远大住工(02163) - 2020 - 年度财报

Financial and Operational Summary Financial Summary In 2020, the company's total revenue and net profit declined, but its core PC component manufacturing business grew, and its financial structure improved with a lower debt-to-asset ratio Condensed Consolidated Income Statement (2016-2020) | Indicator (RMB in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 2,613,850 | 3,369,416 | 2,269,129 | 1,935,689 | 1,671,495 | | Gross Profit | 926,807 | 1,144,019 | 724,547 | 704,930 | 602,483 | | Operating Profit | 335,970 | 600,612 | 343,563 | 372,254 | 315,390 | | Net Profit | 216,420 | 676,919 | 466,304 | 168,391 | 197,646 | | Debt-to-Asset Ratio | 55.0% | 56.5% | 60.7% | 61.2% | 67.9% | Condensed Financial Position Statement (2016-2020) | Indicator (RMB in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 9,191,168 | 9,567,426 | 7,325,885 | 6,971,391 | 5,797,131 | | Total Equity | 4,138,642 | 4,166,041 | 2,882,723 | 2,706,974 | 1,863,215 | | Total Liabilities | 5,052,526 | 5,401,385 | 4,443,162 | 4,264,417 | 3,933,916 | - In 2020, total revenue decreased by 22.4% year-on-year, and net profit decreased by 68.0%; net cash from operating activities decreased by 81.2%[42][44] - The core PC component manufacturing business revenue grew by 5.0% year-on-year, its share of total revenue increased from 68.4% to 92.6%, and its gross margin improved from 34.6% to 36.6%[42] Operational Summary The PC component business achieved strong growth in new contracts and backlog, while production line utilization declined due to new capacity and the pandemic PC Component Manufacturing Business Contract Status (RMB in millions) | Contract Type | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | New Contracts | 4,090.7 | 3,106.2 | 31.7% | | Uncompleted Contracts | 5,195.9 | 3,748.9 | 38.6% | - The production volume of PC components increased by 3.4% to 797,000 cubic meters, while sales volume grew by 7.0% to 872,000 cubic meters[49] - Production line utilization rate decreased from 45.8% in 2019 to 37.8% in 2020, mainly due to the ramp-up phase of new capacity and temporary production halts caused by the pandemic[49] Chairman's Statement Chairman's Statement Chairman Zhang Jian highlights the company's resilience amid the pandemic, with strong order growth in the core PC business and a strategic pivot towards a "To B + To C" model - Despite the pandemic's impact, new contracts for the PC component business reached RMB 4.091 billion in 2020, a 31.7% year-on-year increase, with orders on hand reaching RMB 5.196 billion, up 38.6%[52] - The company solidified its "To B + To C" dual-driver strategy by launching "B-house," a fully assembled industrialized residential product, to meet the demand for quality rural housing post-pandemic[53][54] - The company advanced its digital transformation with the self-developed PC-CPS intelligent manufacturing system, which is now commercialized and will be upgraded to an AI-CPS platform[56] - Looking ahead to 2021, the company will seize opportunities from urban renewal and rural construction initiatives, adhering to long-termism and innovation to become a creator of a better life[57] Management Discussion and Analysis Business Review and Outlook In 2020, the company strengthened its core PC component business with significant order growth and margin improvement while launching the "B-house" product to explore a new "To B + To C" model - In 2020, the PC component business secured RMB 4.09 billion in new contracts, a 31.7% increase year-on-year, with RMB 5.20 billion in orders on hand, up 38.6%; the gross margin for this segment improved to 36.6%[60] - The company is transitioning from a pure To B model to a "To B + To C" model with the launch of its "B-house" product, laying the groundwork for future To C business[61] - To optimize its asset structure, the company divested its engineering construction business to an independent third party in September 2020 and will no longer engage in this segment[66] - Future strategies include expanding the national production center layout, upgrading the digital platform to AI-CPS, focusing technical marketing on top 50 property developers, and developing overseas markets and module integration B2C business[67][70][71][72][74] Analysis of Operating Results In 2020, total revenue and net profit declined significantly, primarily due to a sharp drop in the PC production equipment business and reduced gains from associate companies Revenue by Business Segment (RMB in thousands) | Business Segment | 2020 Revenue | 2020 % | 2019 Revenue | 2019 % | | :--- | :--- | :--- | :--- | :--- | | PC Component Manufacturing | 2,419,235 | 92.6% | 2,303,660 | 68.4% | | PC Production Equipment Manufacturing | 91,753 | 3.5% | 896,768 | 26.6% | | Engineering Construction (Discontinued) | 102,862 | 3.9% | 168,988 | 5.0% | | Total | 2,613,850 | 100.0% | 3,369,416 | 100.0% | Gross Profit and Gross Margin by Business Segment | Business Segment | 2020 Gross