ANNUAL REPORT Contents
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(a joint stock limited company incorporated in the People's Republic of China with limited liability) H Share Stock Code: 1108 A Share Stock Code: 600876 2019 ANNUAL REPORT Contents I. DEFINITIONS................................................................... 2 II. COMPANY PROFILE AND MAJOR FINANCIAL INDICATORS............................... 4 III. BUSINESS SUMMARY OF THE COMPANY ............................................ 8 IV. DISCUSSION AND ANALYSIS OF THE OPERATIONS .................................... 10 V. SIGNIFICANT EVENTS............................................................ 31 VI. RELATED PARTY TRANSACTIONS .................................................. 53 VII. CHANGES IN SHAREHOLDING OF ORDINARY SHARES AND INFORMATION OF SHAREHOLDERS. 56 VIII. DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES..................... 66 IX. CORPORATE GOVERNANCE ...................................................... 77 X. FINANCIAL REPORT ............................................................. 93 XI. DOCUMENTS AVAILABLE FOR INSPECTION .......................................... 244 Important Notice I. The board of directors (the “Board”), the supervisory committee and the directors (the “Directors”), supervisors and senior management of the Company confirm that the information contained in this annual report is true, accurate, and complete without any false and misleading statements or material omissions, and severally and jointly accept legal responsibility for the above. II. All Directors of the Company attended the Board meeting. III. WUYIGE Certified Public Accountants LLP has issued an auditors’ report with standard unqualified opinions for the Company. IV. Mr. Zhang Chong, the Chairman of the Company, Mr. Ma Yan, the Chief Financial Controller and Ms. Chen Jing, the Person in charge of Accounting Department, warrant the truthfulness, accuracy and completeness of the financial statements set out in the annual report. V. Profit distribution proposal or proposal for conversion of capital reserve to the share capital during the reporting period as considered by the Board As considered by WUYIGE Certified Public Accountants LLP, the net profit of the Company for 2019 was RMB2,546,900, together with the undistributed profit RMB-1,365,555,300 at the beginning of the year, the accumulated undistributed profit amounted to RMB-1,363,008,400 as at the end of 2019. The Company will not distribute profit or convert capital reserve to the share capital for 2019. VI. Risk statements on forward-looking statements Forward-looking statements, including future plan and development strategy, contained in this report do not constitute a real commitment to investors by the Company. Investors should be reminded of such investment risks. VII. Is there any embezzlement of non-operating funds by the controlling shareholder(s) and its/their related parties No VIII. Is there any decision-making procedure in violation of any provisions for providing external guaranty? No IX. Notice of Significant Risks The Company has described in detail the potential risk factors in this report. Please refer to the content about potential risks exposed to the future development of the Company discussed and analyzed in IV. “Discussion and Analysis of the Operations”. LUOYANG GLASS COMPANY LIMITED I 2019 ANNUAL REPORT 1 Definitions I. DEFINITIONS Unless otherwise stated in context, the following terms should have the following meanings in this report: Definitions of frequently-used terms CSRC China Securities Regulatory Commission SASAC State-owned Assets Supervision and Administration Commission SSE Shanghai Stock Exchange Stock Exchange The Stock Exchange of Hong Kong Limited Company, Luoyang Glass Luoyang Glass Co., Ltd. Group Luoyang Glass Co., Ltd. and its subsidiaries Longhai Glass CLFG Longhai Electronic Glass Limited Longmen Glass CLFG Longmen Glass Co. Ltd. Bengbu CNBM Information Display Bengbu China National Building Materials Information Display Materials Company Limited Puyang CNBM Photovoltaic Materials Puyang China National Building Materials Photovoltaic Materials Company Limited Hefei New Energy CNBM (Hefei) New Energy Co., Ltd.* Tongcheng New Energy CNBM (Tongcheng) New Energy Materials Co., Ltd.* Yixing New Energy CNBM (Yixing) New Energy Resources Co., Ltd CNBM China National Building Materials Group Co., Ltd. Triumph Group Triumph Technology Group Co., Ltd. * For identification purposes only 2 LUOYANG GLASS COMPANY LIMITED I 2019 ANNUAL REPORT Definitions CLFG China Luoyang Float Glass Group Co., Ltd. Bengbu Institute Bengbu Design & Research Institute for Glass Industry Co., Ltd International Engineering China Triumph International Engineering Co., Ltd. Triumph Technology Triumph Science & Technology Co., Ltd. Huaguang Group Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. Hefei Gaoxin Investment Hefei Gaoxin Development and Investment Group Company* Yixing Environmental Technology Yixing Environmental Technology Innovation Venture Investment Co., Ltd.