2013 annual results announcement - yip's chemical...2013 annual results announcement...

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


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


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


Agenda



CSR Development


7


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%


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


Agenda



CSR Development


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

*




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

*




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

#

*

*




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


Agenda



CSR Development


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


Agenda



CSR Development


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

演示者

演示文稿备注

- 7 volunteer activities in the 1H 2013

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

Q & A

32

Appendix

33

Capacity of Core Businesses

Solvents Acetate Solvents : 800,000 MT

Butyl Acrylate: 80,000 MT

Coatings

Household Paints : 167,000 MT

Inks : 96,500 MT

Industrial Paints: 56,000 MT

Resins : 45,000 MT

Lubricants

Automotive and Industrial Lubricants : 30,000 MT

As of 31 Dec 2013

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2013 annual results announcement - yip's chemical...2013 annual results announcement...

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