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RoboSense Technology Co., Ltd — Annual Report 2001
Apr 29, 2002
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Download source fileLuoyang Glass Company Limited
(A joint stock limited company incorporated in the Peoples's Republic of China)
SUMMARY OF 2001 ANNUAL REPORT
Important Note
It is hereby confirmed by the Board of Directors of the Company that there is no false representation, material misleading information or substantial omission, contained in this report. The Board of Directors of the Company also jointly and severally accepts full responsibility for the truthfulness, accuracy and completeness of the contents of the report. The summary is extracted from and should be read in conjunction with the full text of the annual report.
I. Company Profile
- Registered Company name in Chinese : 洛陽玻璃股份有限公司
Company short name : Luoyang Glass
Registered company name in English : Luoyang Glass Company Limited
(Abbreviation: LYG)
-
Legal Representative : Mr. Guo Xiaohuan
-
Board Secretary : Mr. Wang Jie
Correspondence address : Secretary office of Board of Directors of
Luoyang Glass Company Limited
No. 9, Tang Gong Zhong Lu,
Xigong District, Luoyang Municipal,
Hensn Province, the People's Republic of
China
Contact Person : Mr. Wang Fan/Mr. Guo Bing
Telephone : 86-379-3908588
Fax : 86-379-3251984
E-mail Address : [email protected]
- Registered address and office : No.9, Tang Gong Zhong Lu,
Xigong District
Luoyang Municipal,
Henan Province,
the People's Republic of China
(the "PRC")
Postal code : 471009
Internet address : http://www.clfg.com,
- Newspapers for information disclosure : China Securities Journal,
Shanghai Securities Journal,
Hong Kong Economic Times and
Hong Kong iMail (in English)
Website publishing the Annual Report : http://www.sse.com.cn
- A Shares - Place of Listing : Shanghai Securities Exchange
Stock Code : 600876
Stock Abbreviation : Luoyang Glass
H Shares - Place of Listing : The Stock Exchange of Hong Kong Limited
Stock code : 1108
Stock Abbreviation : Luoyang Glass
II. Financial and Business Summary
- The result of Luoyang Glass Company Limited ("the Company") and its subsidiaries ("the subsidiaries) for the current year prepared under PRC Accounting Regulations are as follows:
2001 2000
Rmb'000 Rmb'000
Total profit 8,088 89,440
Net profit 9,868 65,991
Net profit excluding non-operating profit and loss 9,868 65,991
Principal operating profit 146,406 284,954
Other operating profit - -
Operating profit 10,770 89,791
Investment expense (804 ) (9,559 )
Subsidied income - -
Non operating Loss/(profit) (1,878 ) 9,208
Net cash inflow from operating activities 135,567 45,062
Net increase (decrease) in
cash and cash equivalent 25,560 (62 )
- Major financial data and financial indicators for the previous three years of the Group
(1) Prepared in accordance with PRC Accounting Regulations (for the year ended 31 December)
2001 2000 1999
Rmb'000 Rmb'000 Rmb'000
Income from principal operations 817,277 901,522 822,082
Net profit 9,868 65,991 52,147
Total assets 3,121,000 2,889,045 2,878,541
Shareholders' funds (excluding
minority interests) 1,562,584 1,552,716 1,486,725
Earnings per share (diluted) 0.014 0.094 0.074
Earnings per share (weighted) 0.014 0.094 0.074
Net assets per share (diluted)(yuan) 0.014 0.094 0.074
Net assets per share (yuan) 2.23 2.22 2.12
Adjusted net assets per share (yuan) 1.23 1.81 1.42
Return (%) on net assets (diluted) 0.63 4.25 3.51
Return (%) on net assets (weighted) 0.63 4.25 3.51
Cash flow from operating
activities per share (yuan) 0.194 0.064 0.13
(2) Return on net assets calculated as required by "No.9 Document of Regulations of Information Disclosure for Public Companies" issued by China Securities Regulatory Commission:
2001
Profit during the reporting period Return on net asset Earnings per share
Fully Weighted Fully Weighted
dilluted average dilluted average
Principal operating profit 0.094 0.094 0.209 0.209
Operating profit 0.007 0.007 0.015 0.015
Net profit 0.006 0.006 0.014 0.014
Net profit excluding extraordinary items 0.006 0.006 0.014 0.014
2000
Profit during the reporting period Return on net asset Earnings per share
Fully Weighted Fully Weighted
dilluted average dilluted average
Principal operating profit 0.18 0.19 0.41 0.41
Operating profit 0.06 0.06 0.13 0.13
Net profit 0.04 0.04 0.09 0.09
Net profit excluding extraordinary items 0.04 0.04 0.09 0.09
(3) Prepared under International Accounting Standards ("IAS") (for the year ended 31 December)
2001 2000 1999
Rmb'000 Rmb'000 Rmb'000
Turnover 813,385 896,169 818,000
Profit attributable
to shareholders 9,868 65,991 56,161
Total assets 3,100,509 2,858,471 2,828,757
Shareholders' fund (excluding 1,562,584 1,552,716 1,486,725
minority interests)
Earnings per share
(basic and diluted) (yuan) 0.014 0.09 0.08
Net assets per share (yuan) 2.23 2.22 2.12
Return (%) on net assets 0.63 4.25 3.78
Note: The profits and other financial indicators are calculated based on the number of shares of 700,000,000.
- There was no difference between the net profit prepared under PRC Accounting Regulations and under International Accounting Standards
III. CHANGE IN SHARE CAPITAL AND SHAREHOLDERS
- Structure of share capital and change in share capital of the Company during the period: (unit: 0'000 shares)
After
Before Surplus change
change for Placing Bonus reserve New for the
the period shares shares converted issue Others the period
(1) Non-circulating shares
- Promoters' shares 40,000 - - - - - 40,000
Including:
Nation-owned 40,000 - - - - - 40,000
Domestic-owned legal
person shares - - - - - -
Shares held by overseas
legal persons - - - - - - -
Others - - - - - -
-
Subscribed legal person shares - - - - - -
-
Internal employees' shares - - - - - -
-
Preferential shares or others - - - - - -
Total non-circulating shares 40,000 - - - - - 40,000
(II) Circulating shares
- Domestic listed Renminbi
ordinary shares (A shares) 5,000 - - - - - 5,000
-
Domestic listed foreign shares - - - - - -
-
Overseas listed foreign
shares (H shares) 25,000 - - - - - 25,000
- Others - - - - - -
Total circulating shares 30,000 - - - - - 30,000
(III) Total number of shares 70,000 - - - - - 70,000
-
Shareholders
-
At the end of the reporting period, the number of shareholders was 36,159, of which 1 was state-owned legal person share holder, 36,062 were A share holders and 96 were holders of H shares.
-
Legal person shareholder holding more than 5% of shares.
China Luoyang Float Glass (Group) Company Limited ("CLFG") held 400,000,000 State-owned legal person shares, representing 57.14% of the total share capital. During the period, there was no change in the number of shares held by it, nor pledge or frozen of shares was undertaken.
The number of H shares of the Company held by HKSCC Nominees Limited at the end of the period acocunted for 35.3% of the total share capital of the Company. HKSCC Nominees Limited is a participant of Hong Kong Central Clearing and Settlement System providing securities registration and custody services for its customers.
- Shareholdings of substantial shareholders
As at 31 December 2001, the top ten shareholders of the Company were as follows:
No. of Percentage to total
Name of shareholders Class shares held share capital
(shares) (%)
China Luoyang Float Glass
Group Company Limited
(held on behalf of the State) A Shares 400,000,000 57.14
HKSCC (Nominees) Company Limited H Shares 247,116,998 35.3
HSBC Nominees (Hong Kong) Limited H Shares 520,000 0.074
Chuk Yee Men Liza H Shares 374,000 0.053
Xinhe Jijin A Shares 234,972 0.034
Tam Chow Hing H Shares 210,000 0.03
Shou Jianhong A Shares 195,300 0.028
Chen Jinshou A Shares 183,100 0.026
Tam Tung Sun H Shares 150,100 0.021
Wang Wing Tuan A Shares 139,921 0.020
- Introduction to the controlling shareholder of the Company
China Luoyang Float Glass (Group) Company Limited was incorporated in April 1991, and its legal representative is Mr. Guo Xiaohuan. Its registered capital is Rmb1,286,740,000 and its shareholders include Luoyang Assets Management Company, China Hua Rong Assets Management Company, China Changcheng Assets Management Company, China Dongfang Assets Management Company, China Xinda Assets Management Company and China Xinxing Construction Material (Group) Company holding 80.27%, 8.55%, 5.44%, 3.10%, 1.94% and 0.7% respectively. Its scope of business includes production of glass and related raw material, manufacturing of assembly equipment and intensive glass processing.
