深圳高速公路股份(00548) - 2019 - 年度财报

Definitions and Major Risk Warnings This section provides definitions for key terms used throughout the report and highlights the company's primary operational uncertainties Definitions This chapter defines key terms used in the report, including reporting periods, company entities, business models, and specific project names, providing a foundational understanding of the content - The report defines over 60 professional terms and company entity abbreviations, primarily related to the company's toll road projects, environmental business investment entities, and various business cooperation models[5][6][8] Major Risk Warnings The company highlights two core operational uncertainties: the significant impact of policy changes on the toll road industry and the potential for regional road network improvements to divert or induce traffic flow, posing management challenges - The company's primary risks stem from changes in the policy environment and road network variations affecting traffic flow, which the Group will address through stable operations and timely strategic adjustments[29] Company Profile Shenzhen Expressway Company Limited, established in 1996, primarily invests in, constructs, and manages toll roads and urban transportation infrastructure, expanding into environmental protection sectors like water and solid waste treatment, listed on both A and H shares with Shenzhen International as its indirect controlling shareholder - The company's core business is toll roads, actively developing the environmental protection industry as its second main business, operating and investing in 16 highway projects with an equity mileage of approximately 546 kilometers, and investing in over 10 environmental, clean energy, and financial projects as of the reporting date[30] - The company's total share capital is approximately 2.181 billion shares, with A-shares accounting for 65.72% and H-shares for 34.28%, and indirect controlling shareholder Shenzhen International holds over 50% of the company's shares[30] Summary of Accounting Data and Financial Indicators This chapter presents the company's core financial and operational data for 2019 and previous years, showing a 6.52% increase in operating revenue but a 27.34% decrease in net profit attributable to shareholders in 2019, primarily due to 2018 asset disposal gains, while non-recurring net profit attributable to shareholders increased by 45.89%, alongside quarterly financial data, non-recurring gains/losses, and five-year traffic volume and toll revenue trends for various road and bridge projects 2019 Annual Key Accounting Data (RMB) | Indicator | 2019 | 2018 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 6,185,825,111.97 | 5,807,108,031.78 | 6.52% | | Net Profit Attributable to Shareholders of Listed Company | 2,499,484,975.75 | 3,440,050,607.33 | -27.34% | | Net Profit Attributable to Parent Company after Non-recurring Items | 2,243,627,358.26 | 1,537,875,136.33 | 45.89% | | Net Cash Flow from Operating Activities | 1,751,428,675.07 | 3,222,228,582.62 | -45.65% | | Basic Earnings Per Share (RMB/share) | 1.146 | 1.577 | -27.34% | | Total Assets (Year-end) | 44,923,734,271.98 | 41,100,850,328.23 | 9.30% | 2019 Quarterly Key Financial Data (RMB) | Item | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 1,330,593,040.84 | 1,368,599,660.97 | 1,486,215,187.60 | 2,000,417,222.56 | | Net Profit Attributable to Shareholders of Listed Company | 467,451,393.65 | 1,109,372,962.48 | 574,156,897.38 | 348,503,722.24 | - Total non-recurring gains and losses in 2019 amounted to RMB 256 million, primarily from gains on disposal of subsidiaries (RMB 262 million), fair value changes and settlement gains from foreign exchange swap instruments, and fair value changes of other non-current financial assets[35] Five-Year Financial Summary (RMB Million) | Indicator | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 6,186 | 5,807 | 5,210 | 4,867 | 3,746 | | Of which: Toll Revenue | 4,569 | 5,066 | 4,684 | 4,064 | 3,338 | | Net Profit | 2,499 | 3,440 | 1,384 | 1,061 | 1,407 | | Earnings Per Share (RMB) | 1.146 | 1.577 | 0.635 | 0.487 | 0.645 | | Cash Dividend Per Share (RMB) | 0.52 | 0.71 | 0.30 | 0.22 | 0.34 | | Asset-Liability Ratio (%) | 53.87% | 52.46% | 64.13% | 58.59% | 56.62% | Annual Milestones This chapter chronologically reviews the company's significant events and achievements in 2019, including performance releases, project wins, equity acquisitions, financing