中船科技(600072) - 2018 Q4 - 年度财报

Definitions This section provides a glossary of terms used throughout the report Company Profile and Key Financial Indicators This section outlines the company's fundamental information and presents its key financial performance metrics over recent periods Company Information This section provides basic corporate registration details, contact information, stock listing data, and disclosure channels for CSSC Science & Technology Co., Ltd | Item | Information | | :--- | :--- | | Company Chinese Name | 中船科技股份有限公司 | | Company Chinese Abbreviation | 中船科技 | | Stock Abbreviation | 中船科技 | | Stock Code | 600072 | | Stock Exchange | Shanghai Stock Exchange | | Legal Representative | Zhou Hui | Key Accounting Data and Financial Indicators In 2018, the company's operating revenue decreased by 23.44% to RMB 3.264 billion, primarily due to reduced land consolidation business and the parent company ceasing original marine equipment operations, while net profit attributable to shareholders increased by 115.09% to RMB 65.43 million, despite a significant decline in non-recurring net profit due to increased R&D and reduced investment income from associates and joint ventures Key Accounting Data for the Past Three Years (Unit: RMB) | Key Accounting Data | 2018 | 2017 | Change YoY (%) | 2016 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 3,264,373,125.15 | 4,263,628,598.18 | -23.44 | 5,304,151,934.91 | | Net Profit Attributable to Shareholders of Listed Company | 65,427,430.33 | 30,419,191.59 | 115.09 | -42,929,500.08 | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-Recurring Items) | -78,412,167.69 | 7,702,375.42 | Not Applicable | -141,964,704.34 | | Net Cash Flow from Operating Activities | -333,901,731.36 | -1,054,616,839.10 | Not Applicable | -702,114,914.05 | | Net Assets Attributable to Shareholders of Listed Company | 3,718,262,301.58 | 3,653,201,662.71 | 1.78 | 3,624,500,142.69 | | Total Assets | 10,527,625,393.33 | 10,945,048,146.16 | -3.81 | 11,177,662,074.36 | Key Financial Indicators for the Past Three Years | Key Financial Indicators | 2018 | 2017 | Change YoY (%) | 2016 | | :--- | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | 0.089 | 0.041 | 117.07 | -0.080 | | Weighted Average Return on Net Assets (%) | 1.78 | 0.84 | Increased by 0.94 percentage points | -1.52 | - The decrease in operating revenue was primarily due to a RMB 642 million reduction in land consolidation business income from subsidiary CSSC No. 9 Institute, and a RMB 461 million decrease in marine equipment business income as the parent company ceased original operations[19] Quarterly Key Financial Data The company's 2018 quarterly performance showed significant fluctuations, with losses in Q2 and Q3, but a notable profit of RMB 62.79 million in Q4, reversing previous losses, though Q4 non-recurring net profit remained negative, indicating reliance on non-operating income 2018 Quarterly Key Financial Data (Unit: RMB) | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 579,830,015.16 | 866,761,893.34 | 809,611,973.38 | 1,008,169,243.27 | | Net Profit Attributable to Shareholders of Listed Company | 11,064,352.38 | -2,878,222.57 | -5,552,182.33 | 62,793,482.85 | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-Recurring Items) | 4,429,294.55 | -4,340,782.73 | -11,557,707.84 | -66,942,971.67 | | Net Cash Flow from Operating Activities | -349,663,071.71 | -213,161,647.16 | -213,178,164.79 | 442,101,152.30 | Non-Recurring Gains and Losses Items and Amounts In 2018, the company's total non-recurring gains and losses amounted to RMB 144 million, significantly impacting current profit, primarily driven by RMB 147 million from 'disposal gains/losses on non-current assets' due to a subsidiary's 21% equity transfer of Xuzhou Yangguang Company Non-Recurring Gains and Losses Items (Unit: RMB) | Non-Recurring Gains and Losses Item | 2018 Amount | 2017 Amount | 2016 Amount | | :--- | :--- | :--- | :--- | | Disposal Gains/Losses on Non-Current Assets | 146,810,093.43 | -2,906,826.56 | 24,311,559.19 | | Government Grants Recognized in Current Profit/Loss | 14,642,070.29 | 22,389,132.59 | 17,317,674.60 | | Total | 143,839,598.02 | 22,716,816.17 | 99,035,204.26 | Business Overview This section provides a comprehensive overview of the company's principal businesses, operational models, and the industry landscape in which it operates Principal Businesses, Business Model, and Industry Overview The company's core business primarily involves engineering design, survey, general contracting, and land consolidation services by