海纳智能(01645) - 2022 - 年度业绩

Financial Summary Key Financial Indicators The company's total revenue slightly increased by 1% to RMB 397.8 million, but gross profit significantly dropped by 24% to RMB 64.2 million, resulting in a net loss attributable to owners of RMB 3.1 million Key Financial Indicators | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 397.8 | 393.0 | Increase of approx 1% | | Gross Profit | 64.2 | 84.8 | Decrease of approx 24% | | (Loss) Profit Attributable to Company Owners | (3.1) | 27.0 | Turned from profit to loss | | Basic (Loss) Earnings Per Share | (0.56) cents | 5.21 cents | Turned from profit to loss | - The Board of Directors resolved not to declare a final dividend for the year ended December 31, 2022[1] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income Revenue slightly increased to RMB 397.8 million in 2022, but a sharp rise in cost of sales led to a significant drop in gross profit, turning a pre-tax profit in 2021 into a pre-tax loss in 2022 Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Revenue | 397,817 | 392,982 | | Cost of sales | (333,600) | (308,211) | | Gross profit | 64,217 | 84,771 | | Other income | 13,511 | 15,415 | | Selling and distribution costs | (13,795) | (14,389) | | Administrative and other operating expenses | (53,176) | (54,857) | | Net impairment loss on trade receivables | (3,331) | (1,338) | | Fair value change of equity instruments at FVTPL | (4,124) | 812 | | Finance costs | (2,186) | (1,614) | | (Loss) profit before tax | (5,395) | 27,166 | | Income tax credit (expense) | 2,174 | (870) | | (Loss) profit for the year | (3,221) | 26,296 | | (Loss) profit for the year attributable to owners of the Company | (3,147) | 26,980 | | Basic (loss) earnings per share (RMB cents) | (0.56) | 5.21 | Consolidated Statement of Financial Position As of year-end 2022, non-current assets increased significantly, driven by property, plant and equipment, while total current assets decreased, leading to a slight decline in net current assets Consolidated Statement of Financial Position | Indicator | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Non-current assets | | | | Property, plant and equipment | 88,037 | 35,051 | | Intangible assets | 5,225 | 5,331 | | Equity instruments at FVTOCI | – | 14,267 | | Goodwill | 1,369 | 1,369 | | Deferred tax assets | 2,174 | 2,174 | | Deposit paid for acquisition of land use rights | – | 21,530 | | Total non-current assets | 96,805 | 79,722 | | Current assets | | | | Inventories | 197,607 | 276,096 | | Equity instruments at FVTPL | 4,257 | 8,885 | | Debt instruments at amortised cost | 29,653 | 31,893 | | Trade and other receivables | 115,417 | 107,177 | | Restricted bank deposits | 22,328 | 21,700 | | Bank balances and cash | 85,596 | 102,443 | | Total current assets | 454,858 | 548,194 | | Current liabilities | | | | Trade and other payables | 168,894 | 217,632 | | Lease liabilities | 10,592 | 9,494 | | Interest-bearing borrowings | 25,000 | 39,193 | | Income tax payable | 1,021 | 3,264 | | Total current liabilities | 205,507 | 269,583 | | Net current assets | 249,351 | 278,611 | | Total assets less current liabilities | 346,156 | 358,333 | | Non-current liabilities | | | | Lease liabilities | 5,528 | 16,210 | | Deferred tax liabilities | 1,856 | 1,873 | | Total non-current liabilities | 7,384 | 18,083 | | Net assets | 338,772 | 340,250 | | Total equity | 338,772 | 340,250 | Notes to the Consolidated Financial Statements General Information and Basis of Preparation The company, incorporated in the Cayman Islands and listed in Hong Kong, primarily engages in designing and producing automated machines for disposable hygiene products in China - The company was incorporated in the Cayman Islands on December 20, 2017, and its shares were listed on the Main Board of the Hong Kong Stock Exchange on June 3, 2020[36] - The Group is principally engaged in the design and production of automated machines for disposable hygiene products in the People's Republic of China ("China")[13] - The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (HKFRSs) issued by the Hong Kong Institute of Certified Public Accountants and comply with the applicable disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[7] Statement of Compliance The adoption of new/revised Hong Kong Financial Reporting Standards in the current and