[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)

[Important Notes, Table of Contents, and Definitions](index=2&type=section&id=%E7%AC%AC%E4%B8%80%E8%8A%82%20%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA%E3%80%81%E7%9B%AE%E5%BD%95%E5%92%8C%E9%87%8A%E4%B9%89) [Important Notes](index=2&type=section&id=%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA) This is the restated 2017 annual report, which received a standard unqualified audit opinion after correcting prior period accounting errors - The Board of Directors approved the adjustment of 2017 asset impairments and the correction and restatement of prior period accounting errors on April 22, 2019[2](index=2&type=chunk) - The original 2017 annual report received a "disclaimer of opinion" from Zhongqin Wanxin Certified Public Accountants, prompting the company to reassess the value of its Laos potash mining rights and restate financial data[2](index=2&type=chunk) - Following a re-audit, Zhongqin Wanxin Certified Public Accountants issued a **standard unqualified audit opinion** on the company's restated 2017 financial report in April 2019[3](index=3&type=chunk) - The company does not plan to distribute cash dividends, issue bonus shares, or capitalize reserves for the 2017 fiscal year[4](index=4&type=chunk) [Company Profile and Key Financial Indicators](index=6&type=section&id=%E7%AC%AC%E4%BA%8C%E8%8A%82%20%E5%85%AC%E5%8F%B8%E7%AE%80%E4%BB%8B%E5%92%8C%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) [Company Information and Changes in Main Business](index=6&type=section&id=%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF%E4%B8%8E%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E5%8F%98%E6%9B%B4) The company's main business shifted from grain and oil processing to potash fertilizer, grain trading, and shipping in 2015 - The company's main business underwent a major change in 2015, shifting from grain and oil processing and sales to three segments: **potash fertilizer operations, grain trading, and shipping**[12](index=12&type=chunk) - As of the reporting period end, the controlling shareholder Dongling Industry held **22.10%** of the company's shares, while the ultimate controller Mr. Lai Ningchang and his concerted parties held a combined **22.14%**[12](index=12&type=chunk) [Key Accounting Data and Financial Indicators](index=8&type=section&id=%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%92%8C%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) The company's performance declined sharply in 2017, with revenue down 36.01% and a net loss of RMB 688 million Annual Financial Highlights | Indicator | 2017 | 2016 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Operating Revenue (RMB) | 1,535,770,294.27 | 2,399,954,760.73 | -36.01% | | Net Profit Attributable to Shareholders (RMB) | -688,323,758.32 | 19,520,905.53 | -3626.09% | | Net Cash Flow from Operating Activities (RMB) | 14,425,310.23 | 119,022,392.35 | -87.88% | | Basic Earnings Per Share (RMB/Share) | -0.9094 | 0.03 | -3131.33% | | Weighted Average Return on Equity | -17.41% | 0.45% | -17.86% | | Total Assets (RMB) | 4,235,247,036.60 | 5,170,864,649.57 | -18.09% | | Net Assets Attributable to Shareholders (RMB) | 3,607,087,348.60 | 4,301,893,893.70 | -16.15% | Quarterly Financial Data | Quarter | Operating Revenue (RMB) | Net Profit Attributable to Shareholders (RMB) | | :--- | :--- | :--- | | Q1 | 274,319,702.18 | -5,105,250.22 | | Q2 | 415,938,398.35 | -15,393,520.39 | | Q3 | 417,087,906.17 | -15,828,733.67 | | Q4 | 428,424,287.57 | -651,996,254.04 | [Non-recurring Gains and Losses](index=9&type=section&id=%E9%9D%9E%E7%BB%8F%E5%B8%B8%E6%80%A7%E6%8D%9F%E7%9B%8A%E9%A1%B9%E7%9B%AE%E5%8F%8A%E9%87%91%E9%A2%9D) Non-recurring items totaled RMB 0.71 million in 2017, having a minor impact on net profit Details of Non-recurring Items | Item | 2017 Amount (RMB) | 2016 Amount (RMB) | | :--- | :--- | :--- | | Gains/Losses from Disposal of Non-current Assets | -33,780.63 | -10,510.43 | | Government Grants | 20,368.37 | 120,707.18 | | Gains/Losses from Trading Financial Assets/Liabilities | 2,461,286.04 | 8,850.14 | | Other Non-operating Income and Expenses | -1,664,560.62 | 579,745.01 | | **Total** | **706,410.02** | **13,454,162.00** | [Business Overview](index=11&type=section&id=%E7%AC%AC%E4%B8%89%E8%8A%82%20%E5%85%AC%E5%8F%B8%E4%B8%9A%E5%8A%A1%E6%A6%82%E8%A6%81) [Principal Activities](index=11&type=section&id=%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E4%BB%8E%E4%BA%8B%E7%9A%84%E4%B8%BB%E8%A6%81%E4%B8%9A%E5%8A%A1) The