Financing Leasing and Factoring Business - In 2023, the financing leasing industry in China saw a decrease in the number of entities and business volume, with the total financing leasing contract balance dropping to RMB 576.6 billion, a decline of approximately RMB 84 billion or 1.44% from the end of 2022[8]. - The company plans to reduce risks in its financing leasing business and shift resources to the lower-risk factoring business to ensure stable and sustainable operations amid economic uncertainties[8]. - The factoring business is recognized for its significant potential in the Chinese market, enhancing companies' financing capabilities and cash flow efficiency[9]. - The group plans to actively seek investment opportunities in the non-performing asset management sector while ensuring compliance and sustainability[12]. - The group aims to achieve steady development in 2024 by adjusting its business layout and managing risks prudently[13]. - The group will focus on cultivating and attracting talent to ensure stable progress in its operations[13]. - The loan financing segment includes business loans, short-term loans, and factoring services, with a focus on the medical equipment sector[19]. - The group has not entered into new short-term loan agreements since the implementation of regulations in July 2020, adjusting its operations accordingly[27]. - The group has established over 100 end customers across China, including real estate developers, construction companies, building materials companies, and landscape design firms as of December 31, 2023[42]. - The interest rates for the group's factoring and re-factoring agreements range from approximately 9.41% to 11.00%[46]. - The group primarily targets large-scale, stable, and reputable tier 2 and tier 3 hospitals for its loan financing services, which are considered to have lower default risks[41]. - The average term for the group's loan financing agreements is one year, with interest rates set around 9.80%[43]. - The group has implemented a systematic operational process for loan financing and factoring transactions, ensuring risk control measures are applied consistently[48]. - The group offers flexibility in collateral requirements for factoring and re-factoring agreements to meet financial needs[47]. - The group’s re-factoring agreements typically have a term of six months to one year, aligning with industry practices to mitigate bad debt risks[46]. - The group has developed strong relationships and expertise in various industries, including energy, manufacturing, and real estate, enhancing its market opportunities[53]. - The group’s re-factoring income is recognized as interest income generated from providing re-factoring services[40]. - The group has a direct obligation from factoring companies to repay loans, regardless of the original debtor's ability to repay[39]. - The company will analyze the target market's demand for loan financing and factoring services, collecting potential customer data and assessing financing needs[54]. - A project proposal report will be prepared after receiving loan financing service applications, detailing lessee information, principal amounts, equipment conditions, collateral, and repayment sources[55]. - The company conducts due diligence to assess credit risk, including on-site visits to potential lessees to verify financial status and operational capabilities[59]. - The company requires lessees to provide purchase records or independent asset valuation reports for asset evaluation[60]. - All existing factoring agreements have recourse, meaning clients must repay loans regardless of their ability to collect receivables[62]. - Due diligence for factoring services focuses on reviewing clients' operational status, business risks, and repayment capabilities[66]. - The company will cross-check transaction authenticity and reasonableness during the due diligence process for receivables[65]. - A due diligence report will be compiled after assessing potential risks and compliance with relevant laws and regulations[64]. - Continuous monitoring procedures are established post-loan approval to manage risks associated with clients and final debtors[61]. - The project approval committee evaluates whether potential clients meet the company's requirements and if project proposals align with business policies[55]. - The company conducts thorough due diligence on factoring companies, suppliers, and final debtors, including financial status and credit ratings[67]. - A series of ongoing procedures are in place for risk management after approving loans to factoring companies, ensuring continuous monitoring of all parties involved[69]. - The project approval committee reviews and assesses the