中国龙天集团(01863) - 2019 - 年度财报

Company Information This report is the 2019 annual report for China Longtian Group Holdings Limited, detailing its registration, Hong Kong office, and key personnel - This report is the 2019 annual report for China Longtian Group Holdings Limited (Stock Code: 1863), registered in the Cayman Islands, with its Hong Kong principal place of business in Tsim Sha Tsui, detailing core company information including directors and bankers[2][17] Financial Highlights The company's 2019 financial performance shows significant growth in revenue and profit, alongside improved financial health 2019 Annual Financial Highlights | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Performance | | | | | Revenue (RMB Million) | 660.5 | 536.6 | +23.1% | | Gross Profit (RMB Million) | 145.0 | 122.2 | +18.7% | | Profit Before Tax (RMB Million) | 44.2 | 31.1 | +42.1% | | Profit for the Year Attributable to Owners of the Company (RMB Million) | 40.4 | 31.1 | +29.9% | | Basic Earnings Per Share (RMB Cents) | 4.74 | 3.65 | +29.9% | | Gross Profit Margin (%) | 22.0 | 22.8 | -0.8pp | | Financial Position | | | | | Total Assets (RMB Million) | 784.6 | 751.1 | +4.5% | | Total Liabilities (RMB Million) | 466.4 | 477.2 | -2.3% | | Total Equity (RMB Million) | 318.2 | 274.0 | +16.1% | | Gearing Ratio (Borrowings/Total Assets) (%) | 11.6 | 14.1 | -2.5pp | Chairman's Statement The Group achieved significant revenue and profit growth in 2019, actively preparing for future challenges through R&D and operational efficiency improvements - In 2019, the Group's turnover increased by 23.1% to RMB 660.5 million, with profit attributable to shareholders growing to RMB 40.4 million, primarily due to increased sales across its PVC, TPU materials, and flooring businesses in domestic and international markets[31] - Facing challenges from the US-China trade war and the COVID-19 pandemic, the Group anticipates a severe economic environment in 2020, planning to increase R&D investment in new and eco-friendly flooring materials and implement lean and performance management to enhance operational efficiency[32][34] - The Group secured 9 national authorized patents and applied for 28 invention patents in 2019, with Fujian Sijia recognized as a "National Intellectual Property Advantage Enterprise," while actively pursuing share resumption[34][35] Management Discussion and Analysis This section reviews the Group's 2019 operational and financial performance, outlining its market position, financial health, and future strategic directions Business Review and Market Outlook The Group, a leader in eco-friendly materials, achieved significant revenue growth, maintaining a global lead in spacer fabric and developing medical materials Revenue by Product Category | Product Category | 2019 Revenue (RMB Million) | Proportion (%) | 2018 Revenue (RMB Million) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Material Products | 622.3 | 94.2 | 531.3 | 99.0 | | Flooring Products | 38.2 | 5.8 | 5.3 | 1.0 | | Total | 660.5 | 100.0 | 536.6 | 100.0 | Revenue by Geographical Region | Region | 2019 Revenue (RMB Million) | Proportion (%) | 2018 Revenue (RMB Million) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | China | 450.3 | 68.2 | 353.5 | 65.9 | | Other Regions | 210.2 | 31.8 | 183.1 | 34.1 | | Total | 660.5 | 100.0 | 536.6 | 100.0 | - The Group achieved significant success in spacer fabric materials, becoming the sole global supplier with the largest production of both warp-knitted and woven spacer fabrics, and a preferred global material supplier for Decathlon[48] - The Group's successfully developed flooring material for medical isolation cabins was utilized in COVID-19 prevention and control in early 2020, leading to the inclusion of its Fuzhou factory on the national list of key epidemic prevention and control enterprises[49] Financial Review In 2019, the Group's revenue grew by 23.1%, with increased gross profit despite a slight margin dip, while administrative and finance costs decreased Gross Profit and Gross Profit Margin | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Gross Profit (RMB Million) | 145.0 | 122.2 | | Gross Profit Margin (%) | 22.0 | 22.8 | - Administrative expenses decreased from RMB 76.9 million to RMB 70.6 million, primarily due to the completion of several high-investment R&D projects in the previous year, resulting in reduced R&D costs this year[61] - Impairment losses of approximately RMB 3.2 million on trade