Wangsu Science & Technology (SZ:300017)2020-04-22 16:00Financial Performance - The company's operating revenue for 2019 was ¥6,007,497,816.26, a decrease of 5.21% compared to ¥6,337,460,593.18 in 2018[11]. - The net profit attributable to shareholders for 2019 was ¥34,483,627.00, representing a significant decline of 95.71% from ¥804,151,524.35 in 2018[11]. - The net profit attributable to shareholders after deducting non-recurring gains and losses was -¥591,523,621.10, a decrease of 184.71% compared to ¥698,274,191.49 in 2018[11]. - The company's total assets at the end of 2019 were ¥10,330,948,687.22, down 13.48% from ¥11,940,124,566.31 at the end of 2018[11]. - The company reported a basic earnings per share of ¥0.01 for 2019, a decrease of 96.97% from ¥0.33 in 2018[11]. - The total operating costs for 2019 were ¥4,496,767,560.00, an increase of 6.28% from ¥4,231,024,271.08 in 2018[61]. - The revenue from telecom value-added services was ¥5,975,858,364.29, accounting for 99.47% of total revenue, down 5.69% year-on-year[53]. - The revenue from IDC services was ¥514,111,995.52, representing 8.56% of total revenue, with a year-on-year decrease of 9.96%[53]. - The revenue from CDN services was ¥5,437,144,698.59, which accounted for 90.51% of total revenue, also down 5.41% year-on-year[53]. - The company reported a net profit attributable to shareholders of ¥110,561,869.95 in Q1 2019, compared to ¥694,649,218.46 in Q2 2019, indicating significant fluctuations in quarterly performance[55]. Shareholder Information - The company reported a total share capital of 2,434,015,604 shares as of December 31, 2019, with a profit distribution plan of cash dividends of 0.3 RMB per 10 shares[2]. - The company's cash dividend distribution is based on a total of 2,425,893,275 shares after excluding shares in the repurchase account[2]. - The company plans to distribute a cash dividend of 0.3 yuan per 10 shares, totaling 72,776,798.25 yuan (including tax) for the 2019 fiscal year[129]. - The total number of shares eligible for profit distribution is 2,425,893,275 shares after excluding repurchased shares[129]. - The cash dividend distribution policy has been consistent and complies with the company's articles of association and shareholder resolutions[124]. - The company has repurchased 8,122,329 shares, which do not participate in the profit distribution[124]. - The cash dividend amount distributed in 2018 was 72,984,558.51 yuan (including tax), with a similar dividend of 0.3 yuan per 10 shares[124]. - The total cash dividend (including other methods) for the year was 137,781,908.86 yuan[127]. - In 2019, the cash dividend amount was 72,776,798.25, representing 211.05% of the net profit attributable to ordinary shareholders[130]. - The total cash dividend, including other forms, reached 137,781,908.86, which is 399.56% of the net profit attributable to ordinary shareholders[130]. Risk Factors and Future Outlook - The company emphasizes the importance of risk factors including market, technology, management, and overseas business risks in its future development outlook[2]. - The company's future plans and development strategies are not to be considered as profit forecasts or commitments to investors[2]. - The company plans to enhance its research and development efforts to provide more stable and reliable service experiences for clients[20]. - The company aims to leverage new technologies such as 5G, big data, IoT, and AI to meet the increasing demand for edge computing[21]. - The company plans to enhance its edge computing services to meet the growing demand for digital transformation[25]. - The company will continue to increase R&D investment to respond to market changes and optimize existing products and core technologies[108]. - The company aims to enhance its cloud security and cloud computing business by improving global security coverage and service automation[109]. - The company plans to deepen its focus on the government and enterprise market, increasing investment and strengthening specialized sales teams[112]. - The company will expand its overseas business to increase the proportion of overseas revenue, leveraging its strong R&D capabilities and service experience[113]. - The company is committed to building a comprehensive intelligent business platform with capabilities in transmission, computing, storage, and security[110]. Research and Development - R&D investment for 2019 was 669.62 million CNY, accounting for 11.15% of total revenue[42]. - The total number of patents held by the company reached 324 by December 31, 2019[34]. - The company has established five R&D centers in