未来机器有限公司(01401) - 2021 - 中期财报

Corporate Information Core Corporate Information This chapter provides essential company details, including key personnel, board committees, auditors, and principal operational contacts - Mr. Li Chengjun serves as Chairman and Chief Executive Officer, and Mr. Xiong Bin serves as Vice Chairman[2] - The company's auditor is Shinewing (Hong Kong) CPA Limited[3] Business Review and Prospects Business Review In the first half of 2021, the Group faced challenges despite economic recovery, with revenue growing 6.3% to RMB 911.7 million, but rising raw material costs and increased R&D expenses led to a net loss of RMB 34.1 million Performance Highlights for H1 2021 | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Revenue (million RMB) | 911.7 | 857.6 | | Net (Loss)/Profit for the Period (million RMB) | (34.1) | 12.6 | | (Loss)/Earnings Per Share (RMB cents) | (3.39) | 1.27 | - The Group's overall gross profit margin decreased from 10.1% to approximately 7.4% due to a significant increase in raw material costs, particularly for mobile phone chips and screens, caused by global electronic component shortages[7][10] - To maintain market competitiveness, the Group increased R&D investment in its own-brand products and IoT-related products, with R&D expenses growing by 21.7% year-on-year[7][10] - To address financial performance, the Group has implemented measures such as increasing raw material inventory, controlling costs, and communicating with customers to secure orders[11][12] Outlook and Strategy Looking ahead, the Group anticipates that the rapid global rollout of 5G networks will drive demand for smartphones and IoT-related products, leading to a cautious business development strategy focused on expanding capacity, enhancing R&D, diversifying product portfolios, and strengthening sales and marketing for geographical diversification - The Directors believe that the rapid rollout of 5G telecommunication networks globally will drive demand for smartphones and IoT-related products[12][13] - The Group's future strategies include gradually increasing production capacity, enhancing R&D capabilities, enriching product portfolios, and strengthening sales and marketing efforts to achieve geographical diversification[14][15] Management Discussion and Analysis Financial Review This chapter analyzes the Group's H1 2021 financial performance, noting a 6.3% revenue increase driven by India, offset by China's IoT sales decline, a significant gross margin drop due to rising costs, increased expenses, a net loss, and an increased gearing ratio Revenue Total revenue for H1 2021 increased by 6.3% to RMB 911.7 million, primarily driven by mobile phone sales in India, while IoT product sales in China declined Revenue by Product Category (RMB thousands) | Product Category | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Smartphones | 511,145 | 407,425 | | Feature Phones | 94,592 | 131,144 | | Mobile Phones Subtotal | 605,737 | 538,569 | | Printed Circuit Board Assemblies (PCBAs) | – | 58,401 | | IoT-related Products | 202,932 | 236,975 | | Others | 103,068 | 23,635 | | Total | 911,737 | 857,580 | Revenue by Geographical Location (RMB thousands) | Region | H1 2021 | H1 2020 | | :--- | :--- | :--- | | India | 481,537 | 280,104 | | Bangladesh | 107,585 | 107,387 | | China | 304,374 | 449,006 | | Pakistan | 1,069 | 13,819 | | Algeria | 8,071 | 7,003 | | Others | 9,101 | 261 | | Total | 911,737 | 857,580 | - Revenue from India significantly increased by 71.9%, primarily due to production and delivery delays caused by the pandemic in H1 2020, coupled with sustained demand in H1 2021[23][25] - Revenue from China decreased by 32.2%, mainly because the delivery schedules for IoT-related products for some major customers were rescheduled to H2 2021[27][31] Gross profit and gross profit margin The Group's gross profit decreased by 22.4% to RMB 67.4 million, with the gross profit margin falling from 10.1% to 7.4%, primarily due to significantly increased raw material costs caused by global electronic component shortages in H1 2021 - Gross profit decreased by 22.4% from RMB 86.8 million to RMB 67.4 million compared to the same period last year[29][32] - Gross profit margin decreased from 10.1% to 7.4%, mainly attributable to increased raw material costs due