RoboSense Technology Co., Ltd — Audit Report / Information 2015

Aug 10, 2015

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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OVERSEAS REGULATORY ANNOUNCEMENT

This overseas regulatory announcement is issued by Luoyang Glass Company Limited (the “ Company* ”) pursuant to Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

The following is a translation of the pro forma audit report of the Company and its subsidiaries published on the website of the Company at http://www.zhglb.com and the website of the Shanghai Stock Exchange at http://www.sse.com.cn.

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

Luoyang, the People’s Republic of China 10 August 2015

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

* for identification purposes only

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Luoyang Glass Company Limited

AUDITORS’ REPORT

Daxin Shen Zi [2015] No. 2-00685

WUYIGE CERTIFIED PUBLIC ACCOUNTANTS LLP.

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大信會計師事務所 WUYIGE Certified Public Accountants.LLP 電話 Telephone：+86 (10) 82330558 北京市海淀區知春路1號 15/F,Xueyuan International Tower 學院國際大厦15層 1 Zhichun Road,Haidian Dist 傳真 Fax：+86 (10) 82327668 郵編100083 Beijing,China, 100083 網址 Internet：www.daxincpa.com.cn

Auditors’ Report

Daxin Shen Zi [2015] No.2-00685

To the Shareholders of Luoyang Glass Company Limited:

We have audited the accompanying pro forma financial statements of Luoyang Glass Company Limited (hereafter referred to as “ the Company ”) prepared in accordance with the basis mentioned in note 3 of pro forma financial statements, including the pro forma consolidated balance sheet as of 31 May 2015 and 31 December 2014, the pro forma consolidated income statement from January to May of 2015 and for 2014, and notes of pro forma financial statements.

I. MANAGEMENT’S RESPONSIBILITY

The Company’s management is responsible for the preparation and fair presentation of the pro forma financial statements. The responsibility includes: (1) preparation of the pro forma financial statements in accordance with the Accounting Standards for Business Enterprises and the preparation basis mentioned in note 3 of pro forma financial statements, to give a fair view; (2) designing, implementing and maintaining necessary internal controls so that the pro forma financial statements are free from material misstatement whether due to fraud or error.

II. AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on these pro forma financial statements based on our audit. We conducted our audit in accordance with the Auditing Standards for PRC Certified Public Accountants. Those standards require that we comply with the Code of Ethics, plan and implement the audit to obtain a reasonable assurance as to whether the pro forma financial statements are free from material misstatement.

An audit involves performing audit procedures to obtain audit evidence about the amounts and disclosures in the pro forma financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the pro forma financial statements, whether due to fraud or error. In making those risk assessments, we consider the internal controls relevant to the entity’s preparation of pro forma financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the pro forma financial statements.

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

III. AUDIT OPINION

In our opinion, the Company’s pro forma financial statements have been prepared in accordance with the Accounting Standards for Business Enterprises in all material aspects and the preparation basis mentioned in note 3 of the accompanying pro forma financial statements, and they fairly present the Company’s pro forma financial position as of 31 May 2015 and 31 December 2014, and the Company’s pro forma operating results from January to May of 2015 and for 2014.

IV. OTHER MATTERS

The report is only used for submitting the documents in relation to material asset reorganisation to China Securities Regulatory Commission by the Company and not for other purposes. The certified accountants who performed the audit business and the firm shall not be liable for any consequences of inappropriate usage.

WUYIGE Certified Public Chinese Certified Public Accountant: Qiao Guanfang Accountants LLP. Beijing, the PRC Chinese Certified Public Accountant: Wang Haizhou

10 August 2015

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PRO FORMA CONSOLIDATED BALANCE SHEET

Prepared by: Luoyang Glass Company Limited January to May 2015 Item Note 31 May 2015 Current assets: Bank balance and cash VIII(I) 138,277,699.88 Financial assets classified into financial assets at fair value through profit or loss Derivative financial assets Notes receivable VIII(II) 9,486,937.92 Accounts receivable VIII(III) 8,889,748.04 Prepayments VIII(IV) 6,066,359.83 Interest receivable Dividends receivable Other receivables VIII(V) 26,542,943.99 Inventory VIII(VI) 186,017,296.11 Assets classified as held for sale Non-current assets due within one year Other current assets VIII(VII) 70,343,258.44 Total current assets 445,624,244.21

Unit: RMB 31 December 2014 92,200,835.25 800,000.00 8,652,502.42 5,890,029.57 28,671,649.67 175,441,355.52 72,666,538.55 384,322,910.98

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Prepared by: Luoyang Glass Company Limited January to May 2015 Item Note 31 May 2015 Non-current assets: Available-for-sale financial assets VIII(VIII) Held-to-maturity investments Long-term receivables VIII(IX) 49,909,275.11 Long-term equity investments Investment properties Fixed assets VIII(X) 736,430,675.72 Construction in progress VIII(XI) 1,391,728.81 Construction materials 595,051.16 Disposal of fixed assets Biological assets for production Fuel assets Intangible assets VIII(XII) 65,386,567.78 Development expenses Goodwill Long-term deferred expenses 441,000.00 Deferred income tax assets VIII(XIII) 3,819,352.74 Other non-current assets VIII(XIV) 1,290,000.00 Total non-current assets 859,263,651.32 Total assets 1,304,887,895.53

Unit: RMB 31 December 2014 48,649,780.65 767,766,733.75 428,213.56 66,301,423.93 486,000.00 4,493,731.26 888,125,883.15 1,272,448,794.13

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Prepared by: Luoyang Glass Company Limited January to May 2015 Item Note 31 May 2015 Current liabilities: Short-term loans VIII(XV) 47,930,000.00 Financial liabilities: classified into financial liabilities at fair value through profit or loss Derivative financial liabilities Notes payable VIII(XVI) 139,805,536.28 Accounts payable VIII(XVII) 102,455,703.12 Payments received in advance VIII(XVIII) 43,150,179.36 Staff remuneration payables VIII(XIX) 38,266,549.53 Taxes payable VIII(XX) 24,426,588.87 Interest payable Dividends payable Other payables VIII(XXI) 187,348,515.76 Liabilities classified as held for sale Non-current liabilities due within one year VIII(XXII) 44,853,636.87 Other current liabilities Total current liabilities 628,236,709.79

Unit: RMB 31 December 2014 20,000,000.00 109,657,336.88 107,773,437.96 51,748,840.94 28,727,378.13 24,756,255.87 119,012,684.94 44,853,636.87 506,529,571.59

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Prepared by: Luoyang Glass Company Limited	Prepared by: Luoyang Glass Company Limited	January to May	2015	Unit: RMB
			31 May	31 December
Item		Note	2015	2014
Non-current liabilities:
Long-term loans		VIII(XXIII)	426,279,235.62	445,175,761.38
Debentures payable
Long-term payables
Long-term employee remuneration payable
Specific payables
Accrued liabilities
Deferred income		VIII(XXIV)	9,972,225.75	10,648,914.15
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities			436,251,461.37	455,824,675.53
Total liabilities			1,064,488,171.16	962,354,247.12
Owners’ equity:
Total equity attributable to the equity
holders of the Company			240,399,724.37	310,094,547.01
Minority interests
Total owners’ equity			240,399,724.37	310,094,547.01
Total liabilities and shareholders’ equities			1,304,887,895.53	1,272,448,794.13
Legal representative:	Chief accountant:		Person in charge of
			accounting	department:
Ma Liyun		Sun Lei	Chen Jing

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PRO FORMA CONSOLIDATED INCOME STATEMENT

Prepared by: Luoyang Glass Company Limited	Prepared by: Luoyang Glass Company Limited	January to May	2015	Unit: RMB
			January to
Item		Note	May 2015	2014
I.	Operating revenue	VIII(XXV)	168,920,068.62	382,615,240.16
	Less: Operating costs	VIII(XXV)	144,827,045.08	270,255,522.66
	Business taxes and surcharges	VIII(XXVI)	942,904.90	4,721,602.79
	Selling expenses	VIII(XXVII)	3,440,643.05	9,128,945.18
	Administration expenses	VIII(XXVIII)	26,370,972.58	68,121,958.10
	Finance expenses	VIII(XXIX)	765,994.72	3,339,930.39
	Impairment loss on assets	VIII(XXX)	12,073,127.57	24,005,054.77
	Add: Gains from changes in fair value
	Investment income	VIII(XXXI)		93,394,560.90
	Including: Gains from investment in
	associates and joint ventures
II.	Operating Profit		-19,500,619.28	96,436,787.17
	Add: Non-operating income	VIII(XXXII)	1,196,313.88	81,018,123.26
	Including: Gain on disposal of
	non-current assets			1,830,865.12
	Less: Non-operating expenses	VIII(XXXIII)	584,772.07	4,604,552.55
	Including: Loss from disposal of
	non-current assets			946,162.68
III.	Total profit		-18,889,077.47	172,850,357.88
	Less: Income tax expenses	VIII(XXXIV)	2,263,685.49	10,099,785.71
IV.	Net profit		-21,152,762.96	162,750,572.17
	Including: Net profit attributable to owners
	of the Company		-21,152,762.96	162,750,572.17
	Minority interests

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January to May 2015

Prepared by: Luoyang Glass Company Limited

Unit: RMB

			January to
Item		Note	May 2015	2014
V.	Other	comprehensive income, net of tax
	(I)	Other comprehensive income, net of tax
		attributable to owners of the Company
		1. Other comprehensive income that can
		not be reclassified to profit and loss
		in subsequent periods
		2. Other comprehensive income that will
		be subsequently reclassified into
		profit and loss
	(II)	Other comprehensive income net of tax
		attributable to minority shareholders
VI.	Total	comprehensive income	-21,152,762.96	162,750,572.17
	(I)	Total comprehensive income attributable to
		owners of the Company	-21,152,762.96	162,750,572.17
	(II)	Total comprehensive income attributable to
		minority shareholders
VII.	Earnings per share:
	(I)	Basic earnings per shar_e (RMB/share)_	-0.04	0.32
	(II)	Diluted earnings per sha_re (RMB/share)_
Legal representative: Chief accountant:			Person in	charge of
			accounting department:
		Ma Liyun Sun Lei	Chen Jing

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NOTES TO THE PRO-FORMA FINANCIAL STATEMENTS

I. BASIC INFORMATION OF THE COMPANY

1. Company Overview

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 Company was established as part of the restructuring plan of China Luoyang Float Glass Group Company Limited (“ CLFG ”), a state-owned enterprise. Pursuant to the approvals from relevant authorities including the State Restructuring Commission and the National Administrative Bureau of State-owned Assets, CLFG established the Company on 6 April 1994 with CLFG as the sole promoter. At the time of its establishment, the Company had a registered capital of RMB400,000,000, divided into 400,000,000 state-owned legal person shares of RMB1.00 each, which was paid up in full by CLFG by way of transfer of its principal business undertakings and subsidiaries together with the relevant assets and liabilities.

On 29 June 1994, 250,000,000 H shares were issued at HK$3.65 per share, which were listed on the Hong Kong Stock Exchange on 8 July 1994.

According to the plan disclosed in the H shares prospectus and with the approval from the Securities Commission of the State Council of the PRC, the Company issued 40,000,000 A shares to the public in the PRC and 10,000,000 A shares to the employees of the Company on 29 September 1995 at RMB5.03 each, which were listed on the Shanghai Stock Exchange on 30 October 1995 and 10 May 1996 respectively.

The principal activities of the Company and its subsidiaries (the “ Group ”) are manufacturing and sale of float sheet glass. The scope of business includes manufacturing of glass and relevant sophisticated processing goods, mechanical equipment, electric appliances and accessories, sale of self-produced products, provision of technical consultancy and technical services. The major products include various types of float sheet glass.

Legal Person Business Registration 410300400003275; Number of the Company: Legal representative: Ma Liyun; Registered address and address of No. 9, Tang Gong Zhong Lu, head office: Xigong District, Luoyang.

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As at 31 May 2015, the Company’s total share capital was 500,018,242 shares.

The financial statements were approved for disclosure by the Board of the Company.

2. Scope of pro forma consolidated financial statements

No. Name of subsidiary Abbreviation

1 CLFG Longmen Glass Co., Ltd. Longmen Company

• 2 CLFG Longhai Electronic Glass Limited Longhai Company

• 3 Bengbu China National Building Materials Bengbu Company Information Display Material Company* (蚌埠中建材電子信息顯示材料有限公司)

• 4 Luoyang Luobo Furuida Commerce Co., Ltd. Furuida (洛陽洛玻福睿達商貿有限公司)

II. SIGNIFICANT ASSETS RESTRUCTURING

(I) Proposal on significant assets restructuring

Pursuant to the proposal on significant assets restructuring, the Company will utilize the following equity interests held by it as of 31 October 2014, i.e. the valuation benchmark date, as the outgoing assets under this transaction: 100% equity interests in CLFG Longhao Glass Co. Ltd., 63.98% equity interests in CLFG Longfei Glass Co. Ltd., 67% equity interests in Dengfeng CLFG Silicon Co., Ltd., 52% equity interests in Yinan Huasheng Mineral Products Industry Co. Ltd. and 40.29% equity interests in CLFG Mineral Products Company Limited and the Company’s creditor’s right (including receivables, other receivables and entrusted loans) over CLFG Longhao Glass Co. Ltd., CLFG Longfei Glass Co. Ltd., CLFG Longxiang Glass Co. Ltd., Yinan Huasheng Mineral Products Industry Co. Ltd. and CLFG Mineral Products Company Limited so as to swap with the audited and appraised 100% equity interests (hereinafter “ incoming assets ”) legally held by it in Bengbu China Building Information Display Materials Co. Ltd. (hereinafter “ Bengbu Company ”). The difference between the incoming assets and outgoing assets will be acquired by Company from CLFG by way of issue of shares and cash.

