中国三江化工(02198) - 2019 - 年度财报

Chairman's Report The Chairman's Report reviews the Group's 2019 performance, highlighting improved full-year results despite H1 commodity price volatility, success of vertical integration, and initial COVID-19 impact - In H1 2019, due to average selling prices of ethylene glycol and ethylene oxide falling by approximately 36% and 26% respectively, the Group's revenue decreased by approximately 11.6%, gross profit margin dropped from 11.8% to 4.9%, and profit attributable to shareholders significantly declined by approximately 86.8% to RMB 32.3 million[10] - The Group's diversified vertical integration strategy proved successful by utilizing both crude oil derivatives (ethylene, propylene) and natural gas/coal derivatives (methanol) as raw materials, effectively diversifying market risks[11] Key Financial Indicators for FY2019 (Year-on-Year Change) | Indicator | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Revenue | Decreased by approx. 4.1% | - | - | | Overall Gross Profit Margin | Increased by approx. 0.9% | - | - | | Profit Attributable to Shareholders | Approx. RMB 550.5 million | - | Increased by approx. 38.0% | | Basic Earnings Per Share | Approx. RMB 46.57 cents | - | Increased by approx. 19.7% | | Final Dividend | HK 20.0 cents per share | - | - | | Payout Ratio | Approx. 48.9% | - | - | - Polypropylene sales revenue and sales volume increased by approximately 46.6% and 44.8% respectively in 2019 compared to 2018, partially offsetting the impact of declining average selling prices for ethylene oxide and ethylene glycol and reduced ethylene glycol production[16] - The COVID-19 pandemic had some impact on the Group's business operations, particularly concerning logistics arrangements and delivery of customers' finished products, but the Group believes the impact is temporary and has implemented short-term measures for cost savings and maintaining high liquidity[17] Management Discussion and Analysis This section details the Group's 2019 financial year performance across business segments, including revenue, sales volume, average selling price, and gross profit margin, analyzing changes in key products and covering overall gross profit margin drivers, administrative expenses, liquidity, capital commitments, contingent liabilities, and employee information Business and Financial Review This section provides detailed 2019 financial year data on revenue, sales volume, average selling price, and gross profit margin by business segment, showing a 4.1% year-on-year decrease in total revenue, strong polypropylene performance, and significant impact on ethylene oxide and ethylene glycol due to price declines FY2019 Revenue, Sales Volume, Average Selling Price, and Gross Profit Margin by Business Segment | Business | 2019 Revenue (RMB thousand) | 2018 Revenue (RMB thousand) | Revenue Change (+/-) | 2019 Sales Volume (tonnes) | 2018 Sales Volume (tonnes) | Sales Volume Change (+/-) | 2019 Average Selling Price (RMB) | 2018 Average Selling Price (RMB) | Average Selling Price Change (+/-) | 2019 Gross Profit Margin (%) | 2018 Gross Profit Margin (%) | Gross Profit Margin Change (+/-) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Ethylene Oxide | 2,441,936 | 2,821,678 | -13.5% | 363,479 | 318,756 | 14.0% | 6,718 | 8,852 | -24.1% | 14.5% | 16.9% | -2.4% | | Ethylene Glycol | 1,080,070 | 2,385,058 | -54.7% | 257,393 | 379,700 | -32.2% | 4,196 | 6,281 | -33.2% | 2.9% | 17.5% | -14.6% | | Polypropylene | 3,670,890 | 2,504,017 | 46.6% | 512,985 | 354,291 | 44.8% | 7,156 | 7,068 | 1.2% | 10.5% | -5.9% | 16.4% | | Surfactants | 859,073 | 756,842 | 13.5% | 108,816 | 173,090 | -37.1% | 7,895 | 4,373 | 80.5% | 19.3% | 13.5% | 5.8% | | MTBE/C4 | 470,839 | 410,961 | 14.6% | 99,154 | 79,283 | 25.1% | 4,749 | 5,183 | -8.4% | 2.5% | 8.4% | -5.9% | | C5 | 340,328 | 276,167 | 23.2% | 89,631 | 59,366 | 51.0% | 3,797 | 4,652 | -18.4% | -2.4% | -1.8% | -0.6% | | Polypropylene Processing Services | 54,455 | 46,760 | 16.5% | 100,152 | 86,290 | 16.1% | 544 | 542 | 0.4% | 66.8% | 50.8% | 16.0% | | Surfactant Processing Services | 34,380 | 34,437 | -0.2% | 118,929 | 105,582 | 12.6% | 291 | 326 | -10.7% | 65.1% | 69.1% | -4.0% | | Others | 238,922 | 349,939 | -31.7% | - | - | - | - | - | - | - | - | - | | Total | 9,190,893 | 9,585,859 | -4.1% | - | - | - | - | - | - | - | - | - | Ethylene Oxide Sales In 2019, ethylene oxide business revenue decreased by approximately 13.5% year-on-year, primarily due to a 24.1% drop in average selling price, despite a 14.0% increase in sales volume driven by production facility adjustments - The average selling price of ethylene oxide fell by approximately 24.1% due to major commodity price fluctuations in H1 2019[27] - The Group adjusted its Phase V ethylene oxide/ethylene