RoboSense Technology Co., Ltd - Annual Report 2018

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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LUOYANG GLASS COMPANY LIMITED ANNUAL RESULTS ANNOUNCEMENT FOR 2017

I. IMPORTANT NOTICE

1.1 In order to fully understand the Company’s operating results, financial position and future development plans, investors should carefully read the full text of the Annual Report at the website of Shanghai Stock Exchange (SSE) and other websites designated by China Securities Regulatory Commission (CSRC).
1.2 The Board of Directors, the Board of Supervisors, the directors, the supervisors and senior management of the Company confirm that the information contained in the Annual Report is true, accurate and complete without any false and misleading statements or material omissions, and bear joint and several legal responsibilities.
1.3 All directors of the Company attended the Board meeting.
1.4 PKF Daxin Certified Public Accountants LLP has issued an auditor’s report with standard unqualified opinions for the Company.

– 1 –

1.5 Company Profile

Stock Abbreviation	Luoyang Glass	Stock Code 600876
Stock Listing Exchange	Shanghai Stock Exchange (SSE)
Stock Abbreviation	Luoyang Glass LTD	Stock Code 01108
Stock Listing Exchange	The Stock Exchange of Hong
	Kong Limited
Contact Persons and		Representative of
Contact Methods	Secretary to the Board	Securities Affairs
Name	Wu Zhixin	Zhao Zhiming
Tel.	86-379-63908588	86-379-63908833
Fax	86-379-63251984	86-379-63251984
E-mail	[email protected]	[email protected]

II. BRIEF INTRODUCTION TO MAIN SERVICES OR PRODUCTS DURING THE REPORTING PERIOD

During the reporting period, the Company was principally engaged in the production and sale of ultra-thin optical electronic and information display substrate glasses and has three ultra-thin glass production lines (one of which is being upgraded). The Company ranks among the leading manufacturers of ultrathin glass in China in terms of production capacity as well as product varieties and specifications. Its products are mainly distributed across 18 provinces (or municipalities directly under the central government) including Anhui, Guangdong, Jiangsu, Shanghai, Zhejiang and Hebei.

Float glass production enterprises have the feature of uninterrupted production. In their business model, sales are determined by production and sales of inventory are commonly adopted. Based on sales determined by production, the Company manages to base production on sales to the maximum extent with reference to the historical sales record and market demand forecasts of various kinds of product as well as the actual operation of production lines, thus effectively increasing the utilization rate of production capacity and sales-to-output ratio. The Company adopts two sales models, namely distribution and direct sale, where the direct sale model is adopted for ITO conductive film glass manufacturers; and the model of distribution by professional distributors is mainly adopted for protective shield manufacturers and other manufacturers.

– 2 –

The products of the Company are mainly used in the downstream of the flat panel display industry and touch panel industry, including TN-LCD, STN-LCD, OLED and other kinds of displays, as well as ITO glass substrates for touch screens and cover glass for touch screen devices. During the reporting period, the products of the Company take up approximately 15%–20% share of the domestic market.

III. SUMMARY OF ACCOUNTING DATA AND FINANCIAL INDICATORS

Unit: Yuan Currency: RMB

			Increase/
			decrease over
	2017	2016	the last year	2015
			(%)
Total assets	1,373,132,245.83	1,356,917,020.31	1.20	1,314,035,081.52
Operating revenue	367,047,136.12	392,095,626.14	-6.39	662,156,635.13
Net profit attributable
to shareholders of the
Company	20,568,060.51	11,516,063.78	78.60	-184,755,120.74
Net assets attributable
to shareholders of the
Company	559,139,146.36	523,269,416.96	6.85	278,344,996.00
Net cash flow from
operating activities	50,453,331.32	30,552,921.95	65.13	-131,037,564.70
Closing total share capital	526,766,875	526,766,875		515,018,242
Basic earnings per share
(RMB/share)	0.0390	0.0219	78.08	-0.3587
Diluted earnings per share
(RMB/share)	0.0390	0.0219	78.08	-0.3587
			Increased by
Weighted average return			1.43 percentage
on net assets (%)	3.85	2.42	points	-29.58

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IV. MAJOR QUARTERLY FINANCIAL INDICATORS IN 2017

Unit: Yuan Currency: RMB

	Q1 (January–	Q2 (April–	Q3 (July–	Q4 (October–
	March)	June)	September)	December)
Operating revenue	76,356,597.31	78,612,679.73	106,469,086.57	105,608,772.51
Net profit attributable
to shareholders of the
Company	1,158,297.48	19,661.54	-608,779.97	19,998,881.46
Net cash flow from
operating activities	-29,306,072.80	-46,530,296.12	47,609,488.44	78,680,211.80

V. INFORMATION OF SHAREHOLDERS

5.1 Number of ordinary shareholders and preferred shareholders whose voting rights are restored and shareholdings of top 10 shareholders

Number of ordinary shareholders at the end 57,229,including57183 holders of A shares and of the reporting period 46 holders of H shares Total number of ordinary shareholders at 56,329, including 56283 holders of A shares the end of one month prior to publishing and 46 holders of H shares date of the Annual Report

– 4 –

Shareholdings of top 10 Shareholders and top 10 holders of circulating shares (or holders of shares not subject to trading moratorium) at the end of the reporting Period

Unit: shares

		Shareholdings of top 10	Shareholdings of top 10	Shareholders
	Increase/			Number	Pledged	or Frozen
	decrease			of Shares
	during			subject to
Name of Shareholder	reporting	Closing		trading			Nature of
(Full Name)	period	shareholding	Proportion	moratorium	Status	Number	Shareholder
			(%)
HKSCC NOMINEES	10,000	248,680,699	47.21	0	Unknown	0	Overseas legal
LIMITED							person
China Luoyang Float Glass	0	105,018,242	19.94	15,000,000	Pledged	41,000,000	State-owned legal
(Group) Company Limited							person
CNBMG Bengbu Design &	0	69,000,000	13.10	0	Unknown	0	State-owned legal
Research Institute for Glass							person
Industry Co., Ltd.
Beijing Taiji Huaqing	2,400,000	2,400,000	0.46	0	Unknown	0	Domestic non-
Information System							state-owned
Co., Ltd.							legal person
Hong Kong Securities	82,377	600,290	0.11	0	Unknown	0	Overseas legal
Clearing Company Limited							person
Beijing Taiji Huaqing	430,000	430,000	0.08	0	Unknown	0	Domestic non-
Peicheng Software							state-owned
Technology Co., Ltd.							legal person
CHUK YEE MEN LIZA U/D	0	374,000	0.07	0	Unknown	0	Overseas legal
							person
Hou Liyuan	353,500	353,500	0.07	0	Unknown	0	Domestic natural
							person
Jin Ruiming	315,394	315,394	0.06	0	Unknown	0	Domestic natural
							person
Liu Bibo	-700,000	300,000	0.06	0	Unknown	0	Domestic natural
							person

– 5 –

Shareholdings of top 10 holders of shares not subject to trading moratorium

	Number of circulating
	shares held not subject	Type and number of shares
Name of Shareholder	to trading moratorium	Type	Number
HKSCC NOMINEES LIMITED	248,680,699	Overseas listed foreign shares 248,680,699
China Luoyang Float Glass (Group) Company	90,018,242	Ordinary shares denominated	90,018,242
Limited		in RMB
CNBMG Bengbu Design & Research Institute	69,000,000	Ordinary shares denominated	69,000,000
for Glass Industry Co., Ltd		in RMB
Beijing Taiji Huaqing Information System Co.,	2,400,000	Ordinary shares denominated	2,400,000
Ltd.		in RMB
Hong Kong Securities Clearing Company	600,290	Ordinary shares denominated	600,290
Limited		in RMB
Beijing Taiji Huaqing Peicheng Software	430,000	Ordinary shares denominated	430,000
Technology Co., Ltd.		in RMB
CHUK YEE MEN LIZA U/D	374,000	Overseas listed foreign shares	374,000
Hou Liyuan	353,500	Ordinary shares denominated	353,500
		in RMB
Jin Ruiming	315,394	Ordinary shares denominated	315,394
		in RMB
Liu Bibo	300,000	Ordinary shares denominated	300,000
		in RMB
Explanation on connected relationship or	There are connected parties or persons acting in concert as defined by
action acting in concert among the	Regulations for Disclosure of Changes in Shareholding of Listed Companies
aforesaid shareholders	(“上市公司股東持股變動信息披露管理辦法”) issued by the CSRC
	among the top 10 shareholders of the Company, including China Luoyang
	Float Glass (Group)	Company Limited and CNBMG Bengbu Design &
	Research Institute for Glass Industry Co., Ltd. The Company		is not aware
	of any parties acting	in concert or any connected relationship	among other
	holders of circulating	shares.

Explanations on preference shareholders with None voting rights restored and the number of shares held

Notes: 1. Shares held by HKSCC NOMINEES LIMITED are held on behalf of various customers.
The ordinary shares dominated in Renminbi held by Hong Kong Securities Clearing Company Limited are held on behalf of overseas investors who held these shares via Northbound Trading in the Shanghai-Hong Kong Stock Connect.

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5.2 Number of shares held by top 10 holders of shares subject to trading moratorium and trading moratorium

Unit: shares

			Shares	Shares	subject to
			trading moratorium
			available for listing
				and	trading
					Number of
		Number of			additional
		shares held	Time		shares
	Name of holders of	subject to	available		available for
	shares subject to	trading	for listing		listing and
NO.	trading moratorium	moratorium	and trading		trading	Trading moratorium
1	China Luoyang Float Glass	15,000,000	2018-12-29		0	Non-transferable within
	(Group) Company Limited					36 months from the
						completion date of the
						issuance
2	Caitong Fund Management Co.,	10,546,448	2017-03-22		10,546,448	Non-transferable within
	Ltd.					12 months from the
						completion date of the
						issuance
3	First Capital Securities Co., Ltd.	1,202,185	2017-03-22		1,202,185	Non-transferable within
						12 months from the
						completion date of the
						issuance
Explanation on connected		There are no connected parties or		persons acting in concert as defined by Regulations
relationship or action acting in		for Disclosure of Changes in Shareholding of Listed Companies among the aforesaid
concert among The aforesaid		shareholders, including China Luoyang Float Glass (Group) Company Limited and
shareholders		other holders of shares subject to trading moratorium. The				Company is not aware of
		any parties acting in concert or		any	connected relationship among other holders of
		shares subject to trading moratorium.

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5.3 Block Diagram on Equity and Control Relationship among the Company and Controlling Shareholders, and De Facto Controllers

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----- Start of picture text -----

State-owned Assets Supervision and
Administration Commission of the State
100%
China National Building Material
Group Co., Ltd.
100%
100%
Triumph Technology
Group Company
CNBMG Bengbu Design &
53.64% Research Institute for Glass
Industry Co., Ltd
China Luoyang Float Glass (Group)
19.0%
19.94%
Luoyang Glass Company Limited
13.10%
----- End of picture text -----

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VI. DISCUSSION AND ANALYSIS OF THE OPERATIONS

6.1 Discussion and analysis on the Company’s operations during the reporting period

During the reporting period, the Company implemented the spirit of the 19th National Congress of the CPC, adhered to the management principles of “integration and optimization, quality improvement and benefit increase” and the business culture of “profit and efficiency as the first priority” and insisted on operation policies of “price stabilization, quantity assurance, cost reduction, receivables collection, inventory control, adjustment”. On this basis, the Company implemented its development strategy in an all-round way so as to achieve the goals and tasks of the year.

