Lomon Billions Group Co., Ltd 2019 Report
March 2020
Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
This document is a free translation of the annual report and consolidated financial statements of Lomon Billions Group Co Limited for 2019, produced for the convenience of English-speaking readers.
In the event of any ambiguity or conflict between statements or other items contained herein and the original version which was prepared in Mandarin, the relevant statement or item of the original Mandarin version shall prevail. While all possible care has been taken to ensure that this translation is an accurate representation of the original document, this English language version has not been audited by the company’s statutory auditors and in all matters of interpretation of information, views or opinions expressed therein, only the original language version of the document in Mandarin is legally binding.
As such, this translation may not be relied upon to sustain any legal claim, nor be used as the basis of any legal opinion, and Lomon Billions Group Co Limited expressly disclaims all liability for any inaccuracy herein.
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1 Section I Important Notes, Contents and Definitions The Board of Directors, Board of Supervisors, directors, supervisors and senior executives of the Company warrant that the contents of the Annual Report are true, accurate and complete and do not contain false records, misleading statements or major omissions, for which they will assume several and joint legal liabilities.
XU Gang, Chairman, SHEN Qingfei, Chief Financial Officer, and GUO Liangpo, Head of Accounts (accounting supervisor) declare that the financial statements in the Annual Report are true, accurate and complete.
All directors have attended the board meeting to review the Report.
The Company has described possible risks in detail herein. Investors are requested to refer to Item IX “Future Prospects of the Company” in Section IV “Discussion and Analysis of Business Conditions”.
The Company plans neither to pay cash dividends or bonus shares nor raise capital with accumulation funds.
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Table of Contents
1 SECTION I IMPORTANT NOTES, CONTENTS AND DEFINITIONS...... III
DEFINITIONS ...... 1
2 SECTION II COMPANY PROFILE AND MAJOR FINANCIAL INDICATORS ...... 3
2.1 COMPANY PROFILE ...... 3 2.2 II. CONTACT PERSON AND CONTACT INFORMATION ...... 3 2.3 III. INFORMATION DISCLOSURE AND PREPARATION LOCATION ...... 4 2.4 IV. REGISTRATION CHANGES ...... 4 2.5 V. OTHER RELEVANT INFORMATION ...... 4 2.6 VI. MAJOR ACCOUNTING DATA AND FINANCIAL INDICATORS ...... 5 2.7 VII. DIFFERENCES IN ACCOUNTING DATA UNDER THE DOMESTIC AND FOREIGN ACCOUNTING STANDARDS ...... 6 2.8 VIII. KEY FINANCIAL INDICATORS BY QUARTER ...... 6 2.9 IX. ITEMS AND AMOUNT OF NON-RECURRING PROFIT AND LOSS ...... 7
3 SECTION III BUSINESS OVERVIEW OF THE COMPANY ...... 9
3.1 I. MAIN BUSINESS OF THE COMPANY DURING THE REPORTING PERIOD ...... 9 3.2 II. MAJOR CHANGES IN MAJOR ASSETS ...... 12 3.3 III. ANALYSIS OF CORE COMPETITIVENESS ...... 12
4 SECTION IV DISCUSSION AND ANALYSIS OF BUSINESS CONDITIONS ...... 19
4.1 (I) ANALYSIS OF BUSINESS ENVIRONMENT ...... 19 4.2 (II) OVERALL OPERATIONS OF THE COMPANY ...... 20 4.3 III. ANALYSIS OF NON-MAIN BUSINESS ...... 34 4.4 IV. ANALYSIS OF STATUS OF ASSETS AND LIABILITIES ...... 34 4.5 V. ANALYSIS OF INVESTMENT STATUS ...... 36 4.6 VI. SALE OF MAJOR ASSETS AND EQUITY ...... 39 4.7 VII. ANALYSIS OF MAJOR HOLDING AND PARTICIPATING COMPANIES ...... 39 4.8 VIII. STRUCTURED SUBJECTS CONTROLLED BY THE COMPANY ...... 41 4.9 IX. PROSPECTS FOR THE COMPANY’S FUTURE DEVELOPMENT ...... 41 4.10 X. RECEPTION OF SURVEY, COMMUNICATION, INTERVIEW AND OTHER ACTIVITIES ...... 47
5 SECTION V IMPORTANT PARTICULARS ...... 48
5.1 I. DISTRIBUTION OF RETURN ON COMMON SHARES AND TRANSFER OF CAPITAL RESERVE INTO EQUITY OF THE COMPANY ...... 48 5.2 II. PROFIT DISTRIBUTION AND TRANSFER OF CAPITAL RESERVE INTO SHARE CAPITAL DURING THE REPORTING PERIOD ...... 52 5.3 III. FULFILLMENT OF COMMITMENTS ...... 53
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5.4 IV. NON-BUSINESS CAPITAL OCCUPYING IN THE LISTED COMPANY BY CONTROLLING SHAREHOLDER AND ITS RELATED PARTIES ...... 54 5.5 V. EXPLANATION OF THE BOARD OF DIRECTORS, THE BOARD OF SUPERVISORS AND INDEPENDENT DIRECTORS (IF ANY) ON THE “NON-STANDARD AUDIT REPORT” ISSUED BY THE ACCOUNTING FIRM FOR THE REPORTING PERIOD ...... 54 5.6 VI. EXPLANATION OF CHANGES IN ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND ACCOUNTING METHODS COMPARED WITH THOSE SET OUT IN THE PREVIOUS YEAR’S FINANCIAL REPORT 54 5.7 VII. EXPLANATION OF MAJOR ACCOUNTING ERROR CORRECTIONS DURING THE REPORTING PERIOD THAT NEED TO BE RETROSPECTIVELY RESTATED ...... 54 5.8 VIII. DESCRIPTION OF CHANGES IN THE SCOPE OF CONSOLIDATED STATEMENTS COMPARED WITH THE PREVIOUS YEAR’S FINANCIAL REPORT ...... 55 5.9 IX. APPOINTMENT AND DISMISSAL OF ACCOUNTING FIRM ...... 55 5.10 X. DESCRIPTION OF SUSPENSION AND TERMINATION OF LISTING AFTER DISCLOSURE OF ANNUAL REPORT ...... 56 5.11 XI. MATTERS CONCERNING BANKRUPTCY REORGANIZATION ...... 56 5.12 XII. MAJOR LAWSUITS AND ARBITRATIONS ...... 56 5.13 XIII. PUNISHMENT AND RECTIFICATION ...... 56 5.14 XIV. DESCRIPTION ON INTEGRITY OF THE COMPANY AND ITS CONTROLLING SHAREHOLDER AND ACTUAL CONTROLLER ...... 56 5.15 XV. DESCRIPTION ON IMPLEMENTATION OF THE COMPANY’S EQUITY INCENTIVES PLAN, EMPLOYEE STOCK OWNERSHIP PLAN OR OTHER EMPLOYEE INCENTIVES...... 57 5.16 XVI. MAJOR RELATED PARTY TRANSACTIONS ...... 59 5.17 XVII. MAJOR CONTRACTS AND THEIR PERFORMANCE ...... 60 5.18 XVIII. OVERVIEW OF SOCIAL RESPONSIBILITY ...... 68 5.19 XIX. DESCRIPTION OF OTHER MAJOR MATTERS ...... 81 5.20 XX. MAJOR MATTERS OF THE COMPANY’S SUBSIDIARIES ...... 84
6 SECTION VI CHANGES IN SHARES AND PROFILE OF SHAREHOLDERS ...... 87
6.1 I. CHANGES IN SHARES ...... 87 6.2 II. ISSUANCE AND LISTING OF SECURITIES ...... 93 6.3 III. SHAREHOLDERS AND ACTUAL CONTROLLER ...... 94
7 SECTION VII RELEVANT INFORMATION CONCERNING PREFERRED SHARES ...... 100
8 SECTION VIII RELEVANT INFORMATION CONCERNING CONVERTIBLE CORPORATE BONDS ...... 101
9 SECTION IX DIRECTORS, SUPERVISORS, SENIOR EXECUTIVES AND EMPLOYEES ..... 102
9.1 I. CHANGES IN SHAREHOLDING OF DIRECTORS, SUPERVISORS AND SENIOR EXECUTIVES ...... 102 9.2 II. CHANGES IN DIRECTORS, SUPERVISORS AND SENIOR EXECUTIVES OF THE COMPANY ...... 105 9.3 III. OFFICE HOLDING OF RELEVANT PERSONNEL ...... 105
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9.4 IV. REMUNERATIONS OF DIRECTORS, SUPERVISORS AND SENIOR EXECUTIVES ...... 112 9.5 V. EMPLOYEES OF THE COMPANY ...... 115
10 SECTION X CORPORATE GOVERNANCE ...... 121
10.1 I. BASIC SITUATION OF CORPORATE GOVERNANCE ...... 121 10.2 II. INDEPENDENCE OF THE COMPANY AND CONTROLLING SHAREHOLDERS IN TERMS OF BUSINESS, PERSONNEL, ASSETS, ORGANIZATION, FINANCE, ETC...... 122 10.3 III. HORIZONTAL COMPETITION ...... 122 10.4 IV. RELEVANT INFORMATION OF ANNUAL GENERAL MEETINGS AND EXTRAORDINARY GENERAL MEETINGS HELD DURING THE REPORTING PERIOD ...... 122 10.5 V. PERFORMANCE OF DUTIES BY INDEPENDENT DIRECTORS DURING THE REPORTING PERIOD .. 124 10.6 VI. PERFORMANCE OF DUTIES BY THE SPECIAL COMMITTEES UNDER THE BOARD OF DIRECTORS DURING THE REPORTING PERIOD ...... 125 10.7 VII. WORK OF THE BOARD OF SUPERVISORS ...... 127 10.8 VIII. EVALUATION OF AND INCENTIVES FOR SENIOR EXECUTIVES ...... 127 10.9 IX. INTERNAL CONTROL EVALUATION REPORT ...... 128 10.10 X. INTERNAL CONTROL AUDIT REPORT OR AUTHENTICATION REPORT...... 130
11 SECTION XI RELEVANT INFORMATION CONCERNING CORPORATE BONDS ...... 131
12 SECTION XII FINANCIAL REPORT ...... 132
12.1 I. AUDIT REPORT ...... 132 12.2 II. FINANCIAL STATEMENTS ...... 139 12.3 III. COMPANY OVERVIEW ...... 185 12.4 IV. BASIS OF PREPARATION FOR FINANCIAL STATEMENTS ...... 192 12.5 V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES ...... 192 12.6 VI. TAXATION ...... 263 12.7 VII. NOTES ON ITEMS IN CONSOLIDATED FINANCIAL STATEMENTS ...... 268 12.8 VIII. CHANGES IN CONSOLIDATION SCOPE ...... 382 12.9 IX. EQUITY IN OTHER SUBJECTS ...... 386 12.10 X. RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS ...... 396 12.11 XI. DISCLOSURE OF FAIR VALUE ...... 402 12.12 XII. RELATED PARTIES AND RELATED-PARTY TRANSACTIONS ...... 403 12.13 XIII. SHARE-BASED PAYMENT ...... 416 12.14 XIV. COMMITMENTS AND CONTINGENCIES ...... 424 12.15 XV. MATTERS AFTER THE BALANCE SHEET DATE ...... 435 12.16 XV. OTHER IMPORTANT MATTERS ...... 437 12.17 XVII. NOTES TO MAJOR ITEMS IN FINANCIAL STATEMENTS OF PARENT COMPANY ...... 438 12.18 XVIII. SUPPLEMENTARY INFORMATION ...... 448
13 SECTION XIII DIRECTORY OF FILES FOR FUTURE REFERENCE ...... 452
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Definitions
Term means Definitions
The Company, Company, the means Lomon Billions Group Co., Ltd. Listed Company or Lomon Billions
Company Law means Company Law of the People’s Republic of China
Securities Law means Securities Law of the People’s Republic of China
Articles of Association of Lomon Billions Group Articles of Association means Co., Ltd.
CSRC means China Securities Regulatory Commission
SZSE means Shenzhen Stock Exchange
BDO China Shu Lun Pan Certified Public Accountant means Accountants (Special General Partnership)
Lawyer means Shanghai AllBright Law Offices (Shenzhen)
Lomon Billions Sichuan Titanium Industry Co., Ltd. or Sichuan Lomon Titanium Industry Co., Longbai Sichuan or Lomon Ltd. respectively. Sichuan Lomon Titanium means Titanium Industry Co., Ltd. renamed as Lomon Billions Sichuan Titanium Industry Co., Ltd. in September 2019.
Xiangyang Titanium means Xiangyang Lomon Titanium Industry Co., Ltd.
Panzhihua Company means Sichuan Lomon Titanium Industry Co., Ltd.
RMB, RMB ten thousand means RMB, RMB ten thousand
Reporting Period means From January 1, 2019 to December 31, 2019
New materials company means Henan Billions New Material Co., Ltd.
Finance lease company means Billions Finance Lease (Guangzhou) Co., Ltd.
Jiaozuo City Zhongli District Yili Microfinance Co., Yili Microfinance means Ltd.
Ruierxin company means Panzhihua Ruierxin Industry and Trade Co., Ltd.
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Xinli Titanium means Yunnan Metallurgical Xinli Titanium Co., Ltd.
YMG means Yunnan Metallurgical Group Co., Ltd.
CNNC means China National Nuclear Corporation
Guangdong Orient Zirconic Industry Science and Orient Zirconic means Technology Co., Ltd.
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2 Section II Company Profile and Major Financial Indicators
2.1 Company Profile
Stock abbreviation Lomon Billions Stock code 002601
Stock exchange for Shenzhen Stock Exchange stock listing
Chinese name of the Lomon Billions Group Co., Ltd. Company
Chinese abbreviation of 龙蟒佰利联 the Company
English name of the Lomon Billions Group Co., Ltd Company (if any)
English name abbreviation of the Lomon Billions Company (if any)
Legal representative of XU Gang the Company
Registered address Fengfeng Sub-district Office, Zhongzhan District, Jiaozuo City, Henan Province
Zip code for registered 454191 address
Office Address Fengfeng Sub-district Office, Zhongzhan District, Jiaozuo City, Henan Province
Zip code for office 454191 address
Website http://www.lomonbillions.com/
Email [email protected]
2.2 II. Contact Person and Contact Information
Board Secretary Securities Affairs Representative
Name ZHANG Haitao
Fengfeng Sub-district Office, Address Zhongzhan District, Jiaozuo City, Henan Province
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Tel 0391-3126666
Fax 0391-3126111
Email [email protected]
2.3 III. Information Disclosure and Preparation Location
Name of the Company’s selected China Securities Journal, Securities Times information disclosure media
Website designated by CSRC for the posting http://www.cninfo.com.cn of annual reports
Location for the preparation of the Annual Board Office of the Company Report
2.4 IV. Registration Changes
Organization code No change
Changes in main business since None the Company’s listing (if any)
Previous changes in controlling None shareholders (if any)
2.5 V. Other Relevant Information
Accounting firm engaged by the Company
BDO China Shu Lun Pan Certified Public Accountants (Special General Name of accounting firm Partnership)
Office address of Floor 19, Tower A, China Sea International Center, Building 7, No. 5 accounting firm Courtyard, Anding Road, Chaoyang District, Beijing
Accountant signatories XU Peimei, ZHANG Zhen
Sponsor institution engaged by the Company for the performance of ongoing supervision during the reporting period □ Applicable √ Not applicable
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Financial advisor engaged by the Company for the performance of ongoing supervision during the reporting period □ Applicable √ Not applicable
2.6 VI. Major Accounting Data and Financial Indicators
Does the Company need to retroactively adjust or restate previous year’s accounting data □ Yes √ No
Increase/Decrease in the current 2019 2018 year when 2017 compared with last year
Operating revenue 11,358,539,703.02 10,440,588,458.46 8.79% 10,257,509,524.84 (RMB)
Net profit attributable to shareholders of the 2,593,975,280.30 2,285,728,663.61 13.49% 2,502,413,958.33 Listed Company (RMB)
Net profit attributable to shareholders of the Listed Company net of 2,491,632,401.41 2,155,550,097.61 15.59% 2,448,921,663.51 non-recurring gains and losses (RMB)
Net cash flows from operating activities 2,003,546,325.65 2,030,779,405.22 -1.34% 2,367,767,996.78 (RMB)
Basic earnings per 1.29 1.15 12.17% 1.25 share (RMB/share)
Diluted earnings per 1.29 1.15 12.17% 1.25 share (RMB/share)
Weighted average 19.51% 17.09% 2.42% 19.14% return on equity
Increase/Decrease at the end of the End of 2019 End of 2018 current year when End of 2017 compared with last year
Total assets (RMB) 25,942,781,551.31 20,923,673,048.52 23.99% 20,846,353,820.17
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Net profit attributable to shareholders of the 13,870,935,212.22 12,422,895,246.32 11.66% 12,886,662,146.51 Listed Company (RMB)
2.7 VII. Differences in Accounting Data under the Domestic and Foreign Accounting Standards
1. Differences in net profit and net assets in financial reports disclosed in accordance with international accounting standards and Chinese accounting standards, respectively
□ Applicable √ Not applicable
The Company, during the reporting period, has no differences in net profit and net assets in financial reports disclosed in accordance with international accounting standards and Chinese accounting standards, respectively.
2. Differences in net profit and net asset in financial reports disclosed in accordance with overseas accounting standards and Chinese accounting standards, respectively
□ Applicable √ Not applicable
The Company, during the reporting period, has no differences in net profit and net assets in financial reports disclosed in accordance with overseas accounting standards and Chinese accounting standards, respectively.
2.8 VIII. Key Financial Indicators by Quarter Monetary Unit: Yuan
Q1 Q2 Q3 Q4
Operating income 2,777,577,471.59 2,584,104,151.21 2,909,646,085.78 3,087,211,994.44
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Net profit attributable to shareholders of listed 622,936,264.04 646,638,005.99 796,331,265.60 528,069,744.67 company
Net profit attributable to shareholders of listed 611,073,504.44 611,414,266.67 772,389,514.42 496,755,115.88 company net of non- recurring gains and losses
Net cash flows from 575,570,682.23 290,979,950.44 126,756,448.50 1,010,239,244.48 operating activities
Whether the above financial indicators or their sum are significantly different from the relevant financial indicators in the Company’s disclosed quarterly and semi-annual reports
□ Yes √ No
2.9 IX. Items and Amount of Non-recurring Profit and Loss
√ Applicable □ Not applicable Monetary Unit: Yuan Amount in Amount in Amount in Item .Description 2019 2018 2017
Gains and losses on disposal of non-current assets (including the - -7,919,333.24 -14,914,142.84 written off portion of the provision 21,282,770.48 for impairment of assets)
Government grants included in current profit and loss (closely related to business activities, except for government grants 88,431,580.59 89,042,657.57 70,508,013.11 enjoyed by quota or fixed amount in accordance with national uniform standard)
Fund occupation fees charged to non-financial enterprises and 897,768.43 889,988.59 included in current profit and loss
Profit and loss of debt 24,941,728.28 44,410,838.85 restructuring
In addition to the effective hedging business in relation to the normal 28,612,661.15 49,130,458.65 16,925,871.23 operation of the Company, the Company holds profit and loss from
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fair value changes arising out of trading financial assets, derivative financial assets, trading financial liabilities and derivative financial liabilities, and investment gains from the disposal of trading financial assets, derivative financial assets, trading financial liabilities and derivative financial liabilities and other investment on bonds.
Reversal of receivables and contract assets depreciation 18,500,000.00 reserves subject to separate impairment test
Other non-operating revenue and -28,426,439.14 -3,153,229.18 -1,939,641.26 expenditure other than the above
Less: Amount income tax affected 21,594,396.45 27,775,699.32 9,466,149.12
Amount of minority equity 1,100,690.73 6,562,317.73 2,143,017.25 affected (after-tax)
Total 102,342,878.89 130,178,566.00 53,492,294.82 --
The reasons shall be explained for non-recurring profit and loss items defined by the Company subject to the definition set forth in the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public- --Non-recurring Profit and Loss (hereinafter referred to as the “Announcement No.1”) and non-recurring profit and loss items set forth in the Announcement No.1 defined as recurring profit and loss items.
□ Applicable √ Not applicable
During the reporting period of the Company, there is no circumstance where non- recurring profit and loss items defined and set forth in the Announcement No.1 are defined as recurring profit and loss items.
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3 Section III Business Overview of the Company
3.1 I. Main Business of the Company During the Reporting Period (I) Main business and product use of the Company Headquartered in Industry Cluster Area, Jiaozuo, Henan Province, the Company is a large-scale inorganic fine chemical group mainly engaged in production and sales of titanium dioxide pigment, sponge titanium, zirconium products and sulfuric acid, and is also the largest titanium dioxide pigment manufacturing enterprise in Asia.
The chemical formula for titanium dioxide pigment is TiO2. Titanium dioxide pigment is a bright white pigment with a high refractive index and UV resistance. It’s excellent light scattering properties and its high opacity make it a key ingredient in formulations for a wide range of products worldwide including indoor and outdoor paints, inks, plastics, paper, electronics, rubber, fibers, ceramics, enamels, cosmetics, pharmaceuticals and sunscreens.
There are two main types of TiO2 pigment, anatase and rutile. They account for around 98% of all titanium dioxide pigment manufactured globally. Typically, rutile titanium dioxide pigment has better weatherability and hiding power than anatase titanium dioxide pigment, and is mainly used in indoor and outdoor coatings, inks, plastics and paper. Anatase titanium dioxide pigment is mainly used in fibers, ceramics, cosmetics, and pharmaceuticals. Ultrafine titanium dioxide pigment is manufactured for use in sunscreens.
(II) Development status and cyclical characteristics of the industry The global titanium dioxide pigment industry is almost 100 years old. It has grown by acquisition and merger, restructuring and technological advancement. The titanium dioxide pigment industry in China is over 60 years old. It began in 1956 with the production of anatase titanium dioxide pigment mainly used for enamels and welding
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electrodes. In the mid-1980s, project ‘Panzhihua Vanadium-Titanium Magnetite Resources Comprehensive Utilization’ improved production equipment and sulfate- process technology to manufacture rutile titanium dioxide pigments for coatings. In the 1980s and 1990s, a succession of titanium dioxide pigment factories was built throughout the country which developed slowly due to their small production scale, low-tech approach and poor product quality. Since 2000, China’s titanium dioxide pigment industry has developed rapidly and competes in the international titanium dioxide pigment market. Since 2009, with the rapid growth of the Chinese national economy, market demand for titanium dioxide pigment has been advancing by leaps and bounds, market prices have risen rapidly, social capital has been continuously attracted, and manufacturers in the industry have also further expanded successively, leading to a significant increase in the production capacity of domestic titanium dioxide pigment after 2011. However at the same time, China’s GDP growth rate slowed down and the country’s economic structure changed, especially the demand growth rate of downstream industries such as real estate and paints, which gradually declined, resulting in an oversupply of ordinary anatase and rutile products in the industry and a continuous decline in market prices.
In 2016, under the impetus of a series of policy measures such as the national supply- side structural reform, “de-capacity, destocking, deleveraging, cost reduction, improving weak links”, stable growth, quality and efficiency improvement, innovation- driven development and transformational development, China’s titanium industry gradually improved and rejuvenated, showing some different development characteristics from the past, and at the same time the entire industry developed in many favorable ways. From 2016 to 2018, the market for titanium dioxide pigment products boomed, leading to an upward trend in product prices, tight supplies and great reduction in stocks, to realize a double-digit growth rate in annual export volume. Today, China’s titanium dioxide pigment industry is in the process of transformation, growing its chloride-process titanium dioxide pigment manufacturing technology, steadily improving titanium dioxide pigment quality, and gradually narrowing the gap
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with international titanium dioxide pigment manufacturing giants. In addition, many excellent titanium dioxide pigment manufacturing enterprises have built a unique integrated circular economy industrial chain based on local conditions. On the whole, the “quantity” in industrial development has been effectively controlled and the “quality” is constantly improving. And China is gradually developing from a large titanium dioxide pigment manufacturing country to a titanium dioxide pigment manufacturing superpower.
(III) Business model and performance-driven development The Company adopts a continuous large-scale production model which is typically applied by chemical enterprises, with an annual production capacity of 1.01 million tonnes of titanium dioxide pigment and 10,000 tonnes of titanium sponge, and implements the buy-out-based end-user and dealer sales model, and internally establishes a sales company responsible for domestic sales and exports of its products. With the internationalization of the Company, in recent years, it has set up several subsidiaries overseas, such as Billions (Hong Kong) Co., Ltd., Billions Europe Ltd. and Billions America Corporation, to be responsible for business expansion of the export market. Since it went public in 2011, the Company’s development has been driven by merger and acquisition expansion and organic growth. The Company acquired Sichuan Lomon Titanium Industry Co., Ltd. in 2016 and Yunnan Metallurgical Xinli Titanium Co., Ltd. in 2019, forming a management model with group headquarters as the center and six production bases coordinating with each other.
During the reporting period, the Company relied on strong integration of its development achievements, and fully tapped its own advantages in terms of technology, international market, quality and brand, circular economy, scale development, full industrial chain and informatization, to continuously strengthen its core competitiveness. Meanwhile, the Company is committed to the transformation, upgrading and improvement of its industrial chain, and has been striving to be a leading integrated service supplier of titanium dioxide pigments and titanium
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derivatives in the world. Through an annual output of 200,000 tonnes of chloride- process titanium dioxide pigment, comprehensive utilization of Panxi vanadium- titanium-magnetite resources, production of high-end titanium alloy, acquisition of Xinli Titanium and other key projects, the Company is endeavouring to transform its whole industrial chain which consists of “titanium ore, titanium tetrachloride, chloride-process titanium dioxide pigment, titanium sponge and titanium alloy” to help the Company to seize development opportunities. The acquisition of 15.66% of the equity of Guangdong Orient Zirconic Industry Science and Technology Co., Ltd. has further improved the Company’s industrial strength in zirconium, forming a two-pronged development pattern of “titanium-zirconium production.
3.2 II. Major Changes in Major Assets
1. Major changes in major assets □ Applicable √ Not applicable 2. Major overseas assets □ Applicable √ Not applicable
3.3 III. Analysis of Core Competitiveness The Company has been awarded such titles as National High-tech Enterprise, National Contract-honoring and Credit-respecting Enterprise, National Technology Innovation Demonstration Enterprise, Excellent Demonstration Enterprise of Energy- saving and Emission Reduction Technology Innovation in Henan Province, and Leading Enterprise in Innovation in Henan Province. The Company has been selected as one of the “Top 500 Chinese Chemical Enterprises” for many years, and its Panzhihua Base is rated as a “National Green Mine”. The Company has two national- level demonstration bases and laboratories, namely “National Mineral Resources Comprehensive Utilization Demonstration Base” and “National and Local Joint Engineering Laboratory for Titanium Dioxide Pigment Clean Production Process and Technology”, and has two famous Chinese trademarks as “Xuelian” and “Mang”. Its
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‘LOMON® and BILLIONS® TiO2 pigment product trademarks are recognized world- wide. The Company, as a sample enterprise of China’s export leading index (ELI), has production capacity of the main product, i.e. titanium dioxide pigment, a best seller throughout the country, ranking first in Asia and third in the world, and exports to more than 100 countries and in Asia, Africa, Latin America, North America, the Middle East and Europe. The Company ranks first in China in terms of titanium dioxide pigment production capacity, scale of fixed assets, operating revenue, net profit and other indicators, and it has strong core competitive advantages in technology, market, circular economy, brand and quality.
Business management advantages: The Company, based on in-depth integration of Lomon Billions, has basically realized an integrated management model covering market development, financial management, information management, system management, personnel management, process management and control, strategic planning, cultural concepts, etc., and has formed a lean management model with strict system standards and strict whole-process control and in combination with its own development characteristics. The Group has taken the intensified leaders training of lean management teams as an entry point to comprehensively conduct lean management training; has vigorously carried out personal improvement and innovation project improvement and completed its annual per capita labor efficiency target; has made greater efforts to promote the construction of lean production areas, has realized a qualitative overview in investigation and rectification of safety hazards, vulnerability management, creation of corporate image and improvement of the working environment for employees, has introduced OEE assessment indicators in the equipment management evaluation method, and has further optimized its lean management level.
Technology advantages: The Company has always attached importance to scientific and technological innovation. Relying on the only national-level enterprise technology center in the industry, the national and local joint engineering research center, the
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national CNAS accreditation laboratory, the provincial engineering technology center and other R&D platforms, the Company has remarkable technology advantages in terms of upgrading and deep processing of titanium raw materials, R&D of new titanium dioxide pigment products and optimization of product performance, process coupling and clean production of titanium dioxide pigment and its derivatives, comprehensive utilization of wastes and by-products, increase in atom utilization, production process management and control, and improvement and localization of chloride-process equipment. In addition, the Company has set up the Academicians and Experts Workstation, the Industrialization Base of Henan Nanomaterials Engineering Technology Research Center, the Postdoctoral Research and Development Base and other research institutions. The Company has especially engaged domestic and foreign industry experts to participate in various types of its technological innovation work to meet the highest international standards.
Advantages in circular economy: The Company has achieved horizontal and vertical integration of industrial resources through mergers and acquisitions, which has further expanded the business of the Company. The Company, as the first enterprise in the industry to have been certified in the appraisal of clean production, with its comprehensive R&D capability, is leading its domestic counterparts, and has formed the production model of vertical integration and horizontal coupling. It has full-process production technologies ranging from titanium ore mining, concentrate processing, and titanium slag smelting to production of titanium dioxide pigment by the sulfuric acid process and the chloride process, full-process production technology for titanium sponge, and over 432 technology patents for production of titanium dioxide pigment, production of titanium sponge, comprehensive utilization of resources, and efficient and comprehensive utilization of vanadium titano-magnetite. Key technologies of green coupling of the sulfuric acid-chlorination industry chain, joint production and clean production technologies of sulfur-iron-titanium and sulphur-phosphorus titanium, and production technologies of white gypsum are all original in the industry, among which joint production and clean production technologies of sulfur-iron-titanium and
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sulphur-phosphorus titanium have won the first prize and second prize of Science and Technology Progress of Sinopec Industry and the first prize and second prize of Provincial Science and Technology Progress respectively. Years of operational experience has enabled the Company to fully design, install and start up titanium dioxide pigment production lines with a production capacity of 200,000 tonnes/year with the sulfate process and a production capacity per line of 100,000 tonnes/year with the chloride process. The Company has enhanced its international competitiveness in the field of high-end titanium dioxide pigment by conducting multi-directional international cooperation. The Company’s ongoing research and development projects will also greatly enhance the Company’s comprehensive competitiveness in the titanium industry chain and provide a core driving force for the Company to achieve green and high-quality development. The Company’s innovatively developed key technology in green coupling of the sulfuric acid-chlorination industry chain not only provides sufficient raw materials for chlorination, but also addresses the problems of treating waste acid from the manufacture of titanium dioxide pigment by the sulfate process, and gypsum storage; the company has successfully developed the high- efficiency comprehensive utilization technology of vanadium titanium magnetite associated with extremely poor complex polymetal; this technological achievement upgrades the off-balance sheet mineral resources from unusable to exploitable valuable resources and it is a specialized technology for the development of major national industries, which is of great value to the realization of resource-saving and sustainable development of vanadium titano-magnetite in Panxi; the Company makes active use of deep-membrane processing technology and explores reuse of waste by- products, which has realized the comprehensive utilization of resources recycling and ultra-clean emissions and effectively increased the capacity for sustainable development of the Company.
Advantages in the full industrial chain and scale production: In the titanium industry, the Group has six production bases in five locations in four provinces, namely Jiaozuo in Henan Province, Deyang and Panzhihua in Sichuan Province, Xiangyang in Hubei
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Province and Chuxiong in Yunnan Province, forming the full-industrial chain pattern ranging from mining and processing of vanadium titano-magnetite, intensive processing of such raw materials as reduced titanium, high-titanium slag and synthetic rutile, to the production of sulfate-process titanium dioxide pigment, chloride-process titanium dioxide pigment, and sponge titanium. With a total capacity of 1.01 million tonnes in production of the main product, titanium dioxide pigment (including the production capacity for projects under construction), the Company has more than 30 years of experience in technology innovation, production and management of titanium dioxide pigment products. The Company’s new chloride-process titanium dioxide pigment manufacturing project at Jiaozuo is the most stable and largest scale chloride- process titanium dioxide pigment production line construction project in China, which is of great significance for leading transformation and upgrading of the industry.
Advantages in quality and brand: The Company has set strict quality control standards and has been certified with IS09001:2008(GB/T19001:2008) quality management system, IS014001:2004(GB/T24001:2004) environmental management system and OHSAS18001: 2007 (GB/T28001-2011) occupational health and safety management system. The Company’s titanium dioxide pigment products, being complete in variety and covering 16 categories used in coatings, plastics, inks, paper-making and other fields, are excellent in quality, especially comparable to internationally renowned competitive products in terms of brightness, hiding power, weather resistance and dispersibility. In addition, the Company has also established a comprehensive system for sales and technical support and product after-sales services to provide customers with high-quality and personalized services. The Company has two well-known brands in the titanium dioxide pigment industry in China, namely “Xuelian Brand” and “Mang
Brand”, It’s two ‘LOMON®’ and ‘BILLIONS®’ TiO2 pigment brands are well known outside China. LOMON® and BILLIONS® TiO2 pigment brands are exported to more than 100 countries worldwide. All of the Company’s product brands are well received by both domestic and foreign customers.
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Advantages in export market: In order to better develop and maintain the market and customers, the Company has set up its subsidiaries in the United States, the United Kingdom and Hong Kong, and has widely established strategic partnerships with international giants in the fields of coatings, plastics and inks, further increasing the Company’s globalization process and international influence. The Company has been awarded the titles of “Key Import Enterprise in Henan Province” and “Key Export Enterprise in Henan Province” by Henan Provincial Commerce Department for many years; in terms of procurement of machinery and equipment, raw materials and instruments and apparatus, the Company actively explores foreign procurement channels and has established stable cooperative relations with many world-class raw material suppliers in Canada, South Africa, India, Mozambique and Senegal, effectively ensuring supply of raw materials to the Company.
Advantages in information management: The Company continues to improve its level of information management, and has promoted its Eisso system based on the original ERP system, OA office system, energy system, MES manufacturing execution system, data decision system and other information management systems, which not only satisfies the needs of group companies for realizing secure file storage and sharing, but also improves the efficiency of informationized office. At the same time, the Company has developed and unified the NC system in financial management, which has improved the efficiency of fund management and approval. The Company has launched the “standardization work of two-in-one integration management system” to improve the management level under the Company’s information environment and to create an innovative company with informationization, automation and intelligence.
With a mission to be an enterprise “which supports the development of the Titanium industry in China and is respected”, and guided by technological innovation, the Company continues to explore the green circular economy development path and vertical and horizontal integration in the titanium manufacturing industry . In the future, the Company will become the world’s only titanium dioxide pigment production
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enterprise to: couple the sulfuric acid-chloride technology chain ; build a low-cost co- production system for chloride-process titanium dioxide pigment, titanium sponge and high-end titanium alloy by virtue of the large-scale production advantages of raw material titanium, and tetrachloride; and actively expand the field of titanium derivatives such as “vanadium, zirconium, iron, antimony, manganese and silicon” and improve the green recycling industry chain. In the end, the Company will form a high- quality industrial chain development system focusing on “taking a lead, providing the most comprehensive and high-quality products, and being unique”, continuously enhancing its core competitiveness, and striving to become a large-scale chemical enterprise group with first-class competitiveness in domestic and foreign industries as well as a model for the transformation of China’s chemical industry to achieve green and high quality development.
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4 Section IV Discussion and Analysis of Business Conditions
I. Overview
4.1 (I) Analysis of business environment 2019 is the 70th anniversary of the founding of the People’s Republic of China and a crucial year for building a moderately prosperous society in all respects. In 2019, China’s economic development was faced with more complicated external environment and internal conditions, and China was exposed to more economic and non-economic difficulties and challenges. Internationally, the global economic situation reversed from “synchronous recovery” last year to “synchronous deceleration”; the monetary policy of major economies shifted from “interest rate hike” and “balance sheet reduction” to “interest rate cut” and “quantitative easing” (QE); economic and trade frictions kept cropping up and protectionism was increasingly getting intensified; and in addition, Brexit, geopolitics and populism in many places posed greater risks and challenges to the global economy. Domestically, as Chinese government stepped up counter-cyclical adjustment and actively implemented the “Six Stables” policy, key development was achieved in the three critical battles, the overall national economy was at a stage of reasonable development, the quality of development was gradually enhanced, and the main expected goals were accomplished. In the first three quarters of 2019, economic growth slowed down, and downward pressure continued to mount. In the fourth quarter, nevertheless, economic growth gradually tended to be stable. According to the National Bureau of Statistics (NBS), China’s GDP reached RMB990.865 trillion, approximately RMB100 trillion in 2019; the per capita GDP was RMB70,892 or equivalent USD10,276 at the average annual exchange rate, which exceeded USD10,000 for the first time.
In 2019, the titanium dioxide pigment industry continued to undergo severe challenges, and as environmental and safety regulations were tightened and the internal and external economic environment became more complex, the titanium dioxide pigment industry,
19 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. however, generally developed well, with a basic balance between supply and demand, stable price, stable capacity utilization rate and a stable and normal development trend. In the same year, the output and capacity of the titanium dioxide pigment industry achieved double growth, and the capacity utilization rate of large and medium-sized enterprises was generally high, while that of small and micro enterprises was relatively low, according to Titanium Dioxide Pigment Branch, Chemical Industry Productivity Promotion Center of China. 41 full-process titanium dioxide pigment manufacturing enterprises with normal production conditions had 3.18 million tonnes of overall yields across China, a year-on-year growth of 7.69%, among which rutile production enterprises yielded 2.54 million tonnes, accounting for 80.00%, up 2.39% from the previous year, anatase production enterprises yielded 520,000 tonnes, accounting for 16.29%, up 1.3% from the previous year, and non- pigment product and other products manufacturers yielded 120,000 tonnes, accounting for 3.70%, down 1.5% from the previous year. Imports and exports in 2019 carried on the development trend in 2018, with imports falling and exports rising. China imported 167,600 tonnes of titanium dioxide pigment, a year-on-year decrease of 20.00%, while the exports of titanium dioxide pigment nationwide were 1.0034 million tonnes, a year-on-year increase of 10.47%.
4.2 (II) Overall operations of the Company In 2019, Lomon Billions Group, facing the complex situation at home and abroad, took the measures of “intensive growth, extensive development, integrated development and innovative promotion” to tackle challenges and seek changes through innovation. With great efforts made in mergers and acquisitions, project construction, quality control, green development and other aspects, the Group managed to fulfill various objectives and tasks and boost its development with low cost, fast speed, and high quality.
The Company’s operating revenue in 2019 reached RMB11.359 billion, an increase of 8.79% from the previous year; its total profit was RMB3.022 billion, an increase of 11.27%
20 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. from the previous year; and the net profit attributable to shareholders of the listed company was RMB2.594 billion, an increase of 13.49% from the previous year.
Main business tasks of the Company this year are as follows: 1. With steady progress in production and marketing, the Company possesses an apparent advantage in industrial chain and core technologies.
In 2019, the Company yielded a total of 555,200 tonnes of sulfate-process titanium dioxide pigment, a year-on-year decrease of 1.65% and 74,700 tonnes of chloride-process titanium dioxide pigment, a year-on-year increase of 20.40%; the Company sold a total of 557,800 tonnes of sulfate-process titanium dioxide pigment, a year-on-year increase of 6.06% and 67,500 tonnes of chloride-process titanium dioxide pigment, a year-on-year increase of 13.31%; and the Company mined 3.5186 million tonnes of iron concentrate, a year-on-year increase of 6.37% and 853,100 tonnes of titanium concentrate, a year-on-year increase of 6.12%. Steady progress was made in production and marketing over the previous year, and the Company accomplished the production and marketing plan drawn up at the beginning of the year, reaching a new record.
The Company operates a complete industry chain ranging from “titanium ore, titanium tetrachloride, chloride-process titanium dioxide pigment, titanium sponge to titanium alloy” and mastered the core technology required to produce each product. A steady supply of raw materials and intermediate products guarantees the sustainable yield and product quality of titanium dioxide pigment and titanium sponge and has lowered the production costs. In 2019, with the growth in the sales of high titanium slag, titanium tetrachloride, iron ore concentrate and other intermediate products and by-products, the sales prices increased and performance was further improved, the Company achieved prominent advantage from its industrial chain and core technologies.
2. Acquisitions and mergers were conducted to seize opportunities
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As the only enterprise that fully masters the whole chloride titanium dioxide pigment manufacturing process in China, the Company acquired Yunnan Metallurgical Xinli Titanium Co., Ltd. (Xinli Titanium) in May 2019 to expand its business rapidly, seize market opportunities, consolidate the dominant position of the enterprise in the industry, and exploit its existing advantages in its industry chain and technologies, so as to find new revenue growth opportunities in the titanium industry. The holding ratio of minority shareholders’ equity and debt-equity swap reached 98.39% as a result of acquisition of the state-owned equity of Xinli Titanium. Close to Panzhihua, the titanium ore producing area in China, and located in Chuxiong Prefecture, Yunnan Province, Xinli Titanium has abundant water, electricity, natural gas, and other resources. With a relatively complete supporting production line for the chloride process, Xinli Titanium has production lines with an annual output of 60,000 tonnes of chloride-process titanium dioxide pigment, 10,000 tonnes of titanium sponge and 80,000 tonnes of high-titanium slag. At present, Xinli Titanium has fully resumed production and initially formed a low-cost co-production system integrating titanium chloride slag, chloride-process titanium dioxide pigment and titanium sponge. The production line with a planned annual output of 80,000 tonnes of high-titanium slag was restarted on September 15, 2019, with an annual production capacity of 12,000 tonnes of high-titanium slag and an output value of RMB110 million; the production line with a planned annual output of 10,000 tonnes of titanium sponge was resumed at the end of September 2019, with the first batch of titanium sponge produced on October 5, 2019 and 700 tonnes of titanium sponge yielded throughout the year; and titanium dioxide pigment was manufactured on the production line on December 6, 2019, with a planned annual output of 60,000 tonnes of chloride-process titanium dioxide pigment.
Zirconium is the second major business of the Company and has strong synergy with the Company’s titanium business in terms of raw materials, production, technology and marketing. With persistent efforts in terms of titanium, the Company acquired 15.66% of the equity of Oriental Zirconium in November 2019 to further enhance the structure of its zirconium business and realize the in-depth and coupling development of its titanium and
22 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. zirconium business. Oriental Zirconium is a major high-tech enterprise under the National Torch Program which is engaged in R&D, production, and management of various zirconium products. With a complete zirconium industry chain and its own zirconium ore resources, the company possesses core technologies of independent intellectual property rights and solid industrial foundation in composite zirconia powder & zirconia ceramics and nuclear- level sponge zirconium that are developing into high-end businesses. Using the advantages of the industrial chains of the two companies, the Company will further develop the zircon / titanium business in Australia. On the one hand, the Company will consolidate the original product lines and vigorously develop the downstream emerging zirconium products market to expand and enhance the zirconium metal business. On the other hand, the Company will give full play to the platform advantage of the two listed companies and their capital market to integrate the domestic zirconium industry, forming a new two-pronged development structure of “titanium-zirconium production”.
3. With the accelerated development of leading projects, industrial chain advantages have been consolidated. The Company accelerated the expansion of titanium dioxide pigment production capacity and made every effort to promote upstream and downstream industrial chain development to consolidate the industry’s dominant position. Completed and put into production in 2019, the project with a planned annual output of 200,000 tonnes of chloride-process titanium dioxide pigment is the major project leading the sustainable development of the Company in the next 5 to 10 years. During the reporting period, the Board of Directors of the Company deliberated and approved the Proposal on the Innovation Project of Investment and Production of 500,000 Tonnes of Panxi Titanium Concentrate and Upgrading and Transforming Titanium Chloride Residue, and the Proposal on Investment and Construction of New Material Project with Annual Output of 30,000 Tonnes of High-end Titanium Alloy. The investment and construction of the two projects is conducive to full utilization of the abundant titanium resources in Panxi to achieve large-scale production of titanium concentrate, upgrade and transform titanium chloride slag, and to enhance the multipurpose
23 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. utilization value of mineral resources with steady supply of chloride titanium dioxide pigment raw materials. The investment in and construction of the projects also helps to advance the optimization and upgrading of the Company’s complete industrial chain “ranging from titanium ore, titanium tetrachloride, chloride-process titanium dioxide pigment, titanium sponge to titanium alloy” to achieve the development goal of “making refined titanium products and elaborating titanium derivatives”, build up the Company’s profitability and core competitiveness, and promote the sustainable development of the Company.
4. Scientific research was stepped up in order that the Company can have a bigger influence in the industry The Company stepped up research technology and sci-tech R&D to promote its scientific and technological progress. In 2019, the Company made great efforts to implement technological innovation with more than 180 innovation projects implemented successively and with total profits of nearly RMB250 million achieved. In particular, the Company tackled difficult technical problems in upgrading titanium ore to make chlorinatable materials, new chloride-process titanium dioxide pigment product development, and multipurpose utilization of environmental resources.
Upgrading titanium ore to make chlorinatable materials: the Company made a study on upgrading titanium ore to make chlorinatable materials from the mines in Panzhihua and Yunnan, succeeded in upgrading raw materials by chlorination from domestic ores, and provided technical support for the innovation project of investment and production of 500,000 tonnes of Panxi titanium concentrate and upgrading and transforming titanium tetrachloride.
New chloride-process titanium dioxide pigment product development: the Company, developed a chloride-process titanium dioxide pigment for superdurable coatings and color masterbatches, currently in trial production for customer evaluation in order to increase the market share of its chloride-process titanium dioxide pigment.
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Multipurpose utilization of environmental resources: The Company continuously drove multipurpose utilization projects of chloride ion and high salt waste water, and it is possible that sulphuric acid produced from the sulfur-chlorine coupling project can be used as polyferric sulfate raw materials.
5. The human resources system was optimized to meet strategic needs Talent is of primary importance to a business in the long run. In 2019, with the help of the professional human-resource-management consulting organization, the Company developed a future-oriented talent strategy, optimized the compensation strategy to attract and retain outstanding talent, built the performance, talent and capability management system conducive to sustainable, personalized and professional development human capital to address the talent problem for the rapid and sustainable development of the Company. In order to maintain competitive advantages and seize market opportunities, driven by “internal growth and extensive development”, the Company has been constantly speeding up mergers and acquisitions, technological transformation and expansion, and new project construction. Based on the growing demand for various talents, optimization of the human resources system is helpful for the Company to attract and retain outstanding talent, build a thriving talented team and ensuring successful implementation of the Company’s strategies.
6. Shareholders were rewarded and shared the development results of the Company During the reporting period, the Company adhered to the stable, sustainable, and scientific dividends distribution principle. In June this year, the Company made equity distributions for 2018 and the first quarter of 2019 and distributed RMB1 in cash (including tax) for every 10 shares and RMB6 in cash (including tax) for every 10 shares to all shareholders respectively. In December of this year, the Company made equity distributions for the first three quarters of 2019 and distributed RMB1.5 in cash (including tax) for every 10 shares to all shareholders. Shareholders who had supported the Company’s development were all rewarded with a good dividend return.
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II. Analysis of Main Business
1. Overview Please refer to “I. Overview” in “Discussion and Analysis of Business Conditions”.
2. Income and cost (1) Composition of operating income
2019 2018 Year-on-year Proportion to Proportion to increase or Amount operating Amount operating decrease income income
Total operating 11,358,539,703. 10,440,588,458. 100% 100% 8.79% income 02 46
By industry
Chemical raw materials and 11,158,363,360. 10,243,417,108. chemical 98.24% 98.11% 0.13% 17 98 products manufacturing
Other business 200,176,342.85 1.76% 197,171,349.48 1.89% -0.13%
By product
8,750,322,232.4 8,764,997,925.0 Titanium dioxide 77.04% 83.95% -6.91% 6 3
Mineral 1,391,273,523.4 12.25% 722,305,857.72 6.92% 5.33% products 5
Zirconium 65,982,070.13 0.58% 76,753,611.65 0.74% -0.15% products
1,150,961,876.9 Other decreases 10.13% 876,531,064.06 8.40% 1.74% 8
By region
6,506,447,721.4 5,581,807,536.9 At home 57.28% 53.46% 3.82% 5 9
4,852,091,981.5 4,858,780,921.4 Overseas 42.72% 46.54% -3.82% 7 7
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(2) Description of industries, products, or regions that account for more than 10% of the Company’s operating income or operating profit √ Applicable □ Not applicable Monetary Unit: Yuan Increase or Increase or Increase or decrease of decrease of decrease of operating operating gross profit Gross income when cost when margin when Operating income Operating cost profit compared compared compared margin with the with the with the same period same period same period of the of the of the previous year previous year previous year
By industry
Chemical raw materials and chemical 11,158,363,360.17 6,447,777,915.18 42.22% 8.93% 7.05% 1.02% products manufacturing
By product
Titanium 8,750,322,232.46 4,983,161,776.62 43.05% -0.17% 0.88% -0.59% dioxide
Mineral 1,391,273,523.45 699,379,978.73 49.73% 92.62% 57.06% 11.38% products
Zirconium 65,982,070.13 52,223,314.69 20.85% -14.03% -8.41% -4.86% products
Other 950,785,534.13 713,012,845.14 25.01% 39.95% 22.65% 10.58% decreases
By region
At home 6,306,271,378.60 3,763,873,721.70 40.32% 17.12% 13.35% 1.98%
Overseas 4,852,091,981.57 2,683,904,193.48 44.69% -0.14% -0.69% 0.31%
The Company’s main business data adjusted in the last year based on the caliber at the end of the reporting period in the case that the Company’s main business data statistics caliber is adjusted during the reporting period
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(3) Is the Company’s physical sales revenue greater than its income from labor service √ Yes □ No
Year-on-year Industry Item Unit 2019 2018 increase or category decrease
Sales volume Tonne 625,356.30 585,561.07 6.80% Fine chemical industry Production Tonne 629,921.22 626,560.06 0.54% (titanium dioxide) Stock Tonne 92,877.92 88,313 5.17%
Explanation on reasons for changes in related data over 30% year on year □ Applicable √ Not applicable
(4) Performance of the major sales contracts signed by the Company as at the reporting period □ Applicable √ Not applicable
(5) Composition of operating cost Product category Monetary Unit: Yuan
2019 2018 Year-on-year Product Item Proportion Proportion increase or category to to Amount Amount decrease operating operating cost cost
Titanium Raw 3,121,035,372.52 62.63% 3,130,331,551.51 63.37% -0.74% dioxide materials
Titanium Energy and 933,113,324.11 18.73% 896,552,260.95 18.15% 0.57% dioxide power
Titanium Labor 231,337,395.57 4.64% 231,144,934.01 4.68% -0.04% dioxide service
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Titanium Depreciation 328,729,489.68 6.60% 332,365,033.70 6.73% -0.13% dioxide
Titanium Other 368,946,194.74 7.40% 349,187,137.86 7.07% 0.33% dioxide decreases
(6) Whether the scope of consolidation during the reporting period was changed √ Yes □ No Please refer to “VIII. Changes in the Scope of Consolidation” and “IX. Interests in Other Entities” in Section XII of the Report for details of the scope and changes of the consolidated financial statements in the current period.
(7) Major changes or adjustments in business, products, or services of the Company during the reporting period □ Applicable √ Not applicable
(8) Description of major sales customers and major suppliers Description of the Company’s major sales customers
Total sales amount of the top five customers (RMB) 1,469,497,134.34
Proportion of total sales of the top five customers in 13.17% total annual sales
Proportion of sales of related parties in total sales of 0.00% the top five customers in total annual sales
Information of the top 5 customers of the Company
No. Name of customer Sales (RMB) Proportion to total annual sales
1 No.1 407,360,034.22 3.65%
2 No.2 393,830,402.66 3.53%
3 No.3 264,745,446.72 2.37%
4 No.4 205,745,068.59 1.84%
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5 No.5 197,816,182.15 1.77%
Total -- 1,469,497,134.34 13.17%
Other information of major customers □ Applicable √ Not applicable
Description of the Company’s major suppliers
Total purchase amount of the top five suppliers (RMB) 914,464,631.78
Proportion of total purchase amount of the top five 13.96% suppliers to total annual purchase amount
Proportion of purchase amount of related parties in purchase amount of the top five suppliers to total annual 0.00% purchase amount
Information of the top 5 suppliers of the Company Proportion to total annual purchase No. Name of supplier Purchase amount (RMB) amount 1 No.1 236,982,623.47 3.62% 2 No.2 195,602,567.55 2.99% 3 No.3 173,706,682.09 2.65% 4 No.4 164,763,566.11 2.52% 5 No.5 143,409,192.56 2.19% Total -- 914,464,631.78 13.96%
Other information of major suppliers □ Applicable √ Not applicable
3. Fees Monetary Unit: Yuan Year-on-year 2019 2018 increase or Description of major changes decrease
Sales expenses 463,159,405.98 402,391,163.30 15.10%
General and 550,761,046.95 455,761,314.76 20.84%
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administrative expenses
Mainly due to presentation of current discounted expenses Financial expenses 123,402,493.49 231,821,455.45 -46.77% carried forward to investment income
R&D costs 416,280,062.17 399,479,867.34 4.21%
4. R&D investment √ Applicable □ Not applicable
1. Investment in design and development of new products.
1. The Company has been responding to the country’s call for “supply-side structural reforms” and constantly researching and developing new products to meet different needs of the market; investments in this aspect not only helped the Company to improve its product quality, but also helped to increased market share of the Company’s products in the proprietary field. To achieve sustainable development and to be in an invincible position in a vast market, any enterprise must have core competitiveness that is different from other enterprises, and for enterprises themselves, independent innovation is the most important way to obtain core competitiveness.
2. R&D investment for improvement of product manufacturing process.
2. In order to better control production costs and improve product profitability, the Company strengthened its R&D investment in production process improvement to ensure effective reduction of product costs and further improve its profitability.
3. Investment in development and research for application of environmentally friendly products.
3. In view of application performance of titanium dioxide pigment and current environmental protection requirements, the Company is committed to the research and development of environmentally friendly products, in order to solve the impact of environmental pollution to society. If the results of R&D investment in this aspect are widely available, it can effectively reduce smog weather and the content of nitrogen oxides in the air, and greatly alleviate environmental pollution. In view of the fact that the
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development of society will inevitably lead to environmental pollution, how to take into account environmental protection while focusing on development is the Company’s long- term development goal.
4. Research investment for comprehensive utilization of resources.
4. The investment in this aspect effectively utilized the wastes and by-products generated in the Company’s titanium dioxide pigment production, which helped to enhance the Company’s comprehensive utilization of resources and greatly promote the Company’s sustainable development. In recent years, the Company has been adhering to sustainable development, and has made certain achievements in its sustainable development, which will become one of the Company’s long-term investment priorities.
Description of the Company’s R&D investment
2019 2018 Proportion of change
Number of R&D personnel 931 822 13.26% (person)
Proportion of number of 13.13% 12.28% 0.85% R&D personnel
R&D investment amount 416,280,062.17 399,479,867.34 4.21% (RMB)
Proportion of R&D investment in operating 3.66% 3.83% -0.17% income
Amount of capitalized 0.00 0.00 R&D investment (RMB)
Proportion of capitalized R&D investment in total 0.00% 0.00% R&D investment
Reasons for significant change in the ratio of total R&D investment to operating income compared with the previous year □ Applicable √ Not applicable Reason and rationality of the drastic change of the capitalization rate of R&D investment □ Applicable √ Not applicable
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5. Cash flow Monetary Unit: Yuan Year-on-year increase or Item 2019 2018 decrease
Sub-total of cash inflows 11,066,826,976.07 8,736,042,361.57 26.68% from operating activities
Sub-total of cash outflows 9,063,280,650.42 6,705,262,956.35 35.17% from operating activities
Net cash flows from 2,003,546,325.65 2,030,779,405.22 -1.34% operating activities
Sub-total of cash inflows 4,852,850,683.50 8,824,547,312.34 -45.01% from investment activities
Sub-total of cash outflows 6,855,504,735.33 9,416,930,597.84 -27.20% from investment activities
Net cash flows from -2,002,654,051.83 -592,383,285.50 238.07% investment activities
Sub-total of cash inflows 10,266,655,699.63 6,334,119,694.08 62.08% from financing activities
Sub-total of cash outflows 10,715,294,225.84 8,490,939,054.26 26.20% from financing activities
Net cash flows from -448,638,526.21 -2,156,819,360.18 -79.20% financing activities
Net increase in cash and -440,405,331.86 -722,701,359.82 -39.06% cash equivalents
Description of main influencing factors leading to significant changes in related data over the same period of last year
√ Applicable □ Not applicable
The year-on-year increase of 35.17% in the sub-total of cash outflows from business activities was largely the result of the increase in cash paid for goods purchased and services received during the period.
33 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
The year-on-year decrease of 45.01% in the sub-total of cash inflows from investment activities was largely the result of the decrease in the accumulated due amount of bank financial products during the period.
The 238.07% year-on-year decrease in net cash flows from investment activities was largely the result of the cumulative decrease in purchase and maturity of current financial products. The 62.08% year-on-year increase in the sub-total of cash inflows from financing activities was largely the result of the increase in cash received from loans received, the increase in maturity of large-amount deposit certificate and the increase in discount during the period. The 79.20% year-on-year increase in net cash flows from financing activities was largely the result of the increase in cash received on borrowings received during the period.
Description of the reasons for significant difference between the net cash flow generated by the Company’s operating activities during the reporting period and the net profit for the current year □ Applicable √ Not applicable
4.3 III. Analysis of Non-main Business □ Applicable √ Not applicable
4.4 IV. Analysis of Status of Assets and Liabilities 1. Description of significant changes in composition of assets Monetary Unit: Yuan
End of 2019 Beginning of 2019 Increase/d Description of ecrease in Proportio Proportio major changes Amount n to total Amount n to total proportion assets assets
Cash at bank 1,684,382,500. 2,640,651,165.38 10.18% 8.05% 2.13% and on hand 87
34 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Accounts 1,099,681,911. 1,604,917,925.44 6.19% 5.26% 0.93% receivable 52
1,947,721,511. Inventories 2,223,433,795.02 8.57% 9.31% -0.74% 24
Investment 58,837,297.83 0.23% 52,195,136.57 0.25% -0.02% properties
Long-term equity 940,594,769.26 3.63% 11,625,909.94 0.06% 3.57% investments
5,843,524,617. Fixed assets 6,810,838,758.77 26.25% 27.93% -1.68% 18
Construction 1,413,238,779. 1,654,194,308.22 6.38% 6.75% -0.37% in progress 28
Short-term 3,634,598,568. 2,867,356,101.03 11.05% 17.37% -6.32% borrowings 81
Long-term 408,945,656.4 2,752,332,976.56 10.61% 1.95% 8.66% borrowings 1
2. Assets and liabilities measured at fair value □ Applicable √ Not applicable
3. Description of restricted rights to assets as at the end of the reporting period
Item Closing book value Cause of restriction
Deposits, large-amount deposit certificate and court Cash at bank and on hand 1,585,515,706.01 freezing
Accounts receivable 104,534,875.52 Pledged borrowings
Receivables financing 140,338,168.16 Acceptance deposit
Fixed assets 360,093,417.68 Collateralized borrowings
Construction in progress 5,462,554.64 Involving seizure by litigation court
Long-term equity 530,021,479.28 Pledged loans of Xinli Titanium investments
Total 2,725,966,201.29
35 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
4.5 V. Analysis of Investment Status 1. Overall situation √ Applicable □ Not applicable
Investment amount during the Investment amount in the same Proportion of change reporting period (RMB) period of last year (RMB)
1,941,623,253.07 135,000,000.00 1,338.24%
36 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
2. Significant equity investment obtained during the reporting period
√ Applicable □ Not applicable Monetary Unit: Yuan Name of Primary Way of Investment Sharehol Capi Part Term of Product Progres Estima Current Whet Date of Disclosure invested busines investme amount ding tal ner investm type s as at ted investm her disclos index (if any) company s nt ratio sour ent balance revenu ent any ure (if ce sheet e profit litigati any) date and on is loss involv ed
Yunnan Product Acquisitio 882,430,00 98.39% Own Non Long Inorganic Comple 0.00 0.00 No July 3, www.cninfo.c Metallurgi ion and n 1.00 fund e term chemical ted 2019 om.cn cal Xinli sales of s industry Titanium titaniu and Co., Ltd. m bank dioxide, loan high s titaniu m residue and sponge titaniu m
Henan Product New 146,200,00 100.00% Own Non Long Machine Comple 0.00 0.00 No Apr. www.cninfo.c Lomon ion and establish 0.00 fund e term manufact ted 23, om.cn Billions sales of ment s uring 2019 Intelligent general Equipmen mechan t ical Manufact equipm uring Co., ent and
37 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Ltd. parts
Guangdon Product Acquisitio 872,993,25 15.66% Own Non Long Inorganic Comple 0.00 0.00 No Decem www.cninfo.c g Orient ion and n 2.07 fund e term chemical ted ber 24, om.cn Zirconic sales of s industry 2019 Industry zirconiu Science m and series Technolog product y Co., Ltd. s and structur al ceramic product s
Jiaozuo Product Additiona 40,000,000. 77.50% Own Non Long Inorganic Comple 0.00 0.00 No Billions ion and l 00 fund e term chemical ted United sales of investme s industry Pigment iron nt Co., Ltd. oxide pigmen t series product s
Total -- -- 1,941,623,2 ------0.00 0.00 ------53.07
38 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
3. Significant non-equity investment in progress during the reporting period
□ Applicable √ Not applicable
4. Financial assets measured at fair value
□ Applicable √ Not applicable
5. Use of raised funds
□ Applicable √ Not applicable
4.6 VI. Sale of Major Assets and Equity 1. Sale of major assets
□ Applicable √ Not applicable
No significant assets were sold by the Company during the reporting period.
2. Sale of major equity
□ Applicable √ Not applicable
4.7 VII. Analysis of Major Holding and Participating Companies √ Applicable □ Not applicable
Description of major subsidiaries and participating companies that affect the Company’s net profit by more than 10% Monetary Unit: Yuan Company Company Primary Registere Total Net Operating Operating Net profit name Type business d capital Assets assets income Profit
Lomon Billions Titanium 430,116,1 3,536,626 1,864,985 3,383,198 908,816,3 768,635,9 Sichuan Subsidiary dioxide 92.80 ,359.61 ,223.55 ,701.31 72.74 59.86 Titanium Industry
39 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Co., Ltd.
Sichuan Lomon Mining Mineral 520,000,0 2,831,862 2,106,430 2,597,573 1,059,949 898,717,9 Subsidiary and products 00.00 ,719.47 ,855.44 ,126.13 ,057.81 55.29 Metallurgy Co., Ltd.
Xiangyang Lomon Titanium 300,000,0 1,586,165 1,093,286 1,869,510 461,630,1 401,735,8 Titanium Subsidiary dioxide 00.00 ,844.82 ,553.62 ,115.00 78.37 05.41 Industry Co., Ltd.
Acquisition and disposal of subsidiaries during the reporting period √ Applicable □ Not applicable
Ways of acquiring and disposing of Impacts on overall production, Company name subsidiaries during the reporting operation and performance period
New establishment of the subsidiary has further promoted the Company’s equipment level and the independent scientific research level of intelligent manufacturing and Henan Lomon Billions Intelligent New establishment green manufacturing, lowered Equipment Manufacturing Co., Ltd. manufacturing costs, enhanced production efficiency and product quality, and gave strong support to the titanium industry structure of the Company.
Equity acquisition and debt-for- equity swap help to improve the Company’s capacity of titanium dioxide by chlorination, enhance the Yunnan Metallurgical Xinli Titanium Equity acquisition and debt-for- production lines of titanium sponge, Co., Ltd. equity swap and seize the development opportunities of titanium dioxide by chlorination and high-end titanium alloy materials.
Description of major shareholding and joint-stock companies
40 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
4.8 VIII. Structured Subjects Controlled by the Company □ Applicable √ Not applicable
4.9 IX. Prospects for the Company’s Future Development I. Trends in the titanium industry
The titanium dioxide pigment industry is a niche industry. Overall enhancement has been made in the scale and quality of this industry in China since it has been experiencing rapid development for over 20 years. In recent years, the titanium dioxide pigment industry has gradually entered a new normal, evolving from high-speed growth to medium-low-speed growth, with the product structure having been upgraded from middle and low end to middle and high end. Under the pressure of supply-side reform and environmental protection policies, green, energy-saving and environmental protection has become the mainstream of the industry development. Recycling economy and the manufacture of chloride-process titanium dioxide pigment are where the industry is headed, and development with high quality has become the main melody of the industry.
Owing to its low density, high intensity, low thermal conductivity, high resistance to high temperature and low temperature, strong corrosion resistance and good biocompatibility, titanium is widely applied in aviation, aerospace, biomedicine, chemical metallurgy, marine engineering and other fields, and therefore titanium is also called “space metal”, “ocean metal”, “modern metal” and “strategic metal”. As a fundamental industry for national economic development and industrial upgrading as well as a key industry supported and prioritized by the state, the titanium industry is of strategic value to the development of national defence, economy, and science and technology of a country. In view of this, China has introduced a series of policies to support the development of this industry. Demand for titanium in China has been on the rise since 2008. After the titanium market reached a peak in 2011, domestic demand for titanium began to decline and China’s titanium industry
41 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. showed structural overcapacity. The supply of high-end aviation titanium materials is in short supply, and the production capacity of civil medium and low-end titanium materials is seriously oversupplied. China’s demand for titanium processing materials has reached a record high since 2017, driven by demand from high-end chemical, aerospace, shipping, and power industries.
II. Development Strategy of the Company
(I) Stable supply of raw materials and cost reduction
Via technological transformation, project construction and acquisition, the Company strives to effectively enhance self-sufficiency rate of main raw materials and the multipurpose utilization rate of mineral resources, ensure the green, safe, stable and reliable supply of raw materials, and provide guarantee for building a low-cost and full process titanium industry chain. Striving for elaborate management, the Company carries on technological transformation and expansion of its existing mining areas to ensure the simultaneous growth in recovery rate, production efficiency and output; the Company is stepping up the construction of the innovation project for investment and production of 500,000 tonnes of
Panxi titanium concentrate and upgrading and transforming titanium chloride residue; meanwhile, the Company is considering the construction of a domestic-titanium-slag upgrading project in Xinli Titanium to achieve large-scale production in upgrading and converting titanium chloride residue in domestic titanium concentrate, guarantee steady supply of chloride-process titanium dioxide pigment and titanium sponge raw materials, and enhance the multipurpose utilization value of mineral resources; and the Company seeks for and acquires domestic and foreign high-quality titanium ore to increase the sustainable self-sufficiency of titanium ore.
(II) Upgrade of both product structure and product quality
In the titanium dioxide pigment industry: the Company is enhancing the proportion of chloride-process titanium dioxide pigment and upgrading its products to the middle and high 42 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. end so as to be a pioneer in the industrial structure reform of titanium dioxide pigment in
China. Chloride-process titanium dioxide pigment production is expected to experience great development in China. The Company makes every effort to ensure production, with a planned annual production of 200,000 tonnes of chloride-process titanium dioxide pigment in Jiaozuo, and a planned annual production of 60,000 tonnes of chloride-process titanium dioxide pigment in Xinli Titanium, is up to standard; the Company is rapidly expanding its business and is seizing opportunities in the market to consolidate its advantages in the industry; the Company has increased R&D investment to develop new high-end products featuring high light fastness and super weather resistance; the Company has increased research and development investment to develop super light-fast and weather-resistant new high-end products; the Company is building and improving the quality supervision and feedback system, promoting the TR52 quality concept and stabilizing product quality to meet customer demands.
In the titanium metal industry: relying on its mature large-scale chloride technology and advantages in the industrial chain, the Company is promoting the production capacity of titanium sponge by means of acquisition, cooperation and new projects, and if the talent and technology reserves are in place, the Company will seize the opportunity to enter the titanium alloy field. The Company is exerting every effort to resume the production line with an estimated annual output of 10,000 tonnes of titanium sponge in Xinli Titanium; relying on its mature large-scale chloride technology, the Company is building a rotor-grade production line of sponge titanium, is reserving talent and technology in titanium alloy, and is preparing to enter the titanium alloy field when the time is right.
(III) Excellent market service capabilities
By integrating and optimizing its marketing network, the Company is (1) building a professional and localized network for marketing to provide differentiated products and services in areas designated in the world to meet the demands of customers and end-use 43 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. product formulations; (2) building Lomon Billions Shanghai Market Service Center, making the best use of talent, technology, finance, policies and other resources in the Yangtze River
Delta and taking into account both domestic and foreign markets to enhance its status and brand advantages in titanium and titanium derivatives related industries; (3) working out a market structure for chloride products, paying close attention to the industry mainstream customers, gaining insight into customer demands, keeping an eye on development trends of competitors and the industry, and making use of its cost advantage to occupy the chloride market and provide new production capacity for chloride process titanium dioxide pigment.
(IV) Green sustainable development
The Company will increase its innovation inputs and upgrade existing technologies to realize multipurpose utilization of waste water and solid resources. The Company will (1) upgrade its sulfuric acid technology and optimize its existing sulfuric acid production technology to achieve coordinated development of titanium dioxide pigment production and environmental protection; (2) accelerate horizontal integration of sulfuric acid and chloride technology, build a synthetic rutile production line, guarantee the supply of raw materials for production of chloride-process titanium dioxide pigment, and save the costs of waste acid disposal and gypsum storage; (3) industrialize the high-salt waste water project to meet production standards, recycle chlorinated waste water from the chloride production line, and reduce waste water discharges and avoid chloride contamination to recycle chloride ions; (4) accelerate the research and industrialization of recovery of vanadium scandium sparse metal by waste acid extraction using the chloride method.
III. Possible risks and countermeasures
(I) Environmental policy related risks
The developing political environment requires enterprises to achieve green development.
Future national environmental standards, resource recycling standards and production safety standards will push for the adoption of international standards and those of leading 44 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. companies in the world and will promote the strengthening of law enforcement. With higher standards, stricter requirements and continuous strengthening of environmental supervision, chemical companies will face environmental risks in the next few years.
Responses: The Company always attaches great importance to fulfilling environmental protection social responsibility, firmly embraces the concept of ecological priority and green development, takes the initiative to comply with the new standards and new requirements for treatment of waste water, waste gas, dust, noise and solid waste, and continuously increases its investment in environmental protection to ensure normal operation of environmental protection facilities and standard-compliant discharge of various pollutants.
At the same time, the Company, in accordance with the principle of “reduction, reuse and recycling”, relies on technological advancement and technological innovation to vigorously develop comprehensive utilization and circular economy.
(II) Management related risks
In recent years, the Company has experienced rapid development and has formed a trans- regional group management model based on its six production bases, giving higher requirements for management of the Group. In view of the increasingly complex and volatile macroeconomic environment, any inability of the Company to continue to improve its management level and decision-making efficiency may have a certain impact on the
Company’s normal production and operation.
Responses: The Company will take into account its development strategy outline for the next ten years to unify its management philosophy and development goals, always maintain a new and innovative way of thinking, continuously improve the knowledge structure of the
Company’s employees by continuing to improve its operation and management level through multi-level and multi-channel training and communication, and actively introduce relevant industry talents and management teams. 45 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
(III) Risks in raw material price fluctuation
In view of the fact that ever-changing policy factors and complex market environment will lead to more frequent price fluctuation of bulk raw materials, and will have a greater impact on production and operation and cost control of enterprises, the Company will inevitably bear the risk of fluctuations concerning raw material prices.
