The property management arm of troubled real estate developer Evergrande has released its 2021 and 2022 reports.
Photo from CFP
By HUANG Yu
Evergrande Property Services, the property management arm of troubled real estate developer Evergrande, has released its long-delayed performance reports after having its shares suspended for over 14 months.
The release of these reports is a crucial step for Evergrande Property Services toward resuming trading, but there are still significant hurdles to overcome.
The reports include the 2021 annual report, 2022 interim report, and 2022 annual report. However, all of them have been stamped as non-standard by the auditors, who don’t like much of what they saw.
To resume trading, the company must fulfill six conditions, including publishing all undisclosed financial performance and resolving audit reservations. It also needs to complete an independent investigation into a 13.4 billion yuan (US$1.9 billion) loan.
The 13.4 billion yuan fund occupied by Evergrande Group, the controlling shareholder, has been the biggest obstacle to the resumption of Evergrande Property Services. However, according to the 2022 report, discussions are still underway regarding repayment.
Despite a net loss of approximately 316 million yuan in 2021, Evergrande Property Services turned the tide in 2022, reporting a net profit of 1.4 billion yuan. However, the situation remains concerning, with the company’s liabilities exceeding its assets.
As the only listed platform within the Evergrande Group generating stable cash flow, Evergrande Property Services’ value has declined significantly since its listing, and it has incurred substantial losses.
With its assets and liabilities in a precarious state, time may be up for the property services operation. Auditors Prism Hong Kong and Shanghai Limited expressed concern about the company’s ability to sustain its operations based on its financial statements and other disclosures.
In an effort to alleviate financial pressure, Xu has considered selling Evergrande Property Services shares. The company had previously received acquisition offers, but they did not materialize due to disagreements over payment conditions.
