远大住工(02163) - 2019 - 年度财报

Company Profile Broad Homes Industrial Group, a pioneer in China's construction industrialization, provides global, specialized prefabricated building services, aiming to upgrade the traditional construction industry - The company is a pioneer and leader in China's construction industrialization, offering comprehensive industrialization solutions for the construction sector, including global, large-scale, specialized, and intelligent prefabricated building manufacturing and services[3] - The company is committed to building a digital system covering the entire construction industry chain, leveraging information technology and IoT data to transform traditional construction into efficient, intensive modern industrial manufacturing[4] - As of December 31, 2019, the company owned 15 wholly-owned PC factories and had cumulatively signed 86 joint factories, with a total production capacity of approximately 6.8 million cubic meters[4] - The company's H-shares were officially listed on the Main Board of the Hong Kong Stock Exchange on November 6, 2019, with stock code 2163[6] Corporate Information This section provides essential corporate information, including board and committee members, legal advisors, auditors, registered office, and principal bankers Board of Directors and Key Personnel | Position | Name/Institution | | :--- | :--- | | Executive Directors | Mr. Zhang Jian (Chairman), Ms. Tang Fen (General Manager), Ms. Shi Donghong, Mr. Zhang Kexiang, Mr. Tan Xinming | | Non-Executive Director | Mr. Zhang Quanxun | | Independent Non-Executive Directors | Mr. Chen Gongrong, Mr. Li Zhengnong, Mr. Wang Jiaxin | | Supervisors | Ms. Zhang Mingxin, Mr. Li Gen, Ms. Liu Jing | | Auditor | KPMG | | Compliance Advisor | Anglo Chinese Corporate Finance, Limited | Board Committees | Committee | Chairman | | :--- | :--- | | Audit Committee | Mr. Chen Gongrong | | Remuneration and Appraisal Committee | Mr. Li Zhengnong | | Nomination Committee | Mr. Zhang Jian | | Strategy Committee | Mr. Zhang Jian | Definitions This section defines specific terms and abbreviations used in the annual report, covering business, legal, financial, and technical terminology for clarity - "Broad Joint Plan" refers to the company's initiative to establish joint factories with local business partners for the production of PC precast components[25] - "PC" or "Prefabricated Concrete" refers to building products manufactured in a controlled environment and then transported to the construction site for assembly[65] - "PC-CPS" refers to a cyber-physical system for managing operations and production[67] Financial and Operational Highlights In 2019, the company achieved robust financial growth with total revenue up 48.5% and net profit up 45.2%, driven by PC component manufacturing and improved gross margins Condensed Consolidated Income Statement 2016-2019 (RMB in thousands) | Metric | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 3,369,416 | 2,269,129 | 1,935,689 | 1,671,495 | | Gross Profit | 1,144,019 | 724,547 | 704,930 | 602,483 | | Operating Profit | 600,612 | 343,563 | 372,254 | 315,390 | | Profit for the Year | 676,919 | 466,304 | 168,391 | 197,646 | | Gearing Ratio | 56.5% | 60.7% | 61.2% | 67.9% | Financial Data by Business Segment 2019 vs 2018 (RMB in thousands) | Business Segment | Metric | 2019 | 2018 | | :--- | :--- | :--- | :--- | | PC Component Manufacturing | Revenue | 2,303,660 | 854,334 | | | Gross Profit | 797,903 | 203,643 | | | Gross Margin | 34.6% | 23.8% | | PC Production Equipment Manufacturing | Revenue | 896,768 | 1,226,268 | | | Gross Profit | 304,482 | 466,404 | | | Gross Margin | 34.0% | 38.0% | | General Contracting | Revenue | 168,988 | 188,527 | | | Gross Profit | 41,634 | 54,500 | | | Gross Margin | 24.6% | 28.9% | - Total Revenue: Increased by 48.5% year-on-year to RMB 3.37 billion[91] - Total Gross Profit: Increased by 57.9% year-on-year to RMB 1.14 billion, with gross margin improving from 31.9% to 34.0%[91] - Operating Profit: Increased by 74.8% year-on-year to RMB 600 million[91] - Net Profit: Increased by 45.2% year-on-year to RMB 680 million[91] - Net Cash from Operating Activities: Increased by 56.4% year-on-year to RMB 970 million[91] Key Operating Data Year-on-Year Change 2019 | Operating Metric | 2019 | 2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Average Utilization Rate of PC Component Production Lines | 45.8% | 17.4% | +28.4 percentage points | | Cumulatively