香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不 負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告 全部或任何部份內容而產生或因倚賴該等內容而引致的任何損失承擔任何責 任。 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） 3300 （股份代號： ） 截至二零二二年十二月三十一日止年度之全年業績公告 中國玻璃控股有限公司（「本公司」）董事會（分別為「董事」及「董事會」）謹此公佈 本公司及其附屬公司（以下統稱「本集團」）截至二零二二年十二月三十一日止年 度之經審核綜合全年業績，以及二零二一年相應年度的可資比較數字。 ...

Production and Sales Performance - In the first half of 2022, China Glass Holdings produced approximately 21.17 million weight cases of various glass products, a 20% increase compared to the same period last year[11]. - The total sales of glass products reached 16.52 million weight cases, a decrease of 3% year-on-year[11]. - The average selling price of glass products was approximately RMB 116.4 per weight case, reflecting a 1% increase compared to the previous year[11]. Financial Performance - The company's revenue for the first six months of 2022 was RMB 2,061,978,000, an increase of approximately 2% compared to RMB 2,025,214,000 in the same period of 2021[31]. - Gross profit decreased by approximately 40% to RMB 426,447,000 in the first half of 2022, compared to RMB 714,699,000 in the same period of 2021, attributed to rising sales costs despite slight revenue growth[33]. - The company's profit for the first half of 2022 fell to RMB 121,149,000, down from RMB 302,148,000 in the same period of 2021, primarily due to declining gross profit and rising administrative expenses[39]. Cost and Expenses - Sales costs rose by approximately 25% to RMB 1,635,531,000 in the first half of 2022, up from RMB 1,310,515,000 in the previous year, primarily due to increased raw and fuel material costs[32]. - Administrative expenses rose by approximately 22% to RMB 158,350,000 in the first half of 2022, compared to RMB 130,021,000 in the same period of 2021, due to the acquisition of a new production line and costs during cold repair periods[35]. - Financing costs decreased by approximately 9% to RMB 128,787,000 in the first half of 2022, down from RMB 142,011,000 in the same period of 2021, benefiting from lower average interest rates on new borrowings[36]. Market Conditions - The domestic flat glass industry is facing challenges due to a sluggish real estate market and rising raw material costs[9]. - The company is closely monitoring market conditions to adjust procurement and marketing strategies effectively[14]. Strategic Focus and Development - The company is focusing on a mid-to-long-term development strategy that combines natural growth, acquisition growth, and international expansion[14]. - The company is actively promoting new glass, new materials, and new energy projects to enhance operational performance[14]. - The company is focusing on expanding its "three new projects" and enhancing its upstream and downstream industrial chain to achieve new breakthroughs in business development[26]. Shareholder and Equity Information - First Fortune Enterprises Limited holds 272,926,000 shares, representing approximately 14.86% of total shares[57]. - Right Lane Limited owns 307,926,000 shares, accounting for approximately 16.77% of total shares[57]. - The total number of issued shares as of June 30, 2022, is 1,836,218,258 shares[68]. Employee and Management - The group employed approximately 3,788 employees as of June 30, 2022, a slight decrease from 3,822 employees as of December 31, 2021, primarily due to increased efficiency and production line maintenance[104]. - The company plans to strengthen its management functions and implement measures to enhance employee satisfaction and optimize personnel structure for sustainable development[27]. Cash Flow and Financing - The net cash generated from operating activities for the six months ended June 30, 2022, was RMB 562,923,000, compared to RMB 406,726,000 in the previous year, representing a 38.4% increase[139]. - The company has unutilized bank financing of RMB 791,100,000 and plans to secure new financing of RMB 496,700,000[147]. - The company’s major shareholder, China National Building Material Group Corporation, has provided financial support commitments[147]. Assets and Liabilities - Current assets increased from RMB 2,477,825,000 as of December 31, 2021, to RMB 3,048,431,000 as of June 30, 2022, reflecting a growth of about 23%[41]. - Non-current liabilities surged from RMB 1,236,795,000 as of December 31, 2021, to RMB 2,015,736,000 as of June 30, 2022, marking a significant increase of about 63%[43]. - The company’s total liabilities as of June 30, 2022, were RMB 4,133,880,000, an increase of 8.0% from RMB 3,826,420,000 as of December 31, 2021[200]. Compliance and Governance - The company maintained compliance with the Corporate Governance Code, emphasizing the importance of high-quality board governance and effective internal controls[108]. - The audit committee has been established and has reviewed the accounting principles and practices adopted by the group, ensuring transparency and accountability[108]. Other Financial Metrics - Basic earnings per share decreased to RMB 6.881 from RMB 16.480, reflecting a decline of about 58.3%[118]. - The total capital expenditure for property, plant, and equipment for the six months ended June 30, 2022, was RMB 760,000,000, an increase of 42.3% from RMB 534,300,000 in the same period of 2021[178]. - The group recognized a depreciation and amortization expense of RMB 170,547,000 for the six months ended June 30, 2022, compared to RMB 132,541,000 for the same period in 2021, representing an increase of 28.7%[176].

Financial Performance - The total revenue for China Glass Holdings Limited for the year ended December 31, 2021, was RMB 5,065,048,000, representing a 60.5% increase from RMB 3,158,567,000 in 2020[12]. - Gross profit for the same period was RMB 1,733,703,000, up from RMB 738,724,000 in 2020, indicating a significant improvement in profitability[12]. - The operating profit increased to RMB 1,302,052,000 in 2021, compared to RMB 269,554,000 in 2020, reflecting a growth of 383.5%[12]. - Net profit for the year was RMB 801,947,000, a turnaround from a net loss of RMB 98,478,000 in 2020[12]. - The company's revenue increased from RMB 3.159 billion for the year ended December 31, 2020, to RMB 5.065 billion for the year ended December 31, 2021, representing a growth of approximately 60%[44]. - The company's gross profit rose from RMB 739 million for the year ended December 31, 2020, to RMB 1.734 billion for the year ended December 31, 2021, with the gross profit margin increasing from 23% to 34%[47]. - The group's profit for the year ended December 31, 2021, turned from a loss of approximately RMB 98.48 million in 2020 to a profit of approximately RMB 802 million, driven by strong performance in the glass market, increased average selling prices, sales volume, and gross margins[53]. Assets and Liabilities - Total assets as of December 31, 2021, reached RMB 10,380,534,000, an increase from RMB 7,201,243,000 in 2020[12]. - Total liabilities rose to RMB 7,002,511,000 in 2021, compared to RMB 5,033,247,000 in 2020, indicating increased leverage[12]. - The net asset value increased to RMB 3,378,023,000 in 2021, up from RMB 2,167,996,000 in 2020, showing a strong growth in equity[12]. - Current assets increased from RMB 2.151 billion as of December 31, 2020, to RMB 2.478 billion as of December 31, 2021, representing a growth of approximately 15%[56]. - Current liabilities rose from RMB 3.753 billion as of December 31, 2020, to RMB 5.766 billion as of December 31, 2021, an increase of approximately 54%[57]. - The debt-to-equity ratio as of December 31, 2021, was 0.48, slightly down from 0.49 as of December 31, 2020[60]. Market and Production - The company produced 40.93 million weight cases of various glass types in 2021, an increase of 15% compared to the previous year, with sales volume reaching 39.4 million weight cases, up 8% year-on-year[22]. - The average selling price of glass products in 2021 was 123 RMB per weight case, representing a 49% increase from the previous year[22]. - Revenue from colorless glass products reached RMB 2.688 billion, an increase of 97% compared to the previous year; revenue from colored glass products was RMB 640 million, up 44%; revenue from coated glass products was RMB 1.048 billion, up 29%; and revenue from energy-saving and new energy glass products was RMB 472 million, up 17%[44]. - The company has 14 float glass production lines with a daily melting capacity of 7,400 tons, with 13 lines operational as of December 31, 2021[21]. Strategic Plans and Investments - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[11]. - The company plans to accelerate expansion into new glass, new energy, new materials, and deep processing sectors in 2022[18]. - The company aims to enhance product quality and optimize cost structure as part of its growth strategy[27]. - The company plans to focus on expanding into new glass, new materials, and new energy sectors while enhancing upstream and downstream industry chains[40]. - The company aims to implement a long-term development strategy combining organic growth, mergers and acquisitions, and international expansion[40]. - The company is considering strategic acquisitions to enhance its market position, targeting a potential acquisition valued at $100 million[142]. Employee and Management - The number of employees increased to approximately 3,822 as of December 31, 2021, compared to approximately 3,391 as of December 31, 2020, reflecting growth from acquisitions and business expansion[68]. - The company emphasizes the importance of employee relations and has implemented a competitive compensation mechanism to enhance employee motivation[198]. - The management team has extensive experience, with over 30 years in the glass industry, ensuring strong leadership[143]. Related Party Transactions and Agreements - The group acquired a 55% stake in Fujian Longtai Industrial Co., Ltd. for a total consideration of RMB 444.18 million, which was approved by shareholders on July 16, 2021[65]. - The group completed the acquisition of all shares of Huangyu Development Co., Ltd. for a consideration of USD 66.42 million (approximately HKD 516.75 million) on December 28, 2021[66]. - The company has established a related party transaction with the signing of the Suqian Engineering Contract and the Olivotto supply contracts[166][172]. - The independent non-executive directors confirmed that the related party transactions in 2021 were conducted in the ordinary course of business and on normal commercial terms[186]. Dividends and Shareholding - The board recommends a final dividend of HKD 0.05 per share for the fiscal year ending December 31, 2021, to be distributed on July 20, 2022, pending approval at the annual general meeting[77]. - As of December 31, 2021, the total number of issued shares was 1,830,288,258[95]. - The company has arranged appropriate directors and officers liability insurance for legal actions against its directors[93]. - The company maintained a public float of at least 25% of its issued share capital as required by the listing rules[192]. Future Outlook - The company provided a positive outlook for the next fiscal year, projecting a revenue growth of 10% to 12%[142]. - The company anticipates that the glass industry will maintain a tight supply-demand balance in 2022, with potential growth in prices despite various market uncertainties[35].

