Financial Performance - The company reported revenue of 1.405 billion MYR for the fiscal year 2022, a slight decrease of approximately 1% from 1.418 billion MYR in 2021[16]. - The sales volume of black scrap metal was 675,062 tons in 2022, down about 3.8% from 701,846 tons in the previous fiscal year[16]. - The gross profit for 2022 was 52.329 million MYR, a decline from 77.574 million MYR in 2021[8]. - The net profit attributable to shareholders was 2.381 million MYR, significantly down 90.6% from 25.485 million MYR in 2021[8]. - Total assets as of December 31, 2022, were 278.456 million MYR, slightly down from 280.020 million MYR in 2021[8]. - Total liabilities increased to 74.676 million MYR in 2022 from 73.248 million MYR in 2021[8]. - The net profit after tax for the fiscal year 2022 was 1.48 million MYR, a significant decrease of approximately 94.18% from 25.41 million MYR in the fiscal year 2021[58]. - The average gross profit margin decreased from 5.5% to 3.7%, primarily due to lower selling prices of black scrap metal in the second half of 2022[66]. - Distribution and selling expenses increased by approximately 18% to 25.76 million MYR from 21.78 million MYR in the previous fiscal year[69]. - Administrative expenses rose to 24.95 million MYR in fiscal year 2022 from 22.93 million MYR in fiscal year 2021, mainly due to the acquisition of additional fleets and leased land[70]. - The actual tax rate for fiscal year 2022 was 65.5%, significantly higher than 28.5% in the previous year, due to an increase in non-deductible expenses[71]. - The liquidity ratio (current ratio) was 3.5 times in fiscal year 2022, slightly down from 3.6 times in fiscal year 2021[75]. - The inventory turnover period was 14 days in fiscal year 2022, a slight decrease from 15 days in the previous year, indicating improved logistics efficiency[78]. - The trade receivables turnover period improved to 32 days in fiscal year 2022 from 35 days in the previous year, reflecting stricter control over credit terms[78]. - As of December 31, 2022, the total equity attributable to shareholders was RM 204.76 million, a slight decrease from RM 206.84 million in 2021[79]. - The group's operating cash was RM 149.0 million, down from RM 174.0 million in the previous year, with cash and bank balances at RM 30.66 million[80]. - Total borrowings increased to RM 52.3 million in 2022 from RM 33.4 million in 2021, primarily used for the procurement of ferrous scrap metal and capital expenditures[80]. - The debt-to-equity ratio rose to 26.6% in 2022 from 16.7% in 2021, attributed to additional term loans and increased short-term bank financing[80]. - The expected credit loss rate for trade receivables was 1.1% in 2022, slightly up from 1.0% in 2021, with provisions amounting to RM 1.2 million[89]. - As of December 31, 2022, the group had capital commitments for the acquisition of property, plant, and equipment amounting to RM 11.76 million, compared to RM 10.06 million in 2021[86]. - The group has significant credit risk concentration, with 84% of trade receivables from customers in the ferrous scrap metal sector as of December 31, 2022[90]. Corporate Governance - Heng Hup International Pte. Ltd. holds a 51% stake in Heng Hup Chiho Recycling (Malaysia) Sdn. Bhd. and a 49% stake in other subsidiaries[23]. - The company has a total of 8 board members, including 5 executive directors and 3 independent non-executive directors[26]. - The board of directors consists of five executive directors and three independent non-executive directors, ensuring compliance with listing rules regarding independent director appointments[100]. - The company has adopted a board diversity policy, considering factors such as gender, age, cultural background, and professional experience in board member selection[101]. - As of December 31, 2022, the gender ratio among employees, including senior management, is 9:1, with one female member on the board[104]. - The company has fully complied with the corporate governance code, except for the deviation regarding the roles of the chairman and CEO[100]. - The nomination committee regularly reviews the board's composition and diversity to maintain operational effectiveness[108]. - All independent non-executive directors have confirmed their independence and possess relevant professional qualifications[109]. - The company has established appropriate liability insurance for its directors and senior management to cover responsibilities arising from corporate activities[98]. - The board has established three committees: audit and risk committee, remuneration committee, and nomination committee to oversee specific areas of governance[96]. - The company emphasizes merit-based appointments for board members while ensuring diversity benefits are considered[101]. - The board's structure is