated using the income approach and market approach, respectively[171] - As of December 31, 2022, investment properties with a net book value of RMB 33,807,000 were pledged to secure the Group's borrowings[53] Intangible Assets As of December 31, 2022, the net book value of intangible assets was RMB 39.5 million, primarily comprising goodwill and software. Goodwill arose from the acquisition of Ruitu Mingsheng, and an impairment review concluded that no impairment provision was necessary. Amortization expense for intangible assets during the year was RMB 59 thousand Net Book Value of Intangible Assets | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :----------- | :------------------ | :------------------ | | Net Book Value at Year-End | 39,513 | 39,458 | | Of which: Goodwill | 39,297 | 39,297 | | Of which: Software | 216 | 161 | - Goodwill arose from the acquisition of Ruitu Mingsheng. The Company performed an impairment review on the carrying amount of goodwill as of December 31, 2022, and concluded that no impairment provision was necessary[129] - Amortization expense for intangible assets was charged to profit or loss during the year, of which RMB 59 thousand was included in cost of sales (2021: RMB 26 thousand)[144][172] Inventories As of December 31, 2022, the Group's net book value of inventories decreased to RMB 22.6 million, primarily consisting of raw materials, work-in-progress, and finished goods. Cost of inventories recognized during the year was RMB 449.6 million, and impairment provision for inventories was RMB 1.0 million Composition of Inventories | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Raw Materials | 8,771 | 12,752 | | Work-in-Progress | 623 | 1,373 | | Finished Goods | 14,214 | 18,723 | | Less: Impairment Provision for Inventories | (1,037) | (2,939) | | Total | 22,571 | 29,909 | - For the year ended December 31, 2022, cost of inventories recognized as an expense and included in 'cost of sales' was RMB 449,552,000 (2021: RMB 510,995,000)[146] Changes in Impairment Provision for Inventories | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | At Beginning of Year | 2,939 | 1,529 | | Increase in Provision Recognized in Profit or Loss During the Year | 1,037 | 2,939 | | Provision Written Off Upon Sale of Inventories | (2,939) | (1,529) | | At End of Year | 1,037 | 2,939 | Trade Receivables As of December 31, 2022, total trade receivables (including retention receivables) amounted to RMB 717.8 million. The Group generally grants customers a 40-day credit period and applies the simplified approach to recognize expected credit loss provisions for trade and retention receivables. Some receivables have been transferred under factoring arrangements, but the Group retains overdue and credit risks Total Trade Receivables | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Trade Receivables | 704,195 | 645,318 | | Less: Impairment Provision | (11,808) | (10,905) | | Net Trade Receivables | 692,387 | 634,413 | | Non-current: Retention Receivables | 26,947 | 31,906 | | Less: Impairment Provision | (1,553) | (1,177) | | Net Retention Receivables | 25,394 | 30,729 | | Total | 717,781 | 665,142 | - The Group applies the simplified approach to recognize expected credit loss provisions as required by HKFRS 9, which is a lifetime expected loss provision for trade and retention receivables[60] - As of December 31, 2022, the carrying amount of trade receivables included receivables of RMB 19,586,000 (2021: RMB 10,470,000) subject to factoring arrangements. The Group has retained the overdue payment risk and credit risk[148] Aging Analysis of Trade Receivables | Aging | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------- | :------------------ | :------------------ | | Within One Year | 465,067 | 547,485 | | One to Two Years | 205,149 | 99,324 | | Two to Three Years | 52,185 | 25,566 | | Over Three Years | 8,741 | 4,849 | | Total | 731,142 | 677,224 | Trade and Other Payables As of December 31, 2022, total trade and bills payables amounted to RMB 348.4 million, and total other payables and accruals amounted to RMB 134.9 million. Due to their short-term nature, their carrying amounts approximate their fair values and are primarily denominated in RMB Total Trade and Other Payables | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------------------- | :------------------ | :------------------ | | Trade and Bills Payables | 348,408 | 328,289 | | Other Payables and Accruals | 134,873 | 112,870 | | Total | 483,281 | 441,159 | - Due to the short-term nature of trade and bills payables and other payables and accruals, their carrying amounts approximate their fair values at the reporting date[30] Aging Analysis of Trade and Bills Payables | Aging | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------- | :------------------ | :------------------ | | Within One Year | 325,543 | 312,519 | | One to Two Years | 19,158 | 12,104 | | Over Two Years | 3,707 | 3,666 | | Total | 348,408 | 328,289 | Currency Composition of Trade and Other Payables | Currency | 2022 (RMB thousands) | 2021 (RMB thousands) | | :----- | :------------------ | :------------------ | | RMB | 480,693 | 440,817 | | HKD | 2,588 | 342 | | Total | 483,281 | 441,159 | Income Tax The Group applies different tax rates in various jurisdictions: Cayman Islands and British Virgin Islands are tax-exempt, Hong Kong profits tax rate is 16.5% (no taxable profit for the year), and China corporate income tax rate is 25%, with Xiamen Zhixin Construction Technology Co., Ltd. enjoying a preferential tax rate of 15%. The Group has not recognized deferred income tax liabilities for unremitted earnings of its Chinese subsidiaries - The Company is incorporated in the Cayman Islands as an exempted company and is not subject to Cayman Islands taxation. The Group's subsidiaries incorporated in the British Virgin Islands are exempted companies and are not subject to British Virgin Islands taxation[64] - Hong Kong profits tax has been provided at a rate of 16.5% on the estimated assessable profit for the year. During the year, the Group had no assessable profit in Hong Kong[64] - The Company's subsidiaries incorporated in China are subject to corporate income tax at a rate of 25%, except for Xiamen Zhixin Construction Technology Co., Ltd., which enjoys a preferential tax rate of 15%[64] - As of December 31, 2022, no deferred income tax liability was recognized for withholding tax payable on the unremitted earnings of the Group's Chinese subsidiaries. The Group does not intend to distribute their respective unremitted profits in the foreseeable future[67][109] Other Information Significant Acquisitions and Disposals Except for