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RoboSense Technology Co., Ltd Interim / Quarterly Report 2014

Aug 27, 2014

50628_rns_2014-08-27_a37d9b7e-874a-4043-b6e8-4598b6f12024.pdf

Interim / Quarterly Report

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

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SUMMARY OF 2014 INTERIM REPORT

1 IMPORTANT NOTICE

  • 1.1 This interim report summary is extracted from the interim report. Investors should carefully read the full text of the interim report as published on the websites designated by China Securities Regulatory Commission including the website of the Shanghai Stock Exchange for details.

— 1 —

1.2 Basic information

Stock abbreviation Luoyang Glass Luoyang Glass
Stock code 600876 01108
Place of listing Shanghai Stock Exchange The Stock Exchange of
Hong Kong Limited
Secretary to the Board Securities affairs
representative
Name Wu Zhixin Zhao Zhiming (趙志明)
Correspondence Secretary Office of Secretary Office of
address the Board of Luoyang Glass the Board of Luoyang Glass
Company Limited, Company Limited,
No. 9, Tang Gong Zhong Lu, No. 9, Tang Gong Zhong Lu,
Xigong District, Xigong District,
Luoyang City, Luoyang City,
Henan Province, Henan Province,
the PRC the PRC
Telephone 86-379-63908637, 63908588 86-379-63908833
Facsimile 86-379-63251984 86-379-63251984
E-mail [email protected] [email protected]

— 2 —

2. MAJOR FINANCIAL DATA AND CHANGES IN SHAREHOLDERS

2.1 Major Accounting data and financial indicators

Unit: RMB

Increase/decrease
as at 30 June
As at As at
2014 from
30 June 31 December
the beginning
2014 2013 of the year
(%)
Net assets attributable to
shareholders of the Company 65,647,606.43 33,306,058.69 97.10
Total assets 1,262,238,557.09 1,226,528,319.88 2.91
Increase/decrease
for this reporting
period from
Reporting Corresponding
the corresponding
period period last year period last year
(%)
Net cash flow from operating activities 6,794,700.09 –5,614,662.34 Not Applicable
Operating income 265,633,853.92 133,317,678.23 99.25
Net profit attributable to shareholders
of the Company 32,267,809.50 –47,311,964.99 Not Applicable
Net profit attributable to
shareholders of the Company
after non-recurring items –61,870,608.82 –49,157,900.66 Not Applicable
Basic earnings per share_(RMB/share)_ 0.0645 –0.0946 Not Applicable
Diluted earnings
per share_(RMB/share)_ 0.0645 –0.0946 Not Applicable
Weighted average return on net assets 65.27 –43.62 Increased by 108.89
percentage points

— 3 —

2.2 Shareholdings of the top 10 shareholders

0

Total number of shareholders There were 17,930 shareholders of the Company as at the end of in total, including 17,878 holders of the reporting period A shares and 52 holders of H shares

Total number of holders of preferential shares with reinstated voting rights as at the end of the reporting period

Shareholdings of the top 10 shareholders

Increase/ Total number Number of
decrease of shares held shares subject Number of shares
during the as at the end of to trading pledged or frozen
reporting the reporting Shareholding moratorium Status of Nature of
Full name of shareholder period period Percentage held shares Number shareholder
(%)
HKSCC Nominees Limited 0 247,848,998 49.57 0 Unknown Overseas
legal person
China Luoyang Float Glass 0 159,018,242 31.80 0 Pledged 159,018,242 State-owned
(Group) Company Limited legal person
Zhang Lixin –4,944 2,760,000 0.55 0 Unknown Domestic
natural person
Mao Jianghui (毛江慧) –11,000 2,092,599 0.42 0 Unknown Domestic
natural person
Ji Haibin (紀海濱) –95,338 1,266,454 0.25 0 Unknown Domestic
natural person
Liu Yujun (劉宇軍) +167,313 1,022,613 0.20 0 Unknown Domestic
natural person
Beijing Daiwei Debang 0 1,021,853 0.20 0 Unknown Domestic
Investment Consultation legal person
Co., Ltd.
(北京代維德邦投資咨詢
有限公司)
Zhang Ruiying (張瑞潁) +330,000 1,000,000 0.20 0 Unknown Domestic
legal person
China Everbright Bank— +850,100 850,100 0.17 0 Unknown Other
Penghua Assets Longqi
Chitu Quantitative Hedge
Asset Management Plan
(光大銀行—鵬華資產
龍旗赤兔量化對沖資產
管理計劃)
Zhang Wenming (張文明) –280,000 590,000 0.12 0 Unknown Domestic
natural person

— 4 —

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

Number of shares
held not subject
to trading Type and number of shares
Name of shareholder moratorium Type Number
HKSCC Nominees Limited 247,848,998 Overseas listed 247,848,998
foreign shares
China Luoyang Float Glass 159,018,242 Ordinary shares 159,018,242
(Group) Company Limited denominated in RMB
Zhang Lixin (張立新) 2,760,000 Ordinary shares 2,760,000
denominated in RMB
Mao Jianghui (毛江慧) 2,092,599 Ordinary shares 2,092,599
denominated in RMB
Ji Haibin (紀海濱) 1,266,454 Ordinary shares 1,266,454
denominated in RMB
Liu Yujun (劉宇軍) 1,022,613 Ordinary shares 1,022,613
denominated in RMB
Beijing Daiwei Debang Investment 1,021,853 Ordinary shares 1,021,853
Consultation Co., Ltd. denominated in RMB
(北京代維德邦投資咨詢有限公司)
Zhang Ruiying (張瑞潁) 1,000,000 Ordinary shares 1,000,000
denominated in RMB
China Everbright Bank—Penghua Assets 850,100 Ordinary shares 850,100
Longqi Chitu Quantitative Hedge Asset denominated in RMB
Management Plan
(光大銀行—鵬華資產龍旗赤兔量化
對沖資產管理計劃)
Zhang Wenming (張文明) 590,000 Ordinary shares 590,000
denominated in RMB

— 5 —

Explanation on connected There are no connected parties or persons acting in relationship or action concert as defined by Regulations for Disclosure of acting in concert among Changes in Shareholding of Listed Companies（《上市 the aforesaid 公司股東持股變動信息披露管理辦法》）issued by shareholders: CSRC among the top ten shareholders of the Company, including China Luoyang Float Glass (Group) Company Limited and other shareholders of circulating shares. The Company is not aware of any parties acting in concert or any connected relationship among other shareholders of circulating shares.

Note:

  1. HKSCC Nominees Limited held shares on behalf of its clients and the Company has not been notified by HKSCC Nominees Limited that there were any single shareholders of H shares who held 10% or above of the Company’s total share capital;

  2. Save as disclosed above, as at 30 June 2014, there were no persons who have any interests or short position in any shares or underlying shares in the equity derivatives of the Company that is recorded in the register of interest kept under section 336 of the Securities and Futures Ordinance of Hong Kong.

2.3. Changes in controlling shareholder and ultimate controller of the Company

Applicable 3 Not Applicable

— 6 —

III. MANAGEMENT DISCUSSION AND ANALYSIS

3.1 Discussion and Analysis on Business Operations during the Reporting Period

In the first half of 2014, the domestic glass market was trapped into the sustained downturn, especially the ex-factory price of manufacturing enterprises hit the bottom since May 2014 which led to the expansion of the scale of loss. Confronted with the adverse market situation, the Company refined target management through implementation of technical innovation. It also conducted management improvement and other measures to maintain the overall operation situation. Meanwhile, the Company accelerated adjustment on products structure, technical advance as well as transformation and upgrading to fight against the market competition and challenges in an active manner.

The Company recorded operating revenue of RMB265,633,900 for the reporting period, representing a year-on-year increase of 99.25% from RMB133,317,700 for the corresponding period of last year. The Company recorded operating profit of RMB29,359,200, to make up the deficit and achieved a surplus from RMB-51,522,200 for the corresponding period of last year. Net profit attributable to shareholders of the Company amounted to RMB32,267,800, to make up the deficit and achieved a surplus from RMB-47,312,000 for the corresponding period of last year. Basic earnings per share attributable to shareholders of the Company were RMB0.0645.