Signed Joint Factories (units) | 86 | 81 | +5 | | Joint Factories Achieving Profitability (units) | 20 | 8 | +12 | | Total Uncompleted Contract Value (RMB in millions) | 4,960.7 | 4,689.0 | +5.8% | Chairman's Statement Chairman Mr. Zhang Jian reported that despite macroeconomic challenges, the company achieved high growth in 2019 with significant increases in revenue and net profit, driven by innovation and digital transformation - In 2019, the company achieved revenue of RMB 3.37 billion (a 48.5% year-on-year increase), with PC component business revenue reaching RMB 2.3 billion (a 169.6% year-on-year increase), and net profit of RMB 680 million (a 45.2% year-on-year increase), attributed to technological innovation, quality adherence, and digital management transformation[103] - The company fully implemented the PC-CPS full-process digital system to enhance mass customization and rapid delivery capabilities, establishing strategic partnerships with major real estate developers like Country Garden and Midea Real Estate, shifting from "business cooperation" to "standard co-construction"[104] - The company proactively shifted from B2B to B2B+C, establishing Broad Module Integration Technology Co., Ltd., launching the iterated product "Broad Beautiful Home," and entering the trillion-level rural housing market[105] - Looking ahead, the company will seize opportunities from the "RMB 25 trillion" investment plan and the transformation and upgrading of the rural housing market, adhere to technological innovation, and strengthen "cost competitiveness, product competitiveness, and service competitiveness" to enhance overall competitiveness[108][109] Management Discussion and Analysis 1. Business Review and Outlook In 2019, the company focused on quality and efficiency, achieving a 48.5% increase in total revenue and a 45.2% rise in net profit, with PC component manufacturing as the core growth driver, while future plans include continued investment, digital platform upgrades, and B2C market expansion 2019 Performance Review by Business Segment | Business Segment | Revenue Change | Key Dynamics | | :--- | :--- | :--- | | PC Component Manufacturing | +169.6% year-on-year | Revenue contribution increased from 37.7% to 68.4%; gross margin improved from 23.8% to 34.6%; average utilization rate of production lines increased from 17.4% to 45.8% | | PC Production Equipment Manufacturing | -26.9% year-on-year | Operating strategy shifted from pursuing national layout quantity to assisting joint factories in improving operational capabilities | | General Contracting | -10.4% year-on-year | Business focus shifted, no new contracts signed, existing projects gradually entering completion phase | - Future Development Strategy: - Continued Investment: Expand 7 existing regional production centers and add new regional production centers in 14 potential cities, further increasing the number of joint factories[118] - Digital Platform Upgrade: Using PC Maker I as a breakthrough, build a platform-level PC-CPS intelligent manufacturing management system and establish an industry big data platform[122] - Focus on Strategic Clients: Provide customized overall solutions for the top 50 real estate developers nationwide, fostering deep client reliance[126] - Overseas Market Expansion: Promote fully prefabricated villa products to developed regions such as Europe and America, and leverage "Belt and Road" opportunities to export technology and services[127] - Module Integration Business Development: Establish a B2C business unit responsible for B-house and B-BOX products, targeting C-end consumers and developing the rural self-built housing market[131] 2. Operating Results In 2019, total revenue increased by 48.5% to RMB 3.37 billion, driven by PC component manufacturing, leading to a 57.9% increase in gross profit and a 74.8% rise in operating profit, with net profit up 45.2% to RMB 677 million, also benefiting from a RMB 248 million gain and a reduced effective tax rate of 7.7% Revenue by Business Segment 2019 vs 2018 (RMB in thousands) | Business Segment | 2019 Revenue | 2019 Contribution | 2018 Revenue | 2018 Contribution | | :--- | :--- | :--- | :--- | :--- | | PC Component Manufacturing | 2,303,660 | 68.4% | 854,334 | 37.7% | | PC Production Equipment Manufacturing | 896,768 | 26.6% | 1,226,268 | 54.0% | | General Contracting | 168,988 | 5.0% | 188,527 | 8.3% | | Total | 3,369,416 | 100% | 2,269,129 | 100% | Gross Profit and