Company Limited China NationalMaterials China National Materials Company Limited A joint stock company incorporated in the People’s Republic of China with limited liability (Stock Code: 01893) Materials Bring a Prosperous Life Annual Report 2014 2014 Annual Report China National Materials Company Limited CONTENTS CORPORATE INFORMATION 2 CORPORATE PROFILE 4 CORPORATE STRUCTURE 5 FINANCIAL SUMMARY 6 BUSINESS SUMMARY 7 CHAIRMAN’S STATEMENT 8 MANAGEMENT DISCUSSION AND ANALYSIS 11 BIOGRAPHY OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT 24 DIRECTORS’ REPORT 32 SUPERVISORY COMMITTEE’S REPORT 45 CORPORATE GOVERNANCE REPORT 46 INDEPENDENT AUDITOR’S REPORT 59 CONSOLIDATED STATEMENT OF PROFIT OR LOSS 61 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 62 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 63 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 65 CONSOLIDATED STATEMENT OF CASH FLOWS 68 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 71 DEFINITIONS 222 Annual Report 2014 1 CORPORATE INFORMATION As at 31 December 2014 DIRECTORS STRATEGY COMMITTEE Executive Directors LIU Zhijiang (Chairman) LIU Zhijiang (Chairman) YU Shiliang PENG Jianxin1 (President) LI Xinhua PENG Jianxin1 Non-executive Directors LI Jianlun YU Shiliang YU Guobo LI Xinhua1 (Vice-chairman) ZHOU Zude LI Jianlun YU Guobo AUDIT COMMITTEE TANG Baoqi LU Zhengfei (Chairman) WANG Shimin Independent Non-executive Directors YU Shiliang LEUNG Chong Shun LU Zhengfei REMUNERATION COMMITTEE WANG Shimin WANG Shimin (Chairman) ZHOU Zude LEUNG Chong Shun LU Zhengfei Supervisors XU Weibing (Chairman) NOMINATION COMMITTEE ZHANG Renjie LIU Zhijiang (Chairman) WANG Jianguo WANG Shimin WANG Yingcai ZHOU Zude QU Xiaoli 1 On 26 August 2014, Mr. ZHANG Hai resigned from his position as a non-executive Director of the Company, and accordingly ceased to be a member of the Strategy Committee, with effect from 21 October 2014 on which the shareholders of the Company approved the appointment of a new Director as his replacement at the extraordinary general meeting; On 21 October 2014, Mr. PENG Jianxin was appointed as a non-executive Director of the Company at the extraordinary general meeting. On the same day, Mr. LI Xinhua was re-designated from an executive Director to a non-executive Director of the Company and resigned from his position as president of the Company; Mr. PENG Jianxin was re-designated from a non-executive Director to an executive Director of the Company and was appointed as president of the Company and a member of the Strategy Committee. For details, please refer to the announcements of the Company dated 26 August 2014 and 21 October 2014. 2 China National Materials Company Limited CORPORATE INFORMATION As at 31 December 2014 SECRETARY TO THE BOARD AUDITORS GU Chao Hong Kong auditor SHINEWING (HK) CPA Limited JOINT COMPANY SECRETARIES GU Chao PRC auditor YU Leung Fai (HKICPA, AICPA) ShineWing Certified Public Accountants LLP AUTHORISED REPRESENTATIVES HONG KONG H SHARE REGISTRAR LIU Zhijiang AND TRANSFER OFFICE YU Leung Fai (HKICPA, AICPA) Computershare Hong Kong Investor Services Limited 17M Floor, Hopewell Centre REGISTERED OFFICE AND PLACE OF BUSINESS 183 Queen’s Road East 11 Beishuncheng Street Wanchai, Hong Kong Xizhimennei Xicheng District Beijing 100035, the PRC STOCK CODE 01893 PLACE OF BUSINESS IN HONG KONG 7th Floor, Hong Kong Trade Centre COMPANY WEBSITE 161-167 Des Voeux Road Central http://www.sinoma-ltd.cn Hong Kong INVESTOR CONTACT LEGAL ADVISORS Tel: (8610)8222 9925 DLA Piper (as to Hong Kong law) Fax: (8610)8222 8800 Jia Yuan Law Firm (as to PRC law) E-mail: [email protected] Annual Report 2014 3 CORPORATE PROFILE China National Materials Company Limited is a joint stock company approved by the State-owned Assets Supervision and Administration Commission of the State Council and established jointly by China National Materials Group Corporation Ltd. and other promoters. The Company was incorporated on 31 July 2007 and was listed on the Main Board of the Hong Kong Stock Exchange on 20 December 2007. The Company is mainly engaged in cement equipment and engineering services, cement and high-tech materials businesses. The Company possesses series of core technologies such as glass fiber, composite materials, synthetic crystals, advanced ceramics and new dry process cement technology, with pioneering research and development capabilities, strong implementation capability for commercialisation of innovative technologies, successful mergers and acquisitions experience and unique business model. The Company is the largest provider of cement equipment and engineering services globally and is a leading producer of non-metal materials in the PRC. The Company is the only enterprise in the non-metal materials industry in the PRC with a business model that integrates research and development, industrial design, equipment manufacturing, engineering and construction services and production. The Company is committed to maintaining sustainable development for the long term and continuously creates value for all our stakeholders including Shareholders, customers, employees and the society. The Company upholds our positioning as an innovative, international and value-added enterprise. We strive to become the leading provider of technology, core equipment and engineering and system integration services in the global cement engineering industry and to become a prominent developer and provider of non-metal materials and related products globally. 