RoboSense Technology Co., Ltd — Interim / Quarterly Report 2017

Aug 29, 2017

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.

==> picture [373 x 149] intentionally omitted <==

＊

2017 INTERIM RESULTS ANNOUNCEMENT

1 IMPORTANT NOTICE

• 1.1 This interim results announcement is extracted from the full text of the interim report. For details, investor are advised to read carefully the full text of the interim report which will be published simultaneously on the website of the Shanghai Stock Exchange and other websites designated by China Securities Regulatory Commission.

• 1.2 This interim results of the Company for the six months ended 30 June 2017 are unaudited but have been reviewed and approved by the audit committee under the board of directors (the “ Board ”) of the Company.

– 1 –

1.3 Company Profile

Stock Abbreviation Luoyang Glass (A Share(s)) Luoyang Glass (H Share(s)) Stock Code 600876 01108 Listing Exchange Shanghai Stock Exchange The Stock Exchange of Hong Kong Limited Secretary to the Board Securities Affairs Representative Name Wu Zhixin Zhao Zhiming Contact address Secretary Office of the Secretary Office of the Board Board of Luoyang Glass of Luoyang Glass Company Company Limited, No. Limited, No. 9 Tang Gong 9 Tang Gong Zhong Lu, Zhong Lu, Xigong District, Xigong District, Luoyang, Luoyang, Henan Province, the Henan Province, the PRC PRC Telephone 86-379-63908588, 63908637 86-379-63908833 Facsimile 86-379-63251984 86-379-63251984 E-mail lywzhx@126.com lybl600876@163.com

2 MAJOR FINANCIAL DATA AND INFORMATION OF SHAREHOLDERS

2.1 Major financial data

Unit: Yuan Currency: RMB

			Increase/
			decrease
	At the end of	At the end of	from the
	the reporting	the previous	end of the
	period	year	previous year
			(%)
Net assets attributable
to shareholders of the
Company	524,447,375.98	523,269,416.96	0.23
Total assets	1,267,087,349.76	1,356,917,020.31	-6.62

– 2 –

			Increase/
			decrease over
			the same
	Reporting	Same period	period
	period	last year	last year
			(%)
Net cash flow from
operating activities	-22,220,380.57	-75,836,368.92	N/A
Operating revenue	154,969,277.04	137,239,714.63	12.92
Net profit attributable
to shareholders of the
Company	1,177,959.02	-25,745,594.23	N/A
Net profit attributable
to shareholders of
the Company after
extraordinary items	-18,229,205.65	-29,066,503.40	N/A
Basic earnings per share
(RMB/share)	0.0022	-0.0491	N/A
Diluted earnings per
share (RMB/share)	0.0022	-0.0491	N/A
Weighted average
return on net assets	0.22	-5.85	N/A

2.2 Number and shareholdings of shareholders

2.2.1 Number of shareholders

Total number of shareholders as at the end of the reporting period

61,816, including 61,767 holders of A shares and 49 holders of H shares

Total number of holders of preferred shares with restored voting rights as at the end of the reporting period 0

– 3 –

2.2.2 Shareholdings of top ten shareholders

Unit: shares

				Number
	Nature of	Proportion of	Number of	of restricted	Number	of shares
Name of shareholder	shareholder	shareholding	shares held	shares held	pledged	or frozen
		(%)
HKSCC NOMINEES	Overseas	47.21	248,666,699	0	Unknown
LIMITED	legal person
China Luoyang Float Glass (Group) Company Limited	State-owned legal person	19.94	105,018,242	15,000,000	Pledged	41,000,000
Bengbu Design & Research	State-owned	13.10	69,000,000	0	None
Institute for Glass Industry	legal person
Zhang Lixin (張立新)	Domestic	0.15	800,000	0	Unknown
	natural
	person
Hong Kong Securities Clearing	Overseas	0.12	622,327	0	Unknown
Company Limited	legal person
Industrial Bank Co., Ltd. –	Unknown	0.09	455,700	0	Unknown
GF Securities Baidu Baifa
Strategy 100 Index Securities
Investment Fund (興業銀行
股份有限公司－廣發中證百
度百發策略100指數型證券
投資基金)
Liu Bibo (劉碧波)	Domestic	0.08	400,000	0	Unknown
	natural
	person
Pu Lulu (蒲露露)	Domestic	0.07	390,000	0	Unknown
	natural
	person
CHUK YEE MEN LIZA U/D	Overseas legal	0.07	374,000	0	Unknown
	person
Jin Ruiming (金瑞明)	Domestic	0.06	315,394	0	Unknown
	natural
	person

Explanation on connected relationship or action acting in concert among the aforesaid shareholders

Among the top 10 shareholders of the Company, China Luoyang Float Glass (Group) Company Limited and Bengbu Design & Research Institute for Glass Industry are connected parties or persons acting in concert as defined under the Regulations for Disclosure of Changes in Shareholding of Listed Companies (“上市公司股東持股變 動信息披露管理辦法”). The Company is not aware of any parties acting in concert or any connected relationship among other holders of circulating shares.

Explanations on holders of preferred shares with restored voting rights and the number of shares held

N/A

– 4 –

3 MANAGEMENT DISCUSSION AND ANALYSIS

3.1 Discussion and analysis of operations of the Company during reporting period

During the reporting period, the Company took the initiative to adapt to market changes and fully implemented its development strategy aiming for “integration and optimization, quality and benefit improvement”.

The Company proactively carried forward the significant asset restructuring. Under the restructuring, the Company proposed to acquire 100% equity interest in CNBM (Hefei) New Energy Company Limited (中建材（合 肥）新能源有限公司), 100% equity interest in CNBM (Tongcheng) New Energy Materials Company Limited (中國建材桐城新能源材料有限公 司) and 70.99% equity interest in CNBM (Yixing) New Energy Company Limited* (中建材（宜興）新能源有限公司) by means of issuance of shares and raise proceeds through non-public issuance of shares for funding the relevant project construction of the companies proposed to be acquired. The restructuring, if completed, will enable the Company to develop the new energy glass business in addition to its photoelectric glass and information display glass businesses, further enrich the product mix and expand the application scope of the products, thereby enhancing the profitability and core competitiveness of the Company and strengthening its risk-resistant capability.

