RoboSense Technology Co., Ltd - Annual Report 2014

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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SUMMARY ANNUAL REPORT OF 2014

1. IMPORTANT NOTICE

1.1 This summary of the annual report is extracted from the full text of the annual report. Investors should read the full text of the annual report published on the websites designated by the CSRC including the website of the Shanghai Stock Exchange (www.sse.com.cn) for a thorough understanding of its content.
1.2 The financial statements were prepared in accordance with the Accounting Standards and Regulations for Business Enterprises of the People’s Republic of China (“PRC”) (“PRC GAAP”). PKF DAXIN Certified Public Accountants LLP has issued auditors’ reports with standard unqualified opinions.

— 1 —

1.3 Company Profile

Stock name	Luoyang Glass	Stock code	600876
Place of listing	Shanghai Stock Exchange
Stock name	Luoyang Glass	Stock code	01108
Place of listing	The Stock Exchange	of Hong Kong Limited
Contact person	Secretary to	Securities Affairs Representative
and method	the Board
Name	Wu Zhixin	Zhao Zhiming
Telephone	86-379-63908588,	86-379-63908833
	63908637
Facsimile	86-379-63251984	86-379-63251984
E-mail	[email protected]	[email protected]

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2. MAJOR FINANCIAL DATA AND CHANGES IN SHAREHOLDERS

2.1 Major Financial Data

Unit: RMB

			Increase/(decrease)
			at the end of
	As at the	As at the	the year over the	As at the
	end of 2014	end of 2013	end of last year	end of 2012
			(%)
Total assets	1,057,067,719.83	1,226,528,319.88	–13.82	1,302,782,333.52
Net assets attributable to shareholders	49,399,018.40	33,306,058.69	48.32	132,125,006.45
of the listed company
Net cash flow from operating activities	–40,828,687.97	10,986,238.59	–471.63	8,734,731.95
Operating income	612,541,199.49	375,735,014.43	63.02	553,687,171.35
Net profit attributable to shareholders	16,004,696.49	–98,980,994.84	N/A	5,093,137.28
of the listed company
Net profit attributable to shareholders	–152,872,896.29	–126,902,481.73	N/A	–62,801,994.21
of the listed company after deducting
extraordinary profit or loss
Weighted average return	38.74	–119.78	Increased by	3.93
on net assets_(%)_			158.52
			percentage points
Basic earnings per share_(RMB/share)_	0.0320	–0.1980	N/A	0.0102
Diluted earnings per share_(RMB/share)_	0.0320	–0.1980	N/A	0.0102
Basic earnings per share after deducting	–0.3057	–0.2538	N/A	–0.1256
extraordinary profit or loss_(RMB/share)_
Weighted average return on net assets	–370.08	–153.57	Decreased by	–48.47
after deducting extraordinary			216.51
profit or loss_(%)_			percentage points

2.2 Shareholdings of the top ten shareholders

Total number of shareholders as at the end of the Reporting Period (shareholder)

Total number of shareholders as at the end of the fifth trading day before the disclosure date of the annual report (shareholder)

17,681, including 17,624 holders of A shares and 57 holders of H shares
16,715, including 16,658 holders of A shares and 57 holders of H shares

— 3 —

Shareholdings of the top ten shareholders

Total number

		Total number
	Increase/	of shares held		Number of
	decrease	as at the end		shares subject
	during the	of the		to trading	Pledged	or frozen
Name of shareholder	reporting	reporting	Shareholding	moratorium	Status of		Nature of
(full name)	period	period	percentage	held	shares	Number	shareholder
			(%)
HKSCC Nominees
Limited	+12,000	247,860,998	49.57	0	Unknown	0	Overseas legal
							person
China Luoyang Float	0	159,018,242	31.80	0	Pledged	159,018,242	State-owned
Glass (Group)							legal-person
Company Limited
Zhang Lixin	–4,944	2,760,000	0.55	0	Unknown	0	Domestic
							natural person
Mao Jianghui	–11,000	2,092,599	0.42	0	Unknown	0	Domestic
							natural person
Ji Haibin	–95,338	1,266,454	0.25	0	Unknown	0	Domestic
							natural person
Liu Yujun	+167,313	1,022,613	0.20	0	Unknown	0	Domestic
							natural person
Beijing Daiwei Debang	0	1,021,853	0.20	0	Unknown	0	Domestic non
Investment							state-owned
Consultation							legal person
Co., Ltd.
(北京代維德邦投資
諮詢有限公司)
Zhang Ruiying	330,000	1,000,000	0.20	0	Unknown	0	Domestic
							natural person
Penghua Assets —	+850,100	850,100	0.17	0	Unknown	0	Unknown
China Everbright
Bank— Penghua
Assets Longqi Chitu
Quantitative Hedge
Asset Management
Plan
(鵬華資產
—光大銀行
—鵬華資產龍旗
赤兔量化對沖
資產管理計劃)
Zhang Wenming	–280,000	590,000	0.12	0	Unknown	0	Domestic
(張文明)							natural person

— 4 —

Particulars of the top 10 holders of shares not subject to trading moratorium

	Number of
	tradable
	shares held
	not subject
	to trading
Name of shareholder	moratorium	Type and number of shares
		Type	Number
HKSCC Nominees Limited		Overseas listed
	247,860,998	foreign shares	247,860,998
China Luoyang Float Glass		Ordinary shares
(Group) Company Limited		denominated in
	159,018,242	RMB	159,018,242
Zhang Lixin		Ordinary shares
		denominated in
	2,760,000	RMB	2,760,000
Mao Jianghui		Ordinary shares
		denominated in
	2,092,599	RMB	2,092,599
Ji Haibin		Ordinary shares
		denominated in
	1,266,454	RMB	1,266,454
Liu Yujun	1,022,613	Ordinary shares	1,022,613
		denominated in
		RMB
Beijing Daiwei Debang Investment	1,021,853	Ordinary shares	1,021,853
Consultation Co., Ltd.		denominated in RMB
(北京代維德邦投資諮詢有限公司)
Zhang Ruiying	1,000,000	Ordinary shares	1,000,000
		denominated in
		RMB
Penghua Assets — China Everbright Bank	850,100	Ordinary shares	850,100
— Penghua Assets Longqi Chitu Quantitative		denominated in RMB
Hedge Asset Management Plan
(鵬華資產—光大銀行—鵬華資產龍旗
赤兔量化對沖資產管理計劃)
Zhang Wenming (張文明)	590,000	Ordinary shares	590,000
		denominated in RMB

— 5 —

Connected relationship or parties acting in concert among the aforesaid shareholders

Among the top ten shareholders of the Company, there are no connected relationship or parties acting in concert as defined by Regulations for Disclosure of Changes in Shareholding of Listed Companies （上市公司股東持股變動信息披露管理辦法）between CLFG and other shareholders of circulating shares. The Company is not aware of any parties acting in concert or any connected relationship among other holders of circulating shares. Shares were held by HKSCC Nominees Limited, representing its various customers.

Explanations on preference Nil

shareholders with voting rights restored and number of shares held thereby

2.3 Illustration of shareholding and controlling relationship between the Company and its de facto controller

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State-owned Assets Supervision and
Administration Commission of the State Council
100%
China National Building
Material Group Corporation
100%
Kaisheng Technology
Group Company 100%
Bengbu Glass Industry
Design Institute
51.7%
19.0%
China Luoyang Float Glass
(Group) Company Limited
31.8%
Luoyang Glass Company Limited
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3. MANAGEMENT DISCUSSION AND ANALYSIS

3.1 Discussion and analysis about business operation

During the Reporting Period, the Company was still confronted with numerous adverse factors, including the continuous downturn in the common glass market, contractions between supply and demand in the electronic glass market and the increase in cost generated from the rise in natural gas price, etc. Through measures including scientific renovation, structural adjustment, management optimization, assets disposal, the Company kept the continuous operation of production and operation and basically achieved the annual profit targets.

During the Reporting Period, the Company recorded an operation revenue of RMB612,541,200, representing a year-on-year increase of 63.02%; recorded an operating profit of RMB-63,256,600, representing a year-on-year reduction of loss of 72,270,700; recorded a net profit attributable to the shareholders of the company of RMB16,004,700, representing a year-on-year increase of RMB114,985,700, mainly attributable to the income and government grant obtained from disposal of equity interests of subsidiaries.

The operations during the Reporting Period are as follows:

— Implement innovation to promote the profitability of products.

The Company proactively undertook research and development of new innovative products with high techniques and proprietary intellectual property rights. During the Reporting Period, 0.33mm ultra-thin glass achieved commercial production smoothly. The number of the categories of ultra-thin glass of the Company were increased to twelve, which further consolidated and improved the market competitiveness in the ultra-thin glass region. 1.1mm ultra-white and ultra-thin glass was approved to be a strategic creative production project in the national major new products scheme.

During the Reporting Period, the Company held new products presentation regarding 0.33mm and 0.4mm ultra-thin electronic float glass as well as 0.6mm and 0.7mm ultra-white and ultra-thin glass float glass, at which, the new products of the Company were recognized by the market and customers.

— 7 —

— Implement significant asset restructuring to facilitate the transform and upgrade, with the purpose of enhancing the continuous profitability.

In order to strengthen its competitiveness and continuous profitability, the Company implemented significant asset restructuring in order to achieve the material adjustments of development strategies. On 27 June 2014, the stock of the Company applied for suspension of trading. On 31 December 2014, the Company entered into the Framework Agreement in Relation to the significant asset exchange and the issue of Consideration Shares, as well as the Proposed A Share Placing (the “Framework Agreement”) with China Luoyang Float Glass (Group) Company Limited (“CLFG”). According to the Framework Agreement, the Company intended to exchange its equity interests in the subsidiaries which operated ordinary float glass business and other business and the amounts due from the subsidiaries to the Company (“the Disposal”) for 100.00% equity interest in Bengbu China Building Information Display Materials Co. Ltd.* (蚌埠中建材信息顯示材料有限公司). The difference between the considerations of the Disposal and the Acquisition will be settled by the issue of Consideration Shares by the Company to CLFG. Meanwhile, in order to promote the integrated efficiency of this transaction, the Company intended to undertake a proposed placing of new A shares to no more than other ten specific investors. The amount of gross funds raised through the Proposed A Shares Placing will not exceed 25% of the transaction amount under the Reorganisation. In 2 and 5 January 2015, the stock of the Company resumed its trading in Hong Kong and Shanghai.

At present, the restructuring work has entered the relevant appraisal and filing process with SASAC. Upon completion of relevant work, the Company will enter into a formal (to be consistent with the Announcement) agreement to supersede the Framework Agreement, and will hold another Board meeting to consider all issues in relation to this transaction, and proposed them to the general meeting for consideration.

If the restructuring is successfully completed, the Company will possess three electronic glass production lines, becoming the largest electronic glass production enterprise, and will basically realize the successful transformation from the traditional construction material region to electronic information display region. This transform will effectively promote the asset quality, financial position and profitability of the Company, and be in favor of the interests of the shareholders of the Company.

