越南制造加工出口(00422) - 2018 - 年度财报

Company Overview This section outlines the company's fundamental information, including its leadership, auditors, and operational locations - Chairman is Mr. Liu Wu-Hsiung, and CEO is Mr. Lin Chih-Ming (appointed on August 13, 2018)[17] - The company's auditor is KPMG[17] - The company's stock code is 422, incorporated in the Cayman Islands, with main production facilities in Dong Nai Province and Hanoi City, Vietnam[18][24] Financial Summary The Group faced significant challenges in FY2018, with revenue decline, a shift from profit to gross loss, and a substantial increase in net loss, leading to a sharp decrease in total assets and net equity Five-Year Financial Data Summary The Group faced significant challenges in FY2018, with revenue decline, a shift from profit to gross loss, and a substantial increase in net loss, leading to a sharp decrease in total assets and net equity. Return on equity deteriorated to -50.9%, but the current ratio remained stable at 3.3 times Past Five Years Consolidated Results and Balance Sheet Summary (Million USD) | Indicator | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | Results | | | | | | | Revenue | 91.5 | 133.2 | 125.7 | 177.5 | - | | Gross (Loss) / Profit | (2.3) | 15.7 | 9.1 | 11.9 | - | | Loss Before Income Tax | (40.5) | (13.2) | (11.0) | (15.5) | - | | Loss Attributable to Equity Holders | (41.8) | (9.8) | (7.8) | (10.2) | - | | Loss Per Share (USD) | (0.050) | (0.010) | (0.009) | (0.011) | - | | Assets and Liabilities | | | | | | | Total Assets | 115.2 | 178.0 | 177.3 | 212.1 | - | | Total Liabilities | 33.1 | 43.4 | 41.0 | 62.7 | - | | Net Assets | 82.1 | 134.6 | 136.3 | 149.4 | - | | Ratios | | | | | | | Return on Equity (%) | (50.9) | (7.4) | (5.9) | (7.0) | - | | Current Ratio (Times) | 3.3 | 3.5 | 3.7 | 2.9 | - | | Debt to Equity Ratio (%) | 23 | 19 | 18 | 25 | - | Management Discussion and Analysis This section provides an in-depth review of the Group's operating environment, financial performance, liquidity, human resources, and future strategies Operating Environment and Business Review Despite strong Vietnamese economic growth in 2018, the motorcycle industry faced intense competition and rising costs, with the Group maintaining its third-place market position and expanding product offerings - Vietnam's GDP growth reached 7.08% in 2018, a ten-year high, but the motorcycle industry faced intense competition and challenges from environmental and infrastructure limitations[25] - The Group ranked third in the Vietnamese market, behind Honda and Yamaha, selling approximately 57.3 thousand units in 2018, with a market share of 1.7%[26] - To address market changes, the Group launched several new models in 2018, including the Abela 110 scooter, 50cc commuter series (Elegant 50, Angela 50, Galaxy 50), and the high-performance Star SR 170[28] - As of the end of 2018, the Group had 213 SYM authorized distribution points across all provinces in Vietnam[28] Financial Review In FY2018, the Group's net loss significantly widened to $41.8 million due to a slight revenue decrease, increased cost of sales, and a substantial impairment loss on property, plant, and equipment FY2018 Key Financial Indicators Change (Million USD) | Indicator (Million USD) | 2018 | 2017 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 91.5 | 93.7 | -2.3% | | Cost of Sales | 93.9 | 87.7 | +7.1% | | Gross (Loss) / Profit | (2.3) | 6.1 | Shift from profit to loss | | Loss from Operations | (43.5) | (13.2) | +230% | | Net Loss | (41.8) | (9.3) | +349% | | Net Loss Margin | 46% | 10% | +36pp | - Due to poor performance, the Group conducted impairment tests on property, plant and equipment and prepaid lease payments, recognizing an impairment loss of approximately $20.2 million[37] - Administrative and other expenses increased by 47% year-on-year to $13.7 million, primarily due to increased research and development expenses[36] Liquidity and Financial Resources As of year-end 2018, the Group's net current assets and cash decreased, while interest-bearing borrowings were short-term, with the board affirming a stable financial position Liquidity and Financial Position (As of Year-End) (Million USD) | Indicator (Million USD) | December 31, 2018 | December 31, 2017 | | :--- | :--- | :--- | | Net Current Assets | 77.7 | 105.1 | | Cash and Bank Balances | 63.7 | 102.2 | | Interest-Bearing Borrowings Due Within One Year | 18.9 | 23.3 | | Gearing Ratio | 23.0% | 18.6% | Human Resources The Group maintained a stable workforce of 1,575 employees in 2018, with total annual compensation