glycol production facility to maximize ethylene oxide output, leading to a sales volume increase of approximately 14.0%[27] Ethylene Glycol Sales In 2019, ethylene glycol business revenue significantly decreased by approximately 54.7% year-on-year, mainly because the Group reduced ethylene glycol production capacity at its Phase V ethylene oxide/ethylene glycol facility, resulting in a 32.2% decrease in sales volume - Ethylene glycol sales volume decreased by approximately 32.2% compared to 2018, primarily due to the Group reducing ethylene glycol production capacity at its Phase V ethylene oxide/ethylene glycol facility[28] Polypropylene Sales In 2019, polypropylene business revenue increased by approximately 46.6% year-on-year, mainly driven by the full-year operation of the Phase II polypropylene production facility after its capacity upgrade in July 2018, leading to a 44.8% increase in sales volume - Polypropylene business revenue increased by approximately 46.6%, primarily attributable to the full-year operation of the Phase II polypropylene production facility in 2019, following its capacity upgrade in July 2018, which added 300,000 tonnes of annual production capacity[29] - Polypropylene sales volume increased by approximately 44.8% compared to 2018[29] Gross Profit Margin In 2019, the Group's overall gross profit margin increased by approximately 0.9%, primarily due to a more than 26% decrease in methanol prices, from approximately RMB 3,180 per tonne to approximately RMB 2,330 per tonne - The overall gross profit margin increased by approximately 0.9%, mainly due to methanol prices falling by over 26% from approximately RMB 3,180 per tonne in 2018 to approximately RMB 2,330 per tonne in 2019[30] Administrative Expenses Administrative expenses primarily comprise staff-related costs, local taxes and education surcharges, depreciation, amortization of land use rights, operating lease rental expenses, audit fees, and miscellaneous expenses - Administrative expenses primarily include staff-related costs, various local taxes and education surcharges, depreciation, amortization of land use rights, operating lease rental expenses, audit fees, and miscellaneous expenses[31] Liquidity and Financial Resources As of December 31, 2019, the Group's cash and bank balances increased to approximately RMB 591.7 million, interest-bearing bank borrowings rose to approximately RMB 4,095.7 million, and the gearing ratio increased to 39.5%, while inventory turnover days remained stable, trade and bills receivables turnover days slightly increased, and trade and bills payables turnover days slightly decreased Liquidity and Financial Resources Overview | Indicator | December 31, 2019 (RMB million) | December 31, 2018 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 591.7 | 453.6 | Increase | | Interest-Bearing Bank Borrowings | 4,095.7 | 3,059.7 | Increase | | Gearing Ratio | 39.5% | 32.6% | Increase | | Inventory Turnover Days | 45.7 days | 46.2 days | Stable | | Trade and Bills Receivables Turnover Days | 21.6 days | 16.6 days | Increase | | Trade and Bills Payables Turnover Days | 56.1 days | 62.4 days | Decrease | Capital Commitments As of December 31, 2019, the Group's capital commitments were approximately RMB 702.5 million, a significant increase from RMB 250.0 million in 2018, primarily for the acquisition of plant and machinery to construct additional production capacity Capital Commitments | Indicator | December 31, 2019 (RMB million) | December 31, 2018 (RMB million) | | :--- | :--- | :--- | | Capital Commitments | 702.5 | 250.0 | - Capital commitments are primarily related to the acquisition of plant and machinery for the construction of additional production capacity[36] Contingent Liabilities As of December 31, 2019, the Group had no bank guarantees for financing granted to related parties, compared to approximately RMB 1,022.7 million in 2018, of which approximately RMB 915.7 million had been utilized Contingent Liabilities (Bank Guarantees for Financing Granted to Related Parties) | Indicator | December 31, 2019 (RMB thousand) | December 31, 2018 (RMB thousand) | | :--- | :--- | :--- | | Bank Guarantees | — | 1,022,702 | | Utilized Amount | — | 915,660 | Employees and Remuneration Policy As of December 31, 2019, the Group employed 1,012 full-time employees, a decrease from 2018, with total employee remuneration of approximately RMB 164.6 million, a year-on-year increase of approximately 22.0%, and the Group provides various benefits with remuneration packages regularly reviewed by the Remuneration Committee Employees and Remuneration Overview | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Total Number of Employees | 1,012 | 1,086 | | Total Employee Remuneration | Approx. RMB 164,551,000 | Approx. RMB 134,911,000 | | Remuneration Growth | Approx. 