prior years had no material impact on the Group's financial performance and position - The application of new/revised HKFRSs that are relevant to the Group and effective in the current year has had no material effect on the Group's financial performance and financial position for the current and prior years[15] Segment Information The Group operates as a single reportable segment, designing and producing automated machines for disposable hygiene products, with revenue primarily from China and expanding overseas Geographical Information The Group's revenue is predominantly from China, which amounted to RMB 310.214 million in 2022, with active expansion into overseas markets like the Philippines, India, and Indonesia Revenue by Geographical Location | Region | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | China | 310,214 | 285,485 | | Philippines | 35,121 | 15,408 | | India | 17,854 | – | | Indonesia | 16,219 | 29,158 | | Bangladesh | 9,101 | – | | Pakistan | 5,846 | 1,157 | | South Korea | 1,355 | 27,838 | | Nigeria | 1,354 | 9,564 | | Dubai | 430 | 2,367 | | Uzbekistan | 317 | 6,034 | | Angola | 6 | 158 | | Thailand | – | 8,595 | | Yemen | – | 5,390 | | Vietnam | – | 1,413 | | Malaysia | – | 362 | | Cambodia | – | 53 | | Total | 397,817 | 392,982 | - Non-current assets, allocated based on the physical location of assets and the operations to which they are assigned, are primarily located in China[40][42] Information about Major Customers For the years ended December 31, 2022 and 2021, no single external customer contributed 10% or more to the Group's total revenue - For the years ended December 31, 2022 and 2021, no revenue from transactions with a single external customer amounted to 10% or more of the Group's total revenue[42] Other Income Other income decreased to RMB 13.511 million in 2022 from RMB 15.415 million in 2021, mainly due to reduced government grants and no reversal of provision for litigation and claims Breakdown of Other Income | Income Source | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Bank interest income | 1,185 | 1,896 | | Interest income from debt instruments at amortised cost | 2,061 | 1,880 | | Net foreign exchange gain | 2,617 | 382 | | Government grants | 5,745 | 8,499 | | Sales of scrap materials | 442 | 423 | | Reversal of provision for litigation and claims | – | 2,000 | | Others | 1,461 | 335 | | Total | 13,511 | 15,415 | - The decrease in other income was mainly attributable to the decrease in government grants and the absence of a reversal of provision for litigation and claims during the year[153] (Loss) Profit Before Tax The company reported a pre-tax loss of RMB 5.395 million in 2022, a reversal from a pre-tax profit of RMB 27.166 million in 2021, driven by lower gross profit and finance costs - (Loss) profit before tax shifted from RMB 27,166 thousand in 2021 to RMB (5,395) thousand in 2022[33] Expenses by Nature | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Finance costs | 2,186 | 1,614 | | Staff costs (including directors' remuneration) | 46,213 | 46,861 | | Depreciation of property, plant and equipment | 46,975 | 47,878 | | Amortisation of intangible assets | 3,083 | 3,276 | | Research and development expenses (net of capitalisation) | 23,584 | 28,336 | Income Tax (Credit) Expense An income tax credit of RMB 2.174 million was recorded in 2022, compared to an expense of RMB 0.870 million in 2021, mainly due to an overprovision credit from prior years Breakdown of Income Tax | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | PRC Enterprise Income Tax - Current year | 958 | 2,983 | | Hong Kong Profits Tax - Current year | 15 | 5 | | Overprovision in prior years | (3,130) | – | | Deferred tax | (17) | (2,118) | | Income tax (credit) expense for the year | (2,174) | 870 | - Jinjiang Haina and Hangzhou Haina were recognised as High and New Technology Enterprises and are entitled to a preferential tax rate of 15%[29] (Loss) Earnings Per Share Basic loss per share was RMB 0.56 cents in 2022, compared to basic earnings per share of RMB 5.21 cents in 2021, with diluted loss per share being the same due to anti-dilutive potential ordinary shares Calculation of (Loss) Earnings Per Share | Indicator | 2022 | 2021 | | :--- | :--- | :--- | | Basic (loss) earnings per share (RMB cents) | (0.56) | 5.21 | | (Loss) profit attributable to owners of the