annual report annual report 2017 - lomonbillions.global · this document is a free translation of...
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ANNUAL REPORT
Annual Report
2017
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This document is a free translation of the annual report and consolidated financial
statements of Lomon Billions Group Co Limited for the twelve-month period ended
December 31, 2017 produced for the convenience of English speaking readers.
In the event of any ambiguity or conflict between statements or other items contained
herein and the original version which was prepared in Mandarin, the relevant statement
or item of the original Mandarin version shall prevail. While all possible care has been
taken to ensure that this translation is an accurate representation of the original
document, this English language version has not been audited by the company’s
statutory auditors and in all matters of interpretation of information, views or opinions
expressed therein, only the original language version of the document in Mandarin is
legally binding.
As such, this translation may not be relied upon to sustain any legal claim, nor be used
as the basis of any legal opinion, and Lomon Billions Group Co Limited expressly
disclaims all liability for any inaccuracy herein.
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Important
Reminder
The board of directors, board of supervisors, directors, supervisors and senior officers warrant
that the contents of the Annual Report are true, accurate and complete and do not contain false
records, misleading statements or major omissions, for which they will assume several and joint
legal liabilities.
Mr. XU Gang, Chairman, and QIAO Zhuqing, head of the accounting organization (accounting
officer) declare that the financial report in the Annual Report is true, accurate and complete.
All directors have attended the board meeting at which this Report was considered.
The profit distribution plan approved by the board of directors is as follows: subject to a base
number of 2,032,095,439 shares, a cash dividend of 5.5 yuan (including tax) per 10 shares and 0
shares of bonus stocks (including tax) will be distributed to all shareholders, without
capitalization of common reserve fund.
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CO
NT
EN
TS
Table of
Contents
Section 1 Definitions………………………………………………………………… 4
Section 2 Company Profile and Major Financial Indicators………………………… 5
Section 3 Business Overview of the Company……………………………………… 8
Section 4 Business Situation Discussion and Analysis……………………………… 10
Section 5 Important Matters…………………………………………………………. 20
Section 6 Share Changes and Shareholders…………………………………………. 30
Section 7 Preferred Shares…………………………………………………....……… 33
Section 8 Directors, Supervisors, Senior Officers and Employees…………………. 34
Section 9 Company Governance……………………………………………………. 40
Section 10 Corporate Bonds………………………………………………....……… 43
Section 11 Financial Report……………………………………………………….... 44
Section 12 Category of Documents for Reference…………………………………. 126
Annex: 2017 Social Responsibility Report - Lomon Billions Group Co., Ltd.…… 127
Lomon Billions
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Section 1 Definitions
Item Refers to Definition
The Company, Company, Listed Company, Lomon
Billions Refers to Lomon Billions Group Co., Ltd.
Company Law Refers to Company Law of the People's Republic of China
Securities Law Refers to Securities Law of the People's Republic of China
Articles of Association Refers to Articles of Association of Lomon Billions Group Co.,
Ltd.
CSRC Refers to China Securities Regulatory Commission
SSE Refers to Shenzhen Stock Exchange
Accountant Refers to BDO CHINA SHU LUN PAN CERTIFIED PUBLIC
ACCONTANTS LLP
Lawyer Refers to AllBright Law Offices (Shenzhen)
Lomon Titanium Deyang Refers to Sichuan Lomon Titanium Industry Co., Ltd.
Lomon Titanium Xiangyang Refers to Xiangyang Lomon Titanium Industry Co., Ltd.
Panzhihua Company Refers to Sichuan Lomon Mining and Metallurgy Co., Ltd.
Yuan, Ten Thousand yuan Refers to RMB yuan, RMB Ten Thousand yuan
Reporting Period Refers to From January 01, 2017 to December 31, 2017
New Materials Company Refers to Henan Billions New Materials Co., Ltd.
Financial Leasing Company Refers to Billions Financial Leasing (Guangzhou) Co., Ltd.
Ruierxin Refers to Panzhihua Ruierxin Industry and Trade Co., Ltd.
Lomon Billions
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Section 2 Company Profile and Major Financial Indicators I. Company Information
Stock abbreviation Lomon Billions
Stock code 002601
Stock Exchange Shenzhen Stock Exchange
Chinese name of the Company 龙蟒佰利联集团股份有限公司(Lomon Billions Group Co., Ltd.)
Chinese abbreviation of the Company 龙蟒佰利联(Lomon Billions)
Foreign name of the Company Lomon Billions Group Co., Ltd
Foreign name abbreviation of the Company Lomon Billions
Legal representative of the Company XU Gang
Registered address Fengfeng Office, Zhongzhan District, Jiaozuo, Henan Province
Zip code for registered address 454191
Office address Fengfeng Office, Zhongzhan District, Jiaozuo, Henan Province
Zip code for office address 454191
Company website http://www.lomonbillions.com/
E-mail [email protected]
II. Contacts and Contact Information
Board Secretary Securities affairs representative
Name ZHANG Haitao HAO Junjie
Address Fengfeng Office, Zhongzhan District, Jiaozuo,
Henan Province
Fengfeng Office, Zhongzhan District, Jiaozuo,
Henan Province
Tel. 0391-3126666 0391-3126666
Fax 0391-3126111 0391-3126111
E-mail [email protected] [email protected]
III. Information Disclosure and Preparation Location
The name of the Company's selected information disclosure media China Securities Journal, Securities Times
Website designated by CSRC for the posting of annual reports http://www.cninfo.com.cn
Location for the preparation of the Annual Report The office of the board of directors of the Company.
IV. Registration Changes
Organization code N/A
Changes of the primary business of the Company since its listing None
Changes of previous controlling shareholders None
V. Other Relevant Materials Accounting firm engaged by the Company
Name of accounting firm BDO CHINA SHU LUN PAN CERTIFIED PUBLIC ACCONTANTS LLP
Lomon Billions
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Office address of the accounting firm F28, Maotai Building, No. 29 North Third Ring Middle Road, Xicheng District, Beijing
Signature of accountant signatory XU Peimei, ZHANG Zhen
Sponsor institution engaged by the Company for the performance of ongoing supervision during the
Reporting Period
Name of sponsor institution Office address of sponsor institution: Name of sponsor representative Ongoing supervision period
GF Securities Co., Ltd. Metropolitan Plaza, No.183 North
Tianhe Road, Guangzhou CHENG Yan, WU Caiyu September 2016 - December 2017
Financial advisor engaged by the Company for the performance of ongoing supervision during the
Reporting Period: N/A
VI. Major Accounting Data and Financial Indicators Does the Company need to perform retroactive adjustment or reiteration of the accounting data of prior
years: No
2017 2016 Increase or decrease
over last year 2015
Operating income (yuan) 10,257,509,524.84 4,135,559,614.70 148.03% 2,634,532,199.73
Net profit attributable to shareholders of listed
company (yuan) 2,502,413,958.33 442,105,136.22 466.02% 111,435,586.31
Net profit attributable to shareholders of listed
company net of non-recurring gains and losses
(yuan)
2,448,921,663.51 449,914,781.86 444.31% 102,268,700.99
Net cash flows from operating activities (yuan) 2,367,767,996.78 432,222,148.37 447.81% -561,933,424.30
Basic earnings per share (yuan/share) 1.25 0.43 190.70% 0.16
Diluted earnings per share (yuan/share) 1.25 0.43 190.70% 0.16
Weighted average return on equity 19.14% 8.91% Up 10.24% 4.85%
End of 2017 End of 2016
Increase or decrease
over the end of last
year
End of 2015
Total assets (yuan) 20,846,353,820.17 18,048,563,627.76 15.50% 5,761,043,537.93
Net assets attributable to shareholders of listed
company (yuan) 12,886,662,146.51 12,339,880,136.00 4.43% 2,298,228,109.75
The total share capital of the Company as at the trading date prior to disclosure:
The total share capital of the Company as at the trading date prior to disclosure (share) 2,032,095,439
Fully diluted earnings per share calculated using the latest share capital (yuan/share) 1.2314
Are there corporate bonds: No
Is there a continuous loss in the most recent two consecutive years: No
VII. The differences in accounting data under the domestic and foreign
accounting standards
1. Differences in net profit and net asset in financial reports disclosed in accordance with international
accounting standards and Chinese accounting standards, respectively.
There are no differences in net profit and net asset in financial reports disclosed in accordance with
international accounting standards and Chinese accounting standards respectively during the Reporting
Period.
2. Differences in net profit and net asset in financial reports disclosed in accordance with foreign
accounting standards and Chinese accounting standards, respectively.
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There are no differences in net profit and net asset in financial reports disclosed in accordance with
foreign accounting standards and Chinese accounting standards respectively during the Reporting Period.
VIII. Major financial indicators by quarter
Monetary Unit: Yuan
Q1 Q2 Q3 Q4
Operating income 2,350,285,196.76 2,610,058,265.67 2,593,046,516.64 2,704,119,545.77
Net profit attributable to shareholders of listed company 585,196,818.10 724,735,703.15 610,803,651.83 581,677,785.25
Net profit attributable to shareholders of listed company net
of non-recurring gains and losses 571,146,372.36 708,146,308.98 602,117,562.06 567,511,420.11
Net cash flows from operating activities 57,219,612.21 699,138,606.95 455,928,306.84 1,155,481,470.78
Are there any significant differences between the above financial indicators or their total figures and the
relevant financial indicators of quarterly reports and semi-annual reports disclosed by the Company: No
IX. Items and amount of non-recurring profit and loss
Monetary Unit: Yuan
Item Amount in
2017 Amount in 2016 Amount in 2015 Remark
Gains and losses on the disposal of non-current assets (including the write-
off part for which the provision for impairment of assets has been drawn) -21,282,770.48 -23,617,841.72 9,320.71
Tax refund and reduction or exemption involving unauthorized approval or
without formal approval documents
Government subsidies included in current profit and loss (closely related to
business activities, except for government subsidies enjoyed by quota or
fixed amount in accordance with national uniform standard)
70,508,013.11 14,081,615.44 9,127,200.00
Fund occupation fees charged to non-financial enterprises and included in
current profit and loss 889,988.59
Income from the difference by which the cost of receiving investments from
subsidiaries, joint ventures and associates is less than the fair value of the
identifiable net assets of the invested entity when the investments are made
Profit or loss on non-monetary asset exchange
Profit and loss from authorizing others to invest or manage assets
Provision for impairment of assets as a result of force majeure, such as
natural disasters
Debt restructuring profit and loss
The cost of enterprise restructuring, such as staff resettlement expenses, and
integration costs
Profit and loss arising from unfair transactions and in excess of fair value
The net profit and loss of a subsidiary formed from business combination
under common control from the beginning of the period to the date of
combination
929,318.89
Profits and losses arising from contingencies related to normal operation of
the Company
Except for effective hedging business related to normal operation of the
Company, profits and losses on the changes in fair value of financial assets
and financial liabilities held for trading, and investment income earned from
disposal of financial assets, financial liabilities held for trading and financial
assets available for sale
16,925,871.23
Reversal of the provision for impairment of receivables undergoing separate
impairment test
Profit and loss from entrusted loans
Profits and losses arising from changes in fair value of investment real estate
subsequently measured by fair value mode
The effect of one-time adjustment of current profit and loss according to the
requirements of taxation, accounting and other laws and regulations on
current profit and loss
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Trusteeship income from entrusted operation
Other non-operating incomes and expenses other than those mentioned
above -1,939,641.26 390,246.76 736,378.42
Other profits and losses within the meaning of non-recurring profit and loss
Less: Income tax amount affected 9,466,149.12 -1,333,820.66 1,635,332.70
Effect of minority equity (after tax) 2,143,017.25 -2,513.22
Total 53,492,294.82 -7,809,645.64 9,166,885.32 --
Section 3 Business Overview of the Company
I. Major business activities engaged in by the company during the
Reporting Period Whether the Company needs to abide by the disclosure requirements for special industries: No
1. The Company’s major business and product purpose
Mainly engaged in the production and sale of titanium dioxide, zirconium products and sulfuric acid, the
Company is the largest titanium dioxide enterprise in Asia. The chemical name and commercial name of
titanium dioxide is “titanium dioxide” and “titanium pigment” and its chemical formula is TiO2. With a
high refractive index, good particle size distribution, good hiding power (opacity) and tinting strength,
titanium dioxide is an excellent bright white pigment widely used in paint, rubber, plastics, papermaking,
printing inks, cosmetics, electronics, MEMS and the environmental protection industry.
Titanium dioxide is mainly divided into pigment grade titanium dioxide and non-pigment grade titanium
dioxide. People usually refer to the titanium dioxide mainly used as the white pigment in paint, ink,
plastics, rubber, papermaking, chemical fiber, fine arts, cosmetics and other industries as pigment grade
titanium dioxide, titanium dioxide pigment or titanium dioxide. The titanium dioxide mainly used in
enamel, welding electrode, ceramics, electronics, metallurgy and other industrial sectors is referred to as
non-pigment grade titanium dioxide.
Pigment grade titanium dioxide is divided into anatase titanium dioxide (type A) and rutile titanium
dioxide (type R) by crystal habit. Anatase titanium dioxide is mainly used in indoor coatings, printing
ink, rubber, glass, cosmetics, soap, plastics, papermaking and other industries. The rutile titanium dioxide,
by virtue of better weatherability and opacity than anatase titanium dioxide, is mainly used in advanced
outdoor coatings, glossy latex paints, plastics, rubber materials with high requirements for lightening
power and weather fastness, advanced paper coatings, etc.
Non-pigment grade titanium dioxide is divided into enamel grade titanium dioxide, welding electrode
grade titanium dioxide, ceramics grade titanium dioxide, electronics grade titanium dioxide, and other
types by purpose.
2. Development and characteristics of the industry
The global titanium dioxide industry has developed over almost one hundred years. It is growing stronger
as a result of competitive mergers, reorganization and technical progress. China’s titanium dioxide
industry began in 1956, over 60 years ago, with the production of titanium dioxide for enamel and
welding electrodes. In the mid-1980s, as a result of the development of titanium dioxides produced by
the sulfuric acid process achieved in the “Comprehensive Utilization of Vanadium Titano-magnetite
Resources in Panzhihua” key science and technology project, production equipment and technology
improved, and production changed to focus on pigment grade titanium dioxide used in the paints. In the
1980s and 1990s, titanium dioxide factories were built across the country, but the development of the
titanium dioxide industry was slow because production scale was small, and process technology and
product quality were poor. After 2000, China’s titanium dioxide industry began to grow rapidly and
compete in the international titanium dioxide market. From 2009, rapid growth of the country’s economy
meant the market demand for titanium dioxide grew quickly, the market price rose fast, social capital
was continuously introduced, and the manufacturers increased production, driving a significant year-by-
year increase in domestic titanium dioxide capacity after 2011. In the same period, slowdown in the
growth of GDP in China, the national economic structure adjustment, and especially the continuous
decline in the demand from downstream industries including real estate and the paint industry led to
excess production capacity and the continuous decline in market price of standard anatase titanium
dioxide and rutile titanium dioxide pigments.
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In recent years, China has devoted itself to effectively promoting supply side reform, controlling titanium
dioxide capacity, reducing excess supply, and optimizing product structure. In 2016 and 2017, the
titanium dioxide industry was booming, product price rose, demand outstripped supply, stock fell sharply,
and annual export volume maintained a high double-digit growth. As a result of the transformation and
uprating of its titanium dioxide industry, China is developing from a large titanium dioxide
manufacturing country to a powerful titanium dioxide manufacturing country. Product quality has
improved steadily, narrowing the gap with international titanium dioxide giants. The economic
advantages of recycling are recognized, and many titanium dioxide businesses make recycling part of
their manufacturing process. Meanwhile, breakthroughs in technology have driven the development of
titanium dioxide produced by the chloride process, heralding a new titanium dioxide manufacturing era.
The titanium dioxide industry is cited as a “barometer” of the national economy; its price and demand
closely relate to the rate of economic development and take on a periodic characteristic. Titanium dioxide
is widely used in coatings, plastics, papermaking, printing inks, cosmetics, electronics, new energy
materials and other fields, and its periodicity relates closely to the operating rate and economic vitality
of these ‘downstream’ industries.
3. Business model and performance drive
The Company adopts the continuous large-scale production model typically used by chemical enterprises,
which helps it realized an annual titanium dioxide capacity of 600,000 tons. It employs a buyout-type
end user and distributor marketing model; its sales company is responsible for the domestic sale and
export of products, its subsidiaries including Billions (Hong Kong) Co., Ltd., Billions (Europe) Co., Ltd.
and Billions (America) Co., Ltd. are responsible for export expansion.
This year, the Company strengthened its core competitiveness as a result of its own technical strength,
in-process recycling, product quality, brand image, international market advantages, and the advantages
delivered through economies of scale obtained through merger with Lomon Titanium Industry.
The Company adopted an accelerated integration pace, quickly realizing synergies from the merger
between Billions and Lomon Titanium Industry, seizing market opportunities, and continued to realize
high profits during this boom period. Meanwhile, it performed its social responsibilities, embedded its
“green and coordination” concept of sustainable development, competed effectively, and benefited from
reforms resulting from severe environmental protection issues [in China].
II. Significant Changes in Major Assets 1. Significant changes in major assets: N/A
2. Information about major overseas assets: N/A
III. Analysis of Core Competitiveness The Company is a national-level new high-tech enterprise, a national enterprise abiding by contract and
valuing credit, a national enterprise demonstrating technical innovation, a Henan Province enterprise
demonstrating energy saving, emission reduction and scientific and technical innovation, and a leading
innovative enterprise in Henan Province. The Company has been rated as one of “China’s Top 500
Chemical Enterprises” for consecutive years. Its base in Panzhihua has also been rated as a “National
Green Mine". The Company is a national-level demonstration base and a national-level laboratory, i.e.,
“National Demonstration Base for Comprehensive Utilization of Mineral Resources” and “National and
Local Joint Engineering Laboratory of Process and Technology for Clean Production of Titanium
Dioxide”. The Company owns two famous trademarks in China, i.e., “Xuelian” and “Mang, and also
markets its pigments under the prominent LOMON and BILLIONS product brands outside China.
Lomon Billions is ranked first in Asia for its titanium dioxide pigment production and fourth in the world.
Its titanium dioxide pigments sell well across the country and have also been sold to more than 100
countries and regions in Asia, Africa, Latin America and Europe. The Company is the ELI sample
enterprise in China. The company’s titanium dioxide capacity, the scale of its fixed assets, operating
income, net profit and other indicators make it the number one titanium dioxide producer in China. The
Company has strong core competitiveness advantages in terms of technology, market, recycling economy,
brand and quality.
In terms of management advantages, after the acquisition of Lomon Titanium Industry, the Company
initially realized the integration of market development, financial management, information management,
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system management, personnel management, process control, strategic planning and cultural concepts,
forming a lean management model featuring strict and impartial systems and standards and serious and
principled overall management and control, incorporating its own development characteristics. During
the Reporting Period, the company implemented a lean management system. It carried out
comprehensive lean management training of its lean management team leaders from the outset. It
energetically promoted continuous improvement of the individual and innovation projects and met its
labor efficiency objective. It embraced lean production to help realize its objectives and strengthened the
construction of lean production areas. Meanwhile, it realized a qualitative leap in the troubleshooting
and rectification of potential safety hazards, governance of leakage and venting, building of enterprise
image and improvement of working environment of employees. In particular, it introduced the OEE
evaluation indicator for the first time in equipment management evaluation, playing a role of
benchmarking demonstration and effectively improving the lean management level.
In terms of technical advantages, the Company, based on the national-level enterprise technology center,
the national and local joint engineering laboratory, the national laboratory approved by CNAS, the
provincial-level engineering technology center and other research & development platforms, has
prominent technical advantages in the research & development of new titanium dioxide products,
production process management and control, equipment improvement, and design and production. The
Company has also set up academician and expert workstations, industrialization bases of Henan
nanometer materials engineering technology center, post-doctoral research and development bases and
other relevant research institutions. The Company has more than 130 technical patents, including
technical patents in respect of titanium dioxide production and high-efficiency and comprehensive
utilization of vanadium titano-magnetite; and is the first enterprise passing the identification of clean
production tough co-production in the industry. The sulfur-chlorine coupling green production
technology, ferrous sulfide-titanium and sulfur-phosphorus-titanium co-production clean production
technology, and white plaster production technology of the Company are all original creations in the
industry. The ferrous sulfide-titanium and sulfur-phosphorus-titanium co-production clean production
process and technology has also won the first prize and third prize of the Prize for Progress in Science
and Technology in China’s Petrochemical Industry, and the first and second prize of the provincial-level
Prize for Progress in Science and Technology. Many years of operational experience has enabled the
Company to complete the design, installation and pilot run of titanium dioxide production lines produced
by the chloride process with a capacity of 100,000 tons/ year and of titanium dioxide produced by the
sulfate process with a capacity of 600,000 tons/ year. In 2014, the Company introduced Huntsman’s
TR52 titanium dioxide production technology, which helped the Company enhance its international
competitiveness in the field of high performance rutile titanium dioxide produced by sulfuric acid
process.
In terms of production process advantages, the Company is the only large titanium dioxide manufacturer
in China able to produce titanium dioxide by both the sulfate process and the chloride process. Phase 1
of the Company’s project to construct new chloride production capacity is significantly transforming its
manfucaturing process. During the Reporting Period, the Company produced 60,000 tons of titanium
dioxide using the chloride process. Its chloride pigments earned a good reputation among industry
benchmarking customers such as PPG, AkzoNobel, AkzoNobel and NipponPaint. The quality of its
titanium dioxide produced by the sulfate process was continuously improved, the products became more
reliable and output repeatedly set new all-time highs, laying a good foundation for the Company’s
performance growth.
In terms of export market advantages, in order to better maintain and increase its market share and
customer base, the Company has set up subsidiaries in the United States, the UK and Hong Kong, and
has established strategic partnerships with international giants in the coating, plastics, printing ink and
other industries, further accelerating its internationalization process and increasing its international
influence. The Company has been awarded by the Department of Commerce of Henan Province the title
of “Important Import Enterprises in Henan province” and “Important Export Enterprise in Henan
province” for consecutive years. In terms of procurement of machinery and equipment, raw materials
and instruments and apparatus, the Company has actively developed foreign procurement channels and
has established stable partnerships with many world-class raw materials suppliers in Canada, South
Africa, India, Mozambique, Senegal and other countries, effectively ensuring raw material supply.
In terms of quality and brand influence, the Company has developed strict quality control standards and
achieved ISO9001:2008(GB/T19001:2008) quality management system certification,
ISO9001:2008(GB/T19001:2008) environment management system certification, and
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OHSAS18001:2007(GB/T28001-2011) occupational health and safety management system certification.
The Company has established a sound sales, technical support, and product after-sales service system so
as to provide customers with high-quality and personalized service. The Company also owns two famous
titanium dioxide brands in China, i.e., “Xuelian” and “Mang”. Products of these two brands not only sell
well across the country but are also sold to more than 100 other countries and regions of the world under
our prominent LOMON and BILLIONS product brands; and are well received by both domestic and
foreign customers
In terms of the advantages of recycling economy, the Company makes full use of its co-products and
connects the production process of its titanium dioxide pigments, zirconium products, sulfuric acid, rich-
titanium materials, scandium oxide, and other products, to help form a perfect sulfur-phosphorus-
titanium and ferrous sulfide-titanium recycling operation. The company’s sulfur-chlorine coupling
‘green’ production technology not only provides sufficient raw materials for the chloride process, but
also solves the problem of having to treat waste acids resulting from the production of titanium dioxide
pigment by the sulfate process, and of gypsum stockpiling. Meanwhile, the Company actively adopts
deep membrane treatment technology, and exploring other ways to reuse by-products. These innovative
measures help the Company optimize its use of resources and help it produce ultra-low emissions,
effectively increasing its ability to develop sustainably. The Company has successfully developed
proprietory technology for the highly-efficienct processing of extremely poor and complex vanadium
titano-magnetite metal. This technology helps turn this mineral resource into a valuable raw material in
its own right and represents a significant technical development for industry in China. It is particularly
significant in relation to the development of the vanadium titano-magnetite industry in west Panzhihua.
In terms of the whole industry chain’s advantages, the Company has realized the horizontal and vertical
integration of industrial resources through merger and reorganization, further expanding its business.
The Company’s holding subsidiary Lomon Titanium Industry has large-scale vanadium titano-magnetite
resources in China. By virtue of this resource advantage, the Company has effectively improved its
industrial supply chain structure, stabilized the supply of raw materials and increased its profitability.
Section 4 Business Situation Discussion and Analysis
I. Overview (1) Analysis of business environment
In 2017, the Chinese economy grew steadily and performed better than expected. GDP exceeded 82
trillion yuan, up 6.9% year on year; CPI gently grew by 1.6% and import & export volumes by 14.2%,
reversing the tide of decline for two consecutive years. Significant progress was made in the structural
reform of the supply side; the transformation of new and old kinetic energy was accelerated, and the
quality and efficiency of economic development was continuously improved. 2017 marks the 60th
anniversary of the titanium dioxide industry in China and is a year that provided both industry
opportunities and challenges. The national environmental policy had the most far-reaching impact on the
production and business operations. Titanium dioxide businesses already embracing recycling and
environmental protection could enjoy high revenues during this boom period; while titanium dioxide
businesses that did not faced market competition pressure and experienced operational difficulties.
During the Reporting Period, the imbalance between supply and demand of raw materials was prominent
and the price rose due to short supply; and titanium dioxide products were in short supply but in great
demand, driving a stable rise in price. In terms of output, the total output of 41 titanium dioxide
manufacturing businesses across the country that were able to maintain normal production in 2017 was
2.87 million tons, up 10.49%. In terms of export, the export market continued to grow due to international
macroeconomic recovery. According to the statistics from the General Administration of Customs, China
exported 830,900 tons of titanium dioxide in 2017, up 15.33% year on year, maintaining a high growth
rate.
Under the complex business environment, the Company accelerated the pace of in-depth integration and
development, insisted on the development idea of seeking changes on the basis of stability, developed
the concept of green development, and stabilized its frontier position in industry development, realizing
the efficient economic operation of the group, excellently completing the business objectives of this year,
and seeking returns to investors with good performance.
(2) Overall business performance of the Company
In 2017, the Company initially realized the integration of products supply and marketing, technology,
financial management, enterprise culture, human resources and other modules by determining the
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direction, clarifying the thought, strengthening management and paying attention to implementation. By
regarding activities such as system benchmarking, technology benchmarking and cost benchmarking as
the carrier, it gradually developed a modern management system meeting the group’s development
demand of large strategy, large market and large liability, effectively making their respective advantages
complementary to each other and realizing the synergistic effect of “1+1＞2”.
In 2017, the Company realized operating incomes of 10.258 billion yuan, up148.03% year on year; total
profits of 3.055 billion yuan, up 465.26% year on year; and net profits attributable to shareholders of
listed companies of 2.502 billion yuan, up 466.02% year on year.
The major business performance in current year is as follows:
1. Three systems were integrated to stabilize the enterprise development base
In 2017, the group entered the first year of strategic integration, and carried out a series of management
reforms in an orderly way. The Company comprehensively promoted the integration of three systems so
as to lay a good foundation for the group’s future development.
① Corporate culture system integration
The corporate culture is the core concept to be followed in planning the Company’s future development
and the embodiment of the Company's soft power. In current year, the Company quickly started the
corporate cultural reconstruction project, and engaged famous domestic experts to tease and integrate
the corporate culture of Lomon and Billions, forming the value and standard system focusing on
“developing China’s titanium industry and becoming a respected enterprise”. The Company uses this
value and standard system to guide its future development work.
② Enterprise management system integration
By organizing exchange visits within the group and teasing and benchmarking of management standard
documents to realize unified management standards and government decrees and the effective
integration of two sets of management systems, the Company prepared a group tree diagram composed
of 15 modules and carried out the standard construction work on this basis. As at the end of 2017, the
group had completed the preparation of standards of 12 modules including Compliance Management
Standard, Financial Management Standard, Sales Management Standard and Procurement Management
Standard, further standardizing its management system.
③Enterprise development strategy integration
In 2017, the group’s core management team teased the enterprise’s strategic development prospect in
the form of enterprise strategy training class, and finally developed the Outline of 2018-2027
Development Strategy for Titanium Industry of Lomon Billions Group, which laid a solid theoretical
foundation for the group’s sustainable development in the next ten years and pointed out the Company’s
future development direction.
2. The group realized an overall operation and management model
During the Reporting Period, focusing on the management of the groups’ head office, the Company
carried out overall operation and management of its five production bases, fully implemented the
economic responsibility management by signing contract, established the incentive and constraint and
assessment mechanism, effectively promoted the technology benchmarking of each base, and drew on
each other’s strength, initially realizing the group’s lean management model, and providing a strong
guarantee for the completion of the Company’s production and business objectives and the rapid growth
of the Company’s performance. In 2017, the Company produced 540,100 tons of titanium dioxide
produced by sulfuric acid process and 56,900 tons of titanium dioxide produced by chlorination process,
selected and purchased 3,184,700 tons of iron ore concentrate and 790,300 tons of titanium concentrate,
completing its production and business objectives well.
3. A road for green development of titanium chemical industry was opened
The competition among modern enterprises lies in the core competitiveness. Under the sustainable
development concept that “green hills and clear waters are mountains of gold and silver”, the green
development has become a new kinetic energy to drive an enterprise’s core competitiveness. The
Company adhered to the general policy of green development and based on the operation and
management objectives and by focusing on management energy conservation, technical energy
conservation and system energy conservation, developed a unit energy consumption control system,
realizing a decrease in the comprehensive energy consumption per ten thousand yuan output value by
31.5% in 2017, and comprehensively improving the energy utilization. Meanwhile, it continued to
Lomon Billions
Statements Page 5
improve the long-term water saving mechanism, optimized the reclaimed water reuse system and
scientifically saved water, driving the obvious reduction in the unit water consumption and in the
wastewater discharge by 3.24% year on year. 2017 is a key year for national air pollution prevention and
control work. In the current year, the Company continued to consolidate its measures for prevention and
control of air pollution, reducing sulfur dioxide emission by 16.18% year on year, and nitrogen oxide
emission by 24.33% year on year. It performed its social responsibility in the battle of air pollution
prevention and control.
4. The leading chlorination process project showed results
The chlorination process project is the core force driving the Company to promote its product process,
and a powerful weapon helping the Company to realize the good vision of “developing China’s titanium
industry and becoming a respected enterprise”. During the Reporting Period, the Company’s chlorination
process project phase I with an annual capacity of 60,000 tons reached design capacity, and the system
was stable. 56,900 tons of titanium dioxide produced by chlorination process was produced in the whole
year, and the production and operation time created a new high. The chlorination process project phase
II with an annual capacity of 200,000 tons started construction. By the end of the year, the project’s
infrastructure had already begun to take shape, laying a good foundation for project construction in the
coming year. The chlorination project is the carrier with which the Company extends its titanium dioxide
business to titanium alloy and titanium derivative business, and a leading project guiding the Company’s
future development. The good development results achieved by this project not only provides new
driving force for the Company’s performance growth, but also enhances the Company's confidence in
the future development.
5. The system integration was optimized, and the sale vitality was released
2017 is the first year of the integration of Lomon and Billions. The sales Company took the lead in
carrying out the integration work within the group, completed the compilation and integration of
standards for management of domestic and international marketing, carried out benchmarking
integration of 69 work contents and 20 operational processes in respect of the marketing background of
two modules of Lomon and Billions, and managed the customer files and payment methods in a unified
manner. At the same time, the Company adjusted the marketing model in a timely manner, came into
contact with customers and the terminal market, compressed the distributor’s business proportion,
intensified the direct-selling business and mastered the opportunity provided by this booming period. In
2017, a total of 584,500 tons of titanium dioxide were sold, including exports of 307,300 tons.
Furthermore, the Company increased the gross profit rate of its products while ensuring the sales,
completing the performance growth objectives.
6. The transformation of scientific research results was strengthened to escort production
Scientific and technological innovation is the internal driving force to promote the sustainable and
healthy development of the Company. In 2017, the Company’s scientific research institution, Lomon
Billions Research Institute, approved 191 scientific research projects, 131 of which had been completed;
obtained 81 new accepted patents and 34 authorized patents, including 7 patents for invention and 27
patents for utility models; applied for 49 scientific research projects, 25 of which were accepted; and
obtained 15,050,200 yuan of funds for scientific research projects. In terms of improvement and
innovation of the environmental technology, the Company’s scientific research department , based on
the policy of “comprehensive treatment and recycling use of pollutants from three wastes”, carrying out
the tail gas treatment in acidolysis, restoration kiln, calcining kiln and other means to, and completed
the research on 12 major scientific research topics, such as the comprehensive utilization of high salinity
wastewater and performance optimization of the titanium dioxide for denitration, offering the science
and technology power for the group to realize its green development objectives.
7. The talent reserve was shaped to boost the development of the group
“To obtain results from a 1-year plan, the best choice is to grow grain; to obtain results from a 10-year
plan, the best choice is to plant trees; and to obtain results from a 100-year plan, the best choice is to
cultivate people.” Talent cultivation is the fundamental guarantee for the Company to realize its vision
of “excellent Lomon Billions, global Lomon Billions and 100-year Lomon Billions”. In this regard, the
Company set up the Lomon Billions College on April 7, 2017 and focusing on the Value and Standard
of Lomon Billions, comprehensively set up a talent cultivation system with the characteristics of Lomon
Billions, carried out a total of more than 3000 special trainings with the total participants of nearly 50,000.
At the same time, it developed the Measures for Management of Further Study by Staff to encourage the
Lomon Billions
Statements Page 5
staff to study independently and strive to improve their professional ability and quality, so as to reserve
talents with high moral integrity, quality, ability and efficiency for the Company’s future development.
II. Analysis of primary business
1. Overview
For details, please refer to "I. Overview" in "Business Situation Discussion and Analysis".
2. Income and cost
1. Composition of operating income
Monetary Unit: Yuan
2017 2016
YOY increase or decrease Amount
Percentage
to Operating
Income
Amount
Percentage
to Operating
Income
Total of operating income 10,257,509,524.84 100% 4,135,559,614.70 100%
By industry
Chemical materials and
products manufacturing 10,117,719,002.82 98.64% 4,081,191,029.08 98.69% Down 0.05%
Other business 139,790,522.02 1.36% 54,368,585.62 1.31% Up 0.05%
By product type
Titanium dioxide 8,589,075,949.10 83.73% 3,503,375,601.65 84.71% Down 0.98%
Mineral products 1,110,808,665.01 10.83% 232,726,702.16 5.63% Up 5.2%
Zirconium products 60,279,662.71 0.59% 44,259,417.49 1.07% Down 0.48%
Other 497,345,248.02 4.85% 355,197,893.40 8.59% Down 3.74%
By region
Domestic 5,504,255,361.64 53.66% 2,412,547,071.54 58.34% Down 4.68%
Overseas 4,753,254,163.20 46.34% 1,723,012,543.16 41.66% Up 4.68%
(2) Industries, products or regions that account for more than 10% of the Company's operating income
or operating profit
Whether the Company needs to abide by the disclosure requirements for special industries: No
Monetary Unit: Yuan
Operating income Operating cost Gross
profit rate
Increase
or
Decrease
Increase
or
Decrease
Increase or Decrease of Gross
Profit over Last Year
Lomon Billions
Statements Page 5
of
Operating
Income
over Last
Year
of
Operating
Cost over
Last Year
By industry
Chemical materials and
products manufacturing 10,117,719,002.82 5,523,171,189.36 45.41% 147.91% 92.85% Up 15.58%
By product type
Titanium dioxide 8,589,075,949.10 4,707,190,268.00 45.20% 145.17% 92.48% Up 15%
Mineral products 1,110,808,665.01 496,198,435.06 55.33% 377.30% 529.28% Down 10.79%
Zirconium products 60,279,662.71 45,500,464.99 24.52% 36.20% 3.93% Up 23.43%
Other 357,554,726.00 274,282,021.31 23.29% 18.86% -7.24% Up 21.58%
By region
Domestic 5,364,464,839.62 2,954,835,970.69 44.92% 127.48% 82.30% Up 13.66%
Overseas 4,753,254,163.20 2,568,335,218.67 45.97% 175.87% 106.62% Up 18.11%
The Company's primary business data of the most recent 1 year after adjustment per statistical standard
as at the end of the Reporting Period in the case of any adjustment of the statistical standard of the
Company's primary business data during the Reporting Period: N/A
(3) Whether the physical sales revenue is more than the service revenue of the Company: Yes
Industry Item unit 2017 2016 YOY increase or
decrease
Titanium dioxide
Sales Volume Ton 584,514.20 346,314.69 68.78%
Output Ton 597,082.70 359,431.44 66.12%
Inventory Ton 47,314.01 34,745.51 36.17%
The reasons for the YOY change of relevant data by over 30%: Applicable
The data in this Reporting Period incorporates the annual data of Sichuan Lomon Titanium, while the
data in the same period of last year only incorporated the Q4 data of Lomon Titanium.
(4) The fulfillment of major sales contracts signed by the Company as at the date of this report: N/A
(5) Composition of operating cost
Product
Monetary Unit: Yuan
Product Item
2017 2016
YOY increase or decrease Amount
Percentage
to
Operating
Cost
Amount
Percentage
to
Operating
Cost
Titanium
dioxide Raw materials 2,588,128,002.27 59.12% 1,122,083,730.87 61.33% Down 2.22%
Titanium
dioxide Energy 1,014,912,424.85 23.18% 492,707,429.96 26.93% Down 3.75%
Titanium
dioxide Direct labor 237,688,509.63 5.43% 105,056,125.30 5.74% Down 0.31%
Titanium
dioxide Depreciation 346,481,619.16 7.91% 109,598,635.50 5.94% Up 1.97%
(6) Whether there is any change in the scope of combination during the Reporting Period: Yes
The scope and change of the consolidated financial statements of the current period are detailed in “VIII.
Change of Consolidation Scope” and “IX. Interest in Other Entities” under Section XI Financial Reports.
Lomon Billions
Statements Page 5
(7) Major changes or adjustments to the business, products or services during the Reporting Period:
N/A
(8) Major sales clients and suppliers
Major sales clients of the Company
Total sales amount of top five clients (yuan) 1,255,608,804.96
Percentage of total sales amount of top five clients to the total annual sales amount 12.41%
Percentage of total related-party sales amount of top five clients to the total annual sales amount 0.00%
Information of top 5 customers of the Company
Serial No. Customer name Sales Amount (yuan) Percentage to Annual Sales
Revenue
1 No.1 443,221,355.41 4.38%
2 No.2 287,429,869.62 2.84%
3 No.3 209,625,543.41 2.07%
4 No.4 202,227,008.28 2.00%
5 No.5 113,105,028.24 1.12%
Total -- 1,255,608,804.96 12.41%
Major suppliers of the Company
Total purchase amount of top five suppliers (yuan) 690,869,510.00
Percentage of total purchase amount of top five suppliers to the total annual purchase amount 15.04%
Percentage of total related-party purchase amount of top five suppliers to the total annual purchase amount 0%
Information of top 5 suppliers
Serial No. Supplier Name Purchase Amount (yuan) Percentage to the total annual
purchase amount
1 No.1 157,111,776.20 3.42%
2 No.2 149,134,910.33 3.25%
3 No.3 139,773,116.63 3.04%
4 No.4 129,825,267.85 2.83%
5 No.5 115,024,438.98 2.50%
Total --- 690,869,510.00 15.04%
Lomon Billions
Statements Page 5
3. Costs
Monetary Unit: Yuan
2017 2016 YOY increase
or decrease Major Changes
Marketing
expenses 326,907,809.63 179,595,894.33 82.02%
This is mainly due to increase as a result of incorporation of the
data of Lomon in the current Reporting Period.
Overhead expenses 1,000,315,406.02 367,249,656.15 172.38% This is mainly due to increase as a result of incorporation of the
data of Lomon in the current Reporting Period.
Financial expenses 158,608,194.53 95,826,876.03 65.52% This is mainly due to increase as a result of incorporation of the
data of Lomon in the current Reporting Period.
4. R&D investment
First, new product design and R&D investment. In response to "structural reform of the supply side"
advocated by the state, the Company has made continuous efforts to develop new products to meet the
varying needs of the market; our investment in this respect not only has improved product quality, but
also has increased the market share of our products in the exclusive fields. To achieve sustainable
development and have an invincible position in the vast market, an enterprise must have its core
competitiveness that distinguishes it from other enterprises. For an enterprise, independent innovation is
the most important approach to obtaining the core competitiveness.
Second, R&D investment for the improvement of product manufacturing technology. To better control
the production cost and improve the profit margin of products, the Company increased the R&D
investment for the improvement of product manufacturing technology so as to ensure the effective
reduction of product cost, and thus to improve the Company's profitability.
Third, investment in the application and R&D of environment-friendly products. In light of the
application performance of titanium dioxide, and according to the current environmental protection
requirements, the Company is committed to the R&D of environment-friendly products in the hope of
solving the problem of impairment of environmental pollution to the society. If the results of such R&D
investment are widely applied, the content of nitrogen oxides in hazy weather and in the air can be
effectively reduced, and the environmental pollution greatly eased. The development of society will
inevitably lead to environmental pollution. How to take environmental protection into account in the
course of development is our long-term development goal.
Fourth, investment in the research of comprehensive utilization of resources. With such investment, the
waste by-products generated in the production of titanium dioxide by the Company are effectively
utilized, and the comprehensive utilization rate of the Company's resources increased, which can greatly
push forward the sustainable development of the Company. In recent years, the Company has been taking
the road of sustainable development and has made some achievements in the work of sustainable
development. Sustainable development will be one of the important areas receiving long-term
investment from the Company.
The Company's R&D investment
2017 2016 Variable
proportion
Quantity of R&D personnel (person) 607 570 6.49%
Percentage of R&D personnel 10.07% 11.51% -1.44%
R&D investment amount (yuan) 418,913,222.03 150,197,289.80 261.47%
Percentage of R&D investment to operating income 4.08% 3.63% 1.28%
Amount of capitalized R&D investment (yuan) 0.00 0.00 0.00%
Percentage of capitalized R&D investment to R&D investment 0.00% 0.00% 0.00%
The reasons for significant change of the percentage of total R&D investment to operating income
compared with past year: N/A
Lomon Billions
Statements Page 5
5. Cash flow
Monetary Unit: Yuan
Item 2017 2016 YOY increase or
decrease
Sub-total of cash flow from operating activities 8,394,657,295.72 3,682,071,769.96 127.99%
Sub-total of cash outflow from operating activities 6,026,889,298.94 3,249,849,621.59 85.45%
Net cash flows from operating activities 2,367,767,996.78 432,222,148.37 447.81%
Sub-total of cash inflow from investment activities 5,758,328,940.33 1,236,843,986.30 365.57%
Sub-total of cash outflow from investment activities 6,714,550,448.18 10,023,579,284.01 -33.01%
Net cash flow from investment activities -956,221,507.85 -8,786,735,297.71 89.12%
Sub-total of cash inflow from financing activities 4,718,913,685.40 13,863,388,861.03 -65.96%
Sub-total of cash outflow from financing activities 4,983,721,541.03 4,923,423,638.67 1.22%
Net cash flow from financing activities -264,807,855.63 8,939,965,222.36 -102.96%
Net increase in cash and cash equivalents 1,132,253,133.55 597,337,093.63 89.55%
Main factors affecting the significant YOY changes in the relevant data
1. The net cash flow from operating activities in 2017 increased by 1,935,548,500 yuan compared to
2016, which was mainly because of the increase in the cash received from the sale of goods and rendering
of services in the current Reporting Period, resulting in that the cash inflow from operating activities
exceeds the cash outflow from operating activities, and the fact that the annual cash flow of the subsidiary
Lomon Titanium was incorporated.
2. The net amount of cash flow from investment activities increased by 7,830,513,800 yuan compared
with that of 2016, which was mainly because of the decrease in acquisition and cash payments.
3. The net cash flow from fund-raising activities decreased by 9,214,773,100 yuan compared with that
of 2016, which was mainly because of the cash received for completion of the non-public issuance in the
last Reporting Period.
The reasons for a significant difference between the net cash flow of the Company from operating
activities during the Reporting Period and the net profit of the current year: N/A
III. Analysis of Non-primary Business
Monetary Unit: Yuan
Amount
Percentage
to Total
Profit
Cause Sustainability
Incomes from investment 15,396,457.61 0.50% Return on long-term equity investment and financial
products accounted for using the equity method
Profit/loss from change in fair
value
Assets impairment 93,386,678.46 3.06% Appropriation of impairment provision
Non-operating revenue 12,185,773.85 0.40% Government subsidies included in non-operating
revenue, and accounts payable that cannot be paid
Non-operating expenses 10,703,355.11 0.35% Donations, extraordinary losses, and fines
Lomon Billions
Statements Page 5
IV. Analysis of Assets and Liabilities 1. Major changes in asset structure
Monetary Unit: Yuan
End of 2017 End of 2016 Increase or
Decrease in
Percentage
Major
Changes Amount Percentage to
Total Assets Amount
Percentage
to Total
Assets
Monetary fund 2,353,500,074.73 11.29% 1,303,390,707.30 7.22% 4.07%
Receivables 1,204,537,334.31 5.78% 817,564,022.94 4.53% 1.25%
Inventory 1,563,195,630.79 7.50% 1,280,670,101.25 7.10% 0.40%
Investment real estate 15,082,985.33 0.07% 13,570,613.04 0.08% -0.01%
Long-term equity investment 17,354,982.65 0.08% 40,509,607.25 0.22% -0.14%
Fixed Assets 6,028,939,588.31 28.92% 6,265,500,281.12 34.71% -5.79%
Construction in progress 604,727,691.73 2.90% 418,636,002.32 2.32% 0.58%
Short-term borrowing 3,440,802,914.00 16.51% 1,927,622,577.08 10.68% 5.83%
Long-term borrowing 665,419,851.07 3.19% 732,480,306.17 4.06% -0.87%
2. Assets and liabilities measured at fair value: N/A
3. The limitation of assets rights as at the end of the Reporting Period
Item Ending book value Cause of restriction
Monetary fund 135,257,923.68 Acceptance draft deposit
Notes receivable 120,000,000.00 Acceptance draft for pledge
Intangible assets 731,963,542.04 Mining right pledge borrowings
Fixed assets 460,185,623.43 Machinery and equipment pledge borrowings
Total 1,447,407,089.15
Lomon Billions
Statements Page 5
V. Analysis of Investment Status 1. Overall situation
Reporting Period Investment (yuan) Investment in the Same Period of the
Immediately Prior Year (yuan) Change
325,000,000.00 10,838,584,880.90 -97.00%
2. Major equity investment received during the Reporting Period: N/A
3. Major non-equity investment underway during the Reporting Period: N/A
4. Financial assets measured at fair value: N/A
5. The use of funds raised
As at December 31, 2016, the utilization of the funds raised by the Company had been completed on
schedule, the total amount of funds used was 9,960,037,801.83 yuan, and the net amount of the
accumulated interest income deducting the commission fees was 9,829,474.76 yuan.
On December 23, 2016, the 29th meeting of the Fifth Board of Directors of the Company considered
and approved the Proposal on the Conclusion of the Private Placement Project of the Company and the Permanent Replenishment of Working Capital with the Surplus Funds Raised, which allowed the
Company to use the surplus raised funds to replenish the working capital for the purpose of everyday
production and operating activities [for details, please refer to the Announcement on the Conclusion of
the Private Placement Project of the Company and the Permanent Replenishment of Working Capital
with the Surplus Funds Raised (Announcement No.: 2016-128) published on China Securities Journal,
Securities Times and www.cninfo.com.cn, respectively, on December 26, 2016].
On February 17, 2017, the Company published the Announcement on the Completion of the Cancellation of the Segregated Account of Private Placement Funds in 2015 (Announcement No.: 2017-028) on
www.cninfo.com.cn. The total balance of 9,836,735.40 yuan (the main reason for its difference from the
9,829,474.76 yuan surplus raised funds is the interest incurred from December 31, 2016 to the
cancellation of the segregated account of the funds raised) in the raised fund accounts opened in
Industrial Commercial Bank of China Ltd, Jiaozuo Minzhu Road Sub-branch, Bank of Luoyang Co.,
Ltd., Jiaozuo Branch Office, China Minsheng Banking Corp., Ltd., Zhengzhou Songshan Road Sub-
branch, Shanghai Pudong Development Bank Co., Ltd., Zhengzhou Zhengbian Road Sub-branch, Bank
of China Travel Service CO., Ltd., Jiaozuo Zhongzhan Sub-branch, Bank of China Travel Service CO.,
Ltd., Jiaozuo Branch Office, and Zhongyuan Bank Co., Ltd., Jiaozuo Branch Office, respectively, has
been transferred to the basic account of the Company for replenishing the working capital of the
Company.
XI. Sale of Major Assets and Equity
1. Information on the sale of major assets: N/A
2. Information on the sale of equity: N/A
VII. Analysis of major shareholding companies
Information of major subsidiaries and shareholding companies that contribute to over 10% of the net
profit of the Company
Monetary Unit: Yuan
Name of
company
Company
Type
Primary
Business
Registered
Capital Total Assets Net assets
Operating
income
Operating
profit Net profit
Sichuan Lomon
Titanium
Industry Co.,
Ltd.
Subsidiary
Manufactur
e and sale of
chemical
products
1200000000
.00
6,841,833,028
.63
3,721,583,288
.16
6,041,946,1
76.26
2,675,386,5
71.99
2,282,162,89
4.22
Acquisition and disposal of subsidiaries during the Reporting Period
Lomon Billions
Statements Page 5
Name of company Method of Acquisition and Disposal of
Subsidiaries During the Reporting Period
Impact on Overall Production, Operation and
Performance
Panzhihua Ruierxin Industry and Trade Co.,
Ltd. Invest with own funds
Temporarily no significant impact on the
Company
Billions Financial Leasing (Guangzhou) Co.,
Ltd. Invest with own funds
Temporarily no significant impact on the
Company
Overview of major shareholding companies
Ruierxin is an enterprise with strong comprehensive strength in ilmenite processing in western Panzhihua
area and with more than 10 years of experience in titanium ore procurement, processing and trading. The
Company's acquisition of Ruierxin against the background of short supply of titanium concentrate can
alleviate the tension in the supply of titanium ore, ensure the stable supply of raw materials to the
Company and thus enhance the profitability and industry competitiveness of the Company. Due to
insufficient mineral processing capacity, Lomon Titanium has to sell part of its raw minerals. The
Company's acquisition of Ruierxin can improve the Company's mineral processing capacity, enhance the
self-supply ability of the Company and consolidate the advantages of the whole industry chain.
Financial Leasing Company is a quasi-financial enterprise. By establishing a Financing Leasing
Company, the Company can effectively rely on the advantages of the quasi-financial enterprise to serve
and build the strong main industry chain of the Company and to meet the short-term and medium and
long-term financing requirements of upstream suppliers and downstream clients, so as to improve the
fund utilization efficiency of the Company, control the foreign exchange risk of the Group by using the
foreign debt indicators, and facilitate the realization of the development goals of the Company.
VIII. The structured entities controlled by the company: N/A
IX. Outlook for the Company’s future development
(1) Adhere to the concept of green and open development.
The green and open development is the only way for the Company to ensure the long-term profitability
and achieve the enterprise transformation. In this regard, the Company will proceed from the following
aspects to promote the green and open development process of the group.
1. Upgrade and transform the sulfuric acid process. The Company will complete the elimination of the
defects and hidden dangers in environmental protection existing in Deyang-based, Xiangyang-based and
Jiaozuo-based bases; speed up the introduction of advanced sulfuric acid process technology from abroad;
introduce the environmental protection technology, equipment, ideas and talents supporting the sulfuric
acid process; summarize the technology, process and management standards; optimize the existing
sulfuric acid process production technology so as to realize the coordinated development of the titanium
dioxide production and the environmental protection.
2. Develop the chlorination process in an Innovative matter. The Company should try its best to learn
and draw lessons from the environmental protection standards and management system of excellent
titanium dioxide companies in the world; and in realizing the design capacity target as scheduled,
summarize the technical standard, equipment operation standard, process standard and management
standard so as to form the exclusive chlorination process production management system of Lomon
Billions, making it become an excellent manufacturer of titanium dioxide produced by chlorination
process with global influence.
3. Accelerate the transverse coupling of sulfuric acid process and chlorination process. The Company
should use the waste acids produced during production of titanium dioxide by sulfuric acid process, and
the existing production equipment and technological process; more comprehensively consider the
occupational health and safety risk, equipment operation risk and environmental protection risk facing
the staff in batch and continuous production; and ensure the supply of raw materials for production of
titanium dioxide by chlorination process by carrying out the green and safe production process.
4. Build an open and reliable raw materials supply channel. First of all, the Company should accelerate
the integration of Panzhihua-based raw material base, increase the investment in green transformation
of the existing facilities and equipment, and improve the standard for ecological restoration of tail areas and slag yards. Secondly, it should strictly follow the agreements of the global contract alliance, seek
reliable raw material suppliers in strict accordance with the social responsibility and procurement
requirements and do its best to establish stable cooperation relations. Thirdly, the Company should
comprehensively consider the production factor endowments and risks factors in different regions and
Lomon Billions
Statements Page 5
countries, take the environmental protection risk into full account and speed up the overseas acquisition
of titanium ores.
(2) Adhere to the idea of deep integration and seeking changes on the basis of stability.
The Company should fully implement the development requirements raised at the 19th National Congress
of the Communist Party of China, and draw the biggest concentric circle by gathering strength, so as to
achieve the deep integration development of Lomon Billions Group.
1. Create new cause for Lomon Billions through deep integration. In 2017, the integration development
of Lomon Billions started to show its effects. The Company effectively used the scale advantage, market
advantage, overall industry chain advantage and brand value advantage obtained after completion of the
acquisition to better release the synergistic effect and complete the goal of becoming an enterprise worth
hundreds of billions. In the next few years, the Company will strive to comprehensively realize the deep
integration of the operation management, market development, financial management, strategic planning,
cultural concept and other relevant factors, make breakthroughs and innovations, and complete the
qualitative change and leap of 1+1 > 2.
2. Be prepared for danger in times of safety, transform rapidly, and lead the industry standard in an
innovative manner. The Company should shoulder the mission of strengthening China’s titanium
industry, comprehensively fulfill its social responsibilities, and take the initiative to achieve the
upgrading of the production process and product innovation technology to seek development through
transformation. Meanwhile, the Company should pay attention to the output, quality, environmental
protection and safety in an all-round way to help Lomon Billions start its new journey of green and
innovative development.
(3) Conscientiously implement the "market research and development policy" and consolidate the core
competitiveness.
The Company should earnestly implement the market research and development policy of “standing at
the industry forefront, closely following the terminal market, closely contacting customers and meeting
customer needs”, and do everything possible to promote the efficient exploitation of raw materials,
optimization of the application of raw materials, stabilization of product performance, and bring frontier
new products and business.
1. Titanium dioxide business: The Company should, based on the strategic positioning of high quality
and low cost, achieve the coordinated development of two production processes, i.e., sulfuric acid
process and chlorination process; speed up the realization of breakthrough in the recycling of main waste
indirect materials; and focus on the development of industrial coatings, functional color master,
engineering plastics, inner printing inks, and water-based products or products with a low VOC.
2. Titanium derivative business: The Company should follow up the international advanced technology,
introduce excellent R&D talents, provide coordination in overcoming the technical difficulty of reducing
titanium and titanium tetrachloride to titanium alloy, summarize, optimize, and solidify the relevant
product standards, technical standards and marketing standards, and do its best to form intellectual
property.
(4) Possible risks
1. Environmental protection policy risk
The development trend of the political environment requires enterprises to develop in a green way. The
future national environmental protection standards, resource recycling standards and production safety
standards will further align with the developed countries and the global leading enterprises; and the
comprehensive law enforcement efforts will be strengthened. The tightening of environmental policies
will have a profound impact on the production and operation of the Company while standardizing the
industry order.
Countermeasures: The Company should regard the green development as the general policy of its future
development strategy; promote the orderly implementation of energy conservation, consumption
reduction, emission reduction and other relevant environmental protection work; set up a systematic
environmental protection and safety work system according to leading international standards; realize
the development goals of green industrial structure, green production organization, green park base and
green performance assessment; and fulfill the ecological protection responsibility in an all-round way.
Lomon Billions
Statements Page 5
2. Operation management risk
During the Reporting Period, the Company has initially realized the integration of enterprise values,
production process, financial management, product supply and marketing, technology, human resources
and other relevant aspects, and formed a transregional group operation management model focusing on
five bases. The Company’s deep integration development objective forces the group to abide by new
requirements for operation management. If the Company cannot continue to improve its operation
management level and decision-making efficiency, the normal production and operation of the Company
may be affected to some extent.
Countermeasures: The Company should, based on its outline of development strategy for the next ten
years, unify the management concept and development goal, strengthen the operation management level,
continuously improve the management level of its existing teams through multi-level and multi-channel
training, and actively introduce relevant industry talents and management teams.
3. Risk of fluctuation in the price of raw materials
In 2017, prices of bulk raw materials and auxiliary materials rose sharply, which increased the difficulty
in making production and operation decisions by the Company. Changeable policy factors and the
complex market environment make the fluctuation in the price of bulk raw material more and more
frequent, which means that the Company will inevitably face the risk of the fluctuation in the price of
raw materials.
Countermeasures: The Company shall strive to seek the integration and acquisition of titanium ore
resources, improve the titanium industry chain, cooperate with upstream suppliers, further expand the
group’s mining and mineral separation ability, stand at the market forefront, endeavor to master the
market pace, and further digest the risk facing the Company due to fluctuation in the price of raw material.
4. Industry competition risk
After integration with Lomon Titanium Industry, the Company has taken a leading position in the
titanium dioxide industry with its capacity and output greatly increasing and its competitiveness in the
domestic and international market being further strengthened. This will effectively help the Company
resist the industry competition risk. At the same time, with the increase of export volume and market
share, the Company will face the competition from international titanium dioxide producers and a new
international competition pattern.
Countermeasures: The Company shall further strengthen the research on the future industry development
direction, follow its development strategy for the next ten years, adhere to the policy of deep integration
and green development, seize the industry development opportunities, and strive to achieve sustainable,
healthy and stable development.
5. Investment risk
In order to realize its strategic layout in the titanium dioxide industry, the Company will continue to carry
out domestic and foreign industry M&A around its main business. In carrying out M&A, affected by
many factors, such as domestic and foreign economic environment, macropolicy, industry cycle,
investment target management and transaction schemes, the Company will face the investment risk.
Countermeasures: In order to effectively eliminate the investment risks caused by industrial M&A, the Company will employ a professional project team to carry out investment cooperation, carefully select
the investment target, carry out a comprehensive project due diligence, establish an efficient investment
decision-making mechanism, fully pay attention to and guard against risks, and strictly control risks.
