CGII HLDGS(01940) - 2022 - 年度业绩

Financial Summary Annual Performance Highlights The company achieved significant revenue growth of 22.5% to RMB 1.482 billion, turned a loss into a net profit of RMB 113 million, and improved its gearing ratio to 42.3% Key Financial Indicators for 2022 | Indicator | 2022 | 2021 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | Approx. RMB 1.482 billion | Approx. RMB 1.209 billion | +22.5% | | Gross Profit | Approx. RMB 342 million | Approx. RMB 248 million | +37.8% | | Profit/(Loss) for the year | Profit approx. RMB 113 million | Net loss approx. RMB 27 million | Turned loss into profit | | Basic Earnings/(Loss) Per Share | Approx. RMB 0.09 | Approx. (RMB 0.02) | Turned loss into profit | | Gearing Ratio | 42.3% | 48.0% | Decreased by 5.7 percentage points | - The Board decided not to recommend a final dividend for the reporting period[13] Consolidated Financial Statements Consolidated Statement of Comprehensive Income The Group's total revenue grew 22.5% to RMB 1.482 billion, with gross profit up 37.8% to RMB 342 million, resulting in a net profit of RMB 113 million Summary of Consolidated Statement of Comprehensive Income (RMB) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | 1,481,644,241 | 1,209,270,875 | | Gross Profit | 341,850,613 | 248,139,133 | | Operating Profit | 187,037,964 | 42,166,251 | | Profit Before Income Tax | 161,017,910 | 14,118,021 | | Profit/(Loss) for the year attributable to owners of the Company | 112,742,520 | (26,816,529) | | Earnings/(Loss) Per Share - Basic and Diluted | 0.09 | (0.02) | - In 2022, the Group recognized a credit loss provision of RMB 8.135 million for trade receivables, compared to zero in 2021. Conversely, a credit loss provision of RMB 66.4 million for bill investments was recognized in 2021, with zero in 2022[15] Consolidated Statement of Financial Position As of December 31, 2022, total assets reached RMB 1.746 billion, net assets grew 8.1% to RMB 1.386 billion, and net current assets significantly improved to RMB 130 million Summary of Consolidated Statement of Financial Position (As at December 31, RMB) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Non-current Assets | 1,615,885,963 | 1,595,732,254 | | Current Assets | 990,790,481 | 810,316,923 | | Current Liabilities | 860,485,398 | 787,832,387 | | Non-current Liabilities | 360,357,987 | 336,186,920 | | Net Assets | 1,385,833,059 | 1,282,029,870 | Notes to the Consolidated Financial Statements General Information and Basis of Preparation The Group, an investment holding company, primarily produces and supplies industrial gases in China, with financial statements prepared in RMB under IFRS - The Group's principal business is the production and supply of industrial gases in China[19] - The financial statements are presented in RMB, despite the Company's functional currency being USD, to better present information to management for monitoring Group performance[9] Independent Investigation An independent investigation found former Chairman Mr. Chen made unauthorized loans of RMB 118 million and a HKD 80 million bill investment, which were unrecoverable, impaired, and written off in 2022 - The investigation involved three loans totaling RMB 118 million and a bill investment of HKD 80 million (approximately RMB 66.4 million), all conducted by former Chairman Mr. Chen without Board approval[53][27][55] - Mr. Chen claimed the loans were to attract IPO investors and the investment was for higher returns, but neither involved due diligence nor complied with internal financial control procedures[32][33][60] - Due to long-term overdue status and unrecoverability, the RMB 118 million loans were fully provided for in 2020, and the RMB 66.4 million bill investment was fully provided for in 2021; both amounts were formally written off in 2022[66][39][67] - The Board concluded that despite forensic accountants finding no direct evidence of management overreach beyond the Xijieai agreement, Mr. Chen's and Mr. Bai's actions constituted management overreach due to the unauthorized nature of the transactions[85] Segment Information, Revenue and Expenses The Group operates in industrial gases and LNG services, with industrial gases contributing most revenue and gross profit, while 67.8% of total revenue came from one major customer Segment Results for 2022 and 2021 (RMB) | Segment | 2022 Revenue | 2022 Gross Profit | 2021 Revenue | 2021 Gross Profit | | :--- | :--- | :--- | :--- | :--- | | Supply of Industrial Gases | 1,194,342,987 | 334,105,185 | 1,047,227,064 | 242,720,623 | | Liquefied Natural Gas and Gas Transportation Services | 305,207,749 | 7,745,428 | 181,881,285 | 5,418,510 | - The Group's revenue is highly concentrated, with RMB 1.005 billion from its largest customer in 2022, accounting for 67.8% of total revenue[73] Major Expenses by Nature (RMB) | Expense Item | 2022 | 2021 | | :--- | :--- | :--- | | Consumption of Utilities | 796,860,170 | 717,011,666 | | Consumption of Raw Materials and Low-Value Consumables | 186,939,664 | 105,151,805 | | Depreciation of Property, Plant and Equipment | 124,107,610 | 111,614,153 | | Employee Benefit Expenses | 58,384,236 | 54,041,647 | Income Tax Expense Income tax expense increased 17.9% to RMB 48.28 million in 2022, driven by higher subsidiary profits and preferential tax rates for high-tech enterprises Composition of Income Tax Expense (RMB) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Current Tax | 31,152,096 | 31,965,302 | | Deferred Tax | 17,123,294 | 8,969,248 | | Total Income Tax Expense | 48,275,390 | 40,934,550 | - Tangshan Tanggang Gas Co., Ltd. and Luannan Tanggang Gas Co., Ltd., subsidiaries of the Group, enjoy a preferential income tax rate of 15% as recognized high-tech enterprises[79] - The Group obtained RMB 16.65 million in super tax deductions through R&D activities, significantly higher than RMB 4.99 million in 2021[78][113] Notes to Key Statement of Financial Position Items Trade receivables increased to RMB 567 million with an RMB 8.14 million impairment, while prior-year unrecoverable loans and bill investments totaling RMB 184.4 million were fully written off - Trade receivables increased from RMB 427 million to RMB 567 million, with 91.6% aged within 6 months. A new impairment provision of RMB 8.135 million was recognized this year[117][151] - The RMB 118 million loans issued in 2020, after full impairment provision, were written off during 2022[120][152] - The RMB 66.4 million bill investment made in 2021, after full impairment provision, was written off during 2022[128][121] Management Discussion and Analysis Business Review and Outlook In 2022, the Group's revenue grew 22.5% driven by customer capacity and new products, with industrial gas remaining core, and anticipates future growth from market trends and customer expansion - The Group's revenue achieved a 22.5% year-on-year increase, benefiting from the gradual release of production capacity at major customer HBIS Group's coastal production bases and improved market sales and prices for new product krypton-xenon mixture[160] 2022 Key Product Sales Performance | Product Category | Sales Revenue (RMB) | Sales Volume | | :--- | :--- | :--- | | Pipeline Industrial Gases | Approx. RMB 928 million | Approx. 3,622 million standard cubic meters | | Liquid Industrial Gases | Approx. RMB 228 million | Approx. 190,553 tonnes | | Liquefied Natural Gas and Gas Transportation Services | Approx. RMB 305 million | Not applicable | - Future development opportunities include the continuous growth of China's industrial gas market, an increasing proportion of outsourced gas supply models, and expansion plans by major customers (e.g., HBIS Co., Ltd.'s 4 blast furnace construction)[164][166][198] Financial Review In 2022, total revenue grew 22.5% to RMB 1.482 billion, gross profit increased 37.8% to RMB 342 million, administrative expenses decreased 14.0%, and net finance costs decreased 7.2%, resulting in a net profit of RMB 113 million Revenue Growth by Business Segment | Business Segment | 2022 Revenue (RMB million) | Year-on-Year Growth | | :--- | :--- | :--- | | Supply of Pipeline Industrial Gases | 927.74 | +15.7% | | Supply of Liquid Industrial Gases | 228.03 | +10.5% | | Supply of Liquefied Natural Gas and Gas Transportation Services | 305.21 | +67.8% | - Gross profit increased by 37.8%, primarily due to higher revenue, improved equipment efficiency, and reduced unit power consumption[146] - Administrative expenses decreased by 14.0% to RMB 82.18 million, mainly due to reduced professional fees[204] - Net finance costs decreased by 7.2% to RMB 26.02 million, primarily due to lower interest expenses from reduced bank borrowings[176] Liquidity, Financial Resources and Risk Management At year-end 2022, the Group's financial position was robust, with cash up to RMB 361 million, borrowings down to RMB 586 million, and improved gearing and current ratios Key Financial Resources Indicators (As at December 31) | Indicator | 2022 | 2021 | | :--- | :--- | :--- | | Cash and Bank Balances | RMB 361 million | RMB 298 million | | Bank and Other Borrowings | RMB 586 million | RMB 615 million | | Gearing Ratio | 42% | 48% | | Current Ratio | 1.15 | 1.03 | - The Group's credit risk is primarily concentrated with HBIS Group, which accounts for 97% of trade receivables. Given a good historical repayment record, management considers the inherent credit risk not significant but has prudently made impairment provisions[210] - The Group regularly monitors liquidity risk and has approximately RMB 511 million in unused bank loan facilities to provide additional liquidity[178][182] Employees and Remuneration Policy As of year-end 2022, the Group employed 341 staff, with total employee costs of RMB 58.38 million, and maintains competitive remuneration and training programs Employee Data | Indicator | 2022 | 2021 | | :--- | :--- | :--- | | Number of Employees | 341 | 369 | | Total Employee Costs | Approx. RMB 58.38 million | Approx. RMB 54.04 million | - The Group provides employees with training in operations, technical knowledge, work safety, and environmental protection[189] - The Company adopted a share option scheme in 2020, but no share options had been granted as of the reporting date[216] Other Information Discloseable and Connected Transactions In June 2022, Tanggang Gas entered a RMB 82.9 million gas supply agreement with a connected party, which was approved by independent shareholders in January 2023 - Tanggang Gas signed an agreement with Tangshan Zhonghouban to invest RMB 82.9 million in building a Vacuum Pressure Swing Adsorption oxygen production unit to meet Tangshan Zhonghouban's anticipated 30% increase in oxygen demand[219][193] - The transaction was approved by an extraordinary general meeting of shareholders on January 6, 2023[220] Updated Expected Timetable for Use of Proceeds The Company extended the use of unutilized IPO proceeds of RMB 50.553 million to June 30, 2024, due to customer project delays, with 83.0% of proceeds already utilized - The Board decided to extend the expected timetable for the use of unutilized IPO proceeds to June 30, 2024[222] IPO Proceeds Usage and Application (RMB '000) | Planned Use | Planned Amount | Amount Utilized | Amount Unutilized | | :--- | :--- | :--- | :--- | | Procurement and Relocation of Air Separation Units (Phase I) | 246,950 | 246,950 | 0 | | Purchase and Installation of New Air Separation Units (Phase II) | 50,553 | 0 | 50,553 | | Total | 297,503 | 246,950 | 50,553 | - The primary reason for extending the timetable for use of proceeds is delays in customer project construction, requiring the Company, as the exclusive supplier, to align with their development schedule[224] Corporate Governance The Company complied with most Corporate Governance Code provisions, achieving separation of Chairman and CEO roles, and the Audit Committee reviewed the audited financial statements - The Company has adopted the Corporate Governance Code set out in Appendix 14 of the Listing Rules[246] - Addressing the Corporate Governance Code's requirement for separation of Chairman and CEO roles, the Company, after removing the former Chairman, appointed Mr. Yao Li as Chairman of the Board and Mr. Li Libing as Chief Executive Officer, complying with the provisions[225][247] - The Audit Committee, together with the external auditor, reviewed the audited consolidated financial statements for the reporting period[251] Extracts from Independent Auditor's Report The independent auditor issued a "Qualified Opinion" on the 2022 consolidated financial statements due to insufficient audit evidence for unauthorized loans of RMB 118 million and HKD 80 million bill investments - The auditor issued a qualified opinion, stating that, except for the possible effects of the matters described in the basis for qualified opinion, the financial statements present fairly the Group's financial position[230] - The core reason for the qualified opinion is the limited audit scope regarding two significant transactions: - Loan Transactions: Loans totaling RMB 118 million provided to three companies in 2020 - Bill Investment: An HKD 80 million bill investment made to one company in 2021[254][255] - Auditor concerns include: transactions not being part of the Group's ordinary course of business, lack of Board approval, absence of due diligence, use of funds earmarked for dividends, and no recovery to date. Due to unsatisfactory explanations, the auditor could not determine the commercial substance or the appropriateness of their accounting treatment, including the current year's write-off[234][257][258]