approvals, and various industry and social honors, comprehensively showcasing its annual progress in business expansion, capital operations, and corporate governance - In 2019, the company achieved significant business expansion results, including the acquisition of a 51% equity stake in Nanjing Wind Power and a 67% equity stake in Baotou Nanfeng, and successfully won bids for the Guangming Environmental Park and Shenshan Environmental Park projects[43][44] - The company gained recognition in the capital market, approved to issue corporate bonds of no more than RMB 5 billion, and received multiple honors such as "Best Investor Relations Award" and "Outstanding Investor Return Listed Company"[42][44] Chairman's Statement The Chairman reviewed 2019 operating performance, highlighting a 30.42% year-on-year increase in net profit after excluding 2018 asset disposal gains, noting the completion of core business tasks like toll system upgrades and breakthroughs in the environmental protection industry through acquisitions in food waste treatment and wind power, successfully concluding the "2015-2019" five-year strategy by consolidating the toll road business and initiating new industry layouts, and despite the short-term impact of the COVID-19 pandemic, the company will seize Greater Bay Area opportunities to drive high-quality sustainable development in transportation infrastructure and environmental protection under the new "2020-2024" strategy 2019 Performance Overview and Dividend Proposal | Indicator | Amount (RMB) | YoY Change | | :--- | :--- | :--- | | Operating Revenue | 6.186 billion | +6.52% | | Profit | 2.499 billion | -27.34% | | Profit after Non-recurring Items | - | +30.42% | | Earnings Per Share | 1.146 | -27.34% | | Proposed Final Dividend | 0.52 per share | 45.37% of EPS | - Breakthroughs in Environmental Protection Industry: - Successfully won the bid for Guangming Environmental Park project, adopting a BOT model with a 1,000 tons/day food waste treatment capacity[48] - Completed the acquisition of Nanjing Wind Power (wind power system R&D) and Baotou Nanfeng (wind farm operation), successfully entering the wind power industry chain, contributing RMB 599 million in revenue and RMB 102 million in net profit in the same year[48] - Five-Year Strategy (2015-2019) Review: - Toll Roads: Consolidated the main business by investing in Outer Ring, increasing stake in Shuiguan, and acquiring Yichang and Yanjiang Expressways, resulting in a net increase of 130 kilometers in equity mileage[50] - New Industry Expansion: Focused on waste treatment, water environment management, and clean energy, initially completing the layout of the environmental protection industry[50] - Future Outlook and Pandemic Impact: - The COVID-19 pandemic led to free toll road policies, which will negatively impact 2020 revenue and operating performance[52] - The company will formulate a new "2020-2024" development strategy, continuing to focus on transportation infrastructure and environmental protection as its main businesses, seizing opportunities in the Guangdong-Hong Kong-Macao Greater Bay Area and Shenzhen Pilot Demonstration Zone[53] Management Discussion and Analysis This section provides a comprehensive review of the company's operational performance, financial results, and future plans, highlighting key achievements in toll road and environmental businesses, alongside detailed financial analysis and strategic outlook 2019 Operating Revenue Composition | Business Segment | Revenue (RMB Billion) | Share of Total Revenue (%) | | :--- | :--- | :--- | | Toll Revenue | 4.57 | 73.87% | | Clean Energy Business | 0.599 | 9.68% | | Real Estate Development | 0.457 | 7.39% | | Entrusted Management Services | 0.376 | 6.08% | | Advertising and Others | 0.184 | 2.98% | | Total | 6.186 | 100.00% | Business Review In 2019, the Group's total revenue reached RMB 6.186 billion, a 6.52% year-on-year increase, with toll revenue accounting for 73.87% as the primary source, though it decreased year-on-year due to asset disposals, while environmental and new energy businesses showed initial success, contributing nearly RMB 600 million or 9.68% of revenue, and the company made progress across its four segments: toll roads, environmental protection, entrusted management, and project development, with toll road business maintaining growth on a comparable basis, environmental business achieving significant breakthroughs in solid waste treatment and clean energy through multiple acquisitions, and