its wholly-owned subsidiary CSSC No. 9 Institute, supplemented by marine equipment business from CSSC Huahai, while transitioning to a holding platform company leveraging capital markets for industrial layout amidst a growing construction sector but a challenging, adjusting shipbuilding market - The company's core business is undertaken by its wholly-owned subsidiary CSSC No. 9 Institute, covering engineering design, survey, consulting, supervision, general contracting, and land consolidation services[25] - CSSC No. 9 Institute has established a '3+2' strategic layout: strengthening design consulting, optimizing general contracting, stabilizing investment and financing as three core businesses, and expanding into technology industrialization and smart factory digital platform construction as two new businesses[25] - The company released its 2018-2025 Development Strategic Plan, outlining a transformation into a holding platform company, driving industrial layout through capital markets, and achieving diversified development with military-civilian integration as the main theme[26] Analysis of Core Competencies The company's core competencies lie in its leading position in marine engineering design, with over 60 years of experience and planning/designing over 90% of domestic shipbuilding and repair enterprises, alongside national leadership in hydraulic and underground engineering and large non-standard equipment design, supported by comprehensive Class A and Class 1 industry qualifications and 201 valid patents - The company holds a leading position in marine engineering design, having planned and designed over 90% of domestic shipbuilding and repair enterprises[29] - It possesses a nationally leading advantage in hydraulic and underground engineering, including dock and pier design[31] - The company and its subsidiaries hold comprehensive top-tier industry qualifications, including Class A comprehensive engineering design, Class A comprehensive engineering survey, and Class 1 general contracting[31][32][33] - During the reporting period, the company held 201 valid patents (63 invention patents), demonstrating technological advantages in areas such as luxury cruise interior outfitting and non-ship equipment development[33] Management Discussion and Analysis This section provides a detailed discussion and analysis of the company's operational performance, financial condition, and future outlook Management Discussion and Analysis In 2018, the company's operating revenue reached RMB 3.264 billion, a 23.44% year-on-year decrease, primarily due to a significant decline in land consolidation services from subsidiary CSSC No. 9 Institute due to business model changes and slow project execution, yet CSSC No. 9 Institute remained the core operating entity, contributing 95.89% of revenue and actively expanding domestic and international general contracting and design consulting projects, while the parent company largely completed the cleanup of legacy projects - The company's 2018 operating revenue was RMB 3.264 billion, a 23.44% year-on-year decrease, primarily due to a significant decline in land consolidation services[34] - Wholly-owned subsidiary CSSC No. 9 Institute is the core operating entity, achieving RMB 3.13 billion in revenue in 2018, accounting for 95.89% of the company's total revenue[35] - CSSC No. 9 Institute successfully undertook several significant domestic and international projects, including the Zhanjiang Port General Terminal EPC General Contracting and Cambodian Military Port Support Base Design Consulting[35] Key Operating Performance During the Reporting Period During the reporting period, the company achieved RMB 3.264 billion in operating revenue and RMB 65.4274 million in net profit attributable to shareholders, with profit growth primarily driven by RMB 138 million in investment income from a subsidiary's equity transfer, while engineering general contracting constituted the main revenue at RMB 2.606 billion, land consolidation services significantly shrank to RMB 101 million, and R&D investment continuously increased by 28.47% Analysis of Principal Business In 2018, the company's principal business revenue decreased by 23.44% year-on-year, with operating costs down by 23.31%, primarily dragged by significant declines of 86.37% and 80.64% in land consolidation services and marine equipment revenue respectively, while engineering general contracting grew by 5.62%, and increased management and R&D expenses by 15.28% and 28.47% respectively indicated higher investment in compensation and research Key