— 7 —

3.2 Analysis of Principal Businesses

3.2.1 Analysis of changes in relevant items in the financial statements of the Company

Unit: RMB

January– January–
Item June 2014 June 2013 Change
(%)
Operating revenue 265,633,853.92 133,317,678.23 99.25
Operating costs 250,301,099.35 110,078,534.75 127.38
Selling expenses 12,629,073.36 12,127,616.18 4.13
Administration expenses 51,687,832.01 57,430,149.55 –10.00
Financial expenses 5,685,689.96 5,292,810.73 7.42
Net cash flow from
operating activities 6,794,700.09 –5,614,662.34 N/A
Net cash flow from
investment activities 36,718,940.00 –5,915,833.85 N/A
Net cash flow from
financing activities –23,799,531.17 –40,720,865.67 N/A
R&D expenditures 7,132,893.57 5,551,597.10 28.48

Reasons for the changes:

  • (1) Operating revenue for the period increased by 99.25% year-on-year, mainly due to the increase in sales volume as a result of the increase in production capacity in the reporting period;

  • (2) Operating costs for the period increased by 127.38% year-on-year, mainly due to the increase in sales volume as a result of the increase in production capacity in the reporting period;

  • (3) Selling expenses for the period increased by 4.13% year-on-year, mainly due to the growth in wages of salesmen and related expenses as a result of increased production capacity;

— 8 —

  • (4) Administrative expenses for the period decreased by 10.00% yearon-year, mainly due to the fact that the depreciation expenses of a subsidiary’s production line which put back on production were no longer charged to administrative expenses;

  • (5) Financial expenses for the period increased by 7.42% year-on-year, mainly due to an increase in discounting charges;

  • (6) Net cash inflow from operating activities increased by RMB12,409,400 year-on-year, mainly due to the increase in revenue as a result of the increase in sales volume in the reporting period;

  • (7) Net cash inflow from investment activities increased by RMB42,634,800 year-on-year, mainly attributable to the collection of payments in respect of land acquisition for reserve of previous years and the payments for disposal of equity interests in subsidiaries in the reporting period;

  • (8) Net cash outflow from financing activities decreased by RMB16,921,300, mainly due to the decrease in net expense on bills due for payment and relevant deposit thereof in the reporting period as compared to the same period last year.

  • 3.2.2 Explanations for other substantial changes in the composition of profits or source of profits of the Company

  • (1) Impairment loss on assets for the period showed a year-on-year increase of RMB5,092,700, mainly due to the provision for depreciation of inventories with the signs of impairment

  • (2) Investment income for the period presented an increase of 3,774.37% on a year-on year basis, which was mainly due to the revenue from disposal of the equity interest in Luobo Industrial Co., Ltd. in the period.

— 9 —

3.3 Analysis of Operations by Industry, Product or Region

3.3.1 Principal operations by industry and by product

Principal operations by industry

Unit: Yuan Curreny: RMB

Year-on-year Year-on-
increase/ Year-on-year
year increase/
decrease increase/ decrease in
Operating Operating Gross profit in operating decrease in
gross profit
By industry revenue costs margin revenue operating costs
margin
(%) (%) (%) (%)
Float glass 248,169,292.49 240,989,045.80 2.89 128.84 144.66 Decreased by
6.28 percentage
points
Silica sand 12,374,634.96 6,981,955.80 43.58 –16.06 7.82 Decreased by
12.49 percentage
points

Principal operations by product

Unit: Yuan Curreny: RMB

Year-on-year Year-on-
increase/ Year-on-year year increase/
decrease increase/ decrease in
Gross in operating decrease in gross profit
By product Operating revenue Operating costs profit margin revenue operating costs
margin
(%) (%) (%) (%)
Float glass 248,169,292.49 240,989,045.80 2.89 128.84 144.66 Decreased by
6.28 percentage
points
Including: ultra-thin glass 157,252,578.28 121,667,177.39 22.63 45.01 23.52 Increased by
13.46 percentage
points
Common glass 90,916,714.21 119,321,868.41 –31.24
Silica sand 12,374,634.96 6,981,955.80 43.58 –16.06 7.82 Decreased by
12.49 percentage
points

— 10 —

Explanations on principal operations by industry and by product: there was no sales of or revenue from sales of common glass because the production lines of common glass were shut down due to upgrading and transformation in the same period last year.

3.3.2 Principal operations by region

Unit: Yuan Curreny: RMB

Region
Domestic
Overseas
Total		 Operating
revenue
Year-on-year
increase/decrease
in operating
revenue
(%)
260,543,927.45
111.50
0
0
260,543,927.45
111.50

3.4 Analysis of core competitiveness

During the reporting period, the Company organized the production of the 0.33mm ultra-thin float glass product, which was the thinnest glass in the PRC, and launched some products into the market, which further increased the varieties of high added-value products of the Company. This has further enhanced its variety advantage, thus strengthening the competitiveness of the Company’s products.

There was no significant change in other aspects of the Company’s competitiveness during the reporting period.

3.5 Analysis of investment

3.5.1 Overall analysis of external equity investment

During the reporting period, there was no increase or decrease in external investment of the Company.

— 11 —

Shareholdings in financial enterprises are as follows:

Percentage of Percentage of Carrying Profit or Change in
Initial shareholding at shareholding at amount at loss during owner’s equity
amount of the beginning the end the end of the reporting during the Accounting Sources
Name of investee investment of the period of the period the period period reporting period subject of shares
(RMB) (%) (%) (RMB) (RMB) (RMB)
Sanmenxia Bank 7,000,000.00 2.92 2.92 7,000,000.00 0 Long-term Purchase
Holdings Limited equity
（三門峽銀行股份 investment
有限公司）
Total 7,000,000.00 2.92 2.92 7,000,000.00 0 Long-term Purchase
equity
investment

Explanation on equity interests held in financial enterprises: The Company has not received any dividend during the reporting period.

3.5.2 Entrusted wealth management and derivative investment with non-financial corporations

  • (1) Entrusted wealth management

During the reporting period, there was no entrusted wealth management activity.

  • (2) Entrusted loans

The Company did not have any external entrusted loans, while it provided entrusted loans to its subsidiaries. As at 30 June 2014, the balance of the entrusted loans provided by the Company through banks to its subsidiaries amounted to RMB416,969,000.00.

  • (3) Other wealth management and derivative investment

During the reporting period, there was no other wealth management and derivative investment activity.

— 12 —

3.5.3 Use of proceeds from fundraisings

N/A

3.5.4 Analysis of major subsidiaries and investee companies

Unit: Yuan Curreny: RMB

Major products Registered Total
Company name Industry or services capital assets Net assets Net profit
(RMB) (RMB) (RMB) (RMB)
CLFG Longmen Glass Building Manufacture of 20,000,000.00 226,898,808.16 -352,932,265.69 -23,441,465.16
Company Limited materials float sheet glass
CLFG Longfei Glass Building Manufacture of 74,080,000.00 79,008,139.98 -196,948,713.20 -8,269,222.94
Company Limited materials float sheet glass
Yinan Mineral Products Co., Ltd. Building Mining, processing and 28,000,000.00 45,070,458.55 9,068,842.60 200,999.10
（沂南華盛礦實業有限公司） materials sales of quartz sand
CLFG Longhai Electronic Building Manufacture of 60,000,000.00 372,344,431.50 318,100,345.19 19,476,908.40
Glass Co., Ltd. materials float sheet glass
and electronic glass
CLFG Longhao Glass Co., Ltd. Building Manufacture of 50,000,000.00 320,069,463.97 -177,736,303.99 -52,072,502.70
materials float sheet glass
CLFG Longxiang Glass Co., Ltd. Building Manufacture of 50,000,000.00 73,597,388.68 -41,686,883.95 -6,166,243.47
materials float sheet glass
Dengfeng CLFG Silicon Co., Ltd. Building Sales of silica sand 13,000,000.00 10,323,345.96 10,277,905.58 -310,830.05
materials
Dengfeng Hongzhai Silicon Co., Ltd. Building Sales of silica sand 2,050,000.00 10,241,564.06 379,915.35 -51,116.65
materials
Luoyang Luobo Furuida Commerce Co., Ltd.
Building		 Sales of glass 500,000.00 45,228,365.55 -283,041.09 -782,736.76
（洛陽洛玻福睿達商貿有限公司） materials and raw materials

3.5.5 Projects financed by non-raised capital

N/A

— 13 —

3.5.6 Others

(1) Bank and other loans

  • a. Short-term loans: The balance at the beginning of the year amounting to RMB50,696,800 has been repaid in the reporting period and there is no balance as at the end of the reporting period.

