国际精密(00929) - 2019 - 年度财报

Company Information This section provides essential administrative and contact information, including board members, committee structures, registered office, key operating locations (Hong Kong, China, Thailand), principal bankers, and auditor details - The Board of Directors comprises executive, non-executive, and independent non-executive directors, with established audit, remuneration, nomination, and environmental, social, and governance committees[4] - The company's auditor is KPMG[16] - The company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited under stock code 929[23] Company Profile International Precision Group Limited, incorporated in the Cayman Islands in 2002, operates as an investment holding company with subsidiaries primarily engaged in manufacturing and selling precision metal parts for automotive, hydraulic, HDD, and electronics industries, serving top-tier multinational clients - The company was incorporated in the Cayman Islands on July 10, 2002, with its principal business being the manufacturing and sale of precision metal parts[25] - Products are applied in automotive parts, hydraulic equipment, hard disk drives (HDD), electronics, and other instruments[25] - Clients are primarily top-tier multinational corporations in the IT, hydraulic power, automotive, and electrical appliance industries, demanding high precision for metal parts[25] Company Milestones The company's milestones highlight its development since 1990 in business expansion, technological innovation, and industry certifications, including establishing operations in Singapore, Thailand, and China, listing on the HKEX in 2004, developing proprietary robotic arms, achieving IATF16949 certification, and securing council member status in the China Robot Industry Alliance with a strategic partnership with Zhejiang University - Precision parts business commenced in Singapore in 1990, with subsidiaries progressively established in Thailand and China[27] - Listed on the Main Board of The Stock Exchange of Hong Kong Limited on November 1, 2004[27] - Successfully developed proprietary robotic arms in 2015 and obtained IATF16949 automotive certification in 2017-2018[27] - Appointed as a council member of the China Robot Industry Alliance and the first council member of the Guangdong Robot Association in 2019, also signing a strategic cooperation agreement with Zhejiang University South China Industrial Technology Research Institute[27] Group Structure The group structure chart illustrates the complex hierarchy of the company and its principal subsidiaries and associates as of December 30, 2019, with the Cayman Islands-based investment holding company controlling manufacturing, sales, and technology development entities in China (Guangzhou, Shenzhen, Dongguan, Jiangsu) and Thailand through various BVI and Hong Kong investment holding companies, covering precision metal parts manufacturing, surface treatment, intelligent manufacturing, and robotics manufacturing - International Precision Group Limited (Cayman Islands) is an investment holding company with multiple BVI and Hong Kong investment holding subsidiaries[29][30][33] - Key operating entities are located in China (Guangzhou Xinhao Precision Technology, Dongguan Keda Hardware Products, Jiangsu Keda Precision Machinery Equipment, Shenzhen Intelligent Manufacturing Technology, etc.) and Thailand (Integrated Precision Engineering (Thailand) Company Limited), engaged in manufacturing, sales, and technology development[30][33] - The Group's business encompasses diversified areas such as precision metal parts manufacturing, sales offices, technology development offices, surface treatment, and robotics manufacturing[30][33] Financial Highlights In FY2019, the Group faced severe challenges, with revenue decreasing by 13.9% to HK$812 million and gross profit significantly declining by 37.8% to HK$181 million, resulting in a 51.3% year-on-year decrease in profit for the year to HK$41.11 million; despite profit pressure, the current ratio improved to 7.93 and net cash to equity ratio increased to 0.34, indicating enhanced liquidity, with Mainland China, Macau, and Hong Kong contributing the largest share of regional revenue at 39% 2019 Key Financial Data (Consolidated Statement) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 812,177 | 943,476 | (131,299) | -13.9% | | Cost of sales | (631,249) | (652,687) | 21,438 | -3.3% | | Gross profit | 180,928 | 290,789 | (109,861) | -37.8% | | Other income | 19,913 | 8,557 | 11,356 | 132.7% | | Distribution costs | (15,959) | (26,535) | 10,576 | -39.9% | | Administrative and other expenses | (123,524) | (152,887) | 29,363 | -19.2% | | Finance costs | (14,430) | (18,471) | 4,041 | -21.9% | | Share