January 2, 2018, Henglong Group Headquarters, big Meeting Room.
On the first working day of New Year, the smell of New Year's Eve fireworks and firecrackers still lingered in the Shan City air.
Meeting Room was full of people, lined up on both sides of Long Table - Chen Wei, Chen Qiming, Liu Mingyu, Zhang Qingxue, Su Wantang, and several heads of core departments.
Zhao Chen is sitting in the middle, with a cup of tea and a notebook spread out in front of him.
Su Wantang is sitting on his left, wearing a dark gray suit jacket, with his hair tied back and a calm expression.
"New Year Good."
Zhao Chen looked around, the sound was not loud, but very clear.
"Today is the first working day of 2018. I have called everyone here for one thing--
Summarize last year and plan for this year. Report the finances first and then talk about strategy."
He looked at Chen Wei: "Mr. Chen, you come first. Haoyu Construction, how's it going?"
Chen Wei stood up, opened the laptop in front of him, and the projector lit up.
Haoyu Construction's organizational chart appears on the screen.
Chen Wei walked up to Projection Screen. She was much calmer than when she first joined Henglong. Her speech was not fast, but she was clear and coherent.
"Everyone, it has been just over three months since Haoyu Construction was officially merged into Henglong in late September last year. Let me first take stock of the situation."
She switched to the next page, which was a balance sheet.
"Before the acquisition of Haoyu Construction, Haoyu's total assets were 5.5 billion, total liabilities were 4.5 billion, and Off-Balance Sheet Liabilities had 200 million. Net assets were 1 billion.
This is the basis on which we enter the market."
Meeting Room was quiet for a few seconds.
4.5 billion debt, 200 million Off-Balance Sheet Liabilities - everyone here knows this number, which is one of the reasons why Haoyu Construction faced difficulties in the first place.
The debt is too high and the cash flow cannot support it.
Chen Wei continued:
"In the past three months, we have done three things.
First, clean up Off-Balance Sheet Liabilities. 200 million Off-Balance Sheet Liabilities has been completely cleared.
Pay back what should be paid, make up for what should be paid, and owe nothing."
She glanced at Zhao Chen, who nodded.
"Second, revitalize non-Core Assets."
Chen Wei switches to the next page, which is an asset disposal list.
"Haoyu headquarters building was sold for 130 million. The book value of this building was only 40 million. The actual transaction price was 130 million, resulting in a net profit of 90 million."
Liu Mingyu whispered from the side, "This price is still very good."
She continued to scroll down, "In addition to the headquarters building, other non-Core Assets have also been disposed of -
Including two pieces of idle land, a suspended commercial project, and some equity investments in foreign countries.
A total of 150 million were sold, with basically no loss, and some even made a slight profit."
Chen Xi whispered to Zhang Qingxue from the side, "Chen Wei has not been idle in the past three months."
Zhang Qingxue nodded and said nothing.
Chen Wei Turn to the next page, which is a project schedule:
"Haoyu originally had seven projects under construction. In the past three months, one project has been completed and is being delivered.
The other six projects are still under construction and are progressing normally."
She paused and concluded:
"In general, in the past three months, Haoyu Construction's liabilities have dropped by 500 million, and its net assets have increased by 100 million.
The current total assets are 5.4 billion, total liabilities are 4 billion, and Off-Balance Sheet Liabilities is zero."
Zhao Chen heard this and spoke, "Mr. Chen, you did it very steadily."
Chen Wei looked at Zhao Chen, waiting for him to continue.
Zhao Chen said, "You did not rush to start new projects, nor did you blindly expand.
Clear Off-Balance Sheet Liabilities first, then sell non-Core Assets, cash out what can be cashed, and pay back what should be paid. This rhythm is right."
He paused and his voice became more serious:
"When many people take over a new company, the first thing they do is make big moves and launch big projects, hoping to achieve results within three months.
But that is seeking quick success and quick profit, not running a business. You are doing a very stable job, and I feel reassured."
Chen Wei's expression did not change, but her shoulders relaxed significantly.
Only she knows the pressure of these three months.
Now Zhao Chen gave her a higher evaluation than she expected.
"Thank you Zhao Zong." Chen Wei sat down.
Zhao Chen turned to Chen Qiming: "Director Chen, it's your turn. Henglong's financial situation last year will be reviewed for you."
Chen Qiming stood up and pushed up his glasses.
He is much calmer than half a year ago. He is no longer the frightened middle-aged man when Zhao Chen was lifted from the position of the Finance Department Deputy Director.
"Everyone, let me first report on the main real estate business. It does not include the Haoyu Construction part."
He switched to the first slide, which was a revenue trend chart.
"For the whole year of 2017, the main real estate business revenue was 8.5 billion, including 4.8 billion in the first half and 3.7 billion in the second half."
Liu Mingyu frowned. "The second half of the year was 1.1 billion less than the first half?"
Chen Qiming nodded. "Yes. The main reason is that the company Strategic Contraction has fewer sales.
Shrinking is our general strategic direction. With fewer promotions, revenue will naturally decline. It will be even less in the future."
He turned to the next page, which was profit data.
"Net profit in the first half of the year was RMB 400 million.
In the second half of the year, due to discounts and promotions during the National Day period, the profit margin was compressed to only 150 million.
The net profit of the main real estate business for the whole year was 550 million yuan."
Chen Qiming paused and added, "It's down compared to 2016. The net profit of the main real estate business in 2016 was 680 million yuan."
Meeting Room was quiet for a second.
A drop in net profit is not good news at any company's annual summary meeting.
But Zhao Chen's expression didn't change. He just nodded, indicating for him to continue.
Chen Qiming Turn to the next page, which is a chart of changes in the balance sheet.
"There was another big move last year - the sale of Henglong Property for 2.6 billion.
This transaction resulted in a reduction of Henglong's net assets by RMB 500 million and a reduction of liabilities by RMB 300 million."
He explained, "Everyone knows about Henglong Property, so I won't say more.
After the sale, 2.6 billion in cash was recovered, which was mainly used to inject capital into Haoyu Construction, invest and pay off debts."
Zhao Chen asked, "Let me tell you about Off-Balance Sheet Liabilities's situation!"
Chen Qiming nodded. "Off-Balance Sheet Liabilities has cleaned everything up.
As of the end of last year, 3 billion Off-Balance Sheet Liabilities of Henglong had been cleared.
An impairment of 100 million occurred during the cleanup process, mainly liquidated damages and some Historical Issue processing costs."
Zhao Chen's expression did not change, but Su Wantang nodded slightly beside him.
Off-Balance Sheet Liabilities is the most concealed mine of Henglong. Zhao Jianguo hid it for many years when he was in office. It took Zhao Chen half a year to dismantle it all.
This account is worth it.
Chen Qiming took a deep breath:
"Next, let me calculate the overall financial situation of Henglong after acquiring Haoyu Construction.
This data is more critical, so I will speak more slowly."
Everyone in Meeting Room sat upright.
Chen Qiming switches to a new slide showing a complex consolidated balance sheet.