22.0% | - | - Employee benefits include housing subsidies, shift allowances, bonuses, allowances, medical examinations, staff dormitories, social insurance contributions, and housing fund contributions[38] Directors and Senior Management This section introduces the biographies of China Sanjiang Fine Chemicals Company Limited's Board of Directors (including executive and independent non-executive directors) and senior management, covering their extensive experience in the chemical industry, primary responsibilities, and relationships with each other - Executive Directors include Mr. Guan Jianzhong (Chairman, responsible for overall management and strategy), Ms. Han Jianhong (responsible for business planning, structure, and investor relations), Mr. Han Jianping (responsible for sales), and Mr. Rao Huatao (responsible for project management)[41][43][44][45] - Independent Non-Executive Directors include Mr. Shen Kaijun (Chairman of the Audit Committee), Ms. Pei Yu, and Mr. Kong Liang, who possess extensive experience in accounting, law, and higher education in business administration[46][48][49] - Senior management includes Ms. Chen Xian (Company Secretary and Chief Accountant, responsible for financial management) and Mr. Ding Rongguo (Production Director, responsible for production management, safety assurance, and environmental protection)[50][51] Environmental, Social and Governance Report This report details China Sanjiang Fine Chemicals Company Limited's Environmental, Social, and Governance (ESG) policies, strategies, priorities, and objectives, covering emissions management, resource utilization, employment practices, health and safety, training and development, supply chain management, product responsibility, anti-corruption, and community investment, emphasizing the Group's commitment to sustainable development About This Report This report, prepared in accordance with the HKEX ESG Reporting Guide, details the Group's ESG practices in its core businesses in China (ethylene oxide, ethylene glycol, polypropylene, and surfactant production and processing services), affirming its commitment to integrating sustainable development into business operations - This report covers the Group's core businesses in China, namely the production and supply of ethylene oxide, ethylene glycol, polypropylene, and surfactants, as well as the provision of processing services[55] - The report is prepared with reference to the ESG Reporting Guide, adhering to the principles of materiality, quantification, balance, and consistency[56] Stakeholder Engagement and Materiality Assessment The Group maintains close communication with stakeholders including shareholders, customers, suppliers, employees, government, and media through various channels, and conducted a materiality assessment to identify ESG issues with the greatest impact on business operations, such as employee development, remuneration and benefits, greenhouse gas emissions, occupational health and safety, and product safety - The Group maintains close communication with stakeholders including shareholders, customers, suppliers, employees, government and regulatory bodies, industry associations, and media, collecting feedback through company visits, meetings, feedback mechanisms, and training[58][59] - The materiality assessment identified high-importance issues including employee development and training, employee remuneration and benefits, anti-bribery, greenhouse gas emissions, occupational health and safety, product health and safety, fraud and money laundering, and anti-corruption mechanisms[68] Environmental Aspects The Group actively monitors emission reduction efforts, sets targets for gas emissions, wastewater discharge, and industrial water consumption, and implements waste management and energy-saving measures; in 2019, wastewater discharge, COD, ammonia nitrogen emissions, and non-hazardous waste significantly decreased, while greenhouse gas emissions and hazardous waste increased - The Group has formulated policies to actively monitor emission reduction efforts and set reduction targets, aiming for all gas emissions, wastewater discharge, and industrial water consumption (in tonnes) per RMB 1 million of revenue not to increase by more than 5% compared to the previous year[71] - The Group implemented measures such as reusing some heat/gas generated during production, encouraging double-sided printing, and paper recycling to reduce its carbon footprint and environmental impact[71][72][83] FY2019 Environmental Key Performance Indicators | Key Performance Indicator | 2019 (tonnes) | 2018 (tonnes) | Change | | :--- | :--- | :--- | :--- | | Wastewater Discharge | 385,463 | 517,547 | -25.5% | | Industrial Water