Financial Performance - In the first half of 2023, the fluorosilicon chemical industry faced significant challenges, with a decline in product prices and weakening demand from downstream sectors, leading to a decrease in revenue and profit for the Group [10]. - For the six months ended June 30, 2023, the Group recorded revenue of approximately RMB7,198,111,000, representing a decrease of 28.83% compared to RMB10,113,288,000 in the same period last year [20]. - The gross profit margin declined to 15.73%, down from 36.86% in the corresponding period of 2022 [20]. - The Group's profit before taxation was approximately RMB287,755,000, a significant decrease from RMB2,381,058,000 in the same period last year [20]. - The net profit for the period was approximately RMB208,069,000, compared to RMB1,967,640,000 in the corresponding period of 2022 [20]. - The total comprehensive income for the period was approximately RMB 207,032,000, compared to RMB 1,950,435,000 in the same period of 2022 [21]. - The profit for the period attributable to owners of the Company was RMB 283,871,000, compared to RMB 1,692,775,000 in the prior year, reflecting a significant decline [104]. - The company reported a total comprehensive income for the period of RMB 282,834,000, down from RMB 1,675,570,000 in the previous year [104]. Operational Efficiency - Despite the adverse market conditions, the Group maintained stable production, achieving growth in both production and sales volume, which contributed to an increase in market share [9]. - The energy consumption level per unit product was reduced during the review period, indicating improved operational efficiency [9]. - The Group's management is focused on preparing for a potential industry recovery in the future, leveraging its operational strengths [9]. - The Group's strategies during the challenging market conditions included exploring potential developments and enhancing operational efficiencies [9]. - The management emphasized the importance of reinforcing internal strengths and cost reduction strategies in response to market changes [9]. Market Conditions - The overall market sentiment remained gloomy, impacting the fluorosilicon chemical industry significantly during the review period [10]. - The decline in sales and profits was attributed to significant price drops in key products due to weak downstream demand and increased industry capacity [24]. - The Group's performance in the first half of 2023 showed a significant decline compared to the historical best results from the previous year, but the management believes that the foundation for future growth remains solid [9]. Research and Development - R&D costs amounted to approximately RMB475,928,000, accounting for approximately 6.61% of total revenue [13]. - The Group added 53 new product grades during the period, contributing to profits and new vitality [13]. - The Group was granted 47 patents during the period, bringing the total to 587 licensed patents [13]. Segment Performance - The Fluoropolymer segment's external sales were approximately RMB 2,275,072,000, representing a year-on-year decrease of 31.45% [28]. - The profit for the Fluoropolymer segment was RMB 224,466,000, a decrease of 80.46% compared to RMB 1,148,539,000 in the previous year [28]. - The refrigerants segment generated revenue of RMB 1,452,853,000 with a segment profit margin of 11.58% [23]. - The organic silicone segment reported revenue of RMB 2,502,180,000 but incurred a loss of RMB 222,336,000, resulting in a negative margin of -8.89% [23]. - The overall operating profit margin for the Group was 3.78%, down from 23.56% in the same period last year [21]. Financial Position - As of June 30, 2023, the Group's total equity was RMB16,742,561,000, a decrease of 9.47% from December 31, 2022 [45]. - The Group's bank balances and cash as of June 30, 2023, were RMB4,260,716,000, compared to RMB5,315,994,000 on December 31, 2022 [45]. - The current ratio as of June 30, 2023, was 1.58, down from 2.00 on December 31, 2022 [45]. - The Group had no borrowings as of June 30, 2023, maintaining a negative gearing ratio of -25.45% [46]. - The total assets less current liabilities amounted to RMB 17,370,942, a decrease from RMB 19,071,987 as of December 31, 2022, representing a decline of approximately 8.9% [107]. - The company's equity attributable to the owners decreased to RMB 14,572,844 from RMB 16,082,018, reflecting a reduction of about 9.4% [109]. Employee and Governance - The Group aims to enhance human resources reform to create a vibrant platform for talent and innovation [18]. - The Board of Directors did not declare an interim dividend for the six months ended June 30, 2023, compared to no dividend declared for the same period in 2022 [50]. - The Company has established a Remuneration Committee to consider remuneration for Directors and senior management [54]. - The Risk Management Committee is responsible for overseeing the Group's risk management and internal control systems [55]. - The Company has established a whistleblowing policy for employees and stakeholders to confidentially report any improprieties [56]. Capital Expenditure and Investments - The Group's capital expenditure for the six months ended June 30, 2023, was approximately RMB744,415,000, down from RMB1,616,112,000 for the same period in 2022 [43]. - The company plans to enhance its production capacity of PVDF, a weather-resistant fluoropolymer, with a target completion date of December 31, 2025, involving a total investment of HK800,000,000 [75]. Shareholder Information - As of June 30, 2023, Mr. Zhang Jianhong holds a corporate interest of 258,948,451 Shares, representing 11.49% of the issued share capital [80]. - Mr. Fu Kwan has a corporate interest of 520,977,818 Shares, accounting for 23.12% of the issued share capital [80]. - The Company has disclosed all required interests and short positions as per the Securities and Futures Ordinance [84].
东岳集团(00189) - 2023 - 中期财报