Financial Performance - For the year ended December 31, 2021, the Group's revenue was RMB 131.3 million, representing a year-on-year decrease of 30.6%[21] - Revenue from ITO film sales was approximately RMB 47.8 million for the year ended December 31, 2021, representing an increase of approximately RMB 4.7 million or 10.9% from RMB 43.1 million in 2020[36] - Revenue from Smart PDLC products was approximately RMB 41.5 million for the year ended December 31, 2021, a decrease of approximately RMB 7.4 million or 15.1% from RMB 48.9 million in 2020[37] - Revenue from LED Display and Projection System was approximately RMB 11.5 million for the year ended December 31, 2021, a significant increase of approximately RMB 11.3 million or 52 times from RMB 0.2 million in 2020[41] - Revenue from other products was approximately RMB 30.4 million for the year ended December 31, 2021, representing a significant increase of approximately RMB 22.1 million or 2.7 times from RMB 8.3 million in 2020[42] - The company recorded a loss attributable to owners of approximately RMB 18.2 million for the year ended December 31, 2021, compared to a profit of approximately RMB 584,000 for the same period in 2020[43] - The company's cost of sales for the year ended December 31, 2021, was approximately RMB 106.2 million, an increase of approximately RMB 29.3 million or 38.1% from approximately RMB 76.9 million for the same period in 2020[51][54] - Gross profit increased by approximately RMB 1.4 million or 6.0%, from approximately RMB 23.6 million for the year ended December 31, 2020, to approximately RMB 25.0 million for the year ended December 31, 2021[56][60] - The gross profit margin decreased from approximately 23.5% for the year ended December 31, 2020, to approximately 19.1% for the same period in 2021, mainly due to a drop in selling prices in response to competition[56][60] Production and Market Development - The production of ITO film recorded a year-on-year increase of 10%, accounting for nearly 65% of the market share in the PRC[22] - Official bulk production of motor vehicle films was realized, establishing a foundation for entering the motor vehicle sector[24] - The market development for multimedia screen door systems for railways achieved breakthroughs in cities such as Lanzhou and Jinan[24] - Participation in public sector construction projects, including a museum in Shenyang and Guiyang Longdongbao Airport, facilitated the application of low-carbon, energy-conservative technologies[24] - The company successfully launched mass production of automotive films in 2021, laying a solid foundation for entering the automotive industry[26] - The company aims to strengthen its technology research and development to consolidate its leading position in the new material industry[29] Expenses and Financial Management - Selling and distribution expenses were approximately RMB 6.1 million for the year ended December 31, 2021, a decrease of approximately RMB 2.7 million or 30.1% from approximately RMB 8.8 million for the same period in 2020[57][61] - Administrative expenses were approximately RMB 26.0 million for the year ended December 31, 2021, an increase of approximately RMB 0.3 million or 1.2% from approximately RMB 25.7 million for the same period in 2020[58][62] - The company did not have any bank borrowings as of December 31, 2021, and plans to satisfy liquidity requirements through operating cash flows, bank borrowings, and proceeds from the listing[65][66] Risk Factors and Market Conditions - The Group's reliance on a single regional market in China poses a risk, as any decline in market demand could adversely affect operating performance[113] - The Group's entire production process is currently based in a single facility in China, which could lead to significant operational disruptions if affected by natural disasters[114] - The ITO film industry in China has seen rapid growth, but key production technologies and market share remain dominated by a few players, indicating potential competitive pressures[97] - The Smart PDLC Products market is experiencing increased competition from both established manufacturers and new entrants, leading to price competition and pressure on production costs[104] - The Group's brand and reputation are critical for sales success, and any failure to maintain these could adversely impact financial results and sustainable development[107] Corporate Governance - The Board has complied with GEM Listing Rules, maintaining at least three independent non-executive Directors, representing more than one-third of the Board[133] - The Company has adopted a code of conduct for directors' securities transactions, ensuring compliance with GEM Listing Rules[126] - The Board has received annual confirmations of independence from each independent non-executive Director, affirming their compliance with GEM Listing Rules[136] - The Company has developed and reviewed policies on corporate governance, compliance, and training for Directors and senior management[124] - The Board believes that combining the roles of Chairman and Chief Executive Officer will not impair the balance of power and authority within the Company[142] - The Company has established a structure and procedural rules for Board meetings to address major operational matters effectively[142] - The attendance of executive Directors at Board meetings was 100%, with Mr. Sun Jinli having attended four meetings before his resignation[132] - The Company encourages shareholders to express their views on corporate governance matters directly to the Board[124] Audit and Risk Management - The Audit Committee held five meetings during the year ended December 31, 2021, with three meetings attended by the external auditor to discuss the financial reporting process[157] - The Audit Committee reviewed the accounting principles and practices adopted by the Group and confirmed compliance with applicable accounting principles for the audited consolidated financial statements for the year ended December 31, 2021[159] - The effectiveness of internal controls and risk management was reviewed by the Audit Committee, covering financial, operational, and compliance controls[160] - The Company has established a Remuneration Committee to recommend overall remuneration policy and structure for all Directors and senior management, ensuring no Director determines their own remuneration[164] - The Board is responsible for directing and approving the Group's overall strategies, while management teams handle operational duties[148] - The Board has assessed and reviewed the risk management policies and internal control procedures of the Group, considering them effective and adequate[194] - The external auditor's responsibility is to form an independent opinion on the consolidated financial statements prepared by the Board[190] - The Group has engaged external independent professionals to review its risk management and internal control systems[194] Shareholder Communication and Dividend Policy - The Group did not make any material acquisitions or disposals during the year ended December 31, 2021, and has no plans for significant investments or capital assets[85] - The Directors did not recommend a final dividend for the year, maintaining a dividend payout ratio dependent on actual performance[87] - The Group has not entered into any agreements to hedge against currency risks as of December 31, 2021[91] - The Company maintains a transparent and timely disclosure policy to keep shareholders informed of its business performance and strategies[200] - The Company ensures equal access to information for all shareholders and investors through its communication policies[200]
水发兴业新材料(08073) - 2021 - 年度财报