Responses: Build a more perfect industrial chain through domestic and foreign resource integration and technological innovation to achieve the goal of industrial integration as soon as possible; cooperate with upstream suppliers to further expand the mining and mineral separation capabilities of group companies, strive to grasp the market trend, make profits, appropriately avoid risks in raw material price fluctuations, and ensure the stability of production and operation.
(IV) Risks in investment
In order to realize strategic structure of the Company’s titanium business as soon as possible, the Company will continue to carry out domestic and overseas industrial mergers and acquisitions as well as resource integration based on its main business. There is investment risk since investment in each project will be affected by various factors such as domestic and international economic environment, macro policies, industry cycle and trading plan.
Responses: In order to effectively resolve the investment risks brought by industrial mergers and acquisitions, the Company will engage professional project teams to carry out investment related cooperation in carefully selecting investment targets, carry out comprehensive project due diligence, establish an efficient investment decision-making mechanism, fully pay attention to and prevent risks, and strictly control risks.
46 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
(V) Exchange rate risks
As the largest export enterprise of titanium dioxide pigment in China, the annual export volume of the Company accounts for 30%-40% of China’s export volume of titanium dioxide pigment, with the potential of continuous growth. As the Company grows to be an international enterprise, its import and export business will gradually increase, and any exchange rate fluctuation may result in exchange loss risks.
Responses: Improve the level of financial and foreign exchange business of relevant management personnel, actively pay attention to the fluctuations of the foreign exchange market and exchange rate trends, enhance the ability of pre-judgment, and seek advantages and avoid risks. Actively make use of advanced financial instruments, flexibly adjust policies concerning export settlement and pricing and avoid the risks that may result from exchange rate fluctuations to the maximum extent.
4.10 X. Reception of Survey, Communication, Interview and Other Activities 1. Registration form concerning reception of survey, communication, interview, and other activities during the reporting period
√ Applicable □ Not applicable
Type of reception Date of reception Way of reception Index of basic situation of survey object
For details, please visit http://www.cninfo.com.cn for March 13, 2019 Field survey Institution 002601 Survey Information of Lomon Billions 20190314
For details, please visit http://www.cninfo.com.cn for June 19, 2019 Field survey Institution Investor Survey Activity Record Form by June 19, 2019
47 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
5 Section V Important Particulars
5.1 I. Distribution of return on common shares and transfer of capital reserve into equity of the Company Policies concerning distribution of return on common shares during the reporting period, especially formulation, implementation, or adjustment of cash dividends distribution policies
√ Applicable □ Not applicable
The Company has worked out and is strictly implementing its Shareholder Return Plan for the Next Three years (2018-2020). The plan has been reviewed and approved at the 10th meeting of the 6th Board of Directors and the 3rd extraordinary general meeting in 2018 of the Company, with relevant content in the plan published on Cninfo
(http://www.cninfo.com.cn). The Company did a good job in the implementation of its profit distribution plan strictly in accordance with Decisions on Amending Some Provisions on
Cash Dividends by Listed Companies and Notice on Further Implementing Matters concerning Cash Dividends of Listed Companies issued by China Securities Regulatory
Commission, Memorandum No. 33 on the SME Board Information Disclosure: Profit
Distribution and Transfer of Capital Reserve into Equity issued by Shenzhen Stock
Exchange, Articles of Association of the Company and the provisions and requirements of other rules.
During the reporting period, the Company’s good-faith implementation of its cash dividends distribution policies was in line with the provisions of its Articles of Association or the requirements of the resolutions made at general meetings, matched with the growth of performance and future development plan of the Company, and successfully safeguarded the interests of all shareholders.
48 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Special Notes on Cash Dividends Distribution Policies
Whether the provisions of the Company’s Articles of Association or the requirements of the resolutions Yes made at general meeting are satisfied:
Whether the standards and proportions of dividends Yes distribution are clear:
Whether relevant decision-making procedures and Yes mechanisms are complete:
Whether independent directors have performed their Yes duties and played their due role:
Whether minority shareholders can fully express their opinions and appeals, and have their legitimate rights Yes and interests fully protected:
Whether relevant conditions and procedures are compliant and transparent where any adjustment or Yes change is made to cash dividends distribution policies:
Common stock dividends distribution plan (pre-arranged planning) and plan on transfer of capital reserve into equity (pre-arranged planning) of the Company for the past 3 years
(including the current reporting period)
1. On Oct. 18, 2017, the Company’s sixth extraordinary general meeting in 2017 reviewed and approved the Company’s 2017 Semi-annual Profit Distribution Plan: distribute cash dividends of RMB5.00 (including tax) for every 10 shares to all shareholders, and distribute cash dividends of RMB998,927,845 (including tax) in total based on the total share capital of 1,997,855,690 shares of the Company after deducting the repurchased shares in repurchase account from original total share capital (the Company has its total share capital of 2,032,095,439 shares, and has the number of repurchased shares in its repurchase account of 34,239,749 shares). The profit distribution plan was completely implemented on
Dec. 7, 2017. For details, please refer to the 2017 Semi-annual Equity Distribution
Implementation Announcement (Announcement No.: 2017-127) published by the Company
49 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. on China Securities Journal, Securities Times and http://www.cninfo.com.cn on Dec. 1,
2017.
2. On Apr. 23, 2018, the Company’s 2017 annual general meeting reviewed and approved the 2017 Equity Distribution Plan of the Company: distribute cash dividends of RMB5.50
(including tax) for every 10 shares to all shareholders based on the Company’s existing share capital of 2,032,095,439 shares, and distribute cash dividends of
RMB1,117,652,491.45 (including tax) in total. The profit distribution plan was completely implemented on May 4, 2018. For details, please refer to the 2017 Annual Equity Distribution
Implementation Announcement (Announcement No.: 2018-050) published by the Company on China Securities Journal, Securities Times and http://www.cninfo.com.cn on Apr. 26,
2018.
3. On Sep. 5, 2018, the Company’s fifth extraordinary general meeting in 2018 reviewed and approved the Company’s 2018 Semi-annual Profit Distribution Plan: distribute cash dividends of RMB6.540279 (including tax) for every 10 shares to all shareholders, and distribute cash dividends of RMB1,320,813,577.85 (including tax) in total based on
2,019,506,427 shares (the Company’s total share capital of 2,032,020,889 shares -
12,514,462 shares of the Company that have been repurchased in the Company’s special securities account for repurchase). The profit distribution plan was completely implemented on Oct. 25, 2018. For details, please refer to the 2018 Semi-annual Equity Distribution
Implementation Announcement (Announcement No.: 2018-111) published by the Company on China Securities Journal, Securities Times and http://www.cninfo.com.cn on Oct. 17,
2018.
4. On May 14, 2019, the Company’s 2018 annual general meeting reviewed and approved the 2018 Profit Distribution Plan of the Company: distribute cash dividends of RMB1.00
(including tax) for every 10 shares to all shareholders based on the Company’s total share 50 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. capital of 2,032,020,889 shares as at Dec. 31, 2018 and distribute cash dividends of
RMB203,202,088.9 in total. The Profit Distribution Plan was completely implemented on
Jun. 17, 2019. For details, please refer to the 2018 Annual Equity Distribution
Implementation Announcement (Announcement No.: 2019-044) published by the Company on China Securities Journal, Securities Times and http://www.cninfo.com.cn on Jun. 11,
2019.
5. On May 14, 2019, the Company’s 2018 annual general meeting reviewed and approved the Profit Distribution Plan of the Company for the first quarter of 2019: distribute cash dividends of RMB6.00 (including tax) for every 10 shares to all shareholders based on the
Company’s total share capital of 2,032,020,889 shares as at Mar. 31, 2019 and distribute cash dividends of RMB1,219,212,533.4 in total. The Profit Distribution Plan was completely implemented on Jun. 19, 2019. For details, please refer to the Equity Distribution
Implementation Announcement for the First Quarter of 2019 (Announcement No.: 2019-045) published by the Company on China Securities Journal, Securities Times and http://www.cninfo.com.cn on Jun. 12, 2019.
6. On Nov. 13, 2019, the third extraordinary general meeting of shareholders of the
Company in 2019 reviewed and approved the Profit Distribution Plan of the Company for the third quarter of 2019: distribute cash dividends of RMB1.50 (including tax) for every 10 shares to all shareholders based on the Company’s total share capital of 2,032,020,889 shares as at Sep. 30, 2019 and distribute cash dividends of RMB304,803,133.35 in total.
The Profit Distribution Plan was completely implemented on Dec. 13, 2019. For details, please refer to the Equity Distribution Implementation Announcement for the Third Quarter of 2019 (Announcement No.: 2019-093) published by the Company on China Securities
Journal, Securities Times and http://www.cninfo.com.cn on Dec. 9, 2019.
51 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Table of the Company’s distribution of common stock cash dividends for the past three years
(including the current reporting period) Monetary Unit: Yuan Proportion of total amount of Proportion Proportion cash Net profit of cash of cash dividends attributable dividends dividends (including to ordinary distributed to the net Amount of Total those shareholde in other profit cash amount of distributed rs of listed ways to the Amount of attributable dividends cash in other companies net profit cash to common distributed dividends ways) to Year of in the attributable dividends shareholde in other (including the net distribution consolidate to common (including rs of the ways (such those profit d shareholde tax) Listed as distributed attributable statements rs of the Company in repurchase in other to common of Company in the of shares) ways) shareholder dividends the consolidate s of the distribution consolidate d Company in year d statements the statements consolidate d statements
1,524,015,6 2,593,975,2 1,524,015,6 2019 58.75% 0.00 0.00% 58.75% 66.75 80.30 66.75
1,524,015,6 2,285,728,6 1,524,015,6 2018 66.68% 0.00 0.00% 66.68% 66.75 63.61 66.75
2,116,580,3 2,502,413,9 2,116,580,3 2017 84.58% 0.00 0.00% 84.58% 36.45 58.33 36.45
The Company achieved profit during the reporting period and the parent company’s profit available to be distributed to common shareholders was positive; but no common stock cash dividend distribution plan was proposed
□ Applicable √ Not applicable
5.2 II. Profit distribution and transfer of capital reserve into share capital during the reporting period □ Applicable √ Not applicable
52 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
The Company plans to neither pay cash dividends or bonus shares nor raise capital with accumulation funds.
5.3 III. Fulfillment of Commitments 1. Commitments that are fulfilled during the reporting period and not fulfilled at the end of the reporting period by actual controllers, shareholders, affiliates or acquirers of the Company, the Company, and other relevant parties
√ Applicable □ Not applicable
Type of Content of Date of Period of Descriptio Cause of commitment Promisee commitme commitme commitme commitme n of nt nt nt nt fulfillment
XU Gang, LI Ling, The shares TAN not Ruiqing, publicly WANG issued this Zelong, Commitm time shall FAN ent on not be This Xianguo, restricted transferre From Sep. Commitments made during commitme WANG sale of d in any Jun. 4, 20, 2016 initial public offering or nt has Tao, WEI non- form 2015 to Sep. 19, refinancing been fully Zhaoqi, HE publicly within 36 2019 fulfilled. Benliu, issued months China shares from the Great Wall date of Asset completio Managem n of ent Co., issuance. Ltd.
Whether the commitment has Yes been fulfilled on time
2. Forecasts on profit of assets or projects of the Company are made and the reporting period falls in the period when the profit forecasts apply; and an explanation is made by the Company on satisfying the original profit forecasts by assets or projects as well as on corresponding reasons
□ Applicable √ Not applicable
53 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
5.4 IV. Non-business Capital Occupying in the Listed Company by Controlling Shareholder and Its Related Parties
□ Applicable √ Not applicable
There was no non-operating capital occupied by the controlling shareholders and their affiliates to the Company during the reporting period of the Company.
5.5 V. Explanation of the Board of Directors, the Board of Supervisors, and Independent Directors (if any) on the “Non-standard Audit Report” Issued by the Accounting Firm for the Reporting Period
□ Applicable √ Not applicable
5.6 VI. Explanation of Changes in Accounting Policies, Accounting Estimates and Accounting Methods Compared with Those Set Out in the Previous Year’s Financial Report
√ Applicable □ Not applicable
For changes in current accounting policies, accounting estimates and accounting methods, please refer to “V. Significant Accounting Policies and Accounting Estimates in Section XII” of this Report for details.
5.7 VII. Explanation of Major Accounting Error Corrections during the Reporting Period that Need to be Retrospectively Restated
□ Applicable √ Not applicable
54 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
There were no major accounting error corrections that need to be retrospectively restated during the reporting period of the Company.
5.8 VIII. Description of Changes in the Scope of Consolidated Statements Compared with the Previous Year’s Financial Report
√ Applicable □ Not applicable
Please refer to “VIII. Changes in the Scope of Consolidation” and “IX. Interests in Other
Entities” in Section XII of the Report for details of the scope and changes of the consolidated financial statements in the current period.
5.9 IX. Appointment and Dismissal of Accounting Firm
Current accounting firm
BDO China Shu Lun Pan Certified Public Accountants (Special Name of domestic accounting firm General Partnership)
Compensation of domestic accounting firm (RMB ten 200 thousand)
Continuous years of auditing services of domestic accounting 7 firm
Name of certified public accountant of domestic accounting XU Peimei, ZHANG Zhen firm
Continuous years of auditing services provided by certified 3 public accountant of domestic accounting firm
Whether the accounting firm is replaced in the current period
□ Yes √ No
Appointment of accounting firm, financial advisor or sponsor for internal control and auditing
□ Applicable √ Not applicable
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5.10 X. Description of Suspension and Termination of Listing After Disclosure of Annual Report
□ Applicable √ Not applicable
5.11 XI. Matters Concerning Bankruptcy Reorganization
□ Applicable √ Not applicable
No bankruptcy or reorganization related issues arose during the reporting period of the
Company.
5.12 XII. Major Lawsuits and Arbitrations
□ Applicable √ Not applicable
5.13 XIII. Punishment and Rectification
□ Applicable √ Not applicable
No punishment or rectification arose during the reporting period of the Company.
5.14 XIV. Description on Integrity of the Company and Its Controlling Shareholder and Actual Controller
□ Applicable √ Not applicable
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5.15 XV. Description on Implementation of the Company’s Equity Incentives Plan, Employee Stock Ownership Plan or Other Employee Incentives
√ Applicable □ Not applicable
Implementation of the first Employee Stock Ownership Plan (ESOP):
1. On Dec. 14, 2017, the sixth meeting of the sixth board of directors of the Company reviewed and approved the Proposal on the Company’s First Employee Stock Ownership
Plan (Draft) and its Summary as well as the Proposal on the Management of the Company’s
First Employee Stock Ownership Plan which were published on www.cmnfo.com.cn on Dec.
16, 2017. On Jan. 3, 2018, relevant proposal concerning the Company’s employee stock ownership plan was reviewed and approved by the Company’s first extraordinary general meeting in 2018. On Feb. 27, 2018, the Company’s first employee stock ownership plan completed non-transaction transfer [for details, please refer to the Announcement on
Completion of Non-transaction Transfer of the First Employee Stock Ownership Plan
(Announcement No.: 2018-018) published in China Securities Journal, Securities Times and www.cninfo.com.cn on Mar. 1, 2018].
2. Upon expiration of the Company’s first employee stock ownership plan on Feb. 27, 2019, the Company authorized “Xuanyuan Liudu Lomon Billions Employees Shareholding Private
Equity Investment Fund” to reduce the shares held by no more than 50% of the total number of shares held under this employee stock ownership within 1 year after expiration of lock-up period according to arrangements of the employee stock ownership plan and the market situation, and to reduce the shares held in all the remaining shares within 13 to 24 months after expiration of lock-up period. For details, please refer to the Prompt Announcement on
Expiration of Lock-up Period of the First Employee Stock Ownership Plan published on www.cninfo.com.cn on Feb. 23, 2019 (Announcement No.: 2019-008).
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3. As at Mar. 22, 2019, the Company’s first employee stock ownership plan has completed the task of reducing the shares held by 50% with the cumulative number of shares reduced by 17,119,855 shares which account for 0.84% of the Company’s total share capital, with the highest transaction price of RMB16.35/share and the lowest transaction price of
RMB14.49/share, and with the accumulated amount of the shares held reduced of
RMB261,618,600.54 (excluding transaction costs).
4. As at the date of this Announcement, 17,119,894 shares remained in the first ESOP, accounting for 0.84% of the total share capital. The first ESOP intends to sell off all remaining shares within the 13th to 24th months from Feb. 28, 2020 to Feb. 27, 2021, upon expiry of the lock-up period. For details, please refer to the Prompt Announcement on Reduction of
Shares of the First Employee Stock Ownership Plan published on www.cninfo.com.cn on
Feb. 7, 2020 (Announcement No.: 2020-015).
Implementation of the second ESOP:
1. From Sep. 4, 2018 to Jan. 25, 2019, the Company repurchased a total of 56,936,308 shares via centralized price bidding in the secondary market, accounting for 2.80% of the
Company’s total share capital, in which repurchase, the highest transaction price was
RMB13.86 per share, the lowest transaction price was RMB12.20 per share and the total amount paid was RMB750,108,799.73 (excluding transaction costs). For details, please refer to the Announcement on Completion of Share Repurchase (Announcement No.: 2019-
006) published in China Securities Journal, Securities Times and on www.cninfo.com.cn on
Jan. 29, 2019.
2. On Apr. 8, 2019, the 15th meeting of the 6th Board of Directors reviewed and approved the Proposal on Determining the Purpose of Share Repurchase and determined that all the shares repurchased would be used for the Company’s second ESOP. For details, please refer to the Announcement on Determining the Purpose of Share Repurchase published in 58 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
China Securities Journal, Securities Times and www.cninfo.com.cn on Apr. 9, 2019
(Announcement No.: 2019-020).
3. On Apr. 19, 2019, the 16th meeting of the 6th Board of Directors reviewed and approved the Proposal on the Company’s Second ESOP (Draft) and Its Summary and the Proposal on the Plan Management Measures of the Company’s Second ESOP. On May 14, 2019, the proposal concerning the Company’s second ESOP was reviewed and approved at the
Company’s general meeting in 2018. On Jun. 10, 2019, the Company received the
Confirmation of Securities Transfer Registration from China Securities Depository and
Clearing Corporation Limited Shenzhen Branch. The Company’s shares held in its repurchase special securities account were transferred on Jun. 6, 2019 in a non-trading manner to “Lomon Billions Group Co., Ltd. - the Second ESOP”, with the transfer price of
RMB10.01 per share and 56,936,308 shares transferred. For details, please refer to related announcements published in China Securities Journal and Securities Times and on www.cninfo.com.cn.
5.16 XVI. Major Related Party Transactions
1. Related party transactions related to daily operations
□ Applicable √ Not applicable
No related transactions in connection with daily operations occurred to the Company during the reporting period.
2. Related party transactions arising from acquisition and sale of assets or equity
□ Applicable √ Not applicable
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No transaction related to acquisition or sale of assets or equity occurred to the Company during the reporting period.
3. Related party transactions involving joint foreign investment
□ Applicable √ Not applicable
No transaction related to joint foreign investment occurred to the Company during the reporting period.
4. Related creditor’s rights and debts
□ Applicable √ Not applicable
There were no related creditor’s rights and debts during the reporting period of the
Company.
5. Other major related party transactions
□ Applicable √ Not applicable
There were no other major related party transactions during the reporting period of the
Company.
5.17 XVII. Major Contracts and Their Performance
1. Description of Trusteeship, Contracting and Lease
(1) Trusteeship
□ Applicable √ Not applicable
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The company was not involved in any trusteeship during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
No contracting occurred to the Company during the reporting period.
(3) Lease
□ Applicable √ Not applicable
The Company was not involved in any lease during the reporting period.
2. Major guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB ten thousand
External guarantees of the Company and its subsidiaries (excluding guarantees provided to subsidiaries)
Wheth er the Disclosure Wheth guaran date of er the tee is Name of announce Actual date Actual Type of guaran Guarante Period of a guarantee ment of guarantee guarant tee is e amount guarantee guaran object related to occurrence amount ee fully tee of guarantee perfor relate amount med d parties
Total actual amount of Total amount of external external guarantees guarantees approved during during the reporting the reporting period (A1) period (A2)
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Total amount of external Total actual balance of guarantees approved at the external guarantees at end of the reporting period the end of the (A3) reporting period (A4)
Guarantees provided by the Company to its subsidiaries
Wheth er the Disclosure Wheth guaran date of er the tee is Name of announce Actual date Actual Type of Period of guaran Guarante a guarantee ment of guarantee guarant guarante tee is e amount guaran object related to occurrence amount ee e fully tee of guarantee perfor relate amount med d parties
Joint Dec. 23, Billions Apr. 26, liability 2016 to (Europe) Co., 24,707.52 Dec. 23, 2016 6,812.77 Yes Yes 2016 guarant Mar. 14, Ltd. ee 2019
Joint Jul. 2, Billions Dec. 26, liability 2019 to (Europe) Co., 20,000 Jul. 2, 2019 13,729.47 No Yes 2018 guarant Jul. 2, Ltd. ee 2022
Joint May 25, Billions (Hong Dec. 16, liability 2018 to 50,000 May 7, 2018 6,863.2 Yes Yes Kong) Co., Ltd. 2017 guarant May 24, ee 2019
Joint Jun. 25, Billions (Hong Dec. 26, liability 2019 to 100,000 Jun. 25, 2019 13,952.4 No Yes Kong) Co., Ltd. 2018 guarant Jun. 12, ee 2020
Joint Jun. 28, Billions (Hong Dec. 26, liability 2019 to 100,000 Jun. 28, 2019 10,312.05 Yes Yes Kong) Co., Ltd. 2018 guarant Dec. 24, ee 2019
Joint May 31, Billions (Hong Dec. 16, liability 2018 to 50,000 May 31, 2018 13,726.4 Yes Yes Kong) Co., Ltd. 2017 guarant May 22, ee 2019
Lomon Billions Joint May 3, Sichuan Dec. 16, liability 2018 to Titanium 150,000 May 3, 2018 10,000 Yes Yes 2017 guarant May 2, Industry Co., ee 2019 Ltd.
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Lomon Billions Joint May 31, Sichuan Dec. 16, liability 2018 to Titanium 150,000 May 31, 2018 10,000 Yes Yes 2017 guarant May 30, Industry Co., ee 2019 Ltd.
Lomon Billions Joint Dec. 27, Sichuan Dec. 26, liability 2018 to Titanium 120,000 Dec. 27, 2018 13,000 Yes Yes 2018 guarant Dec. 26, Industry Co., ee 2019 Ltd.
Lomon Billions Joint Jan. 11, Sichuan Dec. 26, liability 2019 to Titanium 120,000 Jan. 11, 2019 15,000 Yes Yes 2018 guarant Sep. 4, Industry Co., ee 2019 Ltd.
Lomon Billions Joint Feb. 27, Sichuan Dec. 26, liability 2019 to Titanium 120,000 Feb. 27, 2019 2,590.29 Yes Yes 2018 guarant Aug. 27, Industry Co., ee 2019 Ltd.
Lomon Billions Joint Mar. 11, Sichuan Dec. 26, Mar. 11, liability 2019 to Titanium 120,000 3,780 Yes Yes 2018 2019 guarant Sep. 11, Industry Co., ee 2019 Ltd.
Lomon Billions Joint Mar. 20, Sichuan Dec. 26, Mar. 20, liability 2019 to Titanium 120,000 10,000 No Yes 2018 2019 guarant Mar. 19, Industry Co., ee 2020 Ltd.
Lomon Billions Joint Mar. 27, Sichuan Dec. 26, Mar. 27, liability 2019 to Titanium 120,000 10,000 No Yes 2018 2019 guarant Mar. 26, Industry Co., ee 2020 Ltd.
Lomon Billions Joint Mar. 28, Sichuan Dec. 26, Mar. 28, liability 2019 to Titanium 120,000 2,903.18 Yes Yes 2018 2019 guarant Sep. 28, Industry Co., ee 2019 Ltd.
Lomon Billions Joint May 15, Sichuan Dec. 26, liability 2019 to Titanium 120,000 May 15, 2019 10,000 No Yes 2018 guarant May 14, Industry Co., ee 2020 Ltd.
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Lomon Billions Joint May 30, Sichuan Dec. 26, liability 2019 to Titanium 120,000 May 30, 2019 10,000 No Yes 2018 guarant May 29, Industry Co., ee 2020 Ltd.
Lomon Billions Joint Jun. 12, Sichuan Dec. 26, liability 2019 to Titanium 120,000 Jun. 12, 2019 6,976.2 No Yes 2018 guarant Jun. 11, Industry Co., ee 2020 Ltd.
Lomon Billions Joint Jun. 21, Sichuan Dec. 26, liability 2019 to Titanium 120,000 Jun. 21, 2019 6,976.2 No Yes 2018 guarant Jun. 20, Industry Co., ee 2020 Ltd.
Lomon Billions Joint Jun. 28, Sichuan Dec. 26, liability 2019 to Titanium 120,000 Jun. 28, 2019 13,952.4 No Yes 2018 guarant Jun. 26, Industry Co., ee 2020 Ltd.
Lomon Billions Joint Sep. 27, Sichuan Dec. 26, liability 2019 to Titanium 120,000 Sep. 27, 2019 8,000 No Yes 2018 guarant Sep. 23, Industry Co., ee 2020 Ltd.
Lomon Billions Joint Nov. 15, Sichuan Dec. 26, liability 2019 to Titanium 120,000 Nov. 15, 2019 20,000 No Yes 2018 guarant Sep. 23, Industry Co., ee 2020 Ltd.
Joint Oct. 18, Henan Billions Jun. 6, liability 2016 to New Material 20,000 Oct. 18, 2016 20,000 No Yes 2016 guarant Jun. 11, Co., Ltd. ee 2024
Joint May 28, Henan Billions Dec. 16, liability 2018 to New Material 150,000 May 28, 2018 4,700 Yes Yes 2017 guarant May 28, Co., Ltd. ee 2019
Joint May 31, Henan Billions Dec. 16, liability 2018 to New Material 150,000 Apr. 23, 2018 5,000 Yes Yes 2017 guarant May 31, Co., Ltd. ee 2019
Joint Jun. 28, Henan Billions Dec. 16, liability 2018 to New Material 150,000 May 2, 2018 10,000 Yes Yes 2017 guarant Jun. 27, Co., Ltd. ee 2019
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Joint Oct. 1, Henan Billions Dec. 16, liability 2018 to New Material 150,000 Oct. 1, 2018 1,723.7 Yes Yes 2017 guarant Jan.18, Co., Ltd. ee 2019
Joint Dec. 27, Henan Billions Dec. 26, liability 2018 to New Material 300,000 Dec. 27, 2018 9,000 No Yes 2018 guarant Dec. 21, Co., Ltd. ee 2026
Joint Dec. 28, Henan Billions Dec. 26, liability 2018 to New Material 300,000 Dec. 28, 2018 16,557.03 No Yes 2018 guarant Dec. 21, Co., Ltd. ee 2026
Joint Jan. 26, Henan Billions Dec. 26, liability 2019 to New Material 300,000 Jan. 26, 2019 15,000 Yes Yes 2018 guarant Aug. 21, Co., Ltd. ee 2019
Joint Jan. 31, Henan Billions Dec. 26, liability 2019 to New Material 300,000 Jan. 31, 2019 5,000 Yes Yes 2018 guarant Dec. 2, Co., Ltd. ee 2019
Joint Mar. 26, Henan Billions Dec. 26, liability 2019 to New Material 300,000 Mar. 26, 2019 15,000 No Yes 2018 guarant Dec. 21, Co., Ltd. ee 2026
Joint Mar. 28, Henan Billions Dec. 26, liability 2019 to New Material 300,000 Mar. 28, 2019 5,162.39 No Yes 2018 guarant Mar. 27, Co., Ltd. ee 2020
Joint Mar. 29, Henan Billions Dec. 26, liability 2019 to New Material 300,000 Mar. 29, 2019 20,000 No Yes 2018 guarant Mar. 29, Co., Ltd. ee 2020
Joint Apr. 1, Henan Billions Dec. 26, liability 2019 to New Material 300,000 Apr. 1, 2019 5,000 No Yes 2018 guarant Dec. 21, Co., Ltd. ee 2026
Joint Nov. 7, Henan Billions Dec. 26, liability 2019 to New Material 300,000 Nov. 7, 2019 8,015.77 No Yes 2018 guarant Dec. 21, Co., Ltd. ee 2026
Joint Dec. 6, Henan Billions Dec. 26, liability 2019 to New Material 300,000 Dec. 6, 2019 10,000 No Yes 2018 guarant Dec. 21, Co., Ltd. ee 2026
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Jiaozuo Billions Joint Sep. 5, United Dec. 16, liability 2018 to 5,000 Sep. 5, 2018 250 Yes Yes Pigment Co., 2017 guarant Jan.18, Ltd. ee 2019
Jiaozuo Billions Joint Oct. 11, United Dec. 16, liability 2018 to 5,000 Oct. 11, 2018 900 Yes Yes Pigment Co., 2017 guarant Apr. 11, Ltd. ee 2019
Jiaozuo Billions Joint May 15, United Dec. 26, liability 2019 to 5,000 May 15, 2019 300 Yes Yes Pigment Co., 2018 guarant Nov. 15, Ltd. ee 2019
Jiaozuo Billions Joint Aug. 5, United Dec. 26, liability 2019 to 5,000 Aug. 5, 2019 50 No Yes Pigment Co., 2018 guarant Feb. 5, Ltd. ee 2020
Jiaozuo Billions Joint Aug. 9, United Dec. 26, liability 2019 to 5,000 Aug. 9, 2019 100 No Yes Pigment Co., 2018 guarant Feb. 9, Ltd. ee 2020
Jiaozuo Billions Joint Dec. 24, United Dec. 26, December liability 2019 to 5,000 550 No Yes Pigment Co., 2018 24, 2019 guarant Jun. 24, Ltd. ee 2020
Total actual amount of Total amount of guarantees guarantees for for subsidiaries approved 545,000 subsidiaries during 370,883.45 during the reporting period the reporting period (B1) (B2)
Total actual balance of Total amount of guarantees guarantees for for subsidiaries approved at 944,707.52 subsidiaries at the end 233,021.86 the end of the reporting of the reporting period (B3) period (B4)
Guarantees between subsidiaries
Wheth er the Disclosure Wheth guaran date of er the tee is Name of announce Actual date Actual Period of guaran Guarante Type of a guarantee ment of guarante guarante tee is e amount guarantee guaran object related to occurrence e amount e fully tee of guarantee perfor relate amount med d parties
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Total actual amount of Total amount of guarantees guarantees for for subsidiaries approved subsidiaries during during the reporting period the reporting period (C1) (C2)
Total actual balance of Total amount of guarantees guarantees for for subsidiaries approved at subsidiaries at the end the end of the reporting of the reporting period (C3) period (C4)
Total guarantee amount of the Company (namely the sum of the three items above)
Total amount of guarantees Total actual amount of approved during the guarantees during the 545,000 370,883.45 reporting period reporting period (A1+B1+C1) (A2+B2+C2)
Total actual balance of Total amount of guarantees guarantee amount at approved at the end of the 944,707.52 the end of the 233,021.86 reporting period reporting period (A3+B3+C3) (A4+B4+C4)
Proportion of total actual amount of guarantees (i.e. 16.80% A4+B4+C4) in the Company’s net assets
Therein:
Particulars of composite guarantee
(2) External guarantees provided in violation of rules
□ Applicable √ Not applicable
No illegal external guarantee occurred to the Company during the reporting period.
3. Cash asset management by means of trusteeship by others
(1) Entrusted wealth management
□ Applicable √ Not applicable
The Company was not involved in entrusted finance management during the reporting period.
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(2) Entrusted loan
□ Applicable √ Not applicable
The Company was not involved in entrusted loan during the reporting period.
4. Other major contracts
□ Applicable √ Not applicable
The Company was not involved in other significant contracts during the reporting period.
5.18 XVIII. Overview of Social Responsibility 1. Performance of social responsibility
In 2019, adhering to the strategy of “Driven by Project”, Lomon Billions Group (1) paid taxes in good faith, abode by laws and regulations, consciously fulfilled corporate responsibilities and attached great value to humanistic care; (2) was actively involved in social responsibility construction and supported vigorously and provided funds for joint construction of the village and the enterprise, poverty alleviation through education, ecological civilization construction and social welfare. In terms of village and enterprise co-construction, the Group has invested more than RMB3.25 million. For instance, the subsidiary in Panzhihua built a parking lot and renovated the flood drainage system, water pipes for villagers’ living and agricultural production, and water conservancy facilities in Luku Village; the subsidiary in Deyang financed joint construction of the village and the enterprise for Xinshi Town Government and built roads for Xiadonglin Village; Xiangyang Titanium supplied funds for construction of agricultural industries in Chejiadian Village, transport projects in Xuping Village, Xueping
Town, irrigation ditches in Huangya Village and roads in Chejiadian Village. In terms of poverty alleviation through education, the Group has invested over RMB470,000 in education-oriented poverty alleviation activities, including but not limited to, Children’s Day care, financial aid to schools, and supply of funds for poor children in the surrounding villages to go to university; in construction of ecological civilization, the Group has invested a total of
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RMB22.56 million to (1) enhance the environment in factory areas, beautify slag yards, rectify forest lands, and afforest the factories and the surrounding environment; (2) build a unique green landscape with a demonstration effect and thus the Group has well performed the responsibility for ecological environment protection; in terms of social welfare, the Group has invested a total of over RMB10.33 million in constant caring activities such as “Love
Available in Jiaozuo”, caring activities for the elderly and the disabled, and social public welfare donations.
For instance, the Group sponsored the 10th China Jiaozuo International Taijiquan Exchange
Competition in 2019 with a total of RMB5 million funded; for assistance with prevention and control of COVID-19, the Group donated RMB5.18891 million to the local Red Cross Society and Charity Society, and donated 52,800 masks, 6.124 tonnes of sodium hypochlorite, numerous instant noodles and ham sausages, with a total amount of RMB140,500. Statistics show that the Group invested over RMB38.2453 million to fulfill its social responsibility in
2019.
2. Performance of social responsibility of targeted poverty alleviation
(1) Targeted poverty alleviation plan
In accordance with the overall thinking, basic objectives, key tasks and major measures of the country’s poverty alleviation program during the period of 13th Five-Year, Lomon Billions
Group further implemented the decisions and deployments of the central, provincial and municipal government to promote targeted poverty alleviation, formulated work programs for targeted poverty alleviation in various regions and developed poverty alleviation measures according to overall planning of the government and based on local conditions, established a sound partner assistance mechanism, centralized resources available for poverty alleviation, and ensured practical implementation of targeted poverty alleviation program. To be specific, firstly, the Group will carry on with industrial development and poverty alleviation: participate actively in poverty alleviation programs launched by the state, 69 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. provide constant support for public works construction in surrounding communities, build housing projects in poor areas and industrial support projects for poor villages, and support them to enhance water conservancy, roads and other infrastructures so as to address problems in travel safety in poor communities and help farmers get rich as soon as possible.
Secondly, the Group will help the government to lift people out of poverty through employment and promote vocational and technical training for residents in poverty-stricken areas in order to help them get employed. Thirdly, the Group will continue to get involved in education-oriented poverty alleviation: provide constant financial aid to schools and make effort to enhance the educational environment for schools in mountainous areas and surrounding villages so as to help poor students with their schooling. Fourthly, the Group will go ahead to help those in need: help orphans, widows and the needy, and visit and help poor families, elderly people of no family and poverty-stricken people in surrounding villages and schools in mountain areas. Fifthly, the Group will lift people out of poverty and, meanwhile, enhance the environment, by carrying out various greening and landscaping projects. Last but not the least, the Group will continue to take an active part in various public welfare donation activities.
(2) Summary of annual targeted poverty alleviation work
In 2019, the Group actively implemented policies of the government at the provincial, municipal, and county levels on targeted poverty alleviation, and carried out poverty alleviation in the aspects of education, society, and industry. In terms of education-oriented poverty alleviation: visited schools in surrounding areas, donated schoolbags and stationery, among other things, and provided financial support for infrastructure improvement of the schools. For example, the subsidiary in Deyang donated two primary schools in urban areas as designated with RMB80,000 to enhance their teaching conditions and reward outstanding teachers; the Company donated RMB59,000 respectively for poverty alleviation to
Panzhihua Huacheng Volunteer Association and Xiangyang Poverty Alleviation Association.
In terms of poverty alleviation for the benefit of society: The Company vigorously promotes 70 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. projects jointly built by villages and the enterprise and establishes pair support relationship with surrounding villages to help solve actual problems of the people in poor villages. For instance, the Company paid Xinshi Town Government RMB800,000 for joint construction of villages and the enterprise in 2019, donated RMB800,000 to Halang Village and Rilong
Village, Muli County, Panzhihua and the Youth Care Foundation, and RMB180,000 to Xinshi
Town, Xiangyang City to help lift poor villagers out of poverty. In terms of poverty alleviation for the benefit of industry: the Company has developed projects in the agricultural industry to help poor villagers out of poverty by building irrigation ditches to assist in the development of agricultural production and constructing village roads, among others; Xiangyang Titanium donated RMB670,000 in support of the agricultural industry in Chejiadian Village and the transport project construction in Xuping Village, Xueping Town, and meanwhile, financed
RMB60,000 to assist Xingjiaping Village, Xiaoyan Town, the designated poverty alleviation target, to develop bag-material production and tobacco production, which has yielded collective income of over RMB200,000 for them. Statistics show that the Group invested and donated a total of RMB5,097,200 in targeted poverty alleviation in 2019.
(3) Effect of targeted poverty alleviation
Unit of Index Number/Progress measurement
I. Overall situation -- --
RMB ten Thereinto: 1. Funds 509.72 thousand
3. Population of poverty-stricken people getting rid of poverty and having Person 30 established cards for archives
II. Sub-investment -- --
1. Poverty alleviation in industrial -- -- development
1.3 Amount invested in industrial RMB ten development-based poverty alleviation 111.55 thousand projects
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2. Employment transfer for the purpose -- -- of poverty alleviation
3. Land change and relocation for -- -- poverty alleviation
4. Education-based poverty alleviation -- --
Thereinto: 4.1 Amount of funding for RMB ten 36.78 poor students thousand
4.3 Amount of investment in improving RMB ten 9.1 educational resources in poor areas thousand
5. Health-based poverty alleviation -- --
6. Ecological protection-based poverty -- -- alleviation
RMB ten 6.2 Amount of investment 7.2 thousand
7. Catch-all guarantee -- --
Thereinto: 7.1 Amount of investment in RMB ten helping “left-behind children, left-behind 3.68 thousand women, left-behind elderly”
7.2 Number of personnel participating in helping “left-behind children, left-behind Person 31 women, left-behind elderly”
8. Social poverty alleviation -- --
8.1 Amount invested in poverty RMB ten alleviation work carried out in designated 144 thousand areas
8.2 Amount invested in public welfare RMB ten 22 funds for poverty alleviation thousand
9. Other projects -- --
9.1 Population of poverty-stricken people getting rid of poverty and having Person 175.41 established cards for archives
III. Awards (title, level) -- --
(4) Follow-up targeted poverty alleviation plan
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1. Continue to rely on projects to make planning on related supporting facilities and create more job opportunities for poor villagers to increase their income.
2. Continue to carry out social donation activities to give financial support to poor students and improve the educational environment of those students in mountainous areas and help poor students in mountainous areas to solve employment related problems.
3. Continue to conduct targeted poverty alleviation work to help the left-behind, poor families and poor students to help them solve their practical difficulties.
4. Make greater efforts in the construction of roads, water conservancy facilities and cultural facilities in the surrounding poor villages to effectively improve the living conditions of poor villages.
5. Do a good job in targeted poverty alleviation work according to the overall plan of local government.
3. Description of matters related to environmental protection
Whether the Listed Company and its subsidiaries are key pollutant discharge units announced by environmental protection department
Yes
Name Pollutan of t Name of major Number Distribut discharg Approve Excessiv company pollutan Discharg Emission Total of ion of e d total e or its ts and e concentr emission discharg discharg standard emission emission subsidiari charact method ation s e outlets e outlets s s s es eristic impleme pollutan nted ts
Total number Lomon of Billions Continu discharg 14.65mg COD 1 50mg/L 146.6t 539.3t/a 0 Group ous e outlets /L Co., Ltd. for waste water
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Total number Lomon of Ammon Billions Continu discharg 2.68mg/ 5(8)mg/ ia 1 27.3t 30.26t/a 0 Group ous e outlets L L nitrogen Co., Ltd. for waste water
Lomon Total Billions number Sichuan of Titanium Continu discharg COD 1 35.55 100 512.57 473.3t 39.27 Industry ous e outlets Co., Ltd. for waste water
Lomon Total Billions number Sichuan of Ammon Titanium Continu discharg ia 1 8.29 15 121.26 32.4t 88.86 Industry ous e outlets nitrogen Co., Ltd. for waste water
Lomon Billions 4 outlets Sichuan Continu for 850mg/ SO2 4 27.98 71.15 1627.32t 0 Titanium ous incinerat m3 Industry ion Co., Ltd.
Lomon 2 outlets Billions for Sichuan Continu 400mg/ SO2 2 sulfate 56.83 103.88 1627.32t 0 Titanium ous m3 emission Industry s Co., Ltd.
Lomon Billions 1 outlet Sichuan Continu 400mg/ SO2 1 for 110.71 84.45 1627.32t 0 Titanium ous m3 boiler Industry Co., Ltd.
Lomon Billions 4 outlets Sichuan Continu for 550mg/ SO2 4 8.38 7.77 1627.32t 0 Titanium ous acidolysi m3 Industry s Co., Ltd.
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Lomon Billions 1 outlet Sichuan Continu 200mg/ NOX 1 for 90.75 61.18 402.66t 0 Titanium ous m3 boiler Industry Co., Ltd.
Lomon Conversi Billions 4 outlets on of Sichuan Continu for natural NOX 4 / 252.22 402.66t 0 Titanium ous incinerat gas Industry ion consum Co., Ltd. ption
Xiangyan Waste g Lomon Continu water 17.11mg Titanium COD 1 60mg/L 112.837t 311.5t 0 ous discharg /L Industry e outlet Co., Ltd.
Xiangyan Waste g Lomon Ammon Continu water 1.57mg/ Titanium ia 1 8mg/L 10.700t 28.248t 0 ous discharg L Industry nitrogen e outlet Co., Ltd.
Xiangyan 1 outlet g Lomon Continu for 78.99mg 550mg/ Titanium SO2 1 14.524t 566.38t 0 ous acidolysi /m3 m3 Industry s Co., Ltd.
Xiangyan 1 outlet g Lomon Continu for 16.18mg 550mg/ Titanium SO2 1 14.210t 566.38t 0 ous incinerat /m3 m3 Industry ion Co., Ltd.
Xiangyan g Lomon 1 outlet Continu 11.46mg 200mg/ Titanium SO2 1 for 9.621t 566.38t 0 ous /m3 m3 Industry boiler Co., Ltd.
Xiangyan 1 outlet g Lomon for Continu 37.8mg/ 400mg/ Titanium SO2 1 sulfate 16.985t 566.38t 0 ous m3 m3 Industry emission Co., Ltd. s
Xiangyan 1 outlet g Lomon Continu for 90.11mg 240mg/ Titanium NOX 1 77.374t 307.3t 0 ous incinerat /m3 m3 Industry ion Co., Ltd.
75 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Xiangyan g Lomon 1 outlet Continu 71.09mg 200mg/ Titanium NOX 2 for 53.997t 307.3t 0 ous /m3 m3 Industry boiler Co., Ltd.
Xiangyan 1 outlet g Lomon Particul Continu for 23.88mg 120mg/ Titanium 1 21.046t 257.3t 0 ates ous incinerat /m3 m3 Industry ion Co., Ltd.
Xiangyan g Lomon 1 outlet Particul Continu 2.04mg/ 30mg/m Titanium 1 for 1.364t 257.3t 0 ates ous m3 3 Industry boiler Co., Ltd.
Construction and operation of pollution prevention facilities
Lomon Billions Group Co., Ltd.
Waste gas treatment: Invest RMB35 million to renovate the existing calcination-tail-gas treatment system, add matching desuperheating tower, electric (or low temperature plasma) demister, draught fan and other equipment, and optimize tail gas treatment technology to lower the cost and the emission concentration of pollutants; Invest RMB35 million to reduce the emission of acidolysis tail gas and add high-efficiency electric (or low temperature plasma) demister for dedusting and demisting to substantially reduce the concentration of pollutants and enhance the surrounding environment.
Waste water treatment: Build a sewage treatment system matched with the Company’s production line, adopt mature and advanced processes related to “Secondary Neutralization
+ Secondary Precipitation + Pressure Filter Separation” with a treatment capacity of
48,000m3/d. The project has its production and operation running stably with pollutants discharge meeting relevant standards.
Lomon Billions Sichuan Titanium Industry Co., Ltd. Waste gas treatment: Continue to develop the acid hydrolysis tail gas bleaching and calcination tail gas bleaching technologies. The Company plans to invest RMB40 million to combine the acidolysis and 76 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. calcining chimneys and increase the corresponding equipment and facilities, for the ultimate purpose of bleach of the tail gas. The Company has worked out the drawings of the acid hydrolysis tail gas bleaching project and is ready to purchase new equipment. The design of the calcined tail gas bleaching project has been completed and the new chimney is under preliminary construction; the project is expected to be completed and put into operation in
2020.
Waste water treatment: Based on the original mature and advanced technology of “Three- stage Neutralization + Three-stage Precipitation + Pressure Filtration Separation”, the
Company invested RMB28.29 million to upgrade the existing sewage treatment facilities.
After the completion of the renovation, the sewage treatment capacity will be hoisted to
72,000 m3/d, while the pollutant discharge concentration will further decrease on the existing basis.
The Company invested RMB15 million to promote water-saving capacity for the production system and reduce the discharge of external drainage. The Company has built a new reverse osmosis water making device to replace the original anion resin water making device, and meanwhile, built an external drainage reuse system to enhance recycling of external drainage and reduce emissions.
The Company, in order to lower the discharge temperature of the external drainage, built a
2.2-kilometer-long external drainage wetland park and put it into use with nearly RMB1.7 million invested, which park is conducive to the external environment.
Xiangyang Lomon Titanium Industry Co., Ltd.
To ensure that the boiler exhaust gas meets the requirements as set forth in the Circular on
Issuance of the Implementation Plan for the Special Emission Limits of Air Pollutants by Key
Industries in Xiangyang City (X. Z. B. H. [2018] No. 22), the Company invested RMB1.04 million in a set of non-catalytic reduction SNCR device for denitration of circulating fluidized 77 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. bed boiler in 2018 to meet emission requirements for special limits of pollutants specified in the Emission Criteria of Air Pollutants for Boilers (GB13271-2014) as of Jan. 1, 2019.
In January 2019, the Company invested RMB4.5 million to the ash system transformation project and introduced new chemical processing equipment with full negative pressure dust collection system and DCS system control. The equipment, which was put into operation in
May 2019, has eradicated disorganized dust emissions in the production of the original lime plant, greatly enhanced the working environment of employees and addressed problems in environmental protection from disorganized emissions. At the meantime, the Company has built a sewage neutralization device, which is upgraded from three-stage neutralization to five-stage neutralization to lift the treatment capacity and meet the discharge standards.
Waste water treatment: the sewage treatment station of the Company utilizes the technology of five-stage neutralization, two-stage sedimentation (dynamic clarification) and mud pressure and filtration. The waste water treatment capacity is 35,000 m3/d, and the pollutant treatment meets the operation requirements of environmental protection.
Evaluations related to environmental impact of construction projects and other administrative permits for environmental protection
Lomon Billions Group Co., Ltd.
Resources comprehensive utilization project for rutile titanium dioxide pigment: The project obtained environmental assessment approval after review by Henan Environmental
Protection Bureau (Y. H. S. (2008) No. 59) in Mar. 2008, and passed the environmental protection acceptance in Apr. 2014 (Y. H. S. (2014) No. 152). Acceptance of the project with the production capacity of 200,000 tonnes of rutile titanium dioxide pigment will be completed by the end of April 2020.
78 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
The 2x300,000 t/a sulfur-producing acid project of Jiaozuo Gaotai Fine Chemical Co., Ltd.: the project was reviewed and approved by the Bureau of Ecology and Environment of Henan
Province with an EIA Reply (Y. H. S. (2007) No.22) in Jan. 2007, and was verified for
Environmental Protection Acceptance, respectively, (Y. H. B. Y. (2008) No.6) of Phase I
Project in Mar. 2008 and (Y. H. S. (2014) No.153) of Phase II Project in Apr. 201
4.
Sichuan Lomon Titanium Industry Co., Ltd.
Phased technical transformation project for rutile titanium dioxide pigment: From October
2001 to April 2015, the phased technical transformation project for titanium dioxide pigment obtained environmental assessment approval after review by Sichuan Provincial
Department of Environmental Protection and passed the environmental protection acceptance.
Ferrous comprehensive utilization project with a capacity of 250,000 tonnes/year: On Apr.
13, 2016, the project obtained the approval of Mianzhu Environmental Protection Bureau for the project environmental impact assessment report (Z. H. J. G. H. [2016] No. 31). And on
Sep. 9, 2018, the company organized Mianzhu Environmental Protection Bureau, Mianzhu
City Environmental Monitoring Station, Mianzhu City Safety Supervision Bureau and
Sichuan Yuyuan Jieding Environmental Protection Engineering Co., Ltd. to carry out environmental protection completion acceptance, and the project passed the acceptance.
The upgrading project of the Sewage Treatment Plant: the project was approved by Mianzhu
Environmental Protection Bureau with an EIA Reply (Z. H. J. G. H. [2018] No. 67) on Dec.
25, 2018. The main works of the project has been completed and was verified for environmental protection acceptance on Dec. 25, 2019.
Xiangyang Lomon Titanium Industry Co., Ltd.
Rutile titanium dioxide pigment project with an annual output of 100,000 tonnes: The project obtained environmental assessment approval after review by Hubei Provincial Department 79 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. of Environmental Protection (E. H. H. (2011) No. 406) in May 2011, and passed the inspection and acceptance of environmental protection in Apr. 2016 (X. S. P. H. Y. (2016)
No. 10).
Emergency plans for sudden environmental incidents
Lomon Billions Group Co., Ltd.
An emergency plan for sudden environmental incidents has been worked out, reviewed by experts, and filed with Department of Ecology and Environment of Henan Province and
Jiaozuo City Ecological Environment Bureau.
Lomon Billions Sichuan Lomon Titanium Industry Co., Ltd. An emergency plan for sudden environmental incidents has been formulated and filed with Mianzhu Environmental
Protection Bureau.
Xiangyang Lomon Titanium Industry Co., Ltd.
In 2019, the emergency plan for sudden environmental incidents was revised by Xiangyang
Titanium, reviewed by experts, and filed with Nanzhang Branch of Xiangyang Municipal
Ecological Environment Bureau, and the plan was approved for filing on Aug. 8, 2019 with filing No. 420624-2019-007H.
Environmental self-monitoring plans
Environmental self-monitoring plans have been developed and regular inspections have been carried out in strict accordance with the requirements of the plans.
Other environmental information that shall be disclosed
Basic information of pollutant discharge units, production and discharge links, pollution prevention facilities, detection concentration of pollutants, and operation status of automatic
80 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. online equipment have been fully disclosed in national pollutants discharge permit information disclosure system.
Other environmental protection related information
None
5.19 XIX. Description of Other Major Matters √ Applicable □ Not applicable
1. Adjustment of the Company’s equity structure and establishment of subsidiaries
The Proposal on Adjusting the Equity Structure of Subsidiaries and Proposal on Investment in the Establishment of Wholly-Owned Subsidiaries were reviewed and approved at the 16th meeting of the 6th Board of Directors held on Apr. 19, 2019. The Company intended to acquire 100% and 42.31% shares of Xiangyang Titanium and Lomon Mining and Metallurgy held by its subsidiary, Sichuan Lomon Titanium Industry Co., Ltd. Upon completion of the aforesaid equity transfer, Xiangyang Titanium and Lomon Mining and Metallurgy would be the first level wholly-owned subsidiaries of the Company. The Company planned to invest
RMB200 million with its own funds to set up Henan Lomon Billions Intelligent Equipment
Manufacturing Co., Ltd., with a view to further improving the independent scientific research level of the Company in terms of intelligent manufacturing and green manufacturing. For details, please refer to the Announcement on Investment in the Establishment of Wholly- owned Subsidiaries and the Announcement on Adjusting the Equity Structure of
Subsidiaries published by the Company on China Securities Journal, Securities Times and www.cninfo.com.cn on Apr. 23, 2019.
The Proposal on Consolidation by Merger of Wholly-owned Subsidiaries was reviewed and approved at the 18th meeting of the 6th Board of Directors held on Jun. 11, 2019. To effectively integrate its existing resources, reduce management levels and lower
81 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. management costs, the Company planned to merge its wholly-owned subsidiary, Jiaozuo
Xingtai Resources Comprehensive Utilization Co., Ltd.. For details, please refer to the
Announcement on Consolidation by Merger of Wholly-owned Subsidiaries published by the
Company on China Securities Journal, Securities Times and www.cninfo.com.cn on Jun.
13, 2019.
The Proposal on Investment in the Establishment of a Holding Subsidiary was reviewed and approved at the 21st meeting of the 6th Board of Directors held on Sep. 23, 2019. The
Company planned to jointly invest RMB300 million to set up Southwest Titanium Material
Technology Co., Ltd with its holding subsidiary, Lufeng Xinli Titanium Industry Co., Ltd.
(tentatively named; the final name shall be subject to the approval and registration of the department of administration for industry and commerce), which newly-established company is specialized in production and sales of titanium related products to further focus on the business of the Company, promote the professional operation level, and enhance the product competitiveness and profitability. For details, please refer to the Announcement on
Investment in the Establishment of a Holding Subsidiary published by the Company on
China Securities Journal, Securities Times and www.cninfo.com.cn on Sep. 24, 2019.
The Proposal on Investment in the Establishment of a Wholly-owned Subsidiary was reviewed and approved at the 24th meeting of the 6th Board of Directors held on Dec. 6,
2019. The Company intended to invest RMB100 million in founding Shanghai Longbai Trade and Technological Service Co., Ltd. in Shanghai (tentatively named; the final name shall be subject to the approval and registration of the department of administration for industry and commerce), to help the Company better implement its innovation-driven development strategy and meanwhile take into account both domestic and foreign markets. For details, please refer to the Announcement on Investment in the Establishment of a Wholly-owned
Subsidiary published by the Company in China Securities Journal, Securities Times and www.cninfo.com.cn on Dec. 7, 2019. 82 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
2. Acquisition of equity, creditor’s right and debt-for-equity swap of Yunnan Metallurgical
Xinli Titanium Co., Ltd.
The Proposal on the Bid for Equity and Related Creditor’s Rights of Xinli Titanium Sold by
YMG at China Beijing Equity Exchange was reviewed and approved at the 17th meeting of the 6th Board of Directors held on May 13, 2019, in which proposal the Company agreed to bid for 68.10% of the equity and RMB5218.7983 million creditor’s rights of Yunnan
Metallurgical Xinli Titanium Co., Ltd. (hereinafter referred to as “Xinli Titanium”) which were publicly listed and transferred by Yunnan Metallurgical Group Co., Ltd. (hereinafter referred to as “YMG”) at China Beijing Equity Exchange on Apr. 18, 2019. The Company entered into the Assets and Equity Exchange Contract with YMG on May 24, 2019. The Company acquired 68.10% of the shares in Xinli Titanium and completed transfer procedures necessary for the shares acquired. For details, please refer to the announcements published by the Company in China Securities Journal, Securities Times and www.cninfo.com.cn on
May 14, 2019, May 28, 2019, and Jun. 20, 2019.
The Proposal on Acquisition of Minority Shareholders’ Equity in Xinli Titanium and Proposal on Capital Increase of Xinli Titanium by Debt-for-equity Approach were reviewed and approved at the 18th meeting of the 6th Board of Directors held on Jun. 11, 2019, in which two proposals it was agreed that the Company would acquire, with its own funds of RMB
53.41 million, 26.18% of minority shareholders’ equity in Yunnan Metallurgical Xinli Titanium
Co., Ltd. (hereinafter referred to as “Xinli Titanium”) held by Shente Enterprises
Management (Shenzhen) Co., Ltd., and increase the capital of Xinli Titanium with the creditor’s rights of RMB5218.7983 million of Xinli Titanium held by the Company. The aforesaid proposals were reviewed and approved by the Company at the second extraordinary general meeting in 2019 held on Jun. 28, 2019. The Company has completed the registration of industrial and commercial changes with respect to the acquisition of minority shareholders’ equity and debt-for-equity conversion of Xinli Titanium, as a result of 83 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. which the Company’s shareholding ratio in Xinli Titanium rose from 68.10% to 98.39%. For details, please refer to the announcements published by the Company in China Securities
Journal, Securities Times and www.cninfo.com.cn on Jun. 13, 2019 and Jul. 3, 2019.
3. Acquisition of 15.66% of the equity of Guangdong Orient Zirconic Industry Science and
Technology Co., Ltd.
The Proposal to Participate in Transfer of 15.66% Equity of Orient Zirconium was reviewed and approved at the 23rd meeting of the 6th Board of Directors held on Oct. 18, 2019, agreeing that the Company would acquire 97,210,818 RMB ordinary shares held by CNNC in Orient Zirconium, a company listed at Shenzhen Stock Exchange (SZSE), via transfer by agreement, accounting for 15.66% of the total equity of Orient Zirconium. On Nov. 8, 2019, the Company entered into the Agreement on Transfer of Shares in Guangdong Orient
Zirconic Industry Science and Technology Co., Ltd. with CNNC. On Dec. 23, 2019, the
Company received the Confirmation of Securities Transfer Registration issued by China
Securities Depository and Clearing Corporation Limited Shenzhen Branch, which
Confirmation indicated that the transfer procedures of the shares transferred were completed. For details, please refer to the announcements published by the Company in
China Securities Journal, Securities Times and www.cninfo.com.cn on Nov. 9, 2019 and
Dec. 24, 2019.
5.20 XX. Major Matters of the Company’s Subsidiaries
√ Applicable □ Not applicable
On Jan. 23, 2019, Lomon Titanium, the Company’s holding subsidiary, held the 1st extraordinary general meeting in 2019 which reviewed and approved the Proposal on
Distribution of Undistributed Profits of the Company as at Dec. 31, 2018. It was set out in the Proposal that the company shall, based on its total share capital of 1.2 billion shares by
Dec. 31, 2018, distribute cash dividends of RMB4.1667 (tax inclusive) for every 10 shares
84 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. to all shareholders with the undistributed profits of parent company, and distribute a total of
RMB500 million in cash (tax inclusive).
On Feb. 15, 2019, Lomon Titanium, a holding subsidiary of the Company, held the 2nd extraordinary general meeting in 2019 which reviewed and approved the Proposal on
Distribution of Undistributed Profits of the Company as at Jan. 31, 2019. It was set out in the
Proposal that the company shall, based on its total share capital of 1.2 billion shares by Jan.
31, 2019, distribute cash dividends of RMB4.1667 (tax inclusive) for every 10 shares to all shareholders with the undistributed profits of parent company, and distribute a total of RMB
500 million in cash (tax inclusive).
On Jul. 22, 2019, Jiaozuo Rongjia Scandium Industry Science & Technology Co., Ltd. was renamed Henan Rongjia Scandium Vanadium Technology Co., Ltd..
On Aug. 15, 2019, Lomon Titanium, a holding subsidiary of the Company, held the 3rd extraordinary general meeting in 2019 which reviewed and approved the Proposal on
Distribution of Undistributed Profits of the Company as at Jun. 30, 2019. It was set out in the
Proposal that the company shall, based on its total share capital of 1.2 billion shares by Jun.
30, 2019, distribute cash dividends of RMB1.4167 (tax inclusive) for every 10 shares to all shareholders with the undistributed profits of parent company, and distribute a total of RMB
170 million in cash (tax inclusive).
On Sep. 25, 2019, Lomon Titanium, a holding subsidiary of the Company, had its shareholders changing from such two shareholders as Jiaozuo Xingtai Resources
Comprehensive Utilization Co., Ltd. and Lomon Billions Group Co., Ltd. to one shareholder,
Lomon Billions Group Co., Ltd., and Lomon Titanium became a wholly-owned subsidiary of the Company and was renamed “Lomon Billions Sichuan Titanium Industry Co., Ltd.
(hereinafter referred to as “Longbai Sichuan”)” with type of the company changed from “other
85 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. joint stock limited company (unlisted)” to “a limited liability company wholly owned by a legal person invested or controlled by a non-natural person”.
On Dec. 20, 2019, the Company made the 6th shareholders’ decision on Longbai Sichuan in 2019, which approved the Proposal on Distribution of Undistributed Profits of the
Company as at Sep. 30, 2019. It was set out in the Proposal that the company shall, based on Lomon Titanium’s total share capital of 1.2 billion shares by Sep. 30, 2019, distribute cash dividends of RMB0.6667 (tax inclusive) for every 10 shares to all shareholders with the undistributed profits of parent company, and distribute a total of RMB80 million in cash (tax inclusive).
86 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
6 Section VI Changes in Shares and Profile of Shareholders
6.1 I. Changes in Shares 1. Changes in shares Unit: Share Before this change Increase and decrease this time (+, -) After this change Shares Newly converted Number of Shares Other Number of Percentage issued from Subtotal Percentage shares donated decreases shares shares provident fund I. Restricted 1,326,490,341 65.28% -734,641,641 -734,641,641 591,848,700 29.13% shares 1. Shares 53,149,606 held by state 2. Shares held by 1,273,340,735 2.62% -53,149,606 -53,149,606 state-owned legal person 3. Shares held by other 1,273,340,735 62.66% -681,492,035 -681,492,035 591,848,700 29.13% domestic entities Shares held by domestic 705,530,548 62.66% -681,492,035 -681,492,035 591,848,700 29.13% natural person II. Shares 705,530,548 34.72% 734,641,641 734,641,641 1,440,172,189 70.87% without
87 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. restrictions on sales 1. Common shares in 705,530,548 34.72% 734,641,641 734,641,641 1,440,172,189 70.87% RMB III. Total 2,032,020,889 100.00% 2,032,020,889 100.00% shares
88 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Reasons leading to changes in shares
√ Applicable □ Not applicable
1. During the reporting period, the non-publicly offered and restricted shares issued by the
Company in 2015 were lifted from restrictions on sales and listed for circulation on Sep. 20,
2019, as a result of which there were 9 shareholders whose shares were lifted from restrictions on sales and there were 1,321,653,539 shares lifted from restrictions on sales, accounting for 65.04% of the total share capital of the Company. For details, please refer to the Suggestive Announcement on Listing and Circulation of Non-public Offered and
Restricted Shares (Announcement No.: 2019-069) published by the Company in China
Securities Journal, Securities Times and on www.cninfo.com.cn on Sep. 17, 2019.
2. During the reporting period, locked shares held by senior executives increased by
587,011,898 shares, of which 312,481,801 shares were held by XU Gang, 186,199,497 shares were held by TAN Ruiqing, 66,437,008 shares were held by FAN Xianguo, and
21,893,592 shares were held by HE Benliu.
Approval on changes in shares
□ Applicable √ Not applicable
Transfer related to changes in shares
□ Applicable √ Not applicable
Progress in implementing share repurchase
√ Applicable □ Not applicable
On Jul. 27, 2018, the 4th extraordinary general meeting in 2018 convened by the Company reviewed and approved the Proposal on Repurchasing the Company’s Shares by special 89 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. resolution. For details, please refer to the Announcement on Resolutions of the 4th
Extraordinary General Meeting in 2018 (Announcement No.: 2018-091) published by the
Company on its designated information disclosure media (www.cninfo.com.cn) on Jul. 28,
2018; and the Company published the Report on the Repurchase of the Company’s Shares
(Announcement No.: 2018-105) on www.cninfo.com.cn. on Aug. 24, 2018. On Sep. 4, 2018, the Company published the Announcement on the First Implementation of Repurchasing
Shares of the Company (Announcement No.: 2018-106) on www.cninfo.com.cn; subsequently, the Company published announcements concerning the progress in repurchase of the Company’s shares on Oct. 9, 2018, Oct. 30, 2018, Nov. 3, 2018, Nov. 10,
2018, Dec. 4, 2018 and Jan. 3, 2019 respectively; on Jan. 29, 2019, the Company published the Announcement on Completion of Share Repurchase (Announcement No.: 2019-006) on www.cninfo.com.cn in which it was set out that the Company repurchased 56,936,308 shares in total which accounted for 2.80% of the Company’s total share capital, that the highest transaction price was RMB13.86/share and the lowest price was RMB12.20/share, and that the total amount paid was RMB750,108,799.73 (excluding transaction fees).
Progress in implementation of reduction in shareholding by means of centralized bidding
□ Applicable √ Not applicable
Impact of changes in shares on such financial indicators as basic earnings per share and diluted earnings per share for the most recent year and the most recent period, and net assets per share attributable to common shareholders of the Company
□ Applicable √ Not applicable
Other content that the Company deems necessary or required by the securities regulator
□ Applicable √ Not applicable
2. Changes in restricted shares
90 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
√ Applicable □ Not applicable
Unit: Share Number of Number of Number of Number of restricted restricted restricted restricted Reason for Date of Name of shares at the shares added shares shares at the restriction on restriction shareholder beginning of in current released in end of the sales release the period period current period period
As a result of additional 318,897,637 non-publicly shares were issued in 2015, The the shares were 318,897,637 restricted for restricted sale after the shares non- IPO; the publicly XU Gang 318,897,637 312,481,801 318,897,637 312,481,801 312,481,801 issued in restricted shares 2015 were issued non- lifted from publicly in 2015 restrictions were converted on sales on into locked Sep. 20, 2019. shares held by senior executives after being lifted from restrictions.
After initial The public offering 283,464,566 of 283,464,566 restricted shares not shares issued issued publicly non-publicly LI Ling 283,464,566 283,464,566 0 and increased in 2015 were for shareholding lifted from in 2015, the restrictions restricted shares on sales on were restricted. Sep. 20, 2019.
As a result of additional The 248,031,496 248,031,496 non-publicly restricted shares issued in shares issued 2015, the shares non-publicly TAN Ruiqing 248,031,496 186,199,497 248,031,496 186,199,497 were restricted in 2015 were for sale after the lifted from IPO; the restrictions 186,199,497 on sales on restricted shares Sep. 20, 2019. issued non- publicly in 2015
91 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
were converted into locked shares held by senior executives after being lifted from restrictions.
After initial The public offering 187,795,275 of 187,795,275 restricted shares not shares issued WANG issued publicly non-publicly 187,795,275 187,795,275 0 Zelong and increased in 2015 were for shareholding lifted from in 2015, the restrictions restricted shares on sales on were restricted. Sep. 20, 2019.
As a result of additional 88,582,677 shares non- publicly issued in 2015, the The shares were 88,582,677 restricted for restricted sale after the shares issued IPO; the non-publicly FAN Xianguo 88,582,677 66,437,008 88,582,677 66,437,008 66,437,008 in 2015 were restricted shares lifted from issued non- restrictions publicly in 2015 on sales on were converted Sep. 20, 2019. into locked shares held by senior executives after being lifted from restrictions.
After initial The public offering 70,866,141 of 70,866,141 restricted shares not shares issued issued publicly non-publicly WANG Tao 70,866,141 70,866,141 0 and increased in 2015 were for shareholding lifted from in 2015, the restrictions restricted shares on sales on were restricted. Sep. 20, 2019.
China Great After initial The Wall Asset 53,149,606 53,149,606 0 public offering 53,149,606 Managemen of 53,149,606 restricted
92 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
t Co., Ltd. shares not shares issued issued publicly non-publicly and increased in 2015 were for shareholding lifted from in 2015, the restrictions restricted shares on sales on were restricted. Sep. 20, 2019.
After initial The public offering 42,519,685 of 42,519,685 restricted shares not shares issued issued publicly non-publicly WEI Zhaoqi 42,519,685 42,519,685 0 and increased in 2015 were for shareholding lifted from in 2015, the restrictions restricted shares on sales on were restricted. Sep. 20, 2019.
As a result of additional 28,346,456 shares non- publicly issued in 2015, the The shares were 28,346,456 restricted for restricted sale after the shares issued IPO; the non-publicly HE Benliu 28,661,456 21,893,592 28,346,456 22,208,592 21,893,592 in 2015 were restricted shares lifted from issued non- restrictions publicly in 2015 on sales on were converted Sep. 20, 2019. into locked shares held by senior executives after being lifted from restrictions.
1,321,968,53 Total 587,011,898 1,321,653,539 587,326,898 -- -- 9
6.2 II. Issuance and Listing of Securities 1. Issuance of securities (excluding preferred shares) during the reporting period
□ Applicable √ Not applicable
93 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
2. Description of changes in the Company’s total shares and shareholder structure, as well as changes in the Company’s assets and liabilities structure
□ Applicable √ Not applicable
3. Existing internal employee shares
□ Applicable √ Not applicable
6.3 III. Shareholders and Actual Controller 1. Number and shareholding of the Company’s shareholders Unit Share Total number of preferred Total shareholde number of Total number of rs whose Total common preferred voting number of sharehold stockholders rights were common ers at the with voting restored at shareholde end of the 43,612 37,716 rights restored 0 the end of 0 rs at the previous at the end of previous end of the month the reporting month reporting before period (if any) before period disclosure (see Note 8) disclosure of annual of annual report report (if any) (see Note 8)
Shareholdings of shareholders holding more than 5% of shares or top 10 shareholders
Increas Number Pledge or freezing e and of Number decreas Number shares of Nature of Shareh e of of Name of held at unrestric shareholde olding shares restricte shareholder the end ted r ratio during d shares Status of Number of of the shares the held shares shares reportin held reportin g period g period
Domestic 416,642, 312,481, 104,160, 334,849,8 XU Gang natural 20.50% 0 Pledge 402 801 601 00 person
94 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Domestic - 254,510, 254,510, LI Ling natural 12.52% 28,954, 0 366 366 person 200
Domestic 248,265, 186,199, 62,066,4 248,265,9 TAN Ruiqing natural 12.22% 0 Pledge 996 497 99 00 person
Domestic - 126,875, 126,875, WANG Zelong natural 6.24% 60,920, 0 067 067 person 208
Domestic 88,582,6 66,437,0 22,145,6 FAN Xianguo natural 4.36% 0 77 08 69 person
Domestic 62,148,4 19,628, 62,148,4 WEI Zhaoqi natural 3.06% 0 10 725 10 person
Non-state- Henan Yintai owned 61,000,0 61,000,0 Investment legal 3.00% 0 0 72 72 Co., Ltd. person at home
Lomon Billions Group Co., Ltd. - Second Other 56,936,3 56,936, 56,936,3 Employee 2.80% 0 decreases 08 308 08 Stock Ownership Plan
Hong Kong Securities Overseas 40,162,6 34,849, 40,162,6 Clearing legal 1.98% 0 05 345 05 Company person Limited
China Great State- - Wall Asset owned 32,829,4 32,829,4 1.62% 20,320, 0 Management legal 14 14 192 Co., Ltd. person
Among the top ten shareholders of the Company, Actual Controller TAN Ruiqing of Henan Yintai Investment Co., Ltd. and Tangyin County Yuxin Xylose Development Description of affiliated Co., Ltd., and XU Gang, Chairman of the Board of the Company, signed the relationship between or Concerted Action Agreement on Mar. 3, 2010 which expired and was terminated concerted actions of the on Jul. 15, 2014, and the Company currently has no actual controller; except for above-mentioned the above, the Company is not aware of whether there is any relationship shareholders between other shareholders or whether it is a person acting in concert as stipulated in Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed Companies.