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(II) Pricing of the transaction

According to the Assets Appraisal Report (Zhong Lian Ping Bao Zi (2015) No. 29, 30, 31, 32, 33 and 34) issued by China United, as at 31 October 2014, the appraised value of the outgoing assets amounted to RMB494,179,500 and the consideration for the outgoing assets was RMB494,179,500 as confirmed between the parties under the transaction. According to the Assets Appraisal Report (Zhong Lian Ping Bao Zi (2015) No. 35) issued by China United, as at 31 October 2014, the appraised value of the outgoing assets amounted to RMB674,909,200 and the consideration for the outgoing assets was RMB674,909,200 as confirmed between the parties under the transaction.

Based on the appraised value and pricing principle of the incoming assets and outgoing assets, the difference between the incoming assets and outgoing assets amounted to RMB180,729,700, among which, RMB90,729,700 will be settled by cash and the remaining balance will be settled by way of issue of shares, pursuant to which, 15,000,000 shares will be issued.

(III) Basic background on incoming assets

Bengbu China Building Information Display Materials Co. Ltd. is a company incorporated by Bengbu Glass Industry Design Institute (蚌埠玻璃工業 設計研究院) (hereinafter “ Bengbu Institute* ”) with limited liability on 29 September 2013. At the time of establishment, the registered capital was RMB30 million.

On 31 December 2013, pursuant to the resolutions of the shareholders’ general meeting of the Company, the registered capital of the Company changed to RMB142.40 million, among which, Bengbu Institute subscribed for RMB42.72 million and CLFG subscribed for RMB99.68 million with the contribution to be paid within two years. On the same date, CLFG contributed RMB40 million in cash and the paid-in capital of the Company changed from RMB30 million to RMB70 million.

On 9 October 2014, pursuant to the resolutions of the shareholders’ general meeting of the Company, the registered capital of the Company was RMB632,764,300, among which, CLFG contributed RMB40 million in cash, representing a shareholding of 6.32% and Bengbu Institute contributed RMB30 million in cash and RMB562,764,300 in-kind respectively, representing a shareholding of 93.68%.

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On 28 October 2014, pursuant to the resolutions of the shareholders’ general meeting of the Company, Bengbu Institute transferred the 93.68% shareholding in the Company to CLFG. Upon completion of the transfer of equity, the shareholding structure of the Company is set out below:

	Contribution
Shareholder	Amount	Shareholding
	(RMB’000)		(%)
China Luoyang Float Glass (Group)
Company Limited	63,276.43	100.00
Enterprise legal entity business	340300000109563
license registered No.:
Domicile:	No. 1 Factory, No.	751 Yard,
	Donghai Avenue, Bengbu City,
	Anhui Province
Legal representative:	Peng Shou
Registered capital:	RMB632,764,300

Scope of business: the Company operates in the glass manufacturing industry and the business of scope mainly includes the research and development, production, sales and value-added processing of ultra-thin glasses; import and export of various commodities and by-products on its own account or as agency; and related technical service.

III. BASIS ON THE PREPARATION FOR THE PRO FORMA FINANCIAL STATEMENTS

As the restructuring constitutes a significant assets restructuring of a listed company, the Company was required to prepare pro forma and combined financial statements for its business upon completion of restructuring in accordance with relevant requirements under “Administrative Measures on Significant Asset Restructuring of Listed Companies” and “Standards on the Contents and Formats of Information Disclosures by Companies Publicly Offering Securities No. 26 – Application Documents of the Significant Asset Restructuring of Listed Companies” issued by the China Securities Regulatory Commission.

In the preparation of the pro forma financial statements, it was assumed that the restructuring was completed on 1 January 2014 (hereinafter “ Merger Benchmark Date ”) and the preparation was based on the shareholding structure after the completion of the restructuring (i.e. on the Merger Benchmark Date, the Company issued 15 million A shares to CLFG by way of non-public issuance of shares for the acquisition of incoming assets) and taken into consideration the following assumptions on an ongoing basis:

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1. The resolutions as described in note 2 to the pro forma financial statements obtained approval at the general meeting of the Company and from the China Securities Regulatory Commission.

2. Assuming that, on 1 January 2014, the shares issued by the Company under the restructuring were 15 million A shares of RMB1 per share with an issue price of RMB6.00 per share. Cash of RMB90,729,700 paid for the incoming assets was recorded under other payables.

3. The pro forma financial statements were prepared based on the combined financial statements of the Company and the financial statements of Bengbu Company for the year 2014 and January – May 2015 audited by WUYIGE Certified Public Accountants LLP. and has adopted the critical accounting policies, accounting estimates and the basis of preparation for the combined financial statements as stated in these notes.

4. As the Company and Bengbu Company were under control by CLFG prior to the transaction, the pro forma combined financial statements were prepared in accordance with the accounting treatment for business combination under common control.

5. In the preparation of the pro forma financial statements, supporting funds raised from the non-public issuance of share s under the restructuring were not taken into consideration.

6. In the preparation of the pro forma financial statements, relevant tax that may be arisen from the restructuring was not taken into consideration.

7. During the reporting period of the pro forma financial statements, the Company had connected transactions with the outgoing assets which had significant impacts on the financial statements. Upon completion of the restructuring, such connected transactions will not proceed. For better understanding on the operation of the Company upon completion of the restructuring by readers of the financial reports, the Company has excluded the impacts on financial reports by the connected transactions conducted with the outgoing assets in the preparation of the pro forma financial statements. During the reporting period of the pro forma combined financial statements, the impacts on gains and losses by the excluded connected transactions are set out as follows:

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	January –
Item	May 2015	For the year 2014	Remarks
I. Operating income	14,207,148.43	346,598,618.35	Mainly income from the purchase of
			glass from the outgoing companies and
			from external sales and income from the
			sales of raw materials to the outgoing
			companies
Less: Operating costs	13,991,475.66	338,447,076.80	Mainly costs from the purchase of glass
			from the outgoing companies and costs
			from the sales of raw materials to the
			outgoing companies
Finance costs	-558,942.00	-1,376,304.00	Mainly interest income from the
			provision of funds to the outgoing
			companies
Gain on investment	2,310,493.44	12,377,040.74	Mainly gains from the provision of
			loans to the outgoing companies by the
			entrusted bank
II. Operating profits	3,085,108.21	21,904,886.29
Add: Non-operating		58,331.26	Mainly gains from the re-designation of
income			fixed assets for the outgoing companies
III. Net profits	3,085,108.21	21,963,217.55

1. The pro forma financial statements were prepared assuming the transaction was completed during the Relevant Period and for the abovementioned purposes. As such, the pro forma financial statements do not include the pro forma cash flow statement and the pro forma statement of changes in owner’s interests. In the preparation of the pro forma combined balance sheet, shareholder’s equity is only presented as attributable to total shareholder’s equity of the parent company and total minority interests and is not classified into detailed breakdowns.

Subject to the approval at the general meeting of the Company and from the CSRC, the final version of the restructuring proposal approved, including the shares actually issued by the Company and the consideration and issuance fee thereof, may differentiate to the above assumption adopted for the pro forma financial statements. As such, adjustments will be made to relevant assets and liabilities accordingly upon completion of the restructuring when they are recorded in the accounts.

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IV. STATEMENT ON THE COMPLIANCE WITH THE BUSINESS ACCOUNTING STANDARDS

The pro forma financial statements were prepared according to the Business Accounting Standards and the basis of preparation as described in note 3, which give a true and complete picture of the pro forma financial position and operating results of the Company.

V. IMPORTANT ACCOUNTING POLICIES AND ESTIMATES

(I) Declaration on compliance with Accounting Standards for Business Enterprises

The financial statements of the Company were prepared under the requirements of Accounting Standards for Business Enterprises, reflecting the Company’s financial positions as at 31 May 2015 and 31 December 2014, and operating results, cash flows and other relevant information from January to May 2015 and for the year 2014 on a true and complete basis.

(II) Accounting period

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

(III) Operating cycle

The normal operating cycle of the Company is 12 months in a year, and the operating cycle is determined as the classification criterion of the liquidity of assets and liabilities.

(IV) Measurement currency

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

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(V) Enterprise merger

1. Enterprise merger under common control

In case the consideration for the long-term equity investments formed in the enterprise merger under common control is paid by way of cash, transfer of non-cash assets or assumption of debts, the Company will regard the share of carrying amounts of the net assets in the final controller’s consolidated financial statements obtained as the initial investment cost of long-term equity investments as at the date of combination. In case the consideration for the combination is paid by issuance of equity instruments, the aggregate nominal value of shares issued will be deemed as the share capital. The difference between the initial investment cost of long-term equity investments and the carrying amount of consideration (or aggregate nominal value of shares issued) for the combination shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.

2. Enterprise merger not under common control

For this kind of enterprise merger, the acquisition cost is the aggregate fair value of assets paid, liabilities incurred or assumed and equity instruments issued, in exchange for the control of the acquiree. The recognizable and identifiable assets, liabilities and contingent liabilities acquired or assumed, through enterprise merger not under common control shall be measured at fair values at the date of enterprise merger. When the cost of a enterprise merger exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets obtained, the difference shall be recognized as goodwill value. Where the cost of a enterprise merger is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference shall be recognized in non-operating profits for the current period if it remains true after reassessment.

(VI) Preparation method of consolidated financial statements

1. Scope of consolidated financial statements

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

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

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

3. Offset matters in the consolidated financial statements

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

4. Accounting treatment of subsidiaries acquired from merger

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

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(VII) Classification of joint arrangements and accounting for joint operations

1. Classification of joint arrangements

Joint arrangements are divided into joint operations and joint ventures. Joint arrangements achieved not through separate entities are classified as joint operations. Separate entities refer to the entities with separate identifiable financial architecture including separate legal entities and legally recognised entities without the qualification of legal entity. Joint arrangements achieved through separate entities are generally classified as joint ventures. In case of changes in rights entitled to and obligations undertaken by the parties of joint venture under a joint arrangement due to the changes in relevant facts and circumstances, the parties of joint venture will re-assess the classification of joint arrangements.

2. Accounting treatment for joint operations

The parties of joint operation should recognise the following items in relation to their share of interest in joint operation, and proceed with accounting in accordance with the relevant provisions under the Accounting Standards for Business Enterprises: to recognise their separate assets or liabilities held, and recognise the assets or liabilities jointly held according to their respective shares; to recognise the income from the disposal of their output share under joint operation; to recognise the income from the disposal of output under joint operation according to their respective shares; to recognise the expenses incurred separately, and recognise the expenses incurred under joint operation according to their respective shares.

For the parties of a joint operation not under common control, if they are entitled to relevant assets and undertake relevant liabilities of the joint operation, accounting will be carried out with reference to the provisions of the parties of joint operation; otherwise, it should be subject to relevant Accounting Standards for Business Enterprises.

3. Accounting treatment for joint ventures

The parties of a joint venture should perform accounting for investments by the joint venture in accordance with the Accounting Standards for Business Enterprises No. 2 – Long-term Equity Investments. The parties not under common control should carry out accounting depending on their influence on the joint venture.

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(VIII) Recognition standard for cash and cash equivalents

Cash presented in the cash flow statements represents the cash on hand and deposits available for payment at any time. Cash equivalents presented in the cash flow statements refer to short-term, highly liquid investments held that are readily convertible to known amounts of cash and which are subject to an insignificant risk on change in value.

• (IX) Translation of foreign currency transactions and financial statements denominated in foreign currency

1. Translation of foreign currency transactions

• Foreign currency transactions of the Company are recorded in the recording currency of the transaction date. At the balance sheet date, foreign currency monetary items are translated to RMB using the spot exchange rate at that date. Exchange differences arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate used in initial recognition or on the last balance sheet date shall be recorded into the profit or loss for the current period, except for those arising from borrowings denominated in foreign currencies and used for financing the construction of qualifying assets, which are capitalized as cost of the related assets. Foreign currency non-monetary items measured at historical cost shall continue to be translated using the spot exchange rate at the date of transaction. Foreign currency non-monetary items measured at fair value shall be translated at the spot exchange rate on the date the fair value is determined. The exchange difference arising therefrom shall be treated as the change in fair value (including the change in exchange rate), and included in profit or loss for the current period or recognised as other comprehensive income.