CNG中玻 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) *僅供搬別 目錄 目錄 公司資料 2-3 管理層討論及分析 4-10 其他資料 11-21 致中國玻璃控股有限公司董事會審閱報告 22 綜合損益表 23 綜合損益及其他全面收益表 24 綜合財務狀況表 25-26 綜合權益變動表 27-28 簡明綜合現金流量表 29 未經審核中期財務報告附註 30-56 1 中國玻璃控股有限公司 2021年中期報告 公司資料 公司資料 | --- | --- | |-----------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------| | | | | 董事會 | 高級管理層 | | 執行董事 | 李平先生 | | 呂國先生 ...

[Company Information](index=3&type=section&id=Company%20Information) This section provides key contact and service information for the company, including board members, senior management, registered office, and auditors [Board of Directors and Senior Management](index=3&type=section&id=Board%20of%20Directors%20and%20Senior%20Management) This section lists the company's board members and senior management, including executive, non-executive, and independent non-executive directors, and committee compositions - Board members include Executive Director Mr. Lü Guo (CEO), Mr. Cui Xiangdong (retired on April 1, 2021), 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 (passed away on December 22, 2020), and Mr. Chen Huachen[6](index=6&type=chunk) - Senior management includes Mr. Li Ping, Mr. Yang Hongfu, Mr. Xu Ning, Mr. Wang Jianxun (retired on January 1, 2021), and Mr. Han Liming[6](index=6&type=chunk) [Company Contact and Service Institutions](index=3&type=section&id=Company%20Contact%20and%20Service%20Institutions) This section details the company's registered office, main business locations, share registrars, principal bankers, auditor, and stock code - The company's registered office is in Bermuda, its principal place of business in Hong Kong is in Shun Tak Centre, Central, and its principal place of business in China is in Chaoyang District, Beijing[6](index=6&type=chunk) - Principal bankers include China Construction Bank, Bank of Shanghai, and Bank of Communications, with KPMG as the auditor[8](index=8&type=chunk) - The company's stock code is HKEX: 3300, and its website is www.chinaglassholdings.com[8](index=8&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) This section presents a concise overview of the group's financial performance, assets, and liabilities for the reporting period [Performance Overview](index=5&type=section&id=Performance%20Overview) The group's revenue increased significantly by 33% to RMB 3.159 billion in FY2020, but it recorded a net loss of RMB 98.48 million due to increased impairment losses on receivables and reduced government subsidies 2020 vs 2019 Performance Comparison (RMB thousand) | Indicator | 2020 | 2019 | | :-------- | :---------- | :---------- | | Revenue | 3,158,567 | 2,369,230 | | Gross Profit | 738,724 | 284,642 | | Operating Profit | 269,554 | 275,258 | | Profit Before Tax | 5,155 | 89,428 | | Net (Loss)/Profit for the Year | (98,478) | 72,704 | - Revenue increased by **33% year-on-year**, primarily due to improved glass market conditions, leading to higher sales volume and average selling prices[26](index=26&type=chunk) - The group turned from profit to loss for the year, mainly due to increased impairment losses on receivables and reduced non-recurring government subsidies from relocation[26](index=26&type=chunk) [Assets and Liabilities Overview](index=5&type=section&id=Assets%20and%20Liabilities%20Overview) The group's total assets and liabilities slightly increased by the end of 2020, leading to a minor decrease in net assets and an expanded net current liabilities 2020 vs 2019 Assets and Liabilities Comparison (RMB thousand) | Indicator | 2020 | 2019 | | :-------- | :---------- | :---------- | | Total Assets | 7,201,243 | 7,188,111 | | Total Liabilities | (5,033,247) | (4,938,392) | | Net Assets | 2,167,996 | 2,249,719 | - Total assets increased from **RMB 7,188,111 thousand in 2019 to RMB 7,201,243 thousand in 2020**, while total liabilities increased from **RMB 4,938,392 thousand in 2019 to RMB 5,033,247 thousand in 2020**[12](index=12&type=chunk) - Net assets decreased from **RMB 2,249,719 thousand in 2019 to RMB 2,167,996 thousand in 2020**[12](index=12&type=chunk) [Chairman's Report](index=6&type=section&id=Chairman's%20Report) The Chairman's report reviews the company's operational performance in 2020 and outlines strategic plans and outlook for 2021 [2020 Operating Review](index=6&type=section&id=2020%20Operating%20Review) Despite global challenges, the company achieved significant revenue growth and improved gross margin in 2020, driven by its core float glass business and optimized management - In 2020, the group's operating revenue increased by **33% year-on-year**, and gross profit margin improved by **11 percentage points year-on-year**, achieving significant operational results[16](index=16&type=chunk) - The company optimized its organizational structure, establishing a comprehensive information management model integrating "marketing, procurement, production technology, finance, and investment"[16](index=16&type=chunk) - Both Nigeria and Italy projects achieved stable production and operation growth, and the company will continue to adhere to its "going out" and "Belt and Road" development strategies[16](index=16&type=chunk) [2021 Outlook and Strategy](index=6&type=section&id=2021%20Outlook%20and%20Strategy) The company plans to expand into photovoltaic and deep processing sectors, enhance R&D, optimize product structure, and implement refined management to improve profitability in 2021 - In 2021, the company will accelerate its expansion into the photovoltaic and deep processing sectors, increase R&D efforts, optimize product structure, and foster synergistic effects across the upstream and downstream industrial chains[16](index=16&type=chunk) - Management will deepen the "five-unified" business model, implement the "three-refinements" management philosophy, reduce non-profitable companies, lower operating costs, and enhance the company's profitability[16](index=16&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth analysis of the group's market conditions, operational performance, financial results, and future plans, including the impact of COVID-19 [Market and Business Review](index=7&type=section&id=Market%20and%20Business%20Review) In 2020, China's flat glass industry benefited from supply-side reforms and strong demand, while the group maintained 13 float glass production lines and diversified into specialized glass - In 2020, China's GDP grew by **2.3% year-on-year**, becoming one of the few major economies with positive economic growth[21](index=21&type=chunk) - The flat glass industry benefited from supply-side structural reforms, environmental policies, accelerated real estate construction, the booming photovoltaic industry, and the release of real estate completion demand, maintaining high overall prices[21](index=21&type=chunk) - The group operates **10 out of 13 float glass production lines** (daily melting capacity of 6,650 tonnes/day) and owns one Low-E glass production line, one ultra-thin photovoltaic encapsulation material production line for double-glass modules, and a pharmaceutical glass production line technical service company[22](index=22&type=chunk) [Raw Materials and Manufacturing Costs](index=7&type=section&id=Raw%20Materials%20and%20Manufacturing%20Costs) Raw material prices were stable in 2020, while soda ash prices fluctuated, and fuel prices showed mixed trends with imported petroleum coke rising and natural gas stabilizing - Throughout 2020, domestic soda ash prices fluctuated significantly, showing an L-shape in the first half, a strong rebound in the third quarter, and a notable decline in the fourth quarter[23](index=23&type=chunk) - Prices for mineral raw materials (silica sand, limestone, dolomite, etc.) remained relatively stable[23](index=23&type=chunk) - In terms of fuel, the market price of imported low-sulfur petroleum coke slightly increased and consolidated at a high level, fuel oil prices continuously declined before a strong rebound, and natural gas prices stabilized after hovering at a low level[23](index=23&type=chunk) [Production, Sales and Selling Price](index=7&type=section&id=Production%2C%20Sales%20and%20Selling%20Price) In 2020, the group's glass production volume increased by 14%, sales volume by 23%, and average selling price by 10% 2020 Production, Sales and Selling Price Data | Indicator | 2020 Data | Year-on-Year Change | | :-------- | :---------- | :------------------ | | Glass Production Volume | 35.44 million weight cases | Up 14% | | Glass Sales Volume | 36.60 million weight cases | Up 23% | | Average Selling Price | RMB 83/weight case | Up 10% | [Profitability Analysis and COVID-19 Impact](index=8&type=section&id=Profitability%20Analysis%20and%20COVID-19%20Impact) Group sales revenue increased by 33% in 2020, but a net loss was recorded due to higher impairment losses on receivables and reduced non-recurring government subsidies, with effective COVID-19 response measures implemented - In 2020, sales revenue was approximately **RMB 3.159 billion**, an increase of **33% year-on-year**, mainly