Gross Margin by Business Segment 2019 vs 2018 (RMB in thousands) | Business Segment | 2019 Gross Profit | 2019 Gross Margin | 2018 Gross Profit | 2018 Gross Margin | | :--- | :--- | :--- | :--- | :--- | | PC Component Manufacturing | 797,903 | 34.6% | 203,643 | 23.8% | | PC Production Equipment Manufacturing | 304,482 | 34.0% | 466,404 | 38.0% | | General Contracting | 41,634 | 24.6% | 54,500 | 28.9% | | Total | 1,144,019 | 34.0% | 724,547 | 31.9% | - Due to the implementation of a "two-tier management strategy," the company reclassified certain joint factories as financial assets measured at fair value, no longer participating in their principal operating management, thus recognizing a RMB 248 million gain from losing significant influence over associates[178] - The effective income tax rate for 2019 was 7.7%, a significant decrease from 15.9% in 2018, primarily because four subsidiaries were newly recognized as high-tech enterprises during the year, enjoying a preferential tax rate of 15%[184] 3. Liquidity and Capital Resources As of year-end 2019, the company's cash and cash equivalents significantly increased to RMB 1.08 billion, driven by strong operating cash inflow of RMB 967 million and financing cash inflow of RMB 1.13 billion, despite a RMB 1.31 billion net cash outflow from investing activities and increased capital expenditure Cash Flow Statement Summary 2019 vs 2018 (RMB in thousands) | Cash Flow Item | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 967,056 | 618,296 | | Net Cash Used in Investing Activities | (1,307,209) | (785,560) | | Net Cash from/(Used in) Financing Activities | 1,129,410 | (212,203) | | Cash and Cash Equivalents at Year-End | 1,084,750 | 296,475 | - Net cash inflow from financing activities was RMB 1.13 billion, primarily attributed to new loans of RMB 2.28 billion, repayment of borrowings and interest of RMB 1.72 billion, and proceeds from H-share issuance of RMB 956 million[194] - Capital expenditure in 2019 was RMB 1.46 billion (2018: RMB 975 million), primarily for the purchase of property, plant, and equipment, and investments in financial assets and associates[196] 5. Financial Ratios In 2019, the company maintained a sound financial position, with the gearing ratio decreasing from 67.4% to 62.9% due to H-share issuance and profit growth, while profitability metrics significantly improved, and liquidity ratios remained stable Key Financial Ratios 2019 vs 2018 | Financial Ratio | As of December 31, 2019 | As of December 31, 2018 | | :--- | :--- | :--- | | Current Ratio | 0.9 | 1.0 | | Quick Ratio | 0.9 | 0.9 | | Gearing Ratio | 62.9% | 67.4% | | Return on Total Assets | 8.0% | 6.5% | | Return on Equity | 19.2% | 16.7% | | Interest Coverage Ratio | 8.2 | 8.7 | - The decrease in gearing ratio was primarily due to the company's H-share issuance introducing financial investments and increased profits in 2019[215] Directors, Supervisors and Senior Management This section details the backgrounds and résumés of the company's Board of Directors, Supervisory Committee, and senior management, highlighting the executive team's experience and non-executive directors' expertise in strategic and oversight support - The core members of the executive director team include: Mr. Zhang Jian, founder and Chairman; Ms. Tang Fen, General Manager; Ms. Shi Donghong, Deputy General Manager and Head of Finance; Mr. Zhang Kexiang, Deputy General Manager; and Mr. Tan Xinming, Deputy General Manager[229][235][236][240][241] - Independent non-executive directors include Mr. Chen Gongrong (Professor of Accounting, serving as independent director for multiple listed companies), Mr. Li Zhengnong (Professor at the School of Civil Engineering), and Mr. Wang Jiaxin (with extensive experience in accounting and asset management), providing professional independent opinions to the Board[250][253][256] Report of the Directors The Report of the Directors outlines key corporate affairs for 2019, detailing global offering proceeds, principal business activities, a final dividend of RMB 0.5 per share, and corporate governance matters, affirming adherence to relevant regulations and listing rules Use of Net Proceeds from Global Offering as of December 31, 2019 (HKD in millions) | Purpose | Allocation Ratio | Allocated Amount (HKD in millions) | Amount Used (HKD in millions) | Unused Amount (HKD in millions) | | :--- | :--- | :--- | :--- | :--- | | Expand PC Component Manufacturing Business | 45% | 