创维集团(00751) - 2018 - 年度财报

Financial Summary The reporting period covers nine months ending December 31, 2018, reflecting a fiscal year-end change, with turnover decreasing by 23.1% but net profit increasing by 10.8% compared to the prior twelve-month period - Due to the change in fiscal year-end from March 31 to December 31, this reporting period covers the nine months ended December 31, 2018, Compared to the twelve months ended March 31, 2018, turnover decreased by 23.1%, but net profit increased by 10.8%[3] Financial Summary | Metric | Nine Months Ended December 31, 2018 | Twelve Months Ended March 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Turnover (Million RMB) | 30,192 | 39,271 | -23.1% | | Operating Profit (Million RMB) | 973 | 1,083 | -10.2% | | Net Profit for the Period/Year (Million RMB) | 553 | 499 | +10.8% | | Profit Attributable to Equity Holders of the Company (Million RMB) | 420 | 459 | -8.5% | | Gross Profit Margin (%) | 18.7 | 16.7 | +2.0 percentage points | | Earnings Per Share - Basic (RMB Cents) | 13.85 | 15.21 | -8.9% | | Dividend Per Share (HK Cents) | 6.0 | 9.0 | -33.3% | | Debt-to-Equity Ratio (%) | 48.1 | 57.6 | -9.5 percentage points | Chairman's Report The Chairman's Report highlights the Group's resilience in a challenging 2018, achieving slight turnover growth, improved gross margin, and significant profit increase, while advancing its 'One-Three-Three-Four' strategy towards intelligent and high-end products and a RMB 100 billion revenue target Operating Performance January-December 2018 (Year-on-Year Comparison) | Metric | Jan-Dec 2018 | Jan-Dec 2017 | YoY Change | | :--- | :--- | :--- | :--- | | Turnover | 39.0 Billion RMB | 38.9 Billion RMB | +0.1% | | Overall Gross Profit Margin | 18.5% | 16.9% | +1.6 percentage points | | After-tax Profit | 839 Million RMB | 220 Million RMB | +281.4% | - The TV industry, as the Group's core business, recorded sales exceeding 15 million units and turnover of 23.512 billion RMB, accounting for 60.3% of total revenue during the review period, with overseas sales exceeding 6.5 million units, indicating initial success in the internationalization strategy[7] - The Group will continue to execute the 'One-Three-Three-Four' overall strategy for transformation and upgrading, aiming to achieve 100 billion RMB in revenue, focusing on intelligence, refinement, and internationalization, promoting the construction of three major bases, and building four major business segments: multimedia, smart home appliances, smart system technology and big data, and modern services[8] Management Discussion and Analysis This section provides an in-depth analysis of the Group's financial and operational performance, highlighting key drivers and strategic initiatives across various business segments and geographical markets Business Performance Review The nine-month reporting period, following a fiscal year-end change, saw turnover of 30.192 billion RMB and profit of 553 million RMB, with full-year unaudited data showing a 0.1% turnover increase and 281.4% profit growth driven by product optimization and internet content - This reporting period is the first fiscal year after changing the fiscal year-end from March 31 to December 31, covering nine months, Concurrently, the presentation currency has been changed from HKD to RMB[16][17] Unaudited Financial Data January-December 2018 (Year-on-Year) | Metric | Jan-Dec 2018 (Million RMB) | Jan-Dec 2017 (Million RMB) | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | Turnover | 38,978 | 38,935 | 0.1% | | Gross Profit | 7,194 | 6,596 | 9.1% | | Gross Profit Margin | 18.5% | 16.9% | 1.6 p.p. | | Profit Before Tax | 1,033 | 435 | 137.5% | | Profit for the Year | 839 | 220 | 281.4% | TV Sales Volume 2018 (Thousand units) | Market | Jan-Dec 2018 (Thousand units) | Jan-Dec 2017 (Thousand units) | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | China Market | 8,804 | 7,813 | 12.7% | | Of which: 4K TVs | 5,003 | 4,302 | 16.3% | | Overseas Market | 6,512 | 7,770 | (16.2%) | | Total Sales Volume | 15,316 | 15,583 | (1.7%) | Business Analysis - By Region The Group's business is primarily focused on mainland China, which saw a 10.7% increase in turnover to 28.236 billion RMB for the twelve months ended December 31, 2018, while overseas turnover decreased by 20.0% due to strategic adjustments in OEM business - For the twelve months ended December 31, 2018, turnover from the mainland China market was approximately 28.236 billion RMB, a year-on-year increase of 10.7%[22] - For the twelve months ended December 31, 2018, overseas market turnover was 10.742 billion RMB, a year-on-year decrease of 20.0%, primarily due to the strategic adjustment of OEM business client and order structure to pursue higher stability[23] Overseas Market Turnover Geographical Distribution | Region | Jan-Dec 2018 (%) | Jan-Dec 2017 (%) | | :--- | :--- | :--- | | Asia (excluding Middle East) | 52 | 53 | | Middle East | 14 | 13 | | Africa | 13 | 7 | | Europe | 12 | 13 | | Americas | 8 | 13 | | Oceania | 1 | 1 | Business Analysis - By Business Segment The Group's business is divided into four segments, with multimedia TV