Report Cover This report is the First Quarter Report of Asia Potash International Investment (Guangzhou) Co., Ltd. for 2021, published in April 2021[1](index=1&type=chunk) [Section I Important Notice](index=2&type=section&id=Section%20I%20Important%20Notice) The company's board, supervisory board, and senior management guarantee the report's truthfulness, accuracy, and completeness - The company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of the quarterly report content and assume legal responsibility[2](index=2&type=chunk) - All directors attended the board meeting to review this quarterly report[2](index=2&type=chunk) - Company head Guo Baichun, chief accountant Su Xuejun, and head of accounting department Su Xuejun declare that the financial statements are true, accurate, and complete[2](index=2&type=chunk) [Section II Company Profile](index=3&type=section&id=Section%20II%20Company%20Profile) This section presents the company's key financial data, performance indicators, and shareholder structure [I. Key Accounting Data and Financial Indicators](index=3&type=section&id=I.%20Key%20Accounting%20Data%20and%20Financial%20Indicators) Key financial indicators showed significant growth, with operating revenue up **54.47%** and net profit up **325.23%** Key Accounting Data and Financial Indicators (Current Period vs. Prior Year Period) | Indicator | Current Period (Million CNY) | Prior Year Period (Million CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 125.47 | 81.22 | 54.47% | | Net Profit Attributable to Shareholders of Listed Company | 17.53 | 4.12 | 325.23% | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-Recurring Gains and Losses) | 17.30 | 4.09 | 323.08% | | Net Cash Flow from Operating Activities | 81.62 | 17.56 | 364.81% | | Basic Earnings Per Share (CNY/share) | 0.0232 | 0.0054 | 329.63% | | Diluted Earnings Per Share (CNY/share) | 0.0232 | 0.0054 | 329.63% | | Weighted Average Return on Net Assets | 0.47% | 0.11% | 0.36% | | **Period-End Indicators** | **Current Period-End (Billion CNY)** | **Prior Year-End (Billion CNY)** | **Change (%)** | | Total Assets | 4.43 | 4.32 | 2.49% | | Net Assets Attributable to Shareholders of Listed Company | 3.73 | 3.71 | 0.47% | Non-Recurring Gains and Losses Items and Amounts | Item | Amount from Year-Beginning to End of Reporting Period (CNY) | Explanation | | :--- | :--- | :--- | | Other Non-Operating Income and Expenses Apart from the Above | 300,685.54 | Primarily due to the sale of scrap materials in the current reporting period | | Less: Income Tax Impact | 59,209.87 | | | Impact on Minority Interests (After Tax) | 10,996.12 | | | Total | 230,479.55 | -- | [II. Total Number of Shareholders and Top Ten Shareholders at Period-End](index=4&type=section&id=II.%20Total%20Number%20of%20Shareholders%20and%20Top%20Ten%20Shareholders%20at%20Period-End) At period-end, the company had **16,737** common shareholders; top ten include China Agricultural Materials Group with pledged/frozen shares - At the end of the reporting period, the total number of common shareholders was **16,737**, with no preferred shareholders whose voting rights have been restored[7](index=7&type=chunk) Top 10 Shareholders' Shareholding Status | Shareholder Name | Shareholder Type | Shareholding Ratio | Number of Shares Held (Million Shares) | Number of Restricted Shares Held (Million Shares) | Pledge or Freeze Status (Share Status) | Quantity (Million Shares) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | China Agricultural Materials Group Co., Ltd. | Domestic Non-State-Owned Legal Person | 19.15% | 144.91 | 144.91 | Frozen | 56.17 | | | | | | | Pledged | 88.74 | | Guangzhou Dongling Industrial Investment Group Co., Ltd. | Domestic Non-State-Owned Legal Person | 11.05% | 83.65 | 0.00 | Frozen | 20.00 | | Mudanjiang Guofu Investment Center (Limited Partnership) | Other | 11.05% | 83.65 | 0.00 | | | | Xinjiang Jiangzhiyuan Equity Investment Partnership (Limited Partnership) | Domestic Non-State-Owned Legal Person | 7.94% | 60.09 | 60.09 | Frozen | 41.32 | | | | | | | Pledged | 26.14 | | Shanghai Jinbang Jinde Equity Investment Partnership (Limited Partnership) | Domestic Non-State-Owned Legal Person | 7.47% | 56.55 | 56.55 | Frozen | 21.92 | | | | | | | Pledged | 34.63 | | Shanghai Kaili Tianren Asset Management Co., Ltd. | Domestic Non-State-Owned Legal Person | 3.74% | 28.28 | 28.28 | Frozen | 10.96 | | | | | | | Pledged | 17.20 | | National Social Security Fund 503 Portfolio | Other | 2.91% | 22.00 | 0.00 | | | | Shanghai Lianchuang Yongjin Equity Investment Enterprise (Limited Partnership) | Domestic Non-State-Owned Legal Person | 2.57% | 19.44 | 19.44 | Frozen | 7.54 | | Tianjin Saifeng Venture Capital Fund (Limited Partnership) | Domestic Non-State-Owned Legal Person | 2.57% | 19.44 | 19.44 | Frozen | 7.54 | | Zhiwei Zhixin Business Consulting (Beijing) Co., Ltd. | Domestic Non-State-Owned Legal Person | 0.93% | 7.07 | 7.07 | Frozen | 2.74 | | Jin Chengxin Group Co., Ltd. | Domestic Non-State-Owned Legal Person | 0.93% | 7.07 | 7.07 | Frozen | 2.74 | | Chongqing Pharmaceutical Holdings Co., Ltd. | State-Owned Legal Person | 0.93% | 7.07 | 7.07 | Frozen | 2.74 | - Guangzhou Dongling Industrial Investment Group Co., Ltd. and Mudanjiang Guofu Investment Center (Limited Partnership) have formed a concerted action relationship[9](index=9&type=chunk) - The company's top 10 common shareholders and top 10 unrestricted common shareholders did not engage in agreed repurchase transactions during the reporting period[10](index=10&type=chunk) [Section III Significant Events](index=7&type=section&id=Section%20III%20Significant%20Events) This section details financial data changes, major asset restructuring disputes, and unfulfilled commitments [I. Changes and Reasons for Key Financial Data and Indicators During the Reporting Period](index=7&type=section&id=I.%20Changes%20and%20Reasons%20for%20Key%20Financial%20Data%20and%20Indicators%20During%20the%20Reporting%20Period) Key financial metrics changed significantly due to potash project payments, increased revenue, and higher construction in progress Consolidated Balance Sheet Item Changes | Item | Current Period-End (Million CNY) | Prior Year-End (Million CNY) | Change Rate (%) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 242.32 | 346.29 | -30.02% | Payment for Laos 1 Million Tons/Year Potash Expansion Project | | Accounts Receivable | 48.64 | 23.10 | 110.60% | Increase in Potash Revenue | | Prepayments | 67.63 | 14.99 | 351.02% | Increase in Prepayments to Suppliers | | Construction in Progress | 221.09 | 129.92 | 70.17% | Increase in Construction in Progress for Laos 1 Million Tons/Year Potash Expansion Project | | Contract Liabilities | 42.21 | 9.86 | 328.14% | Increase in Advance Receipts for Goods | Consolidated Income Statement Item Changes | Item | Current Period Amount (Jan-Mar 2021) (Million CNY) | Prior Period Amount (Jan-Mar 2020) (Million CNY) | Change Rate (%) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 125.47 | 81.22 | 54.47% | Increase in Potash Product Sales | | Operating Cost | 69.55 | 46.71 | 48.90% | Increase in Potash Product Sales | | Taxes and Surcharges | 10.57 | 7.64 | 38.39% | Increase in Potash Revenue and Corresponding Taxes and Fees | | Financial Expenses | -0.49 | -1.37 | 63.91% | Decrease in Interest Income | | Credit Impairment Losses | -0.30 | 1.69 | -117.85% | Increase in Provision for Bad Debts of Accounts Receivable | | Income Tax Expense | 7.03 | 3.28 | 114.44% | Increase in Potash Business Profit | Consolidated Cash Flow Statement Item Changes | Item | Current Period Amount (Jan-Mar 2021) (Million CNY) | Prior Period Amount (Jan-Mar 2020) (Million CNY) | Change Rate (%) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 81.62 | 17.56 | 364.81% | Cash Paid for Goods and Services Decreased Compared to Prior Year Period | | Net Cash Flow from Investing Activities | -194.71 | -3.87 | -4937.23% | Increase in Acquisition of Fixed Assets | | Net Cash Flow from Financing Activities | 9.37 | 0.12 | 7439.85% | Obtaining Short-Term Loans | | Net Increase in Cash and Cash Equivalents | -103.97 | 15.28 | -780.27% | Change in Net Cash Flow from Investing Activities | [II. Progress, Impact, and Solutions for Significant Events](index=8&type=section&id=II.%20Progress%2C%20Impact%2C%20and%20Solutions%20for%20Significant%20Events) This section details long-standing disputes from the Sinochem Potash major asset restructuring, including defaults and ongoing litigation [1. Progress of Issuance of Shares to Acquire Assets and Raise Supporting Funds for Related Party Transaction - Sinochem Potash Matter](index=8&type=section&id=1.%20Progress%20of%20Issuance%20of%20Shares%20to%20Acquire%20Assets%20and%20Raise%20Supporting%20Funds%20for%20Related%20Party%20Transaction%20-%20Sinochem%20Potash%20Matter) The Sinochem Potash major asset restructuring led to multiple legal disputes over defaulted fundraising and performance compensation - In September 2015, the company completed the issuance of shares to acquire **100%** equity of Sinochem International Potash Development Co., Ltd., increasing its total share capital to **762.90 million shares**[17](index=17&type=chunk) - Supporting fund subscribers Dongling Industrial, Lai Ningchang, and Li Chaobo defaulted by abandoning their subscriptions, and the company has demanded payment of liquidated damages from them[17](index=17&type=chunk)[18](index=18&type=chunk) - The company engaged intermediaries to conduct a special investigation and evaluation of the Laos 1 million tons/year potash project, identifying defects in the original technical solution and design methods[18](index=18&type=chunk)[19](index=19&type=chunk) - The company filed a lawsuit and applied for asset preservation with the Beijing High People's Court regarding disputes with Sinochem Group and ten other parties in the major asset restructuring[20](index=20&type=chunk) - Settlement discussions regarding performance compensation and asset impairment compensation disputes from the restructuring with Sinochem Group and ten other issuing parties are ongoing, with inherent uncertainties[33](index=33&type=chunk) - The Supreme People's Court has issued a final judgment on Dongling Industrial's abandonment of subscription for supporting new capital, rejecting the appeal and upholding the original judgment, requiring Dongling Industrial to pay liquidated damages of **102.96 million CNY**[33](index=33&type=chunk) - The company has applied to the court for compulsory enforcement of Dongling Industrial's liquidated damages and has frozen **20 million shares** of the company's stock held by them[34](index=34&type=chunk) [2. Explanation Regarding Temporary Non-Application for Listing and Circulation of Restricted Shares](index=17&type=section&id=2.