The Company devoted great efforts to implement the plan on improvement and transformation of aged production lines. It planned to rebuild a new generation of production line of ultra-thin substrate for information display on the original site of Longhai Company so as to elevate the standard of production process techniques and core equipment of the ultra-thin glass substrate production line of Longhai Company, thereby further enhancing the competitive edges and market advantages of its products. A mature, reliable, advanced and rational technical solution is expected to be adopted for the new production line in a bid to reach the advanced standard of the industry in terms of technical equipment and automated control of the main part of the production line. The designed melting capacity of the melting furnace is 180t/d and the designed annual output is 15.50 million m[2] . So far, Longhai Company has completed the demolition of the original production line.

The Company officially commenced the construction of the ultra-white photothermal materials project in Puyang on 10 May 2017, with an aggregate of approximately RMB800 million invested in phase one of the project. The project is designed mainly for the production of solar glass substrate used for solar thermal power generation and, upon completion, is expected to enrich and optimise the ultra-thin glass product portfolio of the Company, thereby further expanding the new energy material business, improving profitability and enhancing industry competitiveness and sustainable development capability of the Company.

– 5 –

For the reporting period, the Company’s operating revenue amounted to RMB154,969,277.04, representing year-on-year increase of 12.92%; operating profit amounted to RMB3,935,160.93, representing a year-on-year increase of RMB30,706,339.06; net profit attributable to the shareholders of the Company amounted to RMB1,177,959.02, representing a year-on-year increase of RMB26,923,553.25; and basic earnings per share attributable to shareholders of the Company amounted to RMB0.0022. Gearing ratio was 58.61%, representing a decrease of 2.83 percentage points from the beginning of the reporting period.

Borrowings and debts

As at the end of the reporting period, the balance of short-term loans was RMB326,496,500.00, including secured loans of RMB5,000,000.00 and guaranteed loans of RMB321,496,500.00. The balance of long-term loans was RMB233,130,025.08 (including the balance of long-term loans due within one year amounting to RMB111,407,706.89), of which: bank loans of RMB9,973,021.49 and secured loans from non-bank financial institutions of RMB223,157,003.59.

Liquidity and capital resources

As at 30 June 2017, the Group had cash and cash equivalents of RMB60,688,037.20, including US dollar deposits of RMB186.84 (31 December 2016: RMB234.47), HK dollar deposits of RMB6,218.24 (31 December 2016: RMB6,408.42) and Euro deposits of RMB4.66 (31 December 2016: RMB4.38), representing a decrease of RMB51,840,479.33 compared with the total amount of RMB112,528,516.53 as at 31 December 2016. Cash inflows of the Group in the reporting period mainly came from sales revenue and financial leases, which were mainly used as working capital and for repayment of bank loans.

– 6 –

Gearing ratio

Gearing ratio is calculated based on the total liabilities at the end of the reporting period less the balance of cash and cash equivalents and divided by net assets attributable to the parent. The gearing ratio of the Group calculated under this formula was 130.03% as at 30 June 2017, compared to 137.81% as at 31 December 2016.

Contingent liabilities

As at 30 June 2017, the Group has no material contingent liabilities.

Risk of exchange rate fluctuations

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

Employees of the Company

As at 30 June 2017, the number of employees listed on the payroll register of the Group was 938, of which 714 were production staff, 128 were sales, finance and technical staff, and 96 were administrative staff. 49% of the Group’s staff were college graduates or above.

– 7 –

3.2 Analysis of principal operating activities

Analysis of changes in relevant items in the financial statements

Unit: Yuan Currency: RMB

		Amount for
		corresponding
	Amount for	period
Item	the period	last year	Change
			(%)
Operating revenue	154,969,277.04	137,239,714.63	12.92
Operating costs	112,590,015.32	128,487,520.70	-12.37
Cost of sales	3,261,156.57	3,541,156.15	-7.91
Administrative expenses	37,112,773.42	27,468,430.63	35.11
Financial expenses	13,663,932.39	3,217,323.22	324.70
Net cash flow from operating activities	-22,220,380.57	-75,836,368.92	N/A
Net cash flow from investment	20,851,362.38	-90,877,849.51	N/A
activities
Net cash flow from financing activities	-50,471,265.75	160,745,006.27	-131.40
R&D expenses	14,594,681.15	7,580,645.82	92.53
Taxes and surcharges	3,301,953.14	192,141.99	1,618.50

– 8 –

Reasons for changes:

Reasons for change in operating revenue: an increase in operating revenue due to optimisation of product mix and increase in the selling prices of products in the reporting period.

Reasons for change in operating costs: a decrease in operating costs as a result of the enhancement of cost management and optimisation of product mix in the reporting period.

Reasons for change in cost of sales: a decrease in staff costs as a result of decreased sales personnel in the reporting period.

Reasons for change in administrative expenses: more investment in research and development in the reporting period.

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

Reasons for change in net cash flow from operating activities: improvement of business operations in the reporting period.

Reasons for change in net cash flow from investment activities: payment of the shortfall of the consideration for asset swap in the same period last year.

Reasons for change in net cash flow from financing activities: receipt of proceeds raised from non-public issuance of shares in the same period last year.

Reasons for change in R&D expenses: more investment in research and development during the reporting period.

Reasons for change in taxes and surcharges: mainly because the stamp duty, vehicle and vessel tax, land use tax and property tax, which were included in “administrative expenses” for the same period last year, were included in “taxes and surcharges” for the reporting period under the Provisions Concerning the Accounting Treatments of Value-Added Tax (Cai Kuai [2016] No. 22) promulgated by the Ministry of Finance of the PRC.

