[Part I Important Notice](index=2&type=section&id=Part%20I%20Important%20Notice) [Important Notice](index=2&type=section&id=Important%20Notice) The company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of the quarterly report, assuming legal responsibility; the company's head, chief accountant, and head of accounting department declare the financial statements are true, accurate, and complete - The company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of the quarterly report, free from false records, misleading statements, or major omissions, and assume individual and joint legal responsibility[2](index=2&type=chunk) - Company head Cao Bangjun, chief accountant Li Kai, and head of accounting department Liu Wei declare that the financial statements in the quarterly report are true, accurate, and complete[2](index=2&type=chunk) [Part II Company Profile](index=3&type=section&id=Part%20II%20Company%20Profile) [I. Major Accounting Data and Financial Indicators](index=3&type=section&id=I.%20Major%20Accounting%20Data%20and%20Financial%20Indicators) The company's total assets and net assets attributable to shareholders increased, but operating revenue, net profit, and non-recurring net profit significantly decreased year-over-year, along with basic EPS and ROE Major Accounting Data and Financial Indicators for Q3 2019 | Indicator | Current Period End (RMB) | Prior Year End Adjusted (RMB) | Change (Adjusted) | Current Period (RMB) | YoY Change for Current Period | Year-to-Date (RMB) | YoY Change for Year-to-Date | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 9,811,676,437.84 | 9,385,461,410.01 | 4.54% | -- | -- | -- | -- | | Net Assets Attributable to Shareholders | 7,801,712,173.56 | 7,435,201,825.75 | 4.93% | -- | -- | -- | -- | | Operating Revenue | -- | -- | -- | 353,562,568.83 | -49.23% | 1,160,288,525.20 | -36.76% | | Net Profit Attributable to Shareholders | -- | -- | -- | 115,093,881.53 | -64.16% | 352,127,119.20 | -53.26% | | Net Profit Attributable to Shareholders (Excluding Non-Recurring Gains/Losses) | -- | -- | -- | 122,227,387.78 | -61.04% | 311,548,181.64 | -57.20% | | Net Cash Flow from Operating Activities | -- | -- | -- | -- | -- | 176,983,113.03 | -21.85% | | Basic Earnings Per Share (RMB/share) | -- | -- | -- | 0.0577 | -64.18% | 0.1869 | -50.53% | | Diluted Earnings Per Share (RMB/share) | -- | -- | -- | 0.0577 | -64.18% | 0.1869 | -50.53% | | Weighted Average Return on Net Assets | -- | -- | -- | 1.51% | -67.44% | 4.62% | -57.40% | [Reasons for Changes in Accounting Policies and Correction of Accounting Errors](index=3&type=section&id=Reasons%20for%20Changes%20in%20Accounting%20Policies%20and%20Correction%20of%20Accounting%20Errors) The company retrospectively adjusted its 2018 financial statements due to controlling shareholder fund occupation and non-compliant trade revenue recognition, impacting accounts receivable, other current assets, deferred revenue, operating income, capital reserves, and retained earnings - During the preparation of the 2018 annual report, the company discovered instances of fund occupation by the controlling shareholder and its related parties, leading Ruihua Certified Public Accountants to issue a qualified audit opinion on the 2018 financial report[4](index=4&type=chunk) - As of December 31, 2018, **404.36 million RMB** in accounts receivable, **790.97 million RMB** in other current assets, and **-106.24 million RMB** in deferred revenue were funds occupied by the controlling shareholder, retrospectively adjusted to other receivables with corresponding bad debt provisions[4](index=4&type=chunk) - Portions of trade revenue from subsidiaries Shanghai Zangxiang Trading Co., Ltd. and Shanghai Yaobo Trading Co., Ltd. did not comply with revenue recognition principles, impacting 2017 and 2018 operating revenue by **-131.66 million RMB** and **-468.49 million RMB**, respectively[5](index=5&type=chunk) - The asset management plan purchased by the company for **1.80 billion RMB** involved transactions lacking commercial substance, with **1.20 billion RMB** of reduced accounts receivable and prepayments partially occupied by related parties[6](index=6&type=chunk) [Non-Recurring Gains and Losses Items and Amounts](index=4&type=section&id=Non-Recurring%20Gains%20and%20Losses%20Items%20and%20Amounts) During the reporting period, the company's total non-recurring gains and losses amounted to **40.58 million RMB**, primarily from government subsidies and fund occupation fees collected from non-financial enterprises Non-Recurring Gains and Losses Items from Year-Beginning to End of Reporting Period | Item | Year-to-Date Amount (RMB) | Notes | | :--- | :--- | :--- | | Government subsidies recognized in current profit or loss (excluding those closely related to the company's business and enjoyed at fixed or quantitative standards set by the state) | 2,854,612.19 | | | Fund occupation fees collected from non-financial enterprises recognized in current profit or loss | 45,595,661.05 | | | Other non-operating income and expenses apart from the above | -710,346.70 | | | Less: Income tax impact | 7,160,988.98 | | | Minority interest impact (after tax) | 0.00 | | | Total | 40,578,937.56 | -- | [II. Total Number of Shareholders and Top Ten Shareholders' Holdings at the End of the Reporting Period](index=4&type=section&id=II.