sales growing in China but declining overseas due to strategic shifts, while internet content revenue surged and smart appliance business showed strong growth domestically and internationally 1. Multimedia Business Multimedia business, encompassing TV products and internet content, saw China's color TV sales grow by 12.7% but revenue slightly decline due to price adjustments, while overseas revenue fell 27.4% from strategic OEM abandonment, contrasted by a 113.4% surge in internet content revenue - Color TV product sales in mainland China increased by 12.7% year-on-year, but turnover decreased by 3.8% to 16.201 billion RMB due to price adjustments in response to market competition[28] - Overseas market color TV product turnover decreased by 27.4% year-on-year to 7.311 billion RMB, primarily because the company strategically abandoned low-margin OEM projects to ensure operational stability[29] - Internet content revenue significantly increased by 113.4% year-on-year to 510 million RMB, benefiting from over 36 million activated smart TV users and strategic collaborations with iQiyi, Tencent, and Baidu[30] 2. Smart System Technology Business Smart system technology business, including digital set-top boxes and LCD modules, grew 15.5% in mainland China to 5.120 billion RMB due to increased smart terminal sales and telecom operator market share, while overseas turnover decreased by 11.3% despite new product R&D and strategic partnerships - Turnover from digital set-top boxes and LCD modules in mainland China was 5.120 billion RMB, a year-on-year increase of 15.5%, primarily driven by a higher proportion of smart terminal sales and increased market share in the telecom operator segment[31] - Overseas market turnover was 2.188 billion RMB, a year-on-year decrease of 11.3%, as the company focuses on R&D for new Android ecosystem products and establishes strategic partnerships with Google and Netflix[31] 3. Smart Appliances Business The smart appliances business achieved growth through product and sales channel optimization, with smart white goods showing strong performance, increasing 17.4% in mainland China and 67.0% overseas, while other smart appliances grew 40.7% internationally despite a domestic decline Smart Appliances Business Turnover (Jan-Dec 2018) | Product Category | Market | Turnover (Million RMB) | YoY Growth | | :--- | :--- | :--- | :--- | | Smart White Goods | China Mainland | 2,052 | +17.4% | | | Overseas Market | 618 | +67.0% | | Other Smart Appliances | China Mainland | 736 | -25.0% | | | Overseas Market | 166 | +40.7% | - The company is deepening product R&D around 'health,' 'energy efficiency,' and 'intelligence,' launching high-end, intelligent products such as washing machines with AI smart voice systems[33] Financial Performance Analysis The Group's financial position remains robust, with overall gross profit margin increasing to 18.5% due to lower panel prices and product optimization, while R&D expenses rose 18.0% and the debt-to-equity ratio improved to 48.1% - For the twelve months ended December 31, 2018, the Group's overall gross profit margin was 18.5%, a year-on-year increase of 1.6 percentage points, primarily due to falling upstream panel prices, the launch of differentiated high-end products (MAXTV and OLED series), and the abandonment of low-margin projects in overseas markets[34] - Selling and distribution expense ratio decreased by 1.1 percentage points to 9.5%, while general and administrative expense ratio increased by 0.8 percentage points to 7.1%, with R&D expenses growing 18.0% year-on-year to 1.688 billion RMB, mainly for high-intelligence, high-quality product development[35][36] - As of December 31, 2018, the Group's debt-to-equity ratio was 48.1%, an improvement from 57.6% as of March 31, 2018[38] - The Group holds 1.911 billion RMB in unlisted equity securities investments, as well as equity investments in two listed companies, Chigo Holding and Ningbo Gezhi Technology[40][41] Outlook Looking ahead, the Group will capitalize on the upgrading opportunities in the home appliance industry, steadfastly advancing its 'One-Three-Three-Four' transformation strategy to achieve 100 billion RMB in revenue, focusing on intelligence, refinement, and internationalization, and investing in new technologies like ultra-HD video, AI, IoT, and 5G to build a smart home appliance ecosystem - The Group will continue to deeply implement the 'One-Three-Three-Four' strategic plan, aiming for 100 billion RMB in revenue, and comprehensively implementing three major strategies: intelligence, refinement, and internationalization[45][46] - Future efforts will increase R&D and utilization of new technologies such as ultra-HD video, artificial intelligence, IoT, and 5G, accelerating the deep integration of hardware, software, content, and services to build a smart home appliance industry ecosystem[46] Directors and Senior Management Profile This section details the background information of the company's executive directors, independent non-executive directors, and senior management, including their age, positions, professional qualifications, industry experience, and