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Shareholding of top 10 unrestricted shareholders
Class of share Number of unrestricted shares held at the end of the Name of shareholder reporting period Class of Number of share shares
Common 254,510,3 LI Ling 254,510,366 shares in 66 RMB
Common 126,875,0 WANG Zelong 126,875,067 shares in 67 RMB
Common 104,160,6 XU Gang 104,160,601 shares in 01 RMB
Common 62,148,41 WEI Zhaoqi 62,148,410 shares in 0 RMB
Common 62,066,49 TAN Ruiqing 62,066,499 shares in 9 RMB
Common Henan Yintai Investment Co., 61,000,07 61,000,072 shares in Ltd. 2 RMB
Lomon Billions Group Co., Common 56,936,30 Ltd. - Second Employee Stock 56,936,308 shares in 8 Ownership Plan RMB
Common Hong Kong Securities Clearing 40,162,60 40,162,605 shares in Company Limited 5 RMB
Common China Great Wall Asset 32,829,41 32,829,414 shares in Management Co., Ltd. 4 RMB
Common Tangyin County Yuxin Xylose 32,458,61 32,458,613 shares in Development Co., Ltd. 3 RMB
Description of the relationship Among the top ten shareholders of the Company, Actual Controller TAN Ruiqing of or concerted action between Henan Yintai Investment Co., Ltd. and Tangyin County Yuxin Xylose Development the top 10 shareholders of Co., Ltd., and XU Gang, Chairman of the Board of the Company, signed the unrestricted tradable shares Concerted Action Agreement on Mar. 3, 2010 which expired and was terminated and between the top 10 on Jul. 15, 2014, and the Company currently has no actual controller; except for shareholders of unrestricted the above, the Company is not aware of whether there is any relationship tradable shares and the top 10 between other shareholders or whether it is a person acting in concert as
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shareholders stipulated in Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed Companies.
Whether the top 10 common shareholders and the top 10 common shareholders subject to no restrictions on sales have conducted agreed repurchase transactions in the reporting period
□ Yes √ No
The top 10 common shareholders and the top 10 common shareholders subject to no restrictions on sales conducted no agreed repurchase transactions in the reporting period.
2. Controlling shareholder of the Company
Nature of controlling shareholder: no controlling entity
Type of controlling shareholder: None
Description on the absence of a controlling shareholder in the Company
So far, the ownership structure of the Company is decentralized with no shareholder holding more than 25% of the shares and no agreement or arrangement for concerted action among the major shareholders holding more than 5% of the shares. Therefore, there is no controlling shareholder or actual controller in the Company.
Changes of controlling shareholder in the reporting period
□ Applicable √ Not applicable
There was no change of controlling shareholder in the reporting period.
3. The Company’s actual controller and its concerted actor
Nature of actual controller: No actual controller
Type of actual controller: None
Description on the absence of an actual controller in the Company
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So far, the ownership structure of the Company is decentralized with no shareholder holding more than 25% of the shares and no agreement or arrangement for concerted action among the major shareholders holding more than 5% of the shares. Therefore, there is no controlling shareholder or actual controller in the Company.
Whether there is a shareholder with a shareholding ratio of more than 10% at the final control level of the Company
√ Yes □ No
Natural person
Shareholdings at the final control level
Name of shareholders at the final Whether the right of residence in other Nationality control level countries or regions is obtained
XU Gang Chinese No
TAN Ruiqing Chinese No
XU Gang, male, born in 1963, Chinese, no permanent residency abroad, master’s degree. He has been Chairman of the Board of the Company since July 2002. He currently serves as Chairman of the Board and Secretary of the Party Committee of the Company. TAN Ruiqing, male, born in 1966, Chinese, no permanent residency Main occupation and position abroad, bachelor degree. He has been Deputy Chairman of the Board of the Company since July 2002. He currently serves as Deputy Chairman of the Board of the Company, Executive Director and General Manager of Henan Yintai Investment Co., Ltd., and Director of Henan Yinke International Chemical Co., Ltd..
Change of actual controllers in the reporting period
□ Applicable √ Not applicable
There was no change of actual controllers in the reporting period.
Block diagram of property rights and control relationship between the Company and its actual controllers
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XU Gang TAN Ruiqing
Tangyin County Yuxin Henan Yintai Xylose Development Co., Investment Co., Ltd. Ltd.
Lomon Billions Group Co., Ltd. Actual controller controls the Company through trust or other assets management methods
□ Applicable √ Not applicable
4. Other corporate shareholders holding more than 10% of shares
□ Applicable √ Not applicable
5. Share restrictions and shareholding reductions of controlling shareholders, actual controllers, restructuring parties and other subjects making commitments
□ Applicable √ Not applicable
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7 Section VII Relevant Information Concerning Preferred Shares
□ Applicable √ Not applicable
There were no preferred shares in the Company during the reporting period.
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8 Section VIII Relevant Information Concerning Convertible Corporate
Bonds
□ Applicable √ Not applicable
There were no convertible bonds in the Company during the reporting period.
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9 Section IX Directors, Supervisors, Senior Executives and Employees
9.1 I. Changes in Shareholding of Directors, Supervisors and Senior Executives
Number of Number Number of Other Number of shares held of shares shares Starting Ending date increase shares held Employment at the increased decreased Name Position Sex Age date of of and at the end of status beginning of in this in this appointment appointment decrease the period the period period period (share) (share) (share) (share) (share)
Apr. 23, XU Gang Chairman Incumbent Male 57 Jul. 5, 2002 416,642,402 416,642,402 2020
Deputy Chairman of the Board, Vice TAN Apr. 23, President of Incumbent Male 54 Jul. 5, 2002 248,265,996 248,265,996 Ruiqing 2020 Marketing, Vice President of Purchasing
CHANG May 18, Apr. 23, Director Incumbent Male 71 1,575,000 1,575,000 Yili 2002 2020
YANG May 18, Apr. 23, Director Incumbent Male 64 1,714,125 1,714,125 Minle 2002 2020
FAN Director, Apr. 24, Apr. 23, Incumbent Male 56 88,582,677 88,582,677 Xianguo President 2017 2020
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ZHOU Apr. 24, Apr. 23, Director Incumbent Male 58 Xiaokui 2017 2020
ZHANG May 18, Apr. 23, Director Incumbent Male 55 Qibin 2002 2020
HUANG December Apr. 23, Director Incumbent Male 69 Ligao 15, 2017 2020
ZHANG Independent Apr. 23, Incumbent Male 62 Apr. 4, 2014 Zhijun Director 2020
CHEN Independent Apr. 23, Incumbent Male 55 Apr. 4, 2014 Junfa Director 2020
XU Independent Apr. 23, Incumbent Male 43 Apr. 4, 2014 Xiaobin Director 2020
LIN Independent Apr. 23, Incumbent Female 57 Jan. 3, 2018 Suyue Director 2020
Chairman of FENG Apr. 25, Apr. 23, the Board of Incumbent Male 52 1,448,200 1,448,200 Jun 2005 2020 Supervisors
FAN May 18, Apr. 23, Director Incumbent Male 81 Lixing 2002 2020
ZHAO Apr. 23, Director Incumbent Male 52 Apr. 4, 2014 31,745 31,745 Yongjun 2020
Executive Vice President and Apr. 24, Apr. 23, HE Benliu Incumbent Male 52 29,611,456 29,611,456 Director of 2005 2020 Personnel Administration
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SHEN Financial Apr. 23, Incumbent Male 39 Apr. 4, 2014 656,250 656,250 Qingfei Director 2020
Technical ZHU Dec. 23, Apr. 23, Engineering Incumbent Male 54 Quanfang 2016 2020 Director
JIN Compliance Dec. 23, Apr. 23, Incumbent Male 54 603,750 603,750 Sanliang Director 2012 2020
Vice Bruce Jan. 23, Apr. 23, President of Incumbent Male 52 Griffin 2017 2020 Strategy
ZHANG Board Oct. 23, Apr. 23, Incumbent Male 44 Haitao Secretary 2017 2020
Total ------789,131,601 789,131,601
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9.2 II. Changes in Directors, Supervisors and Senior Executives of the Company √ Applicable □ Not applicable
Name Position Type Date Cause
R&D Vice ZHOU Xiaokui Resigned Aug. 20, 2019 Personal reasons President
Vice President BruceGriffin Resigned Jan. 31, 2020 Expiry of employment contract of Strategy
9.3 III. Office Holding of Relevant Personnel Professional background, main work experience and current main duties in the Company of current directors, supervisors, and senior executives
Board members:
XU Gang, male, born in 1963, Chinese, no permanent residency abroad, master’s degree.
He has been Chairman of the Board of the Company since July 2002. He currently serves as Chairman of the Board and Secretary of the Party Committee of the Company.
TAN Ruiqing, male, born in 1966, Chinese, no permanent residency abroad, bachelor’s degree. He has been serving as Deputy Chairman of the Board of the Company since July
2002, currently serves as Executive Director and General Manager of Henan Yintai
Investment Co., Ltd. and Director of Henan Yinke International Chemical Co., Ltd., and has been serving as Vice President of Marketing and Vice President of Purchasing of the
Company since December 2016.
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CHANG Yili, male, born in 1949, Chinese, no permanent residency abroad, junior college degree, economist. He has been Director of the Company since May 2002. He currently serves as Director of the Company.
YANG Minle, male, born in 1956, Chinese, no permanent residency abroad, bachelor’s degree, senior engineer. He currently serves as Master’s Tutor at Zhengzhou University,
Editorial Board Member of the magazine Titanium Dioxide and Member of Expert Group of
Jiaozuo City Safety Management Committee. He served as Director and Deputy General
Manager of the Company from May 2002 to December 2016 and currently serves as Director of the Company.
FAN Xianguo, male, born in 1964, Chinese, doctoral degree, senior engineer. He served as
President of Sichuan Lomon Group Co., Ltd. from October 2009 to September 2016,
General Manager (concurrent) of Xiangyang Lomon Titanium Industry Co., Ltd. from March
2014 to November 2016, 2016 and Chairman of the Board of Sichuan Lomon Titanium
Industry Co., Ltd. from April 2016 to February 2017, and has been serving as President of the Company since December 2016 and Director of the Company since April 2017.
ZHOU Xiaokui: male, born in 1962, Chinese, master’s degree, engineer. He served as
Deputy Chairman of the Board of Sichuan Lomon Titanium Industry Co., Ltd. from Oct. 2010 to Sept. 2013, Deputy General Manager and Director of Sichuan Lomon Titanium Industry
Co., Ltd. from Sep. 2013 to Apr. 2017, R&D Vice President of the Company from Dec. 2016 to Aug. 2019, and Director of the Company since Apr. 2017.
ZHANG Qibin, male, born in 1965, Chinese, no permanent residency abroad, junior college degree, economist. He has been Director of the Company since May 2002. He currently serves as Director of the Company, General Manager of Tangyin County Yuxin Xylose
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Development Co., Ltd., and Executive Director and General Manager of Anyang City Yuxin
Xylitol Technology Co., Ltd..
HUANG Ligao, male, born in 1951, Chinese, no permanent residency abroad, bachelor’s degree, accountant. He has been serving as Director of the Company since December 2007.
And he currently serves as Director of the Company and Vice President of Shanghai Fosun
Pharmaceutical Chemicals Venture Capital Co., Ltd..
Independent directors:
ZHANG Zhijun, male, born in 1958, Chinese, no permanent residency abroad, doctor, professor, and doctoral supervisor. He is specially-appointed professor of Henan Province,
Central Plains Scholar, Executive Member of Tribology Branch of Chinese Mechanical
Engineering Society, National Outstanding Scientific and Technological Worker, and also an outstanding expert of Henan Province, cross-century academic and technical leader in
Henan Province and expert enjoying special government allowances. He currently serves as Director of Henan Nanomaterials Engineering Technology Research Center. And he once served as Dean of College of Chemistry and Chemical Engineering of Henan
University, Executive Deputy Director of Key Lab for Special Functional Materials, Ministry of Education, Director of Henan Key Lab for Special Functional Materials, Member of
Chinese Chemical Society and Vice Chairman of Henan Chemical Society.
CHEN Junfa, male, born in 1965, Chinese, no permanent residency abroad, master’s degree, certified public accountant (non-practicing) and assets appraiser. He graduated from University of Science and Technology Beijing in 1988 with a bachelor’s degree and graduated from Nankai University in 1993 with a master’s degree in economics. He once worked in Shenzhen Zhonghua Certified Public Accountants, Shenzhen Weiming Assets
Appraisal Firm, Shenzhen Sinocoms Appraisal Co., Ltd., Shenzhen Dezhengxin
International Assets Appraisal Co., Ltd., and other companies. He currently serves as 107 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Deputy Chairman of the Board of Shenzhen Pengxin Assets Land and Real Estate Appraisal
Co., Ltd., and Independent Director of Shenzhen Mason Technologies Co., Ltd., Shenzhen
Hepalink Pharmaceutical Co., Ltd. and Shenzhen O-Film Tech Co., Ltd..
XU Xiaobin, male, born in 1977, Chinese, no permanent residency abroad, master’s degree.
He now is a member of Taiwan, Hong Kong, Macao and Overseas Chinese Legal
Committee of Beijing Lawyers Association and a member of Taiwan-related Legal Affairs
Institute of China Law Society, and has been awarded the title of Outstanding Professional
Lawyer in Haidian District, Beijing in 2012. He once worked as a lawyer in Jinyan Law Group
Beijing Office. And he currently serves as Independent Director of Home Credit Consumer
Finance Co., Ltd., Partner and Lawyer of Beijing Harmony Partners Law Firm and
Independent Director of the fifth board of directors of the Company.
LIN Suyue, female, born in 1963, Chinese, no permanent residency abroad, master’s degree. She served as Vice Director of Provident Fund Center of Mengzhou Municipal
Finance Bureau of Henan Province from July 1986 to October 1996, Manager of Henan
Province Jiaozuo City Agricultural Development Company from October 1996 to October
2005 and Researcher of State-owned Assets Supervision and Administration Commission of Jiaozuo City, Henan Province from October 2005 to April 2017, and retired in April 2017.
Members of board of supervisors:
FENG Jun, male, born in 1968, Chinese, no permanent residency abroad, bachelor’s degree. He has been serving as Supervisor of the Company since April 2005. And he currently serves as Chairman of the Board of Supervisors, Secretary of Committee for
Discipline Inspection and Head of Labor Union of the Company.
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FAN Lixing, male, born in 1939, Chinese, no permanent residency abroad, high school degree. He has been serving as Supervisor of the Company since May 2002. He currently serves as Supervisor of the Company.
ZHAO Yongjun, male, Chinese, no permanent residency abroad, born in Jul. 1968, junior college degree, corporate counsel. He once served as Clerk of Metrology Energy Division,
Clerk and Director of Legal Department, and Deputy Director of Audit Department of the
Company, and now serves as Director of Audit Department of the Company.
Other senior executives:
HE Benliu, male, born in 1968, Chinese, no permanent residency abroad, master’s degree.
He served as Deputy General Manager of the Company from 2005 to January 2015 and
General Manager of the Company from January 2015 to December 2016 and has been serving as Executive Vice President and Director of Personnel Administration of the
Company since December 2016. He has been serving as Chairman of the Board of Longbai
Sichuan since Jan. 2018, and Chairman of the Board of Lomon Mining and Metallurgy since
Aug. 2018.
SHEN Qingfei, male, born in 1981, Chinese, Master of Accounting. He has qualification certificates as accountant, financial professional economist, and board secretary. He served as Deputy Director of Strategic Development Department of the Company from July 2003 to January 2006, and Manager Assistant of Securities Department, Deputy Director of Board
Secretariat and Securities Affairs Representative of Guangdong Guanhao High -Tech Co.,
Ltd. from January 2006 to June 2008. And he served as Deputy Director of Internal Audit of
Guangzhou Mopark Department Store Co., Ltd. from June 2008 to January 2011, and
Securities Affairs Representative of China Hainan Rubber Industry Group Co., Ltd. from
January 2011 to October 2012. In addition, he has been serving as Board Secretary of the
Company since October 2012, and Financial Director of the Company since April 2014. He 109 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. currently serves as Financial Director of the Company. And he has been serving as
Chairman of the Board of Henan Rongjia Scandium Vanadium Technology Co., Ltd. since
Dec. 2015, and Chairman of the Board of Billions Finance Lease (Guangzhou) Co., Ltd. since Oct. 2017.
ZHU Quanfang, male, Chinese, born in 1966, bachelor’s degree. He served as General
Manager of Sichuan Lomon Titanium Industry Co., Ltd. from October 2009 to October 2013, and General Manager of Xiangyang Lomon Titanium Industry Co., Ltd. from October 2013 to March 2014; and has been serving as Chief Engineer of Sichuan Lomon Titanium Industry
Co., Ltd. since March 2014. And he has been serving as Technical Engineering Director of the Company since December 2016.
JIN Sanliang, male, born in 1966, Chinese, junior college degree, senior engineer. He once served as Technician, Workshop Director, Director of Production Equipment Department,
General Manager Assistant and Deputy General Manager and held other positions in the
Company, and now serves as Compliance Director of the Company.
ZHANG Haitao, male, born in 1976, member of Communist Party of China, master’s degree,
Doctor of Economics, and economist. He has qualifications in accounting and securities and has passed the examination for board secretary qualification certificate organized by
Shenzhen Stock Exchange. He served as Manager of Investment Banking Department of
China Southern Securities Zhengzhou Business Department from July 1998 to December
2001, and Deputy Director and Budget Division and Deputy Secretary of Youth League
Committee of Jiaozuo City Finance Bureau from December 2001 to September 2007
(studied for a master’s degree in economics at Zhongnan University of Economics and Law from June 2003 to December 2006); conducted full-time learning for a Ph.D. in Economics at Zhongnan University of Economics and Law from September 2007 to July 2010; served as Deputy Director of Budget Planning Bureau of Jiaozuo City Finance Bureau from July 110 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
2010 to January 2014 and Director of Credit and Debt Division of Jiaozuo City Finance
Bureau from January 2014 to August 2017; and has been serving as Board Secretary of the
Company since October 2017.
Officeholding in share-holding entities
√ Applicable □ Not applicable
Whether Position remuneration Starting held in Ending date allowances are Name of date of Name of share-holding entity share- of granted by the officeholder appointme holding appointment units to which nt entities shareholders belong
Executive Director Sep. 1, TAN Ruiqing Henan Yintai Investment Co., Ltd. and Yes 2016 General Manager
ZHANG Tangyin County Yuxin Xylose General Sep. 1, No Qibin Development Co., Ltd. Manager 2001
Description of officeholding in other entities
√ Applicable □ Not applicable
Whether Position Starting Ending date remuneration Name of held in date of Name of other entities of allowances officeholder other appointmen appointment are granted entities t by other units
Henan Yinke International Chemical TAN Ruiqing Director Sep. 1, 2016 No Co., Ltd.
HUANG Shanghai Fosun Pharmaceutical Vice Jun. 1, 2005 Yes Ligao Chemicals Venture Capital Co., Ltd. President
Executive Director ZHANG Anyang City Yuxin Xylitol Technology and Mar. 7, 2017 Yes Qibin Co., Ltd. General Manager
ZHANG Henan Nanomaterials Engineering Director Apr. 1, 2013 Yes Zhijun Technology Research Center of
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Henan University
Shenzhen Pengxin Assets Land and Vice CHEN Junfa Apr. 1, 2016 Yes Real Estate Appraisal Co., Ltd. Chairman
Independ Shenzhen Mason Technologies Co., CHEN Junfa ent Jul. 1, 2014 Yes Ltd. Director
Independ Shenzhen Hepalink Pharmaceutical CHEN Junfa ent May 1, 2017 Yes Co., Ltd. Director
Independ CHEN Junfa OFILM Group Co., Ltd. (OFILM) ent Nov. 1, 2017 Yes Director
XU Xiaobin Beijing Harmony Partners Law Firm Lawyer Nov. 1, 2011 Yes
Independ Home Credit Consumer Finance Co., XU Xiaobin ent Aug. 1, 2012 Yes Ltd. Director
Penalties imposed by securities regulatory agencies on current directors, supervisors, and senior executives of the Company and those who left during the reporting period in the past three years
□ Applicable √ Not applicable
9.4 IV. Remunerations of Directors, Supervisors and Senior Executives Decision-making procedures, determination basis and actual payment of remunerations of directors, supervisors, and senior executives
Decision-making procedures: The Company formulated the Measures for Management of
Remunerations of Chairman of the Board, Chairman of the Board of Supervisors and Senior
Executives which was reviewed and approved at the 7th meeting of the 6th board of directors held on Feb. 10, 2018 and the 2nd extraordinary general meeting of 2018 held on Mar. 2,
2018.
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Determination basis: Remunerations for such personnel are determined according to the
Measures for Management of Remunerations of Chairman of the Board, Chairman of the
Board of Supervisors and Senior Executives reviewed and approved at the 2nd extraordinary general meeting of 2018 of the Company and by taking into account of work division and business performance of the Company, individual performance, performance of duties, completion of responsibility objectives and other factors. Remunerations of independent directors and the directors and supervisors not working in the Company were determined in accordance with the Proposal on Adjusting the Allowances of Independent
Directors, Non-Independent Directors and Supervisors of the Company passed at the first extraordinary general meeting of 2012.
Remunerations of directors, supervisors, and senior executives of the Company in the reporting period Unit: RMB ten thousand Whether Total pre-tax compensatio remuneration Employment n is obtained Name Position Sex Age s obtained status from affiliates from the of the Company Company
XU Gang Chairman Male 57 Incumbent 167.12 No
Deputy Chairman of the Board, Vice TAN Ruiqing President of Male 54 Incumbent 156.66 Yes Marketing, Vice President of Purchasing
CHANG Yili Director Male 71 Incumbent 96 No
YANG Minle Director Male 64 Incumbent 96.75 No
FAN Xianguo Director, Male 56 Incumbent 136.17 No
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President
Director, R&D ZHOU Xiaokui Vice Male 58 Incumbent 38.9 No President
ZHANG Qibin Director Male 55 Incumbent 2.4 Yes
HUANG Ligao Director Male 69 Incumbent 2.4 No
Independent ZHANG Zhijun Male 62 Incumbent 8 No Director
Independent CHEN Junfa Male 55 Incumbent 8 No Director
Independent XU Xiaobin Male 42 Incumbent 8 No Director
Independent LIN Suyue Female 57 Incumbent 0 No Director
Chairman of FENG Jun the Board of Male 52 Incumbent 120.93 No Supervisors
FAN Lixing Director Male 81 Incumbent 2.4 No
ZHAO Yongjun Director Male 52 Incumbent 11.57 No
Executive Vice President and HE Benliu Director of Male 52 Incumbent 137.82 No Personnel Administratio n
Financial SHEN Qingfei Male 39 Incumbent 127.43 No Director
Technical ZHU Engineering Male 54 Incumbent 129.17 No Quanfang Director
Compliance JIN Sanliang Male 54 Incumbent 137.40 No Director
Vice BruceGriffin President of Male 52 Resigned 395.74 No Strategy
ZHANG Board Male 44 Incumbent 128.17 No
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Haitao Secretary
Total ------1,911.03 --
Equity incentives granted to directors and senior executives of the Company during the reporting period
□ Applicable √ Not applicable
9.5 V. Employees of the Company 1. Number, professional background and education level of employees
Number of on-job employees in parent company 1,854 (person)
Number of on-job employees in major subsidiaries 7,231 (person)
Total number of on-job employees (person) 9,085
Total number of employees receiving remunerations in 9,085 the current period (person)
Number of retired employees to whom payment is made by parent company and major subsidiaries 0 (person)
Specialty
Type of specialty Number of professionals (person)
Production personnel 7,135
Marketing personnel 170
Technical personnel 1,329
Financial personnel 98
Administrative personnel 353
Total 9,085
Educational background
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Category of degree of education Number
Master’s degree and above 155
Bachelor degree 865
Junior college degree 1,609
Technical school graduate 1,285
High school degree 1,823
Middle school degree and below 3,348
Total 9,085
2. Remuneration policies
(I) Salary
(1) The Company provides its employees with reasonable benefits based on the principle that employees do all they can and are paid according to work performance and that revenue of the Company arising from production and business are taken into account for salary increase or decrease.
(2) Post salary of an employee is paid as per his/her post responsibilities, labor performance, labor skills and length of service, among other things. Priority is given to those employees of extraordinary capabilities and highly skilled posts with significant responsibilities.
(3) Remunerations of employees include, but are not limited to, basic salary, performance salary, individual awards, and insurance benefits.
(II) Remuneration evaluation
(1) Remunerations of employees are evaluated on the basis of monthly performance evaluation method. Each employee is paid as per monthly performance of the Company and the employee.
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(2) The Company conducts monthly evaluation on its subsidiaries in accordance with the annual performance evaluation program or the economic liability contract, mainly covering monthly production and business results of each subsidiary in terms of output, quality, cost, safety and environmental protection of products.
(III) Employee benefits
(1) Each employee is entitled to seniority allowance as per his/her length of service in the
Company.
(2) Each employee is entitled to meal allowance and other benefits for regular attendance on a monthly basis.
The Company constantly perfects the salary and welfare system, which can benefit employees from the profits made by them and enhance their sense of belonging, faith and happiness. By engaging the world’s top human resources professional consulting company, the Company conducts sufficient research to promote remunerations and benefits of employees in an all-round way under actual circumstances. The Company will strive to achieve a better situation in which “the Company functions well and employees live in harmony” by 2020 with more competitive remunerations and benefits, more human-oriented welfare mechanisms and more scientific management.
3. Training plan
(I) Training principles
(1) Apply the general management rules and the personnel management criteria, promote cultivation of all employees by training all employees, and promote decent employment of all employees by offering training to employees.
(2) Adhere to the principle of train and cultivate the staff with “good character, high quality, strong capability and high efficiency” to enhance their attitude to work, job skills and professional quality in a systematic manner.
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(3) Fulfill the principle of “acquiring knowledge through experience, and applying knowledge to practice”, implement the training performance management in an all-round way, and give strong backing to personnel strategic objectives.
(II) Training objectives
In line with the needs of its strategic development and the progress in modern science, technology and management, the Company provides employees with on-the-job training to
(1) gradually build a study-oriented enterprise and meet its demands of human resources for strategic development and routine business management activities; (2) ensure that employees possess the knowledge, skills, attitude and experience necessary to perform their jobs at a high level, help to improve employees’ career planning, and promote employees to constantly enhance their professional skills and other overall qualities; (3) reinforce the core competitiveness and cohesion of the Company, give publicity to corporate culture, promote the implementation of corporate strategy, and ensure sustained and healthy development of the Company.
(III) Training content
Category Item Major content
Emphasize values and guidelines at any time at daily, monthly and annual Values and meetings; and explain those values and guidelines based on general guidelines templates and with reference to case-based and practical coursewares developed.
Basic training Each employee must be given comprehensive training, must take exams, and Pre-job training must pass exams with satisfied results.
Department responsibilities and procedures, job responsibilities and Orientation standards, and coordination and communication; fully implement the training mentoring system.
Safety, Attach equal importance to both occupational safety and production safety; environmental develop environment-friendly education coursewares for all employees protection and under specific circumstances; and give trainings on identification of, crisis management emergency measures to and handling procedures of various crisis events.
Professional skills Give top priority of professional skill training to front-line operators; enhance
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communication skills of all employees.
Organize post qualification examinations; make plans to assist employees in Job qualifications applying for various certificates and licenses related to their posts and the and certificates development of the Company.
Major training Safety, environmental protection and lean production (LP); standardization of content human resource management.
Team management practice of primary level managers; MBA programs for Management mid-level and backup managerial personnel; EMBA programs for top competency management team (TMT).
Ensure that all job objectives are achieved as scheduled with high quality, Academic degrees without affecting routine duties of the department and the team climate, Competency and diplomas and reward the employees who have obtained academic certificates enhancement registered by the state. training Professional etiquette of all employees; document writing skills of low-level Comprehensive management team and functional department personnel; English qualities communication skills of the R&D team.
“Three new” New process, new technology and new business; once a month. forum
(IV) Training orientation
Conduct training on operating skills of primary level employees in a serialized, diverse and practical way, constantly improve standards of operating skills for each post, and evaluate post skills gradually when appropriate.
With specialization, professionalization and college education as the guide, focus on management competency training of team leaders, enhance standardization and effectiveness of primary level management, and promote design and management of team leaders’ career.
Focusing on post-90s generation and those with bachelor’s or master’s degree and on the basis of professionalization, develop the backup middle-level management team and improve the overall management competency under the environment of automation, intelligence and complexity.
Focusing on introducing professionals with master’s or doctor’s degree and with overseas experience, enhance the professional quality and innovation capability of existing
119 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. professional teams, and prepare professionals who share the Company’s values for excellence.
Select and develop backup senior executives of the post-80s generation with master’s or doctor’s degree and with professional skills and international vision, to meet the strategic needs of the Group’s senior management team.
Oriented by science, standardization, leading edge and globalization, promote systematically the complex decision-making ability and strategic control capability of the current senior management team and enhance the authority, demonstration and leadership of senior management.
(V) Training examination and evaluation
Examination and evaluation are classified into two categories: (1) examination of the training organizer by Lomon Billions College and its branches; (2) evaluation of the training results by the training organizer, which examination is mainly conducted on teaching process, teaching effect and training results of the training organizer, and which evaluation mainly covers teaching process, teaching materials, schedule, examination, training management and comments and suggestions given to the training organizer. Evaluation of training results includes, but is not limited to, survey of employees’ satisfaction with the training, and employees’ evaluation of the training organizer and training instructors, and the teaching effect.
4. Labor outsourcing
□ Applicable √ Not applicable
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10 Section X Corporate Governance
10.1 I. Basic Situation of Corporate Governance The Company continued to improve its corporate governance structure and establish sound internal management and control mechanisms to further improve corporate governance strictly in accordance with Company Law, Securities Law, Guidelines for the Governance of
Listed Companies, Stock Listing Rules of the Shenzhen Stock Exchange, Guidelines of the
Shenzhen Stock Exchange for the Standardized Operation of Companies Listed on the
Small and Medium-Sized Enterprise Board and other requirements. As at the end of the reporting period, actual situation of corporate governance of the Company complied with the above-mentioned laws and regulations and the normative documents issued by China
Securities Regulatory Commission and Shenzhen Stock Exchange regarding governance of listed companies.
During the reporting period, the Company developed and revised 3 rules, as detailed below:
Date of No. Name of system Media of disclosure disclosure
Management Rules of Foreign Exchange Hedging Business 1 Sep. 24, 2019 http://www.cninfo.com.cn (Sep. 2019)
2 Articles of Association (Dec. 2019) Dec. 28, 2019 http://www.cninfo.com.cn
Measures for Management of Remunerations of Chairman of 3 the Board, Chairman of the Board of Supervisors and Senior Dec. 28, 2019 http://www.cninfo.com.cn Executives (Dec. 2019)
Whether there is any significant difference between actual situation of corporate governance of the Company and the regulatory documents issued by China Securities Regulatory
Commission regarding governance of listed companies
□ Yes √ No
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There is no significant inconsistence between the actual governance of the Company and the regulatory documents issued by China Securities Regulatory Commission (CSRC) regarding governance of listed companies.
10.2 II. Independence of the Company and Controlling Shareholders in Terms of Business, Personnel, Assets, Organization, Finance, Etc. The Company had no controlling shareholder.
10.3 III. Horizontal Competition □ Applicable √ Not applicable
10.4 IV. Relevant Information of Annual General Meetings and Extraordinary General Meetings Held During the Reporting Period 1. General meetings held during the reporting period
Investor Type of Date of Session participation Meeting date Index of disclosure meeting disclosure ratio
Announcement on the Resolutions of the 1st Extraordinary General Meeting of 2019, which was 1st Extraordinary Extraordinary numbered 2019- General Meeting general 63.93% Jan. 10, 2019 Jan. 11, 2019 003 and was of 2019 meeting published in China Securities Journal, Securities Times and on www.cninfo.com.cn on Jan. 11, 2019.
Announcement on Annual General Annual general 76.95% May 14, 2019 May 15, 2019 the Resolutions of Meeting of 2018 meeting the Annual General
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Meeting of 2018, which was numbered 2019- 039 and was published in China Securities Journal, Securities Times and on www.cninfo.com.cn on May 15, 2019.
Announcement on the Resolutions of the 2nd Extraordinary General Meeting of 2019, which was 2nd Extraordinary Extraordinary numbered 2019- General Meeting general 74.97% Jun. 28, 2019 Jun. 29, 2019 054 and was of 2019 meeting published in China Securities Journal, Securities Times and on www.cninfo.com.cn on Jun. 29, 2019.
Announcement on the Resolutions of the 3rd Extraordinary General Meeting of 2019, which was 3rd Extraordinary Extraordinary numbered 2019- General Meeting general 48.25% Nov. 13, 2019 Nov. 14, 2019 091 and was of 2019 meeting published in China Securities Journal, Securities Times and on www.cninfo.com.cn on Nov. 14, 2019.
Announcement on the Resolutions of the 4th Extraordinary General Meeting of 2019, which was 4th Extraordinary Extraordinary December 24, numbered 2019- General Meeting general 64.16% Dec. 23, 2019 2019 102 and was of 2019 meeting published in China Securities Journal, Securities Times and on www.cninfo.com.cn on Dec. 24, 2019.
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2. Preferred stockholders with voting rights restored requested to hold an extraordinary general meeting
□ Applicable √ Not applicable
10.5 V. Performance of Duties by Independent Directors during the Reporting Period 1. Participation by independent directors in board meetings and general meetings
Participation by independent directors in board meetings and general meetings
Whether Numbe the Number of Number of Number of r of director times of Number of times of times of times has not Number of participatin times of Name of participating in participatin of personall times of g in board participatin independen board meeting g in board absenc y participatio meeting g in on-site t director by meeting e from attended n in general during the board correspondenc through board board meeting reporting meeting e proxy meetin meeting period g twice in a row
ZHANG 11 2 9 0 0 No 2 Zhijun
CHEN Junfa 11 1 10 0 0 No 2
XU Xiaobin 11 1 10 0 0 No 3
LIN Suyue 11 11 0 0 0 No 5
Explanation for absence from board meeting in person for two consecutive times
2. Objections raised by independent directors to relevant matters of the Company
Whether independent directors raised any objections to the Company’s related matters
□ Yes √ No
Independent directors raised no objection to any matter of the Company in the reporting period.
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3. Additional information on performance of duties by independent directors
Whether relevant recommendations proposed by independent directors to the Company were adopted
√ Yes □ No
Description on adopting or not adopting relevant recommendations proposed by independent directors to the Company
Independent directors of the Company, in accordance with Company Law, Securities Law,
Stock Listing Rules of the Shenzhen Stock Exchange, Articles of Association, Working
System of Independent Directors and other applicable regulations, (1) paid close attention to normative operation of the Company, performed its duties independently, diligently and conscientiously, provided many valuable professional suggestions on the Company’s system improvement and daily business decision-making, (2) carefully supervised daily related transactions, external guarantees, profit distribution plan, appointment to an accounting firm, Second ESOP, and asset acquisition during the reporting period and provided professional independent opinions, and (3) maintained full independence in work, served all shareholders with care, loyalty and diligence, and effectively protected the interests of the Company and all shareholders.
10.6 VI. Performance of Duties by the Special Committees under the Board of Directors during the Reporting Period There were four special committees under the board of directors of the Company, namely
Audit Committee, Strategy Committee, Remuneration and Assessment Committee, and
Nomination Committee. In 2019, the special committees performed its duties in accordance with the principles of diligence and conscientiousness and as per relevant provisions of
125 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. applicable laws and regulations, normative documents and rules of procedure of the
Company’s special committees. During the reporting period, performance of duties by the special committees is detailed as follows:
Performance of duties by Audit Committee under the board of directors:
During the reporting period, Audit Committee of the Company actively carried out various tasks, carefully reviewed internal audit plans and implementation of the plans, annual reports, semi-annual reports and other periodic reports of the Company, and supervised and guided the Company’s Internal Audit Department to check the Company’s operations strictly in accordance with Stock Listing Rules of the Shenzhen Stock Exchange, Guidelines of the
Shenzhen Stock Exchange for the Standardized Operation of Companies Listed on the
Small and Medium-Sized Enterprise Board, Articles of Association, Working Rules of Audit
Committee of the Board of Directors and other relevant provisions. In addition, Audit
Committee supervised annual audit work of the accounting firm and fully communicated relevant issues in the audit process to ensure smooth progress of the audit work and actively perform its auditing and supervision functions.
Performance of duties by Strategy Committee under the board of directors:
During the reporting period, Strategy Committee under the board of directors conducted in- depth discussions and analysis on the Company’s new major projects and foreign investments, and submitted such projects and investments to the board of directors for consideration upon review and approval by all members of Strategy Committee.
Performance of duties by Remuneration and Assessment Committee under the board of directors:
Remuneration and Assessment Committee under the Board of Directors reviewed the
Measures for Management of Remunerations of Chairman of the Board, Chairman of the
Board of Supervisors and Senior Executives and other matters during the reporting period,
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10.7 VII. Work of the Board of Supervisors Whether any risk was found by the board of supervisors in the Company during the reporting period
□ Yes √ No
The Board of Supervisors had no objection to the matters under supervision during the reporting period.
10.8 VIII. Evaluation of and Incentives for Senior Executives In order to enable the Company’s senior executives to better perform their duties and clarify their rights and obligations, the Company actively established and improved fair, transparent and efficient senior executives work performance evaluation standards as well as incentive and restraint mechanisms. The Company strictly evaluated the performance by the
Company’s senior executives of their job duties as well as fulfillment of economic responsibility objectives strictly in accordance with national labor law and applicable regulations concerning wages and social security; and during the reporting period, the
Company assessed and paid remunerations to senior executives on a monthly basis, and the board of supervisors conducted supervision in this regard. During the reporting period, senior executives of the Company were able to perform their duties conscientiously in accordance with the Company Law, Articles of Association and other laws and regulations, actively implement relevant resolutions passed at the Company’s general meetings and board meetings, actively adjust the Company’s business ideas under the correct guidance of the Board of Directors, and continuously strengthen internal management, and therefore has completed various tasks of the year.
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10.9 IX. Internal Control Evaluation Report 1. Specific particulars of major internal control defects discovered during the reporting period
□ Yes √ No
2. Internal control self-evaluation report
Date of disclosure of full text of Mar. 25, 2020 internal control evaluation report
Index of disclosure of full text of For details, please refer to 2019 Internal Control Self-evaluation Report internal control evaluation report published on www.cninfo.com.cn on Mar. 25, 2020.
Proportion of total unit assets included in the evaluation scope to 100.00% total assets in the Company’s consolidated financial statements
Proportion of unit operating income included in the evaluation scope to 100.00% operating income in the Company’s consolidated financial statements
Defect identification standard
Category Financial report Non-financial report
The qualitative standards for The qualitative standards for evaluation of internal control defects evaluation of internal control in financial reports determined by the defects in non-financial reporting Company are as follows: Defects with determined by the Company are as the following characteristics are follows: Defects with the following identified as major defects: ①The characteristics and significant Company’s directors, supervisors and influences are recognized as major senior executives conduct fraudulent defects: ① where national laws, practices, causing significant losses administrative regulations and Qualitative standards and adverse effects; ②The Company regulatory documents are has experienced major violations of violated; ② where matters laws and regulations and liability concerning “decision-making on accidents in terms of financial major issues, appointment and accounting, assets management, dismissal of key cadres, investment capital operation, information decisions for major projects, disclosure, product quality, safety application of large-amount funds” production, environmental protection fail to go through the collective and other aspects, causing significant decision-making process; ③ where losses and adverse effects to the there is a loss of management
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Company or causing the Company to personnel holding key posts and suffer major administrative regulatory technicians; ④ where important penalties; ③The Company’s Audit business involving the Company’s Committee and Internal Audit Division production and operation lacks fail to play an effective supervisory institutional control or any function, causing significant losses to institutional system fails; ⑤ where the Company; ④With respect to the internal control of information Company’s financial statements, disclosure fails, causing the certified public accountants have Company to be publicly issued or are likely to issue any condemned by regulatory negative opinions, or have refused or authorities; ⑥ where are likely to refuse to give any consequences of internal control opinions. If the consequences of the evaluation, major defects or above Paragraphs ①, ② and ③ are important defects in particular, are not significant but important, related not rectified. The above defects defects are deemed as important which are not significant but defects; but if the consequences are important are considered to be not significant or important, related major defects. The above defects defects are deemed to be common which are not significant and not defects. important are considered to be common defects.
The quantitative standards for evaluation of internal control The quantitative standards for defects in non-financial reports evaluation of internal control defects determined by the Company are as in financial reports determined by the follows: Based on the quantitative Company are as follows: Based on the standards for internal control data in the 2019 consolidated financial defects in financial reports, the statements, the quantitative standards quantitative standards for for determining the importance determining the importance Quantitative standards degree of misreporting (including degree of internal control defects underreporting) in the Company’s in the Company’s non-financial consolidated financial statements are: reports are: major defects: major defects: misreporting ≥ 5% of misreporting ≥ 5% of pre-tax pre-tax profit; important defects: 1% profit; important defects: 1% of of pre-tax profit ≤ misreporting < 5% of pre-tax profit ≤ misreporting < 5% pre-tax profit; and common defects: of pre-tax profit; and common misreporting <1% of pre-tax profit. defects: misreporting <1% of pre- tax profit.
Number of major defects in financial 0 reports
Number of major defects in non- 0 financial reports
Number of important defects in 0 financial reports
Number of important defects in 0 non-financial reports
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10.10 X. Internal Control Audit Report or Authentication Report Internal control audit report
Deliberations in internal control audit report
We believe that Lomon Billions maintained effective internal control over financial reporting in all material respects on Dec. 31, 2019 in accordance with the Basic Internal Control Norms for Enterprises and applicable regulations.
Disclosure of internal control Disclosed audit report
Date of disclosure of full text of Mar. 25, 2020 internal control audit report
Index of disclosure of full text of For details, please refer to 2019 Internal Control Audit Report published on internal control audit report www.cninfo.com.cn on Mar. 25, 2020
Type of opinions on the internal Standard and unqualified opinions control audit report
Whether there are major defects No in non-financial reports
Whether an internal control audit report with non-standard opinions was issued by accounting firm
□ Yes √ No
Whether the internal control audit report issued by the accounting firm is consistent with the self-evaluation report of the Board of Directors
√ Yes □ No
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11 Section XI Relevant Information Concerning Corporate Bonds
Whether the Company had any corporate bonds publicly issued and listed at stock exchange, and not matured on the approved disclosure date in annual report or not fully cashed upon maturity
No
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12 Section XII Financial Report
12.1 I. Audit Report
Type of audit opinions Standard and unqualified opinions
Signing date of audit report Mar. 23, 2020
BDO China Shu Lun Pan Certified Public Accountants (Special Name of audit office General Partnership)
Audit report No. X. K. S. B. Z. [2020] No. ZG10268
Name of certified public accountants XU Peimei, ZHANG Zhen
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Audit Report
X. K. S. B. Z. [2020] No. ZG10268
To all shareholders of Lomon Billions Group Co., Ltd.:
1. Auditor’s Opinions
We have audited financial statements of Lomon Billions Group Co., Ltd. (hereinafter referred to as “Lomon Billions”), including the consolidated and parent company balance sheets as of Dec. 31, 2019, consolidated and parent company income statements, consolidated and parent company cash flow statement, consolidated and parent company statements of changes in shareholder equity for 2019 and relevant notes to financial statements.
In our opinion, the accompanying financial statements give a true and fair view of consolidated and parent company financial position of Lomon Billions as of December 31,
2019 as well as consolidated and parent company business performance and cash flows for the year of 2019 in accordance with the Accounting Standards for Business Enterprises.
2. Basis for the Formation of Auditor’s Opinions
We conducted our audit in accordance with China Standards on Auditing and Quality
Control. The “Auditor’s Responsibility” section of the auditor’s report further describes our responsibilities under these Standards. In accordance with the Code of Ethics for Chinese
Certified Public Accountants, we are independent of Lomon Billions and have fulfilled other responsibilities in terms of professional ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
3. Key Matters for Audit
The key audit items are the items we think based on our professional judgement as the most critical to the current financial statements. These items should be based on the overall audit of the financial statements and the formation of audit opinions. We do not comment on these
133 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. items separately. We have identified the following items as key audit matters that need to be communicated in audit report.
Key matters for audit How the matters are dealt with in auditing
(I) Recognition of income
Our audit procedures for the recognition of income mainly include: 1. Learn about and evaluate the management’s design and For accounting policies on revenue recognition, operation effectiveness of key internal control related to revenue please refer to Note III (23). recognition. For the revenue classification and the disclosure 2. For revenue from domestic sales, check the supporting of the amount incurred this year, please refer to documents related to revenue recognition by sampling, including Note V (42). checking invoices, sales contracts, ODOs, acceptance forms and In 2019, Lomon Billions’ consolidated main other documents; for revenue from export sales, obtain export business income was RMB 11.158 billion, mainly declaration data directly from the customs, check book records, from domestic and foreign sales of titanium and check the supporting documents such as the sales contracts, dioxide. export declaration forms, shipping bills of lading and sales General principles of recognition of the revenue invoices by sampling to verify the authenticity of sales revenue; from selling the Company’s products: for 3. Follow the accounts receivable confirmation procedures and domestic sales, the Company recognizes revenue select samples of revenue transactions recorded in the current according to the order and outbound delivery year to verify the current sales revenue from major customers. order (ODO) and after the customer confirms 4. Implement analytical procedures for income and costs, receipt of the goods; for export sales, the including procedures concerning analyzing income, cost and Company recognizes revenue according to the gross profit margin fluctuations of each month of the current order and delivery order and after handling period and analyzing income, cost and gross profit margin of export customs declaration and shipping the major products during the period by comparing with the previous goods. Since Lomon Billions’ main business period, and checking accuracy of the confirmed income; revenue is in a large amount and is deemed as a 5. Check business information of important customers, ask key performance indicator, there is inherent risk relevant personnel and compare sales volume and number of that the management will control the timing of important customers in the same period to confirm whether revenue recognition to achieve specific goals or there is any abnormal transaction. expectations. Therefore, we consider revenue 6. Select samples, check out outbound delivery orders and other recognition as a key audit matter. supporting documents for the income transactions recorded before and after balance sheet date to assess whether the income is recorded in the appropriate accounting period.
(II) Goodwill impairment
For accounting policies on goodwill, please refer Our main audit procedures for the impairment test of goodwill to Note III (5)/(18); for disclosure of goodwill, are: please refer to Note V (18). On Dec. 31, 2019, 1. Learn about control procedures of the goodwill impairment book value of goodwill in the consolidated test of Lomon Billions, including the asset groups divided by the financial statements of Lomon Billions was RMB Company and the Company’s judgment on the value of the asset 5.665 billion with RMB28,184,300 accrued as groups. provision for impairment of goodwill. The above 2. Evaluate competency, professionalism and objectivity of goodwill was mainly formed as a result of external valuation experts appointed by the management. Lomon Billions’ acquisition of Sichuan Lomon 3. Evaluate the methods and assumptions used in estimating the Titanium Industry Co., Ltd. (now renamed as present value of future cash flows based on the requirements of
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Lomon Billions Sichuan Titanium Industry Co., accounting standards. Ltd.) in 2016, Panzhihua Ruierxin Industry and 4. Assess the appropriateness of parameters such as discount Trade Co., Ltd. in 2017, and Yunnan rate and growth rate in the discounted cash flow model used by Metallurgical Xinli Titanium Co., Ltd. in 2019. external experts. Such parameters include the estimated The management of the Company conducted production, future sales price, growth rate, estimated gross profit impairment test on goodwill at the end of each margin and related expenses of the asset group, which may be year and adjusted book value of goodwill based compared with historical data and industry levels of relevant on results of the impairment test. Impairment asset groups. test is carried out based on recoverable amount 5. Evaluate whether the disclosure of goodwill impairment in the of the asset group including goodwill which is financial statements meets the requirements of the Accounting determined by the higher of present value of Standards for Business Enterprises. the estimated future cash flows of the asset group and net amount of the fair value of the assets after deducting disposal expenses. Forecasting future cash flows involves key assumptions about forecasted revenue, growth rate and profit margin and determination of appropriate discount rate. Since these key assumptions are inherently uncertain and may be affected by bias of the management, we identify the impairment of goodwill in the consolidated financial statements as a key audit matter.
4. Other Matters
The management of Lomon Billions (hereinafter referred to as the management) is responsible for other information. Additional information includes the information covered in
2019 Annual Report of Lomon Billions but does not include financial statements and our audit report.
Our audit opinions on the financial statements do not contain other information, nor do we issue any form of authentication conclusion on other information. Based on our audit of the financial statements, our responsibility is to read other information, and in the process, consider whether other information is in major disagreement with the financial statements or what we know in the process of auditing, or if there seems to be any major misstatement in other information.
Based on the work we have done, if we ascertain that there are material misstatements in other information, we should report this fact. In this regard, we have nothing to report. 135 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
5. Responsibilities of the Management or Governance for Financial Statements
The management of Lomon Billions (hereinafter referred to as “the management”) shall prepare financial statement in accordance with the Accounting Standards for Enterprises, rendering it with fair reflections; and design, implement and maintain internal control relating to the preparation of financial statements so as to avoid any major misstatement caused by malpractices or mistakes.
In preparing financial statements, the management is responsible for assessing Lomon
Billions’ ability to continue as a going concern, disclosing matters relating to continuing operations (if applicable), and applying the assumption of going concern, unless there is a plan to liquidate or terminate operations, or there are no other realistic options.
The governance layer is responsible for overseeing the process of preparing Lomon Billions’ financial reports.
6. CPA’s Responsibilities in Auditing the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with the auditing standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: 136 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Understand the internal controls related to audit so as to design appropriate audit procedures.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management.
(4) Draw a conclusion on the appropriateness of management’s use of the going-concern assumptions. At the same time, based on the audit evidence obtained, it is possible to draw conclusions as to whether there are significant uncertainties in the matters or circumstances leading to significant doubts about going-concern ability of Lomon Billions. If we conclude that a material uncertainty exists, we are required by the auditing standards to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence available up to the date of our auditor’s report. However, future events or circumstances may result in failure of Lomon Billions to be going-concern.
(5) Evaluate the overall presentation (including disclosure), structure and content of the financial statements, and whether the financial statements represent the underlying transactions and events in a manner that achieves a fair presentation.
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(6) Obtain sufficient and appropriate audit evidence on financial information of entities in or business activities of Lomon Billions to provide audit opinions on financial statements. We are responsible for guiding, supervising and implementing group audit, and undertake the full responsibility for our audit opinions.
We communicate with the Governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We have also made a statement to the governance on our compliance with the professional ethics requirements related to independence, and communicate with the governance with regard to all relationships and other matters that may be reasonably considered to affect our independence, as well as related precautions (if applicable).
Among the matters that we have communicated with the governance, we decide which matters are most critical to the audit of the current financial statements and form key audit items. We describe these matters in the audit report, unless the laws and regulations prohibit the public disclosure of these matters, or in very few cases, the negative consequences of communication of a matter in the audit report are reasonably expected to exceed the benefits from the public interest, in which case, we should not communicate the matter in the audit report.
BDO China Shu Lun Pan CPAs Chinese Certified Public Accountant: XU Peimei (Special General Partnership) (Project Partner)
Chinese Certified Public Accountant: ZHANG Zhen
Shanghai, China Mar. 23, 2020
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12.2 II. Financial Statements Unit used in the statements mentioned in the financial notes is: RMB
1. Consolidated Balance Sheet
Prepared by: Lomon Billions Group Co., Ltd.
Dec. 31, 2019 Monetary Unit: Yuan
Item Dec. 31, 2019 Dec. 31, 2018
Current assets:
Cash at bank and on hand 2,640,651,165.38 1,684,382,500.87
Provision for securities
settlement
Funds lent
Financial assets held for trading
Financial assets at fair value 658,835,379.00 through profit or loss
Derivative financial assets
Notes receivable 37,358,180.56 712,636,370.67
Accounts receivable 1,604,917,925.44 1,099,681,911.52
Receivables financing 334,530,263.20
Advance payment 486,893,907.83 218,033,111.50
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves
receivable
Other receivables 45,216,280.73 34,840,956.03
Thereinto: Interests receivable
Dividends receivable
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Buying back the sale of financial assets
Inventories 2,223,433,795.02 1,947,721,511.24
Contract assets
Assets held for sale
Non-current assets maturing within one year
Other current assets 469,787,900.07 111,397,079.43
Total current assets 7,842,789,418.23 6,467,528,820.26
Non-current assets:
Loans and advances 278,114,569.45 282,814,500.00
Investments on bonds
Available-for-sale financial assets
Other investments on bonds
Held-to-maturity investments
Long-term receivables 299,519,834.57 215,964,897.35
Long-term equity investments 940,594,769.26 11,625,909.94
Other equity instrument 466,093.40 investments
Other non-current financial assets
Investment properties 58,837,297.83 52,195,136.57
Fixed assets 6,810,838,758.77 5,843,524,617.18
Construction in progress 1,654,194,308.22 1,413,238,779.28
Bearer biological assets
Oil and gas assets
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Right-of-use assets
Intangible assets 1,552,024,834.44 1,246,645,639.67
Development costs
Goodwill 5,636,985,265.15 4,985,888,761.43
Long-term unamortized expenses 59,219,259.45 52,251,712.94
Deferred tax assets 230,053,129.74 182,217,136.72
Other non-current assets 579,144,012.80 169,777,137.18
TOTAL NON-CURRENT ASSETS 18,099,992,133.08 14,456,144,228.26
TOTAL ASSETS 25,942,781,551.31 20,923,673,048.52
Current liabilities:
Short-term borrowings 2,867,356,101.03 3,633,223,440.00
Borrowings from central bank
Loans from other financial institutions
Financial liabilities held for trading
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable 2,406,738,099.45 1,178,503,367.08
Accounts payable 2,012,151,921.33 1,259,382,923.61
Advances from customers 129,906,556.59 85,667,651.39
Contract liabilities
Financial assets sold for repurchase
Deposits from customers and interbank
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Payment for trading securities by agency
Payment for underwriting securities by agency
Employee benefits payable 202,303,040.00 209,555,057.41
Taxes and surcharges payable 202,223,224.02 243,421,541.33
Other payables 427,070,838.33 159,237,824.53
Thereinto: Interests payable 264,896.50 264,896.50
Dividends payable 17,600,000.00 1,420,000.00
Handling charges and commissions payable
Reinsurance accounts payable
Liabilities held for sale
Non-current liabilities maturing 141,832,464.00 578,127,672.50 within one year
Other current liabilities
TOTAL CURRENT LIABILITIES 8,389,582,244.75 7,347,119,477.85
Non-current liabilities:
Insurance contract reserves
Long-term borrowings 2,752,332,976.56 407,807,282.10
Bonds payable
Including: Preferred stock
Perpetual bond
Lease liabilities
Long-term payables 164,609,892.00 200,000,000.00
Long-term employee benefits payable
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Accrued liabilities 47,780,891.68 4,169,943.33
Deferred income 281,987,533.35 184,070,128.41
Deferred income tax liabilities 234,547,657.57 146,504,289.96
Other non-current liablities
Total non-current liabilities 3,481,258,951.16 942,551,643.80
Total liabilities 11,870,841,195.91 8,289,671,121.65
Owner’s equity:
Capital stock 2,032,020,889.00 2,032,020,889.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Capital surplus 9,484,824,798.92 9,581,876,882.10
Less: Treasury shares 663,155,409.81
Other comprehensive income 5,385,060.90 1,924,206.40
Special reserve 34,002,890.35 22,284,630.23
Surplus reserve 650,571,671.61 478,506,573.31
General risk provisions 6,113,341.37 6,113,341.37
Undistributed profits 1,658,016,560.07 963,324,133.72
Total equity attributable to equity 13,870,935,212.22 12,422,895,246.32 owners of the Parent Company
Minority interests 201,005,143.18 211,106,680.55
Total owner’s equity 14,071,940,355.40 12,634,001,926.87
Total liabilities and owners’ 25,942,781,551.31 20,923,673,048.52 equity
143 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Legal Representative: XU Gang Accounting Director: SHEN Qingfei Person in Charge of
Accounting Firm: GUO Liangpo
2. Balance Sheet of Parent Company Monetary Unit: Yuan
Item Dec. 31, 2019 Dec. 31, 2018
Current assets:
Cash at bank and on hand 1,848,090,465.38 1,020,479,716.39
Financial assets held for trading
Financial assets at fair value 557,078,712.33 through profit or loss
Derivative financial assets
Notes receivable 220,905,272.29
Accounts receivable 781,730,892.85 619,612,072.19
Receivables financing 111,275,591.39
Advance payment 42,101,067.27 59,005,279.37
Other receivables 954,386,496.37 311,080,609.16
Thereinto: Interests receivable
Dividends receivable
Inventories 463,431,570.54 580,274,655.82
Contract assets
Assets held for sale
Non-current assets maturing
within one year
Other current assets 14,048,858.34 53,370,967.21
Total current assets 4,215,064,942.14 3,421,807,284.76
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Non-current assets:
Investments on bonds
Available-for-sale financial assets
Other investments on bonds
Held-to-maturity investments
Long-term receivables
Long-term equity investments 14,078,474,714.36 12,086,678,848.70
Other equity instrument investments
Other non-current financial assets
Investment properties 50,653,797.05 50,352,066.06
Fixed assets 1,423,204,645.28 1,245,193,004.81
Construction in progress 346,773,426.31 342,900,941.52
Bearer biological assets
Oil and gas assets
Right-of-use assets
Intangible assets 197,408,879.25 200,302,562.43
Development costs
Goodwill
Long-term unamortized expenses 139,589.24
Deferred tax assets 25,888,288.06 16,982,898.30
Other non-current assets 348,661,593.41 49,354,846.55
TOTAL NON-CURRENT ASSETS 16,471,065,343.72 13,991,904,757.61
TOTAL ASSETS 20,686,130,285.86 17,413,712,042.37
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Current liabilities:
Short-term borrowings 1,281,831,460.00 2,346,327,440.00
Financial liabilities held for trading
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable 1,919,595,931.29 1,047,206,000.00
Accounts payable 580,290,101.88 437,938,725.42
Advances from customers 14,572,825.82 26,334,853.82
Contract liabilities
Employee benefits payable 50,802,521.67 75,975,094.77
Taxes and surcharges payable 22,084,365.01 31,282,743.70
Other payables 2,744,008,054.50 1,121,227,659.73
Thereinto: Interests payable
Dividends payable
Liabilities held for sale
Non-current liabilities maturing 45,136,248.00 510,000,000.00 within one year
Other current liabilities
TOTAL CURRENT LIABILITIES 6,658,321,508.17 5,596,292,517.44
Non-current liabilities:
Long-term borrowings 1,788,396,599.11 135,000,000.00
Bonds payable
Including: Preferred stock
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Perpetual bond
Lease liabilities
Long-term payables
Long-term employee benefits payable
Accrued liabilities
Deferred income 4,183,493.24 6,990,909.08
Deferred income tax liabilities 1,061,806.85
Other non-current liablities
Total non-current liabilities 1,792,580,092.35 143,052,715.93
Total liabilities 8,450,901,600.52 5,739,345,233.37
Owner’s equity:
Capital stock 2,032,020,889.00 2,032,020,889.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Capital surplus 9,477,165,715.26 9,572,892,476.05
Less: Treasury shares 663,155,409.81
Other comprehensive income
Special reserve
Surplus reserve 650,571,671.61 478,506,573.31
Undistributed profits 75,470,409.47 254,102,280.45
Total owner’s equity 12,235,228,685.34 11,674,366,809.00
Total liabilities and owners’ equity 20,686,130,285.86 17,413,712,042.37
147 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
3. Consolidated Income Statement Monetary Unit: Yuan
Item 2019 2018
I. Revenue 11,419,887,283.48 10,553,992,381.67
Including: Operating revenue 11,358,539,703.02 10,440,588,458.46
Interest income 57,695,922.99 110,268,641.56
Earned premium
Handling charges and commission 3,651,657.47 3,135,281.65 income
II. Total costs 8,233,270,621.49 7,778,584,823.48
Including: Cost of sales 6,546,012,361.56 6,139,057,448.54
Interest expenses 147,653.93 3,649,339.33
Handling charges and commission 8,404.67 14,935.32 expenditure
Surrender value
Net payments for insurance claims
Net reserves accrued of insurance
liability contracts
Policyholder dividend payment
Reinsurance expenses
Sales tax and additions 133,499,192.74 146,409,299.44
Sales expenses 463,159,405.98 402,391,163.30
General and administrative 550,761,046.95 455,761,314.76 expenses
R&D costs 416,280,062.17 399,479,867.34
Financial expenses 123,402,493.49 231,821,455.45
Thereinto: Interest expense 182,886,637.41 205,581,833.78
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Interest income 70,192,540.80 9,461,796.34
Add: Other income 113,373,308.87 87,752,657.57
Income from investments (Fill in -50,770,570.39 41,543,317.94 with “-” for loss)
Including: Share of profit of -1,560,405.68 1,601,659.66 associates and joint ventures
Derecognized earnings of financial assets measured at amortized cost
Exchange gain (minus: loss)
Net exposure hedging revenue (Fill in with “-” for loss)
Revenue from change in fair value 8,835,379.00 (Fill in with “-” for loss)
Credit impairment loss (Fill in with -129,090,842.13 “-” for loss)
Asset impairment loss (Fill in with -61,734,067.01 -225,653,995.87 “-” for loss)
Income from asset disposal (Fill in -7,919,333.24 565,805.78 with “-” for loss)
III. Operating profit (Fill in with “-” 3,050,475,158.09 2,688,450,722.61 for loss)
Add: Non-operating income 6,258,180.04 56,657,180.76
Less: Non-operating expenses 34,684,619.18 29,236,098.34
IV. Total profits (Fill in with “-” for 3,022,048,718.95 2,715,871,805.03 total loss)
Less: Income tax expenses 417,501,038.38 395,634,353.16
V. Net profits (Fill in with “-” for net 2,604,547,680.57 2,320,237,451.87 loss)
(I) Classification by business continuity
1. Net profit from continuing operations (Fill in with “-” for net 2,604,547,680.57 2,320,237,451.87 loss)
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2. Net profit from terminating operations (Fill in with “-” for net loss)
(II) Classification by ownership
1. Net profits attributable to 2,593,975,280.30 2,285,728,663.61 owners of parent company
2. Gains and losses of minority 10,572,400.27 34,508,788.26 shareholders
VI. Other comprehensive income, 3,460,854.50 7,913,038.46 net of tax
Net of tax from other comprehensive income 3,460,854.50 7,913,038.46 attributable to owners of the parent company
(I) Other comprehensive income that cannot be reclassified to profit or loss
1. Changes in re-measurement and setting of benefit plans
2. Other comprehensive income that cannot be transferred to profit or loss under the equity method
3. Changes in fair value of other equity instrument investments
4. Changes in fair value of corporate credit risk
5. Others
(II) Other comprehensive income that will be reclassified to profit or 3,460,854.50 7,913,038.46 loss
1. Other comprehensive income that can be transferred to profit or loss under the equity method
2. Changes in fair value of other investments on bonds
3. Gains and losses on changes in fair value of financial assets available for sale
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4. Amount of financial assets reclassified into other comprehensive income (OCI)
5. Gains or losses arising from reclassification of held-to-maturity
investments into available-for-sale financial assets
6. Provision for credit impairment
of other investments on bonds
7. Cash flow hedging reserves
8. Conversion difference of foreign 3,460,854.50 7,913,038.46 currency financial statements
9. Others
Net of tax from other comprehensive income
attributable to minority shareholders
VII. Total comprehensive income 2,608,008,535.07 2,328,150,490.33
Attributable to equity owners of 2,597,436,134.80 2,293,641,702.07 the Parent Company
Total comprehensive income attributable to minority 10,572,400.27 34,508,788.26 shareholders
VIII. Earnings per share:
(I) Basic earnings per share 1.29 1.15
(II) Diluted earnings per share 1.29 1.15
In the current period of business combination under the same control, the net profit realized by the merged party before the merger is RMB , and the net profit realized by the merged party in the previous period is RMB.
