Financial Performance - In 2022, the company's revenue decreased by 50.6% to HKD 359.6 million from HKD 728.1 million in 2021[4] - The gross profit for 2022 was HKD 27.3 million, down 34.4% from HKD 41.6 million in 2021[4] - The company reported a loss of HKD 212.5 million for the year, compared to a loss of HKD 96.3 million in 2021[4] - The basic loss per share increased to HKD 13.9 from HKD 6.3 in the previous year[4] - The group reported a significant decline in sales volume by 51.7% to 86,000 tons for the year, down from 178,000 tons in 2021[32] - Revenue decreased by approximately 50.6% to around HKD 359.6 million, compared to HKD 728.1 million in 2021, while gross profit fell by 34.4% to HKD 27.3 million from HKD 41.6 million[32] - The group recorded a net loss of HKD 212.5 million for the year, compared to a net loss of HKD 96.3 million in 2021, and an LBITDA of approximately HKD 74.6 million[33] - Other income and gains decreased by approximately 88.8% to about HKD 16,300,000 (2021: HKD 145,700,000) due to the absence of one-time gains recorded in the previous year[41] - The group recorded a net loss attributable to shareholders of approximately HKD 212,500,000 (2021: HKD 96,300,000) due to reduced gross profit and other income[48] Operational Challenges - The company's production facilities in Shanghai were shut down for nearly two months due to lockdown measures, impacting sales volume and revenue significantly[12] - The group has suspended operations at certain production facilities to minimize financial risks during uncertain economic conditions[32] - The restructuring is expected to provide additional funds to repay loans and improve working capital, preparing for the resumption of operations at the Jinzhou production base[29] - Financial risks include liquidity risks due to production halts, with measures such as resource integration for higher efficiency[163] Strategic Initiatives - The company plans to focus resources on its sweetener business in Jinzhou and Shanghai following a strategic restructuring involving the sale of 47.0% equity to Da Cheng Biochemical Group[13][14] - The management team is focused on accelerating the restructuring of Da Cheng Sugar Industry, which is expected to significantly improve the financial condition of the group by the end of 2023[16] - The group anticipates a return to operational growth and efficiency improvements following the restructuring, with a focus on the Jinzhou production base's resumption based on market demand and cash flow considerations[16] - The company aims to expand its product range by developing sweeteners that align with health trends and consumer preferences[15] - The company plans to maintain a balance between robust cash flow and market share while closely monitoring market conditions and financial status for strategic decision-making[24] - The company plans to optimize production and maintain market share while enhancing its product portfolio and developing high-value products and new applications[70] Market Conditions - Economic recovery in China is expected to support domestic sugar prices, despite anticipated downward pressure from rising global sugar production[15] - The global corn production for the 2022/23 season is estimated at 1,151.4 million tons, a decrease from 1,216 million tons in the previous season, impacting corn prices[21] - International corn prices peaked at $8.18 per bushel in April 2022, dropping to $6.785 per bushel by the end of 2022, reflecting a significant price fluctuation[21] - China's domestic corn production for the 2022/23 season is projected at approximately 277.2 million tons, with consumption expected to reach 286.6 million tons, leading to continued imports to address supply shortages[21] - The sugar market saw a slight surplus in the 2021/22 season, with global production at 180.3 million tons and consumption at 173.2 million tons, while international sugar prices rose to $0.1891 per pound by the end of 2022[23] - China's sugar production for the 2022/23 season is expected to increase to 10.1 million tons, while consumption is estimated at 15.6 million tons, indicating a potential improvement in demand[24] Governance and Management - The company has adopted a set of strict codes of conduct for directors' securities trading, ensuring compliance with the standards set forth in the Listing Rules[84] - The board consists of five directors, including two executive directors and three independent non-executive directors, with no significant relationships among them[89] - The company has established a mechanism to ensure strong independence of the board, which is reviewed annually for effectiveness[89] - The company recognizes the benefits of a diverse board and has adopted a diversity policy to enhance board composition across various dimensions[96] - The company has a process in place to review the independence of independent non-executive directors at least annually, confirming their status through independent declarations[95] - The attendance record of directors at board meetings and committees shows full participation, indicating strong governance practices[85] - The company has mechanisms to seek external independent professional advice to ensure directors receive independent opinions[94] - The board has adopted a written policy for the nomination of new directors, ensuring a structured approach to board appointments[131] - The company is committed to maintaining effective risk management and internal control systems as part of its governance framework[119] Shareholder Relations - The company maintains communication with shareholders through annual and interim reports, as well as investor meetings, ensuring transparency in operations and financial performance[146] - The total number of shares held by Da Cheng Biochemical Group was 978,278,000, representing 64.04% of the total shareholding, with a market value of HKD 64.57 million[148] - The total number of shares held by the Hong Kong public was 549,308,000, accounting for 35.96% of the total shareholding, with a market value of HKD 36.25 million[148] - The board plans to distribute dividends of no less than 15% of the annual profit attributable to shareholders in the foreseeable future, subject to various factors[152] - The company has adopted a dividend policy aimed at providing stable and sustainable returns to shareholders[151] Employee and Workforce Management - The group employed approximately 890 full-time employees as of December 31, 2022, down from 930 in 2021, indicating a reduction of about 4.3% in workforce size[71] - Employee costs, including directors' remuneration, amounted to approximately HKD 91,484,000 for the year, a decrease of about 8.5% from HKD 99,728,000 in 2021[71] - The company is dedicated to maintaining competitive compensation and career development opportunities to retain talent[71] - The employee gender diversity structure shows 18% male and 82% female, indicating a significant gender imbalance[103] Risk Management - The company has established a "three lines of defense" risk management framework to manage operational risks effectively[160] - The board and senior management are responsible for overseeing the overall risk management procedures of the company[162] - The company aims to balance risk and return while identifying and managing significant risks at various levels[163] - The internal audit team has reviewed the efficiency of the company's risk management and internal control systems, finding them effective and sufficient[165]
大成糖业(03889) - 2022 - 年度财报