创维集团(00751) - 2021 - 中期财报

Financial Highlights The company's financial highlights for the first half of 2021 show significant revenue growth, a slight increase in profit attributable to equity holders, and changes in key financial ratios and per-share metrics 2021 First Half Financial Highlights (For the Six Months Ended June 30) | Indicator Category | Indicator | 2021 First Half (Unaudited) | 2020 First Half (Unaudited) | Change | | :--- | :--- | :--- | :--- | :--- | | Operating Results (RMB millions) | Revenue | 22,567 | 15,979 | +41.2% | | | Operating Profit | 1,050 | 1,010 | +4.0% | | | Profit for the Period | 610 | 573 | +6.5% | | | Profit Attributable to Equity Holders of the Company | 409 | 391 | +4.6% | | Financial Position (RMB millions) | Cash Position | 9,242 | 7,901 | +17.0% | | | Borrowings | 13,580 | 7,849 | +73.0% | | | Equity Attributable to Equity Holders of the Company | 17,052 | 15,919 | +7.1% | | | Inventories | 8,746 | 5,388 | +62.3% | | Key Ratios | Gross Profit Margin | 16.6% | 19.3% | -2.7 percentage points | | | Net Profit Margin | 2.7% | 3.6% | -0.9 percentage points | | | Net Debt to Equity Ratio | 77.3% | 63.9% | +13.4 percentage points | | | Inventory Turnover Period (Days) | 78 | 79 | -1.3% | | Per Share Data (RMB cents) | Earnings Per Share - Basic | 15.54 | 12.87 | +20.7% | | | Earnings Per Share - Diluted | 14.44 | 12.11 | +19.2% | | | Book Value Per Share | 747.08 | 594.48 | +25.7% | Company Information Skyworth Group Limited is a Bermuda-incorporated company listed on the Hong Kong Stock Exchange, with Deloitte Touche Tohmatsu as its auditor - Skyworth Group Limited is a company incorporated in Bermuda, with its shares listed on The Stock Exchange of Hong Kong Limited under stock code 00751[5][6] - The company's auditor is Deloitte Touche Tohmatsu[5] Business and Financial Review This section provides an overview of the group's operational performance, financial position, and key strategic initiatives during the reporting period Performance Summary In the first half of 2021, the Group's revenue significantly increased by 41.2% to RMB 22.567 billion, primarily driven by multimedia and smart system technology businesses, despite a decline in gross profit margin and a modest increase in profit for the period 2021 First Half Performance Summary | Indicator | Amount (RMB millions) | Prior Period | Remarks | | :--- | :--- | :--- | :--- | | Revenue | 22,567 | 15,979 | 64.9% from Mainland China market | | Gross Profit | 3,745 | - | Gross profit margin was 16.6%, compared to 19.3% in the prior period | | Profit for the Period | 610 | 573 | - | | Profit Attributable to Equity Holders | 409 | 391 | - | | Interim Dividend | Not distributed | Not applicable | Company may use cash for share repurchases | Business Performance Review Despite global pandemic challenges and rising raw material costs, the Group achieved strong revenue growth across both Mainland China and overseas markets, with significant contributions from multimedia and modern service businesses Revenue Analysis In the first half of 2021, the Group's total revenue reached RMB 22.567 billion, a 41.2% year-on-year increase, primarily due to global economic recovery, though rising raw material prices led to a decline in gross profit margin and a decrease in smart TV system sales - The Group's overall revenue increased by 41.2% year-on-year, reaching RMB 22,567 million[8] - Affected by rising raw material prices, the Group's gross profit margin was 16.6%, a 2.7 percentage point decrease from the prior period[8] Smart TV System Sales Volume (Thousand Units) | Market | 2021 First Half | 2020 First Half | Change | | :--- | :--- | :--- | :--- | | China Market | 2,881 | 3,415 | (15.6%) | | Overseas Market | 3,852 | 3,613 | 6.6% | | Total | 6,733 | 7,028 | (4.2%) | Geographical Segment Analysis The Group achieved strong revenue growth in both Mainland China and overseas markets, with Mainland China contributing 64.9% of total revenue and Asia (excluding Middle East) being the largest overseas market - Revenue from the Mainland China market increased by 40.8% year-on-year, reaching RMB 14.641 billion[10] - Overseas market revenue increased by 42.0% year-on-year, reaching RMB 7.926 billion, accounting for 35.1% of the Group's total revenue[11] Overseas Market Revenue Geographical Distribution | Region | 2021 First Half (%) | 2020 First Half (%) | | :--- | :--- | :--- | | Asia (excluding Middle East) | 60 | 58 | | Europe | 12 | 14 | | Middle East | 10 | 12 | | Americas | 10 | 6 | | Africa | 7 | 9 | | Oceania | 1 | 1 | Business Segment Analysis All four of the Group's business segments achieved growth, with multimedia business revenue increasing by 45.4% due to new photovoltaic operations, and