Lomon Billions
Statements Page 5
X. Reception Survey, Communication, Interview and Other Activities
Table for the Registration of Reception Survey, Communication, Interview and Other Activities During
the Reporting Period
Reception Time Reception
Method
Type of
Reception
Object
Index of Basic Information on Survey
January 18, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on January 18, 2017 on http://www.cninfo.com.cn
May 05, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on May 05, 2017 on http://www.cninfo.com.cn
May 08, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on Monday, May 08, 2017 on http://www.cninfo.com.cn
June 09, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on Friday, June 09, 2017 on http://www.cninfo.com.cn
June 13, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on June 13, 2017 on http://www.cninfo.com.cn
June 16, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on June 16, 2017 on http://www.cninfo.com.cn
June 26, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on June 26, 2017 on http://www.cninfo.com.cn
July 14, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on July 14, 2017 on http://www.cninfo.com.cn
August 29, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on August 29, 2017 on http://www.cninfo.com.cn
September 01, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on September 01, 2017 on http://www.cninfo.com.cn
November 03, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on November 03, 2017 on http://www.cninfo.com.cn
November 06, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on November 06, 2017 on http://www.cninfo.com.cn
November 30, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on November 30, 2017 on http://www.cninfo.com.cn
December 12, 2017 Field survey Organization For details, please refer to the Log Sheet of Investor Relations Activities
on December 12, 2017 on http://www.cninfo.com.cn
Section V Important matters I. The Distribution of Common Stock Profits and the Capitalization of
Capital Reserves
The formulation, implementation or adjustment of the common stock profit distribution policy,
especially the cash dividend policy, during the Reporting Period
During the Reporting Period, the Company implemented the Company's profit distribution plan in strict
accordance with the provisions and requirements under the Decision on Revising the Several Regulations
on Cash Dividends of Listed Companies and the Notice on Further Implementation of Certain Matters
Concerning the Cash Dividends of Listed Companies issued by the China Securities Regulatory
Commission, No.33 Memorandum on SME Board Information Disclosure Business: Profit Distribution
and Capitalization of Capital Reserves issued by Shenzhen Stock Exchange, the Articles of Association
and other relevant rules and regulations.
During the Reporting Period, the implementation of the Company's cash dividend policy met the
requirements of the Articles of Association or the resolutions of the shareholders' meeting, matched the
growth of corporate performance and the future development plan of the Company, and safeguarded the
interests of all the shareholders.
Specific description of the cash dividend policy
Whether the policy met the requirements of the Articles of Association or the resolutions of the shareholders' meeting: Yes
Whether the standards and proportions of the dividends were explicit and clear: Yes
Whether the relevant decision-making procedures and mechanisms were complete: Yes
Lomon Billions
Statements Page 5
Whether independent directors have fulfilled their duties and played their due roles: Yes
Whether the minority shareholders had the opportunity to fully express their opinions and appeals and whether their legitimate rights
and interests have been adequately protected: Yes
Whether the cash dividend policy adjustment or change conditions and procedures (if any) were legitimate and transparent: Yes
The common stock dividend distribution schemes (plans) and the capital reserve capitalization schemes
(plans) of the Company in the most recent 3 years
1. On March 22, 2016, the Company's 2015 shareholders' meeting considered the Company's 2015 equity
distribution scheme: on the basis of a total share capital of 204,424,200 shares of the Company as at
December 31, 2015, a cash dividend of 3.50 yuan (including tax) per 10 shares was distributed to all
shareholders, involving a total cash dividend of 71,548,470 yuan (including tax), and meanwhile, every
10 shares were converted into 25 shares through the capitalization of capital reserves, resulting in a total
increase of 511,060,500 shares. The implementation of the above profit distribution plan was completed
on April 27, 2016. For details, please refer to the Announcement on the Implementation of 2015 Annual
Equity Distribution Plan (Announcement No.: 2016-033) published on China Securities Journal,
Securities Times and www.cninfo.com.cn on April 20, 2016.
2. On November 14, 2016, the Company's 2016 extraordinary shareholders' meeting considered the
Company's the plan for the distribution of profit not distributed in the prior year: on the basis of a total
share capital of 2,032,164,739 shares of the Company as at September 30, 2016, a cash dividend of 3.00
yuan (including tax) per 10 shares was distributed to all shareholders, involving a total cash dividend of
609,649,421.70 yuan (including tax). The implementation of the above profit distribution plan was
completed on Thursday, December 08, 2016. For details, please refer to the Announcement on the
Implementation of Equity Distribution Plan for the Third Quarter of 2016 (Announcement No.: 2016-
119) published on China Securities Journal, Securities Times and www.cninfo.com.cn on November 30,
2016.
3. On April 20, 2017, the Company's 2016 shareholders' meeting considered the Company's 2016 equity
distribution scheme: on the basis of a total share capital of 2,032,164,739 shares of the Company as at
December 31, 2015, a cash dividend of 2.00 yuan (including tax) per 10 shares was distributed to all
shareholders, involving a total cash dividend of 406,432,947.80 yuan (including tax). The
implementation of the above profit distribution plan was completed on Friday, May 12, 2017. For details,
please refer to the Announcement on the Implementation of 2016 Annual Equity Distribution Plan
(Announcement No.: 2017-074) published on China Securities Journal, Securities Times and
www.cninfo.com.cn on Saturday, May 06, 2017.
4. On October 18, 2017, the Company's 2017 extraordinary shareholders' meeting considered the
Company's the 2017 semi-annual profit distribution plan: on the basis of a total share capital of
1,997,855,690 shares of the Company deducting the repurchased shares in the segregated repurchase
account (the Company's total share capital was 2,032,095,439 shares and the repurchased shares in the
segregated repurchase account was 34,239,749 shares), a cash dividend of 5.00 yuan (including tax) per
10 shares was distributed to all shareholders, involving a total cash dividend of 998,927,845 yuan
(including tax). The implementation of the above profit distribution plan was completed on Thursday,
December 07, 2017. For details, please refer to the Announcement on the Implementation of 2017 Semi-annual Equity Distribution Plan (Announcement No.: 2017-127) published on China Securities Journal,
Securities Times and www.cninfo.com.cn on December 01, 2017.
5. On March 30, 2018, the Company held the 8th meeting of the Sixth Board of Directors and drafted the
Company's 2017 profit distribution plan: on the basis of a total share capital of 2,032,095,439.00 shares
of the Company as at December 31, 2017, a cash dividend of 5.50 yuan (including tax) per 10 shares
was distributed to all shareholders, involving a total cash dividend of 1,117,652,491.45 yuan (including
tax). When the profit distribution scheme is implemented, if the total number of shares of the Company
on the equity registration date is changed compared with that as at the end of 2017, then the distribution
proportion shall be adjusted with the total amount of distribution unchanged provided that the total share
capital of the Company as at the equity registration date is deemed as the base number when the
distribution scheme is implemented in the future. The proposal needs to be approved by the Company's
2017 shareholders’ meeting.
Table of Common Stock Cash Dividends of the Company in the Most Recent Three Years (including the
current Reporting Period)
Monetary Unit: Yuan
Lomon Billions
Statements Page 5
Year of
Dividend
Distribution
Amount of Cash
Dividends
(Including Tax)
Net profit attributable to the
general shareholders of the
Listed Company in the
consolidated statements of the
dividend distribution year
Percentage of net profit
attributable to the general
shareholders of the Listed
Company in the consolidated
statements
Amount of
Cash
Dividends
Distributed in
Other Ways
Percentage of
Cash Dividends
Distributed in
Other Ways
2017 2,116,580,336.45 2,502,413,958.33 84.58%
2016 406,432,947.80 442,105,136.22 91.93%
2015 71,548,470.00 111,435,586.31 64.21%
The Company yielded profit during the Reporting Period and the profit of the parent Company for
distribution to ordinary shareholders is positive, but no distribution plan for the common stock cash
dividends is proposed: N/A
II. Plan for profit distribution and capital reserves capitalization during
the current Reporting Period
The number of bonus shares per 10 shares (share) 0
The amount of dividend per 10 shares (yuan) (including tax) 5.50
The number of increased shares per 10 shares (share) 0
Equity base of the distribution plan (share) 2,032,095,439
Total cash dividend (yuan) (including tax) 1,117,652,491.45
Distributable profit (yuan) 1,121,069,123.42
Percentage of cash dividend to the total profit distribution 100%
Cash dividends for the current Reporting Period
If the Company is in a mature development stage with significant cash outlay arrangements, the minimum percentage of cash dividend to profit
distribution shall be 40%.
Details of the plan for profit distribution or capital reserve capitalization
On the basis of a total share capital of 2,032,095,439 shares of the Company as at December 31, 2017, a
cash dividend of 5.50 yuan (including tax) per 10 shares was distributed by the Company to all
shareholders, involving a total cash dividend of 1,117,652,491.45 yuan (including tax). The proposal
needs to be approved by the Company's 2017 shareholders’ meeting.
III. The Performance of commitments
1. Commitments fulfilled and unfulfilled by the Company's actual controllers, shareholders, related
parties and purchasers, the Company and other commitment parties as at the end of the Reporting Period.
Cause of
Commitment
Commitment
Party
Commitment
Type
Commitment
Content
Commitment
Time
Commitment
Period Fulfillment
Xu Gang, Li
Ling, Tan
Ruiqing, Wang
Zelong, Fan
Xianguo, Wang
Tao, Wei Zhaoqi,
He Benliu, China
Great Wall Asset
Management
Co., Ltd.
Commitment
on restricted
sale of
privately
issued shares
These privately
issued shares will
not be transferred in
any form within 36
months from the
date of completion
of issue.
June 04,
2015
From
September
20, 2016 to
September
19, 2019
Strictly fulfilled
Commitments
made at the
time of IPO
or refinancing
Li Jiaquan,
Sichuan Lomon
Group Co., Ltd.,
Tibet Nippon
Investment Co.,
Performance
commitment
In 2015, 2016 and
2017, the committed
net profit is 700
million yuan, 900
million yuan and 1.1
June 04,
2015 2015-2017
Lomon Titanium failed to complete
the 700 million yuan performance
commitment in 2015. The Company
has deducted the subsidy for Lomon
Titanium for failure to fulfill the
Lomon Billions
Statements Page 5
Ltd. billion yuan,
respectively.
performance commitment in 2015.
For details, please refer to the
Announcement on Deducting the
Subsidy for the Shareholders of
Sichuan Lomon Titanium Industry
Co., Ltd. for Failure to Fulfill the
Performance Commitment in 2015
(Announcement No.: 2016-098)
published on www.cninfo.com.cn. In
2016 and 2017, Lomon Titanium
fulfilled the 900 million yuan and 1.1
billion yuan performance
commitments.
Lomon Titanium Dividend
commitment
From 2016 to 2018,
the total amount of
cash dividends
distributed to the
Company and
Jiaozuo Xingtai
Resource
Comprehensive
Utilization Co., Ltd.
is not less than 600
million yuan per
year.
2016-2018
In 2016 and 2017, Lomon Titanium
distributed 600 million yuan and 1.0
billion yuan in cash, respectively.
Whether the commitment is fulfilled on time Yes
2. There is a profit forecast for the Company's assets or projects, and the Reporting Period is still in the
period of profit forecast. The Company explains the fulfillment of the original profit forecast and the
reasons for such fulfillment: N/A
IV. Non-operating capital of the listed company occupied by the
controlling shareholder and its related parties There was no non-operating capital of the listed company occupied by the controlling shareholder and
its related parties during the Reporting Period.
V. Statements by the board of directors, the board of supervisors and
independent directors on the "non-standard audit report" of the
accounting firm during the current Reporting Period: N/A
VI. Changes in accounting policies, accounting estimates and accounting
methods compared with the financial report of the immediately prior year
Change of principal accounting policies
The Accounting Standards for Business Enterprises No.42 - Held-for-Sale
Non-current Assets, Disposal Groups and Discontinued Operation, Accounting Standards for Business
Enterprises No.16 - Government Subsidy, and the Notice of the Ministry of Finance on Revising and Issuing the Format of General Enterprise Financial Statements apply to the Company.
The Accounting Standards for Business Enterprises No.42 - Held-for-Sale
Non-current Assets, Disposal Groups and Discontinued Operation was promulgated by the Ministry of
Finance in 2017 and came into force as of May 28, 2017. These Accounting Standards stipulates that
held-for-sale non-current assets, disposal groups and discontinued operation existing on the effective
date of these Accounting Standards shall be dealth with by prospective application method.
The Ministry of Finance revised the Accounting Standards for Business Enterprises No.16 - Government
Subsidy in 2017 and the revised Accounting Standards came into force as of June 12, 2017. Government subsidies existing before January 1, 2017 shall be dealt with by the prospective application method; new
government subsidies existing from January 1, 2017 to the effective date of these Accounting Standards
shall be dealt with according to the revised Accounting Standards.
The Ministry of Finance issued the Notice of the Ministry of Finance on Revising and Issuing the Format
Lomon Billions
Statements Page 5
of General Enterprise Financial Statements in 2017, which revised the format of general enterprise
financial statements and is applicable to financial statements prepared in 2017 and later.
The main effects of the Company's implementation of the above three regulations are as follows:
Contents of and reasons for change of accounting policies The name and amount of the affected statement items
(1) "Net profit from continuous operation" and "net profit from
discontinued operation" are listed respectively in the Income
Statement. The comparison data is adjusted accordingly.
The net profit from continuous operation of the current year is presented at
2,588,874,607.00 yuan; net profit from discontinued operation of the
current year at 0.00 yuan; net profit from continuous operation of the
immediately prior year at 459,312,586.99 yuan; and net profit from
discontinued operation of the immediately prior year at 0.00 yuan.
(2) Government subsidies related to the daily activities of the
Company are included in other income and no longer included in
non-operating revenue. The comparison data is not adjusted.
The Company increased other income by RMB67,085,953.11, and reduce
non-operating revenue - government subsidies by RMB67,085,953.11.
(3) Add "assets disposal income" to the profit statement, and
reclassify the profit and loss from disposal of assets previously listed
in "non-operating revenue and expenditure" into the "asset disposal
income". The comparison data is adjusted accordingly.
In the current year, the net decrease in non-operating revenue and
expenditure is RMB-18,907,981.46, and is reclassified into the asset
disposal income; in the immediately prior year, the net decrease in non-
operating revenue and expenditure is RMB-23,617,841.72, and is
reclassified into the asset disposal income.
Change of significant accounting estimates
The Company has no change in significant accounting estimates in the current period.
VII. Correction of major accounting error during the Reporting Period,
rendering it necessary for retroactive restatement No correction of major accounting error which rendered it necessary for retroactive restatement
happened during the Reporting Period.
VIII. Changes in the scope of consolidated statements compared with the
financial report of the immediately prior year The scope and change of the consolidated financial statements of the current period are detailed in “VIII.
Change of Consolidation Scope” and “IX. Interest in Other Entities” under Section XI Financial Reports.
IX. Engagement and dismissal of accounting firm Accounting firm currently engaged by the Company
Name of domestic accounting firm BDO CHINA SHU LUN PAN CERTIFIED
PUBLIC ACCONTANTS LLP
Remuneration of domestic accounting firm (ten thousand yuan) 150
Number of consecutive years of audit service provided by domestic accounting firm 5
Name of certified public accountants from domestic accounting firm Xu Peimei, Zhang Zhen
Number of consecutive years of audit service provided by certified public accountants
from domestic accounting firm 1
Lomon Billions
Statements Page 5
Whether the accounting firm was changed during the current Reporting Period: No
Engagement of internal control audit accounting firms, financial advisers or sponsors: N/A
X. Suspension of listing and termination of listing after the disclosure of
annual report: N/A
XI. Matters related to bankruptcy reorganization: N/A
XII. Major litigation and arbitration cases
Basic Situation of
Litigation (Arbitration)
Amount Involved (ten
thousand yuan)
Whether Estimated
Liabilities Are
Formed
Litigation
(Arbitration)
Progress
Litigation
(Arbitration) Trial
Results and
Consequences
Enforcement of
Litigation
(Arbitration)
Decisions
Ti-Cons arbitration case 3,189.4 No A court session has
been opened None None
With regard to the case of dispute over the Contract for the Design, Construction, Operation Technology
Transfer and Technical Service in Respect of the Product Line for Chloride Process Titanium Dioxide
between the Company and Ti-Cons (Germany), the Company has received an Arbitration Notice
numbered (2016) ZhongGuo Mao ZhongZi No.001432 (case number: SC20160008) issued by China
International Economic and Trade Arbitration Commission on January 19, 2016. The amount of the
dispute is 31,894,000 yuan. The case has been tried and is now awaiting final ruling by China
International Economic and Trade Arbitration Commission.
On March 9, 2018, the Company received the Notice on Postponing the Deadline for the Issue of the
Arbitral Award for No. SC20160008 Case of Dispute over the Technical Transfer and Service Contract issued by China International Economic and Trade Arbitration Commission, notifying the Company that
the deadline for the issue of the arbitral award would be postponed to May 10, 2018.
XIII. Punishment and rectification: N/A
XIV. Integrity of the Company and its controlling shareholders and actual
controllers: N/A
XV. The implementation of the Company's equity incentive plan,
employee stock ownership plan or other employee incentive measures
1. On March 29, 2017, the Company held the 33rd meeting of the 5th Board of Directors, at which the
Company considered and approved the Proposal on Unlocking in the Second Unlocking Period under
the 2015 Restricted Stock Incentive Plan. The board of directors held that the unlocking conditions for
the second unlocking period of the restricted stocks under the Company's 2015 Incentive Plan had been
achieved. According to the relevant provisions of the Incentive Plan, the board of directors of the
Company will unlock the restrictive stocks granted in 2015 that meet the unlocking conditions. The
above restricted stocks were circulated on the market since May 26, 2017 [For details, please refer to the
Indicative Announcement on the Public Offering of the Unlocked Shares in the Second Unlocking Period
under the 2015 Restricted Stock Incentive Plan (Announcement No.: 2017-078) published on China
Securities Journal, Securities Times and http://www.cninfo.com.cn on May 24, 2017].
2. On March 29, 2017, the Company held the 33rd Meeting of the Fifth Board of Directors, and
considered and approved the Proposal on Repurchasing and Writing off Part of the Restricted Stocks,
according to which the Company agreed to repurchase and write off a part of restricted stocks that were
granted to the original incentive objects who had left office and which have not been unlocked. [Please
refer to the Announcement on Repurchasing and Writing off Part of the Restricted Stocks (Announcement
No.: 2017-050) published on China Securities Journal, Securities Times and http://www.cninfo.com.cn
on March 31, 2017 for details]. As repurchasing and writing off part of the restricted stocks will result
in the reduction in the Company’s registered capital, after completion of repurchase and writing off
Lomon Billions
Statements Page 5
transactions, the Company’s registered capital was changed from 2,032,164,739 yuan to 2,032,095,439
yuan.
3. On December 14, 2017, the Company held the 6th Meeting of the 6th Board of Directors, and
considered and approved the Proposal on the First Employee Stock Ownership Plan of the Company
(Draft) and its Summary and the Proposal on the Measures for Management of the First Employee Stock
Ownership Plan of the Company. In order to improve the corporate governance structure, establish and
improve the benefit sharing mechanism for employees and all shareholders, improve the employees’
cohesive force and the Company’s competitiveness, promote the concept of joint development between
the Company and individuals, and attract and retain outstanding management talents and business
backbone, the Company hereby implements the 1st employee stock ownership plan. The First Employee
Stock Ownership Plan of the Company (Draft) and the Measures for the Management of the First
Employee Stock Ownership Plan of the Company has been published on http://www.cninfo.com.cn on
December 16, 2017.
XVI. Major related party transactions
1. Related party transactions related to daily operations
The Company had no related party transactions related to daily operations during the Reporting Period.
2. Related party transactions arising from the acquisition or sale of assets or shares
The Company had no related party transactions arising from the acquisition or sale of assets or shares
during the Reporting Period.
3. Related party transactions related to joint external investment
The Company had no related party transactions related to joint external investment during the
Reporting Period.
4. Related party transactions related to credits and debts
The Company had no related party transactions related to credits and debts during the Reporting
Period.
5. Other major related party transactions
The Company had no other major related party transactions during the Reporting Period.
Lomon Billions
Statements Page 5
XVII. Major Contracts and Their Performance
1. Trusteeship, contracting and leasing
(1) Trusteeship: N/A
(2) Contracting: N/A
(3) Leasing: N/A
2. Major guarantees
(1) Guarantees
Monetory Unit: RMB ten thousand
Guarantees made by the Company and its subsidiaries (excluding guarantees for subsidiaries)
Name of Guarantee
Object
Date of
Disclosure
of
Announcem
ent on the
Guarantee
Limits
Guarantee
Limits
Date of
Actual
Occurrence
(agreement
signing
date)
Actual
Amount of
Guarantee
Guarantee
Type
Guarantee
Period
Whether
fulfilled or
not
Whether
related
party
guarantee
Total of guarantee
limits approved
during the
Reporting Period
(A1)
Total of
accrual
amounts of
guarantee
during the
Reporting
Period (A2)
Total of guarantee
limits approved by
the end of the
Reporting Period
(A3)
Total of
balances of
guarantee at
the end of
the
Reporting
Period (A4)
The Company's guarantees for its subsidiaries
Name of Guarantee
Object
Date of
Disclosure
of
Announcem
ent on the
Guarantee
Limits
Guarantee
Limits
Date of
Actual
Occurrence
(agreement
signing
date)
Actual
Amount of
Guarantee
Guarantee
Type
Guarantee
Period
Whether
fulfilled or
not
Whether
related
party
guarantee
Jiaozuo Billions
Reservoir
Management Co.,
Ltd.
August 19,
2014 5,000
November
18, 2014 3,500
Joint
liability
guarantee
From 1/16/2015
to 11/16/2019 No Yes
Jiaozuo Zhongzhan
District Yili Small
Loan Co., Ltd.
January 24,
2017 15,000
March 13,
2017 5,000
Joint
liability
guarantee
From 4/10/2017
to 4/9/2018 No Yes
Jiaozuo Zhongzhan
District Yili Small
Loan Co., Ltd.
June 20,
2017 30,000
September
01, 2017 5,200
Joint
liability
guarantee
From 9/5/2017
to 9/4/2018 No Yes
BILLIONSEUROP
ELTD.
April 26,
2016 24,387.84
December
20, 2016 6,541.99
Joint
liability
guarantee
From
12/22/2016 to
12/22/2019
No Yes
Billions (Hong
Kong) Corporation
Limited
January 24,
2017 60,000
March 05,
2018 16,276.69
Joint
liability
guarantee
From 3/7/2017
to 5/9/2018 No Yes
Sichuan Lomon
Titanium Industry
Co., Ltd.
October 28,
2016 70,000
November
28, 2016 40,000
Joint
liability
guarantee
From
11/22/2016 to
2/9/2018
No Yes
Henan Billions
New Materials Co.,
Ltd.
June 06,
2016 20,000
October 18,
2017 20,000
Joint
liability
guarantee
From
10/18/2016 to
6/11/2024
No Yes
Lomon Billions
Statements Page 5
Henan Billions
New Materials Co.,
Ltd.
January 24,
2017 50,000
November
29, 2017 1,350
Joint
liability
guarantee
From
11/29/2017 to
5/30/2018
No Yes
Jiaozuo Billions
Pigment Co., Ltd.
January 24,
2017 5,000
April 13,
2017 600
Joint
liability
guarantee
From 7/25/2017
to 6/20/2018 No Yes
Total of guarantee limits for
subsidiaries approved during the
Reporting Period (B1)
160,000
Total of accrual amounts of
guarantee for subsidiaries
during the Reporting Period
(B2)
28,426.69
Total of guarantee limits for
subsidiaries approved by the end of
the Reporting Period (B3)
279,387.84
Total of balances of guarantee
for subsidiaries at the end of the
Reporting Period (B4)
98,468.68
Guarantees made by one subsidiary for another
Name of Guarantee
Object
Date of
Disclosure
of
Announcem
ent on the
Guarantee
Limits
Guarantee
Limits
Date of
Actual
Occurrence
(agreement
signing
date)
Actual
Amount of
Guarantee
Guarantee
Type
Guarantee
Period
Whether
fulfilled or
not
Whether
related
party
guarantee
Total of guarantee limits for subsidiaries approved during the Reporting Period
(C1)
Total of accrual amounts of guarantee for subsidiaries during
the Reporting Period (C2)
Total of guarantee limits for subsidiaries approved by the end of the Reporting
Period (C3)
Total of balances of guarantee for subsidiaries at the end of
the Reporting Period (C4)
Total guarantees made by the Company (the total of the first three items)
Total of guarantee limits approved
during the Reporting Period
(A1+B1+C1)
160,000
Total of accrual amounts of
guarantee during the Reporting
Period (A2+B2+C2)
28,426.69
Total of guarantee limits approved
by the end of the Reporting Period
(A3+B3+C3)
279,387.84
Total of balances of guarantee
at the end of the Reporting
Period (A4+B4+C4)
98,468.68
Percentage of the total amount of actual guarantees (A4+B4+C4) to the Company's net assets 7.64%
Therein:
Balance of guarantees for shareholders, actual controllers and their related parties (D)
Debt guarantee balance directly or indirectly provided to a party which has an asset-liability ratio in excess of 70%
Amount of difference by which the total guarantees exceed 50% of the net assets (F)
The total amount of the above three guarantees (D+E+F)
Statement on circumstances in which guarantee liability has been incurred or it is likely to assume joint liability for discharge during the Reporting
Period provided that the guarantee is not yet due
Statement on guarantees in violation of prescribed procedures
(2) Illicit guarantees: N/A
3. Delegating the management of cash assets to others
(1) Entrusted financial management
Entrusted financial management during the Reporting Period
Monetary Unit: RMB ten thousand
Specific type
The source of funds for
entrusted financial
management
The accrual amount of
entrusted financial
management
Undue balance Overdue amount not
recovered
Bank financial
products The Company's own funds 636,740 70,000 0
Total 636,740 70,000 0
(2) Entrusted loan: N/A
Lomon Billions
Statements Page 5
XVIII. Social responsibilities
1. Fulfillment of social responsibilities
The group Company adheres to the “project-driven” strategy, and while striving to become a bigger and
stronger enterprise, conscientiously fulfills its social responsibility and actively participates in public
benefit activities. In 2017, it devoted itself to supporting the construction of public projects in
surrounding communities and flood restoration and construction, making charitable donations, and
carrying out the poverty alleviation in terms of education and ecological protection. In 2017, it invested
7,560,980 yuan in this regard, showing its good public image as a listed Company.
2. Fulfilling the social responsibility of targeted poverty alleviation
(1) Targeted poverty alleviation planning
In accordance with the overall thinking, basic objectives, major tasks and major measures in respect of
the national poverty alleviation program during the “13th Five-Year Plan” period, Lomon Billions Group
further implements the decisions and arrangements as to the targeted poverty alleviation work made at
the central, provincial and municipal level. Meanwhile, according to the overall planning of the
government and local conditions, it has developed targeted poverty alleviation work plan for different
regions, formulated poverty alleviation measures, established and perfected the assistance working
mechanism, and centralized the poverty alleviation resources to ensure the implementation of targeted
poverty alleviation. First of all, the Company improved the tourism infrastructure upgrading project,
created excellent tourism routes, and arranged the tourism service ability training for and employment
of poverty stricken population. Secondly, it continued to carry out golden autumn fundraising activities
and improve the educational environment of schools in the mountainous areas and surrounding villages,
and helped impoverished college students in mountainous areas to solve the employment problems.
Thirdly, according to the actual needs of impoverished villages, it continued to carry out the targeted
poverty alleviation by various means, supported impoverished villages in perfecting the construction of
water conservancy, road and other relevant infrastructure and helped farmers become rich as soon as
possible. Fourthly, it continued to participate in charitable donation activities.
(2) Summary of the targeted poverty alleviation work in 2017
In 2017, in order to actively respond to the relevant spirit of the association of industry and commerce
at the provincial and municipal level with regard to the targeted poverty alleviation work, the group
Company, carried out a series of activities as to the construction of public projects in surrounding
communities, flood restoration and construction, charitable donations, and poverty alleviation in terms
of education and ecological protection. For example, the group Company signed a contract, and
established the assistance relationship, with Beiye Village and Sangyuan Village located in Zhongzhan
District to properly solve the practical difficulties of populations in the impoverished villages.
Meanwhile, it successively carried out the activities of helping the disabled, and helped the villagers to
build the roads and water conservancy facilities, reconstructed the adobe houses damaged by the
geological disasters, improved the teaching conditions in Luku Village and Jiuchang Village located in
Xinjiu Township. At the same time, it actively participated in Jiaozuo International Shadowboxing
Exchange Competition, China Bicycle League Mianzhu Station "Rose Valley Cup", Music Festival of
Cangshan Town, Zhongjiang District, Deyang, the Third Sports Meet of Deyang and other public benefit
activities and gave economic sponsorship to these activities. The Company gave back to society with
true feelings and better demonstrated its good public image as a listed Company.
(3) Effect of targeted poverty alleviation
Indicator Measuring Unit Quantity/Progress
I. Overall situation - -
Including: 1. funds Ten thousand yuan 756.098
2. Conversion of materials into cash Ten thousand yuan 3.6
3. Number of archived impoverished populations
alleviated from poverty with the help of the Company Person 50
Lomon Billions
Statements Page 5
Continued
Indicator Measuring Unit Quantity/Progress
II. Itemized investments - -
1. Poverty alleviation through industry development - -
Including: 1.1 Industry development poverty alleviation project types - Agricultural and forestry industry;
tourism; e-commerce
1.2. Number of industry development poverty alleviation project Project 5
1.3 Amount of industry development poverty alleviation project Ten thousand yuan 354
1.4 Number of archived impoverished populations alleviated from poverty
with the help of the Company Person
2. Poverty alleviation through employment transfer - -
Including: 2.1 The amount of investment in vocational training Ten thousand yuan
2.2 Number of people that have received vocational training Man-time
2.3 Number of archived impoverished populations employed with the help
of the Company Person
3. Poverty alleviation through relocation - -
Including: 3.1 Number of relocated people employed with the help of the
Company Person
4. Poverty alleviation through education - -
Including: 4.1 Amount of investment for helping impoverished students Ten thousand yuan 10.3
4.2 Number of impoverished students helped Person 48
4.3 Amount of investment for improving the educational resources in
poverty-stricken areas Ten thousand yuan 20
5. Health poverty alleviation - -
Including: 5.1 Amount of investment in medical and health resources in
poverty-stricken areas Ten thousand yuan 5
6. Poverty alleviation through ecological protection - -
Including: 6.1 Project type - Ecological protection and
construction
6.1 Amount of investment Ten thousand yuan 20
7. Overall guarantee - -
Including: 7.1 Amount of investment in "three kinds of people left behind" Ten thousand yuan
7.2 Number of "three kinds of people left behind" helped by the Company Person
7.3 The amount of investment in impoverished disabled Ten thousand yuan 1.9
7.4 Number of impoverished disabled helped by the Company Person 27
8. Social poverty alleviation - -
Including: 8.1 Amount of investment in poverty alleviation cooperation
between east and west Ten thousand yuan
8.2 Amount of investment in fixed-point poverty alleviation Ten thousand yuan 130
8.3 Amount of investment in public welfare fund for poverty alleviation Ten thousand yuan 153.5
9. Other projects - -
Including: 9.1 Number of projects Project
9.2 Amount of investment Ten thousand yuan 61.398
9.3 Number of archived impoverished populations alleviated from poverty
with the help of the Company Person
III. Awards (content, level) - -
Sichuan provincial level
Advanced enterprise of Sichuan
province in "ten thousand
enterprises to help ten thousand
villages" precision poverty
Lomon Billions
Statements Page 5
alleviation action
Panzhihua municipal level
Advanced unit of Sichuan
province in "ten thousand
enterprises to help ten thousand
villages" precision poverty
alleviation action
(4) Subsequent targeted poverty alleviation plan
1. Based on the project, continue to plan the relevant facilities ancillary to the project, provide more jobs
for impoverished villagers so as to increase their incomes;
2. Continue to donate money to the society to help students in their study through golden autumn
fundraising plan, improve the educational environment for students in mountainous areas, and help
impoverished college students in mountainous areas solve their employment problems;
3. Continue to provide the targeted poverty alleviation to stay-at-home personnel, impoverished families
and impoverished students by providing help and solving their practical difficulties;
4. Increase the construction of roads, water conservancy and cultural facilities of surrounding poverty-
stricken villages and improve the living conditions of impoverished villages; and
5. Earnestly carry out the targeted poverty alleviation work according to the overall planning of the local
government.
3. Environmental protection
Whether the Listed Company and its subsidiaries were key pollutant discharge units announced by the
environmental protection authorities: Yes
Name of
the
Company
or its
subsidiary
Names of
major and
characteristi
c pollutants
Dischar
ge
method
Number
of
discharg
e outlets
Distribution of
discharge outlets
Discharge
concentration
Pollutant
discharge
standard
Total
discharge
Total
approved
discharge
Excess
discharg
e
Lomon
Billions
Group Co.,
Ltd.
COD Continu
ous 1
Main discharge outlet
of enterprise
wastewater
36.58mg/L 150mg/L 228.64t 529.3t 0
Ammonia
nitrogen
Continu
ous 4.1mg/L 25mg/L 25.52t 30.26t 0
Sichuan
Lomon
Titanium
Industry
Co., Ltd.
COD Continu
ous 1
Main discharge outlet
of enterprise
wastewater
33mg/L 100mg/L 397.84t 473.3t 0
Ammonia
nitrogen 5.28mg/L 15mg/L 63.65t 0.36t 63.29t
SO2 Continu
ous 10 3 calcination outlets 138.42mg/m3 850mg/m3 1299.14t 1627.32t 0
2 sulfuric acid outlets 79.36mg/m3 400mg/m3
1 boiler 54.1mg/m3 400mg/m3
4 acidolysis outlets 27.71mg/m3 550mg/m3
NOX Continu
ous 1 Boiler 66.35mg/m3 200mg/m3 294.69t 402.66t 0
3 Calculation of natural
gas for calcination / /
Xiangyang
Lomon
Titanium
Industry
Co., Ltd.
COD Continu
ous 1
Wastewater discharge
outlet 41mg/L 60mg/L 205.097t 311.5t 0
Ammonia
nitrogen
Continu
ous 5.24mg/L 8mg/L 26.95t 28.248t 0
SO2 Continu
ous 4 1 acidolysis outlets 38.08mg/L 550mg/m3 98.87t 566.38t 0
1 calcination outlets 45.36mg/m3 550mg/m3
1 boiler 16.03mg/m3 400mg/m3
1 sulfuric acid outlets 39.93mg/m3 400mg/m3
NOX Continu
ous 2 1 calcination outlets 111.68mg/m3 240mg/m3 109.84t 307.3t 0
1 boiler 128.43mg/m3 200mg/m3
Lomon Billions
Statements Page 5
Particulate
matter
Continu
ous 2 1 calcination outlets 9.11mg/m3 120mg/m3 38.84t 257.3t 0
1 boiler 14.53mg/m3 30mg/m3
Construction and operation of pollution prevention and control facilities:
1. Lomon Billions Group Co., Ltd.
Waste gas treatment: 20 million yuan was invested to upgrade the tail gas desulfurization facilities. After
being put into operation, the upgraded facilities were operating stably, and the pollution factors removal
rate reached more than 95%, which lived up to the treatment requirements and discharge standard.
Wastewater treatment: about 200 million yuan was successively invested to build a sewage treatment
system matching the titanium dioxide production line, with a daily treatment capacity of 48,000m3. After
the project was put into operation, the system was running stably, and the sewage discharge lived up to
standard.
2. Sichuan Lomon Titanium Industry Co., Ltd.
Waste gas treatment: the Company invested about 5 million yuan to upgrade the acidolytic tail gas
desulfurization facilities and adopted the spray washing + Venturi + empty tower treatment process,
bringing the pollution factors removal rate up to more than 95% and keeping the discharge up to standard.
Wastewater treatment: the wastewater treatment system of the Company was equipped with
neutralization tank, sedimentation tank, filter press, buffer tank and large ash plant, achieving a treatment
capacity of nearly 72,000 ton/day, and a pollutant treatment efficiency of 100%.
3. Xiangyang Lomon Titanium Industry Co., Ltd.
Waste gas treatment: in 2017, the Company gradually upgraded the auxiliary waste gas treatment
facilities, which improved the processing capacity and reduced the pollutant discharge amount. During
2016-2017, the Company added boiler flue gas wet-process desulphurization and flue gas denitrification
projects to improve boiler flue gas discharge effect and achieve standard discharge.
Wastewater treatment: the Company built a sewage treatment station with three-stage neutralization,
two-stage sedimentation (dynamic clarification) and mud pressure filtration treatment process, with a
daily treatment capacity of 35,000m3. The pollutant treatment met the requirements for the operation of
environmental protection facilities.
Environmental impact assessment of construction projects and other administrative permission for
environmental protection
1. Rutile titanium dioxide resources comprehensive utilization project of Lomon Billions Group Co.,
Ltd.: the construction project environmental impact assessment report was prepared by a qualified unit
and was approved by Henan Provincial Department of Environmental Protection in March 2008 by
issuing an Environmental Impact Assessment Approval Document (Yu Huan Shen (2008) No.59).
The project passed the environmental protection inspection (Yu Huan Shen (2014) No.152) in April 2014.
60,000 tons/year chlorination titanium dioxide project: the construction project environmental impact
assessment report was prepared by a qualified unit and was approved by Henan Provincial Department
of Environmental Protection in December 2010 by issuing an Environmental Impact Assessment
Approval Document (Yu Huan Shen (2010) No.310). The project was filed with Jiaozuo Municipal
Environmental Protection Bureau in December 2016.
2. Sichuan Lomon Titanium Industry Co., Ltd.
140,000 to 200,000 tons/year rutile titanium dioxide production technology upgrading project: the
construction project environmental impact assessment report was prepared by a qualified unit and was
approved by Sichuan Provincial Department of Environmental Protection in May 2011 by issuing an
Environmental Impact Assessment Approval Document (Chuan Huan Shen Pi (2011) No.202). The
project passed the environmental protection inspection (Chuan Huan Yan (2014) No.084) in July 2014.
3. Xiangyang Lomon Titanium Industry Co., Ltd.
100,000 tons/year rutile titanium dioxide production project: the construction project environmental
impact assessment report was prepared by a qualified unit and was approved by Hubei Provincial
Department of Environmental Protection in May 2011 by issuing an Environmental Impact Assessment
Approval Document (E Huan Shen Han (2011) No.406). The project passed the environmental protection
inspection (Xiang Shen Pi Huan Yan (2016) No.10) in April 2016.
Emergency plan for emergency environmental events
1. Lomon Billions Group Co., Ltd.
Emergency plan for emergency environmental events has been developed and filed with Henan
Provincial Department of Environmental Protection.
Lomon Billions
Statements Page 5
2. Sichuan Lomon Titanium Industry Co., Ltd.
Emergency plan for emergency environmental events has been developed and filed with Mianzhu
Municipal Environmental Protection Bureau.
3. Xiangyang Lomon Titanium Industry Co., Ltd.
Emergency plan for emergency environmental events has been developed and filed with Nanzhang
County Environmental Protection Bureau.
Environmental self-monitoring plan
All have developed environmental self-monitoring plans and conducted regular inspections in strict
accordance with the requirements of the plans.
Other environmental information to be disclosed
The basic information of pollutant discharge units, pollutant production and discharge procedures,
pollution prevention and control facilities, pollutant detection concentration, and automatic online
equipment operation condition are all made public in the national pollutant discharge license information
system.
XIX. Description of other important matters
On February 24, 2017, the Company held the third extraordinary shareholders' meeting of 2017 and
considered and approved the Proposal on Repurchasing the Shares of the Company by the way of a
special resolution. For details, refer to the Announcement on the Resolution of the Third Extraordinary
Shareholders' Meeting of 2017 (Announcement No.: 2017-031) published on February 25, 2017 the
Company designated information disclosure media (www.cninfo.com.cn); on March 27, 2017, the
Company published a Report on Repurchasing the Shares of the Company on www.cninfo.com.cn.
On April 6, 2017, the Company published an Announcement on the First Repurchase of the Shares of the Company (Announcement No.: 2017-057) on www.cninfo.com.cn; later, the Company successively
published an Announcement on the Progress of Repurchase of the Shares of the Company on May 3,
June 7, July 4 and August 2 of 2017, respectively; on August 24, 2017, the Company published an
Announcement on the Completion of Repurchase of the Shares of the Company (Announcement No.:
2017-099). By then, the Company had repurchased a total of 34,239,749 shares, accounting for 1.68%
of the total share capital of the Company, with a maximum transaction price of 17.72 yuan/share and a
minimum transaction price of 13.85 yuan/share, involving a total payment of 550,808,621.16 yuan
(excluding transaction costs).
XII. Major matters of the Company's subsidiaries
On December 15, 2017, the Company's subsidiary, Lomon Titanium, held the sixth extraordinary
shareholders' meeting of 2017, and considered and approved the Proposal on the Distribution of Profits
of the Company Undistributed by September 30, 2017. Distribution scheme: on the basis of a total share
capital of 1.2 billion shares of the Company as at September 30, 2017, a cash dividend (from the
undistributed profit of the parent company) of 8.3333 yuan (including tax) per 10 shares was distributed
to all shareholders, involving a total cash dividend of 1 billion yuan (including tax).
Section 6 Share Changes and Shareholders
I. Changes in shares I. Changes in shares
Unit: Share
Before current change Increases (+) or decrease (-) for
current change After current change
Quantity Ratio
(%)
Newly
issued
shares
Donat
ed
shares
Capitalizati
on of capital
reserves
Other Sub-total Quantity Ratio
(%)
I. Shares with
restricted conditions 1,436,974,734 70.71 -76,654,937 -76,654,937 1,360,319,797 66.94
Lomon Billions
Statements Page 5
1. State shareholding
2. State-owned legal
person shareholding 53,149,606 2.62 53,149,606 2.62
3. Other domestic
shareholdings 1,383,825,128 68.09 -76,654,937 -76,654,937 1,307,170,191 64.32
Including: Domestic
legal person
shareholding
Domestic natural
person shareholding 1,383,825,128 68.09 -76,654,937 -76,654,937 1,307,170,191 64.32
4. Foreign
shareholding
Including: Foreign
legal person
shareholding
Foreign natural person
shareholding
II. Shares without
restricted conditions 595,190,005 29.29 76,585,637 76,585,637 671,775,642 33.06
1. RMB common
stocks 595,190,005 29.29 76,585,637 76,585,637 671,775,642 33.06
2. Domestic-listed
foreign stocks
3. Overseas-listed
foreign stocks
4. Other
III. Total number of
shares 2,032,164,739 100.00 -69,300 -69,300 2,032,095,439 100.
Reasons for change of shares
1. On May 26, 2017, the Company unlocked 15,717,450 shares in the second unlocking period according
to the 2015 Restricted Stocks Incentive Plan. [For details, please refer to the Indicative Announcement
on thePublic Offering of the Unlocked Shares in the Second Unlocking Period under the 2015 Restricted
Stock Incentive Plan (Announcement No.: 2017-078) published on China Securities Journal, Securities
Times and http://www.cninfo.com.cn on May 24, 2017].
2. On June 21, 2017, the Company completed the repurchase and cancellation of 69,300 shares of
unlocked restricted stock held by retired incentive objects according to the 2015 Restricted Stocks Incentive Plan. [For details, please refer to the Indicative Announcement on the Completion of
Cancellation of Part of the Restricted Stocks (Announcement No.: 2017-089) published on China
Securities Journal, Securities Times and http://www.cninfo.com.cn on June 23, 2017].
3. The executives' locked stocks decreased by 60,868,187 shares in the current Reporting Period.
Approval of changes in shares: N/A
Ownership transfer related to changes in shares: N/A
The effect of share changes on basic earnings per share, diluted earnings per share, net assets per share
attributable to the common shareholders, and other financial indicators of the Company in the most
recent one year and the most recent one period
In the current Reporting Period, the Company sustained minor change in its share capital, which caused
no impact on basic earnings per share, diluted earnings per share, net assets per share attributable to the
common shareholders, and other financial indicators of the Company in the most recent one year and the
most recent one period
Other contents the Company deemed necessary or required by the securities regulatory authorities to
be disclosed: N/A
Lomon Billions
Statements Page 5
I. Changes in restricted shares
Unit: Share
Name of
shareholder
Beginning
number of
restricted
shares
Number of
unlocked
shares in
current
period
Increased
number of
restricted
shares in
current
period
Closing number
of restricted
shares
Reasons for restriction Date of unlocking
Xu Gang 392,206,211 57,356,374 334,849,837
15,952,200 shares of
executives' locked stock
were restricted from sale;
restricted after initial
offering of additional
318,897,637 shares of
privately issued stocks in
2015
At the beginning of 2017,
57,356,374 shares of the
executives' locked stock were
unlocked; 318,897,637 shares
were restricted from sale after
initial offering of privately
issued stocks in 2015, which
are scheduled for unlocking
on September 20, 2019.
Li Ling 283,464,566 283,464,566
Restricted after initial
offering of additional
283,464,566 shares of
privately issued stocks in
2015
283,464,566 shares were
restricted from sale after
initial offering of privately
issued stocks in 2015, which
are scheduled for unlocking
on September 20, 2019.
Tan Ruiqing 248,207,371 248,207,371
175,875 shares of executives'
locked stock were pledged,
frozen and restricted from
sale; restricted after initial
offering of additional
248,031,496 shares of
privately issued stocks in
2015
248,031,496 shares were
restricted from sale after
initial offering of privately
issued stocks in 2015, which
are scheduled for unlocking
on September 20, 2019.
Wang
Zelong 187,795,275 187,795,275
Restricted after initial
offering of additional
187,795,275 shares of
privately issued stocks in
2015
187,795,275 shares were
restricted from sale after
initial offering of privately
issued stocks in 2015, which
are scheduled for unlocking
on September 20, 2019.
Fan Xianguo 88,582,677 88,582,677
Restricted after initial
offering of additional
88,582,677 shares of
privately issued stocks in
2015
88,582,677 shares were
restricted from sale after
initial offering of privately
issued stocks in 2015, which
are scheduled for unlocking
on September 20, 2019.
Wang Tao 70,866,141 70,866,141
Restricted after initial
offering of additional
70,866,141 shares of
privately issued stocks in
2015
70,866,141 shares were
restricted from sale after
initial offering of privately
issued stocks in 2015, which
are scheduled for unlocking
on September 20, 2019.
China Great
Wall Asset
Management
Co., Ltd.
53,149,606 53,149,606
Restricted after initial
offering of additional
53,149,606 shares of
privately issued stocks in
2015
53,149,606 shares were
restricted from sale after
initial offering of privately
issued stocks in 2015, which
are scheduled for unlocking
on September 20, 2019.
Wei Zhaoqi 42,519,685 42,519,685
Restricted after initial
offering of additional
42,519,685 shares of
privately issued stocks in
2015
42,519,685 shares were
restricted from sale after
initial offering of privately
issued stocks in 2015, which
are scheduled for unlocking
on September 20, 2019.
He Benliu 30,682,706 2,021,250 28,661,456
1,706,250 shares of
executives' locked stock and
630,000 shares of equity
incentive stock were
restricted from sale;
At the beginning of 2017,
1,706,250 shares of
executives' locked stock were
unlocked; on May 26, 2017,
315,000 shares of equity
Lomon Billions
Statements Page 5
restricted after initial
offering of additional
28,346,456 shares of
privately issued stocks in
2015
incentive stock were
unlocked; 28,346,456 shares
were restricted from sale after
initial offering of privately
issued stocks in 2015, which
are scheduled for unlocking
on September 20, 2019.
Yang Minle 1,785,000 70,875 1,714,125
1,785,000 shares of the
executives' locked stock
were restricted from sale.
At the beginning of 2017,
70,875 shares of executives'
locked stock were unlocked
Equity
incentive
restricted
stocks of
non-top ten
restricted
shareholders
30,874,200 15,717,450 -69,300 15,402,450
31,504,200 shares of
restricted stock were not
unlocked in Phase II and
Phase III of the 2015
Restricted Stock Incentive
Plan. In the current
Reporting Period,
15,717,450 shares of
restricted stock were
unlocked in Phase II of the
2015 Restricted Stock
Incentive Plan, 69,300 shares
of equity incentive restricted
stock in Phase II and Phase
III that have been awarded to
ineligible original incentive
objects but not unlocked
were repurchased and
cancelled by the Company,
and there were 15,717,450
shares of equity incentive
restricted stock not unlocked
at the end of the Reporting
Period.
At the beginning of 2017,
70,875 shares of executives'
locked stock were unlocked
Executives'
locked
stocks of
non-top ten
restricted
shareholders
6,841,296 1,734,688 0 5,106,608
The executives' locked
stocks were restricted from
sale due to their nature.
During the current Reporting
Period, the executives'
locked stocks were partially
unlocked according to the
relevant rules.
Dealt with according to the
rules related to executives'
locked stocks.
Total 1,436,974,734 76,900,637 -69,300 1,360,319,797 -- --
II. Issuance and listing of securities
1. Issuance of securities (excluding preferred stock) during the Reporting Period: N/A
2. Changes in the total number of shares and the shareholder structure of the Company, and changes in
the structure of assets and liabilities of the Company.
On March 29, 2017, the Company held the 33rd Meeting of the Fifth Board of Directors, and considered
and approved the Proposal on Repurchasing and Writing off Part of the Restricted Stocks, according to
which the Company agreed to repurchase and write off a part of restricted stocks that were granted to
the original incentive objects who had left office and which have not been unlocked. [Please refer to the
Announcement on Repurchasing and Writing off Part of the Restricted Stocks (Announcement No.: 2017-
050) published on China Securities Journal, Securities Times and http://www.cninfo.com.cn on March
31, 2017 for details]. As repurchasing and writing off part of the restricted stocks will result in the
reduction in the Company’s registered capital, after completion of repurchase and writing off
transactions, the Company’s registered capital was changed from 2,032,164,739 yuan to 2,032,095,439
yuan.
3. The existing internal staff shares: N/A
III. Shareholders and actual controllers
Lomon Billions
Statements Page 5
1. The number of shareholders and the shareholding structure of the Company
The total number of common shareholders at the end of the Reporting Period: 69,602 shareholders
The total number of common shareholders at the end of the month immediately preceding the date of
disclosure of the annual report: 62,057 shareholders
The total number of preferred shareholders with their voting rights resumed at the end of the Reporting
Period: 0 shareholders
The total number of preferred shareholders with their voting rights resumed at the end of the month
immediately preceding the date of disclosure of the annual report: 0 shareholders
Shareholding of shareholders holding 5% or more of the shares or top ten shareholders of the Company
Unit: Share
Name of
shareholder
Nature of
shareholder
Shareholding
proportion
Number of
shares held at
the end of the
Reporting
Period
Changes in
increase
and
decrease
during the
Reporting
Period
Number of
shares with
restricted
conditions
Number of
shares
without
restricted
conditions
Pledged or frozen shares
Status
of
shares
Quantity
Xu Gang Domestic
natural person 20.50% 416,642,402 334,849,837 81,792,565 Pledged 334,849,800
Li Ling Domestic
natural person 13.95% 283,464,566 283,464,566 0
Tan Ruiqing Domestic
natural person 12.22% 248,265,996 248,207,371 58,625 Pledged 248,265,900
Wang Zelong Domestic
natural person 9.24% 187,795,275 187,795,275 0
Fan Xianguo Domestic
natural person 4.36% 88,582,677 88,582,677 0
Wang Tao Domestic
natural person 3.49% 70,866,141 70,866,141 0 Pledged 70,860,000
Henan Yintai
Investment Co.,
Ltd.
Domestic non-
state owned
legal person
3.01% 61,264,572 0 61,264,572
China Great Wall
Asset
Management Co.,
Ltd.
State-owned
legal person 2.62% 53,149,606 53,149,606 0
Wei Zhaoqi Domestic
natural person 2.09% 42,519,685 42,519,685 0 Pledged 31,825,101
Tangyin County
Yuxin Xylose
Development Co.,
Ltd.
Domestic non-
state owned
legal person
1.90% 38,668,613 0 38,668,613
Circumstances in which strategic investors or general legal persons become top 10 shareholders due to the issue of new shares
Statement on the
associated
relations between
or concerted
action of the
abovementioned
shareholders
Among the top 10 shareholders of the Company, Tan Ruiqing, (actual controller of Henan Yintai Investment Co., Ltd. and
Tangyin Yuxin Xylose Development Co., Ltd.) and Xu Gang (chairman of the Company) signed a Concerted Action Agreement
on March 3, 2010, which has expired on July 15, 2014, and now, the Company has no actual controllers; except the
abovementioned associated relations, the Company do not know whether or not there are any associated relations between other
shareholders or whether such other shareholders fall under the circumstances of concerted action stipulated in the Measures for
the Management of Disclosure of Information on Shareholding Changes of Shareholders of Listed Companies.
Shareholding of top 10 shareholders without restricted conditions
Unit: Share
Name of shareholder
Number of shares
without restricted
conditions held at
the end of the
Reporting Period
Types and quantities of stocks
Type of stock Quantity
Xu Gang 81,792,565 RMB common stock 81,792,565
Lomon Billions
Statements Page 5
Henan Yintai Investment Co., Ltd. 61,264,572 RMB common stock 61,264,572
Tangyin County Yuxin Xylose Development Co., Ltd. 38,668,613 RMB common stock 38,668,613
Special securities repurchase account of Lomon Billions Group Co., Ltd. 34,239,749 RMB common stock 34,239,749
Qingdao FTPA Qianye Trading Co., Ltd. 20,934,200 RMB common stock 20,934,200
Central Huijin Asset Management Ltd. 8,223,600 RMB common stock 8,223,600
Jiaozuo DongfangBoya Investment Co., Ltd. 5,839,002 RMB common stock 5,839,002
ZhongOu AMC - ABC - China Pacific Life Insurance - Entrusted investment
in active management equity products (individual dividends) of China Pacific
Life Insurance
3,169,150 RMB common stock 3,169,150
Continued
Name of shareholder
Number of shares without
restricted conditions held at the
end of the Reporting Period
Types and quantities of stocks
Type of stock Quantity
Bank of Communications Co., Ltd. - Changxin Quantitative Pioneer
YifangdaKexun Hybrid Securities Investment Fund 2,377,786 RMB common stock 2,377,786
Bank of China - Nanfang High Growth Equity Type Securities
Investment Fund 2,200,000 RMB common stock 2,200,000
Statement on the associated relations between or concerted action of
top 10 shareholders of tradable shares without restricted conditions,
and associated relations between or concerted action of top 10
shareholders of tradable shares without restricted conditions and top 10
shareholders
Among the top 10 shareholders of the Company, Tan Ruiqing, (actual
controller of Henan Yintai Investment Co., Ltd. and TangyinYuxin Xylose
Development Co., Ltd.), Du Xinchang (actual controller of Qingdao FTPA
Qianye Trading Co., Ltd.) and Xu Gang (chairman of the Company) signed
a Concerted Action Agreement on March 3, 2010, which has expired on July
15, 2014, and now, the Company has no actual controllers; except the
abovementioned associated relations, the Company do not know whether or
not there are any associated relations between other shareholders or whether
such other shareholders fall under the circumstances of concerted action
stipulated in the Measures for the Management of Disclosure of Information
on Shareholding Changes of Shareholders of Listed Companies.
Statement on the participation by top 10 common shareholders in securities margin trading
Whether the top 10 common shareholders of the Company and the top 10 common shareholders without
restricted conditions conducted the agreed repurchase transaction during the Reporting Period: No
2. Controlling shareholders of the Company
Nature of controlling shareholders: no shareholding entity
3. Actual controllers of the Company
The Company had no actual controllers
Whether there were shareholders holding 10% or more of the shares at the final control level of the
Company: Yes
Shareholding of shareholders at the final control level
Name of shareholders at the
final control level Nationality
Whether the right of residence in other countries or
regions was obtained
Xu Gang China No
Tan Ruiqing China No
Main occupations and
positions
Xu Gang, male, born in 1963, Chinese nationality, postgraduate degree, without foreign permanent residency, acted
as the Company's Chairman since July 2002.
and now as Chairman and Party Committee Secretary of the Company.
Tan Ruiqing, male, born in 1966, Chinese nationality, bachelor degree, without foreign permanent residency, acted
as the Company's deputy chairman since July 2002.
and now as Vice Chairman of the Company, Executive Director and General Manager of Henan Yintai Investment
Co., Ltd., and Director of Henan Yinke International Chemical Co., Ltd.
Domestic and foreign listed
companies that once held
shares of the Company in
Lomon Billions
Statements Page 5
the past 10 years
4. Other corporate shareholders holding 10% or more of the shares: N/A
5. Decrease in shares held by controlling shareholders, actual controllers, restructuring entities and other
commitment entities due to shareholding restrictions: N/A
Section 7 Preferred Shares The Company did not have preferred stocks during the Reporting Period
Section 8 Directors, Supervisors, Senior Officers and
Employees
I. Changes in shareholding of directors, supervisors and senior officers of
the Company
Name Position Post
Status Gender Age
Start Date
of Term
of Office
Expiry
Date of
Term of
Office
Beginning
Number of
Shares
(Share)
Number
of shares
increased
in
current
period
(share)
Number
of shares
reduced
in current
period
(share)
Other
Increases
and
Decreases
(Share)
Closing
Number of
Shares
(Share)
Xu Gang Board
Chairman
Present
position Male 55
July 05,
2002
April 23,
2020 416,642,402 416,642,402
Tan
Ruiqing
Deputy
Chairman,
Vice President
of Marketing,
Vice President
of Purchasing
Present
position Male 52
July 05,
2002
April 23,
2020 248,265,996 248,265,996
Chang Yili Director Present
position Male 69
May 18,
2002
April 23,
2020 1,575,000 1,575,000
Yang
Minle Director
Present
position Male 62
May 18,
2002
April 23,
2020 2,285,500 571,375 1,714,125
Fan
Xianguo
Director,
President
Present
position Male 54
April 24,
2017
April 23,
2020 88,582,677 88,582,677
Zhou
Xiaokui
Director, Vice
President of
R&D
Present
position Male 56
April 24,
2017
April 23,
2020
Zhang
Qibin Director
Present
position Male 53
May 18,
2002
April 23,
2020
Huang
Ligao Director
Present
position Male 67
December
15, 2007
April 23,
2020
Zhang
Zhijun
Independent
Director
Present
position Male 60
April 04,
2014
April 23,
2020
Chen Junfa Independent
Director
Present
position Male 53
April 04,
2014
April 23,
2020
Xu
Xiaobin
Independent
Director
Present
position Male 41
April 04,
2014
April 23,
2020
Zhang
Xiaocheng
Independent
Director Departure Male 52
April 24,
2017
October
23, 2017
Feng Jun
Chairman of
the Board of
Supervisors
Present
position Male 50
April 25,
2005
April 23,
2020 1,647,500 199,300 1,448,200
Fan Lixing Supervisor Present
position Male 79
May 18,
2002
April 23,
2020
Zhao
Yongjun Supervisor
Present
position Male 50
April 04,
2014
April 23,
2020 42,329 10,584 31,745
He Benliu
Executive
Vice President
and HR &
Administrative
Present
position Male 50
April 24,
2005
April 23,
2020 30,831,456 315,000 1,850,000 29,296,456
Lomon Billions
Statements Page 5
Director
Shen
Qingfei CFO
Present
position Male 37
April 04,
2014
April 23,
2020 350,000 262,500 218,750 393,750
Zhu
Quanfang
Technical
Engineering
Director
Present
position Male 52
December
23, 2016
April 23,
2020
JinSanliang Compliance
Director
Present
position Male 52
December
28, 2012
April 23,
2020 280,000 262,500 201,250 341,250
Bruce
Griffin
Vice President
of Strategy
Present
position Male 50
January
23, 2017
April 23,
2020
Zhang
Haitao
Board
Secretary
Present
position Male 42
October
23, 2017
April 23,
2020
Total -- -- -- -- -- -- 906,225,425 840,000 3,051,259 904,014,166
II. Changes to Directors, Supervisors and Senior Officers
Name Title Type Date Reason
Fan Xianguo Director Appointment
and removal April 24, 2017
The general election of the Board of Directors,
the nomination by the Board of Directors and
the election by the shareholders' meeting.
