蜡笔小新食品(01262) - 2023 - 年度财报

Company Information Company Overview This section outlines the company's fundamental registration details, operational locations, listing information, board and committee members, and key professional partners - The company's board of directors comprises three executive directors (Zheng Yuhuan, Zheng Yushuang, Zheng Yulong), one non-executive director (Li Hongjiang), and three independent non-executive directors (Li Biao, Guo Li, Zhong Youtang)[5] - The company has established an Audit Committee, Remuneration Committee, and Nomination Committee, chaired by independent non-executive directors Zhong Youtang, Guo Li, and Li Biao, respectively[5][6] Financial Summary and Overview Summary of Financial Performance FY2023 revenue grew, but gross profit declined and losses widened; assets and equity decreased, with jelly products as the main revenue source Consolidated Income Statement Summary (For the year ended December 31) | Metric | 2023 (RMB thousands) | 2022 (RMB thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 764,377 | 684,263 | +11.7% | | Gross Profit | 218,940 | 244,192 | -10.3% | | Loss Before Tax | (104,754) | (67,671) | +54.8% | | Loss for the Year | (104,754) | (75,328) | +39.1% | Consolidated Statement of Financial Position Summary (As at December 31) | Metric | 2023 (RMB thousands) | 2022 (RMB thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total Assets | 810,907 | 977,311 | -17.0% | | Total Equity | 222,558 | 327,312 | -32.0% | | Total Liabilities | 588,349 | 649,999 | -9.5% | - The revenue structure by product shows jelly products as the absolute core, accounting for 87.1% in 2023, with sweet products at 11.2%[7] Chairman's Statement Operating Review and Outlook 2023 sales grew from new channels, but increased credit loss provisions and lower gross margins led to higher net losses; future strategy focuses on brand promotion, new products, and channel expansion Key Performance Indicators for FY2023 | Metric | 2023 | 2022 | Reason for Change | | :--- | :--- | :--- | :--- | | Revenue | RMB 764.4 million | RMB 684.3 million | Consumer recovery and new sales channel expansion | | Gross Margin | 28.6% | 35.7% | Lower profitability of new sales channels | | Net Loss | RMB 104.8 million | RMB 75.3 million | Increase in expected credit loss provisions | | Advertising and Promotion Expenses | RMB 60.3 million | RMB 92.1 million | Reduced promotional activities required for snack chain convenience stores | - The Group recorded expected credit loss provisions of approximately RMB 78.9 million due to slow settlements or defaults by some distributors, leading to a significant reduction in distributor numbers from 1,095 to 729[14] - Future strategic priorities include: (i) actively promoting brand image and products; (ii) launching new snack foods periodically; and (iii) expanding coverage of new sales channels in China[17] Management Discussion and Analysis Business Review 2023 revenue grew 11.7%, driven by jelly and sweet products through new channels, while other segments declined, and distributor count decreased by 33.4% FY2023 Revenue Performance by Product Line | Product Category | 2023 Revenue (RMB millions) | 2022 Revenue (RMB millions) | Y-o-Y Growth Rate | | :--- | :--- | :--- | :--- | | Jelly Products | 665.6 | 592.2 | +12.4% | | Sweet Products | 85.6 | 73.0 | +17.2% | | Beverage Products | 5.2 | 5.1 | +1.5% | | Other Snack Foods | 8.1 | 14.0 | -42.2% | | Total | 764.4 | 684.3 | +11.7% | - To mitigate credit risk, the company rigorously evaluated distributors, eliminating underperforming ones, reducing the number from 1,095 at the end of 2022 to 729 at the end of 2023, a 33.4% decrease[22][24] Financial Review Gross margin declined to 28.6%, net loss expanded to RMB 104.8 million due to increased credit loss provisions, and the debt-to-equity ratio rose to 202.8%, despite improved operating cash flow Key Financial Indicators Change | Metric | 2023 | 2022 | Primary Reason | | :--- | :--- | :--- | :--- | | Gross Margin | 28.6% | 35.7% | Increased proportion of lower-margin new sales channels | | Net Loss | RMB 104.8 million | RMB 75.3 million | Increase in expected credit loss provisions | | Debt-to-Equity Ratio | 202.8% | 156.6% | Decrease in equity and borrowings | | Net Cash Inflow from Operating Activities | RMB 88.6 million | RMB 15.5 million | Improved working capital management | | Trade Receivables Turnover Days | 147 days | 200 days | Improved collection performance | | Inventory Turnover Days | 50 days | 53 days | Enhanced inventory management efficiency | - Capital expenditure for the year was RMB 40.4 million, primarily for upgrading production lines[38] Prospects and Risks Management anticipates business improvement with economic recovery, focusing on brand promotion, new products, and channel