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2. Translation of financial statements denominated in foreign currency

If the functional currencies used as the bookkeeping base currency by the subsidiaries, joint ventures and associates under the control of the Company are different from that of the Company, their financial statements denominated in foreign currencies shall be translated to perform accounting and prepare the consolidated financial statements. The assets and liabilities in the financial statements are translated into functional currency at the spot exchange rates at the balance sheet date. Except the item “Retained earnings”, the owner’s equity items are translated into functional currency at the transaction dates. The income and expenses of foreign operations in the income statement are translated into functional currency at the spot exchange rates at the transaction dates. The resulting exchange differences are recognized in a separate component of owner’s equity in the balance sheet. The cash flow of foreign currency which can be determined by the systematic and reasonable system shall be translated at the spot exchange rate at the transaction date. The effect of exchange movement shall be included separately in the cash flow statement. On disposal of foreign operations, exchange differences arising from the translation of financial statements denominated in foreign currencies related to the disposed foreign operation shall be transferred to profit or loss in proportionate share in the period in which the disposal took place.

(X) Financial instruments

1. Classification and recognition of financial instruments

Financial instruments are classified as financial assets or financial liabilities. A financial asset or a financial liability is recognized when the Company becomes a contractual party of a financial instrument.

Upon initial recognition, financial assets are classified into financial assets at fair value through profit or loss, held-to-maturity investments, receivables and available-for-sale financial assets. Except for receivables, the classification of a financial asset is based on the purpose and capability of holding the financial asset of the Company and its subsidiaries. Upon initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities.

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Financial assets at fair value through profit or loss include financial assets held for the purpose of selling in the short term; receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market; available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories at initial recognition; held-to-maturity investments are non-derivative financial assets with fixed maturity and fixed or determinable payments that management has the positive intention and ability to hold to maturity.

2. Measurement of financial instruments

Financial assets and financial liabilities of the Company are initially recognized and measured at fair values. Subsequent measurement is dealt with based on different categories: financial assets at fair value through profit or loss, financial assets available for sale and financial liabilities at fair value through profit or loss are subsequently measured at fair values; held-to-maturity investments, loans and receivables and other financial liabilities are subsequently measured at amortised costs; Derivative financial assets or liabilities linked to and which must be settled by delivery of an unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be measured reliably are subsequently measured at cost. Except for financial instruments held for hedging purposes, the gains or losses arising from the changes in fair values in subsequent measurements of the Company’s financial assets or financial liabilities are accounted for as follows: ① The gains or losses resulting from the changes in fair values of the financial assets or financial liabilities which are measured at fair values through profit and loss for the current period are recorded as change in fair value in profit or loss; ② Changes in fair values of available-for-sale financial assets are recorded in other comprehensive income

3. Recognition of the fair value of financial assets and financial liabilities by the Company

As for the financial assets or financial liabilities for which there is an active market, the quoted prices in the active market shall be used to recognize the fair values thereof. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques to determine its fair value. The value appraisal techniques mainly include market approach, income approach and cost approach.

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4. Recognition and measurement of transfer of financial assets and liabilities

When the Company has transferred nearly all of the risks and rewards related to the ownership of a financial asset to the transferee, or neither transferred of financial assets nor retained nearly all of the risks and rewards related to the ownership of the financial asset but given up the control of the financial asset, the financial asset shall be derecognized. When the criteria for derecognition of a financial asset are met, the difference between the carrying value of the transferred financial asset and the sum of the consideration received from the transfer and the accumulated fair value changes previously recorded in other comprehensive income are recorded in profit or loss for current period. If the partial transfer satisfies the criteria for derecognition, the entire carrying value of the transferred financial asset shall proportionally allocated between the derecognized portion and the retained portion according to their respective relative fair value.

When all or part of the current obligation to a financial liability has been terminated, the entire or part of such financial liability shall be derecognized.

5. Impairment of financial assets

When an impairment loss on a financial asset carried at amortised cost has occurred, the amount of loss is provided for at the difference between the asset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence that the value of the financial asset recovered and the recovery is related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed and the amount of reversal is recognised in profit or loss.

When an impairment loss on a financial asset measured at cost has occurred, the amount of loss is provided for at the difference between the asset’s carrying amount and the present value of its estimated future cash flows. The impairment loss on such financial asset is not reversed once it is recognised.

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Where there is objective evidence that an impairment loss on available-for-sale financial assets occurs, the cumulative loss arising from the decline in fair value that had been recognised directly in equity is removed from equity and recognised in impairment loss. For an investment in debt instrument classified as available-for-sale on which impairment losses have been recognised, if, in a subsequent period, its fair value increases and the increase can be objectively related to an even occurring after the impairment loss was recognised in profit or loss, the previously recognised impairment loss is reversed and recognised in profit or loss for the current period. For an investment in an equity instrument classified as available-for-sale on which impairment losses have been recognised, the increase in its fair value in a subsequent period is recognised in equity directly.

For investments in equity instruments, the specific quantitative criteria for the Company to determine “serious” or “not temporary” decrease in their fair value, cost computing method, method for determining closing fair value, and basis for determining the continuous decrease period are set out below:

Specific quantitative criterion Decrease in closing fair value relative on “serious” decrease in to the cost has reached or exceeded their fair value 50%. Specific quantitative criterion Fall for 12 consecutive months. on “not temporary” decrease in their fair value

Cost computing method

C o n s i d e r a t i o n o f p a y m e n t a t acquisition (net of cash dividends declared but not yet paid or due but unpaid interest on bonds) and the relevant transaction cost are recognized as the investment cost.

Method for determining closing fair value

As for a financial instrument for which there is an active market, the quoted prices in the active market shall be used to recognize the fair values thereof. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques to determine its fair value.

Basis for determining the continuous decrease period

The rebound in the continuous fall or the period with the tread of fall is less than 20% margin. Rebound duration not more than six months is treated as continuous decrease period.

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(XI) Receivables

Receivables include accounts receivable, long-term receivables and other receivables. If there is objective evidence that receivables have been impaired at the balance sheet date, impairment loss shall be recognized based on the differences between the carrying values and the present value of estimated future cash flows.

1. Receivables individually significant and with provision for bad debts on an individual basis

Basis and criteria for determining whether a receivable is individually significant

Receivables with the book balance of over RMB5.00 million

• Provision policies of bad debt provision on an individual basis for individually significant receivables

• To confirm according to the differnce between the carrying values and the present value of estimated future cash flows

2. Receivables with provision for bad debts on a group basis

Basis for group Nature of receivables and risk determination characteristics

The group with provision for bad debts based on aging analysis

Apart from those for which no provision has been made for bad debts, receivables which are unimpaired through separately test of impairment are divided into certain portfolios of credit risk in accordance with the aging analysis method, and then the provision for bad debts is made in proportion to the balance of these receivable portfolios.

• The group without provision for bad debts

• (1) Various margins and deposits r e l a t e d t o t h e p r o d u c t i o n and operations that are fully recoverable upon maturity;

• (2) Receivables due from related p a r t i e s w i t h g o o d f i n a n c i a l position;

• (3) Other balances that have positive evidence indicating they are fully recoverable.

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Provision method for bad debts in group

The group with provision	Aging analysis method
for bad debts based on
aging analysis
The group without	No provision for bad debts will be
provision for bad debts	made

In the groups, the provision for bad debts based on aging analysis is set out as follows:

	Proportion of	Proportion of
	provision rate	provision
	for accounts	for other
Age	receivable	receivables
	(%)	(%)
Within 1 year (including 1 year)	0	0
1–2 years	30	30
2–3 years	50	50
3–4 years	100	100
4–5 years	100	100
Over 5 years	100	100

3. Individually insignificant receivables with provision for bad debts on an individual basis

Basis for individual provision Concrete evidence indicates that there for bad debts is obvious difference in recoverability. Provision method For the provision for bad debts by for bad debts using individual determination method, provisions are made for receivables due from related parties that are estimated to be fully unrecoverable.

(XII) Inventories

1. Classification of inventories

Inventories means finished goods or merchandise held for sale in the ordinary course of business, unfinished products in the process of production, materials or supplies used in the process of production or rendering of services. Inventories mainly include raw materials, revolving materials, unfinished products and commodity stock.

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2. Measurement for delivered inventories

Upon delivery of inventories, the actual cost of such inventories will be determined by using weighted average method.

3. Provision method for impairment for decline in value of inventories

At the end of the period, after a thorough inspection of the inventories, provision for decline in value of inventories will be made and adjusted at the lower of the cost and the net realizable value. Net realizable value of held-for-sale commodity stock, such as products, commodity stock, and held-for-sale raw materials, during the normal course of production and operation, shall be determined by their estimated sales less the related selling expenses and taxes; the net realizable value of material inventories, which need to be processed, during the normal course of production and operation, shall be determined by the amount after deducting the estimated cost of completion, estimated selling expenses and relevant taxes from the estimated selling price of finished goods; the net realizable value of inventories held for execution of sales contracts or labor contracts shall be calculated on the ground of the contracted price. If an enterprise holds more inventories than the quantity stipulated in the sales contract, the net realizable value of the exceeding part shall be calculated on the ground of general selling price.

Decline in value of inventories is made on an item-by-item basis at the end of the period. For large quantity and low value items of inventories, provision may be made based on categories of inventories; for items of inventories relating to a product line that is produced and marketed in the same geographical area and with the same or similar end uses or purposes, which cannot be practicable evaluated separately from other items in that product line, provision for decline in value of inventories may be determined on an aggregate basis.

Should the factors causing any write-down of the inventories do not exist anymore, the amount of write-down will be recovered and be reversed from the provision for diminution in value of inventories that has been made. The reversed amount will be included in the current profits and losses.

4. Inventory system

The Company adopts perpetual inventory system.

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5. Amortization of low-value consumables and packaging materials

Low-value consumables are amortized using one-off write-off method. Packaging materials and other revolving materials are amortized using equal-split amortization method.

(XIII) Recognition of assets held for sale

Non-current assets meet the following criteria shall be recognised as assets held for sale: (i) The resolution has been made to dispose this non-current asset; (ii) There is an irrecoverable transfer agreement that has been entered into between the Company and the transferee; (iii) The transfer shall be completed within one year.

(XIV) Long-term equity investments

1. Determination of initial investment cost

For a long-term equity investment obtained from business consolidation under common control, the initial cost is measured at the combining party’s share of the carrying amount of the equity of the combined party; for a long-term equity investment obtained from business consolidation not under common control, the initial cost is the consolidation cost at the date of acquisition. For a long-term equity investment acquired by cash, the initial investment cost shall be the total purchase price. For a long-term equity investment acquired by the issue of equity securities, the initial investment cost shall be the fair value of the securities issued. For a long-term equity investment acquired by debt restructuring, the initial investment cost is recognized according to relevant requirements of Accounting Standards for Business Enterprises No. 12 – Debt Restructuring. For a long-term equity investment acquired by exchange of non-monetary assets, the initial investment cost is recognized according to relevant standards and regulations.

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2. Subsequent measurement and profit or loss recognition

Where the investor has a control over the investee, long-term equity investments are measured using cost method. Long-term equity investments in associates and joint ventures are measured using equity method. Where part of the equity investments of an investor in its associates are held indirectly through venture investment institutions, common fund, trust companies or other similar entities including investment linked insurance funds, such part of equity investments indirectly held by the investor shall be measured at fair value through profit or loss according to according to relevant requirements of Accounting Standards for Business Enterprises No. 22 – Recognizition and measurement of Financial Instruments regardless whether the above entities have significant influence on such part of equity investments, while the remaining part shall be measured using equity method.

3. Basis of conclusion for common control and significant influence over the investee

Joint control over an investee refers to where the activities which have a significant influence on return on certain arrangement could be decided only by mutual consent of the investing parties sharing the control, which includes the sales and purchase of goods or services, management of financial assets, acquisition and disposal of assets, research and development activities and financing activities, etc.; Significant influence on the investee refers to that: significant influence over the investee exists when holding more than 20% but less than 50% of the shares with voting rights or even if the holding is below 20%, there is still significant influence if any of the following conditions is met: there is representative in the board of directors or similar governing body of the investee; participation in the investee’s policy setting process; assign key management to the investee; the investee relies on the technology or technical information of the investing company; or major transactions with the investee.

(XV) Investment properties

Investment properties of the Company include land use rights and buildings for leasing and land use rights held for resale after appreciation in value. An investment property is initially measured at cost, and cost method is adopted for subsequent measurement.

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The building of an investment property is depreciated over its useful life. The overall measurement policy is the same as fixed assets. For land use rights leased out or held for resale after appreciation in value, they are amortized over their useful lives using the straight-line method. The overall measurement policy is the same as intangible assets.

(XVI) Fixed assets

1. Recognition of fixed assets

Fixed assets are tangible assets that are held for production, provision of services, leasing or administrative purposes, and have useful life more than one financial year. Fixed asset are recognized when both of the following conditions are met: economic benefits in relation to the fixed assets are very likely to flow into the enterprise; and the cost of the fixed assets can be measured reliably.

