Report Overview Financial Highlights In the first half of 2023, the company reported modest growth in revenue and net profit attributable to shareholders | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue (RMB Thousand) | 5,293,583 | 5,226,576 | 1.3% | | Net Profit Attributable to Company Shareholders (RMB Thousand) | 273,269 | 267,469 | 2.2% | | Earnings Per Share (RMB) | 0.245 | 0.240 | 2.1% | Independent Review Report The auditor issued an unqualified review report on the interim financial statements, confirming compliance with HKAS 34 - The auditor issued an unqualified review report on the interim financial statements, deeming them compliant in all material respects with HKAS 341920 Financial Statements Condensed Consolidated Statement of Profit or Loss Revenue grew modestly while gross profit significantly increased, though higher finance costs and lower other income moderated overall profit growth | Item | Six Months Ended June 30, 2023 (RMB Thousand) | Six Months Ended June 30, 2022 (RMB Thousand) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 5,293,583 | 5,226,576 | +1.3% | | Cost of Sales | (4,499,302) | (4,605,856) | -2.3% | | Gross Profit | 794,281 | 620,720 | +28.0% | | Other Income and Gains | 57,335 | 110,921 | -48.3% | | Finance Costs | (101,356) | (35,848) | +182.7% | | Profit Before Income Tax | 335,456 | 301,079 | +11.4% | | Profit for the Period | 271,568 | 262,461 | +3.5% | | Net Profit Attributable to Owners of the Company | 273,269 | 267,469 | +2.2% | Condensed Consolidated Statement of Financial Position Total assets remained stable, but the company transitioned from net current assets to net current liabilities due to increased short-term borrowings | Item | June 30, 2023 (RMB Thousand) | December 31, 2022 (RMB Thousand) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 14,055,177 | 14,074,506 | -0.1% | | Total Liabilities | 8,285,299 | 8,346,104 | -0.7% | | Net Current (Liabilities)/Assets | (371,393) | 562,170 | Shift from positive to negative | | Net Assets | 5,769,878 | 5,728,402 | +0.7% | | Total Equity | 5,769,878 | 5,728,402 | +0.7% | - The company reported net current liabilities of RMB 371.39 million, but management believes the Group has sufficient undrawn borrowing facilities to meet liabilities maturing within the next twelve months, and financial statements are prepared on a going concern basis274445 Condensed Consolidated Statement of Cash Flows Operating cash flow turned positive, but continued outflows from investing and financing activities led to a net decrease in cash and cash equivalents | Item | Six Months Ended June 30, 2023 (RMB Thousand) | Six Months Ended June 30, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 51,798 | (224,572) | | Net Cash from Investing Activities | (362,712) | (321,802) | | Net Cash from Financing Activities | (144,822) | 432,912 | | Net Decrease in Cash and Cash Equivalents | (455,736) | (113,462) | | Cash and Cash Equivalents at End of Period | 1,938,933 | 1,809,552 | Management Discussion and Analysis Business Overview The company, a leading packaging enterprise, saw aluminum packaging drive growth in H1 2023, while tinplate declined and plastic grew stably - The company primarily engages in the production and sale of packaging products for consumer goods, including food, beverages, and daily chemical products, with core offerings in aluminum, tinplate, and plastic packaging147148 | Business Segment | H1 2023 Revenue (RMB Million) | Year-on-Year Change | Revenue Contribution | | :--- | :--- | :--- | :--- | | Aluminium Packaging | 2,892 | +5.2% | 54.6% | | Tinplate Packaging | 2,081 | -4.1% | 39.3% | | Plastic Packaging | 321 | +4.1% | 6.1% | | Total | 5,294 | +1.3% | 100% | Aluminium Packaging Aluminum packaging, the core business, saw revenue and gross margin growth driven by recovering downstream demand, with both two-piece and monobloc cans contributing - Two-piece can business revenue was approximately RMB 2.785 billion, a 4.9% year-on-year increase, with key clients including AB InBev, Coca-Cola, and Snow Beer152153 - Monobloc can business revenue was approximately RMB 106 million, a 12.8% year-on-year increase, primarily used for daily chemical, beer, and pharmaceutical product packaging155156 Tinplate Packaging Tinplate packaging revenue declined overall, with steel drum growth offset by slight decreases in infant formula cans and significant drops in metal caps - Steel drum business revenue grew 3.4% to RMB 737 million161 - Infant formula can business revenue decreased 1.9% to RMB 369 million163 - Metal cap business revenue decreased 15.6% to RMB 244 million168 Plastic Packaging Plastic packaging revenue grew, supported by strengthened client relationships in daily chemicals and increased food product supply - Plastic packaging is primarily used for personal care, daily chemical, and food and beverage products, with notable clients including P&G, Blue Moon, Unilever, and Heinz170171 Financial Review Overall sales revenue saw modest growth, while gross margin significantly improved due to R&D and cost control, leading to increased pre-tax profit despite higher finance costs Overall Performance Sales revenue grew modestly, with gross margin improving due to R&D and cost control, contributing to a 3.5% increase in net profit - Gross profit margin increased from 11.9% to 15.0%, primarily attributed to technological R&D and cost-efficiency measures173174 Group Profitability Pre-tax profit grew, but surging finance costs and a higher effective tax rate constrained net profit growth - Finance costs surged 182.7% year-on-year to RMB 101 million due to rising financing costs175176 - The effective income tax rate increased from 12.8% to 19.0% compared to the prior period175176 Capital and Liquidity The Group's gearing ratio increased due to higher borrowings, while capital expenditure