modern service business revenue in Mainland China surging by 131.0% Revenue by Business Segment (RMB millions) | Business Segment | 2021 First Half | 2020 First Half | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Multimedia Business | 13,655 | 9,394 | +45.4% | | Smart System Technology Business | 4,599 | 3,805 | +20.9% | | Smart Appliances Business | 2,200 | 1,880 | +17.0% | | Modern Service Business | 1,987 | 899 | +121.0% | - The photovoltaic business, a new segment within multimedia, generated RMB 829 million in revenue during the period[20] - Coolita system's internet value-added service revenue reached RMB 605 million, a 19.6% year-on-year increase, covering over 96 million smart terminals cumulatively[19] - Modern service business revenue in the Mainland China market increased by 131.0% year-on-year, reaching RMB 1.751 billion[24] Gross Profit Margin In the first half of 2021, the Group's overall gross profit margin decreased by 2.7 percentage points to 16.6%, primarily due to rising upstream supply chain costs, particularly for key raw materials in smart TV systems and smart appliances - The Group's overall gross profit margin was 16.6%, a 2.7 percentage point decrease from 19.3% in the prior period[26] - The decline in gross profit margin is primarily attributed to rising upstream raw material costs, such as over 50% increase in glass and IC prices for smart TVs, and rising copper prices affecting appliance products[26] Expenses During the reporting period, the Group's selling and distribution, general and administrative, and research and development expenses all increased in absolute terms, but their ratios to revenue decreased, indicating improved cost control efficiency and continued investment in R&D Expense Analysis (RMB millions) | Expense Item | 2021 First Half | Ratio to Revenue | 2020 First Half | Ratio to Revenue | | :--- | :--- | :--- | :--- | :--- | | Selling and Distribution Expenses | 1,855 | 8.2% | 1,495 | 9.4% | | General and Administrative Expenses | 615 | 2.7% | 587 | 3.7% | | Research and Development Expenses | 980 | 4.3% | 814 | 5.1% | Liquidity, Financial Resources, and Cash Flow Management As of June 30, 2021, the Group maintained a stable financial position with net current assets increasing to RMB 13.442 billion, though total interest-bearing debt rose to RMB 15.417 billion, leading to an increase in the debt-to-equity ratio Key Financial Position Indicators (RMB millions) | Indicator | June 30, 2021 | December 31, 2020 | Change | | :--- | :--- | :--- | :--- | | Net Current Assets | 13,442 | 11,517 | +16.7% | | Bank Balances and Cash | 8,385 | 8,214 | +2.1% | | Total Interest-Bearing Debt | 15,417 | 13,224 | +16.6% | | Debt to Equity Ratio | 77.3% | 69.6% | +7.7 percentage points | Treasury Policy and Investment Portfolio The Group adopts a prudent treasury policy with most assets and liabilities settled in RMB, recorded a net exchange loss of RMB 1 million, and holds significant investments in unlisted and listed equity securities for strategic smart home ecosystem development - As of June 30, 2021, the Group held investments in 46 unlisted companies with a total value of RMB 2.796 billion[31] Major Listed Equity Securities Investments (As of June 30, 2021) | Listed Company | Investment Value (RMB millions) | Listing Exchange | | :--- | :--- | :--- | | Bank of Gansu Co., Ltd. | 102.6 | Hong Kong Stock Exchange | | Jiangsu Broadcasting & TV Information Network Corporation Limited | 122.0 | Shanghai Stock Exchange | | Amlogic (Shanghai) Co., Ltd. | 171.2 | Shanghai Stock Exchange | | Sanrenxing Media Group Co., Ltd. | 79.4 | Shanghai Stock Exchange | | Linklogis Inc. | 112.5 | Hong Kong Stock Exchange | | Anhui Core-Ray Technology Co., Ltd. | 49.7 | Shenzhen Stock Exchange | Significant Investments and Acquisitions During the reporting period, the Group invested RMB 409 million in factory expansions across multiple locations and an additional RMB 197 million in other property, plant, and equipment to enhance production scale and smart product capacity - The Group spent RMB 409 million on factory expansion projects and invested RMB 197 million in other production equipment during the reporting period[34] Human Resources and Contingent Liabilities As of June 30, 2021, the Group's global workforce decreased to approximately 33,000 employees, while the company continues to focus on staff welfare and training, and addresses patent disputes deemed not to have a material adverse financial impact - As of June 30, 2021, the Group had approximately 33,000 employees, a decrease from 36,000 as of December 31, 2020[35] - The Group is involved in some individual patent disputes, but the directors believe these will not have a material