Company for basic EPS calculation (RMB in thousands) | (3,147) | 26,980 | | Weighted average number of ordinary shares for basic EPS calculation (in thousands) | 563,976 | 517,506 | - Diluted (loss) earnings per share was the same as the basic (loss) earnings per share as the potential ordinary shares had an anti-dilutive effect for the years ended December 31, 2022 and 2021[51] Dividends No dividends were declared or proposed by the Group for the years 2022 and 2021 - No dividend was declared by the Group for each of the years ended December 31, 2022 and 2021, nor has any dividend been proposed since the end of the reporting period[32] Debt Instruments at Amortised Cost As of year-end 2022, the net amount of unlisted debt instruments at amortised cost was RMB 29.653 million, a decrease from RMB 31.893 million in 2021 Debt Instruments at Amortised Cost | Indicator | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Unlisted debt instruments, unsecured | 35,458 | 32,679 | | Less: Provision for expected credit losses | (5,805) | (786) | | Net amount | 29,653 | 31,893 | - The maturity date of the bond with Zhuohang Holdings Group Co, Ltd was extended from January 26, 2022, to July 25, 2023, with the annual interest rate revised from 6% to 8%[53][54] - The bond is guaranteed by a corporate guarantee deed executed by an independent third party in favour of the Group on March 4, 2023[75] Trade and Other Receivables Total trade and other receivables increased to RMB 115.417 million by the end of 2022, including retention money of approximately RMB 30.650 million due after the warranty period Breakdown of Trade and Other Receivables | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Trade receivables (net of provision) | 75,768 | 73,340 | | Bills receivable | 1,394 | – | | Prepayments to suppliers | 3,912 | 9,264 | | Other prepaid expenses | 4,702 | 1,804 | | Consideration receivable | 7,978 | – | | Interest receivable from debt instruments at amortised cost | 2,009 | 1,880 | | Deposits and other receivables | 2,939 | 2,230 | | VAT and other tax recoverable (net of provision) | 38,255 | 33,837 | | Total | 115,417 | 107,177 | - Trade receivables included retention money of approximately RMB 30,650,000, which is due upon the expiry of the product warranty period (generally 12 months from customer acceptance)[78] - The Group may grant a credit period of up to 30 days from the invoice date, with specific settlement arrangements allowing for monthly instalments up to 12 months[57] Trade and Other Payables Total trade and other payables significantly decreased to RMB 168.894 million by year-end 2022, mainly due to a reduction in trade payables and contract liabilities Breakdown of Trade and Other Payables | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Trade payables | 50,600 | 76,367 | | Bills payable | 29,810 | 23,400 | | Salaries payable | 5,674 | 6,390 | | Contract liabilities - receipts in advance | 63,534 | 98,559 | | Accrued expenses and other payables | 19,276 | 12,916 | | Total | 168,894 | 217,632 | - Trade payables are interest-free and the Group is generally granted a credit period of up to 180 days[62] - The overall contract activities decreased during the year ended December 31, 2022, resulting in a decrease in the amount of receipts in advance[84] Interest-bearing Borrowings As of year-end 2022, total interest-bearing borrowings, consisting of bank loans, decreased to RMB 25.0 million, all classified as current liabilities with fixed interest rates Breakdown of Interest-bearing Borrowings | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Bank loans - unsecured | 25,000 | 20,000 | | Bank revolving loans - unsecured | – | 19,193 | | Total | 25,000 | 39,193 | - The bank loans are repayable within one year and were therefore classified as current liabilities as at December 31, 2022[185] - The bank loans carry fixed interest rates ranging from 3.50% to 4.5% per annum (December 31, 2021: 3.35% to 4.35%)[185] Share Capital Issued and fully paid share capital remained at RMB 5.088 million as of year-end 2022, following the issuance of 93,972,000 new shares via a placing in 2021 Movement in Share Capital | Item | Number of Shares (in thousands) | Equivalent in RMB thousands | | :--- | :--- | :--- | | Issued and fully paid at 1 January 2021 | 470,004 | 4,315 | | Issue of shares upon placing | 