2. Classification and depreciation methods for fixed assets

Fixed assets held by the Company are mainly classified as: buildings and structures, machinery, and transportation equipment. Depreciation is provided based upon the straight- line method. The useful life and residual value of an asset is assessed based on its nature and the manner of use. At the end of each financial year, the useful lives, residual values and the depreciation method are reviewed, and adjusted if there are variances with the original estimates. Other than fully depreciated assets which are still in use and land individually measured and recorded, depreciation is provided for all fixed assets.

		Expected	Annual
	Estimated	net residual	depreciation
Category	useful lives	value rate	rate
	(years)	(%)	(%)
Buildings and structures	30–50	3–5	1.90–3.23
Machinery	4–28	3–5	3.39–24.25
Electronic equipment	10	3	9.70
Transportation equipment	6–12	3–5	7.92–16.17
Other equipment	4–28	3–5	3.39–24.25

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3. Recognition and measurement of fixed assets under finance lease

Recognition of fixed assets under finance lease: the nature of this kind of lease is a transfer of all risk and rewards related to the ownership of assets. Measurement of fixed assets under finance lease: the initial amount of a fixed asset under finance lease should be recorded as the lower of fair value of the leased asset at the beginning date of lease term and the present value of minimum lease payment. Subsequent measurement of fixed assets under finance lease should be in accordance with the accounting policies adopted for self-owned fixed assets in respect of provision of depreciation and impairment.

(XVII) Construction in progress

There are two types of construction in progress for the Company: self-construction and sub-contracting construction. Construction in progress is transferred to fixed assets when the project is completed and ready for its intended use. A fixed asset is ready for intended use if any of the following criteria is met: the construction of the fixed assets (including installation) has been completed or substantially completed; the fixed asset has been put to trial operation and it is evidenced that the asset can operate ordinarily or produce steadily qualified products; or the result of trial operation proves that it can run or operate normally; little or no expenditure will be incurred for construction of the fixed asset; or the fixed asset constructed has achieved or almost achieved the requirement of design or contract.

(XVIII) Borrowing costs

1. Basis for capitalization of borrowing costs

The Company’s borrowing costs that are directly attributable to the acquisition or production of a qualifying asset are capitalized into the cost of relevant assets. Other borrowing costs are recognized as expenses in profit and loss based on the actual amount when incurred. Qualifying assets include fixed assets, investment property and inventories that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale.

2. Calculation of amount to be capitalized

Capitalization period: the period beginning from the commencement of capitalizing borrowing costs to the date of ceasing capitalization, excluding the period of suspension of capitalization. Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended.

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The capitalized amount shall be, for designated borrowings the actual interest expense incurred for the designated borrowings, less the interest income from the unused funds of the designated borrowings or investment income from the temporary investments; and for general borrowings, the weighted average of general borrowings occupied, based on the accumulated expenditure exceeding the capital expenditure from designated borrowings times the interest rate of the general borrowings so occupied. The interest rate is the weighted average rate of the general borrowings; and for borrowings with discount or premium, the discount or premium was amortized over the term of the borrowings to adjust the interest in every period using effective interest rate method.

The effective interest rate method is based on the effective interest rate of the borrowings to calculate the amortization of discount or premium or interest expense. The effective interest rate is the rate in discounting the estimated future cash flows to the carrying value of the borrowings.

(XIX) Intangible assets

1. Measurement of intangible assets

Intangible assets are initially measured at costs. The actual costs of purchased intangible assets include the considerations and relevant expenses paid. The actual costs of intangible assets contributed by investors are the prices contained in the investment agreements or mutually agreed. If the price contained in the investment agreement or mutually is not a fair value, the fair value of the intangible asset is regarded as the actual cost. The cost of a self-developed intangible asset is the total expenditure incurred in brings the asset to its intended use.

Subsequent measurement of the Company’s intangible assets: Intangible assets with finite useful lives are amortized on a straight-line basis over the useful lives of the intangible assets; at the end of each year, the useful lives and amortization policy are reviewed, and adjusted if there are variance with original estimates; Intangible assets with indefinite useful lives are not amortized and the useful lives are reviewed at the end of each year. If there is objective evidence that the useful life of an intangible asset is finite, the intangible asset is amortized using the straight line method according to the estimated useful life.

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The exploration right of the Company is included in other non-current liabilities as the cost less the provision for impairment. The charges for the use of the exploration rights, the cost of the exploration right and other costs paid by the Company for acquiring the exploration right is included into “the exploration and development cost” when it is actually incurred. Once it can be reasonably confirmed that the mine can be used for commercial production and the relevant mining right has been obtained, the exploration and development cost incurred can be transferred to “intangible assets – mining rights” and amortised using the straight-line method. In the event that any project has been abandoned at the development stage or cannot proceed due to the failure to obtain the mining right, the total expenses shall be written-off and included in the expenses for the current period.

2. Determination basis of indefinite useful life

An intangible asset is regarded as having an indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate economic benefits for the Company or it has no definite useful life. The determination basis of intangible assets with infinite useful lives: derived from contractual rights or other legal rights and there are no explicit years of use stipulated in the contract or laws and regulations; useful life till could not be estimated after considering the industrial practices or relevant expert opinion.

At each year end date, the useful lives of the intangible assets with indefinite useful lives are reviewed. The assessment is performed by the departments that use the intangible assets, using the down-to-top approach, to determine if there are changes to the indefinite useful lives.

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3. Basis for research and development phases for internal research and development project and basis for capitalization of expenditure incurred in development stage

As for an internal research and development project, expenditure incurred in the research phase is recognized in profit or loss in the period as incurred. Expenses incurred in the development stage are recognized as intangible assets if all of the following conditions are met: (1) the technical feasibility of completing the intangible asset so that it will be available for use or for sale; (2) the intention to complete the intangible asset for use or for sale; (3) how the intangible asset will generate economic benefits including there is evidence that the products produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidence that there exists usage for the intangible asset; (4) the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and (5) the expenditures attributable to the development of the intangible asset could be reliably measured.

Basis for distinguishing research phase and development phase of an internal research and development project: research stage is the activities carried out for the planned investigation and search of new technology and knowledge, which has the characteristics of planning and exploration; before commercial production or other uses, the application of new technologies and new knowledge obtained from the research phase to produce new or improved materials, equipment and products is regarded as development phase, which has the characteristics of very probable pinpointing and forming results.

(XX) Assets impairment

Long-term equity investments, investment properties measured at cost and long-term assets such as fixed assets, construction in progress, intangible assets and goodwill are tested for impairment if there is any indication that an asset may be impaired at the balance date. If the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount, a provision for impairment and an impairment loss are recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

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The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognised on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.

Goodwill arising from a business combination is tested for impairment at least at each year end, irrespective of whether there is any indication that the asset may be impaired. For the purpose of impairment testing, the carrying amount of goodwill acquired in a business combination is allocated from the acquisition date on a reasonable basis to each of the related asset groups; if it is impossible to allocate to the related asset groups, it is allocated to each of the related set of asset groups. If the carrying amount of the asset group or set of asset groups is higher than its recoverable amount, the amount of the impairment loss first reduced by the carrying amount of the goodwill allocated to the asset group or set of asset groups, and then the carrying amount of other assets (other than the goodwill) within the asset group or set of asset groups, pro rata based on the carrying amount of each asset.

Once the impairment loss of such assets is recognized, it is not be reversed in any subsequent period.

(XXI) Long-term deferred expenses

Long-term deferred expenses of the Company are expenses which have been paid but the benefit period is over one year (not including one year). Long-term deferred expenses are amortized over the benefit period. If a long-term deferred expense cannot benefit the future accounting period, the residue value of such project not amortized yet shall be transferred to the profit or loss in the current period.

(XXII) Employee benefits

Employee benefits are all forms of considerations given by an entity in exchange for services rendered by employees or for the termination of employment. Employee benefits include short-term benefits, post-employment benefits, termination benefits and other long-term employee benefits.

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1. Short-term benefits

In the period of employee services, short-term benefits are actually recognized as liabilities and charged to profit or loss, or if otherwise required or allowed by other accounting standards, to the related costs of assets for the current period. At the time of actual occurrence, The Company’s employee benefits are recorded into the profits and losses of the current year or assets associated costs according to the actual amount. The non-monetary employee benefits are measured at fair value. Regarding to the medical and health insurance, industrial injury insurance, maternity insurance and other social insurances, housing fund and labor union expenditure and personnel education that the Company paid for employees, the Company should recognize corresponding employees benefits payable according to the appropriation basis and proportion as stipulated by relevant requirements and recognize the corresponding liabilities and include these expenses in the profits or losses of the current period or recognized as respective assets costs.

2. Post-employment benefits

During the accounting period in which an employee provides service, the amount payable calculated under defined contribution scheme shall be recognized as a liability and recorded in profit and loss of the current period or in assets. In respect of the defined benefit scheme, the Company shall use the projected unit credit method and attribute the welfare obligations calculated using the formula stipulated by the defined benefit scheme to the service period of the employee, and record the obligation in the current profit and loss or related assets cost.

3. Termination benefits

The Company recognizes a liability and expenses in the current profit or loss for termination benefits at the earlier of the following dates: when the Company can no longer withdraw the offer of those benefits; and when the Company recognizes costs for restructuring involving the payment of termination costs.

4. Other long-term employee benefits

The Company provides other long-term employee benefits to its employees. For those falling within the scope of defined contribution scheme, the Company shall account for them according to relevant requirements of the defined contribution scheme. In addition, the Company recognizes and measures the net liabilities or net assets of the other long-term employee benefits according to relevant requirements of the defined contribution scheme.

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(XXIII) Estimated liability

If an obligation in relation to contingency is the present obligation of the Company and the performance of such obligation is likely to lead to the outflow of economic benefits and its amount can be reliably measured, such obligation shall be recognized as estimated liability. The best estimate of the expenditure from current obligation is initially recorded as accrued liability. When the necessary expenditures falls within a range and the probability of each result in the range are identical, the best estimate is the median of the range; if there are severable items involved, every possible result and relevant probability are taken into account for the best estimation.

At the balance sheet date, the carrying value of provision is reviewed. If there is objective evidence that the carrying value could not reflect the current best estimate, the carrying value is adjusted to the best estimated value.

(XXIV) Revenue

1. Sales of goods

Revenue from the sale of goods shall be recognized at the amount received or receivable from buyers based on contractual or agreed prices, only when all of the following conditions are satisfied: ① the significant risks and rewards of ownership of the goods have been passed to the buyer; ② the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; ③ the amount of revenue can be measured reliably; ④ it is probable that the associated economic benefits will flow to the enterprise; and ⑤ the associated costs incurred or to be incurred can be measured reliably.

Specific method for revenue recognition: the sales revenue shall be recognized upon the goods are delivered, the client signs to acknowledge the receipt of such goods and the relevant papers such as invoices and bill of lading are handed to the purchasing client.

If there is deferred payment clause in the agreement or mutually agreed price, which in substance is a financing nature, the fair value of the receivables is recorded as sales amount.

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2. Provision of labour services

At the balance sheet date, when the outcome of a transaction involving the rendering of services can be estimated reliably, revenue from provision of services shall be recognized using the percentage of completion method. The percentage of completion is determined by the Company based on the percentage of actual cost over estimated total cost. At the balance sheet date, when the outcome of the transaction involving the rendering of services cannot be estimated reliably, it shall be dealt with in the following ways: ① if the cost of services incurred is expected to be compensated, the revenue from the rendering of services is recognized to the extent of actual cost incurred to date, and the relevant cost is transferred to cost of service in profit or loss; ② if the cost of services incurred is not expected to be compensated, the cost incurred should be included in current profit or loss, and no revenue from the rendering of services may be recognized.

3. Abalienating the right to use an asset

When the inflow of economic benefits from the abalienation of assets is probable and the income can be measured reliably, the income from abalienating the right to use an asset is recognized.

(XXV) Government grants

1. Accounting treatment for government grants related to assets

If the government grant received by the Company is used for construction or other project that forms a long term asset, it is regarded as asset-related government grant. Asset-related government grant is recognized as deferred income and is evenly amortised to profit or loss on a straight-line basis over the useful life of the relevant asset starting from the date the asset is available for use.

2. Accounting treatment for government grants related to income

The government grants other than the government grants related to assets are recognized as government grants related to income. Government grants related to income shall be treated as follows: those used to compensate relevant expenses or losses to be incurred by the enterprise in subsequent periods are recognized as deferred income and recorded in profit and loss for the current period when such expenses are recognized; and those used to compensate relevant expenses or losses that have been incurred by the enterprise are recorded directly in profit or loss for the current period.

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3. Specific standards for differentiating governmental subsidy relating to asset from that relating to income

Where there is no express regulation on subsidy object in government documents, the criteria for differentiating governmental subsidy relating to asset from that relating to income is as below: ① government grant subject to a certain project shall be separated according to the proportion of expenditure budget and capitalization budget, and the proportion shall be reviewed and modified if necessary on the balance sheet date; ② government grant shall be categorized as related to income if its usage is just subject to general statement but specific project in relevant document.