expansion, while facing key business, industry, operational, financial, and external risks - Future development strategies: - Actively promote brand image and products - Periodically launch new snack foods - Expand coverage of new sales channels in China[54] - Key risk factors: - Business Risk: Changes in consumer preferences and tastes - Industry Risk: Potential food safety and hygiene issues - Operational Risk: Insufficient or lacking internal procedures, personnel, and systems - Financial Risk: Detailed in Note 4 to the financial statements - Disaster Events: Epidemics or other catastrophic events[56][58][59][60][61] Biographies of Directors and Senior Management Directors and Senior Management Profiles This section provides biographies of board members and senior management, detailing their roles, experience, and relationships, with core leadership by the Zheng brothers and Li Hongjiang - The company's core leadership has significant family ties: Executive Directors Zheng Yulong, Zheng Yushuang, and Zheng Yuhuan are brothers, and Non-Executive Director Li Hongjiang is their brother-in-law; they co-founded the Group's jelly product business[64][67][69][71] - Independent Non-Executive Director Mr Zhong Youtang possesses over 28 years of experience in auditing, financial management, and compliance for Hong Kong-listed companies, and is a practicing accountant of the Hong Kong Institute of Certified Public Accountants[76] Corporate Governance Report Governance Structure and Practices The company confirms 2023 compliance with the Corporate Governance Code, detailing board responsibilities, committee structures, separation of Chairman and CEO roles, and perfect board meeting attendance - The company has complied with all code provisions set out in Part 2 of the Corporate Governance Code for the year ended December 31, 2023, without any deviation[80] - The Board of Directors comprises 7 members, including 3 executive directors, 1 non-executive director, and 3 independent non-executive directors, meeting the Listing Rules' requirement for independent non-executive directors to constitute over one-third of the board[85][87] 2023 Board Meeting Attendance Record | Director Name | Attendance/Meetings | | :--- | :--- | | Mr Zheng Yuhuan | 4/4 | | Mr Zheng Yushuang | 4/4 | | Mr Zheng Yulong | 4/4 | | Mr Li Hongjiang | 4/4 | | Mr Li Biao | 4/4 | | Ms Guo Li | 4/4 | | Mr Zhong Youtang | 4/4 | Risk Management and Internal Control The Board confirms responsibility for risk management and internal control; an independent consultant identified deficiencies, and the company is implementing improvement recommendations - The Board is fully responsible for overseeing the design, implementation, and effectiveness of risk management and internal control systems, reviewed at least annually through the Audit Committee[129] - The company engaged an independent professional consultant to review its internal controls, identifying several deficiencies, and is now implementing the consultant's recommendations to ensure compliance with Listing Rules[130][131] Directors' Report Principal Activities and Results This section reiterates the Group's principal business of producing and selling jelly, sweets, beverages, and other snack foods in China, with no final dividend recommended for FY2023 - The Board does not recommend the payment of any final dividend for the year ended December 31, 2023[151] Directors' and Shareholders' Interests This section discloses directors' and major shareholders' interests, with Alliance Holding (controlled by the Zheng brothers and Li Hongjiang) holding 45.97% and Zheng Yulong personally owning 9.02%; no share options have been granted Major Shareholders and Directors' Shareholdings (As at December 31, 2023) | Shareholder/Director Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Total Share Capital | | :--- | :--- | :--- | :--- | | Alliance Holding | Beneficial Owner | 610,915,527 | 45.97% | | Zheng Yulong | Interest in Controlled Corporation | 610,915,527 | 45.97% | | | Beneficial Owner | 119,935,060 | 9.02% | | Zheng Yushuang | Interest in Controlled Corporation | 610,915,527 | 45.97% | | Zheng Yuhuan | Interest in Controlled Corporation | 610,915,527 | 45.97% | | Li Hongjiang | Interest in Controlled Corporation | 610,915,527 | 45.97% | - The company adopted a share option scheme in 2021, but no share options have been granted since its adoption as of the reporting date[181][184] Customers and Suppliers This section discloses customer and supplier concentration, with the largest customer accounting for 10.5% of total turnover and the top five for 38.1% in 2023, showing increased customer concentration, while supplier concentration remained stable Customer and Supplier Concentration | Concentration Metric | 2023 | 2022 | | :--- | :--- | :--- | | Percentage of