company operates in three segments: potash mining, grain trading, and international shipping - **Potash Business**: Holds mining rights to a 35 sq km potash mine in Khammouane Province, Laos, with total reserves of 1.002 billion tons; produced 173,000 tons and sold 191,300 tons of potash fertilizer in 2017, but the planned 1 million ton/year expansion project has stalled due to lack of funding[21](index=21&type=chunk) - **Grain Trading**: Procures primary agricultural products like corn, feed barley, and sorghum from production areas and imports protein feed ingredients like rapeseed meal and sunflower meal for end-users in southern China[22](index=22&type=chunk) - **Shipping Business**: Engages in ocean-going dry bulk transportation by chartering vessels, primarily transporting commodities like grain, iron ore, and coal on routes mainly between the Americas and China, as well as within the Asia-Pacific region[22](index=22&type=chunk)[23](index=23&type=chunk) [Significant Changes in Major Assets](index=12&type=section&id=%E4%B8%BB%E8%A6%81%E8%B5%84%E4%BA%A7%E9%87%8D%E5%A4%A7%E5%8F%98%E5%8C%96%E6%83%85%E5%86%B5) Intangible assets decreased significantly due to impairment of the Laos potash mining rights, which pose a major risk - Intangible assets changed significantly due to the impairment provision for the Laos potash mining rights during the reporting period[24](index=24&type=chunk) Major Overseas Assets | Overseas Asset | Asset Size (RMB) | Location | Profit/Loss (RMB) | % of Company's Net Assets | Major Impairment Risk | | :--- | :--- | :--- | :--- | :--- | :--- | | Sino-Agri Hong Kong (holds 90% of Sino-Agri Potash) | 896,256,296.31 | Hong Kong | 32,479,007.98 | 46.96% | Yes | [Core Competency Analysis](index=12&type=section&id=%E6%A0%B8%E5%BF%83%E7%AB%9E%E4%BA%89%E5%8A%9B%E5%88%86%E6%9E%90) Core competencies include potash resources, integrated grain supply chain services, and professional shipping capabilities - **Potash Resources & Location Advantage**: The Laos potash project has total reserves of **1.002 billion tons**, equivalent to 152 million tons of pure potassium chloride; the shallow deposit is easy to mine, and its location in central Southeast Asia offers an economic land transport radius to neighboring countries[28](index=28&type=chunk) - **Grain Supply Chain Services**: Provides end-to-end services for terminal customers, from sourcing and transportation to loading/unloading and delivery, effectively controlling quality and costs[29](index=29&type=chunk) - **Professional Shipping Capabilities**: The team possesses comprehensive information advantages in commodity trading and shipping markets, enabling them to offer optimized bulk sea freight solutions[30](index=30&type=chunk) [Management Discussion and Analysis](index=14&type=section&id=%E7%AC%AC%E5%9B%9B%E8%8A%82%20%E7%BB%8F%E8%90%A5%E6%83%85%E5%86%B5%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) [Overview](index=14&type=section&id=%E4%B8%80%E3%80%81%E6%A6%82%E8%BF%B0) The company faced severe challenges in 2017, leading to a significant revenue decline and substantial net loss 2017 Performance Summary | Indicator | 2017 Amount (RMB 10,000) | Y-o-Y Change | | :--- | :--- | :--- | | Operating Revenue | 153,577.03 | -36.01% | | Operating Profit | -74,930.90 | -7296.12% | | Net Profit Attributable to Parent | -68,832.38 | -3626.09% | - The company faced three major challenges: the stalled expansion of the 1 million ton/year potash project, a harsh grain trading environment due to national destocking policies, and overcapacity in the international shipping market[32](index=32&type=chunk) [Analysis of Main Business Operations](index=16&type=section&id=%E4%BA%8C%E3%80%81%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E5%88%86%E6%9E%90) Only the potash business was profitable, while the shipping and trading segments incurred losses and saw revenue declines Performance by Business Segment | Segment | Operating Revenue (RMB) | Operating Cost (RMB) | Gross Margin | Revenue Y-o-Y Change | | :--- | :--- | :--- | :--- | :--- | | Shipping | 883,124,651.83 | 920,197,495.13 | -4.20% | -35.97% | | Trading | 378,122,042.86 | 383,271,040.03 | -1.36% | -53.49% | | Potash | 274,523,599.58 | 155,621,331.84 | 43.31% | 32.21% | - The total sales to the company's top five customers amounted to **RMB 422 million**, accounting for 27.49% of total annual sales; total purchases from the top five suppliers were **RMB 421 million**, representing 28.87% of total annual purchases[47](index=47&type=chunk)[48](index=48&type=chunk) Analysis