NONGFU SPRING(09633)2023-03-28 11:18Financial Performance - Total revenue for 2022 reached RMB 33,239 million, an increase of 11.9% year-on-year[1] - Net profit attributable to the parent company's owners was RMB 8,495 million, up 18.6% compared to the previous year[1] - Basic earnings per share were RMB 0.76, representing an 18.8% increase from 2021[1] - Gross profit for 2022 was RMB 19,095 million, compared to RMB 17,656 million in 2021[2] - Pre-tax profit for 2022 was RMB 11,050,332 thousand, an 18.1% increase from RMB 9,354,300 thousand in 2021[16] - Net profit for 2022 increased by 18.6% to RMB 8,495 million[56] - The company's net profit attributable to shareholders increased from RMB 7,162 million in 2021 to RMB 8,495 million in 2022 (adjusted to RMB 8,295 million after excluding one-time non-operating gains/losses)[37] - Gross profit increased by 8.2% to RMB 19,095 million in 2022, with gross margin decreasing by 2.1% to 57.4% due to higher PET procurement costs[51] Revenue Breakdown by Segment - Segment revenue breakdown for 2022: Water products RMB 18,262,614 thousand, Ready-to-drink tea RMB 6,905,986 thousand, Functional drinks RMB 3,837,605 thousand, Juice drinks RMB 2,878,830 thousand, Other products RMB 1,354,152 thousand[14] - Packaged water products contributed 54.9% of total revenue, generating RMB 18,263 million, a 7.1% increase from 2021[42][43] - Tea beverage products saw a significant growth of 50.8%, contributing RMB 6,906 million, or 20.8% of total revenue[42][44] - Functional beverage products generated RMB 3,838 million, accounting for 11.5% of total revenue[42] - Juice beverage products contributed RMB 2,879 million, making up 8.7% of total revenue[42] - Other products, including soda water, flavored carbonated drinks, and coffee beverages, contributed RMB 1,353 million, or 4.1% of total revenue[42] - Functional beverage products revenue reached RMB 3,838 million in 2022, a 3.9% increase from 2021, accounting for 11.5% of total revenue[46] - Juice beverage products revenue grew by 10.1% to RMB 2,879 million in 2022, representing 8.7% of total revenue[47] - Other products revenue declined by 22.7% to RMB 1,353 million in 2022, making up 4.1% of total revenue[48] Expenses and Costs - Sales and distribution expenses increased to RMB 7,821 million in 2022 from RMB 7,233 million in 2021[2] - Sales and distribution expenses rose by 8.1% to RMB 7,821 million in 2022, but the expense ratio decreased by 0.9% to 23.5%[52] - Administrative expenses increased by 4.8% to RMB 1,835 million in 2022, with the expense ratio dropping by 0.4% to 5.5%[53] - Financial expenses increased to RMB 76,028 thousand in 2022 from RMB 52,945 thousand in 2021, primarily due to higher interest on interest-bearing borrowings, which rose to RMB 70,628 thousand from RMB 47,565 thousand[24] - R&D costs in 2022 were RMB 277,166 thousand, a 121.9% increase from RMB 124,912 thousand in 2021[22] - Depreciation and amortization for 2022 totaled RMB 1,972,362 thousand, a 4.7% increase from RMB 1,883,401 thousand in 2021[14] Assets and Liabilities - Total assets as of December 31, 2022, amounted to RMB 24,084 million, up from RMB 20,742 million in 2021[5] - Cash and bank balances stood at RMB 15,211 million at the end of 2022[4] - Property, plant, and equipment totaled RMB 853 million as of December 31, 2022[4] - The company's long-term bank deposits, pledged deposits, cash, and bank balances increased by 21.4% to RMB 19,316 million as of December 31, 2022, compared to RMB 15,909 million in 2021[57] - Inventory increased by 16.5% to RMB 2,108 million as of December 31, 2022, from RMB 1,809 million in 2021, with inventory turnover days decreasing from 54.8 days to 50.5 days[58] - Trade receivables and bills increased slightly to RMB 479 million as of December 31, 2022, from RMB 476 million in 2021, with turnover days increasing from 5.1 days to 5.2 days[59] - Trade payables and bills increased to RMB 1,425 million as of December 31, 2022, from RMB 1,153 million in 2021, with turnover days increasing from 30.8 days to 33.3 days[60] - The capital-to-debt ratio decreased to 10.5% as of December 31, 2022, from 12.5% in 2021, primarily due to slower growth in interest-bearing borrowings compared to equity growth[61] Dividends and Shareholder Returns - The company proposed a final dividend of RMB 0.68 per ordinary share[1] - The company proposed a final dividend of RMB 0.68 per share for 2022, amounting to approximately RMB 7,647,597 thousand, pending shareholder approval[29] - The company plans to distribute a final cash dividend of RMB 0.68 per share for 2022, totaling approximately RMB 7,647.6 million[38] - The company will propose a final cash dividend of RMB 0.68 per share for the year ended December 31, 2022, totaling approximately RMB 7,647.6 million[57] - The company proposed a final dividend of RMB 0.68 per share (tax inclusive) for the year ended December 31, 2022, totaling approximately RMB 7,647.6 million[75] International Financial Reporting Standards (IFRS) - The company has adopted revised International Financial Reporting Standards (IFRS) for the current year's financial statements, including amendments to IFRS 3, IAS 16, and IAS 37, with no significant financial impact[10] - The company has not yet applied newly issued but not yet effective IFRS standards, including amendments to IFRS 10, IAS 28, IAS 16, and IFRS 17, and is assessing their potential impact on operations and financial position[11][12] Operational Highlights - The company operates in five reportable segments, including manufacturing and sales of agricultural products and other beverage products, with performance evaluated based on adjusted pre-tax profit[13] - Over 99% of the company's revenue and operating profit come from customers in Mainland China[17] - No single customer accounted