(XXVI) Deferred tax assets and deferred tax liabilities

1. Deferred tax assets and liabilities are recognized based on the temporary difference between the carrying amount and the tax base amount of an asset or liability (asset or liability not recognized in balance sheet but the tax base is ascertained by the current tax laws and regulation, the tax base is the temporary difference), and the expected applicable tax rate at the time of recovering the relevant asset or discharge of relevant liability.

2. Deferred tax asset is recognized to the extent that there is enough future profit for the utilization of the deductible temporary difference. At the balance sheet date, if there is sufficient evidence that there would be enough future benefit for the utilization of the deductible temporary difference, the deferred asset not previously recognized is recognized in current period. If there is not sufficient evidence that there would be enough future benefit for the utilization of the deductible temporary difference, the carrying value of the deferred asset reduced in current period.

3. Deferred tax liability is recognized for assessable temporary difference related to the investments of the subsidiaries and associated companies, unless the Company could control the time for the reversal of the temporary differences and the temporary differences would not be reserved in the foreseeable future. Deferred tax asset is recognized for the deductible temporary difference related to the investments of subsidiaries and associated enterprises, if such temporary differences are much likely to be reversed in the foreseeable future and there will be enough future profit for the utilization of such deductible temporary difference.

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(XXVII) Lease

1. Accounting treatment for operating lease: Operating lease payments are recognized on a straight-line basis over the term of the relevant lease, and are either included in the cost of related asset or charged to profit or loss for the period.

2. Accounting treatment for finance lease: At the commencement of the lease term, the Group records the leased asset at an amount equal to the lower of the fair value of the leased asset and the present value of the minimum lease payments. The difference between the recorded amounts is accounted for as unrecognized finance charge, using the effective interest method amortization during the lease term. Minimum lease payments deducting unrecognized financing charges are listed as long-term payables.

(XXVIII) Changes in significant accounting policies and accounting estimates

Nil

VI. TAXES

(I) Major categories of taxes and tax rates

Category	Tax basis	Tax rate
Value added tax	Assessable value-added part of sales	13%–17%
	revenue, and revenue from
	processing and repair, fitting and
	labour services
Business tax	Business revenue	5%
City maintenance	Value added tax and business tax paid	5%–7%
and construction tax
Educational surcharges	Value added tax and business tax paid	3%
Enterprise income tax	Enterprise income	15%, 25%

– 41 –

(II) Major preferential tax treatment and approvals

On 26 June 2013, Longhai Company, the Company’s wholly-owned subsidiary, was recognized as high-tech enterprise as verified by Henan Scientific and Technological Department, Henan Finance Department, National Taxation Bureau of Henan Province and Local Taxation Bureau of Henan Province, and awarded “High-tech Enterprise Certificate” with an effective period of three years. In accordance with Paragraph 2 of Article 28 of the Enterprise Income Tax Law of the PRC, Article 93 of the Regulation on the Implementation of Enterprise Income Tax Law of PRC and the relevant provisions of the Notice of the State Administration of Taxation concerning Relevant Issues for Implementation of Tax Preferential Treatment for High-Technology Enterprises (Guo Shui Han [2009] No. 203), Longhai Company was taxed at a rate of 15% during the reporting period.

VII. MERGERS AND CONSOLIDATED FINANCIAL STATEMENTS

1. Subsidiaries

• (1) Subsidiaries acquired through such ways as incorporation or investment

							Balance of				Whether the
							other items that				subsidiary is
							constitute net				consolidated
						Actual capital	investments				into the
	Type of the	Place of				contribution at the	to the subsidiary	Shareholding		Proportion of	financial
Full name of the subsidiary	subsidiary	incorporation	Business nature	Registered capital	Business scope	end of the period	on an actual basis	direct	indirect	voting rights	statement
								(%)		(%)
CLFG Longmen Glass	Wholly-owned	Yanshi, the PRC	Processing	20,000,000.00	Manufacture of	64,513,390.18	205,000,000.00	100		100	Yes
Co. Ltd. (“Longmen”)	subsidiary		and sales		float sheet glass
CLFG Longhai Electronic	Wholly-owned	Yanshi, the PRC	Processing	60,000,000.00	Manufacture of float	48,941,425.28		100		100	Yes
Glass Limited (“Longhai”)	subsidiary		and sales		sheet glass
					and electronic glass
Luoyang Luobo Furuida	Wholly-owned	Luoyang, the PRC	Trading	500,000.00	Sales of glass and	500,000.00		100		100	Yes
Commerce Co., Ltd. (“Furuida”)	subsidiary				raw materials

– 42 –

(2) Subsidiaries acquired by mergers under common control

							Balance of				Whether the
							other items that				subsidiary is
							constitute net				consolidated
						Actual capital	investments to				into the
	Type of the	Place of				contribution at the	the subsidiary on	Shareholding		Proportion of	financial
Full name of the subsidiary	subsidiary	incorporation	Business nature	Registered capital	Business scope	end of the period	an actual basis	direct	indirect	voting rights	statement
								(%)		(%)
Bengbu China Building	Wholly-owned	Bengbu, the PRC	Processing	632,764,300.00	Manufacture of float	632,764,300.00		100		100	Yes
Information Display Materials	subsidiary		and sales		sheet glass and
Co. Ltd. (“Bengbu Company”)					electronic glass

2. Changes in the scope of consolidation during the reporting period

• (1) Subsidiary no longer incorporated in the consolidated financial statements during the reporting period

Net profit from the beginning of the period Net assets at the to the date of Name date of disposal disposal Luoyang Glass Industrial Co., Ltd. 39,149,906.17 -217,871.76

Note: on 31 December 2013, the Company entered into an equity transfer agreement with Luoyang Tianyuan Real-estate Company Limited, and the Company transferred 100% of its interests in Luoyang Glass Industrial Co., Ltd. to Luoyang Tianyuan Real-estate Company Limited at a consideration of RMB122 million. Procedures for the settlement of the equity transfer were completed in February 2014.

– 43 –

VIII. N O T E S T O S I G N I F I C A N T I T E M S O F T H E P R O F O R M A CONSOLIDATED FINANCIAL STATEMENTS

(I) Cash balance and cash

Item Cash: Including: RMB Deposits at banks: Including: RMB USD Euro HKD Other monetary funds: Including: RMB Total	Amount in original currency – – – – 18,660.65 0.60 7,162.91 – – –	31 May 2015 Exchange rate – – – – 6.1422 6.6833 0.7921 – – –	Amount in RMB 203,802.08 203,802.08 45,571,129.66 45,450,834.39 114,617.63 4.01 5,673.63 92,502,768.14 92,502,768.14 138,277,699.88	31 December 2014 Amount in original currency Exchange rate – – – – – – – – 18,659.08 6.1190 0.60 7.4667 7,162.73 0.7889 – – – – – –	Amount in RMB 71,516.95 71,516.95 37,200,649.85 37,080,819.81 114,175.13 4.48 5,650.43 54,928,668.45 54,928,668.45
					92,200,835.25

• Note: In the closing balance of other monetary funds, the funds of RMB92,502,768.14 represent the security deposit for bank acceptance notes.

(II) Notes receivable

31 May 31 December Category 2015 2014 Bank acceptance 9,486,937.92 800,000.00 Total 9,486,937.92 800,000.00

– 44 –

(III) Accounts receivable

1. Category of receivables

Category Account receivables with significant single amount and individual provision for bad debts Accounts receivable provided for bad debts in groups Account receivables with insignificant single amount and individual provision for bad debts Total Category Account receivables with significant single amount and individual provision for bad debts Accounts receivable provided for bad debts in groups Account receivables with insignificant single amount and individual provision for bad debts Total	Carrying Amount 60,276,615.11 60,276,615.11 Carrying Amount 59,520,297.68 59,520,297.68	31 May 2015 amount Provision for bad debts Percentage Amount Percentage for provision (%) (%) 100.00 51,386,867.07 85.25 100.00 51,386,867.07 85.25 31 December 2014 amount Provision for bad debts Percentage Amount Percentage for provision (%) (%) 100.00 50,867,795.26 85.46 100.00 50,867,795.26 85.46

– 45 –

Accounts receivable provided for bad debts in groups:

• ① Accounts receivable with provision for bad debts based on the aging analysis

Age Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Total	Carrying amount 2,572,382.59 123,353.53 5,002,301.67 24,318.56 2,621,120.50 46,203,271.10 56,546,747.95	31 May 2015 Percentage for provision % 30.00 50.00 100.00 100.00 100.00 90.88	Provision for bad debts 37,006.06 2,501,150.85 24,318.56 2,621,120.50 46,203,271.10 51,386,867.07	31 December 2014 Carrying amount Percentage for provision % 1,958,640.75 2,352,408.18 30.00 2,675,362.38 50.00 2,621,120.50 100.00 1,606,969.75 100.00 44,596,301.35 100.00 55,810,802.91 91.14	Provision for bad debts 705,722.46 1,337,681.20 2,621,120.50 1,606,969.75 44,596,301.35 50,867,795.26

• ② In the groups, account receivables without provision for bad debts:

Item Group without provision for bad debts (related party) Total	31 May 2015 3,729,867.16 3,729,867.16	31 December 2014 3,709,494.77 3,709,494.77

– 46 –

2. Top five debtors in the closing balance of account receivables

The aggregate account receivables from top five debtors amounted to RMB15,570,787.68, accounting for 25.83% of the total account receivables at the end of the period, and the total provision for bad debts for such top five debtors amounted to RMB14,246,819.96 at the end of the period.

(IV) Prepayments

1. Aging analysis of prepayments

Age Within 1 year 1–2 years 2–3 years Over 3 years Total	31 May 2015 Amount Percentage (%) 5,641,744.58 92.99 332,136.81 5.48 16,217.24 0.27 76,261.20 1.26 6,066,359.83 100.00	31 December 2014 Amount Percentage (%) 5,582,996.13 94.79 8,722.24 0.15 199,771.00 3.39 98,540.20 1.67 5,890,029.57 100.00

2. Top five largest prepayments

The aggregate amounts of top five largest prepayments grouped based on the debtor amounted to RMB4,356,171.29, accounting for 71.80% of the total prepayments at the end of the period.

– 47 –

(V) Other receivables

1. Category of other receivables

Category Other receivables with significant single amount and individual provision for bad debts Other receivables provided for bad debts in groups Other receivables with insignificant single amount and individual provision for bad debts Total Category Other receivables with significant single amount and individual provision for bad debts Other receivables provided for bad debts in groups Other receivables with insignificant single amount and individual provision for bad debts Total	Carrying Amount 10,808,704.00 64,009,854.28 74,818,558.28 Carrying Amount 10,808,704.00 66,137,170.86 76,945,874.86	31 May 2015 amount Provision for bad debts Percentage Amount Percentage for provision (%) (%) 14.45 10,808,704.00 100.00 85.55 37,466,910.29 58.53 100.00 48,275,614.29 64.52 31 December 2014 amount Provision for bad debts Percentage Amount Percentage for provision (%) (%) 14.05 10,808,704.00 100.00 85.95 37,465,521.19 56.65 100.00 48,274,225.19 62.74

– 48 –

• (1) Other receivables with significant single amount and individual provision for bad debts at the end of the period

Debtor Zhengzhou Xili Sub-branch of China Construction Bank (建行鄭州西里支 行) Total	Carrying amount 10,808,704.00 10,808,704.00	Bad debts amount Age Percentage for provision Reason for provision 10,808,704.00 Over 5 years 100.00% Provided for bad debts in full as it was unrecoverable 10,808,704.00

• (2) Other receivable provided for bad debts in groups

• ① Other receivables with the provision for bad debts based on the aging analysis

Age Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Total	Carrying amount 8,160,692.62 361,986.67 594,670.06 183,920.71 1,751,432.14 35,125,626.41 46,178,328.61	31 May 2015 Percentage for provision % 30.00 50.00 100.00 100.00 100.00 81.14	31 December 2014 Provision for bad debts Carrying amount Percentage for provision % 7,959,551.08 108,596.00 431,827.92 30.00 297,335.03 459,208.27 50.00 183,920.71 1,911,983.54 100.00 1,751,432.14 503,329.28 100.00 35,125,626.41 34,691,055.85 100.00 37,466,910.29 45,956,955.94 81.52	Provision for bad debts 129,548.38 229,604.14 1,911,983.54 503,329.28 34,691,055.85
				37,465,521.19

– 49 –

② In the groups, other receivables without provision for bad debts

Item Group of other receivables without provision for bad debts (related party, spare fund, security deposit, etc.) Total	31 May 2015 17,831,525.67 17,831,525.67	31 December 2014 20,180,214.92
		20,180,214.92

