国民技术(300077) - 2017 Q4 - 年度财报

Important Notice, Table of Contents, and Definitions This section provides essential preliminary information, including the table of contents and key definitions for the report Company Profile and Key Financial Indicators This section provides an overview of the company's fundamental information and a summary of its key financial performance and position Company Basic Information This chapter provides basic information about Nationz Technologies Inc., including its stock code, company name, legal representative, and registered and office addresses | Item | Information | | :--- | :--- | | Stock Abbreviation | Nationz | | Stock Code | 300077 | | Chinese Name | 国民技术股份有限公司 | | Legal Representative | Luo Zhaoxue | | Registered Address | 301, 302, Building 3, Shenzhen Software Park, High-tech Industrial Park, Nanshan District, Shenzhen | | Website | www.nationz.com.cn | Key Accounting Data and Financial Indicators In 2017, the company's operating revenue remained stable, but a significant asset impairment led to a net loss of RMB 488 million, a 582.21% year-over-year decrease, with operating cash flow also deteriorating significantly Key Financial Data for 2017 | Indicator | 2017 | 2016 | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue (RMB) | 694,957,148.30 | 706,124,094.84 | -1.58% | | Net Profit Attributable to Shareholders (RMB) | -488,035,935.10 | 101,207,345.09 | -582.21% | | Net Profit Attributable to Shareholders (Excluding Non-Recurring Items) (RMB) | -502,892,167.22 | 76,972,115.43 | -753.34% | | Net Cash Flow from Operating Activities (RMB) | -112,590,197.68 | -57,162,333.21 | -96.97% | | Basic Earnings Per Share (RMB/share) | -0.88 | 0.18 | -588.89% | | Weighted Average Return on Net Assets | -17.78% | 3.52% | -21.30% | | Balance Sheet Indicators | End of 2017 | End of 2016 | YoY Change | | Total Assets (RMB) | 2,979,892,720.29 | 3,294,161,979.78 | -9.54% | | Net Assets Attributable to Shareholders (RMB) | 2,531,348,428.14 | 2,963,461,029.50 | -14.58% | Key Quarterly Financial Indicators for 2017 (Unit: RMB) | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 190,623,167.03 | 166,805,229.86 | 181,117,714.60 | 156,411,036.81 | | Net Profit Attributable to Shareholders | 21,582,248.78 | 22,656,305.41 | 6,298,329.63 | -538,572,818.92 | - The company incurred a significant loss in the fourth quarter, primarily due to a RMB 500 million impairment provision for available-for-sale financial assets related to a missing persons incident[35][36][47] Business Overview This section outlines the company's core business, significant asset changes, and key competitive advantages, focusing on its integrated circuit and information security expertise Principal Business During the reporting period, the company focused on integrated circuits and information security, with core technologies in security, SoC, and wireless RF, providing comprehensive solutions from chips to services - The company's core business is integrated circuit design, focusing on information security and providing security chips and related solutions[34] Significant Changes in Major Assets Major asset changes during the period include a substantial decrease in available-for-sale financial assets due to a RMB 500 million impairment, increased construction in progress for the headquarters building, and significant growth in notes receivable and other receivables Explanation of Major Asset Changes | Major Asset | Explanation of Significant Change | | :--- | :--- | | Available-for-Sale Financial Assets | Period-end balance of RMB 44.90 million, a decrease of RMB 480.40 million from the beginning of the period, primarily due to a RMB 500 million impairment provision for Guotai Qixing Fund | | Construction in Progress | Increased by RMB 130.72 million from the beginning of the period, mainly due to increased settlement payments for the Nationz Technology Building project | | Notes Receivable | Increased by RMB 72.49 million from the beginning of the period, mainly due to increased goods payments settled by notes | | Other Receivables | Increased by RMB 179.06 million from the beginning of the period, mainly due to increased payments for supply chain management services and business cooperation earnest money | - Due to the disappearance of personnel related to Guotai Qixing Fund, the company made a full impairment provision of RMB 500 million for available-for-sale financial assets and a bad debt provision for RMB 500 million in other receivables from its subsidiary, Nationz Investment[35][36] Core Competencies The company's core competencies stem from continuous R&D investment, an improved external standard environment, and significant intellectual property