deemed reasonable, with members possessing diverse experiences and skills to maintain high operational standards[108]. - The board held five meetings during the fiscal year ending December 31, 2022, with all directors attending all meetings[117]. - The company provides necessary onboarding training and continuous professional development for all directors to ensure compliance and awareness of regulations[111]. - The board retains decision-making authority over all significant matters, including policies, strategies, budgets, and major transactions[118]. - The chairman and CEO roles are held by Sia Kok Chin, which deviates from the corporate governance code, but the board believes this arrangement benefits the group's management[112]. - The board is committed to reviewing and considering the separation of the chairman and CEO roles at an appropriate time[112]. - The company encourages independent consultation for directors and provides independent professional advice at the company's expense[110]. - The board's governance policies and practices have been reviewed to ensure compliance with legal and regulatory requirements[119]. Environmental, Social, and Governance (ESG) Initiatives - The ESG report for 2022 highlights the company's commitment to sustainability and outlines measures taken to integrate sustainability across its operations[159]. - The report covers the period from January 1, 2022, to December 31, 2022, focusing on the company's core business of procuring recyclable black metal for sale to steel mills[159]. - The board of directors is responsible for overseeing significant environmental and sustainability risks and opportunities, supported by the audit and risk committee[166]. - Stakeholder engagement is emphasized as a key tool for improving business operations and managing related risks[169]. - The company maintains ongoing communication with stakeholders, including shareholders, customers, and regulatory bodies, to gather feedback and address concerns[174]. - The company has implemented various communication channels to connect with different stakeholder groups, ensuring continuous engagement[174]. - The ESG report is prepared in accordance with the Hong Kong Stock Exchange's guidelines, focusing on the company's response to ESG challenges[159]. - The company aims to optimize sustainability initiatives and ensure continuous disclosure of relevant matters for long-term benefits[160]. - In 2022, the company increased its truck fleet to 76 vehicles, up from 67 in 2021, contributing to a total carbon dioxide equivalent emission of 4,917.66 tons[180]. - The company reported a nitrogen oxide (NOx) emission of 21.78 kg and sulfur oxide (SOx) emission of 5.82 kg in 2022, reflecting its ongoing efforts to monitor and reduce emissions[180]. - Water consumption increased to 27,036 cubic meters in 2022, compared to 18,109 cubic meters in 2021, attributed to the return of all employees to the office[187]. - The company’s electricity consumption reached 1,768,964 kWh in 2022, an increase from 1,244,662 kWh in 2021, driven by operational changes post-COVID-19[191]. - Diesel consumption rose in 2022, correlating with the increase in the number of trucks and sales growth, indicating a direct relationship between operational scale and environmental impact[192]. - The company aims to continue implementing water-saving measures and will monitor water usage to set reasonable consumption targets[190]. - The paper consumption decreased significantly in 2022 to 543 kg from 593 kg in 2021, attributed to the successful migration to an ERP system[184]. - The company is committed to adhering to climate-related financial disclosure standards set to take effect in 2025, indicating a proactive approach to environmental governance[194]. Employee Welfare and Development - The management emphasizes the importance of employee welfare and safety, maintaining health and safety protocols established during the COVID-19 pandemic[196]. - The company has implemented a recycling culture among employees, focusing on reducing paper waste and improving overall waste management practices[183]. - The company is committed to providing necessary training and development programs for employees to maximize their potential[199]. - Average training hours per employee have varied significantly by gender and employee category from 2019 to 2022, with male employees receiving 0 hours in 2020, 2021, and 2022[200]. - Female employees had an average of 15 training hours in 2020, but this dropped to 1 hour in 2021 and 2 hours in 2022[200]. - Senior management team members had an average of 6 training hours in 2019, which decreased to 1 hour by 2022[200]. - Middle management team members had an average of 2 training hours in 2019, with a slight increase to 1 hour in 2022[200].
兴合控股(01891) - 2022 - 年度财报