%20Total%20Number%20of%20Shareholders%20and%20Top%20Ten%20Shareholders%27%20Holdings%20at%20the%20End%20of%20the%20Reporting%20Period) As of the end of the reporting period, the company had **27,033** common shareholders; the top ten included Tibet Zangge Venture Capital Group, Sichuan Yonghong Industrial, and Xiao Yongming as concerted parties, with most of their shares pledged - The total number of common shareholders at the end of the reporting period was **27,033**[8](index=8&type=chunk) - Tibet Zangge Venture Capital Group Co., Ltd., Sichuan Yonghong Industrial Co., Ltd., and Xiao Yongming are concerted parties[9](index=9&type=chunk) - Controlling shareholder Tibet Zangge Venture Capital Group Co., Ltd. holds **43.08%** of shares, with all its holdings pledged[8](index=8&type=chunk) Top 10 Shareholders' Holdings | Shareholder Name | Shareholder Nature | Shareholding Percentage | Number of Shares Held (shares) | Number of Restricted Shares Held (shares) | Share Status | Number of Pledged or Frozen Shares (shares) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Tibet Zangge Venture Capital Group Co., Ltd. | Domestic Non-State-Owned Legal Person | 43.08% | 858,892,678 | 858,892,678 | Pledged | 858,892,678 | | Sichuan Yonghong Industrial Co., Ltd. | Domestic Non-State-Owned Legal Person | 19.42% | 387,228,181 | 387,228,181 | Pledged | 387,228,181 | | Xiao Yongming | Domestic Natural Person | 10.87% | 216,803,365 | 216,803,365 | Pledged | 216,801,382 | | Beijing Lianda Times Investment Co., Ltd. | Domestic Non-State-Owned Legal Person | 2.76% | 55,031,595 | 55,023,743 | Pledged | 55,031,595 | | National Social Security Fund 604 Portfolio | Other | 1.74% | 34,600,027 | 0 | | | | Li Ming | Domestic Natural Person | 1.71% | 33,996,752 | 0 | Pledged | 33,996,752 | | Yang Ping | Domestic Natural Person | 0.90% | 17,848,295 | 0 | Pledged | 17,848,295 | | Guotong Trust Co., Ltd. | State-Owned Legal Person | 0.82% | 16,307,899 | 0 | | | | Ningbo Xingtong Investment Management Co., Ltd. | Domestic Non-State-Owned Legal Person | 0.79% | 15,780,000 | 0 | | | | Beijing Lianda Sifang Investment Consulting Center (Limited Partnership) | Domestic Non-State-Owned Legal Person | 0.45% | 9,004,464 | 9,004,464 | Pledged | 9,000,000 | [1. Total Number of Common Shareholders and Preferred Shareholders with Restored Voting Rights, and Top 10 Shareholders' Holdings](index=4&type=section&id=1.%20Total%20Number%20of%20Common%20Shareholders%20and%20Preferred%20Shareholders%20with%20Restored%20Voting%20Rights%2C%20and%20Top%2010%20Shareholders%27%20Holdings) At the end of the reporting period, common shareholders totaled **27,033**; the top ten included the controlling shareholder and concerted parties with high ownership, and most of their shares were pledged - The total number of common shareholders at the end of the reporting period was **27,033**[8](index=8&type=chunk) - Tibet Zangge Venture Capital Group Co., Ltd., Sichuan Yonghong Industrial Co., Ltd., and Xiao Yongming are concerted parties, with most of their shareholdings pledged[8](index=8&type=chunk)[9](index=9&type=chunk) [2. Total Number of Preferred Shareholders and Top 10 Preferred Shareholders' Holdings](index=6&type=section&id=2.%20Total%20Number%20of%20Preferred%20Shareholders%20and%20Top%2010%20Preferred%20Shareholders%27%20Holdings) The company had no preferred shareholders during the reporting period - The company had no preferred shareholders during the reporting period[11](index=11&type=chunk) [Part III Significant Events](index=7&type=section&id=Part%20III%20Significant%20Events) [I. Changes and Reasons for Major Financial Data and Indicators During the Reporting Period](index=7&type=section&id=I.%20Changes%20and%20Reasons%20for%20Major%20Financial%20Data%20and%20Indicators%20During%20the%20Reporting%20Period) Key financial data showed decreases in assets and profits, mainly due to payments, loan repayments, reduced potash sales, and investment losses Changes and Reasons for Major Financial Data During the Reporting Period | Item | Change Rate | Main Reasons | | :--- | :--- | :--- | | **Balance Sheet Items** | | | | Cash and Cash Equivalents | -34.10% | Primarily due to payments for materials and repayment of bank loans during the reporting period | | Notes Receivable | -87.16% | Primarily due to payments for materials and other supplier invoices during the reporting period | | Other Receivables | -91.42% | Due to the controlling shareholder's repayment of occupied funds during the reporting period | | Inventories | 33.04% | Primarily due to an increase in goods dispatched and work-in-progress during the current period | | Other Current Assets | -77.77% | Mainly due to the offset of asset management plans by fund occupation amounts recognized from January to June 2019 | | Short-term