山东海化(000822) - 2019 Q4 - 年度财报

Important Notice, Table of Contents, and Definitions This section provides essential notices, the table of contents, and key definitions for the report - The company's Board of Directors, Supervisory Board, and senior management guarantee the truthfulness, accuracy, and completeness of this annual report, free from any false records, misleading statements, or material omissions[4] 2019 Profit Distribution Plan | Distribution Base (shares) | Cash Dividend per 10 Shares (Yuan, tax-inclusive) | Bonus Shares per 10 Shares (shares) | Capitalization from Capital Reserve | | :--- | :--- | :--- | :--- | | 895,091,926 | 0.90 | 0 | No Capitalization | Company Profile and Key Financial Indicators This section provides the company's basic information, contact details, and core financial data for 2019, highlighting a significant decline in revenue and net profit, with net profit attributable to shareholders decreasing by 72.20%, while operating cash flow increased by 79.27% Key Accounting Data and Financial Indicators In 2019, the company's operating revenue was 4.621 billion Yuan, a 12.19% decrease year-on-year, and net profit attributable to shareholders significantly dropped by 72.20% to 163 million Yuan, while operating cash flow strongly increased by 79.27% to 587 million Yuan 2019 Key Financial Indicators | Indicator | 2019 | 2018 (Adjusted) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue (Yuan) | 4,621,274,158.31 | 5,262,654,919.00 | -12.19% | | Net Profit Attributable to Shareholders (Yuan) | 163,041,776.43 | 586,547,071.90 | -72.20% | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) (Yuan) | 104,167,964.81 | 515,025,075.00 | -79.77% | | Net Cash Flow from Operating Activities (Yuan) | 587,394,506.77 | 327,660,827.35 | 79.27% | | Basic Earnings Per Share (Yuan/share) | 0.18 | 0.66 | -72.73% | | Weighted Average Return on Net Assets | 4.86% | 18.95% | -14.09% | | Total Assets (Yuan) | 4,518,707,608.58 | 4,580,736,486.93 | -1.35% | | Net Assets Attributable to Shareholders (Yuan) | 3,361,317,832.00 | 3,374,293,360.67 | -0.38% | Quarterly Key Financial Indicators The company's 2019 quarterly operating revenue remained relatively stable, but net profit attributable to shareholders showed a declining trend, recording a loss of 81.58 million Yuan in the fourth quarter, while operating cash flow was negative in Q2 but positive in other quarters 2019 Quarterly Financial Indicators (Unit: Yuan) | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 1,069,579,320.18 | 1,168,794,011.18 | 1,200,079,070.35 | 1,182,821,756.60 | | Net Profit Attributable to Shareholders | 90,878,122.00 | 114,893,196.03 | 38,849,296.90 | -81,578,838.50 | | Net Cash Flow from Operating Activities | 337,639,713.64 | -18,588,980.34 | 130,576,863.47 | 137,766,910.00 | Non-recurring Gains and Losses Items and Amounts In 2019, the company's total non-recurring gains and losses amounted to 58.87 million Yuan, primarily from disposal gains of non-current assets (49.33 million Yuan) and reversal of executive incentive funds (42.33 million Yuan), partially offset by non-operating expenses 2019 Non-recurring Gains and Losses Items (Unit: Yuan) | Item | 2019 Amount | | :--- | :--- | | Disposal Gains and Losses of Non-current Assets | 49,328,580.07 | | Government Grants Included in Current Profit/Loss | 4,694,352.32 | | Reversal of Executive Incentive Fund | 42,328,889.22 | | Other Non-operating Income and Expenses, Net | -24,213,621.50 | | Total | 58,873,811.62 | Company Business Overview This section outlines the company's main business, significant asset changes, and core competencies, focusing on the production and sale of chemical products like soda ash and bromine, with soda ash as the leading product Main Businesses Engaged in During the Reporting Period The company primarily engages in the production and sale of basic chemical raw materials such as soda ash, bromine, calcium chloride, and crude salt, with soda ash being its leading product, widely used in various industries and ranking among the top in production and sales - The company's main business involves the production and sale of products like soda ash, bromine, calcium chloride, and crude salt, with soda ash as its core product, ranking among the industry leaders in production and sales[32] Analysis of Core Competencies The company's core competencies stem from its abundant brine resources, strong brand reputation for products like "Yuan Du" soda ash, continuous technological innovation, advantageous geographical location, and deepening internal management and corporate culture - The company's core competencies are rooted in resource advantages, brand recognition, technological innovation, strategic location, and corporate culture, forming a comprehensive competitive edge[34][35] Management Discussion and Analysis This section analyzes the company's 2019 operating performance, detailing revenue and cost structures, expenses, R&D investment, and cash flow, while also discussing industry trends, company strategy, and future risks Overview In 2019, affected by macroeconomic conditions and market fluctuations, the