focused on two-piece can projects, with significant capital commitments Cash Flow, Financial Resources and Gearing Ratio The Group's gearing ratio increased due to higher bank borrowings, while the current ratio declined, with cash and cash equivalents at RMB 1.939 billion | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Net Assets (RMB Million) | 5,770 | 5,728 | | Total Borrowings (RMB Million) | 5,365 | 5,211 | | Current Ratio | 1.0 | 1.1 | | Gearing Ratio* | 63.2% | 52.6% | - Gearing ratio is calculated as net borrowings divided by equity attributable to owners of the Company183 Capital Expenditure, Commitments and Contingent Liabilities Capital expenditure focused on two-piece can projects, with significant capital commitments for property, plant, equipment, and joint venture contributions | Capital Expenditure Item | Amount (RMB Million) | Proportion | | :--- | :--- | :--- | | Two-Piece Can Projects | 249 | 65.0% | | Tinplate Projects | 37 | 9.7% | | Plastic Projects | 31 | 8.1% | | Belgium Project | 22 | 5.7% | | Steel Drum Projects | 10 | 2.6% | | Other Equipment Purchases | 34 | 8.9% | | Total | 383 | 100.0% | - As of June 30, 2023, total capital commitments amounted to RMB 365 million190 Risk Management Operating primarily in China with RMB-denominated transactions, the Group's directors assess exchange rate fluctuations as having no material impact Foreign Exchange Risk Operating mainly in China with RMB transactions, management deems foreign exchange risk immaterial, except for minor USD and HKD exposures - The directors believe exchange rate fluctuations have no material impact on the company's performance, as most assets, revenue, payments, and cash balances are settled in RMB193194 Human Resources The Group's full-time employees increased, with production and quality control staff forming the majority, and total staff costs rising - As of June 30, 2023, the Group had 6,292 full-time employees, an increase from 5,776 in the prior period195 - Total staff costs for the first half of 2023 were approximately RMB 427 million, compared to RMB 387 million in the prior period197198 Outlook for 2023 Management anticipates further domestic consumption growth driven by policies, with the Group focusing on low-carbon development, technological innovation, and product differentiation to enhance value - Management expects more pro-consumption policies in the second half of the year to further boost domestic demand, potentially unleashing greater consumption potential178 - Company strategic priorities include: practicing low-carbon and green development, establishing a '3+N' technological innovation system, enhancing intelligent manufacturing, and focusing on research into environmentally friendly and recyclable materials179180 Corporate Governance and Other Information Shareholding Structure The company's two major shareholders are COFCO Group (Hong Kong) and ORG Technology, while the public float is below the HKEX minimum, prompting restoration efforts Directors' and Chief Executive's Interests As of June 30, 2023, the Chairman and General Manager held 1.31% and 0.84% interests in the company, respectively | Director's Name | Capacity/Nature of Interest | Number of Relevant Shares Held (Long Position) | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Mr. Zhang Xin | Beneficial Owner | 14,560,000 | 1.31% | | Mr. Zhang Ye | Beneficial Owner | 9,366,000 | 0.84% | Substantial Shareholders' Interests COFCO Group (Hong Kong) and ORG Technology Co., Ltd. are the two largest shareholders, holding 29.70% and 24.40% respectively | Substantial Shareholder | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | | COFCO Group (Hong Kong) Limited (and its concert parties) | 330,658,800 | 29.70% | | ORG Technology Co., Ltd. (and its concert parties) | 271,667,200 | 24.40% | Sufficiency of Public Float The company's public float is below the HKEX minimum requirement, and measures are being taken to restore it - The company's public float is approximately 20.75%, which is below the minimum 25% requirement under the Listing Rules213214 Dividend Policy The Board declared an interim dividend of RMB 0.122 per share, with a 10% enterprise income tax withheld for non-resident enterprise shareholders - The Board declared an interim dividend for 2023 of RMB 0.122 per ordinary share223 - As the company is deemed a Chinese resident enterprise, a 10% enterprise income tax will be withheld from dividends paid to non-resident enterprise shareholders229230 Corporate Governance The company complied with the Corporate Governance Code, establishing Audit, Remuneration, Nomination, and Risk Management Committees with defined roles - The company has applied and complied with the principles and all code provisions of the Corporate Governance Code220224 - The company has established four committees: Audit, Remuneration, Nomination, and Risk Management, to perform various oversight and governance functions237241242247 Board Committees The company maintains four Board committees—Remuneration, Audit, Nomination, and Risk Management—with detailed compositions and responsibilities to ensure effective governance - The Remuneration Committee, chaired by Mr. Poon Tit Shan, is responsible for reviewing the remuneration policies and structure for directors and senior management238239 - The Audit Committee, chaired by Mr. Cheng Yuk Wo, is responsible for overseeing the financial reporting process, internal control systems, and the independence of external auditors241243 - The Nomination Committee, chaired by Mr. Zhang Xin, is responsible for reviewing the Board structure and making recommendations on director nominations242246 - The Risk Management Committee, chaired by Mr. Chan Kee Hwa, is responsible for reviewing the Group's risk management framework, policies, and effectiveness247249
中粮包装(00906) - 2023 - 中期财报