93,972 | 773 | | Issued and fully paid at 31 December 2021, 1 January 2022 and 31 December 2022 | 563,976 | 5,088 | - On June 30, 2021, the placing of 93,972,000 shares was completed, with net proceeds of approximately RMB 67,971,000, of which approximately RMB 773,000 was credited to share capital and the remainder to the share premium account[68] Share-based Payments The company granted 14,000,000 share options in 2021 under its 2020 share option scheme and recognised an expense of RMB 1.356 million for equity-settled share-based payments in 2022 - The company adopted a new share option scheme on May 8, 2020, to provide incentives or rewards to participants for their contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees[69][110] - On May 21, 2021, the company granted a total of 14,000,000 share options to certain eligible participants at an exercise price of HK$1.14 per share[90] Movement of Share Options | Category of Grantee | Number of options at 1 Jan 2022 | Granted during the year | Exercised | Cancelled/Lapsed | Number of options at 31 Dec 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | | Directors | 10,000,000 | – | – | – | 10,000,000 | | Eligible employees | 4,000,000 | – | – | – | 4,000,000 | | Total | 14,000,000 | – | – | – | 14,000,000 | - For the year ended December 31, 2022, the Group recognised an expense of RMB 1,356,000 (2021: RMB 804,000) for equity-settled share-based payments[95] Litigation and Claims The Group resolved two customer claims, with Claim 1 dismissed in March 2022 and Claim 2 resulting in a payment of RMB 1.714 million which has been fully settled - Claim 1 (regarding quality issues of disposable medical mask machines) was dismissed by the Intermediate Court on March 24, 2022, with no liability for the Group, and a provision of approximately RMB 2,000,000 was reversed in 2021[97][98][119] - For Claim 2 (regarding quality issues of disposable medical mask machines), a judgment on August 1, 2022, required Hangzhou Haina to pay Plaintiff 2 RMB 1,600,000 plus interest of approximately RMB 114,000, which the Group fully settled in 2022[99][119] Events After the Reporting Period No other significant events occurred for the Group after December 31, 2022, other than those disclosed elsewhere in the consolidated financial statements - Save as disclosed elsewhere in the consolidated financial statements, the Group does not have other significant events after December 31, 2022[100] Management Discussion and Analysis Business Review The Group, a manufacturer of automated machines for disposable hygiene products, achieved total revenue of approximately RMB 397.8 million in 2022 but recorded a net loss of RMB 3.2 million - In 2022, the Group recorded total revenue of approximately RMB 397.8 million from the sale of 57 machines, an increase of 1% from the previous year[103] - The Group's main customer base is in China, and during the year, it also extended its sales to 10 overseas countries[103] - The Group recorded a net loss of approximately RMB 3.2 million for the year[103] - The Group has two production bases in Jinjiang and Hangzhou, China, with a total gross floor area of approximately 53,000 square meters, operating 18 and 9 production lines, respectively[138] Outlook The Group plans to enhance its business prospects and financial performance through five key strategies, including improving R&D efficiency and expanding production capacity - The Group plans to strengthen R&D innovation by adopting new technologies such as precision manufacturing and enhanced automation, with R&D expenses of approximately RMB 26.6 million in 2022[104][141] - The Group intends to acquire companies engaged in automated packaging equipment to provide integrated solutions, accelerate technological iteration, and increase the self-manufacturing rate of core components[125][143] - The Group has commenced construction of a digital factory (Zhejiang Tongchuang project) expected to be completed in 2024 with a total investment of no less than RMB 600 million, while a new R&D and production center in Jinjiang is also under planning with an investment of no less than RMB 350 million[122][126][139][145] - The Group will continue to cultivate the Chinese market, protect its overseas market share, and explore new markets like South America through advertising on various platforms and collaborating