1. Actively promote the major asset restructuring and expand and strengthen the new glass business.

In 2017, the Company has made substantial progress in assets acquisition by issuance of shares and supporting funds raising. It has obtained approvals from the State-owned Assets Supervision and Administration Commission of the State Council, the Shanghai Stock Exchange and Hong Kong Stock Exchange, the CSRC and the SFC, and the approvals from the Board of Directors and the general meeting of Luoyang Glass, ensuring the steady advancement of the restructuring work.

On 15 March 2018, the assets acquisition by issuance of shares and supporting funds raising (connected transaction) by the Company were approved by the CSRC.

Through this restructuring, the Company increased photovoltaic glass business on the basis of its existing optical electronic and information display glasses business. The successful implementation of the restructuring broadened the scope of application of the Company’s new glass products, diversified product categories and downstream markets, and reduced dependence on a single downstream market. With the expansion of the size of and the improvement of the quality of the assets of the Company, it is expected to further enhance the stability and sustainability of future business development, and enhance profitability and overall competitiveness.

– 9 –

2. Steadily promote technological upgrading projects and new product projects, and strive to drive high-quality development.

(1) The Company proactively coped with competitions in the ultrathin glass market, improves weak links, and carried out production line transformation and technological upgrading project.

During the reporting period, the Company implemented the technological transformation and upgrading of the ultra-thin electronic glass production line of Longhai Company that was discontinued in the second half of 2016, and invested to rebuild a new generation of information display ultra-thin glass substrate production line, and optimized and improved production technology and core equipment. According to the design plan, the main line’s technology and equipment and automatic control of the new-generation production line will reach the advanced level of the industry. The melting capacity of the melting furnace will be 180t/d, and the annual production capacity will be about 15.5 million square meters. At present, the project is progressing in an orderly manner.

(2) Consolidate and enhance the ability of continuous innovation and expand new energy materials business.

The ultra-white solar thermal materials are the basic materials of condenser, the core basic component used for solar thermal power generation. At present, domestic glass manufacturers haven’t engaged in this field. According to the development strategy of the Company, and based on the pre-project market research, technological R&D, and the unique location advantage of the project site as well as energy supply advantage, the Company started the construction of the Ultra-White Solar Thermal Material Project in the industrial cluster district of Puyang County, Henan Province in May 2017. The project is to build a ultra-white solar thermal material production line with a daily melting capacity of 400 tonnes, which could produce 14 million square meters of solar thermal power generation raw materials for glasses production and 2.80 million square meters of high-end auto windshield and dashboard glass materials annually. And it will build an ancillary deep processing production line of solar thermal power generation reflector with an annual production capacity of 6.80 million square meters during later phase.

The Company also plans to construct a photoelectric material R&D center and its ancillary facilities in the industrial cluster district of Puyang County, Henan Province. The completion and operation of the R&D center will create a good research environment for attracting high-level talents and fostering key technical personnel and will also effectively enhance the scientific research level and innovation capabilities of the Company in new materials and strengthen the core competitiveness of the Company.

– 10 –

3. Manage factories internally, and expand market externally to achieve stable growth during the production and operation courses.

(1) The Company increased the production of, and intensified the marketing and market synergy of marketable and high value-added products, and steadily raised the product selling price. During the reporting period, the selling prices of various products such as 0.33mm, 0.4mm, 0.7mm and 1.1mm products have been improved to varying degrees. The sales-to-output ratio of Longmen Company reached over 110%, which is the highest level in record.
(2) It has achieved remarkable results in new product R&D, and quality improvement through technological innovation. In the two production lines of the Company, the customer use rate of Longmen Company’s 1.1mm product increased by approximately 20% year-on-year, and the gross rate of finished products of Bengbu Company’s 0.33mm product increased by 5%. 0.25mm aluminum glass product has been successfully developed and has been continuously and stably produced.
(3) The efforts in “improving efficiency, cutting expenditures and reducing costs” has achieved substantial results. The Company reduced procurement costs and capital costs through centralized purchasing of bulk raw material and centralized use of funds, and optimized processing technologies and upgraded equipment to save raw material consumption and improve energy efficiency. The Company also adhered to benchmarking management, strictly controlled various costs and expenditures, and revitalized stock assets. Various measures such as repairing old facilities and reusing wastes were carried out, saving a total of about RMB20,000,000.

4. Major progress has been made in scientific research projects with remarkable scientific and technological achievements.

During the reporting period, Bengbu Company undertook a total of 4 R&D projects, including the provincial-level major special project, namely Research on the Production Technology and Key Technology in the Industrialization of 0.15mm Ultra-Thin Float Electronic Glass (0.15mm 及薄浮法電子玻璃工藝及產業化關鍵技術研究 ), the project of Research on the Production Technology of Industrialization of 0.2mm High Strength Electronic Glass ( 高強 0.2mm 電子玻璃工業化生產技術研究 ) and the project of Research on the Production Technology of 3D Wear-Resistant Glass Substrate ( 耐磨 3D 玻璃基板生產技術研究 ). The latter two projects were established as major projects of independent innovation in Bengbu City.

– 11 –

During the reporting period, the Company applied for a total of 12 patents, including 4 invention patents and 8 utility model patents. It has also obtained 9 authorized patents and the Building Material Innovative Technology Award of China ( 中國建材技術革新獎 ). In 2017, the technology center of Bengbu Company was rated as a city-level enterprise technology center of Bengbu City. In addition, the Company has participated in revising the national standard GB/T 20314-2006 Float Glass for Liquid Crystal Displays (《液晶顯示器用薄浮法玻璃》), which will be formally implemented from 1 August 2018.

The information-based and digitized management project of the smart factory achieved staged results. The constructed digital workshop of the united float workshop of Bengbu Company was recognized as the provincial digital workshop in Anhui Province.

5. Enhance production safety to ensure no accident in production throughout the year and achieve remarkable results in energy conservation and emission reduction.

In 2017, the comprehensive energy consumption per RMB10,000 of total output value was 1.73 tons of standard coal, which was 19.9% lower than the same period of last year. The major pollutant emission indexes, waste gas, waste water, SO2, NOx, particulate matter, and COD were reduced by 32%, 49.5%, 2%, 66.0%, 42.4% and 58.9% yearon-year respectively.

6. Optimize personnel allocation of the Company and reform the remuneration system, both yielding good results.

In line with the goal of “highly capable personnel, efficient operation, harmonious company, and development promotion”, the Company completed the resettlement of 199 redundant personnel. At the same time, the reform of the remuneration system will be implemented to achieve the initial goal of matching corresponding personnel and salary to relevant posts, and deciding remuneration based on performance. The salary level of employees has been greatly improved, which has further mobilized the enthusiasm of the staff.

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6.2 Analysis of Principal Businesses

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

Unit: Yuan Currency: RMB

Item	2017	2016	Change
			(%)
Operating revenue	367,047,136.12	392,095,626.14	-6.39
Operating costs	256,499,345.38	343,709,563.17	-25.37
Selling expenses	6,851,477.86	7,482,306.95	-8.43
Administration expenses	98,426,434.95	87,025,947.92	13.10
Finance expenses	29,554,391.47	8,433,936.20	250.42
Net cash flow from Operating activities	50,453,331.32	30,552,921.95	65.13
Net cash flow from Investment activities	61,987,355.67	-150,917,078.02	141.07
Net cash flow from Financing activities	-50,413,260.74	190,549,383.10	-126.46
R&D expenditures	17,793,597.50	21,276,277.57	-16.37
Taxes and surcharges	6,956,503.80	5,232,136.49	32.96
Gains on disposal of assets (loss is
represented by “-”)	6,063,804.98	239,093.33	2,436.17
Other income	39,751,226.80	0.00	100
Non-operating income	40,561,205.33	105,623,639.01	-61.60

Reasons for change in finance expenses: an increase in interest-bearing liabilities in the reporting period.

Reasons for change in net cash flow from operating activities: the decrease in cash outflows from operating activities in the reporting period.

Reasons for change in net cash flow from investment activities: On the one hand, the subsidy received for project investment in the reporting period; on the other hand, the payment of differences for asset swap over the same period last year.

Reasons for change in net cash flow from financing activities: on the one hand, the proceeds received from the non-public issuance of shares over the same period last year, on the other hand, the decrease of financing for the period.

Reasons for change in taxes and surcharges: mainly due to the adjustment of the accounting items under the Provisions Concerning the Accounting Treatments of Value-Added Tax (Cai Kuai [2016] No.22) promulgated by the Ministry of Finance of the PRC.

– 13 –

Reasons for change in gains on disposal of assets: the increase in net income due to disposal of old equipment by the subsidiaries in the reporting period.

Reasons for change in other income: The government grants related to daily activities during the reporting period were presented in the “other income” item and were still presented in the “non-operating income” item during the same period last year according to the amended Accounting Standards for Business Enterprises No. 16 – Government Grants published by the Ministry of Finance of the PRC.

Reasons for change in non-operating income: The government grants related to daily activities during the reporting period were presented in the “other income” item and were still presented in the “nonoperating income” item during the same period last year according to the amended Accounting Standards for Business Enterprises No. 16 – Government Grants published by the Ministry of Finance of the PRC.

6.2.2 Revenue

(1) Analysis of the reasons for changes in revenue

During the reporting period, the Company recorded an operating revenue of RMB367,047,100, representing a decrease of 6.39% as compared to that of last year, mainly due to the sales volume of Longhai Company (a subsidiary of the Company) decreased yearon-year for stopped production for technical transformation.

(2) Major sales to customers

The total sales to the top five customers amounted t o RMB202,855,700, representing 55.27% of the total annual sales, of which sales to the related party amounted to RMB15,257,100, representing 4.16% of the total annual sales.

– 14 –

6.2.3 Costs

(1) Analytical Statement of Costs

Unit: Yuan Currency: RMB

			By industry	By industry
						Percentage
			Percentage		Percentage	of changes
			over total		over total	in amount
			cost for		cost for the	over the
By	Component		the current		same period	same period
industry	of cost	2017	period	2016	last year	last year	Explanation
			(%)		(%)	(%)
New	Direct materials	173,582,042.22	69.39	247,219,997.05	73.25	-29.79	year-on-year
materials							decrease
	Direct labour	21,812,641.44	8.72	28,147,641.99	8.34	-22.51	year-on-year
							decrease
	Manufacturing	54,765,238.79	21.89	62,134,063.42	18.41	-11.86	year-on-year
	expenses						decrease
			By products
						Percentage
			Percentage		Percentage	of changes
			over total		over total	in amount
			cost for the		cost for the	over the
By	Component		current		same period	same period
products	of cost	2017	period	2016	last year	last year	Explanation
			(%)		(%)	(%)
Photoelectric	Direct materials	173,582,042.22	69.39	247,219,997.05	73.25	-29.79	year-on-year
glass							decrease
	Direct labour	21,812,641.44	8.72	28,147,641.99	8.34	-22.51	year-on-year
							decrease
	Manufacturing	54,765,238.79	21.89	62,134,063.42	18.41	-11.86	year-on-year
	expenses						decrease

(2) Major Suppliers

The purchase amount of top five suppliers is RMB132,785,400, representing 76.63% of total purchase amount of the year, of which the amount purchased from the related parties was RMB19,539,600, representing11.28% of total purchase amount of the year.