Income Statement Item Changes | Item | Current Period (RMB) | Prior Period (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 3,264,373,125.15 | 4,263,628,598.18 | -23.44 | | Operating Cost | 2,935,504,343.97 | 3,827,601,639.85 | -23.31 | | Administrative Expenses | 181,082,757.34 | 157,080,002.48 | 15.28 | | R&D Expenses | 98,409,899.30 | 76,603,076.68 | 28.47 | Principal Business by Product (Unit: RMB) | By Product | Operating Revenue | Operating Cost | Gross Margin (%) | Operating Revenue Change YoY (%) | | :--- | :--- | :--- | :--- | :--- | | Engineering Design, Survey, Consulting, and Supervision | 421,861,823.53 | 312,473,282.68 | 25.93 | -0.27 | | Engineering General Contracting | 2,606,485,238.52 | 2,401,019,211.71 | 7.88 | 5.62 | | Land Consolidation Services | 101,400,451.63 | 52,485,000.00 | 48.24 | -86.37 | | Marine Equipment | 110,634,971.32 | 149,133,165.50 | -34.80 | -80.64 | - The year-on-year decrease in land consolidation service revenue was primarily due to changes in business model and delayed demolition, while the reduction in marine equipment revenue resulted from the parent company ceasing to undertake this business since 2017 after the 2016 reorganization[41] R&D Investment In 2018, the company's R&D investment was fully expensed, totaling RMB 98.41 million, a 28.47% increase year-on-year, representing 3.01% of operating revenue, with 259 R&D personnel accounting for 14.63% of the total workforce 2018 R&D Investment Overview | Indicator | Value | | :--- | :--- | | Expensed R&D Investment (RMB) | 98,409,899.30 | | Total R&D Investment (RMB) | 98,409,899.30 | | R&D Investment as % of Operating Revenue | 3.01 | | Number of Company R&D Personnel (Persons) | 259 | | R&D Personnel as % of Total Company Staff | 14.63 | Cash Flow Analysis In 2018, the company's cash flow improved; net cash flow from operating activities, though still negative, significantly increased year-on-year due to higher collections from subsidiary contracting businesses, while net cash flow from investing activities turned positive due to reduced investment payments, and net cash flow from financing activities decreased year-on-year due to increased loan repayments - Net cash flow from operating activities increased year-on-year, primarily due to increased collections from subsidiary CSSC No. 9 Institute's contracting business[48] - Net cash flow from investing activities increased year-on-year, primarily due to reduced cash payments for investments by subsidiary CSSC No. 9 Institute during the period[48] - Net cash flow from financing activities decreased year-on-year, primarily due to increased loan repayments by subsidiary CSSC No. 9 Institute during the period[48] Explanation of Significant Profit Changes from Non-Principal Business The significant change in the company's 2018 profit was primarily driven by non-principal business activities, specifically the RMB 138 million investment income realized from subsidiary CSSC No. 9 Institute's transfer of its 21% equity in joint venture Xuzhou CSSC Yangguang Investment Development Co., Ltd., which was the main source of profit for the period - Subsidiary CSSC No. 9 Institute's transfer of its 21% equity in joint venture Xuzhou CSSC Yangguang Investment Development Co., Ltd., realizing RMB 138 million in investment income, was the primary reason for the significant change in profit[49] Analysis of Assets and Liabilities As of year-end 2018, the company's total assets were RMB 10.528 billion, a 3.81% year-on-year decrease; on the asset side, notes receivable significantly increased by 273.92% while long-term receivables decreased by 16.94%; on the liability side, both short-term and long-term borrowings substantially decreased by 48.47% and 42.99% respectively, mainly due to subsidiary loan repayments and reclassification of some long-term borrowings to current maturities, while other payables and long-term payables significantly increased due to shareholder loans received by subsidiaries Key Balance Sheet Item Changes | Item Name | Current Period End (RMB) | Prior Period End (RMB) | Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Notes Receivable | 65,149,930.36 | 17,423,544.95 | 273.92 | Increase in subsidiary's notes receivable | | Long-Term Receivables | 2,346,298,344.09 | 2,824,766,157.57 | -16.94 | Decrease in subsidiary's long-term receivables | | Short-Term Borrowings | 1,080,000,000.00 | 2,096,000,000.00 | -48.47 | Increase in subsidiary's short-term loan repayments | | Long-Term Borrowings | 1,260,000,000.00 | 2,210,000,000.00 | -42.99 | Reclassification of some