– 9 –

3.3 Analysis of principal operations by business or product

Principal operations by industry

Unit: Yuan Currency: RMB

				Year-on-	Year-on-	Year-on-
				year	year	year
				increase/	increase/	increase/
			Gross	decrease in	decrease in	decrease in
	Operating	Operating	profit	operating	operating	gross profit
By industry	revenue	costs	margin	revenue	costs	margin
			(%)	(%)	(%)	(%)
New materials	152,856,356.90	111,125,433.36	27.30	12.84	-12.83	Increased
						by 21.40
						percentage
						points

Principal operations by product

				Year-on-	Year-on-	Year-on-
				year increase/	year increase/	year increase/
			Gross	decrease in	decrease in	decrease in
	Operating	Operating	profit	operating	operating	gross profit
By product	revenue	costs	margin	revenue	costs	margin
			(%)	(%)	(%)	(%)
Photoelectric glass	152,856,356.90	111,125,433.36	27.30	12.84	-12.83	Increased
						by 21.40
						percentage
						points

– 10 –

3.4 Analysis of investments

3.4.1 Overall analysis of external equity investment

During the reporting period, the Company had no external equity investment.

As considered and approved at the 23rd meeting of eighth session of the Board, the Company proposed to make an additional capital contribution of RMB239,500,000 to Puyang Company, a wholly-owned subsidiary of the Company. After the capital increase, the registered capital of Puyang Company increased to RMB240,000,000, and the newly-added registered capital will be used to finance the construction of ultra-white solar thermal material project of Puyang Company. As at the end of the reporting period, the Company had invested RMB80,000,000 in Puyang Company in currency.

3.4.2 Analysis of major subsidiaries and investee companies

Unit: Yuan Currency: RMB

		Major	Registered
Company name	Industry	products	capital	Total assets	Net assets	Net profit
CLFG Longhai Electronic	New materials	Photoelectric glass	60,000,000.00	192,229,526.30	129,244,928.86	-7,245,292.38
Glass Limited
CLFG Longmen Glass Co.	New materials	Photoelectric glass	20,000,000.00	191,636,745.79	-518,296,318.35	-8,405,428.37
Ltd.
Bengbu China National	New materials	Photoelectric glass	632,764,300.00	989,609,221.49	777,969,137.37	21,566,401.56
Building Materials
Information Display
Materials Co., Ltd.
CNBMG (Puyang)	New materials	Photothermal glass	240,000,000.00	78,891,505.76	78,889,505.76	-122,831.22
Photoelectric Material Co.,
Ltd. (Note)

Note:

On 1 March 2017, Luoyang Luobo Furuida Commerce Company Limited was renamed as CNBMG (Puyang) Photoelectric Material Co., Ltd..

– 11 –

3.5 Business outlook of the Company for the second half of 2017

In 2017, the competition in the domestic ultra-thin electronic substrate glass market intensified due to the slowed increase in demand at the downstream and adjustment to product mix. To proactively cope with the grim situation and challenges, the Company, firmly upholding the operating guidelines of “price stabilization, cost reduction, receivables collection and inventory control”, increased market development efforts, made reasonable arrangements for the production cycle of profitable products and continuously optimised and innovated technologies to enhance the quality of leading products. Meanwhile, the Company went all out to proceed with the construction of new and reconstruction projects to ensure orderly advancement of project construction as scheduled.

3.6 Other Disclosable Matters

3.6.1 Repurchase, sale and redemption of shares

During the reporting period, neither the Company nor any of its subsidiaries had repurchased, sold and redeemed any securities of the Company.

3.6.2 Audit Committee

The audit committee under the Board of the Company has reviewed the Interim Report.

3.6.3 Compliance with the Corporate Governance Code

During the reporting period, the Company complied with all the code provisions under the Corporate Governance Code as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Hong Kong Stock Exchange (the “ Listing Rules ”).

3.6.4 Compliance with the Model Code

Having made specific enquires to all Directors, the Company confirmed that 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 throughout the reporting period. The Company has adopted a code of conduct regarding securities transactions by the Directors on terms no less exacting than the Model Code.

– 12 –

4 MATTERS RELATING TO FINANCIAL REPORT

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

On 10 May 2017, the Ministry of Finance of the PRC published the amended Accounting Standard for Business Enterprises No. 16 – Government Grants which came into force since 12 June 2017 with the Accounting Standard for Business Enterprises No. 16 promulgated by the Ministry of Finance of the PRC in 2006 repealed simultaneously. For government grants existing as at 1 January 2017, the prospective application method shall be applied; and for newly-added government grants from 1 January 2017 to the date on which the standard came into force, adjustments shall be made according to the amended standard. As considered and approved at the 33rd meeting of the eighth session of the Board of the Company, the Group started to implement the amended standard since 12 June 2017.

The main changes in the aforementioned accounting policy are as follows: government grants relating to the ordinary activities of enterprises shall be included in other income or used to write down the related costs based on the nature of economic business. Enterprises shall separately present “other income” above “operating profit” in their income statements and the government grants included in other income shall be reflected therein. Government grants not relating to the ordinary activities of enterprises shall be included in non-operating income and expenses.

	Unit: Yuan	Currency: RMB
	Before change	After change
	of accounting	of accounting
Item	policy	policy
Other income	–	19,749,138.28
Non-operating income	19,749,138.28	–

• 4.2 There was no change in the scope of consolidation as compared with the latest annual report.