%20Explanation%20Regarding%20Temporary%20Non-Application%20for%20Listing%20and%20Circulation%20of%20Restricted%20Shares) Due to unfulfilled performance commitments and ongoing litigation, **353.45 million** restricted shares are temporarily not being unblocked - Sinochem International failed to meet its performance commitment for 2017, requiring Sinochem Group and ten other issuing parties to compensate **117.40 million shares** and **246.76 million CNY** in cash[36](index=36&type=chunk) - As of September 28, 2018, Sinochem Group and ten other issuing parties had not fulfilled their compensation obligations on time[36](index=36&type=chunk) - The company will temporarily not apply for the lifting of restrictions on a total of **353.45 million restricted shares** held by Sinochem Group and ten other issuing parties; the lifting of restrictions will depend on the payment of performance compensation or the outcome of litigation[37](index=37&type=chunk) [III. Unfulfilled Commitments by Actual Controllers, Shareholders, Related Parties, Acquirers, and Other Concerned Parties Beyond Deadline During the Reporting Period](index=24&type=section&id=III.%20Unfulfilled%20Commitments%20by%20Actual%20Controllers%2C%20Shareholders%2C%20Related%20Parties%2C%20Acquirers%2C%20and%20Other%20Concerned%20Parties%20Beyond%20Deadline%20During%20the%20Reporting%20Period) Unfulfilled commitments include Sinochem International's 2017 performance guarantee and key management violating non-compete clauses - Sinochem International failed to meet its performance commitment for 2017, and Sinochem Group and ten other counterparties have not yet fulfilled their compensation obligations[51](index=51&type=chunk)[53](index=53&type=chunk)[66](index=66&type=chunk) - Five key management personnel, including Meng Dianyong, Huang Lu, Song Ying, Bai Ming, and Kong Lina, resigned without the listed company's consent and subsequently joined Sinochem Mining Resources Exploration Co., Ltd., a subsidiary of Sinochem Group, violating their term of office and non-compete commitments[61](index=61&type=chunk)[62](index=62&type=chunk)[66](index=66&type=chunk) - The company has filed a lawsuit and applied for asset preservation with the Beijing High People's Court regarding disputes with Sinochem Group and ten other parties in the major asset restructuring; currently, there is no judgment or mediation result[66](index=66&type=chunk) [IV. Financial Asset Investments](index=45&type=section&id=IV.%20Financial%20Asset%20Investments) The company did not engage in securities or derivative investments during the reporting period - The company had no securities investments during the reporting period[67](index=67&type=chunk) - The company had no derivative investments during the reporting period[67](index=67&type=chunk) [V. Progress of Raised Fund Investment Projects](index=46&type=section&id=V.%20Progress%20of%20Raised%20Fund%20Investment%20Projects) The company had no progress on raised fund investment projects during the reporting period - The company had no progress on raised fund investment projects during the reporting period[68](index=68&type=chunk) [VI. Forecast of Operating Performance for January-June 2021](index=46&type=section&id=VI.%20Forecast%20of%20Operating%20Performance%20for%20January-June%202021) The company did not forecast a loss or significant change in cumulative net profit for January-June 2021 - The company did not forecast that the cumulative net profit from the beginning of the year to the end of the next reporting period might be a loss or experience significant changes compared to the prior year period[68](index=68&type=chunk) [VII. Significant Contracts in Ordinary Course of Business](index=46&type=section&id=VII.%20Significant%20Contracts%20in%20Ordinary%20Course%20of%20Business) The company had no significant contracts in the ordinary course of business during the reporting period - The company had no significant contracts in the ordinary course of business during the reporting period[69](index=69&type=chunk) [VIII. Wealth Management](index=46&type=section&id=VIII.%20Wealth%20Management) The company had no wealth management activities during the reporting period - The company had no wealth management activities during the reporting period[69](index=69&type=chunk) [IX. Irregular External Guarantees](index=46&type=section&id=IX.%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[69](index=69&type=chunk) [X. Non-Operating Funds Occupied by Controlling Shareholders and Their Related Parties from the Listed Company](index=46&type=section&id=X.%20Non-Operating%20Funds%20Occupied%20by%20Controlling%20Shareholders%20and%20Their%20Related%20Parties%20from%20the%20Listed%20Company) No non-operating funds were occupied by controlling shareholders or related parties from the listed company - The company had no non-operating funds occupied by controlling shareholders and their related parties from the listed company during the reporting period[69](index=69&type=chunk) [XI. Registration Form for Research, Communication, Interview, and Other Activities During the Reporting Period](index=46&type=section&id=XI.%20Registration%20Form%20for%20Research%2C%20Communication%2C%20Interview%2C%20and%20Other%20Activities%20During%20the%20Reporting%20Period) The company engaged with individual investors via phone to discuss the Laos potash project and business development Reception Activities During the Reporting Period | Reception Time | Reception Location | Reception Method | Type of Recipient | Recipient | Main Content Discussed and Materials Provided | | :--- | :--- | :--- | :--- | :--- | :--- | | January 01, 2021 - March 31, 2021 | Guangzhou | Phone Communication | Individual | Individual Investor | Construction Progress of the Company's Laos 1 Million Tons/Year Potash Expansion Project and Company's Business Development | [Section IV Financial Statements](index=47&type=section&id=Section%20IV%20Financial%20Statements) This section presents the company's consolidated and parent company balance sheets, income statements, and cash flow statements for Q1 2021 [I. Financial Statements](index=47&type=section&id=I.%20Financial%20Statements) This section provides the company's consolidated and parent company financial statements for the reporting period [1. Consolidated Balance Sheet](index=47&type=section&id=1.%20Consolidated%20Balance%20Sheet) As of March 31, 2021, total consolidated assets were **4.43 billion CNY**, liabilities **408.00 million CNY**, and equity **4.02 billion CNY** Consolidated Balance Sheet Key Data (March 31, 2021 vs. December 31, 2020) | Item | March 31, 2021 (Million CNY) | December 31, 2020 (Million CNY) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 242.32 | 346.29 | | Accounts Receivable | 48.64 | 23.10 | | Prepayments | 67.63 | 14.99 | | Inventories | 67.06 | 74.12 | | Fixed Assets | 786.83 | 784.94 | | Construction in Progress | 221.09 | 129.92 | | Intangible Assets | 2751.72 | 2755.33 | | Total Assets | 4425.24 | 4317.70 | | Short-Term Borrowings | 9.86 | 0.00 | | Contract Liabilities | 42.21 | 9.86 | | Total Liabilities | 408.00 | 320.37 | | Total Equity Attributable to Parent Company Shareholders | 3731.50 | 3713.97 | | Total Equity | 4017.24 | 3997.33 | [2. Parent Company Balance Sheet](index=50&type=section&id=2.%20Parent%20Company%20Balance%20Sheet) As of March 31, 2021, parent company total assets were **3.64 billion CNY**, liabilities **71.67 million CNY**, and equity **3.57 billion CNY** Parent Company Balance Sheet Key Data (March 31, 2021 vs. December 31, 2020) | Item | March 31, 2021 (Million CNY) | December 31, 2020 (Million CNY) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 12.72 | 4.12 | | Long-Term Equity Investments | 3479.15 | 3479.15 | | Total Assets | 3642.58 | 3626.41 | | Short-Term Borrowings | 9.86 | 0.00 | | Total Liabilities | 71.67 | 49.81 | | Total Equity | 3570.91 | 3576.60 | [3. Consolidated Income Statement](index=52&type=section&id=3.%20Consolidated%20Income%20Statement) In Q1 2021, consolidated total operating revenue was **125.47 million CNY**, with net profit attributable to parent company shareholders at **17.53 million CNY** Consolidated Income Statement Key Data (Jan-Mar 2021 vs. Jan-Mar 2020) | Item | Current Period Amount (Million CNY) | Prior Period Amount (Million CNY) | | :--- | :--- | :--- | | Total Operating Revenue | 125.47 | 81.22 | | Total Operating Costs | 98.53 | 75.79 | | Operating Profit | 26.66 | 7.14 | | Total Profit | 26.94 | 7.17 | | Net Profit | 19.90 | 3.89 | | Net Profit Attributable to Parent Company Shareholders | 17.53 | 4.12 | | Basic Earnings Per Share (CNY/share) | 0.0232 | 0.0054 | | Diluted Earnings Per Share (CNY/share) | 0.0232 | 0.0054 | [4. Parent Company Income Statement](index=55&type=section&id=4.%20Parent%20Company%20Income%20Statement) In Q1 2021, the parent company reported zero operating revenue and a net loss of **5.69 million CNY**, primarily due to administrative and financial expenses Parent Company Income Statement Key Data (Jan-Mar 2021 vs. Jan-Mar 2020) | Item | Current Period Amount (Million CNY) | Prior Period Amount (Million CNY) | | :--- | :--- | :--- | | Operating Revenue | 0.00 | 0.00 | | Administrative Expenses | 5.72 | 3.13 | | Financial Expenses | 0.09 | -0.97 | | Operating Profit | -5.78 | -2.16 | | Net Profit | -5.69 | -2.16 | | Basic Earnings Per Share (CNY/share) | -0.0075 | -0.0029 | | Diluted Earnings Per Share (CNY/share) | -0.0075 | -0.0029 | [5. Consolidated Cash Flow Statement](index=57&type=section&id=5.