– 15 –

6.2.4 Expenses

Unit: Yuan Currency: RMB

				Reasons of
Item	2017	2016	Changes	Changes
Selling expenses	6,851,477.86	7,482,306.95	-8.43
Administration	98,426,434.95	87,025,947.92	13.10
expenses
Finance expenses	29,554,391.47	8,433,936.20	250.42	the increase in
				interest-bearing
				liabilities in the
				reporting period
Income tax expenses	13,098,505.13	9,654,432.12	35.67	the year-on-
				year increase
				of the profit of
				subsidiaries in the
				reporting period.

6.2.5 R&D expenditures

(1) R&D expenditures

Unit: Yuan Currency: RMB

Expensed R&D expenditure in current period	17,793,597.50
Capitalized R&D expenditure in current period	–
Total of R&D expenditure	17,793,597.50
Percentage of total R&D expenditure to operating
revenue (%)	4.85
Number of the Company’s R&D staff	63
Percentage of R&D staff number to the Company’s
total number of employees (%)	9.13
Percentage of capitalized R&D expenditure (%)	–

– 16 –

6.2.6 Cash flow

(1) The net cash flow from operating activities amounted to RMB50,453,300, representing a decrease in net inflow of RMB19,900,400 as compared with RMB30,552,900 for the same period last year, mainly due to the decrease of cash outflow from operating activities during the reporting period.
(2) The net cash flow from investing activities amounted to RMB61,987,400, representing an increase of net inflow of RMB212,904,400 over RMB-150,917,100 for the same period last year, on the one hand, the subsidy received for project investment in the reporting period; on the other hand, the payment of differences for asset swap over the same period last year.
(3) The net cash flow from financing activities amounted to RMB-50,413,300, representing an decrease of net inflow of RMB240,962,600 over RMB190,549,400 for the same period last year, mainly due to, on the one hand, the proceeds received from the non-public issuance of shares over the same period last year, on the other hand, the decrease of financing for the period.

6.2.7 Others

(1) Explanation for major changes in the composition of profits or source of profits of the Company

During the reporting period, the subsidy received from the government was higher, of which RMB78,201,300 was included in extraordinary profit and loss.

– 17 –

6.3 Analysis of operations by industry, products or regions

6.3.1 Statement of the principal operations by industry and products

Unit: Yuan Currency: RMB

Principal operations by industry

				Increase/	Increase/	Increase/
				decrease of	decrease of	decrease of
				operating	operating	gross profit
				revenue as	costs as	margin as
			Gross	compared	compared	compared
	Operating	Operating	profit	with	with	with
By industry	revenue	costs	margin	last year	last year	last yea
			(%)	(%)	(%)	(%)
						increased by
						16.93
						percentage
New materials	348,115,904.29	250,159,922.45	28.14	-8.41	-25.88	points
		Principal operations by products
				Increase/	Increase/	Increase/
				decrease of	decrease of	decrease of
				operating	operating	gross profit
				revenue as	costs as	margin as
			Gross	compared	compared	compared
	Operating	Operating	profit	with	with	with
By products	revenue	costs	margin	last year	last year	last year
			(%)	(%)	(%)	(%)
						increased by
						16.93
						percentage
Photoelectric glass	348,115,904.29	250,159,922.45	28.14	-8.41	-25.88	points

– 18 –

6.3.2 Principal operations by regions

Unit: Yuan Currency: RMB

		Increase/decrease of
		revenue from
		principal operations
	Revenue from	as compared with
Regions	principal operations	last year
	(RMB)	(%)
PRC	348,115,904.29	-8.41
Explanation of principal	There was no export business during the reporting
operations by regions	period

6.4 Analysis of assets and liabilities

6.4.1 Analytical statement of assets and liabilities

Unit: Yuan Currency: RMB

					Increase/
					decrease
		Percentage			of closing
		of closing		Percentage	balance
		balance of		of closing	of current
		current		balance of	period over
	Closing	period over	Closing	last period	closing
	balance of	the total	balance of	over the	balance of
Item	current period	assets	last period	total assets	last period	Explanation
		(%)		(%)	(%)
Notes receivable	86,642,392.18	6.31	45,986,571.00	3.39	88.41	mainly due to the
						increase in payment
						in form of notes
Prepayments	742,542.55	0.05	1,638,352.47	0.12	-54.68	mainly due to
						the decrease
						in advances to
						suppliers

– 19 –

					Increase/
					decrease
		Percentage			of closing
		of closing		Percentage	balance
		balance of		of closing	of current
		current		balance of	period over
	Closing	period over	Closing	last period	closing
	balance of	the total	balance of	over the	balance of
Item	current period	assets	last period	total assets	last period	Explanation
		(%)		(%)	(%)
Inventory	87,935,528.43	6.40	132,978,500.26	9.80	-33.87	mainly due to
						the decrease
						inventories
Other current	10,632,360.95	0.77	34,874,034.35	2.57	-69.51	mainly due to the
assets						decrease in input
						tax to be deducted
Intangible assets	117,435,554.98	8.55	62,609,172.40	4.61	87.57	mainly due to the
						increase of land use
						right
Long-term	4,920,152.57	0.36	3,515,290.90	0.26	39.96	mainly due to the
deferred						increase in handling
expenses						charges for finance
						and service fees
Deferred income	2,071,257.08	0.15	4,341,222.30	0.32	-52.29	mainly due to the
tax assets						reversal of deferred
						income tax assets
Other non-current	6,652,062.63	0.48		0.00	100.00	mainly due to the
assets						prepayment for
						Desulfurization,
						Denitrification and
						Heat Recovery
						Boiler Project
Short-term loans	366,009,000.00	26.66	20,000,000.00	1.47	1,730.05	mainly due to
						additional working
						capital borrowings
Notes payable	0.00	0.00	90,000,000.00	6.63	-100.00	mainly due to the
						reimbursement of
						bill financing due

– 20 –

					Increase/
					decrease
		Percentage			of closing
		of closing		Percentage	balance
		balance of		of closing	of current
		current		balance of	period over
	Closing	period over	Closing	last period	closing
	balance of	the total	balance of	over the	balance of
Item	current period	assets	last period	total assets	last period	Explanation
		(%)		(%)	(%)
Staff remuneration	14,451,972.62	1.05	25,743,969.95	1.90	-43.86	mainly due to the
payables						increase in actual
						payment of staff
						salary
Interest payable	2,214,172.42	0.16	713,868.25	0.05	210.17	mainly due to
						the increase in
						provision for loan
						interests
Non-current	87,076,248.22	6.34	471,337,062.91	34.74	-81.53	mainly due to the
liabilities due						repayment of long-
within one year						term borrowings
						due
Long-term loans	130,781,745.65	9.52	87,836,374.23	6.47	48.89	mainly due to
						the increase in
						borrowings from
						finance leasing
Deferred income	108,193,683.26	7.88	19,290,781.82	1.42	460.86	mainly due to
						the increase in
						government grants
						related to assets

6.4.2 Explanation for changes in assets measured by fair value and measurement nature of major assets:

There is no change in assets measured by fair value and measurement nature of major assets.

– 21 –

6.5 Analysis of core competitiveness

Advantages in brand. 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 ( 馳名商標 )”, “National Science & Technology Progress Award (first class) (國家科學技術進步一等獎)”, etc. “CLFG” (洛玻) brand still internationally and domestically enjoys certain popularity and brand recognition.

Strong capacity in respect of product development and continuous innovation. The Company is the first domestic enterprise that carried out research and development and commercial production of ultrathin float grass products. It possesses core production technology of float glass and a number of proprietary intellectual property rights and holds a leading position in PRC in the production technology of ultrathin, ultra-thin and ultra-white, and ultra-thick float glass. Meanwhile, it fostered core technology teams in product research and development, processing technology improvement and quality control, etc. During the reporting period, a number of scientific and technological achievements were achieved, with a total of 12 patent applications.
Advantages in series and scale of products. The Company has 3 ultrathin glass production lines and ranks among the leading ultra-thin glass manufacturer in China,being capable of producing 0.15mm– 2.0mm series of ultra-thin glass in large scale. In particular, the 150t/d production line of Bengbu Company, equipped with most advanced technical equipment in China, is the only production line capable of producing 0.15mm ultra-thin glass substrate in large scale. The Company will fully combine the technical characteristics and different advantages of its 3 production lines, and coordinate and manage products, technologies, marketing channels,funds and personnel in a unified manner, so as to make the best out of its overall advantages in terms of personnel, technology and brand and strengthen its advantage in economies of scale and synergistic effects,thereby continuously enhancing its profitability.
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.China National Building Materials Group supports the establishment of Luoyang Glass as a capital operation and industry integration platform specializing in ultra-thin glass substrate business and new energy glass business.

– 22 –

6.6 Analysis of Investment

6.6.1 Overall Analysis of External Equity Investment

The company proposed to acquire 100% equity interest in Hefei New Energy, 100% equity interest in Tongcheng New Energy and 70.99% equity interest in Yixing New Energy by by means of issuance of shares. As of the date of this report, the matter has been approved by the China Securities Regulatory Commission.

6.6.2 Analysis of major subsidiaries and investee companies

(1) Basic information on major subsidiaries and investee companies

Unit: Yuan Currency: RMB

		Major
		products	Registered
Company name	Industry	or services	capital	Total assets	Net assets	Net profit
CLFG Longmen	New	photoelectric	20,000,000	148,032,166.38	-547,025,836.06	-37,134,946.08
Glass Company	materials	glass
Limited
CLFG Longhai	New	photoelectric	100,000,000	213,944,003.78	166,093,810.83	-10,396,410.41
Electronic Glass	materials	glass
Co., Ltd.
Bengbu CNBMG	New	photoelectric	632,764,300	1,066,867,264.66	824,350,103.80	67,947,367.99
Information	materials	glass
Display Material
Co., Ltd.
CNBMG (Puyang)	New	photoelectric	240,000,000	180,507,862.40	79,640,165.66	627,828.68
Photoelectric	materials	glass
Material Co., Ltd.

Notes: As at 1 March 2017, Luoyang Luobo Furuida Commerce Co., Ltd. was renamed CNBMG (Puyang) Photoelectric Material Co., Ltd.

– 23 –

6.7 Continuing Connected Transactions in 2017

In 2017, the transaction amount of the continuing connected transactions of the Group amounted to RMB1,333,810,000, and the annual caps being considered and approved amounted to RMB1,712,500,000 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 2017 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 2017.

