Financial Performance - Revenue for the nine months ended September 30, 2021, increased to RMB 81,476,000, representing a 11.0% growth compared to RMB 72,953,000 in the same period of 2020[22]. - Gross profit for the nine months ended September 30, 2021, was RMB 17,795,000, a decrease of 4.7% from RMB 18,667,000 in the previous year[22]. - Profit for the period was RMB 2,167,000, down 59.0% from RMB 5,296,000 for the same period in 2020[22]. - Total comprehensive income for the nine months ended September 30, 2021, was RMB 1,635,000, a decline of 59.5% compared to RMB 4,030,000 in 2020[22]. - The company reported a basic and diluted earnings per share of RMB 0.001 for the nine months ended September 30, 2021, down from RMB 0.010 in the same period of 2020[22]. - Other income and gains for the nine months ended September 30, 2021, increased to RMB 12,719,000, compared to RMB 5,742,000 in the previous year[22]. - Selling and distribution expenses decreased to RMB 5,627,000 for the nine months ended September 30, 2021, from RMB 6,900,000 in 2020, reflecting an 18.5% reduction[22]. - The total comprehensive income attributable to equity shareholders of the company was RMB 742,000 for the nine months ended September 30, 2021, compared to RMB 4,190,000 in the same period of 2020[22]. - The profit before tax for the nine months ended September 30, 2021, was impacted by a cost of inventories sold amounting to RMB 63,681,000, an increase from RMB 54,286,000 in the same period of 2020, representing a growth of approximately 17.5%[61]. - Employee benefit expenses for the nine months ended September 30, 2021, totaled RMB 12,394,000, slightly decreased from RMB 12,966,000 in the same period of 2020, indicating a reduction of about 4.4%[61]. - Research costs for the nine months ended September 30, 2021, were RMB 6,876,000, which is comparable to RMB 6,852,000 in the same period of 2020, showing a marginal increase of 0.4%[61]. - The basic earnings per share for the nine months ended September 30, 2021, was RMB 1,274,000, a decrease from RMB 5,456,000 in the same period of 2020, indicating a decline of about 76.7%[64]. - The group recorded foreign exchange gains of RMB 979,000 for the nine months ended September 30, 2021, compared to RMB 1,116,000 in the same period of 2020, representing a decrease of approximately 12.3%[56]. - Current tax expense for the nine months ended September 30, 2021, was RMB 388,000, with no tax expense recorded in the same period of 2020[63]. - Deferred income released to profit or loss for the nine months ended September 30, 2021, was RMB 3,814,000, an increase from RMB 3,095,000 in the same period of 2020, reflecting a growth of approximately 23.2%[56]. Revenue Breakdown - Revenue from contracts with customers for the three months ended September 30, 2021, was RMB 29,304,000, representing an increase of 5.93% compared to RMB 27,658,000 for the same period in 2020[41]. - For the nine months ended September 30, 2021, total revenue from contracts with customers reached RMB 81,476,000, up 11.00% from RMB 72,953,000 in the prior year[41]. - ITO film sales contributed RMB 12,118,000 for the three months ended September 30, 2021, a significant increase of 34.93% from RMB 8,994,000 in the same period of 2020[42]. - Smart Light-adjusting Film revenue decreased to RMB 7,604,000 for the three months ended September 30, 2021, down 30.00% from RMB 10,917,000 in the previous year[42]. - The revenue from Smart Light-adjusting Glass increased to RMB 6,062,000 for the three months ended September 30, 2021, compared to RMB 1,533,000 in the same period of 2020, marking a growth of 295.00%[42]. - Domestic revenue from Mainland China accounted for RMB 27,980,000 for the three months ended September 30, 2021, which is an increase from RMB 27,658,000 in the same period of 2020[45]. - The Group's principal revenue is generated in Mainland China, with total revenue from this region for the nine months ended September 30, 2021, amounting to RMB 75,377,000, up from RMB 70,445,000 in the previous year[45]. - The Group's revenue recognition for goods transferred at a point in time was RMB 29,304,000 for the three months ended September 30, 2021, compared to RMB 27,658,000 in the same period of 2020[48]. - For the three months ended September 30, 2021, revenue from Customer A was RMB 4,418,000, while revenue from Customer B for the same period was RMB 3,385,000[53]. Market and Competition - The Group faced intense competition in a saturated domestic market, impacting gross profit despite sales growth[71]. - The Group is focusing on research and development to maintain