China Billion Resources : 2014 Annual Report of the Company

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RCES LIMITED

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(Incorporated in the Cayman Islands with limited liability)

(stock Code :274)

2014

ANNUAL REPORT

* For identification only

CONTENTS

Corporate Information 2

Chairman's Statement 3

Management Discussion and Analysis 5

Biographical Details of Directors 9

Corporate Governance Report 11

Report of the Directors 25

Independent Auditor's Report 32

Consolidated Statement of Profit or Loss and Other Comprehensive Income 35

Consolidated Statement of Financial Position 36

Consolidated Statement of Changes in Equity 37

Consolidated Statement of Cash Flows 38

Notes to the Consolidated Financial Statements 39

Five Years Financial Summary 77

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Mr. Long Xiaobo (Chairman)

Mr. Zuo Weiqi (Chief Executive Officer)

Mr. Chen Yi Chung

Independent Non-executive Directors

Mr. Jin Shunxing

Mr. Chiang Tsung-Nien Ms. Liu Shuang

AUDIT COMMITTEE

Mr. Jin Shunxing (Chairman of Audit Committee)

Mr. Chiang Tsung-Nien Ms. Liu Shuang

REMUNERATION COMMITTEE

Mr. Jin Shunxing (Chairman of Remuneration Committee)

Mr. Chiang Tsung-Nien Ms. Liu Shuang

Mr. Long Xiaobo

NOMINATION COMMITTEE

Mr. Long Xiaobo (Chairman of Nomination Committee)

Mr. Chiang Tsung-Nien Mr. Jin Shunxing

Ms. Liu Shuang Mr. Zuo Weiqi

COMPANY SECRETARY

Mr. Cheung Yuk Chuen

AUTHORISED REPRESENTATIVES

Mr. Chen Yi Chung Mr. Zuo Weiqi

REGISTERED OFFICE

Cricket Square, Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111 Cayman Islands

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS

Room 2811, 28/F.

China Merchants Tower

No.168-200 Connaught Road Central Hong Kong

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Tengis Limited

Level 22, Hopewell Centre 183 Queen's Road East Hong Kong

AUDITORS

ZHONGHUI ANDA CPA Limited

Unit 701, 7/F., Citicorp Centre

18 Whitfield Road, Causeway Bay Hong Kong

COMPANY'S WEBSITE

www.chinabillion.net

STOCK CODE

274

PRINCIPAL BANKERS

The Hongkong and Shanghai Banking Corporation Limited

1 Queen's Road Central Hong Kong

Agricultural Bank of China (Hong Kong) Ltd

25/F., Agricultural Bank of China Tower 50 Connaught Road Central

Hong Kong

2 China Billion Resources Limited

CHAIRMAN'S STATEMENT

Since 2011, China Billion Resources Limited ("Company") has undergone various challenges, especially the impacts of the suspension of trading of the Company's shares ("Shares") on The Stock Exchange of Hong Kong Limited ("Stock Exchange"). The suspension was mainly caused by the Company's delay in the publication of the audited financial reports which was in part attributable to the debt restructuring of the Company during the year 2011. I would like to express my heartfelt gratitude to our management, staff, customers, suppliers, business partners, professional parties and last but not the least, our shareholders, for their continuous support of the Company and its subsidiaries (collectively referred to as "Group").

During the year ended 31 December 2014, the Group recorded an increased turnover of approximately HK$20.1 million (as compared with the turnover of approximately HK$8.3 million in the year ended 31 December 2013) in the mining products business segment. For the remarkable outcome, we give thanks to the Group's investments in 2013 in modifying the existing tunnel structure and exploration process of the gold mine. Meanwhile, we also saw an increased turnover of approximately HK$23.6 million (as compared with the turnover of approximately HK$21.9 million in the year ended 31 December 2013) in the cosmetic and skincare products business segment. The board of directors ("Directors") of the Company ("Board"), together with the management of the Company ("Management"), has taken and will continue to take actions to adjust the business strategies of the Group to strive for success even in the new operating environment.

Although it is not mandatory for the Company to follow the new standards stated in the Chapter 18 of the Rules Governing the Listing of Securities on the Stock Exchange ("Listing Rules") updated in year 2010, the Board is of the view that for the sake of working towards better compliance results, the Board should have an updated technical report prepared in accordance with Chapter 18 pursuant to which other mineral companies that are obligated to follow. The Company therefore voluntarily engaged SRK Consulting China Ltd ("SRK") to prepare an updated and independent technical report for assisting the Management to assess the fair value of the mining right of the Group's Yuanling gold project ("Gold Mine") in Hunan Province, the People's Republic of China ("PRC"), in accordance with the Australian Joint Ore Reserves Committee Code 2012 Edition ("JORC Code 2012"). Based on the updated technical report, the Group is required to make a significant impairment loss on the mining right. Accordingly, the Group's financial results for the financial year ended 31 December 2014 shows a further loss, details of which are disclosed in the management discussion and analysis of this annual report. Nevertheless, the Board is confident in the potential development of the Gold Mine. The Company will continue to allocate suitable resources in the basic structural infrastructure and expertise in the Gold Mine. In the meantime, we will seek other investment opportunities to diversify our business portfolio and broaden the source of income of the Group.

As fully set out in auditor's report, the Board notes that ZHONGHUI ANDA CPA Limited, the auditor of the Group ("Auditor") has given an opinion of material uncertainty regarding the Company's ability to continue as a going-concern, which was mainly caused by the convertible bonds issued by the Company in March 2010. As at the date of this annual report, the Board and the Management has been trying their best endeavour to negotiate with the creditors of the Company regarding the possible debt restructuring, including but not limited to, converting the convertible bonds into Shares, to solve the going concern issue raised by the Auditor.

Annual Report 2014 3