6.8 Industry competition pattern and development trend

2018 is the first year for the full implementation of the spirit of the 19th CPC National Congress and is also a crucial year for the completion of building of a moderately prosperous society in all respects and the implementation of the 13th Five-Year Plan. The report of the 19th CPC National Congress explicitly pointed out that China’s economy has been transitioning from a phase of rapid growth to a stage of high-quality development, and that this is a pivotal stage for transforming our growth model, improving our economic structure, and fostering new drivers of growth. The strategic goal of China’s economic development is to develop a modernized economy, raise total factor productivity and steadily strengthen the innovation capacity and competitiveness of economy based on efforts for better quality, higher efficiency, and more robust drivers of economic growth through reform. In the new historical period, opportunities coexist with challenges.

The market demand for information display ultra-thin glass mainly derives from the demand increase in downstream markets and the expansion of application fields. The mobile Internet application penetrates into all aspects of consumption in daily life more quickly, and the intelligentization in professional application fields including on-board equipment, industrial

– 24 –

control, intelligent household appliances and medical treatment continued to intensify in an accelerated manner. It is expected that the demand for ultra-thin glass substrate, as a core material for touch screen, will reach 101 million square meters by 2020. China has become the largest producer and exporter of ITO conductive glass, TP touch screen glass, cover glass and protective shields. The overall market developments show favorable signs as domestic and international markets have maintained stable growth driven by the expansion, upgrading and growth of relevant consumer markets.

In recent years, China has introduced a series of industrial policies to promote the healthy development of the photovoltaic industry, which promotes the growth of China’s domestic photovoltaic application market and the extensive application of photovoltaic energy. From 2013 to 2016, the annual growth rate of new PV installed capacity was 54.80%. According to Guidelines of the National Energy Administration on the Implementation of the 13th Five-Year Development Plan for Renewable Energy (《國家能源局關於可再生能源發展「十三五」規劃實施的指導意見》) (Guo Neng Fa Xin Neng [2017] No. 31), the additional construction scale of photovoltaic power generation for 2017 to 2020 is 86.50GW. Photovoltaic glass is one of the important components of the photovoltaic industry, and its development is closely related to the development of the photovoltaic industry. At present, China is the world’s largest producer of photovoltaic glass. According to statistics, 93% of photovoltaic modules in the world use photovoltaic glass produced in China in 2015. With the diversified application and scale development of photovoltaic power generation technology, solar energy will gradually transition from complementary energy in some regions to alternative energy for the whole country. Driven by domestic and international demand for photovoltaic power generation, photovoltaic glass will have a larger market as it is an indispensable key material for photovoltaic module packaging.

At the same time, new production capacity is also increasing, so the market competition must be fiercer. 2018 will be a year of competitions in the quality of manufacturers.

6.9 Future development strategy

Led by innovation, the Company will maintain the lead in respect of Luoyang float glass technology. With the stress laid on consolidating information display glass substrate to enhance competitive edge and market advantage, the Company, centering on new glass, new material and new energy market, aims at becoming a provider of special high-tech glass through expansion of application fields and optimization of product mix.

– 25 –

6.10 Business plan

In 2018, by adopting a quality-oriented approach, the Company will continue to conduct business operations based on a high starting point, and focusing on pursuing high standards, high level, and high efficiency. In the courses of production and operation, the Company will conduct assets restructuring, and put the projects into production and make those projects reach design capacity and meet production standards, which can drive the growth of the Company. Taking strengthening the internal control and management as the focus of efforts, the Company will continue to reduce cost and improve efficiency. We will take pride in hard work, face the market with a high sense of mission and a strong sense of responsibility, and wholeheartedly provide customers with high-standard and strictly-required products and services, so as to create reliable brands, powerful strengths, strong innovation ability and creativity.

In 2017, the Company’s main operation targets are to strive to achieve production volume of 89.62 million square meters, to realize operating revenue of RMB1,741,190,000 and fully complete major development projects of the Company.

Based on the aforesaid annual targets, the Company will take the following measures:

1. Continue to do a good job in production and operation and fully complete the goals and tasks of production and operation.

(1) The Company will create marketing synergy to produce synergy effects. Adhere to the operation guiding principle of “Price-CostProfit”, the Company will stabilize the price and increase the quantity of products, and sale products with current quality level. It will make efforts to consolidate traditional markets, expand deeper into market segments, and secure major customers and big contracts. It will also pay attention to product prices, stabilize its existing market share, and help to maintain market stability.
(2) The Company will continue to make technological innovation, do a good job in production and management, and promote the steady improvement of product quality and output.
(3) The Company will implement fine management and control cost. Emphasis should be placed on key indicators such as revenue and profit to create an atmosphere in which every employee pays attention to the operation and development of the Company. The Company will effectively reduce costs and fees, increase profitability, strictly control the risk of accounts receivable, reduce inventory and capital occupation.

– 26 –

(4) The Company will continue to intensify efforts in “improving efficiency, cutting expenditures and reducing costs”, which is a long-term activity that has no finishing line and requires full participation of the staff. The Company will proactively implement the “eight measures”, insist on benchmarking management, strictly control costs and reduce various types of consumption. We will innovate process technology, strengthen lean management to improve the quality and output of products, realize cost reduction and efficiency improvement, increase revenue and reduce expenditures. In 2018, we expect to realize the goal of”improving efficiency, cutting expenditures and reducing costs” to increase our revenue by more than 20% year-on-year.
(5) Focusing on project construction and production and operation activities, the Company will raise funds to meet the capital requirements for project construction and daily production and operation activities.

2. Promote major special projects in a solid manner and create reliable brands and hard strengths of the Company.

(1) The Company should make asset delivery and other relevant works conduct smoothly followed the major assets restructuring, and start to raise supporting funds in due course.
(2) The Company will actively push forward the construction of the cold repair technology upgrading project and the UltraWhite Solar Thermal Materials Project in Puyang of Longhai Company. According to the project network schedule, we will make reasonable arrangements and conduct scientific construction to ensure safety, good quality and high efficiency. After the upgrading project of Longhai Company is completed and put into production, we will fully meet the requirements on highend ITO glass from downstream market, to become a leading manufacture in the industry and truly achieve the desired results. We will make the Ultra-White Solar Thermal Materials Project in Puyang into a quality project, which will enable our company to become a benchmarking enterprise in the region. We will ensure that the project will be put into production on schedule and start to produce photothermal glass in 2018.
(3) The Company will plan to conduct the upgrading project of Longmen Company. The melting furnace of Longmen Company is about to expire. We will plan to carry out the upgrading of the production line as soon as possible, conduct pre-project investigation and feasibility studies, go through the various procedures for project approval, and start construction as soon as possible.

– 27 –

3. Deepen internal mechanism reform, strengthen internal control and management and prevent various risks

(1) The Company will establish a new type of management and control mode that meets the Company’s future requirements to achieve efficient operations. Combining the reorganization of the Company and the addition of new companies and business segments after the completion of the project construction, the internal control will be further optimized to ensure the efficient operation of the Company. At the same time, upon the completion of the reorganization, we must integrate and optimize the business, personnel, and corporate culture of newly joined companies to create synergy effects and become united as one.
(2) The Company will deepen the reform of internal mechanisms. Giving priority to efficiency, we will reform the mechanism to make it show a positive correlation between the interests of management, employees, and corporate profits. We will improve the performance evaluation system of the Company, so that management personnel and employees can share the growing corporate value and benefits. We will research the professional manager system and stock appreciation right incentive in due course, and in accordance with the market-based principles, foster energetic professional managers with strong political position and good management capability, explore enterprise annuity system to encourage employees develop with the Company.
(3) The Company will strengthen internal control and management and prevent various risks. All departments of the Company must follow the requirements of the Internal Control Manual (《內控手冊》) to ensure the legal compliance of the Company’s operations and asset security. We will strengthen the self-evaluation of the effectiveness of the Company’s internal control structure and procedures. We will also strengthen risk management and control, fully implement the risk management system to effectively control various risk points and ensure the safe and efficient operation of the Company.
(4) The Company will strengthen production safety, energy saving and emission reduction. We must always make unremitting efforts to ensure safe production and no accidents, and realize the goal of energy conservation and emission reduction. Production and business units must put production safety first, strictly implement the safety responsibility system, and conduct standard operations in strict compliance with the requirements of the operational

– 28 –

procedures to prevent the occurrence of major safety accidents, so as to ensure production safety, equipment in good condition, personal safety, and property security. We will strictly follow the requirements of the Notice on Soliciting the Opinions on Revising the Work Plan for the Prevention and Control of Atmospheric Pollution in Henan Province in 2018 (Exposure Draft) (《關於徵求河南省 2018 年大氣污染防治攻堅戰工作方案（徵求意見稿）修改意見的通知》) to upgrade existing environmental protection facilities to meet the “ultra-low emission” standard.

4. Strengthen cultural construction and team building

We will carry out extensive learning activity throughout the Company to remind the staff to stay true to their original selves, to enable them to know the mission of the Company, learn to shoulder responsibility and improve skills. We will actively implement the management training plan and the reserve talent training plan to make every effort to build a team of cadres who have the overall awareness, sense of innovation, pioneering spirit, the courage to undertake responsibility, and the willingness to work hard, and who have the comprehensive ability and qualities of wanting to work hard, being able to serve and achieving success, daring to take responsibility, and doing good in their posts, and to train a group of competent leaders, a number of managers with strong will, and a group of first-line employees with the craftsmanship. We will strengthen the cultivation of reserve talents, select and emphatically train a group of young talents in the whole Company who will have a promising future after training and are loyal to the Company, establish a system of trainee foremen and trainee directors (managers), and accelerate the growth of reserve talents.

The Company will establish professional talent pools to handle the Company’s various urgent production technology problems and provide talent support. The Company will also establish a growth mechanism for technical talents, operational talents, and management talents, set up professional positions of chief engineers, chief technicians, and senior managers to give full play to the role of various talents.

– 29 –

6.11 Potential Risks

1. Risks arising from policies and the industry

Risks arising from the industry are mainly reflected in the following aspects: the ultra-thin glass substrate is primarily used for consumer electronic products which are upgraded at fast pace, giving rise to the rapidly changing demands for nature and quality of basic materials. In this regard, the upstream manufacturers are required to possess cuttingedge R&D strengthen and technical equipment, keep abreast of the changing market demands, and produce quality products with high added-value, so as to maintain stable profitability and high profit level.

Countermeasures: The Company has a core technical team and has strong technical strength in product R&D, process technology improvement, and quality control. The Company will further increase the research and development of new products, continue to innovate and improve to strive to become the industry leader.

2. 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 fully capitalize on its centralized procurement platform and take good advantage of large scale procurement; accurately follow the fluctuations of prices to purchase in due course so as to reduce purchasing costs. In addition, the Company will expand supply channels to ensure the stability and efficiency of its supply channels.

3. Risks arising from new engineering projects

New engineering projects are subject to capital input, construction progress and subsequent market operation, product introduction period and other factors. In addition, certain market risks may arise from longer ramp-up period in the initial stage after the projects are put into operation.

– 30 –

Countermeasures: The Company will proactively raise funds to guarantee project construction progress, doing project construction management to ensure project quality; collect information from different ways to enhance forward-looking forecast and analysis of the market; proactively raise funds to guarantee project construction progress; prepare the project budget appropriately, purchase equipment for the projects in time and promote construction progress of the projects; organize resources to produce marketable new products; enhance training and reserve of the front-line staff and formulate comprehensive and reasonable remuneration system to increase staff’s welfare and keep a stable talents team

4. Financial Risks

Credit risk: The Company’s credit risk arises mainly from accounts receivable; most clients of the Company have been implemented delivery on cash while a few clients with sound reputation have been granted credit extension. As such, the Company faces low credit risks.