Borrowings | -19.81% | Primarily due to repayment of bank loans during the reporting period | | Deferred Revenue | 154.22% | Primarily due to an increase in customer prepayments during the reporting period | | Employee Benefits Payable | 49.39% | Primarily due to an increase in unpaid employee benefits during the current period | | Non-current Liabilities Due Within One Year | -100.00% | Primarily due to repayment of long-term bank loans during the reporting period | | **Income Statement Items (Year-to-Date)** | | | | Operating Revenue | -36.76% | Primarily due to decreased potash sales and reduced subsidiary trade business, leading to lower revenue compared to the same period last year | | Taxes and Surcharges | -31.06% | Primarily due to decreased potash sales, leading to reduced resource tax | | Selling Expenses | -24.63% | Primarily due to decreased potash sales, leading to reduced railway freight costs | | Other Income | -97.43% | Primarily due to reduced government subsidies obtained from trade business | | Investment Income | -66.69% | Investment loss recognized from Julong Copper during the current period | | Non-operating Income | 78.99% | Primarily due to an increase in government subsidies obtained during the current period | | Non-operating Expenses | -94.48% | Primarily due to fewer fixed asset disposals compared to the previous period | | Income Tax Expense | -61.58% | Primarily due to decreased potash sales, reduced subsidiary trade business, and lower revenue compared to the previous period, leading to reduced income tax expense | | **Cash Flow Statement Items (Year-to-Date)** | | | | Cash Received from Sales of Goods and Services | -56.30% | Primarily due to reduced cash from Zangge subsidiary's trade business during the reporting period | | Cash Received from Other Operating Activities | -43.12% | Primarily due to reduced government subsidies received from Zangge subsidiary's trade business during the current period | | Cash Paid for Goods and Services | -61.70% | Primarily due to reduced cash from Zangge subsidiary's trade business during the reporting period | | Cash Paid for Other Operating Activities | -32.16% | Primarily due to decreased potash sales, leading to reduced railway freight payments | | Taxes and Levies Paid | -77.71% | Primarily due to reduced taxes from Zangge subsidiary's trade business during the reporting period | | Cash Paid for Acquisition of Fixed Assets, Intangible Assets, and Other Long-term Assets | -90.36% | Primarily due to the commissioning of the lithium carbonate project, leading to reduced fixed asset investment during the reporting period | [II. Progress, Impact, and Solutions for Significant Events](index=7&type=section&id=II.%20Progress%2C%20Impact%2C%20and%20Solutions%20for%20Significant%20Events) The company made progress in new energy, with the lithium carbonate project successfully commissioned; controlling shareholder fund occupation was fully repaid through self-inspection, accounting corrections, and asset-for-debt swaps; the company also completed the re-election of directors and senior management - Subsidiary Zangge Potash established Golmud Zangge Lithium Industry Co., Ltd. in Golmud, strategically entering the new energy sector; the lithium carbonate project has successfully produced qualified battery-grade lithium carbonate products, expected to enhance future company profits[14](index=14&type=chunk) - The controlling shareholder's fund occupation issue has been fully repaid, including occupied funds, fees, and trade-related losses, through self-inspection, accounting error corrections, and asset-for-debt swaps, with the transfer of these asset equities completed[15](index=15&type=chunk) - The company completed its re-election of directors and senior management during the reporting period, replacing some personnel as required for development[15](index=15&type=chunk) [Progress of Share Repurchase Implementation](index=8&type=section&id=Progress%20of%20Share%20Repurchase%20Implementation) The company did not conduct any share repurchases during the reporting period - The company did not engage in agreed repurchase transactions or share repurchases during the reporting period[10](index=10&type=chunk)[15](index=15&type=chunk) [III. Unfulfilled Commitments by Actual Controllers, Shareholders, Related Parties, Acquirers, and the Company During the Reporting Period](index=8&type=section&id=III.%20Unfulfilled%20Commitments%20by%20Actual%20Controllers%2C%20Shareholders%2C%20Related%20Parties%2C%20Acquirers%2C%20and%20the%20Company%20During%20the%20Reporting%20Period) Performance commitments and compensation arrangements from asset restructuring remain unfulfilled due to the primary compensation obligor's pledged shares, with the company actively urging them to raise funds for resolution - Performance commitments and compensation arrangements made during asset restructuring remain unfulfilled beyond their due date[16](index=16&type=chunk) - Zangge Potash committed to achieving projected net profits (excluding non-operating gains/losses) of **1.14 billion RMB**, **1.50 billion RMB**, and **1.63 billion RMB** for 2016, 2017, and 2018, respectively[16](index=16&type=chunk) - The majority of Zangge Holdings shares held by the primary compensation obligor are currently pledged, which is the main reason for the unfulfilled commitment[15](index=15&type=chunk) - The company will continue to urge the compensation obligor to promptly unpledge their Zangge Holdings shares to fulfill the performance compensation for the restructuring project as committed[15](index=15&type=chunk) [IV. Securities Investment](index=8&type=section&id=IV.