Consumption | 7,280,900 | 7,521,960 | -3.2% | | COD in Wastewater Discharge | 34 | 62 | -45.2% | | Nitrogen Oxides Emissions | 73 | 56 | +30.4% | | Ammonia Nitrogen Emissions | 7 | 13 | -46.2% | | Particulate Matter Emissions | 5 | 4 | +25.0% | | Greenhouse Gas — Scope 1 Emissions | 1,085,605 | 1,041,843 | +4.2% | | Greenhouse Gas — Scope 1 Emissions Intensity (tonnes/RMB 1 million revenue) | 118 | 109 | +8.3% | | Greenhouse Gas — Scope 2 Emissions | 650,482 | 610,641 | +6.5% | | Greenhouse Gas — Scope 2 Emissions Intensity (tonnes/RMB 1 million revenue) | 71 | 64 | +10.9% | | Hazardous Waste | 757 | 187 | +304.8% | | Hazardous Waste Intensity (tonnes/RMB 1 million revenue) | 0.08 | 0.02 | +300.0% | | Non-Hazardous Waste | 2,574 | 5,480 | -53.0% | | Non-Hazardous Waste Intensity (tonnes/RMB 1 million revenue) | 0.28 | 0.57 | -50.9% | | Environmental Investment (RMB million) | 42.2 | 28.9 | +46.0% | FY2019 Resource Utilization Key Performance Indicators | Key Performance Indicator | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Electricity Consumption (kWh) | 794,878,941 | 785,405,147 | +1.2% | | Electricity Consumption Intensity (kWh/RMB 1 million revenue) | 86,484 | 81,933 | +5.6% | | Water Consumption (cubic meters) | 7,621,437 | 7,767,179 | -1.9% | | Water Consumption Intensity (cubic meters/RMB 1 million revenue) | 829 | 810 | +2.3% | | Steam Consumption (tonnes) | 2,922,646 | 1,860,462 | +57.1% | | Steam Consumption Intensity (tonnes/RMB 1 million revenue) | 318 | 194 | +63.9% | - The Group is committed to fine-tuning pipeline structures, utilizing waste heat to generate low-pressure steam, and optimizing production efficiency to save energy and reduce emissions[84] Social Aspects The Group has established policies for employment, health and safety, development and training, labor standards, supply chain management, product responsibility, anti-corruption, and community investment; in 2019, total employees were 1,012 with a turnover rate of 15.1%, emphasizing safety and health, providing comprehensive training, prioritizing environmental standards in supplier selection, implementing strict customer and supplier vetting, reporting no product recalls or corruption lawsuits, and actively engaging in community investment FY2019 Employment Key Performance Indicators | Key Performance Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Total Number of Employees | 1,012 | 1,086 | | Total Male Employees | 862 | 928 | | Total Female Employees | 150 | 158 | | Employee Turnover Rate | 15.1% | 13.8% | | Male Employee Turnover Rate | 15.8% | 13.6% | | Female Employee Turnover Rate | 11.3% | 15.2% | | Employee Turnover Rate (Age 18–35) | 20.0% | 16.4% | | Employee Turnover Rate (Age 36–55) | 6.7% | 8.4% | | Employee Turnover Rate (Age 55+) | 9.5% | 12.5% | - The Group prioritizes a safe working environment and safe production, launching the "Safety and Health Cup" campaign and an annual health check program[90] FY2019 Development and Training Key Performance Indicators | Key Performance Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Total Employees Trained | 1,012 | 1,086 | | Total Male Employees Trained | 862 | 928 | | Total Female Employees Trained | 150 | 158 | | Average Training Hours for Male Employees | 96 hours | 96 hours | | Average Training Hours for Female Employees | 96 hours | 96 hours | | Average Training Hours for Senior Management | 160 hours | 160 hours | | Average Training Hours for Middle Management | 160 hours | 160 hours | | Average Training Hours for Other Employees | 96 hours | 96 hours | - The Group implements strict recruitment processes to prevent child labor and forced labor, ensuring compliance with relevant laws and regulations[95] - Environmental protection is the most important criterion in supplier selection, and suppliers are vetted and registered through an Enterprise Resource Planning (ERP) system[96] - The Group's main products are crude oil derivatives, standardized, and intermediate products, focusing on long-term recurring customers and implementing a customer ERP system for vetting and registration[101] FY2019 Product Responsibility Key Performance Indicators | Key Performance Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Percentage of total products sold or shipped recalled due to safety and health reasons | 0% | 0% | | Number of complaints received regarding products and services | — | — | - The Group implements a code of conduct prohibiting bribery, extortion, fraud, and money laundering, and provides regular anti-corruption training[105] - The Group actively participates in community investment, providing financial assistance for a direct bus route between Zhapu and Shanghai, and maintaining communication with local educational institutions and labor unions to