long-term borrowings to current maturities | | Other Payables | 875,744,729.78 | 473,679,233.19 | 84.88 | Increase in shareholder loans received by subsidiaries | | Long-Term Payables | 633,883,200.00 | 200,000,000.00 | 216.94 | Increase in long-term shareholder loans received by subsidiaries | Industry Operating Information Analysis In 2018, the company completed 990 projects totaling RMB 97.842 billion and had 144 ongoing projects totaling RMB 167.783 billion; among major ongoing projects, the Jiangke University project (BT model) was 95% complete, and the Fenghua Affordable Housing project (BT model) was 100% complete, with RMB 506 million in completed but unsettled inventory Completed and Accepted Projects During the Reporting Period (Unit: RMB 10,000) | Sub-Industry | Building Construction | Infrastructure Engineering | Specialized Engineering | Other | Total | | :--- | :--- | :--- | :--- | :--- | | Number of Projects (Units) | 4 | 13 | 11 | 962 | 990 | | Total Amount | 38,964 | 31,138 | 2,172 | 25,568 | 97,842 | Ongoing Projects During the Reporting Period (Unit: RMB 10,000) | Sub-Industry | Building Construction | Infrastructure Engineering | Specialized Engineering | Other | Total | | :--- | :--- | :--- | :--- | :--- | | Number of Projects (Units) | 8 | 19 | 9 | 108 | 144 | | Total Amount | 86,632 | 69,869 | 11,281 | 1.47 | 167,783.47 | - The balance of completed but unsettled inventory was RMB 505.9408 million[59] Investment Status Analysis During the reporting period, the company's most significant investment activity was a major asset sale, with wholly-owned subsidiary CSSC No. 9 Institute publicly listing and completing the transfer of 21% equity in Xuzhou CSSC Yangguang Investment Development Co., Ltd. in December 2018, while also initiating pre-listing procedures for the transfer of 50% equity in Yangzhou Sanwan Investment Development Co., Ltd., maintaining a largely stable total external equity investment Overall Analysis of External Equity Investments As of year-end 2018, the company's total long-term equity investments in joint ventures and associates amounted to RMB 194 million, remaining largely consistent with the beginning of the period Long-Term Equity Investment Status (Unit: RMB) | Item | Period-End Balance | Period-Start Balance | Change (%) | | :--- | :--- | :--- | :--- | | Joint Ventures | 42,444,755.07 | 45,109,640.72 | -5.91 | | Associates | 151,301,981.86 | 148,717,352.32 | 1.74 | | Total | 193,746,736.93 | 193,826,993.04 | -0.04 | Major Asset and Equity Sales During the reporting period, the company's wholly-owned subsidiary CSSC No. 9 Institute successfully transferred 21% equity in Xuzhou CSSC Yangguang Investment Development Co., Ltd., completed in December 2018, while also initiating and obtaining board and shareholder approval for the transfer of 50% equity in Yangzhou Sanwan Investment Development Co., Ltd - Wholly-owned subsidiary CSSC No. 9 Institute completed the sale of 21% equity in Xuzhou CSSC Yangguang Investment Development Co., Ltd. in December 2018[63] - The company has initiated and received approval for the public listing and transfer of 50% equity in Yangzhou Sanwan Investment Development Co., Ltd., with an appraisal base date of March 31, 2018, and a proposed transfer value of RMB 456 million[63][64] Analysis of Major Holding and Participating Companies Wholly-owned subsidiary CSSC No. 9 Institute is the company's core asset and primary revenue source, achieving RMB 3.14 billion in operating revenue and RMB 108 million in net profit in 2018, while another wholly-owned subsidiary, CSSC Huahai Marine Equipment Co., Ltd., incurred a significant loss with a net profit of -RMB 90 million Financial Status of Major Holding and Participating Companies (Unit: RMB 10,000) | Investee Name | Shareholding (%) | Operating Revenue | Net Assets | Net Profit | | :--- | :--- | :--- | :--- | :--- | | CSSC No. 9 Design and Research Institute Engineering Co., Ltd. | 100.00 | 314,000 | 306,658 | 10,761 | | CSSC Huahai Marine Equipment Co., Ltd. | 100.00 | 6,565 | 14,926 | -9,042 | Company's Future Development Outlook The company plans to achieve approximately RMB 3.55 billion in operating revenue in 2019, continuing to advance its development strategy through M&A projects like acquiring 100% equity of Haiying Enterprise Group to optimize industrial structure, while subsidiary CSSC No. 9 Institute will focus on strengthening design consulting, optimizing general contracting, stabilizing investment and financing, and expanding into technology industrialization and smart factory digital platform