of Expenses | Expense Item | 2017 (RMB) | 2016 (RMB) | Y-o-Y Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | 8,407,464.03 | 5,835,850.09 | 44.07% | Increased transportation fees for potash business | | Administrative Expenses | 83,955,771.82 | 69,812,491.92 | 20.26% | Increased mining rights amortization, litigation and legal fees | | Financial Expenses | -3,481,468.74 | -19,987,129.16 | 82.58% | Interest on deferred payment from asset sale in prior year and currency fluctuations | | Income Tax Expense | 22,852,815.08 | -2,450,513.44 | 1,032.57% | Increased income tax provision for Sino-Agri Potash | - Net cash flow from operating activities **decreased sharply by 87.88%** year-over-year, primarily due to reduced cash flows from the shipping and trading businesses[51](index=51&type=chunk)[52](index=52&type=chunk) [Analysis of Non-core Business](index=21&type=section&id=%E4%B8%89%E3%80%81%E9%9D%9E%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E5%88%86%E6%9E%90) Asset impairment losses of RMB 708 million were the primary cause of the company's significant loss in 2017 Impact of Non-core Items on Profit | Item | Amount (RMB) | % of Total Profit | Explanation | | :--- | :--- | :--- | :--- | | Investment Income | 2,699,446.77 | -0.36% | Mainly from wealth management products, OTC, and reverse repos | | Asset Impairment | 707,892,571.71 | -94.26% | Mainly impairment provision for Sino-Agri Potash mining rights | | Non-operating Income | 280,481.55 | -0.04% | Mainly from sale of scrap materials | | Non-operating Expenses | 1,934,836.27 | -0.26% | Mainly charitable donations | [Assets and Liabilities](index=21&type=section&id=%E5%9B%9B%E3%80%81%E8%B5%84%E4%BA%A7%E5%8F%8A%E8%B4%9F%E5%80%BA%E7%8A%B6%E5%86%B5) Total assets decreased by 18.09% to RMB 4.24 billion, with significant shifts in cash, prepayments, and other current assets - Cash and cash equivalents at year-end were **RMB 499 million**, an increase of 4.69 percentage points from the beginning of the year, mainly due to the redemption of wealth management products and reverse repos[55](index=55&type=chunk) - Other current assets at year-end were **RMB 31 million**, a significant decrease from the beginning of the year, primarily due to a reduction in principal-protected wealth management products[55](index=55&type=chunk) - Prepayments and advances from customers decreased by 1.93 and 2.08 percentage points, respectively, reflecting a contraction in business scale[55](index=55&type=chunk)[56](index=56&type=chunk) [Future Outlook](index=27&type=section&id=%E4%B9%9D%E3%80%81%E5%85%AC%E5%8F%B8%E6%9C%AA%E6%9D%A5%E5%8F%91%E5%B1%95%E7%9A%84%E5%B1%95%E6%9C%9B) The company plans to advance its potash project, explore new grain markets, and stabilize shipping operations while addressing multiple risks - **2018 Operating Plan**: - **Potash**: Plan to produce 200,000 tons and actively promote the construction of the 1 million ton project in Laos - **Grain Trading**: Increase development of agricultural products from Ukraine and ASEAN countries and seek new business models - **Shipping**: Maintain a transport volume of 5 million tons, focusing on improving profitability and stability[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) - **Key Risks**: - **Performance Compensation Risk**: Sino-Agri International failed to meet its 2017 performance commitment, and with some counterparties' shares pledged, the company faces the risk of not receiving full compensation and has initiated legal action - **Asset Impairment Risk**: The potash mining rights are subject to impairment risk, with the final impairment amount pending a court ruling - **Industry and Market Risks**: Faces risks from currency fluctuations, trade protectionism, and low potash prices - **Litigation Risk**: The company is involved in several major lawsuits with uncertain outcomes[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) [Significant Events](index=32&type=section&id=%E7%AC%AC%E4%BA%94%E8%8A%82%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) [Profit Distribution](index=32&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E6%99%AE%E9%80%9A%E8%82%A1%E5%88%A9%E6%B6%A6%E5%88%86%E9%85%8D%E5%8F%8A%E8%B5%84%E6%9C%AC%E5%85%AC%E7%A7%AF%E9%87%91%E8%BD%AC%E5%A2%9E%E8%82%A1%E6%9C%AC%E6%83%85%E5%86%B5) The company proposed no profit distribution for 2017 due to losses and has not paid cash dividends for three consecutive years - For three consecutive years (2015, 2016, and 2017), the company's profit distribution plan involved **no