%20Securities%20Investment) The company had no securities investments during the reporting period - The company had no securities investments during the reporting period[17](index=17&type=chunk) [V. Wealth Management](index=8&type=section&id=V.%20Wealth%20Management) The company had no entrusted wealth management during the reporting period - The company had no entrusted wealth management during the reporting period[17](index=17&type=chunk) [VI. Derivative Investments](index=9&type=section&id=VI.%20Derivative%20Investments) The company had no derivative investments during the reporting period - The company had no derivative investments during the reporting period[18](index=18&type=chunk) [VII. Registration Form for Investor Relations Activities During the Reporting Period](index=9&type=section&id=VII.%20Registration%20Form%20for%20Investor%20Relations%20Activities%20During%20the%20Reporting%20Period) During the reporting period, the company primarily engaged with individual investors via phone, addressing inquiries on controlling shareholder fund occupation, lithium carbonate project progress, company operations, and share pledge releases - During the reporting period, the company primarily engaged with individual investors via phone communication[19](index=19&type=chunk)[20](index=20&type=chunk) - Inquiries mainly covered the controlling shareholder's fund occupation, lithium carbonate project status, company operations, share repurchase and cancellation, share release, actual controller's share pledges, and Julong Company project progress[19](index=19&type=chunk)[20](index=20&type=chunk) [VIII. Irregular External Guarantees](index=10&type=section&id=VIII.%20Irregular%20External%20Guarantees) The company had no irregular external guarantees during the reporting period - The company had no irregular external guarantees during the reporting period[21](index=21&type=chunk) [IX. Non-Operating Fund Occupation by Controlling Shareholder and Related Parties](index=10&type=section&id=IX.%20Non-Operating%20Fund%20Occupation%20by%20Controlling%20Shareholder%20and%20Related%20Parties) There was no non-operating fund occupation by the controlling shareholder or its related parties during the reporting period - There was no non-operating fund occupation by the controlling shareholder or its related parties during the reporting period[21](index=21&type=chunk) [Part IV Financial Statements](index=11&type=section&id=Part%20IV%20Financial%20Statements) [I. Financial Statements](index=11&type=section&id=I.%20Financial%20Statements) This section presents the company's consolidated and parent company balance sheets, income statements, and cash flow statements, comprehensively detailing financial position, operating results, and cash flows at the end of the reporting period [1. Consolidated Balance Sheet](index=11&type=section&id=1.%20Consolidated%20Balance%20Sheet) As of September 30, 2019, consolidated total assets were **9.81 billion RMB**, a **4.54%** increase from year-end, with total current assets at **2.27 billion RMB**, non-current assets at **7.54 billion RMB**, total liabilities at **2.01 billion RMB**, and total owner's equity at **7.80 billion RMB** Consolidated Balance Sheet Key Data (September 30, 2019 vs December 31, 2018) | Item | September 30, 2019 (RMB) | December 31, 2018 (RMB) | | :--- | :--- | :--- | | Total Assets | 9,811,676,437.84 | 9,385,461,410.01 | | Total Current Assets | 2,272,572,457.16 | 4,279,290,986.62 | | Total Non-current Assets | 7,539,103,980.68 | 5,106,170,423.39 | | Total Liabilities | 2,009,964,264.28 | 1,950,259,584.26 | | Total Owner's Equity | 7,801,712,173.56 | 7,435,201,825.75 | - Cash and cash equivalents decreased from **60.34 million RMB** on December 31, 2018, to **39.77 million RMB** on September 30, 2019[23](index=23&type=chunk) - Other receivables significantly decreased from **2.33 billion RMB** on December 31, 2018, to **200.24 million RMB** on September 30, 2019[23](index=23&type=chunk) - Long-term equity investments increased from **0 RMB** on December 31, 2018, to **2.58 billion RMB** on September 30, 2019[24](index=24&type=chunk) [2. Parent Company Balance Sheet](index=14&type=section&id=2.