Section I Important notes, Contents and DefinitionsThe Board of Directors, the Supervisory Committee and the Directors,Supervisors and senior management of the Company warrant that the contents ofthe annual report are true, accurate and complete, and that there are no falserecords, misleading statements or material omissions, and that they shall bearindividual and joint legal liabilities.
Qiu Yibo, legal representative, Zheng Xingang, person in charge of accountingactivities, and Yu Zhicheng, the head of the accounting agency (account in charge),declared that ensure the annual financial statement report is true, accurate andcomplete.
The annual financial statement report has been audited by ZhongxinghuaCertified Public Accountants LLP, which has issued a standard unqualified auditreport.
The report has been considered and approved at the Eighth Meeting of the TwelfthSession of the Board of Directors of the Company. All directors have attended theBoard meeting at which this report was considered.
This report involves future plans, development strategies, industry discussion andoutlook, etc. covered in this report do not constitute substantial commitments bythe company to investors, and investors are advised to pay attention theinvestment risks. Investors are advised to refer to "XI: Prospects for the FutureDevelopment of the Company IV: Risks and Countermeasures Faced by theCompany" under “Section III”: Management Discussion and Analysis" for therisks that may exist in the operation and development of the Company.
The Company is required to comply with the disclosure requirements in respectof the chemical industry as set out in the "No. 3 Self-Regulatory Guidelines forListed Companies of the Shenzhen Stock Exchange - Disclosure of IndustryInformation".
The Company's profit distribution plan reviewed and approved by the Board: onthe basis of the share capital entitled to profit distribution registered on the dateof registration of shareholdings for the implementation of the equity distribution,a cash dividend of RMB 1.0 (tax included) per 10 shares will be distributed to allshareholders. There will be no equity dividend (tax included) or conversion ofequity reserve into share capital of the Company.
This annual report is prepared in Chinese and English respectively. In case of anydiscrepancy between the two versions, the Chinese version shall prevail.
Contents
Section I Important notes, Contents and Definitions ...... 4
Section II Company Profile and Key Financial Indicators ...... 11
Section III Management Discussion and Analysis ...... 18
Section IV Corporate Governance ...... 129
Section V Environmental and Social Responsibilities ...... 191
Section VI Important Matters ...... 212
Section VII Changes in Shares and Shareholders ...... 242
Section VIII Preferred Shares ...... 259
Section IX Bonds ...... 260
Section X Financial Report ...... 273
List of Documents for Reference
1. Accounting statements signed and stamped by the legal representative, person incharge of accounting activities and the head of the accounting agency;
2. The original audit report stamped by the accounting firm and signed and stamped bythe certified public accountant;
3. All original documents and original announcements of the Company publiclydisclosed on the website designated by CSRC during the current period.
Definitions
| Item | Refers to | Definition |
| Hengyi Petrochemical/Company/the Company | Refers to | Hengyi Petrochemical Co., Ltd. |
| SZSE/the Exchange | Refers to | Shenzhen Stock Exchange |
| Hengyi Group | Refers to | Zhejiang Hengyi Group Co., Ltd. |
| Hengyi Limited | Refers to | Zhejiang Hengyi Petrochemical Co., Ltd. |
| Hengyi Brunei | Refers to | Hengyi Industries Sdn. Bhd. |
| Zhejiang Yisheng | Refers to | Zhejiang Yisheng Petrochemical Co., Ltd. |
| Yisheng New Materials | Refers to | Zhejiang Yisheng New Materials Co., Ltd. |
| Yisheng Dahua | Refers to | Yisheng Dahua Petrochemical Co., Ltd. |
| Hainan Yisheng | Refers to | Hainan Yisheng Petrochemical Co., Ltd. |
| Hengyi Polymer | Refers to | Zhejiang Hengyi Polymer Co., Ltd. |
| Hengyi High-Tech | Refers to | Zhejiang Hengyi High-Tech Materials Co., Ltd. |
| Haining New Materials | Refers to | Haining Hengyi New Materials Co., Ltd. |
| Haining Thermal Power | Refers to | Haining Hengyi Thermal Power Co., Ltd. |
| Taicang Yifeng | Refers to | Taicang Yifeng Chemical Fibre Co., Ltd. |
| Jiaxing Yipeng | Refers to | Jiaxing Yipeng Chemical Fibre Co., Ltd. |
| Shuangtu New Materials | Refers to | Zhejiang Shuangtu New Materials Co., Ltd. |
| Hangzhou Yichen | Refers to | Hangzhou Yichen Chemical Fibre Co., Ltd. |
| Suqian Yida | Refers to | Suqian Yida New Materials Co., Ltd. |
| Ningbo Hengyi Trading | Refers to | Ningbo Hengyi Trading Co., Ltd. |
| Hong Kong Yisheng | Refers to | Hong Kong Yisheng Co., Ltd. |
| Hengyi Singapore | Refers to | Hengyi Industries International (Singapore) Co., Ltd. |
| Hangzhou Yijing | Refers to | Hangzhou Yijing Chemical Fibre Co., Ltd. |
| Hengyi Caprolactam | Refers to | Zhejiang Baling Hengyi Caprolactam Co., Ltd. |
| Fujian Yijin | Refers to | Fujian Yi Jin Chemical Fibre Co., Ltd. |
| China Zheshang Bank | Refers to | China Zheshang Bank Co., Ltd. |
| Yisheng Investment | Refers to | Dalian Yisheng Investment Co., Ltd. |
| Hong Kong Tianyi | Refers to | Hong Kong Tianyi International Holding Co., Ltd. |
| Hengyi Investment | Refers to | Hangzhou Hengyi Investment Co., Ltd. |
| Item | Refers to | Definition |
| Hengqi Environmental Protection | Refers to | Haining Hengqi Environmental Protection Technology Co., Ltd. |
| Hengyi Polyamide | Refers to | Zhejiang Hengyi Polyamide Co., Ltd. |
| Guangxi New Material | Refers to | Guangxi Hengyi New Material Co., Ltd. |
| Brunei Refinery Project,PMB Petrochemical Project | Refers to | The petrochemical project invested and constructed by the Company in Brunei |
| PX | Refers to | Paraxylene, a colorless and transparent liquid. It is used to produce plastics, polyester fibres and films. |
| PTA | Refers to | Purified terephthalic acid, mainly used to produce PET, can also be made into engineering polyester plastics, and be used as the raw material of plasticizer and dye intermediate. |
| PIA | Refers to | Isophthalic acid, mainly used in the production of alkyd resin, unsaturated polyester resin and other polymers and plasticizers, as well as in the production of film finishers, coatings, polyester fibre dyeing modifiers and medicines. |
| MEG | Refers to | Ethylene glycol, mainly used to produce polyester fibre, antifreeze, unsaturated polyester resin, lubricant, plasticizers, non-ionic surfactant and explosives, etc. |
| PET and polyester | Refers to | Polyethylene terephthalate. It is a fibre-forming polymer made from PTA and MEG through direct esterification and continuous polycondensation reaction. |
| POY | Refers to | Polyester pre-oriented yarn or partially oriented yarn |
| FDY | Refers to | Fully drawn yarn or polyester drawn yarn |
| DTY | Refers to | Drawn textured yarn, also known as polyester textured yarn |
| CPL | Refers to | Caprolactam, mainly used to produce polyamide fibre, engineering plastics, plastic film, etc. It is widely used in industrial and civil fields. |
| RPET | Refers to | Recycled plastic materials from PET |
| Item | Refers to | Definition |
| Differentiated yarn | Refers to | A variety that is innovative in technology or performance or has some characteristics that is different from traditional yarns. |
| RMB 1 and RMB 10,000 | Refers to | RMB 1 and RMB 10,000 |
| Reporting period / during the reporting period / this reporting period | Refers to | From January 1, 2023 to December 31, 2023 |
| End of reporting period/end of the current reporting period | Refers to | As of December 31, 2023 |
Section II Company Profile and Key Financial IndicatorsI. Company profile
| Stock abbreviation | Hengyi Petrochemical | Stock code | 000703 |
| Stock abbreviation before the change (if any) | None | ||
| Stock exchange | Shenzhen Stock Exchange | ||
| Chinese name | 恒逸石化股份有限公司 | ||
| Chinese abbreviation | 恒逸石化 | ||
| Foreign name (if any) | HENGYI PETROCHEMICAL CO., LTD. | ||
| Foreign abbreviation (if any) | HYPC | ||
| Legal representative | Qiu Yibo | ||
| Registered address | 4/F, Building 2, International Science and Technology Park, No. 5 Zhongma Avenue, China-Malaysia Qinzhou Industrial Park, Qinzhou Port Area, China (Guangxi) Pilot Free Trade Zone | ||
| Post code of the registered address | 535000 | ||
| Change history of the Company’s registered address | The original registered address of the Company, No. G, F7, Haifu Building, No. 16 West Beihai Avenue, Beihai City, Guangxi Zhuang Autonomous Region, was changed to current registered address of the Company in August 2022. | ||
| Office address | Building 3, Hengyi Nan’an Mingzhu, 260 North Shixin Road, Xiaoshan District, Hangzhou City, Zhejiang Province | ||
| Post code of the office address | 311215 | ||
| Company website | http://www.hengyishihua.com | ||
| E-mail address | hysh@hengyi.com | ||
II. Contact person and contact information
| Secretary of BOD | Securities Representative | |
| Name | Zheng Xingang | Zhao Guanshuang |
| Contact address | BOD Office, 16/F, Building 3, Nan’an Mingzhu, No. 260 North Shixin Road, Xiaoshan District, Hangzhou City, Zhejiang Province | BOD Office, 16/F, Building 3, Nan’an Mingzhu, No. 260 North Shixin Road, Xiaoshan District, Hangzhou City, Zhejiang Province |
| Telephone | （0571）83871991 | （0571）83871991 |
| Fax | （0571）83871992 | （0571）83871992 |
| E-mail address | hysh@hengyi.com | hysh@hengyi.com |
III. Information disclosure and place of preparation
| The website of the Stock Exchange where the Company disclosure the Annual report | Shenzhen Stock Exchange：http://www.szse.cn |
| Press name and website of Annual reporting disclosure | China Securities Journal, STCN, Shanghai Securities News and Securities Daily; CNINFO：http://www.cninfo.com.cn |
| Place where the Company’s Annual Report is prepared | Office of the BOD of Hengyi Petrochemical Co., Ltd. |
IV. Registration changes
| Unified Social Credit Code | 9145050019822966X4 |
| Changes in the Company’s main business since listing (if any) | No changes |
| Previous changes of controlling shareholders (if any) | No changes |
V. Other relevant informationAccounting firm engaged by the company
| Name | Zhongxinghua Certified Public Accountants LLP |
| Address | 20/F, Tower B, Lize SOHO, 20 Lize Road, Fengtai District, Bejing |
| Name of signing accountants | Liu Yuehong, Wang Guohai |
Sponsor engaged by the company to perform continuous supervisions duties during thereporting period
□Applicable ?Not applicable
VI. Main accounting data and financial indicatorsWhether the company is required to retrospectively adjust or restate prior years’accounting data
□Applicable ?Not applicable
| 2023 | 2022 | Increase/decrease of this year over the previous year | 2021 | |
| Revenue (RMB) | 136,148,114,082.34 | 152,050,274,944.64 | -10.46% | 129,666,931,795.26 |
| Net profit attributable to shareholders of listed companies (RMB） | 435,458,340.57 | -1,079,547,699.72 | 140.34% | 3,378,328,289.28 |
| Net profit after deducting non-recurring profits and losses attributable to shareholders of listed companies（RMB） | 53,685,831.74 | -1,092,334,520.95 | 104.91% | 2,728,828,428.31 |
| Net cashflow from operation activities（RMB） | 4,531,834,805.15 | 2,705,533,483.36 | 67.50% | 7,720,521,139.40 |
| Primary earnings per share（RMB/share） | 0.13 | -0.30 | 143.33% | 0.93 |
| Diluted earnings per share | 0.13 | -0.30 | 143.33% | 0.90 |
| （RMB/share） | ||||
| Weighted average ROE | 1.74% | -4.31% | 6.05% | 13.45% |
| End of 2023 | End of 2022 | Increase/decrease at the end of this year over the end of the previous year | End of 2021 | |
| Total assets（RMB） | 108,052,106,925.94 | 111,964,797,711.33 | -3.49% | 105,514,058,363.19 |
| Net assets attributable to shareholders of listed companies (RMB） | 25,211,150,840.09 | 25,446,694,059.09 | -0.93% | 25,863,447,788.06 |
The lower of the net profit before and after deducting non-recurring gains and losses ofthe company in the last three financial years is negative, and the audit report of the lastyear shows that the company’s liability to continue as a going concern is uncertain.
□Yes ?No
The lower of the net profit before and after deducting non-recurring gains and losses isnegative.
□Yes ?No
VII. Difference in accounting data under domestic and foreign accountingstandards
(1) Difference in the net profit and net asset in the annual financial statement reporwhich are presented concurrently in accordance with international accounting standardsand the accounting standards of China
There is no difference in the net profit and net asset in the annual financial statementrepor which are presented concurrently in accordance with international accountingstandards and the accounting standards of China.
(2) Difference in the net profit and net asset in the annual financial statement reporwhich are presented concurrently in accordance with foreign accounting standards andthe accounting standards of China
There is no difference in the net profit and net asset in the annual financial statementrepor which are presented concurrently in accordance with international accountingstandards and the accounting standards of China.
VIII. Quarterly main financial indicators
Currency unit: RMB
| First quarter | Second quarter | Third quarter | Fourth quarter | |
| Revenue | 28,381,122,577.28 | 35,935,125,699.85 | 37,212,788,835.38 | 34,619,076,969.83 |
| Net profit attributable to shareholders of listed company | 34,846,332.38 | 41,236,053.83 | 130,208,150.81 | 229,167,803.55 |
| Net Profit after deducting non-recurring profits and losses attributable to shareholders of listed companies | 7,863,150.21 | 65,147,441.32 | 118,617,778.05 | -137,942,537.84 |
| Cash flow from operating activities | -1,607,351,938.39 | 2,411,545,164.17 | -377,022,608.63 | 4,104,664,188.00 |
Whether the above financial indicators or their sums are materially different from therelevant financial indicators in the Company's disclosed quarterly reports and half-yearly reports.
□Yes ?No
IX. Non-recurring profit and loss items and amount
Currency: RMB
| Item | 2023 | 2022 | 2021 | Notes |
| Gains and losses on disposal of non-current assets (including elimination of provision for impairment of assets) | 416,787,000.84 | 128,936,835.05 | -12,534,455.04 | |
| Tax rebates, exemptions and reductions that exceed the authority to approve or are not accompanied by official approval documents | Inapplicable | 24,841,218.44 | 15,609,249.33 | |
| Government grants recognised in the current period's profit or loss (except for government grants that are closely related to the Company's normal operating business, in line with national policies and in accordance with defined criteria, and that have a continuing impact on the Company's profit or loss) | 114,355,884.18 | 179,870,984.15 | 277,839,245.44 | |
| Gains and losses from changes in fair value of financial assets and liabilities held by non-financial corporations and gains and losses from the disposal of financial assets and liabilities, except for effective hedging operations related to the Company's normal business operations | 491,763.52 | -448,914,776.35 | 480,727,659.11 | |
| Gains and losses on external entrusted loans | 38,393,856.92 | 48,520,852.95 | 49,567,383.65 | |
| Reversal of provision for impairment of receivables individually tested for impairment | 6,570.00 | 0.00 | 309,000.00 | |
| The cost of investments in subsidiaries, associates and joint ventures acquired by an enterprise is less than its share of the gain arising from the fair value of the identifiable net assets of the investee at the time the investment is acquired | 16,534,148.40 | 0.00 | 0.00 | |
| Custodian fee income earned on trusteeship | 1,698,113.16 | 1,698,113.19 | 1,698,113.20 | |
| Non-operating income and expenses other than those listed above | -24,115,026.00 | 612,146.73 | 13,359,433.22 |
| Other items of profit or loss that meet the definition of non-recurring profit or loss | 63,233,423.28 | 17,898,857.26 | 0.00 | |
| Less: income tax effect | 156,969,934.37 | 91,691,403.61 | 38,805,031.16 | |
| Minority interest impact (after tax) | 88,643,291.10 | -151,013,993.42 | 138,270,736.78 | |
| Total | 381,772,508.83 | 12,786,821.23 | 649,499,860.97 | -- |
Details of other items of profit or loss that meet the definition of non-recurringprofit or loss:
Other profit and loss items that meet the definition of non-recurring profit and lossmainly consist of non-recurring profit and loss attributable to investees from theinvestment income of significant associates and joint ventures accounted for under theequity method in the amount of RMB 64,952,698.90 through the recognition of non-recurring profit and loss.
Definition of non-recurring profit and loss items listed in "InterpretativeAnnouncement for Information Disclosure of Companies Issuing Public SecuritiesNo. 1 - Non-recurring Profit and Loss" as recurring profit and loss items
There are no instances where the Company defines items of non-recurring gains andlosses listed in "Interpretative Announcement No. 1 on Information Disclosure byCompanies Issuing Public Securities - Non-recurring Gains and Losses" as items ofrecurring gains and losses.
Section III Management Discussion and AnalysisI． Industry in which the company operated during the reporting periodThe Company shall comply with the disclosure requirements for petrochemicalindustry specified in Guidelines No. 3 for Self-Regulation of Listed Companies ofShenzhen Stock Exchange - Industry Information Disclosure(I) OverviewHengyi Petrochemical (Stock code: 000703.SZ) is a global leading enterprise in theintegration of the “refining-chemical engineering-chemical fibre” industry chain. Sinceits establishment, the company has always focused on its core business, taking "onedrop of oil, two threads" as the core of its strategic policy. It has laid out the Bruneirefining project in a forward-looking manner, opening up the "last kilometer" of theindustrial chain from refining to chemical fibre. This has formed the unique "polyester+ polyamide" dual "polyamide" drive mode in China. The company continues to givefull play to the comprehensive competitive advantages of "upstream and downstreamsynergy, domestic and overseas linkage" and has constructed an integrated columnarbalanced industrial structure of upstream, midstream, and downstream industry chains.
In order to deepen the core competitiveness of its main business, HengYi Petrochemicalhas continued to push forward the strategic transformation from "Industry Hengyi" to"Technology Hengyi" in recent years, and has built up a system of independentintellectual property rights around the company's core business areas, steadily pushingforward the technological research and development of high-value added products andthe innovative optimization of processes. We will steadily push forward thetechnological research and development of high value-added products, as well as theinnovation and optimization of processes, in order to lay a solid foundation for thecompany's sustainable development. Driven by digitalization and intelligentconstruction, the company is marching towards the ambitious goal of becoming aleading domestic and world-class private multinational industrial group of "refining,chemical industry and chemical fibre".
(II) Industries in which the company’s three major business operate
In 2023, economics in the China achieved steady growth against the backdrop of afaltering global economic recovery and intensifying international geopolitical conflicts.According to the National Bureau of Statistic, China’s gross domestic growth (GDP)grew by 5.2% year-on-year (y-o-y) in 2023, and total retail sales of consumer goods forthe year increased by 7.2% y-o-y. Focusing on the chemical industry, the boom in thechemical industry was first depressed and then rose in the first three quarters of 2023,before falling back to the median level for the year in the fourth quarter. As of 29December 2023, China chemical product price index was 4,635, lower than the medianvalue of 4,696 and the average value of 4,657 in the past ten years, still at the low levelof the industry cycle.
Data sources: WIND
1. Refining and petrochemical industry
In 2023, under the geopolitics, the expectation of interest rate hike in the United States,production cuts by major crude oil producers, banking crisis and other factors, the Brentcrude oil futures price is generally running in the range of 70-95 US dollars per barrel,and the overall trend is wide oscillation.
4,0004,2004,4004,6004,8005,0005,200
China chemcial product price index in 2023
2023-012023-042023-072023-102024-01
Brent crude oil futures average daily price chart ($/bbl)
Data sources: CCF
(1) Southeast Asia refined oil market demand gap is large; supply tension situationis difficult to improve in the short term
IEA reporting refers to Asia remains an important region dominating oil demand. Fromthe demand side, Southeast Asia has richer oil and gas resources, but due to the shortageof infrastructure investment, instead of becoming the largest net import market ofrefined oil in the world, besides, Australian also need import refined oil. In addition,the implementation of the new IMO standard in 2020, a greater impact on the globalshipping industry, Singapore as a major shipping base, bunker fuel sulphur content ofshipping fuel is mandatory restrictions, some MGO (marine diesel) need to replacemarine fuel oil, stock replacement space release, Southeast Asia diesel demand isexpected to continue to increase.
According to the latest forecast released by the International Monetary Fund in January2024, ASEAN's GDP growth rate in 2024 will remain high, of which Indonesia isexpected to grow at a rate of 5.0%, and the Philippines is expected to grow at a rate of
6.0%, which is still significantly higher than the global level, and the favourable trendof the economic expectations may further drive the growth of demand for refinedchemical products.
From the supply side, compared with the surplus state of domestic refined oil supply,the gap in the Southeast Asian refined oil market is larger, with an overall surplus ofsupply over demand. According to Platts data, from 2020 to 2023, more than 30 milliontons of refining capacity in Southeast Asia and Australia will be withdrawn from themarket due to public health events and energy structure transformation. Some refineriesin Southeast Asia are still facing challenges such as early construction of equipment,outdated technology, poor management, and heavy government subsidies burden.
Additionally, with the tightening of global environmental protection policies, refineriesare reluctant to expand production, and capital expenditure plans are becoming morecautious. Refiners and chemical companies are also hesitant to increase production,further limiting the future growth of refinery capacity. According to the IEA forecast,the refining capacity in Southeast Asia is expected to remain unchanged until 2028.
(2) Refinery earnings expected to rise as refined oilcrack spreads remain high inSingapore market
As a benchmark for refinery profitability in Southeast Asia, looking at the refinedoilcracking spread in the Singapore market from 2022 to the present, in 2022, the refinedoil cracking spread fluctuated significantly due to multiple factors such as geopoliticaltensions, drastic fluctuations in crude oil prices, and weak downstream demand. In2023, the reshaped global refined oil market supply and demand structure, influencedby geopolitical factors, remained relatively stable, resulting in a reduced amplitude ofthe refined oil cracking spread. There was a noticeable boost starting in the secondquarter. Since 2024, the refined oil cracking spread in Singapore has remained at highlevels, indicating the potential for sustained and robust improvement in refineryprofitability in Brunei.
| DieselJetfuel | ||||||
Data sources: Platts platform
2. PTA industry
PTA is one of the important bulk organic raw materials, widely used in various aspectsof the national economy such as chemical fibers, light industry, electronics, andconstruction. 95% of domestic PTA demand is used in the polyester industry. Chinanow dominates the worldwide PTA market since it is the largest producer and consumerof PTA worldwide because to its ongoing improvement of PTA independent productioncapacity.
The CCF statistics shows that in 2023 China's actual new PTA capacity expanded by10 million tons, with a capacity growth rate that dropped from 18.5% in 2020 to 12.8%in 2023. CCF anticipated that in 2024 China's PTA capacity commissioning wouldcontinue to slow down and that the rate of capacity expansion would drop to 6%.
Furthermore, PTA exports are increasing consistently and China's market share in theworld PTA market has progressively grown. Chinese PTA capacity accounted foralmost 76% of Asian PTA output in 2023; the foreign PTA sector did not add any newunits. China's PTA capacity will continue to rise in the future years, accounting for thepercentage of Asia and the world. The demand for polyester goods is really high inoverseas markets such Bangladesh, Turkey, and other nations; China's PTA exports arestill rising.
3. Polyester industry
Polyester fibres are mainly used in clothing, home textiles and technical textiles, etc.The development of the industry is closely related to the downstream demand of thetextile and chemical fibre industry.
(1) The downstream demand outlook has significantly improved, driving a steadyrelease of demand for polyester products.
The domestic economy steadily recovered in 2023, and the textile and apparelindustries' boom much improved, propelling polyester market production and sales andexhibiting strong development against the backdrop of a slowing down of crude oilprice swings. According to the National Bureau of Statistics, China's retail sales ofconsumer goods overall increased by 7.2% year over year in 2023, up 7.4 percentagepoints from the prior year; retail sales of clothing, shoes, hats and textile goods in Chinaincreased by 12.9% year over year, up 19.4 percentage points from the prior year.Expanding, there was a clear marginal comeback trend in China's retail sales of textiles,needles, headgear, clothes, and footwear in the second half of 2023. The demand iscontinuing maintaining a better trend, demonstrating a strong momentum of recovery,and the chain growth rate has been growing positively since August, particularly inNovember when it reached a new record high of 24 percent. Exports in 2023 are littleless than in 2022 because of the sluggish recovery of the world economy, geopolitics,supply chain adjustment, and other factors influencing the total export volume oftextiles and apparel. China's cumulative textile and apparel exports in 2023 wereUS$293.64 billion, down 8.1 percent from the same time last year, but the total valueremains high and the export volume is still higher than in 2019. The development ofChina's textile and garment industries still heavily depends on the international market.
Data sources: National Bureau of Statistics
Notes: In order to eliminate the impact of the irregularities brought about by the SpringFestival holiday and to enhance the comparability of the data, the National Bureau ofStatistics does not carry out a separate survey of January statistics, and the January-February data are surveyed and released together.
In the textile and apparel industry under the high degree of boom, polyester fibredemand is expected to release, the production of high-load operation, productiongrowth rate hit a record high in the past thirteen years. According to CCF data, in 2023,polyester fully drawn yarn demand growth is strong, and the demand growth rate ismuch higher than the growth rate of production capacity, which is conducive to thecontinuous optimization of the industry's competitive landscape. According to CCFdata, the apparent demand for polyester fully drawn yarn in 2023 was 36.68 milliontons, up 22.8% year-on-year, with the demand side of the boom significantly improved;the net new capacity of 3.85 million tons during the year, the annual production capacityreached 51.68 million tons, an increase of 8.0% year-on-year; the annual productiontotalled 40.6 million tons, an increase of 22.7% year-on-year.
| China: Retail Sales: Clothing, Shoes, Hats, Textiles: Current Month Value Month-on-monthgrowth rate |
Data sources: CCF
(2) Strong demand in the overseas market, exports maintain high growth rate
In recent year, the polyester productions widely used in the apparel, industry and otherfields due to its excellent performance, favoured by international market, of whichfilament, bottle chips and other products are in greater demand. China's polyesterindustry has outstanding advantages in technological innovation, product quality andcost control, etc., and is actively expanding overseas markets, continuously improvingbrand awareness and market share, China's polyester product exports maintain a bettertrend. According to CCF statistics, the total export volume of China's polyester industry(including polyester fully drawn yarn, polyester staple fibre, polyester chips, polyesterbottle flakes and polyester film) in 2023 was 11.16 million tons, up 13.0% year-on-year,with the growth rate maintaining a high level. Among them, the export volume ofpolyester fully drawn yarn is 3.99 million tons, up 20.7% year-on-year; the exportvolume of polyester staple fibre (including virgin and recycled polyester staple fibre)is 1.205 million tons, up 21% year-on-year; the export volume of polyester chips is855,000 tons, up 12.4% year-on-year; and the export volume of polyester bottle flakesis about 4.55 million tons, up 5.6% year-on-year.
| Year-on-year capacity growthProduction capacitiesYear-on-year production growth rateApparent demandYear-on-year growth in apparent demand | |
Data sources: CCF
(3) Outdated production capacity continues to be eliminated and the competitivelandscape is further optimized
While demand continues to pick up, industry concentration on the supply side isexpected to further increase, with the competitiveness of leading companies highlighted.According to CCF statistics, in 2023, some factories or installations have been clearlywithdrawn, and the annual polyester fully drawn yarn production capacity withdrawaltotalled 1.01 million tons. The industry device old and backward, lack of technologicalinnovation ability of the plant, the future will gradually withdraw from the industrycompetition, backward capacity clearance may speed up. In addition, along with thedual-carbon policy and equipment supply requirements continue to improve, thethreshold of entry into the industry will be further increased, polyester industry marketconcentration will continue to be optimised. At the same time, the company as anindustry leader, with obvious technological innovation and scale advantages, withstrong market competitiveness, operating efficiency is expected to improve.
| Polyester exports -left axisYear-on-year growth rate -right axis |
(4) Upstream raw material supply tends to loosen; profit is expected to shift to thedownstream polyester sideImportant raw materials for the polyester industry mainly include paraxylene (PX),purified terephthalic acid (PTA) and ethylene glycol (MEG). For many years, China'sPX is highly dependent on imports, and its independent production capacity is limited,while in recent years, along with the integrated construction of the domestic chemicalfibre industry chain and technological breakthroughs, the domestic PX productioncapacity has been gradually enhanced, and according to CCF statistics, the domesticPX production capacity in 2023 will be 43.67 million tons, a year-on-year increase of
21.4%. Accompanied by the continuous improvement of production capacity, thedomestic PX import dependence is reduced from 50% in 2019 to 21.3% in 2023.
Data sources: CCF
According to CCF statistics, the global MEG new capacity in 2023 is 3.95 million tons,of which 3.1 million tons of new domestic capacity, 850,000 tons of new foreignproduction capacity, import dependence from the previous period of 35.5% to 30%, theindependent supply capacity to further enhance. From the price point of view, 2013 -2023, MEG prices generally show a downward trend, the price in recent years is at a
| Year-on-year growth rate -right axisCapacities -left axis |
low level, directly bringing the polyester industry cost end down. The continuedexpansion of domestic PX, PTA and MEG production capacity is conducive to thetransfer of industry chain profits to the polyester industry.
Data sources: CCF
(5) Actively building a high-end, intelligent and green chemical fibre industryDuring the "14th Five-Year Plan" period, China based on the new development stage,the implementation of the new development concept, and the construction of a newdevelopment pattern, which put forward higher requirements for the high-qualitydevelopment of the chemical fibre industry. In 2022, the Ministry of Industry andInformation Technology and the Development and Reform Commission of the twoministries and commissions jointly issued the "Guiding Opinions on the High-qualityDevelopment of the Chemical Fibre Industry", which put forward A series of high-quality development goals to guide the chemical fibre industry to build a high-end,intelligent, green and modern industrial system, and comprehensively build a strongchemical fibre country. In the face of the new development situation, the chemical fibreindustry focuses on research and development of new technologies to promote thedevelopment of the industry to high-end, intelligent and green. In terms of digital
transformation and upgrading, leading polyester enterprises have established a PTA-polyester-spinning-trading polyester fibre whole industrial chain industrial internetplatform system, developed data-driven fibre high-efficiency production of the wholeprocess of intelligent management and control technology, and achieved large-scale,flexible and green production, as well as high-value and efficient fine management.
(III) Industry position of the company’s three major businesses
1. Refining and petrochemical segment
As a unique overseas refinery operator among private large refineries, the company hassuccessfully built the largest single overseas project among private enterprises in termsof investment. In the future, along with the completion and commissioning of the phaseII of the company's Brunei project, the company is expected to usher in newdevelopment opportunities.
According to Platts data, as of 31 December 2023, Southeast Asia's refining capacitywill be approximately 271 million tons, in line with 2022. As the profitability of refinedproducts continues to trend better in 2023, there is no exit capacity, but it is still lowerthan the 278 million tons in 2020, with the phase I of the Hengyi Brunei projectaccounting for 3% of the total capacity.
Phase I of Hengyi's Brunei project introduced the world's largest single-series aromaticsplant and the world's sixth flexible coking process plant, which has a significantlatecomer's advantage in terms of lower unit production costs and cleaner and moreenvironmentally friendly products. After the completion of the second phase of theBrunei project, the advantages of refining and chemical integration will be furtherrevealed under the trend of overall transformation and upgrading of the petrochemicalindustry. In addition, due to the Southeast Asian countries in the future new refining
capacity is limited, and Southeast Asia itself there is a shortfall of refined oil, supplyand demand is expected to continue to be tight, Brunei refining project is expected tobenefit significantly.
2. PTA segment
According to CCF data, China’s PTA capacity is 80.615 million tons as at 31 December2023. As a leading company in the PTA industry, the company has four major PTAbases, with a total PTA capacity of about 21.5 million tons, strategically laid out alongthe coastline from north to south in Dalian, Liaoning Province, Ningbo, ZhejiangProvince and Yangpu, Hainan Province. Moreover, according to CCF data, as of 31December 2023, the national PIA capacity is 550,000 tons and the company's PIAcapacity is 300,000 tons.
3. Polyester segment
CCF data indicated that the majority of polyester productions capacity is focused in theAsia-Pacific region, and China is the world’s leading textile exporter. As of 31December 2023, the total national polyester production capacity was 79.84 million tons,an increase of 13% year-on-year, of which 51.68 million tons were polyester fullydrawn yarn production capacity, 9.43 million tons were polyester staple fibreproduction capacity, and 16.61 million tons were polyester bottle flakes productioncapacity. The company participates in the holding of polymer production capacity of
11.115 million tons, including polyester bottle flakes (including RPET) capacity of 3.6million tons; polyester fibre production capacity, including polyester filament 6.335million tons, 1.18 million tons of staple fibre. In recent years, the company has beenincreasing the proportion of differentiated fibre varieties, focusing on the promotion ofdifferentiated filament products, and accelerating the promotion of the new green andenvironmentally friendly product "Yitaikang", which continues to lead the
technological progress of the chemical fibre industry.
II. Major businesses in which the Company was engaged during the reportingperiod
The Company shall comply with the disclosure requirements for petrochemicalindustry specified in Guidelines No. 3 for Self-Regulation of Listed Companies ofShenzhen Stock Exchange -Industry Information Disclosure
(I) Overview of major operations
During the reporting period, the corporate continued to concentrate in the petrochemicaland chemical fibre industry chain, and continuously leverage "Petrochemical+"segment, which includes supply chain services and long-term investments on equity, tosupport our main business.
1. Petrochemical and chemical fibre business
The Company is deeply engaged in the petrochemical and chemical fibre industry, andhas developed into a leading private multinational enterprise integrating "refining-chemical engineering-chemicalfibre" in China. During the reporting period, theCompany continued to extend and strengthen the chain, enrich the product range andoptimize the product structure, which effectively consolidated the core competitivenessof the main industry, enhanced the profitability of the products and strengthened theability to withstand market risks.
During the reporting period, the main products of the company include refined oil suchas gasoline, diesel oil and aviation paraffin; petrochemical products such as chemicallight oil, liquefied petroleum gas (LPG), paraxylene (PX), benzene, purified
terephthalic acid (PTA) and caprolactam (CPL); polyester bottles and chips and otherpackaging products, as well as polyester products such as polyester pre-oriented yarn(POY), polyester drawn yarn (FDY), polyester textured yarn (DTY), polyester staplefibre and polyester (PET). Polyester products such as PET chips are widely used tosatisfy the rigid needs of the country's economy and people's livelihood, and to meetthe people's aspirations for a better life.
As of the disclosure date of this report, the Company has a refining design capacity of8 million tons, a PTA production capacity of 21.5 million tons, a polymerisationproduction capacity of 11.12 million tons and a caprolactam production capacity of400,000 tons.
The production capacity of major products in the chemical and synthetic fibre
industryCategory
| Category | Products | Shareholding and controlling production capacity (10,000 tpa) |
Refined oil
| Refined oil | Gasoline, diesel, jet fuel, etc. | 565 |
Chemicalproducts
| Chemical products | Chemical products such as PX and benzene | 265 |
| PTA | 2,150 | |
| PIA | 30 | |
| CPL | 40 |
Polyesterproducts
| Polyester products | Polyester fibre | 751.5 |
| Polyester bottle flakes (including RPET) | 360 |
2. “Petrochemical +” business
In the face of the severe challenges of increasing uncertainty in the domestic andinternational situation, the company firmly adheres to the core business of "one drop ofoil, two threads", and protects the company's steady development in all aspects byconstructing the "petrochemical +" business.
(1) Supply Chain Services to Enhance Product Operations
In order to reduce the negative impacts of global geopolitics, energy security and otherfactors on the industrial chain and supply chain, the Company unswervingly pursuesand builds a supply chain system that is both resilient and stable, enhances theindependent control of the supply chain, promotes the healthy and stable developmentof the industry, and ensures that the Company's strategy is steadily advanced. TheCompany has continued to strengthen its supply chain co-operation and service
management capabilities, and has actively carried out comprehensive distributionservices for raw materials and products, with HengYi Micro Mall and marketing supplychain system as the core online, and logistics business as the support offline, so as torealize the effective integration of online and offline. Among them, the intelligentlogistics management platform (HTMS) is one of the functionalized applications ofHengYi Micro Mall, and the synergistic price enquiry, quick order, market information,financial services and other ancillary services have contributed to the continuousexplosive growth of the system's trading volume. Meanwhile, the company haspioneered the establishment of an omni-channel logistics control system and built athree-party logistics and transport platform. In addition, the company strengthens theconstruction of digital factory through the deep integration of digital intelligencemanagement, and actively explores the production of flexible personalizedcustomization through the means of big data to create a flexible, controllable andefficient supply chain industry chain system.
With the sustained and stable operation of the first phase of the Brunei project, thecompany is actively developing the supporting maritime business, accelerating theimplementation of integrated management of supply chain services, and forming anintelligent supply chain closed-loop system of "factory-products-warehouse-logistics-customers". The company will accelerate the implementation of integratedmanagement of supply chain services, forming an intelligent closed-loop supply chainsystem of "factory-product-warehouse-logistics-customer", and leading the industry inthe upgrade of intelligent supply chain services.
(2) Long-term equity investment boots company’s profit
Zheshang Bank founded in 2004, which is one of the 12 national joint-stock commercialbanks approved by the China Banking Regulatory Commission, and was listed on theMain Board of the Hong Kong Stock Exchange on 30 March 2016 and on the Shanghai
Stock Exchange on 26 November 2019, becoming an "A+H" listed bank. ZCB hasdeveloped into a high-quality commercial bank with solid foundation, excellentefficiency, rapid growth and sound risk control. With the completion of the "A+H"layout and the further optimization of its development strategy, Zheshang Bank ispoised to accelerate its development and continue to create value for its shareholders.According to the 2023 annual report released by ZCB, ZCB achieved operating incomeof RMB63.70 billion and net profit of RMB15.49 billion in 2023; as of the end ofDecember 2023, ZCB's total assets amounted to RMB3.14 trillion, representing anincrease of 19.91% compared with that at the end of the previous year. With the visionof "a first-class commercial bank" as the overall leader, ZCB focuses on the 12-wordoperation policy of "strengthening foundation, adjusting structure, controlling risks andcreating benefits", focuses on the four strategic priorities, carries out the operationstrategy of building up the ballast of weakly sensitive assets in the economic cycle, andraises the flag of "Good Financial Services" to lead the financial development towardsgoodness. The Company has achieved coordinated development in terms of scale,efficiency and quality, and has continued to maintain a steady and positive trend in itsbusiness development by promoting high-quality development through intelligentmanagement.
(II) Operation model
1. Procurement model
The Company mainly purchases raw materials through direct negotiation withmanufacturers or traders. It selects competitive suppliers to establish long-term andstable cooperative relations, on the basis of which it decides the transaction priceaccording to market conditions. The Company adopts a centralized procurementstrategy, integrating resources from Brunei and domestic operating suppliers andincreasing resource sharing efforts, so as to enhance the Company's own bargaining
power.
The raw materials required for production of the Company are mainly purchased frommajor petrochemical products and crude oil suppliers at home and abroad. Whenselecting raw material suppliers, the Company first considers the quality of theirproducts and the stability of supply. While ensuring the above, the Company will alsogive priority to suppliers with competitive prices to reduce production costs. TheCompany will sign annual supply contracts with major suppliers, regarding the supplyin the relevant year of their products to the Company in accordance with internationalor domestic market prices at the time of actual supply as per the quantity agreed in thecontracts. The main procurement process for auxiliary materials is basically the sameas that for raw materials.
2. Production model
For polyester products, the Company arranges production mainly according to theproduction plan formulated in advance. In specific implementation, the annualproduction plan will be subdivided into monthly production plan, and then theProduction Department will make necessary adjustments to the monthly productionplan according to the market feedback and change information provided by the SalesDepartment before finalizing the monthly production plan and arranging production.
The Company's refined oil and chemical products (PX, benzene, etc.) are mainlyproduced by Hengyi Brunei. Usually, it will adjust the process and parameters to controlthe output of specific products, such as refinedoil and chemical products, according tothe market demand.
The Company's PTA products are mainly produced by Zhejiang Yisheng. Usually, itwill adjust the load level of production unit to control PTA output according to themarket demand.
3. Sales model
The Company’s refined oils are mainly sold to Brunei, other Southeast Asian countriesand Australia. PTA and polyester products are mainly sold in the domestic market,covering more than 20 provinces and regions in China. Most products are sold directlyto customers through the Company's Sales Department, and only a small number ofproducts are sold through distributors.
(1) Sales model of refined oil and chemical products (PX, benzene, etc.)
The Company's refined oil and chemical products are mainly produced by HengyiBrunei. Among them, the main customers of chemical products are PTA manufacturersdownstream of the Company's industry chain, and the settlement mode usually adoptswire transfer and letter of credit, etc. Refined oil is mainly sold to Brunei, otherSoutheast Asian countries and Australia. When selling to local enterprises in Brunei,the Company usually signs sales contracts directly and the settlement mode is letter ofcredit. The Company's sales to other Southeast Asian countries and Australia are mainlythrough Singapore Commodity Exchange. Sales contracts are directly entered into withcustomers and the settlement mode is letter of credit.
(2) Sales model of PTA products
The Company’s PTA products are generally sold by direct sales, that is, the Companywill directly sign purchase and sale contracts with downstream polyester manufacturersor large traders, agreeing on the purchase quantity and price within a certain period.
After receiving the payment for goods from customers, the products are delivereddirectly from the Company's warehouse. The settlement mode for sales of PTA productsis “payment before delivery”, or “collect on delivery”, usually by wire transfer,acceptance draft or letter of credit.
(3) Sales model of polyester fibre products
The main customers of the Company's polyester fibre products are textile enterprises,including elastomer enterprises, garment fabric manufacturers, bag fabricmanufacturers, home decoration fabric manufacturers, etc. These customers are mainlyconcentrated in the areas of Jiangsu and Zhejiang as well as Shanghai. The Companygenerally adopts direct sales, and directly concludes sales contracts with customers.The settlement mode is usually “payment before delivery”, or “collect on delivery”.
4. Business model of supply chain service business
The company’s supply chain service business mainly includes trade business andsupporting logistics related services.
(1) Trading business
Petrochemical industry is a cyclical industry. On the one hand, the supply side of rawmaterials is susceptible to factors such as upstream suppliers' production capacity,operation stability of the plant and start-up time of the new plant. On the demand side,especially in the downstream polyester business, sales have typical seasonalcharacteristics. Meanwhile, chemical raw materials and finished products are verydependent on the stability of port facilities and international logistics transportation. Onthe other hand, the prices of products in the petrochemical industry chain are affectedby the price of terminal crude oil, showing wide fluctuations. Therefore, in order to
ensure production and operation, strengthen supply chain stability and reduce the riskof price fluctuation, petrochemical enterprises need to smooth supply and demand andhedge risks through trade business in procurement and sales.
The company has never carried out trade in products unrelated to its main business,insisting on the principle of positioning trade business to serve the main business, andtrading varieties around the main business and core products. Among them, crude oil,refined oil and other oil products are the main raw materials and products of Bruneiproject of the company, PX is the raw material of the company's main product PTA,PTA and MEG are the main raw materials of the company's polyester products. Theabove trading business is conducive to the Company's access to spot marketinformation and revenue through trading, as well as the Company's need for inventorymanagement of raw materials and products, which can stabilize the supply chain andhedge against the risk of price fluctuations.
(2) Logistics warehousing and other operations
The company's logistics segment provides raw material and product transport servicesfor the upstream and downstream industries of Hengyi Petrochemical. Its businesscovers raw material transport, product transport, foreign trade transport andinternational transport, etc. The company is deeply engaged in the domestic market andis gradually moving towards the overseas market, and its business scope involvesinternational sea transport and land transport. Its main business model is raw materialtransport, product transport, foreign trade transport and international transport and otherlogistics services.
(III) Process flow charts of main products
1. Production flow of refined oil/chemical products
The production flow of the Company’s refined oil/chemical products includeatmospheric distillation, vacuum distillation, hydrocracking, flex coking, catalyticcracking and alkylation, etc.
2. preparation process
PTA oxidation and refining unit
3. Polyester esterification polycondensation process
In the process of polyester esterification, the raw material PTA, ethylene glycol andcatalyst solution are continuously sent into the slurry preparation tank according to thespecified proportion. After they enter the esterification reactor, the esterification ratecan reach about 95%-96% by controlling the reaction temperature at an appropriatelevel. By means of gear pump discharging and pressurization, the polyester meltproduced from esterified materials after Polycondensation and final polycondensationis filtered by melt filter, and is distributed through a specially designed melt distributionsystem. Part of it is sent to the spinning device for melt direct spinning, and the otherpart is sent to the flake production system for ribbon casting and pelletizing. Thespecific flow chart of polyester esterification, polycondensation and other reactions isas follows:
4. Production flow of POY/FDY
The production process of POY and that of FDY are basically the same. The polyestermelt is connected and transported to the device from the outlet of the melt distributionvalve of the polyester device, and then is divided into two systems through the meltthree-way valve. On the way, it is pressurized by the melt booster pump, and then sentto the melt distribution valve after cooling-down by the melt cooler. The polyester meltfrom the melt distribution system enters the spinning chamber insulated by steam phaseheat medium at a certain temperature and is delivered to the spinning assembly aftermetering by a metering pump. The melt pipe is equipped with a freezing valve to ensurethat the spinning position can be independently started and stopped. After the melt isfiltered and pressed by the filter layer again in the spinning assembly, it is ejected fromthe spinneret in a thin stream and solidified into yarns under the condition of constanttemperature and humidity. The yarn is oiled by the tanker, and then through the networknozzles, it is rolled into a yarn tube in the winding machine. POY and FDY productswere prepared under highspeed winding ranging from 2,500m/min to 5,100m/min.
5. Production flow of DTY
The POY yarn on the yarn tube rack is wound into a DTY yarn tube and becomes afinished product after it passes through yarn guide, feeding roller, texturing heater,cooling, drafting, false twister, feeding roller in the middle, network, heater, delivery
Cooling
Oil + water
Blending
Oil
roller and oil roller.
6. Production flow of staple fibre
Polyester staple fibre is a kind of fibre that is transported to the spinning machinethrough melt, spun into shape, cut into fibres of different lengths after drafting,crimping and heat setting, and then packed into individual packages. The main processincludes melt conveying, spinning, cooling, winding, tube falling, bundling, drafting,tension heat setting, folding, crimping, cutting and packing.
7. Production flow of bottle flakes
The production process of bottle flakes, i.e. bottle grade flakes, is composed of twoparts: melt polymerization + solid phase polymerization. The main process of meltpolymerization consists of pulping, esterification, polycondensation, and dicing, and isbasically the same as that of fibre polymerization. The difference lies in that IPA,stabilizer and toner are added in the formula of bottle flakes. The main process of solidphase polymerization is crystallization, preheating, reaction, and cooling.
(IV) Highlights of company’s operations during the reporting period
In 2023, against the background of steady growth in the domestic economy and thecontinued rebound in demand from the downstream textile and apparel industries wherethe Company operates, the Board of Directors and the management of HYPC insistedon innovation as the leader, technology as the foundation, and quality and efficiencyenhancement as the guidance, and relied on many years of experience in operation andmanagement of the chemical industry and its strategic advantages to keep close tochanges in end-use demand, flexibly adjust the market strategy, and steadily andsteadily enhance the operating efficiency of the main business. At the same time, theCompany made full use of its advantageous resources, continued to optimize itsindustrial layout, ensured the smooth commissioning of its projects, pushed forward theconstruction of major strategic projects, built up momentum and empowered itself forhigh-quality development, and actively overcame the impact of unfavourable factors topush forward the stable and positive operating results for the whole year.
During the reporting period, the company implemented the third and fourth phases ofits share repurchase plan. The third phase of the share repurchase plan has beencompleted, with a total repurchase of 150.8138 million shares, accounting for 4.11% ofthe company's total share capital, with a transaction amount of RMB 1.112 billion. Asof March 31, 2024, the cumulative repurchase of shares under the fourth phase of theshare repurchase plan amounted to 64.5755 million shares, accounting for 1.76% of thecompany's total share capital, with a transaction amount of RMB 430 million. Thecompany's cumulative repurchase amount of four-phase share repurchase plan reachedRMB 2.675 billion. Additionally, in 2023, the company implemented and completedthe fifth phase of its employee stock ownership plan, purchasing 87.1678 million sharesof company stock, accounting for 2.38% of the company's total share capital, with atransaction amount of RMB 675 million. The cumulative amount of five-phaseemployee stock ownership plan reached RMB 4.437 billion. The continuedimplementation of share repurchase plans and employee stock ownership plansdemonstrate the company's strong confidence in its own value and future development.
The key operational priorities that drove the Company's performance during thereporting period are set out below:
1. Tackling difficulties and promoting the upgrading and operation of key projects
(1) Successful completion of the phase I of the Brunei project's technicalrenovation, with profitability gradually improvingIn 2023, under the macro background of unstable global economic recovery momentum,geopolitical risk exposure becoming bigger, downstream demand to be boosted,Southeast Asia's economy showed strong resilience, economic development to maintaina better trend, the demand for refined oil to obtain a strong support, and at the sametime by the backward production capacity to continue to exit, geopolitics and otherfactors, the supply pattern of refined oil continues to be tight, in the context of demand
exceeds supply, the Under the background of supply exceeding demand, Southeast Asiarefined oil market maintains a booming pattern, driving Brunei Refining's profitabilityto improve. Meanwhile, the first phase of Brunei project achieved safe and smoothoperation throughout the year. In addition, based on years of operating experience inSoutheast Asia, the Company continuously summed up and improved its productionand sales strategies, adhered to the market-oriented approach, followed the demandtrend, grasped the development opportunities, and made every effort to enhance theoperating efficiency of the refining and chemical segment.
During the reporting period, the Company successfully completed the "first technicaltransformation" of Brunei Project Phase I, focusing on the working theme of "ensuringsafety, adjusting structure, stabilising operation and seeking development". Throughthis scheduled turnover, the process and equipment indexes of Brunei Project Phase Ihave been greatly improved, which further enhanced the competitive strength of BruneiProject Phase I in the international market. We are fully prepared for market demand toimprove, and the marginal profit contribution is expected to continue to improve.
In the report period, the company ensured stable operation of Phase I of the Bruneiproject. Measures were taken to actively respond to fluctuations in crude oil prices andproduct price differentials. This involved procuring various types of crude oil materialssuitable for the company's processing, thereby reducing upstream costs. Simultaneously,the product structure closely followed market changes. Rational adjustments were madeto the production volumes of chemical light oils, gasoline, diesel, aviation kerosene,benzene, and PX. Clean oil products, benzene, PX, and diesel each accounted forapproximately one-third of the total production, aiming to maximize the operationalefficiency of Phase I of the Brunei project. During the reporting period, Phase I of theBrunei project operated at high capacity, producing mainly refined oil products (diesel,gasoline, chemical light oil, liquefied gas, etc.), as well as chemicals (PX, benzene, etc.).
The production volumes were 5.8024 million tons and 1.8184 million tons respectively,while the sales volumes were 5.825 million tons and 1.8277 million tons respectively.Sales revenue amounted to 31.841 billion yuan and 12.146 billion yuan (external salesamount). This further enhanced the global recognition of the "Hengyi" brand andcontributed to the continuous improvement of the company's competitive advantagethrough the vertical integration of the industrial chain.
In 2023, the performance of Brunei Phase I refining project was under pressure, mainlydue to (1) in the first half of 2023, the Brunei refinery implemented technical renovationwork, with higher expenditure on technical renovation costs, and at the same time, thetechnical renovation period still needs to bear fixed costs such as manpower costs,depreciation, and so on; and (2) the interest rate of overseas US dollar borrowings rose,resulting in a significant increase in the company's financial expenses compared withthe same period of the previous year.
As of the disclosure date of this report, the Company's Brunei project's internationaloperation advantages have become more prominent, mainly including:
? High level of support from both Chinese-speaking countries and long-term taxincentives? Brunei is politically stable and the project is in line with Brunei's 2035 ambitions;? The project is in line with the national "Belt and Road" strategy, and the syndicatedloan has national strategic support;? The products are free of customs duty, personal income tax, business tax, salarytax, production tax and export tax;? The project has been granted eleven-year tax exemption for pioneer enterprises andpreferential treatment for export enterprises, and can enjoy longer-term corporateincome tax exemption.
? Brunei's significant geographical advantage, enabling strategic development of theindustry
? Brunei is closer to the crude oil supplying area and close to the Singapore crude
oil trading market, which is convenient for crude oil procurement and has lowerlogistics cost;? Refined oil products produced by the project are sold to Southeast Asia andAustralia, with strong demand in Southeast Asia, Brunei project has a short salesradius and low logistics cost;? Chemicals can be supplied to the downstream supporting digestion of its ownindustrial chain, realizing integrated industrial chain operation.
? Technological advantage of latecomer, unit cost continues to improve? The project is fully equipped with its own power plant, with obvious cost
advantages in public works;? The main production units, such as hydrocracking, reforming and PX unit, adopt
the latest advanced technology, which has the technical characteristics of low
running cost and high product conversion rate, and reduces the production cost of
PX;? Low-temperature heat reuse technology is adopted, and the waste heat is used for
seawater desalination, which reduces the seawater desalination operation cost and
the comprehensive energy consumption index of PX production;? Residual oil treatment adopts the latest flexible coking process, which can be
produced continuously, reducing labour costs, and the by-produced fuel gas
reduces fuel costs. Compared with the traditional process, the closed production of
the plant is more environmentally friendly, and the harmless treatment of residual
oil has been realized;? Liquid-phase diesel hydrotreating technology is adopted, which can meet the new
international diesel standard and at the same time reduce the investment and energy
consumption of the plant;? Brunei has a mild climate all year round and no natural disasters. As a rich oil
producing country, it has abundant oil and gas resources, which can provide part
of the crude oil and reduce the logistics cost of crude oil.
(2) Vigorous construction of key projects and solid advancement of industriallayout
In 2023, driven by the high prosperity of the textile and apparel industry, the start rateof the PTA industry basically remained at around 80%, and the growth rate of polyesterindustry output hit a record high in the past thirteen years. Against this backdrop, thecompany’s PTA and polyester segments maintained high annual average work rates,higher than the industry average, to achieve efficient production of each project andgive full play to the economies of scale.
During the reporting period, the company's joint venture Hainan Yisheng annual outputof 2.5 million tons of purified terephthalic acid (PTA) project entered the trialproduction stage; annual output of 1.8 million tons of functional materials project, thefirst set of 600,000 tons of annual production capacity of the device has been trialproduction, the two sets of 1.2 million tons of annual production capacity of the devicewill be carried out in 2024 for the trial production, which will further enhance thecompany's position in the industry. At the same time, the company vigorously promoteQinzhou "annual output of 1.2 million tons of caprolactam - polyamide industryintegration and supporting projects", after the project is completed and put intooperation, the company's performance is expected to further thicken, increase thecompany's market share in the field of bottle flakes, nylon and other areas, effectivelystrengthen the downstream industrial chain, give full play to the company's "Polyester+ polyamide" double "spandex" drive unique advantages, and further enhance theupstream and downstream highly matched balanced integration of industry chainadvantages.
2. Technology leadership, accelerate the “industrial Hengyi” to “science andtechnology Hengyi” innovation transformation
In 2023, the Company will focus on the core key technology of "one drop of oil, twothreads", strengthen the investment in R&D of scientific and technological innovation,strongly promote the comprehensive innovation with science and technology as thecore, accelerate the transformation and application of relevant high-tech achievements,and build up momentum and empower the Company's high-quality development.During the reporting period, the Company actively introduced high-level R&D talents,optimized the incentive mechanism and system for scientific research, and activelycreated a corporate innovation culture of "creating and sharing"; at the same time, theCompany actively cooperated with Zhejiang University, Donghua University and otherfamous universities in China to build the "Hengyi Scholars Laboratory", which is ledby famous professors in the industry. At the same time, the company actively cooperateswith Zhejiang University, Donghua University and other famous universities in Chinato build the "Hengyi Scholars Laboratory" led by famous professors in the industry, andestablishes a joint research and development platform to break through the bottlenecksof research and development, and to develop forward-looking innovative technologies.
In 2023, the company invested RMB 744 million in R&D, with a total of 1,027 R&Dpersonnel, accounting for 6.61% of the company's total headcount, of which the numberof R&D talents with doctoral degrees was 79. As of the end of the reporting period, thecompany's innovation achievements continue to emerge, and Hengyi and itssubsidiaries have 422 validly authorized patents, of which 262 are valid inventionpatents. The company's innovation development has achieved milestones, laying a solidfoundation for the next step of scientific and technological innovation development.
During the reporting period, Hengyi Petrochemical, relying on years of experience inthe petrochemical and chemical fibre industry, continued to play a leading role in theindustry, and the company has won major scientific and technological awards such asthe "First Prize of Scientific and Technological Progress of China Textile Association
in 2023", "Second Prize of Zhejiang Provincial Technical Invention Award", "SecondPrize of Technical Invention Award of China Chemical Industry Association in 2023",etc. The company has taken part in the formulation and revision of a total of 40standards, among which there are 10 national standards, 24 industry standards and 6group standards.
During the reporting period, the company focused on strategic R&D directions,breaking through key R&D projects such as "Research and Development Project ofFlame Retardant Cationic Polyester Fibre", which demonstrated its strong R&Dstrength; and realizing the "Polyester Titanium Polycondensation Catalyst PreparationTechnology", The industrialization of projects such as "Polyester TitaniumCondensation Catalyst Preparation Technology", "Green Manufacturing of TiO2Matting Agent for Nylon and Complete Set of Technology for Industrialization andApplication of Fully Matting Nylon" and "Research and Development of Zinc OxideAntibacterial Polyester Fibre" has enhanced the competitiveness of the differentiatedproducts and injected new impetus for the company's long-term and steadydevelopment.
3. Keeping up with demand and strengthening production and marketing linkagesIn 2023, to enhance the market sensitivity of various business departments and leveragethe guiding role of "Hengyi Brain" in scientific decision-making, the companyestablished the "Industry Chain Research Group" on the basis of the original "MarketInformation Tracking Professional Team." This group deeply covers various segmentedmarkets upstream and downstream of the "Refining-Chemical-Fiber" industry chain. Itconducts in-depth analysis from the perspectives of market data, industry dynamics,etc., and regularly produces professional research reports. These reports serve as thebasis for important decisions such as company production and sales coordination,strategic planning, etc. The group has become an indispensable "nerve center" for thecompany.
Relying on the digital visualization platform "Hengyi Brain" and its research team, theCompany gained insights into domestic and overseas market conditions, strengthenedmarket prediction, swiftly adjusted its business strategies, and optimized its productand market structure to meet market demand and strengthen its competitive strength.During the reporting period, the proportion of the Company's differentiated productsincreased rapidly, and the added value of the products was significantly enhanced,which provided the original impetus for the Company to consolidate its leading positionin the industry and seize the market share.
4. Improve quality and efficiency, fine management and stable operation
In 2023, while responding to the external market, the Company took "improving qualityand increasing efficiency" as the key to continuously improve internal operationalefficiency, fully implemented the production and operation tasks of each business line,strictly controlled operational risks and ensured the stable operation of the business.
During the reporting period, the Company strengthened fine management, formulateda detailed management system, continuously optimised workflow, deepened digitaloperation empowerment, and continued to promote the management culture of strivingfor excellence, constructing a closed loop of closely-connected and efficiently-operating management processes, which significantly enhanced the timeliness,accuracy and comprehensiveness of the Company's management, and promoted theCompany's per capita efficiency to continue to improve, meet the demand for refinedoperation and assist the Company's high-quality development. The company'smanagement process is closed loop.
During the reporting period, the Company dug deep into the potential of process costreduction and efficiency enhancement, attached importance to the optimization and
innovation of process technology, and reduced production costs, improved productionefficiency and product quality through the introduction of advanced equipment andimprovement of process flow, thereby enhancing market competitiveness. At the sametime, the company strengthens cost control, comprehensively covering all aspects ofraw material procurement, manufacturing to sales and service, fine management andreduce losses. In addition, the company actively explores ways to reduce costs andincrease efficiency, and continues to carry out the circular economy, implement greenproduction and improve resource utilization efficiency, laying a solid foundation forsteady development.
5. Green drive, practising sustainable development
In 2023, the company is committed to becoming an industry-leading chemicalinnovation and technology enterprise, actively responding to the national carbon peakand carbon neutral policy, adhering to the "green manufacturing" and "circulareconomy" as the guidance, and continuing to practice and promote the green and low-carbon transformation of the industrial chain, and actively exploring the innovation ofgreen polyester fibre products, of which the flame retardant fibre products are in theleading position in the country, and the production and sales volume continue toincrease. We are actively exploring the innovation of green polyester fibre products, ofwhich the flame-retardant fibre products are in the leading position in the country, andthe output and sales volume continue to increase; the key technology of in-situpolymerisation of anti-bacterial polyester has made a breakthrough, which has a broadprospect.
Procurement pattern of major raw materials
Currency unit: RMB/Tons
| Main raw | Procurement | Percentage | Has the | Average | Average |
| materials | model | of total amount of purchase | settlement method changed significantly? | price in the first half of the year | price in the second half of the year |
| Crude oil | Purchasing inquiry | 21.43% | No | 4,293.01 | 4,841.10 |
| PX | Purchasing inquiry | 14.27% | No | 7,191.23 | 7,565.98 |
| MEG | Purchasing inquiry | 6.52% | No | 3,598.00 | 3,523.51 |
Reasons for the significant change in the prices of raw materials compared withthe previous periodDuring the reporting period, there were significant changes in the prices of theCompany's raw materials compared to the previous reporting period, mainly due tohigher interest rates as a result of the Federal Reserve's interest rate hike, as well asslower growth in downstream demand and weaker upstream investment as a result ofgeopolitical turmoil. Crude oil prices were constrained by macroeconomic pressures,the risk of supply disruptions and expectations of falling demand, resulting in increasedprice volatility throughout the year and overall lower prices compared to the sameperiod. According to CCF data, the average price of WTI crude oil fell 17.62 per centyear-on-year in 2023 and the average price of Brent crude oil fell 16.82 per cent year-on-year.
The purchase price of energy accounts for more than 30% of the total productioncost
□Applicable ?Not applicable
Reasons for significant changes in major energy types
□Applicable ?Not applicable
Main production technologies
| Main products | Stage of production technology | Core technical personnel | Patented technology | Advantage in product R&D |
| Gasoline | Mass production | Multiple persons | Introduction and innovation | Advanced equipment and technology, high production capacity, low costs of raw materials and transportation, and high level of eco-friendliness |
| Diesel | Mass production | Multiple persons | Introduction and innovation | Advanced equipment and technology, high production capacity, low costs of raw materials and transportation, and high level of eco-friendliness |
| Kerosene | Mass production | Multiple persons | Introduction and innovation | Advanced equipment and technology, high production capacity, low costs of raw materials and transportation, and high level of eco-friendliness |
| Paraxylene | Mass production | Multiple persons | Introduction and innovation | Advanced equipment and technology, high production capacity, low costs of raw materials and transportation, high product purity, and long operating cycle of the plant |
| Benzene | Mass production | Multiple persons | Introduction and innovation | Advanced equipment and technology, high production capacity, low costs of raw materials and transportation, high product purity, and long operating cycle of the plant |
| Purified terephthalic acid | Mass production | Multiple persons | Introduction and innovation | High production capacity, low investment, low energy consumption, convenient transportation and high level of eco-friendliness |
| Polyester | Mass production | Multiple persons | Introduction and innovation | Short process, high production capacity, low consumption of raw materials and public works, etc. |
| Polyester | Mass production | Multiple persons | Introduction and innovation | The third and fourth monomers are added into the polymerization reaction system, and a special equipment structure is adopted. Through esterification, polycondensation and final polycondensation reaction, low-temperature dyeable cationic polyester is prepared, lowering the cost of subsequent dyeing and reducing environmental pollution. Additives such as compound stabilizers are used to increase the melting point and improve the heat resistance of melts, while increasing the whiteness and improving the hue and heat resistance of the products. |
| Polyester | Mass production | Multiple persons | Introduction and innovation | No dulling agent is added in the polymerization process to produce super bright polyester products to meet the needs of different customers with low production costs |
| Polyester | Mass production | Multiple persons | Introduction and innovation | By adding dulling agents in the polymerization process to produce full dull polyester products, the problem of low filter life due to the increase of dulling agents is solved and energy consumption is reduced. |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | By optimizing the design of the reactor structure and adding titanium-based catalysts instead of antimony-based catalysts, the catalyst is uniformly dispersed in the material, and an environmentally-friendly antimony-free polyester product is produced, realizing a high level of eco- friendliness. |
| Polyester | Mass production | Multiple persons | Introduction and innovation | The masterbatch preparation process has been improved, the types and proportions of silver-based antibacterial agent, PBT powder mixture and dispersant have been studied, and the optimal proportions of the three have been determined. The antibacterial masterbatch has been prepared by melt blending and extrusion with outstanding features. |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | Maximum output, highest conversion rate and lowest energy consumption are realized |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | By tapping the potential of equipment, the effect of increasing production and efficiency has been achieved without increasing investment |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | Through recycling, energy utilization rate is improved; by continuously introducing energy-saving technologies, production costs have been reduced. |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | It extends the filter service life, reduces labor waste, and saves packaging costs, bringing considerable economic benefits to the Company |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | Through modification during the polymerization reaction, the fluidity and ductility of the polyester melt are improved. With the same polymerization residence time, the intrinsic viscosity of the product is higher than that of the conventional polyester, and the processing performance of the melt is also improved. A utility model patent has been granted for this technology. The patent number is ZL201120219233.4. |
| Polymerization | Wide range of applications | Multiple persons | Introduction and innovation | Through independent R&D, the Company has successfully developed and produced titanium dioxide for polyamide, and completed independent production and supply of auxiliary materials to replace imports. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Using advanced AI technology, the Company can automatically monitor the spinning process, and detect and deal with abnormalities in a timely manner, thereby improving the product quality and production efficiency and reducing the cost |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Using advanced AI technology, the Company can automatically inspect the appearance defects of fully drawn yarn rolls, thereby improving the production efficiency and reducing the cost |
| Spinning | Wide range of application | Multiple persons | Introduction and innovation | Using advanced automation technology, the Company realizes the automation of the production process, greatly reducing manual operations, improving the production efficiency and reducing the cost |
| Spinning | Wide range of application | Multiple persons | Introduction and innovation | Using advanced automation technology, the Company realizes the automation of the production process, greatly reducing manual operations, improving the production efficiency and reducing the cost |
| Spinning | Mass production | Multiple persons | Introduction and innovation | Using advanced technology, the Company shortens the process flow and increases the production capacity and degree of differentiation, maintaining stable product quality with low utility costs |
| Spinning | Mass production | Multiple persons | Introduction and innovation | Using the melt direct spinning POY→DTY process route, the melt is ejected from the independently designed "straight-line"-shaped spinneret hole, and then cooled, oiled, rolled and spun into flat special-shaped POY yarns. POY yarns are then textured into flat DTY polyester fully drawn yarn, which feature lower bulk density, lighter weight and softer fabric feel. |
| Spinning | Mass production | Multiple persons | Introduction and innovation | Using the melt direct spinning POY→DTY process route, the melt is ejected from the independently designed "cross"-shaped spinneret hole, and then cooled, oiled, rolled and spun into cross-shaped POY yarns. POY yarns are then textured into cross DTY polyester fully drawn yarn, which feature lower bulk density, lighter weight, better air permeability and softer fabric feel. |
| Spinning | Mass production | Multiple persons | Introduction and innovation | Using the melt direct spinning PDY process route, the melt is ejected from the independently designed "tree"- or "star"-shaped and other special-shaped spinneret holes, and then cooled, oiled, rolled and spun into "tree"- or "star"-shaped and other special-shaped FDY yarns. This type of polyester fully drawn yarn features lower bulk density, lighter weight, special luster, and softer fabric feel. |
| Spinning | Mass production | Multiple persons | Introduction and innovation | The functional self-heating masterbatch is added to produce the functional hollow polyester fibre. It can be used as the "core layer" of the heat retaining and comfortable composite fibre, with double heat retaining effects. A utility model patent has been granted for this technology. The patent number is ZL201410481816.0. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation |
With the use of advanced equipment and processtechnology, short process, high degree of automation, andlow manufacturing cost are achieved.
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Through technical improvement, the manual operation cycle is extended, the product quality stability is improved, and the resource consumption and cost are reduced |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | By installing in-line addition equipment, dynamic and static mixing equipment, oiling nozzles, winders, etc. on the melt direct spinning line, the existing equipment has been transformed and upgraded, enabling the polyester melt direct spinning line to produce differentiated and high-end products. It solves the challenge of using the large-capacity polyester plant to produce functional differentiated chemical fibres of multiple varieties in small batches. Functional modified fibres are produced, including colored, flame-retardant, antibacterial and full dull fibres. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | The self-owned technology of the Company is applied to the production of flame-retardant polyester. Single- component spinning or composite spinning technology is used to produce single-component or two-component sheath-core composite flame-retardant and anti-dripping POY-DTY polyester fully drawn yarn. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Through independent R&D, the Company produces polyester and polyamide, SPH, sea-island, cationic dyed polyester and other composite yarns to meet the high-end market demand |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Through independent R&D, the Company produces differentiated and functional products such as HOY and medium-strength yarns for segment markets, meeting the needs of specific users |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | In the spinning process, the non-contact heating method is adopted to reduce the friction and heating of the yarns during processing to avoid the production of broken yarns. Low-temperature stretching deformation-high- temperature setting is adopted and appropriate tangle jets are used to reasonably control the tangle air pressure bundling performance and other production processes to produce ideal fully-drawn yarns (FDY) similar to the products of parallel drafting machines. A utility model patent has been granted for this technology. The patent number is ZL200810059725.2. |
| Spinning | Wide range of applications | Multiple persons | Independent R&D | Through independent R&D, the Company produces oils suitable for the spinning process to improve the processing performance of the product, so that the weaving process can proceed smoothly and the product quality is excellent. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | By using the programmable controller (PLC), the composite yarn is stretched in multiple stages, and the order of the stretching ratio of each stage can be changed as needed within the range, so that the composite yarn has different structural densities, resulting in the difference in color absorption and dyeing rates, and realizing multiple colors after dyeing. It has brought significant economic and social benefits. A utility model patent has been granted for this technology. The patent number is ZL200710070581.6. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | The graphene masterbatch and PET flakes are blended and spun into yarns. A spinneret with a 4C aperture is used to prepare hollow graphene polyester fibre POY, and the fluffy curl of the polyester fibre is further improved in the subsequent texturing process. This gives the polyester fibre the features of heat retaining and light weight in addition to the functionality of graphene, expanding its application prospect of graphene in the field of textiles. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | The antimony-free polyester melt is produced by adding a titanium-based catalyst to polyester to instead of antimony-based catalysis, and then antimony-free staple fibres and fully drawn yarns are produced through a spinning process, featuring high environment-friendliness. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | By spinning and winding a bunch of POY and a bunch of FDY, a new type of polyester/polyester composite yarn is made, and it can be used for weaving high-grade artificial silk clothing fabrics and home textile fabrics, which has the advantages of rich hand feel, anti-wrinkle property and good drapability. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Through independent R&D, the spinning oil for FDY has been successfully prepared to replace imported oils. |
| Texturing | Mass production | Multiple persons | Introduction and innovation | By controlling the temperature of false twisting deformation, the linen type is achieved, which not only has the style of natural linen fibres, but also has the stiffness of artificial linen fibres. |
| Texturing | Mass production | Multiple persons | Introduction and innovation | The airflow through the tangle jet is closed intermittently, and a variety of polyester POY yarns of different colors are composited through false twisting deformation to produce a fancy composite polyester yarn interleaved with fluffy non-intermingled low-stretch fibre and intermingled blended fibre. Colored polyester POY is used to produce the colored composite yarn directly by texturing, eliminating the complicated downstream dyeing process, reducing the cost of the product, simplifying the process and lessening the pollution to the environment |
| Texturing | Mass production | Multiple persons | Introduction and innovation | A double-solenoid valve opening and closing logic design is adopted. The two solenoid valves arranged in parallel or series are designed with a reasonable opening and closing logic to jointly control them to realize intermittent switching of the tangle jet airflow and the intelligent design of polyester fancy composite yarn tangling points. At the same time, it reduces the frequency of use of a single solenoid valve to prevent overheating damage to a single solenoid valve, effectively improving the efficiency of texturing. |
| Texturing | Mass production | Multiple persons | Introduction and innovation | The Company has a more mature technology for producing products with a monofil fineness of 0.5-1.0dpf, which provides technical support and experience accumulation for the development of finer products. Through the supporting of pre- and post-spinning equipment, the Company realizes independent R&D. At present, the Company's production technology of ultra-fine fibres of less than 0.5dpf is mature, the quality is stable, and relevant production conditions are available. They are mainly used for producing high-grade fabrics and decorative fabrics. |
| Texturing | Wide range of applications | Multiple persons | Introduction and innovation | Using the production technology of wool-like fibres, POY yarns are drawn and falsely twisted on the DTY machine, and then compounded with DTY of the PTT component. The PTT fibre floats on the surface of the yarn and exerts its excellent wearing performance. The high-shrinkage modified PET fibre is placed in the inner layer of the yarn to exert its rigid supporting effect and bring out a stronger sense of uprightness. A utility model patent has been granted for this technology. The patent number is ZL201010174972.4. |
| Texturing | Wide range of applications | Multiple persons | Introduction and innovation | The false-twisting texturing technology is used to produce polyester fully drawn yarn with good hollowness and clear profiled outline, and high requirements for conformal properties such as profile degree and hollowness |
| Texturing | Wide range of applications | Multiple persons | Introduction and innovation | The technology is independently developed by the Company and is used to process DTY of various colors such as black, red, grey, and yellow. The color is uniform and not easy to fade in daily use. No dyeing is required after weaving, and the yarn is mostly used for making special-purpose fabrics. |
| Multifunctional polyester bottle flakes | Leading in China | Multiple persons | Introduction and innovation | The core technology of this product is the current international advanced high-temperature crystallization and solid-phase polycondensation process with short process and low energy consumption. The comprehensive energy consumption per unit of product has reached the leading level in China |
Production capacity of main productsPlease refer to the section headed "II. MAJOR BUSINESSES OF THE COMPANYDURING THE REPORTING PERIOD (I) Overview of major businesses.
| Major chemical parks | Main product categories |
| PMB Industrial Park | Gasoline, diesel, jet fuel, PX, and benzene |
| Hangzhou Linjiang High-tech Industrial Park | Flake, staple fibre, POY, FDY, CPL |
| Haining Economic Development Zone (Jianshan New District) | Flake, POY, FDY, and DTY |
| Suqian High-tech Industrial Development Zone | Flake and staple fibre |
| Jiaxing Xiuzhou High-tech Industrial Development Zone | Flake, POY, and FDY |
| Shaxi Town Industrial Park | Flake and POY |
| Ningbo Petrochemical Economic and Technological Development Zone | PTA |
| Dalian Economic and Technological Development Zone | PTA and bottle flake |
| Hainan Yangpu Economic Development Zone | PTA and bottle flake |
| Jingjiang Yinglin Town Industrial Park | FDY, staple fibre, flake |
EIA approvals being applied for or newly obtained during the reporting period
1. Zhejiang Hengyi High-tech Material Co., Ltd. submitted a new type of energy-savingand environmentally friendly boiler renovation project for the record on 14th September,2022, and obtained the approval of EIA on 13th April, 2023 (Hangzhou Huanyuanqianevaluation approval [2023] No. 22);
2. Zhejiang Shuangtu New Materials Co., Ltd. submitted the thermal oil boilersubstitution project for filing on 14th September 2022, and obtained the EIA approvalon 13th April 2023 (Hangzhou Huanchengqian Assessment and Approval [2023] No.
23);
3. Zhejiang Hengyi Polymer Co., Ltd. submitted a new type of energy-saving andenvironmentally-friendly boiler replacement and transformation project for filing on 31July 2023, and obtained the EIA approval on 19 February 2024 (Xiaohuanjian [2024]No. 23).
Unusual suspension of production of the listed company during the reportingperiod
□Applicable ?Not applicable
Relevant approvals, permits, qualifications and validity periods
| SN | Holder | Certificate name | Certificate No. | Issuer | Validity period |
| 1 | Hengyi Limited | Emission Permit | 91330000765215943G001Y | Hangzhou Municipal Ecology | August 27,2028 |
| and Environment Bureau | |||||
| 2 | Hengyi High- Tech | Emission Permit | 913301006680033406001Q | Hangzhou Municipal Ecology and Environment Bureau | November 25, 2026 |
| 3 | Hengyi Polymer | Emission Permit | 913301097245283880001P | Hangzhou Municipal Ecology and Environment Bureau | November 02, 2026 |
| 4 | Hengyi Polymer | Radiation Safety Permit | ZHFZ NO. A2255 | Department of Ecology and Environment of Zhejiang Province | September 19, 2024 |
| 5 | Jiaxing Yipeng | Emission Permit | 91330411MA28BLMY30001V | Jiaxing Municipal Ecological Environment Bureau | September 21, 2026 |
| 6 | Taicang Yifeng | Emission Permit | 91320585MA1P1GPBXM001V | Suzhou Municipal Ecological Environment Bureau | February 29, 2028 |
| 7 | Shuangtu New Materials | Emission Permit | 91330100566050736P001Y | Hangzhou Municipal Ecology and Environment Bureau | November 26, 2026 |
| 8 | Shuangtu New Materials | Radiation Safety Permit | ZHFZ NO. A3048 | Hangzhou Municipal Ecology and Environment Bureau | December 12, 2028 |
| 9 | Fujian Yijin | Emission Permit | 91350582MA31G07Q8C001V | Quanzhou Municipal Ecological Environment Bureau | April 07, 2026 |
| 10 | Suqian | Emission Permit | 91321311MA1 | Suqian Municipal | November |
| Yida | UXUC8XJ001R | Ecological Environment Bureau | 05, 2028 | ||
| 11 | Suqian Yida | Radiation Safety Permit | SHFZ No. N0199 | Suqian Municipal Ecological Environment Bureau | January 12, 2027 |
| 12 | Suqian Hengyuan Thermal Energy | Emission Permit | 91321311MA25ADT26R001V | Suqian Municipal Ecological Environment Bureau | December 27, 2028 |
| 13 | Haining Thermal Power | Emission Permit | 91330481MA29HXML34001R | Jiaxing Municipal Ecological Environment Bureau | July 22, 2025 |
| 14 | Haining New Materials | Emission Permit | 91330481MA29HRX724001V | Jiaxing Municipal Ecological Environment Bureau | July27, 2025 |
| 15 | Hengyi Caprolactam | Emission Permit | 913301006706049462 | Hangzhou Municipal Ecology and Environment Bureau | August 20, 2028 |
| 16 | Hengyi Caprolactam | Radiation Safety Permit | ZHFZ NO. A3044 | Department of Ecology and Environment of Zhejiang Province | January 16, 2027 |
| 17 | Zhejiang Yisheng | Emission Permit | 91330200744973411W001W | Beilun Branch of Ningbo Municipal Bureau of Ecology and Environment | 2028.August, 02 |
| 18 | Zhejiang Yisheng | Radiation Safety Permit | ZHFZ NO. B2005 | Department of Ecology and Environment of Zhejiang Province | November 17, 2024 |
| 19 | Hainan | Emission Permit | 9146030055279 | Yangpu Economic | May 14, |
| Yisheng | 89627001P | Development Zone Ecological Environment Bureau | 2026 | ||
| 20 | Hainan Yisheng | Radiation Safety Permit | QHFZ No.00153 | Department of Ecology and Environment of Hainan Province | December 26, 2026 |
| 21 | Hainan Yisheng | Safety Production Licence | (Qiong) WH Security Licence No. (2024) 10 | Hainan Provincial Department of Emergency Management | March 29, 2027 |
| 22 | Hainan Yisheng | Hazardous Chemicals Business Licence | Qiongpu Dangerous and Chemical Economic [2022]0084 | Yangpu Economic Development Zone Administrative Approval Service Bureau | March 08, 2025 |
| 23 | Hainan Yisheng | Port Operation Licence of the People's Republic of China | (Qiongpu) HKEX (0017) | Yangpu Economic Development Zone Transport and Harbour Bureau | 2025.September 30, 2025 |
| 24 | Hainan Yisheng | Production Safety Standardisation Level 3 Enterprises (Hazardous Chemicals) | QIONG AQB469034HGM202100002 | Hainan Geological Testing and Research Centre | 2024.July06, 2024 |
| 25 | Hainan Yisheng | Certificate of the People's Republic of China for the Use of Port Shoreline | Cross Harbour Coast 2015 No. 50 | Ministry of Transport of the People's Republic of China | May 20, 2065 |
| 26 | Hainan Yisheng | Certificate of Registration of Dangerous Chemicals | 46902400021 | Chemical Registration Centre of the Ministry of Emergency Management | February 03, 2027 |
| 27 | Hainan Yisheng | Certificate of Registration of Special Equipment | Pot 12 Joan A0007(13) | Hainan Provincial Bureau of Quality and Technical Supervision | Reference boiler inspection qualification period |
| 28 | Hainan Yisheng | Certificate of Conformity for Port Facility Security | HNSGHI ISPS-2021-004HNSGHI ISPS-2021-007 | Hainan Provincial Port and Maritime Administration | August 09, 2026 |
| 29 | Hainan Yisheng | Radio Registration Certificate | 460420140001/V0001460420140001/LM0001Qiong ground (2021)00022 | Hainan Provincial Department of Industry and Information Technology | June 09, 2031 |
| 30 | Yisheng Dahua | Emission Permit | 912102137873094570001R | Dalian Municipal Ecology and Environment Bureau | October 13, 2028 |
| 31 | Yisheng Dahua | Radiation Safety Permit | LHFZ No.（B0001） | Dalian Municipal Ecology and Environment Bureau | November 25, 2026 |
Engaged in petroleum processing and petroleum trading?Yes □ NoEngaged in fertilizer industry
□Yes ?No
Engaged in pesticide industry
□Yes ?No
Engaged in chlor-alkali and soda ash industry
□Yes ?No
III. Analysis of core competitiveness
1. Focus on the main business, strategic leadership
The company has been investing in the petrochemical and chemical fiber industries formany years, accumulating significant expertise and resources. The company continuesto focus on the main business of "one drop of oil, two threads", and has formed a highlyintegrated and deeply synergistic integrated industrial cluster, with three corebusinesses of refining, PTA and polyester fibre, and is actively building a platform, twocenters and six bases in accordance with the trinity model of "headquarters + scientificresearch + base", constructing "backed by the Yangtze River Delta, Pearl River Delta,Bohai Bay and facing the South China Sea". In accordance with the "headquarters +scientific research + base" trinity mode, the company is actively building a platform,two centres and six bases, constructing a market pattern of "backing the Yangtze RiverDelta, Pearl River Delta, Bohai Bay and facing the South China Sea", helping to crossthe cycle with sound operation and comprehensively enhancing the company'sdevelopment kinetic energy.
Strategic layout of the Southeast Asian market, accelerating the internationalizationprocess. The company took the lead in deploying the first phase of the Brunei projectoverseas, actively responding to the “Belt and Road” initiative, seizing the developmentopportunities in the Southeast Asian market, promoting the expansion of the industryin the direction of internationalization, realizing the extension of the industrial chainupwards, and assisting the integration of the strategic blueprint to move forwardsteadily.
Hengyi (Brunei) PMB Petrochemical Project is the first large-scale overseaspetrochemical project that fully implements Chinese standards. It is the first privaterefining and chemical project of the Company to realize the international layout of itsproduction capacity and to put into practice China's "One Belt, One Road" initiative,and it has received unanimous and high level of support from the governments of the
Chinese and English-speaking countries. At present, Brunei Project Phase II is carryingout the work of dike blowing and filling construction, and all the work is progressingin an orderly manner. The completion of Brunei Project Phase II will help the Companyto further reduce production costs, stabilize the supply of raw materials, optimize theproduct structure and continue to enhance the overall profitability of the Company.
2. Enabling research and development, leading by science and technologyDeep research and development heritage, and continue to enhance the industry's leadingpower. The company attaches great importance to technological research anddevelopment innovation, and constantly explores cutting-edge technologies to leadproduct and process innovation. Closely focusing on the strategic policy of"consolidating, highlighting and optimising the competitiveness of the main business",the company has taken the lead in applying polyester melt spinning technology, large-scale PTA technology and caprolactam green high-end technology, highly leading thedevelopment of the industry.
Focusing on high-end fields and accelerating the implementation of scientific researchresults. The company has long been focusing on the R&D and application of high-endtechnologies and products in the field of petrochemicals and chemical fibres. Relyingon the platform of schools and enterprises, the company realizes the leading technologyand "diversification, serialization, quality and uniqueness" of product structure, carriesout the R&D of new products and technologies related to the whole industrial chain,and realizes the development of new and high-tech products and the transformation ofscientific and technological achievements with the full-process, flexible technology,development and transformation of scientific and technological achievements, withleading technology level in the industry.
Dedicated research organisation to achieve synergistic transformation of production,learning, research and application. Hengyi Research Institute under the company is
committed to the research and development of advanced materials and green chemicals,actively enhancing its innovation leading ability, taking the initiative to assume themain responsibility for the transformation of scientific and technological achievements,launching new products into the market and realising economic benefits, so as toaccelerate the landing of cutting-edge technological achievements. In addition, thecompany has invested in the construction of the Hengyi Global Innovation Centre inHangzhou for research and development of future-oriented advanced technologies, andhas established joint research and development platforms with Zhejiang University andDonghua University to promote synergistic innovation between schools and enterprisesand provide innovation power for the company's long-term development. At present,the company has formed a complete combination of "production, learning, research anduse" of scientific and technological innovation mechanism, can effectively achieve thesharing of technological innovation resources and complement each other, so as tocontinuously improve the company's technological innovation ability, scientificresearch level and market responsiveness.
Adhering to the concept of green environmental protection and sustainabledevelopment. The company pays attention to the recycling of polyester throughout itslife cycle, breaks through the existing technical difficulties, and realises high-qualityrecycling of polyester. At the same time, through independent projects and research anddevelopment, the company has produced safe, high-quality, environmentally friendlygreen polyester products, such as the company's innovative green polyester products"Yitaikang", and high-performance polyester materials prepared from bio-based rawmaterials. By promoting green manufacturing, the company is able to effectively reducepollutants in the production process of downstream enterprises and contribute to thegreen cycle of the entire life cycle of textiles.