achievements, particularly in secure, low-power, and wireless connectivity technologies - The company continuously focuses on R&D in security, low-power, and wireless connectivity technologies, independently developing new-generation trusted computing chips and low-power Bluetooth MCU chips[41] - The company's self-developed RCC Restricted Communication Technology officially became a national standard on December 1, 2017, providing a positive external environment for business development[41] - The company has achieved significant intellectual property results, with its "Method and System for Near-Field Communication" patent in the RCC technology domain winning the 19th China Patent Gold Award; as of the end of 2017, the company had cumulatively applied for 1,325 domestic and international patents and obtained 613 authorizations[42][43] Management Discussion and Analysis This section discusses the company's operational performance, financial position, investment activities, and future outlook, highlighting the impact of significant asset impairment on profitability Overview of Operations In 2017, operating revenue remained stable at RMB 695 million, but a RMB 500 million asset impairment due to a fund partner's disappearance led to a net loss of RMB 488 million, while the company expanded into new energy and compound semiconductor sectors - At the end of November 2017, the company encountered a missing persons incident involving an industrial fund partner, leading to a RMB 500 million impairment provision, which was the core reason for the significant annual loss[47] - Sales volume and revenue for the traditional core business of USBKEY security master control chips both decreased year-over-year due to market competition and diversified payment methods[47] - The company expanded into the new energy sector by acquiring a 70% equity stake in Shenzhen Sino Industrial Development Co., Ltd. through a cash acquisition, and also explored new growth areas by jointly investing in a compound semiconductor industrial park project with partners[55][56] Analysis of Principal Business In 2017, principal business revenue was RMB 695 million, a slight decrease of 1.58%, with security chip products remaining the core revenue source at 71.18% despite a slight decline, while trade (system integration) business grew significantly Operating Revenue Composition (Unit: RMB) | By Product | 2017 Amount | Share of Revenue | 2016 Amount | Share of Revenue | | :--- | :--- | :--- | :--- | :--- | | Security Chip Products | 494,670,279.46 | 71.18% | 505,855,764.74 | 71.64% | | Trade (System Integration) | 178,777,334.67 | 25.72% | 130,475,465.28 | 18.48% | | Technical Services | 6,718,955.62 | 0.97% | 19,372,082.65 | 2.74% | Gross Margin of Major Products | By Product | Operating Revenue (RMB) | Operating Cost (RMB) | Gross Margin | YoY Change in Gross Margin | | :--- | :--- | :--- | :--- | :--- | | Security Chip Products | 494,670,279.46 | 315,108,524.70 | 36.30% | -1.89% | | Trade (System Integration) | 178,777,334.67 | 162,728,504.46 | 8.98% | 3.38% | R&D Investment | Indicator | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | | R&D Investment Amount (RMB) | 137,469,143.60 | 121,160,681.84 | 135,570,620.02 | | R&D Investment as % of Operating Revenue | 19.78% | 17.16% | 24.18% | Key Cash Flow Statement Items (Unit: RMB) | Item | 2017 | 2016 | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -112,590,197.68 | -57,162,333.21 | -96.97% | | Net Cash Flow from Investing Activities | 169,827,613.36 | -170,659,610.64 | 199.51% | | Net Cash Flow from Financing Activities | -45,762,315.96 | -30,954,044.83 | -47.84% | | Net Increase in Cash and Cash Equivalents | 10,361,666.03 | -257,423,343.31 | 104.03% | Assets and Liabilities As of year-end 2017, total assets decreased by 9.54% to RMB 2.98 billion, with available-for-sale financial assets significantly reduced by a RMB 500 million impairment, while construction in progress, notes receivable, and other receivables increased Significant Changes in Asset Composition | Asset Item | 2017 Year-End Amount (RMB) | Share of Total Assets | 2016 Year-End Amount (RMB) | Share of Total Assets | Change in Share | | :--- | :--- | :--- | :--- | :--- | :--- | | Available-for-Sale Financial Assets | 44,902,600.00 | 1.51% | 525,300,000.00 | 15.95% | -14.44% | | Construction in Progress | 247,051,696.60 | 8.29% | 116,332,928.83 | 3.53% | 4.76% | | Notes Receivable | 169,252,400.88 | 5.68% | 96,764,075.76 | 2.94% | 2.74% | | Other Receivables | 192,728,173.44 | 6.47% | 13,663,680.30 | 0.41% | 6.06% | - The company had RMB 190 million in receivables from supply chain trade with OptimumNano and RMB 115 million in other receivables from supply