%20Parent%20Company%20Balance%20Sheet) As of September 30, 2019, parent company total assets significantly grew to **14.82 billion RMB** from **10.66 billion RMB** at year-end 2018, driven by increases in long-term equity investments and other receivables, while total liabilities rose to **613.24 million RMB** mainly due to other payables Parent Company Balance Sheet Key Data (September 30, 2019 vs December 31, 2018) | Item | September 30, 2019 (RMB) | December 31, 2018 (RMB) | | :--- | :--- | :--- | | Total Assets | 14,824,338,078.50 | 10,656,210,803.27 | | Total Current Assets | 4,013,373,946.15 | 2,427,920,167.79 | | Total Non-current Assets | 10,810,964,132.35 | 8,228,290,635.48 | | Total Liabilities | 613,243,479.52 | 21,325,771.31 | | Total Owner's Equity | 14,211,094,598.98 | 10,634,885,031.96 | - Parent company other receivables increased from **2.40 billion RMB** on December 31, 2018, to **3.99 billion RMB** on September 30, 2019, with dividends receivable rising from **392.21 million RMB** to **3.99 billion RMB**[27](index=27&type=chunk) - Parent company long-term equity investments increased from **8.23 billion RMB** on December 31, 2018, to **10.81 billion RMB** on September 30, 2019[28](index=28&type=chunk) - Parent company other payables increased from **17.65 million RMB** on December 31, 2018, to **610.85 million RMB** on September 30, 2019[29](index=29&type=chunk) [3. Consolidated Income Statement for the Current Reporting Period](index=17&type=section&id=3.%20Consolidated%20Income%20Statement%20for%20the%20Current%20Reporting%20Period) For the third quarter, consolidated total operating revenue was **354 million RMB**, a **49.23%** year-over-year decrease; net profit attributable to parent company owners was **115 million RMB**, down **64.16%**, with basic EPS at **0.0577 RMB**, a **64.18%** decline Consolidated Income Statement Key Data for the Current Reporting Period (Current Period vs Prior Period) | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 353,562,568.83 | 696,401,384.09 | -49.23% | | Total Operating Costs | 231,151,183.48 | 308,532,585.03 | -25.08% | | Operating Profit | 137,676,525.25 | 390,640,752.40 | -64.75% | | Total Profit | 136,983,238.53 | 388,656,405.50 | -64.75% | | Net Profit | 115,093,881.53 | 321,113,408.66 | -64.16% | | Net Profit Attributable to Parent Company Owners | 115,093,881.53 | 321,113,408.66 | -64.16% | | Basic Earnings Per Share (RMB/share) | 0.0577 | 0.1611 | -64.18% | | Diluted Earnings Per Share (RMB/share) | 0.0577 | 0.1611 | -64.18% | - Financial expenses changed from **-32,221.61 RMB** in the prior period to **10.18 million RMB** in the current period[31](index=31&type=chunk) - Credit impairment losses for the current period were **22.13 million RMB**, with no such item in the prior period[32](index=32&type=chunk) [4. Parent Company Income Statement for the Current Reporting Period](index=20&type=section&id=4.%20Parent%20Company%20Income%20Statement%20for%20the%20Current%20Reporting%20Period) For the third quarter, the parent company reported **zero operating revenue** but achieved a net profit of **3.59 billion RMB**, primarily driven by substantial investment income, contrasting with a **3.68 million RMB** net loss in the prior period Parent Company Income Statement Key Data for the Current Reporting Period (Current Period vs Prior Period) | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | | :--- | :--- | :--- | | Operating Revenue | 0.00 | 0.00 | | Administrative Expenses | 5,320,436.23 | 3,738,785.86 | | Financial Expenses | -1,808.83 | -7,968.24 | | Investment Income | 3,592,726,761.77 | 0.00 | | Operating Profit | 3,587,405,564.29 | -3,730,904.04 | | Total Profit | 3,587,405,531.71 | -3,678,275.26 | | Net Profit | 3,587,405,531.71 | -3,678,275.26 | - Parent company investment income for the current period reached **3.59 billion RMB**, serving as the primary source of profit[34](index=34&type=chunk) [5. Consolidated Income Statement from Year-Beginning to End of Reporting Period](index=22&type=section&id=5.%20Consolidated%20Income%20Statement%20from%20Year-Beginning%20to%20End%20of%20Reporting%20Period) From year-beginning to the end of the reporting period, consolidated total operating revenue was **1.16 billion RMB**, a **36.76%** year-over-year decrease; net profit attributable to parent company owners was **352 million RMB**, down **53.26%**, with basic EPS at **0.1869 RMB**, a **50.53%** decline Consolidated Income Statement Key Data from Year-Beginning to End of Reporting Period (Current Period vs Prior Period) | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 1,160,288,525.20 | 1,834,624,531.25 | -36.76% | | Total Operating Costs | 763,745,418.21 | 917,521,428.64 | -16.76% | | Operating Profit | 418,309,258.06 | 945,656,015.47 | -55.77% | | Total Profit | 419,798,311.36 | 929,480,858.18 | -54.84% | | Net Profit | 352,127,119.20 | 753,340,570.33 | -53.26% | | Net Profit Attributable to Parent Company Owners | 352,127,119.20 | 753,340,570.33 | -53.26% | | Basic Earnings Per Share (RMB/share) | 0.1869 | 0.3778 | -50.53% | | Diluted Earnings Per Share (RMB/share) | 0.1869 | 0.3778 | -50.53% | - Credit impairment losses for the current period were **17.31 million RMB**, compared to **-8.41 million RMB** in the prior period[37](index=37&type=chunk) - Net amount of other comprehensive income after tax for the current period was **20.54 million RMB**, compared to **0 RMB** in the prior period[37](index=37&type=chunk) [6. Parent Company Income Statement from Year-Beginning to End of Reporting Period](index=24&type=section&id=6.