– 13 –

4.3 Financial Statements

Consolidated Balance Sheet

Prepared by: Luoyang Glass Company Limited* 30 June 2017

Unit: RMB Yuan

Item Current Assets: Cash and cash equivalents Bills receivables Accounts receivables Prepayments Other receivables Inventories Other current assets Total current assets Non-current assets: Long-term receivables Fixed assets Construction in progress Intangible assets Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	Closing Balance 90,688,037.20 43,611,023.42 138,102,959.21 3,394,273.59 30,165,639.43 125,052,551.31 25,249,726.39 456,264,210.55 55,000,000.00 616,035,578.26 14,085,910.61 117,744,298.48 4,926,055.07 2,667,194.21 364,102.58 810,823,139.21 1,267,087,349.76	Opening Balance 157,528,516.53 45,986,571.00 101,891,329.13 1,638,352.47 107,581,717.91 132,978,500.26 34,874,034.35
		582,479,021.65
		55,000,000.00 648,972,313.06 – 62,609,172.40 3,515,290.90 4,341,222.30 –
		774,437,998.66
		1,356,917,020.31

– 14 –

Item Current liabilities: Short-term borrowings Bills payables Accounts payables Receipts in advance Employee compensation payable Taxes payable Interest payable Other payables Non-current liabilities due within one year Total current liabilities Non-current liabilities: Long-term borrowings Deferred income Total non-current liabilities Total Liabilities	Closing Balance 326,496,500.00 50,000,000.00 32,946,511.78 11,271,186.74 18,417,757.49 6,744,882.37 1,717,967.40 53,049,499.38 111,407,706.89 612,052,012.05 121,722,318.19 8,865,643.54 130,587,961.73 742,639,973.78	Opening Balance 20,000,000.00 90,000,000.00 46,373,902.20 14,391,654.50 25,743,969.95 15,381,067.45 713,868.25 42,578,922.04 471,337,062.91
		726,520,447.30
		87,836,374.23 19,290,781.82
		107,127,156.05
		833,647,603.35

– 15 –

Closing Balance Opening Balance

Item		Closing Balance		Opening Balance
Owners’ equity:
Share capital		526,766,875.00		526,766,875.00
Capital reserve		1,473,105,039.50		1,473,105,039.50
Surplus reserve		51,365,509.04		51,365,509.04
Undistributed profit		-1,526,790,047.56		-1,527,968,006.58
Total owners’ equity attributable
to owners of the Company		524,447,375.98		523,269,416.96
Total owners’ equity		524,447,375.98		523,269,416.96
Total liabilities and owners’ equity		1,267,087,349.76		1,356,917,020.31
	Person in charge of Person in charge of
Legal representative:	accounting: accounting department:
Zhang Chong	Ma	Yan		Chen Jing

– 16 –

Balance Sheet of the Company

Prepared by: Luoyang Glass Company Limited* 30 June 2017

Unit: RMB Yuan

Item Current Assets: Cash and cash equivalents Bills receivables Accounts receivables Prepayments Other receivables Other current assets Total current assets Non-current assets: Long-term receivables Long-term equity investments Fixed assets Intangible assets Long-term deferred expenses Total non-current assets Total assets	Closing Balance 70,744,724.85 740,000.00 206,785,944.80 692,465.64 24,603,318.97 156,428.50 303,722,882.76 55,000,000.00 828,986,593.99 2,688,202.10 64,376,286.57 216,000.00 951,267,082.66 1,254,989,965.42	Opening Balance 109,837,249.29 12,832,190.32 207,658,323.10 58,700.86 82,751,723.72 52,829.24
		413,191,016.53
		55,000,000.00 748,986,593.99 2,878,637.33 6,674,333.25 270,000.00
		813,809,564.57
		1,227,000,581.10

– 17 –

Item		Closing Balance		Opening Balance
Current liabilities:
Short-term borrowings		321,496,500.00		–
Bills payables		60,000,000.00		90,000,000.00
Accounts payables		7,035,573.47		15,317,580.28
Receipts in advance		10,188,797.54		11,625,410.24
Employee compensation payable		5,744,367.17		8,015,791.49
Tax payables		551,330.73		807,117.66
Other payables		412,242,355.52		281,486,640.75
Non-current liabilities due within
one year		9,146,724.30		386,428,324.30
Total current liabilities		826,405,648.73		793,680,864.72
Non-current liabilities:
Long-term borrowings		826,297.19		946,806.31
Total non-current liabilities		826,297.19		946,806.31
Total Liabilities		827,231,945.92		794,627,671.03
Owners’ equity:
Share capital		526,766,875.00		526,766,875.00
Capital reserve		1,253,391,100.15		1,253,391,100.15
Surplus reserve		51,365,509.04		51,365,509.04
Undistributed profit		-1,403,765,464.69		-1,399,150,574.12
Total owners’ equity		427,758,019.50		432,372,910.07
Total liabilities and owners’ equity		1,254,989,965.42		1,227,000,581.10
	Person in charge of Person in charge of
Legal representative:	accounting: accounting department:
Zhang Chong	Ma	Yan		Chen Jing

– 18 –

Consolidated Income Statement

Prepared by: Luoyang Glass Company Limited* January–June 2017

Unit: RMB Yuan

	January–	January–
Item	June 2017	June 2016
I. Operating revenue	154,969,277.04	137,239,714.63
Less: Operating cost	112,590,015.32	128,487,520.70
Taxes and surcharges	3,301,953.14	192,141.99
Selling expenses	3,261,156.57	3,541,156.15
Administrative expenses	37,112,773.42	27,468,430.63
Financial expenses	13,663,932.39	3,217,323.22
Impairment losses of assets	853,423.55	1,104,320.07
Add: Other income	19,749,138.28	–
II. Operating profit (loss is represented by
“-”)	3,935,160.93	-26,771,178.13
Add: Non-operating income	1,909,633.82	4,328,879.61
Including: Gains on disposal of non-
current assets	83,418.35	95.03
Less: Non-operating expense	236,378.61	140,580.22
III. Total profit (total loss is represented by
“-”)	5,608,416.14	-22,582,878.74
Less: Income tax expenses	4,430,457.12	3,162,715.49
IV. Net profit (net loss is represented by “-”)	1,177,959.02	-25,745,594.23
Including: N et profit attributable to the
owners of the Company	1,177,959.02	-25,745,594.23
Minority interests	–	–