with agents[129][146][147] - The Group is building a "5G + Smart Equipment Operation and Maintenance Service Platform" to transition towards a "manufacturing + service" model, leveraging 5G and AR technology for equipment visualization and lean production management[130][131][148] Financial Review Revenue Total revenue in 2022 slightly increased by 1% to RMB 397.8 million, driven by sales growth in adult diaper, mattress, pet diaper, and wet wipe machines Revenue by Product Type | Product Category | 2022 Units | 2022 (RMB in thousands) | 2022 % | 2021 Units | 2021 (RMB in thousands) | 2021 % | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Baby diaper machines | 22 | 159,520 | 40% | 33 | 215,073 | 55% | | Adult diaper machines | 21 | 183,976 | 46% | 13 | 109,986 | 28% | | Feminine sanitary napkin machines | 6 | 18,779 | 4% | 14 | 44,117 | 11% | | Mattress machines | 3 | 7,035 | 2% | 2 | 3,516 | 1% | | Pet diaper machines | 2 | 5,841 | 2% | – | – | – | | Wet wipe machines | 3 | 1,735 | 1% | – | – | – | | Components and parts | N/A | 20,931 | 5% | N/A | 20,290 | 5% | | Total | 57 | 397,817 | 100% | 62 | 392,982 | 100% | - The increase in revenue was mainly due to increased sales of adult diaper machines (approx RMB 74.0 million), mattress machines (approx RMB 3.5 million), pet diaper machines (approx RMB 5.8 million), wet wipe machines (approx RMB 1.7 million), and components and parts (approx RMB 0.6 million)[132] - After December 31, 2022, the Group entered into further sales contracts with customers for delivery in 2023 with a total value of approximately RMB 124.3 million[152] Gross Profit and Gross Profit Margin Gross profit decreased by 24% to RMB 64.2 million in 2022, with the gross profit margin falling by 5.5 percentage points to 16.1% due to rising costs and supply chain issues Gross Profit and Margin | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Gross Profit | 64.2 | 84.8 | Decrease of approx RMB 20.6 million (24%) | | Gross Profit Margin | 16.1% | 21.6% | Decrease of approx 5.5 p.p. | - The decrease in gross profit and gross profit margin was mainly due to (i) a significant increase in raw material costs; (ii) inability to pass on costs due to market competition; (iii) freight disruptions and increased transportation costs due to the COVID-19 pandemic; and (iv) decreased production efficiency from untimely supply of parts[153] Other Income Other income for 2022 was RMB 13.5 million, a 12% year-on-year decrease, primarily due to reduced government grants and no reversal of provision for litigation and claims Other Income | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Other Income | 13.5 | 15.4 | Decrease of approx RMB 1.9 million (12%) | - The decrease in other income was mainly attributable to the decrease in government grants and the absence of a reversal of provision for litigation and claims during the year[153] Selling and Distribution Costs Selling and distribution costs for 2022 were RMB 13.8 million, a slight year-on-year decrease of 4.2%, mainly due to lower commissions Selling and Distribution Costs | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Selling and Distribution Costs | 13.8 | 14.4 | Decrease of approx RMB 0.6 million (4.2%) | - The decrease in selling and distribution costs was mainly due to a decrease in commissions[155] Administrative and Other Operating Expenses Administrative and other operating expenses for 2022 were RMB 53.2 million, a 3% year-on-year decrease, primarily due to reduced research and development expenses Administrative and Other Operating Expenses | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Administrative and Other Operating Expenses | 53.2 | 54.9 | Decrease of approx RMB 1.7 million (3%) | - The decrease in administrative and other operating expenses was mainly due to the decrease in research and development expenses during the year[156] Finance Costs Finance costs for 2022 were RMB 2.2 million, a 38% year-on-year increase, mainly due to higher interest on bank borrowings Finance Costs | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Finance Costs | 2.2 | 1.6 | Increase of approx RMB 0.6 million (38%) | - The increase in finance costs was mainly due to the increase in interest on bank borrowings[171] Income Tax Credit/(Expense) An income tax credit of RMB 2.2 million was recorded in 2022, compared to an expense