According to the Zhitong Finance App, Rongfeng Group Asia (08526) announced that the Group expects the company's revenue for the year ended December 31, 2023 (relevant period) to be reduced by at least 30% compared to the same period in 2022. The Group also anticipates a net loss of between HK$32.3 million and HK$39.5 million during the relevant period, while net loss of approximately HK$11.2 million for the same period in 2022.
According to the announcement, the decrease in revenue and the increase in expected net losses during the relevant period were mainly due to the following factors: a decrease in the number of ongoing projects for which the Group undertook to generate revenue during the relevant period; the Group confirmed a one-time COVID-19 relief and subsidy of about HK$5.6 million from the Hong Kong and Macau governments of China for the year ended December 31, 2022, and no similar government subsidies were collected during the relevant period; a final account agreement was reached after negotiations with customers for the three projects located in Chek Lap Kok, Shatin and Macau, China. As a result, contract assets were written off between HK$10.1 million and HK$12.3 million; and anticipated credit losses on contract assets that were overdue for at least three years and the company had no reasonable expectation of recovering contract cash flow and unrealizable future recovery after considering factors such as the external economic environment and receipt of customer payments; and impairment caused by the affected projects described below, confirming that impairment losses ranged from HK$11 million to HK$13.4 million.
The Board hereby informs shareholders and potential investors that, based on recent communication with the affected project client (direct customer), the direct client has received the final ruling issued to the general contractor of the affected project. It is anticipated that when the direct client implements the final ruling, the Group will likely be able to recover from the direct customer the total amount of approximately HK$29.1 million generated by the affected project. In this regard, the company expects to obtain contract asset impairment losses of approximately HK$1.3 million for the affected projects during the relevant period.