entrusted management business steadily advancing with new maintenance projects successfully expanded Toll Road Business Influenced by stable macroeconomic operation and optimized regional economic structure, the company's toll road business performed steadily overall, with ETC promotion and new vehicle classification standards having some negative impact on revenue but long-term benefits for operational efficiency, and most road sections maintaining growth in traffic volume and toll revenue, notably Yanjiang, Qinglian, and Changsha Ring Expressways, while the company enhanced management efficiency and road conditions through quality management, informatization (BIM), ETC system upgrades, and road maintenance, with ongoing construction projects like Outer Ring and Yanjiang Phase II, and expansion work on Jihe and Yangmao Expressways 2019 Key Road Section Operating Data | Toll Road | Daily Average Mixed Traffic Volume (Thousand Vehicles/Day) | YoY | Daily Average Toll Revenue (RMB Thousand) | YoY | | :--- | :--- | :--- | :--- | :--- | | Yanjiang Expressway | 100 | 10.3% | 1,459 | 14.6% | | Qinglian Expressway | 48 | 11.5% | 2,293 | 10.0% | | Changsha Ring Road | 44 | 22.1% | 428 | 8.4% | | Guangzhou West Second Ring | 86 | 15.4% | 1,597 | -3.4% | | Yangmao Expressway | 46 | -9.3% | 1,524 | -13.9% | - The company actively promotes major engineering projects: - Outer Ring Project: Approximately 67% completed as of the reporting period end[78] - Yanjiang Phase II: Approximately 40% completed as of the reporting period end, with the International Convention and Exhibition Center Interchange already open to traffic[79] - Jihe Expressway Expansion: Overall construction plan largely agreed upon, with preliminary special work underway - Yangmao Expressway Expansion: Steadily progressing, planned for completion in 2022 - In response to the national policy of abolishing provincial toll stations, the company completed the timely upgrade of toll station and lane hardware/software, and the construction of new ETC gantry systems, successfully launching the new system on January 1, 2020[76] Environmental Business The Group achieved significant breakthroughs in the environmental protection industry, focusing on solid waste treatment and clean energy, winning the bid for the Guangming Environmental Park BOT project with a 1,000 tons/day capacity, completing controlling acquisitions of 51% of Nanjing Wind Power (wind turbine manufacturing) and 67% of Baotou Nanfeng (wind farm operation) to build a full wind power industry chain, and further strengthening its leading position in the food waste treatment market by acquiring a controlling stake in Lande Environmental at the beginning of 2020 - Successfully won the bid for the Guangming Environmental Park project, adopting a BOT model with a 10-year concession period and a 1,000 tons/day food waste treatment capacity, with the company holding a 65% equity stake in the project company[81] - Signed an agreement in January 2020 to acquire a controlling stake in Lande Environmental, which owns 16 organic waste treatment BOT/PPP projects, enabling the Group to rapidly enter and focus on the organic waste treatment segment, forming full industry chain synergy[82] - Completed controlling acquisitions of a 51% equity stake in Nanjing Wind Power (wind turbine manufacturing) and a 67% equity stake in Baotou Nanfeng (wind farm with a total installed capacity of 247.5 MW), achieving a full industry chain layout from equipment manufacturing to wind farm operation[84][85] Entrusted Management and Other Infrastructure Development Leveraging its expertise in infrastructure, the Group actively engaged in entrusted construction and management services, including the Outer Ring project and freight organization adjustment projects, and newly won the Shenshan Environmental Park full-process entrusted construction project, while renewing the equity management contract for Longda Company and successfully bidding for comprehensive maintenance projects for four government-transferred roads, also participating in other infrastructure development projects such as the Nanmen River treatment in Shenshan Cooperation Zone and Guizhou Duohua Bridge construction - Entrusted Construction Business: Newly won the full-process entrusted construction for the Shenshan Ecological Environment Technology Industrial Park infrastructure and supporting facilities project, with a contract value of approximately RMB 227 million[88] - Entrusted Management