CHINA GLASS HOLDINGS LIMITED 中國玻璃控股有限公 司 （於百慕達註冊成立之有限公司） （股份代號：3300) 中期報告 2020 *僅供識別 目錄 目錄 | --- | --- | |--------------------------------------|-------| | | | | 公司資料 | 2-3 | | 管理層討論及分析 | 4-9 | | 其他資料 | 10-20 | | 致中國玻璃控股有限公司董事會審閱報告 | 21 | | 綜合損益表 | 22 | | 綜合損益及其他全面收益表 | 23 | | 綜合財務狀況表 | 24-25 | | 綜合權益變動表 | 26-27 | | 簡明綜合現金流量表 | 28 | | 未經審核中期財務報告附註 | 29-54 | 中國玻璃控股有限公司 2020年中期報告 1 公司資料 公司資料 董事會 執行董事 崔向東先生 非執行董事 彭壽先生（主席） 周誠先生（名譽主席） 趙令歡先生 張勁舒先生 獨立非執行董事 | --- | --- | --- | |-------|------------|-------| | | | | ...

Company Information [Board of Directors and Senior Management](index=3&type=section&id=董事会与高级管理层) This section outlines the company's Board of Directors and senior management, including committee compositions, providing a clear overview of its corporate governance structure - Board members include **Mr. Cui Xiangdong** (CEO, Executive Director), **Mr. Peng Shou** (Chairman, Non-executive Director), **Mr. Zhou Cheng** (Honorary Chairman, Non-executive Director), **Mr. Zhao Linghuan** (Non-executive Director), **Mr. Zhang Jinshu** (Non-executive Director), and Independent Non-executive Directors **Mr. Zhang Baiheng**, **Mr. Zhao Lihua**, and **Mr. Chen Huachen**[8](index=8&type=chunk) - The company has an Audit Committee, Remuneration Committee, Nomination Committee, and Strategy Committee, with all committee chairpersons clearly identified[8](index=8&type=chunk) [Professional Advisors and Contact Information](index=4&type=section&id=专业顾问与联系方式) This section provides essential contact details for the company, including its share registrars, legal advisors, principal bankers, auditors, and stock code - The company's auditor is **KPMG**[10](index=10&type=chunk) - The company's stock code is **The Stock Exchange of Hong Kong Limited: 3300**[11](index=11&type=chunk) - The company's principal bankers include China Construction Bank, Bank of Shanghai, China Development Bank, Bank of Communications, CITIC Bank, etc[10](index=10&type=chunk) Financial Highlights [Performance and Balance Sheet Summary](index=5&type=section&id=业绩与资产负债概要) This section summarizes the Group's five-year performance and balance sheet, noting a 2019 decrease in revenue and profit for the year, alongside growth in total assets and net assets 2019 Fiscal Year Key Financial Data (Consolidated Statements) | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 2,369,230 | 2,617,725 | | Gross Profit | 284,642 | 410,095 | | Operating Profit | 275,258 | 313,826 | | Profit Before Tax | 89,428 | 153,134 | | Profit for the Year | 72,704 | 104,074 | | Total Assets | 7,188,111 | 6,974,710 | | Total Liabilities | (4,938,392) | (4,752,779) | | Net Assets | 2,249,719 | 2,221,931 | - **2019 revenue decreased by 9.5%** year-on-year, and **profit for the year decreased by 30.1%** year-on-year[15](index=15&type=chunk) - **2019 total assets increased by 3.06%** year-on-year, and **net assets increased by 1.25%** year-on-year[15](index=15&type=chunk) Chairman's Statement [2019 Review and Strategic Focus](index=6&type=section&id=2019年度回顾与战略重点) Chairman Mr. Peng Shou reviews 2019's global economic slowdown, highlighting the company's demand-driven innovation, informatization, and "Belt and Road" international cooperation strategies - In 2019, global economic growth slowed synchronously, China's GDP grew by **6.1%**, and the glass industry optimized its industrial structure through supply-side reform[18](index=18&type=chunk) - The company adhered to demand-driven and innovation-led strategies, promoting informatization across the entire chain of product R&D, logistics procurement, production processing, management operations, professional services, and marketing[17](index=17&type=chunk) - In terms of internationalization, the company continued to adhere to the "going out" and "Belt and Road" development strategies, strengthening international cooperation in high-quality production capacity and technology[17](index=17&type=chunk) [2020 Outlook and Development Strategy](index=6&type=section&id=2020年度展望与发展思路) The Chairman outlines the 2020 outlook, acknowledging global economic adjustments and the COVID-19 impact, while emphasizing product quality, R&D, structural optimization, and new glass business development - In 2020, the global economy will undergo deep adjustments, with the COVID-19 pandemic creating a severe external environment, but China's economic recovery trend remains unchanged[17](index=17&type=chunk) - The company will continue to improve product quality, increase R&D efforts, optimize product structure, and establish clear product strategic development routes in automotive glass, pharmaceutical glass, and special glass[17](index=17&type=chunk) - The goal is to form differentiated market competitiveness, thereby enhancing corporate profitability[17](index=17&type=chunk) Management Discussion and Analysis [Market Review](index=7&type=section&id=市场回顾) This section reviews the 2019 market, noting global economic slowdown, China's GDP growth, and the flat glass industry's stability driven by supply-side reform and market recovery - In 2019, China's GDP grew by **6.1%** year-on-year, with the macro economy facing dual pressures from a tightening external environment and domestic economic adjustments[24](index=24&type=chunk) - The flat glass industry focused on supply-side structural reform, optimizing industrial structure and resolving overcapacity, maintaining stable operations[24](index=24&type=chunk) - Supply contracted due to environmental policies and cold repair constraints, while demand recovered somewhat due to a cyclical recovery in the real estate and automotive markets[24](index=24&type=chunk) [Business Review](index=7&type=section&id=业务回顾) The Group's 2019 business review indicates decreased glass production, sales, and average selling prices, leading to lower profitability, despite 10 operational production lines and a daily melting capacity of 6,650 tons - The Group has 13 glass production lines, with a daily melting capacity of **6,650 tons/day**, of which 10 float glass production lines are actually operating[25](index=25&type=chunk) - In 2019, mineral raw material prices increased and supply was tight, while soda ash and petroleum coke prices decreased, natural gas prices increased, and fuel oil prices decreased[26](index=26&type=chunk)[27](index=27&type=chunk) 2019 Production, Sales, and Selling Price | Indicator | 2019 | Year-on-year Change | | :--- | :--- | :--- | | Various Glass Production | 30.99 million weight cases | Down 9% | | Sales Volume | 29.66 million weight cases | Down 12% | | Average Selling Price | RMB 75/weight case | Down 3% | - In 2019, sales revenue was approximately **RMB 2.369 billion**, a year-on-year decrease of **9%**; profit for the year was **RMB 72.7 million**, a year-on-year decrease of **30%**[30](index=30&type=chunk) [Key Initiatives in 2019](index=8&type=section&id=2019年主要工作) Key initiatives in 2019 focused on implementing organic growth, M&A, and "going global" strategies, enhancing product quality, advancing informatization, and optimizing organizational management - Implemented and deepened three major strategies: organic growth (improving product quality and added value), mergers and acquisitions (identifying quality projects), and going global (successful ignition of Nigeria float glass production line, Kazakhstan project delayed due to pandemic)[31](index=31&type=chunk) - Improved testing methods and standards, strengthened dual quality control management, and promoted product quality upgrades[32](index=32&type=chunk) - Vigorously promoted informatization, advanced ERP system construction, optimized organizational management structure, and improved performance appraisal and incentive mechanisms[33](index=33&type=chunk) - Expanded online marketing channels, developed new customers, increased sales of high-end products, and achieved differentiated sales[34](index=34&type=chunk) - Increased openness in technological R&D, solved production process challenges, and promoted new and old kinetic energy conversion projects[37](index=37&type=chunk) [Glass Market Outlook and 2020 Work Plan](index=9&type=section&id=玻璃市场展望与2020年工作计划) The 2020 outlook for the glass industry anticipates continued capacity control and supply-side reform, with the company planning to expand new glass businesses, optimize product structure, and advance overseas projects - In 2020, the glass industry will continue to strictly control new capacity and deepen supply-side structural reform, but will face short-term pressure in the first half due to the COVID-19 pandemic[38](index=38&type=chunk) - Mineral raw material prices are expected to rise due to increased environmental protection efforts, and fuel prices (coal tar, natural gas, imported petroleum coke) are expected to increase slightly[40](index=40&type=chunk) - The 2020 work plan includes: achieving "Made in China" and "Created in China" according to "Two Modernizations" requirements; expanding into new glass businesses such as pharmaceutical glass, automotive glass, and special glass; introducing an informatization platform to expand online sales channels; continuing to upgrade the ERP management system; actively assisting the operation of the Nigeria project, advancing the construction of the Kazakhstan project, and strategically developing Italian pharmaceutical glass technology[41](index=41&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) [Financial Review](index=10&type=section&id=财务回顾) The 2019 financial review shows a 9% revenue decrease and 31% gross profit decline, primarily due to lower glass prices and sales, partially offset by increased other income from relocation gains and government grants 2019 Financial Review Key Indicators | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 2,369,230 | 2,617,725 | -9% | | Cost of Sales | (2,084,588) | (2,207,630) | -6% | | Gross Profit | 284,642 | 410,095 | -31% | | Gross Margin | 12% | 16% | -4 percentage points | | Other Income | 319,597 | 230,849 | +38% | | Finance Costs | (185,728) | (160,805) | +15% | | Administrative Expenses | (261,656) | (249,030) | +5% | | Income Tax | (16,724) | (49,060) | -66% | - Revenue decrease was mainly due to a **3% drop in glass market prices** and a **12% decrease in sales volume**, partially offset by **RMB 133 million** in technical service revenue from the Italian subsidiary[46](index=46&type=chunk) - Other income primarily came from net gains on relocation of production plants and government grants[51](index=51&type=chunk) - The significant reduction in income tax was mainly due to a decrease in profit before tax and tax-exempt compensation for the relocation of production plants[54](index=54&type=chunk) [Capital Structure, Liquidity, and Financial Resources](index=12&type=section&id=资本架构、流动资金及财务资源) As of 2019, the Group's cash and cash equivalents slightly decreased, while outstanding loans increased, with improvements in debt-to-equity and current ratios, despite remaining net current liabilities 2019 Capital Structure and Liquidity | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 584,000 | 607,000 | | Outstanding Bank and Other Loans | 3,212,000 | 2,794,000 | | Debt-to-Equity Ratio (Total Interest-bearing Debt/Total Assets) | 0.46 | 0.42 | | Current Ratio (Current Assets/Current Liabilities) | 0.62 | 0.50 | | Net Current Liabilities | (1,345,000) | (1,944,000) | | Debt-to-Asset Ratio (Total Liabilities/Total Assets) | 0.69 | 0.68 | - Of the outstanding bank and other loans, **42%** were at fixed interest rates and **58%** at floating interest rates[59](index=59&type=chunk) - Approximately **RMB 776 million** of property, plant and equipment, construction in progress, and land use rights, as well as approximately **RMB 308 million** of bank deposits, trade and other receivables, and bills receivable, were pledged to secure bank loans totaling approximately **RMB 1.747 billion**[61](index=61&type=chunk) [Human Resources and Final Dividend](index=13&type=section&id=人力资源与末期股息) The