completeness of due diligence reports before approving loan financing and factoring projects[70]. - The company is responsible for monitoring loan repayments and collections, with specific teams handling asset management and legal actions if necessary[74]. - In the event of default, the company initiates a structured process to engage with counterparties, including notifications of repayment obligations and potential consequences[83]. - The company has the right to take remedial actions, including accelerating repayment of loans if counterparties breach financing agreements[78]. - The company regularly conducts asset inspections and valuations to ensure the integrity and condition of leased assets[75]. - The company requires factoring clients to repay loans regardless of their ability to collect receivables from original debtors[79]. - The company has established procedures for dealing with defaults, including arbitration and legal actions if initial negotiations fail[84]. - The company actively monitors the financial status of end clients and factoring companies through regular communication and media searches[77]. - As of December 31, 2023, the company is pursuing legal actions to recover unpaid loans from Shaanxi Taibai Investment Group Co., Ltd., which amounts to approximately RMB 35,426,293.77 (around HKD 39 million) due under the financing agreement[87]. - The court ruled in favor of the company on November 6, 2020, ordering Shaanxi Taibai to pay approximately RMB 33 million (around HKD 36.3 million) in unpaid rent and purchase price, along with default interest totaling around RMB 600,000 (around HKD 700,000) and legal fees of RMB 300,000 (around HKD 300,000)[88]. - The company has recognized expected credit losses primarily due to the default of Shaanxi Taibai, with provisions reflecting macroeconomic changes and the financial condition of counterparties[91]. - The expected credit loss is calculated based on the difference between the contractual cash flows due to the company and the expected cash flows to be received, discounted at the original effective interest rate[96]. - The company has engaged independent valuation experts to assess expected credit losses on certain loans and factoring receivables, with the loss amount based on the valuation report[96]. - The company has no ongoing litigation, arbitration, or claims against customers for recovering unpaid loans, aside from the case with Shaanxi Taibai[90]. - The company may explore collaboration with third-party asset management firms to recover some or all of the bad debts if the likelihood of recovering overdue loans is deemed low[86]. - The company’s credit risk assessment is conducted monthly by the board, focusing on the financial health of counterparties and the actual default situation[91]. - The company assumes significant financing components in its receivables, which may lead to increased credit risk assessments since the initial recognition[92]. - The company will write off financial assets when there is evidence of severe financial difficulties of the counterparty, such as bankruptcy or overdue debts exceeding two years[95]. Financial Performance - The group's revenue for the year ended December 31, 2023, was approximately HKD 72.58 million, a decrease of 32.21% compared to HKD 107.12 million in 2022[102]. - The profit attributable to the owners of the company for the year ended December 31, 2023, was approximately HKD 13.30 million, compared to a loss of approximately HKD 17.30 million in 2022[103]. - The group recorded a loan impairment loss reversal of approximately HKD 6.70 million for the year ended December 31, 2023, compared to a loss reversal of approximately HKD 0.30 million in 2022[100]. - The East Kui business segment contributed revenue of approximately HKD 50.50 million for the year ended December 31, 2023, a decrease of about 13.53% from HKD 58.40 million in 2022[106]. - The group’s total assets as of December 31, 2023, were approximately HKD 1.00 billion, with non-current assets at HKD 324.47 million and current assets at HKD 678.10 million[102]. - The group’s total liabilities as of December 31, 2023, were approximately HKD 64.70 million, with current liabilities at HKD 59.29 million and non-current liabilities at HKD 5.41 million[102]. - The group plans to maintain a cautious approach in business development to achieve long-term stable growth[106]. - The group will continue to monitor the macroeconomic developments in China and optimize its loan financing and factoring processes[100]. - The group’s internal control procedures regarding loan approvals are considered sound and effective, with no significant deviations noted[99]. - The group entered into a loan financing