— 8 —

Optimize management and control mode to enhance performance assessment and promote management efficiency. First, the Company reformed the performance assessment model in the ultra-thin glass production lines and relevant production units to enlarge the production of high added value products, like A-class products, and the monthly remuneration weight of provisions for new products, in order to stimulate quality improvement and consumption reduction, product creation and market innovative potential. Second, the Company reinforced benchmark management. Through monthly on-site benchmark meetings and participation in China Building glass platform benchmark meetings, the Company compared and analyzed the differences between the production and operation indicators with the annual targets and progress plans of each subsidiary, to find out reasons and stipulate measures to improve, enhance and promote the management. Third, the Company revised, optimized and integrated more than ten management systems to promote normalization, systematicness and suitability. Meanwhile, we strengthened the supervision, examination and assessment on the implement of systems to enhance management efficiency and reduce management cost.
Continue the promotion of disposal of idle assets to increase income. During the Reporting Period, the Company acquired long-term equity investment disposal income of RMB93,394,600, and endeavored to obtain land reserve financial grant of RMB60,012,700.
Proactively promoted the construction of energy conservation and environment protection projects. The Company accomplished the establishment of glass production lines cogeneration projects of Longhao Company and put it into grid-connected operation, which will better achieve the target of realization of energy comprehensive utilization and reduction of production and operation cost. In addition, the Company has all-roundly started the denitration, desulfuration, dedusting environmental protection projects regarding the production lines in operation. Upon completion of production, the projects will reach the national and industrial environmental protection requirements.

— 9 —

3.2 Analysis of Principal Businesses

3.2.1 Analytical Statement of Changes in Relevant Items in the Income Statement and Cash Flow Statement

			Unit: RMB
Item	2014	2013	Change
			(%)
Operating income	612,541,199.49	375,735,014.43	63.02
Operating costs	576,252,408.19	322,728,783.02	78.56
Selling expenses	26,065,248.80	22,648,035.94	15.09
Administration expenses	110,155,298.65	107,131,092.30	2.82
Finance expenses	6,160,463.44	9,554,004.27	–35.52
Net cash flow from
operating activities	–40,828,687.97	10,986,238.59	– 471.63
Net cash flow from
investment activities	94,559,344.33	–74,851.10	N/A
Net cash flow from
financing activities	–58,609,501.28	–38,397,140.08	N/A
R&D expenditures	12,235,056.31	8,929,713.21	37.02

3.2.2 Revenue
(1) Analysis of the factors driving the changes in business revenue

The income from business operations of the Company is mainly from sales of physical products (glass and silicon sand). During the Reporting Period, the Company recorded an operating revenue of RMB612,541,200, representing an increase of 63.02% as compared to that of last year.

(2) Analysis of the factors affecting the income mainly from sales of physical products of the Company

During the Reporting Period, the sales of glass products of the Company recorded a significant growth due to the increase in production. Therefore, the income from glass products increase attributable to the increase in sales.

— 10 —

(3) Impact analysis of new products and new services

During the Reporting Period, the Company successfully researched and developed 0.33mm ultra-thin glass products, accordingly, we achieved continuous and stable production. The successful and stable production of 0.33mm ultra-thin glass products further enriched the categories of high added value products of the Company.

(4) Major sales to customers

The total sales to the top five customers amounted to RMB135,191,553.84, representing 22.07% of the Company’s total operating income, among which, the sales to Anhui Province Bengbu Huayi Glass Company Limited, one of the top five customers, accounted for 3.55% of the Company’s total operating income for the year. Anhui Province Bengbu Huayi Glass Company Limited is a subsidiary controlled by CNBMG, the de facto controller of the Company.

— 11 —

3.2.3 Costs

(1) Analytical Statement of Costs

Unit: RMB

By industry

						Percentage
			Percentage over		Percentage over	of changes in
			total cost for		total cost for	amount over
	Component		the current		the same period	the same period
By industry	of cost	2014	period	2013	last year	last year	Explanation
			(%)		(%)	(%)
Float glass	Direct materials	451,628,467.57	80.91	242,233,937.54	80.33	86.44	Increase in sales
	Direct labour	27,042,582.07	4.84	14,353,487.12	4.76	88.40
	Manufacturing
	expenses	79,504,348.11	14.25	44,962,044.26	14.91	76.83
Silica sand	Direct materials	10,489,190.17	78.92	8,880,160.25	80.11	18.12	Increase in sales
	Direct labour	1,457,039.47	10.96	1,105,999.34	9.98	31.74
	Manufacturing
	expenses	1,344,719.63	10.12	1,099,015.31	9.91	22.36

By products

						Percentage
			Percentage over		Percentage over	of changes in
			total cost for		total cost for	amount over
	Component		the current		the same period	the same period
By products	of cost	2014	period	2013	last year	last year	Explanation
			(%)		(%)	(%)
Common glass	Direct materials	267,177,481.79	84.23	52,021,080.34	86.07	413.59	Increase in sales
	Direct labour	10,349,347.78	3.26	2,300,199.70	3.80	349.93
	Manufacturing	39,661,991.32	12.51	6,121,481.15	10.13	547.91
	expenses
Ultra-thin glass	Direct materials	184,450,985.78	76.54	190,212,857.20	78.89	–3.03
	Labour expenses	16,693,234.29	6.93	12,053,287.42	5.00	38.50	Increase in labour
							expenses due
							to bonus of
							the research and
							development of
							new products
	Manufacturing	39,842,356.79	16.53	38,840,563.11	16.11	2.58
	expenses
Silica sand	Direct materials	10,489,190.17	78.92	8,880,160.25	80.11	18.12	Increase in sales
	Direct labour	1,457,039.47	10.96	1,105,999.34	9.98	31.74
	Manufacturing	1,344,719.63	10.12	1,099,015.31	9.91	22.36
	expenses

— 12 —

(2) Major Suppliers

The procurement amount of the top five suppliers was RMB317,738,226.95, representing 60.54% of the total procurement amount, among which CLFG Yuantong Energy Co., Ltd. is the largest supplier (accounting for 21.39% of the total procurement amount), the Directors and vice chairman of which was Mr. Guo Yimin, the formal director of the Company.

Save as disclosed above, none of the directors, supervisors and its associates and any shareholder (as far as the directors were aware, the holders holding 5% or more of the Company’s share capital) has any interests in the aforesaid suppliers and customers.

3.2.4 Expenses

				Unit: RMB
Item	2014	2013	Changes	Reasons of changes
			(%)
Selling expenses	26,065,248.80	22,648,035.94	15.09	Increase in
				remunerations and
				relevant expenses
				in the period
Administration	110,155,298.65	107,131,092.30	2.82
expenses
Financial expenses	6,160,463.44	9,554,004.27	-35.52	Decrease in interest
				expenditure,
				discount charge,
				commission charge
				of trust loans
Income tax expenses	8,125,432.82	3,287,385.84	147.17	Increase in profit of
				Longhai Company,
				a subsidiary of
				the Company

— 13 —

3.2.5 R&D expenditures

(1) R&D expenditures

	Unit: RMB
Expensed research and development
expenditure in the period	12,235,056.31
Capitalized research and development
expenditure in the period
Total research and development expenditure	12,235,056.31
Percentage of total research and development
expenditure to net assets_(%)_	N/A
Percentage of total research and development
expenditure to operating revenue_(%)_	2.00

(2) Explanation

The research and development expenditures during the period account for 100% of the total expenditures of research and development projects during the period, and the internal research and development did not generate intangible assets.

— 14 —

3.2.6 Cash flow

(1) The net cash flow from operating activities amounted to RMB-40,828,700, representing an increase in net expenditure of RMB51,814,900 over RMB10,986,200 for the same period last year, mainly due to the increase in material expenses and employee remuneration expenses during the period.
(2) The net cash flow from investing activities amounted to RMB94,559,300, representing an increase of net inflow of RMB94,634,200 over RMB-74,900 for the same period last year, mainly due to that the Company received the land purchase and reserve excess funds and government grant of the previous years during the period.
(3) The net cash flow from financing activities amounted to RMB-58,609,500, representing an increase of net outflow of RMB20,212,400 over RMB-38,397,100 for the same period last year, mainly due to the increase in the borrowings received and borrowings repaid during the period.

3.2.7 Others

(1) Explanation for substantial changes in the composition of profits or source of profits of the Company
① During the Reporting Period, investment income increased by 4,000.38% to RMB98,842,500 from the same period last year, mainly due to income generated from disposal of equity interest in subsidiaries during the period.
② During the Reporting Period, non-operating income increased by 163.30% to RMB81,654,500 from the same period last year, mainly due to increase in government subsidy received during the period.

— 15 —

(2) Progress of development strategies and operating plan

In order to solve peer competition and promote the continuous profitability, the Company started material asset restructuring to realize the successful transformation from the traditional construction material region to electronic information display region.

3.3 Analysis of operations by industry, products or regions

3.3.1 Statement of the principal operations by industry and products

Unit: RMB

Principal operations by industry

				Increase/		Increase/
				decrease of	Increase/	decrease of
				operating	decrease of	gross profit
				income as	operating costs	margin as
	Operating	Operating	Gross	compared with	as compared	compared with
By industry	income	costs	profit margin	last year	with last year	last year
			(%)	(%)	(%)	(%)
Float glass	578,920,975.34	558,175,397.75	3.58	75.18	85.10	Decreased by
						5.17 percentage
						points
Silica sand	23,861,594.36	13,290,949.27	44.30	–0.75	19.90	Decreased by
						9.59 percentage
						points

— 16 —

Principal operations by products

						Increase/		Increase/
						decrease of	Increase/	decrease of
						operating	decrease of	gross profit
						income as	operating costs	margin as
	Operating		Operating		Gross	compared with	as compared	compared with
By products	income		costs	profit margin		last year	with last year	last year
					(%)	(%)	(%)	(%)
Common glass	246,722,694.09	317,188,820.89			–28.56	348.63	424.78	Decreased by
								18.65 percentage
								points
Ultra-thin glass	332,198,281.25	240,986,576.86			27.46	20.59	–0.05	Increased by
								14.99 percentage
								points
Silica sand	23,861,594.36	13,290,949.27			44.30	–0.75	19.90	Decreased by
								9.59 percentage
								points
Explanation of principal			Increase		in ultra-thin glass		was attributable to
operations by industry			the new additional profit drivers					created
and products			for	the Company through research and
			development			of new products during the
			Reporting Period.

— 17 —

3.3.2 Principal operations by regions

Unit: RMB

		Increase/decrease
		of revenue from
		principal
	Revenue from	operations as
	principal	compared
Regions	operations	with last year
	(RMB)	(%)
PRC	602,782,569.70	70.03
Explanation of principal	There was no export business	during the
operations by regions	Reporting Period.

