Financial Performance - For the year ended December 31, 2018, the company's total revenue was approximately RMB 1,146,400,000, representing a slight increase of 5.3% compared to the previous year[12]. - The net profit for the same period was RMB 146,300,000, reflecting a moderate decrease of 6.3% year-on-year[12]. - The gross profit decreased to approximately RMB 588,200,000, down 4.8% from RMB 617,600,000 in 2017, with a gross margin decline from 56.7% in 2017 to 51.3% in 2018[29]. - The health products segment saw significant revenue growth, reaching approximately RMB 230,200,000, a substantial increase of 15.3% from RMB 199,700,000 in 2017, driven by the launch of several new products[27]. - The flavor enhancer segment generated revenue of approximately RMB 602,600,000, a slight increase of 2.8% from RMB 586,400,000 in 2017, maintaining its leading revenue position within the company[24]. - The net profit for the year was approximately RMB 146,300,000, a moderate decrease of 6.3% from RMB 156,100,000 in 2017, with a net profit margin decreasing to about 12.8% from 14.3%[37]. - Other income for the year was approximately RMB 12,900,000, a decrease from RMB 26,300,000 in 2017, primarily due to reduced government subsidies received by certain subsidiaries[33]. - As of December 31, 2018, the group's net current assets amounted to approximately RMB 74.9 million, an increase from RMB 59.9 million in 2017[39]. - Cash and bank deposits increased to RMB 306.1 million as of December 31, 2018, compared to RMB 175.6 million in 2017, primarily due to cash generated from operating activities and new borrowings[39]. - Total equity as of December 31, 2018, was approximately RMB 2.65 billion, up from RMB 2.50 billion in 2017, mainly due to an increase in share premium and other reserves[41]. - The total borrowings amounted to approximately RMB 1.34 billion as of December 31, 2018, with a debt-to-equity ratio of 50.4%, up from 47.3% in 2017[41]. - The group recorded a net exchange loss of approximately RMB 2.8 million in 2018, a decrease from RMB 14.4 million in 2017[48]. - Capital expenditures for fixed assets were approximately RMB 231.8 million in 2018, compared to RMB 199 million in 2017[49]. Business Strategy and Market Position - The company aims to strengthen its existing business, expand market share, and enhance R&D capabilities to maintain its leading position in the flavors and fragrances industry[12]. - The company plans to develop more innovative products, including electronic cigarette products, to adapt to the rapidly changing market[13]. - The company continues to improve product quality and create more innovative products in response to the slowing Chinese economy and trade tensions[18]. - The company is one of the major producers of flavors and fragrances in China, serving various industries including tobacco, beverages, and cosmetics[17]. - The company signed a framework agreement for cooperation in the development and utilization of natural flavor and fragrance resources on April 13, 2018[12]. - The company is considering a spin-off of Dongguan Boton Flavor Co., Ltd. for independent listing on the Shenzhen Stock Exchange, focusing on food and daily-use fragrance businesses[59]. - The proposed spin-off is currently in the feasibility study stage, with the Hong Kong Stock Exchange having granted conditional exemptions for the process[61]. Corporate Governance - The company emphasizes the importance of corporate governance to enhance transparency and protect shareholder interests[78]. - The company has adhered to all provisions of the corporate governance code as of December 31, 2018, except for specific deviations[79]. - The company has adopted the standard code for securities trading by directors, confirming compliance throughout the review year[80]. - The board of directors held four meetings during the fiscal year ending December 31, 2018, with an attendance rate of 100% for most executive directors[84]. - The company emphasizes the importance of board diversity and will review its composition at least once a year to enhance decision-making efficiency[83]. - Independent non-executive directors are required to submit annual confirmations of their independence, ensuring compliance with listing rules[94]. - The board is responsible for overseeing the management and strategic direction of the group, including financial policy formulation and investment approvals[87]. - The company has established clear guidelines for management's authority, requiring board approval for significant transactions and conflicts of interest[88]. - The company has established a remuneration committee responsible for recommending the remuneration policy for all directors and senior management, ensuring transparency and alignment with corporate objectives[101]. - The nomination committee is tasked with reviewing the board's structure and diversity at least once a year, ensuring alignment with the company's strategic goals[107]. - The audit committee is responsible for reviewing the company's financial reporting system and internal controls, meeting at least twice a year to discuss audit work and financial policies[110]. - The company paid RMB 6,100,000 for audit services to the independent auditor during the review year[113]. - The chairman and CEO roles are held by the same individual, which the board believes provides strong and consistent leadership for long-term business planning[98]. - The board has three committees: remuneration, nomination, and audit, each with defined roles and responsibilities[100]. - The company will continue to assess the effectiveness of its corporate governance structure, including the potential separation of the chairman and CEO roles[99]. - The audit committee has recommended the reappointment of the external auditor, ensuring compliance with financial regulations[111]. Shareholder Engagement - The company ensures effective communication with shareholders through announcements and news releases on the Hong Kong Stock Exchange, enhancing transparency[123]. - The company allows shareholders to propose suggestions at the annual general meeting, promoting shareholder engagement and participation[121]. - The annual general meeting is scheduled to be held on May 10, 2019, providing an opportunity for shareholders to discuss company matters[124]. - The company will issue a circular detailing the scrip dividend plan to shareholders on or around May 23, 2019[132]. - As of December 31, 2018, the company's distributable reserves amounted to RMB 442,700,000, an increase from RMB 370,400,000 in 2017[138]. Environmental and Social Responsibility - The company has implemented environmental policies that comply with national and regional regulations, focusing on sustainable development[196]. - The company has relocated its production facilities to Dongguan, which has improved operational efficiency and reduced emissions[191]. - The company aims to minimize greenhouse gas emissions through energy-efficient practices and pollution reduction measures[197]. - The company encourages stakeholder feedback on its ESG report to enhance future reporting and address stakeholder concerns[194]. - Total greenhouse gas emissions amounted to 7,930 tons, with Shenzhen contributing 2,917 tons, Huizhou 2,622 tons, and Dongguan 2,391 tons[199]. - Wastewater discharge increased from 5,215 cubic meters in 2017 to 12,000 cubic meters in 2018, primarily from the Dongguan production facility[200]. - Other two core production bases reduced wastewater discharge to zero in 2018, down from 2,756 cubic meters and 4,072 cubic meters in 2017[200]. - The company has installed a wastewater treatment system to process wastewater, with treated "grey water" reused for irrigation and flushing[200]. - The Huizhou production facility did not generate wastewater in 2018 due to the production process not requiring water resources[200]. - Dongguan production facility uses water resources for cleaning production-related containers and workshops[200]. - The density of emissions is recorded at 5.86 tons per cubic meter[199].