Business: Renewed the entrusted management contract for 89.93% equity of Longda Company, and successfully won bids for comprehensive maintenance projects for four roads: Nanguang, Yanpai, Yanba, and Longda Shenzhen section[88] - Other Infrastructure Development: Participated in the Nanmen River comprehensive treatment project in Shenshan Cooperation Zone (approximately 72% completed), Guizhou Duohua Bridge project (approximately 38% completed), and long-term rental apartment projects in Shenzhen[89] Project Development and Management As a beneficial supplement to its main business, the Group prudently conducts integrated land development and urban renewal, with phases one and two of the Guizhou Guilong development project "Interlaken Town" residential units largely sold out and delivered, and phase three under construction and sale, while also completing the equity transfer of approximately 810 mu of Guilong land to recover funds during the reporting period, and the Meilinguan renewal project in Shenzhen, a collaboration with Shenzhen International and Vanke, progressed smoothly, with all phase one residential units sold and funds recovered, and phase two achieving a 75% signing rate by the end of the reporting period - Guilong Development Project: Interlaken Town Phase I and II residential units are largely sold out and delivered, with 217 units in Phase III already signed for sale, and during the reporting period, approximately 810 mu of Guilong land was transferred, recovering approximately RMB 567 million[92][93] - Meilinguan Renewal Project: All 832 units in Phase I have been sold and funds recovered; Phase II launched for sale at the end of September 2019, with over 510 units cumulatively signed by the end of the reporting period, achieving a 75% signing rate[94] Financial Analysis In 2019, the Group's net profit attributable to the parent company decreased by 27.34% year-on-year to RMB 2.5 billion, primarily due to significant gains from three asset disposals in the prior year, but excluding this impact, net profit increased by 30.42% year-on-year, driven mainly by the recognition of deferred income tax assets for Yanjiang Company, revenue recognition from United Land's Meilinguan Phase I project, and investment gains from the transfer of four Guizhou subsidiaries, while operating revenue increased by 6.52% year-on-year with significant contributions from new wind power business, and finance costs decreased significantly by 45.69% year-on-year due to reduced borrowing scale and lower exchange losses, with the Group's capital structure remaining stable and asset-liability ratio slightly increasing to 53.87% Analysis of Major Financial Statement Item Changes (RMB Thousand) | Item | Current Period | Prior Period | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 6,185,825 | 5,807,108 | 6.52 | | Operating Cost | 3,499,538 | 2,858,212 | 22.44 | | Finance Costs | 572,938 | 1,055,006 | -45.69 | | Investment Income | 1,242,672 | 555,594 | 123.67 | | Income Tax Expense | -92,249 | 966,447 | N/A | | Net Cash Flow from Operating Activities | 1,751,429 | 3,222,229 | -45.65 | - The main reasons for the significant year-on-year increase in net profit (after non-recurring items) include: - Yanjiang Company Deferred Income Tax Assets: After completing capital injection into Yanjiang Company, related deferred income tax assets were recognized, increasing net profit by a total of RMB 464 million[119] - United Land Investment Income: Recognition of commercial housing development income from Meilinguan Renewal Project Phase I contributed significant investment income to the Group[114] - Subsidiary Transfer Gains: Transfer of 100% equity and creditor's rights of four Guizhou subsidiaries resulted in a recognized equity transfer gain of RMB 262 million, increasing after-tax net profit by RMB 138 million[120] - An impairment provision of RMB 552 million was made for the Shuiguan Expressway concession intangible asset, which reduced the Group's 2019 net profit by approximately RMB 181 million[121] Capital Structure and Solvency | Key Indicator | 2019 Year-end | 2018 Year-end | | :--- | :--- | :--- | | Asset-Liability Ratio | 53.87% | 52.46% | | Net Debt-to-Equity Ratio | 67.02% | 58.04% | | Interest Coverage Ratio (times) | 4.56 | 5.54 | Outlook and Plans The company has largely completed its new "2020-2024 Development Strategy," continuing the "transportation infrastructure + environmental protection" dual-core business model, with the 2020 operating plan