* GCL System Integration GCL System Integration Technology Co., Ltd. Far East Opto-Electronics Far East Opto-Electronics Co., Ltd. Hong Kong Listing Rules The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited Shanghai Listing Rules The Rules Governing the Listing of Stocks on the Shanghai Stock Exchange LUOYANG GLASS COMPANY LIMITED I 2019 ANNUAL REPORT 3 Company Profile and Major Financial Indicators I. INFORMATION OF THE COMPANY Chinese name of the Company 洛陽玻璃股份有限公司 Chinese abbreviation 洛陽玻璃 English name of the Company Luoyang Glass Company Limited English abbreviation LYG Legal representative of the Company Zhang Chong II. CONTACT PERSONS AND CONTACT METHODS Secretary to the Board Representative of securities affairs Name Wu Zhixin Zhao Zhiming Correspondence Secretary Office of the Board of Luoyang Secretary Office of the Board of Luoyang address Glass Co., Ltd., No. 9, Tang Gong Zhong Glass Co., Ltd., No. 9, Tang Gong Zhong Lu, Xigong District, Luoyang, Henan Lu, Xigong District, Luoyang, Henan Province, the PRC Province, the PRC Telephone 86-379-63908588, 63908637 86-379-63908833 Fax 86-379-63251984 86-379-63251984 Email [email protected] [email protected] III. BASIC INFORMATION Registered address No. 9, Tang Gong Zhong Lu, Xigong District, Luoyang, Henan Province, the People’s Republic of China (the “PRC”) Postal code 471009 Office address No. 9, Tang Gong Zhong Lu, Xigong District, Luoyang, Henan Province, the People’s Republic of China (the “PRC”) Postal code 471009 Website of the Company http://www.zhglb.com/ Email [email protected] IV. PLACES FOR INFORMATION DISCLOSURE AND REFERENCE Name of newspapers designated for information China Securities Journal, Shanghai Securities News, disclosure Securities Daily Website designated by CSRC for publishing http://www.sse.com.cn, http://www.hkexnews.hk annual reports Place for inspection of annual reports Secretary Office of the Board of Luoyang Glass Co., Ltd. V. BASIC INFORMATION OF THE COMPANY’S SHARES Basic Information of the Company’s Shares Place of listing of the Stock abbreviation Type of shares Company’s shares Stock abbreviation Stock code before changes A Share Shanghai Stock Exchange Luoyang Glass 600876 The Stock Exchange of H Share Hong Kong Limited Luoyang Glass 01108 4 LUOYANG GLASS COMPANY LIMITED I 2019 ANNUAL REPORT Company Profile and Major Financial Indicators VI. OTHER INFORMATION Accounting firm appointed by the Name WUYIGE Certified Public Accountants LLP Company (domestic) Office address 16 F, Bosom Friend Media Plaza, No. 31 Zhongbei Road, Wuhan, the PRC Names of signing Qiao Guanfang(喬冠芳), Wang Haizhou(汪海洲) accountants Financial advisors fulfilling continuing Name Morgan Stanley Huaxin Securities Co., Ltd.(摩根士 supervisory responsibilities during 丹利華鑫證券有限責任公司) the reporting period Office address Room 75T30, 75th Floor, Shanghai World Financial Center, No. 100 Century Avenue, Pilot Free Trade Zone, Shanghai, PRC Names of signing Shao Qing (邵清), Wang Jian(王鑒) financial advisors Period of continuing 2018.04.13-2019.12.31 supervision VII. MAJOR ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE COMPANY FOR THE LAST THREE YEARS (I) Major accounting data Unit: Yuan Currency: RMB Increase/decrease over the same Major accounting data 2019 2018 period last year 2017 (%) Operating income 1,854,842,208.09 1,402,748,187.74 32.23 1,502,152,910.64 Net profit attributable to shareholders of the listed company 53,999,883.71 15,645,310.47 245.15 87,672,262.83 Net profit attributable to shareholders of the listed company after deducting nonrecurring profit or loss 11,804,391.65 -21,745,281.44 N/A -43,601,538.34 Net cash flow from operating activities 22,491,988.77 -80,220,923.17 N/A -310,839,620.63 Increase/decrease As at the As at the over the same As at the end of 2019 end of 2018 period last year end of 2017 (%) Net assets attributable to shareholders of the listed company 1,299,216,365.32 1,245,216,484.61 4.34 1,131,687,647.58 Total assets 5,241,039,877.95 4,504,181,920.36 16.36 3,998,452,082.99 LUOYANG GLASS COMPANY LIMITED I 2019 ANNUAL REPORT 5 Company Profile and Major Financial Indicators VII. MAJOR ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE COMPANY FOR THE LAST THREE YEARS (CONTINUED) (II) Major Financial Indicators Increase/ decrease over the same period Major financial indicators 2019 2018 last year 2017 (%) Basic earnings per share (RMB/share) 0.0965 0.0280 244.64 0.1583 Diluted earnings per share (RMB/share) 0.0965 0.0280 244.64 0.1583 Basic earnings