Group's employee count decreased in 2019 due to efficiency improvements and production line shutdowns, with competitive remuneration and no final dividend recommended - As of December 31, 2019, the Group employed approximately **3,419 staff**, a decrease from 2018, mainly due to improved efficiency and cold repair shutdowns of some production lines at certain production bases[66](index=66&type=chunk) - The company's remuneration remained competitive and was adjusted based on employee performance, with employees participating in welfare plans compliant with local labor laws[66](index=66&type=chunk) - The Board did not recommend a final dividend for the year ended December 31, 2019[67](index=67&type=chunk) [Exchange Rate Risk and Major Customers and Suppliers](index=13&type=section&id=汇率风险与主要客户供应商) The Group faces currency risk from multi-currency transactions and USD-denominated borrowings, with diversified customer and supplier bases and no hedging derivatives used in 2019 - The Group's transactions and monetary assets are primarily denominated in RMB, HKD, EUR, and USD, with some borrowings in USD, exposing it to exchange rate fluctuation risks[68](index=68&type=chunk) - For the year ended December 31, 2019, the Group did not use any derivative instruments for hedging[68](index=68&type=chunk) - Revenue from sales of goods or services to the top five customers accounted for **less than 30%** of total sales for the year[69](index=69&type=chunk) - **34%** of the Group's purchases came from the top five suppliers, with the largest supplier accounting for **13%** of total purchases[69](index=69&type=chunk) Directors' Report [Principal Activities and Financial Overview](index=14&type=section&id=主要业务与财务概况) This section outlines the Group's main business, reiterates 2019 financial performance, and confirms no final dividend, providing a five-year financial summary - Details of the Group's principal activities are set out in Note 14 to the consolidated financial statements[72](index=72&type=chunk) - The Board did not recommend a final dividend for the year ended December 31, 2019[74](index=74&type=chunk) - A summary of the Group's results, assets, and liabilities for the past five years is presented in the financial highlights on page 4 of the annual report[75](index=75&type=chunk) [Board Composition and Interests](index=15&type=section&id=董事会组成与权益) This section details the Board's composition, director rotation, and re-election mechanisms, disclosing directors' interests in company shares and confirming independent non-executive directors' independence - Board members include Executive Director **Mr. Cui Xiangdong**, Non-executive Directors **Mr. Peng Shou** (Chairman), **Mr. Zhou Cheng** (Honorary Chairman), **Mr. Zhao Linghuan**, **Mr. Zhang Jinshu**, and Independent Non-executive Directors **Mr. Zhang Baiheng**, **Mr. Zhao Lihua**, and **Mr. Chen Huachen**[82](index=82&type=chunk) - **Mr. Peng Shou**, **Mr. Zhao Linghuan**, and **Mr. Chen Huachen** are subject to retirement by rotation at the upcoming Annual General Meeting and are eligible for re-election[82](index=82&type=chunk) - The company has received annual confirmations of independence from all independent non-executive directors and considers them to be independent as of the reporting date[82](index=82&type=chunk) Directors' Interests in the Company's Shares (December 31, 2019) | Director Name | Capacity | Total Ordinary Shares (L) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Cui Xiangdong | Beneficial Owner/Controlled Corporation Interest | 19,532,000 | 1.08% | | Mr. Zhou Cheng | Beneficial Owner | 22,672,633 | 1.25% | [Major Shareholders' Interests](index=17&type=section&id=主要股东权益) This section discloses major shareholders' interests and/or short positions in the company's shares as of December 31, 2019, as required by the Securities and Futures Ordinance Major Shareholders' Interests in the Company's Shares (December 31, 2019) | Shareholder Name/Entity | Capacity | Total Ordinary Shares (L) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | First Fortune Enterprises Limited | Beneficial Owner | 272,926,000 | 15.08% | | Legend Holdings (International) Limited | Controlled Corporation Interest | 272,926,000 | 15.08% | | Mei Long Developments Limited | Beneficial Owner | 104,750,740 | 5.79% | | Easylead Management Limited | Controlled Corporation Interest | 377,676,740 | 20.86% | | Right Lane Limited | Controlled Corporation Interest | 412,676,740 | 22.80% | | Mr. Cao Zhijiang | Controlled Corporation Interest | 377,676,740 | 20.86% | | Mr. Liu Jinduo | Controlled Corporation Interest | 377,676,740 | 20.86% | | Mr. Zhang Zuxiang | Controlled Corporation Interest | 377,676,740 | 20.86% | | Legend Holdings Corporation | Controlled Corporation Interest | 412,676,740 | 22.80% | | China Kaicheng International Investment Co., Ltd. | Beneficial Owner | 156,424,621 | 8.64% | | Kaicheng Technology Group Co., Ltd. | Beneficial Owner/Controlled Corporation Interest | 416,424,621 | 23.01% | | China National Building Material Group Co., Ltd. | Controlled Corporation Interest | 416,424,621 | 23.01% | | Bank of Communications Trustee Limited | Trustee | 115,620,000 | 6.39% | - As of December 31, 2019, the total number of issued shares was **1,810,147,058 shares**[94](index=94&type=chunk)[102](index=102&type=chunk) [Share Option Schemes and Share Award Scheme](index=19&type=section&id=购股权计划与股份奖励计划) This section details the company's old share option scheme (expired in 2015 but unexercised options remain valid) and new share option scheme (adopted in 2016, no options granted in 2019), as well as the share award scheme adopted in 2011, all aimed at incentivizing and retaining talent - The old share option scheme was adopted on May 30, 2005, and expired on June 22, 2015, but all unexercised share options remain valid[105](index=105&type=chunk)[112](index=112&type=chunk) Details of Unexercised Share Options under Old Share Option Scheme (December 31, 2019) | Participant | Grant Date | Exercise Price per Share (HKD) | Exercise Period | Held on Jan 1, 2019 | Lapsed During Year | Held on Dec 31, 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cui Xiangdong | 13/5/2015 | 1.25 | 13/5/2016-12/5/2022 | 1,920,000 | – | 1,920,000 | | Cui Xiangdong | 13/5/2015 | 1.25 | 13/5/2017-12/5/2022 | 1,440,000 | – | 1,440,000 | | Cui Xiangdong | 13/5/2015 | 1.25 | 13/5/2018-12/5/2022 | 1,440,000 | – | 1,440,000 | | Employees | 13/5/2015 | 1.25 | 13/5/2016-12/5/2022 | 10,676,000 | (440,000) | 10,236,000 | | Employees | 13/5/2015 | 1.25 | 13/5/2017-12/5/2022 | 8,007,000 | (330,000) | 7,677,000 | | Employees | 13/5/2015 | 1.25 | 13/5/2018-12/5/2022 | 8,007,000 | (330,000) | 7,677,000 | | **Total** | | | | **31,490,000** | **(1,100,000)** | **30,390,000** | - The new share option scheme was adopted on February 19, 2016, and no share options were granted, exercised, cancelled, or lapsed under it during 2019[118](index=118&type=chunk) - The share award scheme was adopted on December 12, 2011, to recognize and encourage employee contributions and attract talent. Bank of Communications Trustee Limited was appointed as trustee to hold shares purchased for employees in trust. No shares were granted or vested in 2019[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) [Biographies of Directors, Senior Management, and Company Secretary](index=24&type=section&id=董事、高级管理层及公司秘书的履历) This section provides detailed biographies of the company's directors, senior management, and company secretary, showcasing their extensive experience and professional backgrounds in the building materials industry, corporate management, finance, and technology R&D - Executive Director **Mr. Cui Xiangdong** is the CEO, with over **30 years of experience** in the building materials industry, corporate management, and marketing[132](index=132&type=chunk) - Non-executive Director **Mr. Peng Shou** is the Chairman, a professor-level senior engineer, an expert in inorganic material R&D and engineering design and consulting, with over **35 years of experience** in the building materials industry[133](index=133&type=chunk)[134](index=134&type=chunk) - Senior management includes Senior Vice President **Mr. Li Ping**, Vice Presidents **Mr. Lu Guo**, **Mr. Yang Hongfu**, **Mr. Xu Ning**, Technical Director **Mr. Wang Jianxun**, and Financial Controller **Mr. Han Liming**, all with extensive experience in their respective fields[147](index=147&type=chunk)[148](index=148&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - Company Secretary **Ms. Guo Youli** is a member of The Chartered Governance Institute and The Hong Kong Chartered Governance Institute, holding an MBA in International Management[152](index=152&type=chunk) [Connected Transactions and Continuing Connected Transactions](index=29&type=section&id=关连交易及持续关连交易) This section discloses several connected transactions and continuing connected transactions entered into by the Group in 2019, primarily involving machine procurement, engineering services, and raw material procurement with major shareholder Kaicheng Group and its associates, aimed at improving production efficiency, environmental protection, and optimizing procurement strategies - On February 21, 2019, China Glass Technology and CNBM Kaicheng Robot entered into a machine contract for the procurement of a grading and stacking robot system, with a contract price of **RMB 3.38 million**[156](index=156&type=chunk) - China Glass Technology, Weihai China Glass, and Shenzhen Kaicheng Technology Engineering entered into an engineering contract for flue gas treatment engineering design, equipment procurement, and installation, with a total contract price of **RMB 6 million**[158](index=158&type=chunk)[159](index=159&type=chunk) - Xianyang China Glass and Shenzhen Kaicheng Technology Engineering entered into the Xianyang Flue Gas Treatment Contract, providing flue gas treatment system construction services, with a total contract price of **RMB 19.88 million**[162](index=162&type=chunk) - Shaanxi China Glass and China Building Material International Engineering Group Co., Ltd. entered into an engineering contract for the cold repair and renovation of a float glass production line, with a contract price of **RMB 90.98 million**[166](index=166&type=chunk) - Jiangsu Suhuada and China Building Material International Engineering Group Co., Ltd. entered into an engineering contract for the establishment of a new high-grade automotive glass production line, with a contract price of **RMB 286 million**[167](index=167&type=chunk) - China Glass Investment and Anhui Huaguang Optoelectronic Materials Technology Group Co., Ltd. entered into a procurement framework agreement for raw and fuel materials, with a service period of three years and an annual cap of up to **RMB 980 million**[171](index=171&type=chunk)[173](index=173&type=chunk) [Post-Reporting Period Events and Business Operations](index=34&type=section&id=报告期后事项与业务运营) This section discusses the uncertain impact of the COVID-19 pandemic on the Group's operating environment after the reporting period and highlights the contingency measures taken. It also reviews the Group's relationships with employees, customers, and suppliers, and its performance in complying with environmental policies and laws - The COVID-19 pandemic presents additional uncertainties for the Group's operating environment, but directors believe the impact is temporary and have formulated contingency measures, including reassessing sales and price fluctuations, inventory adequacy, and strengthening cash management[179](index=179&type=chunk) - The Group values its employees, adhering to "people-oriented" and "innovative mechanism" management philosophies, providing competitive remuneration, and fostering a positive and healthy corporate culture[182](index=182&type=chunk) - The Group values long-term relationships with customers, establishing a strict customer complaint feedback mechanism through pre-training, on-site