Chairman's Statement
The Group will continue to focus on cash generation from its main business of water supply services and waste water treatment.
Dear Shareholders,
Greetings to you all.
On behalf of the Board of Directors of China International Holdings Limited (the “Company”), I am pleased to present the Annual Report of the Company and its subsidiaries (the “Group”) for the financial year ended 31 December 2023.
In the past year, various regions in the world experienced some form of conflicts, regional instability and economic slowdown. Although the People’s Republic of China (the “PRC”) has reopened to the world after ending its zero-Covid policy, its overall economic performance has being on a slow recovery.
Looking back on the past year, the Group, its Board and Management have had to face significant stress on several fronts. On the one hand, the overall unstable economic environment had negatively impacted the business activities of the Group which in turn had dampened operating revenue and profit to some extent. On the other hand, a series of events arising from the disposal in late 2022 of the 50% equity interests in KYWJ Group, including litigations brought about by external parties, have taken a toll on management’s time and resources. These have also brought stress on the Group’s cashflow situation.
Nevertheless, the Board, working with the Management and all our employees have continued to focus our efforts and energy on promoting the sustainable and stable development of the Group’s main businesses, including water supply services and waste water treatment. At the same time, the Group will continue to explore and seek out suitable business and investment opportunities to help drive future growth.
REVIEW OF 2023
In FY2023, Group revenue decreased by 5.5% to RMB97.91 million from RMB103.6 million in FY2022 mainly due to the lower revenue recorded on wastewater treatment services at CIHL (Tianjin) Water Development Company Limited (“CIHL Tianjin Water”).
The Group’s administrative expenses in FY2023 rose to RMB11.32 million compared to RMB8.66 million recorded in FY2022, mainly due to higher professional and legal fees incurred in relation to an Independent Review commissioned by the Independent Directors in early 2023 as well as the ongoing litigations.
For the year under review, the Group recorded a net loss of RMB74.01 million compared to a net profit of RMB62.50 million in FY2022. This was mainly because of a provision of RMB59.50 million made in respect of a dividend received by the Group in FY2022 following a written judgement from the Yichang Dianjun District Court of the PRC on 2 February 2024 which ruled that the profit distribution resolution of Yichang Zeyou Real Estate Development Co. Ltd (“Yichang Zeyou”, formerly known as Yichang Xinshougang Real Estate Development Co. Ltd) dated and approved on 1 September 2022 was in violation of the relevant Company Law of the PRC. (The dividend was partly paid in cash and partly by way of completed property units in the KYWJ Group.)
At the end of 2023, the Group had cash and cash equivalents of RMB20.80 million. In the next financial year, the Group will actively focus more on cash flow generation from our water supply services and wastewater treatment services.
During the year under review, Tianjin Lingang Water Co. Ltd, a subsidiary of the Group, completed the expansion project to provide re-pressurized water from CIHL Tianjin Water’s pipeline network for supply to local users. We successfully obtained the construction planning acceptance certificate in June 2023. The completed project will allow for increased sales of treated water to the related service areas.
In the past few years, the real estate industry in the PRC has witnessed a downturn, with many real estate companies experiencing difficult conditions, with some facing crisis situations. In view of this, the Group had decided back in 2022 to exit the real estate sector, when we disposed our 50% equity interests in KYWJ Group on 18 December 2022. Subsequent to the Group’s exit, Yichang Zeyou faced a series of tax investigations brought on by the local authorities, which has also brought negative impact to the Group.
Moving forward, the Group will continue to focus on cash generation from its main business of water supply services and waste water treatment.
LOOKING AHEAD
The Group’s water supply services, wastewater treatment services and water pipeline construction business in Tianjin are very dependent on the local economic environment and the general state of property development there. However, we will still continue to leverage on our advantages and further develop the Group’s key water business and strengthen our position as a leading corporate enterprise in Tianjin.
The Group has no major investment plans for 2024 at present and will continue to focus on the execution of the existing business and improve value returns for our shareholders.
The management will make prompt disclosure when it becomes aware of any material or significant information concerning its operations.
STATEMENT OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT (“ESG REPORT”)
In the context of global movement of green and low-carbon emission economy, the Group strives to meet the Rules of Listing Manual and Best Practice of SGX-ST required of the listed companies in the areas of environmental, social and governance capabilities. The Group seeks to effectively integrate the corporate social responsibility, sustainable development concept and good corporate governance into the actual business activities. The Group has also made reasonable efforts to develop the sustainable development capabilities in multiple dimensions and levels. The Group has been working on establishing a sustainability development governance framework and have invited internal audit consultants to assist in review of this year’s ESG Report under the environmental, social and governance dimensions. We hope to further to improve and strengthen the disclosure quality of the Group’s ESG Report.
The Group will release its FY2023 ESG Report on or before 30 April 2024.
A NOTE OF APPRECIATION
On behalf of the Board, I would like to express our heartfelt gratitude to all our shareholders, management, customers, business partners and employees for your unyielding faith, support and contributions to the Group during these very challenging times. We look forward to your continued support as we still strive to enhance the Group’s financial performance.
I would also like to thank all my fellow Directors for their invaluable contributions. A special thanks goes to our long serving Independent Director, Mr Chee Teck Kwong Patrick, who has been with the Group for over 9 years and made positive contributions to the governance of the Group. In 2023, the Company actively implemented and improved the diversity of the Board. Two new independent directors with outstanding achievements in their respective professional fields joined the Board on 1 December 2023. We believe that their joining will introduce new blood and enhance the capabilities of the Board. We will continue to work together and do our best to improve the finances of the Company and enhance value for our shareholders.
Shan Chang
Non-Independent
Non-Executive Chairman