3. Integration and synergy, significant scale
It is a leading chemical and chemical fibre enterprise, continuously extending,
supplementing and strengthening the chain. The company has developed into a leadingenterprise in the integration of "PX-Polyester" and "Benzene-Nylon" industry chain,and has continuously extended, supplemented and strengthened the chain through theconstruction of upstream refineries overseas and the expansion of middle anddownstream in ChinaThe company has built a balanced and balanced integratedindustry chain of "crude oil-PX-PTA-polyester" and "crude oil-benzene-CPL-nylon"by constructing upstream refineries overseas and expanding downstream at home. Thecompany's upstream, midstream and downstream raw materials are coordinated toachieve the balanced and coordinated development of the whole industrial chain fromthe unique large refining to the matching of PX, PTA and polyester (PET) productioncapacity.
The company's production capacity is at the forefront of the industry, with obvious scaleadvantages. The company has an existing refining design capacity of 8 million tons, aholding capacity of 21.5 million tons of PTA, a holding capacity of 11.115 million tonsof polyester and a holding capacity of 400,000 tons of caprolactam. The companycontinuously consolidates and expands the advantages of production capacity scale ineach segment, optimises and upgrades the industrial model, promotes the quantitativechange of the company's operation scale and the qualitative change of the businessstructure, pushes forward the investment and application of large-scale devices andenergy-saving and consumption-reduction technologies, continues to guarantee theoperation of the production devices and the stability of the products' quality, andcontinuously improves the production efficiency, which greatly reduces the investmentcost per unit and the energy consumption per unit and the unit cost of the products hasa significant advantage in the same industry. At the same time, large-scale procurement,domestic and international project integration and centralised procurement enable thecompany to have strong operational capability, obtain advantageous prices and saveprocurement costs, which provides a strong guarantee for the profitability of the finalproducts.
4. Excellent talents and advanced management
The management and operation team has outstanding professional ability and advancedmanagement experience. The Company has an international, professional andvocational management and operation team with solid professional knowledge and richexperience in the industry, which constantly injects vitality into the Company's high-quality development. At the same time, the Company has established a perfect internalsystem by drawing on the management experience of advanced organisations at homeand abroad, and continues to implement organisational structure optimisation tocontinuously improve the efficiency of the Company's organisational management andoperation and give full play to the synergy advantage of scale.
Solidly promote the construction of industrial talent team, and strongly guarantee thestrategic transformation and upgrading of science and technology. The Companyattaches importance to talent introduction and talent cultivation, strengthens theconstruction of management and technical talents, actively introduces domestic andforeign senior management and technical talents through various channels, andimproves the internal talent cultivation mode combining "production, study, researchand application" to provide employees with good career development channels. Thecompany's Brunei project steadily improves the degree of staff localisation, andstrongly supports the growth of Brunei's local youth to achieve win-win talentcooperation.
Improve the incentive mechanism, employees share the same creation. In terms ofemployee incentives, in addition to providing employees with competitive benefits inthe industry, the Company has implemented two phases of Restricted Share IncentivePlan and six phases of Employee Share Ownership Plan since 2015. As of the date ofdisclosure of this report, the Company is continuing to promote the fourth phase of theshare repurchase plan to reserve for the subsequent implementation of the EmployeeShare Ownership Plan or equity incentives, which has fully mobilised employees'
motivation and attracted high-calibre talents to join the Company. The establishment ofthe long-term development and sharing mechanism has effectively enhanced the senseof belonging and cohesion of employees and provided a talent base for the Company'slong-term development.
5. Digital Intelligence Integration, Efficient Operation
Closely integrated with information technology, the company has established a digitalintelligence system. The company has established the information strategy of"Petrochemical + Industrial Internet", actively carried out industrial digital andintelligent transformation, promoted the deep integration of new-generationinformation technology and petrochemical manufacturing industry, and realised a highdegree of collaboration across the whole industry chain. As an industry leader, thecompany actively builds digital workshops and intelligent factories, completing the firstfull-process intelligent polyester factory and the first digital benchmark factory inChina; creatively proposes the single ingot data flow system to achieve the full lifecycle management of single ingot products; develops its own finished productwarehousing system to realize the efficient flow of products in the factory, optimize theoperation process and enhance the ability of resource integration; and opens up the databarriers through intelligent manufacturing. The company is the first in the industry tocreate a whole-life product quality traceability system and an intelligent sales supplychain system, and has independently developed the visual "Hengyi Brain" to help thecompany realise digital upgrading. The company's intelligent construction has won the2nd China Benchmark Intelligent Factory, China Intelligent Manufacturing BestPractice Award, the first batch of enterprise CDO pilot enterprises in Zhejiang Province,China Textile Union Product Development Contribution Award, China ComputerFederation Outstanding Cases of Enterprise Digitalisation Development, and ChinaIndustrial Internet Distinguished Application Award, among other awards.
Integrated supply chain platform, forming efficient closed-loop operation. The
company innovates the customer service ecosystem, builds the integrated platform ofchemical fibre supply chain with micro-mall, supply chain finance and warehousingand logistics, externally combines the internet marketing and customer socialexperience management, from the customer placing order independently to thesupporting supply chain service, from realizing the full process of sales data display toproviding the multi-dimensional portrait data service; internally realizes the datasharing of each business system, improves the data interaction efficiency, andeliminates the information circulation obstacles. It has also achieved data sharingamong business systems, improved data interaction efficiency, eliminated informationcirculation barriers, and formed a closed-loop process of supply chain business, suchas sales, collection, scheduling, delivery, dispatching, loading, and invoicing.At the same time, the company aims to become the leader of chemical fibre industrialInternet, play its own supply chain supporting advantages, actively build the industryecosystem, and strive to build an integrated platform with the characteristics of thechemical fibre industry, providing digital management, intelligent manufacturing,online trading, logistics services, market analysis, production, supply and marketingcoordination, supply chain finance and other types of digital solutions for the chemicalfibre industry, to deeply empower the development of the chemical fibre industry, andto do a good job as the industry digital leader. The industry digitalisation leader.
IV. Analysis of main business
1. Overview
In 2023, the Company achieved total operating revenue of RMB136.148 billion, netprofit attributable to shareholders of the listed company of RMB 435 million, and netprofit attributable to shareholders of the listed company of RMB 53.6858 million afterdeducting non-recurring gains and losses, achieving a turnaround.
2. Revenue and costs
(1) Composition of operating income
Currency unit: RMB
| 2023 | 2022 | Year-on- year increase/de crease | |||
| Amount | Percentage in operating income | Amount | Percentage in operating income | ||
| Total operating income | 136,148,114,082.34 | 100% | 152,050,274,944.64 | 100% | -10.46% |
| By industry | |||||
| Petrochemical industry | 56,484,387,971.19 | 41.49% | 59,269,682,296.57 | 38.98% | -4.70% |
| Chemical fibre industry | 52,243,154,781.06 | 38.37% | 46,316,793,158.99 | 30.46% | 12.80% |
| Supply chain services | 27,420,571,330.09 | 20.14% | 46,463,799,489.08 | 30.56% | -40.99% |
| By product | |||||
| Refinery products | 31,841,158,971.62 | 23.39% | 41,531,346,473.30 | 27.31% | -23.33% |
| Chemical products | 12,145,808,146.64 | 8.92% | 8,599,075,610.04 | 5.66% | 41.25% |
| PTA | 11,572,721,877.37 | 8.50% | 8,966,680,849.79 | 5.90% | 29.06% |
| PIA | 924,698,975.56 | 0.68% | 172,579,363.44 | 0.11% | 435.81% |
| Polyester yarn | 46,359,718,319.18 | 34.05% | 41,123,434,064.32 | 27.05% | 12.73% |
| Flake | 5,883,436,461.88 | 4.32% | 5,193,359,094.67 | 3.42% | 13.29% |
| Supply chain services | 27,420,571,330.09 | 20.14% | 46,463,799,489.08 | 30.56% | -40.99% |
| By region | |||||
| Domestic | 84,946,111,780.67 | 62.39% | 98,119,165,712.07 | 64.53% | -13.43% |
| Overseas | 51,202,002,301.67 | 37.61% | 53,931,109,232.57 | 35.47% | -5.06% |
| By sales model | |||||
| Direct sales | 132,413,772,035.05 | 97.26% | 150,056,276,149.80 | 98.69% | -11.76% |
| Distribution | 3,734,342,047.29 | 2.74% | 1,993,998,794.84 | 1.31% | 87.28% |
(2)Industries, products, regions, and sales models that account for more than 10%of the Company's operating income or profit
The Company shall comply with the disclosure requirements for petrochemicalindustry specified in Guidelines No. 3 for Self-Regulation of Listed Companies ofShenzhen Stock Exchange - Industry Information DisclosureCurrency unit: RMB
| Operating income | Operating cost | Gross profit margin | Increase or decrease in operating income compared with the same period of the previous year | Increase or decrease in operating cost compared with the same period of the previous year | Increase or decrease in gross profit margin compared with the same period of previous year | |
| By industry | ||||||
| Petrochemical industry | 56,484,387,971.19 | 54,021,381,180.67 | 4.36% | -4.70% | -4.80% | 0.10% |
| Chemical fibre industry | 52,243,154,781.06 | 50,038,957,948.78 | 4.22% | 12.80% | 9.66% | 2.74% |
| Supply chain services | 27,420,571,330.09 | 26,969,894,553.43 | 1.64% | -40.99% | -41.55% | 0.95% |
| By product | ||||||
| Refinery products | 31,841,158,971.62 | 30,756,174,029.44 | 3.41% | -23.33% | -21.28% | -2.51% |
| Chemical products | 12,145,808,146.64 | 10,728,464,028.04 | 11.67% | 41.25% | 28.08% | 9.08% |
| PTA | 11,572,721,877.37 | 11,671,156,811.34 | -0.85% | 29.06% | 28.42% | 0.51% |
| PIA | 924,698,975.56 | 865,586,311.85 | 6.39% | 435.81% | 320.13% | 25.77% |
| Polyester yarn | 46,359,718,319.18 | 44,281,108,046.88 | 4.48% | 12.73% | 9.10% | 3.17% |
| Flake | 5,883,436,461.88 | 5,757,849,901.90 | 2.13% | 13.29% | 14.15% | -0.74% |
| Supply chain services | 27,420,571,330.09 | 26,969,894,553.43 | 1.64% | -40.99% | -41.55% | 0.95% |
| By region | ||||||
| Domestic | 84,946,111,780.67 | 82,286,414,562.98 | 3.13% | -13.43% | -15.52% | 2.40% |
| Overseas | 51,202,002,301.67 | 48,743,819,119.90 | 4.80% | -5.06% | -4.63% | -0.43% |
| By sales model | ||||||
| Direct sales | 132,413,772,035.05 | 127,509,011,660.83 | 3.70% | -11.76% | -12.96% | 1.33% |
| Distribution | 3,734,342,047.29 | 3,521,222,022.05 | 5.71% | 87.28% | 74.30% | 7.02% |
The Company's main business data in the year adjusted according to the caliberat the end of the reporting period as the statistical caliber of the Company's mainbusiness data was adjusted during the reporting period
□Applicable ?Not applicable
Currency unit: RMB, 10,000 tons
| Product name | Capacity | Sales volume | Income realized | Price trend during the reporting period | Reason for change |
| Refinery products | 580.24 | 582.50 | 31,841,158,971.62 | First down, then up, overall, down | Market reasons |
| Polyester yarn | 672.71 | 677.44 | 46,359,718,319.18 | First up and then down; overall stable | Market reasons |
The operating income or net profit generated by overseas business accounts formore than 10% of the audited operating income or net profit of the Company inthe latest fiscal year.
| Name of overseas business | Operation status | Impact of tax policies on overseas business during the reporting period | Company's response |
| Brunei Project | Stable operation under high load | The overall tax burden during the reporting period was low, because Brunei does not levy personal income tax, business tax, salary tax, production tax and export tax. A local pioneer enterprise certificate and an export enterprise certificate have been issued for the project, so it can enjoy a long-term corporate income tax exemption. | Both China and Brunei provided powerful support. The project enjoyed long- term tax incentives and other favorable policies. |
(3) Whether the Company's income from product sales is greater than its incomefrom labor services?Yes □No
| Industry | Item | Units | 2023 | 2022 | Year-on-year increase/decrease |
| Refinery products | Sales volume | 10,000 tons | 582.50 | 639.12 | -8.86% |
| Production volume | 10,000 tons | 580.24 | 642.25 | -9.66% | |
| Inventory | 10,000 tons | 12.47 | 14.73 | -15.34% | |
| Chemical products | Sales volume | 10,000 tons | 182.77 | 201.79 | -9.43% |
| Production volume | 10,000 tons | 181.84 | 202.39 | -10.15% | |
| Inventory | 10,000 tons | 7.87 | 8.80 | -10.57% | |
| PTA | Sales volume | 10,000 tons | 391.78 | 286.27 | 36.86% |
| Production volume | 10,000 tons | 392.25 | 285.13 | 37.57% | |
| Inventory | 10,000 tons | 2.44 | 1.97 | 23.86% | |
| PIA | Sales volume | 10,000 tons | 11.93 | 2.11 | 465.40% |
| production volume | 10,000 tons | 14.25 | 1.07 | 1,231.78% | |
| Inventory | 10,000 tons | 2.33 | 0.01 | 23,200.00% | |
| Polyester Products | Sales volume | 10,000 tons | 772.03 | 684.97 | 12.71% |
| Production volume | 10,000 tons | 770.79 | 692.19 | 11.36% | |
| Inventory | 10,000 tons | 51.23 | 52.47 | -2.36% |
Note: The above PTA sales, production and inventory data only include the company'sholding subsidiary, Zhejiang Yisheng, and do not include other shareholding companies.
Description of the reasons for the year-on-year change of more than 30% inrelevant dataDuring the reporting period, the output and sales of PIA and PTA of the Companyincreased by more than 30% as compared with the same period in 2022, which wasmainly due to the impact of the Company's shutdown and maintenance during the sameperiod in 2022, which resulted in a low start-up load, and a gradual increase in the start-up load during the reporting period.
(4) Performance of the major sales contracts and major purchase contractsentered into by the Company as of the Reporting Date
□Applicable ?Not applicable
(5) Composition of operating cost
By industry and productProduct Classification of Hengyi Brunei
Currency unit: RMB
| Industry | Item | 2023 | 2022 | Year-on- year increase/decrease | ||
| Amount | Percentage in operating cost | Amount | Percentage in operating cost | |||
| Refinery products | Raw materials | 29,630,498,059.96 | 96.34% | 37,827,012,569.00 | 96.82% | -21.67% |
| Energy | 246,049,392.24 | 0.80% | 425,050,466.17 | 1.09% | -42.11% | |
| Depreciation and others | 879,626,577.24 | 2.86% | 819,346,406.17 | 2.09% | 7.36% | |
| Total | 30,756,174,029.44 | 100.00% | 39,071,409,441.34 | 100.00% | -21.28% | |
| Chemical products | Raw materials | 9,681,365,938.90 | 90.24% | 7,647,487,621.92 | 91.30% | 26.60% |
| Energy | 637,270,763.27 | 5.94% | 500,515,083.07 | 5.98% | 27.32% | |
| Depreciation | 409,827,325.87 | 3.82% | 228,246,923.84 | 2.72% | 79.55% | |
| and others | |||||
| Total | 10,728,464,028.04 | 100.00% | 8,376,249,628.83 | 100.00% | 28.08% |
By domestic industry and product
Currency unit: RMB
| Industry | Item | 2023 | 2022 | Year-on- year increase/decrease | ||
| Amount | Percentage in operating cost | Amount | Percentage in operating cost | |||
| PIA products | Raw materials | 666,934,253.28 | 77.05% | 144,253,439.63 | 70.02% | 362.34% |
| Energy | 89,588,183.28 | 10.35% | 16,491,918.19 | 8.00% | 443.22% | |
| Depreciation and others | 109,063,875.29 | 12.60% | 45,280,680.01 | 21.98% | 140.86% | |
| Total | 865,586,311.85 | 100.00% | 206,026,037.83 | 100.00% | 320.13% | |
| PTA products | Raw materials | 10,689,612,523.50 | 91.59% | 8,104,904,977.86 | 89.18% | 31.89% |
| Energy | 263,768,143.94 | 2.26% | 263,544,052.57 | 2.90% | 0.09% | |
| Depreciation and others | 717,776,143.90 | 6.15% | 720,052,888.16 | 7.92% | -0.32% | |
| Total | 11,671,156,811.34 | 100.00% | 9,088,501,918.59 | 100.00% | 28.42% | |
| Polyester products | Raw materials | 41,517,323,410.10 | 82.97% | 37,624,877,259.76 | 82.46% | 10.35% |
| Energy | 2,987,325,789.54 | 5.97% | 3,093,599,154.96 | 6.78% | -3.44% | |
| Depreciation and others | 5,534,308,749.14 | 11.06% | 4,911,638,564.92 | 10.76% | 12.68% | |
| Total | 50,038,957,948.78 | 100.00% | 45,630,114,979.64 | 100.00% | 9.66% | |
(6) Whether there was any change in the scope of consolidation during thereporting periodThe total number of subsidiaries included in the scope of consolidation in fiscal year
2023 was 52, an increase of 6 subsidiaries and a decrease of 2 subsidiaries comparedwith the previous year. For details, please refer to "VII. Interests in Other Entities" in"Section X. Financial Reporting".
(7) Significant changes or adjustments in the Company's business, products orservices during the reporting period
□Applicable ?Not applicable
(8) Major customers and suppliers Major customers
| Total sales amount of the top five customers (RMB) | 30,300,809,498.37 |
| Percentage of the total sales amount of the top five customers in total annual sales amount | 22.26% |
| Percentage of sales amount of related parties among the top five customers in total annual sales amount | 0.00% |
Top 5 customers
| SN | Customer name | Sales amount (RMB) | Percentage in total annual sales amount |
| 1 | Customer 1 | 8,474,515,955.22 | 6.22% |
| 2 | Customer 2 | 6,361,948,805.59 | 4.67% |
| 3 | Customer 3 | 6,033,936,095.69 | 4.43% |
| 4 | Customer 4 | 5,201,344,726.29 | 3.82% |
| 5 | Customer 5 | 4,229,063,915.58 | 3.11% |
| Total | -- | 30,300,809,498.37 | 22.26% |
Other information about major customers
□ Applicable ?Not applicable
Major suppliers
| Total purchase amount of top five suppliers (RMB) | 48,898,927,197.17 |
| Percentage of the total purchase amount of the top five suppliers in the total annual purchase amount | 37.32% |
| Percentage of purchase amount of related parties among the top five suppliers in total annual sales amount | 18.51% |
Top 5 suppliers
| SN | Supplier name | Purchase amount (RMB) | Percentage in total annual purchase amount |
| 1 | Supplier 1 | 24,077,350,046.95 | 18.38% |
| 2 | Supplier 2 | 8,882,321,610.32 | 6.78% |
| 3 | Supplier 3 | 6,114,575,959.58 | 4.67% |
| 4 | Supplier 4 | 5,650,282,142.12 | 4.31% |
| 5 | Supplier 5 | 4,174,397,438.20 | 3.19% |
| Total | -- | 48,898,927,197.17 | 37.32% |
Other information about major suppliers
□Applicable ?Not applicable
3. Expense
| 2023 | 2022 | Year-on- year increase/decrease | Description of major changes | |
| Selling expenses | 229,284,289.09 | 247,443,749.81 | -7.34% | - |
| Administration expenses | 1,434,227,935.73 | 1,084,986,983.70 | 32.19% | This was mainly due to the implementation of technological renovation and |
| upgrading work at the Brunei Refinery, and the cost of technological renovation was included in administrative expenses, resulting in an increase in administrative expenses year-on-year. | ||||
| Financial expenses | 3,243,902,745.47 | 2,787,697,495.20 | 16.36% | Mainly due to the increase in interest expense as a result of the year-on-year increase in the USD LIBOR rate, which led to an increase in interest expense - |
| R&D expenses | 716,319,527.66 | 668,706,028.57 | 7.12% | Mainly due to the company's increased investment in research and development |
4. R&D investment
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Name of major R&D projects |
| R&D of preparation technology of polyester titanium-based polycondensati on catalyst | To improve and optimize the preparation process of titanium-based polyester catalyst to produce titanium-based PET flakes with excellent performance and good hue, and then conduct spinning and post-processing as needed to produce heavy metal-free titanium- based polyester products. | Completed and industrialized | The self-developed titanium catalysts are used in the production of large lines, and the resulting products meet the indicators of superior polyester chips and fibres for large line production. | By further optimizing the catalyst preparation process and polymerization process to improve product quality, the project has high eco-friendliness value and social significance. |
| Green manufacturing of TiO2 matting agent for nylon and complete set of technology for industrial application of full matting nylon | TiO2 matting agent is an important auxiliary for nylon production, used to improve the performance of fibre, due to the technical difficulty and European and American technology blockade, the supply has long been subject to European and American constraints, the domestic does not yet have a high-quality matting agent mature production technology. In recent years, China's nylon fibre into high-quality development stage, the demand for high-quality matting agent is urgent, breakthrough | Completed and industrialized | We have designed and built a 10,000-ton green production demonstration plant for nylon titanium dioxide matting agent paste, and combined with the characteristics of the matting agent paste, we have carried out engineering system modification to form a set of complete set of industrialised application technology for nylon titanium dioxide matting | Breaking the monopoly of foreign technology, successfully solving the "necklace" problem of matting agent in nylon industry, improving the relationship between supply and demand, improving production efficiency, reducing the production cost of domestic nylon manufacturers, promoting the healthy and rapid development of nylon chemical fibre industry, and guaranteeing the security |
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Name of major R&D projects |
| technology blockade, is of great significance. | agent paste. | of supply of important fibre materials. | ||
| Research and development of zinc oxide antimicrobial polyester fibres | Nano-zinc oxide antimicrobial polyester fibre has green, safe, healthy and other characteristics, with people's consumer attitudes and changes in the concept of health and the enhancement of the concept of health, which will be favoured by more and more consumers in the field of home, medical and health care, military apparel, and so on, and zinc antimicrobial textiles will be more and more in demand. | Completed and industrialized | Study the effect of zinc oxide particle size and content on the mechanical properties and antimicrobial properties of fibres, develop antimicrobial masterbatch or antimicrobial polyester chips to meet the production needs, melt spinning into antimicrobial polyester fibres. | Open up the market of functional fibre products, increase market competitiveness and enhance the added value of products. |
| Research and Development Project on Flame Retardant Cationic Polyester Fibre | Starting from the future development direction of flame-retardant polyester fibre and market demand, based on the R&D and production of flame-retardant polyester fibre, high shrinkage fibre and cationic dyeable fibre, the feasibility of preparing flame-retardant high shrinkage, flame-retardant cationic dyeable and other composite functional polyester fibre is investigated, aiming at launching high-quality and functionalized composite flame-retardant polyester fibre | Pilot conversion to industrialisation for stable mass production and wider use | Determine the technical solutions of flame-retardant cation polyester and flame-retardant high shrinkage polyester, and prepare flame-retardant cation and flame-retardant high shrinkage polyester chips. The spinning process is also researched and confirmed, and flame-retardant cation and flame-retardant high shrinkage fibres are prepared to meet | Enrich the company's differentiated products, increase market competitiveness, enhance the added value of products and achieve better economic benefits. |
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Name of major R&D projects |
| products. | customers' requirements. The technology of this project is the enterprise's own technology, and makes full use of our existing equipment, technology and relevant supporting conditions. |
R&D personnel
| 2023 | 2022 | Change ratio | |
| Number of R&D staff (person) | 1,027 | 1,065 | -3.57% |
| Percentage of R&D personnel | 6.61% | 6.81% | -0.20% |
| Educational background of R&D personnel | —— | —— | |
| PhD | 79 | 69 | 14.49% |
| Master | 125 | 118 | 5.93% |
| Bachelor | 375 | 335 | 11.94% |
| Junior college degree and below | 448 | 543 | -17.50% |
| Age of R&D personnel | —— | —— | |
| Under 30 | 414 | 457 | -9.41% |
| 30~40 | 401 | 373 | 7.51% |
| 40~50 | 176 | 166 | 6.02% |
| 50~60 | 34 | 64 | -46.88% |
| 60 and above | 2 | 5 | -60.00% |
R&D investment
| 2023 | 2022 | Change ratio | |
| R&D investment amount (RMB) | 743,797,778.86 | 688,229,267.31 | 8.07% |
| R&D investment as a percentage of operating income | 0.55% | 0.45% | 0.10% |
| Capitalized R&D investment (RMB) | 27,478,251.20 | 19,523,238.74 | 40.75% |
| Capitalized R&D investment as a percentage of R&D investment | 3.69% | 2.84% | 0.85% |
Notes: R&D investment= R&D expenses + Capitalized R&D investment during theperiod
Reasons for and effects of significant changes in the composition of R&Dpersonnel
□Applicable ?Not applicable
Reasons for the significant changes in the percentage of total R&D investment inoperating income compared with the previous year
□Applicable ?Not applicable
Reasons for the substantial changes in the capitalization rate of R&D investmentand Description of their reasonableness
□Applicable ?Not applicable
5. Cash flow
Description of the main factors influencing significant year-on-year changes inrelevant data
(1) Net cash flow from operating activities increased, mainly due to the polyestersegment downstream demand in the current period, price difference repair, improvedoperating efficiency, compared with last year's sales volume rose, inventory realizationinflow increased in the current period, and inventory at the end of the reporting perioddecreased year-on-year.
(2) Net cash flow from investing activities decreased, mainly due to the increase in cashoutflow from investing activities as a result of the payment of equipment for Guangxi
| Item | 2023 | 2022 | Year-on-year increase/decrease |
| Subtotal of cash inflows from operating activities | 151,342,732,624.92 | 162,080,383,545.53 | -6.62% |
| Subtotal of cash outflows from operating activities | 146,810,897,819.77 | 159,374,850,062.17 | -7.88% |
| Net cash flow from operating activities | 4,531,834,805.15 | 2,705,533,483.36 | 67.50% |
| Subtotal of cash inflows from investing activities | 1,597,063,826.52 | 2,401,958,320.75 | -33.51% |
| Subtotal of cash outflows from investing activities | 6,899,721,564.69 | 4,528,249,402.63 | 52.37% |
| Net cash flows from investing activities | -5,302,657,738.17 | -2,126,291,081.88 | -149.39% |
| Subtotal of cash inflows from financing activities | 61,611,945,020.67 | 67,702,995,578.82 | -9.00% |
| Subtotal of cash outflows from financing activities | 65,350,940,711.86 | 66,030,295,613.61 | -1.03% |
| Net cash flows from financing activities | -3,738,995,691.19 | 1,672,699,965.21 | -323.53% |
| Net increase in cash and cash equivalents | -4,415,951,490.91 | 2,689,332,661.19 | -264.20% |
project and the purchase of equity shares of Zheshang Bank allotment.
(3) The decrease in net cash flows from financing activities was mainly due to the factthat cash outflows for debt repayment exceeded cash inflows for new borrowingsduring the period.
(4) The net decrease in cash and cash equivalents was mainly due to the combined effectof changes in cash flows from operating activities, investing activities and financingactivities during the reporting period.
Description of the reasons for the significant difference between the net cash flowsgenerated by the Company's operating activities and the net profit of the yearduring the reporting periodFor details, please refer to the supplementary information in the cash flow statement inthe Company's annual audit report.
V. Analysis of non-main business
Currency unit: RMB
| Amount | Percentage of total profit | Reasons | Sustainable or not | |
| Investment income | 985,476,736.48 | 246.47% | Mainly attributable to the accrual of investment income on participating companies and investment income on disposal of subsidiaries | Yes (of which investment gains on disposal of subsidiaries are not sustainable) |
| Profits and losses from changes in | -45,121,198.68 | -11.28% | It was mainly attributable to changes in fair value of foreign exchange and commodity | No |
| fair value | derivatives during the reporting period | |||
| Assets impairment loss | -71,262,509.77 | -17.82% | It was mainly attributable to the Company's provision of inventory depreciation reserves | No |
| Non-operating income | 35,920,509.46 | 8.98% | Mainly represents non-operating income recognized under the equity method by adjusting the initial investment cost of long-term equity investments, and income from compensation and penalties. | No |
| Non-operating expenses | 65,971,503.46 | 16.50% | Mainly due to loss on fixed assets, donations and fines during the reporting period. | No |
VI. Analysis of assets and liabilities
1. Significant changes in asset composition
Currency unit: RMB
| End of 2023 | Early 2023 | Proportion increase or decrease | Description of major changes | |||
| Amount | Percentage in total assets | Amount | Percentage in total assets | |||
| Monetary funds | 13,827,903,087.40 | 12.80% | 17,358,475,538.50 | 15.50% | -2.70% | |
| Accounts receivable | 5,925,174,959.59 | 5.48% | 6,857,913,648.22 | 6.13% | -0.65% | |
| Inventory | 13,060,195,863.37 | 12.09% | 14,083,484,571.18 | 12.58% | -0.49% | |
| Long-term equity investments | 13,669,254,123.61 | 12.65% | 12,831,505,320.53 | 11.46% | 1.19% | |
| Fixed assets | 45,430,020,661.94 | 42.04% | 47,466,461,676.63 | 42.39% | -0.35% | |
| Construction in progress | 4,610,305,760.02 | 4.27% | 3,751,889,400.94 | 3.35% | 0.92% | |
| Right-of-use assets | 414,782,305.73 | 0.38% | 430,002,663.24 | 0.38% | 0.00% | |
| Short-term loans | 41,122,258,268.86 | 38.06% | 37,875,833,338.09 | 33.83% | 4.23% | |
| Contract liabilities | 756,571,793.30 | 0.70% | 989,622,772.97 | 0.88% | -0.18% | |
| Long-term loans | 14,739,441,863.92 | 13.64% | 16,107,140,036.35 | 14.39% | -0.75% | |
| Lease liabilities | 449,163,796.50 | 0.42% | 431,285,378.29 | 0.39% | 0.03% |
High proportion of foreign assets
| Specific content of assets | Reason | Asset size | Location | Operation mode | Controls to ensure asset security | Income status | Proportion of overseas assets in the Company's net assets | Whether there is significant risk of impairment |
| Subsidiaries controlled by the Company | Overseas investment | USD 6209.6358 million | Hong Kong/Brunei/Singapore | Built by the Company | Strengthen the parent Company's management control over overseas subsidiaries | Good | 174.45% | No |
2. Assets and liabilities measured at fair value
Currency unit: RMB
| Item | Beginning balance | Ending balance |
| 1. Held-for-trading financial assets (excluding derivative financial assets) | 251,021,508.33 | 366,311,518.38 |
| 2. Derivative financial assets | 1,872,460.80 | 0.00 |
| 3. Investment in other equity instruments | 5,600,000.00 | 5,600,000.00 |
| Subtotal of financial assets | 258,493,969.13 | 371,911,518.38 |
| Financial liabilities | 62,965,410.64 | 108,194,619.69 |
Other changesNot applicable
Whether the measurement attributes of the Company's main assets changedsignificantly during the reporting period
□Yes ?No
3. Restricted asset rights as of the end of the reporting period
Currency unit: RMB
| Item | Ending book value of the year | Reason for restriction |
| Monetary funds | 5,309,784,965.28 | Margin |
| Notes and receivables financing | 147,675,900.00 | Pledge to open acceptance bills |
| Long-term equity investments | 6,837,853,788.22 | Mortgage, pledge loan |
| Fixed assets | 20,145,141,526.55 | Sale and leaseback finance leases, secured loans |
| Intangible assets | 2,031,649,175.86 | Mortgage loan |
| Total | 34,472,105,355.91 |
VII. Analysis of investment status
1. General situation
| Investment amount during the reporting period (RMB) | Investment amount in the same period of previous year (RMB) | Range of change |
| 13,669,254,123.61 | 12,831,505,320.53 | 6.53% |
2. Significant equity investments acquired during the reporting period
| Name of investee company | Main business | Investment Approach | Investment amount | Percentage of shareholding | Source of funds | Co-operating party | Investment period | Product Type | Progress as at the balance sheet date | Whether or not involved in litigation | Date of disclosure (if any) | Disclosure index (if any) |
| China Zheshang Bank Co.,Ltd. | Financial industry | Capital increase | 453,329,985.70 | 3.54% | Equity fund | Hong Kong Securities Clearing Company (Nominees) Limited, Zhejiang Provincial Financial Holdings Company Limited, etc. | Lump sum | Corporate and retail banking services, treasury and other commercial banking operations | Completed | No | June 17, 202 3 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1217085275&announcementTime=2023-06-17 |
| Total | -- | -- | 453,329,985.70 | -- | -- | -- | -- | -- | -- | -- | -- | -- |
3. Significant non-equity investments in progress during the reporting period
| Project name | Investment method | Whether it is fixed asset investment | Industry involved in the project | Amount invested during the reporting period | Cumulative actual investment amount as of the end of the reporting period | Sources of funds | Project progress | Disclosure date (if any) | Disclosure index (if any) |
| Brunei Phase II Project | Built by the Company | Yes | Petrochemical industry | 455,933,849.94 | 2,535,847,842.18 | Self- raised funds and loans | 2.86% | September 16, 2020 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1208444483&announcementTime=2020-09-16 |
| Suqian Yida New Environment- friendly Differentiated Fibre Project | Built by the Company | Yes | Chemical fibre industry | 451,809,220.82 | 973,324,107.87 | Self-financing, borrowing and fund-raising | 30.00% | June 1, 2021 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1210132115&announcementTime=2021-06-01 |
| The 1.2 mtpa Caprolactam- Polyamide Industry Integration and Supporting Project | Built by the Company | Yes | Petrochemical chemical fibre industry | 744,043,388.55 | 887,509,283.57 | Self-financing and borrowing | 18.18% | January 22, 2022 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1212243026&announcementTime=2022-01-22 |
| Total | -- | -- | -- | 1,651,786,459.31 | 4,396,681,233.62 | -- | -- | -- | -- |
4. Investment in financial assets
(1) Investment in securities
The Company's made no investment in securities in the reporting period.
(2) Investment in derivatives
1) Investments in derivatives for hedging purposes during the reporting period
Currency unit: RMB 10,000
| Type of Hedging Investment | Beginning investment amount | Profits and losses from changes in fair value in the reporting period | Accumulated fair value changes recognized in equity | Ending amount | Ending investment amount as a percentage of the Company's net assets at the end of the reporting period | Type of Hedging Investment | Beginning investment amount | Profits and losses from changes in fair value in the reporting period |
| Foreign exchange hedging | -1,165 | -1,165 | -10,134 | 814 | 279,991 | 289,645 | -10,819 | -0.43% |
| Commodity hedging | 20,158 | 20,158 | 5,622 | 2,540 | 420,544 | 404,071 | 36,631 | 1.45% |
| Total | 18,993 | 18,993 | -4,512 | 3,354 | 700,535 | 693,716 | 25,812 | 1.02% |
| Explanation on whether there is any significant change in the accounting policy and specific principles of accounting for hedging business of the Company in the reporting period compared with that in the previous reporting period | No. The Company accounted for the hedging investment carried out in accordance with the relevant provisions of the Ministry of Finance's Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, Accounting Standards for Business Enterprises No. 24 - Hedging, Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets, Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments and relevant guidelines to reflect the relevant items of the balance sheet and profit and loss statement. | |||||||
| Explanation on actual profit or loss in the reporting period | During the reporting period, the actual gain or loss amounted to RMB 0.4918 million, of which the floating loss on positions was RMB 45.1212 million and the gain on closing positions was RMB 45.6130 million. | |||||||
| Explanation on hedging effects | The profits and losses generated from the Company's hedging tools can offset the value changes of the hedged items, and the hedging business has a good hedging effect. | |||||||
| Source of funding for investments in derivatives | Self-owned funds | |||||||
| Risk analysis and description of control measures for derivatives positions during the reporting period (including but not limited to market risk, liquidity risk, credit risk, operational risk, and legal risk) | 1. Market risks When the market changes drastically, the Company may not be able to fully lock in the price of raw materials or products, thereby resulting in losses. 2. Liquidity risks Commodity hedging transactions are ordered within the authority specified in the Company's Management System for Commodity Derivatives Transactions. If the market fluctuates drastically, losses may be caused by forced liquidation of positions due to lack of time for margin replenishment. 3. Operational risks as futures and forward transactions are highly specialized and complex, unexpected losses may be caused due to defects in information systems or internal controls. 4. Credit risks When the price fluctuates greatly to the disadvantage of the counterparty, the counterparty may violate the relevant provisions of the contract and cancel the contract, resulting in losses to the Company. 5. Legal risks Due to changes in relevant legal systems or violations of relevant legal systems by the counterparty, the contract may not be executed normally, resulting in losses to the Company. Risk control measures taken by the Company: The BOD of the Company has reviewed and approved the Management System for Foreign Exchange Derivatives Transactions and the Management System for Commodity Derivatives Transactions, which stipulate that the Company engages in hedging investment business with the main purpose of hedging, and speculation and arbitrage transactions are prohibited. The systems clearly stipulate the principles of the Company's business operations, approval authority, internal audit process, responsible departments and responsible persons, information isolation measures, internal risk reporting system and risk handling procedures, which are in line with the relevant requirements of regulatory authorities and meet the needs of actual operations. The specified risk control measures are practical and effective. |
| Changes in market price or air value of products involved in invested derivatives during the reporting period; the analysis of the fair value of derivatives shall disclose the specific methods used and the setting of relevant assumptions and parameters | Amount of current profit or loss affected by the Company's hedging investments during the reporting period: RMB 0.4918 million. The Company's hedging investment was priced at fair value, and forward foreign exchange was basically determined according to the price provided by or obtained from banks, the Reuters system and other pricing service agencies. The Company conducted fair value measurement and confirmation every month; the transaction price of futures was the fair price. |
| Involvement in lawsuits | None |
| (if applicable) | |
| Date of disclosure of announcement of the BOD for approval of derivatives investment (if any) | December 07, 2022 |
| Date of disclosure of announcement of shareholders meeting for approval of derivatives investment (if any) | December 23, 2022 |
| Special opinions of independent directors on the Company's derivatives investment and risk control | The hedging investment carried out by the Company for the purpose of hedging was closely related to the Company's daily business needs and complied with relevant laws and regulations. The Company formulated the Management System for Foreign Exchange Derivatives Transactions and the Management System for Commodity Derivatives Transactions, which have strengthened the Company’s risk management and control abilities and improved the Company's ability to withstand market risks, causing no damage to the interests of the Company and all shareholders. |
The Company shall comply with the disclosure requirements for petrochemical industry specified in Guidelines No. 3 for Self-Regulationof Listed Companies of Shenzhen Stock Exchange - Industry Information Disclosure
During the reporting period, the Company carried out hedging investment for the purpose of reasonably avoiding the risk of price and exchangerate fluctuations of raw materials and finished products, reducing the impact of price and exchange rate fluctuations of raw materials and finished
products on the normal operation of the Company, and ensuring the stable operation and sustainable profitability of the Company. The commoditiesinvolved in the hedging transactions included raw materials, finished products, and foreign exchange related to the Company's production andoperation.
2) Investments in derivatives for speculative purposes during the reporting periodThere were no investments in derivatives for speculative purposes during the reporting period.
5. overall of raised funds
(1) Overall use of raised funds
Currency unit: RMB 10,000
| Year of fund raising | Mode of fund raising | Total funds raised | Total amount of raised funds used in this period | Total amount of raised funds used cumulatively | Total amount of raised funds with changed usage during | Cumulative total amount of raised funds with changed usage | Proportion of cumulative total amount of raised funds with changed | Total amount of raised funds not yet used | Usage and destination of raised funds not yet used | Amount of raised funds idle for more than two |
| the reporting period | usage | years | ||||||||
| 2019 | Issue of shares to purchase assets and raise supporting funds | 291,091.12 | 0 | 288,785.36 | 0 | 156,300 | 53.69% | 0 | On April 25, 2022, the seventeenth meeting of the eleventh session of the BOD of the Company reviewed and approved the Proposal on Closing Investment Projects with Raised Funds and Permanently Replenishing Working Capital with Surplus Raised Funds, agreeing to permanently supplement the working capital with the balance of supporting funds from share issuance by the Company in 2019. As of December 31, 2023, the Company's remaining sporadic idle proceeds have been permanently transferred out to supplement liquidity and the special account for proceeds has been cancelled in full. | 0 |
| 2022 | Public issuance of convertible corporate | 298,367.92 | 25,689.16 | 153,383.8 | 0 | 0 | 0.00% | 144,984.13 | As of December 31, 2023, the unused raised funds amounted to RMB 1449.8413 million, of which RMB 1451.5893 million had not yet been returned as temporary supplementary working | 0 |
| bonds in 2022 | capital due to the balance of the Company's special account for fund-raising funds was RM 1.7856 million, and the sum of the amount of temporary supplementary liquidity not yet due for return and the balance of the special account for fund-raising funds exceeded the amount of fund-raising funds not yet used by RMB 3.5336 million, which represented the interest income from the special account for fund-raising funds less the net amount of the handling fee and the issuance fee not yet paid. | |||||||||
| Total | -- | 589,459.04 | 25,689.16 | 442,169.16 | 0 | 156,300 | 26.52% | 144,984.13 | -- | 0 |
| General description of the use of raised funds | ||||||||||
| 1. As approved by the [2018] No. 1937 CSRC Permit issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the Company raised a total of RMB 2,949,999,987.00 through non-public issuance of 213,768,115 ordinary shares (A shares) to eligible investors, which was verified by Ruihua Certified Public Accountants (Special General Partnership). After deducting the broker’s underwriting fees and related issuance expenses, the actual net amount of funds raised was RMB 2,910,911,218.99. As of December 31, 2023, the Company has used RMB 2887.8536 million from the funds. 2. As approved by CSRC Permit [2022] No. 565 issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the Company publicly issued 30 million convertible corporate bonds to eligible investors, each with a face value of RMB 100. The total issuance amount was RMB 3 billion, the conversion price was RMB 10.50 per share, and the bonds were listed on the Shenzhen Stock Exchange on August 11, 2022. The total amount of funds raised from the public issuance of convertible corporate bonds was RMB 3 billion. After deducting the underwriting and recommendation fees excluding taxes and related issuance fees, the actual net amount of funds raised was RMB 2983.6792 million. As of December 31, 2023, the Company has used RMB 1553.8380 million from the funds. | ||||||||||
(2) Projects for committed investment with raised funds
Currency unit: 10,000
| Projects for committed investment and investment direction of over- raised funds | Whether the project has been changed (or partially changed) | Total committed investment of raised funds | Adjusted total investment amount (1) | Amount invested during the reporting period | Cumulative investment amount as of the end of the period (2) | Investment progress as of the end of the period (3) = (2)/ (1) | Date when the project reaches its scheduled availability date | Benefits realized during the reporting period | Whether the expected benefits are achieved | Whether there is a significant change in the feasibility of the project |
| Projects for committed investment | ||||||||||
| 500,000 tpa differentiated functional fibre upgrading and transformation project | No | No more than 93,500 | 93,500 | 0 | 93,647.49 | 100.16% | August 2020 | 7,257.25 | No | No |
| Intelligent upgrading and transformation project | No | No more than 28,170 | 28,170 | 0 | 25,621.7 | 90.95% | August 2020 | Not applicable | Not applicable | No |
| Differentiated chemical fibre energy saving and consumption reduction upgrading and transformation project | No | No more than 8,500 | 8,500 | 0 | 8,399.34 | 98.82% | May 2019 | Not applicable | Not applicable | No |
| 250,000 tpa environmentally- friendly functional fibre upgrading and transformation project | Yes | No more than 141,500 | 416.05 | 0 | 416.05 | 100.00% | Not applicable | Not applicable | Not applicable | Yes |
| Intelligent upgrading and transformation project | Yes | No more than 20,500 | 5,283.95 | 0 | 3,406.99 | 64.48% | Not applicable | Not applicable | Not applicable | Yes |
| 500,000 tpa New- type Functional fibre technological transformation projects | No | No more than 70,000 | 70,000 | 33,398.74 | 33,398.74 | 47.71% | January and August 2021 | 6,105.52 | No | No |
| 1.1 mtpa New Environment- friendly Differentiated Fibre Project | No | No more than 230,000 | 230,000 | 25,689.16 | 119,985.06 | 52.17% | Partially commissioned in May and December 2023 | -3,415.06 | Not applicable | No |
| Subtotal of committed investment for the projects | -- | No more than 592,170 | 435,870.00 | 25,689.16 | 284,875.37 | -- | -- | / | -- | -- |
| Investment direction of over-raised funds | ||||||||||
| None | ||||||||||
| Total | -- | No more than 592,170 | 435,870.00 | 25,689.16 | 284,875.37 | -- | -- | / | -- | -- |
| Description of the situation and reasons why the planned progress and expected benefits have not been achieved by projects (including the reason for selecting "not applicable" for "whether the expected benefits have been achieved") | Due to significant fluctuations in raw material prices and the weak downstream demand, some project benefits did not meet expectations. |
| Description of significant changes in project feasibility | Not applicable |
| Amount, purpose and progress of use of over-raised funds | Not applicable |
| Change of location for implementation of projects for committed investment | Not applicable |
| Adjustment of implementation mode of projects for committed investment | Not applicable |
| Preliminary investment and replacement of projects for committed investment | Applicable |
| 1. On February 1, 2019, the twenty-fourth meeting of the tenth session of the BOD of the Company reviewed and approved the Proposal on Using Raised Funds to Replace Self-raised Funds and Intermediary Fees and Related Taxes Pre-paid for Relevant Investment Projects, agreeing to use RMB 1,147,288,319.73 from the raised funds to replace the self-raised funds and the intermediary fees and related taxes that had been paid for relevant investment projects, of which the self-raised funds that had been invested in the projects were RMB 1,141,188,319.73 and the intermediary fees and related taxes paid in advance by the Company with its own funds were RMB 6,100,000.00. On June 18, 2019, the thirtieth meeting of the tenth session of the BOD of the Company reviewed and approved the Proposal on Using Raised Funds to Replace Self-raised Funds Pre-paid for Relevant Investment Projects, agreeing to use RMB 331,666,503.97 from the raised funds to replace the self-raised funds that had been paid for relevant investment projects 2. According to the resolution of the tenth meeting of the eleventh session of the BOD on May 31, 2021, and the Proposal on the Company's Public Issuance of Convertible Corporate Bonds reviewed and approved at the third Extraordinary General Meeting (EGM) of Shareholders 2021 on June 16, 2021, it is agreed that if the Company has invested self-raised funds in the construction of the above projects first before the funds raised from the issuance of convertible corporate bonds are in place, the funds can be replaced in accordance with the procedures prescribed by relevant laws and regulations after the funds raised are available. As of July 28, 2022, the Company has invested RMB 1,042,688,264.58 in the above-mentioned raised funds investment project with self-raised funds in advance, and has made the advance payment of intermediary fees and related taxes of RMB 1,550,000.00 with self-owned funds. After the review of the BOD of the Company, it was decided to replace the self-raised funds invested in the raised funds investment project with the raised funds, with an amount of RMB 1,042,688,264.58, and to replace the self-raised funds with the raised funds for the paid issuance fees, with an amount of RMB 1,462,264.15 (excluding tax). As of December 31, 2023, the Company has replaced the self-raised funds invested in advance of RMB 1,044,150,528.73. | |
| Temporary replenishment of working capital with idle raised funds | Applicable |
| As of December 31, 2023, the Company has temporarily replenished its working capital with idle raised funds of RMB 1451.5893 billion, and there is no situation where any fund has not been returned upon maturity. | |
| Amount and reasons for the balance of raised funds in project implementation | Applicable |
| Due to the long payment cycle of contract payments agreed with some suppliers, the Company will continue to make relevant payments as agreed in the contract after the project is completed. | |
| Usage and destination of unused raised funds | As of December 31, 2023, the unused proceeds amounted to RMB1,449,841,300, of which RMB1,451,589,300 had not yet been due for the return of temporary supplementary liquidity, and the balance of the Company's special account for proceeds was RMB1,785,600, and the sum of the amount of temporary supplementary liquidity that had not yet been due for the return of temporary supplementary liquidity and the balance of the special account for proceeds exceeded the amount of the unused proceeds by RMB3,533,600, which was the amount of the special account for proceeds. Interest income net of handling fees and outstanding issue fees. |
| Problems or other situations in the use and disclosure of raised funds | Not applicable |
(3) Changes of projects for investment with raised funds
During the reporting period, there was no change of the projects for investment with raised funds.
VIII. Sales of major assets and equity
1. Sales of major assets
The company did not sell any significant assets during the reporting period.
2. Sales of major equity
| Counter party | Sold equity | Date of sale | Ttransaction price (RM B 10,000) | Net profit contributes by the equity to the listed company from the beginning of current period to the date of sale (RMB10,000) | Impact of the sale on the company | Net profit contributed by the equity sale to the listed company as a percentage of the total net profit | Pricing principle of equity disposal | Whether it is a related-party transaction | Relationship with the counter party | Whether the equity involved has been fully transferred | Whether it is implemented as planned; if not explain the reasons and the measures the company has taken | Data of disclosure | Disclosure index (if any) |
| Zhejiang Hengyi Group Co.,Ltd. | 100% equity interest in Hangzhou Yijing Chemical Fibre Co.,Ltd. | December 19, 2023 | 88,000 | 2,582.01 | The disposal of equity interest will not adversely affect the Company's business continuity, management stability and daily production and operation | 121.78% | Determined with reference to the book value and appraised value of the net assets of the subject company as at 31 October 2023 | Yes | Hengyi Group is the controlling shareholder of the Company; Mr Qiu Yibo, Chairman and President of the Company, is a shareholder and director of Hengyi Group; Mr Fang Xianshui, Vice Chairman of the Company, is also a director of Hengyi Group; and Mr Ni Defeng, Director, is the President | Yes | Yes | December08, 2023 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1218547547&announcementTime=2023-12-08 |
and director of Hengyi
Group.
IX. Analysis of major subsidiaries and JV companies
Major subsidiaries and JV companies with an impact of 10% or more on the netprofit of the Company
Currency unit: RMB
| Company name | Type of company | Main business | Registered capital | Total assets | Net assets | Operating income | Operating profit | Net profit |
| Hengyi Brunei (Single unit) | Subsidiary | Refining and petrochemical | USD 1.0548 billion | 37,786,868,368.92 | 10,246,578,199.96 | 44,088,120,113.95 | 46,457,509.55 | 13,984,311.35 |
| Hainan Yisheng | JV company | PTA and bottle flake | 4,580,000,000.00 | 16,886,352,145.66 | 6,782,363,911.16 | 17,995,790,974.30 | 406,311,358.76 | 364,367,774.59 |
| Yisheng Investment | JV company | PTA and bottle flake | 2,018,000,000.00 | 16,216,384,823.21 | 7,700,142,596.37 | 30,081,391,445.25 | 3,961,933.76 | 57,567,769.18 |
| Yisheng New Materials | JV company | PTA | 3,000,000,000.00 | 11,939,894,488.83 | 2,291,993,920.94 | 34,389,876,066.56 | -784,303,905.25 | -567,448,779.11 |
| Hengyi Limited | Subsidiary | DTY | 3,000,000,000.00 | 41,061,996,420.47 | 8,599,478,026.72 | 62,888,166,435.20 | 245,694,203.90 | 254,352,818.12 |
| Hengyi High-Tech | Subsidiary | Flakes, POY, etc. | 2,757,250,000.00 | 11,607,580,622.29 | 4,898,283,462.40 | 10,358,224,455.18 | 441,336,470.83 | 432,448,585.91 |
| Shuangtu New Materials | Subsidiary | POY, FDY, and flakes | 600,000,000.00 | 5,184,969,615.15 | 2,248,516,210.90 | 7,148,921,932.66 | 139,284,403.28 | 121,053,026.00 |
| Jiaxing Yipeng | Subsidiary | FDY | 3,000,000,000.00 | 5,334,717,810.95 | 2,746,345,202.72 | 4,605,245,658.41 | 64,957,382.37 | 65,077,779.99 |
| Hong Kong Tianyi | Subsidiary | Investment and trade | USD 1.5095 billion | 14,995,526,709.40 | 11,292,819,604.28 | 1,019,114,286.03 | -123,246,933.21 | -123,246,933.21 |
| China Zheshang Bank | JV company | Finance | 27,464,635,963.00 | 3,143,879,000,000.00 | 189,577,000,000.00 | 63,704,000,000.00 | 17,523,000,000.00 | 15,493,000,000.00 |
Acquisition and disposal of subsidiaries during the reporting period
| Company name | Methods of acquiring and disposing of subsidiaries during the reporting period |
| Hangzhou Yijing Chemical Fibre Co.,Ltd. | Disposal |
| Zhejiang Yi Zhi Information Technology Co. | Cancellation |
| Hangzhou Lantong Technology Co. | Establishment |
| Hangzhou Lanfang High-tech Material Co. | Establishment |
| Hangzhou Lanshun Technology Co. | Establishment |
| Hangzhou Lanbiao Testing Service Co. | Establishment |
| Hangzhou Yigao Environmental Protection Technology Co. | Establishment |
| Hangzhou Yixian Energy Technology Co. | Establishment |
Description of major subsidiaries and JV companies
(1) Hengyi Brunei
The Company holds 70% of the shares of Hengyi Industries Sdn. Bhd. through HongKong Tianyi International Holding Co., Ltd. Hengyi Brunei has a registered capital ofUSD 1.0548 billion, and the scope of business covers: Petroleum refining andpetrochemical.
(2) Hainan Yisheng
The Company holds 50% of the shares of Hainan Yisheng Petrochemical Co., Ltd.through Ningbo Hengyi Commerce Co., Ltd. a subsidiary of Zhejiang HengyiPetrochemical Co., Ltd. Hainan Yisheng has a registered capital of RMB 4.58 billion.The scope of business: production, processing, wholesale and retail of purifiedterephthalic acid, PET flakes, polyester bottle flakes, polyester staple fibres, POY yarns,FDY yarns, crude cobalt oxide and manganese oxide, and chemical fibre raw materials;purchase and sales of paraxylene (PX), acetic acid, and ethylene glycol; self-supportingand acting as an agent for the import and export of various goods and technologies;terminal facilities operation, general cargo handling service in the terminal area,
terminal tugboat operation, ship service, fresh water supply for ships, collection of shippollutants (including oily sewage, residual oil, tank washing water, domestic sewageand garbage), and supply of oil containment boom.
(3) Yisheng Investment
The Company holds 30% of the shares of Dalian Yisheng Investment Co., Ltd. throughZhejiang Hengyi Petrochemical Co., Ltd. Scope of Business: Project investment,domestic general trade, import and export of goods, technology import and export, andtrade intermediary agency. (Except for business prohibited by laws and administrativeregulations, business restricted by laws and administrative regulations can be operatedonly after obtaining corresponding permit). (Business activities subject to approvalaccording to laws can be carried out only after by relevant departments.) The legalrepresentative is Li Shuirong, and the registered capital is RMB 2.018 billion.
(4) Yisheng New Materials
The Company holds 49% of the shares of Zhejiang Yisheng New Materials Co., Ltd.through Zhejiang Hengyi Petrochemical Co., Ltd. The scope of business: import andexport of technologies; import and export of goods; import and export of agency(Business activities subject to approval according to laws can be carried out only afterapproved by relevant departments. Specific business activities are subject to theapproval results). General business: Sales of new membrane materials; sales ofsynthetic materials; sales of chemical products (excluding chemical products subject tolicense); sales of petroleum products (excluding hazardous chemicals); production ofchemical products (excluding chemical products subject to license); manufacturing ofsynthetic materials (excluding hazardous chemicals); technical services, technicaldevelopment, technical consultation, technical exchange, technology transfer, andtechnology promotion (except for business subject to approval according to laws,
business activities shall be carried out independently and legally with the businesslicense). The legal representative is Xu Baoyue, and the registered capital is RMB 3billion.
(5) Hengyi Limited
The Company directly holds 100% of the shares (actually enjoys 100% of the rights)of Zhejiang Hengyi Petrochemical Co., Ltd. Hengyi Limited has a registered capital ofRMB 3 billion. The scope of business: production, processing and sales of chemicalfibres and chemical raw materials (excluding hazardous chemicals); import and export.
(6) Hengyi High-Tech
The Company holds 100% of the shares of Zhejiang Hengyi High-Tech Materials Co.,Ltd. through Zhejiang Hengyi Petrochemical Co., Ltd. Hengyi High-Tech has aregistered capital of RMB 2.75725 billion, and the scope of business covers: production,processing and sales of PET flakes, POY yarns, FDY yarns, and chemical fibre rawmaterials; export of the company’s own products and technologies and import of self-use products and technologies (except for those that are prohibited or restrictedaccording to national laws and regulations); all other legal business not subject toapproval.
(7) Shuangtu New Materials
The Company holds 100% of the shares of Zhejiang Shuangtu New Materials Co., Ltd.,and the registered capital of Shuangtu New Materials is RMB 600 million. Scope ofBusiness: General business: general business: production of chemical products(excluding chemical products subject to license); sales of chemical products (excludingchemical products subject to license); sales of synthetic fibres; synthetic fibre
manufacturing; sales of synthetic materials; manufacture of synthetic materials(excluding hazardous chemicals) (except for business subject to approval according tolaw, other business activities can be carried out independently and legally with thebusiness license). Licensed business: import and export of goods; import and export oftechnologies (Business activities subject to approval according to law can only becarried out after approved by relevant departments. Specific business activities aresubject to the approval results). The main products are FDY, POY and fibre grade PETflakes.
(8) Jiaxing Yipeng
The Company holds 100% of the shares of Jiaxing Yipeng Chemical Fibre Co., Ltd.Jiaxing Yipeng has a registered capital of RMB 3 billion, and the scope of businesscovers: manufacture, processing and sales of PET flakes and FDY fully drawn yarns;sales of chemical fibre raw materials; import and export of goods. (excluding hazardouschemicals). The main products are FDY and fibre grade PET flakes.
(9) Hong Kong Tianyi
The Company holds 100% of the shares of Hong Kong Tianyi International HoldingCo., Ltd. through Zhejiang Hengyi Petrochemical Co., Ltd. The registered capital ofHong Kong Tianyi is USD 1.5095 billion, and its business scope involves investmentand trading.
(10) China Zheshang Bank
The Company holds a total of 972,490,068 shares of China Zheshang Bank Co., Ltd.through its subsidiary Zhejiang Hengyi Petrochemical Co., Ltd. and its indirectsubsidiary Zhejiang Hengyi High-Tech Materials Co., Ltd., accounting for 3.54% of
the total share capital of China Zheshang Bank. Scope of Business: financial business(For details, please refer to the approval of the China Banking and Insurance RegulatoryCommission). Established in 2004, the company is one of the 12 national joint-stockcommercial banks approved by the China Banking and Insurance RegulatoryCommission. China Zheshang Bank was listed on the main board of the Hong KongStock Exchange on March 30, 2016 (stock code: 02016.HK) and on the Shanghai StockExchange on November 26, 2019 (stock code: 601916.SH).
X. Information on structured entities controlled by the Company
□Applicable ?Not applicable
XI. Prospects for the future development of the Company
(I) Strategic prospects for the development of the Company
In 2024, HengYi Petrochemical will continue to adhere to high-quality development,taking technological innovation, product innovation and process innovation as the basisfor its strategic transformation from "Industrial HengYi" to "Technological HengYi".At the same time, the company will continue to consolidate its integration advantages,strengthen the linkage between domestic and overseas markets, further improve the"polyester + polyamide" double "spandex" driven industrial chain, and deepen the"petrochemical +" multi-level three-dimensional industrial layout to achieve resourcesharing, and to achieve the "petrochemical +" multi-level three-dimensional industriallayout. We will continue to consolidate our integration advantages, strengthen thelinkage between home and abroad, further improve the "polyester+nylon" dual"spandex"-driven industrial chain, deepen the "petrochemical+" multi-layered andthree-dimensional industrial layout, share resources, systematically build upstream anddownstream synergies, and comprehensively enhance our comprehensivecompetitiveness, so as to develop into a leading domestic and first-class "refining-
chemicals-chemicals-chemical fibres" private multinational industrial group.
(II) Prospects for the industrial development of the Company
For details, please refer to the section headed (II) Industry in which the Company's threemajor businesses operate" under the heading "I. Industry in which the Companyoperated during the reporting period".
(III) Business strategy of the Company for 2024
Based on the requirements of high-quality development in the new era and the newpattern of industrial development, the company will continue to promote thetransformation of "Industrial Hengyi" to "Science and Technology Hengyi", and take"Green Manufacturing" and "Circular Economy" as the guide. With "GreenManufacturing" and "Circular Economy" as the guiding principles, we will increaseinvestment in scientific and technological research and development to improve thetransformation efficiency of new materials and technologies; promote the planning andconstruction of key strategic projects to enhance the company's sustained profitabilityand risk-resistance; deepen the strategy of digital transformation, strengthen data-driven, and empower the work of production, sales, operation, and managementdecision-making at multiple levels; Optimise the grass-roots organisation model, buildup the talent team and introduce advanced management experience, so as to build upmomentum and energy for the company to achieve strategic transformation and long-term high-quality development.
1. Promote the transformation from "Industrial Hengyi" to "Science andTechnology Hengyi", and create an innovation-driven science and technologyenterprise.
In 2024, the company will continue to give full play to the functional positioning andadvantageous features of linkage with universities and research institutes, participate inbasic research through various forms and channels, carry out scientific andtechnological collaboration in the front-end, and promote the application of landing inthe back-end to create a flexible mechanism with strong R&D momentum, hightransformation efficiency and smooth management and operation, to continuously giverise to new results, promote the transformation of results, and to actively play a role inthe innovation of the back-end. We will build a multi-body synergistic innovationecology of technological innovation, application demonstration, talent training, modelinnovation and business integration. The company will closely surround the industriallayout, aim at the world's scientific and technological frontiers, gather global innovationresources, cultivate high-end innovation achievements, build a world-class R&D basefor key common technologies of refining and chemical integration and high-endchemical products, and will devote itself to the research and development of greenchemicals and advanced materials to become a technology leader in the whole industry.
The company has begun to enter the forefront of industry technology in some of itsadvantageous areas, and will continue to give full play to the spirit of independentinnovation of the Enterprise Research Institute, continue to increase investment inresearch and development, product development and transformation of results aroundthree major themes: environmental protection, functionality, and biobased categories.We will continue to promote "Yitaikang" products and increase the promotion andapplication of environmentally friendly polyester technology and product sales. Wehave successfully completed the research on the "catalytic + solvent" system for theefficient dehydration reaction for the preparation of bio-based polyester monomers, andsolved the key technical problems in the preparation of HMF with high selectivity; wewill accelerate the industrialisation of functional composite materials such as flame-retardant and anti-static materials. At the same time, the company will focus onpromoting the research and development of gas-phase reformulation, ammonia,
hydrogen peroxide, chemical fibre oiling agent and other technologies, so as to promotethe high-quality development of the green petrochemical industry.
2. Stable operation of existing production capacity, and actively promote theconstruction of major strategic projects
In 2024, the company will continue to deepen the integration of industrial chain andstrengthen the linkage between domestic and overseas advantages. On the domesticfront, the Company will safely and stably operate the two major segments of PTA andpolyester, strengthen the implementation and effect of the construction of the "1.2million tons per annum caprolactam-polyamide industrial integration and ancillaryprojects" in Qinzhou, and continue to build up the nylon industry.
Overseas, the Company will continue to do a good job in the production and operationof Brunei Project Phase I, always put safety and environmental protection in the firstplace in the operation of the refinery, insist on the operation of the plant to be"affordable, stable, and long-cycle", and strive to maximise the operational efficiencyand profitability after the completion of the technological transformation in 2023, andto maintain good performance in HSE. At the same time, the Company will continue toadhere to the tenet of "market-oriented, benefit-oriented and production service", graspthe whole process of control of raw materials entering the plant, product production,blending and transferring, and sales, and further improve and optimise the processingflow of the whole plant, so as to effectively ensure the safe production of the plant,increase production capacity, optimise the process, and reduce costs and increaseefficiency. At the same time, the company will continue to steadily push forward theconstruction of Brunei Project Phase II, the completion of Brunei Project Phase II willfurther increase the company's overseas market share, thickening the company's profits,injecting new blood for growth, and is conducive to strengthening the integration of theindustrial chain and the advantages of scale, reducing the cost of production, ensuring
the stability of the supply of raw materials, and enhancing the company's sustainedprofitability and risk-resistant ability.
3. Deepen the integration of digital intelligence and strengthen data-drivenempowerment
Taking the digital intelligent factory as a blueprint, the company will accelerate theconstruction of information operation standardisation system. In 2024, the companywill continue to consolidate and improve the service experience of HengYi Brain,continue to upgrade the comprehensive application based on AI technology, andprovide the company's top management with a scientific decision-making system forthe integration of production and sales. At the same time, it will achieve onlinemanagement of information assets, operation knowledge base and system operationconfiguration, online display and analysis of operation data, improve the informationinfrastructure construction, promote the value mining of production and operation bigdata, establish the construction of daily operation standardisation system, and realisethe development of digital transformation of traditional industries. In addition, with theincreasing demand for intelligent logistics technology in the petrochemical industry,the Company will continue to focus on the construction of a highly efficient MESsystem to achieve consistency and interconnection of data throughout the plant, andcontinue to improve and upgrade the chemical fibre industrial internet platform withthe trinity of "online trading + online finance + warehousing and logistics", so as toeffectively reduce the cost of logistics of raw materials and products and realise thedevelopment of digital transformation in the Company. This will effectively reduce thelogistics costs of raw materials and products, realise upstream and downstream synergy,and provide powerful assistance for the development of the main industry, so as tocomprehensively enhance the comprehensive competitive strength.
4. Improve the company's management system, help the steady progress of
strategic objectives
In 2024, the Company will continue to build a management team that matches theCompany's strategy, stimulate the vitality of the organisation and mechanism, carryforward the guiding spirit of hard work, and mobilise the enthusiasm and creativity ofemployees to the greatest extent possible. The Company will continue to strengthen theconstruction of the talent ladder, promote steady front-line work on a regular basis,increase the sense of belonging of employees and stimulate the endogenous force of theenterprise through continuous improvement of the system, enhancement of thetransparency of the policy, and enhancement of the grass-roots atmosphere.At the same time, the company will continue to establish and improve the advancedoperation management system, continue to improve the efficiency of productionorganisation and management performance, actively promote the construction of leanproduction system, strengthen the awareness of cost reduction and efficiency from topto bottom, deeply implement the whole process, all elements, all-directional costreduction and control, build a scientific and efficient management system, and furtherrefine the management of purchasing cost, production cost, operation cost, etc. toeffectively reduce the costs and expenses of the company, and achieve the goal ofreducing costs and expenses. Effectively reduce the company's costs and expenses,achieve synergistic improvement of operational efficiency, and ensure the company'ssustainable, stable and healthy development.
(IV) Risks faced by the company and countermeasures
1. Macroeconomic risk
The company is engaged in the business of petrochemical and polyester fibre productsproduction and sales, petrochemical and polyester chemical fibre industry and the worldeconomy and China's economic development is closely related to the state of the
economy, but also an industry closely related to national economy and people'slivelihood, and the price and sales of its products are affected by macro-economicfluctuations and changes in supply and demand and other factors. With the accelerationof economic globalisation and integration, national macro-controls and cyclicalfluctuations in the world economy will have an impact on the development of theindustry, and if the global economic growth slows down or there is a recession, it willhave a direct impact on the Company's business, operating results and financial positionend demand.
2. Safety and environmental production risks
As the awareness of eco-friendliness increases and the government's environmentally-friendly requirements become stricter, the Company strictly implements the ProductionSafety Law of the People's Republic of China, Environmental Protection Law of thePeople's Republic of China and other relevant laws and regulations to ensure safe andenvironmentally-friendly production, and earnestly fulfils our social responsibility.Since the operation of the main production entity, no major safety and eco-friendlinessincidents have occurred. With the expansion of the Company's production scale and theextension of the industry chain, preventing safety and eco-friendliness accidents hasbecome the focus of the Company's operation and management.
In order to reduce industrial safety and environmental production risks, the Companystrengthens subsequent investment in eco-friendliness, including but not limited to thepurchase and update of equipment and facilities, the construction and implementationof organizational systems, etc. The Company will actively carry out safetystandardization and acceptance work in accordance with the arrangements for theconstruction of Class 1, 2, and 3 national safety standards, and focus on building asafety standard management system. The Company will implement the dual-preventionwork mechanism combining safety risk classification and control and hidden danger
investigation and management, strengthen safety training, increase safety investment,practice the strategy of promoting safety based on science and technology, promptlyremove safety and eco-friendliness hazards, and eliminate all possibilities of majoraccidents.
3. Risk of significant fluctuations of raw materials price
More than 80% of the cost composition of the industry chain in which the Companyoperates is determined by upstream raw materials, in particular, the price fluctuation ofcrude oil has a greater impact on the Company's production and operation. 2024, theprice of crude oil is likely to fluctuate significantly in line with the internationalsituation, geopolitics, etc., which will in turn affect the price change of various productsin the industry chain, aggravate the uncertainty of raw material costs and operatingcosts, and may bring about greater fluctuations in the Company's efficiency. TheCompany will continue to optimise its inventory strategy to reduce the adverse impactcaused by price fluctuations of crude oil and other raw materials.
4. Environmental protection risks
The production and operation of the Company must comply with multipleenvironmental protection laws and regulations related to air, water quality, wastedisposal, and public health and safety, obtain relevant environmental protection permits,and accept inspections from relevant national environmental protection departments. Inrecent years, the Company has invested a large amount of funds and technical strengthin the transformation of environmental protection equipment and production processes,and has treated and discharged pollutants in accordance with national environmentalprotection requirements. However, with the promotion of vertical integration of theindustrial chain of listed companies, the expansion of production scale, and thepossibility of stricter environmental protection standards and broader and stricter
pollution control measures being implemented in China or Brunei in the future, theCompany's environmental protection costs and management difficulties will alsoincrease.
5. Risk of exchange rate and interest rate fluctuations
The main operations of the Company's subsidiary, Hengyi Brunei, are located outsideof China, and its main business is settled in US dollars. The exchange rate and interestrate between the settlement currency and RMB may fluctuate in line with changes inthe international political and economic environment, and is subject to a certain degreeof uncertainty. With the expansion of the Company's overseas business layout and theincrease in overseas sales revenue in the future, the Company's asset position andoperating results are exposed to risks arising from exchange rate fluctuations.
The Company's interest rate risk mainly comes from bank borrowings. The Company,through establishing a good cooperative relationship with banks, has made reasonabledesigns for credit limits, credit varieties and credit terms to ensure sufficient bank creditlimits to meet the Company's various long and short-term financing needs and toreasonably reduce the risk of interest rate fluctuations.
XII. Reception of research, communication, interview and other activities duringthe reporting period
| Time | Location | Reception method | Visitor type | Visitor | Main content of communication and information provided | Index of basic facts of research |
| January 10, 2023 | The Company’s meeting room | Field research | Institution | Guosen Securities, | Company operation | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of |
| China Shipping Fund and 2 other institutions | and industry development trend | January 11, 2023 on SZSE (cninfo.com.cn): 1215576894.PDF (cninfo.com.cn) | ||||
| February 14, 2023 | The Company’s meeting room | Field research | Institution | Tianfeng Securities, Haitong Securities and other 12 institutions | Company operation and industry development trend | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of February 15, 2023 on SZSE (cninfo.com.cn): 1215871172.PDF (cninfo.com.cn) |
| February 21, 2023 | The Company’s meeting room | Field research | Institution | CRE Securities, CICC and 16 other institutions | Company operation and industry development trend | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of February 22, 2023 on SZSE (cninfo.com.cn): 1215939225.PDF (cninfo.com.cn) |
| February 28, 2023 | The Company’s meeting room | Field research | Institution | Changjiang Securities, CITIC Capital Securities and other 10 institutions | Company operation and industry development trend | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of March 1, 2023 on SZSE (cninfo.com.cn): 1216023145.PDF (cninfo.com.cn) |
| March 09, 2023 | The Company’s meeting room | Field research | Institution | Shenwan Hongyuan Securities, Shenwan Hongyuan Capital Management and other 7 institutions | Company operation and industry development trend | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of March 10, 2023 on SZSE (cninfo.com.cn): 1216091308.PDF (cninfo.com.cn) |
| April 20, 2023 | Teleconference and the Company’s meeting | Telephone communication | Institution | Changjiang Securities, Shenwan Hongyuan | Company operation and industry development | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of April 21, 2023 on SZSE |
| room | Securities and other 182 institutions | trend | (cninfo.com.cn): 1216516849.PDF (cninfo.com.cn) | |||
| April 26, 2023 | Teleconference and the Company’s meeting room | Telephone communication | Institution | 54 institutions such as CRE Securities, China Pacific Securities and others | Company operation and industry development trend | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of April 27, 2023 on SZSE (cninfo.com.cn): 1216656021.PDF (cninfo.com.cn) |
| May 08, 2023 | p5w.net "Investor Relations Interactive Platform" | Telephone communication | Institutions and individuals | Investors participating in the Company's 2022 annual online earnings presentation | Company operation and industry development trend | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of May 09, 2023 on SZSE (cninfo.com.cn): 1216782053.PDF (cninfo.com.cn) |
| August 23, 2023 | Teleconference and the Company’s meeting room | Telephone communication | Institution | Shenwan Hongyuan Securities, CITIC Capital Securities and other 124 institutions and individuals | Company operation and industry development trend | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of August 24, 2023 on SZSE (cninfo.com.cn): 1217630484.PDF (cninfo.com.cn) |
| September 11, 2023 | p5w.net "Investor Relations Interactive Platform" | Others | Institutions and individuals | Investors participating in the Company's 2023 Half-Year Annual | Company operation and industry development trend | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of September 12, 2023 on SZSE (cninfo.com.cn): 1217835096.PDF (cninfo.com.cn) |
| Online Earnings Conference | ||||||
| October 30, 2023 | Teleconference | Telephone communication | Institutions and | CITIC Capital Securities, Huachuang Securities and 72 other institutions and individuals | Company operation and industry development trend | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of October 31, 2023 on SZSE (cninfo.com.cn): 1218216180.PDF (cninfo.com.cn) |
XIII. Implementation and enforcement of the action programme "QualityReturns and Double Improvement"
Whether the company has disclosed the "Quality Returns Double Improvement" actionprogramme.
□Yes ?No
Section IV Corporate GovernanceI. Basic status of corporate governanceDuring the reporting period, the Company strictly complied with the Company Law,Securities Law, Code of Corporate Governance for Listed Companies in China, RulesGoverning the Listing of Shares on Shenzhen Stock Exchange, Shenzhen StockExchange Self-Regulatory Guidelines for Listed Companies No. 1 - StandardizedOperation of Listed Companies on the Main Board and other relevant laws andregulations. Based on the actual situation of the Company, we continuously improvedand enhanced the standardized operation of corporate governance, and established asound internal management and control system to regulate the operation of theCompany. The Company's internal control system has been increasingly improved, andthe standardization level of governance has been continuously increased.
1. Shareholders and shareholders' general meetings
During the reporting period, the Company strictly complied with laws and regulations,and convened and held shareholders' general meetings in a standardized manner. Theconvening and holding procedures of the shareholders' general meetings, thequalifications of the persons attending the shareholders' general meetings, the votingprocedures and voting results of the shareholders' general meetings all complied withthe Company Law, Rules for the Shareholders' Meetings of Listed Companies and otherlaws and regulations and the Company's Rules of Procedure for the General Meetingof Shareholders, which ensured that all shareholders, especially minority shareholders,could fully exercise their rights. The Company's shareholders' general meetings duringthe reporting period were convened by the BOD, and lawyers were engaged to witnessthe meetings on site, ensuring the legality of the meeting convening, holding and votingprocedures, and safeguarding the legitimate rights and interests of the Company andshareholders.
2. The Company and the controlling shareholder
The Company is completely independent from the controlling shareholder and itssubsidiaries in terms of business, personnel, assets, organization, and finance. TheCompany has independent and complete business and the ability to operateindependently. The Company's BOD, BOS and internal organizations operateindependently. The controlling shareholder of the Company can strictly regulate itsbehavior. Major decisions of the Company were made by the shareholders’ generalmeetings in accordance with the law. The controlling shareholder exercised itsshareholder rights in accordance with the law, and did not directly or indirectly interferewith the decision-making and operating activities of the Company beyond theshareholders’ general meetings of the Company.
3. Directors and the BOD
The Company elected directors in strict accordance with the selection and appointmentprocedures stipulated in the Company Law and the Articles of Association of theCompany. The number and composition of the BOD of the Company met therequirements of laws and regulations. All directors of the Company could carry outtheir work in accordance with the Rules of Procedure of the BOD, attend the boardmeetings and shareholders' general meetings on time with a conscientious andresponsible attitude, faithfully perform their duties in the interests of the Company andall shareholders, actively participate in training on relevant knowledge, study relevantlaws and regulations, and promote the standardized operation and scientific decision-making of the BOD. The independent directors of the Company could perform theirduties independently in accordance with the corresponding rules and regulations,without being influenced by the actual controller of the Company or other units orpersons that have an interest in the Company.During the reporting period, the procedures of the meetings of the BOD of the Companywere in compliance with relevant regulations, the minutes of the meeting were completeand true, and the disclosure of relevant information at the meetings was timely, accurate
and adequate. The BOD of the Company set up four special committees, namely theRemuneration Assessment and Nomination Committee, the Risk Control Committee,the Audit Committee and the Strategy and Investment Committee, which have playedan important role in promoting the standardized operation and healthy development ofthe Company.
4. Supervisors and the BOS
The Company's BOS consists of three supervisors, one of whom is an employeerepresentative. The number and personnel of the Company's BOS met the requirementsof relevant laws and regulations and the Company's Articles of Association. All thesupervisors of the Company could perform their duties conscientiously in accordancewith the requirements of the Company's Rules of Procedure of the BOS and otherrelevant regulations, attend the shareholders’ general meeting, attend the meetings ofthe BOD as nonvoting delegates, convene the meetings of the BOS according to theprescribed procedures, diligently and conscientiously supervise the legality andcompliance of the Company's financial situation, directors and senior executives, andsafeguard the legitimate rights and interests of the Company and its shareholders.
5. Stakeholders
The Company fully respected and safeguarded the legitimate rights and interests ofrelevant stakeholders to achieve a win-win situation for customers, suppliers,employees, shareholders and other stakeholders and jointly promote the Company'ssustainable and steady development.
6. Information disclosure and transparency
The Company strictly followed the requirements of relevant laws and regulations aswell as the Information Disclosure Management System and the Investor RelationsManagement System to conscientiously fulfill our information disclosure obligations,disclose the Company's operation and management and matters that have significant
impact on the Company in a true, accurate, complete and timely manner, coordinate therelationship between the Company and investors, receive investors’ visits, and answerinvestors’ inquiries. The Company's designated newspapers and websites such as STCN,China Securities Journal, Shanghai Securities News, Securities Daily and CNINFO(http://www.cninfo.com.cn) for the Company's information disclosure.
7. Performance evaluation and incentive and restraint mechanismsThe Company is gradually improving and establishing fair and transparent performanceevaluation standards and incentive and restraint mechanisms for directors, supervisorsand senior executives. The appointment of senior executives of the Company was openand transparent, in line with laws and regulations.
Whether there is any material difference between the actual situation of corporategovernance of the Company and the laws, administrative regulations and the ruleson the governance of listed companies issued by the China Securities RegulatoryCommission
There is no material difference between the actual situation of corporate governance ofthe Company and laws, administrative regulations and the rules on the governance oflisted companies issued by the China Securities Regulatory Commission.
II. Independence of the Company in guaranteeing the Company's assets,personnel, finance, organization, and business relative to the controllingshareholder and actual controller
The Company carried out operations in strict accordance with the Company Law,Articles of Association and other laws, regulations and rules, established a soundcorporate governance structure of the Company, and maintained independent from thecontrolling shareholder in terms of business, personnel, assets, organization, and
finance. The Company has an independent and complete business system and the abilityto operate independently.
1. Business: The Company has an independent and complete supply, R&D, productionand sales system, has the ability to operate independently in the market, conductbusiness, accounting and decision-making, assume responsibilities and risksindependently, and does not rely on the controlling shareholder or other any relatedparties.
2. Personnel: The Company has formed a complete system for labor, personnel andsalary management, and an independent human resources management department tomanage labor, personnel and salary independently of the controlling shareholder. TheCompany has an independent workforce. The Company's directors, supervisors andsenior executives are legally elected in accordance with the Company Law, Articles ofAssociation and other relevant laws, regulations and rules. The Company's seniorexecutives all work in the Company and receive remuneration, and do not hold anypositions other than directors and supervisors in the controlling shareholder and itssubsidiaries.
3. Assets: The Company has a clear property relationship with the controllingshareholder, and independently owns complete legal person assets, production andsupporting facilities, land, plant, machinery and equipment related to production andoperation, as well as ownership and right to use of trademarks, patents and non-patentedtechnologies. The Company has full control over all assets, and its assets and funds arenot occupied by the controlling shareholder to the detriment of the interests of theCompany.
4. Organization: The Company established a sound organizational system to meets itsown production and operation needs. The functional departments operate independently
and smoothly, and there is no subordination relationship between the controllingshareholder and the functional departments.
5. Finance: The Company has an independent financial and accounting departmentequipped with full-time financial personnel. The Company established an independentaccounting system and a standardized financial management system, and financialdecisions were made independently. The Company opened an independent bankaccount to independently make tax declarations and perform tax obligations inaccordance with the law. There is no shared bank account or mixed tax payment withthe controlling shareholder.