Zhou Xiaokui Director Appointment
and removal April 24, 2017
The general election of the Board of Directors,
the nomination by the Board of Directors and
the election by the shareholders' meeting.
Zhang Xiaocheng Independent Director Appointment
and removal April 24, 2017
The general election of the Board of Directors,
the nomination by the Board of Directors and
the election by the shareholders' meeting.
Zhang Xiaocheng Independent Director Departure October 23, 2017 Resigned from the Company's independent
director for personal reasons.
Shen Qingfei Board Secretary Appointment
and removal October 23, 2017
Appointment and removal due to replacement
of the secretary of the Board of Directors.
Zhang Haitao Board Secretary Appointment
and removal October 23, 2017
Employed by the Board of Directors of the
Company.
III Staff Members The professional background, major work experience, and main responsibilities the incumbent directors,
supervisors and senior officers of the Company.
Board members:
Xu Gang, male, born in 1963, Chinese nationality, postgraduate degree, without foreign permanent
residency, acted as the Company's Chairman since July 2002 and now as Chairman and Party Committee
Secretary of the Company.
Tan Ruiqing, male, born in 1966, Chinese nationality, bachelor degree, without foreign permanent
residency, Vice President of the Company since July 2002; Executive Director and General Manager of
Henan Yintai Investment Co., Ltd.; Director of Henan Yinke International Chemical Co., Ltd.; Marketing
VP and Procurement VP since December 2016.
Chang Yili, male, born in 1949, Chinese nationality, no permanent residency abroad, junior college
degree, economist. He acted as the Company's Director since May 2002 to date.
Yang Minle, male, born in 1956, Chinese nationality, no permanent residency abroad, bachelor degree,
senior engineer. He was once master tutor of Zhengzhou University; editor of “Titanium White”
magazine; and member of expert group of Jiaozuo City Safety Management Committee. He served as
Director and Deputy General Manager of the Company from May 2002 to December 2016, and now
Director of the Company.
Fan Xianguo, male, born in 1964, Chinese nationality, doctoral degree, senior engineer. Served as
president of Sichuan Lomon Group Co., Ltd. from October 2009 to September 2016; served as General
Manager of XiangyangLomon Titanium Industry Co., Ltd. (additional post) from March 2014 to
November 2016; served as Chairman of Sichuan Lomon Titanium Co., Ltd. from April 2016 to February
Lomon Billions
Statements Page 5
2017; has been president of the Company since December 2016 and has been a director of the Company
since April 2017.
Zhou Xiaokui: Male, born in 1962, Chinese nationality, master's degree, engineer. Served as Vice
Chairman of Sichuan Lomon Titanium Industry Co., Ltd. from October 2010 to September 2013; has
been Deputy GM and director of Sichuan Lomon Titanium Industry Co., Ltd. from September 2013 to
date; has been R&D VP of the Company since December 2016 and a director of the Company since April
2017.
Zhang Qibin, male, born in 1965, Chinese nationality, no permanent residency abroad, junior college
degree, and economist. He acted as the Company's Director since May 2002 He is currently a director of
the Company, General Manager of TangyinYuxin Xylose Development Co., Ltd., and Vice Chairman of
Danisco Sweeteners (Anyang) Co., Ltd.
Huang Li Gao, male, born in 1951, Chinese nationality, no permanent residency abroad, bachelor's
degree, accountant. He acted as the Company's Director since December 2007 and now serves as Director
of the Company and Vice President of Shanghai Fosun Chemical Pharmaceutical Venture Capital Co.,
Ltd.
Independent directors:
Zhang Zhijun, male, born in 1958, Chinese nationality, no permanent residency abroad, Ph.D., professor,
doctoral tutor, distinguished professor of Henan Province, Zhongyuan Scholar, Standing Director of
Tribological Society of China Mechanical Engineering Society, National Outstanding Scientific and
Technological Worker, Henan Provincial Outstanding Expert, cross-century academic and technical
leader of Henan Province, an expert enjoying special government allowance. He is now Director of
Henan Nanomaterials Engineering Technology Research Center. Served as Dean of the College of
Chemistry and Chemical Engineering of Henan University, Deputy Director of the Key Laboratory of
Special Functional Materials of the Ministry of Education, Director of the Key Laboratory of Special
Functional Materials of Henan Province, Director of the Chinese Chemical Society, and Deputy
Chairman of the Henan Provincial Chemical Society.
Chen Junfa, male, born in 1965, Chinese nationality, no permanent residency abroad, postgraduate
degree, certified public accountant (non-practicing), asset appraiser. He draduated from Beijing
University of Science and Technology with a bachelor's degree in 1988 and from Nankai University in
1993 with a master's degree in economics. He once worked for Shenzhen Zhonghua Accounting Firm,
Shenzhen Weiming Assets Appraisal Firm, Shenzhen Zhongqinxin Assets Appraisal Co., Ltd., Shenzhen
Dezhengxin International Assets Appraisal Co., Ltd. and other firms. He is now Deputy General Manager
of Shenzhen Pengxin Asset & Land and Real Estate Appraisal Co., Ltd., an independent director of
Shenzhen Yingtang Intelligent Control Co., Ltd., an independent director of Shenzhen Wanrun
Technology Co., Ltd. and an independent director of the fifth Board of Directors of the Company.
Xu Xiaobin: Male, born in January 1977, Chinese nationality, no permanent residency abroad,
postgraduate degree. He is a member of Beijing Lawyers Association Professional Committee on Legal
Issues regarding Taiwan, Hong Kong, Macao and Overseas Chinese, a member of the Taiwan Issue
Research Association of China Law Society, 2012 outstanding professional lawyer of Haidian District,
Beijing. He once worked as a lawyer at Beijing office of Beijing Jinyan Lawyer Group and now serves
as an independent director of Home Credit Finance Co., Ltd. partner of Beijing Harmony Partners Law
Firm
Zhang Xiaocheng: Male, born in August 1966, Chinese nationality, no permanent residency abroad,
bachelor degree. He served as a lawyer at Lenghu Mining Area Law Firm in Qinghai Province from
October 1988 to September 2000; as a director of Jiahuang Law Firm of Gansu Province from October
2000 to February 2002; has been serving as a lawyer at Tahota Law Firm from March 2002 to date;
He has been serving as Chairman of Sichuan Kangweike Technology Co., Ltd. since May 2004;
Professional Manager of Mintrust International Trust Co., Ltd since October 2011; Chairman of Chengdu
Huixun Technology Co., Ltd. since August 2013.
Members of the Board of Supervisors:
Lomon Billions
Statements Page 5
Feng Jun, male, born in 1968, Chinese nationality, no permanent residency abroad, and bachelor degree.
He acted as the Company's Supervisor since April 2005 and now serves as Chairman of the Board of
Supervisors of the Company, Secretary of its Disciplinary Committee, and head of the labor union.
Fan Lixing, male, born in 1939, Chinese nationality, no permanent residency abroad, high school degree.
He acted as the Company's Supervisor since May 2002 and now a supervisor of the Company and Deputy
General Manager of Chainex Industrial.
Zhao Yongjun, male, Chinese nationality, without permanent residency abroad, born in July 1968, junior
college degree, corporate legal advisor, former member of the Company's Metering Energy Division,
section member of Legal Department, Deputy Director of Audit Department, and currently head of the
Company's Audit Department.
Other senior officers:
He Benliu, male, born in 1968, Chinese nationality, no permanent residency abroad, postgraduate degree.
He served as Deputy General Manager of the Company from 2005 to January 2015, and General
Manager of the Company from January 2015 to December 2016. From December 2016 to date, he has
been Executive Vice President and HR & Administration Director of the Company. He was prompted to
Chairman of Lomon Titanium in January 2018.
Shen Qingfei, male, born in 1981, Chinese nationality, master of accounting, with qualifications as
accountant, financial economist, board secretary, etc. He served as Deputy Director of Strategic
Development of the Company from July 2003 to January 2006; worked for Guangdong Guanhao High-
tech Co., Ltd. from January 2006 to June 2008 in posts including Assistant Manager of the securities
department, Deputy Director of the Board Secretariat, securities affairs representative, etc.; He served as
internal audit deputy director of Guangzhou Mopark Co., Ltd. from June 2008 to January 2011; as
securities affairs representative of Hainan Natural Rubber Industry Group Co., Ltd. from January 2011
to October 2012. He acted as Secretary of the Board of Directors of the Company since October 2012
and Chief Financial Officer of the Company since April 2014 to date. He has been Chairman of Jiaozuo
Rongjia Scandium Industry Science & Technology Co., Ltd. since December 2015, and simultaneously
as Chairman of Billions Financial Leasing (Guangzhou) Co., Ltd. since October 2017.
Zhu Quanfang, male, Chinese nationality, born in 1966, bachelor degree. He served as General Manager
of Sichuan Lomon Titanium Industry Co., Ltd. from October 2009 to October 2013; General Manager
of XiangyangLomon Titanium Industry Co., Ltd from October 2013 to March 2014, and Chief Engineer
of Sichuan Lomon Titanium Industry Co., Ltd. since March 2014. He has been technical engineering
director of the Company since December 2016.
Jin Sanliang, male, born in 1966, Chinese nationality, junior college degree, senior engineer. He served
successively as technician, workshop director, director of production equipment department, general
manager assistant, deputy general manager, etc. of the Company. He is now the Compliance Director of
the Company.
Bruce Griffin, male, born in June 1968, British nationality, master's degree. He served as General
Manager of Grain Corp's warehouse and logistics operations in Australia from 2009 to 2010, president
of Australian MIL (Mineral Development Company) in 2011; President of WTR (World Titanium
Resources) of the United Kingdom from 2012 to 2013; President of TZMI (TZMI Mineral Resources
International Consulting Company) from January 2014 to January 2017; Vice President of the Company
since December 2016 to date.
Zhang Haitao, male, born in 1976, a member of the Communist Party of China, master's degree, a
doctorate in economics, economist. He has qualifications in accounting practice and securities practice,
and has passed the board secretary qualification test of Shenzhen Stock Exchange. He served as Manager
of the Investment Banking Division of the Southern Securities Zhengzhou Sales Department from July
1998 to December 2001; Deputy Section Chief and Deputy Secretary of the Youth League Committee
of the Budget Department of Jiaozuo Municipal Finance Bureau from December 2001 to September
2007 (during this period: from September 2007 to July 2010, he took an on-the-job course for a doctoral
degree in economics at Zhongnan University of Economics and Law). From June 2003 to December
Lomon Billions
Statements Page 5
2006, he disengaged from work to study for a master's degree in economics at Zhongnan University of
Economics and Law); Deputy Director of Budget Bureau of Jiaozuo Municipal Finance Bureau from
July 2010 to January 2014; Section Chief of the Credit and Debt Section of Jiaozuo Finance Bureau from
January 2014 to August 2017; and Secretary of the Board of Directors of the Company since October
2017.
Positions in shareholder entities
Name of
Position Holder
Name of Shareholder
Entity
Positions in
Shareholder
Entities
Start Date of Term of
Office
Expiry Date of Term of
Office
Whether there are
remunerations and
allowances from the
shareholder entity
Tan Ruiqing Henan Yintai Investment
Co., Ltd.
Executive
Director,
General
Manager
September 01, 2016 September 01, 2019 Yes
Fan Lixing Qingdao FTPA Qianye
Trading Co., Ltd.
Deputy General
Manager September 20, 2001 No
Zhang Qibin
Tangyin County Yuxin
Xylose Development Co.,
Ltd.
General
Manager September 10, 2001 No
Positions in other entities
Name of
Position Holder Name of Other Entities
Positions in
Other Entities
Start Date of Term of
Office
Expiry Date of Term of
Office
Whether there are
remunerations and
allowances from
other entities
Tan Ruiqing Henan YinkeInernational
Chemical Co., Ltd. Director September 01, 2016 September 01, 2019 No
Huang Ligao
Shanghai Fosun Chemical
Pharmaceutical Venture
Capital Co., Ltd.
Vice President June 01, 2005 Yes
Zhang Qibin Danisco Sweeteners (Anyang)
Co. Ltd.
Deputy
General
Manager
May 01, 2005 Yes
Zhang Zhijun
Henan Nanomaterials
Engineering Technology
Research Center, Henan
University
Director April 01, 2013 Yes
Chen Junfa
Shenzhen Pengxin Asset
Evaluation Land and Real
Estate Valuation Co., Ltd.
Deputy
General
Manager
April 01, 2016 Yes
Chen Junfa Shenzhen Yitoa Intelligent
Control Co., Ltd.
Independent
Director May 10, 2011 Yes
Chen Junfa Zibo QixiangTengda
Chemical Co., Ltd.
Independent
Director March 09, 2014 Yes
Chen Junfa Shenzhen Mason
Technologies Co., Ltd.
Independent
Director July 18, 2014 Yes
Xu Xiaobin Harmony Partners Law Firm Lawyer November 01, 2011 Yes
Xu Xiaobin Home Credit Consumer
Finance Co., Ltd.
Independent
Director August 01, 2012 Yes
Zhang
Xiaocheng TAHOTA LAW FIRM Lawyer March 01, 2002 Yes
The punishments of incumbent directors, supervisors and senior officers of the Company and directors,
supervisors and senior officers leaving the Company during the Reporting Period by securities regulatory
authorities in the most recent three years: N/A
IV. Remunerations of directors, supervisors and senior officers
The decision-making procedure, determination basis and actual payment of the remunerations of
directors, supervisors and senior officers
Decision-making procedure: the remunerations of directors and supervisors were decided by the
Lomon Billions
Statements Page 5
shareholders' meeting, and the remunerations of senior officers were determined by the Board of
Directors.
Determination basis: according to the Measures for the Management of Remunerations of Chairman of the Board of Directors, Chairman of the Board of Supervisors and Senior Officers in 2017 considered
and approved by the shareholders' meeting in 2016, in combination with such factors as job
responsibilities, business performance, personal performance, performance of duties, and completion of
responsible targets. The remunerations of independent directors, and directors and supervisors who do
not hold office in the Company is determined according to the Proposal on Adjusting the Allowances of
Independent Directors, Non-independent Directors and Supervisors adopted by the first extraordinary
shareholders' meeting in 2012.
Remunerations of directors, supervisors and senior officers of the Company during the Reporting Period
Monetary Unit: RMB ten thousand
Name Position Gender Age Post Status
Total amount
of pre-tax
remunerations
received from
the Company
Whether
remunerations were
received from the
Company's related
parties
Xu Gang Board Chairman Male 55 Present
position 186.15 No
Tan Ruiqing
Deputy Chairman & Vice President
of Marketing, Vice President of
Purchasing
Male 52 Present
position 150.01 Yes
Chang Yili Director Male 69 Present
position 73.79 No
Yang Minle Director Male 62 Present
position 73.79 No
Fan Xianguo Director, President Male 54 Present
position 152.07 No
Zhou Xiaokui Director, Vice President of R&D Male 56 Present
position 125.35 No
Zhang Qibin Director Male 53 Present
position 2.4 Yes
Huang Ligao Director Male 67 Present
position 2.4 No
Zhang Zhijun Independent Director Male 60 Present
position 8 No
Chen Junfa Independent Director Male 53 Present
position 8 No
Xu Xiaobin Independent Director Male 40 Present
position 8 No
Zhang
Xiaocheng Independent Director Male 52 Departure 8 No
Feng Jun Chairman of the Board of
Supervisors Male 50
Present
position 116.13 No
Fan Lixing Supervisor Male 79 Present
position 2.4 No
Zhao Yongjun Supervisor Male 50 Present
position 8.89 No
He Benliu Executive Vice President and HR
& Administrative Director Male 50
Present
position 137.16 No
Shen Qingfei CFO Male 37 Present
position 125.33 No
Zhu Quanfang Technical Engineering Director Male 52 Present
position 125.24 No
JinSanliang Compliance Director Male 52 Present
position 125.21 No
BruceGriffin Vice President of Strategy Male 50 Present
position 329.43 No
Zhang Haitao Board Secretary Male 42 Present
position 35.96 No
Total -- -- -- -- 1,803.71 --
Lomon Billions
Statements Page 5
Equity incentives granted to directors and senior officers during the Reporting Period
Unit: Share
Name Position
Number of
shares
with
exercisable
rights in
the
Reporting
Period
Number
of shares
with
rights
exercised
in the
Reporting
Period
Exercise
price of
shares with
rights
exercised in
the
Reporting
Period
(yuan/share)
Market
price at the
end of the
Reporting
Period
(yuan/share)
Begining
number
of limited
stocks
Number
of shares
unlocked
in the
current
period
Number
of limited
stocks
newly
awarded
during
the
Reporting
Period
Award price
of limited
stocks
(yuan/share)
Closing
number
of
limited
stocks
He Benliu
Executive
Vice President
and HR &
Administrative
Director
16.02 630,000 315,000 0 2.88 315,000
Shen
Qingfei CFO 16.02 525,000 262,500 0 2.88 262,500
JinSanliang Compliance
Director 16.02 525,000 262,500 0 2.88 262,500
Total -- -- -- 1,680,000 840,000 0 -- 840,000
V. Employees of the Company
1. Number, professional composition and educational background of employees
Number of on-the-job employees in the parent company (person) 2,029
Number of on-the-job employees in major subsidiaries (person) 5,031
Total number of on-the-job employees (person) 7,060
The total number of paid employees in the current period (person) 7,060
Number of retired employees receiving payments from the parent company and major subsidiaries 0
Professional composition
Professional category Number of professional staff
(person)
Production personnel 5,472
Sales personnel 136
Technical personnel 1,125
Financial personnel 66
Administrative staff 261
Total 7,060
Education
Educational type Quantity (person)
Master and above 112
Undergraduate 548
Junior college 880
Technical secondary school 1,295
Lomon Billions
Statements Page 5
Senior High School 1,084
Junior high and below 3,141
Total 7,060
2. Remuneration policy
In order to bring out the enthusiasm and creativity of employees, guarantee the living standard of
employees, enhance the cohesion of the Company, establish a stable workforce, attract high-quality
talents, ensure steady growth of employees’ income while maintaining development of the Company,
achieve common development of the Company and its employees, according to the principle of "people
first" and scientific rationality, this "Remuneration System and Management Measures" of the Company
is formulated, which sets out establish specific measures on the composition, standards, distribution, and
adjustment of remuneration.
3. Training plan
In the face of increasingly fierce market competition, in order to strengthen the management of training,
improve the planning, effectiveness and pertinence of training work, so that the same can be effectively
coordinated with and used to promote the strategic enhancement of Company and the achievement of its
annual business goals. As a dedicated training division of the Group, Lomon Billions College plans to
divide future training work into three major sections, and establish a comprehensive training system
featuring characteristics of Lomon Billions on the basis of improving the overall capabilities of all
employees and by focusing on the improvement of middle management capabilities, team integration,
and employees' actual skills, so as to comprehensively promote the growth and development of
employees, enhance the overall competitiveness of the Company, and ensure that training becomes the
driving force for the Company’s performance as well as the personal growth of its employees.
(1) EMBA and MBA courses
Developed for current senior management, the EMBA courses aim to help improve their decision-
making, strategic thinking, global control and develop their global perspective. Developed for current
middle-level management, the MBA courses cover basic concepts, practical methods and latest
management methods contained in efficiency-related MBA materials, and can be used to improve
executive ability. The reserve management training courses are developed for key undergraduates and
master graduates who are yet to take up administrative posts and focus on teaching comprehensive and
systematic management skills and methods.
(2) Basic training
In terms of corporate value training, we shall implement the method of "penetration to daily works, shift
meetings, monthly and annual meetings", which shall be used in combination with guidance materials
developed basing on actual cases and practical operations, so as to comprehensively promote the sense
of responsibility and mission among employees.
In terms of new employee orientation training, we must achieve "complete training, evaluation and
qualification for every employee", so that new employees can quickly understand the development
history, corporate culture and various rules and regulations of the Company, ensuring their fast adaptation
to jobs and all-out efforts to develop the Company. Orientation training shall be conducted in
combination with the full implementation of the "master and disciple" system, which covers learning of
departmental responsibilities and processes, job responsibilities and standards, so that new employees
can satisfy the requirements of specific units and establish collaborative relationships with colleagues
and teams.
In terms of trainings on safety, environmental protection and crisis management, we shall adopt the
method of "in and out" (internal and external training), ensure "regular, institutionalized, diversified,
specialized, and systematic" training and education. We must implement occupational safety and
production safety, and do a good job in identifying, responding to, and handling various crisis events,
commitment to occupational and production safety, so that employees can do a good job in identification
of various types of crisis events as well as the implementation of emergency measures and handling procedures.
In terms of professional skills training, department leaders are required to coordinate, supervise and
guide the work of their subordinates, organize relevant professional training courses according to
employees' needs and conduct scientific assessment.
Lomon Billions
Statements Page 5
Important special trainings cover safety, environmental protection and lean production, standardization
of HR management, etc., the purpose of which including strengthening the organization's core
competencies, enhancing teamwork and mutual assistance, ensuring correct employee attitudes and
improving professional skills of the employees.
(3) Enhancement training
Management training focuses on the management practices of base-level managers, the purpose of which
is to enhance professionalism and responsibility, strengthen quality management and improve the overall
working capacity of managers.
Comprehensive literacy training courses cover Company-wide professional etiquette, writing ability of
base-level management team and staff of functional divisions, English communication skills of R&D
team.
The Three News Lecture is a series of trainings of the Company that cover new processes, technologies
and business. As training is an important talent cultivation measure, we shall integrate the same with the
Company's development strategies and operating principles in 2018, scientifically determine training
needs, participants, and course instructors, and do a good job in various works such as follow-up tracking,
file management.
As the Company continues to grow, to ensure the realization of corporate strategic goals, we must have
a workforce featuring “high morality, high-quality, high-capacity, high-efficiency". Through enhanced
training, we can not only improve personal ability and professional level of employees, encourage good
behavior and habits, but also effectively improve management efficiency and labor productivity of the
Company, develop knowledge-based teams, so as to improve the comprehensive competitiveness of the
Company and ultimately achieve win-win between the Company and its employees.
4. Labor service outsourcing: N/A
Section 9 Company Governance
I. Basic Situation of Corporate Governance The Company continuously improved its governance structure, established and improved its internal
management and control mechanisms and further improved its corporate governance level in strict
accordance with the requirements of the Company Law, the Securities Law, the Code of Corporate
Governance of Listed Companies, the Shenzhen Stock Exchange Listing Rules, and Guidelines of Shenzhen Stock Exchange for Standardized Operation of Companies Listed on the SME Board. As at the
end of the Reporting Period, the actual state of corporate governance of the Company was in compliance
with the above laws and regulations and the normative documents issued by China Securities Regulatory
Commission and Shenzhen Stock Exchange concerning the governance of listed companies.
During the Reporting Period, the Company formulated and amended 5 rules as detailed below:
Serial No. Name of Rule Date of Disclosure Disclosure Media
1 Articles of Association (January, 2017) 2017-01-24 www.cninfo.com.cn
2 Authorized Management Rule (March 2017) 2017-03-14 www.cninfo.com.cn
3
The Articles of Association (March 2017), the Measures for
the Management of Remunerations of Chairman of the Board
of Directors, Chairman of the Board of Supervisors and
Senior Officers in 2017 (March 2017) 2017-03-31
2017-03-31 www.cninfo.com.cn
4 The Articles of Association (April, 2017) 2017-04-07 www.cninfo.com.cn
Whether there was major difference between the actual state of corporate governance of the Company
and the normative documents issued by China Securities Regulatory Commission and Shenzhen Stock
Exchange concerning the governance of listed companies: No
II. The Independence of the Company from Its Controlling Shareholders in
Business, Personnel, Assets, Organizations, and Finance, among Others. The Company has no controlling shareholders.
Lomon Billions
Statements Page 5
III. Horizontal Competition: N/A
IV. Information on Annual Shareholders' Meeting and Extraordinary
Shareholders' Meeting Held During the Reporting Period
1. The shareholders' meetings in the current Reporting Period
Session Meeting type
Percentage of
Attended
Investors
Date of
Meeting
Date of
Disclosure Disclosure Index
The first
extraordinary
shareholders'
meeting in
2017
Extraordinary
shareholders'
meeting
42.99% January 10,
2017
January 11,
2017
The Announcement on the Resolutions of the First
Extraordinary Shareholders' Meeting in 2017 (No.2017-
006) published on China Securities Journal, Securities
Times and www.cninfo.com.cn on January 11, 2017
The second
extraordinary
shareholders'
meeting in
2017
Extraordinary
shareholders'
meeting
60.84% February 10,
2017
February 11,
2017
The Announcement on the Resolutions of the Second
Extraordinary Shareholders' Meeting in 2017 (No.2017-
027) published on China Securities Journal, Securities
Times and www.cninfo.com.cn on February 11, 2017
The third
extraordinary
shareholders'
meeting in
2017
Extraordinary
shareholders'
meeting
77.80% February 24,
2017
February 25,
2017
The Announcement on the Resolutions of the Third
Extraordinary Shareholders' Meeting in 2017 (No.2017-
031) published on China Securities Journal, Securities
Times and www.cninfo.com.cn on February 25, 2017
Shareholders'
meeting in
2016
Annual
shareholders'
meeting
60.75% April 20, 2017 April 21, 2017
The Announcement on the Resolutions of the
Shareholders' Meeting in 2016 (No.2017-067)
published on China Securities Journal, Securities Times
and www.cninfo.com.cn on April 21, 2017
The fourth
extraordinary
shareholders'
meeting in
2017
Extraordinary
shareholders'
meeting
58.25% April 24, 2017 April 25, 2017
The Announcement on the Resolutions of the Fourth
Extraordinary Shareholders' Meeting in 2017 (No.2017-
069) published on China Securities Journal, Securities
Times and www.cninfo.com.cn on April 25, 2017
The fifth
extraordinary
shareholders'
meeting in
2017
Extraordinary
shareholders'
meeting
43.55% June 01, 2017 June 02, 2017
The Announcement on the Resolutions of the Fifth
Extraordinary Shareholders' Meeting in 2017 (No.2017-
081) published on China Securities Journal, Securities
Times and www.cninfo.com.cn on June 02, 2017
The sixth
extraordinary
shareholders'
meeting in
2017
Extraordinary
shareholders'
meeting
40.92% October 18,
2017
October 19,
2017
The Announcement on the Resolutions of the Sixth
Extraordinary Shareholders' Meeting in 2017 (No.2017-
118) published on China Securities Journal, Securities
Times and www.cninfo.com.cn on October 19, 2017
2. Shareholders of preferred stock who have resumed voting rights request to hold extraordinary
shareholders' meeting: N/A
V. Information on performance of duties by independent directors during
the Reporting Period
1. Independent directors attending the meetings of the Board of Directors and the shareholders' meetings
Independent directors attending the meetings of the Board of Directors and the shareholders' meetings
Name of
Independent
Director
The number of
meetings of the
Board of
Directors that
should be
attended during
the Reporting
Period
The number
of meetings of
the Board of
Directors
attended in
person
The number of
meetings of the
Board of
Directors
attended by
means of
communication
The number
of meetings of
the Board of
Directors
attended by
proxy
The number
of absence
from meetings
of the Board
of Directors
Whether two
consecutive
sessions of the
meeting of the
board of
directors were
not attended in
person
The number of
shareholders'
meetings
attended
Zhang Zhijun 12 3 9 0 0 No 0
Lomon Billions
Statements Page 5
Chen Junfa 12 5 7 0 0 No 2
Xu Xiaobin 12 2 10 0 0 No 0
Zhang
Xiaocheng 6 5 1 0 0 No 0
2. Independent directors' objection to the Company's related matters
Whether the independent directors raised objection to the Company's related matters: No
3. Other information on performance of duties by independent directors
Whether the independent directors' proposals related to the Company were adopted: Yes
Statement on the fact that independent directors' proposals related to the Company were or were not
adopted
Independent directors of the Company, in accordance with the Company Law, the Securities Law, the
SSE Listing Rules, the Articles of Association, Work Rules for Independent Directors and other relevant
regulations, attached importance to the standardization of the Company's operations, performed their
duties independently and diligently, provided many valuable professional suggestions on the Company's
system improvement and daily decision-making in operations, conducted prudential supervision and
provided professional independent opinions on the appointment and replacement of members of senior
management, board of directors and other organizations, daily related-party transactions, financial
assistance, external guarantees, profit distribution plan, engagement of accounting firm, repurchasing
and writing-off of restricted stocks, the first employee stock ownership plan and other matters related to
the Company during the Reporting Period. They maintained full independence at work, served all
shareholders in a cautious, faithful, and diligent manner and earnestly safeguarded the interests of the
Company and all shareholders.
VI. Performance of duties by special committees of the board of directors
during the Reporting Period
The Company's board of directors has four special committees, namely the audit committee, the strategy
committee, the remuneration and appraisal committee and the nomination committee. In 2017, the
special committees carried out relevant works in accordance with the principle of due diligence and the
provisions of relevant laws and regulations, normative documents, and relevant rules of procedure
developed by the Company for special committees. During the Reporting Period, the performance of
various special committees was as follows:
Performance of duties by the Audit Committee under the Board of Directors:
During the Reporting Period, the Audit Committee actively performed its duties in accordance with the
relevant provisions of the Company Law, the Code of Corporate Governance of Listed Companies issued
by China Securities Regulatory Commission and the Work Regulations of the Audit Committee of the
Board of Directors, and maintained good interaction with the auditing department and the auditing
accountants of the Company in the guidance and review of the Company's audit work.
The Company's Audit Committee consists of three directors, including two independent directors.
During the Reporting Period, the Audit Committee held 5 meetings in total, reviewed the Company’s
regular reports, the deposit and use of funds raised, the implementation of internal controls, and the
reappointment of accounting firms, and implemented effective guidance on and supervision of the
Company’s property status and operating conditions.
Performance of the Strategy Committee:
The Company's Strategy Committee consists of five directors, including two independent directors.
During the Reporting Period, the strategy committee held a total of two meetings for review of the
Company’s major development strategy for the next ten years, its investments as well as liquidation and
cancellation of subsidiaries. Focusing on the Company's development plans for the next decade, the
committee has passed resolutions after carefully analyzing the issues that have a significant impact on
the Company's development.
Performance of duties by the Remuneration and Appraisal Committee:
The Remuneration and Appraisal Committee consists of three directors, including two independent
Lomon Billions
Statements Page 5
directors. During the Reporting Period, the remuneration and appraisal committee held 3 meetings,
reviewed and approved successively the Plan for Distribution of Performance Awards in 2016. The
Proposal on Unlocking in the Second Unlocking Period under the 2015 Restricted Stock Incentive Plan,
the Proposal on Repurchasing and Writing off Part of the Restricted Stocks, the Proposal on Amending
the Measures for the Management of Remunerations of Chairman of the Board of Directors, Chairman
of the Board of Supervisors and Senior Officers in 2017, the Proposal on the First Employee Stock Ownership Plan (Draft) and Its Summary, the Proposal on Withholding the 2017 Performance Award to
Subsidize the Employee Stock Ownership Plan and other proposals. The Remuneration and Appraisal
Committee actively performed various duties in accordance with the relevant provisions of the Company Law, the Code of Corporate Governance of Listed Companies, the Articles of Association, and the Rules
of Procedure of the Remuneration and Appraisal Committee.
It has established a talent base for the long-term stable development of the Company.
The performance of duties by the Nomination Committee under the Board of Directors:
The Company's Nomination Committee consists of three directors, including two independent directors.
During the Reporting Period, the nomination committee held a total of 4 meetings, successively reviewed
the Proposal on Reviewing and Recommending the President of the Company and the Secretary of the
Board of Directors, the Proposal on Reviewing and Recommending Other Senior Officers of the
Company, the Proposal on Changing the Secretary of the Board of Directors, the Proposal on Supplementing Independent Directors of the Company and other proposals. The Nomination Committee
actively performed various duties in accordance with the relevant provisions of the Company Law, the
Code of Corporate Governance of Listed Companies, the Articles of Association, and the Rules of Procedure of the Nomination Committee.
VII. Performance of duties by the Board of Supervisors
Whether the Board of Supervisors found any risks in the Company's activities during the Reporting
Period: No
VIII. Evaluation and motivation of senior officers
In order to enable the Company's senior officers to better perform their duties and clarify their rights and
obligations, the Company actively established and enhanced its senior officer performance evaluation
standards and incentive and restraint mechanisms that are fair, transparent, and efficient. In strict
accordance with the Labor Law and relevant regulations on wages and social security of the state, the
Company evaluated and assessed on a monthly basis the performance of job responsibilities by the
Company's senior officers and completion of their economic objectives; during the Reporting Period,
performance appraisal of and compensation payment to senior officers of the Company were conducted
on a monthly basis under the supervision of the Board of Supervisors. During the Reporting Period,
senior officers of the Company could follow laws and regulations such as the Company Law and the
Articles of Association to conscientiously perform their duties and actively implement the relevant
resolutions of the shareholders' meeting and the Board of Directors of the Company, actively adjusted
its business ideas under the correct guidance of the Board of Directors, continuously strengthened
internal management, and completed various tasks for the year.
IX. Internal Control Evaluation Report
1. The details of major defects in internal control found during the Reporting Period: No
2. Internal Control Self-evaluation Report
The date of disclosing the full text of the Internal Control Evaluation
Report April 03, 2018
The index of disclose of the full text of the Internal Control Evaluation
Report
For details, please refer to the Internal Control Self-evaluation Report
2017 published on www.cninfo. com.cn on April 3, 2018.
Percentage of the evaluated total unit assets to the total assets shown in
the consolidated financial statements of the Company 100.00%
Percentage of the evaluated unit operating revenue to the operating
revenue shown in the consolidated financial statements of the Company 100.00%
Lomon Billions
Statements Page 5
Defect identification standard
Category Financial report Non-financial report
Qualitative
standards
The qualitative standards for the evaluation of internal
control defects of financial reports as determined by the
Company are as follows: defects with the following
characteristics are identified as major defects: ①the
directors, supervisors and senior officers of the Company
perform malpractice, causing major losses and adverse
effects; ②the Company is involved in major events in
violation of laws and regulations and liability accidents in
the aspects of financial accounting, asset management,
capital operation, information disclosure, product quality,
safety production and environmental protection, among
others, causing major losses and adverse effects to the
Company, or is subject to major administrative
supervision and punishment; ③the Company's Audit
Committee and internal audit organization fail to perform
effective supervision function, causing major losses to the
Company; and ④the CPA has issued or is likely to have
issued negative opinions or has refused to give its
opinions on the Company's financial statements. If the
results caused in the above ①, ② and ③ are not material
but important, the defects are identified as important
defects. If the results caused in the above ①, ② and ③
are neither material nor important, the defects are
identified as general defects.
The qualitative standards for the evaluation of internal control
defects of non-financial reports as determined by the Company are
as follows: defects with the following characteristics are identified
as major defects: ①violation of national laws, administrative
regulations and normative documents; ② the "three important and
one major" matters fail to go through the collective decision-
making process; ③outflow of managerial and technical personnel
on key posts; ④important business involved in the production and
operation of the Company is lack of institutional control or
sustains institutional system failure; ⑤the internal control of
information disclosure becomes invalid, causing the Company to
be publicly condemned by regulatory authorities; and ⑥the results
of internal control evaluation, especially major or important
defects, are not rectified. If the above results are neither material
nor important, the defects are identified as general defects. If the
above results are neither material nor important, the defects are
identified as general defects.
Quantitative
standards
The quantitative standards for the evaluation of internal
control defects of financial reports as determined by the
Company are as follows: regarding the data of the 2017
consolidated financial statements as the reference data, the
quantitative standards for determining the importance of
misstatement (including omission) on the Company's
consolidated financial statements are as follows: major
defect: misstatement ≥ 5% of the pre-tax profit; important
defect: 1% pre-tax profit ≤ misstatement ＜ 5% of pre-tax
profit; general defect: misstatement < 1% of pre-tax
profit.
The quantitative standards for the evaluation of internal control
defects of non-financial reports as determined by the Company are
as follows: by referring to the quantitative standards for the
evaluation of internal control defects of financial reports, the
quantitative standards for determining the importance of internal
control defects of non-financial reports are as follows: major
defect: misstatement ≥ 5% of the pre-tax profit; important defect:
1% pre-tax profit ≤ misstatement ＜ 5% of pre-tax profit; general
defect: misstatement < 1% of pre-tax profit.
Number of major defects in financial reports (unit) 0
Number of major defects in non-financial reports (unit) 0
Number of important defects in financial reports (unit) 0
Number of important defects in non-financial reports (unit) 0
X. Internal Control Audit Report or Authentication Report Internal Control Authentication Report
The audit opinion section in Internal Control Authentication Report
In our opinion, your company has maintained effective internal control related to the financial statements in all major aspects as at December 31,
2017, in accordance with the Basic Regulations on Internal Control of Enterprises and other related regulations issued by the five ministries
including the Ministry of Finance.
Disclosure of Internal Control Audit Report Disclosure
The date of disclosing the full text of the Internal Control
Audit Report April 03, 2018
The index of disclose of the full text of the Internal Control
Audit Report
For details, please refer to the Internal Control Authentication Report 2017
published on www.cninfo. com.cn on April 03, 2017.
Type of opinions related to Internal Control Audit Report Standard and unqualified opinions
Whether there are major defects in non-financial reports No
Whether the accounting firm issued an Internal Control Audit Report with non-standard opinions: No
Whether the Internal Control Audit Report issued by the accounting firm is consistent with the Self-
Lomon Billions
Statements Page 5
evaluation Report issued by the Board of Directors: Yes
Section 10 Corporate Bonds
Whether the Company had publicly issued corporate bonds traded on the stock exchange, which did not
become due as at the approved issue date of the annual report or which became due but were not fully
honored: No
Lomon Billions
Statements Page 5
Section 11 Financial Report
I. Audit Report
Type of Audit Opinion Standard clean opinion
Signing Date of Audit Report March 30, 2018
Name of Audit Agency BDO CHINA SHU LUN PAN CERTIFIED
PUBLIC ACCONTANTS LLP
Audit Report Ref. No. Xin Kuai Shi Bao Zi [2018] No.ZG10544
Name of Certified Public Accountant Xu Peimei, Zhang Zhen
Audit Report
Xin Kuai Shi Bao Zi [2018] No. ZG10544
To all shareholders of Lomon Billions Group Co., Ltd.,
I. Audit Opinions We have audited the accompanying Financial Statements of Lomon Billions Group Co., Ltd.
(hereinafter referred to as “Lomon Billions”), including the Consolidated and Parent Company Balance
Sheets as at Sunday, December 31, 2017, Consolidated and Parent Company Profit Statements,
Consolidated and Parent Company Cash Flow Statements, Consolidated and Parent Company Statement
of Change in Stockholders' Equity for the year of 2017 and the Notes to Financial Statements.
We have been reassured that the enclosed financial statements of Lomon Billions have been
prepared according to the Accounting Standards for Enterprises and have fairly reflected in all major
aspects the consolidated and parent company financial situations of Lomon Billions by December 31,
2017 and its consolidated and parent company business performance and cash flow in 2017.
II. The Basis for the Formation of Audit Opinions We have exercised our auditing work in accordance with the Auditing Standards for CPA. The
"CPA's Responsibilities in Auditing the Financial Statements" section of the audit report further describes
our responsibilities under these Standards. In accordance with the Code of Professional Ethics for
Chinese Certified Public Accountants, we are independent of Lomon Billions and have performed other
responsibilities in terms of professional ethics. We believe the audit evidence so acquired by us is
sufficient and appropriate, which underlies the publication of audit opinions.
III. Key Audit Items The key audit items are the items we think based on our professional judgment as the most critical
to the current financial statements. These items should be based on the overall audit of the financial
statements and the formation of audit opinions. We do not comment on these items separately. We
identify the following items as critical audit items that need to be communicated in the audit report.
Lomon Billions
Statements Page 5
Key Audit Items How to deal with the items in the audit
process
(I) Revenue recognition
For the accounting policy on income
recognition, refer to Note III (XXV) for details;
for the income classification and the disclosure
of the accrual amount in the current year, refer
to V (XLVI) for details.
In 2017, the prime operating revenue of Lomon
Billions at the business combination level was RMB10.118 billion, which was mainly from the sale of titanium dioxide at home and abroad.
As the sales amount of titanium dioxide in the current year is RMB8.589, up by RMB5.086 billion compared with that of the previous year, representing a relatively high growth rate of 145.19%. There is an inherent risk that the management might manipulate the time point of revenue recognition for the purpose of achieving a specific goal or expectation, so we identify revenue recognition as a key audit
item.
Our audit procedures for revenue recognition include:
1. Understand and evaluate the design and operation
effectiveness of the management's key internal control
related to revenue recognition;
2. Select samples and check the sales contract, identify
the contract terms and conditions related to the transfer
of the risk and return related to the ownership of the
goods, and evaluate whether the time point of revenue
recognition meets the requirements of the Accounting
Standards for Business Enterprises;
3. According to the accounts receivable correspondence
procedure, we select the samples of revenue transactions
recorded in the current year, check the invoices, sales
contracts, outbound delivery orders and other related
documents, obtain the customs declaration form for
overseas sales, check the customs sales statistics and
accounts to confirm the overseas sales data, and verify
the authenticity of the sales revenue;
4. The analytical procedures for revenue and cost,
including the analysis of the fluctuation of revenue, cost
and gross interest rate in all months of the current period,
the analysis of contrast between the revenue, cost and
gross interest rate of the current period and those of the
immediately prior period, and check the accuracy of the
recognized revenue; and
5. On the basis of the revenue transactions recorded around
the balance sheet date, select samples and check outbound
delivery orders and other supporting documents so as to
evaluate whether the revenue is recorded in the appropriate
accounting period.
(II) Depreciation of goodwill For the accounting policy on goodwill, refer to
Note III (V)/(XX) for details; for the disclosure
of goodwill, refer to Note V (XIX) for details.
As at December 31, 2017, the book value of
goodwill in the financial statements of
Lomon Billions was RMB4.986 billion,
including the RMB28,184,300.00 goodwill
impairment provision that had been
appropriated. The above goodwill is formed
mainly due to the acquisition of Sichuan
Lomon Titanium Industry Co., Ltd. in 2016
and the acquisition of PanzhihuaRuierxin
Industry and Trade Co., Ltd. in 2017.
At the end of each year, the management of
the Company will conduct an impairment test
on goodwill and adjust the book value of
goodwill based on the results of the
impairment test. The results of the goodwill
Our main audit procedures for goodwill impairment
test include:
1. Based on our understanding of the business
activities of Lomon Billions and the provisions of
the Accounting Standards for Business Enterprises,
we evaluate the management's identification of the
assets and asset groups and how they allocate the
goodwill and other assets to the asset groups;
2. Evaluate the competency, professional quality and
objectivity of the external valuation experts hired by
the management;
3. Based on the work of external valuation experts and
the requirements of the accounting standards, we
evaluate the methods and assumptions used to
forecast the present value of the future cash flow;
Lomon Billions
Statements Page 5
impairment test largely depend on the
assessment done and assumptions adopted by
the management. Due to the importance of the
book value of goodwill to the effect of the
consolidated financial statements, and major
judgment and estimation by the management
is involved in determining whether the
goodwill impairment provision should be
appropriated, so we identify the impairment of
goodwill in the consolidated financial
statements as a key audit item.
4. Recheck the forecast level of cash flow and the
rationality of the discount rate, including the expected
output of the related asset group, future sales price,
growth rate, estimated gross interest rate and related
expenses, and compare with the historical data of the
related asset group and the industry level; and
5. Evaluate whether the disclosure of goodwill
impairment in the financial statements is in line with
the requirements of the Accounting Standards for
Business Enterprises.
IV. Other Information The management of Lomon Billions (the "Management") is responsible for other information.
Other information includes the information contained in the 2017 annual report of Lomon Billions, but
excludes the financial statements and our Audit Report.
Our audit opinions on the financial statements do not contain other information, nor do we issue
any form of authentication conclusion on other information.
Based on our audit of the financial statements, our responsibility is to read other information, and
in the process, consider whether other information is in major disagreement with the financial
statements or what we know in the process of auditing, or if there seems to be any major misstatement
in other information.
Based on the work we have done, if we ascertain that there are material misstatements in other
information, we should report this fact. In this regard, we have nothing to report.
V. Responsibilities of the Management or Governance for Financial
Statements The management shall prepare financial statement in accordance with the Accounting Standards
for Enterprises, rendering it with fair reflections; and design, implement and maintain internal control
relating to the preparation of financial statements so as to avoid any major misstatement caused by
malpractices or mistakes.
In preparing the financial statements, the management is responsible for assessing the going-
concern capability of Lomon Billions, disclosing the issues related to going concern (if applicable) and
using the going-concern assumptions, unless Lomon Billions is pending liquidation or termination of
operation or has no other realistic options.
The governance is responsible for supervising the financial reporting process of Lomon Billions.
VI. CPA's Responsibilities in Auditing the Financial Statements Our goal is to acquire a reasonable assurance that the overall financial statements do not have any
major misstatement caused by malpractice or error, and to issue an audit report containing audit
opinions. Reasonable assurance is a high level of assurance, but it does not guarantee that an audit
performed in accordance with audit standards can always find the existence of a material misstatement.
Misstatements may be caused by malpractices or errors, and are often considered to be material if they,
individually or collectively, are reasonably expected to affect the economic decisions made by the
financial statements users based on the financial statements.
In carrying out the audit work according to the auditing standards, we make professional judgment
and maintain professional skepticism. Meanwhile, we also carry out the following work:
(1) Identify and assess the risk of significant misstatements in the financial statements caused by
malpractices or errors, design and implement audit procedures to cope with these risks and obtain
sufficient and appropriate audit evidence as the basis for issuing audit opinions. As malpractice may
involve collusion, forgery, intentional omission, false statement or overriding internal control, the risk of major misstatements caused by malpractices is higher than the risk of failure to find major
misstatements caused by errors.
(2) Understand internal control related to audit so as to work out appropriate audit procedures, but
Lomon Billions
Statements Page 5
not for the purpose of giving opinions to the effectiveness of internal control.
(3) Assess the appropriateness of the management in selecting the accounting policy and the
rationality in making accounting estimations and related disclosures.
(4) Draw a conclusion on the appropriateness of management's use of the going-concern
assumptions. Meanwhile, on the basis of the audit evidence obtained, draw a conclusion on whether
there is a major uncertainty about the matters or circumstances of serious concern for the going-concern
capability of Lomon Billions. If we conclude that there is a major uncertainty, the audit standards
require us to remind in the audit report the financial statements users to pay attention to the relevant
disclosure in the financial statements; if the disclosure is inadequate, we should issue modified opinions.
Our conclusion is based on information available as at the audit report date. However, future matters
or circumstances may discontinue the operation of Lomon Billions.
(5) Evaluate the overall presentation, structure and content (including disclosure) of the financial
statements, and evaluate whether the financial statements fairly reflect the related transactions and
matters.
(6) Obtain sufficient and appropriate audit evidence on the financial information of the entity or
business activities of Lomon Billions in order to issue audit opinions on the financial statements. We
are responsible for guiding, supervising and implementing group audit, and undertake the full
responsibility for our audit opinions.
We communicate with the governance on the scope, schedule, and major findings in respect
of audit, including the noteworthy internal control defects that we have identified in the audit process.
We have also made a statement to the governance on our compliance with the professional
ethics requirements related to independence, and communicate with the governance with regard to
all relationships and other matters that may be reasonably considered to affect our independence, as
well as related precautions (if applicable).
Among the matters that we have communicated with the governance, we decide which matters
are most critical to the audit of the current financial statements and form key audit items. We describe
these matters in the audit report, unless the laws and regulations prohibit the public disclosure of
these matters, or in very few cases, the negative consequences of communication of a matter in the
audit report are reasonably expected to exceed the benefits from the public interest, in which case,
we should not communicate the matter in the audit report.