and related costs increasing by approximately 5.8% - As of December 31, 2018, the Group's total number of employees was 1,575 (2017: 1,578)[47] - Total annual salaries and related costs for 2018 were approximately $12.8 million, an increase from $12.1 million in 2017[47] Outlook and Strategies For 2019, the Group anticipates continued challenges in the motorcycle industry and plans to focus on product innovation, brand enhancement, channel optimization, and ASEAN market expansion - The operating environment for the Vietnamese motorcycle industry is expected to remain challenging in 2019, with continued price volatility and competition[49] - Key strategies for 2019 include: - Product Innovation: Plans to launch several new or revamped scooter, commuter, and electric vehicle models - Brand Enhancement: Introduction of a new corporate identity system, including a change to the SYM brand logo - Channel Optimization: Improvement of the dealer agency system and expansion of sales and service points - Market Expansion: Active participation in ASEAN market promotion and introduction of diversified OEM products[50] Use of Proceeds from Initial Public Offering Of the $76.7 million net IPO proceeds from 2007, $41.4 million has been utilized for distribution channel expansion and R&D center construction, with $35.3 million remaining unused IPO Proceeds Utilization (Million USD) | Use | Allocation in Prospectus | Amount Used | Balance as of End of 2018 | | :--- | :--- | :--- | :--- | | Construction and Establishment of R&D Center in Vietnam | 15.0 | 11.7 | 3.3 | | Expansion of Distribution Channels in Vietnam | 4.0 | 4.0 | – | | - Enhancement of Existing Dealers | 46.0 | 14.0 | 32.0 | | - Construction of New Dedicated Stores | 9.0 | 9.0 | – | | Acquisition of Assets or Businesses | 2.7 | 2.7 | – | | General Working Capital | 76.7 | 41.4 | 35.3 | Corporate Governance Report This report details the company's adherence to corporate governance principles, board structure, committee functions, risk management, and shareholder rights Corporate Governance Practices and the Board The company complied with HKEX Listing Rules on corporate governance in 2018, with the Board assuming nomination committee duties and clear separation of Chairman and CEO roles - The company complied with the Corporate Governance Code, with the only deviation being the absence of a Nomination Committee, whose functions were performed by the Board as a whole[56] - The responsibilities of the Chairman (Mr. Liu Wu-Hsiung) and CEO (Mr. Lin Chih-Ming) are clearly segregated, in compliance with the Code[63] 2018 Board and General Meeting Attendance Record | Director Name | Board Meetings Attended | General Meetings Attended | | :--- | :--- | :--- | | Mr. Liu Wu-Hsiung | 8/8 | 2/2 | | Mr. Lin Chih-Ming | 2/2 | 0/0 | | Mr. Lin Chun-Yu | 8/8 | 2/2 | | Mr. Chiang Chin-Yung | 2/2 | 0/0 | | Ms. Wu Li-Chu | 6/8 | 2/2 | | Mr. Chiu Ying-Feng | 8/8 | 0/2 | | Ms. Lin Ching-Ching | 8/8 | 2/2 | | Mr. Shen Hua-Jung | 8/8 | 2/2 | | Ms. Wu Kuei-Mei | 8/8 | 2/2 | | Mr. Lu Tien-Fu (Resigned) | 5/5 | 0/0 | Board Committees The company established Audit and Remuneration Committees, both comprising independent non-executive directors, to oversee financial reporting, risk management, and executive compensation policies - Audit Committee: Composed of three independent non-executive directors, chaired by Ms. Lin Ching-Ching. Held 4 meetings during the year, with all members in full attendance, responsible for reviewing financial reports, risk management, and internal control systems[69][70] - Remuneration Committee: Composed of two independent non-executive directors and one executive director, chaired by Ms. Lin Ching-Ching. Held 3 meetings during the year, with all members in full attendance, responsible for recommending remuneration policies and structures to the Board[67][68] Risk Management and Internal Control The Board is responsible for assessing and managing the Group's risks, ensuring effective internal control systems are in place and reviewed annually, with management confirming their adequacy - The Board is responsible for overseeing risk management and internal control systems, reviewing their effectiveness at least annually[78] - Management confirmed to the Board that the company's risk management and internal control systems were effective and adequate for the year ended December 31, 2018[78] Shareholder Rights The report outlines procedures for shareholders to submit proposals, requisition extraordinary general meetings, and nominate directors, ensuring transparency and engagement - Shareholders holding not less than 10% of the company's paid-up capital have the right to request the Board to convene an extraordinary general meeting in writing[92] - Shareholders may nominate candidates for directorship at general meetings by providing written notice to the company in advance as required[93] Directors' Report This report provides an overview of the company's business, financial performance, key relationships, director and shareholder interests, and significant transactions Business Review and Results The company, primarily an investment holding entity with core motorcycle manufacturing operations, reported no significant business changes in 2018 and proposed no final dividend, adhering to its dividend policy - The Board does not recommend the payment of a final dividend for the year ended December 31, 2018[108] - The company has adopted a dividend policy, but dividend payment considers financial performance, reserves, operational needs, and future development, among other factors[109] Key Customers, Suppliers, and Employee Relations The Group maintained diversified customer and supplier bases in 2018, with no single entity exceeding 50% of revenue or procurement, while valuing employees through competitive compensation and development - As of the end of 2018, none of the five largest customers or suppliers accounted for more than 50% of the Group's total operating revenue or procurement[113] - The Group considers employees valuable assets, providing competitive compensation, training, and development opportunities to motivate them[115] Directors' and Shareholders' Interests The report details shareholdings of directors and major shareholders, including Sym Yang Industrial Co Ltd as the controlling shareholder, noting the expiration of the 2007 share option scheme - The share option scheme adopted on November 24, 2007, expired on November 23, 2017, with no remaining share options as of the end of 2018[133] Major Shareholders' Interests in the Company's Shares (December 31, 2018) | Major Shareholder Name | Capacity | Number of Shares Held (Shares) | Approximate Percentage of Total Share Capital (%) | | :--- | :--- | :--- | :--- | | Sanyang Industry Co Ltd | Interest in controlled corporation | 608,818,000 (L) | 67.07% | | SY International Ltd | Beneficial owner | 608,818,000 (L) | 67.07% | Connected Transactions The Group engaged in ongoing connected transactions with its ultimate holding company, including procurement and technical services, all conducted within annual limits and deemed fair by independent directors 2018 Major Continuing Connected Transaction Amounts (USD) | Transaction Type | 2018 Transaction Amount | 2018 Annual Cap | | :--- | :--- | :--- | | General Purchase Agreement (Purchase of parts from Sanyang Group) | 13,284,154 | 42,430,000 | | Distribution Agreement (Agency for Sanyang Group products) | 2,637,616 | 10,000,000 | | Technical License Agreement | 1,513,924 | 5,680,000 | | Research and Development Service Agreement | 2,576,694 | 4,910,000 | - Independent non-executive directors and the company's auditor reviewed these continuing connected transactions, confirming their compliance with relevant Listing Rules[155] Major Acquisition In 2018, the company acquired Sym Yang Motors Vietnam Co Ltd for $4.7 million to consolidate and relocate its existing manufacturing facilities, completing the transaction in December - In 2018, the Group completed the acquisition of Sym Yang Motors Vietnam Co Ltd for a total consideration of $4.7 million, aiming to integrate production facilities[159] Environmental, Social and Governance Report This report details the Group's commitment to environmental protection, social responsibility, and robust governance practices Environmental Protection and Safety The Group adheres to ISO14001 and 5S management for environmental and occupational safety, implementing measures for air, waste, and wastewater control, alongside energy and water conservation efforts - The Group has obtained ISO14001 environmental management system certification and established a Safety and Health Committee to review and promote environmental and labor safety policies[167][169] 2018 Emissions and Resource Consumption Data | Category | Item | Total Amount | | :--- | :--- | :--- | | Air Pollutants | Volatile Organic Compounds (VOC) | 29,321 Metric Tons | | Waste | Hazardous Waste | 289,056 Kilograms | | | Non-Hazardous Waste | 64,270 Kilograms | | Energy Consumption | Electricity | 11,622,659 Kilowatts | | Water Consumption | Tap Water | 124,669 Cubic Meters | | | Groundwater | 12,448 