  • b. Long-term loans: The Company’s long-term loans are bank loans. The balance of long-term loans as at the end of the reporting period amounted to RMB529,299,552.93, including RMB46,347,526.35 due within one year.

  • (2) Liquidity and capital resources

As at 30 June 2014, the Group had cash and cash equivalents of RMB48,032,274.30, including US dollar deposits of RMB115,688.55 (as at 31 December 2013: RMB113,714.38), HK dollar deposits of RMB5,731.16 (as at 31 December 2013: RMB5,630.75) and Euro deposits of RMB5.10 (as at 31 December 2013: RMB5.06). The total cash and cash equivalents increased by RMB19,716,164.20 as compared with RMB28,316,110.10 as at 31 December 2013. Cash inflows of the Group in the current period mainly came from sales revenue during the reporting period, collection of outstanding payments in respect of land acquisition for reserve in the period and gains on equity interest from disposal of subsidiary, which were mainly used as working capital and for repayment of bank loans.

— 14 —

(3) Gearing ratio

Gearing ratio was 1,869% for the period as compared with 1,411% for the same period last year.

  • (4) Contingent liabilities

At 30 June 2014, the bills that the Group had discounted or endorsed but still unexpired amounted to RMB380,016,108.01.

  • (5) Risk of exchange rate fluctuations

The Group’s assets, liabilities and transactions are denominated in Renminbi. Therefore, fluctuations in foreign exchange rate do not have material impacts on the Group.

3.6 Business Outlook for the Second Half of 2014

In 2014, influenced by the economic environment in the PRC of structure adjustment and slow growth, the demand in downstream was low, and the support of the government on the real estate industry is damping. The increase in environmental costs resulted in the decrease of income of manufacturing enterprises. Accordingly, they would bear more operating pressure. In addition, due to the composition of various factors such as the severe overcapacity, structure adjustment, actual pressure of transformation and upgrading and etc., the glass market in 2014 was not optimistic judging from the actual operation in the first of 2014. The second half of the year is the traditional peak season with high demand in building material products. Therefore, it is expected that the absolute demand volume will increase as compared to the first half of the year, which will ease the price decline speed and pressure to some extent.

In the second half of the year, the Company will stick to the decisions and demand of the Board to proactively fight against the severe situation and challenges with the core strategy of continuous persevere in the market and the major instrument of structure adjustment. Accordingly, it will guarantee the annual operation scheme and working target.

— 15 —

  • Coordinate controlling shareholders, de facto controllers and intermediary institutions in an active manner to promote the asset reorganization projects, accelerate the implementation of project schemes and promote the subsequent relevant works.

  • Further increase the marketing promotion of 0.33mm and 0.40mm glass to maintain the steady increase of sales and stabilized profitability. Continuously enhance the market competitiveness of electronic glass business, give full play to the product advantages and synergy effect to strengthen market control capability and continuously increase its market speaking right.

  • Increase and stabilize the product quality in each production line of its subsidiaries, increase the total rate of finished products to decrease production costs, increase gross profit margin and expand profit scales.

  • Enhance corporate management and control, continuously consolidate management and integration results, optimize resource allocation mechanism and promote human resources management.

  • Deepen compliance and internal control management to prevent various risks in an effective manner and increase regulatory operation level.

3.7 Other Disclosures

3.7.1 Repurchase, Sale and Redemption of Shares

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

3.7.2 Audit Committee

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

— 16 —

3.7.3 Compliance with the Corporate Governance Code

During the reporting period, the Company complied with the Code on Corporate Governance Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange.

3.7.4 Compliance with the Model Code

Having made specific enquires to all Directors, the Company confirmed all Directors have complied with the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) set out in Appendix 10 to the Listing Rules during the reporting period. In respect of the securities transactions by the Directors, the code of conduct adopted by the Company is no less exacting than the Model Code.

IV. RELATED MATTERS INVOLVING FINANCIAL STATEMENTS

  • 4.1 In the reporting period, there was no change in accounting policies, accounting estimates and accounting methods.

  • 4.2 In the reporting period, there were no major accounting error corrections that need retrospective restatements.

  • 4.3 The consolidated scope changed as compared with the recent annual report.

As at 31 December 2013, the Company entered into the Equity Transfer Contract with Luoyang Tianyuan Real Estate Co., Ltd. (洛陽天元置業有限公司), pursuant to which, the Company transferred 100% equity interests in Luoyang Luobo Industrial Co., Ltd. (洛陽洛玻實業有限公司) to Luoyang Tianyuan Real Estate Co., Ltd. at a consideration of RMB122 million. The relevant transfer procedures were completed in February 2014. Therefore, Luoyang Luobo Industrial Co., Ltd. will not be consolidated into the Company.

— 17 —

Consolidated Balance Sheet

Prepared by: Luoyang Glass Company Limited
30 June 2014
Monetary unit: RMB
Item
30 June 2014
Current assets:
Bank balance and cash
248,052,274.30
Balances with clearing companies
Placements with banks and other
financial institutions
Held-for-trading financial assets
Bills receivable
990,000.00
Accounts receivable
18,219,744.20
Prepayments
17,992,824.92
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves
receivable
Interest receivable
Dividends receivable
Other receivables
40,267,736.06
Financial assets purchased
under agreements to resell
Inventories
213,932,670.85
Non-current assets due
within one year
Other current assets
Total current assets
539,455,250.33		 31 December 2013
128,509,961.33
39,799,612.49
29,651,547.60
13,806,820.85
81,916,322.40
200,349,541.58
494,033,806.25

— 18 —

Non-current assets:
Entrusted loans and advances
granted
Available-for-sale financial assets
Held-to-maturity investments
Long-term receivables
Long-term equity investments
Investment properties
Fixed assets
Construction in progress
Construction materials
Disposal of fixed assets
Biological assets for production
Fuel assets
Intangible assets
Development expenses
Goodwill
Long-term deferred expenses
Deferred income tax assets
Other non-current assets
Total non-current assets
Total assets		 47,180,271.51
7,000,000.00
607,786,511.83
2,139,957.20
560,049.54
53,026,564.28
540,000.00
2,437,064.61
2,112,887.79
722,783,306.76
1,262,238,557.09		 0.00
7,000,000.00
644,340,372.61
2,139,957.20
506,186.30
73,958,045.12
0.00
2,437,064.61
2,112,887.79
732,494,513.63
1,226,528,319.88

— 19 —

Current liabilities:
Short-term loans
Loans from central bank
Deposit taking and deposit in
inter-bank market
Placements from banks and other
financial institutions
Held-for-trading financial
liabilities
Bills payable
Accounts payable
Payments received in advance
Disposal of repurchased
financial assets
Handling charges and
commissions payable
Staff remuneration payables
Taxes payable
Interest payable
Dividends payable
Other payables
Reinsurance accounts payable
Reserve for insurance contracts
Customer deposits for
trading in securities
Customer deposits
for underwriting
Non-current liabilities due
within one year
Other current liabilities
Total current liabilities		 0.00
250,000,000.00
306,022,998.81
63,860,214.95
66,112,135.32
–6,510,791.80
55,511,477.91
47,616,446.91
782,612,482.10		 50,696,833.33
150,000,000.00
282,538,381.85
41,704,096.40
59,538,138.48
–7,987,198.97
126,044,622.62
47,612,486.96
750,147,360.67