BDO CHINA SHU LUN PAN CERTIFIED
PUBLIC ACCONTANTS LLP (Sealed)
Chinese Certified Public Accountant: XU
Peimei (Signed)
(Associate)
Shanghai, China Chinese Certified Public Accountant: ZHANG
Zhen (Signed)
March 30, 2018
Statements
Page 2
III. Company’s Profiles 1. Consolidated Balance Sheet
By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Assets Closing Balance Beginning Balance
Current assets:
Monetary fund 2,353,500,074.73 1,303,390,707.30
Deposit reservation for balance
Lending funds
Financial assets at FVTPL 700,000,000.00
Derivative financial assets
Notes receivable 977,142,300.36 829,771,559.34
Receivables 1,204,537,334.31 817,564,022.94
Advance payments 202,246,176.65 151,770,957.86
Premium receivables
Receivables from reinsurers
Reinsurance contract reserves receivable
Interest receivable 1,613,266.67 1,065,406.14
Dividend receivable
Other receivables 16,752,127.45 30,514,319.53
Buying back the sale of financial assets
Inventory 1,563,195,630.79 1,280,670,101.25
Assets held for sale
Non-current assets due within one year
Other current assets 62,576,781.59 167,297,575.45
Total current assets 7,081,563,692.55 4,582,044,649.81
Non-current assets
Loans and advances 437,187,650.00 207,713,251.24
Available-for-sale financial assets
Held-to-maturity investment
Long-term receivables 62,973,360.00 3,873,360.00
Long-term equity investment 17,354,982.65 40,509,607.25
Investment real estate 15,082,985.33 13,570,613.04
Fixed Assets 6,028,939,588.31 6,265,500,281.12
Construction in progress 604,727,691.73 418,636,002.32
Engineering goods and materials 64,110,107.69 58,378,944.35
Disposal of fixed assets 1,551,800.00
Productive biological assets
Oil & gas assets
Intangible assets 1,312,928,031.11 1,420,018,203.66
Development expenditure
Goodwill 4,985,888,761.43 4,881,901,979.36
Long-term deferred expenses 26,462,321.80 25,258,008.42
Deferred income tax assets 134,965,580.71 83,341,751.09
Other non-current assets 74,169,066.86 46,265,176.10
Total non-current assets 13,764,790,127.62 13,466,518,977.95
Total assets 20,846,353,820.17 18,048,563,627.76
Legal Representative: XU Gang
(Signed)
Chief Accountant: SHEN Qingfei
(Signed)
Leader of the Accounting Agency:
QIAO Zhuqing (Signed)
Annual Report of 2017
Statements Page 4
Consolidated Balance Sheet (Continued) By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Liabilities and Owner’s Equity Closing Balance Beginning Balance
Current liabilities:
Short-term borrowing 3,440,802,914.00 1,927,622,577.08
Borrowings from central bank
Deposits from clients and interbank 102,000,000.00
Borrowing funds
Financial liabilities at FVTPL
Derivative financial liabilities
Notes payable 420,953,502.48 264,913,906.49
Payables 985,650,869.05 916,152,552.50
Advance receipts 128,047,904.96 238,769,625.81
Financial assets sold for repurchase
Handling charges and commission payable
Payroll 350,340,105.92 172,963,534.72
Taxes payable 240,135,260.84 104,716,850.18
Interest payable 3,260,956.88 1,423,684.04
Dividend payable 17,522,756.71 12,601,680.00
Other payables 176,211,444.84 247,584,368.01
Due to reinsurers
Insurance contract reserves
Acting trading securities
Acting underwriting securities
Liabilities held for sale
Non-current liabilities due within one year 379,000,000.00 30,000,000.00
Other current liabilities
Total current liabilities 6,243,925,715.68 3,916,748,778.83
Non-current liabilities
Long-term borrowing 665,419,851.07 732,480,306.17
Bonds payable
Including: Preferred shares
Perpetual capital securities
Long-term payables 200,000,000.00 199,578,453.33
Long-term payroll payable
Special payables
Estimated liabilities 3,891,544.52
Deferred income 209,175,402.79 244,794,668.10
Deferred income tax liabilities 189,734,795.37 213,163,748.98
Other non-current liabilities
Total non-current liabilities 1,268,221,593.75 1,390,017,176.58
Total liabilities 7,512,147,309.43 5,306,765,955.41
Owner’s equity:
Capital stock 2,032,095,439.00 2,032,164,739.00
Other equity instruments
Including: Preferred shares
Perpetual capital securities
Capital reserve 9,640,990,354.09 9,580,445,001.38
Less: treasury stock 586,589,206.78 81,190,824.00
Other comprehensive income -5,988,832.06 6,580,752.60
Special reserve 86,963,901.73 179,788,103.92
Surplus reserves 303,909,289.50 112,318,664.79
General risk provisions 5,360,038.64
Undistributed profit 1,409,921,162.39 509,773,698.31
Total equity attributable to owners of the parent company 12,886,662,146.51 12,339,880,136.00
Minority equity 447,544,364.23 401,917,536.35
Total owner’s equity 13,334,206,510.74 12,741,797,672.35
Total liabilities and owners' equity 20,846,353,820.17 18,048,563,627.76
Legal Representative: XU Gang (Signed) Chief Accountant: SHEN
Qingfei (Signed)
Leader of the Accounting
Agency: QIAO Zhuqing
(Signed)
Statements Page 4
2.Balance Sheet of Parent Company By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Assets Closing Balance Beginning Balance
Current assets:
Monetary fund 1,093,289,307.89 543,614,412.88
Financial assets at FVTPL
Derivative financial assets
Notes receivable 160,758,407.42 328,634,777.00
Receivables 232,035,842.23 185,880,108.14
Advance payments
53,331,132.34
55,736,893.87
Interest receivable
Dividend receivable 1,049,900,000.00
Other receivables 839,705,411.73 482,617,505.63
Inventory 500,486,088.79 428,858,766.64
Assets held for sale
Non-current assets due within one year
Other current assets 42,949,421.69 78,363,662.08
Total current assets 3,972,455,612.09 2,103,706,126.24
Non-current assets
Available-for-sale financial assets
Held-to-maturity investment
Long-term receivables
Long-term equity investment 11,480,395,910.16 10,982,287,803.36
Investment real estate 13,197,552.23 11,812,929.49
Fixed Assets 1,296,985,138.65 1,372,588,645.72
Construction in progress 158,792,246.93 53,466,901.56
Engineering goods and materials 1,575,589.74 2,418,409.34
Disposal of fixed assets
Productive biological assets
Oil & gas assets
Intangible assets 151,147,729.67 142,902,006.68
Development expenditure
Goodwill
Long-term deferred expenses 813,505.07 1,495,343.27
Deferred income tax assets 38,112,797.10 7,257,878.36
Other non-current assets 11,588,724.25 13,931,353.89
Total non-current assets 13,152,609,193.80 12,588,161,271.67
Total assets 17,125,064,805.89 14,691,867,397.91
Legal Representative: XU Gang
(Signed)
Chief Accountant: SHEN Qingfei
(Signed)
Leader of the Accounting Agency:
QIAO Zhuqing (Signed)
Statements Page 4
2.Balance Sheet of Parent Company(Continued) By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Liabilities and Owner’s Equity Closing Balance Beginning Balance
Current liabilities:
Short-term borrowing 2,611,941,200.00 927,099,609.08
Financial liabilities at FVTPL
Derivative financial liabilities
Notes payable 309,645,042.48 212,520,631.59
Payables 302,526,029.72 257,172,761.52
Advance receipts 29,737,955.25 68,259,443.16
Payroll 168,036,005.41 21,061,512.89
Taxes payable 39,496,503.95 3,821,760.44
Interest payable 360,098.08
Dividend payable 17,302,756.71 12,601,680.00
Other payables 383,731,719.41 318,936,874.95
Liabilities held for sale
Non-current liabilities due within one year 164,000,000.00
Other current liabilities
Total current liabilities 4,026,777,311.01 1,821,474,273.63
Non-current liabilities
Long-term borrowing 580,000,000.00 413,000,000.00
Bonds payable
Including: Preferred shares
Perpetual capital securities
Long-term payables
Long-term payroll payable
Special payables
Estimated liabilities
Deferred income 9,798,324.92 12,605,740.76
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 589,798,324.92 425,605,740.76
Total liabilities 4,616,575,635.93 2,247,080,014.39
Owner’s equity:
Capital stock 2,032,095,439.00 2,032,164,739.00
Other equity instruments
Including: Preferred shares
Perpetual capital securities
Capital reserve 9,638,004,524.82 9,579,388,916.27
Less: treasury stock 586,589,206.78 81,190,824.00
Other comprehensive income
Special reserve
Surplus reserves 303,909,289.50 112,321,988.02
Undistributed profit 1,121,069,123.42 802,102,564.23
Total owner’s equity 12,508,489,169.96 12,444,787,383.52
Total liabilities and owners' equity 17,125,064,805.89 14,691,867,397.91
Legal Representative: XU Gang
(Signed)
Chief Accountant: SHEN Qingfei
(Signed)
Leader of the Accounting Agency:
QIAO Zhuqing (Signed)
Statements Page 5
3. Consolidated Profit Statement By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Item Accrual amount for current
period
Accrual amount for
last period
I. Total operating income 10,353,118,937.89 4,183,880,071.61
Including: Operating income 10,257,509,524.84 4,135,559,614.70
Income from interests 95,584,255.82 48,320,456.91
Earned premium
Handling charges and commission income 25,157.23
II. Total operating cost 7,362,713,908.92 3,636,336,460.58
Including: Operating cost 5,629,184,186.55 2,912,959,839.59
Interest expenses 3,925,497.13 2,861,917.18
Handling charges and commission expenditure 21,182.58 14,963.05
Surrender value
Net payments for insurance claims
Net appropriations to insurance contract reserves
Policyholder dividend expenses
Reinsurance costs
Taxes and surcharges 150,364,954.02 45,464,422.69
Marketing expenses 326,907,809.63 179,595,894.33
Overhead expenses 1,000,315,406.02 367,249,656.15
Financial expenses 158,608,194.53 95,826,876.03
Assets depreciation loss 93,386,678.46 32,362,891.56
Plus: Income from change in fair value (indicate loss with "-")
Income from investment (indicate loss with "-") 15,396,457.61 2,142,045.54
Including: income from investment in joint ventures and partnerships 845,375.40 266,773.25
Income from disposal of assets (indicate loss with "-") -18,907,981.46 -23,617,841.72
Gain on exchange (indicate loss with "-")
Other incomes 67,085,953.11
III. Operating profit (indicate loss with "-") 3,053,979,458.23 526,067,814.85
Plus: non-operating revenue 12,185,773.85 16,987,421.44
Less: non-operating expenses 10,703,355.11 2,515,559.24
IV. Total profit (indicate total loss with "-") 3,055,461,876.97 540,539,677.05
Less: Income tax expenses 466,587,269.97 81,227,090.06
V. Net profit (indicate net loss with "-") 2,588,874,607.00 459,312,586.99
1. Net profit from continued operation (indicate net loss with "-") 2,588,874,607.00 459,312,586.99
2. Net profit from discontinued operation (indicate net loss with "-")
Minority gain and loss 86,460,648.67 17,207,450.77
Net profit attributable to shareholders of parent company 2,502,413,958.33 442,105,136.22
VI. Net of tax from other comprehensive income -12,569,584.66 5,646,993.43
Net of tax from other comprehensive income attributable to owners of the parent company -12,569,584.66 5,646,993.43
(I) Other comprehensive income that cannot be reclassified into the profit and loss
1. Remeasure the variation of net indebtedness or net asset of defined benefit plans
2. Shares in other comprehensive income of the invested that cannot be reclassified into the profit
and loss under the equity law
(II) Other comprehensive income that will be reclassified into the profit and loss -12,569,584.66 5,646,993.43
1. Shares in other comprehensive income of the invested that will be reclassified into the profit and
loss under the equity law
2. Profit and loss from change in fair value of available-for-sale financial assets
3. Profit and loss from reclassification of held-to-maturity investment into available-for-sale
financial assets
4. Effective part of profit and loss from cash flow hedging
5. Translation difference of foreign currency financial statements -12,569,584.66 5,646,993.43
6. Other
Net of tax from other comprehensive income attributable to minority shareholders
VII. Total comprehensive income 2,576,305,022.34 464,959,580.42
Total comprehensive income attributable to owners of the parent company 2,489,844,373.67 447,752,129.65
Total comprehensive income attributable to minority shareholders 86,460,648.67 17,207,450.77
Annual Report of 2017
Statements Page 6
VIII. Earnings per share:
(I) Basic earnings per share (yuan/share) 1.25 0.43
(II) Diluted earnings per share (yuan/share) 1.25 0.43
Legal Representative:
XU Gang (Signed) Chief Accountant: SHEN Qingfei (Signed)
Leader of the Accounting Agency: QIAO
Zhuqing (Signed)
Statements Page 7
4. Profit Statement of Parent Company By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Item Accrual amount for
current period Accrual amount for last
period I. Operating income
3,125,392,300.43
2,482,530,030.27 Less: Operating cost
2,197,655,848.51
1,931,738,759.61 Taxes and surcharges
27,779,379.83
16,478,071.21 Marketing expenses
100,224,343.05
84,434,768.97 Overhead expenses
414,649,829.91
228,362,458.50 Financial expenses
73,265,163.52
63,372,930.31 Assets depreciation loss
27,556,814.15
-3,769,577.43 Plus: Income from change in fair value (indicate loss with "-")
Income from investment (indicate loss with "-")
1,661,905,894.93
607,791,863.85 Including: income from investment in joint ventures and partnerships
1,114,656.56
351,863.85 Income from disposal of assets (indicate loss with "-")
-3,847,270.23
-1,410,665.44 Other incomes
7,716,015.84 II. Operating profit (indicate loss with "-")
1,950,035,562.00
768,293,817.51 Plus: non-operating revenue
256,776.77
7,969,245.53 Less: non-operating expenses
651,028.16
1,064,239.27 III. Total profit (indicate total loss with "-")
1,949,641,310.61
775,198,823.77 Less: Income tax expenses
33,768,295.81
26,718,426.62 IV. Net profit (indicate net loss with "-")
1,915,873,014.80
748,480,397.15 (I) Net profit from continued operation (indicate net loss with "-")
1,915,873,014.80
748,480,397.15 (II) Net profit from discontinued operation (indicate net loss with "-")
V. Net of tax from other comprehensive income (I) Other comprehensive income that cannot be reclassified into the profit and loss
1. Remeasure the variation of net indebtedness or net asset of defined benefit plans 2. Shares in other comprehensive income of the invested that cannot be reclassified
into the profit and loss under the equity law
(II) Other comprehensive income that will be reclassified into the profit and loss 1. Shares in other comprehensive income of the invested that will be reclassified
into the profit and loss under the equity law
2. Profit and loss from change in fair value of available-for-sale financial assets 3. Profit and loss from reclassification of held-to-maturity investment into available-
for-sale financial assets
4. Effective part of profit and loss from cash flow hedging 5. Translation difference of foreign currency financial statements 6. Other
VI. Total comprehensive income
1,915,873,014.80
748,480,397.15 VII. Earnings per share:
(I) Basic earnings per share (yuan/share) (II) Diluted earnings per share (yuan/share)
Legal Representative: XU Gang
(Signed)
Chief Accountant: SHEN Qingfei
(Signed)
Leader of the Accounting Agency:
QIAO Zhuqing (Signed)
Statements Page 8
5. Consolidated Cash Flow Statement By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Item Accrual amount for
current period
Accrual amount for
last period
I. Cash flow from operating activities
Cash received from sales of goods and rendering of services 8,056,741,608.05 3,471,543,517.63
Net increase in deposits from clients and interbank
Net increase in borrowings from central bank
Net increase in placements from other financial institutions 52,000,000.00
Cash premiums received on original insurance contracts
Cash received from re-insurance business
Net increase in deposits and investments from insurers
Net increase from disposal of financial assets at FVTPL
Interest, handling charges and commissions received 104,931,053.71 58,555,410.02
Net increase in funds deposit
Net increase in repurchase business funds
Taxes and dues refund received 27,502,692.44
Cash received for other operating activities 180,984,633.96 124,470,149.87
Sub-total of cash flow from operating activities 8,394,657,295.72 3,682,071,769.96
Cash paid for purchase of goods and acceptance of labor service 3,412,031,484.25 2,390,716,821.32
Net increase in loans and advances 233,722,816.00 95,112,684.00
Net increase in deposits with central bank and interbank
Original insurance contract claims paid
Interest, handling charges and commissions paid 3,126,493.75 15,022.41
Policyholder dividend paid
Cash paid to and for employees 591,282,576.19 240,537,808.79
Cash paid for taxes and surcharges 1,373,209,436.15 298,002,415.30
Cash paid for other operating activities 413,516,492.60 225,464,869.77
Sub-total of cash outflow from operating activities 6,026,889,298.94 3,249,849,621.59
Net cash flows from operating activities 2,367,767,996.78 432,222,148.37
II. Cash flow from investment activities
Cash received from divestment 5,738,200,000.00 1,214,300,000.00
Cash received from return on investment 17,369,252.21 2,439,321.20
Net cash received from disposal of fixed assets, intangible assets and other long-term assets 2,759,688.12 2,661,682.60
Net cash received from disposal of subsidiaries and other business units
Cash received for other investment activities 17,442,982.50
Sub-total of cash inflow from investment activities 5,758,328,940.33 1,236,843,986.30
Net cash paid for purchase or construction of fixed assets, intangible assets and other long-term
assets 164,253,667.26 193,838,873.00
Cash paid for investment 6,367,400,000.00 1,136,400,000.00
Net increase in pledge loans
Net cash paid for acquisition of subsidiaries and other business units 182,896,780.92 8,693,340,411.01
Cash paid for other investing activities
Sub-total of cash outflow from investment activities 6,714,550,448.18 10,023,579,284.01
Net cash flow from investment activities -956,221,507.85 -8,786,735,297.71
III. Cash flow from financing activities
Cash received from capital contributions 4,444,444.00 10,008,555,523.18
Including: cash received from minority shareholder investment by subsidiary 4,444,444.00 52,395,556.00
Cash received from borrowing 4,707,269,241.40 3,654,833,337.85
Cash received from issuance of bonds
Cash received for other financing activities 7,200,000.00 200,000,000.00
Sub-total of cash inflow from financing activities 4,718,913,685.40 13,863,388,861.03
Cash paid for debt repayment 2,853,950,739.80 3,989,686,201.76
Cash paid for distribution of dividends and profits or payment of interests 1,576,908,211.25 799,382,866.00
Including: dividend and profit paid to minority shareholders by subsidiary 25,228,400.00 7,500,000.00
Cash paid for other financing activities 552,862,589.98 134,354,570.91
Sub-total of cash outflow from financing activities 4,983,721,541.03 4,923,423,638.67
Net cash flow from financing activities -264,807,855.63 8,939,965,222.36
IV. Effect of changes in exchange rate on cash and cash equivalent -14,485,499.75 11,885,020.61
V. Net increase in cash and cash equivalents 1,132,253,133.55 597,337,093.63
Plus: balance of cash and cash equivalents at the beginning of year 1,085,989,017.50 488,651,923.87
VI. Balance of cash and cash equivalents at end of period 2,218,242,151.05 1,085,989,017.50
Legal Representative: XU Gang (Signed) Chief Accountant: SHEN Qingfei
(Signed)
Leader of the Accounting Agency:
QIAO Zhuqing (Signed)
Annual Report of 2017
Statements Page 9
6. Cash Flow Statement of Parent Company By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Item Accrual amount for current
period
Accrual amount for last
period
I. Cash flow from operating activities
Cash received from sales of goods and rendering of services 2,309,516,278.54 1,753,928,716.85
Taxes and dues refund received
Cash received for other operating activities 79,066,206.44 188,860,100.18
Sub-total of cash flow from operating activities 2,388,582,484.98 1,942,788,817.03
Cash paid for purchase of goods and acceptance of labor service 1,514,546,203.41 1,524,663,406.72
Cash paid to and for employees 155,304,187.36 135,870,638.25
Cash paid for taxes and surcharges 170,605,802.33 65,108,911.39
Cash paid for other operating activities 109,968,169.07 126,678,906.37
Sub-total of cash outflow from operating activities 1,950,424,362.17 1,852,321,862.73
Net cash flows from operating activities 438,158,122.81 90,466,954.30
II. Cash flow from investment activities
Cash received from divestment 400,000,000.00
Cash received from return on investment 613,266,027.39 607,866,000.00
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
26,336.00 1,302,982.60
Net cash received from disposal of subsidiaries and other business units
Cash received for other investment activities 1,096,100,979.17 13,907,622.10
Sub-total of cash inflow from investment activities 2,109,393,342.56 623,076,604.70
Net cash paid for purchase or construction of fixed assets, intangible assets and other long-
term assets 57,905,656.91 138,372,296.58
Cash paid for investment 741,886,529.95 9,080,957,796.50
Net cash paid for acquisition of subsidiaries and other business units 190,000,000.00
Cash paid for other investing activities 1,168,317,289.05
Sub-total of cash outflow from investment activities 2,158,109,475.91 9,219,330,093.08
Net cash flow from investment activities -48,716,133.35 -8,596,253,488.38
III. Cash flow from financing activities
Cash received from capital contributions 9,966,999,967.18
Cash received from borrowing 3,590,792,240.82 2,079,288,897.01
Cash received from issuance of bonds
Cash received for other financing activities 300,000,000.00
Sub-total of cash inflow from financing activities 3,890,792,240.82 12,046,288,864.19
Cash paid for debt repayment 1,574,950,649.90 2,595,036,900.87
Cash paid for distribution of dividends and profits or payment of interests 1,504,357,642.37 769,215,828.32
Cash paid for other financing activities 673,621,403.98 134,354,570.91
Sub-total of cash outflow from financing activities 3,752,929,696.25 3,498,607,300.10
Net cash flow from financing activities 137,862,544.57 8,547,681,564.09
IV. Effect of changes in exchange rate on cash and cash equivalent -3,095,928.39 3,736,597.52
V. Net increase in cash and cash equivalents 524,208,605.64 45,631,627.53
Plus: balance of cash and cash equivalents at the beginning of year 453,027,285.24 407,395,657.71
Closing balance of cash and cash equivalents 977,235,890.88 453,027,285.24
Legal Representative: XU
Gang (Signed) Chief Accountant: SHEN Qingfei (Signed)
Leader of the Accounting Agency:
QIAO Zhuqing (Signed)
Statements Page 10
7. Consolidated Statement of Change in Owners’ Equity
By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Item
Balance of This Year
Equity attributable to owners of the parent company
Minority equity Total owner’s equity Capital stock
Other equity instruments
Capital reserve Less: treasury stock Other
comprehensive
income Special reserve Surplus reserves
General risk
provisions Undistributed profit
Preferred shares Perpetual
capital
securities Other
I. Closing balance of last year 2,032,164,739.00 9,580,445,001.38 81,190,824.00 6,580,752.60 179,788,103.92 112,318,664.79 509,773,698.31 401,917,536.35 12,741,797,672.35
Plus: changes in accounting policies
Corrections of prior period errors
Business merger under the common control
Other
II. Beginning balance of the year 2,032,164,739.00 9,580,445,001.38 81,190,824.00 6,580,752.60 179,788,103.92 112,318,664.79 509,773,698.31 401,917,536.35 12,741,797,672.35
III. Increase or decrease of current period -69,300.00 60,545,352.71 505,398,382.78 -12,569,584.66 -92,824,202.19 191,590,624.71 5,360,038.64 900,147,464.08 45,626,827.88 592,408,838.39
(I) Total comprehensive income -12,569,584.66 2,502,413,958.33 86,460,648.67 2,576,305,022.34
(II) Capital paid in and reduced by owners -69,300.00 60,545,352.71 505,398,382.78 3,323.23 2,511,376.61 -442,407,630.23
1. Ordinary shares paid in owners -69,300.00 -137,016.00 -206,316.00 4,444,444.00 4,444,444.00
2. Capital paid in by owners of other equity
instruments
3. The amount of share-based payment
recognized in the owner’s equity 58,752,624.55 58,752,624.55
4. Other 1,929,744.16 505,604,698.78 3,323.23 -1,933,067.39 -505,604,698.78
(III) Distribution of profits 191,587,301.48 5,360,038.64 -1,602,266,494.25 -25,228,400.00 -1,430,547,554.13
1. Appropriations to surplus reserves 191,587,301.48 -191,587,301.48
2. Appropriations to general risk provisions 5,360,038.64 -5,360,038.64
3. Appropriations to owners (or shareholders) -1,405,360,792.80 -25,228,400.00 -1,430,589,192.80
4. Other 41,638.67 41,638.67
(IV) Internal carry-forward of owners’ equity
1. Capital reserve transferred to paid-in capital (or
capital stock)
2. Surplus reserve transferred to paid-in capital
(or capital stock)
3. Surplus reserves for making up losses
4. Other
(V) Special reserves -92,824,202.19 -17,992,470.72 -110,816,672.91
1. Appropriations in the current period 32,929,128.15 32,929,128.15
2. Use in the current period 125,753,330.34 -17,992,470.72 143,745,801.06
(VI) Other -124,326.68 -124,326.68
4. Ending balance of current period 2,032,095,439.00 9,640,990,354.09 586,589,206.78 -5,988,832.06 86,963,901.73 303,909,289.50 5,360,038.64 1,409,921,162.39 447,544,364.23 13,334,206,510.74
Legal Representative: XU Gang (Signed) Chief Accountant: SHEN Qingfei (Signed) Leader of the Accounting Agency: QIAO Zhuqing (Signed)
Annual Report of 2017
Statements Page 11
7. Consolidated Statement of Change in Owners’ Equity(Continued)
By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Item Balance of Prior Year
Equity attributable to owners of the parent company
Minority equity
Total owner’s equity
Capital stock
Other equity instruments
Capital reserve
Less: treasury
stock
Other
comprehensive
income
Special reserve
Surplus reserves
General risk
provisions
Undistributed
profit
Preferred
shares
Perpetual
capital
securities
Other
I. Closing balance of last year 204,424,200.00 1,404,497,154.0
0
172,314,772.0
0 933,759.17 98,214,625.07 762,473,143.51 59,713,990.08 2,357,942,099.83
Plus: changes in accounting policies
Corrections of prior period errors
Business merger under the common control
Other
II. Beginning balance of the year 204,424,200.00 1,404,497,154.0
0
172,314,772.0
0 933,759.17 98,214,625.07 762,473,143.51 59,713,990.08 2,357,942,099.83
3. Increase or decrease of current period 1,827,740,539.00 8,175,947,847.3
8 -91,123,948.00 5,646,993.43 179,788,103.92 14,104,039.72 -252,699,445.20 342,203,546.27 10,383,855,572.52
(I) Total comprehensive income 5,646,993.43 442,105,136.22 17,207,450.77 464,959,580.42
(II) Capital paid in and reduced by owners 1,316,680,039.00 8,660,721,723.3
8 -91,123,948.00 332,496,095.50 10,401,021,805.88
1. Ordinary shares paid in owners 1,316,680,039.00 8,645,608,017.6
8 52,395,556.00 10,014,683,612.68
2. Capital paid in by owners of other equity
instruments
3. The amount of share-based payment
recognized in the owner's equity 15,113,705.70 -91,123,948.00 106,237,653.70
4. Other 280,100,539.50 280,100,539.50
(III) Distribution of profits 14,104,039.72 -694,804,581.42 -7,500,000.00 -688,200,541.70
1. Appropriations to surplus reserves 14,104,039.72 -14,104,039.72
2. Appropriations to general risk provisions
3. Appropriations to owners (or shareholders) -680,700,541.70 -7,500,000.00 -688,200,541.70
4. Other
(IV) Internal carry-forward of owners' equity 511,060,500.00 -511,060,500.00
1. Capital reserve transferred to paid-in capital
(or capital stock) 511,060,500.00 -511,060,500.00
2. Surplus reserve transferred to paid-in capital
(or capital stock)
3. Surplus reserves for making up losses
4. Other
(V) Special reserves -34,078,990.37 -34,078,990.37
1. Appropriations in the current period 13,832,366.18 13,832,366.18
2. Use in the current period 47,911,356.55 47,911,356.55
(VI) Other 26,286,624.00 213,867,094.29 240,153,718.29
4. Ending balance of current period 2,032,164,739.00 9,580,445,001.3
8 81,190,824.00 6,580,752.60 179,788,103.92 112,318,664.79 509,773,698.31 401,917,536.35 12,741,797,672.35
Legal Representative: XU Gang (Signed) Chief Accountant: SHEN Qingfei (Signed) Leader of the Accounting Agency: QIAO Zhuqing (Signed)
Annual Report of 2017
Statements Page 12
8. Statement of Change in Stockholders' Equity of Parent Company
By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Item
Equity capital
Capital stock
Other equity instruments
Capital reserve
Less: treasury
stock
Other
comprehensive income
Special reserve
Surplus reserves
Undistributed
profit
Total owner’s equity Preferred
shares
Perpetual
capital securities
Other
I. Closing balance of last year 2,032,164,739.00 9,579,388,916.27 81,190,824.00 112,321,988.02 802,102,564.23 12,444,787,383.52
Plus: changes in accounting policies
Corrections of prior period errors
Other
II. Beginning balance of the year 2,032,164,739.00 9,579,388,916.27 81,190,824.00 112,321,988.02 802,102,564.23 12,444,787,383.52
3. Increase or decrease of current period -69,300.00 58,615,608.55 505,398,382.78 191,587,301.48 318,966,559.19 63,701,786.44
(I) Total comprehensive income 1,915,873,014.80 1,915,873,014.80
(II) Capital paid in and reduced by owners -69,300.00 58,615,608.55 505,398,382.78 -446,852,074.23
1. Ordinary shares paid in owners -69,300.00 -137,016.00 -206,316.00
2. Capital paid in by owners of other equity instruments
3. The amount of share-based payment
recognized in the owner's equity 58,752,624.55 58,752,624.55
4. Other 505,604,698.78 -505,604,698.78
(III) Distribution of profits 191,587,301.48 -1,596,906,455.61 -1,405,319,154.13
1. Appropriations to surplus reserves 191,587,301.48 -191,587,301.48
2. Appropriations to owners (or
shareholders) -1,405,360,792.80 -1,405,360,792.80
3. Other 41,638.67 41,638.67
(IV) Internal carry-forward of owners'
equity
1. Capital reserve transferred to paid-in capital (or capital stock)
2. Surplus reserve transferred to paid-in
capital (or capital stock)
3. Surplus reserves for making up losses
4. Other
(V) Special reserves
1. Appropriations in the current period 15,053,787.28 15,053,787.28
2. Use in the current period 15,053,787.28 15,053,787.28
(VI) Other
4. Ending balance of current period 2,032,095,439.00 9,638,004,524.82 586,589,206.78 303,909,289.50 1,121,069,123.42 12,508,489,169.96
Legal Representative: XU Gang (Signed) Chief Accountant: SHEN Qingfei (Signed) Leader of the Accounting Agency: QIAO Zhuqing (Signed)
Annual Report of 2017
Statements Page 13
8. Statement of Change in Stockholders' Equity of Parent Company (Continued)
By: Lomon Billions Group Co., Ltd. Monetary Unit: Yuan
Item
Prior year
Capital stock
Other equity instruments
Capital reserve
Less: treasury
stock
Other comprehensive
income
Special reserve
Surplus reserves
Undistributed
profit
Total owner’s equity Preferred
shares
Perpetua
l capital
securities
Other
I. Closing balance of last year 204,424,200.00 1,404,497,154.00 172,314,772.00 98,217,948.30 748,426,748.50 2,283,251,278.80
Plus: changes in accounting policies
Corrections of prior period errors
Other
II. Beginning balance of the year 204,424,200.00 1,404,497,154.00 172,314,772.00 98,217,948.30 748,426,748.50 2,283,251,278.80
3. Increase or decrease of current period 1,827,740,539.00 8,174,891,762.27 -91,123,948.00 14,104,039.72 53,675,815.73 10,161,536,104.72
(I) Total comprehensive income 748,480,397.15 748,480,397.15
(II) Capital paid in and reduced by owners 1,316,680,039.00 8,148,605,138.27 -91,123,948.00 9,556,409,125.27
1. Ordinary shares paid in owners 1,316,680,039.00 8,149,746,824.57 -91,123,948.00 9,557,550,811.57
2. Capital paid in by owners of other equity
instruments
3. The amount of share-based payment
recognized in the owner's equity -1,141,686.30 -1,141,686.30
4. Other
(III) Distribution of profits 14,104,039.72 -694,804,581.42 -680,700,541.70
1. Appropriations to surplus reserves 14,104,039.72 -14,104,039.72
2. Appropriations to owners (or
shareholders) -680,700,541.70 -680,700,541.70
3. Other
(IV) Internal carry-forward of owners'
equity 511,060,500.00 26,286,624.00 537,347,124.00
1. Capital reserve transferred to paid-in
capital (or capital stock) 511,060,500.00 511,060,500.00
2. Surplus reserve transferred to paid-in
capital (or capital stock)
3. Surplus reserves for making up losses
4. Other 26,286,624.00 26,286,624.00
(V) Special reserves
1. Appropriations in the current period 13,832,366.00 13,832,366.00
2. Use in the current period 13,832,366.00 13,832,366.00
(VI) Other
4. Ending balance of current period 2,032,164,739.00 9,579,388,916.27 81,190,824.00 112,321,988.02 802,102,564.23 12,444,787,383.52
Legal Representative: XU Gang (Signed) Chief Accountant: SHEN Qingfei (Signed) Leader of the Accounting Agency: QIAO Zhuqing (Signed)
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
III. Basic Information of the Company
Company Profile
Lomon Billions Group Co., Ltd. (the “Company”) changed its Chinese name from
“河南佰利联化学股份有限公司” to “龙蟒佰利联集团股份有限公司” in February 2017.
Its predecessor is Jiaozuo General Chemicals Factory. Jiaozuo General Chemicals Factory,
founded in 1975, was restructured by the Trade Union Committee of Jiaozuo General
Chemicals Factory and 13 natural persons including Xu Gang to became a stock
cooperative enterprise in 1998 with the approval of the Economic and Trade Commission
of Jiaozuo by issuing the document Notice on Approval of the Implementation of Stock
Cooperative Transformation of Jiaozuo General Chemicals Factory (Jiao Jing Mao Qi Zi
(1998) No.78). On November 1, 2001, the shareholders meeting of Jiaozuo General
Chemicals Factory, through consideration, adopted the resolution of restructuring Jiaozuo
General Chemicals Factory to a limited liability company with a registered capital of
RMB18.50 million, and then the company name was changed to Jiaozuo Haoke Chemicals
Co., Ltd.
According to the Reply on Changing the Establishment Registration of Henan Billions
Chemicals Co., Ltd. (Yu Gu Pi Zi [2002] No.07) issued by Henan provincial people’s
government, the company name was changed to Henan Billions Chemicals Co., Ltd. on
July 1, 2002 after going through change registration procedures with the Industry and
Commerce Administration of Henan Province, with a registered capital of RMB
52,162,900. In 2007, the Company’s registered capital was changed to RMB70 million
after two times of capital increase.
By issuing the Reply on Approving the IPO by Henan Billions Chemicals Co., Ltd.
(Zheng Jian Xu Ke [2011] No.1016), China Securities Regulatory Commission agrees that
the Company may issue 24 million Renminbi ordinary shares to the general public. The
changed registered capital was RMB94 million, and paid-up capital was RMB94 million.
In 2012, the Company capitalized the common reserves to share capital and
distributed 10 shares for every 10 shares to all shareholders. After such distribution, the
total share capital of the Company increased to 188 million shares. On May 22, 2013, the
Company held the 21st Meeting of the 4th Board of Directors, and considered and
approved the Proposal on Matters Related to the Granting of Restricted Stock Incentive
Plan, according to which, the Company agreed to issue 3.515 million shares of restricted
stocks to incentive objects. After such change, the total share capital reached
191,515,000.00 shares. On February 28, 2014, the Company held the 26th Meeting of the
4th Board of Directors, and considered and approved the Proposal on Repurchasing and
Writing off Part of the Restricted Stocks, according to which the Company agreed to
repurchase and write off part of the restricted stocks that were granted to the original
incentive objects whose business performance in 2013 failed to meet the unlocking and
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
incentive conditions and which have not been unlocked. After completion of repurchase
and writing off transactions, the Company’s total share capital changed from
191,515,000.00 shares to 1,904,02,400.00 shares.
On March 19, 2014, the Company held the 27th Meeting of the 4th Board of Directors,
and considered and approved the Proposal on Granting Retained Restricted Stocks to
Incentive Objects, according to which, the Company agreed to issue 390,000.00 shares of
restricted stocks to incentive objects. After such change, the total share capital changed
from 190,402,400.00 shares to 190,792,400.00 shares.
On April 24, 2015 , the Company held the 11th Meeting of the 5th Board of Directors,
and considered and approved the Proposal on Granting Restricted Stocks to Incentive
Objects, according to which, the Company agreed to issue 15,005,000.00 shares of
restricted stocks to incentive objects. After such change, the total share capital changed
from 190,792,400.00 shares to 205,797,400.00 shares.
On March 13, 2015, the Company held the 9th Meeting of the 5th Board of Directors,
and considered and approved the Proposal on Repurchasing and Writing off Part of the
Restricted Stocks, according to which the Company agreed to repurchase and write off
1,373,200.00 shares of restricted stocks that were granted to the original incentive objects
whose business performance in 2014 failed to meet the unlocking and incentive conditions
and which have not been unlocked. After completion of repurchase and writing off
transactions on June 19, 2015, the Company’s total share capital changed from
205,797,400 shares to 204,424,200 shares.
On February 25, 2016, the Company held the 33rd Meeting of the 5th Board of
Directors and the 31st Meeting of the 5th Board of Supervisors, respectively and
considered and approved the Proposal on Repurchasing and Writing off Part of the
Restricted Stocks, according to which the Company agreed to repurchase and write off the
1,421,000.00 shares of restricted stocks that were granted to the original incentive objects
whose business performance in 2015 failed to meet the unlocking and incentive conditions
and which have not been unlocked.
In accordance with the resolutions of the 19th Meeting of the 5th Board of Directors
held on February 27, 2016 and March 22, 2016 respectively and the 2015 Preliminary Plan
for Profit Distribution and Capitalization of Capital Reserves considered and approved at
the 2015 general meeting of shareholders of the Company, the Company distributed cash
dividend to all shareholders at a rate of RMB3.50 (including tax) per 10 shares based on a
total capital of 204,424,200 shares as at the end of 2015; and meanwhile capitalize the
common reserves to share capital and distribute 25 shares for every 10 shares to all
shareholders, based on a total capital of 204,424,200 shares. The above equity allocation
scheme was completed on April 27, 2016. After implementation of the above scheme, the
Company’s total share capital changed from 204,424,200.00 shares to 715,484,700.00
shares.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
The Company held the 23rd Meeting of the 5th Board of Directors on June 5, 2016
and the 2nd extraordinary general meeting of 2016 on June 21, 2016, and considered and
approved the Proposal on Increasing the Registered Capital and Modifying the Articles of
Association. On July 13, 2016, the Company completed the industrial and commercial
change registration procedures and obtained the Business License (unified social credit
code: 91410800173472241R) issued by Jiaozuo Administration for Industry & Commerce.
China Securities Depository and Clearing Corporation Limited (CSDC), Shenzhen Branch
ascertained that the third stage of the initial restricted stocks, the second stage of the
retained restricted stocks and the restricted stocks held by restricted stock incentive objects
in 2015 which had been granted but had not been unlocked had been repurchased and
written off on July 28, 2016. The Company carried out an equity allocation scheme in 2015,
resulting in that the number of stocks repurchased and written off reached 4,973,500.00
shares and the Company’s total share capital changed from 715,484,700.00 shares to
710,511,200.00 shares.
With the approval from China Securities Regulatory Commission by issuing the Reply
on Approving the Non-public Offering of Stocks by Henan Billions Chemicals Co., Ltd.
(Zheng Jian Xu Ke [2016] No.899), the Company issued to 9 subscribers in a non-public
manner 1,321,653,539.00 shares of Renminbi common stocks (class A), at par value of
RMB1.00/share and an issuing price of RMB7.62/share. As at September 2, 2016, the
Company has issued in a non-public manner to specific objects 1,321,653,539 shares of
Renminbi common stocks (class A) and raised a total fund of RMB10,070,999,967.18. The
fund actually raised by the Company, deducting underwriting and sponsoring fees of
RMB106,000,000.00, is RMB9,964,999,967.18. And the net amount of fund actually
raised by the Company, deducting the above fees and other issuing costs of
RMB4,962,165.35, is RMB9,960,037,801.83. Arrival of the above fund has been verified
by BDO CHINA SHU LUN PAN CERTIFIED PUBLIC ACCONTANTS LLP upon the
issuance of a Capital Verification Report (Xin Kuai Shi BaoZi [2016] No.711952). Stocks
privately offered in 2015 were issued to the public on September 20, 2016, resulting in that
the Company’s total share capital changed from 710,511,200 shares to 2,032,164,739
shares.
On February 10, 2017, the Company held an extraordinary general meeting, and
considered and approved a proposal on changing the Company's name and stock
abbreviation, according to which the Company changed its Chinese name from “河南佰
利联化学股份有限公司” to “龙蟒佰利联集团股份有限公司” and English name from
“Henan Billions Chemicals Co., Ltd” to “Lomon Billions Group Co., Ltd”, Chinese
abbreviation from “佰利联” to “龙蟒佰利联” and the stock abbreviation from “Billions”
to “Lomon Billions”. On February 16, 2017, with the approval from Jiaozuo
Administration for Industry & Commerce, the Company completed the industrial and
commercial registration of change in the company name and obtained the Business License
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
of Lomon Billions Group Co., Ltd. (unified social credit code: 91410800173472241R)
issued by Jiaozuo Administration for Industry & Commerce.
China Securities Depository and Clearing Corporation Limited (CSDC), Shenzhen
Branch ascertained that 69,300.00 shares of restricted stocks held by restricted stock
incentive objects in 2015 which had been granted but had not been unlocked had been
repurchased and written off on July 21, 2017. After such change, the Company’s total share
capital changed from 2,032,164,739.00 shares to 2,032,095,439.00 shares.
Legal Representative: XU Gang
Registered capital: RMB two thousand and thirty-two million, ninety-five thousand
four hundred and thirty-nine only
Domicile: Fengfeng Office, Zhongzhan District, Jiaozuo
Business scope: import and export of self-manufactured products and related
technology (other than commodities and technology prohibited from operation, import or
export by the state); production and sale of chemical products (excluding dangerous
chemicals and inflammable and explosive articles); sale of iron fertilizer; production
(production site: Zhongzhan District Billions Park) and sale of sulfuric acid for 0.60
million tons per year (provided that such sale shall be limited to the sulphuric acid produced
within the plant); production of scandium oxide; and leasing of equipment, property and
land.
(Items needing approval by law shall only be operated after getting approval from
relevant authority.)
On March 30, 2018, the financial statements were approved by the Board of Directors
to be published.
Scope of consolidated financial statements
Subsidiary Name
Jiaozuo Billions Reservoir Management Co., Ltd. ("Billions Reservoir")
Jiaozuo Xingtai Resource Comprehensive Utilization Co., Ltd. ("Xingtai Resource")
Jiaozuo Zhongzhan District Yili Small Loan Co., Ltd. ("Yili Small Loan")
Billions (Hong Kong) Corporation Limited ("Billions HK")
Billions Europe Ltd. ("Billions Europe")
BILLIONS AMERICA CORPORATION ("BILLIONS AMERICA")
Jiaozuo Rongjia Scandium Technology Co., Ltd. ("Rongjia Scandium")
Henan Longxiang Mountain Tourism Development Co., Ltd. ("Longxiang Mountain Tourism")
Jiaozuo Billions Pigment Co., Ltd. ("Billions Pigment")
Henan Billions New Materials Co., Ltd. ("Billions New Materials")
Sichuan Lomon Titanium Industry Co., Ltd. ("Lomon Titanium")
Sichuan Lomon Mining and Metallurgy Co., Ltd. ("Lomon Mining and Metallurgy")
PanzhihuaLomon Mineral Products Co., Ltd. ("Lomon Mineral Products")
XiangyangLomon Titanium Industry Co., Ltd. ("XiangyangLomon")
BaokangXingtai Titanium Industry Co., Ltd. ("BaokangXingtai")
Lomon US Ltd. ("Lomon US")
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Billions Financial Leasing (Guangzhou) Co., Ltd. ("Billions Financial Leasing")
PanzhihuaRuierxin Industry and Trade Co., Ltd. ("Ruierxin")
The scope and change of the consolidated financial statements of the current period
are detailed in “VI. Change of Combination Scope” and “VII. Interest in Other Entities”
under these Notes.
Ⅳ. Basis of Preparation
(I) Preparation basis
The Company shall prepare the financial statements, on a going-concern basis,
and according to the transactions and matters that have actually occurred and
subject to the Accounting Standards for Business Enterprises - Basic Standards,
specific accounting standards, guidelines for the application of enterprise
accounting standards, interpretation of enterprise accounting standards, and other
relevant regulations issued by the Ministry of Finance ( “Accounting Standards
for Business Enterprises”),
and the disclosure clause under the Compilation Rules for Information
Disclosure by Companies Offering Securities to the Public No.15 - General
Provisions on Financial Reports issued by China Securities Regulatory
Commission.
(II) Going concern
Within 12 months following the end of the reporting period, the company has the
going-concern capability and experiences no significant matters affecting its
going-concern capability.
Ⅴ. Principal Accounting Policies and Accounting Estimates
1. Statement of Compliance
The Company's financial statements have been prepared in accordance with the
Accounting Standards for Enterprise Businesses, and truthfully and completely reflect the
Company’s financial position, results of operations, cash flows and other relevant
information in the corresponding reporting period.
2. Accounting period
The accounting year shall be a calendar year commencing from January 1 and ending
on December 31.
3. Operating cycle
The Company’s operating cycle is 12 months.
4. Recording currency
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
The Company regards Renminbi as recording currency and overseas subsidiaries
regard US dollar as the recording currency.
5. Accounting process for combination under common control and different control
Consolidation under common control: the assets and liabilities acquired by the
Company are measured at the book value of the assets and liabilities (including the
goodwill formed in the acquisition by the final controlling party of the combined party) of
the combined party in the consolidated statements of the final controlling party at the date
of combination. In case of difference between the book value of net assets acquired in the
combination and that of the consideration for combination (or the total book value of issued
shares), the stock premium of capital reserve shall be adjusted; if the stock premium is
insufficient for offset, the retained income shall be adjusted.
Business combination not under common control: The assets delivered as the
consideration for business combination and the liabilities incurred or assumed by the
Company on the purchase date shall be measured at fair value. The difference between the
fair value and book value shall be recognized as current profits and losses. The excess of
the cost of acquisition over the fair value of the acquired party’s share of the identifiable
net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair
value of the net assets of the party acquired, the difference, upon review, is recognized
directly as profit or loss for the current period.
Intermediary costs of audit, legal service, assessment and consultation and other
related direct costs incurred for and in connection with the business combination shall be
recognized as current profit and loss at the time of occurrence; and the equity securities
transaction costs incurred due to business combination shall be used to offset the equities.
6. Methods for preparation of consolidated financial statements
① Scope of combination
The consolidation scope of the Company’s consolidated financial statements shall be
determined on the basis of control; all subsidiaries (including those which are controlled
by the Company but may be divided by investors) shall be included into the consolidated
financial statements.
② Consolidation procedure
The Company shall prepare consolidated financial statements on the basis of its own
financial statements and those of its subsidiaries, as well as other relevant materials. In
preparing the consolidated financial statements, the Company shall regard the whole
enterprise group as an accounting subject and abide by the confirmation, measurement and
reporting requirements of the relevant enterprise accounting standards, and the unified
accounting policy so as to reflect the overall financial situation, business performance and
cash flow of the enterprise group.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
The accounting policies or accounting periods of the subsidiaries shall be consistent
with those of the Company. If the accounting policies or accounting periods of the
subsidiaries are different from those of the Company, when preparing the consolidated
financial statements, necessary adjustments shall be made to the financial statements of the
subsidiaries based on the accounting policies and accounting periods of the Company.
Where a subsidiary has been acquired through a business combination not involving
enterprises under common control, the subsidiary’s financial statements shall be adjusted
according to the fair value of identifiable net assets at the acquisition date. The financial
statements of the subsidiary acquired from business combination under common control
shall be adjusted based on the book value of the assets and liabilities (including the
goodwill formed in the acquisition by the final controlling party of the combined party) of
such subsidiary in the statements of the final controlling party.
The ownership interests, net profits and losses in current period and comprehensive
incomes in current period in respect of subsidiaries which are attributable to minority
shareholders shall be listed under the item of ownership interest in the consolidated balance
sheet, the item of net profits and the item of total comprehensive incomes in the
consolidated profit statements, respectively. If the current losses allocated to a minority
shareholder of any subsidiary are more than the beginning ownership interest enjoyed by
such minority shareholder in such subsidiary, the balance shall be used to offset the
minority interest.
（1） Addition of subsidiaries or business
During the reporting period, if the business combination under common control
results in new subsidiaries or business, the beginning balance of the consolidated balance
sheet shall be adjusted; the incomes, costs and profits obtained or incurred by such
subsidiaries or business during the period from the beginning of the consolidation period
to the end of the reporting period shall be included into the consolidated profit statements;
the cash flow of such subsidiaries or business during the period from the beginning of the
consolidation period to the end of the reporting period shall be included into consolidated
cash flow statements. Meanwhile, the relevant items in the comparative statements shall
be adjusted so as to ensure that the reporting subject after consolidation is deemed to exist
since the final controller starts to exercise control.
During the reporting period, if the business combination not under common control
results in new subsidiaries or business, the beginning balance of the consolidated balance
sheet is not required to be adjusted; the incomes, costs and profits obtained or incurred by
such subsidiaries or business during the period from the purchase date to the end of the
reporting period shall be included into the consolidated profit statements; and the cash flow
of such subsidiaries or business during the period from the purchase date to the end of the
reporting period shall be included into consolidated cash flow statements.
If investees not under common control may be controlled due to additional investment,
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
for any equity of acquirees held before the purchase date, the Company shall re-measure
such equity at its fair value on the purchase date, and the difference between the fair value
and book value of such equity shall be recognized as current incomes from investment. If
the equity of the purchased party held before the purchase date is connection with the
change in other comprehensive incomes and other ownership interests other than net profits
and losses, other comprehensive incomes and profit distribution, which are calculated
through the equity method, other comprehensive incomes and other ownership interests in
connection therewith shall be recognized as the current incomes from investment on the
purchase date, except for other comprehensive incomes obtained due to re-measurement
and redefinition of net liabilities or net assets under the benefit plans by investees.
（2） Disposal of subsidiaries or business
If during the reporting period, the Company disposes of any of its subsidiaries or
business, the incomes, costs and profits obtained or incurred by such subsidiaries or
business during the period from the beginning to the disposal date shall be included into
the consolidated profit statements; and the cash flow of such subsidiaries or business
during the period from the beginning to the disposal date shall be included into
consolidated cash flow statements.
Where the Company has lost control over the invested due to disposal of partial equity
investments or any other reason, the Company shall re-measure the remaining equity
according to its fair value at the date of loss of control. The sum of the consideration for
disposal of equity and the fair value of remaining equity, minus the sum of goodwill and
the share of net assets obtainable from the original subsidiaries per original shareholding
ratio and continuously calculated from the date of purchase or combination, shall be
recorded into the investment gains and losses for the period of loss of control. For any
change in other comprehensive incomes in connection with the equity investment by
original subsidiaries and in other ownership interests other than net profits and losses, other
comprehensive incomes and profit distribution, such change shall be recognized as the
current incomes from investment at the time loss of control, except for other
comprehensive incomes obtained due to re-measurement and redefinition of net liabilities
or net assets under the benefit plans by investees.
If the Company loses its control due to decline in its shareholding ratio caused by
capital increase by other investors against subsidiaries, the accounting treatment shall be
carried out according to the above principles.
（3） Purchase of minority interests in subsidiaries
The capital premium of the capital reserves in the consolidated balance sheet shall be
adjusted according to the difference between the long-term equity investments newly
acquired by the Company from purchase of minority interest and the share of net assets
obtainable from the original subsidiaries per original shareholding ratio and continuously
calculated from the date of purchase or combination; if the capital reserves are insufficient
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
for offset, the retained income shall be adjusted.
（4） The capital premium of the capital reserves in the consolidated balance sheet
shall be adjusted according to the difference between the gains from disposal of partial
long-term equity investments in subsidiaries without losing control over the subsidiaries
and the share of net assets obtainable from the original subsidiaries per original
shareholding ratio and continuously calculated from the date of purchase or combination;
if the capital reserves are insufficient for offset, the retained income shall be adjusted.
7. Classification of and accounting methods for joint venture arrangements
The joint venture arrangements of the Company include joint operations and joint
ventures.
If the Company is a party to the joint venture arrangement and may enjoy assets and
shall assume liabilities in connection with such arrangement, such arrangement is joint
operation.
The Company shall confirm the following items related to the interests in the joint
venture and carry out accounting treatment in accordance with the relevant accounting
standards for business enterprises:
(1) Confirm the assets independently held by the Company and the assets held
together with the Company as per the share accounted for by the Company;
(2) Confirm the liabilities independently assumed by the Company and the liabilities
assumed together with the Company as per the share accounted for by the Company;
(3) Confirm the income from sale of outputs of the joint venture enjoyed by the
Company;
(4) Confirm, in proportion to the Company's shareholding ratio, the income from sale
of outputs of the joint venture; and
(5) Confirm the costs independently incurred and the costs incurred by the joint
venture in proportion to the Company's shareholding ratio.
8. Standard for identification of cash and cash equivalents
In the preparation of the cash flow statements, the cash on hand and the deposit readily
disposable shall be recognized as cash. Cash equivalents mean the investments with short
term (generally due in 3 months from the purchasing date), high liquidity, low risk of value
fluctuation and easy to be converted to cash with known amount.
9. Foreign currency operations and translation of foreign currency statements
① Foreign currency operations
In foreign currency transactions, foreign currency amount shall be credited into RMB
at the spot exchange rate at the transaction date.
At the balance sheet date, the monetary items denominated in foreign currency are
converted into Renminbi according to the spot exchange rate prevailing on the balance
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
sheet date, the difference from conversion, except the balance of exchange arising from
the specific foreign currency borrowings borrowed for the purpose of purchasing or
constructing assets qualifying for capitalization, is directly recorded into the current profits
and losses.
② Translation of foreign currency financial statements
Assets and liabilities for each balance sheet presented are translated at the spot
exchange rate at the date of that balance sheet; all equity items, except “Undistributed
Profits”, are translated at the spot rates at the dates of the transactions. Incomes and costs
listed in the profit statements shall be converted at such spot rate as published on the date
of transaction.
In disposal of foreign operating items, the balance of foreign-currency financial
statements related to such foreign operating items shall be converted and transferred from
ownership interests to the current profits and losses subject to disposal.
10. Financial instruments
Financial instruments include financial assets, financial liabilities and equity
instruments.
① Classification of financial instruments
Financial assets and financial liabilities recognized at inception include financial
assets or liabilities measured at fair value through profit or loss ("FVTPL") (including
trading financial assets or liabilities and those designated as financial assets or liabilities
measured at FVTPL), held-to-maturity investment, receivables, and available-for-sale
financial assets and other financial liabilities.
② Recognition basis and measurement method of financial instruments
(1) Financial assets (financial liabilities) at FVTPL
The fair value (deducting cash dividend that has been declared but not distributed or
bond interest that has been due but not claimed) at the time of acquisition shall be
recognized as the initial recognition amount, and the related transaction costs shall be
included in current profit and loss.
The interest or cash dividend gained during the period of holding is recognized as the
investment income; the change in fair value is included in the current profit and loss at the
end of the period.
In disposal of such financial assets (financial liabilities), the difference between their
fair value and initial book amount shall be recognized as investment income, and
meanwhile the profit and loss due to change of fair value shall be adjusted.
(2) Held-to-maturity investments
The sum of the fair value (deducting bond interest that has been due but not claimed)
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
and the related transaction costs at the time of acquisition shall be recognized as the initial
recognition amount.
During the period of holding, the interest income shall be calculated according to the
amortized cost and real interest rate, and attributed to investment income. The actual
interest rate shall be determined at the time of acquisition and remain unchanged during
the expected period of existence or a shorter period (if applicable).
In disposal of held-to-maturity investments, the difference between the obtained price
and the book value of the investment shall be attributed into investment income.
(3) Receivables
Debts receivable created due to sale of commodities or provision of service by the
Company, and creditors’ rights held by the Company in other enterprises excluding debts
instruments with a quotation in active markets, including accounts receivable and other
receivables, shall be initially recognized at the contract or agreement prices due from the
buyers; or if of financing nature, at their current value.
in recovery or disposal of receivables, the difference between the obtained price and
the book value of the receivables shall be included in current profit and loss.
(4) Available-for-sale financial assets
The sum of the fair value (deducting cash dividend that has been declared but not
distributed or bond interest that has been due but not claimed) and the related transaction
costs at the time of acquisition shall be recognized as the initial recognition amount.
The interest or cash dividend obtained during the holding period shall be recognized
as investment income. At the end of the period, the measurement shall be made at fair value
and the change in the fair value shall be recognized as other comprehensive incomes.
However, derivatives that are linked to and must be settled by delivery of investments in
equity instruments that do not have a quoted market price in an active market and whose
fair value cannot be reliably measured shall be measured at cost.
In disposing of available-for-sale financial assets, the difference between the price
obtained and the book value of the financial assets shall be attributed into investment
income, and meanwhile the amount related to the disposed portion in the total change in
fair value originally attributed into other comprehensive income, shall be attributed into
current profit and loss.
(5) Other financial liabilities
The sum of the fair value obtained and the related transaction costs shall be recognized as
the initial recognition amount. Subsequent measurements shall be made at amortized cost.
③ Recognition basis and measurement method of transfer of financial assets
The Company derecognizes a financial asset when it transfers substantially all the
risks and rewards of ownership of the asset to the transferee, and the Company does not
derecognize a financial asset when it retains substantially all the risks and rewards of
ownership of the asset.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
The principle of substance over form shall be abided by in judging whether the
transfer of financial assets meets the conditions for termination of recognition of financial
assets. The transfer of the financial assets of the Company includes two types: overall and
partial transfer of financial assets. While the transfer of whole financial assets meets the
condition for termination of confirmation, the Company shall attribute the difference
between the following two items into current profit and loss:
(1) The book value of transferred financial assets; and
(2) The sum of the consideration received for transfer and the aggregated amount of
change in fair value originally directly attributed into owner's equity.
(Where the financial assets transferred are available-for-sale financial assets).
If partial transfer of the financial assets meets the condition for derecognition, the
total book value of the transferred financial assets shall be divided into the derecognized
part and the part not derecognized respectively as per the corresponding fair value, and the
difference between the following two amounts shall be attributed into the current profit
and loss:
(1) The book value of the derecognized part; and
(2) The sum of the consideration for the recognized part and the amount related to the
recognized part (where the financial assets transferred are available-for-sale financial
assets) in the aggregated amount of change in fair value originally directly attributed into
owner's equity.
If the transfer of the financial assets does not meet the condition for derecognition,
the Company shall continue to recognize such financial assets, and recognize the
consideration received as a financial liability.
④ Conditions for termination of recognition of financial liabilities
If the current obligation for financial liabilities has been released in whole or in part,
the financial liabilities may be no longer recognized in whole or in part. If the Company
has signed an agreement with the creditors, according to which the Company shall replace
the existing financial liabilities with new financial liabilities, and there are differences
between new financial liabilities and existing financial liabilities in the substance of
contract terms, the existing financial liabilities shall be no longer recognized and the new
financial liabilities shall be recognized.
If the contract terms as to the existing financial liabilities have been modified
materially in whole or in part, the existing financial liabilities shall be no longer recognized
in whole or in part and the financial liabilities after such modification shall be recognized
as new financial liabilities. If the financial liabilities are no longer recognized in whole or
in part, the difference between the book value of such financial liabilities and the
consideration (including non-cash assets transferred out or new financial liabilities
assumed) shall be recognized as the current profits and losses. If the Company repurchases
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
the financial liabilities in part, the book value of such financial liabilities as a whole shall
be distributed on the repurchase date at a ratio of fair value of the financial liabilities which
shall continue to be recognized against those that will be no longer recognized. The
difference between the book value attributable to the financial liabilities that will be no
longer recognized and the consideration (including non-cash assets transferred out or new
financial liabilities assumed) shall be recognized as the current profits and losses.
⑤ Recognition method of fair value of financial assets and liabilities
The fair value of financial instruments having active market is determined on the basis
of the quotation in the active market. For financial instruments having no active market,
the Company shall adopt assessment technique to confirm the fair value. At the time of
valuation, the Company shall adopt valuation technologies which are applicable in the
current situation and may be supported by sufficient available data and other information,
choose input values consistent with the characteristics of assets or liabilities considered by
market participants in the relevant assets or liabilities transactions, and preferentially use
the relevant observable input values. Unobservable input values may be only used when it
is unable to obtain or unpractical to obtain the relevant observable input values.
⑥ Method of testing and accounting treatment of the impairment of financial
assets (excluding accounts receivable)
An assessment is made at each balance sheet date to determine whether there is
objective evidence of impairment of fair value of financial assets other than those at
FVTPL. If objective evidence proves the impairment of the fair value of financial assets,
the impairment provision shall be recognized.
(1) Provision for impairment of available-for-sale financial assets: if the fair value of
an available-for-sale financial asset has decreased greatly or after consideration of various
related factors the decreasing trend is expected to be not provisional, the Company may
deem the available-for-sale financial asset to have been depreciated, transfer out the
accumulated losses from the fair value depreciation included directly in the owner's equity,
and recognize the impairment losses.
If, in a subsequent period, the carrying amount of AFS debt instruments increases and
the increase can be related objectively to an event occurring after the impairment was
recognized, the previously recognized impairment losses are reversed and included in
current profit and loss.
The reversal of impairment losses of AFS equity instruments is recognized not in
profit or loss.
(2) Provision for impairment of held-to-maturity investment: the loss of impairment
of held-to-maturity investment shall be measured by reference to the method for
measurement of loss of impairment of accounts receivable.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
11. Provisions for bad debts receivable
① Receivables with significant individual amount and appropriation of
provisions for bad debts on individual amount:
The judgment basis or amount standard for significant individual amount: accounts
receivable with an individual amount of not less than RMB1 million.
Methods for appropriation of provisions for bad debts receivable with significant
individual amount:
An impairment testing shall be independently carried out at the end of the year for accounts
receivable (including accounts receivable and other receivables) with a large individual
amount. If there are objective proofs indicating that an impairment of such accounts
receivable has occurred, the provision for bad debts shall be appropriated as per the
difference between the expected present value of future cash flow and their book value and
such difference shall be included into the current profits and losses. For any accounts
receivable that an independent testing indicates that there is no impairment, such account
receivable shall be classified into the corresponding group and the provision for bad debts
shall be appropriated.
② Receivables with combined appropriation of provisions for bad debts based on credit risk
characteristics:
Appropriation of provisions for bad debts according to aging analysis method in the
portfolio:
Name of portfolio Methods for provision of bad debts
The basis for recognition of combination of credit risk characteristics
Aging combination The accounts receivable with the same aging shall have similar credit risk characteristics
Related party combination The funds of related parties with control relations
Methods for combined appropriation of provisions for bad debts based on credit risk characteristics（ Aging analysis method）
Aging combination Aging analysis method
Related party combination No appropriation of provisions for bad debts is made for funds of related parties with
control relations
Accounting Age Ratio of appropriation of receivables (%) Ratio of appropriation of other receivables
(%)
Less than 1 year 5.00% 5.00%
1-2 years 10.00% 10.00%
2-3 years 30.00% 30.00%
More than 3 years
3-4 years 50.00% 50.00%
4-5 years 80.00% 80.00%
More than 5 years 100.00% 100.00%
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
③ Receivables with non-significant individual amount but with appropriation of provisions
for bad debts on individual amount:
12 Inventory
Classification of inventory
Inventories are divided into materials in transit, raw materials, revolving material,
inventory commodities, products in transit, commodities delivered and materials
commissioned for processing, etc.
Method for valuation of inventory delivered
Inventoried delivered shall be calculated according to the weighted average
method; and the raw materials for materials commissioned for processing shall be
calculated according to the individual pricing method.
Basis for determination of the net realizable value of inventory by category
The net realizable value of finished products, inventory goods, materials for sale
and other goods in stock directly for sale is determined according to the estimated
price of the inventory minus the estimated sales expenses and related taxes and dues
in the normal production and operation process; the net realizable value of materials
inventory held for production is determined according to the estimated price of the
finished products minus the estimated costs, sales expenses and related taxes and dues
incurred at completion of production; the net realizable value of inventory held for the
implementation of a sales contract or an employment contract is calculated on the basis
of the contract price. If the quantity of the inventory is more than the quantity ordered
under the sales contract, the net realizable value of the excess inventory is calculated
on the basis of the general sales price. At the end of the year, the inventory falling price
reserves shall be appropriated for single inventory item. For inventories with higher
quantity and lower unit price, the inventory falling price reserves shall be appropriated
by inventory category. For any inventory that is connection with and has the same or
similar final use or purpose with the series products produced and sold within the same
area and is difficult to be measured independent of other items, the inventory falling
price reserves for such inventory shall be appropriated together with those for the said
series products.
Except that there are explicit proofs indicating the abnormal market price on the
The reasons for appropriation of
provisions for bad debts on individual
amount
If there are objective evidence to prove that the expected present value of future cash flow is
lower than the book value.
Methods for calculation of provisions
for bad debts
The Company shall recognize the impairment losses and appropriate the provisions for bad debts
according to the difference by which the current value of future cash flow is lower than the book
value. For any accounts receivable that an independent testing indicates that there is no
impairment, such account receivable shall be classified into the corresponding aging analysis
method group and the provision for bad debts shall be appropriated.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
balance sheet date, the net realizable value of inventories shall be determined on the
basis of the market price on the balance sheet date.
At the end of the current period, the net realizable value of inventories shall be
determined on the basis of the market price on the balance sheet date.
Inventory checking system
Perpetual inventory system.
The amortization method of low value consumables and packages
Direct charge-off method.
13. Loans and advances
（1）Loans and advances with significant individual amount and
appropriation of provisions for loan losses on individual amount
Name of portfolio Method for provision of bad debts
The judgment basis or amount standard
for significant individual amount At the end of the current period, the individual amount of the same legal or
natural person accounts for 10% of the closing loan and advance balance or
above. Methods for appropriation of receivables
with significant individual amount and
appropriation of provisions for loan
losses on individual amount
If the impairment is tested separately and there is objective evidence to indicate
that it is impossible to recover the loans and advances according to the original
terms, the provision for loan losses shall be recognized at the difference by which
its present value of future cash flow is lower than its book value.
（2）Loans and advances for combined appropriation of provisions for loan
losses based on credit risk characteristics
The basis for recognition of combination of credit risk characteristics
Normal type
portfolio For any loan whose borrower is able to perform the contract or agreement and is not suspected of being
unable to repay the principal of and incomes from debts in full with sufficient evidence, such loan shall be deemed as the normal loan.
Focus type
portfolio For any loan which the borrower is able to repay the principal of and interest on such loan, but there are
certain factors that may adversely affect such repayment and if such factors continue, the borrower’s
repayment ability will be affected, and such loan shall be deemed as the Special-mentioned loan.
Substandard
portfolio If there are obvious problems with the borrower’s repayment ability that the borrower is unable to repay
the principal of and interest on loan in full with its normal operation revenues and has to repay the principal
of and interest on loan by disposal of assets or financing or even execution of mortgage a security, such
loan shall be deemed as the substandard loan. Doubtful
portfolio If there are problems with the borrower’s repayment ability that the borrower is unable to repay the principal
of and incomes from debts with its normal operation revenues in full and on time and may cause certain
losses even if the security has been enforced, such loan shall be deemed as the doubtful loan.
Loss type portfolio
For any loan that cannot be recovered or may be recovered in part after taking all possible measures or
carrying out all necessary legal procedures, such loan shall be deemed as the loss loan. Methods for combined appropriation of provisions for loan losses based on credit risk characteristics (balance percentage
method) Normal type Balance percentage method
Focus type Balance percentage method
Substandard Balance percentage method
Doubtful Balance percentage method
Loss type Balance percentage method
If for the above portfolio, the provision for loss of loan is appropriated according to the balance percentage method:
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Category of loan risks Ratio of appropriation (%)
Normal type 1.50
Focus type 3.00
Substandard 30.00
Doubtful 60.00
Loss type 100.00
（3）Receivables with insignificant individual amount but with appropriation
of provisions for loan losses on individual amount
The reasons for
appropriation of
provisions for loan
losses on individual
amount
There are obvious differences between granted loans and advances and granted loans and advances portfolio with credit risks from overdue repayment in the present value of future cash flow, including granted loans and advances which cause the problems with the repayment ability or cannot be timely recovered within three (3) months when due.
Methods for
appropriation of
provisions for loan
losses
The impairment shall be tested separately and the provision for loan losses shall be recognized at the
difference by which its present value of future cash flow is lower than its book value.
14 Long-term equity investment
Standard for judgment of common control and significant effects
Common control refers to the common control over certain arrangement
exercised according to the relevant provisions; and activities related to such
arrangement shall be determined with the consent of all parties sharing the control. If
the Company and other joint venture partners exercise the common control over the
same invested unit and are entitled to the net assets of such invested unit, such
invested unit shall be deemed as the joint venture of the Company.
Significant effects refers to the power to participate in making financial or
operation decisions of an enterprise; which is not sufficient to control independently
or together with other parties the formulation of policies. If the Company may impose
significant effects on any invested unit, such invested unit shall be deemed as the
joint venture of the Company.
Determination of initial investment cost
① Long-term equity investment from business combination
Business combination under common control: if the Company makes cash payments,
transfer of non-cash assets or debt assuming and issuance of equity securities as the
consideration for combination, then the book value of owner's equity of the combined party
obtained at the date of combination in the consolidated financial assets of the final
controlling party is made as the initial investment of the long-term equity investment. If
any invested unit under common control may be controlled due to additional investment
or other reasons, the long-term equity investment’s initial investment costs shall be
determined on the consolidation date according to the book value of the net assets of the
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
consolidated party after consolidation in the consolidated financial statements of the final
controller. The stock premium shall be adjusted according to the difference between the
long-term equity investment’s initial investment costs on the consolidation date, and the
sum of the long-term equity investment’s book value before consolidation and the book
value of the consideration paid for further acquisition of shares on the consolidation date;
if the stock premium is insufficient for deduction, the deduction shall be made from
retained earnings.