chain management services with Fuyuan Electromechanical, for which the company has taken full preservation measures[88][89] Investment Analysis During the reporting period, the company made several equity investments, including establishing new subsidiaries, with RMB 845 million in unused raised funds remaining, while some previously funded projects failed to meet expected returns due to market and technical changes - Significant equity investments during the reporting period include: contributing RMB 13.8 million to establish Fujian Xingmin Yifu (holding 46% equity), and contributing RMB 120 million to participate in establishing Chengdu Nationz Tiancheng (holding 35% equity)[93] Overall Utilization of Raised Funds (Unit: RMB 10,000) | Total Raised Funds | Used in Current Period | Cumulatively Used | Total Change in Use | Total Unused | Amount Idle for Over Two Years | | :--- | :--- | :--- | :--- | :--- | :--- | | 230,401.97 | 25,602.67 | 181,301.28 | 1,648.73 | 84,502.61 | 84,502.61 | - Some raised fund investment projects did not meet expected returns, such as the mobile payment project being impacted by emerging payment technologies and market promotion difficulties; the secure storage project shifted to mobile payment integration due to market changes but also faced obstacles[106] Future Development Outlook and Risks The company plans to deepen its integrated circuit and information security expertise while expanding into IoT, AI, and new energy industrial electronics, but faces risks from maturing traditional markets, uncertain R&D returns, increased accounts receivable, and inventory obsolescence - Future Development Strategy: - Security Chips and Smart Cards: Continuously optimize cost-performance, maintain a leading position, and expand into financial terminals, social security cards, health cards, and other industry applications - IoT and Wireless Connectivity: Launch ultra-low-power, high-security products meeting IoT demands, promoting trusted computing and wireless communication solutions in industrial control and other fields - New Sector Layout: Focus on AI terminals, new energy industrial electronics, smart manufacturing, and other areas, entering new markets through independent R&D or collaborative development[121][122][123][125] - Key Risks Faced by the Company: - Strategic Opportunity Risk: The traditional security chip market is maturing; failure to achieve rapid, high-quality development may lead to missing opportunities in the "informatization + internetization" trend - R&D Return Risk: The integrated circuit industry has long R&D cycles, and market acceptance is influenced by standards and macroeconomic factors, potentially leading to high R&D investments not yielding expected returns - Accounts Receivable Risk: Credit sales strategies adopted due to market competition have increased accounts receivable balances, raising the risk of bad debts - Inventory Loss Risk: Long chip stocking cycles and rapid product iteration may lead to losses from unsalable or accumulated inventory[126][127][128][129] Significant Matters This section details important corporate events, including profit distribution, major litigation, equity incentive plan implementation, and other significant disclosures such as regulatory investigations and major acquisitions Profit Distribution and Dividends Due to a net loss in 2017, the board proposed no profit distribution, cash dividends, bonus shares, or capital reserve conversions for the year, aligning with the company's articles of association, contrasting with cash dividends in the prior two years - The 2017 profit distribution proposal adopted a "three noes" policy: no cash dividends, no bonus shares, and no capital reserve conversions to share capital[137][141] Cash Dividend Distribution for the Past Three Years (Unit: RMB) | Dividend Year | Cash Dividend Amount (Incl. Tax) | Ratio to Net Profit Attributable to Shareholders | | :--- | :--- | :--- | | 2017 | 0.00 | 0% | | 2016 | 11,272,800.00 | 11.14% | | 2015 | 28,196,000.00 | 32.78% | Major Litigation and Arbitration The company had no major litigation or arbitration during the reporting period, with a supply contract dispute arbitration with Apexone Electronics concluding, resulting in the company paying USD 400,000 and some arbitration fees - The arbitration case with Apexone Electronics has concluded, with the company paying USD 400,000 and some fees, and the matter has been fully executed[158] Implementation of Equity Incentive Plan During the reporting period, the company continued its 2015 restricted stock incentive plan, with the second unlocking period conditions met in April 2017, and subsequent repurchase and cancellation of restricted