LHG(SH:600186)2019-04-25 16:00Financial Performance - The company's operating revenue for 2018 was CNY 1,728,816,962.45, a decrease of 6.70% compared to CNY 1,852,912,238.60 in 2017[22]. - The net profit attributable to shareholders for 2018 was a loss of CNY 332,530,365.72, compared to a loss of CNY 103,432,698.68 in 2017[22]. - The net cash flow from operating activities for 2018 was a negative CNY 24,097,844.18, an improvement from a negative CNY 31,281,205.63 in 2017[22]. - The total assets at the end of 2018 were CNY 1,708,542,518.01, down 9.56% from CNY 1,889,231,700.08 at the end of 2017[22]. - The net assets attributable to shareholders at the end of 2018 were negative CNY 298,388,016.47, a significant decrease of 973.95% from CNY 34,142,349.25 at the end of 2017[22]. - The basic earnings per share for 2018 was -CNY 0.31, compared to -CNY 0.10 in 2017[24]. - The diluted earnings per share for 2018 was also -CNY 0.31, reflecting the same trend as basic earnings[24]. - The company reported a total of CNY -12,652,614.21 in non-recurring gains and losses for 2018, compared to CNY 71,302,652.42 in 2017[30]. - The company achieved a total revenue of 1.73 billion RMB in 2018, a year-on-year decrease of 6.70%[41]. - The net profit attributable to shareholders was -333.04 million RMB, with losses increasing compared to the previous year[41]. - The sales volume of monosodium glutamate was 121,101.26 tons, reflecting a year-on-year decrease of 29.75%[48]. - The gross profit margin for monosodium glutamate decreased by 2.07 percentage points to 9.59%[46]. - The company reported a net loss of CNY 140.61 million for 2017 and CNY 384.14 million for 2018, indicating consecutive negative net profits for two fiscal years[87]. - As of December 31, 2018, the company's total equity was negative CNY 494.92 million, with a debt-to-asset ratio of 128.97%[87]. - The company had a negative operating cash flow, unable to meet its due debts[176]. Operational Challenges - The company has faced challenges with production costs and is adapting its business model to maintain competitiveness in the market[34]. - The company is transitioning towards purchasing semi-finished products for processing due to aging equipment and rising production costs[34]. - The company has faced significant debt challenges, with many loans overdue and legal actions initiated by creditors, posing a risk to its assets[79]. - The company has reported a continuous negative operating cash flow, indicating challenges in meeting its debt obligations[87]. - The company has faced significant uncertainties regarding its ability to continue as a going concern due to consecutive years of net losses[176]. Sales and Market Strategy - The company primarily utilizes a distributor-based sales model, targeting a dispersed consumer market for its products[34]. - The company aims to enhance its production capacity for seasoning products, including MSG and chicken essence, while also developing new health-oriented products[75]. - The company plans to increase MSG sales prices to counteract rising raw material costs and improve profit margins[78]. - The company intends to expand its international trade from a focus on MSG and chicken essence to include a broader range of food products[78]. - The company is recognized as a leading brand in the domestic MSG retail market, with a strong presence in over 70 countries[74]. Environmental Management - The company has implemented a comprehensive environmental management system, ensuring that the discharge of COD is controlled below 100 mg/L, which is better than the industry standards[120]. - The company has achieved zero discharge of high-concentration wastewater by utilizing it in the production of organic-inorganic compound fertilizers[121]. - The company operates a wastewater treatment plant with a processing capacity of 5,000 m³/day, currently receiving 600 m³ of industrial wastewater daily, including 200 m³ of high-concentration wastewater[123]. - The company has established an environmental management network led by the general manager, ensuring compliance with ISO 14001 standards and effective pollution control measures[123]. - The environmental monitoring department conducts regular wastewater testing every 2 hours using online analyzers for pH, COD, and ammonia nitrogen[126]. Corporate Governance - The company has established a performance evaluation system for senior management based on operational goals to determine remuneration and performance rewards[169]. - The board of directors has established four specialized committees to enhance decision-making quality and governance[164]. - The company adheres to legal requirements for corporate governance, ensuring independent operations from its controlling shareholder[164]. - The company has a transparent performance evaluation and incentive mechanism for senior management, promoting accountability and motivation[169]. Legal and Financial Issues - The company is involved in multiple significant lawsuits, including a contract dispute with Henan Shenma Chlor-Alkali Chemical Co., with a claim amount of CNY 2,651,650.04, currently under execution of a court mediation agreement[103]. - The company faces a loan contract dispute with Agricultural Bank of China, with a claim amount of CNY 1,000,000.00, which has also been ruled in favor of the company and is under execution[103]. - The company recognized an estimated liability of 24.86 million yuan related to ongoing litigation involving 29 cases[179]. - The company disclosed that a substantial portion of its fixed assets and construction projects are currently idle or halted, necessitating impairment testing[177]. Employee and Management - The company has a total of 9,191 employees, with 1,324 in production, 418 in sales, and 23 in technical roles[160]. - The total remuneration for all directors, supervisors, and senior management amounted to 3.3561 million yuan[153]. - The company has implemented a training system combining internal and external training to meet employee growth and company development needs[162]. - The number of employees in the parent company is 7,833, while the total number of employees in the parent and major subsidiaries is 9,191[159].