focusing on mitigating the impact of COVID-19-induced free toll road policies while ensuring progress on key projects like Yanjiang Phase II and Outer Ring Section A, and the environmental sector will concentrate on integrating newly acquired projects like Lande Environmental and Nanjing Wind Power to enhance core competitiveness, with total capital expenditure planned for the next three years at approximately RMB 7.65 billion, primarily for Outer Ring, environmental projects, and Jihe expansion, and the company has identified and formulated risk response measures for operational management, financing, business expansion, and construction management - The company's new "2020-2024 Development Strategy" will continue to adhere to its two main businesses of transportation and urban infrastructure and environmental protection, while exploring new business models such as urban integrated services and industry-finance integration[156] 2020-2022 Major Capital Expenditure Plan (RMB Thousand) | Project Name | 2020 | 2021 | 2022 | Total | | :--- | :--- | :--- | :--- | :--- | | Outer Ring Project | 1,179,163 | 1,770,616 | – | 2,949,779 | | Lande Food Waste Project | 700,000 | 300,000 | – | 1,000,000 | | Guangming Environmental Park PPP Project | 358,000 | 350,000 | – | 708,000 | | Jihe Expansion Pre-expenditure | 400,497 | – | – | 400,497 | | Yangmao Expansion (Equity) | 103,750 | 196,580 | 196,590 | 496,920 | | Total | 4,238,958 | 2,946,606 | 463,800 | 7,649,364 | - The company identified four key risk areas and formulated response measures: - Operational Management Risk: Addressing new challenges from national ETC networking, improving systems and processes, and promoting intelligent upgrades[162] - Financing Risk: Ensuring funding needs during peak capital expenditure periods by issuing H-shares, corporate bonds, and expanding asset securitization channels[165] - Business Expansion Risk: Strengthening integration and management of newly acquired environmental projects, and managing investment return risks for existing highway expansion through innovative business model design[168] - Construction Management Risk: Controlling project schedule, quality, cost, and safety risks for ongoing projects using mature management systems and contractual terms[170] Report of the Board of Directors This chapter is a statutory report presented as required by listing rules, covering the company's main business, performance and distribution, share capital structure, related party transactions, significant contracts, external guarantees, and commitments, confirming 2019 performance and a proposed final dividend of RMB 0.52 per share, detailing daily related party transactions with controlling shareholder Shenzhen International and its associates, such as entrusted management of Longda Company's equity, and explaining the company's environmental, social responsibility, and legal compliance status, along with significant capital operations like the termination of A-share convertible bond issuance and proposed non-public H-share issuance - The Board of Directors recommends a 2019 final cash dividend of RMB 0.52 per share (tax inclusive)[174] - During the reporting period, the company had ongoing connected transactions with Baotong Company (a wholly-owned subsidiary of Shenzhen International), specifically the entrusted management of 89.93% equity of Longda Company, with a management fee of RMB 8.77 million in 2019, and this contract has been renewed until the end of 2020[201] - The company decided to terminate the issuance of A-share convertible corporate bonds and proposed a non-public issuance of no more than 300 million H-shares in early 2020 to optimize its capital structure and support the new development strategy[195][196] - Controlling shareholder Shenzhen International and its parent company Shenzhen Investment Holdings have committed to avoiding horizontal competition, including injecting eligible expressway assets into the company within 5-8 years[214] Share Capital and Shareholder Information This chapter details the company's share capital structure and shareholder information, showing total share capital maintained at 2.181 billion shares as of the reporting period end, with A-shares accounting for 65.72% and H-shares for 34.28%, listing the top ten shareholders, where Xintongchan Company is the largest beneficial shareholder with a 30.03% stake, and Shenzhen International is the indirect controlling shareholder (51.56% total stake), with the Shenzhen SASAC