cash dividends, no bonus shares, and no capitalization of reserves**[86](index=86&type=chunk)[87](index=87&type=chunk) [Fulfillment of Commitments](index=34&type=section&id=%E4%B8%89%E3%80%81%E6%89%BF%E8%AF%BA%E4%BA%8B%E9%A1%B9%E5%B1%A5%E8%A1%8C%E6%83%85%E5%86%B5) Sino-Agri International failed to meet its 2017 profit commitment, and several key managers violated their service and non-compete agreements - Sino-Agri International **failed to meet its 2017 performance commitment**; the promised net profit was no less than RMB 451.5 million, while the actual recurring net profit attributable to the parent was RMB 24.74 million[97](index=97&type=chunk)[112](index=112&type=chunk) - Five key managers, including Meng Dianyong, Huang Lu, Song Ying, Bai Ming, and Kong Lina, resigned without the company's consent, **violating their commitment to a service period of no less than 5 years**[105](index=105&type=chunk) - Four key managers, including Meng Dianyong, Huang Lu, Song Ying, and Bai Ming, took positions in subsidiaries of Sino-Agri Group after their departure, **violating their non-compete commitments**[105](index=105&type=chunk) [Explanation of Non-standard Audit Report](index=56&type=section&id=%E4%BA%94%E3%80%81%E8%91%A3%E4%BA%8B%E4%BC%9A%E3%80%81%E7%9B%91%E4%BA%8B%E4%BC%9A%E3%80%81%E7%8B%AC%E7%AB%8B%E8%91%A3%E4%BA%8B%EF%BC%88%E5%A6%82%E6%9C%89%EF%BC%89%E5%AF%B9%E4%BC%9A%E8%AE%A1%E5%B8%88%E4%BA%8B%E5%8A%A1%E6%89%80%E6%9C%AC%E6%8A%A5%E5%91%8A%E6%9C%9F%E2%80%9C%E9%9D%9E%E6%A0%87%E5%87%86%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A%E2%80%9D%E7%9A%84%E8%AF%B4%E6%98%8E) The initial disclaimer of opinion was due to insufficient audit evidence regarding the impairment of potash mining rights - Zhongqin Wanxin Certified Public Accountants initially issued a **disclaimer of opinion** on the company's 2017 financial report (Qin Xin Shen Zi [2018] No. 1017)[114](index=114&type=chunk) - The Board explained that the disclaimer of opinion stemmed from the auditor's inability to verify the reasonableness of the impairment provision for the potash mining rights, particularly due to disagreements over the adoption of a third-party valuation report[114](index=114&type=chunk) - The Supervisory Committee and independent directors respected the auditor's professional opinion and agreed with the Board's explanation, urging the company to take measures to resolve the issue[116](index=116&type=chunk) [Correction of Major Accounting Errors](index=58&type=section&id=%E4%B8%83%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%8F%91%E7%94%9F%E9%87%8D%E5%A4%A7%E4%BC%9A%E8%AE%A1%E5%B7%AE%E9%94%99%E6%9B%B4%E6%AD%A3%E9%9C%80%E8%BF%BD%E6%BA%AF%E9%87%8D%E8%BF%B0%E7%9A%84%E6%83%85%E5%86%B5%E8%AF%B4%E6%98%8E) The company restated its 2017 financials by adjusting the mining rights impairment from RMB 2.59 billion to RMB 0.71 billion - The company made a significant adjustment to the impairment provision for intangible assets (mining rights) for fiscal year 2017, reducing the original provision of **RMB 2.593 billion** to a re-evaluated amount of **RMB 706 million**[119](index=119&type=chunk) - This adjustment was treated as a prior period error correction, and the Board of Directors approved the related restatement proposal on April 22, 2019, facilitating a re-audit of the 2017 financial statements[119](index=119&type=chunk) [Major Litigation and Arbitration](index=59&type=section&id=%E5%8D%81%E4%BA%8C%E3%80%81%E9%87%8D%E5%A4%A7%E8%AF%89%E8%AE%BC%E3%80%81%E4%BB%B2%E8%A3%81%E4%BA%8B%E9%A1%B9) The company is involved in multiple lawsuits concerning performance commitments, subscription defaults, and contract disputes Summary of Major Legal Cases | Parties | Cause of Action | Amount Involved | Status | | :--- | :--- | :--- | :--- | | Company vs Sino-Agri Group & 9 others | Performance commitment & asset impairment compensation dispute | RMB 247 million cash & 225 million shares | Hearing held, verdict pending | | Company vs Dongling Industry | Dispute over default on private placement subscription | RMB 103 million | Hearing held, verdict pending | | Company vs Lai Ningchang/Li Chaobo | Dispute over default on private placement subscription | RMB 10 million each | Hearing not yet scheduled | | Mitsui & Co. (U.S.A.) vs Company | Brazilian soybean purchase contract dispute | Approx. USD 82.66 million | Hearing not yet scheduled | | Sino-Agri Group vs Company | Dispute over validity of Board resolutions | N/A | Hearing held, verdict pending | [Equity Incentive