— 18 —

3.4 Analysis of assets and liabilities

3.4.1 Analytical statement of assets and liabilities

Unit: RMB

					Increase/
					decrease
		Percentage		Percentage	of closing
		of closing		of closing	balance of
		balance of		balance of	this period
	Closing	this period	Closing	last period	over closing
	balance of	over the total	balance of	over the total	balance of
Item	this period	assets	last period	assets	last period	Explanation
		(%)		(%)	(%)
Monetary funds	68,478,221.61	6.48	128,509,961.33	10.48	-46.71	Mainly due to the increase
						in notes deposits
Bills receivable	400,000.00	0.04	39,799,612.49	3.24	-98.99	Mainly due to the increase
						in payments of products
						fee by notes
Prepayment	7,692,326.00	0.73	13,806,820.85	1.13	-44.29	Mainly due to the settlement
						of prepayments of the bulk
						raw material fee
Other receivables	37,020,177.60	3.50	81,916,322.40	6.68	-54.81	Mainly due to the receiving of
						balances of land purchase and
						reserve fee in the previous years
Other current assets	21,865,034.21	2.07	0	0		Mainly due to the reclassification of
						the amount of the debtor from
						the tax payables to this item
Held-for-sale	4,343,500.00	0.41	7,000,000.00	0.57	-37.95	Mainly due to the disposal of
financial assets						certain equity interest
Long-term receivables	48,649,780.65	4.60	0	0		Mainly due to the disposal of
						equity interest in the subsidiaries
Short-term borrowings	10,000,000.00	0.95	50,696,833.33	4.13	-80.27	Mainly due to the repayment
						of borrowings
Bills payables	90,000,000.00	8.51	150,000,000.00	12.23	-40.00	Mainly due to the payment
						of expired bills
Receivables	57,399,049.54	5.43	41,704,096.40	3.4	37.63	Mainly due to the increase
						in prepayment for goods
Tax payables	27,800,706.43	2.63	-7,987,198.97	-0.65	448.07	Mainly due to the reclassification
						of the amount of the debtor in
						the tax payables from this item
						to other current asset item
Other payables	80,705,153.66	7.63	126,044,622.62	10.28	–35.97	Mainly due to the roll out
						of first batch of amount received
						in the preliminary disposal
						resulted from the completion
						of disposal transaction
						of industrial equity

— 19 —

3.4.2 Explanation for changes in assets measured by fair value and measure nature of major assets:

There is no changes in assets measured by fair value and measure nature of major assets.

3.5 Analysis of core competitiveness

Brand advantage. The Company is the place of origin for one of three major float glass manufacturing methods in the world — “Luoyang Float Glass Technology”. The Company has successively won “National Quality ”

—

Award for Float Glass - Silver Award (國家浮法玻璃質量獎銀質獎) ,

“Gold Invention Award (金質發明獎)”, “National Consumer Trustworthy Product (全國消費者信得過產品)”, “Well-known Trademark (弛名商標)”, “National Science & Technology Progress Award (first class) (國家科學技術進步一等獎)”, etc. “CLFG” (洛玻) brand still domestically enjoys certain popularity and brand recognition.

Strong capacity in respect of technical development and innovation. The Company possesses core production technology of float glass and a number of proprietary intellectual property rights and holds a leading position in the industry in terms of the production technology of ultra-thin, ultra-thin and ultra-white, and ultra-thick float glass. In addition, it owns teams of and experience in product research and development and tackling key problems in production technology.
Many varieties of ultra-thin glass products and high market share. During the reporting period, the Company has successfully launched the production of the 0.33mm ultra-thin float glass, increased the varieties of the Company’s ultra-thin glass products to twelve, which further enhanced the variety advantage of ultra-thin glass products of the Company, thus strengthening the competitiveness of the Company’s products.

In March 2015, the thinnest 0.28mm and 0.25mm ultra-thin glass products researched and developed by the Company also realized commercial production, which further enriched the categories of high added-value products of the Company.

— 20 —

Powerful support from the de facto controller. China National Building Materials Group, the de facto controller of the Company, is an enterprise directly under the SASAC, the largest comprehensive building material group corporation in China and an enterprise of Fortune Global 500. It is able to provide support in terms of capital, technology, etc., for the Company.

3.6 Analysis of Investment

3.6.1 Overall Analysis of External Equity Investment

(1) Statement of the Company’s investment in 2014

		Percentage
		of equity in
Name of investee	Principal activities	the investee
		(%)
CLFG Jingwei Glass Fibre	Manufacture of glass fibre	35.90
Co., Ltd.	and relevant products
CLFG Luoyang Jingjiu Glass	Manufacture of glass	31.08
Products Company Limited	packaging containers
CLFG New Lighting	Manufacture of daily use	29.45
Company Limited	glass products
Zhongyuan Bank Holdings Limited	Monetary and banking	0.0457
（中原銀行股份有限公司）	services
Luoyang Jingxin Ceramic	Manufacture of daily	49.00
Co., Ltd.	use ceramic products
CLFG Mineral Products	Mining of clay and other	40.29
Company Limited	soil, sand and stone

— 21 —

(2) Statement of changes in external equity investment

Unit: RMB

Amount of external equity investment in the period	12,134,717.53
Amount of external equity investment	14,791,217.53
in the last period
Change amount of the amount of external	–2,656,500.00
equity investment in the period over the amount
of external equity investment in the last period
Change of the amount of external equity investment	–17.96
in the period over the amount of external
equity investment in the last period_(%)_

— 22 —

(3) Equity held in unlisted financial enterprises

Unit: RMB

							Change in
				Amount of	Carrying	Profit or loss	owner’s
	Initial		Percentage of	investment	amount at	during the	equity during
Name of	amount of	Number of	equity in the	during the	the end of	Reporting	the Reporting	Accounting	Source of
investee	investment	shares held	company	period	the period	Period	Period	Subject	Share
		(Share)	(%)
Zhongyuan	7,000,000	7,039,484	0.0457		4,343,500.00	5,447,976.24		Available-for-sale	purchase
Bank								financial assets
Holdings
Limited
（中原銀行
股份有限
公司）
Total	7,000,000	7,039,484	0.0457		4,343,500.00	5,447,976.24

Explanation of equity held in unlisted financial enterprises

Du ring the Reporting Period, the Company received a dividend of RMB1,224,570.83 from Sanmenxia Bank and disposed the 3,659,521 shares in Sanmenxia Bank held by it, receiving investment income of RMB4,223,405.41. In December 2014, Sanmenxia Bank Holdings Limited reorganized and set up Zhongyuan Bank Holdings Limited together with the other twelve city commercial banks. Upon completion of the reorganization, the total share capital of Zhongyuan Bank was 15,420,540,741 shares, of which, Longfei Company held 7,039,484 shares, accounting for 0.0457% of the total share capital.

— 23 —

3.6.2 Analysis of major subsidiaries and investee companies

(1) Basic information on major subsidiaries and investee companies

Unit: RMB

Company name	Industry	Major products or services	Registered capital	Total assets	Net assets	Net profit
CLFG Longmen	Building materials	Manufacture of float	20,000,000	225,724,040.09	–370,039,831.39	–40,549,030.86
Glass Company Limited		sheet glass
CLFG Longfei Glass	Building materials	Manufacture of float	74,080,000	77,728,145.59	–209,052,093.74	–20,372,603.48
Company Limited		sheet glass
Yinan Mineral Products	Building materials	Mining, processing and	28,000,000	44,472,712.48	3,772,669.81	–5,123,106.34
Co., Ltd.（沂南華盛礦產		sales of quartz sand
實業有限公司）
CLFG Longhai Electronic	Building materials	Manufacture of float sheet	60,000,000	221,241,417.93	168,866,064.91	46,242,628.12
Glass Co., Ltd.		glass and electronic glass
CLFG Longhao Glass	Building materials	Manufacture of float	50,000,000	334,166,861.32	–264,406,434.54	–138,742,633.25
Co., Ltd.		sheet glass
CLFG Longxiang	Building materials	Manufacture of float	50,000,000	67,143,637.08	–48,972,714.58	–13,452,074.10
Glass Co., Ltd.		sheet glass
Dengfeng CLFG Silicon	Building materials	Sales of silica sand	13,000,000	10,210,919.06	9,897,104.81	–691,630.82
Co., Ltd.
Dengfeng Hongzhai	Building materials	Sales of silica sand	2,050,000	9,078,709.42	–822,939.29	–1,253,971.29
Silicon Co., Ltd.
Luoyang Luobo Furuida	Trading	Sales of glass and	500,000	20,393,393.21	–1,040,705.89	–1,540,401.56
Commerce Co., Ltd.		raw materials
(洛陽洛玻福睿達商貿
有限公司)

(2) Statement of subsidiaries acquired and disposed of during the year

Way of Impact on the overall production, operation Company name disposal and performance of the Company Luoyang Luobo Industrial Co., Ltd. Disposal of 100% Net investment income incurred equity interest amounted to RMB93,394,560.90

— 24 —

3.7 Continuing Connected Transactions in 2014

In 2014, the transaction amount of the continuing connected transactions of the Group amounted to RMB264,930,000, and the annual caps being considered and approved amounted to RMB1,375,120,000 in aggregate. Each continuing connected transaction did not exceed the annual caps as disclosed in the announcement.

All the continuing connected transactions of the Group were indispensable parts of the day-to-day operations of the Group and entered into on normal commercial terms or terms not less favourable than those available to or from independent third parties, and the transaction prices of which were fair and reasonable, and in the interests of the shareholders of the Company as a whole.

All the continuing connected transactions of the Company in 2014 implemented corresponding consideration and approval procedures pursuant to relevant requirements under the Listing Rules on the Hong Kong Stock Exchange and the Shanghai Stock Exchange, and the aggregate transaction amount did not exceed the approval threshold. The Company’s independent auditors have reviewed and issued a special audit report on the continuing connected transactions. The independent directors of the Company also reviewed and confirmed the continuing connected transactions conducted in 2014.

3.8 Industry competition pattern and development trend

The national government encouraged and supported the development of the ultrathin electronic glass industry. The “Development Guidance for the Construction Materials Industry for the Twelfth Five-Year Plan” definitely stated that the government will pay attention to develop “solar glass, ultra-thin plat glass and other highly-processed products”.

— 25 —

During the recent years, along with the focus of the global panel display industry to the PRC, China has become the largest consumption market of panel display in the world. The consumption of LED TV, 3D TV, smart phones, panel personal computers and other electronic products will drive the development of the industry. Major downstream industries of ultra-thin glass are still in the development period, thereby the overall market demand is expected to keep the increase trend in the future. Liquid crystal display screen glass plate, glass plate used in touch screens and protection screen glass, have great demand on ultra-thin glass. At present, the national ultra-thin glass products account for a relatively small proportion of the market share, the remaining majority part is imported. Accordingly, there is still room to increase in the future.

However, in the meantime, most of the domestic enterprises started to produce ultra-thin glass, with several production lines successively put into operation. Especially since the second half of 2014, in order to fight for market shares, domestic ultra-thin glass producers enlarged the production volume of 1.1mm and 0.7mm glass, which weakened the price monopoly of foreign enterprises and resulted in the downturn of market prices of low and medium end products.

In summary, the market demand for high-end ultra-thin glass will continue the upturn in 2015, while the low and medium ultra-thin glass market will present obvious contraction of oversupply with intensifying competitions.

3.9 Development strategy

Guided by electronic float glass, the Company implemented innovative impetus on the strategic innovative products in the industry. In addition, the Company comprehensively improved and continued to optimize the techniques and equipment regarding the “Luoyang Float Glass Technology”. We continuously expanded the new region of application of float glass, in a bid to become the most competitive electronic glass provider.

— 26 —

3.10 Business plan and measures

1. Business plan for 2015

Output of float glass: 8,408,900 boxes Sales: 8,546,200 boxes Sales revenue: RMB960,457,800

Cost and expenses as a proportion of the sales revenue: 97.92%

2. Working policies and measures to be adopted in 2015

In 2015, the Company will spare no effort in promoting the significant asset restructuring to innovate operation system. Through acceleration of the structural adjustment and promotion of transform and upgrade, we will enhance the core competitiveness to comprehensively elevate the enterprise image, which will lead to the healthy and continuous development of Luoyang Glass. In addition, we will guarantee to complete the annual operation target to create more value for shareholders. The main tasks are as follows:

(1) The Company will continue to advance the various subsequent work regarding the significant asset restructuring of the Company to guarantee the smooth implement of the significant asset restructuring project.
(2) The Company will strengthen the techniques and business process as well as the adaptive matching and standard of organization structure to improve the effectiveness of operation and management. Furthermore, we will optimize the management procedures and innovate management mechanism to promote department simplification and staff elitism. With department simplification, the Company will increase efficiency and reduce cost. With hierarchy reduction, the Company will achieve flat management. With reducing redundant staff, the Company improved the labor productivity.