shares from departing incentive recipients - On April 27, 2017, the Board of Directors approved the "Proposal on the Fulfillment of Unlocking Conditions for the Second Unlocking Period of the Restricted Stock Incentive Plan"[162] - Due to the departure of 5 incentive recipients, the company completed the repurchase and cancellation of 247,000 restricted shares on July 31, 2017[192][193] Other Significant Matters Key disclosures during the period include a CSRC investigation for alleged information disclosure violations, significant impairment provisions for other receivables and available-for-sale financial assets, and the planned cash acquisition of a 70% stake in Shenzhen Sino Industrial Development Co., Ltd - On December 15, 2017, the company was investigated by the China Securities Regulatory Commission (CSRC) for alleged violations of information disclosure regulations[183] - On December 21, 2017, the company announced significant bad debt provisions for other receivables from its wholly-owned subsidiary and impairment provisions for available-for-sale financial assets, involving substantial amounts[183] - On December 21, 2017, the company announced its intention to acquire a 70% equity stake in Shenzhen Sino Industrial Development Co., Ltd. through a cash acquisition, marking its expansion into new sectors[183] Share Changes and Shareholder Information This section details changes in the company's share capital and provides an overview of its shareholder structure, including major shareholders and the absence of a controlling shareholder Share Changes During the reporting period, the company's total share capital slightly decreased from 563.64 million shares to 563.39 million shares due to the repurchase and cancellation of restricted shares from departing employees, alongside the unlocking of other restricted shares - Due to the departure of 5 equity incentive recipients, the company repurchased and cancelled 247,000 restricted shares, leading to a reduction in total share capital[192][193][194] - The second unlocking period of the restricted stock incentive plan unlocked 4,046,000 shares, increasing the number of unrestricted shares[192] Shareholders and Actual Controller As of the end of the reporting period, the company's equity structure is dispersed, with no controlling shareholder or actual controller, and the largest shareholder, Liu Yiqian, holds 4.38% of the shares - The company's equity is dispersed, with no controlling shareholder or actual controller[206][209] Top Five Shareholders' Shareholding | Shareholder Name | Shareholding Ratio (%) | Shares Held at Period End (shares) | | :--- | :--- | :--- | | Liu Yiqian | 4.38 | 24,691,300 | | Sun Yingtong | 3.05 | 17,164,400 | | Luo Shen | 1.34 | 7,535,759 | | Liu Xiaoxu | 1.30 | 7,331,567 | | Yu Yunbo | 1.07 | 6,025,000 | Preferred Shares Information This section confirms that the company had no preferred shares during the reporting period Preferred Shares During the reporting period, the company had no preferred shares - The company had no preferred shares during the reporting period[210] Directors, Supervisors, Senior Management, and Employees This section provides details on the company's board of directors, supervisors, and senior management, including their tenure, shareholdings, and compensation, as well as an overview of the employee structure Directors, Supervisors, and Senior Management This chapter details the status, shareholdings, and changes of the company's directors, supervisors, and senior management, noting the departure of three executives and a total compensation of RMB 9.35 million for the year - During the reporting period, 3 directors, supervisors, and senior management members left the company: Independent Director Zheng Bin (term expired), Deputy General Manager Guan Shiyuan (personal reasons), and Deputy General Manager Zhang Xiang (personal reasons)[214][216] Shareholding of Key Senior Management (Unit: shares) | Name | Position | Shares Held at Period End | | :--- | :--- | :--- | | Luo Zhaoxue | Chairman | 4,700,000 | | Sun Yingtong | Vice Chairman, General Manager | 17,164,400 | | Yu Junjie | Director, Executive Deputy General Manager | 1,200,000 | - In 2017, the total pre-tax compensation paid to directors, supervisors, and senior management was RMB 9.35 million[229][231] Employee Information As of the end of the reporting period, the company had 342 employees, with technical personnel comprising 65.20% of the workforce, reflecting its technology-driven nature, and over 82% holding bachelor's degrees or higher Employee Professional Composition | Professional Category | Number of Employees (persons) | Percentage | | :--- | :--- | :--- | | Technical Personnel | 223 | 65.20% | | Administrative Personnel | 59 | 17.25% | | Sales Personnel | 32 | 9.36% | | Management Personnel | 18 | 5.26% | | Financial Personnel | 10 | 2.92% | | Total | 342 | 100% | Corporate Governance This section describes the company's corporate governance structure, which complies with relevant laws and regulations, emphasizing its independent operation without a controlling shareholder and its commitment to information disclosure and investor relations Basic Corporate Governance Status The company has established a corporate governance structure compliant with laws and regulations, comprising the General Meeting of Shareholders, Board of Directors, Supervisory Committee, and management, with no significant discrepancies from regulatory requirements - The company's corporate governance structure is sound, complying with the "Company Law" and relevant CSRC regulations, with no significant discrepancies[239] - The company has no controlling shareholder or actual controller, ensuring operational independence[243][249] Corporate Bonds Information This section confirms that the company had no outstanding corporate bonds publicly issued and listed on a stock exchange during the reporting period Corporate Bonds During the reporting period, the company had no corporate bonds publicly issued and listed on a stock exchange that were not yet due or fully redeemed by the report approval date - The company had no outstanding corporate bonds[265] Financial Report This section presents the company's audited financial statements for 2017, including the audit report, balance sheet, income statement, cash flow statement, and detailed notes, highlighting key accounting policies and significant financial events Audit Report Daxin Certified Public Accountants issued a standard unqualified audit opinion on the company's 2017 financial statements, highlighting available-for-sale financial asset impairment, accounts receivable impairment, and goodwill impairment as key audit matters - The audit opinion type is a standard unqualified opinion[267][268] - Key Audit Matters (KAMs) include: - Impairment of Available-for-Sale Financial Assets: Due to the disappearance of personnel related to Guotai Qixing Fund, a partner of subsidiary Nationz Investment, the company made a full impairment provision of RMB 500 million for the investment - Impairment of Accounts Receivable: The significant amount of accounts receivable and their impairment provision involve significant management judgment - Goodwill Impairment: Impairment testing of RMB 54.67 million in goodwill from the 2012 acquisition of Nationz E-commerce involved significant judgment and estimation of future cash flows[273][275][278][283] Financial Statements This section includes the company's 2017 consolidated and parent company financial statements, showing a decrease in total assets, a shift from profit to loss, negative operating cash flow, and a significant reduction in owners' equity - The consolidated balance sheet shows total assets decreased from RMB 3.294 billion to RMB 2.980 billion, and net assets attributable to shareholders decreased from RMB 2.963 billion to RMB 2.531 billion[298][303] - The consolidated income statement shows operating revenue of RMB 695 million and net profit attributable to shareholders of -RMB 488 million[314] - The consolidated cash flow statement shows net cash flow from operating activities of -RMB 113 million[323] Notes to Financial Statements The notes provide detailed explanations of the company's financial statements, including accounting policies, significant estimates, and specific disclosures on the RMB 500 million impairment of available-for-sale financial assets, accounts receivable provisions, goodwill impairment, share-based payments, related party transactions, and significant commitments and contingencies - The notes provide a detailed explanation of the accounting treatment and reasons for the full impairment provision of RMB 500 million for available-for-sale financial assets due to the Guotai Qixing Fund missing persons incident[506][507] - The notes disclose the contingent liability that the company is under investigation by the CSRC for alleged violations of information disclosure regulations[646] - The notes disclose subsequent events after the balance sheet date, specifically the progress of the company's cash acquisition of a 70% equity stake in Shenzhen Sino Industrial Development Co., Ltd., which will lead to significant changes in the company's asset and liability structure[653] Documents Available for Inspection This section lists the documents available for public inspection, ensuring transparency and compliance with regulatory requirements