IV. Directors, Supervisors and Senior Management
- Background Information on Directors, Supervisors and Senior Management
Shareholding Shareholding
at beginning at end of
Name Position Gender Age Term of the year the year
Guo Xiaohuan Chairman M 59 Until 28.3.2003 2,000 2,000
Wang Yongxin Vice-Chairman
& General Manager M 43 Until 28.3.2003 1,800 1,800
Zhu Lei Bo Executive Director M 39 Until 28.3.28 2,000 2,000
Zhang Shaojie Executive Director and
Standing Deputy
General Manager M 39 Until 28.3.2003 1,700 1,700
Zhu Liuxin Executive Director &
Deputy General Manager M 48 Until 28.3.2003 1,700 1,700
Jiang Hong Executive Director &
Deputy General Manager M 39 Until 28.3.2003 1,800 1,800
Wang Jie Executive Director and
Company Secretary M 39 Until 28.3.2003 2,000 2,000
Dai Zhiliang Independent Non-executive
Director M 61 Until 28.3.2003 0 0
Wei Chenglong Independent Non-executive
Director M 37 Until 28.3.2003 0 0
Lui Baoying Chairman of the Suprevisory
Committee M 48 Until 28.3.2003 2,000 2,000
Cheng Rongfa Supervisor M 52 Until 28.3.2003 0 0
Ma Shixin Supervisor M 51 Until 28.3.2003 0 0
Wu Wenzheng Supervisor M 37 Until 28.3.2003 0 0
Gu Meifeng Supervisor F 38 Until 28.3.2003 0 0
Li Jinran Deputy General Manager M 59 Until 28.3.2003 2,000 2,000
Wang Heping Deputy General Manager M 49 Until 28.3.2003 1,700 1,700
Gao Tianbao Chief Financial Offier M 43 Until 28.3.2003 0 0
Note: There was no change in the number of shares held by the directors, supervisors and senior management during the year. Save as disclosed above, no directors, supervisors and senior management had any interests, whether beneficial or non-beneficial, in the issued share capital of the Company, and other associated corporations (within the meaning of the Securities (Disclosure of Interests ("SDI") Ordinaance in Hong Kong) as at 31 December 2001.
- Details of Positions held by Directors and Supervisors in Shareholders
Relationship of shareholder
Name Name of Shareholder with the Company Positions
Guo Xiaohuan China Luoyang Float Glass Controlling shareholder Chairman, General
(Group) Company Limited Manager, Deputy
Secretary to the
Party Committee
Wang Yongxin China Luoyang Float Glass Controlling shareholder Director, Deputy
(Group) Company Limited General Manager,
Member of the
Standing Committee
Zhu Leibo China Luoyang Float Glass Controlling shareholder Director, Deputy
(Group) Company Limited General Manager,
Zhang Shaojie China Luoyang Float Glass Controlling shareholder Director, Deputy
(Group) Company Limited General Manager,
Zhu Liuxin China Luoyang Float Glass Controlling shareholder Deputy General
(Group) Company Limited Manager,
Jiang Hong China Luoyang Float Glass Controlling shareholder Deputy General
(Group) Company Limited Manager,
Liu Baoying China Luoyang Float Glass Controlling shareholder Vice Chairman,
(Group) Company Limited Secretary
to the Party Committee
Cheng Rongfa China Luoyang Float Glass Controlling shareholder Supervisor
(Group) Company Limited
3) Remuneration for the year
During the reporting period, the remuneration for directors, supervisors and senior managers of the Company totalled Rmb316,188, of which the independent non-executive directors received only Rmb10,000 allowance; independent supervisors received allowances of Rmb6,000. Remuneration for three highest paid directors totalled Rmb88,845. Remuneration for three highest paid senior mangement totalled Rmb57,827. The remuneration for directors, supervisors and senior management ranged as follows: 2 people in the range of Rmb30,000 to Rmb40,000; 6 people in the range of Rmb20,000 to Rmb30,000 and 6 people in the range of Rmb10,000 to Rmb20,000. The independent directors and supervisors, did not receive remunerations and allowance from shareholding units or other related units.
4) Change of directors, supervisors and senior managers during the reporting period
The Board meeting held on 17 April 2001 approved the resignation of Mr. Zhang Gaobo from his position as the Company's independent director due to personal reasons; the appointment of Mr. Wei Chenglong as the Company's independent director; appointment of Mr. Li Jinrang as the Company's Deputy General Manager. These changes were approved at the Company's 2000 General Meeting.
- The Company's governance structure
1) The Company's governance
The Company has improved its legal person governance structure and standard operation in accordance with the Company Law, Security Law and other laws and regulations and has basically complied with the requirements stipulated in the regulatory document of "Regulation of Listing Companies" issued by China Security Regulatory Commission and State Economic and Foreign Trade Commission on 7 January 2002. The Company's compliance are as follows:
(1) Shareholder and General Meeting: The Company has ensured equity of all its shareholders particularly medium and small shareholders and their rights to be fully exercised. The Company convened and held the General Meeting in accordance with the Articles of Associations and Standard Opinion of General Meetings of Listing Companies. The Company is in the process of formulating "Rules and Procedures of General Meetings" in order to further clarify functions and obligations of General Meetings and to standardize its operation.
(2) Connected transaction: The Company's connected transactions were fair and reasonable. Full disclosure was given to relevant connected transactions in accordance with regulation and supervision of overseas authority.
(3) Relationship between listing company and controlling shareholder: Relationship between controlling shareholder and the Company is in compliance with relevant regulations. The controlling shareholder did not intervene, directly or indirectly, the Company's policy making and operation. Some of the Company's senior managers temporarily hold administrative positions in the holding company due to existing personnel management system. However, such managers only hold the position title and did not involve in the actual work of the holding company, instead, they put entirely their time and energy into the Company's work. Furthermore, some of them did not receive remunerations from the holding company. In addition, the Company and the controlling shareholder basically operated separately in terms of personnel, asset, finance, structure and business. The Company's directors, supervisors and internal management operate independently.
(4) Directors and Board of Directors: The Company elected its directors in accordance with the Articles of Associations. Number and composition of the Board of Director are in line with laws and regulations. The Board formulated "Rules and Procedures of Board of Directors". Each director diligently studied relevant laws and regulations and understood duties and obligations of being a director of a listing company.
(5) Supervisors and the Supervisory Committee: Number and composition of the Supervisory Committee are in line with laws and regulations. The Supervisory Committee formulated "Rules and Procedures of the Supervisory Committees". The supervisors diligently performed their duties and accountable for the shareholders. They effectively supervised the Company's financial status and the compliance of the performance of directors, General Manager and other senior managers with laws and regulations.
(6) Performance review and incentive and control system: The Company is in the process of establishing fair and transparent standard of performance review and incentive and control system for its directors, supervisors and senior managers.
(7) Associates: The Company respected and maintained the legal rights of bank and other debtors, staff and consumers.
(8) Information disclosure and transparency: The Company designated the Secretary of Board of Directors to be in charge of information disclosure, reception of visits of shareholders and inquiry. The Company disclosed relevant information in a truthful, timely and complete manner in order to provide investors with equal access to information. The Secretary to Board of Directors is accountable for the Board of Directors, who provides full support for his work.
2) Independent directors
The Company set up system of independent directors upon its establishment and appointed two independent directors. These independent directors performed their duties in accordance with the Articles of Associations and Listing Rules and played significant role in standardizing the Company's operation.
3) Plan to improve the Company's management structure
-
To amend and improve the Articles of Associations and its specific rules with reference to "Regulations of Listing Companies";
-
To further standardize relationship with controlling shareholders;
-
To further improve and standardize operating mechanism of the Special Committee of Board of Directors;
-
To accelerate and improve performance review standard and incentive the control system for directors, supervisors and senior management.
VI. Particulars of General Meetings
-
The Company's 2000 Annual General Meeting was held at 9:00 am on Tuesday, 5 June 2001 at Conference Room, 2nd floor, the Company's office building, No.9, Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province. The following were considered and approved: Report of the Board of Directors; Report of the Supervisory Committee; audited financial statement; profit appropriation plan; re-appointment of KPMG Huazhen and KPMG as the Company's PRC and international auditor for the year 2001 and authorization of the Board of Directors to fix their remuneration; resignation of Mr.Zhang Gaobo from his position of independent director and appointment of Mr. Wei Chenglong to fill in this position; resolution that, upon satisfying relevant conditions, the Company may distribute, issue or handle domestic listed investment shares and overseas listed foreign investment shares separately or concurrently during relevant period; the amount shall not exceed 20% of the total issued shares of the same category on the date of approval this resolution; the Board of Directors was authorized to handle issues in relations to such issuance. Announcement of resolutions passed at this meeting was published in China Securities Journal, Shanghai Security Journal, Hong Kong Wei Wui Po and Hong Kong iMail (English) on 18 April and 6 June 2001.
