亲亲食品(01583) - 2020 - 年度财报

Overview Company Information This section provides core company information including basic registration details, board members, principal office address, listing venue, legal advisors, and auditors - Mr. Xu Qingliu serves as the Chairman, and Mr. Huang Weiliang is the Chief Financial Officer. The company is registered in the Cayman Islands and listed on the Hong Kong Stock Exchange with stock code 1583[5] Financial Highlights In FY2020, the company's revenue increased by 14.8% year-on-year, but operating profit and profit attributable to shareholders significantly declined by 68.1% and 78.2% respectively. Key financial ratios indicate a 3.7 percentage point decrease in gross profit margin, a significant reduction in return on equity, and a halved current ratio, reflecting weakened profitability and short-term solvency despite revenue growth Consolidated Income Statement Highlights | Indicator | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Revenue | 792,829 RMB thousands | 690,852 RMB thousands | 14.8% | | Operating Profit | 24,452 RMB thousands | 76,618 RMB thousands | -68.1% | | Profit Attributable to Company Shareholders | 17,660 RMB thousands | 81,187 RMB thousands | -78.2% | | Basic Earnings Per Share | RMB 0.026 | RMB 0.125 | -79.2% | Consolidated Balance Sheet Highlights | Indicator | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 711,018 RMB thousands | 732,033 RMB thousands | -2.9% | | Bank Borrowings | 70,199 RMB thousands | 0 | 100% | | Net Current Assets | 492,577 RMB thousands | 661,494 RMB thousands | -25.5% | | Net Assets | 1,335,958 RMB thousands | 1,146,760 RMB thousands | 16.5% | Key Financial Ratios | Indicator | 2020 | 2019 | Change (percentage points) | | :--- | :--- | :--- | :--- | | Gross Profit Margin | 31.7% | 35.4% | -3.7 | | Return on Equity | 1.3% | 7.1% | -5.8 | | Current Ratio (times) | 2.0 | 4.1 | -2.1 | Chairman's Statement The Chairman's Statement highlights a 14.8% revenue growth in 2020 despite pandemic challenges, primarily driven by a 5.8-fold surge in e-commerce business. However, consolidated net profit significantly declined due to a one-off asset disposal gain in 2019, current year exchange losses, and promotional activities to expand e-commerce market share, while progress in new product launches, production base construction, and strategic investments is affirmed with confidence in future development - 2020 revenue increased by 14.8% year-on-year to RMB 792.8 million, primarily driven by e-commerce business, which grew 5.8 times and accounted for 7.7% of total revenue[11][13] - Consolidated net profit decreased from RMB 81.2 million to RMB 17.7 million, primarily due to: - A one-off gain of approximately RMB 23.8 million from land and property disposal in 2019 - An exchange loss of approximately RMB 12.2 million in 2020, compared to an exchange gain of RMB 13.1 million in 2019 - Aggressive promotional activities in e-commerce channels to boost sales, resulting in losses for this business segment[14] - The Group achieved success in strategic investments, with the fair value of investments in several consumer goods companies increasing by RMB 28.7 million[13][15] - The Group successfully launched the new brand 'Qinqin Wuyu' and a new rice wine business, and completed the construction of a new production base in Xiaogan[13] Management Discussion and Analysis This section provides an in-depth analysis of the Group's operating environment, business segment performance, strategic development, and financial position in 2020. Despite pandemic challenges, the leisure food industry shows potential. The company achieved 14.8% revenue growth by adjusting product structure and vigorously developing e-commerce channels. All major product lines recorded sales growth, but gross profit margins were pressured by promotional activities. The company continues to invest in product development, channel expansion, and production facility improvements, maintaining optimism for future growth Business Review and Segment Performance In 2020, all four of the Group's business segments achieved revenue growth. Jelly products, as the core business, saw a 2.4% revenue increase; puffed food grew by 18.9%; seasoning products increased by 7.2%; and the candy and other products segment's revenue surged 2.0 times year-on-year, driven by the 'Qinqin Wuyu' e-commerce business and new rice wine business. However, gross profit margins for all segments except seasoning products declined due to promotional activities or changes in