— 20 —

Non-current liabilities
Long-term loans 482,952,026.58 506,104,010.11
Debentures payable
Long-term payables
Specific payables
Accrued liabilities
Deferred income tax liabilities
Other non-current liabilities 9,404,519.67 10,179,045.75
Total non-current liabilities 492,356,546.25 516,283,055.86
Total liabilities 1,274,969,028.35 1,266,430,416.53
Owners’ equity:
Share capital 500,018,242.00 500,018,242.00
Capital reserve 857,450,406.90 857,450,406.90
Less: Treasury shares
Special reserve 441,632.76 367,894.52
Surplus reserve 51,365,509.04 51,365,509.04
General risk provision
Retained earnings –1,343,628,184.27 –1,375,895,993.77
Currency translation differences
Total equity attributable to the
owners of the Company 65,647,606.43 33,306,058.69
Minority interests –78,378,077.69 –73,208,155.34
Total owners’ equity –12,730,471.26 –39,902,096.65
Total liabilities and
owners’ equities 1,262,238,557.09 1,226,528,319.88
Person in charge of
Legal representative: Chief accountant: accounting department:
Ma Liyun Sun Lei Chen Jing

— 21 —

Balance Sheet of the Company Prepared by: Luoyang Glass Company Limited 30 June 2014 Monetary unit: RMB

Item
Current assets:
Bank balance and cash
Held-for-trading financial assets
Bills receivable
Accounts receivable
Prepayments
Interest receivable
Dividends receivable
Other receivables
Inventories
Non-current assets due
within one year
Other current assets
Total current assets		 30 June 2014
201,025,825.06
0.00
549,814,592.32
10,607,139.51
303,389,025.43
5,774,988.43
1,070,611,570.75		 31 December 2013
100,484,846.41
37,380,000.00
536,576,422.25
1,099,223.51
291,258,468.88
5,787,785.18
972,586,746.23

— 22 —

Non-current assets:
Available-for-sale financial assets
Held-to-maturity investments
Long-term receivables
Long-term equity investments
Investment properties
Fixed assets
Construction in progress
Construction materials
Disposal of fixed assets
Biological assets for production
Fuel assets
Intangible assets
Development expenses
Goodwill
Long-term deferred expenses
Deferred income tax assets
Other non-current assets
Total non-current assets
Total assets		 139,969,000.00
47,180,271.51
52,597,961.54
4,726,119.90
443,778.51
6,968,413.54
540,000.00
252,425,545.00
1,323,037,115.75		 139,969,000.00
0.00
92,519,028.76
5,035,983.24
443,778.51
7,080,505.96
0.00
245,048,296.47
1,217,635,042.70

— 23 —

Current liabilities:
Short-term loans
Held-for-trading
financial liabilities
Bills payable
Accounts payable
Payments received in advance
Staff remuneration payables
Taxes payable
Interest payable
Dividends payable
Other payables
Non-current liabilities due
within one year
Other current liabilities
Total current liabilities
Non-current liabilities:
Long-term loans
Debentures payable
Long-term payables
Specific payables
Accrued liabilities
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities		 0.00
250,000,000.00
88,471,456.73
60,877,067.71
39,877,653.88
3,288,701.71
194,796,579.88
43,467,526.35
680,778,986.26
452,792,026.58
452,792,026.58
1,133,571,012.84		 50,696,833.33
150,000,000.00
105,199,176.11
39,196,282.16
35,821,245.04
678,566.99
205,350,299.14
43,463,566.40
630,405,969.17
474,504,010.11
474,504,010.11
1,104,909,979.28

— 24 —

Owners’ equity:
Share capital 500,018,242.00 500,018,242.00
Capital reserve 891,129,782.23 891,129,782.23
Less: Treasury shares
Special reserve
Surplus reserve 51,365,509.04 51,365,509.04
General risk provision
Retained earnings –1,253,047,430.36 –1,329,788,469.85
Total owners’ equity 189,466,102.91 112,725,063.42
Total liabilities and
owners’ equities 1,323,037,115.75 1,217,635,042.70
Person in charge of
Legal representative: Chief accountant:
accounting department:
Ma Liyun Sun Lei Chen Jing

— 25 —

Consolidated Income Statement Prepared by: Luoyang Glass Company Limited January–June 2014 Monetary unit: RMB

January–June January–June
Item 2014 2013
I. Total operating revenue 265,633,853.92 133,317,678.23
Including: Operating revenue 265,633,853.92 133,317,678.23
Interest income
Premiums earned
Handling charges and
commission income
II. Total operating costs 329,669,173.19 187,250,455.91
Including: Operating costs 250,301,099.35 110,078,534.75
Interest expenses
Handling charges and
commission expenses
Surrender payment
Net expenditure for
compensation payments
Net provision for insurance
contracts
Policyholder dividend expenses
Reinsurance costs
Business taxes and surcharges 4,272,807.91 2,321,344.70
Selling expenses 12,629,073.36 12,127,616.18
Administrative expenses 51,687,832.01 57,430,149.55
Finance expenses 5,685,689.96 5,292,810.73
Impairment loss on assets 5,092,670.60 0.00
Others

— 26 —

Add: Gains from changes in fair value Gains from changes in fair value
(losses are represented by “–”)
Investment income
(losses are represented by “–”) 93,394,560.90 2,410,572.50
Including: Gains from investment
in associates and joint ventures
Gains from currency exchange
(losses are represented by “–”)
III. Operating profit (loss is represented by “–”) 29,359,241.63 –51,522,205.18
Add: Non-operating income 2,228,942.66 2,897,208.34
Less: Non-operating expenses 1,054,742.01 872,349.99
Including: Loss from disposal of
non-current assets 0.00 327,425.21
IV. Total profit (total loss is represented by “–”) 30,533,442.28 –49,497,346.83
Less: Income tax expenses 3,503,621.19 2,813,316.51
V. Net profit (net loss is represented by “–”) 27,029,821.09 –52,310,663.34
Including: Net profit attributable to
the owners of the Company 32,267,809.50 –47,311,964.99
Minority interests –5,237,988.41 –4,998,698.35
VI. Earnings per share
(1) Basic earnings per share
(RMB/share) 0.0645 –0.0946
(2) Diluted earnings per share
(RMB/share) 0.0645 –0.0946
VII. Other comprehensive income
VIII. Total comprehensive income 27,029,821.09 –52,310,663.34
Including: Total comprehensive income
attributable to owners
of the Company 32,267,809.50 –47,311,964.99
Total comprehensive income
attributable to minority interests –5,237,988.41 –4,998,698.35
Person in charge of
Legal representative: Chief accountant: accounting department:
Ma Liyun Sun Lei Chen Jing

— 27 —

Income Statement of the Company Prepared by: Luoyang Glass Company Limited January–June 2014 Monetary unit: RMB

January–June January–June
Item 2014 2013
I. Operating revenue 294,388,398.98 106,921,897.89
Less: Operating costs 289,429,370.11 104,504,140.88
Business taxes and surcharges 2,111,965.93 676,375.19
Selling expenses 1,271,732.29 957,037.09
Administrative expenses 10,708,303.93 16,048,210.85
Finance expenses –3,312,173.01 438,065.12
Impairment loss on assets
Others
Add: Gains from changes in fair value
Investment income 83,302,931.27 10,884,243.90
Including: Gains from investment in
associates and joint ventures
Gains from currency exchange
(losses are represented by “–”)
II. Operating profit 77,482,131.00 –4,817,687.34
Add: Non-operating income 278,903.85 402,543.95
Less: Non-operating expenses 1,019,995.36 437,425.21
Including: Loss from disposal of
non-current assets 0.00 327,425.21

