福成股份(600965) - 2017 Q2 - 季度财报

Definitions This section provides definitions for key terms and abbreviations used throughout the report Company Profile and Key Financial Indicators This section provides an overview of the company's basic information and its key financial performance and indicators Company Basic Information This section outlines the basic information of Hebei Fucheng Wufeng Food Co., Ltd., including its name, legal representative, and contact details - The company's Chinese name is Hebei Fucheng Wufeng Food Co., Ltd., with stock abbreviation Fucheng Shares and stock code 600965[17][21] Key Financial Data and Indicators In H1 2017, operating revenue decreased by 8.60% to RMB 621 million, and net profit attributable to the parent declined by 22.86% to RMB 65.53 million, while operating cash flow increased by 42.51% | Key Accounting Data | Current Period (Jan-Jun) (RMB) | Prior Year Period (RMB) | Current Period vs. Prior Year Period Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 620,775,343.64 | 679,171,550.48 | -8.60% | | Net Profit Attributable to Parent Company Shareholders | 65,525,512.41 | 84,939,197.23 | -22.86% | | Net Profit Attributable to Parent Company Shareholders (Excluding Non-recurring Gains/Losses) | 64,052,064.36 | 84,840,935.48 | -24.50% | | Net Cash Flow from Operating Activities | 63,972,632.80 | 44,890,014.11 | 42.51% | | Asset Status | End of Current Period (RMB) | End of Prior Year (RMB) | End of Current Period vs. End of Prior Year Change (%) | | Net Assets Attributable to Parent Company Shareholders | 1,762,620,792.77 | 1,754,404,347.21 | 0.47% | | Total Assets | 2,207,813,410.83 | 2,602,546,027.60 | -15.17% | | Key Financial Indicators | Current Period (Jan-Jun) | Prior Year Period | Current Period vs. Prior Year Period Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | 0.08 | 0.10 | -20.00% | | Diluted Earnings Per Share (RMB/share) | 0.08 | 0.10 | -20.00% | | Weighted Average Return on Net Assets (%) | 3.69 | 5.09 | Decrease of 1.40 percentage points | - During the reporting period, total non-recurring gains and losses amounted to RMB 1.47 million, primarily comprising RMB 4.62 million in government subsidies and RMB -3.24 million in other non-operating income and expenses[26][27] Business Overview This section provides an overview of the company's main business segments, operating model, and industry landscape Main Business, Operating Model, and Industry Overview The company operates four main business segments: livestock breeding and slaughter, food processing, catering, and funeral services, with a focus on direct sales and future M&A in the funeral sector - The company's main business has formed four segments: livestock breeding and slaughter, food processing, catering services, and funeral services[29] - The company's operating model covers a complete industry chain from livestock breeding to catering services, with both catering and cemetery businesses adopting a direct sales model to control quality and service[30] - The funeral service industry, a new business, exhibits strong local characteristics and competitiveness, benefiting from the Beijing-Tianjin-Hebei integration strategy, with peer M&A being a key focus for future growth[33] Core Competitiveness Analysis The company's core competitiveness stems from its integrated beef cattle to catering supply chain, "Fucheng" brand, strategic Beijing-Tianjin-Hebei location, and unique position as an A-share funeral business - The company has established a complete industry chain from beef cattle breeding, slaughtering, and food processing to catering services, including a high-quality beef cattle breeding base in Australia[34] - The company holds the "Fucheng" China Well-known Trademark and maintains long-term strategic partnerships with major clients like McDonald's and KFC[36] - Strategically located in Yanjiao, Hebei, 35 kilometers from Beijing, the company benefits from a superior geographical position and efficient logistics distribution[37] - As the sole A-share company with funeral services, this segment has become a new hallmark, offering significant industry advantages and capital market recognition[38] Discussion and Analysis of Operations This section provides a detailed discussion and analysis of the company's operational performance, including revenue, profit, and cash flow Overview of Operations Total revenue declined 8.6% to RMB 621 million and net profit fell 22.86% to RMB 65.53 million due to industry headwinds, while funeral services revenue grew 15.47%, and the company initiated an employee stock ownership plan | Financial Indicators | H1 2017 (RMB 10,000) | Year-on-Year Change (%) | | :--- | :--- | :--- | | Total Operating Revenue | 62,077.53 | -8.6% | | Net Profit Attributable to Parent Company | 6,552.55 | -22.86% | | Business Segment | Operating Revenue (RMB 10,000) | Year-on-Year Change (%) | | :--- | :--- | :--- | | Livestock Slaughter and Food Processing | 38,023.35 | -7.92% | | Catering Services | 13,450.47 | -25.17% | | Funeral Services | 10,878.81 | +15.47% | - The company launched its first employee stock ownership plan, acquiring 9,051,291 shares (representing 1.11% of total share capital) in the secondary market through a trust, with a transaction value of approximately RMB 114 million[41] Main Business Analysis Operating revenue decreased 8.60% due to declines in livestock and catering, offset by 15.47% growth in funeral