Legal Representative: XU Gang Accounting Director: SHEN Qingfei Person in Charge of
Accounting Firm: GUO Liangpo
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4. Income Statement of Parent Company Monetary Unit: Yuan
Item 2019 2018
I. Operating income 2,982,595,364.89 3,012,184,494.29
Less: Operating cost 2,153,859,011.30 2,051,113,267.49
Sales tax and additions 26,234,823.45 34,704,773.01
Sales expenses 103,140,504.67 111,465,432.53
General and administrative 185,863,578.25 162,060,623.10 expenses
R&D costs 100,528,011.23 112,760,315.21
Financial expenses 53,338,415.53 168,997,893.32
Thereinto: Interest expense 115,303,497.28 153,455,249.99
Interest income 62,428,534.24 32,483,019.60
Add: Other income 4,889,123.59 14,992,919.59
Income from investments (Fill in 1,415,801,527.98 1,434,426,625.20 with “-” for loss)
Including: Share of profit of -1,216,085.75 1,601,659.66 associates and joint ventures
Derecognized earnings of financial assets measured at
amortized cost (Fill in with “-” for loss)
Net exposure hedging revenue
(Fill in with “-” for loss)
Revenue from change in fair value 7,078,712.33 (Fill in with “-” for loss)
Credit impairment loss (Fill in -15,687,916.87 with “-” for loss)
Asset impairment loss (Fill in with 10,893,079.71 -20,293,164.39 “-” for loss)
Income from asset disposal (Fill in -983,092.11 -284,985.70 with “-” for loss)
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II. Operating profit (Fill in with “-” 1,774,543,742.76 1,807,002,296.66 for loss)
Add: Non-operating income 90,887.39 435,381.75
Less: Non-operating expenses 2,241,928.00 375,927.50
III. Total profits (Fill in with “-” for 1,772,392,702.15 1,807,061,750.91 total loss)
Less: Income tax expenses 51,741,719.18 61,088,912.82
IV. Net profits (Fill in with “-” for 1,720,650,982.97 1,745,972,838.09 net loss)
(I) Net profits from continuing operations (Fill in with “-” for net 1,720,650,982.97 1,745,972,838.09 loss)
(II) Net profits from terminating operations (Fill in with “-” for net loss)
V. Net of tax from other comprehensive income
(I) Other comprehensive income that cannot be reclassified to profit or loss
1. Changes in re-measurement and setting of benefit plans
2. Other comprehensive income that cannot be transferred to profit or loss under the equity method
3. Changes in fair value of other equity instrument investments
4. Changes in fair value of corporate credit risk
5. Others
(II) Other comprehensive income that will be reclassified to profit or loss
1. Other comprehensive income that can be transferred to profit or loss under the equity method
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2. Changes in fair value of other
investments on bonds
3. Gains and losses on changes in fair value of financial assets available for sale
4. Amount of financial assets reclassified into other comprehensive income (OCI)
5. Gains or losses arising from reclassification of held-to-
maturity investments into available-for-sale financial assets
6. Provision for credit impairment
of other investments on bonds
7. Cash flow hedging reserves
8. Conversion difference of foreign currency financial statements
9. Others
VI. Total comprehensive income 1,720,650,982.97 1,745,972,838.09
VII. Earnings per share:
(I) Basic earnings per share
(II) Diluted earnings per share
5. Consolidated Cash Flow Statement Monetary Unit: Yuan
Item 2019 2018
I. Cash flows from operating
activities:
Cash received from sales of 10,471,977,093.31 8,520,703,358.53 goods or rendering of services
Net increase in deposits from clients and other financial institutions
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Net increase in borrowings from central bank
Net increase in placements from -102,000,000.00 other financial institutions
Cash premiums received on original insurance contracts
Net cash received from reinsurance businesses
Net increase in deposits and investments from insureds
Interest, handling charges and 60,694,276.67 113,268,061.85 commissions received
Net increase in loans from other financial institutions
Net increase in repurchase business funds
Net cash received from acting sales of securities
Tax refund received 12,526,915.33 5,800,504.11
Cash received relating to other 521,628,690.76 198,270,437.08 operating activities
Sub-total of cash inflows 11,066,826,976.07 8,736,042,361.57
Cash paid for purchasing goods 5,858,580,883.91 3,716,081,756.03 and receiving services
Net increase in customer loans 222,876,270.76 285,442,851.68 and advances
Net increase in deposits with central bank and other financial institutions
Cash paid for original insurance contract claims
Net increase in funds lent
Cash paid as interests, handling 91,274.34 2,800,439.75 charges and commissions
Policyholder dividend paid
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Cash paid to and on behalf of 792,744,800.39 740,541,150.24 employees
Various taxes paid 1,309,258,303.47 1,407,831,504.67
Cash paid relating to other 879,729,117.55 552,565,253.98 operating activities
Sub-total of cash outflows 9,063,280,650.42 6,705,262,956.35
Net cash flows from operating 2,003,546,325.65 2,030,779,405.22 activities
II. Cash flows from investing activities:
Cash received from disposal of 4,787,780,741.00 8,781,364,653.84 investments
Cash received from returns on 37,443,584.00 40,353,758.50 investments
Net cash received from disposal of fixed assets, intangible assets and 7,616,358.50 2,828,900.00 other long-term assets
Net cash received from disposal of subsidiaries and other business units
Cash received relating to other 20,010,000.00 investing activities
Sub-total of cash inflows 4,852,850,683.50 8,824,547,312.34
Cash paid to acquire fixed assets, intangible assets and other long- 1,002,355,323.63 454,774,097.84 term assets
Cash paid for investments 5,008,701,481.46 8,962,156,500.00
Net increase in pledge loans
Net cash paid to acquire subsidiaries and other business 844,447,930.24 units
Cash paid relating to other investing activities
Sub-total of cash outflows from 6,855,504,735.33 9,416,930,597.84 investment activities
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Net cash flows from investment -2,002,654,051.83 -592,383,285.50 activities
III. Cash flows from financing
activities
Cash received by absorbing 4,500,000.00 investment
Including: Cash received from capital contributions by minority 4,500,000.00 shareholders of subsidiaries
Cash received from borrowings 7,397,532,268.09 5,273,716,651.77
Cash received relating to other 2,869,123,431.54 1,055,903,042.31 financing activities
Sub-total of cash inflows 10,266,655,699.63 6,334,119,694.08
Cash repayments of borrowings 6,182,589,010.66 4,996,342,896.21
Cash payments for interest expenses and distribution of 1,947,315,038.29 2,806,476,091.77 dividends or profits
Including: Dividends and profits paid to minority shareholders by 140,000,000.00 subsidiaries
Cash payments relating to other 2,585,390,176.89 688,120,066.28 financing activities
Sub-total of cash outflows 10,715,294,225.84 8,490,939,054.26
Net cash flows from financing -448,638,526.21 -2,156,819,360.18 activities
IV. Effect of foreign exchange rate changes on cash and cash 7,340,920.53 -4,278,119.36 equivalents
V. Net increase in cash and cash -440,405,331.86 -722,701,359.82 equivalents
Add: Opening balance of cash 1,495,540,791.23 2,218,242,151.05 and cash equivalents
VI. Closing balance of cash and 1,055,135,459.37 1,495,540,791.23 cash equivalents
6. Cash Flow Statement of Parent Company 157 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Monetary Unit: Yuan
Item 2019 2018
I. Cash flows from operating activities:
Cash received from sales of 1,781,267,832.02 2,780,016,427.91 goods or rendering of services
Tax refund received
Cash received relating to other 214,082,837.20 38,593,808.73 operating activities
Sub-total of cash inflows 1,995,350,669.22 2,818,610,236.64
Cash paid for purchasing goods 2,363,926,789.98 1,550,718,989.17 and receiving services
Cash paid to and on behalf of 198,115,137.37 185,245,614.74 employees
Various taxes paid 148,744,699.62 239,624,209.01
Cash paid relating to other 342,495,431.68 137,591,807.39 operating activities
Sub-total of cash outflows 3,053,282,058.65 2,113,180,620.31
Net cash flows from operating -1,057,931,389.43 705,429,616.33 activities
II. Cash flows from investing activities:
Cash received from disposal of 4,296,580,741.00 6,865,387,342.84 investments
Cash received from returns on 1,488,716,414.01 2,482,844,965.54 investments
Net cash received from disposal of fixed assets, intangible assets and 5,267,021.50 other long-term assets
Net cash received from disposal of subsidiaries and other business units
Cash received relating to other 96,721,473.04 2,003,105,206.96 investing activities
Sub-total of cash inflows 5,887,285,649.55 11,351,337,515.34
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Cash paid to acquire fixed assets, intangible assets and other long- 291,876,542.79 71,678,207.49 term assets
Cash paid for investments 5,648,944,482.46 7,998,156,500.00
Net cash paid to acquire subsidiaries and other business units
Cash paid relating to other 106,363,200.00 2,184,320,532.21 investing activities
Sub-total of cash outflows from 6,047,184,225.25 10,254,155,239.70 investment activities
Net cash flows from investment -159,898,575.70 1,097,182,275.64 activities
III. Cash flows from financing activities
Cash received by absorbing investment
Cash received from borrowings 4,230,853,970.00 3,108,523,962.95
Cash received relating to other 12,340,903,442.38 6,297,669,663.13 financing activities
Sub-total of cash inflows 16,571,757,412.38 9,406,193,626.08
Cash repayments of borrowings 4,112,012,948.00 3,517,273,223.25
Cash payments for interest expenses and distribution of 1,835,918,229.74 2,603,541,598.91 dividends or profits
Cash payments relating to other 9,764,760,558.06 5,170,384,899.41 financing activities
Sub-total of cash outflows 15,712,691,735.80 11,291,199,721.57
Net cash flows from financing 859,065,676.58 -1,885,006,095.49 activities
IV. Effect of foreign exchange rate changes on cash and cash 5,414,621.08 -1,884,370.97 equivalents
V. Net increase in cash and cash -353,349,667.47 -84,278,574.49 equivalents
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Add: Opening balance of cash 892,957,316.39 977,235,890.88 and cash equivalents
VI. Closing balance of cash and 539,607,648.92 892,957,316.39 cash equivalents
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7. Consolidated Statement of Changes in Owners’ Equity
Accrual amount of the current period Monetary Unit: Yuan 2019
Attributable to equity owners of the Parent Company
Other equity instruments Minorit Item Other Othe Total Less: Gener y compre Undistri r owner’s Capital Pref Perp Othe Capital Treasur Special Surplus al risk interest hensiv buted decr Subtotal equity stock erre etua r surplus y reserve reserve provisi s e profits ease d l decr shares ons income s shar bon ease es d s
I. Closing 663,15 478,50 6,113, 12,422,8 211,10 12,634,0 balanc 2,032,02 9,581,87 1,924,2 22,284, 963,324, 5,409.8 6,573.3 341.3 95,246.3 6,680.5 01,926.8 e of the 0,889.00 6,882.10 06.40 630.23 133.72 1 1 7 2 5 7 last year
Add: Accoun ting
policy change s
Correct ions of Prior Period Errors
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Busine ss merger under the commo n control
Other decrea ses
II. Openin g 663,15 478,50 6,113, 12,422,8 211,10 12,634,0 2,032,02 9,581,87 1,924,2 22,284, 963,324, balanc 5,409.8 6,573.3 341.3 95,246.3 6,680.5 01,926.8 0,889.00 6,882.10 06.40 630.23 133.72 e of 1 1 7 2 5 7 this year
III. Amoun t of increas e or decrea - - 172,06 1,448,03 - se in 663,15 3,460,8 11,718, 694,692, 1,437,93 97,052,0 5,098.3 9.,965.9 10,101, current 5,409.8 54.50 260.12 426.35 8,428.53 83.18 0 0 537.37 period 1 (Fill in with “-” for decrea se)
(I) 3,460,8 2,593,97 2,597,43 10,572, 2,608,00
Total 54.50 5,280.30 6,134.80 400.27 8,535.07
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(III) Capital contrib - uted by - 663,15 566,103, 4,985,8 571,089, owners 97,052,0 5,409.8 326.63 13.47 140.10 and 83.18 1 capital decrea ses
1. Com mon shares investe d by owners
2. Capi tal investe d by other equity instrum ent holders
3. Amo unt of - - - share- 95,726,7 95,726,7 95,726,7 based 60.79 60.79 60.79 payme nts
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4. Othe - - r 663,15 661,830, 4,985,8 666,815, 1,325,32 decrea 5,409.8 087.42 13.47 900.89 2.39 ses 1
(III) - 172,06 - - - Distribu 1,727,21 5,098.3 1,899,28 26,329, 1,753,54 tion of 7,755..6 0 2,853.95 600.00 7,355.65 profits 5
1. Surp 172,06 - lus 5,098.3 172,065, reserve 0 098.30 drawn
2. Gen eral risk provisi on drawn
3. Distri butions to - - - - owners 1,727,21 1,727,21 26,329, 1,753,54 (or 7,755.65 7,755.65 600.00 7,355.65 shareh olders)
4. Othe r decrea
164 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. ses
(IV) Internal carry- forward of owners ’ equity
1. Capi tal reserve transfe rred to paid-in capital (or capital stock)
2. Surp lus reserve transfe rred to paid-in capital (or capital stock)
3. Rec overy of losses by surplus
165 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. reserve
4. Cha nges in the defined benefit plan for carry- over retaine d earning s
5. Othe r compre hensiv e earning s carried forward to retaine d earning s
6. Othe r decrea ses
(V) 11,718, 11,718,2 669,84 12,388,1
Special 260.12 60.12 8.89 09.01
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reserve s
1. Amo unt 123,52 drawn 123,520, 6,331,3 129,851, 0,231.3 in the 231.32 32.99 564.31 2 current period
2. Amo unt 111,80 used in 111,801, 5,661,4 117,463, 1,971.2 the 971.20 84.10 455.30 0 current period
(VI)
Other
4. Ending 650,57 6,113, 13,870,9 201,00 14,071,9 balanc 2,032,02 9,484,82 5,385,0 34,002, 1,658,01 1,671.6 341.3 35,212.2 5,143.1 40,355.4 e of 0,889.00 4,798.92 60.90 890.35 6,560.07 1 7 2 8 0 current period
Amount of the last period Monetary Unit: Yuan 2018 Item Attributable to equity owners of the Parent Company
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Other equity instruments Othe Other Gener Minorit Less: Undistrib r Total Capital Pref Othe Capital compre Special Surplus al risk y Treasur uted decr Subtotal owner’s stock erre Perp r surplus hensive reserve reserve provisi interest y shares profits ease equity d etual decr income ons s s shar bond ease es s
I. Closing - 2,032,09 9,640,99 586,589 86,963, 303,909 5,360, 1,409,92 12,886,66 447,544 13,334,20 balance 5,988,8 5,439.00 0,354.09 ,206.78 901.73 ,289.50 038.64 1,162.39 2,146.51 ,364.23 6,510.74 of the 32.06 last year
Add: Account ing policy changes
Correcti ons of Prior Period Errors
Busines s merger under the commo n control
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Other decreas es
II. Opening - 2,032,09 9,640,99 586,589 86,963, 303,909 5,360, 1,409,92 12,886,66 447,544 13,334,20 balance 5,988,8 5,439.00 0,354.09 ,206.78 901.73 ,289.50 038.64 1,162.39 2,146.51 ,364.23 6,510.74 of this 32.06 year
III. Amount of increase or decreas ------e in 76,566, 7,913,0 174,597 753,30 74,550.0 59,113,4 64,679, 446,597, 463,766,9 236,437 700,204,5 current 203.03 38.46 ,283.81 2.73 0 71.99 271.50 028.67 00.19 ,683.68 83.87 period (Fill in with “-” for decreas e)
(I) Total compre 7,913,0 2,285,72 2,293,641 34,508, 2,328,150 hensive 38.46 8,663.61 ,702.07 788.26 ,490.33 income
(III) Capital ------contribu 76,566, 1,273,6 74,550.0 59,113,4 118,632, 253,113,3 124,139 377,252,8 ted by 203.03 06.21 0 71.99 708.49 27.30 ,474.49 01.79 owners and
169 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. capital decreas es
1. Commo - - - n shares 4,500,0 4,500,000 74,550.0 147,396. 221,946 investe 00.00 .00 0 00 .00 d by owners
2. Capital investe d by other equity instrum ent holders
3. Amo unt of share- based - - - paymen 64,964,6 64,964,65 64,964,65 ts 52.77 2.77 2.77 include d in owners’ equity
4. Other - - - - 5,998,57 76,788, 1,273,6 decreas 118,632, 118,148,6 128,639 316,788,1 6.78 149.03 06.21 es 708.49 74.53 ,474.49 49.02
170 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
(III) - - - - Distribu 174,597 753,30 2,613,69 2,438,342 140,000 2,578,342 tion of ,283.81 2.73 2,983.79 ,397.25 ,000.00 ,397.25 profits
1. Appropr 174,597 174,597, iation of ,283.81 283.81 surplus reserve
2. Gene - ral risk 753,30 753,302. provisio 2.73 73 n drawn
3. Distri butions to - - - - owners 2,438,34 2,438,342 140,000 2,578,342 (or 2,397.25 ,397.25 ,000.00 ,397.25 shareho lders)
4. Other decreas es
(IV) Internal carry- forward of owners’ equity
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1. Capital (or stock) transfer red from capital surplus
2. Surpl us reserve transfer red to paid-in capital (or capital stock)
3. Reco very of losses by surplus reserve
4. Chan ges in the defined benefit plan for carry- over
172 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. retained earning s
5. Other compre hensive earning s carried forward to retained earning s
6. Other decreas es
(V) - - - - Special 65,952, 65,952,87 6,806,9 72,759,87 reserves 877.71 7.71 97.45 5.16
1. Appropr iations 40,838, 40,838,46 40,838,46 in the 465.06 5.06 5.06 current period
2. Amo unt - - - 6,806,9 used in 106,791 106,791,3 99,984,34 97.45 the ,342.77 42.77 5.32 current
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period
(VI)
Other
4. Ending balance 2,032,02 9,581,87 663,155 1,924,2 22,284, 478,506 6,113, 963,324, 12,422,89 211,106 12,634,00
of 0,889.00 6,882.10 ,409.81 06.40 630.23 ,573.31 341.37 133.72 5,246.32 ,680.55 1,926.87 current period
8. Statement of Changes in Owners’ Equity of Parent Company
Accrual amount of the current period Monetary Unit: Yuan 2019
Other equity instruments Other Item Less: Other Total Capital Prefer Capital comprehe Special Surplus Undistribut Perpe Other Treasury decrea owner’s stock red surplus nsive reserve reserve ed profits tual decrea shares ses equity share income bond ses s
I. Closing balance 2,032,020, 9,572,892, 663,155,4 478,506,5 254,102,28 11,674,366,
of the last 889.00 476.05 09.81 73.31 0.45 809.00 year
Add: Accountin
g policy changes
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Correctio ns of Prior Period Errors
Other decrease s
II. Opening 2,032,020, 9,572,892, 663,155,4 478,506,5 254,102,28 11,674,366, balance 889.00 476.05 09.81 73.31 0.45 809.00 of this year
III. Amount of increase or - - - 172,065,0 560,861,876 decrease 95,726,760 663,155,4 178,631,87 98.30 .34 in current .79 09.81 0.98 period (Fill in with “-” for decrease)
(I) Total comprehe 1,720,650, 1,720,650,9 nsive 982.97 82.97 income
(III) Capital - - 567,428,649 contribute 95,726,760 663,155,4 .02 d by .79 09.81 owners
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1. Common shares invested by owners
2. Capital invested by other equity instrumen t holders
3. Amoun t of share- based - - payments 95,726,760 95,726,760. included .79 79 in owners’ equity
4. Other - 663,155,409 decrease 663,155,4 .81 s 09.81
(III) - - Distributio 172,065,0 1,899,282, 1,727,217,7 n of 98.30 853.95 55.65 profits
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1. Appropria - 172,065,0 tion of 172,065,09 98.30 surplus 8.30 reserve
2. Distributio ns to - - owners 1,727,217, 1,727,217,7 (or 755.65 55.65 sharehold ers)
3. Other decrease s
(IV) Internal carry- forward of owners’ equity
1. Capital (or stock) transferre d from capital surplus
2. Surplus reserve transferre d to paid- in capital (or capital
177 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. stock)
3. Recove ry of losses by surplus reserve
4. Chang es in the defined benefit plan for carry-over retained earnings
5. Other comprehe nsive earnings carried forward to retained earnings
6. Other decrease s
(V) Special reserves
1. Appropria 13,217,9 13,217,938. tions in 38.12 12 the
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current period
2. Amoun t used in 13,217,9 13,217,938. the 38.12 12 current period
(VI) Other
4. Ending balance 2,032,020, 9,477,165, 650,571,6 75,470,409 12,235,228,
of current 889.00 715.26 71.61 .47 685.34 period
Amount of the last period Monetary Unit: Yuan 2018
Other equity instruments Other Item Less: Other Total Capital Prefer Capital comprehe Special Surplus Undistribut Perpe Other Treasury decrea owner’s stock red surplus nsive reserve reserve ed profits tual decrea shares ses equity share income bond ses s
I. Closing balance 2,032,095, 9,638,004, 586,589,2 303,909,2 1,121,069, 12,508,489,
of the last 439.00 524.82 06.78 89.50 123.42 169.96 year
Add:
Accountin
179 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. g policy changes
Correctio ns of Prior Period Errors
Other decrease s
II. Opening 2,032,095, 9,638,004, 586,589,2 303,909,2 1,121,069, 12,508,489, balance 439.00 524.82 06.78 89.50 123.42 169.96 of this year
III. Amount of increase or - - - 76,566,20 174,597,2 decrease -74,550.00 65,112,048 866,966,84 834,122,360 3.03 83.81 in current .77 2.97 .96 period (Fill in with “-” for decrease)
(I) Total comprehe 1,745,972, 1,745,972,8 nsive 838.09 38.09 income
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(III) Capital contribute d by - - 76,566,20 owners -74,550.00 65,112,048 141,752,801 3.03 and .77 .80 capital decrease s
1. Common - shares - -74,550.00 221,946.0 invested 147,396.00 0 by owners
2. Capital invested by other equity instrumen t holders
3. Amount of share- - - based 64,964,652 64,964,652. payments .77 77 recorded in owners’ equity
- 76,788,14 4. Others 76,788,149. 9.03 03
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(III) - - Distributio 174,597,2 2,612,939, 2,438,342,3 n of 83.81 681.06 97.25 profits
1. Appropria - 174,597,2 tion of 174,597,28 83.81 surplus 3.81 reserve
2. Distributio ns to - - owners 2,438,342, 2,438,342,3 (or 397.25 97.25 sharehold ers)
3. Others
(IV) Internal carry- forward of owners’ equity
1. Capital (or stock) transferre d from capital surplus
2. Capital (or stock) transferre
182 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. d from surplus reserve
3. Recovery of losses by surplus reserve
4. Change in the defined benefit plan for carry-over retained earnings
5. Other comprehe nsive earnings carried forward to retained earnings
6. Others
(V) Special reserves
1. 14,897,2 14,897,224.
Appropria 24.12 12
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2. Amount used in 14,897,2 14,897,224. the 24.12 12 current period
(VI) Other
4. Ending balance 2,032,020, 9,572,892, 663,155,4 478,506,5 254,102,28 11,674,366, of current 889.00 476.05 09.81 73.31 0.45 809.00 period
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12.3 III. Company Overview (I) Company profile
Chinese name of Lomon Billions Group Co., Ltd. (hereinafter referred to as “Company” or
“the Company”) was changed from “Henan Billions Chemicals Co., Ltd. (河南佰利联化学股
份有限公司)” to “Lomon Billions Group Co., Ltd.(龙蟒佰利联集团股份有限公司)” in February
2017. The Company was formerly known as Jiaozuo Chemical General Factory. Jiaozuo
Chemical General Factory, established in 1975, was restructured into a joint-stock cooperative enterprise by Union Committee of Jiaozuo Chemical General Factory, XU Gang and other 12 natural persons in 1998 upon approval by the Notice on Approving
Restructuring Joint-stock Cooperative System of Jiaozuo Chemical General Factory issued by Jiaozuo City Economic and Trade Commission (J. J. M. Q. Z. (1998) No. 78); on Nov. 1,
2001, the board of shareholders of Jiaozuo Chemical General Factory reviewed and approved to restructure Jiaozuo Chemical General Factory into a limited liability company with a registered capital of RMB 18.5 million and changed its name to Jiaozuo Haoke
Chemical Co., Ltd..
On Jul. 1, 2002, Jiaozuo Haoke Chemical Co., Ltd. changed its name registered with Henan
Administration for Industry and Commerce to Henan Billions Chemicals Co., Ltd. with registered capital of RMB 52.1629 million according to the Reply on Change in
Establishment of Henan Billions Chemicals Co., Ltd. (Y. G. P. Z. [2002] No. 07) issued by
Henan Provincial People’s Government. In 2007, two capital increases were made, and registered capital was changed to RMB 70 million.
Upon review and approval of Reply on Approval of Initial Public Offering of Henan Billions
Chemicals Co., Ltd. (Z. J. X. K. [2011] No. 1016) issued by China Securities Regulatory
Commission, the Company was agreed to publicly issued 24 million RMB common share to the public. Registered capital after the change was RMB 94 million and the paid-up share 185 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. capital was RMB 94 million. In 2012, the Company distributed 10 shares for every 10 shares to all shareholders in the form of capital reserve, as a result of which total share capital after such distribution increased to 188 million shares.
According to relevant provisions of the Proposal on Relevant Matters Concerning the Grant of Restricted Stock Incentive Plan reviewed and passed by the 21st meeting of the 4th board of directors on May 22, 2013, the Company issued 3.515 million restricted stocks to its incentive objects, as a result of which its total share capital after the issuance increased to
191.515 million shares. According to relevant provisions of the Proposal on Repurchasing and Cancelling Partially Restricted Stocks reviewed and approved at the 26th meeting of the 4th board of directors held on Feb. 28, 2014, the Company repurchased and cancelled some of the restricted stocks that were granted to incentive objects but not yet unlocked as the annual operating results in 2013 did not meet the unlocking conditions and did not meet the incentive conditions. After completion of the repurchase and cancellation on May 20,
2014, total share capital of the Company was changed from 191,155,000 shares to
190,402,400 shares.
According to relevant provisions of the Proposal on Granting Reserved and Restricted
Stocks to Incentive Objects reviewed and approved at the 27th meeting of the 4th board of directors of the Company held on Mar. 19, 2014, the Company issued 390,000 restricted stocks to incentive objects, as a result of which total share capital after the issuance increased from 190,402,400 shares to 190,792,400 shares.
According to relevant provisions of the Proposal on Granting Restricted Stocks to Incentive
Objects reviewed and approved at the 11th meeting of the 5th board of directors of the
Company held on Apr. 24, 2015, the Company issued 15.005 million restricted stocks to its incentive objects, as a result of which its total share capital after the issuance increased from 190,792,400 shares to 205,797,400 shares. 186 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
According to relevant provisions of the Proposal on Repurchasing and Cancelling Partially
Restricted Stocks reviewed and approved at the 9th meeting of the 5th board of directors held on Mar. 13, 2015, the Company repurchased and cancelled 1,373,200 restricted stocks that were granted to incentive objects but not yet unlocked as the annual operating results in 2014 did not meet the unlocking conditions and did not meet the incentive conditions.
After completion of the repurchase and cancellation on Jun. 19, 2015, total share capital of the Company was decreased from 205,797,400 shares to 204,424,200 shares.
According to relevant provisions of the Proposal on Repurchasing and Cancelling Partially
Restricted Stocks reviewed and approved at the 19th meeting of the 5th board of directors and the 18th meeting of the 5th board of supervisors on Feb. 25, 2016, the Company repurchased and cancelled 421,000 restricted stocks that were granted to incentive objects but not yet unlocked as the annual operating results in 2015 did not meet the unlocking conditions and did not meet the incentive conditions.
According to the Proposal on Profit Distribution and Transfer of Capital Reserve into Share
Capital in 2015 reviewed and approved at the 19th meeting of the 5th board of directors and the general meeting of 2015 held on Feb. 27, 2016 and Mar. 22, 2016 respectively, the
Company allocated cash dividends of RMB3.50 (including tax) for every 10 shares to all shareholders based on the Company’s total share capital of 204,424,200 shares at the end of 2015, and at the same time further allocated 25 shares for every 10 shares to all shareholders by means of transfer of capital reserve into share capital and based on the
Company’s total share capital of 204,424,200 shares at the end of 2015. The above- mentioned equity distribution plans were completely implemented on Apr. 27, 2016. After the implementation of this plan, the Company’s total share capital increased from
204,424,200 shares to 715,484,700 shares.
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As confirmed by China Securities Depository and Clearing Corporation Limited Shenzhen
Branch, the restrictive stocks granted to incentive objects but not yet unlocked in the third- phase restricted stocks for the first phase, reserved second-phase stocks and restricted stocks in 2015 were completely repurchased and cancelled on Jul. 28, 2016, and after the
Company’s implementation of 2015 Equity Distribution Plan, number of shares repurchased and cancelled was 4,973,500.00 shares and total share capital of the Company was changed from 715,484,700 shares to 710,511,200 shares.
As reviewed and approved by the Reply on Approval of Non-public Issuance of Shares by
Henan Billions Chemicals Co., Ltd. (Z. J. X. K. [2016] No. 899) issued by China Securities
Regulatory Commission, the Company non-publicly issued 1,321,653,539 RMB ordinary shares (A shares) to 9 subscribers with a par value of RMB1.00 per share and an issue price of RMB7.62 per share. As at Sep. 2, 2016, the Company non-publicly issued 1,321,653,539
RMB ordinary shares (A shares) to specific targets and raised a total of
RMB10,070,999,967.18. After deducting underwriting and sponsorship expenses of
RMB106,000,000.00, the Company actually raised RMB9,964,999,967.18. After deducting other issuance expenses totalling RMB4,962,165.35, net amount of the funds actually raised by the Company was RMB9,960,037,801.83. The above-mentioned funds were verified by
BDO China Shu Lun Pan Certified Public Accountants (Special General Partnership) which issued the Capital Verification Report numbered X. K. S. B. Z. [2016] No. 711952. The
Company’s non-publicly issued shares were listed on Sep. 20, 2016, as a result of which the Company’s total share capital changing from 710,511,200 shares to 2,032,164,739 shares.
The extraordinary general meeting held on Feb. 10, 2017 reviewed and approved to change company name and stock name of the Company by changing Chinese name of the
Company from “Henan Billions Chemicals Co., Ltd.(河南佰利联化学股份有限公司)” to
188 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
“Lomon Billions Group Co., Ltd.(龙蟒佰利联集团股份有限公司)”, changing English name of the Company from “Henan Billions Chemicals Co., Ltd.” to “Lomon Billions Group Co., Ltd.”, changing Chinese abbreviation of the Company from “Billions” to “Lomon Billions” and changing stock name from “Billions(佰利联)” to “Lomon Billions(龙蟒佰利)”. On Feb. 16,
2017, Upon review and approval by Jiaozuo Administration for Industry and Commerce, the
Company completed the formalities for industrial and commercial alteration of company name, and obtained the Business License of Lomon Billions Group Co., Ltd. which was issued by Jiaozuo Administration for Industry and Commerce with unified social credit code of 91410800173472241R.
As confirmed by China Securities Depository and Clearing Corporation Limited Shenzhen
Branch, 69,300 second-phase restrictive stocks granted to incentive objects but not yet unlocked in the restricted stocks of 2015 were completely repurchased and cancelled on
Jun. 21, 2017, as a result of which total share capital of the Company was changed from
2,032,164,739 shares to 2,032,095,439 shares.
As confirmed by China Securities Depository and Clearing Corporation Limited Shenzhen
Branch, 74,550 third-phase restrictive stocks granted to the third batch of incentive objects but not yet unlocked in the restricted stocks of 2015 were completely repurchased and cancelled on Jun. 22, 2018, as a result of which the Company’s total share capital was changed from 2,032,095,439 shares to 2,032,020,889 shares.
According to the Proposal on Reducing Registered Capital and Amending the “Articles of
Association” which was reviewed and approved at the 8th meeting of the 6th Board of
Directors and the 2017 annual general meeting held by the Company on Mar. 30, 2018 and
Apr. 23, 2018 respectively, the Company completed the formalities for industrial and commercial registration and obtained the Business License which was renewed by Jiaozuo
189 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Administration for Industry and Commerce on Jul. 17, 2018 with unified social credit code of
91410800173472241R.
Legal representative: XU Gang;
Registered capital: RMB two billion thirty-two million twenty thousand eight hundred and eighty-nine only; domicile of the Company: Fengfeng Sub-district Office, Zhongzhan District.
Business scope: Import and export of self-produced products and related technologies; production and sales of chemical products (excluding chemical dangerous goods and flammable and explosive materials); sales of iron and fertilizer; production (with production capacity of 600,000 tonnes/year (production site: in Billions Park in Zhongzhan District)) and sales of sulfuric acid (only sales of own sulfuric acid products within the scope of the factory); production of antimony oxide; lease of equipment, real estate and land, except for the goods and technologies that are restricted by state for sale or prohibited by the state for import and export. (Those business activities which cannot be carried out without approval according to law shall not be carried unless approval from relevant department is obtained).
These Financial Statements were disclosed after being approved by the Company’s Board of Directors on Mar. 23, 2020.
(2) Scope of consolidated financial statements
As at Dec. 31, 2019, the subsidiaries within the scope of the consolidated financial statements of the Company are as follows:
Subsidiary name
Jiaozuo Bailiyuan Reservoir Management Co., Ltd. (hereinafter referred to as “Bailiyuan Reservoir”)
Jiaozuo City Zhongzhan District Yili Microfinance Co., Ltd. (hereinafter referred to as “Yili Microfinance”)
Billions (Hong Kong) Co., Ltd. (hereinafter referred to as “Billions (Hong Kong)”)
Billions Europe Ltd. (hereinafter referred to as “Billions Europe”)
190 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
BILLIONS AMERICA CORPORATION (hereinafter referred to as “Billions America”)
Henan Rongjia Scandium Vanadium Technology Co., Ltd. (hereinafter referred to as “Rongjia Scandium and Vanadium”)
Henan Longxiangshan Tourism Development Co., Ltd. (hereinafter referred to as “Longxiangshan Tourism”)
Jiaozuo Billions United Pigment Co., Ltd. (hereinafter referred to as “United Pigment”)
Henan Billions New Material Co., Ltd. (hereinafter referred to as “Billions New Material”)
Lomon Billions Sichuan Titanium Industry Co., Ltd. (hereinafter referred to as “Longbai Titanium Industry”)
Sichuan Lomon Mining and Metallurgy Co., Ltd. (hereinafter referred to as “Lomon Mining and Metallurgy”)
Panzhihua Dragon Python Mineral Products Co., Ltd. (hereinafter referred to as “Dragon Python Mineral Products”)
Xiangyang Lomon Titanium Industry Co., Ltd. (hereinafter referred to as “Xiangyang Lomon”)
Lomon US Ltd. (hereinafter referred to as “Lomon US”)
Billions Finance Lease (Guangzhou) Co., Ltd. (hereinafter referred to as “Finance Lease”)
Panzhihua Ruierxin Industry and Trade Co., Ltd. (hereinafter referred to as “Ruierxin”)
Henan Lomon Billions Intelligent Equipment Manufacturing Co., Ltd. (hereinafter referred to as “Lomon Billions Intelligent”)
Yunnan Metallurgical Xinli Titanium Co., Ltd. (hereinafter referred to as “Xinli Titanium”)
Notes:
(1) Sichuan Lomon Titanium Industry Co., Ltd., a subsidiary of the Company, was renamed as Lomon Billions Sichuan Titanium Industry Co., Ltd.
(2) Jiaozuo Rongjia Scandium Industry Science & Technology Co., Ltd., a subsidiary of the
Company, was renamed as Henan Rongjia Scandium Vanadium Technology Co., Ltd.
For details of the scope of the consolidated financial statements and corresponding changes in the current period, please refer to “VI. Changes in the scope of consolidation” and “VII.
Rights and interests in other entities” in the Notes.
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12.4 IV. Basis of Preparation for Financial Statements 1. Preparation basis
The financial statements are prepared by the Company on the basis of on-going business and in accordance with the Enterprise Accounting Standards - Basic Standards promulgated by the Ministry of Finance and various specific corporate accounting standards, application guidelines for business accounting standards, corporate accounting standards interpretation and other relevant provisions (hereinafter collectively referred to as “enterprise accounting standards”) and the provisions on disclosure set out in the Preparation Rules for Information
Disclosure by Companies Offering Securities to the Public No. 15 - General Provisions on
Financial Reports issued by China Securities Regulatory Commission.
2. Going concern
The Company has the ability to continue as a going concern for 12 months from the end of the reporting period and there is no major event that affects its ability to continue as a going concern.
12.5 V. Significant Accounting Policies and Accounting Estimates Tips for specific accounting policies and accounting estimates:
None
1. Statement of compliance to Accounting Standards for Business Enterprises
The financial statements prepared by the Company are in compliance with the requirements of the Accounting Standards for Business Enterprises, and truly and completely reflect financial status, operating results, cash flow and other information of the Company during the reporting period.
2. Accounting period
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Every accounting period is from January 1 to December 31.
3. Operating cycle
The Company’s operating cycle is 12 months.
4. Recording Currency
The Company adopts RMB as its recording currency, and overseas subsidiaries adopt USD as their recording currency.
5. Accounting treatment method for business combination under the same control and not under the same control
Business combination under common control: The assets and liabilities acquired by the combined party in business combination shall be measured based on carrying amount of the merged party’s assets and liabilities (including goodwill formed by the ultimate controlling party’s acquisition of the merged party) in the ultimate controlling party’s consolidated financial statements on the date of combination. The difference between book value of the net assets acquired in merger and book value of the merger consideration paid (or total par value of the shares issued) shall be taken into account in adjusting equity premium in capital reserve; if the capital reserve is insufficient for offset, the retained earnings shall be adjusted.
Business combination not under the same control: The assets paid by and the liabilities incurred or assumed by the acquirer on the purchase date as the consideration for business combination shall be measured at fair value, and the difference between fair value and carrying amount shall be included in current profit or loss. The difference between merger cost and the share of fair value of the identifiable net assets of the acquiree acquired in the merger (if the former is higher than the latter) is recognized as goodwill; the difference between merger cost and fair value of the identifiable net assets of the acquiree obtained in the merger (if the former is lower than the latter) shall be included in the current profit and loss. 193 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Direct related expenses incurred for business combination are included in the current profit or loss when incurred; the transaction costs of issuing equity securities or debt securities for business combination are included in the initial recognition amount of equity securities or debt securities.
6. Method for preparing consolidated financial statements
Scope of consolidation
Scope of consolidation of the Company’s consolidated financial statements shall be determined on the basis of control, and all subsidiaries (including those that may be divided and are controlled by the Company) shall be included in consolidation scope of the consolidated financial statements.
Consolidation procedures
The consolidated financial statements were prepared by the Company based on financial statements of itself and its subsidiaries and with reference to other relevant materials. When preparing the consolidated financial statements, the Company regards the entire group as an accounting entity, and refers to confirmation, measurement and presentation requirements of relevant enterprise accounting standards and complies with unified accounting policies, in order to reflect overall financial situation, operating results and cash flow of the Company.
The accounting policies and accounting periods adopted by all subsidiaries included in the consolidated financial statements are consistent with those adopted by the Company. If the accounting policies and accounting periods adopted by subsidiaries are inconsistent with those adopted by the Company, necessary adjustments shall be made in accordance with the Company’s accounting policies and accounting periods when preparing the consolidated financial statements. For a subsidiary acquired by business combination not under the same 194 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. control, its financial statements shall be adjusted based on fair value of its identifiable net assets at the acquisition date. For a subsidiary acquired by business combination under the same control, its financial statements shall be adjusted based on book value of its assets and liabilities (including goodwill formed by the ultimate controlling party’s acquisition of the subsidiary) in financial statements of the ultimate controlling party.
The shareholder’s equity, current net profit or loss and comprehensive income of the current period of subsidiaries shall be separately listed under the owner’s equity item in consolidated balance sheet, under the net profit item in consolidated income statement and under the comprehensive income item. The current loss shared by minority shareholders of subsidiaries exceeds the balance of minority shareholder’s share of owner’s equity in subsidiaries at the beginning, which offsets minority shareholders’ equity.
(1) Increase of subsidiaries or business
During the reporting period, if a subsidiary or business is added due to business combination under the same control, opening balance of consolidated balance sheet shall be adjusted; income, expenses and profits of the subsidiary or business combination from the beginning of the period to the end of the reporting period shall be included in consolidated income statement; cash flows of the subsidiary or business combination from the beginning of the period from the beginning to the end of the reporting period shall be included in consolidated cash flow statement, and related items in comparative statement shall be adjusted, as a result of which the combined reporting entity shall be considered to be always exist from the time when the ultimate controlling party begins to take control.
During the reporting period, if any subsidiary or business is added due to business combination not under the same control, opening balance of consolidated balance sheet shall not be adjusted; income, expenses and profits of the subsidiary or business from the date of purchase to the end of the reporting period shall be included in consolidated income 195 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. statement, and cash flow of the subsidiary or business from the date of purchase to the end of the reporting period shall be included in consolidated cash flow statement.
(2) Disposal of subsidiaries or businesses
① General treatment method
If the Company disposes of any subsidiary or business during the reporting period, the income, expenses and profits of the subsidiary or business from the beginning of the period to the disposal date shall be included in consolidated income statement; and cash flows of the subsidiary or business from the beginning to the disposal date shall be included in consolidated cash flow statement.
If the control of the investee is lost due to disposal of part of the equity investment or other reasons, the Company shall re-measure the remaining equity investment after the disposal according to its fair value on the date of loss of control. The difference between the sum of the consideration obtained from equity disposal and fair value of remaining equity, and the sum of the share of net assets that shall be continuously calculated from the original subsidiary’s acquisition date or merger date and goodwill calculated based on original shareholding ratio, shall be included in investment income of the current period when control is lost. Other comprehensive income related to original subsidiary’s equity investment or other changes in owner’s equity other than net profit or loss, other comprehensive income and profit distribution shall be included in current investment income when control is lost, except for other comprehensive income arising from remeasurement of the net benefit or net assets of the defined benefit plan by the investee.
If shareholding ratio of the Company is reduced due to increase of capital by other investors to subsidiaries, leading to further loss of control, accounting treatment shall be carried out in accordance with the above principles.
② Disposal of subsidiaries by stages 196 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
If equity investment in a subsidiary is disposed of in stages through multiple transactions until loss of control, and the terms, conditions and economic impacts of each transaction in which equity investment in the subsidiary is disposed meet one or more of the following conditions, it is usually indicated that the multiple transactions shall be accounted for as a package transaction:
i. These transactions are concluded at the same time or by taking into consideration of each other’s impacts. ii. These transactions as a whole can achieve a complete business result. iii. The occurrence of one of the transactions depends on the occurrence of at least one other transaction. iv. One of the transactions is not economical on its own, but it is economical when considered together with other transactions.
If the transactions conducted to dispose of equity investment in a subsidiary until loss of control shall be taken as a package transaction, the Company shall treat each transaction as a transaction that disposes of the subsidiary and leads to loses control; however, the difference between each disposal price and the share in net assets of the subsidiary corresponding to the investment disposal before loss of control, shall be recognized as other comprehensive income in the consolidated financial statements, and shall also be included in profit and loss of the current period when the control is lost.
If the transactions conducted to dispose of equity investment in a subsidiary until loss of control are deemed as a package transaction, relevant policies based on which equity investment in the subsidiary is partially disposed of without losing control shall be followed for accounting treatment before loss of control; in the event of loss of control, accounting treatment shall be carried out in accordance with general accounting treatment methods of the subsidiary subject to the investment disposal. 197 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
(3) Purchase of minority equity in subsidiaries The difference between long-term equity investment newly acquired by the Company as a result of purchase of minority equity and the share of the net assets of subsidiaries that are continuously calculated from the date of purchase (or the combination date) in accordance with new shareholding ratio, shall be taken into account in adjusting equity premium of capital reserve in the consolidated balance sheet; if capital premium of capital reserve is insufficient for offset, the retained earnings shall be adjusted.
(4) Partial disposal of equity investments in subsidiaries without loss of control The difference between disposal price obtained by partial disposal of long-term equity investment in subsidiaries without loss of control and the share of the net assets of subsidiaries that are continuously calculated from the date of purchase or the combination date as a result of disposing of long-term equity investment, shall be taken into account in adjusting equity premium of capital reserve in the consolidated balance sheet; if capital premium of capital reserve is insufficient for offset, the retained earnings shall be adjusted.
7. Classification of joint arrangement and accounting treatment methods for joint operation
Joint venture arrangements are divided into joint operation and joint venture.
If the Company is a joint venture party of joint arrangement and enjoys relevant assets of the arrangement and bears relevant liabilities of the arrangement, it constitutes a joint operation. The Company confirms the following items related to the Company in the share of interest in joint operation, and carries out accounting treatment in accordance with relevant accounting standards:
(1) Its assets, including its share of any assets held jointly.
(2) Its liabilities, including its share of any liabilities incurred jointly.
(3) Its revenue from the sale of its share of the output arising from the joint operation. 198 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
(4) Its share of the revenue from the sale of the output by the joint operation; and
(5) Its expenses, including its share of any expenses incurred jointly.
8. Determination standards for cash and cash equivalents
When preparing the cash flow statement, the Company’s cash on hand and deposits that can be used for payment at any time shall be recognized as cash. Any investment that is short-term (due within three months from the date of purchase), highly liquid and readily convertible into a known amount of cash and has a small risk of changes in value, shall be recognized as cash equivalent.
9. Foreign currency transactions and translation of foreign currency financial statements
Foreign currency transactions
Foreign currency transactions in foreign currencies shall be converted into amount in RMB for bookkeeping based on spot exchange rate on the transaction date.
On the balance sheet date, monetary items in foreign currencies shall be converted at spot exchange rate on the balance sheet date. The resulting exchange differences, except for exchange differences arising from special foreign currency borrowings related to acquisition and construction of assets eligible for capitalization shall be treated in accordance with the principle of capitalization of borrowing costs, shall be included in current loss and profit.
Translation of foreign currency financial statements
The asset and liability items in the balance sheets are translated at the spot exchange rates on the balance sheet date. Among the owners’ equity items, the items other than
“undistributed profits” are translated at the spot exchange rates of the transaction dates.
Income and expense items in the income statement shall be translated at spot exchange rate on the date of transaction.
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When an overseas operation is disposed of, the foreign currency financial statements related to the overseas operation shall be subject to conversion of difference and included in current profit and loss sine owner’s equity is transferred for disposal.
10. Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
Classification of financial instruments
Accounting policy applicable as of Jan. 1, 2019
In line with the Company’s business mode for managing financial assets and the contract cash flow characteristics of financial assets, financial assets at initial recognition shall be classified into: (1) financial assets measured at amortized cost, (2) financial assets (debt instruments) that are measured at fair value and whose changes are included in other comprehensive earnings, and (3) financial assets that are measured at fair value and whose changes are included in current gains and losses.
To be specific, (1) where the business mode is to collect the contract cash flow and the contract cash flow is only for the payment of the principal and the interest based on the outstanding principal amount, the financial assets shall fall into the category of the assets measured at amortized cost; (2) where the business mode is both to collect the contract cash flow and sell the financial assets and the contract cash flow is only for the payment of the principal and interest based on the outstanding principal amount, the financial assets shall fall into the category of the assets (debt instruments) that are measured at fair value and whose changes are included in other comprehensive earnings; and (3) other financial assets shall be classified as financial assets that are measured at fair value and whose changes are included in current gains and losses.
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For the investments of non-trading equity instruments, the Company determines, at initial recognition, whether to designate those investments as financial assets (equity instruments) measured at fair value and whose changes are included in other comprehensive earnings.
At initial recognition, the Company may designate financial assets as the assets that are measured at fair value and whose changes are included in current gains and losses to eliminate or significantly reduce accounting mismatches.
Financial liabilities, at initial recognition, shall be classified into (1) financial liabilities that are measured at fair value and whose changes are included in current gains and losses, and
(2) financial liabilities measured at amortized cost.
Financial liabilities shall not be designated at the initial measurement as such liabilities as are measured at fair value and whose changes are included in current gains and losses, unless any of the following conditions is met:
(1) Where such designation can eliminate or significantly reduce accounting mismatches.
(2) Where financial liability portfolio or financial assets and financial liability portfolio is managed and is subject to performance evaluation on the basis of fair value and is reported to key management personnel in the enterprise on this basis as per enterprise risk management or investment strategy set forth in formal written documents.
(3) Where such financial liability contains embedded derivatives that need to be separated.
Accounting policy applicable prior to Jan. 1, 2019
Financial assets or liabilities are classified into the following categories at initial recognition: financial assets or liabilities at fair value through profit or loss, including trading financial assets or liabilities and those financial assets or liabilities designated to be measured fair value through profit or loss; held-to-maturity investments; receivables; available-for-sale financial assets; and other financial abilities.
Recognition and measurement of financial instruments 201 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Accounting policy applicable as of Jan. 1, 2019
(1) Financial assets measured at amortized cost
Financial assets measured at amortized cost, including, but not limited to, notes receivable, accounts receivable, other receivables, long-term receivables and debt investments, shall be initially measured at fair value, and relevant transaction costs shall be included in the initially recognized amount; receivables containing no significant financing components and receivables that the Company decides not to consider financing components for no more than one year shall be initially measured at the contract transaction price.
The interests calculated by the effective-interest method during the holding period shall be included in the current gains and losses.
The difference between the price obtained and the book value of the financial assets shall be included in gains or losses for the current period at recovery or disposal.
(2) Financial assets (debt instruments) that are measured at fair value and whose changes are included in other comprehensive earnings
Financial assets (debt instruments) that are measured at fair value and whose changes are included in other comprehensive earnings, including receivables financing and other investments on bonds, shall be measured at fair value with relevant transaction fees incurred included in the amount initially recognized. The financial assets shall be subsequently measured at fair value and have the changes in their fair value to be included in other comprehensive earnings except for interest, impairment loss or gain and exchange gain or loss calculated by the effective-interest method.
Upon derecognition, accumulated gains or losses previously included in other comprehensive income shall be transferred out from other comprehensive income and included in current profit and loss.
(3) Financial assets (equity instrument) measured at fair value and with its changes included in other comprehensive income 202 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Financial assets (equity instrument) that measured at fair value with its changes included in other comprehensive income, including other equity instruments investments, shall be measured at fair value with relevant transaction fees incurred included in the amount initially recognized. Subsequent measurement of the financial asset shall be done based on fair value with changes in fair value included in other comprehensive income. Dividends gained shall be included in current profit and loss.
Upon derecognition, accumulated gains or losses previously included in other comprehensive income shall be transferred out from other comprehensive income and included in retained income.
(4) Financial assets measured at fair value with its changes included in profit or loss
The initial measurement of financial assets that are measured at fair value with its changes included in current profit and loss, including trading financial assets, derivative financial assets and other non-current financial assets, shall be done at fair value with relevant transaction fees incurred included in current profit and loss. Subsequent measurement of the financial asset shall be done at fair value with changes in fair value included in current profit and loss.
(5) Financial liabilities measured at fair value with its changes included in current profit or loss
The initial measurement of financial liabilities that are measured at fair value with its changes included in current profit and loss, including trading financial liabilities and derivative financial liabilities, shall be done at fair value with relevant transaction fees incurred included in current profit and loss. Subsequent measurement of the financial liabilities shall be done at fair value with changes in fair value included in current profit and loss.
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Upon derecognition, the difference between book value and consideration paid shall be included in current profit and loss.
(6) Financial liabilities measured at amortized cost
The initial measurement of financial liabilities measured at amortized cost, including short- term borrowings, notes payable, accounts payable, other payable, long-term borrowings, bonds payable and long-term payables, shall be done at fair value with relevant transaction fees incurred included in the amount initially recognized.
The interests calculated by the effective-interest method during the holding period shall be included in the current gains and losses.
Upon derecognition, the difference between the consideration paid and the book value of financial liabilities shall be included in current profit and loss.
Accounting policy applicable prior to Jan. 1, 2019
(1) Financial assets (financial liabilities) measured at fair value with their changes included in current profit or loss
These financial assets (liabilities) should be initially recognized at fair value (after deduction of cash dividend that is declared to be distributed but not received or interest on bonds due but not received), and the transaction expenses thereof should be directly recorded into the profit and loss of the current period.
Interests and cash dividends received during the period in which such financial instrument is held should be recognized as investment income. Gains or losses arising from change in the fair value are recognized in profit or loss for the current period at the closing date.
Upon disposal, the differences between the fair value and the initial measurement value should be recognized as investment income and the profits and losses on the changes in fair value account should be adjusted into investment income. 204 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
(2) Held-to-maturity investments
The held-to-maturity investment should be initially measured at the total amount of fair value
(after deduction of the bond interests due but not yet paid) and relevant transaction expenses.
During the period in which such financial instrument is held, the interest income should be calculated based on the amortized cost and the effective interest rate and recognized in the investment income. The effective interest rate is determined upon the acquisition of the financial instrument and should remain the same within the predicted term of existence or within a shorter applicable term.
Upon disposal, the differences between the amounts received and the carrying value of the investment should be recognized as investment income.
(3) Receivables
The creditor’s rights arising from selling goods or rendering services by the Company and other creditor’s rights from other enterprises held by the Company (excluding liability instruments quoted in an active market), including accounts receivable and other receivables, are initially recognized at the contract or agreement price. If the right is financing in nature, it shall be initially recognized at present value.
Differences between the amounts received and book values of the receivables are charged to profit or loss for the current period upon collection or disposal.
(4) Available-for-sale financial assets
Available-for-sale financial assets are initially measured at fair value (after deduction of cash dividend that is declared to be distributed but not received or interest on bonds due but not received) plus transaction costs when acquired.
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The interest and cash dividends received during the holding period are recognized as investment income. Available-for-sale financial assets are measured at fair value at the closing date, and the amount of changes in fair value is charged to other comprehensive income. However, an equity instrument investment for which there is no quoted price in the active market and whose fair value cannot be reliably measured, or a derivative financial asset which is connected with the equity instrument and which must be settled by delivering the equity instrument shall be measured at the acquisition cost.
At the time of disposal, the differences between the proceeds and the book values of the financial assets are recognized as gains or losses on investment upon disposal. Meanwhile, the accumulated changes in fair values of the disposed assets which are previously recognized in other comprehensive income are transferred to current gain or loss.
(5) Other financial liabilities
Other financial liabilities are initially recognized at fair values plus transaction costs. The subsequent measurement is based on amortized costs.
Recognition basis and measurement method of transfer of financial assets
In the transfer of financial assets, if the Company has transferred nearly all of the risks and rewards relating to the ownership of the financial assets to the transferee, they should be derecognized. If it retains nearly all of the risks and rewards relating to the ownership of the financial assets, they should not be derecognized.
Substance over form principle is adopted to determine whether the transfer of financial assets can satisfy the criteria as described above for derecognition.
The Company should classify the transfer of financial assets into the entire transfer and the partial transfer. If the transfer of entire financial assets satisfies the criteria for derecognition,
206 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. differences between the amounts of the following two items should be recognized in profit or loss for the current period:
(1) Carrying amount of the transferred financial asset.
(2) The sum of the consideration received for transfer and the cumulative amount of changes in fair value directly included into owner’s equity (financial assets related to transfer are the financial assets (debt instruments) and available-for-sale financial assets measured at fair value with their changes included in other comprehensive income).
If the partial transfer of financial assets satisfies the criteria for derecognition, the carrying amounts of the entire financial assets transferred shall be split into the derecognized and recognized portions according to their respective fair values and differences between the amounts of the following two items are charged to profit or loss for the current period:
(1) Carrying amounts of the derecognized portions.
(2) The sum of the consideration subject to derecognition and the cumulative amounts of changes in fair value directly included into owners’ equity originally (financial assets related to transfer are the financial assets (debt instruments) and available-for-sale financial assets measured at fair value with their changes included in other comprehensive income).
If the transfer of financial assets does not satisfy requirements for derecognition, the financial assets shall continue to be recognized, and the consideration received will be recognized as financial liabilities.
Conditions for derecognition of financial liabilities
Financial liabilities shall be entirely or partially derecognized if the present obligations derived from them are entirely or partially discharged. Where the Company enters into an agreement with a creditor so as to substitute the current financial liabilities with new ones, and the contract clauses of which are substantially different from those of the current ones, it shall recognize the new financial liabilities in place of the current ones. 207 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Where substantial revisions are made to some or all of the contract clauses of the current financial liabilities, the Company shall recognize the new financial liabilities after revision of the contract clauses in place of the current ones entirely or partially.
Upon entire or partial derecognition of financial liabilities, differences between the carrying amounts of the derecognized financial liabilities and the consideration paid (including non- monetary assets surrendered or new financial liabilities assumed) are charged to profit or loss for the current period.
Where the Company redeems part of its financial liabilities, it shall allocate the carrying amounts of the entire financial liabilities between the relative fair values of the parts that continue to be recognized and the derecognized parts on the redemption date. Differences between the carrying amounts allocated to the derecognized parts and the consideration paid (including non-monetary assets surrendered and the new financial liabilities assumed) are charged to profit or loss for the current period.
Measurement of fair values of financial assets and liabilities
Where there is an active market for financial instruments, the fair values are measured with direct reference to the quoted prices in the active market. If there is no active market, valuation techniques are used to determine the fair value. During valuation, the Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data and other information are available to measure fair value, selects inputs that are consistent with the characteristics of assets or liabilities considered by market participants in the trading of relevant assets or liabilities, and maximizes the use of relevant observable inputs. The Company minimizes the use of unobservable inputs only under the circumstances where such relevant observable inputs cannot be obtained or practicably obtained. 208 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Testing method and accounting treatment method for the impairment of financial assets
Accounting policy applicable as of Jan. 1, 2019
Taking into consideration of all reasonable and grounded information, including prospective information, the Company will, in a single or combined manner, estimate the expected credit loss of financial assets which are measured at amortized cost and financial assets (debt instruments) which are measured at fair value with their changes included in other comprehensive income. The measurement of expected credit loss depends on whether or not financial assets are exposed to significantly increased credit loss risks after the initial recognition.
If the credit risk of the financial instrument has increased significantly after the initial recognition, the Company shall measure its loss reserve based on the amount equivalent to the expected credit loss of the financial instrument in its whole existence; if the credit risk of the financial instrument has experienced no significant increase after the initial recognition, the Company shall measure its loss reserve based on the amount equivalent to the expected credit loss of the financial instrument in the future 12 months. The increased or reversed amount of loss reserve resulted thereby shall be included in current profit and loss as impairment loss or gain.
Generally, in the event of more than 30 days overdue, the Company deems that the credit risk of the financial instrument has increased significantly, unless there is conclusive evidence showing that the credit risk of that financial instrument has not increased significantly after initial recognition.
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If the financial instrument shows a lower credit loss risk on the balance sheet date, the
Company deems that the credit risk of that financial instrument has not increased significantly after initial recognition.
If there is objective evidence showing that credit impairment has occurred to certain financial assets, the Company will set aside impairment reserve for the financial assets on a single item basis.
As to accounts receivable, whether or not any material financing is contained, the Company will always measure its loss reserve in accordance with the amount equivalent to expected credit loss in the whole existence.
As to lease receivable and long-term receivables formed by the Company through selling commodities or providing labor service, the Company shall, at all times, choose to measure the loss reserve in accordance with the amount equivalent to the expected credit loss in the whole existence.
Specific division for financial assets involved in the Company’s business when executing financial instruments is as follows:
As to notes receivable, accounts receivable, advance payment, other receivables, receivables financing, loans released and advances, long-term receivables and other payments for which there is objective evidence showing impairment and which are applicable to single-item assessment, impairment testing shall be conducted separately, expected credit loss shall be determined and single-item impairment reserve shall be set aside; as to notes receivable, accounts receivable, other receivables, receivables financing, loans released and advances, long-term receivables for which there is no objective evidence showing impairment or when the expected credit loss information of a single financial asset cannot be assessed at reasonable cost, the Company will divide notes receivable, accounts 210 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. receivable, other receivables, receivables financing, loans released and advances, long- term receivables into several portfolios according to the features of credit risk and calculate expected credit loss based on these portfolios. Methods for determining these portfolios and expected credit loss are as follows:
The basis for determining notes receivable portfolio and the method for calculating expected credit loss are as follows:
Recognition basis Item Methods for measuring expected credit loss of portfolio
Bank acceptance With the credit rating of the accepting bank in bank acceptance as a notes characteristic of credit risk Notes receivable Trade acceptance With the credit rating of the accepting company in commercial notes acceptance as a characteristic of credit risk
The basis for determining accounts receivable portfolio and the method for calculating expected credit loss are as follows:
Recognition Item Methods for measuring expected credit loss basis of portfolio
Refer to historical credit loss experience, combine current Accounts receivable condition with the forecasts on the future economic trend, develop Aging portfolio 1 - Credit risk comparison statement between the aging of accounts receivable combination characteristic portfolio and the overdue credit loss rate in the whole existence period, and calculate expected credit loss
Accounts receivable Related parties Refer to historical credit loss experience, combine current portfolio 2 - Related portfolio within condition with the forecasts on the future economic trend, and current items portfolio the based on default risk exposure and the expected credit loss rate in within the consolidation consolidation the whole existence period, the expected credit loss rate of the scope scope portfolio is 0
The basis for determining receivables financing portfolio and the method for calculating expected credit loss are as follows:
Re-classified Recognition basis Subject Methods for measuring expected credit loss item of portfolio
Receivables Notes Bank acceptance With the credit rating of the accepting bank in bank financing receivable notes acceptance as a characteristic of credit risk
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Trade acceptance With the credit rating of the accepting company in notes commercial acceptance as a characteristic of credit risk
Refer to historical credit loss experience, combine current condition with the forecasts on the future economic trend, develop comparison statement Aging combination between the aging of accounts receivable and the overdue credit loss rate in the whole existence period, Accounts and calculate expected credit loss receivable portfolio Refer to historical credit loss experience, combine Related parties current condition with the forecasts on the future portfolio within economic trend, and based on default risk exposure and the consolidation the expected credit loss rate in the whole existence scope period, the expected credit loss rate of the portfolio is 0
The basis for determining other receivables portfolio and the method for calculating expected credit loss are as follows:
Recognition basis Item Methods for measuring expected credit loss of portfolio
Related parties Refer to historical credit loss experience, combine current condition within and with the forecasts on the future economic trend, develop comparison beyond the statement between the aging of dividends receivable and the overdue consolidation credit loss rate in the whole existence period, and calculate expected Other receivables - scope credit loss Dividends receivable Related parties Refer to historical credit loss experience, combine current condition within the with the forecasts on the future economic trend, and based on default consolidation risk exposure and the expected credit loss rate in the whole existence scope period, the expected credit loss rate of the portfolio is 0
Refer to historical credit loss experience, combine current condition with the forecasts on the future economic trend, develop comparison Aging statement between the aging of other receivables and the overdue combination credit loss rate in the whole existence period, and calculate expected credit loss Other receivables Related parties Refer to historical credit loss experience, combine current condition portfolio within with the forecasts on the future economic trend, and based on default the consolidation risk exposure and the expected credit loss rate in the whole existence scope period, the expected credit loss rate of the portfolio is 0
The basis for determining loans released and advances portfolio and the method for calculating expected credit loss are as follows:
Item Recognition basis Methods for measuring expected credit loss
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Loan released and Refer to historical credit loss experience, combine current advances 1 - Credit Five-level condition with the forecast on the future economic trend, classify Risk characteristics classification loans released and advances based on the five-level portfolio classification, and calculate expected credit loss Loans released and Related parties Refer to historical credit loss experience, combine current advances 2 - Related within the condition with the forecasts on the future economic trend, and current items portfolio consolidation based on default risk exposure and the expected credit loss rate within the consolidation scope in the whole existence period, the expected credit loss rate of the
The basis for determining long-term receivables portfolio and the method for calculating expected credit loss are as follows:
Item Recognition basis Methods for measuring expected credit loss
Long-term receivables Five-level Refer to historical credit loss experience, combine current 1 - Credit risk classification condition with the forecasts on the future economic trend, classify characteristics long-term receivables based on the five-level classification, and Refer to historical credit loss experience, combining current Long-term receivables Related parties condition with the forecasts on the future economic trend, and 2 - Related within the based on default risk exposure and the expected credit loss rate in current items portfolio consolidation the whole existence period, expected credit loss rate of this within the scope portfolio is 0. consolidation scope
Therein: As to account ages portfolio among the aforementioned portfolios, the comparison statement between the account ages of credit risk characteristics portfolio in the whole existence period and the expected credit loss rate is as follows:
Expected credit loss rate of accounts Expected credit loss rate of other Account age receivable (%) receivables (%)
Within one year 5.00 5.00
1-2 years 10.00 10.00
2-3 years 30.00 30.00
3-4 years 50.00 50.00
4-5 years 80.00 80.00
Over 5 years 100.00 100.00
As to the five-level classification portfolio among aforementioned portfolios, the comparison statement between the basis for five-level classification, the account age of credit risk 213 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. characteristics portfolio in the whole existence period and the expected credit loss rate is as follows:
The basis for determining five-level classification portfolios
If it will be possible to perform contract or agreement, and there is no sufficient reason to Normal suspect that debt principal and corresponding proceeds cannot be fully repaid, corresponding characteristics credit risk characteristics shall be deemed as normal characteristics.
If it will be able to repay loan principal and interest, and if there are some factors that may Attention-needed adversely affect loan repayment and whose continuing existence will affect borrowers’ ability to characteristics repay, corresponding credit risk characteristics shall be deemed as attention-needed characteristics.
If there is a clear problem with repayment ability, it is completely unable to repay loan principal and interest in full by completely relying on normal operating income, and it is necessary to Secondary repay loan principal and interest by disposing of assets or external financing or even characteristics implementing mortgage guarantees, corresponding credit risk characteristics shall be deemed as secondary characteristics.
If there is a clear problem with repayment ability, it is completely unable to repay loan principal Doubtful and proceeds in full by completely relying on normal operating income and any loss may be characteristics caused even though any guarantee is implemented, corresponding credit risk characteristics shall be deemed as doubtful characteristics.
If it is still impossible to recover or it is possible to recover only a very small portion of loan after Loss-related taking all possible measures or all necessary legal procedures, corresponding credit risk characteristics characteristics shall be deemed as loss-related characteristics.
The expected credit loss rate for five-level classification portfolio is as follows:
Classification of loan risks Expected credit loss rate (%)
Normal 1.50
Attention-needed 3.00
Secondary 30.00
Doubtful 60.00
Loss-related 100.00
Accounting policy applicable prior to Jan. 1, 2019
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Except financial assets measured at fair value through profit and loss, the Company makes assessment on the carrying values of financial assets at the period end. If there is evidence that the fair value of specific financial asset has been impaired, provisions for impairment loss is made accordingly.
11. Inventory
Classification of inventories
Inventories may be classified as in-transit materials, raw materials, turnover materials, inventory goods, unfinished products, goods shipped in transit, materials processed upon entrustment, etc.
Valuation method for inventories sent out
Inventories sent out shall be checked by weighted average method, and raw materials used for goods processing upon entrustment shall be checked by individual pricing method.
Basis for determining net realizable value of different types of inventories
Net realizable value of finished goods, stock goods and materials directly used for sale shall be determined based on estimated selling price of the inventories minus estimated selling expenses and related taxes during normal business operation or production; net realizable value of the inventories of materials that need to be processed shall be determined based on estimated costs of finished products produced minus estimated costs, estimated sales expenses and relevant taxes and fees incurred at the time of completion during normal business operation or production. Net realizable value of the inventories held for execution of a sales contract or a labor contract shall be calculated on the basis of contract price. If the quantity of inventories held is greater than the quantity ordered by the sales contract, net realizable value of the excess inventories shall be calculated on the basis of general sales price.
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Provision for inventory depreciation shall be made at the end of period in accordance with individual inventory items; inventory depreciation reserve of the inventories with a large quantity and a lower unit price shall be accrued according to inventory category; and consolidated inventory depreciation reserve shall be accrued for the inventories that are related to a product line produced and sold in the same region, have the same or similar end use or purpose and are difficult to be measured separately from other items.
Unless there is clear evidence that market price on the balance sheet date is abnormal, net realizable value of inventories shall be determined on the basis of the market price on the balance sheet date.
Net realizable value of inventories at the end of the period shall be determined based on the market price on the balance sheet date.
Inventory system of inventories
Perpetual inventory system is adopted.
Amortization method for low-value consumables and packaging materials
One-off write-off method shall be adopted for low-value consumables and packaging materials.
12. Long-term equity investment
Judgment criteria of joint control and significant impact
Common control refers to the common control over certain arrangement exercised according to the relevant provisions; and activities related to such arrangement shall be determined with the consent of all parties sharing the control. If the Company and other joint venture parties jointly exercise joint control over the investee and have rights to net assets of the investee, the investee shall be regarded as a joint venture of the Company. 216 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Significant impact means the power to participate in the decision-making of the financial and operating policies of an enterprise but no power to control or jointly control the formulation of these policies with other parties. Where the Company is able to exert significant influences on the investee, the investee shall be regarded as a joint venture of the Company.
Determination of initial investment cost
(1) Long-term equity investment formed by business combination
Business merger under the same control: if merger consideration is paid in the form of cash paid, non-monetary assets transferred, liabilities assumed or equity securities issued, the initial cost of investments of long-term equity investment shall be recognized at the proportionate share of the carrying amount of the owners’ equity of the merged party in the consolidated financial statements of the ultimate controlling party. If it is possible to exercise control over the investee under the same control due to additional investment and other reasons, initial investment cost of long-term equity investment shall be determined on the basis of the share of the book value of net assets of the merged party in the consolidated financial statements of the ultimate controlling party on the combination date. Capital premium shall be adjusted based on the difference between initial investment cost of long- term equity investment on the combination date and the sum of book value of long-term equity investment before merger and book value of new consideration paid on the merger date; and if capital premium is insufficient to offset, the retained earnings shall be offset.
Business merger not under the same control: The Company shall take the combined cost determined on purchase date as initial investment cost of long-term equity investment. If it is possible to control the investee under the same control due to additional investment and other reasons, the sum of book value of original equity investment and new investment cost shall be deemed as initial investment cost calculated by the cost method.
(2) Long-term equity investment obtained by other means
The long-term equity investment obtained by way of cash payment shall be measured by taking its actual purchase price as initial investment cost. 217 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
For the long-term equity investment obtained by issuing equity securities, fair value of the issued equity securities shall be taken as initial investment cost.
When non-currency asset exchange is of the commercial nature and fair value of asset received and asset surrendered can be reliably measured, the measurement shall be done at fair value. If fair value of asset received and asset surrendered can be reliably measured, regarding long-term equity investment received, its initial investment cost shall be the sum of the fair value of asset surrendered and relevant taxes payable, unless there is conclusive evidence showing that the fair value of asset received is more reliable. If the non-currency asset exchange is of no commercial nature, or the fair value of asset received and asset surrendered cannot be measured reliably, regarding the long-term equity investment, its initial investment cost shall be the sum of the book value of asset surrendered and relevant taxes payable.
Regarding long-term equity investment gained by debt reorganization, book value of the investment shall be determined based on the fair value of the abandoned debt and other costs, such as taxes, that can be directly attributable to the asset. And the difference between fair value and book value of the abandoned debt shall be included in current profit and loss.
Subsequent measurement and profit and loss recognition method
(1) Long-term equity investment measured by cost method
The Company’s long-term equity investment in subsidiaries shall be accounted for by cost method. Except for actual payment made at the time of acquiring the investment or cash dividends or profits included in the consideration that have been announced but not yet paid, current investment income is recognized by the Company according to the cash dividends or profits declared to be distributed by the investee.
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(2) Long-term equity investment measured by equity method
Long-term equity investments in associates and joint ventures shall be accounted for by equity method. In view of the difference between initial investment cost and fair value of identifiable net assets of the investee, initial investment cost of long-term equity investment is not adjusted; and the difference between initial investment cost and fair value of identifiable net assets of the investee that shall be enjoyed at the time of investment is included in current profit or loss.
The Company shall recognize investment income and other comprehensive income according to the share of net profit and loss and other comprehensive income realized by the investee that shall be enjoyed or shall be shared, and adjust book value of long-term equity investment; moreover, the Company shall calculate the portion to be enjoyed according to the profit or cash dividend declared by the investee, and reduce book value of long-term equity investment; for other changes in owner’s equity other than net profit or loss, other comprehensive income and profit distribution of the investee, book value of long-term equity investment shall be adjusted and included in the owner’s equity.
When confirming the share of net profit or loss of the investee that shall be enjoyed, the
Company shall adjust and recognize net profit of the investee based on fair value of identifiable net assets of the investee at the time of investment and in accordance with accounting policies and accounting period of the Company. If the investee prepares the consolidated financial statements during the period of holding the investment, it shall be accounted for based on the net profit, other comprehensive income and other changes in owner’s equity in the consolidated financial statements that are attributable to the investee.
The Company shall recognize the loss that shall be shared by the investee in the following order: Firstly, book value of long-term equity investment shall be offset. Secondly, if book value of long-term equity investment is not sufficient for offset, investment loss shall continue to be recognized and book value of long-term receivable items and other items shall be 219 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. offset to the extent that it substantially constitutes book value of long-term equity invested as net investment to the investee. Thirdly, after the above-mentioned treatment, if the
Company still has to bear additional obligations under investment contract or agreement, estimated liabilities shall be recognized according to estimated obligations and included in current investment losses.
(3) Disposal of long-term equity investments
When disposing of a long-term equity investment, the difference between its book value and its actual purchase price shall be included in the current profit and loss.
Long-term equity investments accounted for using equity method, when the investment is disposed of, shall be accounted for based on the basis on which the investee directly disposes of relevant assets or liabilities, and the portion that is originally included in other comprehensive income shall be accounted for based on the corresponding proportion.
Owner’s equity recognized as a result of changes in other owners’ equity other than net profit or loss, other comprehensive income and profit distribution of the investee shall be included in current loss and profit pro rata, except for other comprehensive income arising from remeasurement of the net benefit or net assets of the defined benefit plan by the investee.
If joint control over or significant influence on the investee is lost due to disposal of part of the equity investment or other reasons, the remaining equity after disposal shall be accounted for in accordance with the Recognition and Measurement of Financial
Instruments, and the difference between fair value and book value on the date of loss of joint control or significant influence shall be recognized in current profit or loss. Other comprehensive income of the originally held equity investment recognized by equity method shall be accounted for on the same basis as that used when the investee directly disposes of relevant assets or liabilities when equity method is no longer applied. Owner’s equity 220 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. recognized as a result of changes in other owners’ equity other than net profit or loss, other comprehensive income and profit distribution of the investee shall be fully included in current loss and profit when accounting is not conducted by equity method any more.
If the control over the investee is lost due to disposal of part of the equity investment, other investors’ capital increase in subsidiaries leading to decrease in the Company’s shareholding ratio and other reasons, and if the remaining equity after disposal can exert joint control over or significant influence on the investee, the remaining equity shall be accounted for using equity method, and the remaining equity shall be adjusted as if the equity is accounted for since from acquisition; the remaining equity after disposal, if it is impossible to exercise control over or have significant influence on the investee, shall be accounted for according to relevant provisions of the Recognition and Measurement of
Financial Instruments, and the difference between fair value and book value on the date of loss of control shall be recognized in current profit or loss.
If the disposed equity is obtained through business combination for additional investment or other reasons, and if the remaining equity after disposal is accounted for using cost method or equity method when any individual financial statement is prepared, other comprehensive income and other owner’s equity recognized by equity method before the date of purchase shall be carried forward on a pro rata basis; if the remaining equity after disposal is accounted for in accordance with the financial instrument recognition and measurement criteria, other comprehensive income and other owner’s equity shall be fully carried forward.
13. Investment real estate
Measurement model of investment real estate
Measurement by cost method
Depreciation or amortization method
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Investment real estate refers to real estate held for the purpose of earning rent or capital appreciation, or for both two purposes, including land use rights that have been leased, land use rights that are held and are ready for transfer after appreciation, and buildings that have been leased (including buildings for lease after completion of self-construction or development activities and buildings for future rental under construction or development).
Cost method is adopted by the Company to measure its existing investment real estate.
Investment real estate measured by cost model - Buildings constructed for lease are subject to the same depreciation policies as fixed assets of the Company, and land use rights for lease and are subject to the same amortization policies as intangible assets.
14. Fixed assets
(1) Conditions for recognition
Fixed assets refer to tangible assets that are held for the purpose of producing goods, providing labor services, lease or operating management, and that have a useful life of more than one accounting year. Fixed assets are recognized when the following conditions are met:
(1) Economic benefits associated with the fixed assets are likely to flow into enterprises.
(2) Cost of the fixed assets can be reliably measured.
(2) Depreciation method
Depreciation of fixed assets shall be accrued using the straight-line method and sum-of-the- years-digits method, and depreciation rate shall be determined based on type of fixed assets, expected service life and expected net residual value rate. If each component of fixed assets has different service life or generates economic interests for enterprises in different ways, different depreciation rates or depreciation methods shall be applied for depreciation accrual.
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Depreciation method, depreciation period, residual value rate and annual depreciation rate of various fixed assets are as follows:
Depreciation Yearly Depreciation Category Depreciation period Residual value rate Method Rate
Houses and Average service life 25-30 3-5 3.17-3.88 buildings method
Machinery and Average service life 10-18 3-5 5.28-9.70 equipment method
Electronic and office Average service life 5-8 3-5 11.88-19.40 equipment method
Transportation Average service life 10-12 3-5 7.92-9.70 equipment method
Depreciation of fixed assets of Panzhihua Lomon Minerals Co., Ltd., a subsidiary of the
Company, is accrued using the straight-line method and sum-of-the-years-digits method, with depreciation method, depreciation period, residual rate and annual depreciation rate of fixed assets as follows:
Depreciation Yearly Depreciation Category Depreciation period Residual value rate Method Rate
Houses and Average service life 20 3 4.85 buildings method
Machinery and Average service life 10 3 9.70 equipment method
Electronic and office Average service life 5 3 19.40 equipment method
Transportation Sum-of-the-years- 5 3 equipment digits method
Depreciation of fixed assets of Sichuan Lomon Mining and Metallurgy Co., Ltd., a subsidiary of the Company, is accrued using the straight-line method and sum-of-the-years-digits method, with depreciation method, depreciation period, residual rate and annual depreciation rate of fixed assets as follows:
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Depreciation Yearly Depreciation Category Depreciation period Residual value rate Method Rate
Houses and Average service life 20-40 3 2.425-4.85 buildings method
Machinery and Average service life 10 3 9.70 equipment method
Electronic and office Average service life 5 3 19.40 equipment method
Transportation Sum-of-the-years- 5 3 equipment digits method
(3) Recognition basis, valuation and depreciation method for financing leased fixed assets
If the lease agreement signed between the company and the lessor stipulates one of the following conditions, the assets involved shall be recognized as assets financed by leasing:
(1) The ownership of the leased assets after the lease expires is attributable to the Company.
