中国波顿(03318) - 2021 - 中期财报

Company Information The report outlines China Boton Group Company Limited's fundamental information, including board, committees, banks, address, and auditor - This report provides an overview of China Boton Group Company Limited (stock code: 3318), detailing its board members, committee structures, principal bankers, registered address, and auditor, PricewaterhouseCoopers[5] Financial Statements Interim Condensed Consolidated Statement of Financial Position As of June 30, 2021, the Group's total assets grew to RMB 5.976 billion, driven by a significant increase in trade and other receivables, with total liabilities reaching RMB 2.896 billion and total equity rising to RMB 3.080 billion Key Balance Sheet Items (RMB in thousands) | Item | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 5,976,041 | 5,489,194 | +8.9% | | Total Non-current Assets | 4,052,124 | 4,082,382 | -0.7% | | Total Current Assets | 1,923,917 | 1,406,812 | +36.8% | | Total Liabilities | 2,896,481 | 2,548,858 | +13.6% | | Total Non-current Liabilities | 1,080,821 | 1,205,657 | -10.3% | | Total Current Liabilities | 1,815,660 | 1,343,201 | +35.2% | | Total Equity | 3,079,560 | 2,940,336 | +4.7% | - Significant growth in current assets was primarily due to 'trade and other receivables' increasing from RMB 781 million to RMB 1.281 billion[7] - The increase in current liabilities mainly stemmed from 'trade and other payables' rising from RMB 599 million to RMB 1.020 billion[10] Interim Condensed Consolidated Statement of Profit or Loss In H1 2021, the Group achieved RMB 1.082 billion in revenue, a 5.9% increase, with gross profit up 13.0% to RMB 429 million, and profit for the period surged 65.3% to RMB 135 million, driven by significantly lower finance costs, resulting in RMB 103 million attributable to owners, up 59.9% Income Statement Summary (RMB in thousands) | Item | H1 2021 (Unaudited) | H1 2020 (Unaudited) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 1,081,825 | 1,021,303 | +5.9% | | Gross Profit | 429,486 | 380,216 | +13.0% | | Operating Profit | 197,716 | 167,635 | +17.9% | | Profit for the Period | 134,601 | 81,420 | +65.3% | | Attributable to Owners of the Company | 103,245 | 64,578 | +59.9% | | Basic and Diluted Earnings Per Share (RMB) | 0.10 | 0.07 | +42.9% | - Net finance costs significantly decreased from RMB 55.8 million in the prior period to RMB 24.7 million, a key driver of profit growth[14] Interim Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2021, total comprehensive income for the period was RMB 137 million, a substantial 77.9% increase from RMB 76.93 million in the prior period, primarily due to strong profit growth Comprehensive Income Statement Summary (RMB in thousands) | Item | H1 2021 (Unaudited) | H1 2020 (Unaudited) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Profit for the Period | 134,601 | 81,420 | +65.3% | | Other Comprehensive Income (Currency Translation Differences) | 2,238 | (4,491) | N/A | | Total Comprehensive Income for the Period | 136,839 | 76,929 | +77.9% | | Attributable to Owners of the Company | 110,764 | 60,182 | +84.0% | | Attributable to Non-controlling Interests | 26,075 | 16,747 | +55.7% | Interim Condensed Consolidated Statement of Changes in Equity During the reporting period, the Group's total equity increased from RMB 2.940 billion at the beginning of the year to RMB 3.080 billion at period-end, primarily driven by RMB 135 million in current profit, with RMB 103 million attributable to owners and recognized in retained earnings - As of June 30, 2021, total equity attributable to owners of the Company was RMB 2.837 billion, a 4.1% increase from RMB 2.725 billion at the beginning of the year[19] - Retained earnings, a primary source of equity growth, increased from RMB 977 million to RMB 1.080 billion due to the injection of current period profit[19] Interim Condensed Consolidated Statement of Cash Flows In H1 2021, the Group's operating cash flow turned positive, generating a net RMB 78.04 million, but net cash and cash equivalents decreased by RMB 9.52 million at period-end due to net cash outflows from both investing and financing activities Cash Flow Statement Summary (RMB in thousands) | Item | H1 2021 (Unaudited) | H1 2020 (Unaudited) | | :--- | :--- | :--- | | Net Cash Generated From/(Used In) Operating Activities | 78,035 | (1,410) | | Net Cash Used In Investing Activities | (14,333) | (66,244) | | Net Cash Used In Financing Activities | (73,222) | (86,733) | | Net Decrease in Cash | (9,520) | (154,387) | | Cash at Beginning of Period | 263,486 | 324,437 | | Cash at End of Period | 251,469 | 172,147 | Notes to the Interim Condensed Consolidated Financial Statements Revenue and Segment Information The Group operates five segments, with e-cigarette products being the largest revenue source, accounting for 55.5% of total revenue and growing 13.2% year-on-year, while food flavors and investment properties also showed strong growth, contrasting with declines in flavor enhancers and daily flavors H1 2021 Segment Revenue (RMB in thousands) | Segment | H1 2021 Revenue | % of Total Revenue | H1 2020 Revenue | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | | Flavor Enhancers | 300,289 | 27.8% | 330,161 | -9.1% | | Food Flavors | 91,088 | 8.4% | 70,499 | +29.2% | | Daily Flavors | 65,660 | 6.1% | 73,325 | -10.4% | | E-cigarette Products | 600,583 | 55.5% | 530,628 | +13.2% | | Investment Properties | 24,205 | 2.2% | 16,690 | +45.0% | | Total | 1,081,825 | 100.0% | 1,021,303 | +5.9% | H1 2021 Segment Operating Profit/(Loss) (RMB in thousands) | Segment | H1 2021 Operating Profit/(Loss) | H1 2020 Operating Profit/(Loss) | | :--- | :--- | :--- | | Flavor Enhancers | 109,620 | 126,352 | | Food Flavors | 24,880 | 22,719 | | Daily Flavors | 6,172 | 6,960 | | E-cigarette Products | 71,961 | 20,822 | | Investment Properties | 4,157 | 4,126 | | Unallocated | (19,074) | (13,344) | | Total | 197,716 | 167,635 | Notes to Financial Position (Assets and Liabilities) As of June 30, 2021, the Group's total borrowings slightly decreased to RMB 1.379 billion, while net trade receivables significantly increased from RMB 398 million to RMB 738 million, and trade payables rose from RMB 256 million to RMB 640 million, reflecting business expansion and changes in working capital needs - Gross trade receivables increased from RMB 446 million to RMB 811 million, an 81.8% increase[43] Borrowings (RMB in thousands) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Non-current Borrowings | 767,792 | 890,543 | | Current Borrowings | 611,189 | 557,988 | | Total Borrowings | 1,378,981 | 1,448,531 | Notes to Statement of Profit or Loss Items During the reporting period, the Group's revenue primarily derived from goods sales (RMB 1.058 billion) and rental income (RMB 24.21 million), with basic earnings per share significantly increasing to RMB 0.10 from RMB 0.07 in the prior period, and key subsidiaries benefiting from a 15% preferential tax rate as high-tech enterprises - Key subsidiaries, including Shenzhen Boton, Dongguan Boton, and Jisheng Technology, are recognized as high-tech enterprises, enjoying a 15% preferential corporate income tax rate[56] Earnings Per Share Calculation | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company (RMB in thousands) | 103,245 | 64,578 | | Weighted Average Number of Ordinary Shares in Issue (thousands) | 1,080,512 | 897,287 | | Basic Earnings Per Share (RMB) | 0.10 | 0.07 | Dividends, Commitments and Contingent Liabilities The Board does not recommend an interim dividend for the six months ended June 30, 2021, and at period-end, the Group had capital commitments of RMB 38.85 million, primarily for property, plant, and equipment, with no significant contingent liabilities - The Board does not recommend an interim dividend for 2021, consistent with the policy for the same period in 2020[63] - As of June 30, 2021, the Group's contracted but unprovided capital commitments amounted to approximately RMB 38.85 million[65] Management Discussion and Analysis Business Review and Segment Performance In H1 2021, despite macroeconomic uncertainties, the Group's total revenue grew 5.9% to RMB 1.082 billion, with net profit surging 65.4% to RMB 135 million, primarily driven by a 13.2% revenue increase in e-cigarette products, benefiting from the rapid expansion of its own brand 'MEIQ' in the Chinese market H1 2021 Performance Summary | Indicator | H1 2021 | H1 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Revenue (RMB billion) | 1.082 | 1.021 | +5.9% | | Gross Profit (RMB billion) | 0.429 | 0.380 | +13.0% | | Net Profit (RMB billion) | 0.135 | 0.081 | +65.4% | - E-cigarette product revenue increased by 13.2%, primarily due to newly established domestic subsidiaries distributing the own-brand 'MEIQ' to over 30 major Chinese cities through approximately 6,000 sales channels and franchised stores[75] - The flavor enhancers segment experienced a 9.1% revenue decrease due to internal strategic reforms and restructuring, while the daily flavors segment saw a 