company's operating revenue decreased by 12.19% to 4.621 billion Yuan, and net profit attributable to shareholders declined by 72.20% to 163 million Yuan, despite efforts in production management and cost reduction - During the reporting period, the company's operating revenue and net profit significantly decreased due to market fluctuations, but the company maintained stable production and achieved cost reduction through enhanced internal management[39][40] Analysis of Main Business Soda ash revenue accounted for 87.29% of total revenue but saw declines in both revenue and gross margin, while bromine and calcium chloride products experienced significant growth, with sales to top five customers accounting for 31.99% and procurement from top five suppliers, including related parties, at 64.97% 2019 Operating Revenue Composition (by Product) | Product | Revenue (Yuan) | Proportion of Operating Revenue | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Soda Ash | 4,033,935,308.77 | 87.29% | -14.41% | | Bromine Products | 214,449,512.99 | 4.64% | 28.80% | | Calcium Chloride | 156,725,556.50 | 3.39% | 42.97% | 2019 Main Product Gross Margin | Product | Operating Revenue (Yuan) | Operating Cost (Yuan) | Gross Margin | Gross Margin Change from Previous Year | | :--- | :--- | :--- | :--- | | Soda Ash | 4,033,935,308.77 | 3,577,205,833.88 | 11.32% | -6.57% | | Bromine Products | 214,449,512.99 | 98,253,476.97 | 54.18% | -6.55% | - The inventory of chemical products increased by 126.17% year-on-year during the reporting period, primarily due to an increase in soda ash inventory[44][47] - The top five customers accounted for 31.99% of total annual sales, with related party sales at 5.64%, while the top five suppliers accounted for 64.97% of total annual procurement, with related party procurement as high as 51.95%, indicating significant reliance on the controlling shareholder Shandong Haihua Group and its subsidiaries for procurement[50][51][54] Expenses During the reporting period, the company's three major expenses (selling, general and administrative, and financial) all decreased, with management expenses down 20.42% due to the reversal of executive incentive funds, and financial expenses significantly down 168.65% due to increased interest income 2019 Period Expense Changes (Unit: Yuan) | Expense Item | 2019 | 2018 | Year-on-Year Change | Main Change Explanation | | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | 155,836,347.47 | 162,970,082.17 | -4.38% | - | | General and Administrative Expenses | 163,564,088.78 | 205,545,037.89 | -20.42% | Primarily due to the reversal of executive incentive funds accrued in previous years | | Financial Expenses | -3,920,849.88 | 5,710,977.13 | -168.65% | Primarily due to an increase in interest income during the current period | Research and Development Investment In 2019, the company invested 10.25 million Yuan in R&D, accounting for 0.22% of operating revenue, focusing on seawater resource utilization, technology upgrades, and energy saving, with 8.96 million Yuan (87.44%) capitalized 2019 R&D Investment | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | R&D Investment Amount (Yuan) | 10,247,225.98 | 0 | | R&D Investment as % of Operating Revenue | 0.22% | 0% | | Capitalized R&D Investment Amount (Yuan) | 8,959,794.38 | 0 | | Capitalized R&D Investment as % of Total R&D Investment | 87.44% | 0% | Cash Flow Analysis The company's cash flow significantly improved in 2019, with net cash flow from operating activities increasing by 79.27% due to reduced payments for goods and services, and net cash flow from investing activities turning positive with a 239.05% increase due to reduced payments for long-term asset acquisition, while financing cash flow decreased by 300% due to increased dividend distribution 2019 Cash Flow Statement Key Items (Unit: Yuan) | Item | 2019 | 2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 587,394,506.77 | 327,660,827.35 | 79.27% | | Net Cash Flow from Investing Activities | 33,576,536.74 | -24,147,225.99 | 239.05% | | Net Cash Flow from Financing Activities | -179,018,385.20 | -44,754,596.30 | -300.00% | | Net Increase in Cash and Cash Equivalents | 441,952,658.31 | 258,759,005.06 | 70.80% | Outlook on Company's Future Development The company anticipates continued overcapacity and intense competition in the soda ash industry in 2020, and plans to strengthen its core salt chemical business through reform and refined management to become a leading listed company, while identifying and addressing risks related to macroeconomic fluctuations, safety, environmental protection, and internal management - Industry Trend: The overcapacity in the soda ash industry is expected to persist in 2020, leading to continued intense market competition[73] - Company Strategy: The company is committed to strengthening its core salt chemical business, aiming to become a leading enterprise characterized by refined management, excellent performance, and stable operations[76] - Key Risks: The company faces risks from macroeconomic fluctuations, production safety, stricter environmental policies, and internal management, with