Magnesium Market Performance - The average monthly price of magnesium in 2023 decreased from 21,811 yuan/ton in January to 20,433 yuan/ton in December, with an annual average price of 21,953 yuan/ton, representing a 27.5% decrease compared to the previous year, marking a three-year low [13]. - The magnesium market has continued to face pressure since the beginning of 2024, with prices exploring lower levels and downstream purchases remaining cautious, leading to significant losses for factories and enterprises [18]. - The overall economic environment in 2023 was unfavorable, contributing to the decline in magnesium prices despite temporary rebounds observed in mid-April, mid-May, and late September [18]. - The magnesium-aluminum price ratio remained low for 9 months in 2023, with a minimum of 1.08 and ending the year at 1.18, indicating a significant cost-effectiveness advantage for magnesium [26]. - The Group aims to promote downstream applications of magnesium-based products, leveraging the cost advantages of magnesium over aluminum [26]. - The sales volume of magnesium products slightly increased from 11,098 tons in 2022 to 12,300 tons in 2023, but the average selling price dropped from HK$34,592 per ton to HK$21,337 per ton [39]. - The Group's magnesium product business incurred losses in 2023 due to a global economic slowdown, leading to potential impairment assessments for assets valued at approximately HK$1,101,300,000 [63][64]. Financial Performance - The Group's revenue for the year was HK$263,491,000, a decrease of 31.4% compared to HK$383,899,000 in 2022 [34]. - The overall gross loss for the year was HK$85,281,000, reversing from a gross profit of HK$46,614,000 in the previous year [34]. - The loss attributable to shareholders was HK$423,600,000, compared to a profit of HK$1,404,000 in 2022 [34]. - The Group's revenue in 2023 decreased by approximately HK$120,408,000, or 31.4%, compared to the previous year [38]. - The Group recorded an overall gross loss of HK$85,281,000 in 2023, compared to a gross profit of HK$46,614,000 in the previous year [40]. - Administrative expenses decreased to approximately HK$83,658,000 in 2023 from HK$126,222,000 in 2022, primarily due to the absence of a similar provision for long outstanding prepayments [47]. - The finance cost for the year totaled approximately HK$48,793,000, representing a year-on-year increase of HK$27,870,000, or 133.2% [56]. - The Group recorded a reversal of allowance for expected credit loss of HK$3,992,000 in 2023, compared to an allowance of HK$104,191,000 in 2022 [55]. - The Group reported a retained cumulative loss of approximately HKD 30,317,000 as of December 31, 2023 [198]. - The Group did not declare an interim dividend during the review period and the Board does not recommend a final dividend for the year ended December 31, 2023 [198]. Impairment and Asset Management - An impairment loss provision of approximately HK$203,902,000 was recognized on non-current assets in 2023, compared to HK$61,530,000 in 2022 [54]. - The estimated recoverable amount of the cash-generating unit (CGU) was approximately HK$1,101,300,000, leading to impairment losses recognized on various assets [60]. - Impairment losses recognized included HK$188,941,000 for property, plant, and equipment, HK$5,876,000 for right-of-use assets, HK$2,443,000 for intangible assets, and HK$6,642,000 for mining rights [65]. - As of December 31, 2023, the Group's current borrowings amounted to approximately HK$111,228,000, while cash and cash equivalents were only about HK$39,954,000, indicating liquidity risk [75]. Corporate Governance and Management - The Company has established relevant committees and adopted internal policies to enhance corporate governance practices and protect stakeholder interests [104]. - The Company has complied with the Code on Corporate Governance Practices as set out in the Listing Rules, with no significant deviations reported [105]. - The Board consists of five directors, including two executive directors and three independent non-executive directors, ensuring adequate expertise in financial management [115]. - The Company encourages continuous professional development for directors, providing training records for the year ended December 31, 2023 [119]. - The Company has implemented measures to improve internal controls and enhance transparency in business operations [104]. - The Company has established three committees: Audit Committee, Remuneration Committee, and Nomination Committee, to assist the Board in its duties [133]. - The Audit Committee is composed of three Independent Non-executive Directors, ensuring independent oversight of financial reporting [133]. - The Company reviewed its corporate governance policies and practices, making appropriate recommendations for improvement [125]. - The Company has adopted a Board Diversity Policy, considering various objective criteria such as gender, age, and professional qualifications for Board appointments [149]. Risk Management - The Group is actively seeking financing options, including venture capital and equity financing, to address the capital needs for environmental upgrades and transformations [27]. - The Group's management does not currently hedge foreign exchange risks, as they do not expect significant net foreign currency risk from operations primarily in Mainland China and Hong Kong [66][67]. - The Group has established procedures for credit risk management, including determining credit limits and monitoring overdue debts to minimize exposure [74]. - The operational risk management framework is guided by functional departments, focusing on internal processes and external events to mitigate potential losses [76]. - The Board is responsible for maintaining the Group's risk management and internal control systems to mitigate risks associated with achieving business objectives [171]. - The effectiveness of the internal control system was reviewed, covering risk management functions, financial, operational, and compliance controls, as well as staff qualifications and training adequacy [172]. Community and Environmental Commitment - The Group is committed to improving and maintaining the long-term sustainability of the communities in which it operates, adhering to environmental laws and regulations [89]. - The Group emphasizes the importance of environmental protection for its long-term development and will continue to review and improve management practices [197]. - The Group's annual report includes a discussion on major risks and uncertainties faced by the business, as well as potential future developments [196].
稀镁科技(00601) - 2023 - 年度业绩