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 inventories prepayment as at 31 March 2021, 2022 and 2023 and 30 November 2023 were RMB589.3 million, RMB1,042.6 million, RMB1,308.6 million and RMB1,898.8 million, respectively.
Financial Information · p. 425
The increase in our inventories prepayment from RMB1,308.6 million as at 31 March 2023 to RMB1,898.8 million as at 30 November 2023 was primarily due to the prepayment made to our suppliers in 8MFY2024 to secure sources of KCL for our production and sales for the remaining period of the peak season in FY2024.
Financial Information · p. 426
As at the Latest Practicable Date, RMB975.7 million, or approximately 51.4%, of our inventories prepayment as at 30 November 2023 were subsequently utilised.
As at 31 March 2021, 2022, 2023 and 30 November 2023, our trade receivables included unbilled receivables of RMB190.7 million, RMB203.6 million, RMB90.9 million and RMB105.6 million, respectively, which represent accrued sales for goods delivered by our Group but yet to bill.
Financial Information · p. 422
Our unbilled receivables as at 31 March 2021 and 2022 included unbilled receivables from Supplier B of RMB55.6 million and RMB97.8 million which were derived from our appointment of Supplier B as our domestic designated agent to purchase raw materials from oversea suppliers and sell them to domestic customers of our Group under the instructions of our Group during the Track Record Period.
Financial Information · p. 423
Such arrangement has been terminated since October 2021, and the related outstanding receivables from Supplier B have been fully settled as at 31 January 2023.
Our prepayments and other receivables increased significantly from RMB18.4 million as of December 31, 2022 to RMB36.1 million as of September 30, 2023, primarily attributable to an increase of RMB16.6 million in prepaid expenses due to our increased engagement of CROs and trial sites as we advanced the development of our drug candidates.
Financial Information · p. 487
As of January 31, 2024, RMB15.8 million, or 48.0%, of our prepaid expenses as of September 30, 2023 had been subsequently utilized.
As at 31 December 2020, 2021 and 2022 and 30 September 2023, our prepayments to suppliers amounted to approximately RMB146.7 million, RMB179.3 million, RMB251.1 million and RMB334.5 million, respectively, accounting for approximately, 38.4%, 39.0%, 50.3% and 58.5% respectively, of our total assets as at the respective date.
Business · p. 177
Such increase was mainly attributable to the delay in settlement by the customers for traffic acquisition cost paid by our Group on their behalf to media partners for advertisement distribution services, in particular a direct advertiser customer which was engaged in the gaming industry has delayed its payment to our Group as such customer was restructuring its business due to change of its shareholders.
Financial Information · p. 291
In view of long payment cycle of some customers, our finance department and our sales and marketing department would closely monitor the collection status and would actively communicate with our customers on the settlement dates and would send payment reminders to our customers.
Ageing of our trade receivables from 6 months to 12 months increased from approximately RMB11.5 million as at 31 December 2022 to approximately RMB41.8 million as at 30 September 2023.
Financial Information · p. 289
Our Group’s expected loss rate of ageing of trade receivables from 12 months to 24 months was approximately 6.9%, 13.9%, 22.1% and 30.2% as at 31 December 2020, 2021 and 2022 and 30 September 2023, respectively.
Financial Information · p. 288
The average trade receivable turnover days increased from approximately 71 days for the year ended 31 December 2020 to approximately 83 days for the year ended 31 December 2021, and decreased to approximately 75 days for the year ended 31 December 2022 and further decreased to approximately 59 days for the nine months ended 30 September 2023.
As at 31 December 2020, 2021, 2022 and 30 September 2023, our gross retention receivables amounted to approximately HK$50.5 million, HK$53.4 million, HK$55.9 million and HK$63.0 million, respectively.
Business · p. 170
Our gross contract assets amounted to approximately HK$145.6 million as at 30 September 2023, out of which approximately 55.1% (which amounted to approximately HK$80.2 million) had been settled up to the Latest Practicable Date.
Financial Information · p. 327
As at 30 September 2023, the trade receivables and retention receivables owing from this customer amounted to approximately HK$2.6 million and HK$1.5 million, respectively, for which impairment provision has been fully provided.
As of December 31, 2020, 2021 and 2022 and June 30, 2023, we had trade receivables of RMB40.0 million, RMB59.9 million, RMB101.3 million and RMB179.8 million, respectively.
Financial Information · p. 303
Our overall trade receivable turnover days was 35 days, 39 days, 55 days and 85 days in 2020, 2021 and 2022 and the six months ended June 30, 2023, respectively.
Financial Information · p. 303
We believe there is no recoverability issue for our trade receivables and there is a sufficient provision given: (i) our periodic performance of impairment analysis using a provision matrix to measure expected credit losses and assessment of our credit risk exposure; and (ii) we have been exerting efforts to enhance the management and collection of trade receivables, in particular, we closely monitor the status of our trade receivables, we hold periodic meetings to discuss the status of trade receivables, and we timely communicate with relevant parties and remind them of due payments through various channels.