services, while financial expenses surged 72.70% and operating cash flow improved 42.51% | Account | Current Period Amount (RMB) | Prior Year Period Amount (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 620,775,343.64 | 679,171,550.48 | -8.60 | | Operating Cost | 391,492,987.29 | 406,443,573.63 | -3.68 | | Financial Expenses | 6,188,510.62 | 3,583,438.41 | 72.70 | | Net Cash Flow from Operating Activities | 63,972,632.80 | 44,890,014.11 | 42.51 | | Net Cash Flow from Financing Activities | -130,728,035.17 | 137,271,694.61 | -195.23 | - The decline in operating revenue was primarily driven by reduced income from the livestock industry (-6.93%) and catering industry (-25.73%), partially offset by a 15.47% increase in funeral services revenue[43] - Financial expenses increased by 72.70% year-on-year, primarily due to higher interest expenses from increased parent company financing and the impact of loan interest and exchange differences from the Australian subsidiary[50] - Net cash flow from financing activities decreased by 195.23% year-on-year, primarily due to reduced cash received from borrowings and increased cash paid for debt repayment[53] Analysis of Assets and Liabilities As of the reporting period end, total assets decreased 15.17% to RMB 2.21 billion, and total liabilities significantly dropped 47.58% to RMB 444 million, driven by reduced monetary funds and repayment of short-term debt | Item Name | End of Current Period (RMB) | Change from Prior Period End (%) | Main Reason | | :--- | :--- | :--- | :--- | | Monetary Funds | 450,373,173.11 | -44.57 | Repayment of bank loans | | Construction in Progress | 13,284,463.94 | 33.83 | Increase in headquarters construction projects | | Short-term Borrowings | 100,000,000.00 | -57.49 | Bank loans repaid at maturity | | Notes Payable | 160,020,000.00 | -55.55 | Bank acceptance bills matured and paid | | Taxes Payable | 13,414,058.68 | -75.58 | Decrease in corporate income tax, VAT, etc. | | Total | | | | | Total Assets | 2,207,813,410.83 | -15.17 | | | Total Liabilities | 443,841,606.80 | -47.58 | | Analysis of Major Holding and Participating Companies Sanhe Lingshan Baota Cemetery, the funeral business subsidiary, was the primary profit driver with RMB 61.05 million net profit, while Fucheng Fat Beef Catering reported RMB 8.95 million net profit | Unit Name | Net Assets (RMB 10,000) | Operating Revenue (RMB 10,000) | Net Profit (RMB 10,000) | | :--- | :--- | :--- | :--- | | Fucheng Fat Beef Catering Management Co., Ltd. | 39,539.53 | 13,450.47 | 895.39 | | Sanhe Lingshan Baota Cemetery Co., Ltd. | 83,073.29 | 10,878.81 | 6,105.03 | | Fucheng Australia Investment Holding Co., Ltd. | 29,342.66 | 424.07 | 17.43 | Risk Analysis The company faces business risks including beef cattle epidemics, resource shortages, food safety, and price volatility, alongside governance risks from major shareholder control and strategic risks from diversified operations and overseas investments - Operating risks include beef cattle epidemics, resource shortages, food safety, and market price volatility[57][58][59] - Governance and strategic risks include control risk from the major shareholder (Fucheng Investment Group) with 35.51% ownership, management challenges from diversified operations (new cemetery business), and overseas investment uncertainties in Australia, such as political, legal, and exchange rate risks[59][60][61] Significant Matters This section details significant events and decisions, including shareholder meetings, commitment fulfillment, and related party transactions Shareholder Meeting Information The company held three shareholder meetings during the period, approving the 2016 annual report, profit distribution, establishment of M&A funds, and the first employee stock ownership plan - The company convened its 2016 Annual General Meeting and the first and second extraordinary general meetings in H1 2017[64] - Key resolutions included approving the establishment of Fucheng Hehui Phase II and Fucheng Guanyue Industrial M&A Funds, and adopting the draft of the first employee stock ownership plan[65] Fulfillment of Commitments The company and related parties strictly fulfilled all commitments from the major asset restructuring, including share lock-up, profit forecasts, and resolutions for horizontal competition and property defects - Controlling shareholder Fucheng Group committed to a 36-month lock-up period for its subscribed shares, effective from July 21, 2015, following the major asset restructuring[67] - Fucheng Group committed to the non-recurring net profit of the target asset (Baota Cemetery) for 2014-2018, with committed values of RMB 122.40 million for 2017 and RMB 146.88 million for 2018[67] Equity Incentive and Employee Stock Ownership Plans The company launched its first employee stock ownership plan, which has acquired 9,051,291 shares, representing 1.11% of total share capital, with a transaction value of approximately RMB 114 million - The company launched and received shareholder approval for its first employee stock ownership plan[70] - The employee stock ownership plan acquired 9,051,291 shares, representing 1.11% of total share capital, at an average price of RMB 12.548 per share[41] Significant Related Party Transactions The company engaged in minor related party transactions for daily operations, including goods and services, and maintained intercompany receivables and payables