— 27 —

(3) The Company will continue to implement product innovation. With the multi-element profile of high added-value products and innovative products, the Company could resist the risks caused by market changes. In addition, we will continue to stabilize the yield and quality of 0.33mm and 0.4mm high gross margin products to consolidate and increase the market share. We will enlarge the investment in research and development to continuously develop new products and make it a new profit growth point of the Company. Furthermore, we will perfect, optimize and improve the techniques to further improve the quality of “double-ultra” products and develop new “double-ultra” products to guide the new demand of the market, in a bid to realize the long-term production, stability and profit of “double-ultra” products.
(4) The Company will reinforce marketing innovation and enhance market management to increase the possibility of generating profit in the marketing link. Moreover, the Company will strengthen the marketing publicity and expansion of “double-ultra” products as well as 0.25mm and 0.28mm new products to explore the market potential demand. In 2015, the Company will strive to achieve a sales of 1 million square meters of 0.25mm and 0.28mm new products, a sales of more than 2.3 million square meters of the two products of 0.4mm and 0.33mm, and an annual sales of double-ultra products of more than 1.7 million square meters.

The Company will plan and coordinate the synergy between the products of each ultra-thin glass production line and the market to give full play to the advantages of each production line to complement each other. Therefore, the Company will guarantee and better satisfy the multilevel and multi-aspect demands of the market in the links of breed structure, product quality, regional position and date of delivery, etc. In addition, the Company will improve its right of speech and pricing power in the domestic ultra-thin glass market to increase its overall competition and anti-risk capability and develop the economies of scale.

The Company will focus on the business training of marketing staff to increase the comprehensive quality, increase the marketing techniques and the quality of after-sales service.

— 28 —

(5) The Company will emphasize refined management to consolidate the foundation, improve endogenous power and increase the profitability of principle business. Furthermore, we will enhance the optimization of technical process, reinforce the control of technical cost and reduce the time of invalid work. The Company will increase the raw and auxiliary material utilization efficiency to reduce the production cost. In addition, the Company will promote the utilization of new techniques regarding energy conservation and environment protection to decrease energy consumption and achieve clean production. In respect of storage management, the Company stringently regulates the procedures in relation to storage, discharge and receipt of inventory material, and strictly implements regular examination system to control storage loss. Accordingly, the inventory decreased by 10% on a year-on-year basis. As for the procurement, the Company will strictly control the surrogate products, quality and cost to ensure the stability of the supply channel. In addition, we will enhance the supervision and examination to increase the work efficiency and implementation as well as the management level.
(6) The Company will explore to implement the reform of simulative marketization remuneration system and make use of the incentive and constraint functions of remuneration and assessment to achieve personpost matching. Therefore, everyone will fully display his talents. With preferences to efficiency and benefits, we could establish a fair and transparent distribution mechanism. Furthermore, we will explore to establish the internal simulative marketization talent flow mechanism to enhance position rotation and training to cultivate inter-disciplinary talent in many aspects.

— 29 —

3.11 Potential Risks

1. Risks arising from policies and the industry

The Ministry of Industry and Information Technology newly issued the “Specifications and Conditions of the Plate Glass Industry (2014) (平板玻璃行業規範條件(2014年本)》)” to implement the “Guiding Opinions of the State Council on Resolving Serious Production Overcapacity Conflicts (Guo Fa [2013] No. 41) (《國務院關於化解產能嚴重過剩矛盾的指導意見》(國發[2013]41號))”. The Industry Specifications further reinforced the standard constraint regarding environmental protection, energy consumption, safety and others, which is favor of promoting the restructuring and integration as well as industrial upgrade of the glass industry. Accordingly, the glass industry will develop in a healthy and orderly manner, and the investment in environmental protection of production enterprises will be increased as well.

The adjustments on the development strategies of the Company are in line with the industrial development direction and upgrade path which are encouraged and supported by the national government. Under the premise of fulfilling the demand on environmental protection by the central government, the Company proactively seeks the measures regarding energy saving and consumption reduction, cost decreasing and benefit increasing.

2. Risks arising from product price

The productivity of the ultra-glass market is enlarged continuously, which will affect the selling price and sales volume of products. The fluctuation in prices will result in the great difficulties in realization of overdue inventories, therefore, the Company will confront with risks arising from inventory impairment.

Countermeasures: the Company will accelerate the reactions and closely follow up the mainstream prices in the market. We will also develop new products in a due course and increase our market shares. In addition, the Company will stabilize and broaden the marketing channels to cultivate new clients and large clients.

— 30 —

3. Risks arising from price of raw materials

The major raw materials of the Company’s products include fuel, sodium carbonate and silica sands, the procurement costs represent a significant percentage of the product cost. Price fluctuation of raw and fuel materials might bring in certain risks in respect of increase in costs.

Countermeasures: the Company will accurately follow the fluctuations of prices to purchase in due course, in order to reduce the purchasing cost. In addition, the Company will expand the supply channel to ensure the stability and efficiency of the supply channel.

4. Financial Risks

Credit risk: The Company’s credit risk is primarily attributable to accounts receivable. We implement payment upon delivery for most of our customers and a few customers with good reputation are entitled with credit. So the Company faces small credit risks.

Liquidity risk: the Company has sufficient cash and cash equivalents to basically meet its operational needs. At the same time, it has obtained financial assistance commitment from the controlling shareholder and de facto controller that can satisfy our long- and short-term capital demand.

Interest rate risk: The Company’s interest rate risk arises primarily from bank and other borrowings as well as bank deposits. As there was no significant connection between most of the Company’s expenses and operating cash flows and the changes in market interest rates, interest rate risk has little effect on the Company.

5. Technological risks

All of the core techniques of the Company are self-researched and selfdeveloped, with proprietary intellectual property rights. Of which, the production of ultra-thin and ultra-white glass uses advanced techniques with abundant experience in product research and development. Therefore, the Company does not confront with technical risks regarding the above.

— 31 —

3.12 Profit Distribution or Proposal for Conversion of Capital Reserve

Under the PRC GAAP, the net profit of the Company attributable to owners of the Company for 2014 was RMB16,004,700, together with the undistributed profit RMB-1,375,896,000 at the beginning of the year, the accumulated undistributed profit amounted to RMB-1,359,891,300. Therefore, the Company will not distribute profit for 2014 or convert capital reserve to the share capital.

3.13 Repurchase, Sale and Redemption of Shares

During the reporting period, the Company and its subsidiaries did not repurchase, sell and redeem any securities of the Company.

3.14 Compliance with the Corporate Governance Code

The Company has complied with the requirements of the Code on Corporate Governance Practices set out in Appendix 14 to the Listing Rules of The Hong Kong Stock Exchange (“Listing Rules”).

3.15 Audit Committee

The Audit Committee of the Board of the Company has reviewed the annual report.

— 32 —

4. MATTERS RELATING TO FINANCIAL REPORT

4.1 Change in the accounting policies or accounting estimates during the reporting period.

The Ministry of Finance revised and issued eight Accounting Standards for Business Enterprises including Accounting Standards for Business Enterprises No.2 — Long-term Equity Investments in 2014. Except for Accounting Standards for Business Enterprises No. 37 — Presentation of Financial Instruments, which was adopted in 2014 and the subsequent years, other standards will be implemented since 1 July 2014 in enterprises which implement the Accounting Standards for Business Enterprises. The Company re-determined relevant accounting policies in accordance with the standards, and restated the comparative financial statements for 2014 with the application of retrospective adjustment method.

Pursuant to the stipulations in the revised Accounting Standards for Business Enterprises including Accounting Standards for Business Enterprises No. 2 — Long-term Equity Investments, the Group adjusted the equity interest without control, common control, significant influence and quotations in open and active market, to calculate as available-for-sale financial assets with the cost approach. According to the stipulations in Accounting Standards for Business Enterprises No. 30 – Presentation of Financial Statements, the Company adjusted the government grant presented in non-current liabilities to deferred income. The influence of the above-mentioned changes in accounting policies on the relevant items in the comparative financial statements are as follows:

	Amount affected in the items	of relevant financial
	statements as at 31 December 2013/for 2013
Changes in accounting polies and the influences		Increase +/ decrease –
thereof on the Company	Item	in amount affected
Accounting Standards for Business Enterprises No. 30 — Presentation of	Deferred income	11,447,966.31
Financial Statements (revised in 2014)	Non-current liabilities due	-1,268,920.56
	within one year
	Other non-current liabilities	-10,179,045.75
Accounting Standards for Business Enterprises No. 2 — Long-term	Available-for-sale financial assets	7,000,000.00
Equity Investments (revised in 2014)	Long-term equity investments	-7,000,000.00

— 33 —

Amount affected in the items of relevant financial statements as at 1 January 2013/for 2012

Changes in accounting policies and		Increase +/decrease –
the influences thereof on the Company	Item	in amount affected
Accounting Standards for Business Enterprises No. 30 — Presentation	Deferred income	14,053,655.20
of Financial Statements (revised in 2014)	Non-current liabilities due	-2,325,557.29
	within one year
	Other non-current liabilities	-11,728,097.91
Accounting Standards for Business Enterprises No. 2 — Long-term	Available-for-sale financial assets	7,000,000.00
Equity Investments (revised in 2014)	Long-term equity investments	-7,000,000.00

The changes in the accounting policies only have influences on the above-presented items in the financial statements, and do not have any influence on the total assets, total liabilities, net assets as at the end of 2013 and 2012, as well as the net profit for 2013 and 2012.

4.2 There was no correction of errors for the previous period during the reporting period.

— 34 —

4.3 Change or not in the scope of consolidation compared with the latest annual report.

On 31 December 2013, the Company entered into the Equity Transfer Contract with Luoyang Tianyuan Property Company Limited (洛陽天元置業有限公司) and transferred the 100% equity interest of Luoyang Glass Industrial Co., Ltd. to Luoyang Tianyuan Property Company Limited at a transaction price of RMB122 million. In March 2014, the Company completed the delivery procedures regarding this equity transfer. Therefore, Luoyang Tianyuan Property Company Limited* will not been incorporated into the consolidation scope of the Company in the period.