2. Top five largest other receivables by debtors at the end of the period

Debtor Nature Luoyang Hoisting Machinery Company Limited (洛陽起重機 廠有限公司) Proceeds from disposal of properties Zhengzhou Xili Sub-branch of China Construction Bank (建行鄭州西里支行) Fund transfer Government of Zhuge Township Fund transfer Shenzhen Cynthia Industrial Company Limited (深圳新西亞 實業有限公司) Fund transfer Estimated input tax Material Total	Closing balance Age Percentage of total closing balance of other receivables (%) 11,450,000.00 1–2 years 15.30 10,808,704.00 Over 5 years 14.45 9,856,832.00 Over 5 years 13.17 4,600,000.00 Over 5 years 6.15 3,906,703.34 Within 1 year 5.22 40,622,239.34 54.29	Balance of provision for bad debts 10,808,704.00 9,856,832.00 4,600,000.00
		25,265,536.00

– 50 –

(VI) Inventories

1. Category of inventories

Category Raw materials Work in progress Goods in stock Circulation materials Total	Carrying amount 51,750,648.45 4,259,816.83 179,995,922.35 516,590.53 236,522,978.16	31 May 2015 Impairment provision 2,018,858.79 48,486,823.26 50,505,682.05	Book value 49,731,789.66 4,259,816.83 131,509,099.09 516,590.53 186,017,296.11	Carrying amount 51,073,139.53 4,824,482.31 171,905,230.42 517,582.99 228,320,435.25	31 December 2014 Impairment provision Book value 51,073,139.53 4,824,482.31 52,879,079.73 119,026,150.69 517,582.99 52,879,079.73 175,441,355.52
					52,879,079.73

2. Change in provision for diminution in value of inventories

Inventory items Raw materials Goods in stock Total	31 December 2014 52,879,079.73 52,879,079.73	Provision in the period 2,018,858.79 9,533,807.87 11,552,666.66	Decrease in Reversal	the period Write-off 13,926,064.34 13,926,064.34	31 May 2015 2,018,858.79 48,486,823.26
					50,505,682.05

– 51 –

(VII) Other current assets

Item Tax payment deductible Total	31 May 2015 70,343,258.44 70,343,258.44	31 December 2014 72,666,538.55 72,666,538.55

(VIII) Available-for-sale financial assets

1. Information on available-for-sale financial assets

Item Available-for-sale equity instruments Including: at cost Total	Carrying amount 7,791,217.53 7,791,217.53 7,791,217.53	31 May 2015 Impairment provision 7,791,217.53 7,791,217.53 7,791,217.53	Book value	31 December 2014 Carrying amount Impairment provision 7,791,217.53 7,791,217.53 7,791,217.53 7,791,217.53 7,791,217.53 7,791,217.53	Book value

– 52 –

2. Breakdown of available-for-sale equity instruments measured at cost at the end of the period

Item 1. CLFG Jingwei Glass Fibre Co., Ltd.(Note 1) 2. CLFG Luoyang Jingjiu Glass Products Company Limited (Note 1) 3. CLFG New Lighting Company Limited_(Note 1) 4. Luoyang Jingxin Ceramic Co. Ltd.(Note 3)_ Total	Carrying amount 4,000,000.00 1,500,000.00 2,291,217.53 7,791,217.53	31 May 2015 Impairment provision 4,000,000.00 1,500,000.00 2,291,217.53 7,791,217.53	Book value	Carrying amount 4,000,000.00 1,500,000.00 2,291,217.53 7,791,217.53	31 December 2014 Impairment provision Book value 4,000,000.00 1,500,000.00 2,291,217.53 7,791,217.53	Shareholding percentage in the investee (%) 35.90 31.08 29.45	Cash dividend item during this period

• Notes: 1. The above mentioned companies are subsidiaries of CLFG, the largest shareholder of the Company. Although the Company’s shareholding percentage in such investees is above 20%, the Directors of the Company consider that the Company has no significant impact on them.

• The book value of investment in Luoyang Jingxin Ceramic Co. Ltd. was nil.

3. Changes in impairment of available-for-sale financial assets during the reporting period

	Available-for-
Type of available-for-sale	sale equity
financial assets	instruments	Total
Balance of impairment provision
at the beginning of the period	7,791,217.53	7,791,217.53
Provided for the period
Including: transfer from other
comprehensive income
Decrease for the period
Including: reverse on subsequent
increase in fair value
Balance of impairment provision
at the end of the period	7,791,217.53	7,791,217.53

– 53 –

(IX) Long-term receivables

Information on long-term receivables

Item Receivables on disposal of equity interests in Industrial Company Including: unrealized financing income Total	Carrying amount 55,000,000.00 -5,090,724.89 49,909,275.11	31 May 2015 Provision for bad debts	Book value 55,000,000.00 -5,090,724.89 49,909,275.11	31 December 2014 Carrying amount Provision for bad debts Book value 55,000,000.00 55,000,000.00 -6,350,219.35 -6,350,219.35 48,649,780.65 48,649,780.65	Range of discount rate 6.15%

Note: The Company and Luoyang Tianyuan Real Estate Co., Ltd. entered into the Equity Transfer Agreement, pursuant to which, the Company transferred 100% equity interests in Industry Company to Luoyang Tianyuan Real Estate Co., Ltd. at a consideration of RMB122 million. The Company has received the consideration for the equity transfer of RMB67 million from Luoyang Tianyuan Real Estate Co., Ltd. The remaining consideration for the equity transfer of RMB55 million may be paid in kind by Luoyang Tianyuan Real Estate Co., Ltd. As such, the Company discounted the long-term receivables of RMB55 million at the interest rate for bank loans with the same term of 6.15% over a term of 34 months.

– 54 –

(X) Fixed assets

1. Details of fixed assets

			Buildings and	Machinery	Transportation
Item			structures	equipment	equipment	Others	Total
I.	Original book value
	1.	Balance as at 1 January 2015	307,345,929.52	725,869,838.58	5,147,188.79	1,210,370.89	1,039,573,327.78
	2.	Increase in the period	615,077.93	420,256.62		37,206.59	1,072,541.14
		(1) Purchase	615,077.93	420,256.62		37,206.59	1,072,541.14
	3.	Decrease in the period
	4.	Balance as at 31 May 2015	307,961,007.45	726,290,095.20	5,147,188.79	1,247,577.48	1,040,645,868.92
II.	Accumulated depreciations
	1.	Balance as at 1 January 2015	60,868,798.63	203,611,264.05	3,603,385.40	162,367.99	268,245,816.07
	2.	Increase in the period	5,383,051.22	26,783,735.46	118,080.12	123,732.37	32,408,599.17
		(1) Provision	5,383,051.22	26,783,735.46	118,080.12	123,732.37	32,408,599.17
	3.	Decrease in the period
	4.	Balance as at 31 May 2015	66,251,849.85	230,394,999.51	3,721,465.52	286,100.36	300,654,415.24
III.	Impairment provision
	1.	Balance as at 1 January 2015	1,093,850.10	2,429,364.91	37,562.95		3,560,777.96
	2.	Increase in the period
	3.	Decrease in the period
	4.	Balance as at 31 May 2015	1,093,850.10	2,429,364.91	37,562.95		3,560,777.96
IV.	Book	value
	1.	Book value as at 31 May 2015	240,615,307.50	493,465,730.78	1,388,160.32	961,477.12	736,430,675.72
	2.	Book value as at 1 January 2015	245,383,280.79	519,829,209.62	1,506,240.44	1,048,002.90	767,766,733.75

– 55 –

(XI) Construction in progress

1. Basic information of construction in progress

Item Smoke gas and denitration project of 160T/D float glass production line Installation of equipments Total	Carrying amount 1,212,126.40 179,602.41 1,391,728.81	31 May 2015 Impairment provision	Book value 1,212,126.40 179,602.41 1,391,728.81	31 December 2014 Carrying amount Impairment provision Book value	31 December 2014 Carrying amount Impairment provision Book value

(XII) Intangible assets

			Trademark
Item		Land use rights	use rights	Total
I. Original book value
1.	Balance as at 1 January 2015	71,449,612.50	6,000,000.00	77,449,612.50
2.	Increase in this period
3.	Decrease in this period
4.	Balance as at 31 May 2015	71,449,612.50	6,000,000.00	77,449,612.50
II. Accumulated amortization
1.	Balance as at 1 January 2015	5,848,188.57	5,300,000.00	11,148,188.57
2.	Increase in this period	664,856.15	250,000.00	914,856.15
	(1) Provision	664,856.15	250,000.00	914,856.15
3.	Decrease in this period
4.	Balance as at 31 May 2015	6,513,044.72	5,550,000.00	12,063,044.72
III. Impairment provision
IV. Book value
1.	Book value as at 31 May 2015	64,936,567.78	450,000.00	65,386,567.78
2.	Book value as at 1 January 2015	65,601,423.93	700,000.00	66,301,423.93

Note: Among the Group’s intangible assets as at the end of the period, the land use right certificate for lands located in the developmental zone of Luoyang with a cost of RMB9,415,764.88 was in the process of application.

– 56 –

(XIII) Deferred tax assets and deferred tax liabilities

1. Deferred tax assets and deferred tax liabilities presented not on the netting basis

Item Deferred tax assets: Provision for impairment of assets Deferred income Subtotal	31 May 2015 Deferred tax assets/ liabilities Deductible/ taxable temporary differences 3,639,665.24 23,210,285.89 179,687.50 718,750.00 3,819,352.74 23,929,035.89	31 December 2014 Deferred tax assets/ liabilities Deductible/ taxable temporary differences 4,306,231.26 27,416,422.68 187,500.00 750,000.00 4,493,731.26 28,166,422.68

2. Details of deferred tax assets not recognized

Item Deductible temporary differences Deductible losses Total	31 May 2015 158,862,923.01 149,550,986.29 308,413,909.30	31 December 2014 156,509,722.99 101,790,196.87 258,299,919.86

Note: Deductible temporary differences and deductible losses of the deferred tax assets were not recognized by the Group as it was uncertain whether there would be enough taxable profit in the future.

– 57 –

3. Deductible losses not yet recognized as deferred tax assets will expire in the following years indicated

31 May 31 December Year 2015 2014 Remark 2015 47,933,770.96 40,490,149.47 2016 11,523,112.57 2017 10,589,070.12 2018 36,614,485.92 36,614,485.92 2019 21,894,490.75 24,685,561.48 2020 20,996,055.97 Total 149,550,986.29 101,790,196.87 Other non-current assets 31 May 31 December Item 2015 2014 Prepayments for construction 1,290,000.00 Total 1,290,000.00

(XIV) Other non-current assets

– 58 –

(XV) Short-term loans

Category of short-term loans

Condition of loans Credit loan Guaranteed loan Total	31 May 2015 10,000,000.00 37,930,000.00 47,930,000.00	31 December 2014 10,000,000.00 10,000,000.00 20,000,000.00

• Note: Credit loan represents the bank loans granted to the Company as entrusted by CLFG at an interest rate of 5.6%. Guaranteed loan represents the loan provided by Bengbu Branch of CITIC Bank Corporation Limited to Bengbu Company, guaranteed by Bengbu Glass Industry Design Institute.

– 59 –

(XVI) Notes payable

Item Bank acceptance Total	31 May 2015 139,805,536.28 139,805,536.28	31 December 2014 109,657,336.88 109,657,336.88

Note: In the closing balance, notes payable of RMB135,000,000.00 represents bank acceptances issued by the Company to its subsidiaries which have discounted such notes with the banks after receiving such notes.