(2) The Company has the option to purchase assets, at a purchase price which is much lower than fair value of the assets when exercising the option.
(3) Lease term accounts for the majority of useful life of the leased assets.
(4) There is no significant difference between present value of the minimum lease payment on the commencement date of lease and fair value of the assets.
The Company shall, at start of the leasing period, make the lower between the fair value of leased assets and the current value of minimum payment for leasing as the account value of the rent-in assets, the minimum payment for leasing as the account value of long-term payables, and the difference as unrecognized financing charges.
15. Construction in progress
Construction in progress shall be entered into accounts as fixed assets based on necessary expenses incurred before construction of the assets to intended use status. If the fixed
224 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. assets constructed in progress has reached its intended use status without completing final completion settlement, the construction in progress shall be included in fixed assets according to project budget, construction cost or actual project cost and based on estimated project value, and depreciation of fixed assets shall be accrued according to the Company’s fixed assets depreciation policies since the date of reaching intended use status. After final completion settlement, original temporary valuation shall be adjusted according to actual cost without adjusting depreciation amount already accrued.
16. Borrowing costs
Recognition principles of capitalization of borrowing costs
Borrowing costs include amortization and subsidiary expenses of borrowing interest, discount or premium, exchange balance occurred due to borrowing in foreign currencies and others. Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be recognized when incurred as expenses and shall be recorded into the current profit and loss.
Qualifying assets are those fixed assets, investment properties or inventories that take substantial periods of time to get ready for their intended use or sale.
Capitalization shall be made when borrowing costs meet the following conditions:
(1) Asset expenditures have occurred, including expenditures for acquire, construction or production of assets eligible for capitalization to pay cash, transfer non-cash assets or assume overall debts.
(2) Borrowing costs have occurred.
(3) Acquisition, construction or production activities necessary to bring the assets to their intended usable or saleable state have begun.
Capitalization period of borrowing costs
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Capitalization period means the period from the beginning of capitalization to the end of capitalization, excluding the period when the capitalization of the borrowing costs is temporarily suspended.
When the purchased, constructed or produced assets meeting the capitalization condition have reached expected usable or available-for-sale condition, the capitalization of the borrowing costs shall be stopped.
When part of the purchased, constructed or produced assets meeting the capitalization condition have been completed and can be used independently, the capitalization of the borrowing costs of such part of assets shall be stopped.
If the various parts of the asset purchased or produced are completed respectively, but the asset cannot be used or sold until its overall completion, the capitalization of the borrowing costs is suspended when the asset is fully completed.
Capitalization suspension period
If for the assets meeting capitalization conditions, the purchase and construction process or production process is interrupted abnormally and the interrupting period exceeds 3 months, the capitalization of borrowing costs shall be suspended; if the interruption is a procedure necessary for the purchased, constructed or produced assets meeting the capitalization condition are ready for their intended use or reach their available-for-sale state, the capitalization of the borrowing costs shall be continued. The borrowing costs incurred during the period of interruption is recognized as the current profit and loss, and the capitalization of the borrowing costs shall not be continued until the purchase and construction or the production of the assets is resumed.
Calculation method of capitalization rate and capitalization amount of borrowing costs 226 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Where borrowing special borrowings for the acquisition, construction or production of assets meeting the capitalization conditions, capitalization amount of borrowing costs are determined according to the borrowing expenses actually incurred in the current special borrowings minus the interest income from the unused borrowing funds deposited in the bank or the investment income made through temporary investment.
Where a general borrowing is used for the acquisition and construction or production of qualifying assets, the Company shall calculate and determine the to-be-capitalized amount of borrowing costs on the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate should be calculated and determined in light of the weighted average interest rate of the general borrowing.
17. Intangible assets
(1) Valuation method, service life, impairment test
Valuation method of intangible assets
(1) Initial measurement shall be conducted based on cost when intangible assets are acquired by the Company:
Cost of purchased intangible assets includes purchase price, related taxes and fees, and other expenses directly attributable to making the assets reaching their intended use. If purchase price of an intangible asset is not paid timely without meeting normal credit conditions and is financing-related, cost of the intangible asset shall be determined on the basis of present value of its purchase price.
For intangible assets obtained by debtor through debt restructuring, entry value of the intangible assets is determined based on their fair value, and the difference between book 227 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. value of restructured debts and fair value of intangible assets used for debt repayment is included in the current profit and loss.
Under the premise that non-monetary asset exchange is business essential and fair value of the assets obtained by exchange or given for exchange can be reliably measured, entry value of intangible assets obtained from exchange of non-monetary assets shall be measured based on fair value of the assets given for exchange, unless there is conclusive evidence that fair value of the assets obtained from exchange is more reliable. For non- monetary assets exchange that does not meet the above premise, book value of the assets given for exchange and relevant taxes and fees payable shall be used as costs of the intangible assets obtained through exchange without recognizing profit or loss.
(2) Subsequent measurement
Useful life of intangible assets shall be analyzed and judged when such assets are acquired.
Intangible assets with a finite useful life shall be amortized on a straight-line basis over the period in which economic benefit is created for the Company; intangible assets that cannot predict whether they will bring economic benefits to the Company shall be regarded as intangible assets with uncertain useful life and shall not be amortized.
Estimated useful life of intangible assets with limited useful life:
Item Expected useful life Basis for determination
Land use right 50 years Period agreed upon in Land Use Certificate
Period expected in which economic benefits are Franchise right 25 years created for the Company
Period expected in which economic benefits are ERP information system 5-10 years created for the Company
Mining right 20 years Period agreed upon in Mining Right Certificate
Proprietary technology 5-10 years Period expected in which economic benefits are
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created for the Company
At the end of each year, useful life and amortization method of intangible assets with limited useful life shall be reviewed.
It is determined upon review that useful life and amortization method of intangible assets at the end of the year are not different from previous estimates.
Judgment basis for intangible assets with uncertain useful life and procedures for reviewing their useful life
As at the balance sheet date, the Company has no intangible assets with uncertain useful life.
(2) Accounting policies for internal research and development expenditure
Specific criteria for dividing research phase and development phase
Expenditures on internal research and development projects of the Company include expenditures in research phase and expenditures in development phase.
Research phase: refers to a phase during which original and planned investigation and research activities are conducted for acquiring and understanding new scientific or technical knowledge.
Development phase: refers to a phase during which research results or other knowledges are applied in a plan or design to produce new or substantially improved materials, devices, products, etc. prior to commercial production or use.
Specific conditions for capitalization of expenditures in the development phase
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Expenditures for development phase of internal research and development projects shall be recognized as intangible assets when the following conditions are met:
(1) It is technically feasible to complete the intangible assets to enable them to be used or sold.
(2) There is an intent to complete the intangible assets and to use or sell the assets.
(3) There is a way in which the intangible assets are able to generate economic benefits, including that it is possible to prove that the product produced using the intangible assets is marketable or the intangible assets are marketable, and that it is possible to prove usefulness of the intangible assets if the assets will be used internally;
(4) There are sufficient technical, financial and other resources to support development of the intangible assets and there is the ability to use or sell the intangible assets.
(5) Expenditures attributable to development phase of the intangible assets can be reliably measured.
Expenditures in the development phase, if they do not meet the above conditions, shall be included in the current profit and loss when incurred. Expenditures in the research phase shall be included in the current profit and loss when incurred.
The Company’s research and development projects enter the development phase after meeting the above conditions, completing technical feasibility and economic feasibility studies and obtaining project approval.
Capitalized expenditure on the development phase is presented as development costs on the balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use.
18. Impairment of long-term assets
If the long-term assets such as long-term equity investment, investment real estate measured by cost model, fixed assets, construction in progress and intangible assets with 230 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. limited useful life have signs of impairment on the balance sheet date, impairment test shall be conducted. If the results of impairment test indicate that recoverable amount of the asset is lower than their carrying amount, impairment loss shall be accrued and included in impairment loss based on the difference between the recoverable amount and carrying amount. The recoverable amount is determined based on the higher of the net amount of fair value of the assets after deducting disposal expenses, and present value of the estimated future cash flows of the assets. Assets impairment provision shall be calculated and confirmed on the basis of individual assets. If it is difficult to estimate recoverable amount of any individual assets, recoverable amount of the assets group shall be determined by the assets group to which the assets belong. An asset group is the smallest portfolio of assets that can generate cash inflows independently.
Goodwill is tested for impairment at least at the end of each year.
The Company shall conduct goodwill impairment test. Book value of the goodwill formed as a result of business combination shall be apportioned to relevant assets group on a reasonable basis from the date of acquisition; the book value that is difficult to be apportioned to relevant assets group shall be apportioned to relevant assets group combination. In amortizing goodwill and book value, the Company can conduct amortization in relative benefits gained from the synergistic effect of corporate merger according to relevant asset group or asset group portfolio, based on which goodwill impairment test may be conducted.
When performing an impairment test on a relevant assets group or an assets group combination containing goodwill, if there is any sign of impairment of the assets group or assets group combination related to goodwill, the assets group or assets group combination that does not contain goodwill shall be tested for impairment and the recoverable amount shall be calculated. And the calculated recoverable amount shall be compared with relevant book value to confirm the corresponding impairment loss. The assets groups or assets group 231 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. combinations containing goodwill shall then be tested for impairment and book value of these relevant asset groups or assets group combinations (including book value of the apportioned goodwill) and its recoverable amount shall be compared. If the recoverable amount of relevant assets groups or assets group combinations is lower than their book value, impairment loss of goodwill shall be recognized.
The above asset impairment loss shall not be reversed in a subsequent accounting period once it is confirmed.
19. Long-term unamortized expenses
The Company’s long-term unamortized expenses refer to the expenses that have already been paid with benefit period being more than one year (excluding one year), mainly including land compensation fees paid for the leased land. Long-term unamortized expenses shall be amortized in installments based on benefit period of the expenses. If long-term deferred expenses cannot benefit the future accounting periods, amortized value of the item that has not been amortized shall be fully included to the current profit and loss.
20. Payroll
(1) Accounting treatment method of short-term compensation
During the accounting period that the staff provides service, the Company determines the actual short-term benefits as liability which is counted into the current profits and losses or relevant asset cost.
For the social insurance premium and housing provident fund paid by the Company for its employees, as well as the labor union funds and employee education funds drawn according to applicable regulations, the corresponding employee compensation amount shall be calculated and determined according to the prescribed accrual basis and proportion during the accounting period in which employees provide services for the Company. 232 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Non-monetary employee benefits that can be reliably measured shall be measured at fair value.
(2) Accounting treatment method of post-employment benefits
(1) Defined contribution plans
The Company shall pay premiums of basic endowment insurance and unemployment insurance for its employees according to relevant regulations of the local government, calculate the amount payable according to the local payment base and proportion during the accounting period in which employees provide services for the Company, and recognize the amount as a liability and include it in the current profit and loss or relevant assets costs.
In addition to basic endowment insurance, the Company has also established an enterprise annuity payment system (as a supplement to pension insurance)/enterprise annuity plan based on relevant policies of the national enterprise annuity system. The Company shall make payments to local social insurance institutions based on payment/annuity plan according to a certain percentage to total wages of employees, in which case the corresponding expenses shall be included in the current profit and loss or relevant assets costs.
(2) Defined benefit plans
The benefit obligations arising from the defined benefit plan are determined by the Company to be attributable to the period during which employees provide services according to the formula determined by the expected accumulated benefit unit method, and are included in the current profit and loss or related assets cost.
The deficit or surplus determined based on the difference between present value of the obligations under the defined benefit plan and fair value of the assets under the defined benefit plan is recognized as a net benefit or net asset of the defined benefit plan. If there is a surplus under the defined benefit plan, the Company shall measure the net assets under 233 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. the benefit plan based on the surplus or the asset upper limit under the defined benefit plan
(whichever is lower).
All obligations under the defined benefit plan, including the obligations to make payment as expected within twelve months after the end of the annual reporting period in which employees provide services, shall be discounted based on the market yield of the government bonds or high-quality corporate bonds in the active market that match the currency on the balance sheet date and during the period in which the obligations under the defined benefit plan exist.
The service cost generated by the defined benefit plan and the net interest of the net benefit or net assets under the defined benefit plan shall be included in the current profit and loss or related asset cost; changes in net liabilities or net assets resulted from re-measurement of the defined benefit plan shall be included in other comprehensive income and shall not be transferred back to profit or loss in subsequent accounting periods. When the original defined benefit plan is terminated, part or all of the income originally included in other comprehensive income shall be carried forward to undistributed profit within the scope of equity.
When defining settlement of the benefit plan, settlement gain or loss shall be confirmed based on the difference between present value of the obligations under the defined benefit plan and settlement price determined on the settlement date.
For details, please refer to Note “V. (26) Payroll Payable”.
(3) Accounting treatment method of dismission benefits
If the Company cannot unilaterally withdraw the dismissal benefits provided as a result of termination of the labor relationship plan or the reduction proposal, or if the Company confirms the costs or expenses related to the reorganization involving payment of
234 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. termination benefits (whichever is earlier), the employee compensation liabilities arising from the termination benefits shall be recognized and included in the current profit and loss.
(4) Accounting treatment method of other long-term employee benefits
None
21. Estimated liabilities
Recognition criteria for estimated liabilities
The Company shall recognize the obligation related to litigation, debt guarantee, loss contract, reorganization and other contingent events and satisfying the following conditions as estimated liabilities:
(1) The obligation is the current obligation assumed by the Company.
(2) Fulfilling the obligation is likely to cause economic benefits to flow out from the Company.
(3) Amount of the obligation can be reliably measured.
Measurement method of various estimated liabilities
The Company shall make initial valuation on the estimated liabilities in accordance with the best estimate number of the expenditure needed for fulfillment of relevant current obligation.
When determining the best estimate number, the Company takes into account the factors pertaining to a contingency such as the risks, uncertainties and time value of money. Where there is a significant impact on the time value of money, the best estimate number is determined by discounting the related future cash outflow.
If all or part of the expenses required by the Company to repay its estimated liabilities are expected to be compensated by the third party, the compensation amount shall be separately recognized as assets when it is basically determined to be recoverable, and the confirmed compensation amount shall not exceed book value of the estimated liabilities.
For details, please refer to Note “V. (32) Estimated liabilities”. 235 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
22. Share-based payment
Share-based payment of the Company refers to a transaction in which the Company grants equity instruments or assumes liabilities determined on the basis of equity instruments in order to obtain services from its employees or other parties. Share-based payment of the
Company can be divided into equity-settled share-based payment and cash-settled share- based payment.
Equity-settled share-based payment and equity instrument
In the case of an equity-settled share-based payment in exchange for service provided by an employee, it shall be measured at fair value of the equity instrument granted to the employee. If the Company make share-based payment with restricted stocks and if any employee contributes to subscribe for stocks, these stocks may not be listed or circulated until unlocking conditions are met and such stocks are unlocked; if the unlocking conditions specified in the final equity incentive plan are not met, the Company shall repurchase the stocks at the price agreed in advance. When the Company obtains the payment by any employee for subscription of restricted stocks, share capital and capital reserve (share premium) shall be confirmed according to the acquired subscription amount, and at the same time the Company shall recognize the repurchase obligation as a liability and confirm treasury stocks. On each balance sheet date during the waiting period, the Company shall make the best estimates of the number of vesting equity instruments based on the latest information such as [changes in the number of employees with vesting rights] and [whether or not the required performance conditions are met]. Based on this, the Company shall, in accordance with fair value on the grant date, include the services obtained in the current period in relevant costs or expenses, and increase its capital reserve accordingly. No adjustments may be made to the identified related costs or expenses and total owner’s equity after the vesting date. However, equity instruments that are vested immediately after
236 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. granting shall be included in relevant costs or expenses at fair value on the grant date, and the capital reserve shall be increased accordingly.
For the share-based payment that is not ultimately exercised, the cost or expense shall not be recognized unless the vesting conditions are market conditions or non-vesting conditions.
At this time, regardless of whether the market conditions or non-vesting conditions are met, as long as the non-market conditions in all the vesting conditions are met, the share-based payment is considered to be a vesting right.
If the terms and conditions concerning the equity-settled share-based payment are modified, the service obtained shall be confirmed at least in accordance with the unmodified terms. In addition, any modification that increases fair value of the equity instruments granted, or changes that are beneficial to employees on the modification date, shall be recognized as the increase in the services obtained.
If the equity-settled share-based payment is cancelled, the unconfirmed amount shall be confirmed immediately to speed up the exercise on cancellation date. If an employee or other party can choose to satisfy the non-vesting conditions but fails to meet within the waiting period, it shall be treated as cancellation of the equity-settled share-based payment.
However, if a new equity instrument is granted and the new equity instrument granted on the grant date of the new equity instrument is used to replace the cancelled equity instrument, the alternative equity instrument granted shall be treated in the same manner as the original terms and conditions concerning modification of equity instrument.
Cash-settled share-based payment and equity instrument
Cash-settled share-based payment shall be measured in accordance with fair value of the liabilities determined by the Company on the basis of shares or other equity instruments.
The equity instrument that is immediately vested after granting shall be included in the cost 237 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. or expense at the fair value of the liabilities assumed at the grant date, and the liability shall be increased accordingly; for the equity instruments that are vested after completing the services in the waiting period or meeting the required performance conditions, the services obtained in the current period shall be included in relevant costs or expenses based on best estimates of the vesting equity instruments and in accordance with fair value of the liabilities assumed during the waiting period, and the corresponding liabilities shall be increased. The
Company shall re-measure fair value of liabilities on each balance sheet date and settlement date before settlement of relevant liabilities, and include corresponding changes in current profit and loss.
23. Income
Whether or not new income standards are applied
√ Yes □ No
Accounting policy adopted to recognize and measure income
Recognition of income from sales of goods
Under the circumstance that the Company has transferred main risks and rewards of ownership of goods to purchaser, income from sales of goods shall be recognized if the
Company neither retains continuous management right associated with ownership, nor does it exercise effective control over the goods sold; amount of income can be reliably measured; relevant economic benefits are likely to flow into the Company; and relevant costs that have occurred or will occur can be reliably measured.
Specific recognition method of the Company’s sales revenue is as follows:
Domestic sale: In case of delivery upon payment, the sales income shall be recognized when the payment is received and corresponding invoice and bill of lading are delivered to the buyer; in case of advance payment for goods, the sales income shall be confirmed when sales invoice is issued and the goods are shipped; and in case of credit sales, the sales 238 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. income shall be recognized when the goods are shipped and title certificate of the goods is handed over.
Export sales: Main price related clauses applicable to export sales of the Company include
FOB, CIF, C&F, etc.. Based on FOB, CIF, C&F and other price related clauses, the
Company has transferred main risks and rewards of ownership of the goods to the purchaser after loading at domestic port, and the Company no longer implements and retains the continuing management rights normally associated with ownership, nor does it exercise effective control over the products sold. Therefore, under FOB, CIF, C&F and other price related clauses, the Company recognizes revenue at the time of customs clearance and shipment based on FOB.
Income from transfer of assets use rights
The Company shall recognize the income from transfer of the assets use rights in accordance with the following circumstances when the economic benefits related to transfer of the assets use right are likely to flow in and the amount of the income can be reliably measured:
(1) Amount of interest income shall be calculated and determined according to the time period when others use the Company’s monetary funds as well as actual interest rate.
(2) Amount of royalty income shall be calculated and determined according to the time and method of charging as stipulated in relevant contract or agreement.
Income from provision of labor services
Where the results of labor service provision transactions on the balance sheet date can be reliably estimated, the income from provision of labor services shall be recognized by the percentage of completion method. If the results of labor service provision transactions on the balance sheet date cannot be reliably estimated, it shall be dealt with based on the following circumstances: 239 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
(1) If the labor costs incurred have been expected to be compensated, the income from the services provided shall be recognized in accordance with the amount received or expected to be recovered, and the labor costs incurred shall be carried forward.
(2) If the labor costs incurred have been expected to be partially compensated, the income from provision of labor services shall be recognized in accordance with the amount of labor costs that can be compensated, and the labor costs incurred shall be carried forward.
(3) If the cost of labor services incurred is not expected to be compensated, the cost of labor services incurred shall be included in the profits or losses of the current period without any recognition of the revenue from the rendering of services.
The method by which the Company confirms the percentage of completion is to make reference to the ratio of the cost incurred to the estimated total cost. Difference in income recognition accounting policy caused by adopting different business models for similar businesses
None
24. Government grants
Type
Government subsidies refer to monetary assets and non-monetary assets obtained by the
Company from government free of charge. Government subsidies are classified into government subsidies related to assets and government subsidies related to income.
Government subsidies related to assets refer to government subsidies acquired by the
Company for the purpose of purchasing or constructing or otherwise forming long-term assets. Government subsidies related to income refer to government subsidies other than government subsidies related to assets.
Confirmation timepoint
240 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Government subsidies shall be confirmed when payments are received and financial funds are paid.
Accounting treatment
Government subsidies related to assets shall be used to offset book value of related assets or be recognized as deferred income. Government subsidies recognized as deferred income shall be recognised in profit or loss in the current period in a reasonable and systematic manner within the useful lives of relevant assets (government subsidies related to daily activities of the Company shall be included in other income; and government subsidies not related to daily activities of the Company shall be included in non-operating income);
Government subsidies that are related to revenue and are used to compensate for related costs or losses of the Company in the subsequent period, shall be recognized as deferred income and shall be included in the current profit or loss (government subsidies related to daily activities of the Company shall be included in other income; and government subsidies not related to daily activities of the Company shall be included in non-operating income) or offset related costs or losses in the period in which related costs or losses are recognised; government subsidies used to compensate for related costs or losses incurred by the
Company shall be directly recognized in the current profit or loss (government subsidies related to daily activities of the Company shall be included in other income; and government subsidies not related to daily activities of the Company shall be included in non-operating income) or offset related costs or losses.
The policy concessional loan discount acquired by the Company undergoes accounting treatment in either of the following ways:
(1) If financial department allocates the interest discount funds to loan bank and loan bank provides the loan to the Company at a policy-based preferential interest rate, the Company shall take the amount of the borrowed money actually received as book value of the loan,
241 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. and shall calculate relevant borrowing costs based on loan principal and the policy-based preferential interest rate.
(2) If financial department directly allocates interest discount funds to the Company, the
Company shall use corresponding interest discount funds to offset related borrowing costs.
25. Deferred income tax assets/liabilities
Recognition of deferred income tax assets for deductible temporary differences is limited to the amount of taxable income that is likely to be available in the future to offset the deductible temporary differences. Deferred tax assets are only recognized for deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible losses and tax credits can be utilized.
Taxable temporary differences, except for special circumstances, shall be recognized as deferred income tax liabilities.
The special circumstances where deferred income tax assets or deferred income tax liabilities are not recognized include: initial recognition of goodwill; other transactions or events that occur in addition to business combinations that do not affect accounting profits or taxable income (or deductible losses).
When there is a statutory right to settle on a net basis and the intention is to settle the net amount or acquire the assets and pay off the liabilities simultaneously, the current income tax assets and current income tax liabilities shall be reported based on the net amount after offset.
When there is a statutory right to settle current income tax assets and current income tax liabilities on a net basis, and deferred income tax assets and deferred income tax liabilities are related to the income tax levied by the same tax collection authority on the same 242 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. taxpayer or related to different taxpayers, however, in the future period in which each of the important deferred income tax assets and liabilities are reversed, if the taxpayer involved intends to settle current income tax assets and liabilities on a net basis or acquire assets and liquidate liabilities at the same time, the deferred income tax assets and deferred income tax liabilities shall be presented at the net amount after offset.
26. Lease
(1) Accounting treatment method of operating lease
(1) The lease fee paid by the Company for renting assets shall be apportioned based on straight-line method over the entire lease term without deduction of the rent-free period and shall be included in current expenses. The initial direct expenses paid by the Company related to the leasing transaction are included in the current expenses.
If the lessor of assets bears the expenses related to the lease that shall be borne by the
Company, the Company shall deduct the same from the total rent, apportion it based on the rent expenses during the lease term and included the same in current expenses.
(2) The rental fee charged by the Company for leasing assets shall be apportioned on a straight-line basis and recognized as rental income over the entire lease term without deduction of the rent-free period. The initial direct expenses related to lease transaction paid by the Company shall be included in current expenses; if the amount is large, it shall be capitalized and included in current income by stages throughout the lease period according to the same principles based on which lease income is recognized.
When the Company assumes the lease related expenses payable by the lessee, the
Company deducts such expenses from the total rent income and allocates the balance of the rent after deduction within the lease term.
(2) Accounting treatment method of financing lease
(1) Financing assets leased: The Company shall, at start of the leasing period, make the lower between the fair value of leased assets and the current value of minimum payment for 243 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. leasing as the account value of the rent-in assets, the minimum payment for leasing as the account value of long-term payables, and the difference as unrecognized financing charges.
The Company amortizes the unrecognized financing expenses by the effective interest rate method during the asset leasing period and includes the amortized financing expenses in the financial expenses. The occurred initial direct expenses shall be attributed to rent-in assets value.
(2) Financing assets rented out: The Company shall recognize the difference between the sum of the finance lease receivables and the unguaranteed residual value and its present value as unrealized financing income on start date of lease, and shall recognize this difference as rental income. The initial direct expenses incurred by the Company related to the lease transaction are recorded in the initial measurement of the financing lease receivables and the amount of income recognized within the lease term reduced.
27. Discontinued operations
Termination of business is a separately distinguishable component that satisfies one of the following conditions and that has been disposed of by the Company or classified by the
Company as held for sale:
(1) The component represents an independent primary business or a major business area.
(2) This component is part of an associated plan to be disposed of for an independent primary business or a separate primary business area.
(3) This component is a subsidiary that is acquired for resale.
28. Changes in significant accounting policies and accounting estimates
(1) Changes in accounting policies
√ Applicable □ Not applicable
244 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
(1) Implement Notice on Revising and Issuing the Format of 2019 Financial Statement for
General Enterprises by Ministry of Finance and Notice on Revising and Issuing the Format of Consolidated Financial Statement (Version 2019)
The Ministry of Finance issued Notice on Revising and Issuing the Format of 2019 Financial
Statement for General Enterprises (C. K. (2019) No. 6) and Notice on Revising and Issuing the Format of Consolidated Financial Statement (Version 2019) (C. K. (2019) No. 6) on Apr.
30, 2019 and Sep. 19, 2019 respectively, making modifications to format of general financial statements of enterprises. Main effects of the Company’s implementation of the above provisions are as follows:
Content of and reasons for Name and amount of affected item in statements Approval changes in accounting procedures policies Consolidation Parent company
“Notes receivable and accounts “Notes receivable and accounts receivable” shall be divided into receivable” shall be divided into (1) “Notes receivable and “notes receivable” and “accounts “notes receivable” and “accounts accounts receivable” in receivable”. Balance at the end of receivable”. Balance at the end of balance sheet shall be last year for “notes receivable” is last year for “notes receivable” is divided and listed as RMB712,636,370.67, and balance RMB220,905,272.29, and balance “notes receivable” and at the end of last year for at the end of last year for Examination “accounts receivable”; “accounts receivable” is “accounts receivable” is and “notes payable and RMB1,099,681,911.52; RMB619,612,072.19; approval by accounts payable” shall be “Notes payable and accounts “Notes payable and accounts the Board of divided and listed as payable” shall be divided into payable” shall be divided into Directors “notes payable” and “notes payable” and “accounts “notes payable” and “accounts “accounts payable”; and payable”. Balance at the end of payable”. Balance at the end of last corresponding adjustment last year for “notes payable” is year for “notes payable” is shall be made to RMB1,178,503,367.08, and RMB1,047,206,000.00, and comparison data. balance at the end of last year for balance at the end of last year for “accounts payable” is “accounts payable” is RMB1,259,382,923.61. RMB437,938,725.42.
(2) Add the item of “Therein: Derecognized earnings of financial assets Examination “Derecognized earnings of “Derecognized earnings of measured at amortized and financial assets measured at financial assets measured at cost” under investment approval by amortized cost” in the current amortized cost” in the current return in the profit the Board of period amount to RMB0. period amount to RMB0. statement. No adjustment Directors is made to comparison data.
245 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
(2) Implement Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instrument, Accounting Standards for Business Enterprises No.
23 - Financial Asset Transfer, Accounting Standards for Business Enterprises No. 24 -
Hedge Accounting, and Accounting Standards for Business Enterprises No. 37 - Financial
Instrument Reporting (revised in 2017)
The Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instrument, Accounting Standards for Business Enterprises No. 23 - Financial
Asset Transfer, Accounting Standards for Business Enterprises No. 24 - Hedge Accounting, and Accounting Standards for Business Enterprises No. 37 - Financial Instrument Reporting were revised by the Ministry of Finance in 2017. The revised Standards stipulate that regarding the financial instrument that is not derecognized on first implementation date, if the requirements of previous recognition and measurement conflict with that of revised
Standards, the retroactive adjustment shall be made. No adjustment is required to be made with respect to the inconsistency between the requirement of previous comparative financial statement data and that of revised Standards. The Company will adjust retained income and other comprehensive income based on the cumulative amount affected by retroactive adjustment.
Based on the balance at the end of last year adjusted in accordance with the provisions of
C. K. [2019] No. 6 and C. K. [2019] No. 16, the main effects of implementing the above new financial instrument standards are as follows:
Name and amount of affected item in statements Content of and reasons for Approval changes in accounting policies procedures Consolidation Parent company
(1) As a result of name change of Examination Financial assets measured at Financial assets measured at items in statements, reclassify the and approval fair value with their changes fair value with their changes “financial assets (liabilities) by the Board included in current profit or included in current profit or measured at fair value with their of Directors loss: Decrease by loss: Decrease by
246 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
changes included in current profit RMB658,835,379.00. Trading RMB557,078,712.33. Trading and loss” into “trading financial financial assets: Increase by financial assets: Increase by assets (liabilities)” RMB658,835,379.00 RMB557,078,712.33
Notes receivable: Decrease Notes receivable: Decrease (2) Re-classify a part of by RMB700,880,940.95. by RMB219,149,842.57. “receivables” into “financial assets Examination Financial assets measured at Financial assets measured at (debt instruments) measured at and approval fair value with their changes fair value with their changes fair value with their changes by the Board included in other included in other included in other comprehensive of Directors comprehensive income: comprehensive income: income” Increase by Increase by RMB700,880,940.95. RMB219,149,842.57.
Other receivables: Decrease by RMB1,122,515.76; Other (3) Set aside expected credit loss payables: Decrease by reserve for “financial assets Examination RMB2,513,503.12; Long- measured at amortized cost” and and approval term receivables: Increase by “financial assets (debt Not involved by the Board RMB1,122,515.76; Short- instruments) measured at fair of Directors term borrowings: Increase by value with their changes included RMB1,375,128.81; Long- in other comprehensive income”. term borrowing: Increase by RMB1,138,374.31.
Based on the balance at the end of last year adjusted in accordance with the provisions of
C. K. [2019] No. 6 and C. K. [2019] No. 16, the classification and measurement results for various financial assets and liabilities conducted according to financial instrument recognition and measurement standards before and after revision are compared as follows:
Consolidation
Original financial instrument standards New financial instrument standards
Measurement Measurement Item presented Net book value Item presented Net book value classification classification
Measured at fair Financial assets value with Measured at fair value at fair value changes Financial assets 658,835,379.00 with changes included in 658,835,379.00 through profit or included in held for trading current profit and loss loss current profit and loss
Notes receivable Amortized cost 11,755,429.72 Notes receivable Amortized cost 712,636,370.67 Receivables Measured at fair value 700,880,940.95 financing with changes included in
247 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
other comprehensive income
Other receivables Amortized cost 33,718,440.27 Other Amortized cost 34,840,956.03 receivables Long-term Amortized cost 1,122,515.76 receivables
Other payables Amortized cost 156,724,321.41
Short-term Amortized cost 1,375,128.81 Other payables Amortized cost 159,237,824.53 borrowings
Long-term Amortized cost 1,138,374.31 borrowings
Parent company
Original financial instrument standards New financial instrument standards
Measurement Measurement Item presented Net book value Item presented Net book value classification classification
Measured at fair Financial assets Measured at fair value value at fair value with changes included Financial assets 557,078,712.33 with changes 557,078,712.33 through profit in current profit and held for trading included in current or loss loss profit and loss
Notes receivable Amortized cost 1,755,429.72
Notes Amortized cost 220,905,272.29 Measured at fair receivable Receivables value with changes 219,149,842.57 financing included in current profit and loss
(3) Implement Accounting Standards for Business Enterprises No. 7 - Non-Currency Asset
Exchange (revised in 2019)
The Ministry of Finance issued Accounting Standards for Business Enterprises No. 7 - Non-
Currency Asset Exchange (Revised in 2019) (C. K. [2019] No. 8) on May 9, 2019. The revised standards were implemented as of Jun. 10, 2019. Non-currency asset exchange occurred from Jan. 1, 2019 to the implementation date of the standards shall be adjusted according to the standards. Non-currency asset exchange occurred before Jan. 1, 2019 is
248 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. not required to be subject to retroactive adjustment according to the standards. The
Company’s implementation of the above standards has no significant impacts in the reporting period.
(4) Implement Accounting Standards for Business Enterprises No. 12 - Debt Reorganization
(revised in 2019)
The Ministry of Finance issued Accounting Standards for Business Enterprises No.12 - Debt
Reorganization (Revised in 2019) (C. K. [2019] No. 9) on May 16, 2019. The revised standards were implemented as of Jun. 10, 2019. Debt reorganization occurred from Jan.
1, 2019 to the implementation date of the standards shall be adjusted according to the standards. Debt reorganization occurred before Jan. 1, 2019 is not required to be subject to retroactive adjustment according to the standards. The Company’s implementation of the above standards affected an amount of RMB24,941,728.28, of which increased other income - debt reorganization totalled RMB24,941,728.28 and decreased non-business income - debt reorganization totalled RMB24,941,728.28.
(2) Changes in important accounting estimates
□ Applicable √ Not applicable
(3) Adjustment and implementation of relevant items in financial statements at the beginning of the year as a result of the implementation of new financial instrument standards, new income standards or new lease standards as of 2019
√ Applicable □ Not applicable
Consolidated Balance Sheet Monetary Unit: Yuan
Item Dec. 31, 2018 Jan. 1, 2019 Adjusted amount
Current assets:
249 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Cash at bank and on hand 1,684,382,500.87 1,684,382,500.87
Provision for securities settlement
Funds lent
Financial assets held for 658,835,379.00 658,835,379.00 trading
Financial assets at fair 658,835,379.00 -658,835,379.00 value through profit or loss
Derivative financial assets
Notes receivable 712,636,370.67 11,755,429.72 -700,880,940.95
Accounts receivable 1,099,681,911.52 1,099,681,911.52
Receivables financing 700,880,940.95 700,880,940.95
Advance payment 218,033,111.50 218,033,111.50
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves receivable
Other receivables 34,840,956.03 33,718,440.27 -1,122,515.76
Thereinto: Interests receivable
Dividends receivable
Buying back the sale of financial assets
Inventories 1,947,721,511.24 1,947,721,511.24
Contract assets
Assets held for sale
Non-current assets matured within one year
Other current assets 111,397,079.43 111,397,079.43
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Total current assets 6,467,528,820.26 6,466,406,304.50 -1,122,515.76
Non-current assets:
Loans and advances 282,814,500.00 282,814,500.00
Investments on bonds
Available-for-sale financial assets
Other investments on bonds
Held-to-maturity investments
Long-term receivables 215,964,897.35 217,087,413.11 1,122,515.76
Long-term equity 11,625,909.94 11,625,909.94 investments
Other equity instrument investments
Other non-current financial assets
Investment properties 52,195,136.57 52,195,136.57
Fixed assets 5,843,524,617.18 5,843,524,617.18
Construction in progress 1,413,238,779.28 1,413,238,779.28
Bearer biological assets
Oil and gas assets
Right-of-use assets
Intangible assets 1,246,645,639.67 1,246,645,639.67
Development costs
Goodwill 4,985,888,761.43 4,985,888,761.43
Long-term unamortized 52,251,712.94 52,251,712.94 expenses
Deferred tax assets 182,217,136.72 182,217,136.72
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Other non-current assets 169,777,137.18 169,777,137.18
TOTAL NON-CURRENT 14,456,144,228.26 14,457,266,744.02 1,122,515.76 ASSETS
TOTAL ASSETS 20,923,673,048.52 20,923,673,048.52
Current liabilities:
Short-term borrowings 3,633,223,440.00 3,634,598,568.81 1,375,128.81
Borrowings from central bank
Loans from other financial institutions
Financial liabilities held for trading
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable 1,178,503,367.08 1,178,503,367.08
Accounts payable 1,259,382,923.61 1,259,382,923.61
Advances from customers 85,667,651.39 85,667,651.39
Contract liabilities
Financial assets sold for repurchase
Deposits from customers and interbank
Payment for trading securities by agency
Payment for underwriting securities by agency
Employee benefits payable 209,555,057.41 209,555,057.41
Taxes and surcharges 243,421,541.33 243,421,541.33 payable
Other payables 159,237,824.53 156,724,321.41 -2,513,503.12
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Thereinto: Interests 264,896.50 264,896.50 payable
Dividends payable 1,420,000.00 1,420,000.00
Handling charges and commissions payable
Reinsurance accounts payable
Liabilities held for sale
Non-current liabilities 578,127,672.50 578,127,672.50 maturing within one year
Other current liabilities
TOTAL CURRENT 7,347,119,477.85 7,345,981,103.54 -1,138,374.31 LIABILITIES
Non-current liabilities:
Insurance contract reserves
Long-term borrowings 407,807,282.10 408,945,656.41 1,138,374.31
Bonds payable
Including: Preferred stock
Perpetual bond
Lease liabilities
Long-term payables 200,000,000.00 200,000,000.00
Long-term employee benefits payable
Accrued liabilities 4,169,943.33 4,169,943.33
Deferred income 184,070,128.41 184,070,128.41
Deferred income tax 146,504,289.96 146,504,289.96 liabilities
Other non-current liablities
Total non-current liabilities 942,551,643.80 943,690,018.11 1,138,374.31
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Total liabilities 8,289,671,121.65 8,289,671,121.65
Owner’s equity:
Capital stock 2,032,020,889.00 2,032,020,889.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Capital surplus 9,581,876,882.10 9,581,876,882.10
Less: Treasury shares 663,155,409.81 663,155,409.81
Other comprehensive 1,924,206.40 1,924,206.40 income
Special reserve 22,284,630.23 22,284,630.23
Surplus reserve 478,506,573.31 478,506,573.31
General risk provisions 6,113,341.37 6,113,341.37
Undistributed profits 963,324,133.72 963,324,133.72
Total equity attributable to equity owners of the 12,422,895,246.32 12,422,895,246.32 Parent Company
Minority interests 211,106,680.55 211,106,680.55
Total owner’s equity 12,634,001,926.87 12,634,001,926.87
Total liabilities and owners’ 20,923,673,048.52 20,923,673,048.52 equity
Description of adjustment
Parent Company Balance Sheet Monetary Unit: Yuan
Item Dec. 31, 2018 Jan. 1, 2019 Adjusted amount
Current assets:
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Cash at bank and on hand 1,020,479,716.39 1,020,479,716.39
Financial assets held for 557,078,712.33 557,078,712.33 trading
Financial assets at fair 557,078,712.33 -557,078,712.33 value through profit or loss
Derivative financial assets
Notes receivable 220,905,272.29 1,755,429.72 -219,149,842.57
Accounts receivable 619,612,072.19 619,612,072.19
Receivables financing 219,149,842.57 219,149,842.57
Advance payment 59,005,279.37 59,005,279.37
Other receivables 311,080,609.16 311,080,609.16
Thereinto: Interests receivable
Dividends receivable
Inventories 580,274,655.82 580,274,655.82
Contract assets
Assets held for sale
Non-current assets matured within one year Assets
Other current assets 53,370,967.21 53,370,967.21
Total current assets 3,421,807,284.76 3,421,807,284.76
Non-current assets:
Investments on bonds
Available-for-sale financial assets
Other investments on bonds
Held-to-maturity investments
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Long-term receivables
Long-term equity 12,086,678,848.70 12,097,571,928.41 investments
Other equity instrument investments
Other non-current financial assets
Investment properties 50,352,066.06 50,352,066.06
Fixed assets 1,245,193,004.81 1,245,193,004.81
Construction in progress 342,900,941.52 342,900,941.52
Bearer biological assets
Oil and gas assets
Right-of-use assets
Intangible assets 200,302,562.43 200,302,562.43
Development costs
Goodwill
Long-term unamortized 139,589.24 139,589.24 expenses
Deferred tax assets 16,982,898.30 16,982,898.30
Other non-current assets 49,354,846.55 49,354,846.55
TOTAL NON-CURRENT 13,991,904,757.61 13,991,904,757.61 ASSETS
TOTAL ASSETS 17,413,712,042.37 17,413,712,042.37
Current liabilities:
Short-term borrowings 2,346,327,440.00 2,346,327,440.00
Financial liabilities held for trading
Financial liabilities at fair value through profit or loss
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Derivative financial liabilities
Notes payable 1,047,206,000.00 2,346,327,440.00
Accounts payable 437,938,725.42 437,938,725.42
Advances from customers 26,334,853.82 26,334,853.82
Contract liabilities
Employee benefits payable 75,975,094.77 75,975,094.77
Taxes and surcharges 31,282,743.70 31,282,743.70 payable
Other payables 1,121,227,659.73 1,121,227,659.73
Thereinto: Interests payable
Dividends payable
Liabilities held for sale
Non-current liabilities 510,000,000.00 510,000,000.00 maturing within one year
Other current liabilities
TOTAL CURRENT 5,596,292,517.44 5,596,292,517.44 LIABILITIES
Non-current liabilities:
Long-term borrowings 135,000,000.00 135,000,000.00
Bonds payable
Including: Preferred stock
Perpetual bond
Lease liabilities
Long-term payables
Long-term employee benefits payable
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Accrued liabilities
Deferred income 6,990,909.08 6,990,909.08
Deferred income tax 1,061,806.85 1,061,806.85 liabilities
Other non-current
liablities
Total non-current liabilities 143,052,715.93 143,052,715.93
Total liabilities 5,739,345,233.37 5,739,345,233.37
Owner’s equity:
Capital stock 2,032,020,889.00 2,032,020,889.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Capital surplus 9,572,892,476.05 9,572,892,476.05
Less: Treasury shares 663,155,409.81 663,155,409.81
Other comprehensive
income
Special reserve
Surplus reserve 478,506,573.31 478,506,573.31
Undistributed profits 254,102,280.45 254,102,280.45
Total owner’s equity 11,674,366,809.00 11,674,366,809.00
Total liabilities and owners’ 17,413,712,042.37 17,413,712,042.37 equity
Description of adjustment
According to new financial instrument standards, the Company will re-classify the “financial assets measured at fair value with their changes included in current profit and loss” into
258 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. trading financial assets, and will re-classify notes receivable into receivables financing according to the management mode of notes receivable. Interests of financial instruments accrued based on effective interest method shall be included in book balance of corresponding financial instruments. Interests receivable and interests payable accrued correspondingly shall be reclassified into corresponding financial instruments.
Parent Company Balance Sheet
Adjusted amount Balance at the end Balance at the Item of the previous beginning of year Re- year Reclassified Total measured
Current assets:
Cash at bank and on 1,020,479,716.39 1,020,479,716.39 hand
Financial assets held Not applicable 557,078,712.33 557,078,712.33 557,078,712.33 for trading
Financial assets at fair value through 557,078,712.33 Not applicable -557,078,712.33 -557,078,712.33 profit or loss
Derivative financial
assets
Notes receivable 220,905,272.29 1,755,429.72 -219,149,842.57 -219,149,842.57
Accounts receivable 619,612,072.19 619,612,072.19
Receivables Not applicable 219,149,842.57 219,149,842.57 219,149,842.57 financing
Advance payment 59,005,279.37 59,005,279.37
Other receivables 311,080,609.16 311,080,609.16
Inventories 580,274,655.82 580,274,655.82
Assets held for sale
Non-current assets matured within one
year Assets
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Other current assets 53,370,967.21 53,370,967.21
Total current assets 3,421,807,284.76 3,421,807,284.76
Non-current assets:
Investments on Not applicable bonds
Financial assets Not applicable available for sale
Other investments Not applicable on bonds
Held-to-maturity Not applicable investments
Long-term receivables
Long-term equity 12,086,678,848.70 12,086,678,848.70 investments
Other equity instrument Not applicable investments
Other non-current Not applicable financial assets
Investment 50,352,066.06 50,352,066.06 properties
Fixed assets 1,245,193,004.81 1,245,193,004.81
Construction in 342,900,941.52 342,900,941.52 progress
Bearer biological assets
Oil and gas assets
Intangible assets 200,302,562.43 200,302,562.43
Development expense
Goodwill
Long-term unamortized 139,589.24 139,589.24 expenses
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Deferred tax assets 16,982,898.30 16,982,898.30
Other non-current 49,354,846.55 49,354,846.55 assets
TOTAL NON- 13,991,904,757.61 13,991,904,757.61 CURRENT ASSETS
TOTAL ASSETS 17,413,712,042.37 17,413,712,042.37
Current liabilities:
Short-term 2,346,327,440.00 2,346,327,440.00 borrowings
Financial liabilities Not applicable held for trading
Financial liabilities at fair value through Not applicable profit or loss
Derivative financial liabilities
Notes payable 1,047,206,000.00 1,047,206,000.00
Accounts payable 437,938,725.42 437,938,725.42
Advances from 26,334,853.82 26,334,853.82 customers
Employee benefits 75,975,094.77 75,975,094.77 payable
Taxes and surcharges 31,282,743.70 31,282,743.70 payable
Other payables 1,121,227,659.73 1,121,227,659.73
Liabilities held for sale
Non-current liabilities maturing 510,000,000.00 510,000,000.00 within one year
Other current liabilities
TOTAL CURRENT 5,596,292,517.44 5,596,292,517.44 LIABILITIES
Non-current liabilities:
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Long-term 135,000,000.00 135,000,000.00 borrowings
Bonds payable
Including: Preferred stock
Perpetual bond
Long-term payables
Long-term employee benefits payable
Accrued liabilities
Deferred income 6,990,909.08 6,990,909.08
Deferred income tax 1,061,806.85 1,061,806.85 liabilities
Other non-current liablities
Total non-current 143,052,715.93 143,052,715.93 liabilities
Total liabilities 5,739,345,233.37 5,739,345,233.37
Owner’s equity:
Capital stock 2,032,020,889.00 2,032,020,889.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Capital surplus 9,572,892,476.05 9,572,892,476.05
Less: Treasury shares 663,155,409.81 663,155,409.81
Other comprehensive income
Special reserve
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Surplus reserve 478,506,573.31 478,506,573.31
Undistributed profits 254,102,280.45 254,102,280.45
Total owner’s equity 11,674,366,809.00 11,674,366,809.00
Total liabilities and 17,413,712,042.37 17,413,712,042.37 owners’ equity
Description of adjustments to various items:
According to new financial instrument standards, the Company will re-classify the “financial assets measured at fair value with their changes included in current profit and loss” into trading financial assets, and will re-classify notes receivable into receivables financing according to the management mode of notes receivable.
(4) Comparison explanation of previous retroactive adjustment since the implementation of new financial instrument standards or new lease standards in 2019
□ Applicable √ Not applicable
29. Others
12.6 VI. Taxation
1. Major taxes and tax rates
Tax category Taxation basis Tax rate
Output tax is calculated on the basis of the sold goods and taxable income from labor services calculated according to the tax law. After deducting the input Value-added tax 16%、13%、10%、9%、6%、5%、3% tax amount that is allowed to be deducted in the current period, the difference is included in the value- added tax payable.
Value-added tax and consumption tax Urban maintenance and construction are calculated and paid based on that 7%、5%、1% tax actually paid
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Calculation and payment based on Corporate income tax 25%、20%、16.5%、15%、8.25% taxable income
Value-added tax and consumption tax Educational surtax 3% are levied based on that actually paid
Value-added tax and consumption tax Local education surcharge 2% are levied based on that actually paid
If the taxpaying entities apply to different enterprise income tax rates, details shall be disclosed
Taxpayer name Income tax rate
Lomon Billions Group Co., Ltd. 15.00%
Henan Billions New Material Co., Ltd. 15.00%
Henan Rongjiayu Technology Co., Ltd. 15.00%
Longbai Sichuan Titanium Industry Co., Ltd. 15.00%
Lomon Billions Sichuan Titanium Industry Co., Ltd. 15.00%
Panzhihua Lomon Mineral Products Co., Ltd. 15.00%
Xiangyang Lomon Titanium Industry Co., Ltd. 15.00%
Billions (Hong Kong) Co., Ltd. 16.50%、8.25%
Billions Europe Ltd. 20.00%
Lomon US Ltd. 20.00%
Jiaozuo Bailiyuan Reservoir Management Co., Ltd. 25.00%
Jiaozuo Xingtai Resources Comprehensive Utilization Co., Ltd. 25.00%
Jiaozuo City Zhongli District Yili Microfinance Co., Ltd. 25.00%
Henan Longxiangshan Tourism Development Co., Ltd. 25.00%
Jiaozuo Billions United Pigment Co., Ltd. 25.00%
Billions Finance Lease (Guangzhou) Co., Ltd. 25.00%
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Panzhihua Ruierxin Industry and Trade Co., Ltd. 25.00%
BILLIONS AMERI CACORPORATION 20.00%
Henan Lomon Billions Intelligent Equipment Manufacturing 25.00% Co., Ltd.
Yunnan Metallurgical Xinli Titanium Co., Ltd. 25.00%
2. Tax incentives
1. According to the High-tech Enterprise Certificate (Certificate No.: GR201741000264) jointly issued by Henan Provincial Department of Science and Technology, Henan Provincial
Department of Finance, Henan Provincial State Taxation Bureau and Henan Provincial
Local Taxation Bureau, the Company passed the 2017 high-tech enterprise certification
(certificate number: GR201741000264) and enjoyed relevant preferential policies for high- tech enterprises for three consecutive years from 2017 to 2019, and paid corporate income tax at a rate of 15% this year.
2. According to the Notice of the Second Batch of Proposed High-tech Enterprises in Henan
Province in 2018 issued by the Office of the National High-tech Enterprise Certification
Management Leading Group on Nov. 29, 2018, Henan Billions New Material Co., Ltd. has passed the high-tech enterprise certification (certificate number: GR201841001107), is entitled to enjoy preferential policies for high-tech enterprises for three consecutive years from 2018 to 2020, and has paid corporate income tax at a rate of 15% this year.
3. According to the Notice of the Second Batch of Proposed High-tech Enterprises in Henan
Province in 2018 issued by the Office of the National High-tech Enterprise Certification
Management Leading Group on Nov. 29, 2018, Henan Rongjia Scandium Vanadium
Technology Co., Ltd. has passed the high-tech enterprise certification (certificate number:
GR201841000749), is entitle to enjoy preferential policies for high-tech enterprises for three
265 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. consecutive years from 2018 to 2020, and has paid corporate income tax at a rate of 15% this year.
4. According to the provisions of the Notice on Implementing the Tax Policy Issues Related to the Strategy of the Western Development (C. S. [2011] No. 58) issued by Ministry of
Finance, General Administration of Customs and State Administration of Taxation, corporate income tax will be levied at a reduced rate of 15% on encouraged industrial enterprises
(refer to enterprises that are mainly engaged in the industrial projects specified in the
Catalogue of Encouraged Industries in the Western Region, and whose main business income accounts for more than 70% of their total income) located in the western region from
January 1, 2011 to December 31, 2020; according to the provisions of the Announcement on Deepening the Implementation of the Western Development Strategy Related to
Enterprise Income Tax Issues (G. J. S. W. Z. J. G. G. [2012] No. 12), enterprises that enjoy tax preference on corporate income tax in the Western Development Strategy shall be reviewed and confirmed by competent tax authorities in the first year and shall be subject to filing management in the second year and subsequent years. If the enterprises comply with the Industrial Structure Adjustment Guidance Catalogue (2011) and other provisions before publication of the Catalogue of Encouraged Industries in the Western Region, they may pay their corporate income tax at the rate of 15% upon confirmation by tax authorities. If the enterprises that have paid enterprise income tax at the rate of 15% after publication of
Catalogue of Encouraged Industries in the Western Region do not meet relevant requirements, they may recalculate and declare at the applicable tax rate stipulated by the tax law after performing relevant procedures. With the approval of the State Council,
National Development and Reform Commission issued the Catalogue of Encouraged
Industries in the Western Region (Order No. 15 of the National Development and Reform
Commission of the People’s Republic of China), which took effect on October 1, 2014.
(1) As confirmed by the Approval on Confirming Main Businesses of 6 Enterprises Including
Sichuan Dongfang Bearing Manufacture Co., Ltd. As State-encouraged Industrial Projects 266 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
(C. J. X. C. Y. H. [2012] No. 402) issued by Sichuan Provincial Economic and Information
Commission, main businesses of Lomon Billions Sichuan Titanium Industry Co., Ltd. belong to encouraged industries set out in the Guiding Catalogue for the Adjustment of Industrial
Structure (Version in 2011) (No. 9 Order of National Development and Reform Commission) and paid corporate income tax in 2019 at the rate of 15%.
(2) As confirmed by the Approval on Confirming Main Businesses of 27 Enterprises Including
Escommuco (Sichuan) Fertilizer Co., Ltd. As State-encouraged Industrial Projects (C. J. X.
C. Y. H. [2012] No. 1212) issued by Sichuan Provincial Economic and Information
Commission, main businesses of Sichuan Lomon Mining and Metallurgy Co., Ltd. and
Panzhihua Dragon Python Mineral Products Co., Ltd. belong to encouraged industries set out in the Guiding Catalogue for the Adjustment of Industrial Structure (Version in 2011) (No.
9 Order of National Development and Reform Commission) and paid corporate income tax in 2019 at the rate of 15%.
Besides:
Lomon Billions Sichuan Titanium Industry Co., Ltd. passed the re-authentication for high- tech enterprises on Oct. 14, 2019, and obtained the high-tech enterprises certificate jointly issued by Science & Technology Department of Sichuan Province, Sichuan Provincial
Finance Department and Sichuan Provincial Tax Service, State Taxation Administration, with certificate number of GR201951000778 and a valid term of 3 years. According to
Enterprise Income Tax Law and its relevant provisions, Lomon Billions Sichuan Titanium
Industry Co., Ltd., within three years (from 2019 to 2021) since its acquisition of high-tech enterprises authentication, shall be entitled to relevant preferential policies issued by the country for high-tech enterprises, and in 2019, the company shall be entitled to a preferential corporate income tax rate of 15%.
Sichuan Lomon Mining and Metallurgy Co., Ltd. obtained the High-tech Enterprise
Certificate (certificate number: GR201851001346) jointly issued by Science & Technology 267 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Department of Sichuan Province, Sichuan Provincial Finance Department and Sichuan
Provincial Tax Service, State Taxation Administration on Dec. 3, 2018, with a valid term of
3 years. Sichuan Lomon Mining and Metallurgy Co., Ltd., within three years (from 2018 to
2020) since its acquisition of high-tech enterprise authentication, shall be entitled to relevant preferential policies issued by the country for high-tech enterprises.
5. On Nov. 28, 2017, Xiangyang Lomon Titanium Industry Co., Ltd. obtained the High-tech
Enterprise Certificate jointly recognized by Hubei Science and Technology Department,
Hubei Provincial Finance Department, Hubei Provincial State Taxation Bureau and Hubei
Provincial Local Taxation Bureau with a valid term of three years and certificate number of
GR201742001720, with which certificate the company enjoyed a preferential corporate income tax rate of 15% in 2019 according to the Enterprise Income Tax Law and other applicable regulations.
6. Billions (Hong Kong) Co., Ltd. paid corporate income tax at a rate of 8.25% for its income less than HKD 2 million and at a rate of 16.5% for its income exceeding HKD 2 million according to the latest preferential tax policy promulgated in Hong Kong.
3. Miscellaneous
None
12.7 VII. Notes on Items in Consolidated Financial Statements 1. Monetary fund Monetary Unit: Yuan
Item Closing balance Opening balance
Cash on hand 100,644.89 99,953.99
Cash at bank 976,747,868.08 1,485,440,837.24
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Other monetary funds 1,663,802,652.41 198,841,709.64
Total 2,640,651,165.38 1,684,382,500.87
Including: total amount of cash 77,542,118.66 37,711,777.19 deposited overseas
Other instructions
The details of monetary funds that are subject to restrictions on the use of monetary funds due to mortgage, pledge or freeze, and that are deposited abroad and subject to restrictions on remittance-back are as follows:
Item Closing balance Opening balance
Margin for banker’s acceptance bills 10,000,116.77 188,841,709.64
Fixed deposits used for drawing a 1,573,802,535.64 warrant for pledge
Bank deposits frozen by court 1,713,053.60
Total 1,585,515,706.01 188,841,709.64
2. Trading financial assets Monetary Unit: Yuan
Item Closing balance Opening balance
Financial assets at fair value through 658,835,379.00 profit or loss
Therein:
Other decreases 658,835,379.00
Therein:
Total 658,835,379.00
Other descriptions: Other items are structured bank deposits. 269 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
3. Notes receivable
(1) Breakdown of notes receivable Monetary Unit: Yuan
Item Closing balance Opening balance
Commercial acceptance bill 37,358,180.56 11,755,429.72
Total 37,358,180.56 11,755,429.72
4. Accounts receivable
(1) Disclosure of classification of accounts receivable Monetary Unit: Yuan Closing balance Opening balance
Provision for Provision for Book balance Book balance bad debt bad debt Categ Net Net ory Prop Prop book book Perc ortio Perc ortio value Amoun value Amount entag Amount n of Amount entag n of t e accr e accr ual ual
Acco unts receiv able with bad 3,349,57 0.20 3,349,57 100. 2,207,83 0.19 2,207, 100.
debt 7.71 % 7.71 00% 1.68 % 831.68 00% reser ve set aside indivi dually
There
in:
Acco unt receiv 63,084 able 1,696,11 99.80 1,696,11 5.38 1,604,91 1,162,76 99.81 5.43 1,099,68 ,835.1 for 4,817.32 % 4,817.32 % 7,925.44 6,746.67 % % 1,911.52 5 which bad debt
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provis ion is made by group
There
in:
Aging 63,084 1,696,11 99.80 1,696,11 5.38 1,604,91 1,162,76 99.81 5.43 1,099,68 combi ,835.1 4,817.32 % 4,817.32 % 7,925.44 6,746.67 % % 1,911.52 nation 5
65,292 1,699,46 100.0 1,699,46 5.56 1,604,91 1,164,97 100.0 5.60 1,099,68 Total ,666.8 4,395.03 0% 4,395.03 % 7,925.44 4,578.35 0% % 1,911.52 3
Bad debt reserve set aside individually: Monetary Unit: Yuan
Closing balance Name Provision for bad Proportion of Book balance Reason debt accrual
Yillong Chemical Group Expected to Co., Ltd. 1,479,941.18 1,479,941.18 100.00% unrecoverable (YILLONG) Shanghai
Hebi Zhongyi Profile Co., Expected to 788,189.00 788,189.00 100.00% Ltd. unrecoverable
Jiaozuo Yuhang Profile Expected to 519,000.00 519,000.00 100.00% Co., Ltd. unrecoverable
Linhai Yaoxin Trading Co., Expected to 212,400.00 212,400.00 100.00% Ltd. unrecoverable
Jiaozuo Zhongchen Expected to 202,357.53 202,357.53 100.00% Trading Co., Ltd. unrecoverable
Zhejiang Jiabang Expected to 143,810.00 143,810.00 100.00% Chemical Co., Ltd. unrecoverable
Cathay Pigments (Yixing Expected to Xingjin Pigments 3,880.00 3,880.00 100.00% unrecoverable Chemicals Co., Ltd.)
Total 3,349,577.71 3,349,577.71 -- --
Disclosure based on account age
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Monetary Unit: Yuan
Account age Book balance
Within 1 year(including 1 year) 1,675,204,061.70
1-2 years 10,231,817.99
2-3 years 4,047,249.83
Over 3 years 9,981,265.51
3-4 years 336.00
4-5 years 5,412,411.39
Over 5 years 4,568,518.12
Total 1,699,464,395.03
(2) Provision for bad debts withdrawn, recovered or reversed in the current period
Accrual of bad debt reserve of the current period: Monetary Unit: Yuan
Changes in amount of the current period Category Opening balance Closing balance Recovery or Appropriation Write-off reversal
Receivables with combined appropriation of provisions for 63,084,835.15 30,721,803.73 2,609,747.00 91,196,891.88 bad debts based on credit risk characteristics
Receivables with insignificant individual amount and appropriation of 2,207,831.68 1,472,631.18 330,885.15 3,349,577.71 provisions for bad debts on individual amount
Total 65,292,666.83 32,194,434.91 2,940,632.15 94,546,469.59
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Thereinto, the significant amount of provision for bad debts that is recovered or reversed in the current period:
Monetary Unit: Yuan
Company name Amount recovered or reversed Recovery method
(3) Accounts receivable actually written off in the current period Monetary Unit: Yuan
Item Amount written off
Fuzhou Baililong Chemicals Co., Ltd. 1,640,237.00
Harbin Bier Industry and Trade Co., Ltd. 926,800.00
Jiaozuo Maikerui New Building Materials Co., Ltd. 330,885.15
Luoyang Sunrui Wanji Titanium Industry Co., Ltd. 42,710.00
Total 2,940,632.15
Therein: Important receivables written off: Monetary Unit: Yuan Whether the Write-off amount arises Nature of Amount written Causes for Company name procedures from related receivables off write-off performed party transaction
No
Description of write-off of accounts receivable
(4) Top five accounts receivable by the closing balance of arrears Monetary Unit: Yuan Proportion to total ending Ending balance of accounts Ending balance of provision Company name balance of accounts receivable for bad debts receivable
No.1 94,185,540.40 5.54% 4,709,277.02
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No.2 76,981,738.40 4.53% 3,849,086.92
No.3 64,842,629.82 3.82% 3,242,131.49
No.4 50,481,876.06 2.97% 3,186,658.40
No.5 42,879,865.36 2.52% 2,596,460.69
Total 329,371,650.04 19.38%
(5) Receivables derecognised due to transfer of financial assets
None
(6) Amount of assets and liabilities formed as a result of transfer of accounts receivable and continuing involvement
None
Other descriptions:
5. Receivables financing Monetary Unit: Yuan
Item Closing balance Opening balance
Notes receivable 334,530,263.20 700,880,940.95
Total 334,530,263.20 700,880,940.95
Increase and decrease in the current period of and changes in fair value of receivables financing
√ Applicable □ Not applicable
Increase and decrease in the current period of and changes in fair value of receivables financing
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Accumulated loss reserve Balance at the Derecognition in Other Increase in the Closing recognized in Item beginning of the current change current period balance other year period s comprehensiv e income
Bank 700,880,940.9 10,577,378,277.4 10,943,728,955.1 334,530,263.2 acceptanc 5 1 6 0 e notes
700,880,940.9 10,577,378,277.4 10,943,728,955.1 334,530,263.2 Total 5 1 6 0
Notes receivable pledged by the Company at the end of the period
Item Amount pledge at the end of the period Bank acceptance notes 140,338,168.16 Total 140,338,168.16
Notes receivables endorsed or discounted by the Company but not yet due as of the balance sheet date
Item Closing derecognized amount Closing amount not derecognized Bank acceptance notes 4,793,484,808.26 Total 4,793,484,808.26
If the impairment reserve of receivables financing is set aside in accordance with the general model of expected credit loss, relevant information of impairment reserve shall be disclosed by means of the disclosure method which is applicable to other receivables:
□ Applicable √ Not applicable
Other descriptions:
6. Advance payment
(1) Prepayments listed by account age Monetary Unit: Yuan
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Closing balance Opening balance Account age Amount Percentage Amount Percentage
Within one year 479,705,338.80 98.52% 207,359,748.28 95.10%
1-2 years 3,243,628.34 0.67% 9,402,376.25 4.31%
2-3 years 3,859,056.83 0.79% 1,270,986.97 0.59%
Over 3 years 85,883.86
Total 486,893,907.83 -- 218,033,111.50 --
Description of the reason why the prepayments with an age greater than 1 year and with an important amount are not settled in time:
(2) Prepayments with the top five ending balances that are ranked by prepayment object
Proportion to the total balance of Prepayment object Closing balance advance payment at the end of period (%)
No.1 144,320,819.64 29.64
No.2 44,664,451.56 9.17
No.3 23,221,237.60 4.77
No.4 17,775,477.22 3.65
No.5 16,787,366.00 3.45
Total 246,769,352.02 50.68
Other descriptions:
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7. Other receivables Monetary Unit: Yuan
Item Closing balance Opening balance
Other receivables 45,216,280.73 33,718,440.27
Total 45,216,280.73 33,718,440.27
1) Interests receivable
2) Classification of interests receivable Monetary Unit: Yuan Item Closing balance Opening balance Entrusted loan 3,867,750.00 3,867,750.00 Provision for bad debt -3,867,750.00 -3,867,750.00
2) Important overdue interests Monetary Unit: Yuan Whether any Cause leading to impairment occurs Borrower Closing balance Overdue time being overdue and corresponding basis of judgment
CEFC (Shanghai) Yes/Expected to Group Industrial 3,867,750.00 May 2, 2018 Insolvency unrecoverable Equipment Co., Ltd.
Total 3,867,750.00 ------
Other descriptions:
3) Accrual of bad debt reserve
√ Applicable □ Not applicable Monetary Unit: Yuan
Stage 1 Stage 2 Stage 3 Provision for bad Total debt Expected credit Expected credit loss in Expected credit loss in loss in future 12 the whole existence the whole existence months period (no credit period (with credit
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impairment) impairment)
Balance on Jan. 1, 2019 ------In the current period
Book balance change with significant changes in the amount of loss reserve in the current period
□ Applicable √ Not applicable
2) Other receivables
1) Classification of other receivables by nature of account
Monetary Unit: Yuan Carrying amount at the beginning of Fund nature Closing Book Balance the period
2) Accrual of bad debt reserve Monetary Unit: Yuan
Stage 1 Stage 2 Stage 3
Provision for bad Expected credit loss in Expected credit loss in Expected credit Total debt the whole existence the whole existence loss in future 12 period (no credit period (with credit months impairment) impairment)
Balance on Jan. 1, 43,569,921.32 21,500,000.00 65,069,921.32 2019
Balance on Jan. 1, 2019 ------In the current period
-- Amount carried 78,445.00 78,445.00 over to stage 3
Appropriation for 3,710,886.10 1,495,455.00 5,206,341.10 current period
Amount reversed in 1,935,814.90 19,400,947.51 21,336,762.41 the current period
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Other changes 8,720,727.92 6,326,583.56 15,047,311.48
Balance on Dec. 31, 53,987,275.44 9,999,536.05 63,986,811.49 2019
Book balance change with significant changes in the amount of loss reserve in the current period
□ Applicable √ Not applicable
Disclosure based on account age Monetary Unit: Yuan
Account age Book balance
Within 1 year(including 1 year) 35,720,733.29
1-2 years 12,781,970.76
2-3 years 1,268,633.24
Over 3 years 59,431,754.93
3-4 years 1,434,478.46
4-5 years 3,057,333.92
Over 5 years 54,939,942.55
Total 109,203,092.22
3) Accrual, recovery and reversal of bad debt reserve in the current year
Accrual of bad debt reserve of the current period: Monetary Unit: Yuan
Changes in amount of the current period Opening Category Closing balance balance Recovery or Appropriation Write-off reversal
Other accounts 21,500,000.0 receivable for 7,900,483.56 19,400,947.51 9,999,536.05 0 which the bad
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debt reserve is accrued on single item
Other accounts receivable for which the bad debt reserve is 43,569,921.3 12,353,169.02 1,935,814.90 53,987,275.44 accrued based on 2 credit risk characteristics portfolio
65,069,921.3 Total 20,253,652.58 21,336,762.41 63,986,811.49 2
Thereinto, the significant amount of provision for bad debts that is recovered or reversed in the current period: Monetary Unit: Yuan
Company name Reversed or recovered amount Recovery method
4) Other accounts receivable with top five closing balances as collected by arrears
Monetary Unit: Yuan Proportion in total balance of Ending balance Nature of other Company name Closing balance Account age of provision for payment receivables at bad debts the end of period
No.1 Investment fund 18,500,000.00 Over 5 years 16.94% 18,500,000.00
Land purchase No.2 17,000,000.00 Over 5 years 15.57% 17,000,000.00 price
No.3 Loan at call 10,000,000.00 Within one year 9.16% 500,000.00
Return of 3-4 years, 4-5 borrowing and No.4 6,912,797.16 years, and over 6.33% 5,888,704.40 land transfer 5 years price
Land for 3-4 years, 4-5 No.5 economically 3,037,600.00 years, and over 2.78% 3,037,600.00 affordable 5 years
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housing
Total -- 55,450,397.16 -- 50.78% 44,926,304.40
8. Inventory
Whether or not new income standards are applied
□ Yes √ No
(1) Classification of inventories Monetary Unit: Yuan
Closing balance Opening balance
Item Provision for Provision for decline in the Net book decline in the Net book Book balance Book balance value of value value of value inventories inventories
566,833,705. 11,822,419.4 555,011,285. 458,956,117. 457,464,027. Raw materials 1,492,090.45 35 7 88 69 24
Work in 632,796,100. 632,796,100. 391,275,893. 388,995,766. 2,280,126.69 progress 60 60 43 74
894,004,218. 891,212,006. 893,473,721. 893,457,394. Stock goods 2,792,211.71 16,326.83 43 72 49 66
Revolving 72,231,302.8 72,231,302.8 69,779,813.0 69,779,813.0
materials 3 3 8 8
Completed unsettled assets formed 965,005.64 965,005.64 based on construction contract
Materials in 69,034,097.6 69,034,097.6 138,024,509. 138,024,509.
transit 5 5 52 52
Consigned processing 2,183,995.70 2,183,995.70 material
2,238,048,42 14,614,631.1 2,223,433,79 1,951,510,05 1,947,721,51 Total 3,788,543.97 6.20 8 5.02 5.21 1.24
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(2) Provision for decline in the value of inventories Monetary Unit: Yuan
Increase in the current period Decrease in the current period Opening Closing Item balance Other Reversal or Other balance Appropriation decreases reselling decreases
11,822,419.4 Raw materials 1,492,090.45 2,296,453.52 8,033,875.50 7
Work in 2,280,126.69 2,280,126.69 progress
Stock goods 16,326.83 2,792,211.71 16,326.83 2,792,211.71
14,614,631.1 Total 3,788,543.97 5,088,665.23 8,033,875.50 2,296,453.52 8
9. Other current assets
Whether or not new income standards are applied
□ Yes √ No Monetary Unit: Yuan
Item Closing balance Opening balance
Prepaid corporate income tax 48,309,198.46
Tax to be deducted 469,787,900.07 63,087,880.97
Total 469,787,900.07 111,397,079.43
Other descriptions:
10. Loans released and advances
Loans are listed as below by category:
Item Closing balance Balance at the beginning of year
Principal of loans and advances 278,062,625.00 282,814,500.00
Interests of loans and advances 51,944.45
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Total 278,114,569.45 282,814,500.00
Principal of loans and advances
Five-level classification of loans and advances is as follows:
Closing balance Type of borrowings Amount Proportion (%) Provisions for loan loss Net amount
Normal 280,825,000.00 1.50 4,212,375.00 276,612,625.00
Special- 3.00 mentioned
Subordinate 1,500,000.00 30.00 450,000.00 1,050,000.00
Suspicious 1,000,000.00 60.00 600,000.00 400,000.00
Loss- 271,670,600.00 100.00 271,670,600.00 causing
Total 554,995,600.00 276,932,975.00 278,062,625.00
Balance at the beginning of year Type of borrowings Amount Proportion (%) Provisions for loan loss Net amount
Normal 137,700,000.00 1.50 2,065,500.00 135,634,500.00
Special- 3.00 mentioned
Subordinate 57,400,000.00 30.00 17,220,000.00 40,180,000.00
Suspicious 267,500,000.00 60.00 160,500,000.00 107,000,000.00
Loss- 5,500,000.00 100.00 5,500,000.00 causing
Total 468,100,000.00 185,285,500.00 282,814,500.00
Loans are listed as below by account age:
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Account Closing balance age structure Amount Proportion (%) Provisions for loan loss Net amount
Within one 282,325,000.00 1.65 4,662,375.00 277,662,625.00 year
Within 1-2 years (1 year and 2 266,500,000.00 100.00 266,500,000.00 years inclusive)
Within 2-3 years (2 years and 3 1,340,000.00 100.00 1,340,000.00 years inclusive)
Over 3 4,830,600.00 91.72 4,430,600.00 400,000.00 years
Total 554,995,600.00 49.90 276,932,975.00 278,062,625.00
Balance at the beginning of year Account age structure Amount Proportion (%) Provisions for loan loss Net amount
Within one 390,200,000.00 41.89 163,465,500.00 226,734,500.00 year
Within 1-2 years (1 year and 2 72,900,000.00 23.62 17,220,000.00 55,680,000.00 years inclusive)
Within 2-3 years (2 years and 3 years inclusive)
Over 3 5,000,000.00 92.00 4,600,000.00 400,000.00 years
Total 468,100,000.00 39.58 185,285,500.00 282,814,500.00
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Note: The maximum loan released by the Company in the current year was
RMB25,000,000.00. The highest yearly loan interest rate in the current year was 18.00%, and the lowest yearly loan interest rate was 6.10%.
