Financial Performance - Total revenue for 2023 was 715 million, a decrease from 811 million in 2022, representing a decline of approximately 11.8%[67]. - The net asset value of the indirect major shareholder, Nongtou, was approximately RMB 2,010.7 million as of December 31, 2023, down from RMB 2,105.5 million in 2022, indicating a decrease of about 4.5%[74]. - The company plans to repay the total transferred loans amounting to RMB 1,580 million to Nongtou by January 30, 2024, as part of its debt restructuring agreement[89]. - The company has successfully transferred a total of RMB 1,580 million, including net proceeds from the convertible preferred shares subscription, to Nongtou for loan repayment[89]. - The company anticipates that the unpaid amount for the repurchase loans will be settled in 2024 and/or 2025[90]. - The company completed the issuance of convertible preferred shares on January 4, 2024, raising net proceeds of approximately HKD 1,716,800,000, significantly improving the group's financial position[93]. Operational Efficiency - The inventory turnover days have significantly decreased to approximately 20 days from 235 days as of December 31, 2022, indicating improved operational efficiency[4]. - The group plans to upgrade production facilities in Changchun to reduce production costs and aims to launch various new amino acid products in 2024, which is expected to provide stable cash inflows[13]. - The company is focusing on operational cash flow monitoring and partial recovery of production operations[91]. - Efforts are being made to upgrade production facilities to improve production efficiency and product mix in response to market changes[158]. Workforce Management - The total employee cost from continuing operations for the year was approximately HKD 115.04 million, down from HKD 196.53 million in 2022, indicating a reduction in workforce expenses[15]. - The company has reduced its full-time employees to approximately 2,154 from 3,500 in 2022, reflecting a strategic adjustment in workforce management[15]. - The company emphasizes the importance of employee selection, training, and evaluation to align performance with strategic goals[186]. Corporate Governance - The board emphasizes the importance of corporate governance to enhance confidence among shareholders and stakeholders, focusing on quality food and excellent service[22]. - The board consists of three independent non-executive directors, accounting for over one-third of the board, ensuring compliance with listing rules[29]. - Total remuneration for independent non-executive directors in 2023 amounted to HKD 531,000, compared to HKD 618,000 in 2022, reflecting a decrease of approximately 14.1%[41]. - The company has adopted a board diversity policy to maintain sustainable development and competitive advantage[54]. - The company has established measurable targets for implementing its board diversity policy, which have been met[55]. - The company recognizes the importance of diverse expertise among board members, including accounting, compliance, and risk management[51]. - The company has established a communication policy to maintain ongoing dialogue with shareholders and stakeholders, encouraging their participation and feedback[129]. - The company’s governance committee includes one executive director and two independent non-executive directors, ensuring compliance with corporate governance policies[121]. - The company’s board has adopted a remuneration policy for directors and senior management, linking compensation to performance metrics[120]. Risk Management - The board of directors is responsible for overseeing the overall risk management procedures, integrating risk management into business processes[116]. - The company has established a risk management framework based on the COSO model, identifying key risks and implementing control measures to mitigate them[135]. - The internal audit department has reviewed the effectiveness of the risk management and internal control systems, finding them to be effective and sufficient[136]. - The company has identified significant financial risks, including liquidity issues and the inability to renew bank loans on time, and is actively working to address these[158]. Shareholder Relations - The group maintains communication with shareholders through annual and interim reports, investor meetings, and a dedicated website for updates on business operations and financial performance[110]. - The annual general meeting for 2024 is scheduled for June 20, 2024, to approve the audited consolidated financial statements for 2023 and other matters[115]. - The company has amended its articles of association to allow for electronic or hybrid meetings for shareholder meetings[167]. - The company has adopted a dividend policy aimed at providing stable and sustainable returns to shareholders, with the actual dividend amount to be determined at the board's discretion based on various factors[132]. - The company has adopted a dividend policy, but the board does not recommend any dividend distribution for the current year[173]. - The company aims to maintain a dividend policy of at least 15% of annual profit attributable to equity holders in the foreseeable future[153]. Strategic Initiatives - Export sales, settled in USD, accounted for approximately 25.8% of the group's revenue for the year, compared to none in 2022, reflecting a diversification in revenue sources[6]. - The group is actively participating in industry conferences and maintaining close business relationships with major animal feed manufacturers to strengthen its market position[13]. - The company is focusing on enhancing R&D and diversifying its product portfolio to respond to intense market competition in the lysine market[158]. - The company has established strong long-term relationships with major customers and is actively seeking new clients to mitigate risks associated with customer dependency[187]. - Supply chain management is prioritized, with a commitment to selecting quality suppliers and conducting annual performance reviews[188]. - One of the corporate goals is to enhance shareholder value through sustainable business growth[189]. Compliance and Ethics - The company has implemented a culture of compliance with the highest ethical standards and is committed to adhering to all applicable laws and regulations[184]. - The company has established procedures for handling and disclosing inside information in compliance with securities regulations[165]. - The internal audit team reports directly to the audit committee, ensuring unrestricted access to all business units and resources[140]. - The internal audit department conducts audits at least once every three years for major business units, with newly acquired businesses audited within twelve months[163]. - The company has not identified any significant control failures or weaknesses during the annual review of its internal controls and risk management systems[162].
大成生化科技(00809) - 2023 - 年度财报