III. Competition in the same industry
□Applicable ?Not applicable
IV. Information on the annual general meeting and extraordinary general meetings of shareholders held in the reporting period
1. Annual general meeting of shareholders held during the reporting period
| Session of meeting | Session of meeting | Type of meeting | Percentage of investors | Date of meeting | Disclosure date |
| 2022 Annual General Meeting of shareholders | Annual shareholders' meeting | 56.96% | May 10, 2023 | May 11, 2023 | 1. Reviewed and approved the Proposal on the Company’s fulfilment of the conditions for the issuance of A shares to specific targets； 2. Reviewed and approved the Proposal to amend the Company’s proposal for the issuance of A shares to specific targets； 3. Reviewed and approved the Proposal on the Company’s <Proposed Issue of A Shares to Specific Targets in FY2023 (Revised)； 4. Reviewed and approved the Resolution on the Feasibility Analysis Report on the Utilisation of Proceeds from the Issue of A-Shares to Specific Targets in FY2023 (Revised)； 5. Reviewed and approved the Motion on the signing of the “Conditionally Effective Share Subscription Agreement” between the Company and the Specified Objects； 6. Reviewed and approved the Resolution on the signing of the Supplemental Agreement to the Conditionally Effective Share Subscription Agreement between the Company and the Specified Parties； 7. Reviewed and approved the Proposal on the Issue of Shares to Specific Targets Constituting a Connected Transaction； 8. Reviewed and approved the Proposal on the Company’s Shareholder Return Plan for the Next Three Years (2023- |
| 2025)； 9. Reviewed and approved the Resolution on the Diluted Immediate Return on the Issue of A Shares to Specific Targets, Filling Measures and Commitments of Relevant Entities； 10. Reviewed and approved the Proposal to propose to the Shareholders’ General Meeting to authorize the Board of Directors to handle the specific matters relating to the issuance of A shares to specific targets in an all-embracing manner； 11. Reviewed and approved the Proposal to submit to the General Meeting of Shareholders for approval of the exemption of subscribers from the issue of the offer； 12. Reviewed and approved the Motion on the Annual Report <2022> and its Summary； 13. Reviewed and approved the Report on the work of the Board of Directors for the year 2022； 14. Reviewed and approved the Report on the work of the Supervisory Board for the year 2022； 15. Reviewed and approved the Report on the Financial Accounts for the year 2022； 16. Reviewed and approved the Motion on the Proposed Non-distribution of Profit for FY2022； 17. Reviewed and approved the Annual Internal Control Self-Evaluation Report 2022； 18. Reviewed and approved the Motion on the Deposit and Use of Proceeds in FY2022； 19. Reviewed and approved the Motion on the Report on the Use of Previously Raised Funds； 20. Reviewed and approved the Motion on the Renewal of Appointment of Accounting Firm | |||||
| First Extraordinary General Meeting 2023 | Extraordinary general meeting of shareholders | 53.01% | August 15, 2023 | August 16, 2023 | 1. Reviewed and approved the Motion on < Hengyi Petrochemical Company Limited Fifth Employee Stock Ownership Plan (Draft) > and Abstract； 2. Reviewed and approved the Motion on <Administrative Measures for the Fifth Employee Stock Ownership Plan of Hengyi Petrochemical Co.； 3. Reviewed and approved the Proposal on Requesting the Shareholders’ General Meeting to Authorise the Board |
| of Directors to Handle Matters Related to the Fifth Employee Share Ownership Plan of the Company | |||||
| The second Extraordinary General Meeting 2023 | Extraordinary general meeting of shareholders | 68.16% | September 28, 2023 | September 29, 2023 | 1. Reviewed and approved the Resolution on the Election of Non-Independent Directors for a New Term of the Board of Directors of the Company； 2. Reviewed and approved the Resolution on the Election of Independent Directors by the Company’s Board of Directors for a New Term of Office； 3. Reviewed and approved the Proposal for the Election of Shareholders’ Representative Supervisors for a New Session of the Supervisory Committee of the Company； 4. Reviewed and approved the Resolution on the Estimation of the Amount of New Daily Connected Transactions for FY2023 |
| The third Extraordinary General Meeting 2023 | Extraordinary general meeting of shareholders | 60.26% | November 14, 2023 | November 15, 2023 | 1. Reviewed and approved the Resolution on the Provision of Affiliated Entrusted Loans to Yisheng New Material, a Participating Company； |
| The fourth Extraordinary General Meeting 2023 | Extraordinary general meeting of shareholders | 51.00% | December 25, 2023 | December 26, 2023 | 1. Reviewed and approved the Proposal to Amend the Articles of Association of the Company； 2. Reviewed and approved the Proposal to Amend the Working System of Independent Directors； 3. Reviewed and approved the Motion to Amend the Rules of Procedure of the Board of Directors |
2. The preference shareholders whose voting rights have been restored request the convening of an extraordinary general meeting
□ Applicable ?Not applicable
V. Directors, supervisors and senior executives
1. Basic information
| Name | Gender | Age | Title | Employment status | tart date of term | End date of term | Number of shares held at the beginning of the period (shares) | Stock options | Number of restricted shares granted (shares) | Increase of shares in current period (shares) | Decrease of shares in current period (shares) | Other changes (shares) |
| Qiu Yibo | Male | 37 | President | Current | May 15, 2015 | September 27, 2026 | 1,365,000 | 1,365,000 | ||||
| CEO | Current | September 15, 2020 | September 27, 2026 | |||||||||
| Fang Xianshui | Male | 60 | Vice President | Current | May 16, 2011 | September 27, 2026 | 4,777,500 | 4,777,500 | ||||
| Financial Director | Leave the position | December 6, 2022 | December 7, 2023 | |||||||||
| Ni Defeng | Male | 46 | Director | Current | August 25, 2017 | September 27, 2026 | 6,051,500 | 6,051,500 | ||||
| Wu Zhong | Male | 35 | Vice President | Current | January 15, 2020 | September 27, 2026 | 109,200 | 109,200 | ||||
| Director | Current | September 15, 2021 | September 27, 2026 | |||||||||
| Zhao Donghua | Male | 39 | Vice President | Current | January 16, 2020 | September 27, 2026 | 327,600 | 327,600 | ||||
| Director | Current | September 28, 2023 | September 27, 2026 | |||||||||
| Luo Dan | Female | 41 | Director | Current | December 22, 2022 | September 28, 2026 | 0 | 0 | ||||
| Chen Sanlian | Male | 60 | Independent Director | Step down | August 25, 2017 | September 28, 2023 | 0 | 0 | ||||
| Yang Baizhang | Male | 67 | Independent Director | Step down | August 25, 2017 | September 28, 2023 | 0 | 0 | ||||
| Yang Liuyong | Male | 60 | Independent Director | Step down | August 25, 2017 | September 28, 2023 | 0 | 0 | ||||
| Chen Linrong | Male | 53 | Independent Director | Current | September 28, 2023 | September 27, 2026 | 0 | 0 | ||||
| Hou Jiangtao | Male | 50 | Independent Director | Current | September 28, 2023 | 2026年09月27日 | 0 | 0 |
| Hong Xin | Male | 40 | Independent Director | Current | September 28, 2023 | September 27, 2026 | 0 | 0 | ||||
| Wang Songlin | Male | 54 | Executive Vice President | Current | May 15, 2011 | September 27, 2026 | 5,778,500 | 5,778,500 | ||||
| Chen Liancai | Male | 57 | Vice President | Current | August 25, 2017 | September 27, 2026 | 3,640,000 | 3,640,000 | ||||
| Lou Jianchang | Male | 37 | Vice President | Retire and leave office | September 15, 2021 | March 1, 2024 | 0 | 0 | ||||
| Zheng Xingang | Male | 37 | Secretary of the BOD | Current | August 28, 2017 | September 27, 2026 | 2,912,000 | 2,912,000 | ||||
| Vice President and Financial Director | Current | December 7, 2023 | September 27, 2026 | |||||||||
| Li Yugang | Male | 37 | Chairman of the BOS | Current | September 15, 2021 | September 27, 2026 | 218,400 | 218,400 | ||||
| Jin Danwen | Female | 38 | Supervisor | Current | September 14, 2021 | September 27, 2026 | 109,200 | 109,200 | ||||
| Wang Peng | Male | 37 | Supervisor | Current | September 28, 2023 | September 27, 2026 | 0 | 0 | ||||
| Ni Jinmei | Female | 48 | Supervisor | Leave the position | August 28, 2021 | September 28, 2023 | 273,000 | 273,000 | ||||
| Total | -- | -- | -- | -- | -- | -- | 25,561,900 | 0 | 0 | 25,561,900 | -- |
Whether there was any departure of directors and supervisors and dismissal of senior management during the term of office during thereporting period
□Yes ?No
Changes in directors, supervisors and senior executives of the Company
| Name | Positions held | Type | Date | Reason |
| Chen Sanlian | Independent Director | Step down | September 28, 2023 | Step down |
| Yang Baizhang | Independent Director | Step down | September 28, 2023 | Step down |
| Yang Liuyong | Independent Director | Step down | September 28, 2023 | Step down |
| Fang Xianshui | Financial Director | Leave the position | December 7, 2023 | Job changes |
| Zheng Xingang | Vice President and Financial Director | Currently employed | December 7, 2023 | Currently employed |
| Chen Linrong | Independent Director | Currently employed | September 28, 2023 | Currently employed |
| Hou Jiangtao | Independent Director | Currently employed | September 28, 2023 | Currently employed |
| Hong Xin | Independent Director | Currently employed | September 28, 2023 | Currently employed |
2. Employment status
Professional background, main work experience and main responsibilities of thecurrent directors, supervisors and senior executives of the Company
(1) Directors
Qiu Yibo, male, born in December 1987, Chinese nationality, EMBA of China EuropeInternational Business School (CEIBS), has worked in the East China Branch ofSINOPEC Chemical Sales Co., Ltd. and the manager of the Investment andDevelopment Department of Zhejiang Hengyi Group Co. He is now the Chairman andPresident of Hengyi Petrochemical Co., Ltd. and also serves as a director of ZhejiangHengyi Group Co., Ltd., an executive director of Suqian Yida New Material Co., Ltd.,the Chairman of Fujian Yijin Chemical Fibre Co, director of Zhejiang Baling HengyiCaprolactam Co., Ltd, Director of Dongzhan Shipping Co., Ltd, Manager and
Executive Director of Ningbo Jinhou Industrial Investment Co., Ltd, Director ofZhejiang FibreBee Data Technology Co. He is also one of the important shareholdersof Zhejiang Hengyi Group Co.
Fang Xianshui, male, born in March 1964, Chinese nationality, bachelor degree, senioreconomist, has more than 30 years of experience in production management inchemical fibre industry. He has served as the general manager of Hangzhou HengyiIndustrial Corporation, the general manager of Hangzhou Hengyi Chemical FibreCompany Limited, the general manager of Zhejiang Hengyi Group Company Limited,and the financial controller of Hengyi Petrochemical Company Limited. He is currentlythe vice chairman of Hengyi Petrochemical Co., Ltd. and also serves as a director ofZhejiang Hengyi Group Co., Ltd., chairman of Hangzhou Hengyi Investment Co., Ltd.,executive director and general manager of Zhejiang Hengyi Petrochemical Co., Ltd.,chairman of Zhejiang Hengyi Polymers Co, Chairman of Zhejiang YishengPetrochemical Co., Ltd, Chairman and General Manager of Zhejiang Hengyi High-techMaterial Co., Ltd, Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd, Directorof Hong Kong Tianyi International Holding Co. Ltd., Executive Director and GeneralManager of Ningbo Hengyi Trading Co., Ltd., Director of Hong Kong Hengyi FibreCo. Ltd., executive director and general manager of Zhejiang Hengkai Energy Co., Ltd.,executive director and general manager of Zhejiang Hengyi Energy Co., Ltd., executivedirector and general manager of Zhejiang Xiaoyi Supply Chain Management Co., Ltd.and director of Dalian Yisheng Investment Co., Ltd., he is also one of the significantshareholders of the Company's controlling shareholder, Zhejiang Hengyi Group Co.
Ni Defeng, male, born in January 1978, Chinese nationality, doctoral degree, full senioreconomist, has nearly 20 years of experience in finance and investment. He has workedas an auditor in Zhejiang Tianjian Accounting Firm, Manager of Finance Department,Manager of Investment and Development Department, Assistant to the President ofZhejiang Hengyi Group Company Limited, and Investment Director of Hengyi
Petrochemical Company Limited. He is currently a director of Hengyi PetrochemicalCo., Ltd. and also serves as a director and president of Zhejiang Hengyi Group Co.,Ltd., a director of Zhejiang Fibre Bee Data Technology Co., Ltd., a director and generalmanager of Hangzhou Hengyi Investment Co. Ltd., Director of Dalian YishengyuanReal Estate Co., Ltd. and Chairman and General Manager of Hangzhou Jingyi IndustryCo.
Wu Zhong, male, born in July 1989, with Chinese nationality, has a bachelor's degreefrom Zhejiang Gongshang University and a master's degree from Shanghai JiaotongUniversity. He was the deputy general manager of Zhejiang Hengyi PetrochemicalSales Co., Ltd. and is currently a director and vice president of Hengyi PetrochemicalCo., Ltd. and a director of Fujian Yijin Chemical Fibre Co., Ltd., an executive directorand manager of Hainan Henggeli Trading Co., Ltd., an executive director and generalmanager of Zhejiang Hengyi International Trading Co., Ltd. and a director of NingboQingzhi Chemical Terminal Co.
Zhao Donghua, male, born in February 1985, with Chinese nationality, Master of Lawsfrom Zhejiang University, EMBA from China Europe International Business School,intermediate economist. He has worked as a securities affair representative, deputymanager of the Legal Affairs Department and assistant to the general manager of themarketing centre of Hengyi Petrochemical Company Limited, and is currently the vicepresident of Hengyi Petrochemical Company Limited.
Luo Dan，female, born in September 1983, Chinese nationality, bachelor degree fromZhejiang Agriculture and Forestry University and master degree from WuhanUniversity of Technology. She was the manager of the General Department of theIntegrated Management Centre of Hengyi Petrochemical Company Limited and is nowthe general manager of the Investment Management Department of HengyiPetrochemical Company Limited.
Hou Jiangtao, male, born in October 1974, Chinese nationality, obtained a master'sdegree in Professional Accounting from the Chinese University of Hong Kong and abachelor's degree in Economics from the Shanghai University of Finance andEconomics respectively, and has worked for Tianan Insurance Company Limited, FarEast Credit Rating Company Limited and Jianyin Engineering and ConsultingCompany Limited, and is currently the general manager of Silicon Power Technology(Hainan) Company Limited, an independent director of Zhejiang Xiangyuan CultureCompany Limited and an expert advisor to a number of enterprises. He is currently thegeneral manager of Silicon Power Technology (Hainan) Co., Ltd, an independentdirector of Zhejiang Xiangyuan Culture Co., Ltd. and an expert consultant of manyenterprises.
Chen Linrong, male, born in November 1971, member of CPC, PhD, postdoctoralfellow, associate professor, master's supervisor, certified public accountant of China,independent director of listed companies, graduated from Jiangxi University of Financeand Economics with master's degree, graduated from Central South University withdoctorate degree, completed postdoctoral research at Fudan University, and was asenior visiting scholar at Tokyo Keizai University (Japan) and Tsinghua University. Heis now an associate professor and master's supervisor at the School of Accounting ofZhejiang Gongshang University, the director of the doctoral programme in accounting,and an independent director of Founder Electric.
Hong Xin, male, born in March 1984, is a doctor of finance, associate professor,doctoral tutor, and Zhejiang University QiuYue Young Scholar. He obtained abachelor's degree in finance from Peking University and a doctoral degree in financefrom the University of Kentucky. He is currently the deputy director of the AssetManagement Research Centre of Zhejiang University, an associate professor at theSchool of Economics of Zhejiang University, a researcher at the Institute of FinancialResearch of Zhejiang University, a member of the Academic Committee of Zhejiang
Equity Investment Industry Association, and a former deputy director of theDevelopment and Reform Bureau of Xiaoshan District, Hangzhou.
(2) Supervisors
Li Yugang, male, born in November 1977, Chinese nationality, Master, Economist,Internationally Certified Internal Auditor, Company Lawyer, with more than 20 yearsof experience in auditing, was the First Deputy Director of the Audit Department of theBoard of Directors of Shagang Group, the Deputy Director of the Legal Department,and is currently the Director of Audit and Legal Affairs of Hengyi PetrochemicalCompany Limited.
Jin Danwen, female, born in April 1986, Chinese nationality, Master of Accountingfrom Hangzhou University of Electronic Science and Technology, Certified PublicAccountant of China, Senior Accountant. She has served as Finance Director of HengyiIndustry (Brunei) Co., Ltd. and Deputy General Manager of Finance ManagementDepartment of Hengyi Petrochemical Co. Ltd. and General Manager of CapitalManagement Department of Hengyi Petrochemical Company Limited. She is also adirector of Hangzhou Jinyi Industry Co., Ltd., a supervisor of Hainan HenggelingTrading Co., Ltd., a supervisor of Zhejiang Hengyi Engineering Management Co., Ltd.,a supervisor of Zhejiang Hengyi Hanlin Enterprise Management Co., Ltd. and asupervisor of Haining Hengyi New Material Co.
Wang Peng, male, born in July 1979, with Chinese nationality and no permanentforeign residency, graduated from Donghua University with a master's degree inmaterials science, and has more than 20 years of experience in the petrochemicalindustry. He has worked as a R&D specialist in the R&D management centre ofZhejiang Henglan Technology Co., Ltd, a chief engineer of Hengyi Industry (Brunei)Co., Ltd, a deputy general manager of the strategic investment department of Hengyi
Group, and since March 2018, he has been the general manager of the productionmanagement centre.
(3) Senior management
Wang Songlin, male, born in April 1970, Chinese nationality, master degree, has morethan 20 years of experience in petrochemical and chemical fibre industry. He has servedas deputy director of China Textile Construction Planning Institute, office director ofChina National Chemical Fibre Corporation, general manager of China Chemical FibreEconomic Information Network, and general manager of Beijing Cotton OutlookCompany. He is currently the Executive Vice President of Hengyi PetrochemicalCompany Limited, as well as the Executive Director and General Manager of ZhejiangHengyi Petrochemical Research Institute Co., Ltd. and the Supervisor of Jiangsu NewVision Advanced Functional Fibre Innovation Centre Co.
Chen Liancai, male, born in June 1967, Chinese nationality, postgraduate degree,senior engineer, has more than 20 years of experience in petrochemical industry. He hasserved as Deputy General Manager of SINOPEC Zhenhai Refining and ChemicalIndustry, Deputy General Manager (General Manager of Chemical Branch) of GuodianSINOPEC Ningxia Energy Chemical Co. Currently, he is the Chief Executive Officer(CEO) of Hengyi Brunei and Vice President of Hengyi Petrochemical Co.
Lou Jianchang, male, born in November 1962, Chinese nationality, Master ofEngineering from China University of Petroleum (Beijing), MBA from University ofHouston, professor of senior engineering. He has served as Deputy Chief Dispatcherof the General Dispatch Office of SINOPEC Yanshan Petrochemical Company, DeputyDirector and Director of the Refinery Plant of SINOPEC Yanshan PetrochemicalCompany, Deputy General Manager of SINOPEC Yanshan Petrochemical Company,Deputy Director of SINOPEC's Material and Equipment Department and Deputy
General Manager of SINOPEC International Business Company Limited, and Directorof Hengyi Petrochemical Company Limited. He is currently a director of Fujian YijinChemical Fibre Co., Ltd. and a director of Zhejiang Baling Hengyi Caprolactam Co.,Ltd. and retired as a vice president of Hengyi Petrochemical Co.
Zheng Xingang, male, born in December 1979, Chinese nationality, bachelor's degreefrom Huazhong University of Science and Technology, master's degree from WuhanUniversity, EMBA from Fudan University, master's degree, senior economist. He hasnearly 20 years of experience in investment and financing, capital market operation andfinance. He has served as Deputy Manager of Capital Operation Department, DeputyManager of Investment and Development Department and Director of the Board ofDirectors Office of Hengyi Petrochemical Co. He is now the Vice President, Secretaryof the Board of Directors and Chief Financial Officer of Hengyi Petrochemical Co.
Posts held in corporate shareholders
| Name of incumbent | Name of corporate shareholder | Post held | Start date of term | Whether to receive remuneration allowance in shareholder units |
| Qiu Yibo | Zhejiang Hengyi Group Co., Ltd. | Director | September 26, 2017 | No |
| Fang Xianshui | Zhejiang Hengyi Group Co., Ltd. | Director | October 18, 1994 | No |
| Fang Xianshui | Hangzhou Hengyi Investment Co., Ltd. | President | October 8, 2022 | No |
| Ni Defeng | Zhejiang Hengyi Group Co., Ltd. | Director & President | September 26, 2017 | Yes |
| Ni Defeng | Hangzhou Hengyi Investment Co., Ltd. | Director & General Manager | December 28, 2016 | No |
| Description of the position in the shareholder unit | None | |||
Posts held in other entities
| Name of incumbent | Name of other entities | Posts held in other entities | Start date of term | Is remuneration paid by other entities? |
| Qiu Yibo | Hangzhou Yibo Investment Management Co., Ltd. | Executive Director | March 17, 2016 | No |
| Qiu Yibo | Ningbo Jinhou Industry Investment Co., Ltd. | Manager & Executive Director | May 3, 2016 | No |
| Qiu Yibo | Zhejiang Hengyi Hanlin Enterprise Management Co., Ltd. | Executive Director & GM | August 20, 2021 | No |
| Qiu Yibo | Fujian Yijin Chemical Fibre Co., Ltd. | President | January 26, 2018 | No |
| Qiu Yibo | Zhejiang Hengyi Polyamide Co., Ltd. | Vice President | January 14, 2022 | No |
| Qiu Yibo | Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Director | June 9, 2022 | No |
| Qiu Yibo | Suqian Yida New Materials Co., Ltd. | Executive Director | January 19, 2018 | No |
| Qiu Yibo | Dongzhan Shipping Co., Ltd. | Director | November 30, 2017 | No |
| Qiu Yibo | Zhejiang Xianfeng Data Technology Co., Ltd. | Director | June 7, 2016 | No |
| Qiu Yibo | Zhejiang Hengyi Polymer Co., Ltd. | Director | November 29, 2022 | No |
| Fang Xianshui | Zhejiang Yixin Chemical Fibre Co., Ltd. | Executive Director | July 26, 2017 | No |
| Fang Xianshui | Hainan Yisheng Trading Co., Ltd. | Executive Director | August 14, 2014 | No |
| Fang Xianshui | Zhejiang Hengkai Energy Co., Ltd. | Executive Director | December 18, 2017 | No |
| Fang Xianshui | Ningbo Hengyi Trading Co., Ltd. | President | May 24, 2011 | No |
| Fang Xianshui | Ningbo Hengyi Engineering Management Co., Ltd. | GM & Executive Director | November 27, 2014 | No |
| Fang Xianshui | Zhejiang Hengyi Energy Co., Ltd. | Executive Director & GM | September 24, 2022 | No |
| Fang Xianshui | Zhejiang Xiaoyi Supply Chain Management Co., Ltd. (Zhejiang Xiaoyi Supply Chain Management Co., Ltd.) | Executive Director & GM | April 19, 2022 | No |
| Fang Xianshui | Zhejiang Hengyi Petrochemical Co., Ltd. | Executive Director & GM | July 26, 2004 | No |
| Fang Xianshui | Zhejiang Hengyi High-Tech Materials Co., Ltd. | Executive Director & GM | October 15, 2007 | No |
| Fang Xianshui | Zhejiang Hengyi Polymer Co., Ltd. | President | September 5, 2000 | No |
| Fang Xianshui | Zhejiang Yisheng Petrochemical Co., Ltd. | President | May 12, 2015 | No |
| Fang Xianshui | Zhejiang Hengyi Petrochemical Sales Co., Ltd. | Manager & Executive Director | July 24, 2017 | No |
| Fang Xianshui | Hainan Yisheng Petrochemical Co., Ltd. | President | June 23, 2014 | No |
| Fang Xianshui | Shanghai Hengyi Polyester Fibre Co., Ltd. | Executive Director | May 14, 2015 | No |
| Fang Xianshui | Fujian Yijin Chemical Fibre Co., Ltd. | Director | January 26, 2018 | No |
| Fang Xianshui | Zhejiang Yixin Chemical Fibre Co., Ltd. | Executive Director | July 26, 2017 | No |
| Fang Xianshui | Hainan Yisheng Trading Co., Ltd. | Executive Director | August 14, 2014 | No |
| Fang Xianshui | Zhejiang Hengkai Energy Co., Ltd. | Executive Director | December 18, 2017 | No |
| Fang Xianshui | Ningbo Hengyi Trading Co., Ltd. | President | May 24, 2011 | No |
| Fang Xianshui | Ningbo Hengyi Engineering Management Co., Ltd. | GM & Executive Director | November 27, 2014 | No |
| Fang Xianshui | Zhejiang Hengyi Energy Co., Ltd. | Executive Director & GM | September 24, 2022 | No |
| Fang Xianshui | Zhejiang Xiaoyi Supply Chain Management Co., Ltd. (Zhejiang Xiaoyi Supply Chain Management Co., Ltd.) | Executive Director & GM | April 19, 2022 | No |
| Fang Xianshui | Zhejiang Hengyi Petrochemical Co., Ltd. | Executive Director & GM | July 26, 2004 | No |
| Fang Xianshui | Zhejiang Hengyi High-Tech Materials Co., Ltd. | Executive Director & GM | October 15, 2007 | No |
| Fang Xianshui | Zhejiang Hengyi Polymer Co., Ltd. | President | September 5, 2000 | No |
| Fang Xianshui | Zhejiang Yisheng Petrochemical Co., Ltd. | President | May 12, 2015 | No |
| Fang Xianshui | Zhejiang Hengyi Petrochemical Sales Co., Ltd. | Manager & Executive Director | July 24, 2017 | No |
| Fang Xianshui | Hainan Yisheng Petrochemical Co., Ltd. | President | June 23, 2014 | No |
| Fang Xianshui | Shanghai Hengyi Polyester Fibre Co., Ltd. | Executive Director | May 14, 2015 | No |
| Fang Xianshui | Fujian Yijin Chemical Fibre Co., Ltd. | Director | January 26, 2018 | No |
| Ni Defeng | Zhejiang Xianfeng Data Technology Co., Ltd. | Director | June 7, 2016 | No |
| Wu Zhong | Ningbo Qingchi Chemical Terminal Co. | Director | September 1, 2023 | No |
| Wu Zhong | Hainan Hengjing Trading Co., Ltd. | Executive Director & manager | August 21, 2021 | No |
| Wu Zhong | Zhejiang Hengyi International Trade Co., Ltd. | Executive Director & GM | July 1, 2022 | No |
| Wu Zhong | Fujian Yijin Chemical Fibre Co., Ltd. | Director | October 22, 2021 | No |
| Jin Danwen | Hainan Hengjing Trading Co., Ltd. | Supervisor | August 21, 2021 | No |
| Jin Danwen | Hangzhou Jinyi Industrial Co., Ltd. | Director | February 28, 2021 | No | |
| Jin Danwen | Zhejiang Hengyi Engineering Management Co., Ltd. | Supervisor | January 29, 2018 | No | |
| Jin Danwen | Zhejiang Hengyi Hanlin Enterprise Management Co., Ltd. | Supervisor | August 20, 2021 | No | |
| Jin Danwen | Haining Hengyi New Materials Co., Ltd. | Supervisor | October 27, 2021 | No | |
| Wang Songlin | Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. | Executive Director & GM | August 4, 2021 | No | |
| Wang Songlin | Jiangsu New Horizon Advanced Functional Fibre Innovation Center Co., Ltd. | Supervisor | July 19, 2018 | No | |
| Posts held in other entities | None | ||||
Punishments of the Company’s current and outgoing directors, supervisors andsenior management by securities regulators during the reporting period in theprevious three years
On September 9, 2022, the Company received the Administrative SupervisionMeasures Decision Letter ([2022] No. 25) issued by the Guangxi Regulatory Bureau,i.e., Decision on Measures to Issue Warning Letter to Wuzhong. In accordance withArticle 170 (2) of the Securities Law of the People's Republic of China, the GuangxiRegulatory Bureau decided to adopt the regulatory measures to issue a warning letterto Wuzhong. For details, please refer to the Announcement on the Receipt of WarningLetter from Guangxi Regulatory Bureau by Company Directors (Announcement No.2022-097) disclosed on September 17, 2022 in the STCN, China Securities Journal,Shanghai Securities News, Securities Daily, and CNINFO (www.cninfo. com. cn).
3. Remuneration of directors, supervisors and senior management
Decision-making procedures, basis for determination, and actual payment ofremuneration of directors, supervisors, and senior management
The Company passed the Salary and Performance Appraisal Management System forSenior Management Staff (reviewed and approved at the third meeting of the eighthsession of the BOD) to conduct performance appraisal and pay remuneration to theCompany's directors, supervisors and senior management. The annual remuneration ofdirectors, supervisors and senior managers who receive remuneration from theCompany in 2022 (including total remuneration of basic salary, bonuses, allowances,subsidies, employee benefits and various insurance premiums, public reserve funds andother forms of pre-tax payment from the Company) is released in accordance with theCompany’s relevant regulations, and based on the Company’s operating conditions andthe duties and work performance evaluation of relevant personnel by BOD. During thereporting period, the remunerations of the Company's directors, supervisors and seniormanagement have been paid on a monthly basis.
Upon agreement reached at the first meeting of the eleventh BOD of the Company onSeptember 15, 2020 and the fifth extraordinary general meeting of shareholders of theCompany on October 12, 2020, the allowance standard of the independent director wasadjusted to RMB 150,000 per person per year (including Tax), allowances are paid onan average monthly basis.
Remuneration of directors, supervisors and senior management during thereporting period of the Company
| Name | Gender | Age | Title | Employment status | Total pre-tax remuneration received from the Company | Whether to get remuneration from related parties of the Company |
| Qiu Yibo | Male | 37 | President and CEO | Current | 92.63 | No |
| Fang Xianshui | Male | 60 | Vice President | Current | 95.63 | No |
| Ni Defeng | Male | 46 | Director | Current | - | Yes |
| Wu Zhong | Male | 35 | Director, Vice President | Current | 68.83 | No |
| Zhao Donghua | Male | 39 | Director, Vice President | Current | 68.83 | No |
| Luo Dan | Female | 41 | Director | Current | 23.7 | No |
| Chen Sanlian | Male | 60 | Independent Director | Step down | 10 | No |
| Yang Baizhang | Male | 67 | Independent Director | Step down | 10 | No |
| Yang Liuyong | Male | 60 | Independent Director | Step down | 10 | No |
| Chen Linrong | Male | 53 | Independent Director | Current | 3.88 | No |
| Hou Jiangtao | Male | 50 | Independent Director | Current | 3.88 | No |
| Hong Xin | Male | 40 | Independent Director | Current | 3.88 | No |
| Wang Songlin | Male | 54 | Executive Vice President | Current | 74.94 | No |
| Chen Liancai | Male | 57 | Vice President | Current | 88.08 | No |
| Lou jianchang | Male | 62 | Vice President | Retire and leave office | 77.48 | No |
| Zheng Xingang | Male | 45 | Vice President, Secretary of the BOD, Financial Director | Current | 47.93 | No |
| Li Yugang | Male | 47 | Chairman of the BOS | Current | 45.71 | No |
| Jin Danwen | Female | 38 | Supervisor | Current | 35.51 | No |
| Wang Peng | Male | 45 | Supervisor | Current | 7.33 | No |
| Ni Jinmei | Female | 48 | Supervisor | Leave the position | 37.13 | No |
| Total | -- | -- | -- | -- | 805.37 | -- |
Note: The Company disclosed the ''Announcement of Resolutions of the SecondExtraordinary General Meeting of HengYi Petrochemical Company for the Year 2023''(Announcement No. 2023-096) on 29 September 2023, appointing Mr. Wang Peng asa Supervisor of the Company and Ms. Ni Jinmei stepping down from her position uponexpiry of her term of office. Accordingly, the remuneration disclosed by Mr Wang Pengand Ms Ni Jinmei represents the total remuneration received by them during their tenureas Supervisors.
Other information notes
□Applicable ?Not applicable
VI. Performance of Duties by the Directors during the reporting period
1. Performance of the BOD during the reporting period
| Session of meeting | Date of meeting | Disclosure date | Resolutions |
| Twenty-sixth meeting of the Eleventh Board of Directors | February 07, 2023 | February 08, 2023 | 1. Reviewed and approved the Resolution on the Company’s fulfilment of the conditions for the non-public offering of A-share shares； 2. Reviewed and approved the Motion on the Programme of the Company’s Non-public Offering of A Shares； 3. Reviewed and approved the Proposal on the Company’s <Proposed Non-Public Offering of A Shares for the Year 2023； 4. Reviewed and approved the Motion on the Feasibility Analysis Report on the Utilisation of Proceeds from the Company’s Non-public Offering of A Shares in FY2023； 5. Reviewed and approved the Motion on the Signing of the “Conditionally Effective Share Subscription Agreement” between the Company and the Targets of the Private Offering； 6. Reviewed and approved the Motion on the Non-public Offering of Shares |
| Constituting a Connected Transaction； 7. Reviewed and approved the Proposal on the Company’s Shareholder Return Plan for the Next Three Years (2023-2025)； 8. Reviewed and approved the Resolution on the Diluted Immediate Return on the Non-public Issue of A Shares, Filling Measures and Commitments of Relevant Entities； 9. Reviewed and approved the Motion on the Company’s Inability to Provide a Report on the Use of Previously Raised Funds for the Time Being； 10. Reviewed and approved the Proposal on Requesting the Shareholders’ General Meeting to Authorise the Board of Directors to Exclusively Handle the Specific Matters of the Non-public Offering of A Shares； 11. Reviewed and approved the Proposal to submit to the General Meeting of Shareholders for approval of the exemption of subscribers from the issue of the offer； 12. Reviewed and approved the Motion to suspend the General Meeting of Shareholders | |||
| Twenty-seventh meeting of the Eleventh Board | March 17, 2023 | March 18, 2023 | 1. Reviewed and approved the Motion on Not Amending the Conversion Price of “Heng Yi Convertible Bonds” Downwards； |
| of Directors | |||
| Twenty-eighth meeting of the Eleventh Board of Directors | April 19, 2023 | April 20, 2023 | 1. Reviewed and approved the Proposal on the Company’s fulfilment of the conditions for the issuance of A shares to specific targets； 2. Reviewed and approved the Proposal to amend the Company’s proposal for the issuance of A shares to specific targets； 3. Reviewed and approved the Proposal on the Company’s <Proposed Issue of A Shares to Specific Targets in FY2023 (Revised)； 4. Reviewed and approved the Motion Regarding the Feasibility Analysis Report on the Utilisation of Proceeds from the Issue of A Shares by the Company to Specific Targets in FY2023 (Revised Draft)； 5. Reviewed and approved the Resolution on the signing of the Supplemental Agreement to the Conditionally Effective Share Subscription Agreement between the Company and the Specified Parties； 6. Reviewed and approved the Proposal on the Issue of Shares to Specific Targets Constituting a Connected Transaction； 7. Reviewed and approved the Resolution on the Diluted Immediate Return on the Issue of A Shares to Specific Targets, Filling Measures and Commitments of Relevant Entities； 8. Reviewed and approved the Proposal to propose to the Shareholders’ General |
| Accounting Firm； 18. Reviewed and approved the Proposal to submit to the General Meeting of Shareholders for approval of the exemption of subscribers from the issue of the offer； 19. Reviewed and approved the Motion on Changes in Accounting Policies； 20. Reviewed and approved the Proposal to Convene the 2022 Annual General Meeting of Shareholders | |||
| Twenty-ninth meeting of the Eleventh Board of Directors | April 25, 2023 | - | 1. Reviewed and approved the Full text of the <First Quarter Report 2023> |
| Thirtieth meeting of the eleventh Board of Directors | May 09, 2023 | May 10, 2023 | 1. Reviewed and approved the Motion on Not Amending the Conversion Price of “Heng Yi Conversion 2” Downwards |
| Thirty-first meeting of the Eleventh Board of Directors | June 16, 2023 | June 17, 2023 | 1. Reviewed and approved the Motion on the Proposed Participation in the Capital Increase by Share Allotment of Zheshang Bank Co. |
| Thirty-second meeting of the eleventh Board of Directors | July 28, 2023 | July 29, 2023 | 1. Reviewed and approved the Motion on < Hangyi Petrochemical Company Limited Fifth Employee Stock Ownership Plan (Draft) > and Abstract； 2. Reviewed and approved the Motion on <Administrative Measures for the Fifth Employee Stock Ownership Plan of Hengyi Petrochemical Co.； 3. Reviewed and approved the Proposal on Requesting the Shareholders’ General Meeting to Authorise the Board of Directors to Handle Matters Related to the Fifth Employee Share Ownership Plan of the Company； 4. Reviewed and approved the Motion on the Use of Part of the Idle Proceeds to Temporarily Supplement Liquid Funds； 5. Reviewed and approved the Proposal to Call for the First Extraordinary General Meeting of Shareholders for the Year 2023； |
| Thirty-third meeting of the Eleventh Board of Directors | August 22, 2023 | August 23, 2023 | 1. Reviewed and approved the Full and summary of the Half Year Report 2023； 2. Reviewed and approved the Motion on the Company’s <Special Report on the Deposit and Use of Proceeds for the Semi-Annual Period in 2023； |
| Thirty-fourth meeting of the Eleventh Board of Directors | September 12, 2023 | September 13, 2023 | 1. Reviewed and approved the Resolution on the Election of Non-Independent Directors for a New Term of the Board of Directors of the Company； 2. Reviewed and approved the Resolution on the Election of Independent Directors by the Company’s Board of Directors for a New Term of Office； |
| 3. Reviewed and approved the Resolution on the Estimation of the Amount of New Daily Connected Transactions for FY2023； 4. Reviewed and approved the Proposal to propose the convening of the Second Extraordinary General Meeting of Shareholders for the year 2023 | |||
| First meeting of the twelfth session of the Board of Trustees | September 28, 2023 | September 29, 2023 | 1. Reviewed and approved the Resolution on the Election of the Chairman of the Twelfth Session of the Board of Directors of the Company； 2. Reviewed and approved the Resolution on the Election of the Vice Chairman of the Twelfth Session of the Board of Directors of the Company； 3. Reviewed and approved the Resolution on the Election of Members of the Specialised Committees of the Twelfth Session of the Board of Directors of the Company； 4. Reviewed and approved the Motion on the Appointment of the President of the Company； 5. Reviewed and approved the Motion on the Appointment of the Company’s Vice President； 6、Reviewed and approved the Motion on the Appointment of the Chief Financial Officer of the Company； 7. Reviewed and approved the Resolution on the Appointment of the Secretary |
| of the Board of Directors of the Company； 8. Reviewed and approved the Motion on the Appointment of the Head of Internal Audit of the Company ； 9. Reviewed and approved the Proposal on the Appointment of the Company’s Securities Affairs Representative | |||
| Second meeting of the twelfth session of the Board of Trustees | October 16, 2023 | October 17, 2023 | 1. Reviewed and approved the Motion on Not Amending the Conversion Price of “Heng Yi Convertible Bonds” Downwards |
| Third meeting of the twelfth session of the Board of Trustees | October 27, 2023 | October 28, 2023 | 1. Reviewed and approved the Third Quarterly Report 2023； 2. Reviewed and approved the Resolution on the Provision of Affiliated Entrusted Loans to Yisheng New Material, a Participating Company； 3. Reviewed and approved the Proposal to convene the Third Extraordinary General Meeting of Shareholders for the year 2023 |
| Fourth meeting of the twelfth session of the Board of | November 29, 2023 | November 30, 2023 | 1. Reviewed and approved the Motion on Not Amending the Conversion Price of “Heng Yi Conversion 2” Downwards； |
| Trustees | |||
| Fifth meeting of the twelfth session of the Board of Trustees | December 07, 2023 | December 08, 2023 | 1. Reviewed and approved the Proposal to Amend the Articles of Association of the Company； 2. Reviewed and approved the Proposal to Amend the Working System of Independent Directors； 3. Reviewed and approved the Motion to Amend the Rules of Procedure of the Board of Directors； 4. Reviewed and approved the Motion to Amend the Rules of Work of the Audit Committee； 5. Reviewed and approved the Motion to Amend the Rules of Work of the Risk Control Committee； 6. Reviewed and approved the Motion to Amend the Rules of Work of the Remuneration, Evaluation and Nomination Committee； 7. Reviewed and approved the Motion to Amend the Rules of Work of the Strategy and Investment Committee； 8. Reviewed and approved the Resolution on the Transfer of 100% Equity Interests in Hangzhou Yi Maizi Chemical Fibre Company Limited and Connected Transaction； |
| 9. Reviewed and approved the Motion on the Appointment of Deputy General Manager and Financial Controller； 10、Reviewed and approved the Proposal to convene the Fourth Extraordinary General Meeting of Shareholders for the year 2023 | |||
| Sixth meeting of the Twelfth Board of Trustees | December 15, 2023 | December 16, 2023 | 1. Reviewed and approved the Motion on Share Repurchase Programme by means of Centralised Auction Trading (Phase IV) |
2. Attendance of Directors in the Board Meeting and the General Meeting ofShareholders
| Attendance of Directors in the Board Meeting and the General Meeting of Shareholders | |||||||
| Name of director | Number of board meetings to attend during the reporting period | Number of on-site attendances of board meetings | Number of attendances of board meetings by means of telecommunications | Number of attendances of board meetings by entrustees | Number of absences at board meetings | Whether absent from board meetings in person for two consecutive times | Number of attendances of General Shareholder s Meetings |
| Qiu Yibo | 15 | 9 | 6 | 0 | 0 | No | 5 |
| Fang Xianshui | 15 | 9 | 6 | 0 | 0 | No | 5 |
| Ni defeng | 15 | 9 | 6 | 0 | 0 | No | 5 |
| Lou Jianchang | 9 | 5 | 4 | 0 | 0 | No | 2 |
| Wu Zhong | 15 | 9 | 6 | 0 | 0 | No | 5 |
| Zhao Donghua | 6 | 4 | 2 | 0 | 0 | No | 3 |
| Luo Dan | 15 | 9 | 6 | 0 | 0 | No | 5 |
| Chen Sanlian | 9 | 5 | 4 | 0 | 0 | No | 2 |
| Yang Baizhang | 9 | 5 | 4 | 0 | 0 | No | 2 |
| Yang Liuyong | 9 | 5 | 4 | 0 | 0 | No | 2 |
| Chen Linrong | 6 | 4 | 2 | 0 | 0 | No | 3 |
| Hou Jiangtao | 6 | 4 | 2 | 0 | 0 | No | 3 |
| Hong Xin | 6 | 4 | 2 | 0 | 0 | No | 3 |
Description of the failure to physically attend board meetings for two consecutivetimes
Not applicable
3. Objections of directors to related issues of the Company
Whether the directors raise objections to relevant matters of the CompanyDuring the reporting period, the directors did not raise objections to the Company’srelated matters.
4. Other information on directors' performance of duties
Whether directors’ suggestions to the Company are accepted?Yes □ No
Description of the directors' recommendations that were adopted or refused
During the reporting period, all directors of the Company strictly followed theCompany Law, Securities Law, Code of Corporate Governance for Listed Companiesin China, Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed CompaniesNo. 1 - Standardized Operation of Listed Companies on the Main Board and the Articlesof Association and Rules of Procedure for the BOD to diligently carry out their workand perform their duties. They took the initiative to pay attention to the Company'soperation and management information, financial position, important matters, etc., putforward opinions on the Company’s important decisions regarding its governance andoperation, deeply discussed the proposals submitted to the BOD for review, expressedtheir own views and reached unanimous options after full communication and
discussion. They fully considered the interests and demands of minority shareholderswhen making decisions, and resolutely supervised and promoted the implementation ofthe resolutions adopted at the BOD in order to make the decisions scientific, timely andefficient and protect the legitimate rights and interests of the Company and allshareholders.
VII. Performance of duties by the specialized committees under the BOD during the reporting period
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| Audit Committee | Yang Baizhang, Chen Sanlian, Yang Liuyong, Lou Jianchang, Fang Xianshui | 3 | April 14, 2023 | 1. Reviewed Internal Audit Performance Report 2022； 2. Reviewed Report on the Financial Accounts for the year 2022 (preliminary draft)； 3. Reviewed Annual Audit Report 2022 (preliminary draft)； 4. Reviewed Annual Report 2022 (preliminary draft)； 5. Reviewed Annual Internal Control Self-Evaluation Report 2022； 6. Reviewed Motion on the Annual Deposit and Use of Proceeds in FY2022； 7. Reviewed Special Audit Report on Funds Utilisation by Related Parties for the Year 2022 (Preliminary Draft)； 8. Reviewed Motion on the Renewal of Appointment of Accounting Firm | The Audit Committee carried out its work in strict accordance with the Company Law, the regulatory rules of the CSRC and the Articles of Association of the Company, the Rules of Procedure of the Board of Directors and other laws and | Not applicable | Not applicable |
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| April 21, 2023 | 1. Reviewed First Quarterly Report 2023 (preliminary draft) 2. Reviewed Report on the Work of Internal Audit for the First Quarter of 2023 | regulations, with diligence and due diligence, and made relevant comments in accordance with the actual situation of the Company, and unanimously passed all the motions after full communication and discussion. | |||||
| August 18, 2023 | 1. Reviewed Half Yearly Report of the Company 2023 (preliminary draft)； 2. Reviewed Motion on the Special Report on the Deposit and Use of Proceeds for the Semi-Annual Period of 2023； 3. Reviewed Report on the Semi-Annual Internal Audit Exercise 2023 (preliminary draft) | ||||||
| Chen Linrong, ChongXin, Hou Jiangtao, Ni Defeng, | 3 | September 28, 2023 | |||||
1. Reviewed Resolution on the Election of the Chairman of the
Audit Committee of the Twelfth Session of the Board ofDirectors of the Company
| October 13, 2023 | 1. Reviewed Third Quarterly Report 2023 (preliminary draft)； 2. Reviewed Report on the Work of Internal Audit for the Third |
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| Luo Dan | Quarter of 2023 | ||||||
| December 07, 2023 | 1. Reviewed Motion to Amend the Rules of Work of the Audit Committee； 2. Reviewed Motion on the Appointment of Deputy General Manager and Financial Controller | ||||||
| Strategy and Investment Decision- making Committee | Qiu Yibo, Fang Xianshui, Ni Defeng, Yang Liuyong | 3 | February 08, 2023 | 1. Reviewed and approved Resolution on the Company’s fulfilment of the conditions for the non-public offering of A-share shares； 2. Reviewed Motion on the Programme of the Company’s Non-public Offering of A Shares； 3. Reviewed Proposal on the Company’s <Proposed Non-Public Offering of A Shares for the Year 2023； 4. Reviewed Motion on the Feasibility Analysis Report on the Utilisation of Proceeds from the Company’s Non-public Offering of A Shares in FY2023； | The Strategy and Investment Committee worked strictly in accordance with the Company Law, the regulatory rules of the CSRC and the Articles of Association of the | Not applicable | Not applicable |
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| 5. Reviewed Motion on the Signing of the “Conditionally Effective Share Subscription Agreement” between the Company and the Targets of the Private Offering； 6. Reviewed Motion on the Non-public Offering of Shares Constituting a Connected Transaction； 7. Reviewed Proposal on the Company’s Shareholder Return Plan for the Next Three Years (2023-2025)； 8. Reviewed Resolution on the Diluted Immediate Return on the Non-public Issue of A Shares, Filling Measures and Commitments of Relevant Entities； 9. Reviewed Motion on the Company’s Inability to Provide a Report on the Use of Previously Raised Funds for the Time Being | Company and the Rules of Procedure of the Board of Directors, diligently and responsibly, and put forward relevant opinions in accordance with the actual situation of the Company, and unanimously passed all the motions after full communication and discussion. | ||||||
| April 20, 2023 | 1. Reviewed Proposal on the Company’s fulfilment of the conditions for the issuance of A shares to specific targets； |
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| 2. Reviewed Proposal to amend the Company’s proposal for the issuance of A shares to specific targets； 3. Reviewed Proposal on the Company’s <Proposed Issue of A Shares to Specific Targets in FY2023 (Revised)； 4. Reviewed Motion Regarding the Feasibility Analysis Report on the Utilisation of Proceeds from the Issue of A Shares by the Company to Specific Targets in FY2023 (Revised Draft)； 5. Reviewed Resolution on the signing of the Supplemental Agreement to the Conditionally Effective Share Subscription Agreement between the Company and the Specified Parties； 6. Reviewed Proposal on the Issue of Shares to Specific Targets Constituting a Connected Transaction； 7. Reviewed Resolution on the Diluted Immediate Return on the Issue of a Shares to Specific Targets, Filling Measures and Commitments of Relevant Entities |
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| June 17, 2023 | 1. Reviewed Motion on the Proposed Participation in the Capital Increase by Share Allotment of Zheshang Bank Co. | ||||||
| Qiu Yibo, Fang Xianshui, Ni Defeng, Hou Jiangtao | 2 | September 28, 2023 | 1. Reviewed Resolution on the Election of the Chairman of the Strategy and Investment Committee of the Twelfth Session of the Board of Directors of the Company | ||||
| September 7, 2023 | 1. Reviewed Motion to Amend the Rules of Work of the Strategy and Investment Committee | ||||||
| Risk Control Committee | Chen Sanlian, Yang Baizhang, Lou Jianchang | 1 | April 14, 2023 | 1. Reviewed Report on the Financial Accounts for the year 2022 (preliminary draft)； 2. Reviewed Motion on the Renewal of Appointment of Accounting Firm | The Risk Control Committee worked strictly in accordance with the Company Law, the regulatory rules of | Not applicable | Not applicable |
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| Hou Jiangtao, Chen Linrong, Zhao Donghua | 2 | September 28, 2023 | 1. Reviewed Motion on the Election of the Chairman of the 12th Risk Control Committee of the Company | the CSRC and the Articles of Association of the Company and the Rules of Procedure of the Board of Directors, diligently and responsibly, and put forward relevant opinions in accordance with the actual situation of the Company, and unanimously passed all the motions after full communication | |||
| December 07, 2023 | 1. Reviewed Motion to Amend the Rules of Work of the Risk Control Committee |
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| and discussion. | |||||||
| Remuneration, Evaluation and Nomination Committee | Yang Liuyong, Qiu Yibo, Wuzhong, Yang Baizhang, Chen Sanlian | 2 | July 28, 2023 | 1. Reviewed Motion on <Hangyi Petrochemical Company Limited Fifth Employee Stock Ownership Plan (Draft) > and Abstract； 2. Reviewed Motion on <Administrative Measures for the Fifth Employee Stock Ownership Plan of Hengyi Petrochemical Co. | The Remuneration, Evaluation and Nomination Committee worked strictly in accordance with the Company Law, the regulatory rules of the CSRC and the Articles of Association of the Company and the Rules of Procedure of the Board of Directors, diligently | Not applicable | Not applicable |
| September 07, 2023 | 1. Reviewed Proposal on the Nomination of Non-Independent Directors for the Twelfth Session of the Board of Directors of the Company； 2. Reviewed Proposal on the Nomination of Independent Directors for the Twelfth Session of the Board of Directors of the Company | ||||||
| Hongxin, Qiu Yibo, Wu | 2 | September 28, 2023 | 1. Reviewed Motion on the Nomination of Senior Management of the Company; 2. Reviewed Resolution on the Election of the Chairman of the |
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| Zhong, Chen Linrong, Hou Jiangtao | Twelfth Remuneration, Evaluation and Nomination Committee of the Company | and responsibly, and put forward relevant opinions in accordance with the actual situation of the Company, and unanimously passed all the motions after full communication and discussion. | |||||
| 2 | December 07, 2023 | 1. Reviewed Motion to Amend the Rules of Work of the Remuneration, Evaluation and Nomination Committee； 2. Reviewed Motion on the Nomination of Deputy General Manager and Chief Financial Officer |
VIII. Performance of Duties by the BOS
Whether there are any risks found by the BOS in its supervisory activities duringthe reporting periodThe BOS had no objections to the matters under supervision during the reporting period
IX. Employees of the Company
1. Number, composition and education level
| Number of employees in the parent company at the end of the reporting period (person) | 0 |
| Number of employees of service in major subsidiaries at the end of the reporting period (person) | 15,548 |
| Total number of employees in service at the end of the reporting period (person) | 15,548 |
| Total number of employees receiving salaries in current period (person) | 15,548 |
| Number of retired employees whose expense is borne by the parent company and major subsidiaries (person) | 153 |
| Composition | |
| Professional composition category | Number of professional composition (person) |
| Production personnel | 12,547 |
| Sales staff | 359 |
| Technical staff | 2,015 |
| Finance staff | 150 |
| Administrative staff | 477 |
| Total | 15,548 |
| Education level | |
| Education level category | Quantity (person) |
| Master degree or above | 318 |
| Bachelor degree | 1,959 |
| College degree or below | 13,271 |
| Total | 15,548 |
2. Compensation policies
The Company implements a labor contract system, sign labor contracts with everyemployee in accordance with the Labor Law of the PRC, the Labor Contract Law ofthe PRC and relevant labor laws and regulations. The Company strictly implements thenational employment system, labor protection system, and social security system, payssocial insurance for employees in accordance with national regulations, sets upcorresponding safety protection measures, and creates a good and safe productionenvironment for employees. Through innovative management mechanisms, theCompany guides the functional system to continuously improve quality and efficiency,and to create a streamlined and efficient functional team of headquarters. The Companydevelops an effective salary incentive system for the Company's financial personnel,administrative personnel, technical personnel, production personnel and salespersonnel, and gives corresponding performance rewards based on the performanceevaluation of the Company, department and individual.
3. Training plans
The Company established Hengyi Enterprise University according to the needs ofproduction and operation and talent training, aiming to build a competitive enterpriseuniversity and support Hengyi's global development. It serves as the power center andload bearing platform for Hengyi's organizational development, talent training,
technology accumulation, and corporate transformation. The "Blue" series of talentprojects are implemented in Hengyi University, to establish talent echelons at differentlevels; meanwhile, it attaches importance to continuous improvement, job skillassessment, and on-the-job education promotion to enhance professional skills andeffectiveness. The Company develops training plans for different types of employees,organizes internal and outbound trainings according to the plan, pays special attentionto job skills training, and provides certification for special positions and hazardouschemical operators to ensure safe production and normal operation. The Company alsotrains technical and business backbones through targeted training to improve theirbusiness capabilities.
4. The situation of labor outsourcing
| Total number of working hours of labor outsourced (hours) | 11,004,208 |
| Total remuneration paid for labor outsourced (RMB) | 284,188,115.00 |
X. The Company’s common stock profit distribution and capitalization of capitalreserves
During the reporting period, the common stock profit distribution policy,especially the formulation, implementation or adjustment of the cash dividendpolicy
According to the China Securities Regulatory Commission's Notice on FurtherImplementing Issues Related to Cash Dividends of Listed Companies (ZJF [2012] No.
37), and Guidelines for the Supervision of Listed Companies No. 3 - Cash Dividendsof Listed Companies Securities Regulatory Commission Announcement (Revised
December 2023), Provisions and requirements of the Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed Companies No. 1 - Standardised Operation of MainBoard Listed Companies (Revised in December 2023) and other documents, combinedwith the actual situation of the Company, specific provisions has been made for theprofit distribution decision-making procedures and profit distribution policy in theArticles of Association. In addition, it has formulated the Shareholder Dividend ReturnPlan for the Next Three Years (2023-2025) to better guarantee the reasonable return ofall shareholders, further refine the provisions of the profit distribution policy in theArticles of Association, and increase the transparency and operability in dividenddistribution decision, establish a continuous, stable and scientific return plan andmechanism for investors to ensure the continuity and stabil ity of the profit distributionpolicy. During the reporting period, the Company shall strictly implement the aboveprofit distribution policy.
According to the Company's 2022 annual general meeting held on 10 May 2023, whichconsidered and passed the "Proposal on the Proposed No Profit Distribution for the Year2022", based on the negative net profit attributable to shareholders of the listedcompany for the year 2022, and taking into account the current situation of the industry,the Company's development strategy, the operating situation and other factors, theprofit distribution plan for the year 2022 is as follows: for the year 2022, there will beno cash dividend, no bonus shares, no capitalisation of capital with provident fund, andthe undistributed profits will be carried forward to the next year.
| Special description of cash dividend policy | |
| Whether it meets the requirements of the Company's Articles of Association or the resolutions of the General Meeting of Shareholders: | Yes |
| Whether the dividend standard and proportion are clear and definite: | Yes |
| Were the relevant decision-making procedures and mechanisms are complete: | Yes |
| Whether independent directors have performed their due diligence and played their due role: | Yes |
| If the company has not made cash dividends, it should disclose the specific reasons and the next steps it intends to take to enhance the level of investor returns: | Not applicable |
| Whether small and medium shareholders have sufficient opportunities to express their opinions and demands, and whether their legitimate equities are fully protected: | Yes |
| If the cash dividend policy is adjusted or changed, whether the conditions and procedures are compliant and transparent: | Not applicable |
The Company was profitable during the reporting period and the parentcompany’s profit available for distribution to ordinary shareholders was positive,but no distribution plan for cash dividend for ordinary shares was proposed
□Applicable ?Not applicable
Distribution of profit and capitalisation of capital reserve for the reporting period
| Number of bonus shares per 10 shares (shares) | 0 |
| Dividend per 10 shares (RMB) (inclusive of tax) | 1.00 |
| Number of shares transferred per 10 shares (shares) | 0 |
| Equity base for the proposed distribution (shares) | 3,387,209,237 |
| Cash dividend amount (RMB) (including tax) | 338,720,923.70 |
| Amount of cash dividends in other ways (e.g. share buybacks) (RMB) | 885,407,742.07 |
| Total cash dividends (including other means) (RMB) | 1,224,128,665.77 |
| Distributable profit (RMB) | 436,055,598.07 |
| Total cash dividends (including other methods) Percentage of total profit distribution | 100% |
| The current cash dividend | |
| If the company's development stage is in the growth period and there are arrangements for major | |
| capital expenditure, when profit distribution is made, the proportion of cash dividends in the profit distribution should be at least 20%. |
| Detailed description of the proposed distribution of profits or capitalisation of capital reserves |
| (1) Basic information on the proposed profit distribution for FY2023 On 19 April 2024, as considered and approved at the Eighth Meeting of the Twelfth Session of the Board of Directors of the Company, the Company proposed to distribute a cash dividend of RMB1.00 (inclusive of tax) for every 10 shares to all shareholders, based on the total share capital as at the date of shareholding registration at the time of implementation of the equity distribution. There will be no capitalisation of capital reserves and no bonus shares for the year. As at 29 March 2024, the total share capital of the Company was 3,666,302,286 shares, of which 279,093,049 shares of the Company held by the Company's special securities account for repurchase will not be involved in the profit distribution, and the total share capital of the Company after excluding the shares held by the special securities account for repurchase will be 3,387,209,237 shares, and the total cash dividend to be distributed based on this calculation will be RMB 338,720 923.70 (including tax). If the total share capital on the date of equity registration for dividend distribution changes due to additional issue, share repurchase, conversion of convertible bonds to share capital, etc. before the date of equity registration for implementation of equity distribution, the Company intends to maintain the same amount of distribution per share and adjust the corresponding total share capital. (2) Basic information on the interim cash dividend for FY2024 In order to increase investor returns, share operating results and boost investor confidence in shareholding, the Company has decided to request the General Meeting of Shareholders to authorise the Board of Directors to fully handle the interim profit distribution in accordance with the relevant provisions of the "Supervisory Guidelines for Listed Companies No. 3 - Cash Dividends for Listed Companies", "Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange" and "Articles of Association of the Company", and other relevant regulations. Related Matters. The Board of Directors will formulate the Company's 2024 interim profit distribution plan in accordance with the Company's profitability and capital requirements and implement it within the prescribed period. The above proposal is subject to the approval of the Company's 2023 Annual General Meeting. |
XI. Implementation of the Company's SIPs, ESOPs or other employee incentives?Applicable □Not applicable
1. Equity incentive
□Applicable ? Not applicable
2. Implementation of the Employee Share Ownership PlanEmployee Share Ownership Schemes in force during the reporting period
| Name | Scope of employees | Number of employees | Total number of shares held (shares) | Status of changes | Percentage of total share capital of listed companies | Implementation plan Sources of funding for the implementation of the plan |
| Fourth Employee Share Ownership Plan | Directors, Supervisors, senior management of the Company, regular employees of the Company and its subsidiaries, and other persons as determined by the Board of Directors | No more than 4,011 | 113,754,600 | / | 3.10% | Legal remuneration of employees, self-financing and other means permitted by laws and regulations |
| Fifth Employee Share Ownership Plan | Directors, Supervisors, senior management of the Company, regular employees of the Company and its subsidiaries, and other persons as determined by the Board of Directors | No more than 6,000 | 87,167,750 | / | 2.38% | Legal remuneration of employees, self-financing and other means permitted by laws and regulations |
Shareholdings of directors, supervisors and senior management in the EmployeeShare Ownership Plan during the reporting period
| Name | Title | Number of shares held at the beginning of the reporting period | Number of shares held at the end of the reporting period (shares) | Percentage of total share capital of listed companies |
| (shares) | ||||
| Fang Xianshui | Vice president | 0 | 1,550,388 | 0.0423% |
| Ni Defeng | Director | 408,163 | 1,958,551 | 0.0534% |
| Wu Zhong | Director, Vice president | 408,163 | 924,959 | 0.0252% |
| Zhao Donghua | Director, Vice president | 408,163 | 924,959 | 0.0252% |
| Luo Dan | Director | 97,959 | 356,357 | 0.0097% |
| Wang Songlin | Vice president | 408,163 | 408,163 | 0.0111% |
| Chen Liancai | Vice president | 408,163 | 924,959 | 0.0252% |
| Lou Jianchang | Vice president | 408,163 | 924,959 | 0.0252% |
| Zheng Xingang | Vice president, Secretary of BOD, Financial Director | 244,898 | 761,694 | 0.0208% |
| Li Yugang | Supervisor | 244,898 | 503,296 | 0.0137% |
| Jin Danwen | Supervisor | 122,449 | 380,847 | 0.0104% |
| Wang Peng | Supervisor | 122,449 | 380,847 | 0.0104% |
| Ni Jinmei | Supervisor | 244,898 | 503,296 | 0.0137% |
Changes in asset management organisations during the reporting period
□Applicable ? Not applicable
Changes in equity during the reporting period arising from holders' disposals ofshares, etc.
□Applicable ? Not applicable
Exercise of shareholders' rights during the reporting period
□Applicable ? Not applicable
Other relevant circumstances and description of the Employee Share OwnershipPlan during the reporting period
□Applicable ? Not applicable
Changes in the membership of the Management Committee of the EmployeeShare Ownership Plan
□Applicable ? Not applicable
Financial impact of the Employee Share Ownership Plan on listed companiesduring the reporting period and related accounting treatment
□Applicable ? Not applicable
Termination of the Employee Share Ownership Plan during the reporting period
□Applicable ? Not applicable
Other notes:
None
3. Other employee incentives
□Applicable ? Not applicable
XII. Establishment and implementation of internal control system during thereporting period
1. Establishment and implementation
During the reporting period, the Company continuously updated and optimized itsinternal control system in accordance with the Basic Standard for Enterprise Internal
Control and other relevant regulations to adapt to the changing external environmentand internal management requirements. The Company's internal control system issound and reasonable and covers the main aspects of its operation and management. Itworks well and there is no significant omission.
(1) Internal environment. The Company has an organizational structure that is suitablefor its business, which has a clear division of labor and sound and complete functionaldepartments, and the Company implements the principle of separation of incompatibleduties to make these departments restrain with each other.
(2) Risk assessment. The Company collects relevant information in a comprehensiveand systematic manner according to its strategic objectives, development thoughts andthe industry characteristics to conduct risk assessment timely and weigh risks andbenefits, then determines risk response strategies to keep the risks under control.
(3) Control activities. The Company continuously sorts out and improves the systemaccording to the current state of its management and development needs, withoutcomprising the legality, normality, feasibility and operability.
(4) Information and communication. The Company has established an information andcommunication system to define the procedures for the collection, processing andtransmission of information related to internal control, in order to build a smoothcommunication line and promote effective conduct of internal control.
(5) Supervision. The Company has established a corporate governance mechanism, sothat the independent directors and the BOS are able to independently perform theirsupervisory duties and independently conduct evaluation and providerecommendations on the Company's management. A special internal audit body is setup under the Audit Committee of the BOD to carry out internal audit work
independently according to law in order to realize the effective supervision of themanagement and effective operation of the internal control system.
2. Details of significant internal control deficiency identified during the reportingperiod
□Yes ? No
XIII. The Company’s management and control over subsidiaries during thereporting period
As of the end of the reporting period, the Company has 53 subsidiaries. During thereporting period, in order to strengthen the management, regulate the internal operationand promote the healthy development of subsidiaries, the Company developed andimproved the Comprehensive Management System of Subsidiaries in accordance withthe requirements for the standardized operation of listed companies, to provide for theestablishment of a sound governance structure and its operation, operational businessdecision-making, financial management, information management, investmentdecision-making management, inspection and assessment, etc. Also, the Companyrequires subsidiaries to implement the Internal Reporting System for ImportantInformation, etc., which clearly stipulates the procedures for reporting and reviewingimportant matters, to timely track the governance, financial position, production andoperation, project construction, safety and environmental protection and othersignificant matters of the subsidiaries, in order to timely fulfil the informationdisclosure obligations. To improve the standardized operation of its subsidiaries, theAudit Department and Legal Department of the Company provides guidance on,supervision and evaluation of the establishment and implementation of the internalcontrol system of each subsidiary, and supervises the continuous improvement andeffective operation of each internal control system of the Company.
XIV. Internal control self-evaluation report or internal control audit report
1. Internal control self-evaluation report
| Disclosure date of full text of Internal Control Evaluation Report | April 20, 2024 | |
| Disclosure index of full text of Internal Control Evaluation Report | http://www.cninfo.com.cn | |
| Proportion of total assets included in the evaluation scope to that of the Company’s consolidated financial statements | 100.00% | |
| Proportion of operating income included in the evaluation to that of the Company’s consolidated financial statements | 100.00% | |
| Defect Identification Standard | ||
| Category | Financial reports | Financial reports Non-financial reports |
| ⑴ Identification standard of major | ⑴Major defects: The negative news about the safety, eco-friendliness, social responsibility, practice ethics and operation of the enterprise has been spread all over the country, has been specially investigated by the government or regulatory agencies, and has caused continuous special reports by the public media. As a result, the enterprise has adverse events such as capital loan and recovery, suspension or revocation of administrative license, pledge of assets, and a large number of claims | |
| defects: ① lack of democratic | ||
| decision-making process; ② huge | ||
| errors caused by decision-making process; ③ violation of national | ||
| laws and regulations and punishment; ④ serious loss of middle or senior | ||
| management members and senior technicians; ⑤ frequent negative | ||
| news in the media, involving a wide range; ⑥ lack of system or system | ||
| failures in major business; ⑦ failure | ||
| to rectify major or significant internal control defects. ⑵ Identification | ||
| standard of significant defects: ① | ||
| Imperfect democratic decision- | ||
| making procedures; ② decision- | ||
| Qualitative criteria | making procedures leading to general errors; ③ violation of internal regulations of the Company, resulting in losses; ④ outflow of many business | (occurrence of level-I mass disturbance). ⑵ Significant defects: The negative news about the safety, eco-friendliness, social responsibility, practice ethics and operation of the enterprise has been reported by the public media for three times in a row, and has been concerned and investigated by the industry or regulatory agencies, and has caused adverse effects within the industry (occurrence of level-II mass disturbance). ⑶General defects: The negative news about the safety, eco- friendliness, social responsibility, practice ethics and operation of the enterprise has been reported by the public media for three times in a row, and has been concerned and investigated by the industry or regulatory agencies, and has caused adverse effects within the industry (occurrence of level-III or level-IV mass disturbance) |
| personnel in key positions; ⑤ | ||
| negative news appeared on the media, involving local region; ⑥ defects in | ||
| important business systems or systems; ⑦ failure to rectify | ||
| material or general deficiencies in internal control. ⑶ Identification | ||
| standard of general defects: ① low | ||
| efficiency of decision-making process; ② violation of internal rules | ||
| and regulations without losses; ③ | ||
| serious loss of business personnel in general positions; ④ negative news | ||
| in the media, with little impact; ⑤ | ||
| defects in general business systems; ⑥ failure to rectify general defects; | ||
| ⑦ other defects. | ||
| Quantitative standard | ⑴Major defects: The overall impact | ⑴Major defects: direct financial loss: |
| level is higher than the importance level (1% of the audited net assets of the previous year). ⑵Significant defects: 0.2% of the audited net assets of the previous year < overall importance level < 1% of the audited net assets of the previous year. ⑶ General defects: The overall importance level is less than 0.2% of the audited net assets of the previous year. | RMB 50 million or above; personnel health and safety impact: death of more than 10 people, or serious injury of more than 50 people. ⑵ Significant defects: direct financial loss: RMB 10 million (included) to RMB 50 million; personnel health and safety impact: death of more than 3 (included) but less than 10 people, or serious injury of more than 10 (included) but less than 50 people. ⑶ General defects: |
| direct financial loss: less than RMB 10 million; personnel health and safety impact: death of less than 3 people, or serious injury of less than 10 people. | ||
| Number of major defects in financial report (piece) | 0 | |
| Number of major defects in non- financial report (piece) | 0 | |
| Number of significant defects in financial report (piece) | 0 | |
| Number of significant defects in non-financial report (piece) | 0 | |
2. Internal control audit report
| Reviewed parts in the internal control audit report | |
| In our opinion, Hengyi Petrochemical Co., Ltd. maintained effective internal control, in all material respects, in accordance with the Basic Norms for Enterprise Internal Control and relevant regulations at December 31, 2023. | |
| Disclosure of internal control audit report | Disclosure |
| Date of full-text disclosure for Internal Control Audit Report | April 20, 2024 |
| Full-text disclosure index for the Internal Control Audit Report | CNINFO (http://www.cninfo.com.cn) |
| Category of opinions | Opinion type in the Internal Control Audit Report |
| Whether there are major defects in the non-financial report | No |
Whether the accounting firm has issued an internal control audit report withmodified and qualified opinions
□Yes ?No
Whether the opinions in the internal control assurance report issued by theaccounting firm are consistent with those in the self-evaluation report issued by theBOD?Yes □ No
XV. Self-examination and rectifications through the special campaign on corporategovernance of listed companiesNot applicable
Section V Environmental and Social Responsibilities
I. Major environmental issues
Whether the listed company and its subsidiaries are the key pollutant discharge unitsannounced by the environmental protection departments??Yes □ NoEnvironmental protection related policies and industry standardsThe Company and its subsidiaries strictly abided by national and local environmentalprotection laws and relevant rules and regulations, including Environmental ProtectionLaw, Air Pollution Prevention and Control Law, Water Pollution Prevention andControl Law, Law of the PRC on the Prevention and Control of Environment PollutionCaused by Solid Wastes, Noise Pollution Prevention and Control Law, EnvironmentalProtection Tax Law, Soil Pollution Prevention and Control Law, Regulations on theAdministration of Construction Project Environmental Protection, and PollutantDischarge Permit Management Regulations. All pollutants are strictly discharged inaccordance with relevant standards, including: Emission Standards of Pollutants forSynthetic Resin Industry (GB31752-2015), Emission Standard of Air Pollutants forBoilers (GB13271-2014), Emission Standards for Odor Pollutants (GB14554-93),Standard for Pollution Control on Hazardous Waste Storage (GB18597-2001),Emission Standard for Industrial Enterprises Noise at Boundary (GB12348-2008), andStandard for Pollution Control of General Industrial Solid Waste Storage and DisposalSites (GB18599-2020).
Environmental protection administrative permits
| SN | Holder | Certificate name | Certificate No. | Issuer | Validity period |
| 1 | Hengyi Limited | Emission Permit | 91330000765215943G001Y | Hangzhou Municipal Ecology and Environment Bureau | August 27,2028 |
| 2 | Hengyi High-Tech | Emission Permit | 913301006680033406001Q | Hangzhou Municipal Ecology and Environment Bureau | November 25, 2026 |
| 3 | Hengyi Polymer | Emission Permit | 913301097245283880001P | Hangzhou Municipal Ecology and Environment Bureau | November 2, 2026 |
| 4 | Hengyi Polymer | Radiation Safety Permit | ZHFZ No. A2255 | Department of Ecology and Environment of Zhejiang Province | September 19, 2024 |
| 5 | Jiaxing Yipeng | Emission Permit | 91330411MA28BLMY30001V | Jiaxing Ecology and Environment Bureau | September21, 2026 |
| 6 | Taicang Yifeng | Emission Permit | 91320585MA1P1GPBXM001V | Suzhou Municipal Ecology and Environment Bureau | February 29, 2028 |
| 7 | Shuangtu New Materials | Emission Permit | 91330100566050736P001Y | Department of Ecology and Environment of Zhejiang Province | November 26, 2026 |
| 8 | Shuangtu New Materials | Radiation Safety Permit | ZHFZ No. A3048 | Department of Ecology and Environment of Zhejiang Province | December 12, 2028 |
| 9 | Fujian Yijin | Emission Permit | 91350582MA31G07Q8C001 V | Quanzhou Municipal Ecology and Environment Bureau | April 7, 2026 |
| 10 | Suqian Yida | Emission Permit | 91321311MA1UXUC8XJ001R | Suqian Municipal Ecology and Environment Bureau | November 5,2028 |
| 11 | Suqian Yida | Radiation Safety Permit | SHFZ No. 0199 | Suqian Municipal Ecology and Environment Bureau | January 12, 2027 |
| 12 | Suqian Hengyuan Thermal Energy | Emission Permit | 91321311MA25ADT26R001V | Suqian Municipal Ecology and Environment Bureau | December 27, 2028 |
| 13 | Haining Thermal Power | Emission Permit | 91330481MA29HXML34001R | Jiaxing Ecology and Environment Bureau | July 22,2025 |
| 14 | Haining New Materials | Emission Permit | 91330481MA29HRX724001 V | Jiaxing Ecology and Environment Bureau | July 2,2025 |
| 15 | Hengyi Caprolacta m | Emission Permit | 913301006706049462 | Hangzhou Municipal Ecology and Environment Bureau | August 20,2028 |
| 16 | Hengyi Caprolacta m | Radiation Safety Permit | ZHFZ No. A3044 | Department of Ecology and Environment of Zhejiang Province | January 16, 2027 |
| 17 | Zhejiang Yisheng | Emission Permit | 91330200744973411W001 W | Beilun Branch of Ningbo Municipal Ecology and Environment Bureau | August 02, 2028 |
| 18 | Zhejiang Yisheng | Radiation Safety Permit | ZHFZ No. B2005 | Department of Ecology and Environment of Zhejiang Province | November 17, 2024 |
| 19 | Hainan Yisheng | Emission Permit | 914603005527989627001P | Yangpu Economic Development Zone Ecological Environment Bureau | May 14, 2026 |
| 20 | Hainan Yisheng | Radiation Safety Permit | QHFZ No.00153 | Department of Ecology and Environment of Hainan Province | December 26, 2026 |
| 21 | Yisheng Dahua | Emission Permit | 912102137873094570001R | Dalian Municipal Ecology and Environment Bureau | October 13, 2028 |
| 22 | Yisheng Dahua | Radiation Safety Permit | ZHFZ No. B0001 | Dalian Municipal Ecology and Environment Bureau | November 25, 2026 |
Industry emission standards and specific situations of pollutant emissions involved in production and business activities
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| Zhejiang Yisheng | Process wastewater | COD | Discharge after treatment | 2 | Sewage station | 46.03/32.08mg/L | GB31571-2015 | 606.84 t | 1039.84 t | Up to standard |
| Ammonia nitrogen | Discharge after treatment | 2 | Sewage station | 0.17/0.15mg/L | GB31571-2015 | 2.25 t | 15.59 t | Up to standard | ||
| Waste gas | SO2 | Discharge after treatment | 2 | Boiler Island | 7.61 /9.68mg/ m3 | DB33/2147-2018 | 39.24 t | 197.45 t | Up to standard | |
| NOX | Discharge after treatment | 2 | Boiler Island | 14.98/21.53mg/ m3 | DB33/2147-2018 | 72.98 t | 409.53 t | Up to standard | ||
| Particulate matter | Discharge after treatment | 2 | Boiler Island | 1.76 /3.26mg/ m3 | DB33/2147-2018 | 14.84 t | 78.99 t | Up to standard | ||
| Hainan Yisheng | Waste gas | SO2 | Discharge after treatment | 2 | Boiler/thermal furnace | 12.25/39.54mg/ m3 | GB13223-2011、GB13271-2014 | 128.07 t | 679.90 t | Up to standard |
| NOx | Discharge after treatment | 2 | Boiler/thermal furnace | 22.86/100.43mg/ m3 | GB13223-2011、GB13271-2014 | 274.13 t | 989.90 t | Up to standard |
| Smoke and ashes | Discharge after treatment | 2 | Boiler/thermal furnace | 4.91/12.75mg/ m3 | GB13223-2011、GB13271-2014 | 41.92 t | 232.00 t | Up to standard | ||
| Process wastewater | COD | Discharge after treatment | 1 | Sewage station | 27.67mg/ m3 | GB31571-2015、GB31572-2015 | 121.35 t | 236.15 t | Up to standard | |
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage station | 0.17mg/ m3 | GB31571-2015、GB31572-2015 | 0.67 t | 17.7 t | Up to standard | ||
| Hengyi Caprolactam | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment | 8.26 | GB31571-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment | 124.4mg/L | GB31571-2015 | 124.57 t | 146.258 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment | 0.51mg/L | GB31571-2015 | 6.23 t | 7.313 t | Up to standard | ||
| total phosphorus | Discharge after treatment | 1 | Sewage treatment | 0.85mg/L | DB33-887-2013 | / | / | Up to standard | ||
| Hengyi High-Tech | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment | 7.22 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment | 12.767mg/L | GB31572-2015 | 0.39 t | 3.68 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment | 0.731mg/L | GB31572-2015 | 0.022 t | 0.15 t | Up to standard | ||
| Waste gas | Smoke and ashes | Discharge after treatment | 2 | Power station | 1.51/1.10mg/ m3 | GB13271-2014 | 1.18 t | 21.51 t | Up to standard |
| SO2 | Discharge after treatment | 2 | Power station | 5.67/6.38mg/ m3 | GB13271-2014 | 4.91 t | 60.4 t | Up to standard | ||
| NOx | Discharge after treatment | 2 | Power station | 23.91/31.62mg/ m3 | GB13271-2014 | 25.82 t | 181.21 t | Up to standard | ||
| Hengyi Polymer | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment | 7.98 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage station | 77.81mg/L | GB31572-2015 | 3.27 t | 34.5 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment | 11.49mg/L | GB31572-2015 | 0.48 t | 2.42 t | Up to standard | ||
| Waste gas | Smoke and ashes | Discharge after treatment | 3 | Power station | 7.27/5.53/3.12mg/ m3 | GB13271-2014 | 2.96 t | 14.02 t | Up to standard | |
| SO2 | Discharge after treatment | 3 | Power station | 16.31/14.27/9.81mg/ m3 | GB13271-2014 | 8.94 t | 29.22 t | Up to standard | ||
| NOx | Discharge after treatment | 3 | Power station | 123.91/110.62/82.71mg/ m3 | GB13271-2014 | 69.68 t | 87.67 t | Up to standard | ||
| Shuangtu New Materials | Waste gas | Smoke and ashes | Discharge after treatment | 2 | Power station | 2.51/1.4mg/ m3 | GB13271-2014 | 1.39 t | 28.32 t | Up to standard |
| SO2 | Discharge after treatment | 2 | Power station | 12.58/20.54mg/ m3 | GB13271-2014 | 17.51 t | 75.92 t | Up to standard | ||
| NOx | Discharge after treatment | 2 | Power station | 35.35/41.98mg/ m3 | GB13271-2014 | 55.91 t | 168 t | Up to standard |
| Haining Hengyi Thermal Power | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment | 7.95 | GB8978-1996 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment | 24.59mg/L | GB8978-1996 | 6.84 t | 21.33 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment | 0.187mg/L | GB8978-1996 | 0.0682 t | 2.13 t | Up to standard | ||
| Waste gas | Smoke and ashes | Discharge after treatment | 1 | Power station | 0.544 mg/ m3 | DB33/2147-2018 | 1.01 t | 8.83 t | Up to standard | |
| SO2 | Discharge after treatment | 1 | Power station | 12.57mg/ m3 | DB33/2147-2018 | 24.59 t | 61.52 t | Up to standard | ||
| NOx | Discharge after treatment | 1 | Power station | 40.16mg/ m3 | DB33/2147-2018 | 76.2 t | 88.33 t | Up to standard | ||
| Haining Hengyi New Materials | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment | 7.2 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment | 14.39mg/L | GB31572-2015 | 0.038 t | 4.26 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment | 0.16mg/L | GB31572-2015 | 0.0002 t | 0.42 t | Up to standard | ||
| Jiaxing Yipeng | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment | 7.43 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment | 11.30mg/L | GB31572-2015 | 0.123 t | 5.028 t | Up to standard |
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment | 0.35mg/L | GB31572-2015 | 0.004 t | 0.503 t | Up to standard | ||
| Taicang Yifeng | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment | 8.25 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment | 33.71mg/L | GB31572-2015 | 1.182 t | 13.27 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment | 0.63mg/L | GB31572-2015 | 0.022 t | 0.46 t | Up to standard | ||
| Waste gas | Smoke and ashes | Discharge after treatment | 1 | Power station | 5.11mg/ m3 | GB31572-2015 | 2.001 t | 9.72 t | Up to standard | |
| SO2 | Discharge after treatment | 1 | Power station | 2.0mg/ m3 | GB31572-2015 | 0.752 t | 3.8 t | Up to standard | ||
| NOx | Discharge after treatment | 1 | Power station | 73.49mg/ m3 | GB31572-2015 | 26.15 t | 26.6 t | Up to standard | ||
| Suqian Yida | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment | 7.86 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment | 33.32mg/L | GB31572-2015 | 2.59 t | 7.85 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment | 0.49mg/L | GB31572-2015 | 0.041 t | 0.089 t | Up to standard | ||
| Suqian Hengy | Waste gas | Smoke and ashes | Discharge after treatment | 1 | Boiler Island | 0.32mg/ m3 | DB33/2147-2018 | 0.3 t | 12.405 t | Up to standard |
| uan Thermal Energy | SO2 | Discharge after treatment | 1 | Boiler Island | 2.95mg/ m3 | DB33/2147-2018 | 2.1 t | 46.21 t | Up to standard | |
| NOx | Discharge after treatment | 1 | Boiler Island | 13.78mg/ m3 | DB33/2147-2018 | 9.1 t | 59.33 t | Up to standard | ||
| Fujian Yijin | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment | 8.044 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment | 17.81mg/L | GB31572-2015 | 0.38 t | 3.45 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment | 0.09mg/L | GB31572-2015 | 0.002 t | 0.46 t | Up to standard | ||
| Waste gas | Smoke and ashes | Discharge after treatment | 1 | Power station | 1.45mg/ m3 | GB13271-2014 | 0.82 t | 49.5 t | Up to standard | |
| SO2 | Discharge after treatment | 1 | Power station | 33.67mg/ m3 | GB13271-2014 | 20.17 t | 143.29 t | Up to standard | ||
| NOx | Discharge after treatment | 1 | Power station | 158.87mg/ m3 | GB13271-2014 | 93.25 t | 179.12 t | Up to standard | ||
| Yisheng Dahua | Process wastewater | COD | Discharge after treatment | 2 | Sewage station | 56.28mg/L | 300mg/L | 708.77 t | 1680 t | Up to standard |
| Ammonia nitrogen | Discharge after treatment | 2 | Sewage station | 0.2mg/L | 30mg/L | 4.88 t | 182 t | Up to standard | ||
| Waste gas | NOX | Discharge after treatment | 3 | Boiler Island | 23.48mg/m? | 50mg/m? | 107.04 t | 405 t | Up to standar |
| d | ||||||||
| SO2 | Discharge after treatment | 3 | Boiler Island | 1.15mg/m? | 35mg/m? | 3.54 t | 251 t | Up to standard |
| Smoke and ashes | Discharge after treatment | 3 | Boiler Island | 1.32mg/m? | 5mg/m? | 4.84 t | 51 t | Up to standard |
Treatment of pollutants
(1) Sewage treatment
The principle of "separation of clean water and sewage, separation of rainwater andsewage, and separation of sewage and sewage" has been implemented, a comprehensivewastewater collection system in the factory has been established, and anti-corrosion,leak-proof, and anti-seepage measures have been taken. The polyester productionwastewater was pre-treated by a steam stripping device and enters the sewage treatmentstation for treatment along with the spinning workshop wastewater and domesticsewage. The sewage treatment station adopted a “pre-treatment + anaerobic + aerobicsecondary biochemical" treatment process, and the treated parts were reused throughthe reclaimed water reuse system. The remaining wastewater was treated to meet therelevant standards in the Emission Standards of Pollutants for Synthetic Resin Industry(GB31752-2015) and then included in the sewage pipeline network.
(2) Waste gas treatment
The principle of classified waste gas treatment was adopted, and sources of waste gaswere controlled. With various treatment measures proposed in the environmentalimpact assessment being taken, the amount of waste gas generated was reduced, andthe emission of unorganized waste gas was strictly controlled and reduced. The PTAfeeding dust was treated by a bag filter and discharged externally. The polyester wastegas was introduced into the thermal furnace for incineration and discharged externally.The spinning waste gas was treated by an oil fume purifier and discharged externally.The flue gas from the coal water slurry boiler was treated by denitrification, dustremoval, and desulfurization and discharged through the chimney.
The organized emissions of dust, non-methane total hydrocarbons, and acetaldehydewere in compliance with the relevant standards in the Emission Standards of Pollutantsfor Synthetic Resin Industry (GB31752-2015), the flue gas emissions from coal water
slurry boilers in Hangzhou were in compliance with the Hangzhou Emission Standardof Air Pollutants for Boilers, other regions were in compliance with the relevantstandards in the Emission Standard of Air Pollutants for Boilers (GB13271-2014), andthe emission of odor pollutants was in compliance with the relevant standards in theEmission Standards for Odor Pollutants (GB14554-93).
(3) (General and dangerous) Solid waste treatment situation
According to the principles of "resource utilization, reduction, and harmless disposal",the Company established a ledger system, set up temporary waste storage warehouses,classified, collected, stacked, and disposed of hazardous waste and general solid wasteaccording to their quality, and achieved comprehensive utilization of resources. Wasteoils and other hazardous wastes were entrusted to companies with correspondinghazardous waste treatment qualifications and processing capabilities for disposal,hazardous waste transfer approval procedures were handled in accordance with relevantregulations, and the hazardous waste transfer receipt system was strictly implemented.The temporary storage of hazardous waste was strictly in compliance with the relevantprovisions of the Standard for Pollution Control on Hazardous Waste Storage(GB18597-2001), and general solid waste were in compliance with the Standard forPollution Control of General Industrial Solid Waste Storage and Disposal Sites(GB18599-2020).
Environmental emergency response plan
1. Emergency Plan for Emergent Environmental Incidents of Zhejiang Baling HengyiCaprolactam Co., Ltd. was filed by the local environmental protection department inApril 2022, and a new Emergency Plan for Emergent Environmental Incidents is beingprepared.
2. Emergency Plan for Emergent Environmental Incidents of Zhejiang Hengyi High-
Tech Materials Co., Ltd. was filled by the local environmental protection departmentin March 2022.
3. Emergency Plan for Emergent Environmental Incidents of Zhejiang Hengyi PolymerCo., Ltd. was filled by the local environmental protection department in August 2021.
4. Emergency Plan for Emergent Environmental Incidents of Zhejiang Shuangtu NewMaterials Co., Ltd. was filled by the local environmental protection department inOctober 2022.
5. Emergency Plan for Emergent Environmental Incidents of Haining Hengyi ThermalPower Co., Ltd. was filled by the local environmental protection department authorityin June 2021.
6. Emergency Plan for Emergent Environmental Incidents of Haining Hengyi NewMaterials Co., Ltd. was filled by the local environmental protection department in June2021.
7. Emergency Plan for Emergent Environmental Incidents of Jiaxing Yipeng ChemicalFibre Co., Ltd. was filled by the local environmental protection department inNovember 2023.
8. Emergency Plan for Emergent Environmental Incidents of Taicang Yifeng ChemicalFibre Co., Ltd. was filled by the local environmental protection department in March2022.
9. Emergency Plan for Emergent Environmental Incidents of Suqian New Materials Co.,Ltd. was filled by the local environmental protection department in December 2021.
10. Emergency Plan for Emergent Environmental Incidents of Suqian Hengyuan
Thermal Energy Co., Ltd. was filled by the local environmental protection departmentin July 2023.
11. Emergency Plan for Emergent Environmental Incidents of Fujian Yijin ChemicalFibre Co., Ltd. was filled by the local environmental protection department in January2022.
12. Emergency Plan for Emergent Environmental Incidents of Hainan YishengPetrochemical Co., Ltd. was revised, reviewed and filled by the local environmentalprotection department in December 2021.
13. Emergency Plan for Emergent Environmental Incidents of Zhejiang YishengPetrochemical Co., Ltd. was revised, reviewed and filled by the local environmentalprotection department in September 2023.
14. Emergency Plan for Emergent Environmental Incidents of Yisheng DahuaPetrochemical Co., Ltd. was filled by the local environmental protection department inMarch 2023.
Environmental self-monitoring program
The Company and its subsidiaries strictly comply with national and local environmentalprotection laws, regulations and relevant provisions, and establish environmental self-monitoring programs to ensure that all pollutants discharged are strictly up to thedischarge standards set out in and reasonably disposed according to relevant laws andregulations. The Company carries out pollution source monitoring in strict accordancewith the self-monitoring program, which is publicized in the pollution sourcemonitoring data management system, to ensure that all pollutants discharged are strictlyup to the standards as specified by relevant laws and regulations, and also entrusts
qualified third-party monitoring entities to carry out regular monitoring.
Investments in environmental governance and protection and payment ofenvironmental protection taxes
In 2023, the Company invested a total of RMB 51,248,400 in the environmentalgovernance and protection of each key emission unit and paid environmental protectiontax of RMB 22,421,500. Among them, the joint venture subsidiary Zhejiang BalingHengyi Caprolactam Co., Ltd. continued to invest approximately RMB 18 million inupgrading the two waste furnaces (which included the renovation of the denitrificationsystem), and invested approximately RMB 7 million in upgrading and renovating theperoxide tail gas adsorption device of Unit 43; Zhejiang Shuangtu New Materials Co.,Ltd. continued to invest approximately RMB 15 million in renovating the boiler fluegas denitrification and dedusting facilities, and added an oil smoke purifier in thespinning B workshop, which reduced the emission of exhaust gases; Suqian Yida NewMaterial Co., Ltd. invested nearly RMB 4 million, supporting VOCs exhaust gasfacilities for short staple fibre C workshop, adopting VOC absorption coupled with de-whitening integrated equipment, absorbing VOCs while reducing water vapouremissions; Zhejiang Hengyi Petrochemical Co., Ltd. invested about RMB 500,000,renewing the oil fume purifier; Zhejiang Hengyi Polymers Co., Ltd. invested aboutRMB 400,000 , carrying out cinder block stacking yards and boiler flues Ltd.