Plan](index=64&type=section&id=%E5%8D%81%E4%BA%94%E3%80%81%E5%85%AC%E5%8F%B8%E8%82%A1%E6%9D%83%E6%BF%80%E5%8A%B1%E8%AE%A1%E5%88%92%E3%80%81%E5%91%98%E5%B7%A5%E6%8C%81%E8%82%A1%E8%AE%A1%E5%88%92%E6%88%96%E5%85%B6%E4%BB%96%E5%91%98%E5%B7%A5%E6%BF%80%E5%8A%B1%E6%8E%AA%E6%96%BD%E7%9A%84%E5%AE%9E%E6%96%BD%E6%83%85%E5%86%B5) The 2015 employee stock ownership plan was terminated in January 2018 after all shares were sold - The company's 2015 employee stock ownership plan completed its share purchases on January 5, 2016, acquiring a total of **4,224,603 shares**, representing 0.56% of the total share capital, at an average price of approximately RMB 15.31 per share[135](index=135&type=chunk) - The plan's duration was extended once and was ultimately terminated on January 5, 2018, after all shares were sold[135](index=135&type=chunk) [Share Capital and Shareholders](index=80&type=section&id=%E7%AC%AC%E5%85%AD%E8%8A%82%20%E8%82%A1%E4%BB%BD%E5%8F%98%E5%8A%A8%E5%8F%8A%E8%82%A1%E4%B8%9C%E6%83%85%E5%86%B5) [Changes in Share Capital](index=80&type=section&id=%E4%B8%80%E3%80%81%E8%82%A1%E4%BB%BD%E5%8F%98%E5%8A%A8%E6%83%85%E5%86%B5) The company's total share capital remained unchanged at 756.9 million shares during the reporting period Share Structure | Share Type | Number of Shares | Percentage | | :--- | :--- | :--- | | Shares with Selling Restrictions | 356,048,822 | 47.04% | | Shares without Selling Restrictions | 400,854,450 | 52.96% | | **Total Shares** | **756,903,272** | **100.00%** | [Shareholders and Ultimate Controller](index=81&type=section&id=%E4%B8%89%E3%80%81%E8%82%A1%E4%B8%9C%E5%92%8C%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E6%83%85%E5%86%B5) The controlling shareholder is Dongling Industry, and a significant portion of shares held by major shareholders are pledged or frozen - Nearly all of the **167 million shares** held by the controlling shareholder, Dongling Industry, were pledged; of the **145 million shares** held by the second-largest shareholder, Sino-Agri Group, approximately 61% were pledged and 39% were frozen[170](index=170&type=chunk) - Several shareholders who came in through the restructuring, including Xinjiang Jiangzhiyuan, Shanghai Jinbang Jinde, and Shanghai Kaili Tianren, also had a large proportion of their shares pledged or frozen[175](index=175&type=chunk) - The company's ultimate controller, Mr. Lai Ningchang, controls the shareholder Dongling Industry through Dongling Holding Group; although Dongling Holding underwent a capital increase in April 2018, Mr. Lai maintained his ultimate control through a concerted action agreement[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) [Directors, Supervisors, Senior Management, and Employees](index=88&type=section&id=%E7%AC%AC%E5%85%AB%E8%8A%82%20%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%91%E4%BA%8B%E3%80%81%E9%AB%98%E7%BA%A7%E7%AE%A1%E7%90%86%E4%BA%BA%E5%91%98%E5%92%8C%E5%91%98%E5%B7%A5%E6%83%85%E5%86%B5) [Changes in Directors, Supervisors, and Senior Management](index=89&type=section&id=%E4%BA%8C%E3%80%81%E5%85%AC%E5%8F%B8%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%91%E4%BA%8B%E3%80%81%E9%AB%98%E7%BA%A7%E7%AE%A1%E7%90%86%E4%BA%BA%E5%91%98%E5%8F%98%E5%8A%A8%E6%83%85%E5%86%B5) The company experienced several changes in its senior management team, including the appointment of a new General Manager Management Changes | Name | Position Change | Date | Reason | | :--- | :--- | :--- | :--- | | Guo Jiahua | Resigned as General Manager | 2017-06-08 | Work adjustment | | Zhang Zhigang | Resigned as Chairman of Supervisory Committee | 2017-06-09 | Work adjustment | | Kang He | Dismissed as Deputy General Manager | 2017-06-24 | Board resolution | | Cheng Xiaona | Resigned as Deputy GM & Board Secretary | 2018-03-29 | Personal reasons | [Employee Information](index=96&type=section&id=%E4%BA%94%E3%80%81%E5%85%AC%E5%8F%B8%E5%91%98%E5%B7%A5%E6%83%85%E5%86%B5) As of year-end, the company had 468 employees, with production staff accounting for the largest proportion at 46% Employee Composition | Category | Number of Employees | | :--- | :--- | | Production | 217 | | Sales | 14 | | Technical | 91 | | Financial | 18 | | Administrative | 86 | | Management | 42 | | **Total** | **468** | [Corporate Governance](index=98&type=section&id=%E7%AC%AC%E4%B9%9D%E8%8A%82%20%E5%85%AC%E5%8F%B8%E6%B2%BB%E7%90%86) [Overview of Corporate Governance](index=98&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E6%B2%BB%E7%90%86%E7%9A%84%E5%9F%BA%E6%9C%AC%E7%8A%B6%E5%86%B5) The company's governance practices were generally compliant with