as the ultimate controlling party Top Ten Shareholders' Holdings (As of 2019 Year-end) | Shareholder Name | Number of Shares Held | Percentage (%) | Share Type | | :--- | :--- | :--- | :--- | | HKSCC NOMINEES LIMITED | 729,925,099 | 33.47% | H-share | | Xintongchan Industrial Development (Shenzhen) Co., Ltd. | 654,780,000 | 30.03% | A-share | | Shenzhen Shenguanghui Highway Development Co., Ltd. | 411,459,887 | 18.87% | A-share | | China Merchants Expressway Network & Technology Holdings Co., Ltd. | 87,211,323 | 4.00% | A-share | | Guangdong Provincial Road & Bridge Construction Development Co., Ltd. | 61,948,790 | 2.84% | A-share | - The company's indirect controlling shareholder is Shenzhen International Holdings Limited, which, through its wholly-owned subsidiaries, collectively holds 51.561% of the company's shares, and the ultimate controlling party is the Shenzhen Municipal People's Government State-owned Assets Supervision and Administration Commission[231][233] Directors, Supervisors, Senior Management, and Employees This chapter comprehensively introduces the composition of the company's governance team and workforce, covering personal resumes, terms, shareholdings, and remuneration of directors, supervisors, and senior management, detailing the company's remuneration policy, including principles for director/supervisor fees and employee compensation and benefits, and presenting the performance-linked evaluation and incentive system, particularly the "Incremental Profit Incentive and Restraint Scheme" implemented in 2019, while also outlining the overall employee situation, professional composition, educational structure, and annual training plan execution 2019 Partial Senior Management Remuneration (Pre-tax, RMB Ten Thousand) | Name | Position | Total Remuneration | | :--- | :--- | :--- | | Hu Wei | Chairman | 123.34 | | Liao Xiangwen | Executive Director, President | 154.69 | | Wang Zengjin | Supervisor | 151.14 | | Gong Taotao | Vice President, Board Secretary | 149.12 | | Zhao Guiping | Chief Accountant | 167.43 | - The company established a long-term incentive mechanism, implementing the "Incremental Profit Incentive and Restraint Scheme" (2018-2020) approved by the general meeting of shareholders, and has already implemented the incentive scheme for the 2018 operating performance[275] - As of the reporting period end, the Group's total number of employees was 4,889, with toll collection personnel accounting for 72% and management and professional personnel for 28%, and approximately 36% of employees holding a college degree or above[268][270][272] Corporate Governance This section details the company's robust corporate governance framework, adherence to A+H listing rules, and the effective functioning of its board, supervisory committee, and specialized committees, ensuring compliance, transparency, and accountability Overview of Corporate Governance The company is committed to improving its governance structure, fully complying with A+H laws, regulations, and listing rules, including all provisions of the HKEX Corporate Governance Code during the reporting period, having established a governance framework comprising the general meeting of shareholders, board of directors, supervisory committee, and management, with clearly defined responsibilities through the Articles of Association and committee rules, and the Board has five specialized committees—Strategy, Audit, Remuneration, Nomination, and Risk Management—all actively performing their duties in 2019, providing professional advice and oversight on company strategy, financial report auditing, executive remuneration and nominations, and risk management - The company's governance structure is clear, comprising the general meeting of shareholders, Board of Directors, Supervisory Committee, and management, with five specialized Board committees established: Strategy, Audit, Remuneration, Nomination, and Risk Management[281][290] - During the reporting period, the company fully adopted and complied with all code provisions of the HKEX Corporate Governance Code, with no significant deviations or violations[279] - Annual performance of each specialized committee: - Strategy Committee: Reviewed the company's "2020-2024 Development Strategic Plan"[291] - Audit Committee: Held 5 meetings, reviewed periodic reports and internal control reports, and conducted independent meetings with auditors[292] - Remuneration Committee: Evaluated executive performance and reviewed employee incentive