2013 annual results announcement - yip's chemical...2013 annual results announcement...
TRANSCRIPT
2013 Annual Results Announcement
Presenters: Mr. Tony Chi Shing Ip (Chairman of the Group) Mr. Stephen Tsz Hin Yip (Chairman of the Group Executive Committee) Mr. Johnson Sai Hou Ho (CFO) Ms. Wendy Yik Chu Tse (Head of IR and Corporate Communications)
(SEHK: 00408)
Disclaimer
The information on these slides does not constitute a
recommendation by financial adviser or selling agent
that any recipient should invest in the Company.
Recipients should make their own independent
appraisal, evaluation, assessment and investigation as
deemed necessary by them.
2
Chairman’s Remarks
Agenda
Financial Highlights
Core Business Analysis and Growth Strategies
Consolidated Financial Statements
CSR Development
3
深化業務整合效益
Ensure the Success of Consolidation
Solvents Coatings Lubricants
Striving for Profitable Growth
4
Chairman’s Remarks
Continued business growth and another record-high turnover Turnover rose 11% to HK$9,876,033,000 A 12% growth in sales volume reaching over 900,000 metric tons Net profit attributable to owners drops 9% to HK$250,622,000 Maintained prudent financial management and returns to shareholders Gearing ratio improved from 58.8% in June 2013 to 46.7% in December 2013 The Board recommended a final dividend of HK15 cents per share. Together with
the interim dividend of HK10 cents, will give a total of HK25 cents for the whole year. Payout ratio at 56%
Difficult operating environment poses challenges Tenuous economies worldwide, dipping consumer sentiment in China, and
overcapacity across various sectors intensify market competition
5
Chairman’s Remarks
Rose to the challenges and achieved good progress Consolidated or expanded plant premises to support business development In-depth optimisation and streamlining of plant equipment, production processes,
as well as management and operating structure Increased non-operating expenses and affected profitability in the short term, but
would radically raise the competitiveness of the Group in the long run Devotion to enhance long-term competitiveness Operating environment of this year will be the continuation of last year We will consolidate our businesses in household coatings, industrial coatings and
resins into a new coatings group, and keep our inks business independent It will raise the competitiveness of coatings business, and we will suitably increase
investments in this business The Group will strive persistently to raise profitability, make good use of funds and
carry out long-term personnel planning
6
Chairman’s Remarks
Agenda
Financial Highlights
Consolidated Financial Statements
CSR Development
Core Business Analysis and Growth Strategies
7
Financial Highlights
2013 2012 % Change
Turnover 9,876,033 8,894,409 +11%
Gross Profit 1,507,154 1,499,925 —
Gross Profit Margin 15.3% 16.9% -1.6% point
Net Profit Attributable to Owners
250,622 276,302 -9%
Earnings Per Share HK44.6 cents HK49.4 cents -10%
Dividend Per Share - Final - Interim
HK15 cents HK10 cents
HK15 cents HK10 cents
— —
For the year ended 31 Dec (HK$’000)
8
* Non-controlling interests in solvents and coatings business
Products
Turnover (HK$’000) % Breakdown#
2013 2012 % Change 2013 2012
6,164,413 5,315,984 +16% 62% 60%
3,395,381 3,209,418 +6% 34% 36%
463,831 433,150 +7% 5% 5%
Financial Highlights
For the year ended 31 Dec (HK$’000)
Solvents*
Coatings*
Lubricants
#Before inter-segment sales
9
311,565
144,679
(6,107)
265,186
122,706
9,996
-50,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Solvents * Coatings* Lubricants
HK$'000
2012
2013
* Non-controlling interests in solvents and coatings business
Operating Profits
10
Chairman’s Remarks
Agenda
Financial Highlights
Consolidated Financial Statements
CSR Development
Core Business Analysis and Growth Strategies
11
Turnover
5,456
7,038
8,276 8,894
9,876
2,676 3,155
3,768 4,045 4,403
0
2,000
4,000
6,000
8,000
10,000
2009/10 2010 2011 2012 2013
HK$ million
Interim (Period ended 30 Jun, unaudited)
Full Year (Year ended 31 Dec, audited) Full Year (Year ended 31 Mar, audited)
Interim (Period ended 30 Sep, unaudited)
Turnover sustained growth momentum and reached another new record
*Unaudited
*
12
378.1
309.5
201.3
276.3 250.6
227.7
116.2 103.1 123.9 128.8
0
100
200
300
400
500
2009/10 2010 2011 2012 2013