of loss of associates | 1,650 | (1,271) | 2,921 | N/A | | Profit before tax | 48,578 | 100,182 | (51,604) | -51.5% | | Income tax | (7,467) | (15,720) | 8,253 | -52.5% | | Profit for the year | 41,111 | 84,462 | (43,351) | -51.3% | | Attributable to equity holders of the Company | 40,345 | 85,328 | (44,983) | -52.7% | | Earnings per share – Basic | 3.83 HK cents | 8.11 HK cents | (4.28) HK cents | -52.8% | 2019 Key Financial Ratios | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Current ratio | 7.93 | 2.59 | | Net cash to equity ratio | 0.34 | 0.24 | | Gearing ratio | 15.1% | 25.8% | | Gross profit margin | 22.3% | 30.8% | | Net profit margin | 5.1% | 9.0% | | Net asset value per share (HK$) | 1.63 | 1.61 | | Dividend per share (HK cents) | 0.50 | 0.90 | 2019 Regional Revenue Breakdown | Region | Percentage | | :--- | :--- | | Mainland China, Macau and Hong Kong | 39% | | North America | 23% | | Europe | 23% | | Malaysia | 9% | | Thailand | 4% | | Others | 2% | - As of December 31, 2019, cash and cash equivalents amounted to HK$847 million, total debt was HK$258 million, and total equity was HK$1.716 billion, indicating an improved net cash to equity ratio[47] Chairman's Report The Chairman's Report reviews the challenging operating environment in 2019, including a sharp decline in HDD business, a sluggish global automotive market, and the impact of US-China trade friction, leading to a significant drop in overall turnover and gross profit; in response, the Group implemented various measures such as relocating production lines to Thailand to mitigate tariffs, expanding into the 3C market, developing new domestic clients, optimizing procurement, improving production processes and automation, and strengthening industry-academia collaboration, with future strategies focusing on "promoting transformation, preventing risks, and enhancing efficiency" through sales growth, cost control, and talent development 2019 Turnover by Business Segment (vs. 2018) | Business Segment | 2019 (HK$ thousand) | 2018 (HK$ thousand) | Change % | | :--- | :--- | :--- | :--- | | Automotive Parts | 449,302 | 465,070 | -3.4% | | Hydraulic Equipment Parts | 228,038 | 263,476 | -13.5% | | HDD Parts | 92,452 | 165,964 | -44.3% | | Others | 42,385 | 48,966 | -13.4% | | Total | 812,177 | 943,476 | -13.9% | - HDD parts turnover declined by 44.3% year-on-year, and US-China trade friction led to a 20.0% decrease in sales to US customers[50][51] - Gross profit decreased by 37.8% year-on-year to HK$181 million, primarily due to declining orders and underutilized production capacity[52] - Proactive measures were taken: relocating some product lines to Thailand to avoid tariffs; reallocating idle resources to target the 3C market; developing new domestic clients (e.g., Hengli Hydraulic); and expanding new suppliers to reduce costs and enhance supply chain flexibility[54] - Strengthened industry-academia collaboration with Tsinghua University, Zhejiang University, and South China University of Technology to develop harmonic reducers, hydraulic technology, and industrial automation equipment[56] - Established an internal audit department to enhance cost control and actively applied for government support policies and tariff exemptions[56] - Future operating strategies will continue to focus on "promoting transformation, preventing risks, and enhancing efficiency," prioritizing sales growth, strengthening cost control, optimizing financial analysis and auditing, and continuously enhancing talent development[59][60] Management Discussion and Analysis Management discussion and analysis details the 2019 financial performance, with turnover decreasing by 13.9% due to a sharp decline in HDD parts orders and gross profit margin significantly falling due to unachieved economies of scale; however, other income substantially increased from bank interest, government grants, and accounts receivable reversals, while the Group effectively controlled selling and distribution expenses, administrative expenses, and finance costs; liquidity improved with increased net cash inflow from operating activities, reduced capital expenditure, and a significant decrease in total bank borrowings, leading to a substantial increase in net cash and a more robust financial position; human resources focused on employee safety, welfare, and talent development - 2019 turnover was HK$812 million, a 13.9% year-on-year decrease, primarily impacted by the sharp decline in HDD parts orders[64] - Gross profit margin decreased from 30.8% in 2018 to 22.3% in 2019, with gross profit declining by 37.8% year-on-year[64] - Other income increased to HK$19.913 million (2018: HK$8.557 million), mainly due to increased bank interest income (HK$4.74 million), government grants (HK$3.361 million), and accounts receivable reversals (HK$2.079 million)[64] - Selling and distribution expenses decreased by 39.9%, primarily due to a HK$7.027 million refund of US import tariffs on parts[65] - Administrative and other expenses saved 19.2%, mainly due to reduced share option amortization, salaries, and directors' emoluments, but offset by an increase in exchange losses of HK$13.016 million[67] - Finance costs decreased by 21.8% to HK$14.43 million, attributed to reduced financing amounts and lower borrowing interest rates[67] - Net cash inflow from operating activities was HK$229 million (2018: HK$180 million), and net cash outflow from investing activities significantly decreased by HK$79.27 million[69] - Total bank borrowings decreased by HK$178 million to HK$258 million, and net cash increased by HK$185 million to HK$589 million, enhancing the Group's financial resilience in adverse conditions[70] - The total number of employees decreased by 140 (5.9%) to 2,229 in 2019, with the Group continuously strengthening employee safety awareness, recreational activities, and team building, while collaborating with universities to cultivate talent[73] Directors and Senior Management This section details the biographies of the Group's Board members, including executive, non-executive, and independent non-executive directors, and senior management; Board members possess extensive professional backgrounds and management experience in economics, finance, accounting, and mechanical engineering, with independent non-executive directors having deep expertise in their respective fields, while senior management brings years of experience in marketing, manufacturing, and financial management, collectively supporting the Group's operations and strategic development - Executive Directors include Mr. Zeng Guangsheng (Chairman and CEO, Doctor of Economics) and Mr. Wu Kaiping (responsible for financial management, Master of Economics, MBA)[75][76] - Non-Executive Directors include Ms. Zeng Jing (Financial Controller of Asset Management at China Baoan Group) and Mr. Chen Kuangguo (Executive Deputy General Manager of Financial Investment Department at China Baoan Group)[77] - Independent Non-Executive Directors include Mr. Yang Rusheng (Chairman of the Audit Committee, Certified Public Accountant, Tax Agent), Mr. Zhang Zhenyu (Chairman of the Remuneration Committee, Senior Accountant of CPA Australia, ESG Analyst), Mr. Mei Weiyi (MBA, investment management experience), and Mr. Xu Bing (Doctor of Mechanical Engineering, Professor at Zhejiang University, Director of State Key Laboratory of Fluid Power and Mechatronic Systems)[79][80][82][83] - Senior management includes Mr. He Ruhai and Mr. Liu Zhaocong (Vice Presidents of Marketing), Mr. Jiang Fei (Deputy General Manager, Head of Heat Treatment Department), and Mr. Tam Yiu Chung (Chief Financial Officer and Company Secretary)[85][86] Corporate Governance Report The Corporate Governance Report outlines the company's commitment to good corporate governance and its compliance with the HKEX Corporate Governance Code, noting a deviation where the Chairman and CEO roles are combined, which the Board believes provides strong and consistent leadership; the report details the Board's responsibilities, composition, director training, securities dealing code, and the terms of reference and 2019 work of the Executive, Remuneration, Audit, Nomination, and Environmental, Social and Governance Committees, also emphasizing directors' responsibilities for financial reporting, risk management, internal controls, and communication policies with shareholders and investors - The company complies with the Corporate Governance Code, though the roles of Chairman and Chief Executive Officer are combined under Mr. Zeng Guangsheng, which the Board believes provides strong and consistent leadership[89][96] - The Board of Directors comprises two executive directors, two non-executive directors, and four independent non-executive directors, meeting the Listing Rules' requirement for independent non-executive directors[93][94] - Executive, Remuneration, Audit, Nomination, and Environmental, Social and Governance Committees are established, each with written terms of reference[93][110] - The Remuneration Committee reviewed the remuneration policy in 2019 and made recommendations on the remuneration of newly appointed directors[113] - The Audit Committee reviewed annual and interim financial results, the scope of audit work, and assessed the effectiveness of risk management and internal control systems in 2019[117] - The Nomination Committee reviewed the Board structure, assessed the independence of independent non-executive directors, and made recommendations for new director