corresponding mitigation strategies in place[80][82][83] Significant Events This section covers the company's profit distribution, accounting policy changes, significant related party transactions, social responsibility, and environmental performance, including a proposed cash dividend of 0.90 Yuan per 10 shares for 2019 and the adoption of new financial instrument accounting standards Profit Distribution of Ordinary Shares and Capitalization from Capital Reserve The company has consistently distributed cash dividends over the past three years, with the 2019 proposed plan to distribute 0.90 Yuan (tax-inclusive) per 10 shares based on a total share capital of 895 million shares, totaling 80.56 million Yuan, representing 49.41% of net profit attributable to shareholders Cash Dividend Distribution Over the Past Three Years (Unit: Yuan) | Dividend Year | Cash Dividend Amount (tax-inclusive) | Ratio to Net Profit Attributable to Shareholders | | :--- | :--- | :--- | | 2019 | 80,558,273.34 | 49.41% | | 2018 | 179,018,385.20 | 30.52% | | 2017 | 44,754,596.30 | 6.53% | Significant Related Party Transactions In 2019, the company's daily related party transactions primarily involved procuring production materials like water, electricity, and steam from its controlling shareholder, Shandong Haihua Group, and selling products such as high-temperature hot water and soda ash to it, with procurement from Haihua Group reaching 2.075 billion Yuan, accounting for 90.85% of similar transactions - The company has large-scale daily related party transactions with its controlling shareholder, Shandong Haihua Group Co., Ltd., primarily involving the procurement of production materials such as water, electricity, and steam, with procurement amounting to 2.075 billion Yuan in 2019[100] Social Responsibility The company prioritizes social responsibility, investing in investor relations, employee welfare, supply chain cooperation, and environmental protection, and as a key polluting entity, it has disclosed pollutant emissions and prevention facilities, confirming compliance with all emission standards - The company and its subsidiaries (Soda Ash Plant, Shengxing Thermal Power) are designated as key polluting entities, have developed and filed emergency response plans for environmental incidents, and conducted self-monitoring as required, with no instances of exceeding emission standards during the reporting period[121][124] Share Changes and Shareholder Information This section details the company's share capital structure, number of shareholders, and major shareholder holdings, indicating no changes in total share capital during the reporting period, with Shandong Haihua Group Co., Ltd. as the controlling shareholder (40.34%) and China National Offshore Oil Corporation as the ultimate actual controller Share Change Status During the reporting period, the company's total share capital and share structure remained unchanged, with a total of 895,091,926 shares, all being unrestricted RMB ordinary shares - The company's total share capital remained stable during the reporting period at 895,091,926 shares, all of which are unrestricted shares[131] Shareholders and Actual Controller Information As of the end of 2019, the company had 67,414 shareholders, with Shandong Haihua Group Co., Ltd. as the controlling shareholder holding 40.34%, and China National Offshore Oil Group Co., Ltd., under the central SASAC, as the ultimate actual controller Top Two Shareholders' Holdings | Shareholder Name | Shareholder Type | Holding Percentage | Number of Shares Held | | :--- | :--- | :--- | :--- | | Shandong Haihua Group Co., Ltd. | State-owned Legal Person | 40.34% | 361,048,878 | | UBS AG | Overseas Legal Person | 2.12% | 18,961,145 | - The company's controlling shareholder is Shandong Haihua Group Co., Ltd., and the ultimate actual controller is China National Offshore Oil Group Co., Ltd.[140][141] Directors, Supervisors, Senior Management, and Employees This section provides details on the background, appointments, and compensation of the company's directors, supervisors, and senior management, along with statistics on employee numbers, professional composition, and education levels, noting the departure of Vice General Manager Wang Zhaojie due to work changes Compensation of Directors, Supervisors, and Senior Management The company's directors, supervisors, and senior management are compensated on an annual salary basis, determined by the Board's Remuneration and Assessment Committee based on performance, with a total pre-tax compensation of 2.3256 million Yuan received from the company in the reporting period, while some serving in shareholder units do not receive compensation from the listed company - In 2019, the total pre-tax compensation received by the company's directors, supervisors, and senior management from the company amounted to 2.3256 million Yuan[163] Employee Information As of the end of the reporting period, the company had 4,731 employees, with production personnel accounting for the largest proportion at 3,851, and 1,167 employees holding college degrees or above, with the company