Profit (RMB'000) | 2020 Gross Margin | 2019 Gross Profit (RMB'000) | 2019 Gross Margin | | :--- | :--- | :--- | :--- | :--- | | PC Component Manufacturing | 885,440 | 36.6% | 797,903 | 34.6% | | PC Production Equipment Manufacturing | 26,823 | 29.2% | 304,482 | 34.0% | | Engineering Construction (Discontinued) | 14,544 | 14.1% | 41,634 | 24.6% | | Total | 926,807 | 35.5% | 1,144,019 | 34.0% | - Selling and marketing expenses increased by 16.3% year-on-year, mainly due to higher compensation and market development costs for promoting the new B-house product[107] - Due to an adjustment in the "dual-level management strategy," the "gain on losing significant influence over associate companies" dropped sharply from RMB 248 million to RMB 60.2 million, a key reason for the decline in net profit[122] Liquidity and Capital Resources The company's net cash from operations decreased significantly, while total borrowings increased to manage customer payment delays, though its net current asset position improved Cash Flow Statement Summary (RMB in thousands) | Cash Flow Item | 2020 | 2019 | | :--- | :--- | :--- | | Net cash from operating activities | 181,814 | 967,056 | | Net cash used in investing activities | (367,074) | (1,307,209) | | Net cash (used in)/from financing activities | (76,414) | 1,129,410 | | Cash and cash equivalents at end of year | 828,288 | 1,084,750 | - Net cash from operating activities decreased sharply, mainly due to a RMB 299 million increase in trade and other receivables and a RMB 364 million decrease in trade and other payables[137] - Total borrowings increased from RMB 2.62 billion to RMB 2.98 billion to manage delayed customer payments; the company had unused credit facilities of approximately RMB 2.17 billion at year-end[142] - Net current assets improved, turning from a deficit of RMB 316 million at the end of 2019 to a surplus of RMB 78 million at the end of 2020[144] Financial Ratio Analysis In 2020, the company's liquidity improved, but higher leverage and a sharp decline in net profit led to significantly weaker profitability and debt service capacity Key Financial Ratios | Ratio | 2020 | 2019 | | :--- | :--- | :--- | | Current Ratio | 1.0 | 0.9 | | Quick Ratio | 1.0 | 0.9 | | Gearing Ratio | 72.1% | 62.9% | | Return on Total Assets (ROA) | 2.3% | 8.0% | | Return on Equity (ROE) | 5.2% | 19.2% | | Interest Coverage Ratio | 3.2 | 8.2 | - Trade and bills receivable turnover days increased from 230 to 346 days, primarily due to payment delays from some customers affected by the pandemic[170] Directors, Supervisors, and Senior Management Biographies of Directors, Supervisors, and Senior Management This section details the professional backgrounds of the company's board of directors, supervisory committee, and senior management team - The executive director team is led by founder Mr. Zhang Jian (Chairman) and includes core members Ms. Tang Fen (General Manager), Ms. Shi Donghong (Deputy GM, CFO, Board Secretary), Mr. Zhang Kexiang (Deputy GM), and Mr. Tan Xinming (Deputy GM), all of whom are long-serving executives[179][185][189][190] - The independent non-executive directors, including Mr. Chen Gongrong, Mr. Li Zhengnong, Mr. Wang Jiaxin, and Mr. Zhao Zhengting, bring extensive expertise in accounting, civil engineering, asset management, and real estate industry associations[199][202][205][208] Report of the Board of Directors Report of the Board of Directors This report details key corporate affairs in 2020, including the use of IPO proceeds, business overview, dividend policy, and major customer and supplier information Use of Proceeds from the Global Offering (HKD in millions) | Purpose | Allocated Amount | Utilized Amount | Unutilized Amount | | :--- | :--- | :--- | :--- | | Expand PC component manufacturing business | 500.2 | 283.85 | 216.44 | | Expand overseas markets | 222.3 | 6.05 | 216.25 | | R&D for intelligent equipment business | 166.8 | 14.25 | 152.46 | | R&D for industrial intelligent service platform | 111.2 | 38.21 | 72.99 | | Working capital and general corporate purposes | 111.2 | 111.20 | 0.00 | | Total | 1,111.7 | 453.56 | 658.14 | - The Board does not recommend the payment of a final dividend for the year ended December 31, 2020[229] - For the year ended 2020, the top five customers accounted for 12.29% of total revenue, while the top five suppliers accounted for 18.73% of total purchases[237][238] - Chairman Mr. Zhang Jian controls approximately 56.07% of the company's shares through direct holdings and controlled corporations[261] Report of the Supervisory Committee Report of the Supervisory Committee The Supervisory Committee confirms that the company operated in compliance with laws, its financial reports were accurate, and its directors and senior management fulfilled their duties diligently in 2020 - During the reporting period, the Supervisory Committee held four meetings to review key proposals, including the 2019 annual report, profit distribution plan, interim