Liquidity risk: The Company has sufficient cash and cash equivalents to basically meet its operational needs. In addition, it has obtained financial assistance commitment from its controlling shareholder that can satisfy its long- and short-term capital demand.

Interest rate risk: The Company’s interest rate risk arises mainly from bank and other loans as well as bank deposit. As there is no significant connection between the vast majority of Company’s expenses and operating cash flows and the changes in market interest rates, bank loans at fixed interest rate will be not sensitive to the changes in the market interest rates.

5. Technological risks

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

– 31 –

6.12 Proposal for Profit Distribution or Conversion of Capital Reserves into Share Capital

The Parent Company recorded a net profit of RMB2,883,500 for 2017, which is audited by PKF Daxin Certified Public Accountants LLP, and together with the undistributed profit of RMB-1,399,150,600 at the beginning of the previous year, the accumulated undistributed profit of the Parent Company at the end of 2017 was RMB-1,396,267,100.

As provided in the relevant provisions of Articles of Association that the profit after tax should first be used to cover the deficit, the Company will not distribute profits nor convert capital reserve into share capital in 2017.

6.13 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.

6.14 Compliance with the Corporate Governance Code

The Group has complied with all the code provisions of the Code on Corporate Governance Practices set out in Appendix 14 to the Listing Rule of the Hong Kong Stock Exchange.

6.15 Audit Committee

The audit committee of the Board of the Company has reviewed this annual report.

VII. MATTERS RELATED TO FINANCIAL REPORT

7.1 Compared with the financial report of the last year, whether the Company’s accounting policies, accounting estimates and accounting methods have been changed or not.

In 2017, the Ministry of Finance issued the Accounting Standards for Business Enterprises No. 42 – Non-Current Assets and Disposal Groups Held for Sale and Termination of Business Operation, which took effect on 28 May 2017. Non-current assets and disposal groups held for sale and termination of business operation existing on the date of the implementation shall be handled with prospective application method.

In 2017, the Ministry of Finance revised the Accounting Standards for Business Enterprises No. 16 – Government Grants, and the revised standards will be implemented since 12 June 2017. The government grant existing on 1 January 2017 shall be handled with prospective application method; and the new government grant from 1 January 2017 to the date of the implementation shall also be adjusted according to the revised standard.

– 32 –

In 2017, the Ministry of Finance issued the Notice of the Ministry of Finance on Revising and Issuing the Format of Financial Statements of General Enterprises (《財政部關於修訂印發一般企業財務報表格式的通知》) (Cai Kuai〔2017〕No. 30). Enterprises that apply the Accounting Standards for Business Enterprises shall prepare the financial statements for 2017 and the future periods in accordance with the Accounting Standards for Business Enterprises and the requirements of the Notice.

The main impacts of the Company’s implementation of the above two standards and the Notice (Cai Kuai [2017] No. 30) are as follows:

Unit: RMB

		The amount of		The amount of	The amount of
		affected items of		non-operating	on-operating
	Affected items	financial	Restated amount	income reported	expenses reported
Changes in accounting	of financial	statement during	of the previous	in the previous	in the previous
policies and causes	statement	the current period	period	period	period
1. Government grants	Other income	39,751,226.80	–	21,647,581.14	–
related to the daily
operations of the
Company are
included in other
income
2. Adjustment to the	Gains from asset	6,063,804.98	239,093.33	254,968.93	15,875.60
presentation of	disposal
gains and losses
from asset disposal

7.2 During the reporting period, whether there is significant accounting error correction in the Company or not.

None

7.3 Compared with the financial report of the last year, if the consolidation scope of the financial report is changed, the Company shall make specific explanation.

None

– 33 –

VIII. NOTES TO THE FINANCIAL STATEMENTS

Consolidated Balance Sheet 31 December 2017

Prepared by: Luoyang Glass Company Limited*

Unit: Yuan Currency: RMB

Item Current Assets： Cash and cash equivalents Bills receivables Accounts receivables Prepayments Other receivables Inventories Assets classified as held for sale Non-current assets due within one year Other current assets Total current assets Non-current assets: Held-to-maturity investment Long-term receivables Long-term equity investment Fixed assets Construction in progress Engineering materials Disposal of fixed assets Intangible assets Development expenditures Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	Closing Balance Operating Balance 175,955,511.45 157,528,516.53 86,642,392.18 45,986,571.00 105,313,043.46 101,891,329.13 742,542.55 1,638,352.47 78,228,794.75 107,581,717.91 87,935,528.43 132,978,500.26 10,632,360.95 34,874,034.35 545,450,173.77 582,479,021.65 55,000,000.00 55,000,000.00 561,330,800.42 648,972,313.06 80,258,263.80 13,980.58 117,435,554.98 62,609,172.40 4,920,152.57 3,515,290.90 2,071,257.08 4,341,222.30 6,652,062.63 827,682,072.06 774,437,998.66 1,373,132,245.83 1,356,917,020.31	Closing Balance Operating Balance 175,955,511.45 157,528,516.53 86,642,392.18 45,986,571.00 105,313,043.46 101,891,329.13 742,542.55 1,638,352.47 78,228,794.75 107,581,717.91 87,935,528.43 132,978,500.26 10,632,360.95 34,874,034.35 545,450,173.77 582,479,021.65 55,000,000.00 55,000,000.00 561,330,800.42 648,972,313.06 80,258,263.80 13,980.58 117,435,554.98 62,609,172.40 4,920,152.57 3,515,290.90 2,071,257.08 4,341,222.30 6,652,062.63 827,682,072.06 774,437,998.66 1,373,132,245.83 1,356,917,020.31
		582,479,021.65

		55,000,000.00 648,972,313.06 62,609,172.40 3,515,290.90 4,341,222.30
		774,437,998.66

		1,356,917,020.31

– 34 –

Item

Closing Balance Operating Balance

Current liabilities：

Short-term borrowings Bills payables Accounts payables Receipts in advance Employee compensation payable Taxes payable Interest payable Dividend payable Other payables Non-current liabilities due within one year Other current liabilities tal current liabilities on-current liabilities： Long-term borrowings Accrued liability Deferred income Deferred tax liabilities Other non-current liabilities tal non-current liabilities tal Liabilities	366,009,000.00 39,537,119.64 10,817,124.88 14,451,972.62 11,764,954.55 2,214,172.42 43,147,078.23 87,076,248.22 575,017,670.56 130,781,745.65 108,193,683.26 238,975,428.91 813,993,099.47	20,000,000.00 90,000,000.00 46,373,902.20 14,391,654.50 25,743,969.95 15,381,067.45 713,868.25 42,578,922.04 471,337,062.91
		726,520,447.30

		87,836,374.23 19,290,781.82
		107,127,156.05

		833,647,603.35

Total current liabilities

Non-current liabilities：

Total non-current liabilities

Total Liabilities

– 35 –

Closing Balance Operating Balance

Item

Owners’ equity
Share capital		526,766,875.00		526,766,875.00
Capital reserve		1,488,406,708.39		1,473,105,039.50
Surplus reserve		51,365,509.04		51,365,509.04
Undistributed profit		-1,507,399,946.07	-1,527,968,006.58
Total owners’ equity attributable to
owners of the Company		559,139,146.36		523,269,416.96

Minority interests
Total owners’ equity		559,139,146.36		523,269,416.96

Total liabilities and owners’	equity	1,373,132,245.83		1,356,917,020.31

	Person in charge of Person in charge of
Legal representative:		accounting: accounting department:
Zhang Chong		Ma Yan Chen Jing

– 36 –

Balance Sheet of the Company 31 December, 2017

Prepared by: Luoyang Glass Company Limited*

Item Current Assets： Cash and cash equivalents Bills receivables Accounts receivables Prepayments Other receivables Inventories Assets classified as held for sale Non-current assets due within one year Other current assets Total current assets Non-current assets： Held-to-maturity investment Long-term receivables Long-term equity investment Investment properties Fixed assets Construction in progress Intangible assets Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	Unit: Yuan Closing Balance 52,744,789.07 7,469,611.05 204,327,727.83 30,238.87 31,131,296.66 489,663.39 296,193,326.87 55,000,000.00 868,986,593.99 2,508,762.95 63,612,709.86 162,000.00 990,270,066.80 1,286,463,393.67	Currency: RMB Opening Balance 109,837,249.29 12,832,190.32 207,658,323.10 58,700.86 82,751,723.72 52,829.24
		413,191,016.53

		55,000,000.00 748,986,593.99 2,878,637.33 6,674,333.25 270,000.00
		813,809,564.57

		1,227,000,581.10

– 37 –

Closing Balance Opening Balance

Item

Current liabilities：

Short-term borrowings		347,509,000.00	347,509,000.00
Bills payable					90,000,000.00
Accounts payable			5,062,801.26		15,317,580.28
Receipts in advance			7,813,062.37		11,625,410.24
Employee compensation payable			8,089,982.67		8,015,791.49
Taxes payable			566,122.59		807,117.66
Interest payable			472,432.69
Dividend payable
Other payables		465,380,879.74			281,486,640.75
Liabilities classified as held for sale
Non-current liabilities due within one year			404,406.94		386,428,324.30
Other current liabilities
Total current liabilities		835,298,688.26			793,680,864.72

Non-current liabilities：
Long-term borrowings			606,605.65		946,806.31
Other non-current liabilities
Total non-current liabilities			606,605.65		946,806.31

Total Liabilities		835,905,293.91			794,627,671.03

Owners’ equity：
Share capital		526,766,875.00			526,766,875.00
Capital reserve		1,268,692,769.04			1,253,391,100.15
Surplus reserve			51,365,509.04		51,365,509.04
Undistributed profit	-1,396,267,053.32			-1,399,150,574.12
Total owners’ equity		450,558,099.76			432,372,910.07

Total liabilities and owners’ equity		1,286,463,393.67			1,227,000,581.10

	Person in charge of		Person		in charge of
Legal representative:	accounting:		accounting department:
Zhang Chong	Ma Yan		Chen Jing

– 38 –

Consolidated Income Statement January–December 2017

Unit: Yuan Currency: RMB

Amount for Amount for current period previous period I. Total operating revenue 367,047,136.12 392,095,626.14 Including: Operating revenue 367,047,136.12 392,095,626.14 II. Total operating costs 419,356,209.01 472,351,862.60 Including: Operating costs 256,499,345.38 343,709,563.17 Taxes and surcharges 6,956,503.80 5,232,136.49 Selling expenses 6,851,477.86 7,482,306.95 Administration expenses 98,426,434.95 87,025,947.92 Finance expenses 29,554,391.47 8,433,936.20 Impairment loss on assets 21,068,055.55 20,467,971.87 Gain on disposal of assets (loss is represented by “-”) 6,063,804.98 239,093.33 Other income 39,751,226.80 Operating profit (loss is represented by “-”) -6,494,041.11 -80,017,143.13 Add: Non-operating income 40,561,205.33 105,623,639.01 Less: Non-operating expenses 400,598.58 4,435,999.98 IV. Total profit (total loss is represented by “-”) 33,666,565.64 21,170,495.90 Less: Income tax expenses 13,098,505.13 9,654,432.12 V. Net profit (net loss is represented by “-”) 20,568,060.51 11,516,063.78 (I) Classified on a going concern basis 1. Ne t profit from continued operation (Net loss is represented by “-”) 20,568,060.51 11,516,063.78 2. Ne t profit from discontinued operation (Net loss is represented by “-”) (II) Classified by ownership 1. Pro fit or loss attributable to minority interests 2. Ne t profit attributable to the shareholders of the Parent Company 20,568,060.51 11,516,063.78

