华众车载(06830) - 2019 - 中期财报

Company Information This section provides essential information about Huazhong In-Vehicle Holdings Company Limited, including board members, auditors, and stock exchange listing Company Basic Information This chapter provides fundamental details of Huazhong In-Vehicle Holdings Company Limited, including board members, auditors, and its listing on the HKEX Main Board (stock code 6830) Company Key Information | Item | Information | | :--- | :--- | | Company Name | Huazhong In-Vehicle Holdings Company Limited | | Listed Exchange | The Stock Exchange of Hong Kong Limited Main Board | | Stock Code | 6830 | | Chairman and CEO | Mr. Zhou Minfeng | | Auditor | Ernst & Young | | Company Website | www.cn-huazhong.com | Management Discussion and Analysis This section reviews the company's business performance, financial results, liquidity, and future outlook for the reporting period Business and Market Review In the first half of 2019, the Group's performance declined due to the overall downturn in China's automotive industry, despite maintaining market position - The company's main business involves manufacturing and selling automotive interior and exterior structural and decorative parts, molds and tools, air conditioning related components, and other non-automotive products[8] - In H1 2019, China's auto production and sales decreased by 13.7% and 12.4% year-on-year, posing market challenges[8] H1 2019 Key Financial Indicators | Indicator | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | RMB 919,456,000 | RMB 975,675,000 | -5.8% | | Profit attributable to owners of the parent | RMB 48,709,000 | RMB 67,465,000 | -27.8% | Financial Review This chapter analyzes the Group's financial performance, highlighting revenue decline in core business, growth in molds and tools, and changes in expenses and taxation Revenue Analysis Group total revenue decreased by 5.8% to RMB 919.46 million, with core automotive parts declining but molds and tools showing significant growth, leading to a slight increase in overall gross margin Revenue and Gross Margin by Product Segment (Six Months Ended June 30) | Product Segment | 2019 Revenue (RMB '000) | 2019 Gross Margin (%) | 2018 Revenue (RMB '000) | 2018 Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Automotive interior and exterior structural and decorative parts | 656,053 | 31.8 | 738,055 | 30.9 | | Molds and tools | 153,638 | 11.5 | 104,005 | 11.0 | | Air conditioning/heater casings/reservoirs | 40,616 | 13.5 | 58,627 | 13.0 | | Non-automotive products | 26,475 | 45.6 | 23,882 | 38.9 | | Sales of raw materials | 42,674 | 5.1 | 51,106 | 5.2 | | Total | 919,456 | 26.8 | 975,675 | 26.5 | - The increase in molds and tools revenue was primarily driven by rising customer demand for new automotive model molds and tools[12] Other Income, Expenses and Profit Analysis Other income and gains significantly increased, while administrative expenses rose due to R&D investment, and tax expenses decreased with lower taxable profit - Other income and gains increased by 101.6% year-on-year to RMB 17.19 million, mainly due to higher rental income, government subsidies, dividends, and management fee income[15] - Administrative expenses increased by 14.3% year-on-year to RMB 125 million, primarily due to higher staff costs, R&D expenses, and professional service fees[17] - Tax expense decreased by 35.0% year-on-year to RMB 12.22 million, mainly attributable to a reduction in taxable profit[21] Liquidity and Financial Resources The Group's operating cash flow turned negative, total interest-bearing borrowings increased, and the gearing ratio slightly rose, with no significant contingent liabilities - Operating cash flow shifted from a net inflow of RMB 96.93 million in the prior period to a net outflow of RMB 52,000[23] Financial Position Summary (As at June 30, 2019) | Indicator | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | RMB 90.12 million | RMB 78.75 million | | Interest-bearing bank and other borrowings | RMB 934 million | RMB 798 million | | Gearing ratio | 67.3% | 66.6% | | Capital commitments | RMB 198 million | RMB 157 million | - The Group's sales, purchases, and borrowings are primarily denominated in RMB, HKD, and EUR, exposing it to foreign exchange risk, for which no hedging policy is currently adopted[25] Employees and Remuneration Policy As of June 30, 2019, the Group's employee count increased to 3,416, with total staff costs (excluding directors and senior management) rising by approximately 14.2% - As of June 30, 2019, the Group had 3,416 employees, compared to 3,286 in the prior period[31] - Total staff costs (excluding directors and key management personnel) for the six months ended