-
2001 Extraordinary General Meeting was held at 9:00 am on Monday, 3 December 2001 at No.9, Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province. During which the execution of the relevant legal documents such as the Debt Transfer Agreement between the Company and CLFG under the accounts receivable and the guarantee were approved and confirmed. Announcement of resolutions passed at this meeting was published in China Securities Journal, Shanghai Security Journal, Hong Kong Wei Wui Po and Hong Kong iMail (English) on 16 October and 4 December 2001.
7. Report of the Board of Directors
- Business Review
The Company's position in the industry
The Company is the place of origin for one of three great float glass production methods "Luoyang Float Glass". The Company has six production lines of float glass and is the largest producer and distributor of float glass in the PRC. The Company is in a leading position as a listed company within the industry. During 2001, the Company produced 11,615,700 weighted cases of 1-25 mm high quality float glass in different brand, colours and specifications. The Company achieved sales income of Rmb817,277,000. The Company was in a leading position in the industry in terms of production volume and sales income.
Major business and operating results
The Group mainly engages in production and sale of float flat glass and reprocessed glass, of which the floating flat glass accounted for 95.77% of income from principal operations and 98.89% of principal operating profit; reprocessed glass accounted for 4.23% of income from principal operations and 1.11% of the total profit from principal operations.
The geographic area and its ratio of sale volume are as follows: Eastern China: 11.08%, Nothern China: approximately 10.21%, Central China approximately 45.60%, Northwestern China approximately 8.00%, Southwestern China: approximately 16.7%, Southern China: approximately 8.40%.
Main products:
Over 10% of the income and profit from principal business is float sheet glass. During 2001, the Group's sale income from float sheet glass was Rmb817,277,000 cost of sales was Rmb666,979,000 and gross profit ratio was 18.39%.
Major supplier and customer
During the reporting period, five largest suppliers accounted to 29.6% of the total purchases and five largest customers accounted to 15.89% of the group turnover.
Existing difficulties and measures to take:
During 2001, the glass industry experienced excessive expansion, orderless competition, price decline and the efficiency decrease. Confronted with such situation, the Company's staff and management, under correct leadership of the Board of Directors, carried out activities of the "year of quality", duly implemented the working guideline of "improve quality, create competitive advantage, rely on technological progress, strengthen development, carry out innovation and improve capacity" , strengthened internal management, took active measures to overcome such negative factors as increasing price of raw material, intensity of rail transportation and over inventory, devoted great efforts in improving product quality, optimizing variety, sizes and specification, exploring potential, reducing cost, disciplining the enterprise and improving competitive advantage and produced 11,615,700 weighted cases of float glass during the year and recorded a net profit of Rmb9,868,000. During the year, the Company mainly focused on the following:
- Initiated by the activities of "year of quality", promote the quality management to the next level and strengthen product competitiveness
(1) Strengthened quality awareness and education, improved staff's responsibility of quality control: Firstly, organized product exhibition, studied quality promotion material, ensured that staff are fully aware of the urgency and importance of improving quality; Secondly, organized staff in charge of production to visit major customers and asked for their opinion to experience the market pressure and learn the existing shortcomings thus motivated to improve and enhance product quality.
(2) Focused on management of production procedure, strengthen control of production process and improve product quality
(3) Targeted on satisfying market demand, tentatively organized production, improved marketing service: First, float glass production line No.1 of the Company ("Float Glass Line No.1") has developed 25 mm extra-thick and extra-large glass after technological renovation which resulted in long-term stability of product quality and has maximized customer's demand; thick glass of over 8 mm accounted for 53.62% of the total production volume. Float glass production line No.3 has made breakthrough in terms of product variety and specification. Secondly, the Company initiated technology competition among staff, which has enhanced business capacity of staff. Thirdly, the Company strengthened sale service, formulated "Implementation Standard of After-sale Service of float glass", which has set out standard for service before, during and after sale.
- Prompted by the technological renovation project of super-thin glass production line of Luobo Group Longmen Glass Company, a subsidiary of the Company ("Longmen"), the Company has boosted technology progress and realized breakthrough and innovation of "Luoyang Float Sheet Glass Technology"
(1) Float Glass Line No. 1 Phase III has made significant breakthrough in terms of variety and quality. Firstly, 25 mm extra-thick and extra-large (4.2x12m) float glass was successfully developed which was the first in the country representing new breakthrough of "Luoyang Float Glass Technology"; Secondly, the monitoring equipment for existing line's shortcoming was installed and satisfactory results was achieved upon trial operation. As results, the accuracy of quality inspection and passing rate was improved significantly; Thirdly, the Company paid attention to research on those factors affecting stability of product quality, such as micro-shortcoming of glass and quality requirements on glass raw material. The Company also strengthened study and application of "Luoyang Float Sheet Glass Technology" software and gradually changed from operation based on "experience" to operation based on system, procedures and regulations. As at present, technology and quality of Float Sheet Glass Line 1 product has reached the level of the production line adopting overseas advanced floating technology.
(2) Technology renovation project of Longmen was successfully completed and super-thin glass of less than 2mm was produced. A couple of breakthrough has been made during the process. This production line was the most advanced among the Group's production lines and it was the first time for the Technology Center to complete the most advanced design task mainly on its own efforts and resources. Furthermore, project organization and management was much standard. Longmen's super-thin production line commenced production on 23 September and produced high quality glass of 3 mm, 2 mm, 1.8 mm, 1.5 mm, 1.3 mm and 1.1mm, especially, the 1.5 mm 1.3 mm and 1.1 mm products have reached a stable production level, which not only the first in the country but also led "Luoyang Float Sheet Glass Technology" to a new stage. This production line will contribute greatly to the adjustment of product mix, improvement of technological component and added-value of product and increase of enterprise competitiveness.
-
Adopted variety of forms and tunnels to explore internal potential and continuously reduce cost and expenses.
-
Standardized regional sale network, implement flexible and effective marketing strategy to maximize profit.
-
Strengthened supervision and management to govern the company in a disciplined manner;
-
Tentatively promoted system innovation, strengthened capacity to cope with market change and improved competitiveness on the whole.
The Company's financial status:
Based on the Group's financial statements for the year 2001 prepared under PRC Accounting Regulations, the Group's total asset was Rmb3,121,000,000, shareholders' fund was Rmb1,562,584,000, total long term liabilities was Rmb179,664,000, profit from principal operations was Rmb146,406,000, net profit was Rmb9,868,000, representing an increase/(decrease) of 8.029%, 0.636%, 925.362%, (48.621)% and (85,046)% over the previous year.
The above increase/(decrease) was mainly due to the speedy expansion of the glass industry in the PRC and the disorder market competition causing a significant decrease in prices. As a result, the total assets and shareholders' fund edged up slightly over last year and profit from principal operations and net profit plunged dramatically when compared with the previous year. As the Company has undertaken a number of technological renovation projects during the reporting period, bank borrowings had increased. Consequently, long term liabilities for the reporting period had increased when compared over last year.
Investment of the Company
During the reporting period, the Company's total investment was Rmb208,316,000, representing an increase of 186,097,000 or 11.94% over last year.
(1) Use of proceeds
There had been no use of proceeds during the reporting period nor use of the proceeds commenced before the period which has been extended to the period.
(2) Other investments (other than proceeds)
(a) During the period, the registered capital of China Luoyang Float Glass Group Financial Company of Limited liabilities ("CLFC"), an associated company of the Group, had been increased from Rmb100,000,000 to Rmb300,000,000. The Company correspondingly increased its investment in CLFC by Rmb71,000,000.
(b) During the period, the Company, its holding company and another third party had set up the production lines of float glass, namely, CLFG Yang Shao Glass Co., Ltd. ("Yang Shao"), which has commenced operation in April 2001, in Mianchi, San Men Xia, Henan, the PRC. As at 31 December 2001, the Company's total investment in this subsidiary amounted to Rmb40,000,000.
During the reporting period, no use of proceed prior to the reporting year continued to the reporting year.
During the reporting period, there has been no change of material importance of the Company's operating environment and macro policy.
