Financial Performance - The company recorded a net loss of RMB 2.7 million for the year ended December 31, 2019, compared to a net profit of RMB 4.6 million in 2018, reflecting the challenging macroeconomic environment [14]. - The company's revenue for the year ended December 31 was approximately RMB 738 million, a decrease of about 13.6% from RMB 854 million in the previous year, primarily due to a decline in sales to wholesale customers [26]. - The net loss for the year was approximately RMB 27 million, compared to a net profit of RMB 46 million in the previous year, mainly due to reduced income from wholesale customers and increased administrative expenses [26]. - Gross profit for the year was approximately RMB 67 million, with a gross margin of 9.1%, down from 19.8% in the previous year, mainly due to reduced income from wholesale customers [33]. - The average procurement price of natural gas increased from RMB 1.86 per cubic meter to RMB 1.93 per cubic meter, impacting the company's gross margin [32]. - The company's total distributable reserves as of December 31, 2019, were approximately RMB 450 million, a decrease from RMB 482 million as of December 31, 2018, representing a decline of about 6.6% [105]. - The company's reserves available for distribution decreased by approximately RMB 32 million year-over-year, indicating a need for strategic financial management [105]. Revenue Sources and Business Strategy - Revenue decreased due to reduced income from wholesale customers and an inability to pass on increased natural gas purchase prices, leading to a decline in gross profit and gross margin [14]. - The company plans to diversify its revenue sources and enhance shareholder value by exploring various business opportunities in response to market conditions [16]. - In December 2019, the company entered into an agreement to acquire an automatic car wash business for approximately RMB 20 million, aimed at providing additional value-added services to retail customers [17]. - The acquisition is expected to stimulate existing gas station revenues and expand the company's business scope by offering automatic car wash services at other gas stations and service stations in China [17]. - The company has identified three new business opportunities, including the acquisition of an automatic car wash business in China and property investments in Malaysia [41]. - The company plans to explore opportunities for electric charging stations in addition to CNG and LNG as cleaner alternative fuels [43]. Operational Challenges - The company suspended its gas station operations in Jingzhou, Hubei Province for nearly 2 months due to the COVID-19 outbreak, significantly impacting its operational and financial status in 2020 [15]. - The overall economic outlook for 2020 is challenging, with no significant turnaround expected, but the company believes in the long-term development of a robust economy in China [15]. - The company has begun preparations for its projects despite delays in government approvals due to the COVID-19 outbreak [66]. Management and Governance - Liu Yongcheng serves as the Executive Director, Chairman, and CEO, with approximately 13 years of experience in the natural gas industry [72]. - Liu Yongqiang, the Executive Director and Deputy General Manager, also has around 13 years of experience in the natural gas sector [73]. - Liu Chunde, the Executive Director and General Manager, has about 11 years of experience in the natural gas industry [74]. - The company emphasizes the importance of experienced leadership in the natural gas sector for its growth strategy [72][73][74]. - The management team has a diverse background, including military and legal experience, contributing to a well-rounded leadership approach [76][78]. - The company has a management team with extensive experience in finance and operations, contributing to its strategic direction [87]. Corporate Governance and Compliance - The company has adopted the corporate governance code as a benchmark for its governance practices, complying with all applicable provisions except for a specific deviation regarding the roles of the chairman and CEO [155]. - The independent non-executive directors have confirmed their independence according to the GEM listing rules, ensuring compliance with the requirement for at least three independent directors [165]. - The board is responsible for leading and monitoring the company, directly guiding management through strategy formulation and performance oversight [168]. - The company encourages continuous professional development for directors, providing training and resources to enhance their knowledge and skills [173]. - The company has established a written guideline for securities trading by employees to ensure compliance with insider trading regulations [157]. - The company has implemented appropriate checks and balances with a board composed of independent non-executive directors to ensure effective decision-making [164]. Risk Management - The board confirmed its responsibility for the effectiveness of risk management and internal control systems, which aim to manage risks rather than eliminate them [199]. - The Audit and Risk Management Committee assists the board in overseeing the management's development, implementation, and monitoring of risk management and internal control systems [200]. - The company has adopted a series of internal control policies and procedures to provide reasonable assurance for effective operations and reliable financial reporting [200]. Shareholder Information - The company’s issued share capital includes 375 million shares held by Yongsheng Industrial Limited, representing 75% of the total issued share capital [121]. - The company’s major shareholders include Liu Yongcheng and Liu Yongqiang, each holding 375 million shares, representing 75% of the issued share capital [126]. - Liu Yongqiang directly owns 100% of Hongsheng, which holds approximately 53.25% of the company's issued share capital, equating to 266,250,000 shares [128]. - The company has arranged appropriate insurance for its directors and senior officers regarding potential legal liabilities, which remains in effect [116]. Environmental and Social Responsibility - The company is committed to supporting sustainable development and has implemented compliance procedures to adhere to applicable environmental laws and regulations [95]. - The company has a strong focus on environmental, social, and governance (ESG) aspects, with a report included in the annual report [96]. - The group emphasizes the importance of relationships with employees, customers, and business partners for sustainable development [97].
TL NATURAL GAS(08536) - 2019 - 年度财报