competitiveness and diversify its product range in response to market trends[86]. - The Group's key operating subsidiary is ranked as a leading manufacturer of Smart Light-adjusting Products in the PRC by market share[81]. Corporate Governance - The board of directors includes both executive and independent non-executive members, ensuring governance and oversight[14]. - The Company has established an Audit Committee to review financial reporting processes and internal controls, consisting of three independent non-executive Directors[128]. - The Audit Committee reviewed the unaudited condensed consolidated financial statements for the nine months ended September 30, 2021, and confirmed compliance with applicable accounting principles[130]. - The Company has adopted a code of conduct for directors' securities transactions, ensuring compliance with GEM Listing Rules[126]. - The Company recognizes the importance of good corporate governance and has complied with applicable code provisions during the Relevant Period[120]. - The roles of Chairman and Chief Executive Officer were combined under Mr. Zhang Chao, with measures in place to maintain the balance of power and authority within the Company[122]. Share Options and Capital Structure - The total number of Shares available under the Share Option Scheme is capped at 10% of the total issued share capital as of 17 October 2017, which amounts to 480,000,000 Shares[139]. - As of September 30, 2021, a total of 7,790,000 share options remain unexercised, down from 8,590,000 at the beginning of the year, reflecting a forfeiture of 800,000 options during the period[159]. - The exercise price for the share options is set at HK$1.16 per share[159]. - The company’s share options plan allows for the exercise of options even after the plan is terminated, as long as they were granted before termination[155]. - The maximum number of Shares that can be issued to any Eligible Person in any 12-month period shall not exceed 1% of the number of Shares in issue[144]. - The Share Option Scheme will remain in force for ten years from 17 October 2017, expiring on the day before the tenth anniversary unless terminated earlier[151]. Use of Proceeds - Net proceeds from the listing amounted to HK$ 93.5 million, which will be utilized for various business strategies including overseas expansion and R&D[104]. - Actual use of net proceeds includes HK$ 9.8 million for overseas business expansion and HK$ 21.1 million for R&D of new materials and products[110]. - The actual use of proceeds was lower than planned due to delays in automation and installation of production lines, exacerbated by the COVID-19 pandemic[113]. - As of September 30, 2021, approximately HK$77.1 million of the net proceeds from the Share Offer had been utilized, with the unused net proceeds deposited in licensed banks[112]. Employee Information - The total headcount as of September 30, 2021, was 150 full-time employees, with a remuneration package that includes basic salary, allowances, and bonuses[115]. Shareholding Structure - Top Access Management Limited holds 324,324,325 shares, representing approximately 62.37% of the total shareholding[164]. - AMATA Limited and Mr. Luo Jingxi each hold 40,000,000 shares, accounting for 7.69% of the total shareholding[166]. - Kunlun Holdings Group Limited holds 26,021,206 shares, which is 5.00% of the total shareholding[166]. - Water Development (HK) Holdings Co., Limited has a beneficial interest in 1,687,008,585 shares of Shuifa Singyes, representing approximately 66.92% of its issued share capital[166]. - The total number of shares issued as of September 30, 2021, was 520,000,000[171]. - Mr. Liu Hongwei holds 202,038,750 shares of Shuifa Singyes, representing approximately 8.01% of the total registered share capital[175]. - The total interest held by Mr. Liu Hongwei, including beneficial interest, amounts to 203,538,750 shares, or 8.07% of the total[175]. Compliance and Non-competition - Shuifa Singyes has confirmed compliance with the Deed of Non-competition during the nine months ended September 30, 2021[187]. - No business interests that compete with the Group's business were reported by Directors or controlling shareholders during the nine months ended September 30, 2021[188]. - The controlling shareholder, Shui Fa Xing Ye, has confirmed compliance with the non-competition agreement as of September 30, 2021, and up to the report date[189]. - No directors or controlling shareholders have any competing business interests or conflicts of interest with the group as of September 30, 2021[190].
水发兴业新材料(08073) - 2021 Q3 - 季度财报