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Dear Shareholders,

On behalf of the Board of Directors of China Longevity Group Company Limited (the “Company”) and its subsidiaries (together referred to as the “Group”), I am pleased to present the 2017 annual report to the shareholders of the Company (the “Shareholders”).

BUSINESS REVIEW AND PROSPECTS

A review of the Group’s business and the analysis using the financial key performance indicators are set out on page 3 of this report under the section headed Financial Highlights and the section headed Management Discussion and Analysis that set out on page 6 to 13 of this report.

This year, the Group recorded a growth of turnover by 10.8% from approximately RMB472.7 million last year to approximately RMB523.8 million. The profit attributable to shareholders for the year was approximately RMB28.4 million as compared to the profit approximately of RMB22.3 million for the previous year. The reason for the increase is mainly due to increase in gross profit for the year arising from the increase in sales.

During the year ended 31 December 2017, the Group continued to focus on the core business of Reinforced Materials. Besides maintaining the business relationship with our loyal customers, we put our best efforts on finding new customers to increase our market shares. Because of last year’s scaling down of Conventional Materials, our revenue and gross profit margin for the year under review have increased.

Due to the halt in manufacturing the End Products, the Group entered into two sale and purchase agreements to dispose of certain property, plant and equipment, and prepaid land lease payments of a subsidiary, Hubei Sijia Industrial Material Company Limited, to two independent third parties at a total consideration of RMB28,437,000 in 2015. These assets have been classified as non-current assets held for sale as detailed in note 28 to the consolidated financial statements. The transactions have yet to be completed at 31 December 2017, as they are pending for the approval from the relevant PRC Government authority. We expect that these disposals to be completed in mid of 2018.

Contrary to the uncertainty and volatility of the global political and economic environments of 2016, 2017 was relatively stable with an uptick in the market and the economy in general. However, factors contributing to unstable market competition persisted. The Group envisages 2018 to be a year of perseverance amidst challenging market conditions.

Committed to the research and development of new materials, the Group has set out to input more resources to development of new material business and new products, and to increase the production of PVC elastic flooring products in 2018. The management believes that the Group will have successful achievements in developing new materials, upgrading new technologies in the foreseeable future to consolidate the development momentum of reinforced materials and flooring products.

The management team and staff of the Group are committed to continue to work hard and to strictly comply with the Group’s cost-controlling measures designed to increase effectiveness and optimize capacity continuously. At the same time, the management would cooperate with the technical experts in Europe and US in research and development of the new materials and new products. The management expects that the Group would further expand its market segment in the international market.

On 26 July 2017, the Board of the Group smoothly completed the handover of sessions. With the support of the Group’s shareholders and the leadership of new session of Board, the Group would continue its product technology innovation strategy, reinforce its position on the markets of old products, and develop new drop stitch fabric products and eco-friendly flooring options as its core business in the future. Furthermore, the Company will persistently uphold its market development philosophies of adopting a customer-centric approach, continuing to create real value and reciprocating its shareholders and community.

As the trading of the shares of the Company on the Stock Exchange has been suspended since 14 February 2013, the management will fully cooperate with the engaged professional parties to plan its application for the resumption of trading in the shares of the Company on the Stock Exchange (the “Resumption”). The Company would update the Shareholders on the progress of the Resumption through further announcement in due course.

Appreciation

On behalf of the Board, I would like to extend our sincere gratitude to the Shareholders, customers and business partners of the Group for their persistent support throughout the year. Lastly, I would like to take this opportunity to thank all colleagues and staff for their persistent contribution to the Group.

On behalf of the Board
LIN Shengxiong
Chairman

Hong Kong, 29 March 2018

 

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