%20Consolidated%20Cash%20Flow%20Statement) In Q1 2021, net cash flow from operating activities was **81.62 million CNY**, while investing activities saw a net outflow of **194.71 million CNY** Consolidated Cash Flow Statement Key Data (Jan-Mar 2021 vs. Jan-Mar 2020) | Item | Current Period Amount (Million CNY) | Prior Period Amount (Million CNY) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 81.62 | 17.56 | | Net Cash Flow from Investing Activities | -194.71 | -3.87 | | Net Cash Flow from Financing Activities | 9.37 | 0.12 | | Net Increase in Cash and Cash Equivalents | -103.97 | 15.28 | | Cash and Cash Equivalents at Period-End | 242.32 | 461.02 | [6. Parent Company Cash Flow Statement](index=60&type=section&id=6.%20Parent%20Company%20Cash%20Flow%20Statement) In Q1 2021, parent company net cash flow from operating activities was **-0.77 million CNY**, with financing activities providing **9.37 million CNY** Parent Company Cash Flow Statement Key Data (Jan-Mar 2021 vs. Jan-Mar 2020) | Item | Current Period Amount (Million CNY) | Prior Period Amount (Million CNY) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -0.77 | -4.19 | | Net Cash Flow from Investing Activities | 0.00 | -400.00 | | Net Cash Flow from Financing Activities | 9.37 | 0.00 | | Net Increase in Cash and Cash Equivalents | 8.60 | -404.19 | | Cash and Cash Equivalents at Period-End | 12.72 | 15.92 | [II. Explanation of Financial Statement Adjustments](index=61&type=section&id=II.%20Explanation%20of%20Financial%20Statement%20Adjustments) Financial statements were adjusted at the beginning of 2021 due to the first-time adoption of new lease standards, impacting assets and liabilities [1. Adjustments to Financial Statements at the Beginning of the First Year of Adopting New Lease Standards in 2021](index=61&type=section&id=1.%20Adjustments%20to%20Financial%20Statements%20at%20the%20Beginning%20of%20the%20First%20Year%20of%20Adopting%20New%20Lease%20Standards%20in%202021) Consolidated and parent company balance sheets were adjusted on January 1, 2021, for the first-time adoption of new lease standards - The company adopted new lease standards for the first time starting in 2021, adjusting its financial statements at the beginning of the year[89](index=89&type=chunk)[93](index=93&type=chunk) Consolidated Balance Sheet Adjustments (January 1, 2021) | Item | December 31, 2020 (Million CNY) | January 1, 2021 (Million CNY) | Adjustment Amount (Million CNY) | | :--- | :--- | :--- | :--- | | Right-of-Use Assets | 0.00 | 16.41 | 16.41 | | Lease Liabilities | 0.00 | 16.41 | 16.41 | | Total Assets | 4317.70 | 4334.11 | 16.41 | | Total Liabilities | 320.37 | 336.78 | 16.41 | Parent Company Balance Sheet Adjustments (January 1, 2021) | Item | December 31, 2020 (Million CNY) | January 1, 2021 (Million CNY) | Adjustment Amount (Million CNY) | | :--- | :--- | :--- | :--- | | Right-of-Use Assets | 0.00 | 8.13 | 8.13 | | Lease Liabilities | 0.00 | 8.13 | 8.13 | | Total Assets | 3626.41 | 3634.55 | 8.13 | | Total Liabilities | 49.81 | 57.95 | 8.13 | [2. Explanation of Retrospective Adjustment of Prior Period Comparative Data Upon First Adoption of New Lease Standards in 2021](index=67&type=section&id=2.%20Explanation%20of%20Retrospective%20Adjustment%20of%20Prior%20Period%20Comparative%20Data%20Upon%20First%20Adoption%20of%20New%20Lease%20Standards%20in%202021) Prior period comparative data was not retrospectively adjusted to reflect the impact of the new lease standards - The company did not retrospectively adjust prior period comparative data to reflect the impact of the new lease standards[96](index=96&type=chunk) [III. Audit Report](index=67&type=section&id=III.%20Audit%20Report) The company's 2021 first quarter report is unaudited - The company's first quarter report is unaudited[96](index=96&type=chunk)

Company Overview - The company’s stock code is 000893, and it is listed on the Shenzhen Stock Exchange[13]. - The company’s registered address is located at No. 3, Hong'an Road, Wanqingsha Town, Nansha District, Guangzhou, with a postal code of 511462[13]. - The company’s official website is http://www.asia-potash.com/[13]. - The company’s legal representative is Guo Baichun[13]. - The company has a total of 51 floors in its office located at Guangzhou Chow Tai Fook Financial Center[13]. - The company’s contact email for investor relations is stock@asia-potash.com[14]. - The company’s annual report is disclosed through multiple media outlets including China Securities Journal and Securities Times[15]. - The company’s financial report period covers January 1, 2020, to December 31, 2020[10]. Financial Performance - Total revenue for 2020 was CNY 363,172,361.57, a decrease of 40.01% compared to CNY 605,438,216.50 in 2019[18]. - Net profit attributable to shareholders for 2020 was CNY 59,616,114.86, an increase of 43.88% from CNY 41,435,599.36 in 2019[18]. - Net profit after deducting non-recurring gains and losses was CNY 4,571,741.47, down 86.52% from CNY 33,924,325.81 in 2019[18]. - Operating cash flow for 2020 was CNY 104,629,673.55, an increase of 30.04% compared to CNY 80,456,810.66 in 2019[18]. - Basic earnings per share for 2020 was CNY 0.0788, up 44.06% from CNY 0.0547 in 2019[18]. - Total assets at the end of 2020 were CNY 4,317,703,878.92, a 2.34% increase from CNY 4,219,000,564.35 at the end of 2019[18]. - Net assets attributable to shareholders at the end of 2020 were CNY 3,713,971,354.66, an increase of 1.66% from CNY 3,653,477,153.54 at the end of 2019[18]. Production and Sales - The company achieved a total production of 25.17 million tons of qualified potassium fertilizer in 2020, with sales reaching 23.54 million tons, demonstrating strong economic benefits[32]. - The company plans to expand its production capacity from 25,000 tons to 100,000 tons per year by 2021, aiming to become an international-level potassium fertilizer supplier[33]. - The company holds mining rights for a potassium salt reserve of 1.002 billion tons in Laos, with a pure potassium chloride equivalent of 152 million tons[32]. - The company’s potassium fertilizer production facility is the first in Laos to achieve industrial-scale production, utilizing advanced mining and production technologies[32]. - The company’s potassium fertilizer market is primarily focused on Southeast Asia, which is a high-price region for potassium fertilizers[35]. - The company’s potassium fertilizer imports in China were 8.74 million tons in 2020, with Canada, Russia, and Belarus accounting for 84% of the total imports[30]. - The company produced 251,700 tons of qualified potassium fertilizer in 2020, achieving a historical high and exceeding the annual production target[56]. - Total sales of potassium fertilizer reached 235,400 tons, maintaining a balance between production and sales[56]. Strategic Initiatives - The company is accelerating the construction of the 1 million tons/year potassium fertilizer expansion project, which includes a 250,000 tons quality improvement project and a 750,000 tons expansion project, expected to significantly increase production capacity and enhance product quality[38]. - The company has established a sales network and logistics system in Southeast Asia, including Vietnam, Indonesia, and Thailand[32]. - The company has received strong support from both the Chinese and Laotian governments for its potassium salt project, enhancing its external development environment[48]. - The company has implemented a supply chain information management platform to support its international procurement logistics system, ensuring cost control and quality improvement[38]. - The company is focusing on strengthening its international market presence and logistics supply chain to support the sales system for the Laos potash project[99]. Risks and Challenges - The company faces risks related to the fluctuation of potash prices influenced by international supply and demand dynamics[106]. - The impact of the pandemic on production and sales is expected to be minimal, as the company has implemented various preventive measures and the regions of operation are less affected[107]. - Financial risks are heightened due to the increasing funding requirements for the 1 million ton potash project in Laos, alongside potential foreign exchange risks from USD transactions[109]. - There is a risk that the Laos potash project may not be completed on schedule due to weather and other factors affecting construction[103]. - The company faces risks related to the inability to obtain sufficient performance compensation from transaction counterparties, with ongoing legal proceedings to address these issues[102]. Corporate Governance and Compliance - The company guarantees the return of all non-operating funds occupied by its subsidiaries prior to the asset sale[127]. - The company will assume unlimited joint liability for the return of non-operating funds occupied by its subsidiaries[127]. - The company assures that all information provided regarding the restructuring is true, accurate, and complete, and will bear legal responsibility for any misrepresentation[128]. - The company has committed to avoiding any business activities that may compete with its subsidiaries following a major asset sale, ensuring no conflict of interest[125]. - The company has a stable profit distribution policy, prioritizing cash dividends, with a commitment to distribute at least 30% of the average distributable profit over the last three years[113]. - The company has conducted 36 investor communications during the reporting period, focusing on the potash project and operational developments[110]. Future Outlook - The company provided a positive outlook for the next fiscal year, projecting a revenue growth of 10% to 1.32 billion CNY[143]. - New product launches are expected to contribute an additional 200 million CNY in revenue, with a focus on expanding the product line in the agricultural sector[141]. - The company is investing 100 million CNY in research and development for new technologies aimed at improving production efficiency[142]. - The company is expanding its market presence in Southeast Asia, targeting a 25% market share by the end of 2021[140]. - A strategic acquisition of a local competitor is anticipated to enhance operational capabilities and increase market penetration[140].