Our trade and bills receivables increased from RMB124.0 million as of December 31, 2022 to RMB151.1 million as of June 30, 2023 mainly due to (i) the completion of the settlement audit of Hengsheng Flood Control Bulk Yard Project (恒盛防汛散貨堆場項目); and (ii) the substantial completion of the certification process of the Tianjiang Apartment Projects (天江公寓項目) for the six months ended June 30, 2023.
Financial Information · p. 342
Our average trade and bills receivables turnover days increased from 141.5 days as of December 31, 2022 to 249.0 days as of June 30, 2023 due to the completion of (i) the settlement audit of Hengsheng Flood Control Bulk Yard Project (恒盛防汛散貨堆場項目); and (ii) the substantial certification process of the Tianjiang Apartment Projects (天江公寓項目) for the six months ended June 30, 2023, while the corresponding balances were not yet settled as of June 30, 2023.
Financial Information · p. 351
During the Track Record Period, a majority of our contract assets and trade and bills receivables aged over one year were attributable to customers that are government authorities or state-owned enterprises, representing 63.8%, 90.6%, 97.9% and 97.9% of our total contract assets aged over one year, respectively and 75.5%, 71.9%, 88.5% and 52.8% of our total trade and bills receivables aged over one year, respectively.
Our cash and cash equivalents as of December 31, 2020, 2021 and 2022 and June 30, 2022 and 2023 was RMB12.2 million, RMB11.3 million, RMB20.2 million, RMB7.0 million and RMB32.6 million, respectively.
Financial Information · p. 321
We may experience significant amount of cash outflow at a specific point of time when certain projects, in particular large scale projects, are at the initial stage which we may incur significant amount of upfront cost, which may lead to a decrease in the amount of cash and cash equivalents at the relevant point of time.
Financial Information · p. 321
Despite our cash and cash equivalents fluctuated from time to time during the Track Record Period, we managed to expand our business since 2021 without experiencing financial difficulties.
Our trade receivables turnover days was 127 in 2020, which was higher than our general credit terms, primarily due to the delayed payment of our customers resulting from their extended payment cycle in light of the outbreak of COVID-19 pandemic.
Financial Information · p. 355
As of December 31, 2020, 2021, 2022 and June 30, 2023, we recorded allowance for impairment of trade receivables of RMB5.0 million, RMB4.6 million, RMB24.3 million and RMB21.4 million, respectively.
Financial Information · p. 357
Our senior management regularly reviews our trade receivables balance and overdue balance, and we follow up with customers with past due trade receivables.
As at 31 December 2020, 2021 and 2022 and 30 June 2023, our contract assets and trade receivables amounted to approximately RMB857.0 million, RMB1,072.4 million, RMB1,207.2 million and RMB1,095.1 million, respectively.
Financial Information · p. 238
Our aggregate trade receivables and contract assets turnover days was approximately 190.5 days, 270.0 days, 310.8 days and 431.5 days, respectively, and our aggregate trade receivables and contract assets turnover days (excluding Customer Group A) was approximately 185.1 days, 260.2 days, 267.2 days and 390.0 days, respectively, for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023, and are within the range of 163.9 days to 442.0 days of those of our industry peers according to the Frost & Sullivan Report.
Financial Information · p. 292
We have established a control procedure to set a target of recovering trade receivables and contract assets to ensure a progressive collection since 2022. Particularly our management team has set an overall recovery baseline target at 75% as compared with the current income incurred.
During the Track Record Period, we experienced a relatively stable trade receivable and contract asset turnover days ranged from approximately 153.0 days to 170.5 days.
Financial Information · p. 347
Our net impairment losses of contract assets and trade receivables increased from approximately RMB0.2 million for FY2021 to approximately RMB3.3 million for FY2022.
Financial Information · p. 331
Our trade receivable turnover days during the Track Record Period were approximately 51.5 days, 52.0 days, 53.9 days and 67.5 days for FY2020, FY2021, FY2022 and 6M2023, respectively.
According to the announcement published by the holding company of Customer Group A, given the property sector of the PRC has undergone profound adjustments, since the beginning of 2023, the sales of the holding company of Customer Group A and its subsidiaries have been under remarkable pressure and recorded a significant decline in contracted sales during the period from January to September 2023 as compared to the same period in 2021 and 2022.
Financial Information · p. 310
The expected credit loss rate of Customer Group A as at 31 December 2022 was determined to be 11.83% and further increased to 12.23% as at 30 June 2023.
Financial Information · p. 310
Our Directors are of the view that the contract assets and trade receivables due from Customer Group A does not have any material potential recoverability issues nor any material potential impact of the phased liquidity pressures experienced by Customer Group A on our financial position and performance and results of operation subsequent to the Track Record Period.
Our trade and notes receivables increased from RMB70.6 million as of December 31, 2020 to RMB120.3 million as of December 31, 2021, and further to RMB207.0 million as of December 31, 2022 and RMB257.2 million as of June 30, 2023, primarily due to our strong sales growth throughout the Track Record Period.