Business combination under different control: the Company makes the combination
cost determined at the date of purchase as the initial investment cost of the long-term equity
investment. If any invested unit not under common control may be controlled due to
additional investment or other reasons, the sum of the book value of equity investment
originally held and the additional investment costs shall be deemed as the initial investment
costs calculated according to the cost method.
② Long-term equity investment acquired through other methods
For the long-term equity investment acquired by cash payments, the actually paid
purchase price shall be made as the initial investment cost.
For the long-term equity investment acquired by issuing equity securities, the fair
value of equity securities shall be made as the initial investment cost.
Subsequent measurement and recognition method for profit and loss
①The Company calculates the long-term equity investments of its subsidiaries using
the cost method. When acquiring the cash dividend or profit declared by the invested unit,
the Company shall, besides the cash dividend or profit declared but not distributed,
included in the price or consideration actually paid while acquiring the investment,
recognize the current return on investment according to the cash dividend or profit declared
and distributed by the invested unit.
②Long-term equity investments calculated according to the equity method
Long-term equity investments in any joint venture shall be calculated according to the
equity method. Where initial investment cost is more than the fair value of the identifiable
net assets obtainable at the time of investment, the initial investment cost of the long-term
equity investment shall not be adjusted; where initial investment cost of long-term equity
investment is less than the fair value of the identifiable net assets obtainable at the time of
investment, the difference shall be included in the current profit and loss.
The Company shall recognize incomes from investment and other comprehensive incomes,
respectively and adjust the long-term equity investment’s book value according to the net
profits and losses and other comprehensive incomes realized by an invested unit due to or
attributable to the Company; calculate the profits or cash dividends declared to be
distributed by an invested unit and attributable to the Company and reduce the long-term
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
equity investment’s book value accordingly; and for other changes in the ownership
interests of an invested unit other than net profits and losses, other comprehensive incomes
and profit distribution, adjust the long-term equity investment’s book value and include
such changes in the ownership interests.
The Company shall, on the ground of the fair value of all identifiable net assets of the
invested entity when it obtains the investment, recognize the attributable share of the net
profits and losses of the invested entity after it adjusts the net profits of the invested entity,
in accordance with the accounting policy and period of the Company. During the period of
holding investments, an invested unit shall prepare the consolidated financial statements
and carry out calculation on the basis of net profits, other comprehensive incomes and
changes in other ownership interests listed in the consolidated financial statements which
are attributable to such invested unit.
In recognizing the losses suffered by an invested unit which shall be allocated by the
Company, the accounting treatment shall be carried out in the following order: firstly,
deduction of the long-term equity investment’s book value. Secondly, if the long-term
equity investment’s book value is insufficient for deduction, the investment losses shall
continue to be recognized which shall be limited to the book value of the long-term equity
substantially constituting the net investments in such invested unit, and the book value of
long-term accounts receivable and other items shall be deducted. Finally, after completion
of the above treatment, if an enterprise shall perform additional obligations according to
any investment contract or agreement, the expected liabilities shall be recognized based on
the obligations expected to be performed and included into the current investment losses.
③ Disposal of long-term equity investment
In case of disposal of any long-term equity investment, the difference between the
book value and the price actually obtained in respect of such long-term equity investment
shall be included into the current profits and losses. For any long-term equity investment
calculated according to the equity method, such investment shall be disposed of on the
same basis as used for direct disposal of related assets or liabilities by an invested unit, and
the accounting treatment shall be carried out for the part originally recognized as other
comprehensive incomes proportionally. All ownership interests recognized by an invested
unit due to changes in other ownership interests other than net profits and losses, other
comprehensive incomes and profit distribution shall be proportionally carried forward to
the current profits and losses, except for other comprehensive incomes obtained due to re-
measurement and redefinition of changes in net liabilities or net assets under the benefit
plans by investees.
If the common control or significant effects on an invested unit are lost due to disposal
of certain equity investment or other reasons, the remaining equity after disposal shall be
calculated according to the standards for recognition and measurement of financial
instruments, and the difference between the fair value and book value on the date of loss
of the common control or significant effects shall be included into the current profits and
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
losses. If the original equity investment is calculated according to the equity method and
other comprehensive incomes are so recognized, the accounting treatment shall be carried
out at the time of termination of use of equity method and on the same basis as used for
direct disposal of related assets or liabilities by an invested unit. All ownership interests
recognized due to changes in other ownership interests other than net profits and losses,
other comprehensive incomes and profit distribution of an investee shall be carried forward
to the current profits and losses at the time of termination of use of equity method.
If the control over an invested unit is lost due to disposal of certain equity investment
or declined shareholding proportion of the Company due to making additional investment
by other investors in subsidiaries, in preparing individual financial statements, if the
remaining equity may exercise common control over or impose significant effects on such
invested unit, the equity method shall be adopted for calculation and the remaining equity
shall be deemed to have been calculated and adjusted according to the equity method as of
the time of acquisition; or if the remaining equity cannot exercise common control over or
impose significant effects on such invested unit, the accounting treatment shall be carried
out according to the standards for recognition and measurement of financial instruments,
and the difference between the fair value and book value on the date of loss of control shall
be included into the current profits and losses.
If the equity disposed of is obtained through business combination due to additional
investment or other reasons, in preparing individual financial statements, if the remaining
equity after disposal is calculated according to the cost or equity method, other
comprehensive incomes and other ownership interests recognized due to calculation of
equity investment held before purchase date according to the equity method shall be carried
forward proportionally; or if the accounting treatment is carried out for the remaining
equity after disposal according to the standards for recognition and measurement of
financial instruments, other comprehensive incomes and other ownership interests shall be
carried forward in whole.
15. Investment real estate
Investment Property Measurement Mode
Cost-based measurement
Depreciation or amortization method
The Company measures the existing investment real estate at cost. For investment
real estate measured at cost - the depreciation of to-be-leased buildings is done in the same
way as the fixed assets of the Company, the leasing of the land use right is amortized in
the same way as the intangible assets.
Basis for selection of fair value-based measurement
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
16. Fixed assets
① The conditions for recognition
Fixed assets are tangible assets that are held for use in the production of goods,
rendering of service, lease or operating management and have useful lives over one
accounting year. Fixed assets are recognized when all the following conditions are met:
(1) The economic interest related to the fixed assets is most likely to flow into the
enterprise; and
(2) The cost of the fixed assets can be measured reliably.
② Depreciation method
Category Depreciation Method Depreciation Life (Year) Residual Rate Yearly Depreciation Rate
Structures and buildings Average service life
method 25-30 3-5 3.17-3.88
Machinery equipment Average service life
method 10-18 3-5 5.28-9.70
Electronic and office
facilities
Average service life
method 5-8 3-5 11.88-19.40
Transportation equipment Average service life
method 10-12 3-5 7.92-9.70
The depreciation of the fixed assets of the subsidiary, Panzhihua Lomon Mineral
Products Co., Ltd., is appropriated by category through straight-line method and sum-of-
the-years-digits method, and the depreciation method, depreciation life, residual rate and
annual depreciation rate are as follows:
Category Depreciation Method Depreciation Life
(Year) Residual Rate Yearly Depreciation Rate
Structures and buildings Average service life method 20 3 4.85
Machinery equipment Average service life
method 10 3 9.70
Electronic and office
facilities Average service life
method 5 3 19.40
Transportation equipment Sum-of-the-years-digits method 5 3
The depreciation of the fixed assets of the subsidiary, Sichuan Lomon Mining and
Metallurgy Co., Ltd., is appropriated by category through straight-line method and
sum-of-the-years-digits method, and the depreciation method, depreciation life,
residual rate and annual depreciation rate are as follows:
Category Depreciation Method Depreciation Life (Year)
Residual Rate
Yearly Depreciation Rate
Structures and buildings Average service life method 20-40 3 2.425-4.85
Machinery equipment Average service life method 10 3 9.7
Electronic and office
facilities Average service life method 5 3 19.4
Transportation equipment Sum-of-the-years-digits method
5 3
③ Identification basis and valuation methods for rented fixed assets under financial
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
leasing
If the lease agreement signed between the Company and the lessor contains any one
of the following conditions, the asset is identified as rented asset under financial leasing:
(1) The ownership of the leased asset is attributable to the Company after the
expiration of the lease term;
(2) The Company has the option to purchase the asset, and the purchase price is far
lower than the fair value of the asset when exercising the option;
(3) The lease term accounts for most of the service life of the leased asset; or
(4) The present value of the minimum lease payment at the beginning of the lease is
not significantly different from the fair value of the asset.
The Company shall, at start of the leasing period, make the lower between the fair
value of leased assets and the current value of minimum payment for leasing as the account
value of the rent-in assets, the minimum payment for leasing as the account value of long-
term payables, and the difference as unrecognized financing charges.
17. Construction in progress
For construction in progress, the Company shall make all the expenditures necessary
for this asset to reach usable condition as the account value of the fixed assets. For the
fixed assets reaching usable condition but not preparing the final account for completion,
the Company shall, since the date of reaching usable condition, transfer the estimated value
into fixed assets according to project budget and cost or actual cost of the project and
appropriate the provision for depreciation according to the Company's policy for
depreciation of fixed assets; after the procedure for final account for completion has been
ended, the Company shall adjust the original temporarily estimated value as per actual cost,
but not adjust the original appropriated provision for depreciation.
18. Borrowing costs
① Recognition principle for capitalization of borrowing costs
The borrowing costs include the costs of amortization of loan interest, discount or
premium and subsidiary expenses as well as foreign exchange balance due to borrowing
in foreign currencies.
Where the borrowing costs incurred to the Company can be directly attributable to
the acquisition and construction or production of assets eligible for capitalization, it shall
be capitalized and recorded into the costs of relevant assets. Other borrowing costs shall
be recognized when incurred as expenses, and shall be recorded into the current profit and
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
loss.
Assets qualifying for capitalization refer to fixed assets, investment real estates,
inventory or other assets that can reach their intended usable or available-for-sale condition
after purchase, construction or production for a considerable period of time. Capitalization
begins when the borrowing costs concurrently meet the following requirements:
(1) The asset expenditure has already occurred, and includes expenses incurred from
the payment of cash, transfer of non-cash assets or assumption of an interest bearing debt
for the purpose of purchasing or producing assets that meet the capitalization conditions;
(2) The borrowing costs have already occurred; and
(3) The purchase or production activities needed for making the assets reach usable
or available-for-sale condition have started.
② Borrowing costs capitalization period
Capitalization period means the period from the beginning of capitalization to the end
of capitalization, excluding the period when the capitalization of the borrowing costs is
temporarily suspended.
When the purchased, constructed or produced assets meeting the capitalization
condition have reached expected usable or available-for-sale condition, the capitalization
of the borrowing costs shall be stopped.
When part of the purchased, constructed or produced assets meeting the capitalization
condition have been completed and can be used independently, the capitalization of the
borrowing costs of such part of assets shall be stopped.
If the various parts of the asset purchased or produced are completed respectively, but
the asset cannot be used or sold until its overall completion, the capitalization of the
borrowing costs is suspended when the asset is fully completed.
③ Capitalization suspension period
If for the assets meeting capitalization conditions, the purchase and construction
process or production process is interrupted abnormally and the interrupting period
exceeds 3 months, the capitalization of borrowing costs shall be suspended; if the
interruption is a procedure necessary for the purchased, constructed or produced assets
meeting the capitalization condition are ready for their intended use or reach their
available-for-sale state, the capitalization of the borrowing costs shall be continued. The
borrowing costs incurred during the period of interruption is recognized as the current
profit and loss, and the capitalization of the borrowing costs shall not be continued until
the purchase and construction or the production of the assets is resumed.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
④ Calculation methods for the capitalization rate and capitalized amount of
borrowing costs
If the special loan is borrowed for purchase or production of the assets meeting the
condition of capitalization, the borrowing costs of the special loan actually occurring in the
current period deducted by the interest income of the not-used-loan fund in the bank or the
income obtained from temporary investment shall be recognized as the capitalized amount
of the borrowing costs of the special loan.
If the Company uses the general loan in order to purchase or produce the assets
meeting the conditions of capitalization, it shall use the weighted average of the portion by
which the total expenditure for assets exceeds the special loan multiplied by the
capitalization rate of the occupied general loan to calculate the amount of borrowing costs
of the general loan which should be capitalized. The capitalization rate is calculated
according to the weighted average interest rate for general borrowing.
19.Intangible assets
① Valuation methods for intangible assets
(1) The intangible assets of the Company are measured at cost at the time of
acquisition;
The cost of outsourcing intangible assets includes purchase price, related taxes and
other expenses directly attributable to making the assets reach its intended use. If the
purchase price of intangible assets exceeds the normal credit condition and is delayed in
payment, which is essentially of financing nature, the cost of intangible assets is
determined based on the present value of the purchase price. In case of debt restructuring,
the Company obtains the intangible assets used by the debtor to cover debts, determine the
recording value of such assets on the basis of their fair value, and record the difference
between the book value of the restructured debt and the fair value of the intangible assets
used to cover debts into the current profit and loss.
When a non-monetary asset exchange is of commercial essence and the fair value of
assets received or surrendered can be reliably measured, the recording value of the
intangible asset received is determined on the basis of the fair value of the asset surrendered,
unless there is a solid evidence to prove that the fair value of the assets received is more
reliable. For a non-monetary asset exchange which does not meet the above premise, the
cost of exchanging for the intangible asset is the sum of the book value of the assets
surrendered and the related taxes and fees payable, and no profit and loss is recognized.
(2) Subsequent measurement
The service life of intangible assets is analyzed and determined at the time of
acquisition.
Intangible assets with limited service life are amortized by straight-line method in the
period within which the intangible assets bring economic benefit to the Company; if the
Company cannot predict the period within which the intangible assets bring economic
benefit to the Company, it shall deem such assets as intangible assets with uncertain service
life and such assets shall not be amortized.
② Estimation of service life of intangible assets with limited service life:
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Item Estimated Service Life Basis
Land use right 50 years Period described in land use certificate
ERP information system 5-10 years Estimated period within which economic
benefit is brought to the Company
Know-how 5-10 years Estimated period within which economic benefit is brought to the Company
At end of each year, the Company shall recheck the service life and amortization
methods for intangible assets with limited service life. After rechecking, the service life
and amortization methods for intangible assets are not different from the original
estimation.
③ The judgment basis of intangible assets with uncertain service life and the
procedure for checking its service life.
As at the balance sheet date, the Company had no intangible assets with uncertain
service life.
④ Standard for dividing the research phase and development phase
The expenditures of the Company's internal research and development projects are
divided into expenditure in research phase and expenditure in development phase.
Research stage: the stage of original planned investigation and research activities for
acquiring and understanding new scientific or technical knowledge.
Development stage: the stage of applying research or other knowledge to a plan or
design prior to commercial production or use in order to produce materials, devices,
products and other items that are new or involve substantial improvements.
⑤ The specific conditions for the capitalization of expenditure in the
development stage
The expenditure in development phase which meets following conditions is
recognized as intangible asset:
(1) The technical feasibility of completing the intangible asset so that it is technically
possible for use or sale;
(2) With the intention to complete the intangible asset and use or sell it;
(3) The way of generating economic interest with the intangible asset includes the
proof that the products produced with this intangible asset have a market or this intangible
asset itself has a market. If the intangible asset is used inside the Company, it can be proved
to be useful;
(4) The availability of adequate technical, financial and other resources to complete
the development and the ability to use or sell the intangible asset; and
(5) Its ability to measure reliably the expenditure attributable to the intangible asset
during its development phase. Expenditure failing to meet the conditions mentioned above
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
is included in profit or loss for the period in which it is incurred. The expenditure in
development phase is included in current profit and loss for the period in which it is
incurred.
The Company's research and development projects enter the development stage after
meeting the above conditions, going through technical feasibility and economic feasibility
study and completing the project approval procedure.
Capitalized expenditure in the development phase is presented as development
expenditure in the balance sheet, and transferred to intangible assets when such projects
are ready for their intended use.
20. Impairment of long-term assets
Long-term assets such as long-term equity investment, investment real estate measured at
cost, fixed assets, construction in progress, and intangible assets with limited service life,
if they show a sign of impairment at the balance sheet date, undergo impairment test. The
results of impairment test show that the difference by which the recoverable amount is
lower than the book value is recognized as and included in the provision for impairment.
The recoverable amount of an asset is the higher of its fair value less costs of disposal and
the present value of the future cash flows expected to be derived from the asset. Assets
impairment provision is calculated and determined on the basis of individual asset. If it is
not possible to estimate the recoverable amount of the individual asset, the Company
determines the recoverable amount of the asset group to which the asset belongs. An asset
group is the smallest asset portfolio that can generate cash inflow independently.
The goodwill of the Company goes through impairment test at least once at the end
of each year.
The Company carries out goodwill impairment test and apportions the book value of
the goodwill formed in business combination to the relevant asset group through
reasonable method from the date of purchase; if it is difficult to apportion the book value
to the relevant asset group, then to the relevant asset group portfolio. When the book value
of the goodwill is apportioned to the related asset group or asset group portfolio, such
apportioning is made on the basis of the proportion of the fair value of each asset group or
asset group portfolio to the total fair value of the related asset groups or asset group
portfolios. If the fair value is difficult to be measured reliably, the apportioning is made on
the basis of the proportion of the book value of each asset group or asset group portfolio
to the total book value of the related asset groups or asset group portfolios.
When an impairment test is conducted on related asset groups or asset group
portfolios containing goodwill, if any asset groups or asset group portfolios related to
goodwill show a sign of impairment, the Company first conducts an impairment test on the
asset groups or asset group portfolios that do not contain goodwill, calculate the
recoverable amount and compare with the relevant book value to determine the
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
corresponding impairment loss. Then, the Company makes impairment test to the asset
groups or asset group portfolios, and compares the account value (including the account
value of shared goodwill) and reclaimable amount of these asset groups or asset group
portfolios. If the reclaimable amount of the relevant asset groups is lower than the book
value, the impairment loss of goodwill is recognized.
Once an impairment loss on above mentioned assets is recognized, it shall not be
reversed in a subsequent period.
21. Long-term deferred expenses
The long-term deferred expenses of the Company mean expenses that have been paid,
but the beneficial period is more than one year (exclusive), which mainly includes land
compensation fees paid for land renting. Long-term deferred expenses are amortized
according to the beneficial period of such expenses. If the long-term prepaid expenses
cannot benefit the later accounting periods, the amortized value of the unamortized
expenses shall be transferred to the current profit and loss.
22. Payroll
① Accounting treatment methods for short-term compensation
In the accounting period in which the employees provide services, the Company
recognizes the actual short-term compensation as liabilities, and records the same into the
current profits and losses or related asset costs.
The amount of employee compensation is calculated according to the appropriation
base and proportion during the accounting period in which the employees provide service
to the Company and on the basis of the Company's social insurance and housing provident
fund for employees, as well as labor union funds and staff education funds appropriated
according to the relevant regulations.
Where the employee welfare is non-monetary welfare and can be measured reliably,
the employee welfare expenses are measured at fair value.
② Accounting treatment methods for welfare after resignation
(1) Set up an escrow plan
The Company takes out the basic endowment insurance and unemployment insurance for
its employees in accordance with the relevant regulations of the local government. During
the accounting period in which the employees provide service to the Company, the amount
payable calculated according to the payment base number and proportion stipulated by
local authorities is recognized as liabilities, and included in profit and loss or the cost of
related assets.
In addition to the basic endowment insurance, the Company has also established an
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
enterprise annuity payment system (supplementary endowment insurance) / enterprise
annuity plan according to the relevant policy of the state on enterprise annuity system. The
Company pays the fees to the local social insurance agency by a certain proportion of the
total payroll or according to the annuity plan, and the corresponding expenditure is
included in the current profit and loss or the cost of the related assets.
(2) Set up a benefit plan
According to the formula established by the expected accumulative welfare unit
method, the Company attributes the welfare obligations created in the development of the
benefit plan to the period in which the employees provide services, and includes the same
in the current profit and loss or the cost of the related assets.
The deficit or surplus by which the present value of the benefit plan obligation is more
or less than the fair value of the benefit plan assets is recognized as a net debt or net asset
with benefit plan. If there is a surplus under the benefit plan, the Company measures the
net assets under the benefit plan by the lower of the surplus and the asset limit under the
benefit plan.
All the benefit plan obligations, including the payment obligations within twelve
months after the end of the annual report period in which the employees provide services,
are discounted on the balance sheet date on the basis of the market return of national debts
corresponding to the period and currency of the benefit plan obligations or of the high
quality corporate bonds in the active market.
The service cost incurred from the benefit plan and the net interest on the net liabilities
or net assets under the benefit plan are included in the current profit and loss; the changes
in the net liabilities or net assets under the beneficiary plan due to re-measurement are
included in other comprehensive income and are not reversed to the profit and loss during
the subsequent accounting period. When the original benefit plan is terminated, the portion
which was originally included in other comprehensive income is carried forward to the
undistributed profit within the scope of interests. In regard to the settlement of the benefit
plan, the difference between the present value and settlement price of the benefit plan
obligation as at the settlement date is recognized in the current profit or loss.
See "X (XXVIII) Payroll payable" for details.
③ Accounting methods for dismissal benefits
The Company shall recognize the staff remuneration liabilities incurred from
dismissal benefits and include them into the profits and losses of the current period when
the group cannot unilaterally cancel such dismissal benefits provided due to termination of
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
labor relations or the lay-off proposal, or when the Company recognizes the costs or
expenses for and in connection with the reorganization involving the payment of dismissal
benefits, whichever is earlier.
23. Estimated liabilities
Recognition criteria for estimated liabilities
When the obligations related to litigation, debt guarantee, loss contract,
reorganization and other contingent matters concurrently meet the following conditions,
the Company recognizes such obligations as estimated liabilities:
(1) The obligation is the current obligation assumed by the Company;
(2) The fulfillment of the obligation is most likely to cause the economic interest to
flow out of the Company; and
(3) The amount of the obligation can be measured reliably.
① Method for the measurement of various estimated liabilities
The Company shall make initial valuation on the estimated liabilities in accordance
with the best estimate number of the expenditure needed for fulfillment of relevant current
obligation. When determining the best estimate number, the Company takes into account
the factors pertaining to a contingency such as the risks, uncertainties and time value of
money. Where there is a significant impact on the time value of money, the best estimate
number is determined by discounting the related future cash outflow.
If the expenditure necessary for paying off the estimated liabilities is expected to be
compensated by third parties, the amount of compensation, if it is generally confirmed that
it can be received, is separately recognized as an asset, and the amount of compensation
recognized is not more than the book value of the estimated liabilities.
See "V (XXXVI) Estimated liabilities" for details.
24. Share-based Payment
The Company's share-based payments are transactions in which the Company grants
equity instruments or undertakes liabilities determined on the basis of the equity
instruments for the purpose of obtaining the service provided by the employees [or other
parties]. The Company's share-based payments are divided into share-based payments
settled with equity and share-based payments settled in cash.
① Share-based payment and equity instruments settled with equity
Where share-based payment settled with equity is made in exchange for the services
provided by the employees, such payment shall be measured by the fair value of the equity
instruments of the employees. Where the Company pays for the shares with the restricted
stocks, and the employees subscribe for the stocks, the stocks may not be circulated or
transferred before the unlocking conditions are reached and the stocks are unlocked; if the
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
unlocking conditions stipulated in the final equity incentive plan are not met, the Company
will repurchase the stocks at the predetermined price. When the Company has obtained the
money paid by employees to subscribe for the restricted stocks, the Company determines
the share stock and capital reserves (stock premium) according to the subscription money,
and recognizes a debt in full amount of the repurchase obligation and determines the
treasury stocks. At each balance sheet date in the cooling-off period, the Company makes
the best estimate of the number of vesting equity instruments according to the [changes in
the number of vesting employees], [whether the specified performance criteria is reached]
and other latest follow-up information, and on that basis, records the services acquired in
the current period in the related costs or expenses based on the fair value at the grant date,
and increases the capital reserves accordingly. After the vesting date, no further adjustment
is made to the recognized related costs or expenses and the total amount of owners' equity.
However, if the right is exercisable immediately after the grant, the fair value shall be
included in the related costs or expenses at the grant date, and the capital reserves increased
accordingly.
For share-based payments that eventually fail to be vested, the costs or expenses are
not recognized, unless the vesting conditions are market conditions or non-vesting
conditions, in which case, whether or not the market conditions or non-vesting conditions
are satisfied, the right is deemed exercisable as long as the non-market conditions in all the
vesting conditions are satisfied.
If the terms regarding share-based payment settled with equity are modified, the
services obtained shall be recognized at least according to the terms not modified. In
addition, any modification that increases the fair value of the equity instruments granted
or any changes made in the interest of the employee on the date of modification are
recognized as increase in services.
If the share-based payment settled with equity is cancelled, the cancellation date will
be processed as an accelerated exercise, and the amount that has not been recognized shall
be recognized immediately on the cancellation date by means of accelerated exercise. If
the employees or other parties may choose to satisfy the non-vesting conditions which are
not satisfied during the cooling-off period, the share-based payment settled with equity
shall be deemed cancelled. However, if new equity instruments are granted and on the date
of such grant, it is ascertained that the new equity instruments so granted are used to
substitute the cancelled equity instruments, the substituting equity instruments so granted
shall be treated in the same way as the terms and conditions of the original equity
instruments are modified.
② Share-based payment and equity instruments settled in cash
Share-based payment settled in cash is measured at the fair value of the liabilities
undertaken by the Company and calculated on the basis of shares or other equity
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
instruments. If the right is exercisable immediately after being granted, the fair value of
the liability undertaken by the Company at the grant date is included in the costs or
expenses, and the liabilities increased accordingly; if the right is exercisable only when the
service in the cooling-off period is completed or the prescribed performance criteria is
satisfied, the Company, on the basis of the best estimate of the exercisable condition during
the cooling-off period as well as the fair value of the liabilities undertaken by the Company,
records the services acquired in the current period in the related costs or expenses, and
increases the capital reserves accordingly. At each balance sheet date and settlement date
before the settlement of related liabilities, the Company re-measures the fair value of the
liabilities and records the changes in the current profit and loss.
25. Revenue
① Income from sale of goods
The Company has already transferred main risk and reward for the property in the
goods to the purchaser; it has neither kept the right of continuous management related to
the property in that goods, nor exercised control to the sold goods; the amount of income
can be calculated reliably; the relevant economic benefits are likely to flow into the
Company, and when the related costs incurred or to be incurred can be measured reliably,
the income from sale of goods is recognized.
The specific methods of recognizing the Company's sales revenue are as follows:
Domestic sales: in the case of delivery on payment, the revenue is recognized when the
purchase price has been received and the invoices, bills and delivery notes have been
delivered to the buyer; in the case of advance on sales, the revenue is recognized when the
sales invoice is issued and the goods are delivered; and in the case of sale on credit, the
revenue is recognized when the goods have been shipped and the goods ownership
certificate has been transferred.
Export: the Company mainly adopts FOB, CIF, C&F, etc. as the price terms in export
sales. Under the FOB, CIF or C&F price terms, the Company has transferred the main risks
and rewards related to the ownership of the goods to the buyer after loading in the domestic
port. Meanwhile, the Company neither implements and maintains the continuous
management right that is generally associated with ownership, nor does it effectively
control the sold goods. Therefore, under the FOB, CIF or C&F price terms, the Company
takes the time of loading at the customs as the time point of revenue recognition, and
recognizes the revenue at FOB.
② Income from acquisition of assets use right
When the economic interest related to acquisition of assets use right is most likely to
flow into the Company, and the received amount can be reliably measured, the Company
shall determine the amount of income from acquisition of assets use right as follows:
(1) The amount of interest income shall be calculated and confirmed according to the
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
time and actual interest rate of the Company's monetary fund used by other entities.
(2) The amount of use right income is calculated and determined according to the
chargeable time and way specified in the relevant contract or agreement.
③ Income from rendering of service
If the transaction results for rendering of service by the Company at the date of
balance sheet can be estimated reliably, the completion percentage method shall be adopted
to confirm the income from rendering of service. In case the result from rendering of
service at the date of balance sheet cannot be estimated reliably, the Company shall:
(1) If it is estimated the occurred service cost can be compensated, recognize the
income from rendering of service according to the service cost recovered or expected to be
recovered, and carry forward the occurred service cost;
(2) If it is estimated the occurred service cost can be partially compensated, recognize
the income from rendering of service according to the amount of the service cost that can
be compensated, and carry forward the occurred service cost; or
(3) If it is estimated the occurred service cost cannot be compensated, attribute the
already occurred service cost into the current profit and loss, and shall not recognize the
income from rendering of service.
The Company determines the percentage of completion by the ratio of the cost
incurred to the total estimated cost.
26. Government subsidies
① Type government subsidy is the monetary and non-monetary assets acquired by
the Company from the government free of charge. Government subsidies consist of
government subsidy related to assets and government subsidy related to earnings.
Government subsidies related to assets refer to government subsidies that are acquired by
the Company for purchasing, constructing or otherwise forming long-term assets.
Government subsidies related to income refer to government subsidies other than assets
related government subsidies.
② Recognition time point
The time when the payment is received and the financial fund payment voucher is
obtained is the recognition time point of the government subsidy.
③ Accounting treatment
A government subsidy related to assets is used to offset the book value of relevant
assets or is recognized as deferred income. If a government subsidy is recognized as the
deferred income, it is included in the current profit and loss (in other income if it is related
to the daily activities of the Company; in non-operating revenue if it is not related to the
daily activities of the Company) through reasonable and systematic methods during the
service life of the related assets; if a government subsidy is related to income and is used
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
to make up for the Company's related costs, expenses or losses in the future, it is recognized
as deferred income and included in the current profit and loss (in other income if it is
related to the daily activities of the Company; in non-operating revenue if it is not related
to the daily activities of the Company) or is used to offset related costs, expenses or losses
during the period when the related costs, expenses or losses are recognized; if a
government subsidy is used to make up for related costs, expenses or losses that have been
incurred by the Company, it is directly included in the current profit and loss (in other
income if it is related to the daily activities of the Company; in non-operating revenue if it
is not related to the daily activities of the Company) or or is used to offset related costs,
expenses or losses.
The policy concessional loan discount acquired by the Company undergoes
accounting treatment in either of the following ways:
(1) The Finance pays the discount funds to the lending bank, and the lending bank
provides the loan to the Company at the policy preferential interest rate. The Company
takes the amount of the loan that is actually received as the recording value of the loan,
and calculates the related borrowing costs according to the principal of the loan and the
policy preferential interest rate.
(2) The Finance directly pays the discount funds to the Company, and the Company
used the corresponding discount to offset the related borrowing costs.
27. Deferred income tax assets and liabilities
The deferred income tax assets are recognized at the deductible temporary difference
to the extent of the amount of the taxable income that is likely to be obtained in the future
to offset the deductible temporary difference. For the deductible loss and tax credits which
can be carried forward to future years, the Company shall confirm the related deferred
income tax assets in the limit of the future taxable amount of income which are most likely
obtained to offset the loss and tax credits.
Unless under special circumstances, the Company recognizes deferred tax liabilities
for all taxable temporary differences.
The special circumstances in which deferred income tax assets or liabilities are not
recognized include: the initial recognition of goodwill; other transactions or matters that
affect neither the accounting profit and nor the taxable income (or deductible loss) except
in the case of business combination.
When the Company has the legal right of net settlement and is intended to
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
simultaneously settle or acquire assets and repay liabilities with net amount, the current
income tax assets and the current income tax liabilities shall be recorded at the net amount
after offsetting.
When the Company has the legal right to settle the current income tax assets and
liabilities with net amount, and deferred income tax assets and liabilities
are related to the income tax levied by the same tax collection and management authority
on the same tax subject or are related to different subjects, but during the future period in
which each important deferred income tax asset and liability is reversed, the tax subject
concerned is intended to settle the deferred income tax assets and liabilities with net
amount or simultaneously acquire assets and repay liabilities, the current income tax assets
and the current income tax liabilities shall be recorded at the net amount after offsetting.
28. Lease
①Accounting treatment methods for operating leasing
(1) The rent paid by the Company for the renting of assets is amortized by the straight-
line method within the entire lease term without deducting the rent free period, and
included in the current expenses. The initial direct expenses paid by the Company related
to the leasing transaction are included in the current expenses. When the asset lessor
assumes the lease related expenses payable by the Company, the Company deducts such
expenses from the total rent, and records the remaining rent in the current expenses after
amortization within the lease term.
(2) The rent received by the Company for the leasing of assets is amortized by the
straight-line method within the entire lease term without deducting the rent free period,
and recognized as lease related income. The initial direct expenses paid by the Company
related to the lease transaction is recorded in the current expenses; if the amount is large,
it shall be capitalized and recorded in the current profit during the entire lease term by
installments determined in the same way as lease related income is recognized. When the
Company assumes the lease related expenses payable by the lessee, the Company deducts
such expenses from the total rent income, and allocates the balance of the rent after
deduction within the lease term.
② Accounting treatment methods for financial leasing
(1) Rented assets under financial leasing: when the Company is a leaseholder in
finance leasing, it shall, at start of the leasing period, make the lower between the fair value
of leased assets at start of leasing period and the current value of smallest payment for
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
leasing as account value of the rent-in assets, the smallest payment for leasing as account
value of long-term payables, and the difference as unconfirmed financing charges. The
Company amortizes the unrecognized financing expenses by the effective interest rate
method during the asset leasing period and includes the amortized financing expenses in
the financial expenses. The occurred initial direct expenses shall be attributed to rent-in
assets value.
(2) Leased assets under financial leasing: On the lease start date, the Company
recognized the difference between the sum of the financing lease receivables and
unsecured balance and the present value of such sum as unrealized financing income, and
as lease income in each future period when the rent is received. The initial direct expenses
incurred by the Company related to the lease transaction are recorded in the initial
measurement of the financing lease receivables and the amount of income recognized
within the lease term reduced.
29. Discontinued operation
Discontinued operation is a component that meets one of the following conditions and
can be separately distinguished, and such component has been disposed of by the Company
or classified by the Company as a category held for sale:
(1) This component represents an independent main business or a separate main
business area;
(2) This component is part of a related plan designed to dispose of an independent
main business or a separate main business area; or
(3) This component is a subsidiary acquired specifically for resale.
30.Change of principal accounting policies and accounting estimates
① Change of principal accounting policies
The Accounting Standards for Business Enterprises No.42 - Held-for-Sale
Non-current Assets, Disposal Groups and Discontinued Operation, Accounting Standards
for Business Enterprises No.16 - Government Subsidy, and the Notice of the Ministry of
Finance on Revising and Issuing the Format of General Enterprise Financial Statements
apply to the Company.
The Accounting Standards for Business Enterprises No.42 - Held-for-Sale
Non-current Assets, Disposal Groups and Discontinued Operation was promulgated by the
Ministry of Finance in 2017 and came into force as of May 28, 2017. These Accounting
Standards stipulates that held-for-sale non-current assets, disposal groups and discontinued
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
operation existing on the effective date of these Accounting Standards shall be dealt with
by prospective application method.
The Ministry of Finance revised the Accounting Standards for Business Enterprises No.16
- Government Subsidy in 2017 and the revised Accounting Standards came into force as of
June 12, 2017. Government subsidies existing before January 1, 2017 shall be dealt with
by the prospective application method; new government subsidies existing from January
1, 2017 to the effective date of these Accounting Standards shall be dealt with according
to the revised Accounting Standards.
The Ministry of Finance issued the Notice of the Ministry of Finance on Revising and
Issuing the Format of General Enterprise Financial Statements in 2017, which revised the
format of general enterprise financial statements and is applicable to financial statements
prepared in 2017 and later.
The main effects of the Company's implementation of the above three regulations are
as follows:
Contents of and reasons for change of accounting
policies The name and amount of the affected statement items
(1) "Net profit from continuous operation" and "net profit from
discontinued operation" are listed respectively in the profit
statement. The comparison data is adjusted accordingly.
The net profit from continuous operation of the current year is presented at RMB2,588,874,607.00; net profit from discontinued operation of the current year at RMB0.00; net profit from continuous operation of the immediately prior year at RMB459,312,586.99; and net profit from discontinued operation of the immediately prior year at RMB0.00.
(2) Government subsidies related to the daily activities of the
Company are included in other income and no longer included in
non-operating revenue. The comparison data is not adjusted.
The Company increased other income by RMB67,085,953.11, and reduce
non-operating revenue - government subsidies by RMB67,085,953.11.
(3) Add "assets disposal income" to the profit statement, and reclassify the profit and loss from disposal of assets previously listed in "non-operating revenue and expenditure" into the "asset disposal income". The comparison data is adjusted accordingly.
In the current year, the net decrease in non-operating revenue and expenditure is RMB-18,907,981.46, and is reclassified into the asset disposal income; in the immediately prior year, the net decrease in non-operating revenue and expenditure is RMB-23,617,841.72, and is reclassified into the asset disposal income.
② Change of significant accounting estimates
The Company has no change in significant accounting estimates in the current period.
Ⅵ. Taxes
1. Main taxes and tax rates
Tax Category Taxation basis Tax Rate
VAT
The amount of output tax calculated according to the tax law on the
basis of the income from sale of goods and provision of taxable labor
service, deducting the amount of deductible input tax of the current
period, is the VAT payable.
3%、6%、11%、13%、17%
Urban maintenance and
construction tax Calculated and paid according to the business tax, VAT and GST
actually paid 1%、5%、7%
Enterprise income tax Per taxable income 15%、16.5%、20%、25%、35%
Education surcharge Calculated and collected according to the VAT, business tax and GST 3%
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
If the taxpaying entities apply to different enterprise income tax rates, details shall be disclosed
Taxpayer name Income tax rate
Sichuan Lomon Titanium Industry Co., Ltd. 15.00%
Sichuan Lomon Mining and Metallurgy Co., Ltd. 15.00%
Panzhihua Lomon Mineral Products Co., Ltd. 15.00%
Xiangyang Lomon Titanium Industry Co., Ltd. 15.00%
Jiaozuo Rongjia Scandium Technology Co., Ltd. 15.00%
Billions (Hong Kong) Corporation Limited 16.50%
Billions Europe Ltd. 20.00%
Lomon US Ltd. 20.00%
Jiaozuo Billions Reservoir Management Co., Ltd. 25.00%
Jiaozuo Xingtai Resource Comprehensive Utilization Co., Ltd. 25.00%
Jiaozuo Zhongzhan District Yili Small Loan Co., Ltd. 25.00%
Henan Longxiang Mountain Tourism Development Co., Ltd. 25.00%
Jiaozuo Billions Pigment Co., Ltd. 25.00%
Henan Billions New Materials Co., Ltd. 25.00%
Baokang Xingtai Titanium Industry Co., Ltd. 25.00%
Billions Financial Leasing (Guangzhou) Co., Ltd. 25.00%
Panzhihua Ruierxin Industry and Trade Co., Ltd. 25.00%
BILLIONS AMERICA CORPORATION 35.00%
2. Tax preference
1. According to the High-tech Enterprise Certificate (certificate number:
GR201741000264) jointly issued by Henan Provincial Department of Science and
Technology, Henan Provincial Department of Finance, and , and Local Tax Bureau of
Henan Province on August 29, 2017, the parent company passed the 2017 high-tech
enterprise certification (certificate number: GR201741000264), enjoying the relevant
preferential policies for high-tech enterprises for three consecutive years from 2017 to
2019. In current year, the parent company pays the enterprise income tax at the rate of 15%.
2. Jiaozuo Rongjia Scandium Industry Technology Co., Ltd. obtained the high-tech
enterprise certificate on August 3, 2015, enjoying the relevant preferential policies for
high-tech enterprises for three consecutive years from 2015 to 2017, and paid the enterprise
income tax at the rate of 15%.
3. According to the Notice of the Ministry of Finance, the General Administration of
Customs and the State Administration of Taxation on Tax Policy Issues concerning Further
Implementing the Western China Development Strategy (Cai Shui [2011] No.58), from
January 1, 2011 to December 31, 2020, encouraged industry enterprises established in
western China (i.e. enterprises which regard any industry item listed in the Catalogue of
Encouraged Industries in Western China and whose prime business revenue accounts for
actually paid
Local education surcharge Calculated and collected according to the VAT, business tax and GST
actually paid 2%
Resource tax Ad valorem collection: raw ore mining volume / income from sale of
raw ore * converting ratio 1.5 * tax rate 4% 4%
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
more than 70% of its total revenue) are levied enterprise income tax at a preferential rate
of 15%; according to the Announcement of the State Administration of Taxation on Issues
Concerning Enterprise Income Tax concerning Further Implementing the Western Region
Development Strategy (Announcement No.12 of the State Administration of Taxation in
2012), in the first year of enjoying the preferential tax preference for western development
enterprise income tax, such enterprise income tax shall be reported to the competent tax
authorities for review and approval; in the second year and later years, record management
should be carried out. Before the publication of the Catalogue of Encouraged Industries in
Western China, enterprises falling within the scope of the Industrial Restructuring
Guidance Catalogue (2011 Edition), after confirmation by the tax authorities, may pay
enterprise income tax at the rate of 15%. After the publication of the Catalogue of
Encouraged Industries in Western China, enterprises that have already paid the enterprise
income tax at the rate of 15%, if not in conformity with relevant requirements, may
recalculate and declare the enterprise income tax at the applicable tax rate in accordance
with the tax law after completing relevant procedures. With the approval of the State
Council, the Catalogue of Encouraged Industries in Western China (Order No.15 of
National Development and Reform Commission of the People's Republic of China) issued
by National Development and Reform Commission comes into force as of October 1, 2014.
(1) Upon confirmation by the Economic and Information Commission of Sichuan
Province through the issue of the Reply on Identifying the Prime Business of the 6
Enterprises including Sichuan Dongfang Bearing Manufacturing Co., Ltd. as the
Industries Encouraged by the State (Chuan Jing Xin Chan Ye Han [2012] No.402). The
prime business of Sichuan Lomon Titanium Industry Co., Ltd. falls within the scope of the
encouraged industries listed in the Industrial Restructuring Guidance Catalog (2011
Edition), so, the said company paid the enterprise income tax at the rate of 15% in 2017.
(2) Upon confirmation by the Economic and Information Commission of Sichuan
Province through the issue of the Reply on Identifying the Prime Business of the 27
Enterprises including SQM MIGAO (Sichuan) Chemical Fertilizer Co., Ltd. as the
Industries Encouraged by the State (Chuan Jing Xin Chan Ye Han [2012] No.1212). The
prime businesses of Sichuan Lomon Mining and Metallurgy Co., Ltd. and Panzhihua
Lomon Mineral Products Co., Ltd. fall within the scope of the encouraged industries listed
in the Industrial Restructuring Guidance Catalog (2011 Edition) (Order No.9 of the
National Development and Reform Commission), so, the said companies paid the
enterprise income tax at the rate of 15% in 2017.
4. On November 28, 2017, Xiangyang Lomon Titanium Industry Co., Ltd. obtained a
three-year high-tech enterprise certificate (GR201742001720) jointly issued by Hubei
Provincial Department of Science and Technology, Hubei Provincial Department of
Finance, and State Taxation Bureau and Local Taxation Bureau of Hubei Province.
According to the Enterprise Income Tax Law and its related provisions, the company
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
enjoyed a preferential enterprise income tax rate of 15%.
Ⅶ Notes to consolidated financial statements
1. Monetary fund
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Cash on hand 91,712.49 305,309.66
Bank deposit 2,218,150,438.56 1,085,683,707.84
Other monetary fund 135,257,923.68 217,401,689.80
Total 2,353,500,074.73 1,303,390,707.30
Including: total amount of funds deposited overseas 35,554,637.63 109,561,527.64
Of which, the details of the restricted monetary funds are as follows:
Item Closing Balance Beginning Balance
Deposit for bank acceptance draft 135,257,923.68 116,780,417.77
Security deposit 621,272.03
Financing guarantee deposit 100,000,000.00
Total 135,257,923.68 217,401,689.80
2. Financial assets at FVTPL
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Tradable financial assets
In which: Investments in debt instruments
Investments in equity instruments
Derivative financial assets
Others
Financial assets at FVTPL 700,000,000.00
Including: investment in bond instruments
Investment in equity instruments
Other 700,000,000.00
Total 700,000,000.00
Note: Other items include RMB700 million bank structured deposit.
3. Notes receivable
（1） Classification of notes receivable
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Bank acceptance draft 942,142,300.36 690,005,559.34
Trade acceptance draft 35,000,000.00 139,766,000.00
Total 977,142,300.36 829,771,559.34
（2） Notes receivable pledged by the Company at the end of the period
Monetary Unit: Yuan
Item Amount pledged at the end of the period
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Bank acceptance draft 120,000,000.00
Total 120,000,000.00
（3） Notes receivable endorsed or discounted at the end of the period and
not due at the balance sheet date
Monetary Unit: Yuan
Item Closing derecognized amount Closing amount not derecognized
Bank acceptance draft 1,817,259,786.95
Total 1,817,259,786.95
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
4 Receivables
（1） Disclosure of receivables by category
Monetary Unit: Yuan
Category
Closing Balance Beginning Balance
Book Value Bad Debt Reserves
Book Value
Book Value Bad Debt Reserves
Book Value
Amount Ratio (%) Amount Ratio of
appropriation (%) Amount Ratio (%) Amount
Ratio of
appropriation (%)
Receivables with significant individual amount and
appropriation of provisions for bad debts on individual
amount
Receivables with combined appropriation of provisions for
bad debts based on credit risk characteristics 1,272,089,795.38 99.97% 67,552,461.07 5.31% 1,204,537,334.31 862,359,967.88 100.00% 44,795,944.94 5.19% 817,564,022.94
Receivables with insignificant individual amount and
appropriation of provisions for bad debts on individual
amount
330,885.15 0.03% 330,885.15 100.00%
Total 1,272,420,680.53 100.00% 67,883,346.22 5.33% 1,204,537,334.31 862,359,967.88 100.00% 44,795,944.94 5.19% 817,564,022.94
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Receivables with appropriation of provisions for bad debts according to aging analysis method in the portfolio:
Monetary Unit: Yuan
Accounting Age
Closing Balance
Receivables Bad Debt Reserves Ratio of appropriation
(%)
Sub-items within 1 year
Sub-total within 1 year 1,247,799,372.90 62,389,968.63 5.00 %
1-2 years 13,701,632.44 1,370,163.25 10.00 %
2-3 years 7,824,421.73 2,347,326.53 30.00 %
More than 3 years
3-4 years 2,613,639.99 1,306,820.00 50.00 %
4-5 years 62,728.32 50,182.66 80.00 %
More than 5 years 88,000.00 88,000.00 100.00 %
Total 1,272,089,795.38 67,552,461.07
Receivables with insignificant individual amount and appropriation of provisions for bad debts on individual amount at the end of the period
Entity Name
Closing Balance
Receivables Bad Debt Reserves Ratio of appropriation
(%)
Cause of
appropriation
Jiaozuo Maikerui New Building
Materials Co., Ltd. 330,885.15 330,885.15 100.00
Estimated to be
unrecoverable
Total 330,885.15 330,885.15
（2） Accounts receivable from top 5 debtors listed by their closing balance
Entity Name Closing Balance
Receivables Proportion to total receivables (%) Bad Debt Reserves
No.1 65,472,520.65 5.15 3,273,626.03
No.2 51,983,970.01 4.09 2,599,198.50
No.3 38,924,229.41 3.06 1,946,211.47
No.4 37,289,318.33 2.93 1,864,465.92
No.5 34,107,729.04 2.68 1,705,386.45
Total 227,777,767.44 17.91 11,388,888.37
5 Advance to suppliers
（1） The advance to suppliers is listed by aging Monetary Unit: Yuan
Accounting Age Closing Balance Beginning Balance
Book balance Ratio (%) Book balance Ratio (%)
Less than 1 year 190,825,040.15 94.35% 140,215,228.53 92.39%
1-2 years 11,421,136.50 5.65% 11,555,729.33 7.61%
2-3 years
More than 3 years
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Total 202,246,176.65 -- 151,770,957.86 --
（2） Advances to top 5 objects listed by their closing balance
Object of advance Closing Balance Proportion to total closing balance of advances
(%)
No.1 25,537,297.68 12.63
No.2 15,892,506.41 7.86
No.3 12,978,490.64 6.42
No.4 10,838,091.30 5.36
No.5 8,906,576.25 4.4
Total 74,152,962.28 36.67
6 Interest receivable
（1） Classification of interest receivable
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Term deposits
Entrusted loans
Creditor investments
Loans and advances 2,231,352.81 1,065,406.14
Lease interest receivable 158,333.33
Sub-total of impairment provision -776,419.47
Total 1,613,266.67 1,065,406.14
（2） Significant overdue interest
Borrowing unit Closing Balance Overdue time Overdue reason Impairment and its judgment basis
Jiaozuo Fengguang Concrete
Co., Ltd. 389,511.12 Insolvency Yes, under lawsuit
Jiaozuo Zhongzhan Benteng Stone Processing Factory
384,533.35 Insolvency Yes, under lawsuit
Total 774,044.47 -- -- --
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
7 Other receivables
（1） Disclosure of other receivables by classification:
Monetary Unit: Yuan
Type
Closing Balance Beginning Balance
Book balance Bad Debt Reserves
Book Value
Book balance Bad Debt Reserves
Book Value Amount Ratio (%) Amount
Ratio of appropriation
(%) Amount Ratio (%) Amount
Ratio of appropriation
(%)
Other receivables with significant individual
amount and appropriation of
provisions for bad debts on individual amount
21,500,000.00 28.99 21,500,000.00 100.00 18,500,000.00 25.45 18,500,000.00 100.00
Other receivables with
combined appropriation of
provisions for bad debts based on credit risk
characteristics
52,655,583.01 71.01 35,903,455.56 68.19 16,752,127.45 54,190,539.50 74.55 23,676,219.97 43.69 30,514,319.53
Other receivables with
insignificant individual amount and appropriation of
provisions for bad debts on individual amount
Total 74,155,583.01 100.00 57,403,455.56 77.41 16,752,127.45 72,690,539.50 100.00 42,176,219.97 58.02 30,514,319.53
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Other receivables with significant individual amount and appropriation of
provisions for bad debts on individual amount at the end of the period
Monetary Unit: Yuan
Other receivables (by unit) Closing Balance
Other receivables Bad Debt Reserves Ratio of appropriation (%)
Cause of appropriation Government of Xinshi Town,
Mianzhu City 3,000,000.00 3,000,000.00 100.00% Estimated to be
unrecoverable due to a long
account age Sichuan
XichuangHuayuTiancheng Industrial Co., Ltd.
18,500,000.00 18,500,000.00 100.00% The business license of the
opposite entity is revoked Total 21,500,000.00 21,500,000.00 -- --
Other receivables with appropriation of provisions for bad debts according
to aging analysis method in the portfolio:
Monetary Unit: Yuan
Accounting Age
Closing Balance
Other receivables Bad Debt Reserves Ratio of appropriation
(%)
Sub-items within 1 year
Sub-total within 1 year 7,701,845.33 385,122.27 5.00 %
1-2 years 243,844.84 24,384.49 10.00 %
2-3 years 1,440.00 432.00 30.00 %
More than 3 years
3-4 years 551,394.00 275,697.00 50.00 %
4-5 years 40,756,981.00 32,605,584.80 80.00 %
More than 5 years 2,612,235.00 2,612,235.00 100.00 %
Total 51,867,740.17 35,903,455.56
Note: It is required to state the causes for recovery or withdrawal, and to determine the grounds
and rationality for proportions for percentage of provision of original bad debts.
（2）Other receivables cancelled this year.
（3）Other receivables will be classified according to nature of money.
Monetary Unit: Yuan
Nature of money Ending book balance Starting book balance
Current accounts 62,251,122.49 57,579,166.51
Provisions 1,686,861.89 134,025.05
Advances 5,966,845.27 53,121.88
Bid bonds 620,000.00 40,000.00
Deposits 24,600.00 625,000.00
Others 3,606,153.36 14,259,226.06
Total 74,155,583.01 72,690,539.50
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
(4) Other accounts receivable from top 5 debtors listed by their closing balance
Monetary Unit: Yuan
Entity Name Fund
Nature Closing Balance Accounting Age
Proportion to total closing balance of other receivables (%)
Closing Balance
of Provisions for
Bad Debts
Nanzhang County State-owned
Land Assets Administration Office
Land
purchase fund 37,010,000.00 4-5 years 49.91% 29,608,00000.00 Sichuan Xichang Huaxu Tiancheng
Company
Investment
fund 18,500,000.00 More than 5 years 24.95% 18,500,000.00 Government of Mianzhu Xinshi
Township
Land purchase fund 3,000,000.00 More than 5 years 4.05% 3,000,000.00
Yanbian County Sanyuan Water
Affairs Co., Ltd.
Intercourse
funds 2,946,981.00 4-5 years 3.97% 2,357,584.80
Finance Division of Government of
Sichuan Yanbian Xinjiu Township
Technical transformatio
n fund
2,000,000.00 4-5 years; more than 5
years 2.70% 1,920,000.00
Total -- 63,456,981.00 -- 85.57% 55,385,584.80
8. Inventory
Note: No special industry is written in this Section, so it is not required to make a special disclosure on
such industry in this Section.
（1） Inventory classification
Unit: Yuan
Item
Closing Balance Beginning Balance
Book balance Falling price reserve Book Value Book balance Falling price
reserve Book Value
Raw materials 595,730,560.11 30,222.16 595,700,337.95 382,267,684.71 126,234.60 382,141,450.11
Work in progress 348,329,531.09 3,556,424.69 344,773,106.40 325,009,546.66 3,080,729.08 321,928,817.58
Stock goods 470,165,703.87 1,383,942.51 46,8781,761.36 371,331,512.32 1,829,891.92 369,501,620.40
Revolving materials 75,420,827.89 75,420,827.89 25,136,114.85 25,136,114.85
Consumptive
biological assets
Completed and unpaid
assets derived from
building contracts
Materials in transit 78,519,597.19 78,519,597.19 181,962,098.31 181,962,098.31
Total 1,568,166,220.15 4,970,589.36 1,563,195,630.79 1,285,706,956.85 5,036,855.60 1,280,670,101.25
（2） Inventory falling price reserve Unit: Yuan
Item Beginning Balance Increase in the current period Decrease in the current period
Closing Balance Appropriation Other Reversal or reselling Other
Raw materials 126,234.60 1,072,103.03 1,168,115.47 30,222.16
Work in progress 3,080,729.08 2,828,635.31 2,352,939.70 3,556,424.69
Stock goods 1,829,891.92 445,949.41 1,383,942.51
Revolving materials
Consumptive
biological assets
Completed and
unpaid assets derived
from building
contracts
Total 5,036,855.60 3,900,738.34 3,967,004.58 4,970,589.36
9. Other current assets
Monetary Unit: Yuan
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Item Closing Balance Beginning Balance
Prepaid enterprise income tax 41,453,637.12 78,677,431.35
Tax to be deducted 21,123,144.47 17,820,144.10
Short-term bank financial products 70,800,000.00
Total 62,576,781.59 167,297,575.45
10. Loans and advances ① Distribution of loans and advances by individuals and enterprises
Item Closing Balance Beginning Balance Enterprise loan 429,900,417.00 196,367,601.00
Personal loan 26,500,000.00 26,310,000.00
Total loans and advances 456,400,417.00 222,677,601.00
Less: provisions for enterprise loan losses 17,472,767.00 14,212,849.76
Provisions for enterprise loan losses 1,740,000.00 751,500.00
Sub-total of Provisions for losses 19,212,767.00 14,964,349.76
In which: provision for single item
Provision for portfolio 19,212,767.00 14,964,349.76
Book value of loans and advances 437,187,650.00 207,713,251.24
② Distribution of loans and advances by the method of guarantee
Item Closing Balance Beginning Balance
Credit loan 51,775,000.00 129,990,000.00
Guaranteed loan 361,125,417.00 45,007,601.00
Collateral loan 43,500,000.00 47,680,000.00
Including: mortgage loan 43,500,000.00 3,000,000.00
Pledge loan
0
0
44,680,000.00
Total loans and advances 456,400,417.00 222,677,601.00
Sub-total of Provisions for losses 19,212,767.0 14,964,349.76
Including: individual appropriation
Combined appropriation 19,212,767.00 14,964,349.76
Book value of loans and advances 437,187,650.00 207,713,251.24
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
③ Overdue loan
④ Change of provisions for loan losses
Item
Closing Balance Beginning Balance
1-90 days
(inclusive) overdue
90-360 days
(inclusive)
overdue
360 days to 3
years (inclusive) overdue
Over 3 year
overdue Total
1-90 days
(inclusive)
overdue
90-360 days
(inclusive) overdue
360 days to 3
years (inclusive) overdue
Over 3 year
overdue Total
Credit loan 12,000,000.00 13,585,000.00 6,290,000.00 31875,000.00 1,290,000.00 5,100,000.00 4,500,000.00 10,890,000.00
Guaranteed loan 5,000,000.00 4,210,000.00 4,500,000.00 3,715,417.00 17425417.00 8,800,000.00 560,000.00 7,947,601.00 17,307,601.00
Collateral loan 32,000,000.00 3,000,000.00 35,000,000.00 3,000,000.00 3,000,000.00
Including: mortgage
loan 32,000,000.00 3,000,000.00 35,000,000.00 3,000,000.00 3,000,000.00
Pledge loan 12,000,000.00 13,585,000.00 25585,000.00
Total 49,000,000.00 17,795,000.00 13,790,000.00 3,715,417.00 84,300,417.00 10,090,00.00 5,660,000.00 15,447,601.00 31,197,601.00
Item Beginning Balance Increase for Current
Year
Decrease for Current Year
Reversal Reselling Other transfer-
outs
Closing
Balance
Normal type 2,874,932.76 3,186,567.24 6,061,500.00
Focus type 24,000.00 974,850.00 998,850.00
Substandard 6,750,000.00 4,413,000.00 2,337,000.00
Doubtful 3,600,000.00 1,500,000.00 2,100,000.00
Loss type 1,715,417.00 6,000,000.00 7,715,417.00
Total 14,964,349.76 10,161,417.24 5,913,000.00 19,212,767.00
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
⑤ The details of top 10 loan balances are listed as follows
11. Long-term receivables
Monetary Unit: Yuan
Entity Name
Closing Balance
Book balance Nature or content Loan Time Proportion to total amount
(%)
No.1 100,000,000.00 Guaranteed loan 2017/09/14 21.91
No.2 60,000,000.00 Guaranteed loan 2017/07/20、2017/07/27、 2017/09/08 13.15
No.3 50,000,000.00 Guaranteed loan 2017/12/07 10.96
No.4 50,000,000.00 Guaranteed loan 2017/12/07 10.96
No.5 32,000,000 00 Mortgage loan 2017/08/25 7.01
No.6 25,000,000.00 Guaranteed loan 2017/12/15 5.48
No.7 17,000,000.00 Guaranteed loan 2017/07/27 3.72
No.8 15,000,000.00 Guaranteed loan 2017/11/28 3.29
No.9 15,000,000.00 Guaranteed loan 2017/03/10、2017/03/15、 2017/03/24 3.29
No.10 12,235,000 00 Credit loan 2017/01/04 2.68
Total 376,235,000 00 82.45
Closing Balance Beginning Balance Range of discount
rate Item Book balance Bad Debt Reserves
Book Value Book balance Bad Debt Reserves
Book Value
Financing lease 60,000,000.00 900,000.00 59,100,000.00 7%-8.9%
In which: Unrealized
financing income
Commodities sold on installment basis
Labor services provided on
installment basis
Geological environment
deposit 3,873,360.00 3,873,360.00 3,873,360.00 3,873,360.00
Total 63,873,360.00 900,000.00 62,973,360.00 3,873,360.00 3,873,360.00 --
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
12. Long-term equity investment
Monetary Unit: Yuan
The invested Beginning
Balance
Change of current increases and decreases
Closing
Balance
Appropriation
of
impairment
provision of
current period
Closing
balance of
impairment
provision
Additional
investment
Reduced
investment
Investment
profit and
loss
recognized
under the
equity law
Adjustment of
other
comprehensive
income
Other equity
changes
Declaration of
cash dividends
or profits
Other
1.Joint venture
2.Joint venture
Jiaozuo Weina
Technology Co.,
Ltd.