guidance, and a national complaint hotline[183](index=183&type=chunk) - The Group has established a unified supplier management system, selecting and reserving high-quality suppliers through bidding and negotiation procurement processes, and providing free technical guidance[184](index=184&type=chunk) - The Group's environmental facilities are industry-leading, strictly enforcing environmental laws and regulations, with all environmental indicators meeting or exceeding national standards[185](index=185&type=chunk) - For the year ended December 31, 2019, the Group had no significant impact on its business and operations due to serious violations of applicable laws and regulations[188](index=188&type=chunk) Environmental, Social and Governance Report [Working Environment](index=37&type=section&id=工作环境) The Group prioritizes employee well-being, adhering to labor laws, offering competitive compensation, ensuring health and safety, and providing diverse training and fair promotion opportunities - The Group strictly complies with the "Labor Law of the People's Republic of China" and the "Labor Contract Law of the People's Republic of China," paying social insurance for employees and providing subsidies for transportation, communication, high temperatures, and meals[196](index=196&type=chunk) 2019 Employee Count by Employment Type, Age Group, and Region | Employment Type | Under 35 | 35-60 | Over 60 | Total | Shandong | Shaanxi | Jiangsu | Inner Mongolia | Other | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Contract Employees | 583 | 2,830 | 6 | 3,419 | 1,111 | 509 | 1,173 | 284 | 342 | - The Group implements the policy of "safety first, prevention foremost, comprehensive governance," promoting an integrated management system covering quality, environment, energy, safety, and occupational health[200](index=200&type=chunk) - In 2019, the company provided new employee onboarding training, on-the-job skills training, professional position advancement training, academic seminars, external training, internal trainer training, and senior management comprehensive skills training[205](index=205&type=chunk) 2019 Employee Training by Category | Category | Management | Middle Management | Administration | Professional Technical | Marketing | Production Staff | Other | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Number of Employees | 85 | 360 | 451 | 212 | 61 | 1,789 | 461 | 3,419 | | Average Number Trained | 85 | 359 | 446 | 209 | 61 | 1,749 | 325 | 3,234 | | Percentage of Employees Trained | 100% | 99.7% | 98.8% | 98.6% | 100% | 97.8% | 70.5% | 94.6% | - The company's recruitment follows principles of fairness, openness, and voluntariness, signing labor contracts, prohibiting child labor and forced labor, and providing fair training and promotion opportunities[208](index=208&type=chunk)[210](index=210&type=chunk) [Environmental Protection](index=41&type=section&id=环境保护) The Group maintains green environmental practices, investing in facilities, achieving pollutant emissions below national standards, and actively developing energy-saving glass and resource conservation initiatives - The Group's environmental facility operating expenses in 2019 were **RMB 72.86 million**, largely consistent with 2018[216](index=216&type=chunk) - In 2019, the concentration of soot emissions was **47.1%** of the national standard, sulfur dioxide emissions **32.88%**, and nitrogen oxide emissions **44.58%**, all better than national standards, with annual total pollutant emissions showing a downward trend[216](index=216&type=chunk) 2019 Total Emissions | Pollutant Name | 2019 Total (tons) | 2018 Total (tons) | Year-on-year Decrease | | :--- | :--- | :--- | :--- | | Sulfur Dioxide | 494 | 671 | 26.4% | | Nitrogen Oxides | 1,720 | 2,182 | 21.2% | | Particulate Matter | 103 | 137 | 24.9% | - In 2019, the Group generated approximately **100 tons** of denitration waste catalysts, with a **100%** legal disposal rate[227](index=227&type=chunk) 2017-2019 Annual Total Carbon Dioxide Emissions by Base | Base | 2019 (tCO2) | 2018 (tCO2) | 2017 (tCO2) | | :--- | :--- | :--- | :--- | | Dongtai Base | 287,102 | 282,900 | 285,372 | | Weihai Base | 421,675 | 522,000 | 513,504 | | Suqian Base | 65,764 | 87,400 | 195,188 | | Linyi Base | 137,413 | 162,700 | 152,293 | | Wuhai Base | 176,380 | 167,000 | 165,688 | | Xianyang Base | 174,561 | 294,000 | 318,423 | | **Total** | **1,262,895** | **1,516,000** | **1,630,468** | | Density (tCO2/ton glass product) | 0.75 | 0.81 | 0.83 | - The Group uses coke oven gas as its primary fuel, increases the use of natural gas clean energy, and builds waste heat power generation systems to achieve a virtuous cycle of energy utilization[232](index=232&type=chunk)[234](index=234&type=chunk) 2019 Total Energy Consumption | Energy Name | Unit | 2019 Total | 2018 Total | | :--- | :--- | :--- | :--- | | Coke Oven Gas | 10,000 cubic meters | 27,138 | 27,182 | | Petroleum Coke Powder | tons | 88,080 | 102,064 | | Fuel Oil | tons | 40,197 | 34,856 | | Natural Gas | 10,000 cubic meters | 5,471 | 4,941 | | Electricity | 10,000 kWh | 18,067 | 21,740 | | Coal | tons | 53,082 | 96,924 | - The Group conserves timber resources through bare packaging or iron frame packaging processes and improved wooden box structures; production lines adopt closed-loop circulating water systems, with indirect cooling water circulation rates exceeding **98%**[236](index=236&type=chunk) [Operating Practices](index=47&type=section&id=营运惯例) The Group employs a unified supplier management system, fostering long-term partnerships with over 170 qualified suppliers through fair procurement, emphasizing green supply chain management and compliance - The Group has established a unified supplier management system, forming a fair and just supplier evaluation system through bidding and negotiation procurement[241](index=241&type=chunk) - As of December 31, 2019, the company procured raw and fuel materials and production line equipment from over **170 qualified suppliers**, without reliance on any specific supplier[241](index=241&type=chunk) - The company imposes strict environmental and safety requirements on suppliers, ensuring their production complies with national policies, products meet environmental and safety standards, and fuels are clean energy[242](index=242&type=chunk) [Product Responsibility](index=48&type=section&id=产品责任) The Group upholds product quality through full-process control, stricter-than-national standards, enhanced customer service, and R&D of high-end energy-saving glass with patented technologies - The Group implements full-process quality control from "product design to product manufacturing to after-sales service," executing "Premium Product Quality Enterprise Standards" and "Product Quality Inspection and Control Procedures" stricter than national standards, and strictly operates according to the **ISO9001:2015** quality management system[244](index=244&type=chunk) - The company enhances pre-sales and after-sales service levels and customer satisfaction through various methods, including pre-training, on-site guidance, a national marketing service and complaint hotline, and a mobile APP[245](index=245&type=chunk) - The Group holds **dozens of national and world-class proprietary R&D patents** for glass products and won the "Excellent R&D Achievement Award" in the "Second Generation China Float Glass Technology and Equipment Innovation R&D Project"[248](index=248&type=chunk) - Dongtai Base and Weihai Base achieved breakthroughs in R&D trials for online Low-E products with emissivity **≤0.15 and ≤0.13**, and Weihai Base successfully mass-produced online Sun-E specialty products[248](index=248&type=chunk) [Anti-Corruption and Community Involvement](index=49&type=section&id=反贪污与社会参与) The Group maintains strict anti-corruption compliance with internal controls and commitment letters, reporting no legal cases in 2019, and actively engages in charitable activities with increased donations - The Group has an Ethics and Compliance Supervision Department and Committee, and has formulated the "China Glass Holdings Limited Whistleblowing Management System" to strengthen internal control mechanisms[249](index=249&type=chunk) - Middle and senior management and external business managers are required to sign the "Cadre Integrity and Law-Abiding Operation Commitment Letter," accepting supervision from employees and customers[249](index=249&type=chunk) - For the year ended December 31, 2019, neither the Group nor its employees were involved in any legal cases concerning corrupt activities[250](index=250&type=chunk) - The Group actively participates in public welfare and charitable activities, establishing hardship relief funds for the areas where its subsidiaries are located, providing student aid, and visiting employees and their relatives facing difficulties[251](index=251&type=chunk) - Charitable donations in 2019 amounted to **RMB 621,452**, a significant increase from **RMB 358,035** in 2018[251](index=251&type=chunk) Corporate Governance Report [Corporate Governance Framework and Board Operations](index=50&type=section&id=企业管治框架与董事会运作) The Group adheres to strong corporate governance, complying with relevant codes, with the Board leading strategy, overseeing performance, and ensuring effective risk management and internal controls - The company has complied with the applicable code provisions of the "Corporate Governance Code," except for a deviation from code provision A.2.7 (the chairman should hold a meeting with the independent non-executive directors at least once a year without the presence of other directors)[254](index=254&type=chunk) - The company has adopted the "Model Code for Securities Transactions by Directors of Listed Issuers," and all directors have confirmed compliance[255](index=255&type=chunk) - The Board is responsible for effectively leading and controlling the company, formulating Group objectives, strategies, policies, and business plans, and monitoring and controlling operational and financial performance[259](index=259&type=chunk) - The roles of Chairman **Mr. Peng Shou** and CEO **Mr. Cui Xiangdong** are held by different individuals to maintain independence and balanced judgment[263](index=263&type=chunk) - The Board comprises eight directors, including one executive director, four non-executive directors, and three independent non-executive directors, with the number of independent non-executive directors exceeding **one-third**[264](index=264&type=chunk) - The company encourages all directors to participate in continuous professional development to update their knowledge and skills, ensuring informed and significant contributions to the Board[273](index=273&type=chunk) [Board Committees](index=55&type=section&id=董事委员会) The Board operates through Audit, Nomination, Remuneration, and Strategy Committees, each with defined responsibilities for financial oversight, director selection, compensation, and strategic review - The primary responsibilities of the Audit Committee are to provide recommendations on the appointment, reappointment, and removal of external auditors, review financial statements, and oversee risk management and internal control systems[279](index=279&type=chunk) - The primary responsibilities of the Nomination Committee include reviewing the Board's structure, size, and composition, identifying suitable director candidates, and making recommendations on director appointments or re-elections[284](index=284&type=chunk) - The primary responsibilities of the Remuneration Committee include making recommendations to the Board on the overall remuneration policy and structure for directors and senior management, and proposing remuneration packages for executive directors[298](index=298&type=chunk) - The Strategy Committee is primarily responsible for reviewing the company's medium- and long-term strategies[300](index=300&type=chunk) Attendance Record of Board and Board Committee Meetings (2019) | Director