Xiamen, Shenzhen, Seoul, Silicon Valley, and Moscow[34]. - The number of R&D personnel decreased to 2,099 in 2019, representing 66.17% of the total workforce[69]. - Research and development expenses increased by 12.39% to ¥661,528,188.75, primarily due to increased labor costs for capitalized R&D expenditures[66]. - The company authorized 129 new patents and 37 software copyrights during the reporting period, bringing the total to 324 patents and 266 software copyrights[68]. - The company actively collaborates with universities and industry partners to advance edge computing and IoT technologies[48]. Corporate Governance and Compliance - The company has not engaged in any continuous supervision responsibilities during the reporting period[10]. - The company has fulfilled all commitments made by actual controllers, shareholders, and related parties during the reporting period[132]. - The company has committed to avoiding any direct or indirect competition with its controlled enterprises[134]. - The company has pledged to reduce and regulate related party transactions to ensure compliance with regulations[134]. - The company has ensured the independence of its operations, assets, and finances post-transaction[134]. - The company has maintained compliance with its commitments regarding the repayment of corporate income tax liabilities, ensuring no tax liabilities arose during the reporting period[136]. - The company has committed to not providing financial assistance or guarantees to incentive plan participants, ensuring strict adherence to its equity incentive plan[137]. - The company has not faced any penalties or violations related to its commitments over the reporting period, demonstrating a strong compliance record[137]. - The company has no major litigation or arbitration matters reported during the fiscal year[149]. - The company has maintained a good integrity status with no significant debts due and unpaid by major shareholders[153]. Investments and Acquisitions - The company established CDNetworks Holdings Singapore Pte. Ltd. and acquired 55% of Ningbo Yihui Wangsu Equity Investment Fund Management Co., Ltd., resulting in a 95% ownership post-acquisition[146]. - The company sold 100% of the shares of Xiamen Qinhuai Technology Co., Ltd. and its subsidiaries, as well as 100% of Shenzhen Ruiwang Technology Co., Ltd.[146]. - The company made a significant equity investment of ¥212,500,000.00 in Yunjizhihui Technology Co., Ltd., acquiring a 42.50% stake[81]. - The company has expanded its international presence through acquisitions, including a total investment of RMB 130,701.66 million in a Korean CDN company and RMB 5,341.66 million in a Russian CDN company[87]. - The company sold 100% of its shares in Xiamen Qinhuai for RMB 990 million, contributing RMB 40.56 million to the company's net profit[94]. - The sale of Xiamen Qinhuai is part of the company's strategic focus on CDN, cloud security, and cloud computing[94]. Financial Management - The total amount of entrusted financial management during the reporting period was ¥287,316.69 million, with an unexpired balance of ¥239,071.59 million[185]. - The company invested ¥278,582.86 million in bank financial products and ¥8,733.83 million in broker financial products[185]. - The company achieved a total income of ¥6,358.85 million from various low-risk financial products during the reporting period[187]. - The company utilized idle self-owned funds of ¥300,000 million for financial management, allowing for rolling use of capital[186]. - The annualized return rates for structured deposits ranged from 3.50% to 4.10%[188]. - The company reported no overdue amounts for entrusted financial management during the reporting period[185]. - The income from the Minsheng Bank's financial products included ¥843.47 million from the Cuizhu product and ¥2,697.06 million from the Winner product[186]. - The company has a strong focus on low-risk financial products, with all investments categorized as low-risk or principal-protected floating income[186]. - The structured deposits were primarily aimed at idle fundraising, ensuring capital preservation with floating returns[190]. - The structured deposits were diversified across multiple banks, including Minsheng Bank and China Merchants Bank, to mitigate risk[190]. Employee Stock Incentive Plans - The company decided to cancel 13,000,366 stock options from the 2015 stock option incentive plan due to not meeting the exercise conditions[154]. - The company canceled 6,400,134 stock options from the 2016 stock option incentive plan, leaving a total of 8,533,511 stock options remaining[155]. - The 