due to improved glass market conditions, leading to higher sales volume and average selling prices[26](index=26&type=chunk) - The group recorded a net loss of **RMB 98.48 million** for the year, primarily due to increased impairment losses on receivables and reduced non-recurring government subsidies from relocation[26](index=26&type=chunk) - To cope with the COVID-19 pandemic, the group maintained safe inventory levels of raw materials and fuel, adjusted its sales strategy to focus on overseas markets, resulting in a **doubling of export sales volume** in the first quarter year-on-year[27](index=27&type=chunk) [Key Initiatives in 2020](index=8&type=section&id=Key%20Initiatives%20in%202020) In 2020, the group deepened its three major strategies, implemented a "five-unified" management model, strengthened procurement and marketing, improved performance incentives, and managed COVID-19 prevention - Continued to implement key work for the three major strategies, including improving product quality, reducing production costs, exploring potential high-quality projects, ensuring stable operation of the Nigeria project, and addressing delays in the Kazakhstan project[28](index=28&type=chunk) - Deepened management system reforms, implemented a "five-system" business management model for "marketing, procurement, production technology, finance, and investment" under unified group headquarters management, and established a Capital Management Committee and a Price Management Committee[29](index=29&type=chunk) - Strengthened procurement and marketing management by reducing costs through centralized and off-peak procurement, establishing a long-term price control mechanism, and developing diversified sales strategies[33](index=33&type=chunk) - Improved the performance incentive system by establishing a "Performance Contract" assessment mechanism and strengthening compliance supervision through various special audits[34](index=34&type=chunk) - Established an epidemic prevention leading group and formulated and activated a COVID-19 prevention and control emergency plan to strengthen epidemic prevention[35](index=35&type=chunk) [Market Outlook and 2021 Work Plan](index=9&type=section&id=Market%20Outlook%20and%202021%20Work%20Plan) The company anticipates global economic recovery and sustained high prosperity in the flat glass industry in 2021, planning to focus on core float glass, accelerate photovoltaic and deep processing projects, and expand overseas - The Organisation for Economic Co-operation and Development (OECD) projects global economic growth of approximately **5.6% in 2021**, with China's economy expected to return to a rapid development level[36](index=36&type=chunk) - The flat glass industry is expected to maintain high prosperity in 2021, with supply remaining constrained and demand likely to expand due to high certainty in the real estate and automotive sectors[36](index=36&type=chunk) - The 2021 work plan includes focusing on the core float glass business to improve performance, deepening the "five-unified" system management, accelerating the construction of photovoltaic and deep processing projects, expanding overseas business (Nigeria, Kazakhstan, Italy pharmaceutical glass technology), strengthening human resource management, and continuing epidemic prevention efforts[39](index=39&type=chunk)[40](index=40&type=chunk) [Financial Review](index=11&type=section&id=Financial%20Review) In 2020, group revenue grew by 33% to RMB 3.159 billion, with gross profit increasing significantly, but other income decreased, and administrative expenses, impairment losses, financing costs, and income tax expenses rose 2020 Key Financial Indicators Change (RMB thousand) | Indicator | 2020 | 2019 | Change Rate | | :----------------- | :---------- | :---------- | :-------- | | Revenue | 3,158,567 | 2,369,230 | +33% | | Cost of Sales | (2,419,843) | (2,084,588) | +16% | | Gross Profit | 738,724 | 284,642 | +159% | | Gross Profit Margin | 23% | 12% | +11pp | | Other Income | 30,413 | 319,597 | -90.5% | | Administrative Expenses | 287,656 | 241,128 | +19% | | Impairment Loss on Receivables | 122,739 | 20,528 | +498% | | Financing Costs | 263,674 | 185,728 | +42% | | Net Income Tax Expense | 103,633 | 16,724 | +520% | - Revenue from clear glass, tinted glass, and coated glass products increased by **58%, 39%, and 46% respectively**, while revenue from energy-saving and new energy glass products decreased by **19%**[43](index=43&type=chunk) - Current assets decreased by approximately **1% to RMB 2.151 billion**, current liabilities increased by approximately **7% to RMB 3.753 billion**, and non-current liabilities decreased by approximately **10% to RMB 1.281 billion**[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) [Capital Structure and Liquidity](index=13&type=section&id=Capital%20Structure%20and%20Liquidity) As of year-end 2020, the group's cash and bank balances increased to RMB 806 million, while outstanding loans also rose to RMB 3.44 billion, leading to higher debt-to-equity and debt-to-asset ratios and an expanded net current liabilities 2020 Capital Structure and Liquidity Indicators | Indicator | 2020 | 2019 | | :----------------- | :---------- | :---------- | | Cash and Bank Balances | RMB 806 million | RMB 584 million | | Outstanding Bank and Other Borrowings | RMB 3.44 billion | RMB 3.212 billion | | Debt-to-Equity Ratio | 0.49 | 0.46 | | Current Ratio | 0.57 | 0.62 | | Net Current Liabilities | RMB 1.602 billion | RMB 1.345 billion | | Debt-to-Asset Ratio | 0.70 | 0.69 | - Of the outstanding bank and other borrowings, **56.8% were denominated in RMB**, **36.1% in USD**; **62% adopted fixed interest rates**, and **38% adopted floating interest rates**[57](index=57&type=chunk) [Pledged Assets and Contingent Liabilities](index=13&type=section&id=Pledged%20Assets%20and%20Contingent%20Liabilities) As of year-end 2020, approximately RMB 763 million in property, plant, and equipment, construction in progress, inventories, and land use rights, along with RMB 110 million in trade and bills receivables, were pledged for bank loans totaling RMB 601 million, with no significant contingent liabilities - Approximately **RMB 763 million** of property, plant and equipment, construction in progress, inventories, and land use rights were pledged[59](index=59&type=chunk) - Approximately **RMB 110 million** of trade and bills receivables were pledged[59](index=59&type=chunk) - The total pledged amount was approximately **RMB 601 million**[59](index=59&type=chunk) - The group had no significant contingent liabilities[60](index=60&type=chunk) [Significant Investments and Future Plans](index=13&type=section&id=Significant%20Investments%20and%20Future%20Plans) The group had no significant investments or disposals in 2020 but plans to acquire a controlling stake in Fujian Longtai Industrial Co., Ltd. in early 2021 to expand its float and photovoltaic glass production lines - For the year ended December 31, 2020, the group had no significant investments or acquisitions of capital assets, nor any significant acquisitions or disposals of subsidiaries and associates or significant investments[61](index=61&type=chunk) - On February 4, 2021, the company proposed to acquire **51% or more equity interest** in Fujian Longtai Industrial Co., Ltd. (which is establishing float glass and photovoltaic glass production lines)[61](index=61&type=chunk) - The potential acquisition is expected to be funded by the company's internal resources[61](index=61&type=chunk) [Human Resources and Remuneration](index=14&type=section&id=Human%20Resources%20and%20Remuneration) As of year-end 2020, the group employed approximately 3,391 staff globally, a slight decrease due to efficiency improvements and retirements, offering competitive remuneration and share option/award schemes - As of December 31, 2020, the group employed approximately **3,391 staff globally**, a decrease compared to 2019[64](index=64&type=chunk) - The decrease in employees was mainly due to improved efficiency, reduced workforce due to production line shutdowns for cold repair at individual production bases, and an increase in retired workers[64](index=64&type=chunk) - The company has conditionally adopted a share option scheme and a share award scheme for eligible participants and certain employees[64](index=64&type=chunk) [Final Dividend and Exchange Rate Risk](index=14&type=section&id=Final%20Dividend%20and%20Exchange%20Rate%20Risk) The board did not recommend a final dividend for 2020. The group faces exchange rate fluctuation risks as its transactions and monetary assets are primarily denominated in RMB, HKD, and USD, with no hedging derivatives used in 2020 - The directors do not recommend the payment of a final dividend for the year ended December 31, 2020[65](index=65&type=chunk) - The group's transactions and monetary assets are primarily denominated in RMB, HKD, and USD, exposing it to exchange rate fluctuation risks[66](index=66&type=chunk) - For the year