product mix 2020 Performance by Business Segment | Business Segment | Sales (RMB millions) | Y-o-Y Growth | Share of Total Revenue | Gross Profit Margin | Y-o-Y Change in Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | :--- | | Jelly Products | 421.3 | 2.4% | 53.1% | 33.4% | -0.8 percentage points | | Puffed Food | 217.7 | 18.9% | 27.5% | 37.2% | -2.8 percentage points | | Seasoning Products | 74.7 | 7.2% | 9.4% | 36.9% | +1.1 percentage points | | Candy and Other Products | 79.1 | 200% | 10.0% | Not disclosed, but overall decline mentioned | Not disclosed | - Revenue from the 'Candy and Other Products' segment significantly increased, primarily attributed to the newly established 'Qinqin Wuyu' brand, under which over 200 new snack products were developed and primarily sold through e-commerce channels[32][33] - The Group's new rice wine and sesame candy business in Xiaogan City completed its first phase factory construction and launched new products in Q4 2020, though its revenue contribution for the year was minimal[34][36] Strategic Development and Operations The company pursued multi-faceted strategic initiatives, including a RMB 21.7 million net gain in fair value from strategic investments in several consumer goods companies. Product development saw multiple new launches across categories, such as 'Konjac Jelly' and 'Chicken Flavored Cubes'. Marketing efforts involved celebrity endorsements and social media engagement to boost brand awareness. E-commerce revenue grew 5.8 times, but remained unprofitable due to aggressive promotions. Significant progress was made in constructing new production bases in Xiaogan, Xiantao, Sishui, Meishan, and Xiji - E-commerce business revenue grew 5.8 times, accounting for 7.7% of total revenue, but remained in a net loss position in 2020 due to aggressive product promotions and channel expenditures[42] - The Group is advancing new production base construction across multiple locations nationwide, with the first phase of Xiaogan Rice Wine Industrial Park already operational, the Shandong Sishui base commencing production in January 2021, and new bases in Xiantao, Meishan, and Xiji currently under construction[44][45] - Strategic investments in several fast-growing consumer goods companies recorded a fair value gain (after tax) of RMB 21.7 million[37] Liquidity and Financial Position As of year-end 2020, the Group maintained a net cash position with RMB 711 million in cash and bank balances. New bank borrowings of RMB 70.2 million were incurred during the year. Working capital stood at RMB 492.6 million, and the current ratio decreased from 4.1 times to 2.0 times. Capital expenditure significantly increased year-on-year to RMB 318.9 million, primarily for land acquisition and new production base construction. The Group's overall financial position remains robust, sufficient to support business expansion Key Financial Position as of Year-End 2020 | Indicator | Amount (RMB millions) | 2019 Corresponding Period | | :--- | :--- | :--- | | Cash and Bank Balances | 711.0 | 732.0 | | Bank Borrowings | 70.2 | 0 | | Working Capital | 492.6 | 661.5 | | Capital Expenditure | 318.9 | 168.6 | - The number of employees increased from approximately 2,200 to 2,600 during the year, with total staff welfare expenses growing accordingly to RMB 155.2 million[55] - Due to the depreciation of HKD and USD against RMB, the Group recorded a total exchange loss of RMB 12.2 million, compared to an exchange gain of RMB 13.1 million in the corresponding period of 2019[57] - The Board of Directors does not recommend the payment of a final dividend for the year ended December 31, 2020[58] 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, including their age, position, responsibilities, industry experience, educational background, and appointments in other listed companies - Mr. Xu Qingliu, 41 years old, serves as the Chairman of the Board and assumes the responsibilities of the Chief Executive Officer during the vacancy of that position[60] - Mr. Wu Wenxu, 49 years old, was appointed as an Executive Director on December 8, 2020, responsible for the Group's production activities, supply chain, and production facility management[64] Corporate Governance Report The report outlines the company's corporate governance structure and practices, confirming substantial compliance with the HKEX Corporate Governance Code provisions during 2020. The sole deviation is the temporary combined role of Chairman and CEO held by Mr. Xu Qingliu, which the Board deems in the