2017 stock option and restricted stock incentive plan saw adjustments, reducing the number of stock options from 14,738,500 to 14,283,000 due to employee departures[156]. - The company approved the exercise of 4,276,200 stock options and the unlocking of 6,173,400 restricted stocks for eligible participants in the first exercise/unlock period[158]. - The company completed the cancellation of 45,550 stock options and 64,050 stock options from the 2017 incentive plan due to employee departures and other conditions[158]. - The total cost amortized for the 2016 stock option incentive plan during the reporting period was 25.566 million yuan, with a cumulative amortized cost of 12.3142 million yuan[155]. - The company adjusted the exercise price of stock options from 10.19 yuan to 10.16 yuan as part of the 2017 incentive plan[156]. - The company has a total of 419 participants in the first grant of stock options under the 2017 incentive plan, with a total of 13,567,489 stock options granted[157]. - The actual amortization cost for the stock option and restricted stock incentive plan in 2019 was 7.2988 million yuan, with a cumulative amortization cost of 67.7966 million yuan[159]. - The remaining expense for the 2017 stock option and restricted stock incentive plan to be recognized in 2020 is 13.0943 million yuan[161]. Related Party Transactions - The total amount of related party transactions during the reporting period was 335.73 million yuan, with a maximum approved transaction limit of 652 million yuan[170]. - The company engaged in related party transactions with Beijing Qinhuai, with transaction amounts of 110.27 million yuan and 177.81 million yuan for procurement and sales, respectively[170]. - The company reported that the stock incentive plan expenses were allocated across research and development, management, and sales expenses[170]. - The company has not exceeded the approved transaction limits for related party transactions during the reporting period[170]. - The company disclosed that the pricing principles for related party transactions adhered to normal commercial practices under market competition[170]. - The company did not report any significant differences between transaction prices and market reference prices for related party transactions[171]. - The company plans to continue its daily related party transactions as approved in previous board meetings[170]. Market Trends and Strategic Focus - The global CDN market is projected to grow from 9 billion USD in 2018 to 23.2 billion USD by 2021, indicating strong market potential for overseas expansion[105]. - The company plans to focus on CDN services while expanding into cloud security, cloud computing, and edge computing to enhance its global strategy[106]. - The company aims to leverage the increasing demand for integrated solutions beyond single CDN services, including security and application acceleration[104]. - The Chinese government is prioritizing network infrastructure development, which is expected to boost the CDN and cloud computing sectors[100]. - The company is adapting to customer needs shifting from "single service" to "overall solutions" in response to evolving business requirements[104]. - The establishment of CDNetworks Holdings Singapore Pte. Ltd. during the reporting period is part of the company's strategy to enhance its operational footprint[97]. - The company is committed to advancing key technologies in internet and cloud computing infrastructure to support its growth strategy[106]. Corporate Changes and Compliance - The company has undergone significant changes in its major subsidiaries, including the sale of several subsidiaries, which are detailed in the report[97]. - The company will continue to strengthen its governance structure and internal controls to improve management efficiency and adapt to its growing scale[115]. - The company will focus on protecting its intellectual property rights and enhancing overseas IP protection efforts[108]. - The company has not reported any significant changes in the measurement attributes of its major assets during the reporting period[78]. - The company has not faced any bankruptcy reorganization issues during the reporting period[149]. - The company faced a reprimand from the Shenzhen Stock Exchange for a violation related to stock trading by a senior executive, who reduced holdings without adhering to the required notice period[151]. - The senior executive, Shu Minjian, reduced his holdings by 6,734,402 shares, representing 0.2768% of the total share capital, leading to a commitment not to sell shares for 12 months following the reduction[152].