and other receivables (2018: RMB 1.0 million) and approximately RMB 4.0 million on inventories (2018: RMB 4.7 million) were recognized this year[65][66] Liquidity, Financial Resources and Human Resources At 2019 year-end, total equity increased, net current liabilities narrowed, and gearing ratio improved, with employee growth supporting expansion Key Financial Position Indicators | Metric | As at 2019 Year-End (RMB Million) | As at 2018 Year-End (RMB Million) | | :--- | :--- | :--- | | Total Equity | 318.2 | 274.0 | | Net Current Liabilities | (125.3) | (184.5) | | Interest-Bearing Bank Borrowings | 89.7 | 105.0 | | Cash and Cash Equivalents | 26.4 | 28.2 | - The Board does not recommend the payment of a final dividend for the year ended December 31, 2019[77] - As at the end of 2019, the Group employed a total of 445 employees, an increase from 430 in 2018, primarily due to the establishment of the flooring product manufacturing department[78] Future Outlook The Group plans to expand its industrial chain, enhance production lines, accelerate R&D in advanced materials, and implement intelligent upgrades while investing in talent - The Group plans to implement a series of upgrades in 2020, including: - Shanghai Sijia introducing advanced foreign production lines to expand the industrial chain - Fujian Sijia adding dedicated production lines for Decathlon orders - Accelerating product R&D for TPU materials in medical applications - Implementing intelligent upgrades to flooring production lines to reduce labor costs and enhance efficiency - Planning to recruit 30 graduates with bachelor's, master's, or doctoral degrees in polymer and chemical materials[83][86] Biographical Details of Directors and Senior Management This section provides detailed biographical information for the Group's six directors, highlighting their extensive industry experience and professional backgrounds - The Board comprises six directors, including three executive and three independent non-executive directors, with Chairman and Founder Mr. Lin Shenxiong possessing over 33 years of experience in polymer materials and plastics, responsible for the Group's overall strategic planning[88][89] - Executive Directors Mr. Huang Wanneng and Mr. Jiang Shisheng are both senior engineers with technical backgrounds, responsible for the Group's R&D and technological development respectively, possessing extensive industry experience and multiple patent contributions[90][92] - The three independent non-executive directors, Mr. Liu Zhenbang, Mr. Lu Jiayu, and Ms. Jiang Ping, possess extensive professional backgrounds and experience in accounting, business administration, and financial auditing, respectively[93][95][96] Corporate Governance Report This report details the Group's adherence to corporate governance principles, outlining its Board and committee structure, risk management, and shareholder communication Board and Committee Functions The company complied with the Corporate Governance Code, maintaining a Board with balanced composition and establishing key committees with clear mandates - The Company has complied with the code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules[103] - The Board comprises three executive directors and three independent non-executive directors, meeting the Listing Rules' requirement that independent non-executive directors constitute at least one-third of the Board[109][122] - The Audit Committee, Remuneration Committee, and Nomination Committee have all been established, chaired by independent non-executive directors, and provided with sufficient resources to discharge their duties[132][133][134][136] Risk Management, Internal Control and Compliance The Board confirmed the effectiveness of its risk management and internal control systems, maintaining full compliance and disclosing auditor remuneration - The Board has reviewed the risk management and internal control systems for the year ended December 31, 2019, and considers them to be effective and adequate[119][152] 2019 Auditor's Remuneration | Services Provided | Fees Paid/Payable (HKD Thousand) | | :--- | :--- | | Audit of Financial Statements | 1,400 | | Review of 2019 Interim Results | 180 | | Total | 1,580 | Shareholder Communication and Rights The company facilitates shareholder communication, outlining procedures for general meetings and resolutions, and has adopted a balanced dividend policy - Shareholders holding not less than one-tenth of the