Financial Performance - For the year ended December 31, 2018, the turnover was RMB 7,191,911, a decrease of 15.5% from RMB 8,507,477 in 2017[20] - Profit attributable to owners of the Company was RMB 13,135, down 54.9% from RMB 29,120 in 2017[20] - Total assets decreased by 2.4% to RMB 3,903,038 from RMB 3,998,797 in 2017[20] - The basic profit per share was RMB 0.01, a decline of 66.7% from RMB 0.03 in 2017[20] - Return on total assets was 1.59%, down 31.0% from 2.30% in 2017[20] - Gearing ratio increased to 62.1%, up 28.3% from 48.4% in 2017[20] - The gross profit for 2018 was RMB 760,300, down 6.8% from RMB 815,942 in 2017, with a gross profit margin of 10.6%[47] - In 2018, the Group's turnover decreased by approximately RMB1,315,566 thousand, with RMB1,212,632 thousand attributed to changes in income recognition principles[60] - The Group's gross profit decreased by approximately RMB55,642 thousand due to declines in both domestic and Vietnamese feed performance[61] - Profit attributable to equity shareholders decreased by approximately RMB15,985 thousand compared to the previous year[62] Market and Industry Trends - The domestic chicken market demand rose steadily due to the outbreak of African swine fever, with the price of day-old chicks reaching a record high of RMB 8.5[49] - The domestic feed industry shifted its focus to poultry feed to minimize the adverse impact of the African swine fever epidemic on profitability[54] - The catering industry is facing stricter quality requirements, which aligns with DaChan's strategy of food safety and traceability[33] Operational Strategies - The Group operates over 30 factories across China, Vietnam, and Malaysia, enhancing its market position for rapid growth[9] - The Group is committed to developing new high value-added products using the latest food science and technology[14] - The company plans to introduce more diverse ingredients to provide complete catering solutions in the future[33] - DaChan Food aims to improve its relative competitiveness by leveraging its experience and technological know-how from Taiwan[43] - The company will cautiously consolidate its market position and enhance competitiveness through collaboration with other subsidiaries[44] - The Group plans to expand the scale of self-owned parent breeders to ensure a supply of high-quality day-old chicks[71] - The Group aims to increase the ratio of converting chicken meat to prepared and deeply processed food products to mitigate market risks[71] Segment Performance - The meat product segment's turnover was RMB1,134,149 thousand, a decrease of 52.4% from RMB2,382,142 thousand in 2017[65] - Gross profit for the meat product segment increased by approximately RMB47,842 thousand, representing a growth of 58.2%[68] - The total turnover for the livestock feeds segment was RMB4,249,355 thousand, a decrease of 5.5% from RMB4,498,662 thousand in 2017[73] - Gross profit for the livestock feeds segment decreased by 23.0% to RMB319,841 thousand from RMB415,416 thousand in 2017[73] - The gross profit margin for the feeds segment in China decreased to 5.1% from 7.7% in 2017[73] - In 2018, the gross profit of the domestic feed business in China fell by 41.4%, with total sales volume decreasing by 12% year-on-year, while broiler feeds increased by 14%[76][78] - The gross profit of the Vietnamese and Malaysian feed business decreased by 13.7% in 2018, but sales volume in the fourth quarter grew by 9.5% quarter-on-quarter and 8.7% year-on-year[79] - The processed food segment's operating income increased by 11.2% year-on-year, with sales volume growing by 7.4%[86][87] - The gross profit of exported foods grew by 13.4% year-on-year, benefiting from the appreciation of the US dollar[87] - The gross profit margin for processed food decreased to 17.2% from 19.6% year-on-year, while the gross profit margin for exports increased to 15.9% from 14.8%[83] Corporate Governance - The company emphasizes good corporate governance to maintain close relationships with employees, partners, shareholders, and investors[145] - The management team is committed to enhancing corporate transparency and governance standards[145] - The Company has adopted a corporate governance code based on the latest revised code on corporate governance as per the Listing Rules[150] - The Board consists of more than one third independent non-executive Directors, ensuring high standards of financial reporting and adequate checks and balances for safeguarding shareholder interests[172] - The Company ensures timely distribution of meeting agendas and related documents at least 3 days prior to meetings[178] - The independent non-executive Directors are responsible for ensuring the Board adheres to high standards of mandatory reporting[172] - The Company has a structured approach to corporate governance, including regular meetings and adherence to established policies[174] Management Team - The company has a strong management team with over 35 years of experience in global commodity procurement and trading operations[138] - The Chief Executive Officer, Mr. Ou Chang-Jou, has been with the company since 1980 and has extensive experience in the feed, meat, and food business operations[138] - The management team includes Mr. Han, who has extensive experience in operation analysis and strategic management since joining in 2012[143] - The company has a diverse management team with expertise across various sectors, including finance, operations, and strategic planning[143] Financial Position - As of December 31, 2018, the Group's cash and bank deposit balances amounted to approximately RMB408,721 thousand, a decrease of approximately RMB117,847 thousand from 2017[92] - Interest-bearing borrowings increased by approximately RMB234,447 thousand to approximately RMB1,135,259 thousand in 2018, compared to approximately RMB900,812 thousand in 2017[92] - The Group's interest expense in 2018 was approximately RMB35,407 thousand, a decrease of approximately 16.1% from RMB42,183 thousand in 2017[96] - In 2018, the Group's capital expenditure on the acquisition of properties, machinery, and equipment amounted to approximately RMB184,743 thousand[99] Acquisitions and Disposals - In September 2018, the Group transferred its entire equity interest in Beijing Sister Kitchen Catering Management Co., Ltd. for RMB10,000,000[110] - The Group completed the disposal of its entire equity interests in Beijing Sisters Kitchen Food and Beverage Management Co. for a consideration of RMB 10,000,000 in September 2018[112] - Following the completion of the disposals, Sisters Kitchen ceased to be a subsidiary and Better Me ceased to be an associate of the Group[112] - No other material acquisitions or disposals of subsidiaries, associates, and joint ventures occurred during the financial year ended December 31, 2018[113]
大成食品(03999) - 2018 - 年度财报