schemes[293] - Nomination Committee: Reviewed the Board structure and completed the re-appointment review for the Board Secretary[294] - Risk Management Committee: Reviewed the annual risk report and financial early warning indicator system[295] Corporate Governance Report This report elaborates on the company's compliance with the HKEX Corporate Governance Code, confirming full adoption of all code provisions during the reporting period, covering the Board's duties and operations, separation of Chairman and CEO roles, Board composition and diversity policy, functions of specialized committees, directors' responsibilities and training, financial reporting accountability and audit, and shareholder communication mechanisms, with the company practicing standards higher than code recommendations in areas such as independent director tenure, executive remuneration disclosure, and internal control audits - The company's corporate governance practices exceed the requirements of the Corporate Governance Code in several aspects, such as independent directors serving no more than 6 years, named disclosure of all executive remuneration, and external audits of financial reporting internal controls[297] - The Board of Directors comprises 12 directors, including 4 independent directors, meeting the requirement of no less than 1/3, with members possessing diverse professional backgrounds in highways, environmental protection, finance, banking, and law, reflecting the principle of diversity[301][304] - The company appointed Ernst & Young as its 2019 auditor, responsible for the integrated audit of financial statements and internal controls, with total audit-related fees for 2019 amounting to RMB 4.598 million, of which RMB 2.078 million was for non-audit services[315][316] Internal Control The company's Board of Directors is responsible for establishing and effectively implementing internal controls to ensure operational compliance, asset security, and financial report accuracy, having built a comprehensive management system covering investment, engineering, finance, legal, and information disclosure, and developed an internal control manual based on the "Basic Norms for Enterprise Internal Control" by the "Five Ministries," with the Board, through the Audit Committee and its Audit Department, continuously supervising and evaluating the internal control system, and the 2019 internal control evaluation report concluded that the company maintained effective internal controls over financial and non-financial reporting in all material aspects, with no material weaknesses found, a conclusion supported by an unqualified audit opinion from external auditor Ernst & Young - The Board of Directors confirms that the company has maintained effective internal controls over financial reporting in all material aspects, in accordance with the requirements of the "Basic Norms for Enterprise Internal Control," with no material weaknesses found[332] - Ernst & Young Hua Ming LLP, engaged by the company, audited the effectiveness of the company's internal controls over financial reporting and issued an unqualified audit opinion[333] - The company established a systematic risk management system, annually identifying, assessing, and responding to major risks affecting operational objectives, and implemented a reporting mechanism for sudden significant risk events and a financial risk early warning management system[330] Investor Relations The company upholds a culture of respect and responsibility towards investors, maintaining good relationships with the capital market through timely, accurate, and fair information disclosure and multi-channel communication activities, having issued over 170 announcements and documents in 2019 and actively conducted performance presentations, roadshows, on-site surveys, and other events, engaging with over 800 investors and media representatives, and in terms of shareholder returns, the company adheres to an active dividend policy, having distributed cash dividends for 22 consecutive years, with a proposed dividend payout ratio of 45.37% for 2019 - In 2019, the company communicated with over 800 investors and media representatives through various forms, including performance presentations, roadshows, reverse roadshows, and investor conferences[338] - The company is committed to shareholder returns, having continuously distributed cash dividends for 22 consecutive years since its listing, with cumulative dividends totaling approximately RMB 8.8 