CONSOLIDATED BALANCE SHEET

Prepared by: Luoyang Glass Company Limited		December 31, 2014
		Unit: RMB
	December 31,	December 31,
Item	2014	2013
Current assets:
Bank balance and cash	68,478,221.61	128,509,961.33
Financial assets classified into
financial assets at fair value
through profit or loss
Derivative financial assets
Notes receivable	400,000.00	39,799,612.49
Accounts receivable	23,412,089.50	29,651,547.60
Prepayments	7,692,326.00	13,806,820.85
Interest receivable
Dividends receivable
Other receivables	37,020,177.60	81,916,322.40
Inventory	211,781,486.51	200,349,541.58
Assets classified as held for sale
Non-current assets due within one year
Other current assets	21,865,034.21
Total current assets	370,649,335.43	494,033,806.25

— 35 —

Item Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term receivables Long-term equity investments Investment properties Fixed assets Construction in progress Construction materials Disposal of fixed assets Biological assets for production Fuel assets Intangible assets Development expenses Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	December 31, 2014 4,343,500.00 48,649,780.65 568,040,126.38 698,734.75 428,213.56 54,815,729.68 486,000.00 3,821,811.59 5,134,487.79 686,418,384.40 1,057,067,719.83	December 31, 2013 7,000,000.00 644,340,372.61 2,139,957.20 506,186.30 73,958,045.12 2,437,064.61 2,112,887.79 732,494,513.63 1,226,528,319.88

— 36 —

December 31, December 31, 2014 2013

Item

Current liabilities: Short-term loans Financial assets classified into financial assets at fair value through profit or loss Derivative financial assets Notes payable Accounts payable Payments received in advance Staff remuneration payables Taxes payable Interest payable Dividends payable Other payables Assets classified as held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities: Long-term loans Debentures payable Long-term payables Long-term employee remuneration payable Specific payables Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities	10,000,000.00 90,000,000.00 266,198,092.81 57,399,049.54 48,625,920.94 27,800,706.43 80,705,153.66 46,293,636.87 627,022,560.25 459,535,761.38 9,898,914.15 469,434,675.53 1,096,457,235.78	50,696,833.33 150,000,000.00 282,538,381.85 41,704,096.40 59,538,138.48 –7,987,198.97 126,044,622.62 46,343,566.40
		748,878,440.11

		506,104,010.11 11,447,966.31
		517,551,976.42
		1,266,430,416.53

— 37 —

December 31, December 31, 2014 2013

Item

Owners’ equity:
Share capital		500,018,242.00		500,018,242.00
Other equity instruments
Capital reserve		857,450,406.90		857,450,406.90
Less: Treasury stock
Other comprehensive income
Special reserve		456,157.74		367,894.52
Surplus reserve		51,365,509.04		51,365,509.04
Retained earnings		–1,359,891,297.28		–1,375,895,993.77
Total equity attributable to
the owners of the Company		49,399,018.40		33,306,058.69
Minority interests		–88,788,534.35		–73,208,155.34
Total owners’ equity		–39,389,515.95		–39,902,096.65
Total liabilities and owners’ equities		1,057,067,719.83		1,226,528,319.88

		Person in charge of
Legal representative:	Chief accountant: accounting department:
Ma Liyun	Sun Lei		Chen Jing

— 38 —

BALANCE SHEET OF THE COMPANY

Prepared by: Luoyang Glass Company Limited

December 31, 2014

Unit: RMB

Item Current assets: Bank balance and cash Financial assets classified into financial assets at fair value through profit or loss Derivative financial assets Notes receivable Accounts receivable Prepayments Interest receivable Dividends receivable Other receivables Inventory Assets classified as held for sale Non-current assets due within one year Other current assets Total current assets	December 31, 2014 45,193,116.50 0.00 556,257,598.52 1,485,067.67 179,069,893.00 0.00 782,005,675.69	December 31, 2013 100,484,846.41 37,380,000.00 536,576,422.25 1,099,223.51 291,258,468.88 5,787,785.18 972,586,746.23

— 39 —

December 31, December 31, 2014 2013

Item Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term receivables Long-term equity investments Investment properties Fixed assets Construction in progress Construction materials Disposal of fixed assets Biological assets for production Fuel assets Intangible assets Development expenses Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	2014 48,649,780.65 52,597,961.54 3,813,540.76 428,213.56 6,856,321.12 486,000.00 112,831,817.63 894,837,493.32	2013 139,969,000.00 92,519,028.76 5,035,983.24 443,778.51 7,080,505.96
		245,048,296.47
		1,217,635,042.70

— 40 —

December 31, December 31, 2014 2013

Item

Current liabilities: Short-term loans Financial assets classified into financial assets at fair value through profit or loss Derivative financial assets Notes payable Accounts payable Payments received in advance Staff remuneration payables Taxes payable Interest payable Dividends payable Other payables Assets classified as held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities: Long-term loans Debentures payable Long-term payables Long-term employee remuneration payable Specific payables Estimated liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities	10,000,000.00 90,000,000.00 75,935,633.93 50,176,727.50 13,822,236.57 7,262,758.60 50,643,969.60 43,413,636.87 341,254,963.07 430,815,761.38 430,815,761.38 772,070,724.45	50,696,833.33 150,000,000.00 105,199,176.11 39,196,282.16 35,821,245.04 678,566.99 205,350,299.14 43,463,566.40
		630,405,969.17

		474,504,010.11
		474,504,010.11

		1,104,909,979.28

— 41 —

		December 31,	December 31,
Item		2014	2013
Owners’ equity:
Share capital		500,018,242.00	500,018,242.00
Other equity instruments
Capital reserve		891,129,782.23	891,129,782.23
Less: Treasury stock
Other comprehensive income
Special reserve
Surplus reserve		51,365,509.04	51,365,509.04
Retained earnings		–1,319,746,764.40	–1,329,788,469.85
Total owners’ equity		122,766,768.87	112,725,063.42

Total liabilities and owners’ equities		894,837,493.32	1,217,635,042.70

		Person in charge of
Legal representative:	Chief accountant: accounting department:
Ma Liyun	Sun Lei		Chen Jing

— 42 —

CONSOLIDATED INCOME STATEMENT

Prepared by: Luoyang Glass Company Limited

For 2014

Unit: RMB

Item		2014	2013
I.	Total operating revenue	612,541,199.49	375,735,014.43
	Less: Operating costs	576,252,408.19	322,728,783.02
	Business taxes and surcharges	6,598,685.62	4,945,624.54
	Selling expenses	26,065,248.80	22,648,035.94
	Administration expenses	110,155,298.65	107,131,092.30
	Finance expenses	6,160,463.44	9,554,004.27
	Impairment loss on assets	49,408,258.94	46,665,378.40
	Add: Gains from changes in fair value
	Investment income	98,842,537.14	2,410,572.50
	Including: Gains from investment
	in associates and
	joint ventures
II.	Operating profit	–63,256,627.01	–135,527,331.54
	Add: Non-operating income	81,654,516.83	31,012,446.69
	Including: gain on disposal of
	non-current assets	2,294,067.72	20,099,782.07
	Less: Non-operating expenses	9,929,613.25	3,051,871.70
	Including: Loss from disposal of
	non-current assets	1,628,535.23	1,673,324.51
III.	Total profit	8,468,276.57	–107,566,756.55
	Less: Income tax expenses	8,125,432.82	3,287,385.84
IV.	Net profit	342,843.75	–110,854,142.39
	Including: Net profit attributable to	16,004,696.49	–98,980,994.84
	the owners of the Company
	Minority interests	–15,661,852.74	–11,873,147.55

— 43 —

2014

Item

2013

V.	Other comprehensive income net of tax
	Net comprehensive income attributable to
	equity holders of the Company
	(1) Other comprehensive income that can
	not be reclassified to profit and loss
	in subsequent periods
	(2) Other comprehensive income that will be
	subsequently reclassified to profit
	and loss
	Net other comprehensive income after tax
	attributable to minority interests
VI.	Total comprehensive income	342,843.75	–110,854,142.39
	Total comprehensive income attributable	16,004,696.49	–98,980,994.84
	to owners of the parent company
	Total comprehensive income attributable
	to minority interests –15,661,852.74		–11,873,147.55
VII. Earnings per share
	(1) Basic earnings per share_(RMB/share)_	0.0320		–0.1980
	(2) Diluted earnings per share_(RMB/share)_	0.0320		–0.1980
		Person in charge of
	Legal representative: Chief accountant:	accounting department:
	Ma Liyun Sun Lei		Chen Jing

— 44 —

INCOME STATEMENT OF THE COMPANY Prepared by: Luoyang Glass Company Limited

For 2014

Unit: RMB

Item				2014	2013
I.	Operating revenue			715,403,789.93	444,758,638.37
	Less:	Operating costs		702,105,154.31	415,670,940.26
		Business taxes and surcharges		2,544,953.25	883,856.67
		Selling expenses		2,457,715.83	2,937,640.86
		Administration expenses		23,386,907.28	23,881,432.01
		Finance expenses		–6,287,017.61	–343,993.97
		Impairment	loss on assets	321,657,803.07	1,898,152.14
	Add:	Gains from	changes in fair value
		Investment	income	270,997,339.33	23,124,763.96
		Including:	Gains from investment
			in associates
			and joint ventures
II.	Operating profit			–59,464,386.87	22,955,374.36
	Add:	Non-operating income		72,550,822.52	19,362,784.25
		Including:	gain on disposal of
			non-current assets	1,889,196.38	18,649,703.38
	Less:	Non-operating expenses		3,044,730.20	2,206,182.54
		Including:	Loss from disposal of
			non-current assets	298,792.54	1,630,927.34

— 45 —

2014

Item

2013

III.	Total	profit	10,041,705.45	40,111,976.07
	Less:	Income tax expenses
IV.	Net profit		10,041,705.45	40,111,976.07
V.	Net other comprehensive income after tax
	(1)	Other comprehensive income that
		can not be reclassified to profit
		and loss in subsequent periods
	(2)	Other comprehensive income that
		will be subsequently reclassified
		to profit and loss
VI.	Total	comprehensive income	10,041,705.45	40,111,976.07
VII. Earnings per share
	(1)	Basic earnings per share_(RMB/share)_	0.0201	0.0802
	(2)	Diluted earnings per share_(RMB/share)_	0.0201	0.0802
			Person in charge of
	Legal	representative: Chief accountant:	accounting department:
	Ma Liyun Sun Lei			Chen Jing

— 46 —

CONSOLIDATED CASH FLOW STATEMENT Prepared by: Luoyang Glass Company Limited For 2014

			Unit: RMB
Item		2014	2013
I.	Cash flows from operating activities:
	Cash received from sale of goods
	or rendering of services	319,135,078.49	185,908,945.36
	Tax rebates
	Other cash received from activities
	related to operation	16,382,969.13	13,445,194.56
	Sub-total of cash inflow from
	operating activities	335,518,047.62	199,354,139.92
	Cash paid for goods purchased and
	services rendered	202,349,909.55	80,997,979.90
	Cash paid to and on behalf of employees	104,900,603.91	54,971,205.12
	Tax payments	44,490,722.23	30,671,267.60
	Other cash paid for activities related
	to operation	24,605,499.90	21,727,448.71
	Sub-total of cash outflow from
	operating activities	376,346,735.59	188,367,901.33
	Net cash flow from operating activities	–40,828,687.97	10,986,238.59

— 47 —

2014

Item

2013

Cash flow from investment activities:
Cash received from disposal of investment		23,000,000.00
Cash received from return of investments	1,224,570.83	2,410,572.50
Net cash received from disposal of fixed assets,	38,441,655.62	15,635,926.98
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries	4,000,000.00
and other operating entities
Other cash received from activities	60,012,700.00	5,000,000.00
related to investment
Sub-total of cash inflow from	103,678,926.45	46,046,499.48
investment activities
Cash paid for purchase and construction	4,119,582.12	45,778,122.90
of fixed assets, intangible assets
and other long-term assets
Cash paid for investment
Net cash paid for acquisition of
subsidiaries and other operating entities
Other cash paid for activities
related to investment	5,000,000.00	343,227.68
Sub-total of cash outflow from
investment activities	9,119,582.12	46,121,350.58
Net cash flow from investment activities	94,559,344.33	–74,851.10