to global electronic component shortages[29][32] Expenses In H1 2021, the Group's other income and revenue decreased by 40.2% due to reduced government subsidies, while sales expenses increased by 41.7% from higher India sales, administrative expenses decreased by 10.3%, R&D expenses rose by 21.7% due to increased investment and employee benefits, and finance costs slightly increased by 14.8% - Other income and revenue decreased by 40.2% to RMB 17.4 million, mainly due to reduced government grants and fair value gains on financial assets[30][33] - Sales expenses increased by 41.7% to RMB 20.4 million, driven by higher transportation and customs clearance fees due to an increased proportion of sales to India[34][37] - R&D expenses increased by 21.7% to RMB 61.8 million, primarily due to increased employee retirement benefit contributions and greater resource allocation to R&D for own-brand and IoT products[36][39] - Finance costs increased by 14.8% to RMB 3.1 million, mainly due to higher interest on discounted bills financing and factoring loans[40][44] Loss/profit for the period Considering the aforementioned factors, the Group recorded a net loss of RMB 34.1 million in H1 2021, a stark contrast to the net profit of RMB 12.6 million reported in the same period of 2020 - The Group recorded a net loss of RMB 34.1 million for the six months ended June 30, 2021[42][46] - This compares to a net profit of RMB 12.6 million for the six months ended June 30, 2020[42][46] Capital Structure, Liquidity, Financial Resources and Gearing As of June 30, 2021, the Group's net current assets were RMB 204.7 million and cash and cash equivalents were RMB 51.3 million, with the gearing ratio increasing from 0.2 to 0.4 and the current ratio decreasing from 1.3 times to 1.2 times, primarily funded by internal resources, borrowings, and IPO proceeds Key Financial Ratios and Liquidity Indicators | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Net Current Assets (million RMB) | 204.7 | 232.1 | | Cash and Cash Equivalents (million RMB) | 51.3 | 26.3 | | Borrowings (million RMB) | 106.8 | 53.5 | | Current Ratio (times) | 1.2 | 1.3 | | Gearing Ratio | 0.4 | 0.2 | Future Plan for Material Investments and Capital Assets The Group plans to establish an intelligent equipment R&D headquarters in Shanghai Lingang New Area with a fixed asset investment of at least RMB 120 million, currently in preliminary planning, with land bidding expected in H1 2022, while continuing R&D to enrich mobile and IoT product lines - The company's indirect wholly-owned subsidiary, Hemiao Chuangxian, entered into an investment agreement with the Shanghai Lingang New Area Administration Committee to establish an intelligent equipment R&D headquarters[52][54] - The fixed asset investment for this project will be no less than RMB 120 million[52][54] - As of June 30, 2021, this investment is in the preliminary planning stage, with public bidding for the relevant land expected in H1 2022[52][54] Use of Proceeds from IPO The company, listed in November 2019, fully utilized its net IPO proceeds of approximately HKD 84.4 million by June 30, 2021, as planned in the prospectus, for capacity enhancement, R&D, sales promotion, system upgrades, loan repayment, and working capital IPO Proceeds Usage as of June 30, 2021 (HKD millions) | Planned Use | Planned Net Proceeds (HKD millions) | Utilized Net Proceeds (HKD millions) | Unutilized Net Proceeds (HKD millions) | | :--- | :--- | :--- | :--- | | Enhance SMT production capacity | 38.8 | 38.8 | – | | Enhance R&D capabilities | 14.2 | 14.2 | – | | Increase sales and marketing efforts | 8.6 | 8.6 | – | | Upgrade enterprise resource planning system | 5.7 | 5.7 | – | | Repay bank loans | 8.8 | 8.8 | – | | General working capital | 8.3 | 8.3 | – | | Total | 84.4 | 84.4 | – | Condensed Consolidated Financial Statements Report on Review of Condensed Consolidated Financial Statements Shinewing (Hong Kong) CPA Limited reviewed the company's condensed consolidated financial statements for the six months ended June 30, 2021, in accordance with Hong Kong Standard on Review Engagements 2410, concluding that nothing came to their attention to suggest the statements were not prepared in all material respects in accordance with HKAS 34 - The auditor reviewed the condensed consolidated