The main reasons for the drop in the gross profit ratio and net profit were that the liquefied natural gas ("LNG") supplies had a lower gross profit margin and an expected credit losses provision was made for the trade receivables at RMB9.4 million (Previous Year: Nil). Moreover, the government subsidy was also reduced by RMB7.3 million for the Current Year.
During the Current Year, the Group focused on the expansion of the New Energy Business in terms of strengthening LNG supply during the heat supply period and enhanced its sales platforms and capabilities. The Group continued to obtain and complete a number of construction related and consultancy contracts. The subsidiary that operated LNG supply and related businesses brought stable income to the Group. The rental and management fees from LNG storage tanks and trading of new energy related industrial products were also other income sources for the Group.
The Group has been seeking new partnership in different regions, aiming to adopt a win-win strategy through co-exploring the LNG markets and securing stable LNG supplies with an extended and strong supply chain. At the end of last year, the Group successfully cooperated with Shanghai Jiulian Group, a wholly-owned subsidiary of the Shanghai Shenergy Group. Both parties agreed to form a Joint Venture to secure the supply of LNG resources and develop the business into the high potential market in the Yangtze River Delta region. Meanwhile, the Group continued to maintain strong business relationships with Tractebel Engineering S.A. from France and Tianjin Jinre Heat-Supply Group Co. Ltd.
Looking ahead, the Group will adopt a prudent business approach in near term to cope with the impact of COVID-19. The Group will actively identify suitable opportunities to develop any existing and new construction related and consultancy business. It will also cautiously execute strategic plans to enlarge its business scopes and take steps to gradually grow the scale of the LNG supply business, forge comprehensive partnership in the new energy sector as well as search for the PRC and international LNG suppliers to enrich its product portfolio. The Group's determination to become a leading diversified and integrated new energy service provider in the PRC remains unchanged. It will concentrate on extending its New Energy business coverage to other major cities in the PRC and be committed to broadening its income streams to achieve sustainable profitability and assuring the supply of LNG resources.
Zhonghua Gas Holdings Limited
Zhonghua Gas Holdings Limited is principally engaged in provision of diverse integrated new energy services including technological development, construction and consultancy services in relation to heat supply and coal-to-natural gas conversion, supply of liquefied natural gas, coupled with trading of new energy related industrial products. The Group is also engaged in the property investment business.
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