billion, and a proposed dividend payout ratio of 45.37% for 2019[342] Audit Report and 2019 Annual Financial Statements This section presents the independent auditor's report, which provides an unqualified opinion on the company's 2019 financial statements, along with the complete audited financial statements and their detailed notes, offering a comprehensive view of the company's financial position and performance Audit Report Ernst & Young Hua Ming LLP issued a standard unqualified audit opinion on the company's 2019 financial statements, deeming them to fairly reflect the company's financial position and operating results in all material respects, with two key audit matters highlighted: impairment considerations for long-term equity investments and concession intangible assets, both receiving significant attention due to substantial management accounting estimates and judgments involved - The auditor issued a standard unqualified audit opinion, stating that the financial statements fairly reflect the company's financial position and operating results[347] - Key audit matters include: - Impairment of Long-term Equity Investments: Due to significant accounting estimate uncertainties in valuing investees[350] - Impairment of Concession Intangible Assets: Due to significant judgments and estimates regarding key assumptions like traffic volume, toll rates, and costs when calculating the present value of future cash flows from these assets[354] Financial Statements and Notes This section contains the company's complete audited financial statements for 2019, including consolidated and company balance sheets, income statements, cash flow statements, and statements of changes in shareholders' equity, with accompanying notes detailing the company's significant accounting policies, estimates, and the specific composition and changes of each statement item, serving as crucial supplementary information for understanding the company's financial position and operating results, and also includes supplementary information on non-recurring gains/losses and return on net assets Consolidated Balance Sheet Summary (December 31, 2019) | Item | Amount (RMB) | | :--- | :--- | | Total Assets | 44,923,734,271.98 | | Current Assets | 7,666,017,378.51 | | Non-current Assets | 37,257,716,893.47 | | Total Liabilities | 24,200,462,012.14 | | Current Liabilities | 6,480,694,273.95 | | Non-current Liabilities | 17,719,767,738.19 | | Total Shareholders' Equity | 20,723,272,259.84 | | Equity Attributable to Parent Company Shareholders | 18,374,542,643.63 | Consolidated Income Statement Summary (2019) | Item | Amount (RMB) | | :--- | :--- | | Total Operating Revenue | 6,185,825,111.97 | | Operating Profit | 2,444,057,783.36 | | Total Profit | 2,444,233,723.81 | | Net Profit | 2,536,483,221.77 | | Net Profit Attributable to Parent Company Shareholders | 2,499,484,975.75 | Consolidated Cash Flow Statement Summary (2019) | Item | Amount (RMB) | | :--- | :--- | | Net Cash Flow from Operating Activities | 1,751,428,675.07 | | Net Cash Flow from Investing Activities | -253,489,067.08 | | Net Cash Flow from Financing Activities | -1,147,072,626.17 | | Net Increase in Cash and Cash Equivalents | 350,980,012.00 | Company Information This chapter provides the company's basic profile information, including its Chinese and English names, registered and office addresses, legal representative, contact details, information disclosure channels, listed securities details, and key collaborating intermediaries such as legal advisors, accounting firms, and share registrars, additionally including a summary table of toll road project information as of March 2020, detailing each project's equity ratio, location, mileage, number of lanes, operational status, and toll expiry date Company Toll Project Information (As of March 2020) | Toll Project | Company's Equity Interest | Location | Toll Mileage (km) | Status | Toll Expiry Date | | :--- | :--- | :--- | :--- | :--- | :--- | | Meiguan Expressway | 100% | Shenzhen | 5.4 | Operational | 2027.03 | | Jihe East Section | 100% | Shenzhen | 23.7 | Operational | 2027.03 | | Yanjiang Project | 100% | Shenzhen | 36.6 | Phase I Operational, Phase II Under Construction | 2038.12 | | Outer Ring Project | 100% | Shenzhen | 60 | Under Construction | – | | Qinglian Expressway | 76.37% | Guangdong | 216.0 | Operational | 2034.07 | | Wuhuang Expressway | 100% | Hubei | 70.3 | Operational | 2022.09 | | Yichang Project | 100% | Hunan | 78.3 | Operational | 2033.12 |