Magnesium Industry Overview - The average price of magnesium in 2021 was RMB 25,244 per ton, representing an increase of 86% year-on-year, with a lowest price of RMB 13,950 per ton and a highest price of RMB 70,000 per ton[11][14]. - The magnesium price has experienced significant fluctuations, with an increase of 89% from the historic high in 2008, reaching a new high in 14 years[11][14]. - The implementation of the "Dual Control of Total Energy Consumption and Energy Intensity" policy has significantly impacted magnesium production, leading to a cautious approach from downstream companies and weaker demand[14][17]. - The high magnesium prices have suppressed production demand in downstream industries, affecting the sustainable development of the magnesium market[14]. - The magnesium industry is expected to play a crucial role in promoting green, low-carbon, and high-quality development in the future[10][13]. Company Performance - The company's revenue for the year was HKD 416,060,000, a decrease of 44.1% compared to HKD 744,836,000 in 2020[32]. - The overall gross profit margin decreased by 1% to 16.5%[32]. - Shareholders' attributable loss was HKD 331,883,000, compared to HKD 74,011,000 in 2020[32]. - Total sales volume decreased to 16,901 tonnes in 2021 from 39,156 tonnes in 2020[46]. - EBITDA decreased by HK$97,385,000 or 73.1% to HK$35,835,000 in 2021[40]. Financial Challenges and Restructuring - The creditors' scheme approved on March 1, 2022, allows the company to pay off debts in phases over the next five years[28]. - The company is facing a winding-up petition due to an outstanding principal amount of US$20,707,777.78, which includes unpaid interest and default interest[63]. - The proposed creditors' scheme includes options for term extension and convertible bond swaps, subject to court approval[66]. - The company is undergoing a restructuring process with the appointment of joint provisional liquidators to oversee debt management and maintain its stock exchange listing[60]. - The Group's current liabilities exceeded its current assets by approximately HK$483,515,000 as of December 31, 2021[117]. Operational and Management Insights - The company holds 22 technical patents and is recognized as a national-level high and advanced technology enterprise[4]. - The innovative vertical retorts magnesium smelting technology has characteristics such as high mechanisation, small foot-print, less labor, low labor intensity, small investment, and low energy consumption[19][23]. - The company plans to focus on green and low-carbon production to leverage new opportunities in the magnesium industry[26]. - The management is focused on minimizing credit risk by regularly assessing clients' transaction records and credit history[110]. - The Group has adopted green initiatives in daily operations, including resource recycling, energy saving measures, and water saving practices[128]. Corporate Governance - The Group has implemented corporate governance practices in line with the Code on Corporate Governance Practices, with no significant deviations reported[140]. - The Company has established four committees: Audit Committee, Remuneration Committee, Nomination Committee, and Executive Management Committee[170]. - The Audit Committee is responsible for providing independent and professional advice on financial reporting and reviewing the internal control of the Group[171]. - The Company has adopted a Board Diversity Policy, considering various objective criteria such as gender, age, and professional qualifications for Board appointments[191]. - The Company Secretary has over 10 years of experience in auditing, accounting, financial management, and corporate finance[196]. Employee and Stakeholder Relations - As of December 31, 2021, the Group employed 365 staff, down from 382 in 2020, and provided various employee benefits[97]. - The Group recognizes the importance of balancing risk and return in its investment decision process and has established proper investment assessment procedures[120]. - The Company encourages shareholders to provide feedback and inquiries regarding management and corporate governance[200]. - The Group has maintained compliance with relevant laws and regulations in Mainland China and Hong Kong, with no material non-compliance reported as of the report date[129]. - The Group's commitment to social responsibility includes efforts to improve the sustainability of the communities in which it operates[128].
稀镁科技(00601) - 2021 - 年度财报