the disclosed acquisition of Ruitu Mingsheng, the Group did not undertake any significant acquisitions or disposals related to subsidiaries, associates, and joint ventures in FY2022 - Save as disclosed above, the Group did not undertake any significant acquisitions or disposals related to subsidiaries, associates, and joint ventures in FY2022[98] Significant Investments As of December 31, 2022, the Group had no significant investments - As of December 31, 2022, the Group had no significant investments[204] Use of Proceeds The net proceeds from the Company's share offer amounted to approximately HKD 238.7 million. As of December 31, 2022, most of the proceeds were used for general working capital and repayment of borrowings, a small portion for expanding precast concrete component production capacity, and the remainder for enhancing IT systems, improving environmental protection systems, and purchasing vehicles - The Company obtained net proceeds from the share offer of approximately HKD 238.7 million[100] Use of Net Proceeds from Share Offer | Purpose | Disclosed Updated Intended Use of Net Proceeds (HKD millions) | Net Proceeds Utilized as at December 31, 2022 (HKD millions) | Net Proceeds Unutilized as at December 31, 2022 (HKD millions) | Expected Timeline for Utilization of Unutilized Net Proceeds | | :------------------------- | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :----------------------------------- | | Expand Production Capacity for Precast Concrete Components | 24.5 | 17.2 | 7.3 | Before December 2023 | | Enhance Information Technology Systems | 1.2 | 1.2 | — | N/A | | Improve Environmental Protection Systems | 1.2 | 1.2 | — | N/A | | Purchase Mixer Trucks and Concrete Pump Trucks | 2.0 | 2.0 | — | N/A | | General Working Capital | 105.3 | 105.3 | — | N/A | | Repay Borrowings | 104.5 | 104.5 | — | N/A | | Total | 238.7 | 231.4 | 7.3 | | Employees and Remuneration Policy As of December 31, 2022, the Group had 508 employees, a decrease from 613 in 2021. Employee remuneration is determined based on qualifications, responsibilities, contributions, and experience, with some factory workers outsourced to enhance human resource efficiency and flexibility - As of December 31, 2022, the Group had 508 employees (2021: 613 employees)[225] - Employee remuneration is determined with reference to factors such as qualifications, responsibilities, contributions, and experience[225] - The Group outsources some factory workers for its precast concrete components production lines to certain labor service companies to enhance human resource efficiency, flexibility, and management capabilities[225] Currency Risk Most of the Group's subsidiaries operate in China, with RMB as their functional currency. The Group does not expect to face significant currency risk and currently has no foreign currency hedging policy, but management will continue to monitor and consider hedging if necessary - Most of the Group's subsidiaries operate in China, and their functional currency is RMB[220] - The Group does not expect to face any significant currency risk that could materially impact its operating results. Currently, the Group has no foreign currency hedging policy[220] - The Group's management will continue to monitor foreign currency risk and will consider hedging significant foreign currency risks when necessary[220] Capital Structure The Group's capital structure has remained unchanged since its listing, comprising equity attributable to owners of the Company, including issued share capital and reserves. The Board regularly reviews the capital structure, considering the cost of capital and associated risks - The Group's capital structure has remained unchanged since the Company's shares were listed on The Stock Exchange of Hong Kong Limited[202] - The Group's capital structure comprises equity attributable to owners of the Company, including issued share capital and reserves[202] - The Board regularly reviews the Group's capital structure, considering the cost of capital and risks associated with various types of capital[202] Corporate Governance To the best knowledge of the Directors, the Company has complied with the code provisions set out in the Corporate Governance Code contained in Appendix 14 to the Listing Rules of the Stock Exchange for the year ended December 31, 2022 - To the best knowledge of the Directors, the Company has complied with the code provisions set out in the Corporate Governance Code contained in Appendix 14 to the Listing Rules of the Stock Exchange for the year ended December 31, 2022[101] Events After Reporting Period Except as disclosed in this announcement, no significant events materially affecting the Group occurred from the end of the Company's reporting period up to the date of this announcement. The Company will hold its annual general meeting on June 27, 2023 - Save as disclosed in this announcement, no significant events materially affecting the Group occurred from the end of the Company's reporting period up to the date of this announcement[102] - The Company will hold its annual general meeting in Hong Kong on Tuesday, June 27, 2023[208] Purchase, Sale or Redemption of Listed Securities For the year ended December 31, 2022, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the year ended December 31, 2022, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[80] Review and Publication The financial figures for the Group's results for the year ended December 31, 2022, have been reviewed by the auditor, PricewaterhouseCoopers, and are consistent with the consolidated financial statements. The Audit Committee has reviewed the audited financial statements and found them to comply with applicable accounting standards, Listing Rules, and other legal requirements. This results announcement has been published on the Company's website and the Stock Exchange's website - The financial figures for the Group's results for the year ended December 31, 2022, as presented in this results announcement, have been compared by the Group's auditor, PricewaterhouseCoopers, with the amounts contained in the Group's consolidated financial statements for the year ended December 31, 2022, and these amounts are in agreement[210] - The Audit Committee has reviewed the Group's audited financial statements for the year ended December 31, 2022, and is of the opinion that they comply with applicable accounting standards, the Listing Rules, and other legal requirements, and that adequate disclosures have been made[231] - This results announcement is published on the Company's website at www.xiamenzhixin.com and on the Stock Exchange's website at www.hkexnews.hk[232](index=232&type=chunk)