亚钾国际投资（广州）股份有限公司 2020 年第三季度报告全文 亚钾国际投资（广州）股份有限公司 2020 年第三季度报告 2020-065 2020 年 10 月 1 亚钾国际投资（广州）股份有限公司 2020 年第三季度报告全文 第一节 重要提示 公司董事会、监事会及董事、监事、高级管理人员保证季度报告内容的真 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。 所有董事均已出席了审议本次季报的董事会会议。 公司负责人郭柏春、主管会计工作负责人苏学军及会计机构负责人(会计主 管人员)苏学军声明：保证季度报告中财务报表的真实、准确、完整。 2 亚钾国际投资（广州）股份有限公司 2020 年第三季度报告全文 第二节 公司基本情况 一、主要会计数据和财务指标 公司是否需追溯调整或重述以前年度会计数据 | --- | --- | --- | --- | --- | |-----------------------------------------------------|------------------|-------------------------|--------- ...

Important Notice [Statement by the Board of Directors and Supervisory Board](index=2&type=section&id=Statement%20by%20the%20Board%20of%20Directors%20and%20Supervisory%20Board) The Board of Directors, Supervisory Board, and senior management affirm the report's truthfulness, accuracy, and completeness, with all directors present for the review - The company's Board of Directors, Supervisory Board, and all directors, supervisors, and senior management guarantee the report's content is **true, accurate, and complete**, free from false records, misleading statements, or major omissions[3](index=3&type=chunk) - The company's principal officer, the person in charge of accounting, and the head of the accounting department all declare that the financial statements in the quarterly report are **true, accurate, and complete**[3](index=3&type=chunk) Company Profile [Key Accounting Data and Financial Indicators](index=3&type=section&id=I.%20Key%20Accounting%20Data%20and%20Financial%20Indicators) In Q1 2020, operating revenue decreased by **20.18%** to **CNY 81.22 million**, while net profit attributable to shareholders surged by **181.64%** to **CNY 4.12 million**, and operating cash flow improved significantly from a net outflow to a net inflow of **CNY 17.56 million** | Indicator | Current Period | Prior Year (Adjusted) | YoY Change | | :--- | :--- | :--- | :--- | | **Operating Revenue (CNY)** | 81,222,250.93 | 101,759,069.54 | -20.18% | | **Net Profit Attributable to Shareholders (CNY)** | 4,121,915.14 | 1,463,527.24 | 181.64% | | **Net Profit Attributable to Shareholders (Excl. Non-recurring Items) (CNY)** | 4,088,313.66 | 847,549.43 | 382.37% | | **Net Cash Flow from Operating Activities (CNY)** | 17,559,724.72 | -33,670,971.42 | 152.15% | | **Basic Earnings Per Share (CNY/share)** | 0.0054 | 0.0019 | 184.21% | | **Weighted Average Return on Net Assets** | 0.11% | 0.04% | Increased by 0.07 percentage points | | **Total Assets (CNY)** | 4,193,753,165.05 | - | -0.60% (vs. End of Prior Year) | | **Net Assets Attributable to Shareholders (CNY)** | 3,657,295,033.60 | - | 0.10% (vs. End of Prior Year) | - The company performed accounting error corrections and retrospectively adjusted relevant financial statement data due to non-compliant intangible asset amortization methods in prior periods[5](index=5&type=chunk) [Non-recurring Gains and Losses Items and Amounts](index=3&type=section&id=Non-recurring%20Gains%20and%20Losses%20Items%20and%20Amounts) During the reporting period, total non-recurring gains and losses amounted to **CNY 33,601.48**, primarily from government subsidies and other non-operating income from scrap material sales | Item | Amount (CNY) | Description | | :--- | :--- | :--- | | Government Subsidies Included in Current Profit/Loss | 17,247.19 | Mainly unemployment insurance stabilization subsidies received by the company | | Other Non-operating Income and Expenses | 27,956.05 | Mainly from the sale of scrap materials in the current period | | Less: Income Tax Impact | 9,784.62 | - | | Less: Impact on Minority Interests (After Tax) | 1,817.14 | - | | **Total** | **33,601.48** | - | [Shareholder Information](index=4&type=section&id=II.%20Shareholder%20Information%20at%20Period-End%20and%20Top%20Ten%20Shareholders%27%20Holdings) As of the reporting period end, the company had **16,479** common shareholders, with the top three holding significant stakes, and notable share pledges, freezes, and related party relationships among major shareholders - At the end of the reporting period, the company had a total of **16,479** common shareholders[8](index=8&type=chunk) - Guangzhou Dongling Industrial and Mudanjiang Guofu Investment are parties acting in concert; Xinjiang Jiangzhiyuan and Shanghai Kaili Tianren are controlled by the same ultimate beneficial owner[9](index=9&type=chunk)[12](index=12&type=chunk) | Shareholder Name | Shareholding Percentage | Share Status | | :--- | :--- | :--- | | China Agricultural Means of Production Group Co., Ltd. | 19.15% | Frozen, Pledged | | Guangzhou Dongling Industrial Investment Group Co., Ltd. | 11.05% | Pledged | | Mudanjiang Guofu Investment Center (Limited Partnership) | 11.05% | - | | Xinjiang Jiangzhiyuan Equity Investment Partnership (Limited Partnership) | 7.94% | Frozen, Pledged | Significant Events [Analysis of Major Financial Data Changes](index=7&type=section&id=I.%20Analysis%20of%20Major%20Financial%20Data%20Changes%20and%20Reasons) During the reporting period, the company experienced significant financial changes, including reduced accounts receivable and contract liabilities, decreased operating revenue due to trade business, lower financial expenses, and a positive shift in operating cash flow | Consolidated Balance Sheet Item | Change Rate | Primary Reason | | :--- | :--- | :--- | | Accounts Receivable | -54.41% | Due to collection of accounts receivable from potash business | | Contract Liabilities | -76.00% | Due to decrease in advance receipts for goods | | Employee Compensation Payable | -49.17% | Due to payment of employee compensation accrued at period-beginning | | Consolidated Income Statement Item | Change Rate | Primary Reason | | :--- | :--- | :--- | | Operating Revenue | -20.18% | Due to decrease in trade business revenue | | Financial Expenses | -131.39% | Due to increase in interest income | | Asset Impairment Losses | 100.00% | No inventory impairment losses recognized in current period | | Investment Income | -100.00% | Due to no wealth management activities in current period | | Consolidated Cash Flow Statement Item | Change Rate | Primary Reason | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 152.15% | Increase in sales collection, decrease in procurement expenditure | | Net Cash Flow from Investing Activities | -103.72% | Due to no wealth management activities in current period | [Progress of Significant Events](index=8&type=section&id=II.%20Progress%20of%20Significant%20Events%20and%20Analysis%20of%20Impact%20and%20Solutions) This section details the ongoing complex legal disputes stemming from the 2015 acquisition of Zhongnong Potash, primarily concerning unfulfilled performance commitments, compensation obligations, and related issues impacting board governance and restricted share解除 [Zhongnong Potash Major Asset Restructuring and Subsequent Disputes](index=8&type=section&id=1.%20Issuance%20of%20Shares%20to%20Purchase%20Assets%20and%20Raise%20Supporting%20Funds%20for%20Related%20Transactions%20-%20Progress%20on%20Zhongnong%20Potash%20Matter) The company details complex legal disputes arising from the 2014 Zhongnong Potash acquisition, including unfulfilled 2017 performance commitments by ten parties, leading to ongoing lawsuits for performance compensation and a successful first-instance ruling against a defaulting subscriber for supporting funds, now under appeal - The core of the dispute is Zhongnong International's failure to meet its **2017 performance commitment**, with the ten transaction parties (including China Agricultural Group) yet to fulfill their compensation obligations[40](index=40&type=chunk)[51](index=51&type=chunk) - The company has filed a lawsuit regarding the performance compensation dispute with the Beijing High People's Court, and the case is currently **under trial** with no judgment yet rendered[23](index=23&type=chunk)[35](index=35&type=chunk)[52](index=52&type=chunk) - The company sued Dongling Industrial for defaulting on supporting fund subscriptions, with the Guangdong High Court ruling in the first instance that Dongling Industrial pay **CNY 103 million** in liquidated damages, though Dongling Industrial has appealed to the Supreme People's Court[21](index=21&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) [Explanation Regarding Restricted Shares Not Yet Listed for Circulation](index=16&type=section&id=2.%20Explanation%20Regarding%20Restricted%20Shares%20Not%20Yet%20Listed%20for%20Circulation) Due to the failure of ten transaction parties, including China Agricultural Group, to meet 2017 performance commitments and fulfill compensation obligations, their **353,448,272** restricted shares remain unlisted, pending resolution of ongoing compensation disputes - The transaction parties, having failed to meet their **2017 performance commitment**, are required to compensate the company with **117,400,934 shares** and **CNY 247 million** in cash, but have not yet fulfilled this obligation[40](index=40&type=chunk) - Given the unfulfilled performance compensation obligations and ongoing litigation, the company will not apply for the lifting of restrictions on the **353 million** restricted shares held by the transaction parties[41](index=41&type=chunk) [Overdue Unfulfilled Commitments](index=23&type=section&id=III.%20Overdue%20Unfulfilled%20Commitments%20by%20Controlling%20Shareholders%2C%20Shareholders%2C%20Related%20Parties%2C%20Acquirers%2C%20and%20the%20Company) During the reporting period, the company faced multiple overdue unfulfilled commitments related to a major asset restructuring, primarily involving ten transaction parties' failure to meet performance compensation, related parties' joint liability for failed fundraising, and core management's breach of service and non-compete agreements | Promising Party | Commitment Type | Fulfillment Status | | :--- | :--- | :--- | | China Agricultural Group and Ten Other Transaction Parties | Performance Commitment and Compensation Arrangement | 2017 performance commitment unfulfilled, compensation obligations not met, company has filed a lawsuit | | Guangzhou Huishan Investment Co., Ltd. and Others | Other Commitments (Guarantees for Supporting Funds) | Fund subscribers defaulted, related parties bear joint and several liability for breach | | Bai Ming, Huang Lu, and Other Core Management Personnel | Other Commitments (Service Period and Non-Compete) | Some personnel resigned early without company consent and joined affiliated companies, breaching commitments | - The company has filed a lawsuit against China Agricultural Group and other transaction parties for unfulfilled performance compensation commitments, with the case still **under trial**[52](index=52&type=chunk) [Securities Investment](index=27&type=section&id=IV.