paid-up share capital may request to convene an extraordinary general meeting[168] - The Company has adopted a dividend policy, where the Board considers operating results, cash flow, capital requirements, and economic conditions, among other factors, when deciding on dividend distribution[176] Environmental, Social and Governance Report This report details the Group's commitment to environmental protection, responsible talent management, ethical operations, and community investment Environmental Management and Resource Utilization The Group is committed to environmental protection, complying with regulations, disclosing resource data, and implementing energy-saving and recycling measures 2019 Key Resource Consumption | Resource Category | 2019 Consumption | Unit | | :--- | :--- | :--- | | Water | 41,954 | Cubic Meters | | Electricity | 2,157.19 | 10,000 kWh | | Gasoline | 19,040 | Tonnes | | Diesel | 724.02 | Tonnes | | Biomass Fuel | 10,111.29 | Tonnes | 2019 Key Emissions Data | Emission Category | 2019 Emissions | Unit | | :--- | :--- | :--- | | Sulfur Dioxide | 12,374 | Kilograms | | Nitrogen Oxides | 18,474.72 | Kilograms | | Wastewater | 3,145 | Tonnes | - The Group provides all biomass ash generated from its operations to surrounding villagers for agricultural and forestry fertilization, achieving resource recycling[221] Talent Management and Health and Safety The Group upholds equal opportunity, provides regular training, and ensures a safe work environment with 100% safety training coverage and no work-related incidents Employee Composition as at 2019 Year-End | Category | Sub-category | Number of Employees | Proportion (%) | | :--- | :--- | :--- | :--- | | Total Employees | | 445 | 100% | | Gender | Male | 304 | 68.3% | | | Female | 141 | 31.7% | | Age | 18-25 years old | 69 | 15.5% | | | 26-35 years old | 135 | 30.3% | | | 36-45 years old | 95 | 21.4% | | | 46-55 years old | 115 | 25.8% | | | Over 56 years old | 31 | 7.0% | - The Group conducts at least 3 training sessions weekly, with a minimum of 30 attendees per session, each lasting at least 1 hour[238] - During the reporting period, the Group reported no work-related fatalities or occupational disease cases, with 445 employees receiving occupational safety and health education, achieving a 100% safety training coverage rate[239][241] Compliant Operations and Community Investment The Group ensures product quality, implements anti-corruption policies, and actively engages in community investment through charitable donations - The Group maintains a comprehensive product quality control system and customer information security measures, strictly adhering to laws and regulations related to product quality and consumer rights[243] - The Group has established an anti-corruption policy, with no reports of bribery or corruption cases received, nor any concluded corruption-related legal proceedings during the year[246] - During the year, the Group donated a total of RMB 698,000 for charitable purposes, actively participating in community activities such as rural revitalization and education poverty alleviation[247][248] Report of the Directors This report covers the Board's dividend recommendation, details of major customers and suppliers, directors' and major shareholders' interests, and share trading suspension status - The Board does not recommend the payment of a final dividend for the year ended December 31, 2019[279] - During the year, sales to the top five customers accounted for approximately 25.3% of total revenue, with the largest customer contributing 7.4%; purchases from the top five suppliers accounted for approximately 38.8% of total cost of sales, with the largest supplier contributing 16.6%[288][290] Shareholding of Directors and Major Shareholders (as at December 31, 2019) | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Company's Shareholding | | :--- | :--- | :--- | :--- | | Mr. Lin Shenxiong | Interest in Controlled Corporation | 410,886,000 | 48.19% | | Mr. Huang Wanneng | Beneficial Owner | 5,060,000 | 0.59% | | Rongliang Investment Enterprise Limited | Beneficial Owner | 59,011,000 | 6.92% | - The Company's shares have been suspended from trading since February 14, 2013, and will remain suspended until further notice[321] Independent Auditor's Report The auditor issued an unmodified opinion on the financial statements, highlighting a material uncertainty regarding the Group's going concern ability - The auditor, Zhonghui Anda