双桦控股(01241) - 2020 - 年度财报

Chairman's Report The Group achieved a transformative breakthrough in 2020, resuming operations in March and strategically entering the cold chain logistics industry, while pursuing diversification in energy, environmental, and innovative technologies - In 2020, facing the COVID-19 pandemic, the Group designated the year as a 'transformative breakthrough year' and resumed production and operations in March[8] - The Group made a strategic decision to develop supply chain management business primarily focused on cold storage and cold chain supply, capitalizing on the rapid growth opportunities in China's cold chain logistics industry[8] - The Group will continue to seek acquisition, investment, or joint venture opportunities in energy saving, environmental protection, innovative technologies, and supply chain services to achieve business diversification and profit growth[10] Management Discussion and Analysis Business Review The Group focused on automotive HVAC components and supply chain management, achieving significant revenue growth to RMB 63.8 million in automotive parts and narrowing losses, while formally entering the cold chain business with its first operational cold storage area - The Group's business is divided into two segments: trading, manufacturing, and R&D of automotive HVAC components; and the newly added supply chain management business for cold storage and cold chain supply[12] - The Group introduced Fuzhou Anda by selling a 40% equity stake in Shuanghua Supply Chain to jointly develop cold storage services, and established a joint venture with Shanghai Lidaxing to expand into the supply chain services industry[15][16] - The first cold storage area has been completed and put into operation, laying the foundation for the Group's supply chain management business development[16] Outlook and Strategies The Group will focus on four core strategies: deepening its presence in the domestic automotive aftermarket, expanding cold storage and cold chain supply, developing refrigerated vehicle business leveraging its refrigeration system expertise, and building an IoT cold chain ecosystem to enhance competitiveness and achieve long-term sustainable growth - Continuously deepen presence in the domestic automotive aftermarket, strengthening cooperation with major distributors and developing secondary and tertiary sales networks[19][21] - Focus on developing cold storage and cold chain supply businesses to meet the rapidly growing market demand from fresh food e-commerce and other sectors[20][22] - Leverage existing technology and experience to develop HVAC and refrigeration systems for refrigerated vehicles, and seek cooperation with major OES partners[23] - Plan to build an IoT-enabled supply chain ecosystem from farm to table, extending services to cold chain processing, transportation, and e-commerce to achieve business upgrades[24] Financial Review In fiscal year 2020, the Group's financial performance significantly improved, with total revenue growing 123.1% year-on-year to RMB 63.8 million, driven by high-margin products like compressors in the domestic market, turning gross profit from a RMB 5.7 million loss to a RMB 9.6 million gain, and narrowing net loss attributable to owners from RMB 31.4 million to RMB 5.2 million Revenue by Product and Region for Fiscal Year 2020 | Category | Product | 2020 Revenue (RMB Thousand) | Share | 2019 Revenue (RMB Thousand) | Share | | :--- | :--- | :--- | :--- | :--- | :--- | | Domestic | Subtotal | 58,522 | 91.7% | 25,156 | 87.9% | | | Compressors | 21,680 | 34.0% | – | – | | | Evaporators | 15,278 | 23.9% | 16,657 | 58.2% | | | Condensers | 10,901 | 17.1% | 6,978 | 24.4% | | | Others | 10,663 | 16.7% | 1,521 | 5.3% | | International | Subtotal | 5,271 | 8.3% | 3,460 | 12.1% | | | Compressors | 4,391 | 6.9% | – | – | | | Others | 880 | 1.4% | 3,460 | 12.1% | | Total | | 63,793 | 100.0% | 28,616 | 100.0% | - Gross profit turned from a RMB 5.7 million gross loss in 2019 to a RMB 9.6 million gross profit in 2020, with gross margin improving from -19.9% to 15.0%, primarily due to increased sales of high-margin products such as compressors[28] - Administrative expenses decreased by 12.2% year-on-year to RMB 25.9 million, mainly due to reduced consulting fees and employee termination benefits[32] - Loss attributable to owners of the Company significantly decreased from RMB 31.4 million in 2019 to RMB 5.2 million in 2020[37] Liquidity and Financial Resources As of the end of 2020, the Group maintained a sound financial position with no bank borrowings, and cash and equivalents, restricted deposits, and financial assets totaling approximately RMB 121.9 million, while net current assets decreased from RMB 170.8 million to RMB 134.4 million, and