June 30, 2019, were approximately RMB 129.64 million, an increase from RMB 113.54 million in the prior period[31] Prospects Management is optimistic about the H2 2019 automotive market stabilization, focusing on leveraging existing relationships, expanding into new energy vehicles, and investing in lightweight technology R&D - Management is optimistic about the stabilization of passenger vehicle sales in the coming months, particularly in the luxury and joint venture brand markets[34] - Group strategic priorities include leveraging strong relationships with luxury and joint venture automakers, entering the new energy vehicle sector, expanding new production bases, and continuous investment in lightweight technology R&D[34] Corporate Governance and Other Information This section covers the company's adherence to corporate governance codes, details on directors' and shareholders' interests, loan financing covenants, and interim dividend policy Corporate Governance Practices The company complied with all applicable code provisions of the Corporate Governance Code during the reporting period and confirmed directors' adherence to securities dealing codes - The company complied with all applicable code provisions of the Corporate Governance Code for the six months ended June 30, 2019[37] - Mr. Zhou Minfeng, Chairman and Executive Director, was appointed as the company's Chief Executive Officer, effective July 31, 2019[39] Directors' and Shareholders' Interests This chapter discloses the shareholdings of directors, key management, and major shareholders, with Chairman Zhou Minfeng holding 74.61% indirectly as the controlling shareholder Major Directors' and Shareholders' Shareholdings (As at June 30, 2019) | Name/Entity | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Issued Shares | | :--- | :--- | :--- | :--- | | Mr. Zhou Minfeng | Interest in controlled corporation | 1,320,000,000 | 74.61% | | Huayou Holdings | Beneficial owner | 1,320,000,000 | 74.61% | - No outstanding share options were granted, exercised, lapsed, or cancelled under the share option scheme during the reporting period or as of the reporting date[43] Loan Facilities and Audit Committee The company has a HKD 136.5 million term loan facility with covenants requiring the controlling shareholder to maintain his position and control, and the Audit Committee reviewed the interim results - A HKD 136.5 million financing agreement requires controlling shareholder Mr. Zhou to maintain his chairman position, control over the company, and direct or indirect ownership of no less than 50% of the share capital[51] - The Audit Committee reviewed the interim results for the six months ended June 30, 2019, and deemed them to be properly disclosed[52] Interim Dividend The Board resolved not to declare an interim dividend for the six months ended June 30, 2019, contrasting with a dividend paid in the prior year - The Board resolved not to declare an interim dividend for the six months ended June 30, 2019[53] Interim Financial Statements This section presents the condensed consolidated interim financial statements, including the income statement, comprehensive income statement, statement of financial position, statement of changes in equity, and cash flow statement Condensed Consolidated Interim Income Statement For the six months ended June 30, 2019, the company reported revenue of RMB 919.46 million, a gross profit of RMB 246.20 million, and profit attributable to owners of the parent of RMB 48.71 million Consolidated Income Statement Summary (Six Months Ended June 30) | Item (RMB '000) | 2019 (Unaudited) | 2018 (Unaudited) | | :--- | :--- | :--- | | Revenue | 919,456 | 975,675 | | Gross profit | 246,201 | 258,923 | | Profit before tax | 62,970 | 86,194 | | Profit for the period | 50,750 | 67,387 | | Profit attributable to owners of the parent | 48,709 | 67,465 | | Basic earnings per share (RMB) | 0.0275 | 0.0381 | Condensed Consolidated Interim Statement of Comprehensive Income Total comprehensive income for the period was RMB 63.25 million, including profit for the period and other comprehensive income primarily from equity revaluation gains - Total comprehensive income for the period was RMB 63.246 million, with RMB 61.205 million attributable to owners of the parent[58] - Other comprehensive income primarily arose from fair value changes of equity investments designated at fair value through other comprehensive income, net of tax, amounting to RMB 12.96 million[58] Condensed Consolidated Interim Statement of Financial Position As of June 30, 2019, total assets were RMB 3.283 billion, total liabilities were RMB 2.244 billion, and net assets were RMB 1.039 billion, with a net current liability of