Measures taken to reduce carbon emissions during the reporting period and theireffects
The quality of coal was improved to make chemical raw materials lighter; a series ofmeasures such as renovation of energy-saving lamps, combined use of air compressorsand renewal of equipment to reduce the electricity consumption. Solar thermal powerwas used for power generation by establishing a pilot base for solar thermal power
generation and PV power generation on the roof of the Company's factory. Employeeswere encouraged to use new energy vehicles and new energy non- road mobilemachinery and equipment were additionally arranged in the factory. Employees weretrained with knowledge of ecological civilization, to make them to practice the greenlow-carbon concept in life and production, thematic publicity activities such as All StaffEnvironment Day and Low Carbon Day were carried out to make employees knowmore about green low-carbon.
Administrative punishment for environmental issues during the reporting period
| Name of Company or subsidiary | Reasons for punishment | Violations | Penalty results | Impacts on the production and operation of listed companies | Rectification measures of the Company |
| Hengyi Polymers | Heng Yi polymer plant west of the coal-fired boiler west of the cinder yard storage of cinder, coal ash and other general industrial solid waste, and part of the solid waste piled up in the open air, did not take protective measures in line with national environmental protection standards | Violation of the Law of the People's Republic of China on the Prevention and Control of Environmental Pollution by Solid Wastes (2020 Edition), Article 40(1) of the Law on the Prevention and Control of Environmental Pollution by Solid Wastes (2020 Edition) There are general industrial solid wastes such as coal slag and coal ash stored in the coal slag dump on the west side of the Hengyi Polymer factory | Fine RMB 100,000 | No impacts on the production and operation of the Company | Upon receipt of the notice of administrative penalty, the company immediately carried out rectification and renovated the cinder yard |
west of the coal-fired boiler, andsome of the solidwastes are piled upin the open airwithout takingprotectivemeasures in linewith nationalenvironmentalprotectionstandards
Other environmental information that shall be made publicEnvironmental information that shall be made public had been disclosed as required.
Other environmental protection informationThe Company and its subsidiaries attach great importance to eco-friendliness, and makemajor decisions regarding the Company's environmental protection on a regular orirregular basis. The Company has established a health, safety and environment (HSE)management committee to implement comprehensive supervision and management ofthe Company's HSE work; each subsidiary has a full-time environmental protectiondepartment responsible for daily comprehensive management, supervision andinspection. The Company has established a strict monitoring system and entrusted theenvironmental management and monitoring department to monitor the water, gas,sound, and slag of the whole plant to grasp the pollution dynamics.
The Company shall comply with the disclosure requirements for petrochemicalindustry specified in Guidelines No. 3 for Self-Regulation of Listed Companies ofShenzhen Stock Exchange - Industry Information Disclosure
Relevant situations of environmental accidents in listed companiesNot applicable
II. Social responsibility
Please see the Social, Environmental, Governance (ESG) report of 2023 for details.The Company shall comply with the disclosure requirements for petrochemicalindustry specified in Guidelines No. 3 for Self-Regulation of Listed Companiesof Shenzhen Stock Exchange - Industry Information Disclosure
In 2023, the company's production safety situation was stable, with no major productionsafety accidents and zero new cases of occupational diseases. The company alwaystakes safety as the first element of development, fully fulfils the main responsibility ofsafety management, and pays close attention to safety management in all aspects.
Firstly, the company actively implements the safety responsibility, and at the beginningof the year, it signed the "Safety and Environmental Protection Production TargetResponsibility Letter" with each subsidiary and relevant department, clarifying theresponsibility of safety production, strengthening the awareness of safety production,and forming a good pattern of promoting one level and implementing one level at atime.
Secondly, we actively promote the construction of safety standardisation system anddual prevention mechanism in our subsidiaries. The company maintains the first levelof safety standardisation in the field of road traffic and transportation, the second levelof safety standardisation in the field of hazardous chemicals production, and 80% ofthe enterprises in the field of chemical fibre manufacturing have achieved the third levelof safety standardisation, while the other subsidiaries are being gradually created andperfected.Thirdly, it has comprehensively carried out special inspections of the production safety
investigation and remediation and the implementation of the system of fullresponsibility for production safety, and strengthened the depth and professionalism ofsafety supervision and inspection by means of comprehensive inspections, specialinspections by external experts, and squatting inspections, so as to achieve a 100 percent completion rate for the annual rectification and rectification of hidden dangers.
Fourthly, we increased investment in safety production, actively adopted newtechnologies, new techniques and new equipment, continuously improved safetyproduction conditions, and continuously upgraded the enterprise's intrinsic safety level.Throughout the year, the Company invested a total of RMB 139,868,600 in safetyexpenses.
Fifthly, the company focuses on safety education and training to improve the safetyawareness of all staff. The safety training system covers the main person in charge,safety production management personnel, special operation and equipment operators,other employees, as well as contractors (sub)contractors and labourers. 49,177education and training sessions were conducted throughout the year, and the trainingcompletion rate and qualification rate reached 100%, achieving a focused and fullcoverage.
Sixthly, we built a dual prevention mechanism for production safety, and built a soliddefence line for production safety. Throughout the year, the subsidiaries of theCompany accepted 62 routine safety inspections by the competent units, without anyviolations or penalties, and no major production safety hazards were found.
III. Achievements in poverty alleviation consolidation and expansion and ruralrevitalization
The company has always advocated the concept of public welfare and charity, actively
participate in volunteer services, education donations, community building and othertypes of public welfare activities, to give a helping hand to the needy groups, andcontinue to promote the healthy development of society, to show a responsible andresponsible corporate image, and to contribute to the building of a harmonious andbeautiful society.
In order to support the development of education in the west, the Company hasincreased its support for education. In 2023, the Company donated RMB 6 million tothe Red Cross Society of Wuzhong City, Ningxia for the construction of Hongde HopeSchool in Hongsibao District, Wuzhong City, Ningxia, and the cumulative donation hasreached RMB 30 million, which has completed all the donations for the project, andhas pushed forward the consolidation of the results of poverty alleviation and theeffective convergence of rural revitalisation.
In the future, the Company will continue to participate in poverty alleviation and reliefactivities, take the initiative to interact with local governments in the public interest,give full play to the Company's role as an important player in local enterprises, and giveback to the community at the right time to build a harmonious development atmosphere.
Section VI Important MattersI. Fulfilment of commitments
1. Commitments that the Company’s actual controllers, shareholders, related parties, acquirers, and the Company and other relevant parties havefulfilled during the reporting period and that have not been fulfilled as of the end of the reporting period?Applicable □Not applicable
| Commitment item | Promising party | Commitment type | Commitment content | Commitment time | Commitment period | Performance |
| Commitments made in the acquisition report or | Qiu Jianlin, the actual controller of Hengyi Group and the Company | Commitment on independent operation | He ensures the independence of Hengyi Group and its actual controller's affiliates and the Company in terms of personnel, assets, finance, organization and business in the commitment. | Aprl 29, 2010 | Long-term effective | Up to now, Hengyi Group and the actual controller Qiu Jianlin have not violated this commitment. |
| equity change report | Qiu Jianlin, the actual controller of Hengyi Group and the Company | Commitment on horizontal competition | Promise not to compete with the Company in the same industry. | April 29, 2010 | Long-term effective | Up to now, Hengyi Group and the actual controller Qiu Jianlin have not violated this commitment. |
| Qiu Jianlin, the actual controller of Hengyi Group and the Company | Commitment on related- party transactions | Commit to regulate related-party transactions with the Company. | April 29, 2010 | Long-term effective | Up to now, Hengyi Group and the actual controller Qiu Jianlin have not violated this commitment. |
2. There is a profit forecast for the Company’s assets or projects, and it is still inthe profit forecast period at the reporting period, the Company provides anexplanation of the reason for the assets or projects reaching the original profitforecast
□Applicable ?Not applicable
II. The non-operating capital occupation of the listed company by the controllingshareholder and its related parties
During the reporting period of the Company, there was no non-operating capitaloccupation of the listed company by the controlling shareholder and its related parties.
III. External Guarantees Against the Rules and Regulations
There was no external guarantee provided by the Company which was against rules andregulations during the reporting period.
IV. Explanation of the BOD on the latest “Non-standard Audit Report”
□Applicable ?Not applicable
V. Description of the BOD, the BOS, and the independent directors (if any) on the“Non- standard Audit Report” for the current reporting period issued by theaccounting firm
□Applicable ?Not applicable
VI. Description of changes in accounting policies, accounting estimates orcorrections of material accounting errors compared to the financial report of theprevious year
□ Applicable ?Not applicable
VII. Description of changes in the scope of the consolidated financial statementscompared to the financial report of the previous year
The total number of subsidiaries included in the scope of consolidation in fiscal year2023 was 52, an increase of 6 subsidiaries and a decrease of 2 subsidiaries comparedwith the previous year. For details, please refer to "VII. Interests in Other Entities" in"Section X. Financial Reporting".
VIII. Appointment and dismissal of the accounting firms
Currently employed accounting firm
| Name of the domestic accounting firm | Zhongxinghua Certified Public Accountants LLP |
| Remuneration of domestic accounting firms (RMB 10,000) | 325 |
| Consecutive years of audit services of domestic accounting firms | 5 |
| Name of CPA in domestic accounting firms | Liu Hongyue, Wang Guohai |
| Consecutive years of audit services provided by the domestic accounting firm's CPAs | 5 |
| Name of overseas accounting firms (if any) | None |
| Remuneration of overseas accounting firms (RMB 10,000) (if any) | 0 |
| Consecutive years of audit services of overseas accounting firms (if any) | None |
| Name of the certified public accountant of the overseas accounting firms (if any) (if any) | None |
| Consecutive years of CPA audit services of overseas accounting firms (if any) | None |
Whether to reappoint an accounting firm in current period
□Yes ?No
Employment of internal control auditing accounting firms, financial consultants orsponsors During the reporting period, the Company hired Zhongxinghua CertifiedPublic Accountants LLP as the internal control audit agency, with an internal controlaudit fee of RMB 550,000, and the fees paid during the reporting period were RMB 3.8million.
IX. Delisting after the disclosure of annual report
□Applicable ?Not applicable
X. Matters Related to bankruptcy and reorganizationDuring the reporting period, the Company did not have any bankruptcy andreorganization related matters.
XI. Major litigations and arbitrationsThe Company had no major litigation or arbitration matters during the reporting period.
XII. Penalties and rectificationsThere were no penalties and rectifications during the reporting period of the Company.
XIII. Integrity of the Company and its controlling shareholders and the actualcontroller
□Applicable ?Not applicable
XIV. Significant related-party transactions
1. Related-party transactions related to daily operations
| Related party | Related party relations | Type of related- party transactions | Contents of related- party transactions | Pricing principle for related- party transactions | Price of related- party transactions | Amount of related- party transactions (RMB 10,000) | Proportion s in the amount of similar transactions (%) | Approved transaction limit (RMB 10,000) | Whether it exceeds the approve d quota | Settlement method of related- party transactions | Available market prices for similar transaction s |
| Yisheng Dahua | Associated enterprises | Procurement of goods | PTA | Market price | Market price | 15,459.25 | 0.72% | 80,300 | No | Bill/cash | Market price |
| Yisheng Dahua | Associated enterprises | Sales of goods | PIA | Market price | Market price | 10,229.64 | 11.06% | 12,200 | No | Bill/cash | Market price |
| Hainan Yisheng | JV | Procurement of goods | PTA | Market price | Market price | 2,000.52 | 0.09% | 20,000 | No | Bill/cash | Market price |
| Hainan Yisheng | JV | Sales of goods | PX | Market price | Market price | 97,713.84 | 10.80% | 203,000 | No | Bill/cash | Market price |
| Hainan Yisheng | JV | Sales of goods | PIA | Market price | Market price | 27,670.09 | 29.92% | 40,100 | No | Bill/cash | Market price |
| Hainan Yisheng | JV | Provision of labor | Transportation of goods | Market price | Market price | 166.48 | 0.20% | 1,000 | No | Bill/cash | Market price |
| services | |||||||||||
| Yisheng New Materials | Associated enterprises | Procurement of goods | PTA | Market price | Market price | 1,521,384.95 | 70.54% | 2,000,000 | No | Bill/cash | Market price |
| Yisheng New Materials | Associated enterprises | Provision of labor services | Transportation of goods | Market price | Market price | 7,101 | 8.39% | 7,700 | No | Bill/cash | Market price |
| Hengyi Caprolactam | JV | Procurement of goods | Steam | Market price | Market price | 14,712.15 | 100.00% | 17,000 | No | Bill/cash | Market price |
| Hengyi Caprolactam | JV | Procurement of goods | Electricity | Market price | Market price | 30,789.99 | 100.00% | 33,000 | No | Bill/cash | Market price |
| Hengyi Caprolactam | JV | Sales of goods | Power and energy-related products | Market price | Market price | 129,207.49 | 71.58% | 186,800 | No | Bill/cash | Market price |
| Hengyi Caprolactam | JV | Sales of goods | Benzene | Market price | Market price | 44,877.8 | 65.49% | 60,000 | No | Bill/cash | Market price |
| Hengyi Caprolactam | JV | Provision of labor services | Transportation of goods | Market price | Market price | 483.16 | 0.57% | 1,000 | No | Bill/cash | Market price |
| Hengyi Caprolactam | JV | Provision of labor services | Engineering management | Market price | Market price | 3,260.78 | 70.09% | 3,200 | Yes | Bill/cash | Market price |
| Hengyi Jinlun | A holding subsidiary of the ultimate parent company | Provision of labor services | Transportation of goods | Market price | Market price | 1,452.94 | 1.72% | 1,900 | No | Bill/cash | Market price |
| Hengyi Jinlun | A holding subsidiary of the ultimate parent company | Sales of goods | Auxiliary materials | Market price | Market price | 2,334.88 | 9.03% | 2,600 | No | Bill/cash | Market price |
| Hengyi Jinlun | A holding subsidiary of the ultimate parent company | Procurement of goods | Polyester products | Market price | Market price | 337.96 | 2.86% | 2,500 | No | Bill/cash | Market price |
| Shaoxing Hengming | Associates of the ultimate parent company | Procurement of goods | Packing materials | Market price | Market price | 883,802.92 | 14.03% | 900,000 | No | Bill/cash | Market price |
| Shaoxing Hengming | Associates of the ultimate parent company | Procurement of goods | Packing materials | Market price | Market price | 3,442.57 | 42.25% | 4,000 | No | Bill/cash | Market price |
| Shaoxing Hengming | Associates of the ultimate parent company | Sales of goods | Polyester products | Market price | Market price | 2,839.99 | 32.15% | 3,700 | No | Bill/cash | Market price |
| Shaoxing Hengming | Associates of the ultimate parent company | Sales of goods | Auxiliary materials | Market price | Market price | 3,024.08 | 11.69% | 2,500 | Yes | Bill/cash | Market price |
| Shaoxing Hengming | Associates of the ultimate parent company | Sales of goods | Energy- related products | Market price | Market price | 31,840 | 17.64% | 41,500 | No | Bill/cash | Market price |
| Shaoxing Hengming | Associates of the ultimate parent company | Provision of labor services | Transportation of goods | Market price | Market price | 11,594.21 | 13.70% | 10,000 | Yes | Bill/cash | Market price |
| Shaoxing Hengming | Associates of the ultimate parent company | Provision of labor services | Engineering management | Market price | Market price | 1,183.83 | 25.45% | 1,100 | Yes | Bill/cash | Market price |
| Hangzhou Yichen | A holding subsidiary of the ultimate parent company | Procurement of goods | Polyamide flake | Market price | Market price | 11,474.32 | 97.14% | 15,000 | No | Bill/cash | Market price |
| Hangzhou Yichen | A holding subsidiary of the ultimate parent company | Sales of goods | PTA | Market price | Market price | 413.15 | 0.02% | 350 | Yes | Bill/cash | Market price |
| Hangzhou Yichen | A holding subsidiary of the ultimate parent company | Provision of labor services | Transportation of goods | Market price | Market price | 2,860.83 | 3.38% | 3,100 | No | Bill/cash | Market price |
| Hangzhou Yichen | A holding subsidiary of the ultimate parent company | Sales of goods | Auxiliary materials | Market price | Market price | 1,907.13 | 7.37% | 2,100 | No | Bill/cash | Market price |
| Hengqi Environmental Protection | Joint ventures of ultimate parent company | Sales of goods | Power and energy products | Market price | Market price | 1,880.02 | 1.04% | 4,500 | No | Bill/cash | Market price |
| Qingzhi Marina | Affiliated corporations of which a director of a listed company is a director | Procurement of labour | Loading and unloading of goods | Market price | Market price | 1,352.16 | 9.21% | 1,800 | No | Bill/cash | Market price |
| Hong | A holding subsidiary of the ultimate parent company | Procurement of goods | Crude oil | Market price | Market price | 152,581.08 | 4.96% | 306,000 | No | Bill/cash | Market price |
| Kong Tianyi | |||||||||
| Total | -- | -- | 3,019,379.21 | -- | 3,967,950 | -- | -- | -- | |
| Disclosure date | December 07 2022, September 13 2023 | ||||||||
| Details of returns of large sales | None | ||||||||
| Actual performance during the reporting period, if the total amount of the daily related-party transactions that are expected to take place in current period is forecasted by category (if any) | The above-mentioned related-party transactions are conducive to utilization of the superior resources of the Company and important related parties, ensuring the stable supply of important raw materials and the stable and continuous supply of electricity and other auxiliary materials, broadening the Company's downstream product sales channels, and realizing the Company's attempts to operate upstream products. It is conducive to consolidating and enhancing the advantages of industrial chain integration. | ||||||||
| Reasons for the large difference between the transaction price and the market reference price (if applicable) | The related-party transactions between the Company and the above-mentioned related parties are closely related to the Company’s daily operations. Related party transactions are based on market prices or prices determined by regulatory authorities, and follow the principles of fairness, justice, and openness, and will not harm the interests of the Company and small and medium shareholders. The main business will not form a significant dependence on related parties due to the above-mentioned related transactions, nor affect the Company's independence, and will have a positive impact on the Company's current and future financial status and operating results. | ||||||||
2. Related-party transactions arising from the acquisition or sale of assets or equity
| Related Party | Related party relations | Type of related-party transactions | Contents of related-party transactions | Pricing principle for related-party | Book value of transferred assets(RMB | Assessed value of transferred | Transfer price (RMB 10,000) | Settlement met | Profit and loss of transactions | Disclosure date | Disclosure index |
| transactions | 10,000) | assets (RMB 10,000) | hod of related-party transactions | (RMB 10,000) | |||||||
| Hengyi Group | The parent company of the Company | Transfer of assets | Sell 100% equity of Hangzhou Yijing | Market value | 43,102.66 | 88,755.42 | 88,000 | Cash | 44,897.34 | December 08, 2023 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1218547547&announcementTime=2023-12-08 |
| Reasons for significant differences between the transfer price and the book value or assessed value (if any) | The total price of the equity transfer is based on the book value and appraised value of the net assets of the Subject Company as at 31 October 2023, which has been objectively and prudently assessed and determined through negotiation between the parties to the transaction, and the pricing of the connected transaction is fair. | ||||||||||
| Impacts on the operating results and financial conditions of the Company | The transaction price is fair and reasonable and will not adversely affect the Company's financial condition and results of operations。 | ||||||||||
| Achievements of performance during the reporting period in case the relevant transaction involves performance agreements | Not applicable | ||||||||||
3. Related-party transactions for joint overseas investment
□Applicable ?Not applicable
4. Related credit and debt transactions
During the reporting period, the Company did not have associated credit and debt transactions.
5. Transactions with related finance companies
The Company had no transactions regarding deposits, loans, credits or other financial businesses with the related finance companies and relatedparties.
6. Transactions between finance companies controlled by the Company and related parties
The finance companies controlled by the Company had no transactions regarding deposits, loans, credits or other financial businesses with therelated parties
7. Other major related-party transactions
The Company had no other major related-party transactions during the reporting period.
XV. Major contracts and their performance
1. Custody, contracting and leasing matters
(1) Custody situation
There was no custody in the Company during the reporting period.
(2) Contracting situation
There was no contracting situation during the reporting period of the Company.
(3) Leasing situation
During the reporting period, there was no leasing situation.
2. Major guarantees
Currency unit: 10,000
| The Company and its subsidiaries’ external guarantees (excluding guarantees to subsidiaries) | ||||||||||
| Name of the guaranteed object | Date of disclosure of announcement on guaranteed quota | Guaranteed limit | Actual date | Actual guarantee amount | Type of guarantee | Guarantee period | Whether it has been fulfilled | Whether it is a related party guarantee | ||
| Hainan Yisheng | December 07, 2022 | 70,000 | March 10, 2023 | 53,662.78 | General guaranty | May 22, 2023 to December 24, 2024 | No | Yes | ||
| Total amount of external guarantees approved during the reporting period (A1) | 70,000 | Total amount of external guarantees actually incurred during the reporting period (A2) | 53,662.78 | |||||||
| Total amount of external guarantees approved at the end of the reporting period (A3) | 70,000 | Total balance of actual external guarantees at the end of the reporting period (A4) | 53,662.78 | |||||||
| The Company's guarantees for subsidiaries | ||||||||||
| Name of the guaranteed object | Date of disclosure of announcement on guaranteed quota | Guaranteed limit | Actual date | Actual guarantee amount | Type of guarantee | Guarantee period | Whether it has been fulfilled | Whether it is a related party guarantee | ||
| Hengyi Limited | January 16, 2020 | 2,207.41 | May 31, 2020 | 2,207.41 | General | May 31, 2020 to February 20, 2023 | Yes | Yes | ||
| guaranty | ||||||||
| January 16, 2020 | 5,559.94 | July 24, 2020 | 5,559.94 | General guaranty | July 24, 2020 to March 15, 2023 | Yes | Yes | |
| January 16, 2020 | 2,237.45 | May 31, 2020 | 2,237.45 | General guaranty | May 31, 2020-5-31to May 31, 2023 | Yes | Yes | |
| January 22, 2021 | 4,482.13 | March 31, 2021 | 4,482.13 | General guaranty | March 31, 2021to March 31, 2024 | No | Yes | |
| January 22, 2022 | 72,732.66 | March 28, 2022 | 72,732.66 | General guaranty | March 28, 2022 to November 21, 2023 | Yes | Yes | |
| December 07, 2022 | 17,025.41 | January 1, 2023 | 17,025.41 | General guaranty | January 1, 2023 to December 26, 2023 | Yes | Yes | |
| December 07, 2022 | 113,183.62 | April 12, 2023 | 113,183.62 | General guaranty | April 12, 2023 to December 28, 2024 | No | Yes | |
| December 07, 2022 | 137,809.85 | January 5, 2023 | 137,809.85 | General guaranty | January 5, 2023 to September 10, 2024 | No | Yes | |
| Hengyi High- Tech | January 16, 2020 | 14,000 | May 29, 2020 | 14,000 | General guaranty | May 29, 2020 to May 25, 2023 | Yes | Yes |
| January 22, 2022 | 52,280 | March 31, 2022 | 52,280 | General guaranty | March 31, 2022 to August, 2023 | Yes | Yes | |
| December 07, 2022 | 83,780 | February 07, 2023 | 83,780 | General guaranty | February 07, 2023 to December 27, 2024 | No | Yes | |
| December 07, 2022 | 156,012 | February 03, 2023 | 156,012 | General guaranty | February 03, 2023 to December 09, 2024 | No | Yes |
| Hengyi Polymer | January 22, 2022 | 31,250 | March 10, 2022 | 18,750 | General guaranty | March 10 to November 16 | Yes | Yes |
| December 07, 2022 | 6,400 | December 16, 2022 | 3,840 | General guaranty | December 16, 2022 to December 16, 2023 | Yes | Yes | |
| December 07, 2022 | 1,000 | January 1, 2023 | 600 | General guaranty | January 1, 2023 to December 26, 2023 | Yes | Yes | |
| December 07, 2022 | 39,300 | January 4, 2023 | 23,580 | General guaranty | January 4, 2023 to December 28, 2024 | No | Yes | |
| December 07, 2022 | 12,595 | August 1, 2023 | 7,557 | General guaranty | August 1, 2023 to May 1, 2024 | No | Yes | |
| December 07, 2022 | 13,500 | February 21, 2023 | 8,100 | General guaranty | February 21, 2023 to June 7, 2024 | No | Yes | |
| December 07, 2022 | 5,000 | November 30, 2023 | 3,000 | General guaranty | November 30, 2023 to November 29, 2024 | No | Yes | |
| Shuangtu New Materials | January 16, 2020 | 4,000 | September 30, 2020 | 4,000 | General guaranty | September 30, 2020 to September 2023-9-20 | Yes | Yes |
| January 22, 2022 | 48,800 | May 6, 2022 | 48,800 | General guaranty | May 6, 2022 to July 25, 2023 | Yes | Yes | |
| December 07, 2022 | 15,600 | January 1, 2023 | 15,600 | General guaranty | January 1, 2023 to December 27, 2023 | Yes | Yes | |
| December 07, 2022 | 73,400 | March 24, 2023 | 73,400 | General guaranty | March 24, 2023 to December 28, 2024 | No | Yes | |
| December 07, 2022 | 59,999.75 | July 11, 2023 | 59,999.75 | General | July 11, 2023 to December 12, | No | Yes |
| guaranty | 2024 | |||||||
| Zhejiang Yisheng | January 22, 2021 | 20,000 | January 19, 2022 | 14,000 | General guaranty | January 19, 2022 to January 19, 2023 | Yes | Yes |
| January 22, 2022 | 103,654.04 | April 13, 2022 | 72,557.83 | General guaranty | April 13, 2022 to November 22, 2023 | Yes | Yes | |
| January 22, 2022 | 20,000 | March 22, 2022 | 14,000 | General guaranty | March 22, 2022 to March 21, 2024 | No | Yes | |
| December 07, 2022 | 31,000 | December 13, 2022 | 21,700 | General guaranty | December 13, 2022 to January 19, 2024 | Yes | Yes | |
| December 07, 2022 | 43,662.82 | February 21, 2023 | 30,563.97 | General guaranty | February 21, 2023to December 27, 2023 | Yes | Yes | |
| December 07, 2022 | 109,675 | January 4, 2023 | 76,772.50 | General guaranty | January 4, 2023 to November 12, 2025 | No | Yes | |
| December 07, 2022 | 18,800 | August 10, 2023 | 13,160 | General guaranty | August 10, 2023 to June 26, 2024 | No | Yes | |
| Taicang Yifeng | January 22, 2021 | 1,500 | January 17, 2022 | 1,500 | General guaranty | January 17, 2022 to January 16, 2023 | Yes | Yes |
| January 22, 2022 | 18,000 | February 16, 2022 | 18,000 | General guaranty | February 16, 2022 to July 25, 2023 | Yes | Yes | |
| December 07, 2022 | 30 | February 24, 2023 | 30 | General guaranty | February 24, 2023 to August 23, 2023 | Yes | Yes | |
| December 07, 2022 | 20,370 | January 3, 2023 | 20,370 | General guaranty | January 3, 2023 to July 11, 2024 | No | Yes |
| December 07, 2022 | 5,000 | February 21, 2023 | 5,000 | General guaranty | February 21, 2023 to February 22, 2024 | No | Yes | |
| Suqian Yida | January 22, 2022 | 5,000 | June 24, 2022 | 4,550.00 | General guaranty | June 24, 2022 to July 27, 2023 | Yes | Yes |
| December 07, 2022 | 7,000 | June 25, 2023 | 6,370.00 | General guaranty | June 25, 2023 to June 19, 2024 | No | Yes | |
| December 07, 2022 | 13,000 | March 24, 2023 | 11,830.00 | General guaranty | March 24, 2023 to July 22, 2024 | No | Yes | |
| Hng Kong Tianyi | January 22, 2022 | 1,528.55 | November 2, 2022 | 1,528.55 | General guaranty | November 2, 2022 to February 7, 2023 | Yes | Yes |
| December 07, 2022 | 28,598.22 | January 19, 2023 | 28,598.22 | General guaranty | January 19, 2023 to December 26, 2023 | Yes | Yes | |
| December 07, 2022 | 16,304.53 | October 07, 2023 | 16,304.53 | General guaranty | October 07, 2023 to March 21, 2024 | No | Yes | |
| Jiaxin Yipeng | January 22, 2022 | 5,000 | October 31, 2022 | 5,000 | General guaranty | October 31, 2022 to October 30, 2023 | Yes | Yes |
| December 07, 2022 | 5,000 | January 13, 2023 | 5,000 | General guaranty | January 13, 2023 to January 12, 2024 | Yes | Yes | |
| December 07, 2022 | 10,000 | October 10, 2023 | 10,000 | General guaranty | October 10, 2023 to April 9, 2024 | No | Yes | |
| December 07, 2022 | 25,996 | July 18, 2023 | 25,996 | General guaranty | July 18, 2023 to April 19, 2024 | No | Yes | |
| December 07, 2022 | 60,000 | September 1, 2023 | 60,000 | General | September 1, 2023 to November | No | Yes |
| guaranty | 23, 2024 | |||||||
| Haining Thermal Power | January 16, 2020 | 6,250 | April 24, 2020 | 6,250 | General guaranty | April 24, 2020 to December 10, 2023 | Yes | Yes |
| January 16, 2020 | 31,500 | April 24, 2020 | 31,500 | General guaranty | April 24, 2020 to December 10, 2029 | No | Yes | |
| Haining New Materials | January 22, 2021 | 1,500 | January 4, 2022 | 1,500 | General guaranty | January 4, 2022 to July 4, 2023 | Yes | Yes |
| January 22, 2021 | 12,750 | January 4, 2022 | 12,750 | General guaranty | January 4, 2022 to January 4, 2024 | No | Yes | |
| January 22, 2021 | 114,886 | April 20, 2021 | 114,886 | General guaranty | April 20, 2021 to April 26, 2029 | No | Yes | |
| January 22, 2022 | 75 | October 21, 2022 | 75 | General guaranty | October 21, 2022 to October 21, 2023 | Yes | Yes | |
| January 22, 2022 | 675 | October 21, 2022 | 675 | General guaranty | October 21, 2022 to October 21, 2024 | No | Yes | |
| December 07, 2022 | 10,825 | November 20, 2023 | 10,825 | General guaranty | November 20, 2023 to November 21, 2024 | No | Yes | |
| December 07, 2022 | 750 | January 6, 2023 | 750 | General guaranty | January 6, 2023 to January 4, 2024 | No | Yes | |
| December 07, 2022 | 44,000 | January 13, 2023 | 44,000 | General guaranty | January 13, 2023 to March 27, 2024 | No | Yes | |
| Fujian Yijin | January 16, 2020 | 10,224.89 | May 26, 2020 | 9,202.40 | General guaranty | May 26, 2020 to November 21, 2023 | Yes | Yes |
| January 16, 2020 | 33,682 | May 26, 2020 | 30,313.80 | General guaranty | May 26, 2020 to May 21, 2028 | No | Yes | |
| January 22, 2022 | 3,000 | July 15, 2022 | 2,700 | General guaranty | July 15, 2022 to July 14, 2023 | Yes | Yes | |
| Hengyi Singapore | January 22, 2022 | 175,650.96 | July 15, 2022 | 122,955.67 | General guaranty | July 15, 2022 to April 24, 2025 | Yes | Yes |
| December 07, 2022 | 11,617.18 | December 21, 2022 | 8,132.03 | General guaranty | December 21 to June 19, 2023 | Yes | Yes | |
| December 07, 2022 | 44,341.93 | March 24, 2023 | 31,039.35 | General guaranty | March 24, 2023 to October 20, 2023 | Yes | Yes | |
| December 07, 2022 | 72,789.39 | July 6, 2023 | 50,952.57 | General guaranty | July 6, 2023 to March 22, 2024 | No | Yes | |
| Hengyi Brunei | December 07, 2022 | 191,654 | June 12, 2023 | 134,157.80 | General guaranty | June 12, 2023-6-12 to December 14, 2023 | Yes | Yes |
| December 07, 2022 | 200,142.27 | October 9, 2023 | 140,099.59 | General guaranty | October 9, 2023 to May 30, 2024 | No | Yes | |
| Guangxi New Materials | December 07, 2022 | 278,146.80 | January 13, 2023 | 278,146.80 | General guaranty | January 13, 2023 to December 25, 2032 | No | Yes |
| Total amount of guarantees to subsidiaries approved during the reporting period (B1) | 3,318,000 | Total amount of guarantees to subsidiaries actually incurred during the reporting period (B2) | 1,699,613.97 | |||||
| Total amount of guarantees to | 3,318,000 | Total balance of guarantees to | 1,645,606.14 | |||||
| subsidiaries approved at the end of the reporting period (B3) | subsidiaries actually incurred at the end of the reporting period (B4) | |||||||
| Subsidiary guarantees for subsidiaries | ||||||||
| Name of the guaranteed object | Date of disclosure of announcement on guaranteed quota | Guaranteed limit | Actual date | Actual guarantee amount | Type of guarantee | Guarantee period | Whether it has been fulfilled | Whether it is a related party guarantee |
| Hengyi Limited | January 22, 2021 | 9,600 | November 17, 2021 | 9,600.00 | General guaranty | November 17, 2021 to November 13, 2023 | Yes | Yes |
| January 22, 2022 | 27,620 | July 20, 2022 | 27,620.00 | General guaranty | July 20, 2022 to February 17, 2023 | Yes | Yes | |
| January 22, 2022 | 3,599.85 | November 28, 2022 | 3,599.85 | General guaranty | November 28, 2022 to February 24, 2023 | Yes | Yes | |
| December 07, 2022 | 40,300 | March 16, 2023 | 40,300.00 | General guaranty | March 16, 2023 to December 10, 2024 | No | Yes | |
| Hengyi High- Tech | January 22, 2022 | 19,790 | July 15, 2022 | 19,790.00 | General guaranty | July 15, 2022-7-15 to December 2, 2023 | Yes | Yes |
| January 22, 2022 | 10,000 | March 14, 2022 | 10,000 | General guaranty | March 14, 2022 to April 14, 2023 | Yes | Yes | |
| December 07, 2022 | 16,825 | December 09, 2022 | 16,825.00 | General guaranty | December 9, 2022 to June 20, 2023 | Yes | Yes | |
| December 07, 2022 | 19,014.35 | January 12, 2023 | 19,014.35 | General guaranty | January 12, 2023 to December 4, 2023 | Yes | Yes | |
| December 07, 2022 | 20,000 | January 1, 2023 | 20,000 | General guaranty | January 1, 2023 to December 29, 2023 | Yes | Yes | |
| December 07, 2022 | 44,881.89 | June 21, 2023 | 44,881.89 | General guaranty | June 21, 2023 to December 5, 2024 | No | Yes | |
| December 07, 2022 | 20,000 | December 28, 2023 | 20,000 | General guaranty | December 28, 2023 to December 26, 2024 | No | Yes | |
| December 07, 2022 | 23,000 | February 07, 20223 | 23,000 | General guaranty | February 7, 2023 to April 26, 2024 | No | Yes | |
| Hengyi Polymer | January 22, 2022 | 33,370 | July 14, 2022 | 20,022 | General guaranty | July 14, 2022 to April 26, 2023 | Yes | Yes |
| December 07, 2022 | 21,570 | January 17, 2023 | 12,942 | General guaranty | January 17, 2023 to October 23, 2023 | Yes | Yes | |
| December 07, 2022 | 20,000 | January 5, 2023 | 12,000.00 | General guaranty | January 5, 2023 to December 22, 2023 | Yes | Yes | |
| December 07, 2022 | 34,355 | February 16, 2023 | 20,613 | General guaranty | February 16, 2023 to August 23, 2024 | No | Yes | |
| December 07, 2022 | 20,000 | December 27, 2023 | 12,000.00 | General guaranty | December 27, 2023 to November 1, 2024 | No | Yes | |
| Zhejiang Yisheng | January 22, 2022 | 110,024 | February 25, 2022 | 77,016.80 | General guaranty | February 25, 2022 to December 1, 2023 | Yes | Yes |
| January 22, 2022 | 12,500 | February 25, 2022 | 8,750.00 | General guaranty | February 25, 2022 to February 22, 2026 | No | Yes | |
| December 07, 2022 | 2,000 | December 28, 2022 | 1,400.00 | General | December 28, 2022 to December | Yes | Yes |
| guaranty | 27, 2023 | |||||||
| December 07, 2022 | 83,200 | January 1, 2023 | 58,240.00 | General guaranty | January 1, 2023 to September 10, 2024 | Yes | Yes | |
| December 07, 2022 | 17,000 | December 16, 2022 | 11,900.00 | General guaranty | December 16, 2022 to April 29, 2023 | Yes | Yes | |
| December 07, 2022 | 17,000 | June 1, 2023 | 11,900.00 | General guaranty | June 1, 2023 to November 23, 2023 | Yes | Yes | |
| December 07, 2022 | 20,000 | March 1, 2023 | 14,000.00 | General guaranty | March 1, 2023 to August 18, 2023 | Yes | Yes | |
| December 07, 2022 | 79,650 | February 27, 2023 | 55,755.00 | General guaranty | February 27, 2023 to December 4, 2024 | No | Yes | |
| December 07, 2022 | 40,416 | September 26, 2023 | 28,291.20 | General guaranty | September 26, 2023 to April 15, 2024 | No | Yes | |
| December 07, 2022 | 13,290 | August 8, 2023 | 9,303.00 | General guaranty | August 8, 2023 to April 20, 2024 | No | Yes | |
| Hong Kong Tianyi | January 22, 2021 | 19,619.08 | January 21, 2022 | 19,619.08 | General guaranty | January 21, 2022 to January 19, 2023 | Yes | Yes |
| January 22, 2022 | 46,887.47 | January 27, 2022 | 46,887.47 | General guaranty | January 17, 2022 to February 17, 2023 | Yes | Yes | |
| January 22, 2022 | 9,500 | June 27, 2022 | 9,500 | General guaranty | June 27, 2022 to June 26, 2023 | Yes | Yes | |
| Haining New Materials | January 23, 2019 | 6,742.33 | September 15, 2019 | 6,742.33 | General guaranty | September 15, 2019 to November 26, 2023 | Yes | Yes |
| January 23, 2019 | 39,627.05 | September 15, 2019 | 39,627.05 | General guaranty | September 15, 2019 to December 23, 2029 | No | Yes | |
| January 16, 2020 | 4,274.11 | March 29, 2020 | 4,274.11 | General guaranty | March 29, 2020 to November 11, 2023 | Yes | Yes | |
| January 16, 2020 | 27,781.73 | March 29, 2020 | 27,781.73 | General guaranty | March 29, 2020 to May 11, 2030 | No | Yes | |
| Hengyi Brunei | January 22, 2022 | 185,225.75 | May 27, 2022 | 129,658.03 | General guaranty | May 27, 2022-5-27 to November 27, 2023 | Yes | Yes |
| January 22, 2022 | 130,392.51 | May 27, 2022 | 91,274.76 | General guaranty | May 27, 2022-5-27 to May 26, 2027 | No | Yes | |
| December 07, 2022 | 70,827 | December 12, 2022 | 49,578.90 | General guaranty | December 12, 2022, to June 12, 2023 | Yes | Yes | |
| December 07, 2022 | 70,827 | May 22, 2023 | 49,578.90 | General guaranty | May 22, 2023 to November 20, 2023 | Yes | Yes | |
| December 07, 2022 | 31,368.57 | December 12, 2022 | 21,958.00 | General guaranty | December 12, 2022 to March 15, 2023 | Yes | Yes | |
| December 07, 2022 | 426,011.91 | February 15, 2023 | 298,208.34 | General guaranty | February 15, 2023-2-15 to December 22, 2023 | Yes | Yes | |
| December 07, 2022 | 42,496.20 | November 20, 2023 | 29,747.34 | General guaranty | November 20, 2023 to May 20, 2024 | No | Yes | |
| December 07, 2022 | 239,972.30 | October 27, 2023 | 167,980.61 | General guaranty | October 27, 2023 to March 26, 2024 | No | Yes | |
| Total amount of guarantees to | 1,612,000 | Total amount of guarantees to | 947,755.63 | |||||
| subsidiaries approved during the reporting period (C1) | subsidiaries actually incurred during the reporting period (C2) | ||
| Total amount of guarantees to subsidiaries approved at the end of the reporting period (C3) | 1,612,000 | Total balance of guarantees to subsidiaries actually incurred at the end of the reporting period (C4) | 619,305.58 |
| Total amount of company guarantees (i.e., the total of the first three items) | |||
| Total amount of guarantees approved during the reporting period (A1+B1+C1) | 5,000,000 | Total amount of guarantees actually incurred during the reporting period (A2+B2+C2) | 2,701,032.38 |
| Total amount of guarantees approved at the end of the reporting period (A3+B3+C3) | 5,000,000 | Total balance of guarantees actually incurred at the end of the reporting period (A4+B4+C4) | 2,318,574.50 |
| Proportion of the actual total amount of guarantee (A4+B4+C4) to the Company's net assets | 91.97% | ||
| Wherein: | |||
| Balance of guarantees provided for shareholders, actual controllers and their related parties (D) | 0 | ||
| Balance of debt guarantees provided directly or indirectly for the guaranteed object whose asset-liability ratio exceeds 70% (E) | 1,163,789.05 | ||
| Total amount of the total guarantee exceeding 50% of the net assets (F) | 1,058,016.96 | ||
| Total amount of the above three guarantees (D+E+F) | 1,646,160.28 |
| For unexpired guarantees, the statement of the situation where guarantee liability has occurred or may bear joint liability for repayment during the reporting period (if any) | None |
| Description of external guarantees against the rules and regulations (if any) | None |
Description of the specific circumstances of the use of composite guarantees
The Company and its subsidiaries provide the Company's holding subsidiary Hengyi Brunei with a guarantee line of USD 1.75 billion or equivalentoverseas RMB for the syndicated loan. Please refer to the Company’s disclosure Announcement on Providing Guarantees to Holding SubsidiaryHengyi Industries Sdn. Bhd. on the website of CNINFO on November 18, 2017 for details (Announcement No.: 2017-136).
3. Entrust others to manage cash asset
(1) Entrusted financing management
The Company has no entrusted financial management during the reporting period.
(2) Entrusted loans
Overview of entrusted loans during the reporting period
Currency unit: RMB 10,000
| Total amount | Sources of funds | Outstanding balance | Overdue amount |
| 177,400 | Self-owned capital | 78,600 | 0 |
High-risk entrusted loans with significant individual amounts or low security orlow liquidity
Currency unit: RMB 10,000
| Loan object | Loan object type | Loan interest rate | Loan amount | Sources of funds | Start date | End date | Expected return (if any) | Actual profit and loss during the reporting period | Actual recovery of profits and losses during the reporting period | Amount of provision for impairment reserves (if any) | Whether it goes through legal procedures | Whether there is any entrusted loan plan in the future | Summary of matters and related query index (if any) |
| Yisheng New Materials | Associated company | 4.785% | 98,800 | Self- owned capital | January 14, 2022 | December 21, 2023 | 1,872.22 | 1,872.22 | 1,872.22 | 0 | Yes | Yes | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1211403679&announcementTime=2021-10-28 |
| Yisheng New Materials | Associated company | 4.785% | 78,600 | Self- owned capital | January 9, 2023 | December 20, 2024 | 1,967.17 | 1,967.17 | 1,967.17 | 0 | Yes | Yes | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1214941035&announcementTime=2022-10-28 |
| Total | 177,400 | -- | -- | -- | 3,839.39 | 3,839.39 | -- | -- | -- | -- | |||
The principal of the entrusted loans is expected to be unable to be recovered orthere are other situations that may cause impairment
□Applicable ?Not applicable
4. Other major contracts
There were no other major contracts during the reporting period.
XVI. Description of other important matters
During the reporting period, the Company has disclosed the major issues on thewebsite of CNINFO in accordance with the Securities Law and the AdministrativeMeasures for Information Disclosure of Listed Companies, the details are as follows:
| SN | Date of announcement | Title of announcement |
| 1 | January 31,2023 | Annual Results Announcement 2022 (Announcement No. 2023-004) |
| 2 | February 08, 2023 | Proposed Non-public Offering of a Shares for the Year 2023 (Announcement No. 2023-008) |
| 3 | July 15, 2023 | 2023 Half-Yearly Results Announcement (Announcement No. 2023-067) |
| 4 | July 29, 2023 | Draft Fifth Employee Share Ownership Plan of Heng Yi Petrochemical Co. |
| 5 | July 29, 2023 | Announcement on the Establishment of Specialised Financial Products by Some Employees of the Company's Controlling Shareholders and Subsidiary Enterprises to Increase Their Holdings of the Company's Shares (Announcement No. 2023-072) |
| 6 | September 29, 2023 | Announcement on Completion of the Replacement of the Board of Directors and the Board of Supervisors and Appointment of Senior Management and Securities Affairs Representatives (Announcement No. 2023-099) |
| 7 | October 27, 2023 | Announcement on Completion of Share Repurchase and Changes in Shares (Announcement No. 2023-108) |
| 8 | December 08, 2023 | Announcement on the Appointment of the Secretary of the Board of Directors of the Company as Deputy General Manager and Chief Financial Officer (Announcement No. 2023-124) |
| 9 | December 16, 2023 | Announcement on Share Repurchase Programme (Phase IV) by means of Centralised Auction Trading (Announcement No. 2023-129) |
XVII. Important matters of subsidiaries of the company
□Applicable ?Not applicable
Section VII Changes in Shares and Shareholders
I. Changes in shares
1. Changes in shares
Currency unit: Share
| Before the change | Increase or decrease in current period (+, -) | After the change | |||||||
| Quantity | Proportion (%) | Issue of new shares | Quantity | Proportion (%) | Issue of new shares | Quantity | Proportion (%) | Issue of new shares | |
| I. Shares with Restrictions on Sales | 19,171,425 | 0.52% | 68,250 | 68,250 | 19,239,675 | 0.52% | |||
| 1. State shares | |||||||||
| 2. State- | |||||||||
| owned legal person shares | |||||||||
| 3. Other domestic shares | 19,171,425 | 0.52% | 68,250 | 68,250 | 19,239,675 | 0.52% | |||
| Wherein: Domestic corporate shares | |||||||||
| Domestic natural person shares | 19,171,425 | 0.52% | 68,250 | 68,250 | 19,239,675 | 0.52% | |||
| I. Shares with Restrictions on Sales | |||||||||
| 1. State shares | |||||||||
| 2. State-owned legal person shares |
| II. Shares without Restrictions on Sales | 3,647,109,381 | 99.48% | -47,031 | -47,031 | 3,647,062,350 | 99.48% | |||
| 1. Ordinary shares in RMB (A shares) | 3,647,109,381 | 99.48% | -47,031 | -47,031 | 3,647,062,350 | 99.48% | |||
| 2. Domestically listed foreign shares (B shares) | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III. Total Number of Shares | 3,666,280,806 | 100.00% | 21,219 | 21,219 | 3,666,302,025 | 100.00% |
Reason for changes in shares
(1) During the reporting period, due to the expiry of the term of office of Ms Ni Jinmei,Supervisor of the Company, all of her shares were converted into shares subject to lock-up conditions, and 68,250 shares were newly added to the list of shares subject to lock-up conditions.
(2) As at 29 December 2023, a total of 120 "HengYi Convertible Bonds" wereconverted into a total of 1,084 shares of "HengYi Petrochemicals", and a total of 2,116"Heng Yi Conversion 2" shares were converted into a total of 20,135 shares of "HPC",and the total number of shares to be converted from "Heng Yi Convertible Bonds" and"Heng Yi Convertible 2" in 2023 is 21,219 shares of "Heng Yi Petrochemical".
Approval of changes in shares
(1) As agreed by the Shenzhen Stock Exchange in the document "SZSE [2020] No.1027", the Company's RMB 2 billion convertible bonds have been listed for trading onthe Shenzhen Stock Exchange since 16 November 2020, with the short name of thebonds being "Hengyi Convertible Bonds" and the bond code being "127022".
(2) As agreed by the Shenzhen Stock Exchange in "SZSE [2022] No. 782", theconvertible bonds of the Company amounting to RMB 3 billion will be listed and tradedon the Shenzhen Stock Exchange with effect from 18 August 2022, with the short nameof the bonds being "Heng Yi Convertible Bond 2" and the bond code being "Heng YiConvertible Bond 2".
Transfer of changed shares
□Applicable ?Not applicable
The impact of share changes on financial indicators such as basic earnings pershare and diluted earnings per share, net assets per share attributable to theCompany’s common shareholders, etc. in the recent one year and the reportingperiod
The Company’s share capital was 3,666,280,806 shares at the beginning of thereporting period and was 3,666,302,025 shares as at the end of the reporting period.The change in shares resided in the conversion of convertible corporate bonds intoshares. In accordance with Accounting Standards for Business Enterprises - EarningsPer Share, the most recent share capital was recalculated on the basis of the adjustednumber of shares, and therefore the basic earnings per share over the past period wasRMB 0.13/share and the diluted earnings per share after the change was RMB
0.13/share.
Miscellaneous disclosures deemed necessary by the Company or required byregulatory authorities
□Applicable ?Not applicable
2. Changes in restricted shares
Currency unit: share
| Name of shareholders | Number of restricted shares at the beginning of period | Number of restricted shares increased during the period | Number of restricted shares released in current period | Number of restricted shares at the end of period | Reason for restrictions | Date of restriction release |
| Ni Jinmei | 204,750 | 68,250 | 0 | 273,000 | Expiry of the term | March 27, 2024 |
| of office | ||||||
| Total | 204,750 | 68,250 | 0 | 273,000 | -- | -- |
II. Securities issuance and listing
1. Securities issuance (excluding preference shares) in the reporting period
□Applicable ?Not applicable
2. Statement of changes in the Company's total number of shares and shareholderstructure, changes in the Company’s assets and debts
During the reporting period, the Company’s conversion of convertible corporate bondsinto shares resulted in change in the total number of shares, which was 3,666,280,806at the beginning of period and was 3,666,302,025 as at the disclosure date of the report.
3. Existing employee stocks
□ Applicable ?Not applicable
III. Shareholders and actual controller
1. The number of shareholders and shareholding of the Company
| The total number of common shareholders at the end of period | 46,706 | The total number of shareholders as at March 31, 2024 | 46,590 | Total number of preference shareholders with voting rights restored at the end of the reporting period (if any) | 0 | Total number of preference shareholders with voting rights restored at the end of the previous month before the annual report disclosure date, if any | 0 | |
| Shareholders holding more than 5 per cent of shares or top 10 shareholders' shareholdings (excluding shares lent through the transfer facility) | ||||||||
| Name of shareholders | Nature of shareholders | Shareholding ratio | Number of shares held at the end of the reporting period | Increase/decrease in the reporting period | Number of shares with restrictions held | Number of shares without restrictions held | Pledged or frozen | |
| Status of shares | Quantity | |||||||
| Zhejiang Hengyi Group Co., Ltd. | Domestic non- state-owned legal person | 40.61% | 1,488,933,728 | 0 | 0 | 1,488,933,728 | Pledged | 1,149,144,523 |
| Hangzhou Hengyi Investment Co., Ltd. | Domestic non- state-owned legal person | 6.99% | 256,338,027 | 0 | 0 | 256,338,027 | ||
| Gongqingcheng Shengbang Investment Management Co., Ltd. - Gongqingcheng Shengbang Kaimi Investment Partnership (limited partnership) | Others | 2.68% | 98,111,801 | 0 | 0 | 98,111,801 | ||
| Xinghui Chemical Fibre Group Co., Ltd. | Domestic non- state-owned legal person | 2.66% | 97,662,383 | 0 | 0 | 97,662,383 | ||
| Hengyi Petrochemical Company Limited - Fifth Employee Share Ownership Plan | Others | 2.38% | 87,167,750 | 87,167,750 | 0 | 87,167,750 | ||
| Huaneng Guicheng Trust Co., Ltd. - Huaneng Trust Jinyi Xincheng Assembled Funds Trust Program | Others | 1.96% | 72,030,334 | 0 | 0 | 72,030,334 | ||
| Shenwan Hongyuan Securities Co.,Ltd. | State-owned | 1.69% | 62,078,197 | 51,966,232 | 0 | 62,078,197 |
| legal person | ||||||||
| Hong Kong Securities Clearing Company Limited (HKSCC) | Overseas legal person | 1.47% | 53,980,063 | -25,813,710 | 0 | 53,980,063 | ||
| Bersegold Asset Management Co., Ltd. – Berseagold Hui Xin No. 8 Private Securities Investment Fund | Others | 1.36% | 49,936,900 | 0 | 0 | 49,936,900 | ||
| Tibetan Trust Co., Ltd. - Tibetan Trust - Hong Jing No. 29 Assembled Funds Trust Program | Others | 1.30% | 47,841,104 | 0 | 0 | 47,841,104 | ||
| Strategic investors or general legal persons ranked the top 10 shareholders due to placing (if any) (Please refer to Note 3) | None | |||||||
| Statement of the connected relation or parties acting in concert among the above shareholders | Among the top 10 shareholders, Hangzhou Hengyi Investment Co., Ltd. is a controlled subsidiary of Hengyi Group. It is unknown whether connected relation exists among other shareholders and it is unknown whether they are shareholders acting in concert either. | |||||||
| Statement of the above shareholders involvement in entrustment /trustee voting and waiver of voting | Among the top 10 shareholders, holders of Hengyi Petrochemical Company Limited - Phase V Employee Share Ownership Plan voluntarily waived their voting rights in respect of the Company's shares indirectly held as a result of their participation in the Employee Share Ownership Plan. | |||||||
| Special statement of the existence of special | Among the top 10 shareholders, Hengyi Petrochemical Co., Ltd. held 270,165,581 shares of the | |||||||
| account for repurchase among top 10 shareholders (if any) (Please refer to Note 10) | Company in its special securities account for repurchases, accounting for 7.37 per cent of the total share capital of the Company, and was not included in the list of top 10 shareholders. | |||
| Top 10 shareholders holding of shares without restrictions | ||||
| Name of shareholders | Number of shares without restrictions held at the end of the reporting period | Stock class | ||
| Stock class | Quantity | |||
| Zhejiang Hengyi Group Co., Ltd. | 1,488,933,728 | Ordinary shares in RMB | 1,488,933,728 | |
| Hangzhou Hengyi Investment Co., Ltd. | 256,338,027 | Ordinary shares in RMB | 256,338,027 | |
| Gongqingcheng Shengbang Investment Management Co., Ltd. - Gongqingcheng Shengbang Kaimi Investment Partnership (limited partnership) | 98,111,801 | Ordinary shares in RMB | 98,111,801 | |
| Xinghui Chemical Fibre Group Co., Ltd. | 97,662,383 | Ordinary shares in RMB | 97,662,383 | |
| Hengyi Petrochemical Company Limited - Fifth Employee Share Ownership Plan | 87,167,750 | Ordinary shares in RMB | 87,167,750 | |
| Huaneng Guicheng Trust Co., Ltd. - Huaneng Trust Jinyi Xincheng Assembled Funds Trust Program | 72,030,334 | Ordinary shares in RMB | 72,030,334 | |
| Shenwan Hongyuan Securities Co.,Ltd. | 62,078,197 | Ordinary shares in RMB | 62,078,197 | |
| Hong Kong Securities Clearing Company Limited (HKSCC) | 53,980,063 | Ordinary shares in RMB | 53,980,063 | |
| Berseagold Asset Management Co., Ltd. - Berseagold Hui Xin No. 8 Private Securities Investment Fund | 49,936,900 | Ordinary shares in RMB | 49,936,900 | |
| Tibetan Trust Co., Ltd. - Tibetan Trust - Hong Jing No. 29 Assembled | 47,841,104 | Ordinary shares in RMB | 47,841,104 | |
| Funds Trust Program | ||
| Statement of connected relation or parties acting in connect among the top 10 shareholders of unrestricted tradable shares and between the top 10 shareholders of unrestricted tradable shares and top 10 shareholders | Among the top 10 shareholders, Hangzhou Hengyi Investment Co., Ltd. is a controlled subsidiary of Hengyi Group. It is unknown whether connected relation exists among other shareholders and it is unknown whether they are shareholders acting in concert either. | |
| Statement of the top 10 common shareholders involvement in margin trading and securities lending business (if any) (Please refer to Note 4) | 1. The shareholder Zhejiang Hengyi Group Co., Ltd. held 1,400,471,542 shares through general securities account and held 88,462,186 shares through CITIC Securities customer credit collateral securities trading account, both of which sum up to 1,488,933,728 shares. 2.The shareholder Hangzhou Hengyi Investment Co., Ltd. held 0 shares through ordinary securities account and held 256,338,027 shares through Soochow Securities Co., Ltd. customer credit collateral securities trading account, both of which sum up to 256,338,027 shares. 3. A shareholder of the Company, Hengyi Petrochemical Company Limited - Phase V Employee Share Ownership Plan, held 0 shares through an ordinary securities account, and also held 87,167,750 shares through a customer credit transaction guarantee securities account of Guoxin Securities Company Limited, totalling 87,167,750 shares. 4. The shareholder Berseagold Asset Management Co., Ltd. - Berseagold Hui Xin No. 8 private securities investment fund held zero share through general securities account and held 49,936,900 shares through Guosen Securities Co., Ltd. customer credit collateral securities trading account, both of which sum up to 49,936,900 shares. | |
Participation of top ten shareholders in lending of shares in the transfer business
□ Applicable ?Not applicable
Change in the top ten shareholders from the previous period
Currency unit: share
| Changes in the top ten shareholders from the end of the previous period | |||||
| Name of shareholder (full name) | Additions/withdrawals during the reporting period | Lending shares on transfer at the end of the period and not yet returned | Number of shares held in shareholders' ordinary accounts, credit accounts and shares lent on transfer and not yet returned at the end of the period | ||
| Total number | Percentage of total share capital | Total number | Percentage of total share capital | ||
| Hengyi Petrochemical Company Limited - Fifth Employee Share Ownership Plan | Additions | 0 | 0.00% | 0 | 0.00% |
| Shenwan Hongyuan | Additions | 0 | 0.00% | 0 | 0.00% |
| Securities Co.,Ltd. | |||||
| Huaneng Guicheng Trust Co., Ltd. - Huaneng Trust Jinxing Assembled Funds Trust Program | Withdrawal | 0 | 0.00% | 0 | 0.00% |
| Fulida Group Holdings Company | Withdrawal | 0 | 0.00% | 0 | 0.00% |
Whether there are agreed repurchase securities transactions among the top 10 ordinary shareholders and top 10 ordinary shareholdersof shares without restrictions
There are no agreed repurchase securities transactions among the top 10 ordinary shareholders and top 10 ordinary shareholders of shares withoutrestrictions.
2. The majority shareholder of the Company
Nature of controlling shareholder: natural person holdingType of controlling shareholder: legal person
| Name of majority shareholder | Legal representative /Head of company | Date of establishment | Organization code | Primary business |
| Hengyi Group | Qiu Jianlin | October 18, 1994 | 91330109143586141L | Industrial investment, production and marketing of textile materials and products |
| Holding of and involvement in other domestically and overseas listed equity by majority shareholders in the reporting period | As at the disclosure date hereof, Hengyi Group held 643,052,319 shares of China Zheshang Bank Co., Ltd. (Security code: 601916.SH, 02016.HK), accounting for 2.34% of its total share capital. | |||
Change in majority shareholder in the reporting periodThere’s no change in majority shareholder of the Company in the reporting period
3. The Company's actual controller and its persons acting in concertNature of actual controller: domestic natural personType of actual controller: natural person
| Name of actual controller | Relation with the actual controller | Nationality | Whether the right of residence in other countries or regions is acquired or not |
| Qiu Jianlin | Himself | China | No |
| Primary occupation and title | Since 1994, Mr. Qiu Jianlin has been serving as the President of Zhejiang Hengyi Group Co., Ltd. Currently, he holds social positions such as the Special Vice President of the China Textile Industry Federation and the Senior Vice President of the China Chemical Fibres Association. | ||
| Domestically and overseas listed companies controlled over the past 10 years | As at the disclosure date hereof, Mr. Qiu Jianlin is the actual controller of Hengyi Group that directly holds 40.61% of the Company shares and holds 6.99% of the Company shares through Zhejiang Hengyi Investment Co., Ltd., a controlled subsidiary of Hengyi Group (Hengyi Group holds 60% of the shares of Zhejiang Hengyi Investment Co., Ltd.). Therefore, Mr. Qiu Jianlin is the actual controller of the Company. |
Change in actual controller in the reporting period
There’s no change in actual controller of the Company in the reporting period.
Block diagram of equity and control relationship between the Company and theactual controller
Note: As at the disclosure date hereof, Qiu Jianlin holds 26.19% of the equity of HengyiGroup and actually controls 84.77% of the equity of Hengyi Group through acting inconcert with his family members (Qiu Jianlin signed the Acting-in-Concert Agreementwith Hangzhou Wanyong Industrial Investment Co., Ltd., Qiu Xiangjuan, Qiu Yibo,Qiu Lirong and Qiu Xingjuan on February 8, 2018. The agreement has maintainedeffective and under the agreement, Wanyong Industrial Investment Co., Ltd. controlled
by Qiu Xiangjuan, Qiu Yibo, Qiu Lirong and Qiu Xingjuan are persons acting in concertwith Qiu Jianlin. The four shareholders hold 27.04%, 26.19%, 3.94% and 1.42% ofHengyi Group equity respectively). Hengyi Group owns a direct 40.61% stake ofHengyi Petrochemical and owns a 6.99% stake of Hengyi Petrochemical through itscontrolled subsidiary - Hengyi Investment Co., Ltd., both of which sum up to a 47.60%stake of Hengyi Petrochemical. Therefore, Qiu Jianlin remains the actual controller ofthe listed Company.
The actual controller controls the Company through trust or other means of assetmanagement.
□ Applicable ?Not applicable
4. The accumulative total number of pledged shares owned by the controllingshareholder of the Company or the largest shareholder and its persons acting inconcert with him accounts for 80% of their holding.
□ Applicable ?Not applicable
5. Other corporate shareholders with the holding over 10%
□ Applicable ?Not applicable
6. Restricted reduction of holding of the controlling shareholder, actual controller,restructuring party and other major parties to the commitment
□ Applicable ?Not applicable
IV. Implementation details of repurchase in the reporting period
Implementation progress of repurchase
| Disclosure date of the plan | Proposed number of shares repurchased | Proportion to total share capital | Proposed amount of repurchase | Proposed period of repurchase | Purpose of repurchase | Repurchased shares | Proportion of repurchased shares to the |
| underlying stocks relating to share incentive plan (if any) | |||||||
| October 28, 2022 | / | / | Not less than RMB 1 billion ，No more than RMB 2 billion | October 27, 2022 to October 26, 2023 | Convert the Convertible corporate bonds issued by listed companies into shares | 150,813,800 | / |
| December 16, 2023 | / | / | Not less than RMB 500 million and not more than RMB 1 billion | December 16, 2023 to December15, 2024 | Implement employee stock ownership plan or share incentive plan later | 18,481,900 | / |
Implementation progress of reducing the holding repurchased shares throughcentralized bidding
□Applicable ?Not applicable
Section VIII Preferred Shares
There are no preference shares of the Company in the reporting period.
Section IX BondsI. Enterprise bonds
There are no corporate bonds of the Company in the reporting period.
II. Corporate bonds
1. Basic information about corporate bonds
Currency unit: 10,000
| Bond name | Bond abbreviation | Bond code | Date of issuance | Value date | Maturity date | Bond balance | Interest rate | Method for interest and principal repayment | Place of trading |
| Hengyi Petrochemical Co., Ltd. issued corporate bonds (Tranche 1) publicly to eligible investors in 2020 | 20Hengyi01 | 149061.SZ | March 11, 2020 | March 13, 2020 | March 13, 2023 | 0 | 5.50% | Yearly accrual of simple interest is to be calculated without consideration of compound interest. Interest will be paid per | Shenzhen Stock Exchange |
| annum and the last instalment of interest will be paid together with principal payment. | |||
| Investor suitability arrangement (if any) | Corporate bonds are issued publicly to the eligible institutional investors who are in compliance with the provisions of Measures for Administration of Issuance and Trading of Corporate Bonds and have opened eligible securities account for A- share trading at China Securities Depository and Clearing Corporation Limited (CSDC) Shenzhen Branch. | ||
| Applicable trading mechanism | The principal and interest payments of "20 Hengyi 01" were paid in full and on time and was delisted on 13 March 2023. | ||
| Risks of terminating the listing (if any) and countermeasures | None | ||
Overdue outstanding bonds
□ Applicable ?Not applicable
2. Activation and execution of issuer or investor option clauses, investor protectionclauses
"20 Hengyi 01" provides the coupon rate adjustment option for the issuer:
In accordance with the Prospectus for Public Issuance of Hengyi Petrochemical Co.,Ltd. Corporate Bonds (Tranche 1) to Eligible Investors in 2020, the issuer of the bondshas the right to decide whether to change the coupon rate of current tranche at the endof the second year. The issuer will, on the 20th trading day prior to the interest paymentdate in the second interest bearing year of current tranche, disclose an announcementon whether to change the coupon rate of current tranche and the detailed change. Theannual coupon rate of current tranche for the first two years of duration was 5.89%; theissuer opted to reduce the coupon rate by 39bp at the end of the second year of durationand the coupon rate for the third year of duration was 5.50%.
"20 Hengyi 01" provides the put option for the investors:
As of the date of this report, "20 Hengyi 01" provides the coupon rate adjustment optionfor the Company and the put option for the investors. The Company disclosed the first,second and third informative announcements regarding the implementation of themeasures for coupon rate adjustment and investors’ put of "20 Hengyi 01" on February9, 2022, February 10, 2022, and February 11, 2022 respectively. Investors can chooseto put all or part of their “20 Hengyi 01” to the Company during the put declarationperiod (from February 14, 2022 to February 18, 2022), with a put price of RMB 100per piece. According to the data provided by Shenzhen branch of China SecuritiesDepository and Clearing Corporation Limited, the put number of “20 Hengyi 01” is9991890 pieces, with an amount of RMB 999,189,000.00. The remaining quantity afterthis put is 8,110 pieces, with an amount of RMB 811000 (excluding interest). The putthis time has been completed, and the principal and interest of the put "20 Hengyi01"have been fully paid to the account designated by Shenzhen Branch of China
Securities Depository and Clearing Corporation Limited, and the funds will betransferred to the investors' fund accounts on the receipt date of the put funds, March14, 2022.
On March 9, 2023, the Company released an announcement that "HengyiPetrochemical Co., Ltd. publicly issued corporate bonds (Tranche 1) (epidemicprevention and control bonds) to qualified investors in 2020, and have cashed theprincipal and interest and delisted the bonds in 2023". “20 Hengyi 01” has become dueand been cashed, and the principal and interest have been paid in full and on time.
3. Intermediary
| Bond program name | Intermediary name | Office address | Name of signing accountants | Contact of intermediary | Telephone number |
| Hengyi Petrochemical Co., Ltd. issued corporate bonds (Tranche 1) publicly to eligible investors in 2020 | CITIC Securities Co., Ltd. | 22F Central Building, No. 1568 Century Avenue, Pudong New Area, Shanghai | Liu Hongyue, Wang Zhiwei, Jiang Bo, Li Chongshi | Ling Weihao | 021-20262318 |
Whether there are changes to the said agency in the reporting period
□Yes ?No
4. Utilization of funds raised
Currency unit: RMB
| Bond program name | Total amount of funds raised | Amount used | Amount unused | Operation of the special account for funds raised (if any) | Correction of illegal use of funds raised | Whether the fund use is compliant with the purpose, use plan and other provisions under the prospectus |
| Hengyi Petrochemical Co., Ltd. issued corporate bonds (Tranche 1) publicly to eligible investors in 2020 | 1,000,000,000 | 1,000,000 ,000 | 0.00 | None | None | Yes |
Funds raised are used for construction projects
□ Applicable ?Not applicable
The purpose of the said funds raised through bonds issuance was changed in thereporting period
□ Applicable ?Not applicable
5. Change in credit rating results in the reporting period
□ Applicable ?Not applicable
6. Guarantee, execution of and change in debt repayment plan and other debtrepayment safeguard measures in the reporting period and impacts on the rightsand interests of bond investors
“20Hengyi01” is under no guarantee. In the reporting period, the debt repayment planand other safeguard measures remained unchanged, having no impacts on the rightsand interests of bond investors.
III. Non-financial corporate debt financing instruments
There were no debt-financing instruments of non-financial businesses in the reportingperiod.
IV. Convertible corporate bonds
(I) Hengyi convertible bonds (Bond code: 127022)
1. Historic changes in conversion price
Since the Company implemented the equity distribution 2020 business, the convertiblecorporate bonds issued by the Company (bond abbreviation: Hengyi Convertible Bonds;bond code: 127022) were subject to change in the conversion price: original conversionprice was RMB 11.50 per share and the changed conversion price was RMB 11.20 pershare, and the change took effect since July 6, 2021.
Since the Company implemented the equity distribution 2021 business, the convertiblecorporate bonds issued by the Company (bond abbreviation: Hengyi Convertible Bonds;bond code: 127022) were subject to change in the conversion price The originalconversion price of Hengyi Convertible Bonds was RMB 11.20 per share and thechanged conversion price of Hengyi Convertible Bonds was RMB 11.00 per share, andthe change took effect since July 7, 2022.
2. Cumulative conversion
| Abbreviation of the convertible bonds | Beginning and ending dates of conversion | Total number of issues | Total amount of issuance (RMB) | Accumulative amount of conversion (RMB) | Accumulative number of bonds converted into shares (share) | Proportion of converted quantity to total shares in issue before the conversion beginning date | Amount of bonds not converted (RMB) | Proportion of amount of bonds not converted to total amount of issuance |
| Hengyi Convertible Bonds | April 22, 2021 to October 15, 2026 | 20,000,000 | 2,000,000,0 00 | 184,800 | 16,213 | 0.0004% | 1,999,815,200 | 99.99% |
3. Top 10 convertible bond holders
| SN | Name of convertible bonds holders | Nature of convertible bonds holders | Number of convertible bonds held at the end of the reporting period | Amount of convertible bonds held at the end of the reporting period (RMB) | Proportion of convertible bonds held at the end of the reporting period |
| 1 | Industrial Bank Co., Ltd. - Tianhong Yongli Bond Securities Investment Fund | Others | 1,454,510 | 145,451,000 | 7.27% |
| 2 | Agricultural Bank of China Co., Ltd. (ABC) - Penghua Convertible Bond Securities Investment Fund | Others | 454,662 | 45,466,200 | 2.27% |
| 3 | Efatar Yi Tian Allocation Mixed Pension Product-Industrial and Commercial Bank of China Limited | Others | 445,997 | 44,599,700 | 2.23% |
| 4 | China Construction Bank Corporation - China Merchants Anqing Bond Securities Investment Fund | Others | 391,568 | 39,156,800 | 1.96% |
| 5 | UBS AG | Overseas legal person | 368,987 | 36,898,700 | 1.85% |
| 6 | Taikang Asset LOF Fixed Income Pension Products - Bank of China Limited | Others | 309,837 | 30,983,700 | 1.55% |
| 7 | ICBC Credit Suisse Tianli Convertible Bond Fixed Income Pension Product - Bank of China Limited | Others | 275,564 | 27,556,400 | 1.38% |
| 8 | Industrial and Commercial Bank of China Limited - BOC Industrial Bond Bond Fund | Others | 220,302 | 22,030,200 | 1.10% |
| 9 | Fortune Fortune Progressive Fixed Income Pension Product-Industrial and Commercial Bank of China Limited | Others | 216,859 | 21,685,900 | 1.08% |
| 10 | China National Petroleum Corporation Corporate Pension Scheme-Industrial and Commercial Bank of China Ltd. | Others | 208,923 | 20,892,300 | 1.04% |
4. Major changes in the profitability, condition of assets and credit status ofguarantor
□Applicable ?Not applicable
5. Debt condition, credit standing and respectability changes of the Company atthe end of the reporting period and cash arrangement for debt repayment in thecoming years
(1) Relevant accounting data and financial indicators
| Item | End of current reporting period | End of previous year | Add/deduct at the end of current reporting period over the end of previous year |
| Liquidity ratio | 0.66 | 0.75 | -12.00% |
| Debt-to-asset ratio | 70.42% | 70.83% | -0.41% |
| Acid-test ratio | 0.43 | 0.50 | -14.00% |
| Item | Current reporting period | The same period of previous year | Year-on-year add/deduct in the reporting period |
| Interest coverage ratio | 1.10 | 0.58 | 89.66% |
| Loan repayment ratio (%) | 100.00% | 100.00% | 0.00% |
| Interest repayment rate (%) | 100.00% | 100.00% | 0.00% |
(2) Credit rating of convertible bonds
During the reporting period, Shanghai New Century Credit Appraisal & InvestmentServices Co., Ltd. conducted follow-up ratings on the long-term credit status of themain body of the Company and the HengYi Convertible Bonds and HengYi ConvertibleBonds 2 issued by the Company, and maintained the main body of the Company's creditrating at AA+, and assigned the abovementioned bonds a credit rating of AA+. Duringthe term of this convertible bond, Shanghai New Century Credit Appraisal &Investment Services Co., Ltd. will conduct regular follow-up ratings once a year.
(3) Cash arrangement for debt repayment in the coming years
The Company has maintained stable operation, sufficient cash flow, stable growth ofasset size and profitability. Its asset-liability ratio has been maintained at a reasonablelevel and credit standing has been well maintained. The Company will maintain stableand sufficient cash to prepare for payment of the interest of convertible corporate bondsand repayment of bonds in the future.
(II) Hengyi Convertible 2 (Bond Code: 127067)
1. The conversion price adjustment history for Hengyi Convertible 2 (Bond Code:
127067) is as follows:
On March 31, 2021, the company received approval from the China SecuritiesRegulatory Commission (CSRC) regarding the public issuance of convertible corporatebonds, with approval document number [Approval No. [CSRC Approval (2022) No.565]. The issuance of convertible bonds, abbreviated as "Hengyi Convert 2," with bondcode "127067," has been approved by the CSRC. On July 21, 2022, the companypublicly issued 30 million convertible corporate bonds, with each bond having a facevalue of 100 RMB, totalling 3 billion RMB. The conversion price was set at RMB 10.50per share, and the bonds were listed on the Shenzhen Stock Exchange on August 18,2022.
As of the disclosure date of this report, there have been no adjustments to the conversionprice of the company's convertible bonds.
2. The cumulative conversion situation
| Convertible Bond Abbreviation | Translates to "Conversion Period | Total number of issues (units) | Total Issued Amount (RMB) | Cumulative Conversion Amount (RMB) | Cumulative Conversion Quantity (Shares) | The proportion of the conversion quantity to the total issued share capital of the company as of the commencement date of conversion | Outstanding Conversion Amount (RMB) | Proportion of Outstanding Conversion Amount to Total Issued Amount |
| Heng | January 30, 2023 to | 30,000,000 | 3,000,000,000 | 211,600 | 20,135 | 0.0005% | 2,999,788,400 | 99.99% |
| yi Convertible 2 | July 20, 2028 |
3. Top 10 holders of convertible bonds
Currency unit: Share
| SN | Name of convertible bonds holders | Nature of convertible bonds holders | Number of convertible bonds held at the end of the reporting period | Amount of convertible bonds held at the end of the reporting period (RMB) | Proportion of convertible bonds held at the end of the reporting period |
| 1 | China Life Asset Management - Bank of China - China Life Insurance Asset Management - Dingkun Advantage Selection 2383 Asset Management Product | Others | 5,095,499 | 509,549,900 | 16.99% |
| 2 | Hangzhou Hengyi Investment Co., Ltd. | Domestic non-state- owned legal person | 2,144,011 | 214,401,100 | 7.15% |
| 3 | CITIC Securities Co., Ltd. | State-owned Legal Person | 1,986,500 | 198,650,000 | 6.62% |
| 4 | Guotai Junan Securities Co., Ltd. | State-owned Legal Person | 1,631,940 | 163,194,000 | 5.44% |
| 5 | Bank of China Limited - E Fund Stable Income Bond Fund | Others | 1,128,362 | 112,836,200 | 3.76% |
| 6 | Shenwan Hongyuan Securities Co., Ltd. | State-owned Legal Person | 884,400 | 88,440,000 | 2.95% |
| 7 | China Life Asset Management - Bank of China - China Life Insurance Asset Management - Dingkun Advantage Selection 2384 Asset Management Product | Others | 720,000 | 72,000,000 | 2.40% |
| 8 | Guosen Securities Co., Ltd. | State-owned Legal Person | 581,709 | 58,170,900 | 1.94% |
| 9 | Shanghai Pudong Development Bank Co., Ltd. - E Fund Yu Xiang Return Bond Fund | Others | 567,419 | 56,741,900 | 1.89% |
| 10 | Fortune SG Fuyi Progressive Fixed Income Pension Product - Industrial and Commercial Bank of China Limited | Others | 514,037 | 51,403,700 | 1.71% |
4. Major changes in the profitability, condition of assets and credit status ofguarantor
□ Applicable ?Not applicable
5. Debt condition, credit standing and respectability changes of the Companyat the end of the reporting period and cash arrangement for debt repaymentin the coming yearsSame as Hengyi Convertible Bonds (Bond Code: 127022)
V. 10% more losses within the consolidation in the reporting period than the netassets at the end of previous year
□ Applicable ?Not applicable
VI. Overdue situation of interest-bearing debts except for bonds in the reportingperiod
□ Applicable ?Not applicable
VII. Existence/non-existence of violation of rules and regulations in the reportingperiod
□Yes ?No
VIII. Main accounting data and financial indicators for the past two years as atthe end of the reporting periodCurrency unit: RMB 10,000
| Item | End of current reporting period | End of previous year | Add/deduct at the end of current reporting period over the end of previous year |
| Liquidity ratio | 0.66 | 0.75 | -12.00% |
| Debt-to-asset ratio | 70.42% | 70.83% | -0.41% |
| Acid-test ratio | 0.43 | 0.50 | -14.00% |
| Current reporting period | The same period of previous year | Year-on-year add/deduct in the reporting period | |
| Net profit after deducting non- recurring profit and loss | 5,368.58 | -109,233.45 | 104.91% |
| Debts to EBITDA | 9.55% | 6.26% | 3.29% |
| Times interest earned ratio | 1.10 | 0.58 | 89.66% |
| Times cash interest earned ratio | 2.72 | 1.98 | 37.37% |
| EBITDA times interest earned ratio | 2.10 | 1.79 | 17.32% |
| Loan repayment ratio | 100.00% | 100.00% | 0.00% |
| Interest coverage | 100.00% | 100.00% | 0.00% |
Section X Financial Report
Audit Report
ZXHSZ [2024] No. 013504
To: All shareholders of Hengyi Petrochemical Co., Ltd.,
I. Auditor’s opinions
We have audited the financial statements of Hengyi Petrochemical Co., Ltd.(hereinafter referred to as "Hengyi Petrochemical"), which comprise the parentcompany’ balance sheets as of December 31, 2023 and the consolidated statement, theparent company’ income statements and the consolidated statement, the parentcompany’ cash flow statements and the consolidated statement, the parent company’statements of changes in shareholders' equity and the consolidated statement, and notesto the financial statements for the year 2023.
In our opinion, the attached financial statements are prepared and present fairly, in allmaterial aspects, the consolidated financial position of Hengyi Petrochemical andparent company’s financial position as of December 31, 2023, and the results of theiroperations and cash flows for the year 2023 in accordance with the AccountingStandards for Business Enterprises.
II. Basis for Auditor’s Opinions
We conducted our audit in accordance with the Auditing Standards for Certified PublicAccountants (CPAs) in China. Our responsibilities under these standards are furtherdescribed in the "CPAs' Responsibilities for the Audit of the Financial Statements"section of the audit report. According to the China Code of Ethics for Certified PublicAccountants, we are independent from Hengyi Petrochemical and have fulfilled otherethical responsibilities as specified in the code. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Key audit matters
Key audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the financial statements for current period. These matterswere addressed in the context of our audit of the financial statements as a whole, and informing our opinion thereon, and we do not provide a separate opinion on these matters.We have identified the following items as key audit matters that need to be dealt within the Audit Report.
(I) Recognition of operating income
1. Description of matters
"The relevant disclosure information can be found in Note 3 and 26 of the financialstatements, regarding income, and Note 5 and 48, regarding operating revenue andoperating costs.
In the fiscal year 2023, the combined operating revenue of Hengyi PetrochemicalCompany was RMB 136,148,114.10 thousand, a decrease of 10.46% compared to thesame period last year. Considering the significance of income recognition to the overallfinancial statements and the inherent risk of management manipulation of income
recognition to achieve specific objectives or expectations, we identified the recognitionof operating revenue as a key audit matter."
2. Audit response
The main audit procedures we performed are as follows:
(1) Understanding, evaluating and testing the effectiveness of the design and operationof the Company's internal control related to the revenue recycling;
(2) Selecting the sales contracts signed by samples, identifying the individualperformance obligations, transfer of control and other terms in the contracts, andevaluating whether the timing of revenue recognition has met the requirements of theAccounting Standards for Business Enterprises;
(3) Performing analytical procedures on revenues and costs; analyzing fluctuations inrevenue, cost,
gross profit rate for each month of current period; comparing and analyzing the analysisprocedures for revenue, cost, gross profit rate of main products in current period withthose in previous period, and comparing and analyzing product sales prices and rawmaterial purchase prices with those of related products in the industry, and evaluatingthe accuracy of revenue recognition;
(4) Selecting samples from the accounting records of sales revenue, checking sales-related contracts, delivery notes, bills of lading, certificates of transfer of goodsproperty, invoices, etc., and evaluating the authenticity and completeness of revenuerecognition;
(5) Selecting samples from the customers involved in the reporting period,implementing transaction confirmation procedure, and evaluating the authenticity andaccuracy of the revenue;
(6) For some major clients, implementing field-visit procedures to understand andevaluate the transaction purpose and business background of relevant businesses;
(7) For export sales, checking the relevant information via China Export & CreditInsurance Corporation and the People's Insurance Company of China APPs against thebook sales records, export declarations, sales invoices, etc. to verify the authenticity ofthe export income;
(8) Performing a cut-off test for revenue; selecting samples from revenue recognitiontransactions before and after the balance sheet date, obtaining relevant documents suchas contracts, invoices, and delivery notes etc., and evaluating whether revenue has beenrecognized in an appropriate period.
(II). Measurement of Fixed Assets and Construction in Progress
1. The description of the matter
For detailed disclosure, please refer to Note 3, 16 (Fixed Assets), 17 (Construction inProgress), and Note 5, 14 (Fixed Assets), 15 (Construction in Progress) in the financialstatements.
As of December 31, 2023, the book value of fixed asset projects of HengyiPetrochemical Company amounted to RMB 45,430,020,700. These primarily consistof machinery and equipment used for the production of aromatic hydrocarbons, finished
oil products, polyester filament, purified terephthalic acid, and corresponding factorybuildings. These fixed assets are capitalized when they are ready for intended use andare depreciated using the straight-line method over their estimated useful lives.
As of December 31, 2023, the book balance of construction in progress projects ofHengyi Petrochemical Company amounted to RMB 4.6103057 billion. This mainlycomprises projects such as Phase II of the Brunei Refining Project and Phase I of theGuangxi Ji Jin Project. Construction in progress is measured at actual costs incurred,including construction costs, installation costs, borrowing costs that meet thecapitalization criteria, and other necessary expenses incurred to bring the constructionproject to its intended use state, including engineering design, supervision, and costconsulting expenses. Management's judgment on determining which expenses meet thecapitalization criteria, determining the timing of transferring construction in progressto fixed assets and commencing depreciation, and estimating the economic useful livesand residual values of corresponding fixed assets may impact the book value of fixedassets and the fixed asset depreciation policy.
Due to the significant management judgments involved in evaluating the book value offixed assets and construction in progress, and their significant proportion in theconsolidated financial statements, we have identified the measurement of fixed assetsand construction in progress as a key audit matter.
2. Audit response
For the measurement of fixed assets and construction in progress, our audit proceduresprimarily include:
(1) Understanding, evaluating, and testing the effectiveness of management's key
internal controls related to the recognition of fixed assets and construction in progress.
(2) Sampling inspection of the capitalization of newly invested construction in progressduring the year to assess whether the expenditures meet the criteria for capitalization.For example, sampling major construction and installation costs incurred during theyear, examining related engineering contracts, and reconciling actual payment amountsto invoices and payment vouchers.
(3) Obtaining loan contracts and, based on the investment situation in construction inprogress, examining the completeness and accuracy of the evaluation of capitalizedborrowing costs attributable to assets meeting the capitalization criteria.
(4) Conducting on-site inspections of construction sites to understand and evaluate theprogress of the projects and reconcile them with the recorded amounts.
(5) Selecting samples of fixed asset transfer approval procedures for newly added assetsduring the period and confirming the accuracy of the transfer dates in conjunction withphysical inventory.
(6) Assessing the reasonableness of accounting estimates related to fixed assets andcalculating their reasonableness accordingly.
(7) Reviewing the reporting and disclosure of fixed assets and construction in progressin the financial statements.
IV. Other informationThe management is responsible for the “other information”. The “other information”comprises the information included in Hengyi Petrochemical's 2022 Annual Report, but
does not include the financial statements and our audit report.
Our opinion on the financial statements does not cover the “other information” and wedo not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the“other information” and, in doing so, consider whether the “other information” ismaterially inconsistent with the financial statements or otherwise appears to bematerially misstated to the best of our knowledge in the course of our audit.
If, based on the work we have performed, we conclude that there is a materialmisstatement in the “other information”, we are required to report that fact. We havenothing to report in this regard.
V. Responsibilities of the management and those charged with governance for thefinancial statements
The management is responsible for preparing financial statements that present fairlythe financial position of the Company in accordance with the provisions of theAccounting Standards for Business Enterprises, and designing, implementing andmaintaining necessary internal controls relevant to preparing and presenting financialstatements that are free from material misstatement due to fraud or error.
In preparing the financial statements, management is responsible for assessing theability to continue of Hengyi Petrochemical as a going concern, disclosing mattersrelated to going concern (if applicable), and applying the going concern assumptions,unless management intends to liquidate Hengyi Petrochemical, or HengyiPetrochemical ceases operations or has no realistic alternative.
Those charged with governance are responsible for overseeing the financial reportingprocess of Hengyi Petrochemical.