implementing a position-skill-salary point system and detailed training plans Employee Professional Composition | Professional Category | Number of People | | :--- | :--- | | Production Personnel | 3,851 | | Sales Personnel | 65 | | Technical Personnel | 334 | | Financial Personnel | 68 | | Administrative Personnel | 413 | | Total | 4,731 | Corporate Governance This section describes the company's governance structure and internal controls, affirming its compliance with relevant laws and regulations, independent operation from the controlling shareholder in all key aspects, and no material weaknesses found in internal control self-assessment or audit reports Company's Independence from Controlling Shareholder in Business, Personnel, Assets, Organizations, and Finance The company maintains complete independence from its controlling shareholder in business, personnel, assets, organization, and finance, possessing independent supply, production, and sales systems, and full autonomy in its operations - The company maintains independence in its business, personnel, assets, organization, and financial aspects, demonstrating autonomous operational capabilities[171][172] Internal Control Status The company conducted an internal control self-assessment, and Grant Thornton Certified Public Accountants issued an internal control audit report, both concluding that the company maintained effective internal controls over financial reporting in all material respects as of December 31, 2019, with no material weaknesses identified in financial or non-financial reporting - The company's internal control evaluation and audit results received standard unqualified opinions, indicating no material weaknesses in financial or non-financial reporting[186][190] Financial Report This section includes the standard unqualified audit report from Grant Thornton Certified Public Accountants (Special General Partnership), the company's 2019 consolidated and parent company financial statements, and detailed notes, with key audit matters being soda ash revenue recognition and the accounting treatment of the slag field collapse incident, and notes detailing accounting policies, especially the first-time adoption of new financial instrument standards Audit Report Grant Thornton Certified Public Accountants issued a standard unqualified audit opinion on the company's 2019 financial statements, affirming their fair presentation of the company's financial position and operating results, with key audit matters including soda ash revenue recognition and the accounting treatment of the 2016 slag field collapse incident - The auditing firm is Grant Thornton Certified Public Accountants (Special General Partnership), which issued a standard unqualified audit opinion[194][197] - Key audit matters include revenue recognition for soda ash products and the accounting treatment of the slag field collapse incident[199][201][207] Financial Statements This section presents the company's 2019 consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity, showing a slight contraction in total assets, a decrease in total liabilities, stable owners' equity, declining revenue and profit, and improved operating cash flow Consolidated Balance Sheet Summary (Unit: Yuan) | Item | 2019-12-31 | 2018-12-31 | | :--- | :--- | :--- | | Total Assets | 4,518,707,608.58 | 4,580,736,486.93 | | Total Liabilities | 1,187,463,606.60 | 1,237,046,601.31 | | Total Owners' Equity | 3,331,244,001.98 | 3,343,689,885.62 | Consolidated Income Statement Summary (Unit: Yuan) | Item | 2019 Annual | 2018 Annual | | :--- | :--- | :--- | | Total Operating Revenue | 4,621,274,158.31 | 5,262,654,919.00 | | Operating Profit | 240,293,632.77 | 609,011,997.05 | | Total Profit | 216,650,785.35 | 618,201,262.18 | | Net Profit | 163,571,421.46 | 586,933,496.55 | Significant Accounting Policies and Accounting Estimates Changes The most significant accounting policy change in the reporting period was the adoption of new financial instrument accounting standards from January 1, 2019, which altered financial asset classification and measurement, particularly changing impairment from "incurred loss model" to "expected credit loss model," leading to retrospective adjustments affecting items like "Notes Receivable" and "Financial Assets Held for Sale" - The company adopted new financial instrument standards from January 1, 2019, changing financial asset impairment accounting from the "incurred loss model" to the "expected credit loss model"[440] Impact of New Financial Instrument Standards on Opening Consolidated Balance Sheet (Unit: Yuan) | Item | Before Adjustment (2018-12-31) | After Adjustment (2019-01-01) | Adjustment Amount | | :--- | :--- | :--- | :--- | | Notes Receivable | 1,197,499,094.77 | 0 | -1,197,499,094.77 | | Receivables Financing | 0 | 1,197,499,094.77 | 1,197,499,094.77 | | Financial Assets Held for Sale | 11,440,000.00 | 0 | -11,440,000.00 | | Other Equity Instrument Investments | 0 | 11,440,000.00 | 11,440,000.00 | | Other Comprehensive Income | 0 | -11,370,000.00 | -11,370,000.00 | | Retained Earnings | 572,271,793.88 | 583,641,793.88 | 11,370,000.00 |