Corporate Governance - The board has established procedures for directors to seek independent professional advice when necessary, with costs covered by the company[1]. - Significant transactions involving major shareholders or directors will be reviewed at board meetings, allowing for principle approvals and further processing through written resolutions if applicable[1]. - The company ensures timely provision of sufficient information to the board and its committees, facilitating regular and informal contact between directors and management[1]. - The management is responsible for providing adequate explanations and information to the board for informed evaluations of financial and other data presented for approval[9]. - All directors receive monthly updates on the company's performance, conditions, and prospects, ensuring they can fulfill their responsibilities effectively[9]. - The board is committed to providing balanced, clear, and easily understandable assessments in all statutory and regulatory communications regarding the group's status[11]. - The company secretary plays a crucial role in supporting the board, ensuring effective communication among members and adherence to policies and procedures[5]. - The board is responsible for evaluating the nature and extent of risks acceptable in achieving strategic objectives, ensuring effective risk management and internal control systems are in place[11]. - The company has adopted the corporate governance code effective for the year ending December 31, 2023, ensuring compliance with relevant regulations[48]. Risk Management and Internal Control - The company maintains a reasonable, robust, and effective internal control system as assessed by the board[12]. - The board conducts annual reviews of the internal control system, including financial monitoring and risk management functions[14]. - There were no significant changes in the nature and severity of major risks since the last review, including environmental, social, and governance risks[16]. - The company has established an internal audit function, which is reviewed annually for necessity[18]. - A whistleblowing policy and system have been adopted, allowing confidential reporting of concerns regarding misconduct[18]. - The audit committee's responsibilities include specific duties as outlined in the corporate governance code effective for the year ending December 31, 2023[20]. - The audit committee has the authority to seek independent professional advice as needed to fulfill its responsibilities, with costs covered by the company[26]. - The board confirmed its responsibility for the overall internal control framework, acknowledging that the system cannot eliminate all errors and violations, providing reasonable but not absolute assurance against significant misstatements or losses[40]. - As of December 31, 2023, the internal control and risk management systems for financial, operational, and compliance risks were deemed sufficient and effective by the board and audit committee[41]. - An external professional company was engaged to review the group's internal control and risk management functions, identifying weaknesses and recommending measures to mitigate risks[40]. - The audit committee reviews the effectiveness of measures taken based on recommendations from external auditors and professional companies[41]. - The company has established risk management procedures to address all significant risks related to its business[104]. - The board believes that the risk management and internal control systems are reasonable, effective, and adequate as of December 31, 2023[107]. Financial Reporting and Audit - The independent auditor's report will outline the auditor's responsibilities regarding the financial statements, ensuring transparency and accountability[11]. - The audit committee has discussed and reviewed the financial performance for the year ending December 31, 2023[22]. - The company ensures transparency in financial reporting and maintains appropriate relationships with auditors[24]. - The audit committee reviewed the adequacy and effectiveness of the internal control system and provided recommendations to improve risk management[80]. - The audit committee discussed issues encountered during the interim and annual audits and any matters the auditors deemed necessary to discuss[79]. - The audit committee monitored the company's financial statements and reviewed key financial reporting judgments[79]. - The external auditor's fee for audit services was RMB 1,729,000[94]. Remuneration and Compensation - The company disclosed its director remuneration policy and provided details of senior management compensation by salary level in the annual report[31]. - The total compensation for Mr. Wang Zhihe was RMB 1,320,000, which includes a salary of RMB 634,000[60]. - The total compensation for Mr. Sun Zushan was RMB 638,000, with a salary of RMB 312,000[60]. - The total compensation for Mr. Xu Xijiang was RMB 432,000, with a salary of RMB 106,000[60]. - The total compensation for Mr. Wang Chunmeng was RMB 236,000, with a salary of RMB 73,000[60]. - The total compensation for Mr. Wu Shiliang was RMB 163,000, with no additional benefits[60]. - The total compensation for Ms. Lin Xiuxiang was RMB 163,000, with no additional benefits[60]. - The total compensation for Mr. Liu Jincheng was RMB 163,000, with no additional benefits[60]. - The remuneration committee has conducted an annual review of the compensation for all directors and senior management to ensure alignment with their responsibilities and the company's performance[58]. - The remuneration policy aims to provide appropriate rewards to encourage performance improvement and recognize individual contributions to the company's success[58]. - The remuneration committee members