Item

I. Total operating revenue Including: Operating revenue

II. Total operating costs

III. Operating profit (loss is represented by “-”) Add: Non-operating income Less: Non-operating expenses

IV. Total profit (total loss is represented by “-”) Less: Income tax expenses

V. Net profit (net loss is represented by “-”)

– 39 –

		Amount for	Amount for
Item		current period	previous period
VI. Other comprehensive income	net of tax
VII. Total comprehensive income		20,568,060.51	11,516,063.78
Total comprehensive income attributable to
owners of the parent company		20,568,060.51	11,516,063.78
Total comprehensive income attributable to
minority interests
VIII. Earnings per share
(I) Basic earnings
per share (RMB/share)		0.04	0.02
(II) Diluted earnings
per share (RMB/share)		0.04	0.02
		Person in charge of
Legal representative:	Chief accountant:	accounting department:
Zhang Chong	Ma Yan	Chen Jing

– 40 –

Income Statement of the Company January–December 2017

Unit: Yuan Currency: RMB

			Amount for	Amount for
Item			current period	previous period
I. Operating revenue			176,945,128.22	181,485,316.09
Less: Operating costs			174,063,052.65	179,007,684.25
	Taxes and surcharges		1,120,916.64	81,363.39
	Selling expenses		534,770.21	795,650.43
	Administration expenses		20,920,881.42	31,401,951.45
	Finance expenses		26,328,207.69	121,920.22
	Impairment loss on assets		600,521.22	93,488,833.51
	Investment income
	(loss is represented by	“-”)	11,085,247.18	11,066,925.00
	Gain on disposal of assets (loss is
	represented by “-”)		-4,235.58
	Other income
II. Operating profit (loss is represented by “-”)			-35,537,974.43	-112,349,397.74
Add: Non-operating income			38,622,001.35	70,032,828.38
Less: Non-operating expenses			200,506.12	3,399,038.30
III. Total profit (total loss is represented by “-”)			2,883,520.80	-45,715,607.66
Less: Income tax expenses
IV. Net profit (loss is represented		by “-”)	2,883,520.80	-45,715,607.66
(I)	Ne t profit from continued operation
	(Net loss is represented by “-”)		2,883,520.80	-45,715,607.66
(II)	Ne t profit from discontinued operation
	(Net loss is represented by “-”)
V. Other comprehensive income		net of tax
VI. Total comprehensive income			2,883,520.80	-45,715,607.66
VII. Earnings per share
(I)	Ba sic earnings
	per share (RMB/share)		–	–
(II)	Di luted earnings
	per share(RMB/share)		–	–
			Person	in charge of
Legal representative:		Chief accountant:	accounting department:
	Zhang Chong	Ma Yan	Chen Jing

– 41 –

Consolidated Cash Flow Statement January–December 2017

Unit: Yuan Currency: RMB

	Amount for	Amount for
Item	current period	previous period
I. Cash flows from operating activities:
Cash received from sale of goods or
rendering of services	180,851,556.08	136,730,044.67
Tax refunds received
Other cash received from activities related to
operation	71,981,153.19	115,177,751.23
Sub-total of cash inflow from operating activities	252,832,709.27	251,907,795.90
Cash paid for purchase of goods and
rendering of services	65,795,658.53	100,904,584.34
Cash paid to and on behalf of employees	92,293,809.21	75,241,190.93
Tax payments	27,030,576.69	21,684,812.32
Other cash paid for activities related to operation	17,259,333.52	23,524,286.36
Sub-total of cash outflow from operating
activities	202,379,377.95	221,354,873.95
Net cash flow from operating activities	50,453,331.32	30,552,921.95
II. Cash flow from investment activities:
Cash from recovery of investment
Cash received from return of investment
Net cash received from disposal of fixed assets,
intangible assets and other long term assets	2,348,600.00	322,732.92
Net cash received from disposal of subsidiaries
and other operating units
Other cash received from activities related to
investment	100,000,000.00	9,930,000.00
Sub-total of cash inflow from investment
activities	102,348,600.00	10,252,732.92
Cash paid for purchase and construction of
fixed assets, intangible assets and other
long-term assets	40,361,244.33	56,177,058.27
Cash paid for investment
Net cash paid for acquisition of subsidiaries
and other operating entities
Other cash paid for activities related to
investment	104,992,752.67
Sub-total of cash outflow from investment
activities	40,361,244.33	161,169,810.94
Net cash flow from investment activities	61,987,355.67	-150,917,078.02

– 42 –

	Amount for	Amount for
Item	current period	previous period
III. Cash flow from financing activities:
Cash received from capital contributions	209,624,984.30
Proceeds from loans	173,300,000.00	120,000,000.00
Other cash received from financing-related
activities	372,779,589.38	340,319,034.02
Sub-total of cash inflow from financing activities	546,079,589.38	669,944,018.32
Cash paid for repayment of loans	153,584,862.41	141,829,011.07
Cash payment for distribution of dividends and
profits or repayment of interest	22,198,364.85	6,927,438.38
Other cash paid for financing-related activities	420,709,622.86	330,638,185.77
Sub-total of cash outflow from financing
activities	596,492,850.12	479,394,635.22
Net cash flow from financing activities	-50,413,260.74	190,549,383.10
IV. Effects of changes in exchange rate on cash
and cash equivalents	-431.33	428.59
V. Net increase in cash and cash equivalents	62,026,994.92	70,185,655.62
Add: Opening balance of cash and cash
equivalents	112,528,516.53	42,342,860.91
VI. Closing balance of cash and cash equivalents	174,555,511.45	112,528,516.53
	Person in charge of
Legal representative: Chief accountant:	accounting department:
Zhang Chong Ma Yan	Chen Jing

– 43 –

Cash Flow Statement of the Company January–December 2017

Unit: Yuan Currency: RMB

	Amount for	Amount for
Item	current period	previous period
I. Cash flows from operating activities:
Cash received from sale of goods or
rendering of services	75,092,063.97	73,259,614.17
Tax refunds received
Other cash received from activities related to
operation	77,674,347.14	94,349,331.54
Sub-total of cash inflow from operating activities	152,766,411.11	167,608,945.71
Cash paid for goods purchased and services
rendered	1,086,900.00	24,063,475.66
Cash paid to and on behalf of employees	12,143,285.40	25,871,529.56
Tax payments	1,407,217.36	798,236.01
Other cash paid for activities related
to operation	128,184,563.20	15,144,757.50
Sub-total of cash outflow from operating
activities	142,821,965.96	65,877,998.73
Net cash flow from operating activities	9,944,445.15	101,730,946.98
II. Cash flow from investment activities:
Cash from recovery of investment
Cash received from return of investment
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 400,000.00 Other cash received from activities related to
investment	43,164,222.88	9,930,000.00
Sub-total of cash inflow from investment
activities	43,564,222.88	9,930,000.00
Cash paid for purchase and construction of
fixed assets, intangible assets and
other long-term assets	3,361,300.60	55,076,952.45
Cash paid for investment 120,000,000.00 Other cash paid for activities related to
investment	104,992,752.67
Sub-total of cash outflow from investment
activities	123,361,300.60	160,069,705.12
Net cash flow from investment activities	-79,797,077.72	-150,139,705.12

– 44 –

	Amount for	Amount for
Item	current period	previous period
III. Cash flow from financing activities:
Cash received from capital contributions	209,624,984.30
Other cash received from activities related to
financing
Other cash received from activities related to
financing	938,578,015.21	548,024,419.90
Sub-total of cash inflow from financing activities	938,578,015.21	757,649,404.20
Cash paid for repayment of loans	37,636,864.81	43,410,524.18
Cash paid for dividends, profit, or interest
payment	13,537,872.66	40,688.87
Other cash paid for financing-related activities	831,042,674.06	601,374,849.08
Sub-total of cash outflow from financing
activities	882,217,411.53	644,826,062.13
Net cash flow from financing activities	56,360,603.68	112,823,342.07
IV. Effects of changes in exchange rate on cash
and cash equivalents	-431.33	428.59
V. Net increase in cash and cash equivalents	-13,492,460.22	64,415,012.52
Add: Opening balance of cash and cash
equivalents	64,837,249.29	422,236.77
VI. Closing balance of cash and cash equivalents	51,344,789.07	64,837,249.29
	Person in charge of
Legal representative: Chief accountant:	accounting department:
Zhang Chong Ma Yan	Chen Jing

– 45 –

Consolidated Statement of Changes in Owners’ Equity January–December 2017

Unit: Yuan Currency: RMB

Item I. Balance at the end of last year Add: C hanges in accounting policies Effects of correction of prior period errors Business combination under common control Others II. Balance at the beginning of the year III. Increase/decrease in the year (decrease is represented by “-”) (I) T otal comprehensive income (II)S hareholders’ contribution and decrease in capital Others (III)Profit distribution (IV)I nternal carry-forward of shareholders’ equity (V)Special reserve (VI)Others IV. Balance at the end of the year	Current Period
	Equity attributable to owners of the Company Share capital Other equity instruments Capital reserve Less: Treasury stock Other comprehensive income Special reserve Surplus reserve General risk provisions Undistributed profit Minority interest Total shareholder’s equity Preferential shares Perpetual bonds Others 526,766,875.00 1,473,105,039.50 51,365,509.04 -1,527,968,006.58 523,269,416.96 526,766,875.00 1,473,105,039.50 51,365,509.04 -1,527,968,006.58 523,269,416.96 15,301,668.89 20,568,060.51 35,869,729.40 20,568,060.51 20,568,060.51 15,301,668.89 15,301,668.89 15,301,668.89 15,301,668.89 526,766,875.00 1,488,406,708.39 51,365,509.04 -1,507,399,946.07 559,139,146.36

Item
I. Balance at the end
of last year
Add: C hanges in
accounting
policies
Effects of correction
of prior period
errors
Business
combination
under common
control
Others
II. Balance at the
beginning of the year
III. Increase/decrease in
the year (decrease is
represented by “-”)
(I) T otal comprehensive
income
(II)S hareholders’
contribution and
decrease in capital
Others
(III)Profit distribution
(IV)I nternal carry-forward
of shareholders’
equity
(V)Special reserve
(VI)Others
IV. Balance at the end of
the year