— 28 —

III. Total profit 76,741,039.49 –4,852,568.60 Less: Income tax expenses IV. Net profit 76,741,039.49 –4,852,568.60 V. Earnings per share (1) Basic earnings per share (RMB/share) (2) Diluted earnings per share (RMB/share) VI. Other comprehensive income VII. Total comprehensive income 76,741,039.49 –4,852,568.60 Person in charge of Legal representative: Chief accountant: accounting department: Ma Liyun Sun Lei Chen Jing

— 29 —

Consolidated Cash Flow Statement Prepared by: Luoyang Glass Company Limited January–June 2014 Monetary unit: RMB

January–June January–June
Item 2014 2013
I. Cash flows from operating activities:
Cash received from sale of goods
or rendering of services 140,636,459.24 78,255,170.74
Net increase in customer
and interbank deposits
Net increase in loans from central bank
Net increase in loans from other
financial institutions
Cash received from premiums under
original insurance contract
Net cash received from reinsurance business
Net increase in deposits of policy
holders and investment
Net increase in disposal of held-for-trading
financial assets
Cash received from interest,
handling charges and commissions
Net increase in loans
Net increase in income from
repurchase business
Tax rebates
Other cash received from activities
related to operation 8,364,081.92 5,267,979.47
Sub-total of cash inflow from
operating activities 149,000,541.16 83,523,150.21
Cash paid for goods purchased
and services rendered 80,480,437.92 31,595,239.65
Net increase in loans and advances
from customers
Net increase in deposits with central bank
and interbank deposits

— 30 —

Cash paid for compensation payments
under original insurance contracts
Cash paid for interest, handling charges
and commissions
Cash paid for insurance policy dividend
Cash paid to and on behalf of employees 32,823,801.55 29,781,509.67
Tax payments 18,894,546.89 17,400,970.06
Other cash paid for activities
related to operation 10,007,054.71 10,360,093.17
Sub-total of cash outflow from
operating activities 142,205,841.07 89,137,812.55
Net cash flow from operating activities 6,794,700.09 –5,614,662.34
II. Cash flow from investment activities:
Cash received from disposal of investment
Cash received from return of investments 0.00 2,410,572.50
Net cash received from disposal of
fixed assets, intangible assets
and other long-term assets 38,043,000.00 2,103,211.54
Net cash received from disposal
of subsidiaries and other operating entities 4,000,000.00 0.00
Other cash received from activities
related to investment
Sub-total of cash inflow from
investment activities 42,043,000.00 4,513,784.04
Cash paid for purchase and construction
of fixed assets, intangible assets and
other long-term assets 324,060.00 10,429,617.89
Cash paid for investment
Net increase in pledged loans
Net cash paid for acquisition of
subsidiaries and other operating entities
Other cash paid for activities
related to investment 5,000,000.00 0.00
Sub-total of cash outflow from
investment activities 5,324,060.00 10,429,617.89
Net cash flow from investment activities 36,718,940.00 –5,915,833.85

— 31 —

III. Cash flow from financing activities:
Cash received from investments
Including: Proceeds received by subsidiaries
from minority shareholders’
investment
Proceeds from loans 0.00 50,000,000.00
Cash received from issuing bonds
Other cash received from
financing-related activities 309,122,187.01 358,402,106.13
Sub-total of cash inflow from
financing activities 309,122,187.01 408,402,106.13
Repayment of loans 23,170,918.18 73,204,731.25
Cash paid for dividends, profit,
or interest payments 0.00 918,240.55
Including: Dividend and profit paid by
subsidiaries to minority
shareholders
Other cash paid for financing-related activities 309,750,800.00 375,000,000.00
Sub-total of cash outflow from
financing activities 332,921,718.18 449,122,971.80
Net cash flow from financing activities –23,799,531.17 –40,720,865.67
IV. Effects of changes in exchange rate on
cash and cash equivalents 2,055.28 –2,093.78
V. Net increase in cash and cash equivalents 19,716,164.20 –52,253,455.64
Add:
Opening balance of cash and
cash equivalents 28,316,110.10 55,805,556.06
VI. Closing balance of cash
and cash equivalents 48,032,274.30 3,552,100.42
Person in charge of
Legal representative: Chief accountant: accounting department:
Ma Liyun Sun Lei Chen Jing

— 32 —

Cash Flow Statement of the Company Prepared by: Luoyang Glass Company Limited January–June 2014 Monetary unit: RMB

January–June January–June
Item 2014 2013
I. Cash flows from operating activities:
Cash received from sale of goods or
rendering of services 128,814,707.88 47,245,800.58
Tax rebates
Other cash received from activities
related to operation 271,966,344.05 295,855,164.53
Sub-total of cash inflow from
operating activities 400,781,051.93 343,100,965.11
Cash paid for goods purchased
and services rendered 6,343,824.99 25,872,230.84
Cash paid to and on behalf of employees 9,078,028.03 10,563,747.82
Tax payments 1,941,394.86 1,146,504.58
Other cash paid for activities
related to operation 158,105,107.64 129,350,350.22
Sub-total of cash outflow from
operating activities 175,468,355.52 166,932,833.46
Net cash flow from operating activities 225,312,696.41 176,168,131.65
II. Cash flow from investment activities:
Cash received from disposal of investment 0.00 2,946,866.81
Cash received from return of investments 38,043,000.00 780,000.00
Net cash received from disposal
of fixed assets, intangible assets
and other long-term assets 4,000,000.00 0.00
Net cash received from disposal of
subsidiaries and other operating entities
Other cash received from activities
related to investment

— 33 —

Sub-total of cash inflow from
investment activities 42,043,000.00 3,726,866.81
Cash paid for purchase and construction
of fixed assets, intangible assets
and other long-term assets
Cash paid for investment 0.00 5,000,000.00
Net cash paid for acquisition of
subsidiaries and other operating entities
Other cash paid for activities
related to investment 5,000,000.00
Sub-total of cash outflow from
investment activities 5,000,000.00 5,000,000.00
Net cash flow from investment activities 37,043,000.00 –1,273,133.19
III. Cash flow from financing activities:
Cash received from investments
Proceeds from loans 0.00 50,000,000.00
Cash received from issuing bonds
Other cash received from
financing-related activities 10,000,000.00 97,561,808.49
Sub-total of cash inflow from
financing activities 10,000,000.00 147,561,808.49
Repayment of loans 21,730,918.18 51,764,731.25
Cash paid for dividends, profit,
or interest payments 0.00 397,129.44
Other cash paid for financing-related activities 250,000,000.00 270,000,000.00
Sub-total of cash outflow from
financing activities 271,730,918.18 322,161,860.69
Net cash flow from financing activities –261,730,918.18 –174,600,052.20

— 34 —

IV. Effects of changes in exchange rate
on cash and cash equivalents 2,055.28 –2,093.78
V. Net increase in cash and cash equivalents 626,833.51 292,852.48
Add:
Opening balance of cash
and cash equivalents 398,991.55 205,919.60
VI. Closing balance of cash
and cash equivalents 1,025,825.06 498,772.08
Person in charge of
Legal representative: Chief accountant: accounting department:
Ma Liyun Sun Lei Chen Jing