%20Parent%20Company%20Income%20Statement%20from%20Year-Beginning%20to%20End%20of%20Reporting%20Period) From year-beginning to the end of the reporting period, the parent company reported **zero operating revenue** but achieved a net profit of **3.58 billion RMB**, primarily due to substantial investment income, contrasting with an **11.24 million RMB** net loss in the prior period Parent Company Income Statement Key Data from Year-Beginning to End of Reporting Period (Current Period vs Prior Period) | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | | :--- | :--- | :--- | | Operating Revenue | 0.00 | 0.00 | | Administrative Expenses | 16,525,691.58 | 11,331,542.33 | | Financial Expenses | -13,092.09 | -39,635.90 | | Investment Income | 3,592,726,761.77 | 0.00 | | Operating Profit | 3,576,213,877.28 | -11,293,726.39 | | Total Profit | 3,576,214,617.28 | -11,241,077.61 | | Net Profit | 3,576,214,617.28 | -11,241,077.61 | - Parent company investment income for the current period reached **3.59 billion RMB**, serving as the primary source of profit[40](index=40&type=chunk) [7. Consolidated Cash Flow Statement from Year-Beginning to End of Reporting Period](index=26&type=section&id=7.%20Consolidated%20Cash%20Flow%20Statement%20from%20Year-Beginning%20to%20End%20of%20Reporting%20Period) From year-beginning to the end of the reporting period, net cash flow from operating activities was **177 million RMB**, down **21.85%**; net cash flow from investing activities improved to **-52.98 million RMB**; net cash flow from financing activities increased outflow to **-145 million RMB**; and net increase in cash and cash equivalents was **-20.58 million RMB** Consolidated Cash Flow Statement Key Data from Year-Beginning to End of Reporting Period (Current Period vs Prior Period) | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 176,983,113.03 | 226,473,945.50 | -21.85% | | Net Cash Flow from Investing Activities | -52,980,867.23 | -254,166,619.38 | 79.15% (outflow decreased) | | Net Cash Flow from Financing Activities | -144,581,183.34 | -113,729,811.09 | -27.12% (outflow increased) | | Net Increase in Cash and Cash Equivalents | -20,578,937.54 | -141,422,484.97 | 85.46% (outflow decreased) | - Cash received from sales of goods and services decreased by **56.30%** year-over-year, primarily due to reduced cash from Zangge subsidiary's trade business[43](index=43&type=chunk) - Cash paid for the acquisition of fixed assets, intangible assets, and other long-term assets decreased by **90.36%** year-over-year, primarily due to the commissioning of the lithium carbonate project, leading to reduced fixed asset investment[44](index=44&type=chunk) [8. Parent Company Cash Flow Statement from Year-Beginning to End of Reporting Period](index=28&type=section&id=8.%20Parent%20Company%20Cash%20Flow%20Statement%20from%20Year-Beginning%20to%20End%20of%20Reporting%20Period) From year-beginning to the end of the reporting period, parent company net cash outflow from operating activities decreased to **-5.81 million RMB**; net cash flow from investing activities shifted to an outflow of **-0.50 million RMB** from a prior inflow; net cash flow from financing activities was **0 RMB**; and net increase in cash and cash equivalents was **-6.31 million RMB** Parent Company Cash Flow Statement Key Data from Year-Beginning to End of Reporting Period (Current Period vs Prior Period) | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -5,810,166.42 | -12,194,936.85 | | Net Cash Flow from Investing Activities | -496,000.00 | 33,294,001.00 | | Net Cash Flow from Financing Activities | 0.00 | -12,015,243.37 | | Net Increase in Cash and Cash Equivalents | -6,306,166.42 | 9,083,820.78 | - Net cash flow from investing activities shifted from a positive value in the prior period to a negative value in the current period, primarily due to increased cash paid for the acquisition of fixed assets, intangible assets, and other long-term assets[44](index=44&type=chunk)[45](index=45&type=chunk) [II. Explanation of Financial Statement Adjustments](index=30&type=section&id=II.%20Explanation%20of%20Financial%20Statement%20Adjustments) Starting in 2019, the company adopted new financial instrument, revenue, or lease standards, but did not retrospectively adjust prior comparative data - The company adopted new financial instrument, revenue, or lease standards starting in 2019[47](index=47&type=chunk) - Prior comparative data were not retrospectively adjusted[47](index=47&type=chunk) [III. Audit Report](index=30&type=section&id=III.%20Audit%20Report) The company's third-quarter report was unaudited - The company's third-quarter report was unaudited[48](index=48&type=chunk)