- Prospect for 2002 and work arrangement
1) Challenges and positive factors
(1) The new cycle of repeated production of glass industry resulted in excessive expansion of the production volume of glass industry. Domestic glass market will confront more serious over supply. Furthermore, upon entry into WTO, liberalization of trade and opening of market will put enterprises in severer competition and challenges from overseas glass manufacturers.
(2) State government will implement strategic structural adjustment for state-owned enterprises upon transformation of economic systems. Enterprises will face new challenges of coping with these changes and adjustments.
(3) Upon entry into WTO, globalization of world economy was enhanced. The Company will face the challenge of new rules in terms of operating system, management means, product, technology, internationalized operating capability, personnel ability and value system.
(4) Confronted with existing and potential strong competitors, some in-depth conflicts and problems of ideas and systems formulated during the central planning era have not been resolved yet, which will bring negative impact on market competitiveness and innovation capability.
However, it is expected that upon the formal entry into WTO, export of glass products will increase, which will relax the pressure arising from orderless competition in domestic glass market. The urbanization process, acceleration of towns and villages, implementation of grand development strategy of west region and success bidding of Beijing host of Olympic Game will greatly boost investment and demand for construction material. The Group will in good position in the new competition if we could grasp the opportunity.
2. Operating objective
Production volume target:12,400,000 weighted cases; sale income: Rmb900,000,000; comparable cost: reduced by 2%.
3. Measures to take:
(1) To encourage innovation and explore potential, to maximize income and save cost, to increase market competitiveness;
(2) To satisfy market demand and increase customers' satisfaction, to focus on technological research, to enhance technological innovation and realize high quality and stable production;
(3) To accelerate reform of marketing system, to implement flexible and effective marketing strategy, to tentatively cope with new competition;
(4) To enhance training and cultivate a team of staff complying with market economy, to create human resource advantage;
(5) To open up mind and change ideas, to promote "duty objective realization" activity on basis of the project of satisfying customers, to seek innovation of political work;
(6) To strengthen management of major controlling subsidiaries:
-
Longmen : improve its internal management, accelerate system innovation and technological innovation, to realize long-term and stable production of high-quality extra-thin glass to satisfy market demand.
-
Chenzhou Bada Glass Co., Ltd. ("Bada"): to ensure operation of pit as well as production, to endeavor to realize stable production, to improve product quality and to take care of preparation works prior to cold maintenance
-
Yangshao: to set up work model of management, to optimize and standardize internal management and management fundamentals, to explore potentials, to strengthen and maintain cost advantage, to resolve existing problems by means of technolgocial innovation, to improve product quality
(7) To strengthen corporate culture, to intensify cohesion of the Company and unity of the staff to go through difficult times
3. Best Code of Practice
As at 31 December 2001, the Company has complied with requirements of Appendix 14 (Best Code of Practice) of Listing Rules of Hong Kong Stock Exchange Company Limited ("SEHK").
4. Purchase, sale and redemption of shares
During the reporting period, the Company and its subsidiaries did not purchase, sell or redeem its shares.
5. 2001 Profit Appropriation Plan
Under PRC Accounting Regulations, the net profit of the Company for the year 2001 was Rmb9,868,000, plus an accumulated deficit brought forward of Rmb341,078,000, the Company recorded an accumulated deficit of Rmb331,210,000 carried forward. Under International Accounting Standards, the net profit for the year 2001 was Rmb9,868,000, plus an accumulated deficit brought forward of Rmb341,078,000, the Company recorded an accumulated deficit carried forward of Rmb331,210,000. In accordance with relevant regulations and the Company's Articles of Associations, the Company will not transfer public statutory reserve and public welfare fund. The Company recommended not to distribute final dividend for the year 2001, the accumulated deficit will be carried forward to next year. This Profit Appropriate Plan will be subject to the approval of 2001 Annual General Meeting.
6. Policy of Profit Appropriation Plan for 2002
The Company's accumulated deficit carried forward for the year 2001 was Rmb331,210,000. Net profit recorded in 2002 will be fully used to set off the deficit.
8. Report of the Supervisory Committee
During the reporting period, all members of the Supervisory Committee of Luoyang Glass Company Limited carried out its monitoring duties honestly in a positive, pragmatic and prudent manner according to the provisions of the Company Law of the People's Republic of China and the Articles of Association of the Company based on the principle of fidelity in order to safeguard the interests of shareholders and the Company.
During the reporting period, the Supervisory Committee held two meetings.
-
The third Supervisory Committee held meeting on 17 April 2001 to consider and approve the Work Report of Supervisory Committee for the year 2000, Work Report of Board of Directors for the year 2000 and audited financial report for the year 2000.
-
The third Supervisory Committee held meeting on 28 August 2001 to consider and approve 2001 Interim Report and its summary.
-
The Supervisory Committee was present at general meetings and the board of directors meetings and effectively monitored its compliance with laws and safeguarding the interests of shareholders.
The Supervisory Committee would like to provide the following independent opinions:
- Compliance of the Company's operation with laws
The Supervisory Committee is of the opinion that the Board of Directors operated in standard matter in accordance with the Company Law, Articles of Associations and relevant laws and regulations. Directors and senior managers executed their duties of within their terms of reference. No practice violating laws, regulations and the Articles of the Company or harming the Company's interests was found.
- The Company's financial Status
The Supervisory Committee concurs with the unqualified auditing opinions of KPMG Huazhen and KPMG prepared under PRC Accounting Regulations and International Accounting Standards respectively. The Supervisory Committee believed that it truly, objectively, completely and accurately reflected the financial situation and operating results of the Company.
- Connected transaction
The Supervisory Committee is of the opinion that relevant connected transaction were reached on ordinary commercial terms and do not damage the interests of the Company.
9. Significant Events
1) Material litigation and arbitration
- Material litigation of the Group during the reporting period
On 30 December 1998 the Company placed a deposit in the sum of Rmb23,000,000 with Yinji local branch of Zhengzhou branch of Guandong Development Bank (which had been upgraded to Yinji sub-branch of Zhengzhou branch of Guandong Development Bank on 28 December 1999) for a fixed term of one year commencing from 30 December 1998 to 30 December 1999 at an annual interest rate of 3.78%. The Yinji local branch of Zhengzhou branch of Guangdong Development Bank issued an Account Opening Certificate of Fixed Deposit. Subsequently, a dispute arised when the Company made withdrawal of such deposit upon its maturity. The Yinji sub-branch of Zhengzhou branch of Guangdong Development Bank rejected the Company's withdrawal on the ground of the defaulted repayment by Heuan Yinji Property Development Company limited of the outstanding loan in the sum of Rmb21,850,000 for which the Company provided a guarantee in favour of Shangcheng branch of Guangdong Development Bank in December 1998 and that the Company should perform its obligations as the guarantor. In 2001, the Company initiated legal proceedings in Henan High People's Court and the hearings of the case had been completed pending judgement. Upon cross examination, the production of evidence and the defence of both parties in courts, the Company considered that based the relevant notice, regulations and provision issued by the People's bank of China, the facts are favourable to the Company. It is likely that judgement will be made in favour of the Company. The management of the Company and the legal adviser acts for the Company in this case are confidence in the recovering of the deposit.
- The Group was not involved in any material arbitration during the reporting period.
2) Purchase and sale
During the reporting period, the Group had no material purchase or sale.
3) Custody of Fund
There was no custody of funds of the Group during the reporting period, the Group had no entrusted account.
4) Significant connected transactions
- On 3 August 2001, the Company entered into a series of agreements with its related parties regarding supply of service and energy resources. Such agreements were entered into on normal commercial terms with a term of three years. Expenses of each agreement was determined on monthly basis with reference to the market prices and the costs of services, provided and shall be paid in the following month. Transactions set out in such agreements were conducted on daily and normal business course, particularly the energy resources were supplied during the Company's listing of shares. CLFG agreed to transfer auxiliary facilities to the Company while the Company supplied water, electricity, heat, steam and transportation service to CLFG. The Company purchased raw material-silica sand, from related parties in order to maintain stable supply of raw material required for producing float sheet glass. The Board of Director is of the opinion that supply of services and energy was in the benefits of the Company and the relevant terms are fair and reasonable as far as the Company's shareholders concern. Details are published in China Securities Journal, Shanghai Securities Journal, Hong Kong Wei Wui Po and Hong Kong iMail (English) on 6 August 2001. Details of such transactions are as follows:
(a) Transactions between the Group and CLFG
Note 2001 2000
Sales 4,171 94,124
Management fee (i) - 5,000
Auxiliary and community service (ii) 5,588 7,623
Supply of public facilities (iii) 749 691
Interests, paid and payable 10,958 14,773
Guarantee to suppliers for the Company 30,000 5,000
Guarantee to the banks for the Company 219,000 122,000
Note:
(i) The Company and CLFG entered into an agreement of three years term effective from 1 January 2001, under which, the Company is entitled to lease the sale network of CLFG to sell its products. The Company will pay to CLFG expenses of no more than Rmb5 million per year.
