齐合环保(00976) - 2022 - 年度业绩

Financial Performance The group's financial performance in 2022 saw a significant decline in revenue and profit, reflecting a challenging operating environment Consolidated Income Statement In 2022, the Group experienced a 10.8% revenue decrease to HKD 19.57 billion, a 36.0% gross profit decline, and a 62.3% drop in profit attributable to owners, resulting in basic EPS of HKD 0.16 2022 Fiscal Year Key Income Statement Data | Metric | 2022 (million HKD) | 2021 (million HKD) | Year-on-year change | | :--- | :--- | :--- | :--- | | Revenue | 19,574.3 | 21,950.4 | -10.8% | | Gross profit | 1,207.7 | 1,888.5 | -36.0% | | Profit before income tax | 404.0 | 883.7 | -54.3% | | Profit for the year | 237.4 | 692.0 | -65.7% | | Profit attributable to owners of the Company | 264.5 | 702.0 | -62.3% | | Basic earnings per share (HKD) | 0.16 | 0.44 | -63.6% | Consolidated Balance Sheet As of the end of 2022, the Group's total assets were HKD 8.57 billion, a 13.9% decrease from HKD 9.96 billion in the previous year, while total liabilities decreased by 25.6% to HKD 3.79 billion, and total equity remained largely stable, reflecting business scale adjustment and debt repayment 2022 Fiscal Year-End Key Balance Sheet Data | Metric | December 31, 2022 (million HKD) | December 31, 2021 (million HKD) | Year-on-year change | | :--- | :--- | :--- | :--- | | Total assets | 8,573.0 | 9,958.5 | -13.9% | | Total liabilities | 3,792.3 | 5,099.0 | -25.6% | | Total equity | 4,780.7 | 4,859.5 | -1.6% | | Current assets | 4,052.4 | 5,001.6 | -19.0% | | Current liabilities | 3,098.0 | 4,426.6 | -30.0% | Notes to the Financial Statements Financial notes reveal the Group's business composition, significant going concern uncertainties, debt structure, and dividend policy, with metal recycling as the core business primarily in Europe, facing liquidity pressure due to maturing short-term borrowings, but management has taken measures to address it, and no dividends were distributed during the year Business and Segment Information The Group's main business is resource recycling, divided into Asia, Europe, and North America segments by geography, with Europe being the absolute core, contributing over 90% of external sales revenue, and metal recycling, particularly ferrous metals, being the primary source of income - The Group is primarily engaged in resource recycling business in Asia, Europe, and North America, involving the recycling of mixed metals, end-of-life vehicles, and waste electrical and electronic equipment[48] 2022 Fiscal Year External Sales Revenue by Segment | Region | 2022 (million HKD) | 2021 (million HKD) | Revenue Share (2022) | | :--- | :--- | :--- | :--- | | Asia | 1,783.2 | 2,128.9 | 9.1% | | Europe | 17,755.4 | 18,822.5 | 90.7% | | North America | 35.7 | 999.0 | 0.2% | | Total | 19,574.3 | 21,950.4 | 100% | 2022 Fiscal Year Revenue by Business Category | Business Category | 2022 (million HKD) | 2021 (million HKD) | | :--- | :--- | :--- | | Metal Recycling - Ferrous Metals | 12,624.8 | 14,136.9 | | Metal Recycling - Non-ferrous Metals | 6,272.7 | 7,142.8 | | Forging and Casting | 86.2 | 67.6 | | Others | 590.6 | 603.1 | | Total | 19,574.3 | 21,950.4 | Going Concern The report explicitly states a significant uncertainty regarding the Group's ability to continue as a going concern, primarily due to HKD 1.03 billion in current borrowings as of end-2022, including a HKD 740 million syndicated loan due March 2023, while cash and cash equivalents were only HKD 710 million, though management has taken measures to address the risk - Significant uncertainty exists: As of December 31, 2022, current borrowings amounted to HKD 1.03 billion, including a syndicated term loan of HKD 742.4 million repayable by March 31, 2023, while the Group's cash and cash equivalents were HKD 713.7 million[91] - Countermeasures: Management has successfully extended the repayment period of the syndicated loan to March 2024 and is negotiating new long-term borrowings with several financial institutions, confident in obtaining financing at an appropriate time[53][92] - The Group's ability to continue as a going concern depends on the successful implementation of the above plans and measures, including compliance with loan covenants, successful new borrowings, renewal of existing financing, and sufficient cash