company's best interest while searching for a new CEO. The report details the Board's operations and the composition and responsibilities of the Audit, Remuneration, and Nomination Committees - The company complied with all code provisions of the Corporate Governance Code, with the exception of Code Provision A.2.1, where the roles of Chairman and Chief Executive Officer were not separated and were held concurrently by Chairman Mr. Xu Qingliu[83][89] - The Board of Directors comprises 12 directors, including 3 executive directors, 5 non-executive directors, and 4 independent non-executive directors, meeting the Listing Rules' requirements for the number and qualifications of independent non-executive directors[87][92] - The Audit Committee, Remuneration Committee, and Nomination Committee have all been established and are fully operational. The Audit Committee and Remuneration Committee are composed entirely of independent non-executive directors[97][98][103] Auditor's Remuneration for 2020 | Services Provided | Fees Paid/Payable (RMB thousands) | | :--- | :--- | | Audit of Financial Statements | 1,900 | | Other Non-Audit Services | 94 | | Total | 1,994 | Environmental, Social and Governance Report This report outlines the Group's policies, measures, and performance in environmental protection, social responsibility, and corporate governance. Environmentally, it discloses emissions data for exhaust gas, wastewater, greenhouse gases, and waste, along with resource utilization and energy-saving initiatives. Socially, it covers employment policies, employee health and safety (including epidemic prevention and control), development and training, supply chain management, product quality and safety, anti-corruption, and community contributions, reflecting the company's commitment to sustainable development 2020 Key Emissions Data | Emission Category | Specific Emission | 2020 Emissions | | :--- | :--- | :--- | | Exhaust Gas | NOx (Nitrogen Oxides) | 0.18 tonnes | | Exhaust Gas | SO2 (Sulfur Dioxide) | 0.0012 tonnes | | Wastewater | Wastewater Volume | 487,623.0 cubic meters | | Greenhouse Gas | Total Emissions | 25,424.26 tonnes CO2 equivalent | - The Group established an epidemic prevention and control task force, formulating detailed measures including personnel testing, material reserves, staggered work shifts, meal arrangements, and public education, to ensure employee health and safety and smooth production[166][167][169][171] - Regarding product quality, the Group strictly adheres to relevant laws and regulations, with production bases obtaining multiple international certifications such as ISO9001, ISO22000, and HACCP, and establishing a product traceability management system[179][181][182] - In terms of community contributions, the Group actively participated in anti-epidemic donations, contributing funds and supplies to hospitals and frontline personnel in Xiaonan, Xiantao, Tianmen, Hubei, and engaging in public welfare activities such as student aid and caring for medical staff[191][192][193] Report of the Directors This statutory Directors' Report outlines the Group's principal activities, financial performance, dividend policy, reserves, and share capital movements. It details directors' and major shareholders' interests, changes in the share option scheme, continuing connected transactions, and the use of proceeds from two share subscription events. The report confirms that the company maintained sufficient public float and complied with relevant laws and regulations during the year - The Board of Directors does not recommend the payment of a final dividend for the year ended December 31, 2020[199] - The report disclosed a continuing connected transaction: the purchase of flour from Fujian Shuncheng Flour Development Co., Ltd., with a transaction amount of RMB 1.794 million in 2020[218] - As of year-end 2020, there were 11,660,000 unexercised share options under the share option scheme[234] - The report details the use of proceeds and progress from two subscription events in April 2019 and December 2020. As of year-end 2020, RMB 8.2 million from the 2019 subscription remained unutilized, and RMB 148.4 million from the 2020 subscription proceeds had not yet been utilized[253][257] Financial Section Independent Auditor's Report PricewaterhouseCoopers issued an unqualified audit opinion on the company's 2020 consolidated financial statements, affirming that they present a true and fair view of the Group's financial position and operating results. The report highlights