Current Period

Equity attributable to owners of the Company
Share
capital
Other equity instruments
Capital
reserve
Less:
Treasury
stock
Other
comprehensive
income
Special
reserve
Surplus
reserve
General
risk
provisions
Undistributed
profit
Minority
interest
Total
shareholder’s
equity
Preferential
shares
Perpetual
bonds
Others
526,766,875.00
1,473,105,039.50
51,365,509.04
-1,527,968,006.58
523,269,416.96
526,766,875.00
1,473,105,039.50
51,365,509.04
-1,527,968,006.58
523,269,416.96
15,301,668.89
20,568,060.51
35,869,729.40
20,568,060.51
20,568,060.51
15,301,668.89
15,301,668.89
15,301,668.89
15,301,668.89
526,766,875.00
1,488,406,708.39
51,365,509.04
-1,507,399,946.07
559,139,146.36

– 46 –

							Last Period
					Equityattributable to		owners of the Company
		Other	equity instruments			Less:	Other			General			Total
	Share	Preferential	Perpetual		Capital	Treasury	comprehensive	Special	Surplus	risk	Undistributed	Minority	shareholder’s
Item	capital	shares	bonds	Others	reserve	stock	income	reserve	reserve	provisions	profit	interest	equity
I. Balance at the end
of last year	515,018,242.00				1,251,445,315.32				51,365,509.04		-1,539,484,070.36		278,344,996.00
II. Balance at the
beginning of the year	515,018,242.00				1,251,445,315.32				51,365,509.04		-1,539,484,070.36		278,344,996.00
III. Increase/decrease in
the year (decrease is
represented by “-”)	11,748,633.00				221,659,724.18						11,516,063.78		244,924,420.96
(I) T otal comprehensive
income											11,516,063.78		11,516,063.78
(II)S hareholders’
contribution and
decrease in capital	11,748,633.00				221,659,724.18								233,408,357.18
1. O rdinary shares
paid by
shareholders	11,748,633.00				197,876,351.30								209,624,984.30
2. Others					23,783,372.88								23,783,372.88
(III)Profit distribution
(IV)I nternal carry-forward
of shareholders’
equity
(V)Special reserve
(VI)Others
IV. Balance at the end of
the year	526,766,875.00				1,473,105,039.50				51,365,509.04		-1,527,968,006.58		523,269,416.96
									Person in charge of
Legal representative:					Chief accountant:				accounting department:
	Zhang	Chong				Ma	Yan			Chen Jing

– 47 –

Statement of Changes in Owners’ Equity of the Company January–December 2017

Unit: Yuan Currency: RMB

Item I. Balance at the end of last year II. Balance at the beginning of the year III. Increase/decrease in the year (decrease is represented by “-”) (I)T otal comprehensive income (II)O wners’ contribution and decrease in capital Others (III)Profit distribution (IV)I nternal carry- forward of owners’ equity (V)Special reserve (VI)Others IV. Balance at the end of the year	Current Period
	Share capital Other equity instruments Capital reserve Less: Treasury stock Other comprehensive income Special reserve Surplus reserve Undistributed profit Total owners’ equity Preferential shares Perpetual bonds Others 526,766,875.00 1,253,391,100.15 51,365,509.04 -1,399,150,574.12 432,372,910.07 526,766,875.00 1,253,391,100.15 51,365,509.04 -1,399,150,574.12 432,372,910.07 15,301,668.89 2,883,520.80 18,185,189.69 2,883,520.80 2,883,520.80 15,301,668.89 15,301,668.89 15,301,668.89 15,301,668.89 526,766,875.00 1,268,692,769.04 51,365,509.04 -1,396,267,053.32 450,558,099.76

Item
I. Balance at the end of
last year
II. Balance at the
beginning of
the year
III. Increase/decrease in
the year (decrease
is represented by
“-”)
(I)T otal
comprehensive
income
(II)O wners’
contribution
and decrease in
capital
Others
(III)Profit distribution
(IV)I nternal carry-
forward of owners’
equity
(V)Special reserve
(VI)Others
IV. Balance at the end of
the year

Current Period

Share
capital
Other equity instruments
Capital
reserve
Less:
Treasury
stock
Other
comprehensive
income
Special
reserve
Surplus
reserve
Undistributed
profit
Total
owners’
equity
Preferential
shares
Perpetual
bonds
Others
526,766,875.00
1,253,391,100.15
51,365,509.04
-1,399,150,574.12
432,372,910.07
526,766,875.00
1,253,391,100.15
51,365,509.04
-1,399,150,574.12
432,372,910.07
15,301,668.89
2,883,520.80
18,185,189.69
2,883,520.80
2,883,520.80
15,301,668.89
15,301,668.89
15,301,668.89
15,301,668.89
526,766,875.00
1,268,692,769.04
51,365,509.04
-1,396,267,053.32
450,558,099.76

– 48 –

Last Period

								Last	Period
				Other equity instruments				Less:	Other				Total
			Share	Preferential	Perpetual		Capital	Treasury	comprehensive	Special	Surplus	Undistributed	owners’
Item			capital	shares	bonds	Others	reserve	stock	income	reserve	reserve	profit	equity
I. Balance at the		end of
	last year		515,018,242.00				1,030,115,828.84				51,365,509.04	-1,353,434,966.46	243,064,613.42
II. Balance at the
beginning of
the year			515,018,242.00				1,030,115,828.84				51,365,509.04	-1,353,434,966.46	243,064,613.42
III. Increase/decrease in
the year (decrease
is represented by
“-”)			11,748,633.00				223,275,271.31					-45,715,607.66	189,308,296.65
(I)	T otal
	comprehensive
	income											-45,715,607.66	-45,715,607.66
(II)	O wners’
	contribution
	and decrease in
	capital		11,748,633.00				221,659,724.18						233,408,357.18
	1. O rdinary shares
	paid by
	shareholders		11,748,633.00				197,876,351.30						209,624,984.30
	2. Others						23,783,372.88						23,783,372.88
(III)Profit distribution
(IV)	I nternal carry-
	forward of owners’
	equity
(V)	Special reserve
(VI)	Others						1,615,547.13						1,615,547.13
IV. Balance at the		end of
the year			526,766,875.00				1,253,391,100.15				51,365,509.04	-1,399,150,574.12	432,372,910.07
											Person	in charge	of
		Legal representative:					Chief accountant:				accounting department:
			Zhang	Chong			Ma Yan				Chen Jing

– 49 –

NOTES TO THE FINANCIAL STATEMENTS For the year 2017 (Expressed in RMB)

I. COMPANY PROFILE

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. The activities of the Company and its subsidiaries are manufacturing and sale of photoelectric glass.

II. IMPORTANT ACCOUNTING POLICIES

1. Basis for preparation of financial statements

The financial statements of the Company have been prepared on a going concern basis in respect of the actual transactions and events in accordance with the Accounting Standards for Business Enterprises, the Application Guideline of the Accounting Standards for Business Enterprises, the Interpretation to the Accounting Standards for Business Enterprises and other regulations issued by the Ministry of Finance, and based on the following significant accounting policies and estimates.

2. Accounting period

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 ”).

– 50 –

4. Preparation method of consolidated financial statements

The Company incorporates the subsidiaries over which the Company owns actual control and the entities for special purpose into the scope of the consolidated financial statements.

The Company’s consolidated financial statements are prepared pursuant to the requirements of the Accounting Standards for Business Enterprises No. 33 – Consolidated Financial Statements and the relevant regulations, and offset all significant internal transactions and deals within the consolidation scope at the time of consolidation. Shareholders’ equity of the subsidiaries that are not attributable to the parent company is presented as minority equity in the consolidated financial statements separately.

If the accounting policies or accounting period adopted by the subsidiaries are different from that of the Company, in preparation of the consolidated financial statements, necessary adjustment is made to the financial statements of the subsidiaries according to the Company’s accounting policies or accounting period.

As to the subsidiaries acquired through business merger under non-common control, in preparation of the consolidated financial statements, subsidiaries individual financial statements are adjusted based on the fair value of the net identifiable assets on the date of acquisition; as to the subsidiaries acquired through business merger under common control, such business merger is deemed having been accrued at the beginning of the year for merger, and the assets, liabilities, operating results and cash flows are included in the consolidated financial statements from the beginning of the year for merger.

III. SEGMENT REPORTING

During the year, the Company’s revenue mainly generated from the sale of photoelectric glass, thus it is regarded as the single reportable segment. The management of the Company reviewed the Company’s performance based on such single segment and regularly reviewed its financial information to determine resources allocation thereto and assess its performance.

– 51 –

1. Geographic information

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

Item China Total	Revenue from external customers 2017 2016 367,047,136.12 392,095,626.14 367,047,136.12 392,095,626.14	Non-current assets 31 December 2017 31 December 2016 770,610,814.98 715,096,776.36 770,610,814.98 715,096,776.36

2. Major customers

The Company has a relatively concentrated major customer base in 2017. The transaction amount of its top 5 sales customers exceeds 50% of the Company’s revenue.

– 52 –

IV. TURNOVER

Turnover is the invoiced value of the goods sold to the customers after deduction of any trade discounts, VAT and added value; and the analyses of turnover are as follows:

(1) Details of operating revenue

Amount for Amount for Item current period previous period Revenue from main operating activities 348,115,904.29 380,091,217.36 Revenue from other operating activities 18,931,231.83 12,004,408.78 Total operating revenue 367,047,136.12 392,095,626.14 (2) Revenue from main operating activities by product Designation of product Amount for Amount for or labor service current period previous period Photoelectric glass 348,115,904.29 380,091,217.36 Total 348,115,904.29 380,091,217.36 V. OTHER INCOME Amount for Amount for Item current period previous period Government grant 39,751,226.80 Total 39,751,226.80

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VI. GAINS ON THE DISPOSAL OF ASSETS

Item Gains and losses from disposal of fixed assets Gains and losses from disposal of Intangible assets Total VII. NON-OPERATING INCOME Item Government grant Income from debt restructuring Others Total VIII.PRE-TAX PROFITS Pre-tax profits have (deducted)/included: (1) Financial expenses Item Interest expense Less: interest income Exchange losses (less: exchange income) Other finance expenses Total	Amount for current period 6,002,653.36 61,151.62 6,063,804.98 Amount for current period 38,450,106.00 2,000,783.33 110,316.00 40,561,205.33 Amount for current period 26,379,527.79 711,870.89 -238,846.73 4,125,581.30 29,554,391.47	Amount for previous period -15,780.57 254,873.90
		239,093.33

		Amount for previous period 102,455,677.91 3,130,969.27 36,991.83
		105,623,639.01

		Amount for previous period 9,207,506.10 3,669,695.12 113,943.65 2,782,181.57
		8,433,936.20

– 54 –

(2) Operating costs

Item Principal business costs Other business costs Total of operating costs (3) Tax and surcharges Item Business tax Property tax Land-use tax City maintenance tax Education surcharges Others Total (4) Selling expenses Item Staff expense Depreciation expenses Transportation costs Loading and unloading expenses Travel Expense Other selling expenses Total	Amount for current period 250,159,922.45 6,339,422.93 256,499,345.38 Amount for current period 2,074,194.28 3,611,055.11 449,083.06 320,773.60 501,397.75 6,956,503.80 Amount for current period 4,389,291.11 174,878.85 887,604.11 459,594.80 532,402.03 407,706.96 6,851,477.86	Amount for previous period 337,501,702.46 6,207,860.71
		343,709,563.17

		Amount for previous period 5,741.68 1,382,796.18 1,710,769.63 1,692,633.65 275,385.63 164,809.72
		5,232,136.49