flow generation from European operations[15][32] Borrowings and Payables At the end of 2022, the Group's total borrowings decreased from HKD 1.66 billion to HKD 1.14 billion, however, HKD 1.03 billion (90%) were current borrowings due within one year, indicating high short-term repayment pressure, and trade payables also decreased from HKD 1.80 billion to HKD 1.42 billion Borrowing Structure Analysis (million HKD) | Borrowing Category | 2022 | 2021 | | :--- | :--- | :--- | | Non-current borrowings | 111.3 | 50.8 | | Current borrowings | 1,030.8 | 1,611.1 | | Total borrowings | 1,142.1 | 1,661.9 | - As of December 31, 2022, the Group's total credit facilities amounted to approximately HKD 3.54 billion, of which approximately HKD 1.14 billion remained unutilized, and the Group pledged assets totaling approximately HKD 3.72 billion as collateral for borrowings[106][196] Trade Payables Aging Analysis (million HKD) | Aging | 2022 | 2021 | | :--- | :--- | :--- | | 0-90 days | 1,374.0 | 1,747.6 | | 91-180 days | 25.6 | 11.9 | | Over 180 days | 19.2 | 41.8 | | Total | 1,418.8 | 1,801.3 | Dividends and EPS The company neither paid nor proposed any dividends in 2022 and 2021, and basic earnings per share for 2022 significantly decreased by 63.6% to HKD 0.16 from HKD 0.44 in 2021 - The Company did not pay or propose any dividends in 2022 and 2021[5] Basic Earnings Per Share Calculation | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Profit attributable to owners of the Company (million HKD) | 264.5 | 702.0 | | Weighted average number of ordinary shares in issue (thousand shares) | 1,605,152 | 1,605,152 | | Basic earnings per share (HKD) | 0.16 | 0.44 | Management Discussion & Analysis This section provides an in-depth analysis of the Group's operational performance, strategic responses to market challenges, and future outlook Chairman's Statement The Chairman's report highlights 2022 as an extraordinary year globally, with the company facing multiple challenges including the pandemic, Russia-Ukraine war, high inflation, and supply chain instability, responding with a strategy of "stabilizing operations and dynamically reducing costs and increasing efficiency," while remaining confident in future growth driven by global climate change and renewable resource trends - In 2022, the company faced complex challenges and impacts globally, including the COVID-19 pandemic, the Russia-Ukraine war, inflation, and supply chain instability[112] - The company's response strategy is to "stabilize the operating foundation, dynamically reduce costs and increase efficiency, optimize structural governance, and provide high supply warnings" to enhance risk resistance[112] - Looking ahead, addressing climate change and developing renewable resources have become urgent needs for major global economies, which will provide continuous development momentum for the recycled resource industry[117][145] Financial Review The financial review analyzes the reasons for performance decline, attributing a 12.0% decrease in sales volume and 10.8% decrease in revenue primarily to weak market demand, with gross margin falling from 8.6% to 6.2% due to declining recycled metal prices, rising freight costs, and high energy costs, while total operating expenses decreased by 21.7% through effective cost control 2022 Fiscal Year Key Operating Data Review | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Sales Volume (million tonnes) | 3.81 | 4.33 | -12.0% | | Revenue (million HKD) | 19,574.3 | 21,950.4 | -10.8% | | Gross profit margin | 6.2% | 8.6% | -2.4pp | | Operating expenses (million HKD) | 974.8 | 1,245.7 | -21.7% | | Profit attributable to owners of the Company (million HKD) | 264.5 | 702.0 | -62.3% | Key Financial Ratios and Turnover Days | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Current ratio | 1.31 | 1.13 | | Debt-to-asset ratio | 13.3% | 16.7% | | Inventory turnover days | 26 days | 29 days | | Accounts receivable turnover days | 24 days | 30 days | | Accounts payable turnover days | 28 days | 33 days | Business Review The regional business review indicates that Europe, as the core market, saw a 6.8% revenue decrease due to high electricity costs impacting demand and prices, while the North America segment sold off loss-making non-core businesses, leading to a sharp revenue decline, and the Asia segment