8,909,593.72 1,114,656.56 10,024,250.28
Jiaozuo Jiali
Thermoelectric Co.,
Ltd.
24,000,000.00 24,000,000.00
Panzhihua Panxi
Modern Logistics
Co., Ltd.
7,600,013.53 -269,281.16 7,330,732.37
Sub-total 40,509,607.25 24,000,000.00 845,375.40 17,354,982.65
Total 40,509,607.25 24,000,000.00 845,375.40 17,354,982.65
Notes:
1. "Reduced investment" means Jiaozuo Jiali Thermoelectric Co., Ltd., an associate invested by the Company, was deregistered in current year, with
-RMB2,374,789.02 return on investment recognized. The company has completed the business and tax cancellation procedures, but the balance in
the company's bank account has not yet been written off.
2. On December 14, 2017, the Company held the sixth meeting of the sixth board of directors, at which the Company proposes to sell in the open
market the 26.21% shares held by the Company in Panzhihua Panxi Modern Logistics Co., Ltd. at a transfer price of RMB1.17 per share of net
assets after the October 31, 2017 book value evaluation of Panzhihua Panxi Modern Logistics Co., Ltd.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
13 Investment real estate
Investment real estate using the model of cost measurement
Monetary Unit: Yuan
Item Structures and
buildings Total
I． Original Book Value
1. Beginning balance 18,788,323.23 18,788,323.2
3
2. Increase in the current period 5,758,187.17 5,758,187.17
（1）Outsourcing
（2）Inventory / Fixed Assets / Construction in Process
Transfer-in 5,758,187.17 5,758,187.17
（3）Increase from business combination
3. Decrease in the current period 4,626,091.09 4,626,091.09
（1）Disposal
（2）Other transfer-out
- Transfer-in of fixed assets 4,626,091.09 4,626,091.09
4. Closing balance 19,920,419.31 19,920,419.3
1
II． Accumulated depreciation and cumulative amortization
1. Starting balance 5,217,710.19 5,217,710.19
2. Increase in the current period 1,579,735.92 1,579,735.92
（1）Appropriation or amortization 534,944.58 534,944.58
-Transfer-in of fixed assets 1,044,791.34 1,044,791.34
3. Decrease in the current period 1,960,012.13 1,960,012.13
（1）Disposal
（2）Other transfer-out
- Transfer-in of fixed assets 1,960,012.13 1,960,012.13
4. Closing balance 4,837,433.98 4,837,433.98
III. Provision for depreciation
1. Starting balance
2. Increase in the current period
（1）Provision
3. Reduction during current period
（1）Disposal
（2）Other transfer-out
4.Ending balance
IV． Book Value
(1) Ending book value 15,082,985.33 15,082,985.3
3
(2) Beginning book value 13,570,613.04 13,570,613.0
4
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
14 Fixed assets
（1） Fixed assets
Monetary Unit: Yuan
Item Houses and
buildings
Machinery
equipment
Electronic and office
facilities
Transportation
equipment Total
I． Original Book Value
1. Beginning balance 3,093,869,294.47 5,375,131,774.55 824,228,439.06 151,288,366.50 9,444,517,874.5
8
2. Increase in the current period 303,416,876.86 272,923,916.75 33,480,144.25 26,236,312.99 636,057,250.85
（1）Purchase 48,407,306.24 52,428,796.13 18,935,553.38 25,515,211.90 145,286,867.65
（2）Transfer-in of construction in
progress 229,208,891.34 216,767,225.56 13,377,692.73 459,353,809.63
（3）Increase from business combination
- Transfer-in of investment real estate 4,626,091.09 4,626,091.09
- Other increases 21,174,588.19 3,727,895.06 1,166,898.14 721,101.09 26,790,482.48
3. Decrease in the current period 44,934,383.72 204,747,316.14 12,079,222.19 14,372,616.51 276,133,538.56
（1）Disposal or scrapping 8,159,872.49 144,799,606.31 9,552,837.03 14,372,616.51 176,884,932.34
Transfer-in of investment real estate 5,758,187.17 5,758,187.17
Transfer-in of construction in progress 46,996,094.50 8,648.73 - 47,004,743.23
Other 31,016,324.06 12,951,615.33 2,517,736.43 - 46,485,675.82
4. Closing balance 3,352,351,787.61 5,443,308,375.16 845,629,361.12 163,152,062.98 9,804,441,586.8
7
II． Cumulative depreciation
1.Starting balance 564,454,451.09 1,987,088,027.95 451,522,130.16 95,472,104.50 3,098,536,713.7
0
2. Increase in the current period 151,787,539.45 495,063,072.90 94,510,024.05 20,943,343.35 762,303,979.75
（1） Appropriation 131,556,869.01 467,127,511.64 93,324,022.86 17,154,835.79 709,163,239.30
Transfer-in of investment real estate 1,960,012.13 1,960,012.13
- Increase from business combination 15,010,439.40 24,855,923.51 3,097,206.47 42,963,569.38
- Other increases 3,260,218.91 3,079,637.75 1,186,001.19 691,301.09 8,217,158.94
3. Decrease in the current period 5,826,662.25 124,779,614.60 12,053,633.27 12,702,640.24 155,362,550.36
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
（1）Disposal or scrapping 4,802,846.82 108,782,868.70 8,992,843.60 12,702,640.24 135,281,199.36
Transfer-in of investment real estate 1,044,791.34 1,044,791.34
Transfer-in of construction in progress 10,939,899.78 7,055.58 10,946,955.36
Other -20,975.91 5,056,846.12 3,053,734.09 8,089,604.30
4. Closing balance 710,415,328.29 2,357,371,486.25 533,978,520.94 103,712,807.61 3,705,478,143.0
9
III． Impairment provision
1 Starting balance 21,846,500.29 54,518,473.42 4,115,906.05 80,480,879.76
2 Increase in the current period 6,934,179.89 6,934,179.89
（1）Appropriation 6,934,179.89 6,934,179.89
3 Decrease in the current period 4,661.08 17,296,430.87 90,112.23 17,391,204.18
（1） Disposal or scrapping 4,661.08 17,296,430.87 90,112.23 17,391,204.18
4 Closing balance 28,776,019.10 37,222,042.55 4,025,793.82 70,023,855.47
IV． Book Value
1 Ending book value 2,613,160,440.22 3,048,714,846.36 307,625,046.36 59,439,255.37 6,028,939,588.3
1
2 Beginning book value 2,507,568,343.09 3,333,525,273.18 368,590,402.85 55,816,262.00 6,265,500,281.1
2
2. Fixed assets pending the issuance of ownership certificate
Monetary Unit: Yuan
Item Book Value Reasons for failure of being issued the ownership certificate
Houses and buildings 621,809,271.00 Pending
Total 621,809,271.00
Notes:
(1) "Other increase" means the fixed assets increased due to acquisition of Ruierxin in the current period plus the corresponding depreciation.
(2) "Other decrease" means the original value of the fixed assets which is temporarily estimated to be accounted for in the current period is adjusted
according to the final accounts.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
(3) As the subsidiary, Xingtai Resources, was shut down for technical transformation, the Company hired external evaluation experts to evaluate the
buildings used by Xingtai Resources. The evaluation results showed that the buildings suffered a impairment of RMB6,934,179.89, so the Company
appropriated an impairment provision of RMB6,934,179.89 based on the evaluation report.
15 Construction in progress
（1） Construction in progress
Monetary Unit: Yuan
Item
Closing Balance Beginning Balance
Book
balance
Impairment
provision Book Value Book balance
Impairmen
t provision
Book
Value
Resources comprehensive utilization and environmental
thorough treatment project 14,581,027.03 14,581,027.03 1,021,182.40 1,021,182.40
Titanium gypsum yard project 16,848,738.20 16,848,738.20 10,534,753.51 10,534,753.51
Acid hydrolysis comprehensive transformation project 5,949,570.34 5,949,570.34
Alkaline wastewater separate treatment project 4,233,763.56 4,233,763.56
Waste acid membrane treatment & recovery project 1,467,337.37 1,467,337.37
Outsourced steam utilization project 74,009,919.58 74,009,919.58
Comprehensive sewage transformation project 4,184,499.37 4,184,499.37
Sulphur acid making and sulfur melting relocation and
transformation project 7,019,129.43 7,019,129.43
Thermoelectricity and water treatment power grid
transformation project 302,970.82 302,970.82
Titanium dioxide auto control transformation project 2,472,250.36 2,472,250.36
Titanium I 1#2# grinding machines transformation project 2,554,686.22 2,554,686.22
Titanium I ferrous separation system transformation
project 1,010,821.43 1,010,821.43
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Zirconium concentrating capacity upgrading project 3,024,231.87 3,024,231.87
Titanium II gas comprehensive transformation project 1,133,829.79 1,133,829.79
Titanium dioxide denitration and catalyzing phase II
wastewater treatment project 4,206,094.64 4,206,094.64
Titanium I raw material crushing system expansion
project 3,715,011.30 3,715,011.30
Titanium III 2# line code operating system 4,123.08 4,123.08
Titanium II calcination tail gas system comprehensive
transformation project 218,442.79 218,442.79
2*100MW cogeneration distributed energy project 505,999.50 505,999.50
Enterprise cloud service platform construction and
application project 2,154,491.24 2,154,491.24
Sulfuric acid method titanium dioxide waste acid
comprehensive utilization and process modification
project
12,094,886.84 12,094,886.84 1,397,402.69 1,397,402.69
Longxiang Mountain tourist resort project 39,632,582.63 39,632,582.63 11,244,305.37 11,244,305.37
Technical transformation of iron oxide pigments plant
with an annual output of 50,000 tons 36,556,653.04 36,556,653.04
Brick production line technical transformation project 41,871,961.72 12,243,230.01 29,628,731.71 36,555,355.21 36,555,355.21
200,000-ton chlorination process phase II project 122,645,434.28 122,645,434.28
Iron-rich material 1# titanium slag furnace technical
transformation project 34,727,210.52 34,727,210.52
Iron-rich material 2# titanium slag furnace technical
transformation project 45,006,148.54 45,006,148.54
Iron-titanium material phase II project 2,963,500.43 2,963,500.43
Chloride titanium dioxide Liquid chlorine system
rectification project 8,380,591.69 8,380,591.69
Prereduction tail gas treatment project 4,893,586.28 4,893,586.28
Workshop 1 continuous settlement transformation 12,439,863.91 12,439,863.91 11,581.78 11,581.78
Acid hydrolysis tail gas transformation, concentrated
water modification, titanium slag magnetic separation
transformation, high-density additional seed crystal,
double effect concentration, etc. of workshop 1
20,520,398.02 20,520,398.02 6,318,681.27 6,318,681.27
Sulphur-based sulphuric acid plant revamping 11,004,660.96 11,004,660.96 40,279.57 40,279.57
Industrial gypsum safety stacking and transportation
environment comprehensive treatment project 13,049,864.42 13,049,864.42 184,464.05 184,464.05
Acid distribution station revamping 10,944,368.44 10,944,368.44
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Modification of tail gas from acid production with pyrite
concentrate, relocation of steam engine, etc. 2,024,100.53 2,024,100.53
Technical transformation of various sections of rutile
titanium dioxide production line with an annual output of
100,000.00 tons
20,782,786.52 20,782,786.52 1,990,759.45 1,990,759.45
Pre-separation and classification transformation project 110,581.20 110,581.20 8,727,777.11 8,727,777.11
Road improvement engineering project for part of the
section between Yanhong Road in Xinjiu Industrial and
Mining Area and Lomon Mining Area
1,324,772.86 1,324,772.86 1,311,772.86 1,311,772.86
Ore abandoning project 4,158,763.06 4,158,763.06
Technical transformation of abandoned dry coarse-
particle slag yard at 2# gutter of Zhujiayakou 1,839,148.53 1,839,148.53
Technical transformation of titanium selection process in
Selection Plant 1 (including sporadic technical
transformation)
624,006.07 624,006.07
Niuwangtian secondary pump station 6,283,137.53 6,283,137.53
Technical transformation of 2# crushing system in
Selection Plant 2 353,033.16 353,033.16 33,353,847.71 33,353,847.71
3 million-ton iron concentrate conveying and backwater
project 55,536,961.38 55,536,961.38 54,126,349.21 54,126,349.21
Iron and titanium recycling from tailings 8,893,900.17 8,893,900.17
Other sporadic works 39,769,624.79 39,769,624.79 21,014,858.11 21,014,858.11
Gushan Lake Reservoir project 139,744,088.32 139,744,088.32
Total 616,970,921.74 12,243,230.01 604,727,691.73 418,636,002.32 - 418,636,002.32
（2） Changes in significant construction in progress in the current period
Monetary Unit: Yuan
Project Name Budget No. Beginning Balance Increase in the
current period
Transfer-in of
fixed assets in
the current period
Other
decreases in
the current period
Closing
Balance
Proportion of
total
project invest
ment
to the budget
(%)
Construction progress
(%)
Accumul
ative
amount of
interest
capitalized
The amount
of interest capitalized in
the current
period
Fund
source
Gushan Lake Reservoir project 225,640,000.00 139,744,088.32 36,025,782.96 175,769,871.2
8 77.90 100.00
11,969,8
52.69 3,997,837.51 Loan
Workshop 1 continuous settlement transformation
12,000,000.00 11,581.78 12,428,282.13 12,439,863.91
103.67 99.00 Self-raised
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Sulphur-based sulphuric acid
plant revamping 50,000,000.00 40,279.57 35,434,752.70 24,470,371.31 11,004,660.9
6 70.95 99.00 Self-raised
Industrial gypsum safety
stacking and transportation environment comprehensive
treatment project
12,000,000.00 184,464.05 12,865,400.37 13,049,864.42
108.75 99.00 Self-raised
Technical transformation of
various sections of rutile titanium dioxide production line
with an annual output of
100,000.00 tons
54,300,000.00 1,990,759.45 29,957,889.50 11,165,862.43 20,782,786.5
2 58.84 75.00 Self-raised
Pre-separation and classification transformation project
12,800,000.00 8,727,777.11 604,265.59 9,221,461.50 110,581.20 72.91 99.00 Self-raised
Road improvement engineering
project for part of the section
between Yanhong Road in Xinjiu Industrial and Mining
Area and Lomon Mining Area
5,420,500.00 1,311,772.86 13,000.00 1,324,772.86 24.44 50.00 Self-raised
Technical transformation of
abandoned dry coarse-particle slag yard at 2# gutter of
Zhujiayakou
19,140,000.00 1,839,148.53 1,839,148.53 9.61 5.00 Self-raised
Technical transformation of
titanium selection process in Selection Plant 1 (including
sporadic technical
transformation)
3,000,000.00 1,251,056.76 627,050.69 624,006.07 41.70 90.00 Self-raised
Niuwangtian secondary pump station
9,000,000.00 6,555,830.53 272,693.00 6,283,137.53 72.84 80.00 Self-raised
Technical transformation of 2#
crushing system in Selection
Plant 2
38,000,000.00 33,353,847.71 825,869.86 33,826,684.41 353,033.16 89.95 99.00 Self-raised
3 million-ton iron concentrate
conveying and backwater
project
124,500,000.00 54,126,349.21 1,410,612.17 55,536,961.3
8 44.61 50.00 Self-raised
Titanium gypsum yard project 16,000,000.00 10,534,753.51 6,313,984.69 16,848,738.2
0 105.30 80.00
753,856.
90 509,963.62 Loan
Acid hydrolysis comprehensive transformation project
15,000,000.00 5,949,570.34 5,372,069.31 11,321,639.65 75.48 100.00 401,244.
62 339,938.37 Loan
Alkaline wastewater separate
treatment project 6,350,000.00 4,233,763.56 2,219,670.51 6,453,434.07 101.63 100.00
99,267.4
7 43,794.29 Loan
Waste acid membrane treatment & recovery project
7,000,000.00 1,467,337.37 3,608,885.78 5,076,223.15 72.52 100.00 206,262.
62 198,812.82 Loan
Outsourced steam utilization
project 70,000,000.00 74,009,919.58 74,009,919.5
8 105.73 98.00
706,931.
02 706,931.02 Loan
Comprehensive sewage
transformation project 10,500,000.00 4,184,499.37 4,184,499.37 39.85 95.00
45,842.3
6 45,842.36 Loan
Sulphur acid making and sulfur melting relocation and
transformation project
7,000,000.00 7,019,129.43 7,019,129.43 100.27 98.00 67,899.3
7 67,899.37 Loan
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Titanium dioxide auto control
transformation project 2,200,000.00 2,472,250.36 2,472,250.36 11.38 100.00
37,004.2
1 37,004.21 Loan
Titanium I 1#2# grinding
machines transformation project 4,200,000.00 2,554,686.22 2,554,686.22 60.83 70.00
43,037.9
8 43,037.98 Loan
Titanium II gas comprehensive transformation project
1,200,000.00 1,133,829.79 1,133,829.79 94.49 70.00 3,408.26 3,408.26 Loan
Titanium dioxide denitration and
catalyzing phase II wastewater
treatment project
5,000,000.00 4,206,094.64 4,206,094.64 84.12 95.00 40,029.1
0 40,029.10 Loan
Titanium I raw material crushing system expansion project
18,740,000.00 3,715,011.30 3,715,011.30 19.82 30.00 38,221.9
2 38,221.92 Loan
Enterprise cloud service
platform construction and
application project
8,000,000.00 2,154,491.24 2,154,491.24 26.93 30.00 Self-raised
Longxiang Mountain tourist resort project
80,000,000.00 11,244,305.37 29,476,833.63 1,088,556.37 39,632,582.6
3 50.90 60.00
485,145.84
485,145.84 Loan
Sulfuric acid method titanium
dioxide waste acid comprehensive utilization and
process modification project
32,000,000.00 1,397,402.69 10,697,484.15 12,094,886.8
4 37.80 72.00 Self-raised
200,000-ton chlorination
process phase II project
1,811,590,000.0
0
122,645,434.2
8
122,645,434.
28 6.77 30.00 Self-raised
Titanium-rich material 2# titanium slag furnace technical
transformation project
56,500,000.00 45,006,148.54 13,041,891.88 58,048,040.42 102.74 100.00 Self-raised
Iron-titanium material phase II
project 43,300,000.00 2,963,500.43 2,963,500.43 6.84 10.00 Self-raised
Prereduction tail gas treatment project
8,000,000.00 4,893,586.28 4,893,586.28 61.17 80.00 Self-raised
Brick production line technical
transformation project 65,958,000.00 36,555,355.21 5,316,606.51
41,871,961.7
2 63.48 90.00 Self-raised
Technical transformation of iron
oxide pigments plant with an annual output of 50,000 tons
68,440,000.00 36,556,653.04 36,556,653.0
4 53.41 90.00
74,058.3
7 74,058.37 Loan
Total 2,902,778,500.0
0 355,897,556.65
483,768,403.5
2
337,069,195.2
8
502,306,071.
89
14,972,0
62.73 6,631,925.04
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
3. Appropriation of provision for impairment of construction in progress in the
current period
Monetary Unit: Yuan
Item Appropriation for current period Reasons for appropriation
Brick production line technical
transformation project 12,243,230.01
Shutdown for technical
transformation Total 12,243,230.01
Note: as the subsidiary, Xingtai Resource, was shut down for technical transformation, the
Company converted the production line used by Xingtai Resource into the construction in
progress in the current period, and hired external evaluation experts to evaluate the production
line. The evaluation results showed that the production line suffered an impairment of
RMB12,243,230.01. The Company appropriated an impairment provision of RMB12,243,230.01 for
the production line according to the evaluation report.
(XVI) Engineering goods and materials
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Dedicated materials 44,605,012.73 38,568,773.28
Dedicated equipment 16341261.60 16,840,380.06
Tools and instruments 3,163,833.36 2,969,791.01
Total 64,110,107.69 58,378,944.35
Note: the Company checked the dedicated equipment purchased by the production line and found that the equipment was not fully used and showed a sign of impairment, so the Company appropriated an impairment provision of RMB872,435.66 for the production line in the current period.
(XVII) Cleanup of fixed assets
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Machinery equipment 1,551,800.00
Total 1,551,800.00
(XVIII) Conditions on intangible assets
Monetary Unit: Yuan
Item Land use right
Patent and patent
technology,
trademark
Software Mining right Total
1. Original book
value
(1) Beginning
balance 463,054,855.72 209,502,807.40 2,644,716.85 847,086,395.84 1,522,288,775.81
(2) Increase in the
current period 14,044,000.05 14,044,000.05
(1) Purchase 14,044,000.05 14,044,000.05
(2) In-house R&D
(3) Increase
from business
combination
(3) Decrease in the
current period
- Disposal
(4) Closing balance 477,098,855.77 209,502,807.40 2,644,716.85 847,086,395.84 1,536,332,775.86
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
2. Accumulated
amortization
(1) Beginning
balance 44,414,484.66 21,188,501.10 1,169,641.61 35,497,944.78 102,270,572.15
(2) Increase in the
current period 17,617,082.64 23,631,035.98 261,144.96 79,624,909.02 121,134,172.60
- Appropriation 7,522,686.08 3,090,527.16 261,144.96 2,277,515.03 13,151,873.23
- Increase from
business
combination
10,094,396.56 20,540,508.82 77,347,393.99 107,982,299.37
(3) Decrease in the
current period
- Disposal
(4) Closing balance 62,031,567.30 44,819,537.08 1,430,786.57 115,122,853.80 223,404,744.75
3. Impairment
provision
(1) Beginning
balance
(2) Increase in the
current period
- Appropriation
(3) Decrease in the
current period
- Disposal
(4) Closing balance
4. Book value
(1) Ending book
value 415,067,288.47 164,683,270.32 1,213,930.28 731,963,542.04 1,312,928,031.11
(2) Beginning book
value 418,640,371.06 188,314,306.30 1,475,075.24 811,588,451.06 1,420,018,203.66
As of the end of the current period, the intangible assets derived from in-house research and development within the Company
account for 1.43% of the balance of the intangible assets of the Company. (XIX) Goodwill
1. Original book value of goodwill
Monetary Unit: Yuan
Name of the invested or
items contributing to
goodwill
Beginning Balance
Increase in the current period Decrease in the
current period Closing Balance
From business
combination Other Disposal Other
Jiaozuo Rongjia
Scandium Technology
Co., Ltd.
25,413.86 25,413.86
Sichuan Lomon
Titanium Industry Co.,
Ltd.
4,881,876,565.50 4,881,876,565.50
Panzhihua Ruierxin
Industry and Trade Co.,
Ltd.
132,171,117.34 132,171,117.34
Total 4,881,901,979.36 132,171,117.34 5,014,073,096.70
2. Provision for impairment of goodwill
Monetary Unit: Yuan
Name of the invested or items
contributing to goodwill
Beginning
Balance
Increase in the current
period
Decrease in the
current period Closing
Balance Appropriation Other Disposal Other
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Panzhihua Ruierxin Industry
and Trade Co., Ltd. 28,184,335.27 28,184,335.27
Total 28,184,335.27 28,184,335.27
Please state the good will impairment test process and parameters, as well as the method of
recognition of losses from good will impairment:
On December 31, 2017, the Company hired external evaluation experts to evaluate the
recoverable amount of the related asset group or asset group portfolio containing the goodwill
of Lomon Titanium and Ruierxin, using the expected future cash flow discount method, and
found that the recoverable amount of the related asset group of Ruierxin was less than its book
value. The Company appropriated an goodwill impairment provision of RMB28,184,335.27
according to the evaluation results.
(XX) Long-term deferred expenses
Monetary Unit: Yuan
Item Beginning Balance Increase in the
current period
Amount
amortized in the
current period
Other decreases Closing
Balance
Expenditure for
improvement of fixed
assets
1,717,603.59 721,815.60 995,787.99
The costs of leasing
land for mining 22,946,284.97 1,581,136.00 3,502,146.04 21,025,274.93
Niuwangtian tailings
pond rental 594,119.86 5,710,190.00 1,863,050.98 4,441,258.88
Total 25,258,008.42 7,291,326.00 6,087,012.62 26,462,321.80
(XXI) Deferred income tax assets and liabilities
(1) Deferred income tax assets not deducted
Monetary Unit: Yuan
Item
Closing Balance Beginning Balance
Deductible
temporary
differences
Deferred income
tax assets
Deductible
temporary
differences
Deferred income
tax assets
Assets depreciation reserves 158,323,679.18 28,548,545.45 95,892,497.38 18,397,730.72
Unrealized profits from internal
transactions 275,460,057.56 45,008,789.61 122,179,280.16 20,621,894.62
Deductible losses 442,564.30 110,641.08
Equity incentives 182,182,709.33 27,327,406.40 28,393,613.70 4,259,042.06
Provision for fixed assets
impairment 64,101,707.26 9,615,256.09 80,480,879.76 12,072,131.96
Deferred income 57,022,943.80 8,553,441.57 62,849,633.30 9,427,444.99
Payroll drawn but unpaid 54,225,515.26 8,259,382.78 35,917,014.84 5,463,079.69
Provision for expenses 43,527,727.49 6,805,537.00 5,951,568.00 892,735.20
Fixed assets depreciation 4,749,119.67 712,367.95 80,499,939.93 12,207,691.85
Costs reimbursed in prior years 96,851.13 24,212.78
Total 840,132,874.98 134,965,580.71 512,164,427.07 83,341,751.09
(2) Deferred income tax liabilities not deducted
Monetary Unit: Yuan
Item
Closing Balance Beginning Balance
Taxable temporary
differences
Deferred income
tax liabilities
Taxable temporary
differences
Deferred income
tax liabilities
Asset evaluation
increment from business 1,104,945,684.53 165,741,852.68 1,256,785,254.95 188,517,788.24
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
combination not under
common control
Change in fair value of
available-for-sale financial
assets
Fixed assets depreciation 159,531,103.36 23,929,665.50 164,306,404.93 24,645,960.74
Other 316,385.95 63,277.19
Total 1,264,793,173.84 189,734,795.37 1,421,091,659.88 213,163,748.98
(3) Deferred income tax assets or liabilities presented by net amount after offset
Monetary Unit: Yuan
Item
Ending Offset between Deferred Income Tax
Assets and Liabilities
Ending Balance of Deferred Income Tax
Assets or Liabilities
after Offset
Starting Offset between
Deferred Income Tax Assets and Liabilities
Starting Balance of Deferred Income Tax
Assets or Liabilities
after Offset
Deferred income tax assets 134,965,580.71 83,341,751.09
Deferred income tax liabilities
189,734,795.37 213,163,748.98
(4) Schedule of unrecognized deferred income tax assets
Monetary Unit: Yuan
Item Ending balance Starting balance
Deductible temporary difference 11,860,712.31
Deductible losses 42,885,366.96 30,087,396.50
Total 54,746,079.27 30,087,396.50
(5) The deductible loss of unrealized deferred income tax assets will expire in the
year mentioned below:
Monetary Unit: Yuan
Year Closing Balance Beginning Balance Remark
2018 76,580.86 76,580.86
2019 711,045.12 711,045.12
2020 6,668,061.16 6,668,061.16
2021 22,631,709.36 22,631,709.36
2022 12,797,970.46
Total 42,885,366.96 30,087,396.50
(XXII) Other non-current assets
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Advance for projects 67,742,677.95 31,494,377.77
Advance for equipment 6,426,388.91 11,770,798.33
Advance for land 3,000,000.00
Total 74,169,066.86 46,265,176.10
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
(XXIII) Short-term borrowing
Item Closing Balance Beginning Balance
Pledge borrowings
Mortgaged borrowing 466,094,792.00 974,040,000.00
Guaranteed borrowing 362,766,922.00 526,482,968.00
Borrowing on credit 2,611,941,200.00 427,099,609.08
Total 3,440,802,914.00 1,927,622,577.08
Mortgaged borrowing:
1. The subsidiary, Lomon Titanium, borrowed RMB466,094,792.00 from Agricultural Bank
of China Co., Ltd. Mianzhu Branch, which borrowing was mortgaged with the mining right
of Lomon Mineral Products, and guaranteed by the parent company from March 31, 2017
to December 9, 2020.
Guaranteed borrowing:
1. Lomon Titanium borrowed RMB200 million from Export-Import Bank of China Sichuan
Branch, which borrowing was guaranteed by the parent company from November 22, 2016
to November 21, 2018.
2. Billions HK borrowed RMB97,424,922.00 from Export-Import Bank of China Sichuan
Branch, which borrowing was guaranteed by the parent company from May 23, 2017 to
May 23, 2018.
3. Billions Europe borrowed RMB65,342,000.00 from China Construction Bank (Asia)
Corporation Limited, which borrowing was guaranteed by the parent company from March
07, 2017 to March 07, 2018.
(XXIV) Deposits from clients and interbank
Item Closing Balance Beginning Balance
Deposit taking of interbank 102,000,000.00
Deposits from other financial institutions
Total 102,000,000.00
Notes: 1. The subsidiary, Yili Small Loan, borrowed RMB80 million from Bank of China Travel Service
CO., Ltd., Jiaozuo Zhongzhan Sub-branch, which borrowing was guaranteed by the parent company,
with RMB50 million guaranteed from April 10, 2017 to April 9, 2018, and RMB30 million from October
9, 2017 to October 8, 2018.
2. The subsidiary, Yili Small Loan, borrowed RMB22 million from Henan Xiuwu Rural Commercial
Bank, which borrowing was guaranteed by the parent company from September 05, 2017 to September
05, 2018.
(XXV) Notes payable
Monetary Unit: Yuan
Type Closing Balance Beginning Balance
Trade acceptance draft 381,253,502.48 264,913,906.49
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Bank acceptance draft 39,700,000.00
Total 420,953,502.48 264,913,906.49
As of the end of the current period, the total amount of due and unpaid notes payable is RMB 0.00.
(XXVI) Accounts payable
1. Accounts payable
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Less than 1 year 930,233,471.71 828,621,702.50
1-2 years 30,559,301.66 43,265,723.15
2-3 years 13,460,157.06 33,238,825.82
More than 3 years 11,397,938.62 11,026,301.03
Total 985,650,869.05 916,152,552.50
2. Significant payables with an account age of more than one year
Monetary Unit: Yuan
Item Closing Balance Reasons for not being paid or
carried over
Xi’an Electric Furnace Institute Co., Ltd. 5,720,999.74 Contract is not completed
Anshan Taiyuan Industry Co., Ltd. 4,453,863.64 Contract is not completed
Chongqing Pump Industry Co., Ltd. 1,400,000.00 Quality assurance deposit
People Electric Appliance Group Co., Ltd. 1,224,277.41 Contract is not completed
Zibo City Luzhong Refractory Co., Ltd. 1,178,297.39 Contract is not completed
Total 13,977,438.18
(XXVII) Advance receipts
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Less than 1 year 125,913,884.84 235,862,579.04
1-2 years 468,759.96 1,302,975.28
2-3 years 746,850.73 536,083.87
More than 3 years 918,409.43 1,067,987.62
Total 128,047,904.96 238,769,625.81
(XXVIII) Payroll payable
1. Payroll payable
Monetary Unit: Yuan
Item Beginning Balance Increase in the
current period
Decrease in the
current period Closing Balance
I. Short-term compensation 171,431,730.20 733,797,155.06 556,347,159.01 348,881,726.25
II. Retirement benefits - set
up escrow plan 1,531,804.52 50,744,335.01 50,817,759.86 1,458,379.67
III. Dismissal benefits 674,764.88 674,764.88
IV. Other benefits to
become due and payable
within one year
Total 172,963,534.72 785,216,254.95 607,839,683.75 350,340,105.92
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
2. Short-term compensation
Monetary Unit: Yuan
Item Beginning Balance Increase in the
current period
Decrease in the
current period Closing Balance
(1) Wages, bonus,
allowances and subsidies 120,650,982.39 662,404,529.50 489,980,689.14 293,074,822.75
(2) Staff welfare expenses 11,774,361.93 11,469,196.93 305,165.00
(3) Social insurance
premium 1,095,144.58 24,240,859.16 24,597,201-18 738,802.56
Including: medical
insurance premium 375,020.83 18,139,589.68 18,245,910.10 268,700.41
Work-related injury
insurance premium 670,812.33 4,732,549.52 4,980,195.27 423,166.58
Birth insurance premium 49,311.42 1,368,719.96 1,371,095.81 46,935.57
(4) Housing provident fund 29,839,105.23 11,606,784.32 20,210,382.60 21,235,506.95
(5) Labor union dues and
employee education fund 19,846,498.00 23,709,148.15 10,028,217.16 33,527,428.99
(6) Short-term paid absence
(7) Short-term profit
sharing plan
Other 61,472.00 61,472.00
Total 171,431,730.20 733,797,155.06 556,347,159.01 348,881,726.25
3. Set up escrow plan
Monetary Unit: Yuan
Item Beginning Balance Increase in the
current period
Decrease in the
current period Closing Balance
1. Basic endowment
insurance premium 1,218,551.85 49,357,665.51 49,428,727.62 1,147,489.74
2. Unemployment
insurance premium 313,252.67 1,386,669.50 1,389,032.24 310,889.93
3. Payment of enterprise
annuity
Total 1,531,804.52 50,744,335.01 50,817,759.86 1,458,379.67
(XXIX) Taxes payable
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
VAT 86,000,408.54 42,756,259.87
Consumption tax
Enterprise income tax 119,278,764.50 49,326,378.02
Individual income tax 18,757,794.50 530,148.32
Urban maintenance and construction tax 2,821,047.87 1,336,681.25
House property tax 2,874,123.45 2,161,766.98
Land use tax 2,959,666.66 3,255,668.21
Education surcharge 2,172,589.20 1,644,685.72
Local education surcharge 1,335,653.46 1,017,452.79
Resource tax 3,928,717.56 2,453,962.17
Other 6,495.10 233,846.85
Total 240,135,260.84 104,716,850.18
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
(XXX) Interest payable
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Interest on long-term loan with interest paid
by installments and principal paid upon
expiration
1,863,738.56 459,360.08
Interests from corporate bonds
Accrual interest on short-term borrowing 1,132,321.82 699,427.46
Preferred stock / permanent bond interest
classified as financial liabilities
Interest payable to shareholders 264,896.50 264,896.50
Others
Total 3,260,956.88 1,423,684.04
(XXXI) Dividend payable
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Dividends on ordinary shares 17,522,756.71 12,601,680.00
Preferred stock / permanent bond interest
classified as financial liabilities
Others
Total 17,522,756.71 12,601,680.00
Other statements, including the reasons for non-payment if there are significant stock
dividends payable which have been overdue for more than 1 year: the above dividend payable is mainly restricted stock dividends which have not been unlocked in the restricted stock incentive plan. (XXXII) Other payables
1. Other payables listed by nature
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Deposit and margin 56,943,941.07 114,517,842.51
Intercourse funds 37,403,505.92 32,663,419.67
Other 81,863,997.85 100,403,105.83
Total 176,211,444.84 247,584,368.01
2. Other significant payables with an account age of more than one year
Monetary Unit: Yuan
Item Closing Balance Reasons for not being paid or
carried over
Restricted stock repurchase obligation 35,780,585.62 Not unlocked
Hangzhou Yichang Chemical Pigment 1,000,000.00 Deposit
Beijing Haolun International Trade Co., Ltd. 1,000,000.00 Deposit
Zhejiang Taiyuan Industry and Trade Co.,
Ltd. 1,000,000.00 Deposit
Guangzhou Huangpu Titai Chemistry Light
Industry Co., Ltd. 1,000,000.00 Deposit
Foshan Langyun Chemical Co., Ltd. 1,000,000.00 Deposit
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Total 40,780,585.62
(XXXIII) Non-current liabilities due within one year
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Long-term borrowing due within a year 379,000,000.00 30,000,000.00
Bonds payable to become due and payable
within one year
Long-term payables to become due and
payable within one year
Total 379,000,000.00 30,000,000.00
Other statements：
1. The parent company borrowed RMB300 million from China Construction Bank
Corporation, Jiaozuo Branch as credit loan with a loan period from December 29, 2015
to June 28, 2020, of which RMB35 million should be repaid on June 28, 2018 and RMB35
million on December 28, 2018.
2. The parent company borrowed RMB130 million from Zhongyuan Bank Co., Ltd.,
Jiaozuo Branch as credit loan with a loan period from January 25, 2016 to December
31, 2018, of which RMB1 million should be repaid on June 21, 2018 and RMB41
million on December 31, 2018.
3. The parent company borrowed RMB50 million from Zhongyuan Bank Co., Ltd.,
Jiaozuo Branch as credit loan with a loan period from March 14, 2016 to December 31,
2018, of which RMB1 million should be repaid on June 21, 2018 and RMB15 million
on December 31, 2018.
4. The parent company borrowed RMB100 million from Zhongyuan Bank Co., Ltd.,
Jiaozuo Branch as credit loan with a loan period from May 06, 2016 to December 31,
2018, of which RMB1 million should be repaid on June 21, 2018 and RMB31 million
on December 31, 2018.
5. The parent company borrowed RMB40 million from Bank of China Travel Service CO.,
Ltd., Jiaozuo Zhongzhan Sub-branch as credit loan with a loan period from March 30, 2016 to
March 29, 2019, of which RMB2 million should be repaid on March 20, 2018 and RMB2
million on September 20, 2018.
6. The subsidiary, Billions Reservoir, borrowed RMB50 million from Bank of China Travel
Service CO., Ltd., Jiaozuo Zhongzhan Sub-branch as guaranteed loan with a loan period from
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
November 18, 2014 to November 16, 2019, of which RMB7.5 million should be repaid on May
17, 2018 and RMB7.5 million on November 17, 2018.
7. The subsidiary, Lomon Titanium, borrowed RMB200 million from Export-Import Bank of
China, Sichuan Branch as guaranteed loan with a loan period from November 22, 2016 to May
21, 2018, of which RMB100 million should be repaid on May 21, 2018.
8. The subsidiary, Lomon Titanium, borrowed RMB100 million from Export-Import Bank of
China, Sichuan Branch as guaranteed loan with a loan period from November 22, 2016 to April
21, 2018, of which RMB100 million should be repaid on April 21, 2018.
In conclusion, the Company's long-term borrowing due within a year is RMB379,000,000.00. (XXXIV) Long-term borrowing
1. Classification of long-term borrowing
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Pledge borrowings
Mortgaged borrowing 200,000,000.00
Guaranteed borrowing 85,419,851.07 319,480,306.17
Borrowing on credit 380,000,000.00 413,000,000.00
Total 665,419,851.07 732,480,306.17
Mortgaged borrowing:
1. The parent company borrowed RMB200 million from Export-Import Bank of
China, Henan Branch, which borrowing was mortgaged by the subsidiary, Billions New
Materials, with its machine and equipment, with the loan period lasting from June 27,
2017 to June 26, 2019.
Guaranteed borrowing:
1. The subsidiary, Billions Reservoir, borrowed RMB20 million from Bank of
China Travel Service CO., Ltd., Jiaozuo Zhongzhan Sub-branch, which borrowing was
guaranteed by the parent company, with a loan period from November 18, 2014 to
November 16, 2019.
2. The subsidiary, Billions HK, borrowed RMB65,419,851.07 from China
Construction Bank, London Branch, which borrowing was guaranteed by the parent
company, with a loan period from Thursday, December 22, 2016 to Sunday, December
22, 2019. (XXXV) Long-term payables
(1) Long-term payables presented by nature of money
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
Special fund 200,000,000.00 199,578,453.33
Total 200,000,000.00 199,578,453.33
Other statements: the special fund is invested by CDB Key Construction Fund Co., Ltd.
in the subsidiary, Henan Billions New Materials Co., Ltd., which is used for the
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Company's chlorination process chloride production line with an annual output of
200,000.00 tons.
(XXXVI) Estimated liabilities
Monetary Unit: Yuan
Item Closing Balance Beginning Balance Cause of formation
External guarantee
Pending actions
Product quality guarantee
Obligations of reorganization
Onerous contracts to be executed
Other 3,891,544.52
Total 3,891,544.52
Other statements, including statements regarding major assumptions and estimates for
material anticipated liabilities:
Including indemnity for work-related injuries, which equals RMB 450,000,000, and deposit
for geological environment protection, which equals RMB 3,441,544.52 and is derived from
adjustment of “Dedicated Reserves – Environment Restoration & Governance Costs”. (XXXVII) Deferred income
Monetary Unit: Yuan
Item Beginning Balance Increase in the
current period
Decrease in the
current period
Closing
Balance
Cause of
formation
Government subsidies 244,794,668.10 7,250,000.00 42,869,265.31 209,175,402.79 Grants
Total 244,794,668.10 7,250,000.00 42,869,265.31 209,175,402.79
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Projects involving government subsidies:
Monetary Unit: Yuan
Liabilities Beginning
Balance
Subsidies Increased
in the current period
Amount included into
non-business
income in the
current period
Amount included into
other revenue in the
current period
Amount used
to offset costs
in the current
period
Other Changes Closing Balance Related to Assets or
Related to Earnings
Land leveling fees allocated by Zhongzhan District
Finance Bureau for titanium-rich material project 2,714,074.07
757,415.88 1,956,658.19 Related to assets
2013 Subsidies for clean production demonstration
project 8,391,666.69
1,899,999.96 6,491,666.73 Related to assets
Subsidies for calcining kiln tail gas thorough
treatment project 1,500,000.00
150,000.00 1,350,000.00 Related to assets
Technical transformation fund allocated by Mianzhu
Municipal Finance Bureau for "4 to 8" project 70,333.01
70,333.01 Related to assets
Subsidy funds allocated by Deyang Municipal
Commission of Economy and Informatization for "4
to 8" technical transformation project
91,666.99
91,666.99
Related to assets
Funds allocated by Sichuan Provincial Department of
Finance and Sichuan Provincial Commission of
Economy and Informatization for "8-14"
industrialization research and development of new
dedicated titanium dioxide products for laminated
paper
400,000.16
99,999.96
300,000.20 Related to assets
"8 to 14" technical transformation funds allocated by
Sichuan Provincial Department of Finance and
Provincial Commission of Economy and
Informatization for rutile titanium dioxide
1,200,000.00
300,000.00
900,000.00 Related to assets
Central post-disaster reconstruction subsidy funds
allocated by Mianzhu Municipal Development and Reform Commission for "8 to 14" technical
transformation of rutile titanium dioxide
11,400,000.00
2,850,000.00
8,550,000.00 Related to assets
Funds allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Commission of
Economy and Informatization for "8-14"
industrialization research and development of new
dedicated titanium dioxide products for laminated
paper
199,999.84
50,000.04
149,999.80 Related to assets
Service industry development guiding funds ["14 to
20" high-grade titanium dioxide project with an
annual output of 60,000.00 tons]
620,000.00
120,000.00
500,000.00 Related to assets
Industrial technology research and development
funds (relying on ink-specific titanium dioxide
production line for "8 to 14" project)
319,999.84
80,000.04
239,999.80 Related to assets
Special funds for new industry development (clean
production lab) 480,000.00
120,000.00 360,000.00 Related to assets
Funds for technical transformation of "4 to 8"
titanium dioxide project 499,999.84
499,999.84 Related to assets
Investment funds allocated by Sichuan Provincial
Development and Reform Commission and
Provincial Commission of Economy and
1,920,000.00
480,000.00
1,440,000.00 Related to assets
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Informatization within the key industries
revitalization and central technological
transformation budget
Subsidy funds allocated by the Management
Committee of Mianzhu Economic Development
Zone for the natural gas and water intake project
1,999,999.84
500,000.04
1,499,999.80 Related to assets
Project subsidy funds allocated by the Bureau of
Economy and Informatization for "14 to 20" rutile
titanium dioxide technical transformation project
2,066,666.83
399,999.96
1,666,666.87 Related to assets
Post-disaster reconstruction loan discount for
titanium dioxide "8 to 14" technical transformation
project
6,209,124.84
1,241,825.04
4,967,299.80 Related to assets
2011 third technology support plan project funds
allocated by Intellectual Property Office for "14 to
20" high-grade special titanium dioxide project with an annual output of 60,000.00 tons
155,000.00
30,000.00
125,000.00 Related to assets
Special subsidies for the state and local joint engineering laboratory for titanium dioxide clean
production technology and process
1,049,999.81
200,000.04
849,999.77 Related to assets
Industrialization of new process of titanium dioxide
clean production with "sulfur-phosphorus-titanium"
cogeneration method
944,754.79
157,459.08
787,295.71 Related to assets
Special subsidies allocated by Mianzhu Municipal
Finance Bureau for the state and local joint
engineering laboratory for titanium dioxide clean
production technology and process
2,200,000.00
18,333.33
2,181,666.67 Related to assets
"Sulfur-phosphorus-titanium" recycling economy
and low-carbon production technology development and transformation technology project
1,937,500.00
249,999.96
1,687,500.04 Related to assets
Funds for the technology development and
industrialization innovation development of sulfuric acid titanium dioxide acidolysis slag
1,320,000.00
159,999.96
1,160,000.04 Related to assets
Subsidies allocated by the Finance Bureau for the technical transformation project for the quality
optimization of titanium liquid in the sulfur-
phosphorus-titanium industry chain
2,356,666.67
350,000.04
2,006,666.63 Related to assets
Central infrastructure investment funds allocated by
Mianzhu Municipal Finance Bureau for 2013
independent innovation and high-tech
industrialization project
2,766,666.67
399,999.96
2,366,666.71 Related to assets
Funds allocated by Mianzhu Municipal Development
and Reform Commission for the development of
dedicated titanium dioxide for electrophoretic paint
for luxury automobiles
2,000,000.00
150,000.03
1,849,999.97 Related to assets
Infrastructure award for 100,000-ton titanium dioxide
project 22,483,494.00
3,038,310.00 19,445,184.00 Related to assets
Phase II project infrastructure supporting funds 6,873,000.00 1,044,000.00
5,829,000.00 Related to assets
Enterprise technical transformation funds allocated
by Nanzhang County Finance Bureau 5,075,862.07
761,379.31 4,314,482.76 Related to assets
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Central subsidy funds for the mineral resources
protection project 4,550,000.00
1,300,000.00 3,250,000.00 Related to assets
Technical transformation funds 433,333.45 100,000.00
333,333.45 Related to assets
Key technology transformation funds 1,080,000.00 160,000.00
920,000.00 Related to assets
2011 central subsidy funds for the comprehensive
utilization demonstration base for vanadium titanium
magnetite resources
15,615,000.00
3,123,000.00
12,492,000.00 Related to assets
2012 central subsidy funds for the comprehensive
utilization demonstration base for vanadium titanium
magnetite resources
26,000,000.00
4,000,000.00
22,000,000.00 Related to assets
2013 central subsidy funds for the comprehensive
utilization demonstration base for vanadium titanium
magnetite resources
6,559,000.00
937,000.00
5,622,000.00 Related to assets
2014 central subsidy funds for the comprehensive
utilization demonstration base for vanadium titanium
magnetite resources
6,324,900.80
790,612.60
5,534,288.20 Related to assets
2015 central subsidy funds for the comprehensive
utilization demonstration base for vanadium titanium
magnetite resources
2,569,320.00
285,480.00
2,283,840.00 Related to assets
Interest subsidy funds allocated by Sichuan
Provincial Department of Finance and Provincial
Commission of Economy and Informatization for provincial technical transformation loans
525,000.00
100,000.00
425,000.00 Related to assets
Funds allocated by Deyang Municipal Development and Reform Commission for independent innovation
capability and high-tech industrialization
development projects
1,050,000.00
300,000.00
750,000.00 Related to assets
Special funds allocated by National Development and
Reform Commission for major industrial technology
development
1,750,000.00
500,000.00
1,250,000.00 Related to assets
Public rental housing subsidy funds allocated by
Yanbian County Finance Bureau 2,635,392.00
175,692.80 2,459,699.20 Related to assets
Infrastructure construction subsidies allocated by
Yanbian County Finance Bureau 2,225,000.00
150,000.00 2,075,000.00 Related to assets
Industrial technology research and development
funds allocated by Sichuan Provincial Department of
Finance and Provincial Commission of Economy and
Informatization
210,000.00
40,000.00
170,000.00 Related to assets
Provincial special funds allocated by Sichuan
Provincial Department of Finance and Provincial Commission of Economy and Informatization for
technical transformation
630,000.00
120,000.00
510,000.00 Related to assets
Special funds allocated by Sichuan Provincial Department of Finance and Provincial Commission
of Economy and Informatization for the
industrialization of industrial technology
achievements
500,000.00
100,000.00
400,000.00 Related to assets
2011 central subsidy funds allocated by Sichuan
Provincial Department of Finance and Provincial 21,262,500.00
4,050,000.00 17,212,500.00 Related to assets
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Department of Land and Resources for the comprehensive utilization demonstration base for
vanadium titanium magnetite resources
2011 technology plan project funds allocated by Sichuan Provincial Department of Finance and
Provincial Department of Science and Technology
650,000.00
130,000.00
520,000.00 Related to assets
Funds for technology support project of Sichuan Development (Holdings) Co., Ltd.
700,000.00 140,000.00
560,000.00 Related to assets
Provincial industrial technology research and development funds allocated by Sichuan Provincial
Department of Finance and Provincial Commission
of Economy and Informatization
300,000.00
50,000.00
250,000.00 Related to assets
2012 central subsidy funds allocated by Sichuan
Provincial Department of Finance and Provincial
Department of Land and Resources for the
comprehensive utilization demonstration base for
vanadium titanium magnetite resources
33,912,000.00
5,652,000.00
28,260,000.00 Related to assets
2013 central finance subsidy funds allocated by
Sichuan Provincial Department of Land and
Resources for Panzhihua vanadium titanium
magnetite resources conservation and comprehensive
utilization demonstration base
11,901,750.00
1,700,250.00
10,201,500.00 Related to assets
2013 special new energy and energy-saving and
environmental protection funds allocated by Sichuan Provincial Development and Reform Commission for
the development of strategic emerging industries
2,076,666.69
280,000.00
1,796,666.69 Related to assets
2010 incentive funds for central mineral resources conservation and comprehensive utilization
demonstration projects
3,250,000.00
500,000.00
2,750,000.00 Related to assets
2014 central subsidy funds for the comprehensive
utilization demonstration base for vanadium titanium
magnetite resources
8,337,899.20
1,042,237.44
7,295,661.76 Related to assets
2015 central subsidy funds for the comprehensive
utilization demonstration base for vanadium titanium
magnetite resources
4,700,430.00
522,270.00
4,178,160.00 Related to assets
2016 Yanbian County outstanding taxpaying
enterprise award by Yanbian County Bureau of
Economy and Information
50,000.00
50,000.00
Related to Earnings
2013 special new energy and energy-saving and
environmental protection funds for the development
of strategic emerging industries in Sichuan Province
3,000,000.00
300,000.00
2,700,000.00 Related to assets
Total 244,794,668.10 7,250,000.00
42,869,265.31 209,175,402.79
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
(XXXVIII) Share capital
Monetary Unit: Yuan
Item Beginning Balance
Increases (+) or decrease (-) for change in the current period
Closing Balance Newly
issued
shares
Donated
shares
Capitalization
of capital
reserves Other Sub-total
Total shares 2,032,164,739.00 -69,300.00 -69,300.00 2,032,095,439.00
Other statements: as the incentive object resigned, the 69,300.00 shares of restricted stocks
that have been granted but unlocked have been repurchased and written off, resulting in a
share capital reduction by RMB69,300.00.
(XXXIX) Capital reserves
Monetary Unit: Yuan
Item Beginning Balance Increase in the current
period
Decrease in the
current period Closing Balance
Capital premium (stock
premium) 9,525,320,042.87 76,699,762.98 137,016.00 9,601,882,789.85
Other capital reserves 55,124,958.51 30,687,285.16 46,704,679.43 39,107,564.24
Total 9,580,445,001.38 107,387,048.14 46,841,695.43 9,640,990,354.09
Statements on change of capital reserves
1. Capital reserves - stock premium
(1) Increase for current year
① As the restricted stocks in the second stage of 2015 Restricted stock incentive plan have
been ready for unlocking, the RMB20,418,055.43 equity incentive cost which was originally
included in other capital reserves is converted into stock premium.
② The RMB26,286,624.00 income tax effect of the part by which the pre-tax deductible
amount of the unlocked restricted stocks in the first stage of 2015 Restricted Stock Incentive
Plan exceeds the amount of costs related to stock payment and recognized according to the
accounting standard was converted by the Company into stock premium.
③ The RMB28,065,339.39 income tax effect of the part by which the pre-tax deductible
amount of the unlocked restricted stocks in the second stage of 2015 Restricted Stock Incentive
Plan exceeds the amount of costs related to stock payment and recognized according to the
accounting standard was directly added by the Company to stock premium.
④ The capital reserves - stock premium increased by RMB276,612.89 due to unproportioned
capital increase by the subsidiary, Billions Pigment.
⑤ The capital reserves - stock premium increased by RMB1,653,131.27 due to unproportioned
capital increase by the subsidiary, Yili Small Loan.
(2) Decrease for current year
On February 25, 2016, the Company held the thirty-third meeting of the fifth board of directors
and the thirty-first meeting of the fifth board of supervisors, respectively and considered and
approved the Proposal on Repurchasing and Writing off Part of the Restricted Stocks, according
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
to which the Company agreed to repurchase and write off the 69,300 shares of restricted stocks
that were granted on April 24, 2015 but not unlocked and repurchase and write off the premium
to offset the capital reserves - stock premium of RMB137,016.00.
2. Capital reserves - other capital reserves
(1) Increase for current year
① The equity incentive cost apportioned for the restricted stocks of the Company in the current
period is RMB10,177,649.65.
② The income tax effect of the part by which the pre-tax deductible amount of the unlocked
restricted stocks of the Company at the end of the period exceeds the amount of costs related
to stock payment and recognized according to the accounting standard is RMB20,509,635.51.
(2) Decrease for current year
① As the restricted stocks in the second stage of 2015 Restricted stock incentive plan have
been ready for unlocking, the RMB20,418,055.43 equity incentive cost which was originally
included in other capital reserves is converted into stock premium.
② The RMB26,286,624.00 income tax effect of the part by which the pre-tax deductible
amount of the unlocked restricted stocks in the first stage of 2015 Restricted Stock Incentive
Plan exceeds the amount of costs related to stock payment and recognized according to the
accounting standard was converted by the Company into stock premium.
(XL) Treasury stock
Monetary Unit: Yuan
Item Beginning Balance Increase in the current
period
Decrease in the
current period Closing Balance
Restricted stock
incentives 81,190,824.00 45,410,238.38 35,780,585.62
Employee Stock
Ownership Plan
(ESOP)
550,808,621.16 550,808,621.16
Total 81,190,824.00 550,808,621.16 45,410,238.38 586,589,206.78
Other statements: 1. The Company held its 2017 third extraordinary general meeting on
February 24, 2017 and considered and approved the Proposal on Repurchasing Shares of the
Company, according to which the Company agreed to repurchase the shares of the Company
with its own funds, which would be used for its Employee Stock Ownership Plan. By August
23, 2017, the Company had repurchased totally 34,239,749.00 shares, and paid a total amount
of RMB550,808,621.16.
2. As the restricted stocks in the second stage of 2015 restricted stock incentive plan have been
ready for unlocking, the reduction of repurchase obligation resulted in treasury stock reduction
by RMB45,203,922.38.
3. As the incentive object resigned, the 69,300.00 shares of restricted stocks that have been
granted but unlocked have been repurchased and written off by the Company, resulting in a
treasury stock reduction by RMB206,316.00.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
(XLI) Other comprehensive income
Monetary Unit: Yuan
Item Beginning Balance
Accrual amount for current period
Closing Balance Accrual amount of
income tax in the
current period
Less: included in other
comprehensive income in prior
period and converted into current
profit and loss
Less: Income tax
expenses
Attributable to parent
company after tax
Attributable to
minority
shareholders after
tax
1. Other comprehensive income that cannot be
reclassified into the profit and loss
Including: re-measure the variation of net
indebtedness or net asset of defined benefit plans
Shares in other comprehensive income of the
invested that cannot be reclassified into the profit
and loss under the equity law
2. Other comprehensive income that will be
reclassified into the profit and loss 6,580,752.60 -12.569,584.66 -12.569,584.66 -5988,832.06
Including: shares in other comprehensive
income of the invested that will be reclassified into the profit and loss under the equity law
Profits or losses from changes in fair value of
available-for-sale financial assets
Profits or losses from re-classification of held-to-
maturity investments as available-for-sale
financial assets
Effective part of profit and loss from cash flow
hedging
Translation difference of foreign currency
financial statements 6,580,752.60 -12.569,584.66 -12.569,584.66 -5988,832.06
Total of other comprehensive income 6,580,752.60 -12.569,584.66 -12.569,584.66 -5988,832.06
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
(42) Special reserve
Monetary Unit: Yuan
Item Beginning Balance Increase in the current
period
Decrease in the
current period Closing Balance
Safe production 53,084,903.26 32,929,128.15 40,338,016.01 45,676,015.40
Maintenance costs 124,192,413.80 82,904,527.47 41,287,886.33
Environmental
restoration
management costs
2,510,786.86 2,510,786.86
Total 179,788,103.92 32,929,128.15 125,753,330.34 86,963,901.73
Other statements, including statements regarding changes during the current period and their
reasons: the Company includes the "environmental restoration management costs" in the
"estimated liabilities" in the current period.
(XLIII) General risk provisions
Item Beginning
Balance
Appropriation for
current period
Ratio of
appropriation (%)
Decrease in the
current period Closing Balance
General risk
provisions 5,360,038.64 10% 5,360,038.64
Total 5,360,038.64 5,360,038.64
(XLIV) Surplus reserves
Item Beginning Balance Increase in the current
period
Decrease in the
current period Closing Balance
Legal surplus 112,318,664.79 191,590,624.71 303,909,289.50
Discretionary surplus
reserve
Total 112,318,664.79 191,590,624.71 303,909,289.50
(XLV) Undistributed profit
Monetary Unit: Yuan
Item Equity capital Prior year
Closing undistributed profit before adjustment 509,773,698.31 762,473,143.51
Total adjusted beginning undistributed profit (increase +; decrease -)
Adjusted beginning undistributed profit 509,773,698.31 762,473,143.51
Plus: current net profit attributable to owners of the parent company 2,502,413,958.33 442,105,136.22
Other 41,638.67
Less: withdrawal of legal surplus 191,587,301.48 14,104,039.72
Appropriation of discretionary surplus reserve
Appropriations to general risk provisions 5,360,038.64
Dividends payable on ordinary shares 1,405,319,154.13 680,700,541.70
Capitalized dividends on ordinary shares
Closing undistributed profit 1,409,921,162.39 509,773,698.31
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Note: the Company wrote back the dividends when the 69,300.00 shares of restricted stocks
that have been granted but unlocked were repurchased and written off.