adverse effect on the Group's financial position[35] Outlook and Post-Reporting Period Events Looking ahead, the Group designates 2021 as the 'Efficiency Enhancement Year,' focusing on transforming its business model and accelerating R&D in 5G+AI+Terminal technologies, while acknowledging the ongoing uncertainty of the COVID-19 pandemic on overseas operations - The Group will define products with a '5G+AI+Terminal' technology development approach, accelerating R&D and application of new technologies, materials, and processes to enhance product competitiveness[36] - The Group will focus on advancing the construction of overseas production bases in Southeast Asia, India, and Africa, and actively develop OEM business[36] - Post-reporting period, the COVID-19 pandemic is expected to continue to impact the Group's overseas business, though the exact timing and scale of the impact remain unpredictable[37] Condensed Consolidated Financial Statements This section presents the condensed consolidated financial statements, including the statement of profit or loss, financial position, changes in equity, and cash flows Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2021, the Group reported a 41.2% increase in revenue to RMB 22.567 billion, a decline in gross profit margin, and a 4.6% increase in profit attributable to equity holders to RMB 409 million Profit or Loss Statement Summary (RMB millions) | Item | 2021 First Half | 2020 First Half | | :--- | :--- | :--- | | Total Revenue | 22,567 | 15,979 | | Gross Profit | 3,745 | 3,086 | | Profit Before Tax | 812 | 755 | | Profit for the Period | 610 | 573 | | Profit Attributable to Equity Holders of the Company | 409 | 391 | | Basic Earnings Per Share (RMB cents) | 15.54 | 12.87 | Condensed Consolidated Statement of Financial Position As of June 30, 2021, the Group's total assets increased to RMB 56.649 billion, with net current assets rising to RMB 13.442 billion, indicating improved liquidity, despite a significant increase in inventories and bank borrowings Financial Position Statement Summary (RMB millions) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | 56,649 | 53,684 | | Non-current Assets | 14,677 | 14,076 | | Current Assets | 41,972 | 39,608 | | Total Liabilities | 36,717 | 34,693 | | Current Liabilities | 28,530 | 28,091 | | Non-current Liabilities | 8,187 | 6,602 | | Net Assets | 19,932 | 18,991 | | Equity Attributable to Equity Holders of the Company | 17,052 | 16,310 | Condensed Consolidated Statement of Changes in Equity As of June 30, 2021, equity attributable to equity holders of the company increased from RMB 16.310 billion at the beginning of the year to RMB 17.052 billion, primarily driven by profit for the period and fair value gains on equity instruments - Equity attributable to equity holders of the company increased from RMB 16.310 billion at the beginning of 2021 to RMB 17.052 billion at period-end[46] - The primary drivers for the increase in equity were profit for the period (RMB 409 million) and fair value gains on financial assets recognized in other comprehensive income (RMB 445 million)[46] Condensed Consolidated Cash Flow Statement In the first half of 2021, the Group experienced a net cash outflow of RMB 1.403 billion from operating activities, contrasting with a net inflow in the prior year, while financing activities generated a net inflow primarily from new bank loans Cash Flow Statement Summary (RMB millions) | Item | 2021 First Half | 2020 First Half | | :--- | :--- | :--- | | Net Cash (Used in) Generated from Operating Activities | (1,403) | 1,786 | | Net Cash (Used in) Generated from Investing Activities | (202) | 81 | | Net Cash Generated from Financing Activities | 1,755 | 83 | | Net Increase in Cash and Cash Equivalents | 150 | 1,950 | | Cash and Cash Equivalents at Beginning of Period | 8,214 | 4,806 | | Cash and Cash Equivalents at End of Period | 8,385 | 6,827 | Notes to the Condensed Consolidated Financial Statements This section provides detailed notes and disclosures supporting the condensed consolidated financial statements, including segment information, earnings per share, and related party transactions Revenue and Segment Information The Group's revenue is categorized into four reportable segments, with multimedia business being the largest contributor at RMB 13.655 billion, and the modern service and other segment generating the highest profit primarily from property sales 2021 First Half Segment Revenue and Results (RMB millions) | Reportable Segment | External Segment Revenue | Segment Results | | :--- | :--- | :--- | | Multimedia Business | 13,655 | 91 | | Smart System Technology Business | 4,599 | 188 | | Smart Appliances Business | 2,200 | 42 | | Modern Service