For the years ended December 31, 2021 and 2022, we had six and 14 loss-making projects, respectively, which were all landscaping and engineering projects.
Business · p. 217
In 2022, we experienced greater loss in comparison to 2021 because we actively expanded our landscaping and engineering business and offered substantial discounts to our customers if such discounts are likely to attract future project opportunities from the customers which may render greater profit to our Group.
Business · p. 217
We believe that we could gradually reduce losses in the future by effectively organizing construction and implementing various cost-saving measures.
Project #25, a construction engineering project situated in Henan Province with a contract value (excluding VAT) of approximately RMB291.6 million was suspended from December 2020 to October 2022 as Customer C had financial difficulties due to COVID-19 pandemic.
Business · p. 143
During the years ended 31 December 2020 and 2021, our impairment losses recognised for Project #25 was approximately RMB22.8 million and RMB0.1 million, respectively, and during the year ended 31 December 2022 and the six months ended 30 June 2023, our reversal of impairment losses for Project #25 was approximately RMB22.7 million and RMB28,000, respectively.
Business · p. 143
In terms of recoverability of contract assets and trade receivables from Customer C, we consider that the contract assets and trade receivables are recoverable in view of (i) our receipts of payment of approximately RMB22.5 million in aggregate during the second half of 2022 and the first half of 2023; (ii) while Customer C had financial difficulties in settling our payments due to COVID-19 pandemic, COVID-19 pandemic had ended and all the related restrictions were lifted; and (iii) the improved financial conditions of Customer C after its bond issuance.
During the Track Record Period, we recorded losses in 10 construction projects. The aggregate amount of losses during the Track Record Period was approximately RMB2.2 million and was mainly attributable to cost overrun caused by the unexpected complexities during project implementation.
Business · p. 144
During the Track Record Period, save for the 10 lossmaking projects with an aggregate amount of losses of approximately RMB2.2 million, there were no material differences between our budgeted costs and the actual costs incurred for our construction projects.