address employment needs[105] Corporate Governance Report The Corporate Governance Report outlines China Sanjiang Fine Chemicals Company Limited's corporate governance framework, including the Board's composition, responsibilities, meeting frequency, and the operations of the Audit, Remuneration, and Nomination Committees, confirming compliance with the HKEX Corporate Governance Code and disclosing policies on directors' securities transactions, financial reporting, internal controls, independent auditor, non-competition undertakings, and communication with shareholders - The Company has complied with all code provisions of the HKEX Corporate Governance Code throughout the 2019 financial year[108] - The Board comprises four executive directors and three independent non-executive directors, with Mr. Guan Jianzhong (Chairman and Executive Director) and Ms. Han Jianhong (Executive Director) being spouses, and Mr. Han Jianping being Ms. Han Jianhong's elder brother[110] - The Board holds regular meetings (at least four times annually) and has established an Audit Committee, Remuneration Committee, and Nomination Committee to assist in fulfilling its responsibilities[112][113] - The Audit Committee is responsible for reviewing and overseeing financial reporting procedures and internal control systems, the Remuneration Committee evaluates directors' and senior management's remuneration, and the Nomination Committee handles Board member recommendations and diversity policy[115][118][119] - The Board confirmed that the Group's internal control system was effective and adequate during the review year, with no significant control issues[125] - The Company is committed to maintaining continuous communication with shareholders, providing information through annual general meetings and the company website[131][132] Directors' Report The Directors' Report provides a comprehensive overview of the Group's 2019 financial year, including principal activities, financial results, dividend policy, share capital changes, Board composition and remuneration, major shareholders, customer and supplier information, share option scheme, and detailed disclosures of various continuing connected transactions, also confirming compliance with Listing Rules requirements such as public float and independence of independent non-executive directors - The Group's principal activities are the production and supply of ethylene oxide, ethylene glycol, polypropylene, and surfactants, as well as the provision of processing services[136] - The Board recommends a final dividend of HK 20.0 cents per share for the year, which, together with the interim dividend of HK 5.0 cents per share, results in a total payout ratio of approximately 48.9%[139] - As of December 31, 2019, the Company's issued share capital was 1,190,000,000 shares, amounting to RMB 102,662,000[159][593] Directors' and Chief Executive's Interests in Company Shares (December 31, 2019) | Director Name | Personal Interests (Number of Shares) | Trust/Corporate Interests (Number of Shares) | Total (Number of Shares) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Guan Jianzhong | 16,632,000 | 506,451,000 | 523,083,000 | 43.96% | | Han Jianhong | 16,632,000 | 506,451,000 | 523,083,000 | 43.96% | Major Shareholders' Interests in Company Shares (December 31, 2019) | Shareholder Name | Capacity | Number of Shares | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Vistra Trust (Singapore) Pte. Ltd | Trustee | 506,451,000 | 42.56% | | Yihao Development Limited | Interest in controlled corporation | 506,451,000 | 42.56% | | Sure Capital | Interest in controlled corporation | 506,451,000 | 42.56% | FY2019 Major Customers and Suppliers Breakdown | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Largest customer as % of Group's total sales | 6.97% | 8.77% | | Top five customers as % of Group's total sales | 23.77% | 25.69% | | Largest supplier as % of Group's total purchases | 18.05% | 10.56% | | Top five suppliers as % of Group's total purchases | 46.33% | 37.12% | - The Company has a share option scheme designed to incentivize eligible participants who contribute to the Group, with a total of 119,000,000 shares available for issue as of December 31, 2019, representing approximately 10.00% of the issued share capital[170][174] - The report details 23 continuing connected transactions, including material supply, steam purchases, port services, loan agreements, and energy management agreements, confirming their compliance with Listing Rules requirements[179][210][213] Independent Auditor's Report The Independent Auditor's Report expresses an unmodified opinion on the consolidated financial statements of China Sanjiang Fine Chemicals Company Limited and its subsidiaries for the year ended December 