(ii) The Company and CLFG entered into an agreement of three years term effective from 3 August 2001, under which, the CLFG agreed to provide living services, property management, medical care and transportation services to the staff of the Company. With respect to the services provided to the Company by CLFG Group. The relevant price will be determined in accordance with state regulations.
(iii) The Company and CLFG entered into an agreement of supplying public facilities of three years term effective from 3 August 2001, under which, the Company agreed to provide public facility including water and electricity. The relevant charge will be determined on basis of reasonable cost plus taxation expenses.
(iv) The Company and CLFG entered into an agreement, under which, the Company will unconditionally transfer Rmb7,640,000 arising from acquisition of China Chaoyang Construction Material Company Limited to CLFG.
(b) Connected transaction between the Group and other subsidiaries of CLFG Group
Note 2001 2000
Sales 9,931 13,334
Auxiliary and community service (i) 4,985 7,081
Supply of public facilities (ii) 8,726 14,318
Purchase of raw material (iii) 32,871 31,845
Other purchases 7,507 14,094
Interests, paid and payable 3,669 2,649
Interests, received and receivable 24,848 23,266
Note:
(i) The Company and CLFG Xinxiang Co ("Xinxiang") entered into an agreement of three years term effective from 3 August 2001, under which, Xinxing agreed to provide living services, property management, medical care and transportation services to the staff of Company and the relevant price will be determined in accordance with state regulations.
(ii) The Company entered agreements with subsidiaries of CLFG including Luoyang Jingbao Company Limited, CLFG New Illuminating Source Company Limited, CLFG Jingwei Glass Fibre Company Limited, CLFG Jinghua Industrial Co. Ltd, Luoyang Jingying Company Limited and Luobo Hotel for a term of three years with effect from 3 August 2001.
Under these agreements, the Company agreed to supply public facilities including water and electricity to the aforesaid subsidiaries of CLFG. The relevant charge will be determined on basis of reasonable cost plus taxation expenses.
(iii) The Company entered into agreements of three years term effective from 3 August 2001 with subsidiaries of CLFG including Yinan Mineral Products Company ("Yinan") and CLFG Mineral Product Company ("Mineral Co Company"). In accordance with these agreements, Yinan and Mine Company agreed to supply raw material to the Company. Price of the raw material to be supplied shall be determined on basis of market price.
The Board of Directors is of the opinion that the aforesaid transactions were conducted on daily course and with ordinary commercial terms. Such transactions were confirmed by the Company's independent non-executive directors.
- (1) The Company jointly established CLFG Yang Shao Glass Co., Ltd. ("Yang Shao") with CLFG and Henan Mianchi Float Glass Plant on 23 September 2001. Yang Shao is mainly engaged in producing floating sheet glass. The registered capital of Yangshao is Rmb74,080,000, of which the Company contributed Rmb40,000,000 (approximately 54% of the registered capital); Henan Mianchi Float Glass Plant contributed Rmb26,680,000 (approximately 36%) and CLFG Group contributed Rmb7,400,000 (approximately 10%).
(2) To conform the regulation of minimum registered capital of Rmb300,000,000 for a financial company in PRC stipulated by People's Bank of China, the Board of Director of China Luoyang Float Sheet Glass Group Financial Company of Limted Liabilities ("CLFC") approved a resolution on 24 March 2001 to increase the registered capital from Rmb100,000,000 to Rmb300,000,000. On 21 May 2001, the Company contributed another Rmb71,000,000 in cash into CLFC as capital contribution. Gongyi Soda Plant, the new shareholder of CLFG and injected Rmb120,000,000 and Rmb9,000,000 into CLFC respectively. Henan Longhao Enterprise Company Limited, one of the existing shareholders of CLFC, decided not to increase its capital investment in CLFC due to its financial needs. Upon increase of registered capital, the Company holds 37% interests of CLFC, CLFG holds 56.67%, Henan Longhao Enterprise Company Limited holds 3.33% and Gongyi Soda Plant holds 3%. CLFG is the holding shareholder of the Company which holds 57.14% of the Company's issued capital.
Therefore, the transactions described in above (1) and (2) constitute the Company's connected transaction in accordance with Listing Rules. Details are set out on China Security Journal, Shanghai Security Journal, Hong Kong iMail (English) and Hong Kong Economic Daily dated 10 October 2001.
(3) The Company entered into an agreement with CLFG, the controlling shareholder of the Company on 27 March, 2002, for the purpose of setting up China Luoyang Float Glass (Group) Processed Glass Company Limited (the "Processed Glass Company") in order to, inter alia, engage in the production of intensive processed glass.
The registered capital of the Processed Glass Company is RMB 181,495,600, of which RMB89,095,600 (constituting approximately 49.09% thereof) will be contributed by the Company and RMB92,400,000 (constituting approximately 50.91% thereof) will be contributed by CLFG.
CLFG is the controlling shareholder of the Company and is interested in approximately 57.14% of the issued share capital of the Company. The transaction constituted a connected transaction for the Company under the Listing Rules. The details were published in China Securities Journal, Shanghai Securities Journal in the PRC and Hong Kong iMail and Hong Kong Economic Times in Hong Kong on 2 April 2002.
(5) Impact of China's accession into WTO on the Company
Upon China's accession into WTO, export procedure will become simpler which will benefit export to the developing countries. Overseas products will not impose material effect on the Group because domestic glass market is nearly saturated with fairly reasonable product mix and high-quality glass produced domestically was able to satisfy local demands. Furthermore, medium and low class glass are mainly consumed which leaves no competitive advantage for overseas products.
(6) Auditors
Approved by the Company's 2000 Annual General Meeting, the Company re-appointed KPMG Huazhen and KPMG as the Company's PRC and international auditors for the year 2001.
The Company proposed to reappoint KPMG Huazhen and KPMG as the Company's PRC and international auditors for the year 2002 at the Company's 2001 Annual General Meeting.
The Company paid the following audit expenses to KPMG Huazhen and KPMG. No other payment was made.
KPMG Huazhen KPMG
Audit fee for 2001 HK$1,100,000 (partially paid) HK$1,100,000 (partially paid)
Audit fee for 2000 HK$1,100,000 (paid) HK$1,100,000 (paid)
Travel expenses Borne by the firm Borne by the firm
(7) Overdue deposit
Overdue deposit was charged in other receivables including Rmb72,829,000 (2000: Rmb72,829,000) of deposit in non-bank financial institution. This overdue deposit was provided. Details are as follows:
Item Amount Ultimate Borrower Provision Amount
Rmb'000 Rmb'000
Other receivables 145,657 Guangzhou International 50% 72,829
Trust & Investment
Corporation ("GZITIC")
Note:
GZITIC is under re-organization. Upon knowledge of the latest progress, the Board of Directors believes provision of 50% (Rmb72,828,000) was sufficient. The Company did not charge interests income for these deposits.
Save as above deposits, the Company did not have any other overdue deposits as at 31 December 2001.
The Board of Director is of the opinion that the aggregate amount of above deposit of Rmb145,657,000 represents 9.32% of the Group's net asset as at 31 December 2001, which did not impose adverse effect on the Company's normal production, operation and cash flow. The Company will endeavor to recover the above deposits.
(8) Unified income tax and cancellation of tax rebate of local government
The Company did not receive tax preferential policy for the previous years and therefore was not influenced by "Notice to correct tax rebate policy by local government " issued by State Council.
(9) Material contract and its implementation
1) During the reporting period, the Company did not entrust, lease, contract any assets of other companies and no assets of the Company was entrusted, leased or contracted to any other companies.
2) Except for the disclosed, the Company did not have material litigation during the reporting period.
(10) Material contract
The Company did not have any other material contract or the Company did not have contract required to perform obligations during the reporting period.
(11) Directors' Commitment
Shareholders holding more than 5% interests did not disclose any commitment issues in the designated newspaper and websites.
(12) Impact of sale of staff quarter on the Company
The Company did not sell quarters to its staff during the reporting period, nor did the Company have such plan.
(13) During the reporting period, neither the Company, the Board of Directors nor any of the directors was examined, punished or openly critisized by China Security Regulatory Commission or Stock Exchange.