agreement with Chongqing Longyate Metal Materials Co., Ltd. for a total consideration of approximately HKD 2.20 million, with an annual interest rate of 9.80%[107]. - Shanghai Dongrui entered factoring agreements with multiple companies, providing financing secured by accounts receivable totaling approximately RMB 67 million (about HKD 74 million) with a principal amount of RMB 60 million (about HKD 66 million) at an annual interest rate of 12.00% on December 19, 2022[112]. - On September 15, 2023, Shanghai Dongrui signed a factoring agreement with Chongqing Pumei, providing financing secured by accounts receivable totaling approximately RMB 9.9 million (about HKD 10.9 million) with a principal amount of RMB 9 million (about HKD 9.9 million) at an annual interest rate of 11.00%[113]. - Shanghai Dongrui provided financing of approximately RMB 5.84 million (about HKD 6.42 million) secured by accounts receivable with a principal amount of RMB 5.3 million (about HKD 5.83 million) at an annual interest rate of 10.00% on October 11, 2023[118]. - On October 17, 2023, Shanghai Dongrui entered into a factoring agreement with Chongqing Maotong, providing financing secured by accounts receivable totaling approximately RMB 44.4 million (about HKD 48.8 million) with a principal amount of RMB 40 million (about HKD 44 million) at an annual interest rate of 11.00%[119]. - Shanghai Dongrui's recent agreements include a factoring agreement with Shenzhen Shengshi Jiaceng on September 15, 2023, providing financing of approximately RMB 8.6 million (about HKD 9.5 million) with a principal amount of RMB 7.9 million (about HKD 8.7 million) at an annual interest rate of 9.41%[118]. - The company has established a new factoring agreement with Chongqing Pumei on September 27, 2023, providing financing secured by accounts receivable totaling approximately RMB 44.4 million (about HKD 48.8 million) with a principal amount of RMB 40 million (about HKD 44 million) at an annual interest rate of 11.00%[120]. - On October 31, 2023, Shanghai Dongrui signed a refinancing agreement with Shengshi, providing financing secured by accounts receivable totaling RMB 29 million (about HKD 31.9 million) with a principal amount of RMB 26.5 million (about HKD 29.2 million) at an annual interest rate of 9.41%[120]. - Shanghai Dongrui's agreement with Pan Yu Commercial Factoring on November 2, 2023, involves financing secured by accounts receivable totaling approximately RMB 54.2 million (about HKD 59.6 million) with a principal amount of RMB 49.6 million (about HKD 54.6 million) at an annual interest rate of 9.41%[121]. - The company has consistently reduced interest rates in recent agreements, with the latest agreements showing rates as low as 9.41% compared to previous rates of 12.00%[118][121]. - Shanghai Dongrui's factoring agreements reflect a strategic focus on expanding financing options and improving cash flow management for its clients[117]. - Shanghai Dongrui entered into factoring agreements with Chongqing Peicui and Shanghai Hongxuan, providing financing of approximately RMB 67 million (about HKD 73.7 million) and RMB 37 million (about HKD 40.7 million) respectively, both at an annual interest rate of 11.00%[124][125]. - As of December 31, 2023, the total accounts receivable loans amounted to approximately HKD 495.5 million, a decrease from HKD 520.1 million in 2022, with factoring and re-factoring business accounting for HKD 493.7 million[127]. - The investment property segment generated revenue of approximately HKD 15.8 million for the year ended December 31, 2023, representing an increase of about 62.89% compared to HKD 9.7 million in 2022[132]. - The rental income from the Chengdu office is expected to provide stable revenue, with an annual rental amount of approximately RMB 1.6 million (about HKD 1.8 million) from a nearly 10-year lease agreement[132]. - The sales revenue from the flower and plant segment significantly declined to approximately HKD 6.3 million in 2023, down about 83.85% from HKD 39 million in 2022, due to the downturn in the real estate market in Chongqing[133]. - The company provided rent reductions totaling approximately RMB 420,000 (about HKD 460,000) to tenants at Dongdongmo, which accounted for about 3.08% of its revenue in 2023[128]. - The company has established 17 factoring and re-factoring agreements with nine borrowers, all of which are private companies with credit ratings ranging from AAA to A[126]. - The company acquired a property in Chengdu for RMB 19 million (about HKD 20.9 million), which is expected to benefit from the growing demand for office space in the region[129]. - The fair value gains from Dongdongmo and the Chengdu office amounted to approximately HKD 