ended December 31, 2020, the group did not use any derivative instruments for hedging[66](index=66&type=chunk) [Major Customers and Suppliers](index=14&type=section&id=Major%20Customers%20and%20Suppliers) In 2020, sales to the top five customers accounted for less than 30% of total sales, while purchases from the top five suppliers represented 48% of total purchases, with no directors or major shareholders holding interests in the top five suppliers - Revenue from sales of goods or provision of services to the **top five customers accounted for less than 30%** of the group's total sales for the year[67](index=67&type=chunk) - **48% of the group's purchases** were from its top five suppliers, with the largest supplier accounting for **34%** of the group's total purchases for the year[67](index=67&type=chunk) - No directors, their close associates, or any shareholder of the company (to the best of the directors' knowledge, holding 5% or more of the company's issued share capital) had any interest in the group's top five suppliers[67](index=67&type=chunk) [Directors' Report](index=15&type=section&id=Directors'%20Report) The Directors' Report provides an overview of the group's business, financial performance, board composition, directors' interests, major shareholders, and corporate governance matters [Business Overview and Financial Performance](index=15&type=section&id=Business%20Overview%20and%20Financial%20Performance) The group's core business involves glass production and related services, recording a loss in 2020 with no final dividend recommended, and a five-year financial summary is provided - 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[426](index=426&type=chunk) - The group recorded a loss for the year ended December 31, 2020, and the board does not recommend the payment of a final dividend[71](index=71&type=chunk)[72](index=72&type=chunk) - A summary of the group's results, assets, and liabilities for the past five years is presented on page 4 of this annual report[73](index=73&type=chunk) [Board Composition and Independence](index=16&type=section&id=Board%20Composition%20and%20Independence) The board comprises executive, non-executive, and independent non-executive directors; a temporary shortfall in independent non-executive directors due to a resignation is being addressed, and all independent directors have confirmed their independence - The board members include Mr. Cui Xiangdong (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), Mr. Zhang Baiheng (Independent Non-Executive Director), Mr. Zhao Lihua (passed away on December 22, 2020, Independent Non-Executive Director), and Mr. Chen Huachen (Independent Non-Executive Director)[80](index=80&type=chunk) - Due to the passing of Mr. Zhao Lihua, the number of independent non-executive directors fell below the minimum requirement of three and less than one-third of the board, for which the company has applied to the Stock Exchange for a three-month extension until June 22, 2021, to re-comply[80](index=80&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 date of this report[81](index=81&type=chunk) [Directors' Interests and Remuneration](index=16&type=section&id=Directors'%20Interests%20and%20Remuneration) In 2020, no directors or their associates had significant interests in major transactions, while certain directors held company shares and share options, with remuneration determined by the Remuneration Committee based on various factors - For the year 2020, no director or any entity connected with a director had any material interest, directly or indirectly, in any significant transaction, arrangement, or contract entered into by the company or any of its subsidiaries and fellow subsidiaries[82](index=82&type=chunk) Directors' and Chief Executive's Share and Share Option Holdings as of December 31, 2020 | 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% | | Mr. Lü Guo | Beneficial Owner | 8,412,096 | 0.46% | - Directors' remuneration is recommended by the Remuneration Committee, reviewed and determined with reference to each director's duties, responsibilities, involvement in company affairs, skills, knowledge, and performance, as well as the company's results and/or profitability, and prevailing market conditions for similar appointments[83](index=83&type=chunk) [Major Shareholders' Interests](index=18&type=section&id=Major%20Shareholders'%20Interests) As of year-end 2020, several entities and individuals, including First Fortune Enterprises Limited, Lenovo Hony (International) Co., Ltd., and China National Building Materials Group Co., Ltd., were identified as major shareholders with varying equity interests Major Shareholders' Shareholdings as of December 31, 2020 | Shareholder Name/Entity | Capacity | Total Ordinary Shares (L) | Approximate Percentage of Shareholding | | :-------------------------------- | :------------------------ | :---------------- | :----------------------------- | | First Fortune Enterprises Limited | Beneficial Owner | 272,926,000 | 15.08% | | Lenovo Hony (International) Co., Ltd. | Controlled Corporation Interest | 272,926,000 | 15.08% | | Easylead Management Limited | Controlled Corporation Interest | 377,676,740 | 20.86% | | Right Lane Limited | Controlled Corporation Interest | 412,676,740 | 22.80% | | Lenovo Holdings Co., Ltd. | Controlled Corporation Interest | 412,676,740 | 22.80% | | Kaisheng Technology Group Co., Ltd. | Beneficial Owner / Controlled Corporation Interest | 416,424,621 | 23.01% | | China National Building Materials Group Co., Ltd. | Controlled Corporation Interest | 416,424,621 | 23.01% | | Bank of Communications Trustee Limited | Trustee | 152,000,000 | 8.40% | - Lenovo Holdings Co., Ltd. is a direct wholly-owned subsidiary of Right Lane Limited and is therefore deemed to have an interest in the shares held by Right Lane Limited[101](index=101&type=chunk) - China National Building Materials Group Co., Ltd. is a wholly-owned subsidiary of Kaisheng Technology Group Co., Ltd. and is therefore deemed to have an interest in the shares held by Kaisheng Technology Group Co., Ltd[101](index=101&type=chunk) [Share Option Schemes](index=20&type=section&id=Share%20Option%20Schemes) The company operates an expired but still effective old share option scheme and a new scheme adopted in 2016, with 330,000 options lapsing under the old scheme in 2020 and no activity under the new scheme - The old share option scheme was adopted on May 30, 2005, to incentivize eligible participants, with the subscription price not less than the highest of the closing price on the offer date, the average closing price for the preceding five business days, or the nominal value of the shares[105](index=105&type=chunk)[107](index=107&type=chunk) - The old share option scheme expired on June 22, 2015, but options already granted remain valid, and no further options will be granted under the old scheme[111](index=111&type=chunk)[113](index=113&type=chunk) 2020 Old Share Option Scheme Details | Participant | Grant Date | Exercise Price per Share (HKD) | Held at Jan 1, 2020 | Lapsed During Year | Held at Dec 31, 2020 | | :---------- | :--------- | :----------------------------- | :------------------ | :----------------- | :------------------- | | Cui Xiangdong | 13/5/2015 | 1.25 | 4,800,000 | – | 4,800,000 | | Lü Guo | 13/5/2015 | 1.25 | 1,400,000 | – | 1,400,000 | | Employees | 13/5/2015 | 1.25 | 25,590,000 | (330,000) | 25,260,000 | | Total | | | 30,390,000 | (330,000) | 30,060,000 | - The new share option scheme was adopted on February 19, 2016, with no options granted, exercised, cancelled, or lapsed during 2020[118](index=118&type=chunk) [Share Award Scheme](index=24&type=section&id=Share%20Award%20Scheme) Adopted in 2011 to reward and retain employees, the Share Award Scheme saw the trustee purchase 36.38 million shares for HKD 14.59 million in 2020, but no shares were granted or vested to employees - The Share Award Scheme was adopted on December 12, 2011, to recognize the contributions of selected employees, provide incentives, and attract talent[129](index=129&type=chunk)[130](index=130&type=chunk) - Bank of Communications Trustee Limited was appointed as the trustee to purchase existing shares of the company in the market with cash contributed by the group and hold them in trust for the group's employees[131](index=131&type=chunk) - For the year ended December 31, 2020, the trustee purchased **36,380,000 shares** in the market at a total purchase price of **HKD 14,592,850**[132](index=132&type=chunk) - For the year ended December 31, 2020, no shares were granted or vested to the group's directors and employees under the Share Award Scheme[132](index=132&type=chunk) [Biographies of Directors, Senior Management and Company Secretary](index=25&type=section&id=Biographies%20of%20Directors%2C%20Senior%20Management%20and%20Company%20Secretary) This section provides detailed biographies of the company's executive, non-executive, and independent non-executive directors, senior management, and company