(14) Information disclosure
Except for the disclosure required by Article 62 of PRC 'Security Law", Article 60 of "Temporary Regulations of Listing of Shares and Trade" and Article 17 of "Implementation Specifics of Information Disclosure of Listing Companies(Temporary)", the Company did not have any material events or events required to be disclosed during the reporting period.
X. Financial Report
Audit opinion
The Company's financial statements prepared under PRC Accounting Standards was audited by PRC Certified Accountants, Xie Rong and Hu Qiong from KPMG Huazhen, who issue unqualified audit opinion. The Company's financial statements prepared under International Accounting Standard was audited by KPMG, who issue unqualified audit opinion.
Consolidated income statement
(prepared in accordance with IAS)
for the year ended 31 December 2001
2001 2000
Note Rmb'000 Rmb'000
Revenue 1 813,385 896,169
Cost of sales (666,979 ) (611,215 )
Gross profit 146,406 284,954
Administrative expenses (79,511 ) (122,592 )
Selling expenses (34,978 ) (43,434 )
Profit from operations 31,917 118,928
Net financial costs (21,147 ) (29,137 )
Investment income/(expenses) 2,594 (5,607 )
Non-operating income 3,634 14,604
Non-operating expenses (5,512 ) (5,396 )
Profit from ordinary activities
before share of net loss of
associated companies 11,486 93,392
Share of net loss of associated companies (3,398 ) (3,952 )
Profit from ordinary activities
before taxation 2 8,088 89,440
Taxation 3 - -
Profit from ordinary activities
after taxation 8,088 89,440
Minority interests 1,780 (23,449 )
Profit attributable to shareholders 4 9,868 65,991
Accumulated deficit brought forward (341,078 ) (407,069 )
Accumulated deficit carried forward (331,210 ) (341,078 )
Basic earnings per share
(in Rmb Yuan) 5 0.01 0.09
- Revenue
The Group's principal activity is the manufacturing and selling of float sheet glass.
Revenue, which represents turnover, composed of the invoiced value of goods sold to customers, net of value-added tax ("VAT"), business taxes and surcharges, after eliminating inter-company transactions.
2001 2000
Rmb'000 Rmb'000
Revenue from sale of goods 813,385 896,169
- Profit from ordinary activities before taxation
Profit from ordinary activities before taxation is arrived at after (charging)/crediting:
2001 2000
Rmb'000 Rmb'000
(a) Items included in
administrative expense:
Auditors' remuneration (2,200 ) (2,200 )
Provision for bad and doubtful debts 3,006 (32,767 )
Research and development expenses (4,993 ) (2,743 )
(b) Net financing costs:
Interest on bank advances and other
borrowings repayable within five years (55,271 ) (57,185 )
Interest income 32,711 29,172
Net foreign exchange gain/(loss) 1,703 (926 )
Bank charges (290 ) (198 )
Net financing costs (21,147 ) (29,137 )
(c) Items included in investment income/(expenses):
Provision for diminution in value of other
unlisted investments (2,167 ) (5,607 )
Dividend received 4,761 -
2,594 (5,607 )
(d) Items included in non-operating income:
Gain on disposal of property, plant
and equipment 1,381 9,234
(e) Items included in non-operating expenses:
Loss on disposal of property, plant
and equipment (2,374 ) (1,795 )
(f) Personnel expenses:
Wages and salaries # (65,677 ) (69,034 )
Retirement benefit costs # (14,182 ) (15,327 )
(79,859 ) (84,361 )
The number of employees at the end of 2001 was 6,515 (2000: 6,221).
(g) Other items:
Cost of inventories # (666,979 ) (611,215 )
Depreciation # (83,417 ) (69,435 )
Cost of inventories includes personnel expenses, depreciation and repairs and maintenance expenses, the amounts of which are also included in the respective total amounts disclosed separately above for each of these types of expenses.
- Taxation
No provision for PRC income tax has been made in the financial statements as the tax losses brought forward from previous years exceed the estimated assessable profits of certain companies within the Group for the year.
No provision for deferred taxation has been made as the Group has a net deferred tax asset in respect of tax losses brought forward. The deferred tax asset has not been recognised in the financial statements as it is not certain whether the potential taxation benefit will be realised in the foreseeable future.
The Group did not carry on business overseas and therefore no provision has been made for overseas profits tax.
- Profit attributable to shareholders
The profit attributable to shareholders includes a profit of Rmb26,061,000 (2000: Rmb36,646,000) which has been dealt with in the financial statements of the Company.
- Basic earnings per share
(a) The calculation of basic earnings per share is based on the profit attributable to shareholders of Rmb9,868,000 (2000: Rmb65,991,000) and 700,000,000 (2000: 700,000,000) shares in issue during the year.
(b) Diluted earnings per share
No diluted earnings per share is calculated as there are no dilutive potential shares.
- Dividend
No dividend for 2001 will be recommended by Board of Directors. (2000: Nil)
- Profit Appropriation
As at 31 December 2001, the Group and the Company has accumulated losses carried forward, no profit appropriation is proposed for this year.
- Segment reporting
The Group's profits from operations are almost entirely attributable to its sales and manufacture of float sheet glass in the PRC. Accordingly, no segmental analysis is provided.
Consolidated balance sheet
(prepared under the PRC Accounting Regulations)
as at 31 December 2001
2001 2000
Rmb'000 Rmb'000
Assets
Current assets
Cash at bank and in hand 285,337 308,777
Interest receivable 1,802 3,698
Trade debtors 154,158 189,274
Other debtors 457,588 455,389
Advance payments 100,222 93,960
Prepayment and deferred expenses 71,057 69,762
Inventories 244,182 198,197
Total current assets 1,314,346 1,319,057
Non-current assets
Other debtors 314,608 311,982
Interest receivables 24,803 21,249
Total non-current assets 339,411 333,231
Long term investments
Long term equity investments 192,168 172,116
Net long term investments 192,168 172,116
Fixed assets
Fixed assets, at cost 1,613,750 1,330,373
Less: Accumulated depreciation (490,569 ) (411,973 )
Net book value of fixed assets 1,123,181 918,400
Construction materials 8,539 10,463
Construction in progress 6,219 2,797
Total fixed assets 1,137,939 931,660
Intangible assets and other assets
Intangible assets 137,136 132,981
Total intangible assets and
other assets 137,136 132,981
Total assets 3,121,000 2,889,045
2001 2000
Rmb'000 Rmb'000
Liabilities and shareholders' funds
Current liabilities
Short term loans 794,866 888,537
Trade creditors 177,634 127,938
Receipt in advance 46,976 65,469
Salary payable 4,008 3,827
Staff welfare payable 1,758 2,411
Taxes payable 20,575 25,046
Other payables 207 138
Other creditors 165,497 132,852
Accrued expenses 20,581 19,615
Long term loans repayable within one year 39,845 8,469
Total current liabilities 1,271,947 1,274,302
Long term liabilities
Long term loans 174,556 12,193
Long term payables 5,108 4,239
Housing revolving fund - 1,090
Total long term liabilities 179,664 17,522
Total liabilities 1,451,611 1,291,824
Minority interests 106,805 44,505
Shareholders' funds
Share capital 700,000 700,000
Share premium 969,988 969,988
Surplus reserves 223,806 223,806
Accumulated deficit (331,210 ) (341,078 )
Total shareholders' funds 1,562,584 1,552,716
Total liabilities and shareholders' funds 3,121,000 2,889,045
These financial statements have been approved by the management
balance sheet
as at 31 December 2001
2001 2000
Note Rmb'000 Rmb'000
Assets
Current assets
Cash at bank and in hand 268,067 304,302
Dividend receivable - 6,970
Interest receivable 9,010 9,336
Trade debtors 131,691 163,038
Other debtors 525,359 469,555
Advance payments 88,637 87,247
Prepayment and deferred expenses 64,313 62,819
Inventories 156,850 139,645
Total current assets 1,243,927 1,242,912
Non-current assets
Other debtors 314,608 311,982
Interest receivables 24,803 21,249
Total non-current assets 339,411 333,231
Long term investments
Long term equity investments 314,865 262,224
Net long term investments 314,865 262,224
Fixed assets
Fixed assets, at cost 970,870 957,333
Less: Accumulated depreciation (358,756 ) (301,064 )
Net book value of fixed assets 612,114 656,269
Construction materials 7,896 9,747
Construction in progress 5,737 2,538
Total fixed assets 625,747 668,554
Intangible assets and other
assets
Intangible assets 90,638 92,824
