中国玻璃(03300) - 2020 - 年度财报

Company Information 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 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] - 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] Company Contact and Service Institutions 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] - Principal bankers include China Construction Bank, Bank of Shanghai, and Bank of Communications, with KPMG as the auditor[8] - The company's stock code is HKEX: 3300, and its website is www.chinaglassholdings.com[8](index=8&type=chunk) Financial Highlights This section presents a concise overview of the group's financial performance, assets, and liabilities for the reporting period Performance Overview 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] - 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] Assets and Liabilities Overview 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] - Net assets decreased from RMB 2,249,719 thousand in 2019 to RMB 2,167,996 thousand in 2020[12] Chairman's Report The Chairman's report reviews the company's operational performance in 2020 and outlines strategic plans and outlook for 2021 2020 Operating Review 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] - The company optimized its organizational structure, establishing a comprehensive information management model integrating "marketing, procurement, production technology, finance, and investment"[16] - 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] 2021 Outlook and Strategy 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] - 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] Management Discussion and Analysis 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 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] - 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] - 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] Raw Materials and Manufacturing Costs 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] - Prices for mineral raw materials (silica sand, limestone, dolomite, etc.) remained relatively stable[23] - 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] Production, Sales and Selling Price 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 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] - 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] - 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] Key Initiatives in 2020 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] - 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] - 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] - Improved the performance incentive system by establishing a "Performance Contract" assessment mechanism and strengthening compliance supervision through various special audits[34] - Established an epidemic prevention leading group and formulated and activated a COVID-19 prevention and control emergency plan to strengthen epidemic prevention[35] Market Outlook and 2021 Work Plan 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] - 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] - 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][40] Financial Review 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] - 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][53][54] Capital Structure and Liquidity 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] Pledged Assets and Contingent Liabilities 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] - Approximately RMB 110 million of trade and bills receivables were pledged[59] - The total pledged amount was approximately RMB 601 million[59] - The group had no significant contingent liabilities[60] Significant Investments and Future Plans 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] - 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] - The potential acquisition is expected to be funded by the company's internal resources[61] Human Resources and Remuneration 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] - 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] - The company has conditionally adopted a share option scheme and a share award scheme for eligible participants and certain employees[64] Final Dividend and Exchange Rate Risk 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] - The group's transactions and monetary assets are primarily denominated in RMB, HKD, and USD, exposing it to exchange rate fluctuation risks[66] - For the year ended December 31, 2020, the group did not use any derivative instruments for hedging[66] Major Customers and Suppliers 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] - 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] - 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] Directors' Report 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 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] - 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][72] - 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] Board Composition and Independence 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] - 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] - 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] Directors' Interests and Remuneration 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] 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] Major Shareholders' Interests 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] - 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] Share Option Schemes 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][107] - 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][113] 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] Share Award Scheme 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][130] - 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] - 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] - 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] Biographies of Directors, Senior Management and Company Secretary 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] - 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][137] - 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] - 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] Connected Transactions and Continuing Connected Transactions 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][154] - 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] - 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][164] - 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][165] - 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][179] - 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] Other Corporate Governance Matters 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] - 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] - 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][195][196] - 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] - 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] - 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] Environmental, Social and Governance Report 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 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] 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] - 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][216][217] - 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] - 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][226][228] II. Environmental Protection and Sustainable Development 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] - 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] - 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][240] 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][244] 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] - 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] - 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][257] - 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] III. Corporate Governance 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] - In 2020, the group had no sold products that required recall due to safety and health reasons[261] - 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] 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][269] - 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][276] - 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] IV. Social Responsibility 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] - 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] - 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] Corporate Governance Report 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 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] - Deviation from A.2.7: The Chairman did not hold meetings with independent non-executive directors without the presence of other directors[282] - 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] - 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] Board Responsibilities and Composition 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] - The board plans to hold at least four meetings annually, and a total of 4 meetings were held in 2020[287] - The roles of Chairman and Chief Executive Officer are held by different individuals to maintain independence and balanced judgment[292] - 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] - There are no financial, business, family, or other material relationships among board members, ensuring independence[293] Appointment and Continuous Development of Directors 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] - All non-executive directors and independent non-executive directors are appointed by the company for terms not exceeding three years[295] - 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] - 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][305] Board Committees 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] - 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] - 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] - 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] - The Strategy Committee is primarily responsible for reviewing the company's medium and long-term strategies[328] 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 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] - 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] - 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] - The Audit Committee assists the board in leading management and overseeing the design, implementation, and monitoring of risk management and internal control systems[340] - The board and the Audit Committee consider the risk management and internal control systems to be effective and adequate[341] Company Secretary and Shareholders' Rights 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] - 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] - 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] - 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] - 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][355] Communication with Shareholders 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] - The board has adopted a shareholder communication policy and regularly reviews it to ensure its effectiveness[360] - 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] Independent Auditor's Report 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 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] - 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] Key Audit Matters 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] - 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] - 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] Responsibilities of Directors and Auditor 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] - 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] - 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] Consolidated Financial Statements 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 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 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 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] - Cash and bank balances amounted to RMB 806,137 thousand[401] Consolidated Statement of Changes in Equity 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 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] - 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] - Financing cash outflow was primarily for repayment of bank and other borrowings, redemption of convertible bonds, and payment of borrowing costs[423] Notes to the Consolidated Financial Statements 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] - 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] - 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] - Other income significantly decreased to RMB 30,413 thousand in 2020, mainly because the net gains from relocation of production plants (**R