QCMC(SH:600229)2018-04-19 16:00Company Profile and Key Financial Indicators This section provides the company's profile and key financial indicators, highlighting a 11.03% increase in operating revenue and a 21.05% rise in net profit attributable to shareholders in 2017, alongside a 41.35% decrease in operating cash flow | Key Accounting Data | 2017 | 2016 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | CNY 1.969 billion | CNY 1.774 billion | 11.03% | | Net Profit Attributable to Shareholders | CNY 329 million | CNY 272 million | 21.05% | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) | CNY 280 million | CNY 254 million | 10.05% | | Net Cash Flow from Operating Activities | CNY 211 million | CNY 360 million | -41.35% | | Period-end Data | 2017 Year-end | 2016 Year-end | Period-end YoY Change (%) | | Net Assets Attributable to Shareholders | CNY 2.317 billion | CNY 2.116 billion | 9.50% | | Total Assets | CNY 3.529 billion | CNY 2.892 billion | 22.03% | | Key Financial Indicators | 2017 | 2016 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (CNY/share) | 0.4691 | 0.3875 | 21.06% | | Weighted Average Return on Net Assets (%) | 14.83% | 13.54% | Increased by 1.29 percentage points | | Weighted Average Return on Net Assets (Excluding Non-recurring Items) (%) | 12.59% | 12.64% | Decreased by 0.05 percentage points | | Quarter | Operating Revenue (billion CNY) | Net Profit Attributable to Shareholders (billion CNY) | Net Cash Flow from Operating Activities (billion CNY) | | :--- | :--- | :--- | :--- | | Q1 | 0.457 | 0.065 | -0.083 | | Q2 | 0.473 | 0.074 | 0.146 | | Q3 | 0.427 | 0.043 | -0.110 | | Q4 | 0.613 | 0.147 | 0.258 | - In 2017, the company's total non-recurring gains and losses amounted to CNY 49.7947 million, primarily from government subsidies (CNY 26.9945 million) and disposal gains/losses of non-current assets (CNY 14.8066 million)2627 Company Business Overview The company's core business involves publishing and distribution of books and periodicals, while actively expanding into new media, film, television, and cultural complex operations, benefiting from a growing national book retail market - The company's core business comprises four segments: - Publishing Business: Editing and publishing of general books, teaching materials, periodicals, and electronic audio-visual products - Distribution Business: Book wholesale and retail, cultural complex operations - New Media Business: Digital content, audiobooks, VR content, online education - Film and Television Business: Investment and production of TV series, films, and documentaries31 - In 2017, the national book retail market exceeded CNY 80 billion, growing by 14.55% year-on-year, with online channels increasing by 25.82% and physical bookstores achieving their first positive growth of 2.33% after years of decline3435 - The company's core competencies include: - Stable Core Business: Book publishing revenue and profit maintained double-digit growth for three consecutive years - Rich Copyright Assets: Possessing first-tier author resources like Feng Qiyong and Feng Jicai, and building high-end IP assets such as the "Humanities and Arts Image Database" - Urban Cultural Consumption Service System: Developing "culture + commerce" models like "Qingdao City Media Plaza" and exporting light-asset chain bookstore models like "BCMIX" nationwide - Internationalization Strategy: Actively promoting copyright exports and initiating projects like the "Analects of Confucius" translation project in "Belt and Road" countries3839404243 Management Discussion and Analysis In 2017, the company achieved strong operating performance, with operating revenue reaching CNY 1.969 billion (up 11.03%) and net profit attributable to shareholders reaching CNY 329 million (up 21.05%), successfully fulfilling its three-year listing performance commitment | Financial Indicators | 2017 | YoY Growth | | :--- | :--- | :--- | | Operating Revenue | CNY 1.969 billion | 11.03% | | Total Profit | CNY 335 million | 18.89% | | Net Profit | CNY 332 million | 19.05% | | Net Profit Attributable to Parent Company Shareholders | CNY 329 million | 21.05% | - The company successfully fulfilled its three-year listing performance commitment, with non-recurring adjusted net profit attributable to shareholders reaching CNY 297 million in 2017, exceeding the promised CNY 246 million, achieving a completion rate of 120.48%48120134 - The company achieved significant results in transformation and upgrading: - New Media: The first "VR Ocean Classroom" was launched, and audio products from Jiangsheng Company accumulated over 10 million plays - Technology Integration: Utilized VR and 3D printing technology to replicate Yungang Grottoes Cave 3 in 1:1 scale, revitalizing cultural heritage - Urban Cultural Consumption Service System: The "Qingdao City Media Plaza" project, funded by raised capital, commenced operations, and the company partnered with JD.com to establish over 10 "composite cultural consumption spaces" nationwide, exporting its operating model56575960 | Business Segment | Operating Revenue (billion CNY) | YoY Growth | Operating Cost (billion CNY) | Gross Margin | Gross Margin Change | | :--- | :--- | :--- | :--- | :--- | :--- | | By Industry | | | | | | | Publishing | 0.840 | 13.62% | 0.449 | 46.55% | Increased by 1.29 percentage points | | Distribution | 1.615 | 9.83% | 1.285 | 20.41% | Decreased by 0.79 percentage points | | By Product | | | | | | | Teaching Materials, Supplementary Books | 0.559 | 6.26% | 0.295 | 47.28% | Increased by 3.08 percentage points | | General Books | 1.493 | 11.81% | 1.076 | 27.91% | Decreased by 0.65 percentage points | - The company faces key risks including changes in fiscal and tax preferential policies, impact of new depreciation on profitability, raw material price fluctuations, intensified market competition, and management risks from rapid