of RMB 0.9 million in 2021, mainly reflecting an overprovision of income tax expense Income Tax Credit/(Expense) | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | | :--- | :--- | :--- | | Income Tax Credit/(Expense) | 2.2 (Credit) | 0.9 (Expense) | - The income tax credit represents an overprovision of income tax expense[172] Loss Attributable to Owners of the Company The loss attributable to company owners was RMB 3.1 million in 2022, a reversal from a profit of RMB 27.0 million in 2021, primarily due to the decrease in gross profit (Loss) Profit Attributable to Owners of the Company | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | | :--- | :--- | :--- | | (Loss) Profit Attributable to Owners of the Company | (3.1) | 27.0 | - The Group's loss position for the year was mainly due to the decrease in gross profit as described above[173] Dividends The Board of Directors has resolved not to declare a final dividend for the current year - The Board has resolved not to declare a final dividend for the current year[158][174] Use of Proceeds Use of Proceeds from Listing Of the RMB 119.5 million net proceeds from the listing, RMB 72.2 million has been utilized for R&D, capacity expansion, and other purposes, with RMB 47.3 million remaining unutilized as of year-end 2022 Use of Net Proceeds from Listing | Allocation of Net Proceeds | Planned Allocation (RMB in millions) | Unutilized at 1 Jan 2022 (RMB in millions) | Utilized up to 31 Dec 2022 (RMB in millions) | Unutilized at 31 Dec 2022 (RMB in millions) | Timeline for Utilization | | :--- | :--- | :--- | :--- | :--- | :--- | | Establishing an R&D centre | 24.1 | 24.1 | 23.0 | 1.1 | By 31 Dec 2023 | | Enhancing R&D capabilities | 22.9 | 2.9 | 20.0 | 2.9 | By 31 Dec 2023 | | Increasing production capacity | 16.8 | 13.3 | 7.2 | 9.6 | By 31 Dec 2024 | | Increasing competitiveness through acquisitions | 43.5 | 27.0 | 16.5 | 27.0 | By 31 Dec 2024 | | Working capital and general corporate purposes | 12.2 | 10.3 | 5.5 | 6.7 | By 31 Dec 2024 | | Total | 119.5 | 77.6 | 72.2 | 47.3 | | - As at December 31, 2022, the unutilized net proceeds of approximately RMB 47.3 million were deposited with licensed banks in Hong Kong and China[160] - The utilization progress of proceeds for increasing competitiveness through acquisitions has slowed as the Company continues to search for suitable acquisition targets[163] Use of Proceeds from Share Placement Of the RMB 68.0 million net proceeds from the 2021 share placement, RMB 44.1 million has been used for developing the Hangzhou production base, with RMB 23.9 million remaining Use of Net Proceeds from Share Placement | Item | Unutilized at 1 Jan 2022 (RMB in millions) | Utilized up to 31 Dec 2022 (RMB in millions) | Unutilized at 31 Dec 2022 (RMB in millions) | Timeline for Utilization | | :--- | :--- | :--- | :--- | :--- | | Development of Hangzhou production base | 68.0 | 44.1 | 23.9 | By 31 Dec 2024 | - The Group plans to use all net proceeds from the placing to develop its Hangzhou production base[165] - As of the date of this announcement, land foundation works have commenced on Land I[165] Financial Policies Liquidity and Financial Resources The Group funds its operations through internal resources and borrowings, maintaining adequate liquidity with a current ratio of 2.2 times at year-end 2022 - The Group's working capital is mainly derived from internal resources and interest-bearing borrowings[166] Liquidity Ratio | Indicator | 31 Dec 2022 | 31 Dec 2021 | | :--- | :--- | :--- | | Current Ratio | 2.2 times | 2.0 times | - It is the Group's policy to regularly monitor its current and expected liquidity requirements to ensure that it maintains sufficient cash reserves to meet its short-term and long-term liquidity needs[205] Capital Structure As of year-end 2022, the Group's capital structure comprised approximately RMB 338.8 million in equity and RMB 25.0 million in bank borrowings Capital Structure | Indicator | 31 Dec 2022 (RMB in millions) | 31 Dec 2021 (RMB in millions) | | :--- | :--- | :--- | | Equity | 338.8 | 340.3 | | Bank borrowings | 25.0 | 39.2 | Borrowings As of year-end 2022, the Group's bank loans totaled RMB 25.0 million, repayable within one year, with a gearing ratio of approximately 12.1% Borrowings and Gearing Ratio | Indicator | 31 Dec 2022 (RMB in millions) | 31 Dec 2021 (RMB in