Total intangible assets and
other assets 90,638 92,824
Total assets 2,614,588 2,599,745
2001 2000
Rmb'000 Rmb'000
Liabilities and shareholders' funds
Current liabilities
Short term loans 681,267 784,737
Trade creditors 130,937 89,053
Receipt in advance 36,572 43,742
Staff welfare payable 65 398
Taxes payable 576 3,602
Other creditors 81,224 109,790
Accrued expenses 1,697 1,696
Long term loans repayable within
one year 20,365 469
Total current liabilities 952,703 1,033,487
Long term liabilities
Long term loans 94,216 8,193
Long term payables 5,085 4,238
Housing revolving fund - 1,111
Total long term liabilities 99,301 13,542
Total liabilities 1,052,004 1,047,029
Shareholders' funds
Share capital 700,000 700,000
Share premium 969,988 969,988
Surplus reserves 213,496 213,496
Accumulated deficit (320,900 ) (330,768 )
Total shareholders' funds 1,562,584 1,552,716
Total liabilities and shareholders'
funds 2,614,588 2,599,745
consolidated cash flow statement
for the year ended 31 December 2001
2001 2000
Rmb'000 Rmb'000
Cash flow from operating activities
Cash received from sale of goods and
rendering of service 839,303 918,468
Other cash received relating to operating
activities 17,650 18,140
Sub-total of cash inflow 856,953 936,608
Cash paid for purchase of goods and
acceptance of service (573,848 ) (660,061 )
Cash paid to and on behalf
of employees (62,651 ) (66,919 )
Taxes paid for various tax (53,571 ) (72,112 )
Other cash paid relating to
operating activities (31,316 ) (92,454 )
Sub-total of cash outflow (721,386 ) (891,546 )
Net cash inflow from operating
activities (note 1) 135,567 45,062
Cash flow from investing activities
Cash received from return of investments 10,144 -
Cash received from interest income 31,053 9,026
Net cash received from disposal of
fixed assets 2,559 8,664
Cash received from other investing
activities - 170
Sub-total of cash inflow 43,756 17,860
Cash paid to acquire fixed assets (156,177 ) (41,525 )
Other cash paid relating to investing
activities (71,000 ) (40,000 )
Sub-total of cash outflow (227,177 ) (81,525 )
Net cash outflow from investing activities (183,421 ) (63,665 )
Cash flow from financing activities
Proceeds from borrowings 1,079,738 940,740
Sub-total of cash inflow 1,079,738 940,740
Cash paid for repayment of borrowings (949,670 ) (864,552 )
Cash paid for repayment of interest (56,654 ) (57,647 )
Sub-total of cash outflow (1,006,324 ) (922,199 )
Net cash inflow from financing activities 73,414 18,541
Net increase/(decrease) in cash and cash
equivalents (note 3) 25,560 (62 )
notes to the consolidated cash flow statement
for the year ended 31 December 2001
- Reconciliation of net profit to cash inflow from operating activities
2001 2000
Rmb'000 Rmb'000
Net profit 8,088 89,440
Add: (Written back)/provision for bad debts (3,006 ) 32,767
Depreciation of fixed assets 83,554 66,469
Amortisation of intangible assets 3,245 2,966
Gain/(loss) on disposal of fixed assets 993 (7,439 )
Investment loss 804 9,559
Provision for inventories - 3,679
Interest income (32,711 ) (29,172 )
Interest expense 55,270 57,185
Increase in inventories (41,582 ) (66,788 )
Decrease in time deposit with original
maturity over three months 49,000 10,999
Decrease/(increase) in operating receivables 38,669 (3,601 )
Decrease in operating payables (30,561 ) (120,021 )
Others 3,804 (981 )
Net cash inflow from operating activities 135,567 45,062
- Investing and financing activities which do not involve in cash receipts and payments
2001 2000
Rmb'000 Rmb'000
Transfer of loans to share capital 30,000 -
Transfer of interest receivables to long-term
investments - 14,560
Increase in long-term investments by the transfer
from other debtors - 12,475
Transfer of interest receivables to other debtors - 41,295
- Analysis of cash at bank and in hand
Time deposit
with original
Cash and cash maturity over
equivalents three months Total
Rmb'000 Rmb'000 Rmb'000
Balance at 1 January 2001 111,777 197,000 308,777
Net cash outflow 25,560 (49,000 ) (23,440 )
Balance at 31 December 2001 137,337 148,000 285,337
cash flow statement
for the year ended 31 December 2001
2001 2000
Rmb'000 Rmb'000
Cash flow from operating activities
Cash received from sale of goods and
rendering of service 644,981 642,166
Other cash received relating to operating
activities 6,325 7,220
Sub-total of cash inflow 651,306 649,386
Cash paid for purchase of goods and
acceptance of service (419,759 ) (463,130 )
Cash paid to and on behalf of employees (48,423 ) (55,135 )
Taxes paid for various tax (38,864 ) (49,349 )
Other cash paid relating to operating activities (36,994 ) (51,447 )
Sub-total of cash outflow (544,040 ) (619,061 )
Net cash inflow from operating activities (note 1) 107,266 30,325
Cash flow from investing activities
Cash received from return of investments 10,144 -
Cash received from interest income 33,459 13,186
Net cash received from disposal of fixed assets 1,628 7,803
Sub-total of cash inflow 45,231 20,989
Cash paid to acquire fixed assets (22,181 ) (33,910 )
Other cash paid relating to investing activities (71,000 ) (40,000 )
Sub-total of cash outflow (93,181 ) (73,910 )
Net cash outflow from investing activities (47,950 ) (52,921 )
Cash flow from financing activities
Proceeds from borrowings 931,639 855,939
Sub-total of cash inflow 931,639 855,939
Cash paid for repayment of borrowings (929,190 ) (779,722 )
Cash paid for repayment of interest (49,000 ) (51,759 )
Sub-total of cash outflow (978,190 ) (831,481 )
Net cash (outflow) / inflow from financing activities (46,551 ) 24,458
Net increase in cash and cash equivalents (note 3) 12,765 1,862
- Reconciliation of net profit to cash inflow from operating activities
2001 2000
Rmb'000 Rmb'000
Net profit 9,868 65,991
Add: (Written back) / provision for bad debts (3,006 ) 39,332
Depreciation of fixed assets 62,374 48,750
Amortisation of intangible assets 2,186 2,185
Loss / (gain) on disposal of fixed assets 985 (8,426 )
Provision for inventories - 3,679
Interest income (36,689 ) (31,132 )
Interest expense 49,000 50,425
Investment loss / (income) 8,249 (24,460 )
Decrease in time deposits with original
maturity over three months 49,000 10,999
Increase in inventories (12,803 ) (44,188 )
(Increase) / decrease in operating receivables (24,392 ) 12,297
Decrease in operating payables (1,161 ) (98,982 )
Others 3,655 3,855
Net cash inflow from operating activities 107,266 30,325
- Investing and financing activities which do not involve in cash receipts and payments
2001 2000
Rmb'000 Rmb'000
Transfer of loans to share capital 30,000 -
Transfer of interest receivables to
long-term investments - 14,560
Increase in long-term investment by the transfer
from other debtors - 12,475
Transfer of interest receivables to other debtors - 41,295
- Analysis of cash at bank and in hand
Time deposit
with original
Cash and cash maturity over
equivalents three months Total
Rmb'000 Rmb'000 Rmb'000
Balance at 1 January 2001 107,302 197,000 304,302
Net cash inflow/(outflow) 12,765 (49,000 ) (36,235 )
Balance at 31 December 2001 120,067 148,000 268,067
The group originally adopted "Accounting System for Companies Limited by Shares"
In accordance with regulations from documents of Finance (2000) No.25 <>, Finance (2001) No. 17 <>, the Group started to adopt "Accounting System of Enterprises" from 1 January 2001.
Adoption of "Accounting System of Enterprises" did not lead to any impact on financial statement of 2001 and 2000, except for the accounts' reclassification.
Differences in financial statements prepared under PRC Accounting Regulations and IAS
The Company also prepared a set of financial statements which complied with PRC accounting regulations ("PRC financial statements"). The difference between the Group's PRC financial statements and IAS financial statements relates to the accounting treatment on the conversion of the loan due to Hua Rong by Bada to equity interest of Bada in the current year.
Under the PRC financial statements, the equity interest in Bada held by Hua Rong has been classified as redeemable preference shares whereas the IAS financial statements, this amount is disclosed as a long term loan in consideration of the substance of the contractual arrangement.
IX. Other matters
All the information required by Paragraph (45)(1) to (45)(3) of Appendix 16 of the Rules Governing the Listing of Securities on the Exchange will be placed in the Website of SEHK shortly.