Name | Board Meetings | Audit Committee Meetings | Nomination Committee Meetings | Remuneration Committee Meetings | AGM | EGM | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Cui Xiangdong | 4/4 | – | – | – | 1/1 | 2/2 | | Mr. Peng Shou | 4/4 | 2/2 | – | 1/1 | 1/1 | 0/2 | | Mr. Zhao Linghuan | 4/4 | – | – | – | 0/1 | 0/2 | | Mr. Zhou Cheng | 4/4 | – | 1/1 | – | 1/1 | 0/2 | | Mr. Zhang Jinshu | 4/4 | – | – | – | 1/1 | 2/2 | | Mr. Zhang Baiheng | 4/4 | 2/2 | 1/1 | 1/1 | 1/1 | 0/2 | | Mr. Zhao Lihua | 4/4 | 2/2 | 1/1 | 1/1 | 1/1 | 0/2 | | Mr. Chen Huachen | 4/4 | 2/2 | – | – | 1/1 | 1/2 | [Accountability, Risk Management, and Company Secretary](index=61&type=section&id=问责、风险管理与公司秘书) The Board ensures true and fair financial statements, with KPMG as auditor, and oversees risk management and internal controls, supported by the Company Secretary for governance matters - The Board confirms its responsibility for preparing financial statements, ensuring they are true and fair, and is committed to assessing the Group's performance fairly, clearly, and understandably[305](index=305&type=chunk) - KPMG is the company's auditor, with audit fees of **RMB 7 million** for 2019[308](index=308&type=chunk) - The Board is responsible for establishing and maintaining sound and effective risk management and internal control systems, with the Audit Committee assisting in overseeing their effectiveness[310](index=310&type=chunk)[311](index=311&type=chunk) - Company Secretary **Ms. Guo Youli** is a full-time employee, reporting to the Chairman, responsible for advising the Board on corporate governance matters, and received no less than **15 hours** of professional training in 2019[315](index=315&type=chunk) [Shareholders' Rights and Dividend Policy](index=63&type=section&id=股东权利与股息政策) This section outlines the procedures for shareholders to convene extraordinary general meetings, propose resolutions, and make inquiries to the Board. It also details the company's dividend policy, aimed at balancing shareholder returns with prudent capital management, considering the Group's financial performance, reserves, liquidity, and future development - Shareholders can, in accordance with Section 74 of the Bermuda Companies Act, requisition the Board to convene an extraordinary general meeting by holding not less than **one-tenth** of the paid-up share capital carrying voting rights[317](index=317&type=chunk) - Shareholders can, in accordance with Article 103 of the company's bye-laws, submit a written notice to the company's principal office at least **seven days** before the date of the general meeting to propose any person for election as a director[325](index=325&type=chunk) - Shareholders wishing to make inquiries to the Board can mail their questions to the company's principal place of business in Hong Kong[326](index=326&type=chunk) - The dividend policy aims to strike a balance between shareholder expectations and prudent capital management through a sustainable dividend policy, allowing shareholders to share in the company's profits while retaining sufficient cash reserves for operations and future development[327](index=327&type=chunk)[328](index=328&type=chunk) - The Board considers the Group's actual and expected financial performance, retained earnings, liquidity position, loan restrictions, business operating strategies, economic conditions, and other internal and external factors when deciding on dividend distribution[329](index=329&type=chunk)[330](index=330&type=chunk) [Communication with Shareholders](index=66&type=section&id=与股东进行沟通) The company highly values communication with shareholders, ensuring information transparency and timely disclosure of corporate information through various channels such as general meetings, regular investor and analyst meetings, and the company website, to promote shareholders' understanding of the Group's strategies and performance - The company has adopted a shareholder communication policy, maintaining communication with shareholders and investors through channels such as general meetings and regular investor and analyst meetings[333](index=333&type=chunk)[337](index=337&type=chunk) - In 2019, the Chairman and other Board members (including chairpersons of various Board committees) and the external auditor attended the Annual General Meeting and answered questions[336](index=336&type=chunk) - The company website (www.chinaglassholdings.com) contains corporate information, interim and annual reports, announcements, and circulars published by the company, as well as updates on the Group's latest developments[337](index=337&type=chunk) Independent Auditor's Report [Auditor's Opinion and Basis](index=68&type=section&id=核数师意见与基础) KPMG issued an unmodified opinion on the consolidated financial statements of China Glass Holdings Limited and its subsidiaries for the year ended December 31, 2019, stating that they present a true and fair view of the Group's financial position, performance, and cash flows, and comply with Hong Kong Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance - The auditor issued an **unmodified opinion** on the consolidated financial statements[341](index=341&type=chunk) - The consolidated financial statements present a true and fair view of the Group's financial position, performance, and cash flows in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance[341](index=341&type=chunk) - The audit was conducted in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants, and the auditor is independent of the Group and has fulfilled its ethical responsibilities[342](index=342&type=chunk) [Key Audit Matters](index=68&type=section&id=关键审计事项) This section lists the most significant key audit matters in the audit of the current period's consolidated financial statements, including assessing the Group's ability to continue as a going concern (due to net current liabilities), potential impairment of property, plant and equipment, and potential impairment of goodwill, all of which involve significant management judgment and inherent uncertainty - Key audit matters include assessing the Group's ability to continue as a going concern, as the Group had net current liabilities of **RMB 1.345 billion** as of December 31, 2019[347](index=347&type=chunk) - Assessing the potential impairment of property, plant and equipment is a key audit matter because it is the Group's most significant asset, and some cash-generating units have sustained losses, involving significant management judgment[353](index=353&type=chunk) - Assessing potential goodwill impairment is a key audit matter, involving the impairment assessment of goodwill arising from the acquisition of OGT Group, which is inherently subjective and requires significant judgment and estimation[356](index=356&type=chunk) [Directors' and Auditor's Responsibilities](index=73&type=section&id=董事与核数师责任) This section clarifies the directors' responsibilities for preparing the consolidated financial statements, including assessing going concern ability and internal controls. It also outlines the auditor's responsibilities, aiming to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement and to report an audit opinion to shareholders - Directors are responsible for preparing consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance, and for internal controls[361](index=361&type=chunk) - The auditor's objective is to obtain reasonable assurance about whether the consolidated 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 an opinion[363](index=363&type=chunk) - The auditor's responsibilities include identifying and assessing risks of material misstatement, understanding internal controls, evaluating the appropriateness of accounting policies and estimates, and concluding on the going concern basis of accounting[365](index=365&type=chunk)[366](index=366&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk) Consolidated Statement of Profit or Loss [Consolidated Profit or Loss for 2019](index=76&type=section&id=2019年度综合损益) This consolidated statement of profit or loss presents the Group's financial performance for the year ended December 31, 2019, showing a year-on-year decrease in revenue and gross profit, but an increase in other income. Profit for the year was RMB 72,704 thousand, lower than in 2018 2019 Consolidated Statement of Profit or Loss Key Data | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 2,369,230 | 2,617,725 | | Cost of Sales | (2,084,588) | (2,207,630) | | Gross Profit | 284,642 | 410,095 | | Other Income | 319,597 | 230,849 | | Operating Profit | 275,258 | 313,826 | | Finance Costs | (185,728) | (160,805) | | Profit Before Tax | 89,428 | 153,134 | | Income Tax | (16,724) | (49,060) | | Profit for the Year | 72,704 | 104,074 | | Basic Earnings Per Share (RMB cents) | 4.87 | 5.45 | - Of the profit for the year, **RMB 82,570 thousand** was attributable to equity holders of the Company, and **RMB (9,866) thousand** was attributable to non-controlling interests[376](index=376&type=chunk) Consolidated Statement of Profit or Loss and Other Comprehensive Income [Consolidated Profit or Loss and Other Comprehensive Income for 2019](index=77&type=section&id=2019年度综合损益及其他全面收益) This consolidated statement of profit or loss and other comprehensive income lists the Group's profit for the year and other comprehensive income items for the year ended December 31, 2019, including net changes in equity securities measured at fair value and exchange differences, resulting in a total comprehensive income for the year of RMB 62,673 thousand 2019 Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Profit for the Year | 72,704 | 104,074 | | Other Comprehensive Income (before and after tax) | | | | - Equity securities measured at fair value - Net change in fair value reserve (non-recyclable) | (191) | (209) | | - Exchange differences arising from translation of financial statements of the Company and certain subsidiaries into presentation currency | (9,840) | (1,725) | | Total Comprehensive Income for the Year | 62,673 | 102,140 | - Of the total comprehensive income for the year, **RMB 72,542 thousand** was attributable to equity holders of the Company, and **RMB (9,869) thousand** was attributable to non-controlling interests[380](index=380&type=chunk) Consolidated Statement of Financial Position [Consolidated Financial Position as of December 31, 2019](index=78&type=section&id=2019年12月31日综合财务状况) The 2019 consolidated financial position shows a slight decrease in non-current assets, an increase in current assets, improved but still negative net current liabilities, and a modest increase in total equity 2019 Consolidated Statement of Financial Position Key Data (December 31) | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment | 4,180,455 | 4,295,827 | | Right-of-use Assets | 309,783 | – | | Goodwill | 97,730 | 107,936 | | Total Non-current Assets | 5,011,321 | 5,054,874 | | **Current Assets** | | | | Inventories | 549,830 | 492,293 | | Trade and Other Receivables | 1,004,960 | 803,605 | | Cash and Bank Balances | 584,039 | 606,832 | | Total Current Assets | 2,176,790 | 1,919,836 | | **Current Liabilities** | | | | Trade and Other Payables | 1,307,955 | 1,581,995 | | Bank and Other Loans | 1,898,383 | 2,065,400 | | Total Current Liabilities | 3,521,826 | 3,863,764 | | **Net Current Liabilities** | (1,345,036) | (1,943,928) | | **Non-current Liabilities** | | | | Bank and Other Loans | 1,313,543 | 728,983 | | Total Non-current Liabilities | 1,416,566 | 889,015 | | **Net Assets** | 2,249,719 | 2,221,931 | | **Total Equity** | 2,249,719 | 2,221,931 | - HKFRS 16 was first applied on January 1, 2019, recognizing right-of-use assets of **RMB 309,783 thousand** and lease liabilities[385](index=385&type=chunk)[388](index=388&type=chunk) - Net current liabilities improved from **(RMB 1,943,928) thousand** in 2018 to **(RMB 1,345,036) thousand** in 2019[385](index=385&type=chunk) Consolidated Statement of Changes in Equity [Consolidated