Financial Information · p. 302
Our trade and notes receivable turnover days subsequently increased from 105 days in 2021 to 113 days in 2022 and further to 128 days for the six months ended June 30, 2023, primarily due to the increased number of customers in the automotive industry, who are typically given a longer credit period.
Financial Information · p. 303
As of October 31, 2023, RMB186.5 million, or approximately 70.6% of our trade and notes receivables as of June 30, 2023 had been settled.
Our net trade receivables increased to RMB662.1 million as of December 31, 2022, mainly due to the increase in revenue from logistics smart robotic products and services recognised in the fourth quarter in 2022.
Financial Information · p. 506
For our net trade receivables that aged from 6 to 12 months and 1 to 2 years, the balances increased from RMB18.6 million as of December 31, 2020 to RMB118.4 million as of December 31, 2022, and from RMB38.0 million as of December 31, 2020 to RMB54.2 million as of December 31, 2022, respectively, primarily due to the unsettled amount from our customers in relation to the education smart robotic products and services, which we believe was mainly resulting from the budget shrinkage or delay in administrative work for approving budgets.
Financial Information · p. 508
Up to September 30, 2023, we received subsequent settlement of RMB6.0 million, RMB17.9 million, RMB16.7 million and nil from our customers for the unsettled net trade receivables which aged more than two years as of December 31, 2020, 2021 and 2022 and June 30, 2023, respectively.
We generally made full prepayment to wafer channel partner six months in advance according to our estimation based on our customers' demand to secure the manufacturing capacity during the Track Record Period and up to the Latest Practicable Date.
Financial Information · p. 330
Our prepayments continued to increase from RMB202.8 million as of December 31, 2022 to RMB302.7 million as of the June 30, 2023, primarily due to our increasing procurement volume of foundry-manufactured wafers and the increased listing expenses.
Financial Information · p. 331
As of October 31, 2023, RMB255.4 million or 93.9% of our prepayments to suppliers aging within six months, and RMB183.0 million or 64.2% of our prepayments as of June 30, 2023 had been subsequently settled.
Our trade receivables aged over three months increased significantly as of December 31, 2022, which was primarily related to the extended payment period for our largest customer due to the impact of COVID-19 on the payment process, and the amount due from our largest customer as of December 31, 2022 had been fully received as of the Latest Practicable Date.
Financial Information · p. 328
the trade receivables from Arrow was RMB43.0 million as of June 30, 2023, accounting for 90.8% of our trade receivables. As of October 31, 2023, all of our trade receivables from Arrow as of June 30, 2023 had been subsequently settled
Financial Information · p. 328
As of October 31, 2023, RMB45.3 million or 95.7% of our trade receivables as of June 30, 2023 had been subsequently settled.
The allowance for impairment for trade and notes receivables increased from RMB2.0 million as of December 31, 2022 to RMB4.7 million as of June 30, 2023, primarily due to the increase in receivables from customers aged over 90 days as a result of delayed payments of our distributors amid their post-pandemic recovery in the first half of 2023, which was in early stage with relatively slower pace, temporarily resulting in relatively slower sales of our products by distributors in the same period.
Financial Information · p. 340
Our trade receivable turnover days increased from 15 days in 2022 to 20 days in the six months ended June 30, 2023, primarily due to a higher ending balance as of June 30, 2023 as we adjusted our approach in trade receivable collection to bolster our distributors’ post-pandemic recovery by easing pressure on their payment process during such recovery period.
Financial Information · p. 342
As of October 31, 2023, approximately RMB23.0 million, or 72.8%, of our trade receivables as of June 30, 2023 had been settled.
Our trade receivables increased to approximately RMB200.8 million as at 30 June 2023, which was mainly attributable to the increase in revenue from Customer Q during 6M2023, of which over 75% of the transactions with Customer Q during 6M2023 was occurred in April, May and June 2023, while there was generally a settlement period of approximately three months between the Group and Customer Q due the lengthy settlement process.
Financial Information · p. 406
Such turnover days increased to approximately 40.9 days for 6M2023, which was mainly attributable to increase in revenue from Customer Q during 6M2023 as explained before.
Financial Information · p. 408
As at the Latest Practicable Date, approximately RMB188.4 million, or approximately 93.8%, of our trade receivables as at 30 June 2023 had been subsequently settled.
Our trade receivables, net of provisions for impairment, increased significantly from RMB15.0 million as of December 31, 2020 to RMB110.4 million as of December 31, 2021, and further increased to RMB288.6 million as of December 31, 2022, which was in line with our business expansion and primarily due to the increase in our sales as a result of the launch of SuperVision™.
Financial Information · p. 418
Our trade receivables turnover days increased from 116 days in 2020 to 229 days in 2021, as the series production of our first SuperVision^TM^ project started in the fourth quarter of 2021, resulting in a relatively high ending balance of our trade receivables in 2021, while the total revenue in 2021 was relatively low.
Financial Information · p. 419
During the Track Record period, a significant portion of our revenue was concentrated on Geely Group, resulting in the majority of our trade receivables as of June 30, 2023 being due from Geely Group.