10.4% revenue decline due to sluggish market demand and affected customer export businesses[72][74] Costs, Expenses and Profitability The Group's profitability significantly improved, with gross profit up 13.0% and net profit margin increasing from 8.0% to 12.4%; sales and marketing expenses decreased 10.8%, while administrative expenses rose 7.3% due to increased R&D, and net finance costs sharply declined 55.7%, contributing significantly to profit growth - Net profit margin improved from 8.0% in the prior period to 12.4% in the reporting period[78] - Sales and marketing expenses decreased by 10.8%, primarily due to reduced advertising costs, operating lease expenses, and agency fees[81] - Net finance costs decreased from RMB 55.8 million to RMB 24.7 million, mainly attributable to reduced interest expenses on certain loans[83] Outlook and Strategies Looking ahead, the Group plans to expand core business capacity by establishing a large e-cigarette production base in Jiangxi and a new technology park in Xiantao City, Hubei for flavor enhancers, while also strengthening internal management, team building, and cost control to enhance overall competitiveness - Plans are underway to expand the production capacity of the e-cigarette products segment by establishing a large manufacturing base in Jiangxi[84] - A new technology park, spanning over 130,000 square meters, will be established in Xiantao City, Hubei, to increase the production capacity of the flavor enhancers segment[84] - Emphasis is placed on strengthening internal management, including building efficient teams, enhancing management capabilities, promoting innovative concepts, and implementing strict cost controls[85] Financial Position, Liquidity and Capital Management The Group maintains a sound financial position, with net current assets increasing to RMB 108 million and a current ratio of 1.1 as of June 30, 2021; the gearing ratio (total borrowings/total equity) improved from 49.3% to 44.8%, indicating optimized financial leverage, and the Group remains confident in its funding sources Key Financial Ratios | Indicator | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Net Current Assets (RMB million) | 108 | 64 | | Current Ratio | 1.1 | 1.0 | | Gearing Ratio | 44.8% | 49.3% | - The Group's transactions are predominantly denominated in RMB, with close monitoring of RMB to USD exchange rate risk, and bank borrowings carry floating interest rates, exposing the Group to interest rate risk[90] Other Operating Information As of June 30, 2021, the Group employed 1,267 staff members, and a legal proceeding initiated in August 2020 against the vendor of an acquisition (Kimree, Inc.) for breach of non-compete undertakings remains ongoing - As of June 30, 2021, the Group had 1,267 employees across China, Hong Kong, and South Korea[95] - The Company is currently engaged in legal proceedings against the vendor of a 2016 acquisition for breaching non-compete undertakings stipulated in the share transfer agreement, with the litigation ongoing[98][99] Other Information Directors', Chief Executive's and Major Shareholders' Interests As of June 30, 2021, Mr. Wang Mingfan, the Company's Chairman and CEO, held approximately 67.51% of the total share capital, making him the controlling shareholder, with interests encompassing personal, family, and controlled corporate holdings Mr. Wang Mingfan's Shareholding | Interest Type | Number of Shares | Percentage of Total Share Capital | | :--- | :--- | :--- | | Personal Interest | 336,555,052 | - | | Family Interest | 25,262,431 | - | | Corporate Interest | 367,638,743 | - | | Total | 729,456,226 | 67.51% | Corporate Governance and Committees The Company has established an Audit Committee for financial reporting review, a Remuneration Committee for compensation, and a Nomination Committee for director nominations, all chaired by independent non-executive directors; while largely compliant with corporate governance codes, the roles of Chairman and CEO are not separated, both held by Mr. Wang Mingfan, a structure the Board deems suitable for the Company's development - The Audit Committee, Remuneration Committee, and Nomination Committee have all been established and are led by independent non-executive directors[115][116][117] - The Company does not comply with the corporate governance code provision requiring separation of the Chairman and Chief Executive roles, with Mr. Wang Mingfan holding both positions, a structure the Board believes provides strong and consistent leadership[118]