Changes in Equity for 2019](index=80&type=section&id=2019年度综合权益变动) This statement details the 2019 changes in the Group's equity components, including profit, other comprehensive income, share premium transfers, and dividend payments, leading to a slight increase in total equity 2019 Consolidated Changes in Equity Key Data | Equity Component | Jan 1, 2019 (RMB thousand) | Profit/(Loss) for the Year (RMB thousand) | Other Comprehensive Income (RMB thousand) | Share Premium Transfer (RMB thousand) | Dividends Paid (RMB thousand) | Dec 31, 2019 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Share Capital | 84,867 | – | – | – | – | 84,867 | | Share Premium | 2,081,912 | – | – | (301,663) | – | 1,780,249 | | Shares held for Share Award Scheme | (64,253) | – | – | – | – | (64,253) | | Capital Reserve | 33,198 | – | – | – | – | 33,198 | | Statutory Reserve | 40,785 | – | – | – | – | 40,785 | | Other Reserves | (447,539) | – | – | – | – | (447,539) | | Exchange Reserve | (17,604) | – | (9,840) | – | – | (27,444) | | Fair Value Reserve (non-recyclable) | 657 | – | (188) | – | – | 469 | | Retained Earnings | 325,192 | 82,570 | – | 269,029 | (32,634) | 676,791 | | **Total Equity Attributable to Equity Holders of the Company** | **2,037,215** | **82,570** | **(10,028)** | **(32,634)** | **(32,634)** | **2,077,123** | | Non-controlling Interests | 184,716 | (9,866) | (3) | – | (2,251) | 172,596 | | **Total Equity** | **2,221,931** | **72,704** | **(10,031)** | **(32,634)** | **(34,885)** | **2,249,719** | - Profit for the year was **RMB 72,704 thousand**, of which **RMB 82,570 thousand** was attributable to equity holders of the Company[398](index=398&type=chunk) - Total comprehensive income for the year was **RMB 62,673 thousand**[398](index=398&type=chunk) - **RMB 269,029 thousand** was transferred between the Company's share premium account and retained earnings account to offset prior year losses[398](index=398&type=chunk) - An interim dividend of **RMB 32,634 thousand** was approved and paid during the year[398](index=398&type=chunk) Consolidated Statement of Cash Flows [Consolidated Cash Flows for 2019](index=82&type=section&id=2019年度综合现金流量) This consolidated statement of cash flows presents the Group's cash inflows and outflows for the year ended December 31, 2019. Net cash from operating activities significantly decreased, net cash used in investing activities decreased, and net cash from financing activities also showed a downward trend, resulting in a net decrease in cash and cash equivalents 2019 Consolidated Statement of Cash Flows Key Data | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 138,344 | 296,393 | | Net Cash Used in Investing Activities | (240,552) | (417,317) | | Net Cash from Financing Activities | 94,218 | 140,725 | | Net (Decrease)/Increase in Cash and Cash Equivalents | (7,990) | 19,801 | | Cash and Cash Equivalents at December 31 | 565,188 | 570,832 | - Net cash from operating activities decreased by **53.3%** year-on-year[402](index=402&type=chunk) - In investing activities, payments for purchase of property, plant and equipment amounted to **RMB (702,880) thousand**, and proceeds from relocation of production plants and disposal of property, plant and equipment amounted to **RMB 438,150 thousand**[402](index=402&type=chunk) - In financing activities, proceeds from bank and other loans amounted to **RMB 3,062,777 thousand**, and repayment of bank and other loans amounted to **RMB (2,648,248) thousand**[405](index=405&type=chunk) Notes to the Consolidated Financial Statements [1. Company Information](index=84&type=section&id=1.%20公司资料) This note provides essential company information, including its incorporation details, listing status, and the Group's core business activities in glass production, marketing, and related services - The Company was incorporated in Bermuda as an exempted company on October 27, 2004, and its shares were listed on The Stock Exchange of Hong Kong Limited on June 23, 2005[410](index=410&type=chunk) - The Group is principally engaged in the production, marketing and distribution of glass and glass products, the design and installation of pharmaceutical glass production lines, and the research and development of glass production technology[410](index=410&type=chunk) [2. Principal Accounting Policies](index=84&type=section&id=2.%20主要会计政策) This note outlines the Group's key accounting policies, including compliance with HKFRS, the going concern basis, and the impact of HKFRS 16 adoption, alongside treatments for various financial items - The financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, Hong Kong Generally Accepted Accounting Principles, and the disclosure requirements of the Hong Kong Companies Ordinance[411](index=411&type=chunk) - The Group first applied HKFRS 16—Leases on January 1, 2019, using the modified retrospective approach, with no restatement of comparative information[417](index=417&type=chunk) - As of December 31, 2019, the Group had net current liabilities of **RMB 1.345 billion**, but directors believe the Group has sufficient funds to continue as a going concern with the financial support of its largest shareholder[412](index=412&type=chunk) Impact of Adopting HKFRS 16 on Consolidated Statement of Financial Position (January 1, 2019) | Item | Carrying Amount as of Dec 31, 2018 (RMB thousand) | Capitalization of Operating Lease Contracts (RMB thousand) | Reclassification of Right-of-use Assets (RMB thousand) | Carrying Amount as of Jan 1, 2019 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Property, Plant and Equipment | 4,295,827 | – | (69,595) | 4,226,232 | | Right-of-use Assets | – | 5,903 | 329,896 | 335,799 | | Prepaid Lease Payments | 260,301 | – | (260,301) | – | | Lease Liabilities (Current) | 22,262 | 1,967 | – | 24,229 | | Lease Liabilities (Non-current) | 29,723 | 3,936 | – | 33,659 | [3. Accounting Judgments and Estimates](index=113&type=section&id=3.%20会计判断及估计) This note details management's critical accounting judgments, such as lease identification, and key estimation uncertainties, including impairment of assets, depreciation, amortization, and deferred tax - Management identified the lease component of machinery and equipment in service contracts as a lease, even if the legal form was not a lease[574](index=574&type=chunk) - The Group's finance lease agreements were substantially identified as loans collateralized by machinery and equipment, thus the related machinery and equipment were not derecognized[574](index=574&type=chunk) - Estimation uncertainties primarily arise from impairment of trade and contract assets, impairment of durable assets, depreciation and amortization of property, plant and equipment and intangible assets, deferred tax, and determination of lease terms[578](index=578&type=chunk)[579](index=579&type=chunk)[582](index=582&type=chunk)[583](index=583&type=chunk)[584](index=584&type=chunk) [4. Revenue and Segment Reporting](index=116&type=section&id=4.%20收入及分部报告) This note breaks down 2019 revenue by product/service and geographical area, identifying five reportable segments and noting a diversified customer base 2019 Revenue by Major Product or Service Line | Product or Service Line | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Sales of Glass Products | 2,235,985 | 2,581,080 | | Revenue from Service Contracts | 115,000 | 36,645 | | Sales of Spare Parts | 18,245 | – | | **Total** | **2,369,230** | **2,617,725** | - The Group has a diversified customer base, with no single customer transaction exceeding **10% of total revenue** in 2019[589](index=589&type=chunk) - The Group has five reportable segments: clear glass products, tinted glass products, coated glass products, energy-saving and new energy glass products, and design and installation services[595](index=595&type=chunk)[596](index=596&type=chunk)[597](index=597&type=chunk) 2019 Reportable Segment Revenue and Gross Profit | Segment | Revenue (RMB thousand) | Gross Profit (RMB thousand) | | :--- | :--- | :--- | | Clear Glass Products | 864,107 | 86,852 | | Tinted Glass Products | 319,072 | 26,198 | | Coated Glass Products | 556,248 | 79,743 | | Energy-saving and New Energy Glass Products | 496,558 | 77,268 | | Design and Installation Services | 133,245 | 14,581 | | **Total** | **2,369,230** | **284,642** | 2019 Revenue and Specific Non-current Assets by Geographical Area | Region | Revenue (RMB thousand) | Specific Non-current Assets (RMB thousand) | | :--- | :--- | :--- | | Mainland China and Hong Kong | 1,960,258 | 3,673,729 | | Middle East | 83,140 | – | | Bangladesh | 43,357 | – | | South Korea | 19,530 | – | | Italy | 39,936 | 221,173 | | Nigeria | 4,261 | 824,879 | | Other Countries | 218,748 | 7,074 | | **Total** | **2,369,230** | **4,726,855** | [5. Other Income](index=120&type=section&id=5.%20其他收入) This note lists the Group's other income sources for 2019, with net gains/compensation from relocation of production plants and government grants being the main contributors, leading to a significant increase in total other income 2019 Other Income Details | Income Item | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Net gain/compensation from relocation of production plants | 221,214 | 177,407 | | Government grants | 74,603 | 6,664 | | Interest income from financial assets measured at amortized cost | 4,363 | 4,170 | | Net gain from sales of raw materials and scrap | 6,307 | 6,198 | | Net gain from disposal of property, plant and equipment | 2,439 | 24,638 | | Rental income from investment properties | 833 | – | | Others | 9,838 | 9,610 | | **Total** | **319,597** | **230,849** | - Total other income increased by **38.4%** year-on-year in 2019, mainly due to significant growth in net gains/compensation from relocation of production plants and government grants[610](index=610&type=chunk) [6. Profit Before Tax](index=121&type=section&id=6.%20除税前溢利) This note details the components of the Group's profit before tax for 2019, including finance costs, staff costs, and other items. Finance costs increased due to higher borrowings, staff costs rose due to increased salaries and benefits, and depreciation and amortization expenses were adjusted due to changes in accounting policies 2019 Finance Costs Details | Item | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Interest on bank and other loans | 214,126 | 170,219 | | Finance costs of convertible bonds | 11,457 | 11,079 | | Loss on redemption of convertible bonds | 1,695 | – | | Interest on lease liabilities | 5,804 | 11,242 | | Bank charges and other finance costs | 23,981 | 20,785 | | Less: Amount capitalized in property, plant and equipment | (51,723) | (51,731) | | Fair value change of derivative component of convertible bonds | (6,621) | (4,431) | | Net foreign exchange (gain)/loss | (12,991) | 3,642 | | **Total Finance Costs** | **185,728** | **160,805** | 2019 Staff Costs Details | Item | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Salaries, wages and other benefits | 271,618 | 234,394 | | Contributions to defined contribution retirement plans | 32,360 | 32,696 | | Equity-settled share-based payment expenses—share option scheme | – | 592 | | **Total Staff Costs** | **303,978** | **267,682** | 2019 Other Items Details | Item | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Cost of inventories | 2,079,440 | 2,190,887 | | Auditor's remuneration—audit and other services | 6,980 | 7,380 | | Depreciation and amortization expenses—property, plant and equipment and intangible assets | 215,634 | 239,446 | | Depreciation and amortization expenses—investment properties | 625 | – | | Depreciation and amortization expenses—right-of-use assets | 21,123 | – | | Impairment losses recognized/(reversed) on trade and other receivables and contract assets | 20,528 | (2,260) | [7. Income Tax in Consolidated Statement of Profit or Loss](index=123&type=section&id=7.