31, 2019, deeming them to present a true and fair view of the Group's financial position, performance, and cash flows, while highlighting impairment of long-term assets as a key audit matter and outlining the respective responsibilities of directors and auditors - The auditor issued an unmodified opinion on the consolidated financial statements, considering them to present a true and fair view of the Group's financial position and its consolidated financial performance and cash flows for the year ended on that date, in accordance with Hong Kong Financial Reporting Standards[227] - A key audit matter was the impairment of long-term assets, due to the carrying amount of the Group's net assets exceeding the company's market capitalization, and the estimation process being complex and subjective, involving assumptions such as sales expectations, product prices, raw material prices, gross profit margins, growth rates, and market economic conditions[232] - In addressing long-term asset impairment, the auditor evaluated management's impairment assessment and cash-generating unit definition, reviewed and tested future projected cash flows and key assumptions, performed sensitivity analysis, and engaged valuation experts to assist in assessing key valuation parameters[233] Financial Statements This section contains the consolidated financial statements of China Sanjiang Fine Chemicals Company Limited for the year ended December 31, 2019, including the statement of profit or loss, statement of comprehensive income, statement of financial position, statement of changes in equity, and statement of cash flows, along with detailed notes to the financial statements, providing comprehensive information on the Group's financial performance, asset and liability position, cash flows, accounting policies, and significant estimates during the reporting period Consolidated Statement of Profit or Loss For the 2019 financial year, the Group's revenue was RMB 9,190,893 thousand, a 4.1% year-on-year decrease, while gross profit was RMB 1,038,888 thousand, a 4.3% year-on-year increase, and profit for the year significantly increased by 91.7% to RMB 577,497 thousand, with profit attributable to owners of the parent being RMB 550,474 thousand, and basic earnings per share at RMB 46.57 cents FY2019 Consolidated Statement of Profit or Loss Key Data | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue | 9,190,893 | 9,585,859 | -4.1% | | Cost of Sales | (8,152,005) | (8,589,735) | -5.1% | | Gross Profit | 1,038,888 | 996,124 | +4.3% | | Other Income and Gains | 207,455 | 865,867 | -76.0% | | Selling and Distribution Expenses | (34,631) | (25,515) | +35.7% | | Administrative Expenses | (275,991) | (326,948) | -15.6% | | Impairment Losses on Financial Assets | (5,257) | (5,966) | -11.9% | | Net Other Expenses | (68,623) | (945,144) | -92.7% | | Finance Costs | (203,248) | (167,773) | +21.1% | | Profit Before Tax | 658,593 | 389,775 | +69.0% | | Income Tax Expense | (81,096) | (88,583) | -8.4% | | Profit for the Year | 577,497 | 301,192 | +91.7% | | Attributable to Owners of the Parent | 550,474 | 398,915 | +38.0% | | Attributable to Non-Controlling Interests | 27,023 | (97,723) | Turned from loss to profit | | Basic Earnings Per Share | RMB 46.57 cents | RMB 38.89 cents | +19.7% | Consolidated Statement of Comprehensive Income For the 2019 financial year, the Group's profit for the year was RMB 577,497 thousand, with other comprehensive income primarily from fair value changes of equity investments designated at fair value through other comprehensive income, resulting in a gain of RMB 1,063 thousand, and total comprehensive income for the year was RMB 578,560 thousand, of which RMB 551,537 thousand was attributable to owners of the parent FY2019 Consolidated Statement of Comprehensive Income Key Data | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Profit for the Year | 577,497 | 301,192 | +91.7% | | Fair value change of equity investments designated at fair value through other comprehensive income | 1,063 | (665) | Turned from loss to profit | | Total Comprehensive Income for the Year | 578,560 | 300,527 | +92.5% | | Attributable to Owners of the Parent | 551,537 | 398,250 | +38.5% | | Attributable to Non-Controlling Interests | 27,023 | (97,723) | Turned from loss to profit | Consolidated Statement of Financial Position As of December 31, 2019, the Group's total non-current assets were RMB 5,911,924 thousand, total current assets were RMB 4,462,236 thousand, and total current liabilities were RMB 6,327,256 thousand, resulting in net current liabilities of RMB 1,865,020 thousand, with total equity of RMB 4,018,402 thousand, of which RMB 4,001,139 thousand was attributable to owners of the parent FY2019 Consolidated Statement of Financial