HK$ million
Net Profit Attributable to Owners
*Unaudited
Profits declined due to continuous drop of raw material prices in solvents as well as one-off restructuring costs in coatings
*
Interim (Period ended 30 Jun, unaudited)
Full Year (Year ended 31 Dec, audited) Full Year (Year ended 31 Mar, audited)
Interim (Period ended 30 Sep, unaudited)
13
70.3
56.4
36.3
49.4 44.6 42.5
21.3 18.6 22.3 22.9
0
10
20
30
40
50
60
70
80
2009/10 2010 2011 2012 2013
HK cents
Earnings Per Share
*Unaudited
*
Interim (Period ended 30 Jun, unaudited)
Full Year (Year ended 31 Dec, audited) Full Year (Year ended 31 Mar, audited)
Interim (Period ended 30 Sep, unaudited)
14
Dividend Per Share
# Include special dividend of HK4.0 cents
* Interim and final dividends for 6 months ended 30 Sep 2010 and 9 months ended 31 Dec 2010
32
22 24 25 25
12 12 12 10 10
05
10152025303540
2009/10 2010 2011 2012 2013
HK cents
#
*
*
Interim (Period ended 30 Jun, unaudited)
Full Year (Year ended 31 Dec, audited) Full Year (Year ended 31 Mar, audited)
Interim (Period ended 30 Sep, unaudited)
Continue to reward shareholders actively and steadily
15
Consolidated Statement of Financial Position
As of 31 Dec 13 (audited, HK$’000)
As of 31 Dec 12 (audited, HK$’000) % Change
Non-current assets 2,121,746 1,917,173 +11% Current assets 6,006,754 5,225,881 +15% Current liabilities (3,428,450) (2,569,140) +33% Net current assets 2,578,304 2,656,741 -3% Non-current liabilities (1,291,638) (1,470,643) -12% Capital and reserves
Share capital 56,228 56,186 — Reserves 2,916,814 2,677,010 +9% Equity attributable to owners of the company 2,973,042 2,733,196 +9%
Non-controlling interests 435,370 370,075 +18%
3,408,412 3,103,271 +10% Net assets value per share HK$5.29 HK$4.86 +9%
16
Consolidated Statement of Cash Flows
Effect of foreign exchange rate changes
Cash & cash equivalents at the end of the year, consisting of:
Cash & cash equivalents at the beginning of the year
Net increase in cash and cash equivalents
Net cash inflow (Outflow) - Operating activities - Investing activities - Financing activities
(audited, HK$’000)
- Bank balance and cash - Short-term bank deposits with original
maturity within 3 months
Short-term bank deposits with original maturity more than 3 months
Year ended 31 Dec 2013
51,252
288,999
20,658
947,172
350,052
429,430
153,249
1,028,883
4,001
716,152
227,019
119,012
35,644
72,363
728,632
19,128
Year ended 31 Dec 2012
(232,627)
218,540
Total cash & cash equivalents 1,317,882 947,172
17
Funds were well-managed as evidenced by the drop in gearing ratio
Liquidity and Financial Resources
Net Borrowing (HK$’000)
Capital Investments (HK$’000)
Banking Facilities Utilization (HK$’000) As of 31 Dec 2013
Utilized 3,110,979 Reserved 1,562,098
Total 4,673,077
31 Dec 2013 HK$1,389,214
(Gearing Ratio: 46.7%)
31 Dec 2012 HK$1,407,977
(Gearing Ratio: 51.5%)
2013 2012
271,000 424,000
18
Chairman’s Remarks
Agenda
Financial Highlights
Consolidated Financial Statements
CSR Development
Core Business Analysis and Growth Strategies
19
Solvents
Sales volume in tonnage up by 13%
Sales volume of the flagship product, acetate solvents reached a new record of 641,391 metric tons in the year
For the new product butyl acrylate, sales reached 36,595 metric tons and the first profit was made, while the capacity utilization rate had already reached 80% in seven months’ time
Overcapacity of butanol in China resulted in its continuous price drop in the year, which caused inventory losses and dragged down gross profit for acetate solvents by 1.9 percentage points
(HK$’000) 2013 2012 % Change Turnover 6,164,413 5,315,984 +16%
Gross Profit 489,739 539,976 -9%
GP Margin 7.9% 10.2% -2.3% point
Operating Profit 265,186 311,565 -15%
20
Improving returns while seeking further growth
Solvents Growth Strategies Enhance Economy of Scale & Operational Efficiency
Seek & Seize Growth Opportunities
Existing spare capacity sufficient to support sales growth in the coming year
Step up efforts in the adoption of “domestic sourcing of raw materials”
A 300,000 metric tons acetate facility will be built at Taixing plant and will consider introduction of new products
Further mastering of production process operations of butyl acrylate to increase profit margin
21
Coatings
(HK$’000) 2013 2012 % Change Turnover 3,395,381 3,209,418 +6%