– 19 –

	January–	January–	January–	January–
Item	June 2017	June 2016
V. Other comprehensive income, net of tax
Other comprehensive income attributable
owners of the Company, net of tax	–			–
(I) Other comprehensive income that
cannot be subsequently reclassified
into profit and loss	–			–
(II) Other comprehensive income that will
be subsequently reclassified into
profit and loss	–			–
Other comprehensive income attributable
to minority interests, net of tax	–			–
VI. Total comprehensive income 1,177,959.02		-25,745,594.23
Total comprehensive income Attributable
to owners of the Company 1,177,959.02		-25,745,594.23
Total comprehensive income attributable
to minority interests	–			–
VII. Earnings per share
(I) Basic earnings per share	0.0022		-0.0491
(II) Diluted earnings per share	–			–
Person in charge of	Person in charge of
Legal representative: accounting:	accounting department:
Zhang Chong Ma Yan	Chen Jing

– 20 –

Income Statement of the Company

Prepared by: Luoyang Glass Company Limited* January–June 2017

Unit: RMB Yuan

		January–	January–
Item		June 2017	June 2016
I.	Operating revenue	72,438,752.95	90,696,768.06
	Less: Operating cost	72,252,825.33	88,703,352.02
	Taxes and surcharges	401,776.30	15,183.99
	Selling expenses	218,657.97	337,516.41
	Administrative expenses	-1,139,669.58	10,410,987.82
	Financial expenses	11,070,786.45	-905,799.95
	Impairment losses of assets	600,521.20	–
	Add: Investment income	5,515,364.92	5,533,462.50
II.	Operating profit	-5,450,779.80	-2,331,009.73
	Add: Non-operating income	1,036,395.35	65,836.27
	Including: Gains on disposal of non-
	current assets	–	95.03
	Less: Non-operating expense	200,506.12	–
III.	Total profit	-4,614,890.57	-2,265,173.46
IV.	Net Profit	-4,614,890.57	-2,265,173.46

– 21 –

January– January– June 2017 June 2016

Item

V. Other comprehensive income, net of tax

(I) Other comprehensive income that cannot be subsequently reclassified – – into profit and loss (II) Other comprehensive income that will be subsequently reclassified into – profit and loss VI. Total comprehensive income -4,614,890.57 -2,265,173.46 VII. Earnings per share – – (I) Basic earnings per share – – (II) Diluted earnings per share Person in charge of Person in charge of Legal representative: accounting: accounting department: Zhang Chong Ma Yan Chen Jing

– 22 –

Consolidated Cash Flow Statement

Prepared by: Luoyang Glass Company Limited* January–June 2017

Unit: RMB Yuan

	January–	January–
Item	June 2017	June 2016
I. Cash flow from operating activities:
Cash received from sales of goods or
rendering of services	59,649,540.35	46,357,908.63
Other cash received related to operating
activities	12,309,769.38	5,590,870.37
Subtotal of cash inflows from operating
activities	71,959,309.73	51,948,779.00
Cash paid for goods purchased and
services rendered	31,980,948.60	60,010,928.46
Cash paid to and for employees	36,826,931.46	36,484,249.91
Cash paid for various taxes	18,026,778.16	15,594,521.33
Other payments related to operating
activities	7,345,032.08	15,695,448.22
Subtotal of cash outflows from operating
activities	94,179,690.30	127,785,147.92
Net cash flow from operating activities	-22,220,380.57	-75,836,368.92
II. Cash flow from investment activities:
Net cash received from disposal of fixed
assets, intangible assets and other long-
term assets	2,348,600.00	–
Other cash received from investment
activities	23,798,268.89	–
Subtotal of cash inflows from investment
activities	26,146,868.89	–
Cash paid for the acquisition and
construction of fixed assets, intangible
assets, and other long-term assets	5,295,506.51	148,134.20
Other cash payments related to investment
activities	–	90,729,715.31
Subtotal of cash outflows from investment
activities	5,295,506.51	90,877,849.51
Net cash flow from investment activities	20,851,362.38	-90,877,849.51

– 23 –

	January–	January–
Item	June 2017	June 2016
III. Cash flows from financing activities:
Cash received from investments	–	209,624,984.30
Proceeds from loans	335,904,000.00	15,000,000.00
Other cash received related to financing
activities	271,257,432.90	81,055,772.70
Subtotal of cash inflows from financing
activities	607,161,432.90	305,680,757.00
Cash paid for repayments of borrowings	347,464,266.99	54,238,626.83
Cash payment for distribution of dividends
and profits or interest repayment	9,008,431.66	3,841,626.46
Other cash payments related to financing
activities	301,160,000.00	86,855,497.44
Subtotal of cash outflows from financing
activities	657,632,698.65	144,935,750.73
Net cash flow from financing activities	-50,471,265.75	160,745,006.27
IV. Effect of exchange rate changes on cash
and cash equivalents	-195.39	128.15
V. Net increase in cash and cash equivalents	-51,840,479.33	-5,969,084.01
Add: Opening balance of cash andcash
equivalents	112,528,516.53	42,342,860.91
VI. Closing balance of cash and cash
equivalents	60,688,037.20	36,373,776.90
Person in charge of Person		in charge of
Legal representative: accounting:	accounting department:
Zhang Chong Ma Yan	Chen Jing

– 24 –

Cash Flow Statement of the Company

Prepared by: Luoyang Glass Company Limited* January–June 2017

Unit: RMB Yuan

		January–	January–
Item		June 2017	June 2016
I.	Cash flow from operating activities:
	Cash received from sales of goods or
	rendering of services	37,301,455.04	31,355,222.82
	Other cash received related to operating
	activities	37,206,581.02	139,387,525.74
	Subtotal of cash inflows from operating
	activities	74,508,036.06	170,742,748.56
	Cash paid for goods purchased and
	services rendered	86,900.00	21,495,623.96
	Cash paid to and for employees	6,977,169.55	12,015,636.74
	Cash paid for various taxes	686,886.91	943,550.75
	Other payments related to operating
	activities	83,702,867.49	165,597,696.70
	Subtotal of cash outflows from operating
	activities	91,453,823.95	200,052,508.15
	Net cash flow from operating activities	-16,945,787.89	-29,309,759.59
II.	Cash flow from investment activities:
	Net cash received from disposal of fixed
	assets, intangible assets and other long
	term assets	400,000.00	–
	Other cash received from activities related
	to investment	43,164,222.88	–
	Sub-total of cash inflow from investment
	activities	43,564,222.88	–
	Cash paid for purchase and construction
	of fixed assets, intangible assets and
	other long-term assets	3,360,200.60	–
	Cash paid for investment	80,000,000.00	–
	Other cash paid for activities related to
	investment	–	90,729,715.31
	Sub-total of cash outflow from investment
	activities	83,360,200.60	90,729,715.31
	Net cash flow from investment activities	-39,795,977.72	-90,729,715.31