Position Key Data | Indicator | December 31, 2019 (RMB thousand) | December 31, 2018 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Total Non-Current Assets | 5,911,924 | 5,979,722 | -1.1% | | Property, Plant and Equipment | 4,916,741 | 5,239,614 | -6.2% | | Right-of-Use Assets | 442,197 | — | New | | Total Current Assets | 4,462,236 | 3,402,408 | +31.1% | | Inventories | 878,674 | 1,164,328 | -24.6% | | Trade and Bills Receivables | 565,834 | 522,701 | +8.3% | | Financial Assets at Fair Value Through Profit or Loss | 678,105 | 339,881 | +99.5% | | Pledged Deposits | 1,320,152 | 659,000 | +100.3% | | Cash and Cash Equivalents | 591,671 | 453,556 | +30.5% | | Total Current Liabilities | 6,327,256 | 5,774,605 | +9.6% | | Trade and Bills Payables | 934,294 | 1,570,214 | -40.5% | | Interest-Bearing Bank and Other Borrowings | 4,095,668 | 3,059,725 | +33.9% | | Net Current Liabilities | (1,865,020) | (2,372,197) | Improved | | Total Equity | 4,018,402 | 3,594,375 | +11.8% | | Equity Attributable to Owners of the Parent | 4,001,139 | 3,604,135 | +11.0% | | Non-Controlling Interests | 17,263 | (9,760) | Turned from negative to positive | Consolidated Statement of Changes in Equity The Consolidated Statement of Changes in Equity shows the movements in each component of the Group's equity for the year ended December 31, 2019, including issued share capital, share premium, various reserves, and retained profits, with total equity attributable to owners of the parent increasing from RMB 3,604,135 thousand at the beginning of the year to RMB 4,001,139 thousand at year-end - Total equity attributable to owners of the parent increased from RMB 3,604,135 thousand on January 1, 2019, to RMB 4,001,139 thousand on December 31, 2019[257] - Consolidated reserves amounted to RMB 3,898,477 thousand (2018: RMB 3,501,473 thousand)[263] Consolidated Statement of Cash Flows For the 2019 financial year, the Group's net cash inflow from operating activities was RMB 1,248,837 thousand, a 36.0% year-on-year increase, while net cash outflow from investing activities significantly increased to RMB 2,227,734 thousand, mainly due to increased loans to related parties and purchases of financial assets, and net cash inflow from financing activities was RMB 1,116,305 thousand, a substantial 885.9% year-on-year increase FY2019 Consolidated Statement of Cash Flows Key Data | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Net Cash Inflow from Operating Activities | 1,248,837 | 918,243 | +36.0% | | Net Cash Outflow from Investing Activities | (2,227,734) | (853,988) | Outflow increased by 160.9% | | Net Cash Inflow from Financing Activities | 1,116,305 | 113,333 | +885.9% | | Increase in Cash and Cash Equivalents | 137,408 | 177,588 | -22.6% | | Cash and Cash Equivalents at Year-End | 591,671 | 453,556 | +30.5% | - Cash outflow from investing activities significantly increased, primarily due to increased loans to related parties (RMB 1,866,092 thousand) and purchases of financial assets at fair value through profit or loss (RMB 675,896 thousand)[268] - Cash inflow from financing activities significantly increased, mainly from new bank borrowings (RMB 8,167,694 thousand) and loans from related parties (RMB 1,799,789 thousand)[271] Notes to the Financial Statements The Notes to the Financial Statements provide detailed explanations and supplementary information for each item in the consolidated financial statements, including company and group information, basis of preparation, changes in accounting policies and disclosures, significant accounting judgments and estimates, operating segment information, revenue and other income analysis, finance costs, profit before tax breakdown, directors' remuneration, highest paid employees, income tax, earnings per share calculation, property, plant and equipment, leases, intangible assets, financial asset classification, inventories, trade and bills receivables, prepayments, cash and deposits, trade and bills payables, other payables, derivative financial instruments, interest-bearing bank borrowings, deferred tax, share capital, share award scheme, reserves, dividends, cash flow notes, contingent liabilities, pledged assets, commitments, related party transactions, financial instrument classification and fair value hierarchy, financial risk management objectives and policies, company statement of financial position, comparative data, and post-reporting period events (COVID-19 impact) - The Group is primarily engaged in the production and supply of ethylene oxide, ethylene glycol, propylene, polypropylene, methyl tertiary-butyl ether, and surfactants in China, and provides processing services[275] - The Group first adopted Hong Kong Financial Reporting Standard 16 "Leases" on January 1, 2019, leading to