— 35 —

Consolidated Statement of Changes in Owners’ Equity

Prepared by: Luoyang Glass Company Limited

January–June 2014 Monetary unit: RMB

January–June 2014
Attributable to owners of the Company
Share Less: Treasury General risk Retained Minority Total owners’
Item Capital Capital reserve shares Special reserve Surplus reserve provision earnings Others Sub-total interests equity
I. Balance at the end of last year 500,018,242.00 857,450,406.90 367,894.52 51,365,509.04 -1,375,895,993.77 33,306,058.69 -73,208,155.34 -39,902,096.65
Add: Effects of changes
in accounting policies
Effects of correction
of prior year errors
Others
II. Balance at the beginning
of the year 500,018,242.00 857,450,406.90 367,894.52 51,365,509.04 -1,375,895,993.77 33,306,058.69 -73,208,155.34 -39,902,096.65
III. Increase/decreased in the period
(decrease is represented by “–”) 73,738.24 32,267,809.50 32,341,547.74 -5,169,922.35 27,171,625.39
(I) Net profit 32,267,809.50 32,267,809.50 -5,237,988.41 27,029,821.09
(II) Other comprehensive income
Sub-total of above (I) and (II) 32,267,809.50 32,267,809.50 -5,237,988.41 27,029,821.09
(III) Owners’ contribution
and decrease in capital
1. Owners’ capital
contribution
2. Share based payments
credited to
owners’ equity
3. Others
(IV) Profit distribution
1. Appropriation to
surplus reserve
2. Appropriation to
general risk provision
3. Distribution to owners
4. Others
(v) Internal carry-forward
of owners’ equity
1. Conversion of capital
reserve into capital
2. Conversion of surplus
reserve into capital
3. Making good of loss with
surplus reserve
4. Others
(VI) Special reserve 73,738.24 73,738.24 68,066.06 141,804.30
1. Amount withdrawn
in the period 74,726.24 74,726.24 68,978.06 143,704.30
2. Amount utilized
in the period 988.00 988.00 912.00 1,900.00
(VII) Others
IV. Balance at the end of the period 500,018,242.00 857,450,406.90 441,632.76 51,365,509.04 -1,343,628,184.27 65,647,606.43 -78,378,077.69 -12,730,471.26
Person in charge of
Legal representative: Chief accountant: accounting department:
Ma Liyun Sun Lei Chen Jing

— 36 —

Consolidated Statement of Changes in Owners’ Equity

Prepared by: Luoyang Glass Company Limited

January–June 2014

Monetary unit: RMB

January–June 2013
Attributable to owners of the Company
Less: Treasury Surplus General risk Retained Minority Total
Item Share Capital Capital reserve shares Special reserve reserve provision earnings Others Sub-total interests owners’equity
I. Balance at the end of last year 500,018,242.00 857,450,406.90 205,847.44 51,365,509.04 -1,276,914,998.93 132,125,006.45 -61,484,589.71 70,640,416.74
Add: Effects of changes
in accounting policies
Effects of correction of
prior year errors
Others
II. Balance at the beginning
of the year 500,018,242.00 857,450,406.90 205,847.44 51,365,509.04 -1,276,914,998.93 132,125,006.45 -61,484,589.71 70,640,416.74
III. Increase/decreased
in the period (decrease is
represented by “–”) 87,784.84 -47,311,964.99 -47,224,180.15 -4,917,666.19 -52,141,846.34
(I) Net profit -47,311,964.99 -47,311,964.99 -4,998,698.35 -52,310,663.34
(II) Other comprehensive income
Sub-total of above (I) and (II) -47,311,964.99 -47,311,964.99 -4,998,698.35 -52,310,663.34
(III) Owners’ contribution and
decrease in capital
1. Owners’ capital
contribution
2. Share based payments
credited to owners’
equity
3. Others
(IV) Profit distribution
1. Appropriation to
surplus reserve
2. Appropriation to
general risk provision
3. Distribution to owners
4. Others
(V) Internal carry-forward of
owners’ equity
1. Conversion of capital
reserve into capital
2. Conversion of surplus
reserve into capital
3. Making good of loss
with surplus reserve
4. Others
(VI) Special reserve 87,784.84 87,784.84 81,032.16 168,817.00
1. Amount withdrawn
in the period 87,784.84 87,784.84 81,032.16 168,817.00
2. Amount utilized
in the period
(VII) Others
IV. Balance at the end of the period 500,018,242.00 857,450,406.90 293,632.28 51,365,509.04 -1,324,226,963.92 84,900,826.30 -66,402,255.90 18,498,570.40
Person in charge of
Legal representative: Chief accountant: accounting department:
Ma Liyun Sun Lei Chen Jing

— 37 —

Statement of Changes in Owners’ Equity of the Company

Prepared by: Luoyang Glass Company Limited

January–June 2014

Monetary unit: RMB

January–June 2014 January–June 2014
Less: Treasury General risk Retained Total owners’
Item Share Capital Capital reserve shares Special reserve Surplus reserve provision earnings equity
I. Balance at the end of last year 500,018,242.00 891,129,782.23 51,365,509.04 -1,329,788,469.85 112,725,063.42
Add: Effects of changes in
accounting policies
Effects of correction of
prior year errors
Others
II. Balance at the beginning
of the year 500,018,242.00 891,129,782.23 51,365,509.04 -1,329,788,469.85 112,725,063.42
III. Increase/decreased in the
period (decrease is
represented by “–”) 76,741,039.49 76,741,039.49
(I) Net profit 76,741,039.49 76,741,039.49
(II) Other comprehensive income
Sub-total of above (I) and (II) 76,741,039.49 76,741,039.49
(III) Owners’ contribution and
decrease in capital
1. Owners’ capital
contribution
2. Share based payments
credited to owners’
equity
3. Others
(IV) Profit distribution
1. Appropriation to
surplus reserve
2. Appropriation to
general risk provision
3. Distribution to owners
4. Others
(V) Internal carry-forward of
owners’ equity
1. Conversion of capital
reserve into capital
2. Conversion of surplus
reserve into capital
3. Making good of loss with
surplus reserve
4. Others
(VI) Special reserve
1. Amount withdrawn
in the period
2. Amount utilized
in the period
(VII) Others
IV. Balance at the end of the period 500,018,242.00 891,129,782.23 51,365,509.04 -1,253,047,430.36 189,466,102.91
Person in charge of
Legal representative: Chief accountant: accounting department:
Ma Liyun Sun Lei Chen Jing

— 38 —

Statement of Changes in Owners’ Equity of the Company

Prepared by: Luoyang Glass Company Limited

January–June 2014

Monetary unit: RMB

January–June 2013 January–June 2013
Less: Treasury General risk Retained Total owners’
Item Share Capital Capital reserve shares Special reserve Surplus reserve provision earnings equity
I. Balance at the end of last year 500,018,242.00 891,129,782.23 51,365,509.04 -1,369,900,445.92 72,613,087.35
Add:
Effects of changes
in accounting policies
Effects of correction
of prior year errors
Others
II. Balance at the beginning
of the year 500,018,242.00 891,129,782.23 51,365,509.04 -1,369,900,445.92 72,613,087.35
III. Increase/decreased in
the period (decrease is
represented by “–”) -4,852,568.60 -4,852,568.60
(I) Net profit -4,852,568.60 -4,852,568.60
(II) Other comprehensive income
Sub-total of above (I) and (II) -4,852,568.60 -4,852,568.60
(III) Owners’ contribution
and decrease in capital
1. Owners’ capital
contribution
2. Share based payments
credited to owners’
equity
3. Others
(IV) Profit distribution
1. Appropriation to
surplus reserve
2. Appropriation to
general risk provision
3. Distribution to owners
4. Others
(V) Internal carry-forward
of owners’ equity
1. Conversion of capital
reserve into capital
2. Conversion of surplus
reserve into capital
3. Making good of loss
with surplus reserve
4. Others
(VI) Special reserve
1. Amount withdrawn
in the period
2. Amount utilized
in the period
(VII)
Others
IV. Balance at the end of the period 500,018,242.00 891,129,782.23 51,365,509.04 -1,374,753,014.52 67,760,518.75
Person in charge of
Legal representative: Chief accountant: accounting department:
Ma Liyun Sun Lei Chen Jing
— 39 —

NOTES TO THE FINANCIAL STATEMENTS

For the first half ended 30 June 2014 (expressed in RMB)

I. BACKGROUND OF THE COMPANY

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

II. SIGNIFICANT ACCOUNTING POLICIES

  1. Basis of preparation of financial statements

The financial statements of the Company have been prepared on a going concern basis in respect of the actual transactions and events in accordance with the requirements of “Accounting Standards for Business Enterprises-Basic Standard” issued by the Ministry of Finance (MOF) of the PRC, and application guidance, interpretations and other relevant regulations, and based on the following significant accounting policies and estimates.

  1. Accounting period

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

  1. Measurement currency

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

— 40 —

  1. Preparation method of consolidated financial statements

The Company consolidates the controlled subsidiaries and special purpose entities into the scope of consolidated financial statements.