regulations, maintaining independence from its controlling shareholder - The corporate governance structure is well-established and operates in compliance with CSRC regulations regarding shareholder meetings, board of directors, supervisory committee, and information disclosure, with no material discrepancies[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[212](index=212&type=chunk) - The company is **fully separate from its controlling shareholder** in terms of business, personnel, assets, organization, and finance, possessing independent and complete business operations and self-management capabilities[213](index=213&type=chunk) [Performance of Independent Directors](index=100&type=section&id=%E4%BA%94%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E7%8B%AC%E7%AB%8B%E8%91%A3%E4%BA%8B%E5%B1%A5%E8%A1%8C%E8%81%8C%E8%B4%A3%E7%9A%84%E6%83%85%E5%86%B5) Independent directors actively fulfilled their duties, notably opposing several proposals from shareholder Sino-Agri Group - Independent directors Guo Xuejin, Sha Zhenquan, Liu Guochang, and Xu Yue **voted against** the proposal by shareholder Sino-Agri Group to convene an extraordinary general meeting for board elections, citing pending litigation, uncertain share ownership, and a prior board resolution to extend the current term[219](index=219&type=chunk) - All independent directors **voted against** Sino-Agri Group's proposals to remove a supervisor, invalidate the status of an employee supervisor, and elect a new supervisor, stating that the existing supervisory committee structure and election process were legally valid[221](index=221&type=chunk) [Internal Controls](index=108&type=section&id=%E4%B9%9D%E3%80%81%E5%86%85%E9%83%A8%E6%8E%A7%E5%88%B6%E6%83%85%E5%86%B5) The board found no material weaknesses in internal controls, but the auditor issued a qualified opinion with an emphasis of matter paragraph - The Board of Directors' self-assessment concluded that **no material or significant weaknesses** were found in the internal controls for financial reporting and non-financial reporting[233](index=233&type=chunk)[234](index=234&type=chunk) - The accounting firm issued an unqualified internal control audit report with an **emphasis of matter paragraph**, highlighting that multiple lawsuits between the company and its shareholders could affect normal decision-making[236](index=236&type=chunk)[241](index=241&type=chunk) [Financial Report](index=113&type=section&id=%E7%AC%AC%E5%8D%81%E4%B8%80%E8%8A%82%20%E8%B4%A2%E5%8A%A1%E6%8A%A5%E5%91%8A) [Auditor's Report](index=113&type=section&id=%E4%B8%80%E3%80%81%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A) The restated financial report received a standard unqualified opinion, with revenue recognition and mining rights impairment as key audit matters - The audit opinion was a **standard unqualified opinion**, stating that the financial statements fairly present the company's financial position and operating results in all material respects for 2017[244](index=244&type=chunk)[245](index=245&type=chunk) - **Key Audit Matter 1: Revenue Recognition**; As revenue is a key performance indicator with a significant impact on the financial statements, the auditor identified it as a key audit matter and performed control tests, analytical procedures, contract inspections, confirmations, and cut-off tests[248](index=248&type=chunk)[249](index=249&type=chunk) - **Key Audit Matter 2: Impairment of Intangible Assets - Mining Rights**; Due to the material value of the mining rights and the complexity and significant management judgment involved in the impairment test, the auditor identified it as a key audit matter and evaluated the internal controls, external valuation, key assumptions, and calculation accuracy[250](index=250&type=chunk)[251](index=251&type=chunk) [List of Documents for Inspection](index=234&type=section&id=%E7%AC%AC%E5%8D%81%E4%BA%8C%E8%8A%82%20%E5%A4%87%E6%9F%A5%E6%96%87%E4%BB%B6%E7%9B%AE%E5%BD%95)

广州东凌国际投资股份有限公司 2019 年半年度报告全文 广州东凌国际投资股份有限公司 2019 年半年度报告 2019 年 08 月 1 广州东凌国际投资股份有限公司 2019 年半年度报告全文 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、高级管理人员保证半年度报告内容的 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。 公司负责人赖宁昌、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：保证本半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。 | --- | |---------------------------------------------------------------------------------| | | | 《中国证券报》、《证券时报》、《证券日报》、《上海证券报》及巨潮资讯网 | | http://www.cninfo.com.cn 为本公司 2019 年选定的信息披露媒体，本公司对外披 | | 露信息均以在上述选定媒体刊登的信息为准，敬请投资者注意投资风险。公司 | ...