secretary, highlighting their professional backgrounds and industry experience - Mr. Cui Xiangdong is an Executive Director, an accountant and senior economist, with over **30 years of experience** in the building materials industry, enterprise management, and marketing[135](index=135&type=chunk) - Mr. Peng Shou is the Chairman and Non-Executive Director, an academician of the Chinese Academy of Engineering, a professor-level senior engineer, and an expert in inorganic material R&D and engineering design and consulting, with over **35 years of experience** in the building materials industry[136](index=136&type=chunk)[137](index=137&type=chunk) - Mr. Lü Guo is the CEO, a researcher-level senior engineer, with over **30 years of experience** in enterprise management in the glass industry[146](index=146&type=chunk) - Ms. Guo Youli is the Company Secretary, a Fellow of The Chartered Governance Institute and The Hong Kong Chartered Governance Institute, holding dual qualifications as a Chartered Secretary and Chartered Governance Professional[150](index=150&type=chunk) [Connected Transactions and Continuing Connected Transactions](index=29&type=section&id=Connected%20Transactions%20and%20Continuing%20Connected%20Transactions) In FY2020, the group engaged in various connected transactions, including environmental contracts, financial assistance, engineering and supply contracts, and procurement agreements, all compliant with listing rules and deemed fair and reasonable by independent non-executive directors - Entered into a Xianyang Flue Gas Treatment Contract with Shenzhen Kaisheng Technology Engineering Co., Ltd. for a total price of **RMB 13.12 million**, for the renovation and upgrade of flue gas treatment systems[153](index=153&type=chunk)[154](index=154&type=chunk) - Provided a one-year non-revolving loan of up to **USD 3.6 million** at an annual interest rate of **7%** to joint venture Belt and Road Glass Management Limited for the Kazakhstan project construction and working capital needs[158](index=158&type=chunk) - Entered into a Jiangsu Engineering Contract with China National Building Material International Engineering Group Co., Ltd. for a total price of approximately **RMB 50 million**, for the supply and installation of mechanical equipment for a new solar glass production line[160](index=160&type=chunk)[164](index=164&type=chunk) - Olivotto Glass Technologies S.p.A. entered into three supply contracts with Kaisheng Junheng Co., Ltd. and CNBM Bengbu Glass Industry Design & Research Institute Co., Ltd. for a total price of **EUR 4.65 million**, for the construction and upgrade of a Danner tube production line[160](index=160&type=chunk)[165](index=165&type=chunk) - Entered into a Procurement Framework Agreement with Anhui Huaguang Optoelectronic Materials Technology Group Co., Ltd. for a three-year service period, with annual caps of **RMB 890 million (2020), RMB 900 million (2021), and RMB 980 million (2022)**, for the procurement of raw materials and fuel[176](index=176&type=chunk)[179](index=179&type=chunk) - Independent non-executive directors confirmed that the continuing connected transactions were entered into in the ordinary and usual course of the group's business, on normal or better commercial terms, and were fair and reasonable to the company's shareholders[180](index=180&type=chunk) [Other Corporate Governance Matters](index=37&type=section&id=Other%20Corporate%20Governance%20Matters) In 2020, the group maintained public float, had no stock-linked agreements, and reported no significant post-period events, emphasizing strong relationships with stakeholders, environmental compliance, and risk management - For the year 2020, save for the purchase of shares for the Share Award Scheme, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[187](index=187&type=chunk) - The company has maintained a public float of not less than **25%** of the company's issued share capital as required by the Listing Rules[188](index=188&type=chunk) - The group values its relationships with employees, customers, and suppliers, striving to create a positive work environment, provide quality products and services, and establish long-term strategic partnerships[192](index=192&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - The group strictly enforces environmental protection laws and regulations, with its environmental facilities being industry-leading and all environmental indicators meeting or exceeding national standards[197](index=197&type=chunk) - For the year 2020 and up to the date of this report, the group has not experienced any significant impact on its business and operations due to serious violations of applicable laws and regulations[199](index=199&type=chunk) - The group's business operations are affected by changes in market conditions, industry standards, environmental regulations, industry competition, and customer demand, and measures have been taken to address uncertainties[203](index=203&type=chunk) [Environmental, Social and Governance Report](index=40&type=section&id=Environmental%2C%20Social%20and%20Governance%20Report) This report details the group's commitments and performance in environmental protection, social responsibility, and corporate governance, including employee welfare, sustainable development, and ethical conduct [I. Working Environment](index=40&type=section&id=I.%20Working%20Environment) The group adheres to labor laws, offers competitive remuneration, prioritizes occupational health and safety with zero COVID-19 cases in 2020, and invests in diverse employee training and activities - The group strictly complies with the "Labor Law of the People's Republic of China," the "Labor Contract Law of the People's Republic of China," and other relevant applicable laws and regulations, providing competitive remuneration and social insurance[208](index=208&type=chunk) 2020 Employee Count by Age, Region, and Gender | Year | Total Employees | Under 35 | 35-60 | Over 60 | Shandong | Shaanxi | Jiangsu | Inner Mongolia | Other | Male | Female | | :----- | :-------------- | :------- | :------ | :------- | :------- | :------ | :------- | :------------- | :---- | :--- | :----- | | 2020 | 3,391 | 647 | 2,729 | 15 | 1,088 | 497 | 1,127 | 266 | 413 | 2,882 | 509 | | 2019 | 3,419 | 583 | 2,830 | 6 | 1,111 | 509 | 1,173 | 284 | 342 | 2,906 | 513 | - The group strictly complies with safety production regulations, formulating standardized safety production management systems and occupational health and safety management systems, achieving **zero work-related fatalities in 2020**[213](index=213&type=chunk) - During the global COVID-19 pandemic in 2020, the group's domestic and overseas bases actively carried out epidemic prevention work, achieving **zero confirmed COVID-19 cases**[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - In 2020, the group provided employees with new employee onboarding training, on-the-job skills training, professional position advancement training, internal trainer training, specialized training for overseas personnel, and comprehensive skills training for senior executives, with the percentage of trained employees reaching **97.1%**[220](index=220&type=chunk) - The group adheres to fair, open, and voluntary recruitment principles, strictly prohibits child labor and forced labor, and embraces diversity, with **no cases of labor standard violations in 2020**[223](index=223&type=chunk)[226](index=226&type=chunk)[228](index=228&type=chunk) [II. Environmental Protection and Sustainable Development](index=45&type=section&id=II.%20Environmental%20Protection%20and%20Sustainable%20Development) The group is committed to green development, complying with environmental laws, investing in pollution control, achieving emission standards, reducing greenhouse gas emissions, and promoting low-carbon operations and energy-efficient products - The group has formulated an "Environmental Management System," implementing a policy of "prevention first, combining prevention and control, and comprehensive treatment," with all bases certified under the **ISO14001 Environmental Management System**[232](index=232&type=chunk) - In 2020, environmental facility operating expenses were approximately **RMB 83.35 million**, a **14% increase year-on-year**, with over **RMB 40 million** invested in environmental facility upgrades[235](index=235&type=chunk) - All of the group's production bases achieved compliant emissions for atmospheric pollutants (sulfur dioxide, nitrogen oxides, particulate matter), with nitrogen oxide emissions decreasing by **over 20%**[239](index=239&type=chunk)[240](index=240&type=chunk) 2020 Atmospheric Pollutant Emissions (tonnes) | No. | Pollutant Name | Suqian Base | Weihai Base | Shaanxi Base | Wuhai Base | Dongtai Base | Linyi Base | 2020 Total | 2019 Total | | :-- | :------------- | :---------- | :---------- | :----------- | :--------- | :----------- | :--------- | :--------- | :--------- | | 1 | Sulfur Dioxide | 18.2 | 101.8 | 24.8 | 120.8 | 168.9 | 2.2 | 437 | 494 | | 2 | Nitrogen Oxides | 20.6 | 339.9 | 184.1 | 505.6 | 259.6 | 13.3 | 1,323 | 1,720 | | 3 | Particulate Matter | 1.7 | 45.4 | 1.8 | 26.0 | 22.9 | 4.8 | 102 | 103 | - In 2020, the group generated approximately **140 tonnes of denitration waste catalysts**, with a **100% legal disposal rate**, and non-hazardous waste (desulfurization slag, domestic waste, waste material packaging bags) was all recycled[242](index=242&type=chunk)[244](index=244&type=chunk) 2020 Greenhouse Gas Emissions (tCO2) | Base | Emissions from Fossil Fuel Combustion | Emissions from Carbon Oxidation in Raw Materials | Emissions from Raw Material Decomposition | Emissions from Net Purchased Electricity | | :--------- | :---------------------------- | :--------------------------------------- | :-------------------------------- | :------------------------------------- | | Dongtai Base | 199,022 | 381 | 757,289 | 1,762 | | Weihai Base | 328,979 | 0 | 93,922 | 64,765 | | Suqian Base | 20,958 | 81 | 20,690 | 1,617 | | Linyi Base | 88,788 | 0 | 35,302 | 11,057 | | Wuhai Base | 106,757 | 281 | 44,309 | 23,117 | | Shaanxi Base | 127,848 | 132 | 32,142 | 16,891 | Group Greenhouse Gas Emissions (tCO2) | Year | Total | | :----- | :---------- | | 2020 | 1,294,588 | | 2019 | 1,262,895 | | 2018 | 1,516,000 | - All of the group's bases have constructed waste heat power generation systems, utilizing flue gas from glass melting furnaces to generate electricity for self-use, thereby reducing production costs[249](index=249&type=chunk) - In 2020, the group's total energy consumption included **280.06 million cubic meters of coke oven gas**, **96,176 tonnes of petroleum coke powder**, **45,013 tonnes of fuel oil**, **61.74 million cubic meters of natural gas**, **226.10 million kWh of electricity**, and **53,050 tonnes of coal**[253](index=253&type=chunk) - In 2020, the group's total water consumption was **2.8372 million tonnes**, with all production wastewater at each base recycled, and production lines adopting closed-loop circulating water systems, achieving a circulating rate of **over 98%** for indirect cooling water[256](index=256&type=chunk)[257](index=257&type=chunk) - The group actively promotes low-carbon economic solutions, adjusts its product and energy structures, and increases R&D investment in energy-saving products such as on-line Low-E coated glass, on-line Sun-E energy-saving coated glass, and photovoltaic glass[258](index=258&type=chunk) [III. Corporate Governance](index=52&type=section&id=III.%20Corporate%20Governance) The group maintains stringent quality control, is ISO9001-2015 certified, focuses on R&D for high-value products, implements dynamic and green supply chain management, ensures effective customer service, and upholds anti-corruption policies with no related lawsuits in 2020 - The group implements full-process quality control from "product design—product manufacturing—after-sales service" and operates strictly in accordance with the **ISO9001-2015 Quality Management System** requirements[260](index=260&type=chunk) - In 2020, the group had **no sold products that required recall** due to safety and health reasons[261](index=261&type=chunk) - The group achieved excellent results in R&D of energy-saving glass and high-value-added products, including winning the **Second Prize of the National Technology Invention Award** and achieving mass production of on-line Low-E glass products with an emissivity of **≤0.13**[262](index=262&type=chunk) 2020 Production Volume of Energy-Saving and High-Value-Added Glass (ten thousand tonnes) | Product | Dongtai Base | Weihai Base | Suqian Base | Total | | :-------------------------------- | :----------- | :---------- | :---------- | :---- | | On-line LOW-E Coated | 1.19 | 0.39 | 0 | 1.58 | | On-line SUN-E Ⓣ Energy-Saving Coated | 7.10 | 4.67 | 0 | 11.77 | | Automotive / Rearview Mirror / Electronic / Photovoltaic Glass | 0 | 0 | 6.29 | 6.29 | - The group has established long-term strategic partnerships with **over 200 qualified suppliers**, implementing dynamic management and a green supply chain management philosophy[268](index=268&type=chunk)[269](index=269&type=chunk) - The group operates a national marketing service and complaint hotline, and has established a strict customer complaint feedback mechanism, with a total of **353 quality complaints in 2020**, all of which were processed and resolved[273](index=273&type=chunk)[276](index=276&type=chunk) - The group has an internal Compliance Supervision Department to strengthen internal controls and support internal anti-corruption reporting, with **no corruption lawsuits occurring in 2020**[277](index=277&type=chunk) [IV. Social Responsibility](index=55&type=section&id=IV.%20Social%20Responsibility) In 2020, the group actively responded to the COVID-19 pandemic, simultaneously engaging in social welfare activities, and encouraging employees to participate in community service, poverty alleviation, and environmental protection - The group actively procured epidemic prevention materials, and while doing a good job in epidemic prevention and control, it actively undertook social responsibilities and engaged in social welfare activities[278](index=278&type=chunk) - The Weihai base organized party members to donate to "support COVID-19 work"; the Linyi base donated to impoverished villagers; and the Wuhai base participated in donation activities for out-of-school children[278](index=278&type=chunk) - Overseas bases responded to the "Belt and Road" initiative, fulfilling social responsibilities, with the Nigerian company helping local employees master production technology and increase their income through "teaching, helping, and guiding"[278](index=278&type=chunk) [Corporate Governance Report](index=56&type=section&id=Corporate%20Governance%20Report) This report outlines the company's adherence to corporate governance codes, detailing board responsibilities, committee functions, director appointments, and communication with shareholders [Compliance with Corporate Governance Code and Model Code](index=56&type=section&id=Compliance%20with%20Corporate%20Governance%20Code%20and%20Model%20Code) The company largely complied with the Corporate Governance Code in 2020, with minor deviations regarding the Chairman's meetings with IEDs and temporary insufficient IEDs on the Nomination Committee, while all directors adhered to the Model Code for securities transactions - The company has complied with the applicable code provisions of the Corporate Governance Code, except for the deviations listed in Corporate Governance Code provisions A.2.7 and A.5.1[282](index=282&type=chunk) - Deviation from A.2.7: The Chairman did not hold meetings with independent non-executive directors without the presence of other directors[282](index=282&type=chunk) - Deviation from A.5.1: The number of members of the Nomination Committee was insufficient due to the passing of independent non-executive director Mr. Zhao Lihua, and the company has applied for a three-month extension to re-comply with the requirements[283](index=283&type=chunk) - All directors have confirmed that they have complied with the Model Code for Securities Transactions by Directors of Listed Issuers throughout the financial year ended December 31, 2020[284](index=284&type=chunk) [Board Responsibilities and Composition](index=57&type=section&id=Board%20Responsibilities%20and%20Composition) The board is responsible for company leadership, strategy, performance monitoring, and risk management, meeting at least four times annually, with distinct roles for Chairman and CEO, and a diverse composition of seven directors - The board's primary roles are to establish company values, formulate strategies, monitor operational and financial performance, and develop risk management policies[287](index=287&type=chunk) - The board plans to hold at least **four meetings annually**, and a total of **4 meetings** were held in 2020[287](index=287&type=chunk) - The roles of Chairman and Chief Executive Officer are held by different individuals to maintain independence and balanced judgment[292](index=292&type=chunk) - As of the date of the annual report, the board comprises **seven directors**, including one executive director, four non-executive directors, and two independent non-executive directors[293](index=293&type=chunk) - There are no financial, business, family, or other material relationships among board members, ensuring independence[293](index=293&type=chunk) [Appointment and Continuous Development of Directors](index=58&type=section&id=Appointment%20and%20Continuous%20Development%20of%20Directors) Director appointments, re-election, and removal follow company articles, with non-executive directors serving terms not exceeding three years; the board ensures new directors are informed and encourages continuous professional development - In accordance with the company's Bye-laws, the board may appoint individuals to fill casual vacancies or as additional members, who must stand for re-election