operating efficiency significantly improved with reduced inventory and accounts receivable turnover days - As of December 31, 2020, the Group had no bank borrowings, with cash, restricted time deposits, and financial assets totaling approximately RMB 121.9 million[40] Changes in Working Capital Turnover Days | Indicator | 2020 (Days) | 2019 (Days) | Reason for Change | | :--- | :--- | :--- | :--- | | Average inventory turnover days | 140 | 308 | Increased inventory sales | | Average accounts receivable and bills receivable turnover days | 116 | 359 | Increased sales revenue, overall turnover rate improved | | Average accounts payable and bills payable turnover days | 110 | 156 | Management accelerated repayment speed | Capital Expenditure, Commitments, and Human Resources Capital expenditure significantly increased to RMB 49.1 million this year, primarily for new machinery and construction in progress, while the number of employees grew from 64 to 140 to support business expansion, with total remuneration (excluding directors) of approximately RMB 9.4 million, and the Group strictly adheres to labor laws, providing comprehensive social insurance and benefits - Capital expenditure was approximately RMB 49.1 million, a significant year-on-year increase, primarily for new machinery and construction in progress[44] - By year-end, the Group's total number of employees increased from 64 to 140[44] Significant Investments, Acquisitions, and Disposals This year, the Group executed two key strategic transactions to establish its supply chain business: selling a 40% equity stake in Shuanghua Supply Chain to independent third-party Fuzhou Anda to introduce industry expertise, and forming a joint venture, Lidaxing Supply Chain, with Shanghai Lidaxing, holding a 70% stake, to expand Shanghai-centric supply chain services - Disposed of a 40% equity stake in Shuanghua Supply Chain to Fuzhou Anda for RMB 1 and payment of unpaid capital contribution of RMB 8.0 million, aiming to jointly develop cold storage business[46] - Established a joint venture, Lidaxing Supply Chain, with Shanghai Lidaxing, with the Group contributing RMB 10.5 million and holding a 70% equity stake, making it an indirect non-wholly owned subsidiary[46] Other Financial Information The Group, primarily operating in China, faces RMB exchange rate fluctuations against HKD and USD without hedging, had no significant contingent liabilities or asset pledges at year-end, fully utilized the remaining RMB 10.0 million IPO proceeds, and the Board recommended no final dividend, while post-reporting period, the Group increased its equity stake in Anhui Shuanghua - The remaining IPO proceeds of approximately RMB 10.0 million were fully utilized this year for plant facilities, equipment upgrades, and general working capital[55] - The Board recommended no final dividend for the year ended December 31, 2020[56] - Subsequent to the reporting period, on February 10, 2021, the Group acquired approximately 13.51% equity interest in Anhui Shuanghua for RMB 4.6 million in cash[57] Directors' Report Principal Risks and Uncertainties The Group faces principal risks including macroeconomic changes impacting product demand, policy impacts on automotive sales, intense industry competition, operational risks from internal processes or external events, and financial risks such as credit, foreign exchange, and liquidity, which management continuously monitors and addresses - The Group faces multi-faceted risks including macroeconomic, policy and regulatory, intense competition, operational, and financial risks[63] Directors' and Equity Interests The Board of Directors remained stable during the reporting period, with Chairman and CEO Mr. Zheng Ping holding a 43.5% stake through Youshen Group as the controlling shareholder, his spouse Ms. Kong Xiaoling (Non-executive Director) deemed to have the same interest, and Ms. Zhou Shuxian and Mr. Xu Zonglin holding 18.5% and 9.1% respectively as major shareholders Shareholding of Directors and Major Shareholders (as at December 31, 2020) | Shareholder Name/Entity | Capacity/Relationship | Number of Shares | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zheng Ping | Executive Director, held through Youshen Group | 282,750,000 | 43.5% | | Ms. Kong Xiaoling | Non-executive Director, spouse of Mr. Zheng Ping | 282,750,000 | 43.5% | | Youshen Group | Controlling Shareholder (wholly owned by Mr. Zheng Ping) | 282,750,000 | 43.5% | | Ms. Zhou Shuxian | Major Shareholder | 120,160,000 | 18.5% | | Mr. Xu Zonglin | Major Shareholder | 59,144,000 | 9.1% | Major Customers and Suppliers This year, the Group experienced high customer and supplier concentration, with the largest customer accounting for 39.1% of total sales and the top five customers