4.8 million for the year ended December 31, 2023, compared to a fair value loss of about HKD 31.4 million in 2022[132]. - The company has actively adapted to market demands and expanded sales channels to maintain competitiveness in the flower and plant market despite challenges[133]. - Shanghai Dongkui acquired 77.58% of Anxin Wanbang Asset Management for RMB 60,000 (approximately HKD 73,620), with Anxin Wanbang having a net liability of approximately RMB 1.7 million (approximately HKD 1.9 million) at the time of acquisition[134]. - The non-performing asset management segment recorded a post-tax loss of approximately HKD 100,000 for the year ending December 31, 2023, compared to a loss of approximately HKD 3.3 million in 2022[134]. - The company expects the Chinese economy to continue its recovery trend in 2024, with the government increasing economic support to achieve high-quality development[135]. - Shanghai Dongkui will focus resources on factoring and re-factoring businesses, enhancing customer quality while reducing operational risks[136]. - The government has introduced supportive policies for the healthy development of the supply chain finance industry, including commercial factoring[138]. - The company signed a nearly 10-year lease for its Chengdu office in June 2023, which is expected to provide stable income[143]. - Despite a continuous decline in property prices in China, rental prices in Chongqing and Chengdu are showing signs of stabilization and upward movement[143]. - The recovery of the real estate market and the construction of ecological cities are expected to positively impact the company's flower and plant sales business[144]. - The company aims to provide high-quality landscaping flowers and plants at competitive prices while exploring new sales channels to enhance operational quality and efficiency[144]. Cash and Debt Management - As of December 31, 2023, the group held cash and cash equivalents of approximately HKD 159.5 million, an increase from HKD 147.3 million in 2022[148]. - The current ratio as of December 31, 2023, was approximately 11.4, slightly down from 11.5 in 2022[148]. - The group had no capital debt ratio as of December 31, 2023, and total debt did not exceed cash and cash equivalents[148]. - The total employee cost recognized as of December 31, 2023, was approximately HKD 15.8 million, down from HKD 18.1 million in 2022[153]. - The group had 29 employees as of December 31, 2023, compared to 30 employees in 2022[153]. - The board did not recommend the declaration of a final dividend for the year ended December 31, 2023, consistent with 2022[158]. - The group has not incurred any significant contingent liabilities or capital commitments as of December 31, 2023[154]. - The group has maintained a net cash level sufficient to meet its operational and capital requirements[149]. - The group is actively seeking development opportunities in the non-performing asset management industry[145]. - The group aims to establish effective disposal processes and mechanisms to enhance its disposal capabilities and efficiency[145]. - The company reported no final dividend for the year ended December 31, 2023, consistent with the previous year[174]. - As of December 31, 2023, the company had no current or non-current borrowings, maintaining a debt-free status[181]. - The company's main business includes property investment and leasing in China, along with sales of flowers, seedlings, and providing loan financing and bad asset management services to Chinese clients[171]. - The company has not engaged in any share buybacks, sales, or redemptions during the year ended December 31, 2023[183]. - The company has no distributable reserves as of December 31, 2023, and 2022[176]. - The board of directors includes both executive and independent non-executive members, with several directors eligible for re-election at the upcoming annual general meeting[185]. - The company has not proposed any changes to its capital structure or issued new shares during the reporting period[178]. - The company’s financial performance and asset-liability summary for the past five fiscal years are detailed in the report[182]. - The company’s reserves and changes for the year ended December 31, 2023, are documented in the consolidated statement of changes in equity[175]. - The company has established service contracts with its directors, which are ongoing unless terminated by written notice[186]. - As of December 31, 2023, Mr. Luo Shaoyu holds a total of 785,373,018 shares, representing approximately 61.64% of the company's issued shares[192]. - Mr. Cao Zhenwei has a personal holding of 10,000 shares, which is 0.00% of the company's issued shares[
东银国际控股(00668) - 2023 - 年度财报