— 48 —

2014

Item

2013

III.	Cash flow from financing activities:
	Cash received from investments
	Including: Proceeds received by subsidiaries
	from minority shareholders’
	investment
	Proceeds from loans		10,000,000.00	106,039,000.00
	Other cash received from
	financing-related activities	485,705,546.54		690,929,578.87
	Sub-total of cash inflow from
	financing activities	495,705,546.54		796,968,578.87
	Repayment of loans		46,343,246.66	121,326,087.29
	Cash paid for dividends, profit,		221,001.16	1,469,631.66
	or interest payments
	Including: Dividend and profit paid
	by subsidiaries to
	minority shareholders
	Other cash paid for financing-related activities	507,750,800.00		712,570,000.00
	Sub-total of cash outflow from
	financing activities	554,315,047.82		835,365,718.95
	Net cash flow from financing activities	–58,609,501.28		–38,397,140.08
IV.	Effects of changes in exchange
	rate on cash and cash equivalents		430.47	–3,693.37
V.	Net increase in cash and cash equivalents		–4,878,414.45	–27,489,445.96
	Add: Opening balance of cash		28,316,110.10	55,805,556.06
	and cash equivalents
VI.	Closing balance of cash and cash equivalents		23,437,695.65	28,316,110.10
			Person in charge of
	Legal representative: Chief accountant:		accounting department:
	Ma Liyun Sun Lei			Chen Jing

— 49 —

CASH FLOW STATEMENT OF THE COMPANY Prepared by: Luoyang Glass Company Limited For 2014

			Unit: RMB
Item		2014	2013
I.	Cash flows from operating activities:
	Cash received from sale of goods
	or rendering of services	274,277,887.70	153,349,599.68
	Tax rebates
	Other cash received from activities
	related to operation	353,892,935.63	498,996,320.15
	Sub-total of cash inflow from
	operating activities	628,170,823.33	652,345,919.83
	Cash paid for goods purchased and
	services rendered	270,328,215.47	137,093,052.81
	Cash paid to and on behalf of employees	52,915,520.72	18,165,945.07
	Tax payments	6,744,426.47	1,666,303.01
	Other cash paid for activities	26,826,503.99	131,100,851.68
	related to operation
	Sub-total of cash outflow from	356,814,666.65	288,026,152.57
	operating activities
	Net cash flow from operating activities	271,356,156.68	364,319,767.26

— 50 —

2014

Item

2013

Cash flow from investment activities:
Cash received from disposal of investment
Cash received from return of investments	0.00	2,946,866.81
Net cash received from disposal of fixed assets,	38,441,655.62	658,937.40
intangible assets and other long-term assets
Net cash received from disposal of	4,000,000.00	0.00
subsidiaries and other operating entities
Other cash received from activities	60,012,700.00	5,000,000.00
related to investment
Sub-total of cash inflow from	102,454,355.62	8,605,804.21
investment activities
Cash paid for purchase and construction	332,570.00	355,705.78
of fixed assets, intangible assets and
other long-term assets
Cash paid for investment	0.00	7,000,000.00
Net cash paid for acquisition of subsidiaries
and other operating entities
Other cash paid for activities related	5,000,000.00	343,227.68
to investment
Sub-total of cash outflow from	5,332,570.00	7,698,933.46
investment activities
Net cash flow from investment activities	97,121,785.62	906,870.75

— 51 —

2014

Item

2013

III.	Net cash flow from investment	activities
	Cash received from investments
	Proceeds from loans			10,000,000.00	106,000,000.00
	Other cash received from
	financing-related activities		113,000,000.00		135,934,735.15
	Sub-total of cash inflow from
	financing activities		123,000,000.00		241,934,735.15
	Repayment of loans			43,463,246.66	98,446,087.29
	Cash paid for dividends, profit,			221,001.16	948,520.55
	or interest payments
	Other cash paid for financing-related activities		448,000,000.00		507,570,000.00
	Sub-total of cash outflow from		491,684,247.82		606,964,607.84
	financing activities
	Net cash flow from financing activities		–368,684,247.82		–365,029,872.69
IV.	Effects of changes in exchange	rate on
	cash and cash equivalents			430.47	–3,693.37
V.	Net increase in cash and cash equivalents			–205,875.05	193,071.95
	Add: Opening balance of cash			398,991.55	205,919.60
	and cash equivalents
VI.	Closing balance of cash and cash equivalents			193,116.50	398,991.55
				Person in charge of
	Legal representative:	Chief accountant:		accounting department:
	Ma Liyun	Sun Lei			Chen Jing

— 52 —

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Prepared by: Luoyang Glass Company Limited For 2014 Unit: RMB

									2014
						Equity	attributable to equity holders of the		Company
							Other							Total
				Other equity		Less:	comprehensive			Undistributed			Minority	shareholder’s
Item			Share capital	instruments	Capital reserve	Treasury stock	income	Special reserve	Surplus reserve	profit	Others	Sub-total	interest	equity
I.	Balance at the end of last year		500,018,242.00		857,450,406.90			367,894.52	51,365,509.04	-1,375,895,993.77		33,306,058.69	-73,208,155.34	-39,902,096.65
	Add:	Effects of changes in accounting policies
		Effects of correction of prior year errors
		Others
II.	Balance at the beginning of the year		500,018,242.00		857,450,406.90			367,894.52	51,365,509.04	-1,375,895,993.77		33,306,058.69	-73,208,155.34	-39,902,096.65
III.	Increase/decrease in the year
	(decrease is represented by “-”)							88,263.22		16,004,696.49		16,092,959.71	–15,580,379.01	512,580.70
	(I)	Other comprehensive income								16,004,696.49		16,004,696.49	–15,661,852.74	342,843.75
	(II)	Owners’ contribution and decrease
		in capital
		1. Owners’ capital contribution
		2. Capital input by holders of
		other equity instruments
		3. Share based payments credited
		to owners’ equity
		4. Others
	(III)	Profit distribution
		1. Appropriation to surplus reserve
		2. Distribution to owners
		(or shareholders)
		3. Others
	(IV)	Internal carry-forward of owners’ equity
		1. Conversion of capital reserve
		into capital
		2. Conversion of surplus reserve
		into capital
		3. Making good of loss with
		surplus reserve
		4. Others
	(V)	Special reserve
		1. Amount withdrawn in the year						88,263.22				88,263.22	81,473.73	169,736.95
		2. Amount utilized in the year						131,116.42				131,116.42	121,030.53	252,146.95
	(VI)	Others						-42,853.20				-42,853.20	-39,556.80	-82,410.00
IV.	Balance at the end of the year		500,018,242.00		857,450,406.90			456,157.74	51,365,509.04	–1,359,891,297.28		49,399,018.40	–88,788,534.35	–39,389,515.95

— 53 —

2013

Equity attributable to equity holders of the Company

								Other							Total
					Other equity		Less:	comprehensive			Undistributed			Minority	shareholder’s
Item				Share capital	instruments	Capital reserve	Treasury stock	income	Special reserve	Surplus reserve	profit	Others	Sub-total	interest	equity
I.	Balance at the end of last year			500,018,242.00		857,450,406.90			205,847.44	51,365,509.04	-1,276,914,998.93		132,125,006.45	-61,484,589.71	70,640,416.74
	Add:	Effects of changes in
		Effects of correction of prior	year errors
		Others
II.	Balance at the beginning of the year			500,018,242.00		857,450,406.90			205,847.44	51,365,509.04	-1,276,914,998.93		132,125,006.45	-61,484,589.71	70,640,416.74
III.	Increase/decrease in the year
	(decrease is represented by “-”)								162,047.08		-98,980,994.84		-98,818,947.76	-11,723,565.63	-110,542,513.39
	(I)	Other comprehensive income									-98,980,994.84		-98,980,994.84	-11,873,147.55	-110,854,142.39
	(II)	Owners’ contribution and
		decrease in capital
		1. Owners’ capital contribution
		2. Capital input by holders	of
		other equity instruments
		3. Share based payments credited
		to owners’ equity
		4. Others
	(III)	Profit distribution
		1. Appropriation to surplus	reserve
		2. Distribution to owners
		(or shareholders)
		3. Others
	(IV)	Internal carry-forward of owners’ equity
		1. Conversion of capital reserve
		into capital
		2. Conversion of surplus reserve
		into capital
		3. Making good of loss with
		surplus reserve
		4. Others
	(V)	Special reserve							162,047.08				162,047.08	149,581.92	311,629.00
		1. Amount withdrawn in the year							189,739.68				189,739.68	175,144.32	364,884.00
		2. Amount utilized in the year							-27,692.60				-27,692.60	-25,562.40	-53,255.00
	(VI)	Others
IV.	Balance at the end of the year			500,018,242.00		857,450,406.90			367,894.52	51,365,509.04	-1,375,895,993.77		33,306,058.69	-73,208,155.34	-39,902,096.65
												Person in		charge	of
			Legal representative:					Chief	accountant:			accounting department:
				Ma	Liyun			Sun Lei					Chen	Jing

— 54 —

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY OF THE COMPANY Prepared by: Luoyang Glass Company Limited For 2014

Unit: RMB

						2014
						Other				Total
			Other equity		Less:	comprehensive			Undistributed	shareholder’s
Item		Share capital	instruments	Capital reserve	Treasury stock	income	Special reserve	Surplus reserve	profit	equity
I. Balance at the end of last year		500,018,242.00		891,129,782.23				51,365,509.04	-1,329,788,469.85	112,725,063.42
Add:	Effects of changes in
	Effects of correction of prior year errors
	Others
II. Balance at the beginning of the year		500,018,242.00		891,129,782.23				51,365,509.04	-1,329,788,469.85	112,725,063.42
III. Increase/decrease in the year
(decrease is represented by “-”)									10,041,705.45	10,041,705.45
(I)	Other comprehensive income								10,041,705.45	10,041,705.45
(II)	Owners’ contribution and
	decrease in capital
	1. Owners’ capital contribution
	2. Capital input by holders of
	other equity instruments
	3. Share based payments credited
	to owners’ equity
	4. Others
(III)	Profit distribution
	1. Appropriation to surplus reserve
	2. Distribution to owners
	(or shareholders)
	3. Others
(IV)	Internal carry-forward of owners’ equity
	1. Conversion of capital reserve
	into capital
	2. Conversion of surplus reserve
	into capital
	3. Making good of loss with
	surplus reserve
	4. Others
(V)	Special reserve
	1. Amount withdrawn in the year
	2. Amount utilized in the year
(VI)	Others

IV. Balance at the end of the year

500,018,242.00

891,129,782.23

51,365,509.04 -1,319,746,764.40

122,766,768.87

— 55 —

						2013
						Other					Total
			Other equity		Less:	comprehensive			Undistributed	shareholder’s
Item		Share capital	instruments	Capital reserve	Treasury stock	income	Special reserve	Surplus reserve	profit		equity
I. Balance at the end of last year		500,018,242.00		891,129,782.23				51,365,509.04	-1,369,900,445.92	72,613,087.35
Add:	Effects of changes in
	Effects of correction of prior year errors
	Others
II. Balance at the beginning of the year		500,018,242.00		891,129,782.23				51,365,509.04	-1,369,900,445.92	72,613,087.35
III. Increase/decrease in the year
(decrease is represented by “-”)									40,111,976.07	40,111,976.07
(I)	Other comprehensive income								40,111,976.07	40,111,976.07
(II)	Owners’ contribution and
	decrease in capital
	1. Owners’ capital contribution
	2. Capital input by holders of
	other equity instruments
	3. Share based payments credited
	to owners’ equity
	4. Others
(III)	Profit distribution
	1. Appropriation to surplus reserve
	2. Distribution to owners
	(or shareholders)
	3. Others
(IV)	Internal carry-forward of owners’ equity
	1. Conversion of capital reserve
	into capital
	2. Conversion of surplus reserve
	into capital
	3. Making good of loss with
	surplus reserve
	4. Others
(V)	Special reserve
	1. Amount withdrawn in the year
	2. Amount utilized in the year
(VI)	Others
IV. Balance at the end of the year		500,018,242.00		891,129,782.23				51,365,509.04	-1,329,788,469.85	112,725,063.42
							Person in charge			of
	Legal representative:			Chief	accountant:		accounting		department:
	Ma Liyun			Sun Lei				Chen Jing

— 56 —

NOTES TO THE FINANCIAL STATEMENTS

From 1 January 2014 to 31 December 2014

(The amount is expressed in RMB unless otherwise specified)

I. BASIC INFORMATION

Luoyang Glass Company Limited (the “Company”) is a company incorporated in the People’s Republic of China (the “PRC”) as a joint stock limited company that, together with its subsidiaries (collectively referred to as the “Group”), engaged in the production and sales of float sheet glass.