– 25 –

	January–	January–
Item	June 2017	June 2016
III. Cash flow from financing activities:
Cash received from capital contributions	–	209,624,984.30
Proceeds from loans	235,904,000.00
Other cash received from financing-
related activities	534,383,680.49	34,555,772.70
Sub-total of cash inflow from financing
activities	770,287,680.49	244,180,757.00
Cash paid for repayment of loans	290,582,396.18	21,703,058.86
Cash paid for distribution of dividends or
profit or interest payments	5,815,847.75	17,046.53
Other cash paid for financing-related
activities	441,240,000.00	102,800,000.00
Sub-total of cash outflow from financing
activities	737,638,243.93	124,520,105.39
Net cash flow from financing activities	32,649,436.56	119,660,651.61
IV. Effects of changes in exchange rate on
cash and cash equivalents	-195.39	128.15
V. Net increase in cash and cash equivalents	-24,092,524.44	-378,695.14
Add: Opening balance of cash and cash
equivalents	64,837,249.29	422,236.77
VI. Closing balance of cash and cash
equivalents	40,744,724.85	43,541.63
Person in charge of Person		in charge of
Legal representative: accounting:	accounting department:
Zhang Chong Ma Yan	Chen Jing

– 26 –

Consolidated Statement of Changes in Shareholders’ Equity Prepared by: Luoyang Glass Company Limited* January–June 2017

Unit: RMB Yuan

							January–June 2017
					Attributable	to shareholders of	the Company
						Other						Total
			Other equity		Less:	comprehensive			Undistributed		Minority	shareholders’
Item		Share capital	instruments	Capital reserve	Treasury stock	income	Special reserve	Surplus reserve	profit	Sub-total	interests	equity
I.	Balance at the end of last year	526,766,875.00		1,473,105,039.50				51,365,509.04	-1,527,968,006.58	523,269,416.96		523,269,416.96
	Add: Changes in accounting policies
	E ffects of correction of prior
	period errors
II.	Balance at the beginning of the year	526,766,875.00		1,473,105,039.50				51,365,509.04	-1,527,968,006.58	523,269,416.96		523,269,416.96
III.	Change for the period (decrease is
	indicated by “-”)								1,177,959.02	1,177,959.02		1,177,959.02
	(I) Total comprehensive income								1,177,959.02	1,177,959.02		1,177,959.02
	(II) Capital contributed or reduced
	by shareholders
	1. Ordinary shares paid by
	shareholders
	(III) Profit distribution
	(IV) Internal transfers of
	shareholders’ equity
	(V) Special reserve
IV.	Balance at the end of the period	526,766,875.00		1,473,105,039.50				51,365,509.04	-1,526,790,047.56	524,447,375.98		524,447,375.98
							January–June 2016
					Attributable to shareholders of the Company
						Other						Total
			Other equity		Less:	comprehensive			Undistributed		Minority	shareholders’
Item		Share capital	instruments	Capital reserve	Treasury stock	income	Special reserve	Surplus reserve	profit	Sub-total	interests	equity
I.	Balance at the end of last year	515,018,242.00	1,251,445,315.32		51,365,509.04				-1,539,484,070.36	278,344,996.00	278,344,996.00
	Add: Changes in accounting policies
	E ffects of correction of prior year
	errors
II.	Opening balance of the year	515,018,242.00	1,251,445,315.32		51,365,509.04				-1,539,484,070.36	278,344,996.00	278,344,996.00
III.	Change for the period (decrease is
	indicated by “-”)	11,748,633.00	197,876,351.30		-25,745,594.23					183,879,390.07	183,879,390.07
	(I) Total comprehensive income	-25,745,594.23								-25,745,594.23	-25,745,594.23
	(II) Capital contributed or reduced by
	shareholders	11,748,633.00	197,876,351.30		209,624,984.30						209,624,984.30
	1. Ordinary shares paid by
	shareholders	11,748,633.00	197,876,351.30		209,624,984.30						209,624,984.30
	(III) Profit distribution
	(IV) Internal transfers of shareholders’
	equity
	(V) Special reserve
IV.	Balance at the end of the period	526,766,875.00	1,449,321,666.62		51,365,509.04				-1,565,229,664.59	462,224,386.07	462,224,386.07
				Person in		charge of		Person in charge of accounting
	Legal representative:				accounting:				department:
	Zhang Chong				Ma Yan				Chen Jing

– 27 –

Statement of Changes in Shareholders’ Equity of the Company Prepared by: Luoyang Glass Company Limited* January–June 2017

