Working capital: receivables, prepayments and cash cycle
Hong Kong IPO disclosure precedents · 547 companies, 635 items
high or rising trade receivables, long turnover days, overdue balances, subsequent settlement, impairment; large or rising prepayments; a long cash conversion cycle
Our trade and bills receivables increased by 9.4% from RMB572.1 million as of December 31, 2023 to RMB626.1 million as of December 31, 2024, primarily due to relaxation of receivables management practice in light of the market conditions where certain customers had witnessed relatively sluggish external demand for their products.
Financial Information · p. 318
Our trade and bills receivable aging one to two years increased from RMB3.2 million as of December 31, 2023 to RMB9.2 million as of December 31, 2024 primarily due to (i) certain customers for our crayfish products with long-standing relationships are given extended credit term till end of a calendar year, and (ii) certain customers with cashflow issues are also given extended credit terms.
Financial Information · p. 318
RMB595.2 million, or 88.6% of our trade and bills receivables as of December 31, 2024 had been settled as of April 30, 2025.
Our trade receivables increased from RMB20.7 million as of December 31, 2022 to RMB40.9 million as of December 31, 2023, primarily due to significant receivable from one customer outstanding of RMB24.6 million as of December 31, 2023 which had been fully recovered as of December 31, 2024.
Financial Information · p. 360
Our trade receivables turnover days was 20.4 days, 33.4 days and 42.7 days in 2022, 2023 and 2024, respectively.
Financial Information · p. 361
As of April 30, 2025, approximately RMB53.6 million, or 85.5% of our trade receivables as of December 31, 2024 had been settled.
As of December 31, 2024, we had outstanding balance of trade receivables of RMB800.5 million, with approximately RMB237.3 million aged over one year.
Financial Information · p. 318
Our allowance for impairment of trade receivables amounted to RMB137.6 million RMB212.1 million and RMB241.3 million as of December 31, 2022, 2023, and 2024 respectively.
Financial Information · p. 320
Approximately RMB 190.2 million, or 23.8%, of our total trade receivables as of December 31, 2024, had been settled as of April 30, 2025.
Our trade and notes receivables increased by 11.0% from RMB7,432.1 million as of December 31, 2022 to RMB8,250.8 million as of December 31, 2023, and further increased by 16.7% to RMB9,628.4 million as of December 31, 2024, primarily reflecting (i) our revenue growth and business expansion and (ii) the adjustments to credit policies for certain quality customers.
Financial Information · p. 331
Our trade receivables turnover days increased from 79 days in 2022 to 86 days in 2023 and further increased to 88 days in 2024, primarily due to the higher revenue contribution from certain quality customers and the adjustments to credit policies for such customers.
Financial Information · p. 333
As of April 30, 2025, RMB7,280.1 million, or 99.4% of our trade receivables as of December 31, 2024, had been settled.
Our trade and bills receivables increased from RMB196.3 million as of December 31, 2023 to RMB262.1 million as of December 31, 2024, which was in line with the growth of our business.
Financial Information · p. 576
Note: The trade receivables of our hospital business over 3 months but within 6 months as of December 31, 2024 were primarily comprised of the trade receivables due from the public medical insurance programs and it increased significantly from RMB9.9 million as of December 31, 2023 to RMB61.1 million as of December 31, 2024, which was primarily because such trade receivables due from the public medical insurance programs for certain of our In-network Hospitals, which incurred during the third quarter of 2024, were still pending settlement as of December 31, 2024, subject to the public medical insurance programs payment schedules.
Financial Information · p. 577
As of March 31, 2025, 52.3% of our trade receivables as of December 31, 2024 was subsequently settled.
The average turnover days of our accounts receivable increased from 54 days in 2021 to 91 days in 2022, primarily due to the economic downturn caused by COVID-19, which slowed customer payments.
Financial Information · p. 335
As of April 30, 2025, approximately RMB32.2 million, or 96.0%, of our accounts receivable outstanding as of December 31, 2024, had been subsequently settled.
Financial Information · p. 335
To maintain a sustainable business model, we closely monitor our accounts receivable and assess our working capital needs from time to time.