Cubic Meters | - To ensure employee occupational health, the Group provides annual workplace environment monitoring, employee health examinations, and safety and health education training[186] Product Responsibility The Group upholds quality and customer satisfaction through ISO9001, rigorous supplier audits, and active engagement with distributors and consumers, while developing eco-friendly electric vehicles - The Group adheres to the ISO9001 quality management system, controlling product quality from raw material intake to shipment[188] - In supplier management, the Group implements global procurement and conducts regular on-site audits of suppliers for quality, labor safety, and environmental compliance[190] - To address environmental trends, the Group is committed to developing various electric vehicle models in addition to gasoline motorcycles[193] Employee Care The Group provides competitive compensation, comprehensive benefits, and training programs, fostering a respectful and non-discriminatory environment with established labor union communication channels - The Group's standard employee salaries are approximately 16% higher than the government's statutory minimum wage to ensure labor stability[197] - The company has legally established a labor union, holding regular quarterly meetings and an annual "Laborers' Meeting" to facilitate labor-management communication[200] - To cultivate talent, the Group offers Vietnamese executives opportunities for training and internships at Sanyang, the ultimate holding company in Taiwan[202] Anti-Corruption and Community Engagement The Group enforces strict anti-corruption policies with internal audit oversight and actively contributes to community welfare through its 'Caring Society' initiative, focusing on environmental, social, and educational programs - The Group has an internal audit unit, reporting to the Board, which conducts routine audits across procurement, production, sales, and finance, with no significant non-compliance or corruption issues found in 2018[205] - The Group annually invests approximately 1 billion VND (approximately $43.1 thousand USD) in community welfare activities, covering environmental protection, social participation, and education and culture[210] Independent Auditor's Report This section presents the auditor's opinion on the consolidated financial statements, including key audit matters and their implications Independent Auditor's Report KPMG issued an unmodified opinion on the 2018 consolidated financial statements, highlighting the valuation of non-current assets as a key audit matter due to significant impairment losses from operating losses - Auditor KPMG issued an unmodified opinion on the 2018 consolidated financial statements[214] - Key Audit Matter: Valuation of non-current assets (including property, plant and equipment, intangible assets, and prepaid lease payments). Due to significant operating losses during the year, management performed impairment assessments on these assets, recognizing an impairment loss of $20.2 million, a process involving significant judgment and uncertainty[218][219] Consolidated Financial Statements This section presents the Group's comprehensive financial performance, position, equity changes, and cash flows for the reporting period Consolidated Statement of Profit or Loss and Other Comprehensive Income In FY2018, the Group's revenue slightly decreased, resulting in a gross loss and a significant expansion of operating and net losses due to increased costs and substantial asset impairment charges Consolidated Statement of Profit or Loss Summary (USD) | Item | 2018 | 2017 | | :--- | :--- | :--- | | Revenue | 91,546,757 | 93,746,331 | | Gross (Loss) / Profit | (2,330,403) | 6,065,677 | | Impairment Loss on Property, Plant and Equipment | (11,144,183) | (2,232,753) | | Impairment Loss on Prepaid Lease Payments | (9,089,794) | – | | Results from Operating Activities | (43,549,490) | (13,207,786) | | Loss Before Income Tax | (40,508,754) | (9,776,837) | | Loss for the Year After Tax | (41,842,673) | (9,332,218) | | Loss Per Share (USD) | (0.05) | (0.01) | Consolidated Statement of Financial Position As of year-end 2018, total assets significantly decreased to $115 million, primarily due to non-current asset impairment, while total liabilities also declined, leading to a 34.7% reduction in net equity Consolidated Statement of Financial Position Summary (USD) | Item | December 31, 2018 | December 31, 2017 | | :--- | :--- | :--- | | Assets | | | | Non-Current Assets | 4,435,924 | 20,704,479 | | Current Assets | 110,775,290 | 140,974,665 | | Total Assets | 115,211,214 | 161,679,144 | | Liabilities and Equity | | | | Current Liabilities | 33,078,444 | 35,884,646 | | Non-Current Liabilities | 13,037 | – | | Total Liabilities | 33,091,481 | 35,884,646 | | Net Assets | 82,119,733 | 125,794,498 | Consolidated Statement of Changes in Equity Total shareholders' equity decreased from $126 million to $82.12 million by year-end, primarily driven by the $41.84 million net loss and $1.83 million in foreign exchange differences - Shareholders' equity decreased from $125,794,498 at the beginning of the year to $82,119,733 at year-end[240] - The primary drivers for the decrease in equity were the $41,842,673 loss for the year and $1,832,092 in other comprehensive income loss (primarily exchange differences)[240] Consolidated Statement of Cash Flows In 2018, the Group experienced a significant increase in net cash outflow from operating activities, offset by net cash inflow from investing activities, resulting in an overall increase in cash and cash equivalents Consolidated Statement of Cash Flows Summary (USD) | Item | 2018 | 2017 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (26,777,591) | (861,561) | | Net Cash From Investing Activities | 46,810,150 | 6,433,447 | | Net Cash Used in Financing Activities | (4,623,650) | (3,339,850) | | Net Increase in Cash and Cash Equivalents | 15,408,909 | 2,232,036 | | Cash and Cash Equivalents at Year-End | 28,578,446 | 13,356,314 | Notes to the Consolidated Financial Statements This section provides detailed explanations and breakdowns of the figures presented in the consolidated financial statements Note 4: Revenue and Segment Information The Group's revenue primarily derived from motorcycle sales, which incurred an operating loss, while parts and engine sales were profitable, with Vietnam contributing 55% of total revenue 2018 Segment Results (USD) | Segment | Revenue from External Customers | Adjusted Profit/Loss Before Interest and Tax | | :--- | :--- | :--- | | Manufacturing and Sales of Motorcycles | 78,046,137 | (22,195,534) | | Manufacturing and Sales of Spare Parts and Engines | 13,414,316 | 587,463 | | Molds and Maintenance Services | 86,304 | 153,899 | 2018 Revenue from External Customers by Geographical Location (USD) | Region | Revenue | Percentage | | :--- | :--- | :--- | | Vietnam | 50,200,637 | 54.8% | | Malaysia | 27,925,538 | 30.5% | | Philippines | 11,657,120 | 12.7% | | Other Regions | 1,763,462 | 1.9% | Note 11: Property, Plant and Equipment Due to poor performance, the Group recognized $11.14 million in impairment loss on property, plant, and equipment and $9.09 million on prepaid lease payments, significantly reducing their carrying values - Due to operating losses, the Group performed an impairment assessment on non-current assets, recognizing an impairment loss of $11,144,183 on property, plant and equipment[391] - The impairment test was based on value-in-use calculations, applying an 11% pre-tax discount rate to future cash flow forecasts for the next five years[391] Note 25: Financial Risk Management The Group manages credit, interest rate, foreign exchange, and liquidity risks, noting low credit concentration but a concentration risk in raw material procurement from related parties - Credit Risk: The largest debtor accounted for 65% of total trade receivables, but the Group assesses customer credit, deeming the risk minimal[451][452] - Foreign Exchange Risk: Primary risk currencies are USD and New Taiwan Dollar. A sensitivity analysis showed a 5% change in USD exchange rates would impact post-tax loss by approximately $0.21 million[463][480] - Business Risk: There is a concentration risk in raw material procurement from related parties (ultimate holding company Sanyang Group), with related purchases accounting for 18% of total purchases in 2018[486] Note 27: Related Party Transactions This note details recurring transactions with the ultimate holding company, including significant purchases of raw materials and payments for technical services, all compliant with listing rules 2018 Major Related Party Transaction Amounts (USD) | Transaction Type | Transacting Party | 2018 Amount | | :--- | :--- | :--- | | Sales of Finished Goods and Spare Parts | Sanyang Group | 657,454 | | Purchases of Raw Materials and Finished Goods | Sanyang Group and Associates | 15,921,770 | | Purchases of Property, Plant and Equipment | Sanyang Group and Associates | 579,098 | | Technical License Fees | Sanyang Industry Co Ltd | 1,513,924 | | Technical Consulting Fees | Sanyang Industry Co Ltd | 2,576,694 |