II. MAJOR ACCOUNTING POLICY

1. Basis of preparation of financial statements

Basis of preparation: The financial statements of the Company have been prepared on the going concern basis, reflecting the business transactions and affairs actually incurred, in accordance with the Basic Standard and the specific standards of Accounting Standards for Business Enterprises issued by the Ministry of Finance (hereafter together referred to as the “Accounting Standards for Business Enterprises”). The financial statements have also been prepared based on the following principal accounting policies and accounting estimates.
Ongoing basis: On 31 December 2014, the current liabilities of the group reached RMB256,373,224.82, exceeding current assets. Directors of the company have made estimation that with the adjustment of the product structure of the Group, and the upgrading and rebuilding of production lines, the Group was expected to generate positive business activities cash flow. Meanwhile, the actual controller, CNBM, and the controlling shareholder, CHINA LUOYANG FLOAT GLASS GROUP CO., have respectively made undertakings to offer financial aid to the company, which can meet the needs of settlement of debts and committed capital funds of the Group. Directors of the company believe that there is no problem about the Group’s ability to continue. Therefore, the Company has prepared the financial statement based on the going concern basis.

— 57 —

2. Accounting year

Accounting year of the Company is the calendar year from January 1 to December 31.

3. Measurement currency

The Company’s reporting currency is the Renminbi (“RMB”).

4. Preparation method of consolidated financial statements

Scope of consolidation financial statements

The Company incorporated all of its subsidiaries (including the separate entities controlled by the Company) into the scope of consolidation financial statements, including the enterprises under the Company’s control, divisible part in the investees and structured entities.

To unify the accounting policies, date of balance sheets and accounting periods of the parent company and subsidiaries

When preparing consolidated financial statements, adjustments are made if the subsidiaries’ accounting policies and accounting periods are different from that of the Company, in accordance with the Company’s accounting policies and accounting periods.

Offset matters in the consolidated financial statements

The consolidated financial statements shall be prepared on the basis of the balance sheets of the parent company and subsidiaries, which offset the internal transactions incurred between the parent companies and subsidiaries and within subsidiaries. The owner’s equity of the subsidiaries not attributable to the parent company shall be presented as “minority equity” under the owners’ equity item in the consolidated balance sheet. The longterm equity investment of the parent company held by the subsidiaries, deemed as treasury stock of the corporate group as well as the reduction of owners’ equity, shall be presented as “Less: treasury stock” under the owners’ equity item in the consolidated balance sheet.

— 58 —

Accounting treatment of subsidiaries acquired from business combination

For subsidiaries acquired under business combination involving enterprises under common control, the assets, liabilities, operating results and cash flows of the subsidiaries are included in the consolidated financial statements from the beginning of the financial year in which the combination took place. When preparing the consolidated financial statements, for the subsidiaries acquired from business combination not involving entities under common control, the identifiable net assets of the subsidiaries are adjusted on the basis of their fair values on the date of acquisition.

III. SEGMENT REPORTING

The Group divides it business activities into two segments. The management of the Group regularly reviews the financial information of these segments to decide resources allocation and assess their performance.

The two business segments are as follows:

Float sheet glass business: production and sales of float sheet glass; and sales of raw materials for production of float sheet glass.

— 59 —

Silicon sand business: manufacturing, selling and distribution of silicon sand.

The prices for inter-segment movements are determined by reference to the prices offered to a third party.

1. Segments information for the year ended 31 December 2014:

Item	Float glass	Silicon sand	Elimination	Total
1. Income from transactions
with third parties	583,270,736.75	29,270,462.74		612,541,199.49
2. Income from inter-segment
transactions		1,821,928.47	–1,821,928.47
3. Interest income	6,810,183.12	4,794.20	–1,287,000.00	5,527,977.32
4. Interest expense	427,051.06	1,287,000.00	–1,287,000.00	427,051.06
5. Asset impairment loss	32,069,999.68	2,338,259.26	15,000,000.00	49,408,258.94
6. Depreciation and amortization
expenses	73,894,161.37	5,940,473.91		79,834,635.28
7. Total profit (“-” for loss)	30,330,685.86	–6,935,629.48	–14,926,779.81	8,468,276.57
8. Income tax expense	7,992,353.85	133,078.97		8,125,432.82
9. Net profit (“-” for loss)	22,338,332.01	–7,068,708.45	–14,926,779.81	342,843.75
10. Total assets	1,041,686,664.67	54,057,498.95	–38,676,443.79	1,057,067,719.83
11. Total liabilities	1,080,478,155.07	42,440,663.62	–26,461,582.91	1,096,457,235.7 8

— 60 —

2. Segments information for the year ended 31 December 2013:

Item	Float glass	Silicon sand	Elimination	Total
1. Income from transactions
with third parties	340,537,751.30	35,197,263.13		375,735,014.43
2. Income from inter-segment
transactions		1,909,785.81	–1,909,785.81	—
3. Interest income	6,816,798.37	9,007.87	–1,287,000.00	5,538,806.24
4. Interest expense	1,360,433.03	1,419,358.98	–1,287,000.00	1,492,792.01
5. Asset impairment loss	46,504,215.46	161,162.94		46,665,378.40
6. Depreciation and amortization
expenses	69,167,644.02	1,920,749.33		71,088,393.35
7. Total profit (“–” for loss)	–108,028,927.79	–24,100.13	486,271.37	–107,566,756.55
8. Income tax expense	3,123,035.49	164,350.35		3,287,385.84
9. Net profit (“–” for loss)	–111,151,963.28	–188,450.48	486,271.37	–110,854,142.39
10. Total assets	1,201,202,109.80	54,563,948.40	–29,237,738.32	1,226,528,319.88
11. Total liabilities	1,262,331,932.21	36,048,141.57	–31,949,657.25	1,266,430,416.53

3. Geographic information

The following table sets out information about the geographical location of the Group’s revenue from external customers and the Group’s non-current assets (excluding financial assets and deferred income tax assets). The geographical location of customers is based on the location at which the goods delivered. The geographical location of the fixed assets, construction in progress and lease prepayments under non-current assets is based on the physical location of the assets; in the case of intangible assets and exploration and evaluation assets, the location of operations; in the case of interests in associates and other investments, the location of their respective operations.

Item China Total	Revenues from external customers 2014 2013 612,541,199.49 375,735,014.43 612,541,199.49 375,735,014.43	Non-current assets 31 December 2014 31 December 2013 686,418,384.40 732,494,513.63 686,418,384.40 732,494,513.63	Non-current assets 31 December 2014 31 December 2013 686,418,384.40 732,494,513.63 686,418,384.40 732,494,513.63
			732,494,513.63

— 61 —

4. Major customers

The Group has a diverse customer base. None of the customers, entered into transactions with amounts surpassing 10% of the Group’s income.

IV. TURNOVER

Turnover represents revenue from the invoiced value of goods sold to customers, after deduction of any trade discounts and net of value-added tax and surcharges. Details are as follows:

(1) Details of operating income

Item Income from principal operations Other operating income Total Business segments Name of product or service Float glass Silicon sand Total	2014 602,782,569.70 9,758,629.79 612,541,199.49 2014 578,920,975.34 23,861,594.36 602,782,569.70	2013 354,506,270.10 21,228,744.33
		375,735,014.43

		2013 330,464,988.13 24,041,281.97
		354,506,270.10

(2) Business segments

— 62 —

V. INCOME OTHER THAN OPERATION

1. Non-operating income presented by item

Item Total gains on disposal of non-current assets Including: Gain on disposal of fixed assets Government grant Income from debt restructuring Others Total	2014 2,294,067.72 2,294,067.72 63,601,752.16 237,500.00 15,521,196.95 81,654,516.83	2013 20,099,782.07 20,099,782.07 10,105,688.89 677,002.87 129,972.86
		31,012,446.69

— 63 —

2. Government subsidy included in profit and loss for the period

Item Fiscal subsidies for the ultra-thin and ultra-white glass production line Subsidy for land use by the ultra-thin and ultra-white glass production line Special subsidy for “research and development of application technology Supporting funds for enterprise development from the industrial cluster of Ruyang County (汝陽縣產業集聚區撥付企業發展扶持資金) Supporting Funds of Baiping County (白坪鄉扶助資金) Awards for strategic creative products in national major new products (國家重點新產品計劃戰略性創新產品獎勵) Land income returns (土地收益返還)(Note) Total	2014 1,215,000.00 53,920.56 280,131.60 40,000.00 2,000,000.00 60,012,700.00 63,601,752.16	2013 Asset/income related 1,215,000.00 Asset related 53,920.56 Asset related 1,836,768.33 Income related 7,000,000.00 Income related Income related Income related Income related 10,105,688.89

Note: Pursuant to the “Notice of Luoyang Municipal Finance Bureau on the Appropriation of Land Transfer Gains to Luoyang Glass Company Limited (《洛陽市財政局關於撥付洛陽玻璃股份有限公司土地收益資金的通知》)” dated 26 December 2014, the Company recognized the fund of RMB60,012,700.00 of appropriated by Luoyang Municipal Finance Bureau as non-operating income.

— 64 —

VI. PROFIT BEFORE INCOME TAX

Profit before income tax is arrived at after (charging)/crediting:

(1) Finance costs

	Item	2014	2013
	Interest expense	427,051.06	1,492,792.01
	Less: Interest income	5,527,977.32	5,538,806.24
	Foreign exchange loss	59,576.95	154,505.20
	Less: Foreign exchange gain	348,705.65	125,260.85
	Bill discount interest	11,270,268.55	12,466,386.97
	Other expenses	280,249.85	1,104,387.18
	Total	6,160,463.44	9,554,004.27

(2)	Investment income
	Item	2014	2013
	Income from disposal of long-term
	equity investment_(Note 1)_	93,394,560.90
	From holding financial assets
	available for sale_(Note 2)_	1,224,570.83	2,410,572.50
	From disposal of available-for-sale
	financial assets_(Note 3)_	4,223,405.41
	Total	98,842,537.14	2,410,572.50

	Note: 1. The investment income generated from disposal of long-term equity investment
	was acquired through disposal of	100% equity interests	of Luoyang Glass
	Industrial Co., Ltd. during the period.

The investment income generated from holding financial assets available for sale was the dividend received by Longfei Company from Sanmenxia Bank Holdings Limited.
The investment income generated from disposal of available-for-sale financial assets was the investment income from disposal of certain equity interests in Sanmenxia Bank Holdings Limited held by Longfei Company.