millions) | | :--- | :--- | :--- | | Bank loans | 25.0 | 39.2 | | Gearing ratio | 12.1% | 19.1% | - The bank loans are repayable within one year and carry fixed interest rates ranging from 3.50% to 4.5% per annum[185] Capital Commitments As of year-end 2022, the Group's capital expenditure commitments, primarily for construction in progress and intangible asset development, totaled RMB 273.384 million Capital Commitments | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Contracted but not provided for, net of deposits paid: | | | | - Construction in progress | 245,705 | – | | - Development of intangible assets | 27,679 | 29,197 | | - Acquisition of land use rights | – | 19,912 | | Total | 273,384 | 49,109 | Contingent Liabilities As of year-end 2022, the Group had no significant contingent liabilities - As at December 31, 2022, the Group did not have any significant contingent liabilities (December 31, 2021: Nil)[209] Foreign Exchange Risk Management The Group's monetary assets, liabilities, and transactions are mainly denominated in RMB, HKD, and USD, with no foreign exchange derivatives used during the year - The Group's monetary assets, liabilities and transactions are principally denominated in Renminbi, Hong Kong dollars and United States dollars[209] - The Group did not experience any difficulties or effects on its operations or liquidity due to fluctuations in currency exchange rates during the year[209] - The Group did not enter into any foreign exchange derivative contracts to manage currency conversion risk during the year but will continue to review its foreign exchange exposure regularly and may consider using financial instruments for hedging when appropriate[209][210] Other Information Human Resources As of year-end 2022, the Group employed approximately 376 staff in Hong Kong and China, with total staff costs for the year amounting to RMB 46.2 million Employee Data | Indicator | 31 Dec 2022 | 31 Dec 2021 | | :--- | :--- | :--- | | Number of employees | 376 | 394 | | Staff costs (RMB in millions) | 46.2 | 46.9 | - Remuneration is determined based on employees' performance, professional experience, and prevailing market conditions, with the Group's remuneration policies and arrangements reviewed regularly by management[189] Pledge of Group's Assets As of year-end 2022, the Group had not pledged or charged any assets, except for those disclosed in relation to bills payable - Save as disclosed in note 12(b) to the consolidated financial statements, the Group had not pledged or charged any of its assets as at December 31, 2022[190] Significant Investments, Acquisitions and Disposals In 2022, the Group acquired land for a digital factory in Hangzhou and an R&D center in Jinjiang, extended a bond's maturity, and disposed of an unlisted equity investment - On January 5, 2022, Haina Tongchuang successfully acquired Land I in Hangzhou (approx 27,594 sq.m.) for RMB 21,830,000 to build a digital factory[191] - On January 24, 2022, the issuer paid the bond interest of HK$2,400,000 and agreed on January 25, 2022, to extend the bond's maturity date to January 25, 2023[192] - On June 30, 2022, Jinjiang Haina successfully acquired Land II in Jinjiang (approx 28,353 sq.m.) for approximately RMB 19.9 million to build a new R&D and production center[193] - On August 15, 2022, Haina Tongchuang entered into a construction contract with a contractor for a total price of approximately RMB 265.60 million for the construction of factory buildings and ancillary facilities on Land II[215] - On December 13, 2022, Haina Technology disposed of its unlisted equity investment at FVTOCI for a consideration of HK$14,200,000 as it no longer aligned with the Group's investment objectives[194] Future Plans for Material Investments and Capital Assets The Group plans to build a dedicated R&D and production center in Jinjiang and develop a production base in Hangzhou, with no other material investment plans at present - The Group plans to build a dedicated research and development and production centre in Jinjiang City[196] - The Company announced its successful bid for the land use rights of a parcel of land located in Hangzhou Qianjiang Economic Development Zone, Hangzhou City, Zhejiang Province, the PRC, for the development of the Group's Hangzhou production base[217] - Save as mentioned above and disclosed in this announcement, the