experienced a 16.1% revenue decrease and a loss due to China's pandemic lockdowns and Southeast Asian import restrictions, though new projects in Taizhou and Binzhou achieved good progress - Europe: Revenue was HKD 17.84 billion, a 6.8% year-on-year decrease. High electricity costs dampened demand and prices for recycled metals, leading to a sequential 15% decrease in sales volume in the second half and a 28.8% reduction in segment profit[165][191] - North America: To optimize its structure, the Group sold off loss-making non-core businesses. Segment revenue sharply dropped to HKD 35.7 million, resulting in a HKD 17.9 million loss. This segment will no longer negatively impact the Group's performance in the future[142][165][194] - Asia: Revenue was HKD 1.79 billion, a 16.1% year-on-year decrease. Affected by China's pandemic lockdowns and Southeast Asian import restrictions, the segment turned from profit to a HKD 104 million loss. However, end-of-life vehicle projects in Taizhou and Binzhou made progress[143][167][194] Risk Management The Group faces key market risks including commodity prices, foreign currency exchange rates, interest rates, credit, and liquidity risks, and has developed corresponding risk management strategies such as using futures contracts to hedge commodity price risk, forward contracts for foreign exchange risk, and balancing funding flexibility with sustainability through bank borrowings to mitigate adverse impacts on financial performance - The Group faces commodity price risk, foreign currency risk, interest rate risk, credit risk, and liquidity risk in its daily operations[202] - To hedge commodity price and foreign exchange risks, the Group primarily uses futures contracts and foreign exchange forward contracts, stating it does not engage in speculative derivative transactions[190] - Regarding credit risk, the Group largely adheres to a "cash on delivery" policy for most sales and closely monitors trade receivables to minimize potential bad debt losses[176] Contingent Liabilities & Holding Company Restructuring The report discloses two ongoing legal proceedings (HCA 3040/2015 and HCA 2939/2016) deemed not material claims by the Board, and while the company's indirect controlling shareholder, Longxin Group, is undergoing judicial restructuring which may change the ultimate beneficial owner, the Board believes it currently has no material adverse effect on the company's independent operations and financial position - The company is involved in two legal proceedings (HCA 3040/2015 and HCA 2939/2016), but the Board considers them not to be material claims[172][219][220] - The company's indirect controlling shareholder, Longxin Group Co Ltd, is undergoing restructuring, which may lead to a change in the ultimate beneficial owner of the company[222] - The Board believes that, as the company is independent of its controlling shareholder in terms of business, personnel, assets, and finance, this restructuring currently has no material adverse effect on the company's operations and financial position[201] Corporate Governance & Other Information This section covers the company's dividend policy and the independent auditor's opinion on the financial statements Dividend Policy The Board does not recommend a final dividend for the year ended December 31, 2022, consistent with the previous year - The Board does not recommend a final dividend for the year ended December 31, 2022 (2021: nil)[5][211] Independent Auditor's Opinion PricewaterhouseCoopers, the independent auditor, issued an unmodified opinion on the consolidated financial statements for the year, but included an emphasis of matter paragraph regarding "material uncertainty related to going concern," drawing attention to the Group's liquidity risk due to significant short-term borrowings as disclosed in the notes, which does not modify their audit opinion - The auditor believes that the consolidated financial statements present a true and fair view of the Group's financial position and performance[235] - The auditor's report specifically highlighted "material uncertainty related to going concern," noting that the Group's significant short-term borrowings may cast significant doubt on its ability to continue as a going concern; this is an emphasis of matter and does not modify the audit opinion[214][235]