(XVII) Accounts payable

Item Within 1 year (including 1 year) 1–2 years 2–3 years Over 3 years Total	31 May 2015 26,135,120.50 16,553,972.76 4,318,638.81 55,447,971.05 102,455,703.12	31 December 2014 34,555,726.44 7,991,830.61 8,971,497.32 56,254,383.59 107,773,437.96

– 60 –

Accounts payable with significant amount and the age of over 1 year

Name of creditor Zhengzhou Yifan Metallurgy Industrial Co., Ltd. Anlu City Mingfa Industry & Trade Co., Ltd. Gongyi City Xiaoyi Sub-district Office Xiaonan village Committee Qinghai Gaosheng Trading Co., Ltd. Ningan City Huayuan Trade Co., Ltd. Shandong Haitian Biochemical Industry Co., Ltd. Total Receipts in advance Item Within 1 year (including 1 year) 1–2 years 2–3 years Over 3 years Total		Closing balance Reason for unsettlement 8,759,091.22 Due to tight capital resources 5,529,857.64 Due to tight capital resources 4,576,111.42 Due to tight capital resources 6,852,058.93 Due to tight capital resources 2,960,544.93 Due to tight capital resources 4,585,519.48 Due to tight capital resources 33,263,183.62 31 May 2015 31 December 2014 20,034,986.39 48,125,804.39 19,627,288.81 442,771.42 489,499.87 2,060,652.90 2,998,404.29 1,119,612.23 43,150,179.36 51,748,840.94

(XVIII) Receipts in advance

– 61 –

(XIX) Staff remuneration payables

1. Staff remuneration payables by category

Item 31 December 2014 I. Short-term remuneration 25,309,949.45 II. Post-employment benefit – defined contribution plan 3,417,428.68 Total 28,727,378.13 Short-term staff remuneration Item 31 December 2014 1. Salary, bonus, allowance and subsidy 9,437,858.32 2. Staff’s welfare 3. Social insurance premium 3,154,322.19 Including: Medicare 2,525,279.04 Labor injury insurance 375,428.20 Maternity insurance 253,614.95 4. Housing accumulation fund 5,591,642.34 5. Labor union expenses and employee education expenses 7,126,126.60 Total 25,309,949.45	Increase in this period 27,476,653.52 5,933,893.20 33,410,546.72 Increase in this period 21,869,238.97 2,002,720.48 2,467,169.03 1,954,188.49 278,129.84 234,850.70 809,421.16 328,103.88 27,476,653.52	Decrease in this period 22,024,684.14 1,846,691.18 23,871,375.32 Decrease in this period 18,978,307.83 2,002,720.48 889,891.63 695,938.36 100,892.46 93,060.81 118,354.20 35,410.00 22,024,684.14	31 May 2015 30,761,918.83 7,504,630.70
			38,266,549.53
			31 May 2015 12,328,789.46 4,731,599.59 3,783,529.17 552,665.58 395,404.84 6,282,709.30 7,418,820.48
			30,761,918.83

2. Short-term staff remuneration

– 62 –

3. Defined contribution plan

Item 1. Basic endowment insurance 2. Unemployment insurance Total	31 December 2014 3,096,709.43 320,719.25 3,417,428.68	Increase in this period 5,423,192.34 510,700.86 5,933,893.20	Decrease in this period 1,703,286.95 143,404.23 1,846,691.18	31 May 2015 6,816,614.82 688,015.88
				7,504,630.70

(XX) Tax payable

Category of taxes Value-added tax Business tax Enterprise income tax City maintenance tax Property tax Land-use tax Individual income tax Education surcharges Other tax Total	31 May 2015 15,322,887.98 1,709,982.60 1,558,780.01 437,344.30 1,815,112.77 1,697,152.33 111,240.39 1,112,049.93 662,038.56 24,426,588.87	31 December 2014 9,735,367.83 1,703,107.60 6,702,642.35 1,110,911.88 1,684,686.48 2,104,795.96 202,384.32 904,596.54 607,762.91 24,756,255.87

– 63 –

(XXI) Other payables

Item Within 1 year (including 1 year) 1–2 years 2–3 years Over 3 years Total	31 May 2015 176,283,285.46 7,199,566.04 1,914,608.81 1,951,055.45 187,348,515.76	31 December 2014 107,178,790.61 9,745,154.70 317,874.02 1,770,865.61 119,012,684.94

Other payables with significant amount and the age of more than one year

Name Announcement-related fees (Wonderful Sky Financial Group, law firm, etc.) Total	Closing balance Reasons 7,875,385.23 Not yet settled 7,875,385.23 –

(XXII) Non-current liabilities due within one year

Item Long-term loans due within one year Total	31 May 2015 44,853,636.87 44,853,636.87	31 December 2014 44,853,636.87 44,853,636.87

– 64 –

(XXIII) Long-term loans

Condition of loans Guaranteed loan Less: Long-term loans due within one year Total	31 May 2015 471,132,872.49 44,853,636.87 426,279,235.62	31 December 2014 490,029,398.25 44,853,636.87 445,175,761.38	Range of interest rate 0–2.5% 0–2.5%

• Note: In 2010, the Company concluded the debt restructuring agreements of interest free and delayed repayment of principal, respectively, with certain financial institutions, i.e. Bank of Communication – Luoyang Branch, Bank of China – Luoyang Xigong Sub-branch, China Construction Bank – Luoyang Branch, Bank of Luoyang – Kaidong Sub-branch and Industrial & Commercial Bank of China – Luoyang Branch, under which interests are exempted from the period of 1 February 2010 to 31 January 2017 and repayment of principal can be delayed after the first two years. The principals will be paid in the following five years according to the agreed proportion. As at 31 May 2015, the balance of such interest-free long-term loans was RMB469,376,000.00.

(XXIV) Deferred income

1. Deferred income by category

Item Government subsidy Total	31 December 2014 10,648,914.15 10,648,914.15	Increase in this period	Decrease in this period 676,688.40 676,688.40	31 May 2015 9,972,225.75 9,972,225.75	Reason for the grant

– 65 –

2. Details of projects subsidized by the government

Item Fiscal subsidy for ultra-thin and ultra-white glass production line Land-use subsidy for ultra-thin and ultra-white glass production line project 0.45mm E-glass technology research and application projects Special funds for development Total	31 December 2014 5,062,500.00 2,412,944.94 2,423,469.21 750,000.00 10,648,914.15	Amount of new subsidies for the period	Amount recognized in Non- operating income for the period 506,250.00 22,466.90 116,721.50 31,250.00 676,688.40	Other movements	31 May 2015 Related to assets/ income 4,556,250.00 Related to assets 2,390,478.04 Related to assets 2,306,747.71 Related to income 718,750.00 Related to assets 9,972,225.75

(XXV) Operating income and operating cost

Item I. Income from principal operations Float glass II. Subtotal of other operations Raw material, water, electricity, technical services, etc. Total	January to May 2015 Income Cost 165,866,053.50 143,380,942.84 165,866,053.50 143,380,942.84 3,054,015.12 1,446,102.24 3,054,015.12 1,446,102.24 168,920,068.62 144,827,045.08	2014 Income Cost 377,940,618.39 266,876,441.15 377,940,618.39 266,876,441.15 4,674,621.77 3,379,081.51 4,674,621.77 3,379,081.51 382,615,240.16 270,255,522.66	2014 Income Cost 377,940,618.39 266,876,441.15 377,940,618.39 266,876,441.15 4,674,621.77 3,379,081.51 4,674,621.77 3,379,081.51 382,615,240.16 270,255,522.66
			270,255,522.66

– 66 –

(XXVI) Business tax and surcharges

Item Business tax City maintenance tax Education surcharges Others Total (XXVII) Selling expenses Item Staff’s salary and welfare Social insurance premium Depreciation expenses Material consumption Other selling expenses Total	January to May 2015 71,225.00 448,044.17 423,635.73 942,904.90 January to May 2015 1,981,090.36 470,706.82 151,486.00 220,283.15 617,076.72 3,440,643.05	2014 1,683,150.00 1,592,677.84 1,445,549.95 225.00
		4,721,602.79
		2014 5,434,787.72 1,166,909.98 380,567.29 562,667.23 1,584,012.96
		9,128,945.18

– 67 –

(XXVIII) Administration expenses

Item Staff’s salary and welfare Social insurance premium Housing accumulation fund Depreciation of fixed assets Amortization of intangible assets Intermediary engagement fees Business entertainment expenses Taxes Research and development fees Other administrative expenses Total	January to May 2015 6,953,777.48 2,432,966.83 322,712.64 1,583,463.99 914,856.15 2,686,083.00 219,630.90 2,055,708.14 4,667,254.57 4,534,518.88 26,370,972.58	2014 19,255,893.29 5,582,398.56 917,365.37 1,700,229.94 1,642,177.48 7,803,486.28 565,654.45 3,028,489.75 15,201,351.58 12,424,911.40
		68,121,958.10

(XXIX) Financial expenses

Item Interest expense Less: interest income Exchange losses Less: exchange income Interests of discounted bills Other expenses Total	January to May 2015 1,187,691.50 1,540,385.25 0.47 223,490.09 1,281,890.97 60,287.12 765,994.72	2014 723,176.04 5,598,805.78 59,576.95 348,705.65 8,233,851.97 270,836.86
		3,339,930.39

– 68 –

(XXX) Assets impairment losses

Item I. Losses on bad debts II. Losses from inventory impairments III. Impairment losses on fixed assets Total Investment income Category Income from disposal of long-term equity investment_(Note)_ Total	January to May 2015 520,460.91 11,552,666.66 12,073,127.57 January to May 2015	2014 3,820,919.70 18,505,308.18 1,678,826.89
		24,005,054.77
		2014 93,394,560.90
		93,394,560.90

(XXXI) Investment income

Note: Income from disposal of long-term equity investment represents the investment income from disposal by the Company of the 100% equity interest in Luoyang Luobo Industrial Co., Ltd. during this period.

– 69 –

(XXXII) Non-operating income

1. Breakdown of non-operating income

Item Total gains on disposal of non-current assets Including: Gain on disposal of fixed assets Income from debt restructuring Government grant Other gains Total	January to May 2015 50,000.00 1,065,988.40 80,325.48 1,196,313.88	2014 1,830,865.12 1,830,865.12 237,500.00 64,561,752.16 14,388,005.98 81,018,123.26	Amount recognized as current non- recurring gain or loss 50,000.00 1,065,988.40 80,325.48 1,196,313.88

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

Item Fiscal subsidies for the ultra-thin and ultra-white glass production line Subsidy for land use by the ultra-thin and ultra-white glass production line Special subsidy for “research and development of application technology” Awards for strategic creative products in national major new products Land income returns Awards for ultra-thin display glass substrate Other Total	January to May 2015 506,250.00 22,466.90 116,721.50 420,550.00 1,065,988.40	2014 Related to assets/income 1,215,000.00 Related to assets 53,920.56 Related to assets 280,131.60 Related to income 2,000,000.00 Related to income 60,012,700.00 Related to income 1,000,000.00 Related to income (Beng [2014] No. 93) 64,561,752.16

– 70 –

(XXXIII) Non-operating expenses

Item Total loss on disposal of non-current assets Including: Loss on disposal of fixed assets Indemnities, liquidated damages and penalties Other expenses Total Income tax expenses Item Current income tax based on tax and relevant regulations Deferred income tax expenses Total	January to May 2015 2014 Amount recognized as current non- recurring gain or loss 946,162.68 946,162.68 584,772.07 3,490,311.40 584,772.07 168,078.47 584,772.07 4,604,552.55 584,772.07 January to May 2015 2014 laws 1,589,306.98 12,156,452.36 674,378.51 -2,056,666.65 2,263,685.49 10,099,785.71	January to May 2015 2014 Amount recognized as current non- recurring gain or loss 946,162.68 946,162.68 584,772.07 3,490,311.40 584,772.07 168,078.47 584,772.07 4,604,552.55 584,772.07 January to May 2015 2014 laws 1,589,306.98 12,156,452.36 674,378.51 -2,056,666.65 2,263,685.49 10,099,785.71	Amount recognized as current non- recurring gain or loss 584,772.07
			584,772.07
	laws
		10,099,785.71

(XXXIV) Income tax expenses

IX. RELATED PARTY AND RELATED PARTY TRANSACTIONS

(I) Parent company of the Company

	Registered		Registered	Equity interest	Voting shares
Name of the parent company	address	Nature of business	capital	in the Company	in the Company
				(%)	(%)
China Luoyang Float Glass	Luoyang China	Production of glass, related	1,286,740,000.00	31.80	31.80
(Group) Company		raw materials and complete
		sets of equipment

Ultimate controller of the Company is China Building Materials Group Company of Limited.

– 71 –

(II) Subsidiaries of the Company

For details, please refer to Note “VII. Corporate Merger and Consolidated Financial Statements”.

(III) Other related parties of the Company

Name of other related parties

Relationship with the Company

Triumph Technology Group Company CLFG (Beijing) International Engineering Co., Ltd. Luoyang New Jingrun Engineering Glass Co., Ltd. Luoyang Jiaye Commerce and Trade Co., Ltd. Luoyang Luobo Logistics Co., Ltd.

Luoyang Luobo Glass Fibre Co., Ltd.

Luoyang Jingxin Ceramic Co. Ltd.

China Triumph International Engineering Group Co., Ltd. Anhui Bengbu Huayi Conductive Film Glass Co., Ltd. Henan Zhonglian Glass Co., Ltd.

Bengbu Glass Industry Design Institute

Anhui Fangxing Science and Technology Co., Ltd. Shenzhen Triumph Technology Engineering Co., Ltd. Triumph Bengbu Engineering and Technology Company Limited Jiangsu CNBM Environment Protection Research Institute Limited Sino-Italian CTIEC (Bengbu) Glass Cold-End Machinery Company Limited Bengbu Glass Industry Design Institute

Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd.