tenure within the Group - Mr. Lai Weide, Chairman of the Board, 60 years old, has extensive experience in central government agencies and state-owned enterprise management[49] - Mr. Liu Tangzhi, Chief Executive Officer, 56 years old, joined the Group in 1998 and holds a Bachelor's degree in Economics and an MBA[49] - The Board of Directors comprises professionals from diverse fields including accounting, law, electronic engineering, communication information, and enterprise management, reflecting the board's diversity[49][50][52][54] Directors' Report The Directors' Report outlines the Group's principal activities, performance review, environmental and social responsibilities, dividend policy, and financial position, confirming compliance with relevant regulations and disclosing director and major shareholder interests - The Board recommends a final dividend of 6.0 HK cents per share in cash for the reporting period ended December 31, 2018, which is lower than the 9.0 HK cents of the previous year[67] - As of December 31, 2018, controlling shareholder Mr. Huang Hongsheng and his spouse Ms. Lin Weiping collectively held or were deemed to hold approximately 40.11% equity interest in the company[81][82][100] - During the reporting period, the Group had continuing connected transactions with Nanjing Golden Dragon Bus Manufacturing Co., Ltd., involving factoring services and sale-and-leaseback agreements, with an annual cap of 500 million RMB, which was not exceeded[103][104] - On June 12, 2018, the Board granted 10,060,000 shares under the share award scheme, with Chairman Mr. Lai Weide and CEO Mr. Liu Tangzhi receiving 3,000,000 and 2,000,000 shares respectively[93][95] Corporate Governance Report This report details the company's corporate governance practices, confirming compliance with most Code Provisions of the Corporate Governance Code, and outlines the board's composition, responsibilities, committee structures, risk management, internal controls, and shareholder communication - The company complied with the Code Provisions of the Corporate Governance Code during the reporting period, with deviations only due to fewer than four board meetings (Code A.1.1) and two independent non-executive directors' absence from the AGM (Code A.6.7) caused by the change in fiscal year-end[112] - The Board has four committees: Executive Committee, Nomination Committee, Remuneration Committee, and Audit Committee, with the latter three chaired by and majority-composed of independent non-executive directors, meeting corporate governance requirements[134][136][140][145] - The company maintains a Risk Management Department and Internal Audit Department for independent assessment and review of internal controls and risk management systems, which the Board has annually assessed as effective and adequate[150][154][157] Independent Auditor's Report Deloitte Touche Tohmatsu issued an unmodified opinion on Skyworth Digital Holdings Limited's consolidated financial statements for the nine months ended December 31, 2018, highlighting key audit matters including inventory write-downs, expected credit loss provisions for trade receivables, and valuation of unlisted equity securities, all involving significant management judgment and estimation - The auditor issued an unmodified opinion on the consolidated financial statements, deeming them to present fairly, in all material respects, the Group's financial position and performance in accordance with Hong Kong Financial Reporting Standards[169] - Key audit matters include: - Inventory write-downs: due to the significant amount of inventory and the significant management judgment involved in the assessment - Expected credit loss provision for trade receivables: due to the significant amount of trade receivables and the significant management estimates involved in the impairment assessment - Valuation of unlisted equity securities: due to the significant judgment and estimates required in determining fair value[171][173][175][178] Consolidated Financial Statements and Notes This section presents the Group's detailed consolidated financial statements for the nine months ended December 31, 2018, including statements of profit or loss, financial position, changes in equity, and cash flows, along with comprehensive notes explaining accounting policies and the impact of adopting new HKFRS 15 and 9 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the nine months ended December 31, 2018, the Group reported turnover of 30.192 billion RMB, gross profit of 5.658 billion RMB with a 18.7% gross profit margin, and profit for the period of 553 million RMB, with 420 million RMB attributable to equity holders Consolidated Statement of Profit or Loss Summary (Nine Months Ended December 31, 2018) | Metric | Amount (Million RMB) | | :--- | :--- | | Turnover | 30,192 | | Cost of Sales | (24,534) | | Gross Profit | 5,658 | | Profit Before Tax | 648 | | Income Tax Expense | (95) | | Profit for the Period | 553 | | Profit Attributable to Equity Holders of the Company | 420 | | Profit Attributable to Non-controlling Interests | 133 | Consolidated Statement of Financial Position As