500.2 | 20.4 | 479.8 | | Expand Overseas Markets | 20% | 222.3 | - | 222.3 | | R&D and Expand Intelligent Equipment Business | 15% | 166.8 | 1.5 | 165.3 | | R&D of Prefabricated Building Industry Intelligent Service Platform | 10% | 111.2 | 0.7 | 110.5 | | Working Capital and General Corporate Purposes | 10% | 111.2 | 81.0 | 30.2 | | Total | 100% | 1,111.7 | 103.6 | 1,008.7 | - The Board recommended a final dividend of RMB 0.5 per share (tax inclusive) for the year ended December 31, 2019, totaling approximately RMB 244 million[278] - As of the end of 2019, the top five clients accounted for 15.05% of total revenue, with the largest client contributing 3.31%; the top five suppliers accounted for 15.55% of total purchases, with the largest supplier contributing 3.97%[289][290] - Controlling shareholder Mr. Zhang Jian confirmed his compliance with the non-competition agreement and undertakings during the reporting period[331] Report of the Supervisory Committee The Supervisory Committee reported diligent oversight in accordance with laws and company articles, holding two meetings to review profit distribution, related party transactions, and financial reports, concluding that the company operated lawfully and no actions detrimental to its interests were found - During the reporting period, the Supervisory Committee held two meetings, approving various proposals including the distribution of retained profits prior to listing, the 2018 annual financial statements and profit distribution plan, and the 2019 financing and guarantee limits[352] - The Supervisory Committee issued an independent opinion on the company's lawful operations, concluding that the company's decision-making procedures were legal, directors and senior management diligently performed their duties, and no violations of laws or actions detrimental to the company's interests were found[355] - The Supervisory Committee reviewed the 2019 financial report audited by independent auditors, deeming it to objectively and truly reflect the company's financial position and operating results[358] Corporate Governance Report This report details the company's corporate governance practices since its 2019 listing, confirming compliance with Hong Kong Listing Rules, outlining the Board's composition, responsibilities, and committee structures, and covering internal control, risk management, remuneration, and shareholder communication - The company has adopted and complied with the Corporate Governance Code in Appendix 14 of the Hong Kong Listing Rules, adhering to all applicable code provisions from its listing date to the end of 2019[363] - The Board of Directors comprises 9 directors, including 5 executive directors, 1 non-executive director, and 3 independent non-executive directors, meeting the Listing Rules' requirements for the number and professional qualifications of independent non-executive directors[368][369] - The Board has four specialized committees: Audit Committee, Nomination Committee, Remuneration and Appraisal Committee, and Strategy Committee, each with clearly defined written terms of reference[395] - The Board is responsible for maintaining adequate internal control and risk management systems and reviews their effectiveness annually; during the reporting period, the Board considered the company's risk management and internal control systems to be effective and sufficient[428][442] Environmental, Social and Governance Report This inaugural ESG report outlines the Group's environmental protection and social responsibility philosophies, policies, and practices, demonstrating commitment to energy conservation and emission reduction through industrialized construction, strict environmental compliance, employee rights, occupational health and safety, comprehensive training, robust supply chain and quality management, anti-corruption, and community engagement 4. Environmental Protection The company adheres to green development, promoting low-energy, low-pollution industrialized construction, strictly complying with environmental regulations, and managing emissions and resource use, with total greenhouse gas emissions of approximately 12,365 tons primarily from purchased electricity, while new processes significantly reduced water and timber consumption 2019 Greenhouse Gas Emissions Composition | Item | CO2 Emissions (tons) | Percentage | | :--- | :--- | :--- | | Net Purchased Electricity | 11,488.88 | 90.22% | | Natural Gas Consumption | 256.71 | 2.02% | | Diesel | 988.19 | 7.76% | | Total | 12,733.78 | 100.00% | - Centralized use of formwork for precast PC components in factories reduced timber consumption by 75% compared to traditional methods[504] - Production wastewater is treated through a three-stage sedimentation tank and recycled, reducing discharge, with strict wastewater monitoring ensuring 100% compliant discharge[509][514] Resource Consumption Intensity Change | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Water Consumption Intensity (cubic meters/RMB thousand revenue) | 0.11 | 0.15 | | Electricity Consumption Intensity (kWh/RMB thousand revenue) | 3.88 | 4.76 | 5. Social Responsibility The company values employees, adhering to labor laws, ensuring equal opportunities, and prohibiting child and forced labor, while prioritizing occupational health and safety with comprehensive training, fostering talent through the Broad Training Center, and implementing transparent procurement, stringent quality control, innovation, anti-corruption, and community engagement - As of the end of the reporting period, the Group had 3,411 full-time employees, with recruitment adhering to fair principles, prohibiting discrimination based on age, gender, race, or other factors[537] - The company established a comprehensive occupational health and safety management system and obtained ISO45001:2018 certification; in 2019, a total of 655 safety education training sessions and drills were conducted, with 8,342 participants, and new employee safety training coverage reached 100%[556][557] - In 2019, the Group conducted a total of 299 training sessions, with 30,487 participants, achieving 100% training coverage and an average training duration of 378.1 hours/year per person[563] - The company established China's first Broad Training Center offering systematic training in prefabricated construction, cultivating talent for the industry; as of the end of the reporting period, it had provided systematic training to thousands of managers and technical workers from 53 companies[569] - The company regards product quality as its lifeline, implementing a full-process quality management system and obtaining ISO9001:2015 certification; as of the end of the reporting period, the company held 696 patents and served as chief editor or participant in drafting multiple national and local industry standards[582][583][585][586] Independent Auditor's Report KPMG, as the independent auditor, audited the company's consolidated financial statements for 2019, concluding they fairly reflect the Group's financial position and performance in accordance with IFRS and Hong Kong Companies Ordinance, with key audit matters including revenue recognition, development expenditure capitalization, and trade receivables impairment - The auditor issued an unmodified opinion on the company's consolidated financial statements for 2019[620] - Key Audit Matters include: - Revenue Recognition: As revenue is a key performance indicator, there is a risk that management may recognize revenue in incorrect accounting periods to meet performance targets[622][624] - Capitalization of Development Expenditure: Determining compliance with capitalization criteria and the amount to be capitalized involves significant management judgment[629] - Impairment Provisions for Trade Receivables: The determination of expected credit losses involves inherent subjectivity and requires significant management judgment[631] Consolidated Financial Statements This section presents the Group's audited consolidated financial statements for 2019, including the consolidated statement of comprehensive income, financial position, changes in equity, and cash flows, detailing the Group's financial performance, asset and liability position, equity changes, and cash flows Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements This section provides detailed explanations and supplementary information to the consolidated financial statements, covering company information, significant accounting policies, accounting judgments and estimates, detailed analysis of financial statement items, financial risk management, related party transactions, and post-reporting period events Appendix I: Details of Properties Held by the Group This appendix provides detailed information on the Group's long-term leasehold commercial properties in China, including location, usage, gross floor area, Group's interest percentage, and tenure