the recognition of right-of-use assets and lease liabilities, impacting the statement of financial position[299][311] - Significant accounting judgments and estimates include expected credit loss provisions for trade receivables, impairment of non-financial assets, net realizable value of inventories, deferred tax assets, income tax, and fair value of unlisted equity investments[453][457][458][459][460][464][465] FY2019 Total Revenue by Product and Service | Product and Service | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Polypropylene | 3,637,070 | 2,490,258 | | Ethylene Oxide | 2,441,936 | 2,821,678 | | Ethylene Glycol | 1,080,070 | 2,385,058 | | Surfactants | 859,073 | 756,842 | | Methyl Tertiary-Butyl Ether | 470,839 | 410,961 | | C4 and Unprocessed Pentene | 341,470 | 276,167 | | Liquid Nitrogen, Ethylene Glycol and Others | 228,270 | 340,551 | | Processing Services | 88,835 | 81,197 | | Propylene | 33,820 | 13,759 | | Rental Income | 9,510 | 9,388 | | Total | 9,190,893 | 9,585,859 | - As of December 31, 2019, the Group's interest-bearing bank borrowings were approximately RMB 4,095,668 thousand, with most maturing within 12 months, secured by guarantees from Lotte Chemical Corporation, the Group's pledged deposits, financial assets at fair value through profit or loss, and leasehold land[577] - The Group faces interest rate risk, foreign currency risk, credit risk, and liquidity risk, managed through Board review and agreed policies, including monitoring receivable balances and transacting with reputable third parties[664][678] - Post-reporting period, the COVID-19 pandemic has spread in mainland China and beyond; although the Group successfully maintained normal production, the pandemic will have some impact on business operations, particularly on customers' finished product logistics arrangements and delivery, with the related impact still being assessed[703] Five-Year Financial Summary The Five-Year Financial Summary provides an overview of China Sanjiang Fine Chemicals Company Limited's key financial data from 2015 to 2019, including revenue, gross profit, net profit, assets and liabilities, cash flows, earnings per share, and major financial ratios, illustrating the Group's financial performance trends over recent years FY2015-2019 Five-Year Financial Summary | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | 2017 (RMB thousand) | 2016 (RMB thousand) | 2015 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 9,190,893 | 9,585,859 | 8,897,143 | 6,647,019 | 4,966,427 | | Gross Profit | 1,038,888 | 996,124 | 1,085,275 | 906,570 | 164,449 | | Profit/(Loss) Before Tax | 658,593 | 389,775 | 743,846 | 692,815 | (164,964) | | Net Profit/(Loss) for the Year | 577,497 | 301,192 | 623,137 | 598,851 | (227,232) | | Profit/(Loss) Attributable to Owners of the Parent | 550,474 | 398,915 | 690,793 | 552,614 | (145,502) | | Non-Current Assets | 5,911,924 | 5,979,722 | 6,216,427 | 6,916,419 | 6,711,126 | | Current Assets | 4,462,236 | 3,402,408 | 2,448,291 | 2,761,678 | 3,956,061 | | Current Liabilities | 6,327,256 | 5,774,605 | 4,536,028 | 5,845,003 | 7,048,488 | | Net Assets/Total Equity | 4,018,402 | 3,594,375 | 3,516,657 | 2,729,170 | 2,248,312 | | Cash Inflow from Operating Activities | 1,248,837 | 918,243 | 965,307 | 1,832,939 | 43,218 | | Cash (Outflow)/Inflow from Investing Activities | (2,227,734) | (853,988) | 576,777 | 293,984 | 6,837 | | Cash Inflow/(Outflow) from Financing Activities | 1,116,305 | 113,333 | (1,608,510) | (1,876,216) | (361,183) | | Basic Earnings Per Share (RMB cents) | 46.57 | 38.89 | 67.30 | 56.09 | (14.79) | | Gross Profit Margin (%) | 11.3 | 10.4 | 12.2 | 13.6 | 3.3 | | Gearing Ratio — Total Interest-Bearing Borrowings to Total Assets (%) | 39.5 | 32.6 | 27.1 | 42.9 | 50.9 | | Inventory Turnover Days | 45.7 | 46.2 | 40.5 | 38.9 | 30.0 | | Trade and Bills Receivables Turnover Days | 21.6 | 16.6 | 10.6 | 24.0 | 37.8 | | Trade and Bills Payables Turnover Days | 56.1 | 62.4 | 65.9 | 86.1 | 97.2 | Company Information This section provides key company information for China Sanjiang Fine Chemicals Company Limited, including Board members, company secretary, share listing details, auditor, legal advisors, registered office, principal place of business, principal bankers, share registrar, and company website - The Board of Directors includes Executive Directors Guan Jianzhong (Chairman), Han Jianhong, Han Jianping, Rao Huatao, and Independent Non-Executive Directors Shen Kaijun, Pei Yu, Kong Liang[709] - The Company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited, with stock code 2198[709] - The auditor is Ernst & Young, and the Hong Kong Share Registrar is Tricor Investor Services Limited[709] - The Company's website is www.chinasanjiang.com[709](index=709&type=chunk)