collectively 68.5%, while the largest supplier accounted for 23.0% of total purchases and the top five suppliers collectively 87.5%, maintaining good relationships with most major partners for over five years Customer and Supplier Concentration | Category | Share | | :--- | :--- | | Sales | | | Largest Customer | 39.1% | | Top Five Customers Total | 68.5% | | Purchases | | | Largest Supplier | 23.0% | | Top Five Suppliers Total | 87.5% | Biographies of Directors and Senior Management Biographies of Directors and Senior Management This section details the personal biographies of the Company's executive directors, non-executive directors, independent non-executive directors, and senior management, covering their age, positions, professional backgrounds, industry experience, and key responsibilities within the Group, notably with Mr. Zheng Ping, the Group's founder, serving as an executive director, alongside his daughter Ms. Zheng Fei and spouse Ms. Kong Xiaoling on the Board - Mr. Zheng Ping, the Group's founder, serves as Executive Director, Chairman, and Chief Executive Officer, responsible for the Group's overall development strategy[111] - Ms. Zheng Fei (daughter of Mr. Zheng Ping) is an Executive Director and Vice President, responsible for overseeing business operations and strategy execution[112] - Ms. Kong Xiaoling (spouse of Mr. Zheng Ping) is a Non-executive Director, responsible for monitoring the Board and providing advice[115] Corporate Governance Report Board and Committee Operations This year, the Company complied with most Corporate Governance Code provisions, with a deviation where the Chairman and CEO roles were combined by Mr. Zheng Ping, while the Board, comprising 7 members including 3 independent non-executive directors, held 7 meetings, and its Nomination, Remuneration, and Audit Committees, all chaired by independent non-executive directors, convened regularly to fulfill their duties - The Company deviated from Corporate Governance Code provision A.2.1, with the roles of Chairman and Chief Executive Officer combined by Mr. Zheng Ping, a structure the Board believes facilitates swift decision-making[124][131] - The Board has a Nomination Committee, Remuneration Committee, and Audit Committee, all chaired by independent non-executive directors, which held 2, 2, and 5 meetings respectively during the year[144][149][150] Risk Management and Internal Control The Board holds ultimate responsibility for the Group's risk management and internal control systems, reviewing their effectiveness, and has established control procedures, including organizational structure and authorization, to safeguard assets, ensure compliance, and maintain financial information reliability, with the Audit Committee assisting in two annual reviews, concluding the systems operated effectively without significant risks or non-compliance this year - The Board is responsible for the Group's risk management and internal control systems and reviews their effectiveness annually[156] - As of the end of 2020, the Group's risk management and internal control systems operated effectively, with no material breaches or significant risks identified[156] Environmental, Social and Governance (ESG) The Group is committed to sustainable development, demonstrating environmental efforts through improved production processes and waste treatment facilities, resulting in reduced unit product consumption of electricity, water, and packaging in 2020, while socially, it strictly adheres to labor regulations, ensures employee health, safety, and development training, established supply chain management procedures, and actively participates in community investment through various donations to charities, disaster areas, and research institutes over the years Changes in Energy and Resource Consumption | Year | Unit Electricity Consumption (kWh/unit) | Unit Water Consumption (tons/unit) | Unit Packaging Consumption (kg/unit) | | :--- | :--- | :--- | :--- | | 2019 | 6.74 | 0.09 | 0.63 | | 2020 | 5.06 | 0.03 | 0.32 | - As of the end of 2020, the Group had a total of 140 employees, comprising 56 females and 84 males, with no work-related injuries or fatalities reported during the year[173][176] - The Group strictly adheres to labor standards, prohibiting child and forced labor, and provides comprehensive social insurance and benefits to employees[178] - The Group actively fulfills its social responsibilities, donating RMB 2,000,000 to the 'Huangshan United Institute of Applied Technology' in 2019[186] Independent Auditor's Report Independent Auditor's Report Auditor BDO Limited issued an unmodified opinion on the Group's consolidated financial statements for the year ended December 31, 2020, affirming they present a true and fair view of the