construction, recognizing multiple risks including business structure transformation, policy, project management, and financial aspects Industry Landscape and Trends In terms of macroeconomics, China's economy in 2019 will maintain steady progress with supply-side structural reform as the main theme; regarding industry trends, the global new shipbuilding market presents both opportunities and challenges, with an estimated transaction volume of around 70 million deadweight tons, while the construction industry will continue to promote industrial modernization and transformation, with EPC general contracting led by design units becoming a major trend - Global new shipbuilding orders are estimated at approximately 70 million DWT in 2019, with China's shipbuilding completion volume around 35 million DWT and new orders around 30 million DWT[68] - The construction industry will continue to drive transformation and upgrading, with EPC general contracting led by design units gradually becoming the main trend in industry development[68] Company Development Strategy Based on its published '2018-2025 Development Strategic Plan Outline,' the company aims to become a diversified development platform for high-tech and new industries under CSSC Group, striving to establish a leading position in its principal business sectors through active industrial layout and diversified development to maximize company and shareholder value - The company's strategic goal is to build a diversified development platform for high-tech and new industries under CSSC Group, forming a management and control platform with multiple industries of certain scale[69] Operating Plan In 2019, the company plans to achieve approximately RMB 3.55 billion in operating revenue, with key initiatives including promoting the share issuance to acquire 100% equity of Haiying Enterprise Group for restructuring; subsidiary CSSC No. 9 Institute will focus on its '3+2' strategic layout, adjusting production organization to strengthen design, optimize general contracting, stabilize investment and financing, and advance technology industrialization and smart factory digital platform construction; subsidiary CSSC Huahai will concentrate on securing orders, improving management, increasing profits, and leveraging military qualifications to undertake military projects - 2019 operating target is approximately RMB 3.55 billion in operating revenue[70] - Plans to vigorously promote the major related-party transaction of issuing shares to acquire 100% equity of Haiying Enterprise Group Co., Ltd. to optimize industrial structure[70] - CSSC No. 9 Institute will prioritize advancing technology industrialization and smart factory digital platform construction as two 'new' industries[71] Potential Risks The company faces key risks including business structure transformation risk due to tightening national policies on PPP projects and SOE participation in real estate development, policy risk from macroeconomic changes significantly impacting PPP and other projects, engineering project management risk due to uncertainties in new model project implementation, and financial risk from substantial advance payments and loan guarantees in BT and EPC projects, leading to financial and liquidity pressures - Business structure transformation risk: Strict national control and supervision over PPP projects and SOE participation in real estate development impact the company's future business acquisition[72] - Policy risk: Regulatory documents issued by the Ministry of Finance, SASAC, and other departments impose higher requirements on PPP projects, and macroeconomic policies significantly impact the company's future development[72] - Financial risk: Advance payment projects like BT, EPC, and PPP generate substantial advance payments and loan guarantees, leading to certain financial risks and liquidity pressures for the company[72] Significant Matters This section details important events and actions undertaken by the company during the reporting period, including profit distribution, fulfillment of commitments, major related-party transactions, significant contracts, and social responsibility initiatives Profit Distribution Plan The company's board proposed a 2018 profit distribution plan to distribute a cash dividend of RMB 0.2 (tax inclusive) per 10 shares to all shareholders based on a total share capital of 736 million shares, totaling RMB 14.725 million in cash, representing 22.50% of net profit attributable to shareholders, with no capital reserve conversion to share capital for the year; this