Breakdown of overdue loans:
Dec. 31, 2019
Account Company name Ratio to Ratio to age of Ratio to loan Book balance registered working capital overdue balance (%) capital (%) (%) loan
No.1 266,500,000.00 1-2 years 53.30 105.45 48.02
Over 5 No.2 2,000,000.00 0.40 0.79 0.36 years
No.3 1,830,600.00 4-5 years 0.37 0.72 0.33
Within one No.4 1,500,000.00 0.30 0.59 0.27 year
No.5 1,340,000.00 2-3 years 0.27 0.53 0.24
Over 5 No. 6 1,000,000.00 0.20 0.4 0.18 years
Total 274,170,600.00 54.84 108.48 49.4
Details of loans at large amount are listed as follows:
Dec. 31, 2019 Company name Proportion to total Book balance Nature or content Start date of loan loan amount (%)
No.1 266,500,000.00 Guaranteed loan Feb. 2, 2018 48.02
No.2 25,000,000.00 Guaranteed loan Aug. 5, 2019 4.50
No.3 25,000,000.00 Guaranteed loan Dec. 18, 2019 4.50
No.4 25,000,000.00 Guaranteed loan Dec. 27, 2019 4.50
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No.5 24,000,000.00 Guaranteed loan Dec. 16, 2019 4.32
No. 6 19,400,000.00 Guaranteed loan Dec. 16, 2019 3.50
No. 7 19,000,000.00 Guaranteed loan Dec. 19, 2019 3.42
No. 8 18,200,000.00 Guaranteed loan Dec. 16, 2019 3.28
No. 9 17,000,000.00 Guaranteed loan Dec. 13, 2019 3.06
No. 10 11,250,000.00 Credit loan May 28, 2019 2.03
Total 450,350,000.00 81.13
Changes in provision for loss
Decrease in the current period Balance at the Increase in the Item beginning of Closing balance current period Other amounts year Reversal transferred out
Provisions for 185,285,500.00 99,563,125.00 7,915,650.00 276,932,975.00 loan loss
Total 185,285,500.00 99,563,125.00 7,915,650.00 276,932,975.00
Interests of loans and advances
Item Closing balance Balance at the beginning of year
Interests of loans released 51,944.45 and advances
Less: Bad debt reserve
Total 51,944.45 0
11. Long-term receivables
(1) Description of long-term receivables Monetary Unit: Yuan Item Closing balance Opening balance
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Range Provision Provision Book Net book Book Net book of for bad for bad balance value balance value discou debt debt nt rate
Financing 337,366,67 47,983,913 289,382,75 229,631,02 24,355,492 205,275,53
lease 1.27 .35 7.92 9.99 .64 7.35
Including: unrealize 27,739,183. 27,739,183. 32,396,962. 32,396,962. d 05 05 15 15 financing income
Interest on 3,043,009.3 2,974,400.6 1,146,355.3 68,608.65 23,839.59 112,515.76 finance 4 9 5 lease
Geologic al 3,873,360.0 3,873,360.0 environm 346,675.96 346,675.96 0 0 ent deposit
Reclamat 6,816,000.0 6,816,000.0 6,816,000.0 6,816,000.0 ion 0 0 0 0 deposit
347,572,35 48,052,522 299,519,83 241,466,74 24,379,332 217,087,41 Total -- 6.57 .00 4.57 5.34 .23 3.11
Impairment of bad debt reserve Monetary Unit: Yuan
Stage 1 Stage 2 Stage 3
Provision for bad Expected credit loss in Expected credit loss in Expected credit Total debt the whole existence the whole existence loss in future 12 period (no credit period (with credit months impairment) impairment)
Balance on Jan. 1, 2019 in the current ------period
Book balance change with significant changes in the amount of loss reserve in the current period
□ Applicable √ Not applicable
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Classification and disclosure of finance lease payments according to accrual method of bad debt reserve
Closing amount Type of borrowings Provisions for loan Amount Percentage (%) Net amount loss
Normal 263,993,315.24 1.50 3,959,899.73 260,033,415.51
Special-mentioned 3.00
Subordinate 30.00
Suspicious 73,373,356.03 60.00 44,024,013.62 29,349,342.41
Loss-causing 100.00
Total 337,366,671.27 47,983,913.35 289,382,757.92
Bad debt reserve for long-term receivables
Balance at Balance at Changes in amount of the current period the end of the Closing Category the previous beginning of Recovery or Charge-off and balance Appropriation year year reversal write-off
Financing 24,355,492. 24,355,492.6 47,983,913.3 23,628,420.71 lease 64 4 5
Interest on 23,839.59 23,839.59 44,769.06 68,608.65 finance lease
24,379,332. 24,379,332.2 48,052,522.0 Total 23,673,189.77 23 3 0
12. Long-term equity investment Monetary Unit: Yuan
Change of current increases and decreases Closi Invest ng Openin Oth Decla Appro ment Adjust Closing balan g er ration priatio Othe Invest Addition Redu profit ment of balance ce of balanc equi of n of r ee al ced and other (book impai e (book ty cash impair decr investm inves loss compre value) rment value) cha divide ment ease ent tment recog hensive provi nge nds provisi s nized income sion s or on under
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the profit equity s law
I. Joint ventures
II. Associates
Jiaoz uo Wein - a 11,625, 1,216, 10,409,
Tech 909.94 085.7 824.19 nolog 5 y Co., Ltd.
Guan gdon g Orient Zirco 872,993 872,993 nic ,252.07 ,252.07 Ind Sci & Tech Co., Ltd.
Kunm ing Wuxi n Huali - 57,536, 57,191, Miner 344,3 012.93 693.00 al 19.93 Indust ry Co., Ltd.
Dings heng (Hong Kong) 630,050 630,05 630,0
Reso .00 0.00 50.00 urces Co., Ltd.
- Subto 11,625, 931,159 1,560, 630,05 940,594 630,0 tal 909.94 ,315.00 405.6 0.00 ,769.26 50.00 8
11,625, 931,159 - 630,05 940,594 630,0 Total 909.94 ,315.00 1,560, 0.00 ,769.26 50.00
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405.6 8
Other instructions
(1) In this year, the Company acquired 15.66% stock equity of Guangdong Orient Zirconic
Industry Science and Technology Co., Ltd. at an acquisition price of RMB872,993,252.07.
As the acquisition was done on Dec. 20, 2019, the corresponding investment return is not recognized in this year;
(2) In this year, the Company acquired 98.39% stock equity of Yunnan Metallurgy Xinli
Titanium Industry Co., Ltd.. Kunming Wuxin Huali Mineral Industry Co., Ltd. and Dingsheng
(Hong Kong) Resources Co., Ltd. are in charge of accounting of Xinli Titanium by means of the equity method, and Dingsheng (Hong Kong) Resources Co., Ltd. had been cancelled with corresponding impairment accrued in full.
13. Other equity instrument investments Monetary Unit: Yuan
Item Closing balance Opening balance
Yunnan Jinji’an Construction and 73,819.36 Consulting Supervision Co., Ltd.
Sichuan Tianhua Co., Ltd. 129,814.04
Fudian Bank Co., Ltd. Baitalu Sub- 262,460.00 branch
Total 466,093.40
Disclosure of equity instrument investments held not for trading by items Monetary Unit: Yuan Amount carried Reason for Reason for over to requiring to carry-over of Recognized retained measure at fair other Accumulated Accumulated Item dividends income from value with comprehensive gains loss income other changes income to comprehensive included in retained income other income
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comprehensive income
Other descriptions:
14. Investment real estate
(1) Investment real estate measured based on cost measurement model
□ Applicable √ Not applicable Monetary Unit: Yuan Houses and Construction in Item Land use right Total buildings progress
I. Original carrying
amount
1. Opening balance 59,205,436.50 59,205,436.50
2. Amount increased 11,440,867.29 11,440,867.29 in this period
(1) Outsourcing
(2) Carry-over of inventory/fixed 1,612,018.67 1,612,018.67 assets/construction in process
(3) Increase by business 1,077,652.40 1,077,652.40 combination
3. Amount reduced 608,350.00 608,350.00 in this period
(1) Disposal 608,350.00 608,350.00
(2) Other transfer-
out
4. Closing balance 70,037,953.79 70,037,953.79
II. Accumulated Depreciation and Accumulated
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Amortization
1. Opening balance 7,010,299.93 7,010,299.93
2. Amount increased 3,169,676.84 3,169,676.84 in this period
(1) Accrual or 2,852,939.81 2,852,939.81 amortization
(2) Increase by business 316,737.03 316,737.03 combination
3. Amount reduced 39,782.26 39,782.26 in this period
(1) Disposal 39,782.26 39,782.26
(2) Other transfer- out
4. Closing balance 10,140,194.51 10,140,194.51
III. Impairment
Provision
1. Opening balance
2. Amount increased 1,629,029.19 1,629,029.19 in this period
(1) Accrual
(2) Increase by business 1,629,029.19 1,629,029.19 combination
3. Amount reduced 568,567.74 568,567.74 in this period
(1) Disposal 568,567.74 568,567.74
(2) Other transfer- out
4. Closing balance 1,060,461.45 1,060,461.45
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IV. Carrying amount
1. Carrying amount at the end of the 58,837,297.83 58,837,297.83 period
2. Carrying amount at the beginning of 52,195,136.57 52,195,136.57 the period
(2) Investment real estate measured based on fair value
□ Applicable √ Not applicable
(3) Investment real estate without valid certificate of title Monetary Unit: Yuan
Item Net book value Reason for no certificate of title
Other instructions
15. Fixed assets Monetary Unit: Yuan
Item Closing balance Opening balance
Fixed assets 6,810,838,758.77 5,843,524,617.18
Total 6,810,838,758.77 5,843,524,617.18
(1) Description of fixed assets Monetary Unit: Yuan Electronic and Houses and Machinery and Transportation Item office Total buildings equipment equipment equipment
I. Original carrying amount:
1. Opening 3,568,830,962.7 5,716,585,404.6 867,562,174.01 173,492,381.36 10,326,470,922.
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2. Amount 3,470,734,531.9 5,754,714,635.0 9,328,961,537.3 increased in this 58,698,480.28 44,813,890.04 8 4 4 period
(1) Purchase 67,361,578.57 136,304,258.97 44,801,987.76 15,696,469.87 264,164,295.17
(2) Carry-over of 1,420,930,647.9 1,810,835,774.5 3,243,032,607.3 construction in 8,478,805.75 2,787,379.16 2 6 9 progress
(3) Increase by 1,982,442,305.4 3,807,574,601.5 5,821,764,634.7 business 5,417,686.77 26,330,041.01 9 1 8 combination
3. Amount 1,938,800,121.0 3,891,052,002.4 5,856,621,814.5 reduced in this 15,197,236.99 11,572,454.12 2 4 7 period
(1) Disposal or 28,055,025.06 112,312,819.66 14,824,195.04 11,572,454.12 166,764,493.88 scrappage
(2) Carry-over to investment real 1,612,018.67 1,612,018.67 estate
(3) Carry-over to 1,908,514,486.4 3,778,032,619.0 5,686,835,125.1 construction in 288,019.66 8 0 4 progress
(4) Adjustment of final account 618,590.81 706,563.78 85,022.29 1,410,176.88 for completed project
4. Closing 5,100,765,373.6 7,580,248,037.2 13,798,810,645. 911,063,417.30 206,733,817.28 balance 9 4 51
II. Accumulated
Depreciation
1. Opening 2,809,235,458.6 4,376,970,433.6 848,649,297.69 621,047,703.85 98,037,973.44 balance 6 4
2. Amount 1,654,213,495.3 2,137,061,212.8 increased in this 351,809,700.25 103,747,347.50 27,290,669.75 4 4 period
(1) Accrual 145,606,201.50 558,501,271.44 100,786,865.22 15,207,846.39 820,102,184.55
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(2) Consolidate 135,404,028.20 793,976,762.70 2,960,482.28 11,809,040.97 944,150,314.15 increase
(3) Carry-over of construction in 70,799,470.55 301,735,461.20 273,782.39 372,808,714.14 progress
3. Amount 1,065,624,601.5 reduced in this 147,836,825.47 898,352,012.51 9,415,640.19 10,020,123.39 6 period
(1) Disposal or 12,245,358.07 97,115,587.85 9,274,272.09 10,020,123.39 128,655,341.40 scrappage
(2) Carry-over to construction in 135,591,467.40 801,236,424.66 141,368.10 0.00 936,969,260.16 progress
4. Closing 1,052,622,172.4 3,565,096,941.4 5,448,407,044.9 715,379,411.16 115,308,519.80 balance 7 9 2
III. Impairment
Provision
1. Opening 41,716,428.32 58,478,665.18 5,780,778.42 105,975,871.92 balance
2. Amount 2,408,698,311.1 3,602,993,007.1 6,022,183,594.2 increased in this 1,706,874.77 8,785,401.21 0 4 2 period
(1) Accrual 58,941,855.30 0.00 0.00 0.00 58,941,855.30
(2) Carry-over of 1,376,083,851.3 construction in 653,481,231.60 722,602,619.74 0.00 0.00 4 progress
(3) Consolidate 1,696,275,224.2 2,880,390,387.4 4,587,157,887.5 1,706,874.77 8,785,401.21 increase 0 0 8
3. Amount 1,697,302,645.1 2,890,836,849.4 4,588,594,624.3 reduced in this 416,041.19 39,088.47 8 8 2 period
(1) Disposal or 1,027,420.98 797,946.31 416,041.19 39,088.47 2,280,496.95 scrappage
(2) Carry-over to 1,696,275,224.2 2,890,038,903.1 4,586,314,127.3 construction in 0.00 0.00 0 7 7 progress
4. Closing 1,539,564,841.8 753,112,094.24 770,634,822.84 7,071,612.00 8,746,312.74 balance 2
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IV. Carrying
amount
1. Carrying amount at the 3,295,031,106.9 3,244,516,272.9 6,810,838,758.7 188,612,394.14 82,678,984.74 end of the 8 1 7 period
2. Carrying amount at the 2,678,465,236.7 2,848,871,280.8 5,843,524,617.1 240,733,691.74 75,454,407.92 beginning of the 2 0 8 period
(2) Fixed assets without valid certificate of title Monetary Unit: Yuan Reasons for failure of being issued Item Net book value the ownership certificate
Houses and buildings 959,172,705.34 In progress
Other instructions
16. Construction in progress Monetary Unit: Yuan
Item Closing balance Opening balance
Construction in progress 1,205,995,892.54 1,103,970,388.32
Project materials 448,198,415.68 309,268,390.96
Total 1,654,194,308.22 1,413,238,779.28
(1) Description of construction in progress Monetary Unit: Yuan
Closing balance Opening balance Item Provision for Net book Provision for Net book Book balance Book balance impairment value impairment value
Second phase 249,363,433. 249,363,433. 597,988,619. 597,988,619. of 01 01 90 90 chlorination
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Technical improvement project of titanium sponge 115,508,105. 115,508,105. technology 44 44 with an annual output of 10,000 tonnes/year
Technical improvement project of chlorination process titanium 110,691,249. 110,691,249. dioxide 51 51 technology with an annual output of 60,000 tonnes/year
2*50MW combined heat and power 101,748,946. 101,748,946. 14,526,099.5 14,526,099.5 generation 88 88 8 8 distributed energy project
Power grid optimization 99,431,234.7 99,431,234.7 and 9 9 construction project
Project concerning technical reform for 77,358,543.7 77,358,543.7 11,317,785.1 11,317,785.1 deep 1 1 1 1 treatment and recycling of high-salt waste water
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Iron ore concentrate transportatio n and return 53,609,881.2 53,609,881.2 56,010,532.4 56,010,532.4 water project 1 1 7 7 with an output of 3 million tonnes
Innovation project of upgrading and transforming Panxi titanium 48,707,744.1 48,707,744.1 concentrate 0 0 into titanium dichloride dregs with an output of 500,000 tonnes
Technical reform project for each phase of rutile titanium 37,997,460.0 37,997,460.0 45,701,500.2 45,701,500.2 dioxide 6 6 7 7 production line with an annual output of 100,000 tonnes
Technical reform project of 35,527,960.4 35,527,960.4 10,146,913.9 10,146,913.9 Zhujiayukou 6 6 3 3 2# ditch coarse-grain dry slag yard
Saline waste water treatment 36,324,974.7 36,324,974.7 with an 4 4 output of 20m3/h
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Titanium- based raw material 22,335,022.1 22,335,022.1 12,541,321.8 12,541,321.8 crushing 0 0 8 8 system expansion project
Technical improvement 19,598,783.4 19,598,783.4 project of 8 8 first selection plant
Slag drainage 16,429,493.2 16,429,493.2 4,353,542.13 4,353,542.13 system 9 9
Calcine tail gas system - Comprehensi ve process 15,648,985.2 15,648,985.2 optimization 3 3 and improvement project
High-end titanium alloy new material project with 15,558,128.9 15,558,128.9 9,936,734.23 9,936,734.23 an annual 2 2 output of 30,000 tonnes
Comprehensi ve fees of No. 14,971,320.5 14,971,320.5 2 barren rock 6 6 crushing station
Phase-2 technical reform project of iron-based 11,989,299.3 11,989,299.3 pigments 2 2 with an annual output of 50,000 tonnes/year
Sewage 10,678,133.4 10,678,133.4 station 1,589,057.54 1,589,057.54 0 0 expansion
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Vacation project of 10,521,134.8 10,521,134.8 94,219,326.2 94,219,326.2
Longxiangsha 1 1 0 0 n Tourism
Technical transformatio n project of secondary 4,782,090.78 4,782,090.78 5,063,070.40 5,063,070.40 material selection plant
Niuwangtian technical 2,665,811.32 2,665,811.32 reform project
Comprehensi ve management 8,114,036.81 8,114,036.81 project of Liuzhuang stock dump
Gushanhu reservoir 6,449,438.00 6,449,438.00 5,404,147.01 5,404,147.01 project
Water treatment and exhaust 6,394,134.02 737,915.66 5,656,218.36 gas management project
New office building in 8,405,318.06 8,405,318.06 Kunming
Continuous acid hydrolysis tail 5,393,189.08 5,393,189.08 gas reform (phase II) project
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New acetylene 4,675,900.92 4,675,900.92 sludge warehouse
Mining boundary 4,047,814.96 4,047,814.96 optimization project
Belt modification project for 4,008,640.77 4,008,640.77 1,838,317.75 1,838,317.75 water treatment filter press
Phase II project of closed dam 3,401,649.30 3,401,649.30 face of slag yard
Three provisions and one 2,822,869.74 2,822,869.74 property management
Overhaul of No.2 2,753,626.67 2,753,626.67 thermoelectri c boiler
Smart manufacturin g technical improvement project for rotor-level 2,748,966.27 2,748,966.27 titanium sponge with an annual output of 30,000 tonnes/year
Intelligent mining equipment and chemical 2,721,992.81 2,721,992.81 equipment project with an annual output of
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60,000 tonnes/year
Tail gas treatment project of 2,520,509.02 2,520,509.02 denitration kiln
Pools and pump houses 2,223,163.78 2,223,163.78 for emergencies
Percolate pre- treatment 2,183,442.14 2,183,442.14 project
In-depth renovation project of tail 1,826,628.13 1,826,628.13 gas resolved by acid
Project concerning production of 23,128,142.6 23,128,142.6 3,802,797.48 3,802,797.48 synthetic 6 6 rutile using waste acid
Titanium-rich material 28,697,776.5 28,697,776.5 second-phase 1 1 project
Comprehensi ve utilization of resources and in-depth environmenta l protection project - 36,557,328.5 36,557,328.5 comprehensiv 5 5 e utilization and in-depth treatment of burning tail gas by titanium white
Titanium 24,592,381.9 24,592,381.9 gypsum yard 0 0 project
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Project concerning environmenta 15,810,077.7 15,810,077.7 l rectification 1 1 in the eastern plant area
Irconium industry enrichment capacity 15,406,896.1 15,406,896.1 upgrading 8 8 and transformatio n project
Comprehensi ve sewage 12,803,538.0 12,803,538.0 reform 3 3 project
Second-phase waste water treatment project 6,983,087.54 6,983,087.54 related to titanium dioxide denitrification
Ferrous materials site 5,288,107.31 5,288,107.31 renovation project
Project related to construction and 4,524,773.74 4,524,773.74 application of enterprise cloud service platforms
Transit 2,523,777.07 2,523,777.07 warehouse
Titanium production line 3 and 4 2,417,862.78 2,417,862.78 transformatio n project
Reconstructio 2,411,971.79 2,411,971.79 n project of
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Continuous acid hydrolysis tail 2,228,720.56 2,228,720.56 gas treatment project
Sewage comprehensiv e 2,163,510.02 2,163,510.02 transformatio n second- phase project
No. 1 and 2 sulfuric acid 2,044,765.75 2,044,765.75 tank renewal project
Comprehensi ve renovation project of automatic control device 1,656,916.92 1,656,916.92 and filter press in hydrolysis workshop
Titanium gas comprehensiv 1,434,160.90 1,434,160.90 e renovation project
Other 20,791,953.1 20,791,953.1 42,659,624.0 42,659,624.0 sporadic 2 2 0 0 projects
1,206,733,80 1,205,995,89 1,103,970,38 1,103,970,38 Total 737,915.66 8.20 2.54 8.32 8.32
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Monetary Unit: Yuan
Propor Including: tion of Accumul Amount Interest Transfer-in Other total Proje ated of capitaliz Increase in of fixed decreas Opening Closing project ct amount interest ation Capital Item Budget the current assets in e in the balance balance invest progr of capitalize rate in source period the current current ment ess capitalize d in the this period period to the d interest current period budget period
Second phase of Loans chlorinatio from n project 1,811,590, 597,988,6 432,309,06 780,934,24 249,363,43 56.87 27,660,3 25,549,8 financi 80.00 3.06% with an 000.00 19.90 0.23 7.12 3.01 % 46.59 40.81 al output of instituti 200,000 ons tonnes
Technical improvem ent project of titanium sponge Other technolog 100,000,00 212,320,64 96,812,542 115,508,10 212.32 85.00 decrea y with an 0.00 7.58 .14 5.44 % ses annual output of 10,000 tonnes/ye ar
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Technical improvem ent project of chlorinatio n process titanium Other 130,000,00 110,691,24 110,691,24 85.15 dioxide 85.15 decrea 0.00 9.51 9.51 % technolog ses y with an annual output of 60,000 tonnes/ye ar
2*50MW Loans cogenerati from on 776,650,00 14,526,09 87,222,847 101,748,94 13.10 1,820,46 1,754,53 financi distributed 40.00 4.31% 0.00 9.58 .30 6.88 % 0.31 7.83 al energy instituti project of ons Billions
Power Loans grid from optimizati 134,000,00 99,431,234 99,431,234 74.20 160,357. 160,357. financi 95.00 4.31% on and 0.00 .79 .79 % 55 55 al constructi instituti on project ons
Project Loans concernin from g 331,000,00 11,317,78 66,040,758 77,358,543 23.37 758,899. 758,899. financi technical 70.00 3.76% 0.00 5.11 .60 .71 % 41 41 al reform for instituti deep ons treatment
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Transport lines of iron ore concentrat Other 124,500,00 56,010,53 2,400,65 53,609,881 43.06 e from the 43.06 decrea 0.00 2.47 1.26 .21 % second ses selection plant to Anning
Innovation project of upgrading and transformi ng Panxi titanium concentrat Other 576,544,40 48,707,744 48,707,744 e into 8.45% 8.45 decrea 0.00 .10 .10 titanium ses dichloride dregs with an annual output of 500,000 tonnes/ye ar
Technical Other reform 387,962,30 45,701,50 87,052,525 90,986,565 3,770,00 37,997,460 33.25 46.00 decrea project for 0.00 0.27 .49 .70 0.00 .06 % ses each
307 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. phase of rutile titanium dioxide production line with an annual output of 100,000 tonnes
Zhujiayuk ou 2# ditch Other 46,000,000 10,146,91 25,381,046 35,527,960 77.23 coarse- 77.23 decrea .00 3.93 .53 .46 % grain ses tailing dry slag yard
Salty waste water Other 37,350,000 22,280,49 14,044,476 36,324,974 97.26 treatment 97.26 decrea .00 8.12 .62 .74 % with an ses output of 20m3/h
High-end titanium alloy new material Other project 1,315,000, 9,936,734 5,621,394. 15,558,128 1.18% 5.00 decrea with an 000.00 .23 69 .92 ses annual output of 30,000 tonnes
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Comprehe nsive fees of No. 2 Other 32,000,000 2,550,658 12,420,662 14,971,320 46.79 barren 46.79 decrea .00 .00 .56 .56 % rock ses crushing station
Phase-II iron- based pigment Loans technical from transform 19,440,000 14,321,527 2,332,228. 11,989,299 73.67 286,660. 286,660. financi ation 74.00 5.18% .00 .38 06 .32 % 67 67 al project instituti with an ons annual output of 50,000 tonnes
Sewage station expansion and transform Other ation (new 15,000,000 1,589,057 9,089,075. 10,678,133 71.19 71.19 decrea sewage .00 .54 86 .40 % ses pressure filtration plant and equipment )
Slag Other 10,000,000 3,048,543 5,922,330. 8,970,873. 89.71 drainage 89.71 decrea .00 .72 12 84 % system ses
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Drainage Other 14,500,000 1,304,998 6,153,621. 7,458,619. 51.44 ditches of 51.44 decrea .00 .41 04 45 % slag dump ses
Iron ore concentrat e Other desulfurati 7,200,000. 6,749,843. 6,749,843. 93.75 93.75 decrea on project 00 00 00 % ses of first selection plant
Gushanhu Other 225,640,00 5,404,147 1,045,290. 6,449,438. reservoir 2.86% 2.86 decrea 0.00 .01 99 00 project ses
New office Other 5,462,554. 8,405,318 8,405,318. 153.87 building in 90.00 decrea 64 .06 06 % Kunming ses
New acetylene Other 13,500,000 4,675,900. 4,675,900. 34.64 sludge 34.64 decrea .00 92 92 % warehous ses e
Mining Other boundary 20,443,000 4,047,814. 4,047,814. 19.80 19.80 decrea optimizati .00 96 96 % ses on project
Phase II project of Other closed 4,500,000. 3,401,649. 3,401,649. 75.59 75.59 decrea dam face 00 30 30 % ses of slag yard
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Three provisions Other and one 9,397,929. 2,822,869. 2,822,869. 30.04 30.04 decrea property 94 74 74 % ses managem ent
Smart manufactu ring technical improvem ent project for rotor- Other level 1,856,000, 2,748,966. 2,748,966. 0.15% 0.15 decrea titanium 000.00 27 27 ses sponge with an annual output of 30,000 tonnes/ye ar
Intelligent mining equipment and chemical equipment Other 6,070,616. 2,721,992. 2,721,992. 44.84 project 68.00 decrea 65 81 81 % with an ses annual output of 60,000 tonnes/ye ar
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Project concernin g environme Other 80,000,000 15,810,07 67,307,984 83,118,062 103.90 100.0 ntal decrea .00 7.71 .37 .08 % 0 rectificatio ses n in the eastern plant area
Project concernin g Loans production from of 98,000,000 23,128,14 51,973,738 71,299,083 3,802,797. 76.63 1,122,30 1,054,40 financi 80.00 4.31% synthetic .00 2.66 .64 .82 48 % 7.35 0.85 al rutile instituti using ons waste acid
Comprehe nsive utilization of Loans resources from and 53,218,600 36,557,32 14,495,496 51,052,825 95.53 100.0 2,600,58 1,392,95 financi 4.31% environme .00 8.55 .55 .10 % 0 5.37 3.84 al ntal instituti protection ons deep treatment project
Titanium- Other rich 43,300,000 28,697,77 20,646,713 49,344,490 113.96 100.0 decrea material .00 6.51 .97 .48 % 0 ses second-
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Low- temperatu re waste Other heat 45,000,000 33,343,525 33,343,525 74.10 100.0 decrea recovery .00 .47 .47 % 0 ses project of sand acid workshop
Irconium industry Loans enrichmen from t capacity 28,000,000 15,406,89 16,334,661 58.34 100.0 625,299. 129,627. financi upgrading 927,765.42 4.31% .00 6.18 .60 % 0 23 60 al and instituti transform ons ation project
Chlorinate d slag Other waste 10,000,000 4,574,837 6,331,594. 10,906,432 109.06 100.0 decrea water .00 .37 86 .23 % 0 ses treatment project
Pre- reduction Other 8,000,000. 7,323,470 1,893,666. 9,217,137. 115.21 100.0 tail gas decrea 00 .89 76 65 % 0 treatment ses project
Project Other 8,000,000. 4,524,773 1,983,536. 6,508,310. 81.35 100.0 related to decrea 00 .74 86 60 % 0 constructi ses
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Phase-I drainage project of Other pool of 8,500,000. 4,438,719. 4,438,719. 52.22 100.0 decrea 100,000m 00 18 18 % 0 ses 3 and dam face of slag dump
Modificati on of Other waste 3,000,000. 3,057,377. 3,057,377. 101.91 100.0 decrea heat boiler 00 76 76 % 0 ses evaporato r
8,394,769, 926,234,7 1,471,344, 1,309,686, 6,170,65 1,081,722, 35,034,9 31,087,2 Total 401.23 09.96 650.23 208.99 1.26 499.94 16.48 78.56
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Closing balance Opening balance
Item Provision Provision for Net book for Net book Book balance Book balance impairmen value impairmen value t t
Special 201,074,859.1 201,074,859.1 212,153,035.5 212,153,035.5
materials 0 0 1 1
Special 120,370,357.4 872,435.6 119,497,921.7 872,435.6 equipmen 64,493,042.58 63,620,606.92 1 6 5 6 t
Tools and 127,625,634.8 127,625,634.8 appliance 33,494,748.53 33,494,748.53 3 3 s
449,070,851.3 872,435.6 448,198,415.6 310,140,826.6 872,435.6 309,268,390.9 Total 4 6 8 2 6 6
Other descriptions:
17. Intangible assets (1) Intangible assets Monetary Unit: Yuan Pate Nonpate Patent and Land use nt nted patented Mining Franchise Item Software Total right righ technolo technology, right right ts gy trademark
I. Original carrying amount
1. 463,495,98 2,644,716 209,502,80 847,086,39 68,632,00 1,591,361,90 Opening 7.78 .85 7.40 5.84 0.00 7.87 balance
2. Amount 434,586,28 6,277,642 6,071,536.6 53,817,635. 500,753,101. increased 7.93 .00 0 38 91 in this period
(1) 64,045,026. 6,277,642 1,838,200.0 72,160,868.3
Purchase 39 .00 0 9
(2)
Internal
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(3) Increase by 370,541,26 6,071,536.6 51,979,435. 428,592,233. business 1.54 0 38 52 combinat ion
3. Amount reduced in this period
(1) Dispositi on
4. 898,082,2 8,922,35 215,574,3 900,904,0 68,632,0 2,092,115,0 Closing 75.71 8.85 44.00 31.22 00.00 09.78 balance
II. Accumul ated Amortiza tion
1. 71,858,94 1,672,10 79,339,76 191,616,6 228,773. 344,716,26 Opening 8.81 7.31 4.74 74.01 33 8.20 balance
2. Amount 57,125,33 836,928. 34,852,04 89,399,11 2,745,27 184,958,69 increase 5.53 29 3.15 0.98 9.96 7.90 d in this period
(1) 15,889,47 836,928. 34,852,04 78,834,98 2,745,27 133,158,71
Accrual 3.99 29 3.15 4.84 9.96 0.22
(2) Increase by 41,235,86 10,564,12 51,799,987. business 1.54 6.14 68 combina tion
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3. Amount reduced in this period
(1)
Disposal
4. 128,984,2 2,509,03 114,191,8 281,015,7 2,974,05 529,674,96 Closing 84.34 5.60 07.89 84.99 3.29 6.10 balance
III. Impairm ent Provisio n
1. Opening balance
2. Amount 10,415,20 10,415,209. increase 9.24 24 d in this period
(1)
Accrual
(2) Increase by 10,415,20 10,415,209. business 9.24 24 combina tion
3. Amount reduced in this period
(1) disposal
4. Closing 10,415,209. 10,415,209.2 balance 24 4
IV.
Carrying
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amount
1. Carrying amount 769,097,99 6,413,323 101,382,53 609,473,03 65,657,94 1,552,024,83 at the 1.37 .25 6.11 6.99 6.71 4.44 end of the period
2. Carrying amount 391,637,03 972,609.5 130,163,04 655,469,72 68,403,22 1,246,645,63 at the 8.97 4 2.66 1.83 6.67 9.67 beginning of the period
The proportion of intangible assets formed by internal research and development of the Company to the balance of intangible assets at the end of the current period.
(2) Land use right without certificate of title Monetary Unit: Yuan Reasons for failure of being issued Item Net book value the ownership certificate
Other descriptions:
18. Goodwill (1) Original book value of goodwill Monetary Unit: Yuan
Investee Increase in the current period Decrease in the current period name or item Opening Closing that has balance From balance formed the business Disposal goodwill combination
Henan Rongjia Scandium and 25,413.86 25,413.86 Vanadium Technology Co., Ltd.
Longbai Sichuan 4,881,876,56 4,881,876,56
Titanium 5.50 5.50 Industry Co.,
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Ltd.
Panzhihua Ruierxin 132,171,117. 132,171,117. Industry and 34 34 Trade Co., Ltd.
Yunnan Metallurgical 651,096,503. 651,096,503.
Xinli Titanium 72 72 Co., Ltd.
5,014,073,09 651,096,503. 5,665,169,60 Total 6.70 72 0.42
(2) Provision for impairment of goodwill Monetary Unit: Yuan
Investee Increase in the current period Decrease in the current period name or item Opening Closing that has balance balance formed the Appropriation Disposal goodwill
Panzhihua Ruierxin 28,184,335.2 28,184,335.2 Industry and 7 7 Trade Co., Ltd.
28,184,335.2 28,184,335.2 Total 7 7
Relevant information of the asset group or the portfolio of asset group in which goodwill is included 1. The Company acquired 98.39% stock equity of Yunan Metallurgy Xinli Titanium Industry Co., Ltd. at a premium, with the acquisition consideration of RMB882,430,001.00. The goodwill calculated at the fair value of the acquired assets totals RMB651,096,503.72.
2. On Dec. 31, 2019, the goodwill acquired by means of business combination has been allocated to relevant asset group for goodwill impairment test. Recoverable amount of each asset group is calculated based on business plan determined by the management and
319 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. adjusted discount rate. Cash flows after the forecast period are extrapolated based on stable growth rates and final values.
(1) The trading industry to which the Company’s subsidiary Ruierxin belongs adopted a discount rate of 17.44% in 2020 and the forecast period, with a growth rate of the discount rate in forecast period ranging from 1.58% to 7.22% and a growth rate in the stable period being 0%.
(2) The production and manufacturing industry to which the Company’s subsidiary Longbai Titanium Industry belongs adopted a discount rate of 14.61% in 2020, a discount rate of 14.93% in the forecast period from 2021 to 2031, and a discount rate of 14.61% in the stable period (the forecast period is from 2021 to 2031, and the years after 2032 is stable period). The revenue growth rate in forecast period ranges from -35% to 18% and that in stable period is 0%.
(3) The production and manufacturing industry to which the Company’s subsidiary Yunnan Metallurgy Xinli Titanium Industry Co., Ltd. belongs adopted a discount rate of 15.72% in 2020 and the forecast period, and a discount rate of 15.72% in the following years and the stable period (the forecast period is from 2020 to 2025, and the years after 2025 is stable period). The revenue growth rate in the forecast period ranges from -0.04% to 1126% and that in stable period is 0%.
Key assumptions were applied when calculating the present value of each company’s estimated future cash flows as at Dec. 31, 2019. The key assumptions made by the management in making forecasts on cash flow for the purpose of impairment testing of goodwill are detailed below:
Growth rate – Determination basis is based on average growth rate of historical business results and expectations of market development.
320 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. Discount rate – Discount rate adopted is the after-tax discount rate that reflects specific risks of the industry.
The amount of key assumptions assigned to the above asset group is consistent with the Company’s historical experience and external information.
After analyzing the recoverable amount of each asset group based on the above assumptions, the management believes that no provision for impairment of goodwill is required in the current year.
Currently, the forecasted cash flow exceeds book value of each relevant asset group or combination of asset groups, but subsequent cash flow projections may vary depending on future cash flows and assumption, making it possible to result in impairment.
Testing process and key parameters (such as growth rate in the forecast period, growth rate in the stable period, profit rate, discount rate, forecast period etc. when predicting the current value of future cash flow) of good impairment test, and the determination method of goodwill impairment loss: Impacts of goodwill impairment test Other instructions
19. Long-term unamortized expenses Monetary Unit: Yuan Amount Increase in the Item Opening balance amortized in the Other decreases Closing balance current period current period
Mine rental fee 33,159,157.14 5,888,008.40 27,271,148.74
Fees for technical 14,017,122.40 11,315,731.82 3,107,252.84 22,225,601.38 services paid to Ti-Cons
Niuwangtian 2,707,862.23 1,943,396.68 764,465.55
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tailings pond rental
Chlorinated titanium dioxide 1,479,611.00 24,660.18 1,454,950.82 emission permit
Expenses on fixed assets 733,017.80 7,542,077.36 913,488.97 7,361,606.19 improvement
House and land 154,942.37 13,455.60 141,486.77 rentals
Total 52,251,712.94 18,857,809.18 11,890,262.67 59,219,259.45
Other instructions
20. Deferred income tax assets/deferred income tax liabilities (1) Deferred income tax assets without offset Monetary Unit: Yuan Closing balance Opening balance Item Deductable temporary Deductable temporary Deferred tax assets Deferred tax assets difference difference Provision for asset 573,886,204.11 119,268,431.82 465,217,407.16 91,468,673.22 impairments Profits not achieved 346,948,814.54 61,300,148.36 331,354,959.24 56,609,259.90 from interior trade Equity incentives 107,382,010.50 16,332,598.01 34,780,747.19 5,312,247.74 Deferred income 84,435,887.00 12,813,820.55 65,855,950.48 9,878,392.58 Payrolls accrued but 39,439,173.42 5,947,034.64 55,934,576.34 8,409,760.17 not paid Accrued expenses 95,940,642.41 14,391,096.36 65,992,964.18 9,898,944.63 Depreciation of fixed 4,264,799.93 639,719.99 assets Costs listed and spent 568.00 138.49 in previous years Total 1,248,032,731.98 230,053,129.74 1,023,401,972.52 182,217,136.72
(2) Deferred income tax liabilities without offset Monetary Unit: Yuan
Closing balance Opening balance Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax difference liabilities difference liabilities
Business 1,184,012,547.87 211,797,892.90 967,416,799.20 145,112,519.88
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combination not under the same control Assets assessment appreciation
Change in fair value 8,835,379.00 1,325,306.85
Depreciation of fixed 151,322,566.39 22,698,384.96 assets
Other decreases 256,898.55 51,379.71 332,316.15 66,463.23
Total 1,335,592,012.81 234,547,657.57 976,584,494.35 146,504,289.96
(3) Details of unrecognized deferred income tax assets Monetary Unit: Yuan
Item Closing balance Opening balance
Deductible temporary difference 1,634,615,176.12 20,099,210.84
Deductible losses 2,469,711,785.04 62,933,045.59
Total 4,104,326,961.16 83,032,256.43
(4) Deductible losses of unrecognized deferred income tax assets will expire in the following years Monetary Unit: Yuan
Year Ending amount Openning amount Remarks
2019 711,045.12
2020 118,949,638.30 6,668,061.16
2021 532,610,114.83 19,858,728.87
2022 777,184,852.24 12,797,970.46
2023 589,981,681.77 22,897,239.98
2024 450,985,497.90
Total 2,469,711,785.04 62,933,045.59 --
323 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. Other descriptions: RMB2,419,417,057.45 in deductible losses is caused by acquiring Xinli Titanium Industry.
21. Other non-current assets Whether or not new income standards are applied □ Yes √ No Monetary Unit: Yuan
Item Closing balance Opening balance
Prepaid project payment 73,996,841.96 131,861,039.28
Advance for equipment 505,147,170.84 37,916,097.90
Total 579,144,012.80 169,777,137.18
Other descriptions:
22. Short-term borrowings (1) Classification of short-term borrowings Monetary Unit: Yuan
Item Closing balance Opening balance
Pledged borrowings 184,000,000.00
Guaranteed borrowings 1,350,195,880.00 402,896,000.00
Credit borrowings 1,513,268,917.17 3,046,327,440.00
Interest of short-term borrowings 3,891,303.86 1,375,128.81
Total 2,867,356,101.03 3,634,598,568.81
Description of short-term borrowings classification: Guaranteed borrowings:
324 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. The subsidiary Billions (Hong Kong) borrowed RMB139,524,000 from Bank of China Seoul Branch, with guarantee provided by the Company and a guarantee period from Jun. 25, 2019 to Jun. 12, 2020.
The subsidiary Billions New Material borrowed RMB200,000,000 from Bank of China Jiaozuo Branch, with guarantee provided by the Company and a guarantee period from Mar. 29, 2019 to Mar. 29, 2020.
The subsidiary Billions New Material borrowed RMB51,623,900 from Agricultural Bank of China Jiaozuo Minzhu Road Sub-branch, with guarantee provided by the Company and a guarantee period from Mar. 28, 2019 to Mar. 27, 2020.
The subsidiary Longbai Titanium Industry borrowed RMB400,000,000 from The Export- Import Bank of China Sichuan Branch, with guarantee provided by the Company and a guarantee period from Jun. 6, 2019 to Mar. 6, 2022.
The subsidiary Longbai Titanium Industry borrowed RMB139,524,000 from Industrial and Commercial Bank of China Mianzhu Sub-branch, with guarantee provided by the Company and a guarantee period from Jan. 3, 2018 to Jan. 3, 2020.
The subsidiary Longbai Titanium Industry borrowed RMB419,524,000 from Agricultural Bank of China Mianzhu Sub-branch, with guarantee provided by the Company and a guarantee period from Jan. 20, 2017 to Jan. 19, 2020.
23. Notes payable Monetary Unit: Yuan
Category Closing balance Opening balance
Trade acceptance notes 2,394,239,099.45 1,135,348,367.08
Bank acceptance notes 12,499,000.00 43,155,000.00
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Total 2,406,738,099.45 1,178,503,367.08
Total amount of notes payable due and unpaid at the end of the current period is RMB0.00.
24. Accounts payable (1) Presentation of accounts payable Monetary Unit: Yuan
Item Closing balance Opening balance
Within one year 1,665,709,992.38 1,079,267,250.85
1-2 years 174,660,354.48 156,292,856.72
2-3 years 72,962,551.34 9,334,406.38
Over 3 years 98,819,023.13 14,488,409.66
Total 2,012,151,921.33 1,259,382,923.61
(2) Important accounts payable aged over 1 year Monetary Unit: Yuan Reason for not being repaid or Item Closing balance carried forward
No.1 62,785,800.00 Not yet settled
No.2 17,952,971.58 Not due for settlement
The subsidiary suffers difficulties in No.3 16,137,491.04 operation and is insolvent
No.4 11,111,034.48 Not due for settlement
The subsidiary suffers difficulties in No.5 10,365,863.82 operation and is insolvent
Total 118,353,160.92 --
Other descriptions:
25. Advance received
326 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. Whether or not new income standards are applied □ Yes √ No
(1) Breakdown of advance received Monetary Unit: Yuan
Item Closing balance Opening balance
Within one year 124,808,352.00 82,852,005.15
1-2 years 1,240,164.24 2,243,139.90
2-3 years 2,524,916.38 194,550.66
Over 3 years 1,333,123.97 377,955.68
Total 129,906,556.59 85,667,651.39
26. Payroll payable (1) Breakdown of payroll payable Monetary Unit: Yuan Increase in the Decrease in the Item Opening balance Closing balance current period current period
I. Short-term payroll 207,649,620.63 696,835,020.76 705,484,565.35 199,000,076.04
II. Post-employment benefit-defined 1,905,436.78 70,648,381.09 69,950,853.91 2,602,963.96 contribution plan
III. Termination 2,025,788.57 1,325,788.57 700,000.00 benefits
Total 209,555,057.41 769,509,190.42 776,761,207.83 202,303,040.00
(2) Breakdown of short-term payroll Monetary Unit: Yuan Increase in the Decrease in the Item Opening balance Closing balance current period current period
I. Wages and salaries, bonus, 152,343,885.15 599,893,764.10 595,512,091.79 156,725,557.46 allowances and subsidies
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II. Staff welfare 25,610,797.97 25,610,797.97
III. Social security 514,208.91 38,907,730.95 39,043,999.91 377,939.95 contributions
Including: medical 286,228.55 30,292,722.31 30,326,853.84 252,097.02 insurance premium
Work injury 209,882.71 6,600,939.75 6,731,681.81 79,140.65 insurance
Maternity insurance 18,097.65 2,014,068.89 1,985,464.26 46,702.28
IV. Housing funds 15,660,161.85 15,181,610.72 26,674,391.64 4,167,380.93
V. Labor union funds and employee 39,131,364.72 17,162,787.02 18,564,954.04 37,729,197.70 education funds
Other - Production 78,330.00 78,330.00 liability insurance
Total 207,649,620.63 696,835,020.76 705,484,565.35 199,000,076.04
(3) Breakdown of defined contribution plans Monetary Unit: Yuan Increase in the Decrease in the Item Opening balance Closing balance current period current period
1. Basic pension 1,616,511.08 68,286,529.96 67,318,902.02 2,584,139.02 insurance
2. Unemployment 288,925.70 2,361,711.13 2,631,811.89 18,824.94 insurance
3. Annuity premium 140.00 140.00
Total 1,905,436.78 70,648,381.09 69,950,853.91 2,602,963.96
Other descriptions: 27. Taxes payable Monetary Unit: Yuan
Item Closing balance Opening balance
Value-added tax 74,330,726.84 93,184,815.46
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Corporate income tax 89,830,527.19 109,776,919.52
Individual income tax 2,462,939.06 21,459,346.49
Urban maintenance and 1,477,573.33 2,058,368.19 construction tax
Educational surtax 2,187,811.10 2,419,137.31
Local education surcharge 1,420,957.50 1,104,221.91
Housing property tax 3,373,859.89 2,571,110.92
Land use tax 4,277,781.87 3,054,236.09
Resource tax 11,544,152.69 4,472,603.36
Tax for environment protection 2,372,363.30 1,871,613.35
Other taxes 8,944,531.25 1,449,168.73
Total 202,223,224.02 243,421,541.33
Other descriptions: 28. Other payables Monetary Unit: Yuan
Item Closing balance Opening balance
Interests payable 264,896.50 264,896.50
Dividends payable 17,600,000.00 1,420,000.00
Other payables 409,205,941.83 155,039,424.91
Total 427,070,838.33 156,724,321.41
(1) Interests payable Monetary Unit: Yuan
Item Closing balance Opening balance
Interests payable to shareholders 264,896.50 264,896.50
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Total 264,896.50 264,896.50
Important outstanding and overdue interests: Monetary Unit: Yuan
Borrower Overdue amount Cause leading to being overdue
Other descriptions:
(2) Dividend payable Monetary Unit: Yuan
Item Closing balance Opening balance
Common stock dividends 17,600,000.00 1,420,000.00
Total 17,600,000.00 1,420,000.00
An explanation on non-payment of important dividends payable that are due but unpaid for more than 1 year, shall be made:
(3) Other payables
1) Presentation of other payables by nature of account Monetary Unit: Yuan
Item Closing balance Opening balance
Deposit and margin 159,645,117.92 99,234,121.41
Intercourse funds 168,780,999.01 12,623,798.54
Other decreases 80,779,824.90 43,181,504.96
Total 409,205,941.83 155,039,424.91
2) Important other payables aged over one year Monetary Unit: Yuan
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Reason for not being repaid or Item Closing balance carried forward
Tianrui Tourism Group Co., Ltd. 9,000,000.00 Cash deposit
Jiaozuo Zhongzhou Carbon CO., Ltd. 3,000,000.00 Cash deposit
Jiaozuo Hengtai Metal Products Co., 1,100,000.00 Cash deposit Ltd.
Total 13,100,000.00 --
Other instructions
29. Non-current liabilities maturing within one year Monetary Unit: Yuan
Item Closing balance Opening balance
Long-term borrowings maturing 101,832,464.00 578,127,672.50 within one year
Long-term payables maturing within 40,000,000.00 one year
Total 141,832,464.00 578,127,672.50
Other descriptions: Long-term borrowings maturing within one year: The subsidiary Billions New Material borrowed RMB295,728,000 from Industrial and Commercial Bank of China Jiaozuo Branch Minzhu Road Sub-branch, with a loan term from Dec. 28, 2018 to Dec. 21, 2026, of which RMB20,000,000 shall be repaid on Dec. 21, 2020. The subsidiary Billions New Material borrowed RMB340,000,000 from The Export-Import Bank of China Co., Ltd. Henan Province Branch, with a loan term from Dec. 27, 2018 to Dec. 21, 2026, of which RMB18,000,000 shall be repaid on Dec. 21, 2020.
The subsidiary Billions New Material borrowed USD20,000,000 from China Everbright Bank Jiaozuo Jiefang Road Sub-branch, with a loan term from Jan. 4, 2019 to Dec. 20, 2021, of
331 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. which USD4,674,100 shall be repaid on Mar. 21, 2020, Jun. 21, 2020, Sep. 21, 2020 and Dec. 21, 2020 respectively, with a total amount to be repaid of USD18,696,200.
The Company borrowed USD10,000,000 from China Everbright Bank Jiaozuo Jiefang Road Sub-branch, with a loan term from Jan. 4, 2019 to Dec. 20, 2021, of which USD2,302,100, USD2,371,900, USD2,371,900 and USD2,371,900 shall be repaid on Mar. 21, 2020, Jun. 21, 2020, Sep. 21, 2020 and Dec. 21, 2020 respectively, with a total amount to be repaid of USD9,417,900.
The Company borrowed USD20,000,000 from China Everbright Bank Jiaozuo Jiefang Road Sub-branch, with a loan term from May 22, 2019 to Mar. 20, 2022, of which USD4,674,100 shall be repaid on Mar. 21, 2020, Jun. 21, 2020, Sep. 21, 2020 and Dec. 21, 2020 respectively, with a total amount to be repaid of USD18,696,200.
The Company borrowed USD15,000,000 from China Everbright Bank Jiaozuo Jiefang Road Sub-branch, with a loan term from Aug. 8, 2019 to Jun. 20, 2022, of which USD3,488,100, USD3,488,100, USD3,488,100 and USD3,557,900 shall be repaid on Mar. 21, 2020, Jun. 21, 2020, Sep. 21, 2020 and Dec. 21, 2020 respectively, with a total amount to be repaid of USD14,022,200.
The Company borrowed RMB30,000,000 from Bank of Luoyang Jiaozuo Branch, with a loan term from Apr. 29, 2019 to Apr. 29, 2022, of which RMB500,000 shall be repaid on Apr. 29, 2020 and Oct. 29, 2020 respectively, with a total amount to be repaid of RMB1,000,000. The Company borrowed RMB80,000,000 from Bank of Luoyang Jiaozuo Branch, with a loan term from May 14, 2019 to May 14, 2022, of which RMB500,000 shall be repaid on May 14, 2020 and Nov. 14, 2020 respectively, with a total amount to be repaid of RMB1,000,000. The Company borrowed RMB90,000,000 from Bank of Luoyang Jiaozuo Branch, with a loan term from May 21, 2019 to May 21, 2022, of which RMB500,000 shall be repaid on May 21, 2020 and Nov. 21, 2020 respectively, with a total amount to be repaid of RMB1,000,000.
332 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. In summary, long-term borrowings of the Company that are due within one year amount to RMB101,832,500 in total.
Long-term payables due within one year: The Company’s subsidiary Billions New Material received a capital contribution of RMB200,000,000 from Agricultural Development Bank of China Key Construction Fund Co., Ltd. upon its establishment. According to Contribution Agreement, RMB40,000,000 shall be repaid to Agricultural Development Bank of China Key Construction Fund Co., Ltd. on Jun. 2, 2020.
30. Long-term borrowings (1) Classification of long-term borrowings Monetary Unit: Yuan
Item Closing balance Opening balance
Pledged borrowings 548,000,000.00
Mortgaged borrowings 200,000,000.00
Guaranteed borrowings 735,022,666.86 272,807,282.10
Credit borrowings 1,268,001,284.00 135,000,000.00
Interests of long-term borrowings 1,309,025.70 1,138,374.31
Total 2,752,332,976.56 408,945,656.41
Description on classification of long-term borrowings: 1. Pledge-backed borrowings: The Company pledged the shares held in Xinli Titanium Industry to Bank of Communications Jiaozuo Branch and obtained a borrowing of RMB548,000,000.00 with a pledge term from Dec. 12, 2019 to Oct. 28, 2026.
2. Mortgage-backed borrowings:
333 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. The Company mortgaged machinery equipment of its subsidiary Billions New Material to The Export-Import Bank of China Henan Province Branch and obtained a borrowing of RMB200,000,000.00, with a mortgage term from Jun. 17, 2019 to Jun. 16, 2021.
3. Guaranteed borrowings: (1) The subsidiary Billions New Material borrowed RMB145,570,282.10 from Industrial and Commercial Bank of China Minzhu Road Sub-branch with guarantee provided by the Company and a guarantee period from Dec. 28, 2018 to Dec. 21, 2026.
(2) The subsidiary Billions New Material borrowed RMB72,000,000.00 from The Export- Import Bank of China Co., Ltd. Henan Province Branch with guarantee provided by the Company and a guarantee period from Dec. 27, 2018 to Dec. 21, 2026.
(3) The subsidiary Billions New Material borrowed RMB50,000,000.00 from Industrial and Commercial Bank of China Minzhu Road Sub-branch with guarantee provided by the Company and a guarantee period from Apr. 1, 2019 to Dec. 21, 2026.
(4) The subsidiary Billions New Material borrowed RMB150,000,000.00 from The Export- Import Bank of China Henan Province Branch with guarantee provided by the Company and a guarantee period from Mar. 26, 2019 to Dec. 21, 2026.
(5) The subsidiary Billions New Material borrowed RMB80,157,700.00 from Industrial and Commercial Bank of China Minzhu Road Sub-branch with guarantee provided by the Company and a guarantee period from Nov. 7, 2019 to Dec. 21, 2026.
(6) The subsidiary Billions New Material borrowed RMB100,000,000.00 from The Export- Import Bank of China Henan Province Branch with guarantee provided by the Company and a guarantee period from Dec. 6, 2019 to Dec. 21, 2026.
334 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. (7) The subsidiary European Company borrowed RMB137,294,684.76 from HSBC London Branch with guarantee provided by the Company and a guarantee period from Jul. 2, 2019 to Jul. 2, 2022.
Other descriptions, including interest rate intervals: 31. Long-term payables Monetary Unit: Yuan
Item Closing balance Opening balance
Long-term payables 160,000,000.00 200,000,000.00
Special payables 4,609,892.00
Total 164,609,892.00 200,000,000.00
(1) Presentation of long-term payable by nature of payment Monetary Unit: Yuan
Item Closing balance Opening balance
Project construction fund 160,000,000.00 200,000,000.00
Other descriptions: Project construction fund was invested by Agricultural Development Bank of China Key Construction Fund Co., Ltd. into the Company’s subsidiary Henan Billions New Material Co., Ltd. and was used in the Company’s chloride-process titanium dioxide pigment production line project with an annual output of 200,000 tonnes. RMB40,000,000 payable at the end of the period of this year is classified into long-term payables due within one year.
(2) Special payables Monetary Unit: Yuan Increase in the Decrease in the Cause of Item Opening balance Closing balance current period current period formation
Special fund for Government “three 9,190,000.00 4,580,108.00 4,609,892.00 grants provisions
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(provisions of water, electricity and heating) and one property management”
Total 9,190,000.00 4,580,108.00 4,609,892.00 --
Other descriptions:
32. Estimated liabilities Whether or not new income standards are applied □ Yes √ No Monetary Unit: Yuan
Item Closing balance Opening balance Cause of formation
Geological environment Retirement obligation 3,873,360.00 3,948,860.00 deposit formed
Retirement obligation Land rehabilitation fees 7,230,668.15 221,083.33 formed
Retirement obligation Slag dump closing fees 32,164,363.53 formed
Estimated expenses for Improvements fees of improvement of “three “three provisions provisions (provisions of (provisions of water, 4,512,500.00 water, electricity and electricity and heating) heating) and one property and one property management” management”
Total 47,780,891.68 4,169,943.33 --
Other notes include a description of important assumptions and estimates of important estimated liabilities:
Estimated liabilities have been accrued by the Company according to the budget of improvement fees of “three provisions (provisions of water, electricity and heating) and one property management”.
336 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. 33. Deferred income Monetary Unit: Yuan Increase in the current Decrease in the current Item Opening balance Closing balance Cause of formation period period
Government grants 184,070,128.41 151,362,808.71 53,445,403.77 281,987,533.35 Allocated
Total 184,070,128.41 151,362,808.71 53,445,403.77 281,987,533.35 --
Projects involving government grants: Monetary Unit: Yuan Amount Amount included Amount of the Related to Newly added in non- included in costs Opening Other Closing assets / Liabilities grant amount operating other offset balance changes balance related to in this period income incomes in in the incomes in this this period current period period
Central subsidy fund for construction of a demonstration Assets- base for comprehensive utilization of vanadium-titanium 92,977,099.92 22,102,850.04 70,874,249.88 related magnetite resources
Incentives for infrastructure of the titanium dioxide Assets- 16,406,874.00 3,038,310.00 13,368,564.00 project with an output of 100,000 tonnes related
Subsidy funds allocated by Yanbian County for the Assets- reconstruction project of roads from Wanbanqiao, 9,732,620.30 641,711.28 9,090,909.02 related Yanhong Road to Mahuanggou
Special subsidy allocated by Mianzhu City Finance 6,687,500.00 750,000.00 5,937,500.00 Assets-
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Bureau for national and local joint laboratory of titanium related dioxide cleaning production technology and process
Central post-disaster reconstruction subsidy provided by Mianzhu City Development and Reform Bureau for Assets- technical transformation the project concerning 5,700,000.00 2,850,000.00 2,850,000.00 related improving output of rutile titanium dioxide “from 80,000 tonnes to 140,000 tonnes”
Supporting fund for infrastructure of second-phase Assets- 4,785,000.00 1,044,000.00 3,741,000.00 project related
Subsidy for clean production demonstration project in Assets- 4,591,666.77 1,899,999.96 2,691,666.81 2013 related
Loan with discounted interest - Discounted interests of the loan for post-disaster recovery and reconstruction of Assets- the technical reform project improving output of 3,725,474.76 1,241,825.04 2,483,649.72 related titanium dioxide “from 80,000 tonnes to 140,000 tonnes”
Fund allocated by Nanzhang County Finance Bureau for Assets- 3,553,103.59 761,379.12 2,791,724.47 enterprise technology transformation related
Subsidy for road renovation project of the section from Assets- Yanhong Road in Xinjiu Mining Area to Lomon’s Mining 2,845,204.00 284,520.40 2,560,683.60 related Area
(C. F. G. G. J. [2013] No. 1118) Notice on Issuing the First Batch of Project Plan for 2013 Provincial Strategic Assets- Emerging Industrial Development Special New Energy 2,400,000.00 300,000.00 2,100,000.00 related and Energy Saving and Environmental Protection Industry
Subsidy allocated by Yanbian County Finance Bureau for Assets- 2,284,006.40 175,692.80 2,108,313.60 public rental housing related
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Awards budget allocated by central government in 2010 Assets- for demonstration project of conservation and 2,250,000.00 500,000.00 1,750,000.00 related comprehensive utilization of mineral resources
Central infrastructure investment made by Mianzhu City Assets- Finance Bureau for independent innovation and high- 1,966,666.75 399,999.96 1,566,666.79 related tech industrialization projects in 2013
Assets- Subsidy for central mineral resources protection project 1,950,000.00 1,300,000.00 650,000.00 related
Compensation for construction of roads from Assets- 1,925,000.00 150,000.00 1,775,000.00 Mahuanggou to concentration plant related
Subsidy allocated by finance bureau for the project Assets- concerning optimization technology of titanium liquid 1,656,666.59 350,000.04 1,306,666.55 related quality in sulphur-phosphorus titanium industry chain
Development fund allocated by Mianzhu City Development and Reform Bureau for developing special Assets- 1,649,999.93 34,999.95 600,000.00 1,014,999.98 titanium dioxide for producing high-grade automotive related electrophoresis paint
Notice on Issuing the First Batch of Project Plan for 2013 Provincial Strategic Emerging Industrial Development Assets- Special New Energy and Energy Saving and 1,516,666.69 280,000.00 1,236,666.69 related Environmental Protection Industry by Sichuan Provincial Development and Reform Commission
Technology development and transformation project for Assets- low-carbon production process of “sulfur-phosphorus- 1,437,500.08 249,999.96 1,187,500.12 related titanium” circular economy
Project subsidy funds allocated by Economy and Assets- Informatization Bureau - Technical reform project 1,266,666.91 399,999.96 866,666.95 related increasing output of rutile titanium dioxide “from
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140,000 tonnes to 200,000 tonnes”
Deep treatment project for titanium white calcining kiln Assets- 1,200,000.00 150,000.00 1,050,000.00 tail related
Land leveling fund allocated by Zhongzhan Finance Assets- 1,199,242.31 757,415.88 441,826.43 Bureau for titanium-rich material project related
Funds for technology development and industrialization Assets- innovation development related to recovery and 1,000,000.08 159,999.96 840,000.12 related utilization of sulfuric acid titanium dioxide acid slag
Subsidy allocated by Mianzhu Economic Development Assets- Zone Management Committee for natural gas and water 999,999.76 500,000.04 499,999.72 related intake projects
Assets- Technical renovation fund 993,333.45 260,000.00 733,333.45 related
Central on-budget investment fund allocated by Sichuan Provincial Development and Reform Commission and Assets- Sichuan Provincial Economic and Information 960,000.00 480,000.00 480,000.00 related Commission for revitalization and technological transformation of key industries
Special fund allocated by National Development and Assets- Reform Commission for technology development in 750,000.00 500,000.00 250,000.00 related major industries
Special subsidy for national and local joint laboratory of Assets- clean production technology and process of titanium 649,999.73 200,000.04 449,999.69 related dioxide
Project concerning industrialization of new process for Assets- 629,836.63 157,459.08 472,377.55 clean production of titanium dioxide using the “sulfur- related
340 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. phosphorus-titanium” co-production method
Technical renovation fund allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Economic Assets- 600,000.00 300,000.00 300,000.00 Commission for increasing output of rutile titanium related dioxide “from 80,000 tonnes to 140,000 tonnes”
Subsidy allocated by Deyang City Development and Reform Commission for the project concerning Assets- 450,000.00 300,000.00 150,000.00 improving capacity of independent innovation and related development of high-tech industrialization
Fund for science and technology support programs and Assets- 420,000.00 140,000.00 280,000.00 projects of Sichuan Development Holding Co., Ltd. related
Provincial-level special fund allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Assets- 390,000.00 120,000.00 270,000.00 Economic and Information Commission for technical related transformation
Fund allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Department of Science Assets- 390,000.00 130,000.00 260,000.00 and Technology in 2011 for science and technology plans related and projects
Supporting fund for development of service industry (high-grade titanium dioxide project with an annual Assets- 380,000.00 120,000.00 260,000.00 output of 60,000 tonnes related to increasing output related “from 140,000 tonnes to 200,000 tonnes”)
Provincial-level special fund allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Assets- 325,000.00 100,000.00 225,000.00 Economic Commission as interest subsidy for technical related reform loan
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Special fud allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Economic and Assets- 300,000.00 100,000.00 200,000.00 Information Commission for industrialization of industrial related technology achievements
Special fund for development of emerging industries Assets- 240,000.00 120,000.00 120,000.00 (clean production laboratory) related
Fund allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Economic Commission for industrialization research and development of special Assets- 200,000.24 99,999.96 100,000.28 new titanium white products for laminated paper used in related the project concerning increasing output “from 80,000 tonnes to 140,000 tonnes”
Provincial-level fund for industrial technology research and development allocated by Sichuan Provincial Assets- 200,000.00 50,000.00 150,000.00 Department of Finance and Sichuan Provincial Economic related and Information Commission
Fund for industrial technology research and development (rely on ink-specific titanium dioxide Assets- production line with an output of 5kt/a involved in the 159,999.76 80,000.04 79,999.72 related project concerning increasing output “from 80,000 tonnes to 140,000 tonnes)
Fund allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Economic and Assets- 130,000.00 40,000.00 90,000.00 Information Commission for research and development related of industrial technology
Fund allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Economic Commission for Assets- industrialization research and development of special 99,999.76 50,000.04 49,999.72 related new titanium white products for laminated paper used in the project concerning increasing output “from 80,000
342 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. tonnes to 140,000 tonnes”
Fund allocated by intellectual property office for the third batch of science and technology support plans Assets- under high-grade special titanium dioxide project with 95,000.00 30,000.00 65,000.00 related an annual output of 60,000 tonnes related to increasing output “from 140,000 tonnes to 200,000 tonnes”
Assets- National subsidy for titanium dioxide project 65,137,500.00 4,825,000.02 60,312,499.98 related
Special financial fund allocated by Jiaozuo Department of Assets- 10,050,000.00 10,050,000.00 Finance related
Special development fund for advanced manufacturing Assets- enterprises in 2019 that are allocated by Jiaozuo City 9,690,000.00 80,750.00 9,609,250.00 related Zhongzhan District Treasury Payment Center
New technological development and research project for Assets- 9,500,000.00 9,500,000.00 enhancing the recycling of fine-grained ilmenite related
Special development fund for strategic emerging Assets- 8,437,500.00 625,000.02 7,812,499.98 industries related
Assets- Project support fund 5,664,175.35 507,239.58 5,156,935.77 related
Assets- Cross-region special fund for provincial-level industries 5,737,500.00 424,999.98 5,312,500.02 related
Cultivation fund for leading enterprises of emerging Assets- 5,400,000.00 400,000.02 4,999,999.98 industries related
Research and development of key technologies for the 4,200,000.0 Assets- 300,000.00 3,900,000.00 production of high-quality titanium sponge 0 related
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Research and development of key technologies for the Assets- 2,936,250.00 217,500.00 2,718,750.00 industrial chain of rutile titanium dioxide related
Special fund for technological improvement for titanium Assets- 2,700,000.00 199,999.98 2,500,000.02 dioxide production related
Assets- Off-line slag discharge by means of boiling chlorination 2,700,000.00 199,999.98 2,500,000.02 related
Efficient beneficiation and smelting industrial Assets- development for fully enclosed electric arc furnace 2,326,388.87 208,333.33 2,118,055.54 related ilmenite
Research on coated technology of titanium dioxide under Assets- 2,160,000.00 160,000.02 1,999,999.98 chlorination process related
Research and development of high-quality titanium Assets- 2,000,000.00 2,000,000.00 chloride powder for coatings and plastics related
Integration and innovation of key technologies for the Assets- 1,750,000.00 124,999.98 1,625,000.02 production of high-quality titanium sponge related
Research and development of key technologies for Assets- 1,687,500.00 124,999.98 1,562,500.02 chlorination titanium dioxide production related
Assets- Longbai Intelligent Equipment Industrial Park project 1,592,105.61 13,570.11 1,578,535.50 related
Comprehensive utilization project of scandium oxide Assets- with a recovery of 10 tonnes/year of titanium dioxide 1,500,000.00 13,888.89 1,486,111.11 related waste acid
Implementation plan for circular transformation of Assets- 1,500,000.00 15,625.00 1,484,375.00 western industrial cluster in Jiaozuo related
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Assets- Fund for academician workstation 1,215,000.00 90,000.00 1,125,000.00 related
Construction of innovation platform for titanium Assets- 1,200,000.00 1,200,000.00 metallurgy and chemicals related
Low grade waste heat recovery for sulfur-phosphorus- Assets- titanium industry chain waste ferrous sulphate mixed 960,000.00 40,000.00 920,000.00 related with firing acid
Key technology and industrial development for titanium Assets- slag smelting in large and direct current electric-arc 818,888.88 73,333.33 745,555.55 related furnace
Process innovation and demonstration for upgrading and Income- edulcoration of vanadium titano-magnetite and ilmenite 500,000.00 500,000.00 related concentrate
Other descriptions:
34. Capital stock Monetary Unit: Yuan
Increase or decrease (+, -) in this change
Opening balance Shares converted Closing balance Newly issued Shares donated from provident Other decreases Subtotal shares fund
Total number of shares 2,032,020,889.00 2,032,020,889.00
Other descriptions:
345 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. 35. Capital reserve Monetary Unit: Yuan Increase in the Decrease in the Item Opening balance Closing balance current period current period
Capital premium 9,550,143,069.50 21,230,328.98 185,778,484.97 9,385,594,913.51 (share premium)
Other capital 31,733,812.60 88,726,401.79 21,230,328.98 99,229,885.41 reserves
Total 9,581,876,882.10 109,956,730.77 207,008,813.95 9,484,824,798.92
Other descriptions, including changes in other equity instruments in the current period, and reasons for such changes:
1. Capital reserve - equity premium (1) Increase in this year With the unlocking condition for the first employee stock ownership plan of the Company being reached, the stock ownership incentive cost of RMB21,230,328.98 previously included in capital reserve was transferred into capital stock premium. (2) Decrease in this year ① The Company will implement its second employee stock ownership plan this year and will sell 56,936,308 shares which are repurchased at RMB750,235,605.66 to employee of the Company at RMB565,782,443.08, with stock premium to be reduced by RMB184,453,162.58 accordingly. ② The disproportional capital increase of the subsidiary, United Pigment, leaded to a decrease of RMB1,325,322.39 in capital reserve - stock premium.