%20Securities%20Investment) The company had no securities investments during the reporting period - During the reporting period, the company made **no securities investments**[53](index=53&type=chunk) [Wealth Management](index=28&type=section&id=V.%20Wealth%20Management) The company had no entrusted wealth management activities during the reporting period - During the reporting period, the company had **no entrusted wealth management business**[54](index=54&type=chunk) [Derivative Investments](index=28&type=section&id=VI.%20Derivative%20Investments) The company had no derivative investments during the reporting period - During the reporting period, the company made **no derivative investments**[54](index=54&type=chunk) [Investor Relations Activities](index=28&type=section&id=VII.%20Registration%20Form%20for%20Research%2C%20Communication%2C%20Interview%20Activities%20in%20the%20Reporting%20Period) During Q1 2020, the company engaged with individual investors through telephone communication - From January 1 to March 31, 2020, the company communicated with individual investors via **telephone**[54](index=54&type=chunk) [Illegal External Guarantees](index=28&type=section&id=VIII.%20Illegal%20External%20Guarantees) The company had no illegal external guarantees during the reporting period - During the reporting period, the company had **no illegal external guarantees**[55](index=55&type=chunk) [Controlling Shareholder Fund Occupation](index=28&type=section&id=IX.%20Non-Operating%20Fund%20Occupation%20by%20Controlling%20Shareholders%20and%20Related%20Parties) The company had no non-operating fund occupation by controlling shareholders or their related parties during the reporting period - During the reporting period, there was **no non-operating fund occupation** by controlling shareholders or their related parties[55](index=55&type=chunk) Financial Statements [Financial Statements](index=29&type=section&id=I.%20Financial%20Statements) This section provides the consolidated and parent company balance sheets as of March 31, 2020, and the consolidated and parent company income and cash flow statements for Q1 2020 - Includes consolidated balance sheet and parent company balance sheet[56](index=56&type=chunk)[61](index=61&type=chunk) - Includes consolidated income statement and parent company income statement[63](index=63&type=chunk)[67](index=67&type=chunk) - Includes consolidated cash flow statement and parent company cash flow statement[69](index=69&type=chunk)[73](index=73&type=chunk) [Explanation of Financial Statement Adjustments](index=43&type=section&id=II.%20Explanation%20of%20Financial%20Statement%20Adjustments) Effective January 1, 2020, the company adopted new revenue recognition standards, reclassifying **CNY 17,430,309.37** from 'Advance Receipts' to 'Contract Liabilities' on the initial adoption date, with no impact on opening retained earnings - The company first adopted new revenue recognition standards in **2020**, adjusting relevant financial statement items at the beginning of the year[75](index=75&type=chunk) | Adjusted Item | Before Adjustment (2019-12-31) | After Adjustment (2020-01-01) | Adjustment Amount | | :--- | :--- | :--- | :--- | | Advance Receipts | 17,430,309.37 | 0.00 | -17,430,309.37 | | Contract Liabilities | 0.00 | 17,430,309.37 | 17,430,309.37 | [Audit Report](index=46&type=section&id=III.%20Audit%20Report) The company's Q1 2020 report is unaudited - This quarterly report is **unaudited**[79](index=79&type=chunk)

Corporate Governance and Structure - The company’s legal representative is Guo Baichun[12]. - The company’s board secretary is Zhao Qing, and the securities affairs representative is Hua Shunyang[13]. - The company completed the deregistration of its wholly-owned subsidiary, Beijing Dongling New Technology Investment Co., Ltd., in February 2019[61]. - The company has established a long-term cooperative relationship with the Lao government, which supports the potassium salt project as a key area of resource cooperation[42]. - The company has committed to fulfilling performance commitments, and if the actual net profit falls below the agreed amount, compensation obligations will be executed as per the signed agreement[125]. - The company has retained Zhongqi Wanxin Accounting Firm for three consecutive years, with an audit fee of RMB 0.95 million for the current period[160]. - The company held one shareholders' meeting in 2019, ensuring the protection of shareholders' rights through a combination of on-site and online voting[183]. Financial Performance - In 2019, the company's operating revenue reached CNY 605,438,216.50, representing a 43.80% increase compared to CNY 421,023,245.50 in 2018[17]. - The net profit attributable to shareholders was CNY 41,435,599.36, a significant increase of 935.13% from CNY 3,141,902.19 in the previous year[17]. - The total operating revenue for 2019 was CNY 605,438,216.50, representing a 43.80% increase from CNY 421,023,245.54 in 2018[53]. - The potassium fertilizer segment generated CNY 443,039,673.49, accounting for 73.18% of total revenue, with a year-on-year growth of 38.03%[53]. - The trade segment saw a significant increase in revenue to CNY 161,526,575.31, up 101.46% from CNY 80,179,206.11 in 2018[53]. - The company reported a significant increase in the net profit after deducting non-recurring gains and losses, reaching CNY 33,924,325.81, a 6,756.03% increase from a loss of CNY 1,370,718.60 in 2018[17]. - The company achieved a production and sales ratio of 99.59% in 2019, indicating efficient operations, but faces challenges due to limited potassium salt mining scale and insufficient production capacity[94]. Market and Operations - The company underwent a change in its main business focus, shifting to potassium fertilizer operations and grain trading as of 2019[16]. - The company produced 246,900 tons of qualified potassium fertilizer in 2019, with sales reaching 245,900 tons, indicating strong market demand and operational efficiency[29]. - The company is actively advancing a 1 million tons/year potassium salt mining and processing project, which is expected to enhance profitability and core competitiveness upon completion[29]. - The company plans to exit the grain trading business to focus on potassium mining and fertilizer production, consolidating resources for better operational efficiency[28]. - The company’s potassium fertilizer sales are primarily targeted at Southeast Asian markets, with significant sales in Vietnam and Indonesia, expanding its global market influence[32]. - The company is focusing on expanding its market share in Southeast Asia, which is known for high potassium fertilizer prices, leveraging its geographical advantages[93]. Cash Flow and Investments - The net cash flow from operating activities was CNY 80,456,810.66, reflecting a 91.37% increase from CNY 42,042,406.27 in 2018[17]. - The company reported a net cash flow from investment activities improved by 159.41% to ¥245,696,972.42, reflecting increased redemptions of financial products[66]. - The company plans to invest 400 million RMB in expanding the Laos potash project, increasing the registered capital of Zhongnong International to 930.56 million RMB[85]. - The company is facing financial risks due to the increasing funding needs for its 1 million ton potassium fertilizer expansion project in Laos, which may be affected by exchange rate fluctuations[104]. Legal and Compliance Issues - The company is involved in a lawsuit regarding a cash compensation dispute amounting to 247.05 million RMB, which is currently under trial in the Beijing High People's Court[162]. - The company has initiated legal proceedings against several parties regarding disputes related to the non-public issuance of shares for the acquisition of 100% equity in Zhongnong International Potash Development Co., Ltd.[193]. - The company is currently unable to determine the impact of ongoing litigation on its financial performance for the current and future periods[162]. - The company has reported that mediation efforts regarding disputes with China Agricultural Group are still ongoing, with no specific resolution reached yet[162]. Risk Management - The company has established a risk management strategy for derivative trading to mitigate market volatility impacts on operational efficiency[79]. - The company is committed to maintaining production safety and has implemented various measures to ensure that operations are not affected by the COVID-19 pandemic[50]. - The company has committed to ensuring that no insider trading occurs related to the major asset restructuring[123]. Dividend Policy - The company reported a plan not to distribute cash dividends, issue bonus shares, or increase capital from reserves[5]. - The company has not proposed any cash dividend distribution plan despite having a positive profit available for distribution to ordinary shareholders in 2019[116]. - The company’s cash dividend policy emphasizes a sustainable and stable return to shareholders, with a minimum cash dividend of 30% of the average distributable profit over the last three years[108]. - The company has not distributed any cash dividends in the past three years, with the total cash dividend amount for 2019 being 0.00[116]. Strategic Initiatives - The company is investing 200 million RMB in R&D for new technologies aimed at enhancing product efficiency and sustainability[136]. - A strategic partnership was established with a leading agricultural firm, expected to generate an additional 100 million RMB in revenue over the next two years[136]. - The company is exploring potential acquisitions to further enhance its product portfolio and market presence[135].