By Order of the Board
Guo Xiaohuan
Chairman
26 April 2002
Notice of Resolutions of the Directors
The meeting of the third Board of Directors of Luoyang Glass Company Limited (the "Company") was held at 10:00 a.m. on 26th April, 2002 at the Conference Room of the Company on 4th Floor, No.9 Tong Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC. There were 9 eligible directors who should attend the meeting and 8 directors actually attended the meeting and one director attended by proxy, It has complied with the provisions of the Company Law and the Articles of Association of the Company. The meeting was presided by Mr. Guo Xiaohuan, Chairman of the Company. The following resolutions were unanimously passed by the directors:
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resolved and approved the audited financial report of the Company for the year ended 31st December 2001, which will be submitted at the Annual General Meeting of the Company for approval;
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resolved and approved the 2001 Annual Report of the Company and its summary.
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resolved and approved the 2000 profit appropriation proposal
According to PRC Accounting Regulations, the Company has a net profit of RMB9,868,000 for 2001. In addition to a loss of RMB341,078,000 at the begining of the year, the accumulated loss is RMB331,210,000. According to International Accounting Standards, the Company has a net profit of RMB9,868,000 for 2001, In addition to a loss of RMB341,078,000 at the beginning of the year, the accumulated loss is RMB331,210,000 for the year. In accordance with the relevant laws and regulations and the Articles of Association of the Company, no statutory surplus reserve and statutory public welfare fund of the Company will be transferred for the year. No final dividend is recommended for 2001. Accumulated loss is recommended to carry forward to the next year. The above distribution scheme is subject to approval at the Company's 2001 Annual General Meeting.
- resolved and approved the 2002 profit appropriation plan as follows:
The Company incurred an aggregate loss of Rmb331,210,000 for 2001. The net profit for 2002 will totally be used to compensate for such loss.
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resolved and approved the re-appointment of KPMG Huazhen and KPMG as the domestic and international auditors of the Company for 2002 which will be submitted at the 2001 Annual General Meeting for approval, and the Board of Directors is authorized to fix their remunerations.
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- worked out that, as conforming to the relevant conditions (see belows for definitions), when the Company should allocate, distribute and dispose of overseas-listed foreign shares in the relevant period (see belows for definitions), the amount should not exceed 20% of the shares in issue on the date passing this resolution, and proposed at the Annual General Meeting to authorize the Board of Directors of the Company to deal with matters relating to placing and issuance and to make corresponding amendments to the Articles of Association of the Company.
In respect to this resolution, "the relevant conditions" means:
(1) to be in accordance with the Company Law of the PRC and the Listing Rules (revised from time to time) of Securities on the Stock Exchange of Hong Kong Limited; and
(2) to be approved by the Securities & Commission and other departments concerned in the PRC.
"The relevant period" means the period between the date this resolution be approved and the following two dates:
(1) 12 months after the date of this resolution being approved (last day inclusive); and
(2) the date the Annual General Meeting of the Company approved and authorized any special resolution to withdraw and amend this resolution.
This resolution will be submitted to the Annual General Meeting of the Company for approval.
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resolved and approved the submission of a resolution at the 2001 Annual General Meeting regarding the authorization of the Board of Directors to exercise the rights to invest, dispose of assets, acquire or sell assets not exceeding 20% of the net asset of the Company (based on the audited data of the latest financial year).
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resolved and approved the convening of the 2001 Annual General Meeting to be held on 17th June, 2002
Board of Directors
Luoyang Glass Company Limited
26th April, 2002
Resolutions of the Third Supervisory Committee
The third Supervisory Committee of Luoyang Glass Company Limited (the "Company") convened a meeting at the Conference Room on the 4th Floor, at No. 9, Tang Gongzhong Road, Xigong District, Luoyang City, Henan Province, PRC at 10:00 am on 26th April. 2002. There were 5 eligible supervisors and all the 5 supervisors actually attended the meeting. Mr. Liu Baoying presided the meeting during which the 2001 Report of the Supervisory Committee and the Assessment on the 2001 Annual Report of the Company were considered and approved.
The Third Supervisory Committee
Luoyang Glass Company Limited
26th April, 2002
Notice of 2001 Annual General Meeting
NOTICE IS HEREBY given that the 2001 Annual General Meeting of Luoyang Glass Company Limited (the "Company") will be held at the Conference Room of the Company on 4th Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the People's Republic of China (the "PRC") on 17th June, 2002 at 9:00 a.m. for the following purposes:
A. To pass the following resolutions by way of ordinary resolutions:
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To consider the report of the Board of Directors of the Company for 2001;
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To consider the report of the Supervisory Committee of the Company for 2001;
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To consider the Company's audited financial report for 2001;
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To consider the Comopany's proposed profit distribution for 2001;
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To consider the resolution relating to the re-appointment of KPMG Huazhen and KPMG as the Company's PRC and international auditors respectively for the year 2002, and authorize the Board of Directors to fix their remuneration.
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To authorize the Board of Directors to exercise the rights to invest, dispose of assets, acquire or sell assets not exceeding 20% of the net asset of the Company (based on the audited data of the latest financial year).
B. To pass the following resolution by way of special resolution:
- worked out that, as conforming to the relevant conditions (see belows for definitions), when the Company should allocate, distribute and dispose of overseas-listed foreign investment shares in the relevant period (see belows for definitions), the amount should not exceed 20% of the shares in issue on the date passing this resolution, and authorize the Board of Directors of the Company to deal with matters relating to placing and issuance.
In respect to this resolution, "the relevant conditions" means:
(1) to be in accordance with the Company Law of the PRC and the Listing Rules (revised from time to time) of Securities on the Stock Exchange of Hong Kong Limited; and
(2) to be approved by the Securities & Commission and other departments concerned in the PRC.
"The relevant period" means the period between the date this resolution be approved and the following two dates:
(1) 12 months after the date of this resolution being approved (last day inclusive); and
(2) the date the Annual General Meeting of the Company approved and authorized any special resolution to withdraw and amend this resolution.
By Order of the Board
Guo Xiaohuan
Chairman
Luoyang, the PRC, 26th April 2002
The Company's registered address:
No. 9, Tang Gong Zhong Lu
Xigong District, Luoyang Municipal
Henan Province
The People's Republic of China
Postal Code: 471009
Telephone: 86-379-3908588
Facsimile: 86-379-3251984
Notes:
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Holders of the Company's shares ("Shares") who, immediately after the close of trading in the afternoon on 15th May, 2002, are registered on the Register of Members of the Company as shareholders of the Company ("Shareholders") shall have the right to attend the Annual General Meeting. The Company's Register of Members will be temporarily closed from 16th May, 2002 to 17th June, 2002, both dates inclusive.
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Each Shareholder having the rights to attend and vote at the 2001 Annual General Meeting is entitled to appoint one or more proxies (whether a Shareholder or not) to attend and vote on his behalf. Should more than one proxy be appointed by one Shareholder, such proxy shall only exercise his voting rights on a poll.
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Shareholders can appoint a proxy by an instrument in writing (i.e. by using the Proxy Form enclosed). The Proxy Form shall be signed by the person appointing the proxy or an attorney authorised by such person in writing. If the Proxy Form is signed by an attorney, the power of attorney or other documents of authorisation shall be notarially certified. To be valid, the Proxy Form and the notarially certified power of attorney or other documents of authorisation must be delivered to the above legal address of the Company, or for the Company's H Shares' shareholders, also at Hong Kong Registrars Limited at 2nd Floor, Vicwood Plaza, 199 Des Voeux Road Central, Hong Kong, in not less than 24 hours before the time scheduled for the holding of the meeting.
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Shareholders or proxies who intend to attend 2001 Annual General Meeting are asked to send the reply slip for attendance duly completed and signed to the Secretarial Office of the Company at the above registered address of the Company, or for Company's H Shares' shareholders only, also to Hong Kong Registrars Limited at 2nd Floor, Vicwood Plaza, 199 Des Voeux Road Central, Hong Kong, on or before 27th May, 2002 in person, by post or by fax. Please use the reply slip or its duplicate in writing.
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Shareholders or their proxies shall present proofs of their identities upon attending the 2001 Annual General Meeting. Should a proxy be appointed, the proxy shall also present the Proxy Form.
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The 2001 Annual General Meeting is expected to last for less than a day. The shareholders and proxies attending the meeting shall be responsible for their own travelling and accommodation expenses.
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The Company's registered address is as follows:-
No. 9, Tang Gong Zhong Lu
Xigong District, Luoyang Municipal
Henan Province
The People's Republic of China
Postal Code: 471009
Telephone: 86-379-3908588
Facsimile: 86-379-3251984
Please also refer to the published version of this announcement in Hong Kong iMail / Hong Kong Economic Times.