appointments in 2019, emphasizing Board diversity[124] - The Environmental, Social and Governance Committee was established on November 25, 2019, to strengthen the Group's risk management and fulfillment of social responsibilities[126] - The Board confirmed it has reviewed the effectiveness of the Group's risk management and internal control systems and considers them effective and adequate[133] - In 2019, audit service fees paid to external auditor KPMG amounted to HK$1.8 million, and non-audit service fees were HK$0.733 million[136] - The company has a shareholder communication policy and a dividend policy, providing shareholders with the right to convene extraordinary general meetings and propose resolutions[141][143] Environmental, Social and Governance Report This report, the Group's fourth ESG report, covers the 2019 ESG performance of its main operating locations in Guangzhou, Dongguan, China, and Bangkok, Thailand, emphasizing the Group's commitment to sustainable development and the establishment of an ESG Committee for systematic risk management; environmentally, the Group strictly complies with regulations, reducing total greenhouse gas emissions by 8% in 2019 and implementing various energy and water-saving measures; socially, the Group adheres to labor laws, prioritizes employee welfare, health and safety, development training, and actively engages in community investment, while also establishing robust policies and practices for supply chain management, product responsibility, data protection, intellectual property, and anti-corruption Scope and Reporting Period This is the fourth Environmental, Social and Governance (ESG) report for International Precision Group Limited, covering the environmental and social performance of the Group's main operating locations in Guangzhou, Dongguan, China, and Bangkok, Thailand, from January 1 to December 31, 2019, which collectively account for over 90% of the Group's total revenue - This is the Group's fourth ESG report, covering the period from January 1 to December 31, 2019[147] - The report's scope includes manufacturing and sales offices in Guangzhou, Dongguan, China, and Bangkok, Thailand, accounting for over 90% of the Group's total revenue[147] Stakeholder Engagement and Materiality The Group maintains close communication with key stakeholders, including Board members, management, employees, customers, and suppliers, through daily interactions to understand their needs and concerns; the 2019 stakeholder survey identified product and service quality, data protection, customer service, anti-corruption, and occupational health and safety as the most material social issues, with suggestions including establishing an ESG committee, extending lunch breaks, implementing stricter supplier evaluations, addressing excessive employee working hours, optimizing logistics efficiency, and implementing waste recycling - The Group maintains continuous communication with key stakeholders, including Board members, managers, supervisors, frontline employees, customers, and suppliers[148] - The 2019 stakeholder survey confirmed that the most material issues are concentrated in social aspects, including product and service quality, data protection, customer service, anti-corruption, and occupational health and safety[148] - Stakeholder suggestions included establishing a Sustainability and ESG Committee, extending lunch breaks, implementing stricter evaluation procedures for key suppliers, addressing excessive employee working hours, optimizing logistics efficiency, and implementing waste recycling[151][152][153] The Group's Sustainability Mission and Vision The Group is committed to achieving an optimal balance between maximum profit, responsibility, and satisfaction for stakeholders, encouraging waste reduction and energy and water conservation; in 2019, a formal Environmental, Social and Governance Committee was successfully established to identify ESG risks, implement policies, and track performance; the Group continuously pursues management excellence, obtaining multiple system certifications (e.g., IATF16949, AS9100, ISO9001, ISO14001), and gaining community recognition for R&D and technological advancements, including appointment as a council member of the China Robot Industry Alliance and hosting the "International Precision Quality Month" - The Group is committed to achieving the overall best balance between maximum profit, responsibility, and satisfaction for stakeholders, and encourages waste reduction, electricity, and water conservation[161] - In 2019, a formal Environmental, Social and Governance Committee was successfully established, responsible for identifying ESG risks, implementing policies, and tracking performance[161](index=161&type