[Important Notice, Table of Contents and Definitions](index=2&type=section&id=Important%20Notice%2C%20Table%20of%20Contents%20and%20Definitions) This section provides essential disclaimers, the report's table of contents, and definitions of key terms - The company's board of directors, supervisory board, and senior management guarantee the report's content, but directors Liu Jinhong, Wu Yi, and Liu Guochang **cannot guarantee** the truthfulness, accuracy, and completeness of the report's content, urging investors to pay **special attention**[2](index=2&type=chunk) - The company plans **not to distribute** cash dividends, **not to issue** bonus shares, or **not to convert** capital reserves into share capital for the 2018 fiscal year[2](index=2&type=chunk) [Company Profile and Key Financial Indicators](index=5&type=section&id=Company%20Profile%20and%20Key%20Financial%20Indicators) This section introduces the company's basic information, its business evolution, and presents key financial data and indicators [Company Basic Information](index=5&type=section&id=Company%20Basic%20Information) This chapter provides the company's basic business registration information, including stock abbreviation, code, full names, legal representative, and addresses Company Basic Information Details | Item | Content | | :--- | :--- | | Stock Abbreviation | *ST Dongling | | Stock Code | 000893 | | Full Chinese Name | 广州东凌国际投资股份有限公司 | | Full English Name | DONLINKS INTERNATIONAL INVESTMENT CO., LTD. | | Legal Representative | 赖宁昌 | [Registration Changes and Evolution of Main Business](index=6&type=section&id=Registration%20Changes%20and%20Evolution%20of%20Main%20Business) The company's main business has evolved from refrigerator compressors to vegetable oil processing, and currently to potash fertilizer operations and grain trading, with the controlling shareholder changing to Guangzhou Dongling Industrial Investment Group Co., Ltd. since 2006 - The company's main business underwent **significant change** in 2015, **acquired** Zhongnong Potash assets and **divested** grain and oil processing and sales assets, with current main businesses being potash fertilizer operations and grain trading[8](index=8&type=chunk) [Key Accounting Data and Financial Indicators](index=7&type=section&id=Key%20Accounting%20Data%20and%20Financial%20Indicators) In 2018, operating revenue significantly decreased by **72.59%**, but net profit attributable to shareholders **turned profitable** with a **100.58%** increase due to prior year's asset impairment, while operating cash flow grew by **191.45%**, and prior accounting errors were retrospectively adjusted, primarily involving potash mining rights revaluation and amortization method changes to resolve the 2017 audit opinion Annual Financial Performance Summary | Indicator | 2018 | 2017 (Adjusted) | YoY Change (Adjusted) | | :--- | :--- | :--- | :--- | | Operating Revenue (CNY) | 421,023,245.54 | 1,535,770,294.27 | -72.59% | | Net Profit Attributable to Shareholders (CNY) | 4,002,942.47 | -687,438,014.02 | 100.58% | | Net Cash Flow from Operating Activities (CNY) | 42,042,406.27 | 14,425,310.23 | 191.45% | | Basic Earnings Per Share (CNY/share) | 0.0053 | -0.9082 | 100.58% | | Total Assets (CNY) | 4,223,915,770.60 | 4,237,477,506.74 | -0.32% | | Net Assets Attributable to Shareholders (CNY) | 3,612,381,917.80 | 3,609,094,771.72 | 0.09% | - The company retrospectively adjusted prior accounting data due to re-evaluation and recognition of Zhongnong Potash mining rights value and impairment, and correction of non-compliant intangible asset amortization methods to the output method[11](index=11&type=chunk) Quarterly Financial Performance | Quarter | Operating Revenue (CNY) | Net Profit Attributable to Shareholders (CNY) | | :--- | :--- | :--- | | 第一季度 | 85,742,732.41 | -7,859,126.03 | | 第二季度 | 89,085,551.83 | 2,655,129.66 | | 第三季度 | 129,686,540.89 | 4,434,058.50 | | 第四季度 | 116,508,420.41 | 4,772,880.34 | [Company Business Overview](index=10&type=section&id=Company%20Business%20Overview) This section outlines the company's main business activities, significant asset changes, and analyzes its core competitive advantages [Main Business](index=10&type=section&id=Main%20Business) The company's 2018 main business comprised two segments: potash salt mining, potash fertilizer production and sales, and grain trading, with the Laos potash project increasing capacity, producing **221 thousand tons** and selling **191.2 thousand tons** of potash fertilizer in 2018, primarily to Southeast Asia, while grain trading focused on importing feed raw materials like corn, sorghum, and barley for distribution in southern China - Potash fertilizer business: Subsidiary Zhongnong International holds a **35 square kilometers** potash salt mining right in Khammouane Province, Laos, with total reserves of **1.002 billion tons**; in 2018, **221 thousand tons** of potash fertilizer were produced and **191.2 thousand tons** sold, with main markets in Vietnam, Thailand, Laos, and other Southeast Asian countries[17](index=17&type=chunk) - Grain trading business: Primarily imports corn, sorghum, barley, and other grain feed raw materials, as well as rapeseed meal, sunflower meal, and other protein feed raw materials, supplying feed mills and other end-users in the southern regions of China[18](index=18&type=chunk) [Significant Changes in Major Assets](index=10&type=section&id=Significant%20Changes%20in%20Major%20Assets) During the reporting period, the company's major assets, including equity, fixed assets, and intangible assets, showed no significant changes, with construction in progress primarily involving underground mining tunnel construction for the **500 thousand tons** experimental potash salt expansion project, and overseas asset Zhongnong Hong Kong (holding Zhongnong Potash) accounting for **26.14%** of the company's net assets with no significant impairment risk - Construction in progress primarily involves underground mining tunnel construction and some maintenance projects for the **500 thousand tons** experimental potash salt expansion production[20](index=20&type=chunk) Overseas Asset Information | Overseas Assets | Formation Reason | Asset Scale (CNY) | Location | Proportion of Company Net Assets | Significant Impairment Risk | | :--- | :--- | :--- | :--- | :--- | :--- | | 中农香港 | Acquisition through share issuance | 943,491,047.27 | Hong Kong | 26.14% | No | [Core Competitiveness Analysis](index=11&type=section&id=Core%20Competitiveness%20Analysis) The company's core competitiveness stems from its potash fertilizer project's resource and geographical advantages, mature technological expertise, experienced management team, and support from both Chinese and Lao governments, complemented by the grain business's one-stop supply chain services and the company's capital platform advantage as a listed entity - Potash fertilizer project advantages: Possesses **1.002 billion tons** of potash salt reserves in Laos, providing **resource advantages**; located in Southeast Asia, it can radiate to high-price potash regions like Vietnam and Thailand, offering **geographical advantages**[22](index=22&type=chunk) - Technology and team: The company has **mastered** core technologies such as ore mining, beneficiation production, and underground backfilling, and possesses an **experienced** management and technical team[23](index=23&type=chunk)[24](index=24&type=chunk) - Grain business advantages: Through its US subsidiary, the company directly collaborates with local farmers and logistics companies to provide **one-stop supply chain services** to end-users, from source procurement to distribution[26](index=26&type=chunk) [Discussion and Analysis of Operations](index=13&type=section&id=Discussion%20and%20Analysis%20of%20Operations) This section discusses the company's operating performance, analyzes revenue, costs, cash flow, and outlines future development plans and risks [Operating Overview](index=13&type=section&id=Operating%20Overview) In 2018, the company's two main businesses showed divergent performance: potash fertilizer benefited from international market price recovery, with output exceeding **200 thousand tons** and revenue increasing by **16.92%**, though the **1 million tons** expansion project was shelved due to funding issues, while grain trading, affected by the China-US trade war and RMB depreciation, proactively reduced trade volume by **74.39%** to control risk, yet **achieved profitability** by adjusting product categories and seizing protein raw material market opportunities - Potash fertilizer business: 2018 output **exceeded 200 thousand tons** for the first time, reaching **221 thousand tons**; sales were **191.2 thousand tons**; operating revenue reached **321 million CNY**, **increased YoY by 16.92%**; however, the **1 million tons** expansion project was **shelved** due to **funding not secured**[28](index=28&type=chunk) - Grain trading business: Affected by the China-US trade war and RMB depreciation, the company proactively adjusted its operating strategy, avoiding US goods imports, leading to a **74.39%** decrease in trade volume YoY; despite this, the business **achieved profitability** by expanding new product categories, with gross margin **increased YoY by 7.29%**[29](index=29&type=chunk) [Main Business Analysis](index=14&type=section&id=Main%20Business%20Analysis) In 2018, the company's total operating revenue was **421 million CNY**, a **72.59%** significant decrease YoY, primarily due to sharp contractions in shipping and trading business revenues, which decreased by **97.75%** and **78.80%** respectively, making potash fertilizer the revenue pillar, with its revenue proportion jumping from **17.88%** to **76.24%**, reaching **321 million CNY**, an **increased YoY by 16.92%**, and a gross margin of **48.35%**, while sales to the top five customers accounted for **44.45%** of total sales, and purchases from the top five suppliers accounted for **55.87%** of total procurement, indicating **high concentration** Operating Revenue by Industry | By Industry | 2018 Revenue (CNY) | Proportion of Total Revenue | YoY Change | | :--- | :--- | :--- | :--- | | Shipping | 19,868,144.31 | 4.72% | -97.75% | | Trading | 80,179,206.11 | 19.04% | -78.80% | | Potash fertilizer | 320,975,895.12 | 76.24% | 16.92% | Operating Performance by Product | By Product | Operating Revenue (CNY) | Operating Cost (CNY) | Gross Margin | Operating Revenue YoY Change | Operating Cost YoY Change | Gross Margin YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Grain | 80,179,206.11 | 75,490,053.83 | 5.85% | -78.39% | -79.94% | 7.29% | | Potash fertilizer | 320,975,895.12 | 165,798,086.59 | 48.35% | 16.92% | 7.26% | 4.65% | - The company's top five customers' total sales amount was **187 million CNY**, accounting for **44.45%** of total annual sales[38](index=38&type=chunk) - The company's top five suppliers' total procurement amount was **151 million CNY**, accounting for **55.87%** of total annual procurement[41](index=41&type=chunk) [Expense Analysis](index=17&type=section&id=Expense%20Analysis) During the reporting period, selling expenses significantly increased by **268.15%** due to increased potash fertilizer business transportation costs, administrative expenses decreased by **15.57%** primarily because litigation fees were