The consolidated financial statements are prepared in accordance with “Accounting Standards for Business Enterprises No.33-Consolidated Financial Statement” and relevant provisions, and all significant internal transactions and dealings included in the consolidated scope shall be offset. Shareholders’ equity of subsidiaries which is not attributable to parent company should be presented individually as minority interest in Shareholders’ equity in consolidated financial statements.

An adjustment of subsidiaries’ financial statements in accordance with the accounting policy or accounting period of the Company is needed when preparing consolidated financial statements if the accounting policy or accounting period is different between the subsidiaries and the Company.

For subsidiaries acquired from business combination not under common control, when preparing consolidated financial statements, subsidiaries’ certain financial statements should be adjusted on the basis of the fair value of identifiable net assets on the date of acquisition. For subsidiaries acquired from business combination under common control, the assets, liabilities, operating results and cash flow of acquired subsidiaries should be included in consolidated financial statements from the beginning of the year of acquisition in which the combination took place.

— 41 —

III. SEGMENT REPORTING

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

The two business segments are as follows:

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

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

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

  • (1) Segments information from January to June 2014 and as at 30 June 2014:

— 42 —

Float glass Silicon sand

Elimination

Item

Total

1. Income from transactions
with third parties 249,942,578.78 15,691,275.14 265,633,853.92
2. Income from
inter-segment transactions 856,709.17 –856,709.17 —
3. Interest income 3,526,092.78 3,111.89 –643,500.00 2,885,704.67
4. Interest expense 242,523.11 878,471.16 –643,500.00 477,494.27
5. Asset impairment loss 5,092,670.60 5,092,670.60
6. Depreciation and
amortization expenses 37,779,266.20 952,398.98 38,731,665.18
7. Total profit (“–” for loss) 31,466,961.28 –94,427.90 –839,091.10 30,533,442.28
8. Income tax expense 3,437,101.49 66,519.70 3,503,621.19
9. Net profit (“–” for loss) 28,029,859.79 –160,947.60 –839,091.10 27,029,821.09
10. Total assets 1,236,988,359.95 55,970,526.56 –30,720,329.42 1,262,238,557.09
11. Total liabilities 1,270,088,322.57 37,473,863.03 –32,593,157.25 1,274,969,028.35
12. Other important non-cash items
Including: Increase in other non-current
assets other than long-term
equity investment
(“–” for decrease) –9,331,391.01 –379,815.86 –9,711,206.87

— 43 —

(2) Segments information from January to June of 2013 and as at 31 December 2013:

Item Float glass Silicon sand Elimination Total
1. Income from transactions
with third parties 114,208,594.43 19,109,083.80 133,317,678.23
2. Income from inter-segment transactions 1,108,529.01 –1,108,529.01 —
3. Interest income 3,040,180.91 3,565.77 –643,500.00 2,400,246.68
4. Interest expense 666,956.55 643,500.00 –643,500.00 666,956.55
5. Asset impairment loss
6. Depreciation and
amortization expenses 31,633,707.74 964,263.59 32,597,971.33
7. Total profit (“–” for loss) –49,910,767.22 411,632.91 1,787.48 –49,497,346.83
8. Income tax expense 2,812,742.28 574.23 2,813,316.51
9. Net profit (“–” for loss) –52,723,509.50 411,058.68 1,787.48 –52,310,663.34
10. Total assets 1,195,227,321.90 55,504,158.99 –31,119,625.41 1,219,611,855.48
11. Total liabilities 1,197,928,690.53 36,531,655.00 –33,347,060.45 1,201,113,285.08
12. Other important non-cash items
Including: Increase in other non-current
assets other than long-term
equity investment (“–”
for decrease) –15,146,946.98 1,278.42 –15,145,668.56

— 44 —

(3) Geographic information

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

Item
China
Total		 Revenues from external customers
January–
June 2014
January–
June 2013
265,633,853.92
133,317,678.23
265,633,853.92
133,317,678.23		 Non-current assets
30 June
2014
31 December
2013
722,783,306.76
732,494,513.63
722,783,306.76
732,494,513.63		 Non-current assets
30 June
2014
31 December
2013
722,783,306.76
732,494,513.63
722,783,306.76
732,494,513.63
732,494,513.63
  • (4) Major customers

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

— 45 —

IV. TURNOVER

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

  • (1) Details of operating income
Item
January–
June 2014
Income from principal operations
260,543,927.45
Other operating income
5,089,926.47
Total operating income
265,633,853.92
(2) Income from principal operations by product
Name of product or service
January–
June 2014
Float glass
248,169,292.49
Silicon sand
12,374,634.96
Total
260,543,927.45		 January–
June 2013
123,187,993.65
10,129,684.58
133,317,678.23
January–
June 2013
108,446,286.73
14,741,706.92
123,187,993.65

— 46 —

V. 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
Amercement income
Others
Total		 January–
June 2014
517,234.58
517,234.58
187,500.00
774,526.08
749,682.00
2,228,942.66		 January–
June 2013
212,806.10
212,806.10
238,941.43
2,331,162.81
75,448.00
38,850.00
2,897,208.34

Note: Government grant of RMB774,526.08 (2013: RMB2,331,162.81) mainly include:

  1. According to “the Reply on 2009 Additional Investment Projects Funded by the Central Government’s Budget in respect of Revitalization of Key Industries and Technical Upgrading” （關於重點產業振興和技術改造2009年新增中央 預算內投資項目的覆函） (Fa Gai Ban Chan Ye [2009] No. 2425) issued by the General Office of the National Development and Reform Commission and the General Office of the Ministry of Industry and Information Technology, Longmen Company, a subsidiary of the Group, received fiscal subsidies of RMB9,720,000.00 for its ultra thin and ultra-white E-glass production line project. Among the amount, RMB607,500.00 was recognized as non-operating income in the period.

  2. According to “the Notice on the Meeting Minutes of Issues about Longmen Lands” (Luo Ban Wen [2009] No. 121) (《關於龍玻公司土地問題的會議 紀要的通知》) from the office of Luoyang Municipal Party Committee, a government grant of RMB2,579,200 was awarded to Longmen Company, a subsidiary of the Group for the ultra-thin and ultra-white E-glass production line project. Among the amount, RMB26,960.28 was recognized as nonoperating income in the period.

— 47 —

  1. According to the “Contract of Independent Innovation Fund Projects” entered into between Longhai Company, a member of the Group, and the Finance Department, the Development and Reform Committee and the Science and Technology Department of Henan Province in July 2011, a government grant of RMB5,000,000.00 was awarded to Longhai for the “0.45mm E-glass technology research and application projects”. A total of RMB140,065.80 out of the special fund was used by Longhai Company to cover the R&D expenses that had been incurred during the period.

VI. PROFIT BEFORE INCOME TAX

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

(1) Financial expenses

Item
Interest expense
Less: interest income
Exchange loss
Less: exchange income
Bills discount interest
Other expenses
Total
(2) Investment income
Item
Long-term equity investment
income measured
by cost method
Investment income from disposal
of long-term equity investment
Total		 January–
June 2014
242,556.30
2,885,781.06
57,952.14
32,573.32
8,141,717.65
161,818.25
5,685,689.96
January–
June 2014
93,394,560.90
93,394,560.90		 January–
June 2013
666,956.55
2,400,246.68
27,491.34
125,260.64
6,526,405.37
597,464.79
5,292,810.73
January–
June 2013
2,410,572.50
2,410,572.50

— 48 —

(3) Operating cost

Item
January–
June 2014
January–
June 2013
Cost of principal operations
— Float glass
240,989,045.80
98,498,394.04
— Silicon powder
6,981,955.80
6,475,523.50
Other operating cost
— Raw materials, water,
electricity, gas and
technical service, etc.
2,330,097.75
5,104,617.21
Total operating cost
250,301,099.35
110,078,534.75
(4) Business tax and surcharges
Item
Tax base
January–
June 2014
January–
June 2013
Business tax
5%
1,694,800.00
598,689.18
Resource tax
RMB3/t
862,225.80
1,012,902.00
City maintenance
tax
5-7% of the
taxable turnover tax
895,203.22
361,350.60
Education
surcharges_(Note)_
3% of the
taxable turnover tax
820,578.89
348,402.92
Total
4,272,807.91
2,321,344.70		 January–
June 2013
98,498,394.04
6,475,523.50
5,104,617.21		 January–
June 2013
98,498,394.04
6,475,523.50
5,104,617.21
110,078,534.75
January–
June 2013
598,689.18
1,012,902.00
361,350.60
348,402.92
2,321,344.70

Note: Education surcharges include local education surcharges. The calculation standards of the local education surcharges were 2% of the turnover tax payable.