4 China National Materials Company Limited CORPORATE STRUCTURE As at 31 December 2014 Sinoma 41.84% 42.46% Sinoma International Group Cement Equipment and 100% Engineering Services Sinoma Mining 8.96% Cinda 35.49% Tianshan Cement 100% Taishan 8.67% Sinoma Cement Investment Cement 47.56% Ningxia Building Materials3 51% 3.66% Qilianshan Holdings Well Kent1 China National Materials Company 1.80% Limited Tianshan 54.32% Group2 Sinoma Science & Technology 99.46% Sinoma Advanced Materials 1.75% 100% BBMG Hi-Tech Materials CTG 50.01% Sinoma Jinjing Zibo 0.72% 51% Xiamen Standard Hi-Tech Sand Holders 32.60% 100% Sinoma (Hong Kong) of H Shares Notes: 1. Well Kent is a wholly-owned subsidiary of Cinda. 2. Sinoma Group holds 50.95% equity interest in Tianshan Group. 3. The equity interest in Ningxia Building Materials held by the Company increased from 47.54% to 47.56% as a result of the completion of the repurchase and cancellation procedure of the 137,792 compensation shares held by the Company in Ningxia Building Materials on 25 August 2014. The above chart covers first-tier subsidiaries only. Subsidiaries on second-tier and below are not listed. Annual Report 2014 5 FINANCIAL SUMMARY For the year ended 31 December 2014 2013 2012 2011 2010 RMB million RMB million RMB million RMB million RMB million (Audited) (Restated)3 (Restated)2 (Restated)1 Turnover 55,284.82 52,081.32 46,187.07 50,718.59 44,497.16 Profit for the year 1,315.63 1,465.41 1,545.84 3,964.50 3,409.72 Profit for the year attributable to owners of the Company 507.16 397.51 452.29 1,462.57 1,099.98 Earnings per Share – Basic (RMB) 0.14 0.11 0.13 0.41 0.31 As at 31 December 2014 2013 2012 2011 2010 RMB million RMB million RMB million RMB million RMB million (Audited) (Restated)3 (Restated)2 (Restated)1 Total assets 99,904.60 94,512.03 88,004.71 79,746.88 67,204.60 Total liabilities 68,884.41 66,343.88 60,707.49 55,963.82 46,551.92 Equity attributable to owners of the Company 13,819.80 11,405.24 11,477.77 10,978.01 9,788.04 Equity per Share (RMB) 3.87 3.19 3.21 3.07 2.74 Notes: 1. The figures for 2010 have been restated due to the completion of acquisitions of Sinoma Equipment Maintenance (Shangrao) Co., Ltd., Sinoma Slip-form Leasing (Shangrao) Co., Ltd., Suzhou Concrete Cement Product Research Institute Company Limited and Shandong Research & Design Institute of Industrial Ceramics Co., Ltd. during 2011, which were under common control. 2. The figures for 2011 have been restated due to the completion of acquisitions of Nanjing Cement Industry Design & Research Institute Co., Ltd., Sinoma Asset Management (Suzhou) Company Limited, and Tangshan Sinoma Property Management Company Limited during 2012, which were under common control. 3. The figures for 2012 have been restated due to the completion of acquisitions of Handan Sinoma Asset Management Co., Ltd., Chengdu Cement Industry Design & Research Institute Co., Ltd., Tianjin Sinoma Asset Management Company Limited, China Building Materials Industry Construction Tianjin Engineering Co., Ltd., Suzhou Design and Research Institute of Non-metallic Minerals Industry Co., Ltd. and Nanjing Fiberglass Research & Design Institute Co., Ltd. (all were under common control), the change from proportion consolidation to equity method of accounting of jointly controlled entities and the adjustment of defined benefit obligations during 2013. 6 China National Materials Company Limited BUSINESS SUMMARY Cement Equipment And Engineering Services 2014 2013 Change (%) Amount of new order intakes (RMB million) 29,486 34,212 -13.81 Amount of backlog (RMB million) - as at 31 December 58,280 56,742 2.71 Cement 2014 2013 Change (%) Sales volume of cement (‘000 tonnes) 75,645 74,700 1.27 Sales volume of clinker (‘000 tonnes) 8,750 10,030 –12.76 High-tech Materials 2014 2013 Change (%) Sales volume of glass fiber and products (‘000 tonnes) 498 448 11.16 Sales volume of fan blades for wind power generators (set) 2,696 1,816 48.46 Sales volume of solar-energy fused silica crucibles (unit) 61,982 37,300 66.17 Sales volume of natural gas cylinders (unit) 246,340 254,471 –3.20 Annual Report 2014 7 CHAIRMAN’S STATEMENT Dear Shareholders, On behalf of the Board, I present to you the annual report and results of the Company for 2014, and report to you on the development focus of the Company for 2015. Year 2014 witnessed a mixed international political and economic landscape amidst fiercer competition.