VI. Responsibilities of the CPAs for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement, whether due to fraud or error,and to issue an auditor's report that includes our opinion. Reasonable assurance is ahigh level of assurance, but is not a guarantee that an audit conducted in accordancewith Auditing Standards will always detect a material misstatement when it exists.Misstatements may arise from fraud or error and are generally considered material ifthey, individually or in aggregate, could reasonably be expected to influence theeconomic decisions made by users based on the financial statements.As part of an audit in accordance with Auditing Standards, we exercise professionaljudgment and maintain professional scepticism throughout the audit. At the same time,we also:
(1) Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error, design and perform audit procedures responsive to thoserisks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion; The risk of not detecting a material misstatement resulting from fraud ishigher than resulting from error, as fraud may involve collusion, forgery, wilfulomission, misrepresentation or override of internal control;
(2) Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances;
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management;
(4) Conclude on the appropriateness of using the going concern assumption by themanagement; and, based on the audit evidence obtained, conclude whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theability of Hengyi Petrochemical to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required by the Auditing Standards to draw attentionin our report to the related disclosures in the financial statements; if such disclosuresare inadequate, we shall express a modified opinion. Our conclusions are based oninformation available as of the date of our Audit Report. However, future events orconditions may cause Hengyi Petrochemical to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements,and whether the financial statements fairly represent the relevant transactions andevents.
(6) Obtain sufficient and appropriate audit evidence on the financial information ofHengyi Petrochemical’s entities or business activities to express an audit opinion on theconsolidated financial statements. We are responsible for the direction, supervision andperformance of the group audit and are solely responsible for our audit opinion.
We communicated with those charged with governance regarding, among other matters,the planned scope and timing of the audit and significant audit matters, including anysignificant deficiencies in internal control that we identified during our audit.
We also provided a statement to those charged with governance that we had compliedwith ethical requirements related to independence and communicated with thosecharged with governance about all relationships and other matters that may reasonably
be deemed to affect our independence, and related precautions, if applicable.
From the matters communicated with those charged with governance, we determinedwhich matters were most significant to the audit of the financial statements for currentperiod and therefore constituted key audit matters. We described these matters in ouraudit report except public disclosure of such matters is prohibited by laws andregulations, or in rare cases where we determine that a matter shall not becommunicated in an audit report if there is a reasonable expectation that the negativeconsequences of communicating such matter in the audit report would outweigh thebenefits in the public interest.
| Consolidated balance sheet | |||
| December 31, 2022 | |||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||
| Item | Note | Ending balance | Ending balance of previous year |
| Current assets: | |||
| Monetary funds | V.1 | 13,827,903,087.40 | 17,358,475,538.50 |
| Held-for-trading financial assets | V.2 | 366,311,518.38 | 251,021,508.33 |
| Derivative financial assets | V.3 | 1,872,460.80 | |
| Notes receivable | V.4 | 167,871,662.32 | 246,560,954.07 |
| Accounts receivable | V.5 | 5,925,174,959.59 | 6,857,913,648.22 |
| Accounts receivable financing | V.6 | 36,904,996.06 | 129,579,710.85 |
| Advance payments | V.7 | 1,820,494,475.73 | 1,792,696,846.85 |
| Other receivables | V.8 | 187,541,184.46 | 133,782,632.86 |
| Inventory | V.9 | 13,060,195,863.37 | 14,083,484,571.18 |
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | |||
| Other current assets | V.10 | 1,533,885,409.09 | 1,711,232,831.86 |
| Total current assets | 36,926,283,156.40 | 42,566,620,703.52 | |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | V.11 | 140,987,280.45 | 176,482,501.78 |
| Long-term equity investments | V.12 | 13,669,254,123.61 | 12,831,505,320.53 |
| Investments in other equity instruments | V.13 | 5,600,000.00 | 5,600,000.00 |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | V.14 | 45,430,020,661.94 | 47,466,461,676.63 |
| Construction in progress | V.15 | 4,610,305,760.02 | 3,751,889,400.94 |
| Capitalized biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | V.16 | 414,782,305.73 | 430,002,663.24 |
| Intangible assets | V.17 | 2,734,338,605.88 | 2,938,530,705.96 |
| Development expenditure | V.18 | 48,821,220.24 | 21,381,548.20 |
| Goodwill | V.19 | 221,865,586.69 | 221,865,586.69 |
| Long-term deferred and prepaid expenses | V.20 | 460,659,030.78 | 443,731,817.67 |
| Deferred income tax assets | V.21 | 339,577,579.58 | 351,648,873.24 |
| Other non-current assets | V.22 | 3,049,611,614.62 | 759,076,912.93 |
| Total non-current assets | 71,125,823,769.54 | 69,398,177,007.81 | |
| Total assets | 108,052,106,925.94 | 111,964,797,711.33 | |
| (The attached notes to the statements are an integral part of the financial statements) | |||
| Legal representative: Person in charge of accounting activities:: Head of accounting agency: | |||
| Consolidated balance sheet（continued） | |||
| December 31, 2022 | |||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||
| Item | Note | Ending balance | Ending balance of previous year |
| Current liabilities: | |||
| Short-term loans | V.23 | 41,122,258,268.86 | 37,875,833,338.09 |
| Held-for-trading financial liabilities | V.24 | 108,194,619.69 | 21,353,552.33 |
| Derivative financial liabilities | V.25 | 41,611,858.31 | |
| Notes payable | V.26 | 740,998,553.81 | 815,169,321.16 |
| Accounts payable | V.27 | 6,562,123,368.59 | 9,768,477,976.21 |
| Advance receipts | |||
| Contract liabilities | V.28 | 756,571,793.30 | 989,622,772.97 |
| Wages payable | V.29 | 177,419,198.25 | 191,287,035.07 |
| Taxes and dues payable | V.30 | 306,721,370.31 | 389,310,729.61 |
| Other payables | V.31 | 188,374,004.43 | 235,619,327.94 |
| Held for sale liabilities | |||
| Non-current liabilities due within one year | V.32 | 5,809,708,815.79 | 6,533,334,680.84 |
| Other current liabilities | V.33 | 76,672,908.46 | 90,760,675.06 |
| Total current liabilities | 55,849,042,901.49 | 56,952,381,267.59 | |
| Non-current liabilities: | |||
| Long-term loans | V.34 | 14,739,441,863.92 | 16,107,140,036.35 |
| Bonds payable | V.35 | 4,278,805,701.33 | 4,061,538,995.85 |
| Wherein: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | V.36 | 449,163,796.50 | 431,285,378.29 |
| Long-term payables | V.37 | 464,759,585.87 | 1,433,381,038.10 |
| Long-term wages payable | |||
| Estimated liabilities | V.38 | 819,949.97 | 360,508.08 |
| Deferred income | V.39 | 223,722,228.38 | 238,413,108.05 |
| Deferred income tax liabilities | V.21 | 83,862,227.74 | 82,151,983.86 |
| Other non-current liabilities | |||
| Total non-current liabilities | 20,240,575,353.71 | 22,354,271,048.58 | |
| Total liabilities | 76,089,618,255.20 | 79,306,652,316.17 | |
| Stockholders’ equity: | |||
| Share capital | V.40 | 3,666,302,025.00 | 3,666,280,806.00 |
| Other equity instruments | V.41 | 1,159,031,770.29 | 1,159,082,382.38 |
| Wherein: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | V.42 | 9,085,229,180.87 | 9,170,637,734.40 |
| Minus: Treasury Stock | V.43 | 2,368,941,966.92 | 1,483,566,737.98 |
| Other comprehensive income | V.44 | 680,732,360.18 | 380,920,744.19 |
| Special reserve | V.45 | ||
| Surplus reserve | V.46 | 807,136,900.99 | 781,701,619.18 |
| Undistributed profit | V.47 | 12,181,660,569.68 | 11,771,637,510.92 |
| Total stockholders’ equity attributable to parent company | 25,211,150,840.09 | 25,446,694,059.09 | |
| Minority stockholders’ equity | 6,751,337,830.65 | 7,211,451,336.07 | |
| Total stockholders’ equity | 31,962,488,670.74 | 32,658,145,395.16 | |
| Total liabilities and stockholders’ equity | 108,052,106,925.94 | 111,964,797,711.33 | |
| (The attached notes to the statements are an integral part of the financial statements) | |||
| Legal representative: Person in charge of accounting activities:: Head of accounting agency: | |||
| Consolidated income statement FY2023 | |||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||
| Item | Note | Current period amount | Last period amount |
| I. Gross revenue | 136,148,114,082.34 | 152,050,274,944.64 | |
| Wherein: Operating income | V.48 | 136,148,114,082.34 | 152,050,274,944.64 |
| II. Total operating cost | 136,903,509,470.71 | 153,530,837,892.16 | |
| Wherein: Operating cost | V.48 | 131,030,233,682.88 | 148,515,510,522.38 |
| Tax and associate charge | V.49 | 249,541,289.88 | 226,493,112.50 |
| Selling expenses | V.50 | 229,284,289.09 | 247,443,749.81 |
| Administration expenses | V.51 | 1,434,227,935.73 | 1,084,986,983.70 |
| R&D expenses | V.52 | 716,319,527.66 | 668,706,028.57 |
| Financial expenses | V.53 | 3,243,902,745.47 | 2,787,697,495.20 |
| Wherein: Interest expenses | 3,306,322,914.56 | 2,682,684,624.12 | |
| Interest income | 217,648,751.41 | 193,688,404.54 | |
| Plus: Other incomes | V.54 | 336,961,048.78 | 236,242,477.21 |
| Income from investment (loss expressed with a minus sign “ -”) | V.55 | 985,476,736.48 | 745,260,076.32 |
| Wherein: Income from investment in associates and joint ventures | 490,890,359.42 | 823,499,882.13 | |
| Gains from derecognition of financial assets measured at amortized cost | |||
| Net exposure hedging gains (loss expressed with a minus sign “ -”) | |||
| Income from changes in fair value (loss expressed with a minus sign “ -”) | V.56 | -45,121,198.68 | -211,436,484.36 |
| Credit impairment loss (loss expressed with a minus sign “ -”) | V.57 | -11,426,732.92 | -1,101,785.57 |
| Asset impairment loss (loss expressed with a minus sign) | V.58 | -71,262,509.77 | -368,677,441.03 |
| Gains on asset disposal (loss expressed with a minus sign “-”) | V.59 | -9,342,790.49 | -23,661,125.27 |
| III. Business profit (loss expressed with a minus sign “ -”) | 429,889,165.03 | -1,103,937,230.22 | |
| Plus: Non-operating income | V.60 | 35,920,509.46 | 14,943,253.23 |
| Minus: Non-operating expenses | V.61 | 65,971,503.46 | 20,261,590.79 |
| IV. Total profit (total loss expressed with a minus sign “-”) | 399,838,171.03 | -1,109,255,567.78 | |
| Minus: Income Tax Expenses | V.62 | 31,159,461.25 | -184,856,758.54 |
| V. Net profit (net loss expressed with a minus sign “-”) | 368,678,709.78 | -924,398,809.24 | |
| (I) Classified by operation continuity: | |||
| 1. Net profit from continuing operations (net loss expressed with a minus sign) | 368,678,709.78 | -924,398,809.24 | |
| 2. Net profit from discontinued operation (net loss expressed with a minus sign) | |||
| (II) Classification by attribution of the ownership: | |||
| 1. Net profit attributable to shareholders of parent company (net loss expressed with a minus sign) | 435,458,340.57 | -1,079,547,699.72 | |
| 2. Minority interest income (net loss expressed with a minus sign) | -66,779,630.79 | 155,148,890.48 | |
| VI. O ther comprehensive income, net of tax | V.63 | 301,662,130.69 | 1,473,875,713.20 |
| (I) Other comprehensive income, net of tax, attributable to owners of the parent company | 299,811,615.99 | 1,451,779,958.81 | |
| 1. Other comprehensive income that cannot be re-classified into profit and loss | 790,515.39 | ||
| (1) Remeasurement gains or losses of a defined benefit plan | |||
| (2) Other comprehensive income cannot be recognized in profit and loss under equity method | 790,515.39 | ||
| (3) Changes in fair value of investments in other equity instruments | |||
| (4) Changes in fair value of enterprise credit risks | |||
| (5) Others | |||
| 2. Other comprehensive income to be reclassified into profit and loss | 299,021,100.60 | 1,451,779,958.81 |
| (1) Other comprehensive income that can be recognized in profit and loss under equity method | 41,753,641.58 | 99,931,282.10 | |
| (2) Changes in fair value of other debt investments | |||
| (3) Amount of financial assets reclassified into other comprehensive income | |||
| (4) Provision for credit impairment of other debt investments | |||
| (5) Cash flow hedge reserve | 22,418,946.16 | -4,627,201.60 | |
| (6) Exchange differences from translation of financial statements | 234,848,512.86 | 1,356,475,878.31 | |
| (7) Others | |||
| (II) Net amount after taxes of other comprehensive income attributable to minority shareholders | 1,850,514.70 | 22,095,754.39 | |
| VII. Total comprehensive income | 670,340,840.47 | 549,476,903.96 | |
| (I) Total comprehensive income attributable to parent company shareholders | 735,269,956.56 | 372,232,259.09 | |
| (II) Net amount after taxes of other comprehensive income attributable to minority shareholders | -64,929,116.09 | 177,244,644.87 | |
| VIII. Earnings per Share (EPS): | |||
| (I) Basic earnings per share | XVI.2 | 0.13 | -0.30 |
| (II) Diluted earnings per share | XVI.2 | 0.13 | -0.30 |
| (The attached notes to the statements are an integral part of the financial statements) | |||
Legal representative: Person in charge of accounting activities:
Head of accounting agency:
| Consolidated Statement of Cash Flow | |||
| FY2023 | |||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||
| Item | Note | Current period amount | Last period amount |
| I. Cash flow from operating activities: | |||
| Cash received from the sales of goods and the rendering of labor services | 149,171,462,352.96 | 159,672,411,042.94 | |
| Tax refunds received | 1,704,518,936.01 | 1,820,864,021.53 | |
| Other cash received relating to operating activities | V.64 | 466,751,335.95 | 587,108,481.06 |
| Subtotal of cash inflows from operating activities | 151,342,732,624.92 | 162,080,383,545.53 | |
| Cash payments for goods purchased and labor services received | 141,837,557,690.06 | 154,044,175,073.74 | |
| Cash payments to and on behalf of employees | 2,447,999,748.11 | 2,515,740,844.55 | |
| Payments of all types of taxes | 1,235,348,190.93 | 1,892,421,845.68 | |
| Other cash payments relating to operating activities | V.64 | 1,289,992,190.67 | 922,512,298.20 |
| Subtotal of cash outflows from operating activities | 146,810,897,819.77 | 159,374,850,062.17 | |
| Net cash flow from operating activities | 4,531,834,805.15 | 2,705,533,483.36 | |
| II. Cash flow from investment activities: | |||
| Cash received from disposals and withdrawn on investments | 988,000,000.00 | 1,375,000,000.00 | |
| Cash received from return on investment | 301,046,977.47 | 637,798,059.48 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 23,009,592.59 | 14,502,494.60 | |
| Net cash received from disposal of subsidiaries and other business units | 138,494,181.97 | ||
| Other cash received relating to investment activities | V.64 | 146,513,074.49 | 374,657,766.67 |
| Subtotal of cash inflows from investing activities | 1,597,063,826.52 | 2,401,958,320.75 | |
| Cash payments to acquire and construct fixed assets, intangible assets and other long-term assets | 4,934,677,342.08 | 2,955,334,534.93 | |
| Cash payments to acquire investment | 1,820,698,257.11 | 1,541,765,980.81 | |
| Net cash payments for acquisition of subsidiaries and other business units | |||
| Other cash payments relating to investment activities | V.64 | 144,345,965.50 | 31,148,886.89 |
| Subtotal of cash outflows from investing activities | 6,899,721,564.69 | 4,528,249,402.63 | |
| Net cash flows from investing activities | -5,302,657,738.17 | -2,126,291,081.88 | |
| III. Cash flow from financing activities: | |||
| Cash received from investors in making investment in the enterprise | 3,029,697,000.00 | ||
| Wherein: Cash received by subsidiaries from issuing shares of minority shareholders | 44,297,000.00 | ||
| Cash received from borrowings | 54,367,260,691.80 | 57,429,242,118.33 | |
| Other cash received relating to financing activities | V.64 | 7,244,684,328.87 | 7,244,056,460.49 |
| Subtotal of cash inflows from financing activities | 61,611,945,020.67 | 67,702,995,578.82 | |
| Cash repayments of amounts borrowed | 52,009,598,096.99 | 55,105,512,814.65 | |
| Cash payments for distribution of dividends or profit or for interest payment | 2,671,790,544.07 | 3,065,324,736.57 | |
| Wherein: Subsidiaries’ cash payments to minority shareholders for distribution of dividends or profit | 235,986,111.11 | ||
| Other cash payments relating to financing activities | V.64 | 10,669,552,070.80 | 7,859,458,062.39 |
| Subtotal of cash outflows from financing activities | 65,350,940,711.86 | 66,030,295,613.61 | |
| Net cash flows from financing activities | -3,738,995,691.19 | 1,672,699,965.21 | |
| IV. Effect of foreign exchange rate change on cash and cash equivalents | 93,867,133.30 | 437,390,294.50 | |
| V. Net increase in cash and cash equivalents | V.65 | -4,415,951,490.91 | 2,689,332,661.19 |
| Plus: Beginning balance of cash and cash equivalents | V.65 | 12,934,069,613.03 | 10,244,736,951.84 |
| VI. Ending balance of cash and cash equivalents | V.65 | 8,518,118,122.12 | 12,934,069,613.03 |
| (The attached notes to the statements are an integral part of the financial statements) | |||
Legal representative: Person in charge of accounting activities: Head of accountingagency:
| Consolidated Statement of Stockholders Equity | |||||||||||||
| FY2023 | |||||||||||||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||||||||||||
| Item | Current period amount | ||||||||||||
| Stockholders’ equity attributable to parent company | Minority stockholders’ equity | Total stockholders’ equity | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Minus: Treasury Stock | Other comprehensive income | Appropriative reserve | Earned surplus | Undistributed profit | Subtotal | |||||
| Preference shares | Perpetual bonds | Other | |||||||||||
| I. Ending balance of previous year | 3,666,280,806.00 | 1,159,082,382.38 | 9,170,637,734.40 | 1,483,566,737.98 | 380,920,744.19 | 781,701,619.18 | 11,771,637,510.92 | 25,446,694,059.09 | 7,211,451,336.07 | 32,658,145,395.16 | |||
| Plus: Changes in accounting policies | |||||||||||||
| Correction of previous accounting errors | |||||||||||||
| Other | |||||||||||||
| II. Beginning balance of current year | 3,666,280,806.00 | 1,159,082,382.38 | 9,170,637,734.40 | 1,483,566,737.98 | 380,920,744.19 | 781,701,619.18 | 11,771,637,510.92 | 25,446,694,059.09 | 7,211,451,336.07 | 32,658,145,395.16 | |||
| III. Amount increase or decrease in current period (decrease expressed with a minus sign “-”) | 21,219.00 | -50,612.09 | -85,408,553.53 | 885,375,228.94 | 299,811,615.99 | 25,435,281.81 | 410,023,058.76 | -235,543,219.00 | -460,113,505.42 | -695,656,724.42 | |||
| (I) Total comprehensive income | 299,811,615.99 | 435,458,340.57 | 735,269,956.56 | -64,929,116.09 | 670,340,840.47 | ||||||||
| (II) Shareholders investment and capital reduction | 21,219.00 | -50,612.09 | 106,188.81 | 885,375,228.94 | -885,298,433.22 | -188,768,432.00 | -1,074,066,865.22 | ||||||
| 1. Ordinary shares invested by shareholders | -86,407.31 | 885,375,228.94 | -885,461,636.25 | -188,768,432.00 | -1,074,230,068.25 | ||||||||
| 2. Capital invested by holders of other equity instruments | 21,219.00 | -50,612.09 | 192,596.12 | 163,203.03 | 163,203.03 |
| 3. Amount of share-based payment that recognized in stockholders’ equity | |||||||||||||
| 4. Others | |||||||||||||
| (III) Profit distribution | 25,435,281.81 | -25,435,281.81 | -50,981,568.00 | -50,981,568.00 | |||||||||
| 1. Appropriation of earned surplus | 25,435,281.81 | -25,435,281.81 | |||||||||||
| 2. Profit distributed to shareholders | -50,981,568.00 | -50,981,568.00 | |||||||||||
| 3. Others | |||||||||||||
| (IV) Internal carry-forward of stockholder’s equity | |||||||||||||
| 1. Capital reserve carried over into |
| share capital | |||||||||||||
| 2. Earned surplus carried over into share capital | |||||||||||||
| 3. Earned surplus carried over to cover loss | |||||||||||||
| 4. Gains or losses of a defined benefit plan carried over into retained earning | |||||||||||||
| 5. Other comprehensive income carried over into retained earning | |||||||||||||
| 6. Others | |||||||||||||
| (V) Appropriative reserve | |||||||||||||
| 1. Reserve withdraw | 56,840,830.32 | 56,840,830.32 | 56,840,830.32 |
| n in current period | |||||||||||||
| 2. Reserve used in current period | 56,840,830.32 | 56,840,830.32 | 56,840,830.32 | ||||||||||
| (VI) Others | -85,514,742.34 | -85,514,742.34 | -155,434,389.33 | -240,949,131.67 | |||||||||
| IV. Ending balance of current year | 3,666,302,025.00 | 1,159,031,770.29 | 9,085,229,180.87 | 2,368,941,966.92 | 680,732,360.18 | 807,136,900.99 | 12,181,660,569.68 | 25,211,150,840.09 | 6,751,337,830.65 | 31,962,488,670.74 | |||
| (The attached notes to the statements are an integral part of the financial statements) | |||||||||||||
| Legal representative: Person in charge of accounting activities: Head of accounting agency: | |||||||||||||
| Consolidated Statement of Stockholders Equity (continued） | |||||||||||||
| FY2023 | |||||||||||||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||||||||||||
| Item | Last period amount | ||||||||||||
| Stockholders’ equity attributable to parent company | Minority stockholders’ equity | Total stockholders’ equity | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Minus: Treasury Stock | Other comprehensive income | Appropriative reserve | Earned surplus | Undistributed profit | Subtotal | |||||
| Preference shares | Perpetual bonds | Other | |||||||||||
| I. Ending balance of previous year | 3,666,280,014.00 | 478,506,692.86 | 9,165,586,160.07 | 718,150,457.23 | -1,070,859,214.62 | 751,895,667.87 | 13,623,601,273.27 | 25,896,860,136.22 | 7,043,319,140.59 | 32,940,179,276.81 | |||
| Plus: Changes in accounting policies | -3,697,493.97 | -29,714,854.19 | -33,412,348.16 | -1,438,761.58 | -34,851,109.74 | ||||||||
| Correction of previous accounting errors | |||||||||||||
| Other | |||||||||||||
| II. Beginning balance of current year | 3,666,280,014.00 | 478,506,692.86 | 9,161,888,666.10 | 718,150,457.23 | -1,070,859,214.62 | 751,895,667.87 | 13,593,886,419.08 | 25,863,447,788.06 | 7,041,880,379.01 | 32,905,328,167.07 | |||
| III. Amount increase or decrease in current period (decrease expressed with a minus sign “-”) | 792.00 | 680,575,689.52 | 8,749,068.30 | 765,416,280.75 | 1,451,779,958.81 | 29,805,951.31 | -1,822,248,908.16 | -416,753,728.97 | 169,570,957.06 | -247,182,771.91 | |||
| (I) Total comprehensive income | 1,451,779,958.81 | -1,079,547,699.72 | 372,232,259.09 | 177,244,644.87 | 549,476,903.96 | ||||||||
| (II) Shareholders investment and capital reduction | 792.00 | 680,575,689.52 | -139,851.09 | 765,416,280.75 | -84,979,650.32 | 96,408,075.00 | 11,428,424.68 | ||||||
| 1. Ordinary shares invested by shareholders | -147,916.45 | 765,416,280.75 | -765,564,197.20 | 96,408,075.00 | -669,156,122.20 | ||||||||
| 2. Capital invested by holders of other equity instruments | 792.00 | 680,575,689.52 | 8,065.36 | 680,584,546.88 | 680,584,546.88 | ||||||||
| 3. Amount of share-based payment that recognized in stockholders’ equity | |||||||||||||
| 4. Others | |||||||||||||
| (III) Profit distribution | 29,805,951.31 | -744,790,079.91 | -714,984,128.60 | -102,597,186.11 | -817,581,314.71 | ||||||||
| 1. Appropriation of earned surplus | 29,805,951.31 | - |
| 29,805,951.31 | |||||||||||||
| 2. Profit distributed to shareholders | -714,984,128.60 | -714,984,128.60 | -102,597,186.11 | -817,581,314.71 | |||||||||
| 3. Others | |||||||||||||
| (IV) Internal carry-forward of stockholder’s equity | |||||||||||||
| 1. Capital reserve carried over into share capital | |||||||||||||
| 2. Earned surplus carried over into share capital | |||||||||||||
| 3. Earned surplus carried over to cover loss | |||||||||||||
| 4. Gains or losses of a defined benefit plan carried over into retained earning | |||||||||||||
| 5. Other comprehensive income carried over into retained earning | |||||||||||||
| 6. Others | |||||||||||||
| (V) Appropriative reserve | |||||||||||||
| 1. Reserve withdrawn in current period | 66,593,026.55 | 66,593,026.55 | 66,593,026.55 | ||||||||||
| 2. Reserve used in current period | 66,593,026.55 | 66,593,026.55 | 66,593,026.55 |
| (VI) Others | 8,888,919.39 | 2,088,871.47 | 10,977,790.86 | -1,484,576.70 | 9,493,214.16 | ||||||||
| IV. Ending balance of current year | 3,666,280,806.00 | 1,159,082,382.38 | 9,170,637,734.40 | 1,483,566,737.98 | 380,920,744.19 | 781,701,619.18 | 11,771,637,510.92 | 25,446,694,059.09 | 7,211,451,336.07 | 32,658,145,395.16 | |||
| (The attached notes to the statements are an integral part of the financial statements) | |||||||||||||
| Legal representative: Person in charge of accounting activities: Head of accounting agency： | |||||||||||||
| Balance sheet | |||
| December 31, 2023 | |||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||
| Item | Note | Ending balance | Ending balance of previous year |
| Current assets: | |||
| Monetary funds | 460,230,369.89 | 384,399,115.21 | |
| Held-for-trading financial assets | |||
| Derivative financial assets | |||
| Notes receivable | 199,750,000.00 | ||
| Accounts receivable | |||
| Accounts receivable financing | |||
| Advance payments | 112,674.42 | 8,680,068.00 | |
| Other receivables | XIV.1 | 5,912,890,574.22 | 6,026,278,001.08 |
| Inventory | |||
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | |||
| Other current assets | 6,225,369.08 | 697,863.98 | |
| Total current assets | 6,579,208,987.61 | 6,420,055,048.27 | |
| Non-current Assets | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | |||
| Long-term equity investments | XIV.2 | 15,955,924,520.80 | 15,946,023,143.22 |
| Equity instruments | |||
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 649.40 | 649.40 | |
| Construction in progress | |||
| Capitalized biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | |||
| Development expenditure | |||
| Goodwill | |||
| Long-term deferred and prepaid expenses | |||
| Deferred income tax assets | |||
| Other non-current assets | |||
| Total non-current assets | 15,955,925,170.20 | 15,946,023,792.62 | |
| Total assets | 22,535,134,157.81 | 22,366,078,840.89 | |
| (The attached notes to the statements are an integral part of the financial statements) | |||
| Legal representative: Person in charge of accounting activities: Head of accounting agency: | |||
| Balance sheet (continued) | |||
| December 31, 2023 | |||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||
| Item | Note | Ending balance | Ending balance of previous year |
| Current liabilities: | |||
| Short-term loans | 199,750,000.00 | 500,545,833.33 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 847,800,000.00 | 117,600,000.00 | |
| Accounts payable | 60,008,624.46 | 708,624.46 | |
| Advance receipts | |||
| Contract liabilities | |||
| Wages payable | |||
| Taxes and dues payable | 296,916.07 | 531,317.09 | |
| Other payables | 572,827,721.60 | 576,035,092.59 | |
| Held for sale liabilities | |||
| Non-current liabilities due within one year | 10,092,304.09 | 6,828,015.61 | |
| Other current liabilities | |||
| Total current liabilities | 1,690,775,566.22 | 1,202,248,883.08 | |
| Non-current Liabilities | |||
| Long-term loans | |||
| Bonds payable | 4,278,805,701.33 | 4,061,538,995.85 | |
| Wherein: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term wages payable | |||
| Estimated liabilities | |||
| Deferred income | |||
| Deferred income tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 4,278,805,701.33 | 4,061,538,995.85 | |
| Total liabilities | 5,969,581,267.55 | 5,263,787,878.93 | |
| Owner’s equity | |||
| Paid-up capital | 3,666,302,025.00 | 3,666,280,806.00 | |
| Other equity instruments | 1,159,031,770.29 | 1,159,082,382.38 | |
| Wherein: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 13,008,445,718.54 | 13,008,339,529.73 | |
| Minus: Treasury Stock | 2,368,941,966.92 | 1,483,566,737.98 | |
| Other comprehensive income | |||
| Special reserve | |||
| Surplus reserve | 664,659,745.28 | 629,803,709.13 | |
| Undistributed profit | 436,055,598.07 | 122,351,272.70 | |
| Total owner’s equity | 16,565,552,890.26 | 17,102,290,961.96 | |
| Total liabilities and owner’s equity | 22,535,134,157.81 | 22,366,078,840.89 | |
| (The attached notes to the statements are an integral part of the financial statements) | |||
Legal representative: Person in charge of accounting activities: Headof accounting agency:
| Income Statement | |||
| FY2023 | |||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||
| Item | Note | Current period amount | Last period amount |
| I. Operating income | XIV.3 | 1,437,239,380.54 | |
| Minus: Operating cost | XIV.3 | 1,413,310,442.21 | |
| Tax and associate charge | 1,586,855.08 | 1,257,958.97 | |
| Selling expenses | |||
| Administration expenses | 5,089,989.92 | 5,131,757.12 | |
| R&D expenses | |||
| Financial expenses | -12,982,277.77 | -22,743,899.98 | |
| Wherein: Interest expenses | 266,658,832.11 | 177,581,595.81 | |
| Interest income | 288,732,193.54 | 203,043,659.19 | |
| Plus: Other incomes | 2,128,804.24 | 358,091.71 | |
| Income from investment (loss expressed with a minus sign “-”) | XIV.4 | 339,901,377.58 | -37,178.87 |
| Wherein: Income from investment in associates and joint ventures | -98,622.42 | -37,178.87 | |
| Gains from derecognition of financial assets measured at amortized cost | |||
| Net exposure hedging gains (loss expressed with a minus sign “-”) | |||
| Income from changes in fair value (loss expressed with a minus sign “-”) | |||
| Credit impairment loss (loss expressed with a minus sign “-”) | -10,000.00 | ||
| Asset impairment loss (loss expressed with a minus sign) | |||
| Gains on asset disposal (loss expressed with a minus sign “-”) | |||
| II. Business profit (loss expressed with a minus sign “-”) | 348,325,614.59 | 40,604,035.06 | |
| Plus: Non-operating income | 234,746.93 | 21,090.30 | |
| Minus: Non-operating expenses | 3,643.29 | ||
| III. Total profit (total loss expressed with a minus sign “-”) | 348,560,361.52 | 40,621,482.07 | |
| Minus: Income Tax Expenses | |||
| IV. Net profit (net loss expressed with a minus sign “-”) | 348,560,361.52 | 40,621,482.07 | |
| (I) Net profit from continuing operations (net loss expressed with a minus sign) | 348,560,361.52 | 40,621,482.07 | |
| (II) Net profit from discontinued operation (net loss expressed with a minus sign) | |||
| V. Net amount after taxes of other comprehensive income | |||
| (I) Other comprehensive income cannot be reclassified into profit and loss | |||
| 1. Remeasurement gains or losses of a defined benefit plan | |||
| 2. Other comprehensive income cannot be recognized in profit and loss | |||
| under equity method | |||
| 3. Changes in fair value of investments in other equity instruments | |||
| (4) Changes in fair value of enterprise credit risks | |||
| 5. Others |
| (II) Other comprehensive income to be reclassified into profit and loss | |||||
| 1. Other comprehensive income can be recognized in profit and loss under equity method | |||||
| 2. Changes in fair value of other debt investments | |||||
| 3. Amount of financial assets reclassified into other comprehensive income | |||||
| 4. Provision for credit impairment of other debt investments | |||||
| 5. Cash flow hedge reserve | |||||
| 6. Exchange differences from translation of financial statements | |||||
| 7. Others | 348,560,361.52 | 40,621,482.07 | |||
| (The attached notes to the statements are an integral part of the financial statements) | |||||
| Legal representative: Person in charge of accounting activities: Head of accounting agency: | |||||
| Statement of Cash Flow | |||
| FY2023 | |||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||
| Item | Note | Current period amount | Last period amount |
| I. Cash flow from operating activities: | |||
| Cash received from the sales of goods and the rendering of labor services | 1,624,080,500.11 | ||
| Tax refunds received | |||
| Other cash received relating to operating activities | 1,040,086,300.14 | 636,125,692.27 | |
| Subtotal of cash inflows from operating activities | 1,040,086,300.14 | 2,260,206,192.38 | |
| Cash payments for goods purchased and labor services received | 109,000,000.00 | 1,723,040,799.70 | |
| Cash payments to and on behalf of employees | 2,129,443.97 | ||
| Payments of all types of taxes | 1,821,256.10 | 1,369,758.25 | |
| Other cash payments relating to operating activities | 18,375,813.22 | 99,176,944.28 | |
| Subtotal of cash outflows from operating activities | 129,197,069.32 | 1,825,716,946.20 | |
| Net cash flow from operating activities | 910,889,230.82 | 434,489,246.18 | |
| II. Cash flow from investment activities: | |||
| Cash received from disposals and withdrawn on investments | |||
| Cash received from return on investment | 744,772,962.00 | ||
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | |||
| Net cash received from disposal of subsidiaries and other | |||
| business units | 490,259,339.49 | 1,091,801,527.22 | |
| Other cash received relating to investment activities | 490,259,339.49 | 1,836,574,489.22 | |
| Cash payments to acquire and construct fixed assets, intangible assets and other long-term assets | |||
| Cash payments to acquire investment | 10,000,000.00 | 14,000,000.00 | |
| Net cash payments for acquisition of subsidiaries and other business units | |||
| Other cash payments relating to investment activities | 81,350,573.14 | 2,903,987,361.80 | |
| Subtotal of cash outflows from investing activities | 91,350,573.14 | 2,917,987,361.80 | |
| Net cash flows from investing activities | 398,908,766.35 | -1,081,412,872.58 | |
| III. Cash flow from financing activities: | |||
| Cash received from investors in making investment in the enterprise | 2,985,400,000.00 | ||
| Cash received from borrowings | 199,750,000.00 | 800,000,000.00 | |
| Other cash received relating to financing activities | 1,137,694,931.25 | 634,250,000.00 | |
| Subtotal of cash inflows from financing activities | 1,337,444,931.25 | 4,419,650,000.00 | |
| Cash repayments of amounts borrowed | 500,811,000.00 | 1,299,189,000.00 | |
| Cash payments for distribution of dividends or profit or for interest payment | 46,494,106.24 | 790,996,700.78 |
| Other cash payments relating to financing activities | 2,446,291,636.25 | 1,383,685,128.45 | |
| Subtotal of cash outflows from financing activities | 2,993,596,742.49 | 3,473,870,829.23 | |
| Net cash flows from financing activities | -1,656,151,811.24 | 945,779,170.77 | |
| IV. Effect of foreign exchange rate change on cash and cash equivalents | |||
| V. Net increase in cash and cash equivalents | -346,353,814.07 | 298,855,544.37 | |
| Plus: Beginning balance of cash and cash equivalents | 366,704,183.96 | 67,848,639.59 | |
| VI. Ending balance of cash and cash equivalents | 20,350,369.89 | 366,704,183.96 | |
| (The attached notes to the statements are an integral part of the financial statements) | |||
| Legal representative: Person in charge of accounting activities: Head of accounting agency: | |||
| Statement of Stockholders Equity | |||||||||||
| FY2023 | |||||||||||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||||||||||
| Item | Current period amount | ||||||||||
| Share capital | Other equity instruments | Capital reserve | Minus: Treasury Stock | Other comprehensive income | Appropriative reserve | Earned surplus | Undistributed profit | Total stockholders’ equity | |||
| Preference shares | Perpetual bonds | Other | |||||||||
| I. Ending balance of previous year | 3,666,280,806.00 | 1,159,082,382.38 | 13,008,339,529.73 | 1,483,566,737.98 | 629,803,709.13 | 122,351,272.70 | 17,102,290,961.96 | ||||
| Plus: Changes in accounting policies | |||||||||||
| Correction of previous accounting errors | |||||||||||
| Other | |||||||||||
| II. Beginning balance of current year | 3,666,280,806.00 | 1,159,082,382.38 | 13,008,339,529.73 | 1,483,566,737.98 | 629,803,709.13 | 122,351,272.70 | 17,102,290,961.96 | ||||
| III. Amount increase or decrease in current period (decrease expressed | 21,219.00 | -50,612.09 | 106,188.81 | 885,375,228.94 | 34,856,036.15 | 313,704,325.37 | -536,738,071.70 | ||||
| with a minus sign “-”) | |||||||||||
| (I) Total comprehensive income | 348,560,361.52 | 348,560,361.52 | |||||||||
| (II) Shareholders investment and capital reduction | 21,219.00 | -50,612.09 | 106,188.81 | 885,375,228.94 | -885,298,433.22 | ||||||
| 1. Ordinary shares invested by shareholders | -86,407.31 | 885,375,228.94 | -885,461,636.25 | ||||||||
| 2. Capital invested by holders of other equity instruments | 21,219.00 | -50,612.09 | 192,596.12 | 163,203.03 | |||||||
| 3. Amount of share-based payment that recognized in stockholders’ equity | |||||||||||
| 4. Others | |||||||||||
| (III) Profit distribution | 34,856,036.15 | -34,856,036.15 | |||||||||
| 1. Appropriation of earned surplus | 34,856,036.15 | -34,856,036.15 | |||||||||
| 2. Profit distributed to |
| shareholders | |||||||||||
| 3. Others | |||||||||||
| (IV) Internal carry-forward of stockholder’s equity | |||||||||||
| 1. Capital reserve carried over into share capital | |||||||||||
| 2. Earned surplus carried over into share capital | |||||||||||
| 3. Earned surplus carried over to cover loss | |||||||||||
| 4. Gains or losses of a defined benefit plan carried over into retained earning | |||||||||||
| 5. Other comprehensive income carried over into retained earning | |||||||||||
| 6. Others | |||||||||||
| (V) Appropriative reserve | |||||||||||
| 1. Reserve withdrawn in current period | |||||||||||
| 2. Reserve used in current |
| period | |||||||||||
| (VI) Others | |||||||||||
| IV. Ending balance of current year | 3,666,302,025.00 | 1,159,031,770.29 | 13,008,445,718.54 | 2,368,941,966.92 | 664,659,745.28 | 436,055,598.07 | 16,565,552,890.26 | ||||
| (The attached notes to the statements are an integral part of the financial statements) | |||||||||||
| Legal representative: Person in charge of accounting activities: Head of accounting agency: | |||||||||||
| Statement of Stockholders Equity(continued） | |||||||||||
| FY2023 | |||||||||||
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||||||||||
| Last period amount | |||||||||||
| Item | Share capital | Other equity instruments | Earned surplus | Undistributed profit | Total stockholders’ equity | ||||||
| Preference shares | Perpetual bonds | Others | Capital reserve | Minus: Treasury Stock | Other comprehensive income | Appropriative reserve | |||||
| I. Ending balance of previous year | 3,666,280,014.00 | 478,506,692.86 | 13,008,479,380.82 | 718,150,457.23 | 625,741,560.92 | 800,776,067.44 | 17,861,633,258.81 | ||||
| Plus: Changes in accounting policies | |||||||||||
| Correction of previous accounting errors | |||||||||||
| Others | 3,666,280,014.00 | 478,506,692.86 | 13,008,479,380.82 | 718,150,457.23 | 625,741,560.92 | 800,776,067.44 | 17,861,633,258.81 | ||||
| II. Beginning balance of current year | 792.00 | 680,575,689.52 | -139,851.09 | 765,416,280.75 | 4,062,148.21 | -678,424,794.74 | -759,342,296.85 | ||||
| III. Amount increase or decrease in current | 40,621,482.07 | 40,621,482.07 | |||||||||
| period (decrease expressed with a minus sign “-”) | 792.00 | 680,575,689.52 | -139,851.09 | 765,416,280.75 | -84,979,650.32 | ||||||
| (I) Total comprehensive income | -147,916.45 | 765,416,280.75 | -765,564,197.20 | ||||||||
| (II) Shareholders investment and capital reduction | 792.00 | 680,575,689.52 | 8,065.36 | 680,584,546.88 | |||||||
| 1. Ordinary shares invested by shareholders | |||||||||||
| 2. Capital invested by holders of other equity | |||||||||||
| instruments | 4,062,148.21 | -719,046,276.81 | -714,984,128.60 | ||||||||
| 3. Amount of share-based payment that recognized in stockholders’ equity | 4,062,148.21 | -4,062,148.21 | |||||||||
| 4. Others | - | -714,984,128.60 |
| 714,984,128.60 | |||||||||||
| (III) Profit distribution | |||||||||||
| 1. Appropriation of earned surplus | |||||||||||
| 2. Profit distributed to shareholders | |||||||||||
| 3. Others | |||||||||||
| (IV) Internal carry-forward of stockholder’s equity | |||||||||||
| 1. Capital reserve carried over into share capital | |||||||||||
| 2. Earned surplus carried over into share capital | |||||||||||
| 3. Earned surplus carried over to cover loss | |||||||||||
| 4. Gains or losses of a defined benefit plan carried | |||||||||||
| over into retained earning |
| 5. Other comprehensive income carried over into retained earning | |||||||||||
| 6. Others | |||||||||||
| (V) Appropriative reserve | 3,666,280,806.00 | 1,159,082,382.38 | 13,008,339,529.73 | 1,483,566,737.98 | 629,803,709.13 | 122,351,272.70 | 17,102,290,961.96 | ||||
| (The attached notes to the statements are an integral part of the financial statements) | |||||||||||
| Legal representative: Person in charge of accounting activities: Head of accounting agency: | |||||||||||
Hengyi Petrochemical Co., Ltd.Notes to Financial Statements 2023(Unless otherwise specified, the currency unit is RMB)
I. Basic information about the Company
1. Historical development
Hengyi Petrochemical Co., Ltd. (referred to as "the Company" or "Company"),formerly known as Centennial Brilliance Science and Technology Co., Ltd. (referred toas "Centennial Brilliance"), which was changed into its current name on June 1, 2011by change in the registration with administration for industry and commerce. TheCompany was established with initiation by shareholders on December 14, 1989 andupon approval by the Economic System Reform Commission of Guangxi ZhuangAutonomous Region with the G. T. G. [1990] No. 3 Document issued on February 10,1990. The Company’s stocks were listed on Shenzhen Stock Exchange on March 28,1997 under the stock code of 000703 and the current stock abbreviation of "HengyiPetrochemical".
Upon approval by China Securities Regulatory Commission with the document Replyon Approval of the Sales of Major Assets of Centennial Brilliance Science andTechnology Co., Ltd. and the Issuance of Its Shares to Zhejiang Hengyi Group Co., Ltd.for Purchase of Assets (ZJXK [2011] No. 540) issued on April 15, 2011, the Companysold all its assets and liabilities to Henan Huicheng Investment Co., Ltd. ("HenanHuicheng") with the employees transferred with assets. Henan Huicheng paid theconsideration in cash. The Company issued 432,883,813 shares to purchase 100%equity in Zhejiang Hengyi Petrochemical Co., Ltd. (hereinafter referred to as HengyiLimited) held by Zhejiang Hengyi Group Co., Ltd., Tianjin Dinghui Equity InvestmentPhase I Fund (Limited Partnership), Tianjin Dinghui Yuanbo Equity Investment Fund(Limited Partnership); at the same time, Henan Huicheng transferred its 12,237,050
shares in Centennial Brilliance to Zhejiang Hengyi Group Co., Ltd. (hereinafter referredto as Hengyi Group) in form of agreement, and Hengyi Group paid the considerationin cash.
On April 27, 2011, Ascenda conducted capital verification on the major assetreorganization and issuance of shares to purchase assets, and issued TJZXY (2011) Z.Z. No. 020057 Capital Verification Report to verify the issued 432,883,813 shares.According to the resolutions of the Company’s 2011 Annual General Meeting ofShareholders and the revised Articles of Association, three bonus shares for every 10shares were distributed to all shareholders on the basis of the Company’s original totalshare capital of RMB 576,793,813.00, and the capital reserve was transferred toincrease 7 shares for every 10 shares to all shareholders at the same time. The Companyincreased its registered capital by RMB 576,793,813.00. The base date of the increaseby transfer was March 27, 2012, and the registered capital after the change was RMB1,153,587,626.00.
According to the resolutions of the 2015 Annual General Meeting of Shareholders andthe revised Articles of Association, the Company implemented the first restricted stockincentive plan in 2015. The incentive form adopted in this incentive plan was restrictedstocks, and 15 incentive objects were granted the restricted stocks in the first time. 11.7million restricted stocks with a par value of RMB 1 per share were granted to incentiveobjects by means of targeted issuance. The Company increased its registered capital byRMB 11,700,000.00, and the registered capital after the change was RMB1,165,287,626.00.
According to the resolutions of the 2014 Annual General Meeting of Shareholders andthe revised Articles of Association, upon the approval of China Securities RegulatoryCommission with the Reply on Approval of Hengyi Petrochemical Co., Ltd.’s Non-
public Issuance of Stocks (ZJXK [2015] No. 2085), the Company privately issued140,845,070 RMB ordinary shares (A-shares) with a par value of RMB 1 per share in2015. The Company increased its registered capital by RMB 140,845,070.00, and theregistered capital after the change was RMB 1,306,132,696.00.
According to the resolutions of the twenty-sixth meeting of the ninth session of theBOD of the Company in 2016 and the revised Articles of Association, the Company’srepurchased and cancelled 25% of the granted restricted stocks that were held byincentive objects and did not meet the unlocking conditions for the first unlockingperiod, i.e. 2,925,000 restricted stocks. The Company reduced the registered capital byRMB 2,925,000.00, and the registered capital after the change was RMB1,303,207,696.00.
According to the resolutions of the Company’s 2015 Annual General Meeting ofShareholders and the revised Articles of Association, upon the approval granted byChina Securities Regulatory Commission with the Reply on Approval of HengyiPetrochemical Co., Ltd.’s Non- public Issuance of Stocks (ZJXK [2016] No. 1320), theCompany privately issued 316,666,666 RMB ordinary shares (A shares) with a parvalue of RMB 1 per share in 2016. The Company increased its registered capital byRMB 316,666,666.00, and the registered capital after the change was RMB1,619,874,362.00.
According to the resolutions of the Second Extraordinary General Meeting ofShareholders of the Company in 2017 and the Company’s revised Articles ofAssociation, the Company implemented the second restricted stock incentive plan in2017. The incentive form adopted in this incentive plan was restricted stocks, and 50incentive objects were granted the restricted stocks in this time. 28.55 million restrictedstocks with a par value of RMB 1 per share were granted to incentive objects by means
of targeted issuance. The Company increased its registered capital by RMB28,550,000.00, and the registered capital after the change was RMB 1,648,424,362.00.
According to the resolutions of the Company’s 2017 Annual General Meeting ofShareholders and the revised Articles of Association, the capital reserve was transferredto increase 4 shares for every 10 shares to all shareholders based on the Company’soriginal total share capital of RMB 1,648,424,362. The Company completed theregistration of bonus and transferred stocks on May 24, 2018. The Company increasedits registered capital by RMB 659,369,744, and the registered capital after the changewas RMB 2,307,794,106.00.
In October 2018, due to the resignation of restricted stock incentive objects, theCompany repurchased and cancelled 679,000 restricted stocks. The Company reducedits registered capital (share capital) by RMB 679,000. After the change, the registeredcapital was RMB 2,307,115,106, and the share capital was RMB 2,307,115,106.In December 2018, the Company issued 170,592,433 shares to Zhejiang Hengyi GroupCo., Ltd. (hereinafter referred to as "Hengyi Group"), 75,124,910 shares to FulidaGroup Holding Co., Ltd. (hereinafter referred to as "Fulida Group"), and 75,124,910shares to Xinghui Chemical Fibre Group Co., Ltd. (hereinafter referred to as "XinghuiChemical Fibre Group") to purchase related assets. After the change, the registeredcapital was RMB 2,627,957,359.00, and the share capital was RMB 2,627,957,359.00.
In January 2019, the Company privately issued 213,768,115 shares to 6 investorsseparately to raise matching funds. After the change, the registered capital was RMB2,841,725,474.00 and the share capital was RMB 2,841,725,474.00.
According to the resolutions of the Company’s 2019 Annual General Meeting ofShareholders and the revised Articles of Association, the capital reserve was transferred
to increase three shares for every 10 shares to all shareholders based on the Company’soriginal total share capital of RMB 2,841,725,474.00. The Company completed theregistration of bonus and transferred stocks on May 28, 2020. The Company increasedits registered capital by RMB 852,517,642, and the registered capital after the changewas RMB 3,694,243,116.00.
On June 9, 2020, in accordance with the Proposal on the Issuance of Shares to PurchaseAssets and the Realization of Performance Commitments for Related-party TransactionProjects in 2019 and Performance Compensation Plan, the cancellation of 12,597,709shares was completed, and the registered capital after the change was RMB3,681,645,407.00.
Upon approval by Shenzhen Stock Exchange (SZSE) (approval document SZS [2020]No. 1027), the Company’s convertible corporate bonds amounting to RMB 2 billionwere listed on Shenzhen Stock Exchange on November 16, 2020 with the bond nameof Hengyi Convertible Bonds, the conversion period of which was from April 22, 2021to October 15, 2026. Through 2021, a total of 1,639 Hengyi Convertible Bonds wereconverted into 14,337 Hengyi Petrochemical shares.
On July 28, 2021, in accordance with the Proposal on Achievement of PerformanceCommitments and Performance Compensation Plan in 2020 through the Share Issuancefor Asset Acquisition and related-party transactions, the Company cancelled15,379,730 shares, and the registered capital after the change was RMB3,666,265,677.00.
Upon approval by Shenzhen Stock Exchange (SZSE) (approval document SZS [2020]No. 1027), the Company’s convertible corporate bonds amounting to RMB 2 billionwere listed on Shenzhen Stock Exchange on November 16, 2020 with the bond name
of Hengyi Convertible Bonds, the conversion period of which was from April 22, 2021to October 15, 2026.
Approved document SZS [2022] No. 782, the company’s convertible corporate bondsamounting to RMB 3 billion were listed on Shenzhen Stock Exchange on August 18,2022 with the bond name of Hengyi convertible bond 2, the conversion period of whichwas from January 30, 2023 to July 20, 2028.
In fiscal year 2021, a total of 1,639 Heng Yi Convertible Bonds were converted into atotal of 14,337 HPC shares; in fiscal year 2022, a total of 89 HPC Bonds were convertedinto a total of 792 HPC shares; and in fiscal year 2023, a total of 120 HPC Bonds wereconverted into a total of 1,084 HPC shares; a total of 2,116 "Heng Yi Convertible 2"were converted into a total of 20,135 shares of "Heng Yi Petrochemical".
Upon completion of the conversion of 36,348 shares by the aforesaid "HengYiConvertible Bonds" and "HengYi Convertible 2", as at 31 December 2023, theregistered capital of the Company was RMB3,666,265,677.00, and the share capitalwas changed to RMB3,666,302,025.00.
The unified credit code of the Company is 9145050019822966X4; Domicile: Qinzhou,Guangxi; currently headquartered at: No. 260 North Shixin Road, Xiaoshan District,Hangzhou City, Zhejiang Province; legal representative: Qiu Yibo.
The parent company of the Company is: Zhejiang Hengyi Group Co., Ltd.
2. Industry Involved
The Company involves petrochemical and chemical fibre products manufacturing.
3. Line of Business
The approved business scope of the Company: production, processing and sales ofchemical fibres, chemical raw materials (excluding hazardous chemicals); imports andexports (except the items banned and restricted under national laws and regulations).
4. Key Products
The Company's main products include purified terephthalic acid (PTA), polyethyleneterephthalate (PET) flakes, polyester pre-oriented yarn (POY), polyester fully drawnyarn (FDY), polyester drawn textured yarn (DTY), polyester staple fibre, paraxylene(PX), gasoline, diesel and jet fuel etc.
5. Statement of Changes in Line of Business, Major Changes in Equity, Major Mergersand Acquisitions of the CompanyFor details, please refer to “Historical Development”.
6. The Financial Statements were approved for submission by the BOD of the Companyon April 19, 2024.
II. Basis for the preparation of the financial statements
1. Basis for the preparation
The Company's financial statements are prepared on the basis of the actual transactionsand affairs of the Company on the going concern assumption in accordance with theAccounting Standards for Business Enterprises - Basic Standard and the specificaccounting standards, guidelines for the application of and explanations to AccountingStandards for Business Enterprises and other relevant provisions issued (hereinaftercollectively the “Accounting Standards for Business Enterprises”), and provisions ofCSRC on Preparation Rules for Information Disclosure by Companies OfferingSecurities to the Public No. 15 - General Provisions on Financial Reports (2023
Revision).
Following relevant provisions of the Accounting Standards for Business Enterprises,the Company adopts the accrual basis for its accounting. Except for certain financialinstruments, the financial statements are measured on the historical cost basis.
2. Going concern
This financial statement is presented on a going concern basis, and the Company hasgoing- concern ability for at least 12 months from the end of the reporting period.
III. Important accounting policies and estimatesThe Company and its subsidiaries have formulated a number of specific accountingpolicies and accounting estimates in respect of transactions and matters, such as baddebt provision of receivables, depreciation of fixed assets, amortization of intangibleassets, income recognition, etc. according to the actual production and operationcharacteristics and in accordance with the provisions of the Accounting Standards forBusiness Enterprises.
1. Statement of compliance with enterprise accounting standardsThe financial statements prepared by the Company comply with the requirements ofthe Accounting Standards for Business Enterprises and give a true and complete pictureof the Company's consolidated and parent company's financial position as at 31December 2023 and of the consolidated and parent company's results of operations andconsolidated and parent company's cash flows for the year ended 31 December 2023,and other related information.
2. Accounting period
The Company adopts an annual period and an interim accounting period. The latter
refers to one that is shorter than a complete accounting period. The Company adoptsthe calendar year as its financial year, namely from January 1 to December 31 of eachyear.
3. Operating cycle
The normal operating cycle refers to the period in which the Company completes thesteps from the purchase of assets to be processed to the realization of cash or cashequivalent. The Company adopts a 12-month period as its operating cycle and thecriteria for determining the liquidity of its assets and liabilities.
4. Recording currency
The Company uses RMB as the benchmark currency for its operations in the primaryeconomic environment, in which the Company and its domestic subsidiaries operate.The Company’s subsidiaries outside China may decide US dollars as their recordingcurrency pursuant to the prevailing economic environment of their locations. Inpreparing these financial statements, the Company has used RMB as recording currency.
5. Methodology for determining materiality criteria and basis for selectionThe preparation and disclosure of financial statements by the company follow theprinciple of materiality. The items disclosed in the notes to the financial statementsinclude matters related to the judgment of materiality criteria and the methods and basesfor determining materiality criteria as follows:
| Disclosures involving judgements on materiality criteria | Location of disclosure of this matter in the notes to the present financial statements | Methodology for identifying materiality criteria and basis for selection |
| Significant construction in progress | V、15 | The Company considers construction in progress projects |
| Disclosures involving judgements on materiality criteria | Location of disclosure of this matter in the notes to the present financial statements | Methodology for identifying materiality criteria and basis for selection |
| with individual amounts exceeding 0.25 per cent of total assets to be significant construction in progress projects | ||
| Significant non-wholly owned subsidiaries | VIII、1、（2） | The company considers non-wholly owned subsidiaries to be significant if their revenues account for more than 0.5 per cent of the company's total revenues, or if their total assets account for more than 1 per cent of total assets |
| Significant joint ventures or associates | VIII、3、（3） | The company considers a joint venture or an associate to be significant if the proportion of its revenue to the company's total revenue exceeds 0.5 per cent, or if the proportion of its total assets to its total assets exceeds 1 per cent. |
6. Accounting treatment of business combination under common control andbusiness combination not under common control
Business combination refers to the transaction or matter where two or more than twoindividual enterprises merge into one report subject. Business combination is dividedinto combination of enterprises under the same control and combination of enterprisesnot under the same control.
(1) Combination of businesses under common control
Business combination under common control refers to the combination of businessesthat are under the ultimate control of the same party or parties on a non-temporary basisbefore and after the combination. Under a combination of enterprises under the samecontrol, the party acquiring the controlling interests in other enterprises involved in thecombination at the combination date is the acquirer and such other enterprises are theacquiree. The combination date refers to the day when the acquirer substantiallyacquires the controlling interests of the acquiree.
Assets and liabilities the acquirer acquires through the business combination aremeasured at the book value of the acquiree on acquisition date. Capital reserve (stockpremium) is adjusted based on the difference between the net book value of assetsacquired by the acquirer and the book value of the consideration for the combinationpaid (or the total nominal value of issued shares), and if the capital reserve (stockpremium) is insufficient to offset such difference, the difference will be offset againstretained earnings.
Costs directly incurred by the acquirer in the course of the business combination arerecorded in current profit and loss.
(2) Combination of enterprises not under the same control
Combination of enterprises not under the same control means that enterprises involvedin combination are not controlled finally by the same party or parties beforecombination. Under a combination of enterprises not under the same control, the partyacquiring the controlling interests in other enterprises involved in the combination atthe acquisition date is the acquirer and such other enterprises are the acquiree. Theacquisition date refers to the day when the acquirer substantially acquires thecontrolling interests of the acquiree.
In case of combination of businesses not under common control, costs for thecombination include assets paid and liabilities incurred or assumed to acquire thecontrol of the acquirees on the Acquisition Date as well as the fair value of the equitysecurities. Intermediary costs incurred for audit, legal and valuation services and otheradministrative services are recorded in current profit and loss. Transaction costsincurred by the acquirer for equity securities or debt securities issued as considerationfor the combination are recorded as the initial recognition amounts for equity securitiesor debt securities. Contingent considerations paid are recorded as cost for thecombination at the fair value on the Acquisition Date. If any new or further evidence isfound as to the circumstances within 12 months after the Acquisition Date and it isnecessary to adjust the contingent consideration, the goodwill for the combination isadjusted accordingly. Combination costs incurred by the acquirer and identifiable netassets obtained from combinations shall be measured at fair value on the date ofacquisition. The balance of the combination cost less the fair value of the netidentifiable assets acquired is recognized as goodwill. If the merging cost is less thanthe net fair value of the identifiable assets of the acquiree, the fair values of theidentifiable assets, liabilities and contingent liabilities as well as the merging cost arereviewed; if verified, the difference is recognized in current profit and loss.
Where an acquirer acquires the acquiree's deductible temporary difference which is notrecognized due to incompliance with the recognition condition for deferred income taxassets on the acquisition date, within the 12 months since acquisition date, if new orfurther information appears to demonstrate the existence of related situation on theacquisition date, and the economic benefits brought by the acquiree's deductibletemporary difference on the acquisition date are expected to be realized, the relevantdeferred tax assets are recognized and the business reputation is written off; if thebusiness reputation is not enough for write-off, the difference is recognized as profitand loss for the period. Except for the above, the deferred tax assets as recognized
relevant to the merger are included in profit and loss for the period.
For non-identical control business combinations achieved step by step through multipletransactions, if qualified as a package deal, the transactions are treated with referenceto the foregoing paragraphs and Note III, 15 “Long-term Equity Investment”; if theyare not qualified, individual financial statements are separated from consolidatedfinancial statements for relevant accounting treatment:
In the Consolidated Financial Statements, the equity held by the acquiree before theAcquisition Date is remeasured at the fair value on the Acquisition Date and thedifference between the fair value and the book value is recorded in the income frominvestments of current period; if the equity held by the acquiree before the AcquisitionDate involves other comprehensive income, the relevant comprehensive income istreated in the same manner the acquiree disposes of relevant assets or liabilities (i.e.,the income, except the portion in the change resulted from the acquiree'sremeasurement of the net liabilities or net assets of the defined benefit plan accountedusing the equity method, is recorded in the income from investment of the period towhich the Acquisition Date belongs).
In consolidated financial statements, the acquiree's equity held before the acquisitiondate is remeasured at the fair value of such equity on the acquisition date and thedifference between the fair value and the book value is included in current investmentincome; where the acquiree's equity held before the acquisition date involves othercomprehensive income, the accounting of other comprehensive income related to theinvestment is on the same basis as the accounting of the related assets or liabilitiesdisposed directly by the acquiree (that is, other comprehensive income is transferred tothe investment income for the period covering the acquisition date, except for the sharesby equity method proportional to changes in the net defined benefit liability or asset
caused by the acquiree's remeasurement).
7. Criteria for judgement of control and presentation of consolidated financialstatements
(1) Criteria for judgement of control
The scope of the Consolidated Financial Statements is defined on the basis of control.Control refers to the power the Company has over the entity in which it invests, to enjoyvariable return from the entity by participating in the business operations of the entityand to influence the amount of the return through its ability of influencing the entity.Typically includes investees in which the parent company owns more than one-half ofthe voting power and investees in which the Company owns less than one-half of thevoting power but owns more than one-half of the voting power of the investee throughagreements with other investors in the investee; has the power to determine the financialand operating decisions of the investee pursuant to the Company's bylaws or anagreement; has the power to appoint or remove a majority of the members of the boardof directors of the investee; and has a majority of the voting power on the board ofdirectors of the investee.
(2) Presentation of consolidated financial statements
The Company includes a subsidiary in the scope of the combination on the date theCompany acquires the actual control over the net assets and production operations ofsuch subsidiary and discontinues the combination on the date the Company loses thecontrol. For a subsidiary disposed of during the period, the business results and cashflow before the disposal are properly included in the Consolidated Statement of Incomeand the Consolidated Statement of Cash Flow, while the year beginning data containedin the Consolidated Balance Sheet are not adjusted. For a subsidiary included in theperiod as a result of combination of businesses not under common control, the business
results and cash flow after the Acquisition Date have been properly included in theConsolidated Statement of Income and the Consolidated Statement of Cash Flow, whilethe year beginning data and the comparison data contained in the Consolidated BalanceSheet are not adjusted. For a subsidiary under combination of businesses undercommon control and a acquiree under consolidation by merger, the business results andcash flow during the period from the beginning of the period to which the acquisitiondate belongs to the acquisition date have been properly included in the ConsolidatedStatement of Income and the Consolidated Statement of Cash Flow, while thecomparison data contained in the Consolidated Balance Sheet are adjusted.
When preparing the Consolidated Financial Statements, if there is any inconsistencybetween the accounting policies and accounting period of the subsidiary and those ofthe Company, the financial statements of the subsidiary are adjusted accordingly wherenecessary. For a subsidiary acquired through business combinations not under commoncontrol, its financial statements shall be adjusted on the basis of the fair value of itsidentifiable net assets on the date of acquisition.
Balances of major transactions, transactions and unrealized profits within the scope ofthe Company are offset when preparing the Consolidated Financial Statements.The shareholder equity and net profits or losses of the subsidiary not attributable to theCompany are separately presented in the categories of the shareholder equity and netprofit as minority shareholder's equity and net profit in the Consolidated FinancialStatements. The portion of net profits or losses of the subsidiary in the period that istaken as the minority shareholder's equity is presented in the category of MinorityShareholder's Equity under the net profit in the Consolidated Statement of Income. Thebalance of the loss of the subsidiary attributable to minority shareholders less theshareholder equity of the subsidiary attributable to minority shareholders at the yearbeginning is set off against the minority shareholder's equity.
If the control over a subsidiary is lost due to disposal of partial equity investment in thesubsidiary or any other reason, the remaining equity is remeasured at its fair value onthe date the control is lost. The aggregate of the consideration obtained by disposing ofthe equity and the fair value of the remaining equity less the portion of the net assets ofthe subsidiary that has been measured, as calculated at the original shareholdingproportion, from the Acquisition Date is recognized in the income from investments ofthe period, in which the control is lost. When the control is lost, the comprehensiveincome related to the equity investment in the original subsidiary is treated in the samemanner the acquiree disposes of relevant assets or liabilities (i.e., the comprehensiveequity, except the portion in the change resulted from the remeasurement of the netliabilities or net assets of the defined benefit plan, is recorded in the income frominvestment of the period). This portion of the remaining equity is subsequentlymeasured following the Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investment or the Accounting Standards for Enterprises No. 22 -Recognition and Measurement of Financial Instruments, as noted in Note III, 15 “Long-term Equity Investment” and Note III, 11 “Financial Instruments”.
If the control is lost through several transactions of disposing of equity investment inthe relevant subsidiary, the transactions are tested to determine whether they arequalified as a package deal. A number of transactions of disposing of equity investmentsare usually accounted for as a package deal if the conditions, terms and economicimpacts of such transactions meet one or more of the following conditions: ①Thetransactions are done at the same time or in consideration of mutual impacts on eachother; ②The transactions collectively achieve a complete business effect; ③Thecompletion of one transaction depends on the completion of at least one of the othertransactions; ④A transaction does not appear to be economic if considered alone but iseconomic if considered in connection with other transactions. If the transactions aredetermined not to be a package deal, each of them is accounted following the principles
for “disposing of long-term equity investments when the control is not lost” and “thecontrol over a subsidiary is lost due to disposal of partial equity investment in thesubsidiary or any other reason” (refer to the above paragraph for details). If thetransactions of disposing of equity investment in a subsidiary that lead to the loss ofcontrol are determined as a package deal, each of them is treated as a transaction ofdisposing of equity investment in a subsidiary that lead to the loss of control; however,the difference between the disposal price and the corresponding share of the net assetof the subsidiary is recognized in the other comprehensive income in the ConsolidatedFinancial Statements and transferred to current profit and loss in which the control islost.
8. Classification of joint arrangements and accounting of joint operationsA joint arrangement refers to an arrangement between two or more parties participatingin jointly control. The Company divides joint arrangements into joint operations andjoint ventures on the basis of the rights enjoyed and liabilities assumed in the jointarrangements. A joint operation refers to a joint arrangement in which the Companyenjoys rights and assumes liabilities. A joint venture refers to a joint arrangement ofwhich the Company enjoys only the rights to the net asset.The Company adopts equity method for investment accounting of joint ventures, inaccordance with the accounting policies as specified in Note III. 15. (2) ② “equity-accounted long-term equity investment”.
The Company, as a party of joint operation, recognizes the assets and liabilities it isentitled to individually and recognizes at its share the assets and liabilities to which theparties of joint operation are entitled jointly; it recognizes the income from selling theshare arising from joint operation to which the Company is entitled and recognizes atits shares the income from joint operation due to selling such share; it recognizes theexpenses it incurs individually and recognizes at its share the expenses arising from
joint operation.
When the Company makes investments in the joint operation or sells assets to the jointoperation to which the Company is a party (such assets do not constitute business ofthe joint operation, as is also applicable below) or purchases assets from the jointoperation, the Company recognizes only the part of the profits or losses arising fromsuch transactions attributable to other parties to the joint operation. If impairment lossoccurs to an asset defined in the Accounting Standards for Business Enterprises No. 8- Impairment of Assets and other regulatory documents, the Company fully recognizesthe loss occurs to such an asset as the Company has invested in or sold to the jointoperation, or only the loss occurs to such an asset as the Company has purchased fromthe joint operation in proportion to the share in the joint operation the Company isentitled to.
9. Recognition criteria for cash and cash equivalents
The cash and cash equivalents of the Company include cash at hand, deposit in bankthat can be readily used for payment and investments of short terms (generally maturewithin three months from the date of purchase) and high liquidity that can be easilyconverted into known sums of cash and are exposed to low risks in terms of change invalue.
10. Foreign currency business and conversion of foreign currency statement
(1) Translation of transactions in foreign currencies
A transaction in a foreign currency of the Company, when initially recognized, istranslated into the benchmark currency at the spot rate (the middle rate of the foreignexchange quotation published by the People's Bank of China; the same below) on thetransaction date, provided that foreign currency translation transactions andtransactions involving conversion of foreign currencies are translated into the
benchmark currency at the exchange rate actually adopted for the transactions.
(2) Translation of monetary and non-monetary assets in foreign currenciesOn the balance sheet date, monetary assets in foreign currencies are translated at thespot rate on the balance sheet date and the exchange difference arising therefrom isrecognized in current profit and loss except that ①the exchange difference arising fromspecial loans in foreign currencies used to purchase assets eligible for capitalization istreated following the principle of capitalization of borrowing cost; ②the exchangedifference arising from the hedging instruments used for effective hedging of netinvestment in overseas operations is recognized in other comprehensive income, andafter the net investment is disposed, recognized in current profit and loss; ③theexchange difference arising from changes in the book balance of monetary assetsavailable for sale, except the amortized cost, is recognized in other comprehensiveincome.
When preparing the Consolidated Financial Statements, if a monetary asset in foreigncurrency constitutes a net investment in an overseas operation, the exchange differencearising due to a change in the exchange rate is recognized in other comprehensiveincome and transferred to current profit and loss upon the disposal of the overseasoperation.
Non-monetary transactions in foreign currencies that are measured at the historicalcosts are translated at the spot rate prevailing on the Transaction Date. A non-monetaryasset in a foreign currency measured at the fair value, is translated at the spot rate onthe date on which the fair value is determined and the difference between the amountsrecorded in the benchmark currency after the translation and that recorded in theoriginal currency is treated as changes in the fair value (including change in exchangerate) and recognized in current profit and loss or other comprehensive income.
(3) Translation of accounting statements in foreign currencies
When preparing the Consolidated Financial Statements, if a monetary asset in foreigncurrency constitutes a net investment in an overseas operation, the exchange differencearising due to a change in the exchange rate is recognized in other comprehensiveincome as a difference from translation of accounting statements in foreign currenciesand transferred to current profit and loss upon the disposal of overseas operation.
Financial statements in foreign currencies of overseas operations are translated intoRMB and assets and liabilities in the balance sheet are translated at the spot rate on theBalance Sheet Date; all transactions in Shareholders' Equity, except those inUndistributed Profit, are translated at the current exchange rate on the Transaction Date.Income and expense in the balance sheet are translated at the prevailing exchange rateon the Transaction Date. Undistributed profit at the end of previous year is theundistributed profit at the end of previous year; the undistributed profit at the yearendis measured and presented by the items of the translated profit distribution; thedifference between the translated assets/liabilities and the total shareholders' equity isrecognized in other comprehensive income as the difference of foreign currencytranslation. If an overseas operation is disposed of and the control over it is lost, thedifference of foreign currency translation related to the overseas operation listed inShareholders' Equity in the Balance Sheet is transferred to current profit and loss inwhich the same is disposed of, wholly or in proportion to the share of the overseasoperation thus disposed of.
For cash flows in foreign currencies, the weighted-average exchange rate on theoccurrence day of cash flow shall apply. The difference of cash caused by change ofexchange rate shall be separately presented in Cash Flow Statement.The amounts at the end of the previous year and the actual amounts of the previous yearare presented as translated from the financial statements of the previous year.
If all the shareholders’ equity in an overseas operation is disposed of or if the controlover it is lost as a result of disposal of part of the owner’s equity or for any other reason,the difference of foreign currency translation related to the overseas operation that isattributable to shareholders of the parent company, as listed in Owners’ Equity in theBalance Sheet is wholly transferred to current profit and loss in which the same isdisposed of.
If the share of the equity in an overseas operation held by the Company decreases as aresult of disposal of part of the equity investment or for any other reason but thedecrease does not result in the loss of control over the overseas operation, the differenceof foreign currency translation related to the part of the overseas operation is classifiedas minority shareholder's equity and is not transferred to current profit and loss. If partof the equity in an overseas operation that is an associate or a joint venture is disposedof, the difference of foreign currency translation related to the overseas operation istransferred to current profit and loss in which the same is disposed of, wholly or inproportion to the share of the overseas operation thus disposed of.
11. Financial instruments
(1) Translation of transactions in foreign currencies
A transaction in a foreign currency of the Company, when initially recognized, istranslated into the benchmark currency at the spot rate (the middle rate of the foreignexchange quotation published by the People's Bank of China; the same below) on thetransaction date, provided that foreign currency translation transactions andtransactions involving conversion of foreign currencies are translated into thebenchmark currency at the exchange rate actually adopted for the transactions.
(2) Translation of monetary and non-monetary assets in foreign currenciesOn the balance sheet date, monetary assets in foreign currencies are translated at the
spot rate on the balance sheet date and the exchange difference arising therefrom isrecognized in current profit and loss except that ①the exchange difference arising fromspecial loans in foreign currencies used to purchase assets eligible for capitalization istreated following the principle of capitalization of borrowing cost; ②the exchangedifference arising from the hedging instruments used for effective hedging of netinvestment in overseas operations is recognized in other comprehensive income, andafter the net investment is disposed, recognized in current profit and loss; ③theexchange difference arising from changes in the book balance of monetary assetsavailable for sale, except the amortized cost, is recognized in other comprehensiveincome.
When preparing the Consolidated Financial Statements, if a monetary asset in foreigncurrency constitutes a net investment in an overseas operation, the exchange differencearising due to a change in the exchange rate is recognized in other comprehensiveincome and transferred to current profit and loss upon the disposal of the overseasoperation.
Non-monetary transactions in foreign currencies that are measured at the historicalcosts are translated at the spot rate prevailing on the Transaction Date. A non-monetaryasset in a foreign currency measured at the fair value, is translated at the spot rate onthe date on which the fair value is determined and the difference between the amountsrecorded in the benchmark currency after the translation and that recorded in theoriginal currency is treated as changes in the fair value (including change in exchangerate) and recognized in current profit and loss or other comprehensive income.
(3) Translation of accounting statements in foreign currencies
When preparing the Consolidated Financial Statements, if a monetary asset in foreigncurrency constitutes a net investment in an overseas operation, the exchange difference
arising due to a change in the exchange rate is recognized in other comprehensiveincome as a difference from translation of accounting statements in foreign currenciesand transferred to current profit and loss upon the disposal of overseas operation.
Financial statements in foreign currencies of overseas operations are translated intoRMB and assets and liabilities in the balance sheet are translated at the spot rate on theBalance Sheet Date; all transactions in Shareholders' Equity, except those inUndistributed Profit, are translated at the current exchange rate on the Transaction Date.Income and expense in the balance sheet are translated at the prevailing exchange rateon the Transaction Date. Undistributed profit at the end of previous year is theundistributed profit at the end of previous year; the undistributed profit at the yearendis measured and presented by the items of the translated profit distribution; thedifference between the translated assets/liabilities and the total shareholders' equity isrecognized in other comprehensive income as the difference of foreign currencytranslation. If an overseas operation is disposed of and the control over it is lost, thedifference of foreign currency translation related to the overseas operation listed inShareholders' Equity in the Balance Sheet is transferred to current profit and loss inwhich the same is disposed of, wholly or in proportion to the share of the overseasoperation thus disposed of.
For cash flows in foreign currencies, the weighted-average exchange rate on theoccurrence day of cash flow shall apply. The difference of cash caused by change ofexchange rate shall be separately presented in Cash Flow Statement.The amounts at the end of the previous year and the actual amounts of the previous yearare presented as translated from the financial statements of the previous year.If all the shareholders’ equity in an overseas operation is disposed of or if the controlover it is lost as a result of disposal of part of the owner’s equity or for any other reason,the difference of foreign currency translation related to the overseas operation that is
attributable to shareholders of the parent company, as listed in Owners’ Equity in theBalance Sheet is wholly transferred to current profit and loss in which the same isdisposed of.
If the share of the equity in an overseas operation held by the Company decreases as aresult of disposal of part of the equity investment or for any other reason but thedecrease does not result in the loss of control over the overseas operation, the differenceof foreign currency translation related to the part of the overseas operation is classifiedas minority shareholder's equity and is not transferred to current profit and loss. If partof the equity in an overseas operation that is an associate or a joint venture is disposedof, the difference of foreign currency translation related to the overseas operation istransferred to current profit and loss in which the same is disposed of, wholly or inproportion to the share of the overseas operation thus disposed of.
12. Impairment of financial assets
Financial assets for which impairment loss is required to be recognized by the Companyare financial assets measured at amortized cost, investment in debt instrumentsmeasured at fair value through other comprehensive income, these mainly include billsreceivable, accounts receivable, other receivables, debt investments, other debtinvestments and long-term receivables. Furthermore, for certain financial guaranteecontracts, impairment reserves are provided and credit impairment losses arerecognized according to the accounting policies mentioned in this section.
(1) Method for recognizing impairment reserves
Based on expected credit loss, the Company recognizes impairment reserves and creditimpairment loss in respect of the above-mentioned items according to the applicablemethod for measuring excepted credit loss (the general approach or simplifiedapproach).
Credit loss is the difference between all contractual cash flow receivable by theCompany under contracts which are discounted according to the original effectiveinterest rate, and all the cash flow expected to be received, namely the present value ofall cash shortfall. Particularly, financial assets acquired or derived to which creditimpairment has occurred are discounted by the Company according to the credit-adjusted effective interest rate.
The general approach for measuring expected credit loss means that, at each balancesheet date, the Company assesses the financial assets to see if the credit risk hassignificantly increased after initial recognition, if credit risk has significantly increasedafter initial recognition, the Company calculates provision for loss according to theamount of expected credit loss over the life-time of the assets; if credit risk has notsignificantly increased after initial recognition, the Company calculates loss provisionbased on expected credit loss in the future twelve-month. When evaluating expectedcredit loss, the Company considers all reasonable information that is supported byevidence, including forward-looking information.For financial instruments that have relatively low credit risk at the balance sheet date,the about assumes that the credit risk of such instruments has not significantly increasedafter initial recognition, and chooses to calculate loss provision according to the twelve-month expected credit loss.
(2) Criteria for determining whether credit risk has significantly increased since initialrecognition
If the probability of default of a certain financial asset within the expected lifetime ofthe asset, as determined at the balance sheet date, is significantly higher than theprobability of default within the expected lifetime determined at the time of initialrecognition, then it indicates that the credit risk of such asset has significantly increased.
Except for special circumstances, the Company regards the change in default riskoccurring in the future twelve-month period as the reasonable estimate of the change indefault risk occurring over the entire lifetime of an asset,thereby determining whether the credit risk has increased significantly after initialrecognition. Usually in case of more than 30 days overdue, the Company deems thatthe credit risk of the financial instrument has increased significantly, unless there isconclusive evidence showing that the credit risk of the financial instrument has notincreased significantly since its initial recognition.The Company will take into account the following factors when assessing whether thecredit risk has increased significantly:
1) Whether the actual or expected operating results of the debtor have changedsignificantly;
2) Whether the regulatory, economic or technological environment of the debtor hasbeen subject to significant adverse changes;
3) Whether the value of the collateral mortgaged for debt or the quality of guaranteeprovided by a third party or credit enhancement has changed significantly with thesechanges expected to reduce the debtor’s economic motivation to repay the debt withinthe term set out in the contract or affect the probability of breach;
4) Whether the expected performance and repayment behaviors of the debtor havechanged significantly;
5) Whether the Company’s credit management methods for financial instrumentshave changed, etc.
On the balance sheet date, if the Company determines that a financial instrument hasonly low credit risk, the Company will assume that the credit risk of the financialinstrument has not increased significantly since its initial recognition. If the default riskof financial instruments is low, the borrower has a strong capacity to fulfill its cash flowobligations under contract in the short term, and the borrower’s performance of its cash
obligations under contract may not necessarily be reduced even if there are unfavorablechanges in the economic situation and operating environment in a long period of time,then the financial instrument will be deemed to have low credit risk.
(3) Criteria for determining financial assets that have been subject to credit impairmentWhen one or more events that adversely affects the expected future cash flow of afinancial asset has occurred, such financial asset is considered to be an asset which hassuffered credit impairment. Evidence of credit impairment of financial assets includesthe following observable information:
A serious financial difficulty occurs to the issuer or debtor;The debtor breaches any of the contractual stipulations, for example, fails to pay ordelays the payment of interests or the principal, etc.;Due to the economic or contractual considerations related to the debtor’s financialdifficulties, the creditor gives the debtor a compromise that the debtor would not makeunder any other circumstances;The debtor will probably become bankrupt or carry out other financial reorganizations;The issuer or the debtor’s financial difficulties result in the disappearance of the activemarket for the financial asset;A financial asset is purchased or originated at a heavy discount, and this discountreflects the fact that the credit loss has occurred.The credit impairment of a financial asset may be caused by the combined effects ofseveral events, and may not necessarily be caused by a separately identifiable event.
(4) Method for evaluating the expected credit risk on a portfolio basisFor financial assets which have significantly different credit risk, the Companyevaluates the credit risk on an individual basis, for example, amounts due from relatedparties; receivables from a debtor with which the Company has a dispute or whichinvolve a lawsuit or arbitration; and receivables for which there is a clear indication
that the debtor thereof is very likely to be unable to meet its payment obligation.
In addition to financial assets with credit risk assessed individually, the Companydivides financial assets into different groups based on common risk characteristics. Thecommon credit risk characteristics adopted by the Company include types of financialinstruments, credit risk ratings, aging combination, etc., and it assesses credit risk onthe basis of combination.
(5) Accounting treatment for the impairment of financial assets
At the end of period, the Company calculates the expected credit loss of variousfinancial assets, if the expected credit loss is greater than the carrying amount of thecurrent impairment reserves, the difference between the two amounts is recognized asan impairment loss; if the expected credit loss is smaller than the carrying amount ofimpairment reserves, then the difference is recognized as an impairment gain.
(6) Method for determining the credit loss of financial assets
With regard to the notes receivable, accounts receivable and financing of accountsreceivable arising from daily business activities such as selling goods, providing laborservices, etc., the Company measures the loss provision based on the expected creditloss for the entire duration, regardless of whether there is a significant financingcomponent.
① Notes receivable
Based on the credit risk characteristics, the notes receivable will be classified intodifferent combinations.
| Item | Basis for grouping | Method for measuring of expected credit loss |
| Bank acceptance bills and domestic letter of credit | Acceptor: banks at low credit risk | The Company deems that this type of funds has a relatively low credit risk and does not recognize the expected credit loss. |
| Commercial acceptance bills | This credit risk characteristic of this portfolio of receivables is defined by account receivable aging. | Confirm the expected credit rate with reference to corresponding policy of receivables |
② Accounts receivable
Except for other receivables for which credit risk is assessed individually, assets areclassified into different portfolios based on credit risk characteristic:
| Item | Basis for grouping | Method for measuring of expected credit loss |
| Related parties’ receivables within the scope of consolidation (note) |
This portfolio representsreceivables due from relatedparties with relatively low riskwhich are included within thescope of consolidation.
| The Company deems that this type of funds has a relatively low credit risk and does not recognize the expected credit loss. | ||
| Receivables from third parties | This credit risk characteristic of this portfolio of receivables is defined by account receivable aging. | With reference to historical credit loss experience and based on the current conditions and the forecasts of future economic conditions, a comparison table between the aging of accounts receivable and the expected credit loss rate for the entire duration are prepared and the expected credit losses are calculated. |
Note: “Related parties included in the scope of consolidation” refer to HengyiPetrochemical and those companies recorded in the scope of its consolidated financialstatement (the same below).
Comparison table showing the account age of the portfolio of accounts receivable andother receivables based on credit risk characteristic and the full lifetime expected creditloss:
| Aging | Expected credit loss rate (%) |
| 7-12 months (included) | 5.00 |
| 1-2 years (included) | 30.00 |
| Within six (6) months (included) | 0.00 |
| 2-3 years (included) | 50.00 |
| Over three years | 100.00 |
③ Other receivables
Based on the determination as to whether the credit risk of other receivables hasincreased significantly since initial recognition, the Company calculates impairmentloss according to the twelve-month expected credit loss or life-time expected credit loss.Except for other receivables for which credit risk is assessed individually, assets areclassified into different portfolios based on credit risk characteristic:
| Item | Basis for grouping | Method for measuring of expected credit loss |
| Related party funds within the scope of consolidation | The nature of other receivables is used edit risk characteristics | With reference to historical credit loss experience and based on the current conditions and the forecasts of future economic conditions, the expected credit loss is calculated based on the default risk exposure and the expected credit loss rate within the next 12 months or for the entire duration. |
| Receivables and payables such as advance from entities beyond the scope of consolidation | ||
| Combination of consumption taxes and export tax rebates receivable | ||
| Combination of tax refunds receivable and other government subsidies | ||
| Portfolio of deposits and security | ||
| Employee loan and petty cash | ||
| Other groups |
④ For other financial assets, with regard to financial assets other than those under theaforesaid measurement methods, the Company measures impairment at an amountequivalent to expected credit losses within the next 12 months or for the entire durationbased on whether its credit risk has increased significantly since initial recognition loss.
13. Inventory
(1) Classification of inventory
Inventories refer to finished goods or commodities for sale held in daily activities,unfinished goods in manufacturing process, and materials and supplies consumed inprocess of manufacturing products or providing services, etc. including large categoriessuch as materials in transit, raw materials, products in progress, commodities in stock,etc.
(2) Pricing method for acquisition and distribution of inventories
Inventories are measured at the weighted average method upon receiving and sending.If the daily accounting of inventories is valued at planned cost, the cost difference ofmaterials shall be carried over at the end of the year and the planned cost shall beadjusted to the actual cost.
(3) Inventory system
The Company adopts the perpetual inventory system.
(4) Amortization of low-value consumables and packing materialsOne-time amortization method will be used for low-value consumables and packingmaterials.
(5) Methods for recognition of net realizable value of inventories and retaining theprovision for depreciationThe net realizable value of the inventory is determined at the estimated selling priceless the estimated cost and sales cost at the time it is distributed as well as related taxesand charges. The net realizable value of the inventory is determined on the basis of
conclusive evidence obtained while considering the purpose of keeping the inventoryand effect of events after the balance sheet date.On the balance sheet date, the inventories are measured at the lower of cost and netrealizable value. If the net realizable value is lower than the cost, then the inventorydepreciation reserves is retained for the inventory. The inventory depreciation reservesare retained by the difference of the cost less its net realizable value.If the factors leading to the write-down of the price of an inventory no longer exist andthe net realizable value is higher than the book value of the inventory after the inventorydepreciation reserves are retained, the difference is reversed from the provision andrecognized in current profit and loss.
