中国玻璃(03300) - 2018 - 年度财报

Company Information 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][7] Financial Highlights 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][11] 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 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] Management Discussion and Analysis 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 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] 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] - 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] Financial Review 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] - 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] Capital Structure, Liquidity, and Financial Resources 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] Outlook and Plans 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][37][38] - 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] Other Disclosures 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] - 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] Directors' Report 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 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] Directors and Shareholdings 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 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][108][111] - 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][117] - 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][127] Biographies of Directors, Senior Management, and Company Secretary 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 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] - The company has maintained a public float of not less than 25% of its issued share capital as required by the Listing Rules[152] Environmental, Social and Governance Report 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 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] Environmental Protection 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] - 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] Operating Practices and Product Responsibility 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][206] - 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] Anti-Corruption and Community Engagement 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] - For the year ended December 31, 2018, social engagement contributions amounted to RMB 358,035, an increase from RMB 315,200 in 2017[216] Corporate Governance Report 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 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] - 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] Board Committees 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 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] - 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] Shareholder Rights and Communication 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] - Shareholders may submit written notice to the company's head office to propose any person for election as a director[291] Independent Auditor's Report 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] - 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][305][311][315] Consolidated Financial Statements 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 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 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 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][386][387] - 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] Revenue and Segment Reporting 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 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] - The acquisition recognized identifiable net assets at a fair value of Euro 7,690,000, including Euro 16,351,000 in intangible assets[735] Financial Risk Management 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][763] - 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][778]