accrued in the prior period but not in the current period, financial expenses decreased by **25.49%** due to reduced exchange losses from RMB appreciation, and income tax expense increased by **26.05%** due to increased potash fertilizer business profits Expense Analysis | Expense Item | 2018 (CNY) | 2017 (CNY) | YoY Change | Key Change Explanation | | :--- | :--- | :--- | :--- | :--- | | Selling expenses | 30,951,740.96 | 8,407,464.03 | 268.15% | Increased transportation costs for potash fertilizer business | | Administrative expenses | 70,936,987.45 | 84,022,967.70 | -15.57% | Litigation fees accrued in prior period, none added in current period | | Financial expenses | -4,368,813.70 | -3,481,468.74 | -25.49% | Reduced exchange losses due to RMB appreciation | | Income tax expense | 28,806,712.21 | 22,852,815.08 | 26.05% | Increased income tax accrued for potash fertilizer business | [Cash Flow Analysis](index=18&type=section&id=Cash%20Flow%20Analysis) In 2018, the company's cash and cash equivalents net decreased by **378.78 million CNY**; net cash flow from operating activities was **42.04 million CNY**, **increased YoY by 191.45%**, primarily because the decrease in business payments exceeded the decrease in fund recovery; net cash flow from investing activities was **-413.55 million CNY**, a **414.11%** significant decrease YoY, mainly due to the purchase of large wealth management products in the current period; and net cash flow from financing activities was **-8.22 million CNY**, primarily due to subsidiary deregistration and repayment of shareholder investment Cash Flow Summary | Item | 2018 (CNY) | 2017 (CNY) | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 42,042,406.27 | 14,425,310.23 | 191.45% | | Net Cash Flow from Investing Activities | -413,554,069.11 | 131,661,066.13 | -414.11% | | Net Cash Flow from Financing Activities | -8,223,940.55 | 5,196,602.61 | -258.26% | | Net Increase in Cash and Cash Equivalents | -378,784,209.21 | 146,301,651.78 | -358.91% | - Investing activities cash outflow **increased** significantly, primarily due to the current period's **purchase of large wealth management products**, whereas the prior period involved the **recovery of wealth management products**[45](index=45&type=chunk) [Future Development Outlook and Risks](index=25&type=section&id=Future%20Development%20Outlook%20and%20Risks) The company anticipates a potash fertilizer industry price recovery in 2019 and plans to advance the Laos **1 million tons** expansion project, aiming to produce **220 thousand tons** of potash fertilizer, while grain trading faces severe challenges from China-US trade relations and African swine fever, with key risks including the inability to fully obtain Zhongnong International's performance compensation, pending litigation over supporting fundraising defaults, potential delays in the Laos potash project, and industry, market, and financial risks - 2019 operating plan: For potash fertilizer business, plans include **1.66 million tons** of ore supply, **220 thousand tons** of potash fertilizer production, and utmost efforts to support the Laos **1 million tons** expansion project; for grain trading, the company will **address** the **challenging environment** posed by China-US trade relations and African swine fever, and prepare for potential liberalization of US agricultural product business[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - Main risks: - **Performance compensation risk**: Due to Zhongnong International's failure to meet its 2017 performance commitment, the counterparties have **not yet fulfilled** their compensation obligations, and the company faces the **unable to obtain full amount** of compensation, having **filed a lawsuit**[68](index=68&type=chunk)[69](index=69&type=chunk)[73](index=73&type=chunk) - **Litigation risk**: The dispute case regarding Dongling Industrial and two other parties abandoning subscription for new capital has **not yet ruled**, and there is **uncertainty** whether liquidated damages will be supported[68](index=68&type=chunk)[69](index=69&type=chunk)[73](index=73&type=chunk) - **Project construction risk**: The Laos potash fertilizer **1 million tons** expansion project faces risks of **delayed construction** due to approval procedures and funding issues[74](index=74&type=chunk) - **Market risk**: The outcome of China-US trade negotiations and the African swine fever epidemic pose **uncertainty** for the grain trading business[74](index=74&type=chunk) [Significant Matters](index=29&type=section&id=Significant%20Matters) This section details significant corporate events, including profit distribution, fulfillment of commitments, accounting changes, and major litigation [Profit Distribution Policy and Plan](index=29&type=section&id=Profit%20Distribution%20Policy%20and%20Plan) The company has formulated a continuous and stable profit distribution policy, prioritizing cash dividends, but based on its 2018 operating performance, it plans **not to distribute** cash dividends, **not to issue** bonus shares, and **not to convert** capital reserves into share capital, consistent with its 2016 and 2017 distribution plans, marking **three consecutive years** with no profit distribution - The company's 2016, 2017, and 2018 profit distribution proposals have consistently been **not to distribute** cash, **not to issue** bonus shares, and **not to convert** capital reserves into share capital[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) [Fulfillment of Commitments](index=31&type=section&id=Fulfillment%20of%20Commitments) During the reporting period, most commitments were strictly fulfilled; however, the most critical performance commitment was not met, as Zhongnong International failed to complete its 2017 performance commitment, and the counterparties have not yet fulfilled their compensation obligations, leading the company to file a lawsuit, while some key management personnel also violated commitments regarding term of office and non-compete clauses - Zhongnong International failed to meet its 2017 performance commitment, and the counterparties (Zhongnong Group and ten other parties) have **not yet fulfilled** their compensation obligations; the company has **filed a lawsuit**, but the **case has no judgment or mediation outcome yet**[92](index=92&type=chunk)[93](index=93&type=chunk)[107](index=107&type=chunk) - Meng Dianyong, Huang Lu, Song Ying, Bai Ming, and Kong Lina, five key management personnel, **resigned without the listed company's consent**, and **violated the commitment** to serve for at least **5 years**[101](index=101&type=chunk) - Meng Dianyong, Huang Lu, Song Ying, and Bai Ming, four key management personnel, took positions in subsidiaries of Zhongnong Group after resignation, **violated non-compete commitment**[101](index=101&type=chunk)[102](index=102&type=chunk) [Changes in Accounting Policies](index=53&type=section&id=Changes%20in%20Accounting%20Policies) During the reporting period, the company revised its financial statement format according to new regulations issued by the Ministry of Finance, such as merging "notes receivable" and "accounts receivable" into "notes receivable and accounts receivable," and retrospectively adjusted its 2017 financial statements, additionally, withholding tax handling fees received were adjusted from "non-operating income" to "other income" presentation - According to Cai Kuai [2018] No. 15 issued by the Ministry of Finance, the company revised its financial statement format, merging or disaggregating multiple balance sheet and income statement items, and retrospectively adjusted its 2017 data[109](index=109&type=chunk)[350](index=350&type=chunk) [Correction of Significant Accounting Errors](index=55&type=section&id=Correction%20of%20Significant%20Accounting%20Errors) The company corrected two prior accounting errors: first, to eliminate the impact of the 2017 disclaimer of opinion audit report, the company re-evaluated the value of Zhongnong Potash mining rights, recognizing impairment of **705.5838 million CNY** (significantly lower than originally accrued **2.5926252 billion CNY**), and retrospectively adjusted 2017 financial data; second, the company corrected the error of amortizing intangible assets (mining rights) using different methods at the consolidated financial statements level, **unified to output method**, which **increased** net profit attributable to parent company shareholders from 2015 to 2018 - To eliminate the impact of the 2017 disclaimer of opinion audit report, the company **re-evaluated** Zhongnong Potash mining rights value, **recognized impairment** of **705.5838 million CNY**, **significantly lower than originally accrued 2.5926252 billion CNY**, and retrospectively adjusted for this[113](index=113&type=chunk) - The company **corrected** the prior error of amortizing the same intangible asset (mining rights) using different methods at the consolidated financial statements level, **unified to output method**, and retrospectively adjusted relevant financial data[114](index=114&type=chunk) [Significant Litigation and Arbitration Matters](index=57&type=section&id=Significant%20Litigation%20and%20Arbitration%20Matters) The company is involved in multiple significant lawsuits, with the core litigation being a lawsuit against Zhongnong Group and ten other counterparties for failure to meet Zhongnong International's performance commitment, demanding **247 million CNY** in cash compensation and **225 million shares** in compensation shares; additionally, the company filed lawsuits against supporting fundraising subscribers Dongling Industrial, Lai Ningchang, and Li Chaobo for abandoning subscription, claiming **103 million CNY**, **10 million CNY**, and **10 million CNY** respectively, while an overseas arbitration case involving **82.6551 million USD** has not yet been heard, and none of the above cases have been ruled, leading to **uncertain impact on the company's profit and loss** Significant Litigation and Arbitration Cases | Litigation/Arbitration Matter | Amount Involved | Progress | | :--- | :--- | :--- | | Lawsuit against Zhongnong Group and ten other parties for performance compensation dispute | Cash compensation **247 million CNY** and compensation shares **225 million shares** | Hearing held, not yet ruled, under mediation | | Lawsuit against Dongling Industrial for abandoning subscription | **103 million CNY** | Hearing held, not yet ruled | | Lawsuit against Lai Ningchang for abandoning subscription | **10 million CNY** | Hearing held, litigation suspended | | Lawsuit against Li Chaobo for abandoning subscription | **10 million CNY** | Hearing held, litigation suspended | | Arbitration for procurement contract dispute with Mitsui USA | **82.6551 million USD** | Not yet heard | [Explanation of Other Significant Matters](index=68&type=section&id=Explanation%20of%20Other%20Significant%20Matters) This chapter provides a detailed review of the company's acquisition of Zhongnong Potash assets since 2014 and a series of subsequent significant issues, including supporting fundraising subscribers defaulting on subscription, failure to meet 2017 performance commitment triggering litigation, serious disagreements between the company and shareholder Zhongnong Group on corporate governance issues leading to multiple lawsuits, the 2017 financial