14. Assets available for sale and disposal group
Where the Company recovers the book value of one non-current asset or disposal groupmainly through sales (including the non-monetary asset exchange with commercialsubstance, similarly hereinafter) rather than sustained use, upon satisfaction offollowing conditions, it is categorized to the held-for-sale category. The specificstandard is that the following conditions are met simultaneously: some non-currentassets or disposal group can be sold immediately under current conditions according tothe practices of selling similar asset or disposal group in similar transactions; theCompany has made a decision on the selling plan and obtained the positive purchasecommitment. It’s predicted that the selling will be completed within a year. Disposalgroup refers to a group of assets disposed together through selling or other methods ina transaction as a whole and liabilities directly related to these assets transferred in thetransaction. If the goodwill from the business merger is apportioned to the asset groupor combination of asset groups that the disposal group belongs to according to theAccounting Standards for Business Enterprises No. 8 - Impairment of Asset, thedisposal group shall include the goodwill apportioned to the disposal group.Upon initial measurement or re-measurement upon balance sheet date of held-for-sale
non- current asset or disposal group, where the book value is higher than the net amountthat the fair value minus the selling expense, the book value is written down the netamount after the fair value minus selling expense, the write-down amount is determinedas the asset impairment loss and included into current profits and losses, and the held-for-sale asset impairment reserves are retained at the same time. For the disposal group,the recognized assets depreciation loss shall be used to firstly offset against the bookvalue of goodwill in the disposal group and then against the book value of each non-current asset applicable to the measurement rules in the Accounting Standards forBusiness Enterprises No. 42 Non-current Assets Held for Sale, Disposal Groups, andDiscontinued Operations (hereinafter referred to as “No. 42 Standard”). The reversedamount shall be included in the current profit and loss, and its book value shall beincreased proportionally according to the portion of the book value of each non- currentasset in the disposal group applicable to the measurement rules of No. 42 Standard,except goodwill. The written-down book value of goodwill and the assets impairmentloss recognized before the non-current assets is classified into those held for saleapplicable to the measurement rules of No. 42 Standard shall not be reversed.
No depreciation or amortization is provisioned for the non-current asset in the held-for-sale non-current asset or disposal group, and the interest of liability in held-for-saledisposal group and other expenses shall continue recognition.
When the non-current asset or disposal group no longer meets the classificationcondition of held-for-sale category and no longer continues to classify the held-for-salecategory, or the non-current asset is removed from the held-for-sale disposal group,measurement is made at whichever is lesser: (1) for the book value prior toclassification into the held-for-sale category, the amount after adjustment ofdepreciation, amortization or impairment to be recognized in case of assuming noclassification into the held-for-sale category; (2) Recoverable amount.
15. Long-term equity investments
Long-term equity investments in this part refer to the Company’s long-term equityinvestments having control, joint control or significant influence on the invested unit.Long-term equity investments in this section refer to the long-term equity investmentsby the Company in the investee with control, joint control or significant influence.Long-term equity investments which do not enable the Company to exert control,common control or significant influence over the investee entity are accounted for asfinancial assets at fair value through profit or loss, in particular, if such long-term equityinvestments are not held for trading, they may be designated by the Company on initialrecognition as financial assets at fair value through other comprehensive income, forthe relevant accounting policy, refer to Note III, 11 “Financial Instruments”.
Joint control refers to the control the Company shares with other entities over a certainarrangement following relevant agreement by which any activity under the arrangementmay be conducted only with unanimous agreement of all participants sharing the powerof control. Significant influence refers to the situation where the Company is entitledto participate in but is not authorized to control the financial and/or business decisions,either alone or in joint efforts with other participants.
(1) Determination of investment cost
For a long-term equity investment acquired through combination of businesses undercommon control, the share of the shareholders' equity of the acquiree in the book valueof the shareholders’ equity in the consolidated financial statements of the ultimatecontrolling party on acquisition date shall be taken as the initial investment cost for thelong-term equity investment. Capital reserve is adjusted based on the differencebetween the initial cost for the long-term equity investment and the book values of cashpaid, non-cash asset transferred and debt assumed, and if the capital reserve is
insufficient to offset such difference, the difference will be offset against retainedearnings. If the consideration is paid in the form of equity securities, the share of theshareholders’ equity of the acquiree in the book value of the owners’ equity in theconsolidated financial statements of the ultimate controlling party on acquisition dateis taken as the initial investment cost for the long-term equity investment on the date ofcombination. The face value of the shares issued is taken as the equity, and the capitalreserve is adjusted by the difference between the initial investment cost for the long-term equity investment and the total face value of the shares issued; and if the capitalreserve is insufficient to offset such difference, the difference will be offset againstretained earnings. If the combination of businesses under common control is realizedthrough a series of transactions in acquiring the equity of the acquiree, the transactionsare determined whether to be a package deal and treated in either of the followingmanners: If the whole series of transactions are determined to constitute a package deal,then they are treated as one transaction realizing the acquisition of the control. If not,the share of the shareholders’ equity of the acquiree in the book value of the owners’equity in the consolidated financial statements of the ultimate controlling party onacquisition date is taken as the initial investment cost for the long-term equityinvestment on the date of combination. Capital reserve is adjusted based on thedifference between the initial investment cost for the long-term equity investment andthe book value of the long-term equity investment before the combination plus the totalbook value of newly paid consideration for acquiring shares on acquisition date; and ifthe capital reserve is insufficient to offset such difference, the difference will be offsetagainst retained earnings. The other comprehensive income accounted for the adoptionof equity method for the equity investment held or recognized for financial assetsavailable for sale before acquisition date is not accounted for upon the acquisition.
For a long-term equity investment acquired through combination of businesses notunder common control, the cost for the combination, which is fair value of the total of
the assets paid, liabilities incurred or assumed and the equity securities issued by theacquiring party, is taken as the initial investment cost for the long-term equityinvestment on acquisition date. If the combination of businesses not under commoncontrol is realized through a series of transactions in acquiring the equity of the acquiree,the transactions are determined whether to be a package deal and treated in either of thefollowing manners: If the whole series of transactions are determined to constitute apackage deal, then they are treated as one transaction realizing the acquisition of thecontrol. If not, the aggregate of the book value of the equity investment in the acquireeheld by the Company and the increase in the investment cost is taken as the initial costfor the long-term equity investment remeasured using the cost method. If the originallyheld equity is measured by the equity method, the relevant other comprehensive incomeis not accounted.
Intermediary costs incurred by the acquirer in the course of combination for audit, legaland valuation services and other administrative services are recorded in current profitand loss.
Equity investments, except long-term equity investments derived from businesscombination, are initially measured at the cost. The cost is determined, depending onthe means of acquisition, at the purchase price actually paid in cash, the fair value ofthe equity securities issued by the Company, the value determined in the investmentcontract or agreement, the fair value of the original book value of the asset traded offby means of exchange trade of non- monetary asset or the fair value of long-term equityinvestment itself. Charges, taxes and other necessary expenses related to the acquisitionof long-term equity investments are recognized in Investment Costs. In case of a long-term equity investment made in addition to other investment, if the investment resultsin the Company's ability to exercise significant influence over the investee but does notconstitute the control over the same, the cost is the aggregate of the fair value of the
equity investment originally held, as determined following the Accounting Standardsfor Business Enterprises No. 22 - Recognition and Measurement of FinancialInstruments and the newly increased cost.
(2) Methods for subsequent measurement and recognition of profit and lossIf the entity in which the Company invests exercises joint control (except thoseconstitute a joint operation) or significant influence over the long-term equityinvestments, equity method is adopted for such long-term equity investments. Also, along-term equity investment that grants control over the investee is accounted for in thefinancial statements of the Company using the cost method.
① Long-term equity investments accounted for using the cost methodUnder the cost method, a long-term equity investment is measured at the initialinvestment cost, which is adjusted by the increased or recovered investment. Except theprice actually paid upon acquisition of an investment or the cash dividend or profit thathas been declared but notgranted and included in the consideration for the acquisition, cash dividend or profit inthe investee attributable to the Company shall be recognized as income frominvestments.
② Long-term equity investments accounted for using the equity methodIf the long-term equity investment is accounted using the equity method and the initialcost for the investment is greater than the share of the total fair value of the identifiableassets of the investee, the initial cost for the investment is not adjusted; if the former isless than the latter, the difference is recognized in current profit and loss and the costfor the long-term equity investment is adjusted accordingly.When accounted for using the equity method, the share in the net profits or losses thathave been realized by the investee and which the Company is entitled to receive orobliged to assume and the share in other comprehensive income are recognized inincome from investments and other comprehensive income, respectively, and the book
value of the long-term equity investment is adjusted accordingly; the book value of thelong-term investment is adjusted according to the portion of the profit or cash dividenddeclared and distributed by the investee; In case of any change in the owners’ equity inthe invested equity, except the net profits or losses, other comprehensive income andprofit distribution, the book value of the long-term equity investment is adjusted andthe balance is recognized in the capital surplus. The share in the net profits or losses ofthe investee is recognized after adjustment is made on the basis of the fair values of allidentifiable assets of the investee upon the investment is realized. I If the accountingpolicies and accounting periods adopted by the investee are inconsistent with thoseadopted by the Company, the financial statements of the investee are adjusted inaccordance with the accounting policies and accounting period of the Company and theinvestment income and other comprehensive income from the investee is recognizedaccording to the adjustment. In case of a transaction between the Company and itsassociate or joint venture, where the investment or sale does not constitute a businesstransaction, the unrealized profits or losses within the scope of the Company arecalculated and offset according to the share attributable to the Company, with thebalance recognized as profits or losses from investment. However, the losses arisingfrom unrealized transactions with the investee within the Company, if being impairmentloss of the asset to be transferred, may not be offset. In case of an investment of an assetin a joint venture or an associated enterprise that constitutes a business transaction anda long-term equity investment without realizing the control over the investee, the fairvalue of the asset is taken to be the initial investment cost for the long-term equityinvestment and the whole difference between the initial investment cost and the bookvalue of the asset is recognized in current profit and loss. In case of an investment ofan asset sold to a joint venture or an associated enterprise that constitutes a businesstransaction, the whole difference between the consideration acquired and the bookvalue of the asset is recognized in current profit and loss. An asset acquired from a jointventure or an associate, if constitutes a business transaction, is treated following
Accounting Standards for Business Enterprises No. 20 - Business Combinations andwholly recognized as profits or losses related to the transaction.Net loss from an investment in an investee is written down against the total of the bookvalue of the long-term equity investment and the long-term equity from other actual netinvestment in the investee, but only to that extent. In addition, if the Company assumesliability for any extra loss of the investee, the obligation is recognized as an estimatedliability in Losses from Investment of the period. If the investee realizes net profitsubsequently, the share in the profit payable to the Company is recognized as a shareof income after the unrecognized loss arising from the investment.
For the long-term equity investments to joint ventures and associates already heldbefore the first implementation of the new accounting standards, if there is the debitbalance of equity investments related to the investments, the amount amortized usingthe straight-line method over the remaining period shall be included in the current profitand loss.
③Acquisition of minority equity
When preparing the Consolidated Financial Statements, the difference between thenewly increased long-term equity investment due to the acquisition of minority equityand the share in the net asset of the subsidiary attributable to the Company calculatedat the newly increased shareholding ratio on acquisition date or (the Consolidation Date)is recognized as an adjustment to the capital surplus and, and if the capital reserve isinsufficient to offset such difference, the difference will be offset against retainedearnings.
④ Disposal of long-term equity investment
If the Parent Company disposes of part of its long-term equity investment in asubsidiary without losing the control over the latter, the difference between the price of
the disposal and the share in the net asset of the subsidiary corresponding to the long-term equity investment disposed of is recognized in Shareholders' Equity in theConsolidated Financial Statements; if the Parent Company disposes of part of its long-term equity investment in a subsidiary resulting in the loss of control over the latter, thedisposal price is treated following accounting policies described in Note III, 7 (2)“Methods for Preparing Consolidated Financial Statements.”
In case of a long-term equity investment disposed of in other circumstances, thedifference between the book value and the price actually acquired is recognized incurrent profit and loss.
In case of a long-term equity investment accounted for using the equity method, if theremaining equity after disposal continues to be accounted for using the equity method,the corresponding share in the other comprehensive income originally recognized inShareholders' Equity is treated on the same basis on which the investee directly disposesof the relevant asset or liability. All other shareholders' equity of the investee recognizedbecause of changes in the shareholders' equity, other than those in the net profits orlosses, other comprehensive income and profit distribution are carried over to currentprofit and loss in proportion.
Long-term equity investments accounted for using the cost method, if the remainingequity after disposal continues to be accounted for using the cost method, the othercomprehensive income originally accounted for using the equity method or thestandards for recognition and measurement of financial instruments before theacquisition of the control over the investee is treated on the same basis on which theinvestee directly disposes of the relevant asset or liability and is carried forward inproportion; all other shareholders’ equity in the net asset of the investee, as accountedfor and recognized using the equity method, except net profits or losses, other
comprehensive income and profit distributions, are carried forward in proportion. If theCompany loses the control over the investee due to disposal of part of its equityinvestment but the remaining equity constitutes joint control or significant influenceover the investee, the remaining equity is re-accounted for using the equity method andadjustment is made, as if the remaining equity were accounted for using the equitymethod since the acquisition; the remaining equity, if it does not constitute joint controlor significant influence over the investee, is re-accounted for following the standardsfor recognition and measurement of financial instruments and the difference betweenthe fair value on the date the control is lost and the book value of the equity isrecognized in current profit and loss. When the control over the investee is lost, theother comprehensive income accounted for using the equity method or following thestandards for the recognition and measurement of financial instruments before theacquisition of the control over the investee is treated on the same basis on which theinvestee directly disposes of the relevant asset or liability. All changes in othershareholders’ equity in the net asset of the investee, as accounted for and recognizedusing the equity method, except net profits or losses, other comprehensive income andprofit distributions, are carried forward in proportion upon the loss of control. If theremaining equity is accounted for using the equity method, the other comprehensiveincome and other shareholders' equity are carried forward in proportion; if theremaining equity is accounted for following the standards for recognition andmeasurement of the financial instruments, the other comprehensive income and othershareholders' equity are fully carried forward.
If the Company loses the joint control or significant influence over the investee due topartial disposal of equity investments, the remaining equity is re-accounted forfollowing the standards for recognition and measurement of financial instruments andthe difference between the fair value on the date the control or significant effect is lostand the book value of the remaining equity is recognized in current profit and loss.
When the control of the investee is terminated, the other comprehensive income fromthe original equity investment, as accounted for the adoption of equity method orfollowing the standards for the recognition and measurement of financial instrumentsis treated on the same basis on which the investee directly disposes of the relevant assetor liability; all changes in other shareholders’ equity in the net asset of the investee, asaccounted for and recognized because of the adoption of the equity method, except netprofits or losses, other comprehensive income and profit distributions, are carriedforward in proportion upon the loss of control.
If several transactions through which the Company disposes its subsidiary’s equityinvestment till losing the right of control belong to “package deal”, such transactionsshall be subject to accounting treatment as one transaction for treatment of thesubsidiary’s equity investment and for losing the right of control. Prior to losing theright of control, the balance between every disposal price and the book value of long-term equity investment corresponding to the disposed equities shall be confirmed asother comprehensive income. On the point of losing such right, it shall be jointly shiftedinto current profits and losses of losing the right of control.
16. Fixed assets
(1) Conditions for recognition of fixed assets
The fixed assets of the Company refer to tangible assets held for production of goods,provision of labor services, lease or business with a service life of over a fiscal year. Afixed asset is recognized only when the related economic benefit is likely to flow in andthe cost can be reliably measured. A fixed asset is initially measured at cost and theestimated abandonment cost.
(2) Method for depreciating fixed assets
Provision for depreciation of a fixed asset is retained using the straight-line method
from the month after the fixed asset reaches the expected serviceable condition.Estimated service life, estimated residual values and annual depreciation rates ofdifferent types of fixed assets are as follows:
| Category | Depreciable life (year) | Residual ratio (%) | Yearly depreciation rate (%) |
| Houses & buildings | 20 years, 30 years and 50 years | 5.00 10.00 | 4.75，4.50 3.17，3.00 1.90，1.80 |
| Structures | 10 years and 20 years | 5.00 10.00 | 9.50，4.75 9.00，4.50 |
| Machinery equipment | 5-30 years | 5.00 10.00 | 3.00-19.00 |
| Transportation equipment | 5 years, 6 years and 10 years | 5.00 10.00 | 19.00，18.00 15.83，15.00 9.50，4.75 |
| Office facilities and others | 3 years and 5 years | 5.00 10.00 | 31.67，30.00 19.00，18.00 |
Estimated net residual value refers to the value the Company is expected to acquire bydisposing of the fixed asset in its status upon the expiry of its using life.
(3) Method for impairment test of fixed assets and impairment reserves retentionRefer to Note III, 20 “Impairment of Long-term Assets” for methods for depreciationtest and impairment reserves retention for fixed assets.
(4) Other description
Subsequent expenditures relating to fixed assets, if the asset's economic benefits arelikely to flow in and its cost can be reliably measured, are recognized in cost for fixedassets and the book value of the substituted part is derecognized. Other subsequent
expenditures are recognized in current profit and loss in which they are incurred.Fixed assets are derecognized if they are disposed of or no economic benefit can berealized through use or disposal of the same. Income from disposal of fixed assets bymeans of sale, transfer, etc., is accounted as current profit and loss less the book valueand relevant taxes and charges.
The Company reviews the serviceable life, expected residual value and the method ofdepreciation at the latest at the end of the accounting year. If any change is found in theoriginal estimates, adjustment is made to the relevant accounting estimate.
17. Construction in progress
The Company's construction in progress is classified into two types: self-ownedconstruction and contracted construction. Construction in progress is carried forwardto fixed assets when the construction work is completed and reaches the state ofintended use. The criteria for determining the state of intended use shall be one of thefollowing: the physical construction (including installation) of the fixed assets has beencompleted in full or substantially completed; trial production or trial operation has beencarried out and the results indicate that the assets are capable of normal operation orcapable of producing qualified products on a stable basis, or the results of the trialoperation indicate that they are capable of normal operation or business operation; theexpenditures on the constructed fixed assets are minimal or almost no longer incurred;the purchased fixed asset has met the design or contract requirements or is in substantialconformity with the design or contract requirements.
When the construction in progress reaches the intended state of use, it is transferred tofixed assets at the actual cost of construction. If the project has reached the intendedstate of use but has not yet been finalised, it will be transferred to fixed assets at theestimated value first, and the original provisional value will be adjusted according to
the actual cost after the finalisation of the project, but no further adjustment will bemade to the depreciation that has already been provided for.
Refer to Note III, 20. “Impairment of Long-term Assets” for methods for depreciationtest and impairment reserves retention for constructions-in-progress.
18. Borrowing costs
Borrowing costs of the Company include the interest accrued on loans, the amortizationof discount or premium and auxiliary expenses as well as the translation differencesincurred by loans in foreign currencies. Borrowing costs related to the purchase,construction or production of assets that meet the conditions for capitalization arecapitalized when the asset expenditure has been made, the borrowing costs have beenincurred and the purchase, construction or production activities necessary to work theasset into its serviceable or marketable status have begun; the capitalization ceaseswhen the asset that meets the conditions for capitalization under construction orproduction reaches its expected serviceable or marketable status. Other borrowing costsare recognized as expenses in the period they are incurred.
The interest expenses incurred in the period for special loans less the interest incomefrom the loan fund deposited in a bank or income from temporary investments madeout of the loans are capitalized; general loans are capitalized on the basis of result ofthe accumulated capital expenditures excessive of weighted average of the capitalexpenditures of the special loan multiplied by the capitalization ratio of the generalloans. The capitalization rate is determined on the basis of the weighted average interestrate of general borrowings.
During the capitalization, the difference arising from special loans in foreign currenciesis fully capitalized while that arising from general loans in foreign currencies is
recognized in current profit and loss.
Assets qualified for capitalization refer to fixed assets, investment real properties andinventories that take a reasonable period of purchase, construction or production to bedeveloped into the ready-for-sale or ready-for-use status.
If the purchase, construction or production of the asset qualified for capitalization issuspended for over 3 months, the capitalization of the borrowing cost is suspended untilthe resumption of purchase, construction or production.
19. Intangible assets
Intangible asset refers to invisible recognizable non-currency assets owned orcontrolled by the Company.
Intangible assets are initially measured at cost. Expenses related to intangible assets arerecognized in cost for intangible assets when related economic gains are likely to flowin and the cost can be reliably measured. Other subsequent expenditures are recognizedin current profit and loss in which they are incurred.
Land use rights acquired are usually accounted for as intangible assets. Expenditureson the land use right and the cost for the construction of self-developed plants and otherbuildings are accounted for as intangible assets and fixed assets. In case of houses andbuildings purchased, the purchase price is allocated onto the land use right and thebuildings and treated accordingly; if the allocation cannot be done reasonably, thewhole price is treated as fixed assets.
In case of an intangible asset of limited serviceable life, the original value, net ofexpected residual value and the accumulated impairment reserves retained, is amortized
over the expected serviceable life using the straight-line method. Intangible assets withuncertain service life are not amortized.
The useful lives, the basis for determining them and the amortisation method for itemsof intangible assets with finite useful lives are as follows:
| Item | life span | Basis for determining useful life | Amortisation method |
| land use right | 50 years etc. | Years of use registered on land use certificates | Straight-line method |
| Concession | 10 years etc. | Contractual life span | Straight-line method |
| Franchises | 10 years | Expected duration of benefits | Straight-line method |
| Trademark right | 10 years | Expected duration of benefits | Straight-line method |
| Software and others | 5 years, 10 years, etc. | Estimated useful life and serviceable life | Straight-line method |
The service life and the amortization method adopted for intangible assets of a limitedserviceable life is reviewed at the year end, and if any change has occurred, adjustmentsare made accordingly to the accounting estimates. The serviceable life of eachintangible asset with uncertain serviceable life is reviewed at the end of year. If there isevidence that the period in which the intangible asset can bring in economic benefit canbe predicted, the serviceable life is estimated and the intangible asset is amortizedfollowing the policy for amortization of intangible assets with limited serviceable life.
(2) R&D expenses
Internal R&D expenses of the Company include expenses on the research stage andthose on the development stage.Expenses incurred on the research stage are recognized in current profit and loss.
The Company's specific criteria for classifying research-phase expenditures anddevelopment-phase expenditures for internal research and development projects:
The research phase is the stage of original and planned investigation and researchactivities to acquire and understand new scientific or technological knowledge, etc.; thedevelopment phase is the stage of activities to apply research results or other knowledgeto a plan or design to produce new or substantially improved materials, devices,products, etc., prior to commercial production or use.
Expenses incurred on the development stage, if satisfying all of the followingconditions, are recognized as an intangible asset, otherwise, in current profit and loss.
① The expenses contribute to the completion of intangible asset so that it can betechnically usable or salable;
② Having the intention to complete the intangible asset and use or sell it;
③ The intangible asset is able to generate economic benefits, with evidence that thereis a market for the intangible asset or products produced using the intangible asset,or that the intangible asset is useful if it is intended to be internally used;
④ With enough supports from technical/financial and other resources to finish thedevelopment of such intangible assets, and be capable of using or selling suchintangible assets;
⑤ The expenditure attributable to the development stage of the intangible asset canbe reliably measured.Expenses on the research stage and the development stage, if not able to bedistinguished, are both recognized in current profit and loss.
(3) Impairment test of intangible assets and methods for withholding the impairmentreserves. For detail test method and calculation method of provisions for impairmentreserves of intangible assets, please refer to Note III (20. “Impairment of Long-termAssets”).
20. Impairment of long-term assets
The Company determines on the balance sheet date whether there are signs thatimpairment has occurred to fixed assets, constructions-in-progress, intangible assetswith limited serviceable life, right-of-use assets, investment properties measured at costand non-current non-financial assets including long-term equity investments in itssubsidiaries, joint ventures and associates. If there are signs of impairments, therecoverable amount is estimated and an impairment test is done. Goodwill, intangibleassets with uncertain serviceable life and intangible assets that have not reached theserviceable status are subject to impairment tests every year regardless of whether thereare signs of impairments.
If the impairment test results indicate that the recoverable amount of assets is lowerthan its book value, provisions for impairment reserves shall be calculated inaccordance with its balance, and then recorded into impairment loss. The recoverableamount shall be the higher of the fair value minus disposal expenses and the presentvalue of expected future cash flows of the asset. The fair value of an asset is determinedbased on contract price of fair trade; if there is no sales agreement but there is an activemarket, the bid price the buyer offers for the asset is taken to be the fair value; if thereis no sales agreement or active market, the fair value of the asset is estimated on thebasis of the best information available. Disposal expenses include legal fees related toassets disposal, related taxes, carriage expenses and direct expenses for making theassets reach the marketable condition. The present value of the expected future cashflow from an asset is determined by discounting the expected future cash flow from theasset while it is used on an on-going basis and the at the final disposal at a suitablediscount rate. Asset impairment reserves shall be calculated and confirmed on the basisof single assets. The recoverable amount of this asset group shall be determined withsuch assets’ group, if it is difficult to estimate the recoverable amount of single assets.Asset group is the minimum asset portfolio capable of generating cash inflowindependently.
When conducting impairment loss of goodwill separately listed in the financialstatements, the book value of the goodwill is allocated to the asset group or combinationof asset groups that benefit from the synergies of the business combination. Thecorresponding impairment loss shall be recognized when impairment test indicates thatthe recoverable amount of the asset group or combination of asset groups to whichgoodwill is apportioned is lower than its book value. Firstly, the amount of impairmentlosses shall be amortized to the book value of goodwill of this asset group or assetportfolio. Secondly, the book value of other assets shall be amortized in proportionbased on the book value of other assets (excluding goodwill) in the asset group or assetportfolio.
Once impairment losses on above assets are confirmed, the part with recovered valuecannot be rolled back in subsequent periods.
21. Long-term deferred expenses
Long-term deferred expenses refer to expenses that have been incurred and shall beamortized over a period of longer than one year, including the current period andperiods yet to come. Long-term deferred expenses are recorded at actual expense andamortized using the straight- line method over estimated period of benefit.
22. Contract liability
Contract liabilities mean the obligation for which the Company shall transfer goods tocustomers for the consideration received or receivable from customers. If the customerhas already paid the contract consideration or the Company has obtained theunconditional right to receive payment before the Company transfers the goods to thecustomer, the Company shall present the received amounts or receivables as contractliabilities at the earlier of the time when the actual payment is received by the Company
from the customer and the due date of payment. Contract assets and contract liabilitiesunder the same contract are presented at net amount. If the net amount is the debitbalance, the contract asset and contract liability shall be presented in the item of"contract assets" or "other non-current assets" according to its liquidity; if the netamount is the credit balance, the contract asset and contract liability shall be presentedin the item of “contract liabilities” or “other non-current liabilities” according to n itsliquidity. Contract assets and contract liabilities under different contracts are not offset.
23. Staff remuneration
Employee benefits mainly include short-term employee remunerations, post-employment benefits, termination benefits and other long-term employee benefits.Wherein:
The short-term remunerations include salaries, bonuses, allowance and subsidies,welfare, medical insurance premium, maternity insurance premium, industrial injuryinsurance premium, housing fund contributions, labor union fund contribution,employee education fund contributions and non-monetary benefits. The Companytreats short-term employee remunerations actually incurred during the accountingperiod in which employees provide services for the Company as liabilities andrecognizes the same in current profit and loss or relevant cost for assets of the period.Non-monetary benefits are measured at fair value.
Post-employment benefits mainly include basic pension insurance, unemploymentinsurance and annuities. Post-employment benefit plans include defined contributionplans. If a defined contribution plan is in place, the corresponding amounts payable isincluded in relevant costs for assets or current profit and loss in which they are incurred.
If the labor relationship with employees terminates before the employment contractsexpire or if the Company offers compensation with the view of encouraging employees
to voluntarily accept redundancy, payroll liabilities arising from the terminationbenefits are recognized in current profit and loss on the earlier of the date on which itis determined that the Company may not withdraw the termination benefits offeredthrough labor relationship plans or redundancy proposals and the date on which theCompany recognizes the cost for the restructure involving the payment of terminationbenefits. However, if the demission welfare cannot be completely paid within 12months after the termination of the annual report period, it shall be dealt with accordingto the remuneration of another long-term employee.
Internal retirement plans are treated following the same principles related to thetermination benefits as described above. The Company recognizes in current profit andloss (termination benefits) of the salaries, social insurance premiums, etc. that are to bepaid between the date the employees stop to provide services for the Company and thedate of normal retirement, if satisfying the conditions for the recognition of estimatedliabilities.
Other long-term employee benefits provided by the Company to its staff that conformto the defined contribution plans shall be subject to accounting treatment in accordancewith the defined contribution plans. Others shall be shall be subject to accountingtreatment in accordance with the defined benefit plans.
24. Estimated liabilities
When an obligation arising from contingencies such as guarantees provided to externalparties, litigation matters, product quality assurance, loss contracts, etc. becomes apresent obligation incurred by the Company, and it is probable that the fulfilment of theobligation will result in an outflow of economic benefits to the Company and theamount of the obligation can be measured reliably, the Company recognises theobligation as a projected liability.
The Company initially measures a projected liability at the best estimate of theexpenditure required to settle the related present obligation and reviews the carryingamount of the projected liability at the balance sheet date.
If the expenditures required to settle the projected liability are expected to bereimbursed, in whole or in part, by a third party, the amount of reimbursement isseparately recognised as an asset when it is virtually certain that the reimbursement willbe received and the amount of reimbursement recognised does not exceed the carryingamount of the projected liability.
25. Preference shares, perpetual bonds and other financial instruments
In accordance with the relevant standards on financial instruments and the "Regulationson the Distinction between Financial Liabilities and Equity Instruments and RelatedAccounting Treatment" (Caijing [2014] No. 13), for financial instruments such asconvertible corporate bonds issued, the Company, based on the contractual terms of thefinancial instruments issued and their economic substance as reflected in the contractsrather than in legal form only, and in conjunction with the definitions of financial assets,financial liabilities and equity instruments, classifies such financial instruments or theircomponents as financial assets, financial liabilities or equity instruments upon initialrecognition. financial instruments or their components are classified as financial assets,financial liabilities or equity instruments at initial recognition.
At the balance sheet date, for financial instruments classified as equity instruments,their interest expense or dividend distribution is treated as profit distribution of theCompany, and their repurchase or cancellation is treated as a change in equity; forfinancial instruments classified as financial liabilities, their interest expense or dividend
distribution is treated as a borrowing cost, and their gains or losses arising from theirrepurchase or redemption are recognised in profit or loss for the current period.
26. Revenue
1) Principles of revenue recognition
Revenue from a contract between the Company and a customer is recognised when thecustomer obtains control of the underlying commodity when the following conditionsare simultaneously met: the parties to the contract have approved the contract and havecommitted themselves to performing their respective obligations; the contract specifiesthe rights and obligations of the parties to the contract with respect to the transferredcommodity or the provision of services; the contract has clear payment terms withrespect to the transferred commodity; the contract has a commercial substance in thesense that the performance of the contract will change the Company's risk, timedistribution or amount of future cash flows; and it is probable that the consideration towhich the Company is entitled as a result of the transfer of goods to customers will berecovered. On the commencement date of the contract, the Company evaluates thecontract, identifies each individual performance obligation contained in the contract,and determines whether each individual performance obligation is performed within acertain period of time or at a certain time point.It belongs to performance within a period when satisfying any one of the followingconditions. Otherwise, it belongs to performance at a time point.
① The client obtains and consumes corresponding economic benefits while theCompany performs its obligations;
② The client is able to control in-process commodities or services in the process ofperformance by the Company;
③ Commodities or services in the process of performance by the Company haveirreplaceable usage, and the Company has, within the entire contract period, theright to collect money for the part performed so far.
For the contract performance obligations fulfilled within a certain period of time, theCompany recognizes revenue according to the performance progress during that periodof time. When the contract performance progress cannot be reasonably determined, ifthe cost incurred is expected to be compensated, the revenue shall be recognizedaccording to the amount of cost incurred until the performance progress can bereasonably determined. For the contract performance obligations fulfilled at a certaintime point, revenue is recognized at the time point when the customer obtains thecontrol over the relevant goods or services. The Company shall take the following signsinto consideration while judging whether the client has obtained the control right ofcommodity or not: ① The Company has the right of current collection over suchcommodity. In other words, the client is obligated to pay for this commodity currently;
②The Company has already transferred legal ownership of this commodity to the client.In other words, the client has legal ownership of this commodity; ③ The Company hasalready transferred this commodity to the client. In other words, the client has alreadyoccupied this commodity in real material; ④ The Company has already transferred tothe client main risks and remunerations related to the ownership of this commodity. Inother words, the client has already obtained main risks and remunerations related to theownership of this commodity; ⑤ The client has already accepted this commodity; ⑥Other signs indicating that the client has already obtained the control right of thiscommodity
2) Principles of revenue measurement
① The Company measures revenue based on the transaction price allocated to each
individual performance obligation. The transaction price is the amount ofconsideration that the Company expects to have the right to receive due to thetransfer of goods or services to the customer, excluding the amounts collected onbehalf of a third party and the amounts expected to be returned to the customer.
② If there is variable consideration in the contract, the Company will determine thebest estimate of the variable consideration according to the expected value or themost likely amount, but the transaction price including the variable considerationshall not exceed the amount of the accumulated recognized income that is likelyto have no major reversal when the relevant uncertainty is eliminated.
③ If there is a significant financing component in the contract, the Company willdetermine the transaction price based on the amount payable that is assumed to bepaid in cash when the customer obtains the control over the goods or services. Thedifference between the transaction price and the contract consideration isamortized by the effective interest method during the contract term. On thecommencement date of the contract, the Company expects that the intervalbetween the customer’s acquisition of control of the goods or services and thecustomer’s payment of price will not exceed one year, regardless of the significantfinancing components in the contract.
④ If the contract contains two or more performance obligations, the Company will
allocate the transaction price to each individual performance obligation inaccordance with the relative proportion of the separate selling price of the goodspromised under each individual performance obligation on the contractcommencement date.
3) Specific method of revenue recognition
The Company mainly sells crude oil, chemical products, PTA, PET flakes, polyesteryarns, etc., and the sales shall be the fulfilment of contract performance obligation at acertain time point. In combination with the Company’s actual production andmanagement features, its internal product sales revenues shall be confirmed inaccordance with the following conditions: The Company has already deliveredcorresponding products to the client in accordance with the contract agreement; theamount of product sales revenues has been determined already; the Company has
already taken back relevant loans or obtained the receipt voucher, and relevanteconomic interests are likely to flow in; the product control right has already beentransferred to the acquirer; product-related costs can be measured reliably. For exportedgoods, the income is recognized when the goods are declared for export. For the salesof trade goods, the income is recognized when the Company has delivered the goodsproperty in goods to the purchaser in accordance with the contract provisions. For thegoods in the Company’s overseas subsidiary international trade business, the income isrecognized according to the time point for the transfer of goods risk as set out in thecontract.
27. Contract cost
Contract costs are classified as contract performance costs and contract acquisitioncosts.
Costs incurred by the Company's enterprises to perform contracts are recognised as anasset as contract performance costs when both of the following conditions are met:
(1) The cost is directly related to a current or anticipated acquired contract and includesdirect labour, direct materials, manufacturing overheads (or similar costs), costsexplicitly attributable to the customer, and other costs incurred solely in connectionwith that contract;
(2) The cost increases the resources of the business that will be used in the future tomeet its performance obligations;
(3) The cost is expected to be recovered.
Incremental costs incurred by the Company to acquire a contract that are expected tobe recovered are recognised as an asset as contract acquisition costs; however, suchassets are amortised over a period not exceeding one year and may be charged to profitor loss as incurred.Assets related to contract costs are amortised using the same basis as revenue
recognition for the goods or services to which the asset relates.If the carrying amount of an asset related to contract costs is more than the differencebetween the following two items, the Company will make an allowance for impairmentand recognise an asset impairment loss for the excess:
(1) the remaining consideration expected to be received for the transfer of goods orservices related to the asset;
(2) the estimated costs to be incurred for the transfer of the related goods or services.In the event of a subsequent reversal of the provision for impairment of an asset, thecarrying amount of the asset after the reversal shall not exceed the carrying amount ofthe asset at the date of the reversal, assuming that no provision for impairment had beenmade.
28. Government grants
Government grant refers to monetary or non-monetary assets the Company receivesfrom the government for free, but excludes funds invested in the Company by thegovernment, which enjoys the owners’ equity in the same as a fund owner. Governmentgrants are divided into asset-related government grants and income-related governmentgrants. Governmental subsidies obtained by the Company to structure or form long-term assets in other ways shall be defined as assets-related subsidies, and othergovernmental subsidies as income-related subsidies. If the target of a government grantis not specified in relevant government documents, the grant is divided into income-and asset-related subsidy in the following manners: (1) if the project is defined inrelevant government document, the subsidy is divided in accordance with the relativeproportions of the expense allocated for asset and expenditure, provided that thedivision is reviewed against the proportions on each balance sheet date and adjusted ifnecessary; (2) if only a general direction on the use of the subsidy but no specific projectis stated in relevant government documents, the subsidy is recognized as income-relatedsubsidy. If a government grant is a monetary asset, it shall be measured in the light of
the received or receivable amount. Government grants in the form of non-monetaryassets are measured at fair value or, if the fair value cannot be reliably obtained, at itsnominal amount. Government grants measured at nominal amounts shall be directlyincluded into current profit and loss.
The Company usually recognizes and measures government grants at by the amountactually received. However, the financial support funds that meet the relevantconditions stipulated by the financial support policy with conclusive evidence at theend of the period shall be measured according to the amount receivable. Governmentgrant to be measured at the amount receivable must meet all the following conditions:
(1) The amount of the government grant receivable has been confirmed by a formaldocument from competent government authority or can be reasonably calculatedfollowing relevant regulations of formally issued financial fund management measuresand there is no significant uncertainty as to the amount to be received;
(2) the government grant is based on a financial support program and its financial fundmanagement measures formally implemented and disclosed following the Regulationson Open Government Information, and the said measures are inclusive (open to alleligible entities) rather than specifically formulated for certain entities; (3) a deadlinefor the disbursement has been announced in relevant documents and guaranteed withfinancial budget so that the receipt of the amount is reasonably certain; (4) the Companyis expected to satisfy other conditions that may be required for such subsidy (if any).
Asset-related government grant is recognized as a deferred income, which is includedinto current profit and loss in instalments over the life of use of relevant assets in areasonable and systematic way. Income-related government grant, if used to coverrelevant future expenses or losses, is recognized as a deferred income and is includedinto current profit and loss in the period when such expenses and losses are recognized,or, if used to cover related expenses and losses that have been incurred, is directly
included into current profit and loss.
If government grants include both asset-related and income-related grants, differentaccounting methods may be applied for different parts of the grants; government grantsthat cannot be differentiated are accounted for as income-related.
Government grants related to the daily operations of the Company are included in otherincome or used to offset relevant costs and expenses and those irrelevant to the dailyoperations are recorded as non-operating income.
When the recognized government subsidy needs to be returned, if there is a relevantdeferred income balance, the book balance of the relevant deferred income will beoffset, and the excess will be included in the current profit and loss; in other cases, itwill be directly included in the current profit and loss.
29. Deferred income tax assets/deferred income tax liabilities
Deferred tax assets or deferred tax liabilities are recognised based on the differencebetween the carrying amount of an asset or liability and its tax basis (if the tax basis ofan item not recognised as an asset or liability can be determined in accordance with theprovisions of the tax laws, the difference between such tax basis and its carrying amount)calculated at the tax rate that is expected to apply in the period in which the asset isrecovered or the liability is settled.
Deferred tax assets are recognised to the extent that it is probable that taxable incomewill be available against which deductible temporary differences can be utilised.Deferred tax assets not recognised in prior periods are recognised when, at the balancesheet date, it is probable that sufficient taxable income will be available in futureperiods to allow the deductible temporary differences to be utilised.
The carrying amount of deferred tax assets is reviewed at the balance sheet date andwritten down to the extent that it is more likely than not that sufficient taxable incomewill not be available to allow the benefit of the deferred tax assets to be utilised in futureperiods. The amount of the write-down is reversed when it is more likely than not thatsufficient taxable income will be available.
The Company's current income tax and deferred income tax are recorded as income taxexpense or benefit in profit or loss, excluding income tax arising from: businesscombinations; and transactions or events that are recognised directly in equity.
When there is a legal right to settle the financial statements on a net basis, and theintention is to settle the financial statements on a net basis, or when the acquisition ofassets and settlement of liabilities are carried out simultaneously, the Company's currentincome tax assets and current income tax liabilities are presented at the net amountsafter offsetting.
30. leases
(1) The Company as Lessee
The main categories of the Company's leased assets are buildings and structures, landuse rights and machinery and equipment.
On the commencement date of the lease term, the Company recognises a right-of-useasset and a lease liability for leases other than short-term leases and leases of low-valueassets, and recognises depreciation expense and interest expense, respectively, over thelease term.
The Company accrues lease payments for short-term leases and low-value asset leases
on a straight-line basis over the lease term in each period.
① Right-of-Use Assets
A right-of-use asset is the right of the lessee to use the leased asset during the lease term.At the commencement date of the lease term. Right-of-use assets are initially measuredat cost. This cost includes: (i) the initial measurement amount of the lease liability; (ii)the amount of lease payments made on or before the commencement date of the leaseterm, net of the amount relating to the lease incentive already enjoyed if a leaseincentive exists; (iii) the initial direct costs incurred by the lessee; and (iv) the costsexpected to be incurred by the lessee to dismantle and remove the leased asset, toreinstate the site on which the leased asset is located, or to restore the leased asset tothe condition agreed under the terms of the lease.
② Lease liabilities
Lease liabilities are initially measured at the present value of the lease paymentsoutstanding at the commencement date of the lease term. Lease payments include: (i)fixed payments (including substantially fixed payments), net of amounts related to leaseincentives, if any; (ii) variable lease payments that depend on indices or ratios; (iii)amounts expected to be paid based on the residual value of guarantees provided by thelessee; (iv) the exercise price of a purchase option if the lessee is reasonably certain thatthe option will be exercised; and (v) amounts required to be paid upon exercise of atermination option, provided that the lease term reflects that the lessee will exercise thetermination option; and (vi) amounts required to be paid upon exercise of a terminationoption if the lease term reflects that the lessee will exercise the option. (v) Payments tobe made upon exercise of the option to terminate the lease, provided that the lease termreflects that the lessee will exercise the option to terminate the lease;
The Company uses the interest rate embedded in the lease as the discount rate; if the
interest rate embedded in the lease cannot be reasonably determined, the Company'sincremental borrowing rate is used as the discount rate. The Company calculates theinterest expense on the lease liability for each period during the lease term based on afixed periodic rate, which is included in finance costs. This periodic rate is the discountrate used by the Company or a revised discount rate.
Variable lease payments that are not included in the measurement of the lease liabilityare recognised in profit or loss when they are actually incurred.
When there is a change in the Company's evaluation of the renewal option, the optionto terminate the lease or the option to purchase, the lease liability is remeasured at thepresent value of the lease payments after the change and at a revised discount rate, andthe carrying amount of the right-of-use asset is adjusted accordingly. When there is achange in the substantive lease payments, the amount expected to be payable for theresidual value of the guarantee, or variable lease payments that depend on an index orrate, the lease liability is remeasured at the present value calculated using the changedlease payments and the original discount rate, and the carrying amount of the right-of-use asset is adjusted accordingly.
③ Short-term leases and leases of low-value assets
The Company has elected not to recognise right-of-use assets and lease liabilities forshort-term leases and leases of low-value assets, and to recognize the related leasepayments in profit or loss or in the cost of the related assets on a straight-line basis ineach period during the lease term. Short-term leases are leases with a term of less than12 months at the commencement date of the lease term and do not include an option topurchase. Low-value asset leases are leases that have a lower value when the individualleased asset is a new asset.
(2) The Company as leaser
① Operating lease
The straight-line method is adopted by the Company to confirm the lease receipts asrental income in different periods within the lease term. Variable lease payment relatedto operating lease that is not recorded into lease receipts shall be recorded into currentprofits and losses upon the occurrence.
② Finance lease
Since the commencement date of the lease term, the Company shall confirm the amountof finance lease receivable, and derecognize finance lease assets. The amount of financelease receivable shall be initially measured by net lease investment (sum of presentvalue of unguaranteed balance and un-received lease receipts since the commencementdate of the lease term after being discounted in accordance with the interest rate implicitin lease). In addition, interest incomes within the lease term shall be calculated andconformed in accordance with fixed periodic rate. Upon its occurrence, variable leasepayment not measured as lease liabilities shall be recorded into current profits andlosses, or into related asset cost.
(3) Sale-and-leaseback
① Company as lessee
The Company assesses whether the transfer of assets in a sale and leaseback transactionis a sale in accordance with the provisions of ASBE No. 14, "Revenue".
If the transfer of assets in a sale and leaseback transaction is a sale, the Companymeasures the right-of-use asset resulting from the sale and leaseback at the portion ofthe original asset's carrying value that relates to the right-of-use acquired through theleaseback and recognises the related gain or loss only for the right transferred to thelessor.
If the transfer of an asset in a sale-and-leaseback transaction is not a sale, the companycontinues to recognise the transferred asset, and at the same time recognises a financialliability equal to the transfer proceeds and accounts for the financial liability inaccordance with ASBE No. 22, "Recognition and Measurement of FinancialInstruments".
② Company as lessor
The Company assesses whether the transfer of assets in a sale and leaseback transactionis a sale in accordance with the provisions of ASBE No. 14, "Revenue".
If the transfer of assets in a sale and leaseback transaction is a sale, the Companyaccounts for the purchase of assets in accordance with other applicable corporateaccounting standards and for the lease of assets in accordance with ASBE No. 21 -Leasing.
If the transfer of assets in a sale and leaseback transaction is not a sale, the companydoes not recognise the transferred assets, but recognises a financial asset equal to thetransfer proceeds and accounts for the financial asset in accordance with ASBE No. 22- Recognition and Measurement of Financial Instruments.
31. Other significant accounting policies and accounting estimates
(1) Hedge accounting
①Hedges include fair value hedges, cash flow hedges, and hedges of net investmentsin foreign operations.
② Hedge accounting is applied to hedging instruments that meet the followingconditions: (1) the hedging relationship consists solely of the eligible hedging
instrument and hedged instrument; (2) at the inception of the hedge, the Companyformally designates the hedging instrument and hedged item and prepares writtendocumentation regarding the hedging relationship and the Company's risk managementstrategy and risk management objectives for engaging in the hedge; and (3) the hedgingrelationship meets the hedge effectiveness requirements.
The Company determines that a hedging relationship meets the requirements for hedgeeffectiveness when the following conditions are simultaneously met: (1) an economicrelationship exists between the hedged item and the hedging instrument; (2) the impactof credit risk does not dominate the change in value resulting from the economicrelationship between the hedged item and the hedging instrument; and (3) the hedgeratio of the hedging relationship is equal to the ratio of the number of hedged items thatthe Company is actually hedging to the actual number of hedging instruments hedgedagainst the Company, but not to the actual number of hedging instruments hedgedagainst the Company. The ratio of the actual number of instruments hedged does notreflect an imbalance in the relative weights of the hedged item and the hedginginstrument.
The Company evaluates whether a hedging relationship meets the hedge effectivenessrequirements on an ongoing basis at the hedge inception date and in subsequent periods.If a hedging relationship no longer meets the hedge effectiveness requirements due tothe hedge ratio, but the risk management objective for which the hedging relationshipwas designated remains unchanged, the Company rebalances the hedging relationship.
③ Hedge accounting treatment
A. Fair value hedgesa. Gains or losses arising from hedging instruments are recognised in profit or loss. Ifthe hedging instrument is a hedge of a non-trading equity instrument (or componentthereof) that has been elected to be measured at fair value through other comprehensive
income, the gain or loss arising from the hedging instrument is included in othercomprehensive income.
b. Gains or losses arising from the hedged item's exposure are recognised in profit orloss for the period, and the carrying amount of the recognised hedged item that is notmeasured at fair value is adjusted. If the hedged item is a debt instrument (or itscomponent) measured at fair value through other comprehensive income, the gain orloss arising from the hedged risk exposure is recognised in profit or loss for the currentperiod without adjusting the carrying value; if the hedged item is an investment in non-trading equity instruments (or its component) measured at fair value through othercomprehensive income, the gain or loss arising from the hedged risk exposure isrecognised in other comprehensive income for the current period. Gains or lossesarising from the hedged risk exposure are recognised in other comprehensive incomewithout any adjustment to the carrying amount.
If the hedged item is a firm commitment (or a component of a firm commitment) thathas not yet been recognised, the cumulative change in the fair value of the hedged itemattributable to the hedged risk subsequent to the designation of the hedging relationshipis recognised as an asset or a liability, with the related gain or loss being recognised inprofit or loss in each of the relevant periods. When an asset is acquired or a liability isassumed as a result of the fulfilment of a firm commitment, the initial recognitionamount of the asset or liability is adjusted to include the cumulative change in fair valueof the hedged item recognised.
If the hedged item is a financial instrument (or its component) measured at amortisedcost, the company amortises the adjustment to the carrying amount of the hedged itemat the effective interest rate recalculated at the date of commencement of amortisationand recognises it in profit or loss for the period. If the hedged item is a debt instrument
(or its component) that is measured at fair value through other comprehensive income,the cumulative recognised hedging gains or losses are amortised in the same mannerand recognised in profit or loss, but the carrying value of the debt instrument (or itscomponent) is not adjusted.
B. Cash flow hedgesa. The portion of the gain or loss on the hedging instrument that is an effective hedge isrecognised as a cash flow hedge reserve in other comprehensive income, while theineffective portion is recognised in profit or loss. The amount of the cash flow hedgereserve is recognised as the lower of: (i) the cumulative gain or loss on the hedginginstrument from the beginning of the hedge; and (ii) the cumulative change in thepresent value of the expected future cash flows of the hedged item from the beginningof the hedge.
b. When the hedged item is an anticipated transaction and the anticipated transactionresults in the subsequent recognition of a non-financial asset or non-financial liabilityby the Company, or when the anticipated transaction of the non-financial asset and non-financial liability results in a firm commitment for which fair value hedge accountingis applicable, the Company transfers the amount of the cash flow hedge reserve thatwould otherwise have been recognised in other comprehensive income to the amountinitially recognised for that asset or liability.c. For other cash flow hedges, the amount of cash flow hedge reserve originallyrecognised in other comprehensive income is transferred out to profit or loss in the sameperiod in which the hedged forecast transaction affects profit or loss.
C. Hedges of net investment in foreign operationsThe portion of gains or losses arising from hedging instruments that are effective hedgesis recognised in other comprehensive income and transferred out to current profit or
loss upon disposal of the foreign operation; the portion of gains or losses arising fromhedging instruments that are ineffective hedges is recognised in current profit or loss.
(2) Repurchase of Shares
If the Company acquires shares for the purpose of reducing registered capital orrewarding employees, the amount actually paid for the shares is treated as treasury stockand recorded in the register of treasury stock. If the repurchased shares are cancelled,the difference between the total par value of the shares calculated on the basis of thenominal value of the cancelled shares and the number of shares cancelled and theamount actually paid for the repurchase is charged to capital surplus, and if capitalsurplus is not sufficient to be charged to capital surplus, it is charged to retainedearnings; if the award of the repurchased shares to the Company's employees is anequity-settled share payment, the cost of shares and the accumulated amount of capitalsurplus (other capital surplus) during the waiting period are treated as treasury sharesand recorded in the register of record. The cost of treasury stock delivered to employeesand the cumulative amount of capital surplus (other capital surplus) during the waitingperiod are cancelled when the employees receive the purchase price of the Company'sshares by exercising their options, and the capital surplus (share premium) is adjustedfor the difference.
32. Changes in significant accounting policies and estimates
(1) Changes in accounting policies
The Company had no change in accounting policy during the reporting period
(2) Accounting estimate change
The Company had no change in accounting estimate during the reporting period
IV. Taxes
1. Main tax categories and tax rates
| Tax Category | Specific Tax Rate |
| Value-added tax | The output taxes of taxable income shall be calculated at a tax rate of 13%, 9% and 6%, and the VAT shall be calculated and paid based on the difference after deducting the amount of input tax that can be deducted for the current period. |
| Urban maintenance and construction tax | To be paid at 7%, 5% of the actually paid turnover tax. Education surcharge |
| Education surcharge | To be paid at 3% of the actually paid turnover tax. |
| Local education surcharge | To be paid at 2% of the actually paid turnover tax. |
| Enterprise income tax | Calculated and paid at 25%, 18.5%, 17%, 16.5%, 15%, 5% and 2.5% of taxable income. |
The Company has different enterprise income tax rate taxpayers, and the specificconditions are as follows:
| Name of tax payer | Income tax rate |
| Domestic subsidiary | 25%, 20% and 15% |
| Hong Kong Tianyi International Holding Co., Ltd. Good Park International Investment Co., Ltd. Hong Kong Yisheng Petrochemical Investment Co., Ltd. | 16.5% For offshore trade, the offshore profits tax exemption can be applied for. |
| Hengyi Industry International Co., Ltd. | The Company is approved to join the Singapore Global Trader Programme (GTP), so is entitled to the preferential enterprise income tax rate and payment of enterprise income tax at a tax rate of 5% from 2022 to 2026. |
| Hengyi Industries Sdn. Bhd. | 18.5% |
| Hengyi International Logistics Co., Ltd. Hengyi Petrochemical International Co., Ltd. | 17% |
2. Tax incentives and approvals
(1) According to the Announcement on Issuing the Measures for the Administration ofPreferential Value-Added Tax Policies for Promoting the Employment of DisabledPersons (Announcement No. 33 [2016] of the State Administration of Taxation)released by the State Administration of Taxation, Zhejiang Hengyi Polymer Co., Ltd.(Hereinafter “the Polymer Company”), a holding subsidiary of the Company, enjoyedthe preferential VAT policy of immediate refund upon payment for the employment ofdisabled persons.
(2) Pursuant to the relevant provisions of the Announcement of the Ministry of Financeand the State Administration of Taxation on the Policy of Value-added Tax Credits forEnterprises in the Advanced Manufacturing Sector (Announcement No. 43 of 2023),from 1 January 2023 to 31 December 2027, enterprises in the advanced manufacturingsector are allowed to offset the payable value-added tax (VAT) by adding 5% to thecreditable input tax amount for the current period.
(3) Zhejiang Hengyi High-Tech Materials Co., Ltd. (hereinafter referred to as "HengyiHigh- Tech Materials"), the Company’s holding subsidiary, and Zhejiang HengyiPetrochemical Research Institute Co., Ltd. (hereinafter referred to as the "Institute"),the Company’s wholly- owned subsidiary, obtained the High-tech EnterpriseCertificates jointly issued by Zhejiang Provincial Department of Science andTechnology, Zhejiang Provincial Department of Finance and Zhejiang ProvincialTaxation Bureau of the State Administration of Taxation on December 24, 2022, andwere recognized as high-tech enterprises with a validity period of three years.According to the Enterprise Income Tax Law of the People’s Republic of China and theImplementation Regulations of the Enterprise Income Tax Law of the People’sRepublic of China, Hengyi High-Tech Materials and the Institute are taxed at a reducedenterprise income rate of 15% from January 1, 2022 to December 31, 2024.
(4) Zhejiang Shuangtu New Materials (hereinafter referred to as "Shuangtu New
Materials"), a wholly-owned subsidiary of the Company, and Hangzhou YijingChemical Fibre Company Limited (hereinafter referred to as "Hangzhou Yijing"), awholly-owned subsidiary of the Company, were certified as High and New TechnologyEnterprises by the Department of Science and Technology of Zhejiang Province andthe Department of Finance of Zhejiang Province jointly issued by the StateAdministration of Taxation of Zhejiang Province. In accordance with the EnterpriseIncome Tax Law of the People's Republic of China and the Regulations for theImplementation of the Enterprise Income Tax Law of the People's Republic of China,Shuangtu New Materials and Hangzhou Yijing were entitled to a reduction of 15% inenterprise income tax from 01 January 2023 to 31 December 2025 (Note). (Note: TheCompany has disposed of the entire equity interest in Hangzhou Yiqing on 19December 2023).
(5) On March 15, 2019, the Company’s holding subsidiary Hengyi IndustriesInternational Pte. Ltd. was approved to join the Singapore Global Trader Programme(GTP). According to the approval document on December 31, 2021, Hengyi IndustriesInternational Pte. Ltd. was endowed with Approved Global Trading Company Statusand it will enjoy the applicable preferential enterprise income tax rate of 5% from 2022to 2026.
(6) The standard corporate income tax rate in Singapore is 17%, but the first 10,000Singapore dollars of taxable income can enjoy 75% tax relief, and the taxable incomeof 10,001~190,000 Singapore dollars can enjoy 50% tax relief. The wholly-ownedsubsidiaries of the Company, Hengyi International Logistics Co., Ltd. and HengyiPetrochemical International Co., Ltd., enjoy this preference.
(7) As Brunei PMB Petrochemical Project meets corresponding conditions for “PioneerEnterprise”, Hengyi Industries Sdn. Bhd. (a holding subsidiary of the Company) may
enjoy tax preference for 11 years: exemption of corporate income tax and importedapparatus & imported raw material tax.
(8) Pursuant to the Circular of the Ministry of Finance and the State Administration ofTaxation on the Preferential Policies on Enterprise Income Tax of Hainan Free TradePort No. 31 of Cai Shui [2020], Hainan Heng Gui Trading Company Limited, a wholly-owned subsidiary of the Company, has been subject to a reduced enterprise income taxrate of 15% from 1 January 2020 onwards.
(9) Pursuant to the Announcement of the Ministry of Finance and the StateAdministration of Taxation on Preferential Policies on Income Tax for Small and MicroEnterprises and Individual Industrial and Commercial Households (Announcement ofthe Ministry of Finance and the State Administration of Taxation No. 6 of 2023),Zhejiang Xiaoyi Supply Chain Management Co., Ltd. a wholly-owned subsidiary ofthe Company, is subject to a reduction of 25% of its taxable income for 2023, which istaxable income of up to 1 million yuan, and will be subject to an enterprise income taxat a tax rate of 20%.
(10) According to Article 6 of the Interim Regulations of the People's Republic of Chinaon Property Tax, Guo Fa [1986] No. 90, where a taxpayer has difficulties in paying tax,the property tax may be reduced or exempted periodically as determined by the people'sgovernment of the province, autonomous region or municipality directly under thecentral government; according to the Announcement of the State Administration ofTaxation of Zhejiang Province Taxation Bureau of the Department of Finance ofZhejiang Province on Matters Relating to the Hardship Reduction and Exemption ofProperty Tax and Urban Land Use Tax (SAT) Tax Bureau of Zhejiang ProvinceAnnouncement No. 1 of 2024), Shuangtu New Materials is entitled to 80% of thepreferential policy of property tax reduction and exemption for difficulties from 1
January to 31 December 2023, and HengYi Petrochemicals, Hangzhou Yijing, HoldingSubsidiary Polymers and Zhejiang Yi Xin Chemical Fibre Company Limited areentitled to 60% of the preferential policy of property tax reduction and exemption fordifficulties from 1 January to 31 December 2023.
(11) According to the Circular of the Ministry of Finance and the State Administrationof Taxation on the Policies on Urban Land Use Tax and Other Policies for Units PlacingDisabled Persons in Employment (Article 1 of Cai Shui [2010] No. 121), Polymer Co.enjoys a preferential policy of 100% reduction in land use tax for the year 2023 forplacing disabled persons in employment.
(12) Pursuant to the ''Notice of the Department of Finance of Guangxi ZhuangAutonomous Region on Matters Relating to Exemption from Levy of Local WaterConservancy Construction Fund'' (Gui Cai Shui [2022] No. 11), all levy recipients ofthe Guangxi Zhuang Autonomous Region shall be exempted from levy of the localwater conservancy construction fund from 1 April 2022 to 31 December 2026 (theAffiliated Period), and the Company and the Company's wholly-owned subsidiaries,namely, Guangxi Hengyi Shunqi Trading Co. Subsidiary Guangxi Heng Yi NewMaterials Company Limited, and the controlling subsidiary Guangxi Free Trade ZoneYihai Harbour Services Company Limited shall enjoy such preferential treatment.
(13) According to the Circular of the Ministry of Finance, the General Administrationof Taxation, the Ministry of Ex-Servicemen on Tax Policies Related to FurtherSupporting the Entrepreneurship and Employment of Independently Employed RetiredSoldiers ((CaiShui2019) No. 21) and the Announcement on Tax Policies Related toFurther Supporting the Entrepreneurship and Employment of Key Groups(Announcement of the Ministry of Finance, the General Administration of Taxation, theMinistry of Human Resources and Social Security and the Ministry of Agriculture and
Rural Affairs No. 14 of 2023), the recruitment of independently employed retiredsoldiers If they sign a labour contract with a term of more than 1 year and pay socialinsurance premiums in accordance with the law, the value-added tax, urbanmaintenance and construction tax, education surcharge, local education surcharge andenterprise income tax shall be deducted in order of the number of people actuallyrecruited in accordance with the fixed standard of RMB 9,000 per person per year fora period of 3 years starting from the month of signing the labour contract and payingthe social insurance premiums. Hengyi High-tech Materials, Research Institute,Shuangtu New Materials, Hengyi Petrochemicals, Polymer Company, Zhejiang HengyiPetrochemicals Sales Company Limited, a wholly-owned subsidiary of the Company,Zhejiang Hengyi Engineering Management Company Limited, a wholly-ownedsubsidiary of the Company, Haining Hengyi New Materials Company Limited andGuangxi Hengyi Environmental Science and Technology Company Limited are entitledto this tax incentive for FY2023.
(14) According to the Circular of the Ministry of Finance, the General Administrationof Taxation, the Ministry of Human Resources and Social Security, the State CouncilOffice of Poverty Alleviation on Tax Policies Relating to Further Supporting andPromoting Entrepreneurship and Employment of Key Groups (Cai Shui [2019] No. 22)and the Announcement on Tax Policies Relating to Further SupportingEntrepreneurship and Employment of Key Groups (Announcement of the Ministry ofFinance, the General Administration of Taxation, the Ministry of Human Resources andSocial Security, the Ministry of Agriculture and Rural Affairs, Announcement No. 15of 2023) Taxpayers will account for the total amount of tax reduction and exemptionfor their units according to the number of key groups recruited by their units and theiractual number of months of work, and within the total amount of tax reduction andexemption, deduct value-added tax, urban maintenance and construction tax, educationsurcharge and local education surcharge sequentially on a monthly basis at a flat rate of
RMB7,800 per person per annum. HengYi Petrochemicals and HengYi High-TechMaterials are entitled to this tax incentive for the year 2023.
V. Notes to items of consolidated financial statementsUnless otherwise specified, for the following note items (including the main item notesto the Company’s financial statements), the "end of the period" refers to December 31,2023, the "end of previous year" refers to December 31, 2022, the "current period"refers to 2023, and the "previous period" refers to 2022.
1. Monetary funds
| Item | Ending balance | Ending balance of previous year |
| Cash on hand | 1,065,013.70 | 1,118,679.20 |
| Bank deposit | 7,927,366,494.60 | 11,793,245,385.08 |
| Other monetary funds | 5,899,471,579.10 | 5,564,111,474.22 |
| Total | 13,827,903,087.40 | 17,358,475,538.50 |
| Wherein: The total amount of funds deposited abroad | 2,284,767,031.67 | 4,521,667,307.86 |
Note: As of December 31, 2023, the monetary capital that the Company’s right to usewas restricted was RMB 5,309,784,965.28, including RMB 4,033,300,928.58 of L/Cguarantee deposit, RMB1,015,191,038.98 of acceptance bill deposit, RMB61,920,000.00 of L/G deposit, RMB 69,482,993.32 of collection for bill pledge, RMB25,169,796.00 of judicially frozen fund, RMB 64,140,677.71 of futures deposit, andRMB 40,579,530.69 of other restricted funds.
2. Held-for- trading financial assets
| Item | Ending balance | Ending balance of previous year |
| Financial assets measured at fair value through profit and loss | 366,311,518.38 | 251,021,508.33 |
| Wherein: Debt instrument investment | 0.00 | 0.00 |
| Equity instrument investment | 0.00 | 0.00 |
| Item | Ending balance | Ending balance of previous year |
| Derivative financial assets | 366,311,518.38 | 251,021,508.33 |
| Others | 0.00 | 0.00 |
| Specified as financial assets measured by fair value and whose changes included in current profits and losses | 0.00 | 0.00 |
| Total | 366,311,518.38 | 251,021,508.33 |
| Wherein: Portion reclassified to other non-current financial assets | 0.00 | 0.00 |
3. Derivative financial assets
| Item | Ending balance | Ending balance of previous year |
| Foreign exchange derivatives | 0.00 | 0.00 |
| Commodity derivatives | 0.00 | 1,872,460.80 |
| Total: | 0.00 | 1,872,460.80 |
Cash-flow hedge:
In order to avoid the risk of cash flow changes related to commodity prices in productsales that are likely to occur in the future, the Company designates a series ofcommodity futures and paper market contracts held by it as hedging instruments forexpected commodity sales. Commodity futures and paper market contracts designatedas hedging instruments have an economic relationship with the expected sales ofcommodities under the hedging. The hedge ratio is reasonable, if the hedge ratio ofhedging relationship is the same as the hedge ratio set from the perspective of riskmanagement.
In order to avoid the risk of cash flow changes related to foreign currency borrowingsin the future, the Company designates a series of foreign currency derivative contractsheld by the Company as hedging instruments for foreign currency borrowings. Theunderlying assets of foreign currency derivatives designated as hedging instrumentshave an economic relationship with the hedged foreign currency borrowings. The hedge
ratio is reasonable, if the hedge ratio of hedging relationship is the same as the hedgeratio set from the perspective of risk management.
In this year, an amount of RMB22,418,946.16 was recorded into stockholders' equityas cash- flow hedge reserves in the Company. Details are described as follows:
| Item | Current-period Quantity |
| Total gains of fair value recorded into stockholders' equity | 0.00 |
| Minus: Deferred income tax from the gains of fair value | 0.00 |
| Minus: Other comprehensive income is reclassified into current profit and loss | -33,539,051.80 |
| Minus: Deferred income tax reclassified into current profit and loss | -1,511,985.87 |
| Minus: Assigned to Minority Shareholders after Tax | 9,608,119.77 |
| Net profits from cash-flow hedge | 22,418,946.16 |
4. Notes receivable
(1) Classified presentation of notes receivable
| Item | Ending balance | Ending balance of previous year |
| Bank acceptance bills | 167,871,662.32 | 246,560,954.07 |
| Commercial acceptance bills | 0.00 | 0.00 |
| Domestic letter of credit | 0.00 | 0.00 |
| Subtotal | 167,871,662.32 | 246,560,954.07 |
| Minus: Provision for bad debts | 0.00 | 0.00 |
| Total | 167,871,662.32 | 246,560,954.07 |
(2) Pledged notes receivable at the end of the year
| Item | Amounts pledged at the end of period |
| Bank acceptance bills | 147,675,900.00 |
（3）The amount of endorsed or discounted notes receivable that become mature afterthe date of balance sheet at the end of the year.
| Item | Ending balance of those derecognized | Ending balance of those not derecognized |
| Bank acceptance bills | 804,758,584.16 | 0.00 |
（4）Notes converted to accounts receivable at the yearend due to the non-performance of the drawerThere are not notes converted to accounts receivable at the yearend due to the non-performance of the drawer.
5. Accountable receivable
(1) Disclosure by aging
| Aging | Ending balance | Ending balance of previous year |
| Within 1 year | 5,922,412,767.50 | 6,857,378,133.02 |
| Wherein: Within 6 months | 5,916,751,635.07 | 6,853,588,160.54 |
| 7-12 months | 5,661,132.43 | 3,789,972.48 |
| 1-2 years | 9,444,117.81 | 918,708.38 |
| 2-3 years | 606,578.77 | 163,835.86 |
| Over three years | 8,569,211.47 | 8,510,212.00 |
| Subtotal | 5,941,032,675.55 | 6,866,970,889.26 |
| Minus: Provision for bad debts | 15,857,715.96 | 9,057,241.04 |
| Total | 5,925,174,959.59 | 6,857,913,648.22 |
(2) Presented based on bad debt reserve provision method
| Category | Ending balance | ||||
| Book Balance | Provision for bad debts | Book Balance | |||
| Amount | Proportion (%) | Amount | Allotment rate (%) | ||
| Accounts receivable with single provision for bad debt | 14,037,245.00 | 0.24 | 14,037,245.00 | 100.00 | 0.00 |
| Wherein: Hangzhou Hengchuang Chemical Fibre Co., Ltd. | 8,510,212.00 | 0.14 | 8,510,212.00 | 100.00 | 0.00 |
| Changzhou Anding Textile Co. | 4,778,562.20 | 0.08 | 4,778,562.20 | 100.00 | 0.00 |
| Fujian Yuanye Logistics Co. | 748,470.80 | 0.01 | 748,470.80 | 100.00 | 0.00 |
| Category | Ending balance | ||||
| Book Balance | Provision for bad debts | Book Balance | |||
| Amount | Proportion (%) | Amount | Allotment rate (%) | ||
| Receivables with bad debt provision made as per different groups | 5,926,995,430.55 | 99.76 | 1,820,470.96 | 0.03 | 5,925,174,959.59 |
| Wherein: This credit risk characteristic of this portfolio of receivables is defined by account receivable aging. | 5,926,995,430.55 | 99.76 | 1,820,470.96 | 0.03 | 5,925,174,959.59 |
| Total | 5,941,032,675.55 | 100.00 | 15,857,715.96 | 0.27 | 5,925,174,959.59 |
(Continued)
| Category | Ending balance of previous year | ||||
| Book Balance | Provision for bad debts | Book value | |||
| Amount | Proportion (%) | Amount | Allotment rate (%) | ||
| Accounts receivable with single provision for bad debt | 8,510,212.00 | 0.12 | 8,510,212.00 | 100.00 | 0.00 |
| Wherein: Hangzhou Hengchuang Chemical Fibre Co., Ltd. | 8,510,212.00 | 0.12 | 8,510,212.00 | 100.00 | 0.00 |
| Receivables with bad debt provision made as per different groups | 6,858,460,677.26 | 99.88 | 547,029.04 | 0.01 | 6,857,913,648.22 |
| Wherein: This credit risk characteristic of this portfolio of receivables is defined by account receivable aging. | 6,858,460,677.26 | 99.88 | 547,029.04 | 0.01 | 6,857,913,648.22 |
| Total | 6,866,970,889.26 | 100.00 | 9,057,241.04 | 0.13 | 6,857,913,648.22 |
① Accounts receivable with single provision for bad debt
| Accounts Receivable (by Unit) | Ending balance | |||
| Book balance | Bad debt provision | Allotment rate | Reason for provision | |
| Hangzhou Hengchuang Chemical Fibre Co., Ltd. | 8,510,212.00 | 8,510,212.00 | 100% | Expected to be less likely to be recovered |
| Changzhou Anding Textile Co. | 4,778,562.20 | 4,778,562.20 | 100% | Expected to be less likely to be recovered |
| Accounts Receivable (by Unit) | Ending balance | |||
| Book balance | Bad debt provision | Allotment rate | Reason for provision | |
| Fujian Yuanye Logistics Co. | 748,470.80 | 748,470.80 | 100% | Expected to be less likely to be recovered |
| Total | 14,037,245.00 | 14,037,245.00 | -- | -- |
(Continued)
② Accounts receivable with bad debt provision made based on aging combination in
the combination
| Aging | Ending balance | ||
| Accounts receivable | Bad debt provision | Allotment rate (%) | |
| Within 6 months | 5,916,751,635.07 | 0.00 | 0.00 |
| 7-12 months | 5,661,132.43 | 283,056.63 | 5.00 |
| 1-2 years | 3,917,084.81 | 1,175,125.44 | 30.00 |
| 2-3 years | 606,578.77 | 303,289.42 | 50.00 |
| Over three years | 58,999.47 | 58,999.47 | 100.00 |
| Total | 5,926,995,430.55 | 1,820,470.96 | -- |
(Continued)
| Aging | Ending balance of previous year | ||
| Accounts receivable | Bad debt provision | Allotment rate (%) | |
| Within 6 months | 6,853,588,160.54 | 0.00 | 0.00 |
| 7-12 months | 3,789,972.48 | 189,498.62 | 5.00 |
| 1-2 years | 918,708.38 | 275,612.50 | 30.00 |
| 2-3 years | 163,835.86 | 81,917.92 | 50.00 |
| Over three years | 0.00 | 0.00 | 0.00 |
| Total | 6,858,460,677.26 | 547,029.04 | -- |
（3）Bad debt preparation
| Category | Ending balance of previous year | Amount of changes in current period | Ending balance | ||
| Provision | Amount recovered or written back | Resell or write off | |||
| Accounts receivable with single provision for bad debt | 8,510,212.00 | 5,527,033.00 | 0.00 | 0.00 | 14,037,245.00 |
| This credit risk characteristic of this portfolio of receivables is defined by account receivable aging. | 547,029.04 | 1,725,930.53 | 147,909.12 | 304,579.49 | 1,820,470.96 |
| Total | 9,057,241.04 | 7,252,963.53 | 147,909.12 | 304,579.49 | 15,857,715.96 |
（4）The top five ending amounts (totals by borrower) of accounts receivableThe top five ending amounts (totals by borrower) of the Company’s accounts receivableamounted to RMB 2,980,207,054.83 in total, accounting for 50.16% of the year-endbalance of accounts receivable, and the corresponding year-end balance of the provisionfor bad debts was RMB 0.00.
6. Accounts receivable financing
(1) Classified presentation of receivables financing
| Item | Ending balance | Ending balance of previous year |
| Notes receivable | 36,904,996.06 | 129,579,710.85 |
| Accounts receivable | 0.00 | 0.00 |
| Total | 36,904,996.06 | 129,579,710.85 |
(2) Changes of increase or decrease of financing of receivables in current period andchanges in fair value thereof
| Item | Ending balance of previous year | Changes in current period | Ending balance | |||
| Cost | Changes of fair value | Cost | Changes of fair value | Cost | Changes of fair value | |
| Notes receivable | 129,579,710.85 | 0.00 | -92,674,714.79 | 0.00 | 36,904,996.06 | 0.00 |
| Accounts receivable | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 129,579,710.85 | 0.00 | -92,674,714.79 | 0.00 | 36,904,996.06 | 0.00 |
(3) The amount of endorsed or discounted accounts receivable that become mature afterthe date of balance sheet at the end of the year.
| Item | Ending balance of those derecognized | Ending balance of those not derecognized |
| Bank acceptance bills | 1,540,626,533.10 | 0.00 |
| Domestic letter of credit | 814,695,276.00 | 0.00 |
| Total | 2,355,321,809.10 | 0.00 |
(4) Other description
During the current period, the Company discounted bank acceptance bills of RMB2,560,062,129.52 (RMB 3,927,622,490.56 in the previous year) under the financing ofreceivables to banks. Main risks (e.g. interest rate risk) and remunerations related tothese bank acceptance bills have been transferred to the bank. Therefore, the Companyshall derecognize discounted immature bank acceptance bills. According to the cashingagreement, if the banker’s acceptance failed to be cashed upon maturity, the bank hasthe right to ask the Company to pay off the unsettled balance. Therefore, the Companycontinued to involve in cashing the banker’s acceptance. On December 31, 2023, thecashed but not mature banker’s acceptance was RMB 1,102,109,044.00 in total (RMB2,163,654,777.55 on December 31, 2022).
7. Advance payment
(1) Presentation of advance payment based on aging
| Aging | Ending balance | Ending balance of previous year | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1 year | 1,789,373,451.85 | 98.28 | 1,750,732,277.13 | 97.65 |
| 1-2 years | 19,255,479.29 | 1.06 | 23,433,483.12 | 1.31 |
| 2-3 years | 3,028,163.48 | 0.17 | 12,874,502.42 | 0.72 |
| Over three years | 8,837,381.11 | 0.49 | 5,656,584.18 | 0.32 |
| Within 1 year | 1,820,494,475.73 | 100.00 | 1,792,696,846.85 | 100.00 |
(2) Important advance payment with aging >1 year
At the end of the term, there is no important advance payment with aging >1 year inthe Company.
(3) Advance payment with top five ending balance collected by object of prepaymentThe top five ending amounts (totals by prepayment objects) of the Company’s advancepayments amounted to RMB 981,272,442.02, accounting for 53.90% in the totalbalance of prepayments at the year-end balance.
8. Other receivables
| Item | Ending balance | Ending balance of previous year |
| Interest receivable | 0.00 | 0.00 |
| Dividends receivable | 0.00 | 0.00 |
| Other receivables | 187,541,184.46 | 133,782,632.86 |
| Total | 187,541,184.46 | 133,782,632.86 |
(1) Other receivables
① Disclosure by aging
| Aging | Ending balance | Ending balance of previous year |
| Within 1 year | 157,253,512.38 | 85,330,016.44 |
| 1-2 years | 4,033,004.26 | 2,625,100.78 |
| 2-3 years | 1,390,154.45 | 18,718,506.81 |
| Over three years | 61,190,426.54 | 59,126,527.96 |
| Subtotal | 223,867,097.63 | 165,800,151.99 |
| Minus: Bad debt provision | 36,325,913.17 | 32,017,519.13 |
| Total | 187,541,184.46 | 133,782,632.86 |
② Classification based on nature of fund
| Nature of account | Ending balance | Ending balance of previous year |
| Receivables and payables such as advances from entities beyond the scope of consolidation | 27,184,746.69 | 27,054,550.51 |
| Combination of tax refunds receivable and other government subsidies | 15,897,035.30 | 18,364,333.51 |
| Portfolio of deposits and security | 119,507,155.21 | 62,664,839.19 |
| Employee loan and petty cash | 6,383,068.94 | 6,311,098.39 |
| Other groups | 54,895,091.49 | 51,405,330.39 |
| Subtotal | 223,867,097.63 | 165,800,151.99 |
| Minus: Bad debt provision | 36,325,913.17 | 32,017,519.13 |
| Total | 187,541,184.46 | 133,782,632.86 |
③ Accrual of bad debt reserves
| Bad debt provision | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss of the future twelve months | Expected credit loss over the lifetime (no credit impairment has occurred) | Expected credit loss over the lifetime (credit impairment occurred has occurred) | ||
| Balance at end of previous year | 5,350,148.44 | 421,325.60 | 26,246,045.09 | 32,017,519.13 |
| Book balance of other receivables at the end of the previous year: | ||||
| - Transferred to Stage 2 | 0.00 | -- | -- | 0.00 |
| - Transferred to Stage 3 | 0.00 | 0.00 | -- | 0.00 |
| - Transferred back to Stage 2 | -- | -- | 0.00 | 0.00 |
| - Transferred back to Stage 1 | -- | 0.00 | 0.00 | 0.00 |
| Provision in current period | 3,346,898.95 | 0.00 | 1,831,600.73 | 5,178,499.68 |
| Roll-back in current period | 483,910.04 | 379,625.60 | 6,570.00 | 870,105.64 |
| Write-off in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| Cancellation after verification in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| Other changes | 0.00 | 0.00 | 0.00 | 0.00 |
| Ending balance | 8,213,137.35 | 41,700.00 | 28,071,075.82 | 36,325,913.17 |
④ Situation of bad debt reserves
| Category | Ending balance of previous year | Amount of changes in current period | Ending balance | ||
| Provision | Amount recovered or written back | Write-off or Cancellation after Verification and Others | |||
| Receivables and payables such as advances from entities beyond the scope of consolidation | 811,636.50 | 234,545.39 | 230,891.53 | 0.00 | 815,290.36 |
| Portfolio of deposits and security | 3,454,215.52 | 2,957,791.00 | 407,183.46 | 0.00 | 6,004,823.06 |
| Employee loan and petty cash | 189,328.29 | 79,399.85 | 77,236.12 | 0.00 | 191,492.02 |
| Other groups | 27,562,338.82 | 1,906,763.44 | 154,794.53 | 0.00 | 29,314,307.73 |
| Total | 32,017,519.13 | 5,178,499.68 | 870,105.64 | 0.00 | 36,325,913.17 |
⑤ Other receivables with top five ending balance collected by debtor
| Name of organization | Nature of account | Ending balance | Aging | Proportions in the total other accounts receivable at the year ended (%) | Bad debt provision Ending balance | |
| Baiduri Bank Berhad | Margin | 60,183,999.39 | Within 1 year | 26.88 | 3,009,199.97 | |
| China (Guangxi) Pilot Free Trade Zone Qinzhou Port Area Investment Service Centre | Margin | 40,000,000.00 | Within 1 year | 17.87 | 2,000,000.00 | |
| Wang XX | Claim for indemnity | 1,719,275.62 | Within 1 year | 12.49 | 27,956,250.71 | |
| 26,236,975.09 | Over three years | |||||
| Fulida Group and Xinghui Chemical Fibre Group Co., Ltd. | Compensation | 2,253,072.35 | Within 1 year | 11.54 | 1,291,659.37 | |
| 23,580,115.13 | Over three years | |||||
| Tax Bureau of Xiaoshan District | Tax returns | 15,897,035.30 | Within 1 year | 7.10 | 0.00 | |
| Total | — | 169,870,472.88 | -- | 75.88 | 34,257,110.05 | |
Note: The relevant description on balance formation of the Company’s "otherreceivables - Wang" and full provision for bad debts at the end of current period can befound in Note XI. 1 (1).
⑥ Accounts receivable involving government grants
| Name of organization | Name of government grants | Ending balance | Aging at the end of the period | Time, amount and basis of estimated collection |
| Tax Bureau of Xiaoshan District | Value-added tax refund | 15,897,035.30 | Within 6 months | Before May, 2024 |
Note: As of the date of this financial report, RMB 11,428,235.30 has been recoveredfrom "VAT refunds".
9. Inventory
(1) Classification of inventory
| Item | Ending balance | ||
| Book balance | Inventory depreciation reserves/Impairment reserves for contract performance cost | Book value | |
| Materials in transit | 619,097,411.51 | 129,177.90 | 618,968,233.61 |
| Raw materials | 5,057,860,629.36 | 2,477,361.36 | 5,055,383,268.00 |
| Goods in process | 1,423,940,390.58 | 19,196,332.00 | 1,404,744,058.58 |
| Commodity stocks | 6,029,526,106.66 | 49,698,635.18 | 5,979,827,471.48 |
| Contract performance cost | 1,272,831.70 | 0.00 | 1,272,831.70 |
| Total | 13,131,697,369.81 | 71,501,506.44 | 13,060,195,863.37 |
(Continued)
| Item | Ending balance of previous year | ||
| Book balance | Inventory depreciation reserves/Impairment reserves for contract performance cost | Book value | |
| Materials in transit | 2,167,614,674.66 | 0.00 | 2,167,614,674.66 |
| Raw materials | 4,761,057,332.22 | 50,978,954.18 | 4,710,078,378.04 |
| Goods in process | 1,289,739,172.39 | 89,318,021.98 | 1,200,421,150.41 |
| Commodity stocks | 6,222,986,720.67 | 227,434,527.33 | 5,995,552,193.34 |
| Contract performance cost | 9,818,174.73 | 0.00 | 9,818,174.73 |
| Item | Ending balance of previous year | ||
| Book balance | Inventory depreciation reserves/Impairment reserves for contract performance cost | Book value | |
| Total | 14,451,216,074.67 | 367,731,503.49 | 14,083,484,571.18 |
(2) Inventory depreciation reserves
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | ||
| Provision | Others | Write-back or write-off | Others | |||
| Materials in transit | 0.00 | 129,177.90 | 0.00 | 0.00 | 0.00 | 129,177.90 |
| Raw materials | 50,978,954.18 | 2,477,361.36 | 0.00 | 51,245,167.63 | -266,213.45 | 2,477,361.36 |
| Goods in process | 89,318,021.98 | 19,105,849.83 | 0.00 | 90,358,235.15 | -1,130,695.34 | 19,196,332.00 |
| Commodity stocks | 227,434,527.33 | 49,550,120.68 | 0.00 | 228,280,266.03 | -994,253.20 | 49,698,635.18 |
| Total | 367,731,503.49 | 71,262,509.77 | 0.00 | 369,883,668.81 | -2,391,161.99 | 71,501,506.44 |
Note: The reason for the Company’s re-sell inventory depreciation reserves in currentperiod is the external sales of the inventory for which the inventory depreciationprovision has been made.