Financial Performance - The company's operating revenue for the first half of 2018 was ¥174,828,284.24, a decrease of 74.67% compared to ¥690,258,100.53 in the same period last year[17]. - The net profit attributable to shareholders of the listed company was -¥2,667,687.85, an improvement of 86.99% from -¥20,498,770.61 in the previous year[17]. - The net cash flow from operating activities was -¥5,451,847.56, showing a significant improvement of 95.53% compared to -¥122,086,391.10 in the same period last year[17]. - The total assets at the end of the reporting period were ¥2,321,714,154.22, a decrease of 1.13% from ¥2,348,205,704.45 at the end of the previous year[17]. - The net assets attributable to shareholders of the listed company were ¥1,905,820,478.52, a slight decrease of 0.15% from ¥1,908,750,149.67 at the end of the previous year[17]. - The basic earnings per share for the first half of 2018 was -¥0.0035, an improvement of 87.08% from -¥0.0271 in the same period last year[17]. - The weighted average return on net assets was -0.14%, an increase of 0.34% compared to -0.48% in the previous year[17]. Operational Challenges - The company faced significant operational challenges leading to a substantial decline in revenue and net profit[17]. - The report highlights the company's ongoing efforts to improve cash flow and reduce losses in the upcoming periods[17]. - The company’s shipping business faced significant challenges due to the U.S.-China trade war, leading to a reduction in business volume and revenue[44]. - The company is facing operational risks in its shipping business due to the impact of the US-China trade war and changes in international trade dynamics[77]. Potassium Fertilizer Projects - The company has a total potassium ore reserve of 1.002 billion tons, equivalent to 152 million tons of pure potassium chloride, supporting the development of large-scale potassium fertilizer projects[25]. - In the first half of 2018, the company produced 100,400 tons of potassium fertilizer and sold 86,400 tons, with sales remaining stable compared to the same period last year[25]. - The company has achieved a production capacity increase to 200,000 tons per year for potassium fertilizer through technical improvements and optimization measures[26]. - The company is focusing on expanding its potassium fertilizer project in Laos, aiming to enhance profitability and production capacity amid stable domestic and international potassium prices[26]. - The company is committed to accelerating the development of its potassium fertilizer project in Laos, with plans to reach an agreement on expansion scale and funding with stakeholders[26]. - The operating income from the Laos potassium fertilizer project was CNY 134.41 million, an increase of 7.41% year-on-year[40]. - The company plans to expand the potassium fertilizer project to 1 million tons per year, but expansion is currently stalled due to a lack of construction funds[40]. Market and Sales Strategy - The company has established a stable customer base in key Southeast Asian markets, including Vietnam, Thailand, and Laos, and is expanding its reach to Malaysia, India, New Zealand, and Mauritius[25]. - The company’s grain trading business is centered around the demand for imported protein feed raw materials, leveraging its strong supply channels and sales network in Guangdong province[27]. - The company has implemented cost reduction and efficiency enhancement measures, achieving strong economic benefits and competitive cost levels in the global market[26]. - The company has proactively reduced imports of U.S. grains and other agricultural products due to potential risks from U.S.-China trade tensions, diversifying its import sources[32]. Legal and Compliance Issues - The company is currently involved in significant legal disputes, and the impact on its financial performance remains uncertain[79]. - The company acknowledges the risk of talent loss due to compensation and location issues, and plans to enhance internal training and improve employee benefits to retain talent[80]. - The company is committed to maintaining transparency and fulfilling its disclosure obligations regarding ongoing legal matters[79]. - The company is actively working on measures to address the issues raised in the audit report to avoid potential trading suspension[82]. - The company has initiated legal proceedings against China Agricultural Production Materials Group and ten other parties, claiming cash compensation of 24,705.05 thousand RMB[118]. Shareholder and Governance Matters - The company held a temporary shareholders' meeting with a participation rate of 43.21% and an annual shareholders' meeting with a participation rate of 70.57%[85]. - The company has committed to providing timely and accurate information to stakeholders regarding the restructuring, reinforcing transparency[92]. - The company has established a framework for locking shares in case of legal investigations, ensuring shareholder protection[93]. - The company has pledged to maintain a good credit standing, avoiding any major defaults or regulatory actions[93]. - The company has committed to long-term compliance with all promises and guarantees made during the restructuring process[94]. Future Outlook and Growth Strategies - The company provided a positive outlook for the second half of 2018, projecting a revenue growth of 25% driven by new product launches and market expansion efforts[100]. - New product development includes the introduction of a premium fertilizer line, expected to contribute an additional 300 million RMB in revenue by the end of 2018[98]. - The company is expanding its market presence in Southeast Asia, targeting a 10% market share in the region by 2020[99]. - The company plans to invest 200 million RMB in research and development over the next two years to innovate its product offerings[99]. - The management emphasized a commitment to sustainability, aiming for a 50% reduction in carbon emissions by 2025[100]. Legal Disputes and Restructuring - The company is involved in a significant asset restructuring dispute regarding the acquisition of 100% equity in Zhongnong International Potash Development Co., Ltd[114]. - The company has initiated litigation in the Guangzhou Intermediate People's Court, and the case has been accepted by the Beijing High Court, which has also implemented property preservation measures[119]. - The company is actively pursuing new capital increases related to the asset restructuring, although specific details are not yet available[120]. - The ongoing legal proceedings may affect the company's future financial results, but the exact impact remains uncertain at this stage[120]. Employee and Stock Ownership Matters - The employee stock ownership plan raised a total of 72 million yuan, with participation from up to 125 employees[129]. - The average transaction price for shares purchased under the employee stock ownership plan was approximately 15.31 yuan[132]. - The employee stock ownership plan was completed and terminated in January 2018, following the sale of shares[133].