abstained from voting on matters related to their own compensation[59]. Shareholder Engagement - The board is responsible for maintaining ongoing dialogue with shareholders, particularly through the annual general meeting[32]. - The company has ensured that the chairman and committee chairs attended the annual general meeting to answer shareholder questions[36]. - The company has ensured that the voting procedures at the annual general meeting were clearly explained to shareholders[36]. - The company has a policy for shareholders to express their opinions and seek clarifications during the annual general meeting[95]. - The company encourages shareholder participation in the annual general meeting, with notices and related documents sent according to regulations[111]. - The company ensures high transparency in communications with shareholders regarding performance and prospects[89]. Board Composition and Diversity - The Nomination Committee is responsible for identifying qualified candidates for the board and making recommendations for appointments[64]. - The committee reviews the performance of directors annually and assesses the overall effectiveness of the board[69]. - The board has adopted a diversity policy aimed at ensuring a balanced skill set and diverse perspectives among its members[70]. - The company aims to maintain a diverse board in terms of skills, professional experience, and gender, without setting measurable targets at this time[69]. - The Nomination Committee has conducted a performance review of the board for the year ending December 31, 2023, and found no significant issues[69]. - The company has established a director nomination policy that outlines selection criteria and procedures to ensure a balanced skill set and leadership continuity[70]. - The board's composition is reviewed to ensure it meets the business needs and market environment changes[66]. - Independent non-executive directors are evaluated for their independence and contributions to the board[66]. - The company ensures that all directors are re-elected at least every three years, with new appointees standing for election at the next annual general meeting[69]. - The Nomination Committee will regularly review measurable targets to ensure the effectiveness of the board's diversity policy[70]. Corporate Social Responsibility - The company is committed to environmental protection and corporate social responsibility, continuously updating internal policies to prevent environmental risks[122]. - The group made charitable donations of approximately RMB 120,000 during the year ended December 31, 2023[175]. Share Capital and Financial Performance - The total issued share capital of the company as of December 31, 2023, is approximately $62,094, divided into 620,944,000 ordinary shares with a par value of $0.0001 each[117]. - The company has not issued any bonds during the fiscal year ending December 31, 2023[118]. - The company’s total revenue is primarily derived from the sales of urea products, which significantly impacts profit margins and profitability due to fluctuations in average selling prices and coal procurement costs[120]. - The company aims to diversify its product categories to mitigate risks associated with reliance on a single product and continuously improve production efficiency to reduce unit production costs[120]. - Sales to the top five customers accounted for about 22% of the total annual sales for the year ended December 31, 2023[188]. - Purchases from the top five suppliers represented approximately 31% of the total annual purchases, with the largest supplier accounting for about 12%[188]. Compliance and Legal Matters - The company has complied with relevant laws and regulations that significantly impact its business and operations during the fiscal year ending December 31, 2023[123]. - The company confirmed compliance with non-competition agreements for the year ended December 31, 2023[156]. - The board confirmed that there are no significant uncertainties affecting the group's ability to continue as a going concern[92]. - The company has not made any changes to its constitutional documents for the year ending December 31, 2023[99]. - There were no related party transactions that constituted connected transactions for the year ended December 31, 2023[152]. - The company had no interest-bearing bank borrowings as of December 31, 2023[172]. - The board confirmed that there were no claims made against directors during the year ended December 31, 2023[161]. - The company did not purchase, sell, or redeem any of its listed securities during the year ended December 31, 2023[179]. - There were no management or administrative contracts related to the company's business in effect during the year ended December 31, 2023[157]. Stock Options - The stock option plan allows for a total of 62,000,000 shares to be issued, representing approximately 9.98% of the company's issued share capital as of the board report date[182]. - The stock option plan is valid for ten years from the adoption date, with approximately three years remaining[182]. - No stock options have been granted, exercised, or canceled under the stock option plan since its adoption up to December 31, 2023[187]. - The maximum number of shares that can be issued under the stock option plan, if exercised, cannot exceed 30% of the issued shares at any time[182]. - The stock option exercise price will be determined by the board but cannot be lower than the highest of the closing price on the offer date or the average closing price over the preceding five business days[186]. - The company is eligible to revise the general scheme limit of the stock option plan with shareholder approval, not exceeding 10% of the issued shares at the time of approval[182].
东光化工(01702) - 2023 - 年度财报