total turnover from largest customer | 10.5% | 7.0% | | Percentage of total turnover from top five customers | 38.1% | 24.4% | | Percentage of total purchases from largest supplier | 7.9% | 6.4% | | Percentage of total purchases from top five suppliers | 25.3% | 24.9% | Independent Auditor's Report Auditor's Opinion and Key Audit Matters The auditor issued an unmodified opinion but highlighted a material uncertainty regarding going concern due to a significant net loss and current liabilities exceeding current assets, with expected credit loss provisions for trade receivables as a key audit matter - The auditor issued an unmodified opinion but drew attention to a "material uncertainty related to going concern"[212][214] - The primary factors leading to going concern uncertainty are a net loss of approximately RMB 104.8 million for the year ended December 31, 2023, and current liabilities exceeding current assets by approximately RMB 94.37 million[214] - A key audit matter is "Expected credit loss provisions for trade receivables," as its assessment involves significant management judgment[216][218] Consolidated Financial Statements Financial Statements Overview This section presents the four core audited consolidated financial statements for FY2023, including income, financial position, equity changes, and cash flow statements, reflecting the Group's financial performance, position, and cash flows Key Items from Consolidated Income Statement (2023) | Item | Amount (RMB thousands) | | :--- | :--- | | Revenue | 764,377 | | Gross Profit | 218,940 | | Operating Loss | (82,058) | | Loss and Total Comprehensive Loss for the Year | (104,754) | Key Items from Consolidated Statement of Financial Position (As at December 31, 2023) | Item | Amount (RMB thousands) | | :--- | :--- | | Total Assets | 810,907 | | Total Equity | 222,558 | | Total Liabilities | 588,349 | | Net Current Liabilities | (94,369) | Notes to the Consolidated Financial Statements Note 3: Going Concern Basis This note details the material uncertainty regarding going concern, citing a net loss and current liabilities exceeding current assets; management's plans include shareholder support, debt management, external financing, cost control, and potential non-core asset sales - The validity of the going concern assumption depends on future business success, generation of sufficient cash flows, and the ability to refinance or restructure borrowings[255] - One mitigating measure is financial support from major shareholder Mr Zheng Yulong, who has provided partial loan financing and agreed to continue support to ensure the company can meet its liabilities due within the next 12 months[255] Note 4: Financial Risk Management This note outlines the Group's primary financial risks, with credit risk a core focus for trade receivables, significant liquidity risk with the debt-to-equity ratio rising to 202.8%, and interest rate risk from floating-rate borrowings - The debt-to-equity ratio (total borrowings and directors' loans/total equity) increased from 156.6% in 2022 to 202.8% in 2023[356] Expected Credit Loss Provisions for Trade Receivables (December 31, 2023) | Ageing | Gross Carrying Amount (RMB thousands) | Loss Allowance (RMB thousands) | | :--- | :--- | :--- | | Current or less than 30 days | 230,978 | 10,597 | | 31 to 90 days | 9,650 | 797 | | 91 to 180 days | 10,909 | 1,402 | | Over 180 days | 2,371 | 2,371 | | Individually assessed | 66,731 | 66,731 | | Total | 320,639 | 81,898 | Note 6: Segment Information and Revenue This note provides operating segment information by product, showing jelly products as the largest revenue source but incurring an operating loss, while sweet products were profitable, and other smaller segments recorded losses, with a single largest customer contributing over 10% of revenue FY2023 Segment Results | Segment | Revenue (RMB thousands) | Reportable Segment Results (RMB thousands) | | :--- | :--- | :--- | | Jelly Products | 665,559 | (2,274) | | Sweet Products | 85,558 | 13,556 | | Beverage Products | 5,201 | (55,088) | | Other Snack Foods | 8,059 | 1,286 | | Total | 764,377 | (42,520) | - In 2023, a single largest customer (Customer A) contributed RMB 79.56 million in revenue, accounting for 10.4% of total revenue[369] Note 24: Bank Borrowings As of end-2023, total bank borrowings were RMB 405 million, all current liabilities due within one year, with most (RMB 363 million) secured by land use rights, buildings, and executive directors' personal guarantees - As at December 31, 2023, total bank borrowings amounted to RMB 405.2 million, all repayable within one year or on demand[421] - Secured borrowings are guaranteed by the Group's land use rights, buildings, and personal guarantees from executive directors Zheng Yushuang, Zheng Yuhuan, and Zheng Yulong, among others[424]