report, and confirmation of connected transactions[296][298] - The Committee affirmed the company's lawful operations, noting that decision-making processes were compliant, the Board operated effectively, and directors and senior management acted in the company's best interests[300] - The Committee reviewed the 2020 financial statements audited by the independent auditor and concluded that they provided a true and fair view of the company's financial position and operating results[302] Corporate Governance Report Board Governance The company's Board of Directors is structured in compliance with listing rules, with a clear separation of Chairman and General Manager roles to ensure balanced governance - The Board comprises 11 directors, including 5 executive, 2 non-executive, and 4 independent non-executive directors, meeting the Hong Kong Listing Rules' requirements for the number and proportion of INEDs[310][311] - The company maintains a clear distinction between the roles of the Chairman (Mr. Zhang Jian), who leads the Board, and the General Manager (Ms. Tang Fen), who manages daily operations[320] - During the reporting period, the Board held 7 meetings and the shareholders held 2 general meetings, with high director attendance; the Chairman also held a meeting with INEDs without other directors present[326][327] Board Committees The company has established four specialized board committees—Strategy, Audit, Nomination, and Remuneration and Appraisal—to oversee key governance functions - The Audit Committee, composed of three INEDs and chaired by an accounting expert, held 5 meetings to review financial reports and internal controls[336][342] - The Nomination Committee, chaired by an INED, held 1 meeting to review director nominations[347][349] - The Remuneration and Appraisal Committee, chaired by an INED, held 1 meeting to review director and supervisor remuneration proposals[355][360] - The Strategy Committee, chaired by the Chairman, held 4 meetings to review major strategic matters, including share issuance mandates and a potential A-share listing application[365][367] Internal Control and Risk Management The Board is responsible for maintaining an effective internal control and risk management system, which it reviewed and deemed adequate for the reporting period - The Board confirms its ultimate responsibility for maintaining and reviewing the risk management and internal control systems and considers them effective and adequate for the reporting period[378][379] - Key operational risks identified include macroeconomic fluctuations, industry policies, market competition, slowing demand for PC production equipment, seasonal fluctuations, and the impact of the pandemic[383][384][387][388][390][391] - The company has established a Risk Control and Administration Center to oversee internal control, corporate governance, and legal compliance, and has implemented a whistleblowing mechanism[393] Environmental, Social and Governance (ESG) Report ESG Governance and Strategy The company has established a top-down ESG governance structure and identified key material topics through stakeholder engagement and a materiality assessment - The company has implemented a top-down ESG governance structure supervised by the Board and executed by a management-led ESG working group to ensure the integration of sustainability principles[436] - Through a materiality assessment, the company has identified key focus areas, including employment and labor practices, supply chain management, anti-corruption, water resources, and indirect energy consumption[442][443] Environmental Protection The company is committed to green industrial construction, focusing on emissions control, resource efficiency, and pollution prevention in its operations Greenhouse Gas Emissions (tonnes of CO2 equivalent) | Scope | 2020 | 2019 | | :--- | :--- | :--- | | Scope 1 (Direct Emissions) | 831.19 | 989.25 | | Scope 2 (Indirect Emissions) | 12,463.90 | 11,745.59 | | Total | 13,295.09 | 12,734.84 | - By centralizing the use of formwork in factories, the company reduces wood consumption by 75% compared to traditional construction methods[450] - Production wastewater is treated in a three-stage sedimentation tank and recycled, achieving 100% compliant discharge; hazardous waste is handled by qualified third parties[455][462] - The company has adopted a PE film one-step molding process for treating rough surfaces of precast components, significantly reducing water consumption compared to traditional washing methods[473] Social Responsibility The company upholds employee rights, prioritizes health and safety, invests in talent development, ensures product quality, maintains a zero-tolerance policy on corruption, and actively contributes to the community - As of the end of 2020, the company had 3,209 full-time employees and strictly prohibits the use of child and forced labor[501][535][538] - During the reporting period, the company conducted 594 