Group's financial position and performance, highlighting key audit matters including impairment assessment of property, plant and equipment and right-of-use assets, and impairment provision for inventories, both involving significant management judgment and estimation - The auditor issued an unmodified opinion on the 2020 consolidated financial statements[195] - Key audit matters include: - Impairment of property, plant and equipment and right-of-use assets: Management is required to assess impairment when indicators arise, involving significant judgments on future cash flows and discount rates - Impairment provision for inventories: Determining the net realizable value of inventories and provisions for obsolescence involves significant management judgment and estimation[199][201] Consolidated Financial Statements Consolidated Statement of Profit or Loss In fiscal year 2020, the Group's revenue grew 123.1% year-on-year to RMB 63.8 million, with gross profit turning from a RMB 5.7 million loss to a RMB 9.6 million gain, and annual loss significantly narrowed from RMB 31.5 million to RMB 7.1 million, while loss attributable to owners of the parent company narrowed from RMB 31.4 million to RMB 5.2 million Consolidated Statement of Profit or Loss Summary (For the year ended December 31) | Indicator (RMB Thousand) | 2020 | 2019 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 63,793 | 28,616 | +123.1% | | Gross Profit/(Loss) | 9,597 | (5,738) | Turned to Profit | | Loss before tax | (8,008) | (33,099) | Loss narrowed 75.8% | | Loss for the year | (7,127) | (31,548) | Loss narrowed 77.4% | | Loss attributable to owners of the parent | (5,153) | (31,377) | Loss narrowed 83.6% | | Basic loss per share | RMB (0.8) cents | RMB (4.8) cents | - | Consolidated Statement of Financial Position As of the end of 2020, the Group's total assets slightly increased to RMB 383 million, with non-current assets rising to RMB 207 million due to increased property, plant, and equipment, while current assets decreased to RMB 176 million mainly due to reduced restricted time deposits, total liabilities increased to RMB 43.4 million, and net assets remained stable at approximately RMB 339 million Consolidated Statement of Financial Position Summary (As at December 31) | Indicator (RMB Thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Assets | | | | Total non-current assets | 207,149 | 169,708 | | Total current assets | 175,672 | 195,548 | | Total Assets | 382,821 | 365,256 | | Liabilities and Equity | | | | Total current liabilities | 41,231 | 24,787 | | Total non-current liabilities | 2,205 | 2,208 | | Total Liabilities | 43,436 | 26,995 | | Net Assets | 339,385 | 338,261 | | Equity attributable to owners of the parent | 333,327 | 333,429 | | Non-controlling interests | 6,058 | 4,832 | | Total Equity | 339,385 | 338,261 | Consolidated Statement of Cash Flows In fiscal year 2020, the Group's net increase in cash and cash equivalents was RMB 1.7 million, with cash outflow from operating activities significantly improving from a net outflow of RMB 18.0 million to RMB 0.7 million, and investing activities shifting from a net outflow of RMB 73.8 million to a net inflow of RMB 3.4 million, primarily due to a substantial decrease in restricted time deposits, while cash outflow from financing activities remained low Consolidated Statement of Cash Flows Summary (For the year ended December 31) | Indicator (RMB Thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Net cash flows used in operating activities | (658) | (17,995) | | Net cash flows from/(used in) investing activities | 3,383 | (73,779) | | Net cash flows used in financing activities | (1,062) | (1,337) | | Net increase/(decrease) in cash and cash equivalents | 1,663 | (93,111) | | Cash and cash equivalents at beginning of year | 17,995 | 109,825 | | Cash and cash equivalents at end of year | 19,587 | 17,995 | Five-Year Financial Summary Five-Year Financial Summary This section provides a summary of the Group's key financial data for five consecutive fiscal years from 2016 to 2020, showing a continuous decline in revenue from 2016 to 2019 followed by a strong rebound in 2020, with the lowest annual loss in 2020 despite losses in all five years, while total assets remained relatively stable and total liabilities rebounded in 2020 Five-Year Financial Data Summary (RMB Thousand) | Indicator | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 120,749 | 83,751 | 55,166 | 28,616 | 63,793 | | Gross Profit/(Loss) | 12,307 | 11,428 | 10,853 | (5,738) | 9,597 | | Loss for the year | (16,346) | (17,187) | (13,245) | (31,548) | (7,127) | | Total Assets | 448,111 | 430,317 | 409,175 | 365,256 | 382,821 | | Total Liabilities | (50,737) | (51,990) | (44,368) | (26,995) | (43,436) |