financial statements for the six months ended June 30, 2021[60] - The review concluded that nothing came to their attention to suggest the condensed consolidated financial statements were not prepared in all material respects in accordance with Hong Kong Accounting Standard 34[62][64] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement shows that for the six months ended June 30, 2021, the Group achieved revenue of RMB 911.7 million but recorded a loss for the period of RMB 34.13 million, contrasting with a profit of RMB 12.6 million in the prior year, resulting in a basic and diluted loss per share of RMB 3.39 cents H1 2021 Key Profit or Loss Items (RMB thousands) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Revenue | 911,737 | 857,580 | | Gross Profit | 67,436 | 86,840 | | (Loss) Profit Before Tax | (31,909) | 12,900 | | (Loss) Profit for the Period | (34,127) | 12,596 | | (Loss) Earnings Per Share (RMB cents) | (3.39) | 1.27 | Condensed Consolidated Statement of Financial Position As of June 30, 2021, the Group's total assets were RMB 1,192.9 million, total liabilities were RMB 891.6 million, and total equity was RMB 301.3 million, reflecting a decrease in net current assets and an increase in total borrowings compared to year-end 2020 Key Financial Position Items (RMB thousands) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 160,602 | 153,599 | | Current Assets | 1,032,329 | 1,053,885 | | Total Assets | 1,192,931 | 1,207,484 | | Liabilities and Equity | | | | Current Liabilities | 827,637 | 821,740 | | Non-current Liabilities | 63,958 | 50,597 | | Total Liabilities | 891,595 | 872,337 | | Total Equity | 301,336 | 335,147 | Condensed Consolidated Statement of Changes in Equity The statement indicates that as of June 30, 2021, total equity attributable to owners of the company decreased from RMB 333.3 million at the beginning of the period to RMB 299.7 million, primarily due to a loss of RMB 33.92 million recorded during the period - As of June 30, 2021, total equity was RMB 301.3 million, a decrease from RMB 335.1 million at the beginning of 2021[70] - The primary reason for the decrease in equity was a loss for the period of RMB 34.13 million[70] Condensed Consolidated Statement of Cash Flows In H1 2021, the Group experienced a net cash outflow from operating activities of RMB 41.93 million, a net cash inflow from investing activities of RMB 19.46 million, and a net cash inflow from financing activities of RMB 48.90 million, resulting in cash and cash equivalents of RMB 51.30 million at period-end, an increase of RMB 24.97 million from the beginning of the period Key Cash Flow Items (RMB thousands) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (41,925) | (61,867) | | Net Cash From Investing Activities | 19,464 | 188,396 | | Net Cash From (Used in) Financing Activities | 48,896 | (130,579) | | Net Increase (Decrease) in Cash and Cash Equivalents | 26,435 | (4,050) | | Cash and Cash Equivalents at End of Period | 51,301 | 123,718 | Notes to the Condensed Consolidated Financial Statements Note 4. REVENUE This note details revenue from customer contracts by major product type, showing mobile phone business as the primary revenue source at 66.4% of total revenue, with IoT-related products at 22.3%, noting an increase in mobile phone revenue but a decrease in PCBA and IoT product revenue compared to the prior period Revenue by Product Type (RMB thousands) | Product Type | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Mobile Phones | 605,737 | 538,569 | | Printed Circuit Board Assemblies (PCBAs) | – | 58,401 | | IoT-related Products | 202,932 | 236,975 | | Others | 103,068 | 23,635 | | Total | 911,737 | 857,580 | Note 5. SEGMENT INFORMATION This note clarifies that the Group operates as a single segment for resource allocation and performance assessment, primarily engaged in designing, manufacturing, and selling mobile phones and IoT-related products, thus no operating segment information is presented, but provides geographical revenue data highlighting India and China as key markets Revenue by Customer Location (RMB thousands) | Region | H1 2021 | H1 2020 | | :--- | :--- | :--- | | India | 481,537 | 280,104 | | China | 304,374 | 449,006 | | Bangladesh | 107,585 | 107,387 | | Pakistan | 1,069 | 13,819 | | Algeria | 8,071 | 7,003 | | Other Regions | 9,101 | 261 | | Total | 911,737 | 857,580 | Note 14. TRADE AND BILLS RECEIVABLES As of June 30, 2021, the Group's net trade and bills receivables significantly decreased to RMB 211.3 million from RMB 339.2 million at year-end 2020, with approximately 86.6% of receivables within 90 days, and expected credit loss provisions reduced from RMB 4.999 million to RMB 2.412 million due to collections Trade and Bills Receivables Aging Analysis (RMB thousands) | Aging | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Within 30 days | 132,861 | 261,873 | | 31 to 60 days | 28,215 | 34,177 | | 61 to 90 days | 21,970 | 24,672 | | Over 90 days | 28,272 | 18,496 | | Total | 211,318 | 339,218 | - Expected credit loss allowance decreased from RMB 4.999 million at December 31, 2020, to RMB 2.412 million at June 30, 2021, due to the recovery of trade and bills receivables[114] Note 24. LITIGATIONS The Group's subsidiary, Shenzhen Hemiao, is involved in a factoring receivables lawsuit concerning RMB 29.2 million, with a first-instance judgment requiring repayment of approximately RMB 26.805 million plus interest, which the company has appealed; as of June 30, 2021, a litigation provision of approximately RMB 5.552 million has been made, and about RMB 16.201 million in bank balances are frozen, with the controlling shareholder providing an indemnity deed - An independent factoring company initiated a lawsuit against Shenzhen Hemiao for the repayment of outstanding receivables of RMB 29.2 million and related interest under a factoring agreement[149][150] - The first-instance judgment ordered Shenzhen Hemiao to repay approximately RMB 26.805 million of factoring loans and related interest, which the company appealed in February 2021[151][154] - As of June 30, 2021, the Group has made a provision for litigation of approximately RMB 5.552 million, and approximately RMB 16.201 million of bank balances are frozen[153][155] Other Information Directors' and Chief Executive's Interests This section discloses the interests of the company's directors and chief executive as of June 30, 2021, showing Chairman Mr. Li Chengjun and Vice Chairman Mr. Xiong Bin holding 37.0% and 30.5% of shares respectively through trusts, while Executive Directors Mr. Guo Qinglin and Mr. Wen Chuanchuan each hold 3.5 million share options Directors' Shareholdings in the Company | Director Name | Capacity/Nature of Interest | Number of Shares/Relevant Shares Held | Approximate Percentage of Shareholding in the Company | | :--- | :--- | :--- | :--- | | Mr. Li Chengjun | Founder of Discretionary Trust | 369,967,204 (L) | 37.0% | | Mr. Xiong Bin | Founder of Discretionary Trust | 305,032,256 (L) | 30.5% | | Mr. Guo Qinglin | Share Options | 3,500,000 (L) | 0.35% | | Mr. Wen Chuanchuan | Share Options | 3,500,000 (L) | 0.35% | Share Option Scheme The company adopted a share option scheme in 2019, with 48.5 million unexercised options representing 4.85% of issued shares as of June 30, 2021; during H1 2021, no new options were granted or exercised, but 17.3 million options lapsed due to unfulfilled conditions, and no share-based payment expenses were recognized - As of June 30, 2021, the total number of unexercised share options under the scheme was 48,500,000, representing 4.85% of the company's issued shares[207] - During the six months ended June 30, 2021, 17,300,000 share options lapsed due to unfulfilled conditions, with no new options granted or exercised[215][216] - The Group did not recognize any share-based payment expenses for the six months ended June 30, 2021[225][226] Corporate Governance The company has adopted and complied with the Corporate Governance Code under the Listing Rules, with the sole deviation being Code Provision A.2.1 where the roles of Chairman and Chief Executive Officer are combined in Mr. Li Chengjun, which the Board believes ensures leadership continuity and effective strategic planning without undermining checks and balances - The company has complied with all code provisions of the Corporate Governance Code during the reporting period, except for Code Provision A.2.1[229][233] - The roles of Chairman and Chief Executive Officer are performed by Mr. Li Chengjun, which the Board believes ensures consistency in leadership and effective strategic planning[230][233]