(XLVI) Operating incomes and costs
Monetary Unit: Yuan
Item Accrual amount for current period Accrual amount for last period
Income Cost Income Cost
Primary business 10,117,719,002.82 5,523,171,189.36 4,081,191,029.08 2,863,900,184.97
Other business 139,790,522.02 106,012,997.19 54,368,585.62 49,059,654.62
Total 10,257,509,524.84 5,629,184,186.55 4,135,559,614.70 2,912,959,839.59
(XLVII) Net interest income
Item Accrual amount for current period Accrual amount for last period
Income from interests 95,584,255.82 48,320,456.91
Interbank deposit
Deposit in central bank
Interest on financing lease 361,241.79
Loans and advances 95,223,014.03 48,320,456.91
Interest expenses 3,925,497.13 2,861,917.18
Deposit taking of interbank
Borrowings from central bank
Borrowing funds 3,925,497.13 2,861,917.18
Net interest income 91,658,758.69 45,458,539.73
(XLVIII) Handling charges and commission income
Item Accrual amount for current period Accrual amount for last period
Handling charges and commission
income 25,157.23
Settlement and liquidation fees 25,157.23
Handling charges and commission
expenditure 21,182.58 14,963.05
Handling charges 21,182.58 14,963.05
Commission expenditure
Handling charges and net commission
income 3,974.65 -14,963.05
(XLIX) Taxes and surcharges
Item Accrual amount for current period Accrual amount for last period
Vehicle and ship use tax 802,247.20 26,761.64
Urban maintenance and construction
tax 23,068,642.65 4,363,997.18
Export duties 1,754,615.75
Local education surcharge 12,755,277.99 2,950,023.86
House property tax 12,903,540.60 6,437,590.06
Education surcharge 25,542,398.96 4,587,304.37
Mineral resources compensation fees 573,630.69
Land use tax 13,499,025.89 10,387,012.86
Stamp duty 10,607,620.60 8,929,402.74
Business tax 9,748.55 674,037.73
Resource tax 49,421,835.83 6,534,661.56
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Total 150,364,954.02 45,464,422.69
(L) Marketing expenses
Item Accrual amount for current period Accrual amount for last period
Transportation 207,242,256.31 119,932,975.49
Packaging 37,400,191.85 7,609,889.26
Marketing service fee 28,638,220.20 17,222,424.80
Payroll 20,946,803.86 14,253,460.65
Other expenses 18,015,220.53 11,558,024.85
Insurance premium 6,022,705.29 3,149,448.15
Travel expenses 3,652,738.05 2,596,164.44
Advertising and exhibition costs 2,853,437.25 1,983,721.57
Office expenses 1,399,692.58 681,047.41
Business entertainment expenses 736,543.71 608,737.71
Total 326,907,809.63 179,595,894.33
(LI) Overhead expenses
Monetary Unit: Yuan
Item Accrual amount for current period Accrual amount for last period
Technological development costs 418,913,222.03 115,890,868.72
Payroll 337,944,660.22 100,742,021.48
Material consumption and repair costs 102,732,608.51 64,217,152.95
Depreciation and amortization 68,178,852.81 36,498,999.01
Audit, agency and consulting fees 21,864,129.61 14,909,020.07
Other 18,096,627.47 7,619,762.00
Cleaning fees 9,226,349.07 2,549,214.97
Travel expenses 5,756,519.41 3,534,139.61
Business entertainment expenses 4,949,229.57 3,833,527.39
Office expenses 3,202,110.88 3,534,740.75
Insurance premium 2,901,434.33 1,786,249.67
Lease expense 2,003,918.73 1,410,722.94
Transportation expenses 2,050,195.71 1,193,091.49
Conference expenses 1,108,580.65 752,797.37
Ads 716,932.13 1,279,141.69
Security costs 670,034.89 672,480.95
Decoration costs 251,659.00
Taxes 6,574,066.09
Total 1,000,315,406.02 367,249,656.15
(LII) Financial expenses
Monetary Unit: Yuan
Category Accrual amount for current period Accrual amount for last period
Interest expenses 148,175,464.66 89,577,656.54
Less: Income from interests 13,401,382.54 13,530,600.83
Exchange gains/losses 13,025,025.90 12,047,000.87
Handling charges and other 10,809,086.51 7,732,819.45
Total 158,608,194.53 95,826,876.03
(LIII) Assets impairment loss
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Monetary Unit: Yuan
Item Accrual amount for current period Accrual amount for last period
1. Loss from bad debts 44,154,222.26 28,194,532.10
2. Loss on inventory valuation 1,031,009.35 3,790,631.49
III. Losses from Impairment of
Available-for-Sale Financial Assets
IV. Losses from Impairment of Held-
to-Maturity Investments
V. Losses from Impairment of Long-
term Equity Investments
VI. Losses from Impairment of
Investment Property
Loss on impairment of fixed assets 6,901,445.91 377,727.97
Loss on impairment of engineering
goods and materials 872,435.66
Loss on impairment of construction i
progress 12,243,230.01
X. Losses from Impairment of
Productive Biological Assets
XI. Losses from Impairment of Oil &
Gas Assets
XII. Losses from Impairment of
Intangible Assets
Loss on impairment of goodwill 28,184,335.27
14. Others 900,000.00
Total 93,386,678.46 32,362,891.56
(LIV) Return on investment
Monetary Unit: Yuan
Item Accrual amount for current
period
Accrual amount
for last period
Return on long-term equity investment accounted for using the equity
method 845,375.40 266,773.25
Income from dispose of long-term equity investment -2374,789.02
Return on investment in financial assets at FVTPL during the period
of holding
Investment proceeds derived from disposition of financial assets
which are measured by fair value and the changes in whose fair
value are included into current profits or losses
Investment proceeds derived from held-to-maturity investments
while being held
Investment proceeds derived from available-for-sale financial assets
while being held
Investment proceeds derived from disposition of available-for-sale
financial assets
Gains derived from re-measurement of remaining equities by fair
value in case of loss of control
Return on investment in financial products 16,925,871.23 1,875,272.29
Total 15,396,457.61 2,142,045.54
(LV) Income from disposal of assets
Monetary Unit: Yuan
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Item Accrual amount for current period Accrual amount for last period
Income from disposal of fixed assets 1,319,122.71 472,342.58
Loss on disposal of fixed assets -20,227,104.17 -24,090,184.30
Total -18.907,981.46 -23,617,841.72
(LXVI) Other income
Monetary Unit: Yuan
Subsidies Accrual amount for
current period Accrual amount for last
period
Land leveling fees allocated by Zhongzhan District Finance Bureau for titanium-rich material project 757,415.88
2013 Subsidies for clean production demonstration project 1,899,999.96
Subsidies for calcining kiln tail gas thorough treatment project 150,000.00
Supporting enterprises and stabilizing positions with the unemployment insurance 2,205,249.80
2016 City-wide Industrial Development Advanced Enterprise Award 2,140,000.00
Science and Technology Award by Science and Technology Bureau 105,600.00
2016 Advanced Unit Award 1,000,000.00
2016 Patent fund subsidy 3,000.00
Municipal bureau-level subsidy for water-saving enterprises and residential communities 10,000.00
Subsidy funds allocated by Jiaozuo Municipal Bureau of Environmental Protection for technology and ecology
renovation projects 30,000.00
Subsidy funds allocated by Jiaozuo Municipal Bureau of Environmental Protection for automatic smoke
monitoring equipment 100,000.00
Technical transformation fund allocated by Mianzhu Municipal Finance Bureau for "4 to 8" project 70,333.01
Subsidy funds allocated by Deyang Municipal Commission of Economy and Informatization for "4 to 8" technical
transformation project 91,666.99
Funds allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Commission of Economy
and Informatization for "8-14" industrialization research and development of new dedicated titanium dioxide
products for laminated paper 99,999.96
"8 to 14" technical transformation funds allocated by Sichuan Provincial Department of Finance and Provincial
Commission of Economy and Informatization for rutile titanium dioxide 300,000.00
Central post-disaster reconstruction subsidy funds allocated by Mianzhu Municipal Development and Reform
Commission for "8 to 14" technical transformation of rutile titanium dioxide 2,850,000.00
Funds allocated by Sichuan Provincial Department of Finance and Sichuan Provincial Commission of Economy
and Informatization for "8-14" industrialization research and development of new dedicated titanium dioxide
products for laminated paper 50,000.04
Service industry development guiding funds ("14 to 20" high-grade titanium dioxide project with an annual output
of 60,000.00 tons) 120,000.00
Industrial technology research and development funds (relying on ink-specific titanium dioxide production line
for "8 to 14" project) 80,000.04
Special funds for new industry development (clean production lab) 120,000.00
Funds for technical transformation of "4 to 8" titanium dioxide project 499,999.84
Investment funds allocated by Sichuan Provincial Development and Reform Commission and Provincial
Commission of Economy and Informatization within the key industries revitalization and central technological
transformation budget 480,000.00
Subsidy funds allocated by the Management Committee of Mianzhu Economic Development Zone for the natural
gas and water intake project 500,000.04
Project subsidy funds allocated by the Bureau of Economy and Informatization for "14 to 20" rutile titanium
dioxide technical transformation project 399,999.96
Post-disaster reconstruction loan discount for titanium dioxide "8 to 14" technical transformation project 1,241,825.04
2011 third technology support plan project funds allocated by Intellectual Property Office for "14 to 20" high-
grade special titanium dioxide project with an annual output of 60,000.00 tons 30,000.00
Special subsidies for the state and local joint engineering laboratory for titanium dioxide clean production
technology and process 200,000.04
Industrialization of new process of titanium dioxide clean production with "sulfur-phosphorus-titanium"
cogeneration method 157,459.08
Special subsidies allocated by Mianzhu Municipal Finance Bureau for the state and local joint engineering
laboratory for titanium dioxide clean production technology and process 18,333.33
"Sulfur-phosphorus-titanium" recycling economy and low-carbon production technology development and
transformation technology project 249,999.96
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Funds for the technology development and industrialization innovation development of sulfuric acid titanium
dioxide acidolysis slag 159,999.96
Subsidies allocated by the Finance Bureau for the technical transformation project for the quality optimization of
titanium liquid in the sulfur-phosphorus-titanium industry chain 350,000.04
Central infrastructure investment funds allocated by Mianzhu Municipal Finance Bureau for 2013 independent
innovation and high-tech industrialization project 399,999.96
Funds allocated by Mianzhu Municipal Development and Reform Commission for the development of dedicated
titanium dioxide for electrophoretic paint for luxury automobiles 150,000.03
Infrastructure award for 100,000-ton titanium dioxide project 3,038,310.00
Phase II project infrastructure supporting funds 1,044,000.00
Enterprise technical transformation funds allocated by Nanzhang County Finance Bureau 761,379.31
Central subsidy funds for the mineral resources protection project 1,300,000.00
Technical transformation funds 100,000.00
Key technology transformation funds 160,000.00
2011 central subsidy funds for the comprehensive utilization demonstration base for vanadium titanium magnetite
resources 3,123,000.00
2012 central subsidy funds for the comprehensive utilization demonstration base for vanadium titanium magnetite
resources 4,000,000.00
2013 central subsidy funds for the comprehensive utilization demonstration base for vanadium titanium magnetite
resources 937,000.00
2014 central subsidy funds for the comprehensive utilization demonstration base for vanadium titanium magnetite
resources 790,612.60
2015 central subsidy funds for the comprehensive utilization demonstration base for vanadium titanium magnetite
resources 285,480.00
Interest subsidy funds allocated by Sichuan Provincial Department of Finance and Provincial Commission of
Economy and Informatization for provincial technical transformation loans 100,000.00
Funds allocated by Deyang Municipal Development and Reform Commission for independent innovation
capability and high-tech industrialization development projects 300,000.00
Special funds allocated by National Development and Reform Commission for major industrial technology
development 500,000.00
Public rental housing subsidy funds allocated by Yanbian County Finance Bureau 175,692.80
Infrastructure construction subsidies allocated by Yanbian County Finance Bureau 150,000.00
Industrial technology research and development funds allocated by Sichuan Provincial Department of Finance
and Provincial Commission of Economy and Informatization 40,000.00
Provincial special funds allocated by Sichuan Provincial Department of Finance and Provincial Commission of
Economy and Informatization for technical transformation 120,000.00
Special funds allocated by Sichuan Provincial Department of Finance and Provincial Commission of Economy
and Informatization for the industrialization of industrial technology achievements 100,000.00
2011 central subsidy funds allocated by Sichuan Provincial Department of Finance and Provincial Department of
Land and Resources for the comprehensive utilization demonstration base for vanadium titanium magnetite
resources 4,050,000.00
2011 technology plan project funds allocated by Sichuan Provincial Department of Finance and Provincial
Department of Science and Technology 130,000.00
Funds for technology support project of Sichuan Development (Holdings) Co., Ltd. 140,000.00
Provincial industrial technology research and development funds allocated by Sichuan Provincial Department of
Finance and Provincial Commission of Economy and Informatization 50,000.00
2012 central subsidy funds allocated by Sichuan Provincial Department of Finance and Provincial Department of
Land and Resources for the comprehensive utilization demonstration base for vanadium titanium magnetite
resources 5,652,000.00
2013 central finance subsidy funds allocated by Sichuan Provincial Department of Land and Resources for
Panzhihua vanadium titanium magnetite resources conservation and comprehensive utilization demonstration
base 1,700,250.00
Notice of Sichuan Provincial Development and Reform Commission on Issuing the 2013 Plan for the First Batch
of New Energy and Energy-saving and Environmental Protection Projects for the Development of Strategic
Emerging Industries 280,000.00
2010 budget of incentive funds for central mineral resources conservation and comprehensive utilization
demonstration projects 500,000.00
2014 central subsidy funds for the comprehensive utilization demonstration base for vanadium titanium magnetite
resources 1,042,237.44
2015 central subsidy funds for the comprehensive utilization demonstration base for vanadium titanium magnetite
resources 522,270.00
2013 special new energy and energy-saving and environmental protection funds for the development of strategic
emerging industries in Sichuan Province 300,000.00
2016 special funds allocated by Mianzhu Commerce Bureau for foreign trade and economic development 900,000.00
Central special funds allocated by Mianzhu Commerce Bureau for foreign trade and economic development 618,300.00
Special funds allocated by Mianzhu Commerce Bureau for foreign trade and economic development 500,000.00
National energy saving subsidy for purchase of motor III:2016^\209180^ 37,200.00
National benefit subsidies 4,185.00
2017 technological transformation funds forwarded by Mianzhu Bureau of Economic Information and
Technology (8-1480) 930,000.00
2016 central foreign trade funds forwarded by Mianzhu Commerce Bureau 1,455,000.00
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Electricity and gas subsidies allocated by Mianzhu Bureau of Economic Information and Technology 150,000.00
Foreign trade development funds allocated by Mianzhu Commerce Bureau 900,000.00
Technological research and development project funds allocated by Nanzhang County Bureau of Science and
Technology (a new technology for recycling waste titanium dioxide) 200,000.00
2016 Nanzhang foreign trade export incentive funds allocated by Nanzhang County Bureau of Commerce 226,800.00
Subsidies allocated by Nanzhang County Bureau of Finance for technical transformation project of improving
the dispersitivity of titanium dioxide 352,000.00
Investment attraction preferential policy funds allocated by Nanzhang County Bureau of Finance 12,339,353.00
Export reward funds 60,000.00
Total 67,085,953.11
(LXVII) Non-operating revenue
Monetary Unit: Yuan
Item Accrual amount for current
period
Accrual amount for last
period
Amount included in current
non-recurring profit and
loss
Debt restructuring profits
Gains derived from non-
monetary assets exchange
Accepted donations
Government subsidies 3,422,060.00 14,081,615.44 3,422,060.00
Inventory profit gains 3,087.92 3,087.92
Insurance proceeds 299,622.87 299,622.87
Confiscation gains 2,354,238.32 2,354,238.32
Payables that cannot be paid 3,699,208.25 3,699,208.25
Other 2,407,556.49 2,905,806.00 2,407,556.49
Total 12,185,773.85 16,987,421.44 12,185,773.85
Government subsidies included in non-operating revenue
Monetary Unit: Yuan
Subsidies
Payer Reason Nature Type
Subsidy affects
the profits
or
losses of the
year or
not?
Special subsidy or
not Accrual
amount for current
period
Accrual
amount for
prior period
Related to
Assets or Related to
Earnings
The "two new" party construction work fees allocated by the People's Government
of Xinshi Town, Mianzhu City
6,000.00
2017 patent subsidy funds allocated by
Deyang Science and Technology Intellectual Property Office
41,100.00
Patent subsidy funds allocated by Sichuan
Provincial Intellectual Property Office
3,960.00
Industry award funds allocated by
Mianzhu Municipal Bureau of Economic Information and Science and Technology
145,000.00
Industry award funds allocated by
Mianzhu Municipal Bureau of Economic
Information and Science and Technology
200,000.00
Energy-saving and emission reduction funds allocated by Mianzhu Municipal
Bureau of Finance (Environmental
Protection Bureau)
2,000,000.00
Double Hundred Project Awards granted by Mianzhu Bureau of Economic
Information and Technology
79,000.00
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Talent Development Awards granted by
Mianzhu Bureau of Economic Information and Technology
46,000.00
Project costs allocated by Sichuan
Provincial Bureau of Foreign Experts
400,000.00
Provincial Famous Brand Award granted
by Mianzhu Municipal Bureau of Industry and Commerce Administration and
Quality Supervision
60,000.00
New enterprise work funds allocated by
Sichuan Mianzhu Association for Science and Technology
5,000.00
"Substitute subsidies with rewards" funds
allocated by Nanzhang County Bureau of
Environmental Protection
300,000.00
Patent award funds allocated by Nanzhang County Bureau of Finance
25,000.00
Science and technology innovation
platform award funds allocated by
Xiangyang Municipal Bureau of Science and Technology
50,000.00
2016 patent application and authorization
award funds allocated by Xiangyang
Municipal Bureau of Science and Technology
11,000.00
2016 Yanbian County outstanding
taxpaying enterprise award by Yanbian
County Bureau of Economy and Information
50,000.00
Technical transformation fund allocated
by Mianzhu Municipal Finance Bureau
for "4 to 8" project
105,500.01
Subsidy funds allocated by Deyang Municipal Commission of Economy and
Informatization for "4 to 8" technical
transformation project
24,999.99
Funds allocated by Sichuan Provincial Department of Finance and Sichuan
Provincial Commission of Economy and Informatization for "8-14"
industrialization research and
development of new dedicated titanium dioxide products for laminated paper
24,999.99
"8 to 14" technical transformation funds
allocated by Sichuan Provincial
Department of Finance and Provincial Commission of Economy and
Informatization for rutile titanium dioxide
75,000.00
Central post-disaster reconstruction
subsidy funds allocated by Mianzhu Municipal Development and Reform
Commission for "8 to 14" technical
transformation of rutile titanium dioxide
712,500.00
Funds allocated by Sichuan Provincial Department of Finance and Sichuan
Provincial Commission of Economy and
Informatization for "8-14"
industrialization research and
development of new dedicated titanium
dioxide products for laminated paper
12,500.01
Service industry development guiding funds ("14 to 20" high-grade titanium
dioxide project with an annual output of
60,000.00 tons)
30,000.00
Industrial technology research and development funds (relying on ink-
specific titanium dioxide production line
for "8 to 14" project)
20,000.01
Special funds for new industry development (clean production lab)
30,000.00
Funds for technical transformation of "4 to
8" titanium dioxide project
125,000.01
Investment funds allocated by Sichuan
Provincial Development and Reform
120,000.00
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Commission and Provincial Commission
of Economy and Informatization within the key industries revitalization and
central technological transformation
budget
Subsidy funds allocated by the Management Committee of Mianzhu
Economic Development Zone for the
natural gas and water intake project
125,000.01
Project subsidy funds allocated by the Bureau of Economy and Informatization
for "14 to 20" rutile titanium dioxide
technical transformation project
99,999.99
Post-disaster reconstruction loan discount for titanium dioxide "8 to 14" technical
transformation project
310,456.26
2011 third technology support plan project
funds allocated by Intellectual Property Office for "14 to 20" high-grade special
titanium dioxide project with an annual
output of 60,000.00 tons
7,500.00
Special subsidies for the state and local joint engineering laboratory for titanium
dioxide clean production technology and
process
50,000.01
Industrialization of new process of titanium dioxide clean production with
"sulfur-phosphorus-titanium"
cogeneration method
39,364.77
"Sulfur-phosphorus-titanium" recycling economy and low-carbon production
technology development and
transformation technology project
62,500.00
Funds for the technology development and industrialization innovation
development of sulfuric acid titanium
dioxide acidolysis slag
40,000.00
Subsidies allocated by the Finance Bureau
for the technical transformation project for
the quality optimization of titanium liquid in the sulfur-phosphorus-titanium industry
chain
20,171.85
Infrastructure award for 100,000-ton
titanium dioxide project
759,577.50
Phase II project infrastructure supporting funds
261,000.00
Central subsidy funds for the mineral
resources protection project
325,000.03
2011 central subsidy funds for the
comprehensive utilization demonstration base for vanadium titanium magnetite
resources
1,287,000.00
2012 central subsidy funds for the
comprehensive utilization demonstration base for vanadium titanium magnetite
resources
1,425,062.53
2013 central subsidy funds for the
comprehensive utilization demonstration base for vanadium titanium magnetite
resources
246,750.03
2014 central subsidy funds for the
comprehensive utilization demonstration base for vanadium titanium magnetite
resources
458,212.49
2015 central subsidy funds for the
comprehensive utilization demonstration base for vanadium titanium magnetite
resources
201,937.50
Special funds allocated by National
Development and Reform Commission for major industrial technology
development
125,000.00
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Public rental housing subsidy funds
allocated by Yanbian County Finance Bureau
43,923.20
Infrastructure construction subsidies
allocated by Yanbian County Finance
Bureau
37,500.00
Industrial technology research and development funds allocated by Sichuan
Provincial Department of Finance and
Provincial Commission of Economy and Informatization
10,000.00
Provincial special funds allocated by
Sichuan Provincial Department of
Finance and Provincial Commission of Economy and Informatization for
technical transformation
30,000.00
Special funds allocated by Sichuan
Provincial Department of Finance and Provincial Commission of Economy and
Informatization for the industrialization of
industrial technology achievements
25,000.00
2011 technology plan project funds allocated by Sichuan Provincial
Department of Finance and Provincial
Department of Science and Technology
32,500.00
Funds for technology support project of Sichuan Development (Holdings) Co.,
Ltd.
35,000.00
Provincial industrial technology research
and development funds allocated by Sichuan Provincial Department of
Finance and Provincial Commission of
Economy and Informatization
12,500.00
Notice of Sichuan Provincial Development and Reform Commission on
Issuing the 2013 Plan for the First Batch
of New Energy and Energy-saving and Environmental Protection Projects for the
Development of Strategic Emerging
Industries
Reward
70,000.01
Land leveling fees allocated by
Zhongzhan District Finance Bureau for
titanium-rich material project
441,825.93
2013 Subsidies for clean production demonstration project
1,108,333.31
Special funds allocated by Zhongzhan
District Bureau of Science and
Technology for scientific research service platforms in provincial industrial cluster
area
2,000,000.00
Export credit insurance subsidies
allocated by Zhongzhan District Bureau of Finance
640,000.00
2016 special cultivation funds allocated
by Zhongzhan District Bureau of Science
and Technology for provincial science and technology enterprises
1,680,000.00
2016 Well-known Trademark Awards
granted by Zhongzhan District Bureau of
Finance
750,000.00
Henan provincial science and technology award funds allocated by Zhongzhan
District Bureau of Science and
Technology
20,000.00
2015 Progress Award fund remitted by Municipal Bureau of Science and
Technology
20,000.00
Total 3,422,060.00 14,081,615.44
(LXVIII) Non-operating expenses
Monetary Unit: Yuan
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Item Accrual amount for current
period
Accrual amount for last
period
Amount included in current
non-recurring profit and
loss
Debt restructuring losses
Losses from non-monetary
assets exchange
Donations 3,578,241.00 594,000.00 3,578,241.00
Fines 1,224,701.35 1,224,701.35
Extraordinary expenses 3,624,035.40 3,624,035.40
Inventory losses 5,000.00 5,000.00
Other 2,271,377.36 1,921,559.24 2,271,377.36
Total 10,703,355.11 2,515,559.24 10,703,355.11
(LIX) Income tax expenses
1. Schedule of income tax expenses
Monetary Unit: Yuan
Item Accrual amount for current period Accrual amount for last period
Income tax expenses of current period 493,065,078.30 109,173,969.24
Deferred income tax expenses -2,647,780,833 -27,946,879.18
Total 466,587,269.97 81,227,090.06
2. The adjustment process of accounting profit and income tax costs
Monetary Unit: Yuan
Item Accrual amount for current
period
Total profit 3,055,461,876.97
Income tax costs calculated at statutory [or applicable] tax rates 458,319,281.55
The effect of application of different tax rates to subsidiaries 21,065,778.80
The effect of adjustment of income tax of prior period 8,666,787.75
The effect of non-taxable income -313,838.85
The effect of non-deductible costs, expenses and losses 28,323,150.72
Effect of deductible loss of deferred income tax assets unrecognized in early stage of use -8,639,421.31
Effect of deductible temporary difference or deductible loss of closing recognized
deferred income tax assets 5,982,706.46
Other -46,817,175.14
Income tax expenses 466,587,269.97
(LX) Items in cash flow statement
1. Cash received for other operating activities
Monetary Unit: Yuan
Item Accrual amount for current period Accrual amount for last period
Income from interests received 12,077,102.54 13,719,382.27
Deposit and margin received 51,915,936.94 24,195,312.20
Government subsidies received 27,638,747.80
Current and other accounts received 89,352,846.68 86,555,455.40
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Total 180,984,633.96 124,470,149.87
2. Cash paid for other operating activities
Monetary Unit: Yuan
Item Accrual amount for current period Accrual amount for last period
All current accounts paid 71,453,511.77
All expenses paid 220,411,441.39 156,825,824.17
Margin and deposit paid 33,316,500.00 68,639,045.60
Other 88,335,039.44
Total 413,516,492.60 225,464,869.77
3. Cash received for other investment activities
Monetary Unit: Yuan
Item Accrual amount for current period Accrual amount for last period
Notes deposits received (related to project) 13,907,622.10
Acquisition of subsidiary (Rongjia
Scandium) 3,535,360.40
Total 17,442,982.50
4. N/A
5. Cash received in relation to raisings
Monetary Unit: Yuan
Item Accrual amount for current period Accrual amount for last period
Paid contract deposits 200,000,000.00
Government grants 7,200,000.00
Total 7,200,000.00 200,000,000.00
6. Cash paid for other financing activities
Monetary Unit: Yuan
Item Accrual amount for current period Accrual amount for last period
Decrease in cash payment due to
reduction of registered capital 15,981,428.00
Security fees paid 1,847,652.82 3,373,142.91
Contract signing costs 115,000,000.00
Repurchased treasury stocks 550,808,621.16
Funds for stock repurchase and
writing-off 206,316.00
Total 552,862,589.98 134,354,570.91
(LXI) Supplementary information to cash flow statement
1. Supplementary Information to Cash Flow Statement
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Monetary Unit: Yuan
Supplementary Information Amount of Current Period Amount of Prior Period
1. Adjustment of net profit to cash flow received from
operating activities
Net profit 2,588,874,607.00 459,312,586.99
Plus: assets depreciation reserves 93,386,678.46 32,362,891.56
Depreciation of fixed assets, depletion of oil & gas
assets, productive biological assets 755,521,272.80 382,338,219.44
Amortization of intangible assets 121,134,172.60 35,546,747.18
Amortization of long-term deferred expenses 6,087,012.62 2,108,236.21
Loss on disposal of fixed assets, intangible assets and
other long-term assets (indicate income with "-") 18,907,981.46 23,617,841.72
Loss on retirement of fixed assets (indicate income
with "-")
Loss on fair value change (indicate income with "-")
Financial expenses (indicate income with "-") 146,337,822.70 101,624,657.41
Loss on investment (indicate income with "-") -15.396,457.61 -2,142,045.54
Decrease in deferred income tax assets (indicate
increase with "-") -3,048,854.72 -22,482,886.29
Increase in deferred income tax liabilities (indicate
decrease with "-") -23,428,953.61 -5,463,992.89
Decrease in inventory (indicate increase with "-") -282,459,263.30 -287,245,546.19
Decrease in operating receivables (indicate increase
with "-") -522,195,126.98 -63,329,402,538
Increase in operating payables (indicate decrease with
"-") -515,952,894.64 345,939,464.75
Other
Net cash flows from operating activities 2,367,767,996.78 432,222,148.37
2. Major investment and financial activities not
involved with cash payments and receipts
Capitalization of liabilities
Convertible bonds due within a year
Rented fixed assets
3. Net change of cash and cash equivalents
Ending cash balance
Less: Beginning cash balance
Plus: ending balance of cash equivalent 2,218,242,151.05 1,085,989,017.50
Less: beginning cash balance of cash equivalent 1,085,989,017.50 488,651,923.87
Net increase in cash and cash equivalents 1,132,253,133.55 597,337,093.63
2. Net cash received from subsidiaries and paid in the current period
Monetary Unit: Yuan Amount
Cash or cash equivalents paid in the current period for business
combination of the same period 190,000,000.00
Including:
Panzhihua Ruierxin Industry and Trade Co., Ltd. 190,000,000.00
Less: cash and cash equivalents held by subsidiaries at the date of
purchase 7,103,219.08
Including:
Panzhihua Ruierxin Industry and Trade Co., Ltd. 7,103,219.08
Plus: Cash or cash equivalents paid in current period for business
combination occurring in previous periods
Including:
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Net cash received from subsidiaries 182,896,780.92
3 Net cash amount derived from disposition of subsidiaries and received in
current period: N/A
4. Composition of cash and cash equivalents
Monetary Unit: Yuan
Item Closing Balance Beginning Balance
I. Cash 2,218,242,151.05 1,085,989,017.50
Including: cash on hand 91,712.49 305,309.66
Bank deposit readily disposable 2,218,150,438.56 1,085,683,707.84
Other monetary fund readily disposable
Disposable fund due from central bank
Interbank deposit
Interbank loan
II. Cash equivalents 2.218.242.151.05 1.085.989.017.50
Including: bond investment due in three
months
III. Closing balance of cash and cash
equivalents 2.218.242.151.05 1.085.989.017.50
Including: cash and cash equivalents the use of
which by the parent company or group
subsidiaries is restricted
135.257.923.68 217.401.689.80
(LXII) Assets whose ownership or use right is restricted
Monetary Unit: Yuan
Item Ending book value Cause of restriction
Monetary fund 135,257,923.68 Acceptance draft deposit
Notes receivable 120,000,000.00 Acceptance draft for pledge
Inventory
Fixed Assets 460,185,623.43 Machinery and equipment
pledge borrowings
Intangible assets 731,963,542.04 Mining right pledge borrowings
Total 1,447,407,089.15
(LIII) Foreign currency monetary items
1. Foreign currency monetary items
Monetary Unit: Yuan
Item Closing balance in foreign currency Exchange rate Closing balance in RMB
Monetary fund 390,988,198.40
Including: US dollar 30,279,651.90 6.5342 197,853,301.44
Euro 24635365.86 7.8023 192212515.05
HKD 852,144.41 0.8359 712,307.51
Pound sterling 23,928.65 8.7792 210,074.40
Receivables 906,357,759.49
Including: US dollar 132,997,788.19 6.5342 869,034,147.59
Euro 4,702,653.00 7.8023 36,691,509.50
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Pound sterling 72,000.00 8.7792 632,102.40
Long-term borrowing 65,419,851.08
Including: US dollar 8,000,000.00 6.5342 52,273,600.00
Euro 1,684,919.97 7.8023 13,146,251.08
HKD
Short-term borrowing 821,152,914.00
Including: US dollar 125,670,000.00 6.5342 821,152,914.00
Payables 89,774,873.01
Including: US dollar 13,525,984.28 6.5342 88,381,486.48
Euro 128,209.85 7.8023 1,000,331.71
Pound sterling 43,358.80 8.7792 380,655.58
CAD 2,286.50 5.2009 11,891.86
Yen 8,766.00 0.0579 507.38
Taxes payable 37,255.00
Including: US dollar 5,701.54 6.5342 37,255.00
Other payables 5,739,118.54
Including: US dollar 878,320.00 6.5342 5,739,118.54
2. Statements regarding overseas business entities, including disclosure of the principal business place of any important overseas business
entity and of its bookkeeping base currency and the basis for selection of such bookkeeping base currency, as well as disclosure of the reason
for change (if any) of the bookkeeping base currency of any such business entity: N/A
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
VI. Changes in the scope of combination
(I) Business combination not under common control
1. Business combination not under common control in the current period
Monetary Unit: Yuan
Name of the Acquired Equity Acquisition
Time
Equity Acquisition
Cost
Equity Acquisition Ratio (%)
Equity Acquisition
Method Date of Purchase
The Basis for Determining
the Date of Purchase
The Income of the Acquired from the Date of Purchase to the End of the Corresponding
Period
The Net Profit of the Acquired from
the Date of Purchase to the
End of the Corresponding
Period
Panzhihua Ruierxin
Industry and Trade Co.,
Ltd.
2017/5/31 190,000,000.00 100.00% Purchase 2017/5/31
Payment of Investment Fund,
Completion of Industrial and
Commercial Registration of
Changes
139,600,623.00 18,184,335.27
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
2. Combination costs and goodwill
Monetary Unit: Yuan
Item Panzhihua Ruierxin Industry and Trade Co.,
Ltd.
Combination costs
- Cash 19,000,000.00
- The fair value of non-cash assets
- The fair value of debts issued or undertaken
- The fair value of equity securities issued
- The fair value of contingent consideration
- The purchase date fair value of the equity held before the date of purchase
- Other
Total combination costs 190,000,000.00
Less: the fair value of identifiable net assets acquired 57,828,882.66
The amount of the difference by which the goodwill / combination cost is less than the fair value of the identifiable net
assets acquired 132,171,117.34
Panzhihua Ruierxin Industry and Trade Co.,
Ltd.
3. Method of determination of fair value of identifiable assets and liabilities:
Monetary Unit: Yuan
Item Panzhihua Ruierxin Industry and Trade Co., Ltd.
Fair value at purchase date Book Value at Purchase Date
Assets: 75,861,935.11 75,861,935.11
Monetary fund 7,103,219.08 7,103,219.08
Receivables 9,040.73 9,040.73
Inventory 18,202,410.43 18,202,410.43
Fixed assets 18,573,323.54 18,573,323.54
Intangible assets
Deferred income tax assets 25,827.27 25,827.27
Liabilities: 18,033,052.45 18,033,052.45
Borrowings
Payables 11,489,343.70 11,489,343.70
Deferred tax liability
Advance receipts 4,282,294.84 4,282,294.84
Payroll 1,797,110.25 1,797,110.25
Other payables 464,303.66 464,303.66
Net assets 57,828,882.66 57,828,882.6
Less: minority equity
Net assets acquired 57,828,882.66 57,828,882.66
Method of determination of fair value of identifiable assets and liabilities: The fair value of identifiable assets and liabilities is determined on the basis of the audited
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
book value shown on the 2016 Audit Report of Panzhihua Ruierxin Industry and Trade Co., Ltd. (Xin Kuai Shi BaoZi [2017] No. ZE10044) issued by BDO CHINA SHU LUN PAN CERTIFIED PUBLIC ACCONTANTS LLP, and the assessed value shown on the All Shareholders' Equity Valuation Report of Panzhihua Ruierxin Industry and Trade Co., Ltd. (Yin Xin Ping BaoZi [2017] Hu No.0141) issued by YINXIN APPRAISAL CO., LTD.
Contingent liabilities of acquirees undertaken in business combination:
Other statements: The base date for valuation is December 31, 2016. The estimated value (i.e. RMB 51,623,100) slightly exceeds the net book value (i.e. RMB 50,146,200) by RMB 1,477,000, so the book value on the purchase date is deemed to be fair value.
(II) Changes in the scope of combination due to other reasons
Please state the changes in the scope of combination resulting from other reasons (such
as establishment of new subsidiaries, liquidation of existing subsidiaries, etc.) and their
related information:
In this year, the Company and Billions Chem (Hong Kong) Limited, one of its wholly-
owned subsidiaries, jointly established Billions Chem (Guangzhou) Financial Lease Co.,
Ltd as sponsors, which has been included into the scope of combination this year.
VII. Equity in Other Entities
(I) Equity in subsidiaries
1. The composition of the enterprise group
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Subsidiary Name Principal Place of
Business Registered Address Business Type
Shareholding Ratio (%)
Direct Indirect
Jiaozuo Billions Reservoir Management Co., Ltd. Jiaozuo, Henan Jiaozuo, Henan Water resources 97.83 Establishment
Jiaozuo Xingtai Resource Comprehensive
Utilization Co., Ltd. Jiaozuo, Henan Jiaozuo, Henan Manufacturing 100.00 Establishment
Jiaozuo Zhongzhan District Yili Small Loan Co.,
Ltd. Jiaozuo, Henan Jiaozuo, Henan Finance 74.00 Establishment
Billions (Hong Kong) Corporation Limited Hong Kong, China UNITB 15/F ONE CAPITAL PLACE 18
LUARD RD WAN CHAI HK Sale of chemical products 100.00 Establishment
Billions Europe Ltd. UK Floor 1, Winder House, Kingfisher Way,
Stockton-on-tees, United Kingdom Sale of chemical products 100.00 Establishment
Jiaozuo Rongjia Scandium Technology Co., Ltd. Jiaozuo, Henan Billions Park, Jiaozuo Western Industrial
Cluster Area Manufacturing 60.00 Participation and shareholding
BILLIONS AMERICA CORPORATION Illinois, U.S. 801 Adlai Stevenson Dr, Springfield, Illinois, Operation of TR52 painting ink titanium
dioxide business 100.00 Establishment
Henan Longxiang Mountain Tourism Development
Co., Ltd. Jiaozuo, Henan Jiaozuo, Henan Tourism 100.00 Establishment
Jiaozuo Billions Pigment Co., Ltd. Jiaozuo, Henan Jiaozuo, Henan Manufacturing 55.00 Establishment
Henan Billions New Materials Co., Ltd. Jiaozuo, Henan Jiaozuo, Henan Manufacturing 100.00 Establishment
Sichuan Lomon Titanium Industry Co., Ltd. Deyang, Sichuan Deyang, Sichuan Manufacturing 100.00 Purchase
Sichuan Lomon Mining and Metallurgy Co., Ltd. Panzhihua, Sichuan Panzhihua, Sichuan Mineral dressing 100.00 Purchase
PanzhihuaLomon Mineral Products Co., Ltd. Panzhihua, Sichuan Panzhihua, Sichuan Mining, mineral dressing 84.00 Purchase
XiangyangLomon Titanium Industry Co., Ltd. Xiangyang, Hubei Xiangyang, Hubei Production and sale of titanium dioxide 100.00 Purchase
BaokangXingtai Titanium Industry Co., Ltd. Xiangyang, Hubei Xiangyang, Hubei Sale of titanium dioxide 100.00 Purchase
Lomon US Ltd. U.S. U.S. Warehousing, trade and logistics 100.00 Purchase
Billions Financial Leasing (Guangzhou) Co., Ltd. Jiaozuo, Henan Guangzhou Finance 100.00 Establishment
PanzhihuaRuierxin Industry and Trade Co., Ltd. Panzhihua, Sichuan Panzhihua, Sichuan Sale of mineral products 100.00 Establishment
Statements regarding difference between the proportion of shares and the proportion of voting rights held in subsidiaries:
Billions Financial Leasing (Guangzhou) Co., Ltd. was jointly established by the parent company, Billions (Hong Kong) Corporation Limited and
Shenzhen Furun Asset Management Co., Ltd. through joint investment, to which Shenzhen Furun Asset Management Co., Ltd. contributed RMB30
million, accounting for 10% of the total. As at December 31, 2017, the contributions received by Billions Financial Leasing (Guangzhou) Co., Ltd.
from the parent company and Billions (Hong Kong) Corporation Limited accounted for 100% of contributions payable and 90% of all voting rights.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
2. Significant non-wholly-owned subsidiary
Monetary Unit: Yuan
Subsidiary Name The shareholding ratio of minority
shareholders (%) Current profit and loss attributable to minority
shareholders Dividend declared to be distributed to
minority shareholders in the current period Closing balance of minority equity
Jiaozuo Billions Reservoir Management Co., Ltd. 2.17 -16,769.05 934,614.47
Jiaozuo Zhongzhan District Yili Small Loan Co.,
Ltd. 26 13,999,572.64 7,628,400.00 88,295,425.76
Jiaozuo Rongjia Scandium Technology Co., Ltd. 40 -371,073.46 13,060,035.22
Jiaozuo Billions Pigment Co., Ltd. 45 -3,319,158.03 12,880,610.14
PanzhihuaLomon Mineral Products Co., Ltd. 16 87,809,444.67 17,600,000.00 224,723,028.71
3. Main financial information of significant non-wholly-owned subsidiaries
Monetary Unit: Yuan
Subsidiary Name Closing Balance
Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities
Jiaozuo Billions Reservoir Management Co., Ltd. 6,059,538.46 175,865,614.04 181,925,152.50 118,855,361.36 20,000,000.00 138,855,361.36
Jiaozuo Zhongzhan District Yili Small Loan Co., Ltd. 35,311,957.50 442,761,781.75 478,073,739.25 120,556,095.38 120,556,095.38
Jiaozuo Rongjia Scandium Technology Co., Ltd. 24,610,703.03 18,881,930.16 43,492,633.19 10,842,545.13 10,842,545.13
Jiaozuo Billions Pigment Co., Ltd. 32,997,391.17 52,051,187.60 85,048,578.77 56,425,000.69 56,425,000.69
Panzhihua Lomon Mineral Products Co., Ltd. 1,241,917,334.84 309,312,538.60 1,551,229,873.44 90,833,937.83 55,877,006.17 146,710,944.00
Continued
Subsidiary Name Beginning Balance
Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities
Jiaozuo Billions Reservoir Management Co., Ltd. 1,697,522.98 149,660,942.31 151,358,465.29 57,515,906.64 50,000,000.00 107,515,906.64
Jiaozuo Zhongzhan District Yili Small Loan Co.,
Ltd. 45,976,139.80 212,116,301.58 258,092,441.38 56,731,085.75 56,731,085.75
Jiaozuo Rongjia Scandium Technology Co., Ltd. 31,966,613.30 8,616,851.24 40,583,464.54 7,005,692.82 7,005,692.82
Jiaozuo Billions Pigment Co., Ltd. 26,636,493.46 18,030,193.04 44,666,686.50 13,111,645.68 13,111,645.68
Panzhihua Lomon Mineral Products Co., Ltd. 889,004,052.72 1,192,948,106.30 2,081,952,159.02 97,532,129.41 63,131,554.25 160,663,683.66
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Monetary Unit: Yuan
Subsidiary Name
Accrual amount for current period Accrual amount for last period
Operating income Net profit Total comprehensive
income Cash flow from operating
activities Operating income Net profit
Total comprehensive
income Cash flow from operating
activities
Jiaozuo Billions Reservoir Management Co., Ltd. -772,767.51 -772,767.51 -579,199.94 -740,181.20 -740,181.20 9,744,448.89
Jiaozuo Zhongzhan District Yili Small Loan Co., Ltd. 95,223,014.03 51,564,688.24 51,564,688.24 -115,553,995.63 48,320,456.91 20,868,266.37 20,868,266.37 -48,419,913.92
Jiaozuo Rongjia Scandium Technology Co., Ltd. 2,034,995.69 -927,683.66 -927,683.66 -911,357.24 8,320,948.19 1,642,128.16 1,642,128.16 -11,791,151.94
Jiaozuo Billions Pigment Co., Ltd. 37,667,546.15 -7,375,906.74 -7,375,906.74 -21,329,599.59 13,972,286.34 -4,357,809.18 -4,357,809.18 1,103,759.08
Panzhihua Lomon Mineral Products Co., Ltd. 825,760,477.10 549,510,648.18 549,510,648.18 553,230,835.42 118,914,083.88 50,276,211.63 50,276,211.63 157,330,902.46
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
2.Equity in joint ventures and associates (1) Key joint ventures or associated enterprises
Joint Venture or
Associate
Principal
Place of
Business
Registered Address Business Type
Shareholding Ratio (%) Accounting treatment
methods for
investment in joint
venture or associate Direct Indirect
Jiaozuo Weina
Technology Co., Ltd.
Jiaozuo,
Zhengzhou
North to Jiaoke Road, 1km to
West of Zhongzhan District,
Jiaozuo
Production and sale
of ceramic products 21.30 % Calculate by equity
method
Panzhihua Panxi
Modern Logistics Co.,
Ltd.
Panzhihua,
Sichuan
Dashaba, Renhe District,
Panzhihua
Logistics and
transportation 26.21% Calculate by equity
method
(2) Summary financial information of insignificant joint ventures and associates
Monetary Unit: Yuan Closing Balance/Accrual Amount for
Current Period Beginning Balance/Accrual Amount for Prior Period
Joint venture；
Total book value of investment
The total of the following items calculated by
shareholding ratio
- Net profit
- Other comprehensive income
- Total comprehensive income
Associate:
Total book value of investment 17,354,982.65 40,509,607.25
The total of the following items calculated by shareholding ratio
- Net profit 845,375.40 266,773.25
- Other comprehensive income
- Total comprehensive income 845,375.40 266,773.25
X. Risks related to financial instruments
Various financial risks facing the Company in the course of operation: credit risk, market
risk and liquidity risk. The board of directors is fully responsible for the determination of
risk management goals and policies, and undertakes the ultimate responsibility for such
goals and policies, but the board of directors has authorized the Company's functional
department to design and implement procedures that can ensure the effective
implementation of risk management goals and policies. The board of directors examines
the effectiveness of the executed procedures and the rationality of risk management goals
and policies through the monthly reports submitted by the head of the functional
department. The Company's internal auditors will also audit the risk management policies
and procedures, and report the findings to the audit committee.
The overall goal of the Company's risk management is to formulate a risk management
policy that can reduce the risk as much as possible without much impact on the
competitiveness and mobility of the Company.
(I) Credit risk: credit risk means the risk of causing a party to any financial instrument to suffer
financial losses due to the failure of the other party to fulfill its obligations. The Company mainly
faces customer credit risks caused by credit sale. Before signing a new contract, the Company
will assess the credit risk of the new customer, including external credit rating and the bank
credentials in some cases (when the information is available). The Company has set a credit limit
for each customer, which is the maximum amount without additional approval.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
The Company ensures that the Company's overall credit risk is in a controllable range through the quarterly monitoring of the credit rating of existing customers and the monthly review of the accounts receivable aging analysis. When monitoring the credit risk of customers, they are grouped according to their credit characteristics. Customers who are rated as "high risk" will be placed on the list of restricted customers and can buy on credit in the future only with additional approval, otherwise they must be required to pay appropriate amount in advance.
(II) Market risks
The market risk of financial instruments means the risk that the fair value or future
cash flow of a financial instrument fluctuates because of change in the market price,
including exchange rate risk, interest rate risk and other price risks.
(1) Interest rate risk
Interest rate risk means the risk that the fair value or future cash flow of a financial
instrument fluctuates because of change in the market interest rate. The interest
rate risk facing the Company mainly comes from long-term and short-term bank
loans. The Company currently borrows at a fixed interest rate. Although this policy
cannot enable the Company to completely avoid the risk of such fixed interest rate
exceeding the prevailing market interest rate nor can it completely eliminate the
cash flow risk related to the interest payment fluctuation, yet the management
believes that the policy achieves a reasonable balance between these risks.
(2) Exchange rate risk
Exchange rate risk means the risk that the fair value or future cash flow of a financial
instrument fluctuates because of change in the foreign exchange rate. The Company
will match the foreign currency income with foreign currency expenditure as far as
possible to reduce exchange rate risk. In addition, the Company may sign forward
foreign exchange contracts or currency swap contracts to avoid exchange rate risk.
In 2017, the Company did not sign any forward foreign exchange contracts or
currency swap contracts.
The exchange rate risk facing the Company mainly comes from financial assets and
liabilities in foreign currency, such as US dollar, euro, and pound sterling. The
amount of financial assets and liabilities in foreign currency converted into RMB is
listed as follows:
Item
Closing Balance
US dollar Euro Pound
sterling Other foreign
currencies Total
Financial assets in
foreign currency
Monetary fund 197,853,301.44 192,212,515.05 210,074.40 712,307.51 390,988,198.40
Receivables 869,034,147.59 36,691,509.50 632,102.40 906,357,759.49
Other receivables
Sub-total 1,066,887,449.03 228,904,024.55 842,176.80 712,307.51 1,297,345,957.89
Financial liabilities in
foreign currency
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Short-term borrowing 821,152,914.00 821,152,914.00
Payables 88,381,486.48 1,000,331.71 380,655.58 12,399.24 89,774,873.01
Taxes payable 37,255.00 37,255.00
Other payables 5,739,118.54 5,739,118.54
Long-term borrowing 52,273,600.00 13,146,251.08 65,419,851.08
Sub-total 967,584,374.02 14,146,582.79 380,655.58 12,399.24 982,124,011.63
Net amount 99,303,075.01 214,757,441.76 461,521.22 699,908.27 315,221,946.26
Continued
Item
Beginning balance
US dollar Euro Pound sterling Other foreign
currencies Total
Financial assets in foreign
currency
Monetary fund 207,413,826.82 10,073,524.50 32,962.41 354,231.94 217,874,545.67
Receivables 595,897,095.49 17,961,483.04 282,341.89 614,140,920.42
Other receivables 53,121.88 53,121.88
Sub-total 803,364,044.19 28,035,007.54 315,304.30 354,231.94 832,068,587.97
Financial liabilities in foreign
currency
Short-term borrowing 407,715,238.00 867,339.08 408,582,577.08
Payables 14,839,050.47 2,783,854.12 7,469,668.66 115,351.14 25,207,924.39
Other payables 2,986,033.66 2,986,033.66
Sub-total 425,540,322.13 3,651,193.20 7,469,668.66 115,351.14 436,776,535.13
Net amount 377,823,722.06 24,383,814.34 -7,154,364.36 238,880.80 395,292,052.84
(3) Other price risks: the Company does not hold any equity investment in any other
listed company.
(III) Liquidity risk: liquidity risk means the risk of a shortage of funds faced by an
enterprise in fulfilling its payment obligation by delivering cash or other financial
assets. The Company's policy is to ensure that sufficient cash is available to repay
the debts due. Liquidity risk is centrally controlled by the Finance Department of
the Company. The Finance Department ensures that the Company has sufficient
funds to repay its debts under all reasonable forecasts by monitoring the cash
balance, readily realizable securities and a rolling forecast of the future 12 months'
cash flow.
The financial liabilities of the Company are listed below in the form of
undiscounted contractual cash flows, on the basis of their maturity dates:
Item
2017.12.31
Less than 1 year 1-5 years More than 5 years Total
Short-term borrowing 3,440,802,914.00
3,440,802,914.00
Deposits from clients and interbank 102,000,000.00
102,000,000.00
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Notes payable 420,953,502.48
420,953,502.48
Payables 985,650,869.05
985,650,869.05
Advance receipts 128,047,904.96
128,047,904.96
Payroll 350,340,105.92
350,340,105.92
Taxes payable 240,135,260.84
240,135,260.84
Interest payable 3,260,956.88
3,260,956.88
Dividend payable 17,522,756.71
17,522,756.71
Other payables 176,211,444.84
176,211,444.84
Non-current liabilities due within one
year 379,000,000.00
379,000,000.00
Long-term borrowing
665,419,851.07
665,419,851.07
Long-term payables
120,000,000.00 80,000,000.00 200,000,000.00
Estimated liabilities 3,891,544.52
3,891,544.52
Deferred income 209,175,402.79
209,175,402.79
Deferred income tax liabilities 189,734,795.37
189,734,795.37
Total 6,646,727,458.36 785,419,851.07 80,000,000.00 7,512,147,309.43
Ⅺ. Related party and related party relationships
1. Profile of the Company's parent company
On March 3, 2010, XU Gang, TAN Ruiqing and DU Xinchang, the actual controllers of
the Company, signed a Concerted Action Agreement, according to which the parties
agreed to take concerted action on major matters. The Concerted Action Agreement
would expire 3 years from the date on which the Company was listed. The Company was
listed on July 15, 2017. As of July 14, 2014, the Company has been listed for three years,
i.e., the period stipulated in the Concerted Action Agreement has expired.
XU Gang, TAN Ruiqing and DU Xinchang decided that after the termination of the
above-mentioned agreement at its expiry, they would no longer sign the Concerted
Action Agreement with all or part of the original members of the concerted action.
Therefore, the Company has no controlling shareholders and actual controllers.
2. Profile of the Company's subsidiaries
See "Ⅸ. Equity in Other Entities" for details.
3. The profile of the Company's joint ventures and associates
See "Ⅸ. Equity in Other Entities" for the details of the Company's significant joint
ventures and associates.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
4. Other related parties
Name of Other Related Party Relationship of Other Related Party with the Company
Sichuan Lomon Group Co., Ltd. ("Lomon Group") Companies controlled by immediate relatives of shareholders
holding more than 5% of the Company's shares
Sichuan Lomon Phosphorus Products Co., Ltd. ("Lomon Phosphorus Products") Companies controlled by immediate relatives of shareholders
holding more than 5% of the Company's shares
Nanzhang Lomon Phosphorus Products Co., Ltd. ("Nanzhang Phosphorus Products") Companies controlled by immediate relatives of shareholders
holding more than 5% of the Company's shares
Sichuan Lomon Phosphorus Chemical Industry Co., Ltd. ("Lomon Phosphorus
Chemical Industry") Companies controlled by immediate relatives of shareholders
holding more than 5% of the Company's shares
Lomon Dadi Agriculture Co., Ltd. ("LomonDadi") Companies controlled by immediate relatives of shareholders
holding more than 5% of the Company's shares
Tibet Nippon Investment Co., Ltd. Companies controlled by immediate relatives of shareholders
holding more than 5% of the Company's shares
Sichuan Lomon Industrial Gypsum Development Co., Ltd. ("Lomon Gypsum") Companies controlled by immediate relatives of shareholders
holding more than 5% of the Company's shares
Chengdu Billions Investment Management Co., Ltd. ("Billions Investment") Immediate relatives of shareholders holding more than 5% of
the Company's shares
LI Jiaquan Immediate relatives of shareholders holding more than 5% of
the Company's shares
Hunan Oriental Scandium Industry Mining Co., Ltd. ("Oriental Scandium Industry") Shareholders holding more than 5% of the shares of the
Company's subsidiary Rongjia Scandium
5. Related party transactions
（1）Related party transactions involving purchase and sale of goods and rendering and
acceptance of services: Table of Information on Purchase of Goods / Acceptance of
Services
Monetary Unit: Yuan
Related Party Content of Related Party
Transactions Accrual amount for current
period Accrual amount for last
period
Weina Technology Zirconium ball 2,535,777.84
Weina Technology Material 1,923,114.49
Weina Technology Fuel power 284,076.57
Weina Technology Raw materials 1,257,700.00
Lomon Phosphorus Chemical Industry Raw materials, labor service 30,082,331.70 1,524,444.57
Nanzhang Phosphorus Products Raw materials, labor service 1,168,278.40 6879977.17
6879Lomon Phosphorus Chemical Industry Acceptance of transportation and
warehousing service 13,547,355.76
Nanzhang Phosphorus Products Purchase of steam 13,275,655.95
Lomon Phosphorus Chemical Industry Acceptance of ferrous metal sales
agency service 3,034,281.22
Nanzhang Phosphorus Products Acceptance of waste acid
treatment service 18,628,670.88
Lomon Phosphorus Chemical Industry Acceptance of wastewater
treatment service 15,515,926.08
Nanzhang Phosphorus Products Acceptance of wastewater
treatment service 13,580,242.80
Total 110,090,442.79 13,147,390.64
Table of Information on Sale of Goods / Rendering of Services
Monetary Unit: Yuan
Related Party Content of Related Party
Transactions Accrual amount for current period
Accrual amount for last
period
Weina Technology Zirconium chloride 4,505,555.52
Weina Technology Zirconiumdioxide 153,055.56 256.41
Weina Technology Titanium dioxide products 1,489,743.59 2,889,316.24
Weina Technology Material 1,983,016.74 1,426,961.52
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Weina Technology Fuel power 1,262,537.75 1,183,402.11
Oriental Scandium Industry Scandium hydrogen oxide 1,207,621.38
Oriental Scandium Industry Coarse scandium oxide 854,700.87 6,207,448.78
Lomon Bio Revolving materials and other 207,209.88
Lomon Phosphorus Chemical Industry Rendering of sulphuric acid service 354,111.45
Lomon Phosphorus Chemical Industry Sale of electricity 26,973,731.24 8,823,951.33
Lomon Phosphorus Chemical Industry Sale of water 1,387,658.24
Lomon Phosphorus Chemical Industry Rendering of transportation service 13,480,054.20
Lomon Gypsum Products 98,538.91
Nanzhang Phosphorus Products Industrial water 744,419.25 453,044.20
Lomon Phosphorus Chemical Industry Sale of desalted saltwater 497,644.37
Total 53,686,228.78 22,497,750.70
（2） Related party lease
The Company (lessor):
Monetary Unit: Yuan
Name of Lessee Type of rented assets Lease income recognized in the
current period Lease income recognized in
prior period
Weina Technology Plant 970,159.56 1,093,259.44
Jiali Thermoelectric Office occupancy 28,571.43
Lomon Phosphorus Chemical Industry Warehousing, inventory, parking,
equipment, etc. 2,182,645.08 37,900.00
The Company (lessee):
Monetary Unit: Yuan
Name of Lessor Type of leased assets Rental fees recognized in the
current period Rental fees recognized in
prior period
Lomon Phosphorus Chemical Industry Office building, parking lot 42,341.10 1,149,726.96
Billions Investment Office building 540,000.00
Nanzhang Phosphorus Products Slag yard 5,656,084.44 873,743.52
Lomon Phosphorus Products House property, land 232,098.36
（3） Related party guarantee
The Company acts as the guarantor
Monetary Unit: Yuan
The Guaranteed Amount Guaranteed Start Date of Guarantee Expiry Date of
Guarantee Whether guarantee has been
fulfilled
Jiaozuo Reservoir 5,000,000.00 2015.01.16 2019.11.16 No
Jiaozuo Reservoir 10,000,000.00 2015.02.04 2019.11.16 No
Jiaozuo Reservoir 10,000,000.00 2015.03.10 2019.11.16 No
Jiaozuo Reservoir 10,000,000.00 2015.08.11 2019.11.16 No
Jiaozuo Zhongzhan District Yili
Small Loan Co., Ltd. 50,000,000.00 2017.04.10 2018.04.09 No
Jiaozuo Zhongzhan District Yili
Small Loan Co., Ltd. 22,000,000.00 2017.09.05 2018.09.05 No
Jiaozuo Zhongzhan District Yili
Small Loan Co., Ltd. 30,000,000.00 2017.10.09 2018.10.08 No
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Billions Europe Ltd. USD8,000,000.00 2016.12.22 2019.12.22 No
Billions Europe Ltd. EUR1,684,919.97 2016.12.22 2019.12.22 No
Billions (Hong Kong) USD10,000,000.00 2017.03.07 2018.03.07 No
Billions (Hong Kong) USD14,910,000.00 2017.05.23 2018.05.19 No
Sichuan Lomon Titanium
Industry Co., Ltd. 100,000,000.00 2016.11.22 2018.04.21 No
Sichuan Lomon Titanium
Industry Co., Ltd. 100,000,000.00 2016.11.22 2018.05.21 No
Sichuan Lomon Titanium
Industry Co., Ltd. 100,000,000.00 2017.02.10 2018.02.02 No
Sichuan Lomon Titanium
Industry Co., Ltd. 100,000,000.00 2017.02.10 2018.02.09 No
Henan Billions New Materials 200,000,000.00 2016.10.18 2024.06.11 No
Henan Billions New Materials 1,400,000.00 2017.11.29 2018.03.29 No
Henan Billions New Materials 800,000.00 2017.12.18 2018.04.17 No
Henan Billions New Materials 5,000,000.00 2017.12.18 2018.05.18 No
Henan Billions New Materials 6,300,000.00 2017.12.30 2018.05.30 No
Billions Pigment 1,000,000.00 2017.07.25 2018.01.25 No
Billions Pigment 2,500,000.00 2017.11.10 2018.05.10 No
Billions Pigment 2,500,000.00 2017.12.20 2018.06.20 No
The Company acts as the guarantor
Monetary Unit: Yuan
The Guaranteed Amount Guaranteed Start Date of Guarantee Expiry Date of
Guarantee Whether guarantee has been
fulfilled
Henan Billions New Materials
Co., Ltd. 200,000,000.00 2017.06.27 2019.06.26 No
Statements on guarantee
Note: except as otherwise specified, the monetary unit is RMB yuan.