%20综合损益表内所得税) This note details the composition of income tax in the Group's consolidated statement of profit or loss for 2019, including current tax and deferred tax. Total income tax significantly decreased, mainly due to lower profit before tax and tax-exempt compensation for the relocation of production plants. It also provides a reconciliation of tax expense to accounting profit calculated at applicable tax rates 2019 Income Tax Details in Consolidated Statement of Profit or Loss | Item | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | **Current Tax** | | | | - Provision for the year | 57,486 | 69,004 | | - China withholding tax | 6,000 | – | | - Under/(over) provision in prior years | 44 | (584) | | **Deferred Tax** | | | | - Origination and reversal of temporary differences | (46,806) | (19,360) | | **Total Income Tax** | **16,724** | **49,060** | 2019 Reconciliation of Tax Expense to Accounting Profit | Item | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Profit before tax | 89,428 | 153,134 | | Expected tax at applicable tax rates | 28,811 | 40,459 | | Tax effect of tax-exempt income | (24,382) | – | | Tax effect of China withholding tax | 6,000 | – | | Tax effect of non-deductible expenses | 9,149 | 7,635 | | Tax concessions | (6,568) | (8,550) | | Tax effect of previously unrecognized tax losses and temporary differences recognized and utilized in prior years | (9,903) | (1,955) | | Tax effect of write-down of deferred tax assets | 13,766 | 8,694 | | Under/(over) provision in prior years | 44 | (584) | | **Income Tax** | **16,724** | **49,060** | - The Group's subsidiaries established in China are subject to China corporate income tax at a rate of **25%**, with some subsidiaries enjoying a **15%** preferential tax rate or exemption[629](index=629&type=chunk)[630](index=630&type=chunk)[633](index=633&type=chunk) - Compensation income of **RMB 97.5 million** arising from government land acquisition and relocation of production plants in 2019 was treated as tax-exempt income[635](index=635&type=chunk) [8. Directors' Remuneration](index=126&type=section&id=8.%20董事薪酬) This note details the composition of the Group's directors' remuneration for 2019, including directors' fees, salaries, allowances and benefits in kind, retirement scheme contributions, and discretionary bonuses. Executive Director Mr. Cui Xiangdong received the highest remuneration 2019 Directors' Remuneration Details | Director Name | Directors' Fees (RMB thousand) | Salaries, Allowances and Benefits in Kind (RMB thousand) | Retirement Scheme Contributions (RMB thousand) | Discretionary Bonuses (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Executive Directors** | | | | | | | Mr. Cui Xiangdong | – | 896 | 128 | 632 | 1,656 | | **Non-executive Directors** | | | | | | | Mr. Peng Shou | 1 | – | – | – | 1 | | Mr. Zhou Cheng | 1 | 70 | – | – | 71 | | Mr. Zhang Jinshu | 1 | – |

Financial Performance - In the first half of 2019, China Glass Holdings reported a revenue of approximately RMB 971 million, a year-on-year decrease of 19% due to declining sales volume and average selling prices of glass products [13]. - The company's main business revenue for the first six months of 2019 was approximately RMB 971 million, a decrease of about 19% compared to RMB 1.193 billion in the same period of 2018, primarily due to a 4% decline in average selling price and a 21% drop in sales volume [26]. - Gross profit for the first half of 2019 was approximately RMB 76 million, a decrease of about 65% from RMB 219 million in the same period of 2018, mainly due to the decline in market prices and sales volume of glass products [29]. - Revenue for the six months ended June 30, 2019, was RMB 970,572 thousand, a decrease from RMB 1,193,487 thousand in 2018, representing a decline of approximately 18.7% [109]. - Gross profit for the same period was RMB 75,857 thousand, compared to RMB 218,903 thousand in 2018, indicating a significant drop of about 65.3% [109]. - Net profit for the period was RMB 50,143 thousand, marginally up from RMB 50,116 thousand in 2018, showing a year-on-year increase of 0.1% [109]. - The company reported a total comprehensive income of RMB 57,991 thousand for the six months ended June 30, 2019, compared to RMB 53,480 thousand in the same period of 2018, reflecting an increase of approximately 8.5% [131]. - The company’s net profit for the six months ended June 30, 2019, was RMB 57,991 thousand, compared to RMB 50,143 thousand in the same period of 2018, representing a growth of approximately 15.5% [131]. Sales and Market Performance - The group sold 12.2 million weight cases of main float glass products, with an average selling price of approximately RMB 75 per weight case, representing a 4% decrease compared to the same period last year [13]. - The revenue from glass product sales was RMB 910,303 thousand, a decrease of 24% compared to RMB 1,193,487 thousand in the same period of 2018 [180]. - The revenue from the mainland China market was RMB 759,071 thousand for the six months ended June 30, 2019, down from RMB 907,979 thousand in the same period of 2018 [180]. - The company plans to continue expanding its market presence in regions such as the Middle East and South Korea, with revenues of RMB 66,097 thousand and RMB 18,358 thousand respectively for the six months ended June 30, 2019 [180]. Cost and Expenses - The sales cost for the first half of 2019 was approximately RMB 895 million, down about 8% from RMB 975 million in the same period of 2018, attributed to the decline in sales volume and the increase in raw and fuel material costs [28]. - Administrative expenses rose to RMB 123 million in the first half of 2019, an increase of about 38% compared to RMB 89 million in the same period of 2018, mainly due to increased employee benefits and labor costs related to cold repair production lines [31]. - Financing costs increased to approximately RMB 86 million in the first half of 2019, up about 32% from RMB 65 million in the same period of 2018, due to an increase in average borrowing balance as the company actively expanded financing channels [32]. - The cost of inventory for the six months ended June 30, 2019, was RMB 868,492,000, down 11% from RMB 974,584,000 in 2018 [190]. - Research and development costs (excluding capitalized costs) were RMB 270,000 for the six months ended June 30, 2019, compared to RMB 373,000 in 2018, indicating a decrease of 27.7% [190]. Assets and Liabilities - As of June 30, 2019, the company's current assets rose to approximately RMB 2.293 billion, an increase of about 19% from RMB 1.920 billion at the end of 2018, mainly due to cash and receivables related to government relocation compensation [38]. - Non-current liabilities decreased to approximately RMB 793 million as of June 30, 2019, down about 11% from RMB 889 million at the end of 2018, primarily due to the reclassification of short-term borrowings to current liabilities [39]. - The debt-to-equity ratio as of June 30, 2019, was 0.45, compared to 0.42 at the end of 2018, indicating a slight increase in leverage [41]. - The company’s total liabilities as of June 30, 2019, were RMB 2,037,215 thousand, compared to RMB 2,008,865 thousand as of December 31, 2018, indicating a slight increase in liabilities [131]. - The group’s net current liabilities amounted to RMB 1,964,001,000, slightly up from RMB 1,943,928,000 as of December 31, 2018 [143]. Investments and Capital Expenditures - The company incurred capital expenditures of RMB 338,903 thousand for the purchase of property, plant, and equipment during the six months ended June 30, 2019, compared to RMB 98,198 thousand in the same period of 2018, indicating a substantial increase in investment activities [135]. - The group has not made any significant investments or acquisitions of capital assets during the six months ending June 30, 2019 [43]. - There are no plans for any major investments or acquisitions of capital assets as of the report date [44]. Corporate Governance and Compliance - The company has complied with the Corporate Governance Code and maintained good corporate governance practices during the reporting period [97]. - The audit committee has been established and has reviewed the accounting principles and practices adopted by the group, discussing audit, risk management, and internal control matters [96]. - The financial report has been prepared in accordance with the applicable disclosure requirements of the Hong Kong Stock Exchange and complies with Hong Kong Accounting Standards [140]. - The independent review of the interim financial information was conducted by KPMG, ensuring the accuracy of the financial data presented [140]. Shareholder Information - The total number of shares issued by the company as of June 30, 2019, is 1,810,147,058 shares [49]. - First Fortune Enterprises Limited holds 272,926,000 shares, representing 15.08% of the total shares [54]. - Right Lane Limited holds 412,676,740 shares, representing 22.80% of the total shares [56]. - Easylead Management Limited holds 377,676,740 shares, representing 20.86% of the total shares [54]. - Mei Long Developments Limited holds 104,750,740 shares, representing 5.79% of the total shares [54]. - The board has decided not to declare an interim dividend for the six months ending June 30, 2019, consistent with the previous year [47]. Accounting Standards and Changes - The company adopted the revised Hong Kong Financial Reporting Standard No. 16 on January 1, 2019, impacting the financial reporting and cash flow classification [185]. - The implementation of the new Hong Kong Financial Reporting Standard No. 16 on leases began on January 1, 2019, which introduces a single accounting model for lessees [145]. - The group capitalized all leases, including those previously classified as operating leases, except for short-term leases and low-value asset leases [151]. - The adoption of Hong Kong Financial Reporting Standard 16 resulted in a decrease of RMB 69,595,000 in the carrying value of right-of-use assets as of January 1, 2019, leading to a total carrying value of RMB 4,226,232,000 [162]. Employee Information - The group employed approximately 3,442 employees as of June 30, 2019, a decrease from 3,604 employees as of December 31, 2018, primarily due to increased efficiency and production line relocations [91].

