Credit: Visual China

BEIJING, July 19 (TMTPost) —— Evergrande Group, the world's most indebted property developer, reported a combined net loss of 812.03 billion yuan ($112.8 billion) in the past two years, according to the financial reports of the 2021 full year, H2 2022  and the 2022 full year released at the same time by the company on Monday evening.

The financial reports show that China Evergrande's total assets were about 1.84 trillion yuan as of the end of 2022, a decrease of 270 billion yuan compared with the end of 2021. The company still had about 2.30 trillion yuan of total assets as of the end of 2020.  After nearly two years, China Evergrande's total assets shrunk by 20% at the end of 2022.

During the same period, China Evergrande's total liabilities were about 2.44 trillion yuan, a decrease of 140 billion yuan compared with the end of 2021. China Evergrande's insolvency gap increased from 473.1 billion yuan at the end of 2021 to 599.1 billion yuan at the end of 2022.

A large number of commercial paper payments of China Evergrande were overdue from the beginning of 2021, and the company's liquidity pressure increased dramatically. In the second half of that year, China Evergrande's wealth investment products could not be cashed on schedule, and the company's debt difficulties surfaced in an all-around way. China Evergrande triggered a cross-default of all outstanding U.S. dollar bonds on December 3, 2021, due to the failure to fulfill the guarantee responsibility related to a US$260 million private placement debt.

Previously, the market was widely concerned that the company's debt crisis would create systemic risk. According to the financial reports, excluding contractual liabilities, China Evergrande's liabilities were about 1.72 trillion yuan by the end of 2022, an increase of 110 billion yuan compared with the end of 2021.

Contract liabilities refer to the consideration received or receivable from customers and the obligation to transfer goods or provide labor services to customers, and most of the contract liabilities of real estate enterprises refer to advance receipts such as deposits received based on purchase contracts.

Of the above liabilities, China Evergrande's borrowings rose from 607.38 billion yuan at the end of 2021 to 612.39 billion yuan at the end of 2022. Some of these borrowings were secured by China Evergrande's land, investment properties, properties under development, self-owned completed properties, cash at banks, and equity interests in subsidiaries.

In the past, China Evergrande adopted a bundled cooperation model for most of its builders and suppliers. Advance payment by the builder or supplier, or settlement with the partner with commercial bills backed by corporate credit, are all important financing methods for Evergrande.

The financial reports showed that China Evergrande's trade payables and other payables increased to 893.34 billion yuan by the end of 2021 from 829.17 billion by the end of 2020. By the end of 2022, the payables climbed to 1.00 trillion yuan, a year-on-year increase of 12.2%. Among them, payables for construction materials rose from $585.01 billion at the end of 2021 to $596.16 billion at the end of 2022.

(Note: $1 is equal to about 7.2 yuan.)