2. Capital reserve - other capital reserve (1) Increase in this year RMB88,726,401.79 of the stock ownership incentive costs under the Company’s employee stock ownership plan was amortized in this period. Other capital reserve increased by RMB .
346 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. (2) Decrease in this year With the unlocking condition for the first employee stock ownership plan of the Company being reached, the stock ownership incentive cost of RMB21,230,328.98 previously included in capital reserve was transferred into capital stock premium.
36. Treasury shares Monetary Unit: Yuan Increase in the Decrease in the Item Opening balance Closing balance current period current period
Employee stock 663,155,409.81 87,080,195.85 750,235,605.66 ownership plan
Total 663,155,409.81 87,080,195.85 750,235,605.66
Other descriptions, including changes in other equity instruments in the current period, and reasons for such changes:
The Company repurchased shares worth RMB87,080,195.85 in Jan. 2019, and used all those shares repurchased to implement its second employee stock ownership plan, with a decrease of RMB750,235,605.66 in treasury stock accordingly.
37. Other comprehensive income Monetary Unit: Yuan
Current accural
Less: Less: profits and retained losses income transferred Amount Pre-tax transferred Amount in for the Less: attributab Opening accrual in for the attributab Closing Item current Incom le to balance amount current le to balance period that e tax minority for period that parent are expens sharehold current is included company included in es ers after period in other after tax other tax comprehen comprehen sive income sive income previously previously
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I. Other comprehen sive income items which cannot be reclassified as profit or loss
II. Other comprehen sive income items 1,924,206 3,460,854 3,460,854 5,385,060 which will .40 .50 .50 .90 be reclassified as profit or loss
Differences arising from translation 1,924,206 3,460,854 3,460,854 5,385,060
of foreign .40 .50 .50 .90 currency financial statements
Total other 1,924,206 3,460,854 3,460,854 5,385,060 comprehen .40 .50 .50 .90 sive income
Other descriptions, including the conversion of the effective portion of gains and losses form cash-flow hedging to the initial recognition amount adjustment of hedged items:
38. Special reserves Monetary Unit: Yuan Increase in the Decrease in the Item Opening balance Closing balance current period current period
Work safety fund 22,284,630.23 123,520,231.32 111,801,971.20 34,002,890.35
Total 22,284,630.23 123,520,231.32 111,801,971.20 34,002,890.35
Other descriptions, including changes in other equity instruments in the current period, and reasons for such changes:
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39. Surplus reserve Monetary Unit: Yuan Increase in the Decrease in the Item Opening balance Closing balance current period current period
Statutory surplus 478,506,573.31 172,065,098.30 650,571,671.61 reserve
Total 478,506,573.31 172,065,098.30 650,571,671.61
Descriptions of surplus reserves, including changes in other equity instruments in the current period, and reasons for such changes:
40. General risk reserve
Balance at Appropriation Decrease in Item the beginning for current Accrual ratio (%) the current Closing balance of year period period
General risk provisions 6,113,341.37 10.00 6,113,341.37
Total 6,113,341.37 6,113,341.37
41. Undistributed profit Monetary Unit: Yuan
Item Equity capital Prior year
Undistributed profits at the end of last 963,324,133.72 1,409,921,162.39 period before adjustment
Undistributed profit at beginning of the 963,324,133.72 1,409,921,162.39 period after adjustment
Plus: current net profit attributable to 2,593,975,280.30 2,285,728,663.61 owners of parent company
Less: statutory surplus reserve drawn 172,065,098.30 174,597,283.81
General risk provision drawn 753,302.73
Common share dividends payable 1,727,217,755.65 2,438,342,397.25
Other decreases 118,632,708.49
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Closing undistributed profit 1,658,016,560.07 963,324,133.72
42. Operating income and operating cost Monetary Unit: Yuan
Current accural Amount incurred in last period Item Revenue Cost Revenue Cost
Primary business 11,158,363,360.17 6,447,777,915.18 10,243,417,108.98 6,023,229,750.44
Other business 200,176,342.85 98,234,446.38 197,171,349.48 115,827,698.10
Total 11,358,539,703.02 6,546,012,361.56 10,440,588,458.46 6,139,057,448.54
Whether or not new income standards are applied □ Yes √ No Other instructions
43. Net interest income
Item Current accural Amount incurred in last period
Interest income 57,695,922.99 110,268,641.56
Interbank deposit 163,697.43
Deposit in central bank
Interest on finance lease 14,979,260.88 13,497,947.08
Loans and advances 42,552,964.68 96,770,694.48
Interest expenses 147,653.93 3,649,339.33
Interbank deposit
Borrowings from central bank
Loans from other financial institutions 82,496.66 3,649,339.33
Finance lease expense 65,157.27
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Net interest income 57,548,269.06 106,619,302.23
44. Taxes and surcharges Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Urban maintenance and 16,743,110.87 25,380,809.59 construction tax
Educational surtax 19,435,473.41 25,850,258.72
Resource tax 38,555,070.14 42,985,685.75
Housing property tax 13,313,845.26 9,383,741.83
Land use tax 15,666,186.50 13,648,124.05
Vehicle and ship use tax 538,953.11 482,037.11
Stamp duty 9,108,874.63 7,208,034.07
Local education surcharge 12,556,600.12 10,083,155.71
Tariff 174,070.65 4,088,180.02
Environmental protection tax 7,407,008.05 7,299,272.59
Total 133,499,192.74 146,409,299.44
Other descriptions:
45. Net income from service charges and commissions
Item Current accural Amount incurred in last period
Handling charges and commission 3,651,657.47 3,135,281.65 income
Income from commissions 3,651,657.47 3,135,281.65
Handling charges and commission 8,404.67 14,935.32 expenditure
Handling charges expenditure 8,404.67 14,935.32
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Commission expenditure
Handling charges and net income 3,643,252.80 3,120,346.33 from commissions
46. Sales expenses Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Freight and miscellaneous expenses 280,418,776.00 249,779,893.32
Sales service fee 80,645,582.81 37,956,187.44
Packaging fee 41,452,384.31 46,324,635.53
Payroll 25,370,453.85 24,217,486.32
Other expenses 20,951,998.72 24,254,425.02
Insurance expenses 6,331,890.36 8,214,627.33
Travel expense 3,859,089.84 4,285,409.80
Advertising and exhibition fees 1,641,533.48 5,225,619.24
Office fee 1,348,520.13 1,026,138.02
Business entertainment expenses 1,139,176.48 1,106,741.28
Total 463,159,405.98 402,391,163.30
Other descriptions:
47. Administrative expenses Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Payroll and stock ownership 216,156,765.39 173,606,270.30 incentives
Material consumption and repair 118,754,235.66 123,720,795.20 costs
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Depreciation and amortization fees 93,096,907.31 77,894,761.38
Audit, agency and consulting fees 34,414,927.93 25,874,786.49
Other decreases 48,718,086.35 18,641,220.75
Cleaning fee 6,470,276.44 5,766,016.71
Advertising fee 6,222,423.70 953,633.86
Business entertainment expenses 6,722,764.38 5,429,778.75
Office fee 4,787,627.16 3,883,834.51
Rental fee 3,322,931.57 4,032,116.47
Travel expense 4,399,977.62 7,353,139.10
Transportation costs 4,057,308.64 4,130,121.16
Conference fee 1,399,525.31 2,088,051.55
Security costs 625,009.73 637,975.67
Insurance expenses 1,612,279.76 1,748,812.86
Total 550,761,046.95 455,761,314.76
Other descriptions:
48. Research and development expenses Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Material and fueling fee 317,256,771.17 318,724,213.66
Payroll 68,514,153.66 52,814,320.11
Depreciation and rental fees 13,737,590.45 19,511,586.09
Other decreases 16,771,546.89 8,429,747.48
Total 416,280,062.17 399,479,867.34
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49. Financial expenses Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Interest expenses 182,886,637.41 205,581,833.78
Less: Interest income 70,192,540.80 9,461,796.34
Net exchange loss -5,914,298.38 -12,960,003.39
Service charges 16,622,695.26 48,661,421.40
Total 123,402,493.49 231,821,455.45
Other descriptions:
50. Other income Monetary Unit: Yuan
Source of other revenues Current accural Amount incurred in last period
Government grants 88,431,580.59 87,752,657.57
Gains from debt restructuring 24,941,728.28
Total 113,373,308.87 87,752,657.57
51. Investment income Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Income from long-term equity investment calculated based on equity -1,560,405.68 1,601,659.66 method
Investment income from disposal of -353,421.37 long-term equity investment
Bank financing income 28,612,661.15 40,295,079.65
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Other decreases -77,822,825.86
Total -50,770,570.39 41,543,317.94
Other descriptions: The other is discount interest of notes receivable.
52. Gains on changes in fair value Monetary Unit: Yuan Sources of gains on changes in fair Current accural Amount incurred in last period value
Financial assets measured at fair value with changes included in 8,835,379.00 profit or loss
Total 8,835,379.00
Other descriptions:
53. Credit impairment loss Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Bad debt loss of other receivables 16,130,421.31
Bad debt loss of accounts receivable -29,900,598.67
Impairment loss of long-term -23,673,189.77 accounts receivable
Impairment loss of loans and -91,647,475.00 advances
Total -129,090,842.13
Other descriptions:
54. Asset impairment loss
355 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. Whether or not new income standards are applied □ Yes √ No Monetary Unit: Yuan
Item Current accural Amount incurred in last period
I. Loss on bad debts -199,588,010.80
II. Loss on inventory depreciation -2,792,211.71 -271,244.86
VII. Impairment loss of fixed assets -58,941,855.30 -25,794,740.21
Total -61,734,067.01 -225,653,995.87
Other descriptions:
55. Income from assets disposal Monetary Unit: Yuan Sources of income from assets Current accural Amount incurred in last period disposal
Income from disposal of fixed assets 1,366,592.87 3,484,877.25
Loss of disposal of fixed assets -9,285,926.11 -2,919,071.47
Total -7,919,333.24 565,805.78
56. Non-operating income Monetary Unit: Yuan Amount included in Amount incurred in last Item Current accural current non-recurring period profit and loss
Gains from debt 44,415,238.85 restructuring
Government grants 1,290,000.00
Gain on inventory taking 152,984.36 152,984.36
Gains from retirement of 22,520.76 22,520.76 non-current assets
Insurance compensation 5,148,490.18
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Confiscated gains 2,740,431.75 2,193,719.61 2,740,431.75
Other decreases 3,342,243.17 3,609,732.12 3,342,243.17
Total 6,258,180.04 56,657,180.76 6,258,180.04
Government grants included in current profit and loss: Monetary Unit: Yuan Whether grants Accrual Related Whether Accrual Project Reason affect amount to assets Nature and special amount of with grants Receiver for loss and for / related type grants the last granted grants profit in current to or not period current period incomes year
Subsidy Supporting received as fund a result of allocated to compliance 18 financial with local enterprises support Income- Rewards No No 1,090,000.00 (enterprises policies related with the such as nature of local finance) in government 2018 investment promotion
Subsidy Bonus received as awarded by a result of Zhongzhan compliance District with local Jiaozuo City Committee support Income- Financial Rewards No No 200,000.00 in 2016 to policies related Department advanced such as units and local advanced government individuals investment promotion
Other descriptions:
57. Non-operating expenses Monetary Unit: Yuan
Item Current accural Amount incurred in last Amount included in
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period current non-recurring profit and loss
Losses on debt 4,400.00 restructuring
External donations 5,383,836.34 7,910,072.00 5,383,836.34
Abnormal loss 3,340.80
Inventory losses 681,923.21 681,923.21
Loss on damage and retirement of non-current 23,116,724.35 15,126,527.25 23,116,724.35 assets
Penalty expense 1,176,579.23 480,850.45 1,176,579.23
Other decreases 4,325,556.05 5,710,907.84 4,325,556.05
Total 34,684,619.18 29,236,098.34 34,684,619.18
Other descriptions: The loss from damaged and rejected non-current assets is that from the engineering materials that are disposed but not available for use during the course of production resumption of the newly acquired Xinli Titanium Industry Company in this period.
58. Income tax fees (1) Table of income tax expenses Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Income tax expenses of current 465,887,620.65 486,798,377.79 period
Deferred income tax expenses -48,386,582.27 -91,164,024.63
Total 417,501,038.38 395,634,353.16
(2) Adjustment process of accounting profits and income tax expenses Monetary Unit: Yuan
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Item Current accural
Total profits 3,022,048,718.95
Income tax expense calculated at the statutory / 453,307,307.84 applicable tax rate
Impact of application of different tax rates to -12,050,952.78 subsidiaries
Impact of adjustment of income tax of previous periods -41,802,017.54
Impact of non-taxable income 182,412.86
Impact of non-deductible costs, expenses and losses 11,583,465.75
Impact of using deductible loss of deferred tax assets -5,019,522.12 not recognized in the last period
Impact of deductible temporary difference or deductible loss of closing recognized deferred income 11,462,061.30 tax assets
Other decreases -161,716.93
Income tax expenses 417,501,038.38
Other instructions Others are R&D expenses plus deductions.
59. Items in cash flow statement (1) Other cash received relating to operating activities Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Interest income received 30,812,424.71 9,952,547.25
Margin and deposit received 354,506,111.83 96,650,129.62
Government grants received 60,376,862.59 63,937,383.19
Intercourse funds and other 75,933,291.63 27,730,377.02 payments received
Total 521,628,690.76 198,270,437.08
359 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. Description of other cash received relating to operating activities (2) Other cash paid relating to operating activities Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Sales expenses and administrative 316,230,770.44 369,256,768.35 expenses paid
Cash deposit for safety and bidding 328,497,238.33 151,207,929.00
Historical internal left-over amount paid on behalf of Xinli Titanium 110,114,887.40 Industry
Current accounts and others 124,886,221.38 32,100,556.63
Total 879,729,117.55 552,565,253.98
Description of other cash paid relating to operating activities
(3) Other cash received relating to investment activities Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Land refund received 20,010,000.00
Total 20,010,000.00
Description of other cash received relating to investment activities:
(4) Other cash received relating to financing activities Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Transfer payment under employee 569,787,352.91 348,903,042.31 stock ownership plan
Acceptance and discount 1,437,351,666.63 707,000,000.00
Expiration of certificate of large 861,984,412.00 deposits
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Total 2,869,123,431.54 1,055,903,042.31
Description of other cash received relating to financing activities:
(5) Other cash paid relating to financing activities Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Repurchase of treasury shares 87,080,195.85 663,155,409.81
Financing costs 62,409,394.58 22,733,812.86
Guarantee deposit paid 2,267,430.46 2,008,897.61
Payments for repurchasing and 221,946.00 cancelling stocks
Repayment of letter of credit 187,000,000.00
Purchase of certificate of large 2,246,633,156.00 deposits
Total 2,585,390,176.89 688,120,066.28
Description of other cash paid relating to financing activities:
60. Supplementary information to cash flow statement (1) Supplementary information to cash flow statement Monetary Unit: Yuan Accrual amount of the current Supplementary information Amount of the last period period
1. Reconciliation from net profit to -- -- cash flows from operating activities:
Net profit 2,604,547,680.57 2,320,237,451.87
Add: Provision for asset impairments 190,824,909.14 225,653,995.87
Depreciation of fixed assets, depreciation of oil and gas assets and 822,955,124.36 774,102,122.96 depreciation of productive biological assets
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Amortization of intangible assets 133,158,710.22 121,465,009.81
Amortization of long-term 11,890,262.67 8,165,192.96 unamortized expenses
Loss of the disposal of fixed assets, intangible assets and other long-term 7,919,333.24 -565,805.78 assets (Fill in with “-” for income)
Loss of scrapped fixed assets (Fill in 23,094,203.59 15,126,527.25 with “-” for income)
Losses on changes in fair value (Fill in -8,835,379.00 with “-” for income)
Financial expense (Fill in with “-” for 190,227,557.94 221,642,660.22 income)
Investment loss (Fill in with “-” for 50,770,570.39 -41,543,317.94 income)
Decrease in deferred tax assets (Fill in -47,835,993.02 -47,251,556.01 with “-” for increase)
Increase in deferred income tax 88,043,367.61 -43,230,505.41 liabilities (Fill in with “-” for increase)
Decrease in inventories (Fill in with “-” -286,538,370.99 -383,343,835.06 for increase)
Decrease in operating receivables (Fill -291,592,292.50 -396,297,829.91 in with “-” for increase)
Increase in operating payables (Fill in -1,493,918,737.57 -734,545,326.61 with “-” for increase)
Net cash flows from operating 2,003,546,325.65 2,030,779,405.22 activities
2. Significant investing and financing activities that do not involve cash -- -- receipts and payments:
3. Net increase/decrease in cash and -- -- cash equivalents:
Closing cash balance 1,055,135,459.37 1,495,540,791.23
Less: Opening cash balance 1,495,540,791.23 2,218,242,151.05
Net increase in cash and cash -440,405,331.86 -722,701,359.82 equivalents
(2) Net cash paid to acquire subsidiaries in the current period Monetary Unit: Yuan
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Amount
Cash or cash equivalents paid in the current period for 845,043,001.00 business combination of the current period
Therein: --
Xinli Titanium 845,043,001.00
Less: Cash and cash equivalents held by subsidiaries on 595,070.76 purchase date
Therein: --
Xinli Titanium 595,070.76
Therein: --
Net cash received from subsidiaries 844,447,930.24
Other descriptions:
(3) Composition of cash and cash equivalents Monetary Unit: Yuan
Item Closing balance Opening balance
I. Cash 1,055,135,459.37 1,495,540,791.23
Thereinto: Cash on hand 100,644.89 99,953.99
Unrestricted cash at bank 975,034,814.48 1,485,440,837.24
Unrestricted other cash balances 80,000,000.00 10,000,000.00
III. Closing balance of cash and cash 1,055,135,459.37 1,495,540,791.23 equivalents
Other descriptions:
61. Assets with restricted ownership or use rights Monetary Unit: Yuan
Item Closing book value Cause of restriction
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Deposits, large-amount deposit Cash at bank and on hand 1,585,515,706.01 certificate and court freezing
Fixed assets 360,093,417.68 Collateralized borrowings
Long-term equity investments 530,021,479.28 Pledged borrowings
Accounts receivable 104,534,875.52 Pledged borrowings
Receivables financing 140,338,168.16 Acceptance deposit
Construction in progress 5,462,554.64 Involving seizure by litigation court
Total 2,725,966,201.29 --
Other descriptions:
62. Foreign currency monetary items (1) Foreign currency monetary items Monetary Unit: Yuan Closing balance in Exchange rate for Translated ending balance Item foreign currency translation in RMB
Cash at bank and on hand -- -- 237,049,745.99
Thereinto: USD 28,702,227.36 6.9762 200,232,478.53
EUR 4,369,472.82 7.8155 34,149,614.83
HKD 122,652.80 0.8958 109,872.38
GBP 279,535.77 9.1501 2,557,780.25
Accounts receivable -- -- 855,554,631.57
Thereinto: USD 112,856,828.14 6.9762 787,311,804.51
EUR 8,680,786.63 7.8155 67,844,687.91
HKD
GBP 43,512.00 9.1501 398,139.15
Long-term borrowings -- -- 759,080,476.74
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Thereinto: USD 70,000,000.00 6.9762 488,334,000.00
EUR 34,642,246.40 7.8155 270,746,476.74
HKD
Other receivables 0.00 60,811.19
Thereinto: USD 8,716.95 6.9762 60,811.19
EUR 0.00 7.8155 0.00
HKD 0.00 0.8958 0.00
Accounts payable 0.00 217,939,597.21
Thereinto: USD 30,852,258.57 6.9762 215,231,526.24
EUR 251,082.62 7.8155 1,962,336.22
HKD 0.00 0.00
GBP 26,478.54 9.1501 242,281.29
CAD 94,137.43 5.3421 502,891.56
JPY 8,766.00 0.0641 561.90
Other payables 0.00 16,727,397.93
Thereinto: USD 2,393,059.18 6.9762 16,694,459.45
EUR 0.00 0.00
HKD 36,769.90 0.8958 32,938.48
Short-term borrowings 0.00 889,206,413.00
Thereinto: USD 127,462,861.30 6.9762 889,206,413.00
Current liabilities maturing 42,136,248.00 within one year
Thereinto: USD 6,040,000.00 6.9762 42,136,248.00
Other descriptions:
365 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. (2) Description of overseas business entities, including principal business place, recording currency and basis of selection to be disclosed for important overseas business entities, as well as reasons for any change in the recording currency. □ Applicable √ Not applicable
63. Government grants (1) Basic information concerning government grants Monetary Unit: Yuan Amount included in Category Amount Item presented current profit and loss
Central post-disaster reconstruction subsidy provided by Mianzhu City Development and Reform Bureau for technical 2,850,000.00 Deferred income 2,850,000.00 transformation the project concerning improving output of rutile titanium dioxide “from 80,000 tonnes to 140,000 tonnes”
Loan with discounted interest - Discounted interests of the loan for post-disaster recovery and reconstruction of the 2,483,649.72 Deferred income 1,241,825.04 technical reform project improving output of titanium dioxide “from 80,000 tonnes to 140,000 tonnes”
Special subsidy allocated by Mianzhu City Finance Bureau for national and local joint laboratory of 5,937,500.00 Deferred income 750,000.00 titanium dioxide cleaning production technology and process
Subsidy allocated by Mianzhu Economic Development Zone 499,999.72 Deferred income 500,000.04 Management Committee for natural gas and water intake projects
Central on-budget 480,000.00 Deferred income 480,000.00 investment fund allocated
366 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. by Sichuan Provincial Development and Reform Commission and Sichuan Provincial Economic and Information Commission for revitalization and technological transformation of key industries
Project subsidy funds allocated by Economy and Informatization Bureau - Technical reform project 866,666.95 Deferred income 399,999.96 increasing output of rutile titanium dioxide “from 140,000 tonnes to 200,000 tonnes”
Central infrastructure investment made by Mianzhu City Finance Bureau for independent 1,566,666.79 Deferred income 399,999.96 innovation and high-tech industrialization projects in 2013
Subsidy allocated by finance bureau for the project concerning optimization technology 1,306,666.55 Deferred income 350,000.04 of titanium liquid quality in sulphur-phosphorus titanium industry chain
Technical renovation fund allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Economic 300,000.00 Deferred income 300,000.00 Commission for increasing output of rutile titanium dioxide “from 80,000 tonnes to 140,000 tonnes”
Technology development and transformation project for low-carbon production process of 1,187,500.12 Deferred income 249,999.96 “sulfur-phosphorus- titanium” circular economy
Special subsidy for national and local joint 449,999.69 Deferred income 200,000.04 laboratory of clean
367 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. production technology and process of titanium dioxide
Funds for technology development and industrialization innovation development 840,000.12 Deferred income 159,999.96 related to recovery and utilization of sulfuric acid titanium dioxide acid slag
Project concerning industrialization of new process for clean production of titanium 472,377.55 Deferred income 157,459.08 dioxide using the “sulfur- phosphorus-titanium” co- production method
Supporting fund for development of service industry (high-grade titanium dioxide project with an annual output of 260,000.00 Deferred income 120,000.00 60,000 tonnes related to increasing output “from 140,000 tonnes to 200,000 tonnes”)
Special fund for development of emerging 120,000.00 Deferred income 120,000.00 industries (clean production laboratory)
Fund allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Economic Commission for industrialization research and development of 100,000.28 Deferred income 99,999.96 special new titanium white products for laminated paper used in the project concerning increasing output “from 80,000 tonnes to 140,000 tonnes”
Fund for industrial technology research and development (rely on ink- specific titanium dioxide 79,999.72 Deferred income 80,000.04 production line with an output of 5kt/a involved in the project concerning
368 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. increasing output “from 80,000 tonnes to 140,000 tonnes)
Fund allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Economic Commission for industrialization research and development of 49,999.72 Deferred income 50,000.04 special new titanium white products for laminated paper used in the project concerning increasing output “from 80,000 tonnes to 140,000 tonnes”
Low grade waste heat recovery for sulfur- phosphorus-titanium 920,000.00 Deferred income 40,000.00 industry chain waste ferrous sulphate mixed with firing acid
Development fund allocated by Mianzhu City Development and Reform Bureau for developing 1,014,999.98 Deferred income 34,999.95 special titanium dioxide for producing high-grade automotive electrophoresis paint
Fund allocated by intellectual property office for the third batch of science and technology support plans under high- grade special titanium 65,000.00 Deferred income 30,000.00 dioxide project with an annual output of 60,000 tonnes related to increasing output “from 140,000 tonnes to 200,000 tonnes”
Central subsidy fund for construction of a demonstration base for 70,874,249.88 Deferred income 22,102,850.04 comprehensive utilization of vanadium-titanium magnetite resources
Subsidy for central mineral 650,000.00 Deferred income 1,300,000.00 resources protection
369 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. project
Special fund for industrial technology research and 2,250,000.00 Deferred income 720,000.00 development
Subsidy for pavement renovation project from 9,090,909.02 Deferred income 641,711.28 Wanbanqiao, Yanhong Road to Mahuanggou
First special project fund for new energy and energy saving and environmental protection 3,336,666.69 Deferred income 580,000.00 industry for provincial strategic emerging industry development in 2013
Special funds for technology development 250,000.00 Deferred income 500,000.00 in major industries
Special subsidy for the project concerning improving capacity of 150,000.00 Deferred income 300,000.00 independent innovation and development of high- tech industrialization
Subsidy for road renovation project of the section from Yanhong 2,560,683.60 Deferred income 284,520.40 Road in Xinjiu Mining Area to Lomon’s Mining Area
Technical renovation fund 733,333.45 Deferred income 260,000.00
Subsidy for public rental 2,108,313.60 Deferred income 175,692.80 housing
Compensation for construction of roads from 1,775,000.00 Deferred income 150,000.00 Mahuanggou to concentration plant
Fund for science and 280,000.00 Deferred income 140,000.00 technology support plan
Technical renovation fund 270,000.00 Deferred income 120,000.00
Special fund as interest subsidy for technical 225,000.00 Deferred income 100,000.00 reform loan
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Special fund for industrialization of 200,000.00 Deferred income 100,000.00 industrial technology achievements
Implementation plan for circular transformation of 1,484,375.00 Deferred income 15,625.00 western industrial cluster in Jiaozuo
Longbai Intelligent Equipment Industrial Park 1,578,535.50 Deferred income 13,570.11 project
Subsidy for clean production demonstration 2,691,666.81 Deferred income 1,899,999.96 project in 2013
Land leveling fund allocated by Zhongzhan Finance Bureau for 441,826.43 Deferred income 757,415.88 titanium-rich material project
Deep treatment project for titanium white 1,050,000.00 Deferred income 150,000.00 calcining kiln tail
Comprehensive utilization project of scandium oxide with a recovery of 10 1,486,111.11 Deferred income 13,888.89 tonnes/year of titanium dioxide waste acid
Incentives for infrastructure of the titanium dioxide project 13,368,564.00 Deferred income 3,038,310.00 with an output of 100,000 tonnes
Supporting fund for infrastructure of second- 3,741,000.00 Deferred income 1,044,000.00 phase project
Fund allocated by Nanzhang County Finance 2,791,724.47 Deferred income 761,379.12 Bureau for enterprise technology transformation
Special development fund for advanced manufacturing enterprises in 2019 that are allocated 9,609,250.00 Deferred income 80,750.00 by Jiaozuo City Zhongzhan District Treasury Payment Center
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National subsidy for 60,312,499.98 Deferred income 4,825,000.02 titanium dioxide project
Special development fund for strategic emerging 7,812,499.98 Deferred income 217,500.00 industries
Project support fund 5,156,935.76 Deferred income 625,000.02
Cross-region special fund for provincial-level 5,312,500.02 Deferred income 424,999.98 industries
Cultivation fund for leading enterprises of 4,999,999.98 Deferred income 90,000.00 emerging industries
Research and development of key technologies to produce 3,900,000.00 Deferred income 400,000.02 high-quality titanium sponge
Research and development of key technologies for the 2,718,750.00 Deferred income 300,000.00 industrial chain of rutile titanium dioxide
Efficient beneficiation and smelting industrial development for fully 2,118,055.55 Deferred income 199,999.98 enclosed electric arc furnace ilmenite
Special fund for technological 2,500,000.02 Deferred income 199,999.98 improvement for titanium dioxide production
Off-line slag discharge by means of boiling 2,500,000.02 Deferred income 160,000.02 chlorination
Research on coated technology of titanium 1,999,999.98 Deferred income 124,999.98 dioxide under chlorination process
Integration and innovation of key technologies to 1,625,000.02 Deferred income 124,999.98 produce high-quality titanium sponge
Research and 1,562,500.02 Deferred income 507,239.58 development of key
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Fund for academician 1,125,000.00 Deferred income 73,333.33 workstation
Key technology and industrial development for titanium slag smelting in 745,555.55 Deferred income 208,333.33 large and direct current electric-arc furnace
Allocations of provincial department of science Deferred income and technology
Supporting fund from Wuding County Administration of Work Deferred income Safety for hidden hazard control project of tailings pond in Huaqiao
Special fund from Wuding County Financial Deferred income Department for safety control
Allocations of Lufeng County Financial Deferred income Department
Export incentive fund Deferred income
Allocations of Kunming Xishan District Business Deferred income and Investment Promotion Department
Allocations of National Intellectual Property Deferred income Administration, PRC
Allocations of provincial intellectual property Deferred income administration
Allocations of Kunming Xishan District Market Deferred income Supervision and Administration
New technological development and research 9,500,000.00 Deferred income project for enhancing the
373 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. recycling of fine-grained ilmenite
Construction of innovation platform for titanium 1,200,000.00 Deferred income metallurgy and chemicals
Research and development of high- quality titanium chloride 2,000,000.00 Deferred income powder for coatings and plastics
Special financial fund allocated by Jiaozuo 10,050,000.00 Deferred income Department of Finance
Preferential fund from Nanzhang County Financial Department for 39,700,998.11 Other income 21,558,684.11 attracting foreign businesses and investment
Foreign exchange earning award in 2018 of Nanzhang County Bureau 2,209,700.00 Other income 2,209,700.00 of Commerce (undocumented)
Incentives from Jiaozuo 2,000,000.00 Other income City Financial Department
Subsidies for comprehensive management and control 2,000,000.00 Other income of tailings pond “head pond” in Yanbian County (Qiaodijing tailings pond)
Special supporting subsidy for central foreign trade 2,000,000.00 Other income and economic development
Subsidy remitted by Zhongzhan District Science 1,892,000.00 Other income and Technology Bureau for research and development
Three authorized collection commissions 2,503,731.22 Other income 723,239.34 received from tax bureau
Export incentive fund 1,672,000.00 Other income
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Key export incentives of Mianzhu Bureau of 1,471,291.00 Other income Commerce
Subsidy allocated by Zhongzhan District 1,286,900.00 Other income Finance Bureau for import discount interest project
Grants for stabilizing 2,344,186.08 Other income 1,272,672.32 positions
Interest subsidy for import and credit insurance for 1,020,400.00 Other income 1,020,400.00 export in the first half of 2017
Awards for advanced enterprises among 1,000,000.00 Other income industrial enterprises city- wide in 2017
Fund for provincial science and technology project of Mianzhu City Economic 1,000,000.00 Other income 1,000,000.00 Informatization and Technology Bureau
Subsidy allocated by Zhongzhan District Finance Bureau for R&D 1,000,000.00 Other income platform of enterprise technology center in 2016
Incentives for export- based foreign exchange 918,000.00 Other income 918,000.00 earnings in 2018
Awards granted by Zhongzhan District Science and Technology Bureau to 840,000.00 Other income advanced units of scientific and technological innovation
Funds from Nanzhang County Financial Department for traditional 830,000.00 Other income 830,000.00 industry renovation and upgrading projects
Subsidy for abandoning 800,000.00 Other income one-stage gas generator
Financial supporting fund 1,770,000.00 Other income 680,000.00
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Incentives and subsidies for technological improvement granted by 600,000.00 Other income 600,000.00 Mianzhu City Commercial and Economic Cooperation Bureau
Subsidy allocated by Zhongzhan District Finance Bureau for export 589,200.00 Other income credit insurance project in 2016
Awards for economic 560,000.00 Other income benefit
Allowance paid by industrial enterprises for 522,200.00 Other income overtime working during Spring Festival
Special subsidy for foreign trade and economic 517,625.00 Other income development
Enterprise incentive fund granted at the 2019 500,000.00 Other income 500,000.00 Jiaozuo City Industrial Parks Meeting
Fund for supporting leading innovative and 500,000.00 Other income entrepreneurial talents
Process innovation and demonstration for upgrading and 500,000.00 Other income 500,000.00 edulcoration of vanadium titano-magnetite and ilmenite concentrate
Fund allocated by Zhongzhan District Science and Technology Bureau for the third batch of 500,000.00 Other income enterprise technology innovation projects in 2017
Special fund grants for central foreign economy and trade projects 466,558.00 Other income allocated by Mianzhu Business Bureau in 2017
Industrial subsidy 430,000.00 Other income
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Subsidy fund for emission 700,000.00 Other income 400,000.00 reduction projects in 2018
Interest subsidy for financing of Mianzhu City 400,000.00 Other income 400,000.00 Commercial and Economic Cooperation Bureau
Project fund allocated by Sichuan Provincial 400,000.00 Other income Administration of Foreign Experts Affairs
Export performance of Mianzhu City Commercial 380,000.00 Other income 380,000.00 and Economic Cooperation Bureau
Subsidies for the good opening of Mianzhu City Industrial, Technological 350,000.00 Other income 350,000.00 and Informationized Bureau
Special development fund 309,000.00 Other income 309,000.00 for industries at state level
Provincial and municipal foreign trade and economic development 300,000.00 Other income special fund of Mianzhu Bureau of Commerce in 2017
Subsidies from Nanzhang Financial Department for 300,000.00 Other income 300,000.00 the development of industrial project
Supporting fund allocated by Fuyang Finance Bureau 300,000.00 Other income for “Longzhong Talent Innovation Team” of 2017
Project fund allocated by Nanzhang County Finance Bureau for new 250,000.00 Other income technologies applied in a boiler SNCR denitration process
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Funds received from Mianzhu City Economic Informatization and 240,000.00 Other income 240,000.00 Technology Bureau or scientific and technological projects
Income tax immediately 599,766.60 Other income 201,981.05 levied and refunded
Funds for the ferrous gradient cooling 200,000.00 Other income 200,000.00 technology project in 2018
Incentives for the second batch of scientific and 200,000.00 Other income 200,000.00 technological innovation award in 2019
Waste water neutralization treatment conversion project of 200,000.00 Other income 200,000.00 Mianzhu City Financial Department
Subsidy allocated by Mianzhu City Economic Information and 200,000.00 Other income Technology and Technology Bureau for patent transfer
Short-term credit support from Mianzhu City 200,000.00 Other income 200,000.00 Commercial and Economic Cooperation Bureau
Talent introduction fund received from Science & 200,000.00 Other income 200,000.00 Technology Department of Sichuan Province
Special supporting subsidy for central foreign trade 200,000.00 Other income and economic development
Fund awarded by Zhongzhan District Committee in 2016 to 200,000.00 Non-operating income advanced units and advanced individuals
Industrial subsidy allocated by Mianzhu City 150,000.00 Other income Economic Information and
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Technology and Technology Bureau
Subsidy allocated by Mianzhu City Economic Information and 125,000.00 Other income Technology and Technology Bureau for “100-100 Team”
Industrial subsidy allocated by Deyang 120,000.00 Other income Economic Information Committee
Subsidies for comprehensive management and control of tailings pond “head 120,000.00 Other income pond” in Yanbian County (Niuwangtian tailings pond)
Fiscal subsidy fund for starred toilets in scenic 102,000.00 Other income 102,000.00 area
RMB export settlement reward of Mianzhu City 100,000.00 Other income Financial Department in 2017
Subsidy for parking lot construction of the construction office of 100,000.00 Other income 100,000.00 Nanzhang Lomon Phase 2 Project
Incentives received at Private Economy Development Conference 100,000.00 Other income 100,000.00 of Mianzhu City Financial Department
Fund for improving career skills that is transferred from Jiaozuo City social 92,500.00 Other income 92,500.00 security fund financial special account
Patent award 81,000.00 Other income
Payment transferred by Deyang City Science and 80,000.00 Other income 80,000.00 Technology Bureau
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Awards for provincial-level intellectual properties allocated by Nanxun 80,000.00 Other income County Science and Technology Bureau
Subsidy for patents allocated by Mianzhu City Economic Information and 60,000.00 Other income Technology and Technology Bureau
The second batch of patent subsidies allocated by Deyang City Science, 58,500.00 Other income Technology and Intellectual Property Office in 2018
Subsidy allocated by Nanxun County Urban and Rural Construction Bureau 56,000.00 Other income for renewable energy and building application demonstration projects
Incentives for high-tech enterprises recognized in 100,000.00 Other income 50,000.00 2017
Goods payment as incentives for provincial technology innovation 50,000.00 Other income 50,000.00 platform of Xiangyang Science and Technology Bureau
Advanced entity of project 50,000.00 Other income construction
Reward for scientific and technological advancement of Science & 30,000.00 Other income 30,000.00 Technology Department of Sichuan Province
Patent subsidies allocated by Deyang City Science, Technology and 26,000.00 Other income Intellectual Property Office
Equipment fund received from Mianzhu City Water 20,000.00 Other income 20,000.00 Resources Bureau
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American Coating Exhibition of Mianzhu City 18,000.00 Other income 18,000.00 Commercial and Economic Cooperation Bureau
American and African Coating Exhibitions of Mianzhu City Commercial 18,000.00 Other income 18,000.00 and Economic Cooperation Bureau
Enterprise rewards granted at Jiaozuo City 15,000.00 Other income 15,000.00 Industrial Meeting
Technology innovation 14,400.00 Other income reward
Rewards and loans granted by Xiangyang Science and Technology 12,000.00 Other income Bureau for authorized invention patents
Foreign trade and economics fund received in 2018 from Mianzhu City 8,000.00 Other income 8,000.00 Commercial and Economic Cooperation Bureau
Cost for construction of enterprise science and technology association 5,000.00 Other income organization under Deyang Association for Science and Technology
Fund for 2019 “Lecturing and Competition” activity allocated by Sichuan 5,000.00 Other income 5,000.00 Province Mianzhu City Science and Technology Association
Guangzhou Exhibition of Mianzhu City Commercial 4,000.00 Other income 4,000.00 and Economic Cooperation Bureau
Technology innovation 3,200.00 Other income rewards
Subsidy allocated by Xinshi Town People’s 1,000.00 Other income Government for such education activities as
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learning Party constitution, studying series of speeches and being qualified Party members
Awards allocated by State Administration of Foreign 200.00 Other income Exchange Xiangyang Central Branch
(2) Information concerning the refund of government grants √ Applicable □ Not applicable
Monetary Unit: Yuan
Item Amount Cause
Development fund allocated by Mianzhu City Development and Reform Bureau for developing The grants are allocated to a wrong 600,000.00 special titanium dioxide for entity by government producing high-grade automotive electrophoresis paint
Other descriptions:
64. Others
12.8 VIII. Changes in Consolidation Scope 1. Business merger not under common control (1) Business merger not under common control in the current period Monetary Unit: Yuan The Net profit income of of acquiree acquiree The basis Equity from the from the for Equity Equity acquisitio Equity date of date of Name of Date of determini acquisitio acquisitio n acquisitio purchase purchase acquiree purchase ng the n time n cost percentag n method to the to the date of e end of the end of the purchase correspon correspon ding ding period period
Yunnan Jun. 17, 882,430,0 98.39% Purchase Jun. 17, First 70,815,47 39,199,85
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Metallurgi 2019 0 2019 board 6 8 cal Xinli 1.00 meeting .79 .92 Titanium held by Co., Ltd. the new directors
Other descriptions: (1) The Company signed an Equity Transfer Contract with Yunnan Metallurgical Group Co., Ltd. on May 24, 2019, and acquired 68.10% of stock rights and creditor’s rights totalling RMB5,218,798,300 in Yunnan Metallurgy Xinli Titanium Industry Co., Ltd. at a consideration of RMB829,020,001.00.
(2) The Company signed an Equity Transfer Contract with Shente Enterprises Management (Shenzhen) Co., Ltd. on Jun. 13, 2019, and acquired 26.18% of stock rights in Yunnan Metallurgy Xinli Titanium Industry Co., Ltd. at a consideration of RMB53,410,000.00.
(3) Yunnan Metallurgy Xinli Titanium Industry Co., Ltd. held general meeting on Jun. 31, 2019, at which a new Board of Directors was elected and the conversion of debts to shares of Lomon Billions was approved; Yunnan Metallurgy Xinli Titanium Industry Co., Ltd. held the first meeting of the second Board of Directors on Jun. 17, 2019, at which Chairman of the Board, General Manager and Financial Director were elected.
(4) The Business License obtained after merger on Jun. 21, 2019 indicated that the Company held 98.39% of stock rights in Yunnan Metallurgical Group Co., Ltd. In summary, through the above transactions, the Company contributed RMB882,430,001.00 to purchase 98.39% of stock rights in Yunnan Metallurgical Group Co., Ltd., and the merger was completed on Jun. 17, 2019.
(2) Combination costs and goodwill Monetary Unit: Yuan
Combination costs
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--Cash 882,430,001.00
Total combination costs 882,430,001.00
Less: Fair value of identifiable net assets acquired 231,333,497.28
The amount of the difference by which the goodwill / combination cost is less than the fair value of the 651,096,503.72 identifiable net assets acquired
Description of the method for determining fair value of combination cost, or the contingent consideration and its changes:
Main reasons for the formation of large-value goodwill: Yunnan Metallurgy Xinli Titanium Industry Co., Ltd. possesses production lines for high slag, chloride-process titanium dioxide pigment and sponge titanium that are built using advanced technologies, and it can further perfect its production chain upon acquisition and has the ability to produce titanium sponge, increasing the competitiveness of its products. Meanwhile, the production lines of Yunnan Metallurgy Xinli Titanium Industry Co., Ltd. can demonstrate its production capacity rapidly by technological improvement and extension, further consolidating the leading position of the Company in the industry.
Other descriptions:
(3) Identifiable assets and liabilities of the acquiree on the acquisition date Monetary Unit: Yuan
Yunnan Metallurgical Xinli Titanium Co., Ltd.
Fair value on purchase date Book Value on purchase date
Assets: 846,079,260.65 1,200,455,088.06
Cash at bank and on hand 1,690,595.79 1,690,595.79
Receivables 20,850,214.45 20,850,214.45
Inventories 76,030,778.87 76,030,778.87
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Fixed assets 160,053,303.29 290,456,433.04
Intangible assets 146,223,857.77 366,377,036.60
Other current assets 339,029,149.68 339,029,149.68
Long-term equity investments 57,536,012.93 57,536,012.93
Other equity instrument 466,093.40 466,093.40 investments
Investment properties 6,275,540.68 6,805,430.00
Construction in progress 30,565,922.50 33,855,552.01
Other non-current assets 7,357,791.29 7,357,791.29
Liabilities: 876,742,219.46 965,336,176.31
Payables 692,784,044.52 692,784,044.52
Deferred income tax liabilities 88,593,956.85
Employee benefits payable 3,041,340.44 3,041,340.44
Taxes and surcharges payable 23,559,375.87 23,559,375.87
Long-term payables 4,609,892.00 4,609,892.00
Accrued liabilities 36,676,863.53 36,676,863.53
Deferred income 116,070,703.10 116,070,703.10
Net assets -30,662,958.81 235,118,911.75
Less: Minority equity -493,673.64 3,785,414.48
Net assets acquired -30,169,285.17 231,333,497.28
Method of determination of fair values of identifiable assets and liabilities: The Company engaged Yinxin Appraisal Co., Ltd. to appraise the assets of Xinli Titanium Industry as at Jun. 30, 2019, after which appraisal an Appraisal Report numbered Y. X. Z. B. Z. [2019] H. No. 345 was issued, showing that the fair value of identifiable assets of Xinli Titanium Industry as at Jun. 30, 2019 was RMB235,118,911.76.
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Contingent liabilities of acquiree assumed in the business combination: Other descriptions:
(4) Gains or losses arising from re-measurement of equity held before the date of acquisition at fair value Is there a transaction that realizes the business combination step by step through multiple transactions and through which control is obtained during the report period □ Yes √ No
(5) Description concerning the consideration for combination unable to be reasonably determined at the end of the period where the acquisition date falls or the combination period, or the fair value of identifiable assets and liabilities of acquiree
(6) Other description
2. Changes in scope of merger for other reasons Description of changes in scope of combination caused by other reasons (e.g., new establishment of subsidiaries, liquidation of subsidiaries, etc.) and their related circumstances: 1. The subsidiary, Jiaozuo City Xingtai Resources Management Comprehensive Utilization Co., Ltd., has been de-registered this year. 2. Henan Lomon Billions Intelligent Equipment Manufacturing Co., Ltd. has been newly established this year by the Company.
12.9 IX. Equity in Other Subjects
1. Equity in subsidiaries (1) Composition of business group
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Principal Shareholding ratio Subsidiary Place of Business Way of place of name registration nature acquisition business Direct Indirect
Jiaozuo Baililian Jiaozuo, Jiaozuo, Water Establishmen Reservoir 97.83% Henan Henan resources t Management Co., Ltd.
Jiaozuo City Zhongli Jiaozuo, Jiaozuo, Establishmen District Yili Finance 84.40% Henan Henan t Microfinance Co., Ltd.
Unit1503,15/ F, Billions (Hong OneHarbourf Sales of Hong Kong, Establishmen Kong) Co., ront,18TakFu chemical 100.00% China t Ltd. ngStreet,Hun products ghom,Kowloo n,HK
Floor1,Winde rHouse,Kingfi Sales of BillionsEurop sherWay,Stoc Establishmen Britain chemical 100.00% e Ltd kton -on- t products Tees, United Kingdom
Henan Billions Park, Rongjia Western Scandium and Jiaozuo, Manufacturin Participating Industry 60.00% Vanadium Henan g and holding Cluster Area, Technology Jiaozuo City Co., Ltd.
Business activities BILLIONSAME 801AdlaiStev concerning Establishmen RICACORPOR Illinois, U.S. ensonDr,Sprin 100.00% TR52 ink t ATION gfield,Illinois, titanium dioxide
Henan Longxiangsha n Jiaozuo, Jiaozuo, Establishmen Tourism 100.00% Development Henan Henan t Tourism Co., Ltd.
Jiaozuo Jiaozuo, Jiaozuo, Manufacturin Establishmen Billions 77.50% Henan Henan g t United
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Pigment Co., Ltd.
Henan Billions Jiaozuo, Jiaozuo, Manufacturin Establishmen New Material 100.00% Henan Henan g t Co., Ltd.
Longbai Sichuan Deyang, Deyang, Manufacturin Titanium 100.00% Purchase Sichuan Sichuan g Industry Co., Ltd.
Sichuan Lomon Mining and Panzhihua, Panzhihua, Mineral 100.00% Purchase Metallurgy Sichuan Sichuan separation Industry Co., Ltd.
Panzhihua Lomon Mining and Panzhihua, Panzhihua, Mineral mineral 91.20% Purchase Sichuan Sichuan Products Co., separation Ltd.
Xiangyang Production Lomon Xiangyang, Xiangyang, and sales of Titanium 100.00% Purchase Hubei Hubei titanium Industry Co., dioxide Ltd.
Warehousing, Delaware, Delaware, LomonUSLtd. trade, 100.00% Purchase USA USA logistics
Panzhihua Ruierxin Sales of Panzhihua, Panzhihua, Industry and mineral 100.00% Purchase Sichuan Sichuan Trade Co., products Ltd.
Billions Nansha Finance Lease Financial Establishmen Guangzhou District, 61.93% 36.43% (Guangzhou) service t Guangzhou Co., Ltd.
Henan Lomon Billions Intelligent Jiaozuo, Jiaozuo, Manufacturin Establishmen 100.00% Equipment Henan Henan g t Manufacturin g Co., Ltd.
Yunnan Kunming, Kunming, Manufacturin 98.39% Purchase Metallurgical Yunnan Yunnan g
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Xinli Titanium Co., Ltd.
Description of the fact that shareholding ratio in subsidiaries is different from the proportion of the voting rights:
The basis for holding half or less of the voting rights but still controlling the investee, and the basis for holding more than half of the voting rights but not controlling the investee: for important structured entities included in the scope of consolidation, the basis for control is as follows:
Basis for determining whether the Company is an agent or a principal: Other descriptions:
(2) Important non-wholly-owned subsidiaries Monetary Unit: Yuan Dividend declared to Current profit and Shareholding of be distributed to loss attributable to Closing balance of Subsidiary name minority minority minority minority equity shareholders shareholders in the shareholders current period
Jiaozuo Bailiyuan Reservoir 2.17% -245,482.82 403,348.67 Management Co., Ltd.
Jiaozuo City Zhongli District Yili 15.60% -6,428,859.05 74,647,610.27 Microfinance Co., Ltd.
Henan Rongjia Scandium and 40.00% 1,384,155.20 15,384,410.03 Vanadium Technology Co., Ltd.
Jiaozuo Billions United Pigment Co., 22.50% 2,435,759.28 17,910,356.65 Ltd.
Panzhihua Lomon 8.80% 19,155,489.90 26,329,600.00 49,171,284.33 Mineral Products
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Co., Ltd.
Billions Finance Lease (Guangzhou) 1.64% -55,790.28 4,327,743.12 Co., Ltd.
Yunnan Metallurgical Xinli 1.61% 631,117.73 5,868,308.57 Titanium Co., Ltd.
Description of the fact that shareholding ratio of minority shareholders is different from the proportion of the voting rights:
Other descriptions:
(3) Main financial information of important non-wholly-owned subsidiaries Monetary Unit: Yuan
Closing balance Opening balance Sub sidia Non- Non- Non- Non- Curre Curre Curre Curre ry curre Total curre Total curre Total curre Total nt nt nt nt nam nt asset nt liabiliti nt asset nt liabilit asset liabiliti asset liabilit e asset s liabilit es asset s liabili ies s es s ies s ies s ties
Jiao zuo Baili yua n Res 3,894 174,0 177,9 158,8 158,8 7,035 177,6 184,6 154,4 154,4 ervo ,846. 51,62 46,46 82,96 82,96 ,793. 07,13 42,92 48,98 48,98 ir 17 2.02 8.19 9.13 9.13 74 5.41 9.15 4.93 4.93 Man age men t Co., Ltd.
Jiao zuo City Zho 42,86 466,4 489,2 9,956, 9,956, 223,8 329,4 553,3 33,41 33,41 ngli 6,093 02,88 68,97 626.8 626.8 65,56 95,75 61,31 9,206 9,206 Distr .01 1.54 4.55 7 7 2.77 0.59 3.36 .91 .91 ict Yili Micr
390 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. ofin anc e Co., Ltd.
Hen an Ron gjia Sca ndiu m and 25,80 24,66 50,47 9,313, 1,486 10,79 20,54 20,44 40,98 3,850 1,81 5,663 Van 6,193 8,242 4,435. 656.3 ,111. 9,767. 0,625 3,105 3,730. ,067. 3,36 ,431. adiu .32 .15 47 9 11 50 .06 .10 16 25 4.60 85 m yu Tec hnol ogy Co., Ltd
Jiao zuo Billio ns 25,4 Unit 44,68 69,43 114,1 26,44 5,721 32,16 48,33 61,66 109,9 52,45 7,787 19,7 ed 9,979 0,444 20,42 3,597. ,661. 5,258. 1,619 1,524 93,14 7,027 ,681. 83.2 Pig .03 .34 3.37 10 70 80 .35 .43 3.78 .31 51 0 men t Co., Ltd.
Pan zhih ua Lom 48,6 on 520,3 378,0 898,3 290,4 45,31 335,7 679,8 346,1 1,026, 91,04 139,7 79,0 Min 49,75 06,65 56,40 69,89 1,232 81,12 55,78 79,88 035,6 5,774 24,79 16.3 eral 1.80 7.85 9.65 6.40 .63 9.03 3.81 7.05 70.86 .31 0.69 8 Prod ucts Co., Ltd.
Billio ns Fina nce 85,38 319,5 404,9 140,4 140,4 39,80 243,6 283,4 16,01 16,01 Lea 1,636 19,74 01,37 89,31 89,31 4,311 81,28 85,59 9,694 9,694 se .81 0.91 7.72 0.92 0.92 .89 5.06 6.95 .71 .71 (Gu ang zho u)
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Co., Ltd.
Yun nan Met allur gical 628,1 670,3 1,298, 1,135, 152,4 1,287, Xinli 54,59 94,75 549,3 080,1 14,72 494,8 Tita 3.50 1.59 45.09 05.14 0.56 25.70 niu m Co., Ltd.
Monetary Unit: Yuan
Current accrual Amount incurred in last period
Subsidi Cash Cash Total Total ary flows flows Operatin compreh Operatin compreh name Net profit from Net profit from g income ensive g income ensive operating operating income income activities activities
Jiaozuo Bailiyua n Reserv - - - - - 2,498,07 443,959. 1,187,91 oir 11,312,5 11,312,5 13,016,5 13,016,5 749,785. 6.44 20 6.47 Manag 72.16 72.16 78.22 78.22 30 ement Co., Ltd.
Jiaozuo City Zhongli District ------42,552,9 96,770,6 Yili 41,210,6 41,210,6 179,041, 37,796,6 37,796,6 171,977, 64.68 94.48 Microfin 34.93 34.93 006.39 86.72 86.72 312.45 ance Co., Ltd.
Henan Rongjia Scandi um and 20,106,8 3,460,38 3,460,38 5,764,84 10,978,6 2,350,54 2,350,54 9,495,01 Vanadi 69.74 8.01 8.01 7.19 88.69 9.03 9.03 7.14 um yu Technol ogy Co., Ltd
Jiaozuo - - 111,638, 8,158,75 8,158,75 80,954,7 2,819,25 2,819,25 Billions 1,671,24 10,866,4 234.26 1.84 1.84 48.06 5.19 5.19 United 1.50 70.03
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Pigmen t Co., Ltd.
Panzhi hua Lomon - 579,109, 217,676, 217,676, 104,370, 686,882, 407,218, 407,218, Mineral 106,355, 903.63 021.61 021.61 850.73 754.82 343.70 343.70 Product 497.65 s Co., Ltd.
Billions Finance Lease ------22,187,7 17,863,5 (Guang 3,403,20 3,403,20 105,036, 6,083,21 6,083,21 178,255, 66.83 13.89 zhou) 6.96 6.96 699.88 1.84 1.84 813.02 Co., Ltd.
Yunnan Metallur gical - 70,815,4 39,199,8 39,199,8 Xinli 72,062,3 76.79 58.92 58.92 Titaniu 18.36 m Co., Ltd.
Other descriptions:
2. Equity in a joint venture or affiliated business (1) Important joint venture or affiliated business
Shareholding ratio Accounting treatment Name of joint Principal Place of Business methods for ventures or place of registration nature investment in associates business Direct Indirect joint venture or associate
Guangdong Orient Zirconic Industry Chenghai Science and Production District, Accounting Technology Shantou, and sales of Shantou City, 15.66% using equity Co., Ltd. Guangdong zirconic Guangdong method (hereinafter products Province referred to as “Orient Zirconic Industry”)
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Kunming Wuxin Huali Mineral Industry Co., Accounting Yunnan Wholesale Ltd. Yunnan 47.28% using equity Province and retail (hereinafter method referred to as “Wuxin Huali”)
Jiaozuo Weina Technology Production Zhongzhan Accounting Co., Ltd. Jiaozuo, and sales of District, 21.30% using equity (hereinafter Henan ceramic Jiaozuo City method referred to as products “Weina Technology”)
Dingsheng (Hong Kong) Resources Accounting Co., Ltd. Wholesale Hong Kong Hong Kong 49.41% using equity (hereinafter and retail method referred to as “Dingsheng Hong Kong”)
Description of the fact that the shareholding ratio in subsidiaries different from the proportion of the voting rights in joint venture or affiliated business: Basis for holding less than 20% of the voting rights but having a significant impact, or the basis for holding 20% or more of the voting rights but having no significant impact:
(2) Main financial information of important joint ventures Monetary Unit: Yuan Opening balance/accrual incurred in Closing balance/current accrual previous period
Other instructions
(3) Main financial information of important affiliated business Monetary Unit: Yuan
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Opening balance/accrual incurred in Closing balance/current accrual previous period
Orient Zirconic Wuxin Huali
Current assets 578463016.62 91384288.92
Non-current assets 1,641,163,086.62 29,601,141.31
Total assets 1,641,163,086.62 120,662,266.07
Current liabilities 1,374,277,413.27 21,612.54
Non-current liabilities 48,629,999.72
Total liabilities 1,422,907,412.99 21,612.54
Minority interests -53,836,756.50
Shareholder equity attributable to 850,555,446.75 120,963,817.69 parent company
Net assets shares calculated by 133,196,982.9 57,191,693.00 shareholding ratio
Book value of equity investment in 872,993,252.07 57,191,693.00 associates
Fair value of equity investment in affiliated businesses with public 680,470,000.00 offers
Operating income 471,620,283.32
Net profit -224,831,445.53 -1,144,060.92
Other comprehensive income 16,649,195.46
Total comprehensive income -208,182,250.07 -1,144,060.92
Other instructions
(4) Main financial information of unimportant joint ventures or affiliated businesses Monetary Unit: Yuan Opening balance/accrual incurred in Closing balance/current accrual previous period
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Cooperative enterprise: -- --
Total book value of investment 10,409,824.19 11,625,909.94
Total of the following items calculated -- -- based on shareholding ratio
--Net profit -1,216,085.75 1,601,659.66
--Total comprehensive income -1,216,085.75 1,601,659.66
Joint venture: -- --
Total of the following items calculated -- -- based on shareholding ratio
Other instructions Dingsheng Hong Kong has been de-registered, and Lomon Billions has made impairment provision for all stock rights of that company.
(5) Description of the significant restrictions on the ability of joint ventures or affiliated businesses to transfer funds to the Company
(6) Excess deficits incurred in joint ventures or affiliated businesses Monetary Unit: Yuan Unrecognized losses of Cumulative unrecognized Cumulative unrecognized Name of joint ventures or the current period (or net losses accumulated in the losses at the end of the associates profit shared in the previous period current period current period)
Other instructions (7) Unconfirmed commitments related to joint venture investments (8) Contingent liabilities related to joint venture or affiliated business investments
12.10 X. Risks Associated with Financial Instruments The Company faces various financial risks in its business operations: credit risk, market risk and liquidity risk. The Company’s board of directors is fully responsible for determination of
396 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. risk management objectives and policies, and assumes ultimate responsibility for risk management objectives and policies. However, the board of directors has authorized the Company’s functional departments to design and implement procedures that can ensure effective implementation of risk management objectives and policies. The board of directors reviews effectiveness of the implemented procedures and rationality of the risk management objectives and policies by means of the monthly reports submitted by heads of the functional departments. The Company’s internal auditors will also audit risk management policies and procedures and report the findings to audit committee.
Overall goal of the Company’s risk management is to develop risk management policies that minimize risks without overly affecting the Company’s competitiveness and resilience.
Credit risk Credit risk refers to the risk that one party of the financial instrument does not perform the obligations, resulting in the other party suffering the financial losses. The Company is mainly exposed to customer credit risk caused by credit sales. Before signing a new contract, the Company will assess the credit risk of the new customer, including external credit rating and the bank credentials in some cases (when the information is available). The Company has set a credit limit for each customer, which is the maximum amount without additional approval.
The Company ensures that the Company’s overall credit risk is in a controllable range through the quarterly monitoring of the credit rating of existing customers and the monthly review of the accounts receivable aging analysis. When monitoring the credit risk of customers, they are grouped according to their credit characteristics. Customers who are rated as “high risk” will be placed on the list of restricted customers and can buy on credit in the future only with additional approval, otherwise they must be required to pay appropriate amount in advance.
Market risk 397 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. The market risk of financial instruments means the risk that the fair value or future cash flow of a financial instrument fluctuates because of change in the market price, including exchange rate risk, interest rate risk and other price risks.
(1) Interest rate risk Interest rate risk means the risk that the fair value or future cash flow of a financial instrument fluctuates because of change in the market interest rate. The interest rate risk faced by the Company mainly comes from long-term borrowings and short-term bank loans. The Company currently adopts fixed rate borrowings based policy. Although the policy does not allow the Company to completely avoid interest rates involved in its payments that exceed current market interest rate, nor can it completely eliminate the cash flow risk associated with interest payment fluctuations, the management believes that this policy achieves a reasonable balance between these risks.
(2) Exchange rate risk Exchange rate risk means the risk that the fair value or future cash flow of a financial instrument fluctuates because of change in the foreign exchange rate. The Company tries to match foreign currency income with foreign currency expenditure as much as possible to reduce exchange rate risk. In addition, the Company may also sign forward foreign exchange contracts or currency swap contracts to avoid exchange rate risk.
The exchange rate risk faced by the Company mainly comes from financial assets and financial liabilities denominated in foreign currencies such as USD, EUR and GBP. The amount of foreign currency financial assets and foreign currency financial liabilities converted into RMB is as follows:
Closing balance Item Other foreign USD EUR GBP Total currencies
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Cash at bank and 200,232,478.51 34,149,614.83 2,557,780.25 109,872.38 237,049,745.99 on hand
Accounts 787,311,804.48 67,844,687.91 398,139.15 855,554,631.54 receivable
Other receivables 60,811.19 60,811.19
1,092,665,188.7 Subtotal 987,605,094.18 101,994,302.74 2,955,919.40 109,872.38 5
Financial liabilities in foreign -0.00 currencies
Short-term 889206413 889206143 borrowings
Current liabilities maturing within 42,136,248.00 42,136,248.00 one year
Long-term 488,334,000.00 270,746,476.74 759,080,476.74 borrowings
Accounts payable 215,231,526.24 1,962,336.22 242,281.29 503,453.46 217,939,597.21
Other payables 16,694,459.45 32,938.48 16,727,397.93
1,651,602,646.6 1,925,090,132.8 Subtotal 272,708,812.96 242,281.29 536,391.94 9 8
- Net amount -663997552.46 2,713,638.11 -426,519.56 -832,424,944.13 170,714,510.22
Balance at the beginning of year
Item Other USD EUR GBP foreign Total currencies
Financial assets in foreign currencies
Cash at bank and 165,636,470.38 79,949,126.48 466,888.08 295,203.81 246,347,688.75 on hand
Accounts 712,424,622.48 24,519,497.02 464,496.35 737,408,615.85 receivable
Other receivables 99,476.04 99,476.04
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104,468,623.5 Subtotal 878,160,568.90 931,384.43 295,203.81 983,855,780.64 0
Financial liabilities
in foreign
currencies
Short-term 562,382,258.42 562,382,258.42 borrowings
Accounts payable 376,767,123.65 10,048,638.80 216,769.65 387,032,532.10
Other payables 16,153,393.05 16,153,393.05
Subtotal 955,302,775.12 10,048,638.80 0.00 216,769.65 965,568,183.57
Net amount -77,142,206.22 94,419,984.70 931,384.43 78,434.16 18,287,597.07
(3) Other price risks The Company holds equity investments in other listed companies, and the management think that the market price risks faced by these investment activities are acceptable.
Liquidity risk Liquidity risk refers to the risk of a shortage of funds when an enterprise fulfills its obligation to settle cash or other financial assets. The Company’s policy is to ensure that there is sufficient cash to pay off debts as they fall due. Liquidity risk is centrally controlled by Finance Department of the Company. Finance Department ensures that the Company has sufficient funds to repay debts under all reasonable forecasts by monitoring cash balances, marketable securities at any time, and rolling forecasts of future 12-month cash flows. The Company’s various financial liabilities are listed in accordance with the undiscounted contractual cash flows and maturity date as follows:
Balance at the end of year Item Within one year 1-5 years Over 5 years Total
Short-term borrowings 2,867,356,101.03 2,867,356,101.03
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Notes payable 2,406,738,099.45 2,406,738,099.45
Accounts payable 1,998,733,252.75 1,998,733,252.75
Advances from customers 129,906,556.59 129,906,556.59
Employee benefits payable 202,303,040.00 202,303,040.00
Taxes and surcharges 202,223,224.02 202,223,224.02 payable
Other payables 427,070,838.33 427,070,838.33
Non-current liabilities 141,832,464.00 141,832,464.00 maturing within one year
Long-term borrowings 2,752,332,976.56 2,752,332,976.56
Long-term payables 84,609,892.00 80,000,000.00 164,609,892.00
Accrued liabilities 47,780,891.68 47,780,891.68
Deferred income 281,987,533.35 281,987,533.35
Deferred income tax 233,357,774.25 233,357,774.25 liabilities
Total 8,939,289,775.45 2,836,942,868.56 80,000,000.00 11,856,232,644.01
Balance at the beginning of year Item Within one year 1-5 years Over 5 years Total
Short-term borrowings 3,634,598,568.81 3,634,598,568.81
Notes payable 1,178,503,367.08 1,178,503,367.08
Accounts payable 1,259,382,923.61 1,259,382,923.61
Advances from customers 85,667,651.39 85,667,651.39
Employee benefits payable 209,555,057.41 209,555,057.41
Taxes and surcharges 243,421,541.33 243,421,541.33 payable
Other payables 156,724,321.41 156,724,321.41
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Non-current liabilities 578,127,672.50 578,127,672.50 maturing within one year
Long-term borrowings 408,945,656.41 408,945,656.41
Long-term payables 120,000,000.00 80,000,000.00 200,000,000.00
Accrued liabilities 4,169,943.33 4,169,943.33
Deferred income 184,070,128.41 184,070,128.41
Deferred income tax 146,504,289.96 146,504,289.96 liabilities
Total 7,680,725,465.24 528,945,656.41 80,000,000.00 8,289,671,121.65
12.11 XI. Disclosure of Fair Value 1. Closing fair value of assets and liabilities measured at fair value Monetary Unit: Yuan
Fair value at the end of the period
Item Measurement of Measurement of Measurement of second level fair Total first level fair value third level fair value value
I. Continuous measurement at fair ------value
(II) Other creditor’s 466,093.40 466,093.40 rights investments
Total liabilities continuously 466,093.40 466,093.40 measured at fair value
II. Non-continuous measurement at fair ------value
2. Basis for determining the market price of continuous and non-continuous first-level fair value measurement items
402 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. 3. Continuous and non-continuous second-level fair value measurement items, used valuation techniques and qualitative and quantitative information on important parameters
4. Continuous and non-continuous third-level fair value measurement items, used valuation techniques and qualitative and quantitative information on important parameters
5. Continuous third-level fair value measurement items, adjustment information between the opening and closing book values and sensitivity analysis of unobservable parameters
6. Continuous fair value measurement items, the transition between the various levels during the period, the reason for the transition and the policy to determine the transition time
7. Valuation technology changes and reasons for changes occurred during the current period
8. Fair value of financial assets and financial liabilities not measured at fair value
9. Others
12.12 XII. Related Parties and Related-party Transactions 1. Information of parent company of the Company On Mar. 3, 2010, XU Gang, TAN Ruiqing and DU Xinchang signed the Consensus Action Agreement under which the parties, as actual controllers of the Company, agreed to take concerted action on major issues. The Consensus Action Agreement was valid for three years from the date of listing of the Company. The Company was listed on Jul. 15, 2011. As
403 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. at Jul. 14, 2014, the Company has been listed for three years, indicating that the period stipulated in the Concerted Action Agreement expired.
XU Gang, TAN Ruiqing and DU Xinchang decided not to further sign a Concerted Action Agreement with all or part of the original concerted parties after expiration of the above agreement. Therefore, the Company has no controlling shareholders and actual controllers. Ultimate controlling party of the Company
Other descriptions: 2. Information of subsidiaries of the Company For details of subsidiaries of the Company, please refer to Note IX. Equity in other subjects.
3. Information of joint ventures and affiliated businesses of the Company For information of important joint ventures and affiliated businesses of the Company, please refer to Note IX. Equity in other subjects.