and Others | 2,113 | 536 | - Within the modern service and other segment, segment results related to 'property sales' amounted to RMB 340 million[62] Dividends and Earnings Per Share The Board resolved not to recommend an interim dividend for the six months ended June 30, 2021, with basic earnings per share at 15.54 RMB cents and diluted earnings per share at 14.44 RMB cents - The Board resolved not to declare an interim dividend for 2021[67] Earnings Per Share Calculation | Item | 2021 First Half | 2020 First Half | | :--- | :--- | :--- | | Profit for Basic EPS Calculation (millions) | 409 | 391 | | Profit for Diluted EPS Calculation (millions) | 380 | 368 | | Weighted Average Number of Ordinary Shares - Basic (shares) | 2,631,476,890 | 3,037,798,995 | Related Party Transactions During the reporting period, the Group engaged in several related party transactions, with sales of finished goods to associates being the largest at RMB 431 million, and total remuneration for directors and key management increasing by 40% - Sales of finished goods to associates amounted to RMB 431 million, more than doubling from the prior period[113] - Total remuneration for directors and key management personnel was RMB 35 million, a 40% increase from RMB 25 million in the prior period[114] Review Report The company's condensed consolidated financial statements for the period have been reviewed by Deloitte Touche Tohmatsu, who found no material non-compliance with accounting standards - The company's auditor, Deloitte Touche Tohmatsu, has reviewed these interim financial statements in accordance with Hong Kong Standard on Review Engagements 2410[119] - The review concluded that the auditor found no matters leading them to believe the condensed consolidated financial statements are not prepared in all material respects in accordance with Hong Kong Accounting Standard 34[119] Corporate Governance and Other Information This section details the company's corporate governance practices, shareholder information, related party transactions, and internal control systems Shareholders' Equity and Share Schemes As of June 30, 2021, major shareholders Mr. Huang Hongsheng and Ms. Lin Weiping collectively held approximately 46.75% equity, while the company had outstanding share options under its 2014 scheme and purchased shares for a new 2020 share award scheme - Major shareholder Mr. Huang Hongsheng and his spouse Ms. Lin Weiping (Executive Director) are deemed to jointly hold approximately 46.75% of the company's share interests[122][123][132] - As of June 30, 2021, a total of 121,498,000 share options remained unexercised under the 2014 Share Option Scheme[134][137] - The company purchased 40,000,000 shares during the period for the 2020 Share Award Scheme, but no award shares have been granted yet[139][145] Related Party Transactions and Compliance During the reporting period, the Group engaged in three ongoing related party transactions, including a sale and leaseback agreement, advisory services, and product sales, with all directors confirming compliance with securities dealing standards - The Group has three continuing related party transactions involving finance leases, advisory services, and product sales, all disclosed as required[141][142] - All directors confirmed compliance with the standard code for securities transactions[144] Board of Directors and Committees The company is committed to high corporate governance standards, with the Board supported by executive, nomination, remuneration, and audit committees that held meetings to fulfill their responsibilities, largely complying with the Corporate Governance Code - The Board has established four committees: Executive, Nomination, Remuneration, and Audit, to assist in fulfilling its responsibilities[147] - During the reporting period, the company largely complied with the code provisions of the Corporate Governance Code, with a deviation only for code provision A.6.7 due to an independent non-executive director's inability to attend the annual general meeting[146] Risk Management and Internal Control The Board affirms its responsibility for maintaining robust internal control systems, supported by a dedicated Risk Management Department that independently assesses operations and reports directly to the Audit Committee, and an Internal Audit Department ensuring compliance across business units - The company has established a Risk Management Department and an Internal Audit Department to ensure the robustness and effective operation of its internal control systems[157][160] - The head of the Risk Management Department has direct access to the Audit Committee and reports directly to the Board and Audit Committee, ensuring independence[158]