Controlling shareholder of Parent Company Wholly-owned subsidiary of Parent Company Controlling subsidiary of Parent Company Wholly-owned subsidiary of Parent Company Wholly-owned subsidiary of Parent Company Controlling subsidiary of Parent Company Controlling subsidiary of Parent Company Fellow company under the Group Fellow company under the Group Fellow company under the Group Fellow company under the Group Fellow company under the Group Fellow company under the Group Fellow company under the Group Fellow company under the Group Fellow company under the Group Fellow company under the Group Fellow company under the Group

– 72 –

(IV) Related party transactions

1. Purchase and sales of goods and provision and receiving of services

Name of related party	Content of related	January to	2014
	party transaction	May 2015
Purchase of goods/receiving of services:
Bengbu Glass Industry Design Institute	Raw materials	1,513,273.32	2,338,593.32
Triumph Bengbu Engineering and	Raw materials	9,478.63	9,401.71
Technology Company Limited
Sino-Italian CTIEC (Bengbu) Glass	Raw materials	33,893.17	39,263.25
Cold-End Machinery Company Limited
Huali Machinery Works of Bengbu	Raw materials	1,360,717.93	1,160,055.54
Glass Industry Design Institute
Bengbu Glass Industry Design Institute	Interest expense	267,777.78
Sales of goods/provision of services:
Anhui Bengbu Huayi Conductive Film	Float glass	12,154,970.44	31,910,667.95
Glass Co., Ltd
Anhui Bengbu Huayi Conductive Film	Float glass (trial operation		7,347,181.37
Glass Co., Ltd	period of production line
	of Bengbu Company)
Anhui Huaguang Photoelectricity	Float glass		990,009.95
Materials Technology Group Co., Ltd.
Anhui Huaguang Photoelectricity	Float glass (trial operation		1,729,545.51
Materials Technology Group Co., Ltd.	period of production line
	of Bengbu Company)
China Triumph International	Technological service	1,132,075.48	639,622.64
Engineering Group Co., Ltd.
China Luoyang Float Glass	Broken glass		257,214.36
(Group) Company
Anhui Fangxing Science and	Float glass	874,462.55	9,545,308.22
Technology Co., Ltd.
Luoyang New Jingrun Engineering	Float glass		1,871,584.05
Glass Co., Ltd.

– 73 –

2. Related party guarantees

					Guarantee
		Guarantee	Start date of	End date of	fulfilled
Guarantor	The guaranteed	amount	guarantee	guarantee	or not
China National Building	CLFG Longhai Electronic	15,200,000.00	1 February 2010	31 January 2017	No
Material Group Corporation	Glass Limited
China National Building	Luoyang Glass	84,816,000.00	1 February 2010	31 January 2017	No
Material Group Corporation	Company Limited
China National Building	Luoyang Glass	109,060,000.00	1 February 2010	31 January 2017	No
Material Group Corporation	Company Limited
China National Building	Luoyang Glass	126,920,000.00	1 February 2010	31 January 2017	No
Material Group Corporation	Company Limited
China National Building	Luoyang Glass	42,180,000.00	1 February 2010	31 January 2017	No
Material Group Corporation	Company Limited
China National Building	Luoyang Glass	38,000,000.00	1 February 2010	31 January 2017	No
Material Group Corporation	Company Limited
China National Building	Luoyang Glass	53,200,000.00	1 February 2010	31 January 2017	No
Material Group Corporation	Company Limited
China National Building	Luoyang Glass	45,000,000.00	5 November 2014	5 November 2015	No
Material Group Corporation	Company Limited
Bengbu Glass Industry	Bengbu China Building	5,000,000.00	17 July 2014	16 July 2015	No
Design Institute	Information Display
	Materials Co. Ltd.*
Bengbu Glass Industry	Bengbu China Building	5,000,000.00	22 July 2014	16 July 2015	No
Design Institute	Information Display
	Materials Co. Ltd.*
Bengbu Glass Industry	Bengbu China Building	7,930,000.00	22 April 2015	22 April 2016	No
Design Institute	Information Display
	Materials Co. Ltd.*
Bengbu Glass Industry	Bengbu China Building	10,000,000.00	4 January 2015	4 January 2016	No
Design Institute	Information Display
	Materials Co. Ltd.*
Bengbu Glass Industry	Bengbu China Building	10,000,000.00	19 March 2015	25 June 2016	No
Design Institute	Information Display
	Materials Co. Ltd.*

– 74 –

3. Transfer of assets of related parties

	Content of
	related party	January to
Related party	transaction	May 2015	2014
China Luoyang Float Glass	Transfer of		866,236.04
(Group) Company	fixed assets
Bengbu Glass Industry	Acquisition of		82,039.67
Design Institute	fixed assets
Triumph Bengbu Engineering and	Acquisition of		815,333.34
Technology Company Limited	fixed assets
Sino-Italian CTIEC (Bengbu) Glass	Acquisition of	19,384.62	3,381,508.55
Cold-End Machinery	fixed assets
Company Limited

4. Entrusted loans of related party

In 2014, bank loans granted to the Company as entrusted by CLFG totaled RMB10,000,000.00, and the interest paid by the Company during the period was RMB359,049.90. As at 31 May 2015, loan balance of the Company with CLFG was RMB10,000,000.00, and the interest paid by the Company during the period was RMB228,000.00.

5. Financial assistance of related parties

• i. In 2014, Triumph Technology Group Company paid a total of RMB106,500,000.00 on behalf of the Company to suppliers. From January to May 2015, RMB198,698,397.78 was paid on behalf of the Company in aggregate. As at 31 May 2015, balance of amount payable by the Company to Triumph Technology Group amounted to RMB65,000,000.00.

• ii. In 2014, CLFG paid a total of RMB1,500,000.00 on behalf of the Company to suppliers. From January to May 2015, RMB3,000,000.00 was paid on behalf of the Company in aggregate. As at 31 May 2015, balance of amount payable by the Company to CLFG amounted to RMB3,000,000.00.

– 75 –

6. Other related-party transactions

• (1) Connected transactions in relation to the smoke gas dust removal and denitration project for the production lines of Longhai and Longbo Company and its installation

On 14 November 2014, Longhai Company and Longbo Company entered into agreements with Jiangsu CNBM Environment Protection Research Institute Limited respectively, pursuant to which, Jiangsu CNBM Environment Protection Research Institute Limited agreed to provide project design and installation services for the purpose of the production line smoke gas dust removal and denitration project for Longhai Company and Longbo Company, respectively. Total contracted amount of Longhai Company was RMB5,200,000, and that of Longbo Company was RMB6,400,000. As at 31 May 2015, Longhai Company and Longbo Company has paid RMB1,810,000.00 in total.

• (2) As at 30 September 2013, Bengbu Company and Bengbu Glass Industry Design Institute entered into the Entrusted Operation Management Agreement, pursuant to which, Bengbu Company was entrusted to operate and manage production line of 150t/d pure oxygen combustion electronic information display ultra-thin substrates constructed by Bengbu Glass Industry Design Institute and related assets (including but not limited to land use rights, buildings under construction and machinery and equipments) without charges. The entrustment period was from the date of ignition and trail production of the project to the date of completion of transferring all assets of the project held by Bengbu Glass Industry Design Institute to Bengbu Company. During the entrustment period, Bengbu Company was entitled to conduct comprehensive operation and manage the project with receipt of revenue related to operation of the project and undertaking of relevant expenditures and expenses. In October 2014, Bengbu Glass Industry Design Institute made capital increase to Bengbu Company with production line of 150t/d pure oxygen combustion electronic information display ultra-thin substrates related assets and completed the assets transfer procedures.

– 76 –

(V) Accounts receivable/payable of related parties

1. Items of receivable

		31 May	2015	31 December	2014
		Carrying	Bad debt	Carrying	Bad debt
Item	Related party	amount	provision	amount	provision
Accounts	Anhui Bengbu Huayi	563,388.16		500,661.54
receivable	Conductive Film Glass
	Co., Ltd.
Accounts	Luoyang New Jingrun	1,349,753.33		1,519,753.33
receivable	Engineering Glass Co., Ltd
Accounts	Anhui Huaguang	1,689,079.90		1,689,079.90
receivable	Photoelectricity Materials
	Technology Group Co., Ltd.
Accounts	Anhui Fangxing Science and	127,645.77
receivable	Technology Co., Ltd.
Prepayments	Triumph Bengbu Engineering	33,296.00
	and Technology
	Company Limited
Other receivables	China Luoyang Float Glass	2,472,445.72		3,894,451.52
	(Group) Company
Other receivables	China Triumph International	1,650,000.00		1,650,000.00
	Engineering Group Co., Ltd.
Other receivables	CLFG (Beijing) International	82,796.95		82,796.95
	Engineering Co., Ltd.
Other receivables	Luoyang Jingxin Ceramic	3,000.00	3,000.00	3,000.00	3,000.00
	Co. Ltd.
Other receivables	Luoyang Luobo Glass Fibre	150,738.92		150,738.92
	Co., Ltd.

– 77 –

2. Item of payable

		31 May	31 December
Item	Related party	2015	2014
Accounts payable	Bengbu Glass Industry	358,762.88	1,286,716.77
	Design Institute
Accounts payable	Sino-Italian CTIEC (Bengbu)	753,725.56	1,104,693.85
	Glass Cold-End Machinery
	Company Limited
Accounts payable	Huali Machinery Works of Bengbu	1,074,816.12	1,058,416.65
	Glass Industry Design Institute
Accounts payable	Triumph Bengbu Engineering and		191,380.55
	Technology Company Limited
Payments received	Anhui Fangxing Science and	5,181,103.61	5,426,217.94
in advance	Technology Co., Ltd.
Payments received	Anhui Bengbu Huayi Conductive	347,185.00	347,185.00
in advance	Film Glass Co., Ltd.
Other payables	China Luoyang Float Glass	93,731,700.00	90,731,700.00
	(Group) Company
Other payables	Luoyang Jiaye Commerce and	6,300.00	6,300.00
	Trade Co., Ltd.
Other payables	Bengbu Glass Industry	5,538,882.76	5,265,077.69
	Design Institute
Other payables	China Triumph International	240,000.00	240,000.00
	Engineering Group Co., Ltd.
Other payables	Anhui Huaguang Photoelectricity		19,500.00
	Materials Technology
	Group Co., Ltd.
Other payables	Triumph Technology	65,000,000.00
	Group Company

X. CONTINGENCIES

As at 31 May 2015, the Group had no material contingent event to disclose.

XI. COMMITMENTS

As at 31 May 2015, the Group has no material undertaking to disclose.

XII. EVENTS AFTER BALANCE SHEET DATE

Nil

– 78 –

XIII. OTHER SIGNIFICANT EVENTS

As at 31 May 2015, litigation matters pending:

1. Ruyang Yufeng Mining Co., Ltd. sued the Company and Longhao Company for default on payment

Yufeng Company and the Company entered into a sales and purchase agreement, pursuant to which, Yufeng Company provides silicon sands to Longhao Company. During the process of transaction, RMB4,657,795.60 was left unpaid. Yufeng Company appealed to People’s Court of Ruyang County, Henan Province demanding the Company to pay the debt and interest. On 10 April 2013, People’s Court of Ruyang County issued the civil judgment (2013) Ru Min Chu Zi No. 5 ordering the Company to pay Yufeng Company RMB4,657,795.6 for goods and the accrued interest. As at 31 May 2015, the remaining amount of RMB1,357,795.61 was still in the process of performance.

2. Ning’an Huayuan Trading Co., Ltd. sued the Company for sales and purchase contract disputes

During the period of 2009 to 2010, Huayuan Company signed multiple copies of Sales Contract with the Company reaching an agreement that Huayuan Company should provide pulverized coal to the Company. The Company still has partial unpaid payment for goods. On 11 April 2012, Huayuan Company received two assignment of debt from Yima Huayi Trading Co., Ltd. On 30 May 2012, Huayuan Company appealed to Luoyang Intermediate People’s Court demanding the Company to pay RMB9,904,231.3 for goods and interest. The Company lodged an appeal after losing the lawsuit. On 10 December 2013, Henan High People’s Court made a final judgment ordering the Company to pay RMB9,754,231.3 debt and interest. As at 31 May 2015, the remaining amount of RMB2,960,544.93 was still in the process of performance.

3. Xingye Glass Raw Materials Plant in Koudian Town, Yanshi City sued the Company for sales and purchase contract disputes

Xingye Company provided raw silicon sand to the Company and the Company has partial unpaid payment for goods. In September 2013, Xingye Company appealed to People Court of Xigong District demanding the Company to pay RMB2,074,298.01 for goods and interest. On 23 December 2013, People’s Court of Xigong District entered a judgment ordering the Company to pay RMB2,074,298.01 million for goods and interest. As at 31 May 2015, there was still RMB874,298.01 in the process under performance.

– 79 –

XIV. SUPPLEMENTARY INFORMATION

(I) Non-recurring profit and loss

Item 1. Profit/loss on disposal of non-current assets, including write-off of provision for asset impairment 2. Government subsidies (except for the grants which are closely related to the Company’s business and have the standard amount and quantities in accordance with the national standard) attributable to profits and losses for the period 3. Profit/loss from debt restructuring 4. Other non-operating income and expenses except as listed above 5. Effect of income taxation Total	January to May 2015 1,065,988.40 50,000.00 -504,446.59 -84,598.68 526,943.13	2014 Note 94,279,263.34 64,561,752.16 237,500.00 10,729,616.11 -203,678.01 169,604,453.60

– 80 –

(II) Earnings per share

		Earnings	per share
Profit for the	Basic earnings		Diluted earnings
reporting period	per share		per share
	January to		January to
	May 2015	2014	May 2015	2014
Net profit attributable
to holders of ordinary
shares of the Company	-0.0411	0.3160
Net profit attributable
to holders of ordinary
shares of the Company
after deducting
extraordinary item	-0.0421	-0.0133

Luoyang Glass Company Limited 10 August 2015

– 81 –