plan awaits shareholder approval Dividend Distribution Plans for the Past Three Years | Dividend Year | Dividend Per 10 Shares (RMB, Tax Inclusive) | Cash Dividend Amount (RMB, Tax Inclusive) | Ratio of Cash Dividend to Net Profit Attributable to Ordinary Shareholders of Listed Company in Consolidated Statements (%) | | :--- | :--- | :--- | :--- | | 2018 | 0.2 | 14,724,997.66 | 22.50 | | 2017 | 0 | 0 | 0 | | 2016 | 0 | 0 | 0 | Fulfillment of Commitments During the reporting period, the company and its controlling shareholder CSSC Group strictly fulfilled all commitments related to major asset restructuring, including resolving horizontal competition and related-party transactions; regarding profit forecast compensation commitments, 7 companies under CSSC No. 9 Institute assessed by income approach and 3 projects assessed by hypothetical development method all met or exceeded their original cumulative net profit forecasts for 2018 - CSSC Group's commitments made during the major asset restructuring, including resolving horizontal competition, related-party transactions, property defects, asset value guarantees, and profit forecast compensation, were strictly fulfilled during the reporting period[77][78] 2018 Profit Forecast Achievement (Unit: RMB 10,000) | Valuation Method | Commitment Party | 2018 Profit Forecast | 2018 Actual Profit | Difference | | :--- | :--- | :--- | :--- | :--- | | Income Approach (7 Companies Total) | CSSC Group | 1,720.81 | 2,593.30 | 872.49 | | Hypothetical Development Method (3 Projects Cumulative) | CSSC Group | 11,933.45 | 12,324.14 | 390.69 | Significant Related-Party Transactions During the reporting period, the company engaged in multiple significant related-party transactions; in ordinary operations, it conducted approximately RMB 1.136 billion in goods purchase/sale and service provision transactions with intra-group affiliates and other related parties, while in fund movements, the company provided RMB 880 million in funds to related parties and received RMB 276 million from them as of period-end - The total amount of related-party transactions related to ordinary operations was substantial, with provision of services (contracting, survey, design, consulting) being the main component, and transactions with Jiangnan Shipyard (Group) reaching RMB 495 million[97][99] - Wholly-owned subsidiary CSSC Huahai provided a RMB 300 million entrusted loan to Jiangnan Dairuis, and CSSC No. 9 Institute made a capital increase to its controlled subsidiary CSSC Industrial Building Company, both constituting related-party transactions that have completed the necessary approval procedures[94][95] Significant Contracts and Their Performance During the reporting period, the company's total external guarantees amounted to RMB 532 million, representing 14.31% of its net assets, all provided to guaranteed parties with debt-to-asset ratios exceeding 70%; the company won the Zhanjiang Port Xiashan Port Area General Terminal EPC General Contracting Project with a bid amount of approximately RMB 501 million, and also had RMB 600 million in unexpired entrusted loans - Wholly-owned subsidiary CSSC No. 9 Institute won the EPC (Design, Procurement, Construction) general contracting project for Zhanjiang Port Xiashan Port Area General Terminal Engineering, with a total bid amount of RMB 500,706,130.32[111] External Guarantee Status (Unit: RMB) | Item | Amount | | :--- | :--- | | Total Guarantee Balance at Period End (A+B) | 532,000,000.00 | | Ratio of Total Guarantee to Company's Net Assets (%) | 14.31% | | Debt Guarantee Amount Provided to Guaranteed Parties with Debt-to-Asset Ratio Exceeding 70% (D) | 532,000,000.00 | Social Responsibility The company actively fulfills its social responsibilities, participating in targeted poverty alleviation in Heqing County, Yunnan Province, investing RMB 281,100 in industrial poverty alleviation and agricultural product procurement; it organized blood donation and urban-rural pairing assistance, prioritizes employee rights with comprehensive compensation, benefits, and training systems, and disclosed pollution discharge and treatment facility operations for its invested subsidiaries Longxue Pipe Industry and Jiangnan Pipe Industry - The company actively participated in targeted poverty alleviation in Heqing County, Yunnan Province, investing RMB 281,100 during the reporting period to support pig farming projects and purchase local agricultural products[112][113][114] - The company prioritizes employee responsibility, establishing supplementary provident fund and annuity systems, and