LZCIC(SH:600423)2019-03-18 16:00Financial Performance - The company's net profit for 2018 was CNY 387,131,950.45, but the cumulative distributable profit at the end of the period was negative at CNY -423,596,890.16[6]. - The company reported a significant asset impairment provision of CNY 469 million for 2018, leading to an operating loss of CNY 478 million[9]. - The company has faced continuous operating losses in recent years, raising concerns about its ability to sustain operations[9]. - The company has not proposed any profit distribution or capital reserve increase for 2018 due to financial constraints and the need to maintain ongoing operations[6]. - The company's operating revenue for 2018 was approximately ¥2.01 billion, representing a year-on-year increase of 9.75% compared to ¥1.83 billion in 2017[24]. - The net profit attributable to shareholders for 2018 was approximately ¥390.30 million, a significant increase of 534.11% from ¥61.55 million in 2017[24]. - The basic earnings per share for 2018 was ¥0.90, reflecting a 500% increase from ¥0.15 in 2017[26]. - The net cash flow from operating activities decreased by 91.42% to approximately ¥24.16 million, primarily due to a government subsidy of ¥330 million received in the previous year[27]. - The total assets at the end of 2018 were approximately ¥2.74 billion, a decrease of 14.39% from ¥3.20 billion at the end of 2017[25]. - The company's net assets attributable to shareholders increased significantly to approximately ¥2.19 billion, a rise of 5,566.08% from ¥38.63 million at the end of 2017[25]. Restructuring and Legal Issues - The company is currently undergoing a restructuring plan approved by the court, but the execution of this plan is still in progress, posing risks of bankruptcy if not completed[9]. - The company has faced risks of delisting due to negative net profits in previous years, and its stock continues to be under delisting risk warning[9]. - The company has not received favorable credit from financial institutions during the restructuring period, complicating its financing efforts[6]. - The company underwent judicial reorganization in 2018, which resulted in substantial debt restructuring gains contributing to the net profit[26]. - The company is undergoing a judicial restructuring process, with the plan approved by the court on November 26, 2018, aiming to improve asset structure and profitability[44]. - The company executed a debt restructuring plan, resulting in a repayment of 10,917.32 million RMB to creditors[141]. - The company has been involved in multiple significant lawsuits, including a contract dispute with Xi'an Shangu Engineering Technology Co., with a principal debt of RMB 10.5 million, which has been adjudicated[155]. - The company has faced a total of 9 lawsuits related to financial loan contracts, with various principal amounts involved, indicating a high level of legal disputes during the reporting period[156]. Operational Challenges - The company has faced operational pressures due to its location in a densely populated urban area, which may require relocation or closure under new regulations[42]. - The company is at risk of being relocated or shut down due to its operations being in a densely populated urban area[10]. - The company experienced two fire incidents in its diammonium system, leading to prolonged shutdowns and increased repair costs[40]. - The company’s ammonia production capacity utilization rate declined, impacting the performance of subsequent ammonia processing products[45]. - The company’s ammonia production capacity is significantly impacted by a fire incident in December 2018, leading to a reduction in subsequent ammonia processing product capacity[129]. Market and Product Performance - The chemical industry saw a market recovery during the reporting period, with product prices maintaining relatively high levels due to rising costs and stricter safety and environmental regulations[38]. - The company adjusted its sales model to improve customer service and optimize product market layout, resulting in increased revenue despite limited production capacity[45]. - The sales volume of urea decreased by 30.68%, while the sales volume of 27.5% hydrogen peroxide increased by 23.15%[55]. - The company achieved a total sales volume of 59,700 tons for 50% hydrogen peroxide in 2018, capturing approximately 39.80% market share in the region[89]. - The company sold 240,100 tons of ammonium nitrate in 2018, achieving a regional market share of approximately 50.13%[86]. Environmental and Safety Management - The company is focusing on soil pollution risk management in response to the implementation of the Soil Pollution Prevention and Control Law starting January 1, 2019[79]. - The company is engaged in research and development of new environmental technologies, including waste gas treatment and wastewater recovery[86]. - The total annual pollutant discharge limits for the nitrogen fertilizer industry were set at 26 tons of ammonia nitrogen, 208 tons of chemical oxygen demand, 663.11 tons of sulfur dioxide, 376.32 tons of nitrogen oxides, 195.26 tons of particulate matter, and 350 tons of ammonia[167]. - Actual emissions during the reporting period were 54.9 tons of ammonia nitrogen, 262.9 tons of chemical oxygen demand, 892.1 tons of sulfur dioxide, 618.4 tons of nitrogen oxides, 168.5 tons of particulate matter, and 112.6 tons of ammonia, exceeding the permitted limits[167]. - The company has a 98% operational rate for environmental protection facilities, ensuring real-time monitoring of emissions[169]. Shareholder and Governance Changes - The company underwent a capital increase through a capital reserve transfer, increasing total shares from 399,347,513 to 798,695,026 shares[152]. - The restructuring plan allowed the major shareholder, Liu Hua Group, to reduce its holding from 5.72% to 2.86%, while the new major shareholder, Yuan Tong Company, increased its stake from 3.47% to 25.22%[182]. - The total number of shareholders increased from 27,527 to 29,583 by the end of the reporting period[184]. - The company has a three-year lock-up period for shares held by Yuan Tong Company and Liu Hua Group starting from December 17, 2018, preventing any reduction in holdings[191]. - The company has maintained stable shareholding among its directors, with no changes in shareholdings reported for the year[195]. Research and Development - The company applied for 3 patents in 2018, including 1 core invention patent, bringing the total number of valid patents to 25 by the end of 2018[91]. - The total research and development expenditure was ¥4,628,784.37, representing 0.23% of total operating income[65]. - Research and development expenses remained stable at CNY 4.63 million, showing a slight decrease of 0.08%[49].