[Company Information](index=2&type=section&id=Company%20Information) The report provides essential company details including board members, committee compositions, principal place of business, registered office, share registrar, principal bankers, auditor, and legal advisors - The report provides essential company details, including board members, committee compositions, principal place of business, registered office, share registrar, principal bankers, auditor, and legal advisors[5](index=5&type=chunk)[7](index=7&type=chunk) [Financial Highlights](index=4&type=section&id=Financial%20Highlights) This section outlines the Group's key performance and financial position over the past five years, showing significant profit growth in 2018 - In 2018, the Group's revenue was **RMB 2.618 billion**, a year-on-year increase of **2.4%**; annual profit was **RMB 104 million**, a significant year-on-year increase of **72.1%**. Total assets and total liabilities both increased[10](index=10&type=chunk)[11](index=11&type=chunk) Five-Year Financial Summary (RMB Thousand) | Indicator | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Performance** | | | | | | | Revenue | 2,617,725 | 2,556,418 | 2,139,650 | 1,968,857 | 2,489,369 | | Gross Profit | 410,095 | 321,576 | 327,256 | 78,290 | 372,249 | | Operating Profit/(Loss) | 313,826 | 206,563 | 161,663 | (425,545) | 201,774 | | Profit/(Loss) for the Year | 104,074 | 60,471 | 20,734 | (480,098) | 13,159 | | **Assets and Liabilities** | | | | | | | Total Assets | 6,974,710 | 6,272,968 | 5,781,637 | 5,645,602 | 6,164,934 | | Total Liabilities | 4,752,779 | 4,108,518 | 3,605,323 | 3,515,001 | 3,575,275 | | Net Assets | 2,221,931 | 2,164,450 | 2,176,314 | 2,130,601 | 2,589,659 | [Chairman's Statement](index=5&type=section&id=Chairman's%20Statement) Chairman Mr. Peng Shou highlights the stable development of the domestic glass industry in 2018 and outlines strategic plans for product structure optimization and global expansion in 2019 - Chairman Mr. Peng Shou noted that in 2018, the domestic glass industry developed steadily amidst capacity reduction and strengthened environmental protection, with the company optimizing its product structure and management. Looking ahead to 2019, the industry's macroeconomic environment is expected to remain stable, and the company will continue to adjust its product structure, expand into new areas such as automotive and pharmaceutical glass, and firmly pursue its 'going global' strategy to improve production efficiency and profitability[13](index=13&type=chunk) [Management Discussion and Analysis](index=6&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth review of the Group's market performance, financial results, capital structure, and future strategic plans for 2018 [Market and Business Review](index=6&type=section&id=Market%20and%20Business%20Review) In 2018, the flat glass industry operated steadily under supply-side reform, with the Group enhancing profitability despite lower sales volume due to a 12% increase in average selling price - The Group acquired **100% equity** of Olivotto Glass Technologies S.p.A. (OGT) in Italy in October 2018, a global leading brand in hollow glass equipment, especially for pharmaceutical neutral glass products, aiming to expand into the domestic pharmaceutical glass market[20](index=20&type=chunk) 2018 Production, Sales Volume, and Average Selling Price Overview | Indicator | 2018 | Year-on-Year Change | | :--- | :--- | :--- | | Glass Production | 33.38 million weight cases | -6% | | Glass Sales Volume | 33.65 million weight cases | -9% | | Average Selling Price | RMB 77/weight case | +12% | - The company actively promoted its 'going global' strategy, including constructing a **500-ton/day float glass production line in Nigeria** (expected to commence operation in 2019) and advancing the **600-ton float glass production line project in Kazakhstan**[31](index=31&type=chunk) - The company made progress in technology R&D, with significant growth in production of specialty products like **online Low-E and Sun-E®**, and is preparing to launch new products such as low self-explosion and single-piece fire-resistant glass[33](index=33&type=chunk) [Financial Review](index=9&type=section&id=Financial%20Review) For FY2018, the Group's revenue grew 2% to RMB 2.618 billion, driven by a 12% increase in average glass selling price, offsetting a 9% decline in sales volume, leading to a 72.1% surge in annual profit 2018 Key Financial Indicators (RMB) | Indicator | 2018 | 2017 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 2.618 billion | 2.556 billion | +2% | | Gross Profit | 410 million | 322 million | +28% | | Gross Profit Margin | 16% | 13% | +3 percentage points | | Annual Profit | 104 million | 60 million | +72.1% | | Finance Costs | 161 million | 106 million | +51% | | Administrative Expenses | 249 million | 213 million | +17% | - Product structure adjustment yielded significant results, with revenue from higher-margin **coated glass and energy-saving & new energy glass products** increasing by **13% and 10%** year-on-year respectively, while colorless glass revenue decreased by 10%[43](index=43&type=chunk) - Other income increased from **RMB 173 million to RMB 231 million**, primarily due to compensation from local government for losses incurred by the Group due to instructed operational suspensions[46](index=46&type=chunk) [Capital Structure, Liquidity, and Financial Resources](index=11&type=section&id=Capital%20Structure,%20Liquidity,%20and%20Financial%20Resources) As of year-end 2018, the Group's cash and cash equivalents were RMB 607 million, with total interest-bearing debt at RMB 2.794 billion, and net current liabilities expanding to RMB 1.944 billion Capital Structure and Solvency Ratios (As of Year-End) | Indicator | 2018 | 2017 | | :--- | :--- | :--- | | Cash and Cash Equivalents | 607 million RMB | 562 million RMB | | Outstanding Bank and Other Loans | 2.794 billion RMB | 2.352 billion RMB | | Debt-to-Equity Ratio (Interest-bearing Debt/Total Assets) | 42% | 40% | | Debt-to-Asset Ratio (Total Liabilities/Total Assets) | 68% | 65% | | Current Ratio | 0.50 | 0.50 | | Net Current Liabilities | 1.944 billion RMB | 1.648 billion RMB | - As of year-end 2018, the Group had approximately **RMB 793 million** in property, plant, and equipment and **RMB 246 million** in accounts and notes receivable pledged as collateral for bank loans[55](index=55&type=chunk) [Outlook and Plans](index=8&type=section&id=Outlook%20and%20Plans) For 2019, the Group plans to focus on product upgrades, downstream industry extension, and advancing overseas projects, anticipating stable flat glass market conditions but rising raw material costs - Prices of major raw and fuel materials such as **soda ash, coal tar, natural gas, and silica sand** are expected to show varying degrees of increase in 2019 due to environmental protection policies and supply-demand dynamics[35](index=35&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - Core work plans for 2019 include: **Product Upgrades** from ordinary float glass to high-end architectural, industrial, automotive, and electronic glass; **Industrial Chain Extension** into downstream areas like automotive glass processing and specialty glass processing; and the **'Going Global' Strategy** to ensure smooth operation of the Nigeria project, advance the Kazakhstan project, and introduce Italian OGT technology into the Chinese market[39](index=39&type=chunk) [Other Disclosures](index=12&type=section&id=Other%20Disclosures) As of year-end 2018, the Group employed approximately 3,604 staff, with no final dividend proposed, and faced RMB exchange rate fluctuation risks without hedging - The Board of Directors does not recommend the payment of a final dividend for the year ended December 31, 2018[62](index=62&type=chunk) - As of year-end 2018, the Group's total number of employees was **3,604**, a decrease from 3,774 in 2017, primarily due to improved labor efficiency and the relocation and suspension of some production lines[61](index=61&type=chunk) [Directors' Report](index=13&type=section&id=Directors'%20Report) This report details the Group's business activities, financial performance, board composition, shareholdings, and compliance with statutory disclosures for the reporting period [Business and Financials](index=13&type=section&id=Business%20and%20Financials) During the reporting period, the Group primarily engaged in the production, marketing, and distribution of glass and glass products, with no final dividend proposed for 2018 - The Board of Directors does not recommend the payment of a final dividend for the year ended December 31, 2018 (2017: nil)[69](index=69&type=chunk) [Directors and Shareholdings](index=14&type=section&id=Directors%20and%20Shareholdings) The report details changes in board members and major shareholder stakes during the year, including holdings by executive and non-executive directors Shareholdings of Directors and Chief Executive (December 31, 2018) | Director Name | Capacity | Total Ordinary Shares (Long Position) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Cui Xiangdong | Beneficial Owner/Controlled Corporation Interest | 19,532,000 | 1.08% | | Mr. Zhou Cheng | Beneficial Owner | 22,672,633 | 1.25% | Major Shareholder Holdings (December 31, 2018) | Shareholder Name | Approximate Percentage of Shareholding | | :--- | :--- | | Kaisheng Technology Group Co., Ltd. (and parties acting in concert) | 23.01% | | Legend Holdings Corporation (and parties acting in concert) | 22.80% | | Bank of Communications Trustee Limited (Share Award Scheme Trustee) | 6.39% | [Share Option and Share Award Schemes](index=18&type=section&id=Share%20Option%20and%20Share%20Award%20Schemes) The company operates an old share option scheme (expired 2015), a new share option scheme (adopted 2016), and a share award scheme (adopted 2011), with details on unexercised options and share purchases - The old share option scheme expired on June 22, 2015, with no new options to be granted. As of year-end 2018, **31,490,000 share options** granted in 2015 remained unexercised, with an exercise price of **HKD 1.25**[106](index=106&type=chunk)[108](index=108&type=chunk)[111](index=111&type=chunk) - The company adopted a new share option scheme on February 19, 2016, with a maximum of **181,014,705 shares** available for grant. As of year-end 2018, no options had been granted under this scheme[112](index=112&type=chunk)[117](index=117&type=chunk) - As of year-end 2018, the trustee of the share award scheme (Bank of Communications Trustee Limited) purchased **29,620,000 shares** in the market during the year for a total consideration of **HKD 18,794,053**. No shares were granted or vested to directors and employees during the year[125](index=125&type=chunk)[127](index=127&type=chunk) [Biographies of Directors, Senior Management, and Company Secretary](index=23&type=section&id=Biographies%20of%20Directors,%20Senior%20Management,%20and%20Company%20Secretary) This section provides detailed personal biographies of the company's executive, non-executive, and independent non-executive directors, senior management, and company secretary [Other Statutory Disclosures](index=28&type=section&id=Other%20Statutory%20Disclosures) During the reporting period, the Group had no significant related party transactions requiring disclosure under listing rules and maintained sufficient public float, with the acquisition of OGT being the most significant investment - On September 27, 2018, the company entered into an agreement to acquire **100% equity of Olivotto Glass Technologies S.p.A. (OGT)** in Italy for a consideration of **Euro 21,445,142**. OGT primarily produces equipment for neutral pharmaceutical glass, daily-use glass, and mineral wool. Upon completion, OGT became a wholly-owned subsidiary of the company[165](index=165&type=chunk) - The company has maintained a public float of not less than **25%** of its issued share capital as required by the Listing Rules[152](index=152&type=chunk) [Environmental, Social and Governance Report](index=31&type=section&id=Environmental,%20Social%20and%20Governance%20Report) This report details the Group's commitments and performance in fostering a positive work environment, protecting the environment, ensuring responsible operating practices, and engaging in anti-corruption and community initiatives [Work Environment](index=31&type=section&id=Work%20Environment) As of year-end 2018, the Group employed 3,604 staff, primarily aged 35-60, providing competitive compensation, emphasizing health and safety, and offering diverse training opportunities Employee Structure as of Year-End 2018 | Category | Number of Employees | Percentage | | :--- | :--- | :--- | | Total Employees | 3,604 | 100% | | Under 35 years old | 630 | 17.5% | | 35-60 years old | 2,967 | 82.3% | | Over 60 years old | 7 | 0.2% | - In 2018, **86%** of the Group's employees received training, with **100%** of senior and middle management receiving training[181](index=181&type=chunk) [Environmental Protection](index=34&type=section&id=Environmental%20Protection) The Group is committed to energy conservation and emission reduction, with environmental facility operating costs of RMB 74.5 million in 2018, and achieved reduced greenhouse gas emissions through various initiatives Total Emissions of Major Air Pollutants (Tons) in 2018 | Pollutant Name | 2018 Total | 2017 Total | | :--- | :--- | :--- | | Sulfur Dioxide | 671 | 1,018 | | Nitrogen Oxides | 2,183 | 2,104 | | Particulate Matter | 137 | 126 | - The Group's greenhouse gas emissions in 2018 were **1.516 million tons**, a decrease from 1.6305 million tons in 2017, primarily due to the shutdown