business expansion106107108109110 Significant Matters This section details the company's profit distribution plan, commitment fulfillment, accounting policy changes, and other significant matters, including a proposed CNY 1.50 (tax inclusive) cash dividend per 10 shares and core management's participation in equity investment funds | Dividend Year | Cash Dividend Per 10 Shares (CNY) (tax inclusive) | Total Cash Dividend (CNY) | Ratio to Net Profit Attributable to Shareholders (%) | | :--- | :--- | :--- | :--- | | 2017 (Proposed) | 1.50 | 105,314,401.50 | 31.97% | | 2016 | 1.20 | 84,251,521.20 | 30.96% | | 2015 | 1.00 | 70,209,601.00 | 30.09% | - The company's core management team increased their shareholding by 2.6687 million shares (representing 0.38% of total share capital) through a trust plan in the secondary market, with an investment of CNY 24.3958 million, committing not to reduce holdings within 12 months140 - The company, as a limited partner, subscribed to two equity investment funds with an investment of CNY 70 million to invest in projects within the film, television, education, and other cultural industries141142 Changes in Shares and Shareholder Information The company's total share capital remained unchanged at 702,096,010 shares in 2017, with 43,035 shareholders at year-end, and Qingdao Publishing Group Co., Ltd. holding 53.30% as the controlling shareholder - During the reporting period, the company's total ordinary share capital and share structure remained unchanged, with a total share capital of 702,096,010 shares147 | Shareholder Name | Shares Held at Period-end (shares) | Percentage (%) | Shareholder Nature | | :--- | :--- | :--- | :--- | | Qingdao Publishing Group Co., Ltd. | 374,191,691 | 53.30 | State-owned Legal Person | | Qingdao Publishing Property Co., Ltd. | 35,034,590 | 4.99 | State-owned Legal Person | | Shandong Luxin Cultural Industry Venture Capital Co., Ltd. | 9,558,988 | 1.36 | State-owned Legal Person | | Qin Shurong | 8,100,000 | 1.15 | Unknown | | Qingdao Industrial Development Investment Co., Ltd. | 7,688,605 | 1.10 | State-owned Legal Person | - The company's controlling shareholder is Qingdao Publishing Group Co., Ltd., and the ultimate controlling party is Qingdao Municipal Finance Bureau154156 Directors, Supervisors, Senior Management, and Employees This section details the appointments, shareholdings, and remuneration of the company's directors, supervisors, and senior management, totaling CNY 4.8895 million, along with employee composition and compensation policies, noting 1,674 employees with over half holding bachelor's degrees or higher - During the reporting period, the total pre-tax remuneration received by the company's directors, supervisors, and senior management amounted to CNY 4.8895 million162 | Category | Number of People | Proportion | | :--- | :--- | :--- | | Professional Composition | | | | Management Staff | 81 | 4.84% | | Administrative and Logistics Staff | 383 | 22.88% | | Business Staff | 1210 | 72.28% | | Total | 1674 | 100% | | Educational Background | | | | Master's Degree and Above | 135 | 8.06% | | Bachelor's Degree | 734 | 43.85% | | Junior College and Below | 805 | 48.09% | | Total | 1674 | 100% | Corporate Governance During the reporting period, the company strictly adhered to relevant laws and regulations, continuously improving its corporate governance structure and internal control system, maintaining independence in assets, personnel, finance, business, and organization - The company operates strictly in accordance with the "Company Law", "Securities Law", and other regulations, with a sound corporate governance structure that has no significant discrepancies with CSRC regulations179183 - The 18th meeting of the company's Eighth Board of Directors approved the amendment to the "Articles of Association", clarifying the leading role of the Party organization within the company's corporate governance structure179 - The company maintains independence in assets, personnel, finance, business, and organization, with no reliance on the controlling shareholder for business operations180181 Financial Report This section presents the 2017 audited financial statements, which received a standard unqualified opinion, highlighting revenue recognition and allowance for doubtful accounts as key audit matters, with total assets reaching CNY 3.529 billion (up 22.03%) and equity attributable to parent company at CNY 2.317 billion (up 9.50%) - Shandong Hexin Certified Public Accountants (Special General Partnership) issued a standard unqualified audit opinion on the company's 2017 annual financial statements4193194 - Key audit matters in the audit report include: 1. Revenue Recognition: Due to revenue being a key performance indicator, there is an inherent risk of management manipulating the timing of revenue recognition 2. Allowance for Doubtful Accounts: The high carrying value of accounts receivable (period-end balance of CNY 308 million) significantly impacts the recoverability and financial statements196199 | Key Items from Consolidated Balance Sheet | December 31, 2017 (CNY) | December 31, 2016 (CNY) | Change Rate | | :--- | :--- | :--- | :--- | | Total Assets | 3,528,992,841.92 | 2,891,839,053.42 | 22.03% | | Total Liabilities | 1,208,267,192.25 | 732,505,814.60 | 64.95% | | Total Equity Attributable to Parent Company Owners | 2,317,385,785.61 | 2,116,329,046.78 | 9.50% | | Key Items from Consolidated Income Statement | 2017 (CNY) | 2016 (CNY) | Change Rate | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 1,969,485,005.95 | 1,773,881,912.39 | 11.03% | | Operating Profit | 319,760,035.72 | 241,700,646.55 | 32.30% | | Total Profit | 335,185,455.42 | 281,917,332.91 | 18.89% | | Net Profit | 332,404,407.21 | 279,191,168.30 | 19.06% | | Net Profit Attributable to Parent Company Shareholders | 329,363,796.48 | 272,091,277.84 | 21.05% |