RMB 120 million Statement of Financial Position Summary (RMB '000) | Item | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :--- | :--- | :--- | | Total non-current assets | 1,405,988 | 1,268,045 | | Total current assets | 1,876,566 | 1,773,995 | | Total Assets | 3,282,554 | 3,042,040 | | Total current liabilities | 1,996,758 | 1,841,741 | | Total non-current liabilities | 247,290 | 217,909 | | Total Liabilities | 2,244,048 | 2,059,650 | | Net Assets | 1,038,506 | 982,390 | Condensed Consolidated Interim Statement of Changes in Equity Total equity increased from RMB 982 million at the beginning of the period to RMB 1.039 billion, driven by total comprehensive income, partially offset by the 2018 final dividend payment - Equity attributable to owners of the parent increased from RMB 943 million at the beginning of the period to RMB 997 million[64] Condensed Consolidated Interim Statement of Cash Flows The Group's cash and cash equivalents increased by RMB 11.37 million, with operating cash flow turning negative, significant net cash outflow from investing activities, and net cash inflow from financing activities Cash Flow Statement Summary (Six Months Ended June 30, RMB '000) | Item | 2019 (Unaudited) | 2018 (Unaudited) | | :--- | :--- | :--- | | Net cash (used in)/generated from operating activities | (52) | 96,932 | | Net cash used in investing activities | (116,323) | (118,435) | | Net cash generated from financing activities | 127,747 | 47,400 | | Net increase in cash and cash equivalents | 11,372 | 25,897 | Notes to the Condensed Consolidated Interim Financial Information This section provides detailed notes to the interim financial statements, covering accounting policies, revenue breakdown, earnings per share, borrowings, and related party transactions Note 2: Basis of Preparation and Changes in Accounting Policies Financial information is prepared on a going concern basis despite net current liabilities, with the Group adopting IFRS 16 "Leases" for the first time, impacting the financial statements - Despite a consolidated net current liability of RMB 120 million as of June 30, 2019, directors consider the going concern basis appropriate due to unused credit facilities and ongoing cost control measures[72] - The Group first adopted IFRS 16 "Leases" on January 1, 2019, using a modified retrospective approach, resulting in a RMB 226 million increase in right-of-use assets and a RMB 6.26 million increase in interest-bearing borrowings[76][79][81] Note 4: Revenue, Other Income and Gains This note details revenue by product type, with sales of plastic and automotive parts contributing RMB 766 million and molds and tools RMB 154 million, primarily from mainland China Revenue by Geographical Market (Six Months Ended June 30, RMB '000) | Geographical Market | 2019 (Unaudited) | 2018 (Unaudited) | | :--- | :--- | :--- | | Mainland China | 819,482 | 861,047 | | Overseas | 101,945 | 114,628 | | Total | 921,427 | 975,675 | Note 10: Earnings Per Share Basic and diluted earnings per share for the six months ended June 30, 2019, were RMB 0.0275, calculated based on profit attributable to owners of the parent and weighted average shares Earnings Per Share Calculation | Item | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Profit attributable to owners of the parent (RMB '000) | 48,709 | 67,465 | | Weighted average number of ordinary shares in issue | 1,769,193,800 | 1,769,193,800 | | Basic earnings per share (RMB) | 0.0275 | 0.0381 | Note 18: Interest-Bearing Bank and Other Borrowings As of June 30, 2019, total interest-bearing borrowings were RMB 934 million, with RMB 743 million due within one year, and secured bank loans of RMB 98.85 million were collateralized by assets Interest-Bearing Bank and Other Borrowings (RMB '000) | Category | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :--- | :--- | :--- | | Current | 743,471 | 629,664 | | Non-current | 190,624 | 168,136 | | Total | 934,095 | 797,800 | Note 20: Related Party Transactions and Balances The Group engaged in significant related party transactions, including sales of RMB 31.12 million and purchases of RMB 41.28 million, with outstanding receivables of RMB 95.81 million and payables of RMB 50.71 million at period-end - Significant related party transactions included sales of RMB 28.75 million to Changchun Huazhong Yanfeng and purchases of RMB 30.60 million from Ningbo Hualete[127] Outstanding Balances with Related Parties (RMB '000) | Item | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :--- | :--- | :--- | | Amounts due from related parties | 95,811 | 85,017 | | Amounts due to ultimate controlling shareholder | 1,026 | 1,110 | | Amounts due to related parties | 50,712 | 67,819 |