Workflow
雨润食品(01068) - 2024 - 中期业绩
YURUN FOODYURUN FOOD(HK:01068)2024-08-21 12:05

Financial Statements and Summary Consolidated Performance The Group's H1 2024 revenue declined by 29.9% year-on-year, yet improved gross margin and expense control significantly narrowed losses, with attributable loss to equity holders decreasing from HKD 20.2 million to HKD 10.07 million Consolidated Performance Overview (HKD Thousands) | Metric (HKD Thousands) | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 538,975 | 769,700 | -29.9% | | Gross Profit | 75,503 | 69,021 | +9.4% | | Operating Results | 11,606 | (27,942) | Turnaround to Profit | | Loss for the Period | (13,191) | (39,149) | -66.7% | | Loss Attributable to Equity Holders | (10,069) | (20,197) | -50.1% | | Basic Loss Per Share (HKD) | (0.006) | (0.011) | -45.5% | Financial Position As of June 30, 2024, the Group remained in a net liability position, which slightly worsened, with total liabilities stable but increased net current liabilities indicating ongoing liquidity pressure, alongside overdue bank borrowings and covenant breaches Financial Position Summary (HKD Thousands) | Metric (HKD Thousands) | June 30, 2024 | December 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Total Assets | 957,909 | 1,011,951 | -54,042 | | Total Liabilities | 1,695,408 | 1,701,330 | -5,922 | | Net Current Liabilities | (1,018,661) | (979,241) | -39,420 | | Net Liabilities | (737,499) | (689,379) | -48,120 | - As of June 30, 2024, the Group's total bank borrowings were HKD 465 million, with some overdue and in breach of covenants, and these debts are included in a consolidated restructuring plan715 Cash Flow During the period, the Group's operating cash outflow significantly decreased, but continuous net outflows from investing and financing activities led to a decline in cash and cash equivalents from HKD 39.3 million at the beginning of the period to HKD 31.67 million Cash Flow Summary (HKD Thousands) | Metric (HKD Thousands) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (33) | (7,386) | | Net Cash Used in Investing Activities | (5,882) | (5,035) | | Net Cash Used in Financing Activities | (1,469) | (2,323) | | Net Decrease in Cash and Cash Equivalents | (7,384) | (14,744) | | Cash and Cash Equivalents at End of Period | 31,666 | 26,319 | Going Concern Analysis Auditors raised significant doubts about the Group's going concern ability due to substantial net current liabilities and net liabilities, along with overdue bank borrowings and litigation, while management's mitigation plans face significant uncertainties that may hinder asset realization and liability settlement in the normal course of business - As of June 30, 2024, the Group recorded a net loss of HKD 13.19 million, with net current liabilities reaching HKD 1.019 billion and net liabilities of HKD 737 million7 - The Group has HKD 434 million in overdue bank borrowings and has breached several loan covenants, leading to litigation initiated by the relevant banks7 - Management is taking measures to alleviate liquidity pressure, including negotiating renewals with banks, seeking waivers for default clauses, and expecting to resolve some debts through a consolidated restructuring plan; however, the success of these plans remains highly uncertain79 Management Discussion and Analysis Industry and Business Review Facing challenges of insufficient domestic demand and declining pork consumption, the Group in H1 2024 focused on the 'Harbin Meat Union' brand, enhancing new product development and marketing, while strategically reducing production at low-profit facilities to improve overall profitability - Industry Background: In H1 2024, the domestic economy faced insufficient effective demand, with pork consumption projected to decline long-term, yet consumer trends are shifting towards high-quality, safe, and healthy products31 - Business Strategy: The Group primarily operates under the 'Harbin Meat Union' brand, strengthening new product development and market promotion to meet diverse and quality-oriented consumer demands32 Segment Business Performance Upstream slaughtering revenue significantly declined due to strategic production cuts, but downstream processed meat products remained robust, with low-temperature meat products achieving counter-cyclical growth, becoming a core driver of stable revenue and profit, significantly enhancing the Group's overall gross margin Segment Revenue (HKD Millions) | Business Segment | H1 2024 Revenue (HKD Millions) | H1 2023 Revenue (HKD Millions) | YoY Change | | :--- | :--- | :--- | :--- | | Upstream - Chilled and Frozen Meat | 312 | 549 | -43.1% | | Downstream - Processed Meat Products | 227 | 232 | -2.2% | - High-value-added