藏格控股股份有限公司 2018 年年度报告全文 藏格控股股份有限公司 2018 年年度报告 (更正修订版) 2019 年 10 月 1 藏格控股股份有限公司 2018 年年度报告全文 第一节 重要提示、目录和释义 公司董事会、监事会及董事、监事、高级管理人员保证年度报告内容的真 实、准确、完整，不存在虚假记载、误导性陈述或重大遗漏，并承担个别和连 带的法律责任。 公司负责人曹邦俊、主管会计工作负责人李凯及会计机构负责人(会计主管 人员)刘威声明：保证年度报告中财务报告的真实、准确、完整。 所有董事均已出席了审议本报告的董事会会议。 审计机构对公司出具了保留意见的审计报告。针对上述保留意见，公司及 瑞华经过必要的自查和核查后，瑞华于 2019 年 10 月 22 日出具了《2018 年年度 财务报表更正事项的专项鉴证报告》，现将 2018 年年报进行更正。 | --- | |----------------------------------------------------------------------------| | | | 1 、 2018 年 12 月藏格控股未经过董事会审批，亦未按照公司章程 ...

Financial Performance - Operating revenue for the reporting period was ¥696,401,384.09, a decrease of 22.42% compared to the same period last year[8]. - Net profit attributable to shareholders of the listed company was ¥321,113,408.66, down 10.95% year-on-year[8]. - Basic earnings per share for the reporting period was ¥0.1611, a decrease of 7.41% compared to the same period last year[8]. - The weighted average return on net assets was 4.64%, a decrease of 19.03% compared to the same period last year[8]. - The net cash flow from operating activities for the year-to-date was ¥226,473,945.50, a significant decrease of 144.96% year-on-year[8]. - The company does not anticipate significant changes in net profit compared to the same period last year[25]. Assets and Shareholder Information - Total assets at the end of the reporting period reached ¥8,320,643,218.11, an increase of 7.44% compared to the end of the previous year[8]. - Net assets attributable to shareholders of the listed company amounted to ¥7,306,715,474.12, reflecting an increase of 11.81% year-on-year[8]. - The total number of ordinary shareholders at the end of the reporting period was 23,317[12]. - The largest shareholder, Tibet Cangge Venture Investment Co., Ltd., held 43.08% of the shares, with 858,892,678 shares pledged[12]. Cash Flow and Investments - Cash received from sales increased by 111.52% to ¥2,091,879,875.13, driven by increased trade business cash flow[16]. - The company’s net cash flow from operating activities increased significantly, with cash received from other operating activities rising by 1135.11% to ¥252,506,816.95[16]. - The company has made significant investments in lithium carbonate projects, with construction progress reported as smooth[17]. - The company plans to establish a wholly-owned subsidiary in overseas markets to issue offshore USD bonds, pending regulatory compliance[20]. Inventory and Receivables - Accounts receivable increased by 23.74% to ¥844,825,758.01 due to uncollected payments during the reporting period[16]. - Inventory rose by 40.21% to ¥559,218,752.71, attributed to increased trade business inventory from the subsidiary[16]. - The company reported a 173.66% increase in advance payments to ¥176,030,439.40 due to rising potassium fertilizer prices[16]. Expenses and Financial Management - The company’s management expenses decreased by 28.23% to ¥45,622,555.32, due to reduced expense allocation[16]. - The company’s cash outflow for purchasing goods and services increased by 272.22% to ¥1,072,253,865.43, reflecting increased trade business cash flow[16]. - There are no overdue commitments from actual controllers, shareholders, related parties, acquirers, or other related parties during the reporting period[23]. - There are no securities investments during the reporting period[26]. - The company has not engaged in entrusted financial management during the reporting period[27]. - There are no derivative investments during the reporting period[28]. Legal and Compliance - The company is currently involved in a legal dispute with Gelmu Yongwei Magnesium Potassium Industry Co., Ltd. and Gelmu Yongwei Engineering Co., Ltd., which has been accepted by the Qinghai Provincial High People's Court[22]. - The company has received inquiries regarding stock suspension and restructuring progress, but no written reports were provided[28][29]. - There are no violations of external guarantees during the reporting period[31]. - There are no non-operating fund occupations by controlling shareholders or related parties during the reporting period[32].

Financial Performance - The company's operating revenue for the first half of 2018 was ¥1,138,223,147.16, representing a 5.44% increase compared to ¥1,079,501,754.11 in the same period last year[18]. - The net profit attributable to shareholders was ¥432,227,161.67, a significant increase of 37.38% from ¥314,617,635.31 in the previous year[18]. - Basic earnings per share rose to ¥0.2168, marking a 42.82% increase from ¥0.1518 in the previous year[18]. - The company reported a decrease in operating costs by 9.87% to ¥289,576,884.37, primarily due to reduced sales volume of potassium chloride[40]. - Sales expenses decreased by 15.37% to ¥182,010,884.29, attributed to lower transportation costs from reduced sales volume[40]. - The company’s gross profit margin for potassium chloride was 70.68%, with a slight decrease of 0.50% compared to the previous year[42]. - The company reported a significant increase in inventory from RMB 398,857,372.91 to RMB 466,089,979.62, which is an increase of about 17.00%[138]. - The total operating revenue for the period reached ¥1,138,223,147.16, an increase of 5.1% compared to ¥1,079,501,754.11 in the previous period[147]. - Net profit for the period was ¥432,227,161.67, representing a 36.3% increase from ¥317,186,683.74 in the previous period[148]. - Earnings per share (EPS) increased to ¥0.2168, up from ¥0.1518 in the previous period[148]. Assets and Liabilities - Total assets at the end of the reporting period were ¥8,103,879,020.47, up 4.64% from ¥7,744,622,344.49 at the end of the previous year[18]. - The total liabilities decreased from RMB 1,209,767,645.51 to RMB 1,131,302,929.53, a reduction of about 6.46%[139]. - The total equity attributable to the owners of the parent company increased from RMB 6,534,854,698.98 to RMB 6,972,576,090.94, reflecting a growth of approximately 6.71%[140]. - Short-term borrowings rose from RMB 300,000,000.00 to RMB 600,000,000.00, doubling during the reporting period[139]. - The company’s total liabilities are reported at 9,522.00 million RMB[172]. Cash Flow - The net cash flow from operating activities improved to -¥210,719,429.44, a 64.28% increase compared to -¥589,926,872.24 in the same period last year[18]. - The company’s short-term borrowings increased significantly, leading to a 1,099.73% rise in cash flow from financing activities to ¥194,889,056.47[41]. - The cash flow from operating activities showed a net outflow of -210,719,429.44, an improvement from -589,926,872.24 in the previous period[156]. - The net cash flow from financing activities improved to 194,889,056.47 from -19,494,172.71 in the previous period[156]. Business Operations - The company holds a mining license for 724.3493 square kilometers in the Chaka Salt Lake area, focusing on potassium salt production, primarily potassium chloride, which is essential for agricultural fertilizers[26]. - The company has established a complete potassium fertilizer production system, with production capacity continuously increasing, and plans for the next year's sales based on current sales and future price trends[27]. - The company is currently constructing a lithium carbonate project with an annual production capacity of 20,000 tons, which is still in the construction phase and has not yet commenced production[26]. - The potassium fertilizer industry is supported by national policies, with the government encouraging the development of potassium fertilizer production as part of agricultural support initiatives[28]. - The company plans to expand its product offerings by developing industrial potassium chloride, food-grade potassium chloride, potassium sulfate, and sodium sulfate, leveraging its existing potassium fertilizer business[79]. - The company aims to improve operational efficiency and reduce costs through the integration of acquired businesses while maintaining their relative independence[79]. Risks and Challenges - The company faced risks and has outlined measures to address them in the report[6]. - The company is the second largest in China's potassium fertilizer industry, facing risks from price declines due to market concentration among major producers[56]. - The company acknowledges the risks associated with entering new business areas, particularly in the renewable energy sector, and is taking steps to strengthen risk management[78]. - The company faces risks related to the decline in potassium fertilizer prices, which have shown a downward trend since 2009, potentially impacting its financial performance[78]. Corporate Governance and Compliance - The company is committed to enhancing its environmental management to comply with stricter regulations and reduce potential penalties[57]. - The company guarantees that its financial department operates independently, with a separate accounting system and independent bank accounts[67]. - The company has committed to timely disclosure of information related to the major asset restructuring in accordance with relevant laws and regulations[76]. - The company has implemented strict confidentiality measures to prevent insider trading and market manipulation[80]. - The company is committed to improving corporate governance to ensure shareholder rights are fully exercised[80]. Shareholder Information - The total number of shares remains unchanged at 1,993,779,522, with 1,547,146 shares under limited sale conditions, accounting for 77.60% of total shares[116]. - The largest shareholder, Tibet Cangge Chuangye Investment Co., Ltd., holds 43.08% of the shares, totaling 858,892,678 shares[121]. - The total number of shares held by the top three shareholders accounts for 73.37% of the total shares[121]. - The company has no new shares issued or transferred during the reporting period[117]. Social Responsibility - The company donated 50,000 yuan to support educational initiatives in the local community[106]. - The company plans to continue its poverty alleviation efforts in alignment with local government initiatives, focusing on sustainable economic development in targeted villages[109]. - The company is actively involved in social responsibility initiatives, including donations and support for poverty alleviation projects[105].