— 65 —

(3) Operating costs

Item Cost of principal operations — Float glass — Silicon sand Other operating cost — Raw material, water, electricity, technical services, etc. Total operating cost (4) Business tax and surcharges Item Business tax City maintenance tax Education surcharges Resource tax Others Total (5) Selling expenses Item Staff’s salary and welfare Social insurance premium Depreciation expenses Transportation costs Handling charges Material consumption Other selling expenses Total	2014 571,466,347.02 558,175,397.75 13,290,949.27 4,786,061.17 4,786,061.17 576,252,408.19 2014 1,718,865.00 1,756,920.91 1,609,793.01 1,512,881.70 225.00 6,598,685.62 2014 10,271,762.07 2,173,372.89 1,606,222.52 8,045,348.25 479,072.31 1,509,478.15 1,979,992.61 26,065,248.80	2013 312,634,643.82 301,549,468.92 11,085,174.90 10,094,139.20 10,094,139.20
		322,728,783.02

		2013 740,221.83 1,024,024.79 991,593.92 2,189,304.00 480.00
		4,945,624.54

		2013 6,364,921.84 1,701,049.23 1,452,627.21 8,526,521.83 1,601,767.05 1,053,646.35 1,947,502.43
		22,648,035.94

— 66 —

(6) Administrative expenses

Item Staff’s salary and welfare Labor union and employee education expenses Social insurance premium Housing accumulation fund Depreciation of fixed assets Amortization of intangible assets Intermediary engagement fees Including: audit fees Research and development expenditures Taxes Water and electricity charges Other expenses Total (7) Assets impairment losses Item 1. Bad debt losses 2. Losses from inventory impairments 3. Losses from fixed asset impairments 4. Impairment losses for construction in progress 5. Impairment losses for intangible assets Total	2014 29,976,377.58 955,304.13 10,316,651.41 1,440,815.35 18,698,905.99 6,634,671.88 7,268,825.08 2,468,825.08 12,235,056.31 6,139,054.37 710,296.59 15,779,339.96 110,155,298.65 2014 3,773,320.01 35,363,283.38 8,164,473.10 957,502.45 1,149,680.00 49,408,258.94	2013 26,266,417.49 1,036,830.67 11,360,278.29 1,583,497.18 27,176,371.72 2,997,470.75 6,729,466.90 2,369,089.54 8,929,713.21 6,224,335.25 1,768,319.45 13,058,391.39
		107,131,092.30

		2013 4,849,309.68 41,224,768.72 591,300.00
		46,665,378.40

— 67 —

(8) Non-operating expenses

Item Total loss on disposal of non-current assets Incl: Loss on disposal of fixed assets Amercement outlay Donation Indemnities, liquidated damages and penalties Others Total VII. INCOME TAX EXPENSES Item Current income tax based on applicable tax laws and regulations Adjustment to deferred income tax Total	2014 1,628,535.23 1,628,535.23 1,589,792.46 6,109,255.13 602,030.43 9,929,613.25 2014 9,510,179.80 –1,384,746.98 8,125,432.82	2013 1,673,324.51 1,673,324.51 165,684.11 7,000.00 577,707.51 628,155.57
		3,051,871.70

		2013 5,724,450.45 –2,437,064.61
		3,287,385.84

On 26 June 2013, Longhai Company, the Company’s wholly-owned subsidiary, was recognized as high-tech enterprise as verified by Henan Scientific and Technological Department, Finance Department of Henan Province, Henan Provincial Office, SAT, and local Taxation Bureau of Henan Province, and awarded “Hightech Enterprise Certificate” with a validity of three years. In accordance with Paragraph 2 of Article 28 of the Enterprise Income Tax Law of the PRC, Article 93 of the Regulation on the Implementation of Enterprise Income Tax Law of PRC and the relevant provisions of the Notice of the State Administration of Taxation concerning Relevant Issues for Implementation of Tax Preferential Treatment for HighTechnology Enterprises (Guo Shui Han [2009] No. 203), Longhai Company enjoys 15% enterprise income tax in 2014. The applicable enterprise income tax for the Company and other subsidiaries is 25%.

— 68 —

VIII. DIVIDENDS

The board of directors of the Company does not recommend the payment of a dividend in respect of the year ended 31 December 2014.

IX. BASIC EARNINGS PER SHARE

Basic earnings per share is calculated by dividing consolidated net profit for the current year attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding:

Item	2014	2013
Net profit attributable to ordinary
shareholders of the Company	16,004,696.49	–98,980,994.84
Total shares at the beginning of period	500,018,242.00	500,018,242.00
Basic earnings per share	0.0320	–0.1980

No diluted earnings per share is calculated as there are no dilutive potential shares for the two years ended 31 December 2014.

X. ACCOUNTS RECEIVABLE AND BILLS RECEIVABLE

1. Accounts receivable

Item	Carrying amount	Opening balance
Accounts receivable	75,951,368.06	80,281,928.91
Less: provision for bad debts	52,539,278.56	50,630,381.31
Net amount	23,412,089.50	29,651,547.60

Generally, the Group sells its products by receiving advances from customers while 30 days of credit period are granted to a few customers.

— 69 —

The ageing of accounts receivable based on their recording dates is analyzed below:

Ages Within 1 year 1-2 years 2-3 years 3-4 years 4-5 years Over 5 years Total 2. Bills receivable Item Bank acceptance Total	Closing balance 19,048,408.58 2,352,408.18 2,821,542.85 3,890,179.97 1,944,439.71 45,894,388.77 75,951,368.06 Closing balance 400,000.00 400,000.00	Opening balance 25,731,377.61 2,821,542.85 3,890,179.97 1,944,439.71 1,095,404.38 44,798,984.39
		80,281,928.91

		Opening balance 39,799,612.49
		39,799,612.49

XI. ACCOUNTS PAYABLE AND BILLS PAYABLE

1. Ageing analysis of accounts payable:

Item Within 1 year (including one year) 1-2 years 2-3 years Over 3 years Total	Closing balance 67,875,786.71 94,591,759.50 11,562,657.38 92,167,889.22 266,198,092.81	Opening balance 130,718,211.22 23,075,892.73 72,735,956.71 56,008,321.19
		282,538,381.85

— 70 —

2. Bills payable

Item Bank acceptance Total	Closing balance 90,000,000.00 90,000,000.00	Opening balance 150,000,000.00
		150,000,000.00

XII. RESERVE

1. Capital reserve Items Capital premium Other capital reserve Total 2. Surplus reserve Item Statutory surplus reserve Total	Opening balance 787,299,489.41 70,150,917.49 857,450,406.90 Opening balance 51,365,509.04 51,365,509.04	Increase in the period Increase during this period	Decrease in the period Decrease during this period	Closing balance 787,299,489.41 70,150,917.49
				857,450,406.90

				Closing balance 51,365,509.04
				51,365,509.04

— 71 —

3. Undistributed profits

		Closing	balance
			Percentage	of
			allocation	or
Item		Amount	distribution
Undistributed profit of the previous year
before adjustment		–1,375,895,993.77
Total	of adjustment of undistributed profit at
the	beginning of the year (+/-)
Undistributed profit at the beginning of the year
after adjustment		–1,375,895,993.77
Add:	net profit attributable to owners of
	parent company during the period	16,004,696.49		—
Less:	Allocation to statutory surplus reserve
	Allocation to discretionary surplus reserve
	Allocation to general risk provisions
	Dividend of ordinary shares payable
	Dividend of ordinary shares transferred into
	the share capital
Undistributed profit at the end of the period		–1,359,891,297.28

XIII. POST BALANCE SHEET EVENT

None

By order of the Board Luoyang Glass Company Limited* Ma Liyun Chairman

Luoyang, the PRC 27 March 2015

As at the date of this announcement, the Board comprises four executive Directors: Mr. Ma Liyun, Mr. Ni Zhisen, Ms. Sun Lei and Mr. Xie Jun; two non-executive Directors: Mr. Zhang Chengong and Mr. Zhang Chong; and four independent non-executive Directors: Mr. Huang Ping, Mr. Dong Jiachun, Mr. Liu Tianni and Mr. Jin Zhanping.

* For identification purpose only

— 72 —

AI assistant

RoboSense Technology Co., Ltd — Annual Report 2014

50628_rns_2015-03-29_4dd46c3c-eef5-442b-9b5e-1d62c5c4ebec.pdf

SUMMARY ANNUAL REPORT OF 2014

1. IMPORTANT NOTICE

2. MAJOR FINANCIAL DATA AND CHANGES IN SHAREHOLDERS

2.1 Major Financial Data

2.2 Shareholdings of the top ten shareholders

Shareholdings of the top ten shareholders

Total number

2.3 Illustration of shareholding and controlling relationship between the Company and its de facto controller

3. MANAGEMENT DISCUSSION AND ANALYSIS

3.1 Discussion and analysis about business operation

— Implement innovation to promote the profitability of products.

3.2 Analysis of Principal Businesses

(1) Analytical Statement of Costs

Unit: RMB

By industry

By products

3.2.4 Expenses

(1) R&D expenditures

3.2.7 Others

3.3 Analysis of operations by industry, products or regions

3.3.1 Statement of the principal operations by industry and products

Unit: RMB

Principal operations by industry

Principal operations by products

Unit: RMB

3.4 Analysis of assets and liabilities

3.4.1 Analytical statement of assets and liabilities

Unit: RMB

3.5 Analysis of core competitiveness

3.6 Analysis of Investment

3.6.1 Overall Analysis of External Equity Investment

Unit: RMB

Unit: RMB

3.6.2 Analysis of major subsidiaries and investee companies

(1) Basic information on major subsidiaries and investee companies

(2) Statement of subsidiaries acquired and disposed of during the year

3.7 Continuing Connected Transactions in 2014

3.8 Industry competition pattern and development trend

3.9 Development strategy

4. Financial Risks

5. Technological risks

3.12 Profit Distribution or Proposal for Conversion of Capital Reserve

3.13 Repurchase, Sale and Redemption of Shares

3.14 Compliance with the Corporate Governance Code

3.15 Audit Committee

4. MATTERS RELATING TO FINANCIAL REPORT

4.1 Change in the accounting policies or accounting estimates during the reporting period.

4.2 There was no correction of errors for the previous period during the reporting period.

4.3 Change or not in the scope of consolidation compared with the latest annual report.

CONSOLIDATED BALANCE SHEET

Unit: RMB

I. BASIC INFORMATION

II. MAJOR ACCOUNTING POLICY

1. Basis of preparation of financial statements

2. Accounting year

3. Measurement currency

4. Preparation method of consolidated financial statements

III. SEGMENT REPORTING

1. Segments information for the year ended 31 December 2014:

2. Segments information for the year ended 31 December 2013:

3. Geographic information

4. Major customers

IV. TURNOVER

(1) Details of operating income

(2) Business segments

V. INCOME OTHER THAN OPERATION

VI. PROFIT BEFORE INCOME TAX

(1) Finance costs

(3) Operating costs

(6) Administrative expenses

(8) Non-operating expenses

VIII. DIVIDENDS

IX. BASIC EARNINGS PER SHARE

X. ACCOUNTS RECEIVABLE AND BILLS RECEIVABLE

1. Accounts receivable

XI. ACCOUNTS PAYABLE AND BILLS PAYABLE

1. Ageing analysis of accounts payable:

RoboSense Technology Co., Ltd Annual Report 2014