LMZ(SH:600249)2020-08-25 16:00Financial Performance - The company's operating revenue for the first half of 2020 was RMB 292.33 million, a decrease of 51.79% compared to RMB 606.42 million in the same period last year[19]. - The net profit attributable to shareholders for the first half of 2020 was RMB 2.32 million, down 91.73% from RMB 28.07 million year-on-year[19]. - The net cash flow from operating activities was negative RMB 16.72 million, compared to positive RMB 62.51 million in the previous year[19]. - The total assets decreased by 8.98% to RMB 2.45 billion from RMB 2.69 billion at the end of the previous year[19]. - The basic earnings per share for the first half of 2020 was RMB 0.0042, a decrease of 91.76% from RMB 0.051 in the same period last year[20]. - The company reported a significant decline in net profit due to the impact of the pandemic on sales across all segments[22]. - The company’s revenue, excluding the impact of divested subsidiaries, decreased by 28.70% year-on-year[20]. - The weighted average return on net assets decreased by 1.44 percentage points to 0.11% compared to the same period last year[20]. - The company faced substantial losses in net profit attributable to shareholders after excluding non-recurring gains and losses, primarily due to the significant impact of the pandemic on its subsidiaries[22]. - The company reported a total of 10,405,228.26 in non-recurring gains and losses, after accounting for minority interests and tax impacts[24]. Business Segments and Operations - The company's main business segments are daily chemicals and pharmaceuticals, with a focus on oral care products and personal hygiene items[26]. - The Jiangsu subsidiary, primarily dealing with hotel supplies, experienced a significant revenue decline of approximately 36.60% and a net profit drop of 88.40% due to the pandemic[35]. - The company launched new products such as Artemisia annua hand sanitizers and handwashing liquids to explore new profit growth points[34]. - The company aims to expand its brand influence through new advertising strategies and collaborations with other brands[31]. - The company maintains a unified management model with specialized operations across its subsidiaries to maximize benefits[27]. - The daily chemical industry is expected to continue growing steadily, driven by economic growth and rising consumer spending, despite intense competition[30]. - The company has established a technology center and a research institute to focus on the development of new technologies and products in traditional Chinese medicine[31]. - The company is positioned as a leading toothpaste manufacturer in China, having achieved ISO9001 certification and being recognized as a national high-tech enterprise[32]. Subsidiary Performance - Fangcao Company achieved a revenue growth of 45.18% year-on-year during the reporting period, turning a profit from a loss[36]. - Yikang Company reported a 51.79% decrease in revenue, totaling approximately ¥292.33 million, due to prolonged production halts and decreased market demand[39]. - Yikang Company's operating costs decreased by 57.42% to approximately ¥210.75 million, reflecting the impact of reduced sales volume[39]. - Fangcao Company focused on local market channels and internal management adjustments to enhance performance[36]. - Yikang Company's cash and cash equivalents increased by 352.74% to approximately ¥567.31 million, attributed to the transfer of equity stakes[42]. - Accounts receivable for Yikang Company decreased by 48.85% to approximately ¥81.80 million, influenced by the exclusion of certain subsidiaries from consolidation[42]. - Yikang Company's inventory decreased by 56.47% to approximately ¥151.06 million, also due to the exclusion of subsidiaries[42]. Financial Position and Assets - The company's total assets decreased significantly, with fixed assets dropping by 60.88% to CNY 331,857,839.09 from CNY 848,237,087.00[43]. - Long-term equity investments were completely written down to CNY 0, reflecting a 100% decrease from CNY 1,652,476.44[43]. - Deferred tax assets fell by 86.11% to CNY 2,946,890.82 from CNY 21,208,380.61, indicating uncertainty in future tax deductions[43]. - The capital reserve increased by 38.20% to CNY 1,184,901,870.95 from CNY 857,398,769.96, attributed to the difference between the transfer price and the net assets of divested companies[43]. - The company reported a 41.78% decline in undistributed profits, decreasing to CNY 99,846,415.12 from CNY 171,500,064.20, impacted by the exclusion of certain subsidiaries from consolidation[43]. - The total value of restricted assets at the end of the reporting period was CNY 127,748,740.06, primarily due to bank loan collateral[44]. - The company holds CNY 208,787,778.00 in trading financial assets for CITIC Securities, down from CNY 219,092,940.00, reflecting a decrease of 4.5%[46]. Shareholder and Governance - The total number of ordinary shareholders at the end of the reporting period is 50,716[80]. - The largest shareholder, Guangxi Liuzhou Industrial Investment Development Group Co., Ltd., holds 33.34% of the shares[82]. - Liu Wenhua increased his shareholding by 1,971,100 shares during the reporting period[82]. - The company has not proposed any profit distribution or capital reserve transfer plans for the half-year period[64]. - The company has committed to not engaging in any business that competes directly or indirectly with its own operations, ensuring the protection of shareholder rights[66]. - The commitment to avoid conflicts of interest in related transactions has been reaffirmed, with a focus on fair pricing and compliance with market principles[66]. - The company has pledged to maintain its independence and governance structure post-transaction, ensuring the protection of all shareholders' interests[68]. Legal and Compliance - There are no significant lawsuits or arbitration matters reported during the reporting period[70]. - The company has not made any changes to its accounting firm or received a non-standard audit report during the reporting period[70]. - There are no updates on stock incentive plans or employee shareholding plans during the reporting period[70]. - The company has confirmed that it will not use its shares for pledging or guarantees[68]. - The major asset sale and related transactions from 2019 have been disclosed, involving the transfer of equity and debts to the largest shareholder[71]. Cash Flow and Financing Activities - Operating cash flow for the first half of 2020 was negative at -16,721,323.39 RMB, a significant decline from 62,507,766.42 RMB in the same period of 2019, representing a decrease of approximately 126.7%[103]. - Total cash inflow from operating activities decreased to 320,245,371.29 RMB, down 52.5% from 674,085,871.11 RMB in the first half of 2019[103]. - Cash outflow from operating activities increased to 336,966,694.68 RMB, compared to 611,578,104.69 RMB in the previous year, indicating a reduction of 45%[103]. - Cash flow from financing activities was negative at -172,457,458.30 RMB, worsening from -76,110,690.63 RMB in the same period last year, reflecting a decline of 126.5%[104]. Accounting Policies and Estimates - The financial statements were approved for publication by the board of directors on August 25, 2020[126]. - The financial statements are prepared based on the assumption of going concern, with no significant doubts about the company's ability to continue operations for the next 12 months[130]. - The company adheres to the accounting policies and estimates as per the relevant accounting standards, particularly in inventory valuation, fixed asset depreciation, and revenue recognition[131]. - The accounting period for the company runs from January 1 to December 31 each year[133]. - The company's functional currency for accounting purposes is Renminbi (RMB)[135]. Inventory and Asset Management - Inventory is classified as products held for sale, work in progress, and materials consumed in production, with valuation based on cost[188]. - Inventory is initially measured at cost, including procurement and processing costs, and is valued using FIFO or weighted average methods upon issuance[189]. - The company adopts a perpetual inventory system for inventory management[191]. - The net realizable value of inventory is determined based on the lower of cost and net realizable value, with specific methods for different types of inventory[190]. Financial Instruments and Risk Management - The company recognizes expected credit losses for financial assets measured at amortized cost and those measured at fair value with changes recognized in other comprehensive income[173]. - Credit losses are calculated as the present value of cash shortfalls, with specific methods applied based on the stage of credit risk[174]. - The company assesses credit risk based on significant changes in debtor's operational performance, regulatory environment, and collateral value[177].