for 10% or more of the company's total revenue in 2022 or 2021[18] - The company completed the construction and commenced operations of a new production base in Guangxi, bringing the total number of water sources to 12[37] - The company continued to strengthen its information systems, including upgrading its marketing digital system and optimizing production and logistics management through warehouse logistics system improvements[37] Product Innovations and Launches - The company launched new packaging sizes for packaged water, including 4.5L and 6L, to expand its product matrix[43] - The "Teaπ" series introduced new flavors and launched a 900ml large-size packaging to meet diverse consumer needs[44] - The "Dongfang Shuye" brand released seasonal limited-edition products, such as "Longjing New Tea" and "Osmanthus Oolong," to promote Chinese tea culture[44] - In March 2022, the company introduced a new carbonated tea series, "Qi Tea," featuring innovative flavors like Passionfruit Oolong and Tangerine Pu'er[45] Government Subsidies and Grants - Government subsidies and grants related to income in 2022 were RMB 412,529 thousand, a 27.2% increase from RMB 324,271 thousand in 2021[21] Tax and Financial Expenses - Income tax expenses for 2022 totaled RMB 2,555,082 thousand, up from RMB 2,192,506 thousand in 2021, with the majority attributed to China's tax jurisdiction[25] - The company's Chinese subsidiaries are subject to a standard corporate income tax rate of 25%, but some qualify for a reduced rate of 15% due to being recognized as high-tech enterprises or operating in encouraged industries in western China[26] Trade Receivables and Payables - Trade receivables and notes receivable stood at RMB 478,587 thousand in 2022, slightly up from RMB 476,276 thousand in 2021, with 92% of receivables aged within 90 days[31][32] - Impairment losses on trade receivables decreased to RMB 30,511 thousand in 2022 from RMB 33,945 thousand in 2021, reflecting a net reversal of RMB 3,434 thousand[32] - The company's trade receivables expected credit loss rate for 2022 was 1.19% for within 90 days, 11.06% for 91-180 days, 45.47% for 181-365 days, and 100% for over 365 days[34] - The company's trade payables and notes within 90 days amounted to RMB 1,355,022 thousand in 2022, compared to RMB 1,001,840 thousand in 2021[36] - The company's trade receivables expected credit loss for 2022 was RMB 30,511 thousand, compared to RMB 33,945 thousand in 2021[34] Foreign Exchange and Capital Commitments - The company holds HKD 1,469 million and USD 443 million in foreign currencies as of December 31, 2022, with exchange rate fluctuations being monitored closely[63] - Capital commitments as of December 31, 2022, amounted to approximately RMB 1,542 million, primarily for the construction of production facilities and the purchase of production equipment[64] IPO Proceeds Utilization - As of December 31, 2022, the company had utilized approximately HKD 4,896 million (52.2%) of the total IPO proceeds of HKD 9,377 million, with the remaining HKD 4,481 million to be used according to the prospectus[67] Employee and Equity Incentives - Total number of employees exceeded 20,000 as of December 31, 2022, with employee welfare expenses (including director remuneration) totaling RMB 3,261 million[71] - The company granted 6,636,400 H shares under the employee equity incentive plan, representing 0.059% of the total issued shares and 0.1318% of the issued H shares[72] - 2,610,000 incentive shares met the first vesting condition and were allocated to the corresponding incentive recipients, while 44,184 shares were forfeited and sold in the open market[72] - The grant price for the incentive shares was set at 30% of the average closing price of the company's H shares over the 120 trading days prior to the grant date, amounting to HKD 13.22 per share[72] - 108 incentive recipients were granted shares, including two supervisors and one employee from the Yangshengtang Group, with the remaining 105 being employees of the company[73] Corporate Governance and Compliance - The audit committee consists of three directors, including two independent non-executive directors and one non-executive director, with Stanley Yi Chang as the chairman[80] - The independent auditor, Ernst & Young, has agreed with the financial figures in the consolidated financial statements for the year ended December 31, 2022[81] - The company has adopted all code provisions of the Corporate Governance Code, except for a deviation from Code Provision C.2.1 regarding the separation of the roles of chairman and CEO[82] - The board of directors includes five executive directors, one non-executive director, and three independent non-executive directors, ensuring a high level of independence[82] - The board will periodically review its structure to ensure it supports the execution of the company's business strategy and maximizes operational efficiency[83] - All directors and supervisors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers for the year ended December 31, 2022[83] - The 2022 annual report will be distributed to shareholders and published on the Hong Kong Stock Exchange and the company's website[84] Shareholder Meetings and Dividend Distribution - The company will suspend share registration from May 11 to May 16, 2023, and from May 20 to May 25, 2023, for the annual general meeting and final dividend distribution, respectively[78] Securities Transactions - No purchase, sale, or redemption of the company's listed securities was conducted by the company or its subsidiaries during the year ended December 31, 2022[79] Financial Resources and Future Operations - The company has sufficient financial resources to continue operations in the foreseeable future, based on current financial forecasts and available financing[69]