Other joint ventures or affiliated businesses that made related party transactions with the Company in the current period, or that made related party transactions with the Company in the previous period and have formed balances with related parties:
Name of joint ventures or associates Relationship with the Company
Other instructions
4. Information of other related parties
Relationship between the Company and other related Names of other related parties parties
Sichuan Lomon Phosphorus Products Co., Ltd. A company controlled by any close relative of any (hereinafter referred to as “Lomon Phosphorus shareholder holding more than 5% of the Company’s Products”) shares
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Nanzhang Lomon Phosphorus Products Co., Ltd. A company controlled by any close relative of any (hereinafter referred to as “Nanzhang Phosphorus shareholder holding more than 5% of the Company’s Products”) shares before Sep. 2019
Sichuan Lomon Phosphor Chemical Co., Ltd. A company controlled by any close relative of any (hereinafter referred to as “Deyang Phosphor shareholder holding more than 5% of the Company’s Chemical”) shares before Sep. 2019
A company controlled by any close relative of any Lomon Land Agriculture Co., Ltd. (hereinafter referred shareholder holding more than 5% of the Company’s to as “Lomon Land”) shares before Sep. 2019
A company controlled by any close relative of any Chengdu Yibai Investment Management Co., Ltd. shareholder holding more than 5% of the Company’s (hereinafter referred to as “Yibai Investment”) shares
A company controlled by any close relative of any Sichuan Lomon Logistics Co., Ltd. (hereinafter referred shareholder holding more than 5% of the Company’s to as “Lomon Logistics”) shares before Sep. 2019
Hunan Oriental Scandium Industry Co., Ltd. (hereinafter A shareholder holding more than 5% of the shares of referred to as “Oriental Scandium”) subsidiary, Rongjia Scandium and Vanadium
Other instructions
5. Related party transactions (1) Related party transactions for the purchase and sale of goods, provision and acceptance of services Table of goods purchase / acceptance of labor services
Monetary Unit: Yuan
Content of Approved Whether exceed Current Amount incurred Related Party related party transaction transaction accural in last period transaction amount amount or not
Weina Materials 7,412,906.96 8,900,000.00 No 4,012,766.68 Technology
Oriental Aluminum and 2,911,478.52 No Scandium scandium alloy
Accepting Deyang waste acid Phosphor 25,673,885.11 25,673,885.11 No 29,709,324.73 treatment Chemical service
Deyang Acceptance of 2,760,901.18 2,813,908.02 No 9,178,035.85 Phosphor storage and
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Chemical transportation services
Accepting Deyang agent sales Phosphor 4,477,315.97 4,340,000.00 Yes 3,675,503.19 business of Chemical ferrous
Accepting Deyang waste water Phosphor 22,892,508.65 22,892,508.65 No 21,963,069.98 treatment Chemical services
Deyang Consigned Phosphor processing of 1,357,497.36 1,357,497.36 No Chemical sulfuric acid
Nanzhang Raw materials Phosphorus and labor 122,173.84 124,000.00 No 547,083.15 Products services
Nanzhang Purchase of Phosphorus 5,731,090.00 6,030,000.00 No 12,207,740.00 steam Products
Accepting Nanzhang waste acid Phosphorus 23,583,940.52 25,424,522.52 No 19,463,019.56 treatment Products service
Accepting Nanzhang waste water Phosphorus 16,486,133.40 14,846,853.78 Yes 13,846,634.70 treatment Products services
Nanzhang Purchase of Phosphorus waste No 363,306.34 Products materials
Purchase of Lomon Land hydrochloric 2,210,072.43 2,260,000.00 No 1,439,943.30 acid
Acceptance of Lomon Logistics transportation 911,894.89 970,000.00 No services
Table of Information on Sale of Goods / Rendering of Services Monetary Unit: Yuan Content of related party Amount incurred in last Related Party Current accural transaction period
Weina Technology Zirconium oxychloride 3,372,566.39 4,088,638.37
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Weina Technology Zirconium dioxide 33,451.33 160,292.15
Weina Technology Titanium dioxide 585,475.87 3,331,402.89
Weina Technology Materials 4,392,761.05
Weina Technology Wastes 18,275.86
Weina Technology Fuel power 57,163.67 436,189.94
Oriental Scandium Crude cerium oxide 12,864,347.49 10,492,053.06
Oriental Scandium Anti-extraction materials 603.45
Deyang Phosphor Provision of sulfuric acid 8,115,469.92 10,489,751.64 Chemical processing service
Deyang Phosphor Sales of electricity 49,275,829.99 47,421,838.34 Chemical
Deyang Phosphor Sales of water 1,830,046.40 1,491,899.56 Chemical
Deyang Phosphor Provision of 3,390,363.39 13,579,764.18 Chemical transportation service
Deyang Phosphor Sales of hardware 9,846.90 Chemical accessories
Deyang Phosphor Sales of desalted water 2,191,613.21 375,882.40 Chemical
Deyang Phosphor Provision of steaming 7,038,772.20 Chemical processing
Deyang Phosphor Provision of equipment 189,053.16 Chemical processing and repair
Nanzhang Phosphorus Sales of water 903,045.00 801,478.98 Products
Nanzhang Phosphorus Goods and materials 110,232.89 Products
Lomon Land Sales of raw water 15,604.40
Lomon Land Sales of desalted water 68,679.77
Description of related-party transactions for the purchase and sale of goods, provision and acceptance of services
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(2) Related-party trusteeship/contracting and entrusted management/outsourcing Table of the Company’s entrusted management / contracting: Monetary Unit: Yuan Trusteeship Pricing basis Name of Type of Starting date Termination income/contr Name of for entrusted entrusted/co of date of acting income client/contrac trusteeship party/contrac ntracted entrustment/ entrustment/ recognized in t-out party income/contr tor assets contracting contracting the current acting income period
Description of related-party entrusted management/contracting Table of the Company’s entrusted management / outsourcing: Monetary Unit: Yuan Trusteeship Pricing basis Name of Type of Starting date Termination fee/contract- Name of for entrusted entrusted/co of date of out fee client/contrac trusteeship party/contrac ntract-out entrustment/ entrustment/ recognized in t-out party fee/contract- tor assets contract-out contract-out the current out fee period
Production line of zirconic Orient Contractual The Company products Mar. 21, 2020 Mar. 20, 2021 Zirconic pricing series/equity of Weina Technology
Description of related-party management / outsourcing
Lomon Billions held the 25th meeting of the 6th Board of Directors on Dec. 27, 2019, at which the Proposal on the Custody of Zirconium-Related Assets and Related Transactions to Orient Zirconic Industry was deliberated and approved. To avoid horizontal competition, the existing production line of zirconium oxychloride and zirconium dioxide and 21.30% of stock rights held by Lomon Billions in Jiaozuo Weina Technology Co., Ltd. shall be put under the custody of Orient Zirconic Industry, with the custody fee of RMB0.55 million/year.
408 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. (3) Related-party leases The Company acts as lessor: Monetary Unit: Yuan Lease income recognized Lease income recognized Name of lessee Type of leased assets in the current period in the last period
Weina Technology Plant 970,159.56 970,159.56
Deyang Phosphor Warehouse, inventory, 2,226,460.68 2,182,645.08 Chemical device, office building, etc.
The Company acts as lessee: Monetary Unit: Yuan Rental expense recognized Rental expense recognized Name of lessor Type of leased assets in the current period in the last period
Deyang Phosphor Office building and 42,341.16 42,341.16 Chemical parking lot
Deyang Phosphor Land for building slag yard 37,612,825.60 36,259,223.19 Chemical
Yibai Investment Office building 540,000.00 540,000.00
Nanzhang Phosphorus Slag yard 6,060,423.75 5,804,986.51 Products
Lomon Phosphorus Real estate and land 232,098.36 232,098.36 Products
Description of related-party lease
(4) Related-party guarantees The Company acts as the guarantor Monetary Unit: Yuan Whether the Start date of Expiry date of Guaranteed Guaranteed amount guarantee is fully guarantee guarantee performed
Billions Hong Kong USD20,000,000.00 Jun. 25, 2019 Jun. 12, 2020 No
Billions Europe EUR17,566,973.93 Jul. 2, 2019 Jul. 1, 2022 No
Longbai Titanium 100,000,000.00 Mar. 20, 2019 Mar. 19, 2020 No Industry
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Longbai Titanium 100,000,000.00 Mar. 27, 2019 Mar. 26, 2020 No Industry
Longbai Titanium 100,000,000.00 May 15, 2019 May 14, 2020 No Industry
Longbai Titanium 100,000,000.00 May 30, 2019 May 29, 2020 No Industry
Longbai Titanium USD10,000,000.00 Jun. 12, 2019 Jun. 11, 2020 No Industry
Longbai Titanium USD10,000,000.00 Jun. 21, 2019 Jun. 20, 2020 No Industry
Longbai Titanium USD20,000,000.00 Jun. 28, 2019 Jun. 26, 2020 No Industry
Longbai Titanium 80,000,000.00 Sep. 27, 2019 Sep. 23, 2020 No Industry
Longbai Titanium 200,000,000.00 Nov. 15, 2019 Sep. 23, 2020 No Industry
New Material 200,000,000.00 Oct. 18, 2016 Jun. 11, 2024 No
New Material 60,740,500.00 Dec. 28, 2018 Dec. 21, 2026 No
New Material 66,290,000.00 Dec. 28, 2018 Dec. 21, 2026 No
New Material 38,539,782.10 Dec. 28, 2018 Dec. 21, 2026 No
New Material 90,000,000.00 Dec. 27, 2018 Dec. 21, 2026 No
New Material USD7,400,000.00 Mar. 28, 2019 Mar. 27, 2020 No
New Material 200,000,000.00 Mar. 29, 2019 Mar. 29, 2020 No
New Material 50,000,000.00 Apr. 1, 2019 Dec. 21, 2026 No
New Material 150,000,000.00 Mar. 26, 2019 Dec. 21, 2026 No
New Material 51,933,700.00 Nov. 7, 2019 Dec. 21, 2026 No
New Material 28,224,000.00 Nov. 7, 2019 Dec. 21, 2026 No
New Material 100,000,000.00 Dec. 6, 2019 Dec. 21, 2026 No
Billions United 500,000.00 Aug. 5, 2019 Feb. 5, 2020 No Pigment
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Billions United 1,000,000.00 Aug. 9, 2019 Feb. 9, 2020 No Pigment
Billions United 5,500,000.00 December 24, 2019 Jun. 24, 2020 No Pigment
The Company acts as the guaranteed Monetary Unit: Yuan Whether the Start date of Expiry date of Guarantor Guaranteed amount guarantee is fully guarantee guarantee performed
Description of related-party guarantee A. The Company provided joint liability guarantee for short-term borrowings of Billions (Hong Kong) Co., Ltd. On Jun. 25, 2019, Billions (Hong Kong) Co., Ltd. signed a Loan Contract with Bank of China Seoul Branch and obtained a short-term loan of USD20,000,000 for which the joint liability guarantee was provided by Lomon Billions Group Co., Ltd.. As at Dec. 31, 2019, balance of the above loan owed by Billions (Hong Kong) Co., Ltd. totalled USD20,000,000.
B. The Company provided joint liability guarantee for borrowings of Billions (Europe) Co., Ltd. On Jul. 2, 2019, Billions (Europe) Co., Ltd. signed a Loan Contract with HSBC Zhengzhou Branch and obtained a long-term loan of EUR17,567,000 for which the joint liability guarantee was provided by Lomon Billions Group Co., Ltd.. As at Dec. 31, 2019, balance of the above loan owed by Billions (Europe) Co., Ltd. totalled EUR17,567,000. For details of subsidiaries of the Company, please refer to Note IX. Equity in other subjects.
C. The Company provided joint liability guarantee for borrowings of Lomon Billions Sichuan Titanium Industry Co., Ltd. For details of subsidiaries of the Company, please refer to Note IX. Equity in other subjects. On Mar. 20, 2019, Lomon Billions Sichuan Titanium Industry Co., Ltd. signed a Loan Contract with The Export-Import Bank of China Sichuan Province Branch and obtained a
411 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. short-term loan of RMB100,000,000; on Mar. 27, 2019, Lomon Billions Sichuan Titanium Industry Co., Ltd. signed a Loan Contract with The Export-Import Bank of China Sichuan Province Branch and obtained a short-term loan of RMB100,000,000; on May 15, 2019, Lomon Billions Sichuan Titanium Industry Co., Ltd. signed a Loan Contract with The Export- Import Bank of China Sichuan Province Branch and obtained a short-term loan of RMB100,000,000; on May 30, 2019, Lomon Billions Sichuan Titanium Industry Co., Ltd. signed a Loan Contract with The Export-Import Bank of China Sichuan Province Branch and obtained a short-term loan of RMB100,000,000. The joint liability guaranty for the above loans was provided by Lomon Billions Group Co., Ltd..
On Jun. 12, 2019, Lomon Billions Sichuan Titanium Industry Co., Ltd. signed a Loan Contract with Agricultural Bank of China Mianzhu Sub-branch and obtained a short-term loan of USD10,000,000; on Jun. 21, 2019, Lomon Billions Sichuan Titanium Industry Co., Ltd. signed a Loan Contract with Agricultural Bank of China Mianzhu Sub-branch and obtained a short-term loan of USD10,000,000; on Sep. 27, 2019, Lomon Billions Sichuan Titanium Industry Co., Ltd. signed a Loan Contract with Agricultural Bank of China Mianzhu Sub-branch and obtained a short-term loan of RMB80,000,000; on Nov. 15, 2019, Lomon Billions Sichuan Titanium Industry Co., Ltd. signed a Loan Contract with Agricultural Bank of China Mianzhu Sub-branch and obtained a short-term loan of RMB200,000,000. The joint liability guaranty for the above loans was provided by Lomon Billions Group Co., Ltd.. On Jun. 28, 2019, Lomon Billions Sichuan Titanium Industry Co., Ltd. signed a Loan Contract with Industrial and Commercial Bank of China Mianzhu Sub-branch and obtained a short-term loan of USD20,000,000, for which the joint liability guarantee was provided by Lomon Billions Group Co., Ltd..
As at Dec. 31, 2019, balance of the above loans owed by Lomon Billions Sichuan Titanium Industry Co., Ltd. totalled RMB680,000,000 (USD40,000,000).
D. The Company provided joint liability guarantee for borrowings of Henan Billions New Material Co., Ltd. 412 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. On Oct. 18, 2016, Henan Billions New Material Co., Ltd. signed the Loan Contract with Agricultural Development Bank of China Jiaozuo Branch and obtained a long-term loan of RMB 200 million to which a joint liability guarantee was provided by Lomon Billions Group Co., Ltd..
On Dec. 27, 2018, Henan Billions New Material Co., Ltd. signed a Loan Contract with The Export-Import Bank of China Henan Province Branch and obtained a long-term loan of RMB90,000,000; on Mar. 26, 2019, Henan Billions New Material Co., Ltd. signed a Loan Contract with The Export-Import Bank of China Henan Province Branch and obtained a long- term loan of RMB150,000,000; on Dec. 6, 2019, Henan Billions New Material Co., Ltd. signed a Loan Contract with The Export-Import Bank of China Henan Province Branch and obtained a long-term loan of RMB100,000,000. The joint liability guaranty for the above loans was provided by Lomon Billions Group Co., Ltd..
On Dec. 28, 2018, Henan Billions New Material Co., Ltd. signed a Loan Contract with Industrial and Commercial Bank of China Jiaozuo Branch and obtained a long-term loan of RMB165,570,300; on Apr. 1, 2019, Henan Billions New Material Co., Ltd. signed a Loan Contract with Industrial and Commercial Bank of China Jiaozuo Branch and obtained a long- term loan of RMB50,000,000; on Nov. 7, 2019, Henan Billions New Material Co., Ltd. signed a Loan Contract with Industrial and Commercial Bank of China Jiaozuo Branch and obtained a long-term loan of RMB80,157,700. The joint liability guaranty for the above loans was provided by Lomon Billions Group Co., Ltd..
On Mar. 28, 2019, Henan Billions New Material Co., Ltd. signed a Loan Contract with Agricultural Bank of China Jiaozuo Jiefang Sub-branch and obtained a short-term loan of USD7,400,000, for which the joint liability guaranty was provided by Lomon Billions Group Co., Ltd..
413 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. On Mar. 29, 2019, Henan Billions New Material Co., Ltd. signed a Loan Contract with Bank of China Jiaozuo Branch and obtained a short-term loan of RMB200,000,000, for which the joint liability guarantee was provided by Lomon Billions Group Co., Ltd.. As at Dec. 31, 2019, balance of the loan owed by Henan Billions New Material Co., Ltd. totalled RMB1,035,728,000 (USD7,400,000).
E. The Company provided joint liability guarantee for bank acceptance bills of Jiaozuo Billions United Pigment Co., Ltd. On Jan. 12, 2017, the Company signed a Maximum Guarantee Contract with Zhongyuan Bank Co., Ltd. Jiaozuo Branch to provide a joint liability guarantee with the maximum balance of RMB5,000,000 for the acceptance bills formed between Zhongyuan Bank Co., Ltd. Jiaozuo Branch and Jiaozuo Billions United Pigment Co., Ltd.. On Dec. 24, 2019, the guarantee limit was adjusted to RMB10,000,000. As at Dec. 31, 2019, the balance of acceptance bills of Jiaozuo Billions United Pigment Co., Ltd. was RMB7,000,000.
(5) Related-party loans at call Monetary Unit: Yuan Amount of loans at Related Party Beginning date Expiry date .Description call
Amount borrowed
Amount lent
The annual interest rate is 12.00%, and the amount of funds Orient Zirconic 110,000,000.00 Nov. 6, 2019 Jan. 4, 2020 occupation fee for this period is RMB2,016,666.67
(6) Related-party assets transferring and debt restructuring Monetary Unit: Yuan Content of related party Amount incurred in last Related Party Current accural transaction period
Deyang Phosphor Fixed assets 1,525,000.00 5,066,976.53 Chemical
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Lomon Logistics Fixed assets 1,416,100.00
(7) Compensation of key management personnel Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Compensation for key management 27,311,856.62 24,935,553.23 personnel
(8) Other related party transactions
6. Related-party receivables and payables (1) Breakdown of receivables Monetary Unit: Yuan
Closing balance Opening balance Item Related Party Provision for Provision for Book balance Book balance bad debt bad debt
Nanzhang Accounts Phosphorus 986,445.72 49,322.29 receivable Products
Accounts Oriental 3,351,641.63 167,582.08 receivable Scandium
Other Lomon Logistics 646,293.08 32,314.65 receivables
Other Wuxin Huali 4,967.01 248.35 receivables
Long-term Orient Zirconic 112,016,666.67 1,680,250.00 receivables
(2) Breakdown of payables Monetary Unit: Yuan Carrying amount at the Item Related Party Closing Book Balance beginning of the period
Nanzhang Phosphorus Accounts payable 29,522,953.10 9,892,345.24 Products
Accounts payable Lomon Land 4,074,134.14 1,657,282.23
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Accounts payable Weina Technology 131,400.00 733,900.00
Other payables Yibai Investment 189,000.00 283,500.00
Deyang Phosphor Other payables 19,783,686.45 3,596,160.84 Chemical
Lomon Phosphorus Other payables 407,010.78 98,815.44 Products
Advance from customers Oriental Scandium 2,266,107.10
7. Related-party commitments
8. Others
12.13 XIII. Share-based Payment
1. Overall situation of share-based payment √ Applicable □ Not applicable Monetary Unit: Yuan Total amount of various equity instruments granted by the 184,453,162.58 Company in the current period
Total amount of various equity instruments exercised by the 21,230,328.98 Company during the current period
Total amount of the Company’s various equity instruments that 0.00 have lapsed in the current period
Other instructions
2. Equity-settled share-based payments √ Applicable □ Not applicable Monetary Unit: Yuan Accumulated amount of equity-settled share-based 187,120,601.78 payments included in capital reserve
The total amount of the confirmed fees paid by the equity- 88,726,401.79
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settled shares in the current period
Other instructions 3. Share-based payments settled in cash □ Applicable √ Not applicable
4. Modification and termination of share-based payment
5. Others 1. Particulars concerning the first employee stock ownership plan The Company’s third extraordinary general meeting held on Feb. 24, 2017 deliberated and approved the Proposal on Repurchasing the Company’s Shares under which the Company was allowed to repurchase its shares with its own funds by means of centralized auction trading, block trade or other methods permitted by laws and regulations for the purpose to implementing its employee stock ownership plan, in which case total repurchase amount should not be more than RMB 1.2 billion and no more than 100 million shares should be repurchased. As at Aug. 23, 2017, the Company repurchased 34,239,749.00 shares in total, accounting for 1.68% of total share equity of the Company, by paying RMB550,808,621.16 (excluding transaction costs) in total, in which case the maximum transaction price was RMB17.72/share, the minimum transaction price was RMB13.85/share and average transaction price was RMB16.09/share.
In order to reduce employee shareholding costs and effectively motivate employees, the Company decided to transfer 34,239,749 repurchased shares at a price RMB 100 million lower than repurchase cost, which is in line with the provisions concerning share-based payment in No. 11 Accounting Standard for Business Enterprises - Share-based Payment and will be given accounting treatment by the Company as per relevant requirements related to “share-based payment”. In addition, the 6th meeting of the 6th board of directors of the Company reviewed and approved the Proposal on Advance Drawing of Performance
417 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. Bonuses of 2017 as Subsidies for Employee Stock Ownership Plan, and decided to draw RMB 100 million in advance from performance bonuses of 2017 as cash subsidies for the Company’s employee stock ownership plan. Therefore, total amount of funds to be raised under the employee stock ownership plan was not more than RMB 352 million. Considering that management fees, custody fees and corresponding transaction expenses of all the asset management products under the employee stock ownership plan of about RMB 30 million was deducted, transfer amount of the non-transactional transfers under the employee stock ownership plan was about RMB348,903,042.31, and transfer price was RMB10.19 / share.
There were 1,273 employees participating in the stock ownership plan who purchased 34,239,749 stocks repurchased by the Company at a transfer price of RMB10.19/share. This stock ownership plan will remain valid for 3 years. In the first 12 months of the valid period, the shares held in stock ownership plan shall not be reduced; in the 13th to 24th months, the shares held that are reduced in the stock ownership plan shall not exceed 50% of total shares held for this plan; and in the 25th to 36th months, all the remaining shares shall be reduced in the stock ownership plan.
According to Management Measures for Stock Ownership Plan, if the employee who holds any shares suffers a position change and resignation due to non-competence for his/her job, failure to pass performance assessment, violation of laws and professional ethics, disclosure of the Company’s secret, dereliction of duty, misconduct and other bad behaviors damaging the Company’s interests or reputation, his/her qualification for participating in the employee stock ownership plan shall be cancelled by management committee. The management committee will, in accordance with the original contribution actually paid by such holders to employee stock ownership plan, take back the benefits originally held by such holders (without interests) in employee stock ownership plan. The management committee can transfer the shares in employee stock ownership plan that are recovered to a named transferee who is qualified to participate in employee stock ownership plan, and the transferee shall accept the employee stock ownership plan interests at the amount of original 418 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. contribution; if there is no qualified transferee to participate in employee stock ownership plan, the recovered shares shall be jointly owned by the holders who participate in employee stock ownership plan.
The Company entrusted Guangdong Utrust Co., Ltd. to establish Utrust • Lomon Billions Employee Stock Ownership Pooled Funds Trust Plan (hereinafter referred to as “Pooled Trust Plan”) and planned to contribute RMB 352 million in total. RMB 176 million was contributed through the employee stock ownership plan to subscribe ordinary stocks under the Pooled Trust Plan, and RMB 176 million was contributed by Shanghai Pudong Development Bank to subscribe preferred stocks under the Pooled Trust Plan. Upon establishment of employee stock ownership plan, the Xuanyuan Liudu Lomon Billions Employees Shareholding Private Equity Investment Fund (hereinafter referred to as “Private Equity Investment Fund”) established by Guangzhou Xuanyuan Investment Co., Ltd. was fully subscribed through the Pooled Trust Plan. The Private Equity Investment Fund was mainly acquired by means of non-transactional transfer or block trade and auction transaction with stocks of Lomon Billions being held.
The Company, after receiving the repurchase payment from the Private Equity Investment Fund of RMB348,903,042.31 on Feb. 27, 2018, transferred 34,239,749 stocks in repurchase account to the Xuanyuan Liudu Lomon Billions Employees Shareholding Private Equity Investment Fund by means of non-transactional transfer, as a result of which all stocks were subject to lock-up period.
According to the 16th meeting of the 6th Board of Directors held on Apr. 19, 2019, the Company deliberated and approved Annual Profit Distribution Plan of 2018 and Profit Distribution Plan for the First Quarter of 2019. Pursuant to the rights and interests distribution plan for the first quarter of 2018 and 2019 of the Company, with the total capital stock of 2,032,020,889.00 shares as at Dec. 31, 2018 as the cardinal number, cash dividends of RMB1 for every 10 shares should be distributed to all shareholders (tax inclusive), with the total cash dividends distributed of RMB203,202,088.9 (tax inclusive). The rights and 419 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. interests distribution was completed on Jun. 19, 2019, as a result of which the Company distributed cash dividends of RMB3,423,974.9 (tax inclusive) to the first employee stock ownership plan.
According to the 3rd extraordinary general meeting held on Nov. 13, 2019, the Company deliberated and approved Annual Profit Distribution Plan of 2018. Pursuant to the rights and interests distribution plan for the third quarter of 2019 of the Company, with the total capital stock of 2,032,020,889.00 shares as at Sep. 30, 2019 as the cardinal number, cash dividends of RMB1.5 for every 10 shares should be distributed to all shareholders (tax inclusive). The rights and interests distribution was completed on Dec. 13, 2019.
The lockup period for the Company’s first employee stock ownership plan expired on Feb. 27, 2019. At the expiration of the lockup period, according to the arrangement and market condition of the employee stock ownership plan, “Xuanyuan Liudu Lomon Billions Employees Shareholding Private Equity Investment Fund” has reduced 50% of total shares held under the employee stock ownership plan in this audit year.
The next lockup period for the Company’s first employee stock ownership plan expired on Feb. 27, 2020.
2. Particulars concerning the second employee stock ownership plan The Company held the 4th extraordinary general meeting of 2018 on Jul. 27, 2018, at which the Company deliberated and approved Proposal on Repurchasing the Company’s Share and made the Resolution of the 2018 4th Extraordinary General Meeting of Lomon Billions Group Co., Ltd.. As a result, the Company was approved to use no more than RMB1.2 billion and adopt the method of centralized competitive bidding to repurchase up to 100,000,000 public shares at a price of RMB18/share; in principle, the repurchase period shall not exceed 6 months since the approval of Proposal on Repurchasing the Company’s Share, and the shares repurchased shall be used for stock incentive plan, employee stock ownership plan or cancellation. 420 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
As at Jan. 29, 2019, the Company repurchased 56,936,308 shares in total, accounting for 2.81% of total shares of the Company, at a total consideration of RMB750,108,799.73 (excluding transaction costs) and at a maximum transaction price of RMB13.86/share and a minimum transaction price of RMB12.20/share.
The Company held the 15th meeting of the 6th Board of Directors on Apr. 8, 2019, at which the Company reviewed and approved the Proposal on Determining the Use of Shares Repurchased and made the Resolution of the 15th Meeting of the 6th Board of Directors of Lomon Billions Group Co., Ltd.. On Apr. 19, 2019, the Company held the 16th meeting of the 6th Board of Directors, at which the Company deliberated and approved the Proposal on the Company’s Second Employee Stock Ownership Plan (Draft) and Its Summary, Proposal on the Management Measures of the Company’s Second Employee Stock Ownership Plan and Proposal on Requiring General Meeting to Authorize the Board of Directors to Deal with Relevant Matters of Second Employee Stock Ownership Plan. According to those proposals, all shares repurchased this time will be used for employee stock ownership plan.
In order to reduce employee shareholding costs and effectively motivate employees, the Company decided to transfer 56,936,308 repurchased shares at a price lower than repurchase cost, which is in line with the provisions concerning share-based payment in No. 11 Accounting Standard for Business Enterprises - Share-based Payment and will be given accounting treatment by the Company as per relevant requirements related to “share-based payment”. Total amount of funds to be raised under the employee stock ownership plan was not more than RMB580,000,000, and transfer amount of the non-transactional ownership transfers of the employee stock ownership plan was about RMB569,932,443.08, and transfer price was RMB10.01/share. The participating employees acquired 56,936,308 shares repurchased by the Company at a price of RMB10.01/share. This stock ownership plan will remain valid for 3 years. In the first 12 months of the valid period, the shares held in stock ownership plan shall not be reduced; in the 13th to 24th months, the shares held 421 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. that are reduced in the stock ownership plan shall not exceed 50% of total shares held for this plan; and in the 25th to 36th months, all the remaining shares shall be reduced in the stock ownership plan.
According to Management Measures for Stock Ownership Plan, if the employee who holds any shares suffers a position change and resignation due to non-competence for his/her job, failure to pass performance assessment, violation of laws and professional ethics, disclosure of the Company’s secret, dereliction of duty, misconduct and other bad behaviors damaging the Company’s interests or reputation, his/her qualification for participating in the employee stock ownership plan shall be cancelled by management committee. The management committee will, in accordance with the original contribution actually paid by such holders to employee stock ownership plan, take back the benefits originally held by such holders (without interests) in employee stock ownership plan. The management committee can transfer the shares in employee stock ownership plan that are recovered to a named transferee who is qualified to participate in employee stock ownership plan, and the transferee shall accept the employee stock ownership plan interests at the amount of original contribution; if there is no qualified transferee to participate in employee stock ownership plan, the recovered shares shall be jointly owned by the holders who participate in employee stock ownership plan. The Company entrusted Guotong Trust Co., Ltd. to establish Guotong Trust • Lomon Billions Second Employee Stock Ownership Pooled Funds Trust Plan (hereinafter referred to as “Pooled Trust Plan”), and planned to contribute RMB580,000,000 in total. RMB290,000,000 was contributed through the employee stock ownership plan to subscribe ordinary stocks under the Pooled Trust Plan, and RMB290,000,000 was contributed by Shanghai Pudong Development Bank to subscribe preferred stocks under the Pooled Trust Plan. Lomon Billions Group Co., Ltd. - second employee share-holding assembled funds trust was mainly acquired by means of non-transactional ownership transfer or block trade and auction transaction with stocks of Lomon Billions being held. On Jun. 6, 2019, the special securities account for repurchase of the Company transferred the shares held in Lomon Billions to Lomon Billions Group Co., Ltd. - second employee stock
422 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. ownership plan in a non-transactional manner, with the transfer price of RMB10.01/share and with a total of 56,936,308 shares transferred.
According to the resolution made at the 2018 general meeting of the Company, the rights and interests distribution plan of the Company in 2018 required to distribute cash dividends of RMB1 for every 10 shares to all shareholders (tax inclusive) with the total capital stock of 2,032,020,889.00 shares as the cardinal number. The rights and interests distribution was completed on Jun. 17, 2019, as a result of which the Company distributed cash dividends of RMB5,693,630.80 (tax inclusive) to second employee stock ownership plan.
According to the resolution made at the 2018 general meeting of the Company, the rights and interests distribution plan of the Company in the first quarter of 2019 required to distribute cash dividends of RMB6 for every 10 shares to all shareholders (tax inclusive) with the total capital stock of 2,032,020,889.00 shares as the cardinal number. The rights and interests distribution was completed on Jun. 19, 2019, as a result of which the Company distributed cash dividends of RMB34,161,784.80 (tax inclusive) to second employee stock ownership plan.
At the 3rd extraordinary general meeting held by the Company on Nov. 13, 2019, the Annual Profit Distribution Plan of 2018 was deliberated and approved, and the rights and interests distribution plan for the third quarter of 2019 of the Company required to distribute cash dividends of RMB1.5 for every 10 shares to all shareholders (tax inclusive) with the total capital stock of 2,032,020,889.00 shares as at Sep. 30, 2019 as the cardinal number. The rights and interests distribution was completed on Dec. 13, 2019, as a result of which the Company distributed cash dividends of RMB8,540,446.20 (tax inclusive) to second employee stock ownership plan.
The lockup period for the Company’s second employee stock ownership plan will expire on Jun. 6, 2021.
423 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. 12.14 XIV. Commitments and Contingencies 1. Important commitments Important contingencies on balance sheet date
Guarantees provided to subsidiaries On Dec. 6, 2019, the Company held the 24th interim meeting of the sixth Board of Directors which reviewed and approved the Proposal on Providing Guarantees for Subsidiaries and at which it was proposed to provide a financing guarantee of RMB 8.23 billion to the Company’s subsidiaries, which was detailed as below:
1. The Company intended to provide a bank financing guarantee of no more than RMB30 million for its holding subsidiary Henan Rongjia Scandium Vanadium Technology Co., Ltd. 2. The Company intended to provide a bank financing guarantee of no more than RMB50 million for its holding subsidiary Jiaozuo Billions United Pigment Co., Ltd. 3. The Company intended to provide a bank financing guarantee of no more than RMB3 billion for its holding subsidiary Henan Billions New Material Co., Ltd. 4. The Company intended to provide a bank financing guarantee of no more than RMB1 billion (or equivalent amount in USD) for its wholly-owned subsidiary Billions (Hong Kong) Co., Ltd. 5. The Company intended to provide a bank financing guarantee of no more than RMB200 million (or equivalent amount in USD) for its wholly-owned subsidiary Billions (Europe) Co., Ltd. 6. The Company intended to provide a bank financing guarantee of no more than RMB1.4 billion for its wholly-owned subsidiary Lomon Billions Sichuan Titanium Industry Co., Ltd. 7. The Company intended to provide a bank financing guarantee of no more than RMB2 billion for its wholly-owned subsidiary Sichuan Lomon Mining and Metallurgy Co., Ltd. 8. The Company intended to provide a bank financing guarantee of no more than RMB0.5 billion for its wholly-owned subsidiary Xiangyang Lomon Titanium Industry Co., Ltd.
424 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. 9. The Company intended to provide a bank financing guarantee of no more than RMB 50 million for its wholly-owned subsidiary Henan Lomon Billions Intelligent Equipment Manufacturing Co., Ltd.
Provision of guarantee for shareholding subsidiary Orient Zirconic Industry The Company held the 25th meeting of the 6th Board of Directors on Dec. 27, 2019, at which the Company deliberated and approved the Proposal on the Guarantee Provision and Related-party Transaction of Shareholding Subsidiary Orient Zirconic Industry. The Company signed a Letter of Loan Guarantee with China Minsheng Bank Beijing Branch, in order to provide a joint liability guaranty for the short-term loan existing between the Branch and Orient Zirconic Industry, with a guarantee amount of RMB198,997,900.
Execution of strategic cooperation framework agreement (1) On Feb. 26, 2019, the Company signed the Investment Agreement for Innovation Project Concerning Upgrade of Transform Titanium Chloride Slag with 500,000 Tonnes of Titanium Concentrate with Yanbian County People’s Government. This project aims to dramatically increase the value in use of ilmenite concentrate in Panxi area and obtain high-quality chloride titanium slag product which is qualified for producing titanium dioxide pigment using the chloride process. The Company plans to invest RMB2 billion in Yanbian vanadium and titanium industrial development zone and establish the production line of upgrading and transforming 0.5 million tonnes of ilmenite concentrate into titanium dichloride slag and supporting facilities, for the purpose of increasing the value in use of ilmenite concentrate in Panxi area. On Apr. 8, 2019, the Company deliberated and approved the Proposal on Investing in and Constructing the Innovative Engineering Construction Project of Upgrading and Transforming 0.5 Million tonnes of Panxi Ilmenite Concentrate into Titanium Dichloride Slag, approving the holding subsidiary, Sichuan Lomon Mining and Metallurgy Co., Ltd., of the Company to invest in and construct the innovative engineering construction project of upgrading and transforming 0.5 million tonnes of Panxi ilmenite concentrate into titanium dichloride slag. The estimated investment totals RMB1.51 billion. After completion, 300,000
425 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. tonnes of titanium chloride slag base material and 200,000 tonnes of high-quality iron can be produced.
(2) On Dec. 27, 2019, the Company signed Cooperation Framework Agreement on Titanium Industry with Jinchuan Group Co., Ltd., under which both parties intended to establish a joint venture company. Jinchuan Group Co., Ltd. made contribution with all the existing assets of the titanium plant which are closely related to the production of titanium sponge (including lands) at an appraised value (the pricing method of land appraisal), and therefore held 30% of the stock equity of the joint venture company; and the Company made contribution in cash and therefore held 70% of the stock equity of the joint venture company. Specific amount of the contributions shall be subject to the signed formal agreement based on appraisal and pricing. The agreement is conducive to the Company to further improve its titanium business structure, and improve the Company’s core competitiveness and profitability.
Investment in and construction of the high-end titanium alloy new material project with an annual output of 30,000 tonnes The Company held the fifteenth meeting of the sixth board of directors on Apr. 8, 2019 which reviewed and approved the Proposal on Investment in and Construction of the High-end Titanium Alloy New Material Project with an Annual Output of 30,000 Tonnes and at which the Company’s holding subsidiary Henan Billions New Material Co., Ltd. was allowed to invest in and construct the high-end titanium alloy new material project with an annual output of 30,000 tonnes. And the Company planned to invest RMB 1.98 billion in total to produce 30,000 tonnes of high-end titanium alloy new materials annually.
Investment in establishment of wholly-owned subsidiary On Dec. 6, 2019, Lomon Billions Group Co., Ltd. held the 24th interim meeting of the sixth Board of Directors, at which the Proposal on Investment in Establishment of Wholly-Owned Subsidiary was reviewed and approved and pursuant to which proposal RMB100,000,000
426 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. was proposed to invested to establish Shanghai Longbai Trade and Technological Service Co., Ltd. in Shanghai.
Provision of guarantee for customer’s acceptance bill The Company signed the proposal of financial network service agreement at bank with its dealers and customers. According to the proposal, a margin account shall be opened by customers and dealers with the bank where the proposal was signed and dealers and customers shall pay deposit at least 50% of the par value into the account when purchasing products of Lomon Billions Group using acceptance bills; and the bank at which the proposal was signed, for the goods price payable to Lomon Billions, shall issue acceptance bills with dealers and customers was payers and Lomon Billions was payee; and, if dealers and customers fail to pay the acceptance bills in full upon expiry thereof, Lomon Billions shall make up the difference and pay the same to the bank and bear corresponding overdue interests; the guarantee amount limit under the proposal was RMB0.3 billion. As at the reporting date, the Company has not yet engaged in such business.
2. Contingencies (1) Important contingencies on balance sheet date Letters of guarantee and letters of credit issued by the Company As at Dec. 31, 2019, the undue amount for domestic letters of credit issued by the Company totaled RMB19,000,000, with no deposit paid; the amount of letters of guarantee totaled RMB73,414,2700.
Loan defaults of Yili Microfinance (1) Litigation filed by the Company against Jiaozuo Yuandashun Materials Co., Ltd. for arrears Jiaozuo Yuandashun Materials Co., Ltd. borrowed RMB 2 million (as principal) from Jiaozuo City Zhongli District Yili Microfinance Co., Ltd. with Jiaozuo Minhui Industrial Co., Ltd. and JIAO Tongxia being joint guarantors.
427 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. As at Dec. 31, 2019, the case has been decided and is in the implementation stage, and the court seized nine properties of the guarantor Jiaozuo Minhui Industrial Co., Ltd. In addition, Jiaozuo City Jiefang District People’s Court has approved the draft reorganization plan of Jiaozuo Minhui Industrial Co., Ltd. under which the claims involved will be calculated and paid off by stages. It is expected that the Company can be indemnified in partial.
(2) Litigation filed by the Company against Henan Haisheng Industrial Co., Ltd. for arrears Henan Haisheng Industrial Co., Ltd. (hereinafter referred to as “Haisheng Company”) borrowed RMB 2 million (as principal) from Jiaozuo City Zhongli District Yili Microfinance Co., Ltd. with Jiaozuo Haiyu Highway Engineering Co., Ltd., Wenxian Kaisheng Textile Co., Ltd., Jiaozuo Minli Industrial Co., Ltd., NIU Haiguo, NIU Yushan, ZHANG Xiaoling, WANG Caixia and NIU Jianwei being joint guarantors. As at Dec. 31, 2019, an Audi A8 mortgaged by Haisheng Company which was seized by Henan Province Jiaozuo City Zhongzhan Court was auctioned online, compensating for the liabilities totaled at RMB169,400.
(3) Litigation filed by the Company against SUN Siji for arrears SUN Siji borrowed RMB 1 million (as principal) from Jiaozuo City Zhongli District Yili Microfinance Co., Ltd. with JIAO Ton gxia and JIAO Tongbin being joint real estate mortgagors.
The case is in the implementation stage, and the court has seized one property of the mortgagor JIAO Tongxia (J. F. Q. Z. J. F. Z. No. 201413033) and one property of the mortgagor JIAO Tongbin (J. F. Q. Z. J. F. Z. No. 201109845).
(4) Litigation filed by the Company against GAO Guangjie for arrears GAO Guangjie borrowed RMB 1.5 million (as principal) from Jiaozuo City Zhongli District Yili Microfinance Co., Ltd. with LAO Anting, LEI Baolian, Henan Shennongshan Tourism Development Co., Ltd. and Qinyang City Baolian Xinganxian Public Transportation Co., Ltd. being joint guarantors. 428 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
As at Dec. 31, 2019, the case has entered in the implementation stage. And preservative measures in litigation were taken to seize 20 Yutong buses of Qinyang City Baolian Xinganxian Public Transportation Co., Ltd. in turn and seize one property under the name of LEI Baolian located at No. 601, Floor 6, Unit 3, Building 15, Taihang New City, Qinyang City.
(5) Litigation filed by the Company against CEFC (Shanghai) Group Industrial Equipment Co., Ltd. for arrears CEFC (Shanghai) Group Industrial Equipment Co., Ltd. borrowed RMB 300 million (as principal) from Jiaozuo City Zhongli District Yili Microfinance Co., Ltd. with CEFC Shanghai International Group Co., Ltd., CEFC Anhui International Holding Co., Ltd. and LI Yong being joint guarantors and by pledging the creditor’s rights receivable under two purchase and sales contracts signed between CEFC Shanghai International Group Co., Ltd. and Ningbo Yuanzhen International Logistics Co., Ltd.. As at Dec. 31, 2019, the loan principal of RMB 266.5 million was not repaid. Preservative measures were taken in this case after being accepted by Henan High People’s Court. Preservative measures taken are explained as below: Freeze 1.45 billion shares held by CEFC Shanghai International Group Co., Ltd. in CEFC Futures Co., Ltd. and pledged to a third party. Freeze 84.52% of the shares of CEFC Hainan International Group Co., Ltd. held by CEFC Shanghai International Group Co., Ltd. and partially pledged to a third party. Freeze 11.2 billion shares held by CEFC Shanghai International Group Co., Ltd. in CEFC Shanghai Securities Co., Ltd. and pledged to a third party. Freeze 1.5 billion shares held by CEFC Shanghai International Group Co., Ltd. in CEFC Shanghai Commercial Factoring Co., Ltd. Freeze 2.571 billion shares held by CEFC Shanghai International Group Co., Ltd. in CEFC Shanghai Natural Gas Co., Ltd. Freeze 0.2 billion shares held by CEFC Shanghai International Group Co., Ltd. in CEFC (Fujian) Petroleum Co., Ltd. 429 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. Freeze 0.1 billion shares held by CEFC Shanghai International Group Co., Ltd. in CEFC Shanghai Petroleum Development Co., Ltd. Freeze some bank accounts of CEFC Shanghai International Group Co., Ltd.
Loan defaults of Finance Lease Litigation filed by the company against Chengdu Techcent Environment Co., Ltd. (hereinafter referred to as “Techcent Environment”) for arrears Chengdu Techcent Environment Co., Ltd. carried out a finance lease business with a principal of RMB 90 million with Finance Lease by taking the factory building of steel structure under its name as lease subject as well as for security guarantee, in which case a joint liability guarantee was provided by DENG Qinhua, actual controller of Techcent Environment, DENG Xiang and his son and its affiliate Chengdu Qinhua Technology Co., Ltd..
Since Techcent Environment failed to pay the remaining rentals after paying rentals after 2 periods to Finance Lease, Finance Lease filed an indictment on Aug. 13, 2018 with Guangzhou Intermediate People’s Court to request Techcent Environment to repay all outstanding principal and interest and terminate the contract. Guangzhou Intermediate People’s Court held a hearing on the case between Techcent Environment and Finance Lease on Mar. 1, 2019, and made a judgment [(2018) Y. 01 M. C. No. 798) on Apr. 2, 2019 which is detailed as below: (1) Within 10 days since the judgment takes into effect legally, Techcent Environment shall pay Finance Lease unpaid rentals of RMB3,551,745.17 and corresponding liquidated damages. (2) Within 10 days since the judgment takes into effect legally, Techcent Environment shall pay Finance Lease unexpired rentals of RMB81,690,138.91 and corresponding liquidated damages in advance. (3) Within 10 days since the judgment takes into effect legally, Techcent Environment shall pay Finance Lease liquidated damages of RMB816,901.39, insurance expense of RMB140,752.67 and attorney fee of RMB200,000.00. 430 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. (4) If Techcent Environment fails to fulfill the obligations set out in the above paragraphs 1, 2 and 3, Finance Lease has the right to enjoy the priority of compensation by the proceeds from selling five properties under the name of Techcent Environment located at Datong Road, Datong Town, Qingbaijiang District, Chengdu City, Sichuan Province at a discount or from auctioning or selling of the properties. (5) Guarantors DENG Qinhua, DENG Xiang and Chengdu Qinhua Technology Co., Ltd. shall assume a joint and several liability to repay the debts owed by Techcent Environment as it confirmed in the paragraphs 1, 2 and 3 above, and the defendants DENG Qinhua, DENG Xiang and Chengdu Qinhua Technology Co., Ltd. shall have the right to claim for compensation from Techcent Environment after their assumption of the liability. As Techcent Environment Company is not satisfied with the [(2018) Y. 01 M. C. No. 798] Civil Judgment made by Guangdong Province Guangzhou City Intermediate People’s Court on the disputes between Techcent Environment and Finance Lease Company, the appeal was thereby instituted. Guangdong Province Guangzhou City Intermediate People’s Court put the appeal on file on Oct. 11, 2019, and made the Judgement numbered [(2019) Y. M. Z. No. 2416] on Dec. 31, 2019 as follows: Affirm Items 3, 4 and 5 in the Civil Judgment numbered (2018) Y. 01 M. C. No. 798 made by Guangdong Province Guangzhou City Intermediate People’s Court. Revoke Item 1 in the Civil Judgment numbered (2018) Y. 01 M. C. No. 798 made by Guangdong Province Guangzhou City Intermediate People’s Court. Change Item 2 in the Civil Judgment numbered (2018) Y. 01 M. C. No. 798 made by Guangdong Province Guangzhou City Intermediate People’s Court into: Within ten days from the date on which this Judgment becomes legally effective, Techcent Environment shall pay RMB81,690,138.91 of unpaid but payable rental and corresponding liquidated damages (the liquidated damages shall be calculated on the basis of RMB81,690,138.91 at a proportion of 0.05% per day from Aug. 16, 2018 until the date of actual payment, and shall be reduced by the remaining deposit of RMB48,254.83).
Matters involving lawsuit of Xinli Titanium Industry Company
431 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. (1) Lawsuit filed by Xinli Titanium Industry Company against China National Chemical Engineering Sixth Construction Co., Ltd. for arrears Xinli Titanium Industry Company and China National Chemical Engineering Sixth Construction Co., Ltd. (hereinafter referred to as “CNCEC”) signed Integrated Pipe Network and Partial Public Auxiliary Facilities Construction and Installment Engineering of 03 Section for 60KT/a Chloride-Process Titanium Dioxide Project, under which it was agreed that the civil engineering of 60KT/a chloride-process titanium dioxide pigment project and all the construction of installment project shall be contracted by CNCEC. The project was started on Jul. 9, 2010, delivered on Apr. 11, 2013, and passed the completion acceptance on Apr. 11, 2013. Upon audit, the actual project fund payable by the construction unit is RMB15,537,674.18, and the audited amount is less of other amount to be deducted as stipulated in the contract. Upon verification, Xinli Titanium Industry, after deducting the taxes, water and electricity fees and other fees that shall be paid by CNCEC on behalf, shall pay RMB14,564,539.67 to CNCEC. However, Xinli Titanium Industry has paid RMB17,174,850.86 in total, of which RMB2,610,311.19 was over-paid. Xinli Titanium Industry has negotiated with CNCEC for many times for the purpose of having the over-paid project fund to be returned, but has always been ignored by CNCEC.
On Jan. 19, 2018, Xinli Titanium Industry Company instituted a lawsuit which was put on file by Yunan Province Lufeng County Court. On Nov. 26, 2018, the lawsuit filed by Xinli Titanium Industry Company was rejected by the court; Xinli Titanium Industry Company refused to accept the judgment and appealed to the Intermediate Court of Chuxiong State on Feb. 13, 2019. After hearing the case, the intermediate court held that the facts of the first-instance court were not clear and decided to revoke the original judgment and remanded the case on Mar. 26, 2019; the Lufeng Court put the case on file again on Apr. 29, 2019. The court judgment made on Jan. 21, 2020: CNCEC shall return the project fund of RMB2,557,300 to Xinli Titanium Industry. The judgment has taken into effect and is planned to be enforced as requested. (2) Lawsuit filed by Lufeng Xinli Titanium Industry Co., Ltd. against Yunnan Baoyi Investment Co., Ltd., Yunnan Xijin Mining Industry Co., Ltd. and Lufeng County Kelian Titanium Plant 432 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. Selection for arrears On Apr. 26, 2013, the wholly-owned subsidiary of Xinli Titanium Industry, Lufeng Xinli Titanium Industry Co., Ltd. (hereinafter referred to as “Lufeng Xinli Titanium Industry”) signed an Agreement with Lufeng County Kelian Titanium Selection Plant (hereinafter referred to as: the Third Person), agreeing that during the period when the Third Person undertakes the mine of Lufeng Xinli Titanium Industry, Lufeng Xinli Titanium Industry shall prepay the contracting fee of RMB 4 million to the Third Person. Lufeng Xinli Titanium Industry paid the contracting fee on May 8, 2013. On Aug. 17, 2015, Lufeng Xinli Titanium Industry signed the Stockpile Product Disposal Agreement for Mine of Ivory Titanium Ore with Yunnan Xijin Mining Industry Co., Ltd. (hereinafter referred to as “Xijin Mining Industry”), under which the parties agreed that the Third Person borrows RMB3,224,880 (including principal and interest of borrowing) from Lufeng Xinli Titanium Industry as its repayment of contracting fee, and agreed that such borrowing shall be fully repaid by Xinjin Mining Industry to Lufeng Titanium Industry on Dec. 31, 2015. On Oct. 23, 2017, Lufeng Xinli Titanium Industry signed a Repayment Agreement with the Third Person, agreeing that the Third Person shall repay RMB3,224,880 to Lufeng Xinli Titanium Industry on behalf of Xijin Mining Industry. However, the Third Person failed to make repayment as scheduled, and only repaid RMB 0.5 million as at lawsuit.
The lawsuit was put on file in Lufeng Court on Jun. 27, 2018 and was given a judgement on Oct. 8, 2018, in which judgment the appeal of Lufeng Xinli Titanium Industry was rejected; Lufeng Xinli Titanium Industry disagreed with the judgement and made an appeal to Intermediate Court of Chuxiong State on Oct. 29, 2018. The Intermediate Court held that the first instance violated the procedures after hearing, and therefore decided to cancel the original judgment and remanded the retrial. The case was put on file again on Jan. 7, 2019, and was given no final judgment as at Dec. 31, 2019.
The final judgment made by Lufeng Court on Feb. 12, 2020: reject the appeal of Lufeng Xinli Titanium Industry.
433 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. (3) Description of the dispute over notes retrospective right of Ningxia Zhongyuan Daneng New Energy Development Co., Ltd. The drawer, Baota Shenghua Commerce and Trade Group Co., Ltd., issued an electronic bank acceptance numbered 130810000514120171201134273179 on Dec. 1, 2017 with an expiration date on Dec. 1, 2018. The note, with a face amount of RMB 1 million, had its payee and acceptor as Beijing Baota International Economy and Technology Cooperation Co., Ltd. and Baota Petrochemical Group Finance Co., Ltd. respectively. The draft was endorsed by several companies for several times and finally transferred to Ningxia Zhongyuan Daneng New Energy Development Co., Ltd. Upon the expiration of the draft, the plaintiff, Ningxia Zhongyuan Daneng New Energy Development Co., Ltd., reminded the acceptor, Baota Group Finance Company, to make payment, but the system always indicated “the payment to be received”. Besides, Baota Group Finance Company could be contacted, leading to failure in cashing. The plaintiff made an appeal to Intermediate Court of Yinchuan City on May 31, 2019, which appeal was put on trial on Aug. 26, 2019. As at Dec. 31, 2019, no judgment was made yet.
(4) Description of the dispute over notes retrospective right of Jiangsu Jiatai Evaporating Unit Co., Ltd. On Dec. 4, 2017, the drawer Baota Shenghua Commerce and Trade Group Co., Ltd. issued an electronic bank acceptance numbered 13081000051420171204134539014 to Beijing International Economy and Technology Cooperation through electronic bank acceptance system, with a face amount of RMB 1 million and with its acceptor as Baota Petrochemical Group Finance Co., Ltd. and an expiration date on Dec. 4, 2018. The draft was endorsed by several companies for several times and finally transferred to Changshu City Hengfeng Concrete Co., Ltd.. Upon the expiration of the draft, Changshu City Hengfeng Concrete Co., Ltd. reminded the acceptor to make payment, but the acceptor was unable to cash the draft. Changshu City Hengfeng Concrete Co., Ltd. and remote holder of the draft exercised the right of recourse and re-recourse to their respective remote holder. On Jun. 6, 2019, the plaintiff Changshu City Hengfeng Concrete Co., Ltd. performed its obligation of paying face amount of the draft to Longgang Company in one lump sum. The plaintiff demanded the 434 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. remote holder (defendant) Haizhou Environmental Protection Group Co., Ltd. to pay face amount, but Haizhou Environmental Protection evaded payment with various reasons. Therefore, the plaintiff Changshu City Hengfeng Concrete Co., Ltd. claimed the right of re- recourse to its remote holder for the performance of the obligation to pay the par value of the bill.
The plaintiff Changshu City Hengfeng Concrete Co., Ltd. brought a lawsuit before the Court of Yixing City on Dec. 9, 2019. As at Dec. 31, 2019, no judgment was made yet. The case was put on hearing and a reconciliation agreement was made on Jan. 14, 2020: Lufeng Xinli Company shall pay RMB 1 million to the plaintiff on Jan. 19, 2020, and shall plan to sue its remote holder, Yunnan Aluminum Industry Co., Ltd., for recourse in the near future.
(2) Important contingencies not disclosed by the Company shall also be explained The Company has no important contingencies that need to be disclosed.
3. Miscellaneous
12.15 XV. Matters After the Balance Sheet Date 1. Profit distribution
Monetary Unit: Yuan Profits or dividends proposed to be distributed 0.00 Profits or dividends declared to be distributed with approval 0.00
2. Description of other matters after balance sheet date Reelection of Guangdong Orient Zirconic Industry Science and Technology Co., Ltd. Guangdong Orient Zirconic Industry Science and Technology Co., Ltd. held its first general meeting of new members on Jan. 10, 2020. At this meeting, nine new board members were
435 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. elected, and XU Gang was elected as Chairman of Board and QIAO Zhuqing as Financial Director.
Administrative penalty imposed On Feb. 23, 2020, Lomon Billions Group Co., Ltd. received Written Decision of Administrative Penalty (Y. H. F. J. Z. [2019] No. 5) issued by Department of Ecology and Environment of Henan Province, Written Decision of Administrative Penalty (Y. H. F. J. Z. [2019] No. 7) issued by Department of Ecology and Environment of Henan Province, and Written Decision of Administrative Penalty (J. A. J. F. [2019] No. 72) issued by Emergency Management Bureau of Jiaozuo City, which three decisions are detailed as follows: (1) The Written Decision of Administrative Penalty (Y. H. F. J. Z. [2019] No. 5) states: The Company’s act of putting the production line of sulfuric acid process titanium dioxide pigment with an annual production of 120,000 tonnes that does not go through environmental protection acceptance into production is illegal, and such act is ordered to be corrected within six months and imposed a fine of RMB400,000;
(2) The Written Decision of Administrative Penalty (Y. H. F. J. Z. [2019] No. 7) states: The environmental impact assessment document of the construction project, that is, the main work of green manufacturing project for sulfur and chlorine coupling titanium materials with the annual production of 300,000 tonnes, has not been submitted for approval according to law, and the Company is ordered to stop construction and is imposed a fine of RMB 1.3 million;
(3) The Written Decision of Administrative Penalty (J. A. J. F. [2019] No. 72) states: The in- depth treatment project of high salt waste water constructed by the Company with an annual output of 1 million tonnes/year is under progress without the safety review certificate of the construction project, and is ordered to be stopped for construction and to be corrected within required period, and is imposed a fine of RMB 1 million.
Assessment on the impacts of COVID-19 436 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. Since the outbreak of COVID-19 in China in Jan. 2020, ongoing epidemic prevention and control is carried out throughout the country. COVID-19 will have certain impacts on enterprise operation and overall economic operation in some provinces, cities and industries, including Hubei Province, which may affect the asset quality or asset income level of the Company’s credit assets and investment assets to a certain extent, provided, however that the specific impacts will depend on the measures taken in epidemic prevention and control, epidemic duration and various regulatory policies applied. Xiangyang, Hubei, where the subsidiary of the Company, Xiangyang Lomon, is located is affected by the epidemic to certain extent, but the current production of the subsidiary is unaffected and other subsidiaries of the Company are outside of Hubei Province and are not directly affected by the epidemic. At present, the epidemic has limited impact on the whole group. In the later period, close attention will be continuously paid to the development of the epidemic, and assessment and active responses shall be made in response to the impacts of the epidemic on the Company’s financial status and operating results. As at the reporting date, the assessment work is still in progress.
12.16 XV. Other Important Matters 1. Other Environmental penalties The Company’s holding subsidiary Sichuan Lomon Titanium Industry Co., Ltd. received the Written Decision of Administrative Penalty (Z. H. F. J. Z. [2018] No. 67) on Jan. 25, 2019 from Deyang Environmental Protection Bureau, which states that Lomon Titanium is imposed an administrative penalty of RMB 500,000 due to pollutant indicators in spilled waste water discharged.
As at Dec. 31, 2019, share pledges of top 10 shareholders of the Company are detailed as below: Unit: Share Name of Shareholding Number of Number of Number of Status Number of shares shareholde ratio (%) shares held at restricted unrestricte of pledged or frozen
437 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
r the end of the shares held d shares shares reporting held period
104,160,60 XU Gang 20.50 416,642,402 312,481,801 Pledge 334,849,800 1
TAN 12.22 248,265,996 186,199,497 62,066,499 Pledge 248,265,900 Ruiqing
12.17 XVII. Notes to Major Items in Financial Statements of Parent Company I. Accounts receivable (1) Disclosure of classification of accounts receivable Monetary Unit: Yuan
Closing balance Opening balance
Provision for Provision for Book balance Book balance bad debt bad debt Categ ory Prop Book Prop Book ortion value ortion value Perce Perce Amount Amount of Amount Amount of ntage ntage accru accru al al
Acco unts receiv able with bad 3,349,5 0.42 3,349,5 100.0 1,876,9 0.30 1,876,9 100.0
debt 77.71 % 77.71 0% 46.53 % 46.53 0% reser ve set aside indivi dually
There
in:
Acco unt receiv able for 802,248 99.58 20,517, 2.56 781,730 628,480 99.70 8,868,1 1.41 619,612 which ,433.96 % 541.11 % ,892.85 ,241.07 % 68.88 % ,072.19 bad debt provis ion is made
438 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
by group
There
in:
805,598 100.0 23,867, 2.96 781,730 630,357 100.0 10,745, 619,612 Total ,011.67 0% 118.82 % ,892.85 ,187.60 0% 115.41 ,072.19
Bad debt reserve set aside individually: Monetary Unit: Yuan
Closing balance Name Provision for bad Proportion of Book balance Reason debt accrual
Yillong Chemical Expected to Group Co., Ltd. 1,479,941.18 1,479,941.18 100.00% unrecoverable (YILONG) Shanghai
Hebi Zhongyi Profile Expected to 788,189.00 788,189.00 100.00% Co., Ltd. unrecoverable
Jiaozuo Yuhang Expected to 519,000.00 519,000.00 100.00% Profile Co., Ltd. unrecoverable
Linhai Yaoxin Trading Expected to 212,400.00 212,400.00 100.00% Co., Ltd. unrecoverable
Jiaozuo Zhongchen Expected to 202,357.53 202,357.53 100.00% Trading Co., Ltd. unrecoverable
Zhejiang Jiabang Expected to 143,810.00 143,810.00 100.00% Chemical Co., Ltd. unrecoverable
Cathay Pigments (Yixing Xingjin Expected to 3,880.00 3,880.00 100.00% Pigments Chemicals unrecoverable Co., Ltd.)
Total 3,349,577.71 3,349,577.71 -- --
Bad debt reserve accrued by group: Monetary Unit: Yuan
Closing balance Name Book balance Provision for bad debt Proportion of accrual
Within one year 370,616,587.76 18,530,829.39 5.00%
439 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
1-2 years 9,049,726.32 904,972.63 10.00%
2-3 years
3-4 years
4-5 years 15,060.00 12,048.00 80.00%
Over 5 years 1,069,691.09 1,069,691.09 100.00%
Total 380,751,065.17 20,517,541.11 --
Bad debt reserve accrued by group: Monetary Unit: Yuan
Closing balance Name Book balance Provision for bad debt Proportion of accrual
Combination of related 421,497,368.79 parties
Total 421,497,368.79 --
Disclosure based on account age Monetary Unit: Yuan
Account age Book balance
Within 1 year(including 1 year) 792,124,846.55
1-2 years 9,049,726.32
2-3 years 1,479,941.18
Over 3 years 2,943,497.62
4-5 years 375,150.00
Over 5 years 2,568,347.62
Total 805,598,011.67
(2) Provision for bad debts withdrawn, recovered or reversed in the current period
440 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. Accrual of bad debt reserve of the current period:
Changes in amount of the current period Category Opening balance Closing balance Recovery or Appropriation Write-off reversal
Receivables with combined appropriation of provisions for 8,868,168.88 14,216,409.23 2,567,037.00 20,517,541.11 bad debts based on credit risk characteristics
Accounts receivable with bad debt reserve 1,876,946.53 1,472,631.18 3,349,577.71 set aside individually
Total 10,745,115.41 15,689,040.41 2,567,037.00 23,867,118.82
(3) Accounts receivable actually written off in the current period Monetary Unit: Yuan
Item Amount written off
Fuzhou Baililong Chemicals Co., Ltd. 1,640,237.00
Harbin Bier Industry and Trade Co., Ltd. 926,800.00
(4) Top five accounts receivable by the closing balance of arrears Monetary Unit: Yuan Proportion to total ending Ending balance of Ending balance of Company name balance of accounts accounts receivable provision for bad debts receivable
No.1 292,361,902.05 36.29%
No.2 128,982,851.60 16.01%
No.3 55,652,440.00 6.91% 2,782,622.00
No.4 42,879,865.36 5.32% 2,596,460.69
No.5 22,540,102.20 2.80% 1,127,005.11
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Total 542,417,161.21 67.33%
2. Other receivables Monetary Unit: Yuan
Item Closing balance Opening balance
Other receivables 954,386,496.37 311,080,609.16
Total 954,386,496.37 311,080,609.16
(1) Other receivables 1) Classification of other receivables by nature of account Monetary Unit: Yuan Carrying amount at the beginning of Fund nature Closing Book Balance the period
Intercourse funds 943,268,547.69 300,690,269.16
Advances 2,300,000.00
Deposit 11,255,000.00 10,937,200.00
Petty cash 5,000.00
Total 956,828,547.69 311,627,469.16
2) Accrual of bad debt reserve Monetary Unit: Yuan
Stage 1 Stage 2 Stage 3
Provision for bad Expected credit loss in Expected credit loss in Expected credit Total debt the whole existence the whole existence loss in future 12 period (no credit period (with credit months impairment) impairment)
Balance on Jan. 1, 546,860.00 546,860.00 2019
Balance on Jan. 1, 2019 in the current ------period
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Appropriation for 598,876.46 1,896,314.86 2,495,191.32 current period
Amount reversed in 600,000.00 600,000.00 the current period
Balance as at Dec. 1,145,736.46 1,296,314.86 2,442,051.32 31, 2019
Book balance change with significant changes in the amount of loss reserve in the current period □ Applicable √ Not applicable Disclosure based on account age Monetary Unit: Yuan
Account age Book balance
Within 1 year(including 1 year) 676,643,619.23
1-2 years 115,046,644.45
2-3 years 111,880,446.37
Over 3 years 53,257,837.64
3-4 years 44,346,953.17
4-5 years 8,372,929.91
Over 5 years 537,954.56
Total 956,828,547.69
3) Accrual, recovery and reversal of bad debt reserve in the current year None
4) Other accounts receivable actually written off in the current period None
5) Top five other accounts receivable by the closing balance of arrears Monetary Unit: Yuan 443 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd.
Proportion in total balance of Ending balance Nature of other Company name Closing balance Account age of provision for payment receivables at bad debts the end of period
Internal No.1 368,764,401.81 Within one year 38.54% borrowings
Internal No.2 192,879,932.57 Within one year 20.16% borrowings
Internal One year to five No.3 156,467,294.16 16.35% borrowings years
Internal One year to five No.4 126,147,291.66 13.18% borrowings years
Internal No.5 97,658,583.34 Within one year 10.21% borrowings
Total -- 941,917,503.54 -- 98.44%
3. Long-term equity investment Monetary Unit: Yuan
Closing balance Opening balance Item Provision for Net book Provision for Net book Book balance Book balance impairment value impairment value
Investment in 13,195,071,6 13,195,071,6 12,085,946,0 10,893,079.7 12,075,052,9
subsidiaries 38.10 38.10 18.47 1 38.76
Investment in joint ventures 883,403,076. 883,403,076. 11,625,909.9 11,625,909.9
and 26 26 4 4 associates
14,078,474,7 14,078,474,7 12,097,571,9 10,893,079.7 12,086,678,8 Total 14.36 14.36 28.41 1 48.70
(1) Investment in subsidiaries Monetary Unit: Yuan
Change of current increases and decreases Closing balance Opening Closing Reduce Appropri of Investee balance Additional balance d ation of Other impairme (book value) investme (book value) investm impairm decreases nt nt ent ent provision
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provisio n
Sichuan Lomon - 8,941,158,95 8,093,369,96 Titanium 847,788,99 7.33 1.76 Industry Co., 5.57 Ltd.
Henan Billions New 1,738,446,29 11,998,164 1,750,444,46
Material Co., 7.94 .44 2.38 Ltd.
Jiaozuo City Zhongli 422,221,149. 422,802,025. District Yili 580,876.16 30 46 Microfinance Co., Ltd.
Sichuan Lomon 304,602,920. 571,633,04 876,235,970. Titanium 28 9.78 06 Industry Co., Ltd.
Billions 200,412,858. 200,412,858. (Hong Kong) 69 69 Co., Ltd.
Panzhihua Ruierxin 190,000,000. 190,000,000. Industry and 00 00 Trade Co., Ltd.
Billions Finance 170,070,365. 170,419,737. Lease 349,371.52 70 22 (Guangzhou ) Co., Ltd.
Jiaozuo Bailiyuan 45,140,731.3 45,322,858.3 Reservoir 182,127.00 0 0 Managemen t Co., Ltd.
Jiaozuo Billions 23,030,794.0 40,000,00 1,680,079. 64,710,873.4 United 0 0.00 46 6 Pigment Co., Ltd.
Henan Longxiangsh 20,361,880.6 21,244,922.3 an Tourism 883,041.77 0 7 Developmen t Co., Ltd.
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Henan Rongjiayu 19,506,461.2 20,400,442.8 893,981.65 Technology 2 7 Co., Ltd.
Jiaozuo Xingtai Resources 100,522 Comprehens 100,522.40 .40 ive Utilization Co., Ltd.
Henan Lomon Billions 146,200,0 146,411,989. Intelligent 211,989.65 00.00 65 Equipment Manufacturin g Co., Ltd.
Xiangyang Lomon 309,926,40 309,926,403. Titanium 3.74 74 Industry Co., Ltd.
Yunnan Metallurgical 882,430,0 88,339,132.1 Xinli 939,131.14 01.00 4 Titanium Co., Ltd.
12,075,052,9 1,068,630 100,522 51,489,220 13,195,071,6 Total 38.76 ,001.00 .40 .74 38.10
(2) Investment in joint ventures and associates Monetary Unit: Yuan
Change of current increases and decreases
Invest Closi ment Decla ng profit Adjust ratio Appro balan Othe Closing Inves Opening Redu and ment n of priatio Othe ce of Additio r balance tmen balance ced loss of cash n of r impai nal equit (book t unit (book value) inves recog other divid impair decr rmen investm y value) tmen nized compre ends ment ease t ent chan t under hensive or provisi s provi ges the income profit on sion equity s law
I. Joint ventures
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II. Associates
Guangd ong Orient Zirconic 872,99 Industry 872,993, 3,252.0 Science 252.07 7 and Technol ogy Co., Ltd.
Jiaozuo - Weina 11,625 1,216, 10,409, Technol ,909.9 085.7 824.19 ogy Co., 4 5 Ltd.
- 11,625 883,40 872,993, 1,216, Subtotal ,909.9 3,076.2 252.07 085.7 4 6 5
- 11,625 883,40 872,993, 1,216, Total ,909.6 3,076.6 252.07 085.7 4 0 5
(3) Other notes 1. Among other items: (1) Lomon Billions Sichuan Titanium Industry Co., Ltd. has transferred all the shares it held in Sichuan Lomon Mining and Metallurgy Co., Ltd. and Xiangyang Titanium Industry Co., Ltd. to Lomon Billions; (2) According to the accounting treatment of stock ownership incentives, long-term equity investment is adjusted based on the fees amortized by the Company within the scope of stock ownership incentives during the period of stock ownership incentive; 2. The impairment of RMB10,993,602.11 was accrued from the balance at the beginning of year for Jiaozuo City Xingtai Resource Comprehensive Utilization Co., Ltd.
4. Operating income and operating cost Monetary Unit: Yuan
Item Current accural Amount incurred in last period
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Revenue Cost Revenue Cost
Primary business 2,824,325,177.82 2,039,458,659.99 2,818,932,343.89 1,886,262,889.88
Other business 158,270,187.07 114,400,351.31 193,252,150.40 164,850,377.61
Total 2,982,595,364.89 2,153,859,011.30 3,012,184,494.29 2,051,113,267.49
Whether or not new income standards are applied □ Yes √ No Other descriptions:
5. Investment income Monetary Unit: Yuan
Item Current accural Amount incurred in last period
Income from long-term equity investment calculated based on -1,216,085.75 1,601,659.66 equity method
Investment income from disposal of -55,444,412.58 long-term equity investment
Cash dividends distributed to 1,458,400,000.00 1,399,860,000.00 subsidiaries
Investment income of wealth 23,237,701.68 32,964,965.54 management products
Other decreases -9,175,675.37
Total 1,415,801,527.98 1,434,426,625.20
6. Others
12.18 XVIII. Supplementary Information 1. Detailed statement of current non-recurrent profits and losses √ Applicable □ Not applicable Monetary Unit: Yuan
Item Amount .Description
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Profit or loss on disposal of non- -7,919,333.24 current assets
Government grants included in current profit and loss (closely related to business activities, except for 88,431,580.59 government grants enjoyed by quota or fixed amount in accordance with national uniform standard)
Fund occupation fees charged to non- financial enterprises and included in 897,768.43 current profit and loss
Profit and loss of debt restructuring 24,941,728.28
In addition to the effective hedging business in relation to the normal operation of the Company, the Company holds profit and loss from fair value changes arising out of trading financial assets, derivative financial assets, trading financial 28,612,661.15 liabilities and derivative financial liabilities, and investment gains from the disposal of trading financial assets, derivative financial assets, trading financial liabilities and derivative financial liabilities and other investment on bonds.
Reversal of receivables and contract assets depreciation reserves subject to 18,500,000.00 separate impairment test
Other non-operating revenue and -28,426,439.14 expenditure other than the above
Less: Amount income tax affected 21,594,396.45
Amount of minority equity affected 1,100,690.73
Total 102,342,878.89 --
Non-recurring gains and losses items defined by the Company according to the definition of No. 1 Interpretive Announcement on Information Disclosure of Public Securities Offer – Non- recurring Gains and Losses, and explain the reasons for define as of recurring profit and loss items the Non-recurring gain and loss items listed in No. 1 Interpretive Announcement on Information Disclosure of Public Securities Offer – Non-recurring Gains and Losses.
449 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. □ Applicable √ Not applicable
2. Return on equity and earnings per share
Income per share Profit in reporting period Weighted average return on equity Basic earnings per Diluted earnings per share (RMB/share) share (RMB/share)
Net profit attributable to ordinary shareholders of the 19.51% 1.29 1.29 Company
Net profit attributable to ordinary shareholders of the 18.74% 1.24 1.24 Company after deducting non-recurring profit and loss
3. Differences in accounting data under the domestic and foreign accounting standards
(1) Differences in net profit and net assets in financial reports disclosed in accordance with international accounting standards and Chinese accounting standards, respectively □ Applicable √ Not applicable
(2) Differences in net profit and net assets in financial reports disclosed in accordance with overseas accounting standards and Chinese accounting standards, respectively □ Applicable √ Not applicable
(3) Description of differences in accounting data under domestic and foreign accounting standards, which shall indicate name of foreign institution if any difference adjustment is made to data that has been audited by foreign audit institution
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451 Cninfo www.cninfo.com.cn Full Text of 2019 Annual Report of Lomon Billions Group Co., Ltd. 13 Section XIII Directory of Files for Future Reference
I. 2019 Annual Report signed by Mr. XU Gang, Chairman of the Board the Company. II. Financial statements signed and sealed by legal representative, accounting director and person in charge of the accounting firm (accountant in charge). III. The original 2019 Audit Report sealed by the accounting firm and signed and sealed by certified public accountants. IV. The original of all corporate documents and the original announcement publicly disclosed on the website designated by the China Securities Regulatory Commission during the reporting period. V. Other relevant information. VI. Location of documents to be inspected: office of the board of directors of the Company.
Lomon Billions Group Co., Ltd. Chairman of the Board: XU Gang Mar. 23, 2020
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