10. Other current assets
| Item | Ending balance | Ending balance of previous year |
| Unamortized expense | 149,807,903.33 | 180,672,280.12 |
| Input tax retained | 246,014,337.84 | 217,586,355.91 |
| Excess tax paid | 26,449,284.90 | 9,688,362.57 |
| Input tax to be certified | 324,194,945.70 | 313,718,497.07 |
| Principal and interest of entrusted loan | 787,149,197.50 | 989,433,904.99 |
| Others | 269,739.82 | 133,431.20 |
| Total | 1,533,885,409.09 | 1,711,232,831.86 |
11. Long-term receivable
Long-term accounts receivable
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment Reserve | Book value | Book balance | Impairment Reserve | Book value | |
| Financing lease | 137,312,857.42 | 0.00 | 137,312,857.42 | 172,869,347.67 | 0.00 | 172,869,347.67 |
| Wherein: Unrealized financing income | -50,417,221.27 | 0.00 | -50,417,221.27 | -66,418,901.96 | 0.00 | -66,418,901.96 |
| Long-term deposits | 3,674,423.03 | 0.00 | 3,674,423.03 | 3,613,154.11 | 0.00 | 3,613,154.11 |
| Minus: Portion due within one year | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 140,987,280.45 | 0.00 | 140,987,280.45 | 176,482,501.78 | 0.00 | 176,482,501.78 |
12. Long-term equity investments
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment Reserve | Book value | Book balance | Impairment Reserve | Book value | |
| Investments in joint ventures and associates | 13,669,254,123.61 | 0.00 | 13,669,254,123.61 | 12,831,505,320.53 | 0.00 | 12,831,505,320.53 |
Investments in joint ventures and associates
| Investee | Ending balance of previous year | Changes of increase or decrease in current period | ||||
| Additional investment | Negative investment | Investment profits and losses recognized under the equity method Investment profits and losses | Other comprehensive income adjustment | Changes in other equity | ||
| I. Joint ventures | ||||||
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 1,076,560,288.46 | 0.00 | 0.00 | 56,301,538.05 | 0.00 | 0.00 |
| Hainan Yisheng Petrochemical Co., Ltd. | 3,304,105,270.86 | 0.00 | 0.00 | 175,495,660.54 | -3,994,020.89 | 0.00 |
| Subtotal | 4,380,665,559.32 | 0.00 | 0.00 | 231,797,198.59 | -3,994,020.89 | 0.00 |
| II. Associated companies | ||||||
| Dalian Yisheng Investment Co., Ltd. | 2,026,108,173.51 | 0.00 | 0.00 | 23,229,152.72 | 1,347,331.43 | 0.00 |
| Investee | Ending balance of previous year | Changes of increase or decrease in current period | ||||
| Additional investment | Negative investment | Investment profits and losses recognized under the equity method Investment profits and losses | Other comprehensive income adjustment | Changes in other equity | ||
| ChinaZheshang Bank Co., Ltd. | 4,852,177,976.81 | 469,864,134.10 | 0.00 | 497,155,858.90 | 42,997,200.00 | -108,658.67 |
| Ningbo Jinhou Industry Investment Co., Ltd. | 14,254,625.24 | 0.00 | 0.00 | -98,622.42 | 0.00 | 0.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | 1,401,413,074.57 | 0.00 | 0.00 | -278,049,901.76 | -287,482.76 | 0.00 |
| Dongzhan Shipping Co., Ltd. | 156,885,911.08 | 0.00 | 0.00 | 10,165,363.70 | 825,799.57 | 0.00 |
| Subtotal | 8,450,839,761.21 | 469,864,134.10 | 0.00 | 252,401,851.14 | 44,882,848.24 | -108,658.67 |
| Total | 12,831,505,320.53 | 469,864,134.10 | 0.00 | 484,199,049.73 | 40,888,827.35 | -108,658.67 |
(Continued)
| Investee | Changes of increase or decrease in current period | Ending balance | Impairment reserves Ending balance | ||
| Announcement of release Cash dividend or profit | Provisions for impairment reserves | Others | |||
| I. Joint ventures | |||||
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 0.00 | 0.00 | 0.00 | 1,132,861,826.51 | 0.00 |
| Hainan Yisheng Petrochemical Co., Ltd. | 0.00 | 0.00 | 0.00 | 3,475,606,910.51 | 0.00 |
| Subtotal | 0.00 | 0.00 | 0.00 | 4,608,468,737.02 | 0.00 |
| II. Associated companies | |||||
| Dalian Yisheng Investment Co., Ltd. | 0.00 | 0.00 | 0.00 | 2,050,684,657.66 | 0.00 |
| ChinaZheshang Bank Co., Ltd. | 157,094,549.43 | 0.00 | 0.00 | 5,704,991,961.71 | 0.00 |
| Ningbo Jinhou Industry Investment Co., Ltd. | 0.00 | 0.00 | 0.00 | 14,156,002.82 | 0.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | 0.00 | 0.00 | 0.00 | 1,123,075,690.05 | 0.00 |
| Dongzhan Shipping Co., Ltd. | 0.00 | 0.00 | 0.00 | 167,877,074.35 | 0.00 |
| Investee | Changes of increase or decrease in current period | Ending balance | Impairment reserves Ending balance | ||
| Announcement of release Cash dividend or profit | Provisions for impairment reserves | Others | |||
| Subtotal | 157,094,549.43 | 0.00 | 0.00 | 9,060,785,386.59 | 0.00 |
| Total | 157,094,549.43 | 0.00 | 0.00 | 13,669,254,123.61 | 0.00 |
13. Other equity instrument investments
(1) Investment in other equity instruments
| Item | Ending balance | Ending balance of previous year |
| Zhejiang Hengchuang Advanced Functional Fibre Innovation Center Co., Ltd. | 600,000.00 | 600,000.00 |
| Jiangsu New Horizon Advanced Functional Fibre Innovation Center Co., Ltd. | 5,000,000.00 | 5,000,000.00 |
| Total | 5,600,000.00 | 5,600,000.00 |
14. Fixed assets
| Item | Ending balance | Ending balance of previous year |
| Fixed assets | 45,430,020,661.94 | 47,462,032,827.08 |
| Liquidation of fixed assets | 0.00 | 4,428,849.55 |
| Total | 45,430,020,661.94 | 47,466,461,676.63 |
(1) Fixed assets
① Information of fixed assets
| Item | Houses and buildings | Structures | Machinery equipment | Transportation equipment | Office facilities and others | Total |
| I. Original book value | ||||||
| 1. Ending balance (previous year) | 12,813,268,253.23 | 1,399,454,302.06 | 51,173,404,951.36 | 348,095,986.25 | 330,635,705.91 | 66,064,859,198.81 |
| 2. Increase in current period | 628,838,500.06 | 121,741,776.37 | 1,482,899,290.53 | 30,026,375.01 | 26,338,986.11 | 2,289,844,928.08 |
| (1) Acquisition | 42,000,744.06 | -9,289,997.33 | 22,835,176.49 | 7,412,796.46 | 7,968,173.39 | 70,926,893.07 |
| （2）Transfer from construction in progress | 466,137,930.91 | 110,645,472.22 | 1,129,603,596.51 | 20,980,339.70 | 17,270,956.02 | 1,744,638,295.36 |
| Item | Houses and buildings | Structures | Machinery equipment | Transportation equipment | Office facilities and others | Total |
| （3）Translation of foreign currency statements | 120,699,825.09 | 2,009.24 | 330,418,039.65 | 1,633,238.85 | 1,099,856.70 | 453,852,969.53 |
| （4）Others | 0.00 | 20,384,292.24 | 42,477.88 | 0.00 | 0.00 | 20,426,770.12 |
| 3、Decrease in current period | 296,927,477.26 | 10,876,195.75 | 1,467,543,762.70 | 9,229,051.59 | 20,310,963.48 | 1,804,887,450.78 |
| （1）Disposal or retirement | 5,818,853.36 | 583,799.01 | 124,612,947.41 | 4,899,755.36 | 861,769.06 | 136,777,124.20 |
| （2）Transfer to construction in progress | 0.00 | 0.00 | 882,985,801.72 | 0.00 | 0.00 | 882,985,801.72 |
| (3) Conversion of foreign currency statements | 0.00 | 0.00 | 0.00 | 0.00 | 5,168.98 | 5,168.98 |
| （4）Change in scope of consolidation | 259,087,577.64 | 10,292,396.74 | 458,956,369.11 | 4,329,296.23 | 19,434,623.76 | 752,100,263.48 |
| （5）Others | 32,021,046.26 | 0.00 | 988,644.46 | 0.00 | 9,401.68 | 33,019,092.40 |
| 4. Balance at the end of current year | 13,145,179,276.03 | 1,510,319,882.68 | 51,188,760,479.19 | 368,893,309.67 | 336,663,728.54 | 66,549,816,676.11 |
| II. Accumulated depreciation | ||||||
| 1. Ending balance (previous year) | 1,559,080,629.20 | 701,904,351.26 | 15,984,949,611.21 | 163,103,812.80 | 190,150,975.59 | 18,599,189,380.06 |
| 2. Increase in current period | 340,624,406.82 | 82,401,691.59 | 2,707,098,079.84 | 49,783,100.67 | 49,722,058.73 | 3,229,629,337.65 |
| (1) Provision | 332,308,198.68 | 81,464,885.84 | 2,673,042,540.17 | 48,839,729.07 | 48,969,274.20 | 3,184,624,627.96 |
| (2) (2) Conversion of foreign currency statements | 8,316,208.14 | 961.46 | 34,040,318.43 | 943,371.60 | 752,784.53 | 44,053,644.16 |
| （3）Others | 0.00 | 935,844.29 | 15,221.24 | 0.00 | 0.00 | 951,065.53 |
| 3、Decrease in current period | 55,420,621.66 | 4,904,614.29 | 626,480,374.51 | 8,290,940.10 | 13,926,152.98 | 709,022,703.54 |
| （1）Disposal or retirement | 3,229,713.76 | 435,273.57 | 73,287,657.09 | 4,829,450.86 | 740,604.36 | 82,522,699.64 |
| （2）Transfer to construction in progress | 0.00 | 0.00 | 350,182,352.56 | 0.00 | 0.00 | 350,182,352.56 |
| (3) Conversion of foreign currency statements | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| （4）Change in scope of consolidation | 51,255,063.61 | 4,469,340.72 | 203,010,364.86 | 3,461,489.24 | 13,185,548.62 | 275,381,807.05 |
| （5）Others | 935,844.29 | 0.00 | 0.00 | 0.00 | 0.00 | 935,844.29 |
| 4. Balance at the end of current year | 1,844,284,414.36 | 779,401,428.56 | 18,065,567,316.54 | 204,595,973.37 | 225,946,881.34 | 21,119,796,014.17 |
| III. Impairment reserves | ||||||
| 1. Ending balance (previous year) | 0.00 | 0.00 | 3,636,991.67 | 0.00 | 0.00 | 3,636,991.67 |
| 2. Increase in current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Provision | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decrease in current period | 0.00 | 0.00 | 3,636,991.67 | 0.00 | 0.00 | 3,636,991.67 |
| Item | Houses and buildings | Structures | Machinery equipment | Transportation equipment | Office facilities and others | Total |
| (1) Disposal or retirement | 0.00 | 0.00 | 3,636,991.67 | 0.00 | 0.00 | 3,636,991.67 |
| 4. Balance at the end of current year | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| IV. Book value | ||||||
| 1. Book value at the end of this year | 11,300,894,861.67 | 730,918,454.12 | 33,123,193,162.65 | 164,297,336.30 | 110,716,847.20 | 45,430,020,661.94 |
| 2. Book value at the end of the previous year | 11,254,187,624.03 | 697,549,950.80 | 35,184,818,348.48 | 184,992,173.45 | 140,484,730.32 | 47,462,032,827.08 |
Note: The original value of machinery and equipment of RMB882,985,801.72 andaccumulated depreciation of RMB350,182,352.56 were transferred to constructionmaterials in the statement of work-in-progress due to the adjustment of the planning ofthe area in which Hangzhou Yi Maizi is located, and its related relocatable chemicalfibre production equipment was transferred to the Company's subsidiary, HangzhouYitong New Materials Company Limited, which would be put into production on anopportune basis.
② Temporarily idle fixed assets
| Item | Original Book Value | Accumulated depreciation | Impairment reserves | Book value |
| Houses and buildings | 8,710,289.69 | 947,846.90 | 0.00 | 7,762,442.79 |
| Machinery equipment | 14,580,738.09 | 3,970,255.89 | 0.00 | 10,610,482.20 |
| Total | 23,291,027.78 | 4,918,102.79 | 0.00 | 18,372,924.99 |
③ Situation of fixed assets with uncompleted certificate of title
| Item | Book value | Reasons for failure to complete relevant affairs of property right certificate |
| Real estate of Fujian Yi Jin Chemical Fibre Co., Ltd. | 124,783,293.52 | In process |
| Real estate of Guangxi Hengyi New Material Co., Ltd | 11,297,949.33 | In process |
| Real estate of Haining Hengyi Thermal Power Co., Ltd. | 140,296,429.23 | In process |
| Real estate of Jiaxing Yipeng Chemical Fibre Co., Ltd. | 417,698,198.53 | In process |
| Real estate of Suqian Hengyuan Thermal Energy Co., Ltd. | 167,660,813.21 | In process |
| Real estate of Suqian Yida New Materials Co., Ltd. | 311,886,879.10 | In process |
| Real estate of Taicang Yifeng Chemical Fibre Co., Ltd. | 12,797,028.70 | Property obtained by auction, under transaction |
| Real estate of Zhejiang Shuangtu New Materials Co., Ltd. | 7,434,789.85 | Makeshift house |
(2) Liquidation of fixed assets
| Machinery equipment | Ending balance | Ending balance of previous year |
| Machinery equipment | 0.00 | 4,428,849.55 |
15. Construction in progress
| Item | Ending balance | Ending balance of previous year |
| Construction in progress | 4,005,782,015.72 | 3,608,062,223.99 |
| Engineering materials | 604,523,744.30 | 143,827,176.95 |
| Total | 4,610,305,760.02 | 3,751,889,400.94 |
(1) In-process construction
① Situation of in-process construction
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment Reserve | Book value | Book balance | Impairment reserves | Book value | |
| Phase II of the refining- petrochemical project in Brunei | 2,713,040,992.62 | 0.00 | 2,713,040,992.62 | 2,217,273,317.70 | 0.00 | 2,217,273,317.70 |
| Haining New Materials Construction Project | 94,804.30 | 0.00 | 94,804.30 | 49,503,959.30 | 0.00 | 49,503,959.30 |
| Suqian Yida Expansion Project (Phase II) | 14,143,692.44 | 0.00 | 14,143,692.44 | 521,514,887.05 | 0.00 | 521,514,887.05 |
| The project of centralized heating for Suqian Yida Project | 232,083,426.90 | 0.00 | 232,083,426.90 | 365,207,528.09 | 0.00 | 365,207,528.09 |
| Guangxi Jijin Project (Phase I) | 875,865,394.43 | 0.00 | 875,865,394.43 | 143,465,895.02 | 0.00 | 143,465,895.02 |
| The boiler project of Zhejiang | 0.00 | 0.00 | 0.00 | 77,784,628.37 | 0.00 | 77,784,628.37 |
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment Reserve | Book value | Book balance | Impairment reserves | Book value | |
| Shuangtu New Materials Co., Ltd. | ||||||
| Heat transfer oil boiler renovation project of Zhejiang Hengyi High- Tech Materials Co., Ltd. | 0.00 | 0.00 | 0.00 | 60,407,803.61 | 0.00 | 60,407,803.61 |
| Other projects | 170,553,705.03 | 0.00 | 170,553,705.03 | 172,904,204.85 | 0.00 | 172,904,204.85 |
| Total | 4,005,782,015.72 | 0.00 | 4,005,782,015.72 | 3,608,062,223.99 | 0.00 | 3,608,062,223.99 |
② Changes of major construction projects in progress in current period
| Item | Budget (RMB 10,000) | Ending balance of previous year | Increase in current period Amount | Amount of transferred into fixed assets in current period | Other decrease in current period | Ending balance |
| Phase II of the refining- petrochemical project in Brunei | $1,365,389.00 | 2,217,273,317.70 | 455,933,849.94 | 0.00 | -39,833,824.98 | 2,713,040,992.62 |
| Haining New Materials Construction Project | 892,500.00 | 49,503,959.30 | 99,731,117.63 | 149,140,272.63 | 0.00 | 94,804.30 |
| Suqian Yida Expansion Project (Phase II) | 385,000.00 | 521,514,887.05 | 451,809,220.82 | 959,180,415.43 | 0.00 | 14,143,692.44 |
| The project of centralized heating for Suqian Yida Project | 65,000.00 | 365,207,528.09 | 111,958,777.79 | 245,082,878.98 | 0.00 | 232,083,426.90 |
| Guangxi Jijin Project (Phase I) | 1,054,737.57 | 143,465,895.02 | 744,043,388.55 | 11,643,889.14 | 0.00 | 875,865,394.43 |
| The boiler project of Zhejiang Shuangtu New Materials Co., Ltd. | 8,850.00 | 77,784,628.37 | 22,246,577.78 | 100,031,206.15 | 0.00 | 0.00 |
| Heat transfer oil boiler renovation project of Zhejiang Hengyi High- Tech Materials Co., Ltd. | 9,100.00 | 60,407,803.61 | 32,116,193.63 | 92,523,997.24 | 0.00 | 0.00 |
| Other projects | -- | 172,904,204.85 | 184,800,371.37 | 187,035,635.79 | 115,235.40 | 170,553,705.03 |
| Total | -- | 3,608,062,223.99 | 2,102,639,497.51 | 1,744,638,295.36 | -39,718,589.58 | 4,005,782,015.72 |
(Continued)
| Project name | Proportion of project accumulated investment in budget (%) | Progress of Works (%) Project progress | Interest capitalization accumulative amount | Wherein: Interest for the current period Capitalized amount | Capitalization rate of interest in current period (%) | Sources of funds |
| Phase II of the refining- | 2.86 | 2.86% | 0.00 | 0.00 | -- | Self-raised funds |
| Project name | Proportion of project accumulated investment in budget (%) | Progress of Works (%) Project progress | Interest capitalization accumulative amount | Wherein: Interest for the current period Capitalized amount | Capitalization rate of interest in current period (%) | Sources of funds |
| petrochemical project in Brunei | ||||||
| Haining New Materials Construction Project | 103.88 | 99.50% | 344,624,923.13 | 0.00 | -- | Self-raised funds and loans Raised fund |
| Suqian Yida Expansion Project (Phase II) | 25.61 | 30.00% | 24,971,018.35 | 6,561,088.96 | 4.90 | Self-raised funds and loans Raised fund |
| The project of centralized heating for Suqian Yida Project | 101.38 | 95.00% | 0.00 | 0.00 | -- | Self-raised funds |
| Guangxi Jijin Project (Phase I) | 8.45 | 18.18% | 58,549,344.58 | 58,549,344.58 | 4.06 | Self-raised funds and loans Raised fund |
| The boiler project of Zhejiang Shuangtu New Materials Co., Ltd. | 113.03 | 100.00% | 0.00 | 0.00 | -- | Self-raised funds |
| Heat transfer oil boiler renovation project of Zhejiang Hengyi High- Tech Materials Co., Ltd. | 101.67 | 100.00% | 0.00 | 0.00 | -- | Self-raised funds |
| Other projects | -- | -- | 0.00 | 0.00 | -- | Self-raised funds |
| Total | -- | -- | 428,145,286.06 | 65,110,433.54 | -- | -- |
(2) Engineering materials
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment reserves | Book value | Book balance | Impairment reserves | Book value | |
| Special materials | 65,427,244.67 | 0.00 | 65,427,244.67 | 137,253,622.03 | 0.00 | 137,253,622.03 |
| Special equipment | 539,096,499.63 | 0.00 | 539,096,499.63 | 6,573,554.92 | 0.00 | 6,573,554.92 |
| Total | 604,523,744.30 | 0.00 | 604,523,744.30 | 143,827,176.95 | 0.00 | 143,827,176.95 |
16. Right-of-use assets
| Item | Houses and buildings | Machinery equipment | Land use right | Total |
| I. Original book value | ||||
| 1. Ending balance (previous year) | 67,427,680.52 | 0.00 | 414,971,815.78 | 482,399,496.30 |
| 2. Increase in current period | 18,178,771.20 | 0.00 | 7,036,753.21 | 25,215,524.41 |
| (1) Increase in rental income | 17,579,274.72 | 0.00 | 0.00 | 17,579,274.72 |
| (2) Conversion of foreign currency statements | 599,496.48 | 0.00 | 7,036,753.21 | 7,636,249.69 |
| 3. Decrease in current period | 13,394,193.34 | 0.00 | 0.00 | 13,394,193.34 |
| (1) Decrease due to contract expiration | 13,394,193.34 | 0.00 | 0.00 | 13,394,193.34 |
| (2) Conversion of foreign currency statements | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance at the end of current year | 72,212,258.38 | 0.00 | 422,008,568.99 | 494,220,827.37 |
| II. Accumulated depreciation | ||||
| 1. Ending balance (previous year) | 21,921,141.95 | 0.00 | 30,475,691.11 | 52,396,833.06 |
| 2. Increase in current period | 24,121,698.64 | 0.00 | 16,314,183.28 | 40,435,881.92 |
| (1) Provision | 23,803,098.53 | 0.00 | 15,721,790.14 | 39,524,888.67 |
| (2) Conversion of foreign currency statements | 318,600.11 | 0.00 | 592,393.14 | 910,993.25 |
| 3. Decrease in current period | 13,394,193.34 | 0.00 | 0.00 | 13,394,193.34 |
| (1) Decrease due to contract expiration | 13,394,193.34 | 0.00 | 0.00 | 13,394,193.34 |
| (2) Conversion of foreign currency statements | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance at the end of current year | 32,648,647.25 | 0.00 | 46,789,874.39 | 79,438,521.64 |
| III. Impairment reserves |
| Item | Houses and buildings | Machinery equipment | Land use right | Total |
| 1. Ending balance (previous year) | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Increase in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Provision | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decrease in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance at the end of current year | 0.00 | 0.00 | 0.00 | 0.00 |
| IV. Book value | ||||
| 1. Book value at the end of this year | 39,563,611.13 | 0.00 | 375,218,694.60 | 414,782,305.73 |
| 2. Book value at the end of the previous year | 45,506,538.57 | 0.00 | 384,496,124.67 | 430,002,663.24 |
17. Intangible assets
(1) Situation of intangible assets
| Item | Land use right | Patents and Licences | Mark | Software and others | Total |
| I. Original book value | |||||
| 1. Ending balance (previous year) | 2,898,636,499.71 | 659,022,102.02 | 19,740.00 | 170,590,110.17 | 3,728,268,451.90 |
| 2. Increase in current period | 11,485,652.09 | 5,852,100.03 | 0.00 | 14,532,932.91 | 31,870,685.03 |
| (1) Acquisition | 11,485,652.09 | 0.00 | 0.00 | 13,602,869.28 | 25,088,521.37 |
| (2) Internal R&D | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (3) Conversion of foreign currency statements | 0.00 | 5,852,100.03 | 0.00 | 930,063.63 | 6,782,163.66 |
| 3、Decrease in current period | 145,773,556.73 | 0.00 | 0.00 | 2,454,859.33 | 148,228,416.06 |
| （1）Disposal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| （2）Changes in the scope of business combinations | 145,773,556.73 | 0.00 | 0.00 | 2,412,381.45 | 148,185,938.18 |
| (3) Others | 0.00 | 0.00 | 0.00 | 42,477.88 | 42,477.88 |
| Item | Land use right | Patents and Licences | Mark | Software and others | Total |
| 4. Balance at the end of current year | 2,764,348,595.07 | 664,874,202.05 | 19,740.00 | 182,668,183.75 | 3,611,910,720.87 |
| II. Accumulated amortization | |||||
| 1. Ending balance (previous year) | 293,979,925.46 | 410,545,149.16 | 19,740.00 | 85,192,931.32 | 789,737,745.94 |
| 2. Increase in current period | 69,203,639.03 | 37,980,284.24 | 0.00 | 16,541,903.97 | 123,725,827.24 |
| （1）Provision | 69,203,639.03 | 36,024,788.91 | 0.00 | 16,212,016.72 | 121,440,444.66 |
| （2）Conversion of foreign currency statements | 0.00 | 1,955,495.33 | 0.00 | 329,887.25 | 2,285,382.58 |
| 3. Decrease in current period | 34,997,720.14 | 0.00 | 0.00 | 893,738.05 | 35,891,458.19 |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (2) Changes in the scope of business combinations | 34,997,720.14 | 0.00 | 0.00 | 893,738.05 | 35,891,458.19 |
| 4. Balance at the end of current year | 328,185,844.35 | 448,525,433.40 | 19,740.00 | 100,841,097.24 | 877,572,114.99 |
| III. Impairment reserves | |||||
| 1. Ending balance (previous year) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Increase in current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Provision | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decrease in current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance at the end of current year | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| IV. Book value | |||||
| 1. Book value at the end of this year | 2,436,162,750.72 | 216,348,768.65 | 0.00 | 81,827,086.51 | 2,734,338,605.88 |
| 2. Book value at the end of the previous year | 2,604,656,574.25 | 248,476,952.86 | 0.00 | 85,397,178.85 | 2,938,530,705.96 |
(2) Situation of intangible assets with limited ownership or use right
| Item | Book value at the end of the period | Amortization amount in current period | Reason for restriction |
| Land use right | 2,031,649,175.86 | 54,247,115.09 | Mortgage loan |
18. Development expenditure
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | ||
| Internal development expenditures | Others | Recognized as Intangible assets | Transferred to current profit and loss | |||
| Research and application development of bio-based PTT elastic shape memory fibre series | 3,002,503.92 | 434,913.72 | 0.00 | 0.00 | 0.00 | 3,437,417.64 |
| 3,000t/a caprolactam gas phase rearrangement and crystallization project | 18,340,465.12 | 27,043,337.48 | 0.00 | 0.00 | 0.00 | 45,383,802.60 |
| Development of differentiated new flame-retardant products | 38,579.16 | 0.00 | 0.00 | 0.00 | 38,579.16 | 0.00 |
| Total | 21,381,548.20 | 27,478,251.20 | 0.00 | 0.00 | 38,579.16 | 48,821,220.24 |
19. Goodwill
(1) Original book value of goodwill
| Name or formation of investee goodwill matters | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| Business combination | Disposal | |||
| Zhejiang Shuangtu New Material Co., Ltd. | 221,865,586.69 | 0.00 | 0.00 | 221,865,586.69 |
(2) Impairment test process of goodwill
In November 2018, with an amount of RMB 2,105 million, the Company purchased all
stocks of Zhejiang Shuangtu New Materials Co., Ltd., and amortized the merger pricesin accordance with relevant accounting standards. On the combination date, the fairvalue is RMB 1,883,134,400 for the acquiree’s net identifiable assets. As a result, anamount of RMB 221,865,600 goodwill is formed in the consolidated accountingstatement.
This year, the Company assessed the recoverable amount of goodwill and conductedimpairment tests on various asset groups related to goodwill. In the process of goodwillimpairment test, the Company determined the composition of the assets of the assetgroups related to the goodwill reflected in the Company’s consolidated financialstatements and their book value of RMB 1,750,023,000 based on the consolidatedfinancial statement as on December 31, 2023 and the assets and operating conditionsof the merged party Shuangtu. It is found after impairment test that the present value ofthe expected future cash flow of this goodwill and related asset group on December 31,2023 was RMB 1,856,000,000, and no impairment occurred. Details are as follows:
Currency unit: 10,000
| Item | Book number of consolidated statements |
| Fixed assets | 132,855.52 |
| Construction in progress | 555.77 |
| Intangible assets | 19,357.76 |
| Long-term unamortized expenses | 46.69 |
| Goodwill recognized in consolidated statements | 22,186.56 |
| Subtotal of book value of asset groups containing goodwill | 175,002.30 |
| Vale of goodwill not recognized as attributable to minority shareholders’ equity | 0.00 |
| Total adjusted book value of asset groups containing goodwill | 175,002.30 |
| Item | Book number of consolidated statements |
| Present value (recoverable amount) of the estimated future cash flow of the asset group | 185,600.00 |
Note: For the present value (recoverable amount) of the expected future cash flow ofthe asset groups above, the results of assessment set out in the HYZXPBZ [2024] No.A01-0022 Asset Appraisal Report issued by Beijing Huaya Zhengxin Assets AppraisalCo., Ltd. on April 12, 2024 was used.
The recoverable amount of the asset groups above is determined according to thepresent value of the expected future cash flow. Based on its current operating conditions,business characteristics and market supply & demand and upon an overall analysis andconsideration of various factors such as residual service life of main assets included inthe asset group, the acquirer is estimated to enter a stable period in 2028. Therefore, thepredictive period is determined from January 2024 to December 2028 (five years intotal), and the discount rate of 10.27% is adopted.Important assumptions for goodwill impairment test:
① Assumption of orderly transaction: Orderly transaction refers to the transaction thatrelated assets or liabilities have usual marketing activities within a period of time priorto the measurement date.
② Assumption of open market: It means that assets can be traded freely in the fullycompetitive market, and that its price depends on independent buyer’s and seller’s valuejudgment under certain market supply and demand conditions. It is an assumption aboutthe conditions of the target assets market and about the influence of assets underrelatively complete market conditions.
③ Going concern assumption: Assume no unforeseeable factor leading to a failure tocontinue operations, when the entrusted asset group is continuously operated inaccordance with the current situation, purpose, usage mode and management level onthe base date;
④ No significant change in the existing editions of applicable national laws ®ulations and macro-economic situation; No unforeseeable significant change inexternal economic environment (e.g. interest rate, exchange rate, tax base & rate andpolicy collection expenses);
⑤ Assume that the Company’s current business model can be continuously maintainedin the future, and predict the future cash flow of assets based on current asset conditions,excluding the prediction of the future cash flow related to restructuring or modificationthat will probably occur in the future and that has not been promised yet;
⑥ Assume that cash inflow and outflow of the asset group occur in the middle of theyear after the assessment base date.
⑦ Assume that the management of the acquired party after the assessment base date isresponsible, stable, and capable of assuming their positions.
20. Long-term deferred expenses
| Item | Ending balance of previous year | Increase in current period | Amortization amount in current period | Other decreases in amount | Ending balance |
| Renovation costs | 1,300,456.92 | 8,661,752.88 | 1,726,403.06 | -228.81 | 8,236,035.55 |
| Storage tank use right transfer fees | 614,316.50 | 0.00 | 147,435.96 | 0.00 | 466,880.54 |
| Catalyst | 434,858,060.60 | 116,821,613.13 | 116,167,502.89 | -7,377,113.76 | 442,889,284.60 |
| Others | 6,958,983.65 | 4,628,199.93 | 2,520,357.84 | -4.35 | 9,066,830.09 |
| Total | 443,731,817.67 | 130,111,565.94 | 120,561,699.75 | -7,377,346.92 | 460,659,030.78 |
21. Deferred income tax assets/ deferred income tax liabilities
(1) Details of deferred income tax assets
| Item | Ending balance | Ending balance of previous year | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Impairment loss on credit assets | 46,422,101.57 | 7,825,529.70 | 36,951,677.06 | 5,636,084.44 |
| Asset impairment reserves | 13,950,243.69 | 3,487,560.92 | 73,251,230.47 | 15,843,906.01 |
| Changes in fair value of held-for-trading financial assets | 16,480,122.16 | 4,120,030.54 | 28,824,109.33 | 7,206,027.34 |
| Accrued expenses | 819,949.97 | 145,104.74 | 159,529.55 | 23,929.43 |
| Deferred income | 51,550,425.74 | 9,438,555.06 | 91,704,353.43 | 15,346,671.75 |
| Deductible losses | 1,394,478,280.40 | 313,916,414.42 | 1,467,199,781.25 | 306,067,338.31 |
| Cash-flow hedging | 0.00 | 0.00 | 6,047,943.46 | 1,511,985.87 |
| Differences in right-of- use assets | 2,577,536.77 | 644,384.20 | 51,720.35 | 12,930.09 |
| Total | 1,526,278,660.30 | 339,577,579.58 | 1,704,190,344.90 | 351,648,873.24 |
(2) Details of deferred income tax liabilities
| Item | Ending balance | Ending balance of previous year | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Appreciation of assets appraisal for business merger not under the same control | 269,591,564.80 | 40,438,734.72 | 296,207,939.40 | 44,431,190.91 |
| Changes in fair value of held-for-trading financial assets | 24,503,635.04 | 4,663,526.26 | 25,596,501.91 | 4,572,763.08 |
| Deduction differences of fixed assets before one- off income tax | 165,154,726.26 | 34,841,693.13 | 131,540,806.43 | 30,811,846.42 |
| Differences in right-to-use assets | 3,127,960.70 | 781,990.18 | 0.00 | 0.00 |
| Unrealized profits arising from intra-group trading | 12,545,133.80 | 3,136,283.45 | 9,344,733.79 | 2,336,183.45 |
| Item | Ending balance | Ending balance of previous year | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Total | 474,923,020.60 | 83,862,227.74 | 462,689,981.53 | 82,151,983.86 |
(3) Details of unconfirmed deferred income tax assets
| Item | Ending balance | Ending balance of previous year |
| Deductible temporary difference | 200,772,191.45 | 166,691,372.86 |
| Deductible losses | 2,441,391,427.09 | 2,404,898,394.41 |
| Total | 2,642,163,618.54 | 2,571,589,767.27 |
(4) Deductible losses of unconfirmed deferred income tax assets will be mature in thefollowing years
| Year | Ending balance | Ending balance of previous year |
| 2023 | -- | 76,870,143.05 |
| 2024 | 112,798,534.47 | 145,795,018.28 |
| 2025 | 3,192,986.38 | 161,153,678.35 |
| 2026 | 466,167,211.51 | 506,572,258.86 |
| 2027 | 1,017,609,025.68 | 1,514,507,295.87 |
| 2028 and beyond | 841,623,669.05 | -- |
| Total | 2,441,391,427.09 | 2,404,898,394.41 |
22. Other non-current assets
| Item | Ending balance | Ending balance of previous year |
| Payment for long-term assets | 3,042,674,890.57 | 756,296,579.88 |
| Prepayment of dumping right transfer fees | 2,134,899.05 | 2,268,330.25 |
| Taxes for right-of-use assets | 4,801,825.00 | 512,002.80 |
| Others | 3,049,611,614.62 | 759,076,912.93 |
23. Short- term borrowing
(1) Classification of short-term loans
| Item | Ending balance | Ending balance of previous year |
| Pledge loan | 15,270,452,358.06 | 13,158,605,565.69 |
| Mortgage loan | 600,000,000.00 | 1,464,969,222.65 |
| Guarantee loan | 23,405,449,966.48 | 20,146,414,778.93 |
| Fiduciary loan | 1,745,634,031.66 | 3,018,789,487.46 |
| Loan interest | 100,721,912.66 | 87,054,283.36 |
| Total | 41,122,258,268.86 | 37,875,833,338.09 |
Note: For asset classes and amounts of mortgaged loans, please refer to Note V. 6. Fordetail category and amount of assets pledged for loan, please refer to Notes V (66).
24. Held-for-trading financial liabilities
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| Trading financial liabilities | 21,353,552.33 | 91,310,867.34 | 4,469,799.98 | 108,194,619.69 |
| Wherein: Exchangeable bonds issued | 0.00 | 0.00 | 0.00 | 0.00 |
| Derivative financial liabilities | 21,353,552.33 | 91,310,867.34 | 4,469,799.98 | 108,194,619.69 |
| Others | 0.00 | 0.00 | 0.00 | 0.00 |
| Refers to financial liabilities classified as at fair value through profit or loss | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 21,353,552.33 | 91,310,867.34 | 4,469,799.98 | 108,194,619.69 |
25. Derivative financial liabilities
| Item | Ending balance | Ending balance of previous year |
| Foreign exchange derivatives | 0.00 | 8,555,804.28 |
| Commodity derivatives | 0.00 | 33,056,054.03 |
| Total | 0.00 | 41,611,858.31 |
26. Notes payable
| Category | Ending balance | Ending balance of previous year |
| Commercial acceptance bills | 0.00 | 0.00 |
| Bank acceptance bills | 740,998,553.81 | 117,879,321.16 |
| Domestic letter of credit | 0.00 | 697,290,000.00 |
| Total | 740,998,553.81 | 815,169,321.16 |
27. Accounts payable
(1) Presentation of accounts payable
| Item | Ending balance | Ending balance of previous year |
| Within 1 year | 5,541,601,283.94 | 8,480,378,889.22 |
| 1-2 years | 225,665,423.99 | 651,432,866.93 |
| 2-3 years | 416,065,535.80 | 142,063,217.20 |
| Over three years | 378,791,124.86 | 494,603,002.86 |
| Total | 6,562,123,368.59 | 9,768,477,976.21 |
(2) Important accounts payable with > 1year aging
| Item | Ending balance | Reasons for outstanding or carry over |
| China Sinogy Electric Engineering Co., Ltd. | 111,593,237.00 | Warranty has not expired. |
| China Chemical Engineering Second Construction Corporation (Brunei Branch) | 102,865,245.83 | Warranty has not expired. |
| Nanjing Chemical Construction Co., Ltd. (Brunei Branch) | 93,402,273.86 | Warranty has not expired. |
| China National Chemical Engineering Third Construction Co., Ltd. (Brunei Branch) | 70,755,356.70 | Warranty has not expired. |
| CSCPE（B）SDN BHD | 59,799,887.71 | Warranty has not expired. |
| Total | 438,416,001.10 | -- |
28. Contract liabilities
(1) Situation of contract liabilities
| Item | Ending balance | Ending balance of previous year |
| Advance receipts for non-performance of contracts | 833,244,701.76 | 1,080,383,448.03 |
| Minus: Those included in other current liabilities (Note V.33) | 76,672,908.46 | 90,760,675.06 |
| Total | 756,571,793.30 | 989,622,772.97 |
(2) There were no significant changes in the book value in current period.
29. Payroll payable
(1) Presentation of payroll payable
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| I. Short-term remuneration | 162,292,803.90 | 2,473,176,072.16 | 2,467,401,075.57 | 168,067,800.49 |
| II. post-employment benefits - defined contribution plans | 28,994,231.17 | 120,244,892.33 | 139,887,725.74 | 9,351,397.76 |
| III. Termination benefits | 0.00 | 3,556,885.15 | 3,556,885.15 | 0.00 |
| IV. Other benefits due within one year | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 191,287,035.07 | 2,596,977,849.64 | 2,610,845,686.46 | 177,419,198.25 |
(2) Presentation of short-term salaries
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| 1. Wage, bonus, allowances and subsidies | 158,494,565.81 | 2,265,910,341.26 | 2,259,552,766.09 | 164,852,140.98 |
| 2. Employee welfare expenses | 119,631.64 | 82,082,911.11 | 82,100,626.23 | 101,916.52 |
| 3. Social insurance charges | 2,114,081.70 | 70,198,208.46 | 71,187,818.82 | 1,124,471.34 |
| Wherein: Medical insurance | 791,173.83 | 63,219,728.67 | 63,242,234.68 | 768,667.82 |
| Industrial injury insurance premiums | 1,322,907.87 | 6,145,798.67 | 7,112,903.02 | 355,803.52 |
| Birth insurance premiums | 0.00 | 832,681.12 | 832,681.12 | 0.00 |
| 4. Housing fund | 30,036.14 | 38,253,330.96 | 38,217,541.00 | 65,826.10 |
| 5. Labor union dues and personnel education fund | 1,534,488.61 | 16,731,280.37 | 16,342,323.43 | 1,923,445.55 |
| 6. Short-term compensated absences | 0.00 | 0.00 | 0.00 | 0.00 |
| 7. Short-term profit-sharing plan | 0.00 | 0.00 | 0.00 | 0.00 |
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| 8. Others | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 162,292,803.90 | 2,473,176,072.16 | 2,467,401,075.57 | 168,067,800.49 |
(3) Presentation of defined contribution plans
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| 1. Basic endowment insurance | 28,057,494.86 | 116,387,216.75 | 135,347,836.14 | 9,096,875.47 |
| 2. Unemployment insurance expenses | 936,736.31 | 3,857,675.58 | 4,539,889.60 | 254,522.29 |
| 3. Enterprise annuities | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 28,994,231.17 | 120,244,892.33 | 139,887,725.74 | 9,351,397.76 |
30. Tax payable
| Item | Ending balance | Ending balance of previous year |
| Value-added tax | 170,678,334.27 | 254,514,471.42 |
| Enterprise income tax | 35,357,064.36 | 36,531,077.86 |
| Urban maintenance and construction tax | 1,362,481.67 | 7,138,301.48 |
| Education surcharge | 690,626.52 | 3,098,068.34 |
| Land use tax | 23,073,288.28 | 12,211,062.04 |
| Property tax | 38,270,663.18 | 38,615,251.06 |
| Individual income tax | 1,734,026.33 | 1,559,102.94 |
| Stamp tax | 34,122,581.48 | 33,277,197.35 |
| Local education surcharge | 460,417.69 | 2,065,378.90 |
| Disabled security fund | 611,922.97 | 104,544.00 |
| Others | 359,963.56 | 196,274.22 |
| Total | 306,721,370.31 | 389,310,729.61 |
31. Other payables
| Item | Ending balance | Ending balance of previous year |
| Interests payable | 0.00 | 0.00 |
| Dividends payable | 0.00 | 0.00 |
| Other payables | 188,374,004.43 | 235,619,327.94 |
| Total | 188,374,004.43 | 235,619,327.94 |
(1) Other payables
① Listed by nature of amount
| Item | Ending balance | Ending balance of previous year |
| Receivables and payables | 22,826,305.18 | 11,926,223.68 |
| Deposit and security fund | 115,320,416.26 | 169,136,880.99 |
| Unliquidated expense funds | 23,377,964.42 | 30,272,834.48 |
| Agency fund | 16,179,087.78 | 15,407,171.39 |
| Others | 10,670,230.79 | 8,876,217.40 |
| Total | 188,374,004.43 | 235,619,327.94 |
② Listed by aging
| Item | Ending balance | Ending balance of previous year |
| Within 1 year | 132,424,825.33 | 175,682,069.17 |
| 1-2 years | 14,474,680.39 | 31,986,148.62 |
| 2-3 years | 22,285,643.69 | 10,759,047.41 |
| Over three years | 19,188,855.02 | 17,192,062.74 |
| Total | 188,374,004.43 | 235,619,327.94 |
③ Significant accounts payable with aging exceeding 1 year
| Item | Ending balance | Reasons for outstanding or carry over |
| Hangzhou Huifeng Chemical Fibre Co., Ltd. | 11,733,346.48 | Deposit |
| Employee stock ownership | 3,097,780.33 | Incomplete settlement |
| Yousheng Village, Yaqian Town, Xiaoshan City | 2,136,825.00 | Incomplete settlement |
| Shandong Antai Construction Co. | 1,601,960.00 | Margin |
| Zhejiang Hengyang Logistics Co. | 1,000,000.00 | Margin |
| Total | 19,569,911.81 | --- |
32. Non-current liabilities due within one year
| Item | Ending balance | Ending balance of previous year |
| Long-term loans and interests mature within one year (Notes V. 34) | 4,916,491,740.40 | 5,278,621,966.80 |
| Bonds payable and interests mature within one year (Notes V. 35) | 10,092,304.09 | 6,828,015.61 |
| Lease liabilities mature within one year (Notes V. 36) | 11,080,739.86 | 12,747,561.17 |
| Long-term payables and interests mature within one year (Notes V5. 37) | 872,044,031.44 | 1,235,137,137.26 |
| Total | 5,809,708,815.79 | 6,533,334,680.84 |
33. Other current liabilities
| Item | Ending balance | Ending balance of previous year |
| Taxes of items for write-off | 76,672,908.46 | 90,760,675.06 |
34. Long-term borrowings
| Item | Ending balance | Ending balance of previous year |
| Pledge loan | 116,793,723.00 | 128,357,577.99 |
| Mortgage loan | 10,974,343,200.55 | 12,774,621,309.20 |
| Guarantee loan | 8,496,751,227.48 | 8,343,813,035.68 |
| Fiduciary loan | 0.00 | 75,000,000.00 |
| Interests payable | 68,045,453.29 | 63,970,080.28 |
| Minus: Long-term loans and interests due within one year (Notes V, 32) | 4,916,491,740.40 | 5,278,621,966.80 |
| Total | 14,739,441,863.92 | 16,107,140,036.35 |
For asset classes and amounts of mortgaged loans, please refer to Note V. 66.For detail category and amount of assets pledged for loan, please refer to Notes V (66).
35. Bonds payable
(1) Bonds payable
| Item | Ending balance | Ending balance of previous year |
| Corporate bonds | 4,278,805,701.33 | 4,061,538,995.85 |
(2) Increase/decrease in bonds payable (excluding other financial instruments dividedinto financial liabilities, such as preferred stock and perpetual bond)
| Bond name | Nominal Value | Date of issue | Bond Deadline | Issue Amount | Ending balance of previous year |
| Corporate bonds (20Hengyi01) | 1,000,000,000.00 | 2020-03-13 | 3 years | 995,500,000.00 | 848,170.74 |
| Hengyi Convertible Bond 127022 | 2,000,000,000.00 | 2020-10-16 | 6 years | 1,508,831,199.68 | 1,705,891,393.84 |
| Hengyi Convertible Bond 127067 | 3,000,000,000.00 | 2022-07-21 | 6 years | 2,303,101,412.70 | 2,361,627,446.88 |
| Subtotal | 6,000,000,000.00 | -- | -- | 4,807,432,612.38 | 4,068,367,011.46 |
| Bond name | Nominal Value | Date of issue | Bond Deadline | Issue Amount | Ending balance of previous year |
| Minus: Partial year-end balance due within one year (Note V. 32) | -- | -- | -- | -- | 6,828,015.61 |
| Total | 6,000,000,000.00 | -- | -- | 4,807,432,612.38 | 4,061,538,995.85 |
(Continued)
| Bond name | Issuance in current period | Accrued interest at face value | Discounted amortization | Repayment or stock conversion in current period | Interest paid in current period | Ending balance |
| Corporate bonds (20Hengyi01) | 0.00 | 7,434.26 | 0.00 | 811,000.00 | 44,605.00 | 0.00 |
| Hengyi Convertible Bond 127022 | 0.00 | 14,903,446.07 | -87,872,188.76 | 12,000.00 | 11,998,909.20 | 1,796,656,119.47 |
| Hengyi Convertible Bond 127067 | 0.00 | 7,207,515.15 | -129,618,116.72 | 211,600.00 | 5,999,592.80 | 2,492,241,885.95 |
| Subtotal | 0.00 | 22,118,395.48 | -217,490,305.48 | 1,034,600.00 | 18,043,107.00 | 4,288,898,005.42 |
| Minus: Partial year-end balance due within one year (Note V. 32) | -- | -- | -- | -- | -- | 10,092,304.09 |
| Total | 0.00 | 22,118,395.48 | -217,490,305.48 | 1,034,600.00 | 18,043,107.00 | 4,278,805,701.33 |
36. Lease liabilities
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | ||
| New Lease | Interest for the current period | Others | ||||
| Land use right | 426,757,376.88 | 0.00 | 0.00 | 89,396.16 | -18,293,380.23 | 445,140,153.27 |
| Buildings | 17,275,562.58 | 17,753,344.90 | -94,455.23 | 7,401,295.30 | 27,231,364.46 | 15,104,383.09 |
| Minus: Lease liabilities due within one year (Note V. 32.) | 12,747,561.17 | -- | -- | -- | -- | 11,080,739.86 |
| Total | 431,285,378.29 | 17,753,344.90 | -94,455.23 | 7,490,691.46 | 8,937,984.23 | 449,163,796.50 |
37. Long-term payables
| Item | Ending balance | Ending balance of previous year |
| Long-term payables | 464,759,585.87 | 1,433,381,038.10 |
| Special payables | 0.00 | 0.00 |
| Total | 464,759,585.87 | 1,433,381,038.10 |
(1) Long-term payables
| Item | Ending balance | Ending balance of previous year |
| Financing lease payable | 1,336,803,617.31 | 2,668,518,175.36 |
| Minus: Partial balance due within one year (Note V. 32) | 872,044,031.44 | 1,235,137,137.26 |
| Total | 464,759,585.87 | 1,433,381,038.10 |
38. Estimated liabilities
| Item | Ending balance of previous year | Ending balance | Reason |
| Pending action | 360,508.08 | 819,949.97 | See Notes XI, 1 for detail. |
39. Deferred income
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | Reason |
| Government grants | 231,197,027.42 | 57,184,900.00 | 71,658,000.79 | 216,723,926.63 | Assets-related |
| Government grants | 7,216,080.63 | 2,064,926.00 | 2,282,704.88 | 6,998,301.75 | Income-related |
| Total | 238,413,108.05 | 59,249,826.00 | 73,940,705.67 | 223,722,228.38 |
Items involving governmental subsidies:
| Subsidized Items | Ending balance of previous year | Number of new subsidies for the current period | Amount included in non- operating income in current period | Amount included in other income in current period | Other changes | Ending balance | ssets- related/ Income- related |
| Development, modification and corresponding industrialization projects | 7,216,080.63 | 2,064,926.00 | 0.00 | 2,282,704.88 | 0.00 | 6,998,301.75 | |
| Special rewards for significant industry projects | 36,786,793.07 | 500,000.00 | 0.00 | 2,140,348.68 | 0.00 | 35,146,444.39 | Income- related |
| Subsidies for boiler cleaner transformation | 8,583,313.17 | 0.00 | 0.00 | 1,560,602.39 | 0.00 | 7,022,710.78 | Assets- related |
| Subsidies for automation projects | 4,843,879.45 | 0.00 | 0.00 | 565,749.07 | 0.00 | 4,278,130.38 | Assets- related |
| Functional fibre technological transformation projects | 40,238,631.91 | 39,235,200.00 | 0.00 | 23,745,697.35 | 6,933,666.18 | 48,794,468.38 | Assets- related |
| Technological transformation projects in manufacturing enterprises | 40,931,703.78 | 12,548,100.00 | 0.00 | 29,888,745.99 | 2,182,621.07 | 21,408,436.72 | |
| Special equipment subsidies | 5,645,161.29 | 4,701,600.00 | 0.00 | 1,113,650.28 | 0.00 | 9,233,111.01 | Assets- related |
| Industrial robot projects | 1,035,694.78 | 0.00 | 0.00 | 672,673.80 | 363,020.98 | 0.00 | Assets- related |
| Internet digital factory projects | 259,308.34 | 0.00 | 0.00 | 167,198.98 | 92,109.36 | 0.00 | |
| Land compensation | 92,500,000.00 | 0.00 | 0.00 | 2,000,000.00 | 0.00 | 90,500,000.00 | Assets- related |
| Others | 372,541.63 | 200,000.00 | 0.00 | 105,250.00 | 126,666.66 | 340,624.97 | Assets- related |
| Total | 238,413,108.05 | 59,249,826.00 | 0.00 | 64,242,621.42 | 9,698,084.25 | 223,722,228.38 | Assets- related |
40. Share capital
| Item | Ending balance of previous year | Increase/decrease in current period (+, -) | Ending balance | ||||
| Issue of new shares | Bonus shares | Capital reserve converted into share capital | Others | Subtotal | |||
| Sum of shares | 3,666,280,806.00 | 0.00 | 0.00 | 0.00 | 21,219.00 | 21,219.00 | 3,666,302,025.00 |
Note: The conversion period of "Heng Yi Convertible Bonds" (bond code: 127022) isfrom 22 April 2021 to 15 October 2026, and the conversion period of "Heng YiConvertible 2" (bond code: 127067) is from 30 January 2023 to 20 July 2028. InFY2023, a total of 120 "Heng Yi Convertible Bonds" will be converted into a total of
1,084 shares of "Heng Yi Petrochemical Company"; and the total number of 2,116"Heng Yi Conversion 2" shares was converted into 20,135 "Heng Yi Petrochemical"shares. The Company's share capital was increased by RMB 21,219.00, and the "capitalsurplus - capital premium" was increased by RMB 192,596.12 at the same time.
41. Other equity instruments
| Outstanding Financial Instruments | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | ||||
| Quantity | Book value | Quantity | Book value | Quantity | Book value | Quantity | Book value | |
| Equity part of convertible corporate bonds | 49,998,272 | 1,159,082,382.38 | 0.00 | 0.00 | 2,236 | 50,612.09 | 49,996,036 | 1,159,031,770.29 |
Note: For the equity part of convertible corporate bonds decreased in current period,please refer to Note V. 40.
42. Capital surplus
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| Capital premiums | 11,351,506,628.30 | 192,596.12 | 86,407.31 | 11,351,612,817.11 |
| Other capital reserves | 148,432,210.71 | 1,909,527.00 | 87,424,269.34 | 62,917,468.37 |
| Capital reserves generated by simulation of shareholding structure and quantity | -2,329,301,104.61 | 0.00 | 0.00 | -2,329,301,104.61 |
| Total | 9,170,637,734.40 | 2,102,123.12 | 87,510,676.65 | 9,085,229,180.87 |
Note 1: An amount of RMB192,596.12 is increased for capital reserves - capitalpremiums. Please refer to Note V. 40 for details.Note 2: In current period, capital reserves - capital premiums are decreased by anamount of RMB 86,407.31, due to the reduction in commission charges resulted fromstock repurchase.
Note 3: The increase of RMB1,909,527.00 in capital surplus-other during the periodwas due to the addition of new customers involved in lawsuits between Shuangtu NewMaterial and the customers before it was acquired by the Company, which increasedthe loss of Shuangtu New Material and was recognised in the consolidated statement ofincome as capital surplus.Note 4: Capital surplus-other decreased by RMB 87,424,269.34 during the period.Among them, the Company decreased by RMB 108,658.67 due to the share placementof an associate, Zheshang Bank Co., Ltd., which was accounted for under the equitymethod, and reduced capital surplus by RMB 87,315,610.67 in the consolidatedstatement of accounts due to the purchase of equity interests in subsidiaries owned byminority shareholders of the subsidiaries.
43. Treasury stock
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| Stock repurchases via centralized bidding | 1,483,566,737.98 | 885,375,228.94 | 0.00 | 2,368,941,966.92 |
Note: In this reporting period, the Company has increased an amount of RMB885,375,228.94 treasury stock by means of centralized bidding.
44. Other comprehensive income
| Item | At end of the previous year Balance | Amount incurred in current period | Ending Balance | ||||
| Amount incurred before income tax for the current period | Minus: Recorded into other comprehensive income in the earlier stage and rolled into current profits and losses | Minus: Income tax expenses | Assigned to Parent Company after tax | Assigned to minority shareholders after tax | |||
| I. Other | 0.00 | 790,515.39 | 0.00 | 0.00 | 790,515.39 | 0.00 | 790,515.39 |
| Item | At end of the previous year Balance | Amount incurred in current period | Ending Balance | ||||
| Amount incurred before income tax for the current period | Minus: Recorded into other comprehensive income in the earlier stage and rolled into current profits and losses | Minus: Income tax expenses | Assigned to Parent Company after tax | Assigned to minority shareholders after tax | |||
| comprehensive income that cannot be re- classified into profit and loss | |||||||
| Wherein: Re- measurement profits or losses of a defined benefit plan | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Other comprehensive income cannot be recognized in profit and loss by equity law | 0.00 | 790,515.39 | 0.00 | 0.00 | 790,515.39 | 0.00 | 790,515.39 |
| II. Other comprehensive income to be re- classified into profit and loss | 380,920,744.19 | 268,844,549.37 | -32,027,065.93 | 0.00 | 299,021,100.60 | 1,850,514.70 | 679,941,844.79 |
| Wherein: Other comprehensive income can be recognized in profit and loss under equity method | 123,242,202.91 | 40,098,311.96 | 0.00 | 0.00 | 41,753,641.58 | -1,655,329.62 | 164,995,844.49 |
| Item | At end of the previous year Balance | Amount incurred in current period | Ending Balance | ||||
| Amount incurred before income tax for the current period | Minus: Recorded into other comprehensive income in the earlier stage and rolled into current profits and losses | Minus: Income tax expenses | Assigned to Parent Company after tax | Assigned to minority shareholders after tax | |||
| Effective part of cash-flow hedge profits and losses | -22,418,946.16 | 0.00 | -32,027,065.93 | 0.00 | 22,418,946.16 | 9,608,119.77 | 0.00 |
| Exchange differences from translation of financial statements | 280,097,487.44 | 228,746,237.41 | 0.00 | 0.00 | 234,848,512.86 | -6,102,275.45 | 514,946,000.30 |
| Total (other comprehensive income) | 380,920,744.19 | 269,635,064.76 | -32,027,065.93 | 0.00 | 299,811,615.99 | 1,850,514.70 | 680,732,360.18 |
45. Appropriative reserve
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| Production safety expenses | 0.00 | 56,840,830.32 | 56,840,830.32 | 0.00 |
Note: Both increase and decrease in special reserves in this reporting period arecalculated and utilized production safety expenses.
46. Earned surplus
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| Legal surplus | 781,701,619.18 | 25,435,281.81 | 0.00 | 807,136,900.99 |
Note: In accordance with the Company Law and the Articles of Association of theCompany, the Company shall withdraw legal surplus by 10% of its net profits. Legalsurplus will not be withdrawn any more, when its accumulated amount reaches over50% of the Company’s registered capital.
47. Undistributed profit
| Item | Current Period | Prior Period |
| Undistributed profits at the end of previous year before adjustment | 11,771,637,510.92 | 13,623,601,273.27 |
| Total amount of undistributed profits at the end of the previous year after adjustment (+/-) | 0.00 | -29,714,854.19 |
| Undistributed profits at the end of the previous year after adjustment | 11,771,637,510.92 | 13,593,886,419.08 |
| Plus: Net profits assigned to the parent company’s shareholders in current period | 435,458,340.57 | -1,079,547,699.72 |
| Minus: Legal surplus withdrawal | 25,435,281.81 | 29,805,951.31 |
| Withdrawal of any legal surplus | 0.00 | 0.00 |
| Withdrawal of common risk reserves | 0.00 | 0.00 |
| Common stock dividends payable | 0.00 | 714,984,128.60 |
| Dividends transferred to capital | 0.00 | 0.00 |
| Plus: Others | 0.00 | 2,088,871.47 |
| Undistributed profits at the end of the period | 12,181,660,569.68 | 11,771,637,510.92 |
48. Operating income and operating cost
| Item | Amount incurred in current period | Amount incurred in previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Main business | 134,516,059,362.49 | 129,629,554,889.25 | 151,033,877,489.07 | 147,658,124,585.52 |
| Other businesses | 1,632,054,719.85 | 1,400,678,793.63 | 1,016,397,455.57 | 857,385,936.86 |
| Total | 136,148,114,082.34 | 131,030,233,682.88 | 152,050,274,944.64 | 148,515,510,522.38 |
49. Tax and associate charge
| Item | Amount incurred in current period | Amount incurred in previous period |
| Consumption tax | 3,035,691.33 | 2,281,758.47 |
| Urban maintenance and construction tax | 22,513,751.09 | 34,209,769.24 |
| Education surcharge | 10,382,113.28 | 14,778,808.23 |
| Property tax | 45,739,257.62 | 45,934,982.23 |
| Land use tax | 30,084,436.29 | 20,656,922.96 |
| Vehicle and vessel use tax | 115,925.99 | 132,337.88 |
| Stamp tax | 129,021,455.41 | 96,476,768.46 |
| Local education surcharge | 6,921,408.85 | 9,852,512.83 |
| Water conservancy construction funds | 0.00 | 107,209.29 |
| Others | 1,727,250.02 | 2,062,042.91 |
| Total | 249,541,289.88 | 226,493,112.50 |
Note: For detail payment standard for various taxes and surcharges, please refer to NoteIV. “Taxes”.
50. Selling expenses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Import & export charges | 78,314,347.37 | 80,703,510.03 |
| Staff Salaries | 98,266,014.49 | 105,863,328.67 |
| Insurance | 14,105,980.26 | 18,242,399.53 |
| Item | Amount incurred in current period | Amount incurred in previous period |
| Storage charges | 6,848,857.07 | 6,890,273.57 |
| Business entertainment | 1,796,525.52 | 1,386,492.92 |
| Travel expenses | 4,985,577.18 | 3,588,383.56 |
| Vehicle expenses | 1,510,011.64 | 1,704,177.86 |
| Rental expenses | 2,800.00 | 1,024,141.89 |
| Office expenses | 1,262,715.92 | 1,098,049.00 |
| Handling charges | 5,786,721.28 | 3,629,779.27 |
| Agency fees | 5,249,744.25 | 1,073,079.70 |
| Others | 11,154,994.11 | 22,240,133.81 |
| Total | 229,284,289.09 | 247,443,749.81 |
51. Administration expenses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Staff Salaries | 403,725,775.77 | 380,611,106.77 |
| Intangible assets amortization cost | 45,052,660.96 | 44,717,399.78 |
| Fixed assets depreciation expenses | 265,706,471.75 | 264,912,054.87 |
| Business entertainment | 8,422,226.85 | 7,534,601.57 |
| Vehicle expenses | 13,767,451.92 | 14,199,552.08 |
| Environmental expenditure | 13,995,242.27 | 14,099,876.20 |
| Office expenses | 10,691,860.18 | 12,719,117.63 |
| Agency fees | 22,896,767.26 | 23,525,506.07 |
| Travel expenses | 30,398,870.01 | 9,618,696.43 |
| Rental expenses | 13,972,415.31 | 31,059,048.43 |
| Repair charges | 416,808,822.16 | 104,455,800.29 |
| Premiums for property insurance | 28,510,503.37 | 30,266,565.27 |
| Transportation and storage fees | 59,767,369.80 | 64,342,751.65 |
| Operating licence fee | 11,908,662.76 | 10,376,076.19 |
| Others | 88,602,835.36 | 72,548,830.47 |
| Item | Amount incurred in current period | Amount incurred in previous period |
| Total | 1,434,227,935.73 | 1,084,986,983.70 |
52. R&D expenses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Direct investment cost | 411,739,313.04 | 422,987,682.39 |
| Staff Salaries | 148,843,373.25 | 138,713,533.15 |
| Depreciation expenses | 64,325,403.87 | 45,568,357.41 |
| Technical development cost | 17,636,809.83 | 20,972,568.77 |
| Other expenses | 73,774,627.67 | 40,463,886.85 |
| Total | 716,319,527.66 | 668,706,028.57 |
53. Financial expenses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Interest expense | 3,306,322,914.56 | 2,682,684,624.12 |
| Minus: Interest income | 217,648,751.41 | 193,688,404.54 |
| Profit or loss on exchange | -140,346,056.78 | -66,292,681.05 |
| Bank charges | 295,574,639.10 | 364,993,956.67 |
| Total | 3,243,902,745.47 | 2,787,697,495.20 |
54. Other incomes
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Governmental subsidies related to daily enterprise acti | 336,311,581.30 | 234,911,502.58 | 113,982,377.05 |
| Return of withhold individual income tax commission charges | 649,467.48 | 1,330,974.63 | 0.00 |
| Total | 336,961,048.78 | 236,242,477.21 | 113,982,377.05 |
Governmental subsidies related to daily enterprise activities are described in detail asfollows:
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period | Assets-related/ Income-related |
| Assets-related subsidies | 61,959,916.54 | 17,382,373.75 | 42,444,758.19 | Income-related |
| Income-related deferred income | 2,282,704.88 | 1,982,904.60 | 2,282,704.88 | Income-related |
| “Head Goose” policy support rewards | 0.00 | 7,657,500.00 | 0.00 | Income-related |
| Rewards for high-tech enterprise | 530,000.00 | 300,000.00 | 530,000.00 | Income-related |
| Environmental protection subsidies | 613,680.00 | 121,900.00 | 613,680.00 | Income-related |
| Subsidies for scientific and technological innovation | 6,499,432.04 | 66,800,000.00 | 6,499,432.04 | Income-related |
| Incentives for export operations | 10,539,924.52 | 11,386,675.00 | 0.00 | Income-related |
| Tax refund | 59,934,431.35 | 58,170,985.10 | 3,779,601.35 | Income-related |
| Employment-related subsidies | 5,599,282.77 | 14,697,824.54 | 5,599,282.77 | Income-related |
| Policy support funds | 36,468,100.00 | -7,673,592.73 | 36,468,100.00 | Income-related |
| Intelligent manufacturing funds | 61,100.00 | 1,100,000.00 | 61,100.00 | Income-related |
| Special funds for promotion of industrial structure adjustment | 0.00 | 34,050,000.00 | 0.00 | Income-related |
| Rewards for manufacturing enterprises | 14,713,800.00 | 1,470,000.00 | 14,713,800.00 | Income-related |
| Working capital subsidy | 0.00 | 15,575,600.00 | 0.00 | Income-related |
| Investment promotion | 0.00 | 1,500,000.00 | 0.00 | Income-related |
| Advanced manufacturing input VAT credits and deductions | 136,119,291.38 | 0.00 | 0.00 | Income-related |
| Others | 989,917.82 | 10,389,332.32 | 989,917.82 | Income-related |
| Total | 336,311,581.30 | 234,911,502.58 | 113,982,377.05 | -- |
Note: For government subsidies related to assets and deferred income related to income,
please refer to Note V. 39. Deferred Income for details.
55. Investment income
| Item | Amount incurred in current period | Amount incurred in previous period |
| Income from long-term equity investment checked with equity method | 490,890,359.42 | 823,499,882.13 |
| Investment income generated by disposal of long-term equity investment | 448,973,414.86 | 159,238,486.18 |
| Investment income generated by disposal of held-for-trading financial assets | 45,612,962.20 | -237,478,291.99 |
| Total | 985,476,736.48 | 745,260,076.32 |
56. Income from fair value changes
| Source of income from fair value changes | Amount incurred in current period | Amount incurred in previous period |
| Financial assets measured at fair value through profit and loss | 35,044,790.52 | -165,711,256.97 |
| Wherein: Income from fair value change generated by derivative financial instruments | 35,044,790.52 | -165,711,256.97 |
| Financial liabilities measured by fair value and whose changes included in current profits and losses | -82,757,620.02 | -41,547,937.87 |
| Hedging business | 2,591,630.82 | -4,177,289.52 |
| Total | -45,121,198.68 | -211,436,484.36 |
57. Credit impairment losses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Bad debt loss on receivables | -7,103,558.34 | -454,388.44 |
| Bad debt loss on other receivables | -4,323,174.58 | -647,397.13 |
| Total | -11,426,732.92 | -1,101,785.57 |
58. Assets impairment loss
| Item | Amount incurred in current period | Amount incurred in previous period |
| Loss on inventory depreciation | -71,262,509.77 | -361,681,414.01 |
| Loss on impairment of fixed assets | 0.00 | -6,996,027.02 |
| Total | -71,262,509.77 | -368,677,441.03 |
59. Income from assets disposal
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Profits or losses from disposal of fixed assets | -9,399,633.84 | -23,661,125.27 | -9,399,633.84 |
| Gains or losses from disposal of intangible assets | 56,843.35 | 0.00 | 56,843.35 |
| Total | -9,342,790.49 | -23,661,125.27 | -9,342,790.49 |
60. Non-operating income
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Gains from damage and scrapping of non-current assets | 524,905.44 | 0.00 | 524,905.44 |
| Wherein: Fixed assets | 524,905.44 | 0.00 | 524,905.44 |
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Governmental subsidies irrelevant to daily enterprise activities | 373,507.13 | 710,041.57 | 373,507.13 |
| Income from indemnities and fines | 12,920,943.66 | 6,654,298.45 | 12,920,943.66 |
| Non-payable current accounts | 202,885.35 | 1,331,685.07 | 202,885.35 |
| The cost of acquisition of an investment in an associate is less than the gain arising from the fair value of the identifiable net assets of the investee at the time the investment is acquired | 16,534,148.40 | 0.00 | 16,534,148.40 |
| Others | 5,364,119.48 | 6,247,228.14 | 5,364,119.48 |
| Total | 35,920,509.46 | 14,943,253.23 | 35,920,509.46 |
Governmental subsidies are described in detail as follows:
| Subsidized Items | Amount incurred in current period | Amount incurred in previous period | Assets-related /Income-related |
| IRAS Jobs Support Scheme | 159,652.92 | 601,143.99 | Income-related |
| Others | 213,854.21 | 108,897.58 | Income-related |
| Total | 373,507.13 | 710,041.57 | -- |
61. Non-operating expenses
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Loss on damage and scrapping of non-current assets | 23,368,528.97 | 6,640,525.86 | 23,368,528.97 |
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Wherein: Fixed assets | 23,368,528.97 | 6,640,525.86 | 23,368,528.97 |
| Expenditure of donation | 6,858,000.00 | 6,922,110.90 | 6,858,000.00 |
| Late fees, penalties and liquidated damages | 23,519,641.48 | 4,909,233.94 | 23,519,641.48 |
| Others | 12,225,333.01 | 1,789,720.09 | 12,225,333.01 |
| Total | 65,971,503.46 | 20,261,590.79 | 65,971,503.46 |
62. Income tax expenses
(1) Table of income tax expenses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Income tax expenses in current period | 46,126,222.53 | 45,178,553.83 |
| Deferred income tax expenses | -14,966,761.28 | -230,035,312.37 |
| Total | 31,159,461.25 | -184,856,758.54 |
(2) Accounting profit and income tax expense adjustment process
| Item | Amount incurred in current period |
| Total profits | 399,838,171.03 |
| Income tax expenses calculated by legal/applicable tax rate | 99,959,542.76 |
| Influence of subsidiary applicable to different tax rates | -11,340,252.06 |
| Influence of adjustment to income tax in previous periods | 5,137,381.07 |
| Influence of nontaxable income | -137,939,906.39 |
| Influence of non-deductible cost, expense and loss | 45,809,652.14 |
| Influence of deductible loss on the use of previously unconfirmed deferred income tax assets | -75,737,303.76 |
| Influence of deductible temporary difference or deductible loss on | 164,580,656.38 |
| Item | Amount incurred in current period |
unconfirmed deferred income tax assets in current period
| unconfirmed deferred income tax assets in current period | |
| Influence of weighted deduction cost, expense and other items allowed to deduct by tax law | -53,165,286.40 |
| Others | -6,145,022.49 |
| Income tax expenses | 31,159,461.25 |
63. Other comprehensive income
See Notes V. 44 for detail.
64. Items in cash flow statement
(1) Reception of other cash related to business activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| Receivables and payables | 25,922,960.56 | 1,739,551.19 |
| Margin and deposit | 115,436,902.90 | 144,266,262.60 |
| Government grants | 141,665,269.80 | 249,608,718.75 |
| Interest income | 167,866,162.76 | 130,714,288.20 |
| Indemnities and fines | 10,812,516.37 | 6,333,085.21 |
| Judicial freezing | 0.00 | 10,503,440.47 |
| Bank bill margin | 6,230.51 | 5,572,609.84 |
| L/G deposit | 0.00 | 32,068,223.09 |
| Others | 5,041,293.05 | 6,302,301.71 |
| Total | 466,751,335.95 | 587,108,481.06 |
(2) Payment of other cash related to business activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| Vehicle expenses | 2,492,921.07 | 24,310,168.76 |
| Environmental expenditure | 11,516,869.98 | 11,770,134.03 |
| Margin and deposit | 66,156,351.22 | 97,966,065.18 |
| Operating license fee | 252,738,019.47 | 265,497,302.14 |
| Agency fee | 10,480,905.30 | 6,936,808.59 |
| Travel expenses | 15,134,956.54 | 18,316,260.47 |
| Rental expenses | 13,991,862.40 | 11,778,965.14 |
| Frozen fund | 187,229,453.52 | 86,429,498.96 |
| Repair charges | 11,912,838.75 | 10,376,076.19 |
| Insurance | 40,363,230.33 | 29,280,458.44 |
| Transportation, storage and handling charges | 36,465,208.62 | 13,168,292.46 |
| Expenditure of donation | 14,598,058.03 | 26,120,029.25 |
| Others | 0.00 | 25,169,796.00 |
| Total | 403,455,069.89 | 105,146,816.30 |
| Operating license fee | 47,423,146.87 | 43,564,927.95 |
| Agency fee | 56,845,928.25 | 54,051,957.63 |
| Travel expenses | 6,853,000.00 | 6,813,000.00 |
| Rental expenses | 112,334,370.43 | 85,815,740.71 |
| Frozen fund | 1,289,992,190.67 | 922,512,298.20 |
(3) Reception of other cash related to investment activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| Income from consigned loan and interest on capital lending by related parties | 40,982,195.82 | 51,574,324.99 |
| Futures margin recovery | 105,530,878.67 | 47,083,441.68 |
| L/G margin recovery | 0.00 | 276,000,000.00 |
| Total | 146,513,074.49 | 374,657,766.67 |
(4) Payment of other cash related to investment activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| Net cash received by disposal of subsidiary (negative) | 0.00 | 100,000.00 |
| Futures margin recovery | 144,345,965.50 | 31,048,462.70 |
| Others | 0.00 | 424.19 |
| Total | 144,345,965.50 | 31,148,886.89 |
(5) Reception of other cash related to financing activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| Withdrawal of monetary funds pledged for financing | 1,556,261,828.88 | 1,019,866,989.49 |
| Collection of financing leaseback | 100,000,000.00 | 2,075,000,000.00 |
| Interbank borrowing from Hengyi Group | 5,588,422,499.99 | 4,133,189,471.00 |
| Others | 0.00 | 16,000,000.00 |
| Total | 7,244,684,328.87 | 7,244,056,460.49 |
(6) Payment of other cash related to financing activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| Monetary funds pledged for financing | 2,696,022,987.63 | 1,593,104,467.79 |
| Repayment of loan principal and interest of Hengyi Group | 5,578,409,681.37 | 4,126,142,959.89 |
| Stock repurchases | 885,461,636.25 | 765,564,197.20 |
| Rental expenses and commission charges paid for financing leaseback | 1,368,484,777.98 | 1,126,017,003.66 |
| Lease margin for financing leaseback | 5,000,000.00 | 116,500,000.00 |
| Loan commission | 102,882,954.07 | 101,642,305.39 |
| Rental expenses paid for lease liabilities | 32,340,033.50 | 29,061,128.46 |
| Others | 950,000.00 | 1,426,000.00 |
| Total | 10,669,552,070.80 | 7,859,458,062.39 |
65. Further information about cash flow statements
(1) Further information about cash flow statement
| Further Information | Amount incurred in current period | Amount incurred in previous period |
| 1. Adjust net profit to operating cash flow: | ||
| Net profit | 368,678,709.78 | -924,398,809.24 |
| Plus: Asset impairment reserves | 71,262,509.77 | 368,677,441.03 |
| Impairment loss on credit assets | 11,426,732.92 | 1,101,785.57 |
| Depreciation of fixed assets | 3,171,949,886.05 | 3,057,365,476.37 |
| Depreciation of right-of-use assets | 38,811,361.86 | 37,746,948.82 |
| Amortization of intangible assets | 84,384,861.47 | 80,585,704.09 |
| Amortization of long-term deferred expenses | 118,793,677.98 | 109,624,239.00 |
| Loss on disposal of fixed assets, intangible assets and other long-term assets (income listed with “-”) | 9,342,790.49 | 23,661,125.27 |
| Loss on scrapping of fixed assets (income listed with “-”) | 22,843,623.53 | 6,640,525.86 |
| Loss on fair value change (income listed with “-”) | 45,121,198.68 | 211,436,484.36 |
| Financial cost (income listed with “-”) | 3,062,809,389.14 | 2,623,127,122.84 |
| Investment losses (income listed with “-”) | -985,476,736.48 | -745,260,076.32 |
| Decrease in deferred income tax assets (increase listed with “+”) | -16,340,029.81 | -225,671,514.74 |
| Increase in deferred income tax liabilities (decrease listed with “-”) | 1,373,268.53 | -4,365,912.78 |
| Decrease in inventory (increase listed with “-”) | 969,448,083.78 | -1,704,647,587.22 |
| Decrease in operating receivables (increase listed with “-”) | 1,327,681,725.88 | 993,927,177.80 |
| Increase in operating payables (decrease listed with “-”) | -3,731,423,035.99 | -1,263,321,017.94 |
| Others | -38,853,212.43 | 59,304,370.59 |
| Further Information | Amount incurred in current period | Amount incurred in previous period |
| Net cash flow from operating activities | 4,531,834,805.15 | 2,705,533,483.36 |
| 2. Significant investment and financing activities involving no cash receipt and payment: | ||
| Conversion of debt into capital | 0.00 | 0.00 |
| Convertible corporate bonds mature within one year | 0.00 | 0.00 |
| Fixed assets under financing lease | 0.00 | 0.00 |
| 3. Net changes in cash and cash equivalents: | ||
| Ending balance of cash | 8,518,118,122.12 | 12,934,069,613.03 |
| Minus: Cash balance at the end of previous year | 12,934,069,613.03 | 10,244,736,951.84 |
| Plus: Ending balance of cash equivalents | 0.00 | 0.00 |
| Minus: Cash equivalent balance at the end of previous year | 0.00 | 0.00 |
| Net increase in cash and cash equivalents | -4,415,951,490.91 | 2,689,332,661.19 |
(2) Net cash on subsidiary disposal received in current period
| Item | Amount |
| Cash or cash equivalents on subsidiary disposal received in current period | 880,000,000.00 |
| Wherein: Hangzhou Yijing Chemical Fibre Co., Ltd | 880,000,000.00 |
| Minus: Cash and cash equivalents held by subsidiary on the date of losing control right | 917,530,587.60 |
| Wherein: Hangzhou Yijing Chemical Fibre Co., Ltd | 917,530,587.60 |
| Less: Unpaid amounts due at the date of loss of control paid in the current period after the date of loss of control | 669,675,230.43 |
| Wherein: Hangzhou Yijing Chemical Fibre Co., Ltd | 669,675,230.43 |
| Add: Cash received during the period for commercial paper issued by disposed subsidiaries discounted prior to the date of loss of control and not yet due at the date of loss of control | 845,700,000.00 |
| Wherein: Hangzhou Yijing Chemical Fibre Co., Ltd | 845,700,000.00 |
| Net cash received by subsidiary disposal | 138,494,181.97 |
(3) Composition of cash and cash equivalents
| Item | Ending balance | Ending balance of previous year |
| I. Cash | 8,518,118,122.12 | 12,934,069,613.03 |
| Wherein: Cash on hand | 1,065,013.70 | 1,118,679.20 |
| Bank deposit payable at any time | 7,887,839,429.74 | 11,714,153,408.04 |
| Other monetary fund payable at any time | 629,213,678.68 | 1,218,797,525.79 |
| Payable due from Central Bank | 0.00 | 0.00 |
| Deposits in other banks | 0.00 | 0.00 |
| Due from banks | 0.00 | 0.00 |
| II. Cash Equivalents | 0.00 | 0.00 |
| Wherein: Bond investments mature within three months | 0.00 | 0.00 |
| III. Ending balance of cash and cash equivalents | 8,518,118,122.12 | 12,934,069,613.03 |
| Wherein: Cash and cash equivalents used by the parent company or group subsidiaries under certain limitation | 0.00 | 0.00 |
(4) Classification of changes in liabilities arising from financing activities from openingto closing balances
| Item | Beginning balance | Increase during the period | Decrease during the period | Ending balance | ||
| Changes in cash | Non-cash changes | Changes in cash | Non-cash changes | |||
| Bank Borrowings | 59,261,595,341.24 | 54,367,260,691.80 | 24,671,437,509.23 | 52,008,787,096.99 | 25,513,314,572.10 | 60,778,191,873.18 |
| Other payables - Dividends payable | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Bonds payable (including within one year) | 4,068,367,011.46 | 0.00 | 0.00 | 811,000.00 | -221,341,993.96 | 4,288,898,005.42 |
| Lease liabilities (including within one year) | 444,032,939.46 | 0.00 | 25,149,581.13 | 32,340,033.50 | -23,402,049.27 | 460,244,536.36 |
| Item | Beginning balance | Increase during the period | Decrease during the period | Ending balance | ||
| Changes in cash | Non-cash changes | Changes in cash | Non-cash changes | |||
| Long-term accounts payable (including within one year) | 2,668,518,175.36 | 100,000,000.00 | -963,452.85 | 1,368,484,777.98 | 62,266,327.22 | 1,336,803,617.31 |
| Total | 66,442,513,467.52 | 54,467,260,691.80 | 24,695,623,637.51 | 53,410,422,908.47 | 25,330,836,856.09 | 66,864,138,032.27 |
66. Assets with limited ownership or use right
| Item | Book value at the end of the period | Reason for restriction |
| Monetary funds | 5,284,615,169.28 | Margin |
| Monetary funds | 25,169,796.00 | Judicial freezing |
| Notes receivable | 147,675,900.00 | Pledge to open acceptance bills |
| Long-term equity investments | 6,837,853,788.22 | Mortgage, pledge borrowing |
| Fixed assets | 2,672,083,843.53 | Leaseback financing lease |
| Fixed assets | 17,473,057,683.02 | Mortgage loan |
| Intangible assets | 2,031,649,175.86 | Mortgage loan |
| Total | 34,472,105,355.91 | -- |
67. Monetary items in foreign currency
(1) Monetary items in foreign currency
| Item | Ending balance in foreign currency | Exchange rate for conversion | Ending balance (converted into RMB) |
| Monetary funds | |||
| Wherein: HKD | 454,907.43 | 0.9062 | 412,237.11 |
| USD | 490,067,263.72 | 7.0827 | 3,470,999,408.51 |
| EUR | 864,384.42 | 7.8592 | 6,793,370.03 |
| BND | 11,371,328.85 | 5.3772 | 61,145,909.49 |
| Item | Ending balance in foreign currency | Exchange rate for conversion | Ending balance (converted into RMB) |
| SGD | 1,058,287.46 | 5.3772 | 5,690,623.33 |
| Accounts receivable | |||
| Wherein: USD | 608,193,939.66 | 7.0827 | 4,307,655,216.43 |
| BND | 53,547,754.04 | 5.3772 | 287,936,983.02 |
| Other receivables | |||
| Wherein: HKD | 1,779,600.00 | 0.9062 | 1,612,673.52 |
| USD | 8,924,007.85 | 7.0827 | 63,206,070.40 |
| BND | 5,274,274.23 | 5.3772 | 28,360,827.39 |
| SGD | 262,311.75 | 5.3772 | 1,410,502.74 |
| Long-term receivables | |||
| Wherein: USD | 518,788.46 | 7.0827 | 3,674,423.03 |
| Short-term loans | |||
| Wherein: USD | 1,286,616,775.17 | 7.0827 | 9,112,720,633.51 |
| Accounts payable | |||
| Wherein: HKD | 193,000.00 | 0.9062 | 174,896.60 |
| USD | 567,677,254.66 | 7.0827 | 4,020,687,691.58 |
| EUR | 6,073,482.56 | 7.8592 | 47,732,714.14 |
| BND | 3,191,737.90 | 5.3772 | 17,162,613.04 |
| Other payables | |||
| Wherein：USD | 3,140,568.35 | 7.0827 | 22,243,703.45 |
| BND | 3,848,062.37 | 5.3772 | 20,691,800.98 |
| Non-current liabilities due within one year |
| Item | Ending balance in foreign currency | Exchange rate for conversion | Ending balance (converted into RMB) |
| Wherein：USD | 188,339,242.85 | 7.0827 | 1,333,950,355.33 |
| EUR | 14,017,262.00 | 7.8592 | 110,164,465.51 |
| BND | 1,385,745.68 | 5.3772 | 7,451,431.67 |
| SGD | 448,510.12 | 5.3772 | 2,411,728.62 |
| Lease liabilities | |||
| Wherein: BND | 83,328,762.28 | 5.3772 | 448,066,067.92 |
| Long-term loans | |||
| Wherein: USD | 950,220,000.00 | 7.0827 | 6,730,123,194.00 |
| EUR | 71,753,283.00 | 7.8592 | 563,923,401.75 |
68. Hedging
Please refer to Notes VI (3. Notes to derivative financial assets).
69. Government grants
(1) Basic information about governmental subsidies
| Category | Amount | Reported Item | Amount recorded into current profits and losses |
| Income-related subsidies used to compensate for related costs or losses incurred | 272,068,959.88 | Other incomes | 272,068,959.88 |
| 373,507.13 | Non-operating income | 373,507.13 | |
| Income-related subsidies used to compensate for related costs or losses in subsequent periods | 9,281,006.63 | Deferred income | 2,282,704.88 |
| Assets-related subsidies | 288,381,927.42 | Deferred income | 61,959,916.54 |
| Total | 570,105,401.06 | 336,685,088.43 |
70. Leases
(1) The Company as Lessee
① Refer to Notes V, 16 and 36 of this Note for right-of-use assets and lease liabilities.
② Charged to current year's profit or loss
| Item | Charged to profit or loss for the year | |
| Presentation of items | Amount | |
| Interest on lease liabilities | Financial expense | 27,300,291.48 |
| Short-term lease costs (simplified treatment applied) | Administrative expenses, selling expenses, Operating costs, etc. | 14,326,787.75 |
| Lease costs for low-value assets (simplified treatment applied) | Administrative expense | 157,726.68 |
| Sale and leaseback transactions | Financial expense | 108,303,027.47 |
③ Cash flow outflows related to leases
| Item | Category of cash flow | Amount for the year |
| Cash payments for principal and interest on lease liabilities | Cash outflows from financing activities | 32,340,033.50 |
| Payments made on short-term leases and low-value assets (simplified treatment applies) | Cash outflows from operating activities | 15,035,391.83 |
| Total | -- | 47,375,425.33 |
④ Other information
A. At the end of the reporting period, the Company's right-of-use assets mainlyconsisted of buildings and structures and land use rights, of which land use rightsincluded:
a. 260 hectares of land use rights for production area: the leased land is located in PulauGrande Mora, Brunei Darussalam, with a lease period of 30 years (from 26 March 2017to 27 March 2047), with the possibility of applying for a renewal of the lease for a
period of 30 years prior to expiry.
b. 69.7978 hectares of Western Irrigation, Wharf and other land use rights: the leaseholdland is situated in Pulau Grande Mora, Brunei Darussalam for a term of 27 years (from1 November 2019 to 27 March 2047) with the possibility of applying for a renewal ofthe lease for a period of 30 years prior to expiry.
B. Sale and leaseback transactionsSome subsidiaries of the Company entered into leasing agreements with financialleasing companies to carry out financial leasing business by way of sale and leasebackof their own specialised production equipment as leased goods. The Company has beenusing the above assets since the beginning and has agreed to a forward retention in thesaid contract, indicating that the financial leasing company did not obtain control of therelevant goods at the point of sale, and therefore the transfer of assets in the transactionis not a sale.
Effect of sale and leaseback transactions on current cash flows:
| Item | Category of cash flow | Amount for the year |
| Finance leaseback receipts | Cash inflow from financing activities | 100,000,000.00 |
| Lease payments made on finance sale and leasebacks | Cash outflow from financing activities | 1,368,484,777.98 |
| Financial sale and leaseback lease deposits | Cash outflow from financing activities | 30,000,000.00 |
(2) The Company as Lessor
① Charged to profit or loss for the year
| Item | Charged to profit or loss for the year | |
| Presentation of items | Amount | |
| Lease income | Other operating income | 4,696,494.24 |
| Total | -- | 4,696,494.24 |
②Major operating lease assets
| Item | Carrying value at end of period |
| Houses and buildings | 34,239,526.01 |
| Site | Not applicable (Note) |
Note: Haining Hengyi New Material Co., Ltd, a subsidiary of the Company, leased partof its factory to the outside world and charged the lessee for the use of the site as agreedin the lease agreement.
VI. R&D expenditure
1. R&D expenditure incurred during the period
| Item | Amount for the current period | Prior period amount |
| Expensed R&D expenditure | 716,319,527.66 | 668,706,028.57 |
| Capitalised R&D expenditure | 27,478,251.20 | 19,523,238.74 |
| Total | 743,797,778.86 | 688,229,267.31 |
(1) Expensed R&D expenditure
| Item | Amount for the current period | Prior period amount |
| Direct input costs | 411,739,313.04 | 422,987,682.39 |
| Salary of employees | 148,843,373.25 | 138,713,533.15 |
| Depreciation | 64,325,403.87 | 45,568,357.41 |
| Technology development costs | 17,636,809.83 | 20,972,568.77 |
| Other expense | 73,774,627.67 | 40,463,886.85 |
| Total | 716,319,527.66 | 668,706,028.57 |
(2) Capitalised R&D expenditure
| Item | Amount for the current period | Prior period amount |
| Receiving material | 439,813.51 | 2,787,238.10 |
| Salary of employees | 6,692,526.70 | 4,971,705.71 |
| Depreciation | 12,216,189.17 | 5,406,582.52 |
| Fuel cost | 4,136,610.81 | 2,828,841.11 |
| Others | 3,993,111.01 | 3,528,871.30 |
| Total | 27,478,251.20 | 19,523,238.74 |
2. Status of capitalised development projects
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing balance |
| Research and application development of bio-based PTT elastic memory fibre series products | 3,002,503.92 | 434,913.72 | 0.00 | 3,437,417.64 |
| 3000t/a Caprolactam Gas Phase Reworking and Crystallisation Project | 18,340,465.12 | 27,043,337.48 | 0.00 | 45,383,802.60 |
| Flame retardant differentiated new product development | 38,579.16 | 0.00 | 38,579.16 | 0.00 |
| Total | 21,381,548.20 | 27,478,251.20 | 38,579.16 | 48,821,220.24 |
Flame retardant differentiated new product development project transferred to current
expense in the period.