Group does not have any plan for material investments or capital assets at present[197] Events After the Reporting Period No significant events affecting the Group have occurred after the reporting period up to the date of this announcement, other than those disclosed in note 17 to the financial statements - Save as disclosed in note 17 to the consolidated financial statements, no significant events affecting the Group have occurred after the end of the Period and up to the date of this announcement[198] Closure of Register of Members The register of members will be closed from May 22 to May 25, 2023, to determine shareholder eligibility for the 2023 Annual General Meeting - The register of members of the Company will be closed from Monday, May 22, 2023 to Thursday, May 25, 2023 (both days inclusive) to determine the eligibility of the Shareholders to attend the 2023 AGM[218] Compliance with the Corporate Governance Code The company has adopted the Corporate Governance Code, and while the roles of Chairman and CEO are combined, the Board believes this ensures consistent leadership and efficiency - The Company has adopted the applicable code provisions of the Corporate Governance Code as set out in Part 2 of Appendix 14 to the Listing Rules during the Period[200] - The roles of the Chairman and the chief executive officer are performed by the same individual, Mr Hong Yiyuan, which the Board believes ensures consistent leadership and enhances the efficiency of overall strategic planning[219] - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, and all Directors have confirmed compliance[226] Audit Committee Review The Audit Committee has reviewed the Group's financial results for the year, and there were no disagreements between the Board and the committee - The audit committee of the Company has reviewed the Group's financial results for the year (including the accounting principles and practices adopted by the Group)[202] - During the year, there was no disagreement between the Board and the audit committee regarding the financial results of the Group[202] Scope of Work of the Company's Auditor on the Results Announcement The auditor has agreed that the financial figures in the preliminary announcement are consistent with the audited consolidated financial statements, but their work does not constitute an audit or assurance engagement - The Company's auditor, ZHONGHUI ANDA CPA Limited, has agreed the figures in this preliminary announcement with the amounts set out in the Group's audited consolidated financial statements for the year ended December 31, 2022[221] - The work performed by the auditor does not constitute an audit, review or other assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements and consequently no assurance is expressed by the Company's auditor on this announcement[221] Publication of Annual Results and Annual Report This results announcement is available on the websites of the Stock Exchange and the company, with the annual report to be dispatched to shareholders in due course - This results announcement is published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.haina-intelligent.com)[230](index=230&type=chunk) - The annual report of the Company for the year containing all the information required by the Listing Rules will be despatched to the Shareholders of the Company and published on the websites of the Stock Exchange and the Company in due course[230] Appreciation The Board extends its sincere gratitude to the Group's business partners, shareholders, management team, and all employees - The Board would like to express its sincere gratitude to the business partners and Shareholders of the Group for their continuous support, and to the management team and all employees for their unremitting efforts and valuable contributions to the Group[231] Composition of the Board of Directors As of the announcement date, the Board consists of four executive directors, one non-executive director, and three independent non-executive directors - As at the date of this announcement, the Company has four executive Directors, namely Mr Hong Yiyuan (Chairman), Mr Zhang Zhixiong, Mr Su Chengya and Mr He Ziping; one non-executive Director, namely Mr Zheng Zhixiong; and three independent non-executive Directors, namely Mr Chan Ming Kit, Dr Wang Fengxiang and Mr Ng Tat Fung[232]