conducting various employee care and cultural/sports activities[117] - The company disclosed pollution discharge information for key polluting invested subsidiaries (Longxue Pipe Industry, Jiangnan Pipe Industry) regarding exhaust gas, wastewater, solid waste, and noise, along with the construction and operation of pollution control facilities and relevant environmental permits[119][120][121][125] Share Changes and Shareholder Information This section details changes in the company's ordinary share capital and provides information on its shareholders and actual controller Changes in Ordinary Share Capital During the reporting period, the company's total ordinary share capital and share structure remained unchanged, with a total share capital of 736,249,883 shares, of which 135,471,113 shares held by controlling shareholder CSSC Group are restricted shares due to A-share subscription, with a 36-month lock-up period expiring on November 4, 2019 - During the reporting period, the company's total ordinary share capital and share structure remained unchanged[131] Changes in Restricted Shares (Unit: Shares) | Shareholder Name | Restricted Shares at Year Start | Restricted Shares Released This Year | Restricted Shares at Year End | Reason for Restriction | Release Date | | :--- | :--- | :--- | :--- | :--- | :--- | | CSSC Group | 135,471,113 | 0 | 135,471,113 | A-share subscription, committed not to transfer for 36 months | November 4, 2019 | Shareholders and Actual Controller Information As of year-end 2018, the company had 79,432 ordinary shareholders; the controlling shareholder is China State Shipbuilding Corporation Limited, holding a combined direct and indirect stake of 41.28% through concerted parties, while other top ten shareholders, excluding the controlling shareholder, each held less than 5% - As of the end of the reporting period, the company had 79,432 shareholders[133] Top Five Shareholders' Shareholding | Shareholder Name | Shares Held at Period End (Shares) | Proportion (%) | Nature | | :--- | :--- | :--- | :--- | | China State Shipbuilding Corporation Limited | 275,204,726 | 37.38 | State-owned Legal Person | | Jiangnan Shipyard (Group) Co., Ltd. | 28,727,521 | 3.90 | State-owned Legal Person | | Beijing Hengyu Tianze Fund Sales Co., Ltd. - Hengyu Tianze Ying·Ying No. 1 Private Investment Fund | 21,608,920 | 2.93 | Unknown | | Shanghai International Group Asset Management Co., Ltd. | 12,607,879 | 1.71 | Unknown | | Guangxi Railway Development Phase II Investment Fund Partnership (Limited Partnership) | 11,062,385 | 1.50 | Unknown | - The company's controlling shareholder and ultimate actual controller are both China State Shipbuilding Corporation Limited[137][139] Directors, Supervisors, Senior Management, and Employees This section provides information on the company's directors, supervisors, senior management, and employees, including their shareholdings, remuneration, and overall workforce structure Changes in Shareholding and Remuneration of Directors, Supervisors, and Senior Management During the reporting period, all current and former directors, supervisors, and senior management did not hold company shares, nor were there any changes in shareholding; in 2018, the company paid a total pre-tax remuneration of RMB 6.9851 million to directors, supervisors, and senior management, with some directors and supervisors not receiving remuneration from the company due to their positions in related parties - During the reporting period, all directors, supervisors, and senior management did not hold company shares[143][144] - The total pre-tax remuneration received from the company during the reporting period amounted to RMB 6.9851 million[144] Employee Information As of the end of the reporting period, the company had a total of 1,564 employees, with technical personnel being the largest group at 990; employees with bachelor's degrees or higher accounted for over 75% of the total, and the company implements a market-oriented compensation policy linking remuneration to performance, while providing comprehensive training programs to enhance professional capabilities Employee Professional Composition | Professional Category | Number of Persons | | :--- | :--- | | Production Personnel | 262 | | Sales Personnel | 53 | | Technical Personnel | 990 | | Financial Personnel | 43 | | Administrative Personnel | 216 | | Total | 1,564 | - The company implements a market-oriented compensation policy, linking all employee performance-based remuneration to performance appraisals, and contributes to 'five insurances and one