(1) Status of significant capitalised development projects
| Item | R&D progress | Estimated completion time | Projected manner of generation of economic benefits | Point of commencement of capitalisation | Specific basis |
| Research and application development of bio-based PTT elastic memory fibre series products | PTT slice spinning test has been completed, the indicators are basically in line with expectations; PTT and ECDP composite spinning test has been completed, the composite spinning process needs to be further improved. | June 30, 2024 | Formation of spinning process technology to be applied in the workshop for the production of PTT filaments and elasticated filaments | July, 2021 | Based on the previous research and development of PTT slices has been stable production, the development of PTT slices process spinning samples in good condition |
| 3000t/a Caprolactam Gas Phase Reworking and Crystallisation Project | Technology development of the project process package has been completed, and the process is currently being optimised to reduce material consumption. | December 31, 2024 | Formation of technical process packages and core patented technologies, licensing for external use, and collection of licence fees and technical service fees | July, 2022 | The pilot plant was completed and started up in the first half of 2022, and the plant is in stable operating condition |
(2) Changes in the provision for impairment of development expenditures andimpairment testingAs at 31 December 2023, the Company's development expenditure was not impaired.
VII. Interests in other entities
1. Composition of enterprise group
| Name of subsidiary | Main Place of Business | Domicile | Nature of business | Shareholding ratio (%) | Gaining method | |
| Direct | Indirect | |||||
| Zhengjiang Hengyi Petrochemical | Hangzhou City | Hangzhou City | Manufacturing of chemical fibre products | 100.00 | 0.00 | Establishment or |
| Zhengjiang Hengyi Polymer Co., | Hangzhou City | Hangzhou City | Manufacturing of chemical fibre products | 0.00 | 60.00 | Business merger under the same control |
| Zhengjiang Yisheng Petrochemical | Ningbo City | Ningbo City | Manufacturing of petrochemicalp roducts | 0.00 | 70.00 | Business merger under the same control |
| Zhengjiang Yixin Chemical Fibre | Hangzhou City | Hangzhou City | Commerce and trade | 0.00 | 70.00 | Establishment or |
| Hong Kong Yisheng Petrochemical Investment Co., Ltd. | Hong Kong | Hong Kong | Trade and consulting | 0.00 | 70.00 | Establishment or |
| Zhejiang Hengyi High-Tech Materials Co., Ltd. | Hangzhou City | Hangzhou City | Manufacturing of chemical fibre products | 0.00 | 100.00 | Establishment or |
| Ningbo Hengyi Trading Co., Ltd. | Ningbo City | Ningbo City | Commerce and trade | 0.00 | 70.00 | Establishment or |
| Hong Kong Tianyi International Holding Co., Ltd. | Hong Kong | Hong Kong | Trade and investment | 0.00 | 100.00 | Establishment or |
| Good Park International Investment Co., Ltd. | Hong Kong | Hong Kong | Trade and investment | 0.00 | 100.00 | Establishment or |
| Hengyi Industries Sdn. Bhd. | Brunei | Brunei | Manufacturing of petrochemical products | 0.00 | 70.00 | Business merger under the same control |
| Ningbo Hengyi Engineering Management Co., Ltd. | Ningbo City | Ningbo City | Engineering management | 0.00 | 70.00 | Business merger under the same control |
| Hengyi Industry International Co., Ltd. | Singapore | Singapore | Commerce andtrade | 0.00 | 70.00 | Establishment or |
| Hengyi Petrochemical International Co., Ltd.(Singapore) | Singapore | Singapore | Commerce and trade | 0.00 | 100.00 | Establishment or |
| Zhejiang Hengyi Petrochemical Sales Co., Ltd. | Hangzhou City | Hangzhou City | Commerce and trade | 0.00 | 100.00 | Establishment or |
| Haining Hengyi New Materials Co., Ltd. | Haining City | Haining City | Manufacturing of chemical fibre products | 0.00 | 100.00 | Establishment or |
| Haining Hengyi Thermal Power Co., Ltd. | Haining City | Haining City | Electricity & heat production and supply | 0.00 | 90.00 | Establishment or |
| Suqian Yida New Materials Co., Ltd. | Suqian City | Suqian City | Manufacturing of chemical fibre | 0.00 | 91.00 | Establishment or |
| Name of subsidiary | Main Place of Business | Domicile | Nature of business | Shareholding ratio (%) | Gaining method | |
| Direct | Indirect | |||||
| products | ||||||
| Fujian Yijin Chemical Fibre Co., Ltd. | Quanzhou City, Fujian Province | Quanzhou City, Fujian Province | Manufacturing of chemical fibre products | 0.00 | 90.00 | Establishment or |
| Shaoxing Shengong Packaging Co., Ltd. | Shaoxing City | Shaoxing City | Wrap page production and processing | 0.00 | 51.00 | Establishment or |
| Zhejiang Hengyi Logistics Co., Ltd. | Hangzhou City | Hangzhou City | Logistics transportation | 0.00 | 100.00 | Business merger under the same control |
| Zhejiang Hengyi International Trade Co., Ltd. | Hangzhou City | Hangzhou City | Commerce and trade | 100.00 | 0.00 | Establishment or |
| Zhejiang Hengkai Energy Co., Ltd. | Hangzhou City | Hangzhou City | Commerce and trade | 0.00 | 60.00 | Establishment or |
| Zhejiang Hengyi Engineering Management Co., Ltd. | Hangzhou City | Hangzhou City | Engineering management | 100.00 | 0.00 | Establishment or |
| Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. | Hangzhou City | Hangzhou City | Manufacturing of chemical fibre products | 100.00 | 0.00 | Establishment or |
| Jiaxing Yipeng Chemical Fibre Co., Ltd. | Jiaxing City | Jiaxing City | Manufacturing of chemical fibre products | 100.00 | 0.00 | Business merger under the same control |
| Taicang Yifeng Chemical Fibre Co., Ltd. | Taicang City | Taicang City | Manufacturing of chemical fibre products | 100.00 | 0.00 | Business merger under the same control |
| Zhejiang Shuangtu New Materials Co., Ltd. | Hangzhou City | Hangzhou City | Manufacturing of chemical fibre products | 100.00 | 0.00 | Business merger not under the same control |
| Hong Kong Hengyi Logistics Co., Ltd. | Hong Kong | Hong Kong | Logistics transportation | 0.00 | 100.00 | Establishment or |
| Hengyi International Logistics Co., Ltd. | Singapore | Singapore | Logistics transportation | 0.00 | 100.00 | Establishment or |
| Haining Junbo Shengming Trading Co., Ltd. | Haining City | Haining City | Commerce and trade | 0.00 | 100.00 | Establishment or |
| Hangzhou Yitong New Materials Co., Ltd. | Hangzhou City | Hangzhou City | Manufacturing of chemical fibre products | 0.00 | 100.00 | Establishment or |
| Shaoxing Hengyi Logistics Co., Ltd. | Shaoxing City | Shaoxing City | Logistics transportation | 0.00 | 100.00 | Establishment or |
| Guangxi Hengyi Environmental Technology Co., Ltd. | Qinzhou City, Guangxi | Qinzhou City, Guangxi | Science and technology service | 0.00 | 100.00 | Establishment or |
| Name of subsidiary | Main Place of Business | Domicile | Nature of business | Shareholding ratio (%) | Gaining method | |
| Direct | Indirect | |||||
| Zhejiang Hengyi Hanlin Enterprise Management Co., L td . | Hangzhou City | Hangzhou City | Commercial service industry | 0.00 | 75.00 | Establishment or |
| Hainan Hengjing Trading Co., Ltd. | Hainan Province | Hainan Province | Commerce and trade | 0.00 | 100.00 | Establishment or |
| Guangxi Hengyi Shunqi Trading Co., Ltd. | Qinzhou City, Guangxi | Qinzhou City, Guangxi | Commerce and trade | 0.00 | 100.00 | Establishment or |
| Haining Lantai New Materials Co., Ltd. | Haining City | Haining City | Manufacturing of chemical fibre products | 0.00 | 74.00 | Establishment or |
| Jiaxing Hengyu Trading Co., Ltd. | Jiaxing City | Jiaxing City | Commerce and trade | 0.00 | 100.00 | Establishment or |
| Guangxi Hengyi New Materials Co., Ltd. | Qinzhou City, Guangxi | Qinzhou City, Guangxi | Manufacturing of chemical fibre products | 0.00 | 100.00 | Business merger under the same control |
| Zhejiang Xiaoyi Supply Chain Management Co., Ltd. (Zhejiang Xiaoyi Supply Chain Management Co., Ltd.) | Hangzhou City | Hangzhou City | Commercial service industry | 0.00 | 100.00 | Establishment or |
| Ningbo Shengmao Trading Co., Ltd. | Ningbo City | Ningbo City | Commerce and trade | 0.00 | 70.00 | Establishment or |
| Suqian Hengyuan Thermal Energy Co., Ltd. | Suqian City | Suqian City | Electricity & heat production and supply | 0.00 | 100.00 | Establishment or |
| Suqian Huida Port Co., Ltd. | Suqian City | Suqian City | Water transportation industry | 0.00 | 100.00 | Establishment or |
| Guangxi Free Trade Zone Yihai Port Co., Ltd. | Qinzhou City | Qinzhou City | Water transportation industry | 0.00 | 66.00 | Establishment or |
| Hangzhou Lanxing Chemical Fibre Oiling Agent Co., Ltd. | Hangzhou City | Hangzhou City | Wholesale business | 0.00 | 80.00 | Establishment or |
| Lianyungang Junbo Shengda Logistics Co., Ltd. | Lianyungang City | Lianyungan g City | Road transportation industry | 0.00 | 100.00 | Establishment or |
| Hangzhou Yigao Environmental Protection Technology Co., Ltd. | Hangzhou | Hangzhou | Professional and technical services | 0.00 | 100.00 | Establishment or |
| Hangzhou Lantong Technology Co., Ltd. | City | City | Manufacture of chemical materials and products | 0.00 | 80.00 | Establishment or |
| Name of subsidiary | Main Place of Business | Domicile | Nature of business | Shareholding ratio (%) | Gaining method | |
| Direct | Indirect | |||||
| Hangzhou Lanfang High-tech Material Co., Ltd. | Hangzhou | Hangzhou | Manufacture of chemical materials and products | 0.00 | 75.00 | Establishment or |
| Hangzhou Lanshun Technology Co., Ltd. | City | City | Chemical fibre manufacturing | 0.00 | 70.00 | Establishment or |
| Hangzhou Lanbiao Testing Service Co., Ltd. | Hangzhou | Hangzhou | Professional and technical services | 0.00 | 70.00 | Establishment or |
| Hangzhou Yixian Energy Technology Co., Ltd. | City | City | Energy storage technical services, etc. | 100.00 | 0.00 | Establishment or |
2. Combination of enterprises not under the same control
In current period, there is no combination of enterprises not under the same control inthe Company.
3. Business merger under the same control
In current period, there is no business merger under the same control in the Company.
4. Disposal of Subsidiary
(1) Control right lost by single disposal of subsidiary investment
| Name of subsidiary | Equity disposal price (RMB) | Equity disposal proportion (%) | Equity disposal mode | Control right losing time- point | Basis for determination of control right losing time-point | Balance between disposal price and the subsidiary’s net asset shares at the level of consolidated statements corresponding to disposal investment |
| Hangzhou Yijing Chemical Fibre Co.,Ltd. | 880,000,000.00 | 100.00 | Transfer | December 19, 2023 | Completion of shareholding rights transfer | 448,973,414.86 |
(Continued)
| Name of subsidiary | Proportion of residual equities on the control right losing date (%) | Book value of residual equities on the control right losing date | Fair value of residual equities on the control right losing date | Gains or Losses on Remeasurement of Residual Equities by Fair Value | Determination method and main assumption of fair value of residual equities on the control right losing date | Amount of other comprehensive income (related to original subsidiary equity investment) shifted into investment profits and losses |
| Hangzhou Yijing Chemical Fibre Co., Ltd. | 0.00 | -- | -- | -- | -- | 0.00 |
5. Consolidation Scope Change due to Other Reasons
During the year, the Company invested in and established the following six subsidiaries,details of which are as follows:
The Company invested in and established Hangzhou Yixian Energy Technology Co.,Ltd. with a 100% shareholding.
Zhejiang Hengyi Petrochemical Company Limited, a subsidiary of the Company,invested in and established Hangzhou Yigao Environmental Protection TechnologyCompany Limited, with a 100% shareholding.
Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. a subsidiary of theCompany, invested in and established Hangzhou Lantong Technology Co., Ltd, with a80% shareholding.
Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. a subsidiary of theCompany, invested in and established Hangzhou Lanfang High-tech Material Co., Ltd,with a 75% shareholding.
Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. a subsidiary of theCompany, invested in and established Hangzhou Lanfang Hangzhou LanshunTechnology Co., Ltd, with a 70% shareholding.
Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. a subsidiary of theCompany, invested in and established Hangzhou Hangzhou Lanbiao Testing ServiceCo., Ltd, with a 70% shareholding.
Therefore, the number of the Company's subsidiaries included in the scope ofconsolidation for the current reporting period increased by 6 as mentioned above.
In addition, the cancellation of the Company's subsidiary Zhejiang Yi Zhi InformationTechnology Co., Ltd. was completed during the year, thus the number of the Company'ssubsidiaries included in the scope of consolidation for the year was reduced by theaforesaid one.
6. Transactions in which the share of ownership interest in subsidiary changes andthe subsidiary is still controlled
(1) Explanation of changes in the share of ownership interest in subsidiaries
① On 30 December 2022, Heng Yi Limited, a subsidiary of the Company, entered intoan equity transfer agreement with BOC Financial Assets Investment Company Limited("BOC Assets"), pursuant to which BOC Assets transferred its 9.33% equity interest inHeng Yi High-Tech Materials, a subsidiary of the Company, to Heng Yi Limited at atransfer price of RMB 50,000,000. On 31 January 2023, Heng Yi Limited paid theentire amount of the equity transfer. Upon completion of the equity transfer, theCompany held 100% equity interest in Heng Yi High-Tech Materials.
② In August 2023, Heng Yi Limited, a subsidiary of the Company, and PolymerCompany, a subsidiary of the Company, entered into an agreement whereby PolymerCompany transferred 100% of its equity interest in Hangzhou Yitong New MaterialCompany Limited (hereinafter referred to as "Yitong") to Heng Yi Limited at a price of
RMB 534,774,373.33. In August 2023, Heng Yi Limited paid the full amount of theequity transfer. Upon completion of the equity transfer, the Company held 100% equityinterest in Yat Tung.
(2) Effect of the transaction on minority interests and equity attributable toowners of the parent company
| Item | Hengyi High-Tech Materials |
| Purchase cost consideration | 500,000,000.00 |
| -Cash | 500,000,000.00 |
| Total purchase cost consideration | 500,000,000.00 |
| Less: Share of net assets of subsidiaries in proportion to equity acquired | 412,684,389.33 |
| Balance | 87,315,610.67 |
| Wherein: Adjustments to capital surplus | 87,315,610.67 |
| Adjustments to surplus reserves | 0.00 |
| Adjustments to unallocated profits | 0.00 |
| Amounts affecting minority interests | -412,684,389.36 |
7. Interests held by minority shareholders in subsidiaries
(1) Important non-wholly owned subsidiaries
| Name of subsidiary | Minority shareholders’ shareholding ratio (%) | Profits and losses assigned to minority shareholder in current period | Dividends distributed to minority shareholder in current period | Balance of minority shareholders’ equities at the end of current period |
| Ningbo Hengyi Trading Co., Ltd. | 30.00 | -62,971,541.07 | 0.00 | 126,651,920.04 |
| Zhejiang Hengyi Polymer Co., Ltd. | 40.00 | 6,913,809.56 | 0.00 | 366,199,183.96 |
| Zhejiang Yisheng Petrochemical Co., Ltd. | 30.00 | 8,343,778.94 | 0.00 | 2,758,981,276.81 |
| Hengyi Industries Sdn. Bhd. | 30.00 | -25,861,396.76 | 50,981,568.00 | 2,976,819,525.24 |
| Fujian Yi Jin Chemical Fibre Co., Ltd. | 10.00 | -1,005,023.33 | 0.00 | 7,295,072.79 |
| Suqian Yida New Material | 9.00 | 2,404,523.74 | 0.00 | 189,334,048.48 |
| Name of subsidiary | Minority shareholders’ shareholding ratio (%) | Profits and losses assigned to minority shareholder in current period | Dividends distributed to minority shareholder in current period | Balance of minority shareholders’ equities at the end of current period |
| Co., Ltd. |
(2) Main financial information about Important Non-wholly Owned SubsidiariesUnit: RMB 10,000
| Name of subsidiary | Ending balance | |||||
| Current Assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Ningbo Hengyi Trading Co., Ltd. | 66,293.06 | 362,835.45 | 429,128.52 | 373,686.90 | 0.00 | 373,686.90 |
| Zhejiang Hengyi Polymer Co., Ltd. | 279,560.79 | 29,636.31 | 309,197.10 | 196,740.75 | 20,906.56 | 217,647.31 |
| Zhejiang Yisheng Petrochemical Co., Ltd. | 1,649,863.75 | 313,769.13 | 1,963,632.89 | 922,048.55 | 143,690.00 | 1,065,738.56 |
| Hengyi Industries Sdn. Bhd. | 1,447,702.72 | 2,815,925.17 | 4,263,627.88 | 2,403,551.51 | 850,331.94 | 3,253,883.45 |
| Fujian Yi Jin Chemical Fibre Co., Ltd. | 56,226.55 | 164,503.15 | 220,729.70 | 140,018.74 | 23,170.89 | 163,189.63 |
| Suqian Yida New Material Co., Ltd. | 95,436.61 | 218,556.01 | 313,992.63 | 104,722.03 | 923.31 | 105,645.34 |
(Continued)
| Name of subsidiary | Ending balance of previous year | |||||
| Current Assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Ningbo Hengyi Trading Co., Ltd. | 28,711.46 | 345,016.16 | 373,727.61 | 296,896.09 | 0.00 | 296,896.09 |
| Zhejiang Hengyi Polymer Co., Ltd. | 225,211.27 | 71,718.48 | 296,929.74 | 206,821.00 | 287.40 | 207,108.40 |
| Zhejiang Yisheng Petrochemical Co., Ltd. | 1,517,642.10 | 359,313.47 | 1,876,955.57 | 910,110.02 | 73,350.86 | 983,460.88 |
| Hengyi Industries Sdn. Bhd. | 1,868,714.56 | 2,807,143.74 | 4,675,858.29 | 2,536,416.94 | 1,138,641.20 | 3,675,058.14 |
| Fujian Yi Jin Chemical Fibre Co., Ltd. | 32,319.73 | 177,905.71 | 210,225.44 | 116,269.85 | 35,410.49 | 151,680.34 |
| Suqian Yida New Material Co., Ltd. | 90,103.86 | 198,243.78 | 288,347.64 | 95,083.66 | 564.52 | 95,648.17 |
(Continued)
| Name of subsidiary | Amount incurred in current period | Balance of previous period | ||||||
| Operating income | Net profit | Total comprehensive income | Operating cash flow | Operating income | Net profit | Total comprehensive income | Operating cash flow | |
| Ningbo Hengyi Trading Co., Ltd. | 1,799,643.68 | -20,990.51 | -21,389.92 | 3,030.31 | 1,148,454.08 | 9,271.50 | 12,701.28 | 30,454.43 |
| Zhejiang Hengyi Polymer Co., Ltd. | 349,128.66 | 1,728.45 | 1,728.45 | -60,001.73 | 380,707.73 | -3,431.65 | -3,431.65 | -28,627.14 |
| Zhejiang Yisheng Petrochemical Co., Ltd. | 2,259,138.29 | 2,781.26 | 4,399.63 | -128,706.13 | 2,138,615.21 | -17,193.75 | -19,638.17 | -106,204.81 |
| Hengyi Industries Sdn. Bhd. | 4,468,000.63 | -7,538.29 | 8,944.28 | 147,955.36 | 5,631,775.07 | 65,336.76 | 139,648.15 | 323,556.31 |
| Fujian Yi Jin Chemical Fibre Co., Ltd. | 337,451.11 | -1,005.02 | -1,005.02 | 14,293.55 | 349,489.45 | -11,805.93 | -11,805.93 | 86,191.01 |
| Suqian Yida New Material Co., Ltd. | 364,246.51 | 2,671.69 | 2,671.69 | 19,535.20 | 181,493.80 | -396.93 | -396.93 | -10,691.58 |
8. Equities in cooperative enterprise or associated enterprise
(1) Significant joint ventures or associates
| Name of cooperative enterprise or associated enterprise | Main place of business | Domicile | Nature of business | Shareholding ratio (%) | Accountant arrangement method for investment in cooperative enterprise or associated enterprise | |
| Direct | Indirect | |||||
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Hangzhou | Hangzhou | Chemical raw materials and chemical products manufacturing industry | 0.00 | 50.00 | Equity method |
| Dalian Yisheng Investment Co., Ltd. | Dalian | Dalian | Trade and investment | 0.00 | 30.00 | Equity method |
| Hainan Yisheng Petrochemical Co., Ltd. | Hainan | Hainan | Chemical raw materials and chemical products manufacturing industry | 0.00 | 50.00 | Equity method |
| China Zheshang Bank Co., Ltd. | Hangzhou | Hangzhou | Finance | 0.00 | 3.54 | Equity method |
| Zhejiang Yisheng New Materials Co., Ltd. | Ningbo | Ningbo | Chemical raw materials and chemical products manufacturing industry | 0.00 | 49.00 | Equity method |
Note: The Company holds 3.54% stocks of China Zheshang Bank Co., Ltd., and sent a
representative to CZB’s BOD. The Company enjoys substantial right of participationin decision making. The Company may exert significant impact on CZB by suchrepresentative’s participating into CZB’s financial and business policy formulation.
(2) Main financial information about important cooperative enterprises
Currency Unit: 10,000
| Item | Ending balance/ amount in current period | Balance at end of the previous year/ amount in previous period | ||
| Caprolactam | Hainan Yisheng | Caprolactam | Hainan Yisheng | |
| Current assets | 150,136.38 | 616,295.60 | 173,189.83 | 515,284.65 |
| Wherein: Cash and cash equivalents | 13,037.12 | 97,422.24 | 14,264.69 | 101,655.70 |
| Non-current assets | 548,138.82 | 1,072,339.62 | 600,320.82 | 719,282.44 |
| Total assets | 698,275.20 | 1,688,635.21 | 773,510.65 | 1,234,567.09 |
| Current liabilities | 414,346.75 | 577,746.58 | 475,101.61 | 416,670.21 |
| Non-current liabilities | 61,227.74 | 432,652.24 | 86,968.64 | 175,299.13 |
| Total liabilities | 475,574.50 | 1,010,398.82 | 562,070.25 | 591,969.34 |
| Minority stockholders’ equity | 148.50 | 0.00 | 148.50 | 0.00 |
| Stockholders’ equity attributable to parent company | 222,552.21 | 678,236.39 | 211,291.90 | 642,597.75 |
| Net assets calculated by shareholding ratio | 111,276.10 | 339,118.20 | 105,645.95 | 321,298.87 |
| Adjusting events | ||||
| - Goodwill | 0.00 | 0.00 | 0.00 | 0.00 |
| - Unrealized profit of internal transaction | 0.00 | -1,291.21 | 0.00 | -622.08 |
| - Others | 2,010.08 | 9,733.71 | 2,010.08 | 9,733.73 |
| Carrying value of equity investments in joint ventures | 113,286.18 | 347,560.69 | 107,656.03 | 330,410.53 |
| Fair value of cooperative enterprise equity investment with public offer | -- | -- | -- | -- |
| Operating income | 746,659.86 | 1,799,579.10 | 753,035.72 | 2,271,698.29 |
| Item | Ending balance/ amount in current period | Balance at end of the previous year/ amount in previous period | ||
| Caprolactam | Hainan Yisheng | Caprolactam | Hainan Yisheng | |
| Financial expenses | 11,628.06 | 12,423.80 | 10,420.14 | 9,078.70 |
| Income tax expenses | 3,673.62 | 5,020.46 | -13,253.96 | 18,135.43 |
| Net profit | 11,273.81 | 36,436.78 | -35,158.38 | 104,001.29 |
| Net profits of discontinuing operation | 0.00 | 0.00 | 0.00 | 0.00 |
| Other comprehensive income | 0.00 | -798.75 | 0.00 | 6,859.56 |
| Total comprehensive income | 11,273.81 | 35,638.03 | -35,158.38 | 110,860.85 |
| Dividends from cooperative enterprise received this year | 0.00 | 0.00 | 6,729.98 | 0.00 |
(3) Main financial information about important associated enterprises
Currency Unit: 10,000
| Item | Ending balance/ amount in current period | Balance at end of the previous year/ amount in previous period | ||||
| Yisheng Investment | Yisheng New Materials | China Zheshang Bank | Yisheng Investment | Yisheng New Materials | China Zheshang Bank | |
| Current assets | 604,338.28 | 309,241.66 | -- | 786,301.63 | 317,543.60 | -- |
| Non-current assets | 1,017,300.20 | 884,747.79 | -- | 967,092.10 | 911,354.19 | -- |
| Total assets | 1,621,638.48 | 1,193,989.45 | 314,387,900.00 | 1,753,393.73 | 1,228,897.79 | 262,193,000.00 |
| Current liabilities | 750,987.62 | 697,732.79 | -- | 902,013.51 | 782,318.59 | -- |
| Non-current liabilities | 100,636.60 | 267,057.26 | -- | 87,726.34 | 160,576.27 | -- |
| Total liabilities | 851,624.22 | 964,790.06 | 295,430,200.00 | 989,739.85 | 942,894.85 | 245,600,000.00 |
| Minority stockholders’ equity | 104,767.53 | 0.00 | 333,200.00 | 106,599.31 | 0.00 | 299,700.00 |
| Stockholders’ equity attributable to parent company | 665,246.73 | 229,199.39 | 18,624,500.00 | 657,054.57 | 286,002.94 | 16,293,300.00 |
| Net assets calculated by shareholding ratio | 199,574.02 | 112,307.70 | 659,307.30 | 197,116.37 | 140,141.44 | 573,524.16 |
| Item | Ending balance/ amount in current period | Balance at end of the previous year/ amount in previous period | ||||
| Yisheng Investment | Yisheng New Materials | China Zheshang Bank | Yisheng Investment | Yisheng New Materials | China Zheshang Bank | |
| Adjusting events | ||||||
| - Goodwill | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| - Unrealized profit of internal transaction | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| - Others | 5,494.45 | -0.13 | -88,807.83 | 5,494.45 | -0.13 | -88,306.09 |
| Book value of equity investment in associated enterprise | 205,068.47 | 112,307.57 | 570,499.20 | 202,610.82 | 140,141.31 | 485,217.80 |
| Fair value of associated enterprise equity investment with public offer | -- | -- | 245,067.50 | -- | -- | 219,932.37 |
| Operating income | 3,008,139.14 | 3,438,987.61 | 6,370,400.00 | 2,974,782.89 | 3,370,855.32 | 6,108,500.00 |
| Net profit | 5,756.78 | -56,744.88 | 1,549,300.00 | 40,524.44 | -25,199.76 | 1,398,900.00 |
| Net profits of discontinuing operation | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Other comprehensive income | 603.60 | -58.67 | 121,800.00 | 8,153.65 | -39.87 | 163,400.00 |
| Total comprehensive income | 6,360.38 | -56,803.55 | 1,671,100.00 | 48,678.09 | -25,239.62 | 1,562,300.00 |
| Dividends from associated enterprise received this year | 0.00 | 0.00 | 15,709.45 | 0.00 | 0.00 | 0.00 |
(4) Summary of financial information about unimportant associated enterprises
Currency unit: RMB 10,000
| Item | Ending balance/ amount in current period | Balance at end of the previous year/ amount in previous period |
| Associated enterprise: | ||
| Total book value of investment | 18,203.31 | 17,114.05 |
| Total (calculated by shareholding ratio) | ||
| - Net profit | 1,006.67 | 974.76 |
| - Other comprehensive income | 82.58 | -3.31 |
| - Total comprehensive income | 1,089.25 | 971.45 |
(5) Excess losses in cooperative enterprise or associated enterprise
By the end of December 31, 2023, no excess loss takes place in the Company’scooperative enterprises and associated enterprises.
(6) Unconfirmed commitment related to cooperative enterprise investmentBy the end of December 31, 2022, there is no unconfirmed commitment related tocooperative enterprise investment in the Company.
(7) Contingent liabilities related to cooperative enterprise or associated enterpriseinvestment by the end of December 31, 2022, there is no contingent liabilityrelated to cooperative enterprise or associated enterprise investment in theCompany.
9. Equities in structural subjects excluded in the scope of consolidated financialstatementIn the Company, there is no equity in structural subject excluded in the scope ofconsolidated financial statement.
VIII. Risks related to financial instrumentsThe Company’s main financial instruments include monetary capital, financialassets measured by fair value and whose changes included in current profits andlosses, loan, accounts receivable and accounts payable. For detail description ofdifferent financial instruments, please refer to related items in Note V. Risksrelated to these financial instruments and corresponding risk management policiestaken by the Company to mitigate such risks are described in detail as follows.The Company’s management shall manage and monitor these risk exposures, soas to control above risks within a limited scope.
Sensitivity analysis techniques are used by the Company to analyze probableinfluence of rational and probable changes in risk variables on current profit andloss or stockholders' equity. Risk variables seldom change separately. Correlationbetween different variables will have great effect on the final influence amount ofa risk variable. Therefore, the following contents are stated upon the assumptionthat change of every variable takes place independently.
(I) Risk management objective and policyThe Company’s risk management objective is to appropriately balance risk andincome, minimize adverse impact of risk on the Company’s business performance,and maximize benefits of its stockholders and other equity investors. Based on thisrisk management objective, the Company’s basic strategy for the risk managementis to determine and analyze different risks, set up an appropriate risk tolerancebaseline for risk management, supervise various risks in time and reliably, andcontrol all risks within a limited scope.
1. Market risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss generated by fluctuations inexchange rate. The Company’s foreign exchange risk is mainly correlated withUSD and BND. Except the Company’s several subsidiaries that purchase and sellin USD, other main business activities of the Company shall be settled in RMB.On December 31, 2022, most assets and liabilities of the Company are of RMBbalance (excluding the following assets or liabilities in USD and BND). Foreignexchange risk generated by assets and liabilities in such foreign currency mayinfluence the Company’s business performance.
| Item | Ending balance | Balance at the end of previous year | ||
| USD | BND | USD | BND | |
| Cash and cash equivalents | 490,067,263.72 | 11,371,328.85 | 581,686,909.13 | 8,184,622.74 |
| Accounts receivable | 608,193,939.66 | 53,547,754.04 | 817,630,221.72 | 54,599,853.33 |
| Other receivables | 8,924,007.85 | 5,274,274.23 | 8,028,333.81 | 3,631,010.18 |
| Long-term receivables | 518,788.46 | 0.00 | 518,788.46 | 0.00 |
| Short-term loans | 1,286,616,775.17 | 0.00 | 1,493,172,376.69 | 177,944,666.40 |
| Accounts payable | 567,677,254.66 | 3,191,737.90 | 1,116,259,414.13 | 4,823,807.10 |
| Other payables | 3,140,568.35 | 3,848,062.37 | 4,323,553.62 | 1,935,823.58 |
| Non-current liabilities due within one year | 188,339,242.85 | 1,385,745.68 | 251,125,031.52 | 1,334,939.91 |
| Long-term loans | 950,220,000.00 | 0.00 | 1,326,310,000.00 | 0.00 |
| Long-term payables | 0.00 | 0.00 | 1,897,602.19 | 0.00 |
| Lease liabilities | 0.00 | 83,328,762.28 | 0.00 | 81,899,040.00 |
The Company pays close attention to the influence of exchange rate fluctuationson its foreign exchange risk. In accordance with relevant provisions, the Companyshall not be engaged in any transaction of foreign exchange derivatives for thepurpose of speculation. Based on normal production and management, all foreignexchange derivatives transactions shall depend on specific business, so as to avoidand prevent corresponding exchange rate or interest rate risks.Foreign exchange risk sensitivity analysis:
The Company’s foreign exchange risk is mainly correlated with changes in theexchange rate between USD & BND and RMB. The following table showssensitivity analysis upon the assumption of 1% exchange rate change betweenforeign currency and RMB related to the Company. In the process of sensitivity
analysis made by the management, 1% increase or decrease is deemed as rationalreflection of probable exchange rate change scope. On the basis of aboveassumption, under the circumstance that other variables are maintained unchanged,the influence of probable rational changes in exchange rate on current profit &loss and stockholders' equity (before tax) is shown as follows:
| Item | Fluctuation in Exchange Rate | Influence on Current Profit & Loss and Stockholders' Equity (Before Tax) | |
| Current Period | Previous Period | ||
| Monetary assets (USD) | Appreciation of RMB by 1% | 78,455,351.19 | 98,052,113.77 |
| Monetary liabilities (USD) | -212,197,255.78 | -292,031,805.33 | |
| Net influence | -133,741,904.59 | -193,979,691.55 | |
| Monetary assets (USD) | Depreciation of RMB by 1% | -78,455,351.19 | -98,052,113.77 |
| Monetary liabilities (USD) | 212,197,255.78 | 292,031,805.33 | |
| Net influence | 133,741,904.59 | 193,979,691.55 | |
| Monetary assets (BND) | Appreciation of RMB by 1% | 3,774,437.20 | 3,442,381.07 |
| Monetary liabilities (BND) | -4,933,812.66 | -13,887,508.83 | |
| Net influence | -1,159,375.46 | -10,445,127.77 | |
| Monetary assets (BND) | Depreciation of RMB by 1% | -3,774,437.20 | -3,442,381.07 |
| Monetary liabilities (BND) | 4,933,812.66 | 13,887,508.83 | |
| Net influence | 1,159,375.46 | 10,445,127.77 | |
(2) Interest rate risk – cash-flow change risk
The Company’s risk at fair value change of financial instruments caused byinterest rate change mainly comes from: When the financial market interest rate isat a downward trend, the Company cannot enjoy cost saving for fixed-rate loansthat are brought by interest-rate reduction. On the contrary, cost will be increasedfor its loans at floating interest rates due to rate hiking when the financial market
interest rate is at an upward trend. The Company’s short- term loans and mid-and-long-term loans account for approximately 50% of its liabilities with interestrespectively. Moreover, interest is at a fixed rate for most short-term loans, andfloating interest rates for mid-and-long-term loans. According to the Company’smanagement, therefore, the Company’s interest rate risk – fair value change riskis insignificant under the current tendency of interest rate change in macroscopicfinancial market. At present, there is no interest rate hedging policy in theCompany.Interest rate risk sensitivity analysis:
Interest rate risk sensitivity shall be analysed upon the following assumption:
influence of market interest rate changes on interest income or expense of financialinstruments at variable interest rates. For short-term loans, sensitivity analysisshall be based on continuously circulating borrowing of such loan in an integralaccounting year. During sensitivity analysis by the management, increase/decrease in 50 base points will be deemed as reasonable reflection on the feasiblerange of interest rate change. On the basis of above assumption, under thecircumstance that other variables are maintained unchanged and that the interestrate is increased/decreased by 50 base points, probably rational interest ratechanges may have the following influence on current profit & loss andstockholders' equity (before tax):
| Item | Interest rate change | Profit increase in current period | Profit decrease in current period |
| Short-term loans and mid-and- long-term liabilities at fixed interest rate | Increase in every 50 base points at an upward trend of interest rate | 227,932,255.55 | -- |
| Short-term loans and mid-and- long-term liabilities at fixed interest rate | Decrease in every 50 base points at a downward trend of interest rate | -- | 227,932,255.55 |
| Mid-and-long-term liabilities at floating interest rates | Increase in every 50 base points at an upward trend of interest rate | -- | 102,274,200.18 |
| Mid-and-long-term liabilities at floating interest rates | Decrease in every 50 base points at a downward trend of interest rate | 102,274,200.18 | -- |
(3) Other price risks
The Company’s investments classified into held-for-trading financial assets shallbe measured by fair value on the balance sheet. Therefore, the Companyundertakes the risk of related assets price variation The Company has establishedan investment management department, in which members are assigned to closelymonitor the price variation of investment products. In consideration of thenecessity of futures investment and relevant features of leverage risk, theCompany’s BOD authorized the president to set up a futures leading group, andauthorized this group to take charge of the Company’s futures. In addition, theCompany also formulated the train of thought of futures, specified to establish afutures trading group in the Investment Management Department (responsible fororganization and implementation of transaction in accordance with decisions madeby the futures trading group), specified to establish a futures settlement group inthe Financial Management Department (responsible for such works as fundsmanagement, accounting treatment, transaction confirmation and settlementmanagement), and specified to establish a futures supervision group in theAuditing Department (responsible for futures trading risk management & controland periodic review for transaction behaviors). In order to strengthen its internalcontrol over futures and to effectively prevent and relieve probable risks in thetransaction process, the Company also formulated the Futures Business
Management System, requiring all futures business participants to operate in strictaccordance with related provisions and processes. All personnel participating intofutures business in the Company have received special training, and have anadequate understanding of corresponding features and risks of futures involved.According to the Company’s directors, therefore, its price risk has been mitigatedalready.
2. Credit risks
Credit risk refers to the risk of financial loss on the other party as one party offinancial instruments fails to perform its obligations. The Company’s credit riskmainly comes from bank deposit and receivables. In order to control above risk,the Company took the following measures.
In order to lower its credit risk, the Company established a group for determinationof credit limit and for credit approval. The policy of payment before delivery isadopted for unapproved clients. In addition, the Company shall also review onevery balance sheet date recovery of every single receivable, making sure towithdraw adequate bad debt reserves for unrecyclable funds. According to theCompany’s management, therefore, its credit risk has been reduced substantially.
The Company’s working capital is saved in the bank at high credit rating.Therefore, its working capital is at relatively low credit risk.
3. Liquidity risks
According to the Company’s management, adequate cash and cash equivalentsshall be prepared to monitor liquidity risk, so as to meet the Company’s operationneeds and to lower the influence from cash flow fluctuations. The Company’smanagement shall monitor the use of bank loans and make sure to abide by the
loan agreement.
The Company takes bank loan as the main source of funding. On December 31,2023, the Company’s available credit line is RMB 42.348 billion (RMB 32.156billion on December 31, 2022).
Based on maturity of undiscounted residual contract obligations, the Company’sfinancial assets and financial liabilities are analyzed as follows:
| Item | Within 6 months | 7-12 months | 1-3 Years | Over three years |
| Non-derivative financial assets and liabilities: | ||||
| Notes receivable | 167,871,662.32 | 0.00 | 0.00 | 0.00 |
| Short-term loans | 32,365,768,268.86 | 8,756,490,000.00 | 0.00 | 0.00 |
| Notes payable | 740,998,553.81 | 0.00 | 0.00 | 0.00 |
| Long-term loans mature within one year | 2,330,380,457.38 | 2,586,111,283.02 | 0.00 | 0.00 |
| Long-term loans | 0.00 | 0.00 | 6,959,828,587.95 | 7,779,613,275.97 |
| Accounts receivable financing | 36,904,996.06 | 0.00 | 0.00 | 0.00 |
| Derivative financial assets and liabilities: | ||||
| Forward foreign exchange contract | -108,194,619.69 | 0.00 | 0.00 | 0.00 |
| Futures contract | 366,311,518.38 | 0.00 | 0.00 | 0.00 |
Note: For the maturity of the Company’s other undiscounted financial assets andliabilities, please refer to corresponding items in Note V to the financial statementfor details.
(II) Transfer of financial assets
1. Financial assets transferred but not derecognized integrally
This year, it is unnecessary for the Company to disclose financial assets transferredbut no derecognized integrally.
2. Transferred financial assets derecognized integrally already but stillinvolving the assignor
In current period, the Company accumulatively discounted an amount of RMB3,126,325,566.01 bank acceptance bills (RMB 4,632,637,495.03 in 2022. Main risks(e.g. interest rate risk) and remunerations related to these bank acceptance bills havebeen transferred to the bank. Thus, the Company shall derecognize discountedimmature bank acceptance bills. According to the cashing agreement, if the banker’sacceptance failed to be cashed upon maturity, the bank has the right to ask the Companyto pay off the unsettled balance. Therefore, the Company continued to involve incashing the banker’s acceptance. On December 31, 2023, the cashed but not maturebanker’s acceptance was RMB1,313,709,044.00 in total (RMB 2,384,694,492.22 onDecember 31, 2022).
IX. Disclosure of fair value
1. Ending fair value of assets and liabilities measured at fair value
| Item | Ending Fair Value | |||
| The first-tier fair value measurement | The second- tier fair value measurement | The third-tier fair value measurement | Total | |
| I. Continuous fair value measurement | ||||
| (I) Held-for-trading financial assets | 366,311,518.38 | 0.00 | 0.00 | 366,311,518.38 |
| 1. Financial assets measured by fair value and whose changes included in current profits and losses | 366,311,518.38 | 0.00 | 0.00 | 366,311,518.38 |
| (1) Debt instrument investment | 0.00 | 0.00 | 0.00 | 0.00 |
| (2) Equity instrument investment | 0.00 | 0.00 | 0.00 | 0.00 |
| (3) Derivative financial assets | 366,311,518.38 | 0.00 | 0.00 | 366,311,518.38 |
| Item | Ending Fair Value | |||
| The first-tier fair value measurement | The second- tier fair value measurement | The third-tier fair value measurement | Total | |
| 2. Specified as financial assets measured by fair value and whose changes included in current profits and losses | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Debt instrument investment | 0.00 | 0.00 | 0.00 | 0.00 |
| (2) Equity instrument investment | 0.00 | 0.00 | 0.00 | 0.00 |
| (II) Derivative financial assets | 0.00 | 0.00 | 0.00 | 0.00 |
| (III) Held-for-trading financial liabilities | 108,194,619.69 | 0.00 | 0.00 | 108,194,619.69 |
| Wherein: Issued bonds held for trading | 0.00 | 0.00 | 0.00 | 0.00 |
| Derivative financial liabilities | 108,194,619.69 | 0.00 | 0.00 | 108,194,619.69 |
| Others | 0.00 | 0.00 | 0.00 | 0.00 |
| (IV) Derivative financial liabilities | 0.00 | 0.00 | 0.00 | 0.00 |
2. Determination basis for market price of continuous and non-continuous first-tier fair value measurement itemsThe Company’s continuous first-tier fair value measurement items mainly include itsderivative financial instruments with an active market that can obtain unadjusted offerof the same assets or liabilities in the active market.
XI. Related parties and related-party transaction
1. Information about the Company’s parent company
| Name of parent company | Domicile | Nature of business | Registered capital | Shareholding ratio of the parent company in the Company (%) | Percentage of the parent company's voting rights in the Company (%) |
| Zhejiang Hengyi Group Co., Ltd. | Hangzhou | Investment and trade | RMB 51.8 million | 40.61 | 47.60 |
Note: The Company’s ultimate controller is Qiu Jianlin.
2. Information about the Company’s subsidiaries
For detail information, please refer to Notes VII (1. Equities in Subsidiary).
3. Information about the Company’s cooperative and associated enterprises
| Name of cooperative enterprise or associated enterprise | Main place of business | Domicile | Nature of business | Shareholding ratio (%) | Accountant Arrangement Method for Investment in Cooperative Enterprise or Associated Enterprise | |
| Direct | Indirect | |||||
| Ningbo Jinhou Industry Investment Co., Ltd. | Hangzhou | Ningbo | Investment and consulting | 25.00 | 0.00 | Equity method |
| Dongzhan Shipping Co., Ltd. | Zhoushan | Zhoushan | Water transportation industry | 0.00 | 30.00 | Equity method |
For important cooperative and associated enterprises of the Company, please refer toNotes VII (8. Equities in Cooperative or Associated Enterprise).
4. Information about other related parties
| Name of Other Related Party | Relationship between Other Related Parties and the Company |
| Zhejiang Hengyi Polyamide Co., Ltd. | A holding subsidiary of the ultimate parent company |
| Hangzhou Yichen Chemical Fibre Co., Ltd. | A holding subsidiary of the ultimate parent company |
| Hangzhou Yiqing Chemical Fibre Co., Ltd. | A holding subsidiary of the ultimate parent company |
| Name of Other Related Party | Relationship between Other Related Parties and the Company |
| Zhejiang Hengyi Energy Co., Ltd. | A holding subsidiary of the ultimate parent company |
| Hong Kong Yitian Company Limited | A holding subsidiary of the ultimate parent company |
| Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. | Associated company of ultimate parent company |
| Zhejiang Rongtong Chemical Fibre New Material Co., Ltd. | Holding subsidiary of the associated enterprise |
| Yisheng Dahua Petrochemical Co., Ltd. | Holding subsidiary of the associated enterprise |
| Zhejiang Rongyi Trading Co., Ltd. | Wholly-owned subsidiary of the associated enterprise |
| Hangzhou Bayi Energy Co., Ltd. | Holding subsidiary of the joint venture |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | Joint venture of ultimate parent company |
| Ningbo Qingzhi Chemical Terminal Co., Ltd. (Note) | Connected natural persons as directors |
Note: Mr Wu Zhong, a director of the Company, has been a director of Ningbo QingchiChemical Terminal Company Limited ("Qingchi Terminal") since September 2023, andQingchi Terminal has been added as a related party of the Company.
5. Information about related-party transaction
(1) Related-party transaction of commodity purchase & sale and labor provision &reception
① Information about commodity purchase / labor reception
| Related party | Contents of related-party transactions | Amount incurred in current period | Amount incurred in previous period |
| Hainan Yisheng Petrochemical Co., Ltd. | Procurement of goods | 20,005,238.94 | 16,318,689.67 |
| Yisheng Dahua Petrochemical Co., Ltd. | Procurement of goods | 0.00 | 2,690,904,003.22 |
| Yisheng Dahua Petrochemical Co., Ltd. | Labor reception | 0.00 | 504.72 |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Procurement of goods | 311,180,720.25 | 329,558,085.16 |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Labor reception | 2,945,499.49 | 0.00 |
| Zhejiang Hengyi Polyamide CO., Ltd. | Procurement of goods | 3,457,927.39 | 24,605,115.88 |
| Hangzhou Yichen Chemical Fibre Co., Ltd. | Procurement of goods | 115,012,477.80 | 10,048,586.90 |
| Related party | Contents of related-party transactions | Amount incurred in current period | Amount incurred in previous period |
| Zhejiang Yisheng New Material Co., Ltd. | Procurement of goods | 15,213,825,593.72 | 15,096,435,470.51 |
| Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. | Procurement of goods | 8,881,144,362.80 | 6,987,350,219.75 |
| Zhejiang Rongyi Trading Co., Ltd. | Procurement of goods | 0.00 | 671,415,929.18 |
| Hangzhou Bayi Energy Co., Ltd. | Procurement of goods | 147,355,009.33 | 169,237,789.57 |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | Procurement of goods | 1,886,335.85 | 95,751.42 |
| Hangzhou Yijing Chemical Fibre Co., Ltd. | Procurement of goods | 2,986,764.93 | 0.00 |
| Hangzhou Yijing Chemical Fibre Co., Ltd. | Labor reception | 2,020,554.09 | 0.00 |
| Ningbo Qingchi Chemical Terminal Co.,Ltd | Labor reception | 13,521,634.13 | 0.00 |
| Hong Kong Yitian Company Limited | Procurement of goods | 1,525,810,777.02 | 0.00 |
| Zhejiang Rongtong Chemical Fibre New Material Co., Ltd. | Procurement of goods | 154,592,511.47 | 0.00 |
② Information about commodity sale/ labor provision
| Related party | Contents of related-party transactions | Amount incurred in current period | Amount incurred in previous period |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Sales of goods | 1,008,802,975.63 | 950,423,022.45 |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Provision of services | 37,439,423.67 | 29,951,315.01 |
| Hainan Yisheng Petrochemical Co., Ltd. | Sales of goods | 1,253,839,220.98 | 2,380,871,191.28 |
| Hainan Yisheng Petrochemical Co., Ltd. | Provision of services | 1,796,386.36 | 6,389,568.19 |
| Zhejiang Hengyi Polyamide CO, Ltd. | Sales of goods | 26,966,224.78 | 13,117,614.46 |
| Zhejiang Hengyi Polyamide CO., Ltd. | Provision of services | 14,398,564.97 | 7,565,474.40 |
| Yisheng Dahua Petrochemical Co., Ltd. | Provision of services | 3,119.27 | 488,210.40 |
| Yisheng Dahua Petrochemical Co., Ltd. | Sales of goods | 102,296,411.49 | 71,433,479.86 |
| Hangzhou Yichen Chemical Fibre Co., Ltd. | Provision of services | 30,478,797.91 | 21,485,237.51 |
| Hangzhou Yichen Chemical Fibre Co., Ltd. | Sales of goods | 23,289,840.16 | 4,807,243.81 |
| Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. | Sales of goods | 385,958,886.01 | 403,795,638.58 |
| Related party | Contents of related-party transactions | Amount incurred in current period | Amount incurred in previous period |
| Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. | Provision of services | 128,033,960.04 | 93,638,375.93 |
| Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. | Trademark use license fee | 11,784,356.33 | 8,905,990.74 |
| Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. | Patent royalty | 0.00 | 747,910.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | Sales of goods | 0.00 | 2,755,482,514.25 |
| Zhejiang Yisheng New Materials Co., Ltd. | Labor provision | 71,010,316.16 | 62,385,809.22 |
| Zhejiang Rongtong Chemical Fibre New Materials Co., Ltd. | Sales of goods | 0.00 | -212,389.39 |
| Hangzhou Bayi Energy Co., Ltd. | Sales of goods | 734,737,484.94 | 897,671,146.13 |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | Sales of goods | 20,617,481.18 | 3,339,460.36 |
| Hangzhou Yijing Chemical Fibre Co., Ltd. | Labor provision | 648,331.19 | -- |
| Ningbo Qingzhi Chemical Terminal Co., Ltd. | Sales of goods | 2,996,198.66 | -- |
(2) Information about related trusteeship management/ mandatory managementThe Company as trustee
| Name of the Client | Name of the Trustee | Type of Entrusted Assets | Starting Date of Entrustm ent | Custody fee recogniz ed in current period |
| Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. | Zhejiang Hengyi Petrochemical Co., Ltd. | Entrustment of operation | July 25, 2018 | 1,698,11 3.19 |
Note: Zhejiang Hengyi Petrochemical Co., Ltd. (a subsidiary of the Company) isentrusted to provide management advisory services to the production and operating
activities of Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. However, the formerwill not undertake any business risk of the client. The termination date of entrust is thedate of completion when the client is purchased by the Company or the Company’snon-related parties.
(3) Information about related-party lease
① The Company as lessee
| Name of lessor | Category of leased assets | Rental expenses recognized in current period | Rental expenses confirmed in the previous year |
| Hangzhou Yijing Chemical Fibre Co., Ltd. | Warehouse | 994,555.81 | 661,447.12 |
| Hangzhou Yijing Chemical Fibre Co., Ltd. | Property | 1,445,624.69 | -- |
| Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. | Property | 2,935.78 | 12,495.41 |
| Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. (Note) | Property | 1,280,000.00 | 1,280,000.00 |
Note: On January 1, 2021, the Company signed a house-leasing contract with ShaoxingKeqiao Hengming Chemical Fibre Co., Ltd., with the lease term from January 1, 2021to December 31, 2023 and annual rentals of RMB 1.28 million.
② The Company as the leaser
| Name of the lessee | Category of leased assets | Rental expenses recognized in current period | Rental expenses confirmed in the previous year |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | Premises | 910,741.10 | 596,003.52 |
| Zhejiang Hengyi Polyamide Co., Ltd. | Property | 0.00 | 4,000.00 |
| Hainan Yisheng Petrochemical Co., Ltd. | Property | 1,346,678.51 | 1,419,145.21 |
| Zhejiang Yisheng New Materials Co., Ltd. | Property | 365,845.33 | 1,015,495.53 |
(4) Information about related-party guarantee
① The Company as guarantor
| Warrantee | Amount guaranteed (RMB 10,000) | Starting date of guarantee | Maturity date of guarantee | Guarantee finished or not |
| Hainan Yisheng Petrochemical Co., Ltd. | 53,662.78 | May 22, 2023 | December 24, 2024 | No |
② The Company as the warrantee
| Guarantor | Warrantee | Amount (RMB 10,000) | Borrowing date | Repayment date | Mortgage provided by the Company or not | Guarantee finished or not |
| Zhejiang Hengyi Group Co., Ltd. and Qiu Jianlin | Hengyi Industries Sdn. Bhd. | $76,612.00 | 2018-8-23 | 2030-8-22 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. and Qiu Jianlin | Hengyi Industries Sdn. Bhd. | 293,560.00 | 2018-8-23 | 2030-8-22 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. and Qiu Jianlin | Zhejiang Hengyi High-Tech Materials Co., Ltd. | 25,000.00 | 2023-7-5 | 2024-6-20 | No | No |
| Zhejiang Hengyi Group Co., Ltd. and Qiu Jianlin | Zhejiang Hengyi Petrochemicals Co.,Ltd. | 11,000.00 | 2023-7-5 | 2024-6-20 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hengyi Industries Sdn. Bhd. | $200.00 | 2019-6-25 | 2024-9-25 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. | Jiaxing Yipeng Chemical Fibre Co., Ltd. | 66,460.69 | 2022-4-15 | 2027-1-13 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi High-Tech Materials Co., Ltd. | 30,088.84 | 2021-3-8 | 2025-2-22 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Shuangtu New Materials Co., Ltd. | 16,200.00 | 2022-1-28 | 2025-2-20 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. | Haining Hengyi New Materials Co., Ltd. | 70,000.00 | 2023-8-29 | 2024-12-19 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Haining Hengyi New Materials Co., Ltd. | 10,000.00 | 2023-5-15 | 2024-5-15 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Heng Yi Petrochemical Co. | 40,792.00 | 2023-7-25 | 2024-11-15 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hengyi Industries Sdn. Bhd. | $18,560.04 | 2023-10-11 | 2024-4-11 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hengyi Industries Sdn. Bhd. | 170,000.00 | 2023-1-19 | 2024-6-14 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hengyi Industry International Co., Ltd. | $11,481.44 | 2023-7-14 | 2024-4-15 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Jiaxing Yipeng Chemical Fibre Co., Ltd. | 20,000.00 | 2023-8-24 | 2024-8-28 | No | No |
| Guarantor | Warrantee | Amount (RMB 10,000) | Borrowing date | Repayment date | Mortgage provided by the Company or not | Guarantee finished or not |
| Zhejiang Hengyi Group Co., Ltd. | Jiaxing Yipeng Chemical Fibre Co., Ltd. | 10,000.00 | 2023-9-4 | 2024-9-4 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Nongbo Hengyi Trading Co., Ltd | 42,000.00 | 2023-9-12 | 2024-6-11 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Suqian Yida New Materials Co., Ltd. | 14,500.00 | 2023-6-26 | 2024-12-25 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Taicang Yifeng Chemical Fibre Co., Ltd. | 55,410.00 | 2023-8-8 | 2024-12-6 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hong Kong Tianyi International Holding Co., Ltd. | $1,649.00 | 2022-6-28 | 2024-6-27 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi High-tech Material Co., Ltd | 75,816.00 | 2021-11-11 | 2024-11-10 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi Polymers Co., Ltd. | 10,000.00 | 2023-8-24 | 2024-8-15 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi Petrochemicals Co.,Ltd. | 40,000.00 | 2023-8-9 | 2024-12-3 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi Petrochemicals Co.,Ltd. | 85,500.00 | 2023-7-27 | 2024-7-26 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Shuangtu New Materials Co., Ltd. | 33,000.00 | 2023-2-10 | 2024-11-14 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Shuangtu New Materials Co., Ltd. | 6,975.00 | 2023-10-10 | 2024-4-24 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Yisheng Petrochemical Co., Ltd. | 373,300.00 | 2021-2-24 | 2026-4-18 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Yisheng Petrochemical Co., Ltd. | 148,172.24 | 2023-7-13 | 2024-6-12 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Haining Hengyi New Materials Co., Ltd. | 77,482.54 | 2020-1-14 | 2024-12-30 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. and Zhejiang Southeast Space Frame Group Co., Ltd. | Zhejiang Hengyi Petrochemicals Co.,Ltd. | 5,000.00 | 2023-8-23 | 2024-8-23 | No | No |
| Zhejiang Hengyi Group Co., Ltd. and Zhejiang Southeast Space Frame Group Co., Ltd. | Zhejiang Hengyi Petrochemicals Co.,Ltd. | 15,000.00 | 2023-11-27 | 2024-6-3 | No | No |
(5) Related-party lending
| Related party | Lending amount | Start date | Maturity date | Notes |
| Borrowing: |
| Related party | Lending amount | Start date | Maturity date | Notes |
| Zhejiang Hengyi Group Co., Ltd. | 5,588,422,499.99 | -- | -- | Temporary working capital replenished by Heng Yi Group to the Company, which has been returned in full |
| Lending: | ||||
| Zhejiang Yisheng New Materials Co., Ltd. | 988,000,000.00 | 2022-1-14 | 2023-12-21 | Entrusted loan, lending rate: 4.785% |
| Zhejiang Yisheng New Materials Co., Ltd. | 786,000,000.00 | 2023-1-9 | 2024-12-20 | Entrusted loan, lending rate: 4.785% |
(6) Information about related-party assets transfer and debt restructuring
| Related party | Contents of related- party transactions | Amount incurred in current period | Amount incurred in previous period |
| Zhejiang Hengyi Energy Co., Ltd. | Asset transfer | 0.00 | 3,000,000.00 |
| Zhejiang Hengyi Group Co., Ltd. | Asset transfer | 880,000,000.00 | 0.00 |
(7) Remunerations for key management personnel
| Item | Amount incurred in current period | Amount incurred in previous period |
Remunerations for key managementpersonnel
| Remunerations for key management personnel | RMB 8.0573 million | RMB 12.3383 million |
(8) Other related-party transactions
By the end of December 31, 2023, the Company’s and its subsidiaries’ balance ofdeposits is RMB 170.1697 million in its related party, namely China Zheshang BankCo., Ltd. The amount of commercial draft discounted but immature at the end of theterm is RMB 0,00.
6. Related parties’ receivables and payables
(1) Receivables
| Project name | Ending balance | Ending balance of previous year | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | |
| Notes receivable: | ||||
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 966,628.00 | 0.00 | 527,200.00 | 0.00 |
| Accounts receivable: | ||||
| Hainan Yisheng Petrochemical Co., Ltd. | 213,112,065.66 | 0.00 | 140,711,918.33 | 0.00 |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 400,689.72 | 0.00 | 49,142.00 | 0.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | 398,771.41 | 0.00 | 1,106,890.13 | 0.00 |
| Hangzhou Yijing Chemical Fibre Co., Ltd. | 3,877,449.15 | 0.00 | -- | -- |
| Ningbo Qingzhi Chemical Terminal Co., Ltd. | 280,105.95 | 0.00 | -- | -- |
| Advance payment: | ||||
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 9,978.79 | 0.00 | 5,525.28 | 0.00 |
| Other current assets: | ||||
| Zhejiang Yisheng New Materials Co., Ltd. | 787,149,197.50 | 0.00 | 989,433,904.99 | 0.00 |
(2) Payables
| Project name | Ending balance | Ending balance of previous year |
| Notes payables: | ||
| Zhejiang Yisheng New Materials Co., Ltd. | 281,000,000.00 | 0.00 |
| Accounts payable: | ||
| Zhejiang Baling Hengyi Caprolactam Co.,Ltd | 2,716,705.08 | 9,887,234.54 |
| Hangzhou Yichen Chemical Fibre Co., Ltd. | 2,346.68 | 0.00 |
| Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. | 848,660.98 | 3,705,778.85 |
| Zhejiang Hengyi Polyamide Co., Ltd | 1,487.41 | 0.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | 0.00 | 6,305,312.50 |
| Hangzhou Bayi Energy Co., Ltd. | 2,201,434.04 | 1,065,580.38 |
| Hangzhou Yijing Chemical Fibre Co., Ltd. | 391,541.53 | -- |
| Hong Kong Yitian Company Limited | 48,652,663.66 | 0.00 |
| Project name | Ending balance | Ending balance of previous year |
| Contractual liabilities and other current liabilities: | ||
| Hangzhou Bayi Energy Co., Ltd. | 0.00 | 493,849.41 |
| Zhejiang Yisheng New Materials Co., Ltd. | 0.00 | 52,067,253.14 |
| Other payables: | ||
| Zhejiang Hengyi Group Co., Ltd. | 0.00 | 7,355,322.62 |
| Non-current liabilities mature within one year: | ||
| Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. | 0.00 | 1,119,181.06 |
XI. Commitments and Contingencies
1. Contingent liabilities arising from pending litigation and arbitration and theirfinancial impact
① Criminal case of Wang XX and related civil action cases in Zhejiang ShuangtuSince October 21, 2018, Zhejiang Shuangtu has received the notice from more than tenclients (including Haiyan Yixiao Knitting New Materials Co., Ltd.). After the payment,the clients never received goods delivered by Zhejiang Shuangtu, and could not getcontact with WangXX. For the reason of the failure of Zhejiang Shuangtu to deliver after their payment,Haiyan Yixiao Knitting New Materials Co., Ltd., Tonglu Yueheng Knitting ClothingCo., Ltd. and Yiwu Zijing Clothing Co., Ltd. submitted a case to the court.According to its self-inspection, Zhejiang Shuangtu has already received the paymentof above clients for goods, and finished related activities (including delivery andissuance of sales invoice) as per the sales order. All clients failing to receive the goodswere handled by Wang XX, a salesman in Zhejiang Shuangtu. Then, the clients couldnot get contact with Wang XX. On November 11, 2018, Zhejiang Shuangtu reportedthe case to the criminal investigation brigade subordinate to Dajiangdong IndustryCluster District Suboffice of Hangzhou Public Security Bureau. The case has beenaccepted already. On April 13, 2019, Zhejiang Shuangtu received a notice from the
public security organ: Wang XX was arrested.
Both the three civil cases related to Wang XX and the contract dispute case with HaiyanYixiao Knitting New Materials Co., Ltd. were opened to a court session on December3, 2018. The court has not made a judgment yet. As Wang XX’s criminal case isinvolved, Tonglu Yueheng Knitting Clothing Co., Ltd. positively withdrew the contractdispute case, and would decide how to solve after the criminal case was handled. Forthe contract dispute case with Yiwu Zijing Clothing Co., Ltd., Zhejiang Shuangtu hassubmitted corresponding answer brief and evidence materials to the court. The courtwill open a court session later. For the contract dispute case with, Haiyan YixiaoKnitting New Materials Co., Ltd., the court froze RMB 300,000 deposits of ZhejiangShuangtu.
In 2018, based on the information in the client’s letter of notice (including quantity ofgoods not received), Zhejiang Shuangtu deducted an amount of RMB 26,201,814.47from its revenues, recorded corresponding freight cost (i.e. RMB 24,105,503.18) into“other receivables – Wang XX”, and withdrew bad debt losses in full amount. Basedon the receiving time and amount, Zhejiang Shuangtu also withdrew an amount of RMB433,932.50 accrued liabilities by bank lending rates in corresponding period.
On May 17, 2019, Wang XX was arrested by law. On January 22, 2020, the People'sProcuratorate of Hangzhou Xiaoshan District initiated a public prosecution to thePeople's Court of Hangzhou Xiaoshan District on the charge of post occupation andcontract swindling. The case was accepted. Due to epidemic and other reasons, the courthas not determined the date yet. According to the amount involving duty-related crimeas found in the indictment by the People's Procuratorate of Hangzhou Xiaoshan District,Zhejiang Shuangtu deducted an amount of RMB 2,414,257.32 from its revenues, andrecorded corresponding freight cost (i.e. RMB 2,138,041.91) into “other receivables –
Wang XX”, and confirmed anticipated losses in full amount.
Based on the receiving time and amount, Zhejiang Shuangtu also withdrew an amountof RMB 1,573,136.66 accrued liabilities by bank lending rates in corresponding period.According to the Agreement on Stock Issuance for Assets Purchase and subsequentagreements signed by and between the Company and the former shareholders ofZhejiang Shuangtu (namely Fulida Group and Xinghui Chemical Fibre Group Co.,Ltd.), Fulida Group and Xinghui Chemical Fibre Group Co., Ltd. promise and agree toassume joint and several liabilities to the Company and Zhejiang Shuangtu with respectto all losses on Zhejiang Shuangtu and the Company caused by the disputed case priorto December 7, 2018 (included). Therefore, above event will have no significantinfluence on the Company and Zhejiang Shuangtu.
On July 20, 2020, the People’s Court of Hangzhou Xiaoshan District issued a paper ofsentence to judge: (1) The Defendant Wang XX is sentenced to jail for 13 years for dutyencroachment and for eleven (11) years and six (6) months for contract swindling, andalso fined for RMB 150,000. Upon a combined punishment, Wang XX is sentenced to18-year imprisonment, and fined RMB 150,000. (2) The Defendant Wang XX isordered to return and compensate for economic losses to related units and the victim.
After the criminal case of Wang XX was judged, the cases deemed as dutyencroachment of related victims were also heard, judged and/or compromised. By theend of the issue date of this report, 11 out of 13 victims from duty encroachmentaffirmed by the court have been judged, compromised and settled. A total amount ofRMB 936,800 is involved in other two unsettled cases.
On 3 April 2023, Hangzhou Qiantang District People's Procuratorate filed anindictment with Hangzhou Qiantang District People's Court charging defendant Wang
XX with committing the crime of occupational encroachment: from August to October2018, defendant Wang XX took advantage of the convenience of his position, andencroached on Shuangtu Company's property by taking partial shipments and othermeans after presenting the goods on behalf of the company's customers, such asZhejiang Huagang Clothing Accessories Company Limited and other 3 units. The totalamount involved was RMB 2,100,307.86.
On 30 June 2023, Hangzhou Qiantang District People's Court issued a criminaljudgement, sentencing Wang to four years' fixed-term imprisonment for the crime ofoccupying positions and imposing a fine of RMB 50,000; together with the sentence ofeighteen years' fixed-term imprisonment for the previous crime and a fine of RMB150,000, it decided to carry out the fixed-term imprisonment of eighteen years and ninemonths and impose a fine of RMB 200,000; and ordered Defendant Wang Yishi to paycompensation for economic losses of the aggrieved unit, Zhejiang Shuangtu NewMaterial Ltd. for economic losses of RMB 2,100,307.86.
In 2023, Double Rabbit Company offset its income by RMB 1,813,774.41, recordedthe corresponding cost of goods of RMB 1,719,275.62 as "other receivables - Mr.Wang," and fully recognized the estimated loss; at the same time, it accrued estimatedliabilities based on the timing and amount of customer payments received, using thesame period bank loan interest rate and interbank lending rate.
On October 13, 2023, the company received RMB 6,570 from the Hangzhou QiantangDistrict People's Court transferred on behalf of the defendant Mr. Wang.
Due to settlements with some of the victims, the actual refund of payments to thevictims by Double Rabbit Company was less than the amount determined by the courtfor the case. Therefore, the company reduced the amount of receivable compensation
from the original shareholders of Double Rabbit Company, Fulida Group Holding Co.,Ltd., and Xinghui Chemical Fibre Group Co., Ltd., based on the actual expenditures ofsettled cases, reducing the amounts for the years 2021 and 2022 by RMB 8.5558 millionyuan and RMB 54,100 respectively. In 2023, due to the newly confirmed embezzlementoffense committed by Mr. Wang resulting in losses to Double Rabbit Company and theparent company, the receivable compensation from the original shareholders of DoubleRabbit Company, Fulida Group Holding Co., Ltd., and Xinghui Chemical Fibre GroupCo., Ltd. increased by RMB 2,246,502.35 (excluding RMB 6,570 for court-executedfunds for the year).
As of December 31, 2023, the company recognized "other receivables - Mr. Wang" at27,956,250.71 yuan, fully recognizing credit impairment losses; at the same time, itrecognized receivable compensation from the original shareholders of Double RabbitCompany, Fulida Group Holding Co., Ltd., and Xinghui Chemical Fibre Group Co.,Ltd., at RBM 25,833,187.48.
② Arbitration Case for EPC Contract Dispute with COOEC International Co., Ltd.Hengyi Industries Sdn. Bhd. (hereinafter referred to as Hengyi Brunei or Respondent),a subsidiary of the Company, has received China International Economic and TradeArbitration Commission's Notice on Defense of EPC Contract Dispute Case No.P20220470. COOEC International Co., Limited (hereinafter referred to as CNOOCInternational or Applicant) has submitted an arbitration application to ChinaInternational Economic and Trade Arbitration Commission for disputes arising fromthe settlement of Hengyi (Brunei) PMB Petrochemical Project Single Point Mooringand Submarine Pipeline EPC signed with Hengyi Brunei. The main arbitration requestsof CNOOC International Company involved the total amount of RMB 116,758,196.47from twelve claims, including payment or refund of project progress payment, qualityassurance deposit, costs incurred due to contract changes, as well as the losses and
corresponding interest and other expenses caused by the respondent during theconstruction. The Company categorized and summarized the above arbitration requestsand provided defense opinions. In addition, the Company proposes arbitrationcounterclaims, such as bearing corresponding compensation for delayed constructionperiod losses due to the serious delay in the manufacturing, delivery and installationprogress of key equipment by CNOOC, resulting in the completion of the project farbehind the original contract date. The case was heard at Zhejiang Branch of ChinaInternational Economic and Trade Arbitration Commission on July 18, 2022 and March23, 2023, respectively. As of the disclosure date of this report, the arbitration case hasnot yet been adjudicated.
③Dispute over the sales contract with Hainan Guomao Industrial Co., Ltd.On December 28, 2022, Zhejiang Hengyi Petrochemical Sales Co., Ltd. (hereinafterreferred to as Hengyi Sales or Defendant), a subsidiary of the Company, received thesubpoena of No. (2022) Zhejiang 0109 MC 19111 from the People’s Court of HangzhouXiaoshan District: Hainan Guomao Industrial Co., Ltd. (hereinafter referred to asHainan Guomao or plaintiff) has filed a lawsuit to terminate five contracts with HengyiSales, requiring Hengyi Sales to return the payment of RMB 29,468,547.72 paid byHainan Guomao, pay the interest calculated from the plaintiff's payment date to theactual performance date based on the above amount according to three times of themarket interest rate for one-year loans publicized by National Interbank Funding Centerduring the same period and bear the litigation costs of the case. In February 2023,Zhejiang Yilanwen Technology Co., Ltd. was added as the third party to the case. OnMarch 27, 2023, the People’s Court of Hangzhou Xiaoshan District tried the case. Asof the disclosure date of this report, the case is still in the trial stage.
On August 31, 2023, the People's Court of Xiaoshan District, Hangzhou City, issuedthe following civil judgment (hereinafter referred to as the "first-instance judgment"):
the termination of the unfulfilled contract between Hengyi Sales Company and HainanGuomao, with Hengyi Sales Company required to refund the unpaid goods amount ofRMB 756,107.16 to Hainan Guomao within ten days of the judgment coming intoeffect, and to pay interest on the funds occupied from March 27, 2023, to the actualperformance date calculated at the one-year loan market quotation rate published by theNational Interbank Funding Center during the same period.
Hainan Guomao appealed against the first-instance judgment to the HangzhouIntermediate People's Court in September 2023, requesting the termination of the fivecontracts involved, the refund of the paid goods amount of RMB 29,468,547.72, andthe payment of triple interest calculated based on the above amount from the date ofpayment by the appellant to the actual performance date at three times the one-year loanmarket rate published by the National Interbank Funding Center during the same period,with all first and second-instance litigation costs to be borne by the defendant. InDecember 2023, Hengyi Sales Company submitted a second-instance defense pleadingto the Hangzhou Intermediate People's Court requesting the dismissal of HainanGuomao's appeal. The second-instance trial for the aforementioned case took place onDecember 27, 2023, and on February 21, 2024, the Zhejiang Provincial Higher People'sCourt issued a civil judgment "rejecting the appeal and upholding the originaljudgment," which served as the final judgment.
(2) By the end of December 31, 2022, the Company’s debt guarantee is shown asfollows:
Currency unit: RMB 10,000
| Guarantor | Warrantee | Guaranty Style | Amount Guaranteed | Maturity date of guarantee |
| Hengyi Petrochemical Co., Ltd. | Hainan Yisheng Petrochemical Co., Ltd. | Credit guarantee | 53,662.78 | 2024-12-24 |
XII. Events after the balance sheet date
1. Distribution of profits
On April 19, 2024, during the eighth session of the twelfth Board of Directors meeting,the company approved the "Proposal on the Distribution of Profits for the Year 2023."The company intends to distribute cash dividends of RMB 1.00 (tax included) per 10shares to all shareholders entitled to dividends, using the total share capital recorded onthe registration date determined in the announcement of the equity distribution as thebase, deducting the shares held by the company's repurchase special securities account.There will be no bonus shares issued, and no increase in share capital through capitalreserve conversion. This proposal is subject to approval at the annual general meetingof shareholders for the year 2023.
2. As at the date of this financial report, apart from the above matters, there wereno other matters required to be disclosed after the balance sheet date during thecurrent year
XIII. Other important events
1. Correction to prior period errors
There were no prior period error corrections that need to be disclosed by the Companyduring this year.
2. Segment information
Segmental management is not implemented in the Company. Therefore, there is noreporting segment.
3. Other important events
There were no other important events that need to be disclosed by the Company duringthis year.
XIV. Notes to main items in the company’s financial statements
1. Other receivables
| Item | Ending balance | Ending balance of previous year |
| Interests receivable | 0.00 | 0.00 |
| Dividends receivable | 765,000,000.00 | 425,000,000.00 |
| Other receivables | 5,147,890,574.22 | 5,601,278,001.08 |
| Total | 5,912,890,574.22 | 6,026,278,001.08 |
(1) Dividends receivable
| Project (or Invested Unit) | Ending balance | Ending balance of previous year |
| Zhejiang Hengyi Petrochemical Co., Ltd. | 425,000,000.00 | 425,000,000.00 |
| Taicang Yifeng Chemical Fibre Co., Ltd. | 230,000,000.00 | 0.00 |
| Zhejiang Hengyi International Trading Co., Ltd. | 110,000,000.00 | 0.00 |
| Subtotal | 765,000,000.00 | 425,000,000.00 |
| Minus: Bad debt provision | 0.00 | 0.00 |
| Total | 765,000,000.00 | 425,000,000.00 |
(2) Other receivables
① Disclosure by aging
| Aging | Ending balance | Ending balance of previous year |
| Within 1 year | 5,147,710,574.22 | 2,093,805,561.80 |
| 1-2 years | 0.00 | 200,000.00 |
| 2-3 years | 200,000.00 | 1,255,406,748.63 |
| Over three years | 2,500.00 | 2,251,878,190.65 |
| Subtotal | 5,147,913,074.22 | 5,601,290,501.08 |
| Minus: Bad debt provision | 22,500.00 | 12,500.00 |
| Total | 5,147,890,574.22 | 5,601,278,001.08 |
② Classification based on nature of fund
| Nature of account | Ending balance | Ending balance of previous year |
| Related party funds within the scope of consolidation | 5,147,510,574.22 | 5,601,088,001.08 |
| Portfolio of deposits and security | 402,500.00 | 202,500.00 |
| Subtotal | 5,147,913,074.22 | 5,601,290,501.08 |
| Minus: Bad debt provision | 22,500.00 | 12,500.00 |
| Total | 5,147,890,574.22 | 5,601,278,001.08 |
③ Accrual of bad debt reserves
| Bad debt provision | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss of the future twelve months | Expected credit loss over the lifetime (no credit impairment has occurred) | Expected credit loss over the lifetime (credit impairment occurred has occurred) | ||
| Ending balance of previous year | 10,000.00 | 0.00 | 2,500.00 | 12,500.00 |
| Book balance of other receivables at the end of the previous year: | ||||
| - Transferred to Stage 2 | 0.00 | -- | -- | 0.00 |
| - Transferred to Stage 3 | 0.00 | 0.00 | -- | 0.00 |
| - Transferred back to Stage 2 | -- | -- | 0.00 | 0.00 |
| - Transferred back to Stage 1 | -- | 0.00 | 0.00 | 0.00 |
| Provision in current period | 10,000.00 | 0.00 | 0.00 | 10,000.00 |
| Withdrawal or Roll-back in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| Write-off or cancellation after verification in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| Other changes | 0.00 | 0.00 | 0.00 | 0.00 |
| Ending balance | 20,000.00 | 0.00 | 2,500.00 | 22,500.00 |
④ Situation of bad debt reserves
| Category | Ending balance of previous year | Amount of changes in current period | Ending balance | ||
| Provision | Amount recovered or written back | Resell or write off | |||
| Related party funds within the scope of consolidation | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Receivables and payables such as advance from entities beyond the scope of consolidation | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Combination of tax refunds receivable and other government subsidies | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Portfolio of deposits and security | 12,500.00 | 0.00 | 0.00 | 0.00 | 12,500.00 |
| Employee loan and petty cash | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Other groups | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 12,500.00 | 0.00 | 0.00 | 0.00 | 12,500.00 |
⑤ Other receivables with top five ending balance collected by debtor
| Name of organization | Nature of account | Ending balance | Aging | Proportions in the total other accounts receivable at the year ended (%) | Bad debt provision Ending balance |
| Zhejiang Hengyi Petrochemical Co., Ltd. | Related receivables and payables | 5,147,510,574.22 | Within 1 year | 99.99 | 0.00 |
| China Securities Depository & Clearing Corporation Shenzhen Branch | Convertible bonds converted to pay zero share capital | 400,000.00 | Within 1 year, 2-3 | 0.01 | 20,000.00 |
| Beihai Haifu Building | Deposit | 2,500.00 | More than 3 years | 0.00 | 2,500.00 |
| Total | -- | 5,147,913,074.22 | -- | 100.00 | 22,500.00 |
2. Long-term equity investment
(1) Classification of long-term equity investment
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment Reserve | Book value | Book balance | Impairment Reserve | Book value | |
| Investment in subsidiaries | 15,941,768,517.98 | 0.00 | 15,941,768,517.98 | 15,931,768,517.98 | 0.00 | 15,931,768,517.98 |
| Investments in joint ventures and associates | 14,156,002.82 | 0.00 | 14,156,002.82 | 14,254,625.24 | 0.00 | 14,254,625.24 |
| Total | 15,955,924,520.80 | 0.00 | 15,955,924,520.80 | 15,946,023,143.22 | 0.00 | 15,946,023,143.22 |
(2) Investment in subsidiaries
| Investee | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | Provision for impairment reserves in current period | Ending Balance of impairment reserves |
| Zhejiang Hengyi Petrochemical Co., Ltd. | 9,382,870,750.00 | 10,000,000.00 | 0.00 | 9,392,870,750.00 | 0.00 | 0.00 |
| Zhejiang Hengyi International Trade Co., Ltd. | 300,000,000.00 | 0.00 | 0.00 | 300,000,000.00 | 0.00 | 0.00 |
| Zhejiang Hengyi Engineering Management Co., Ltd. | 200,000,000.00 | 0.00 | 0.00 | 200,000,000.00 | 0.00 | 0.00 |
| Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. | 160,000,000.00 | 0.00 | 0.00 | 160,000,000.00 | 0.00 | 0.00 |
| Zhejiang Shuangtu New Materials Co., Ltd. | 2,104,999,978.20 | 0.00 | 0.00 | 2,104,999,978.20 | 0.00 | 0.00 |
| Jiaxing Yipeng Chemical Fibre Co., Ltd. | 2,886,198,482.98 | 0.00 | 0.00 | 2,886,198,482.98 | 0.00 | 0.00 |
| Taicang Yifeng Chemical Fibre Co., Ltd. | 897,699,306.80 | 0.00 | 0.00 | 897,699,306.80 | 0.00 | 0.00 |
| Total | 15,931,768,517.98 | 10,000,000.00 | 0.00 | 15,941,768,517.98 | 0.00 | 0.00 |
(3) Investment in associated and cooperative enterprises
| Investee | Ending balance of previous year | Changes of increase or decrease in current period | ||||
| Additional investment | Negative investment | Profits and losses on investments confirmed by equity method | Other comprehensive income adjustment | Other Equity Changes | ||
| Associated enterprises | ||||||
| Ningbo Jinhou Industry Investment Co., Ltd. | 14,254,625.24 | 0.00 | 0.00 | -98,622.42 | 0.00 | 0.00 |
(Continued)
| Investee | Changes of increase or decrease in current period | Ending balance | Ending balance of impairment reserves | ||
| Cash dividends or profits declared to distribute | Provisions for impairment reserves | Others | |||
| Associated enterprises | |||||
| Ningbo Jinhou Industry Investment Co., Ltd. | 0.00 | 0.00 | 0.00 | 14,156,002.82 | 0.00 |
3. Operating income and operating cost
| Item | Amount incurred in current period | Amount incurred in previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Main business | 0.00 | 0.00 | 1,437,239,380.54 | 1,413,310,442.21 |
| Other businesses | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 0.00 | 0.00 | 1,437,239,380.54 | 1,413,310,442.21 |
4. Investment income
| Item | Amount incurred in current period | Amount incurred in previous period |
| Income from long-term equity investment checked with cost method | 340,000,000.00 | 0.00 |
| Income from long-term equity investment checked with equity method | -98,622.42 | -37,178.87 |
| Total | 339,901,377.58 | -37,178.87 |
XV. Further information
1. List of non-recurring profits and losses in this year
| Item | Amount |
| 1. Gains and losses on disposal of non-current assets, including elimination of provision for impairment of assets | 416,787,000.84 |
| 2. Government grants recognised in profit or loss for the current period, except for those government grants that are closely related to the Company's normal business operations, in line with national policies and in accordance with defined criteria, and that have a sustained impact on the Company's profit or loss | 114,355,884.18 |
| 3. Gains and losses arising from changes in the fair value of financial assets and liabilities held by non-financial corporations and gains and losses arising from the disposal of financial assets and liabilities, except for effective hedging operations related to the Company's normal business operations | 491,763.52 |
| 4. Occupancy fees charged to non-financial corporations included in profit or loss for the period | 0.00 |
| 5. Gains or losses on the investment or management of assets entrusted to others; | 0.00 |
| 6. Gains and losses on external entrusted loans | 38,393,856.92 |
| 7. Losses of assets due to force majeure factors, such as natural disasters; | 0.00 |
| 8. Reversal of provision for impairment of receivables individually tested for impairment; | 6,570.00 |
| 9. The cost of investments in subsidiaries, associates and joint ventures acquired by an enterprise is less than its share of the gain arising from the fair value of the identifiable net assets of the investee at the time the investment is acquired | 16,534,148.40 |
| 10. Net profit or loss for the period from the beginning of the period to the date of consolidation of subsidiaries resulting from business combinations under the same control; | 0.00 |
| 11. Gains and losses on exchange of non-monetary assets; | 0.00 |
| 12. Debt restructuring gains and losses; | 0.00 |
| 13. One-off costs incurred by an enterprise because the relevant business activity is no longer sustainable, such as expenses for relocating employees; | 0.00 |
| 14. One-time effect on profit or loss for the period due to adjustments in tax, accounting and other laws and regulations; | 0.00 |
| 15. One-time recognition of share-based payment fees due to cancellation and | 0.00 |
| Item | Amount |
| modification of equity incentive plans; | |
| 16. For cash-settled share-based payments, gains and losses arising from changes in the fair value of employee compensation payable after the feasible date; | 0.00 |
| 17. Gains and losses arising from changes in the fair value of investment properties that are subsequently measured using the fair value model; | 0.00 |
| 18. Gains arising from transactions where the transaction price is significantly unfair; | 0.00 |
| 19. Gains and losses arising from contingencies that are not related to the Company's normal business operations; | 0.00 |
| 20. Custodial fee income earned on trusteeship; | 1,698,113.16 |
| 21. Non-operating income and expenses other than those listed above. | -24,115,026.00 |
| 22. Other items of profit or loss that meet the definition of non-recurring profit or loss (Note) | 63,233,423.28 |
| Total non-recurring gains and losses before income tax | 627,385,734.30 |
| Less: Amount of income tax effect | 156,969,934.37 |
| Total non-recurring gains and losses, net of income tax | 470,415,799.93 |
| Effect of minority interests in profit or loss (loss expressed as "-") | 88,643,291.10 |
| Amount of net profit attributable to owners of the parent company from non-recurring gains and losses | 381,772,508.83 |
Note: Other income and expenses items that meet the definition of non-recurring gainsand losses mainly include non-recurring gains and losses attributable to the investeeunits in significant jointly controlled entities and associates accounted for using theequity method, with an amount of RMB 64,952,698.90.
The recognition of non-recurring gains and losses by the Company is implemented inaccordance with the provisions of the "Interpretation Announcement No. 1 on Non-recurring Gains and Losses in the Information Disclosure of Companies IssuingPublicly Traded Securities" (Revised in 2023) (CSRC Announcement [2023] No. 65).
(2) The Company has been implementing the "Interpretation Announcement No. 1 on
Non-recurring Gains and Losses in the Information Disclosure of Companies IssuingPublicly Traded Securities (Revised in 2023)" since December 22, 2023, andrecalculating the non-recurring gains and losses for the comparable accounting periodof the year 2022. The affected amount of non-recurring gains and losses is as follows:
| Item | Amount |
| Net non-recurring gains and losses attributable to owners of the parent company for the year 2022 | 12,786,821.23 |
| Net non-recurring gains and losses attributable to owners of the parent company calculated in accordance with "Interpretative Announcement for Information Disclosure by Public Securities Issuers No. 1 - Non-recurring Gains and Losses (Revised in 2023)" for the year 2022 | 32,716,781.06 |
| Amount of impact | 19,929,959.83 |
2. Return on equity and earnings per share
| Profits in reporting period | Weighted average return on net assets (%) | Earnings per Share | |
| Basic earnings per share | Diluted EPS | ||
| Net profits assigned to the Company’s common shareholders | 1.74 | 0.13 | 0.13 |
| Net profits assigned to common shareholders after deduction of non-recurring profits and losses | 0.21 | 0.02 | 0.02 |
Hengyi Petrochemical Co., Ltd.
President: Qiu YiboApril 19, 2024