at the next general meeting; at least **one-third of the directors** must retire by rotation annually[295](index=295&type=chunk) - All non-executive directors and independent non-executive directors are appointed by the company for terms not exceeding **three years**[295](index=295&type=chunk) - The board ensures that each newly appointed director has an appropriate understanding of the group's operations and business, and continuously updates directors on legal and regulatory developments[297](index=297&type=chunk) - In 2020, directors engaged in continuous professional development by attending seminars/conferences/forums, reading newspapers/publications/magazines, and reviewing memoranda/materials provided by the company[304](index=304&type=chunk)[305](index=305&type=chunk) [Board Committees](index=61&type=section&id=Board%20Committees) The board has established Audit, Nomination, Remuneration, and Strategy Committees, each with defined responsibilities for financial oversight, board structure, compensation policy, and long-term strategy, holding regular meetings - The board currently has an Audit Committee, a Nomination Committee, a Remuneration Committee, and a Strategy Committee, all empowered by the board according to their respective terms of reference[308](index=308&type=chunk) - The primary responsibilities of the Audit Committee are to make recommendations on the appointment, reappointment, and removal of external auditors; review financial statements and significant opinions on financial reporting; and oversee the group's financial reporting system, risk management, and internal control systems[309](index=309&type=chunk) - The primary responsibilities of the Nomination Committee include reviewing the structure, size, and composition of the board; identifying individuals with suitable qualifications to become directors and advising the board; and making recommendations to the board on the appointment or re-appointment of directors and succession planning[312](index=312&type=chunk) - The primary responsibilities of the Remuneration Committee include making recommendations to the board on the overall remuneration policy and structure for the group's directors and senior management, and on establishing formal and transparent procedures for such remuneration[326](index=326&type=chunk) - The Strategy Committee is primarily responsible for reviewing the company's medium and long-term strategies[328](index=328&type=chunk) 2020 Board and Board Committee Meeting Attendance Record | Director Name | Board Meetings | Audit Committee Meetings | Nomination Committee Meetings | Remuneration Committee Meetings | AGM | EGM | | :---------------- | :------------- | :----------------------- | :---------------------------- | :------------------------------ | :-- | :-- | | Mr. Cui Xiangdong | 4/4 | – | – | – | 1/1 | 1/1 | | Mr. Peng Shou | 4/4 | 2/2 | – | 2/2 | 0/1 | 0/1 | | Mr. Zhao Linghuan | 4/4 | – | – | – | 1/1 | 0/1 | | Mr. Zhou Cheng | 4/4 | – | 1/1 | – | 1/1 | 1/1 | | Mr. Zhang Jinshu | 4/4 | – | – | – | 1/1 | 1/1 | | Mr. Zhang Baiheng | 4/4 | 2/2 | 1/1 | 2/2 | 1/1 | 1/1 | | Mr. Zhao Lihua | 3/4 | 2/2 | 1/1 | 2/2 | 1/1 | 0/1 | | Mr. Chen Huachen | 4/4 | 2/2 | – | – | 1/1 | 1/1 | [Accountability, Audit and Risk Management](index=67&type=section&id=Accountability%2C%20Audit%20and%20Risk%20Management) The board is accountable to shareholders for financial statements and internal controls, with KPMG as auditor. The board and Audit Committee oversee effective risk management and internal control systems, which were deemed effective and adequate in 2020 - Directors confirm their responsibility for preparing the group's financial statements for the financial year ended December 31, 2020, and believe that the financial statements truly and fairly reflect the group's results and state of affairs[334](index=334&type=chunk) - For the year 2020, the total fees payable to KPMG for annual audit services and interim review, as well as other services, amounted to **RMB 6.98 million**, with non-audit service fees of **RMB 0.2 million**[337](index=337&type=chunk) - The board is solely responsible for evaluating and determining the nature and extent of risks it is willing to undertake in achieving the company's strategic objectives, and for establishing and maintaining sound and effective risk management and internal control systems for the group[339](index=339&type=chunk) - The Audit Committee assists the board in leading management and overseeing the design, implementation, and monitoring of risk management and internal control systems[340](index=340&type=chunk) - The board and the Audit Committee consider the risk management and internal control systems to be effective and adequate[341](index=341&type=chunk) [Company Secretary and Shareholders' Rights](index=69&type=section&id=Company%20Secretary%20and%20Shareholders'%20Rights) The Company Secretary advises on corporate governance, ensuring proper board procedures. Shareholders can convene extraordinary general meetings and propose resolutions, with inquiries directed to the company's principal office. A dividend policy balances shareholder expectations with capital management - Ms. Guo Youli, the Company Secretary, is a full-time employee of the company, responsible for advising the board on corporate governance matters and ensuring proper board procedures are followed[343](index=343&type=chunk) - Shareholders holding not less than **one-tenth of the paid-up share capital** of the company carrying voting rights may, in accordance with Section 74 of the Bermuda Companies Act, require the directors to convene an extraordinary general meeting[344](index=344&type=chunk) - Shareholders may, in accordance with Sections 79 and 80 of the Companies Act, require the company to give notice to shareholders or circulate statements regarding resolutions to be moved at an annual general meeting[347](index=347&type=chunk) - Shareholders wishing to make inquiries and raise concerns with the board may send their questions by post to the company's principal place of business in Hong Kong[353](index=353&type=chunk) - The company has adopted a dividend policy aimed at balancing shareholder expectations with prudent capital management and ensuring the group's ability to continue as a going concern[354](index=354&type=chunk)[355](index=355&type=chunk) [Communication with Shareholders](index=72&type=section&id=Communication%20with%20Shareholders) The company values shareholder communication, utilizing general meetings and a dedicated policy, and maintains high corporate transparency through its website and the HKEX website for timely information disclosure - The company recognizes the importance of communication with shareholders and places high emphasis on it, with general meetings providing an excellent channel for the board and shareholders to communicate and exchange views[360](index=360&type=chunk) - The board has adopted a shareholder communication policy and regularly reviews it to ensure its effectiveness[360](index=360&type=chunk) - The company's 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[363](index=363&type=chunk) [Independent Auditor's Report](index=74&type=section&id=Independent%20Auditor's%20Report) This report presents the independent auditor's opinion on the group's consolidated financial statements, highlighting key audit matters and outlining the responsibilities of both directors and auditors [Opinion and Basis for Opinion](index=74&type=section&id=Opinion%20and%20Basis%20for%20Opinion) KPMG issued an unmodified opinion on the group's consolidated financial statements for FY2020, affirming their fair presentation in accordance with HKFRS and compliance with the Companies Ordinance, based on an audit conducted under HKSA - The auditor issued an unmodified opinion on the consolidated financial statements, believing they present a true and fair view of the group's consolidated financial position as of December 31, 2020, and its consolidated financial performance and consolidated cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards[367](index=367&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[367](index=367&type=chunk) [Key Audit Matters](index=74&type=section&id=Key%20Audit%20Matters) The auditor identified three key audit matters: assessing the group's going concern ability, potential impairment of property, plant, and equipment, and the inherent subjectivity in goodwill impairment assessment - Key audit matters include assessing the group's **going concern ability**, as the group had net current liabilities of **RMB 1,601,920 thousand** as of December 31, 2020, and management used significant key assumptions in its cash flow forecasts[370](index=370&type=chunk) - Key audit matters also include the potential impairment of **property, plant and equipment**, as it is the most significant asset amount in the consolidated statement of financial position, and management exercised significant judgment in assessing its recoverable amount[376](index=376&type=chunk) - The