CPA Limited, believes the consolidated financial statements fairly and accurately reflect the Group's financial position and performance, issuing an unmodified opinion[323] - The auditor's report specifically draws attention to a "material uncertainty related to going concern," noting the Group's RMB 125 million net current liabilities as of 2019 year-end and the continuous suspension of its shares since 2013, which may cast significant doubt on its ability to continue as a going concern, though the auditor's opinion is not modified in respect of this matter[325] - Key audit matters, in addition to the going concern uncertainty, include the impairment testing of property, plant, and equipment, given their significant balances and the management's judgments and estimates involved[327][328] Consolidated Financial Statements This section presents the Group's consolidated financial statements, providing a comprehensive overview of its financial performance and position Consolidated Statement of Profit or Loss and Other Comprehensive Income For 2019, the Group reported increased revenue, gross profit, and profit attributable to owners 2019 Consolidated Statement of Profit or Loss Summary | Item (RMB Thousand) | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | 660,482 | 536,619 | | Gross Profit | 144,987 | 122,179 | | Profit from Operations | 57,335 | 44,077 | | Profit Before Tax | 44,247 | 31,102 | | Profit for the Year Attributable to Owners of the Company | 40,448 | 31,125 | Consolidated Statement of Financial Position As of 2019 year-end, the Group's total assets, liabilities, and net assets are presented, showing an improvement in net current liabilities 2019 Consolidated Statement of Financial Position Summary | Item (RMB Thousand) | 2019 | 2018 | | :--- | :--- | :--- | | Total Non-current Assets | 448,128 | 461,532 | | Total Current Assets | 336,462 | 289,603 | | Total Assets | 784,590 | 751,135 | | Total Current Liabilities | 461,725 | 474,128 | | Total Non-current Liabilities | 4,658 | 3,041 | | Total Liabilities | 466,383 | 477,169 | | Net Assets | 318,207 | 273,966 | Consolidated Statement of Cash Flows In 2019, the Group generated net cash from operating activities, with outflows from investing and financing, resulting in a net decrease in cash 2019 Consolidated Statement of Cash Flows Summary | Item (RMB Thousand) | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 56,750 | 38,521 | | Net Cash (Used in)/Generated from Investing Activities | (21,239) | (8,554) | | Net Cash Used in Financing Activities | (37,369) | (34,069) | | Net Decrease in Cash and Cash Equivalents | (1,858) | (4,102) | | Cash and Cash Equivalents at Year-End | 26,414 | 28,200 | Notes to the Consolidated Financial Statements These notes provide detailed explanations and disclosures for the consolidated financial statements, including accounting policies and financial instrument details - The financial statements are prepared on a going concern basis, but Note 2 explicitly states a material uncertainty regarding going concern due to the Group's RMB 125.3 million net current liabilities as of 2019 year-end and continuous share trading suspension, with its validity dependent on controlling shareholder financial support[379] - Note 33 discloses that the Group breached certain financial covenants for secured bank loans with an outstanding balance of RMB 19.0 million, and the Group is currently negotiating renewal with the banks[646] - Note 38 discloses that the Group completed the disposal of its entire equity interest in Hubei Sijia, an indirect wholly-owned subsidiary, in November 2019 for a consideration of RMB 4.549 million, recognizing a gain on disposal of approximately RMB 0.587 million[669] - Note 42 discloses that the ultimate shareholders and their family members provided guarantees for the Group's bank loans totaling approximately RMB 66.0 million[680] Five Year Financial Summary This section provides a five-year overview of the Group's key financial performance and position indicators Five Year Financial Summary | Item (RMB Thousand) | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 660,482 | 536,619 | 523,799 | 472,688 | 466,531 | | Profit/(Loss) for the Year | 40,448 | 31,125 | 28,396 | 22,252 | (692,444) | | Total Assets | 784,590 | 751,135 | 783,283 | 765,148 | 801,806 | | Total Liabilities | 466,383 | 477,169 | 540,518 | 550,704 | 607,090 | | Total Equity | 318,207 | 273,966 | 242,765 | 214,444 | 194,716 |