Our trade receivables increased from approximately RMB113.0 million as at 31 December 2023 to approximately RMB220.2 million as at 31 December 2024, mainly because (i) we increased sale to Customer E, where the credit period granted thereto was 180 days during FY2024 attributing to trade receivables of approximately RMB73.5 million as at 31 December 2024; (ii) we increased sale to Customer D and such customer, with a credit period of 150 days granted by our Group, mainly procured sucralose from our Group in the third and fourth quarter of FY2024, attributing to trade receivables of approximately RMB65.2 million as at 31 December 2024, we increased sale to Customer E and Customer D in FY2024 since, so far as our Directors are aware of, Customer E and Customer D stockpiled towards the end of FY2024 in anticipation of trade tariffs to be imposed on PRC products exported into the US after the return of the Trump Administration in early 2025; and (iii) the credit period that we granted to certain members of our Swiss Food and Beverage Customer increased to 120 days, attributing to trade receivables of approximately RMB15.6 million as at 31 December 2024.
Financial Information · p. 345
Having considered that (i) a substantial portion of our trade receivables balance as of 31 December 2024 was aged within 60 days based on the date of transfer of goods or issue of invoice; (ii) only approximately RMB35.4 million, or 16.1% of the total trade receivables as at 31 December 2024 was past due; (iii) the trade receivables balances were mainly due from customers with ongoing business relationship with us or which are sizable corporations with good reputation and financial position, in particular, our trade receivables of approximately RMB15.6 million and RMB7.8 million were attributable to members of our Swiss Food and Beverage Customer and members of our American Beverage Customer, respectively, which are listed on the SWX and the NYSE, and hence the expected credit losses of these companies were considered relatively low; (iv) there were no material ongoing disputes or potential disputes with these customers; (v) these customers had been making continuous subsequent repayment to us and their historical repayment patterns were generally consistent during the Track Record Period; (vi) we have continuously carried out stringent credit management policy, such as closely monitoring the amounts and turnover days of our trade receivables to minimise and control credit risk, and the recovery status on a regular basis to ascertain the collectability of our trade receivables; and (vii) sufficient loss allowance provisions for trade receivables were made in accordance with HKFRS to reflect uncertainties associated with the outstanding amount and we would continue to make sufficient provisions to account for any potential write-offs and contingent factors, we are of the view that there is no material recoverability issue for our trade receivables.
Financial Information · p. 346
As at 31 March 2025, approximately RMB76.7 million, or approximately 34.8%, of our trade receivables outstanding as at 31 December 2024 were subsequently settled.
Our trade and note receivables increased from RMB60.2 million as at 31 December 2023 to RMB66.2 million as at 31 December 2024 mainly because we offered more favourable credit terms of 120 days to certain customers for orders of certain newly launched printing equipment.
Financial Information · p. 367
Overdue balances are reviewed regularly and followed up by our sales and financial department.
Financial Information · p. 368
As at 31 March 2025, RMB49.2 million, or 75.0%, of our net trade receivables outstanding as at 31 December 2024 had been subsequently settled.
Notwithstanding the sharp decline in cash and cash equivalents throughout the Track Record Period, taking into account our internal financial resources including cash and cash equivalents of RMB14.3 million and investment in wealth management products which were redeemable on demand of RMB13.4 million as at 31 March 2025, our net cash generated from operations and available banking facilities of RMB125.0 million as at the Latest Practicable Date, and the estimated net proceeds from the Global Offering, we have sufficient working capital for our present requirements and for at least next 12 months from the date of this prospectus.
Our contract assets increased from RMB338.4 million as of December 31, 2022 to RMB631.6 million as of December 31, 2023, and further increased to RMB849.6 million as of December 31, 2024.
Financial Information · p. 416
Our average contract assets turnover days increased from 108.3 days in 2023 to 195.4 days in 2024, mainly due to (i) the decrease in our revenue in 2024 compared to 2023, and (ii) the increase in the balance of our contract assets as of December 31, 2024 further due to the increase in our revenue attributable to renewals in 2024 compared to 2023.
Financial Information · p. 419
Our Directors are of the view that there is no material recoverability issues for our contract assets on the following basis:
Our trade receivables, net increased from RMB479.2 million as of December 31, 2023 to RMB548.9 million as of December 31, 2024, primarily because we had higher transaction volume for our paper packaging business approaching the end of 2024.
Financial Information · p. 376
Our trade and bills receivables turnover days increased to 37.1 days for the year ended December 31, 2024, primarily due to the increase in the trade and bills receivables of and the decline in revenue from our cross-border social e-commerce business.
Financial Information · p. 378
As of March 31, 2025, RMB556.7 million, or 95.3%, of our trade and bills receivables as of December 31, 2024 had been subsequently settled.
The average trade receivables turnover days were 499 days, 344 days and 276 days in 2022, 2023 and 2024, respectively.
Financial Information · p. 540
The trade debtors with aging balance over 90 days mainly consisted of outstanding balance due from one of our major customers in the Philippines in connection with the sales of Fortitude™ as of December 31, 2022, 2023 and 2024, amounting to US$19.0 million, US$9.3 million and nil, respectively, by which the outstanding balance of trade receivables were withheld due to ongoing review and discussion.