Gross Profit 820,493 783,057 +5%
GP Margin 24.2% 24.4% -0.2% point
Operating Profit 122,706 144,679 -15%
Sales volume in tonnage up by 11%
Profit slide caused by one-off loss due to restructuring under the “Mega Plant” plan, and by increased expenses from newly added capacities that had not been fully offset by growth in sales
Drew up effective cost-cutting measures and specific targets to gradually reduce expense ratio every year – e.g. centralized tendering of logistics services and packing drums, outsourcing of product shipment and warehousing services
22
Coatings
Double-digit volume growth for water-based coatings and offset printing inks
Online sales of Bauhinia Paints were on the rise and will plough in more resources in online promotion
Currently around 1,900 exclusive shops and 5,300 points of sales across China
Acquired a resins plant of 15,000 metric tons annual capacity in Zhaoqing, Guangdong to increase technical and cost advantages of offset inks business
Short-term fluctuations and one-off expenses from restructuring are expected to be rewarded with long-term operational efficiency and business quality
Inks Bauhinia Paints Industrial Coatings
23
External – Strive for Sales Growth
Focus on sales within the network for household product market
Substantial increase in capacity for oil-based paints in Jinshan plant would support sales growth of industrial coatings in real estate, furniture, car, container and machinery industries
Continue sales growth while controlling expenses to
improve returns of coatings division
Coatings Growth Strategies Internal – Go for Lower Costs
Consolidate businesses in household coatings, industrial coatings and resins into a new coatings group to raise competitiveness
Set up different working groups on central tendering, labour costs etc
Step up product management in inks business – e.g. invest in equipment renewal, set up production processes team
Cost cutting with gradual reduction of expenses ratio every year
24
Lubricants
Finished consolidation of two lubricants companies with desired effects
Operating profits see significant improvement from the loss in 2012
The business has entered safe waters and will contribute sustained profitability for the Group
(HK$’000) 2013 2012 % Change Turnover 463,831 433,150 +7%
Gross Profit 107,535 97,854 +10%
GP Margin 23.2% 22.6% +0.6% point
Operating Profit 9,996 (6,107) N/A
25
Outlook 2014
Operating environment continues to be tough, but the Group will sustain its mission to focus on its business and excel in the industry
Restructure the coatings division and keep the inks business independent to raise competitiveness and support the long-term strategy of suitably increasing investments in the coatings business
Internal focus on controlling expenses to raise profitability, raising operational efficiency, making good use of funds and carrying out long-term personnel planning to support business growth
Effective implementation of the measures will ensure that sales will go further up, expense ratio will drop and profit will rise
26
Chairman’s Remarks
Agenda
Financial Highlights
Consolidated Financial Statements
CSR Development
Core Business Analysis and Growth Strategies
27
10-Year Donation Plan for Mobile Eye Surgery Centres
At Least 12 Mobile Eye Surgery Centres in 2020
We helped restore vision for almost 26,880 cataract patients up to 31 Dec 2013
The Group donated its 5th mobile centre to Yunan in 2013. The 6th centre will be donated to Shanxi in 2014
Each mobile centre amounting to HK$2.5 million
28
10-Year Donation Plan for Mobile Eye Surgery Centres
Yip’s Chemical Volunteers paid a visit to the mobile surgery centre in Inner Mongolia in Oct 2013 to gain a better understanding of the significance and effectiveness of their work
The Team also participated in cataract prevention education, making home visits to cataract patients and blind school
29
Corporate Volunteer Team
HK
China
376 hrs
733 hrs
90 participants
153 participants
Total 1,109 hrs
Total 243
participants
30
Education Sponsorship Initiatives
Yip’s Care Extension Foundation set up in 2011
Student Sponsorship Program in Jiangmen since 2006
Approved 181 applications and a total of HK$611,600 dispensed in 2013
RMB600,000 donated to sponsor over 100 outstanding students and 20 teachers in 2013
www.yipscef.com.hk 31