with controlled subsidiaries and other affiliates | Related Party Transaction Type | Related Party | Transaction Content | Amount (RMB) | | :--- | :--- | :--- | :--- | | Sale of Goods/Provision of Services | Fucheng Grand Hotel | Beef, dairy products, etc. | 495,178.49 | | Acceptance of Services | Fucheng Grand Hotel | Catering, accommodation | 14,934.00 | | Intercompany Transaction Type | Related Party | Period-End Balance (RMB) | | :--- | :--- | :--- | | Funds Provided by Related Party | Fucheng Qingshan Co., Ltd. | 15,047,100.00 | | Funds Provided to Related Party | Fucheng Real Estate, etc. | 1,087,516.32 | Share Changes and Shareholder Information This section provides an overview of changes in ordinary share capital and the company's shareholder structure Shareholder Information As of the reporting period end, the company had 26,310 shareholders, with Fucheng Investment Group (35.51% restricted shares) and Li Fucheng (15.65%) as the top two, and several top ten shareholders having pledged shares - As of the end of the reporting period, the company had a total of 26,310 ordinary share shareholders[79] | Shareholder Name | Number of Shares Held | Percentage (%) | Number of Restricted Shares | Pledged or Frozen Status | | :--- | :--- | :--- | :--- | :--- | | Fucheng Group | 290,697,674 | 35.51 | 290,697,674 | Pledged 290,601,200 | | Li Fucheng | 128,137,155 | 15.65 | 0 | None | | Fusheng Investment | 73,795,393 | 9.01 | 0 | Pledged 73,795,393 | - Controlling shareholder Fucheng Group holds 290,697,674 restricted shares from subscription, which are scheduled for release on July 21, 2018[78] Directors, Supervisors, and Senior Management This section provides information on the company's directors, supervisors, and senior management, including any changes during the period Changes in Directors, Supervisors, and Senior Management During the reporting period, the Board of Directors saw Mr. Li Fucheng replaced by Ms. Li Yilin, and the Supervisory Board had Mr. Hu Yongqiang succeeded by Ms. Ge Meng | Name | Position Held | Change Type | | :--- | :--- | :--- | | Li Fucheng | Director | Resignation | | Hu Yongqiang | Employee Supervisor | Resignation | | Li Yilin | Director | Appointment | | Ge Meng | Employee Supervisor | Appointment | Financial Report This section presents the company's financial statements, including balance sheets, income statements, and cash flow statements, along with detailed notes Financial Statements As of June 30, 2017, total assets were RMB 2.21 billion and equity attributable to parent was RMB 1.76 billion, with H1 2017 operating revenue at RMB 621 million (-8.6%) and net profit at RMB 65.53 million (-22.86%), while operating cash flow significantly improved to RMB 63.97 million Key Items from Consolidated Balance Sheet (2017-06-30) | Item | Period-End Balance (RMB) | Period-Beginning Balance (RMB) | | :--- | :--- | :--- | | Total Assets | 2,207,813,410.83 | 2,602,546,027.60 | | Total Liabilities | 443,841,606.80 | 846,736,055.30 | | Total Equity Attributable to Parent Company Owners | 1,762,620,792.77 | 1,754,404,347.21 | Key Items from Consolidated Income Statement (Jan-Jun 2017) | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | | :--- | :--- | :--- | | Total Operating Revenue | 620,775,343.64 | 679,171,550.48 | | Operating Profit | 84,747,164.42 | 109,787,921.78 | | Net Profit Attributable to Parent Company Owners | 65,525,512.41 | 84,939,197.23 | | Basic Earnings Per Share (RMB/share) | 0.08 | 0.10 | Key Items from Consolidated Cash Flow Statement (Jan-Jun 2017) | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 63,972,632.80 | 44,890,014.11 | | Net Cash Flow from Investing Activities | -30,267,731.03 | -28,796,052.33 | | Net Cash Flow from Financing Activities | -130,728,035.17 | 137,271,694.61 | Notes to Consolidated Financial Statements Notes to financial statements detail account compositions, highlighting RMB 255 million in inventory development costs, RMB 100 million in guaranteed borrowings, RMB 160 million in notes payable, and the funeral business as the primary profit contributor among four segments - Period-end inventory book value was RMB 568 million, with development costs (unfinished cemetery plot costs) of RMB 255 million representing the largest component[252] - The company's operations are segmented into livestock breeding and food processing, catering, funeral services, and overseas business, with the funeral services segment holding RMB 1.147 billion in total assets and contributing the majority of profits[390][391] - The company has significant operating lease commitments, with total minimum future lease payments amounting to RMB 96.53 million[386] Other Significant Matters The company ceased operations of 5 catering branches, incurring a RMB 290,500 loss, and disclosed that a 359-mu portion of subsidiary Baota Cemetery's land lacks a state-owned land use certificate but has confirmed usage rights until 2047 - During the reporting period, the company ceased operations of 5 catering branches, resulting in a total loss of RMB 290,500 from these discontinued operations[388] - Subsidiary Sanhe Lingshan Baota Cemetery utilizes 359 mu of barren mountain land without a state-owned land use certificate, but has secured confirmed paid usage rights from the municipal government until September 1, 2047[394] Documents for Reference This section provides a list of all supporting documents available for inspection