products performed prominently: - Chilled meat sales amounted to HKD 270 million, a 39.0% year-on-year decrease - Low-temperature meat products sales reached HKD 154 million, a 9.5% year-on-year increase, with their revenue contribution to downstream business rising from 61% to 68%3440 Financial Performance Analysis Despite a decline in total revenue, the Group's financial performance significantly improved, with overall gross margin substantially increasing from 9.0% to 14.0% driven by optimized high-margin downstream products, while operating expenses decreased by 33.5% year-on-year due to significant impairment provisions in the prior period, ultimately achieving a turnaround to operating profit Gross Margin by Segment | Gross Margin | H1 2024 | H1 2023 | Change (Percentage Points) | | :--- | :--- | :--- | :--- | | Group Overall | 14.0% | 9.0% | +5.0 | | Upstream Business | 1.4% | 1.1% | +0.3 | | Downstream Business | 31.4% | 25.8% | +5.6 | - Operating expenses were HKD 66 million, a 33.5% year-on-year decrease, primarily due to approximately HKD 36 million in non-current asset impairment losses recognized in the prior period43 - Operating business achieved a profit of approximately HKD 12 million, compared to a loss of approximately HKD 28 million in the prior period, successfully turning losses into profits44 - Net finance costs increased by 38.6% year-on-year to HKD 25 million, mainly due to increased accrued penalty interest from court judgments45 Financial Resources, Liquidity and Capital Structure The Group's financial position remains severe with limited cash reserves and HKD 434 million in overdue bank borrowings and related litigation, which are part of a consolidated restructuring plan; management is actively communicating with banks and believes immediate repayment risk is low, yet significant uncertainty regarding going concern persists - As of June 30, 2024, cash and cash equivalents were approximately HKD 32 million, with total bank borrowings of HKD 465 million48 - The Group failed to meet covenants for HKD 434 million in bank borrowings, which, along with HKD 285 million in interest, are overdue and included in a consolidated restructuring plan49 - Management believes that despite defaults and litigation, ongoing communication with banks mitigates immediate repayment risk and will not materially adversely affect business operations49 - The Group remains in a net liability position but possesses approximately HKD 364 million in non-current assets to support daily operations; management is confident in restoring a net asset position with economic improvement and internal efforts50 Human Resources and Environmental Responsibility During the reporting period, the Group's total employee count decreased, while staff costs as a percentage of revenue remained stable; the company emphasizes protecting employee rights and actively fulfills environmental responsibilities by integrating green and low-carbon concepts into daily operations - As of June 30, 2024, the Group employed approximately 800 staff, a decrease from approximately 1,000 staff at the end of 202354 - Total staff costs for H1 were HKD 35 million, representing 6.4% of revenue (H1 2023: HKD 51 million, 6.6% of revenue)54 - The Group actively promotes energy conservation, emission reduction, and circular economy, fostering green production methods through measures such as energy saving, recycling, and green packaging55 Corporate Governance and Other Matters Corporate Governance Practices The company generally complies with corporate governance codes, with one deviation: Ms. Zhu Yuan serves as both Board Chairman and CEO; the Board believes this arrangement currently facilitates efficient decision-making and business management, with long-term plans to identify a suitable CEO - The company deviates from the Corporate Governance Code's requirement for distinct roles between Chairman and CEO, as Ms. Zhu Yuan serves concurrently as Board Chairman and Chief Executive Officer57 - The Board believes the current arrangement allows for more effective formulation and execution of business strategies, and with over half of the Board comprising independent non-executive directors, power balance is ensured57 Events After Reporting Period Subsequent to the reporting period, an indirect non-wholly owned subsidiary of the Group signed an agreement to sell land and properties in Xinjiang County, China, for RMB 51 million (approximately HKD 55.59 million), with the transaction completed on August 5, 2024 - On August 5, 2024, Xinjiang Qixing, an indirect non-wholly owned subsidiary of the company, agreed to sell land and properties to Yuncheng Yuanhui Logistics Co Ltd for a total consideration of RMB 51 million2961