report receiving a disclaimer of opinion audit report, and a series of rectification measures such as asset impairment revaluation to remove delisting risk warning - In 2016, supporting fundraising subscribers Dongling Industrial, Lai Ningchang, and Li Chaobo for the major asset restructuring **defaulted** on subscription, and the company has **filed a lawsuit** **claiming liquidated damages**[142](index=142&type=chunk) - In 2017, due to Zhongnong International's failure to meet its performance commitment, the company and counterparties Zhongnong Group and others had disputes, which **triggered multiple lawsuits** regarding board re-election and board resolution validity, **indicating serious internal governance conflicts** within the company[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) - As Zhongnong Group and ten other issuing parties failed to fulfill their performance compensation obligations, their total shares held of **353,448,272 restricted shares** (originally scheduled for lifting of restrictions on September 28, 2018) are **temporarily not applying for listing and circulation**[161](index=161&type=chunk)[163](index=163&type=chunk) [Share Changes and Shareholder Information](index=84&type=section&id=Share%20Changes%20and%20Shareholder%20Information) This section provides an overview of the company's share capital changes, shareholder structure, and information on its controlling shareholder and actual controller [Share Changes](index=84&type=section&id=Share%20Changes) As of the end of 2018, the company's total share capital was **756,903,272 shares**, and the **total share capital remained unchanged** during the reporting period, with restricted shares accounting for **47.06%** and unrestricted shares for **52.94%** Share Capital Structure | Share Type | End-of-Period Quantity (shares) | Proportion | | :--- | :--- | :--- | | Restricted shares | 356,161,322 | 47.06% | | Unrestricted shares | 400,741,950 | 52.94% | | **Total Share Capital** | **756,903,272** | **100.00%** | [Shareholders and Actual Controller Information](index=86&type=section&id=Shareholders%20and%20Actual%20Controller%20Information) As of the end of 2018, the company had **16,451 shareholder accounts**; Guangzhou Dongling Industrial Investment Group Co., Ltd. was the controlling shareholder with a **22.10%** shareholding, and Mr. Lai Ningchang was the actual controller; among the top ten shareholders, those who entered due to the acquisition of Zhongnong International occupy most positions, and **most of their shares are pledged or frozen** Top Shareholders Information | Shareholder Name | Shareholding Proportion | End-of-Period Shareholding (shares) | Share Status | | :--- | :--- | :--- | :--- | | 广州东凌实业投资集团有限公司 | 22.10% | 167,298,554 | Pledged 164,990,000 shares | | 中国农业生产资料集团公司 | 19.15% | 144,913,793 | Frozen/Pledged | | 新疆江之源股权投资合伙企业 | 7.94% | 60,086,206 | Frozen/Pledged | | 上海劲邦劲德股权投资合伙企业 | 7.47% | 56,551,724 | Frozen/Pledged | - The company's actual controller, Mr. Lai Ningchang, and his parties acting in concert collectively hold **22.14%** of the company's shares; in April 2018, Dongling Holdings, the upper-level shareholder of controlling shareholder Dongling Industrial, introduced new shareholders, but Mr. Lai Ningchang's **actual controller status remained unchanged**[8](index=8&type=chunk)[184](index=184&type=chunk) [Preferred Share Information](index=91&type=section&id=Preferred%20Share%20Information) This section confirms the absence of preferred shares issued by the company during the reporting period - During the reporting period, the company had **no preferred shares**[187](index=187&type=chunk) [Directors, Supervisors, Senior Management, and Employees](index=92&type=section&id=Directors%2C%20Supervisors%2C%20Senior%20Management%2C%20and%20Employees) This section details changes in the board, supervisory board, and senior management, their remuneration, and provides an overview of the company's employee structure [Changes in Directors, Supervisors, and Senior Management](index=93&type=section&id=Changes%20in%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) During the reporting period, the company's senior management team changes occurred, with Ms. Cheng Xiaona, Deputy General Manager and Board Secretary, resigning due to personal reasons, and Mr. Zhang Zhigang, General Manager, resigning due to health reasons Changes in Directors, Supervisors, and Senior Management | Name | Position Held | Change Type | Date | Reason | | :--- | :--- | :--- | :--- | :--- | | 程晓娜 | Deputy General Manager, Board Secretary | Dismissed | 2018年03月29日 | Resigned due to personal reasons | | 张志钢 | General Manager | Dismissed | 2018年05月16日 | Resigned due to health reasons | [Remuneration of Directors, Supervisors, and Senior Management](index=99&type=section&id=Remuneration%20of%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) During the reporting period, the total pre-tax remuneration received by the company's directors, supervisors, and senior management was **6.0176 million CNY** - During the reporting period, the company paid to directors, supervisors, and senior management a total remuneration of **6.0176 million CNY**[204](index=204&type=chunk)[205](index=205&type=chunk) [Employee Information](index=101&type=section&id=Employee%20Information) As of the end of the reporting period, the company had a total of **474 active employees**; in terms of professional composition, **production personnel accounted for the highest proportion** at **208 employees**; and in terms of education level, employees with high school education or below accounted for a larger proportion, totaling **341 employees**, or **71.9%** of the total Employee Professional Composition | Professional Composition | Number of Employees | | :--- | :--- | | Production Personnel | 208 | | Sales Personnel | 18 | | Technical Personnel | 96 | | Financial Personnel | 18 | | Administrative Personnel | 81 | | Management Personnel | 53 | | **Total** | **474** | [Corporate Governance](index=103&type=section&id=Corporate%20Governance) This section describes the company's corporate governance framework, independent directors' performance, and internal control status [Basic Corporate Governance Status](index=103&type=section&id=Basic%20Corporate%20Governance%20Status) The company claims its corporate governance status is largely consistent with relevant regulatory requirements, with standardized operations in shareholders' meetings, board of directors, supervisory board, and information disclosure, and the company maintains independence from its controlling shareholder in business, personnel, assets, organization, and finance - The company's corporate governance status is **largely consistent with relevant regulatory requirements** on corporate governance of listed companies issued by the China Securities Regulatory Commission, with **no significant differences**[213](index=213&type=chunk) [Independent Directors' Performance of Duties](index=105&type=section&id=Independent%20Directors%27%20Performance%20of%20Duties) During the reporting period, independent directors actively performed their duties but raised objections to multiple proposals; independent director Liu Guochang abstained or voted against proposals for appointing the Board Secretary and General Manager, and senior management remuneration, citing hasty procedure and significant differences between candidates and company needs, while independent directors Guo Xuejin and Sha Zhenquan also voted against the "2017 General Manager's Work Report," deeming it not comprehensive and not valuing independent directors' opinions, reflecting **clear disagreements within the board** - Independent director Liu Guochang voted against the proposal for appointing the company's General Manager, believing the candidate significantly differs from company needs and that the nomination committee did not reach a consensus[218](index=218&type=chunk) - Independent directors Guo Xuejin, Liu Guochang, and Sha Zhenquan voted against the "2017 General Manager's Work Report," believing the report was **not comprehensive** and **did not value independent directors' opinions**[218](index=218&type=chunk) [Internal Control Status](index=109&type=section&id=Internal%20Control%20Status) The company conducted a self-assessment of internal control for 2018, concluding that there are **no material weaknesses** in financial and non-financial reporting internal controls, and the accounting firm issued a **standard unqualified audit report** on the company's internal control over financial reporting, stating that the company **maintained effective internal control** over financial reporting in all material respects as of December 31, 2018 - The company's internal control evaluation report concluded that **no material weaknesses** were found in financial and non-financial reporting[224](index=224&type=chunk)[226](index=226&type=chunk) - The accounting firm issued a **standard unqualified audit report** on internal control, stating that the company **maintained effective internal control** over financial reporting in all material respects as of December 31, 2018[228](index=228&type=chunk)[229](index=229&type=chunk) [Corporate Bond Information](index=112&type=section&id=Corporate%20Bond%20Information) This section confirms the company has no outstanding corporate bonds that are publicly issued and listed - The company has **no publicly issued corporate bonds** listed on a stock exchange that are not yet due or were not fully redeemed by the annual report approval date[230](index=230&type=chunk) [Financial Report](index=113&type=section&id=Financial%20Report) This section presents the company's audited financial statements and the auditor's opinion, highlighting key audit matters [Audit Report](index=113&type=section&id=Audit%20Report) Zhongqin Wanxin Certified Public Accountants issued a **standard unqualified audit opinion** on the company's 2018 financial statements, believing the financial statements **fairly presented** the company's financial position and operating results in all material respects, which is a **significant positive development**, signifying that the company has **resolved the issues** that led to the 2017 'disclaimer of opinion' audit report, with the audit report listing "recognition of potash fertilizer business revenue" as a key audit matter - The audit opinion type is a "**standard unqualified opinion**," signifying that the accounting firm believes the financial statements **fairly presented** the company's situation[232](index=232&type=chunk)[233](index=233&type=chunk) - The key audit matter is "recognition of potash fertilizer business revenue," due to its **material amount** (accounting for **76.01%** of consolidated revenue) and its status as a **key performance indicator**, posing a **potential misstatement risk**[236](index=236&type=chunk) [List of Reference Documents](index=266&type=section&id=List%20of%20Reference%20Documents) This section lists all documents available for public inspection, including financial statements and original announcements - Reference documents include **financial statements bearing the legal representative's signature**, the **original audit report**, and **originals of all publicly disclosed documents and announcements during the reporting period**[622](index=622&type=chunk)