two key audit matters: the recognition of sales revenue and the recognition of deferred income tax assets related to future deductible losses - The auditor issued an unqualified opinion on the financial statements[265] - Key audit matters include: 1. Revenue Recognition: Due to the Group's high volume of sales transactions and numerous customers, the auditor focused on internal controls and cut-off testing for revenue recognition 2. Recognition of Deferred Income Tax Assets: Involving significant judgment and estimation of future taxable profits, the auditor evaluated management's profit forecasts and key assumptions[271][274] Consolidated Financial Statements This section contains the Group's core financial statements for the year ended December 31, 2020. The consolidated income statement shows revenue of RMB 793 million and net profit of RMB 17.66 million. The consolidated balance sheet presents total assets of RMB 1.843 billion and total equity of RMB 1.336 billion. The consolidated cash flow statement indicates net cash inflow from operating activities of RMB 22.53 million, net outflow from investing activities of RMB 412 million, net inflow from financing activities of RMB 217 million, and year-end cash and cash equivalents decreased to RMB 547 million Consolidated Income Statement Key Data (2020) | Indicator | Amount (RMB thousands) | | :--- | :--- | | Revenue | 792,829 | | Gross Profit | 251,122 | | Operating Profit | 24,452 | | Profit Attributable to Company Shareholders | 17,660 | Consolidated Balance Sheet Key Data (December 31, 2020) | Indicator | Amount (RMB thousands) | | :--- | :--- | | Total Assets | 1,842,928 | | Total Liabilities | 506,970 | | Total Equity | 1,335,958 | Consolidated Cash Flow Statement Key Data (2020) | Indicator | Amount (RMB thousands) | | :--- | :--- | | Net Cash Generated from Operating Activities | 22,529 | | Net Cash Used in Investing Activities | (412,076) | | Net Cash Generated from Financing Activities | 216,979 | | Net Decrease in Cash and Cash Equivalents | (172,568) | Notes to the Consolidated Financial Statements This section provides detailed explanations and supplementary information to the financial statements, crucial for understanding the company's financial position. Content covers principal accounting policies, financial risk management, key accounting estimates, segment information, details of assets and liabilities, related party transactions, and commitments and contingencies. The notes indicate that the Group's revenue primarily originates from mainland China and detail the revenue composition of each product segment, along with specifics of two share issuances and the share option scheme - The financial risk management section identifies foreign exchange risk, credit risk, and liquidity risk as the Group's primary exposures. In 2020, an exchange rate exposure of RMB 18.18 million arose due to the appreciation of the RMB[379][380] - Note 5 details the revenue and cost of sales for the four business segments (Jelly, Puffed Food, Seasoning, and Candy & Other), consistent with data in the Management Discussion and Analysis[413] - Notes 25 and 26 detail changes in share capital and the share option scheme. In December 2020, approximately RMB 148.4 million in net proceeds was raised through the placement of new shares[471][474][476] - Note 34 discloses related party transactions, primarily involving office leases and raw material purchases from entities controlled by the company's directors[502][504] Five-Year Financial Summary This section provides a summary of the Group's key financial data for five consecutive years from 2016 to 2020. The data indicates that Group revenue fluctuated after 2018, rebounding in 2020. Profit attributable to shareholders reached a five-year high in 2019 before declining to a lower level in 2020. Total assets and shareholders' equity have continuously grown over the past two years, primarily driven by financing activities Five-Year Performance Summary (RMB thousands) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 792,829 | 690,852 | 761,819 | 727,257 | 980,902 | | Profit/(Loss) Attributable to Shareholders | 17,660 | 81,187 | 32,760 | (6,536) | 31,522 | Five-Year Assets and Liabilities Summary (RMB thousands) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 1,842,928 | 1,369,574 | 1,050,718 | 792,863 | 894,854 | | Total Liabilities | 506,970 | 222,814 | 182,421 | 121,480 | 218,157 | | Equity Attributable to Shareholders | 1,335,958 | 1,146,760 | 868,297 | 671,383 | 676,697 |