Unit: RMB Yuan

							January–June 2017	January–June 2017
								Other					Total
			Other equity			Less:	comprehensive		Special	Surplus	Undistributed		shareholders’
Item		Share capital	instruments	Capital reserve	Treasury stock			income	reserve	reserve		profit	equity
I.	Balance at the end of last year	526,766,875.00		1,253,391,100.15						**51,365,509.04 **	-1,399,150,574.12		432,372,910.07
	Add: Changes in accounting policies
	Effects of correction of prior period
	errors
II.	Balance at the beginning of the year	526,766,875.00		1,253,391,100.15						**51,365,509.04 **	-1,399,150,574.12		432,372,910.07
III.	Change for the period (decrease is
	indicated by “-”)										-4,614,890.57		-4,614,890.57
	(I) Total comprehensive income										-4,614,890.57		-4,614,890.57
	(II) Capital contributed or reduced by
	shareholders
	1. Ordinary shares paid by
	shareholders
	(III) Profit distribution
	(IV) Internal transfers of shareholders’
	equity
	(V) Special reserve
	(Ⅵ) Others
IV.	Balance at the end of the period	526,766,875.00		1,253,391,100.15						**51,365,509.04 **	-1,403,765,464.69		427,758,019.50
							January–June 2016
								Other					Total
			Other equity	Capital		Less:	comprehensive		Special	Surplus	Undistributed		shareholders’
Item		Share capital	instruments	reserve	Treasury	stock		income	reserve	reserve		profit	equity
I.	Balance at the end of last year	515,018,242.00		1,030,115,828.84						51,365,509.04	-1,353,434,966.46		243,064,613.42
	Add: Changes in accounting policies
	Effects of correction of prior
	year errors
II.	Balance at the beginning of the year	515,018,242.00		1,030,115,828.84						51,365,509.04	-1,353,434,966.46		243,064,613.42
III.	Change for the period (decrease is
	indicated by “-”)	11,748,633.00		197,876,351.30							-2,265,173.46		207,359,810.84
	(I) Total comprehensive income										-2,265,173.46		-2,265,173.46
	(II) Capital contributed or reduced
	by shareholders	11,748,633.00		197,876,351.30									209,624,984.30
	1. Ordinary shares paid by
	shareholders	11,748,633.00		197,876,351.30									209,624,984.30
	(III) Profit distribution
	(IV) Internal transfers of
	shareholders’ equity
	(V) Special reserve
	(Ⅵ) Others
IV.	Balance at the end of the period	526,766,875.00	1,227,992,180.14							51,365,509.04	-1,355,700,139.92		450,424,424.26
			Person in		charge of			Person in charge of accounting
	Legal representative:			accounting:						department:
	Zhang Chong			Ma Yan						Chen Jing

– 28 –

NOTES TO THE FINANCIAL STATEMENTS

Interim report for the half year ended 30 June 2017 (Expressed in Renminbi)

I. BACKGROUND OF THE COMPANY

Luoyang Glass Company Limited (the “ Company ”) was incorporated in the People’s Republic of China (the “ PRC ”) as a joint stock limited company. The Company and its subsidiaries (collectively the “ Group* ”) are engaged in manufacture and sales of photoelectric 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 the Accounting Standards for Business Enterprises, the Application Guidelines for Accounting Standards for Business Enterprises, the Interpretations of the Accounting Standards for Business Enterprises and other regulations issued by the Ministry of Finance, and based on the following significant accounting policies and estimates.

2. Accounting period

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

3. Functional currency

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

4. Preparation method of consolidated financial statements

Subsidiaries and special purpose entities under the de facto control of the Company are incorporated into the consolidated financial statements.

The consolidated financial statements of the Company are prepared in accordance with the “Accounting Standards for Business Enterprises No. 33 – Consolidated Financial Statements” and relevant provisions, and all significant intra-group transactions and balances are eliminated. Interests in subsidiaries that are not attributable to owners of parent company are presented separately as minority interest in the consolidated financial statements.

– 29 –

Adjustments to subsidiaries’ financial statements in accordance with the accounting policies or accounting period of the Company are needed when preparing consolidated financial statements if the subsidiaries’ accounting policies or accounting period are different from those of the Company.

For subsidiaries acquired not under common control, when preparing consolidated financial statements, such subsidiaries’ financial statements should be adjusted on the basis of the fair value of identifiable net assets on the date of acquisition. For subsidiaries acquired under common control, the assets, liabilities, operating results and cash flows of acquired subsidiaries should be included in consolidated financial statements from the beginning of the year of acquisition as if the combination had taken place at the beginning of the year.

III. SEGMENT REPORTING

As the Group’s revenue for the reporting period was mainly derived from the sale of photoelectric glass, the photoelectric glass segment is regarded as the only reportable segment. The management of the Group reviews the Group’s performance based on such segment and regularly reviews its financial information to decide on resources allocation thereto and assess its performance.

1. Geographic segment information

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

Item China Total	Revenue from external customers January– June 2017 January– June 2016 154,969,277.04 137,239,714.63 154,969,277.04 137,239,714.63	Non-current assets 30 June 2017 31 December 2016 753,155,945.00 715,096,776.36 753,155,945.00 715,096,776.36

– 30 –

2. Major customers

The Group has a concentrated group of major customers that the total sales to the top five customers accounted for over 50% of the Group’s revenue from January to June 2017.

IV. TURNOVER

Turnover represents revenue from the invoiced value of goods sold to customers, after deduction of any trade discounts and net of value-added tax and surcharges, an analysis of which is as follows:

(1) Details of operating revenue

Item January– June 2017 Revenue from principal operations 152,856,356.90 Revenue from other operations 2,112,920.14 Total 154,969,277.04 (2) Details of income from principal operations by product Products or services January– June 2017 Photoelectric glass 152,856,356.90 Total 152,856,356.90 V. OTHER INCOME Item January– June 2017 Government subsidies 19,749,138.28 Total 19,749,138.28	January– June 2016 135,466,204.64 1,773,509.99
	137,239,714.63
	January– June 2016 135,466,204.64
	135,466,204.64
	January– June 2016 –
	–

– 31 –

VI. NON-OPERATING INCOME

Item Total gain on disposal of non-current assets Including: Gain on disposal of fixed assets G ains on disposal of intangible assets Gains from debt restructuring Government subsidies Other gains Total	January– June 2017 83,418.35 22,266.73 61,151.62 1,715,899.47 110,316.00 1,909,633.82	January– June 2016 95.03 95.03 2,046.24 4,294,086.69 32,651.65
		4,328,879.61

VII. 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 gain Handling charges (interests of discounted bill) Other expenses Total	January– June 2017 11,717,495.38 422,177.91 74,982.72 0.27 1,164,199.93 1,129,432.54 13,663,932.39	January– June 2016 4,426,071.99 2,061,988.44 70,867.83 162.23 – 782,534.07
		3,217,323.22