		Amount for previous period 5,255,815.70 237,707.59 203,121.71 624,331.64 443,600.90 717,729.41
		7,482,306.95

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(5) Administrative expenses

Item Staff expense Depreciation of fixed assets Amortization of intangible assets Intermediary engagement and consulting fees Research and development fees Repairing cost Taxes Staff settlement fees Other expenses Total (6) Asset impairment loss Item Bad debt loss Inventory falling price loss Impairment loss of fixed assets Total (7) Non-operating expenses Item Indemnities, liquidated damages and penalties Others expenses Total	Amount for current period 28,283,042.04 3,832,378.65 2,691,951.27 17,937,955.22 17,793,597.50 1,494,572.99 19,411,503.76 6,981,433.52 98,426,434.95 Amount for current period 1,586,196.00 9,926,191.35 9,555,668.20 21,068,055.55 Amount for current period 51,014.49 349,584.09 400,598.58	Amount for previous period 37,479,187.08 2,612,502.24 1,840,418.68 7,864,025.28 21,276,277.57 794,003.10 2,282,801.22 9,171,745.41 3,704,987.34
		87,025,947.92

		Amount for previous period -4,058,434.40 22,054,121.69 2,472,284.58
		20,467,971.87

		Amount for previous period 4,431,441.73 4,558.25
		4,435,999.98

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IX. INCOME TAX EXPENSES

Item Current income tax expenses based on tax laws and relevant regulations Deferred income tax expenses Total	Amount for current period 10,828,539.91 2,269,965.22 13,098,505.13	Amount for previous period 9,904,280.09 -249,847.97
		9,654,432.12

Note: Longhai Company and Bengbu Company, the wholly-owned subsidiaries of the Company, have been approved as the high-tech enterprise in 2016 and paid the enterprise income tax at a tax rate of 15% in 2017.

X. DIVIDENDS

The Company’s Board of Directors did not recommend distributing dividends for the year ended 31 December 2017.

XI. BASIC EARNINGS PER SHARE

The basic earnings per share are calculated by the merging net profits of the holders of ordinary shares in the parent company divided by weighted average of the ordinary shares issued by the parent company:

Item Net profits attributable to the holders of ordinary shares of the Company Closing total shares Basic earnings per share	Amount for current period 20,568,060.51 526,766,875.00 0.04	Amount for previous period 11,516,063.78 526,766,875.00
		0.02

For the year ended 31 December 2017, the Company does not have any potential diluted shares, so no diluted earnings per share are calculated.

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XII. ACCOUNTS RECEIVABLE AND NOTES RECEIVABLE

1. Accounts receivable：

Item Account receivable Less: Provision for bad debts Net amount	Carrying amount 160,817,363.43 55,504,319.97 105,313,043.46	Opening balance 156,466,612.01 54,575,282.88
		101,891,329.13

Generally, 1 to 6 months of credit period are granted to the main customers and the Company sells its products by receiving advances for new customers or customers with small business.

The aging of accounts receivable based on their recording dates is analysed as below:

Aging Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Total 2. Notes receivable by category Item Bank acceptance Trade acceptance Total	Closing balance 78,591,460.02 28,161,799.88 13,125.10 79,720.82 605,589.30 53,365,668.31 160,817,363.43 Closing balance 86,642,392.18 86,642,392.18	Opening balance 98,896,250.79 1,880,549.56 1,718,554.05 605,589.30 2,672,254.67 50,693,413.64
		156,466,612.01

		Opening balance 45,586,571.00 400,000.00
		45,986,571.00

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XIII. ACCOUNTS PAYABLE AND NOTES PAYABLE

1. Accounts payable by aging

Item Within 1 year (including 1 year) Over 1 year Total 2. Notes payable by category Item Bank acceptance Total	Closing balance 25,532,687.36 14,004,432.28 39,537,119.64 Closing balance	Opening balance 17,853,268.60 28,520,633.60
		46,373,902.20

		Opening balance 90,000,000.00
		90,000,000.00

XIV. RESERVES 1. Capital reserve

Item I. Share capital premium II. Other capital reserves Total	Opening balance 1,400,804,566.23 72,300,473.27 1,473,105,039.50	Increase in this period Decrease in this period 15,301,668.89 15,301,668.89	Closing balance 1,400,804,566.23 87,602,142.16
			1,488,406,708.39

Notes: Pursuant to the performance compensation commitment to Bengbu Company issued by CLFG in November 2015, since the performance of Bengbu Company in 2017 has not reached its committed amount, RMB15,301,668.89 of performance committed compensation payable by CLFG to the Company included in the capital reserve.

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2. Surplus reserve

		Increase	Decrease
Item Opening balance		in this period	in this period	Closing balance
Statutory surplus reserve 51,365,509.04				51,365,509.04
Total 51,365,509.04				51,365,509.04

Undistributed profits
		Closing balance
				Percentage
			of allocation or
Item		Amount		distribution
Undistributed profit at the end of the
previous year before adjustment	-1,527,968,006.58
Total of adjustment of undistributed
profit at the beginning of the
period (increase expresses with+,
and decrease expressed with -)
Undistributed profit at the beginning
of the period after adjustment	-1,527,968,006.58
Add: Net profit attributable to
owners of parent company during
the period		20,568,060.51		–
Less: Appropriation to Statutory
surplus reserve
Appropriation to discretionary
surplus reserve
Dividend payable in respect of
ordinary shares
Dividend on ordinary shares as
converted into share capital
Undistributed profit at the end of the
period	-1,507,399,946.07

3. Undistributed profits

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XV. MATTERS AFTER BALANCE SHEET DATE

1. The company’s significant asset restructuring was reviewed by the Listed Companies Merger and Reorganization Vetting Committee of China Securities Regulatory Commission

The Issuance of Shares by Luoyang Glass Company Limited to China Luoyang Float Glass (Group) Company Limited for Asset Acquisition and Raising of Supporting Funds Proceeds (CSRC Permit [2018] No. 475) received from CSRC on 19 March 2018 approved that the Company issued 10,097,588 shares to China Luoyang Float Glass (Group) Company Limited.,3,029,276 shares to Hefei High-Tech Construction Investment Group Company,6,377,490 shares to Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd., 2,365,976 shares to CNBMG Bengbu Design & Research Institute for Glass Industry Co., Ltd., 708,610 shares to China Triumph International Engineering Co., Ltd., 7,508,991 shares to Triumph Technology Group Company, 1,877,247 shares to Yixing Environmental Technology Innovation Venture Investment Company Limited and 1,065,338 shares to GCL System Integration Technology Co., Ltd, respectively, and approved that the supporting funds proceeds raised from the non-public issuance of shares of the Company does not exceed RMB511,865,700.

Chairman: Zhang Chong Luoyang Glass Company Limited 22 March 2018

As at the date of this announcement, the Board comprises four executive Directors: Mr. Zhang Chong, Mr. Ni Zhisen, Mr. Wang Guoqiang and Mr. Ma Yan; one non-executive Directors: Mr. Xie Jun; and four independent non-executive Directors: Mr. Jin Zhanping, Mr. Liu Tianni, Mr. Ye Shuhua and Mr. He Baofeng.

– 61 –

AI assistant

RoboSense Technology Co., Ltd — Annual Report 2018

50628_rns_2018-03-22_c55a0a4f-f65b-44da-8c4d-33580c249d2e.pdf

＊

LUOYANG GLASS COMPANY LIMITED ANNUAL RESULTS ANNOUNCEMENT FOR 2017

I. IMPORTANT NOTICE

1.5 Company Profile

II. BRIEF INTRODUCTION TO MAIN SERVICES OR PRODUCTS DURING THE REPORTING PERIOD

III. SUMMARY OF ACCOUNTING DATA AND FINANCIAL INDICATORS

IV. MAJOR QUARTERLY FINANCIAL INDICATORS IN 2017

V. INFORMATION OF SHAREHOLDERS

5.1 Number of ordinary shareholders and preferred shareholders whose voting rights are restored and shareholdings of top 10 shareholders

Shareholdings of top 10 Shareholders and top 10 holders of circulating shares (or holders of shares not subject to trading moratorium) at the end of the reporting Period

Shareholdings of top 10 holders of shares not subject to trading moratorium

5.2 Number of shares held by top 10 holders of shares subject to trading moratorium and trading moratorium

5.3 Block Diagram on Equity and Control Relationship among the Company and Controlling Shareholders, and De Facto Controllers

VI. DISCUSSION AND ANALYSIS OF THE OPERATIONS

1. Actively promote the major asset restructuring and expand and strengthen the new glass business.

2. Steadily promote technological upgrading projects and new product projects, and strive to drive high-quality development.

3. Manage factories internally, and expand market externally to achieve stable growth during the production and operation courses.

4. Major progress has been made in scientific research projects with remarkable scientific and technological achievements.

5. Enhance production safety to ensure no accident in production throughout the year and achieve remarkable results in energy conservation and emission reduction.

6. Optimize personnel allocation of the Company and reform the remuneration system, both yielding good results.

6.2 Analysis of Principal Businesses

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

6.2.2 Revenue

6.2.3 Costs

(1) Analytical Statement of Costs

Unit: Yuan Currency: RMB

(2) Major Suppliers

6.2.4 Expenses

Unit: Yuan Currency: RMB

6.2.5 R&D expenditures

(1) R&D expenditures

6.2.6 Cash flow

6.2.7 Others

6.3 Analysis of operations by industry, products or regions

6.3.1 Statement of the principal operations by industry and products

Principal operations by industry

6.3.2 Principal operations by regions

6.4 Analysis of assets and liabilities

6.4.1 Analytical statement of assets and liabilities

6.4.2 Explanation for changes in assets measured by fair value and measurement nature of major assets:

6.5 Analysis of core competitiveness

6.6 Analysis of Investment

6.6.1 Overall Analysis of External Equity Investment

6.6.2 Analysis of major subsidiaries and investee companies

6.7 Continuing Connected Transactions in 2017

6.8 Industry competition pattern and development trend

6.9 Future development strategy

6.10 Business plan

3. Deepen internal mechanism reform, strengthen internal control and management and prevent various risks

4. Strengthen cultural construction and team building

6.11 Potential Risks

1. Risks arising from policies and the industry

2. Risks arising from price of raw materials

3. Risks arising from new engineering projects

4. Financial Risks

5. Technological risks

6.12 Proposal for Profit Distribution or Conversion of Capital Reserves into Share Capital

6.13 Repurchase, Sale and Redemption of Shares

6.14 Compliance with the Corporate Governance Code

6.15 Audit Committee

VII. MATTERS RELATED TO FINANCIAL REPORT

VIII. NOTES TO THE FINANCIAL STATEMENTS

Consolidated Balance Sheet 31 December 2017

Prepared by: Luoyang Glass Company Limited*

Unit: Yuan Currency: RMB

Item

Closing Balance Operating Balance

Current liabilities：

Total current liabilities

Non-current liabilities：

Total non-current liabilities

Total Liabilities

Item

Balance Sheet of the Company 31 December, 2017

Item

Current liabilities：

Consolidated Income Statement January–December 2017

RoboSense Technology Co., Ltd Annual Report 2018