As of March 31, 2025, US$2.5 million, representing 24.7% of the US$10.1 million trade receivables outstanding as of December 31, 2024 were subsequently settled.
Our trade and bills receivables turnover days further increased to 65.6 days in 2024, mainly due to the decrease in revenue from 2023 to 2024, while the average of the beginning and ending balance of trade and bills receivables increased over the same period.
Financial Information · p. 277
As of March 31, 2025, RMB58.2 billion, or 87.2% of our trade receivables as of December 31, 2024 had been settled.
Financial Information · p. 277
In addition, we have a systematic credit control mechanism that enables us to proactively identify and mitigate risks related to accounts receivable during contract fulfillment.
As of the Latest Practicable Date, approximately RMB160.9 million, or 48.4%, of our trade and other receivables as of December 31, 2024 had been settled subsequent to December 31, 2024.
Financial Information · p. 296
Our value added tax recoverable increased from RMB109.8 million as of December 31, 2022 to RMB149.4 million as of December 31, 2023, and further increased to RMB158.4 million as of December 31, 2024.
Financial Information · p. 297
Our prepayments increased from RMB54.7 million as of December 31, 2023 to RMB75.2 million as of December 31, 2024, primarily due to the expansion of our restaurant network.
Our bills receivables increased from RMB147.7 million as of December 31, 2023 to RMB623.8 million as of December 31, 2024, mainly due to the growth of our overseas sales.
Financial Information · p. 413
Our trade and bills receivables turnover days increased to 14.5 days in 2024 mainly due to the increase in our trade and bills receivables, resulting from the growth of our overseas sales.
Financial Information · p. 414
As of March 31, 2025, RMB538.2 million, or 83.4%, of our trade and bills receivables as of December 31, 2024, had been subsequently settled.
We recorded impairment loss on trade and other receivables of RMB26.8 million, RMB37.8 million and RMB80.5 million, in 2022, 2023 and 2024, respectively. As of December 31, 2022, 2023 and 2024, we had trade and other receivables of RMB257.8 million, RMB435.1 million and RMB555.8 million, respectively.
Financial Information · p. 322
Our trade receivables turnover days increased from 176 days in 2022 to 239 days in 2023, primarily attributable to (i) an increase in sales volume in the second half of 2023 due to our sales efforts to leverage the development of new energy engineering machinery industry, (ii) an increase in sales to customers who used the finance lease services to make the payment, which we usually grant certain credit terms to the finance lease companies, and (iii) our favorable credit terms to secure customers.
Financial Information · p. 335
Additionally, we intend to improve the management of trade receivables by implementing multi-layer credit risk monitoring strategies, which will help reduce the impairment loss on trade and other receivables.
Our trade receivables increased significantly from RMB100.8 million as of December 31, 2023 to RMB379.0 million as of December 31, 2024, generally in line with the R&D activities we conducted in relation to our out-license and collaboration programs.
Financial Information · p. 461
Up to the Latest Practicable Date, all of our trade receivables as of December 31, 2024 had been subsequently settled.
The increase in trade and bills receivables and contract assets turnover days from 2022 to 2023 and further to 2024 was primarily due to (i) a significant portion of sales made in the third and fourth quarters of 2024 had not yet become due or settled as of the end of 2024; (ii) changes in payment terms for certain customers, where upfront payment requirements were reduced and replaced with longer credit terms; and (iii) changes in invoicing practices for certain customers, where invoicing was delayed from the month of delivery to the following month, resulting in an extended collection cycle.
Financial Information · p. 445
As of February 28, 2025, approximately RMB1,016.1 million, or 54.6% of our trade receivables as of December 31, 2024, and 80.7%, of our trade receivables (after excluding the one-off impact of the WM Customer related impairment) as of December 31, 2024 had been settled.
Our net trade and bills receivables amounted to approximately RMB121.2 million, RMB199.9 million, RMB213.8 million and RMB257.6 million as at 31 December 2021, 31 December 2022, 31 December 2023 and 30 September 2024, respectively.
Financial Information · p. 451
Our average trade and bills receivables turnover days were approximately 21.3 days, 44.1 days and 53.9 days for FY2021, FY2022 and FY2023, respectively.
Financial Information · p. 455
Having considered the expected loss rate applied in calculating the loss allowance and that a substantially higher expected loss rates were applied to longer past due trade receivables, our Directors are of the view that there are not recoverability issue for our net trade receivables balance.