housing fund' and enterprise annuity as required[160] - The company formulated and implemented annual training programs covering topics such as accounting standards, capital operations, and project management, to enhance employees' professional capabilities[161][162] Corporate Governance This section describes the company's corporate governance framework, including the roles and operations of its key governing bodies and its internal control systems Overview of Corporate Governance During the reporting period, the company continuously improved its corporate governance structure in strict accordance with the 'Company Law' and other regulations; the Shareholders' Meeting, Board of Directors, Board of Supervisors, and management team operated with clear responsibilities and in a standardized manner, successfully completing the re-election of the Eighth Board of Directors and Board of Supervisors with personnel composition meeting regulatory requirements, and there were no significant discrepancies between the company's actual governance and regulatory provisions - The company's corporate governance structure is well-established, with the Shareholders' Meeting, Board of Directors, Board of Supervisors, and management team each performing their duties with clear responsibilities, in compliance with regulatory requirements[163] - During the reporting period, the re-election of the Eighth Board of Directors and Board of Supervisors was successfully completed, with personnel composition meeting legal and regulatory requirements[163] Internal Control Evaluation The company disclosed its 2018 Internal Control Self-Evaluation Report and Internal Control Audit Report, concluding that as of December 31, 2018, the company maintained effective internal controls over financial reporting in all material respects, with no significant deficiencies found in internal controls over financial or non-financial reporting - The company disclosed its '2018 Internal Control Evaluation Report', concluding that the company has maintained effective internal controls over financial reporting in all material respects[170] - The company found no significant deficiencies in internal controls over financial reporting or non-financial reporting[170] - The company also disclosed the '2018 Internal Control Audit Report' issued by ShineWing Certified Public Accountants (Special General Partnership)[171] Financial Report This section presents the company's audited financial statements for the reporting period, including the audit report, financial statements, basis of preparation, and detailed notes to the consolidated financial statements Audit Report ShineWing Certified Public Accountants (Special General Partnership) issued a standard unqualified audit opinion on the company's 2018 financial statements, concluding that the financial statements fairly presented the company's financial position and operating results in all material respects, with key audit matters being 'provision for doubtful accounts receivable' and 'revenue recognition using the percentage-of-completion method' - The auditing firm is ShineWing Certified Public Accountants (Special General Partnership), which issued a standard unqualified audit opinion[3][173] - Key audit matters include: - Provision for doubtful accounts receivable: Involves significant management judgment in assessing recoverability - Revenue recognition using the percentage-of-completion method: Involves significant management judgment and estimation in recognizing engineering general contracting revenue[175][176][178] Financial Statements This section includes the company's 2018 consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity Basis of Financial Statement Preparation The company's financial statements are prepared on a going concern basis, comply with enterprise accounting standards, and fairly and completely reflect the company's financial position and operating results - Financial statements are prepared on a going concern basis[211] Notes to Consolidated Financial Statement Items This section provides detailed explanations of the composition and changes in major accounts within the consolidated financial statements, including monetary funds, receivables, inventories, fixed assets, borrowings, and related-party transactions Corporate Bonds Related Information This section provides information regarding the company's corporate bonds - During the reporting period, the company had no corporate bond related information[534] Reference Documents Catalog This section lists all documents available for reference