assessment of potential **goodwill impairment** is also a key audit matter due to its inherent subjectivity and the need for significant judgment and estimates, involving goodwill of **EUR 12.5 million** arising from the acquisition of OGT Group[380](index=380&type=chunk) [Responsibilities of Directors and Auditor](index=79&type=section&id=Responsibilities%20of%20Directors%20and%20Auditor) Directors are responsible for preparing fair financial statements and internal controls, while the auditor's role is to provide reasonable assurance against material misstatement and report to shareholders, exercising professional judgment and communicating with the Audit Committee - 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 such internal control as they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error[383](index=383&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 our opinion[384](index=384&type=chunk) - The auditor communicated with the Audit Committee regarding the planned scope and timing of the audit, significant audit findings, including any significant deficiencies in internal control that were identified during the audit[385](index=385&type=chunk) [Consolidated Financial Statements](index=82&type=section&id=Consolidated%20Financial%20Statements) This section presents the group's complete set of consolidated financial statements, including the income statement, statement of comprehensive income, balance sheet, statement of changes in equity, and cash flow statement [Consolidated Statement of Profit or Loss](index=82&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) For the year ended December 31, 2020, the group reported revenue of RMB 3,158,567 thousand and a gross profit of RMB 738,724 thousand, but ultimately recorded a net loss of RMB 98,478 thousand due to increased financing costs and income tax expenses Consolidated Statement of Profit or Loss Key Data (RMB thousand) | Indicator | 2020 | 2019 | | :-------------------------- | :---------- | :---------- | | Revenue | 3,158,567 | 2,369,230 | | Cost of Sales | (2,419,843) | (2,084,588) | | Gross Profit | 738,724 | 284,642 | | Other Income | 30,413 | 319,597 | | Operating Profit | 269,554 | 275,258 | | Financing Costs | (263,674) | (185,728) | | Profit Before Tax | 5,155 | 89,428 | | Income Tax | (103,633) | (16,724) | | Net (Loss)/Profit for the Year | (98,478) | 72,704 | | Basic (Loss)/Earnings Per Share (RMB cents) | (5.07) | 4.87 | [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=83&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the year ended December 31, 2020, the group reported a net loss of RMB 98,478 thousand, with total comprehensive loss of RMB 69,444 thousand after positive foreign exchange differences from financial statement translation Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data (RMB thousand) | Indicator | 2020 | 2019 | | :--------------------------------------- | :---------- | :---------- | | Net (Loss)/Profit for the Year | (98,478) | 72,704 | | Other Comprehensive Income: | | | | - Net Change in Fair Value Reserve (Non-reclassifiable) | (31) | (191) | | - Exchange Differences | 29,065 | (9,840) | | Total Comprehensive (Loss)/Income for the Year | (69,444) | 62,673 | [Consolidated Statement of Financial Position](index=84&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2020, the group's total assets were RMB 7,201,243 thousand, with net current liabilities of RMB 1,601,920 thousand and net assets of RMB 2,167,996 thousand Consolidated Statement of Financial Position Key Data (RMB thousand) | Indicator | 2020 | 2019 | | :------------------------- | :---------- | :---------- | | Total Non-Current Assets | 5,050,642 | 5,011,321 | | Total Current Assets | 2,150,601 | 2,176,790 | | Total Current Liabilities | 3,752,521 | 3,521,826 | | Net Current Liabilities | (1,601,920) | (1,345,036) | | Total Assets Less Current Liabilities | 3,448,722 | 3,666,285 | | Total Non-Current Liabilities | 1,280,726 | 1,416,566 | | Net Assets | 2,167,996 | 2,249,719 | | Total Equity | 2,167,996 | 2,249,719 | - Property, plant and equipment was the largest non-current asset, totaling **RMB 4,265,335 thousand**[401](index=401&type=chunk) - Cash and bank balances amounted to **RMB 806,137 thousand**[401](index=401&type=chunk) [Consolidated Statement of Changes in Equity](index=85&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) For the year ended December 31, 2020, total equity attributable to equity holders decreased from RMB 2,077,123 thousand at the beginning of the year to RMB 2,010,404 thousand at year-end, primarily due to the net loss for the year and share purchases under the share award scheme Consolidated Statement of Changes in Equity Key Data (RMB thousand) | Indicator | Balance at Jan 1, 2020 | Loss for the Year | Other Comprehensive Income | Shares Purchased Under Share Award Scheme | Capital Contribution from Non-Controlling Shareholders | Balance at Dec 31, 2020 | | :------------------------- | :--------------------- | :---------------- | :------------------------- | :---------------------------------------- | :------------------------------------- | :---------------------- | | Share Capital | 84,867 | – | – | – | – | 84,867 | | Share Premium | 1,780,249 | – | – | – | – | 1,780,249 | | Shares Held for Share Award Scheme | (64,253) | – | – | (11,436) | – | (75,689) | | Retained Profits | 676,791 | (84,713) | – | – | – | 592,078 | | Total Equity Attributable to Equity Holders of the Company | 2,077,123 | (84,713) | (55,677) | (11,436) | 394 | 2,010,404 | | Non-Controlling Interests | 172,596 | (13,765) | (13,767) | – | (1,237) | 157,592 | | Total Equity | 2,249,719 | (98,478) | (69,444) | (11,436) | (1,237) | 2,167,996 | [Consolidated Statement of Cash Flows](index=88&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) For the year ended December 31, 2020, the group generated net cash from operating activities of RMB 629,377 thousand, used net cash of RMB 397,765 thousand in investing activities, and RMB 84,616 thousand in financing activities, resulting in a net increase in cash and cash equivalents of RMB 146,996 thousand Consolidated Statement of Cash Flows Key Data (RMB thousand) | Indicator | 2020 | 2019 | | :------------------------------------ | :---------- | :---------- | | Net Cash From Operating Activities | 629,377 | 138,344 | | Net Cash Used In Investing Activities | (397,765) | (240,552) | | Net Cash (Used In)/From Financing Activities | (84,616) | 94,218 | | Net Increase/(Decrease) in Cash and Cash Equivalents | 146,996 | (7,990) | | Cash and Cash Equivalents at January 1 | 565,188 | 570,832 | | Effect of Foreign Exchange Rate Changes | (14,070) | 2,346 | | Cash and Cash Equivalents at December 31 | 698,114 | 565,188 | - Operating cash flow significantly increased, primarily due to profit before tax, depreciation and amortization, decrease in inventories, and decrease in trade and other receivables[420](index=420&type=chunk) - Investing cash outflow was mainly for the purchase of property, plant and equipment, partially offset by proceeds from relocation of production plants and disposal of property[420](index=420&type=chunk) - Financing cash outflow was primarily for repayment of bank and other borrowings, redemption of convertible bonds, and payment of borrowing costs[423](index=423&type=chunk) [Notes to the Consolidated Financial Statements](index=90&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes provide comprehensive supplementary information to the financial statements, detailing accounting policies, judgments, estimates, segment reporting, income, expenses, assets, liabilities, equity, related party transactions, and financial risk management - 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[426](index=426&type=chunk) - As of December 31, 2020, the group had net current liabilities of **RMB 1,601,920 thousand**, but the directors believe the group has sufficient funds to meet liabilities due in the next 12 months, thus preparing financial statements on a going concern basis[431](index=431&type=chunk) - Revenue increased by **33% in 2020**, primarily from sales of glass products (**RMB 3,024,433 thousand**) and service contracts (**RMB 115,230 thousand**)[569](index=569&type=chunk) - Other income significantly decreased to **RMB 30,413 thousand in 2020**, mainly because the net gains from relocation of production plants (**R

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 | – |

ĈNG中玻 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 *值供識別 1 目錄 | --- | --- | |------------------|-------| | | | | 目錄 | | | | | | 公司資料 | | | 管理層討論及分析 | | | 其他資料 | | 致中國玻璃控股有限公司董事會審閱報告 19 綜合損益表 20 綜合損益及其他全面收益表 21 綜合財務狀況表 22 綜合權益變動表 24 簡明綜合現金流量表 26 未經審核中期財務報告附註 27 2019年中期報告 中國玻璃控股有限公司 公司資料 公司資料 2 | --- | --- | |--------------------------------------------------------------|---------------------------------------------------------------------| | | | | 董事會 | 高級管理層 | | 執行董事 | 李平先生 | ...

[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)