Annual Report 2022
8 China Merchants China Direct Investments Limited Annual Report 2022 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) ACQUISITIONS AND DISPOSALS OF INVESTMENTS (CONTINUED) In addition, the Fund exited from an equity investment project during the year. On 31 March 2022, the Fund entered into an equity transfer agreement in relation to Shenzhen Geesun Intelligent Technology Co., Ltd. (“ Geesun Intelligent ”), pursuant to which the Fund agreed to transfer all of its 2.35% equity interest in Geesun Intelligent to the founding shareholder of Geesun Intelligent at a price of RMB53.13 million. All of the transfer consideration of RMB53.13 million (equivalent to US$8.20 million) was fully received by the Fund on 5 May 2022, and the equity transfer was duly completed on 1 June 2022. The pre-tax internal rate of return to the Fund from Geesun Intelligent was 8.90%. LIQUIDITY, FINANCIAL RESOURCES, GEARING AND COMMITMENTS The Fund’s cash and cash equivalents decreased by 30.43%, from US$36.64 million at the end of last year to US$25.49 million (representing 3.56% of the Fund’s total assets) as of 31 December 2022, due mainly to the payment of a special dividend for 2021 by the Fund. As of 31 December 2022, the Fund had no outstanding bank loans (31 December 2021: Nil). As of 31 December 2022, the Fund had no commitments (31 December 2021: US$1.96 million). EXPOSURE TO FLUCTUATIONS IN EXCHANGE RATES AND RELATED HEDGES Most of the Fund’s investments are located in China where the official currency is the Renminbi (“ RMB ”). The conversion rate of RMB against the US dollar recorded a decrease of 9.38% in 2022, which had a negative impact on the Fund since it holds a considerable amount of assets denominated in RMB. The Fund currently does not have any foreign currency hedging policy. However, the Fund continues to monitor foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise. EMPLOYEES Other than a qualified accountant whose remuneration package is determined and borne by the Investment Manager, the Fund has no employees. The Investment Manager handles the portfolio and day-to-day administration of the Fund.
RkJQdWJsaXNoZXIy NTk2Nzg=