and cold repair of two production lines[196](index=196&type=chunk) - Through its waste heat power generation system, the Group generated **89.392 million KWh** in 2018, supplying **28.28%** of the total electricity consumption across its bases. Additionally, rooftop photovoltaic power generation projects at Suqian and Dongtai bases have been connected to the grid[201](index=201&type=chunk) [Operating Practices and Product Responsibility](index=38&type=section&id=Operating%20Practices%20and%20Product%20Responsibility) The Group maintains a unified supplier management system with environmental and safety requirements, ensures product quality through strict standards and ISO9001:2015 certification, and provides comprehensive customer service - The Group established a green supply chain management philosophy, requiring suppliers to strictly adhere to national environmental and safety production policies to ensure supply stability and security[205](index=205&type=chunk)[206](index=206&type=chunk) - In 2018, customers could directly place orders, settle accounts, inquire about balances, and provide feedback via a mobile APP, improving communication efficiency and customer satisfaction[209](index=209&type=chunk) [Anti-Corruption and Community Engagement](index=40&type=section&id=Anti-Corruption%20and%20Community%20Engagement) The Group has an Ethics and Compliance Supervision Department and Committee to prevent and address corruption, with no legal cases involving corruption in 2018, and actively participates in charitable activities - In 2018, the Group and its employees were not involved in any legal cases related to corrupt activities[215](index=215&type=chunk) - For the year ended December 31, 2018, social engagement contributions amounted to **RMB 358,035**, an increase from RMB 315,200 in 2017[216](index=216&type=chunk) [Corporate Governance Report](index=41&type=section&id=Corporate%20Governance%20Report) This report outlines the Group's corporate governance framework, including board structure, committee functions, risk management, and shareholder communication, demonstrating adherence to high standards [Board of Directors](index=42&type=section&id=Board%20of%20Directors) The Board is committed to high corporate governance standards, largely complying with the Corporate Governance Code, with a balanced composition of 8 directors, including 3 independent non-executive directors - The company complied with the applicable code provisions of the Corporate Governance Code, with the only deviation being the absence of separate meetings between the Chairman and non-executive directors (without executive directors present), as deemed unnecessary during the year[220](index=220&type=chunk) - The Board of Directors comprises **8 directors**, including **3 independent non-executive directors**, accounting for over one-third, which complies with the Listing Rules[230](index=230&type=chunk) [Board Committees](index=46&type=section&id=Board%20Committees) The Board has four committees: Audit, Nomination, Remuneration, and Strategy, each with specific responsibilities for oversight of financial reporting, board structure, compensation, and long-term strategy 2018 Attendance Record for Board and Committee Meetings (Attendance/Meetings Held) | Director Name | Board | Audit Committee | Nomination Committee | Remuneration Committee | | :--- | :--- | :--- | :--- | :--- | | **Executive Directors** | | | | | | Mr. Cui Xiangdong | 5/5 | – | – | – | | **Non-Executive Directors** | | | | | | Mr. Peng Shou (Chairman) | 5/5 | 2/2 | – | 3/3 | | Mr. Zhao Linghuan | 5/5 | – | – | – | | Mr. Zhou Cheng (Honorary Chairman) | 5/5 | – | 2/2 | – | | Mr. Zhang Jinshu | 3/3 | – | – | – | | **Independent Non-Executive Directors** | | | | | | Mr. Zhang Baiheng | 5/5 | 2/2 | 2/2 | 3/3 | | Mr. Zhao Lihua | 5/5 | 2/2 | 2/2 | 3/3 | | Mr. Chen Huachen | 5/5 | 2/2 | – | – | [Accountability, Audit, and Risk Management](index=50&type=section&id=Accountability,%20Audit,%20and%20Risk%20Management) The Board affirms its responsibility for preparing true and fair financial statements, with KPMG auditing the 2018 financials, and confirms the effectiveness of the Group's risk management and internal control systems - For 2018, audit services provided by KPMG amounted to **RMB 7,000,000**, and non-audit services amounted to **RMB 400,000**[276](index=276&type=chunk) - The Board, through the Audit Committee, reviewed the effectiveness of the Group's risk management and internal control systems (including financial, operational, and compliance controls) and deemed them effective and adequate during the reporting period[279](index=279&type=chunk) [Shareholder Rights and Communication](index=52&type=section&id=Shareholder%20Rights%20and%20Communication) This section details shareholder rights regarding convening extraordinary general meetings and proposing resolutions, emphasizing the company's commitment to transparent and timely communication through various channels - Shareholders holding not less than **one-tenth** of the company's paid-up share capital may request the company to convene an extraordinary general meeting[283](index=283&type=chunk) - Shareholders may submit written notice to the company's head office to propose any person for election as a director[291](index=291&type=chunk) [Independent Auditor's Report](index=56&type=section&id=Independent%20Auditor's%20Report) KPMG issued an unqualified opinion on the consolidated financial statements, affirming their fair presentation in accordance with Hong Kong Financial Reporting Standards, while highlighting key audit matters - Auditor KPMG opined that the consolidated financial statements fairly and truly reflect the Group's consolidated financial position as of December 31, 2018, and its financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards, issuing an **unqualified opinion**[301](index=301&type=chunk) - The report identified three key audit matters: **Assessment of the Group's Going Concern Ability** given net current liabilities of **RMB 1.944 billion**; **Potential Impairment of Property, Plant and Equipment** due to continuous losses in some cash-generating units, requiring significant management judgment in assessing recoverable amounts; and **Valuation and Goodwill Impairment related to the Acquisition** of OGT Group, involving inherent subjectivity in fair value assessment of identifiable assets, liabilities, and goodwill[303](index=303&type=chunk)[305](index=305&type=chunk)[311](index=311&type=chunk)[315](index=315&type=chunk) [Consolidated Financial Statements](index=66&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's comprehensive financial performance and position, including income statement, balance sheet, and cash flow statement, along with detailed explanatory notes [Core Financial Statements](index=66&type=section&id=Core%20Financial%20Statements) The financial statements show 2018 revenue of RMB 2.618 billion (+2.4%), annual profit of RMB 104 million (+72.1%), total assets of RMB 6.975 billion, total liabilities of RMB 4.753 billion, and net assets of RMB 2.222 billion Consolidated Income Statement Summary (RMB Thousand) | Indicator | 2018 | 2017 | | :--- | :--- | :--- | | Revenue | 2,617,725 | 2,556,418 | | Gross Profit | 410,095 | 321,576 | | Operating Profit | 313,826 | 206,563 | | Profit Before Tax | 153,134 | 100,335 | | Profit for the Year | 104,074 | 60,471 | | Basic Earnings Per Share (RMB cents) | 5.45 | 3.59 | Consolidated Statement of Financial Position Summary (RMB Thousand) | Indicator | 2018 | 2017 | | :--- | :--- | :--- | | Non-Current Assets | 5,054,874 | 4,653,511 | | Current Assets | 1,919,836 | 1,619,457 | | **Total Assets** | **6,974,710** | **6,272,968** | | Current Liabilities | 3,863,764 | 3,267,335 | | Non-Current Liabilities | 889,015 | 841,183 | | **Total Liabilities** | **4,752,779** | **4,108,518** | | **Net Assets** | **2,221,931** | **2,164,450** | Consolidated Cash Flow Statement Summary (RMB Thousand) | Indicator | 2018 | 2017 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 296,393 | 234,465 | | Net Cash Used in Investing Activities | (417,317) | (769,061) | | Net Cash from Financing Activities | 140,725 | 601,629 | | Net Increase in Cash and Cash Equivalents | 19,801 | 67,033 | [Notes to the Consolidated Financial Statements](index=74&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) These notes detail the company's significant accounting policies, judgments, and estimates, providing in-depth explanations for financial statement items, including the impact of new accounting standards and business acquisitions [Significant Accounting Policies](index=74&type=section&id=Significant%20Accounting%20Policies) This section outlines the basis of financial statement preparation and compliance. The company first applied HKFRS 9 and 15 in 2018, with retrospective adjustments to opening equity, and maintains the appropriateness of the going concern basis despite net current liabilities - The Group first applied **HKFRS 9 and HKFRS 15** on January 1, 2018, and adjusted opening equity according to transitional provisions, resulting in a net decrease of **RMB 12.772 million** in retained earnings due to the recognition of additional expected credit losses[383](index=383&type=chunk)[386](index=386&type=chunk)[387](index=387&type=chunk) - Despite net current liabilities of **RMB 1.944 billion** as of year-end 2018, considering unutilized bank facilities, newly raised loans, and the financial support commitment from the largest shareholder, Kaisheng Group, the directors believe the Group has the ability to continue as a going concern[379](index=379&type=chunk) [Revenue and Segment Reporting](index=106&type=section&id=Revenue%20and%20Segment%20Reporting) The Group's revenue primarily derives from glass product sales and design/installation services, with growth in coated and energy-saving glass offsetting a decline in colorless glass, and mainland China/Hong Kong being the main markets Revenue by Product Segment (RMB Thousand) | Segment | 2018 | 2017 | | :--- | :--- | :--- | | Colorless Glass Products | 998,856 | 1,107,106 | | Tinted Glass Products | 356,539 | 361,594 | | Coated Glass Products | 673,396 | 597,720 | | Energy-Saving and New Energy Glass Products | 552,289 | 489,998 | | Design and Installation Services | 36,645 | – | | **Total** | **2,617,725** | **2,556,418** | [Acquisition of Business](index=148&type=section&id=Acquisition%20of%20Business) In October 2018, the Group acquired 100% of Italian OGT for Euro 21.445 million, resulting in Euro 13.755 million in goodwill and significant intangible assets, aiming to introduce OGT's leading pharmaceutical glass technology to China - The Group acquired **100% equity of OGT** for a cash consideration of **Euro 21,445,000**, resulting in goodwill of **Euro 13,755,000**[732](index=732&type=chunk) - The acquisition recognized identifiable net assets at a fair value of **Euro 7,690,000**, including **Euro 16,351,000** in intangible assets[735](index=735&type=chunk) [Financial Risk Management](index=153&type=section&id=Financial%20Risk%20Management) The Group manages credit, liquidity, interest rate, and currency risks, with credit risk primarily from receivables, liquidity managed through cash flow monitoring, and interest rate risk from borrowings, while currency risk involves USD, HKD, Naira, and Euro - The Group's credit risk primarily arises from accounts receivable. As of year-end 2018, the loss allowance for accounts receivable and contract assets was **RMB 98.425 million**, mainly for overdue amounts exceeding one year[758](index=758&type=chunk)[763](index=763&type=chunk) - As of year-end 2018, the Group's total borrowings were **RMB 2.901 billion**, with **53%** at fixed interest rates and **47%** at floating interest rates. A 100 basis point change in interest rates is expected to impact after-tax profit by approximately **RMB 10.8 million**[777](index=777&type=chunk)[778](index=778&type=chunk)