of December 31, 2018, the Group's total assets were 45.160 billion RMB, total liabilities 27.805 billion RMB, and net assets 17.355 billion RMB, with 15.470 billion RMB attributable to equity holders, and significant assets including property, plant, and equipment, trade receivables, and inventories Consolidated Statement of Financial Position Summary (As of December 31, 2018) | Metric | Amount (Million RMB) | | :--- | :--- | | Non-current Assets | 12,396 | | Current Assets | 32,764 | | Total Assets | 45,160 | | Current Liabilities | 24,128 | | Non-current Liabilities | 3,677 | | Total Liabilities | 27,805 | | Net Assets | 17,355 | | Equity Attributable to Equity Holders of the Company | 15,470 | | Non-controlling Interests | 1,885 | Consolidated Statement of Cash Flows For the nine months ended December 31, 2018, the Group's net cash used in operating activities was 2.318 billion RMB, primarily due to increased trade receivables, with net cash used in investing activities of 948 million RMB and in financing activities of 634 million RMB, resulting in a net decrease in cash and cash equivalents of 3.900 billion RMB Consolidated Statement of Cash Flows Summary (Nine Months Ended December 31, 2018) | Metric | Amount (Million RMB) | | :--- | :--- | | Net Cash Used in Operating Activities | (2,318) | | Net Cash Used in Investing Activities | (948) | | Net Cash Used in Financing Activities | (634) | | Net Decrease in Cash and Cash Equivalents | (3,900) | | Cash and Cash Equivalents at Beginning of Period | 7,294 | | Cash and Cash Equivalents at End of Period | 3,314 | Notes to the Consolidated Financial Statements The notes detail accounting policies, key estimates, and statement components, highlighting the change in fiscal year-end and presentation currency, the impact of adopting new HKFRS 15 and 9 on revenue recognition and financial instruments, segment information showing color TV products as the main revenue source, and financial risk management - The Group changed its fiscal year-end from March 31 to December 31 during this financial period, and the presentation currency from HKD to RMB[198] - The Group first adopted HKFRS 15 (Revenue from Contracts with Customers) and HKFRS 9 (Financial Instruments), with the adoption resulting in adjustments to opening retained profits and other equity components as of April 1, 2018, and comparative information not being restated[201][209] - Segment information indicates that color TV products (China and overseas markets) are the primary source of revenue, accounting for approximately 69% of external segment revenue, with digital set-top boxes and LCD modules, and white goods products also being significant components[309] Financial Summary and Review This section provides a comprehensive overview of the Group's financial performance and position over the past five fiscal periods, including key financial ratios and trends in assets, liabilities, and profitability Financial Summary This section provides a summary of the Group's performance, assets, and liabilities over the past five fiscal periods, showing that despite a shorter reporting period in FY2018, net assets and equity attributable to equity holders have consistently grown Five-Year Performance Summary (Million RMB) | Item | 2018 (9 months) | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Turnover | 30,192 | 39,271 | 37,147 | 35,010 | 32,068 | | Gross Profit | 5,658 | 6,545 | 7,428 | 7,678 | 6,411 | | Profit Attributable to Equity Holders of the Company | 420 | 459 | 1,136 | 1,779 | 2,499 | Five-Year Assets and Liabilities Summary (Million RMB) | Item | Dec 31, 2018 | Mar 31, 2018 | Mar 31, 2017 | Mar 31, 2016 | Mar 31, 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Consolidated Assets | 45,160 | 43,101 | 38,193 | 35,078 | 26,691 | | Total Consolidated Liabilities | (27,805) | (26,557) | (23,280) | (21,150) | (14,513) | | Net Assets | 17,355 | 16,544 | 14,913 | 13,928 | 12,178 | Financial Review This section reviews key financial ratios and statistics over the past five fiscal periods, indicating fluctuations in gross and net profit margins, with the FY2018 (nine months) gross margin at 18.7% showing recovery but still below 2016 and 2017 levels, and an improved debt-to-equity ratio Five-Year Key Ratios Review | Ratio | 2018 (9 months) | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit Margin (%) | 18.7 | 16.7 | 20.0 | 21.9 | 20.0 | | Net Profit Margin (%) | 1.8 | 1.3 | 3.6 | 5.9 | 8.3 | | Debt-to-Equity Ratio (%) | 48.1 | 57.6 | 47.5 | 48.5 | 17.0 | | Earnings Per Share - Basic (RMB Cents) | 13.85 | 15.21 | 38.04 | 61.34 | 88.58 | Company Information This chapter provides essential company details, including board and committee members, company secretary, auditor, legal counsel, principal bankers, registered office, principal place of business, share registrar, listing information, and key dates for the 2018/19 final dividend - The company's shares are listed on The Stock Exchange of Hong Kong Limited, stock code 00751[561] - The 2018 final dividend is 6.0 HK cents per share, with a record date of June 11, 2019, and an approximate payment date of June 26, 2019[562]