Financial Performance - The company's operating revenue for Q1 2018 was ¥85,742,732.41, a decrease of 68.74% compared to ¥274,319,702.18 in the same period last year[7] - The net profit attributable to shareholders was -¥6,797,548.92, representing a decline of 33.15% from -¥5,105,250.22 year-on-year[7] - Basic and diluted earnings per share were both -¥0.0090, down 34.33% from -¥0.0067 in the same period last year[7] - Total revenue for the period was ¥85,742,732.41, a decrease of 68.74% compared to ¥274,319,702.18 in the previous period, primarily due to reduced income from potassium fertilizer, shipping, and trading[19] - Operating costs decreased by 76.04% to ¥60,337,143.02 from ¥251,772,958.04, reflecting lower costs associated with potassium fertilizer, shipping, and trading[19] - The company reported a 35.19% decrease in income tax expenses, amounting to ¥4,414,963.51 compared to ¥6,811,910.62 in the previous period, due to lower income from potassium fertilizer[19] - The total comprehensive income for the period was -6,000,116.23 yuan, down from -8,753,241.55 yuan in the previous period[105] Cash Flow and Assets - The net cash flow from operating activities improved significantly to ¥11,906,071.04, a 124.29% increase from -¥49,015,442.77 in the previous year[7] - Cash flow from operating activities improved by 124.29%, reaching ¥11,906,071.04 compared to -¥49,015,442.77 in the previous period, driven by increased cash collection[21] - The company’s cash and cash equivalents decreased by 1.55% to ¥490,890,486.77 from ¥498,640,555.47[16] - The company's total current assets as of March 31, 2018, amounted to CNY 630,275,272.45, a decrease from CNY 644,481,632.19 at the beginning of the period, reflecting a decline of approximately 2.0%[94] - Cash and cash equivalents decreased to CNY 490,890,486.77 from CNY 498,640,555.47, indicating a reduction of about 1.5%[94] - Accounts receivable decreased significantly from CNY 28,484,093.24 to CNY 11,965,953.82, representing a decline of approximately 58.0%[94] - Inventory levels decreased from CNY 39,814,889.91 to CNY 32,419,842.47, a reduction of about 18.6%[94] Shareholder Information - The total number of common shareholders at the end of the reporting period was 27,167[11] - The largest shareholder, Guangzhou Dongling Industrial Investment Group Co., Ltd., held 22.10% of the shares, amounting to 167,298,554 shares, with a significant portion pledged[11] - The company did not engage in any repurchase transactions among the top ten shareholders during the reporting period[12] Legal and Regulatory Matters - The company is involved in multiple lawsuits, including a significant asset restructuring dispute related to the acquisition of 100% equity in Zhongnong International Potash Development Co., Ltd. and is seeking compensation of 107,471,311 shares from the defendants[46] - The company has faced legal challenges regarding the validity of board resolutions, with multiple cases being transferred to the Haizhu District People's Court for further proceedings[49] - The company has been proactive in addressing regulatory concerns raised by the Shenzhen Stock Exchange, ensuring compliance and maintaining operational integrity[49] - The company has disclosed its involvement in various legal proceedings, reflecting a challenging operational environment[49] - The company is focused on maintaining its governance structure amidst ongoing legal challenges, emphasizing the importance of board decisions and shareholder rights[49] Strategic Initiatives and Future Outlook - The company plans to expand its market presence in Southeast Asia, targeting a 25% increase in market share by the end of 2019[54] - Future guidance suggests a revenue target of 5 billion RMB for the full year 2018, reflecting a 20% growth forecast[54] - The company is exploring potential mergers and acquisitions to enhance its supply chain efficiency, with a budget of 500 million RMB allocated for this purpose[54] - The company is considering strategic acquisitions to enhance its product portfolio, with potential targets identified in the food sector[57] - The management emphasized the importance of cost control measures, aiming to reduce operational costs by 8% in 2018[57] Compliance and Governance - The company has established a strict compliance framework to ensure the accuracy and completeness of its financial reporting[81] - The company is committed to continuous improvement in its governance practices to safeguard shareholder interests[74] - The company has pledged to bear any legal responsibilities arising from its commitments, demonstrating accountability and transparency[74] - The company guarantees the authenticity and completeness of the information provided during the restructuring process[77] - The company commits to timely disclosure of relevant information regarding the asset restructuring[77]