A. The Company provides joint liability guarantee for the long-term loans of Billions
Reservoir. On November 10, 2014, Jiaozuo Billions Reservoir Management Co., Ltd. and
Bank of China Travel Service CO., Ltd., Jiaozuo signed a RMB50 million fixed asset loan
contract for the construction of the Jiaozuo Gushan Lake Reservoir project. According to
the Contract, Jiaozuo Billions Reservoir Management Co., Ltd. may draw the loan funds by
installments, but the sum of drawings should not exceed RMB50 million. Lomon Billions
Group Co., Ltd. provides joint liability guarantee for the said loans. As at December 31,
2017, the balance of the loans of Jiaozuo Bailiyuan Reservoir Management Co., Ltd. was
RMB35 million.
B. The Company provides joint liability guarantee for the short-term loans of Jiaozuo
Zhongzhan District Yili Small Loan Co., Ltd. On April 10, 2017, Jiaozuo Zhongzhan
District Yili Small Loan Co., Ltd. and Bank of China Travel Service CO., Ltd., Jiaozuo
signed a working capital loan contract, according to which Yili Small Loan would get a
short-term loan of RMB50 million from Bank of China Travel Service, and Lomon Billions
Group Co., Ltd. would provide the joint liability guarantee.
On October 09, 2017, Jiaozuo Zhongzhan District Yili Small Loan Co., Ltd. and Bank of
China Travel Service CO., Ltd., Jiaozuo signed a working capital loan contract, according
to which Yili Small Loan would get a short-term loan of RMB30 million from Bank of
China Travel Service, and Lomon Billions Group Co., Ltd. would provide the joint liability
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
guarantee. On September 05, 2017, Jiaozuo Zhongzhan District Yili Small Loan Co., Ltd.
and the Rural Commercial Bank of Xiuwu County, Henan Province, Jiaozuo signed a
working capital loan contract, according to which Yili Small Loan would get a short-term
loan of RMB22 million from Bank of China Travel Service, and Lomon Billions Group Co.,
Ltd. would provide the joint liability guarantee. As at December 31, 2017, the balance of
the loan of Jiaozuo Zhongzhan District Yili Small Loan Co., Ltd. was RMB102 million.
C. The Company provides joint liability guarantee for the long-term loans of BILLIONS
EUROPE LTD.
On March 14, 2016, BILLIONS EUROPE LTD. signed a fund loan contract with China
Construction Bank Corporation, Lodon Branch, according to which, BILLIONS EUROPE
LTD. got a short-term loan of USD10 million. On December 23, 2016, the loan was
converted to two long-term loans of USD8 million and EUR1,913,000.00, respectively.
Lomon Billions Group Co., Ltd. provides joint liability guarantee for the said loans. As at
December 31, 2017, the balance of the loans of BILLIONS EUROPE LTD. was USD8
million and EUR1,684,000.00.
D. The Company provides joint liability guarantee for the short-term loans of Billions (Hong
Kong) Corporation Limited.
On March 7, 2017, Billions (Hong Kong) Corporation Limited signed a capital loan contract
with China Construction Bank Corporation, Asia Branch and thereby got a short-term loan
of USD10 million from China Construction Bank; on May 23, 2017, signed a loan contract
with Bank of China, Macau Branch, and whereby got a short-term loan of
USD14,910,000.00. As at December 31, 2017, the balance of the above loan of BBillions
(Hong Kong) Corporation Limited was USD24,910,000.00.
E. On November 22, 2016, the Company signed a maximum guarantee contract with
Export-Import Bank of China, and thereby provided a joint liability guarantee for the
maximum RMB500 million balance of the debts formed between Export-Import Bank of
China and Sichuan Lomon Titanium Industry Co., Ltd. with a guarantee period from
November 22, 2016 to November 21, 2018.
On November 18, 2016, Sichuan Lomon Titanium Industry Co., Ltd. and Export-Import
Bank of China signed a capital loan contract, according to which Lomon Titanium Industry
got a long-term loan of RMB200 million from Export-Import Bank of China, and Lomon
Billions Group Co., Ltd. would provide the joint liability guarantee. On Wednesday,
February 01, 2017, Sichuan Lomon Titanium Industry Co., Ltd. and Export-Import Bank of
China signed a capital loan contract, according to which Lomon Titanium Industry got a
long-term loan of RMB200 million from Export-Import Bank of China, and Lomon Billions
Group Co., Ltd. would provide the joint liability guarantee. As at December 31, 2017, the
balance of the above loans of Sichuan Lomon Titanium Industry Co., Ltd. was RMB400
million.
F. The Company provides joint liability guarantee for the long-term loans of Henan Billions
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
New Materials Co., Ltd.
On October 18, 2016, Lomon Billions Group Co., Ltd. and Agricultural Development Bank
of China, Jiaozuo Branch signed a capital loan contract, according to which Lomon Billions
Group got a long-term loan of RMB200 million from Export-Import Bank of China, and
Lomon Billions Group Co., Ltd. would provide the joint liability guarantee. As at December
31, 2017, the balance of the loan of Henan Billions New Materials Co., Ltd. was RMB200
million.
On November 29, 2017, the Company signed the maximum guarantee contract with
Zhongyuan Bank Co., Ltd., Jiaozuo Branch and thereby provided a joint liability guarantee
for the maximum RMB50 million balance of the commercial acceptance draft formed
between Zhongyuan Bank Co., Ltd., Jiaozuo Branch and Henan Billions New Materials Co.,
Ltd. As at December 31, 2017, the balance of the commercial acceptance draft of Henan
Billions New Materials Co., Ltd. was RMB13.5 million.
E. The Company provides joint liability guarantee for the bank acceptance draft of
Jiaozuo Billions Pigment Co., Ltd.
The Company signed the maximum guarantee contract with Zhongyuan Bank Co.,
Ltd., Jiaozuo Branch and thereby provided a joint liability guarantee for the
maximum RMB10 million balance of the commercial acceptance draft formed
between Zhongyuan Bank Co., Ltd., Jiaozuo Branch and Jiaozuo Billions Pigment
Co., Ltd.As at December 31, 2017, the balance of the commercial acceptance draft
of Jiaozuo Billions Pigment Co., Ltd. was RMB6 million.
（4） The assets transfer and debt restructuring of the related parties
Monetary Unit: Yuan
Related Party Content of Related Party Transactions Accrual amount
for current
period Accrual amount for last period
LomonDadi Fixed Assets 598,826.55
Lomon Bio Fixed Assets 997,662.98
（5） Remuneration of key managerial personnel
Monetary Unit: Yuan
Item Accrual amount for current period Accrual amount for last period
Remuneration of key managerial personnel 21,750,457.82 10,584,913.00
（6）Other related transactions
In 2016, the Company issued shares and paid cash to purchase the 100% shares of Lomon Titanium
held by LI Jiaquan, Sichuan Lomon Group Co., Ltd., and Tibet Nippon Investment Co., Ltd.. Against
this background, the Company signed a Share Transfer Agreement with LI Jiaquan, Sichuan Lomon
Group Co., Ltd. and Tibet Nippon Investment Co., Ltd..According to the Agreement, 1.during the
performance commitment period (2015-2017), the net profit of Lomon Titanium in the 3 years should
be RMB700 million, RMB900 million and RMB1.1 billion, respectively; 2. during the performance
commitment period, the annual performance compensation = cumulative performance commitment
amount of the year - cumulative actual performance amount of the year - cumulative compensated
performance amount. In 2017, Lomon Titanium had completed its performance commitment.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
On February 10, 2018, the seventh meeting of the sixth board of directors of the
Company considered and approved the Proposal on Adjusting the Proportion of the
Excess Profit Award to Key Personnel of Lomon Titanium.
The specific arrangements for implementing the excess profit award before adjustment:
The net profit of Lomon Titanium in the 3 commitment years (2015, 2016 and 2017)
is more than RMB2.7 billion, the Company will give cash reward to the above three
key personnel of Lomon Titanium for their outperformance upon expiration of the
commitment period. The reward amount = (the actual cumulative net profit in 3 years
- RMB2.7 billion) *20%.
After the adjustment, the specific arrangements for implementing the excess profit
award: the reward ratio is adjusted from 20% to 6%, and the absolute amount of the
reward is not more than RMB70 million. The net profit of Lomon Titanium in the
above-mentioned commitment years will be subject to the results audited by the
accounting firm.
In the current year, Lomon Titanium appropriated RMB70 million excess profit award
for the key personnel, including RMB56 million for LI Jiaquan, RMB7 million for
YAO Hengping and RMB7 million for CHEN Jun. LI Jiaquan is the father of LI
Lingzhi, a shareholder holding more than 5% of the Company's shares.
6. Accounts receivable and payable by the related parties
（1） Receivables
Monetary Unit: Yuan
Project Name Related Party
Closing Balance Beginning Balance
Book balance Bad Debt
Reserves Book balance
Bad Debt
Reserves
Lomon Phosphorus Chemical
Industry 5,635,974.45 281,798.72
Oriental Scandium Industry 10,071,904.00 927,365.40
Nanzhang Phosphorus Products 1,545,094.68
Lomon Phosphorus Chemical
Industry 52,500.00 15,750.00
Lomon Group 2,588,179.01 258,817.90
Nanzhang Phosphorus Products 223,311.46 11,165.57
Jiali Thermoelectric 787,842.84
（2） Payables
Monetary Unit: Yuan
Project Name Related Party Closing Book Balance Beginning Book Balance
Payables Lomon Phosphorus Chemical Industry 367,148.93
Nanzhang Phosphorus Products 28,922,857.27 5,872,402.07
Other payables
Jiali Thermoelectric 20,720,000.00
Lomon Group 1,096,474.09
Lomon Phosphorus Products 31,750,033.09 13,922.00
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Ⅻ Share-based Payment
1. Overview of share-based payments
Monetary Unit: Yuan
Total amount of equity instruments of the Company granted in current period 0.00
Total amount of equity instruments of the Company exercised in current period 10,223,745.00
Total amount of equity instruments of the Company expiring in current period 48,882.42
Exercise price range and remaining contractual term of outstanding stock options of
the Company as of the end of the period No exercise, 5 months
Exercise price range and remaining contractual term of other outstanding equity instruments of the Company as of the end of the period
None
Other statements: The Company held the 11th Meeting of the 5th Board of Directors on April 24,
2015, at which the Company considered and approved the Proposal on Granting Restricted
Stocks to the Incentive Objects. The Company decided to grant the 15,030,000.00 shares of
restricted stocks to 752 objects at the price of RMB10.42 on April 24, 2015. When the Company's
board of directors was granting the stocks, 3 incentive objects voluntarily gave up their right to
such restricted stocks under the Equity Incentive Plan because of personal funds or other reasons,
so the number of restricted stocks granted under the Incentive Plan was adjusted from
15,030,000.00 shares to 15,005,000 shares, and the number of incentive objects was adjusted
from 752 to 749.
On February 25, 2016, the Company held the 19th Meeting of the 5th Board of Directors and the
19th Meeting of the 5th Board of Supervisors, respectively and considered and approved the
Proposal on Repurchasing and Writing off Part of the Restricted Stocks, according to which the
Company agreed to repurchase and write off the 1,800 shares of restricted stocks that were
granted on April 24, 2015, at a repurchase price of RMB10.42/share and involving 1 incentive
object.
On February 25, 2016, the Company held the 19th Meeting of the 5th Board of Directors, at
which the Company considered and approved the Proposal on the Achievement of the Unlocking
Conditions for the Company's 2015 Restricted Stock Incentive Plan (the First Unlocking Period).
The board of directors held that the unlocking conditions for the first unlocking period of the
restricted stocks under the Company's Incentive Plan had been achieved.
At the 21st Meeting of the 5th Board of Directors held on May 13, 2016, the Company considered
and approved the Proposal on Adjusting the Number and Price of the Shares under 2015
Restricted Stock Incentive Plan. The Company's 2015 Restricted Stock Incentive Plan was
completed on April 27, 2016. According to the Company's 2015 Restricted Stock Incentive Plan
(Draft), the board of directors adjusted the number and price of the shares involved in the 2015
Restricted Stock Incentive Plan, i.e., from 15,005,000.00 shares to 52,517,500.00 shares, and
from RMB10.42/share to RMB2.88/share. Upon approval from Shenzhen Stock Exchange and
CSDC Shenzhen, the procedure for the first release of the restricted stocks under the 2015
Restricted Stock Incentive Plan has been completed by CSDC Shenzhen. This time, 749
shareholders released a total of 21,007,000.00 restricted shares, accounting for 2.9361% of the
total share capital of the Company when the restricted stocks were released; the released stocks
were circulated on the market on May 26, 2016.
On March 29, 2017, the 33rd Meeting of the 5th Board of Directors of the Company approved
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
the Proposal on Unlocking in the Second Unlocking Period under the 2015 Restricted Stock
Incentive Plan. The board of directors held that the unlocking conditions for the second unlocking
period of the restricted stocks under the Company's 2015 Restricted Stock Incentive Plan had
been achieved. Upon approval from Shenzhen Stock Exchange and CSDC Shenzhen, the
procedure for the second release of the restricted stocks under the 2015 Restricted Stock Incentive
Plan has been completed by CSDC Shenzhen. This time, 745 shareholders released a total of
15,717,450.00 restricted shares, accounting for 0.7734% of the total share capital of the Company
when the restricted stocks were released; the released stocks were circulated on the market on
May 26, 2017.
On March 29, 2017, the Company held the 33rd Meeting of the 5th Board of Directors and the
31st Meeting of the 5th Board of Supervisors, respectively and considered and approved the
Proposal on Repurchasing and Writing off Part of the Restricted Stocks, according to which the
Company agreed to repurchase and write off the 69,300 shares of restricted stocks that were
granted on April 24, 2015 but not unlocked, which accounted for 0.22% of all the restricted stocks.
The repurchase was made at the price of RMB2.98/share (i.e., the sum of RMB2.88/share grant
price after adjustment and RMB0.1/share for the cash dividend received by the Company on
behalf of the shareholders) and involved 3 incentive objects.
2. Share-based payment settled with equity
Monetary Unit: Yuan
Method of determination of fair value of granted equity instruments on grant date
Basis for determination of number of exercisable equity instruments
Reasons for difference between the current period and the previous period in estimated value
Cumulative amounts included into capital reserves as equity-settled share-based
payment 65,834,583.35
Total costs recognized as equity-settled share-based payment in current period 15,717,450.00
Other statements:
Payment in respective of 15,005,000.00 restricted shares
The Company's 749 middle and senior management and key business and technical personnel
contributed RMB156,352,100.00 in monetary form, of which RMB15,005,000.00 was included
in share capital and RMB141,347,100.00 in capital reserves. According to the option pricing
model, the Company determined that the total fair value of the equity instruments granted on the
grant date was RMB68,158,300.00, and the incentive costs of the restrictive stocks amounted to
RMB68,158,300.00.
The amortization of incentive costs of restricted stocks in 2015-2018 is shown in the
following table (monetary unit: RMB ten thousand): Restricted shares to be granted
(ten thousand shares)
The total costs to be
amortized 2015 2016 2017 2018
1,500.50 6,815.83 2,953.53 2,612.74 1,022.37 227.19
The specific unlocking arrangements for restricted stocks of current period: Unlocking period Unlocking time Unlocked ratio
The first unlocking
period From the first trading day 12 months from the date of authorization to the last trading day of
24 months from the date of authorization 40%
The second unlocking
period From the first trading day 24 months from the date of authorization to the last trading day of
36 months from the date of authorization 30%
The third unlocking
period From the first trading day 36 months from the date of authorization to the last trading day of
48 months from the date of authorization 30%
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
The unlocking performance conditions for the restrictive stocks of the current period:
Unlocking conditions
The first unlocking period Taking 2014 performance as the base number, the net profit of 2015 grew by not less than 45% compared with that of 2014;
The second unlocking period Taking 2014 performance as the base number, the net profit of 2016 grew by not less than 60% compared with that of 2014;
The third unlocking period Taking 2014 performance as the base number, the net profit of 2017 grew by not less than 75% compared with that of 2014.
The above-mentioned "net profit" means net profit attributable to the shareholders of the listed company
net of non-recurring profit and loss.
In the locking period, neither the net profit attributable to the shareholders of the listed company nor the net
profit attributable to the shareholders of the listed company net of non-recurring profit and loss shall be lower
than the average level of the most recent three accounting years before the grant date and must not be negative.
The incentive costs incurred from the equity incentives of the current period will be included in the
management costs. If the Company's performance targets are not reached in the first or second unlocking
periods, the target stocks can be deferred to the next year and unlocked when the performance assessment
target is reached next year. If the Company's performance target is not reached next year, the target stocks
should not be unlocked and should be repurchased and written off by the Company. If the Company's
performance target is not reached in the third year, the target stocks should not be unlocked and should be
repurchased and written off by the Company. The repurchase price will be the grant price plus the interest
calculated at the rate of 9%.
(1) On February 25, 2016, the Company held the 9th Meeting of the 5th Board of Directors, at which the
Company considered and approved the Proposal on Unlocking in the First Unlocking Period under the 2015
Restricted Stock Incentive Plan. The board of directors held that the unlocking conditions for the first
unlocking period of the restricted stocks under the Company's 2015 Incentive Plan had been achieved.
According to the relevant provisions of the Incentive Plan, the board of directors of the Company will unlock
the restrictive stocks granted in 2015 that meet the unlocking conditions. The Company's board of directors
has authorized by the Company's 2014 general meeting to handle the unlock issue, and there is no need to
submit it to the general meeting for consideration.
(2) On March 29, 2017, the 33rd Meeting of the 5th Board of Directors of the Company approved the
Proposal on Unlocking in the Second Unlocking Period under the 2015 Restricted Stock Incentive Plan. The
board of directors held that the unlocking conditions for the second unlocking period of the restricted stocks
under the Company's 2015 Incentive Plan had been achieved. According to the relevant provisions of the
Incentive Plan, the board of directors of the Company will unlock the restrictive stocks granted in 2015 that
meet the unlocking conditions. The Company's board of directors has authorized by the Company's 2014
general meeting to handle the unlock issue, and there is no need to submit it to the general meeting for
consideration. Statement on the achievement of the second unlocking conditions under the Incentive Plan:
Serial No. Unlocking conditions Achievement
I
The Company did not have any of the following circumstances:
1. The accounting report of the most recent accounting year has been opposed by
the certified public accountant or cannot express the audit opinions;
2. In the most recent year, the Company received administrative punishment from
CSRC for major violation of laws and regulations; or
3. Other circumstances identified by the CSRC.
The Company did not have the above circumstances, and
satisfied the unlocking conditions.
II
The incentive objects did not have any of the following circumstances:
1. In the most recent three years, the incentive objects were publicly condemned
or declared as inappropriate candidates by the stock exchange;
2. In the most recent three years, the Company received administrative
punishment from CSRC for major violation of laws and regulations;
3. The incentive objects had circumstances under the Company Law in which they
were not allowed to act as directors, supervisors and senior officers; or
4. Other circumstances identified by the board of directors of the Company as
serious violation of the relevant regulations of the Company.
The incentive objects did not have the above
circumstances, and satisfied the unlocking conditions.
III
Performance assessment criteria:
1. Taking 2014 performance as the base number, the net profit of 2016 grew by
not less than 60% compared with that of 2014. 2. In 2016, neither the net profit
attributable to the shareholders of the listed company and the net profit attributable
to the shareholders of the listed company net of non-recurring profit and loss shall
be lower than
The Company's net profit in 2016 net of non-occurring
profits and losses was RMB449,914,800.00, up 737.38%
compared to that in 2014, and not less than the average
level of RMB84,972,300.00 in the most recent three
accounting years.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
the average level of the most recent three accounting years before the grant date
and must not be negative. The above-mentioned "net profit" means net profit
attributable to the shareholders of the listed company net of non-recurring profit
and loss.
In view of the above, the Company has achieved the
performance assessment criteria.
IV
According to the Company's existing assessment methods, the incentive objects
got passing or above grades in the assessment for the immediately prior
accounting year.
In 2016, all the 745 incentive objects passed the
performance assessment criteria and met the unlocking
conditions.
In conclusion, the unlocking conditions for the second unlocking period under the Company's 2015 Incentive
Plan have been achieved. Upon approval from Shenzhen Stock Exchange and CSDC Shenzhen, the procedure
for the second release of the restricted stocks under the 2015 Restricted Stock Incentive Plan has been
completed by CSDC Shenzhen.
1. The date on which the restricted stocks of the current period can be circulated on the market is May 26,
2017;
2. 15,717,140.00 shares of restricted stocks of the current period were unlocked, accounting for 0.7734% of
the total share capital of the Company;
3. A total of 745 shareholders applied for unlocking their restricted stocks in the current period;
The Company's 3 incentive objects resigned in 2016 for personal reasons. According to the relevant
provisions of "Chapter XIII. Dealing with Abnormities of the Company/Incentive Objects" of the 2015
Incentive Plan, the three objects did not meet the restricted stock incentive conditions of the second and third
stages of the 2015 Restricted Stock Incentive Plan. So, the Company should scrap the restricted stocks that
did not meet the restricted stock incentive conditions of the second and third stages and repurchase the
ineligible restricted stocks at the grant price for writing-off.
The number of restricted stocks repurchased in 2015 should be the number of restricted stocks originally held
by the three incentive objects in the second and third stages 115500 * 60%=69300 shares.
The cumulative amount of share-based payments settled with capital reserves was RMB65,834,583.35.
The total costs recognized in the current period due to share-based payments settled with capital reserves
amounted to RMB10,177,649.65.
As at December 31, 2017, the number of restricted stocks was 15,717,450.00 shares.
3. Employee Stock Ownership Plan
The Company held its 2017 third extraordinary general meeting on February 24, 2017 and considered and
approved the Proposal on Repurchasing Shares of the Company, according to which the Company agreed to
repurchase the shares of the Company with its own funds by means of concentrated bidding, block trade or
otherwise permitted by laws and regulations, which would be used for its Employee Stock Ownership Plan.
The total amount of repurchase should be not more than RMB1.2 billion and the total number of repurchase
not more than 100 million shares.
As at August 23, 2017, the Company had repurchased a total of 34,239,749.00 shares of stocks, accounting
for 1.68% of the Company's total share capital. The maximum transaction price was RMB17.72/share, the
minimum transaction price was RMB13.85/share, the total amount paid was RMB550,808,621.16 (excluding
transaction costs), and the average repurchase price was RMB16.09/share.
In order to reduce the employees' shareholding costs, and practically motivate the employees, the Company
decided to transfer 34,239,749.00 repurchased shares of stocks at a price RMB100 million lower than the
cost of repurchase. The part transferred at a price lower than the cost of repurchase was in conformity with
the relevant provisions of the Accounting Standards for Business Enterprises No.11-Share-based Payment. For these stocks, the Company will carry out the accounting treatment according to regulations related to
"share-based payment". In addition, the 6th Meeting of the 6th Board of Directors of the Company
considered and approved the Proposal on Withholding the 2017 Performance Award to Subsidize the
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Employee Stock Ownership Plan, according to which the Company decided to withhold RMB100 million
of the 2017 performance award to subsidy the Company's ESOP in cash. Therefore, the total estimated size
of the present ESOP is not more than RMB352 million, deducting the about RMB3 million period expenses
including management fees, escrow fees and transaction costs related to all the asset management products
involved in the present ESOP. Therefore, the amount of non-transaction ownership transfer under the ESOP
is about RMB348,903,042.31 and the transfer price is RMB10.19/share.
A total of 1,273 employees participated in the present ESOP, and were transferred 34,239,749.00 shares
repurchased by the Company at the price of RMB10.19/share. The present ESOP lasts for 3 years, with a
lockup period of 12 months. Upon expiration of the lockup period, the employees may reduce the shares they
hold on appropriate occasions. From the 1st month to the 12th month after the expiration of the lockup period,
the reduction shall be not more than 50% of the total shares they hold under the present ESOP; from the 13th
month to the 24th month after the expiration of the lockup period, the employees may unload all the remaining
shares they hold, without being subject to any unlocking condition. The Company authorized GUANGDONG
FINANCE TRUST CO., LTD to set up a Guangdong Finance- Lomon Billions Employee Shareholding
Collective Fund Trust Plan ("Collective Trust Plan"), with the total amount of contribution expected to be
RMB352 million, of which, the RMB176 million general shares were contributed by the ESOP, and the
RMB176 million priority shares by Shanghai Pudong Development Bank. After the establishment of the
ESOP, the Company subscribed through the Collective Trust Plan the total shares of Xuanyaun Liudu -
Lomon Billions Employee Shareholding Private Securities Investment Fund ("Private Securities Investment
Fund") set up by Guangzhou Xuanyuan Investment Management Co., Ltd. ("Private Securities Investment
Fund"). The Private Securities Investment Fund acquired and held Lomon Billions stocks mainly through
non-transaction ownership transfer, block trading, bidding and other methods permitted by laws and
regulations.
After receiving RMB348,903,042.31 stock repurchase fund from the Private Securities Investment Fund on
February 27, 2018, the Company transferred the RMB34,239,749.00 shares of stock in the repurchase
account by means of non-transaction ownership transfer to the account under the name of the Xuanyaun
Liudu - Lomon Billions Employee Shareholding Private Securities Investment Fund, all of which has entered
the lockup period.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
XIII. Commitments and Contingencies
1 Significant commitments
Key promises existing as of the date of the Balance Sheet
① Fund support provided to subsidiaries
(1) The Company held the 6th Meeting of the 6th Board of Directors on December 14, 2017, at
which the Company agreed to provide a one-year financial assistance of no more than RMB1
billion to Yili Small Loan, and to charge a fund occupancy fee at a rate 10% above the actual
borrowing rate charged by the bank to the Company.
(2) The Company held the 6th Meeting of the 6th Board of Directors on
December 14, 2017, at which the Company agreed to provide a one-year
financial assistance of no more than RMB900 million to its financial leasing
subsidiary, and to charge a fund occupancy fee at a rate 10% above the actual
borrowing rate charged by the bank to the Company.
② Guarantees provided to subsidiaries
The Company held the 6th Meeting of the 6th Board of Directors on December
14, 2017, at which the Company planned to provide its subsidiaries with a
financing guarantee totaling not more than RMB4.53 billion, which is detailed
as follows:
(1) The Company intends to provide a bank financing guarantee of not more than
RMB250 million for the subsidiary Jiaozuo Zhongzhan District Yili Small Loan
Co., Ltd.;
(2) The Company intends to provide a bank financing guarantee of not more than
RMB30 million for the subsidiary Jiaozuo Rongjia Scandium Industry
Technology Co., Ltd.;
(3) The Company intends to provide a bank financing guarantee of not more than
RMB50 million for the subsidiary Jiaozuo Billions Pigment Co., Ltd.;
(4) The Company intends to provide a bank financing guarantee of not more than
RMB1.5 billion for the subsidiary Henan Billions New Materials Co., Ltd.;
(5) The Company intends to provide a bank financing guarantee of not more than
RMB100 million for the subsidiary Billions Reservoir;
(6) The Company intends to provide a bank financing guarantee of not more than
RMB500 million for the subsidiary Billions (Hong Kong) Corporation Limited;
(7) The Company intends to provide a bank financing guarantee of not more than
RMB300 million (equivalent US dollar) for the subsidiary Billions (Europe)
Corporation Limited;
(8) The Company intends to provide a bank financing guarantee of not more than
RMB300 million for the subsidiary Billions Financial Leasing (Guangzhou) Co.,
Ltd.; and
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
(9) The Company intends to provide a bank financing guarantee of not more than
RMB1.5 billion for the subsidiary Sichuan Lomon Titanium Industry Co., Ltd.
("Lomon Titanium").
2. Contingencies
①Key or contingent matters existing as of the date of the Balance Sheet
The letters of guarantee and letters of credit issued by the Company
The Company's subsidiary, Henan Billions New Materials Co., Ltd., has issued
undue letters of credit totaling USD8,550,000.00, involving a deposit of
USD0.00.
Loan defaults related to Yili Small Loan
(1) Action brought by the Company against Henan Weitong Technology Co., Ltd.
for its default in loan repayment
Henan Weitong Technology Co., Ltd. borrowed a loan of RMB5 million from
Jiaozuo Zhongzhan District Yili Small Loan Co., Ltd., with joint guarantee
provided by Jiaozuo New District Investment Group Co., Ltd., ZHI Baochang,
ZHI Jiawei, CHEN Zhongwei, Henan Weitong Heavy Equipment Manufacturing
Co., Ltd., and Henan Jiatong Industrial Co., Ltd.
As at December 31, 2017, the case had entered the enforcement stage in the
People's Court of Zhongzhan District, Jiaozuo, and the Company has received
an enforcement fund of RMB3,284,583.00.
Meanwhile, the court also seized a housing of the guarantor, ZHI Baochang,
worth RMB1,218,000.00; seized the 2.5 million shares of stock held by Jiaozuo
New District Investment Group Co., Ltd. in Jiaozuo Cigarette Material Co., Ltd.;
and froze the 3 million shares of stock held by the guarantor, Jiaozuo New
District Investment Group Co., Ltd., in Henan Zhuali Membrane Material Co.,
Ltd.
(2) Action brought by the Company against Jiaozuo Jinmaoyuan Breeding Co.,
Ltd. for its default in loan repayment
Jiaozuo Jinmaoyuan Breeding Co., Ltd. borrowed a loan of RMB4 million from
Jiaozuo Zhongzhan District Yili Small Loan Co., Ltd., with the joint guarantee
provided by Henan Saier Wheel Co., Ltd. ("Saier"), HE Sitong, LI Chunji, LIU
Dong Dong, and HE Yuexin.
As at December 31, 2017, the case had been decided and entered the enforcement
stage, and the court had seized a parcel of industrial land possessed by Saier in
Boai County, with an assessed value of more than RMB80 million (part of which
was mortgaged on a bank loan of RMB25 million).
(3) Action brought by the Company against Jiaozuo Yuandashun Materials Co.,
Ltd. for its default in loan repayment
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Jiaozuo Yuandashun Materials Co., Ltd. borrowed a loan of RMB2 million from
Jiaozuo Zhongzhan District Yili Small Loan Co., Ltd., with the joint guarantee
provided by Jiaozuo Minhui Industrial Co., Ltd. and JIAO Tongxia.
As at December 31, 2017, the case has been decided and entered at the
enforcement stage, and the court had sealed six sets of housing property of the
guarantors. A bank mortgage has been created on the loan, so the bank is the first
creditor.
(4) Action brought by the Company against SUN Siji for his default in loan
repayment
SUN Siji borrowed a loan of RMB1 million from Jiaozuo Zhongzhan District
Yili Small Loan Co., Ltd., with the joint guarantee provided by JIAO Tongxia
and JIAO Tongbin.
As at December 31, 2017, the case had been decided and entered at the
enforcement stage, and the court had sealed a housing property (Jiao Fang Quan
Zheng Jie Fang Zi No.201413033) of the guarantor JIAO Tongxia and a housing
property (Jiao Fang Quan Zheng Jie Fang Zi No.201109845) of the guarantor
JIAO Tongbin.
(5) Action brought by the Company against Jiaozuo Yirun Rubber Co., Ltd.
("Yirun") for its default in loan repayment
Yirun borrowed a loan of RMB500,000.00 from Jiaozuo Zhongzhan District Yili
Small Loan Co., Ltd., with the joint guarantee provided by SHEN Quanli, XU
Feng, MENG Guanhong, LIN Shuwei, ZHANG Xuehua and LIN Hong.
As at December 31, 2017, the case had come to an effective judgment. The
Company is negotiating with Yirun and related guarantors, requesting the
borrower Yirun to repay the loan and related interest as soon as possible.
(6) Action brought by the Company against Henan Haisheng Industrial Co., Ltd.
("Haisheng") for its default in loan repayment
Haisheng borrowed a loan of RMB2 million from Jiaozuo Zhongzhan District
Yili Small Loan Co., Ltd., with the joint guarantee provided by Jiaozuo Haiyu
Highway Engineering Co., Ltd., Wen County Kaisheng Textile Co., Ltd., Jiaozuo
Minli Industrial Co., Ltd., ZHANG Xiaoling, WANG Caixia and NIU Jianwei.
As at December 31, 2017, the case had entered at the enforcement stage, and the
People's Court of Zhongzhan District had seized one Audi A8 automobile
mortgaged by Haisheng.
(7) Action brought by the Company against GAO
Guangjie for his default in loan repayment
GAO Guangjie borrowed a loan of RMB1.5 million from Jiaozuo Zhongzhan
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
District Yili Small Loan Co., Ltd., with the joint guarantee provided by LAO
Anting, LEI Baolian, Henan Shennong Mountain Tourism Development Co., Ltd.
and QinyangLianbaoXinganxian Public Transport Co., Ltd.
As at December 31, 2017, the case had entered at the enforcement stage, and the
court had taken the preservative measures to seize 20 Yutong buses owned by
QinyangLianbaoXinganxian Public Transport Co., Ltd..
Arbitration
The case of dispute over the Technical Transfer and Service Contract between
Ti-Cons Jendro, Weiland und Partner Management Consultants and Lomon
Billions Group Co., Ltd. (China International Economic and Trade Arbitration
Commission Case No.SC20160008) are pending the final decision of the arbitral
tribunal. According to the Notice on Postponing the Deadline for the Issue of the
Arbitral Award for No.SC20160008 Case of Dispute over the Technical Transfer
and Service Contract issued by the arbitral tribunal on March 9, 2018, the
president of the arbitral tribunal, JING Maozhong, agreed and decided to
postpone the deadline for the issue of the arbitral award to May 10, 2018.
(2)It is required to state key or contingent matters that are not disclosed.
No key or contingent matters are required for disclosure.
XIV. Proceedings after the Date of Balance Sheet
1.Material non-adjustable matters: N/A
2.Distribution of profits
Monetary Unit: Yuan
Profits for dividends to be distributed 1,117,652,491.45,
Profits or dividends to be issued upon review and approval 1,117,652,491.45
3.Return upon sales: N/A
4.Other statements after the date of the Balance Sheet
Increase the capital of Yili Small Loan
The Company held the 6th Meeting of the 6th Board of Directors on December
14, 2017, at which the Company agreed to increase the capital of Jiaozuo
Zhongzhan District Yili Small Loan Co., Ltd. by RMB200 million, and after such
capital increase, the registered capital of Jiaozuo Zhongzhan District Yili Small
Loan Co., Ltd. was RMB500 million. The Company has paid the capital increase
in January 2018, and the registered capital of Yili small loan has changed to
RMB500 million.
Billions New Materials invested in the construction of a 200,000.00 tons/year
titanium dioxide chloridization project
The board of directors held the 7th Meeting of the 6th Board of Directors on
February 10, 2018, which considered and approved the Proposal on the
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Subsidiary's Investment in the Construction of A 200,000.00 Tons/Year Titanium
Dioxide Chlorination Project. The project is expected to add 200,000.00
tons/year chloride titanium dioxide production capacity. The total construction
period of the project is 2 years, and the total investment is estimated at
RMB1,811,590,000.00.
Participate in the establishment of industrial investment
fund
At the 7th Meeting of the 6th Board of Directors on February 10, 2018 and the
6th Meeting of the 6th Board of Supervisors, the Company considered and
approved the Proposal on Participating in the Establishment of Industrial
Investment Fund. The Company intends to set up an industrial investment fund
through joint investment with Shanghai Sailing Capital Management Co., Ltd.,
with a target size of RMB 1.01 billion. The fund is mainly engaged in domestic
and foreign M&A and investment related to the expansion and extension of the
Company's existing business, and comes in collaboration with the primary
business of the Company. It is conducive to speeding up the Company's strategic
development, provide support for the effective industrial integration of the
Company, and promote the realization of the Company's strategic development
objectives.
Signing of framework agreement
On March 10, 2018, the Company signed a Strategic Cooperation Framework
Agreement with ENN Energy Holdings Limited. The contents of the cooperation
are as follows:
(1) The two sides agree to respect the advantages in their respective fields and to
cooperate in the field of natural gas distributed energy and comprehensive energy
utilization.
(2) In areas where both sides have entered or have not entered, the two sides
agree that when conditions permit, the two sides may establish a joint venture or
other forms of strategic alliance as the case may be.
(3) The two sides agree to conduct in-depth cooperation in the gas-steam
combined cycle cogeneration project at the base in Jiaozuo as a pilot project for
the overall cooperation between the two sides.
Restructuring of major assets
On March 19, 2018, the Company issued an announcement on the suspension of
major asset reorganization and intended to purchase 100% stake jointly held by
Chengdu Zidong Investment Co., Ltd., LUO Yangyong and LUO Hongyou in
Sichuan Anning Iron and Titanium Co., Ltd. ("Target Company") through the
combination of share issuance and cash payment. Through preliminary
consultations, the two sides agreed that the overall transaction price of the
underlying asset is between RMB4.5 billion and RMB5 billion and the final price
of the underlying asset should be evaluated by appraisers with securities practice
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
qualification who shall issue a formal assessment report as a reference, subject
to the signing of a formal asset acquisition agreement. The Company intends to
pay 85% of the transaction consideration by issuing shares and pay 15% of the
transaction consideration in cash. The counterparty undertakes that the net profit
of the Target Company attributable to the owner of the parent company in 2018-
2020 net of non-recurring profit and loss was initially determined to be RMB1.23
billion. The specific net profit is subject to the major asset reorganization report
disclosed by the Company in the later stage. Upon expiration of the profit
commitment period, the counterparty undertook that the Target Company would
compensate the Company if it failed to achieve the above-mentioned
performance commitment. The Company and related parties are actively
promoting the reorganization in all aspects.
Medium-term notes are registered
In March 2018, the Company received the Zhong Shi Xie Zhu [2018]
No.MTN154 Notice of Acceptance of Registration (the "Notice") issued by the
National Association of Financial Market Institutional Investors ("Association"),
according to which the Association agreed to accept the Company's application
for the registration of medium-term notes. The Notice specifies that the registered
amount of the medium-term notes is RMB1 billion, and the registration quota is
valid for 2 years from the date of the Notice and is jointly underwritten by Bank
of China Limited and ZheShang Bank Co., Ltd. The Company may issue
medium-term notes by installments within the validity period of registration.
After the issuance is completed, the results of the issuance shall be disclosed in
such way as approved by the Association.
Profit distribution
The 8th Meeting of the 6th Board of Directors held by the Company on March
30, 2018 considered and approved the 2017 Profit Distribution Plan which is
detailed as follows: taking the Company's total share capital of 2,032,095,439.00
shares as at December 31, 2017 as the base number, the Company distributes a
cash dividend of RMB5.50 (including tax) for every 10 shares to all the
shareholders, totaling 1,117,652,491.45 yuan (including tax). The proposal needs
to be approved by the shareholders’ general meeting.
The third-stage unlocking of restricted stocks and repurchase and writing-
off of part of restricted stocks
The 8th Meeting of the 6th Board of Directors held by the Company on March 30,
2018 considered and approved the Proposal on Unlocking in the Third Unlocking
Period under the 2015 Restricted Stock Incentive Plan. The board of directors
held that the unlocking conditions for the third unlocking period of the restricted
stocks under the Company's 2015 Restricted Stock Incentive Plan had been
achieved. In addition, the meeting also considered and approved the Proposal on
Repurchasing and Writing off Part of the Restricted Stocks. As the original
incentive objects of the Company voluntarily resigned, the Company agrees to
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
repurchase and write off 111,300.00 shares of restricted stocks granted on April
24, 2015.
Increase the capital of Lomon Mining and Metallurgy
The Company held the 8th Meeting of the 6th Board of Directors on March 30,
2018, at which the Company agreed that the parent company may make an
additional contribution of RMB300 million to the capital Sichuan Lomon
Mining and Metallurgy Co., Ltd., and after such capital increase, the registered
capital of Sichuan Lomon Mining and Metallurgy Co., Ltd. was RMB520
million, and the parent company held 57.70% of the total shares of Sichuan
Lomon Mining and Metallurgy Co., Ltd.
Acquisition of minority interest in Lomon Mineral Products
At the 8th Meeting of the 6th Board of Directors held on March 30, 2018, the
Company considered and approved the Proposal on the Purchase of Minority
Interest in PanzhihuaLomon Mineral Products Co., Ltd. by A Wholly-owned
Subsidiary, according to which the Company agreed that the Company's wholly-
owned subsidiary, Sichuan Lomon Mining and Metallurgy Co., Ltd. may use its
owned fund of RMB240 million to purchase the 7.2% minority interest in
PanzhihuaLomon Mineral Products Co., Ltd. After completion of the acquisition,
the shares held by Sichuan Lomon Mining and Metallurgy Co., Ltd. in Lomon
Mineral Products will increase from 84% to 91.2%.
XV. Other Significant Proceedings
1. Short-term financing bonds
In November 2017, the Company received the Zhong Shi Xie Zhu [2017]
No.SCP385 Notice of Acceptance of Registration (the "Notice") issued by the
National Association of Financial Market Institutional Investors, according to
which the Association agreed to accept the Company's application for the
registration of ultra short-term financing bonds. The Notice specifies that the
registered amount of the short-term financing bonds is RMB2 billion, and the
registration quota is valid for 2 years from the date of the Notice and is jointly
underwritten by China CITIC Bank Corporation Limited, Shanghai Pudong
Development Bank Co., Ltd. and Bank of Zhengzhou Co., Ltd.
2. The performance-based reward for directors, supervisors and senior officers
of the parent company
In order to improve the remuneration management system of the Company for
chairman of the board of directors, chairman of the board of supervisors and
senior officers of the Company, and to strengthen the incentive and constraint
mechanism, the Company formulated the 2017 Remuneration Management
Measures for the Chairman of the Board of Directors, Chairman of the Board of
Supervisors and Senior Officers on March 29, 2017. On February 10, 2018, the
Measures was considered and approved by the Remuneration and Assessment
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Committee of the 6th Board of Directors. According to the performance of the
2017 Remuneration Management Measures for the Chairman of the Board of
Directors, Chairman of the Board of Supervisors and Senior Officers and the
completion status of the business performance of the Company in 2017, the
Company should appropriate a total performance-based reward fund of
RMB170,942,000.00. On the basis of the historical performance-based reward
distributions to chairman of the board of directors, chairman of the board of
supervisors, senior offices and other incentive objects, the actual performance-
based reward appropriated by the Company was RMB147,999,300.00, Of which,
RMB100 million was used to subsidize the Company's first ESOP. RMB 35
million is used for individual income taxes arising from shareholding by the
Company’s employees, and the remaining RMB 12.9993 million is used for
performance awards to the president, chairman of the Board of Supervisors and
senior officers in 2017.
3. Environmental punishment
(1) On February 6, 2017, the Company's subsidiary, Sichuan Lomon Titanium
Industry Co., Ltd., received the Written Decision of Environmental
Administrative Penalty (ChuanHuan Fa Mian Zhu Fa Zi [2017] No.3) issued by
the Environmental Protection Bureau of Mianzhu, Sichuan Province, which
imposed an administrative penalty of RMB150,000.00 on Lomon Titanium for
its illegal act of discharging air pollutants.
(2) On October 10, 2017, the Company's subsidiary, Sichuan Lomon Titanium
Industry Co., Ltd., received the Written Decision of Environmental
Administrative Penalty (De Huan Fa [2017] No.19) issued by the Deyang
Municipal Bureau of Environmental Protection, which imposed an
administrative penalty of RMB671,574.00 on Lomon Titanium for its abnormal
use of water pollution treatment facilities.
(3) On February 26, 2018, the Company's subsidiary, Sichuan Lomon Titanium
Industry Co., Ltd., received two Written Decisions of Administrative Penalty
(Zhu Huan Fa JueZi [2018] No.3 and Zhu Huan Fa JueZi [2018] No.4) issued by
Mianzhu Municipal Bureau of Environmental Protection.
The main contents of Zhu Huan Fa JueZi [2018] No.3 Written Decisions of
Administrative Penalty: Lomon Titanium uses diesel fuel to heat up the sulphur
burner, and the flue gas produced by the combustion is discharged through the
exhaust cylinder temporarily installed at the tail of the sulphur burner, which
violates Paragraph 1 of Article 20 of the Law of the People's Republic of China
on the Prevention and Control of Atmospheric Pollution. Therefore, Mianzhu
Municipal Bureau of Environmental Protection imposed an administrative
penalty of RMB50,000.00 on Lomon Titanium.
The main contents of Zhu Huan Fa JueZi [2018] No.4 Written Decisions of
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Administrative Penalty: Lomon Titanium did not start the emergency plan for
the waste water spill problem with the leachate collection pool at the slag yard
which occurred in the bad weather condition, and the emergency measures taken
were not effective, which violated Article 68 of the Law of the People's Republic
of China on the Prevention and Control of Water Pollution. Therefore, Mianzhu
Municipal Bureau of Environmental Protection imposed an administrative
penalty of RMB50,000.00 on Lomon Titanium.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
XVI. Notes to Principle Items of Financial Statements of the Parent Company
1 Receivables
（1） Disclosure of receivables by category
Monetary Unit: Yuan
Category
Closing Balance Beginning Balance
Book balance Bad Debt Reserves
Book Value
Book balance Bad Debt Reserves
Book Value
Amount Ratio (%) Amount Ratio of
appropriation
(%) Amount Ratio (%) Amount
Ratio of
appropriation (%)
Receivables with significant
individual amount and appropriation
of provisions for bad debts on
individual amount
Receivables with combined
appropriation of provisions for bad
debts based on credit risk
characteristics
243,621,205.03 100 11,585,362.80 4.76% 232,035,842.23 192,936,737.24 100 7,056,629.10 3.66 185,880,108.14
Receivables with insignificant
individual amount and appropriation
of provisions for bad debts on
individual amount
Total 243,621,205.03 100 11,585,362.80 4.76% 232,035,842.23 192,936,737.24 100 7,056,629.10 3.66 185,880,108.10
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Receivables with appropriation of provisions for bad debts according to aging
analysis method in the portfolio:
Monetary Unit: Yuan
Accounting Age
Closing Balance
Receivables Bad Debt Reserves Ratio of appropriation (%)
Sub-items within 1 year
Sub-total within 1 year 192,774,359.33 9,638,717.96 5.00
1-2 years 3,570,331.79 357,033.18 10.00
2-3 years 482,030.00 144,609.00 30.00
More than 3 years
3-4 years 2,613,639.99 1,306,820.00 50.00
4-5 years 62,728.32 50,182.66 80.00
More than 5 years 88,000.00 88,000.00 100.00
Total 199,591,089.43 11,585,362.80
（2）Bad debt provisions appropriated, transferred in or recovered in the current period
A bad-debt provision of RMB4,528,733.70 was appropriated in the current period; and RMB0.00 of
provisions for bad debts was recovered or reversed in the current period.
（3）The receivables that are cancelled in the current period
（4）Accounts receivable from top 5 debtors listed by their closing balance
Entity Name
Closing Balance
Receivables Proportion to total receivables (%) Bad Debt Reserves
No.1 38,764,484.02 15.91
No.2 34,107,729.04 14.00 1,705,386.45
No.3 17,660,461.12 7.25 883,023.06
No.4 10,955,577.47 4.50 547,778.87
No.5 8,904,000.00 3.65 445,200.00
Total 110,392,251.65 45.31 3,581,388.38
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
2. Other receivables
（1）Disclosure on classification of other receivables
Monetary Unit: Yuan
Type
Closing Balance Beginning Balance
Book balance Bad Debt Reserves
Book Value
Book balance Bad Debt Reserves
Book Value
Amount Ratio (%) Amount
Ratio of
appropriation
(%)
Amount Ratio (%) Amount
Ratio of
appropriation
(%)
Other receivables with significant
individual amount and appropriation
of provisions for bad debts on individual amount
Other receivables with combined
appropriation of provisions for bad
debts based on credit risk
characteristics
839,705,411.73 100.00 % 839,705,411.73 482,621,329.38 100.00 % 3,823.75 0.00 % 482,617,505.63
Other receivables with insignificant
individual amount and appropriation
of provisions for bad debts on
individual amount
Total 839,705,411.73 100.00 % 839,705,411.73 482,621,329.38 100.00 % 3,823.75 482,617,505.63
In the portfolio, other methods adopted for provision for bad debts for other receivables
Name of portfolio Ending balance
Receivables Provision for bad debts Percentage of provision（%） Causes for provision
Credit portfolio of related parties 839,705,411.73
Total 839,705,411.73
（2）Classification of other receivables by nature
Unit: Yuan
Nature of money Ending book balance Starting book balance
Capital incomings and outgoings of combined related parties 838,917,568.89 482,544,854.38
Reservation fund 76,475.00
Others 787,842.84
Total 839,705,411.73 482,621,329.38
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
（3） Other accounts receivable from top 5 debtors listed by their closing balance
Unit: Yuan
Entity Name Fund Nature Closing Balance Accounting Age Proportion to total closing balance of
other receivables (%)
Closing Balance of
Provisions for Bad Debts
Henan Billions New Materials Co., Ltd.
Incomings and outgoings 580,920,534.04 1-2 years 69.18%
Jiaozuo Billions Reservoir
Management Co., Ltd. Interbank borrowing and lending 97,400,000.00 1-3 years 11.6%
Henan Longxiangshan Development Tourism Co., Ltd.
Interbank borrowing and lending 71,030,000.00 1-2 years 8.46%
Jiaozuo Xingtai Resources
Management and Comprehensive
Utilization Co., Ltd.
Interbank borrowing and lending 64,267,034.85 1-4 years 7.65%
Jiaozuo Billions United Pigment
Co., Ltd. Interbank borrowing and lending 19,000,000.00 Less than 1 year 2.26%
Total -- 832,617,568.89 99.15%
3. Long-term equity investment
Monetary Unit: Yuan
Item
Closing Balance Beginning Balance
Book balance Impairment provision Book Value Book balance Impairment provision
Book Value
Investment in subsidiaries 11,481,264,739.59 10,893,079.71 11,470,371,659.88 10,949,378,209.64 10,949,378,209.64
Investment in joint ventures and associates 10,024,250.28 10,024,250.28 32,909,593.72 32,909,593.72
Total 11,491,288,989.87 10,893,079.71 11,480,395,910.16 10,982,287,803.36 10,982,287,803.36
（1） Investment in subsidiaries
Monetary Unit: Yuan
The invested Beginning Balance Increase for
Current Year
Decrease for
Current Year Closing Balance Appropriation of
impairment provision of
current year
Closing balance of
impairment provision Jiaozuo Billions Reservoir Management Co., Ltd. 45,000,000.00 45,000,000.00
Jiaozuo Xingtai Resource Comprehensive Utilization Co.,
Ltd. 10,893,079.71 10,893,079.71 10,893,079.71 10,893,079.71
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Jiaozuo Zhongzhan District Yili Small Loan Co., Ltd. 100,000,000.00 122,000,000.00 222,000,000.00
Billions (Hong Kong) Corporation Limited 65,526,328.74 134,886,529.95 200,412,858.69
Jiaozuo Rongjia Scandium Technology Co., Ltd. 19,186,800.00 19,186,800.00
Henan Longxiang Mountain Tourism Development Co.,
Ltd. 20,000,000.00 20,000,000.00
Jiaozuo Billions Pigment Co., Ltd. 22,357,294.00 22,357,294.00
Henan Billions New Materials Co., Ltd. 1,735,269,790.40 1,735,269,790.40
Sichuan Lomon Titanium Industry Co., Ltd. 8,931,144,916.79 8,931,144,916.79
PanzhihuaRuierxin Industry and Trade Co., Ltd. 190,000,000.00 190,000,000.00
Billions Financial Leasing (Guangzhou) Co., Ltd. 85,000,000.00 85,000,000.00
Total 10,949,378,209.64 531,886,529.95 11,481,264,739.59 10,893,079.71 10,893,079.71
（2） Investment in joint ventures and associates
Monetary Unit: Yuan
The invested Beginning Balance
Change of current increases and decreases
Closing Balance
Appropriation
of impairment
provision of
current period
Closing balance
of impairment
provision Additional
investment Reduced investment
Investment profit
and loss recognized
under the equity law
Adjustment of other
comprehensive
income Other equity changes
Declaration of
cash dividends
or profits Other
1. Joint venture
2． Joint venture
Jiaozuo Weina Technology Co.,
Ltd. 8,909,593.72 1,114,656.56 10,024,250.28
Jiaozuo Jiali Thermoelectric Co.,
Ltd. 24,000,000.00 24,000,000.00
Sub-total 32,909,593.72 24,000,000.00 1,114,656.56 10,024,250.28
Total 32,909,593.72 24,000,000.00 1,114,656.56 10,024,250.28
（3）Other statements
Jiaozuo Jiali Thermoelectric Co., Ltd., an associate invested by the Company, was deregistered in current year, with -RMB2,374,789.02 return on
investment recognized.
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
4. Operating incomes and costs
Unit: Yuan
Item Accrual amount for current period Accrual amount for last period
Income Cost Income Cost
Primary business 2,782,423,764.36 1,858,596,621.89 2,179,734,605.05 1,638,810,347.20
Other business 342,968,536.07 339,059,226.62 302,795,425.22 292,928,412.41
Total 3,125,392,300.43 2,197,655,848.51 2,482,530,030.27 1,931,738,759.61
Business Name 2017
Operating income Operating cost
Titanium dioxide 2,692,320,807.51 1,783,165,847.89
Zirconium products 86,846,158.41 72,056,133.56
Other 3,256,798.44 3,374,640.44
Total 2,782,423,764.36 1,858,596,621.89
Business Name
2016
Operating income Operating cost
Titanium dioxide 2,012,583,656.48 1,470,036,107.65
Zirconium products 44,515,827.75 43,779,787.70
Other 122,635,120.82 124,994,451.85
Total 2,179,734,605.05 1,638,810,347.20
5. Return on investment
Item Accrual amount for current period Accrual amount for last
period
Long-term equity investment proceeds calculated on cost basis
Return on long-term equity investment accounted for using the equity method
1,114,656.56 351,863.85
Income from dispose of long-term equity investment -2,374,789.02
Investment proceeds derived from financial assets which are
measured by fair value and the changes in whose fair
value are included into current profits or losses while
being held
Investment proceeds derived from disposition of
financial assets which are measured by fair value and the
changes in whose fair value are included into current
profits or losses
Investment proceeds derived from held-to-maturity
investments while being held
Investment proceeds derived from available-for-sale
investments while being held
Investment proceeds derived from disposition of
available-for-sale investments
Gains derived from re-measurement of remaining
equities by fair value in case of loss of control
Distribution of cash dividends to subsidiaries 1,659,620,000.00 607,440,000.00
Return on investment in financial products 3,546,027.39
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Total 1,661,905,894.93 607,791,863.85
XVII. Supplementary Information
1. Breakdown of current non-recurring profits and losses
Unit: Yuan
Item Amount Remark
Profit or loss on disposal of non-current assets -21,282,770.48
Tax refund and reduction or exemption involving unauthorized approval or without formal
approval documents
Government subsidies included in current profit and loss (closely related to business activities,
except for government subsidies enjoyed by quota or fixed amount in accordance with national
uniform standard)
70,508,013.11
Fund occupation fees charged to non-financial enterprises and included in current profit and loss 889,988.59
Income from the difference by which the cost of receiving investments from subsidiaries, joint
ventures and associates is less than the fair value of the identifiable net assets of the invested
entity when the investments are made
Profit or loss on non-monetary asset exchange
Profit and loss from authorizing others to invest or manage assets
Provision for impairment of assets as a result of force majeure, such as natural disasters
Debt restructuring profit and loss
The cost of enterprise restructuring, such as staff resettlement expenses, and integration costs
Profit and loss arising from unfair transactions and in excess of fair value
The net profit and loss of a subsidiary from business combination under common control from
the beginning of the period to the date of combination
Profit and loss arising from any contingencies that are not related to the normal operation of the
Company
Profit and loss from fair value changes arising from the holding of trading financial assets and trading financial liabilities and return on investment from the disposal of trading financial assets,
trading financial liabilities and available-for-sale financial assets, except effective hedging
business related to the normal operation of the Company
16,925,871.23
Reversal of the provision for impairment of receivables undergoing separate impairment test
Profit and loss from entrusted loans
Profit and loss from changes in fair value of investment real estate undergoing subsequent
measurement under fair value mode
The effect of one-time adjustment of current profit and loss according to the requirements of taxation, accounting and other laws and regulations on current profit and loss
Trusteeship income from entrusted operation
Other non-operating incomes and expenses other than those mentioned above -1,939,641.26
Other profits and losses within the meaning of non-recurring profit and loss
Effect of income tax 9,466,149.12
Effect of minority equity 2,143,017.25
Total 53,492,294.82 --
2. Return on equity and earnings per share:
Profit in reporting period Weighted average return on equity (%)
Earnings per share (yuan)
Basic earnings per
share Diluted earnings per share
Net profit attributable to the general shareholders
of the Company 19.14% 1.25 1.25
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Net profit attributable to the general shareholders
of the Company net of non-recurring profit and loss 18.73% 1.22 1.22
Lomon Billions Group Co., Ltd.
Year 2017
Notes to Financial Statements
Section 12 Category of Documents for Reference
I. The 2017 Annual Report bearing the signature of Mr. Xu Gang, Chairman
of the Company.
II. Financial statements bearing the signatures and seals of the Company's
legal representative, person in charge of accounting work, and person in
charge of accounting organization (chief accountant).
III. The original of 2017 Audit Report of the Company bearing the seal of
the accounting firm and the signature and seal of the CPAs.
IV. The originals of all the Company's documents that have been publicly
disclosed on the designated website of the CSRC during the Reporting
Period as well as the originals of the announcements.
V. Other relevant materials.
VI. Location for preparation and storage of documents for reference: the
office of the Board of Directors of the Company.
Lomon Billions Group Co., Ltd.
Chairman: (Signed)
March 30, 2018
Lomon Billions Group Co., Ltd. (Sealed)