safety training sessions and drills with 15,186 participants, achieving a 100% safety training coverage rate for new employees[521] - The company invested in talent development, with an average training duration of 129.06 hours per employee in 2020, and cultivates industry talent through its B-house Academy[528][531] - As of the end of the reporting period, the company held 950 patents and actively participated in setting numerous national, industry, and local standards[559][567][570] - During the COVID-19 pandemic, the company donated medical supplies worth RMB 1 million to Xiangya Hospital of Central South University, fulfilling its social responsibility[600] Independent Auditor's Report Independent Auditor's Report KPMG issued an unmodified audit opinion, confirming the financial statements give a true and fair view, while highlighting four key audit matters requiring significant judgment - The auditor, KPMG, issued an unmodified (clean) opinion on the consolidated financial statements for the year ended December 31, 2020[622] - Key audit matters included: - Revenue recognition: Appropriateness of the timing of revenue recognition for PC components and equipment sales - Capitalization of development costs: Judgment on whether R&D expenditures meet capitalization criteria - Provision for expected credit losses on trade receivables: Significant management judgment in estimating expected credit losses - Valuation of financial assets at FVTPL: Complexity in valuing Level 3 financial assets, such as unlisted equity investments in joint factories[627][632][634][637] Consolidated Financial Statements Consolidated Statement of Comprehensive Income For the year 2020, the company's net profit was RMB 216 million, a 68.0% decrease year-on-year, driven by lower revenue from continuing operations and a significant reduction in gains from associate companies Consolidated Statement of Comprehensive Income Summary (RMB in thousands) | Item | 2020 | 2019 (Restated) | | :--- | :--- | :--- | | Revenue (Continuing operations) | 2,510,988 | 3,200,428 | | Gross Profit (Continuing operations) | 912,263 | 1,102,385 | | Operating Profit (Continuing operations) | 346,808 | 570,956 | | Profit before tax (Continuing operations) | 267,313 | 707,013 | | Profit from continuing operations | 219,347 | 658,750 | | (Loss)/profit from discontinued operations | (2,927) | 18,169 | | Profit for the year | 216,420 | 676,919 | | Basic earnings per share (RMB) | 0.44 | 1.76 | Consolidated Statement of Financial Position As of year-end 2020, the company's total assets stood at RMB 9.19 billion, with a significant portion in non-current assets, while total liabilities decreased to RMB 5.05 billion Consolidated Statement of Financial Position Summary (RMB in thousands) | Item | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total non-current assets | 5,207,489 | 4,853,065 | | Total current assets | 3,983,679 | 4,714,361 | | Total assets | 9,191,168 | 9,567,426 | | Total current liabilities | 3,906,068 | 5,030,721 | | Total non-current liabilities | 1,146,458 | 370,664 | | Total liabilities | 5,052,526 | 5,401,385 | | Total equity | 4,138,642 | 4,166,041 | Consolidated Statement of Changes in Equity Total equity slightly decreased to RMB 4.14 billion by the end of 2020, as the dividend distribution of RMB 244 million outweighed the net profit of RMB 216 million for the year - Total equity decreased from RMB 4.17 billion to RMB 4.14 billion, reflecting the net effect of a RMB 216 million profit for the year offset by a RMB 244 million profit distribution[671][672] Consolidated Statement of Cash Flows In 2020, net cash from operating activities saw a sharp 81.2% decline, and overall cash and cash equivalents decreased to RMB 828 million by year-end Consolidated Statement of Cash Flows Summary (RMB in thousands) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Net cash from operating activities | 181,814 | 967,056 | | Net cash used in investing activities | (367,074) | (1,307,209) | | Net cash (used in)/from financing activities | (76,414) | 1,129,410 | | Net (decrease)/increase in cash and cash equivalents | (261,674) | 789,257 | | Cash and cash equivalents at end of year | 828,288 | 1,084,750 | Summary of Notes to the Consolidated Financial Statements The notes detail key accounting policies, including the classification of the divested construction business as a discontinued operation and the valuation methods for significant financial assets - The company sold its construction business in September 2020, which has been classified as a discontinued operation with prior-period figures restated accordingly[897][899] - Financial assets at FVTPL totaled RMB 1.91 billion, primarily comprising unlisted equity investments in joint factories, which are valued using Level 3 fair value measurement techniques[962][1099] - The company's key capital management metric, the debt-to-equity ratio, increased to 74% at the end of 2020 from 64% in 2019[1052][1053]