— 49 —

(5) Selling expenses

Item
Staff’s salary and welfare
Social insurance premium
Depreciation expenses
Transportation costs
Material consumption
Other selling expenses
Total
(6) Administrative expenses
Item
Staff’s salary and welfare
Social insurance premium
Housing accumulation fund
Depreciation of fixed assets
Amortization of intangible assets
Intermediary engagement fees
Research and development
expenditures
Taxes
Water and electricity charges
Other administrative expenses
Total		 January–
June 2014
4,939,632.60
1,079,216.37
808,783.29
4,008,610.08
811,420.03
981,410.99
12,629,073.36
January–
June 2014
13,346,615.19
4,923,107.43
643,350.23
10,405,886.19
1,267,582.96
4,176,579.80
7,132,893.57
3,006,960.88
461,600.19
6,323,255.57
51,687,832.01		 January–
June 2013
2,729,801.63
813,115.65
683,949.10
5,048,672.74
410,632.12
2,441,444.94
12,127,616.18
January–
June 2013
12,240,705.61
5,872,196.13
847,396.76
14,262,873.94
1,472,692.74
5,284,200.00
5,215,365.49
3,078,035.17
986,136.59
8,170,547.12
57,430,149.55

— 50 —

(7) Assets impairment losses

Item
1.
Losses from inventory
impairments
Total
(8) Non-operating expenses
Item
Total loss on disposal of
non-current assets
Including: Loss on disposal of
fixed assets
Donation
Indemnities, liquidated
damages and penalties
Others
Total		 January–
June 2014
5,092,670.60
5,092,670.60
January–
June 2014
1,019,995.36
34,746.65
1,054,742.01		 January–
June 2013
January–
June 2013
327,425.21
327,425.21
6,000.00
93,369.27
445,555.51
872,349.99

— 51 —

VII. INCOME TAX EXPENSES

Item
Current income tax based on
applicable tax laws and regulations
Total		 January–
June 2014
3,503,621.19
3,503,621.19		 January–
June 2013
2,813,316.51
2,813,316.51
  • Note: On 26 June 2013, Longhai Company, the Company’s wholly-owned subsidiary, was recognized as high-tech enterprise as verified by Henan Scientific and Technological Department, Finance Department of Henan Province, SAT, and local Taxation Bureau of Henan Province, and awarded “Hightech Enterprise Certificate” with a validity of three years. In accordance with Paragraph 2 of Article 28 of the Enterprise Income Tax Law of the PRC, Article 93 of the Regulation on the Implementation of Enterprise Income Tax Law of PRC and the relevant provisions of the Notice of the State Administration of Taxation concerning Relevant Issues for Implementation of Tax Preferential Treatment for High-Technology Enterprises (Guo Shui Han [2009] No. 203), Longhai Company enjoys 15% enterprise income tax in 2014. The applicable enterprise income tax for the Company and other subsidiaries is 25%.

VIII. DIVIDENDS

The Board of Directors does not recommend the payment of an interim dividend in respect of the six months ended 30 June 2014.

— 52 —

IX. BASIC EARNINGS PER SHARE

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

January– January–
Item June 2014 June 2013
Net profit attributable to ordinary
shareholders of the Company 32,267,809.50 –47,311,964.99
Total number of shares
at the beginning of the period 500,018,242.00 500,018,242.00
Basic earnings per share 0.0645 –0.0946

No diluted earnings per share is calculated as there are no dilutive potential shares of the Company for the six months ended 30 June 2014.

— 53 —

X. TRADE AND BILLS RECEIVABLES

  1. Trade receivables:
Item
Closing balance
Opening balance
Trade receivables
68,850,125.51
80,281,928.91
Less : provision for bad debts
50,630,381.31
50,630,381.31
Net trade receivables
18,219,744.20
29,651,547.60
Generally, the Group sells its products by receiving advances from
customers while 30 days of credit period are granted to a few customers.
The aging of trade receivable based on their recording dates is analysed
below:
Aging
Within 1 year
1–2 years
2–3 years
3–4 years
4–5 years
Over 5 years
Total
2.
Bills receivables by category
Item
Bank acceptance
Trade acceptance
Total		 Closing balance
13,462,134.02
3,556,907.08
3,396,946.07
723,120.14
1,816,629.43
45,894,388.77
68,850,125.51
Closing balance
990,000.00
990,000.00		 Opening balance
25,731,377.61
2,821,542.85
3,890,179.97
1,944,439.71
1,095,404.38
44,798,984.39
80,281,928.91
Opening balance
39,799,612.49
39,799,612.49

— 54 —

XI. TRADE AND BILLS PAYABLES

1. Aging of trade payables

Item
Within 1 year
1–2 years
2–3 years
Over 3 years
Total		 Closing balance
Amount
Percentage
(%)
166,001,363.04
54.25
10,473,919.00
3.42
16,552,898.66
5.41
112,994,818.11
36.92
306,022,998.81
100.00		 Opening
Amount
130,718,211.22
23,075,892.73
72,735,956.71
56,008,321.19
282,538,381.85		 balance
Percentage
(%)
46.27
8.17
25.74
19.82
100.00
  1. Bills payables by category
Item
Bank acceptance
Trade acceptance
Total
Notes:		 Closing balance
250,000,000.00
250,000,000.00		 Opening balance
150,000,000.00
150,000,000.00

  1. There were no bills payable to shareholders holding 5% or more of the voting shares of the Company at the end of the period.

  2. Bills payable are mainly bank acceptances issued by the Group for purchase of materials, commodities or products with the repayment period ranging from one to six months.

— 55 —

XII. RESERVE

  1. Capital reserve
Item
Opening
balance
Capital premium
787,299,489.41
Other capital
reserves
70,150,917.49
Total
857,450,406.90
2.
Special reserves
Item
Opening
balance
Special
reserve funds
367,894.52
Total
367,894.52
3.
Surplus reserve
Item
Opening
balance
Statutory
surplus reserve
51,365,509.04
Total
51,365,509.04		 Increase in
the period
Increase in
the period
74,726.24
74,726.24
Increase in
the period		 Decrease in
the period
Decrease in
the period
988.00
988.00
Decrease in
the period		 Closing
balance
787,299,489.41
70,150,917.49
857,450,406.90
Closing
balance
441,632.76
441,632.76
Closing
balance
51,365,509.04
51,365,509.04

— 56 —

  1. Undistributed profits

Closing balance

Percentage of
allocation or
Item Amount distribution
Undistributed profit at the end of the
previous year before adjustment –1,375,895,993.77
Total of adjustment of undistributed profit
at the beginning of the year (+/-)
Undistributed profit at the beginning of
the year after adjustment –1,375,895,993.77
Add: Net profit attributable to owners
of the Company during
the period 32,267,809.50 —
Less: Allocation to statutory
surplus reserve
Allocation to discretionary
surplus reserve
Allocation to general
risk provisions
Dividend of ordinary shares
payable
Dividend of ordinary shares
transferred into the share capital
Undistributed profit
at the end of the period –1,343,628,184.27

XIII. EVENTS AFTER BALANCE SHEET DATE

Nil

Chairman: Ma Liyun

Luoyang Glass Company Limited 27 August 2014

  • For identification purpose only

— 57 —

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