– 32 –

(2) Operating costs

Item Costs of principal operations Costs of other operations Total (3) Taxes and surcharges Item Business tax Urban construction and maintenance tax Education surcharges Property tax Land-use tax Stamp duty Others Total	January– June 2017 111,125,433.36 1,464,581.96 112,590,015.32 January– June 2017 – 222,690.73 159,064.81 1,037,097.14 1,641,860.37 200,128.78 41,111.31 3,301,953.14	January– June 2016 127,477,857.21 1,009,663.49
		128,487,520.70
		January– June 2016 5,741.68 108,800.50 77,599.81 – – – –
		192,141.99

– 33 –

(4) Selling expenses

Items Staff remuneration Depreciation expenses Transportation costs Loading and unloading charges Material consumption Other selling expenses Total (5) Administrative expenses Items Staff remuneration Depreciation of fixed assets Amortization of intangible asset Intermediary engagement fees Research and development expenses Taxes Other expenses Total	January– June 2017 2,379,334.16 87,597.70 46,118.69 276,093.80 110,190.65 361,821.57 3,261,156.57 January– June 2017 10,287,367.74 2,163,272.51 1,253,978.48 3,127,928.60 14,594,681.15 5,685,544.94 37,112,773.42	January– June 2016 2,485,495.04 118,033.97 81,230.34 228,723.14 119,336.11 508,337.55
		3,541,156.15
		January– June 2016 12,035,425.21 992,385.23 878,642.62 2,973,674.53 2,264,527.32 3,022,044.94 5,301,730.78
		27,468,430.63

– 34 –

(6) Impairment losses of assets

		January–		January–
	Items	June 2017		June 2016
	Bad debt losses	1,551,569.96		153,921.09
	Impairment losses of inventories	-698,146.41		950,398.98
	Total	853,423.55		1,104,320.07
(7)	Non-operating expenses
		January–		January–
	Items	June 2017		June 2016
	Indemnities, liquidated damages and
	penalties	226,243.61
	Other expenses	10,135.00		140,580.22
	Total	236,378.61		140,580.22
VIII.INCOME TAX EXPENSES
		January–		January–
Items		June 2017		June 2016
Current income tax calculated according to
tax laws and relevant requirements		2,756,429.03		1,727,874.09
Deferred income tax expenses		1,674,028.09		1,434,841.40
Total		4,430,457.12		3,162,715.49
Note:	Longhai Company and Bengbu Company, both being wholly-owned subsidiaries of
	the Company, were recognized as high-tech enterprises in 2016			and thus enjoyed a
	preferential enterprise income tax rate at 15% in 2017.

– 35 –

IX. DIVIDEND

The board of directors of the Company does not recommend declaring dividends for the six months ended 30 June 2017.

X. BASIC EARNINGS PER SHARE

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

	January–	January–
	June 2017	June 2016
Net profit attributable to ordinary
shareholders of the Company	1,177,959.02	-25,745,594.23
Total shares at the end of period	526,766,875.00	526,766,875.00
Basic earnings per share	0.0022	-0.0491

There were no diluted earnings per share as the Company had no potential diluted shares for the period ended 30 June 2017.

XI. ACCOUNTS RECEIVABLES AND BILLS RECEIVABLES

1. Accounts receivables:

Items Accounts receivables Less: provision for bad debts Accounts receivable, net	Closing balance 193,577,848.89 55,474,889.68 138,102,959.21	Opening balance 156,466,612.01 54,575,282.88
		101,891,329.13

Generally, the Group sells its products to customers on advance payment term while 30 days of credit term is granted to a few customers.

– 36 –

Aged analysis of accounts receivables by date of entry:

Aging Within 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Over 5 years Total 2. Classification of bills receivable Items Bank acceptances Commercial acceptances Total	Closing Balance 134,780,501.04 4,746,367.28 2.14 79,720.82 605,589.30 53,365,668.31 193,577,848.89 Closing balance 43,611,023.42 – 43,611,023.42	Opening Balance 98,896,250.79 1,880,549.56 1,718,554.05 605,589.30 2,672,254.67 50,693,413.64
		156,466,612.01
		Opening balance 45,586,571.00 400,000.00
		45,986,571.00

XII. ACCOUNTS PAYABLE AND BILLS PAYABLE

1. Aged analysis of accounts payable Items Closing Balance Opening Balance Within 1 year (including 1 year) 15,503,229.21 17,853,268.60 Above 1 year 17,443,282.57 28,520,633.60 Total 32,946,511.78 46,373,902.20

– 37 –

2. Classification of bills payable

Items Bank acceptances Total	Closing Balance 50,000,000.00 50,000,000.00	Opening Balance 90,000,000.00
		90,000,000.00

XIII. RESERVES

1. Capital reserve

Items I. Capital premium II. Other capital reserve Total 2. Surplus reserve Items Statutory surplus reserve Total	Opening Balance 1,400,804,566.23 72,300,473.27 1,473,105,039.50 Opening Balance 51,365,509.04 51,365,509.04	Increase for the period Increase for the period	Decrease for the period Decrease for the period	Closing Balance 1,400,804,566.23 72,300,473.27
				1,473,105,039.50
				Closing Balance 51,365,509.04
				51,365,509.04

– 38 –

3. Undistributed profit

Items Undistributed profit at the end of the previous period before adjustment Total effects of adjustments of undistributed profits at the beginning of the period (increase expressed with +, and decrease expressed with -) Undistributed profit at the beginning of the period after adjustment Add: ne t profit attributable to owners of the Company for the period Less: Appropriation to statutory surplus reserve Appropriation to discretionary surplus reserve Dividend payable ordinary shares Di vidend on ordinary shares as converted into share capital Undistributed profit at the end of the period	Closing Balance Amount Appropriation or distribution proportion -1,527,968,006.58 -1,527,968,006.58 1,177,959.02 － -1,526,790,047.56	Closing Balance Amount Appropriation or distribution proportion -1,527,968,006.58 -1,527,968,006.58 1,177,959.02 － -1,526,790,047.56

XIV. SUBSEQUENT EVENTS

N/A

Chairman: Zhang Chong Luoyang Glass Company Limited* 29 August 2017

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

• For identification purposes only

– 39 –